{"url_path":"/sec/febo/10-k/2026/item-4","section_key":"item-4","section_title":"Item 4 INFORMATION ON THE COMPANY**","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":12049,"has_tables":true,"body_markdown":"** **\n\n**ITEM\n4. INFORMATION ON THE COMPANY**\n\n** **\n\n**History\nof the Company**\n\n \n\nFenbo Holdings Limited (the “Company,” “we” or\n“FEBO”), is the holding company of our Operating Subsidiaries, Able Industries Limited (“AIL”), Fenbo Industries\nLimited (“FIL”) and Fenbo Plastic Products Factory (Shenzhen) Ltd. (“FPPF”). Through our Operating Subsidiaries,\nwe have over 30 years of experience producing premium personal care electric appliances (principally electrical hair styling products\nsuch as straighteners, curlers, trimmers, etc.) and toy products to overseas markets.\n\n \n\n35\n\n \n\n \n\nOur\noperating history began in 1993 when FIL was founded in Hong Kong by Mr. Li Kin Shing as a toy manufacturer and distributor. As the toy\nmarket deteriorated, he founded AIL in 2005 in Hong Kong and shifted our operations to the manufacture and sale of personal care electric\nappliances. Our manufacturing subsidiary, FPPF, located in Guangdong, PRC, was formed in the PRC in 2010 and is capable of producing\nover three million units per year. We currently act as an original equipment manufacturer (“OEM”) of certain personal care\nelectric appliances.\n\n \n\n**Dual-Class\nShare Structure.** On September 29, 2025, we held an extraordinary general meeting at which our\nshareholders approved the adoption of a dual-class share structure. Following such approval, our ordinary shares were re-designated as\nClass A Ordinary Shares and Class B Ordinary Shares. Each Class A Ordinary Share entitles its holder to one vote per\nshare, while each Class B Ordinary Share entitles its holder to twenty votes per share on all matters submitted to a vote of shareholders.\nEach Class B Ordinary Share is convertible into one Class A Ordinary Share at any time at the option of the holder. Except\nas described above, no share may be converted or redesignated from one class to another without the approval of a special resolution\nof our shareholders. The Class A Ordinary Shares continue to trade on the Nasdaq Capital Market under the ticker symbol “FEBO,”\nwhile the Class B Ordinary Shares are not listed or traded on any securities exchange.\n\n** **\n\nAs\na result of the concentration of voting power held by our controlling shareholders through LMIL, we are a “controlled company”\nwithin the meaning of the Nasdaq Capital Market listing rules.\n\n \n\nIn\nthe ordinary course of our operations as a public company, we have encountered certain regulatory, listing compliance, governance and\nshare capital–related developments, as summarized below.\n\n** **\n\n**Nasdaq\nMinimum Bid Price Deficiency.** On September 12, 2025, we received notification from the Listing Qualifications Department\nof The Nasdaq Stock Market LLC (“Nasdaq”) that we were not in compliance with the minimum bid price requirement set forth\nin Nasdaq Listing Rule 5550(a)(2), which requires listed companies to maintain a minimum closing bid price of $1.00 per share (the\n“Minimum Bid Price Requirement”). The Nasdaq notification had no immediate effect on the listing of our Ordinary Shares.\nIn accordance with Nasdaq rules, we were provided a compliance period to regain compliance with the Minimum Bid Price Requirement.\n\n \n\nOn December 31, 2025,\nwe received a letter from Nasdaq confirming that, for the ten consecutive business days from December 16, 2025 through December 30, 2025,\nthe closing bid price of our Class A Ordinary Shares was at least $1.00 per share and, as a result, we regained compliance with\nthe Minimum Bid Price Requirement. Nasdaq indicated that the matter is now closed.\n\n** **\n\n**Nasdaq Annual Meeting Compliance Deficiency.**On January 16, 2025, we received notification from\nNasdaq that we were not in compliance with Nasdaq Listing Rules 5620(a) and 5810(c)(2)(G), which require that Nasdaq-listed\ncompanies hold an annual meeting of shareholders within twelve months of their fiscal year end (the “Annual Meeting\nRequirement”), because we did not hold an annual meeting of shareholders within twelve months of our December 31, 2023 fiscal\nyear end. The Nasdaq Notification had no immediate effect on our Nasdaq listing. It stated that, in accordance with Nasdaq rules, we\nhad 45 calendar days, or until March 3, 2025, to submit a plan to regain compliance with the Annual Meeting Requirement and, if\nNasdaq accepted our plan, it could grant an exception of up to 180 days from the fiscal year end, or until June 30, 2025, for us to\nregain compliance.\n\n \n\nWe\nheld our 2023 annual general meeting on April 24, 2025, and have regained compliance with the Nasdaq rules.\n\n \n\n**Change\nin Control.**On November 29, 2024, Luxury Max Investment Limited (“LMIL”), our controlling shareholder, and Mr. Li\nKin Shing, the sole officer, director and shareholder of LMIL, entered into two definitive securities purchase agreements (the “Purchase\nAgreements”) with Mr. Hongwu Huang, our Chairman, Executive Director and Chief Executive Officer, and Ms. Xuefei Wang, our Chief\nFinancial Officer and Executive Director, respectively. Pursuant to the Purchase Agreements, Mr. Li Kin Shing sold 60% of his interest\nin LMIL to Mr. Huang and 40% of his interest to Ms. Wang. Mr. Li concurrently resigned all of his positions with LMIL and the Company.\nLMIL is the owner of record of 8,000,000, or 72.3%, of the Company’s outstanding Ordinary Shares. By virtue of the Purchase Agreements,\nMr. Huang and Ms. Wang, together, own 100% of LMIL and share voting and dispositive control over 72.3% of our issued and outstanding\nOrdinary Shares.\n\n \n\nThe\nPurchase Agreements contained customary representations, warranties and agreements of LMIL and the purchasers, as well as customary indemnification\nrights and obligations of the parties. The Purchase Agreements are filed as Exhibits 99.1 and 99.2 to our Report on Form 6-K filed with\nthe SEC on December 6, 2024.\n\n** **\n\n**Investment\nin a U.S. Artificial Intelligence Focused Fund.**On August 29, 2024, we announced that the Company had entered into a subscription\nagreement to make an initial $150,000 strategic investment in a U.S. Artificial Intelligence (“AI”) focused investment fund\n(the “Fund”). The Fund specializes in making direct venture capital investments in early-stage and growth-stage private technology\ncompanies, with a particular emphasis on financial technology (FinTech), blockchain/web3 and enterprise technology, based upon a belief\nthat AI represents a greater investment opportunity than the internet did at its inception and that AI is a must-do investment opportunity.\n\n \n\nThe\nBoard believes that the Fund’s focus on AI-driven technologies aligns with the Company’s vision for the future of enterprise\nsoftware and that, by investing in the Fund, the Company may gain access to a curated portfolio of innovative startups as well as the\npotential guidance of industry experts, which will assist the Company in identifying and evaluating AI solutions that may improve its\nproducts, customer experiences and business outcomes.\n\n \n\nA\ncopy of the press release issued by the Company with respect to the investment is attached as Exhibit 99.1 to our Report on Form 6-K\nfiled with the SEC on September 3, 2024.\n\n \n\n**Initial\nPublic Offering and Listing History**\n\n \n\nOn December 1, 2023, we closed\non our IPO of 1,000,000 Ordinary Shares at a public offering price of $5.00 for total gross proceeds of $5,000,000 and on January 16,\n2025, we closed on the sale of an additional 62,500 Ordinary Shares pursuant to the partial exercise of the underwriter’s over-allotment\noption for additional gross proceeds of $312,500. On November 30, 2023, we commenced the listing of our Ordinary Shares on the Nasdaq\nCapital Market under the ticker symbol “FEBO.” The primary reason for our IPO and listing on the Nasdaq Capital Market was\nto allow us to raise funds to strengthen our market position and to further expand our market share. We are using the proceeds from the\nIPO for: (i) expansion of our production capacity and capability; (ii) strengthening engineering, research and development capability;\n(iii) penetrating and further expanding into new and existing geographic markets; (iv) general working capital; and (v) payment of advisory\nfees.\n\n \n\n**Recent and Other Developments**\n\n \n\nOther than the furnishing of\na Report on Form 6-K on January 6, 2026 reporting Nasdaq’s December 31, 2025 confirmation that the\nCompany had regained compliance with the minimum bid price requirement, there were no material subsequent events after December 31, 2025.\n\n \n\n**Corporate\nStructure**\n\n \n\nOur\nCompany was incorporated in the Cayman Islands on September 30, 2022 under the Companies Act as an exempted company with limited liability.\nEffective November 18, 2022, our Group completed a reorganization to consolidate its business operations in Hong Kong and the PRC into\nan offshore corporate holding structure to expand our manufacturing and sales operations and in anticipation of listing on a recognized\nsecurities market (the “Reorganization”). Following the Reorganization, on August 11, 2023, LMIL completed a private placement\nof an aggregate of 2,000,000 Ordinary Shares owned by it at a price of $2.50 per share to: Yuk Tong Lam (500,000 Ordinary Shares), Majestic\nDragon Investment Co. Limited (500,000 Ordinary Shares), Top Dragon International Limited (300,000 Ordinary Shares), Smart Tech Group\nLimited (300,000 Ordinary Shares), and Power Ocean Ventures Limited (400,000 Ordinary Shares).\n\n \n\n36\n\n \n\n \n\nTherefore, as a result of the Reorganization, the private placement and\nthe change in control described above, (i) LMIL, which is 100% owned by Mr. Hongwu Huang and Ms. Xuefei Wang, owns approximately 72.3%\nof our Company; (ii) our Company is a holding company and owns 100% of RLHL; (iii) RLHL owns 100% of FIL and AIL; and (iv) FIL owns 100%\nof FPPF. We do not utilize a variable interest entity (“VIE”) structure.\n\n \n\n**Organization\nChart**\n\n \n\nThe\nfollowing chart sets forth our corporate structure as of the date of this Annual Report:\n\n \n\n \n\nA\ndescription of our subsidiaries is set out below.