# EDGAR Filing Document

**Accession Number:** 0001825349
**File Stem:** 0001213900-23-021470
**Filing Date:** 2023-3
**Character Count:** 1424128
**Document Hash:** 01aab63fdcba396b11784cd9215a89eb
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001213900-23-021470.hdr.sgml**: 20230320

**ACCESSION NUMBER**: 0001213900-23-021470

**CONFORMED SUBMISSION TYPE**: F-1/A

**PUBLIC DOCUMENT COUNT**: 43

**FILED AS OF DATE**: 20230320

**DATE AS OF CHANGE**: 20230320

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Chanson International Holding
- **CENTRAL INDEX KEY:** 0001825349
- **STANDARD INDUSTRIAL CLASSIFICATION:** FOOD & KINDRED PRODUCTS [2000]
- **IRS NUMBER:** 000000000
- **STATE OF INCORPORATION:** E9
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** F-1/A
- **SEC ACT:** 1933 Act
- **SEC FILE NUMBER:** 333-254909
- **FILM NUMBER:** 23747156

**BUSINESS ADDRESS:**
- **STREET 1:** NO. 26 CULTURE ROAD, TIANSHAN DISTRICT
- **CITY:** URUMQI
- **STATE:** F4
- **ZIP:** 830000
- **BUSINESS PHONE:** 86-0991-2302709

**MAIL ADDRESS:**
- **STREET 1:** NO. 26 CULTURE ROAD, TIANSHAN DISTRICT
- **CITY:** URUMQI
- **STATE:** F4
- **ZIP:** 830000

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** RON Holding Ltd
- **DATE OF NAME CHANGE:** 20200918

**As filed with the U.S. Securities and Exchange Commission on March 20, 2023.**

 **Registration No. 333-254909**

**UNITED STATES<br> SECURITIES AND EXCHANGE COMMISSION<br> Washington, D.C. 20549**

 **AMENDMENT NO. 9**

**TO**

**FORM** **F-1<br> REGISTRATION STATEMENT<br> UNDER<br> THE SECURITIES ACT OF 1933**

**Chanson International Holding**

(Exact name of registrant as specified in its charter)

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| | | |
|:---|:---|:---|
| **Cayman Islands** | **2000** | **Not Applicable** |
| (State or other jurisdiction of<br> incorporation or organization) | (Primary Standard Industrial<br> Classification Code Number) | (I.R.S. Employer<br> Identification Number) |

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No. 26 Culture Road, Tianshan District

Urumqi, Xinjiang, China

+86-0991-2302709

(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)

George Chanson (NY) Corp.

41 Madison Avenue

New York, NY 10010

917-545-1575

(Name, address, including zip code, and telephone number, including area code, of agent for service)

***With a Copy to:***

---

| | |
|:---|:---|
| **Ying Li, Esq.** <br> **Guillaume de Sampigny, Esq.** <br> **Hunter Taubman Fischer & Li LLC<br> 950 Third Avenue, 19th Floor<br> New York, NY 10022<br> 212-530-2206**  | **Mengyi "Jason" Ye, Esq.** <br> **Ortoli Rosenstadt LLP** <br> **366 Madison Avenue, 3rd Floor** <br> **New York, NY 10017** <br> **212-588-0022**  |

---

**Approximate date of commencement of proposed sale to the public:** Promptly after the effective date of this registration statement.

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| | |
|:---|:---|
| If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. | ☒ |
| If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. | ☐ |
| If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. | ☐ |
| If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. | ☐ |
| Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933. |  |
| Emerging growth company | ☒ |
| If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. | ☒ |

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**The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to such Section 8(a), may determine.**

The information in this prospectus is not complete and may be changed. We may not sell the securities until the registration statement filed with the U.S. Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting any offer to buy these securities in any jurisdiction where such offer or sale is not permitted. <br>

**SUBJECT TO COMPLETION**

 **PRELIMINARY PROSPECTUS DATED March 20, 2023**

 ***3,750,000 Class A Ordinary Shares***

![](image_001.jpg)

**Chanson International Holding**

This is an initial public offering of our Class A ordinary shares, par value $0.001 per share ("Class A Ordinary Shares"). The offering of our Class A Ordinary Shares is being conducted on a firm commitment basis by EF Hutton, division of Benchmark Investments, LLC (the "Underwriter"). See "Underwriting." Prior to this offering, there has been no public market for our Class A Ordinary Shares or Class B ordinary shares, par value $0.001 per share ("Class B Ordinary Shares"). We currently expect that the initial public offering price for our Class A Ordinary Shares will be in the range of $4.00 to $6.00 per share.

Our authorized share capital is $50,000 divided into 44,000,000 Class A Ordinary Shares and 6,000,000 Class B Ordinary Shares, and we have 3,060,000 Class A Ordinary Shares and 5,940,000 Class B Ordinary Shares issued and outstanding, respectively. Holders of Class A Ordinary Shares and Class B Ordinary Shares have the same rights except for voting and conversion rights. In respect of matters requiring a vote of all shareholders, each holder of Class A Ordinary Shares will be entitled to one vote per one Class A Ordinary Share and each holder of Class B Ordinary Shares will be entitled to 10 votes per one Class B Ordinary Share. The Class A Ordinary Shares are not convertible into shares of any other class. The Class B Ordinary Shares are convertible into Class A Ordinary Shares at any time after issuance at the option of the holder on a one-to-one basis.

Unless otherwise stated, as used in this prospectus, the terms "Chanson International," "we," "us," "our Company," and the "Company" refer to Chanson International Holding, an exempted company with limited liability incorporated under the laws of Cayman Islands; the terms "Xinjiang United Family" or "our PRC subsidiary" refer to Xinjiang United Family Trading Co., Ltd., a limited liability company organized under the laws of the PRC and our indirect wholly owned subsidiary; the terms the "VIEs," the "United Family Group," or "UFG" refer to 29 individually-owned businesses organized under the laws of the PRC, 28 of which are owned independently by our chairman of the board of directors ("Chairman"), Mr. Gang Li, and one of which is owned independently by Ms. Hui Wang, the Marketing Director of Xinjiang United Family; "Chanson 23rd Street" refers to Chanson 23rd Street LLC, a New York limited liability company and our indirect wholly owned subsidiary; "Chanson Greenwich" refers to Chanson 355 Greenwich LLC, a New York limited liability company and our indirect wholly owned subsidiary; and "the operating entities" refer to Xinjiang United Family and its branch offices, the VIEs, Chanson 23rd Street, and Chanson Greenwich.

We have reserved the symbol "CHSN" for purposes of listing our Class A Ordinary Shares on the Nasdaq Capital Market and have applied to list our Class A Ordinary Shares on the Nasdaq Capital Market. At this time, Nasdaq has not yet approved our application to list our Class A Ordinary Shares. The closing of this offering is conditioned upon Nasdaq's final approval of our listing application, and there is no guarantee or assurance that our Class A Ordinary Shares will be approved for listing on Nasdaq.

**Investing in our Class A Ordinary Shares involves a high degree of risk, including the risk of losing your entire investment. See "Risk Factors" beginning on page 23 to read about factors you should consider before buying our Class A Ordinary Shares.**

We are a holding company incorporated in the Cayman Islands and not a Chinese operating company. As a holding company with no material operations of our own, we conduct our operations through our subsidiaries in China and the U.S. and the VIEs in China. For accounting purposes, we control and receive the economic benefits of the VIEs through certain contractual arrangements (the "VIE Agreements"), which enable us to consolidate the financial results of the VIEs in our consolidated financial statements under generally accepted accounting principles in the U.S. ("U.S. GAAP"), and the structure involves unique risks to investors. Our Class A Ordinary Shares offered in this offering are shares of Chanson International, the offshore holding company in the Cayman Islands, instead of shares of our subsidiary or the VIEs in China. The VIE structure provides contractual exposure to foreign investment in China-based companies. Chinese law, however, does not prohibit direct foreign investment in the VIEs. For a description of the VIE Agreements, see "Corporate History and Structure—The United Family Group." As a result of our use of the VIE structure, you may never directly hold equity interests in the VIEs.

Because we do not directly hold equity interests in the VIEs, we are subject to risks and uncertainties of the interpretations and applications of PRC laws and regulations, including but not limited to, regulatory review of overseas listing of PRC companies through special purpose vehicles and the validity and enforcement of the VIE Agreements. We are also subject to the risks and uncertainties about any future actions of the PRC government in this regard that could disallow the VIE structure, which would likely result in a material change in our operations, and the value of our Class A Ordinary Shares may depreciate significantly or become worthless. The VIE Agreements have not been tested in a court of law in China as of the date of this prospectus. See "Risk Factors—Risks Relating to Our Corporate Structure," "Risk Factors—Risks Relating to Doing Business in the PRC," and "Risk Factors—Risks Relating to this Offering and the Trading Market."

We are subject to certain legal and operational risks associated with having the majority of our operations in China, which could cause the value of our securities to significantly decline or become worthless. PRC laws and regulations governing our current business operations are sometimes vague and uncertain, and as a result these risks may result in material changes in the operations of the VIEs, significant depreciation or a complete loss of the value of our Class A Ordinary Shares, or a complete hindrance of our ability to offer, or continue to offer, our securities to investors. Recently, the PRC government adopted a series of regulatory actions and issued statements to regulate business operations in China with little advance notice, including cracking down on illegal activities in the securities market, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. As of the date of this prospectus, we, our PRC subsidiary, and the VIEs have not been involved in any investigations on cybersecurity review initiated by any PRC regulatory authority, nor has any of them received any inquiry, notice, or sanction. As confirmed by our PRC counsel, Dentons Law Offices, LLP (Guangzhou) ("Dentons"), we are not subject to cybersecurity review with the Cyberspace Administration of China, or the "CAC," under the Cybersecurity Review Measures that became effective on February 15, 2022, since we currently do not have over one million users' personal information and do not anticipate that we will be collecting over one million users' personal information in the foreseeable future, which we understand might otherwise subject us to the Cybersecurity Review Measures; we are also not subject to network data security review by the CAC if the Draft Regulations on the Network Data Security Administration (Draft for Comments) (the "Security Administration Draft") are enacted as proposed, since we currently do not have over one million users' personal information and do not collect data that affects or may affect national security and we do not anticipate that we will be collecting over one million users' personal information or data that affects or may affect national security in the foreseeable future, which we understand might otherwise subject us to the Security Administration Draft. See "Risk Factors—Risks Relating to Doing Business in the PRC—Recent greater oversight by the CAC over data security, particularly for companies seeking to list on a foreign exchange, could adversely impact our business and our offering."

On February 17, 2023, the China Securities Regulatory Commission (the "CSRC") promulgated the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, or the "Trial Measures," and five supporting guidelines, which will come into effect on March 31, 2023. If our registration statement on Form F-1 cannot be declared effective on or before March 31, 2023, or if our registration statement on Form F-1 is declared effective on or before March 31, 2023 but we fail to complete this offering and listing on or before September 30, 2023, we will be required to complete necessary filing procedures pursuant to the Trial Measures. See "Risk Factors—Risks Relating to Doing Business in the PRC—The Opinions, the Trial Measures, and the revised Provisions recently issued by PRC authorities may subject us to additional compliance requirements in the future." Notwithstanding the foregoing, as of the date of this prospectus, according to Dentons, no relevant PRC laws or regulations in effect require that we obtain permission from any PRC authorities to issue securities to foreign investors, and we have not received any inquiry, notice, warning, sanction, or any regulatory objection to this offering from the CSRC, the CAC, or any other PRC authorities that have jurisdiction over our operations. Since these statements and regulatory actions are newly published, however, official guidance and related implementation rules have not been issued. It is highly uncertain what the potential impact such modified or new laws and regulations will have on the daily business operations of our subsidiaries and the VIEs, our ability to accept foreign investments, and our listing on a U.S. exchange. The Standing Committee of the National People's Congress (the "SCNPC") or PRC regulatory authorities may in the future promulgate additional laws, regulations, or implementing rules that require us, our subsidiaries, or the VIEs to obtain regulatory approval from Chinese authorities before listing in the U.S. If we do not receive or maintain such approval, or inadvertently conclude that such approval is not required, or applicable laws, regulations, or interpretations change such that we are required to obtain approval in the future, we may be subject to an investigation by competent regulators, fines or penalties, or an order prohibiting us from conducting an offering, and these risks could result in a material adverse change in our operations and the value of our Class A Ordinary Shares, significantly limit or completely hinder our ability to offer or continue to offer securities to investors, or cause such securities to significantly decline in value or become worthless.

In addition, our Class A Ordinary Shares may be prohibited from trading on a national exchange or over-the-counter under the Holding Foreign Companies Accountable Act (the "HFCA Act") if the Public Company Accounting Oversight Board (United States) (the "PCAOB") is unable to inspect our auditors for three consecutive years beginning in 2021. Our auditor prior to September 29, 2022, Friedman LLP ("Friedman"), had been inspected by the PCAOB on a regular basis in the audit period, and our new auditor, Marcum Asia CPAs LLP ("Marcum Asia"), has been inspected by the PCAOB on a regular basis, with the last inspection in 2020. Neither Friedman nor Marcum Asia is subject to the determinations announced by the PCAOB on December 16, 2021. If trading in our Class A Ordinary Shares is prohibited under the HFCA Act in the future because the PCAOB determines that it cannot inspect or fully investigate our auditor at such future time, Nasdaq may determine to delist our Class A Ordinary Shares and trading in our Class A Ordinary Shares could be prohibited. On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, and on December 29, 2022, legislation entitled "Consolidated Appropriations Act, 2023" (the "Consolidated Appropriations Act") was signed into law by President Biden, which contained, among other things, an identical provision to the Accelerating Holding Foreign Companies Accountable Act and amended the HFCA Act by requiring the SEC to prohibit an issuer's securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three, thus reducing the time period for triggering the prohibition on trading. On August 26, 2022, the CSRC, the Ministry of Finance of the PRC (the "MOF"), and the PCAOB signed a Statement of Protocol (the "Protocol"), governing inspections and investigations of audit firms based in mainland China and Hong Kong, taking the first step toward opening access for the PCAOB to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong. Pursuant to the fact sheet with respect to the Protocol disclosed by the U.S. Securities and Exchange Commission (the "SEC"), the PCAOB shall have independent discretion to select any issuer audits for inspection or investigation and has the unfettered ability to transfer information to the SEC. On December 15, 2022, the PCAOB Board determined that the PCAOB was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and voted to vacate its previous determinations to the contrary. However, should PRC authorities obstruct or otherwise fail to facilitate the PCAOB's access in the future, the PCAOB Board will consider the need to issue a new determination. See "Risk Factors—Risks Relating to Doing Business in the PRC—Recent joint statement by the SEC and the PCAOB, rule changes by Nasdaq, and the HFCA Act all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties to our offering."

As of the date of this prospectus, our Company, our subsidiaries, and the VIEs have not distributed any earnings or settled any amounts owed under the VIE Agreements. Our Company, our subsidiaries, and the VIEs do not have any plan to distribute earnings or settle amounts owed under the VIE Agreements in the foreseeable future. As of the date of this prospectus, none of our subsidiaries or VIEs have made any dividends or distributions to our Company and our Company has not made any dividends or distributions to our shareholders. We intend to keep any future earnings to finance the expansion of our business, and we do not anticipate that any cash dividends will be paid in the foreseeable future. If we determine to pay dividends on any of our Class A Ordinary Shares or Class B Ordinary Shares in the future, as a holding company, we will depend on receipt of funds from our PRC subsidiary and from the VIEs to our PRC subsidiary in accordance with the VIE Agreements. See "Prospectus Summary—Dividends or Distributions Made to our Company and U.S. Investors and Tax Consequences."

The cash transfers and transfers of other assets that occurred among our Company, our subsidiaries, and the VIEs included the following intercompany borrowings, raw material transfers, and product transfers: (i) during the six months ended June 30, 2022, Xinjiang United Family received from the VIEs cash and raw materials to the approximate value of $1,046,747 and transferred to the VIEs raw materials and products to the approximate value of $2,448,096; (ii) during the fiscal year ended December 31, 2021, Xinjiang United Family received from the VIEs cash and raw materials to the approximate value of $159,715 and transferred to the VIEs raw materials and products to the approximate value of $1,953,748; and (iii) during the fiscal year ended December 31, 2020, Xinjiang United Family received from the VIEs cash and raw materials to the approximate value of $1,794,434 and transferred to the VIEs raw materials and products to the approximate value of $2,968,083. For more detailed discussion of how cash and other assets are transferred among our Company, our subsidiaries, and the VIEs, see "Prospectus Summary—Asset Transfers Between Our Company, Our Subsidiaries, and the VIEs," "Prospectus Summary—Selected Condensed Consolidating Financial Schedule of Chanson International and Its Subsidiaries and the VIEs," and our unaudited condensed consolidated financial statements for the six months ended June 30, 2022 and audited consolidated financial statements for the fiscal years ended December 31, 2021 and 2020. To the extent cash in the business is in the PRC, the funds may not be available to fund operations or for other use outside of the PRC due to interventions in or the imposition of restrictions and limitations on the ability of our Company, our subsidiaries, or the VIEs by the PRC government to transfer cash. See "Risk Factors—Risks Relating to Doing Business in the PRC—To the extent cash in the business is in the PRC or a PRC entity, the funds may not be available to fund operations or for other use outside of the PRC due to interventions in or the imposition of restrictions and limitations on the ability of our Company, our subsidiaries, or the VIEs by the PRC government to transfer cash." Our management is directly supervising cash management. Our finance department is responsible for establishing the cash management policies and procedures among our departments and the operating entities. Each department or operating entity initiates a cash request by putting forward a cash demand plan, which explains the specific amount and timing of cash requested, and submitting it to designated management members of our Company, based on the amount and the use of cash requested. The designated management member examines and approves the allocation of cash based on the sources of cash and the priorities of the needs, and submit it to the cashier specialists of our finance department for a second review. Other than the above, we currently do not have other cash management policies or procedures that dictate how funds are transferred nor a written policy that addresses how we will handle any limitations on cash transfers due to PRC law.

We are an "emerging growth company" as defined under the federal securities laws and will be subject to reduced public company reporting requirements. Please read the disclosures beginning on page 16 of this prospectus for more information.

Following the completion of this offering, our largest shareholder will beneficially own approximately 89.7% of the aggregate voting power of our issued and outstanding Class A Ordinary Shares and Class B Ordinary Shares as a group assuming no exercise of the over-allotment option, or approximately 89.0% assuming full exercise of the over-allotment option. As such, we will be deemed a "controlled company" under Nasdaq Marketplace Rules 5615(c). However, even if we are deemed as a "controlled company," we do not intend to avail ourselves of the corporate governance exemptions afforded to a "controlled company" under the Nasdaq Marketplace Rules. See "Risk Factors" and "Management—Controlled Company."

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| | | | |
|:---|:---|:---|:---|
|  | **Per Share** | **Total Without Over-Allotment Option** | **Total With Over-Allotment Option** |
| **Initial public offering price** | $| $| $|
| **Underwriter's discounts<sup>(1)</sup>** | $| $| $|
| **Proceeds to our company before expenses<sup>(2)</sup>** | $| $| $|

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(1) See "Underwriting"
 for more information regarding our compensation arrangements with the Underwriter.

(2) The total estimated
 expenses related to this offering are set forth in "Underwriting—Discounts and Expenses."

We have granted the Underwriter an option for a period of 45 days after the closing of this offering to purchase up to 15% of the total number of Class A Ordinary Shares to be offered by us pursuant to this offering (excluding Class A Ordinary Shares subject to this option), solely for the purpose of covering over-allotments, at the public offering price less the underwriting discounts.

We have agreed to issue to the Underwriter warrants, exercisable for a period of four and a half years commencing six months from the date of commencement of sales of the offering, to purchase Class A Ordinary Shares equal to 2% of the total number of Class A Ordinary Shares sold in this offering (including any Class A Ordinary Shares sold as a result of the exercise of the Underwriter's over-allotment option) at a per share price equal to 100% of the public offering price (the "Underwriter Warrants"). The registration statement of which this prospectus is a part also covers the Underwriter Warrants and the Class A Ordinary Shares issuable upon the exercise thereof.

The Underwriter expects to deliver the Class A Ordinary Shares against payment as set forth under "Underwriting" on page 173.

**Neither the U.S. Securities and Exchange Commission nor any state securities commission nor any other regulatory body has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.**

 **EF HUTTON**

division of Benchmark Investments, LLC

Prospectus dated [●]

**TABLE OF CONTENTS**

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| | |
|:---|:---|
|  | **Page** |
| [**PROSPECTUS SUMMARY**](#a_001) | 1 |
| [**RISK FACTORS**](#a_003) | 23 |
| [**DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS**](#a_004) | 59 |
| [**ENFORCEABILITY OF CIVIL LIABILITIES**](#a_005) | 60 |
| [**USE OF PROCEEDS**](#a_006) | 61 |
| | |
| [**DIVIDEND POLICY**](#a_007) | 62 |
| [**CAPITALIZATION**](#a_008) | 63 |
| [**DILUTION**](#a_009) | 64 |
| [**CORPORATE HISTORY AND STRUCTURE**](#a_010) | 66 |
| [**MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**](#a_011) | 72 |
| [**INDUSTRY**](#a_012) | 100 |
| [**BUSINESS**](#a_013) | 108 |
| [**REGULATIONS**](#a_014) | 126 |
| [**MANAGEMENT**](#a_015) | 139 |
| [**PRINCIPAL SHAREHOLDERS**](#a_016) | 144 |
| [**RELATED-PARTY TRANSACTIONS**](#a_017) | 146 |
| [**DESCRIPTION OF SHARE CAPITAL**](#a_018) | 147 |
| [**SHARES ELIGIBLE FOR FUTURE SALE**](#a_019) | 163 |
| [**MATERIAL INCOME TAX CONSIDERATION**](#a_020) | 165 |
| [**UNDERWRITING**](#a_021) | 173 |
| [**EXPENSES RELATING TO THIS OFFERING**](#a_022) | 180 |
| [**LEGAL MATTERS**](#a_023) | 181 |
| [**EXPERTS**](#a_024) | 181 |
| **[CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT](#a_024a)** | 181 |
| [**WHERE YOU CAN FIND MORE INFORMATION**](#a_025) | 181 |
| [**INDEX TO FINANCIAL STATEMENTS**](#a_026) | F-1 |

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i

**About this Prospectus**

We and the Underwriter have not authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectuses prepared by us or on our behalf or to which we have referred you. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the Class A Ordinary Shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. We are not making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted or where the person making the offer or sale is not qualified to do so or to any person to whom it is not permitted to make such offer or sale. For the avoidance of doubt, no offer or invitation to subscribe for Class A Ordinary Shares is made to the public in the Cayman Islands. The information contained in this prospectus is current only as of the date on the front cover of the prospectus. Our business, financial condition, results of operations, and prospects may have changed since that date.

