UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2024

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report

For the transition period from             to

Commission file number: 001-42456

INLIF LIMITED

(Exact name of Registrant as specified in its charter)

N/A

(Translation of Registrant’s name into English)

Cayman Islands

(Jurisdiction of incorporation or organization)

No. 88, Hongsi Road

Yangxi New Area, Honglai Town

Nan’an City, Quanzhou

The People’s Republic of China

+86 15375760760

(Address of principal executive offices)

Rongjun Xu, Chief Executive Officer

Telephone: +86-15375760760

Email: xrj@yiwate88.com

No. 88, Hongsi Road

Yangxi New Area, Honglai Town

Nan’an City, Quanzhou

The People’s Republic of China

+86 15375760760

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None

(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

An aggregate of 12,500,000 ordinary shares, par value $0.0001 per share, as of December 31, 2024.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ☐ No ☒

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes ☐ No ☒

Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive- based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☐

TABLE OF CONTENTS

INTRODUCTION

In this annual report on Form 20-F, unless the context otherwise requires, references to:

This annual report on Form 20-F includes our audited consolidated financial statements for the fiscal years ended December 31, 2024, 2023, and 2022. In this annual report, we refer to assets, obligations, commitments, and liabilities in our consolidated financial statements in United States dollars. These dollar references are based on the exchange rate of RMB to United States dollars, determined as of a specific date or for a specific period. Changes in the exchange rate will affect the amount of our obligations and the value of our assets in terms of United States dollars which may result in an increase or decrease in the amount of our obligations and the value of our assets.

This annual report contains translations of certain RMB amounts into U.S. dollars at specified rates. Unless otherwise stated, the following exchange rates are used in this annual report:

Part I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not Applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not Applicable.

ITEM 3. KEY INFORMATION

A. [Reserved]

B. Capitalization and Indebtedness

Not applicable.

C. Reasons for the Offer and Use of Proceeds

Not applicable.

D. Risk Factors

Risks Relating to Doing Business in the PRC

The impact of the Cyberspace Administration of China (the “CAC”)’s increasing oversight over data security remains highly uncertain, particularly for companies with substantial China operations seeking to list on a foreign stock exchange.

In January 2022, the CAC amended Cybersecurity Review Measures, which came into effect on February 15, 2022. Pursuant to the Cybersecurity Review Measures, critical information infrastructure operators procuring network products and services, and online platform operators carrying out data processing activities which affect or may affect national security, shall conduct a cybersecurity review pursuant to the provisions therein. In addition, online platform operators possessing personal information of more than one million users seeking to be listed in foreign country must apply for a cybersecurity review.

As of the date of this annual report, we have not received any notice from any PRC regulatory authority identifying us as a “critical information infrastructure operator,” “online platform operator,” or “data processor,” or requiring us to go through the cybersecurity review procedures pursuant to the Cybersecurity Review Measures and the Regulations for the Security Administration of Network Data Security (the “Data Security Administration Regulations”). According to the Cybersecurity Review Measures and the Data Security Administration Regulations, we do not expect to become subject to cybersecurity review by the CAC for our initial public offering (the “IPO”), given that: neither Fujian INLIF nor the Operating Entity is a critical information infrastructure operator (“CIIO”) or online platform operator with personal information of more than one million users.

However, there remains uncertainty as to how the Cybersecurity Review Measures will be interpreted or implemented and whether the PRC regulatory authorities may adopt new laws, regulations, rules, or detailed implementation and interpretations in relation, or in addition to the Cybersecurity Review Measures. While we intend to closely monitor the evolving laws and regulations in this area and take all reasonable measures to mitigate compliance risks, we cannot guarantee that our business and operations will not be adversely affected by the potential impact of the Cybersecurity Review Measures or other laws and regulations related to privacy, data protection and information security.

We may be affected by changes in the political and economic policies of the PRC government.

A very substantial portion of our assets and operations are currently located in mainland China. Accordingly, we may be influenced to a significant degree by political and social conditions in China generally. The Chinese economy differs from the economies of some developed countries in many respects, including the level of government involvement, level of development, growth rate, control of foreign exchange, and allocation of resources. Although the Chinese government has implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets, and the establishment of improved corporate governance in business enterprises, a substantial portion of productive assets in China is still owned by the government. In addition, the Chinese government continues to play a significant role in regulating industry development by imposing industrial policies. The Chinese government also exercises significant control over China’s economic growth by allocating resources, controlling payment of foreign currency-denominated obligations, setting monetary policy, and providing preferential treatment to companies in particular industries or regions. While the Chinese economy has experienced significant growth over past decades, growth has been uneven, both geographically and among various sectors of the economy. Any adverse changes in economic conditions in China, in the policies of the Chinese government, or in the laws and regulations in China could have a material adverse effect on the overall economic growth of China. Such developments could adversely affect our business and results of operations, lead to a reduction in demand for our future products and adversely affect our competitive position.

Uncertainties with respect to the enforcement of laws, and changes in laws and regulations in China with little advance notice, could materially and adversely affect us.

The Operating Entity’s operations in mainland China are governed by PRC laws and regulations. The Operating Entity in the PRC, Ewatt Robot Equipment Co., Ltd., is a foreign-invested enterprise, and is subject to laws and regulations applicable to foreign investment in China and, in particular, laws applicable to foreign-invested enterprises. The PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions may be cited for reference but do not have binding authority. There are uncertainties regarding the interpretation and application of PRC laws and regulations, including, but not limited to, the laws and regulations governing our business and the enforcement and performance of our business arrangements in certain circumstances. The laws and regulations are sometimes vague and may be subject to future changes with little advance notice, and their official interpretation and enforcement could be unpredictable. The effectiveness and interpretation of newly enacted laws or regulations, including amendments to existing laws and regulations, may be delayed, and our business may be affected if we rely on laws and regulations which are subsequently adopted or interpreted in a manner different from our current understanding of these laws and regulations. New laws and regulations that affect existing and proposed future businesses may also be applied retroactively. We cannot predict what effect the interpretation of existing or new PRC laws or regulations may have on our business.

Since late 1970s, the PRC government has been developing a comprehensive system of laws and regulations governing economic matters in general. The overall effect of legislation over the past several decades has significantly enhanced the protections afforded to various forms of foreign investments in China. However, China has not developed a fully integrated legal system, and recently enacted laws and regulations may not sufficiently cover all aspects of economic activities in China. In particular, because these recently enacted laws and regulations are relatively new, and because of the limited volume of published decisions and their nonbinding nature, the interpretation and enforcement of these laws and regulations involve uncertainties. In addition, the PRC legal system is based in part on government policies and internal rules, some of which may not be published on a timely basis or at all, and some of which may have a retroactive effect. As a result, we may not be aware of our violation of these policies and rules until sometime after the violation. Any administrative and court proceedings in China may be protracted, resulting in substantial costs and diversion of resources and management attention. However, since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy than in more developed legal systems. These uncertainties may also impede our ability to enforce the contracts we have entered into. As a result, these uncertainties could materially and adversely affect our business and results of operations.

The PRC government exerts substantial influence over the manner in which the PRC subsidiaries conduct their business activities. The PRC government may also intervene or influence the PRC subsidiaries’ operations, which could result in a material change in the PRC subsidiaries’ operations.

Because our operations are conducted in China through our Operating Entity, the Chinese government may exercise significant oversight and discretion over the conduct of our business, may intervene in or influence our operations at any time, and may, in general, exert more control over offerings conducted overseas and/or foreign investment in China-based issuers, which could result in a material change in our operations and/or the value of our Ordinary Shares. The Chinese government has exercised, and continues to exercise, substantial control over virtually every sector of the Chinese economy through regulation and state ownership. The central government or local governments may impose new, stricter regulations, or interpretations of existing regulations, that could require additional expenditures and efforts on our part to ensure our compliance with such regulations or interpretations. As such, our Operating Entity in the PRC may be subject to governmental and regulatory interference in the provinces in which it operates. We could also be subject to regulation by various political and regulatory entities, including local and municipal agencies and other governmental subdivisions. Our ability to operate in China may be impaired by any such laws or regulations, or any changes in laws and regulations in the PRC. We may incur increased costs necessary to comply with existing and future laws and regulations or penalties for any failure to comply.

Recent statements by the Chinese government have indicated an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investments in China-based issuers. On July 6, 2021, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued the “Opinions on Severely Cracking Down on Illegal Securities Activities According to Law,” or the “Opinions.” The Opinion requires the relevant governmental authorities to strengthen cross-border oversight of law enforcement and judicial cooperation, to enhance supervision over China-based companies listed overseas, and to establish and improve the system of extraterritorial application of the PRC securities laws. On February 17, 2023, the China Securities Regulatory Commission (the “CSRC”) announced the Trial Measures, and five supporting guidelines which came into effect on March 31, 2023. The Trial Measures refine the regulatory system by subjecting both direct and indirect overseas offering and listing activities to the CSRC filing-based administration. Pursuant to the Trial Measures, we are required to file with the CSRC within three working days following the submission of an initial public offering or listing application.

Furthermore, the Cybersecurity Review Measures were released on December 28, 2021, and became effective on February 15, 2022, and provide that critical information infrastructure operators, or CIIOs, that intend to purchase Internet products and online platform operators engaging in data processing activities that affect or may affect national security must be subject to cybersecurity review by the Cybersecurity Review Office of the PRC. According to the Cybersecurity Review Measures, a cybersecurity review assesses potential national security risks that may arise in connection with any procurement of data processing. The Cybersecurity Review Measures further requires that an online platform operator that possesses the personal data of more than one million users shall declare to the Office of Cybersecurity Review for cybersecurity review before listing in a foreign country. As confirmed by our PRC counsel, Beijing Dacheng Law Offices, LLP (Fuzhou) (“Dacheng”), we are not subject to cybersecurity review or network data security review by the CAC under the Cybersecurity Review Measures or the Regulations for the Security Administration of Network Data Security (which came into effect on January 1, 2025), because neither Fujian INLIF nor the Operating Entity is a CIIO or online platform operator with personal information of more than one million users.

Since these statements and regulatory actions are newly published, however, official guidance and related implementation rules have not been issued. Such modified or new laws and regulations may have a potential impact on the daily business operations of our subsidiaries and our ability to accept foreign investments. We also cannot guarantee that we will not be subject to cybersecurity review in the future. If such review is or becomes necessary, we may be required to suspend our operations or experience other disruptions to our operations. Cybersecurity review could also result in negative publicity with respect to our Company and the diversion of our managerial and financial resources, which could materially and adversely affect our business, financial conditions, and results of operations.

The PRC government has significant authority to exert influence on our operations in mainland China.

The PRC government has significant authority to exert influence on our operations in mainland China. Therefore, uncertainties in the PRC legal system and the interpretation and enforcement of PRC laws and regulations could limit the legal protection available to you and us, hinder our ability to offer or continue to offer the Ordinary Shares, result in a material adverse effect on the Operating Entity’s business operations, and damage our reputation, which might further cause the Ordinary Shares to significantly decline in value or become worthless. Changes in China’s economic, political or social conditions, or government policies could materially and adversely affect our business, financial condition, and results of operations.

The economic, political and social conditions in the PRC differ from those in more developed countries in many respects, including structure, government involvement, level of development, growth rate, control of foreign exchange, capital reinvestment, allocation of resources, rate of inflation and trade balance position. Before the adoption of its reform and opening up policies in 1978, the PRC was primarily a planned economy. In recent years, the PRC government has been reforming the PRC economic system and government structure. For example, the PRC government has implemented economic reforms and measures emphasizing the utilization of market forces in the development of the PRC economy in the past three decades. These reforms have resulted in significant economic growth and social prospects. Economic reform measures, however, may be adjusted, modified or applied inconsistently from industry to industry or across different regions of the country.

We cannot predict whether the resulting changes will have any adverse effect on our current or future business, financial condition, or results of operations. Despite these economic reforms and measures, the PRC government continues to play a significant role in regulating industrial development, allocation of natural and other resources, production, pricing and management of currency, and there can be no assurance that the PRC government will continue to pursue a policy of economic reform or that the direction of reform will continue to be market friendly. The Operating Entity’s ability to successfully expand business operations in the PRC depends on a number of factors, including macro-economic and other market conditions. Demand for the Operating Entity’s future products in the Chinese market and our business, financial condition and results of operations may be materially and adversely affected by the following factors:

These factors are affected by a number of variables which are beyond our control.

Chinese regulatory authorities could disallow our holding company structure by exerting more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers, which could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless.

We indirectly hold the equity of the Operating Entity, and thus the Operating Entity is an indirectly foreign-invested enterprise. Although the PRC government has an increasingly open attitude towards absorbing foreign investment in general, it still implements the Negative List (as defined below), which restricts or prohibits overseas enterprises from holding the equity of Chinese companies whose operations are included in the Negative List. As the boundaries stipulated in the Negative List are relatively vague, they are subject to further determination and clarification by the Chinese government. As of the date of this annual report, the business operated by the Operating Entity has not been included in the Negative List, but we cannot fully guarantee that the Chinese government will not make a different interpretation, so as to disallow our holding corporate structure. Moreover, the Chinese government revises the Negative List from time to time; although the scope of the Negative List is narrowing as a whole, it remains uncertain whether the Operating Entity’s existing business or future business will be included in future revisions. If the business of the Operating Entity is deemed to be a restricted or prohibited business based on the Negative List, our existing corporate structure may be considered illegal and required to be restructured by the Chinese government, which may adversely affect the Operating Entity’s operations and the value of the securities we are registering for sale.

On July 4, 2014, the State Administration of Foreign Exchange of China (the “SAFE”) issued the SAFE Circular 37, which requires PRC residents, including PRC individuals and institutions, to register with SAFE or its local branches in connection with their direct establishment or indirect control of an offshore special purpose vehicle, for the purpose of overseas investment and financing, with such PRC residents’ legally owned assets or equity interests in domestic enterprises or offshore assets or interests. In addition, such PRC residents must update their foreign exchange registrations with SAFE or its local branches when the offshore special purpose vehicles in which such residents directly hold equity interests undergo material events relating to any changes of basic information (including changes of such PRC individual shareholders, names, and operation terms), increases or decreases in investment amount, share transfers or exchanges, or mergers or divisions. As of the date of this annual report, our current shareholders who are subject to the SAFE Circular 37 have completed the initial registrations with the qualified banks as required by the regulations. However, we may not be fully informed of the identities of all our shareholders or beneficial owners who are PRC residents, and therefore, we may not be able to identify all our shareholders or beneficial owners who are PRC residents to ensure their compliance with the SAFE Circular 37 or other related rules. In addition, we cannot provide any assurance that all of our shareholders and beneficial owners who are PRC residents will comply with our request to make, obtain, or update any applicable registrations or comply with other requirements required by the SAFE Circular 37 or other related rules in a timely manner. Even if our shareholders and beneficial owners who are PRC residents comply with such request, we cannot provide any assurance that they will successfully obtain or update any registration required by the SAFE Circular 37 or other related rules in a timely manner. If any of our shareholders who is a PRC resident as determined by SAFE Circular 37 fails to fulfill the required foreign exchange registration, it will be deemed to be illegal for such shareholder to directly or indirectly hold our equity under the PRC laws. Furthermore, if PRC authorities disallow such shareholders to own our equity, the Operating Entity may be prohibited from distributing dividends to us or from carrying out other subsequent cross-border foreign exchange activities, and we may be restricted in our ability to contribute additional capital to the Operating Entity, which may adversely affect the Operating Entity’s operations and our values of the securities we are registering for sale.

Furthermore, if the Chinese government exerts more oversight and control by publishing future laws, administrative regulations, or provisions mandate further actions to be taken by us or the Operating Entity with respect to our existing corporate structure, we may face substantial uncertainties as to whether we can complete such actions in a timely manner, or at all. Failure to take timely and appropriate measures to cope with any of these or similar regulatory compliance challenges could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless.

Recent negative publicity surrounding China-based companies listed in the United States may negatively impact the trading price of the Ordinary Shares.

We believe that recent negative publicity surrounding companies with operations in China that are listed in the United States have negatively impacted the stock prices of these companies. Certain politicians in the United States have publicly warned investors to shun China-based companies listed in the United States. The SEC and the PCAOB, also issued a joint statement on April 21, 2020, reiterating the disclosure, financial reporting, and other risks involved in the investments in companies that are based in emerging markets, as well as the limited remedies available to investors who might take legal action against such companies.

Furthermore, various equity-based research organizations have recently published reports on China-based companies after examining their corporate governance practices, related party transactions, sales practices, and financial statements, and these reports have led to special investigations and listing suspensions on U.S. national exchanges. Any similar scrutiny on us, regardless of the lack of merit, could cause the market price of the Ordinary Shares to fall, divert management resources and energy, cause us to incur expenses in defending ourselves against rumors, and increase the premiums we pay for director and officer insurance.

The Ordinary Shares may be delisted under the Holding Foreign Companies Accountable Act (the “HFCA Act”). The delisting of the Ordinary Shares, or the threat of such delisting, may materially and adversely affect the value of your investment. Additionally, the inability of the Public Company Accounting Oversight Board (United States) (the “PCAOB”) to conduct inspections would deprive our investors of the benefits of such inspections.

The HFCA Act was enacted on December 18, 2020. Pursuant to the HFCA Act, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the PCAOB for two consecutive years, the SEC shall prohibit our shares or Ordinary Shares from being traded on a national securities exchange or in the over-the-counter trading market in the U.S.

On March 18, 2021, the SEC adopted on an interim basis rules disclosure requirements for companies with PCAOB member auditors whom the PCAOB has determined that it cannot inspect their operations within a foreign jurisdiction (“Covered Issuers”). Covered Issuers are required to disclose in their annual reports on Form 20-F: (i) that, during the period covered by the form, the registered public accounting firm has prepared an audit report for the Covered Issuer; (ii) the percentage of the shares of the Covered Issuer owned by governmental entities in the foreign jurisdiction in which the Covered Issuer is incorporated or otherwise organized; (iii) whether governmental entities in the applicable foreign jurisdiction with respect to that registered public accounting firm have a controlling financial interest with respect to the Covered Issuer; (iv) the name of each official of the Chinese Communist Party who is a member of the board of directors of the Covered Issuer or the operating entity with respect to the Covered Issuer; and (v) whether the articles of incorporation of the Covered Issuer (or equivalent organizing document) contains any charter of the Chinese Communist Party, including the text of any such charter.

On June 22, 2021, the U.S. Senate passed the Accelerating HFCA Act, which prohibits an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three consecutive years, as was formerly required under the HFCA Act before such amendment.

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

On November 5, 2021, the SEC approved the PCAOB’s Rule 6100, Board Determinations Under the Holding Foreign Companies Accountable Act, which provides a framework for the PCAOB to use when determining, as contemplated under the HFCA Act, whether it is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction.

On December 2, 2021, the SEC issued amendments to finalize rules implementing the submission and disclosure requirements in the HFCA Act, which became effective on January 10, 2022. The rules apply to registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that PCAOB is unable to inspect or investigate completely because of a position taken by an authority in foreign jurisdictions.

On December 16, 2021, the PCAOB issued a report on its determinations that it is unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong because of positions taken by PRC authorities in those jurisdictions.