\n\n \n\nAIL\n- As the marketing arm for the Group, AIL is responsible for all sales and marketing efforts. As of December 31, 2025, AIL employed one\nemployee.\n\n \n\nFIL\n- Is responsible for the overall management of the Operating Subsidiaries. As of December 31, 2025, FIL employed a total of seven employees.\n\n \n\nFPPF\n- Is responsible for the production of all of the Company’s products, and its engineering and design department conducts in-house\ndesign and research functions for the development of new products and product lines. As of December 31, 2025, FPPF employed a total of\n260 employees.\n\n** **\n\n**Industry\nand Market**\n\n** **\n\nThe\nglobal market for hair styling tools has experienced consistent growth, a trend that is expected to continue. This expansion is driven\nby several interconnected factors related to consumer behavior, technology, and economics. There is a growing emphasis on personal grooming\nand self-maintenance among a wide range of consumers, which has increased demand for personal care appliances. The trend toward at-home\nbeauty and hair care, which allows for greater convenience and personalization, has further bolstered the market for household hair styling\ntools.\n\n \n\nKey\nmarket drivers include evolving fashion and grooming trends supported by continuous technological innovation, which has led to the development\nof more compact, portable, and effective products. Features such as advanced heat regulation, multi-functionality, personalization capabilities,\nand cordless operation powered by improved battery technology have enhanced user convenience and product appeal. The rise of social media\nand e-commerce has also been a significant catalyst, as online influencers, content creators, and DIY tutorials shape consumer preferences\nand drive purchasing trends, while online retail platforms provide broad access to a diverse range of products. Economically, the market\nhas benefited from the increased affordability of these products, as many brand owners have outsourced manufacturing to cost-effective\nregions like the PRC. This, combined with rising disposable incomes particularly in developing economies, has expanded the consumer base.\n\n** **\n\n37\n\n \n\n \n\n**Market\nDrivers**\n\n** **\n\n**Fashion\nTrend***.*Evolving fashion trends, growing fashion consciousness, growing emphasis of people on self-maintenance and appearance\nand changes in consumer preferences have influenced the market and driven the demand for household beauty appliances extensively within\nthe past few years. Millennials are the prime focus consumers of household beauty appliances. Use of hair styling appliances has been\nhigher among females. However, with the rising trend of self-grooming and personal hygiene, the use of these appliances has been increasing\namong men population as well. The growing number of men spending on hair styling appliances, increasing the use of electric hair care\ndevices such as hair straighteners, hair dryers, and other appliances continue to influence the growth of the segment globally. The segment\nis expected to continue to dominate the household beauty appliances market throughout the forecast period.\n\n \n\n**Continued\nInnovation in Hair Styling Products***.*The rapid technological advancements in electronics, reduction in the size of equipment,\nand ease of manufacturing have helped the industry to a great extent. Increased innovations in the tools used for hair styling with the\nopinions of salon expert and also individuals push the manufactures to develop new products and thus boosts the growth of the market.\nHair straighteners create beach waves effectively and effortlessly with just a simple bend of the wrist. High quality ceramics plates\nhave heat balance micro sensors that regulate the temperature and evenly distributes heat. Such products have multifunction features\nthat attract customers, thus increasing the demand for hair styling tools in the market. Further, advancements in battery technologies\nhelped in reducing the size of the equipment and increased the portability feature. This resulted in better marketing opportunities for\nthe companies as people could carry them without any hassle during traveling.\n\n \n\n**Economic\nConsideration***.*Historically, the expenditure on personal grooming was relatively high, as people had to visit professional\nsalons and beauticians for hairstyling, facials, massages, and others. This was mainly owing to the high cost of grooming equipment that\nneeded expertise for effective operation. However, the prices for beauty appliances have been reduced significantly due to the small\nsize of the products and the low cost of manufacturing. Currently major players in the industry have outsourced their production from\ncountries, such as China, where the cost of raw material and labor is lower than the developed countries. The resulting lower the cost\nof the products has attracted sales from middle-income consumers who are eager to keep up with the latest beauty standards. This coincides\nwith the increase in disposable income of consumers, mainly from the developing nations, which has significantly driven the demand for\nhousehold beauty appliances. Countries such as India, South Korea, Vietnam, Brazil, Mexico, Nigeria, Myanmar, and others have witnessed\nlarge-scale economic development in the past few years, resulting in a surge in disposable income. As a result, people are spending more\non self-care and personal grooming products, which in turn propels the growth of the household beauty appliances market.\n\n \n\n**Rise\nin Social Media***.*Consumers are increasingly looking for quality and meaningful interact with different brands throughout\nthe consumer journey from product trial, word-of-mouth interactions, purchase, after-sales experience. Good experiences and interactions\nwith the brands bring consumers back for more and attract new consumers through word of mouth and online reviews. With the prevalence\nof social media in the world of fashion, makeup, hairstyling, and trendsetting, there is the growing number of promotions and advertisements\nfor hair styling tools through different media channels. For example, there is rising popularity of social media influencers, DIY hair\nstyling tutorials, and training videos, which in turn garner the attention of consumers across the world and further promote the use\nof hair styling tools.\n\n \n\n**Surge\nin Demand for Personalization***.*The demand for personalization solutions of beauty and fashion has been on the rise for\ncreating the right fit for every consumer. In the past, consumers generally used the styling services in salons, including hair-cutting,\ncoloring and styling and other treatments. Along with the development of technology, personalized solutions using electrical hair styling\ntools have satisfied consumers’ needs and saved consumers’ time. Once the technology was launched, consumers began to use\nhair styling tools that enable personalization, rather than having treatments in salon.\n\n \n\n**Growth\nin E-Commerce Sales of Personal Care Beauty Appliances***.*Online retail or e-commerce sector has witnessed an exceptional\ngrowth during the past few years. The improvement in ease of buying\nthrough e-commerce platforms is supported by the availability of various products, low costs, marketing strategies and increased dependence\non social media. E-commerce sites and applications have advanced their online platforms to offer a better user experience, thereby attracting\nconsumers toward buying products online. Consumers can now choose from different brands and products of beauty appliances on online applications\nwith categorization between quality, features, price, reviews, popularity, and others. As personal appliances have ergonomic designs\nand smaller sizes, they can be shipped easily locally as well as internationally. In addition, various private labels and brands have\nrecently emerged which only offer products online, thereby reducing the expenditure on construction of showrooms or by other distribution\nchannels.\n\n \n\n38\n\n \n\n  \n\nAnother\nfactor driving the importance of online sales platforms is the growing influence of social media, especially within the millennial\nand Gen-Z consumer population. YouTube, Instagram, Facebook, Twitter, and other social media platforms are filled with influencers,\nwhich are paid by brands to promote their products to the viewers. This is further backed up by various bloggers and online\nmagazines which provide fresh (frequently upgraded) lists of best brands or best personal care products to get more consumer\nattraction. Such trends have helped in the promotion of recently launched products such as at-home laser hair removal appliances,\namong many others. For instance, Cosmopolitan, a widely trusted lifestyle publication, regularly features online articles and\ncurated lists highlighting leading at-home laser hair removal devices, influencing consumer awareness and purchasing decisions. Such\nmarketing strategies and availability of numerous personal care products on online and e-commerce platforms have driven the growth\nof the household beauty appliances market.\n\n \n\n**The\nPersonal Care Beauty Appliance / Hair Styling Tool OEM Market in the PRC**\n\n \n\nThe PRC has become a central\nhub for the global manufacturing of hair styling tools, with its OEM market experiencing robust growth. This is largely due to strong\ndemand from international brand owners who rely on the PRC’s manufacturing expertise and efficiencies. The region’s highly\ndeveloped and integrated supply chain for electronic components reduces logistical costs and production lead times. Furthermore, the\nPRC government has implemented favorable policies to support and modernize its manufacturing sector, encouraging innovation and the adoption\nof advanced production technologies. Manufacturers in the PRC are increasingly leveraging automation and digital systems to enhance production\nefficiency, lower costs, and improve quality control. Despite these strengths, the industry faces challenges, including rising labor\nand raw material costs and the potential for supply chain disruptions due to geopolitical or other external factors.