Company: ILAG
Filing Date: 2025-04-28
Form Type: 20-F
Source: 0001641172-25-006445
Chunk: 9

Company: Intelligent Living Application Group Inc.
Filing Date: 2025-04-28
Form: 20-F
Item: Item 3
Chunk 9
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. The inability to offset price
increases of raw materials by sufficient product price increases could have a material adverse effect on our consolidated financial condition,
results of operations and cash flows.

We do not engage in hedging transactions to protect
against raw material fluctuations but attempt to mitigate the short-term risks of price swings by purchasing raw materials in advance
based on production needs or reaching agreements with some of our suppliers to keep the cost of raw materials stable. We also attempt
to lower consumption of raw materials by lowing waste rate and recycled materials without compromising product quality.

  10  

Xingfa may experience material disruptions to
its manufacturing operations in China that could result in material delays, quality control issues, increased costs and loss of business
opportunities, which may negatively impact our sales and financial results.

We rely primarily upon our manufacturing facilities
of Xingfa, which is located in Shatian Town, Dongguan City, Guangdong Province, China, to produce our products. While we seek to operate
our facilities in compliance with applicable rules and regulations and take measures to minimize the risks of disruption at our facilities,
a material disruption at our manufacturing facilities could prevent us from meeting customer demand, reduce our sales and negatively impact
our financial results. Our manufacturing facilities, or any of our machines, could cease operations unexpectedly due to a number of events,
including: prolonged power failures; equipment failures; disruptions in the transportation infrastructure including roads, bridges, railroad
tracks; fires, floods, earthquakes, health epidemics, acts of war, or other catastrophes, which could also pose a risk to injury or damage
to personnel, the property of others, which in turn could lead to considerable financial costs and may also have negative legal consequences.
Our future growth strategy may include an expansion of our manufacturing capacity to meet increasing demand for our existing products.
Any projects undertaken by us to increase such capacity may not be constructed on the anticipated timetable or within budget. We may also
experience quality control issues as we implement these manufacturing upgrades and ramp up production. Any such material disruption may
prevent us from shipping our products on a timely basis, reduce our sales and market share and negatively impact our financial results.

We face risks associated with managing operations
in China, any of which could decrease our sales or earnings and could significantly limit or completely hinder our ability to offer our
ordinary shares to investors and cause the value of such securities to significantly decline or be worthless.

All of our manufacturing operations currently are
conducted in China. There are