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

Company: Intelligent Living Application Group Inc.
Filing Date: 2025-04-28
Form: 20-F
Item: Item 3
Chunk 25
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 and Circular 36 on June 1, 2015. Circular 19 allows foreign-invested enterprises to make equity investments
by using RMB funds converted from foreign exchange capital. However, Circular 19 continues to prohibit foreign-invested enterprises from,
among other things, using RMB fund converted from its foreign exchange capitals for expenditure beyond its business scope, providing entrusted
loans or repaying loans between non-financial enterprises. In addition, SAFE strengthened its oversight of the flow and use of the RMB
capital converted from foreign currency registered capital of a foreign-invested company. The use of such RMB capital may not be altered
without SAFE’s approval, and such RMB capital may not in any case be used to repay RMB loans if the proceeds of such loans have
not been used. Violations of these Circulars could result in severe monetary or other penalties. These circulars may significantly limit
our ability to use RMB converted from the net proceeds of any offering to fund the establishment of new entities in China by our PRC subsidiary,
to invest in or acquire any other PRC companies through our PRC subsidiary, or to establish variable interest entities in the PRC.

According
to current laws and regulations, the capital subscribed by all shareholders shall be fully paid within five years from the date of establishment
of the company in accordance with the provisions of the company’s articles of association. For companies registered and established before
June 30, 2024, if the remaining subscribed capital period of a limited liability company exceeds 5 years from July 1, 2027, the remaining
subscribed capital period shall be adjusted to within 5 years before June 31, 2027. If we are unable to complete the capital payment
within the prescribed time, we may face penalties from administrative authorities, including fines and revocation of business licenses.

In light of the various requirements imposed by PRC
regulations on loans to and direct investment in PRC entities by offshore holding companies, we cannot assure you that we will be able
to complete the necessary government registrations or obtain the necessary government approvals on a timely basis, if at all, with respect
to future loans to our PRC subsidiary or future capital contributions by us to our PRC subsidiary. If we fail to complete such registrations
or obtain such approvals, our ability to use the proceeds we expect to receive from any offering to capitalize or otherwise fund our PRC
operations may be negatively affected, which could materially and adversely affect