\n\n \n\n**Market\nDrivers and Trends**\n\n \n\n**Advanced\nProduct Design and Growing Demand from Downstream End-customers***.*The market for hair styling tools has demonstrated\nstrong growth in recent years. The robust demand for hair styling tool is principally driven by the growing awareness of beauty and\npersonal grooming needs, consciousness on beauty products, growing disposable income that leads to an elevated living standard and\ngreater consumption of consumer goods and electrical appliances, as well as the continuously advancing product specifications and\ndesigns. In particular, the compactness and portability of hair styling tools have contributed to growing momentum of\ndemand as they are convenient to carry along to different occasions and eliminate the need to visit a salon. In addition, concerns regarding the adverse effects of chemical-based hair styling processes have also contributed to customers pursing hair styling products as a\nsubstitute product. Besides, digitalization of hair styling product, such as the embedment of LCD screen and smartphone connectivity\nfunction has attracted wider target customers. The burgeoning demand also lies in the heightened reliability and durability of hair\nstyling tool.\n\n \n\n**Favorable\nPolicies in the PRC***.*In view of the accelerated downstream demand for various electronic product and subsequently the\nproduction volume, the PRC government has devoted substantial efforts and promulgated development directions underpinning the domestic\nmanufacturing industry, particularly on electronic products. In terms of monetary policy, the PRC government has set out mitigation plans\nto the reduce operational costs of electronics manufacturers, through provisions of tax relief and preferential financing assistance.\nFurther, the “Information Industry Development Guide” published by the PRC government has placed strong emphasis on research\nand development of various types of manufacture red products. As a consequence of the rollout of various technology related proposals\nprior to the Fourteenth Five-Year Plan, the PRC Government has taken initiatives in developing innovative technology that accommodates\nthe dynamic environment. In turn, the demand for hair styling tool OEM services is expected to grow continuously with the support of\nthe favorable PRC government policies.\n\n \n\n39\n\n \n\n \n\n**Digitalization\nin Production and operational Aspects***.*Owing to the advancement of technology and the implementation of “Made\nin China 2025” production initiatives, increasing numbers of electronic products manufacturers including manufacturers of hair\nstyling tool are leveraging computerized machineries and advanced machineries to implement automation with an aim to lower labor\ncosts, alleviating operational risk, and enhancing inventory management. Predictive maintenance technology coupled with Enterprise\nResources Planning (ERP) systems are introduced by manufacturers to monitor the state of equipment, inventory level and utilization\nrate. Further, the rise of business-to-business online marketplace transactions are expected to lower procurement and logistics\ncosts between upstream suppliers and downstream brand owners with information transparency. As such, the integration of automation\nand information integration into the supply chain is expected to alleviate the cost burden on manual efforts to achieve a greater\nallocation of manpower resources.\n\n \n\n**Market\nThreats and Risk Analysis**\n\n \n\n**Rising\nlabor and Raw Material Costs***.*Labor and raw material are the two major cost components. According to the to the Ministry\nof Industry and Information Technology of the PRC, the profitability of enterprises in the electronics industry has declined from 9.1%\nin 2018 to 5.9% in 2021. The decline was attributable to the rising labor costs, as well as a surge in price of component such as printed\ncircuit board, which is expected to put additional cost burden on industry participants.\n\n \n\n**Shortage\nof Experienced Labor***.*In view of the advancement in technology and increasing demand for solution customizations, professionals\nthat are capable of designing, implementing, and overseeing throughout the product development stage, are able to accommodate the demand\nare an essential resource. However, there is a lack of domestic training for qualified personnel to participate in high-end design and\ndevelopment services. As such, the shortage of professionals may hinder the development of the industry.\n\n \n\n**Cost\nStructure Analysis**\n\n \n\n**Labor\nCost***.*During 2016 to 2021, the labor cost in the manufacturing industry in the PRC increased steadily. In particular,\nthe average monthly wage of professional technician has increased from RMB6,212.4 to RMB9,800.9 during 2016 to 2021, representing a CAGR\nof approximately 9.5%. The increasing labor cost is attributable to increasing demand of skillful labor equipped with skills such as\nknowledge on computerized management system, modelling analytical skills and proficiency in foreign languages.\n\n \n\nGoing\nforward, the average monthly wage of employed persons in manufacturing industry, including production and equipment operator, professional\ntechnician and managerial staff, are expected to grow at a slower trend at a CAGR of 7.1%, 7.7% and 6.6% respectively, owing to the increasing\namount of labor entrants, resulting in a stable growth of wage.\n\n \n\n**Raw\nMaterials***.*The prices of key raw materials and component in hair styling tool manufacturing during 2016 to 2026, which\ninclude integrated circuit, printed circuit board, plastics, lithium battery. In general, majority of materials and components used in\nhair styling tool production in the PRC have been sourced domestically. The fast-growing market demand for raw materials worldwide has\nresulted in a general increase in prices for such materials. With the sustained development of the electronic product and hair styling\ntool manufacturing industry, the raw material prices are expected to grow moderately in the forecasted period.\n\n \n\n40\n\n \n\n \n\n**Competitive\nLandscape**\n\n** **\n\n**Overview***.*The hair styling tool OEM industry in the PRC is highly fragmented and competitive, comprising a large number of\nmarket participants. In this environment, competition extends beyond pricing to include a variety of critical factors. Many OEM service\nproviders specialize in specific product categories to develop deep expertise and establish a competitive advantage. The Group considers\nthat Zhejiang Jindelie Electrical Appliance Co. Ltd. and Hang Shun Hing Co. Ltd. are two direct competitors to the Group.\n\n \n\n**Barriers\nto Entry***.*\n\n* *\n\n**R&D\nCapabilities***.*R&D capabilities are the technical abilities to discover, develop, or scale marketable solutions. Strong\nR&D capabilities allow existing market participants to have an improved type of business process, lower marginal costs or increase\nmarginal productivity. In view of the evolving market landscape, regular upgrade and innovation of products is another competition focus.\nFast-changing technical requirements further heighten the needs for R&D capabilities. Therefore, a lack of strong R&D capabilities\nwill prevent new market entrants from entering this industry.\n\n \n\n**Reputation\nand Relationship with Different Stakeholders.****In general, current market participants have already established an extensive\nbusiness network with their upstream equipment suppliers, distributors, as well as downstream customers. New market entrants without\nprior supply and sales network may find it difficult to build a credible relationship with other stakeholders along the value chain,\nthus, a stable business relationship between stakeholders act as one of the major challenges that new market entrants may face in the\nPRC hair styling tool market.\n\n \n\n**Capital\nRequirements***.*Market participants are required to possess sufficient amount of capital and human resources to sustain\ntheir businesses, particularly product research and development (R&D) process, product pilot tests and daily operation costs. Existing\nmarket participants may have already built up a profound and reliable customer base and supply network, so as to ensure a stable and\nsmooth business operation and income flow as a comparative advantage over new market entrants. Therefore, new market entrants who would\nlike to enter the PRC hair styling tool market may have to overcome such high initial capital investment.\n\n \n\n**Factors\nof Competition**\n\n \n\n**Experience\nand Knowledge***.*On time deliveries and lead time, response to shifts in demand and strong customized production platform\nare highly valued by customers in hair styling tools OEM market. In addition, market participants who have in-depth understanding of\ncustomer’s requirements are more capable of developing and offering better solution to address customers’ needs and gain\na competitive advantage.\n\n \n\n**Technological\nCapabilities***.*Technological capabilities, including casting and molding, machining, joining, and shearing and forming,\nform key factors of competition in the hair styling tool OEM market. Market participants with strong technological capabilities are able\nto engage in whole lifecycle of hair styling tool, from product development and prototype production to production, which comes as the\nindistinguishable asset among the hair styling tool OEM services providers.\n\n \n\n**Track\nRecord and Project Experience***.*Market participants with proven track record and satisfactory project reference are usually\nmore preferred by customers, and thus receive higher recognition and earn reputation in the market. Such market participants are more\nlikely to be invited to tender and secure potential projects.\n\n \n\n**Research\nand Development**\n\n \n\nThe\nengineering and design department of the Group conducts in-house design and research for the purposes of developing new product lines\nfor the Group. From time to time, our engineering and design department develops innovative product designs and features around the core\nparameters of creativity, reliability, safety and commercial viability. Our research and development activities also include (i) development\nand standardization of production techniques and procedures; (ii) working with customers to resolve specific problems with customers’\ndesigns and requirements; and (iii) experiment on project bases for calibration and optimization of production processes in order to\nachieve a higher yield on production. We believe that successful research process improvement and refinement is critical to our ability\nto stay competitive in the industry in which we operate.