Company: ILAG
Filing Date: 2025-04-28
Form Type: 20-F
Source: 0001641172-25-006445
Chunk: 18

Company: Intelligent Living Application Group Inc.
Filing Date: 2025-04-28
Form: 20-F
Item: Item 3
Chunk 18
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may be more expensive to lease than our current facilities. Also, the lease may be terminated early due to unexpected change of land usage
by the local government.

Moreover, the lessor of Xingfa has not provided us
with a real estate ownership certificate for the manufacturing facility. Under the relevant PRC laws and regulations, if the lessor is
unable to obtain certificate of title, such lease contract may be recognized as void and as a result, Xingfa may be required to vacate
the relevant properties. Although the lessor agreed to compensate Xingfa’s loss or provide Xingfa with other properties for its
current business operation, we might not be able to recover all the losses and our business might be negatively impacted.

Competition for employees is intense, and we
may not be able to attract and retain the qualified and skilled employees needed to support our business.

We believe our success depends on the efforts and
talent of our employees, including engineering, risk management, information technology, financial and marketing personnel. Our future
success depends on our continued ability to attract, develop, motivate and retain qualified and skilled employees. Competition for highly
skilled marketing, engineering, information technology, risk management and financial personnel is extremely intense. We may not be able
to hire and retain these personnel at compensation levels consistent with our existing compensation and salary structure. Some of the
companies with which we compete for experienced employees have greater resources than we have and may be able to offer more attractive
terms of employment.

In addition, we invest significant time and expenses
in training our employees, which increases their value to competitors who may seek to recruit them. If we fail to retain our employees,
we could incur significant expenses in hiring and training their replacements, and the quality of our products could diminish, resulting
in a material adverse effect to our business.

Increases in labor costs in the PRC may adversely
affect our business and results of operations.

The economy in China has experienced increases in
inflation and labor costs in recent years. As a result, average wages in the PRC are expected to continue to increase. In addition, Xingfa
is required by PRC laws and regulations to pay various statutory employee benefits, including pension, housing fund, medical insurance,
work-related injury insurance, unemployment insurance and maternity insurance to designated government agencies for the benefit of our
employees. The relevant government agencies may examine whether an employer has made adequate payments to the statutory employee benefits,
and those employers who fail to make adequate