{"url_path":"/sec/byah/10-k/2026/item-4","section_key":"item-4","section_title":"Item 4 INFORMATION OF THE COMPANY**","topic":"sec","document":{"doc_type":"20-F/A","doc_date":"2026-05-15","source_url":"https://www.sec.gov/Archives/edgar/data/1986247/0001213900-26-057152-index.html","accession_number":"0001213900-26-057152","cik":"0001986247","ticker":"BYAH","issuer_name":"Park Ha Biological Technology Co., Ltd.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1986247/0001213900-26-057152-index.html","primary_entity_key":"0001986247","primary_entity_name":"Park Ha Biological Technology Co., Ltd."},"word_count":17350,"has_tables":true,"body_markdown":"**ITEM\n4. INFORMATION OF THE COMPANY**\n\n \n\n**A.\nHistory and Development of the Company**\n\n** **\n\n**Our\nCorporate History and Structure**\n\n \n\nPark Ha Cayman is a holding\ncompany incorporated in the Cayman Islands with no operations of its own and conducts its operations in China through its PRC subsidiaries,\nand contractual arrangements with its VIEs based in China.\n\n \n\nThe\nfollowing diagram illustrates our corporate structure as of October 31, 2025:\n\n \n\n \n\nXinzhan\nwas incorporated on March 31, 2016 under the laws of the PRC and is a wholly owned subsidiary of WFOE.\n\n \n\nPark\nHa Shanghai was incorporated on April 17, 2017 under the laws of the PRC and is a wholly owned subsidiary of Xinzhan.\n\n \n\nPark\nHa Jiangsu was incorporated on August 13, 2019 under the laws of the PRC and is a wholly owned subsidiary of WFOE.\n\n \n\nPark\nHa Cayman was incorporated on October 11, 2022 under the laws of the Cayman Islands in anticipation of future capital raising from international\ninvestors.\n\n \n\nPark\nHa HK was incorporated on October 25, 2022 under the laws of Hong Kong and a wholly owned subsidiary of Park Ha Cayman.\n\n \n\nWFOE\nwas incorporated on May 5, 2023 under the laws of the PRC and is a wholly owned subsidiary of Park Ha HK. It is a holding company and\nis not engaged in any business as of the date of this annual report.\n\n \n\nIn\nconnection with the restructuring for our initial public offering, WFOE acquired 100% of the equity interest in Park Ha Jiangsu and Xinzhan.\n\n \n\n52\n\n \n\n \n\nWuxi\nMuchen was incorporated on February 21, 2025 under the laws of the PRC and is a wholly owned subsidiary of Park Ha Jiangsu.\n\n \n\nWuxi\nMufeng was incorporated on February 21, 2025 under the laws of the PRC and is a wholly owned subsidiary of Park Ha Jiangsu.\n\n \n\nXinyuexuan\nBeauty Salon (“xinyuexuan”) was incorporated on July 28, 2025 in the PRC and is controlled by Park Ha Jiangsu through contractual\narrangement as its variable interest entity (“VIE”).\n\n \n\nAimei\nHui Beauty Center (“Aimei Hui”) was incorporated on August 11, 2025 in the PRC and is controlled by Park Ha Jiangsu through\ncontractual arrangement as its VIE.\n\n \n\nHuishan\nDistrict Xuanyayue (“xuanyayue”) was incorporated on January 22,2025, in the PRC and is controlled by Park Ha Jiangsu through\ncontractual arrangement as its VIE. Xuanyayue closed down on October 10, 2025.\n\n** **\n\n**Contractual Arrangements with the VIEs**\n\n \n\nPark Ha Cayman maintained\ncontractual arrangements with Xinyuexuan Beauty Salon, Aimeihui Beauty Center and Huishan District Xuanyayue Beauty Salon (which was closed\ndown on October 10, 2025) through VIEs, which enabled Park Ha Cayman to control and consolidate their financial results. Park Ha Cayman\ndoes not own any equity interests in the VIEs. Under the VIE structure, Park Ha Cayman holds effective control over the VIEs’ primary\neconomic activities and assumes the associated risks and benefits from the economic rewards through contractual arrangements, making Park\nHa Cayman the primary beneficiary.\n\n \n\nPursuant to the operation\nand management agreement with the VIEs, the registered operators grant us exclusive management and control over the operation, assets,\ndecision-making, personnel and finances of the VIEs. The registered operators of the VIEs are prohibited from independently operating,\ntransferring, pledging, dissolving, or incurring debt on behalf of the VIEs, or otherwise interfering with our control. We are entitled\nto all economic benefits and bear all operational costs, debts, risks of losses.\n\n \n\nThe contractual agreements\nare designed to provide us with the power, rights, and obligations equivalent in all material respects to those it would possess as the\nprincipal owner of the VIEs, including absolute control rights and the rights to the assets, property, and revenue of the VIEs, for accounting\npurposes.\n\n \n\n**The\nForward Share Split and Reverse Share Split**\n\n \n\nOn\nJune 29, 2024, the Company effected a forward split of its Ordinary Shares at a ratio of 1-for-5. After the forward split, the Company\nwere authorized to issue 2,500,000,000 Ordinary Shares and have 25,000,000 Ordinary Shares issued and outstanding.\n\n \n\nOn\nFebruary 9, 2026, the Company announced that it expects to implement a 1-for-50 reverse stock split effective February 20, 2026,\nsubject to the Company’s satisfaction of Nasdaq Operations notice requirements, with trading to begin on a split-adjusted basis\nat the market open on that day.\n\n \n\nIn\nconnection with the reverse stock split, the Company filed an Amended and Restated Memorandum of Association, with the Registry of Companies\nof the Cayman Islands on February 4, 2026 to reduce the authorized share capital of the Company from USD 3,000,000.00 divided into divided\ninto 150,000,000,000 ordinary shares of par value US$0.00002 each divided into (i) 120,000,000,000 Class A ordinary shares with a par\nvalue of US$0.00002 each with 1 vote per share and (ii) 30,000,000,000 Class B ordinary shares with a par value of US$0.00002 each with\n20 votes per share to 3,000,000,000 ordinary shares of par value US$0.001 each divided into (i) 2,400,000,000 Class A ordinary shares\nwith a par value of US$0.001 each with 1 vote per share and (ii) 600,000,000 Class B ordinary shares with a par value of US$0.001 each\nwith 20 votes per share, the reduction at the same ratio as its reduction in the issued and outstanding shares. As approved and authorized\nby a majority of the shareholders of at an extraordinary meeting of shareholders held on December 26, 2025 the Board of Directors of\nthe Company subsequently approved the reverse stock split and the exact ratio of the reverse stock split on January 29, 2026.\n\n** **\n\n53\n\n \n\n** **\n\n**The\nIPO**\n\n \n\nIn\nDecember 2024, we completed an initial public offering in which we offered and sold an aggregate of 1,200,000 Ordinary Shares. Our Ordinary\nShares are listed on the Nasdaq Capital Market under the symbol “PHH.”\n\n** **\n\n**2025\nShare Incentive Plans**\n\n \n\nOn\nFebruary 28, 2025 and July 7, 2025, the board of directors of the Company approved and adopted two equity incentive plans, which collectively\nauthorized 7,500,000 Ordinary Shares to be issued. In March 2025 and July 2025, the Company issued a total of 7,500,000 Ordinary Shares\nto several consultants of the Company.\n\n \n\n**October\n2025 Share Capital Increase and Dual Class Structure**\n\n \n\nOn\nOctober 3, 2025, at the 2025 annual general meeting of shareholders (the “AGM”) of the Company, the shareholders of the Company\npassed resolutions to (i) increase the Company’s authorized share capital; (ii) re-classify and re-designate the Company’s\nauthorized share capital; and (iii) adopt amended and restated memorandum and articles of association to reflect the share capital increase,\nthe re-classification and share re-designation, and the terms of the re-classified and re-designated shares of the Company. As a result,\nimmediately following the AGM, the Company’s authorized share capital was increased, and re-classified and re-designated from US$50,000\ndivided into 2,500,000,000 Ordinary Shares of par value US$0.00002 each to US$300,000 divided into 12,000,000,000 Class A Ordinary Shares\nof par value US$0.00002 each, with each Class A Ordinary Share entitled to one vote, and 3,000,000,000 Class B Ordinary Shares of par\nvalue US$0.00002 each, with each Class B Ordinary Share entitled to 20 votes.\n\n** **\n\n**Change\nof Trading Symbol**\n\n \n\nOn\nSeptember 23, 2025, our board of directors approved a change of our trading symbol from “PHH” to “BYAH”, which\nour board of directors believes will have a positive impact on building the Company’s long-term brand influence and enhancing our\nbrand value. The symbol change became effective on October 28, 2025.\n\n** **\n\n**December\n2025 Share Capital Increase**\n\n \n\nOn\nDecember 26, 2025, at the 2025 extraordinary general meeting of shareholders (the “EGM”) of the Company, the shareholders\nof the Company passed resolutions to (i) increase the Company’s authorized share capital; and (ii) adopt amended and restated memorandum\nand articles of association to reflect the share capital increase. As a result, immediately following the EGM, the Company’s authorized\nshare capital was increased from US$300,000 divided into 12,000,000,000 Class A Ordinary Shares of par value US$0.00002 each, with each\nClass A Ordinary Share entitled to one vote, and 3,000,000,000 Class B Ordinary Shares of par value US$0.00002 each, with each Class\nA Ordinary Share entitled to 20 votes, to US$3,000,000 divided into 120,000,000,000 Class A Ordinary Shares of par value US$0.00002 each,\nwith each Class A Ordinary Share entitled to one vote, and 30,000,000,000 Class B Ordinary Shares of par value US$0.00002 each, with\neach Class B Ordinary Share entitled to 20 votes.\n\n \n\n**January\n2026 Registered Offering**\n\n** **\n\nOn\nJanuary 28, 2026, the Company close a best-efforts follow-on public offering of 21,875,000 units (each a “Unit”) at an offering\nprice of US$0.112 per Unit. Each Unit consists of one Class A Ordinary Share of the Company, par value US$0.00002 per share and one warrant\nto purchase one Class A Ordinary Share, or up to nine Class A Ordinary Shares pursuant to the alternative cashless exercise mechanism\ndescribed therein (each, a “Warrant”). Each Warrant has an exercise price of US$0.112 per Class A Ordinary Share and is exercisable\nbeginning on the issuance date and ending on the one-year anniversary of the issuance date.\n\n \n\nThe\nCompany received gross proceeds of US$2.45 million. The Company intends to use the proceeds for the expansion of directly operated stores\nin China.\n\n \n\n54\n\n \n\n \n\n**Reverse\nStock Split**\n\n \n\nWe\nreceived a written notification from Nasdaq on September 2, 2025, notifying us that we are not in compliance with the minimum bid price\nrequirement. To regain compliance, our Ordinary Shares must have a closing bid price of at least US$1.00 for a minimum of 10 consecutive\ntrading days by March 2, 2026. In the event the Company does not regain compliance by March 2, 2026, we are eligible for an additional\n180 calendar day period to regain compliance with the minimum bid price requirement. On October 3, 2025, the Company convened its annual\ngeneral meeting, during which the shareholders of the Company adopted resolutions approving an increase of the Company’s share\ncapital and the reverse stock split in a ratio of one (1)-for-thirty (30) of the Company’s issued and outstanding Ordinary Shares,\nas well as the number of authorized Class A Ordinary Shares and Class B Ordinary Shares. On December 26, 2025, the Company convened the\nextraordinary general meeting, during which the shareholders of the Company adopted resolutions approving an increase of the Company’s\nshare capital and the reverse stock split in a ratio of one (1)-for-two hundred and fifty (250) of the Company’s issued and outstanding\nOrdinary Shares, as well as the number of authorized Class A Ordinary Shares and Class B Ordinary Shares. The reverse stock split was\nto regain compliance with the minimum bid price requirement. Our Class A Ordinary Shares began trading on an adjusted basis, reflecting\nthe reverse stock split, on February 20, 2026, under the existing ticker symbol “BYAH.”\n\n \n\nThe\nnumbers of shares disclosed in this “Our Corporate History and Structure” section prior to this subsection “The Reverse\nStock Split” were not adjusted to reflect the reverse stock split. Unless otherwise indicated, all information elsewhere in this\nannual report reflects the reverse stock split.\n\n** **\n\n**Corporate\nInformation**\n\n \n\nOur\nprincipal executive office is located at 901, Building C, Phase 2, Wuxi International Life Science Innovation Campus, 196 Jinghui East\nRoad, Wuxi, Jiangsu Province, People’s Republic of China 214100. The telephone number of our principal executive offices is +86-400-012-7562.\nOur registered office is at Harneys Fiduciary (Cayman) Limited, 4th Floor, Harbour Place, 103 South Church Street, P.O. Box\n10240, Grand Cayman, KY1-1002, Cayman Islands. Our agent for service for process in the United States is Cogency Global Inc., 122 E 42nd\nStreet 18th Floor, New York, NY 10168.\n\n \n\nWe\nare subject to the periodic reporting and other informational requirements of the Exchange Act as applicable to foreign private issuers.\nUnder the Exchange Act, we are required to file reports and other information with the SEC. Specifically, we are required to file annually\na Form 20-F within four months after the end of each fiscal year. The SEC also maintains a website at www.sec.gov that contains reports,\nproxy and information statements, and other information regarding registrants that make electronic filings with the SEC using its EDGAR\nsystem. Such information can also be found on our investor relations website at http://ir.parkha.cn/.\n\n \n\n**B.\nBusiness overview**\n\n \n\n**Overview**\n\n \n\nOur\nbusiness primarily consists of developing our private skincare label, direct skincare products sales and franchise alliances promotions.\nOur “Park Ha” brand focuses on providing solutions for problematic skin. Established in 2016, the brand had its first store\nlaunched in 2017. In addition to the five stores directly operated by Park Ha Jiangsu, as of October 31, 2025, 2024 and 2023, we had\n22, 45 and 38 franchisees in China, of which 22, 43 and 36 franchisees operate under the store name “Park Ha”. As of October\n31, 2025, 2024 and 2023, we had 0, 2 and 2 franchisees operate under a different brand name, “Geni” or “歌妮”.\n\n \n\n55\n\n \n\n \n\nOur\nPRC subsidiaries specialize in providing skincare and cosmetic products under our brand name “Park Ha” in China. Our PRC\nsubsidiaries develop our proprietary beauty products and offer complimentary after-sales beauty services in our physical stores. Park\nHa Jiangsu, in addition to operating our seven physical stores, is the research and development center focusing on skincare products\ndevelopment and improvement for sensitive skin. Xinzhan leads the marketing and promotional efforts and is the entity in charge of our\nfranchising business. Park Ha Jiangsu provides training to our franchisee staff. As part of our value-added service for our products,\nour directly-operated stores and franchisees offer “light beauty experience”, a quick complimentary after-sales beauty service\nperformed in the stores*.* Light beauty experience is offered to our customers as an effective way to demonstrate how our products\nare used in order to deliver the intended results.