\n\n \n\n41\n\n \n\n \n\n**Manufacturing**\n\n \n\nThe\nGroup’s production facilities (“SZ Factory”) are located in Bao’an District, Shenzhen City, Guangdong Province,\nthe PRC. The SZ Factory is comprised of one block of a four-story building consisting of approximately 11,000 sq. meters.\n\n \n\n**Raw\nmaterials***.*The principal raw materials sourced by the Group in its production, which constitute the basic core components\nof its products, include plastics, motors, power cords, switches, heating elements and thermostats.\n\n \n\nThe\nGroup sources plastics, motors, power cords, switches, heating elements and thermostats mainly from Hong Kong and the PRC. The Group\ndoes not have long term purchase contracts with its suppliers but only purchases via orders. Management negotiates purchase prices by\ntaking into account price trends of the particular commodity and volume discounts.\n\n \n\nDuring the years ended\nDecember 31, 2023, 2024 and 2025, certain major raw materials experienced a general upward price trend. The prices of raw materials\nwere, to a certain extent, volatile over the periods. Factors affecting the supply and prices of raw materials include fluctuations\nin the price of oil and in commodity prices (including metals and plastics) and the variation in the global economy as a whole. The\nCompany has had business relationships with its major suppliers for over 18 years. Some of them are public companies or subsidiaries\nof public companies listed on the Shanghai, Shenzhen or Hong Kong Stock Exchanges and the supplies and availabilities of our raw\nmaterials have not experienced significant disruptions. Also, all of our primary raw materials are general commercial commodities.\nManagement believes that the Group has maintained good business relationships with its suppliers and has a stable material supply\nchain. Other than the Group’s existing suppliers, there are alternative sources of supply available for the raw materials that\nthe Group requires. Therefore, even if our existing suppliers may be temporarily short in inventory, management believes that we\ncould purchase needed raw materials from other suppliers without material difficulty or price premiums.\n\n \n\nIn order to ensure a stable\nsupply of raw materials that can meet the ongoing requirements of sales and distribution, the quantity of each procurement order for\nraw materials is determined by the Group with reference to (i) the customers’ indicative orders prevailing from time to time; (ii)\nthe inventory levels prevailing from time to time; and (iii) the price trend and fluctuation of raw materials as predicted by the Group.\nThe Group also implements stock control procedures, including up-to-date recording of all incoming and outgoing items into and out of\nour warehouse and production lines. The Group has not recorded any material write-offs for inventory written off during the years ended\nDecember 31, 2023, 2024 or 2025.\n\n \n\n**Production\nFacility***.*Our manufacturing facility, which is operated by FPPF, is equipped with different types of machines and is able\nto produce about three million pieces of electrical hair styling products per annum.\n\n \n\nThe\nprincipal production components of the Group are injection molding machines, EDM machines, milling machines, grinding machines, lathe,\nspraying chambers and ovens, pad printing machines, hot stamping machines, production lines with ovens, heater winding machines, bristle\ninsertion machines, wire forming machines, wire stripping machines, lead cutting machines, spot welding machines, hot plate welding machines,\ncrimping machines and ultrasonic welding machines. The majority of the plant and machinery now situated in the SZ Factory are owned by\nthe Group. Safeguarding policies have been set up and maintained by the Group. There are security guards and gates at the entrance, a\n24-hour surveillance system, security scanners for entrance and exit, periodic count of assets, in and out register and insurance coverage.\n\n \n\n42\n\n \n\n \n\n**Production\nProcess**. The following flow chart illustrates our production process:\n\n \n\n \n\n**Marketing,\nPromotions and Advertising**\n\n \n\nThe\nGroup carries out its sales and distribution activities through its sales and marketing team. The Group’s sales and marketing strategy\nsecures its overseas orders by establishing confidence and reputation in the Group’s products, quality assurance, reasonable and\ncompetitive pricing and maintenance of long-term relationships with overseas customers. In addition, the Group has participated in various\nexhibitions in Hong Kong, the PRC and overseas to promote the Group’s products to overseas customers and has pursued potential\noverseas customers through business visits, new product presentations and briefing and video conferences.\n\n \n\nIn\norder to keep abreast of the market trends of electrical appliances in terms of styles, features, functionalities, colors, textures,\nmaterials and pricing, the Group’s sales and marketing department collects market data through participating in local and\noverseas trade exhibitions and fairs and market data and surveys provided and/or conducted by customers. In particular, Mr. Chiu Yat\nChung Gary, the Group’s marketing consultant who has vast experience in marketing, strives to maintain a stable business\nrelationship with the Group’s only customer, Spectrum Brands, a leading global branded consumer product company, for approximately 20 years.\n\n \n\n**Pricing**\n\n \n\nThe\nGroup negotiates with its customer to determine the price each year. The prices of the Group’s products are primarily determined\nwith reference to (i) a cost-plus basis approach; and (ii) the elasticity of the demand for a given product (which in turn is affected\nby (a) the product features and functionality, (b) the product life cycle, and (c) consumer preferences). Our sales and marketing department\nis responsible for providing the quotation after considering the requirements from our customer. The actual selling prices of our products\nare determined by our senior management by taking into account the estimated costs of each order. In arriving at the final price, the\nGroup also takes into account other ancillary factors such as the actual size and time frame of the order, the industry standing of the\ncustomer and the relationship with the customer. Our pricing policy is reviewed quarterly by our senior management.\n\n \n\n43\n\n \n\n \n\n**Seasonality**\n\n \n\nWith\nthe exception of lower sales in February of each calendar year, which correlates with the closure of factories in the PRC during the\nChinese New Year holidays, our Operating Subsidiaries’ sales are not subject to any material seasonal fluctuations and remain steady\nthroughout the year.\n\n \n\n**Customer**\n\n \n\nOur\nsole customer is Spectrum Brands Holdings, Inc. (“Spectrum Brands”) for whom we manufacture hair care electric appliance\nstyling products under the Remington brand, which is owned by Spectrum Brands. The Company has provided OEM services to Spectrum Brands\nsince 2006. It does not have a formal written contract with Spectrum Brands and relies on its long-term relationship to continue to provide\nsuch services in the future. For each individual transaction, the Group generally negotiates and confirms the terms of sale based on\nthe quantity and quality of the products being ordered and enters into a purchase order with the customer. Although the Group has not\nentered into any long-term sales contract with Spectrum Brands, our directors consider that the Group has maintained a good business\nrelationship with Spectrum Brands since 2006.\n\n \n\nWith\nrespect to products distributed to overseas customers, the Group exports its finished products on a Free Carrier (“FCA”)\nbasis, which means the Group is responsible for the delivery of products to a destination specified by the customer. The customer is\nresponsible for all costs after the goods are delivered to the container terminal warehouse designated by the customer. Management estimates\nthat the lead time from the placing of a purchase order by an overseas customer to the delivery of the first batch of finished product\nby the Group takes approximately 55 to 65 days (subject to the size and the type of the order, the location of the customer and the availability\nof raw materials).\n\n \n\nThe\nGroup generally allows a credit period of 120 days for the trade receivables with terms that are common within the industry. Credit terms\noffered to the customer by the Group vary depending on the Group’s assessment of the reputation of the customer, the length of\nbusiness relationship established with the customer and the actual size of the order placed by the customer.\n\n \n\n**Competition**\n\n \n\nThe hair styling tool OEM industry in the PRC is highly fragmented and competitive, comprising a large number of\nmarket participants. In this environment, competition extends beyond pricing to include a variety of critical factors. Many OEM service\nproviders specialize in specific product categories to develop deep expertise and establish a competitive advantage. The Group considers\nthat Zheijang Jindelie Electrical Appliance Co. Ltd. and Hang Shun Hing Co. Ltd. are two direct competitors to the Group.\n\n \n\n**Competitive\nStrengths**\n\n \n\n**Renowned\ncustomer base with stable relationship.**The Group has built up a solid and stable business relationship with Spectrum Brands\nsince 2006, as its OEM manufacturer for a variety of hair styling products under the popular worldwide personal care brand “Remington.”\nThe established customer relationship provides a concrete foundation for the Group to further expand its business and to achieve economies\nof scale.\n\n \n\n**Designs\nfor a diversified product range.