On August 26, 2022, the PCAOB entered into a SOP with the CSRC and the MOF of the PRC and, as summarized in the “Statement on Agreement Governing Inspections and Investigations of Audit Firms Based in China and Hong Kong” published on the SEC’s official website, the parties agreed to the following: (i) in accordance with the Sarbanes-Oxley Act of 2002, the PCAOB shall have independent discretion to select any issuer audits for inspection or investigation; (ii) the PCAOB shall have direct access to interview or take testimony from all personnel of the audit firms whose issuer engagements are being inspected or investigated; (iii) the PCAOB shall have the unfettered ability to transfer information to the SEC, in accordance with the Sarbanes-Oxley Act of 2002; and (iv) the PCAOB inspectors shall have access to complete audit work papers without any redactions, with view-only procedures for certain targeted pieces of information such as personally identifiable information. On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms. On December 29, 2022, legislation entitled Consolidated Appropriations Act, was signed into law by President Joseph Biden of the United Sates. The Consolidated Appropriations Act contained, among other things, an identical provision to the Accelerating Holding Foreign Companies Accountable Act, which reduced the number of consecutive non-inspection years required for triggering the prohibitions under the HFCA Act from three years to two, as was formerly required under the HFCA Act before such amendment.

There can be no assurance that, if we have a “non-inspection” year, we will be able to take remedial measures in response thereto. If any such event were to occur, trading in our securities could in the future be prohibited under the HFCA Act, so we cannot assure you that we will be able to maintain the listing of the Ordinary Shares on the Nasdaq or that you will be allowed to trade the Ordinary Shares in the United States on the “over-the-counter” markets or otherwise. Should the Ordinary Shares not be listed or tradeable in the United States, the value of the Ordinary Shares could be materially affected.

Our current independent accounting firm, Enrome LLP, whose audit report is included in this annual report on Form 20-F, headquartered in Singapore, is a PCAOB-registered CPA firm which is subject to inspection by the PCAOB. Our auditor is not subject to the determinations announced by the PCAOB on December 16, 2021. Our auditor was not among the PCAOB-registered public accounting firms headquartered in the PRC or Hong Kong that were subject to PCAOB’s determination. Therefore, we do not expect to be identified as a Commission-Identified Issuer under the HFCA Act after we file this annual report on Form 20-F for the fiscal year ended December 31, 2024.

However, we cannot assure you whether the national securities exchange we apply to for listing or regulatory authorities would apply additional and more stringent criteria to us after considering the effectiveness of our auditor’s audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach, or experience as it relates to our audit. Furthermore, should PRC authorities obstruct or otherwise fail to facilitate the PCAOB’s access in the future, the PCAOB Board will consider the need to issue a new determination.

PRC regulation of loans to, and direct investments in, PRC entities by offshore holding companies may delay or prevent us from making loans or additional capital contributions to our PRC subsidiaries and thereby prevent us from funding our business.

As an offshore holding company with PRC subsidiaries, we may transfer funds to our PRC subsidiaries by means of loans or capital contributions. Any loans to our Operating Entity in the PRC cannot exceed statutory limits based on the difference between the amount of our investments and registered capital in such subsidiary, and shall be registered with SAFE, or its local counterparts. Furthermore, at this stage, any capital increase contributions we make to the Operating Entity, which is a foreign-invested enterprise, shall be registered with the State Administration for Market Regulation (the “SAMR”) or its local counterparts, and reported to the Ministry of Commerce or its local counterparts. In addition, the PRC government also restricts the convertibility of foreign currencies into RMB and use of the proceeds. Furthermore, SAFE promulgated a series of rules and regulations, including Notice on Reforming the Management Method for the Settlement of Foreign Exchange Capital of Foreign-invested Enterprises, the Circular on Reforming and Regulating Policies on the Management of Foreign Exchange Settlement of Capital Accounts, and the Circular to Further Facilitating Cross-border Trade and Investment, to further regulate the all foreign-invested companies to use RMB converted from foreign currency-denominated capital for equity investments in China.

In light of the various requirements imposed by PRC regulations on loans to, and direct investment in, PRC entities by offshore holding companies, we may not be able to obtain these government registrations or approvals on a timely basis, if at all, with respect to future loans to our PRC subsidiaries or future capital contributions by us to our PRC subsidiaries. If we fail to receive such registrations or approvals, our ability to provide loans or capital to increase contributions to our PRC subsidiaries may be negatively affected, which could adversely affect their liquidity and our ability to fund and expand their business.

It may be difficult for overseas regulators to conduct investigations or collect evidence within the PRC.

Shareholder claims or regulatory investigation that are common in the United States generally are difficult to pursue as a matter of law or practicality in China. For example, in China, there are significant legal and other obstacles to providing information needed for regulatory investigations or litigation initiated outside of China. Although the authorities in China may establish a regulatory cooperation mechanism with the securities regulatory authorities of another country or region to implement cross-border supervision and administration, such cooperation with the securities regulatory authorities in the Unities States may not be efficient in the absence of a mutual and practical cooperation mechanism. Furthermore, according to Article 177 of the PRC Securities Law, which became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigations or evidence collection activities within the territory of the PRC. No organization or individual is allowed to provide documents and information related to securities business activities to overseas securities regulators without the consent of the securities regulatory authority under the State Council and the relevant competent department under the State Council. According to the Data Security Law of the PRC, no organization or individual within the territory of the PRC may provide foreign judicial or law enforcement authorities with data stored within the territory of the PRC without the approval of the competent authorities of the PRC. While a detailed interpretation of, or implementation rules under, these regulations have yet to be promulgated, the inability of an overseas securities regulator to directly conduct investigation or evidence collection activities within China may further increase difficulties faced by you in protecting your interests.

We may rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiaries to make payments to us could have a material and adverse effect on our ability to conduct our business.

We are a holding company, and we may rely principally on dividends and other distributions on equity paid by our PRC subsidiaries for our cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders and service any debt we may incur. If our PRC subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other distributions to us.

Under PRC laws and regulations, our Operating Entity in the PRC, as a wholly foreign-owned enterprise in the PRC, may pay dividends only out of its accumulated profits as determined in accordance with PRC accounting standards and regulations. In addition, a wholly foreign-owned enterprise, such as the Operating Entity, is required to set aside at least 10% of its accumulated after-tax profits after making up the previous year’s accumulated losses each year, if any, to fund statutory reserve funds, until the aggregate amount of such fund reaches 50% of its registered capital. It may allocate a portion of its after-tax profits based on PRC accounting standards to discretionary reserve funds according to its shareholder’s decision. These statutory reserve funds and discretionary reserve funds are not distributable as cash dividends.

In addition, the PRC Enterprise Income Tax Law, and its implementation rules provide that withholding tax rate of 10% will be applicable to dividends payable by PRC companies to non-PRC-resident enterprises unless otherwise exempted or reduced according to treaties or arrangements between the PRC central government and governments of other countries or regions where the non-PRC-resident enterprises are incorporated.

Any limitation on the ability of our PRC subsidiaries to pay dividends or make other distributions to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business.

We may be deemed to be a PRC resident enterprise under the Enterprise Income Tax Law, and be subject to the PRC taxation on our worldwide income, which may significantly increase our income tax expenses and materially decrease our profitability.

Under the PRC Enterprise Income Tax Law, enterprises established outside of China whose “de facto management bodies” are located in China are considered to be “resident enterprises” and will generally be subject to a uniform 25% corporate income tax on their global income (excluding dividends received from “resident enterprises”). In addition, a circular issued by State Administration of Taxation, or the SAT, on April 22, 2009 and amended on January 29, 2014 sets out certain standards for determining whether the “de facto management body” of an offshore enterprise funded by Chinese enterprises as controlling shareholders is located in China. Although this circular applies only to offshore enterprises funded by Chinese enterprises as controlling shareholders, rather than those funded by Chinese or foreign individuals or foreign enterprises as controlling shareholders, the determining criteria set forth in the circular may reflect SAT’s general position on how the “de facto management body” test should be applied in determining the tax resident status of offshore enterprises, regardless of how they are funded. Although our Company is not funded by Chinese enterprises as controlling shareholders, substantial uncertainties remain as to whether our Company or any of our other non-PRC entities will be deemed to be a PRC resident enterprise for the Enterprise Income Tax purposes. If we or any of our subsidiaries registered outside of the PRC are to be deemed a “resident enterprise” under the PRC Enterprise Income Tax Law, our income tax expenses may increase significantly, and our profitability could decrease materially.

We face uncertainties in the PRC with respect to indirect transfer of equity interests in our PRC subsidiaries.

The indirect transfer of equity interests in PRC enterprises by a non-resident enterprise, is potentially subject to income tax in China at a rate of 10% on the gain if such transfer is considered not to have a commercial purpose and is carried out for tax avoidance. We also face uncertainties as to the reporting and other implications of certain past and future transactions where PRC taxable assets are involved, such as offshore restructuring and sale of the shares in our offshore subsidiaries or investments. Our Company may be subject to filing obligations or taxed if our Company is the transferor in such transactions, and may be subject to withholding obligations if our Company is the transferee in such transactions. For transfer of shares in our Company by investors that are non-PRC resident enterprises, our PRC subsidiaries may be requested to assist in investors’ tax filing in China. As a result, we may be required to expend valuable resources to comply with SAT Circular 7 and SAT Circular 37, or to request the relevant transferors from whom we purchase taxable assets to comply with these publications, or to establish that our Company should not be taxed under these publications, which may have a material adverse effect on our financial condition and results of operations.

Conversion of RMB to and from other currency may be subject to governmental control in China.

Currently, the RMB cannot be freely converted into any foreign currency. The PRC government imposes controls on the convertibility of RMB into foreign currencies and, in certain cases, the remittance of currency out of China. Shortages in the availability of foreign currency may restrict the ability of our PRC subsidiaries to remit sufficient foreign currency to pay dividends or other payments to us, or otherwise satisfy their foreign currency dominated obligations. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments, and expenditures from trade-related transactions, can be made in foreign currencies without prior approval from SAFE by complying with certain procedural requirements. However, for most capital account items, approval from or registration with appropriate government authorities is required where RMB is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of bank loans denominated in foreign currencies. The PRC government may also at its discretion restrict access in the future to foreign currencies for current account transactions. If the foreign exchange control system prevents us from obtaining sufficient foreign currency to satisfy our currency demands, we may not be able to pay dividends in foreign currencies to our shareholders, including holders of the Ordinary Shares.

You may experience hardships in effecting service of legal process, enforcing foreign judgments, or bringing actions in China against us or our management named in this annual report based on foreign laws. It may also be burdensome for you or overseas regulators to conduct investigations or collect evidence within China.

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

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

It may also be difficult for you or overseas regulators to conduct investigations or collect evidence within China. For example, in China, there are significant legal and other obstacles to obtaining information needed for shareholder investigations or litigation outside China or otherwise with respect to foreign entities. Although the authorities in China may establish a regulatory cooperation mechanism with counterparts of another country or region to monitor and oversee cross border securities activities, such regulatory cooperation with the securities regulatory authorities in the United States may not be efficient in the absence of a practical cooperation mechanism. Furthermore, according to Article 177 of the PRC Securities Law, or “Article 177,” which became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigations or evidence collection activities within the territory of the PRC. Article 177 further provides that Chinese entities and individuals are not allowed to provide documents or materials related to securities business activities to foreign agencies without prior consent from the securities regulatory authority of the State Council and the competent departments of the State Council. While detailed interpretation of or implementing rules under Article 177 have yet to be promulgated, the inability for an overseas securities regulator to directly conduct investigation or evidence collection activities within China may further increase difficulties faced by you in protecting your interests.

Risks Relating to the Operating Entity’s Business and Industry

The Operating Entity operates in a highly-competitive market and its failure to compete effectively could adversely affect both its and our business, financial condition, and results of operations.

The industrial manipulator arms industry in China is highly-competitive and rapidly evolving, with many new companies joining the competition in recent years and few leading companies. The Operating Entity competes with manufacturers of industrial manipulator arms. See “Item 4. Information on the Company — B. Business Overview — Competition.” Some of its competitors and potential competitors have greater product development capabilities and financial, scientific, marketing, and human resources than we do. Other companies have developed technologies that could be the basis for competitive products. Some of these products have an entirely different approach or means of accomplishing the desired effect than products we are developing. Alternative products may be developed that are more effective, more efficient, and are less costly than our products. Competitors may succeed in developing products earlier than the Operating Entity, or developing products that are more effective than the Operating Entity’s products. Over time, the Operating Entity’s technology or products may become obsolete or uncompetitive, which may adversely impact both our Operating Entity and our business, financial condition, and results of operations.

The Operating Entity’s research and development, acquisitions, and licensing efforts may fail to generate new products.

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

The Operating Entity may be unable to determine with accuracy when or whether any of its products now under development will be launched, or it may be unable to develop, license, or otherwise acquire product candidates or products. In addition, it cannot predict whether any products, once launched, will be commercially successful or will achieve sales and revenue that are consistent with its expectations. Furthermore, the timing and cost of its research and development may increase, making the research and development less predictable.

If the Operating Entity’s research and development, acquisition, and licensing efforts fail to generate new products, both the Operating Entity’s and our business, results of operations, and financial condition will be materially adversely affected.

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

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

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

The Operating Entity may fail to detect or cure defects of its products.

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

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

If the Operating Entity fails to successfully develop and commercialize new industrial manipulator arms in a timely manner, the operating results may be materially adversely affected.

Industrial manipulator arm is a new and emerging market with rapid technological advances and evolving standards. Our future growth depends on whether the Operating Entity can continue to develop and introduce industrial manipulator arms in a timely manner. The Operating Entity’s capability to introduce new or enhanced products is in turn affected by a number of factors, including efficient product manufacturing logistics, reliable distribution channels and, more importantly, research and development capabilities that bring cutting-edge technologies to the market.

If the Operating Entity is unable to commercialize new products, its competitors may increase their market share, which could adversely impact our operating results. In addition, the research and development of new products can be complex and costly. The complexity could create delays or materially impact the benefits we expect to achieve at all. In addition, our business may be adversely affected if there is a delay in market acceptance of new products and or the Operating Entity does not timely optimize complementary product lines.

The Operating Entity has a limited operating history, which makes it difficult to evaluate our future prospects.

The Operating Entity was established in 2016. As the Operating Entity only has a limited history of operating its business at its current scale, it is difficult to evaluate the future prospects, including our ability to plan for our future growth. The Operating Entity’s limited operating experience, uncertainty concerning how the industrial manipulator arms industry may develop, and other economic factors beyond our control, may reduce our ability to accurately forecast demand for the Operating Entity’s products and accordingly, our quarterly or annual revenues. As such, any predictions about our future revenues and expenses may not be as accurate as they would be if the Operating Entity had a longer operating history or operated in a more developed and predictable market.

If the Operating Entity is unable to retain existing customers or attract new ones, or to attract sufficient spending from its customers, our business, results of operations and financial condition could be materially and adversely affected.

In order to increase our revenue and maintain our growth, the Operating Entity must retain existing customers and attract new ones, and encourage their usage of the Operating Entity’s products. As is common in the industry, the Operating Entity does not have long-term agreements with its customers. A substantial portion of our revenue comes from agreements that are on a project-by-project basis. Revenue from these agreements is not recurrent in nature, which exposes us to the risks of uncertainty and potential volatility with respect to our revenue. Our success depends in large part on the Operating Entity’s ability to continue to offer high-quality products in a cost-effective manner. To this end, the Operating Entity must continue to expand its product offerings and keep abreast of user preferences and market trends. Customers may cease their usage of the Operating Entity’s products or may only be willing to purchase its products at reduced prices if the Operating Entity does not deliver products in an effective manner, or if they do not believe that their spending will generate a competitive return or effect as compared to alternative suppliers, which will adversely affect our business. The Operating Entity’s ability to retain existing customers and attract new ones also depends on the following factors, some of which are out of the Operating Entity’s or our control:

If the Operating Entity is unable to retain its existing customers and attracting new customers due to any of the foregoing factors, our business will be adversely affected. Further, if the Operating Entity’s existing customers decrease or cease their usage of the Operating Entity’s products, the Operating Entity may be unable to acquire new customers that spend similarly or even more for its products, and our ability to maintain and/or grow our revenue may be materially and adversely affected.

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

We have grown rapidly over the last few years. Our revenue increased from $12,610,873 in the fiscal year ended December 31, 2023 to $15,796,983 in the fiscal year ended December 31, 2024, with a growth rate of 25.26%, and our revenue increased from $6,652,308 in the fiscal year ended December 31, 2022 to $12,610,873 in the fiscal year ended December 31, 2023, with a growth rate of 89.57%. However, our historical performance may not be indicative of our future growth or financial results. We cannot assure you that we will be able to grow at the same rate as we did in the past, or avoid any decline in the future. Our growth may slow or become negative, and revenue may decline for a number of possible reasons, some of which are beyond our control, including decreasing consumer spending, increasing competition, declining growth of our overall market or industry, the emergence of alternative business models and changes in rules, regulations, government policies, or general economic conditions. It is difficult to evaluate our prospects, as we may not have sufficient experience in addressing the risks to which companies operating in rapidly evolving markets may be exposed. If our growth rate declines, our business, financial condition and results of operations may be materially and adversely affected.

The expected impact of COVID-19 on our future results of operations and financial results remains uncertain.

The World Health Organization declared the COVID-19 a pandemic on March 11, 2020. Given the high public health risks associated with the disease, governments around the world have imposed various degrees of restrictions and other quarantine measures to try to contain the spread of COVID-19. Businesses in China, including us, had to scale back or suspended operations in late 2019 to early 2020, when the pandemic was at its peak.

Our customers are concentrated in the southeastern region of China, such as Fujian province, Guangdong Province, Zhejiang Province, and Jiangsu Province, which areas had shorter periods of lockdown and were less affected by the pandemic. As a result, although we were unable to expand our business to other regions due to the outbreaks of the virus nationwide, our revenue still increased slightly during fiscal year 2022. In addition, our revenue increased by $3,186,110, or 25.26%, for the fiscal year ended December 31, 2024, and $5,958,565, or 89.57%, for the fiscal year ended December 31, 2023.

In early December 2022, the Chinese government announced a nationwide relaxation of its zero-COVID policy, leading to a surge in infections following the easing of restrictions. Although the spread of the COVID-19 appears to be under control as of the date of this annual report, the future ramifications remain highly uncertain and unpredictable, and the Company’s operations may have to scale back again in the future. If this pandemic persists, global commercial activities may face additional constraints, including reduced consumer spending, disruptions in business operation, interruption of supply chains, travel complexities, and workforce reduction. As such, the potential influence of the COVID-19 pandemic on the Company’s operations and financial outcomes over the long term will be contingent upon its ongoing evolution in China and worldwide, which the Company cannot predict with a reasonable degree of certainty.