\n\n \n\nOur\nrevenues mainly consist of (i) products sales and (ii) franchise fees.\n\n \n\nAs\nof October 31, 2025, the 22 franchisees locate in the following regions: 16 in Jiangsu Province, 2 in Shandong Province, 1 in Liaoning\nProvince, 1 in Shanxi Province, 1 in Heilongjiang Province, 1 in Hebei Province, forming a complete commercial network.\n\n \n\nAs\nof October 31, 2024, the 45 franchisees locate in the following regions: 22 in Jiangsu Province, 5 in Guangdong Province, 4 in Shandong\nProvince, 3 in Shaanxi Province, 1 in Anhui Province, 1 in Liaoning Province, 1 in Shanxi Province, 1 in Hainan Province, 1 in Henan\nProvince, 1 in Heilongjiang Province, 1 in Guizhou Province, 1 in Sichuan Province, 1 in Zhejiang Province, 1 in Tianjin, and 1 in Hebei\nProvince, forming a complete commercial network.\n\n \n\nAs\nof October 31, 2023, the 38 franchisees locate in the following regions: 17 stores in Jiangsu Province, 5 stores in Guangdong Province,\n4 stores in Shandong Province, 3 stores in Shaanxi Province, 1 store in Anhui Province, 1 store in Liaoning Province, 1 store in Shanxi\nProvince, 1 store in Hainan Province, 1 store in Henan Province, 1 store in Heilongjiang Province, 1 store in Guizhou Province, 1 store\nin Sichuan Province and 1 store in Zhejiang Province forming a complete commercial network.\n\n \n\n**Our\nBusiness Model**\n\n \n\nUnder\nour retail model, Park Ha Jiangsu provides our products to the franchisees, and Park Ha Jiangsu provides training to the staff of the\nfranchisees. We believe that by creating franchisee chains, Xinzhan provides customers with more effective skincare experiences. Xinzhan’s\nfranchisee strategy gives franchisees the option to determine the quantity and timing of the purchase from Xinzhan, thus lowering the\nfranchisees’ inventory pressure. Xinzhan provides full training for franchisees’ beginner-level staff.\n\n \n\nOur\noperations consist of the following segments:\n\n \n\nI.\nXinzhan is responsible for the experiential marketing of skincare products to target customers. Store beauticians perform Xinzhan’s\nafter-sales service through one-on-one visits by phone or WeChat, giving customers the opportunity to review their purchase on the first day,\nthe third day, and the seventh day after purchasing. We believe that this boosts customers’ confidence in the product\nand encourages future purchases.\n\n \n\nII. Xinzhan\nalso manages the franchisees. It enters into franchisee agreements with our franchisees and operates directly-owned stores.\n\n \n\nIII.\nPark Ha Jiangsu is responsible for providing training to staff working at our franchise stores. We also cooperate with third-party training\nagencies to provide more professional training to our staff.\n\n \n\nOur\ncore operating model has helped us efficiently and quickly build and expand our successful brand and products.\n\n \n\n56\n\n \n\n \n\n**Our\nFranchise Model**\n\n \n\nOur\nfranchise system is critical to our business operations. As of October 31, 2025, 2024 and 2023, we had 22, 45 and 38 franchisees in China,\nof which 22, 43 and 36 franchisees operate under the store name “Park Ha”. As of October 31, 2025, 2024 and 2023, we had\n0, 2 and 2 franchisees operate under a different brand name, “Geni” or “歌妮”.\n\n \n\nXinzhan\nenters into franchise agreements with its franchisees, pursuant to which the franchisees are granted permission to open and operate a\nstore under the brand name “Park Ha” in a specific geographic area. Xinzhan has entered into supplemental agreements with\nthese franchisees that operate stores under the “Geni” or “歌妮” brand, pursuant to which each such\nfranchisee is allowed to keep the existing store name and does not have to change the store name to “Park Ha”. The franchisees\noperating under the “Geni” or “歌妮” brand sell products from the “Park Ha” brand and\nother third-party brands with Xinzhan’s permission. Franchisees must adhere to the proper use of equipment and engage in the sale\nof authorized skincare or beauty products.\n\n \n\nPark\nHa Jiangsu provides training to the beauticians of each franchisee. The training courses include skin physiology, “Park Ha”\nproduct theory, store operation skills, standardized user manual for stores, procurement and store management. After each training, an\nassessment of these beauticians is conducted. We also intend to provide training courses for franchisees on subjects that new industry\ntrends in customer development skills, new product releases, and other topics.\n\n \n\nOur\nproducts are sold under our franchisee’s sale models. Franchisees estimate the product sales volume of each month based on the\nsales records of prior months. Accordingly, they place orders with us based on the expected sales volume. If any product-related problems\ncome up aftersales, the franchisees will consult with us for guidance. Our products carry specific production record-filing certificates\nand quality inspection reports. In case of product damage due to logistics reasons, the products can be exchanged.\n\n \n\nWe\nutilize various channels such as Douyin, Meiye Observation and beautydata.ai (beauty industry websites), Baidu online advertising and\nother platforms, to publish advertisements highlighting preferential pricing for franchisees to attract potential franchisees. The PRC\nsubsidiaries participate in beauty industry exhibitions and events, such as the China Beauty Expo, where we introduce our products and\nservices and engage in face-to-face communication with potential franchisees. Some existing franchisees also become promoters of the\n“Park Ha” brand by introducing potential franchisees to us. Additionally, the PRC subsidiaries organize franchise promotion\nevents periodically in physical stores to attract potential franchisees.\n\n \n\nXinzhan\nis entitled to an annual franchisee fee depending on the size of the franchise, payable within 30 business days from execution of\nthe franchise agreement and within 30 business days of each anniversary date of execution thereafter. Our franchise agreement typically\nlasts for three years and can be renewed upon both parties’ mutual consent. Xinzhan has the right to terminate the franchise\nagreement for cause if the franchisee is found in breach of the agreement. The franchisees may terminate the franchise agreements early\ndue to business reasons by submitting a written application to Xinzhan for consent.\n\n \n\n57\n\n \n\n \n\nFurthermore,\nwe offer incentives such as cash subsidies to our regional store franchisees and skin management center franchisees within two weeks\nupon the entry of franchise agreements/renewals and full payment of the franchise fees. We also require our franchisees to use the cash\nsubsidies for renovation and advertising purposes only. We do not offer any discounts to our franchisees.\n\n \n\n**Type\nof Franchisees**\n** **\n**Annual\nFranchise Fees**\n** **\n**Cash\nSubsidies (limited to renovations and advertising purposes)**\n** **\n**Area**\n** **\n**Notes**\n\nRegional\nstore\n \nRMB2 million\n(approximately $278,730)\n \nRMB360,000\n \n200\nsqm\n \nTerritorial\nexclusivity and a wider variety of products than single store\n\nSkin management\ncenter\n \nRMB550,000\n(approximately $76,650)\n \nRMB50,000\n \n200\nsqm\n \na\nwider variety of products than single store (Starting from the second half of 2025, subsidies will no longer be provided)\n\nSingle\nstore\n \nRMB100,000\n(approximately $13,936)\n \nN/A\n \n50\nsqm\n \n \n\n** **\n\n**Research\nand Development**\n\n \n\nPark\nHa Jiangsu is our research and development center focusing on skincare products development and improvement for sensitive skin. We will\ncontinue to improve upon and expand our products and services offerings through our research and development and “Industry –\nUniversity – Research” integration. In the future, we will mainly focus on the development of small molecule peptide hydration\npenetration technology, as well as providing other products and technologies to solve the problem of skin moisture loss.\n\n \n\nXinzhan\nand Park Ha Shanghai, as subsidiaries, are deeply involved in supporting research and development, forming a synergistic force. In addition,\nto meet market demands, the company collaborates with third-party professional institutions to conduct research and development, focusing\non exploring the application value and market potential of plant exosomes in the fields of beauty and anti-aging.\n\n \n\n**Our\nSales and Marketing**\n\n \n\nWe\nseek to build an industry-leading platform in the beauty market in China. Since 2021, we have adopted a franchise chain system to supplement\nour owned stores. We provide our franchisees with training, a stable supply chain to franchisees and a unified guidance strategy for\ngeographical location and market competition.\n\n \n\nWe\nbelieve that our solutions have a strong competitive edge in China’s beauty market. Our CEO and CTO each has over ten years of\nexperience in the industry and plays essential roles in reaching out to potential customers. Additionally, we have established a good\nreputation among our customers through our consistent high-quality products. Due to our reputation in China, we also receive consultation\nrequests and offers from prospective customers.\n\n \n\n58\n\n \n\n \n\nIn\naddition, we have adopted a digital strategy to better engage with our customers to promote our products through in online communities.\nThis includes launching VR product trials, live online sales and social app advertising. Since 2020, “Park Ha” brand has\nestablished its own official account on various popular short video platforms in China including Douyin, RED, and WeChat Video, which\nhas promoted its popularity among the beauty industry and consumers in China. Since 2022, “Park Ha” brand has launched a\nlive channel on Douyin, which promotes products through live activities. By interacting directly with consumers through live streaming\nand cutting-edge marketing channels, providing instant and customized content access, “Park Ha” brand has created a marketing\nmodel that is designed to be effective among beauty consumers in China. To better promote our products, we provide value-added services,\ncomplimentary facial treatment trial in stores, where our trained staff give 30 to 45-minute facial treatment sessions to customers who\npurchase our products. Such sessions are meant to educate our customers about the optimal ways to use our products.\n\n \n\n**Our\nCompetitive Advantages**\n\n \n\nWe\nbelieve that we are prepared for continued growth due to several competitive advantages:\n\n \n\n*An\ninnovative social marketing model*\n\n \n\nWe\nhave successfully established a regional brand effect through a social marketing model. We help our franchisees organize local salon\nactivities, build product experience models, offer awards on promotion, and take advantage of our internet promotion, to build brand\nawareness and drive customers to our trusted community. This, in turn, attracts additional franchisees.\n\n \n\nTo\nreach potential customers through social marketing, the PRC subsidiaries hold interest-based community virtual events through the WeChat\nplatform and connect people within the community who are interested in skincare products or knowledge. The PRC subsidiaries promote our\nproducts according to our customers’ skincare needs. Our social marketing model is designed to stimulate potential customers’\ndesire to buy our products by reaching accurately targeted user groups who are interested in our products through community activities.\nSince this marketing is carried out within residential communities, we find it easier to build close ties to our target customers through\ncommunity events in the long run, which we believe enhances our long-term customer loyalty.\n\n \n\n*A\nstable supply chain system*\n\n \n\nOur\nsuppliers are located in Guangzhou, Shanghai, Zhejiang Province, and Jiangsu Province in China. The ingredients we use for the product\nformula are supplied by large international and national raw material companies. We also carry out functional testing and compatibility\ntesting on the raw materials used for packaging of our products to ensure the quality of the ingredients. We conduct supplier visits\nand factory inspections to check whether the information they provide is accurate and reliable.\n\n \n\n*A\nstrong and diversified management team*\n\n \n\nOur\nfounders have extensive experience in various industries, including beauty, fashion, retail, and the internet industries. Our CEO and\nCTO each has over ten years of experience in the industry and plays essential roles in reaching out to potential customers. We believe\nthat their experience, coupled with their profound understanding of the beauty industry and their passion and determination, make them\neffective business leaders. They are firmly committed to our mission and customer-oriented approach, helping more customers to solve\nskin problems.\n\n \n\n**Our\nGrowth Strategies**\n\n \n\n*Strengthening\nthe development of own products*\n\n \n\nWe\nplan to expand our partnership with scientific research institutions to develop new skincare raw materials and products. We also plan\nto expand the scope of services to existing customers and acquire new customers by continually making significant investments in R&D.\nWe will continue to improve upon and expand our products and services offerings through our research and development and technology innovations.\nIn the future, we will mainly focus on the development of small molecule peptide hydration penetration technology, as well as providing\nother products and technologies to solve the problem of skin moisture loss.\n\n \n\n59\n\n \n\n \n\n*Intensifying\nour Training Practice*\n\n \n\nWe\nplan to open vocational training schools offering beauty industry knowledge in inland China and western provinces of China, such as Guizhou\nProvince and Ningxia Province. The purpose of the vocational training schools will be to provide professional training to our franchisee\nstaff. We currently have 25 employees in directly owned stores and encourage our franchisees to equip each store with around 4-7 employees.\n\n \n\nWe\nalso intend to set up an internal training institute on beauty treatment to advance existing talents at the headquarters. We will also\nestablish a set of complete on-the-job training system, where we partner with vocational and technical colleges to provide professional\ncourses and textbooks and help students obtain professional qualification certificates of beautician.\n\n \n\n*Enhancing\nour social media-based sales and marketing capabilities*\n\n \n\nWe\nwill continue to seek to improve brand awareness by using social media platforms, such as Douyin, RED and WeChat video, to promote our\nbrand and attract potential future customers and franchisees.\n\n \n\n*Improving\nsupply chain capacity*\n\n \n\nIn\norder to meet the rapidly growing customer demand, Park Ha Jiangsu has partnered with additional third-party manufacturers to increase\nproduction and shorten the wait time. We also plan to establish partnerships with third-party warehouse and distribution centers to support\nour businesses.