{"url_path":"/sec/febo/10-k/2026/item-18","section_key":"item-18","section_title":"Item 18 Financial Statements**","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-05-15","source_url":"https://www.sec.gov/Archives/edgar/data/1957001/0001493152-26-023280-index.html","accession_number":"0001493152-26-023280","cik":"0001957001","ticker":"FEBO","issuer_name":"Fenbo Holdings Ltd","edgar_url":"https://www.sec.gov/Archives/edgar/data/1957001/0001493152-26-023280-index.html","primary_entity_key":"0001957001","primary_entity_name":"Fenbo Holdings Ltd"},"word_count":9868,"has_tables":true,"body_markdown":"** **\n\n**Item\n18. Financial Statements**\n\n \n\n**INDEX\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\nINDEX\n\n \n\n**Condensed\nConsolidated Financial Statements for the Years Ended December 31, 2023, 2024 and 2025 (audited)**\n \n\n \n \n\n[Report of Independent Registered Public Accounting Firm](#sp_001) (PCAOB ID: 1171)\nF-1\n\n \n \n\nFinancial\nStatements:\n \n\n \n \n\n[Condensed Consolidated Balance Sheets as of December 31, 2024 and 2025](#sp_002)\nF-2\n\n \n \n\n[Condensed Consolidated Statements of Operations and Comprehensive Loss for the Years Ended December 31, 2023, 2024 and 2025](#sp_003)\nF-3\n\n \n \n\n[Condensed Consolidated Statements of Changes in Shareholders’ Equity for the Years Ended December 31, 2023, 2024 and 2025](#sp_004)\nF-4\n\n \n \n\n[Condensed Consolidated Statements of Cash Flows for the Years Ended December 31, 2023, 2024 and 2025](#sp_005)\nF-5\n\n \n\n95\n\n \n\n \n\n**REPORT\nOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**\n\n \n\nTo\nthe Board of Directors and Shareholders of\n\nFenbo\nHoldings Limited:\n\n \n\n**Opinion\non the Financial Statements**\n\n \n\nWe\nhave audited the accompanying consolidated balance sheets of Fenbo Holdings Limited and its subsidiaries (collectively, the “Company”)\nas of December 31, 2025 and 2024, and the related consolidated statements of operations and comprehensive income (loss), changes in shareholders’\nequity, and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred\nto as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in\nall material respects, the consolidated financial position of the Company as of December 31, 2025 and 2024, and the consolidated results\nof its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting\nprinciples generally accepted in the United States of America.\n\n \n\n**Basis\nfor Opinion**\n\n \n\nThese\nconsolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion\non the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public\nCompany Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company\nin accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission\nand the PCAOB.\n\n \n\nWe\nconducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain\nreasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.\nThe Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part\nof our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing\nan opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.\n\n \n\nOur\naudits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether\ndue to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence\nregarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles\nused and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.\nWe believe that our audits provide a reasonable basis for our opinion.\n\n \n\n/s/\nSR CPA & Co\n \n\nSR\nCPA & Co.\n \n\nHong\nKong\n \n\nMay\n15, 2026\n \n\nWe\nhave served as the Company’s auditor since 2025.\n \n\nPCAOB\nID No. 7249\n \n\n \n\nF-1\n\n \n\n \n\n**FENBO\nHOLDINGS LIMITED**\n\n**CONSOLIDATED\nBALANCE SHEETS**\n\n**(Amount\nin thousands, except for share and per share data, or otherwise noted)**\n\n \n\n  \nNote \n2024  \n2025  \n2025 \n\n  \n  \nAs of December 31, \n\n  \nNote \n2024  \n2025  \n2025 \n\n  \n  \nHK$’000  \nHK$’000  \nUS$’000 \n\nAssets \n  \n    \n    \n   \n\nCurrent assets: \n  \n    \n    \n   \n\nCash \n  \n 27,476  \n 19,041  \n 2,441 \n\nAccounts receivable, net \n3 \n 37,342  \n 26,760  \n 3,431 \n\nInventories \n4 \n 11,502  \n 9,802  \n 1,257 \n\nPrepaid expenses and other current assets \n5 \n 3,679  \n 3,722  \n 477 \n\nTotal current assets \n  \n 79,999  \n 59,325  \n 7,606 \n\n  \n  \n    \n    \n   \n\nProperty, plant and equipment, net \n6 \n 1,118  \n 810  \n 104 \n\nRight-of-use assets \n7 \n 15,295  \n 11,297  \n 1,448 \n\nTotal non-current assets \n  \n 16,413  \n 12,107  \n 1,552 \n\nTOTAL ASSETS \n  \n 96,412  \n 71,432  \n 9,158 \n\n  \n  \n    \n    \n   \n\nLiabilities \n  \n    \n    \n   \n\nCurrent liabilities \n  \n    \n    \n   \n\nBank loan – current \n9 \n 11,000  \n 3,000  \n 385 \n\nAccounts payable \n  \n 15,223  \n 14,037  \n 1,800 \n\nOther payables and accrued liabilities \n8 \n 6,313  \n 6,860  \n 879 \n\nLease liabilities – current \n7 \n 5,822  \n 4,203  \n 539 \n\nAmounts due to related parties \n10 \n 3,056  \n 611  \n 78 \n\nTotal current liabilities \n  \n 41,414  \n 28,711  \n 3,681 \n\n  \n  \n    \n    \n   \n\nNon-current liabilities \n  \n    \n    \n   \n\nLease liabilities – non-current \n7 \n 9,482  \n 7,093  \n 909 \n\nTOTAL LIABILITIES \n  \n 50,896  \n 35,804  \n 4,590 \n\n  \n  \n    \n    \n   \n\nCommitments and contingencies \n15 \n -  \n -  \n - \n\n  \n  \n    \n    \n   \n\nShareholders’ equity \n  \n    \n    \n   \n\nPreference shares US$0.0001 par value per share; 3,000,000 authorized capital; nil shares issued and outstanding \n  \n -  \n -  \n - \n\nClass A common stock, $0.0001 par value; 285,000,000 shares authorized, 3,062,500 shares issued and outstanding at\nDecember 31, 2025 \n13 \n 3  \n 3  \n - \n\nClass B common stock, $0.0001 par value; 18,000,000 shares authorized, 8,000,000 shares issued and outstanding at\nDecember 31, 2025 (2024: 8,000,000) \n13 \n 6  \n 6  \n 1 \n\nCommon stock, value \n13 \n 6  \n 6  \n 1 \n\nAdditional paid-in capital \n  \n 30,570  \n 30,570  \n 3,919 \n\nStatutory reserve \n13 \n 2,806  \n 2,806  \n 360 \n\nRetained earnings \n  \n 13,239  \n 2,596  \n 333 \n\nAccumulated other comprehensive loss \n  \n (1,108) \n (353) \n (45)\n\nTotal shareholders’ equity \n  \n 45,516  \n 35,628  \n 4,568 \n\nTOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY \n  \n 96,412  \n 71,432  \n 9,158 \n\n \n\n \n\nThe\naccompanying notes are an integral part of these consolidated financial statements.\n\n \n\nF-2\n\n \n\n \n\n**FENBO\nHOLDINGS LIMITED**\n\n**CONSOLIDATED\nSTATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)**\n\n**(Amount\nin thousands, except for share and per share data, or otherwise noted)**\n\n \n\n  \nNote \n2023  \n2024  \n2025  \n2025 \n\n  \n  \nFor the year ended December 31, \n\n  \nNote \n2023  \n2024  \n2025  \n2025 \n\n  \n  \nHK$’000  \nHK$’000  \nHK$’000  \nUS$’000 \n\nRevenues \n  \n 119,110  \n 132,907  \n 85,023  \n 10,900 \n\nCost of sales \n  \n (97,004) \n (108,084) \n (74,086) \n (9,498)\n\nGross profit \n  \n 22,106  \n 24,823  \n 10,937  \n 1,402 \n\nOperating expenses: \n  \n    \n    \n    \n   \n\nSelling and marketing expenses \n  \n (1,961) \n (2,195) \n (1,441) \n (185)\n\nGeneral and administrative expenses \n  \n (20,535) \n (36,391) \n (20,369) \n (2,611)\n\nTotal operating expenses \n  \n (22,496) \n (38,586) \n (21,810) \n (2,796)\n\nLoss from operations \n  \n (390) \n (13,763) \n (10,873) \n (1,394)\n\nOther income (expenses): \n  \n    \n    \n    \n   \n\nExchange gain (loss), net \n  \n 213  \n -  \n (43) \n (6)\n\n(Loss) gain on disposal of property, plant and equipment \n  \n (1) \n -  \n 100  \n 13 \n\nInterest income \n  \n 84  \n 275  \n 99  \n 13 \n\nInterest expense \n9 \n (1,708) \n (552) \n (275) \n (36)\n\nGovernment grant \n  \n 205  \n 167  \n -  \n - \n\nSundry income, net \n  \n 266  \n 132  \n 349  \n 45 \n\nTotal other (expenses) income, net \n  \n (941) \n 22  \n 230 \n 29\n\nLoss before income tax expense \n  \n (1,331) \n (13,741) \n (10,643) \n (1,365)\n\nIncome tax expense \n12 \n (131) \n (1,741) \n -  \n - \n\n  \n  \n    \n    \n    \n   \n\nNet loss \n  \n (1,462) \n (15,482) \n (10,643) \n (1,365)\n\n  \n  \n    \n    \n    \n   \n\nOther comprehensive loss \n  \n    \n    \n    \n   \n\nForeign currency translation (loss) gain, net of taxes \n  \n (809) \n (854) \n 755  \n 97 \n\n  \n  \n    \n    \n    \n   \n\nTotal comprehensive income loss \n  \n (2,271) \n (16,336) \n (9,888) \n (1,268)\n\n  \n  \n    \n    \n    \n   \n\nNet income (loss) per share attributable to ordinary shareholders \n  \n    \n    \n    \n   \n\nBasic and diluted (cents) \n14 \n (14.50) \n (139.98) \n (96.21) \n (12.34)\n\nWeighted average number of ordinary shares used in computing net income (loss) per share \n  \n    \n    \n    \n   \n\nBasic and diluted \n14 \n 10,084,932  \n 11,059,932  \n 11,062,500  \n 11,062,500 \n\n \n\nThe\naccompanying notes are an integral part of these consolidated financial statements.