**Conventions that Apply to this Prospectus**

Unless otherwise indicated or the context requires otherwise, references in this prospectus to:

● "Chanson 3rd Ave" are to Chanson 1293 3rd Ave LLC, a New York limited liability company, which is wholly owned by Chanson NY (as defined below);

● "Chanson 23rd Street" are to Chanson 23rd Street LLC, a New York limited liability company, which is wholly owned by Chanson NY;

● "Chanson Broadway" are to Chanson 2040 Broadway LLC, a New York limited liability company, which is wholly owned by Chanson NY;

● "Chanson Greenwich" are to Chanson 355 Greenwich LLC, a New York limited liability company, which is wholly owned by Chanson NY;

● "Chanson International," "we," "us," "our Company," or the "Company" are to Chanson International Holding, an exempted company with limited liability incorporated under the laws of Cayman Islands and formerly known as RON Holding Limited;

● "Chanson NY" are to George Chanson (NY) Corp., a New York corporation, which is wholly owned by Xinjiang United Family;

● "China" or the "PRC" are to the People's Republic of China;

● "Class A Ordinary Shares" are to Class A ordinary shares of Chanson International, par value $0.001 per share;

● "Class B Ordinary Shares" are to Class B ordinary shares of Chanson International, par value $0.001 per share;

● "Deen Global" are to our wholly owned subsidiary, Deen Global Limited, a British Virgin Islands company;

● "Jenyd" are to Deen Global's wholly owned subsidiary, Jenyd Holdings Limited, a Hong Kong corporation;

● "ordinary shares" are to Class A Ordinary Shares and Class B Ordinary Shares;

● "the operating entities" are to Xinjiang United Family and its branch offices, the VIEs, Chanson 23rd Street, and Chanson Greenwich;

● the "PRC Stores" are to a bakery chain consisting of 33 stores operated by Xinjiang United Family and the VIEs under our "George Chanson<sup>TM</sup>" brand in Xinjiang;

● the "U.S. Stores" are to Chanson 23rd Street and Chanson Greenwich;

● the "VIEs," the "United Family Group," or "UFG" are to 29 individually-owned businesses organized under the laws of the PRC, 28 of which are owned independently by our Chairman, Mr. Gang Li, and one of which is owned independently by Ms. Hui Wang, the Marketing Director of Xinjiang United Family;

● "VIE" are to variable interest entity;

● "Xinjiang" are to the Xinjiang Uygur Autonomous Region of the PRC; and

● "Xinjiang United Family" or "our PRC subsidiary" are to Xinjiang United Family Trading Co., Ltd., a limited liability company organized under the laws of the PRC, which is wholly owned by Jenyd.

Unless the context indicates otherwise, all information in this prospectus assumes no exercise by the Underwriter of its over-allotment option.

The functional currency of Xinjiang United Family, our wholly owned indirect subsidiary in the PRC, and the VIEs, is Renminbi ("RMB"), the currency of China, and the functional currency of Chanson 23rd Street, Chanson Greenwich, Chanson 3rd Ave, and Chanson Broadway, our wholly owned indirect subsidiaries in New York City, is U.S. dollars. Our consolidated financial statements are presented in U.S. dollars. In this prospectus, we refer to assets, obligations, commitments, and liabilities in our consolidated financial statements in U.S. dollars. These dollar references are based on exchange rates of RMB to U.S. dollars, determined as of a specific date or for a specific period. Changes in the exchange rate will affect the amount of our obligations and the value of our assets in terms of U.S. dollars which may result in an increase or decrease in the amount of our obligations (expressed in dollars) and the value of our assets, including accounts receivable (expressed in dollars).

ii

**PROSPECTUS SUMMARY**

*The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and financial statements included elsewhere in this prospectus. In addition to this summary, we urge you to read the entire prospectus carefully, especially the risks of investing in our Class A Ordinary Shares, discussed under "Risk Factors," before deciding whether to buy our Class A Ordinary Shares.*

 

*Unless otherwise indicated, all share amounts and per share amounts in this prospectus have been presented giving effect to a forward split of our ordinary shares at a ratio of 1,000-for-1 share and additional share issuances to our existing shareholders approved by our shareholders and board of directors on March 27, 2021.*

 **Our Corporate Structure**

 ***Corporate Structure***

We are a holding company incorporated in the Cayman Islands and not a Chinese operating company. As a holding company with no material operations of our own, we currently conduct our business through:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) an association between
 Xinjiang United Family and the VIEs known as the "United Family Group" or "UFG": 28 of the entities that
 comprise UFG (each a "UFG Entity" and, collectively, the "UFG Entities") are owned independently by our Chairman,
 Mr. Gang Li, and one of the entities is owned independently by Ms. Hui Wang, the Marketing Director of Xinjiang United Family. Mr.
 Gang Li and Ms. Hui Wang are referred herein individually as a "UFG Operator" and collectively as the "UFG Operators."
 For accounting purposes, we control and receive the economic benefits of the UFG Entities through the VIE Agreements, which enable
 us to consolidate the financial results of the VIEs in our consolidated financial statements under U.S. GAAP, and the structure involves
 unique risks to investors. For more details on the United Family Group, please see "—The United Family Group" and
 "Corporate History and Structure—The United Family Group." Our Class A Ordinary Shares offered in this offering
 are shares of Chanson International, the offshore holding company in the Cayman Islands, instead of shares of Xinjiang United Family
 or the UFG Entities. The VIE structure provides contractual exposure to foreign investment in China-based companies. Chinese law,
 however, does not prohibit direct foreign investment in the VIEs. As a result of our use of the VIE structure, you may never directly
 hold equity interests in the UFG Entities;

(ii) Xinjiang United Family
 and its three branch offices; and

(iii) Chanson 23rd Street,
 Chanson Greenwich, Chanson 3rd Ave (currently expected to open in late March 2023), and Chanson Broadway (currently under renovation
 for an opening planned in April 2023).

The following diagram illustrates our corporate structure after the Reorganization (as defined in "Corporate History and Structure—Our Corporate History") and upon completion of this offering based on a proposed number of 3,750,000 Class A Ordinary Shares being offered, assuming no exercise of the over-allotment option:

![](image_002.jpg)

Notes: All percentages reflect the voting ownership interests instead of the equity interests held by each of our shareholders given that each holder of Class B Ordinary Shares will be entitled to 10 votes per one Class B Ordinary Share and each holder of Class A Ordinary Shares will be entitled to one vote per one Class A Ordinary Share.

&nbsp;&nbsp;&nbsp;&nbsp;(1) Represents 2,700,000 Class
 A Ordinary Shares and 5,670,000 Class B Ordinary Shares held by Gang Li, the 100% owner of Danton
 Global Limited, as of the date of this prospectus.

&nbsp;&nbsp;&nbsp;&nbsp;(2) Represents 270,000 Class
 B Ordinary Shares held by Jihong Cai, the 100% owner of Haily Global Limited, as of the date of this prospectus.

(3) Represents an aggregate
 of 360,000 Class A Ordinary Shares held equally by two corporate shareholders, each one of which holds less than 5% of our voting
 ownership interests, as of the date of this prospectus.

The following is a complete list of the stores of Xinjiang United Family and UFG as of the date of this prospectus, together with their recognized commercial name and relationship to Xinjiang United Family.

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| | | | |
|:---|:---|:---|:---|
|  | **Legal Name of Entity** | **Commercial Name** | **Nature of Entity** |
| 1 | Urumqi Midong District George Chanson Bakery | Midong | Part of UFG – owned 100% by Mr. Gang Li and operated under the VIE Agreements among Mr. Gang Li, this entity, and Xinjiang United Family |
| 2 | Shayibake District Yining Rd. George Chanson Bakery | Dehui Wanda | Same as above |
| 3 | Changji George Chanson Youhao Supermarket Bakery | Changji Youhao | Same as above |
| 4 | Changji George Chanson Bakery | Changji Huijia | Same as above |
| 5 | Tianshan District Xinhua North Rd. George Chanson Bakery | Hongshan | Same as above |
| 6 | Tianshan District Xinmin Rd. George Chanson Bakery | Beimen | Same as above |
| 7 | Tianshan District Minzhu Rd. George Chanson Bakery | Minzhu | Same as above |
| 8 | Tianshan District Jianquan No.3 Rd. George Chanson Bakery | Riyue Xingguang | Same as above |
| 9 | Tianshan District Jiefang North Rd. George Chanson Bakery | Wanyancheng | Same as above |
| 10 | Urumqi Economics and Technology Development District George Chanson Bakery on Kashi West Rd. | Huarun Wanjia | Same as above |
| 11 | Xinshi District Liyushan South Rd. George Chanson Bakery | Medical College | Same as above |
| 12 | Xinshi District Changchun South Rd. George Chanson Bakery | Changchun | Same as above |
| 13 | Xinshi District Beijing Middle Rd. United Family Chanson Bakery | Huijia Third Floor | Same as above |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **Legal Name of Entity** | **Commercial Name** | **Nature of Entity** |
| 14.0 | Xinshi District Suzhou East Rd. Chanson Bakery | Baishang | Same as above |
| 15.0 | Xinshi District Suzhou Rd. Xiaoxigou Chanson Bakery | Xiaoxigou | Same as above |
| 16.0 | Xinshi District South No.3 Rd. Chanson Bakery | Railway Bureau | Same as above |
| 17.0 | Urumqi Economics and Technology Development District George Chanson Bakery on Xuanwuhu Rd. | Economics Development Wanda | Same as above |
| 18.0 | Shayibake District Youhao South Rd. Chanson Bakery | Hongshan Lifestyle Store | Same as above |
| 19.0 | Shuimogou District South Nanhu Rd. George Chanson Bakery | Nanhu | Same as above |
| 20.0 | Xinshi District Hebei East Rd. George Chanson Bakery | Hebei Road Huarun | Same as above |
| 21.0 | Urumqi Toutunhe District George Chanson Bakery on Zhongya South Rd. | Degang Wanda | Same as above |
| 22.0 | Shayibake District Karamay West Rd. Chanson Bakery | Xinbei Yuanchun | Same as above |
| 23.0 | Shayibake District Qitai Rd. Hemeijia Chanson Bakery | Dehui Wangda Fourth Floor | Same as above |
| 24.0 | Tianshan District Qingnian Rd. Chanson Bakery | Qingnian Road Haojiaxiang | Same as above |
| 25.0 | Xinshi District Liyushan North Rd. Hemeijia Bakery | Vanke Jincheng Huafu | Same as above |
| 26.0 | Xinshi District Changchun North Rd. Chanson Bakery | Gaoxin Wanda | Same as above |
| 27.0 | Tianshan District Guangming Rd. Chanson Coffee Bakery | Shidai Guangchang | Same as above |
| 28.0 | Shayibake District Youhao North Rd. Chanson Coffee Bakery | Meimei No.2 | Same as above |
| 29.0 | Shihezi Hemeijia Bakery No.1 | Shihezi | Part of UFG – owned 100% by Ms. Hui Wang and operated under agreements among Ms. Hui Wang, this entity, and Xinjiang United Family |
| 30.0 | Xinjiang United Family Trading Co., Ltd. Tianshan District Chanson Bakery | Tianbai | A branch office of Xinjiang United Family |
| 31.0 | Xinjiang United Family Trading Co., Ltd. Chanson Bakery Urumqi Branch | Wenhua | A branch office of Xinjiang United Family |
| 32.0 | Xinjiang United Family Trading Co., Ltd. Urumqi Meimei Chanson Bakery | Meimei | A branch office of Xinjiang United Family |
| 33.0 | Xinjiang United Family Trading Co., Ltd. Ruitai Chanson Bakery | Ruitai | A store operated by Xinjiang United Family, not a separate legal entity |
| 34.0 | Chanson 23rd Street LLC | Chanson 23rd Street | A wholly owned indirect subsidiary of Xinjiang United Family |
| 35.0 | Chanson 355 Greenwich LLC | Chanson Greenwich | Same as above |
| 36.0 | Chanson 1293 3rd Ave LLC | Chanson 3rd Ave | Same as above. We expect Chanson 3rd Ave to open in late March 2023. |
| 37.0 | Chanson 2040 Broadway LLC | Chanson Broadway | Same as above. We expect Chanson Broadway to open in April 2023.  |

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For ease of reference, unless it is necessary to the understanding of the context to differentiate, throughout this prospectus we will refer to all of the above entities collectively as our "stores" and, to the extent we refer to a specific entity listed in the table above, we refer to such entity by its commercial name.

 ***The United Family Group***

Each UFG Entity was established as an individually-owned business and, for accounting purposes, Xinjiang United Family controls the UFG Entities through the VIE Agreements, which enables us to consolidate the financial results of the UFG Entities in our consolidated financial statements. The VIE Agreements are designed so that the operations of the VIEs are solely for the benefit of Xinjiang United Family and ultimately, the Company, as a result of our direct ownership in Xinjiang United family. As such, under U.S. GAAP, the Company is deemed to have a controlling financial interest in, and be the primary beneficiary of, the VIEs for accounting purposes only and must consolidate the VIEs because it met the conditions under U.S. GAAP to consolidate the VIEs.

UFG's revenue accounted for 44% of our total revenue for the six months ended June 30, 2022, and 86% and 76% of our total revenue for the fiscal years ended December 31, 2021 and 2020, respectively. UFG consists of 29 VIEs. Our Chairman, Mr. Gang Li, is the sole owner of 28 UFG Entities, and Ms. Hui Wang, the Marketing Director of Xinjiang United Family, is the sole owner of one UFG Entity.

Each of the VIE Agreements is described below:

*<u>Exclusive Service Agreement</u>*

Pursuant to the Exclusive Service Agreement between Xinjiang United Family and the applicable UFG Operator, who is the sole operator of the UFG Entity, Xinjiang United Family is in charge of all aspects of the UFG Entity's operation, manages all matters and funds of UFG Entity, and enjoys all the other responsibilities and rights enjoyed by the UFG Operator in accordance with the applicable law, on an exclusive basis. For services rendered to the UFG Entity by Xinjiang United Family under the Exclusive Service Agreement, Xinjiang United Family is entitled to collect a service fee equal to the net profit after tax of the UFG Entity.

The term of the Exclusive Service Agreement is 10 years, unless terminated earlier by Xinjiang United Family with a 30-day prior notice. The UFG Entity does not have the right to terminate that agreement unilaterally. The agreement would renew automatically by 10 years after expiration, with no limit on times of renewal.

Xinjiang United Family has absolute authority over the management of the UFG Entity, including but not limited to decisions with regard to expenses, salary raises and bonuses, hiring, firing, and other operational functions. The Exclusive Service Agreement does not prohibit related party transactions. Upon the establishment of the audit committee at the consummation of this offering, the audit committee of Chanson International will be required to review and approve in advance any related party transactions, including transactions involving the UFG Entity.

 *<u>Pledge Agreement</u>*

Under the Pledge Agreement between Xinjiang United Family and the UFG Operator, the UFG Operator pledged all of his or her assets for the business of the UFG Entity to Xinjiang United Family to guarantee the performance of the UFG Operator's obligations under the Exclusive Service Agreement, Call Option Agreement, and Operating Rights Proxy Agreement (collectively, the "Transaction Agreements"). Under the terms of the Pledge Agreement, in the event that the UFG Entity or the UFG Operator breaches their respective contractual obligations under the Transaction Agreements, Xinjiang United Family, as pledgee, will be entitled to certain rights, including, but not limited to, the right to dispose of the pledged assets in accordance with applicable PRC laws. The UFG Operator further agreed not to dispose of the pledged assets or take any actions that would prejudice Xinjiang United Family's interest.

The Pledge Agreement is effective until the latest date of the following: (1) the secured debt in the scope of pledge is cleared off; (2) Xinjiang United Family, as pledgee, exercise its pledge rights pursuant to provisions and conditions of the Pledge Agreement; and (3) the UFG Operator, as pledger, transfer all the pledged assets to Xinjiang United Family according to the Call Option Agreement, or other entity or individual designated by it.

The purposes of the Pledge Agreement are to (1) guarantee the performance of the UFG Operator's obligations under the Exclusive Service Agreement, (2) make sure the UFG Operator does not transfer or assign the pledged assets, or create or allow any encumbrance that would prejudice Xinjiang United Family's interests without Xinjiang United Family's prior written consent, and (3) provide Xinjiang United Family control over the UFG Entity for accounting purposes. In the event the UFG Entity or UFG Operator breaches its contractual obligations under the Transaction Agreements, Xinjiang United Family will be entitled to foreclose on the UFG Operator's assets in the UFG Entity and may (1) exercise its option to purchase or designate third parties to purchase part or all of the UFG Operator's assets in the UFG Entity and in this situation, Xinjiang United Family may terminate the Pledge Agreement and the other VIE agreements after acquisition of all assets in the UFG Entity or form a new VIE structure with any third party designated by Xinjiang United Family, or (2) dispose of the pledged assets and be paid in priority out of proceeds from the disposal in which case the existing VIE structure will be terminated.

 *<u>Call Option Agreement</u>*

Under the Call Option Agreement, the UFG Operator irrevocably granted Xinjiang United Family an exclusive option to require the UFG Operator to transfer, to the extent permitted under PRC law, once or at multiple times, at any time, part or all of his or her assets in the UFG Entity to Xinjiang United Family (or its designee). The option price is the minimum amount to the extent permitted under PRC law.

Under the Call Option Agreement, Xinjiang United Family may at any time under any circumstances, require the UFG Operator to transfer, at its discretion, to the extent permitted under PRC law, all or part of the UFG Operator's assets in the UFG Entity to Xinjiang United Family (or its designee).

The Call Option Agreement remains effective until all the equity or assets of the UFG Entity is legally transferred under the name of Xinjiang United Family and/or other entity or individual designated by it.

 *<u>Operating Rights Proxy Agreement and Powers of Attorney</u>*

Under the Operating Rights Proxy Agreement and the Powers of Attorney, the UFG Operator entrusted Xinjiang United Family or the personnel designated by it then to act as his or her proxy and exercise his or her rights as the sole operator of the UFG Entity, including but not limited to: (a) exercising operating rights; (b) getting access to financial information of the UFG Entity; (c) making resolutions about the disposition of the assets of the UFG Entity; (d) approving annual budgets of the UFG Entity or announcing dividends; (e) making resolutions about dissolution or liquidation of the UFG Entity, forming the liquidating committee, and exercising the authorities in the course of liquidation; (f) filing any required document to the company registration agency or any other relevant agency; and (g) signing any resolution.

The Operating Rights Proxy Agreement and the Powers of Attorney shall be retrospectively effective from their date of execution and maintain the effectiveness so long as the UFG Operator holds the operating rights of the UFG Entity.

 *<u>Spousal Consents</u>*

 

The spouses of the UFG Operators, agreed, via spousal consents, to the execution of the "Transaction Documents" including: (a) Exclusive Service Agreement entered into with Xinjiang United Family; (b) Call Option Agreement entered into with Xinjiang United Family; (c) Operating Rights Proxy Agreement entered into with Xinjiang United Family; (d) Pledge Agreement entered into with Xinjiang United Family; and (e) Powers of Attorney executed by the UFG Operators, and the disposal of the operating rights or the assets for the business of the UFG Entity held by the UFG Operators and registered in their names.

The spouses of the UFG Operators further undertake not to make any assertions in connection with the operating rights and assets of the UFG Entity which are held by the UFG Operators. The spouses of the UFG Operators confirm that the UFG Operators can perform their obligations under the Transaction Documents and further amend or terminate the Transaction Documents without their authorization or consent. The spouses of the UFG Operators undertake to execute all necessary documents and take all necessary actions to ensure appropriate performance of the Transaction Documents.

The spouses of the UFG Operators also undertake that if they obtain any operating rights and assets of the UFG Entity which are held by the UFG Operators for any reasons, they shall be bound by the Transaction Documents entered into between the UFG Operators and Xinjiang United Family (as amended time to time) and comply with the obligations thereunder as an operator of the UFG Entity. For this purpose, upon Xinjiang United Family's request, they shall sign a series of written documents in substantially the same format and content as the Transaction Documents (as amended from time to time).

Although each UFG Entity has its own set of agreements with Xinjiang United Family, the terms and conditions of their agreements with Xinjiang United Family are identical. As a result of the understandings and agreements, for accounting purposes, we control and receive the economic benefits of the UFG Entities through the VIE Agreements, which enable us to consolidate the financial results of the VIEs in our consolidated financial statements under U.S. GAAP. Except as set forth in these agreements, the UFG Operators are not entitled to any other compensation in connection with their ownership of all the UFG Entities.

 ***Risks Associated with our Corporate Structure and VIE Agreements***

Because we do not directly hold equity interests in the VIEs, we are subject to risks and uncertainties of the interpretations and applications of PRC laws and regulations, including but not limited to, regulatory review of overseas listing of PRC companies through special purpose vehicles and the validity and enforcement of the VIE Agreements. We are also subject to the risks and uncertainties about any future actions of the PRC government in this regard that could disallow the VIE structure, which would likely result in a material change in our operations, and the value of our Class A Ordinary Shares may depreciate significantly or become worthless. The VIE Agreements have not been tested in a court of law in China as of the date of this prospectus. See "Risk Factors—Risks Relating to Our Corporate Structure," "Risk Factors—Risks Relating to Doing Business in the PRC," and "Risk Factors—Risks Relating to this Offering and the Trading Market."