\n\n \n\n*Seeking\nstrategic investment, acquisition and other cooperation*\n\n \n\nWe\nplan to evaluate and selectively seek strategic alliances, investment and acquisition opportunities in the beauty industry across China\nby investing in incubating product patents and acquiring supply chain partners and manufacturers, as part of our long-term goal to lower\nproduction costs and increase future profit margin.\n\n \n\n**Our\nSuppliers**\n\n \n\nFor\nthe fiscal year ended October 31, 2025, there were two suppliers who accounted for 10% or more of the Company’s total purchases\nand such suppliers accounted for approximately 26%, and 11% of our total purchases, respectively. For the fiscal year ended October 31,\n2024, there were four suppliers who accounted for 10% or more of the Company’s total purchases and such suppliers accounted for\napproximately 15%, 11%, 10% and 11% of our total purchases, respectively. For the fiscal year ended October 31, 2023, there was one supplier\nwho accounted for 10% or more of the Company’s total purchases and such supplier accounted for approximately 58% of our total purchases.\n\n \n\n60\n\n \n\n \n\n**Our\nCustomers**\n\n \n\nThe\nmajority of our customers are franchisees and retail customers in the skincare industry. For the fiscal year ended October 31, 2025,\nno customer accounted for more than 10% of our total revenue. For the fiscal year ended October 31, 2024, two customers accounted for\napproximately 10% and 10% of our total revenue, respectively. For the fiscal year ended October 31, 2023, two customers accounted for\napproximately 10% and 10% of our total revenue, respectively.\n\n \n\nAs\nof October 31, 2025, the stores, including directly-operated stores and franchisees, are mostly located in first-, second-, and third-tier\ncities in various provinces in China, including Jiangsu Province, Shanxi Province, Shandong Province, Liaoning Province, Heilongjiang\nProvince and Hebei Province.\n\n \n\nAs\nof October 31, 2025, we had about 6,630 customers in our directly operated stores, all of whom are retail customers. Our products and\ninnovative digital marketing strategy are primarily targeted at young adults and middle-aged generations consisting of women with white-collared\noccupations. Our primary focus currently is on the female group living or working within 2-3 kilometers of the business district.\nAccording to the consumption survey report, 92% of our customers were women. In the future, we will also launch new brands that target\nmale groups across all ages.\n\n \n\n**Our\nProducts**\n\n \n\nOur\nsubsidiary Park Ha Jiangsu has developed a full range of “Park Ha” brand skincare products by collaborating with biological\nlaboratories and supply chain systems to transform our technology and rich experience into cost-effective functional skincare products.\n\n \n\nOur\nproduct line ranges from basic skin physical protection, exfoliation, and sebum film repairing to surface microecological balance and\nanti-aging. Our product line includes nearly 70 products divided into 10 series, covering almost all categories of the skincare industry.\nOur signature products “Little Blue Injection Serum” and series of freeze-dried powders have been well received by consumers.\nOur products mainly focus on small molecule peptide compositions, such as palmitoyl pentapeptide-3, palmitoyl tripeptide-1, acetyl hexapeptide-3,\nacetyl tetrapeptide-5, carnosine, collagen, etc. These substances have a strong permeability and can activate epidermal cells, replenish\nmoisture and nutrients for the skin, stimulate and accelerate the synthesis of collagen, delivering various skincare effects. Our products\nare not medical graded products and have not been assessed by any medical regulatory authority.\n\n \n\nExcept\nfor a third-party brand product “whitening and freckle removing freeze-dried powder”, all of our products are classified\nas “ordinary cosmetics” as defined in the Supervision Regulations, which are subject to filing requirements. As of the date\nof this annual report, the filing with NMPA for all of our products have been completed before they were marketed in accordance with\nthe applicable laws and regulations.\n\n \n\n61\n\n \n\n \n\nOur\nprimary products are as follows:\n\n \n\n**NO.**\n \n**PRODUCT**\n \n**STANDARD**\n \n**FUNCTION**\n \n**RETAIL\n\nPRICE\n(RMB)**\n \n**TARGET\n\nSKIN**\n \n**PICTURE**\n\n**1**\n \n**PARKHA\nCLEAN AND\nBALANCED CLEANING\nGEL**\n \n**120ml**\n \n**Containing\nthe filtrate of yeast fermentation products and quadruple hyaluronic acid, it replenishes skin moisture. Deep cleansing, cleansing\npores, moisturizing and refreshing skin**\n \n**123**\n \n**All\nskin type**\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\n**2**\n \n**PARKHA CLEAN AND\nBALANCED CLEANING\nGEL**\n \n**500ml**\n \n**Containing the filtrate\nof yeast fermentation products and quadruple hyaluronic acid, it replenishes skin moisture. Deep cleansing, cleansing pores, moisturizing\nand refreshing skin**\n \n**293**\n \n**All\nskin type**\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\n**3**\n \n**PAPKHA FIBROIN\nISOLATION REPAIR\nMILK**\n \n**30ml**\n \n**The texture is refreshing\nand non-greasy, providing a smooth and hydrating feel. It is easy to apply and blend, without easily smudging or coming off. It adheres\nclosely to the skin, effectively concealing roughness and imperfections, brightening the complexion, and minimizing the appearance\nof pores. It gives the skin a radiant and translucent glow**\n \n**156**\n \n**All\nskin type**\n \n\n \n\n62\n\n \n\n \n\n**NO.**\n \n**PRODUCT**\n \n**STANDARD**\n \n**FUNCTION**\n \n**RETAIL\n\nPRICE\n(RMB)**\n \n**TARGET\n\nSKIN**\n \n**PICTURE**\n\n**4**\n \n\n**PARKHA\nMETABOLISM\nENERGY ESSENCE\nWATER**\n\n \n**120ml**\n \n**The\nproduct has a fine and smooth texture that is easy to absorb and not sticky. It is formulated with ceramides and high-quality ingredients,\ncombined with a filtrate of yeast fermentation products, to replenish skin moisture, moisturize and moisturize, leaving the skin\ndelicate, hydrated and radiant**\n \n**268**\n \n**All\nskin type**\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\n**5**\n \n**PARK HA PERFECT\nMOISTURIZER CREAM**\n \n**50g**\n \n**It effectively and evenly\nnourishes the skin, making it hydrated and radiant. It moisturizes and locks in moisture while having a lightweight and non-greasy\ntexture**\n \n**398**\n \n**All\nskin type**\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\n**6**\n \n**PARKHA AOUA\nMOISTURIZING\nPEPRIDE-INFUSION\nESSENCE**\n \n**2ml*10\nbottle**\n \n**It contains a hydrating\nand nourishing essence that replenishes the skin’s moisture and nutrients, relieving dry and rough skin. It smoothens and softens\nthe skin, leaving it hydrated and radiant**\n \n**397**\n \n**Dry,\nmixed**\n \n\n \n\n63\n\n \n\n \n\n**NO.**\n \n**PRODUCT**\n \n**STANDARD**\n \n**FUNCTION**\n \n**RETAIL\n\nPRICE\n(RMB)**\n \n**TARGET\n\nSKIN**\n \n**PICTURE**\n\n**7**\n \n**PARKHA\nAOUA\nMOISTURIZING\nPEPRIDE-INFUSION\nESSENCE**\n \n**2ml*30\nbottle**\n \n**It\ncontains a hydrating and nourishing essence that replenishes the skin’s moisture and nutrients, relieving dry and rough skin.\nIt smoothens and softens the skin, leaving it hydrated and radiant**\n \n**1191**\n \n**Dry,\nmixed**\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\n**8**\n \n**PARK HA GANODERMA\nMOISTURIZING CREAM**\n \n**50g**\n \n**Utilizing patented extraction\ntechnology of Ganoderma lucidum, it is pure and concentrated. It deeply nourishes and protects the skin’s foundation, caring\nfor the skin’s barrier, resulting in a well-hydrated and plump complexion, while maintaining the stability of the skin’s\ncondition**\n \n**298**\n \n**Oily,\ncombination to oily skin, acne-prone skin**\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\n**9**\n \n**PARK HA\nMUSSEL MOISTURIZING\nESSENCE LOTION**\n \n**120ml**\n \n**Containing essence of\npearl and a variety of plant extracts, it nurtures and cares for the skin. It improves the dry, rough, and tight state of the skin,\nincreases the skin’s moisture content, provides moisturizing care, and strengthens the skin, resulting in a translucent, radiant,\nand luminous complexion**\n \n**199**\n \n**Oily,\ncombination to oily skin, acne-prone skin**\n \n\n \n\n64\n\n \n\n  \n\n**NO.**\n \n**PRODUCT**\n \n**STANDARD**\n \n**FUNCTION**\n \n**RETAIL\nPRICE (RMB)**\n \n**TARGET\nSKIN**\n \n**PICTURE**\n\n**10**\n \n**PARK\nHA LACTOSE ACID OIL CONTROL SERUM**\n \n**2ml*10\nbottle**\n \n**Enriched\nwith lactobionic acid tenderizing essence, it improves enlarged pores and rough skin texture. It combines various plant essences\nto gently rejuvenate the skin, balance the skin’s moisture and oil, and promote an even and radiant complexion**\n \n**459**\n \n**Oily,\ncombination to oily skin, acne-prone skin**\n \n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\n**11**\n \n**PARKHA COLLAGEN\nENERGIZING & FIRMING ESSENCE**\n \n**2ml*10\nbottle**\n \n**Using a firming formula\nto soften the skin, replenish moisture, enhance skin hydration, and improve dryness and roughness; Effectively enhance skin elasticity,\nimprove skin sagging, gradually tighten your skin under daily care, make your skin delicate, smooth, and radiant with charming radiance**\n \n**619**\n \n**All\nskin types, customers with anti-aging needs**\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\n**12**\n \n**PARKHA COLLAGEN\nENERGIZING & FIRMING ESSENCE**\n \n**30ml**\n \n**Using a firming formula\nto soften the skin, replenish moisture, enhance skin hydration, and improve dryness and roughness; Effectively enhance skin elasticity,\nimprove skin sagging, gradually tighten your skin under daily care, make your skin delicate, smooth, and radiant with charming radiance**\n \n**449**\n \n**All\nskin types, customers with anti-aging needs**\n \n** **\n** **\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\n**13**\n \n**YEAST ESSENCE\nSKIN TREATMENT MILK**\n \n**7g*10\npiece**\n \n**Containing hydrating\nand nourishing essence, it replenishes skin moisture and nutrients, alleviates dry and rough skin, smoothes and tenderizes the skin,\nleaving it hydrated and nourished**\n \n**379**\n \n**All\nskin type**\n \n \n\n \n\n65\n\n \n\n \n\n**NO.**\n \n**PRODUCT**\n \n**STANDARD**\n \n**FUNCTION**\n \n**RETAIL\nPRICE (RMB)**\n \n**TARGET\nSKIN**\n \n**PICTURE**\n\n**14**\n \n**ANTI-AGING\nLIFTING GEL**\n \n**18g*10\npiece**\n \n**Provides\nhydration and nutrients to the skin, repairs and rejuvenates the skin, making it soft, smooth, and firm**\n \n**339**\n \n**All\nskin type**\n \n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\n**15**\n \n**YEAST AND PLANT\nEXTRACT FACIAL TONER**\n \n**3ml*10\nbottle**\n \n**Contains plant extract\nessence that improves dry and rough skin, making the skin moisturized, tender, and radiant**\n \n**188**\n \n**All\nskin type**\n \n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\n**16**\n \n**YEAST AND PLANT\nEXTRACT FACIAL SET**\n \n**(3ml+7g)*10**\n \n**It contains a variety\nof essences, with a natural and hydrating texture. It endows the facial skin with abundant moisture, as if forming a hydrating film\non the skin surface. It deeply moisturizes and hydrates, improving the dry and rough condition of the skin caused by water shortage.\nIt makes the skin refreshing, plump, and more moisturized, bringing a comfortable feeling of moisture. It presents a water-like,\nbright and shiny look, making the facial skin reveal a tender and bright luster, and creating a delicate, hydrated and charming skin**\n \n**567**\n \n**All\nskin type**\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\n**17**\n \n**YEAST ESSENCE\nSKIN TREATMENT MILK**\n \n**7g*10**\n \n**Contain water replenishing\nand moisturizing essence, replenish skin moisture and nutrients, relieve dry and rough skin, smooth and tender and moisturize skin**\n \n**379**\n \n**All\nskin type**\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\n**18**\n \n**PARKHA\nACTIVATING\nMOISTURIZING MASK  **\n \n**28ml*10P**\n \n**Using soft and skin-friendly\nTencel film, the thin film carries a full amount of essence, closely fitting the contours of the skin when applied to the face, as\nif wrapping the skin with a gentle “water film”. The skin appears hydrated**\n \n**268**\n \n**All\nskin type**\n \n\n \n\n66\n\n \n\n \n\n**NO.**\n \n**PRODUCT**\n \n**STANDARD**\n \n**FUNCTION**\n \n**RETAIL\n\nPRICE\n(RMB)**\n \n**TARGET\n\nSKIN**\n \n**PICTURE**\n\n**19**\n \n**ACNE\nCLEAN TEA\nMASK**\n \n**28ml*10P**\n \n**The\nthin and breathable sheet adheres closely to the face, providing moisture while being gentle and translucent. It contains various\nplant extracts that help refine pores, refresh and cleanse the skin, improve skin hydration, and keep the skin moisturized, refreshed,\nsmooth, and delicate**\n \n**199**\n \n**Acne-prone\noily skin**\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\n**20**\n \n**PARKHA COLLAGEN\nBRIGHTENING\nESSENCE MASK**\n \n**5piece**\n \n**The fermentation process\ncontains a recombinant protein expressed by Pichia pastoris, which combines two patented skincare ingredients, glycyrrhizin and β\n- glucan, to care for beautiful skin, nourish and brighten the skin while increasing skin hydration. It helps improve skin problems\nsuch as dehydration, dryness, and roughness, making the skin delicate, translucent, smooth, and radiant**\n \n**268**\n \n**All\nskin type**\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\n**21**\n \n**PARKHA SHUIGUANG\nMASK**\n \n**28ml*10P**\n \n**It contains ingredients\nsuch as sodium hyaluronate and Sophora flavescens root extract, which provide the skin with essential nutrients and moisture, moisturize\nand hydrate, and care for the skin. It improves dryness and roughness of the skin, leaving it hydrated, radiant, and soft to the\ntouch**\n \n**158**\n \n**All\nskin type**\n \n\n \n\n67\n\n \n\n \n\n**NO.**\n \n**PRODUCT**\n \n**STANDARD**\n \n**FUNCTION**\n \n**RETAIL\n\nPRICE\n(RMB)**\n \n**TARGET\n\nSKIN**\n \n**PICTURE**\n\n**22**\n \n**UMBILICAL\nCORD\nESSENCE FREEZE-\nDRIED POWDER**\n \n**(0.05g+3ml)*10**\n \n**The texture is smooth\nand easy to spread. It contains (animal) umbilical cord extract, which deeply nourishes the skin, leaving it hydrated and silky smooth**\n \n**1660**\n \n**All\nskin type**\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\n**23**\n \n**PARRHA\nEXTRACT\nRENEWAL ESSENCE\nOIL**\n \n**30ml**\n \n**Contains various botanical\nextracts such as white lotus flower and squalane, improving fine lines and wrinkles caused by skin dehydration, providing deep hydration.\nThe synergistic effect of licorice fruit and Vitamin E enhances radiance, making the skin smooth and translucent**\n \n**228**\n \n**All\nskin type**\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\n**24**\n \n**PARK\nHA REVITALIZE\nEYE ESSENCE**\n \n**2ml*10**\n \n**Moisturizes the skin,\nimproves dryness and dehydration, provides intense hydration to the skin around the eyes, revitalizing and rejuvenating it with a\nfresh and hydrated appearance**\n \n**298**\n \n**All\nskin type**\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\n**25**\n \n**PARKHA\nLIGHT SENSE\nHUAN LIANG FREEZE\nDRIED POWDER**\n \n**(50mg+3ml)*10**\n \n**The texture is smooth\nand refreshing. effectively brightening the skin and making it fair and luminous. Alpha-arbutin helps reduce skin pigmentation and\nfade dark spots, resulting in a fair and radiant complexion**\n \n**1430**\n \n**For\nskin with whitening needs**\n \n\n** **\n\n**Manufacture\nof Our Products**\n\n \n\nPark\nHa Jiangsu engages and commissions third-party manufacturers to produce our products. The engagement specifies that the third-party manufacturers\nshall purchase raw materials from our designated raw material suppliers. Park Ha Jiangsu does not enter into direct contracts with raw\nmaterial suppliers.