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Blue-Touch Holdings Group Co., Ltd. – IPO: ‘F-1/A’ on 3/22/24

On:  Friday, 3/22/24, at 3:57pm ET   ·   Accession #:  1104659-24-37849   ·   File #:  333-267699

Previous ‘F-1’:  ‘F-1/A’ on 12/14/23   ·   Latest ‘F-1’:  This Filing   ·   4 References:   To:  Blue-Touch Holdings Group Co., Ltd. – ‘F-1/A’ on 11/17/23 To:  Blue-Touch Holdings Group Co., Ltd. – ‘F-1/A’ on 9/27/23 To:  Blue-Touch Holdings Group Co., Ltd. – ‘F-1/A’ on 3/10/23 To:  Blue-Touch Holdings Group Co., Ltd. – ‘F-1’ on 9/30/22 

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  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 3/22/24  Blue-Touch Holdings Gp Co., Ltd.  F-1/A                  7:2.3M                                   Toppan Merrill/FA

Document/Exhibit                   Description                      Pages   Size 

 1: F-1/A       Pre-Effective Amendment to Registration Statement   HTML   1.62M 
                by a Foreign Issuer                                              
 2: EX-4.1      Instrument Defining the Rights of Security Holders  HTML      7K 
 5: EX-10.10    Material Contract                                   HTML     32K 
 3: EX-10.8     Material Contract                                   HTML     27K 
 4: EX-10.9     Material Contract                                   HTML     12K 
 6: EX-23.1     Consent of Expert or Counsel                        HTML      5K 
 7: EX-FILING FEES  Filing Fees                                     HTML     39K 

As filed with the U.S. Securities and Exchange Commission on March 22, 2024.

Registration No. 333-267699

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

AMENDMENT NO. 5
TO

FORM F-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

Blue-Touch Holdings Group Co., Ltd

(Exact name of registrant as specified in its charter)

No.1 Pengda Road, Hunan Town, Changle District

Fuzhou City, Fujian Province

The People’s Republic of China 350212
+86-183-5916-6777

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Cogency Global Inc.
122 East 42nd Street, 18th Floor
New York, NY 10168
(212) 947-7200

(Name, address, including zip code, and telephone number, including area code, of agent for service)

With a Copy to:

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

The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the U.S. Securities and Exchange Commission, acting pursuant to such Section 8(a), may determine.

SUBJECT TO COMPLETION

PRELIMINARY PROSPECTUS DATED [●], 2024

2,000,000 Ordinary Shares

Blue-Touch Holdings Group Co., Ltd

This is an initial public offering of the ordinary shares of Blue-Touch Holdings Group Co., Ltd (the “Company”), a holding company incorporated in the Cayman Islands. The Company is offering on a firm commitment basis its ordinary shares, par value US$0.0005 per share (“Ordinary Shares”). Prior to the completion of this offering, there has been no public market for the Ordinary Shares. The offering is being made on a “firm commitment” basis by Univest Securities, LLC (the “Underwriter”). See “Underwriting.” The Company expects the initial public offering price to be in the range of $4.00 to $6.00 per Ordinary Share. The Company has reserved the symbol “BBCH” for purposes of listing the Ordinary Shares on the Nasdaq Capital Market (“Nasdaq”). At this time, Nasdaq has not yet approved the Company’s application to list the Ordinary Shares. It is a condition to the closing of this offering that the Ordinary Shares qualify for listing on Nasdaq. There is no assurance that the Ordinary Shares will be approved for listing on Nasdaq.

Unless otherwise stated, as used in this prospectus, the terms “Blue-Touch” and the “Company” refer to Blue-Touch Holdings Group Co., Ltd, an exempted company with limited liability incorporated under the laws of the Cayman Islands, and when describing Blue-Touch Holdings Group Co., Ltd’s consolidated financial information, also include the Company’s subsidiaries organized under the laws of the People’s Republic of China (the “PRC”); the term “the WFOE” refers to Fujian Blue-Touch Holdings Group Co., Ltd., the Company’s wholly owned direct subsidiary organized under the laws of the PRC; and the term “the operating entity” refers to Fujian Blue-Touch Technology Co., Ltd., the Company’s wholly owned indirect subsidiary organized under the laws of the PRC.

Investors are cautioned that the Ordinary Shares offered in this prospectus are shares of the Cayman Islands holding company, which has no material operations of its own and conducts substantially all of its operations through the operating entity in the PRC. Therefore, investors will not directly hold equity interests in any of the PRC subsidiaries. Our Company does not use a variable interest entity structure. Investors are also cautioned that our organizational structure involves risks and Chinese regulatory authorities could disallow our organizational structure, which would likely result in a material change in our operations and/or a material change in the value of the Ordinary Shares, and could cause the value of the Ordinary Shares to significantly decline or become worthless. See “Prospectus Summary—PRC-related Risk Disclosure” beginning on page 4, and “Risk Factors—Risks Related to Doing Business in the PRC” beginning on page 19 for a discussion of risks facing our Company and the offering as a result of conducting substantially all of our operations through the operating entity in the PRC.

Investing in the Ordinary Shares involves a high degree of risk, including the risk of losing your entire investment. The risks could result in a material change in the value of the securities the Company is registering for sale or could significantly limit or completely hinder the Company’s ability to offer or continue to offer securities to investors. See “Risk Factors” beginning on page 12 to read about factors you should consider before buying our Ordinary Shares.

As substantially all of the Company’s operations are conducted by the operating entity in China, the Company is subject to legal and operational risks associated with having substantially all of its operations in China, including risks related to the legal, political and economic policies of the Chinese government, the relations between China and the United States, or Chinese or United States regulations, which risks could result in a material change in the operations and/or cause the value of the Company’s Ordinary Shares to significantly decline or become worthless, and affect the Company’s ability to offer or continue to offer securities to investors. Recently, the PRC government initiated a series of regulatory actions and made a number of public statements on the regulation of business operations in China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas, adopting new measures to extend the scope of cybersecurity reviews, and expanding efforts in anti-monopoly enforcement. As advised by our PRC legal counsel, AllBright Law Offices (Fuzhou), as of the date of this prospectus, the Company is not directly subject to these regulatory actions or statements, as the Company has not implemented any monopolistic behavior and its business does not involve the collection of user data, implicate cybersecurity, or involve any other type of restricted industry. However, we are required to file with the China Securities Regulatory Commission (the “CSRC”) for this offering. As of the date of this prospectus, we have submitted a filing report and other required materials in connection with the CSRC filing procedures to the CSRC. There is no assurance that we can complete such filing in a timely manner or even at all. Any failure by us to comply with such filing requirements may result in an order to rectify, warnings and fines against us and could materially hinder our ability to offer or continue to offer our securities. See “Risk Factors—Risks Related to Doing Business in the PRC” beginning on page 19 for a discussion of these legal and operational risks and other information that should be considered before purchasing our Ordinary Shares.

In addition, the Ordinary Shares may be prohibited to trade on a national exchange or over-the-counter under the Holding Foreign Companies Accountable Act (the “HFCA Act”), if the Public Company Accounting Oversight Board (the “PCAOB”) is unable to inspect or investigate completely the Company’s auditor for two consecutive years. On December 16, 2021, the PCAOB issued its determinations that the PCAOB was 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, which determinations were vacated on December 15, 2022. The Company’s auditor, TPS Thayer, LLC, is an independent registered public accounting firm with the PCAOB headquartered in Sugar Land, Texas, with the last inspection in September 2022, and as an auditor of publicly traded companies in the U.S., is subject to laws in the U.S. pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards. The PCAOB currently has access to inspect the working papers of the Company’s auditor and such auditor is not subject to the determinations announced by the PCAOB on December 16, 2021. On August 26, 2022, the PCAOB signed a Statement of Protocol (the “SOP”) Agreement with the CSRC and China’s Ministry of Finance. The SOP, together with two protocol agreements governing inspections and investigations (together, the “SOP Agreements”), establish a specific, accountable framework to make possible complete inspections and investigations by the PCAOB of audit firms based in mainland China and Hong Kong, as required under U.S. law. On December 15, 2022, the PCAOB determined that the PCAOB was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and voted to vacate its previous determinations to the contrary. However, should PRC authorities obstruct or otherwise fail to facilitate the PCAOB’s access in the future, the PCAOB will consider the need to issue a new determination. On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, and on December 29, 2022, legislation entitled “Consolidated Appropriations Act, 2023” (the “Consolidated Appropriations Act”) was signed into law by President Biden, which contained, among other things, an identical provision to the Accelerating Holding Foreign Companies Accountable Act and amended the HFCA Act by requiring the U.S. Securities and Exchange Commission (the “SEC”) to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three, thus reducing the time period for triggering the delisting of our Company and the prohibition of trading in our securities if the PCAOB is unable to inspect our accounting firm at such future. If trading in the Ordinary Shares is prohibited under the HFCA Act in the future because the PCAOB determines that it cannot inspect or fully investigate our auditor at such future time, Nasdaq may determine to delist the Ordinary Shares and trading in the Ordinary Shares could be prohibited. See “Risk Factors—Risks Related to our Ordinary Shares and This Offering—Recent joint statement by the SEC and the PCAOB proposed rule changes submitted by Nasdaq, and the Holding Foreign Companies Accountable Act passed by the U.S. Senate all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties to our offering” on page 29.

As a Cayman Islands holding company, the Company may rely on dividends and other distributions on equity paid by its PRC subsidiaries for cash and financing requirements. If any of the PRC subsidiaries incurs debt on their own behalf in the future, the instruments governing such debt may restrict their ability to pay dividends to the Company. However, none of the PRC subsidiaries have made any dividends or other distributions to the Company as of the date of this prospectus. In the future, cash proceeds raised from overseas financing activities, including this offering, may be transferred by the Company to the PRC subsidiaries via capital contribution or shareholder loans, as the case may be. As of the date of this prospectus, the Company has not made any dividend or distributions to U.S. investors, and there were no cash flows between the Company and the PRC subsidiaries. There are no specific cash management policies and procedures in place that dictate how funds are transferred through our organization. To the extent cash or assets in the business are in the PRC or a PRC entity, the funds or assets may not be available to fund operations or for other use outside of the PRC due to interventions in or the imposition of restrictions and limitations on the ability of the Company or the PRC subsidiaries by the PRC government to transfer cash or assets. See “Risk Factors” and “Prospectus Summary—Asset Transfers Between the Holding Company and Our Subsidiaries.”

The Company is both an “emerging growth company” and a “foreign private issuer” as defined under the U.S. federal securities laws and, as such, may elect to comply with certain reduced public company reporting requirements for this and future filings. See “Prospectus Summary—Implications of Being an Emerging Growth Company” and “Prospectus Summary—Implications of Being a Foreign Private Issuer.”

As of the date of this prospectus, the Company and the PRC subsidiaries have not distributed any earnings, nor do they have any plan to distribute earnings in the foreseeable future. As of the date of this prospectus, none of the PRC subsidiaries have made any dividends or distributions to the Company and the Company has not made any dividends or distributions to the Company’s shareholders or U.S. investors. The Company intends to keep any future earnings to finance business operations, and does not anticipate that any cash dividends will be paid in the foreseeable future. If the Company determines to pay dividends on any of the Ordinary Shares in the future, as a holding company, the Company will be dependent on receipt of funds from the WFOE, which in turn will rely on payments made from the operating entity. There were no cash transfers and transfers of other assets between the Company and the PRC subsidiaries during the fiscal years ended December 31, 2023, and 2022. See “Prospectus Summary—Asset Transfers Between the Holding Company and Our Subsidiaries” and the Company’s audited consolidated financial statements included elsewhere in this prospectus.

This offering is being conducted on a firm commitment basis. The Underwriter is obligated to take and pay for all of the Ordinary Shares if any such Ordinary Shares are taken.

The Underwriter expects to deliver the Ordinary Shares against payment as set forth under “Underwriting,” on or about [●], 2024.

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

Prospectus dated [●], 2024.

TABLE OF CONTENTS

About this Prospectus

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

Conventions that Apply to this Prospectus

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

Our reporting and functional currency is the Renminbi. Solely for the convenience of the reader, this prospectus contains translations of some RMB amounts into U.S. dollars, at specified rates. The results of operations denominated in foreign currency are translated at the average rate of exchange during the reporting period, which is RMB7.0558 to US$1.00 and RMB6.7609 to US$1.0 for the years ended December 31, 2023 and 2023, respectively. Assets and liabilities denominated in foreign currency at the balance sheet date are translated at the applicable rate of exchange in effect at that date, which is RMB7.0827 to US$1.00 and RMB6.9646 to US$1.00 for the years ended December 31, 2023 and 2022, respectively, as published by the Federal Reserve Board on December 31, 2023 and 2022, respectively. The Company has made rounding adjustments to reach some of the figures included in this prospectus. Consequently, numerical figures shown as totals in some tables may not be arithmetic aggregations of the figures that precede them.

Our fiscal year end is December 31. References to a particular “fiscal year” are to our fiscal year ended December 31 of that calendar year. Our audited consolidated financial statements have been prepared in accordance with the generally accepted accounting principles in the United States (the “U.S. GAAP”).

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and financial statements included elsewhere in this prospectus. In addition to this summary, we urge you to read the entire prospectus carefully, especially the risks of investing in our Ordinary Shares, discussed under “Risk Factors,” before deciding whether to buy our Ordinary Shares.

Corporate Structure

The Company is a holding company incorporated in the Cayman Islands with no material operations of its own. The Company conducts its operations through Fujian Blue-Touch Technology Co., Ltd., the Company’s wholly owned indirect subsidiary in the PRC. The Ordinary Shares offered in this offering are shares of the Cayman Islands holding company and not shares of the PRC subsidiaries. Therefore, you will not directly hold any equity interests in the PRC subsidiaries. The Company was incorporated on September 27, 2021 as a Cayman Islands exempted company. Exempted companies are Cayman Islands companies conducting business mainly outside the Cayman Islands and, as such, are exempted from complying with certain provisions of the Companies Act (As Revised).

The following diagram illustrates our corporate structure upon completion of our initial public offering (“IPO”) based on 2,000,000 Ordinary Shares being offered. For more details on our corporate history, please refer to “Corporate History and Structure.”

Notes:

For details of each shareholder’s ownership, please refer to the beneficial ownership table in the section captioned “Principal Shareholders.”

Business Overview

The Company is an offshore holding company incorporated in the Cayman Islands. The Company does not conduct any substantive operations on its own but instead conducts its business operations in China through the operating entity Fujian Blue-Touch Technology Co., Ltd. The operating entity commenced its operation in 2014 and is principally engaged in designing, developing, and selling baby skincare products and toiletries, as well as household cleaning products under the Blue-Touch brand. As of the date of this prospectus, the operating entity pursues product development through collaboration with third-party research companies, and the operating entity’s success on product development depends on its collaboration with such third-party research companies. The operating entity’s internal staff are responsible for determining the research direction and initiating product proposals, and they also engage with detailed discussions and progress tracking in the research and development processes of third-party research companies. The third-party research companies are responsible for conducting the research and development of products.  The Company, through the operating entity, aims to become a leading provider of baby skincare products and toiletries in China. In the fiscal years ended December 31, 2023, and 2022, the Company’s revenue was $9,656,105 and $8,265,451, respectively, representing a growth rate of 16.82%. For the same fiscal years, the Company’s net income was $1,354,341 and $1,111,133, respectively, representing a growth rate of 21.89%.

Competitive Strengths

We believe that the following competitive strengths have contributed to the operating entity’s success and differentiated it from its competitors:

Growth Strategies

The operating entity intends to implement the following strategies to grow its business:

The Impact of the COVID-19 Pandemic

In early 2020, the operating entity experienced logistical stagnation and business disruptions due to the impact of the COVID-19 pandemic. In May 2020, the logistical conditions were restored, because the pandemic was contained to some extent and the business restrictions were eased in the areas where the operating entity, its manufacturers and distributors are located. At about the same time, the operating entity launched its camellia oil baby skincare products and toiletries on the market. As a result, the operating entity gradually recovered from the negative impact of the COVID-19 pandemic on its results of operations. In response to the COVID-19 pandemic, and for the safety of the employees, the operating entity implemented various safety precautions in strict compliance with government regulations, policies and mandates. The operating entity also encouraged employees of non-essential job roles to work from home during the height of the COVID-19 pandemic. Since May 2020, although production and logistical activities in certain parts of China were disrupted by the regional COVID-19 lockdowns, the Chinese government has eased the nationwide COVID-19 restrictions, and as a result, the nationwide production and logistical activities in China have gradually resumed. Since May 2020, the operating entity’s operations, including the activities of its manufacturers or distributors, have not endured any material adverse impact from the COVID-19 restrictions. As of the date of this prospectus, the Chinese government has eased the COVID-19 restrictions. We expect that there will not be any nationwide government-mandated lockdowns in China in the foreseeable future. Even if some of the operating entity’s manufacturers and distributors are subject to regional lockdowns, the operating entity expects to take prompt measures to lessen any disruptions in the production and logistical activities, including cooperating with alternative manufacturers and additional distributors. See “Management’s Discussion And Analysis Of Financial Condition And Results Of Operations—Impact of COVID-19.”

PRC-related Risk Disclosure

The Company is subject to certain legal and operational risks associated with having the majority of its operations in China. As a result, these risks may result in material changes in the operations of the Company’s PRC subsidiaries, significant depreciation of the value of the Ordinary Shares, or a complete hindrance of the Company’s ability to offer, or continue to offer, securities to investors. Recently, the PRC government adopted a series of regulatory actions and issued statements to regulate business operations in China, including cracking down on illegal activities in the securities market, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. As of the date of this prospectus, the Company and the PRC subsidiaries have not been involved in any investigations on cybersecurity review initiated by any PRC regulatory authority, nor has any of them received any inquiry, notice, or sanction. As confirmed by our PRC legal counsel, AllBright Law Offices (Fuzhou), we are not subject to cybersecurity review with the Cyberspace Administration of China (the “CAC”), since we currently do not have over one million users’ personal information and do not anticipate that we will be collecting over one million users’ personal information in the foreseeable future, which we understand might otherwise subject us to the cybersecurity review with the CAC. See “Risk Factors—Risks Related to Doing Business in the PRC—Recent greater oversight by the CAC over data security, particularly for companies seeking to list on a foreign exchange, could impact our offering.”

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, which were made available to the public on July 6, 2021. The Opinions emphasized the need to strengthen the administration over illegal securities activities, and the need to strengthen the supervision over overseas listings by Chinese companies. On December 24, 2021, the China Securities Regulatory Commission (the “CSRC”) released the Administrative Provisions of the State Council Regarding the Overseas Issuance and Listing of Securities by Domestic Enterprises (Draft for Comments) (the “Draft Administrative Provisions”) and the Measures for the Overseas Issuance of Securities and Listing Record-Filings by Domestic Enterprises (Draft for Comments) (the “Draft Filing Measures”, and collectively with the Draft Administrative Provisions, the “Draft Rules Regarding Overseas Listing”), which stipulate that Chinese-based companies, or the issuer, shall fulfill the filing procedures after the issuer makes an application for initial public offering and listing in an overseas market, and certain overseas offering and listing such as those that constitute a threat to or endanger national security, as reviewed and determined by competent authorities under the State Council in accordance with law, may be prohibited under the Draft Rules Regarding Overseas Listing. On February 17, 2023, with the approval of the State Council, the CSRC released the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the “Trial Measures”) and five supporting guidelines, effective on March 31, 2023. According to the Trial Measures, among other requirements, (1) domestic companies that seek to offer or list securities overseas, both directly and indirectly, should fulfill the filing procedures with the CSRC; if a domestic company fails to complete the filing procedures, such domestic company may be subject to administrative penalties; and (2) where a domestic company seeks to indirectly offer and list securities in an overseas market, the issuer shall designate a major domestic operating entity responsible for all filing procedures with the CSRC, and such filings shall be submitted to the CSRC within three business days after the submission of the overseas offering and listing application. Subsequent securities offerings of an issuer in the same overseas market where it has previously offered and listed securities shall be filed with the CSRC within 3 working days after the offering is completed. On the same day, the CSRC also held a press conference for the release of the Trial Measures and issued the Notice on Administration for the Filing of Overseas Offering and Listing by Domestic Companies, which clarifies that (1) on or prior to the effective date of the Trial Measures, domestic companies that have already submitted valid applications for overseas offering and listing but have not obtained approval from overseas regulatory authorities or stock exchanges may reasonably arrange the timing for submitting their filing applications with the CSRC, and must complete the filing before the completion of their overseas offering and listing; (2) a six-month transition period will be granted to domestic companies which, prior to the effective date of the Trial Measures, have already obtained the approval from overseas regulatory authorities or stock exchanges, but have not completed the indirect overseas listing; if domestic companies fail to complete the overseas listing within such six-month transition period, they shall file with the CSRC according to the requirements; and (3) the CSRC will solicit opinions from relevant regulatory authorities and complete the filing of the overseas listing of companies with contractual arrangements which duly meet the compliance requirements, and support the development and growth of these companies.

According to our PRC legal counsel, AllBright Law Offices (Fuzhou), we are required to file with the CSRC for this offering. As of the date of this prospectus, we have submitted a filing report and other required materials in connection with the CSRC filing procedures to the CSRC. We expect to submit any additional materials as and when requested by the CSRC on a timely basis, and expect to obtain CSRC approval prior to our proposed initial public offering and listing on Nasdaq. If we seek a subsequent securities offering in the same overseas market in the future, we will be required to file with the CSRC after the subsequent offering is completed. However, if it is later determined that we have not complied with the filing procedures according to the Trial Measures or if our filing materials are determined to contain false records, misleading statements or material omissions, the CSRC may order us to rectify such non-compliance, issue a warning, and impose a fine of not less than RMB1 million and not more than RMB10 million. In addition, any failure to fully comply with new regulatory requirements may significantly limit or completely hinder our ability to offer or continue to offer our Ordinary Shares, cause significant disruption to our operations, and severely damage our reputation, which would materially and adversely affect our financial condition and results of operations and cause our Ordinary Shares to significantly decline in value or become worthless. As of the date of this prospectus, neither we nor any of our PRC subsidiaries have received any inquiry, notice, warning or sanctions regarding our planned overseas listing from the CSRC or any other PRC governmental authorities. However, modified or new laws and regulations will affect our operations and our ability to accept foreign investments and list on a U.S. stock exchange. For example, the Standing Committee of the National People’s Congress (the “SCNPC”) or other PRC regulatory authorities may in the future promulgate laws, regulations or implementing rules that may require our Company, or any of our PRC subsidiaries, to obtain additional regulatory approvals from Chinese authorities before listing in the U.S.

In addition, the Ordinary Shares may be prohibited from being traded on a national exchange or over-the-counter under the Holding Foreign Companies Accountable Act (the “HFCA Act”), if the Public Company Accounting Oversight Board (the “PCAOB”) is unable to inspect or investigate completely the Company’s auditor for two consecutive years. On December 16, 2021, the PCAOB issued its determinations that the PCAOB was 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, which determinations were vacated on December 15, 2022. The Company’s auditor, TPS Thayer, LLC, is an independent registered public accounting firm with the PCAOB headquartered in Sugar Land, Texas, with the last inspection in September 2022, and as an auditor of publicly traded companies in the U.S., is subject to laws in the U.S., pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards. The PCAOB currently has access to inspect the working papers of the Company’s auditor and such auditor is not subject to the determinations announced by the PCAOB on December 16, 2021. On August 26, 2022, the PCAOB signed a Statement of Protocol (the “SOP”) Agreement with the CSRC and China’s Ministry of Finance. The SOP, together with two protocol agreements governing inspections and investigations (together, the “SOP Agreements”), establish a specific, accountable framework to make possible complete inspections and investigations by the PCAOB of audit firms based in mainland China and Hong Kong, as required under U.S. law. On December 15, 2022, the PCAOB determined that the PCAOB was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and voted to vacate its previous determinations to the contrary. However, should PRC authorities obstruct or otherwise fail to facilitate the PCAOB’s access in the future, the PCAOB will consider the need to issue a new determination. On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, and on December 29, 2022, legislation entitled “Consolidated Appropriations Act, 2023” (the “Consolidated Appropriations Act”) was signed into law by President Biden, which contained, among other things, an identical provision to the Accelerating Holding Foreign Companies Accountable Act and amended the HFCA Act by requiring the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three, thus reducing the time period for triggering the delisting of our Company and the prohibition of trading in our securities if the PCAOB is unable to inspect our accounting firm at such future time. If trading in the Ordinary Shares is prohibited under the HFCA Act in the future because the PCAOB determines that it cannot inspect or fully investigate our auditor at such future time, Nasdaq may determine to delist the Ordinary Shares and trading in the Ordinary Shares could be prohibited. See “Risk Factors—Risks Related to our Ordinary Shares and This Offering—Recent joint statement by the SEC and the PCAOB proposed rule changes submitted by Nasdaq, and the Holding Foreign Companies Accountable Act passed by the U.S. Senate all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties to our offering” on page 29.