\n\n \n\nF-3\n\n \n\n \n\n**FENBO\nHOLDINGS LIMITED**\n\n**CONSOLIDATED\nSTATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY**\n\n**(Amount\nin thousands, except for share and per share data, or otherwise noted)**\n\n \n\n** **** **\n\n**Shares***\n** **** **\n\n**Amount**\n** **** **\n**Shares***** **** **\n**Amount**** **** **\n**capital**** **** **\n**reserve**** **** **\n**(loss)**** **** **\n**earnings**** **** **\n**equity**** **\n\n** **** **\n**Class\nA Ordinary Shares**** **** **\n**Class\nB Ordinary Shares**** **** **\n\n**Additional\npaid-in**\n** **** **\n**Statutory**** **** **\n\n**Accumulated\nother comprehensive**\n\n**income**\n** **** **\n**Retained**** **** **\n**Total**** **\n\n** **** **\n\n**Shares***\n** **** **\n\n**Amount**\n** **** **\n**Shares***** **** **\n**Amount**** **** **\n**capital**** **** **\n**reserve**** **** **\n**(loss)**** **** **\n**earnings**** **** **\n**equity**** **\n\n** **** **\n** **** **\n**HK$’000**** **** **\n** **** **** **\n**HK$’000**** **** **\n**HK$’000**** **** **\n**HK$’000**** **** **\n**HK$’000**** **** **\n**HK$’000**** **** **\n**HK$’000**** **\n\nAs of January 1, 2023 \n 2,000,000  \n 2  \n 8,000,000  \n 6  \n 2,492  \n 2,806  \n 555  \n 30,183  \n 36,044 \n\nNet loss for the year \n -  \n -  \n -  \n -  \n -  \n -  \n -  \n (1,462) \n (1,462)\n\nForeign currency translation \n -  \n -  \n -  \n -  \n -  \n -  \n (809) \n -  \n (809)\n\nIssuance of ordinary Shares, net of issuance costs \n 1,000,000  \n 1  \n -  \n -  \n 26,002  \n -  \n -  \n -  \n 26,003 \n\n  \n    \n    \n    \n    \n    \n    \n    \n    \n   \n\nAs of December 31, 2023 \n 3,000,000  \n 3  \n 8,000,000  \n 6  \n 28,494  \n 2,806  \n (254) \n 28,721  \n 59,776 \n\nNet loss for the year \n -  \n -  \n -  \n -  \n -  \n -  \n -  \n (15,482) \n (15,482)\n\nForeign currency translation \n -  \n -  \n -  \n -  \n -  \n -  \n (854) \n -  \n (854)\n\nIssuance of ordinary Shares, net of issuance costs \n 62,500  \n -  \n -  \n -  \n 2,076  \n -  \n -  \n -  \n 2,076 \n\nAs of December 31, 2024 \n 3,062,500  \n 3  \n 8,000,000  \n 6  \n 30,570  \n 2,806  \n (1,108) \n 13,239  \n 45,516 \n\n  \n    \n    \n    \n    \n    \n    \n    \n    \n   \n\nNet loss for the year \n -  \n -  \n -  \n -  \n -  \n -  \n -  \n (10,643) \n (10,643)\n\nForeign currency translation \n -  \n -  \n -  \n -  \n -  \n -  \n 755  \n -  \n 755 \n\n  \n    \n    \n    \n    \n    \n    \n    \n    \n   \n\nAs of December 31, 2025 \n 3,062,500  \n 3  \n 8,000,000  \n 6  \n 30,570  \n 2,806  \n (353) \n 2,596  \n 35,628 \n\n  \n    \n    \n    \n    \n    \n    \n    \n    \n   \n\n  \n    \n **US$’000**  \n    \n **US$’000**  \n **US$’000**  \n **US$’000**  \n **US$’000**  \n **US$’000**  \n **US$’000** \n\nAs of December 31, 2025 \n 3,062,500  \n -  \n 8,000,000  \n 1  \n 3,919  \n 360  \n (45) \n 333  \n 4,568 \n\n \n\n \n*\nIn\nconnection with the undertaking of a public offering of the Company’s ordinary shares, the Company has performed a series of\nre-organizing transactions resulting in 10,000,000 shares of ordinary shares outstanding effected on November 18, 2022 that have\nbeen retroactively restated to the beginning of the first period presented. On December 1, 2023 the Company closed the IPO. The offering\nwas conducted pursuant to the Company’s registration statement and 1,000,000 shares of ordinary shares were issued at the IPO\nprice of $5.00 per share after the offering. The Shares were approved for listing on The Nasdaq Capital Market and commenced trading\nunder the ticker symbol “FEBO.” On January 11, 2024, the representative of the underwriters partially exercised the over-allotment\noption and on January 16, 2024 purchased 62,500 ordinary shares at the IPO price of $5.00 per share.\n\n \n\nThe\naccompanying notes are an Integral part of these consolidated financial statements.\n\n \n\nF-4\n\n \n\n \n\n**FENBO\nHOLDINGS LIMITED**\n\n**CONSOLIDATED\nSTATEMENTS OF CASH FLOWS**\n\n**(Amount\nin thousands, except for share and per share data, or otherwise noted)**\n\n \n\n  \n2023 \n2024  \n2025  \n2025 \n\n  \nFor the year ended December 31, \n\n  \n2023 \n2024  \n2025  \n2025 \n\n  \nHK$’000 \nHK$’000  \nHK$’000  \nUS$’000 \n\nOperating activities \n   \n    \n    \n   \n\nNet loss \n (1,462)\n (15,482) \n (10,643) \n (1,365)\n\nAdjustments to reconcile net income to net cash provided by (used in) operating activities: \n   \n    \n    \n   \n\nDepreciation \n 506 \n 505  \n 459  \n 59 \n\nAmortization of right to use assets \n 5,410 \n 6,824  \n -  \n - \n\nInterest on lease liabilities \n 313 \n 368  \n 275  \n 36 \n\nLoss (gain) on disposal of property, plant and equipment \n 1 \n -  \n (100) \n (13\n)\n\nChange in operating assets and liabilities: \n   \n    \n    \n   \n\nChange in accounts receivable \n 789 \n (5,856) \n 10,582  \n 1,357 \n\nChange in inventories \n 1,475 \n 1,981  \n 1,700  \n 218 \n\nChange in prepaid expenses and other current assets \n 2,526 \n 2,166  \n (43) \n (6)\n\nChange in accounts payable \n 5,073 \n (4,060) \n (1,186) \n (152)\n\nChange in other payables and accrued liabilities \n 1,398 \n (858) \n 547 \n 70\n\nPayments on lease \n (6,301)\n (6,935) \n - \n -\n\nNet cash provided by (used in) operating activities \n 9,728 \n (21,347) \n 1,591  \n 204 \n\n  \n   \n    \n    \n   \n\nInvesting activities \n   \n    \n    \n   \n\nProceeds from disposal of property,\nplant and equipment \n \n-\n \n -  \n 100  \n 13 \n\nPurchase of property, plant and equipment \n (284)\n (405) \n (59) \n (8)\n\nNet cash used in investing activities \n (284)\n (405) \n 41 \n 5\n\n  \n   \n    \n    \n   \n\nFinancing activities \n   \n    \n    \n   \n\nProceeds from issuance of ordinary shares \n 26,003 \n 2,076  \n -  \n - \n\n(Repayment to) advances from related parties \n (2,704)\n 643  \n (2,445) \n (313)\n\nRepayment of bank loans \n - \n -  \n (8,000) \n (1,026)\n\nNet cash provided by (used in) financing activities \n 23,299 \n 2,719  \n (10,445) \n (1,339)\n\n  \n   \n    \n    \n   \n\nNet increase (decrease) in cash \n 32,743 \n (19,033) \n (8,813) \n (1,130)\n\nEffect on exchange rate change on cash \n (254)\n 167  \n 378  \n 48 \n\n  \n   \n    \n    \n   \n\nCash as of beginning of the year \n 13,853 \n 46,342  \n 27,476  \n 3,523 \n\n  \n   \n    \n    \n   \n\nCash as of the end of the year \n 46,342 \n 27,476  \n 19,041  \n 2,441 \n\n  \n   \n    \n    \n   \n\nSupplementary Cash Flows Information \n   \n    \n    \n   \n\nCash paid for interest \n 1,708 \n 837  \n 275  \n 35 \n\nNet cash refund for taxes \n (196)\n (206) \n (9) \n (1)\n\n \n\nThe\naccompanying notes are an integral part of these consolidated financial statements.\n\n \n\nF-5\n\n \n\n \n\n**NOTES\nTO THE CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\n**Note\n1 Nature of business and organization**\n\n \n\nFenbo\nHoldings Limited (the “Company”) was incorporated in the Cayman Islands on September 30, 2022 as an exempted company with\nlimited liability. The Company conducts its primary operations of manufacture and production of premium personal care electronic appliance\n(such as electrical hair styling products such as hair dryers, straighteners, curlers, trimmers, etc.) through its indirectly held wholly\nowned subsidiaries.\n\n \n\nDetails\nof the Company and its subsidiaries (together the “Company” or the “Group”) are set out in the table as follows:\n\nSchedule of company and its subsidiaries \n\n**Name**\n \n**Date\nof incorporation**\n \n**Place\nof incorporation**\n \n**Principal\nactivities**\n\nFenbo\nHoldings Limited\n \nSeptember\n30, 2022\n \nCayman\nIslands\n \nInvestment\nholding\n\nRich\nLegend Holdings Limited (“RLHL”)\n \nOctober\n21, 2022\n \nThe\nBritish Virgin Islands\n \nIntermediate\nholding company\n\nFenbo\nIndustries Limited (“Fenbo Industries”)\n \nJune\n17, 1993\n \nHong\nKong\n \nIntermediate\nholding company and trading of electronic appliance\n\nFenbo\nPlastic Products Factory (Shenzhen) Limited (“Fenbo SZ”)\n \nOctober\n19, 2010\n \nPeople’s\nRepublic of China (“PRC”)\n \nManufacture\nand production of electronic appliance\n\nAble\nIndustries Limited (“Able Industries”)\n \nNovember\n7, 2005\n \nHong\nKong\n \nMarketing\n\n \n\n**Reorganization**\n\n \n\nImmediately\nbefore a series of transactions (“Reorganization”) as detailed below, the capital structure of the Group was as follows:\n\nSchedule of reorganization \n\n  \nNumber of ordinary shares \n\nShareholder \nThe Company  \nRLHL  \nFenbo Industries  \nFenbo SZ  \nAble Industries \n\nMr. Kin Shing Li (“Mr. Li) \n 10,000  \n 1  \n 1,999,999  \n -  \n 500,000 \n\nMr. Allan Li \n -  \n -  \n 1  \n -  \n - \n\nFenbo Industries \n -  \n -  \n -  \n 5,000,000  \n - \n\nTotal \n 10,000  \n 1  \n 2,000,000  \n 5,000,000  \n 500,000 \n\n \n\nOn\nNovember 17, 2022, RLHL entered into agreements to acquire 1,999,999 ordinary shares in Fenbo Industries and 500,000 ordinary shares\nin Able Industries, respectively from Mr. Li in consideration of the issuance and allotment of a total of 9 shares, credited as fully\npaid, to Mr. Li.