\n\n \n\nPursuant\nto the Agreement of Commissioned Processing, the third-party manufacturers shall provide the formulas to be used in our products and\na packaging material inspection report, produce a manufacture plan in written form, and manufacture and process our products that meet\nthe relevant national standards, industry standards, and our requirements, as well as provide temporary storage of our products. The\nAgreement of Commissioned Processing also requires us to provide the third-party manufacturers with packaging materials that meet the\nrequirements under applicable laws and regulations such as the Advertising Law and intellectual property regulations. However, given\nour reliance on our third-party manufacturers to provide us with the formulas for our products and that we do not own the formulas, if\nwe fail to enforce such agreements and if our competitors engage the same manufacturers and introduce the same or similar products at\na significantly lower price in the same markets that we operate in, our results of operations may be adversely affected.\n\n \n\n68\n\n \n\n \n\nBefore\nsending a product for mass production, the third-party manufacturers produce the product samples. Park Ha Jiangsu will conduct internal\ntests and may improve the formula provided by the third-party manufacturers. In addition, Park Ha Jiangsu engages third-party testing\nagencies to conduct cosmetics safety testing.\n\n \n\nOnce\nthe samples pass the third-party testing agency’s safety testing, Park Ha Jiangsu will coordinate with the third-party manufacturers\nto complete the record-filing with the NMPA.\n\n \n\nPark\nHa Jiangsu has entered into agreements with third-party manufacturers who are responsible for obtaining the raw ingredients for our products\nand for manufacturing them according to specific product formula used by the third-party manufacturers. We maintain control of the ingredients\nbeing used in the process and the quality of finished goods by providing a list of designated ingredients to the third-party manufacturers\nand carefully examining the products before accepting them. We store excess raw materials with the third-party manufacturers for future\nuse. The third-party manufacturers have obtained and maintained licenses for cosmetic production.\n\n \n\nOnce\nthe record-filing is completed, the third-party manufacturers will start manufacturing the products.\n\n \n\n**Distribution\nand Warehouse**\n\n \n\nThe\nthird-party manufacturers deliver the products to our warehouse and Park Ha Jiangsu ships products from the warehouse to the directly\noperated stores on an as-needed basis and ship products from the warehouse to the franchise stores pursuant to their orders.\n\n \n\nPark\nHa Jiangsu maintains a warehouse in Wuxi, Jiangsu Province, PRC. Products produced and packaged by third-party manufacturers are delivered\nby third-party logistics companies directly from the production site to Park Ha Jiangsu’s warehouse. Park Ha Jiangsu\npays for the freight. The warehouse stores the products in a dry environment and away from direct sunlight.\n\n \n\n**Our\nStores**\n\n \n\nOur\nstores are generally located in commercial complexes in urban centers in China. As of October 31,2025, our five directly operated stores\nare located in Wuxi Xinwu Wanda Plaza, No.31 Zhenze Road,Xinwu District ,Wuxi Starlight Life Plaza,No.3 Qianwei Road,Xinwu District,Shop\nNo. 433 at 30.39-401,Coastal City, Economic Development Zone,B161A at No. 88 Jinshi Road, Binhu District, Wuxi Mixc Mall,No.88 Jinshi\nRoad,Binhu District and 59-103 at Bafanghui,Wuxi, Jiangsu Province, PRC, the areas of which are 66.30 square meters, 53.64 square meters,78.8\nsquare meters ,49 square meters and 58.83 square meters, respectively. Each of the directly operated stores has a product sample area\nand a product experience area. We sell our products in the stores and provide complimentary after-sales beauty services. As of October\n31, 2025, we have a total of 25 employees working in our five directly operated stores.\n\n \n\n**Digital\nCustomer Engagement Strategy**\n\n \n\nWe\nbelieve that Chinese consumers expect to have a more intimate product use experience offered by beauty brands on social media platforms.\nMany local skincare enterprises in China also promote their products by increasing their marketing investment in online communities,\nsuch as launching VR product trials, live online sales, social app advertising. Since 2020, “Park Ha” brand has established\nits own official account on various popular short video platforms in China including Douyin, RED, and WeChat Video, which has promoted\nits popularity among the beauty industry and consumers in China. Since 2022, “Park Ha” brand has launched a live channel\non Douyin, which promotes products through live activities. By interacting directly with consumers through live streaming and cutting-edge\nmarketing channels, providing instant and customized content access, we believe that the “Park Ha” brand has created a marketing\nmodel that is widely effective among beauty consumers in China.\n\n \n\n69\n\n \n\n \n\n**Our\nOnline to Offline**\n\n \n\nWe\nbelieve that we should leverage both e-commerce platforms and brick-and-mortar shops to create an omnichannel seamless shopping experience\nfor our customers. Therefore, we constructed our Online-to-Offline (“O2O”) business model in January 2017. Specifically,\nwe use various e-commerce strategies, such as click-and-collect service (i.e., offering our customers the option to purchase products\nonline and pick them up in-store), and offering digital coupons to attract customers on social media platforms (e.g., Douyin and Meituan,\ntwo of the largest social media platforms in China) to visit our physical stores and encourage them to purchase our products. We also\noffer group-buying deals, which refers to a group of customers coming together to purchase products at discounted prices. We offer group-buying\ndeals on social media platforms, including aforementioned platforms like Douyin and Meituan, and we would require a minimum number of\npurchasers for the discounted price to apply. We believe that our O2O Model has enabled us to reach a wider audience online, attract\nnew customers, engage with customers across multiple channels, and increase sales while our customers can enjoy significant discounts\nand a seamless shopping experience.\n\n \n\nThrough\nholding events for customers to experience products under the “Park Ha” brand, stores promote and sell our skincare products.\nOur online order system is open to our franchisees to place orders.\n\n \n\nWe\nbelieve that through our physical stores, we have built a closer relationship with our customers to enhance their experience with Park\nHa products. Generally, each of our physical stores has a prominent product trial area at the front of the store to showcase all of our\nproducts. We also train and employ several aestheticians to answer customers’ questions related to skin problems and provide skincare\nadvice accordingly. The stores have set up a storage area for centralized storage of products and fulfillment of short-term orders from\ncustomers.\n\n \n\n \n\n**Quality\nControl**\n\n \n\nWe\nhave a comprehensive quality assurance program designed to ensure product quality and safety throughout the procurement and production\ncycle. Park Ha Jiangsu outsources our product manufacture process to third-party ingredients suppliers and manufacturers, who shall follow\nour guidelines and product formula in production. We have strict control over the ingredients choices and the quality of finished goods.\nEach batch of products will only be produced after we have examined the sample product from the third-party manufacturers and approved\nits quality. During the quality control process, we perform a series of functionality, stability, and compatibility tests on the designed\npackaging materials and product components under various strict conditions.\n\n \n\n70\n\n \n\n \n\nIn\naddition, we implement a rigorous on-site audit program to ensure that third-party raw material suppliers comply with the product safety\ncompliance standards in China. We take great care to ensure that third-party suppliers of raw materials share our commitment to quality\nand ethics. Given the experience of our third-party manufacturers in supplying high-end and luxury beauty brands around the world, they\ngenerally establish high-quality production standards to ensure that the product quality meets the stringent standards we set.\n\n \n\nWe\nensure consistency in our manufacturing quality through regular on-site inspections and audits of third-party manufacturers and ingredients\nsuppliers. We have a policy of terminating our cooperation with partners that do not meet our quality standards.\n\n \n\n**Our\nDelivery, Return and Exchange Policies**\n\n \n\nOur\ndelivery policy is as follows: on the 15th and 30th of each month, deliveries of our products are made by Park\nHa Jiangsu to various stores within the Wuxi urban area. Deliveries to stores outside the Wuxi urban area are sent through Deppon Logistics\nExpress, SF Express and YTO Express.\n\n \n\nOur\nreturn and exchange policy dictates that within three months from the delivery of the initial inventory listed for each store, products\nwithin their shelf life can be exchanged for other products of up to 10% of the total value. For products purchased at the stores within\none month before the expiration of the warranty period, free returns and exchanges are accepted.\n\n \n\n**Our\nCompetition**\n\n \n\nWe\ncompete with both established multinational and domestic brands, as well as smaller niche brands in both the PRC market and the global\nbeauty market. Some of our largest competitors are Fanwenhua, DR PLANT, and Beauty Farm, each of whom has over 100 franchisees nationwide.\nThey have a longer operating history and relatively higher market share than us, and have established brand recognition and a strong\nreputation in the market. Therefore, we may have trouble gaining visibility and credibility among consumers. Besides, larger and more\nestablished companies tend to benefit from economies of scale, which allows them to produce goods at lower costs per unit. This could\nresult in pricing advantages, making it difficult for us to compete on price while maintaining profitability. We believe that we compete\nprimarily based on perceived value, including pricing and innovation, product efficacy, service to the customer, promotional activities,\nadvertising, special events, new product introductions, e-commerce initiatives, direct sales, and other activities. It is difficult for\nus to predict the timing, scale, and effectiveness of our competitors’ actions in these areas or the timing and impact of new entrants\ninto the marketplace.\n\n \n\n**Insurance**\n\n \n\nWe\ncarry director and officer insurance for our Chief Executive Officer, Chief Financial Officer and directors. We will continue to review\nand assess our risk portfolio and make necessary and appropriate adjustments to our insurance practices to align with our needs and with\nindustry practice in the markets in which we operate. We do not maintain any insurance to cover our assets, operations and any loss arising\nfrom business interruptions.\n\n \n\n**Intellectual\nProperty**\n\n \n\nProtecting\nour intellectual property is a priority of our business. We rely on trademarks, patents, and know-how, as well as contractual restrictions\non information disclosure to protect our intellectual property rights. We have signed confidentiality agreements or clauses with our\nexecutives, certain customers, and suppliers, and rely on such confidentiality agreements or clauses and other protections of our technical\nknowledge to maintain our technological advantages in products and designs. As of the date of this annual report, Park Ha Jiangsu and\nXinzhan have a total of 20 registered trademarks, 12 registered patents, 7 registered copyrights, and 1 domain name. All of them are\nin China.\n\n \n\nAs\nwe engage third-party manufacturers to manufacture our products on our behalf, we rely on the formulas provided by these third-party\nmanufacturers commissioned by us. Under our current commissioned processing agreements with our third-party manufacturers, we do not\nown the formulas for our products. Given our reliance on our third-party manufacturers to provide us with the formulas for our products\nand that we do not own the formulas, if we fail to enforce such agreements and if our competitors engage the same manufacturers and introduce\nthe same or similar products at a significantly lower price in the same markets that we operate in, our results of operations may be\nadversely affected.