The VIE Agreements may not be as effective as direct ownership in providing operational control. For instance, the UFG Entities and the UFG Operators could breach their contractual arrangements with us by, among other things, failing to conduct their operations in an acceptable manner or taking other actions that are detrimental to our interests. The UFG Operators may not act in the best interests of our Company or may not perform their obligations under these contracts. Such risks exist throughout the period in which we intend to operate certain portions of our business through the VIE Agreements. In the event that the UFG Entities or the UFG Operators fail to perform their respective obligations under the VIE Agreements, we may have to incur substantial costs and expend additional resources to enforce such arrangements. In addition, even if legal actions are taken to enforce such arrangements, there is uncertainty as to whether the courts of the PRC would recognize or enforce judgments of U.S. courts against us or such persons predicated upon the civil liability provisions of the securities laws of the U.S. or any state. See "Risk Factors—Risks Relating to Our Corporate Structure—The VIE Agreements with the UFG Entities and the UFG Operators may not be effective in providing control over the UFG Entities" and "Risk Factors—Risks Relating to Our Corporate Structure—The VIE Agreements are governed by the laws of the PRC and we may have difficulty in enforcing any rights we may have under the VIE Agreements."

We are subject to certain legal and operational risks associated with having the majority of our operations in China, which could cause the value of our securities to significantly decline or become worthless. PRC laws and regulations governing our current business operations are sometimes vague and uncertain, and as a result these risks may result in material changes in the operations of the VIEs, significant depreciation or a complete loss of the value of our Class A Ordinary Shares, or a complete hindrance of our ability to offer, or continue to offer, our securities to investors. Recently, the PRC government adopted a series of regulatory actions and issued statements to regulate business operations in China with little advance notice, including cracking down on illegal activities in the securities market, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. As of the date of this prospectus, we, our PRC subsidiary, and the VIEs have not been involved in any investigations on cybersecurity review initiated by any PRC regulatory authority, nor has any of them received any inquiry, notice, or sanction. As confirmed by our PRC counsel, Dentons, we are not subject to cybersecurity review with the CAC under the Cybersecurity Review Measures that became effective on February 15, 2022, since we currently do not have over one million users' personal information and do not anticipate that we will be collecting over one million users' personal information in the foreseeable future, which we understand might otherwise subject us to the Cybersecurity Review Measures; we are also not subject to network data security review by the CAC if the Security Administration Draft is enacted as proposed, since we currently do not have over one million users' personal information and do not collect data that affects or may affect national security and we do not anticipate that we will be collecting over one million users' personal information or data that affects or may affect national security in the foreseeable future, which we understand might otherwise subject us to the Security Administration Draft. See "Risk Factors—Risks Relating to Doing Business in the PRC—Recent greater oversight by the CAC over data security, particularly for companies seeking to list on a foreign exchange, could adversely impact our business and our offering."

On February 17, 2023, the CSRC promulgated the Trial Measures and five supporting guidelines, which will come into effect on March 31, 2023. If our registration statement on Form F-1 cannot be declared effective on or before March 31, 2023, or if our registration statement on Form F-1 is declared effective on or before March 31, 2023 but we fail to complete this offering and listing on or before September 30, 2023, we will be required to complete necessary filing procedures pursuant to the Trial Measures. See "Risk Factors—Risks Relating to Doing Business in the PRC—The Opinions, the Trial Measures, and the revised Provisions recently issued by PRC authorities may subject us to additional compliance requirements in the future." Notwithstanding the foregoing, as of the date of this prospectus, according to Dentons, no relevant PRC laws or regulations in effect require that we obtain permission from any PRC authorities to issue securities to foreign investors, and we have not received any inquiry, notice, warning, sanction, or any regulatory objection to this offering from the CSRC, the CAC, or any other PRC authorities that have jurisdiction over our operations. Since these statements and regulatory actions are newly published, however, official guidance and related implementation rules have not been issued. It is highly uncertain what the potential impact such modified or new laws and regulations will have on the daily business operations of our subsidiaries and the VIEs, our ability to accept foreign investments, and our listing on a U.S. exchange. The SCNPC or PRC regulatory authorities may in the future promulgate additional laws, regulations, or implementing rules that require us, our subsidiaries, or the VIEs to obtain regulatory approval from Chinese authorities before listing in the U.S. If we do not receive or maintain such approval, or inadvertently conclude that such approval is not required, or applicable laws, regulations, or interpretations change such that we are required to obtain approval in the future, we may be subject to an investigation by competent regulators, fines or penalties, or an order prohibiting us from conducting an offering, and these risks could result in a material adverse change in our operations and the value of our Class A Ordinary Shares, significantly limit or completely hinder our ability to offer or continue to offer securities to investors, or cause such securities to significantly decline in value or become worthless.

In addition, our Class A Ordinary Shares may be prohibited from trading on a national exchange or over-the-counter under the HFCA Act if the PCAOB is unable to inspect our auditors for three consecutive years beginning in 2021. Our auditor prior to September 29, 2022, Friedman, had been inspected by the PCAOB on a regular basis in the audit period, and our new auditor, Marcum Asia, has been inspected by the PCAOB on a regular basis, with the last inspection in 2020. Neither Friedman nor Marcum Asia is subject to the determinations announced by the PCAOB on December 16, 2021. If trading in our Class A Ordinary Shares is prohibited under the HFCA Act in the future because the PCAOB determines that it cannot inspect or fully investigate our auditor at such future time, Nasdaq may determine to delist our Class A Ordinary Shares and trading in our Class A Ordinary Shares could be prohibited. On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, and on December 29, 2022, the Consolidated Appropriations Act was signed into law by President Biden, which contained, among other things, an identical provision to the Accelerating Holding Foreign Companies Accountable Act and amended the HFCA Act by requiring the SEC to prohibit an issuer's securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three, thus reducing the time period for triggering the prohibition on trading. On August 26, 2022, the CSRC, the MOF, and the PCAOB signed the Protocol governing inspections and investigations of audit firms based in mainland China and Hong Kong, taking the first step toward opening access for the PCAOB to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong. Pursuant to the fact sheet with respect to the Protocol disclosed by the SEC, the PCAOB shall have independent discretion to select any issuer audits for inspection or investigation and has the unfettered ability to transfer information to the SEC. On December 15, 2022, the PCAOB Board determined that the PCAOB was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and voted to vacate its previous determinations to the contrary. However, should PRC authorities obstruct or otherwise fail to facilitate the PCAOB's access in the future, the PCAOB Board will consider the need to issue a new determination. See "Risk Factors—Risks Relating to Doing Business in the PRC—Recent joint statement by the SEC and the PCAOB, rule changes by Nasdaq, and the HFCA Act all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties to our offering."

**Overview**

***Our Company***

The PRC Stores and the U.S. Stores manufacture and sell a wide selection of bakery products, seasonal products (i.e. products sold during particular holiday seasons), and beverage products; some of these stores also offer eat-in services. The PRC Stores and the U.S. Stores currently focus their business in Xinjiang of the PRC and New York City, respectively, and plan to expand to other regions of the PRC and the U.S., with a goal of opening three to five new stores in China annually and eight new stores in the U.S. during the next five years. The PRC Stores and the U.S. Stores aim to make healthy, nutritious, and ready-to-eat food through advanced facilities and industry research and to create a comfortable, yet distinguishable store environment in which customers can enjoy their products.

The PRC Stores are a bakery chain consisting of 33 stores operated by Xinjiang United Family and the VIEs under the "George●Chanson" brand in Xinjiang, and the U.S. Stores sell their products in New York City. Chanson 3rd Ave and Chanson Broadway are currently renovating spaces for the opening of two new stores in New York City. Selling through directly-operated stores, instead of franchise stores, allows the operating entities to run their entire operation more efficiently and to exercise greater control over the quality of products and the presentation of their brand, and to better manage customer experience in the stores. The PRC Stores and the U.S. Stores also sell their products on their digital platforms and through third-party online food ordering platforms. The current customer base of the PRC Stores and the U.S. Stores consists of both individual and corporate customers. To expand their customer base, the PRC Stores and the U.S. Stores have developed a variety of marketing and sale strategies, such as increasing their presence on social media platforms, devising pricing and discounting programs, and improving customer in-store experience.

The PRC Stores manufacture the majority of bakery products in their central factory located in Urumqi, Xinjiang, prepare beverage products within the stores, and contract third-party manufacturers to produce seasonal products. the U.S. Stores bake bakery products, prepare breakfast, lunch and all-day brunch, bar food, and other light meals for eat in, and make beverage products all within the kitchen in the stores. To ensure the quality and safety of their products, the PRC Stores and the U.S. Stores procure raw materials, including flour, eggs, and milk, from renowned suppliers with a record of consistently supplying high-quality raw materials over decades in the food industry. In addition, the PRC Stores and the U.S. Stores have implemented a rigorous quality control system covering their entire operation process and mandated internal training to improve their employees' awareness and knowledge of food safety.

The PRC Stores and the U.S. Stores have dedicated and highly-experienced product development teams that constantly create new products that reflect market trends and are designed to meet customer demand. As of December 2022, the PRC Stores had more than 707 types of bakery products and seasonal products on sale, including over 145 types of new products introduced to the market since 2021, and the U.S. Stores had 131 types of eat-in menu items and bakery products on sale, including 36 types of new products introduced to the market since 2021. The PRC Stores and the U.S. Stores also offer a large number of beverage products and update their drink menus seasonally and in response to ever changing customer demand. By continuously offering new products and refining their product formulas to enhance existing products, we believe that the PRC Stores and the U.S. Stores are able to steadily bring in new customers and increase the frequency of their existing customers' visits to their stores, digital platforms, and store page on third-party platforms.

For the six months ended June 30, 2022 and 2021, we had total revenue of $8,543,803 and $6,742,121, and net income of $220,793 and $422,685, respectively. The PRC Stores accounted for 78.6% and 89.2% of our total revenue for those periods, respectively, and the U.S. Stores accounted for 21.4% and 10.8%, respectively. For the fiscal years ended December 31, 2021 and 2020, we had total revenue of $14,690,295 and $10,313,512, and net income of $506,769 and a net loss of $164,029, respectively. The PRC Stores accounted for 87.1% and 87.0% of our total revenue for those fiscal years, respectively, and the U.S. Stores accounted for 12.9% and 13.0%, respectively.

The PRC Stores primarily generate revenue through sale of bakery products, seasonal products, and beverage products. For the six months ended June 30, 2022 and 2021, revenue derived from sale of bakery products accounted for 93.8% and 93.4% of the PRC Stores' revenue; revenue derived from sale of seasonal products accounted for 5.4% and 5.4%, and revenue derived from sale of beverage products accounted for 0.8% and 1.2%, respectively. For the fiscal years ended December 31, 2021 and 2020, revenue derived from sale of bakery products accounted for 91.4% and 91.8% of the PRC Stores' revenue, revenue derived from sale of seasonal products accounted for 7.6% and 6.6%, and revenue derived from sale of beverage products accounted for 1.0% and 1.6%, respectively.

The U.S. Stores primarily generate revenue through offering eat-in services and sale of bakery products and beverage products. For the six months ended June 30, 2022 and 2021, revenue derived from offering eat-in services accounted for 27.6%% and 25.9% of the U.S. Stores' revenue, revenue derived from sale of bakery products accounted for 18.2% and 31.3%, and revenue derived from sale of beverage products accounted for 54.2% and 42.8%, respectively. For the fiscal years ended December 31, 2021 and 2020, revenue derived from offering eat-in services accounted for 22.2% and 37.9% of the U.S. Stores' revenue, revenue derived from sale of bakery products accounted for 25.0% and 44.6%, and revenue derived from sale of beverage products accounted for 52.8% and 17.5%, respectively.

***Competitive Strengths***

We believe that the following competitive strengths have contributed to our success and differentiated us from our competitors:

● trendy brand reflecting healthy food concepts;

● strict quality control;

● advanced industry research and constant product innovation;

● advantageous information management system;

● well-developed distribution network in Xinjiang; and

● experienced management and professional teams.

***Growth Strategies***

We intend to develop our business and strengthen brand loyalty by pursuing the following strategies:

● expand into new markets by opening new stores;

● enhance in-store customer experience and customer services;

● keep implementing healthy and nutritious diet principles in product development; and

● increase brand awareness.

***Our Securities***

On March 27, 2021, our shareholders and board of directors approved (i) a forward split of our outstanding ordinary shares at a ratio of 1,000-for-1 share, (ii) the creation of Class A Ordinary Shares and Class B Ordinary Shares, and (iii) additional share issuances to our existing shareholders to increase the number of total ordinary shares issued and outstanding prior to the completion of this offering from 100,000 to 9,000,000. On March 29, 2021, we filed our second amended and restated memorandum and articles of association with the Registrar of Companies of the Cayman Islands (the "Cayman Registrar") to effect such corporate actions, which filing became effective on March 31, 2021. Unless otherwise indicated, all references to ordinary shares, options to purchase ordinary shares, share data, per share data, and related information have been retroactively adjusted, where applicable, in this prospectus to reflect the forward split of our ordinary shares and the additional share issuances to our existing shareholders as if they had occurred at the beginning of the earlier period presented.

Our authorized share capital is divided into Class A Ordinary Shares and Class B Ordinary Shares. Holders of Class A Ordinary Shares and Class B Ordinary Shares have the same rights except for voting and conversion rights. In respect of matters requiring a vote of all shareholders, each holder of Class A Ordinary Shares will be entitled to one vote per one Class A Ordinary Share and each holder of Class B Ordinary Shares will be entitled to 10 votes per one Class B Ordinary Share. Due to the voting power of Class B Ordinary Shares, the holders of Class B Ordinary Shares currently and may continue to have a concentration of voting power, which limits the holders of Class A Ordinary Shares' ability to influence corporate matters. Each Class B Ordinary Share is convertible into one Class A Ordinary Share at any time by the holder thereof. Class A Ordinary Shares are not convertible into Class B Ordinary Shares under any circumstances. See "Description of Share Capital."

Unless the context requires otherwise, all references to the number of Class A Ordinary Shares and Class B Ordinary Shares to be outstanding after our initial public offering are based on 3,060,000 Class A Ordinary Shares and 5,940,000 Class B Ordinary Shares issued and outstanding.

***Corporate Information***

Our principal executive offices are located at No. 26 Culture Road, Tianshan District, Urumqi, Xinjiang, China, and our phone number is +86-0991-2302709. Our registered office in the Cayman Islands is located at 4th Floor, Harbour Place, 103 South Church Street, PO Box 10240, Grand Cayman, KY1-1002 Cayman Islands, and the phone number of our registered office is +1-345-949-8599. We maintain corporate websites at www.xson.com.cn, www.chanson-international.com, www.patisseriechanson.com, and www.thymebarnyc.com. The information contained in, or accessible from, our websites or any other website does not constitute a part of this prospectus. Our agent for service of process in the U.S. is George Chanson (NY) Corp., located at 41 Madison Avenue, New York, NY 10010.

**Summary of Risk Factors**

Investing in our Class A Ordinary Shares involves significant risks. You should carefully consider all of the information in this prospectus before making an investment in our Class A Ordinary Shares. Below please find a summary of the principal risks we face, organized under relevant headings. These risks are discussed more fully in the section titled "Risk Factors."

***Risks Relating to Our Business (for a more detailed discussion, see "Risk Factors—Risks Relating to Our Business")***

 ****

Risks and uncertainties related to our business include, but are not limited to, the following:

● the operating entities' business is affected by changes in consumer preferences and discretionary spending (see page 23 of this prospectus);

● the operating entities' long-term success depends on their ability to successfully identify and secure appropriate sites and timely develop and expand their operations in existing and new markets (see page 23 of this prospectus);

● the operating entities operate in a highly-competitive market and their failure to compete effectively could adversely affect our results of operations (see page 24 of this prospectus);

● our financial condition, results of operations, and cash flows have been adversely affected by the Coronavirus Disease 2019 ("COVID-19") pandemic (see page 25 of this prospectus);

● the operating entities rely on their central factory and a limited number of third-party producers and suppliers. Any interruption in operations at the central factory or in such third-party producers or suppliers could prevent or limit their ability to meet demand for or fulfill orders of the operating entities' products (see page 27 of this prospectus);

● the operating entities' geographic focus makes them particularly vulnerable to economic and other events and trends in Xinjiang and New York City (see page 27 of this prospectus); and

● failure to maintain or enhance the operating entities' brands or image could have a material adverse effect on their business and results of operations (see page 28 of this prospectus).

***Risks Relating to Our Corporate Structure (for a more detailed discussion, see "Risk Factors—Risks Relating to Our Corporate Structure")***

We are also subject to risks and uncertainties relating to our corporate structure, including, but not limited to, the following:

● the VIE Agreements with the UFG Entities and the UFG Operators may not be effective in providing control over the UFG Entities (see page 36 of this prospectus);

● the VIE Agreements are governed by the laws of the PRC and we may have difficulty in enforcing any rights we may have under the VIE Agreements (see page 37 of this prospectus);

● if the PRC government determines that the contractual arrangements constituting part of the VIE structure do not comply with PRC regulations, or if these regulations change or are interpreted differently in the future, we may be unable to assert our contractual rights over the assets of the VIEs, and our Class A Ordinary Shares may decline in value or become worthless (see page 37 of this prospectus);

● our controlling shareholder has potential conflicts of interest with our Company which may adversely affect our business (see page 37 of this prospectus); and

● we rely on the approval certificates and business license held by UFG and any deterioration of the relationship between Xinjiang United Family and UFG could materially and adversely affect our overall business operations (see page 38 of this prospectus).

 ***Risks Relating to Doing Business in the PRC (for a more detailed discussion, see "Risk Factors—Risks Relating to Doing Business in the PRC")***

We face risks and uncertainties relating to doing business in the PRC in general, including, but not limited to, the following:

● changes in China's economic, political, or social conditions or government policies could have a material adverse effect on our business and operations (see page 39 of this prospectus);

● uncertainties in the interpretation and enforcement of PRC laws and regulations and changes in policies, rules, and regulations in China, which may be quick with little advance notice, could limit the legal protection available to you and us (see page 39 of this prospectus);

● you may experience difficulties in effecting service of legal process, enforcing foreign judgments, or bringing actions in China against us or our management named in the prospectus based on foreign laws. It may also be difficult for you or overseas regulators to conduct investigations or collect evidence within China (see page 39 of this prospectus);

● given the Chinese government's significant oversight and discretion over the conduct of the business of our PRC subsidiary and the VIEs, the Chinese government may intervene or influence their operations at any time, which could result in a material change in the operations of our PRC subsidiary and the VIEs and/or the value of our Class A Ordinary Shares (see page 40 of this prospectus);

● any actions by the Chinese government, including any decision to intervene or influence the operations of our PRC subsidiary or the VIEs or to exert control over any offering of securities conducted overseas and/or foreign investment in China-based issuers, may cause us to make material changes to the operations of our PRC subsidiary or the VIEs, may limit or completely hinder our ability to offer or continue to offer securities to investors, and may cause the value of such securities to significantly decline or be worthless (see page 40 of this prospectus);

● recent greater oversight by the CAC over data security, particularly for companies seeking to list on a foreign exchange, could adversely impact our business and our offering (see page 40 of this prospectus);

● the Opinions, the Trial Measure, and the revised Provisions recently issued by PRC authorities may subject us to additional compliance requirements in the future (see page 41 of this prospectus);

● recent joint statement by the SEC and the PCAOB, rule changes by Nasdaq, and the HFCA Act all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties to our offering (see page 42 of this prospectus);

● to the extent cash in the business is in the PRC or a PRC entity, the funds may not be available to fund operations or for other use outside of the PRC due to interventions in or the imposition of restrictions and limitations on the ability of our Company, our subsidiaries, or the VIEs by the PRC government to transfer cash (see page 43 of this prospectus);

● failure to obtain requisite approvals, licenses, or permits or failure to comply with any requirements of PRC laws, regulations, and policies may materially and adversely affect our daily operations and hinder our growth (see page 44 of this prospectus);

● increases in labor costs in the PRC may adversely affect our business and our profitability (see page 44 of this prospectus);

● our PRC subsidiary and the VIEs have not made adequate social insurance and housing fund contributions for all employees as required by PRC regulations, which may subject us to penalties (see page 45 of this prospectus);

● PRC regulations relating to offshore investment activities by PRC residents may subject our PRC resident beneficial owners or our PRC subsidiary to liability or penalties, limit our ability to inject capital into our PRC subsidiary, limit our PRC subsidiary's ability to increase its registered capital or distribute profits to us, or may otherwise adversely affect us (see page 45 of this prospectus);

● PRC regulation of parent/subsidiary loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from using the proceeds of this offering to make loans or additional capital contributions to our PRC operating subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business (see page 46 of this prospectus);

● fluctuations in exchange rates could have a material adverse effect on our results of operations and the value of your investment (see page 46 of this prospectus);

● under the PRC Enterprise Income Tax Law (the "EIT Law"), we may be classified as a PRC "resident enterprise" for PRC enterprise income tax purposes. Such classification would likely result in unfavorable tax consequences to us and our non-PRC shareholders and have a material adverse effect on our results of operations and the value of your investment (see page 47 of this prospectus);

● we face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies (see page 48 of this prospectus);

● our PRC subsidiary is subject to restrictions on paying dividends or making other payments to us, which may have a material adverse effect on our ability to conduct our business (see page 49 of this prospectus);

● governmental control of currency conversion may affect the value of your investment and our payment of dividends (see page 49 of this prospectus);

● there are significant uncertainties under the EIT Law relating to the withholding tax liabilities of our PRC subsidiary, and dividends payable by our PRC subsidiary to our offshore subsidiaries may not qualify to enjoy certain treaty benefits (see page 49 of this prospectus);

● if we become directly subject to the scrutiny, criticism, and negative publicity involving U.S.-listed Chinese companies, we may have to expend significant resources to investigate and resolve the matter which could harm our business operations, stock price, and reputation (see page 50 of this prospectus);

● the disclosures in our reports and other filings with the SEC and our other public pronouncements are not subject to the scrutiny of any regulatory bodies in the PRC (see page 50 of this prospectus); and

● the M&A Rules and certain other PRC regulations establish complex procedures for some acquisitions of Chinese companies by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in China (see page 50 of this prospectus).

 ***Risks Relating to this Offering and the Trading Market (for a more detailed discussion, see "Risk Factors—Risks Relating to this Offering and the Trading Market")***

In addition to the risks described above, we are subject to general risks and uncertainties relating to this offering and the trading market, including, but not limited to, the following:

● there has been no public market for our Class A Ordinary Shares prior to this offering, and you may not be able to resell our Class A Ordinary Shares at or above the price you pay for them, or at all (see page 51 of this prospectus);

● the dual class structure of our ordinary shares has the effect of concentrating voting control with our Chairman, and his interest may not be aligned with the interests of our other shareholders (see page 53 of this prospectus); and

● we do not intend to pay dividends for the foreseeable future (see page 53 of this prospectus).