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

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

The Operating Entity has obtained the requisite business license for the operation of an industrial robotics enterprise and the manufacturing of industrial manipulator arms in the PRC. However, we cannot assure you that the Operating Entity can maintain all the other required licenses, permits and certifications to carry on its business at all times. Moreover, these licenses, permits and certifications are subject to periodic renewal and/or reassessment by the relevant PRC governmental authorities and the standards of such renewal or reassessment may change from time to time. The Operating Entity intends to apply for the renewal of these licenses, permits and certifications when required by then applicable laws and regulations. Any failure by the Operating Entity to obtain and maintain all licenses, permits and certifications necessary to carry on its business at any time could have a material adverse effect on its business, financial condition, and results of operations. In addition, any inability to renew these licenses, permits and certifications could severely disrupt the Operating Entity’s business and prevent it from continuing to carry on its business. Any changes in the standards used by governmental authorities in considering whether to renew or reassess the Operating Entity’s business licenses, permits and certifications, as well as any enactment of new regulations that may restrict the conduct of its business, may also decrease its revenue and/or increase its costs and materially reduce its profitability and prospects. Furthermore, if the interpretation or implementation of existing laws and regulations changes or if new regulations come into effect requiring the Operating Entity to obtain any additional licenses, permits or certifications that were previously not required to operate its existing businesses, we cannot assure you that the Operating Entity will successfully obtain such licenses, permits or certifications.

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

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

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

For the fiscal year ended December 31, 2024, three of the Operating Entity’s suppliers accounted for 24.45%, 18.40%, and 11.61% of the total purchases, respectively. For the fiscal year ended December 31, 2023, three of the Operating Entity’s suppliers accounted for 16.46%, 12.63%, and 10.25% of the total purchases, respectively. For the fiscal year ended December 31, 2022, three of the Operating Entity’s suppliers accounted for 20.35%, 19.71%, and 14.25% of the total purchases, respectively. If we lose suppliers and is unable to swiftly engage new suppliers, the Operating Entity’s operations may be disrupted or suspended, and it may not be able to deliver products to its customers on time. The Operating Entity may also have to pay a higher price to source from a different supplier on short notice. While the Operating Entity is actively searching for and negotiating with new suppliers, there is no guarantee that it will be able to locate appropriate new suppliers or supplier merger targets in its desired timeline. As such, the Operating Entity’s and our results of operations may be adversely and materially impacted.

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

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

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

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

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

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

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

The Operating Entity may not be able to adequately protect and maintain its intellectual property.

Our success will depend on the Operating Entity’s ability to continue to develop and market its products. The Operating Entity has been granted 64 patents in mainland China relating to its products. No assurance can be given that such patents will not be challenged, invalidated, infringed or circumvented, or that such intellectual property rights will provide a competitive advantage to the PRC subsidiaries. On December 30, 2022, the chairman of the board of directors of the Operating Entity, Wenzao Huang, insured 28 patents for the Operating Entity, through People’s Insurance Company of China, with a premium payment of RMB1,900. The insurance period spans from December 31, 2022 to December 30, 2023. On May 11, 2024, Wenzao Huang renewed the insurance with an additional premium payment of RMB1,900, extending the coverage period from May 12, 2024, to May 11, 2025. Should any patent experience infringement within this period, a 5% deductible applies to each patent. Additionally, for any legal actions taken by the Operating Entity due to such infringements, People’s Insurance Company of China will indemnify at a rate of RMB5,700 per infringed patent. Please see “Item 4. Information on the Company — B. Business Overview — Intellectual Property.” There is no assurance that this insurance may be sufficient to cover all damages, legal fees, and other costs associated with an infringement claim. If the costs related to an infringement exceed the policy limits, the Operating Entity would be responsible for the additional amounts, which could have a significant adverse impact on both its and our financial condition. Moreover, even if the Operating Entity makes a successful claim under the insurance, the premiums may increase upon renewal, or the coverage might be reduced or become unavailable. Such changes could leave the Operating Entity more exposed to future risks or increase its operating costs, which may have a material adverse effect on the Operating Entity’s and our business, financial condition and results of operations.

Also, litigation may be necessary to enforce its intellectual property rights or determine the validity and scope of the proprietary rights of others. The outcome of such potential litigation may not be favorable and any success in litigation may not be able to adequately protect its rights. Such litigation may be costly and divert management attention away from the Operating Entity’s business. An adverse determination in any such litigation would impair its intellectual property rights and may harm its business, prospects and reputation, as well as the business and prospects of the Company. Enforcement of judgments in China is uncertain and even if the Operating Entity is successful in such litigation, it may not provide the Operating Entity with an effective remedy.

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

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

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

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

As a result, the scope of the content, product and service offerings could be reduced, which could adversely affect the Operating Entity’s ability to attract new customers, harm our reputation and have a material adverse effect on our business, financial condition and results of operations.

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

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

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

We may need additional capital, and financing may not be available on terms acceptable to us, or at all.

We believe that our current cash and cash equivalents, anticipated cash raised prior to this annual report, and anticipated cash flow from operations will be sufficient to meet our anticipated cash needs for the next 12 months from the date of this annual report. We may, however, require additional cash resources due to changed business conditions or other future developments. If these resources are insufficient to satisfy our cash requirements, we may seek to obtain a credit facility or sell additional equity or debt securities. The sale of additional equity securities could result in dilution of our existing shareholders. The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict the Operating Entity’s operations. It is uncertain whether financing will be available in amounts or on terms acceptable to us, if at all.

The Operating Entity has no business liability or disruption insurance, which could expose it to significant costs and business disruption, and it may incur liabilities that are not covered by insurance.

While the Operating Entity seeks to maintain appropriate levels of insurance, not all claims are insurable, and it may experience major incidents of a nature that are not covered by insurance. The Operating Entity provides social security insurance, including pension, medical insurance, unemployment insurance, maternity insurance, on-the-job injury insurance and housing fund plans through a PRC government-mandated benefit contribution plan for its employees. The insurance industry in China is still at an early stage of development, and insurance companies in China currently offer limited business-related insurance products. The Operating Entity does not carry any key-man life insurance, product liability, professional liability or business liability insurance. Even if it purchases these kinds of insurance, the insurance may not fully protect it from the financial impact of defending against professional liability claims. The Operating Entity has not purchased any property insurance or business interruption insurance. It has determined that the costs of insuring for related risks and the difficulties associated with acquiring such insurance on commercially reasonable terms make it impractical. The Operating Entity considers its insurance coverage to be sufficient for its business operations in China. If it were to incur substantial losses or liabilities due to fire, explosions, floods, other natural disasters or accidents or business interruption, the Operating Entity’s results of operations could be materially and adversely affected. The Operating Entity could, for example, be subject to substantial claims for damages upon the occurrence of several events within one calendar year. Any uninsured risks may result in substantial costs and the diversion of resources, which could adversely affect both our and the Operating Entity’s results of operations and financial condition. In addition, the Operating Entity’s insurance costs may increase over time in response to any negative development in its claims history or due to material price increases in the insurance market in general.

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

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

Failure to make adequate contributions to various employee benefit plans and withhold individual income tax on employees’ salaries as required by PRC regulations may subject the Operating Entity to penalties.

Companies operating in China are required to participate in various government-mandated employee benefit contribution plans, including certain social insurance, housing funds and other welfare-oriented payment obligations, and contribute to the plans in amounts equal to certain percentages of salaries, including bonuses and allowances, of the PRC subsidiaries’ employees up to a maximum amount specified by the local government from time to time at locations where the PRC subsidiaries operate their businesses. The requirement of employee benefit contribution plans has not been implemented consistently by the local governments in China, given the different levels of economic development in different locations. Companies operating in China are also required to withhold individual income tax on employees’ salaries based on the actual salary of each employee upon payment. The Operating Entity may be subject to late fees and fines in relation to the underpaid employee benefits and under-withheld individual income tax, which may adversely affect the Operating Entity’s and our financial condition and results of operations.

As of the date of this annual report, (i) the Operating Entity has completed the social insurance registration and the housing fund registration; (ii) the Operating Entity did not make contributions in the full amount for the social insurance fund and the housing provident fund for their employees, as required under the relevant PRC laws and regulations; and (iii) the Operating Entity did not make contributions in the housing fund for some employees. According to the Provisional Regulations on the Collection and Payment of Social Insurance Premiums, because we did not pay the social insurance premiums in full for all employees, premium collection agencies may order us to pay or make up the arrears and may impose an overdue fine. We may be further fined if we fail to pay such overdue fines. According to the Regulations on the Administration of Housing Provident Fund, due to the failure to pay the housing provident fund for all employees, we may be ordered to do so with a deadline for payment from the Housing Provident Fund Management Center. In addition, if we do not make the housing accumulation fund deposit registration or do not establish the housing provident fund account for the employees, the housing provident fund management center will order a deadline for payment, and if we fail to pay the housing provident fund within the deadline, we will be imposed a fine of not less than RMB10,000 (approximately $1,300) and not more than RMB50,000 (approximately $6,800). We cannot assure you that our employees will not complain to the relevant authorities regarding the basis of how we had made the contribution for them, which may in turn result in the relevant authorities ordering us to make supplemental contributions and/or imposing late fees or fines on us, among other things. If we are subject to late fees or fines in relation to the underpaid employee benefits, our financial condition and results of operations may be adversely affected.

Although the Operating Entity has not received any order or notice from the local authorities, nor has it received any claims or complaints from its current and former employees regarding such non-compliance, we cannot assure you that the Operating Entity will not be subject to any order to rectify non-compliance in the future, nor can we assure you that there will not be any employee complaints regarding social insurance payments or housing provident fund contributions against the Operating Entity, or that the Operating Entity will not receive any claims in respect of social insurance payments or housing provident fund contributions under the PRC laws and regulations. In addition, the Operating Entity may incur additional costs to comply with such laws and regulations by the PRC government or relevant local authorities. Any such development could materially and adversely affect the Operating Entity’s and our business, financial condition and results of operations.

A significant portion of the total revenue of the Operating Entity is derived from a few major customers. A loss of business from any of these major customers may have a significant negative impact on the Operating Entity’s business and financial performance.

We derive a significant portion of our revenues from a few major customers. For the fiscal year ended December 31, 2024, two customers accounted for 41.97% and 10.54% of the Operating Entity’s total revenue, respectively. For the fiscal year ended December 31, 2023, one customer accounted for 22.68% of the Operating Entity’s total revenue. For the fiscal year ended December 31, 2022, no customer accounted for more than 10% of the Operating Entity’s total revenue. There are inherent risks whenever a large percentage of total revenues are concentrated with a limited number of customers. It is not possible for us to predict the future level of demand for our products that will be generated by these customers. If any of these customers experience declining or delayed sales due to market, economic, or competitive conditions, their demand for the Operating Entity’s products may be reduced. Therefore, the Operating Entity could be pressured to reduce its prices or such customers could decrease the quantity of products they purchase, which could have an adverse effect on our margins and financial position, and could negatively affect our revenues and results of operations. If any one of the largest customers terminates the purchase of our products, such termination would materially negatively affect our revenues, results of operations, and financial condition.

We may be required to raise additional capital to fund the projects to be funded with the net proceeds of the IPO. Any failure of such additional fundraising may adversely affect the Operating Entity’s daily operations and may cause us to delay, curtail or abandon such projects.

We may be required to raise additional funding for the anticipated projects proposed to be funded with the net proceeds of the IPO, namely, the 5G digital intelligent equipment production base, the local marketing and service offices, and investment in the advancement of industrial robot and automation application technology research and development. We currently intend to finance the balance of the foregoing project costs from the Operating Entity’s working capital, bank loans, or some combination thereof. Our ability to fully fund such projects will depend upon the ability of the Operating Entity to generate sufficient cash flow from operations and raise capital from third parties. There is no assurance that cash flow from operations will be generated in sufficient amounts, or that we will be able to obtain sufficient financing on adequate terms, or at all, which could cause us to delay, curtail or abandon certain projects. Any additional fundraising efforts may divert our management from their day-to-day activities, which may adversely affect the Operating Entity’s daily operations.

Furthermore, our ability to raise sufficient additional capital could be affected by various factors, including prevailing market and economic conditions. The terms of any financing may adversely affect the holdings or the rights of holders of our securities and the issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may cause the market price of the Ordinary Shares to decline. The incurrence of indebtedness could result in increased fixed payment obligations, and we may be required to agree to certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell, or license intellectual property rights, and other operating restrictions that could adversely impact our ability to conduct our business. Notwithstanding the foregoing, our management has significant flexibility and discretion to apply the net proceeds of the IPO.

Risks Relating to our Ordinary Shares and the Trading Market

The public shareholders hold a minority interest in our Company and our directors, officers and other holders of 5% or more of our Ordinary Shares continue to have significant influence over us.

As of the date of this annual report, our directors, officers and holders of 5% or more of our Ordinary Shares collectively hold approximately 86.21% of our issued and outstanding Ordinary Shares and as a result are able to exert significant influence over the management and affairs of the Company and most matters requiring shareholder approval following the IPO. Our public shareholders collectively hold 13.79% of our issued and outstanding Ordinary Shares and are not able to control matters that require shareholder approval.

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

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

To address the material weaknesses and control deficiencies identified, we took the following remedial measures: (i) hiring additional qualified accounting and financial personnel with appropriate knowledge and experience in U.S. GAAP accounting and SEC reporting; and (ii) organizing regular training for our accounting staffs, especially training related to U.S. GAAP and SEC reporting requirements. We also plan to adopt additional measures to improve our internal control over financial reporting, including, among others, creating U.S. GAAP accounting policies and procedures manual, which will be maintained, reviewed, and updated, on a regular basis, to the latest U.S. GAAP accounting standards, and establishing an audit committee and strengthening corporate governance.

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

As a public company in the United States subject to the Sarbanes-Oxley Act of 2002, Section 404 of the Sarbanes-Oxley Act of 2002 requires that we include a report of management on our internal control over financial reporting in our annual report on Form 20-F beginning with our second annual report after becoming a public company. In addition, once we cease to be an “emerging growth company,” as such term is defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), our independent registered public accounting firm must attest to and report on the effectiveness of our internal control over financial reporting. Our management may conclude that our internal control over financial reporting is not effective. Moreover, even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm, after conducting its own independent testing, may issue a report that is qualified, if it is not satisfied with our internal controls or the level at which our controls are documented, designed, operated, or reviewed, or if it interprets the relevant requirements differently from us. In addition, as a public company, our reporting obligations may place a significant strain on our management, operational, and financial resources and systems for the foreseeable future. We may be unable to complete our evaluation testing and any required remediation in a timely manner.

We incur substantial increased costs as a public company.

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

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

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

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

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

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

Sales of substantial amounts of our Ordinary Shares in the public market, or the perception that these sales could occur, could cause the market price of our Ordinary Shares to decline. An aggregate of 14,500,000 Ordinary Shares are issued and outstanding as of the date of this annual report and 2,000,000 are freely tradable. The remaining Ordinary Shares are “restricted securities” as defined in Rule 144. These Ordinary Shares may be sold without registration under the Securities Act to the extent permitted by Rule 144 or other exemptions under the Securities Act. Sales of these shares into the market could cause the market price of our Ordinary Shares to decline. Sales of these shares into the market could cause the market price of our Ordinary Shares to decline.

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

As of the date of this annual report, none of our subsidiaries have made any dividends or distributions to our Company and our Company has not made any dividends or distributions to our shareholders. We intend to keep any future earnings to finance the expansion of our business, and we do not anticipate that any cash dividends will be paid in the foreseeable future. As a result, you may only receive a return on your investment in our Ordinary Shares if the market price of our Ordinary Shares increases.

The market price of our Ordinary Shares may be volatile or may decline regardless of our operating performance.

The market price of our Ordinary Shares may fluctuate significantly in response to numerous factors, many of which are beyond our control, including:

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

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

We used approximately 33% of the funds raised from the IPO for the construction of our 5G digital intelligent equipment production base, approximately 25% of the funds raised from the IPO for the establishment of 24 local marketing and service offices within the PRC, approximately 17% of the funds raised from the IPO for the construction of an industrial robot and automation application technology research and development center project, and approximately 25% of the funds raised from the IPO for working capital. Our management has significant discretion as to the use of the net proceeds to us from the IPO and could spend the proceeds in ways that do not improve our results of operations or enhance the market price of our Ordinary Shares.

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

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

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

Nasdaq listing rules require listed companies to have, among other things, a majority of its board members be independent. As a foreign private issuer, however, we are permitted to, and we may follow home country practice in lieu of the above requirements, or we may choose to comply with the above requirement within one year of listing.

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

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

Our Ordinary Shares are listed on the Nasdaq Capital Market. We cannot assure you that our securities will continue to be listed on the Nasdaq Capital Market. In order to maintain our listing on the Nasdaq Capital Market, we are required to comply with certain rules of the Nasdaq Capital Market, including those regarding minimum stockholders’ equity, minimum share price, minimum market value of publicly held shares, and various additional requirements. While we currently meet the listing requirements and other applicable rules of the Nasdaq Capital Market, we may not be able to continue to satisfy these requirements and applicable rules. If we are unable to satisfy the Nasdaq Capital Market criteria for maintaining our listing, our securities could be subject to delisting.

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

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

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

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

We are an exempted company incorporated under the laws of the Cayman Islands with limited liability. Our corporate affairs are governed by our amended and restated memorandum and articles of association, the Companies Act (As Revised) of the Cayman Islands and by the common law of the Cayman Islands. The rights of shareholders to take action against our directors, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law in the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands and from English common law. Decisions of the Privy Council (which is the final Court of Appeal for British Overseas Territories such as the Cayman Islands) are binding on a court in the Cayman Islands. Decisions of the English courts, and particularly the Supreme Court and the Court of Appeal are generally persuasive but are not binding in the courts of the Cayman Islands. Decisions of courts in other Commonwealth jurisdictions are similarly persuasive but not binding authority. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedents in the United States. In particular, the Cayman Islands has a less developed body of securities laws relative to the United States. Therefore, our public shareholders may have more difficulty protecting their interests in the face of actions by our management, directors or controlling shareholders than would shareholders of a corporation incorporated in a jurisdiction in the United States.

Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records or to obtain copies of the register of members of these companies. Subject to the foregoing, our directors have discretion under our amended and restated memorandum and articles of association that are currently effective to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders, but are not obliged to make them available to our shareholders. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.

As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by our management, members of the board of directors or controlling shareholders than they would as public shareholders of a company incorporated in the United States.

You may be unable to present proposals before annual general meetings or extraordinary general meetings not called by shareholders.

Cayman Islands law does not provide shareholders with any right to requisition a general meeting or put any proposal before a general meeting. These rights, however, may be provided in a company’s amended and restated articles of association. Our amended and restated articles of association allow our shareholders to requisite a general meeting of our shareholders, the requisition must be in writing and given by one or more shareholders who together hold at least 10% of the rights to vote at such general meeting, in which case our directors are obliged to call such meeting. Advance notice of at least five clear days is required for the convening of our annual general shareholders’ meeting and any other general meeting of our shareholders. A quorum required for a meeting of shareholders consists of (i) if the Company has only one member, that member; or (ii) if the Company has more than one member, one or more members holding shares that represent not less than one-third of the outstanding shares carrying the right to vote at such general meeting. For these purposes, “clear days” means that period excluding (a) the day when the notice is given or deemed to be given and (b) the day for which it is given or on which it is to take effect.

If we are classified as a passive foreign investment company (“PFIC”), United States taxpayers who own our Ordinary Shares may have adverse United States federal income tax consequences.

A non-U.S. corporation such as us will be classified as a PFIC for any taxable year if, for such year, either

Passive income generally includes dividends, interest, rents and royalties (other than rents or royalties derived from the active conduct of a trade or business), and gains from the disposition of passive assets.