\n\n \n\n71\n\n \n\n \n\n**Trademarks**\n\n \n\nThe\nfollowing table sets forth a brief description of Park Ha Jiangsu and Xinzhan’s trademarks as of the date of this prospectus, all\nof which are registered in China:\n\n \n\n**Trademark\n\nNumber**\n \n**File\nDate**\n \n**Trademark\nName**\n \n**Status**\n \n**Expiration\nDate**\n \n**Jurisdiction**\n \n**Owner**\n\n40583272\n \n2020/5/21\n \n\n \nGranted\n \n2030.5.20\n \nChina\n \nPark\nHa Jiangsu\n\n19552102\n \n2017/5/21\n \n\n \nGranted\n \n2027.5.20\n \nChina\n \nXinzhan\n\n52389822\n \n2021/12/21\n \n\n \nGranted\n \n2031.12.20\n \nChina\n \nXinzhan\n\n52369491\n \n2021/9/21\n \n\n \nGranted\n \n2031.9.20\n \nChina\n \nXinzhan\n\n52374721\n \n2021/9/21\n \n\n \nGranted\n \n2031.9.20\n \nChina\n \nXinzhan\n\n52331512\n \n2021/11/28\n \n\n \nGranted\n \n2031.11.27\n \nChina\n \nXinzhan\n\n51586756\n \n2021/8/14\n \n\n \nGranted\n \n2031.8.13\n \nChina\n \nXinzhan\n\n51578063\n \n2021/7/21\n \n\n \nGranted\n \n2031.7.20\n \nChina\n \nXinzhan\n\n49183046\n \n2021/8/21\n \n\n \nGranted\n \n2031.8.20\n \nChina\n \nXinzhan\n\n44201869\n \n2020/10/21\n \n\n \nGranted\n \n2030.10.20\n \nChina\n \nXinzhan\n\n31045437\n \n2019/5/21\n \n\n \nGranted\n \n2029.5.20\n \nChina\n \nXinzhan\n\n31035182\n \n2019/2/28\n \n\n \nGranted\n \n2029.2.28\n \nChina\n \nXinzhan\n\n26363194\n \n2018/9/28\n \n\n \nGranted\n \n2028.9.27\n \nChina\n \nXinzhan\n\n25600575\n \n2018/7/28\n \n\n \nGranted\n \n2028.7.27\n \nChina\n \nXinzhan\n\n24916764\n \n2018/6/21\n \n\n \nGranted\n \n2028.6.20\n \nChina\n \nXinzhan\n\n24923602\n \n2018/6/21\n \n\n \nGranted\n \n2028.6.20\n \nChina\n \nXinzhan\n\n24919892\n \n2018/6/21\n \n\n \nGranted\n \n2028.6.20\n \nChina\n \nXinzhan\n\n19552028\n \n2017/5/28\n \n\n \nGranted\n \n2027.5.27\n \nChina\n \nXinzhan\n\n19552238\n \n2017/5/28\n \n\n \nGranted\n \n2027.5.27\n \nChina\n \nXinzhan\n\n19552309\n \n2017/5/21\n \n\n \nGranted\n \n2027.5.20\n \nChina\n \nXinzhan\n\n \n\n72\n\n \n\n \n\n**Patents**\n\n \n\nThe\nfollowing table sets forth a brief description of Park Ha Jiangsu’s utility model patents as of the date of this prospectus, all\nof which are registered in China:\n\n \n\n**Patent\nNumber**\n \n**File\nDate**\n \n**Issue\nDate**\n \n**Expiration\n\nDate**\n \n**Title**\n \n**Status**\n\nZL202220091842.2\n \n2022.1.13\n \n2022.8.26\n \n2032.1.12\n \nA kettle\ntype device for fine chemical reaction\n \nEffective\n\nZL202220087676.9\n \n2022.1.13\n \n2022.8.26\n \n2032.1.12\n \nA filter\ndevice for biofiltration\n \nEffective\n\nZL202220088104.2\n \n2022.1.13\n \n2022.8.26\n \n2032.1.12\n \nA high-efficiency\nchemical material mixing equipment for deep-processing reaction\n \nEffective\n\nZL202123449958.3\n \n2021.12.31\n \n2022.9.20\n \n2031.12.30\n \nA biological\nresponse kettle\n \nEffective\n\nZL202220087588.9\n \n2022.1.13\n \n2022.08.26\n \n2032.1.12\n \nA Natural\nEffective Ingredients Extraction Equipment\n \nEffective\n\nZL202223446372.6\n \n2022.12.22\n \n2023.3.21\n \n2032.12.21\n \nA biomass\ncontinuous dry distillation equipment\n \nEffective\n\nZL202222184931.4\n \n2022.8.19\n \n2023.10.20\n \n2032.8.18\n \nA biological\ndenitrification equipment\n \nEffective\n\nZL202322585783.1\n \n2023.9.22\n \n2024.4.30\n \n2033.9.21\n \nA biomass\npressing device\n \nEffective\n\nZL202322299499.8\n \n2023.8.25\n \n2024.3.26\n \n2033.8.24\n \nA deep mixing bioreactor\n \nEffective\n\nZL202322268335.9\n \n2023.8.22\n \n2024.3.26\n \n2033.8.21\n \nA cooling and screening\ndevice for biochemical applications\n \nEffective\n\nZL202210977506.2\n \n2022.08.15\n \n2024.05.24\n \n2032.08.14\n \nA biological nanofilm dust\nsuppression device\n \nEffective\n\nZL202322265294.8\n \n2023.08.22\n \n2024.05.24\n \n2033.8.21\n \nA biochemical experimental\nplatform\n \nEffective\n\n \n\n**Copyrights**\n\n \n\nThe\nfollowing table sets forth a brief description of Park Ha Jiangsu’s software copyrights as of the date of this prospectus, all\nof which are registered in China:\n\n \n\n**Copyright\nNumber**\n \n**Issue\nDate**\n \n**Expiration\n\nDate**\n \n**Category**\n \n**Copyright\nName**\n \n**Owner**\n\n2021SR2206930\n \n2021.12.29\n \n2071.12.31\n \nSoftware\n \nA plant\nharmful component detection system basing on big data analysis V1.0\n \nPark\nHa Jiangsu\n\n2021SR2206932\n \n2021.12.29\n \n2071.12.31\n \nSoftware\n \nA microbial\nculture environment data analysis system\n \nPark\nHa Jiangsu\n\n2021SR2206931\n \n2021.12.29\n \n2071.12.31\n \nSoftware\n \nAn\nonline trading system for biosynthetic prepared products based on block chain technology\n \nPark\nHa Jiangsu\n\n2021SR2211374\n \n2021.12.29\n \n2071.12.31\n \nSoftware\n \nA bioactive\nsubstance synthesis system based on artificial intelligence technology\n \nPark\nHa Jiangsu\n\n2021SR2211375\n \n2021.12.29\n \n2071.12.31\n \nSoftware\n \nAn\nherbal essence extraction control system based on AI technology\n \nPark\nHa Jiangsu\n\n2025SR0388978\n \n2025.03.05\n \n2075.12.31\n \nSoftware\n \nPuhua\nBiological Skin Barrier Repair Technology Repair Process Tracking Software V1.0\n \nPark\nHa Jiangsu\n\n2025SR0388956\n \n2025.03.05\n \n2075.12.31\n \nSoftware\n \nPuhua\nBiological Collagen Peptide Gel Synthesis Process Control Software V1.0\n \nPark\nHa Jiangsu\n\n \n\n**Domain**\n\n \n\nThrough\nXinzhan, we currently have the right to use one domain name that is registered and issued in the PRC, as follows:\n\n \n\n**Number**\n \n**Domain\nName**\n \n**Owner**\n\n1\n \nparkha.cn\n \nXinzhan\n\n \n\n**Regulations**\n\n \n\nThis\nsection sets forth a summary of the most significant rules and regulations that affect our business activities in China.\n\n \n\n*Regulatory\nAuthorities*\n\n \n\nThe\nNational Medical Products Administration, or the NMPA, under the SAMR, is the government authority that monitors and supervises the administration\nof cosmetics, medical devices, and foods. The NMPA’s predecessor, the China Food and Drug Administration was established in March 2013\nand separated from the Ministry of Health of the PRC, or the MOH, as part of an institutional reform of the State Council.\n\n \n\n73\n\n \n\n  \n\n*Regulations\nRelating to Cosmetic Products*\n\n \n\nPursuant\nto the Regulations Concerning the Hygiene Supervision over Cosmetics Products, “Hygiene Regulations”), which was promulgated\nby the former MOH on November 13, 1989 and most recently amended on March 2, 2019, cosmetic products are divided into special\npurpose cosmetic products and non-special purpose cosmetic products. The Supervision Regulations was promulgated by the State Council\non June 16, 2020, and became effective on January 1, 2021, which replaced the Hygiene Regulations. Compared with the Hygiene\nRegulations, the Supervision Regulations and its implementation rules (including Measures for the Administration of the Registration\nand Record Filing of Cosmetics, which was promulgated by the SAMR on January 7, 2021 and became effective on May 1, 2021) clarify\nor amend certain provisions including without limitation the follows:\n\n \n\n \n(i)\nResponsibilities of the\ndifferent parties in the operation of cosmetics. The Supervision Regulations for the first time introduce the concepts of registrant\nand record-filing applicant of cosmetics. The applicant for registration or record-filing of cosmetics shall undertake the main responsibilities\nfor the quality, safety and effectiveness claims of cosmetics. Specifically, an applicant for registration or record-filing of cosmetics\nshall be responsible for the registration or record-filing before sale of such cosmetics, the monitoring of adverse reactions, the\nevaluation and reporting, product risk control and recall, and safety re-evaluation of the products and raw materials after sale\nof such cosmetics to ensure quality and safety of the registered/filed products. In addition, the claims for the effectiveness of\nall types of cosmetics shall be supported by sufficient scientific basis and an extract of the papers, research data or product evaluation\nmaterial on which such effectiveness is claimed to be based shall be made public on websites designated by the regulatory authority.\nAn applicant registering or record-filing the record for cosmetics shall be subject to the supervision of the NMPA.\n\n \n\n \n(ii)\nCategories of cosmetics.\nCosmetics are divided into special cosmetics and ordinary cosmetics, instead of special purpose cosmetic products and non-special\npurpose cosmetic products. Special cosmetics refer to products for hair coloring, hair perming, freckle removal and skin whitening,\nsunscreen, and hair loss prevention as well as those purporting to have new functions and effects, such as antioxidant, blue light\nprotection, anti-pollution, pH balance, antiperspirant, and sweat control. Ordinary cosmetics refer to cosmetics other than special\ncosmetics. The NMPA implements registration management for special cosmetics and record-filing management for ordinary cosmetics.\nSpecial cosmetics may not be produced and imported unless they have been registered with the NMPA. Domestic ordinary cosmetics shall\nbe filed with the provincial drug regulatory authority where the record-filing applicant is located before going on sales.\n\n \n\n \n(iii)\nProduction of cosmetics.\nIn case of entrusting a third party to manufacture, a registrant or record-filing applicant of cosmetics shall entrust an entity\nthat has obtained corresponding cosmetics manufacturing license and supervise the manufacture.\n\n \n\nViolations\nof the Supervision Regulations will result in different penalties ranging from fines (fixed range or, in cases of severe violations,\nbased on the values of the illegally manufactured goods), confiscation of raw materials, products illegally manufactured or sold and\nillegally obtained gains, revoking licenses, and suspension of business. Furthermore, pursuant to the Supervision Regulations, the responsible\nindividual shall be subject to an industry operation banning period for five or ten years or even criminal liability.\n\n \n\nPursuant\nto the Provisions for Supervision and Administration of Manufacturing and Marketing of Cosmetics, which was promulgated by the SAMR on\nAugust 2, 2021, and became effective on January 1, 2022, and other applicable laws, to engage in manufacturing of cosmetics,\nthe Cosmetics Manufacturing License shall be obtained in accordance with the law. If the registrant or the record-filing entity of cosmetics\nentrusts manufacturing of cosmetics, it shall entrust one that has obtained the manufacturing license for the relevant cosmetics. The\ncontract manufacturer shall have the corresponding manufacturing conditions.\n\n \n\n74\n\n \n\n \n\nAccording\nto the Good Manufacturing Practice for Cosmetics, which was issued on January 6, 2022 and became effective on July 1, 2022,\napplicants and appointed manufacturers shall establish a production quality management system in accordance with the requirements to\nensure the continuous and stable production of cosmetics that meet the relevant quality and safety requirements.\n\n \n\nThe\nProvisions on the Supervision and Administration of Enterprises’ Implementation of Primary Responsibilities for Cosmetics Quality\nand Safety, “Supervision Provisions”) was promulgated by the NMPA on December 29, 2022 and became effective from March 1,\n2023. The Supervision Provisions emphasize that, a registrant or record-filing applicant, commissioned manufacturing enterprises of cosmetics\nshall be responsible for the quality, safety and effectiveness claims of cosmetics and shall manage the quality, safety of cosmetics\nregistered or filed by them in the whole process from the research, development, production, and operation of cosmetics. Furthermore,\nthe legal representative of the registrant, record-filing applicant and commissioned manufacturing enterprises of cosmetics shall be\nfully responsible for the quality and safety work of cosmetics.\n\n \n\nAccording\nto the Measures for the Administration of Cosmetic Labels, which was issued on May 31, 2021 and became effective on May 1,\n2022, the smallest sales unit of cosmetics shall be labeled. The labels shall comply with the requirements of the relevant laws, administrative\nregulations, departmental rules, compulsory national standards and technical specifications. The contents of the labels shall be lawful,\nauthentic, complete, accurate and consistent with the relevant contents registered or filed.\n\n \n\n*Regulations\nRelating to Online Trading and E-Commerce*\n\n \n\nOn\nMarch 15, 2021, the SAMR promulgated the Measures for the Supervision and Administration of Online Transactions, which became effective\non May 1, 2021, to regulate all operating activities for product sales and services offered via the internet (including mobile internet).\nIt stipulates the obligations of online products operators and services providers and certain special requirements applicable to third-party\nplatform operators.\n\n \n\nOn\nAugust 31, 2018, the SCNPC promulgated the E-Commerce Law of the PRC, or the E-Commerce Law, which became effective on January 1,\n2019. The promulgation of the E-Commerce Law established the basic legal framework for the development of China’s e-commerce business\nand clarified the obligations of the e-commerce business operators and the possible legal consequences if e-commerce business operators\nare found to be in violation of legal obligations. For example, pursuant to the E-Commerce Law, the e-commerce business operators shall\ndisclose information about goods or services provided comprehensively, truthfully, accurately and promptly in order to protect the consumers’\nrights to know and rights to choose. The e-commerce business operators shall not fabricate transactions or users’ comments to conduct\nfalse or misleading business promotions so as to defraud or mislead consumers. Violation of the provisions of the E-Commerce Law may\nresult in being ordered to make corrections within a prescribed period of time, confiscation of illegally obtained gains, fines, suspension\nof business, inclusion of such violations in the credit records and possible civil liabilities.\n\n \n\n*Regulations\non Product Quality and Consumers Protection*\n\n \n\nAccording\nto the Product Quality Law of the PRC, which took effect on September 1, 1993 and was amended by the SCNPC on July 8, 2000,\nAugust 27, 2009 and December 29, 2018 respectively, products for sale must satisfy relevant safety standards and sellers shall\nadopt measures to maintain the quality of products for sale. Sellers may not mix impurities or imitations into products, or pass counterfeit\ngoods off as genuine ones, or defective products as good ones or substandard products as standard ones. For sellers, any violation of\nstate or industrial standards for health and safety or other requirements may result in civil liabilities and administrative penalties,\nsuch as compensation for damages, fines, confiscation of products illegally manufactured or sold and the proceeds from the sales of such\nproducts illegally manufactured or sold and revoking business license; in addition, severe violations may subject the responsible individual\nor enterprise to criminal liabilities.\n\n \n\n75\n\n \n\n \n\nAccording\nto the Consumers Rights and Interests Protection Law of the PRC, or the Consumers Rights and Interests Protection Law, which became effective\non January 1, 1994 and was amended by the SCNPC on August 27, 2009 and October 25, 2013, respectively, business operators\nshould guarantee that the products and services they provide satisfy the requirements for personal or property safety, and provide consumers\nwith authentic information about the quality, function, usage and term of validity of the products or services. The consumers whose interests\nhave been damaged due to the products or services that they purchase or receive on the internet trading platforms may claim damages against\nsellers or service providers. Where the operators of the online trading platforms are unable to provide the real names, addresses and\nvalid contact details of the sellers or service providers, the consumers may also claim damages against the operators of the online trading\nplatforms. Operators of online trading platforms that clearly knew or should have known that sellers or service providers use their platforms\nto infringe upon the legitimate rights and interests of consumers but fail to take necessary measures must bear joint and several liabilities\nwith the sellers or service providers. Moreover, if business operators deceive consumers or knowingly sell substandard or defective products,\nthey should not only compensate consumers for their losses, but also pay additional damages equal to three times the price of the goods\nor services.\n\n \n\nOn\nJanuary 6, 2017, the SAIC issued the Interim Measures for Seven-day Unconditional Return of Online Purchased Goods, which became\neffective on March 15, 2017, and was amended by the SAMR on October 23, 2020, took effect on the same day, further clarifying the\nscope of consumers’ rights to make returns without reason, with exceptions, return procedures and online trading platform operators’\nresponsibility to formulate seven-day unconditional return rules and related consumer protection systems, and supervise the merchants\nfor compliance with these rules.