The PRC subsidiaries currently have obtained all permissions and approvals to operate in China in compliance with relevant PRC laws and regulations, including the business license. The business license is a permit that allows companies to conduct specific business within the government’s geographical jurisdiction. As of the date of this prospectus, neither the Company nor the operating entity has been subject to any investigation, nor received any notice, warning, or sanction from relevant government authorities related to non-compliance with the laws and regulations relevant to cosmetic safety. The operating entity has properly filed for all of the cosmetic products that the operating entity sells in accordance with the relevant PRC laws and regulations. All ingredients used in the products that the operating entity sells are permitted to be used in the production of cosmetics, as required by the applicable governmental authorities.

Asset Transfers Between the Holding Company and Our Subsidiaries

As of the date of this prospectus, there have been no cash transfers or transfers of other assets between the Company and the PRC subsidiaries. To the extent cash or assets in the business are in the PRC or a PRC entity, the funds or assets may not be available to fund operations or for other use outside of the PRC, due to interventions in or the imposition of restrictions and limitations on the ability of the Company or the PRC subsidiaries by the PRC government to transfer cash or assets. There are no specific cash management policies and procedures in place that dictate how funds are transferred through our organization.

Dividends or Distributions Made to our Company and U.S. Investors

As of the date of this prospectus, none of the PRC subsidiaries have made any dividends or distributions to the Company, and the Company has not made any dividends or distributions to its shareholders or U.S. investors. The Company intends to keep any future earnings to finance business operations, and does not anticipate that any cash dividends will be paid in the foreseeable future.

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

If the Company determines to pay dividends on any of the Ordinary Shares in the future, as a holding company incorporated in the Cayman Islands, the Company will be dependent on receipt of funds from the WFOE. The WFOE, in turn, will be dependent on the receipt of funds from the operating entity.

The WFOE is a wholly foreign-owned enterprise under the PRC law. The regulations governing the distribution of dividends paid by the WFOE include Corporate Law (1993) as lastly amended in 2009, the Foreign Investment Law and its implementing Regulations, and the Enterprise Income Tax Law (2007) as lastly amended in 2018 and its implementation Regulations (2007) as lastly amended in 2019.

Current PRC regulations permit the operating entity to pay dividends to the WFOE only out of its accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, each of the PRC subsidiaries in China 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. Each such entity in China is also required to further set aside a portion of its after-tax profits to fund the employee welfare fund, although the amount to be set aside, if any, is determined at the discretion of its board of directors. Although the statutory reserves can be used, among other purposes, to increase the registered capital and eliminate future losses in excess of retained earnings of the respective companies, the reserve funds are not distributable as cash dividends except in the event of liquidation.

The PRC government imposes controls on the conversion of RMB into foreign currencies and the remittance of currencies out of the PRC. Therefore, the Company may experience difficulties in complying with the administrative requirements necessary to obtain and remit foreign currency for the payment of dividends from the profits, if any. Furthermore, if the PRC subsidiaries incur debt on their own in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments. If the Company or the PRC subsidiaries are unable to receive all of the revenue from operations, the Company may be unable to pay dividends on the Ordinary Shares.

Cash dividends, if any, on the Ordinary Shares will be paid in U.S. dollars. The WFOE is considered a resident enterprise for PRC tax purposes, and any dividends that the operating entity pays to the WFOE 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%.

In order for the Company to pay dividends to its shareholders, the Company will rely on payments made from the operating entity to the WFOE, and the distribution of such payments to the Company. According to the PRC Enterprise Income Tax Law, such payments from the operating entity to the WFOE are subject to the PRC enterprise income tax at a rate of 25%.

Summary of Risk Factors

Investing in our Ordinary Shares involves significant risks. You should carefully consider all of the information in this prospectus before making an investment in our Ordinary Shares. Below please find a summary of the principal risks the Company faces, organized under relevant headings. These risks are discussed more fully in the section titled “Risk Factors.”

Below is a summary of certain risks related to doing business in the PRC:

Below is a summary of certain risks related to our business and industry:

Below is a summary of certain risks related to our Ordinary Shares and this offering:

Corporate Information

Our principal executive offices are located at No.1 Pengda Road, Hunan Town, Changle District, Fuzhou City, Fujian Province, China 350212, and our phone number is +86-183-5916-6777. Our registered office in the Cayman Islands is located at Second Floor, Century Yard, Cricket Square, P.O. Box 902, Grand Cayman KY1-1103, Cayman Islands, and the email of our registered office is info@tricorglobal.com. We maintain a corporate website at http://blue-touch.com.cn/. The information contained in, or accessible from, our website or any other website does not constitute a part of this prospectus. Our agent for service of process in the United States is Cogency Global Inc., 122 East 42nd Street, 18th Floor, New York, NY 10168.

Implications of Our Being an “Emerging Growth Company”

As a company with less than $1.235 billion in revenue during our last fiscal year, we qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or the “JOBS Act.” An “emerging growth company” may take advantage of reduced reporting requirements that are otherwise applicable to larger public companies. In particular, as an emerging growth company, we:

We intend to take advantage of all of these reduced reporting requirements and exemptions, including the longer phase-in periods for the adoption of new or revised financial accounting standards under §107 of the JOBS Act. Our election to use the phase-in periods may make it difficult to compare our financial statements to those of non-emerging growth companies and other emerging growth companies that have opted out of the phase-in periods under §107 of the JOBS Act.

Under the JOBS Act, we may take advantage of the above-described reduced reporting requirements and exemptions until we no longer meet the definition of an emerging growth company. The JOBS Act provides that we would cease to be an “emerging growth company” at the end of the fiscal year in which the fifth anniversary of our initial sale of common equity pursuant to a registration statement declared effective under the Securities Act occurred, if we have more than $1.235 billion in annual revenues, have more than $700 million in the market value of our Ordinary Share held by non-affiliates, or issue more than $1 billion in principal amount of non-convertible debt over a three-year period.

Foreign Private Issuer Status

We are a foreign private issuer within the meaning of the rules under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As such, we are exempt from certain provisions applicable to United States domestic public companies. For example:

THE OFFERING

RISK FACTORS

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

Risks Related to Our Business and Industry

The loss of multiple suppliers or a significant disruption or interruption in the supply chain may adversely affect the operating entity’s business.

The operating entity relies on the third-party manufacturers to source and obtain raw materials. During the fiscal years ended December 31, 2023 and 2022, the supply and price of raw materials remained stable. Raw materials, consisting chiefly of essential oils, chemicals, containers and packaging components, are purchased by third-party manufacturers from various suppliers. The loss of multiple suppliers or a significant disruption or interruption in the supply chain could have a material adverse effect on the manufacturing and packaging of the operating entity’s products. Regulatory action, such as restrictions on importation, or limits on the use of certain products, may also disrupt or interrupt the supply chain. In addition, the operating entity is subject to increases in the costs of raw materials or other commodities or, the impossibility of obtaining raw materials and packaging due to several factors beyond control, such as climate, agricultural production, legitimate access to genetic heritage and traditional associated knowledge, economic conditions, and transportation and processing costs. Each of these may adversely affect the operating entity’s profit margins if it is unable to pass along any higher costs in the form of price increases or otherwise achieve cost efficiencies. If there are any material shortages or delays in delivery of packaging materials, the operating entity’s ability to deliver the finished goods to points of sale may be materially adversely affected, and its reputation and sales may suffer material damage.

The operating entity relies on third parties to manufacture products. Any failure by or loss of a third-party manufacturer could result in delays and increased costs.

The operating entity does not have manufacturing facilities and relies on third-party manufacturers to produce products. However, there is no assurance that the third-party manufacturers will be able to meet the operating entity’s manufacturing requirements. There is no assurance that the operating entity would be able to renew the agreements or to negotiate new agreements with the third-party manufacturers at reasonable rates or on a timely basis. Other risks include reliance on third-party manufacturers for regulatory compliance, quality assurance, misappropriation of the operating entity’s intellectual property, limited ability to manage inventory, and possible breach of the manufacturing agreements by third-party manufacturers. Further, if any major third-party manufacturer suffers damage to facilities, loses benefits under material agreements, experiences power outages, encounters financial difficulties, is unable to secure necessary raw materials or suffers any other reduction in efficiency, the operating entity may experience significant business disruption. In the event of any such disruption, the operating entity would need to seek and source other qualified third-party manufacturers, which is likely to result in further delays and increased costs.

The operating entity’s business may face risks associated with logistics and distribution.

After accepting the finished products from the third-party manufacturers, the operating entity is responsible for delivering the products from its warehouse to its distributors’ storage facilities. If operations at the operating entity’s warehouse or the distributors’ storage facilities are adversely affected by factors beyond control, such as fire, natural disasters, disease outbreaks, pandemics, armed conflict, strikes and stoppages, power shortages, failures in the systems, forest fires and deforestation, and in the event that no other warehouse or storage facility is able to meet the demand of the region affected, the distribution of products to the regions supplied by the warehouse or storage facility will be impaired. Any significant interruptions, failures or changes in the logistics infrastructure that the operating entity uses to deliver products could prevent the timely or successful delivery of the products to the clients. If the operating entity is not able to expand or adjust the existing distribution networks in order to meet the supply needs, the operating entity’s business will be adversely affected.

The operating entity relies on distributors to distribute and sell its products.

The operating entity relies on distributors to distribute and sell the products in China. If the operating entity is unable to effectively manage such relationships with the distributors and the agreements under which the distributors operate, the operating entity’s results of operations and cash flows could be adversely impacted. If the distributors fail to meet their obligations to the operating entity, it could adversely impact the operating entity’s operations. Further, if a key distributor were to significantly reduce the inventory level of the operating entity’s products due to factors beyond control, such as increased offerings of other branded manufacturers, were to significantly tighten product delivery windows, or were to experience a significant business disruption, it may adversely affect the operating entity’s business.

Changes in consumer preferences may adversely affect the operating entity’s business, financial condition and operating results.

The operating entity operates in an industry that is subject to rapid and unpredictable changes in consumer demand and trends. The success of the operating entity’s strategy depends on its ability to foresee, evaluate and react effectively to changes in the spending levels of consumers and their preferences regarding skincare and other related products. The operating entity’s competitiveness depends in part on the successful creation of new products, as well as on consumer satisfaction and preferences in line with market trends. Consumer preferences and trends may change due to a variety of factors, such as changes in demographic trends, changes in the characteristics and ingredients of products, new market trends, climate, publicity, or a weak economy in which the operating entity operates. If the operating entity is unable to anticipate changes in consumer preferences or respond to changes in a timely and cost-effective manner, its business and results of operations could be materially adversely affected.

If the operating entity is unable to conduct marketing activities in a cost-effective manner, its results of operations and financial condition may be materially and adversely affected.

The operating entity utilizes a broad mix of marketing programs, including online advertising, social media marketing, and outdoor advertising activities within communities, to increase the publicity and word-of-mouth referrals of the products. The marketing programs are designed by a third-party advertising agency and supervised by the operating entity. There is no assurance that these marketing programs will always be well received or result in the anticipated levels of sales, that these programs will always be implemented in a cost-effective manner, that these programs will always keep pace with industry development and consumer preferences, or that the operating entity will be able to recruit or retain experienced marketing employees. Failures to implement the existing marketing programs in a cost-effective manner or to introduce new branding approaches to adapt to the evolving trends could reduce the operating entity’s market share and cause its revenue to decline. If the operating entity is unable to effectively manage its relationship with the third-party advertising agency, or if the operating entity fails to find a suitable replacement at reasonable costs should the operating entity not be able to maintain such relationship, it could adversely affect the operating entity’s marketing programs and efforts.

The operating entity’s business operates in highly competitive product markets.

The operating entity’s business competes with companies of various sizes on the basis of cost-effectiveness, product innovations, product quality, product safety, real or perceived product advantages, and product pricing. The operating entity competes against cosmetics and skincare companies that manufacture and sell broad product lines through various types of retail establishments and other channels, including through the internet. Some competitors have a greater market presence in certain geographical areas, store formats and for certain categories of products. Some competitors may be able to devote greater resources than the operating entity to invest in business development. Some competitors may be acquired by, receive investments from, or enter into other commercial relationships with large, well-established and well-financed companies in certain lines of business. Some competitors may have marketing investments substantially larger than the operating entity. The operating entity may be materially adversely affected to the extent it is unable to compete successfully with its competitors.

Significant challenges or delays in the innovation and development of new products, technologies and indications could have an adverse impact on the operating entity’s long-term success.

The operating entity’s continued success depends in part on its ability to innovate and develop new products and services that address the evolving needs of consumers. Development of successful products and technologies is also necessary to offset revenue losses when the operating entity’s existing products lose market share due to factors such as competition. As of the date of this prospectus, the operating entity pursues product development through collaboration with third-party research companies. The operating entity will be entitled to own the intellectual property resulting from such collaborations. Developing new products requires significant investment of resources over a protracted period of time. The process depends on many factors, including the ability to: discern future needs; develop promising new compounds, strategies and technologies; achieve successful clinical trial results; secure effective intellectual property protection; obtain regulatory approvals on a timely basis; and, if and when they reach the market, successfully differentiate the operating entity’s products from competing products. New products or enhancements to existing products may not be accepted quickly or significantly in the marketplace due to product and price competition, and changes in customer preferences or purchasing patterns. The operating entity cannot be certain when or whether it will be able to develop products and technologies, or whether particular products will be commercially successful.

The operating entity faces risks associated with its dependence on other companies for product development.

As of the date of this prospectus, the operating entity’s success on product development depends upon its collaboration with third-party research companies. See “Business” for further details on third-party collaborations. Although the operating entity has maintained good relationships with its partner research companies, the operating entity’s ongoing collaborations with them may present risks to the innovation and development of new products. If the operating entity’s partner research companies encounter any situations adversely affecting their research capacity, if they fail to meet contracted obligations, if the collaborations are discontinued for any reason, or if the operating entity fails to find a suitable and timely replacement upon the loss of a significant product development partner, it could have a material adverse impact on product innovation and development prospects, including causing delays in product launches, which, in turn, could result in reductions in future sales and market share.

The operating entity’s success depends in part on the quality of its products.

The operating entity’s success depends in part on the quality of its products. As of the date of this prospectus, the operating entity has not been subject to any significant product quality and safety incidents, nor has it been punished by any relevant government authorities for product quality and safety issues, nor has it received any complaints from any consumers about product quality and safety issues. As is the case with its competitors, the operating entity may be subject to product liability claims if its products are found to be unfit for human use or cause illness. Products may be rendered unfit for human use due to contamination of ingredients, whether accidental or not, and illegal tampering. Despite the measures the operating entity has in place to control the quality of products, contamination of ingredients of the products may occur during the transportation, production, distribution and sales processes due to reasons beyond control, such as acts carried out in bad faith, sabotage, or systemic failure the causes of which are unknown. A significant product recall, product-related litigation, product misuse, negative perceptions of packaging (such as plastic and other petroleum-based materials), lack of recyclability or other environmental impacts, privacy lapses or data breaches, allegations of product tampering or the distribution and sale of counterfeit products and other similar events may cause the loss of revenue. Further, adverse publicity about these types of concerns relating to the operating entity’s brand or to the industry as a whole, whether or not legitimate, may discourage consumers from purchasing the operating entity’s products. If consumers lose confidence in the operating entity’s brand, the operating entity could experience long-term declines in sales.

According to our PRC legal counsel, AllBright Law Offices (Fuzhou), as of the date of this prospectus, the operating entity is in compliance with the PRC laws related to the quality of its products, and has not received any notice, warning, or sanction from relevant government authorities. Although the operating entity does not manufacture any products, it operates a cosmetics business and must ensure the quality and safety of its products. According to the PRC laws and regulations related to the sale of cosmetics, the cosmetics business operators shall establish and implement the inspection and recording system for the purchased goods to verify the market entity registration certificates, cosmetics registration or record-filing situations and the ex-factory inspection conformity certificates of the suppliers and shall truthfully record and keep the relevant vouchers. The cosmetics business operators shall store and transport the cosmetics in accordance with the provisions of the relevant laws and regulations and the requirements indicated on the labels of the cosmetics, regularly inspect and promptly dispose of the deteriorated cosmetics or the cosmetics that have exceeded the service life. The drug regulatory authority shall confiscate the illegal gains if the cosmetics business operators manufacture the cosmetics without any permission, or sell the deteriorated cosmetics or the cosmetics whose service life has expired; if the value of cosmetics illegally operated is less than RMB10,000, a fine of not less than RMB10,000 but not more than RMB50,000 shall be imposed; if the value of cosmetics illegally operated is not less than RMB10,000, a fine of not less than five times but not more than 20 times the value of the goods shall be imposed. Where a cosmetics product is defective due to a mistake by the operator and such defect causes physical injury or damage to third party property, the operator shall bear liability for compensation.

If the operating entity is unable to comply with the PRC laws related to consumer protection and unfair competition, it may face punishments by the PRC government authorities.

According to our PRC legal counsel, AllBright Law Offices (Fuzhou), as of the date of this prospectus, the operating entity is in compliance with the PRC laws related to consumer protection and unfair competition. If the operating entity violates the PRC laws and regulations related to consumer protection, it may face punishments by the PRC government authorities, including the imposition of fines, suspension of business operations and revocation of business license. If the operating entity violates the PRC laws against unfair competition and cause damages to others, it may bear certain civil liability.

The operating entity may not be able to protect its intellectual property rights.

The operating entity’s success depends in part on its ability to defend its intellectual property rights, including trademarks, patents, copyrights, domain names, and know-how. The improper or unauthorized use of the operating entity’s intellectual property rights may decrease the brand value and cause a decline in sales. The operating entity could, even if by omission, fail to renew an intellectual property right in a timely manner, or third parties may challenge, and succeed in obtaining the invalidation of, any existing or future intellectual property issued to, or licensed to the operating entity. Monitoring the unauthorized use of intellectual property requires significant effort. There is no assurance that the steps that have been, or will be, taken to protect intellectual property rights will be sufficient or that third parties will not infringe upon or misappropriate proprietary rights. If the operating entity is unable to protect its proprietary rights against infringement or misappropriation, it could adversely affect the operating entity’s business.

Litigation may also be necessary to defend against claims of infringement or invalidity by others as the operating entity actively pursues product innovation and enhances the value of its intellectual property portfolio. An adverse outcome in litigation or any similar proceedings could adversely affect the operating entity’s business, financial condition and results of operation. In addition, the diversion of management’s attention and resources while addressing any intellectual property litigation claim, regardless of whether the claim is valid, could be significant and could significantly affect the operating entity’s business, financial condition and results of operation.

Interruptions or failures that impair access to information technology systems could adversely affect the business of the operating entity.

The operating entity relies on information technology systems to process, transmit, and store information in relation to its operations. For example, the operating entity relies on Kingdee software to record its financial data. These information technology systems may be vulnerable to interruption due to a variety of events beyond control, including but not limited to, natural disasters, telecommunications failures, computer viruses, hacking and other security issues. Any material interruptions or failures in these information technology systems could cause disruptions in business operations and may require a significant investment to update, remediate or replace with alternate systems. The costs and potential problems associated with supporting, maintaining, remediating and upgrading the existing information technology systems, or with implementing new systems, may severely disrupt the operating entity’s business operations.

Increased labor costs, inability to retain suitable employees, or unfavorable labor relations may adversely affect the business, financial condition or results of operations.

The operating entity devotes significant resources to recruiting and training employees. Its ability to manage and control labor costs is subject to numerous external factors, including market pressures with respect to prevailing wage rates, unemployment levels, health and other insurance costs, as well as the impact of legislation or regulations governing wage and employee benefits. Any changes in these external factors could significantly increase labor costs, which would reduce the operating entity’s net income and cash flows.

The operating entity aims to motivate and retain qualified employees. If the employees are unsatisfied with what the operating entity offers, such as remuneration packages or working environment, the operating entity may not be able to retain qualified employees or replace them with personnel of appropriate skill sets and personal attributes at comparable costs. In such event, the operating entity may need to expend additional resources to retain or replace suitable employees.

From time to time, the operating entity may be subject to various employment-related claims, such as individual actions or government enforcement actions relating to wage-hour, labor standards, or healthcare and benefit issues. Such actions, if brought against the operating entity and successful in whole or in part, may materially and adversely affect the operating entity’s business.

If the operating entity loses key personnel, its business may be adversely affected.

The operating entity depends on the continued contributions of key employees, including members of senior management teams. Failure to attract, motivate and retain key employees, changes in the senior management teams, or failure to develop and implement a viable succession plan, could adversely affect the operating entity’s business and future success. In addition, if any member of senior management teams or any other key employee joins a competitor or forms a competing company, the operating entity may experience difficulty in managing its business effectively. Any such disruption or difficulty in filling key management roles could adversely affect the operating entity’s business.

The operating entity leases office and warehouse space from a third party, and there is no assurance that the operating entity will be able to renew the leases or find suitable alternative premises upon the expiration of the relevant lease terms.

The operating entity leases its office and warehouse space from a third party. Although the operating entity is entitled to the right of first refusal to renew all the current leases and has maintained good relationships with the lessor, there is no assurance that the operating entity will be able to renew such leases on commercially reasonable terms, or at all. In the event that the operating entity is unable to renew the current leases, it will be forced to relocate and may not be able to find suitable alternative premises. Even if the operating entity is able to find desirable alternative locations, it may incur extraordinary relocation costs, hefty rental payments and significant managerial expenses. If any of these events occurs, the operating entity’s business may be materially and adversely affected.

Uncertain economic or social conditions may adversely impact the operating entity’s business.

The operating entity’s business could be negatively impacted by reduced demand for its products related to one or more significant local, regional or global economic or social disruptions. These disruptions may include: a slow-down, recession or inflationary pressures in the general economy; reduced market growth rates; tighter credit markets for the operating entity’s suppliers, vendors or customers; a significant shift in government policies; significant social unrest; or the deterioration of economic relations between countries or regions. Additionally, these and other economic conditions may cause the operating entity’s suppliers, distributors, contractors or other third-party partners to suffer financial or operational difficulties that they cannot overcome, resulting in their inability to provide the operating entity with the needed materials and services, in which case the operating entity’s business and results of operations could be adversely affected.

The operating entity must successfully manage the demand, supply and operational challenges associated with the effects of a disease outbreak, including epidemics, pandemics or similar widespread public health concerns.

The operating entity’s business may be negatively impacted by the fear of, exposure to, or actual effects of, a disease outbreak, epidemic, pandemic or similar widespread public health concern, including travel restrictions or recommendations or mandates from governmental authorities as a result of the COVID-19 pandemic, the threat of the virus, or the emergence of any variants. These impacts include, but are not limited to:

In early 2020, the operating entity experienced logistical stagnation and business disruptions due to the impact of the COVID-19 pandemic. In May 2020, the logistical conditions were restored to some extent and the restrictions were eased in the areas where the operating entity, its manufacturers and distributors are located. About the same time, the operating entity launched its camellia oil baby skincare products and toiletries on the market. As a result, the operating entity gradually recovered from the negative impact of the COVID-19 pandemic on its results of operations. Since May 2020, although production and logistical activities in certain parts of China were disrupted by the regional COVID-19 lockdowns, the Chinese government has eased the nationwide COVID-19 restrictions, and as a result, the nationwide production and logistical activities in China have gradually resumed. Since May 2020, the operating entity’s operations, including the activities of its manufacturers or distributors, have not endured any material adverse impact from the COVID-19 restrictions. As of the date of this prospectus, the Chinese government has eased the COVID-19 restrictions. We expect that there will not be any nationwide government-mandated lockdowns in China in the foreseeable future. Even if some of the operating entity’s manufacturers and distributors are subject to regional lockdowns, the operating entity expects to take prompt measures to lessen any disruptions in the production and logistical activities, including cooperating with alternative manufacturers and additional distributors. See “Management’s Discussion And Analysis Of Financial Condition And Results Of Operations—Impact of COVID-19.” Despite the operating entity’s efforts to manage and remedy the impact of COVID-19, the ultimate impact also depends on factors beyond its control, including the duration and severity of any such outbreak as well as third-party actions taken to contain its spread and mitigate its public health effects. These factors could adversely affect the operating entity’s business, and, in turn, our financial condition and results of operations.

The operating entity may not succeed in its cost saving strategies.

The operating entity continues to identify and execute on cost-saving opportunities designed to improve operational efficiencies and optimize project management. The specific cost-saving strategies designed by the operating entity include selecting cost-efficient suppliers while ensuring product quality and safety at the same time, optimizing the cost-effectiveness of the commission reward structure to encourage the operating entity’s professional sales team to expand the market share, and cooperating with distributors and logistics service providers that offer quality services and execute on cost-saving strategies. As of the date of this prospectus, the operating entity has not implemented all of these cost-saving strategies and does not yet have quantifiable data to demonstrate any material impact on its business. There is no assurance that the operating entity will be able to achieve or sustain cost savings, realize or sustain operational efficiencies, or achieve other benefits that it may initially expect. Such failures may result in various unnecessary costs, temporary operational inefficiencies, and could negatively impact our financial condition.

Our historical financial and operating results are not indicative of future performance and our financial and operating results may fluctuate.

In the fiscal years ended December 31, 2023, and 2022, our revenue was $9,656,105 and $8,265,451, respectively. For the same fiscal years, our net income was $1,354,341 and $1,111,133, respectively. The results of operations may vary from period to period in response to a variety of factors beyond control, including general economic conditions, regulatory actions, changes in consumer spending and preferences, as well as non-recurring charges incurred in connection with extraordinary transactions. Due to these and other factors, our historical financial performance, growth rates, profitability and operating results may not indicate future performance and you should not rely on them to predict our future performance.