If we are determined to be a PFIC for any taxable year (or portion thereof) that is included in the holding period of a U.S. taxpayer who holds our Ordinary Shares, the U.S. taxpayer may be subject to increased U.S. federal income tax liability and may be subject to additional reporting requirements.

Depending on the amount of assets held for the production of passive income, it is possible that, for any subsequent year, more than 50% of our assets may be assets which produce passive income, in which case we would be deemed a PFIC, which could have adverse U.S. federal income tax consequences for U.S. taxpayers who are shareholders. We believe we are not a PFIC for the current year.  We will continue to make this determination following the end of any particular tax year. For purposes of the PFIC analysis, in general, a non-U.S. corporation is deemed to own its pro rata share of the gross income and assets of any entity in which it is considered to own at least 25% of the equity by value.

For a more detailed discussion of the application of the PFIC rules to us and the consequences to U.S. taxpayers if we were determined to be a PFIC, see “United States Federal Income Taxation — Passive Foreign Investment Company (PFIC) Consequences.”

Item 4. INFORMATION ON THE COMPANY

A. History and Development of the Company

Our Corporate History

INLIF Cayman was incorporated on January 4, 2023, as an exempted company with limited liability in the Cayman Islands. On January 30, 2023, Yunfei BVI was incorporated in the British Virgin Islands as a business company with limited liability and a wholly owned subsidiary of INLIF Cayman. On March 8, 2023, Juli HK was incorporated in Hong Kong as a limited company and a wholly-owned subsidiary of Yunfei BVI. On April 21, 2023, Fujian INLIF was incorporated in the PRC as a PRC limited liability company and a wholly-owned subsidiary of Juli HK. Ewatt is a PRC limited liability company established on September 28, 2016, 94% of the equity interests of which is owned by Fujian INLIF after the First Reorganization and the Second Reorganization (each as defined below). Fanqi HK, a Hong Kong limited company incorporated on December 30, 2022 owns 6% of the equity interests in Ewatt and became a wholly-owned subsidiary of Yunfei BVI after the First Reorganization and the Second Reorganization.

On September 28, 2016, Mr. Wenzao Huang and Mr. Yunjun Huang jointly established our PRC Operating Entity, Ewatt, with Mr. Wenzao Huang holding 60% and Mr. Yunjun Huang holding 40% of the equity interests in Ewatt. respectively.

On April 28, 2018, Ewatt adopted a shareholder resolution to increase its authorized share capital from $296,881 (RMB1.88 million) to $7,895,776 (RMB50 million), as a result of which Mr. Wenzao Huang owns 70% of the equity interests in Ewatt and Mr. Yunjun Huang owns 30% of the equity interests in Ewatt.

On November 4, 2019, Ewatt adopted a shareholder resolution to include a new shareholder, Mr. Xiaolong Chen. Mr. Wenzao Huang transferred 30% of his equity interests in Ewatt to Mr. Xiaolong Chen, pursuant to a share transfer agreement between Mr. Wenzao Huang and Mr. Xiaolong Chen dated November 4, 2019, for the consideration of $2,133,713 (RMB15 million). Mr. Yunjun Huang transferred 10% of his equity interests in Ewatt to Mr. Xiaolong Chen, pursuant to a share transfer agreement between Mr. Yunjun Huang and Mr. Xiaolong Chen dated November 4, 2019, for the consideration of $711,238 (RMB5 million). As a result, Mr. Wenzao Huang, Mr. Xiaolong Chen and Mr. Yunjun Huang each held 40%, 40% and 20% of the equity interests in Ewatt, respectively.

On January 4, 2023, INLIF Cayman was incorporated and on the same day we issued one ordinary share of par value HKD0.01 each (“HKD-Denominated Ordinary Share”) to Mapcal Limited.

On January 31, 2023, Mr. Wenzao Huang and Mr. Xiaolong Chen, respectively, transferred 3.125% and 8.625% of their equity interests in Ewatt to Mr. Jinliang Xu for the consideration of $232,519 (RMB1,570,433) and $641,752 (RMB4,334,395), respectively. Mr. Jinliang Xu has paid the aforementioned consideration as of the date of this annual report. On January 31, 2023, Mr. Yunjun Huang transferred 1% of his equity interest in Ewatt to Fanqi HK for the consideration of $74,406 (RMB502,539). Fanqi HK has paid the aforementioned consideration as of the date of this annual report.

Therefore, prior to the First Reorganization (as defined below), 36.875% of the equity interests in Ewatt was owned by Mr. Wenzao Huang; 31.375% of the equity interests in Ewatt was owned by Mr. Xiaolong Chen; 19% of the equity interests in Ewatt was owned by Mr. Yunjun Huang; and 11.75% of the equity interests in Ewatt was owned by Mr. Jinliang Xu (Wenzao Huang, Xiaolong Chen, Yunjun Huang, and Jinliang Xu (collectively, the “Former Shareholders”). The remaining 1% of the equity interest in Ewatt was owned by Fanqi HK.

On February 14, 2023, the Company issued (i) 36,874 HKD-Denominated Ordinary Shares to LIANKEN ENTERPRISE LIMITED (100% beneficial owned by Wenzao Huang) (“LIANKEN”); (ii) 31,375 HKD-Denominated Ordinary Shares to TIANHUA ENTERPRISE LIMITED (100% beneficial owned by Xiaolong Chen) (“TIANHUA”); (iii) 19,000 HKD-Denominated Ordinary Shares to XINGCAN ENTERPRISE LIMITED, (100% beneficial owned by Yunjun Huang) (“XINGCAN”); and (iv) 11,750 HKD-Denominated Ordinary Shares to WEIBO ENTERPRISE LIMITED (100% beneficial owned by Jinliang Xu) (“WEIBO”).

On February 14, 2023, Mapcal Limited transferred the one HKD-Denominated Ordinary Share held by it to LIANKEN.

On May 25, 2023, Fujian INLIF acquired 99% of the equity interests in Ewatt from the Former Shareholders pursuant to several share transfer agreements dated the same date, between Fujian INLIF and each of the Former Shareholders. Fanqi HK continued to own the 1% of the equity interest in Ewatt (the “First Reorganization”).

On June 16, 2023, Fanqi HK further acquired 5% of the equity interests in Ewatt from Fujian INLIF pursuant to that certain share transfer agreement between Fujian INLIF and Fanqi HK, with a consideration of $352,659. The consideration was fully paid by Fanqi HK to Fujian INLIF on July 26, 2023. Fanqi HK’s acquisition on June 16, 2023 increased its total equity interest in Ewatt to 6%.

On August 29, 2023, Kerui Enterprise Limited (“Kerui,” and together with LIANKEN, TIANHUA, XINGCAN, and WEIBO, “Cayman INLIF Shareholders”), the then-parent company of Fanqi HK, entered into a share swap agreement with Yunfei BVI and INLIF Cayman, where Kerui transferred 100% of the equity interests in Fanqi HK to Yunfei BVI in exchange for 18,000 HKD-Denominated Ordinary Shares of INLIF Cayman. (the “Second Reorganization”). After the Second Reorganization, Fanqi HK became a wholly-owned subsidiary of Yunfei BVI, and Yunfei BVI, through Fanqi HK, indirectly holds a 6% equity interest in Ewatt.

As a result of the First Reorganization and the Second Reorganization, INLIF Cayman became the ultimate holding company of our Operating Entity, Ewatt.

On September 11, 2023, INLIF Cayman passed the shareholder resolutions and board resolutions to effect the redenomination of the Company’s authorized share capital, converting the currency from HK dollars to U.S. dollars, as well as increasing its authorized share capital to USD50,000 divided into 5,000,000 Ordinary Shares with a par value of USD0.01 per share.

On September 11, 2023, the Company issued the current Ordinary Shares of the Company, the USD-denominated ordinary shares at par value $0.01 per share, to the Cayman INLIF Shareholders, and then repurchased the HKD-Denominated Ordinary Shares from the Cayman INLIF Shareholders using the proceeds of the share issuance as follows:

On April 10, 2024, INLIF Cayman passed the shareholder resolutions and board resolutions to change its share capital from USD50,000 divided into 5,000,000 Ordinary Shares of par value USD0.01 each, among which 300,000 Ordinary Shares of par value USD0.01 each are issued, to USD50,000 divided into 500,000,000 Ordinary Shares of par value USD0.0001 each, among which 12,500,000 Ordinary Shares of par value USD0.0001 each are issued. To change the Company’s share capital, each shareholder surrendered, and the Company accepted the surrender of such number of Ordinary Shares as set forth next to the name of each shareholder in the table below:

Our Corporate Structure

The following diagram illustrates our corporate structure as of the date of this annual report:

Corporate Information

Our principal executive offices are located at No. 88, Hongsi Road, Yangxi New Area, Honglai Town, Nan’an City, Quanzhou, the People’s Republic of China and our phone number is +86 15375760760. Our registered office in the Cayman Islands is located at the Office of Maples Corporate Services Limited of PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands, and the phone number of our registered office is +852 252 9333. We maintain a corporate website at www.yiwate88.com. The information contained in, or accessible from, our website or any other website does not constitute a part of this annual report. Our agent for service of process in the United States is Cogency Global Inc., located at 122 East 42^nd Street, 18^th Floor, New York, NY 10168.

The SEC maintains a website at www.sec.gov that contains reports, proxies, and information statements, and other information regarding issuers that file electronically with the SEC using its EDGAR system.

For information regarding our principal capital expenditures, see “Item 5. Operating and Financial Review and Prospects — B. Liquidity and Capital Resources — Capital Expenditures.”

B. Business Overview

Our Mission

The Operating Entity’s mission is to become a world-leading manufacturer of industrial manipulator arms, and it is committed to providing professional, reliable, and dexterous manipulator arms to the world.

Overview

The Operating Entity, established in September 2016, is engaged in the research, development, manufacturing, and sales of injection molding machine-dedicated manipulator arms. It is also a provider of installation services and warranty services for manipulator arms, and accessories and raw materials for manipulator arms.

The Operating Entity produces an extensive portfolio of injection molding machine-dedicated manipulator arms, including transverse single and double-axis manipulator arms, transverse and longitudinal multi-axis manipulator arms, and large bullhead multi-axis manipulator arms, which are developed by the Operating Entity. The products are equipped with high-precision linear guide rails for guiding operation, giving them precise positioning, high movement speed, and stable operation. They can be used in linear, planar, and three-dimensional workpiece handling, detection positioning, automatic assembly, and other processes, demonstrating significant value in replacing manual labor, improving production efficiency, and stabilizing product quality. These products were sold to 135, 117, and 101 customers for the fiscal years ended December 31, 2024, 2023, and 2022, respectively.

The Operating Entity generates its revenue from the following sources: (i) sales of injection molding machine-dedicated manipulator arms under its own brand iNLIF (因立夫), and the provision of installation and warranty services for the manipulator arms sold; (ii) sales of injection molding machine-dedicated manipulator arms accessories, including conveyor belts, welded bases, and reducer mounting plates; (iii) sales of raw materials and scraps of injection molding machine-dedicated manipulator arms; and (iv) the provision of installation services to customers who procure the Operating Entity’s injection molding machine-dedicated manipulator arms through third-party vendors.

For the fiscal years ended December 31, 2024, 2023, and 2022, we had total revenue of $15,796,983, $12,610,873, and $6,652,308, and net income of $1,627,977, $1,352,511, and $537,555, respectively.

Competitive Strengths

Growth Strategies

Our Revenue Model

The Operating Entity generates its revenue from the following sources: (i) sales of injection molding machine-dedicated manipulator arms under its own brand iNLIF (因立夫), and the provision of installation and warranty services for the manipulator arms sold; (ii) sales of injection molding machine-dedicated manipulator arms accessories, including conveyor belts, reducer mounting plates, belt clamps, welded bases, and extraction beams; (iii) sales of raw materials and scraps of injection molding machine-dedicated manipulator arms; and (iv) the provision of installation services to customers who procure the Operating Entity’s injection molding machine-dedicated manipulator arms through third-party vendors.

For the fiscal years ended December 31, 2024, 2023, and 2022, the Operating Entity sold 2,912, 2,704, and 1,516 injection molding machine-dedicated manipulator arms, respectively. The revenue derived from the sales of injection molding machine-dedicated manipulator arms and provision of installation and warranty services was $10,328,959, $9,815,219, and $6,181,009, accounting for 65.39%, 77.83%, and 92.92%, respectively, of the total revenue.

For the fiscal years ended December 31, 2024, 2023, and 2022, the revenue derived from the sales of injection molding machine-dedicated manipulator arms accessories was $1,437,989, $998,034, and $137,209, accounting for 9.10%, 7.91%, and 2.06%, respectively, of the total revenue.

For the fiscal years ended December 31, 2024, 2023, and 2022, the revenue derived from the sales of raw materials and scraps of injection molding machine-dedicated manipulator arms was $3,934,593, $1,662,923, and $222,826, accounting for 24.91%, 13.19% and 3.35%, respectively, of the total revenue.

For the fiscal years ended December 31, 2024, 2023, and 2022, the revenue derived from the provisions of installation services to customers who procure the Operating Entity’s injection molding machine-dedicated manipulator arms through third-party vendors was $95,442, $134,697 and $111,264, accounting for 0.60%, 1.07%, and 1.67%, respectively, of the total revenue.

The Operating Entity sells manipulator arms, both domestically and internationally. For the fiscal years ended December 31, 2024, 2023, and 2022, the revenue of domestic sales was $15,101,726, $12,298,482, and $6,525,005, accounting for 95.60%, 97.52%, and 98.09%, respectively, of our revenue, and the revenue of international sales was $695,257, $312,391, and $127,303, accounting for 4.40%, 2.48%, and 1.91%, respectively, of our revenue.

Products

The injection molding machine-dedicated manipulator arms developed and produced by the Operating Entity mainly use servo motor drive and employ belts, gears, and rack and pinion for transmission. They are equipped with high-precision linear guide rails for guiding operation, giving the products precise positioning, high movement speed, and stable operation. They can be used in linear, planar, and three-dimensional workpiece handling, detection positioning, automatic assembly, and other processes, demonstrating significant value in replacing manual labor, improving production efficiency, and stabilizing product quality. The Operating Entity’s injection molding machine-dedicated manipulator arms mainly include three series: Transverse and Longitudinal Multi-axis Manipulator Arms, Large Bullhead Multi-axis Manipulator Arms, and Transverse Single and Double-axis Manipulator Arms. The prices of these manipulator arms are between $1,500 and $35,000.

Set forth below is a summary of the three series of manipulator arms.

Transverse and Longitudinal Multi-axis Manipulator Arms

Main Product Series		Main Models		Product Image		Description		Price
Transverse Three-axis Single-arm, Single-section Manipulator Arm		YLFS3-CPI60 YLFS3-CPI80 YLFS3-CPI100 YLFS3-CPI130				Transverse and longitudinal multi-axis manipulator arms are suitable for various types of horizontal injection molding machines ranging from 50 to 3,000 tons, and they are used for the removal of finished products and sprues with high requirements of exterior appearance and precision. The arm types include single-section and double-section. The up and down stroke of the single-section type is 600/800/1000/1300 mm, and the up and down stroke of the double-section type is 800/1000/1300/1500 mm. All axes are driven by high-performance AC servo motors, offering ultra-high-speed removal time.		$2,500 – $13,700
Transverse Three-axis Single-arm, Double-section Manipulator Arm		YLFS3-CPW80 YLFS3-CPW100 YLFS3-CPW130 YLFS3-CPW150						$1,500 – $4,300
Transverse Five-axis Dual-arm, Single-section Manipulator Arm		YLFS5-CPI60 YLFS5-CPI80 YLFS5-CPI100 YLFS5-CPI130						$2,900 – $3,600
Transverse Five-axis Dual-arm, Double-section Manipulator Arm		YLFS5-CPW80 YLFS5-CPW100 YLFS5-CPW130 YLFS5-CPW150				The main structure is designed for high rigidity, which provides a stable structure with little vibration and long durability. Paired with high-precision linear slide rails and belt drive, it offers high speed with low noise, and the positioning accuracy can reach 0.1mm. It has a microcomputer control system, providing more comprehensive safety protection for operators and injection molding machines. Limit switches are installed on all axes, and collision prevention devices are installed at all terminal positions in various directions, which can effectively prevent operational loss of control. The combination of software and hardware dual protection functions ensures the safe operation of the injection molding machine and the manipulator arm.		$2,900 – $3,600

Longitudinal Three-axis Single-arm, Double-section Manipulator Arm		YLFS3-CPW80-Z YLFS3-CPW100-Z YLFS3-CPW130-Z YLFS3-CPW150-Z YLFS3-CPW170-Z YLFS3-CPW190-Z				These manipulator arms are suitable for various types of horizontal injection molding machines ranging from 50 to 1000 tons, and they are used for the removal of finished products and sprues with high requirements of exterior appearance and precision. The arm adopts a double-section type, with an up and down stroke of 800/1000/1300/1500/1700/1900 mm. All axes are driven by high-performance AC servo motors, offering ultra-high-speed removal time. The longitudinal manipulator arm is suitable for injection molding workshops with limited area.		$2,900 – $3,600
Longitudinal Five-axis Single-arm, Double-section Manipulator Arm		YLFS5-CPW80-Z YLFS5-CPW100-Z YLFS5-CPW130-Z YLFS5-CPW150-Z						$3,500 – $5,300

Large-scale Bullhead Multi-axis Manipulator Arms

Main Product Series		Main Models		Product Image		Description		Price
Large-Scale Bullhead Single-arm, Double-section Manipulator Arm		YLFS3-NPW130 YLFS3-NPW150 YLFS3-NPW170 YLFS3-NPW190 YLFS3-NPW220 YLFS3-NPW250 YLFS3-NPW300				This type of manipulator arm is suitable for the removal of finished products and sprues from various types of horizontal injection molding machines ranging from 550 to 3000 tons. The arm adopts a double-section type, with an up and down stroke of 1300/1500/1700/1900/2200/2500/3000mm. All axes are driven by high-performance AC servo motors, with gear rack transmission. The guide rails of the walking part have a large spacing in the right-angle step distribution, strong structural rigidity, and increase the load capacity for material removal by more than 30% compared to equivalent models. The arm is connected with the front and rear frames, which can move together during operation, making it suitable for the removal of large car parts and household appliance shells.		$2,850 – $35,000

Transverse Single and Double-axis Manipulator Arms

Main Product Series		Main Models		Product Image		Description		Price
Transverse Single-axis Dual-arm Single-section Manipulator Arm		YLFS1-KBI75 YLFS1-KBI85				Transverse single and double-axis manipulator arms are suitable for the removal of finished products and sprues from 50 to 450 tons horizontal injection molding machines. There are both single-section and double-section arm types. The single-section type has an up and down stroke of 750/850 mm, while the double-section type has an up and down stroke of 750/850/1100 mm. The transverse mechanism is driven by an alternating current (“AC”) servo motor, and the arm uses a two-stage double-speed structure, which is easy to adjust and stable. The manipulator arm is designed with a dual-speed functionality — it quickly descends for picking up items within the mold and gently lowers for placing items outside the mold. The arms can be matched with various types of fixtures for different products to achieve stable and perfect removal actions.		$2,000 – $3,000
Transverse Single-axis Dual-arm Double-section Manipulator Arm		YLFS1-KBW75 YLFS1-KBW85 YLFS1-KBI110						$2,000 – $3,000
Transverse Dual-axis Single-arm Double-section Manipulator Arm		YLFS2-CBW75 YLFS2-CBW85 YLFS2-CBW110						$2,000 – $3,000

For the fiscal years ended December 31, 2024, 2023, and 2022, the Operating Entity sold 2,099, 2,105, and 1,518 transverse and longitudinal multi-axis manipulator arms, respectively. The revenue derived from the sales of this series of manipulator arms was $6,968,029, $6,885,240, and $5,083,802 accounting for 68.88%, 72.11%, and 84.05%, respectively, of the total revenue of the sales of manipulator arms.