\n\n \n\n*Regulations\non Commercial Franchising*\n\n \n\nFranchise\noperations are subject to the supervision and administration of the MOFCOM, and its regional counterparts. Such activities are currently\nregulated by the Administrative Regulations on Commercial Franchising, which was promulgated by the State Council on February 6, 2007\nand became effective on May 1, 2007. The Administrative Regulations on Commercial Franchising were subsequently supplemented by the Administrative\nMeasures on Filing of Commercial Franchises, which was amended and promulgated by the MOFCOM on December 12, 2011, became effective on\nFebruary 1, 2012 and was most recently amended on December 29, 2023, and the newly amended Administrative Measures on Information Disclosure\nof Commercial Franchises, which was promulgated by the MOFCOM on February 23, 2012 and became effective on April 1, 2012.\n\n \n\nUnder\nthe above applicable regulations, a franchisor must have certain prerequisites including a mature business model, the capability to provide\nlong-term business guidance and training services to franchisees and ownership of at least two self-operated storefronts that have been\nin operation for at least one year within China. Franchisors engaged in franchising activities without satisfying the above requirements\nmay be subject to penalties such as forfeit of illegal income and imposition of fines between RMB100,000 and RMB500,000 and may be bulletined\nby the MOFCOM or its local counterparts. Franchise contracts shall include certain required provisions, such as terms, termination rights\nand payments.\n\n \n\n76\n\n \n\n \n\nFranchisors\nare generally required to file franchise contracts with the MOFCOM or its local counterparts. Failure to report franchising activities\nmay result in penalties such as fines up to RMB100,000. Such non-compliance may also be bulletined. In the first quarter of every year,\nfranchisors are required to report to the MOFCOM or its local counterparts any franchise contracts they executed, canceled, renewed or\namended in the previous year.\n\n \n\nThe\nterm of a franchise contract shall be no less than three years unless otherwise agreed by franchisees. The franchisee is entitled to\nterminate the franchise contract in his sole discretion within a set period of time upon signing of the franchise contract.\n\n \n\nPursuant\nto the Administrative Measures on Information Disclosure of Commercial Franchises, 30 days prior to the execution of franchise contracts,\nfranchisors are required to provide franchisees with copies of the franchise contracts, as well as written true and accurate basic information\non matters including:\n\n \n\n \n●\nthe name, domiciles, legal\nrepresentative, registered capital, scope of business and basic information relating to its commercial franchising;\n\n \n\n \n●\nbasic information relating\nto the registered trademark, logo, patent, know-how and business model;\n\n \n\n \n●\nthe type, amount and method\nof payment of franchise fees (including payment of deposit and the conditions and method of refund of deposit);\n\n \n\n \n●\nthe price and conditions\nfor the franchisor to provide goods, service and equipment to the franchisee;\n\n \n\n \n●\nthe detailed plan, provision\nand implementation plan of consistent services including operational guidance, technical support and business training provided to\nthe franchisee;\n\n \n\n \n●\ndetailed measures for guiding\nand supervising the operation of the franchisor;\n\n \n\n \n●\ninvestment budget for all\nfranchised hotels of the franchisee;\n\n \n\n \n●\nthe current numbers, territory\nand operation evaluation of the franchisees within China;\n\n \n\n \n●\na summary of accounting\nstatements audited by an accounting firm and a summary of audit reports for the previous two years;\n\n \n\n \n●\ninformation on any lawsuit\nin which the franchisor has been involved in the previous five years;\n\n \n\n \n●\nbasic information regarding\nwhether the franchisor and its legal representative have any record of material violation; and\n\n \n\n \n●\nother information required\nto be disclosed by the MOFCOM.\n\n \n\nIn\nthe event of failure to disclose or misrepresentation, the franchisee may terminate the franchise contract and the franchisor may be\nfined up to RMB100,000. In addition, such non - compliance may be bulletined.\n\n \n\nAccording\nto the Manual of Guidance on Administration for Foreign Investment Access (Edition 2008) promulgated by the MOFCOM in December 2008,\nif an existing FIE wishes to operate a franchise in China, it must apply to the MOFCOM or its local counterparts and must include “engaging\nin commercial activities by way of franchise” in its business scope.\n\n \n\n77\n\n \n\n \n\n*Regulations\non Advertising*\n\n \n\nIn\n1994, the SCNPC promulgated the Advertising Law of the PRC, or the Advertising Law, which was recently amended on April 29, 2021 and\nbecame effective on the same date. The Advertising Law regulates commercial advertising activities in the PRC and sets out the obligations\nof advertisers, advertising operators, advertising publishers and advertisement endorsers, and prohibits any advertisement from containing\nany obscenity, pornography, gambling, superstition, terrorism or violence-related content. Any advertiser in violation of such requirements\non advertisement content will be ordered to cease publishing such advertisements and imposed a fine, the business license of such advertiser\nmay be revoked, and the relevant authorities may revoke the approval document for advertisement examination and refuse to accept applications\nsubmitted by such advertiser for one year. In addition, any advertising operator or advertising publisher in violation of such requirements\nwill be imposed a fine, and the advertisement fee received will be confiscated; in severe circumstances, the business license of such\nadvertising operator or advertising publisher may be revoked.\n\n \n\nThe\nAdministrative Measures for Online Advertising were adopted by the SAMR on February 25, 2023 and became effective on May 01, 2023. According\nto the Administrative Measures for Online Advertising, Advertisers shall be responsible for the truthfulness of the content of their\nonline ads. An online ad shall be identifiable so that it can be clearly identified by consumers as an advertisement. The publication\nor delivery of an ad through the Internet must not affect users’ normal use of the network. It is prohibited to deceive or mislead\nusers into clicking or browsing an ad through the following means: (1) any false system or software update, error or cleanup prompts\nor other notifications; (2) any false Play, Start, Pause, Stop, Return, or other symbols; (3) any false promises of a reward; or (4)\nany other means of deceiving or misleading users into clicking or browsing an ad. It is prohibited to deliver any online ad to any means\nof transport, navigation equipment, smart home appliance, etc., of a user without the user’s consent or the user’s request,\nor when the user has expressly refused consent, and it is prohibited to add any ad or ad link to an email or online instant message sent\nby users. Product sellers or service providers who markets any product or service through livestreaming on the Internet, which constitutes\na commercial advertisement, shall legally bear the responsibilities and obligations of advertisers. Livestream room operators engaged\nto provide advertising design, production, agency, or publishing services shall legally bear the responsibilities and obligations of\nadvertising agents or advertising publishers. Livestream marketers engaged to provide advertising design, production, agency, or publishing\nservices shall legally bear the responsibilities and obligations of advertising agents or advertising publishers. Livestream marketers\nwho recommend or endorse any product or service using their own name or image, which constitutes an advertising endorsement, shall legally\nbear the responsibilities and obligations of advertising spokespersons.\n\n \n\n*Regulations\non Leasing*\n\n \n\nUnder\nthe Law of the PRC on Administration of Urban Real Estate promulgated by the SCNPC, which took effect as of January 1995 and was amended\nin August 2007, August 2009 and January 2020, respectively, and the Administrative Measures on Leasing of Commodity House promulgated\nby the Ministry of Housing and Urban- rural Construction, which took effect as of February 1, 2011, when leasing premises, the lessor\nand lessee are required to enter into a written lease contract, prescribing such provisions as the leasing term, use of the premises,\nrental and repair liabilities, and other rights and obligations of both parties. Both lessor and lessee are also required to go through\nregistration procedures to record the lease with the real estate administration department. Pursuant to these laws and regulations and\nvarious local regulations, if the lessor and lessee fail to go through the registration procedures, both lessor and lessee may be subject\nto fines, and the leasing interest may be subordinated to an interested third party acting in good faith.\n\n \n\n78\n\n \n\n \n\nOn\nMay 28, 2020, the Civil Code of the People’s Republic of China (the “Civil Code”) was promulgated by the National People’s\nCongress, and the Civil Code came into effect on January 1, 2021 and replaced the Property Law, the Contract Law of the PRC and several\nother basic civil laws in the PRC. According to the Civil Code, subject to consent of the lessor, the lessee may sublease the leased\nitem to a third party. Where the lessee subleases the lease item, the leasing contract between the lessee and the lessor remains valid.\nThe lessor is entitled to terminate the contract if the lessee subleases the lease item without the consent of the lessor. Where a lessor\nknows or should have known of the sublease made by a lessee but fails to raise any objection within six months, the lessor is deemed\nto have consented to the sublease. Pursuant to the Civil Code, where a mortgagor leases the mortgaged property before the mortgage contract\nis concluded, the previously established leasing relation shall not be affected; and where a mortgagor leases the mortgaged property\nafter the creation of the mortgage interest, the leasing interest will be subordinated to the registered mortgage interest.\n\n \n\n*Regulations\non Intellectual Property Rights*\n\n \n\nThe\nPRC Copyright Law, which took effect on June 1, 1991 and last amended on November 11,2020, provides that Chinese citizens, legal persons,\nor other organizations shall, whether published or not, own copyright in their copyrightable works, which include, among others, works\nof literature, art, natural science, social science, engineering technology and computer software. Copyright owners enjoy certain legal\nrights, including right of publication, right of authorship and right of reproduction. The Copyright Law extends copyright protection\nto Internet activities, products disseminated over the Internet and software products. In addition, the Copyright Law provides for a\nvoluntary registration system administered by the China Copyright Protection Center. According to the Copyright Law, an infringer of\nthe copyrights shall be subject to various civil liabilities, which include ceasing infringement activities, apologizing to the copyright\nowners and compensating the loss of copyright owner. Infringers of copyright may also be subject to fines and/or administrative or criminal\nliabilities in severe situations.\n\n \n\nPursuant\nto the Computer Software Protection Regulations promulgated by the State Council on June 4, 1991 and last amended on January 30, 2013,\nChinese citizens, legal persons and other organizations shall enjoy copyright on software they develop, regardless of whether the software\nis released publicly. Software copyright commences from the date on which the development of the software is completed. The protection\nperiod for software copyright of a legal person or other organizations shall be 50 years, concluding on December 31 of the 50th year\nafter the software’s initial release. The software copyright owner may go through the registration formalities with a software\nregistration authority recognized by the State Council’s copyright administrative department. The software copyright owner may\nauthorize others to exercise that copyright and is entitled to receive remuneration.\n\n \n\nBoth\nthe Trademark Law of the PRC adopted by the SCNPC on August 23, 1982 and last amended on November 1, 2019, and the Implementation Regulation\nof the Trademark Law of the PRC adopted by the State Council on August 3, 2002 and revised on April 29, 2014 give protection to the holders\nof registered trademarks and trade names. The National Intellectual Property Administration (Trademark Office) handles trademark registrations.\nTrademarks can be registered for a term of ten years and can be extended for another ten years if requested upon expiration of any ten-year\nterm. Trademark license agreements must be filed with the Trademark Office.\n\n \n\nAccording\nto the Administrative Measures on Internet Domain Names promulgated by the Ministry of Industry and Information Technology of PRC on\nAugust 24, 2017 and took effect on November 1, 2017. The registration of domain names in PRC is on a “first-apply-first-registration”\nbasis. A domain name applicant will become the domain name holder upon the completion of the application procedure.\n\n \n\n79\n\n \n\n \n\nPursuant\nto the PRC Patent Law which was promulgated by the SCNPC on March 12, 1984 and last amended on October 17, 2020, and its implementation\nrules, once a patent for an invention or utility model has been granted, unless otherwise provided by the Patent Law, no entity or individual\nmay use the patent, patented product or patented process for production or business purposes without the authorization of the patent\nowner. Once a patent has been granted for a design, no entity or individual may manufacture, sell or import any product containing the\npatented design without the permission of the patent owner. If a patent is found to have been infringed, the infringer must, in accordance\nwith relevant regulations, cease such infringement, take remedial action and pay damages.\n\n \n\n*Regulations\non Foreign Currency Exchange*\n\n \n\nThe\nprincipal regulations governing foreign currency exchange in China are the Foreign Exchange Control Regulations of the PRC promulgated\nby the State Council, as amended on August 5, 2008, or the Foreign Exchange Regulations. Under the Foreign Exchange Regulations, the\nRMB is freely convertible for current account items including goods, services, gains and transaction items, but not for capital account\nitems, such as capital transfers, direct investments, investment in securities, derivatives and loans, unless the prior approval of the\nSAFE, is obtained and prior registration with the SAFE is made.