**Impact of COVID-19 on Our Operations and Financial Performance**

Due to the impact of the COVID-19 pandemic, all but one of the PRC Stores were temporarily closed between late January and early March of 2020. The PRC Stores resumed their normal activities on March 8, 2020. However, all the PRC Stores were closed again on July 17, 2020 due to the resurgence of COVID-19 cases in Xinjiang. The PRC Stores resumed their normal activities in September 2020. However, due to a resurgence of the COVID-19 pandemic in August 2022 in Xinjiang (the "2022 Outbreak"), which resulted in the implementation of significant governmental measures, including lockdowns, closures, quarantines, and travel bans, the operations of the PRC Stores and the production in the PRC Stores' central factory were affected starting from August 10, 2022 and all of the PRC Stores and the central factory were closed between October 5, 2022 and November 30, 2022. The PRC Stores and the central factory started to reopen in early December 2022 and resumed their normal business activities on December 10, 2022, and we expect the PRC Stores to gradually recover from the 2022 Outbreak. The PRC Stores took the following measures during August and September 2022 to mitigate the adverse impact of COVID-19 pandemic and related lockdowns on their business:

● <u>Selecting multiple suppliers in different cities with back-up supply chain plans</u>. This increased the PRC Stores' ability to produce and deliver products on schedule and their capacity to switch suppliers flexibly and safely in case of lockdowns in some of the cities.

● <u>Increasing online sales efforts and cooperating with top-tier online food delivery platforms, including Meituan (美团) and Ele.me (饿了么), to facilitate online sales</u>. These online platforms, together with the PRC Stores' digital platforms, helped the PRC Stores serve more customers when they were not able to serve customers in person because of the COVID-19 pandemic and the related lockdowns.

● <u>Operating the central factory in a close loop</u>. The PRC Stores operated the central factory in a close loop and kept it fully self-sufficient, which enabled the PRC Stores to continue producing its products normally during a lock-down period. In addition, the PRC Stores were granted the approval from the local government to operate delivery vehicles and deliver food orders. As a result, the PRC Stores' entire delivery fleet was able complete delivery orders during lockdown periods, while most local companies were not able to because of lockdown policies.

In addition, consumer demand declines in China have not had a material impact on the business of the PRC Stores, as consumer demand for bakery and beverage products has not declined and usually increases for two to three months after governmental pandemic control measures are lifted based on past experiences of the PRC Stores.

In the U.S., Chanson 23rd Street in New York City provided only delivery and pickup services between the end of February 2020 and the end of June 2020, and resumed outdoor dining services at the end of June 2020 and limited indoor dining services at the end of September 2020. Chanson 23rd Street suspended its indoor dining services again between December 14, 2020 and February 11, 2021 according to an indoor dining ban issued by the Governor of New York State. In addition, the renovation of Chanson Greenwich was delayed and the store opened in December 2021. Chanson 23rd Street resumed its indoor dining services on February 12, 2021 at 25 percent capacity, which was increased to 35 percent on February 26, 2021 and further increased to 50 percent and 75 percent on March 19, 2021 and May 7, 2021, respectively. Starting from May 19, 2021, Chanson 23rd Street has been allowed to provide indoor dining services at full capacity, provided that either diners are seated at least six feet apart or tables are separated by physical barriers. The six-feet rule was later lifted for fully vaccinated people and eventually for all people. As of the date of this prospectus, the U.S. Stores are providing indoor dining services at their full capacity.

See "Risk Factors—Risks Relating to Our Business—Our financial condition, results of operations, and cash flows have been adversely affected by the COVID-19 pandemic" and "Management's Discussion and Analysis of Financial Condition and Results of Operations—COVID-19 Affecting Our Results of Operations."

**Inflation and Supply Chain Impacts**

As of the date of this prospectus, the PRC Stores have not been materially impacted by inflation or supply chain disruptions as their raw material, electricity, and fuel prices and labor costs remain stable and the PRC Stores have been regularly introducing new products and adjusting the prices for their existing products.

Rising inflation, geopolitical conflicts, including the recent war in Ukraine, and the related supply chain disruptions have had a direct or indirect impact on the business and operations of the U.S. Stores.

The annual inflation rate in the U.S. has been over 6% since January 2022 and was 6.5% in December 2022. Increases in the inflation rate of prices of commodities that are inputs to the products and services of the U.S. Stores, such as agricultural and energy commodities, have led to higher raw material, fuel, freight, warehousing, and labor costs and operating expenses. If the disposable income of the customers of the U.S. Stores does not increase at a similar rate as inflation does, the U.S. Stores' sales could suffer, which could materially and adversely affect their business and financial condition and cause the U.S. Stores to have additional working capital needs. However, the U.S. Stores cannot predict whether or how long the higher inflation rates will persist. See "Risk Factors—Risks Relating to Our Business—The operating entities' inability to source raw materials or other inputs of an acceptable type or quality could adversely affect their results of operations."

In addition, although the U.S. Stores do not have any operations outside of the U.S. nor any business relationships, connections to, or assets in, Russia, Belarus, or Ukraine, their business, financial condition, and results of operations have been, and could continue to be, indirectly and adversely affected by the ongoing military conflict between Russia and Ukraine. Such impact arises from: (i) volatility in the global supply of wheat, corn, barley, sunflower oil, and other agricultural commodities; (ii) higher food prices due to supply constraints and the general inflationary impact of the war; (iii) increases in energy prices globally, in particular for electricity and fossil fuels, such as crude oil and natural gas, and related transportation, freight, and warehousing costs; and (iv) disruptions to logistics and supply chains. See "Risk Factors—Risks Relating to Our Business—The PRC Stores and the U.S. Stores are currently operating in a period of economic uncertainty and capital markets disruption, which has been significantly impacted by geopolitical instability due to the ongoing military conflict between Russia and Ukraine. Their business, financial condition, and results of operations may be materially and adversely affected by any negative impact on the global economy and capital markets resulting from the conflict in Ukraine or any other geopolitical tensions."

The impact of supply chains of the U.S. Stores from rising inflation and geopolitical tensions primarily consists of (i) higher purchase prices and fuel, freight, and warehousing costs for raw materials and other products, (ii) delays in the manufacturing, processing, and transportation of raw materials and other products; and (iii) logistics and operational disruptions. Future interruptions or friction in the supply chains of the U.S. Stores, as well as anticipation of interruptions or friction, may cause them to be unable to meet customer demand, retain extra inventory, and make operational plans with less precision. Each of these impacts, if the U.S. Stores are affected more than their competitors, could materially and adversely affect their business, adversely impact their prices and/or margins, and cause them to have additional working capital needs.

In 2022, to mitigate the increases in costs and expenses described above, the U.S. Stores implemented more stringent and accurate inventory management and upgraded their menus to introduce new products, such as the cocktail products, with higher prices and increase the prices of existing products. However, if the costs and expenses described above continue to increase, there can be assurance that the U.S. Stores can continue to increase prices to maintain their margins. Lower margins could adversely impact the profitability of the businesses of the U.S. Stores. If the amounts the U.S. Stores charge their customers increase at a rate that is either unaffordable to their customers or insufficient to compensate for the rise in their material costs and operational expenses, their business may be materially and adversely affected, their product margin may deteriorate, and they may have additional working capital needs. We do not believe that such mitigation efforts have introduced any other new material risks, including, but not limited to, those related to product quality or reliability or regulatory approval. See "Risk Factors—Risks Relating to Our Business—The inability of the PRC Stores and the U.S. Stores to pass on price increases for materials or other inputs to their customers could adversely affect our results of operations." In order to mitigate the potential adverse impact of price increases on their financial condition and results of operations, the U.S. Stores plan to continue to improve their operating efficiency and further strengthen their bargaining power with their suppliers through the continued expansion of their store network.

 ***Permission Required from PRC Authorities***

We are currently not required to obtain permission from any of the PRC authorities to operate and issue our Class A Ordinary Shares to foreign investors. In addition, we, our subsidiaries, and the VIEs are not required to obtain permission or approval relating to our Class A Ordinary Shares from the PRC authorities, including the CSRC or CAC, for our subsidiaries or VIEs' operations, nor have we or our subsidiaries or VIEs received any denial for our subsidiaries or VIEs' operations with respect to this offering. Recently, however, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued the "Opinions on Severely Cracking Down on Illegal Securities Activities According to Law," or the "Opinions," which were made available to the public on July 6, 2021. The Opinions emphasized the need to strengthen the administration over illegal securities activities and the need to strengthen the supervision over overseas listings by Chinese companies. Effective measures, such as promoting the construction of relevant regulatory systems, will be taken to deal with the risks and incidents of China-concept overseas listed companies, cybersecurity, data privacy protection requirements, and similar matters. The Opinions and any related implementing rules to be enacted may subject us to compliance requirements in the future. On February 17, 2023, the CSRC promulgated the Trial Measures and five supporting guidelines, which will come into effect on March 31, 2023. Pursuant to the Trial Measures, domestic companies that seek to offer or list securities overseas, both directly and indirectly, shall complete filing procedures with the CSRC pursuant to the requirements of the Trial Measures within three working days following its submission of initial public offerings or listing application. If a domestic company fails to complete required filing procedures or conceals any material fact or falsifies any major content in its filing documents, such domestic company may be subject to administrative penalties, such as an order to rectify, warnings, fines, and its controlling shareholders, actual controllers, the person directly in charge and other directly liable persons may also be subject to administrative penalties, such as warnings and fines. See "Regulations—Regulations on Mergers & Acquisitions and Overseas Listings."

According to the Notice on the Administrative Arrangements for the Filing of the Overseas Securities Offering and Listing by Domestic Companies from the CSRC, or "the CSRC Notice," the domestic companies that have already been listed overseas before the effective date of the Trial Measures (namely, March 31, 2023) shall be deemed as existing issuers (the "Existing Issuers"). Existing Issuers are not required to complete the filing procedures immediately, and they shall be required to file with the CSRC for any subsequent offerings. Further, according to the CSRC Notice, domestic companies that have obtained approval from overseas regulatory authorities or securities exchanges (for example, the effectiveness of a registration statement for offering and listing in the U.S. has been obtained) for their indirect overseas offering and listing prior to March 31, 2023 but have not yet completed their indirect overseas issuance and listing, are granted a six-month transition period from March 31, 2023 to September 30, 2023. Those that complete their indirect overseas offering and listing within such six-month period are deemed as Existing Issuers and are not required to file with the CSRC for their indirect overseas offerings and listings. Within such six-month transition period, however, if such domestic companies fail to complete their indirect overseas issuance and listing, they shall complete the filing procedures with the CSRC.

Based on the foregoing, if our registration statement on Form F-1 cannot be declared effective on or before March 31, 2023, or if our registration statement on Form F-1 is declared effective on or before March 31, 2023 but we fail to complete this offering and listing on or before September 30, 2023, we will be required to complete necessary filing procedures pursuant to the Trial Measures.

On February 24, 2023, the CSRC, together with the MOF, National Administration of State Secrets Protection and National Archives Administration of China, revised the Provisions on Strengthening Confidentiality and Archives Administration for Overseas Securities Offering and Listing, which were issued by the CSRC and National Administration of State Secrets Protection and National Archives Administration of China in 2009, or the "Provisions." The revised Provisions were issued under the title the "Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies," and will come into effect on March 31, 2023 together with the Trial Measures. One of the major revisions to the revised Provisions is expanding their application to cover indirect overseas offering and listing, as is consistent with the Trial Measures. The revised Provisions require that, among other things, (a) a domestic company that plans to, either directly or indirectly through its overseas listed entity, publicly disclose or provide to relevant individuals or entities, including securities companies, securities service providers, and overseas regulators, any documents and materials that contain state secrets or working secrets of government agencies, shall first obtain approval from competent authorities according to law, and file with the secrecy administrative department at the same level; and (b) a domestic company that plans to, either directly or indirectly through its overseas listed entity, publicly disclose or provide to relevant individuals and entities, including securities companies, securities service providers, and overseas regulators, any other documents and materials that, if leaked, will be detrimental to national security or public interest, shall strictly fulfill relevant procedures stipulated by applicable national regulations. As of the date of this prospectus, the revised Provisions have not come into effect. On or after March 31, 2023, any failure or perceived failure by our Company, our subsidiaries, or the VIEs to comply with the above confidentiality and archives administration requirements under the revised Provisions and other PRC laws and regulations may result in the relevant entities being held legally liable by competent authorities, and referred to the judicial organ to be investigated for criminal liability if suspected of committing a crime.

As there are still uncertainties regarding the interpretation and implementation of such regulatory guidance, we cannot assure you that we will be able to comply with new regulatory requirements relating to our future overseas capital-raising activities and we may become subject to more stringent requirements with respect to matters such as cross-border investigation, data privacy, and enforcement of legal claims. See "Risk Factors—Risks Relating to Doing Business in the PRC—The Opinions, the Trial Measures, and the revised Provisions recently issued by PRC authorities may subject us to additional compliance requirements in the future." Notwithstanding the foregoing, as of the date of this prospectus, we are not aware of any PRC laws or regulations in effect requiring that we obtain permission from any PRC authorities to issue securities to foreign investors, and we have not received any inquiry, notice, warning, sanction, or any regulatory objection to this offering from the CSRC, the CAC, or any other PRC authorities that have jurisdiction over our operations.

 **Asset Transfers Between Our Company, Our Subsidiaries, and the VIEs** 

As of the date of this prospectus, our Company, our subsidiaries, and the VIEs have not distributed any earnings or settled any amounts owed under the VIE Agreements. Our Company, our subsidiaries, and the VIEs do not have any plan to distribute earnings or settle amounts owed under the VIE Agreements in the foreseeable future.

Our management is directly supervising cash management. Our finance department is responsible for establishing the cash management policies and procedures among our departments and the operating entities. Each department or operating entity initiates a cash request by putting forward a cash demand plan, which explains the specific amount and timing of cash requested, and submitting it to designated management members of our Company, based on the amount and the use of cash requested. The designated management member examines and approves the allocation of cash based on the sources of cash and the priorities of the needs, and submit it to the cashier specialists of our finance department for a second review. Other than the above, we currently do not have other cash management policies or procedures that dictate how funds are transferred nor a written policy that addresses how we will handle any limitations on cash transfers due to PRC law.

During the six months ended June 30, 2022 and the fiscal years ended December 31, 2021 and 2020, cash transfers and transfers of other assets between our Company, our subsidiaries, and the VIEs were as follows:

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| | | | | |
|:---|:---|:---|:---|:---|
| **For the Six Months Ended June 30, 2022** | **For the Six Months Ended June 30, 2022** | **For the Six Months Ended June 30, 2022** | **For the Six Months Ended June 30, 2022** | **For the Six Months Ended June 30, 2022** |
| **No.** | **Transfer From** | **Transfer To** | **Approximate Value ($)** | **Note** |
| 1 | VIEs | Xinjiang United Family | 259295 | Cash (as working capital) borrowed by the VIEs from Xinjiang United Family |
| 2 | VIEs | Xinjiang United Family | 1046747 | Raw materials purchased by the stores under the VIEs on behalf of Xinjiang United Family |
| 3 | Xinjiang United Family | VIEs | 970488 | Raw Materials from the central factory under Xinjiang United Family to the stores under the VIEs |
| 4 | Xinjiang United Family | VIEs | 1477608 | Products from the central factory under Xinjiang United Family to the stores under the VIEs |

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| | | | | |
|:---|:---|:---|:---|:---|
| **For the Fiscal Year Ended December 31, 2021** | **For the Fiscal Year Ended December 31, 2021** | **For the Fiscal Year Ended December 31, 2021** | **For the Fiscal Year Ended December 31, 2021** | **For the Fiscal Year Ended December 31, 2021** |
| **No.** | **Transfer From** | **Transfer To** | **Approximate Value ($)** | **Note** |
| 1 | VIEs | Xinjiang United Family | 159715 | Cash (as working capital) borrowed by the VIEs from Xinjiang United Family |
| 2 | VIEs | Xinjiang United Family | 1953748 | Raw materials purchased by the stores under the VIEs on behalf of Xinjiang United Family |
| 3 | Xinjiang United Family | VIEs | 1766804 | Raw Materials from the central factory under Xinjiang United Family to the stores under the VIEs |
| 4 | Xinjiang United Family | VIEs | 2855345 | Products from the central factory under Xinjiang United Family to the stores under the VIEs |

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| | | | | |
|:---|:---|:---|:---|:---|
| **For the Year Ended December 31, 2020** | **For the Year Ended December 31, 2020** | **For the Year Ended December 31, 2020** | **For the Year Ended December 31, 2020** | **For the Year Ended December 31, 2020** |
| **No.** | **Transfer From** | **Transfer To** | **Approximate Value ($)** | **Note** |
| 1 | VIEs | Xinjiang United Family | 423344 | Cash (as working capital) borrowed by the VIEs from Xinjiang United Family |
| 2 | VIEs | Xinjiang United Family | 1371090 | Raw materials purchased by the stores under the VIEs on behalf of Xinjiang United Family |
| 3 | Xinjiang United Family | VIEs | 1127716 | Raw Materials from the central factory under Xinjiang United Family to the stores under the VIEs |
| 4 | Xinjiang United Family | VIEs | 1840367 | Products from the central factory under Xinjiang United Family to the stores under the VIEs |

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 **Dividends or Distributions Made to our Company and U.S. Investors and Tax Consequences**

As of the date of this prospectus, none of our subsidiaries or VIEs have made any dividends or distributions to our Company and our Company has not made any dividends or distributions to our shareholders. We intend to keep any future earnings to finance the expansion of our business, and we do not anticipate that any cash dividends will be paid in the foreseeable future. Subject to the passive foreign investment company ("PFIC") rules, the gross amount of distributions we make to investors with respect to our Class A Ordinary Shares (including the amount of any taxes withheld therefrom) will be taxable as a dividend, to the extent that the distribution is paid out of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles.

Under the Cayman Islands law, a Cayman Islands company may pay a dividend on its shares out of either profit or share premium amount, provided that in no circumstances may a dividend be paid if this would result in the company being unable to pay its debts due in the ordinary course of business.

If we determine to pay dividends on any of our Class A Ordinary Shares or Class B Ordinary Shares in the future, as a holding company, we will depend on receipt of funds from our PRC subsidiary and from the VIEs to our PRC subsidiary in accordance with the VIE Agreements. Pursuant to the EIT Law and its implementation rules, any dividends paid by Xinjiang United Family to Jenyd will be subject to a withholding tax rate of 10%. However, if Jenyd is determined by the relevant PRC tax authority to have satisfied the relevant conditions and requirements under the Arrangement between the Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Tax Evasion on Income, or the "Double Tax Avoidance Arrangement," and other applicable laws, the 10% withholding tax on the dividends Jenyd receives from Xinjiang United Family may be reduced to 5%. See "Risk Factors—Risks Relating to Doing Business in the PRC—There are significant uncertainties under the EIT Law relating to the withholding tax liabilities of our PRC subsidiary, and dividends payable by our PRC subsidiary to our offshore subsidiaries may not qualify to enjoy certain treaty benefits."

Current PRC regulations permit our indirect PRC subsidiary to pay dividends to Jenyd only out of its accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, our PRC subsidiary is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. Each of such entity in the PRC is also required to further set aside a portion of its after-tax profits to fund the employee welfare fund, although the amount to be set aside, if any, is determined at the discretion of its board of directors. Although the statutory reserves can be used, among other ways, to increase the registered capital and eliminate future losses in excess of retained earnings of the respective companies, the reserve funds are not distributable as cash dividends except in the event of liquidation. Furthermore, if our subsidiaries and affiliates in the PRC incur debt on their own in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments. If we or our subsidiaries are unable to receive all of the revenue from our operations, we may be unable to pay dividends on our Class A Ordinary Shares or Class B Ordinary Shares.

Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments, and trade and service-related foreign exchange transactions, can be made in foreign currencies, without prior approval of State Administration of Foreign Exchange ("SAFE"), by complying with certain procedural requirements. Specifically, without prior approval of SAFE, cash generated from the operations in PRC may be used to pay dividends to our Company. As of the date of this prospectus, our PRC subsidiary, Xinjiang United Family, has conducted the foreign exchange registration related to our Company under the existing PRC foreign exchange regulations, which enables our PRC subsidiary to legally distribute their earnings to our Company.

Our Company's ability to settle amounts owed under the VIE Agreements relies upon payments made from the VIEs to Xinjiang United Family in accordance with the VIE Agreements. For services rendered to the UFG Entity by Xinjiang United Family under the Exclusive Service Agreement, Xinjiang United Family is entitled to collect a service fee equal to the net profit after tax of the UFG Entity. Pursuant to the Call Option Agreement, Xinjiang United Family may at any time and under any circumstances, require the UFG Operator to transfer, at its discretion, to the extent permitted under PRC law, all or part of the UFG Operator's assets in the UFG Entity to Xinjiang United Family (or its designee). For restrictions and limitations on our ability to settle amounts owed under the VIE Agreements, please see "Risk Factors—Risks Relating to Our Corporate Structure—The VIE Agreements with the UFG Entities and the UFG Operators may not be effective in providing control over the UFG Entities" and "Risk Factors—Risks Relating to Our Corporate Structure—If the PRC government determines that the contractual arrangements constituting part of the VIE structure do not comply with PRC regulations, or if these regulations change or are interpreted differently in the future, we may be unable to assert our contractual rights over the assets of the VIEs, and our Class A Ordinary Shares may decline in value or become worthless."

**Implications of Our Being an "Emerging Growth Company"**

As a company with less than $1.235 billion in revenue during our last fiscal year, we qualify as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012, or the "JOBS Act." An "emerging growth company" may take advantage of reduced reporting requirements that are otherwise applicable to larger public companies. In particular, as an emerging growth company, we:

● may present only two years of audited financial statements and only two years of related Management's Discussion and Analysis of Financial Condition and Results of Operations;

● are not required to provide a detailed narrative disclosure discussing our compensation principles, objectives and elements and analyzing how those elements fit with our principles and objectives, which is commonly referred to as "compensation discussion and analysis";

● are not required to obtain an attestation and report from our auditors on our management's assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002;

● are not required to obtain a non-binding advisory vote from our shareholders on executive compensation or golden parachute arrangements (commonly referred to as the "say-on-pay," "say-on frequency" and "say-on-golden-parachute" votes);

● are exempt from certain executive compensation disclosure provisions requiring a pay-for-performance graph and CEO pay ratio disclosure;

● are eligible to claim longer phase-in periods for the adoption of new or revised financial accounting standards under §107 of the JOBS Act; and

● will not be required to conduct an evaluation of our internal control over financial reporting until our second annual report on Form 20-F following the effectiveness of our initial public offering.