For the fiscal years ended December 31, 2024, 2023, and 2022, the Operating Entity sold 702, 564, and 180 large-scale bullhead multi-axis manipulator arms, respectively. The revenue derived from the sales of this series of manipulator arms was $2,890,325, $2,555,619, and $962,250, accounting for 28.57%, 26.77% and 15.91%, respectively, of the total revenue of the sales of manipulator arms.

For the fiscal years ended December 31, 2024, 2023, and 2022, the Operating Entity sold 111, 25, and 4 transverse single and double-axis manipulator arms, respectively. The revenue derived from the sales of this series of manipulator arms was $257,868, $11,527, and $2,278, accounting for 2.55%, 0.12%, and 0.04%, respectively, of the total revenue of the sales of manipulator arms.

Production and Manufacturing

The Operating Entity’s production lines are all located at its facilities in Nan’an City, Fujian Province, the PRC. The Operating Entity produces products and stock inventory of raw materials, components, and finished goods at the facilities according to the market demand, orders received or expected to receive, and its production plan and capacity. The production and sales process are as follows:

The Operating Entity’s production lines run 10 hours per day and 250 days per year. For the fiscal years ended December 31, 2024, 2023, and 2022, the Operating Entity produced 3026, 2,711, and 1,702 manipulator arms and were at about 96.52%, 95.12%, and 66.54% capacity, respectively.

Customers

The Operating Entity sells its products directly to its customers, who are mainly injection molding machine manufacturers and industrial automation companies. The Operating Entity sources its customers through multiple channels, including (i) industry exhibitions/expos, (ii) media advertising, and (iii) referrals from former and existing customers. The Operating Entity sells its products both domestically and internationally. As of the date of this annual report, the Operating Entity exports its products to India, South Korea, and Vietnam only. The Operating Entity intends to sell its products in Europe before 2026. It received the European Union’s CE certification for its 25 models of manipulator arms for an injection molding machine, which allows the Operating Entity to sell these 25 models of manipulator arms in Europe. Please see “— Quality Control.” For the fiscal year ended December 31, 2024, the Operating Entity sold its products to 135 customers, of which 132 were domestic customers and three were international customers. For the fiscal year ended December 31, 2023, the Operating Entity sold its products to 117 customers, of which 115 were domestic customers and 2 were international customers. For the fiscal year ended December 31, 2022, the Operating Entity sold its products to 101 customers, of which 99 were domestic customers and 2 were international customers.

Two customers, Shantou Haisu Machinery Co., Ltd. and Ningbo Suji Machinery Manufacturing Co., Ltd., accounted for 41.97% and 10.54% of the Company’s total revenue for the fiscal year ended December 31, 2024, respectively. One customer, Shantou Haisu Machinery Co., Ltd., accounted for 22.68% of the Company’s total revenue for the fiscal year ended December 31, 2023. No customer accounted for more than 10% of the Company’s total revenue for the fiscal year ended December 31, 2022.

The Operating Entity normally has one-year collaboration agreements with its customers. Within the contract period, each customer sale is typically governed by a brief purchase-order based sales agreement. The key terms of the sales agreements, including the sales agreements with the major customers mentioned above and the Operating Entity’s international customers, include:

In these sales agreements, auto-renewal terms and termination terms are not stipulated. Despite the absence of auto-renewal terms in the one-year collaboration agreements with the major customers, we believe we have cultivated stable and mutually beneficial cooperative business relationships with most of our major customers.

The Operating Entity has no offices or subsidiaries in foreign countries and currently has no intention to establish any offices in foreign countries in the future. In the course of dealing with overseas customers, the Operating Entity has maintained stable business relationships; however, such business relationships are not memorialized in any collaboration agreements, but are only provided for in short-form order sheets. In respect of the Operating Entity’s international sales, under “free on board” sales terms, the Operating Entity manages and bears the shipping costs and risks of loss in shipping within the PRC until the products are loaded on board the shipping vessel for international sales. From that point onward, international customers assume responsibility for all shipping and customs charges, as well as the risk of loss outside of China.

The Operating Entity faces an inherent risk of liability claims or complaints from customers. When the products are found to be defective, the Operating Entity is required to recall the products according to usage of trade.

As of the date of this annual report, the Operating Entity is not aware of any warnings, investigations, prosecutions, disputes, claims or other proceedings in respect of the products it manufactures or sells overseas, nor has it been penalized or can foresee any penalties to be made by any overseas jurisdiction with respect to product safety.

Suppliers

The Operating Entity’s suppliers are providers of raw materials and auxiliary materials for the manufacturing of manipulator arms, which materials include linear guides, steel plates, gear reducers, servo motors, and servo accessories. All of the Operating Entity’s suppliers are located in China. The Operating Entity sources its suppliers through multiple channels: (i) industry exhibitions/expos, (ii) professional journals, and (iii) referrals from customers.

For the fiscal years ended December 31, 2024, 2023, and 2022, the Operating Entity had a total of 130, 150, and 56 suppliers, respectively. Although the Operating Entity can utilize any supplier it determines, we believe that it has established stable relationships with its significant suppliers through years of cooperation. There are no minimum purchase requirements with any of the suppliers, including the significant ones below.

Three suppliers, Tianjin Shenghuatai Steel Co., Ltd., Foshan Wenxing Trade Co., Ltd., and Xiamen Chuanrui Machinery Technology Co., Ltd., accounted for 24.45%, 18.40%, and 11.61% of the Operating Entity’s total supplies purchased, respectively, for the fiscal year ended December, 2024. Three suppliers, Mansi (Xiamen) Intelligent Technology Co., LTD, Cangnan County Yongyi New Material Co., LTD, and Fujian Yadeke Intelligent Equipment Co., LTD, accounted for 16.46%, 12.63%, and 10.25% of the Operating Entity’s total supplies purchased, respectively, for the fiscal year ended December 31, 2023. Three suppliers, Xiamen Guangye Bearing Co., Ltd. (“Xiamen Guangye”), Xiamen Chuanrui, and Shenzhen Langyuxin Technology Co., Ltd. (“Shenzhen Langyuxin”), accounted for 20.35%, 19.71%, and 14.25% of the Operating Entity’s total supplies purchased, respectively, for the fiscal year ended December 31, 2022.

Each supplier order is typically governed by a brief purchase-order based purchase agreement. The key terms of the supplier purchase agreements (including those agreements with the significant suppliers) include:

Sales

As of the date of this annual report, the Operating Entity has a sales team of 15 employees. The compensation package for the sales team includes fixed base salaries, bonuses, vacations, and social insurance. The Operating Entity provides its sales team with regular training and internally developed systems to assist them in quickly becoming proficient and productive sales personnel. Key provisions of employment agreements with the sales team members include the contract period (fixed time or indefinite duration), job description, occupational hazard protection, and termination provisions, and the employment agreements comply with the labor laws of the PRC in all material aspects.

Research and Development (“R&D”)

The Operating Entity invests in R&D, aiming to develop new products and improve its existing products to accommodate the market needs. The R&D expenses totaled approximately $1,563,059, $1,362,058, and $504,711 for the fiscal years ended December 31, 2024, 2023, and 2022, respectively. R&D expenses mainly consist of applicable personnel, sample manufacturing, and materials expenses. As of December 31, 2024, the Operating Entity had a total of 29 employees in the R&D department. Below is a list of the most senior employees in the R&D department.

To facilitate its R&D, the Operating Entity enters into collaboration agreements with universities. As of the date of this annual report, the Operating Entity entered into two collaboration agreements as discussed below.

The Operating Entity entered into a collaboration agreement with Min’nan University of Science and Technology on March 3, 2023, with a contract period of five years, pursuant to which Min’nan University of Science and Technology agreed to refer its distinguished graduates to the Operating Entity, send its prominent teachers and staff to participate in the Operating Entity’s R&D projects (the intellectual properties resulting from such agreement to be mutually owned by both parties), provide lectures and professional skills training for the Operating Entity’s employees, and provide other services, such as document translation and consultation related to business development, operation, and management. According to the agreement, the Operating Entity agreed to establish centers for internship, training, and R&D on campus, providing equipment and technology for the students to complete their internships or graduation projects. The Operating Entity also agreed to provide the students research topics for graduation projects and dissertations, which topics arise from the difficulties it encountered during its production, and to direct its engineers or project managers to supervise the students for completing their graduation projects or dissertations. As of the date of this annual report, no intellectual property has been produced under this agreement.

The Operating Entity entered into a similar agreement with Min’nan Science and Technology College as well on May 12, 2022, with a contract period of three years, pursuant to which Min’nan Science and Technology College agreed to refer its distinguished graduates to the Operating Entity, and send its prominent teachers and staff to participate in the Operating Entity’s R&D projects (the intellectual properties of which would be owned by the Operating Entity). The Operating Entity agreed to provide lectures regarding business and management to the students, and hire the management of Min’nan Science and Technology College as its business development consultants. As of the date of this annual report, two invention patents have been produced under this agreement.      

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

As of the date of this annual report, the Operating Entity has 66 registered patents, which consist of 32 invention patents, 32 utility model patents, and two design patents in mainland China. See “— Intellectual Property.” Faced with the ever-changing market demands, it continues to invest in acquiring new patents and technologies that are tailored to the market’s fast-changing requirements.

Quality Control

Quality and safety are always the Operating Entity’s core value. Reliable, safe, and stable product quality is an important driving factor for maintaining market competitiveness. The Operating Entity is committed to strengthening professional ethics and cultivating quality consciousness of its employees and forming a strict quality management system. As a result, we believe that the Operating Entity has developed a sophisticated quality control management system in accordance with the requirements of Chinese laws and regulations as well as ISO standards.

The quality control management system covers the whole process of manufacturing, which consists of three parts: components and raw materials inspection, production check, and product examination. The production process is subject to continuous review and monitoring by the quality control team to ensure that finished products are of the highest quality and meet both regulatory and customer requirements. Set forth below are charts demonstrating these processes.

Components and Raw Materials Inspection Process Flowchart

Production Check Process Flowchart

Product Examination Process Flowchart

The quality control management system has earned the Operating Entity a quality-related manufacturing designation. In 2021, the Operating Entity received ISO certification, which certified that the Operating Entity has implemented and maintained a quality management system for its design, production, and after-sales service of coordinate manipulators, non-standard automation equipment, which fulfils the requirements of the ISO 9001:2015 standard, demonstrating the Operating Entity’s ability to consistently provide products that meet customers’ and applicable statutory and regulatory requirements. With the quality control management system, the Operating Entity is able to consistently produce safe products, which earned the Operating Entity a number of international certifications. In 2021, the Operating Entity received the European Union’s CE certification for its 25 models of manipulator arms for an injection molding machine, which confirmed that the manipulator arms meet all the necessary health and safety requirements of the Machinery Directive 2006/42/EC, and the Operating Entity is allowed to sell these 25 models of manipulator arms in Europe. In addition, in 2022, the Operating Entity received Korea Certification for its transverse five-axis dual-arm, double-section manipulator arms, which signified these products’ compliance with Korea’s product safety requirements for electrical and electronic equipment.

However, despite the quality control management system, like any manufacturer, the Operating Entity cannot eliminate the risks of errors, defects, or failures in its products. See “Item 3. Key Information — D. Risk Factors — Risks Relating to the Operating Entity’s Business and Industry — The Operating Entity may fail to detect or cure defects of its products.”

As of the date of this annual report, neither we nor the Operating Entity is aware of any investigations, prosecutions, disputes, claims or proceedings in respect of quality issues, nor have we nor the Operating Entity been penalized or can foresee any penalty to be made by any related PRC government authorities.

Competition

The industrial manipulator arm industry is intensely competitive, subject to rapid change and significantly affected by new product introductions and other market activities of industry participants. The Operating Entity competes with manufacturers of industrial manipulator arms. Some of these competitors are large, well-capitalized companies with greater market share, resources, and experience than the Operating Entity has. As a consequence, they are able to spend more on product development, marketing, sales, and other product initiatives than the Operating Entity can. The Operating Entity competes based on factors such as price, value, customer support, brand recognition, reputation, and product functionality, reliability, and compatibility.

The Operating Entity’s major competitors include Guangdong Topstar Technology Co., Ltd., Borunte Robot Co., Ltd., GuangDong Switek Technology Co., Ltd., and Abiman Engineering China Co., Ltd. The Operating Entity competes with such competitors particularly in the area of the injection molding machine-dedicated manipulator arm, which is the main product of the Operating Entity with its sales accounting for more than 58%, 77%, and 92% of the Operating Entity’s total revenue in the fiscal years 2024, 2023, and 2022, respectively.

Although there can be no assurance that the Operating Entity will be able to continue to compete successfully in the future, we believe that the Operating Entity can compete successfully with these companies by offering products of better quality to numerous customers. This competitive edge is bolstered by our Operating Entity’s strong research and development capabilities, a comprehensive quality control system, an experienced management team, and a broad range of customers. See “— Competitive Strengths.”

Environmental Matters

As a manufacturer of industrial manipulator arms, the Operating Entity’s production activities are governed by PRC laws and regulations, including Environmental Protection Law, the Law on the Prevention and Control of Environmental Pollution Caused by Solid Waste. In order to better comply to these laws and regulations, the Operating Entity has invested $2,973 in pollutant detection and treatment for the past three years.

The wastewater the Operating Entity generates is sanitary wastewater, which can be disposed directly into municipal pipelines. The corner wastes generated are cleaned and collected by the cleaning personnel on time, and transported to the municipal garbage disposal site for treatment by the local sanitation department. Solid wastes generated during operation are collected and sent to relevant manufacturers for recycling. If new products are developed in the future, the Operating Entity will take corresponding environmental protection measures according to relevant laws and regulations.

As of the date of this annual report, neither we nor the Operating Entity is aware of any warning, investigations, prosecutions, disputes, claims or proceedings in respect of environmental protection, nor has the Operating Entity been punished or can foresee any punishment to be made by any government authorities of the PRC.

Seasonality

Historically, the Operating Entity’s business has not experienced seasonal variations.

Employees

As of December 31, 2024, 2023, and 2022, the Operating Entity had 124, 107, and 90 full-time employees, respectively.

The following table provides a breakdown of the Operating Entity’s employees by function as of December 31, 2024:

The Operating Entity’s success depends on its ability to attract, motivate, train, and retain qualified personnel. We believe the Operating Entity offers its employees competitive compensation packages and an environment that encourages self-development and, as a result, has generally been able to attract and retain qualified personnel and maintain a stable core management team.

We believe the Operating Entity maintains a good working relationship with its employees, and the Operating Entity has not experienced any material labor disputes. None of its employees is represented by a labor union.

Properties

The Operating Entity owns the premises of its offices and manufacturing facilities, which are all located at No. 88 Hongdu Industrial Park, Honglai Town, Nan’an City, Fujian Province, the PRC, and cover an aggregate building area of approximately 155,115 square feet, with the breakdown set for in the table below:

On October 17, 2022, the Industrial and Commercial Bank of China Nan’an Branch (“ICBC Nan’an”) and the Operating Entity entered into a maximum amount mortgage contract, as amended by that certain amendment agreement dated as of November 18, 2022. The Operating Entity provides a guarantee for the debts arising from any agreements signed with the ICBC Nan’an within a maximum limit of $4.81 million, from October 10, 2022 to December 20, 2030. These agreements include foreign and local currency loan contracts, foreign exchange relending contracts, bank acceptance agreements, letter of credit issuance agreements, guarantee issuance agreements, international and domestic trade financing agreements, forward foreign exchange contracts, and other financial derivative product agreements, as well as precious metal leasing contracts. The mortgages deriving from the maximum amount mortgage contract are secured by all the aforementioned properties. All properties owned by the Operating Entity are subject to a mortgage pursuant to a loan agreement entered into by and between the Operating Entity and ICBC Nan’an. The loan, in the principal amount of $827,438 (RMB6 million), secured under the maximum amount mortgage contract, carries an interest rate determined by the one-year LPR set the day immediately before the contract date, plus an additional 55 basis points. The loan matured on December 19, 2024 and was extended to November 19, 2025.

On October 29, 2022, the Ministry of Natural Resources of the PRC issued a real estate certificate for the Operating Entity, which granted the Operating Entity a right to use state-owned land for construction, and limited the usage for general equipment manufacturing. Pursuant to this real estate certificate, the Operating Entity is entitled to use a piece of state-owned land, which is described in the first paragraph under “Properties,” of approximately 358,793 square feet, located at No. 88 Hongdu Industrial Park, Honglai Town, Nan’an City, Fujian Province, the PRC, with an expiration date of November 15, 2069.

Intellectual Property

The Operating Entity’s relies on a combination of trademarks, patents, domain names, and copyrights to protect its intellectual property rights. As of the date of this annual report, the Operating Entity owns the following intellectual properties in China:

On December 30, 2022, the chairman of the board of directors of the Operating Entity, Wenzao Huang, insured 28 patents for the Operating Entity, through People’s Insurance Company of China, with a premium payment of RMB1,900. The insurance period extends from December 31, 2022 to December 30, 2023. On May 11, 2024, Wenzao Huang renewed the insurance with an additional premium payment of RMB1,900, extending the coverage period from May 12, 2024, to May 11, 2025. Should any instance of patent infringement occur within this period, a 5% deductible applies to each patent. For any legal actions taken by the Operating Entity due to any such infringement, People’s Insurance Company of China will indemnify at a rate of RMB5,700 per infringed patent. There is no assurance that such insurance will be adequate to insure against the harm the Operating Entity would experience, in the event of a patent infringement, and upon the occurrence of any such event, both the Operating Entity’s and our business, results of operations, and financial condition could be materially adversely affected.

Insurance

As required by PRC laws and regulations, the Operating Entity participates in various employee benefit plans that are organized by municipal and provincial governments, including pension, medical insurance, unemployment insurance, maternity insurance, on-the-job injury insurance, and housing fund plans through a PRC government-mandated benefit contribution plan. The Operating Entity is required under PRC laws to make contributions to employee benefit plans at specified percentages of the salaries, bonuses, and certain allowances of their employees. As of the date of this annual report, (i) the Operating Entity has completed the social insurance registration and the housing fund registration; (ii) the Operating Entity did not make contributions in the full amount for the social insurance fund and the housing provident fund for their employees, as required under the relevant PRC laws and regulations; and (iii) the Operating Entity did not make contributions in the housing fund for some employees. According to the Provisional Regulations on the Collection and Payment of Social Insurance Premiums, because we did not pay the social insurance premiums in full for all employees, premium collection agencies may order us to pay or make up the arrears and may impose an overdue fine. We may be further fined if we fail to pay such overdue fines. According to the Regulations on the Administration of Housing Provident Fund, due to the failure to pay the housing provident fund for all employees, we may be ordered with a deadline for payment from the Housing Provident Fund Management Center. In addition, if we do not make the housing accumulation fund deposit registration or do not establish the housing provident fund account for the employees, the housing provident fund management center will order a deadline for payment, and if we fail to pay the housing provident fund within the deadline, we will be imposed a fine of not less than RMB10,000 (approximately $1,300) and not more than RMB50,000 (approximately $6,800). Please see “Item 3. Key Information — D. Risk Factors — Risks Relating to Doing Business in the PRC — Failure to make adequate contributions to various employee benefit plans and withhold individual income tax on employees’ salaries as required by PRC regulations may subject the Operating Entity to penalties.”