\n\n \n\nOn\nNovember 17, 2022, RLHL entered into an agreement to acquire 1 ordinary share in Fenbo Industries from Mr. Allan Li for a cash consideration\nof HK$100.\n\n \n\nOn\nNovember 18, 2022, the Company entered into an agreement to acquire 10 ordinary shares representing 100% of the issued share capital\nof RLHL from Mr. Li in consideration of the issuance and allotment of 9,990,000 ordinary shares of the Company, credited as fully paid,\nto Luxury Max Investments Limited (“LMIL”), a company incorporated in the British Virgin Islands on October 21, 2022 and\nwholly owned by Mr. Li. In connection with this acquisition, Mr. Li transferred 10,000 ordinary shares of the Company from Mr. Li to\nRLHL.\n\n \n\nF-6\n\n \n\n \n\nFollowing\nthe above transactions, Fenbo Industries, Fenbo SZ and Able Industries have become indirectly wholly-owned subsidiaries of the Company,\nwhereas their former majority shareholder, namely Mr. Li, has had 100% interest of the Company, through his wholly-owned investment holding\ncompany, LMIL. Upon completion of the Reorganization, the capital structure of the Group was as follows:\n\n \n\n  \nNumber of ordinary shares \n\nShareholder \nThe Company  \nRLHL  \nFenbo Industries  \nFenbo SZ  \nAble Industries \n\nLMIL \n 10,000,000  \n -  \n -  \n -  \n - \n\nThe Company \n -  \n 10  \n -  \n -  \n - \n\nRLHL \n -  \n -  \n 2,000,000  \n -  \n 500,000 \n\nFenbo Industries \n -  \n -  \n -  \n 5,000,000  \n - \n\nTotal \n 10,000,000  \n 10  \n 2,000,000  \n 5,000,000  \n 500,000 \n\n \n\nThe\nReorganization has been accounted for as a reverse acquisition whereby Fenbo Industries and Able Industries are deemed to be the accounting\nacquirers (legal acquirees) and the Company to be the accounting acquiree (legal acquirer). The financial statements before the Reorganization\nare those of Fenbo Industries and Able Industries on a combined basis with the results of the Company being consolidated from the closing\ndate of the Reorganization. The equity section and earnings per share of the Company have been retroactively restated to reflect the\nreverse acquisition and no goodwill has been recorded.\n\n \n\nOn\nDecember 1, 2023 the Company closed the IPO. The offering was conducted pursuant to the Company’s registration statement and 1,000,000\nshares of ordinary shares were issued at the IPO price of $5.00 per share after the offering. The Shares were approved for listing on\nThe Nasdaq Capital Market and commenced trading under the ticker symbol “FEBO.” On January 11, 2024, the representative of\nthe underwriters partially exercised the over-allotment option and on January 16, 2024 purchased 62,500 ordinary shares at the IPO price\nof $5.00 per share.\n\n \n\nThe\naccompanying financial statements are presented assuming that the existing group structure was an existence at the beginning of the first\nperiod presented.\n\n \n\n**Note\n2 Summary of significant accounting policies**\n\n \n\nBasis\nof presentation\n\n \n\nThe\nconsolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States\nof America (“US GAAP”).\n\n \n\nConsolidation\n\n \n\nThe\nconsolidated financial statements include the financial statements of the Company and its subsidiaries. All inter-company transactions,\nif any, and balances due to, due from, long-term investment subsidiary, and registered paid in capital have been eliminated upon consolidation.\n\n \n\nBusiness\ncombinations and non-controlling interests\n\n \n\nThe\nCompany accounts for its business combinations using the acquisition method of accounting in accordance with Accounting Standards Codification\n(“ASC”) 805 “Business Combinations.” The cost of an acquisition is measured as the aggregate of the acquisition\ndate fair value of the assets transferred to the sellers, liabilities incurred by the Company and equity instruments issued by the Company.\nTransaction costs directly attributable to the acquisition are expensed as incurred. Identifiable assets acquired and liabilities assumed\nare measured separately at their fair values as of the acquisition date, irrespective of the extent of any noncontrolling interests.\nThe excess of (i) the total costs of acquisition, fair value of the noncontrolling interests and acquisition date fair value of any previously\nheld equity interest in the acquiree over (ii) the acquisition date amounts of the identifiable net assets of the acquiree is recorded\nas goodwill. If the cost of acquisition is less than the acquisition date amounts of the net assets of the subsidiary acquired, the difference\nis recognized directly in the consolidated income statements. During the measurement period, which can be up to one year from the acquisition\ndate, the Company may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Subsequent\nto the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever\ncomes first, any further adjustments are recorded in the consolidated income statements.\n\n \n\nF-7\n\n \n\n \n\nFor\nthe Company’s non-wholly owned subsidiaries, a noncontrolling interest is recognized to reflect the portion of equity that is not\nattributable, directly, or indirectly, to the Company.\n\n \n\nUse\nof estimates and assumptions\n\n \n\nThe\npreparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that\naffect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated\nfinancial statements and the reported amounts of revenues and expenses during the periods presented. Significant accounting estimates\nreflected in the Company’s consolidated financial statements include the useful lives of property and equipment, the imputed interest\nrate of leases, impairment of long-lived assets, allowance for doubtful accounts, provision for contingent liabilities, revenue recognition,\ndeferred taxes and uncertain tax position. Actual results could differ from these estimates.\n\n \n\nForeign\ncurrency translation and transaction\n\n \n\nThe\nfunctional currencies of the Company are the local currency of the country in which the subsidiaries operate. The reporting currency\nof the Company is the Hong Kong Dollars (“HK$”). The results of operations and the consolidated statements of cash flows\ndenominated in foreign currencies are translated at the average rates of exchange during the reporting period. Assets and liabilities\ndenominated in foreign currencies at the balance sheet date are translated at the applicable rates of exchange in effect at that date.\nThe equity denominated in the functional currencies is translated at the historical rates of exchange at the time of capital contributions.\nBecause cash flows are translated based on the average translation rates, amounts related to assets and liabilities reported on the consolidated\nstatements of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets. Translation\nadjustments arising from the use of different exchange rates from period to period are included as a separate component of accumulated\nother comprehensive income included in consolidated statements of changes in shareholders’ equity. Transaction gains and losses\nthat arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency in the consolidated\nstatement of income and comprehensive income.\n\n \n\nThe\nfunctional currency of RLHL, Fenbo Industries and Able Industries are HK$. The functional currency of Fenbo SZ is Renminbi (“RMB”).\nAn entity’s functional currency is the currency of the primary economic environment in which it operates, normally that is the\ncurrency of the environment in which the entity primarily generates and expends cash. Management’s judgment is essential to determine\nthe functional currency by assessing various indicators, such as cash flows, sales price and market, expenses, financing and inter-company\ntransactions and arrangements.\n\n \n\nFor\nthe purpose of presenting these financial statements of subsidiary using RMB as functional currency, the Company’s assets and\nliabilities are expressed in HK$ at the exchange rate on the balance sheet date, which is 0.8988\nand 0.9424\nas of December 31, 2025 and 2024, respectively; shareholders’ equity accounts are translated at historical rates, and income\nand expense items are translated at the average exchange rate during the period, which is 0.9213, 0.9233\nand 0.9070 for the years ended December 31, 2025, 2024 and 2023, respectively.