**Endowed with over a decade of industry experience and market awareness, the engineering and\ndesign department of the Group has been keeping itself abreast of market changes and has a track record for designing, researching and\ndeveloping an innovative and trendy array of products on a proactive basis. The Group also offers a diversified range of products with\ndifferent value-added features or functionalities to meet the demands of customers of different demographical origins or consumer preferences.\n\n \n\n**Stringent\nquality control.**As a consumer product manufacturer, the Group has a strong commitment to quality control. From the very beginning\nof raw material procurement to the packaging of finished products, the Group imposes intensive quality checks and controls along the\nwhole production line of the Group’s manufacturing processes. The quality checks and controls include incoming checks, online checks,\nrandom checks and technical checks, which are strictly carried out by the operation department of the Group, as well as the representatives\nof the Group’s customers as the case may be. The Group considers that continual adherence to stringent quality control procedures\nis one of the most vital elements in maintaining long-term business relationships with its multinational customer.\n\n \n\n**Decade\nof operating history and established presence in the industry.**The Group has been engaged in the manufacture and sale of small\nelectrical appliances under the management of Mr. Li Kin Shing and Mr. Li Siu Lun, Allan and, since November 2024, under the management\nof Mr. Hongwu Huang and Ms Xuefei Wang. With over a decade of operating history and industry experience, the Group has established its\npresence in the market for providing quality electrical appliances to its customer.\n\n \n\nThe\nGroup also retained suitable talents with different specializations in its senior management team for the business development of the\nGroup. In particular, Mr. Gary Chiu, the Group’s marketing consultant, has been with the Group since 2005 and has vast experience\nin marketing matters. In particular, through Mr. Chiu’s continuous marketing efforts, the Group has enjoyed a stable business relationship\nwith its sole customer, Spectrum Brands, for more than 15 years.\n\n \n\n**Licenses,\nPermits and Approvals**\n\n \n\nOur\nOperating Subsidiaries are required to obtain and maintain certain licenses and permits for their business operations.\n\n \n\nThe\nfollowing table sets forth the licenses and/or approvals our Operating Subsidiaries obtained in respect of their operations in the PRC\nas of the date of this Annual Report.\n\n \n\n44\n\n \n\n \n\n**Group\nmember**\n \n**Licenses/records**\n \n**Expiry\ndate**\n\nFenbo\nPlastic Products Factory (Shenzhen) Ltd.,\n \nBusiness\nLicense\n \nOctober\n26, 2060\n\n \n \n \n \n \n\nFenbo\nPlastic Products Factory (Shenzhen) Ltd.,\n \nSewage\nDischarge Permission\n \nJune\n9, 2028\n\n \n\nAs of the date of this Annual Report, our Operating Subsidiaries have obtained and renewed\nall substantial and necessary licenses and approvals that are material for their business operations in the PRC from the relevant\nauthorities of the PRC governments.\n\n \n\nSome\nof our Operating Subsidiaries’ licenses and permits are subject to renewal. Our Operating Subsidiaries intend to renew all existing\nlicenses and permits before their respective expiry dates or to obtain any additional licenses and permits if necessary. Our Operating\nSubsidiaries have not experienced any refusal to renew the licenses and permits necessary for their operation during the fiscal years\nended December 31, 2025, 2024 and 2023.\n\n \n\n**Insurance**\n\n \n\nManagement\nexercises prudent risk management control through the maintenance of various insurance plans for the purpose of covering against different\naspects of risks, including:\n\n \n\n1.\nProduct liability insurance - product liability insurance for most of the Company’s products against possible claims relating to\npersonal injury or damage to property arising from the product manufactured by it.\n\n \n\n2.\nProperty all risk insurance - covers the Company’s assets, such as plant and machinery, raw materials and finished goods, against\naccidental, physical loss, destruction or damage of property.\n\n \n\n3.\nPublic liability insurance - third party insurance against possible third-party personal injury and property damage claims relating to\nthe Company’s factory premises and offices located in the PRC and Hong Kong.\n\n \n\n**Our\nOperating Subsidiaries and Services**\n\n** **\n\nAs\nan OEM electrical hair styling product manufacturer for a renowned multinational client, the Group has been focusing on the high-end professional electrical hair styling\nproducts which were once more commonly used in salons for the mass household markets (particularly in Europe and the United States).\n\n \n\nThe Group offers a wide array of fashionable electrical hair styling products\nwith different styles, features, functionalities, colors, textures, and materials. It is the Group’s emphasis on the innovation\nof the design and styling of electrical hair styling products that appeals to the demands of different customers.\n\n \n\nThe\nbasic components of hair styling products are casings, motors, heating elements, thermostats, power cords, and switches.\n\n \n\nSince\n2006, the Company has served as an OEM for Spectrum Brands, a global home essentials company and the Company’s sole customer, producing\nelectrical hair styling products under the “Remington” brand, which Spectrum Brands has the right to use, and which are currently\nsold mainly in Europe, and Latin America.\n\n \n\n**Products\n- Personal Care Beauty Appliances / Hair Styling Tools**\n\n** **\n\nThe\nGroup’s electrical hair styling products can be divided into five sub-categories, namely,\n\n \n\n(i)\nCurling Wands and Irons;\n\n \n\n(ii)\nFlat Irons and Hair Straighteners;\n\n \n\n(iii)\nHair irons, which are tools used to alter the structure of hair of which there are three types: (a) crimpers, which are used to create\nlittle crimps in the hair; (b) straighteners, also known as flat irons, which are used to straighten the hair; and (c) curling tongs,\nwhich are used to make the hair curly;\n\n \n\n(iv)\nHair dryers, which are hand-held electric blowers that can blow cool or warm air onto wet or damp hair in order to accelerate and control\nthe evaporation of water particles and thereby to dry and style the hair; and\n\n \n\n(v)\nothers, which includes trimmers, and other small personal care items.\n\n \n\nTypically,\nthe irons embedded in the hair iron devices are made of heat-conductive metal with ceramic layers protecting the ironing surfaces. The\nhandle is made of thermal-resistant plastic. Advanced hair irons consist of components such as a timer, a temperature control system,\nand an automatic shutdown system in order to prevent fire damage.\n\n \n\n45\n\n \n\n \n\n \n \n**Product\ntype:**\n \n**Example\nfeatures:**\n\n \n\n \nCurling\nIrons\n \n\n-\n120 to 240V worldwide voltage\n\n-\n150°C to 230°C variable heat\n\n-\nreaching 100°C in 30 seconds\n\n-\nceramic coated on barrel and clip for a smooth surface for hair to glide on\n\n \n \n \n \n \n\n \n\n \nCurling\nWands\n \n\n-\n120 to 240V worldwide voltage\n\n-\n150°C to 230°C variable heat\n\n-\nreaching 100°C in 30 seconds\n\n-\nceramic coated on barrel and clip for a smooth surface for hair to glide on\n\n \n\n-\nLCD display\n\n \n\n \n \n \n \n \n\n \n\n \nHair\nStraighteners\n \n\n-\n120 to 240V worldwide voltage\n\n-\n150°C to 230°C variable heat\n\n-\nreaching 100°C in 30 seconds\n\n-\nceramic coated on heating plates for a smooth surface for hair to glide on\n\n \n\n-\nLCD display\n\n \n \n \n \n \n\n \nTrimmer\n \n\n-\n17mm and 5mm blade\n\n \n\n-\noperate with AAA battery\n\n \n\n46\n\n \n\n \n\n**Manufacturers**\n\n \n\nThe\ntwo typical categories of beauty appliance manufacturers are:\n\n \n\nOriginal\nequipment manufacturer (“OEM”) refers to a manufacturer that undertakes the manufacture and assembly of hair styling tools\nbased on designs and specifications provided by brand owners. OEMs typically provide two types of offerings: (i) finished end products\nlabelled with the brand name of the brand owner that are ready-to-sell to end customers; and (ii) semi-finished subassemblies that require\nfurther assembly by the brand owner before being sold under the brand name of the brand owner.\n\n \n\nOriginal\ndesign manufacturers (“ODM”) are manufacturers that provide both product design and development and manufacturing services\nfor brand owners. Circumstances in which the manufacturer and brand owner collaborate to jointly develop, design and manufacture a new\nproduct are referred as joint development (“JD”). The business model, i.e., OEM, ODM and JD, utilized by a particular product\nmanufacturer may vary across its product lines.\n\n** **\n\n**Health,\nWork Safety, Social and Environmental Matters**\n\n \n\nDue\nto the nature of our Operating Subsidiaries’ business, our Operating Subsidiaries’ operational activities are subject to\nenvironmental obligations, and they did not directly incur any cost of compliance with applicable environmental protection rules and\nregulations during the fiscal years ended December 31, 2025, 2024 and 2023. Our directors expect that our Operating Subsidiaries will\nnot directly incur significant costs for compliance with applicable environmental protection rules and regulations in the future. As\nof the date of this Annual Report, our Operating Subsidiaries were not in any material non-compliance issues in respect of any applicable\nlaws and regulations on environmental protection, health, and work safety.\n\n \n\nHuman\ncapital is one of the key elements of our Operating Subsidiaries’ success. Our Operating Subsidiaries have taken out\nemployees’ compensation insurance for their staff’s safety. Our Operating Subsidiaries also have adopted a safety and\nhealth policy for its employees to follow and provide safety education and trainings to raise employees’ awareness of safety\nissues. During the fiscal years ended December 31, 2025, 2024 and 2023, our Operating Subsidiaries did not experience any\nsignificant incidents or accidents in relation to employees’ safety or any non-compliance with the applicable laws and\nregulations relevant to the health and work safety issues.