The entry into strategic alliances, or mergers and acquisitions may expose the operating entity to additional risks.

The operating entity may consider potential strategic alliances that would complement the current product offerings, increase the size and geographic scope of its operations or otherwise present growth and/or other opportunities. Any such developments may entail numerous risks, including:

The operating entity’s failure to enter new markets, enter into strategic alliances or complete the integration of any new or acquired businesses successfully could have a material adverse effect on its business, prospects, financial condition, liquidity, results of operations and cash flows. In addition, there can be no assurance that the operating entity will be able to identify suitable candidates or consummate such transactions on favorable terms or at all.

Adverse litigation judgments or settlements resulting from legal proceedings could reduce the profits or negatively affect the operating entity’s business operations.

As of the date of this prospectus, the operating entity is not a party to any material lawsuits and we are not aware of any threats of lawsuits against the operating entity that are anticipated to have a major impact on the operating entity’s business. The operating entity may, in the future, be subject to allegations, claims and legal actions arising in the ordinary course of its business, which may include claims by shareholders and claims by third parties, including manufacturers, distributors, business partners, or regulators. If any of these proceedings is determined adversely against the operating entity, or results in judgments, fines or settlements involving a payment of a material sum of money, it could materially and adversely affect the operating entity’s business, financial condition, and results of operations. In addition, the associated negative publicity could adversely affect the operating entity’s reputation and brand. Even the successful defense of these proceedings may cause the operating entity to incur substantial legal costs and may divert management’s attention and resources.

The operating entity’s insurance coverage may not be sufficient to cover all losses and/or liabilities that may be incurred by its operations.

The operating entity maintains certain insurance policies to safeguard against risks and unexpected events. See “Business—Insurance” for the operating entity’s current insurance policies. However, there is no assurance that the operating entity’s insurance coverage will always be available or will always be sufficient to cover any damages resulting from any kind of claims. In addition, there are certain types of risks that may not be covered by the operating entity’s policies, such as war, force majeure or certain business interruptions. In addition, there is no assurance that when the current insurance policies expire, the operating entity will be able to renew them at sufficient and favorable terms. Claims that are not covered by the policies or the failure to renew the insurance policies may materially adversely affect the operating entity’s business.

Risks Related to Doing Business in the PRC

Changes in economic, political and social conditions of the PRC government could affect on the operating entity’s business.

The Company conducts substantially all of the operations through the operating entity in China. Accordingly, the operating entity’s business, financial condition, results of operations and growth prospects may be influenced to a significant degree by political, economic and social conditions in China generally.

Any changes in economic conditions in China could affect the operating entity’s business and operating results.

The manner in which the PRC subsidiaries conduct their business operations is under the Chinese government’s supervision, which could result in a change in such operations and the value of our Ordinary Shares, limit or hinder our ability to offer or continue to offer securities to investors, and cause the value of our securities to significantly decline or be worthless.

The PRC subsidiaries’ ability to operate in China may be harmed by changes in Chinese laws and regulations, including those relating to securities regulation, data protection, cybersecurity and mergers and acquisitions and other matters. The PRC central or local governments may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts on the PRC subsidiaries’ part for compliance with such regulations or interpretations. Government actions in the future could affect economic conditions in China or particular regions thereof, and could require the PRC subsidiaries to materially change operating activities or divest themselves of any interests they hold in Chinese assets. The PRC subsidiaries’ business may be subject to various types of government and regulatory interference, such as the requirement to gain the approval from CSRC before this listing and to conduct a cyber security review. The PRC subsidiaries may incur increased costs necessary to comply with existing and newly adopted laws and regulations or penalties for any failure to comply. The PRC subsidiaries’ operations could be affected by existing or future laws and regulations relating to the maternal and newborn skincare business or industry.

Any of these events could result in a material change in the PRC subsidiaries’ operations and the value of our Ordinary Shares.

The approval and/or other requirements of the CSRC or other PRC government authorities may be required in connection with an offering under PRC rules, regulations or policies, and, if required, our Company cannot predict whether or how soon our Company will be able to obtain such approval.

The Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rules, purport to require offshore special purpose vehicles that are controlled by PRC companies or individuals and that have been formed for the purpose of seeking a public listing on an overseas stock exchange through acquisitions of PRC domestic companies or assets to obtain CSRC approval prior to publicly listing their securities on an overseas stock exchange. There remains uncertainty as to how the M&A Rules will be interpreted or implemented in the context of an overseas offering.

On July 6, 2021, the relevant PRC government authorities made public the Opinions on Strictly Cracking Down Illegal Securities Activities, which provided that the administration and supervision of overseas-listed China-based companies will be strengthened, and the special provisions of the State Council on overseas issuance and listing of shares by such companies will be revised, clarifying the responsibilities of domestic industry competent authorities and regulatory authorities.

On December 24, 2021, the CSRC released the Administrative Provisions of the State Council Regarding the Overseas Issuance and Listing of Securities by Domestic Enterprises (Draft for Comments) (the “Draft Administrative Provisions”) and the Measures for the Overseas Issuance of Securities and Listing Record-Filings by Domestic Enterprises (Draft for Comments) (the “Draft Filing Measures”, and collectively with the Draft Administrative Provisions, the “Draft Rules Regarding Overseas Listing”), which stipulate that Chinese-based companies, or the issuer, shall fulfill the filing procedures after the issuer makes an application for initial public offering and listing in an overseas market, and certain overseas offering and listing such as those that constitute a threat to or endanger national security, as reviewed and determined by competent authorities under the State Council in accordance with law, may be prohibited under the Draft Rules Regarding Overseas Listing. On February 17, 2023, with the approval of the State Council, the CSRC released the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the “Trial Measures”) and five supporting guidelines, effective on March 31, 2023. According to the Trial Measures, among other requirements, (1) domestic companies that seek to offer or list securities overseas, both directly and indirectly, should fulfill the filing procedures with the CSRC; if a domestic company fails to complete the filing procedures, such domestic company may be subject to administrative penalties; and (2) where a domestic company seeks to indirectly offer and list securities in an overseas market, the issuer shall designate a major domestic operating entity responsible for all filing procedures with the CSRC, and such filings shall be submitted to the CSRC within three business days after the submission of the overseas offering and listing application. Subsequent securities offerings of an issuer in the same overseas market where it has previously offered and listed securities shall be filed with the CSRC within 3 working days after the offering is completed. On the same day, the CSRC also held a press conference for the release of the Trial Measures and issued the Notice on Administration for the Filing of Overseas Offering and Listing by Domestic Companies, which clarifies that (1) on or prior to the effective date of the Trial Measures, domestic companies that have already submitted valid applications for overseas offering and listing but have not obtained approval from overseas regulatory authorities or stock exchanges may reasonably arrange the timing for submitting their filing applications with the CSRC, and must complete the filing before the completion of their overseas offering and listing; (2) a six-month transition period will be granted to domestic companies which, prior to the effective date of the Trial Measures, have already obtained the approval from overseas regulatory authorities or stock exchanges, but have not completed the indirect overseas listing; if domestic companies fail to complete the overseas listing within such six-month transition period, they shall file with the CSRC according to the requirements; and (3) the CSRC will solicit opinions from relevant regulatory authorities and complete the filing of the overseas listing of companies with contractual arrangements which duly meet the compliance requirements, and support the development and growth of these companies.

According to our PRC legal counsel, AllBright Law Offices (Fuzhou), we are required to file with the CSRC for this offering. If we seek a subsequent securities offering in the same overseas market in the future, we will be required to file with the CSRC after the subsequent offering is completed. As of the date of this prospectus, we have submitted a filing report and other required materials in connection with the CSRC filing procedures to the CSRC. We expect to submit any additional materials as and when requested by the CSRC on a timely basis, and expect to obtain CSRC approval prior to our proposed initial public offering and listing on Nasdaq. However, if it is later determined that we have not complied with the filing procedures according to the Trial Measures or if our filing materials are determined to contain false records, misleading statements or material omissions, the CSRC may order us to rectify such non-compliance, issue a warning, and impose a fine of not less than RMB1 million and not more than RMB10 million. In addition, any failure to fully comply with new regulatory requirements may significantly limit or completely hinder our ability to offer or continue to offer our Ordinary Shares, cause significant disruption to our operations, and severely damage our reputation, which would materially and adversely affect our financial condition and results of operations and cause our Ordinary Shares to significantly decline in value or become worthless. As of the date of this prospectus, neither we nor any of our PRC subsidiaries have received any inquiry, notice, warning or sanctions regarding our planned overseas listing from the CSRC or any other PRC governmental authorities.

If the PRC government authorities later promulgate new rules or explanations requiring that our Company and the PRC subsidiaries obtain their approvals for filings, registrations or other kinds of authorizations for an offering, there is no assurance that our Company and the PRC subsidiaries can obtain the approval, authorizations, or complete required procedures or other requirements in a timely manner, or at all, or obtain a waiver of the requisite requirements if and when procedures are established to obtain such a waiver.

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

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

On November 14, 2021, the CAC published the Draft Regulations on the Network Data Security Administration (Draft for Comments) (the “Security Administration Draft”), which provides that data processing operators engaging in data processing activities that affect or may affect national security must be subject to cybersecurity review by the CAC. According to the Security Administration Draft, data processing operators shall apply for a cybersecurity review by the relevant Cyberspace Administration of the PRC under certain circumstances, such as (i) mergers, restructurings, and divisions of Internet platform operators that hold large amount of data relating to national security, economic development, or public interest which affects or may affect the national security, (ii) overseas listings of data processors that process personal data for more than one million individuals, (iii) Hong Kong listings of data processors that affect or may affect national security, and (iv) other data processing activities that affect or may affect the national security. The deadline for public comments on the Security Administration Draft was December 13, 2021.

The PRC Data Security Law, which was promulgated by the SCNPC on June 10, 2021 and took effect on September 1, 2021, requires data collection to be conducted in a legitimate and proper manner, and stipulates that, for the purpose of data protection, data processing activities must be conducted based on data classification and hierarchical protection system for data security.

On August 20, 2021, the SCNPC promulgated the Personal Information Protection Law of the People’s Republic of China, or the Personal Information Protection Law, which integrates the scattered rules with respect to personal information rights and privacy protection and took effect on November 1, 2021.

In addition, the PRC regulatory authorities have recently taken steps to strengthen the regulations on data protection and conducted several rounds of relevant inspections. The Rules on the Scope of Necessary Personal Information for Common Types of Mobile Internet Applications, which came into effect on May 1, 2021 (the “Necessary Personal Information Rules”), require that the operators of mobile apps shall not deny the users who do not consent to the collection of unnecessary personal information from using the basic functions and services of such apps. In addition, under the Necessary Personal Information Rules, “necessary personal information” refers to personal information necessary for ensuring the normal operation of an app’s basic functional services. The basic functional services of the apps are providing instant messaging services through texts, pictures, voice, and video, where the necessary personal information includes mobile phone numbers and account numbers of registered users and lists of accounts of instant messaging contact persons.

As of the date of this prospectus, the operating entity has not received any notice from any authorities identifying the operating entity as a CIIO or requiring it to undertake a cybersecurity review or network data security review by the CAC.

If any new laws, regulations, rules, or implementations and interpretations relating to the Cybersecurity Review Measures and the Security Administration Draft come into effect, the operating entity will take all reasonable measures and actions to comply and to minimize the adverse effect of such laws, regulations, rules, or implementation and interpretations may have on it. Furthermore, the operating entity may be required to adjust its business practices to comply with the personal information protection laws and regulations. There is no assurance that PRC regulatory agencies, including the CAC, would take the same view as we do, and there is no assurance that the operating entity can fully or timely comply with such laws should they be deemed to be applicable. There is no certainty as to how such review or prescribed actions would impact the operating entity’s operations and there is no assurance that any clearance can be obtained, or maintained, if approved, or any actions that may be required can be taken in a timely manner, or at all.

PRC regulations relating to the establishment of offshore special purpose companies by PRC residents may subject the operating entity to liability or penalties, limit our ability to inject capital into the operating entity, limit the operating entity’s ability to increase its registered capital or distribute profits to our Company, or may otherwise adversely affect our Company.

The Circular on Relevant Issues Relating to Domestic Resident’s Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37, was promulgated by the SAFE in July 2014 that requires PRC residents or entities to register with SAFE or its local branch, currently with local bank according to Notice of the State Administration of Foreign Exchange on Further Simplifying and Improving Policies for the Foreign Exchange Administration of Direct Investment issued by SAFE on February 13, 2015, in connection with their establishment or control of an offshore entity established for the purpose of overseas investment or financing. In addition, any PRC resident who is a direct or indirect shareholder of an offshore company is required to update the previously filed registration with the local branch of the SAFE, with respect to that offshore company, to reflect any material change involving its round-trip investment, capital variation, such as an increase or decrease in capital, transfer or swap of shares, merger or division. These regulations apply to our shareholders who are PRC residents and may apply to any offshore acquisitions that the Company makes in the future.

Our Company has requested PRC residents holding direct or indirect interest in our Company to our knowledge to make the necessary applications, filings and amendments as required by applicable foreign exchange regulations. Our Company is committed to complying with and to ensuring that our shareholders who are subject to the regulations will comply with the relevant SAFE rules and regulations. However, due to the inherent uncertainty in the implementation of the regulatory requirements by PRC authorities, such registration might not be always practically available in all circumstances as prescribed in those regulations. In addition, our Company may not always be able to compel them to comply with SAFE Circular 37 or other related regulations. There is no assurance that the SAFE or its local branches will release explicit requirements or interpret the relevant PRC Laws otherwise. Failure by any such shareholders to comply with SAFE Circular 37 may result in restrictions on the foreign exchange activities of the relevant PRC enterprise and may also subject the relevant PRC resident to penalties under the PRC foreign exchange administration regulations. As of the date of this prospectus, the PRC resident shareholders have completed foreign exchange registration under the SAFE Circular 37 and other related regulations.

PRC laws and regulations establish more procedures for some acquisitions of PRC companies by foreign investors, which could make it more difficult for our Company to pursue growth through acquisitions in China.

A number of PRC laws and regulations, including the M&A Rules, the Anti-monopoly Law promulgated by the Standing Committee of the National People’s Congress in August 2007, the Rules of Ministry of Commerce on Implementation of Security Review System of Mergers and Acquisitions of Domestic Enterprises by Foreign Investors promulgated by the Ministry of Commerce in August 2011, and the Measures for the Security Review of Foreign Investment promulgated by the National Development and Reform Commission of the PRC, or NDRC, and the Ministry of Commerce in December 2020 have established procedures and requirements that are expected to make merger and acquisition activities in China by foreign investors more time-consuming and complex. These include requirements in some instances that the approval from the Ministry of Commerce be obtained in circumstances where overseas companies established or controlled by PRC enterprises or residents acquire affiliated domestic companies. PRC laws and regulations also require certain merger and acquisition transactions involving an industry that implicates national security to be subject to merger control review or security review.

In the future, our Company may further grow the business by acquiring businesses. Complying with the requirements of the above-mentioned regulations and other relevant rules to complete such transactions could be time-consuming, and any required approval processes, including obtaining approval from the Ministry of Commerce or its local counterparts may delay or inhibit our ability to complete such transactions. Our ability to expand the business or maintain or expand our market share through future acquisitions would be materially and adversely affected.

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

The Company is a holding company incorporated in the Cayman Islands and operates its business principally through the operating entity in the PRC. Therefore, the availability of funds to the Company to pay dividends to the Company’s shareholders and to service its indebtedness depends upon dividends received from the PRC subsidiaries. The PRC subsidiaries’ ability to distribute dividends is based upon its distributable earnings. Current PRC regulations permit the PRC subsidiaries to pay dividends to their respective shareholders only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, the PRC subsidiaries are required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. Each of such entities in China is also required to further set aside a portion of its after-tax profits to fund the employee welfare fund, although the amount to be set aside, if any, is determined at the discretion of its board of directors. These reserves are not distributable as cash dividends. If the PRC subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments to the Company. Any limitation on the ability of the PRC subsidiaries to distribute dividends or other payments to the Company could materially and adversely limit the ability to grow, make investments or acquisitions that could be beneficial to the businesses, pay dividends or otherwise fund and conduct the business.

Under the Law of the PRC on Enterprise Income Tax and Regulations for the Implementation of the Law on Enterprise Income Tax, dividends, interests, rent or royalties payable by a foreign-invested enterprise to any of its foreign non-resident enterprise investors, and proceeds from any such foreign enterprise investor’s disposition of assets (after deducting the net value of such assets) are subject to a 10% withholding tax, unless the foreign enterprise investor’s jurisdiction of incorporation has a tax treaty with China that provides for a reduced rate of withholding tax. The Cayman Islands, where the Company is incorporated, does not have such a tax treaty with China. If the PRC subsidiaries declare and distribute profits to us, such payments will be subject to withholding tax, which will increase the tax liability and reduce the amount of cash available to the Company.

PRC regulations of loans and direct investment by offshore holding companies to PRC entities may delay or prevent our Company from using the proceeds of our offshore financing to make loans or additional capital contributions to the operating entity, which could materially and adversely affect our liquidity and business.

The Company may transfer funds to the operating entity or finance the operating entity by means of shareholders’ loans or capital contributions after completion of this offering. Any loans to the operating entity, which are foreign-invested enterprises, cannot exceed a statutory limit, and shall be filed with the State Administration of Foreign Exchange, or SAFE, or its local counterparts. Furthermore, any capital contributions the Company makes to the operating entity shall be registered with the PRC State Administration for Market Regulation or its local counterparts, and filed with the Ministry of Commerce (“MOFCOM”) or its local counterparts.

On March 30, 2015, SAFE promulgated the Circular on Reforming the Administration Measures on Conversion of Foreign Exchange Registered Capital of Foreign-invested Enterprises, or SAFE Circular 19. SAFE Circular 19, however, allows foreign invested enterprises in China to use their registered capital settled in RMB converted from foreign currencies to make equity investments, but the registered capital of a foreign invested company settled in RMB converted from foreign currencies remains not allowed to be used, among other things, for investment in the security markets, or offering entrustment loans, unless otherwise regulated by other laws and regulations. On June 9, 2016, SAFE further issued the Circular of the State Administration of Foreign Exchange on Reforming and Regulating Policies on the Control over Foreign Exchange Settlement of Capital Accounts, or SAFE Circular 16, which, among other things, amended certain provisions of Circular 19. According to SAFE Circular 19 and SAFE Circular 16, the flow and use of the RMB capital converted from foreign currency-denominated registered capital of a foreign invested company is regulated such that Renminbi capital may not be used for purposes beyond its business scope or to provide loans to non-affiliates unless otherwise permitted under its business scope. On October 23, 2019, SAFE promulgated the Circular of the State Administration of Foreign Exchange on Further Promoting the Facilitation of Cross-Border Trade and Investment, or SAFE Circular 28, which removes the restrictions on domestic equity investments by non-investment foreign-invested enterprises with their capital funds, provided that certain conditions are met. The applicable foreign exchange circulars and rules may limit our ability to transfer the net proceeds from this offering and convert the net proceeds into RMB, which may adversely affect our financial condition and results of operations.

The Company may be exposed to liabilities under the Foreign Corrupt Practices Act and Chinese anti-corruption laws.

The Company is subject to the U.S. Foreign Corrupt Practices Act (the “FCPA”), and other laws that prohibit improper payments or offers of payments to foreign governments and their officials and political parties by U.S. persons and issuers as defined by the statute for the purpose of obtaining or retaining business. The PRC subsidiaries are subject to Chinese anti-corruption laws, which strictly prohibit the payment of bribes to government officials. The PRC subsidiaries have operations, agreements with third parties, and make sales in China, which may experience corruption. The activities in China create the risk of unauthorized payments or offers of payments by the employees, consultants or distributors, because these parties are not always subject to our control.

Although we believe the Company and the PRC subsidiaries have complied in all material respects with the provisions of the FCPA and Chinese anti-corruption laws as of the date of this prospectus, the existing safeguards and any future improvements may prove to be less than effective, and the employees, consultants or distributors may engage in conduct for which the Company or the PRC subsidiaries might be held responsible. Violations of the FCPA or Chinese anti-corruption laws may result in severe criminal or civil sanctions, and the Company or the PRC subsidiaries may be subject to other liabilities, which could negatively affect the operating results and financial condition. In addition, the government may seek to hold the Company liable for successor liability FCPA violations committed by companies in which the Company invests or that the Company acquires.

The remittance of RMB into and out of China and the conversion of RMB to and from other currencies are subject to governmental regulations in China.

The remittance of RMB into and out of China and the conversion of RMB to and from other currencies are subject to governmental regulations in China. The majority of our income is received in Renminbi and shortages in the availability of foreign currencies may restrict our ability to pay dividends or other payments, or otherwise satisfy foreign currency denominated obligations, if any. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and expenditures from trade-related transactions, can be made in foreign currencies without prior approval from SAFE, by complying with certain procedural requirements. Approval from appropriate government authorities is required where Renminbi is to be converted into foreign currency and remitted out of the PRC to pay capital expenses such as the repayment of loans denominated in foreign currencies.

Fluctuations in exchange rates could result in foreign currency exchange losses.

The value of Renminbi against the U.S. dollar and other currencies fluctuates, is subject to changes resulting from the PRC government’s policies and depends to a large extent on domestic and international economic and political developments as well as supply and demand in the local market. In July 2005, the PRC government changed its decades-old policy of pegging the value of Renminbi to the U.S. dollar, and Renminbi appreciated more than 20% against the U.S. dollar over the following three years. Between July 2008 and June 2010, this appreciation halted and the exchange rate between Renminbi and the U.S. dollar remained within a narrow band. Since June 2010, Renminbi has fluctuated against the U.S. dollar, at times significantly and unpredictably. With the development of the foreign exchange market and progress towards interest rate liberalization and Renminbi internationalization, the PRC government may in the future announce further changes to the exchange rate system and there is no assurance that Renminbi will not appreciate or depreciate significantly in value against the U.S. dollar in the future. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between Renminbi and the U.S. dollar in the future.

The proceeds from this offering will be received in U.S. dollars. As a result, any appreciation of the Renminbi against the U.S. dollar may result in the decrease in the value of our proceeds from this offering. Conversely, any depreciation of the Renminbi may adversely affect the value of, and any dividends payable on, our Ordinary Shares in foreign currency. In addition, there are limited instruments available for our Company to reduce our foreign currency risk exposure at reasonable costs. All of these factors could materially and adversely affect our financial condition, results of operations, and prospects, and could reduce the value of, and dividends payable on, our Ordinary Shares in foreign currency terms.

The enforcement of the PRC Labor Contract Law and other labor-related regulations in the PRC may adversely affect the operating entity’s business and results of operations.

The PRC Labor Contract Law became effective on January 1, 2008 and was amended on December 28, 2012. The Labor Contract Law introduced specific provisions related to fixed-term employment contracts, part-time employment, probationary periods, consultation with labor unions and employee assemblies, employment without a written contract, dismissal of employees, severance, and collective bargaining to enhance previous PRC labor laws. Under the Labor Contract Law, an employer is obligated to sign an unlimited-term labor contract with any employee who has worked for the employer for ten consecutive years. Further, if an employee requests or agrees to renew a fixed exchange rates that has already been entered into twice consecutively, the resulting contract must have an unlimited term, subject to certain exceptions. With certain exceptions, an employer must pay severance to an employee where a labor contract is terminated or expires. In addition, the PRC government authorities have continued to introduce various new labor-related regulations since the effectiveness of the Labor Contract Law.

Under the PRC Social Insurance Law and the Administrative Measures on Housing Fund, employees are required to participate in pension insurance, work-related injury insurance, medical insurance, unemployment insurance, maternity insurance, and housing provident funds and employers are required, together with their employees or separately, to pay the social insurance premiums and housing provident funds for their employees. If the operating entity fails to make adequate social insurance and housing fund contributions, it may be subject to fines and legal sanctions, and its business, financial conditions and results of operations may be adversely affected. As of December 31, 2023, the aggregate amount of underpayment of employee social insurance and housing provident funds was RMB185,970.24, with an estimated maximum penalty of approximately RMB10,000 to RMB50,000. Therefore, the aggregated amount of potential liability related to this noncompliance is estimated to be RMB195,970.24 to RMB235,970.24.

These laws designed to enhance labor protection tend to increase the PRC subsidiaries’ labor costs. In addition, as the interpretation and implementation of these regulations are still evolving, the PRC subsidiaries’ employment practices may not be at all times be deemed in compliance with the regulations. As a result, they could be subject to penalties or incur significant liabilities in connection with labor disputes or investigations.

The custodians or authorized users of our controlling non-tangible assets, including chops and seals, may fail to fulfill their responsibilities, or misappropriate or misuse these assets.

Under the PRC law, legal documents for corporate transactions, including agreements and contracts are executed using the chop or seal of the signing entity or with the signature of a legal representative whose designation is registered and filed with relevant PRC market regulation administrative authorities.