\n\n \n\nThe\nvalue of foreign currencies including the US Dollar may fluctuate against the Hong Kong Dollar. Any significant variations of the foreign\ncurrencies relative to the Hong Kong Dollar may materially affect the Company’s financial condition in terms of reporting in HK$.\n\n \n\nTranslations\nof the consolidated balance sheets, consolidated statements of comprehensive income and consolidated statements of cash flows from HK$\ninto US$ as of and for the year ended December 31, 2025 are solely for the convenience of the reader and were calculated at the rate\nof US$0.12821 = HK$1. No representation is made that the HK$ amounts could have been, or could be, converted, realized or settled into\nUS$ at that rate on December 31, 2025, or at any other rate.\n\n \n\nCash\n\n \n\nCash\ncomprises of cash at banks and on hand. Cash held in accounts at financial institutions located in the PRC is not freely convertible\ninto foreign currencies. In addition, these balances are not covered by insurance. While management believes that these financial institutions\nare of high credit quality, it also continually monitors their creditworthiness. The Company and its subsidiaries have not experienced\nany losses in such accounts and do not believe the cash is exposed to any significant risk.\n\n \n\nF-8\n\n \n\n \n\nAccounts\nreceivable, net\n\n \n\nAccounts\nreceivable, net are stated at the original amount less an allowance for expected credit loss on such receivables. The allowance for expected\ncredit loss is estimated based upon the Company’s assessment of various factors including historical experience, the age of the\naccounts receivable balances, current general economic conditions, future expectations and customer specific quantitative and qualitative\nfactors that may affect the Company’s customers’ ability to pay. An allowance is also made when there is objective evidence\nfor the Company to reasonably estimate the amount of probable loss.\n\n \n\nInventories\n\n \n\nInventories\nare stated at the lower of cost or net realizable value. Cost of inventories is determined using the first-in first-out cost method.\nAdjustments are recorded to write down the cost of inventories to the estimated net realizable value due to slow-moving, damaged and\nlost goods, which is dependent upon factors such as historical and forecasted demand and prevailing market conditions. Write-downs are\nrecorded in cost of revenues on the consolidated statements of income and comprehensive income.\n\n \n\nPrepayments\nand deposits\n\n \n\nPrepayments\nare cash deposited or advanced to suppliers for purchasing goods or services that have not been received or provided and deposits made\nto the Company’s customers and landlord. This amount is refundable and bears no interest. Prepayment and deposit are classified\nas either current or non-current based on the terms of the respective agreements. These advances are unsecured and are reviewed periodically\nto determine whether their carrying value has become impaired.\n\n \n\nOther\nreceivables\n\n \n\nOther\nreceivables primarily include rental deposit, value-added tax (“VAT”) refundable, prepayment and income tax refundable. Management\nregularly reviews the aging of receivables and changes in payment trends and records allowances when management believes collection of\namounts due are at risk. Accounts considered uncollectable are written off against allowances after exhaustive efforts at collection\nare made.\n\n \n\nProperty,\nplants and equipment, net\n\n \n\nProperty,\nplants and equipment are stated at cost net of accumulated depreciation and impairment. Depreciation is provided over the estimated useful\nlives of the assets using the straight-line method from the time the assets are placed in service. Estimated useful lives are as follows:\n\nSchedule\nof property, plants, and equipment estimated useful lives \n\nClassification: \nEstimated useful life\n\nMachinery & equipment \n3 - 10 years\n\nElectronic equipment \n5 years\n\nOffice equipment \n3 - 5 years\n\nMotor vehicles \n3 - 4 years\n\nComputer and software \n3 years\n\n \n\nThe\ncost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is\nincluded in the consolidated statements of income and comprehensive income. Expenditures for maintenance and repairs, which do not materially\nextend the useful lives of the assets, are charged to earnings as incurred, while additions, renewals and betterments, which are expected\nto extend the useful life of assets, are capitalized.\n\n \n\nF-9\n\n \n\n \n\nLeases\n\n \n\nLeases\nthat transfer substantially all of the benefits and risks incidental to the ownership of assets are accounted for as finance leases as\nif there was an acquisition of an asset and incurrence of an obligation at the inception of the lease. All other leases are accounted\nfor as operating leases. The Company has no finance leases.\n\n \n\nUnder\nASC 842, the Company determines if an arrangement is a lease at inception. Operating lease right-of-use assets and operating lease liabilities\nare initially recognized based on the present value of future lease payments at lease commencement. The operating lease right-of-use\nasset also includes any lease payments made prior to lease commencement and the initial direct costs incurred by the lessee and is recorded\nnet of any lease incentives received. As the interest rates implicit in most of the leases are not readily determinable, the Company\nuses the incremental borrowing rates based on the information available at lease commencement to determine the present value of the future\nlease payments. Operating lease expenses are recognized on a straight-line basis over the term of the lease.\n\n \n\nBank\nloans\n\n \n\nBank\nloans are recognized initially at fair value, net of incidental fees. Incidental fees are recorded as a reduction of the proceeds received\nand the related accretion is recorded as interest expense in the consolidated income statements over the estimated term of the facilities\nusing the effective interest method.\n\n \n\nCommitments\nand contingencies\n\n \n\nIn\nthe normal course of business, the Company is subject to contingencies, such as legal proceedings and claims arising out of its business,\nthat cover a wide range of matters. Liabilities for the contingencies are recorded when it is probable that a liability has been incurred\nand the amount of the liability can be reasonably estimated.\n\n \n\nCertain\nconditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company, but\nwhich will only be resolved when one or more future events occur or fail to occur. The Company assesses these contingent liabilities,\nwhich inherently involves judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company\nor unasserted claims that may result in legal proceedings, the Company, in consultation with its legal counsel, evaluates the perceived\nmerits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be\nsought therein. If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount\nof the liability can be estimated, the estimated liability would be accrued in the consolidated financial statements. If the assessment\nindicates that a potentially material loss contingency is not probable, or is probable but cannot be estimated, the nature of the contingent\nliability, together with an estimate of the range of the reasonably possible loss, if determinable and material, would be disclosed.\n\n \n\nLoss\ncontingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee\nwould be disclosed.\n\n \n\nImpairment\nof long-lived assets\n\n \n\nLong-lived\nassets, including property, plants and equipment are reviewed for impairment whenever events or changes in circumstances (such as a significant\nadverse change to market conditions that will impact the future use of the assets) indicate that the carrying value of an asset may not\nbe recoverable. The Company assesses the recoverability of the assets based on the undiscounted future cash flows the assets are expected\nto generate and recognize an impairment loss when estimated undiscounted future cash flows expected to result from the use of the asset\nplus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. If an impairment is\nidentified, the Company will reduce the carrying amount of the asset to its estimated fair value based on a discounted cash flows approach\nor, when available and appropriate, to comparable market values. For the years ended December 31, 2025, 2024 and 2023, no impairment\nof long-lived assets was recognized.