\n\n  \n\n**Employees**\n\n \n\nThe\nfollowing table sets forth a breakdown of our employees by functions and geographical locations as of December 31, 2025:\n\n \n\nFunction \nHong Kong  \nChina  \nTotal \n\n  \nAIL  \nFIL  \nFPPF  \n  \n\nManagement \n -  \n 2  \n 7  \n 9 \n\nSales and Marketing \n 1  \n 1  \n 5  \n 7 \n\nOperation \n -  \n 2  \n 240  \n 242 \n\nWarehouse \n -  \n -  \n 12  \n 12 \n\nAccounting and Administration \n -  \n 2  \n 8  \n 10 \n\n  \n    \n    \n    \n   \n\nTotal \n 1  \n 7  \n 272  \n 280 \n\n \n\n**Recruitment\nand remuneration**\n\n \n\nOur\nOperating Subsidiaries’ success is highly dependent on their employees. Our Operating Subsidiaries recruit employees taking into\naccount their industry experience and interpersonal skills. Our Operating Subsidiaries hire employees through internal recruitment, from\nthe open market through online advertisements or by referrals. Our Operating Subsidiaries endeavor to offer competitive wages and benefits.\nOur Operating Subsidiaries conduct annual review of the performance of their employees for determining the level of bonus, salary adjustment\nand promotion of employees.\n\n \n\n47\n\n \n\n \n\n**Training**\n\n \n\nOur\nOperating Subsidiaries offer their employees training both internally and externally to enhance their skills and knowledge in the personal\ncare electric appliance industry. The regular training for our factory employees includes (i) new employee orientation; (ii) post-promotion\ntraining; and (iii) general annual training. We believe training will help our employees improve their work performance, which will eventually\nincrease their loyalty to the Company. Therefore, the Company has developed a series of training programs targeting the needs and requirements\nof the work and tailored in line with their roles and responsibilities. Most training is undertaken by our internal staff, but if necessary\nfor the effectiveness of the training, outside professionals are also hired to conduct trainings as well.\n\n \n\n**Labor\nunions, labor, and safety incidents**\n\n \n\nOur\nOperating Subsidiaries have not set up a labor union for employees in Hong Kong or in the PRC. Our Operating Subsidiaries strive to maintain\ngood relationships with their employees and provide them with a safe working environment. During the six months ended June 30, 2025 and\n2024 and the fiscal years ended December 31, 2024, 2023 and 2022, and through the date of this prospectus, our Operating Subsidiaries\ndid not experience any form of industrial action of their employees or any work safety related incidents that led to the material disruption\nof operations or to claims against our Operating Subsidiaries.\n\n \n\n**Welfare\nor mandatory contribution**\n\n \n\nIn\nHong Kong, our Operating Subsidiaries operate a defined contribution mandatory provident fund retirement benefits scheme under the Mandatory\nProvident Fund Schemes Ordinance (Chapter 485 of the Laws of Hong Kong) for all of their employees in Hong Kong who are eligible to participate\nin the scheme. Under the relevant PRC laws and regulations, our Operating Subsidiaries are required to participate in social welfare\nschemes, which provide pension insurance, medical insurance, work injury insurance, maternity insurance, and unemployment insurance as\nwell as the coverage of housing provident funds for our Operating Subsidiaries’ employees in the PRC.\n\n \n\n**Intellectual\nProperty**\n\n \n\nOur\nOperating Subsidiaries regard their trademarks, trade secrets, domain names, copyrights, know-how, proprietary technologies, and similar\nintellectual property as critical to their business. As of the date of this prospectus, we have 1 trademark, the Company’s logo,\nas registered with the Trade Marks Registry Intellectual Property Department of Hong Kong, and one domain name.\n\n \n\n**Our\nProperties**\n\n \n\nWe\ndo not own any real property. All of our operations are conducted in leased facilities. We believe that our existing leased premises\nare well-maintained, in good operating condition, and are adequate to meet our current operational needs.\n\n \n\nThe\nfollowing table summarizes our material leased properties as of the date of this prospectus:\n\n \n\n**Lessee**\n \n**Lessor**\n \n**Lease\nAddress**\n \n**Lease\nTerm**\n \n**Monthly\nRent/Fees**\n\n**FIL**\n \nMr. Li Kin Shing\n \nUnit J, 19/F, World Tech Centre, 95 How Ming Street,\nKwun Tong, Kowloon, Hong Kong\n \nInitial Term: 2 years (Jan 1, 2023 - Dec 31, 2024)\nRenewal Term: 2 years (Jan 1, 2025 - Dec 31, 2026)\n \nMonthly Rent: HK$50,000\n\n**FIL**\n \nMr. Li Kin Shing\n \nFlat D, 51st Floor, Tower 1, Sorrento, 1\nAustin Road, West, Kowloon, Hong Kong\n \n24 months from May 1, 2025 to April 30, 2027\n \nMonthly Rent: HK$50,000\n\n**FPPF**\n \nMr. Huang Erchun\n \nPengzhou Industrial Park in Shenzhen\n \n3 years (July 16, 2024 - July 15, 2027)\n \n\nFrom\nJul 16, 2024 to Jul 15, 2026): monthly rent RMB 510,600\n\nFrom\nJul 16, 2026 to Jul 15, 2027): monthly rent RMB 546,342 (7% increase)\n\n \n\n**Legal\nProceedings**\n\n \n\nAs\nof the date of this prospectus, neither we nor our Operating Subsidiaries are party to, nor are we or our Operating Subsidiaries aware\nof any threat of, any legal proceeding that, in the opinion of management, is likely to have a material adverse effect on our business,\nfinancial condition or operations.\n\n \n\nFrom\ntime to time, our Operating Subsidiaries may become involved in legal proceedings arising in the ordinary course of business. Neither\nwe nor our Operating Subsidiaries are involved in any litigation, arbitration or claim of material importance, nor any material impact\nnon-compliance incidents or systemic non-compliance incidents in respect of applicable laws and regulations.\n\n \n\nOn\nAugust 26, 2025, a Writ of Summons was issued in the Court of First Instance of the High Court of the Hong Kong Special Administrative\nRegion by Asia Television Holdings Limited (“ATV”) against several defendants, including Xuefei Wang, our Executive Director,\nTreasury and Secretary. The writ sought, among other things, declaration order against all the defendants, including Ms. Wang that certain\nshare placement of ATV are null and void or have been rescinded and be set aside because of alleged misrepresentation of independence\nin such transaction. Ms. Wang has informed the Company that this litigation arose from an internal dispute between former board members\nand shareholders of ATV. On March 21, 2026, the board of directors of ATV passed a written resolution and approved the discontinuance\nof the proceeding against Ms. Wang and other defendants. The litigation had not been formally dismissed by the High Court of Hong Kong\nas of the date of this Annual Report.\n\n \n\n**Impact\nin the U.S. of the Uyghur Forced Labor Prevention Act (the “UFLPA”) and the War in Ukraine on our Operating Subsidiaries’\nbusiness and operations.**\n\n \n\nThe\nUFLPA prohibits on the importation of goods into the United States manufactured wholly or in part with forced labor in the PRC, especially\nfrom the Xinjiang Uyghur Autonomous Region (“Xinjiang”). It establishes a rebuttable presumption that the importation of\nany goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part in Xinjiang are not entitled to entry\nto the U.S. and requires the importer of record to comply with specified conditions and, by clear and convincing evidence, that the goods,\nwares, articles, or merchandise were not produced using forced labor.\n\n \n\n48\n\n \n\n \n\nWhile\nour manufacturing facilities are located in the PRC, they are not located in Xinjiang and are staffed by our own employees with no raw\nmaterials being sourced from Xinjiang. We believe that our supply chain management system is designed to address the requirements of the UFLPA, and we do\nnot expect the UFLPA to have a material adverse effect on our business operations, financial position, or results of operations.\n\n \n\nThe\nrecent outbreak of war in Ukraine has already affected global economic markets, including a dramatic increase in the price of oil and\ngas, and the uncertain resolution of this conflict could result in protracted and/or severe damage to the global economy. Russia’s\nrecent military interventions in Ukraine have led to, and may lead to, additional sanctions being levied by the United States, European\nUnion, and other countries against Russia and countries supporting Russia. Russia’s military incursion and the resulting sanctions\ncould adversely affect global energy and financial markets and thus could affect our businesses and the businesses of our customer, even\nthough we do not have any direct exposure to Russia or the adjoining geographic regions. The extent and duration of the military action,\nsanctions and resulting market disruptions are impossible to predict, but could be substantial. Any such disruptions caused by Russian\nmilitary action or resulting sanctions may magnify the impact of other risks described herein. We cannot predict the progress or outcome\nof the situation in Ukraine, as the conflict and governmental reactions are rapidly developing and beyond their control. Prolonged unrest\nintensified military activities or more extensive sanctions impacting the region could have a material adverse effect on the global economy.\nHowever, we do not anticipate that such activities will have a disproportionate material adverse effect on our operations, results of\noperations, financial condition, liquidity, and business outlook since:\n\n \n\n●\nwe\nhave multiple sources for raw materials and parts and are able to stockpile inventories in the event that we anticipate shortages\n\n \n \n\n●\nwe\ndo not anticipate challenges sourcing raw materials as none are sourced from Russia, Belarus, Ukraine or Western China\n\n \n \n\n●\nwe\nhave adequate sources of labor and do not anticipate labor shortages\n\n \n \n\n●\nwe\nare able to adjust our production capacity to meet surges or declines in consumer demand\n\n \n\n**Regulatory\nEnvironments**\n\n \n\n**PRC\nLaws and Regulations**\n\n \n\nA\nsummary of the laws and regulations which are material to our Operating Subsidiaries’ operations in the personal care electric\nappliance industry in the PRC are as follows: Laws and Regulations Relating to Foreign Investment The establishment, operation, and management\nof corporate entities in the PRC are governed by the Company Law of the PRC (the “PRC Company Law”). The PRC Company Law\ngenerally governs two types of companies: limited liability companies and joint stock limited companies. Both types of companies have\nthe status of legal persons, and the liability of shareholders of a limited liability company and a joint stock limited company is limited\nto the amount of registered capital they have contributed. The PRC Company Law shall also apply to foreign-invested companies. Where\nlaws on foreign investment have other stipulations, such stipulations shall apply.