In order to secure the use of chops and seals, the PRC subsidiaries have established internal control procedures and rules for using these chops and seals. These procedures may not be sufficient to prevent all instances of abuse or negligence. There is a risk that the employees could abuse their authority, for example, by entering into a contract not approved by the PRC subsidiaries or seeking to gain control of one of the subsidiaries. If any employee obtains, misuses or misappropriates the chops and seals or other controlling non-tangible assets for whatever reason, there could be disruptions to the normal operations. The PRC subsidiaries may have to take corporate or legal action in such an event, which could involve significant time and resources to resolve and divert management from the operations.

If our Company is classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to our Company and our non-PRC shareholders.

Under the PRC Enterprise Income Tax Law and its implementation rules, an enterprise established outside of the PRC with its “de facto management body” within the PRC is considered a “resident enterprise” and will be subject to PRC enterprise income tax on its global income at the rate of 25%. The implementation rules define the term “de facto management body” as the body that exercises full and substantial control and overall management over the business, productions, personnel, accounts and properties of an enterprise. In 2009, the SAT issued a circular (“SAT Circular 82”), which provides certain specific criteria for determining whether the “de facto management body” of a PRC-controlled enterprise that is incorporated offshore is located in China. One of the criteria is that a company’s major assets, accounting books and minutes and files of its board and shareholders’ meetings are located or kept in the PRC. In addition, the SAT issued Administrative Measures for Income Tax on Chinese-controlled Resident Enterprises Incorporated Overseas (Trial Implementation) on July 27, 2011, effective from September 1, 2011, providing more guidance on the implementation of the SAT Circular 82. This bulletin clarifies matters including residence status determination, post-determination administration and competent tax authorities. Although both the SAT Circular 82 and the bulletin only apply to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreigners, the criteria set forth in the circular may reflect the SAT’s general position on how the “de facto management body” text should be applied in determining the tax resident status of all offshore enterprises.

Our Company believes none of our entities outside of China is a PRC resident enterprise for PRC tax purposes. However, the tax resident status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term “de facto management body.” As substantially all of our management members are based in China, it remains unclear how the tax residency rule will apply to us. If the PRC tax authorities determine that our Company is a PRC resident enterprise for PRC enterprise income tax purposes, then our Company could be subject to PRC tax at a rate of 25% on its world-wide income, which could materially reduce our net income. In addition, our Company will also be subject to PRC enterprise income tax reporting obligations. Furthermore, if the PRC tax authorities determine that our Company is a PRC resident enterprise for enterprise income tax purposes, gains realized on the sale or other disposition of our Ordinary Shares may be subject to PRC tax, at a rate of 10% in the case of non-PRC enterprises or 20% in the case of non-PRC individuals (in each case, subject to the provisions of any applicable tax treaty), if such gains are deemed to be from PRC sources. It is unclear whether non-PRC shareholders of our Company would be able to claim the benefits of any tax treaties between their country of tax residence and the PRC in the event that our Company is treated as a PRC resident enterprise. Any such tax may reduce the returns on your investment in our Ordinary Shares.

The operating entity’s business may be materially and adversely affected if the operating entity declares bankruptcy or becomes subject to a dissolution or liquidation proceeding.

The Enterprise Bankruptcy Law of the PRC, or the Bankruptcy Law, came into effect on June 1, 2007. The Bankruptcy Law provides that an enterprise will be liquidated if the enterprise fails to settle its debts as and when they fall due and if the enterprise’s assets are, or are demonstrably, insufficient to clear such debts. The operating entity holds substantially all of the assets that are important to our operations. If it undergoes a voluntary or involuntary liquidation proceeding, unrelated third-party creditors may claim rights to some or all of these assets, thereby materially and adversely affecting our financial condition and results of operations.

According to SAFE’s Notice of the State Administration of Foreign Exchange on Further Improving and Adjusting Foreign Exchange Administration Policies for Direct Investment, promulgated on November 19, 2012 and amended on May 4, 2015, and the Provisions on the Foreign Exchange Administration of Domestic Direct Investment of Foreign Investors, effective on May 13, 2013, if the operating entity undergoes a voluntary or involuntary liquidation proceeding, prior approval from SAFE for remittance of foreign exchange to the shareholders abroad is no longer required, but the operating entity still needs to conduct a registration process with the SAFE local branch. It is not clear whether “registration” is a mere formality or involves the kind of substantive review process undertaken by SAFE and its relevant branches in the past.

If the Company becomes directly subject to the recent scrutiny, criticism and negative publicity involving U.S.-listed Chinese companies, the Company may have to expend significant resources to investigate and resolve the matter which could harm the Company’s operations and reputation and could result in a loss of your investment in the Company’s Ordinary Shares, especially if such matter cannot be addressed and resolved favorably.

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

Failure to make adequate contributions to various employee benefit plans required by PRC regulations may subject the operating entity to penalties.

The operating entity is required under PRC laws and regulations to participate in various government-sponsored employee benefit 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 employees up to a maximum amount specified by the local government from time to time at locations where the operating entity operates its business. The requirement of employee benefit plans has not been implemented consistently by the local governments in China, given the different levels of economic development in different locations. In the event that the local governments deem the operating entity’s contribution to be not sufficient, the operating entity may be subject to late contribution fees or fines in relation to any underpaid employee benefits, and its financial condition and results of operations may be adversely affected.

Currently, the operating entity is making contributions to the plans based on the minimum standards. However, PRC laws required such contributions to be based on the actual employee salaries up to a maximum amount specified by the local government. If the operating entity is subject to late contribution fees or fines in relation to the underpaid employee benefits, its 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 any claims or complaints from its current and former employees regarding such non-compliance, there is no assurance that the operating entity will not be subject to any order to rectify non-compliance in the future, nor 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 contributions. See “Risk Factors—Risks Related to Doing Business in China—The enforcement of the PRC Labor Contract Law and other labor-related regulations in the PRC may adversely affect the operating entity’s business and results of operations.”

The non-registration of lease agreements as required by PRC regulations may subject the operating entity to penalties.

According to the Law on Administration of Urban Real Estate which took effect in January 1995 with the latest amendment in August 2019 and the Administrative Measures on Leasing of Commodity Housing which was promulgated by Ministry of Housing and Urban-Rural Development on December 1, 2010 and took effect on February 1, 2011, the parties to a housing tenancy shall go through the housing tenancy registration formalities with the competent construction (real estate) departments of the municipalities directly under the central government, cities and counties where the housing is located within 30 days after the housing tenancy contract is signed.

As of the date of this prospectus, the operating entity has not registered three leases with the local housing administration authorities as required under the PRC laws. The non-registration of these lease agreements would not affect the validity of such leases, but the operating entity might be ordered to rectify this non-compliance by the competent authorities and if the operating entity does not rectify within a prescribed period, a penalty of RMB1,000 to RMB10,000 per agreement may be imposed on it as a result of such non-compliance.

Risks Related to our Ordinary Shares and This Offering

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

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

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

On May 20, 2020, the Senate passed the Holding Foreign Companies Accountable Act requiring a foreign company to certify it is not owned or manipulated by a foreign government if the PCAOB is unable to audit specified reports because the company uses a foreign auditor not subject to PCAOB inspection. If the PCAOB is unable to inspect the company’s auditors for three consecutive years, the issuer’s securities are prohibited to trade on a national exchange.

On March 24, 2021, the SEC adopted interim final rules relating to the implementation of certain disclosure and documentation requirements of the Holding Foreign Companies Accountable Act. The Company will be required to comply with these rules if the SEC identifies the Company as having a “non-inspection” year under a process to be subsequently established by the SEC. The SEC is assessing how to implement other requirements of the Holding Foreign Companies Accountable Act, including the listing and trading prohibition requirements described above. In May 2021, the PCAOB issued for public comment a proposed rule related to the PCAOB’s responsibilities under the Holding Foreign Companies Accountable Act, which, according to the PCAOB, would establish a framework for the PCAOB to use when determining, as contemplated under the Holding Foreign Companies Accountable 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. The proposed rule was adopted by the PCAOB in September 2021, pending the final approval of the SEC to become effective.

On December 2, 2021, the SEC issued amendments to finalize rules implementing the submission and disclosure requirements in the Holding Foreign Companies Accountable Act. 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 China and in Hong Kong because of positions taken by PRC and Hong Kong authorities in those jurisdictions. The PCAOB has made such determination, as mandated under the Holding Foreign Companies Accountable Act. Pursuant to each annual determination by the PCAOB, the SEC will, on an annual basis, identify issuers that have used non-inspected audit firms and thus are at risk of such suspensions in the future.

On August 26, 2022, the CSRC, the Ministry of Finance of the PRC, and the PCAOB signed a Statement of Protocol (the “Protocol”), governing inspections and investigations of audit firms based in China and Hong Kong. Pursuant to the Protocol, the PCAOB shall have independent discretion to select any issuer audits for inspection or investigation and has the unfettered ability to transfer information to the SEC. On December 15, 2022, the PCAOB determined that the PCAOB was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and voted to vacate its previous determinations to the contrary. However, should PRC authorities obstruct or otherwise fail to facilitate the PCAOB’s access in the future, the PCAOB will consider the need to issue a new determination.

On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, and on December 29, 2022, legislation entitled “Consolidated Appropriations Act, 2023” (the “Consolidated Appropriations Act”) was signed into law by President Biden, which contained, among other things, an identical provision to the Accelerating Holding Foreign Companies Accountable Act and amended the HFCA Act by requiring the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three, thus reducing the time period for triggering the delisting of our Company and the prohibition of trading in our securities if the PCAOB is unable to inspect our accounting firm at such future time.

If for whatever reason the PCAOB is unable to conduct full inspections of the Company’s auditor, such uncertainty could cause the market price of the Ordinary Shares to be materially and adversely affected, and the Company’s securities could be delisted or prohibited from being traded “over-the-counter”. If the Company’s securities were unable to be listed on another securities exchange by then, such a delisting would substantially impair your ability to sell or purchase the Ordinary Shares when you wish to do so, and the risk and uncertainty associated with a potential delisting would have a negative impact on the price of the Ordinary Shares.

The Company’s auditor, TPS Thayer, LLC, the independent registered public accounting firm that issues the audit report included elsewhere in this prospectus, as an auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards. Such auditor is headquartered in Sugar Land, TX, and has been inspected by the PCAOB on a regular basis, with the last inspection in September 2022. It is not subject to the determinations issued by the PCAOB on December 16, 2021.

The recent developments would add uncertainties to our offering and may result in prohibitions on the trading of our Ordinary Shares on the Nasdaq Stock Market, if our auditors fail to meet the PCAOB inspection requirement in time.

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

Prior to this offering, there has been no public market for our Ordinary Shares. The initial offering price of our Ordinary Shares is the result of negotiations between our Company and the Underwriter, and the initial offering price may differ significantly from the market price for our Ordinary Shares following the offering. There is no assurance that an active trading market for our Ordinary Shares will develop or that the market price for our Ordinary Shares will not decline below the initial public offering price.

Because our initial public offering price is substantially higher than our net tangible book value per share, you will experience immediate and substantial dilution.

If you purchase the Ordinary Shares in this offering, you will pay more for your Ordinary Shares than the amount paid by our existing shareholders for their Ordinary Shares on a per share basis. As a result, you will experience immediate and substantial dilution of $3.93 per share, representing the difference between our net tangible book value per share of $1.07 as of December 31, 2023, after giving effect to this offering and an assumed initial public offering price of $5.00 per share, which is the midpoint of the range set forth on the cover page of this prospectus.

The trading price of our Ordinary Shares is likely to be volatile, which could result in substantial losses to investors.

The trading price of our Ordinary Shares is likely to be volatile and could fluctuate widely due to factors beyond our control. This may happen because of broad market and industry factors, including the performance and fluctuation of the market prices of other companies with business operations located mainly in China that have listed their securities in the United States. In addition to market and industry factors, the price and trading volume for our Ordinary Shares may be highly volatile for factors specific to our own operations, including the following:

Any of these factors may result in large and sudden changes in the volume and price at which Ordinary Shares will trade. Furthermore, the stock market in general experiences price and volume fluctuations that are often unrelated or disproportionate to the operating performance of companies like us. These broad market and industry fluctuations may adversely affect the market price of our Ordinary Shares. Volatility or a lack of positive performance in the price of our Ordinary Shares may also adversely affect our ability to retain key employees.

In the past, shareholders of public companies have often brought securities class action suits against companies following periods of instability in the market price of their securities. If our Company were involved in a class action suit, it could divert a significant amount of our management’s attention and other resources from our operations and require our Company and/or the operating entity to incur significant expenses to defend the suit, which could harm our results of operations. Any such class action suit, whether or not successful, could harm our reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully made against us, our Company may be required to pay significant damages, which could have a material adverse effect on our financial condition and results of operations.

The price of our Ordinary Shares could be subject to rapid and substantial volatility.

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

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

If securities or industry analysts cease to publish research or reports about us, or if they adversely change their recommendations regarding the Ordinary Shares, the market price for the Ordinary Shares and trading volume could decline.

The trading market for the Ordinary Shares will be influenced by research or reports that industry or securities analysts publish about us. If one or more analysts who cover our Company downgrade the Ordinary Shares, the market price for the Ordinary Shares would likely decline. If one or more of these analysts cease to cover our Company or fail to regularly publish reports on our Company, our Company could lose visibility in the financial markets, which, in turn, could cause the market price or trading volume for the Ordinary Shares to decline.

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

Sales of our Ordinary Shares in the public market after this offering, or the perception that these sales could occur, could cause the market price of our Ordinary Shares to decline. All Ordinary Shares sold in this offering will be freely transferable without restriction or additional registration under the Securities Act. The remaining Ordinary Shares issued and outstanding after this offering will be available for sale, upon the expiration of the lock-up period, subject to volume and other restrictions as applicable provided in Rules 144 and 701, as applicable, under the Securities Act. See “Underwriting—Lock-Up Agreements.” Our pre-IPO shareholders may be able to sell their Ordinary Shares under Rule 144 after the completion of this offering. Because these shareholders have paid a lower price per Ordinary Share than participants in this offering, when they are able to sell their pre-IPO shares under Rule 144, they may be more willing to accept a lower sales price than the IPO price. This fact could impact the trading price of the Ordinary Shares following the completion of the offering, to the detriment of participants in this offering. Under Rule 144, before our pre-IPO shareholders can sell their shares, in addition to meeting other requirements, they must meet the required holding period. To the extent shares are released before the expiration of the lock-up period and sold into the market, the market price of our Ordinary Shares could decline.

Our Company currently does not expect to pay dividends in the foreseeable future after this offering and you must rely on price appreciation of our Ordinary Shares for return on your investment.

Our Company currently intends to retain most, if not all, of the available funds and any future earnings after this offering to fund development and growth. As a result, our Company does not expect to pay any cash dividends in the foreseeable future. Therefore, you should not rely on an investment in our Ordinary Shares as a source for any future dividend income.

Our Company’s board of directors has complete discretion as to whether to distribute dividends, subject to certain requirements of Cayman Islands law. In addition, our Company’s shareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our Company’s directors. Under Cayman Islands law, a Cayman Islands company may pay a dividend out of either profit or share premium account, provided that in no circumstances may a dividend be paid if this would result in the company being unable to pay its debts as they fall due in the ordinary course of business. Even if our Company’s board of directors decides to declare and pay dividends, the timing, amount and form of future dividends, if any, will depend on the future results of operations and cash flow, our Company’s capital requirements and surplus, the amount of distributions, if any, received by our Company from the PRC subsidiaries, our financial condition, contractual restrictions and other factors deemed relevant by our Company’s board of directors. Accordingly, the return on your investment in our Ordinary Shares will likely depend entirely upon any future price appreciation of our Ordinary Shares. There is no guarantee that our Ordinary Shares will appreciate in value after this offering or even maintain the price at which you purchased the Ordinary Shares. You may not realize a return on your investment in our Ordinary Shares and you may even lose your entire investment in our Ordinary Shares.

Our Company has broad discretion in the use of the net proceeds from our initial public offering and may not use them effectively.

To the extent (i) our Company raises more money than required for the purposes explained in the section titled “Use of Proceeds” or (ii) our Company determines that the proposed uses set forth in that section are no longer in the best interests of our Company, our Company cannot specify with any certainty the particular uses of such net proceeds that our Company will receive from our initial public offering. Our management will have broad discretion in the application of such net proceeds, and our Company may spend or invest these proceeds in a way with which the shareholders disagree. The failure by our management to apply these funds effectively could harm the business and financial condition. Pending their use, our Company may invest the net proceeds from the initial public offering in a manner that does not produce income or that loses value.

You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because our Company is incorporated under Cayman Islands law.

Our Company is an exempted company incorporated under the laws of the Cayman Islands. Our corporate affairs are governed by our memorandum and articles of association, the Companies Act of the Cayman Islands, and the common law of the Cayman Islands. The rights of shareholders to take action against our directors, actions by our minority shareholders and the fiduciary duties of our directors to our Company under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands and from the common law of England, the decisions of whose courts are of persuasive authority, but are not binding, on a court in the Cayman Islands. The rights of our shareholders and the fiduciary duties of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedents in some jurisdictions in the United States. In particular, the Cayman Islands has a less developed body of securities laws than the United States. Some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands. In addition, Cayman Islands companies may not have the standing to initiate a shareholder derivative action in a federal court of the United States.

Shareholders of Cayman Islands exempted companies like our Company have no general rights under Cayman Islands law to inspect corporate records (other than the memorandum and articles of association and any special resolutions passed by such companies, and the register of mortgages and charges of such companies) or to obtain copies of lists of shareholders of these companies. Our directors have discretion under our post-offering memorandum and articles of association that will become effective immediately prior to completion of this offering 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, our public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of our board of directors or controlling shareholders than they would as public shareholders of a company incorporated in the United States. For a discussion of significant differences between the provisions of the Companies Act of the Cayman Islands and the laws applicable to companies incorporated in the United States and their shareholders, see “Description of Share Capital — Differences in Corporate Law.”

Certain judgments obtained against our Company by our shareholders may not be enforceable.

Our Company is a Cayman Islands company and substantially all of our assets are located outside of the United States. In addition, half of our current directors and officers are nationals and residents of countries other than the United States. As a result, it may be difficult or impossible for you to bring an action against our Company or against these individuals in the United States in the event that you believe that your rights have been infringed under the U.S. federal securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of China may render you unable to enforce a judgment against our assets or the assets of our directors and officers that reside outside of the United States.

There can be no assurance that our Company will not be a passive foreign investment company (“PFIC”) for United States federal income tax purposes for any taxable year, which could subject United States holders of our Ordinary Shares to significant adverse United States federal income tax consequences.

A non-United States corporation will be a passive foreign investment company, or PFIC, for United States federal income tax purposes for any taxable year if either (i) at least 75% of its gross income for such taxable year is passive income or (ii) at least 50% of the value of its assets (based on average of the quarterly values of the assets) during such year is attributable to assets that that produce or are held for the production of passive income. Based on the current and anticipated value of our assets and the composition of our income assets, our Company does not expect to be a PFIC for United States federal income tax purposes for our current taxable year ended December 31, 2024, or in the foreseeable future. However, the determination of whether or not our Company is a PFIC according to the PFIC rules is made on an annual basis and depend on the composition of our income and assets and the value of our assets from time to time. Therefore, changes in the composition of our income or assets or value of our assets may cause our Company to become a PFIC. The determination of the value of our assets (including goodwill not reflected on our balance sheet) may be based, in part, on the quarterly market value of Ordinary Shares, which is subject to change and may be volatile.

The classification of certain of our income as active or passive, and certain of our assets as producing active or passive income, and hence whether our Company is or will become a PFIC, depends on the interpretation of certain United States Treasury Regulations as well as certain guidance from the Internal Revenue Service, or IRS, relating to the classification of assets as producing active or passive income. Such regulations guidance is potentially subject to different interpretations. If due to different interpretations of such regulations and guidance the percentage of our passive income or the percentage of our assets treated as producing passive income increases, our Company may be a PFIC in one of more taxable years. If our Company is a PFIC for any taxable year during which a United States person holds Ordinary Shares, certain adverse United States federal income tax consequences could apply to such United States person.

For as long as our Company is an emerging growth company, our Company will not be required to comply with certain reporting requirements, including those relating to accounting standards and disclosure about our executive compensation, that apply to other public companies.

Our Company is classified as an “emerging growth company” under the JOBS Act because our Company generated less than US$1.235 billion in revenues for our last fiscal year. For as long as our Company is an emerging growth company, which may be up to five full fiscal years, unlike other public companies, our Company will not be required to, among other things, (i) provide an auditor’s attestation report on management’s assessment of the effectiveness of our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act, (ii) comply with any new requirements adopted by the PCAOB requiring mandatory audit firm rotation or a supplement to the auditor’s report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer, (iii) provide certain disclosure regarding executive compensation required of larger public companies, or (iv) hold nonbinding advisory votes on executive compensation. Our Company will remain an emerging growth company for up to five years, although our Company will lose that status sooner if our Company has more than $1.235 billion of revenues in a fiscal year, has more than $700 million in market value of our Ordinary Shares held by non-affiliates, or issues more than $1.0 billion of non-convertible debt over a three-year period.

To the extent that our Company relies on any of the exemptions available to emerging growth companies, you will receive less information about our executive compensation and internal control over financial reporting than issuers that are not emerging growth companies. If some investors find our Ordinary Shares to be 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. Our election to take advantage of any of the benefits of the extended transition period for complying with new or revised accounting standards allows for the delay of the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies, and that as a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates with similar disclosure.

Our Company is a foreign private issuer within the meaning of the rules under the Exchange Act, and as such our Company is exempt from certain provisions applicable to U.S. domestic public companies.

Because our Company qualifies as a foreign private issuer under the Exchange Act, our Company is exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including:

Our Company will be required to file an annual report on Form 20-F within four months of the end of each fiscal year. Press releases relating to financial results and material events will also be furnished to the SEC on Form 6-K. However, the information our Company

is required to file with or furnish to the SEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. As a result, you may not be afforded the same protections or information that would be made available to you were you investing in a U.S. domestic issuer.

If our Company fails to establish and maintain proper internal financial reporting controls, our ability to produce accurate financial statements or comply with applicable regulations could be impaired.

Pursuant to Section 404 of the Sarbanes-Oxley Act, our Company will be required to file a report by our management on our internal control over financial reporting, including an attention report on internal control over financial reporting issued by our independent registered public accounting firm. However, while our Company remains an emerging growth company, our Company will not be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. The presence of material weakness in internal control over financial reporting could result in financial statement errors, which, in turn, could lead to error of our financial reports and/or delays in our financial reporting, which could require our Company to restate our operating results. Our Company might not identify one or more material weaknesses in our internal controls in connection with evaluating our compliance with Section 404 of the Sarbanes-Oxley Act. In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal controls over financial reporting. Our Company will need to expend significant resources and provide significant management oversight. Implementing any appropriate changes to our internal controls may require specific compliance training of our directors and employees, entail substantial costs in order to modify our existing accounting systems, take a significant period of time to complete and divert management’s attention from other business concerns. These changes may not, however, be effective in maintaining the adequacy of our internal control.

If our Company is unable to conclude that our Company has effective internal controls over financial reporting, investors may lose confidence in our operating results, the price of the Ordinary Shares could decline and our Company may be subject to litigation or regulatory enforcement actions. In addition, if our Company is unable to meet the requirements of Section 404 of the Sarbanes-Oxley Act, the Ordinary Shares may not be able to remain listed on the exchange.

As a company incorporated in the Cayman Islands, our Company is permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from the Nasdaq listing standards. These practices may afford less protection to shareholders than they would enjoy if our Company complied fully with corporate governance listing standards.

As a foreign private issuer, our Company is permitted to take advantage of certain provisions in the Nasdaq listing standards that allow our Company to follow Cayman Islands law for certain governance matters. Certain corporate governance practices in the Cayman Islands may differ significantly from corporate governance listing standards as, except for general fiduciary duties and duties of care, Cayman Islands law has no corporate governance regime which prescribes specific corporate governance standards. Currently, our Company does not intend to rely on home country practice with respect to our corporate governance after our Company completes with this offering. However, if our Company chooses to follow home country practice in the future, our shareholders may be afforded less protection than they otherwise would have under corporate governance listing standards applicable to U.S. domestic issuers.

Our Company will incur increased costs as a result of being a public company, particularly after our Company ceases to qualify as an “emerging growth company.”

Upon completion of this offering, our Company will become a public company and expect to incur significant legal, accounting and other expenses that our Company did not incur as a private company. The Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the SEC and Nasdaq Stock Market, impose various requirements on the corporate governance practices of public companies. Our Company expects these rules and regulations to increase our legal and financial compliance costs and to make some corporate activities more time-consuming and costlier.

As a result of becoming a public company, our Company will need to increase the number of independent directors and adopt policies regarding internal controls and disclosure controls and procedures. Our Company also expects that operating as a public company will make it more difficult and more expensive for our Company to obtain director and officer liability insurance, and our Company may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. In addition, our Company will incur additional costs associated with our public company reporting requirements. It may also be more difficult for our Company to find qualified persons to serve on our board of directors or as executive officers. Our Company cannot predict or estimate with any degree of certainty the amount of additional costs our Company may incur or the timing of such costs.

In addition, after our Company is no longer an “emerging growth company,” our Company expects to incur significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 and the other rules and regulations of the SEC.

Our Company may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses.

