Company: ILAG
Filing Date: 2025-04-28
Form Type: 20-F
Source: 0001641172-25-006445
Chunk: 19

Company: Intelligent Living Application Group Inc.
Filing Date: 2025-04-28
Form: 20-F
Item: Item 3
Chunk 19
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 payments may be subject to late payment fees, fines and/or other penalties. We expect that
our labor costs, including wages and employee benefits, will continue to increase. Unless we are able to control our labor costs or pass
on these increased labor costs to our customers or end users by increasing the prices of our products, our financial condition and results
of operations may be adversely affected.

If we cannot maintain our corporate culture
as we grow, we could lose the innovation, collaboration and focus that contribute to our business.

We believe that a critical component of our success
is our corporate culture, which we believe fosters innovation, encourages teamwork and cultivates creativity. As we develop the infrastructure
of a public company and continue to grow, we may find it difficult to maintain these valuable aspects of our corporate culture. Any failure
to preserve our culture could negatively impact our future success, including our ability to attract and retain employees, encourage innovation
and teamwork and effectively focus on and pursue our corporate objectives.

  16  

Environmental regulations impose substantial
costs and limitations on our operations and violation of environmental regulations might subject us to fines, penalties or suspension
of production which could have material negative impact on our financial results.

Xingfa uses a variety of chemicals and produce significant
emissions and powder dust in our lockset manufacturing operations. The stamping and casting machines in the manufacturing facility create
high decibel noise. As such, Xingfa is subject to various national and local environmental laws, occupational safety and health (“ OSH”)
laws and regulations in China concerning issues such as air emissions, wastewater discharge, and solid waste management and disposal.
These laws and regulations can restrict or limit our operations and expose us to liability and penalties for non-compliance. For example,
in April 2018, Xingfa was ordered by Dongguan Environmental Protection Bureau to pay a fine of RMB100,000 (approximately $14,000) for
failure to meet the air emission requirement, which Xingfa has paid and corrected the non-compliance emission. While we believe that Xingfa’s
facilities are in material compliance with all applicable environmental and OSH laws and regulations, the risks of substantial unanticipated
costs and liabilities related to compliance with these laws and regulations are an inherent part of our business. It is possible that
future conditions may develop, arise or be discovered that create new environmental compliance or remediation liabilities and costs. While
we believe that we can comply with existing environmental legislation and regulatory requirements