We intend to take advantage of all of these reduced reporting requirements and exemptions, other than the longer phase-in periods for the adoption of new or revised financial accounting standards under §107 of the JOBS Act.

Under the JOBS Act, we may take advantage of the above-described reduced reporting requirements and exemptions until we no longer meet the definition of an emerging growth company. The JOBS Act provides that we would cease to be an "emerging growth company" at the end of the fiscal year in which the fifth anniversary of our initial sale of common equity pursuant to a registration statement declared effective under the Securities Act of 1933, as amended (the "Securities Act"), occurred, if we have more than $1.235 billion in annual revenue, have more than $700 million in market value of our Class A Ordinary Shares held by non-affiliates, or issue more than $1 billion in principal amount of non-convertible debt over a three-year period.

**Foreign Private Issuer Status**

We are a foreign private issuer within the meaning of the rules under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). As such, we are exempt from certain provisions applicable to U.S. domestic public companies. For example:

● we are not required to provide as many Exchange Act reports, or as frequently, as a domestic public company;

● for interim reporting, we are permitted to comply solely with our home country requirements, which are less rigorous than the rules that apply to domestic public companies;

● we are not required to provide the same level of disclosure on certain issues, such as executive compensation;

● we are exempt from provisions of Regulation FD aimed at preventing issuers from making selective disclosures of material information;

● we are not required to comply with the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act; and

● we are not required to comply with Section 16 of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and establishing insider liability for profits realized from any "short-swing" trading transaction.

**Controlled Company**

Upon completion of this offering, our Chairman, Mr. Gang Li, will beneficially own approximately 89.7% of the aggregate voting power of our outstanding Class A Ordinary Shares and Class B Ordinary Shares as a group assuming no exercise of the over-allotment option, or 89.0% assuming full exercise of the over-allotment option. As a result, we will be deemed a "controlled company" for the purpose of the Nasdaq listing rules. As a controlled company, we are permitted to elect to rely on certain exemptions from the obligations to comply with certain corporate governance requirements, including:

● the requirement that our director nominees be selected or recommended solely by independent directors; and

● the requirement that we have a nominating and corporate governance committee and a compensation committee that are composed entirely of independent directors with a written charter addressing the purposes and responsibilities of the committees.

Although we do not intend to rely on the controlled company exemptions under the Nasdaq listing rules even if we are deemed a controlled company, we could elect to rely on these exemptions in the future, and if so, you would not have the same protection afforded to shareholders of companies that are subject to all of the corporate governance requirements of Nasdaq.

**Selected Condensed Consolidating Financial Schedule of Chanson International and Its Subsidiaries and the VIEs**

The following tables present selected condensed consolidating financial data of Chanson International and its subsidiaries and the VIEs for the six months ended June 30, 2022, and the fiscal years ended December 31, 2021 and 2020. Chanson International records its investments in its subsidiaries under the equity method. Such investments are presented in the selected condensed consolidating balance sheets of Chanson International as "Investments in subsidiaries" and the profit of the subsidiaries is presented as "Income for equity method investment" in the selected condensed consolidating statements of operations. Pursuant to the VIE Agreements, Chanson International's wholly owned subsidiary, Xinjiang United Family, has the exclusive right to provide the VIEs services related to business operations, including operational and management consulting services and is entitled to consulting fees, which equal to 100% of the consolidated net income of the VIEs. Accordingly, for the six months ended June 30, 2022, and the years ended December 31, 2021 and 2020, Xinjiang United Family recognized the income from VIEs representing net income of the VIEs and financial interest in VIEs since the commencement of the VIE Agreements.

**SELECTED CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS**

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Six Months Ended June 30, 2022** | **For the Six Months Ended June 30, 2022** | **For the Six Months Ended June 30, 2022** | **For the Six Months Ended June 30, 2022** | **For the Six Months Ended June 30, 2022** | **For the Six Months Ended June 30, 2022** | **For the Six Months Ended June 30, 2022** |
|  | **Chanson International (Cayman<br> Islands)** | **Subsidiaries<br> (British Virgin Islands/Hong Kong)** | **Xinjiang<br> United Family** <br> **(PRC)**  | **Xinjiang<br> United Family's Subsidiaries** <br> **(USA)**  | **VIEs <br> (PRC)** | **Eliminations** | **Consolidated Total** |
|  Revenue | $- | $- | $2956683 | $1832294 | $3754826 | $- | $8543803 |
|  Cost of revenue | $- | $- | $1866636 | $1002401 | $1527678 | $- | $4396715 |
|  Income from VIEs | $- | $- | $959198 | $- | $- | $(959198) | $- |
|  Income for equity method investment | $220793 | $220793 | $- | $- | $- | $(441586) | $- |
|  Net income (loss) | $220793 | $220793 | $1058046 | $(837253) | $959198 | $(1400784) | $220793 |
|  Comprehensive income (loss) | $220793 | $508389 | $1384591 | $(876202) | $412364 | $(1688380) | $(38445) |

---

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Year Ended December 31, 2021** | **For the Year Ended December 31, 2021** | **For the Year Ended December 31, 2021** | **For the Year Ended December 31, 2021** | **For the Year Ended December 31, 2021** | **For the Year Ended December 31, 2021** | **For the Year Ended December 31, 2021** |
|  | **Chanson International (Cayman<br> Islands)** | **Subsidiaries<br> (British Virgin Islands/Hong Kong)** | **Xinjiang<br> United Family**<br> **(PRC)** | **Xinjiang<br> United Family's Subsidiaries**<br> **(USA)** | **VIEs <br> (PRC)** | **Eliminations** | **Consolidated Total** |
| Revenue | $- | $- | $4544478 | $1894207 | $8251610 | $- | $14690295 |
| Cost of revenue | $- | $- | $2516966 | $1177410 | $4065496 | $- | $7759872 |
| Income from VIEs | $- | $- | $1875684 | $- | $- | $(1875684) | $- |
| Income for equity method investment | $506769 | $506769 | $- | $- | $- | $(1013538) | $- |
| Net income (loss) | $506769 | $506769 | $2027809 | $(1521040) | $1875684 | $(2889222) | $506769 |
| Comprehensive income (loss) | $506769 | $328920 | $1849960 | $(1521040) | $2142485 | $(2711373) | $595721 |

---

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Year Ended December 31, 2020** | **For the Year Ended December 31, 2020** | **For the Year Ended December 31, 2020** | **For the Year Ended December 31, 2020** | **For the Year Ended December 31, 2020** | **For the Year Ended December 31, 2020** | **For the Year Ended December 31, 2020** |
|  | **Chanson International (Cayman<br> Islands)** | **Subsidiaries<br> (British Virgin Islands/Hong Kong)** | **Xinjiang<br> United Family**<br> **(PRC)** | **Xinjiang<br> United Family's Subsidiaries**<br> **(USA)** | **VIEs <br> (PRC)** | **Eliminations** | **Consolidated Total** |
| Revenue | $- | $- | $1141748 | $1339770 | $7831994 | $- | $10313512 |
| Cost of revenue | $- | $- | $559844 | $753890 | $3850444 | $- | $5164178 |
| Income from VIEs | $- | $- | $1005508 | $- | $- | $(1005508) | $- |
| Income for equity method investment | $(447151) | $(447151) | $- | $- | $- | $894302 | $- |
| Net income (loss) | $(447151) | $(447151) | $1194255 | $(1641406) | $1288630 | $(111206) | $(164029) |
| Comprehensive income (loss) | $(447151) | $(470574) | $1170832 | $(1641406) | $1444260 | $(87783) | $(31822) |

---

**SELECTED CONDENSED CONSOLIDATING BALANCE SHEETS**

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **As of June 30, 2022** | **As of June 30, 2022** | **As of June 30, 2022** | **As of June 30, 2022** | **As of June 30, 2022** | **As of June 30, 2022** | **As of June 30, 2022** |
|  | **Chanson<br> International<br> (Cayman<br> Islands)** | **Subsidiaries<br> (British<br> Virgin<br> Islands/<br> Hong Kong)** | **Xinjiang<br> United<br> Family<br> (PRC)** | **Xinjiang<br> United<br> Family's<br> Subsidiaries<br> (USA)** | **VIEs <br> (PRC)** | **Eliminations** | **Consolidated<br> Total** |
| Cash and cash equivalents | $- | $- | $136412 | $105071 | $151901 | $- | $393384 |
| Intercompany receivable | $9000 | $- | $- | $- | $6395382 | $(6404382) | $- |
| Total current assets | $9000 | $- | $1225977 | $729567 | $13083084 | $(10422200) | $4625428 |
| Investments in subsidiaries | $(4125279) | $(4038955) | $- | $- | $- | $8164234 | $- |
| Financial interest in VIEs | $- | $- | $3840390 | $- | $<u>-</u> | $(3840390) | $- |
| Total non-current assets | $(4125279) | $(4038955) | $5499272 | $15695773 | $4734863 | $4323844 | $22089518 |
| Total Assets | $(4116279) | $(4038955) | $6725249 | $16425340 | $17817947 | $(6098356) | $26714946 |
| Intercompany payable | $- | $- | $6404382 | $- | $<u>-</u> | $(6404382) | $- |
| Total Liabilities | $- | $- | $8254022 | $18935522 | $7151088 | $(10422200) | $23918432 |
| Total Shareholders' Equity (Deficit) | $(4116279) | $(4038955) | $(1528773) | $(2510182) | $10666859 | $4323844 | $2796514 |
| Total Liabilities and Shareholders' Equity (Deficit) | $(4116279) | $(4038955) | $6725249 | $16425340 | $17817947 | $(6098356) | $26714946 |

---

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **As of December 31, 2021** | **As of December 31, 2021** | **As of December 31, 2021** | **As of December 31, 2021** | **As of December 31, 2021** | **As of December 31, 2021** | **As of December 31, 2021** |
|  | **Chanson<br> International<br> (Cayman<br> Islands)** | **Subsidiaries<br> (British<br> Virgin<br> Islands/** <br> **Hong Kong)** | **Xinjiang<br> United<br> Family** <br> **(PRC)** | **Xinjiang<br> United<br> Family's<br> Subsidiaries<br> (USA)** | **VIEs <br> (PRC)** | **Eliminations** | **Consolidated<br> Total** |
| Cash and cash equivalents | $- | $- | $203587 | $167684 | $3525541 | $- | $3896812 |
| Intercompany receivable | $9000 | $- | $- | $- | $6469788 | $(6478788) | $- |
| Total current assets | $9000 | $- | $1168029 | $887802 | $13044182 | $(8363157) | $6745856 |
| Investments in subsidiaries | $(4346072) | $(4547344) | $- | $- | $- | $8893416 | $- |
| Financial interest in VIEs | $- | $- | $2881192 | $- | $- | $(2881192) | $- |
| Total non-current assets | $(4346072) | $(4547344) | $3457117 | $11482509 | $6191804 | $6012224 | $18250238 |
| Total Assets | $(4337072) | $(4547344) | $4625146 | $12370311 | $19235986 | $(2350933) | $24996094 |
| Intercompany payable | $- | $- | $6478788 | $- | $- | $(6478788) | $- |
| Total Liabilities | $- | $- | $7538510 | $14004291 | $8981491 | $(8363157) | $22161135 |
| Total Shareholders' Equity (Deficit) | $(4337072) | $(4547344) | $(2913364) | $(1633980) | $10254495 | $6012224 | $2834959 |
| Total Liabilities and Shareholders' Equity (Deficit) | $(4337072) | $(4547344) | $4625146 | $12370311 | $19235986 | $(2350933) | $24996094 |

---

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **As of December 31, 2020** | **As of December 31, 2020** | **As of December 31, 2020** | **As of December 31, 2020** | **As of December 31, 2020** | **As of December 31, 2020** | **As of December 31, 2020** |
|  | **Chanson<br> International<br> (Cayman<br> Islands)** | **Subsidiaries<br> (British<br> Virgin<br> Islands/** <br> **Hong Kong)** | **Xinjiang<br> United<br> Family** <br> **(PRC)** | **Xinjiang<br> United<br> Family's<br> Subsidiaries<br> (USA)** | **VIEs <br> (PRC)** | **Eliminations** | **Consolidated<br> Total** |
|  Cash and cash equivalents | $- | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- | $278607 | $848371 | $2971568 | $- | $4098546 |
|  Intercompany receivable | $9000 | $- | $- | $- | $6143430 | $(6152430) | $- |
|  Total current assets | $9000 | $- | $893586 | $1269643 | $9996102 | $(6152430) | $6015901 |
|  Investments in subsidiaries | $(4852841) | $(4876264) | $- | $- | $- | $9729105 | $- |
|  Financial interest in VIEs | $- | $- | $1005508 | $- | $- | $(1005508) | $- |
|  Total non-current assets | $(4852841) | $(4876264) | $1056266 | $11069557 | $4001163 | $8723597 | $15121478 |
|  Total Assets | $(4843841) | $(4876264) | $1949852 | $12339200 | $13997265 | $2571167 | $21137379 |
|  Intercompany payable | $- | $- | $6152430 | $- | $- | $(6152430) | $- |
|  Total Liabilities | $- | $- | $6713176 | $12452140 | $5885255 | $(6152430) | $18898141 |
|  Total Shareholders' Equity (Deficit) | $(4843841) | $(4876264) | $(4763324) | $(112940) | $8112010 | $8723597 | $2239238 |
|  Total Liabilities and Shareholders' Equity (Deficit) | $(4843841) | $(4876264) | $1949852 | $12339200 | $13997265 | $2571167 | $21137379 |

---

**SELECTED CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS**

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Six Months Ended June 30, 2022** | **For the Six Months Ended June 30, 2022** | **For the Six Months Ended June 30, 2022** | **For the Six Months Ended June 30, 2022** | **For the Six Months Ended June 30, 2022** | **For the Six Months Ended June 30, 2022** | **For the Six Months Ended June 30, 2022** |
|  | **Chanson<br> International<br> (Cayman<br> Islands)** | **Subsidiaries<br> (British<br> Virgin<br> Islands/<br> Hong Kong)** | **Xinjiang<br> United<br> Family** <br> **(PRC)** | **Xinjiang<br> United<br> Family's<br> Subsidiaries** <br> **(USA)** | **VIEs <br> (PRC)** | **Eliminations** | **Consolidated<br> Total** |
|  Net cash provided by (used in) operating activities | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- | $(399799) | $(275645) | $315498 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- | $(359946) |
|  Net cash used in investing activities | $- | $- | $(397342) | $(118053) | $(51044) | $- | $(566439) |
|  Net cash provided by (used in) financing activities | $- | $- | $1041018 | $331085 | $(3568914) | $- | $(2196811) |

---

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Year Ended December 31, 2021** | **For the Year Ended December 31, 2021** | **For the Year Ended December 31, 2021** | **For the Year Ended December 31, 2021** | **For the Year Ended December 31, 2021** | **For the Year Ended December 31, 2021** | **For the Year Ended December 31, 2021** |
|  | **Chanson<br> International<br> (Cayman<br> Islands)** | **Subsidiaries<br> (British<br> Virgin<br> Islands/<br> Hong Kong)** | **Xinjiang<br> United<br> Family** <br> **(PRC)** | **Xinjiang<br> United<br> Family's<br> Subsidiaries** <br> **(USA)** | **VIEs <br> (PRC)** | **Eliminations** | **Consolidated<br> Total** |
| Net cash provided by (used in) operating activities | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- | $(953910) | $(1704654) | $4436810 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- | $1778246 |
| Net cash used in investing activities | $- | $- | $(799123) | $(942003) | $(289795) | $- | $(2030921) |
| Net cash provided by (used in) financing activities | $- | $- | $1534818 | $1965970 | $(3679028) | $- | $(178240) |

---

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Year Ended December 31, 2020** | **For the Year Ended December 31, 2020** | **For the Year Ended December 31, 2020** | **For the Year Ended December 31, 2020** | **For the Year Ended December 31, 2020** | **For the Year Ended December 31, 2020** | **For the Year Ended December 31, 2020** |
|  | **Chanson<br> International<br> (Cayman<br> Islands)** | **Subsidiaries<br> (British<br> Virgin<br> Islands/<br> Hong Kong)** | **Xinjiang<br> United<br> Family** <br> **(PRC)** | **Xinjiang<br> United<br> Family's<br> Subsidiaries** <br> **(USA)** | **VIEs <br> (PRC)** | **Eliminations** | **Consolidated<br> Total** |
| Net cash provided by (used in) operating activities | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- | $575362 | $(1586715) | $2257030 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- | $1245677 |
| Net cash used in investing activities | $- | $- | $(33215) | $(312049) | $(229069) | $- | $(574333) |
| Net cash provided by (used in) financing activities | $- | $- | $(1990731) | $1141352 | $- | $- | $(849379) |

---

**ROLL-FORWARD OF INVESTMENT IN SUBSIDIARIES AND VIES**

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| | |
|:---|:---|
| **Balance, December 31, 2019** | $(4405690) |
| Comprehensive loss for the year | (447151) |
| **Balance, December 31, 2020** | $(4852841) |
| Comprehensive income for the year | 506769 |
| **Balance, December 31, 2021** | $(4346072) |
| Comprehensive income for the period | 220793 |
| **Balance, June 30, 2022** | $(4125279) |

---

**THE OFFERING**

---

| | |
|:---|:---|
| **Class A Ordinary Shares offered by us** | 3,750,000 Class A Ordinary Shares, or 4,312,500 Class A Ordinary Shares if the Underwriter exercises its over-allotment option in full |
| **Price per Class A Ordinary Share** | We currently estimate that the initial public offering price will be in the range of $4.00 to $6.00 per Class A Ordinary Share. |
| **Class A Ordinary Shares outstanding prior to completion of this offering** | 3,060,000 Class A Ordinary Shares |
| **Class A Ordinary Shares outstanding immediately after this offering** | <br> 6,810,000 Class A Ordinary Shares assuming no exercise of the Underwriter's over-allotment option and excluding 75,000 Class A Ordinary Shares underlying the Underwriter Warrants <br>7,372,500 Class A Ordinary Shares assuming full exercise of the Underwriter's over-allotment option and excluding 86,250 Class A Ordinary Shares underlying the Underwriter Warrants  |
| **Listing** | We have applied to have our Class A Ordinary Shares listed on the Nasdaq Capital Market. At this time, Nasdaq has not yet approved our application to list our Class A Ordinary Shares. The closing of this offering is conditioned upon Nasdaq's final approval of our listing application, and there is no guarantee or assurance that our Class A Ordinary Shares will be approved for listing on Nasdaq.  |
| **Ticker symbol** | "CHSN" |
| **Transfer Agent** | Transhare Corporation |
| **Use of proceeds** | We intend to use the proceeds from this offering to open new stores in the U.S. See "Use of Proceeds" on page 61 for more information. |
| **Lock-up** | We, on behalf of ourselves and any successor entity, have agreed that, without the prior written consent of the Underwriter, we will not, for a period of 180 days from the commencement of sale of this offering, (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right, or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, our Class A Ordinary Shares or Class B Ordinary Shares or any securities convertible into or exercisable or exchangeable for our Class A Ordinary Shares or Class B Ordinary Shares; (ii) file or cause to be filed any registration statement with the SEC relating to the offering of our Class A Ordinary Shares or Class B Ordinary Shares or any securities convertible into or exercisable or exchangeable for our Class A Ordinary Shares or Class B Ordinary Shares; (iii) complete any offering of debt securities of the Company, other than entering into a line of credit with a traditional bank, or (iv) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of capital shares of our Company, whether any such transaction described in (i), (ii), (iii), or (iv) above is to be settled by delivery of our Class A Ordinary Shares or such other securities, in cash, or otherwise. <br>All of our directors and officers and our shareholders owning 5% or more of our Class A Ordinary Shares have agreed with the Underwriter, subject to certain exceptions, not to offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right, or warrant to purchase, lend, or otherwise to transfer or dispose of, directly or indirectly, any of our Class A Ordinary Shares, Class B Ordinary Shares, or securities convertible into or exercisable or exchangeable for our Class A Ordinary Shares or Class B Ordinary Shares for a period of 180 days from the date of this prospectus. See "Shares Eligible for Future Sale" and "Underwriting" for more information.  |
| **Risk factors**<br>**Voting rights** | The Class A Ordinary Shares offered hereby involve a high degree of risk. You should read "Risk Factors," beginning on page 23 for a discussion of factors to consider before deciding to invest in our Class A Ordinary Shares.<br>Holders of Class A Ordinary Shares are entitled to one vote per one Class A Ordinary Share.<br>Holders of Class B Ordinary Shares are entitled to 10 votes per one Class B Ordinary Share.<br>Holders of our Class A Ordinary Shares and Class B Ordinary Shares will generally vote together as a single class, unless otherwise required by law. Mr. Gang Li, who after our initial public offering will control approximately 89.7% of the voting power of our outstanding ordinary shares assuming no exercise of the over-allotment option by the Underwriter or 89.0% of the voting power of our outstanding ordinary shares assuming full exercise of the over-allotment option by the Underwriter, will have the ability to control the outcome of matters submitted to our shareholders for approval, including the election of our directors. See "Description of Share Capital."  |

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**RISK FACTORS**

*An investment in our Class A Ordinary Shares involves a high degree of risk. Before deciding whether to invest in our Class A Ordinary Shares, you should consider carefully the risks described below, together with all of the other information set forth in this prospectus, including the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and related notes. If any of these risks actually occurs, our business, financial condition, results of operations or cash flow could be materially and adversely affected, which could cause the trading price of our Class A Ordinary Shares to decline, resulting in a loss of all or part of your investment. The risks described below and discussed in other parts of this prospectus are not the only ones that we face. Additional risks not presently known to us or that we currently deem immaterial may also affect our business. You should only consider investing in our Class A Ordinary Shares if you can bear the risk of loss of your entire investment.*

 **Risks Relating to Our Business**

 ***The operating entities' business is affected by changes in consumer preferences and discretionary spending.***

The operating entities' success depends, in part, upon the popularity of their bakery products and their ability to develop new bakery products that appeal to consumers. Shifts in consumer preferences away from their bakery stores or their product offerings and mix, their inability to develop new products that appeal to consumers could harm the operating entities' business. The operating entities' success depends in large part on their customers' continued belief that food made with high-quality ingredients, including selected proteins raised without antibiotics, their artisan breads, cakes, pastries, and other bakery treats made without artificial preservatives, flavors, sweeteners, or colors from artificial sources are worth the prices charged at the operating entities' bakery stores relative to the lower prices offered by some of their competitors. The operating entities' inability to successfully educate customers about the quality of their bakery products or their customers' rejection of the operating entities' pricing approach could result in decreased demand for their products or require the operating entities to change their pricing, marketing, or promotional strategies, which could materially and adversely affect our consolidated financial results or the brand identity that the operating entities have created. In addition, the operating entities' success depends to a significant extent on discretionary consumer spending, which is influenced by general economic conditions and the availability of discretionary income. Accordingly, the operating entities may experience declines in sales during economic downturns or during periods of uncertainty. Any material decline in the amount of discretionary spending could have a material adverse effect on the operating entities' sales, results of operations, business, and financial condition.