As discussed above, our Company is a foreign private issuer, and therefore, our Company is not required to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act. The determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter. Our Company would lose our foreign private issuer status if, for example, more than 50% of our Ordinary Shares are directly or indirectly held by residents of the U.S. and our Company fails to meet additional requirements necessary to maintain our foreign private issuer status. If our Company loses our foreign private issuer status on this date, our Company will be required to file with the SEC periodic reports and registration statements on U.S. domestic issuer forms, which are more detailed and extensive than the forms available to a foreign private issuer. Our Company will also have to mandatorily comply with U.S. federal proxy requirements, and our officers, directors and principal shareholders will become subject to the short-swing profit disclosure and recovery provisions of Section 16 of the Exchange Act. In addition, our Company will lose our ability to rely upon exemptions from certain corporate governance requirements under the Nasdaq listing rules. As a U.S. listed public company that is not a foreign private issuer, our Company will incur significant additional legal, accounting and other expenses that our Company will not incur as a foreign private issuer, and accounting, reporting and other expenses in order to maintain a listing on a U.S. securities exchange.

The obligation to disclose information publicly may put our Company at a disadvantage to competitors that are private companies.

Upon completion of this offering, our Company will be a public company in the United States. As a public company, our Company will be required to file periodic reports with the SEC upon the occurrence of matters that are material to our Company and shareholders. Although our Company may be able to attain confidential treatment of some of our developments, in some cases, our Company will need to disclose material agreements or results of financial operations that our Company would not be required to disclose if our Company were a private company. Our competitors may have access to this information, which would otherwise be confidential. This may give them advantages in competing with our Company. Similarly, as a U.S. public company, our Company will be governed by U.S. laws that our competitors, which are mostly private Chinese companies, are not required to follow. To the extent compliance with U.S. laws increases our expenses or decreases our competitiveness against such companies, our public company status could affect our results of operations.

If we cannot satisfy, or continue to satisfy, the initial listing requirements and other rules of Nasdaq Capital Market, although we exempt from certain corporate governance standards applicable to US issuers as a foreign private issuer, our securities may not be listed or may be delisted, which could negatively impact the price of our securities and your ability to sell them.

We will consummate this offering only if our securities are approved for listing on the Nasdaq Capital Market. However, we cannot assure you that we will be able to meet those initial listing requirements at that time. Even if our securities are listed on the Nasdaq Capital Market, we cannot assure you that our securities will continue to be listed on the Nasdaq Capital Market after this offering.

If the Nasdaq Capital Market does not list our securities, or subsequently delists our securities from trading, we could face significant consequences, including:

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements that reflect our current expectations and views of future events, all of which are subject to risks and uncertainties. Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. You can find many (but not all) of these statements by the use of words such as “approximates,” “believes,” “hopes,” “expects,” “anticipates,” “estimates,” “projects,” “intends,” “plans,” “will,” “would,” “should,” “could,” “may” or other similar expressions in this prospectus. These statements are likely to address our growth strategy, financial results and product and development programs. You must carefully consider any such statements and should understand that many factors could cause actual results to differ from our forward-looking statements. These factors may include inaccurate assumptions and a broad variety of other risks and uncertainties, including some that are known and some that are not. No forward-looking statement can be guaranteed and actual future results may vary materially. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to:

We describe certain material risks, uncertainties and assumptions that could affect the operating entity’s business, and our financial condition and results of operations, under “Risk Factors.” We base our forward-looking statements on our management’s beliefs and assumptions based on information available to our management at the time the statements are made. We caution you that actual outcomes and results may, and are likely to, differ materially from what is expressed, implied or forecast by our forward-looking statements. Accordingly, you should be careful about relying on any forward-looking statements. Except as required under the federal securities laws, we do not have any intention or obligation to update publicly any forward-looking statements after the distribution of this prospectus, whether as a result of new information, future events, changes in assumptions, or otherwise.

Industry Data and Forecasts

This prospectus contains data related to the maternal and newborn skincare product industry in China. The industry data include projections that are based on a number of assumptions which have been derived from industry and government sources which we believe to be reasonable. The industry may not grow at the rate projected by industry data, or at all. The failure of the industry to grow as anticipated is likely to have a material adverse effect on the operating entity’s business and the market price of our Ordinary Shares. In addition, the rapidly changing nature of the industry subjects any projections or estimates relating to the growth prospects or future condition of the industry to significant uncertainties. Furthermore, if any one or more of the assumptions underlying the industry data turns out to be incorrect, actual results may, and are likely to, differ from the projections based on these assumptions.

ENFORCEABILITY OF CIVIL LIABILITIES

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

Substantially all of our assets are located in the PRC. In addition, half of our directors and officers are nationals or residents of the PRC and all or a substantial portion of their assets are located outside the United States. As a result, it may be difficult for investors to effect service of process within the United States upon our Company or these persons, or to enforce against our Company or them judgments obtained in United States courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States.

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

Ogier, our counsel with respect to the laws of the Cayman Islands, and AllBright Law Offices (Fuzhou), our counsel with respect to PRC law, have advised us that there is uncertainty as to whether the courts of the Cayman Islands or the PRC would (i) recognize or enforce judgments of United States courts obtained against our Company or our directors or officers predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States or (ii) entertain original actions brought in the Cayman Islands or the PRC against our Company or our directors or officers predicated upon the securities laws of the United States or any state in the United States.

Ogier has further advised us that it is uncertain whether the courts of the Cayman Islands will allow shareholders of our company to originate actions in the Cayman Islands based upon securities laws of the United States. In addition, there is uncertainty with regard to Cayman Islands law related to whether a judgment obtained from the U.S. courts under civil liability provisions of U.S. securities laws will be determined by the courts of the Cayman Islands as penal or punitive in nature. If such a determination is made, the courts of the Cayman Islands will not recognize or enforce the judgment against a Cayman Islands company, such as our company. As the courts of the Cayman Islands have yet to rule on making such a determination in relation to judgments obtained from U.S. courts under civil liability provisions of U.S. securities laws, it is uncertain whether such judgments would be enforceable in the Cayman Islands. Ogier has further advised us that although there is no statutory enforcement in the Cayman Islands of judgments obtained in the United States, the courts of the Cayman Islands will recognize and enforce a foreign judgement, without any re-examination or re-litigation of matters adjudicated upon, provided such judgment: (i) is given by a foreign court of competent jurisdiction; (ii) imposes on the judgment debtor a liability to pay a liquidated sum for which the judgment has been given; (iii) is final; (iv) is not in respect of taxes, a fine or a penalty; (v) was not obtained by fraud; and (vi) is not of a kind the enforcement of which is contrary to natural justice or the public policy of the Cayman Islands.

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

USE OF PROCEEDS

Based upon an assumed initial public offering price of $5.00 per Ordinary Share, which is the midpoint of the estimated initial public offering price range set forth on the cover page of this prospectus, we estimate that we will receive net proceeds from this offering, after deducting the estimated underwriting discounts and the estimated offering expenses payable by us, of approximately $7,738,112.

Our Company plans to use the net proceeds received from this offering for the following purposes:

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

DIVIDEND POLICY

As of the date of this prospectus, none of our PRC subsidiaries have made any dividends or distributions to our Company and our Company has not made any dividends or distributions to our shareholders or U.S. investors. Our Company intends to keep any future earnings to finance the business expansion, and our Company does not anticipate that any cash dividends will be paid in the foreseeable future. Subject to the PFIC rules, the gross amount of distributions our Company makes to investors with respect to our Ordinary Shares (including the amount of any taxes withheld therefrom) will be taxable as a dividend, to the extent that the distribution is paid out of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles.

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

If our Company determines to pay dividends on any of our Ordinary Shares in the future, as a holding company incorporated in the Cayman Islands, our Company will be dependent on receipt of funds from the WFOE. The WFOE, in turn, will be dependent on the receipt of funds from the operating entity.

The WFOE is a wholly foreign-owned enterprise under the PRC law. The regulations governing the distribution of dividends paid by the WFOE include Corporate Law (1993) as lastly amended in 2009, the Foreign Investment Law and its implementing Regulations, and the Enterprise Income Tax Law (2007) as lastly amended in 2018 and its implementation Regulations (2007) as lastly amended in 2019.

Current PRC regulations permit the operating entity to pay dividends to the WFOE only out of its accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, each of our subsidiaries in China 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. Each such entity in China is also required to further set aside a portion of its after-tax profits to fund the employee welfare fund, although the amount to be set aside, if any, is determined at the discretion of its board of directors. Although the statutory reserves can be used, among other purposes, to increase the registered capital and eliminate future losses in excess of retained earnings of the respective companies, the reserve funds are not distributable as cash dividends except in the event of liquidation.

The PRC government imposes controls on the conversion of RMB into foreign currencies and the remittance of currencies out of the PRC. Therefore, our Company may experience difficulties in complying with the administrative requirements necessary to obtain and remit foreign currency for the payment of dividends from the profits, if any. Furthermore, if our PRC subsidiaries incur debt on their own in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments. If our Company or our subsidiaries are unable to receive all of the revenue from our operations, our Company may be unable to pay dividends on our Ordinary Shares.

Cash dividends, if any, on our Ordinary Shares will be paid in U.S. dollars. The WFOE is considered a resident enterprise for PRC tax purposes, any dividends that the operating entity pays to the WFOE 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%.

In order for our Company to pay dividends to our shareholders, our Company will rely on payments made from the operating entity to the WFOE, and the distribution of such payments to our Company. According to the PRC Enterprise Income Tax Law, such payments from the operating entity to the WFOE are subject to the PRC enterprise income tax at a rate of 25%.

CAPITALIZATION

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

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

A $1.00 increase (decrease) in the assumed initial public offering price of $5.00 per Ordinary Share would increase (decrease) each of additional paid-in capital, total shareholders’ equity and total capitalization by $1,840,000, assuming the number of Ordinary Shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and estimated expenses payable by us.

DILUTION

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

Our net tangible book value as of December 31, 2023, was $7,297,215, or $0.61 per Ordinary Share. Net tangible book value represents the amount of our total consolidated tangible assets, less the amount of our total consolidated liabilities. Dilution is determined by subtracting the net tangible book value per Ordinary Share (as adjusted for the offering) from the initial public offering price per Ordinary Share and after deducting the estimated underwriting discounts to the Underwriter and the estimated offering expenses payable by us.

After giving effect to our sale of 2,000,000 Ordinary Shares offered in this offering based on the initial public offering price of $5.00 per Ordinary Share after deduction of the estimated underwriting discounts and non-accountable expense allowance to the Underwriter and the estimated offering expenses payable by us, our as adjusted net tangible book value as of December 31, 2023, would have been $15,035,327, or $1.07 per outstanding Ordinary Share. This represents an immediate increase in net tangible book value of $0.46 per Ordinary Share to the existing shareholders, and an immediate dilution in net tangible book value of $3.93 per Ordinary Share to investors purchasing Ordinary Shares in this offering. The as adjusted information discussed above is illustrative only.

The following table illustrates such dilution:

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

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

CORPORATE HISTORY AND STRUCTURE

Our Corporate History

Our Company is a Cayman Islands holding company with no material operations. Our Company conducts operations in China through our wholly owned indirect subsidiary Fujian Blue-Touch Technology Co., Ltd. (the operating entity).

In connection with this offering, we have undertaken a reorganization of our corporate structure. On September 27, 2021, we incorporated Blue-Touch Holdings Group Co., Ltd under the laws of the Cayman Islands. On December 20, 2021, we incorporated Fujian Blue-Touch Holdings Group Co., Ltd. (the “WFOE”) under the laws of the PRC, which became a wholly owned subsidiary of Blue-Touch Holdings Group Co., Ltd. On September 24, 2014, we incorporated the operating entity under the laws of the PRC, which became a wholly owned subsidiary of the WFOE on January 10, 2022. The WFOE entered into securities purchase agreements with the operating entity’s then shareholders on January 10, 2022. Accordingly, the WFOE acquired all of the shares of the operating entity, and the operating entity became a wholly-owned subsidiary of the WFOE.

Our Corporate Structure

Currently, our Company holds 100% equity interests in our PRC subsidiaries, and our Company does not use a variable interest entity structure. The following diagram illustrates our corporate structure as of the date of this prospectus and upon completion of our IPO based on 2,000,000 Ordinary Shares being offered.

Notes:

For details of each shareholder’s ownership, please refer to the beneficial ownership table in the section captioned “Principal Shareholders.”

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

The following discussion and analysis should be read in conjunction with our consolidated financial statements, the notes to those financial statements and other financial data that appear elsewhere in our prospectus. This discussion contains forward-looking statements that are based on our current expectations, estimates and projections about the operating entity’s business and operations. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in “Risk Factors” and elsewhere in this prospectus. See “Disclosure Regarding Forward-Looking Statements.”

Overview

Our Company is an offshore holding company incorporated in the Cayman Islands. Our Company does not conduct any substantive operations on its own. Instead, it conducts its business operations through the operating entity in China, which is principally engaged in designing, developing, and selling baby skincare products and toiletries, as well as household cleaning products under the brand Blue-Touch. Our Company derives revenue from the sale of baby skincare products and toiletries such as camellia oil moisturizer, camellia oil lotion, camellia oil 2-in-1 shampoo and body wash, and household cleaning products such as fabric softener, laundry detergent, and multi-functional cleaner.

Our business has grown in recent years, as demonstrated by our growth in revenue from approximately $8.27 million for the year ended December 31, 2022, to approximately $9.66 million for the year ended December 31, 2023, representing an increase of 16.82%. Our net income increased to approximately $1.35 million as of December 31, 2023, representing an increase of 21.89% compared to approximately $1.11 million as of December 31, 2022.

During the years ended December 31, 2023, and 2022, revenue from baby skincare products and toiletries accounted for approximately 51.70% and 47.06% of the total revenue, respectively, and revenue from household cleaning products accounted for approximately 48.30% and 52.94% of the total revenue, respectively.

Principal Factors Affecting Our Financial Performance

Our operating results are primarily affected by the following factors:

Impact of COVID-19

A global pandemic of a novel strain of coronavirus (COVID-19) first emerged in China in December 2019 and has spread globally. The pandemic resulted in quarantines, travel restrictions, and the temporary closure of stores and business facilities in China for the first half year of 2020. In March 2020, the World Health Organization declared COVID-19 as a global pandemic. The PRC government implemented enhanced screenings, quarantine requirements and travel restrictions in connection with the COVID-19 pandemic from early 2020 through the end of 2022. The impacts of the COVID-19 pandemic on the operating entity’s business, our financial condition, and results of operations include, but are not limited to, the following.

The operating entity temporarily closed its office and its manufacturers closed their production facilities in early February 2020, as required by the relevant PRC government authorities. The operating entity reopened its office in early March 2020, and its manufacturers gradually resumed business operations and became fully operational on March 20, 2020. Since May 2020, although production and logistical activities in certain parts of China were disrupted by the regional COVID-19 lockdowns, the Chinese government has eased the nationwide COVID-19 restrictions and has not mandated any nationwide lockdowns, and as a result, the nationwide production and logistical activities in China have gradually resumed.

In the fiscal year of 2021, the COVID-19 lockdowns implemented by the PRC government did not extend to Fujian province, where the operating entity’s major operations are located.

From January 2022 through December 2022, there were outbreaks of the Omicron variant of COVID-19 in the PRC, as a result of which, travel restrictions, mandatory COVID-19 tests, quarantine requirements and/or temporary closure of office buildings and facilities were imposed by local governments. Since December 2022, many restrictive policies previously adopted by the PRC government at various levels to control the spread of COVID-19 have been revoked or replaced with more flexible measures. The operating entity experienced temporary disruptions to its operations, when many of its employees were infected with COVID-19. Notwithstanding such temporary disruptions, during the fiscal year ended December 31, 2022, the operating entity’s business was not materially adversely affected by the COVID-19 pandemic.

In the fiscal year ended December 31, 2023 and as of the date of this prospectus, the operating entity’s business has not been materially adversely affected by the COVID-19 pandemic.

In the long term, the COVID-19 pandemic is likely to adversely affect the Chinese economy and financial market. The degree to which the pandemic ultimately impacts the operating entity’s business and our results of operations will depend on future developments beyond our control, including the severity of the pandemic, the actions to contain or treat the virus, and how quickly and to what extent the economic and operating conditions can resume.

Results of Operations

For the Fiscal Years Ended December 31, 2023 and 2022

The following table summarizes the results of our operations for the fiscal years ended December 31, 2023 and 2022, respectively, and provides information regarding the dollar and percentage increase (or decrease) during such years.

Revenue

The following table presents revenue by product categories for the fiscal years ended December 31, 2023 and 2022, respectively.

Our total revenue grew from approximately $8.27 million for the fiscal year ended December 31, 2022 to approximately $9.66 million for the fiscal year ended December 31, 2023, representing an increase of approximately 16.82%.

The operating entity has been dedicated to improving the existing product formulations to address the evolving needs of consumers, implementing multi-channel advertising, and encouraging its sales team to explore new markets and establish new customer relationships through a commission reward structure, which led to the increases in customer demand and sales of products for the fiscal year ended December 31, 2023. During the fiscal year ended December 31, 2023, the operating entity maintained stable relationships with the existing customers and also established relationship with three new customers. During the fiscal year ended December 31, 2023, the volume of products sold increased by approximately 14.55% in comparison to the fiscal year ended December 31, 2022, with the selling prices remaining unchanged.

Costs of Revenue

The following table presents cost of sales by product categories for the fiscal years ended December 31, 2023 and 2022, respectively.

Costs of revenue increased from approximately $5.03 million for the fiscal year ended December 31, 2022, to approximately $5.73 million for the fiscal year ended December 31, 2023, representing an increase of 13.76%. Such increase was mainly due to the increased volume of products sold.

Gross profit margin

The following table presents gross profit margin by product categories for the fiscal years ended December 31, 2023 and 2022, respectively.

Gross profit margin increased to 40.69% for the fiscal year ended December 31, 2023 from 39.09% for the fiscal year ended December 31, 2022.

Sales and marketing expenses

Sales and marketing expenses primarily comprise salaries and sales commissions of employees in the marketing department, transportation fees, fees associated with attending trade shows and similar exhibitions, advertisement expense and other miscellaneous items. The operating entity conducts sales activities through its sales team, which was comprised of 9 and 9 members as of the fiscal years ended December 31, 2023, and 2022, respectively. The operating entity encourages its professional sales team to explore new markets and establish new customer relationships through a commission reward structure. Sales and marketing expenses were approximately $1.09 million for the fiscal year ended December 31, 2023, representing an increase of approximately $0.17 million, or 19.15%, as compared to approximately $0.92 million for the fiscal year ended December 31, 2022. The increase was primarily due to the increased average in sales commissions made to the sales team and the increased transportation expense arising from marketing activities during the fiscal year ended December 31, 2023.

General and Administrative expenses

General and administrative expenses are incurred in the day-to-day operations of a business and may not be directly tied to a specific function or department, such as manufacturing, production, or sales. General and administrative expenses primarily comprise lease expenses, utilities, insurance, legal fees, certain salaries and operational overhead expenses that impact the entire business. General and administrative expenses were approximately $0.58 million for the fiscal year ended December 31, 2023, representing a decrease of approximately $0.02 million, or 4.16%, as compared to approximately $0.60 million for the fiscal year ended December 31, 2022. General and administrative expenses remained relatively stable without significant changes.

Research and development expenses

Research and development expenses are incurred for the development of new products and services (not meeting the capitalization criteria) each year. During the fiscal years ended December 31, 2023 and 2022, the Company recognized research and development expenses of approximately $0.50 million and approximately $0.24 million, respectively, representing an increase of approximately $0.25 million, or 107.18%. The increase was primarily due to an increase in amortization of the research and development expenditure as a result of a new outsourced research and development project with Xiamen Di En An Biotechnology Co., Ltd. during the fiscal year ended December 31, 2023. See “Business—Our Strengths—Product Innovation Efforts.”

Income from operations

The income from operations increased from approximately $1.47 million for the fiscal year ended December 31, 2022 to approximately $1.76 million for the fiscal year ended December 31, 2023, representing an increase of approximately $0.29 million, or 19.69%.

Total other income, net

For the fiscal year ended December 31, 2023, other income, net of other expenses, was $39,284, representing an increase of $28,006 compared to $11,278 for the fiscal year ended December 31, 2022. The increase in other income was primarily attributable to the foreign currency exchange gain incurred from the deferred offering expense paid on behalf of the Company by the shareholders and gain on disposal of property and equipment.

Net income

As a result of the factors described above, our net income for the fiscal year ended December 31, 2023 was approximately $1.35 million, compared to approximately $1.11 million for the fiscal year ended December 31, 2022, representing an increase of approximately $0.24 million, or 21.89%.

Liquidity and Capital Resources

Liquidity

In assessing our liquidity, we analyze our principal sources, our operating and capital expenditure commitments, our short-term loan commitments and the ability to obtain additional credit facilities such as bank loans and factoring arrangement in the next 12 months from the date of this prospectus.

Our principal sources of liquidity have been cash on hand and net cash flow from operations, which depend on our ability to generate sufficient revenue as well as net profit, and the Company’s ability to collect the accounts receivable.

During the years ended December 31, 2023 and 2022, our cash on hand and net cash flow from operations activities were historically sufficient to meet our working capital and capital expenditure requirements. As of December 31, 2023 and 2022, we had cash of approximately $3.22 million and $2.22 million, respectively. For the years ended December 31, 2023 and 2022, our revenue was approximately $9.66 million and $8.27 million, respectively, and net cash provided from operating activities was approximately $1.05 million and $0.59 million, respectively. We have maintained net positive working capital throughout the years ended December 31, 2023 and 2022, and maintained working capital of approximately $5.57 million and $4.79 million as of December 31, 2023 and 2022, respectively.

We believe we will be able generate sufficient profit for the next 12 months from the date of this prospectus, as we are able to grow our revenue and are able to provide the products with contribution margins sufficient to cover fixed and variable expenses in daily operations based on the current operating plan. We also expect to maintain positive operating cash flow as we are able to collect the payments within a period of 90 days.

Based on our current operating plan, we believe that our current cash of $3.22 million as of December 31, 2023 and our anticipated cash flows generated from operations, based on the operating performance during the years ended December 31, 2023 and 2022, will be sufficient to meet our cash requirements for the next 12 months from the date of this prospectus, provided that we maintain the current scale of our business. We believe that our current cash and anticipated cash flows from operations, together with the anticipated net proceeds from our initial public offering, will be sufficient to meet our anticipated cash needs for our business expansion and continuous revenue growth beyond the next 12 months from the date of this prospectus.

We may, however, in the future require additional cash resources, due to changing business conditions, implementation of our strategy to expand the business, or other investments or acquisitions we may decide to pursue. If our own financial resources are insufficient to satisfy our capital requirements, we may seek to sell additional equity or debt securities or obtain additional credit facilities, such as bank loans and factoring arrangements. The sale of additional equity securities could result in dilution to our shareholders. The incurrence of indebtedness would result in increased debt service obligations and could require us to agree to operating and financial covenants that would restrict our operations. Financing may not be available in amounts or on terms acceptable to us, if at all. Any failure by us to raise additional funds on terms favorable to us, or at all, could limit our ability to expand the business operations and could harm the overall business prospects.

The following table presents working capital for the fiscal years ended December 31, 2023 and 2022, respectively.

Because the exchange rate conversion is different for the consolidated balance sheets and the consolidated statements of cash flows, the changes in assets and liabilities reflected on the consolidated statements of cash flows are not necessarily identical with the comparable changes reflected on the consolidated balance sheets.

Cash Flow Summary

The following table sets forth a summary of our cash flows for the fiscal years ended December 31, 2023 and 2022:

Operating Activities:

Net cash provided by operating activities of continuing operations was approximately $1.05 million for the fiscal year ended December 31, 2023, primarily due to a net income of approximately $1.35 million adjusted by non-cash working capital and non-cash expenses. The adjustments for changes in assets and liabilities primarily included (i) an increase of approximately $0.55 million in deferred offering expenses, (ii) a decrease of approximately $0.14 million in accounts payable, and (iii) an increase of approximately $0.25 million in taxes payable.

Net cash provided by operating activities of continuing operations was approximately $0.59 million for the fiscal year ended December 31, 2022, primarily due to a net income of approximately $1.11 million adjusted by non-cash working capital and non-cash expenses. The adjustments for changes in assets and liabilities primarily included (i) an increase of approximately $0.54 million in accounts receivable, (ii) an increase of approximately $0.62 million in deferred offering expenses, and (iii) a decrease of accounts payable in the amount of approximately $0.21 million.

Investing Activities:

Net cash provided by investing activities of continuing operations was approximately $0.01 million for the fiscal year ended December 31, 2023. It was attributable to the proceeds in the amount of approximately $0.01 million of disposal of property and equipment.

No cash was provided by or used in investing activities of continuing operations for the fiscal year ended December 31, 2022.

Financing Activities:

Net cash used in financing activities of continuing operations was approximately $0.01 million for the fiscal year ended December 31, 2023. It was mainly attributable to approximately $0.58 million borrowed from, and approximately $0.59 million repaid to, the shareholder, Mr. Guanzhao Lin, and approximately $0.02 million repayment of a bank loan.

Net cash used in financing activities of continuing operations was approximately $0.05 million for the fiscal year ended December 31, 2022. It was mainly because we borrowed approximately $0.52 million from and repaid approximately $0.57 million to the shareholder, Mr. Guanzhao Lin.