\n\n \n\nF-10\n\n \n\n \n\n \n\nFair\nValue Measurement\n\n \n\nThe\naccounting standard regarding fair value of financial instruments and related fair value measurements defines financial instruments and\nrequires disclosure of the fair value of financial instruments held by the Company. The accounting standards define fair value, establish\na three-level valuation hierarchy for disclosures of fair value measurement and enhance disclosure requirements for fair value measures.\nThe three levels of the fair value hierarchy are as follows:\n\n \n\n●\nLevel 1 inputs to the valuation\nmethodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.\n\n \n\n●\nLevel 2 inputs to the valuation\nmethodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets\nor liability, either directly or indirectly, for substantially the full term of the financial instruments.\n\n \n\n●\nLevel 3 inputs to the valuation\nmethodology are unobservable and significant to the fair value.\n\n \n\nFinancial\ninstruments included in current assets and current liabilities are reported in the consolidated balance sheets at face value or cost,\nwhich approximate fair value because of the short period of time between the origination of such instruments and their expected realization\nand their current market rates of interest.\n\n \n\nInterest\nrates that are currently available to the Company for issuance of long-term debt and capital lease with similar terms and remaining maturities\nare used to estimate the fair value of the Company’s long-term debt. The fair value of the Company’s long-term debt approximated\nthe carrying value at December 31, 2025, and 2024, as the weighted average interest rate on these long-term debt approximates the market\nrate for similar debt.\n\n \n\nRevenue\nRecognition\n\n \n\nThe\nCompany elected to adopt Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers (ASC 606), effective\nas of October 1, 2019. Accordingly, the consolidated financial statements for the year ended December 31, 2025 and 2024 are presented\nunder ASC 606. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods\nor services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those\ngoods or services. The Company’s revenues are generated from the production and sales of premium personal care electric appliances\n(principally electrical hair styling products such as straighteners, curlers, trimmers, etc.) and toy products. This performance obligation\nis satisfied at a point of time and recognized in revenue upon the transfer of control of the goods to the customers\n\n \n\nInterest\nincome from banks is recognized when received.\n\n \n\nCost\nof revenue\n\n \n\nThe\ncost of revenue primarily consists of the cost of raw materials, direct labor costs and factory overhead.\n\n \n\nEmployee\nbenefit\n\n \n\nThe\nfull-time employees of the Company are entitled to staff welfare benefits including medical care, housing fund, pension benefits, unemployment\ninsurance and other welfare, which are government mandated defined contribution plans. The Company is required to accrue for these benefits\nbased on certain percentages of the employees’ respective salaries, subject to certain ceilings, in accordance with the relevant\nPRC regulations, and make cash contributions to the state-sponsored plans out of the amounts accrued. Total expenses for the plans were\nHK$ 1,342,000, HK$1,342,000 and HK$1,342,000 for the years ended December 31, 2025, 2024 and 2023, respectively.\n\n \n\nValue\nadded taxes\n\n \n\nThe\nHong Kong operations are not subject to the value added tax.\n\n \n\nFor\nthe PRC operations, the PRC export revenue is not subject to VAT. VAT are charged for purchase of materials at 17% of which 13% is refundable.\n\n \n\nRevenues\nare presented net of applicable VAT.\n\n \n\nF-11\n\n \n\n \n\nIncome\ntaxes\n\n \n\nThe\nCompany accounts for income taxes in accordance with the laws of the relevant tax authorities. The charge for taxation is based on the\nresults for the fiscal year as adjusted for items, which are non-assessable or disallowed. It is calculated using tax rates that have\nbeen enacted or substantively enacted by the balance sheet date.\n\n \n\nDeferred\ntaxes are accounted for using the asset and liability method in respect of temporary differences arising from differences between the\ncarrying amount of assets and liabilities in the consolidated financial statements and the corresponding tax basis used in the computation\nof assessable tax profit. In principle, deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assets\nare recognized to the extent that it is probable that taxable profit will be available against which deductible temporary differences\ncan be utilized. Deferred tax is calculated using tax rates that are expected to apply to the period when the asset is realized, or the\nliability is settled. Deferred tax is charged or credited in the income statement, except when it is related to items credited or charged\ndirectly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets are reduced by a valuation allowance\nwhen, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.\nCurrent income taxes are provided for in accordance with the laws of the relevant taxing authorities.\n\n \n\nAn\nuncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained\nin a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that\nis greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test,\nno tax benefit is recorded. No penalties and interest incurred related to underpayment of income tax are classified as income tax expense\nin the period incurred.\n\n \n\nComprehensive\nincome (loss)\n\n \n\nComprehensive\nincome (loss) consists of two components, net income (loss) and other comprehensive income (loss). Other comprehensive income (loss)\nrefers to revenue, expenses, gains and losses that under US GAAP are recorded as an element of shareholders’ equity but are excluded\nfrom net income. Other comprehensive income (loss) consists of a foreign currency translation adjustment resulting from the Company not\nusing HK$ as its functional currencies.\n\n \n\nEarnings\nper share\n\n \n\nThe\nCompany computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings per Share”. ASC 260 requires\ncompanies to present basic and diluted EPS. Basic EPS is measured as net income attributable to the owners of the Company divided by\nthe weighted average ordinary shares outstanding for the period. Diluted EPS presents the dilutive effect on a per share basis of the\npotential ordinary shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the\nperiods presented, or issuance date, if later. Potential ordinary shares that have an anti-dilutive effect (i.e., those that increase\nincome per share or decrease loss per share) are excluded from the calculation of diluted EPS. For the years ended December 31, 2025,\n2024 and 2023, there were no dilutive shares.\n\n \n\nStatutory\nReserves\n\n \n\nPursuant\nto the laws applicable to the PRC, PRC entities must make appropriations from after-tax profit to the non-distributable “statutory\nsurplus reserve fund”. Subject to certain cumulative limits, the “statutory surplus reserve fund” requires annual appropriations\nof 10% of after-tax profit until the aggregated appropriations reach 50% of the registered capital (as determined under accounting principles\ngenerally accepted in the PRC (“PRC GAAP”) at each year-end). For foreign invested enterprises and joint ventures in the\nPRC, annual appropriations should be made to the “reserve fund”. For foreign invested enterprises, the annual appropriation\nfor the “reserve fund” cannot be less than 10% of after-tax profits until the aggregated appropriations reach 50% of the\nregistered capital (as determined under PRC GAAP at each year-end). If the Company has accumulated loss from prior periods, the Company\nis able to use the current period net income after tax to offset against the accumulate loss.\n\n \n\nF-12\n\n \n\n \n\nCommitments\nand Contingencies\n\n \n\nIn\nthe normal course of business, the Company is subject to contingencies, including legal proceedings and claims arising out of the business\nthat relate to a wide range of matters, such as government investigations and tax matters. The Company recognizes a liability for such\ncontingency if it determines it is probable that a loss has occurred, and a reasonable estimate of the loss can be made. The Company\nmay consider many factors in making these assessments including historical and the specific facts and circumstances of each matter.\n\n \n\nRecent\nAccounting Pronouncements\n\n \n\nThe\nCompany is an “emerging growth company” (an “EGC”) as defined in the Jumpstart Our Business Startups Act of 2012\n(the “JOBS Act”). Under the JOBS Act, an EGC can delay adopting new or revised accounting standards issued subsequent to\nthe enactment of the JOBS Act until such time as those standards apply to private companies.