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 ***The operating entities' long-term success depends on their ability to successfully identify and secure appropriate sites and timely develop and expand their operations in existing and new markets.***

One of the key means of achieving the operating entities' growth strategies will be through opening and operating new stores on a profitable basis for the foreseeable future. The operating entities opened six, four, and five new stores in the fiscal years ended December 31, 2021, 2020, and 2019, respectively. The operating entities identify target markets, taking into account numerous factors such as the locations of their current stores, demographics, traffic patterns, and, recently, whether known consumer patterns will remain at the same level as prior to the COVID-19 pandemic and if they need to modify the layout of their new stores to minimize contact with customers. The operating entities may not be able to open their planned new stores within budget or on a timely basis, if at all, given the uncertainty of these factors, which could adversely affect their business, financial condition, and results of operations. As the operating entities operate more stores, their rate of expansion relative to the size of our store base will eventually decline.

The number and timing of new stores opened during any given period may be negatively impacted by a number of factors, including:

● epidemics such as the COVID-19 pandemic;

● the operating entities' ability to increase brand awareness and bakery product consumption in areas where they open stores;

● the identification and availability of sites for store locations with the appropriate size, traffic patterns, local retail and business attractions, and infrastructure that will drive high levels of customer traffic and sales per unit;

● competition in existing and new markets, including competition for store sites;

● the negotiation of acceptable lease terms;

● the operating entities' ability to obtain all required governmental permits on a timely basis;

● the operating entities' ability to control construction and development costs of new stores;

● the maintenance of adequate distribution capacity, information systems, and other operational system capabilities;

● integrating new stores into the operating entities' existing procurement, manufacturing, distribution, and other support operations;

● the hiring, training, and retention of store management and other qualified personnel;

● assimilating new store employees into the operating entities' corporate culture;

● the effective management of inventory to meet the needs of the operating entities' stores on a timely basis; and

● the availability of sufficient levels of cash flow and financing to support the operating entities' expansion.

Unavailability of attractive store locations, delays in the acquisition or opening of new stores, delays or costs resulting from a decrease in commercial development due to capital constraints, difficulties in staffing and operating new store locations, or lack of customer acceptance of stores in new market areas may negatively impact the operating entities' new store growth and the costs or the profitability associated with new stores.

Additionally, customer trends, preferences, and demand may vary significantly by region, and the operating entities' experience in the markets in which they currently operate may not be applicable in other parts of the PRC and the U.S. As a result, the operating entities may not be able to leverage their experience to expand into other parts of the PRC and the U.S. When the operating entities enter new markets, they may face intense competition from companies with greater experience or an established presence in the targeted geographical areas or from other companies with similar expansion targets. In addition, the operating entities' business model may not be successful in new and untested markets and markets with a different business environment. The operating entities may not be able to grow their revenue in the new cities they enter into, but they will incur substantial costs in connection with any such expansion. Consequently, we cannot assure you that the operating entities will achieve their planned growth or, even if the operating entities are able to grow their store base as planned, that any new stores will be profitable, which could have a material adverse effect on their results of operations.

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 ***The operating entities operate in a highly-competitive market and their failure to compete effectively could adversely affect our results of operations.***

The market for bakery products is highly competitive. The current competitors of the PRC Stores and the U.S. Stores include international and domestic companies that produce and sell bakery products in Xinjiang and New York City, respectively, and their potential competitors include companies that produce and sell bakery products in other cities in the U.S. The PRC Stores and the U.S. Stores compete for customers primarily on the basis of the price and quality of their products, food safety, brand awareness and loyalty, responsiveness to customer demand and market trends, customer experience, the ability to accurately estimate sales quota and control inventory, production capacity, and operation and management of chain stores. They may not successfully compete with their existing competitors and new competitors may enter the market.

In addition, we cannot predict the pricing or promotion actions of competitors of the PRC Stores and the U.S. Stores or their effect on customer perceptions or the success of advertising and promotional efforts by the PRC Stores and the U.S. Stores. Competitors of the PRC Stores or the U.S. Stores may develop and launch products targeted to compete directly with their products and some of their competitors may have substantially greater financial, marketing, and other resources than they do. This creates competitive pressure that could cause the PRC Stores or the U.S. Stores to lose market share or require them to lower prices, increase advertising expenditures, or increase the use of discounting or promotional campaigns. These competitive factors may also restrict the ability of the PRC Stores and the U.S. Stores to increase prices, including in response to commodity and other cost increases. If the PRC Stores and the U.S. Stores are unable to continue to respond effectively to these and other competitive pressure, their customers may purchase fewer of their products or may insist on prices that erode their margins. These or other developments could materially and adversely affect sales volumes and margins of the PRC Stores and the U.S. Stores and result in a decrease in their operating results, which could have a material adverse effect on our business, financial condition, and results of operations.

 ***Our financial condition, results of operations, and cash flows have been adversely affected by the COVID-19 pandemic.***

The COVID-19 pandemic has spread throughout the world, especially in China, the U.S., and Europe. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic—the first pandemic caused by a coronavirus. The pandemic has resulted in the implementation of significant governmental measures, including lockdowns, closures, quarantines, and travel bans, intended to control the spread of the virus. Both the Chinese and U.S. governments have ordered quarantines, travel restrictions, and the temporary closure of stores and facilities. Companies are also taking precautions, such as requiring employees to work remotely, imposing travel restrictions, and temporarily closing businesses.

Due to the impact of the COVID-19 pandemic, all but one of the PRC Stores were temporarily closed between late January and early March of 2020. The PRC Stores resumed their normal activities on March 8, 2020. However, all the PRC Stores were closed again on July 17, 2020 due to the resurgence of COVID-19 cases in Xinjiang. The PRC Stores resumed their normal activities in September 2020. Due to the 2022 Outbreak, which resulted in the implementation of significant governmental measures, including lockdowns, closures, quarantines, and travel bans, the operations of the PRC Stores and the production in the PRC Stores' central factory were affected starting from August 10, 2022 and all of the PRC Stores and the central factory were closed between October 5, 2022 and November 30, 2022. The PRC Stores and the central factory stared to reopen in early December 2022 and resumed their normal business activities on December 10, 2022. For measures taken by the PRC Stores during August and September 2022 to mitigate the adverse impact of COVID-19 pandemic and related lockdowns on their business, see "Prospectus Summary—Impact of COVID-19 on Our Operations and Financial Performance."

In the U.S., Chanson 23rd Street in New York City provided only delivery and pickup services between the end of February 2020 and the end of June 2020, and resumed outdoor dining services at the end of June 2020 and limited indoor dining services at the end of September 2020. Chanson 23rd Street suspended its indoor dining services again between December 14, 2020 and February 11, 2021 according to an indoor dining ban issued by the Governor of New York State. In addition, the renovation of Chanson Greenwich was delayed and the store opened in December 2021. Chanson 23rd Street resumed its indoor dining services on February 12, 2021 at 25 percent capacity, which was increased to 35 percent on February 26, 2021 and further increased to 50 percent and 75 percent on March 19, 2021 and May 7, 2021, respectively. Starting from May 19, 2021, Chanson 23rd Street has been allowed to provide indoor dining services at full capacity, provided that either diners are seated at least six feet apart or tables are separated by physical barriers. The six-feet rule was later lifted for fully vaccinated people and eventually for all people. As of the date of this prospectus, the U.S. Stores are providing indoor dining services at their full capacity.

See "Management's Discussion and Analysis of Financial Condition and Results of Operations—COVID-19 Affecting Our Results of Operations." Consequently, the COVID-19 pandemic has materially adversely affected our business operations and condition and operating results for 2021 and 2020, including but not limited to material negative impact on our total revenue and net income.

The extent to which the COVID-19 pandemic impacts our results of operations in 2023 will depend on the future developments of the outbreak, including new information concerning the global severity of and actions taken to contain the outbreak, or the appearance of new or more severe strains of the virus, which are highly uncertain and unpredictable.

 ***Sales of the operating entities' products are subject to changing customer preferences. If the operating entities do not correctly anticipate such changes, their sales and profitability may decline.***

There are a number of trends in customer preferences which have an impact on the operating entities and the bakery industry as a whole. These include, among others, preferences for ready-to-eat, natural, and healthy products. Concerns as to the health impacts and nutritional value of certain bakery products may increasingly result in bakery product manufacturers being encouraged or required to produce products with reduced levels of salt, sugar, and fat and to eliminate trans-fatty acids and certain other ingredients. Customer preferences are also shaped by concern over the environmental impact of products. The success of the operating entities' business depends on both the continued appeal of their products and, given the varied backgrounds and tastes of their customer base, their ability to offer a sufficient range of products to satisfy a broad spectrum of preferences. Any shift in customer preferences in the markets in which the operating entities operate could have a material adverse effect on their business. Customer tastes are also susceptible to change. The operating entities' competitiveness therefore depends on their ability to predict and quickly adapt to customer trends, exploiting profitable opportunities for product development without alienating their existing customer base or focusing excessive resources or attention on unprofitable or short-lived trends. If the operating entities are unable to respond on a timely and appropriate basis to changes in demand or customer preferences, their sales volumes and margins could be adversely affected.

 ***The operating entities' future results and competitive position depend on the successful development of new products and improvement of existing products, which are subject to a number of difficulties and uncertainties.***

The operating entities' future results and ability to maintain or improve their competitive position depend on their capacity to anticipate changes in their key markets and to identify, develop, manufacture, market, and sell new or improved products in these changing markets successfully. The PRC Stores and the U.S. Stores aim to introduce new products and re-launch and extend existing product lines on a timely basis in order to counteract obsolescence and decreases in sales of existing products as well as to increase overall sales of their products. The launch and success of new or modified products are inherently uncertain, especially as to the products' appeal to customers, and there can be no assurance as to the continuing ability of the PRC Stores and the U.S. Stores to develop and launch successful new products or variations of existing products. The failure to launch a product successfully can give rise to inventory write-offs and other costs and can affect customer perception of their other products. Market factors and the need to develop and provide modified or alternative products may also increase costs. In addition, launching new or modified products can result in cannibalization of sales of the existing products of the PRC Stores and the U.S. Stores if customers purchase the new product in place of their existing products. If the PRC Stores and the U.S. Stores are unsuccessful in developing new products in response to changing customer demand or preferences in an efficient and economical manner, or if their competitors respond more effectively than they do, demand for their products may decrease, which could materially and adversely affect their business, financial condition, and results of operations.

 ***The operating entities' inability to source raw materials or other inputs of an acceptable type or quality could adversely affect their results of operations.***

The PRC Stores and the U.S. Stores use significant quantities of food ingredients and packaging materials and are therefore vulnerable to fluctuations in the availability and prices of food ingredients, packaging materials, energy, and other supplies. In particular, raw materials such as milk, butter, eggs, flour, and sugar have historically represented a significant portion of their cost of revenue, and accordingly, adverse changes in raw material prices will impact their results of operations.

Specifically, the availability and the prices of milk, eggs, and other agricultural commodities can be volatile. The PRC Stores and the U.S. Stores are also affected by the availability of quality raw materials. General economic conditions, unanticipated demand, problems in manufacturing or distribution, natural disasters, weather conditions during the growing and harvesting seasons, plant and livestock diseases, and local, national, or international quarantines can also adversely affect availability and prices of commodities in the long and short term.

While the PRC Stores and the U.S. Stores attempt to negotiate fixed prices for certain materials with their suppliers for periods up to a full year, most of their contracts with suppliers do not have fix prices, therefore they cannot guarantee that they will be successful in managing input costs if prices increase for extended periods of time. Moreover, there is no market for hedging against price volatility for certain raw materials and accordingly such materials are bought at the spot rate in the market.

The ability of the PRC Stores and the U.S. Stores to avoid the adverse effects of a pronounced and sustained price increase in raw materials is limited. Any increases in prices or scarcity of ingredients or packaging materials required for their products could increase their costs and disrupt their operations. If the availability of any of their inputs is constrained for any reason, they may not be able to obtain sufficient supplies or supplies of a suitable quality on favorable terms or at all. Such shortages could materially and adversely affect our market share, business, financial condition, and results of operations.

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 ***The inability of the PRC Stores and the U.S. Stores to pass on price increases for materials or other inputs to their customers could adversely affect our results of operations.***

The ability of the PRC Stores and the U.S. Stores to pass through increases in the prices of raw materials to their customers depends, among others, on prevailing competitive conditions and pricing methods in the markets in which they operate, and they may not be able to pass through such price increases to their customers. Even if they are able to pass through increases in prices, there is typically a time lag between cost increases impacting their business and implementation of product price increases, during which time their gross margin may be negatively impacted. During the adjustments of the PRC Stores and the U.S. Stores to increase their prices to recover cost increases, customers may take actions which exacerbate the impact of such cost increases, for example, by ceasing to purchase their products or deferring orders until adjustments have ended. The inability of the PRC Stores and the U.S. Stores to pass through price increases in raw materials and preserve their profit margins in the future could materially and adversely affect their business, financial condition, and results of operations.

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***The operating entities rely on their central factory and a limited number of third-party producers and suppliers. Any interruption in operations at the central factory or in such third-party producers or suppliers could prevent or limit their ability to meet demand for or fulfill orders of the operating entities' products.***

The PRC Stores operate a central factory located in Urumqi, which produces all of the packaged bakery products, and the semi-finished products for birthday cakes and made-in-store pastries for the PRC Stores. Any significant disruption at the central factory for any reason, including regulatory requirements, the loss of certifications or approvals, technical difficulties, labor disputes, power interruptions or other infrastructure failures, fires, earthquakes, or other force of nature, or terrorist attacks, could disrupt the supply of the products of the PRC Stores and significantly harm their results of operations and financial performance.

In addition, the Premises Use Agreement for the PRC Stores' central factory expires in 2031, and the PRC Stores may be unable to renew this agreement or find a new facility on commercially reasonable terms. If the PRC Stores were unable or unwilling to renew at the proposed rates, relocating their manufacturing facility would involve significant expenses in connection with the movement and installation of key manufacturing equipment and any necessary recertification with regulatory bodies, and we cannot assure you that such a move would not delay or otherwise adversely affect the PRC Stores' manufacturing activities or operating results. If the PRC Stores' manufacturing capabilities were impaired by their move, the PRC Stores may not be able to manufacture and ship their products in a timely manner, which would adversely impact their business.

The PRC Stores also depend upon a limited number of third-party producers to produce all of the seasonal products. During the six months ended June 30, 2022 and the fiscal years ended December 31, 2021 and 2020, the four largest third-party suppliers of the PRC Stores represented approximately 35%, 45%, and 59% of raw material purchases of the PRC Stores, respectively, and the three largest third-party suppliers of the U.S. Stores represented approximately 67%, 49%, and 62% of raw material purchases of the U.S. Stores, respectively. These third-party producers and suppliers are run by independent entities that are subject to their own unique operational and financial risks, which are out of the control of the PRC Stores or the U.S. Stores. Certain contracts of the PRC Stores and the U.S. Stores with key suppliers, such as for the raw materials they used in their products, can be terminated by the supplier upon giving notice within a certain period. If any of these producers or suppliers breach or terminate their contracts with the PRC Stores or the U.S. Stores or experience significant disruptions of their operations, the PRC Stores or the U.S. Stores will be required to find and enter into arrangements with one or more replacement producers or suppliers. Finding alternative producers could involve significant delays and other costs and these producers may not be available to the PRC Stores or the U.S. Stores on reasonable terms or at all. Any disruption of producing or packaging could delay delivery of their products, which could harm their business and financial results and result in lost or deferred revenue.

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 ***The operating entities' geographic focus makes them particularly vulnerable to economic and other events and trends in Xinjiang and New York City.***

  **

The current operations of our PRC subsidiary and the VIEs are geographically limited to three cities in Xinjiang, and 30 of the 33 PRC Stores are located in Urumqi, the capital city of Xinjiang. We derived 95%, 90%, and 75% of our revenue from stores in Urumqi in the six months ended June 30, 2022 and the fiscal years ended December 31, 2021 and 2020, respectively. In addition, the U.S. Stores' current operations are limited to New York City. The operating entities' future growth will depend on the growth and stability of the economy of Xinjiang, especially in Urumqi, and New York City. An economic downturn of Xinjiang or New York City, governmental measures implemented in response to the COVID-19 pandemic, or the implementation of provincial or local policies unfavorable to bakery industry may cause a decrease in the demand for the operating entities' products and could have a negative impact on their profitability and business.

The complex ethnic composition of Xinjiang has given rise to ethnic and other tensions both in Urumqi and elsewhere in Xinjiang. Events such as terrorist and ethnic extremist attacks as well as riots and the resulting political instability, economy suspension, and concerns over safety in Xinjiang could have a significant adverse impact on the PRC Stores' business, financial condition, and results of operation.

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 ***The PRC Stores and the U.S. Stores are currently operating in a period of economic uncertainty and capital markets disruption, which has been significantly impacted by geopolitical instability due to the ongoing military conflict between Russia and Ukraine. Their business, financial condition, and results of operations may be materially and adversely affected by any negative impact on the global economy and capital markets resulting from the conflict in Ukraine or any other geopolitical tensions.***

The U.S. and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the start of the military conflict between Russia and Ukraine. On February 24, 2022, a full-scale military invasion of Ukraine by Russian troops was reported, which has since caused significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions.

The PRC Stores and the U.S. Stores do not have any operations outside of mainland China and the U.S. nor any business relationships, connections to, or assets in, Russia, Belarus, or Ukraine. Although the ongoing military conflict between Russia and Ukraine has not had a material impact on the PRC Stores, the business, financial condition, and results of operations of the U.S. Stores have been, and could continue to be, indirectly and adversely affected. Such impact arises from: (i) volatility in the global supply of wheat, corn, barley, sunflower oil, and other agricultural commodities; (ii) higher food prices due to supply constraints and the general inflationary impact of the war; (iii) increases in energy prices globally, in particular for electricity and fossil fuels, such as crude oil and natural gas, and related transportation, freight, and warehousing costs; and (iv) disruptions to logistics and supply chains. If the price of the products and services of the U.S. Stores increases at a rate that is either unaffordable to their customers or insufficient to compensate for the rise in their costs and expenses, their business, financial condition, results of operations, and prospects could be materially and adversely affected. In addition, Russian military actions and the resulting sanctions could adversely affect the global economy and financial markets and lead to increased instability and lack of liquidity in capital markets, potentially making it more difficult for us to obtain additional funds.

The extent and duration of the military action, sanctions, and resulting market and supply chain disruptions are highly unpredictable but could be substantial. Any such disruptions may also magnify the impact of other risks described in this prospectus.

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 ***Failure to maintain or enhance the operating entities' brands or image could have a material adverse effect on their business and results of operations.***

We believe the operating entities' "George●Chanson," "Patisserie Chanson<sup>TM</sup>," and "Chanson" brands are well-recognized among their customers and other food industry players such as other bakery product manufacturers and bakery chain stores in the local markets the operating entities operate in. The operating entities' brands are integral to their sales and marketing efforts. The operating entities' continued success in maintaining and enhancing their brands and image depends to a large extent on their ability to satisfy customer needs by further developing and maintaining the quality of their products, as well as their ability to respond to competitive pressures. If the operating entities are unable to satisfy customer needs or if their public image or reputation were otherwise diminished, their business transactions with their customers may decline, which could in turn adversely affect their results of operations.

 ***Health concerns or adverse developments with respect to the safety or quality of products of the food industry in general or the operating entities' products specifically may damage their reputation, increase their costs of operations, and decrease demand for their products.***

Food safety and the public's perception that the operating entities' products are safe and healthy are essential to their image and business. The PRC Stores and the U.S. Stores sell food products for human consumption, which subjects them to safety risks such as product contamination, spoilage, misbranding, or product tampering. Product contamination, including the presence of a foreign object, substance, chemical, or other agent or residue or the introduction of a genetically modified organism, could require product withdrawals or recalls or the destruction of inventory, and could result in negative publicity, temporary plant closures, and substantial costs of compliance or remediation. The PRC Stores and the U.S. Stores may also be impacted by publicity concerning any assertion that their products caused illness or injury. In addition, they could be subject to claims or lawsuits relating to an actual or alleged illness stemming from product contamination or any other incidents that compromise the safety and quality of their products. Any significant lawsuit or widespread product recall or other events leading to the loss of customer confidence in the safety and quality of the operating entities' products could damage their brand, reputation, and image and negatively impact their sales, profitability, and prospects for growth. In addition, product recalls are difficult to foresee and prepare for and, in the event that the PRC Stores and the U.S. Stores are required to recall one or more of their products, such recall may result in loss of sales due to unavailability of their products and may take up a significant amount of their management's time and attention. The PRC Stores and the U.S. Stores maintain systems designed to monitor food safety risks and carefully select their third-party producers and suppliers. These efforts, however, might not be successful and such risks might materialize. In addition, although the PRC Stores and the U.S. Stores attempt, through contractual relationships and regular inspections, to control the risk of contamination caused by third parties in relation to the manufacturing processes they outsource, their efforts might not be successful and contamination of their products by third parties might materialize.