Except for the intellectual property insurance as described in “— Intellectual Property,” the Operating Entity does not carry any other insurances, such as key-man life insurance, product liability and professional liability insurance, property insurance, or business interruption insurance. It has determined that the costs of insuring for related risks and the difficulties associated with acquiring such insurance on commercially reasonable terms make it impractical. The Operating Entity considers its insurance coverage to be sufficient for its business operations in China. See “Item 3. Key Information — D. Risk Factors — Risks Relating to the Operating Entity’s Business and Industry — The Operating Entity has no business liability or disruption insurance, which could expose it to significant costs and business disruption, and it may incur liabilities that are not covered by insurance.”

Legal Proceedings

As of the date of this annual report, neither we nor the Operating Entity is a party to any material legal or administrative proceedings. From time to time, the Operating Entity may be subject to various claims and legal actions arising in the ordinary course of business. Litigation or any other legal or administrative proceeding, regardless of the outcome, is likely to result in substantial cost and diversion of the Operating Entity’s resources, including management’s time and attention. Furthermore, as of the date of this annual report, the Operating Entity is not a party to any domestic or international claims or litigation with respect to defective products or other matters.

Regulations

This section sets forth a summary of applicable laws, rules, regulations, government and industry policies, and requirements that have a significant impact on the Operating Entity’s operations and business. This summary does not purport to be a complete description of all laws and regulations that apply to the Operating Entity’s business and operations. Investors should note that the following summary is based on relevant laws and regulations in force as of the date of this annual report, which may be subject to change.

Regulations Related to Foreign Investment

Company Law

The establishment, operation, and management of corporate entities in the PRC is governed by the Company Law of the PRC (the “Company Law”), which was promulgated by the SCNPC in December 1993 and last amended in December 2023. The Company Law generally governs two types of companies: limited liability companies and joint stock limited companies. Both types of companies have the status of legal persons, and the liability of a company to its creditors is limited to the entire value of assets owned by the company. Liabilities of shareholders of a limited liability company are limited to the contributions for which they have subscribed. Liabilities of shareholders of a joint stock limited company are limited to the amount of capital they are legally obliged to contribute for the shares for which they have subscribed. The Company Law applies to both PRC domestic companies and foreign-invested companies. Our PRC subsidiaries are limited liability companies legally incorporated in the PRC in accordance with the Company Law on company establishment.

Foreign Investment Law

On March 15, 2019, the National People’s Congress approved the Foreign Investment Law of the PRC (the “Foreign Investment Law”), and on December 26, 2019, the State Council promulgated the Implementing Rules of the Foreign Investment Law (the “Implementing Rules”) to further clarify and elaborate the relevant provisions of the Foreign Investment Law. The Foreign Investment Law and the Implementing Rules both took effect on January 1, 2020 and replaced three previous major laws on foreign investments in China namely, the Sino-foreign Equity Joint Venture Law, the Sino-foreign Cooperative Joint Venture Law, and the Wholly Foreign-owned Enterprise Law, together with their respective implementing rules. Pursuant to the Foreign Investment Law, “foreign investments” refer to investment activities conducted by foreign investors (including foreign natural persons, foreign enterprises, or other foreign organizations) directly or indirectly in the PRC, which include any of the following circumstances: (i) foreign investors setting up foreign-invested enterprises in the PRC solely or jointly with other investors; (ii) foreign investors obtaining shares, equity interests, property portions, or other similar rights and interests of enterprises within the PRC; (iii) foreign investors investing in new projects in the PRC solely or jointly with other investors; and (iv) investment in other methods as specified in laws, administrative regulations, or as stipulated by the State Council. The Implementing Rules introduce a “see-through” principle and further provide that foreign-invested enterprises that invest in the PRC shall also be governed by the Foreign Investment Law and the Implementing Rules.

The Foreign Investment Law and the Implementing Rules provide that a system of pre-entry national treatment and negative list shall be applied for the administration of foreign investment. “Pre-entry national treatment” refers to the treatment provided to foreign investors and their investments at the market entry stage being no less favorable than that provided to domestic investors and their investments, and “negative list” refers to the special administrative measures for the entry of foreign investment into specific fields or industries. Foreign investments in sectors not on the negative list will receive national treatment. Foreign investors shall not invest in the prohibited fields as specified in the negative list, and foreign investors who invest in the restricted fields shall comply with certain special requirements on equity ratio and senior management personnel, among others.

The current industry entry clearance requirements governing investment activities in the PRC by foreign investors are set out in two categories, namely the Special Management Measures for the Entry of Foreign Investment (Negative List) (2024 version) (the “Negative List”), as jointly promulgated on September 6, 2024 by the NDRC, and the MOFCOM, effective on November 1, 2024, and the Encouraged Industry Catalogue for Foreign Investment (2022 version), as jointly promulgated by the NDRC and the MOFCOM on October 26, 2022, effective on January 1, 2023. Industries not listed in these two catalogues are generally deemed “permitted” for foreign investment, unless specifically restricted by other PRC laws. Our PRC legal counsel, Dacheng, has advised us that the Operating Entity’s business is not on the Negative List and, therefore, we are not subject to any restriction or limitation on foreign ownership.

According to the Implementing Rules, the registration of foreign-invested enterprises shall be handled by the SAMR or its authorized local counterparts. Where a foreign investor invests in an industry or field subject to licensing in accordance with laws, the competent government department responsible for granting such license shall review the license application of the foreign investor in accordance with the same conditions and procedures applicable to PRC domestic investors, unless it is stipulated otherwise by the laws and administrative regulations. The competent government department shall not impose discriminatory requirements on the foreign investor in terms of licensing conditions, application materials, reviewing steps, and deadlines, among others.

Pursuant to the Foreign Investment Law and the Implementing Rules, and the Information Reporting Measures for Foreign Investment jointly promulgated by the MOFCOM and the SAMR, which took effect on January 1, 2020, a foreign investment information reporting system is established and foreign investors or foreign-invested enterprises shall report investment information to competent commerce departments of the government through the enterprise registration system and the national enterprise credit information publicity system. The administration for market regulation shall forward the above investment information to the competent commerce departments in a timely manner. Also, foreign investors or foreign investment enterprises will have legal liabilities imposed for failing to report investment information in accordance with the requirements.

As confirmed by our PRC counsel, Dacheng, as of the date of this annual report, neither we nor any of our PRC subsidiaries have been subject to any investigation, or received any notice, warning, or sanction from relevant government authorities related to non-compliance with the PRC Company Law or foreign investment laws.

Regulations Relating to Intellectual Property

Copyright

The Copyright Law of the PRC, or the Copyright Law, which took effect on June 1, 1991 and was last amended on November 11, 2020 and became effective on June 1, 2021, provides that Chinese citizens, legal persons or other organizations shall, whether published or not, own the copyright in their copyrightable works, which include, among others, works of literature, art, natural science, social science, engineering technology, and computer software. Copyright owners enjoy certain legal rights, including the right of publication, right of authorship, and right of reproduction. The Copyright Law (Revised in 2020) extends copyright protection to Internet activities, products disseminated over the Internet and software products. In addition, PRC laws and regulations provide for a voluntary registration system administered by the Copyright Protection Center of China, or the CPCC. According to the Copyright Law (Revised in 2020), an infringer of copyrights shall be subject to various civil liabilities, which include ceasing infringement activities, apologizing to the copyright owners, and compensating the loss of copyright owner. Infringers of copyrights may also be subject to fines and administrative or criminal liabilities in severe situations.

The National Copyright Administration of the PRC administers software copyright registration, and the CPCC is designated as the software registration authority. The CPCC shall grant registration certificates to the Computer Software Copyrights applicants who meet the requirements of both the Software Copyright Measures and the Computer Software Protection Regulations (Revised in 2013).

The Provisions of the Supreme People’s Court on Certain Issues Related to the Application of Law in the Trial of Civil Cases Involving Disputes on Infringement of the Information Network Dissemination Rights specifies that disseminating works, performances, or audio-video products by the Internet users or the Internet service providers via the Internet without the permission of the copyright owners shall be deemed to infringe the right of dissemination of the copyright owner. The infringer shall bear civil liabilities in accordance with the provisions of the Copyright Law (Revised in 2020), including ceasing the infringement, eliminating the impact, making a formal apology, and compensating for the losses incurred.

Trademark

Registered trademarks are protected under the Trademark Law of the PRC, or the Trademark Law, which was promulgated by the SCNPC in August 1982, and amended in February 1993, October 2001, August 2013, and April 2019, respectively, and the Implementation Regulation of the PRC Trademark Law which was adopted by the State Council on August 3, 2002 and amended on April 29, 2014. Trademarks are registered with the State Intellectual Property Office. The PRC Trademark Law adopts a “first-to-file” principle with respect to trademark registration. The application for registration of a trademark may be rejected, if the trademark is identical or similar to another trademark that has already been registered, or been subject to a preliminary examination and approval for use on the same kind of or similar commodities or services. The PRC Trademark Law protects existing rights of the obtained trademarks and unregistered trademarks that has already been used and gained a “sufficient degree of reputation.”

According to the Trademark Law of the PRC, the period of validity for a registered trademark is 10 years, commencing on the date of registration, which is renewable. The registrant shall go through the formalities for trademark renewal within twelve months prior to the expiration if continued use of the trademark is intended. According to the provisions of the Trademark Law, when the registrant fails to do so, a grace period of six months may be granted. The validity period for a renewed trademark is 10 years, commencing on the day immediately following the date of expiration of the last valid period of the trademark. In the absence of a renewal upon expiration, the registered trademark shall be revoked.

The SAMR or its authorized local counterparts shall have the authority to investigate any behavior that infringes the exclusive right of a registered trademark owner in accordance with the Trademark Law. In case of a suspected criminal offense, the case shall be timely referred to a judicial authority and decided according to the applicable laws.

On May 28, 2020, the National People’s Congress approved the Civil Code of PRC, which took effect on January 1, 2021. Under the Civil Code, if an offender intentionally infringes upon the intellectual property rights of others and the circumstance is severe, the infringed party shall have the right to request for the corresponding punitive compensation.

Patent

The Patent Law of the PRC, or the Patent Law, was promulgated by the SCNPC on March 12, 1984, last amended on October 17, 2020, and became effective on June 1, 2021. The State Council promulgated the Implementation Rules of the Patent Law of the PRC on June 15, 2001, which was last amended it on December 11, 2023 and effective on January 20, 2024. Under the Patent Law and the Implementation Rules of the Patent Law, there are three types of patents in the PRC: invention patent, utility model patent, and design patent. The protection period is 20 years for invention patents, and 10 years for utility model patents and 15 years for design patents, commencing from their respective application dates. Patents in China are filed with the State Intellectual Property Office, or SIPO. Normally, the SIPO publishes an application for an invention patent within 18 months after the filing date, which may be shortened at the request of applicant. The applicant must apply to the SIPO for a substantive examination within three years from the date of application.

Existing patents can become narrowed, invalid, or unenforceable, due to a variety of reasons, including lack of novelty, lack of creativity, and deficiencies in patent application. In China, a patent must have novelty, creativity, and practical applicability. Under the Patent Law, novelty means that no identical invention or utility model has been publicly disclosed in any publication in China or overseas or has been publicly used or made known to the public by any other means, whether in or outside of China, nor has any other person filed with the patent authority an application that describes an identical invention or utility model before the filing date and the content of the application is disclosed in patent application documents published or patent documents announced after the filing date. Creativity means that, compared with existing technology, an invention has prominent substantial features and represents notable progress, and a utility model has substantial features and represents any progress. Practical applicability means an invention or utility model can be manufactured or used and may produce positive results.

Any individual or entity that utilizes a patent or conducts any other activity in infringement of a patent without prior authorization of the patentee shall pay compensation to the patentee and is subject to a fine imposed by the patent administrative authority and, if it is considered as a crime, shall be held criminally liable in accordance with the applicable laws. In the event that a patent is owned by two or more co-owners without an agreement regarding the distribution of revenue generated from the patent, such revenue shall be distributed among all the co-owners.

Domain Names

On August 24, 2017, the Ministry of Industry and Information Technology (“MIIT”) promulgated the Administrative Measures for Internet Domain Names, or the Domain Name Measures, which became effective on November 1, 2017. MIIT is the major regulatory body responsible for the administration of the PRC internet domain names, under supervision of China Internet Network Information Center, or the CNNIC, which is responsible for the daily administration of CN domain names and PRC domain names. Pursuant to the Domain Name Measures, the registration of domain names adopts the “first-to-file” principle and the registrant shall complete the registration via the domain name registration service institutions. The Domain Name Measures regulate the registration of domain names, such as China’s top-level domain name “.CN.” The CNNIC issued the Measures for the Resolution of Country Code Top-Level Domain Name Disputes on June 18, 2019, pursuant to which, in the event of a domain name dispute, the disputed parties may lodge a complaint to the designated domain name dispute resolution institution to initiate the domain name dispute resolution procedure, and file a suit to the People’s Court, or initiate an arbitration procedure.

Regulations Relating to Environmental Protection

Environmental Protection Law

The Environmental Protection Law of the PRC (the “Environmental Protection Law”), was promulgated and effective on December 26, 1989, and last amended on April 24, 2014. The Environmental Protection Law has been formulated for the purpose of protecting and improving both the living environment and the ecological environment, preventing and controlling pollution and other public hazards, and safeguarding people’s health.

According to the provisions of the Environmental Protection Law, in addition to other relevant laws and regulations of the PRC, the Ministry of Environmental Protection and its local counterparts take charge of administering and supervising said environmental protection matters. Pursuant to the Environmental Protection Law, the environmental impact statement on any construction project must assess the pollution that the project is likely to produce and its impact on the environment, and provide preventive and curative measures. The statement shall be submitted to the competent administrative department of environmental protection for approval. Installations for the prevention and control of pollution in construction projects must be designed, built, and commissioned together with the principal part of the project.

Permission to commence production or utilize any construction project shall not be granted until the installations for the prevention and control of pollution have been examined and confirmed to meet applicable standards by the appropriate administrative department of environmental protection after examining and approving the environmental impact statement. Installations for the prevention and control of pollution shall not be dismantled or left idle without authorization. Pursuant to Administrative Measures for Urban Living Garbage, which were promulgated by the Ministry of Housing and Urban-Rural Development in 1993 and last amended on May 4, 2015, it is absolutely necessary to dismantle any such installation or leave it idle, and prior approval shall be obtained from the competent local administrative department of environmental protection before doing so.

The Environmental Protection Law makes it clear that the legal liabilities of any violation of said law include warning, fine, rectification within a time limit, compulsory operation suspension, compulsory reinstallation of dismantled installations of the prevention and control of pollution or compulsory reinstallation of those left idle, compulsory shutout or closedown, and even criminal punishment.

Regulations on Disposal of Hazardous Waste

Pursuant to the Law on the Prevention and Control of Environmental Pollution Caused by Solid Waste, which was promulgated by the SCNPC in 1995 and last amended on April 29, 2020, entities generating hazardous waste shall store, utilize, and dispose of hazardous waste according to the relevant requirements of the state and environmental protection standards, and shall not dump or pile up hazardous waste without authorization. Furthermore, it is forbidden to entrust hazardous waste to entities without a permit for disposal, or else the competent ecological and environmental authorities shall order the violator to make rectification, impose fines, confiscate illegal gains, and in serious circumstances, order it to suspend business or close down upon the approval of the government authorities.

Regulations Relating to Labor Protection

Labor Law and Labor Contract Law

The Labor Law of the PRC was promulgated by the SCNPC on July 5, 1994 and was most recently amended on December 29, 2018 (the latest revised version became effective on December 29, 2018). The PRC Labor Contract Law was promulgated by the SCNPC on June 29, 2007 and was amended on December 28, 2012 (the latest revised version became effective from July 1, 2013). The Implementing Regulations of the Labor Contract Law of the PRC were promulgated and became effective on September 18, 2008. These laws together govern issues in relation to employment contracts, settlement of labor dispute, labor remuneration, protection of occupational safety and healthcare, social insurance and welfare, etc. Written employment contracts must be entered into in order to establish the labor relationship between employers and employees. If an employer fails to enter into a written employment contract with an employee within one year from the date on which the employment relationship is established, the employer must rectify the situation by entering into a written employment contract with the employee and pay the employee twice the employee’s salary for the period from the day following the lapse of one month from the date of establishment of the employment relationship to the day prior to the execution of the written employment contract. Employers are also required to pay wages no lower than the local minimum wage standards to their employees. If the payment of employee’s wages at a rate lower than the local minimum wage rate, the labor authority shall order the employer to pay wages and economic compensation to those employees and may also order it to pay compensation.

Social Insurance and Housing Provident Funds

The Social Insurance Law of the PRC, which was promulgated by the SCNPC on October 28, 2010 and amended on December 29, 2018, governs the PRC’s social insurance system. According to the Social Insurance Law of the PRC, the Regulations on Occupational Injury Insurance effective as of January 1, 2004 and as amended on December 20, 2010, the Interim Measures concerning the Maternity Insurance for Enterprise Employees effective as of January 1, 1995, and the Interim Regulations concerning the Levy of Social Insurance effective as of January 22, 1999 and most recently amended on March 24, 2019, employers and/or employees (as the case may be) shall register social insurance with competent authorities and contribute required amount of social insurance funds, including funds for basic pension insurance, unemployment insurance, basic medical insurance, occupational injury insurance, and maternity insurance. Employers who fail to complete social security registration shall be ordered by the social security administrative authorities to rectify within a stipulated period. If rectification is not made within the stipulated period, such employer shall be subject to a fine ranging from one to three times the amount of the social security premiums payable, and the directly accountable person(s)-in-charge and other directly accountable personnel shall be subject to a fine ranging from RMB500 to RMB3,000. Employers who fail to promptly contribute social security premiums in full amount shall be ordered by the social security premium collection agency to make such contributions or make up the difference within a stipulated period and be subject to a late payment fine of 0.05% of the overdue payment from the payment due date. If such overdue payment is not made within the stipulated period, the relevant administrative authorities shall impose a fine ranging from one to three times the amount of the amount in arrears.