Our Company expects to incur additional costs associated with becoming a public company in the United States, primarily due to increased expenses related to accounting and tax services, legal expenses and investor and stockholder-related expenses. These additional long-term expenses may require our Company to seek other sources of financing, such as additional borrowings or public or private equity or debt capital. The availability of these other sources of financing will depend upon our financial condition and results of operations as well as prevailing market conditions and may not be available on terms reasonably acceptable to our Company or at all.

Capital Resources

The following table sets forth a summary of our assets and liabilities as of December 31, 2023 and 2022:

Cash

As of December 31, 2023 and 2022, we had a total of approximately $3.22 million and $2.22 million in cash, which is wholly currently on deposit and held inside the PRC. Cash balances in bank accounts in the PRC are not insured by the Federal Deposit Insurance Corporation or other comparable programs. We have not transferred and do not plan to transfer our cash in RMB outside of the PRC, in order to avoid unnecessary currency exchange costs.

Current assets

Current assets as of December 31, 2023 totaled approximately $6.48 million, representing an increase of approximately $0.95 million, or 17.18%, from approximately $5.53 million as of December 31, 2022.

Current liabilities

Current liabilities as of December 31, 2023 were approximately $0.91 million, representing an increase of approximately $0.17 million, or 23.51%, compared to approximately $0.74 million as of December 31, 2022.

Credit Facility

We partially finance our operations through proceeds borrowed from our shareholder, Mr. Guanzhao Lin. Amounts due to related parties as of December 31, 2023 and December 31, 2022 include:

Our Company obtained several interest-free loans from Mr. Guanzhao Lin for daily operations and these loans are interest free, unsecured and repayable on demand. During the fiscal year ended December 31, 2023 and 2022, our Company borrowed approximately $0.59 million and $0.52 million from Mr. Guanzhao Lin to cover the offering expenses. As of December 31, 2023, the Company had repaid in full the outstanding amounts due to Mr. Guanzhao Lin.

Contractual Obligations

There were no significant contractual obligations and commercial commitments as of December 31, 2023 and 2022.

Trend Information

Other than as disclosed elsewhere in this prospectus, we are not aware of any trends, uncertainties, demands, commitments or events that are reasonably likely to have a material adverse effect on our revenue, net income, profitability, liquidity or capital resources, or that would cause reported financial information not necessarily to be indicative of future operating results or financial conditions.

Off-balance Sheet Commitments and Arrangements

No off-balance sheet arrangements for the years ended December 31, 2023 and 2022 have, or in the opinion of management are likely to have, a current or future material effect on our consolidated financial condition or results of operations.

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations are based upon our audited consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these audited consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses. We evaluate our estimates on an ongoing basis, including those related to revenue recognition and income taxes. We base our estimates on our historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making the judgments we make about the carrying values of our assets and liabilities that are not readily apparent from other sources. Because these estimates can vary depending on the situation, actual results may differ from the estimates.

The critical accounting policies summarized in this section are discussed in further detail in the notes to the audited consolidated financial statements appearing elsewhere in this annual report. Management believes that the application of these policies on a consistent basis enables us to provide useful and reliable financial information about our operating results and financial condition.

Revenue Recognition

We adopted Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”) for all years presented. The core principle of this new revenue standard is that a company should recognize revenue when control of the promised

goods or services is transferred to the customers, in an amount that reflects the consideration to which We expect to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle by us in determination of revenue recognition:

The operating entity derives revenue from the sales of household cleaning products, including fabric softener, laundry detergent, and multi-functional cleaner, and baby skincare products and toiletries, including camellia oil moisturizer, camellia oil lotion and shampoo. The operating entity directly sells the products to the distributors who generally sell the products offline through their own distribution networks. The operating entity considers those distributors to whom the operating entity sells the product to be the customers of the operating entity and their purchase orders to be the contracts with customers. As part of its consideration of the contract, the operating entity evaluates certain factors including the customer’s ability to pay. For each contract, the operating entity has the obligation to transfer products and deliver the products to the place designated by the customer within the agreed time, each of which is distinct, and has right to collect the payment within the agreed period after the distributors has control of the goods. The payment terms for the goods to be transferred can be identified in the order. The operating entity is a principal for this performance obligation. The transaction prices in the orders are agreed upon, once the quantity of goods is confirmed at the inception of the order. The contracts promised the customers conditional rights of return, which give rise to the variable consideration. Regarding to the rights of return, the operating entity evaluated the historical sales return and the impact of sales return is immaterial, and accordingly, the operating entity expected to be entitled to the full consideration for the transferred products and did not accrue any sales return allowance. Except for the rights of returns, the operating entity did not identify other clauses that give rise to variable considerations. Due to the nature of the products sold by the operating entity, there are no warranties provided by the operating entity. There is only one performance obligation in the contract and there is no need for the allocation of transaction price. The operating entity is responsible for delivering the products from its warehouse to its distributors’ storage facilities after accepting the finished products from the third-party manufacturers. The sales predominantly contain a single performance obligation and the revenue was recognized upon fulfillment of the performance obligation, after the distributors have control of the goods, typically at delivery, which is at a point of time.

Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities on the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. We base our estimates and judgments on historical experience and on various other assumptions and information that are believed to be reasonable under the circumstances. Estimates and assumptions of future events and their effects cannot be perceived with certainty and, accordingly, these estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as our operating environment changes. Significant estimates and assumptions by management include, among others, the valuation of accounts receivable, deferred offering expenses, and other receivables, useful lives and impairment of long-lived assets, allowance for doubtful accounts, income taxes including the valuation allowance for deferred tax assets. While we believe that the estimates and assumptions used in the preparation of the financial statements are appropriate, actual results could differ from those estimates. Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the financial statements in the period they are determined to be necessary.

Fair Value of Financial Instruments

We follow the provisions of Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures (“ASC 820”). It clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:

Level 1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.

Level 2-Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.

Level 3-Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.

The carrying amounts reported in the accompanying consolidated balance sheets, which primarily consist of, cash, accounts receivable, amounts due from related parties, other current assets, accounts payable, amounts due to related parties, and accrued expenses and other current liabilities approximate their fair value based on the short-term maturity of these instruments.

Recent Accounting Pronouncements

The Company considers the applicability and impact of all ASUs. Management periodically reviews new accounting standards that are issued.

Accounting Pronouncements Not Yet Adopted

In March 2022, the FASB amended the existing accounting guidance for troubled Debt Restructurings and issued ASU No. 2022-02 Financial Instruments—Credit Losses (Topic 326) Troubled Debt Restructurings and Vintage Disclosures. The amendments in this Update eliminate the accounting guidance for TDRs by creditors in Subtopic 310-40, Receivables—Troubled Debt Restructurings by Creditors, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. Specifically, rather than applying the recognition and measurement guidance for TDRs, an entity must apply the loan refinancing and restructuring guidance in paragraphs 310-20-35-9 through 35-11 to determine whether a modification results in a new loan or a continuation of an existing loan. For entities that have adopted the amendments in Update 2016-13, the amendments in this Update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company does not expect to early adopt this guidance and is in the process of evaluating the impact of adoption of this guidance on the Company’s consolidated financial statements

The Company does not believe other recently issued but not yet effective accounting statements, if adopted, would have a material effect on the Company’s consolidated balance sheets, statements of comprehensive income (loss) and statements of cash flows.

BUSINESS

Overview

Our Company is an offshore holding company incorporated in the Cayman Islands. Our Company does not conduct any substantive operations on its own. Instead, it conducts its business operations in China through the operating entity, Fujian Blue-Touch Technology Co., Ltd. The operating entity commenced its operation in 2014 and is principally engaged in designing, developing, and selling baby skincare products and toiletries, as well as household cleaning products under the brand Blue-Touch. Our Company, through the operating entity, aims to become a leading provider of baby skincare products and toiletries in China.

The operating entity’s current product portfolio comprises two main categories of products, including baby skincare products and toiletries as well as household cleaning products. For the baby skincare products and toiletries, the representative products include camellia body oil, camellia oil moisturizer, camellia oil lotion, camellia oil 2-in-1 shampoo and body wash. The operating entity obtained a Chinese patent on camellia oil extraction and processing technology in 2020. For the fiscal years ended December 31, 2023 and 2022, our revenue derived from sales of baby skincare products and toiletries was approximately $4.99 million and $3.89 million, respectively, accounting for 51.70% and 47.06% of our total revenue for the years, respectively. For the household cleaning products, the signature products comprise fabric softener, laundry detergent, and multi-functional cleaner. The operating entity developed a formula featuring compound fruit enzymes in 2017 and has applied it to certain household cleaning products. For the fiscal years ended December 31, 2023, and 2022, our revenue derived from sales of household cleaning products was approximately $4.66 million and $4.38 million, respectively, accounting for 48.30% and 52.94% of our total revenue for the years, respectively.

The operating entity relies on third-party manufacturers to manufacture its products and depends on distributors to sell its products in China. For the fiscal years ended December 31, 2023, and 2022, the operating entity worked with seven and nine third-party manufacturers located in the south of China, respectively. For the same fiscal years, the operating entity collaborated with 21 and 18 distributors located throughout China, respectively. For the same fiscal years, the operating entity maintained stable relationships with substantially all of its manufacturers and distributors.

As of the date of this prospectus, the operating entity pursues product development through collaboration with third-party research companies, and the operating entity’s success on product development depends on its collaboration with such third-party research companies. The operating entity’s internal staff are responsible for determining the research direction and initiating product proposals, and they also engage with detailed discussions and progress tracking in the research and development processes of third-party research companies. The third-party research companies are responsible for conducting the research and development of products.

Our Company’s revenue and net income have demonstrated a growth momentum in the previous two fiscal years. In the fiscal years ended December 31, 2023, and 2022, our revenue was $9,656,105 and $8,265,451, respectively, representing a growth rate of approximately 16.82%. For the same fiscal years, our net income was $1,354,341 and $1,111,133, respectively, representing a growth rate of approximately 21.89%.

Our Strengths

The operating entity focuses on creating value through the following drivers:

Product Innovation Efforts

The operating entity seeks to innovate and develop a unique product portfolio focusing on protecting human health and the ecological environment. To improve the existing product formulations and develop new camellia oil products, the operating entity collaborated with Guangzhou Bangduo Biological and Technology Co., Limited (“Guangzhou Bangduo”) and subsequently terminated the collaboration with Guangzhou Bangduo. Since then, the operating entity has worked with Guangzhou Motie Biotechnology Co., Ltd. (“Guangzhou Motie”). The operating entity terminated the collaboration with Guangzhou Bangduo and proceeded to work with Guangzhou Motie, because the research staff that worked with the operating entity transitioned from Guangzhou Bangduo to Guangzhou Motie. Copies of the agreements for 2023 and 2022 between the operating entity and Guangzhou Bangduo have been filed as Exhibits 10.5 and 10.4 to this registration statement, of which this prospectus is a part. A copy of the current agreement between the operating entity and Guangzhou Motie has been filed as Exhibit 10.8. According to such agreement, the operating entity is entitled to own the intellectual property rights generated during the course of collaboration with Guangzhou Motie. The operating entity is responsible for providing funds in the amount of RMB2.4 million, and Guangzhou Motie is responsible for completing the research and development in accordance with the operating entity’s requirements. The aggregate amounts paid under the agreement to date total RMB1.3 million, the term of the agreement is from January 1, 2024 to December 31, 2024, and the agreement can be terminated after consensus is reached by the operating entity and Guangzhou Motie. The term of the agreement will not be extended unless the parties enter into a new agreement.

During the fiscal year ended December 31, 2023, the operating entity started collaborating with an additional third-party research company, Xiamen Di En An Biotechnology Co., Ltd. (“Xiamen Di En An”), to develop new products. A copy of the agreement between the operating entity and Xiamen Di En An has been filed as Exhibit 10.6 to this registration statement, of which this prospectus is a part. The operating entity will be entitled to own the intellectual property resulting from such collaboration. The operating entity is responsible for providing funds in the amount of RMB1.2 million under this agreement, and Xiamen Di En An is responsible for completing the research and development in accordance with the operating entity’s requirements. The aggregate amounts paid under the agreement to date total RMB1.2 million, the term of the agreement is from April 1, 2023 to March 31, 2024, and the agreement can be terminated after consensus is reached by the operating entity and Xiamen Di En An. The term of the agreement will not be extended unless the parties enter into a new agreement. As of the date of this prospectus, the operating entity has started negotiating a new agreement with Xiamen Di En An, but no new agreement has been agreed to.

In addition to establishing an alliance with external consultants, the operating entity also cultivates its internal innovation and development team. The internal innovation and development team comprises three full-time employees and two professional consultants, each of whom has approximately 10 years of industry experience on average. Each of the two professional consultants has more than 20 years of industry experience; one having served as an expert at a research center associated with a world-renowned consumer-goods company, and the other one working closely with hospitals and health technology companies. The operating entity’s internal staff are responsible for determining the research direction and initiating product proposals, and they also engage with detailed discussions and progress tracking in the research and development processes of third-party research companies.

During the fiscal years ended December 31, 2023, and 2022, the operating entity’s total innovation and development expenditure reached approximately $498,601 and $240,659, respectively.

Product Quality Control

The operating entity implements comprehensive measures to maintain product quality and safety. To ensure product quality and safety in the production processes, the operating entity carefully selects and evaluates the third-party manufacturers by conducting onsite inspections. All of the selected third-party manufacturers have the production qualifications. None of the third-party manufacturers have been investigated for product safety incidents or punished by the relevant government authorities for product safety issues. After selecting third-party manufacturers, the operating entity performs onsite supervision at such manufacturers’ facilities from time to time to ensure the production processes are consistent with the operating entity’s requirements.

To ensure product quality and safety in general, the operating entity selects and stipulates tested ingredients for the production of its products. The product formulations prioritize the use of vegetable-based raw materials. In addition, the operating entity ensures the products undergo stringent quality and safety tests. For instance, before dispatching the products from the manufacturing facilities, each third-party manufacturer is required to conduct quality and safety tests on each batch of the products. After receiving the products from the third-party manufacturers, the operating entity’s external consultants at third-party research companies perform random sampling for quality and safety testing. The testing focuses on both physical properties and chemical components of the products. If the testing uncovers any product quality or safety issue, the operating entity will immediately contact the third-party manufacturers, return the products to them for reprocessing, investigate the causes behind the issue, and require the third-party manufacturers to make rectification.

As of the date of this prospectus, the operating entity has not been subject to any significant product quality and safety incidents, nor has it been punished by any relevant government authorities for product quality and safety issues, nor has it received any complaints from any end consumers about product quality and safety issues.

Established Relationships with Manufacturers and Distributors

We believe that the operating entity’s strong relationships with major manufacturers and top distributors is one of its strongest advantages. For the fiscal years ended December 31, 2023 and 2022, the operating entity maintained stable relationships with substantially all of its manufacturers and distributors. As of the date of this prospectus, there have not been any significant business interruptions with these manufacturers and distributors, except for the disruptions caused by the COVID-19 pandemic. See “Management’s Discussion And Analysis Of Financial Condition And Results Of Operations—Impact of COVID-19.” Such sustainable relationships promote stable product supply and well-established distribution networks, thereby ensuring the operating entity’s ability to offer the products to the target consumers in a timely and cost-effective manner. For the operating entity’s major manufacturers and distributors, see “—Business Operations.”

Experienced and professional management team

The operating entity’s management team has extensive industry or management experience, which reaches approximately 10 years on average for each member. The management team has accumulated comprehensive knowledge in finance, sales, product management, product innovation and development, and administration matters.

Growth Strategies

In order to maintain the operating entity’s competitiveness in the marketplace, the operating entity plans to adopt the following growth strategies:

In the short term, or in the next three years, the operating entity plans to increase its brand recognition and corporate profitability by launching new products and expanding its offline distribution networks. In the medium term, or in the next three to five years, the operating entity plans to establish online sales channels without compromising the existing offline sales networks. To increase online sales, the operating entity considers building new brands or developing new products for online sales only. In the long term, or in more than five years, the operating entity plans to expand the existing sales channels and build its own sales channels by establishing signature stores, opening franchise stores, selling the products through third-party retail establishments, as well as through mergers and acquisitions of appropriate distributors.

During the fiscal year ended December 31, 2023, the operating entity updated the packaging for its existing products.

By implementing the growth strategies, we hope the operating entity will improve its results of operations, offer safe, reliable and reasonably priced skincare products to the consumers, and grow into a leader of the Chinese maternal and newborn skincare industry.

Business Operations

Our Company’s headquarters is in Fuzhou City, Fujian Province, China. The operating entity works with third-party manufacturers and distributors to conduct its business operations.

Sourcing and Production

The operating entity has no manufacturing facilities and relies on third-party manufacturers to produce its products. The operating entity stipulates the product formulation criteria, brands products, and outsources production to third-party manufacturers. The operating entity depends on certain third-party manufacturers for different product types. The third-party manufacturers produce products in accordance with the operating entity’s specific orders. To determine the type and quantity of products that are to be manufactured, the operating entity gathers, considers, and analyzes customer demand, market predictions, and product inventory status.

The operating entity signs annual processing and manufacturing agreements with third-party manufacturers. The decision of whether to outsource production to a particular third-party manufacturer is based on the analysis of various factors, including production qualifications for skincare products, manufacturing capacity, industry experience, operating scale, corporate reputation, corporate credit history, corporate management, location, previous governmental punishments, and pending commercial litigation. For the fiscal years ended December 31, 2023 and 2022, the operating entity worked with seven and nine third-party manufacturers, respectively, four and four of which independently accounted for at least 10% of the finished products by value, respectively. For the same fiscal years, the operating entity maintained stable relationships with substantially all the third-party manufacturers and there have not been any significant manufacturing interruptions or business disputes with such manufacturers. If the operating entity loses any one third-party manufacturer, we believe that the operating entity would be able to find a replacement of appropriate manufacturing capacity at reasonable cost due to the low concentration and high competitiveness of manufacturers. As such, we do not believe that the loss of any one third-party manufacturer would have a material adverse impact on the operating entity’s ability to offer its products.

The table below summarizes the major contract terms with the top third-party manufacturers and their respective revenue percentages for the fiscal years ended December 31, 2023 and 2022:

Note:

In addition, the production of the operating entity’s products could be affected by the cost and availability of raw materials, such as camellia seed oils, grape seed soils, sodium hyaluronate, fruit enzymes, and packaging components. See “Risk Factors—The loss of multiple suppliers or a significant disruption or interruption in the supply chain may adversely affect the operating entity’s business.” The third-party manufacturers source and obtain all the raw materials to produce the operating entity’s products. According to the third-party manufacturers’ price quotations and the operating entity’s assessment of market conditions, the price and supply of raw materials remained stable in the fiscal years ended December 31, 2023 and 2022.

Distribution and Sale

After manufacturing, packaging, and labeling, the operating entity sells its products to distributors who generally sell the products through their offline distribution networks in China. The distributors generally do not sell the products directly to end consumers, but instead sell to supermarkets, convenience stores, and specialty stores for maternity and newborn care products, which then sell the products to end consumers. The type and quantity of products to be distributed depend on product popularity, product inventory status, and market predictions.

The decision of whether to entrust a distributor is based on the analysis of various factors, including years of relevant experience, distribution capacity in the target market, corporate reputation, previous governmental punishments, and pending commercial litigation. For the fiscal years ended December 31, 2023 and 2022, the operating entity worked with 21 and 18 distributors that are located throughout China, respectively, two and two of which accounted for at least 10% of the total revenue, respectively. For the same fiscal years, the operating entity maintained stable relationships with substantially all the distributors and there have not been any interruptions or business disputes with such distributors. If the operating entity loses any one significant distributor, it might adversely affect the business operations in the short term, but we believe that the operating entity would be able to find a suitable replacement due to the increasing popularity of its branded products and the low concentration of distributors. As such, we do not believe that the loss of any one distributor would have an enduring material adverse impact on the operating entity’s ability to distribute its products.

The table below summarizes the major contract terms with the top distributors and their respective revenue percentages for the fiscal years ended December 31, 2023 and 2022:

Note:

The table below summarizes the number of distributors in each province where the operating entity’s products are distributed for the fiscal years ended December 31, 2023, and 2022:

Logistics and Warehousing

The third-party manufacturers deliver the finished products to the operating entity and bear the costs incurred by such delivery. Certain third-party manufacturers also bear the risk of loss associated with such delivery in accordance with their respective processing and manufacturing agreements. Thereafter, the operating entity stores the products in its warehouse with an area of approximately 600 square meters, delivers the products as needed by distributors, and is responsible for the delivery costs incurred by transporting the products from the operating entity to each distributor. The risk of loss is transferred from the operating entity to the transportation agency once the products leave the operating entity’s warehouse and are received by the transportation agency. After the distributors accept the products at their storage facilities, they are responsible for the subsequent warehousing, logistics, and the risk of loss. For the operating entity’s warehousing capacity, see “—Operating Lease Right-of-Use Assets.”

Our Products

Product Portfolio

Motivated to provide quality products to Chinese consumers, the operating entity has developed a product portfolio including two main categories, consisting of baby skincare products and toiletries and household cleaning products.

Baby skincare products and toiletries

Camellia Oil	Camellia Body Oil	Camellia Oil Lotion

Camellia Oil Moisturizer		Camellia Oil 2-in-1 Shampoo and body Wash

Baby skincare products and toiletries are marketed and sold under the brand Blue-Touch and include camellia oil, camellia body oil, camellia oil moisturizer, camellia oil lotion, and camellia oil 2-in-1 shampoo and body wash. The main ingredients generally contain vitamin E, camelia oil, and other components that feature organic origins. The operating entity’s proprietary camellia-oil-based product formulations serve as a common thread among these products and are a key differentiator in the operating entity’s products from its competition. The operating entity devoted significant efforts to developing such camellia-oil-based product formulations. It used its patented technology to extract and process camellia oil, and collaborated with external consultants to design different experimental product formulations based on camellia oil, select one experimental product formulation after testing and fine-tuning, perform sample product testing on the selected product formulation, collect feedback from users on sample products, and put the products through stringent testing, as required by the applicable PRC laws and regulations.

For the fiscal years ended December 31, 2023, and 2022, baby skincare products and toiletries accounted for 51.70% and 47.06% of the total revenue, respectively. For the same fiscal years, sales of the operating entity’s largest product, camellia oil, accounted for approximately 23.10% and 23.75% of the total revenue, respectively, and sales of the operating entity’s second largest product, camellia body oil, accounted for approximately 13.56% and 7.32% of the total revenue, respectively.

Household cleaning products

Laundry Detergent for Babies	Fruit and Vegetable Wash & Bottle Cleaner	Laundry Detergent for Lingerie

Household cleaning products are marketed under the brand Blue-Touch and include fruit enzyme bottle cleaner, fruit enzyme laundry detergent for babies, fruit enzyme laundry detergent for lingerie, fabric softener, multi-functional cleaner, and cleaning wipes, among other products. The operating entity developed a formula featuring compound fruit enzymes by testing dozens of fruit enzymes and combining these fruit enzymes with other raw materials to achieve expected product results. Such formula featuring compound fruit enzymes has been applied to certain household cleaning products. For the fiscal years ended December 31, 2023, and 2022, the household cleaning products accounted for 48.30% and 52.94% of the total revenue, respectively.

Target Consumers

The baby skincare products and toiletries are tailor-made for babies from infancy through three years and attract female consumers between ages 25 and 35. The household cleaning products are fit for various applications and attract consumers of all age groups. We believe that a vast number of our female consumers between ages 25 and 35 are highly-educated young mothers, who research product ingredients and formulations and impose high requirements for the quality and safety of baby skincare products and toiletries. To understand changes in consumer preferences and industry trends, the operating entity collects market feedback from distributors, conducts market analyses, and attends online and offline industry events from time to time.

Product Pricing

The pricing of products sold to distributors is universal and does not vary with the identity of the distributor. Such pricing is based on the consideration of production costs, profit margins, and market prices of similar products. The pricing of products sold to target consumers is based on the universal market price determined by the operating entity and does not vary with the market area. To determine such universal market price, the operating entity considers product positioning, market prices of similar products, and the target consumers’ purchasing power.

The universal market price for camellia oil baby skincare products and toiletries generally ranges from RMB120 to RMB200 per product. The universal market price for household cleaning products generally ranges from RMB30 to RMB100 per product. We believe that the operating entity’s pricing is competitive and is not a barrier to growing the business.

Sales and Marketing

The operating entity conducts sales activities through its professional sales team. This team is comprised of approximately nine members, each of whom has at least nine years of sales experience on average, as of the fiscal year ended December 31, 2023. The operating entity encourages its professional sales team to explore new markets and establish new customer relationships through a commission reward structure.

The operating entity consolidates multi-channel marketing programs to increase the attractiveness of its products. The marketing programs are implemented through online advertising, social media marketing, and outdoor advertising activities within communities, to increase the publicity and word-of-mouth referrals of the products. The marketing programs are designed by a third-party advertising agency and supervised by the operating entity. The operating entity has been working with the same third-party advertising agency for more than four years, and such advertising agency has been able to propose, design, and implement marketing programs and strategies in line with the operating entity’s expectations. Copies of the agreements for 2023 and 2022 between the operating entity and such advertising agency have been filed as Exhibits 10.7 and 10.3 to this registration statement, of which this prospectus is a part. A copy of the current agreement between the operating entity and such advertising agency has been filed as Exhibit 10.10, and the term of the agreement is from January 1, 2024 to December 31, 2024. The operating entity reviews and considers the marketing programs each year to evaluate whether the operative programs focus on product quality and safety and whether they have been translated into trusted relationships with the target consumers.