\n\n \n\nThe\nCircular on Reforming the Management Method regarding the Settlement of Foreign Exchange Capital of Foreign-invested Enterprises (“Circular\n19”), promulgated on March 30, 2015 and last amended on March 23, 2023, allows FIEs to make equity investments by using RMB funds\nconverted from foreign exchange capital. Under Circular 19, the foreign exchange capital in the capital account of FIEs upon the confirmation\nof rights and interests of monetary contribution by the local foreign exchange bureau (or the book-entry registration of monetary contribution\nby the banks) can be settled at the banks based on the actual operation needs of the enterprises. The proportion of willingness-based\nforeign exchange settlement of capital for FIEs is temporarily set at 100%. The SAFE can adjust such proportion in due time based on\nthe circumstances of the international balance of payments. However, Circular 19 and the Circular on Reforming and Regulating the Management\nPolicies on the Settlement of Capital Projects continues to prohibit FIEs from, among other things, using RMB fund converted from its\nforeign exchange capitals for expenditure beyond its business scope, investment and financing in securities and other investments except\nfor bank’s principal-secured products, providing loans to non-affiliated enterprises or constructing or purchasing real estate\nnot for self-use.\n\n \n\nOn\nOctober 23, 2019, the SAFE promulgated the Circular on Further Promoting the Facilitation of Cross- border Trade and Investment, which\nwas replaced by the Circular on Further Deepening the Reform to Promote the Facilitation Cross-border Trade and Investment as of December\n4, 2023 (“Circular 28”). Pursuant to Circular 28, on the basis of allowing investment-oriented foreign-invested enterprise\n(including foreign-invested investment companies, foreign-invested venture capital enterprises and foreign-invested equity investment\nenterprises) to use capital funds for domestic equity investment in accordance with laws and regulations, non-investment FIEs shall be\nallowed to use capital funds for domestic equity investment in accordance with the laws under the premise of not violating the Special\nEntry Management Measures (Negative List) for the Access of Foreign Investment (2024 version) and the authenticity and compliance of\ntheir domestic invested projects.\n\n \n\n80\n\n \n\n \n\nAccording\nto the Circular on Optimizing Administration of Foreign Exchange to Support the Development of Foreign-related Business issued by the\nSAFE on April 10, 2020, eligible enterprises are allowed to make domestic payments by using their capital funds, foreign credits and\nthe income under capital accounts of overseas listing, with no need to provide the evidentiary materials concerning authenticity of such\ncapital for banks in advance, provided that their capital use shall be authentic and in line with provisions, and conform to the prevailing\nadministrative regulations on the use of income under capital accounts. The concerned bank shall conduct spot checking in accordance\nwith the relevant requirements.\n\n \n\nOn\nDecember 25, 2006, the People’s Bank of China issued the Administration Measures on Individual Foreign Exchange Control and its\nImplementation Rules were issued by the SAFE on January 5, 2007, both of which became effective on February 1, 2007. The Implementation\nRules was later amended on May 29, 2016 and on March 23, 2023. Under these regulations, all foreign exchange matters involved in the\nemployee stock ownership plan, stock option plan and other similar plans, participated by onshore individuals shall be transacted upon\napproval from the SAFE or its authorized branch. On February 15, 2012, the SAFE promulgated the Notice on Relevant Issues Concerning\nForeign Exchange Control on Domestic Individuals Participating in the Stock Incentive Plan of An Overseas Listed Company, or Circular\n7, to replace the Operating Procedures for Administration of Domestic Individuals Participating in the Employee Stock Option Plan or\nStock Option Plan of An Overseas Listed Company. Under Circular 7, the board members, supervisors, officers or other employees, including\nPRC citizens and foreigners having lived within the territory of the PRC successively for at least one year of a PRC entity, who participate\nin stock incentive plans or stock option plans by an overseas publicly listed company, or the PRC participants, are required, through\na PRC agent or PRC subsidiaries of such overseas publicly-listed company, to complete certain foreign exchange registration procedures\nwith respect to the plans upon the examination by, and approval of, the SAFE. We and our PRC participants who have been granted stock\noptions are subject to Circular 7. If our PRC participants who hold such options or our PRC subsidiary fail to comply with these regulations,\nsuch participants and their PRC employer may be subject to fines and legal sanctions.\n\n \n\n*Regulations\non Foreign Investment*\n\n \n\nThe\nNational People’s Congress enacted the Foreign Investment Law of the PRC on March 15, 2019 and the State Council promulgated the\nImplementation Regulations of Foreign Investment Law of the PRC on December 26, 2019, both of which came into force on January 1, 2020.\nOn December 30, 2019, the MOFCOM and the SAMR jointly promulgated the Measures on Reporting of Foreign Investment Information, which\nalso became effective on January 1, 2020. Under these laws and regulations, foreign investors or FIEs shall report and update investment\ninformation to the competent department for commerce through the Enterprise Registration System and the National Enterprise Credit Information\nPublicity System. Any foreign investor or FIE found to be non-compliant with these reporting obligations may potentially be subject to\nfines and legal sanctions.\n\n \n\n81\n\n \n\n \n\nThe\nForeign Investment Law of the PRC, together with its Implementation Regulations replaced, in their entirety, the trio of previous laws\nregulating foreign investment in China, namely, the Sino-foreign Equity Joint Venture Enterprise Law, the Sino-foreign Cooperative Joint\nVenture Enterprise Law and the Wholly Foreign- invested Enterprise Law, together with their implementation rules and ancillary regulations.\nGenerally speaking, the Company Law of the PRC or the Partnership Law of the PRC (promulgated by the SCNPC in February 1997 and amended\nin August 2006) shall apply with respect to the organization of FIEs.\n\n \n\n*Regulations\non Offshore Financing*\n\n \n\nOn\nOctober 21, 2005, the SAFE issued Notice on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Corporate\nFinancing and Roundtrip Investment through Offshore Special Purpose Vehicles, or SAFE Circular 75, which became effective as of November\n1, 2005. Under SAFE Circular 75, if PRC residents use assets or equity interests in their PRC entities as capital contributions to establish\noffshore special-purpose companies directly or indirectly controlled by such PRC residents to carry out equity financing overseas and\nthrough special-purpose companies to carry out direct investment activities in China, they are required to register with local SAFE branches\nwith respect to their overseas investments in offshore companies and roundtrip investment. PRC residents are also required to file amendments\nto their registrations if their offshore companies experience material events involving capital variation, such as changes in share capital,\nshare transfers, mergers and acquisitions, spin-off transactions, long-term equity or debt investments or uses of assets in China to\nguarantee offshore obligations.\n\n \n\nMoreover,\nSAFE Circular 75 applies retroactively. As a result, PRC residents who have established or acquired control of offshore companies that\nhave made onshore investments in the PRC in the past were required to complete the relevant registration procedures with the local SAFE\nbranch by March 31, 2006. Under the relevant rules, failure to comply with the registration procedures set forth in Circular 75 may result\nin restrictions being imposed on the foreign exchange activities of the relevant onshore company, including the increase of its registered\ncapital, the payment of dividends and other distributions to its offshore parent or affiliate and the capital inflow from the offshore\nentity, and may also subject relevant PRC residents to penalties under PRC foreign exchange administration regulations. PRC residents\nwho control our company are required to register periodically with the SAFE in connection with their investments in us.\n\n \n\nThe\nSAFE issued a series of guidelines to its local branches with respect to the operational process for SAFE registration, including the\nNotice of the State Administration of Foreign Exchange on Further Improving and Adjusting Foreign Exchange Administration Policies for\nDirect Investment, which came into effect as of December 17, 2012 and last amended on December 30, 2019. The guidelines standardized\nmore specific and stringent supervision on the registration required by SAFE Circular 75. For example, the guidelines impose obligations\non onshore subsidiaries of an offshore entity to make true and accurate statements to the local SAFE authorities in case any shareholder\nor beneficial owner of the offshore entity is a PRC citizen or resident. Untrue statements by the onshore subsidiaries will lead to potential\nliability for the subsidiaries, and in some instances, for their legal representatives and other individuals.\n\n \n\n82\n\n \n\n  \n\nOn\nJuly 4, 2014, the SAFE issued SAFE Circular 37, which became effective and suspended SAFE Circular 75 on the same date, and Circular\n37 shall prevail over any other inconsistency between itself and relevant regulations promulgated previously. Pursuant to SAFE Circular\n37, any PRC residents, including both PRC institutions and individual residents, are required to register with the local branch of the\nSAFE before making a contribution to an enterprise directly established or indirectly controlled by the PRC residents outside of the\nPRC for the purpose of overseas investment or financing with their legally owned domestic or offshore assets or equity interests, referred\nto in this circular as a “special purpose vehicle.” Under SAFE Circular 37, the term “PRC institutions” refers\nto entities with legal person status or other economic organizations established within the territory of the PRC. The term “PRC\nindividual residents” includes all PRC citizens (also including PRC citizens abroad) and foreigners who habitually reside in the\nPRC for economic benefit. A registered special purpose vehicle is required to amend its SAFE registration with respect to such vehicle\nin connection with any change of basic information including PRC individual resident shareholder, name, term of operation, or PRC individual\nresident’s increase or decrease of capital, transfer or exchange of shares, merger, division or other material changes. In addition,\nif a non- listed special purpose vehicle grants any equity incentives to directors, supervisors or employees of domestic companies under\nits direct or indirect control, the relevant PRC individual residents could register with the local branch of the SAFE before exercising\nsuch options. The SAFE simultaneously issued guidance to its local branches with respect to the implementation of SAFE Circular 37. Under\nSAFE Circular 37, failure to comply with the foreign exchange registration procedures may result in restrictions being imposed on the\nforeign exchange activities of the relevant onshore company, including restrictions on the payment of dividends and other distributions\nto its offshore parent company and the capital inflow from the offshore entity, and may also subject the relevant PRC residents and onshore\ncompany to penalties under the PRC foreign exchange administration regulations.\n\n \n\nOn\nJanuary 5, 2023, the NDRC issued the Administrative Measures for Examination and Registration of Medium and Long-term Foreign Debts of\nEnterprises, which came into effect on February 10, 2023 and replaced the Circular of the National Development and Reform Commission\non Promoting the Administrative Reform of the Record-filing and Registration System for the Issuance of Foreign Debts by Enterprises.\nAccording to the Administrative Measures for Examination and Registration of Medium and Long-term Foreign Debts of Enterprises, enterprises\nshall, prior to the borrowing of foreign debts, obtain the certificate of examination and registration of foreign debts borrowed by enterprises\nand complete the formalities of examination and registration. Enterprises that have not completed examination and registration formalities\nare not allowed to borrow foreign debts.\n\n \n\n*Regulations\non Dividend Distribution*\n\n \n\nThe\nprincipal regulations governing distribution of dividends of FIEs include the Company Law of the PRC. Under the Company Law of the PRC,\ncompanies shall contribute 10% of the profits into their statutory surplus reserve upon distribution of their post-tax profits of the\ncurrent year. A company may discontinue the contribution when the aggregate sum of the statutory surplus reserve is more than 50% of\nits registered capital.\n\n \n\n*Regulations\non Taxation*\n\n \n\nAccording\nto the EIT Law, which was promulgated on March 16, 2007, and came into effect on January 1, 2008 and last amended by the SCNPC on December\n29, 2018, and the Implementation Regulations on the EIT Law, which was promulgated by the State Council on December 6, 2007 and came\ninto effect on January 1, 2008, and last amended by the State Council on December 6, 2024 and came into effect on the same date, a uniform\nincome tax rate of 25% will be applied to domestic enterprises, FIEs. These enterprises are classified as either resident enterprises\nor nonresident enterprises. Besides enterprises established within the PRC, enterprises established in accordance with the laws of other\njudicial districts whose “de facto management bodies” are within the PRC are considered “resident enterprises”\nand subject to the uniform 25% enterprise income tax rate for their global income. A nonresident enterprise refers to an entity established\nunder foreign law whose “de facto management bodies” are not within the PRC but which have an establishment or place of business\nin the PRC, or which do not have an establishment or place of business in the PRC but have income sourced within the PRC. An income tax\nrate of 10% will normally be applicable to dividends declared to or any other gains realized on the transfer of shares by non-PRC resident\nenterprise investors that do not have an establishment or place of business in the PRC, or that have such establishment or place of business\nbut the relevant income is not effectively connected with the establishment or place of business, to the extent such dividends are derived\nfrom sources within the PRC.