Under the Regulations on the Administration of Housing Provident Fund, which was promulgated by the State Council on April 3, 1999 and most recently amended on March 24, 2019, an employer shall make contribution registration with the housing provident fund management and complete the formalities of opening housing provident fund accounts for its employees. If an employer fails to undertake the registration or fails to go through the formalities of opening housing provident fund accounts for its employees, the housing provident fund management center shall order such employer to go through the formalities within a prescribed time limit. Employers who fail to do so within the time limit shall be subject to a fine ranging from RMB10,000 to RMB50,000. If an employer fails to make timely contributions to the housing provident fund in the full amount, the housing provident fund management center shall order such employer to make such contributions or make up the difference within a prescribed time limit. If employers fail to comply within the prescribed time limit, the housing provident fund management center may submit an application to a People’s Court for compulsory enforcement. As of the date of this annual report, no administrative actions, fines, or penalties have been imposed by the relevant PRC government authorities with respect to such non-compliance, nor has any order been received by our PRC subsidiaries to settle the outstanding amount of social insurance contributions and housing provident fund contributions. Please see “Item 3. Key Information — D. Risk Factors — Risks Relating to Doing Business in the PRC — Failure to make adequate contributions to various employee benefit plans and withhold individual income tax on employees’ salaries as required by PRC regulations may subject the Operating Entity to penalties.”

Regulations Relating to Fire Safety

Pursuant to the PRC Fire Safety Law, which was promulgated by the SCNPC on April 29, 1998, and last amended on April 29, 2021, and the Interim Provisions on Administration of Fire Control Design Review and Acceptance of Construction Project promulgated by the Ministry of Housing and Urban-Rural Development on April 1, 2020, which became effective on June 1, 2020, and last amended on August 21, 2023, the construction entity of a large-scale facility (including manufacturing plant whose size is over 2,500 square meters) and other special construction projects must apply for fire prevention design review with fire control authorities, and complete fire assessment inspection and acceptance procedures after the construction project is completed. The construction entity of special construction projects must complete the filing for fire prevention design and complete the fire safety completion inspection and acceptance procedures within five business days after conducting the construction completion inspection and acceptance. If the construction entity fails to conduct the fire safety inspection before such facility is put into use or the construction entity fails to conform to the fire safety requirements after such inspection, the construction entity will be ordered to suspend the construction of projects, stop using the affected construction project and stop production or business operations, and a fine between RMB30,000 and RMB300,000 may be imposed by competent departments.

Regulations Relating to Product Liability

Product Quality Law

Pursuant to the PRC Product Quality Law, which was promulgated on February 22, 1993 and amended on July 8, 2000, August 27, 2009, and December 29, 2018, a manufacturer is prohibited from producing or selling products that do not meet applicable standards and requirements for safeguarding human health and ensuring human and property safety. Products must be free from unreasonable dangers threatening human and property safety. Where a defective product causes personal injury or property damage, the aggrieved party may make a claim for compensation from the manufacturer or the seller of the product. Manufacturers and sellers of non-compliant products may be ordered to cease the production or sale of the products and could be subject to fines and confiscation of the products. Earnings from sales of the products in violation of such standards or requirements may also be confiscated, and, in severe cases, an offender’s business license may be revoked. Manufacturers and sellers shall establish a sound internal product quality control system and strictly adhere to a job responsibility system in relation to quality standards and quality liabilities together with implementing corresponding examination and inspection measures.

Work Safety Law

Pursuant to the Work Safety Law of the PRC, which was promulgated by the SCNPC on June 29, 2002, implemented on November 1, 2002, and revised on August 27, 2009, August 31, 2014 and June 10, 2021, producers and business operators shall abide by the Work Safety Law, strengthen work safety management, establish and improve the all-staff work safety responsibility system and work safety rules and regulations. Producers and business operators that fail to satisfy those conditions shall not engage in production and business operation activities. In addition, the producers and business operators are required to offer education and training programs to the employees regarding production safety, and provide labor protection articles that meet the national standards or industrial standards to the employees, supervise and educate them to wear or use these articles according to the prescribed rules.

PRC Civil Code

On May 28, 2020, the National People’s Congress promulgated the Civil Code of the People’s Republic of China (the “PRC Civil Code”), which took effect on January 1, 2021. Under the PRC Civil Code, if a product is found to be defective and to compromise personal and property security of others, the victim may require compensation to be made by the manufacturer or the seller of the product. Where any manufacturer or seller knowingly produces or sells defective products or fails to take effective remedial measures in accordance with the PRC Civil Code and thus causes death or serious damage to the health of another person, such person shall be entitled to claim punitive damages. If the transporter or storekeeper is responsible for the matter, the manufacturer or seller shall have the right to demand compensation for its losses.

As of the date of this annual report, the Operating Entity has fully complied with product safety laws. Neither we nor any of our PRC subsidiaries have been subject to any investigation, or receive any notice, warning, or sanction from relevant government authorities related to product safety.

Regulations Relating to Anti-Monopoly in China

The PRC Anti-monopoly Law was promulgated on August 30, 2007, amended on June 24, 2022, and took effect on August 1, 2022. The PRC Anti-monopoly Law prohibits monopolistic conduct, such as entering into monopoly agreements, abuse of dominant market position, and concentration of undertakings, that have the effect of eliminating or restricting competition.

A business operator with a dominant market position may not abuse its dominant market position to conduct acts such as selling commodities at unfairly high prices or buying commodities at unfairly low prices, selling products at prices below cost without any justifiable cause, and refusing to trade with a trading party without any justifiable cause. Sanctions for the violations of the prohibition on the abuse of dominant market position include an order to cease the relevant activities, confiscation of the illegal gains, and fines of between 1% to 10% of sales revenue from the previous year. Provisions on Prohibition of Abuse of Market Dominance was promulgated on March 10, 2023, and took effect on April 15, 2023, to prevent and curb the abuse of market dominance. According to the Provisions on Prohibition of Abuse of Market Dominance, SAMR takes charge of unified anti-monopoly law enforcement for abuse of market dominance. With regard to any undertaking abusing its market dominance, the anti-monopoly law enforcement agency shall order it to stop the illegal act, confiscate its illegal income, and impose a fine ranging from 1% to 10% of the preceding year’s sales on it.

We have not implemented monopolistic behaviors including monopoly agreements, abuse of a dominant position and concentration of undertakings that may have the effect to eliminate or restrict competition. As of the date of this annual report, we have not been involved in any investigations on anti-monopoly initiated by the related governmental regulatory authorities, and we have not received any inquiry, notice, warning, or sanction in such respect.

Regulations Relating to Import and Export of Goods

Pursuant to the Regulations of the PRC on the Administration of Import and Export of Goods promulgated by the State Council on December 10, 2001, which came into effect on January 1, 2002 and last amended on March 10, 2024, the import and export of goods are generally allowed by the PRC government, but the prohibitions or restrictions explicitly stipulated in the laws or administrative regulations shall still be complied with during the conduct of import and export of goods by individuals or entities. According to the Foreign Trade Law of the PRC promulgated by the SCNPC, on May 12, 1994, which came into effect on July 1, 1994 and last amended with immediate effect on December 30, 2022, unless otherwise provided by laws and regulations, the PRC government allows free export and import of goods and technologies, and protects the intellectual property rights associated with international trade. The authorities have canceled the requirements to file records and register formalities for foreign trade operators engaging in the import or export of goods or technology with the MOFCOM or the agency entrusted from December 30, 2022. Pursuant to the Customs Law of the PRC promulgated by the SCNPC, on January 22, 1987, which came into effect on July 1, 1987 and last amended on April 29, 2021, and the Administrative Provisions of the Record-filing of Customs Declaration Entities promulgated by the General Administration of Customs of the PRC on November 19, 2021, which came into effect on January 1, 2022, unless otherwise provided for, the declaration of import or export goods and the payment of duties may be made by the consignees or consignors themselves, or by entrusted customs brokers that have been registered with the customs and such declaration shall be made by filing with the customs.

Regulations on Foreign Exchange

General administration of foreign exchange

Under the PRC Foreign Currency Administration Rules promulgated on January 29, 1996, and last amended on August 5, 2008, and various regulations issued by the SAFE and other relevant PRC government authorities, Renminbi is convertible into other currencies for current account items, such as trade-related receipts and payments and payment of interest and dividends. The conversion of Renminbi into other currencies and remittance of the converted foreign currency outside of the PRC for capital account items, such as direct equity investments, loans, and repatriation of investment, require the prior approval from the SAFE or its local office. Payments for transactions that take place within the PRC must be made in Renminbi. Unless otherwise approved, PRC companies may not repatriate foreign currency payments received from abroad or retain the same from abroad. Foreign-invested enterprises may retain foreign currencies in accounts with designated foreign exchange banks under the current account items subject to a cap set by the SAFE or its local office. Proceeds from foreign exchange transactions under the current accounts may be either retained or sold to a financial institution engaged in settlement of foreign exchange and sale of foreign currency pursuant to relevant SAFE rules and regulations. For proceeds from foreign exchange transactions under the capital accounts, approval from the SAFE is generally required for the retention or sale of such proceeds to a financial institution engaged in settlement of foreign exchange and sale of foreign currency.

The SAFE Circular No. 59

Pursuant to the Circular of the SAFE on Further Improving and Adjusting Foreign Exchange Administration Policies for Direct Investment (the “SAFE Circular No. 59”), promulgated by SAFE on November 19, 2012, which became effective on December 17, 2012 and was further amended on May 4, 2015, approval is not required for opening a foreign exchange account and depositing foreign currency into the accounts relating to the direct investments.

The SAFE Circular No. 59 also simplified foreign exchange-related registration required for the foreign investors to acquire the equity interests of Chinese companies and further improve the administration on foreign exchange settlement for foreign-invested enterprises.

The SAFE Circular No. 13

Pursuant to the Circular on Further Simplifying and Improving the Foreign Currency Management Policy on Direct Investment (the “SAFE Circular No. 13”), effective from June 1, 2015 and was further amended on December 30, 2019, which cancels the administrative approvals for foreign exchange registration of direct domestic investment and direct overseas investment and simplifies the procedure of foreign exchange-related registration, the investors shall register with banks for direct domestic investment and direct overseas investment.

The SAFE Circular 19

The Circular on Reforming the Management Approach regarding the Settlement of Foreign Capital of Foreign-invested Enterprise (the “SAFE Circular No. 19”), which was promulgated by the SAFE on March 30, 2015 and last amended on March 23, 2023, provides that a foreign-invested enterprise may, according to its actual business needs, settle with a bank the portion of the foreign currency-denominated capital in its capital account for which the relevant foreign exchange administration has confirmed monetary capital contribution rights and interests (or for which the bank has registered the injection of the monetary capital contribution into the account). Pursuant to the SAFE Circular No.19, for the time being, foreign-invested enterprises are allowed to settle 100% of their foreign currency-denominated capitals on a discretionary basis. A foreign-invested enterprise shall truthfully use its capital for its own operational purposes within the scope of business. Where an ordinary foreign-invested enterprise makes domestic equity investment with the amount of foreign exchanges settled, the invested enterprise shall first complete domestic re-investment registration and open a corresponding account for foreign exchange settlement pending payment with the foreign exchange administration or the bank at the place where it is registered.

The SAFE Circular No. 16

The Circular on Reforming and Regulating Policies on the Control over Foreign Exchange Settlement of Capital Accounts (the “SAFE Circular No. 16”), which was promulgated by the SAFE on June 9, 2016 and last amended on December 4, 2023, provides that enterprises registered in the PRC may also convert their foreign debts from foreign currency into Renminbi on self-discretionary basis. The SAFE Circular No. 16 also provides an integrated standard for conversion of foreign currency under capital account items (including but not limited to foreign currency capital and foreign debts) on self-discretionary basis, which applies to all enterprises registered in the PRC.

The SAFE Circular 28

The Notice of the SAFE on Further Promoting the Convenience of Cross-border Trade and Investment (the “SAFE Circular 28”), which was promulgated by the SAFE and became effective on October 23, 2019 and last amended on December 4, 2023, provides that non-investment foreign-invested enterprises may use capital to make equity investment in the PRC in accordance with laws on the premise that the investment is not in violation of the applicable Negative List and the projects invested are true and in compliance with relevant laws and regulations.

The SAFE Circular 8

The Notice of the SAFE on Optimizing Foreign Exchange Administration to Support the Development of Foreign-related Business (the “SAFE Circular 8”), which was issued by the SAFE and became effective on April 10, 2020, provides that under the condition that the use of the funds is genuine and compliant with current administrative provisions on use of income relating to capital account, enterprises are allowed to use income in the capital account, such as capital funds, foreign debts proceeds, and proceeds from overseas listings for domestic payment, without submission to the bank prior to each transaction of materials evidencing the veracity of such payment.

The SAFE Circular 37

Under the Circular of the State Administration of Foreign Exchange on Issues Concerning the Foreign Exchange Administration over the Overseas Investment and Financing and Round-trip Investment by Domestic Residents via Special Purpose Vehicles (the “SAFE Circular 37”), issued by the SAFE and effective on July 4, 2014, PRC residents are required to register with the local SAFE branch prior to the establishment or control of an offshore special purpose vehicle, which is defined as offshore enterprises directly established or indirectly controlled by PRC residents for offshore equity financing of the enterprise assets or interests they hold in China. An amendment to registration or subsequent filing with the local SAFE branch by such PRC resident is also required if there is any change in basic information of the offshore company or any material change with respect to the capital of the offshore company. At the same time, the SAFE issued the Operation Guidance for the Issues Concerning Foreign Exchange Administration over Round-trip Investment regarding the procedures for SAFE registration under the SAFE Circular 37, which became effective on July 4, 2014, as an attachment to the Circular 37.

Regulations on dividend distribution

According to the PRC Company Law and Foreign Investment Law, the PRC subsidiary, as a foreign invested enterprise, is required to draw 10% of its after-tax profits each year, if any, to fund a common reserve, which may stop drawing its after-tax profits if the aggregate balance of the common reserve has already accounted for over 50% of its registered capital. These reserves are not distributable as cash dividends. Furthermore, under the Law of the People’s Republic of China on Enterprise Income Tax, which became effective in January 2008 and was amended on December 29, 2018, the maximum tax rate for the withholding tax imposed on dividend payments from PRC foreign invested companies to their overseas investors that are not regarded as “resident” for tax purposes is 20%. The rate was reduced to 10% under the Implementing Regulations for the Law of the People’s Republic of China on Enterprise Income Tax issued by the State Council. However, a lower withholding tax rate may be applied if there is a tax treaty between China and the jurisdiction of the foreign holding companies, such as tax rate of 5% in the case of Hong Kong companies that holds at least 25% of the equity interests in the foreign-invested enterprise, and certain requirements specified by PRC tax authorities are satisfied.

If we determine to pay dividends on any of our Ordinary Shares in the future, as a holding company, we will be dependent on receipt of funds from our PRC subsidiaries. Current PRC regulations permit Fujian INLIF to pay dividends to Juli HK only out of its accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, each of our PRC subsidiaries is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. Cash dividends, if any, on our Ordinary Shares would be paid in U.S. dollars. Juli HK may be considered a non-resident enterprise for tax purposes, so that any dividends Fujian INLIF pays to Juli HK may be regarded as China-sourced income and, as a result, may be subject to PRC withholding tax at a rate of up to 10%. Pursuant to the Arrangement between Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Tax Evasion on Income, or the Double Tax Avoidance Arrangement, the 10% withholding tax rate may be lowered to 5% if a Hong Kong resident enterprise owns no less than 25% of a PRC entity.

Regulations on Taxation

Enterprise Income Tax

On March 16, 2007, the SCNPC promulgated the Law of the PRC on Enterprise Income Tax, which was amended on February 24, 2017 and December 29, 2018, and on December 6, 2007, the State Council enacted the Regulations for the Implementation of the Law on Enterprise Income Tax (collectively, the “EIT Law”). The EIT Law came into effect on January 1, 2008 and was amended on December 6, 2024. Under the EIT Law, both resident enterprises and non-resident enterprises are subject to taxation in the PRC. Resident enterprises are defined as enterprises that are established in China in accordance with PRC laws, or that are established in accordance with the laws of foreign countries but are actually or in effect controlled from within the PRC. Non-resident enterprises are defined as enterprises that are organized under the laws of foreign countries and whose actual management is conducted outside the PRC, but have established institutions or premises in the PRC, or have no such established institutions or premises but have income generated from inside the PRC. Under the EIT Law and relevant implementing regulations, a uniform corporate income tax rate of 25% is applied. However, if non-resident enterprises have not formed permanent establishments or premises in the PRC, or if they have formed permanent establishment or premises in the PRC but there is no actual relationship between the relevant income derived in the PRC and the established institutions or premises set up by them, enterprise income tax is set at the rate of 10% with respect to their income sourced from inside the PRC.

Value-added Tax

The Provisional Regulations of the PRC on Value-added Tax were promulgated by the State Council on December 13, 1993 and came into effect on January 1, 1994, which were subsequently amended on November 10, 2008, February 6, 2016, and November19, 2017. The Detailed Rules for the Implementation of the Provisional Regulations of the PRC on Value-added Tax (Revised in 2011) was promulgated by the MOF on December 25, 1993 and subsequently amended on December 15, 2008 and October 28, 2011. The Provisional Regulations of the PRC on Value-added Tax and the Implementation of the Provisional Regulations of the PRC on Value-added Tax (Revised in 2011) are collectively referred to as the VAT Law. On November 19, 2017, the State Council promulgated The Decisions on Abolishing the Provisional Regulations of the PRC on Business Tax and Amending the Provisional Regulations of the PRC on Value-added Tax, or Order 691. According to the VAT Law and Order 691, all enterprises and individuals engaged in the sale of goods, the provision of processing, repair and replacement services, sales of services, intangible assets, real property, and the importation of goods within the territory of the PRC are the taxpayers of VAT. On May1,2015, the VAT tax rates generally applicable are simplified as 17%, 11%, 6%, and 0%, and the VAT tax rate applicable to the small-scale taxpayers is 3%. The new VAT tax rates generally applicable from May 1, 2018 are simplified as 16%, 10%, 6%, and 0%, and the VAT tax rate applicable to the small-scale taxpayers is still 3%. Starting from April 1, 2019, the VAT rate for revenue generated from providing products was changed from 16% to 13%.

Dividend Withholding Tax

The EIT Law provides that since January 1, 2008, an income tax rate of 10% will normally be applicable to dividends declared to non-PRC resident investors which do not have an establishment or place of business in the PRC, or which have such establishment or place of business but the relevant income is not effectively connected with the establishment or place of business, to the extent such dividends are derived from sources within the PRC.

Pursuant to an Arrangement Between the Mainland of China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Incomes (the “Double Tax Avoidance Arrangement”), and other applicable PRC laws, if a Hong Kong resident enterprise is determined by the competent PRC tax authority to have satisfied the relevant conditions and requirements under such Double Tax Avoidance Arrangement and other applicable laws, the 10% withholding tax on the dividends the Hong Kong resident enterprise receives from a PRC resident enterprise may be reduced to 5%. However, based on the Circular on Certain Issues with Respect to the Enforcement of Dividend Provisions in Tax Treaties (the “SAT Circular 81”), issued on February 20, 2009 by the SAT, if the relevant PRC tax authorities determine, in their discretion, that a company benefits from such reduced income tax rate due to a structure or arrangement that is primarily tax-driven, such PRC tax authorities may adjust the preferential tax treatment. According to the Announcement of the State Administration of Taxation on Issues Relating to “Beneficial Owner” in Tax Treaties regarding the “Beneficial Owner” (the “Announcement”) in Tax Treaties, which was issued on February 3, 2018 by the SAT and became effect on April 1, 2018, when determining the applicant’s status of the “beneficial owner” regarding tax treatments in connection with dividends, interests, or royalties in the tax treaties, several factors, including without limitation, whether the applicant is obligated to pay more than 50% of his or her income in twelve months to residents in third country or region, whether the business operated by the applicant constitutes the actual business activities, and whether the counterparty country or region to the tax treaties does not levy any tax or grant tax exemption on relevant incomes or levy tax at an extremely low rate, will be taken into account, and it will be analyzed according to the actual circumstances of the specific cases. This Announcement further provides that an applicant who intends to prove his or her status of the “beneficial owner” shall submit the relevant documents to the relevant tax bureau according to the Announcement of State Taxation Administration on Promulgation of the Administrative Measures on Non-resident Taxpayers Enjoying Treaty Benefits, which was issued by the SAT on October 14, 2019 and effective on January 1, 2020.