Market Competition

The market in which the operating entity’s products are sold is highly competitive. According to Respect Marketing Research Inc., whom the operating entity commissioned in September 2022 to produce the “China Maternal and Infant Washing & Care Product Industry Research Report” (the “RMR Report”), the size of the Chinese maternal and newborn bathing and skincare market was estimated to be $7.59 billion in 2021 and is expected to grow up to $12.92 billion in 2026. Growth drivers of this market include China’s population base, China’s recent birthrate-boosting family planning policy shift, Chinese consumers’ rising disposable income, and Chinese consumers’ increasing emphasis on quality of life, among others.

The operating entity’s products compete against similar products of many large and small companies, including well-known global competitors. According to the RMR Report, global competitors include Johnson & Johnson, Aveeno, Pigeon and Sebamed, and local brands include Baby Elephant, Frog Prince, and Yumeijing. As new competitors enter the market, we expect competition in this market will continue to be intense. Competition in this market is primarily based on the development and the improvement of new and existing products and processes, product quality and safety, brand recognition, and product pricing.

Human Capital

The operating entity strives to attract, recruit, and retain talents through its compensation and benefit programs, as well as learning and development opportunities that support career advancement. In addition to salaries, the operating entity offers complementary benefits including, among other things, endowment insurance, medical insurance, unemployment insurance, employment injury insurance and maternity insurance, as required by the applicable laws and regulations in China.

The operating entity enters into employment agreements with each of its employees. The employment agreements typically contain confidentiality restrictions through the time period the information remains confidential, among other restrictions. We believe that the operating entity maintains good working relationships with its employees, and it has not experienced any labor disputes. None of the employees are represented by labor unions.

The operating entity has a total of 31 full-time employees and 2 part-time employees as of the date of this prospectus. The operating entity had 31, 31 and 31 full-time employees and 2, 2, and 2 part-time employees as of December 31, 2021, 2022 and 2023, respectively. The following table sets forth the numbers of employees categorized by function as of the date of this prospectus.

Operating Lease Right-of-Use Assets

The operating entity’s principal executive office is located in Fuzhou City, Fujian Province, China, with an area of approximately 1,000 square meters. The operating entity’s warehouse is located in Fuzhou City, Fujian Province, China, with an area of approximately 600 square meters. The operating entity’s principal executive office and warehouse are leased from the same party, Fujian Blue-Touch Products Inc., under one lease agreement. Under such lease agreement, the lease term is from January 1, 2019 to December 31, 2025. The lessor, Fujian Blue-Touch Products Inc., is an enterprise in which interests in the voting power are owned by close members of our controlling shareholder’s family. The operating entity is entitled to the right of first refusal to renew the lease agreement upon one month’s written notice of such renewal.

The operating entity’s cosmetics production process testing and inspection facility is located in Fuzhou City, Fujian Province, China, with an area of approximately 450 square meters. Such facility is also leased from Fujian Blue-Touch Products Inc. Under the lease agreement, the lease term is from January 1, 2021 to December 31, 2025. The operating entity may exercise its right of first refusal to renew the lease agreement upon one year’s written notice. The lease agreement may be terminated by the operating entity upon three months’ notice.

The operating entity does not hold title or interest in any other property or plants. We believe that the current facilities are adequate for the time being. The operating entity intends to renew all the leases in accordance with the current leases. There may be a need to secure additional office space as the operating entity’s business grows.

Intellectual Property

As of the date of this prospectus, the operating entity has registered eleven trademarks, five copyrights, one domain name, and two patents in China. These two patents are both owned by the operating entity and consist of (i) one invention patent which is protected for 20 years from the application date, and (ii) one design patent which is protected for ten years from the application date. The operating entity relies on a combination of intellectual property laws and restrictions on disclosure to protect its intellectual property rights. However, there is no assurance that this form of protection will be successful in any given case, particularly since the laws of the PRC do not protect proprietary rights as fully as in the United States. As of the date of this prospectus, the operating entity’s intellectual property rights have not been subject to any adverse claims for infringement upon third parties’ trademarks, licenses, and other intellectual property rights in China. The operating entity has not been involved in any litigation or other claims related to any third party’s intellectual property rights. The chart below presents information about some intellectual property that the operating entity has registered or applied for.

Type	Name	Issuing Authority / Registration Institution	Application Date / Registration Date	Status	Expiration Date
Patent	Camellia oil extraction and application (Type: invention)	Patent Office of China National Intellectual Property Administration	November 25, 2015	Registered	November 25, 2035
	Packaging bottle 1 (BT-001) (Type: design)		August 27, 2018	Registered	August 26, 2028
Trademark	(Trademark Class: 29)	Trademark Office of China National Intellectual Property Administration	January 14, 2021	Registered	January 13, 2031
	(Trademark Class: 10)		January 14, 2021	Registered	January 13, 2031

	(Trademark Class: 21)		January 14, 2021	Registered	January 13, 2031
	(Trademark Class: 30)		January 14, 2021	Registered	January 13, 2031
	(Trademark Class: 5)		January 14, 2021	Registered	January 13, 2031
	(Trademark Class: 8)		February 14, 2021	Registered	February 13, 2031
	(Trademark Class: 3)		December 28, 2019	Registered	December 27, 2029
	(Trademark Class: 5)		May 7, 2020	Registered	May 6, 2030
	(Trademark Class: 5)		July 7, 2020	Registered	July 6, 2030
	(Trademark Class: 5)		April 21, 2020	Registered	April 20, 2030

Seasonality

The operating entity’s business is generally subject to seasonal fluctuations. The operating entity experiences peaks in demand for its baby skincare products in winter from October to December. We believe the consumers’ heavier spending on the baby skincare products is partly due to the cold and dry winter weather in China. The revenue from baby skincare products from October to December can account for approximately 33% of the total annual revenue from baby skincare products. The household cleaning products are not subject to seasonal fluctuations.

Material contracts

In the preceding two years from the date of this prospectus, the operating entity has entered into no material contracts, excluding the contracts entered into in the ordinary course of its business, other than as described in this prospectus.

Insurance

The operating entity maintains certain insurance policies to safeguard against risks and unexpected events. For example, the operating entity provides social security insurance, including endowment insurance, medical insurance, unemployment insurance, employment injury insurance, and maternity insurance for its employees in compliance with the applicable PRC laws. The operating entity maintains auto insurance as required by the PRC laws. The operating entity does not maintain business interruption insurance or product liability insurance, which are not mandatory under the PRC laws. The operating entity does not maintain key person insurance. During the fiscal years ended December 31, 2023, and 2022, the operating entity did not make any material insurance claims in relation to its business.

Legal Proceeding

From time to time, the operating entity may become a party to various legal or administrative proceedings arising in the ordinary course of its business, including actions with respect to intellectual property infringement, breach of contract, and labor and employment claims. As of the date of this prospectus, the operating entity is not a party to any material lawsuits, and we are not aware of any threats of lawsuits against the operating entity that are anticipated to have a major impact on the operating entity’s business. Litigation or any other legal or administrative proceeding, regardless of the outcome, is likely to result in substantial cost and diversion of resources, including the management’s time and attention.

REGULATIONS

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

Foreign Investment

PRC Company Law and Foreign Investment Laws

The PRC Company Law was adopted by the Standing Committee of the National People’s Congress of the PRC (the “SCNPC”) on December 29, 1993, and was last amended on October 26, 2018 (the “Company Law”). The Company Law governs the establishment, operations and management of corporate entities in the PRC. On December 24, 2021, the SCNPC issued a draft revision to the Company Law (the “Draft Revision”) and made it available for public comments. The Draft Revision provides additional stipulations regarding a corporate entity’s establishment, liquidation, organizational structure and capital system, strengthens the responsibilities of shareholders and management personnel, and highlights corporate social responsibility. Foreign invested enterprises (“FIEs”) must comply with the Company Law, unless the PRC foreign investment laws provide otherwise.

The Foreign Investment Law of the PRC (the “Foreign Investment Law”) was adopted by the National People’s Congress of the PRC (the “NPC”) on March 15, 2019 and came into force on January 1, 2020. The Foreign Investment Law grants national treatment to an FIE except when such enterprise operates in industries deemed to be “encouraged,” “restricted,” or “prohibited.” The Catalog of Encouraged Industries for Foreign Investment (2020 Edition) (the “Catalog”) lists the “encouraged” industries for foreign investment. The Catalog was promulgated jointly by the National Development and Reform Commission (the “NDRC”) and the Ministry of Commerce (the “MOFCOM”) on December 27, 2020 and became effective on January 27, 2021. The Special Administrative Measures (Negative List) for the Entrance of Foreign Investment (2021 Version) (the “Negative List”) identifies the “prohibited” and “restricted” industries for foreign investment. The Negative List was promulgated jointly by the NDRC and the MOFCOM on December 27, 2020 and became effective on January 1, 2022. The Catalog and the Negative List contain specific market entrance rules for foreign investment in different industries. If the investment falls within the “encouraged” category, such foreign investment will be entitled to certain preferential treatment and benefits extended by the government. If the investment falls within the “restricted” category, such foreign investment will be permitted to the extent that it satisfies certain restrictions under the PRC laws. If the investment falls within the “prohibited” category, such foreign investment will be prohibited. If the investment falls within an industry not included in the Negative List, such foreign investment will be allowed, unless it is specifically prohibited or restricted by other PRC laws and regulations.

The Implementing Regulations of the Foreign Investment Law (the “Implementing Regulations”) were promulgated by the State Council of the PRC (the “State Council”) on December 26, 2019 and came into effect on January 1, 2020. According to the Implementing Regulations, an FIE must be registered with the State Administration for Market Regulation (the “SAMR”) or its authorized local counterparts. A foreign investor or an FIE must submit investment information to the MOFCOM or its local counterparts via the enterprise registration system and the enterprise credit information publicity system. The Foreign Investment Law and the Implementing Regulations apply to the investment made by an FIE in the PRC.

The Measures on Reporting of Foreign Investment Information (the “Reporting Measures”), promulgated jointly by the MOFCOM and the SAMR on December 30, 2019, came into effect on January 1, 2020. The Reporting Measures replaced the Provisional Measures on Record-filing Administration over the Establishment and Change of Foreign-invested Enterprises. Pursuant to the Reporting Measures, an FIE must report investment information for establishment, modification, dissolution and annual reports of the FIE.

According to our PRC legal counsel, AllBright Law Offices (Fuzhou), as of the date of this prospectus, neither the Company nor the PRC subsidiaries have been subject to any investigation, or receive any notice, warning, or sanction from relevant government authorities related to non-compliance with the PRC Company Law or foreign investment laws.

M&A Rules

On August 8, 2006, the MOFCOM, the State-owned Assets Supervision and Administration Commission of the State Council, the State Administration of Taxation (the “SAT”), the China Securities Regulatory Commission (the “CSRC”), the State Administration for Industry and Commerce, and the State Administration of Foreign Exchange (the “SAFE”) jointly promulgated the Regulations on the Merger and Acquisition of Domestic Enterprises by Foreign Investors (the “M&A Rules”). The M&A Rules came into effect on September 8, 2006 and were amended on June 22, 2009. The M&A Rules require a foreign investor to obtain necessary approvals when the investor (i) acquires the equity of a Chinese enterprise so as to convert the Chinese enterprise into an FIE; (ii) subscribes for new equity of a Chinese enterprise so as to convert the Chinese enterprise into an FIE; (iii) establishes an FIE, which purchases and operates the assets of a Chinese enterprise; or (iv) purchases the assets of a Chinese enterprise, and then invests such assets to establish an FIE. The M&A Rules, among other things, further require that an offshore special purpose vehicle (the “SPV”), formed for overseas listing purposes and controlled directly or indirectly by PRC companies or individuals, shall obtain the CSRC’s approval prior to listing such SPV’s securities on an overseas stock exchange, especially in the event that the SPV acquires shares or an equity interest in the PRC companies by offering the shares of any offshore companies. Pursuant to Article 11 of the M&A Rules, where a Chinese company, enterprise or natural person intends to acquire their related Chinese company in the name of an offshore company which they lawfully established or control, such acquisition shall be subject to the examination and approval of the MOFCOM.

According to our PRC legal counsel, AllBright Law Offices (Fuzhou), as of the date of this prospectus, the Company and the PRC subsidiaries are in full compliance with the M&A Rules in China, and there have not been notifications of any non-compliance.

Overseas Listing

On July 6, 2021, the relevant PRC government authorities released the Opinions on Strictly Cracking Down Illegal Securities Activities, which provided that the administration and supervision of overseas-listed China-based companies will be strengthened, and the special provisions of the State Council on overseas issuance and listing of shares by such companies will be revised, clarifying the responsibilities of domestic industry competent authorities and regulatory authorities.

On December 24, 2021, the CSRC released the Administrative Provisions of the State Council Regarding the Overseas Issuance and Listing of Securities by Domestic Enterprises (Draft for Comments) (the “Draft Administrative Provisions”) and the Measures for the Overseas Issuance of Securities and Listing Record-Filings by Domestic Enterprises (Draft for Comments) (the “Draft Filing Measures”, and collectively with the Draft Administrative Provisions, the “Draft Rules Regarding Overseas Listing”), which stipulate that Chinese-based companies, or the issuer, shall fulfill the filing procedures after the issuer makes an application for initial public offering and listing in an overseas market, and certain overseas offering and listing such as those that constitute a threat to or endanger national security, as reviewed and determined by competent authorities under the State Council in accordance with law, may be prohibited under the Draft Rules Regarding Overseas Listing. On February 17, 2023, with the approval of the State Council, the CSRC released the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the “Trial Measures”) and five supporting guidelines, effective on March 31, 2023. According to the Trial Measures, among other requirements, (1) domestic companies that seek to offer or list securities overseas, both directly and indirectly, should fulfill the filing procedures with the CSRC; if a domestic company fails to complete the filing procedures, such domestic company may be subject to administrative penalties; and (2) where a domestic company seeks to indirectly offer and list securities in an overseas market, the issuer shall designate a major domestic operating entity responsible for all filing procedures with the CSRC, and such filings shall be submitted to the CSRC within three business days after the submission of the overseas offering and listing application. On the same day, the CSRC also held a press conference for the release of the Trial Measures and issued the Notice on Administration for the Filing of Overseas Offering and Listing by Domestic Companies, which clarifies that (1) on or prior to the effective date of the Trial Measures, domestic companies that have already submitted valid applications for overseas offering and listing but have not obtained approval from overseas regulatory authorities or stock exchanges may reasonably arrange the timing for submitting their filing applications with the CSRC, and must complete the filing before the completion of their overseas offering and listing; (2) a six-month transition period will be granted to domestic companies which, prior to the effective date of the Trial Measures, have already obtained the approval from overseas regulatory authorities or stock exchanges, but have not completed the indirect overseas listing; if domestic companies fail to complete the overseas listing within such six-month transition period, they shall file with the CSRC according to the requirements; and (3) the CSRC will solicit opinions from relevant regulatory authorities and complete the filing of the overseas listing of companies with contractual arrangements which duly meet the compliance requirements, and support the development and growth of these companies. According to the Trial Measures, if the Company fails 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 for such violations 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.

According to our PRC legal counsel, AllBright Law Offices (Fuzhou), as of the date of this prospectus, neither we nor the PRC subsidiaries have been subject to any investigation, or received any notice, warning, or sanction from the CSRC or other applicable government authorities related to this offering. However, we are required to file with the CSRC in relation to this offering. As of the date of this prospectus, we have submitted a filing report and other required materials in connection with the CSRC filing procedures to the CSRC. There is no assurance that we can complete such filing in a timely manner or even at all. Any failure by us to comply with such filing requirements may result in an order to rectify, warnings and fines against us and could materially hinder our ability to offer or continue to offer our securities.

In addition, on December 28, 2021, the Cyberspace Administration of China published the Cybersecurity Review Measures (2021), which came into effect on February 15, 2022 and has replaced the current Cybersecurity Review Measures (2020). The Cybersecurity Review Measures provides that the operators of critical information infrastructure must pass a cybersecurity review when purchasing network products and services which do or may affect national security. In addition, if an “online platform operator” that is in possession of personal data of more than one million users intends to list in a foreign country, it must apply for a cybersecurity review. Based on a set of Q&A published on the official website of the State Cipher Code Administration in connection with the issuance of the Cybersecurity Review Measures (2021), an official of the said administration indicated that an online platform operator should apply for a cybersecurity review prior to the submission of its listing application with non-PRC securities regulators.

According to our PRC legal counsel, AllBright Law Offices (Fuzhou), the PRC subsidiaries are unaffected by the Cybersecurity Review Measures because it is neither an operator of critical information infrastructure nor an “online platform operator” possessing personal data of more than one million users.

Manufacture and Sale of Cosmetics

Manufacturing Licensing of Cosmetics and Cosmetics Classification

Pursuant to the Cosmetics Supervision and Administration Regulation, which was promulgated on June 16, 2020 by the State Council and took effect on January 1, 2021, the Cosmetics Classification Rules and Catalog, which was promulgated on April 8, 2021 by the National Medical Products Administration (“NMPA”) and took effect on May 1, 2021, and the Administrative Measures for the Registration and Record Filing of Cosmetics, which was promulgated on January 7, 2021 by the SAMR and took effect on May 1, 2021, the NMPA under the State Council shall be responsible for cosmetics supervision and administration nationwide. According to the Cosmetics Supervision and Administration Regulation promulgated on June 16, 2020, the PRC implements category-based administration on cosmetics products and cosmetic ingredients according to the degree of risks.

The cosmetics ingredients are classified into new ingredients and ingredients that have been used. PRC exercises the registration administration on the new cosmetic ingredients with higher degree of risks (including new cosmetic ingredients that have the functions of preventing corrosion, sunscreen, coloring, hair dyeing, and freckle removal and whitening) and record-filing administration on other new cosmetic ingredients. New cosmetic ingredients are natural or artificial ingredients that are used in cosmetics for the first time within the territory of China. The NMPA shall, within three working days upon acceptance of an application for the registration of new cosmetic ingredients, forward the application materials to the technical evaluation agency and the technical evaluation agency shall complete technical review. The registrant or record-filing party of new cosmetic ingredients shall, within three years after the new cosmetic ingredients that have been registered or filed for the record are put into use, annually report the use and safety conditions of new ingredients to the NMPA. The registration or record-filing of new cosmetic ingredients that have safety issues shall be revoked or cancelled by the NMPA. The new cosmetic ingredients that have no safety problems upon expiry of three years shall be included in the catalogue of used cosmetic ingredients formulated by the NMPA. The catalogue of ingredients prohibited from being used in the production of cosmetics shall be formulated and promulgated by the NMPA. Cosmetic ingredients shall meet the compulsory national standards and technical specifications. Where there is any change in recognition of the safety of cosmetics and cosmetic ingredients based on the development of scientific research or where there is any evidence showing that cosmetics and cosmetic ingredients may have defects, the drug regulatory department of the people’s government at or above the provincial level may order the cosmetics registrant or record-filing party and new cosmetic ingredients to conduct safety re-evaluation or directly organize safety re-evaluation. Where the re-evaluation results indicate that the safety of cosmetics or cosmetic ingredients cannot be guaranteed, the original registration or record-filing authority shall revoke or cancel the registration or record-filing. The NMPA shall include the cosmetic ingredients in the catalogue of ingredients prohibited from being used in the production of cosmetics and release the same to the public. To ensure the safety conditions of new ingredients, the NMPA shall exercise supervision within three years after the new cosmetic ingredients that have been registered or filed for the record are put into use.

Cosmetics are classified into special cosmetics (used for hair coloring, hair perm, freckle removal and whitening, sun protection and hair loss prevention and those that claim new efficacy) and ordinary cosmetics. The PRC exercises the registration administration on special cosmetics and record-filing administration on ordinary cosmetics. Special cosmetics may be manufactured only after they are registered with the NMPA and ordinary cosmetics shall be filed for the record with the drug regulatory departments of the provincial governments. For application for registration of special cosmetics or record-filing of ordinary cosmetics, the formula of the product or total ingredients of the product, materials for product safety evaluation shall be submitted. The NMPA shall examine the applications for registration of special cosmetics under the procedures for examining the registration of new cosmetic ingredients. To ensure the safety conditions of cosmetics, the PRC establishes a monitoring system for adverse events of cosmetics. Cosmetics registrants and

record-filing parties shall monitor the adverse events of the cosmetics marketed, carry out the evaluation in time, and report to the cosmetic adverse effect monitoring institutions in accordance with the regulations of the NMPA.

The products the operating entity sells are “cosmetics” defined by the Cosmetics Supervision and Administration Regulation. Before engaging in the production of cosmetics, an enterprise shall file an application for the cosmetics manufacturing permit with the provincial drug regulatory department. The cosmetics manufacturing permit is valid for five years.

According to the List of Banned Ingredients for Cosmetics and List of Banned Plant (Animal) Ingredients for Cosmetics, which was updated by the NMPA on May 26, 2021, and the Catalog of Used Cosmetic Ingredients (2021 Edition), which was promulgated by the NMPA on April 27, 2021 and took effect on May 1, 2021, cosmetics registrants or record-filing parties shall not produce or import cosmetics that use prohibited ingredients in their formulas and such prohibited ingredients are specified in the List of Banned Ingredients for Cosmetics and List of Banned Plant (Animal) Ingredients for Cosmetics. The Catalog of Used Cosmetic Ingredients (2021 Edition) lists certain ingredients as banned, restricted or permitted ingredients for cosmetics. The cosmetics registrants or record-filing parties shall use the ingredients that meet the laws and regulations, mandatory national standards, and the Technical Specifications for Safety of Cosmetics.

According to our PRC legal counsel, AllBright Law Offices (Fuzhou), as of the date of this prospectus, neither the Company nor the operating entity is engaged in any production activities. Third-party manufacturers are engaged for the production of the operating entity’s products and all of such third-party manufacturers have the cosmetics manufacturing permits. Since there are no new cosmetic ingredients with a higher degree of risk that the operating entity selects for the production of its products and the products that the operating entity sells are not classified as special cosmetics, the operating entity’s products are subject to record-filing, rather than registration with the NMPA and such products are not subject to technical review with the technical evaluation agency. As of the date of this prospectus, neither the Company nor the operating entity has been subject to any investigation, nor received any notice, warning, or sanction from relevant government authorities related to non-compliance with the laws and regulations relevant to cosmetic safety. All of the cosmetic products that the operating entity sells have been properly filed. All ingredients used in the products that the operating entity sells are permitted to be used in the production of cosmetics, as required by the applicable governmental authorities.

Cosmetics Label

According to the Cosmetics Supervision and Administration Regulation, the smallest sales unit of cosmetics shall be labeled. The labels shall comply with the relevant laws, administrative regulations and mandatory national standards, and be true, complete and accurate. Pursuant to the Measures for Administration of Cosmetic Labels, which was promulgated on May 31, 2021 by the NMPA and became effective on May 1, 2022, cosmetics shall be attached with the Chinese labels.

According to our PRC legal counsel, AllBright Law Offices (Fuzhou), all of the cosmetics products that the operating entity sells have Chinese labels attached in accordance with the Measures for Administration of Cosmetic Labels. As of the date of this prospectus, neither the Company nor the operating entity has been subject to any investigation, or receives any notice, warning, or sanction from relevant government authorities related to non-compliance with the relevant laws.

Toiletries and Skin Care Products for Children

According to the Supervision and Administration of Cosmetics for Children, which was promulgated on September 30, 2021 by the NMPA and came into force as of January 1, 2022, the term “cosmetics for children” refers to toiletries and other skin care products that are applicable to the children of or below 12 years old and have cleaning, moisturizing, refreshing and sun-proofing effects. Cosmetics manufacturers and business operators shall establish and implement a record system to ensure the traceability of cosmetics for children. Cosmetics for children shall be produced in accordance with the manufacturing practice for cosmetics. The environmental requirements of the workshops for skin care cosmetics for children shall meet the relevant regulations.

The formula design of cosmetics for children shall follow the principles of “priority of safety,” “necessity of efficacy” and “minimum formula.” The cosmetic ingredients that have a long history of safe use shall be used, and no new ingredients that are still in the monitoring period may be used.

Cosmetics for children shall carry the signs for cosmetics for children as prescribed by the NMPA on the display side of the product packages.

According to our PRC legal counsel, AllBright Law Offices (Fuzhou), all of the cosmetics products for children that the operating entity sells meet the requirements of the Supervision and Administration of Cosmetics for Children.

Product Quality and Production Safety

Pursuant to the Production Safety Law of the PRC (the “Production Safety Law”), which was promulgated by the SCNPC on June 29, 2002, took effect on November 1, 2002 and was amended on June 1, 2004, August 27, 2009, and August 31, 2014, producers and business operators shall have the work safety conditions as specified in the Production Safety Law and relevant laws, administrative regulations and national standards or industrial specifications. Producers and business operators that do not have such conditions are not allowed to engage in production or operation activities.