\n\n \n\nIn\nNovember 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2023-07, “Segment Reporting (Topic\n280): Improvements to Reportable Segment Disclosures”, which amends and enhances the disclosure requirements for reportable segments.\nAll disclosure requirements under this standard will also be required for public entities with a single reportable segment. This new\nstandard became effective for fiscal years beginning after December 15, 2023 and for interim periods within fiscal years beginning after\nDecember 15, 2024. The Company adopted this standard in the fourth quarter of 2024, which did not have a material impact on the consolidated\nfinancial statements and related disclosures.\n\n \n\nIn\nDecember 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”).\nASU 2023-09requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information\non income taxes paid. The ASU is effective for public business entities for annual periods beginning after December 15, 2024. Early adoption\nis permitted. The Company does not expect a material impact from the adoption of this guidance on its consolidated financial statements\nand related disclosures.\n\n \n\nIn\nMarch 2024, the FASB issued ASU No. 2024-02, Codification Improvements-Amendments to Remove References to the Concepts Statements (“ASU\n2024-02”). The amendments in this Update affect a variety of Topics in the Codification. The amendments apply to all reporting\nentities within the scope of the affected accounting guidance. This update contains amendments to the Codification that remove references\nto various Concepts Statements. In most instances, the references are extraneous and not required to understand or apply the guidance.\nIn other instances, the references were used in prior statements to provide guidance in certain topical areas. ASU 2024-02 is effective\nfor public business entities for fiscal years beginning after December 15, 2024. For all other entities, the amendments are effective\nfor fiscal years beginning after December 15, 2025. Early adoption is permitted for both interim and annual financial statements that\nhave not yet been issued or made available for issuance. The Company does not expect to adopt this guidance early and does not expect\nthe adoption of this ASU to have a material impact on its future consolidated financial statements.\n\n \n\nIn\nNovember 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (DISE), which requires new disclosures to disaggregate\nprescribed natural expenses underlying any income statement caption. This ASU is effective for annual periods in fiscal years beginning\nafter December 15, 2026, and interim periods thereafter. Early adoption is permitted. The ASU applies on a prospective basis for periods\nbeginning after the effective date. However, retrospective application to any or all prior periods presented is permitted. The Company\nis currently evaluating the impact of adoption of this standard on its consolidated financial statements.\n\n \n\nF-13\n\n \n\n \n\nExcept\nfor the above-mentioned pronouncements, there are no new recent issued accounting standards that will have material impact on the consolidated\nfinancial position, statements of operations and cash flows.\n\n \n\nConcentrations\nof Risks\n\n \n\n(a)\nForeign currency risk\n\n \n\nA\nmajority of the Group’s revenue and expense transactions are denominated in the functional currency of its subsidiaries.\n\n \n\nFor\nthe Hong Kong operation, as the HK dollar is pegged to the US dollar since 1983, and since May 2005, the US$ 1 is within the range of\nHK$ 7.75 to HK$ 7.85, management considered that the foreign currency risk for the Hong Kong dollar is limited under the pegging arrangement.\n\n \n\nFor\nthe PRC operations, the RMB is not freely convertible into foreign currencies. In the PRC, certain foreign exchange transactions are\nrequired by law to be transacted only by authorized financial institutions at exchange rates set by the People’s Bank of China\n(“PBOC”). It is difficult to predict how market forces or PRC government policy may impact the exchange rate between the\nRMB and the HK$ in the future. The change in the value of the RMB relative to the HK$ may affect the Company’s financial results\nreported in HK$ without giving effect to any underlying changes in the Company’s business or results of operations. Remittances\nin currencies other than RMB by the Company in China must be processed through the PBOC or other China foreign exchange regulatory bodies\nwhich require certain supporting documentation in order to affect the remittance.\n\n \n\nAs\na result, the Company is exposed to foreign exchange risk as revenues and results of operations may be affected by fluctuations in the\nexchange rate between the HK$ and RMB. If the RMB depreciates against the HK$, the value of RMB revenues, earnings and assets as expressed\nin HK$ financial statements will decline. The Company has not entered into any hedging transactions in an effort to reduce its exposure\nto foreign exchange risk.\n\n \n\n(b)\nCredit risk\n\n \n\nFinancial\ninstruments that potentially subject the Company to a significant concentration of credit risk consist primarily of cash and accounts\nreceivable. As of December 31, 2025 and 2024 substantially all of the Company’s cash was held by major financial institutions located\nin Hong Kong and the PRC, which management believes are of high credit quality.\n\n \n\nFor\nthe credit risk related to accounts receivable, the Company performs ongoing credit evaluations of its customers. The Company establishes\nan allowance for doubtful accounts based upon estimates, factors surrounding the credit risk of specific customers and other information.\nThe allowance amounts were immaterial for all periods presented.\n\n \n\n(c)\nCustomer concentration risk\n\n \n\nThe\nCompany has a high concentration risk. For the year ended December 31, 2025 and 2024, one customer accounted for the Group’s total\nrevenue and the total balance of account receivables for the year ended December 31, 2025 and 2024\n\n \n\n(d)\nVendor concentration risk\n\n \n\nFor\nthe year ended December 31, 2025, the five and ten largest vendors accounted for 58.61% and 79.43% of the Company’s total purchases\nrespectively. For the year ended December 31, 2024, the five and ten largest vendors accounted for 59% and 79% of the Company’s\ntotal purchases respectively.\n\n \n\nF-14\n\n \n\n \n\n**Note\n3 Accounts receivable, net**\n\n \n\nAccounts\nreceivable, net consisted of the following:\n\nSchedule\nof accounts receivable net \n\n  \nDecember 31, 2024  \nDecember 31, 2025  \nDecember 31, 2025 \n\n  \nHK$’000  \nHK$’000  \nUS$’000 \n\nAccounts receivable \n 37,342  \n 26,760  \n 3,431 \n\nAllowance for doubtful accounts \n -  \n -  \n - \n\nTotal accounts receivable, net \n 37,342  \n 26,760  \n 3,431 \n\n \n\n**Note\n4 Inventories**\n\n \n\nInventories\nconsisted of the following:\n\nSchedule\nof inventories \n\n  \nDecember 31, 2024  \nDecember 31, 2025  \nDecember 31, 2025 \n\n  \nHK$’000  \nHK$’000  \nUS$’000 \n\nRaw materials \n 4,934  \n 4,421  \n 567 \n\nWork in progress \n 2,002  \n 1,190  \n 153 \n\nFinished goods \n 4,566  \n 4,191  \n 537 \n\nTotal inventories \n 11,502  \n 9,802  \n 1,257 \n\n \n\n**Note\n5 Prepaid expenses and other current assets**\n\n \n\nPrepaid\nexpenses and other current assets consisted of the following:\n\nSchedule\nof prepayment deposit and other receivables \n\n  \nDecember 31, 2024  \nDecember 31, 2025  \nDecember 31, 2025 \n\n  \nHK$’000  \nHK$’000  \nUS$’000 \n\nRental deposit \n 1,852  \n 1,930  \n 247 \n\nVAT refundable \n 860  \n 818  \n 105 \n\nPrepayment \n 125  \n 136  \n 17 \n\nIncome tax refundable \n 73  \n 82  \n 11 \n\nOther receivables \n 769  \n 756  \n 97 \n\nPrepaid\nexpenses and other current assets \n 3,679  \n 3,722  \n 477 \n\n \n\n**Note\n6 Property, plants and equipment, net**\n\nSchedule\nof property plants and equipment net \n\n  \nDecember 31, 2024  \nDecember 31, 2025  \nDecember 31, 2025 \n\n  \nHK$’000  \nHK$’000  \nUS$’000 \n\nMachinery & equipment \n 2,845  \n 3,041  \n 390 \n\nElectronic equipment \n 56  \n 59  \n 8 \n\nOffice equipment \n 2,394  \n 2,493  \n 320 \n\nComputer software \n 106  \n 111  \n 14 \n\nMotor vehicles \n 2,459  \n 2,083  \n 267 \n\nTotal cost \n 7,860  \n 7,787  \n 999 \n\nLess: Accumulated depreciation \n (6,742) \n (6,977) \n (895)\n\nNet book value \n 1,118  \n 810  \n 104 \n\n \n\nDepreciation\nexpenses recognized for the years ended December 31, 2025, 2024 and 2023 were HK$459,000, HK$505,000 and HK$506,000, respectively.