Tax on Indirect Transfer

On February 3, 2015, the SAT issued the Circular on Issues of Enterprise Income Tax on Indirect Transfers of Assets by Non-PRC Resident Enterprises (the “SAT Circular 7”). Pursuant to the SAT Circular 7, an “indirect transfer” of assets, including equity interests in a PRC resident enterprise, by non-PRC resident enterprises, may be recharacterized and treated as a direct transfer of PRC taxable assets, if such arrangement does not have a reasonably commercial purpose and is established for the purpose of avoiding payment of PRC enterprise income tax. As a result, gains derived from such indirect transfer may be subject to PRC enterprise income tax. When determining whether there is a “reasonably commercial purpose” of the transaction arrangement, features to be taken into consideration include, inter alia, whether the main value of the equity interests of the relevant offshore enterprise derives directly or indirectly from PRC taxable assets; whether the assets of the relevant offshore enterprise mainly consists of direct or indirect investment in China or if its income is mainly derived from China; and whether the offshore enterprise and its subsidiaries directly or indirectly holding PRC taxable assets have real commercial nature which is evidenced by their actual function and risk exposure. According to the SAT Circular 7, where the payor fails to withhold any or sufficient tax, the transferor shall declare and pay such tax to the tax authority by itself within the statutory time limit. Late payment of applicable tax will subject the transferor to default interest. The SAT Circular 7 does not apply to transactions of sale of shares by investors through a public stock exchange where such shares are acquired on a public stock exchange. On October 17, 2017, the SAT issued the Circular on Issues of Tax Withholding regarding Non-PRC Resident Enterprise Income Tax (the “SAT Circular 37”) which further elaborates the relevant implemental rules regarding the calculation, reporting, and payment obligations of the withholding tax by the non-resident enterprises.

PRC Laws and Regulations Relating to Mergers & Acquisitions

On August 8, 2006, six PRC governmental and regulatory agencies, including MOFCOM and the CSRC promulgated the Regulations on Mergers and Acquisitions of Domestic Companies by Foreign Investors, or the M&A Rules, governing the mergers and acquisitions of domestic enterprises by foreign investors that became effective on September 8, 2006 and were revised on June 22, 2009. The M&A Rules, among other things, require that if an overseas company established or controlled by PRC companies or individuals, or PRC Citizens, intends to acquire equity interests or assets of any other PRC domestic company affiliated with the PRC Citizens, such acquisition must be submitted to the MOFCOM for approval. The M&A Rules also requires that an offshore special purpose vehicle formed for overseas listing purposes and controlled directly or indirectly by the PRC Citizens shall obtain the approval of the CSRC prior to overseas listing and trading of such special purpose vehicle’s securities on an overseas stock exchange.

PRC Laws and Regulations Relating to Oversea Listing

Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies

On February 17, 2023, the CSRC, announced the Notice on Filing Management Arrangements for Overseas Listings of Domestic Enterprises, and released a set of new regulations which consists of the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the “Trial Measures”), and five supporting guidelines which came into effect on March 31, 2023. The Trial Measures refine the regulatory system by subjecting both direct and indirect overseas offering and listing activities to the CSRC filing-based administration. Pursuant to the Trial Measures, we are required to file with the CSRC within three working days following the submission of an initial public offering or listing application. The Trial Measures apply to overseas securities offerings and/or listings conducted by (i) companies incorporated in the PRC, and (ii) companies incorporated overseas with operations primarily in the PRC and valued on the basis of interests in PRC domestic companies. Where a PRC domestic company seeks to indirectly offer and list securities on overseas markets, the issuer shall designate a major domestic operating entity as the domestic responsible entity, which shall file with the CSRC. The Trial Measures also lay out requirements for the reporting of material events. According to the Trial Measures, if we fail to fulfill the filings, or offer and list securities on an overseas market in violation of these measures, the CSRC will order rectification, issue warnings, and impose a fine ranging from RMB1,000,000 to RMB10,000,000. Persons directly in charge and other individuals directly responsible will be warned and fined between RMB500,000 and RMB5,000,000. Controlling shareholders and actual controllers of the domestic company who organize or instruct these violations will be fined between RMB1,000,000 and RMB10,000,000. As of the date of this annual report, neither we nor our subsidiaries have received any inquiry, notice, warning, or sanctions regarding our overseas listing from the CSRC or any other PRC governmental authorities. Since these statements and regulatory actions are newly published, however, official guidance and related implementation rules have not been issued. It is highly uncertain what the potential impact such modified or new laws and regulations will have on the daily business operations of our Operating Entity, our ability to accept foreign investments, and our listing on a U.S. exchange. The SCNPC or PRC regulatory authorities may in the future promulgate laws, regulations, or implementing rules that require us and our subsidiaries to obtain regulatory approval from Chinese authorities for listing in the U.S.

Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies

On February 24, 2023, the CSRC, the MOF, and National Administration of State Secrets Protection and National Archives Administration of China jointly revised the Provisions on Strengthening Confidentiality and Archives Administration in Overseas Issuance and Listing of Securities (the “Confidentiality and Archives Administration Provisions”), which came into effect on March 31, 2023. The Confidentiality and Archives Administration Provisions set out rules, requirements, and procedures relating to provision of documents, materials, and accounting archives for securities companies, securities service providers, overseas regulators, and other entities and individuals in connection with overseas offering and listing. Domestic companies that carry out overseas offering and listing (either in direct or indirect means) and the securities companies and securities service providers (either incorporated domestically or overseas) that undertake relevant businesses shall not leak any state secret and working secret of government agencies or harm national security and public interest. A domestic company is required to fulfill the approval and filing procedures according to law if it plans to, either directly or through its overseas listed entity, publicly disclose or provide any documents and materials that contain state secrets or working secrets of government agencies. Working papers produced in mainland China by securities companies and securities service providers in the process of undertaking businesses related to overseas offering and listing by domestic companies shall be retained in mainland China. Where such documents need to be transferred or transmitted to outside of mainland China, relevant approval procedures stipulated by regulations shall be followed.

C. Organizational Structure

See “— A. History and Development of the Company.”

D. Property, Plants and Equipment

See “— B. Business Overview — Properties.”

Item 4A. UNRESOLVED STAFF COMMENTS

Not applicable.

Item 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion of our financial condition and results of operations is based upon and should be read in conjunction with our consolidated financial statements and their related notes included in this annual report. This report contains forward-looking statements. In evaluating our business, you should carefully consider the information provided under the caption “Item 3. Key Information—D. Risk Factors” in this annual report. We caution you that our businesses and financial performance are subject to substantial risks and uncertainties. 

A. Operating Results

The following table sets forth a summary of our consolidated results of operations for the years indicated. This information should be read together with our consolidated financial statements and related notes included elsewhere in this annual report. The operating results in any year are not necessarily indicative of the results that may be expected for any future period.

Year ended December 31, 2024 compared to year ended December 31, 2023

Net Revenue

Our revenue is reported net of all VAT. We derive revenue primarily from the sales of manipulator arms, including installation services and warranty services for the manipulator arms sold, and the sales of accessories and raw materials for manipulator arms.

The following table sets forth the breakdown of our revenue by category for the periods indicated.

Compared with net revenue for the year ended December 31, 2023, our net revenue increased by $3.19 million, or 25.26%, for the year ended December 31, 2024, which was primarily attributable to (i) an increase in sales of manipulator arms, including installation and warranty services, by approximately $0.51 million; (ii) an increase in sales of manipulator arms accessories by approximately $0.44 million; (iii) an increase in sales of raw materials and scraps by approximately $2.27 million; and (iv) a decrease in sales of installation services by approximately $0.04 million. The year-over-year increase in sales revenue for fiscal year 2024, in comparison to fiscal year 2023, can be attributed to two key factors: expanded procurement commitments from legacy clients and strategic market penetration through the acquisition of 58 new customers. The substantial growth in existing client orders reflects three critical industry developments: escalating demand within the injection molding industry, expansions in production capacity among major clients, and increased needs for manipulator arms solutions. This growth trajectory was further reinforced by our strategic initiatives aimed at market penetration. Our sales team exhibited outstanding performance in nurturing domestic end-market industrial clients across essential sectors, including home appliances, automotive manufacturing, and medical device production. Simultaneously, proactive development of overseas markets in emerging economies—particularly in Southeast Asia and India—resulted in significant order increases across all targeted regions, underscoring the success of our geographical diversification strategies. The increase in sales of raw materials and scraps was significantly correlated with the growth in sales of manipulator arms, particularly with our primary client, Shantou Haisu Machinery Co., Ltd., which has procured a substantial quantity of raw materials in conjunction with its order of manipulator arms in 2024.

Cost of Revenue

Our cost of revenue consists primarily of (i) costs of raw materials, such as servo motors and servo systems, linear guides, steel plates, and planetary reducers, (ii) sales tax and additions, and (iii) labor costs, production overhead, and other costs related to the business operation.

The following table sets forth the breakdown of our cost of revenue by category for the periods indicated.

Our cost of revenue increased by 33.03% from approximately $8.45 million for the year ended December 31, 2023, to approximately $11.24 million for the year ended December 31, 2024, which was primarily attributable to our business growth and an increase in sales resulting in an increase in costs accordingly.

Gross profit and gross profit margin

Gross profit represents our revenue less cost of sales. Our gross profit margin represents our gross profit as a percentage of our revenue. For the years ended December 31, 2024 and 2023, our gross profit was approximately $4.59 million and $4.16 million, respectively, and our gross profit margin was 29.03% and 32.98%, respectively.

The following table sets forth our gross profit and gross profit margin for the years indicated.

Compared with the gross profit for the year ended December 31, 2023, our gross profit increased by approximately $0.39 million, or 9.49%, for the year ended December 31, 2024, mainly due to (i) an increase in gross profit from sales of manipulator arms, including installation and warranty services, by approximately $0.47 million; (ii) a decrease in gross profit from sales of manipulator arms accessories by approximately $0.11 million; (iii) an increase in gross profit from sales of raw materials and scraps by approximately $0.06 million; and (iv) a decrease in gross profit from sales of installation services by approximately $0.03 million.

Operating expenses

The following table sets forth the breakdown of our operating expenses for the years ended December 31, 2024 and 2023.

Selling expenses

Selling expenses mainly consist of (i) salaries and benefits of sales and marketing staff, (ii) traveling costs of sales and marketing staff, (iii) sales commissions, (iv) advertising costs, and (v) other expenses, such as certification fees.

Our selling expenses increased by 36.46% from approximately $0.69 million for the year ended December 31, 2023, to $0.94 million for the year ended December 31, 2024. The increase was mainly due to (i) an increase in exhibition expenses by approximately $0.12 million, resulting from participation in an additional four exhibitions across four cities in China in 2024; (ii) an increase in salary by approximately $0.12 million, as the growth in revenue has led to higher commissions for sales personnel, alongside the addition of three sales representatives in 2024 compared to 2023; and (iii) an increase in transportation fees by approximately $0.19 million, due to increase of sales to customers from other provinces, such as Guangdong, Zhejiang, and Jiangsu, resulting in a rise in related transportation costs.

General and administrative expenses

General and administrative expenses mainly consist of (i) salaries and benefits for the Operating Entity’s administrative personnel, (ii) professional fees, which primarily consist of legal, accounting, and consulting fees we paid in connection with our planned public offering, (iii) utilities expenses, which consist of water and electricity charges for administrative purposes, (iv) business and office operation fees, and (v) other expenses, which primarily include expenses of freight, traveling, conferences, and other miscellaneous expenses for administrative purposes.

Our general and administrative expenses increased by 5.58% from approximately $0.72 million for the year ended December 31, 2023, to $0.76 million for the year ended December 31, 2024, which was primarily attributable to an increase in consulting fees for external public relations and internal control.

Research and development expenses

Research and development expenses mainly comprise costs of materials used for experiments, employee costs, and other daily expenses related to research and development activities.

Our research and development expenses increased by 14.76% from approximately $1.36 million for the year ended December 31, 2023, to approximately $1.56 million for the year ended December 31, 2024, which was primarily attributable to increased investment in research and corresponding material consumption to enhance the quality and performance of manipulator arms.

Other income (expenses)

Other income (expenses) primarily consists of (i) government subsidies provided as incentives from the PRC local government to encourage the expansion of local business; (ii) interest income on bank deposits and interest expenses of short-term bank borrowings; and (iii) foreign exchange gains or losses.

Our other income increased from approximately $0.11 million for the year ended December 31, 2023, to approximately $0.53 million for the year ended December 31, 2024, primarily due to an increase in government subsidies, particularly designated for the company’s research and development expenditures.

Our other expenses decreased from approximately $0.02 million for the year ended December 31, 2023, to $8,370 for the year ended December 31, 2024.

Income tax expenses

Cayman Islands and BVI

We are incorporated in the Cayman Islands and our wholly own subsidiary is incorporated in the BVI. Under the current laws of the Cayman Islands and the BVI, these entities are not subject to income or capital gains taxes. In addition, dividend payments are not subject to withholdings tax in the Cayman Islands or the BVI.

Hong Kong

In accordance with the Inland Revenue Ordinance (Chapter 112 of the Laws of Hong Kong), a company incorporated or registered in Hong Kong is subject to profit tax in respect of its assessable profits arising in or derived from Hong Kong. For the year of assessment 2018/2019 onwards, the Hong Kong profit tax rates are 8.25% on assessable profits up to HK$2,000,000, and 16.5% on any part of assessable profits over HK$2,000,000.

PRC

Generally, under the Enterprise Income Tax Law of PRC, PRC enterprises are subject to a uniform 25% enterprise income tax rate, while preferential tax rates, tax holidays, and tax exemptions may be granted on a case-by-case basis.

According to the Notice on Implementation of Preferential Tax Policies for Small Low-Profit Enterprises and Individual Industrial and Commercial Households, jointly issued by the Ministry of Finance and the SAT on April 7, 2021, for the year ended December 31, 2021 and 2022, once an enterprise meets certain requirements and is identified as a small-scale and low-profit enterprise, the taxable income below $0.16 million was subject to a reduced tax rate of 2.5%, the taxable income between $0.16 million and $0.47 million was subject to a reduced rate of 10%.

The Notice on Implementation of Preferential Tax Policies for Small Low-Profit Enterprises further reduce the tax rate for small-scale and low-profit enterprises on March 14, 2022. It was stipulated that from January 1, 2022 to December 31, 2024, the taxable income between $0.16 million and $0.47 million of a qualified small-scale and low-profit enterprise is subject to a further reduced rate of 5%.

Ewatt was qualified as a small-scale and low-profit enterprise and enjoyed a reduced income tax rate of 2.5% because its taxable income was below $0.16 million for the year ended December 31, 2022.

In addition, the Enterprise Income Tax Law grants preferential tax treatment to a High and New Technology Enterprise (“HNTE”), if the enterprise meets the requirements by local government and maintains the HNTE status by re-applying every three years. Under this preferential tax treatment, HNTEs are entitled to an income tax rate of 15%. If Ewatt is not classified as a small-scale or low-profit enterprise by the local government and therefore does not qualify for the preferential tax rates outlined in the Notice on Implementation of Preferential Tax Policies for Small Low-Profit Enterprises in the future, it will still be eligible for a reduced income tax rate of 15% from December 2022 to December 2025 due to its status as an HNTE.

For the year ended December 31, 2024, Ewatt was eligible for a reduced income tax rate of 15% as an HNTE.

Our income tax expenses were $14,838 for the year ended December 31, 2024 and income tax benefits were $11,348 for the year ended December 31, 2023.

Net income

As a result of the foregoing, our net income increased by 18.78%, from approximately $1.35 million for the year ended December 31, 2023, to approximately $1.61 million for the year ended December 31, 2024.

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

Net Revenue

Our revenue is reported net of all VAT. We derive revenue primarily from the sales of manipulator arms, including installation services and warranty services for the manipulator arms sold, and the sales of accessories and raw materials for manipulator arms.

The following table sets forth the breakdown of our revenue by category for the periods indicated.

Compared with net revenue for the year ended December 31, 2022, our net revenue increased by $5.96 million, or 89.57%, for the year ended December 31, 2023, which was primarily attributable to (i) an increase in sales of manipulator arms, including installation and warranty services, by approximately $3.63 million; (ii) an increase in sales of manipulator arms accessories by approximately $0.86 million; (iii) an increase in sales of raw materials and scraps by approximately $1.44 million; and (iv) an increase in sales of installation services by approximately $0.02 million. The increase in net revenue is due to rising market demand and our enhanced business development. Meanwhile, we improved our production processes, optimized product features, and increased our manufacturing capacity and product competitiveness.

Cost of Revenue

Our cost of revenue consists primarily of (i) costs of raw materials, such as servo motors and servo systems, linear guides, steel plates, and planetary reducers, (ii) sales tax and additions, and (iii) labor costs, production overhead, and other costs related to the business operation.

The following table sets forth the breakdown of our cost of revenue by category for the periods indicated.

Our cost of revenue increased by 93.91% from approximately $4.36 million for the year ended December 31, 2022, to approximately $8.45 million for the year ended December 31, 2023, which was primarily attributable to our business growth and an increase in sales resulting in an increase in costs accordingly.

Gross profit and gross profit margin

Gross profit represents our revenue less cost of sales. Our gross profit margin represents our gross profit as a percentage of our revenue. For the years ended December 31, 2023 and 2022, our gross profit was approximately $4.16 million and $2.29 million, respectively, and our gross profit margin was 32.98% and 34.48%, respectively.

The following table sets forth our gross profit and gross profit margin for the years indicated.

Compared with the gross profit for the year ended December 31, 2022, our gross profit increased by approximately $1.87 million, or 81.33%, for the year ended December 31, 2023, mainly due to (i) an increase in gross profit from sales of manipulator arms, including installation and warranty services, by approximately $1.14 million; (ii) an increase in gross profit from sales of manipulator arms accessories by approximately $0.31 million; (iii) an increase in gross profit from sales of raw materials and scraps by approximately $0.40 million; and (iv) an increase in gross profit from sales of installation services by approximately $0.02 million. The rise in gross profit can be attributed primarily to the growth in sales of manipulator arms and installation and warranty services and a decrease in related cost of sales, which gross profit increased by approximately $1.14 million.

The gross profit margin decreased from 34.48% for the year ended December 31, 2022 to 32.98% for the year ended December 31, 2023, due to our revised business strategy aimed at lowering unit product margins, boosting product sales, and expanding our market presence.

Operating expenses

The following table sets forth the breakdown of our operating expenses for the years ended December 31, 2023 and 2022.