The containers or transportation vehicles for dangerous articles used by producers and business operators shall be made by professional manufacturers in accordance with relevant regulations, and they shall not be put into use until they pass the tests and checks conducted by professionally qualified testing and checking institutions and safe use certificates or safety tags are issued. In addition, where dangerous articles are to be manufactured, run, transported, stored, used or to be disposed of or scrapped, the matter shall be submitted to the competent departments for approval in accordance with the relevant laws and regulations as well as the national standards or industrial specifications and shall be supervised and controlled by such departments.

According to the Product Quality Law of the PRC (the “Product Quality Law”), which was promulgated by the SCNPC on February 22, 1993, was last amended on December 29, 2018 and took effect on the same day, the Product Quality Law applies to all activities of production and sale of any product within the territory of the PRC, and the producers and sellers shall be liable for product quality in accordance with the Product Quality Law. According to the Product Quality Law, consumers or other victims who suffer personal injury or property losses due to product defects may demand compensation from the producer as well as the seller. Where the responsibility for product defects lies with the producer, the seller has the right to recover such compensation from the producer if it takes the responsibility and makes a compensation, and vice-verse. Violations of the Product Quality Law may result in the imposition of fines. In addition, the seller or producer may be ordered to suspend operation and its business license may be revoked. Criminal liability may be incurred in serious cases.

According to our PRC legal counsel, AllBright Law Offices (Fuzhou), as of the date of this prospectus, neither the Company nor the operating entity has been subject to any investigation, nor received any notice, warning, or sanction from relevant government authorities related to non-compliance with the Production Safety Law or Product Quality Law.

Consumer Protection and Unfair Competition

Protection of Rights and Interests of Consumers

According to the Law of the PRC on the Protection of Rights and Interests of Consumers (the “Consumer Protection Law”) which was promulgated by the SCNPC on October 31, 1993, took effect on January 1, 1994 and was amended on August 27, 2009 and October 25, 2013, the rights and interests of consumers who purchase and use goods or receive services for consumption needs shall be protected. Business operators providing goods manufactured or sold by them to consumers or providing services shall comply with the Consumer Protection Law. Violations of the Consumer Protection Law may result in the imposition of fines. In addition, the operator will be ordered to suspend operations and its business license will be revoked. Criminal liability may be incurred in serious cases.

According to the Part VII tort liability of the Civil Code of the PRC promulgated by the NPC on May 28, 2020 and became effective on January 1, 2021, in the event of an injury caused by a defective product, either the manufacturer or seller of such product, as a tortfeasor, may be subject to tortious liability and relevant remedies seeking by the consumers. If the product defect is caused by the manufacturer, the manufacturer shall be held responsible and the seller, if having made the compensation, shall be entitled to seek reimbursement from the manufacturer. If, on the other hand, the defects of the products are caused by the fault of the seller, the seller shall be held responsible and the manufacturer, if having made the compensation, shall be entitled to seek reimbursement from the seller.

According to our PRC legal counsel, AllBright Law Offices (Fuzhou), as the date of this prospectus, neither the Company nor the operating entity has been subject to any investigation, nor received any notice, warning, or sanction from relevant government authorities related to non-compliance with the relevant laws.

Unfair Competition

According to the Law of the PRC Against Unfair Competition (the “Against Unfair Competition Law”) which was promulgated by the SCNPC on September 2, 1993, took effect on December 1, 1993 and was amended on November 4, 2017 and April 23, 2019, business operators shall adhere to the principles of voluntary participation, equality, fairness and integrity in their production and business operation, and comply with laws and business ethics. Unfair competition referred to in the Against Unfair Competition Law shall mean the behavior of an operator who violates the provisions of this law in its production and business operation, disrupts market competition order, or harms the legitimate rights and interests of other business operators or consumers. Business operators who violate the provisions of the Against Unfair Competition Law and cause others to suffer damages shall bear civil liability pursuant to the law. Where the legitimate rights and interests of a business operator are harmed by unfair competitions, the business operator may file a lawsuit with a court. The compensation for a business operator who suffer damages due to unfair competition shall be determined in accordance with the actual losses suffered as a result of the infringement; where it is hard to ascertain the actual losses, the compensation shall be determined in accordance with the gains made by the infringer from the infringement. For business operators who infringe upon commercial secrets maliciously and if the case is serious, the compensation amount may be determined in accordance with one to five times the amount determined using the aforesaid method. The compensation amount shall also include reasonable expenses paid by the business operator to stop the infringement.

According to our PRC legal counsel, AllBright Law Offices (Fuzhou), as the date of this prospectus, neither the Company nor the operating entity has been subject to any investigation, nor received any notice, warning, or sanction from relevant government authorities related to non-compliance with the Against Unfair Competition Law.

Price Law

According to the Price Law of the PRC (the “Price Law”) promulgated by the SCNPC on December 29, 1998 and took effect on May 1, 1998, an operator must adhere to the principles of fairness, lawfulness, honesty and trustworthiness when setting a price. Production and operating costs and the market supply and demand situation will be the basis on which an operator determines the price. Operators which sell and purchase commodities or provide services must show marked prices in accordance with the provisions of the government department in charge of pricing. The name of the product, place of production, specifications, grade, price unit, price or service item and fee standard and other relevant details must be clearly indicated. An operator must not sell goods at a price higher than the marked price, nor collect any fees which are not clearly indicated. An operator must not carry out any improper pricing acts, such as colluding with others to manipulate market prices, thereby infringing on the legal rights and interests of other operators or consumers. If an operator is involved in any of the pricing infringement listed in the Price Law, authorities will order it to rectify the matter, will confiscate any illicit gains and may also impose a fine of up to five (5) times the amount of the illicit gains. A warning will be given and a fine may be imposed if there are no illicit gains. In serious circumstances, the operator will be ordered to suspend operations while rectification is being carried out or the administration for industry and commerce will revoke the business license. An operator which causes a consumer or another operator to pay too much due to a pricing infringement must refund the excess amount. If the consumer or other operator has incurred a loss as a result of the infringement, the operator will bear liability for compensation in accordance with the law. If an operator violates the provisions on clearly marked prices, authorities will order it to rectify the matter, will confiscate any illicit gains and may also impose a fine of up to 5,000 yuan.

According to our PRC legal counsel, AllBright Law Offices (Fuzhou), as of the date of this prospectus, we believe the Company and the operating entity have been in full compliance with the Price Law and neither has received any notifications of any non-compliance of the related laws.

Intellectual Property Rights

Trademarks

The Trademark Law of the PRC (the “Trademark Law”) was promulgated by the SCNPC on August 23, 1982, was last revised on April 23, 2019 and became effective on November 1, 2019. According to the Trademark Law, any natural person, legal person or other organization that needs to obtain the exclusive right to use a trademark for its goods or services in the course of manufacturing and business activities shall apply to the trademark office of the administrative department for industry and commerce under the State Council for trademark registration. A registered trademark refers to a trademark that is registered with the approval of the trademark office.

The owner of a registered trademark enjoys the exclusive right to use the trademark. A registered trademark shall be valid for 10 years, commencing from the date when its registration is approved. The exclusive right to use a registered trademark shall be limited to trademarks which are registered upon approval and to the commodities on which the use of a trademark is approved.

According to the Trademark Law, if anyone uses a trademark that is similar to a registered trademark on the same kind of goods, or uses a trademark that is identical with or similar to the registered trademark on similar goods, without the authorization of the registered trademark owner, and the use is likely to cause confusion, such use shall constitute infringement on the trademark owner’s exclusive right to use the registered trademark. Any dispute over infringement upon the exclusive right to use a registered trademark shall be resolved through negotiation. Where the parties concerned refuse to negotiate or a negotiation fails, the trademark registrant or any interested party may file a lawsuit in the court, or request the administrative department for industry and commerce to deal with the dispute.

According to our PRC legal counsel, AllBright Law Offices (Fuzhou), as of the date of this prospectus, the operating entity has eleven registered trademarks in the PRC. See “Business—Intellectual Property.”

Copyrights

The Copyright Law of the PRC (the “Copyright Law”) was promulgated by the SCNPC on September 7, 1990, and was last amended on November 11, 2020 and became effective on June 1, 2021. According to the Copyright Law, works of Chinese citizens, legal persons or unincorporated organizations, whether published or not, shall have copyright in accordance with the Copyright Law. The National Copyright Administration shall be responsible for the administration of copyrights nationwide. The local departments of copyright at or above the county level shall be responsible for the administration of copyright in their respective administrative regions.

The duration of copyright protection is generally fifty years. Copyright includes the right of publication, authorship, alteration, integrity, reproduction, distribution, rental, exhibition, performance, projection, broadcasting, communication through information network, cinematography, adaptation, translation, compilation and other rights.

A copyright dispute may be settled through mediation, or be submitted to an arbitration institution for arbitration under a written arbitration agreement between the parties or under the arbitration clause in the copyright contract. In the event there is neither a written arbitration agreement between the parties nor an arbitration clause in the copyright contract, parties may directly bring a lawsuit in a court.

According to our PRC legal counsel, AllBright Law Offices (Fuzhou), as of the date of this prospectus, the operating entity has five registered copyrights in the PRC. See “Business—Intellectual Property.”

Domain names

The Administrative Measures for Internet Domain Names was promulgated by the MIIT on August 24, 2017 and became effective on November 1, 2017. It applies the “first-to-file” principle to domain name registration service, unless otherwise provided in relevant rules.

According to the Interpretation of the Supreme People’s Court on several issues concerning the Applicable Law in the trial of civil cases involving network domain names promulgated on July 17, 2001 and amended on December 29, 2020, where the court determines that the registration and use of a domain name constitutes infringement or unfair competition, it may order the defendant to stop the infringement or cancel the domain name, or, at the request of the plaintiff, order the plaintiff to register and use the domain name. If actual damage is caused to the right holder, the defendant may be ordered to compensate for the loss.

According to our PRC legal counsel, AllBright Law Offices (Fuzhou), as of the date of this prospectus, the operating entity has one registered domain name in the PRC. See “Business—Intellectual Property.”

Patents

According to the PRC Patent Law promulgated by the SCNPC on March 12, 1984 and last amended on October 17, 2020 with effect from June 1, 2021, and its latest Implementation Rules promulgated by the State Council on January 9, 2010 and took into effect on February 1, 2010, the National Intellectual Property Administration is responsible for administering patents in the PRC. Inventions, utility models, and designs with the features of novelty, inventiveness and practical applicability, are three kinds of patent defined and protected under the PRC Patent Law. The State Intellectual Property Office is responsible for examining and approving patent applications. Once the application is approved, the applicants can have their patent under Chinese legal protection for a long term since its application date, which is 20 years for invention and ten years for utility models and designs.

According to our PRC legal counsel, AllBright Law Offices (Fuzhou), as of the date of this prospectus, the operating entity has two registered patents in the PRC. See “Business—Intellectual Property.”

As of the date of this prospectus, the operating entity has legally obtained adequate copyrights, trademarks and domains names to support its operations and as its business develops, it may need to apply for or obtain more intellectual rights. Neither the Company, nor the operating entity has infringed, nor have they received any notice of infringement or been subject to any disputes regarding the intellectual property of others since inception.

Taxation

Enterprise Income Tax (“EIT”)

According to the Enterprise Income Tax Law of the PRC (the “EIT Law”) and the Implementation Rules of the EIT Law, an enterprise established outside the PRC with a de facto management body within the PRC is considered as a resident enterprise for PRC enterprise income tax purposes. An enterprise which is established under the laws of foreign countries and has no de facto management body within the PRC, but has established institutions or premises in the PRC, or has no such institutions or premises but has income generated from the PRC, is considered as a non-resident enterprise. EIT shall be applicable at a uniform rate of 25% to both resident or non-resident enterprises. EIT shall be payable by a resident enterprise for income sourced within or outside the PRC. EIT shall be payable by a non-resident enterprise, for income sourced within the PRC by its institutions or premises established in the PRC, and for income sourced outside the PRC for which the institutions or premises established in the PRC have a de facto relationship. Where the non-resident enterprise has no institutions or premises established in the PRC or has income bearing no de facto relationship with the institution or premises established in the PRC, EIT shall be payable by the non-resident enterprise only for income sourced within the PRC at the rate of 20%. A PRC withholding tax at the rate of 10% is applicable to dividends payable to foreign investors that are non-resident enterprises to the extent that such dividends have their sources within the PRC, unless otherwise provided in any applicable tax treaty. Similarly, any gain realized on the transfer of equity interests by such investors is subject to the EIT at the rate of 10% if such gain is regarded as income derived from the PRC.

According to our PRC legal counsel, AllBright Law Offices (Fuzhou), the applicable EIT rate of the PRC subsidiaries is 25%. As of the date of this prospectus, we believe that the Company and the PRC subsidiaries are in full compliance with the EIT Law and rules in China, and there have not been any notifications of any instance of non-compliance provided to the Company or the PRC subsidiaries by the relevant authorities.

In addition, the SAT promulgated the Announcement of the SAT on Several Issues Relating to Enterprise Income Tax on Transfer of Assets between Non-resident Enterprises (the “SAT Bulletin 7”) on February 3, 2015, which took effect on the same date. According to the SAT Bulletin 7, where a non-resident enterprise makes indirect transfer of assets such as the equity of a Chinese resident enterprise through arrangements which do not have a reasonable commercial objective, to circumvent enterprise income tax payment obligation, the indirect transfer shall be redefined pursuant to the provisions of Article 47 of the EIT Law as direct transfer of assets. For the purpose of SAT Bulletin 7, direct transfer of taxable assets shall mean assets of organizations and premises in China, immovables in China, equity investments in Chinese resident enterprises etc., which are directly held by a non-resident enterprise and for which the proceeds from transfer shall be subject to enterprise income tax in China, and indirect transfer of taxable assets in China shall mean transfer by a non-resident enterprise of equity and other similar interests of an overseas enterprise which holds taxable assets in China directly or indirectly (excluding Chinese resident enterprises registered overseas), which gives rise to a transaction that has identical or similar substantial results as direct transfer of taxable assets in China, including restructuring of a non-resident enterprise which causes changes in shareholders of an overseas enterprise.

The parties to the transaction of indirect transfer of taxable assets in China and the Chinese resident enterprise whose equity is the subject matter of the indirect transfer may report the transfer to the tax authorities in charge.

Value-added Tax (“VAT”)

Pursuant to the Pilot Scheme for Replacing Business Tax with Value-Added Tax (the “Pilot Scheme”), which was issued jointly by the Ministry of Finance of the PRC (“MOF”) and the SAT on November 16, 2011 and became effective on the same day, the VAT rate of 17% applies to movable property leasing services, the VAT rate of 11% applies to transportation and construction services, and the VAT rate of 6% applies to the other modern services, such as research and technical services, information technology services, cultural and creative services, and logistics support services. As of August 1, 2013, the Pilot Scheme has been implemented nationwide.

Pursuant to the Provisional Regulations on Value-added Tax of the PRC (the “VAT Regulations”), which was promulgated by the State Council on December 13, 1993, and was last amended and became effective on November 19, 2017, and the Implementing Rules of the Provisional Regulations on Value-added Tax of the PRC, which was promulgated by the MOF on December 25, 1993, and was last amended on October 28, 2011, entities or individuals in the PRC engaging in the sale of goods, services, intangible assets or real estate, the provision of processing, repairs and replacement services, and the importation of goods are required to pay VAT. The amount of VAT payable is calculated by subtracting “input VAT” from “output VAT.” Where a taxpayer engages in the sale or importation of goods, provision of processing, repairs and replacement services, or moving property leasing, the VAT rate is 17%, except as otherwise provided in the VAT Regulations.

Pursuant to the Notice of the Ministry of Finance and the State Administration of Taxation on the Adjustment of VAT Rates promulgated by the Ministry of Finance and State Administration of Taxation on April 4, 2018 and took effective on May 1, 2018, the deduction rates of 17% applicable to the taxpayers who have VAT taxable sales activities are adjusted to 16%. Pursuant to the Announcement on Policies for Deepening the VAT Reform promulgated by the Ministry of Finance, State Administration of Taxation, General Administration of Customs on March 20, 2019 and took effect on April 1, 2019, for general VAT payers’ sales activities or imports that are subject to VAT at an existing applicable rate of 16%, the applicable VAT rate is adjusted to 13%.

According to our PRC legal counsel, AllBright Law Offices (Fuzhou), the applicable VAT rate of the operating entity is 13%. As of the date of this prospectus, we believe that the Company and the operating entity are in full compliance with the VAT rules and regulations in China, and there have not been any notifications of any instances of non-compliance provided to the Company nor to the operating entity by the relevant authorities.

Employment and Social Welfare

Labor Contracts

Pursuant to the Labor Contract Law of the PRC, which was adopted by the SCNPC on June 29, 2007, was amended on December 28, 2012 and became effective on July 1, 2013, and the Regulations on Implementation of the Labor Contract Law of the PRC, which was promulgated by the State Council and became effective on September 18, 2008, a written labor contract should be concluded to establish a labor relationship. If no written labor contract is concluded as of the date of employment, such contract shall be concluded within one month as of the date of employment. If an employer fails to conclude a written labor contract with an employee for more than one month but less than one year as of the date of employment, the employer shall pay the employee two times his monthly salary. In addition, if an employer fails to conclude a written labor contract with an employee within one year as of the date of employment, the employer shall be deemed to have concluded an open-ended labor contract with the employee.

According to our PRC legal counsel, AllBright Law Offices (Fuzhou), the operating entity has signed labor contracts with all of the employees, and there have not been notifications of any instance of non-compliance.

Social Insurance and Housing Provident Fund

According to the Social Insurance Law of the PRC (the “Social Insurance Law”), which was promulgated by the SCNPC on October 28, 2010, and was amended and became effective on December 29, 2018, employees shall participate in the basic endowment insurance, basic medical insurance, unemployment insurance, employment injury insurance and maternity insurance. The basic endowment, medical insurance and unemployment insurance premiums shall be jointly paid by employers and employees. The employment injury insurance and maternity insurance premiums shall be paid by employers rather than employees. An employer shall apply to the local social insurance agency for social insurance registration in accordance with the Social Insurance Law. In addition, an employer shall declare and pay social insurance premiums in full and on time. No postponement, reduction or exemption of payment shall be allowed without any force majeure or other statutory exceptions. According to the Social Insurance Law, an employer that fails to make social insurance contributions may be ordered to pay the outstanding social insurance contributions within the deadline and may be liable to pay a late payment fee which equals to 0.05% of the outstanding amount for each day of delay. The employer also may be liable to a fine from one to three times the amount of the outstanding contributions if it fails to make such payments.

According to the Regulations on Management of Housing Provident Fund, which was promulgated by the State Council, and was last amended and became effective on March 24, 2019, an employer needs to pay housing provident funds for its employees. A newly established entity shall register with the relevant housing provident fund management center within 30 days from the date of establishment, and open a housing provident fund account at a designated bank on behalf of its employees within 20 days from the date of registration. When hiring a new employee, an employer shall register with the housing provident fund management center within 30 days from the date of employment, and open a housing provident fund account of such new employee at a designated bank. An employer shall pay the full amount of the housing provident fund on time, and shall not be overdue in the payment or underpay the housing provident fund. The housing provident fund payment by both an employer and an employee shall not be less than 5% of the average monthly salary of the employee in the previous year. If an employer fails to make full payment of housing provident funds for its employees in accordance with relevant laws and regulations, the housing provident fund management center shall order such employer to make the payment within a prescribed time limit. If payment is still not made within the prescribed time limit, an application may be made to the court for compulsory enforcement.

According to our PRC legal counsel, AllBright Law Offices (Fuzhou), as of the date of this prospectus, in the years of 2023, 2022 and 2021, the operating entity did not pay social insurance contributions and housing provident fund contributions in full for all of the employees. The operating entity may be subject to late contribution fees or fines in relation to the underpaid employee benefits. Although the operating entity has not received any order or notice from the local authorities, nor any claims or complaints from their 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 contributions.

Foreign Currency Exchange and Dividend Distributions

Foreign Currency Exchange

According to the Regulations on the Foreign Exchange Control of the PRC (the “Foreign Exchange Administration Regulations”), which was promulgated by the State Council on January 29, 1996, and was last amended on August 5, 2008, payments of current account items, such as trade and service-related foreign exchange transactions and dividend payments, can be made in foreign currencies without prior approval from the SAFE. However, prior approval from the SAFE is required where Renminbi is to be converted into foreign currency and remitted out of China to pay capital account items, such as capital transfer, direct investment, investment in securities, derivative products or loans. Under the Foreign Exchange Administration Regulations, if an FIE intends to pay dividends and provides certain evidencing documents (board resolution, tax certificates, etc.), such enterprise may purchase foreign currency without approval of the SAFE. If an FIE intends to engage in trade and services-related foreign exchange transactions and provides relevant commercial documents, such enterprise may purchase foreign currency without approval of the SAFE. An FIE may retain a certain amount of foreign currency, subject to a cap approved by the SAFE, to satisfy its foreign currency liabilities. In addition, foreign exchange transactions involving overseas direct investment, investment in securities, or derivative products must be registered with the governmental authorities in charge of foreign exchange administration, and must be approved or put on record by the other relevant governmental authorities where necessary.

The Circular on Reforming the Administrative Approaches to Settlement of Foreign Exchange Capital of Foreign-invested Enterprises (the “SAFE Circular 19”) was promulgated by the SAFE on March 30, 2015, and became effective on June 1, 2015. In comparison to the Foreign Exchange Administration Regulations, the SAFE Circular 19 provides greater flexibility to an FIE in converting foreign exchange capital in its capital account into Renminbi funds, and allows an FIE to use its converted Renminbi funds to make equity investments in China after performing required procedures. Under the SAFE Circular 19, an FIE may choose to convert any amount of foreign exchange capital in its capital account into Renminbi funds according to its actual business needs. The converted Renminbi funds will be kept in a designated account. If an FIE intends to initiate a new foreign exchange transaction in its capital account, it must provide supporting documents and go through the review process with the bank. An FIE is allowed to use its converted Renminbi funds only within the approved business scope.

On June 9, 2016, the SAFE issued the Circular on Management of Foreign Exchange Settlement under the Capital Account (the “SAFE Circular 16”), which reiterates some of the rules set forth in the SAFE Circular 19. According to the SAFE Circular 16, an enterprise may convert its foreign exchange capital, foreign debt, and funds recovered from overseas listing into Renminbi on a discretionary basis. The converted Renminbi funds may be used to extend loans to related parties or repay inter-company loans (including advances by third parties).

On October 23, 2019, the SAFE issued the Circular of Further Promoting Cross-border Trade and Investment Facilitation (the “SAFE Circular 28”), which expressly allows an FIE, which does not have equity investments in its approved business scope, to use capital obtained from foreign exchange settlement to make equity investments in China as long as the investments are real and in compliance with the foreign investment-related laws and regulations. In addition, the SAFE Circular 28 stipulates that any eligible enterprise in certain pilot areas may use receipts from registered capital, foreign debt and overseas listing, for the purpose of domestic payments, without providing authenticity supporting materials to relevant banks prior to such domestic payments.

On November 19, 2012, the SAFE promulgated the Circular of Further Improving and Adjusting Foreign Exchange Administration Policies on Foreign Direct Investment (the “SAFE Circular 59”), which became effective on December 17, 2012 and was amended on October 10, 2018. The SAFE Circular 59 substantially amends and simplifies the foreign exchange procedure. According to the SAFE Circular 59, approval or verification from the SAFE is not required for a foreign investor or an FIE: (i) to open various special purpose foreign exchange accounts, such as pre-investment expenses accounts, foreign exchange capital accounts, asset realization accounts, and guarantee accounts; (ii) to reinvest his lawful income derived in the PRC, such as profits, proceeds of equity transfer, capital reduction, liquidation and early repatriation of investment; or (iii) to remit foreign exchange capital as a result of capital reduction, liquidation, early repatriation or stock transfer. Multiple capital accounts for the same entity may be opened in different provinces.

On July 4, 2014, the SAFE promulgated the Circular of the SAFE on Foreign Exchange Administration of Overseas Investments and Financing and Round-Trip Investments by Domestic Residents via Special Purpose Vehicles (the “SAFE Circular 37”). According to the SAFE Circular 37, a Chinese resident must apply to a local SAFE branch to register foreign exchange before contributing money to an overseas SPV. An overseas SPV refers to an overseas company that is directly incorporated or indirectly controlled by a Chinese resident using its assets or rights and interests for the purpose of investments and financing. Following the initial registration, in the event of any alternation in the basic information, such as shareholders, name and operating duration of any individual Chinese resident, or key information, such as increases or decreases in capital, or equity transfers, swaps, consolidations, or splits, a Chinese resident must register the change in the foreign exchange with a local SAFE branch. In the event that a Chinese shareholder holding interest in an overseas SPV fails to fulfill the required SAFE registration, the SPV’s PRC subsidiaries may be restricted from making profit distributions to the offshore parent and prohibited from carrying out cross-border foreign exchange transactions, and the SPV may be restricted from contributing additional capital to its PRC subsidiaries. Furthermore, failure to comply with the various SAFE registration requirements described above could result in liability under the PRC law for evasion of foreign exchange controls.