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

Company: Intelligent Living Application Group Inc.
Filing Date: 2025-04-28
Form: 20-F
Item: Item 3
Chunk 20
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 and that the costs of compliance have
been included within budgeted cost estimates, compliance may prove to be more limiting and costly than anticipated. If Xingfa fails to
comply with the environmental regulations, it could face fines, penalties and our production facility-y(-ies) operations might be suspended
until we comply, which could have material negative impact on our operation and financial results.

In addition to our core production facility, we acquire
an electroplating production line. It is a result of polluted water drainage requirements are more stringent. This pushes cost of electroplating
increase. As a result, we acquired a licensed production line. However, we may expose to sudden change in environmental regulations to
require additional remediation costs for the electroplating production line, which would have material negative impact to our operation
and financial results.

We are obligated to develop and maintain proper
and effective internal control over financial reporting. We may not complete our analysis of our internal control over financial reporting
in a timely manner, or these internal controls may not be determined to be effective, which may adversely affect investor confidence in
our company and, as a result, the value of our Ordinary Shares.

We are required, pursuant to Section 404 of the
Sarbanes-Oxley Act, to furnish a report by management on, among other things, the effectiveness of our internal control over
financial reporting (“ ICFR”) for the year ending December 31, 2023, the first year beginning after our IPO. This assessment needs to include disclosure of any material weaknesses identified by our management in our ICFR and, after we cease to be an “emerging growth company,” a statement that our
independent registered public accounting firm has issued an opinion on our ICFR.

We are in the early stages of the costly and challenging
process of compiling the system and processing documentation necessary to perform the evaluation needed to comply with Section 404. We
may not be able to complete our evaluation, testing and any required remediation in a timely fashion. During the evaluation and testing
process, if we identify one or more material weaknesses in our ICFR, we will be unable to assert
that our internal controls are effective.

If we are unable to assert that our ICFR is effective, or if, when required, our independent registered public accounting firm is unable to express an
opinion on the effectiveness of our internal controls, we could lose investor confidence in the accuracy and completeness of our financial
reports,