The PRC Stores and the U.S. Stores are also subject to further risks affecting the food industry generally, including risks posed by widespread contamination and evolving nutritional and health-related concerns. Regulatory authorities may limit the supply of certain types of food products in response to public health concerns and customers may perceive certain products to be unsafe or unhealthy. As a result, the PRC Stores and the U.S. Stores or their suppliers would be required to find alternative supplies or ingredients that may or may not be available at commercially reasonable prices and within the required time. In addition, governmental regulations may require them to identify replacement products to offer to their customers or, alternatively, to discontinue certain offerings or limit the range of products they offer. The PRC Stores and the U.S. Stores may be unable to find substitutes that are as appealing to their customer base, or such substitutes may not be widely available or may be available only at increased costs. Such substitutions or limitations could also reduce demand for their products.

The PRC Stores and the U.S. Stores could also be subject to claims or lawsuits relating to an actual or alleged illness or injury or death stemming from the consumption of a misbranded, altered, contaminated, or spoiled product, which could negatively affect their business. Awards of damages, settlement amounts, and fees and expenses resulting from such claims and the public relations implications of any such claims could have an adverse effect on their business. The PRC Stores and the U.S. Stores do not currently have insurance to cover claims for damages, and if they choose to purchase such insurance, the availability and price of insurance to cover claims for damages are subject to market forces that they do not control, and such insurance may not cover all the costs of such claims and would not cover damage to their reputation. Even if product liability claims against them are not successful or fully pursued, these claims could be costly and time consuming and divert our management's time and resources towards defending them rather than operating our business. In addition, any adverse publicity concerning such claims, even if unfounded, could cause customers to lose confidence in the safety and quality of the operating entities' products and damage their reputation and brand image.

 ***The operating entities could incur material costs to address violations of, or liabilities under, health, safety, and environmental regulations.***

The operating entities' facilities and operations in the PRC are subject to numerous health, safety, and environmental regulations, including local and national laws governing, among other things, water supply and use, water discharges, air emissions, chemical safety, clean-up of contamination, energy use, noise pollution, and workplace health and safety. Health, safety, and environmental legislation in the PRC have generally become more comprehensive and restrictive and more rigid over time and enforcement has become more stringent. Failure to comply with applicable requirements, or the terms of required permits, can result in penalties or fines, clean-up costs, third-party property damage, and personal injury claims, which could have a material adverse effect on the operating entities' brand, business, financial condition, and results of operations. In addition, if health, safety, and environmental laws and regulations in the PRC and the other countries in which the operating entities operate or from which they source raw materials and ingredients become more stringent in the future, the extent and timing of investments required to maintain compliance may exceed their budgets or estimates and may limit the availability of funding for other investments.

Furthermore, under some environmental laws, the operating entities could be liable for costs incurred in investigating or remediating contamination at properties they own or occupy, even if the contamination was caused by a party unrelated to them or was not caused by them, and even if the activity which caused the contamination was legal at the time it occurred. The discovery of previously unknown contamination, or the imposition of new or more burdensome obligations to investigate or remediate contamination at the operating entities' properties or at third-party sites, could result in substantial unanticipated costs which could have a material adverse effect on their business, financial condition, and results of operations.

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The U.S. Stores and any future stores we may open in the U.S. are subject to federal, state, and local laws and regulations concerning waste disposal, pollution, protection of the environment, and the presence, discharge, storage, handling, release, and disposal of, and exposure to, hazardous or toxic substances. These environmental laws provide for significant fines and penalties for noncompliance and liabilities for remediation, sometimes without regard to whether the owner or operator of the property knew of, or was responsible for, the release or presence of hazardous toxic substances. Third parties may also make claims against owners or operators of properties for personal injuries and property damage associated with releases of, or actual or alleged exposure to, such hazardous or toxic substances at, on or from our stores. Environmental conditions relating to releases of hazardous substances at prior, existing, or future store sites could materially adversely affect the U.S. Stores' business, financial condition, or results of operations. Further, environmental laws, and the administration, interpretation, and enforcement thereof, are subject to change and may become more stringent in the future, each of which could materially adversely affect the U.S. Stores' business, financial condition, or results of operations.

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 ***Increased distribution costs or disruption of product transportation could adversely affect the operating entities' business and financial results.***

Distribution costs have historically fluctuated significantly over time, particularly in connection with oil prices, and increases in such costs could result in reduced profits. In addition, certain factors affecting distribution costs are controlled by third-party carriers. To the extent that the market price for fuel or freight or the number or availability of carriers fluctuates, the operating entities' distribution costs could be affected. In addition, temporary or long-term disruption of product transportation due to weather-related problems, strikes, lockouts, or other events could impair the operating entities' ability to supply products affordably and in a timely manner or at all. Failure to deliver the operating entities' perishable food products promptly could also result in inventory spoilage and the inability to satisfy the demand of their customers at their stores. Any increases in the cost of transportation, and any disruption in transportation, could have a material adverse effect on the operating entities' business, financial condition, and results of operations.

 ***Failure to obtain and maintain required licenses and permits or to comply with alcoholic beverage or food control regulations could lead to the loss of the U.S. Stores' liquor and food service licenses and, thereby, harm their business, financial condition, or results of operations.***

The food retail industry is subject to various federal, state, and local government regulations, including those relating to the sale of food and alcoholic beverages. Such regulations are subject to change from time to time. The failure to obtain and maintain licenses, permits, and approvals relating to such regulations could adversely affect the business, financial condition, or results of operations of the U.S. Stores. Typically, licenses must be renewed annually and may be revoked, suspended, or denied renewal for cause at any time if governmental authorities determine that the U.S. Stores' conduct violates applicable regulations. Difficulties or failure to maintain or obtain the required licenses and approvals could adversely affect the U.S. Stores and delay or result in their decision to cancel the opening of new stores, which would adversely affect their business, financial condition, or results of operations.

Alcoholic beverage control regulations generally require the U.S. Stores to apply to a state authority and, in certain locations, county, or municipal authorities for a license that must be renewed annually and may be revoked or suspended for cause at any time. Alcoholic beverage control regulations relate to numerous aspects of daily operations of the U.S. Stores, including minimum age of patrons and employees, hours of operation, advertising, trade practices, wholesale purchasing, other relationships with alcohol manufacturers, wholesalers, and distributors, inventory control, and handling, storage, and dispensing of alcoholic beverages. Any future failure to comply with these regulations and obtain or retain liquor licenses could adversely affect the business, financial condition, or results of operations of the U.S. Stores.

 ***Any disruption of our information technology system would harm the operating entities' business and reduce their profitability.***

The operating entities rely on their information technology systems, in particular the Enterprise Resource Planning management information system (the "ERP System") in the PRC Stores, for various services related to inventory management, production, product transportation, point of sales, and accounting and financial management. The operating entities' performance depends on the availability of accurate and timely data and other information from key software applications to aid day-to-day business and decision-making processes. The operating entities may be adversely affected if their controls designed to manage information technology operational risks fail to contain such risks. If the operating entities do not allocate and effectively manage the resources necessary to build and sustain the proper technology infrastructure and to maintain the related automated and manual control processes, they could be subject to adverse effects including billing and collection errors, business disruptions, in particular concerning their manufacturing and logistics functions, and security breaches. Any disruption caused by failings in their information technology infrastructure equipment or of communication networks, could delay or otherwise impact their day-to-day business and decision-making processes and negatively impact their performance. In addition, the operating entities are reliant on third parties to service parts of their IT infrastructure. Failure on their part to provide good and timely service may have an adverse impact on the operating entities' information technology network. Furthermore, the operating entities do not control the facilities or operations of their suppliers. An interruption of operations at any of their facilities or any failure by them to deliver on their contractual commitments may have an adverse effect on the operating entities' business, financial condition, and results of operations.

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 ***Data security breaches and attempts thereof could negatively affect the operating entities' reputation, credibility, and business.***

The operating entities collect and store personal information relating to their customers and employees, including their personally identifiable information, and rely on third parties for the various social media tools and websites the operating entities use as part of their marketing strategy. Customers are increasingly concerned over the security of personal information transmitted over the Internet (or through other mechanisms), consumer identity theft, and user privacy. Any perceived, attempted, or actual unauthorized disclosure of personally identifiable information regarding the operating entities' employees, customers, or website visitors could harm their reputation and credibility, reduce their e-commerce sales, impair their ability to attract website visitors, reduce their ability to attract and retain customers, and could result in litigation against the operating entities or the imposition of significant fines or penalties. We cannot assure you that any of the operating entities' third-party service providers with access to such personally identifiable information will maintain policies and practices regarding data privacy and security in compliance with all applicable laws, or that they will not experience data security breaches or attempts thereof which could have a corresponding adverse effect on the operating entities' business.

Recently, data security breaches suffered by well-known companies and institutions have attracted a substantial amount of media attention, prompting new foreign, national, provincial or state, and local laws and legislative proposals addressing data privacy and security, as well as increased data protection obligations imposed on merchants by credit card issuers. As a result, the operating entities may become subject to more extensive requirements to protect the customer information that they process in connection with the purchase of their products, resulting in increased compliance costs.

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 ***A breach of security of confidential customer information related to the U.S. Stores' electronic processing of credit and debit card transactions could substantially affect its reputation, business, financial condition, and results of operations.***

A significant portion of the sales in the U.S. Stores are by credit or debit cards. Other retailers have experienced security breaches in which credit and debit card information has been stolen. The U.S. Stores may in the future become subject to claims for purportedly fraudulent transactions arising out of the actual or alleged theft of credit or debit card information, and the U.S. Stores may also be subject to lawsuits or other proceedings relating to these types of incidents. The U.S. Stores may ultimately be held liable for the unauthorized use of a cardholder's card number in an illegal activity and be required by card issuers to pay charge-back fees. In addition, most states have enacted legislation requiring notification of security breaches involving personal information, including credit and debit card information. Any such claim or proceeding could cause the U.S. Stores to incur significant unplanned expenses, which could have an adverse impact on its business, financial condition, or results of operations. Further, adverse publicity resulting from these allegations may have a material adverse effect on the U.S. Stores and could substantially affect its reputation and business, financial condition, or results of operations.

 ***Governmental regulation may adversely affect the operating entities' ability to open new stores in the U.S. or otherwise adversely affect our business, financial condition, or results of operations.***

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The U.S. Stores and any store or stores the operating entities may open in the U.S. are subject to state and local licensing and regulation by health, alcoholic beverage, sanitation, food and occupational safety, and other agencies. The operating entities may experience material difficulties or failures in obtaining the necessary licenses, approvals, or permits for each store, which could delay store openings in the future or affect the operations in the U.S. In addition, stringent and varied requirements of local regulators with respect to zoning, land use, and environmental factors could delay or prevent development of new stores in particular locations.

Our subsidiaries in the U.S. are subject to the U.S. Americans with Disabilities Act and similar state laws that give civil rights protections to individuals with disabilities in the context of employment, public accommodations and other areas, including the U.S. Stores. The operating entities may in the future have to modify their stores, for example, by adding access ramps or redesigning certain architectural fixtures, to provide service to or make reasonable accommodations for disabled persons. The expenses associated with these modifications could be material.

The operations of the U.S. Stores and any store or stores the operating entities may open in the U.S. are also subject to the U.S. Occupational Safety and Health Act, which governs worker health and safety, the U.S. Fair Labor Standards Act, which governs such matters as minimum wages and overtime, and a variety of similar federal, state, and local laws that govern these and other employment law matters. In addition, federal, state, and local proposals related to paid sick leave or similar matters could, if implemented, materially adversely affect the operating entities' business, financial condition, or results of operations.

 ***Disclosure of the operating entities' recipes and other proprietary information, or a failure to adequately protect these, could result in increased competition and have a material adverse effect on their business and financial results.***

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Our ability to compete effectively depends in part on the operating entities' ability to obtain, maintain, and protect their proprietary information. Our operating entities rely on trade secret laws and practices, including physical security, limited dissemination and access, and confidentiality agreements with their employees, consultants, business partners, and others, to protect their recipes, proprietary processes, and other proprietary information. However, trade secrets are difficult to protect, and courts outside the jurisdictions in which the operating entities operate may be less willing to protect their trade secrets. The operating entities' protective measures might not effectively prevent disclosure or unauthorized use of proprietary information or provide an adequate remedy in the event of misappropriation, infringement, or other violations of their proprietary information.

Existing laws afford only limited protection for the operating entities' proprietary rights. Despite their efforts, the operating entities may not be able to protect some of their proprietary information, or the protection that they receive may not be sufficient. The operating entities face additional risks that their protective measures could prove to be inadequate, including:

● the steps they take to prevent circumvention, misappropriation, or infringement of our proprietary rights may not be successful;

● confidentiality agreements may be intentionally or unintentionally breached, be deemed unenforceable, or not provide adequate recourse against the disclosing party;

● intellectual property laws may not sufficiently support their proprietary rights or may change in the future in a manner adverse to them; and

● effective protection of intellectual property rights may be unavailable or limited in some countries in which they operate or plan to do business.

From time to time, the operating entities may seek to enforce their proprietary rights against third parties. Policing unauthorized use of proprietary information can be difficult and expensive. The operating entities may not be successful in their attempts to enforce their proprietary rights against third parties. Any such litigation may result in substantial diversion of financial and management resources and, if decided unfavorably to the operating entities, could have a material adverse effect on their business and financial results.

 ***The operating entities are subject to the risks associated with leasing a substantial amount of space and are required to make substantial lease payments under their operating leases. Any failure to make these lease payments when due would likely harm their business, financial condition, and results of operations.***

The operating entities do not own any real estate. Instead, our subsidiaries and the VIEs lease all of their store locations and their corporate office and central factory in Urumqi and New York City. Many of their lease agreements have defined escalating rent provisions over the initial term and any extensions. As the operating entities' stores mature and as the operating entities expand their store base, their lease expenses and their cash outlays for rent under their lease agreements will increase. Their substantial operating lease obligations could have significant negative consequences, including:

● requiring that an increased portion of their cash from operations and available cash be applied to pay their lease obligations, thus reducing liquidity available for other purposes;

● increasing their vulnerability to adverse general economic and industry conditions;

● limiting their flexibility to plan for or react to changes in their business or in the industry in which they compete; and

● limiting their ability to obtain additional financing.

If an existing or future store is not profitable, and the operating entities decide to close it, they may nonetheless remain committed to perform their obligations under the applicable lease including, among other things, paying the base rent for the balance of the lease term. Moreover, even if a lease has an early cancellation clause, the operating entities may not satisfy the contractual requirements for early cancellation under that lease.

The operating entities depend on cash flow from operations to pay their lease expenses, finance their growth capital requirements, and fulfill their other cash needs. If the operating entities' business does not generate sufficient cash flow from operating activities to fund these requirements, they may not be able to achieve their growth plans, fund their other liquidity and capital needs, or ultimately service their lease expenses, which would harm their business.

 ***Unexpected termination of leases, failure to renew the leases of the operating entities' existing premises, or failure to renew such leases at acceptable terms could materially and adversely affect their business.***

Our subsidiaries and the VIEs lease the premises for all of their stores and their corporate office and central factory. As a result, the operating entities may be subject to compulsory acquisition, closure, or demolition of any of the properties on which their stores are situated. Although the operating entities may receive liquidated damages or compensation if their leases are terminated unexpectedly, they may be forced to suspend operations of the relevant store and divert management attention, time, and costs to find a new site and relocate their store, which will negatively affect their business and results of operations.

Our subsidiaries and the VIEs enter into leases of approximately one to 15 years with an option to renew for their stores. Rent for their leases is typically fixed amounts and subject to annual or biennially incremental increases as stipulated in the lease agreements. We cannot assure you that the operating entities would be able to renew the relevant lease agreements without substantial additional cost or increase in the rental cost payable by them. If a lease agreement is renewed at a rent substantially higher than the current rate, or currently existing favorable terms granted by the lessor are not extended, the operating entities' business and results of operations may be materially and adversely affected. If the operating entities are unable to renew the leases for their store sites, they will have to close or relocate the store, which could subject them to decoration and other costs and risks, and loss of existing customers, and could have a material adverse effect on their business and results of operations. In addition, the relocated store may not perform as well as the existing store.

 ***If the operating entities cannot manage their growth effectively and efficiently, their results of operations or profitability could be adversely affected.***

Our revenue for the six months ended June 30, 2022 increased by 26.7% to $8,543,803 from $6,742,121 for the six months ended June 30, 2021. Our revenue for the fiscal year ended December 31, 2021 increased by 42.4% to $14,690,295 from $10,313,512 for the fiscal year ended December 31, 2020. We intend to continue to expand our business by opening new stores. This expansion has placed, and will continue to place, substantial demands on the operating entities' managerial, operational, technological, and other types of resources. The operating entities' planned expansion will also place significant demands on them to maintain the quality of their product and customer services to ensure that their brand does not suffer as a result of any deviations, whether actual or perceived, in the quality of their product and customer services. In order to manage and support their growth, the operating entities must continue to improve their existing operational, administrative, and technological systems and their financial and management controls, and recruit, train, and retain additional qualified bakery industry professionals as well as other administrative and sales and marketing personnel, particularly as they expand into new markets and launch new business initiatives. The operating entities may not be able to effectively and efficiently manage the growth of their operations, recruit and retain qualified personnel, and integrate new expansion into their operations. As a result, their quality of service may deteriorate and their results of operations or profitability could be adversely affected.

 ***Any decrease in customer traffic in the shopping malls or other locations in which the operating entities' stores are located could cause their sales to be less than expected.***

The operating entities' stores are located in shopping malls, other shopping centers, and busy street locations. Sales at these stores are derived, to a significant degree, from the volume of customer traffic in those locations and in the surrounding area. The operating entities' stores benefit from the current popularity of shopping malls and centers as shopping destinations and their ability to generate customer traffic in the vicinity of these stores. The operating entities' sales volume and customer traffic may be adversely affected by, among other things:

● economic downturns in Xinjiang or New York City;

● high fuel prices;

● changes in customer demographics;

● a decrease in popularity of shopping malls or centers in which a significant number of their stores are located;

● epidemics, such as the COVID-19 pandemic, and measures imposed by governments or shopping malls in response to such epidemics, including limiting the number of customers in shopping malls;

● the closing of the "anchor" store of a shopping mall or center or the stores of other key tenants; or

● a deterioration in the financial condition of shopping mall and center operators or developers which could, for example, limit their ability to maintain and improve their facilities.

A reduction in customer traffic as a result of these or any other factors could have a material adverse effect on the operating entities.

In addition, severe weather conditions and other catastrophic occurrences in areas in which the operating entities have stores may have a material adverse effect on their results of operations. Such conditions may result in physical damage to the operating entities' stores, loss of inventory, decreases in customer traffic, and closure of one or more of their stores. Any of these factors may disrupt the operating entities' business and have a material adverse effect on their financial condition and results of operations.

 ***If the operating entities are unable to attract, train, assimilate, and retain employees that embody their culture, including store personnel, store and district managers, senior managers, and technicians, they may not be able to grow or successfully operate their business.***

The operating entities' success depends in part upon their ability to attract, train, assimilate, and retain a sufficient number of employees, including store personnel, store managers, and district managers, who understand and appreciate their culture and are able to represent their brand effectively and establish credibility with their customers. If the operating entities are unable to hire and retain store personnel capable of consistently providing a high level of customer service, as demonstrated by their enthusiasm for the operating entities' culture, understanding of their customers, and knowledge of the bakery and other products the operating entities offer, the operating entities' ability to open new stores may be impaired, the performance of their existing and new stores could be materially adversely affected, and their brand image may be negatively impacted. In addition, the rate of employee turnover in the bakery industry is typically high and finding qualified candidates to fill positions may be difficult. The operating entities' planned growth will require them to attract, train, and assimilate even more personnel. Any failure to meet their staffing needs or any material increases in team member turnover rates could have a material adverse effect on their business or results of operations.

We place substantial reliance on the bakery industry experience and knowledge of our senior management team as well as their relationships with other industry participants. Mr. Gang Li, our Chairman, and Ms. Jihong Cai, our chief financial officer, are particularly important to our future success due to their substantial experience and reputation in the bakery markets. We do not carry, and do not intend to procure, key person insurance on any of our senior management team. The loss of the services of one or more members of our senior management team due to their departure, or otherwise, could hinder our ability to effectively manage our business and implement our growth strategies. Finding suitable replacements for our current senior management could be difficult, and competition for such personnel of similar experience is intense. If we fail to retain our senior management, our business and results of operations could be materially and adversely affected.

The market for technicians and other individuals with the required technical expertise to succeed in the operating entities' business is highly competitive. There may be a limited supply of qualified individuals in some of the cities in the PRC where the operating entities have operations and other cities into which they intend to expand. The operating entities must hire and train qualified technicians and other employees on a timely basis to keep pace with their rapid growth while maintaining consistent quality of products across their operations in various geographic locations. The operating entities must also provide continuous training to their technicians and other employees so that these employees are equipped with up-to-date knowledge of various aspects of their operations and can meet their demand for high-quality products. If the operating entities fail to do so, the quality of their products may decrease in one or more of the markets where they operate, which in turn, may cause a negative perception of their brand and adversely affect their business.

 ***Failure to maintain the quality of customer services could harm the operating entities' reputation and their ability to retain existing customers and attract new customers, which may materially and adversely affect their business, financial condition, and results of operations.***

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The operating entities' business is significantly affected by the overall size of their customer base, which in turn is determined by, among other factors, these customers' experience with their customer services. As such, the quality of customer services is critical to retaining their existing customers and attracting new customers. If the operating entities fail to provide quality customers services, their customers may be less inclined to visit the operating entities' stores and purchase their products or recommend these stores to new customers, and may switch to the operating entities' competitors. Failure to maintain the quality of customer services could harm the operating entities' reputation and may materially and adversely affect their business, financial condition, and results of operations.

 ***The ongoing need for renovations and other capital improvements at the operating entities' stores could have a material adverse effect on the operating entities, including their financial condition, liquidity, and results of operations.***

To improve the in-store experience of our customers, the operating entities' stores have an ongoing need for maintenance and renovations and other capital improvements, including replacements, from time to time, of furniture, fixtures, and equipment. These capital improvements may give rise to the following risks:

● possible environmental liabilities;

● construction cost overruns and delays;

● the decline in revenue while stores are out of service due to capital improvement projects;

● a possible shortage of available cash to fund capital improvements and the related possibility that financing for these capital improvements may not be available to the operating entities on favorable terms, or at all;

● uncertainties as to market demand or a loss of market demand after capital improvements have begun; and

● bankruptcy or insolvency of a contracted party during a capital improvement project or other situation that renders them unable to complete their work.