\n\n \n\n**Laws\nand Regulations Relating to Foreign Investment**\n\n \n\nThe\nestablishment procedures, approval procedures, registered capital requirements, foreign exchange matters, accounting practices,\ntaxation, and labor matters of FPPF are regulated by the Foreign Investment Law of the PRC and the Implementation Regulations for\nForeign Investment Law of the PRC. Investment in the PRC conducted by foreign investors and foreign-owned enterprises shall\ncomply with the Special Administrative Measures (Negative List) for Foreign Investment Access (the “Negative List”).\nThe Negative List contains specific provisions guiding market access of foreign capital, stipulating in detail the areas of entry\npertaining to the categories of restricted foreign-invested industries, restricted foreign-invested industries and prohibited\nforeign investment. Any industry not listed in the Negative List is a permitted industry.\n\n \n\n49\n\n \n\n \n\n**Laws\nand Regulations Relating to Labor**\n\n** **\n\n**Protection\nLabor Contract.**Pursuant to the Labor Law of the PRC, employers should enter into labor contracts with their employees. Wages\nare to be paid according to the level of performance, and the policy of equal pay for equal work. Lowest wage protection and special\nlabor protection for female workers and juvenile workers shall be implemented. Employers are also required to pay for their employees’\nsocial insurance premiums and housing provident funds. These payments are made to local administrative authorities, and an employer who\nfails to contribute may be fined and be ordered to make up for the outstanding contributions.\n\n \n\nThe\nLabor Contract Law of the PRC and the Implementation Rule of the Labor Contract Law of the PRC set out specific provisions in relation\nto the execution, terms and the termination of an employment contract and the rights and obligations of the employees and employers.\nAt the time of hiring, an employer shall truthfully inform the employee as to the scope of work, working conditions, working place, occupational\nhazards, work safety, salary, and other matters about which the employee requests to be informed about.\n\n \n\n**Social\nInsurance**\n\n \n\nEmployers\nin the PRC are required to contribute, on behalf of their employees, to a number of social insurance funds, including funds for basic\npension insurance, for unemployment insurance, basic medical insurance, work-related injury insurance and maternity insurance. If an\nemployer does not pay the full amount of social insurance premiums as scheduled, the social insurance premium collection institution\nshall order it to make the payment or make up the difference within the stipulated time period and impose a daily fine equivalent to\n0.05% of the overdue payment from the date on which the payment is overdue. If the payment is not made within the stipulated period,\nthe relevant administration department shall impose a fine ranging from one to three times of the overdue payment.\n\n \n\nThe\nvarious laws and regulations that govern employers’ obligation to contribute to the social security funds include the Social Insurance\nLaws of the PRC, the Interim Regulation on the Collection and Payment of Social Insurance Premiums, the Decision of the State Council\non Establishing a Unified System of the Basic Pension Insurance for Enterprise Employees, the Circular on Relevant Issues concerning\nthe Improvement of the Basic Pension Insurance Policy for Urban Employees, the Regulation on Work-Related Injury Insurance, the Regulation\non Unemployment Insurance, the Decision of the State Council on Establishing the Basic Medical Insurance System for Urban Employees,\nthe Circular on the Issuance of Provisions on the Administration of Basic Medical Insurance for Urban Employees, and the Trial Measures\non Maternity Insurance for Enterprise Employees.\n\n \n\n**Laws\nand Regulations Relating to Intellectual Property Rights**\n\n \n\nPursuant\nto the Trademark Law of the PRC (the “Trademark Law”), the right to exclusive use of a registered trademark shall be limited\nto trademarks which have been registered and to goods for which the use of trademark has been permitted. The period of validity of a\nregistered trademark shall be ten years, counted from the day the registration is made. According to the Trademark Law, (i) using a trademark\nthat is identical to a registered trademark on the same goods without the authorization of the owner of the registered trademark; (ii)\nusing a trademark that is similar to a registered trademark on the same goods or (iii) using a trademark that is identical with or similar\nto a registered trademark on similar goods without the authorization of the owner of the registered trademark, which is likely to cause\nconfusion, shall be deemed to constitute an infringement of the exclusive right to use a registered trademark. The infringer shall, in\naccordance with the regulations, undertake to cease the infringement, take remedial action, and pay damages.\n\n \n\n**Laws\nand Regulations Relating to Foreign Exchange**\n\n \n\n**Foreign\nCurrency Exchange***.*The principal regulation governing foreign currency exchange in the PRC is the Regulation of the PRC\nfor the Control of Foreign Exchange (the “Foreign Exchange Regulation”). Under the regulation, RMB are freely convertible\nfor payments of current account items, such as trade and service-related foreign exchange transactions and dividend payments, but are\nnot freely convertible for capital expenditure, such as direct investment, loans, or investments in securities, outside the PRC unless\nthe approval of the State Administration of Foreign Exchange (the “SAFE”) or its local counterpart is obtained in advance.\n\n \n\nAccording to the Notice of the State Administration of Foreign Exchange on Further Simplifying and Improving the\nForeign Exchange Management Policies for Direct Investment ( the “SAFE Circular 13”), and the Notice of the State Administration\nof Foreign Exchange on Matters Concerning the Deepening of Reform in the Administration of Foreign Exchange for Cross-border Investment\nand Financing, in relation to direct\nforeign investments in the PRC, foreign investors are no longer required to obtain approval from the SAFE to re-invest in the PRC by\nusing income legally generated from the PRC. No approval from the SAFE is required for opening the foreign exchange accounts, payment\ninto certain accounts, settlement of the foreign exchange and for the purchase and external payment of foreign exchange. Also, the transfer\nof foreign exchange in the PRC under a direct investment account is no longer subject to approval by the SAFE. In addition, the foreign-invested\nenterprises are permitted to remit funds to their offshore parent companies.\n\n \n\n50\n\n \n\n \n\nAccording to the SAFE Circular 13, verification, and approval of foreign exchange registration under domestic direct investment is\nabolished. The banks shall, in accordance with relevant guidance, directly examine and handle foreign exchange registration under\ndomestic direct investment. Relevant entities may, at their discretion, choose the banks in their respective places of registration\nto go through foreign exchange registration of direct investment, and may handle subsequent formalities for opening relevant\naccounts, fund exchange and other services (including the outflow or inflow of profits and dividends) under direct investment only\nafter foreign exchange registration of direct investment is completed.\n\n \n\n**Dividend\nDistribution**\n\n \n\nThe\nprincipal laws and regulations governing dividend distribution of foreign holding companies include the PRC Company Law, the FIL Law\nand their implementation rules. Under these laws and regulations, foreign-invested enterprises in the PRC may pay dividends only out\nof their after-tax profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, wholly foreign-owned\nenterprises in the PRC must allocate at least 10% of their accumulated profits after tax each year, if any, to fund certain reserve funds\nunless these accumulated reserves have reached 50% of their registered capital. These reserves are not distributable as cash dividends.\n\n \n\n**Laws\nand Regulations Relating to Taxation in the PRC**\n\n \n\n**Enterprise\nIncome Tax***.*Pursuant to the Enterprise Income Tax Law of the PRC (the “EIT Law”), the income tax rate for\nboth resident enterprises and foreign-invested enterprises is 25% commencing from January 1, 2008 (with certain exceptions for qualified\nforeign-invested enterprises). In order to clarify certain provisions in the EIT Law, the State Council promulgated the Implementation\nRules of the Enterprise Income Tax Law of the PRC (the “EIT Implementation Rules”). Pursuant to the EIT Law and the EIT Implementation\nRules, non-resident enterprises which have not established agencies or offices in the PRC, or which have established agencies or offices\nin the PRC but whose income has no association with such agencies or offices, shall pay enterprise income tax on their income earned\nfrom inside the PRC, and such income of nonresident enterprises for which the payer thereof shall be the withholding agent, shall be\ntaxed at the reduced rate of 10% and shall be withheld at the source.\n\n \n\n**Withholding\nincome tax and international tax treaties.**Pursuant to the EIT Law and the EIT Law Implementation Rules, dividends generated\nafter January 1, 2008, and payable by a foreign-invested enterprise in PRC to its foreign investors are subject to a 10% withholding\ntax, unless any such foreign investor’s jurisdiction of registration and incorporation has entered into a tax agreement with PRC\nwhich provides a different withholding tax arrangement.