Company: ILAG
Filing Date: 2025-04-28
Form Type: 20-F
Source: 0001641172-25-006445
Chunk: 199

Company: Intelligent Living Application Group Inc.
Filing Date: 2025-04-28
Form: 20-F
Item: Item 5
Chunk 199
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 units of spare parts) for 2023.
Cost of Goods Sold
 
Cost of goods sold was $5,831,949 for 2024 compared to $5,464,591 for 2023. Cost of goods sold was 77.5% and 84.8% of revenues for the years ended December 31, 2024 and 2023, respectively. The decrease in cost of goods sold as a percentage of revenue mainly caused by (i) improved procurement procedures to reduce the costs for raw materials by using new materials, and (ii) the calibration of production line along with revamping production procedures.
 
Cost of goods sold includes 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 lack the ability to hedge our raw materials costs and we monitor raw material price trends to manage our production needs.
 

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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 $362,894 and $345,424 for the years ended December 31, 2024 and 2023, respectively.
 
Gross Profit
 
Gross profit was $1,311,708 for 2024, an increase of $678,366, or 107.1% from $633,342 for 2023. Profit margin was 17.5% for 2024, increase from 9.8% for 2023 as a result of measures taken by the Company to lower the cost of goods sold during the current period.
 
We believe we can enhance our profit margin as we (i) negotiate for volume rebates that would reduce our cost of raw materials, and (ii) optimize our product mix to focus our marketing efforts on our higher margin products.
 
Selling and marketing expenses
 
Major components of selling and marketing expenses are research expenses, transportation, custom declarations, sales commissions. Selling and marketing expenses increased by $1,042,937, or 1,742.8% to $1,102,778 for 2024 from $59,841 for 2024. The increase was mainly to (i)