\n\n \n\nF-15\n\n \n\n \n\n**Note\n7 Right-of-use assets and operating lease liabilities**\n\n \n\nAs\nof December 31, 2025, the Company had the following non-cancellable lease contracts:\n\nSchedule of non-cancellable lease contracts \n\nDescription\nof lease\n \nTerm\n \nImputed\ninterest rate\n \n\n \n \n \n \n \n \n\nDirector’s quarters, Kowloon,\nHong Kong\n \n24\nmonths, May 1, 2025 to April 30, 2027\n \n \n5.6\n%\n\nOffice, Kowloon, Hong Kong\n \n24 months from January\n1, 2025 to December 31, 2026\n \n \n5.6\n%\n\nProduction plant and administration facility, Shenzhen,\nPRC\n \n3 years from July 16, 2024\nto July 15, 2027\n \n \n3.45\n%\n\n \n\nThe\nfollowing amounts were recognized in the consolidated balance sheets:\n\nSchedule of condensed balance sheet \n\n  \nDecember 31, 2024  \nDecember 31, 2025  \nDecember 31, 2025 \n\n  \nHK$’000  \nHK$’000  \nUS$’000 \n\nRight-of-use assets \n 15,295  \n 11,297  \n 1,448 \n\n  \n    \n    \n   \n\nOperating lease liabilities \n    \n    \n   \n\nCurrent \n 5,822  \n 4,203  \n 539 \n\nNon-current \n 9,482  \n 7,093  \n 909 \n\nTotal \n 15,304  \n 11,296  \n 1,448 \n\n \n\nA\nsummary of lease costs recognized in the Company’s consolidated statements of income and supplemental cash flow information relating\nto the operating leases is as follows:\n\nSchedule of condensed consolidated statement of income and cash flow \n\n  \n2024  \n2025  \n2025 \n\n  \nFor the year ended December 31 \n\n  \n2024  \n2025  \n2025 \n\n  \nHK$’000  \nHK$’000  \nUS$’000 \n\nAmortization charge of right-of use assets \n 6,824  \n 7,513  \n 963 \n\nRight-of-use assets obtained in exchange for operating lease liabilities \n 17,604  \n 17,604  \n 2,257 \n\nInterest on lease liabilities \n 368  \n 275  \n 36 \n\nCash paid for operating leases \n 6,935  \n 6,842  \n 877 \n\n \n\nF-16\n\n \n\n \n\nFuture\nundiscounted lease payments as of December 31, 2025 are as follows:\n\nSchedule of future undiscounted lease\npayments \n\nYear ending December 31, \nHK$’000  \nUS$’000 \n\n  \n   \n  \n\n2026 \n 7,630  \n 978 \n\n  \n    \n   \n\n2027 \n 3,802  \n 487 \n\n  \n    \n   \n\nFuture minimum operating lease payments \n 11,432  \n 1,465 \n\nLess: Imputed interest \n (136) \n (17)\n\n  \n    \n   \n\nTotal operating lease liabilities \n 11,296  \n 1,448 \n\n** **\n\n**Note\n8 Other payables and accrued liabilities**\n\n \n\nOther\npayables and accrued liabilities consisted of the following:\n\nSchedule\nof other payables and accrued liabilities \n\n  \nHK$’000  \nHK$’000  \nUS$’000 \n\n  \nDecember 31, 2024  \nDecember 31, 2025 \n\n  \nHK$’000  \nHK$’000  \nUS$’000 \n\nAccrued salary \n 6,272  \n 4,413  \n 565 \n\nIncome tax payable \n 5  \n -  \n - \n\nOther payables \n 36  \n 2,447  \n 314 \n\nTotal \n 6,313  \n 6,860  \n 879 \n\n \n\n**Note\n9 Credit facilities**\n\n \n\nAs\nof December 31, 2025 and 2024, bank loan consisted of the following:\n\nSchedule of bank loan \n\nBank Name \nNature of Loan \n2024  \n2025 \n \n \n \n \n\n  \n  \nDecember 31\n \n\nBank Name \nNature of Loan \n2024  \n2025\n \n\n  \n  \nHK$’000  \nHK$’000 \n \nUS$’000\n \n\nBank of China (Hong Kong) \nRevolving loan(1) \n 11,000  \n 3,000 \n \n \n385\n \n\nTotal \n  \n 11,000  \n 3,000 \n \n \n385\n \n\n \n\n \n(1)\nThis loan is a revolving\nloan up to HK$11,000,000, carries an interest of 2.25% below Hong Kong prime rate and is collateralized by the Company’s office\npremises located in Hong Kong; a Hong Kong property jointly owned by Mr. Li and his spouse and a personal guarantee from Mr. Li.\nThis loan was first drawn down on October 22, 2018 and has been rolled over for every six-month period. The Company recognized this\nloan as short-term bank borrowing in its consolidated financial statements. The security charged over the Company’s office\npremises located in Hong Kong was released since September 29, 2022.\n\n \n\nInterest\nexpenses incurred from bank borrowings were HK$275,000, HK$474,000 and HK$396,000 for the years ended December 31, 2025, 2024 and 2023,\nrespectively. The interest expense represented the weighted average interest rate of 3.6%, 3.6% and 3.6%, respectively, for the years\nended December 31, 2025, 2024 and 2023.\n\n \n\n**Note\n10 Related party balances and transactions**\n\n \n\nRelated\nparty balances\n\n \n\nThe\nrelated party balances consisted of the following:\n\nSchedule of related party balances \n\nName \nRelationship \nNature \nClassification \nDecember 31, 2024\n(HK$’000)  \nDecember 31, 2025\n(HK$’000)  \nDecember 31, 2025\n(US$’000) \n\n  \n  \n  \n  \n   \n   \n  \n\nMr. Li \nFormer sole shareholder and executive director \nAdvance from a former sole shareholder \nAmounts due to related parties \n 1,714  \n 611  \n 78 \n\nMr. Chiu Yat Chung Gary \nFormer senior management \nAdvance from a former senior management \nAmounts due to related parties \n 1,262  \n -  \n - \n\nMr. Li Siu Lun, Allan \nSenior management \nAdvance from a member of senior management \nAmounts due to related parties \n 80  \n -  \n - \n\nTotal amounts due to related parties \n  \n  \n  \n 3,056  \n 611  \n 78 \n\n \n\nThe\nabove amounts are unsecured, non-interest bearing and repayable on demand.\n\n \n\nF-17\n\n \n\n \n\nRelated\nparty transactions (Guarantees)\n\n \n\nThe\nrelated parties made guarantees to the Company in relation to all the bank borrowings of the Group. Please refer to the Note 9 for details\nof each guarantee made by the related parties in relation to all the bank borrowings of the Group as of December 31, 2025 and 2024.\n\n \n\nRelated\nparty transactions (Sale / lease of properties)\n\n \n\nThe\nCompany entered into the following rental agreement with a related party for a director quarter situated in Hong Kong:\n\nSchedule of rental agreement with related party \n\nPremises \nRelationship\nwith the lessor \nRental payment for\nthe year ended\nDecember 31, 2023\n(HK$’000)  \nRental payment for\nthe year ended\nDecember 31, 2024\n(HK$’000)  \nRental payment for\nthe year ended\nDecember 31, 2025\n(HK$’000)  \nRental payment for\nthe year ended\nDecember 31, 2025\n(US$’000) \n\nDirector’s quarters \nLessor is a company owned by Mr. Li and his spouse \n 600  \n 600  \n 600  \n 77 \n\nHong Kong office \nLessor is Mr. Li and his spouse \n 600  \n 600  \n 600  \n 77 \n\n \n\nIn\nDecember 2022, FIL sold its headquarters and sales office in Hong Kong to Mr. Li, the Company’s then Executive Director and\nsole shareholder, at a consideration of HK$13,880,000.\nThe carrying net book value of the office as of the transaction date was HK$1,349,000,\nand one-off gain on disposal of the property of HK$12,531,000\nwas recognized in the income statement of the Group for the year ended December 31, 2022. This gain on disposal of property was\nregarded as capital gain and classified as a non-taxable income under the tax rule of Hong Kong. The sale consideration of HK$13,880,000\nreceivable from Mr. Li was offset against the amount due to Mr. Li, and the dividend declared of HK$10,000,000\nfor the year ended December 31, 2022.\n\n \n\nAfter\nthe disposal of the office, FIL continued to occupy the office and entered into a lease agreement with Mr. Li to lease this office for\nan initial term of two (2) years, commencing January 1, 2023, for a monthly rental of HK$50,000. Upon the expiry of the above lease term,\nFIL renewed such lease agreement with Mr. Li to lease this office for an initial term of two (2) years, commencing January 1, 2023, for\na monthly rental of HK$50,000.\n\n \n\n**Note\n11 Employee benefits government plan**\n\n \n\nThe\nCompany participates in a government-mandated multi-employer defined contribution plan pursuant to which certain retirement, medical\nand other welfare benefits are provided to employees. PRC labor regulations require the Company to pay to the local labor bureau a monthly\ncontribution calculated at a stated contribution rate based on the basic monthly compensation of qualified employees. The relevant local\nlabor bureau is responsible for meeting all retirement benefit obligations; the Company has no further commitments beyond its monthly\ncontribution.