\n\n \n\nPursuant\nto the Arrangement between Mainland China and the Hong Kong Special Administrative Region for Avoidance of Double Taxation and Prevention\nof Fiscal Evasion with Respect to Taxes on Income, the applicable withholding income tax rate for any dividends declared by a Chinese\ncompany is 5% for a shareholder being a Hong Kong resident holding at least 25% interest in its registered capital, or 10% for a shareholder\nbeing a Hong Kong resident holding less than 25% interest in its registered capital.\n\n \n\nAccording\nto the Announcement of State Taxation Administration on Promulgation of the Administrative Measures on Non-resident Taxpayers Enjoying\nTreaty Benefits, any non-resident taxpayer meeting conditions for enjoying the convention treatment may be entitled to the convention\ntreatment when filing a tax return or making a withholding declaration through a withholding agent, subject to the subsequent administration\nby the tax authorities. The term “non-resident taxpayers” refers to the taxpayers other than the PRC tax residents under\nthe Provisions of domestic tax laws or conventions on the avoidance of double taxation signed by the government of the People’s\nRepublic of China with foreign countries (including the tax arrangements signed with the Hong Kong Special Administrative Region and\nthe Macau Special Administrative Region (hereinafter collectively referred to as the “Tax Conventions”) (including non-resident\nenterprises and non-resident individuals). The convention treatment means the deduction of or exemption from the enterprise income tax\nor individual income tax obligations required by the provisions of PRC tax laws, under the tax conventions or tax clauses of conventions\non aviation, sea transportation, and automobile transportation, as well as the agreements or exchanges of letters on the mutual-exemption\nfrom tax on income from international transportation, signed by the People’s Republic of China with foreign countries, including\nthe Arrangement between Mainland China and the Hong Kong Special Administrative Region for Avoidance of Double Taxation and Prevention\nof Tax Evasion.\n\n \n\n51\n\n \n\n \n\nAccording\nto the Notice of the State Administration of Taxation on Issues Relating to the Implementation of Dividend Clauses in Tax Treaties, if\nthe relevant PRC tax authorities determine, in their discretion, that a company benefits from such reduced income tax rate due to a structure\nor arrangement that is primarily tax-driven, such PRC tax authorities may adjust the preferential tax treatment. Pursuant to the Announcement\nof the State Administration of Taxation on Issues Relating to Withholding at Source of Income Tax of Non-resident Enterprises, when the\nwithholding agent enters into a business contract with a non-resident enterprise in relation to income derived from or accruing in the\nPRC, where the non-resident enterprise has no office or premises established in the PRC or the income derived or accrued has no de facto\nrelationship with the office or premises established, if the contract stipulates that the withholding agent shall bear the tax payable\namount, the tax-exclusive income amount derived by the non-resident enterprise shall be converted to a tax-inclusive income amount and\nthe tax withheld shall be turned over. Where the income subject to withholding at source derived by a non-resident enterprise is equity\ninvestment income such as dividends and bonuses, the date of occurrence of withholding obligation for the relevant tax payable amount\nshall be the date of actual payment of equity investment income such as dividends and bonuses.\n\n \n\n**Hong\nKong Laws and Regulations**\n\n \n\n**Hong\nKong Regulations Related to Business Registration**\n\n \n\n**Business\nregistration requirement.**The Business Registration Ordinance (Chapter 310 of the Laws of Hong Kong) requires every person carrying\non any business to make an application to the Commissioner of Inland Revenue in the prescribed manner for the registration of that business.\nThe Commissioner of Inland Revenue must register each business for which a business registration application is made and as soon as practicable\nafter the prescribed business registration fee and levy are paid and issue a business registration certificate or branch registration\ncertificate for the relevant business or the relevant branch, as the case may be.\n\n \n\nAs\nof the date of this Annual Report, AIL and FIL hold valid business registration certificates.\n\n \n\n**Regulations\nrelated to employment and labor protection**\n\n \n\n**Employment\nOrdinance (Chapter 57 of the Laws of Hong Kong).**The Employment Ordinance (Chapter 57 of the Laws of Hong Kong), or the EO, is\nan ordinance enacted for, amongst other things, the protection of the wages of employees and the regulation of the general conditions\nof employment and employment agencies. Under the EO, an employee is generally entitled to, amongst other things, notice of termination\nof his or her employment contract; payment in lieu of notice; maternity protection in the case of a pregnant employee; not less than\none rest day in every period of seven days; severance payments or long service payments; sickness allowance; statutory holidays or alternative\nholidays; and paid annual leave of up to 14 days depending on the period of employment.\n\n \n\nAs\nof the date of this Annual Report, AIL and FIL have complied with the provisions under the EO.\n\n \n\n**Employees’\nCompensation Ordinance (Chapter 282 of the Laws of Hong Kong).**The Employees’ Compensation Ordinance (Chapter 282 of the\nLaws of Hong Kong), or the ECO, is an ordinance enacted for the purpose of providing for the payment of compensation to employees injured\nin the course of employment. As stipulated by the ECO, no employer shall employ any employee in any employment unless there is in force\nin relation to such employee a policy of insurance issued by an insurer for an amount not less than the applicable amount specified in\nthe Fourth Schedule of the ECO in respect of the liability of the employer. According to the Fourth Schedule of the ECO, the insured\namount shall be not less than HKD100,000,000 per event if a company has no more than 200 employees. Any employer who contravenes this\nrequirement commits a criminal offence and is liable on conviction to a fine and imprisonment. An employer who has taken out an insurance\npolicy under the ECO is required to display a prescribed notice of insurance in a conspicuous place on each of its premises where any\nemployee is employed.\n\n \n\nAs\nof the date of this Annual Report, employee compensation insurance has been obtained for all employees of AIL and FIL.\n\n \n\n52\n\n \n\n \n\n**Mandatory\nProvident Fund Schemes Ordinance (Chapter 485 of the Laws of Hong Kong).**The Mandatory Provident Fund Schemes Ordinance (Chapter\n485 of the Laws of Hong Kong), or the MPFSO, is an ordinance enacted for the purposes of providing for the establishment of non-governmental\nmandatory provident fund schemes, or the MPF Schemes. The MPFSO requires every employer of an employee of 18 years of age or above but\nunder 65 years of age to take all practical steps to ensure the employee becomes a member of a registered MPF Scheme. Subject to the\nminimum and maximum relevant income levels, it is mandatory for both employers and their employees to contribute 5% of the employee’s\nrelevant income to the MPF Scheme. Any employer who contravenes this requirement commits a criminal offence and is liable on conviction\nto a fine and imprisonment.\n\n \n\nAs\nof the date of this Annual Report, the Company believes it has made all contributions required under the MPFSO.\n\n \n\n**Regulations\nrelated to Personal Data**\n\n \n\n**Personal\nData (Privacy) Ordinance (Chapter 486 of the Laws of Hong Kong).**The Personal Data (Privacy) Ordinance (Chapter 486 of the Laws\nof Hong Kong), or the PDPO, imposes a statutory duty on data users to comply with the requirements of the six data protection principles\n(the “Data Protection Principles”) contained in Schedule 1 to the PDPO. The PDPO provides that a data user shall not do an\nact, or engage in a practice, that contravenes a Data Protection Principle unless the act or practice, as the case may be, is required\nor permitted under the PDPO. The six Data Protection Principles are:\n\n \n\n●\nPrinciple\n1 - purpose and manner of collection of personal data;\n\n \n \n\n●\nPrinciple\n2 - accuracy and duration of retention of personal data;\n\n \n \n\n●\nPrinciple\n3 - use of personal data;\n\n \n \n\n●\nPrinciple\n4 - security of personal data;\n\n \n \n\n●\nPrinciple\n5 - information to be generally available; and\n\n \n \n\n●\nPrinciple\n6 - access to personal data.\n\n \n\nNon-compliance\nwith a Data Protection Principle may lead to a complaint to the Privacy Commissioner for Personal Data (the “Privacy Commissioner”).\nThe Privacy Commissioner may serve an enforcement notice to direct the data user to remedy the contravention and/or instigate prosecution\nactions. A data user who contravenes an enforcement notice commits an offense which may lead to a fine and imprisonment.\n\n \n\nThe\nPDPO also gives data subjects certain rights, inter alia:\n\n \n\n●\nthe\nright to be informed by a data user whether the data user holds personal data of which the individual is the data subject;\n\n \n \n\n●\nif\nthe data user holds such data, to be supplied with a copy of such data; and\n\n \n \n\n●\nthe\nright to request correction of any data they consider to be inaccurate.\n\n \n\nThe\nPDPO criminalizes, including but not limited to, the misuse or inappropriate use of personal data in direct marketing activities, non-compliance\nwith a data access request and the unauthorized disclosure of personal data obtained without the relevant data user’s consent.\nAn individual who suffers damage, including injured feelings, by reason of a contravention of the PDPO in relation to his or her personal\ndata may seek compensation from the data user concerned.\n\n \n\nAs\nof the date of this Annual Report, AIL and FIL are in compliance with the provisions of the PDPO."}