Company: ILAG
Filing Date: 2025-04-28
Form Type: 20-F
Source: 0001641172-25-006445
Chunk: 201

Company: Intelligent Living Application Group Inc.
Filing Date: 2025-04-28
Form: 20-F
Item: Item 5
Chunk 201
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443,357 from $12,158,102 for 2022. The decrease was mainly due to decrease in units sold in 2023. Our total number of products sold was approximately 1.3 million units (including approximately 0.1 million units of spare parts) for 2023 comparing to 2.4 million units (including approximately 0.2 million units of spare parts) for 2022.
Cost of Goods Sold
 
Cost of goods sold was $5,464,591 for 2023 compared to $9,961,988 for 2022. Cost of goods sold was 84.8% and 81.9% of revenues for the years ended December 31, 2023 and 2022, respectively. The increase in cost of goods sold as a percentage of revenue was mainly caused by the addition of new machinery along with revamped production procedures, increase of labor and decrease of sales due to weak demand in our major market.
 
Cost of goods sold includes the cost of raw materials (mainly copper, stainless steel, iron and zinc alloy), direct labor (including wages and social security contributions), manufacturing overhead (such as packing materials, direct rental expense and utilities) and taxes. As a small business with limited resources, we currently lack the ability to hedge our raw materials position and we monitor raw material price trends closely to manage our production needs.
 
Cost of goods sold – idle capacity
 
Idle capacity consists of direct production costs in excess of charges allocated to the Company’s finished goods in production. Such costs relate primarily to depreciation expense related to the Company’s electroplating equipment that cannot be directly attributable to the production process. Idle capacity expenses were $345,424 and nil for 2023 and 2022, respectively.
 
Gross Profit
 
Gross profit was $633,342 for 2023, a decrease of $1,562,772, or 71.2% from $2,196,114 for 2022. Profit margin was 9.8% for 2023, decrease from 18.1% for 2022 as a result of depreciation expense of new machinery, increase in direct labor cost and weak demand of our major market in the US, during 2023.

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We believe that we can enhance our gross margin as we are researching new processing procedures to use durable but lower cost materials.
 
Selling and marketing expenses
 
Major components of selling and marketing expenses are transportation, custom declarations, sales