\n\n \n\n**Note\n12 Income taxes**\n\n \n\nThe\nprovision for income taxes consists of the following:\n\nSchedule of provision income taxes \n\n  \n2023  \n2024  \n2025  \n2025 \n\n  \nFor the year ended December 31 \n\n  \n2023  \n2024  \n2025  \n2025 \n\n  \nHK$’000  \nHK$’000  \nHK$’000  \nUS$’000 \n\nCurrent tax \n    \n    \n    \n   \n\n- Hong Kong \n -  \n 686  \n -  \n - \n\n- Other countries \n 131  \n 1,055  \n -  \n    - \n\n \n 131  \n 1,741  \n -  \n - \n\n \n\nF-18\n\n \n\n \n\nReconciliations\nbetween the provision for income taxes computed by applying the Hong Kong profits tax to income before income tax expense are as follows:\n\nSchedule of reconciliation of income before income tax expense \n\n  \n2023  \n2024  \n2025  \n2025 \n\n  \nFor the year ended December 31, \n\n  \n2023  \n2024  \n2025  \n2025 \n\n  \nHK$’000  \nHK$’000  \nHK$’000  \nUS$’000 \n\nIncome (loss) before income tax \n (1,331) \n (13,741) \n (10,643) \n (1,365)\n\n  \n    \n    \n    \n   \n\nProvision for income taxes at Hong Kong profits tax rates of 16.5% \n (220) \n (2,267) \n (1,756) \n (225)\n\nEffect of different tax rates available to different jurisdictions \n 131  \n 3,162  \n (470) \n (60)\n\nNon-deductible expenses and non-taxable income, net \n -  \n (35) \n 221 \n 28\n\nUnder provision from prior year \n -  \n 590  \n -  \n - \n\nValuation allowance for tax losses \n -  \n -  \n 2,005  \n \n257\n \n\nOthers \n 220  \n 291  \n -  \n - \n\nIncome tax expense/ (credit) \n 131  \n 1,741  \n \n-\n \n - \n\n \n\nCayman\nIslands\n\n \n\nThe\nCompany was incorporated in the Cayman Islands and is not subject to tax on income or capital gains under the laws of Cayman Islands.\nAdditionally, the Cayman Islands does not impose a withholding tax on payments of dividends to shareholders.\n\n \n\nBritish\nVirgin Islands\n\n \n\nRLHL\nis incorporated in the British Virgin Islands and not subject to tax on income or capital gains under current British Virgin Islands\nlaw. In addition, upon payments of dividends by these entities to their shareholders, no British Virgin Islands withholding tax will\nbe imposed.\n\n \n\nHong\nKong\n\n \n\nFenbo\nIndustries and Able Industries are incorporated in Hong Kong and is subject to Hong Kong Profits Tax on the taxable income as reported\nin its statutory financial statements adjusted in accordance with relevant Hong Kong tax laws. The applicable tax rate in Hong Kong is\n16.5% for assessable profits.\n\n \n\nPRC\n\n \n\nFenbo\nSZ is governed by the income tax laws of the PRC and the income tax provision in respect to operations in the PRC is calculated at the\napplicable tax rates on the taxable income for the periods based on existing legislation, interpretations and practices in respect thereof.\nUnder the Enterprise Income Tax Laws of the PRC (the “EIT Laws”), Chinese enterprises are subject to income tax at a rate\nof 25% after appropriate tax adjustments.\n\n \n\n**Note\n13 Shareholders’ equity**\n\n \n\nOrdinary\nshares\n\n \n\nThe\nCompany was established under the laws of the Cayman Islands on September 30, 2022. The authorized number of ordinary shares was 300,000,000\nshares with a par value of US$ 0.0001\nper ordinary share.\n\n \n\nFor\nthe purpose of undertaking an initial public offering (“IPO”) of the Company’s ordinary shares, the Company performed\na series of re-organizing transactions resulting in 10,000,000 ordinary shares outstanding effected on November 18, 2022. On December\n1, 2023 the Company closed on the IPO. The offering was conducted pursuant to the Company’s registration statement and 1,000,000\nordinary shares were issued at the IPO price of $5.00 per share in the offering. All these shares rank pari passu with the existing shares\nin all aspects. The Ordinary Shares were approved for listing on The Nasdaq Capital Market and commenced trading under the ticker symbol\n“FEBO.”\n\n \n\nF-19\n\n \n\n \n\nPursuant to a special resolution passed on September 29, 2025, the authorized share capital of the Company was changed\nfrom US$30,300 divided into 303,000,000 shares comprising 300,000,000 ordinary shares of par value of US$0.0001 each and 3,000,000 preference\nshares of par value of US$0.0001 each, to US$30,300 divided into 303,000,000 shares comprising 285,000,000 class A ordinary shares of\npar value of US$0.0001 each and 18,000,000 class B ordinary shares of par value of US$0.0001 each. Holders of Class A Ordinary Shares\nand Class B Ordinary Shares at all times vote together as one class on all resolutions submitted to a vote of the shareholders. Each Class\nA Ordinary Share entitles the holder thereof to one vote on all matters subject to vote at shareholder meetings, and each Class B Ordinary\nShare entitles the holder thereof to 20 votes on all matters subject to vote at shareholder meetings. Accordingly, the 8,000,000 issued ordinary shares of par value of US$0.0001 each in the capital of the Company registered in the\nname of Luxury Max Investments Limited wa redesignated as 8,000,000 issued class B ordinary and the remaining 3,062,500 issued ordinary\nshares of par value of US$0.0001 each in the capital of the Company registered in the names of various shareholders be redesignated as\n3,062,500 issued class A ordinary shares.\n\n \n\nThe\nCompany believes it is appropriate to reflect the above transactions as re-denomination and nominal issuance of shares on a retroactive\nbasis similar to stock split or dividend pursuant to ASC 260. According to the above transactions, the Company has retroactively adjusted\nthe shares and per share data for all periods presented.\n\n \n\nStatutory\nreserves\n\n \n\nIn\naccordance with the relevant PRC laws and regulations, the Group’s subsidiaries in the PRC are required to provide for certain\nstatutory reserves, which are appropriated from net profit as reported in accordance with PRC accounting standards. The Group’s\nsubsidiaries in the PRC are required to allocate at least 10% of their after-tax profits to the general reserve until such reserve has\nreached 50% of their respective registered capital. Appropriations to other types of reserves in accordance with relevant PRC laws and\nregulations are to be made at the discretion of the board of directors of each of the Group’s subsidiaries in the PRC. The statutory\nreserves are restricted from being distributed as dividends under PRC laws and regulations.\n\n \n\nOn\nJanuary 11, 2024, the representative of the underwriters partially exercised the over-allotment option and on January 16, 2024 purchased\n62,500 ordinary shares at the IPO price of $5.00 per share. All these shares rank pari passu with the existing shares in all aspects.\n\n \n\n**Note\n14 Net loss Per Share**\n\n \n\nThe\nfollowing table sets forth the computation of basic and diluted loss per share for the years indicated:\n\nSchedule of net income (loss) per share \n\n  \nFor the year ended December 31, \n\n  \n2023  \n2024  \n2025  \n2025 \n\n  \nHK$’000  \nHK$’000  \nHK$’000  \nUS$’000 \n\nBasic and diluted loss per share \n    \n    \n    \n   \n\nNumerator: \n    \n    \n    \n   \n\nNet loss for the year attributable to the Company’s ordinary shareholders \n (1,462) \n (15,482) \n (10,643) \n (1,365)\n\n  \n    \n    \n    \n   \n\nDenominator: \n    \n    \n    \n   \n\nWeighted average number of basic and diluted ordinary shares outstanding \n 10,084,932  \n 11,059,932  \n 11,062,500  \n 11,062,500 \n\n  \n    \n    \n    \n   \n\nWeighted average number of basic and diluted ordinary shares used in calculating loss per share \n 10,084,932  \n 11,059,932  \n 11,062,500  \n 11,062,500 \n\n  \n    \n    \n    \n   \n\nBasic and diluted net loss per share (cents) \n (14.50) \n (139.98) \n (96.21) \n (12.34)\n\n \n\n**Note\n15 Commitments and Contingencies**\n\n \n\nLease\nCommitments\n\n \n\nThe\nCompany entered into leases for production plant in the PRC and director’s quarters. Please refer to Note 7 for details.\n\n \n\nContingencies\n\n \n\nThere\nwere no contingencies identified for the years ended December 31, 2025 and 2024.\n\n \n\n**Note\n16 Restricted net assets**\n\n \n\nPRC\nlaws and regulations permit payments of dividends by the Company’s subsidiaries incorporated in the PRC only out of their retained\nearnings, if any, as determined in accordance with PRC accounting standards and regulations. In addition, the Company’s subsidiaries\nincorporated in the PRC are required to annually appropriate 10% of their net income to the statutory reserve prior to payment of any\ndividends, unless the reserve has reached 50% of their respective registered capital. Furthermore, registered share capital and capital\nreserve accounts are also restricted from distribution. As a result of the restrictions described above and elsewhere under PRC laws\nand regulations, the Company’s subsidiaries incorporated in the PRC are restricted in their ability to transfer a portion of their\nnet assets to the Company in the form of dividends. Except for the above or disclosed elsewhere, there is no other restriction on the\nuse of proceeds generated by the Company’s subsidiaries to satisfy any obligations of the Company.\n\n \n\n**Note\n17 Subsequent Event**\n\n \n\nThe\nCompany evaluated all events and transactions that occurred after December 31, 2025, up through the date that these consolidated financial\nstatements are available to be issued, there were no other material subsequent events that require disclosure in these consolidated financial\nstatements.\n\n \n\nF-20"}