\n\n \n\n83\n\n \n\n \n\nAccording\nto the Arrangement for the Avoidance of Double Taxation and Tax Evasion between Mainland of China and Hong Kong entered into between\nMainland China and the Hong Kong Special Administrative Region on August 21, 2006, if the non-PRC parent company of a PRC enterprise\nis a Hong Kong resident which directly owns 25% or more of the equity interest of the PRC foreign-invested enterprise which pays the\ndividends and interests, the 10% withholding tax rate applicable under the EIT Law may be lowered to 5% for dividends and 7% for interest\npayments if a Hong Kong resident enterprise is determined by the competent PRC tax authority to have satisfied the relevant conditions\nand requirements under such Double Tax Avoidance Arrangement and other applicable laws. However, according to the Notice on the Certain\nIssues with Respect to the Enforcement of Dividend Provisions in Tax Treaties, which was promulgated by the State Administration of Taxation\nor the SAT on February 20, 2009 and which came into effect on the same date, if the relevant PRC tax authorities determine, in their\ndiscretion, that a company benefits unjustifiably from such reduced income tax rate due to a structure or arrangement that is primarily\ntax-driven, such PRC tax authorities may adjust the preferential tax treatment; and based on the Announcement of the Certain Issues with\nRespect to the “Beneficial Owner” in Tax Treaties, issued by the SAT on February 3, 2018 and effective on April 1, 2018,\nif an applicant’s business activities do not constitute substantive business activities, it could result in the negative determination\nof the applicant’s status as a “beneficial owner,” and consequently, the applicant could be precluded from enjoying\nthe above-mentioned reduced income tax rate of 5% under the Double Tax Avoidance Arrangement.\n\n \n\nThe\nProvisional Regulations on Value-added Tax, which was promulgated on December 13, 1993, came into effect on January 1, 1994, and last\namended on November 19, 2017, and the Detailed Implementing Rules of the Provisional Regulations on Value-added Tax, which was promulgated\non December 25, 1993 and came into effective on the same date, and was amended on December 15, 2008 and October 28, 2011, came into effect\non November 1, 2011 set out that all taxpayers selling goods or providing processing, repairing or replacement services, sales of services,\nintangible assets and immovable assets and importing goods in China shall pay a value- added tax.\n\n \n\nOn\nNovember 19, 2017, the State Council promulgated the Decisions on Abolishing the Provisional Regulations of the PRC on Business Tax and\nAmending the Provisional Regulations of the PRC on Value- added Tax, according to which, all enterprises and individuals engaged in the\nsale of goods, the provision of processing, repair and replacement services, sales of services, intangible assets, real property and\nthe importation of goods within the territory of the PRC are the taxpayers of value-added tax. The value-added tax rates generally applicable\nare simplified as 17%, 11%, 6% and 0%, and the value-added tax rate applicable to the small-scale taxpayers is 3%. According to the Notice\nof the Ministry of Finance and the State Administration of Taxation on Adjusting Value- added Tax Rates issued on April 4, 2018 and became\neffective on May 1, 2018, the deduction rates of 17% and 11% applicable to the taxpayers who have value added tax, taxable sales activities,\nor imported goods are adjusted to 16% and 10%, respectively. According to the Announcement on Policies for Deepening the Value-added\nTax Reform issued by the Ministry of Finance, the SAT and the General Administration of Customs on March 20, 2019 and became effective\non April 1, 2019, the value added tax rate was reduced to 13% and 9%, respectively.\n\n \n\n84\n\n \n\n  \n\n*Regulations\non Employment and Social Insurance*\n\n \n\nThe\nPRC Labor Contract Law promulgated by the SCNPC in 2007 and amended in December 2012, and its implementation rules issued by the State\nCouncil in 2009, require employers to provide written contracts to their employees, restrict the use of temporary workers and aim to\ngive employees long-term job security. Violations of the PRC Labor Law and the PRC Labor Contract Law may result in fines and other administrative\nsanctions, and serious violations may result in criminal liabilities.\n\n \n\nThe\nPRC governmental authorities have passed a variety of laws and regulations regarding social insurance and housing funds from time to\ntime, including, among others, the PRC Social Insurance Law, the Regulation of Insurance for Labor Injury, the Regulations of Insurance\nfor Unemployment and the Provisional Insurance Measures for Maternal Employees. Pursuant to these laws and regulations, PRC companies\nmust make contributions at specified levels for their employees to the relevant local social insurance and housing fund authorities.\nFailure to comply with such laws and regulations may result in various fines and legal sanctions and supplemental contributions to the\nlocal social insurance and housing fund regulatory authorities.\n\n \n\n*Regulations\non Share Incentive Plans*\n\n \n\nPursuant\nto the Notices of Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan\nof Overseas Publicly Listed Company, issued by the SAFE in February 2012, employees, directors, supervisors, and other senior management\nparticipating in any share incentive plan of an overseas publicly-listed company who are PRC citizens or non-PRC citizens residing\nin China for a continuous period of not less than one year, subject to a few exceptions, are required to register with the SAFE through\na domestic qualified agent, which may be a PRC subsidiary of such overseas listed company, and complete certain other procedures\n\n \n\nIn\naddition, the SAT has issued certain circulars concerning employee share options and restricted shares. Under these circulars, employees\nworking in China who exercise share options or are granted restricted shares will be subject to PRC individual income tax. The PRC subsidiaries\nof an overseas listed company are required to file documents related to employee share options and restricted shares with relevant tax\nauthorities and to withhold individual income taxes of employees who exercise their share options or purchase restricted shares. If the\nemployees fail to pay or the PRC subsidiaries fail to withhold income tax in accordance with relevant laws and regulations, the PRC subsidiaries\nmay be subject to sanctions imposed by the tax authorities or other PRC governmental authorities.\n\n \n\n*M&A\nRules and Overseas Listing*\n\n \n\nOn\nAugust 8, 2006, six PRC regulatory authorities, including the MOFCOM and the CSRC, promulgated the M&A Rules governing the mergers\nand acquisitions of domestic enterprises by foreign investors, which became effective on September 8, 2006 and was amended on June 22,\n2009. The M&A Rules, among other things, require that if an overseas company established or controlled by PRC companies or PRC citizens\nintends to acquire equity interests or assets of any other PRC domestic company affiliated with the PRC citizens, such acquisition must\nbe submitted to the MOFCOM for approval. The M&A Rules also require that an offshore special purpose vehicle, or a special purpose\nvehicle formed for overseas listing purposes and controlled directly or indirectly by PRC companies or individuals, shall obtain the\napproval of the CSRC prior to overseas listing and trading of such special purpose vehicle’s securities on an overseas stock exchange.\n\n \n\n85\n\n \n\n  \n\n*Regulation\non Information Protection on Networks*\n\n \n\nOn\nJune 1, 2017, the Cybersecurity Law of the PRC promulgated in November, 2016 by SCNPC became effective. This law also absorbed and restated\nthe principles and requirements mentioned in the aforesaid decision and order, and further provides that, where an individual finds any\nnetwork operator collects or uses his or her personal information in violation of the provisions of any law, regulation or the agreement\nof both parties, the individual shall be entitled to request the network operator to delete his or her personal information; if the individual\nfinds that his or her personal information collected or stored by the network operator has any error, he or she shall be entitled to\nrequest the network operator to make corrections, and the network operator shall take measures to do so. Pursuant to this law, the violators\nmay be subject to: (i) warning; (ii) confiscation of illegal gains and fines equal to one to ten times of the illegal gains; or if without\nillegal gains, fines up to RMB1,000,000; or (iii) an order to shut down the website, suspend the business operation for rectification,\nor revoke business license. Besides, responsible persons may be subject to fines between RMB10,000 and RMB100,000.\n\n \n\nOn\nJune 10, 2021, the SCNPC promulgated the PRC Data Security Law, which came into effect in September 2021. The PRC Data Security Law imposes\ndata security and privacy obligations on entities and individuals carrying out data activities, and introduces a data classification\nand hierarchical protection system based on the importance of data in economic and social development, as well as the degree of harm\nit will cause to national security, public interests, or legitimate rights and interests of individuals or organizations when such data\nis tampered with, destroyed, leaked, or illegally acquired or used. The PRC Data Security Law also provides for a national security review\nprocedure for data activities that may affect national security and imposes export restrictions on certain data and information.\n\n \n\nIn\nAugust 2021, the SCNPC officially promulgated the Personal Information Protection Law, which came into effect from November 1, 2021.\nThe Personal Information Protection Law provides detailed rules on handling personal information and legal responsibilities, including\nbut not limited to the scope of personal information and the ways of processing personal information, the establishment of rules for\nprocessing personal information, and the individual’s rights and the processor’s obligations in the processing of personal\ninformation. The Personal Information Protection Law also strengthens the punishment for those who illegally process personal information.\n\n \n\nOn\nDecember 28, 2021, the CAC, together with 12 other regulatory authorities jointly promulgated the amended Cybersecurity Review Measures,\nwhich came into effect on February 15, 2022 and supersede and replace the Cybersecurity Review Measures previously promulgated on April\n13, 2020. The amended Cybersecurity Review Measures provide that the purchase of network products and services by a CIIO and the data\nprocessing activities of a “internet platform operator” that affect or may affect national security shall be subject to the\ncybersecurity review.\n\n \n\nWhere\nthe purchase of network products and services by a CIIO affects or may affect national security, the CIIO shall notify the Cybersecurity\nReview Office, which is under the CAC, and a cybersecurity review shall be conducted pursuant to the amended Cybersecurity Review Measures.\nFurthermore, if a “internet platform operator” that possesses personal information of more than one million users and seeks\na listing in a foreign country must apply for a cybersecurity review with the Cybersecurity Review Office. According to the amended Cybersecurity\nReview Measures, the term “network products and services” mainly refers to core network equipment, high performance computers\nand servers, large-capacity storage devices, large-capacity databases and application software, network security equipment, cloud computing\nservices, and other network products and services that have a significant impact on critical information infrastructure security, cybersecurity\nand data security. Under the Cybersecurity Law of the PRC, where CIIOs use network products or services that have neither been reviewed\nfor security, nor passed the cybersecurity review, they shall be ordered by the relevant competent departments to stop using such products\nor services, and a fine of no less than one, but no more than ten times the purchase amount shall be imposed. As for the persons in charge\ndirectly or otherwise are directly responsible, a fine of no less than RMB 10,000 but no more than RMB100,000 shall be imposed. As of\nthe date of this annual report, we have not received any notice from the CAC which identifies us as a CIIO under the amended Cybersecurity\nReview Measures.\n\n \n\n86\n\n \n\n \n\n**Organizational\nstructure**\n\n \n\nThe\nfollowing diagram illustrates our corporate structure as of October 31, 2025:\n\n \n\n \n\n**Name**\n \n**Background**\n \n**Ownership**\n\nPark\nHa Biological Technology (HK) Co., Ltd.\n \nIncorporated on October 25, 2022 as a limited liability\ncompany in Hong Kong\n \n100% owned by Park Ha Cayman\n\nPark\nHa Investment (Wuxi) Co., Ltd.\n \nIncorporated on May 5, 2023 as a limited liability\ncompany in the PRC\n \n100% owned by Park Ha HK\n\nJiangsu\nPark Ha Biological Technology Co., Ltd.\n \nIncorporated on August 13, 2019 as a limited liability\ncompany in the PRC\n \n100% owned by Park Ha Investment\n\nWuxi\nXinzhan Enterprise ManagementConsulting Co., Ltd.\n \nIncorporated on March 31, 2016 as a limited liability\ncompany in the PRC\n \n100% owned by Park Ha Investment\n\nShanghai\nPark Ha IndustrialDevelopment Co., Ltd.\n \nIncorporated on April 17, 2017 as a limited liability\ncompany in the PRC\n \n100% owned by Xinzhan\n\nWuxi\nMuchen Biotechnology Co., Ltd\n \nIncorporated on February 21, 2025 as a limited liability\ncompany in the PRC\n \n100% owned by Park Ha Jiangsu\n\nWuxi\nMufeng Biotechnology Co., Ltd.\n \nIncorporated on February 21, 2025 as a limited liability\ncompany in the PRC\n \n100% owned by Park Ha Jiangsu\n\nXinyuexuan Beauty\nSalon, Wuxi Economic Development Zone\n \nIncorporated on July 28, 2025\n \n100% agreement control by Park Ha Jiangsu\n\nAimeihui Beauty\nCenter, Wuxi Economic Development Zone\n \nIncorporated on August 11, 2025\n \n100% agreement control by Park Ha Jiangsu\n\nHuishan\nDistrict Xuanyayue Beauty Salon\n \nIncorporated on January 22, 2025\n \n\n100%\nagreement control by Park Ha Jiangsu (close down on Oct. 10 2025)\n\n \n\n87\n\n \n\n \n\n**D.\nProperty, plants and equipment**\n\n \n\nOur\nprincipal executive offices are located in Wuxi, Jiangsu Province, China. Information on our leased properties as of October 31, 2025\nis summarized below:\n\n \n\n**Location**\n \n**Size\n(Square Meters)**\n \n**Term**\n \n**Primary\nUse**\n\n901,\nBuilding C, Phase 2, Wuxi International Life ScienceInnovation Campus, 196 Jinghui East Road Xinwu District, Wuxi, Jiangsu Province,\nChina\n \n400.00\n \nJuly\n1, 2025 –December 31, 2028\n \nOffice\n\nBuilding\n3, No. 380 Jincheng East Road, Xinwu District, Wuxi\n \n180.00\n \nSeptember 18, 2024 –\nSeptember 30, 2026\n \nWarehouse\n\nUnit\n3404, Building 52, Haiyue Garden, No. 196 GuanshanRoad, Binhu District, Wuxi\n \n109.93\n \nMarch\n13, 2024 – March 12, 2026\n \nEmployee\nDormitory\n\nShop\nNo. 3050B, Xinwu Wanda Plaza, Wuxi, Jiangsu Province, China\n \n66.30\n \nSeptember\n30, 2025 – September 29, 2026\n \nOperation\n\nNo.\n3 Qianwei Road, Xinwu District, Wuxi\n \n53.64\n \nMarch\n1, 2025 – September 30, 2027\n \nOperation\n\nShop\nNo. 433, Coastal City 30.39-401, Wuxi Economic Development Zone, Jiangsu Province, China\n \n78.80\n \nSeptember\n1, 2025 – December 29, 2027\n \nOperation\n\nB161A,\nNo. 88 Jinshi Road, Binhu District, Wuxi City, Jiangsu Province, China\n \n49.00\n \nMay\n20 2025 – May 19 2027\n \nOperation\n\nNo.\n94, Jinghua Garden, Taihu Avenue, Binhu District, Wuxi\n \n250\n \nOctober\n1 2025 – September 30 2027\n \nEmployee\nDormitory\n\n59-103,\nBafanghui, Coastal City, Wuxi\n \n58.83\n \nOctober\n8 2025 – October 7 2027\n \nOperation"}