The costs of all these capital improvements or any of the above noted factors could have a material adverse effect on the operating entities, including their financial condition, liquidity, and results of operations.

 ***Future acquisitions may have an adverse effect on the operating entities' ability to manage our business.***

The operating entities may acquire businesses, technologies, services, or products which are complementary to their core bakery product manufacturing and retail business. Future acquisitions may expose the operating entities to potential risks, including risks associated with the integration of new operations, services, and personnel, unforeseen or hidden liabilities, the diversion of resources from the operating entities' existing business and technology, their potential inability to generate sufficient revenue to offset new costs, the expenses of acquisitions, or the potential loss of or harm to relationships with both employees and customers resulting from their integration of new businesses.

Any of the potential risks listed above could have a material adverse effect on the operating entities' ability to manage their business, their revenue, and net income. The operating entities may need to raise additional debt funding or sell additional equity securities to make such acquisitions. The raising of additional debt funding by the operating entities , if required, would result in increased debt service obligations and could result in additional operating and financing covenants, or liens on their assets, that would restrict their operations. The sale of additional equity securities could result in additional dilution to our shareholders.

**Risks Relating to Our Corporate Structure**

*Our corporate structure, in particular the VIE Agreements, are subject to significant risks, as set forth in the following risk factors.*

***The VIE Agreements with the UFG Entities and the UFG Operators may not be effective in providing control over the UFG Entities.***

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A substantial part of our current revenue and net income is derived from the UFG Entities. We do not have an ownership interest in any of the UFG Entities. For accounting purposes, our wholly owned subsidiary directs the activities and receives the economic benefits of the VIEs through the VIE Agreements, which enable us to consolidate the financial results of the VIEs in our consolidated financial statements under U.S. GAAP. The VIE Agreements, however, may not be as effective in providing us with the necessary control over each UFG Entity and its operations. Any deficiency in the VIE Agreements may result in our loss of control over the management and operations of the UFG Entities, which will result in a significant loss in the value of an investment in our Company. We rely on contractual rights through the VIE Agreements to effect management of the UFG Entities, which exposes us to the risk of potential breach of contract by the UFG Operators. In addition, since our Chairman, Mr. Gang Li, and Ms. Hui Wang, the Marketing Director of Xinjiang United Family, prior to the closing of this offering, own 100% of the equity interests in 28 and one UFG Entities, respectively, it may be difficult for us to change our corporate structure if such UFG Operators refuse to cooperate with us.

***The VIE Agreements with the UFG Entities are governed by the laws of the PRC and we may have difficulty in enforcing any rights we may have under the VIE Agreements.***

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As the VIE Agreements are governed by PRC laws and provide for the resolution of disputes through arbitration in the PRC, they would be interpreted in accordance with PRC law and any disputes would be resolved in accordance with PRC legal procedures. Disputes arising from the VIE Agreements will be resolved through arbitration in the PRC, although these disputes do not include claims arising under the U.S. federal securities law and thus do not prevent you from pursuing claims under the U.S. federal securities law. The legal environment in the PRC is not as developed as in the U.S. As a result, uncertainties in the PRC legal system could further limit our ability to enforce the VIE Agreements, through arbitration, litigation, and other legal proceedings remain in the PRC, which could limit our ability to enforce the VIE Agreements, and we may not be deemed to have a controlling financial interest in, or be the primary beneficiary of, the VIEs for accounting purposes. Furthermore, these contracts may not be enforceable in the PRC if PRC government authorities or courts take a view that such contracts contravene PRC laws and regulations or are otherwise not enforceable for public policy reasons. In the event we are unable to enforce the VIE Agreements, we may not be able to exert effective control over the UFG Entities for accounting purposes, and our ability to conduct our business may be materially and adversely affected.

***If the PRC government determines that the contractual arrangements constituting part of the VIE structure do not comply with PRC regulations, or if these regulations change or are interpreted differently in the future, we may be unable to assert our contractual rights over the assets of the VIEs, and our Class A Ordinary Shares may decline in value or become worthless.***

Recently, the PRC government adopted a series of regulatory actions and issued statements to regulate business operations in China, including those related to VIEs. There are currently no relevant laws or regulations in the PRC that prohibit companies whose entity interests are within the PRC from listing on overseas stock exchanges. The VIE Agreements have not been tested in a court of law in China as of the date of this prospectus. Although we believe that our corporate structure and contractual arrangements comply with current applicable PRC laws and regulations, in the event that PRC government determines that the contractual arrangements constituting part of the VIE structure do not comply with PRC regulations, or if these regulations change or are interpreted differently in the future, we may be unable to assert our contractual rights over the assets of the VIEs, and our Class A Ordinary Shares may decline in value or become worthless.

***We may not be able to consolidate the financial results of some of our affiliated companies or such consolidation could materially adversely affect our operating results and financial condition.***

A substantial part of our business is conducted through the UFG Entities, which currently are considered for accounting purposes as VIEs, and we are considered the primary beneficiary, enabling us to consolidate our financial results in our consolidated financial statements. In the event that in the future a company we hold as a VIE would no longer meet the definition of a VIE, or we are deemed not to be the primary beneficiary, we would not be able to consolidate line by line that entity's financial results in our consolidated financial statements for PRC purposes. Also, if in the future an affiliate company becomes a VIE and we become the primary beneficiary, we would be required to consolidate that entity's financial results in our consolidated financial statements for PRC purposes. If such entity's financial results were negative, this could have a corresponding negative impact on our operating results for PRC purposes. However, any material variations in the accounting principles, practices, and methods used in preparing financial statements for PRC purposes from the principles, practices, and methods generally accepted in the U.S. and in the SEC accounting regulations must be discussed, quantified, and reconciled in financial statements for the U.S. GAAP and SEC purposes.

***The VIE Agreements between Xinjiang United Family and UFG may result in adverse tax consequences.***

PRC laws and regulations emphasize the requirement of an arm's length basis for transfer pricing arrangements between related parties. The laws and regulations also require enterprises with related party transactions to prepare transfer pricing documentation to demonstrate the basis for determining pricing, the computation methodology, and detailed explanations. Related party arrangements and transactions may be subject to challenge or tax inspection by the PRC tax authorizes.

Under a tax inspection, if our transfer pricing arrangements between Xinjiang United Family and UFG are judged as tax avoidance, or related documentation does not meet the requirements, Xinjiang United Family and UFG may be subject to material adverse tax consequences, such as transfer pricing adjustment. A transfer pricing adjustment could result in a reduction, for PRC tax purpose, of adjustments recorded by Xinjiang United Family, which could adversely affect us by (i) increasing UFG's tax liabilities without reducing our subsidiaries' tax liabilities, which could further result in interest being levied to us for unpaid taxes; or (ii) limiting the ability of our PRC companies to maintain preferential tax treatment and other financial incentives.

***Our controlling shareholder has potential conflicts of interest with our Company which may adversely affect our business.***

Mr. Gang Li is our controlling shareholder and Chairman. 28 of the UFG Entities are owned independently by Mr. Li. Given his significant interest in our Company, there is a risk that when conflicts of interest arise, Mr. Li will not act completely in the best interests of our shareholders (as opposed to his personal interest) or that conflicts of interests will be resolved in our favor. For example, he may determine that it is in UFG's interests to sever the contractual arrangements with us, irrespective of the effect such action may have on us. Mr. Li has acted guarantor to certain loans of Xinjiang United Family, which may create conflicts of interest with our Company. In addition, he could violate his fiduciary duties by diverting business opportunities from us to others, thereby affecting the amount of payment UFG is obligated to remit to us under the consulting services agreements.

Our board of directors will be comprised of a majority of independent directors. These independent directors may be in a position to deter and counteract the actions of our officers or non-independent directors (including, potentially, Mr. Li) that are against our interests. We cannot, however, give any assurance as to how the independent directors will act in any given circumstance. Further, if we or the independent directors cannot resolve any conflicts of interest between us and those of our officers and directors who are management members of our affiliated companies in the PRC, we would have to rely on legal proceedings, which could result in the disruption of our business.

In the event that you believe that your rights have been infringed under the securities laws or otherwise as a result of any one of the circumstances described above, it may be difficult or impossible for you to bring an action against us or our officers or directors who reside within the PRC. Even if you are successful in bringing an action, the PRC laws may render you unable to enforce a judgment against our assets and management, most of which are located in the PRC.

 ***We rely on the approval certificates and business license held by UFG, and any deterioration of the relationship between Xinjiang United Family and UFG could materially and adversely affect our overall business operations.***

Pursuant to the VIE Agreements, a substantial part of our business in the PRC will be undertaken on the basis of the approvals, certificates, business licenses, and other requisite licenses held by each UFG Entity. There is no assurance that each UFG Entity will be able to renew its licenses or certificates when their terms expire with substantially similar terms as the ones they currently hold.

Further, our relationship with each UFG Entity is governed by the VIE Agreements, which are intended to enable us, through our indirect ownership of Xinjiang United Family, to have a controlling financial interest in and be the primary beneficiary of each UFG Entity for accounting purposes. However, the VIE Agreements may not be effective in providing control over the applications for and maintenance of the licenses required for our business operations. Any UFG Entity could violate the VIE Agreements, go bankrupt, suffer from difficulties in its business, or otherwise become unable to perform its obligations under the VIE Agreements and, as a result, our operations, reputation, business and stock price could be severely harmed.

***The exercise of our option to purchase part or all of the assets of any UFG Entity under the call option agreement might be subject to approval by the PRC government. Our failure to obtain this approval may impair our ability to substantially control the UFG Entities and could result in actions by the UFG Entities that conflict with our interests.***

Our call option agreement with UFG gives Xinjiang United Family, the option to purchase all or part of the assets of UFG. However, the option may not be exercised if the exercise would violate any applicable laws and regulations in the PRC or cause any license or permit held by, and necessary for the operation of UFG, to be cancelled or invalidated. If we decide to exercise such a call option and PRC government approval is required and we do not, or cannot, obtain such approval, we may be unable to purchase the assets that are the subject of such call option.

 ***Because we rely on the exclusive service agreement with each UFG Entity for our revenue, the termination of these agreements would severely and detrimentally affect our continuing business viability under our current corporate structure.***

We are a holding company and during the six months ended June 30, 2022 and the fiscal years ended December 31, 2021 and 2020, approximately 44%, 86%, and 76% of our revenue was derived from the UFG Entities, respectively. As a result, we currently rely for our revenue on dividends payments from Xinjiang United Family after it receives payments from the UFG Entities pursuant to the exclusive service agreements. The term of the exclusive service agreement is 10 years, unless terminated earlier by Xinjiang United Family with a 30-day prior notice. UFG does not have the right to terminate that agreement unilaterally. The agreement would renew automatically by 10 years after expiration, with no limit on times of renewal. Because neither we nor our subsidiaries own equity interests of UFG, the termination of the exclusive service agreement would sever our ability to continue receiving payments from the UFG Entities under our current holding company structure. While we are currently not aware of any event or reason that may cause the exclusive service agreement to terminate, such an event or reason may occur in the future. In the event that the exclusive service agreements are terminated, this may have a severe and detrimental effect on our continuing business viability under our current corporate structure, which, in turn, may affect the value of your investment.

**Risks Relating to Doing Business in the PRC**

***Changes in China's economic, political, or social conditions or government policies could have a material adverse effect on our business and operations.***

Most of our assets are owned and most of our operations are conducted through our PRC subsidiary and the VIEs located in China. Accordingly, our business, financial condition, results of operations, and prospects may be influenced to a significant degree by political, economic, and social conditions in China generally. The Chinese economy differs from the economies of most developed countries in many respects, including the level of government involvement, level of development, growth rate, control of foreign exchange, and allocation of resources. Although the Chinese government has implemented measures emphasizing the utilization of market forces for economic reform, including the reduction of state ownership of productive assets and the establishment of improved corporate governance in business enterprises, a substantial portion of productive assets in China is still owned by the government. In addition, the Chinese government continues to play a significant role in regulating industry development by imposing industrial policies. The Chinese government also exercises significant control over China's economic growth by allocating resources, controlling payment of foreign currency-denominated obligations, setting monetary policy, and providing preferential treatment to particular industries or companies.

While the Chinese economy has experienced significant growth over the past decades, growth has been uneven, both geographically and among various sectors of the economy. Any adverse changes in economic conditions in China, in the policies of the Chinese government, or in the laws and regulations in China could have a material adverse effect on the overall economic growth of China. Such developments could adversely affect our business and operating results, reduce demand for the products of our PRC subsidiary and the VIEs, and weaken our competitive position. The Chinese government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures may benefit the overall Chinese economy, but may have a negative effect on us. For example, our financial condition and results of operations may be adversely affected by government control over capital investments or changes in tax regulations. In addition, in the past the Chinese government has implemented certain measures, including interest rate adjustments, to control the pace of economic growth. These measures may cause decreased economic activities in China, which may adversely affect our business and operating results.

 ***Uncertainties in the interpretation and enforcement of PRC laws and regulations and changes in policies, rules, and regulations in China, which may be quick with little advance notice, could limit the legal protection available to you and us.***

The PRC legal system is based on written statutes. Unlike common law systems, it is a system in which legal cases have limited value as precedents. In the late 1970s, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general. The legislation over the past three decades has significantly increased the protection afforded to various forms of foreign or private-sector investment in China. Our PRC subsidiary and the VIEs are subject to various PRC laws and regulations generally applicable to companies in China. Since these laws and regulations are relatively new and the PRC legal system continues to rapidly evolve, however, the interpretations of many laws, regulations, and rules are not always uniform and enforcement of these laws, regulations, and rules involve uncertainties.

From time to time, we may have to resort to administrative and court proceedings to enforce our legal rights. Since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, however, it may be more difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy in the PRC legal system than in more developed legal systems. Furthermore, the PRC legal system is based in part on government policies, internal rules, and regulations that may have retroactive effect and may change quickly with little advance notice. As a result, we may not be aware of our violation of these policies and rules until sometime after the violation. Such uncertainties, including uncertainties over the scope and effect of our contractual, property (including intellectual property), and procedural rights, and any failure to respond to changes in the regulatory environment in China could materially and adversely affect our business and impede our ability to continue our operations.

***You may experience difficulties in effecting service of legal process, enforcing foreign judgments, or bringing actions in China against us or our management named in the prospectus based on foreign laws. It may also be difficult for you or overseas regulators to conduct investigations or collect evidence within China.***

We are a company incorporated under the laws of the Cayman Islands, and we conduct most of our operations in China and most of our assets are located in China. In addition, all of our directors and officers are nationals or residents of the PRC and all or a substantial portion of their assets are located outside the U.S. As a result, it may be difficult for you to effect service of process upon us or those persons inside mainland China. In addition, there is uncertainty as to whether the courts of the Cayman Islands or the PRC would recognize or enforce judgments of U.S. courts against us or such persons predicated upon the civil liability provisions of U.S. securities laws or those of any U.S. state.

The recognition and enforcement of foreign judgments are provided for under the *PRC Civil Procedures Law*. PRC courts may recognize and enforce foreign judgments in accordance with the requirements of the *PRC Civil Procedures Law* based either on treaties between China and the country where the judgment is made or on principles of reciprocity between jurisdictions. China does not have any treaties or other forms of written arrangement with the U.S. that provide for the reciprocal recognition and enforcement of foreign judgments. In addition, according to the *PRC Civil Procedures Law*, the PRC courts will not enforce a foreign judgment against us or our directors and officers if they decide that the judgment violates the basic principles of PRC laws or national sovereignty, security, or public interest. As a result, it is uncertain whether and on what basis a PRC court would enforce a judgment rendered by a court in the U.S. See "Enforceability of Civil Liabilities."

It may also be difficult for you or overseas regulators to conduct investigations or collect evidence within China. For example, in China, there are significant legal and other obstacles to obtaining information needed for shareholder investigations or litigation outside China or otherwise with respect to foreign entities. Although the authorities in China may establish a regulatory cooperation mechanism with its counterparts of another country or region to monitor and oversee cross-border securities activities, such regulatory cooperation with the securities regulatory authorities in the U.S. may not be efficient in the absence of a practical cooperation mechanism. Furthermore, according to Article 177 of the PRC Securities Law, or "Article 177," which became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigations or evidence collection activities within the territory of the PRC. Article 177 further provides that Chinese entities and individuals are not allowed to provide documents or materials related to securities business activities to foreign agencies without prior consent from the securities regulatory authority of the PRC State Council and the competent departments of the PRC State Council. While detailed interpretation of or implementing rules under Article 177 have yet to be promulgated, the inability for an overseas securities regulator to directly conduct investigation or evidence collection activities within China may further increase difficulties faced by you in protecting your interests.

 ***Given the Chinese government's significant oversight and discretion over the conduct of the business of our PRC subsidiary and the VIEs, the Chinese government may intervene or influence their operations at any time, which could result in a material change in the operations of our PRC subsidiary and the VIEs and/or the value of our Class A Ordinary Shares.***

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The Chinese government has significant oversight and discretion over the conduct of our PRC subsidiary and the VIEs and may intervene or influence their operations at any time as the government deems appropriate to further regulatory, political, and societal goals, which could result in a material change in the operations of our PRC subsidiary and the VIEs and/or the value of our Class A Ordinary Shares.

The Chinese government has recently published new policies that significantly affected certain industries such as the education and Internet industries, and we cannot rule out the possibility that it will in the future release regulations or policies regarding our industry that could adversely affect the business, financial condition, and results of operations of our PRC subsidiary and the VIEs. Furthermore, if China adopts more stringent standards with respect to certain areas such as environmental protection or corporate social responsibilities, our PRC subsidiary and the VIEs may incur increased compliance costs or become subject to additional restrictions in their operations. Certain areas of the law in China, including intellectual property rights and confidentiality protections, may also not be as effective as in the United States or other countries. In addition, we cannot predict the effects of future developments in the PRC legal system on the business operations of our PRC subsidiary and the VIEs, including the promulgation of new laws, or changes to existing laws or the interpretation or enforcement thereof. These uncertainties could limit the legal protections available to us and our investors, including you.

 ***Any actions by the Chinese government, including any decision to intervene or influence the operations of our PRC subsidiary or the VIEs or to exert control over any offering of securities conducted overseas and/or foreign investment in China-based issuers, may cause us to make material changes to the operations of our PRC subsidiary or the VIEs, may limit or completely hinder our ability to offer or continue to offer securities to investors, and may cause the value of such securities to significantly decline or be worthless.***

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The Chinese government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership. The ability of our subsidiary and the VIEs to operate in China may be impaired by changes in its laws and regulations, including those relating to taxation, environmental regulations, land use rights, foreign investment limitations, and other matters. The central or local governments of China may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts on our part to ensure our PRC subsidiary and the VIEs' compliance with such regulations or interpretations. As such, our PRC subsidiary and the VIEs may be subject to various government and regulatory interference in the provinces in which they operate. They could be subject to regulation by various political and regulatory entities, including various local and municipal agencies and government sub-divisions. They may incur increased costs necessary to comply with existing and newly adopted laws and regulations or penalties for any failure to comply.

Furthermore, it is uncertain when and whether we will be required to obtain permission from the PRC government to list on U.S. exchanges in the future, and even when such permission is obtained, whether it will be denied or rescinded. Although we believes our Company, our PRC subsidiary, and the VIEs, are currently not required to obtain permission from any Chinese authorities and have not received any notice of denial of permission to list on the U.S. exchange, our operations could be adversely affected, directly or indirectly, by existing or future laws and regulations relating to our business or industry, particularly in the event permission to list on U.S. exchanges may be later required, or withheld or rescinded once given.

Accordingly, government actions in the future, including any decision to intervene or influence the operations of our PRC subsidiary or the VIEs at any time or to exert control over an offering of securities conducted overseas and/or foreign investment in China-based issuers, may cause us to make material changes to the operations of our PRC subsidiary or the VIEs, may limit or completely hinder our ability to offer or continue to offer securities to investors, and/or may cause the value of such securities to significantly decline or be worthless.

 ***Recent greater oversight by the CAC over data security, particularly for companies seeking to list on a foreign exchange, could adversely impact our business and our offering.***

On December 28, 2021, the CAC, together with 12 other governmental departments of the PRC, jointly promulgated the Cybersecurity Review Measures, which became effective on February 15, 2022. The Cybersecurity Review Measures provides that, in addition to critical information infrastructure operators ("CIIOs") that intend to purchase Internet products and services, data processing operators engaging in data processing activities that affect or may affect national security must be subject to cybersecurity review by the Cybersecurity Review Office of the PRC. According to the Cybersecurity Review Measures, a cybersecurity review assesses potential national security risks that may be brought about by any procurement, data processing, or overseas listing. The Cybersecurity Review Measures further requires that CIIOs and data processing operators that possess personal data of at least one million users must apply for a review by the Cybersecurity Review Office of the PRC before conducting listings in foreign countries.

On November 14, 2021, the CAC published the Security Administration Draft, which provides that data processing operators engaging in data processing activities that affect or may affect national security must be subject to network data security review by the relevant Cyberspace Administration of the PRC. According to the Security Administration Draft, data processing operators who possess personal data of at least one million users or collect data that affects or may affect national security must be subject to network data security review by the relevant Cyberspace Administration of the PRC. The deadline for public comments on the Security Administration Draft was December 13, 2021.

As of the date of this prospectus, we have not received any notice from any authorities identifying our PRC subsidiary or the VIEs as CIIOs or requiring us to go through cybersecurity review or network data security review by the CAC. As the Cybersecurity Review Measures became effective and if the Security Administration Draft is enacted as proposed, we believe that the operations of our PRC subsidiary and the VIEs and our listing will not be affected and that we are not subject to cybersecurity review and network data security review by the CAC, given that: (i) as companies that mainly manufacture and sell bakery products, our PRC subsidiary and the VIEs are unlikely to be classified as CIIOs by the PRC regulatory agencies; (ii) our PRC subsidiary and the VIEs make substantially all of their bakery product sales through physical stores and only a small amount through online stores, mostly on third-party online food ordering platforms, and they do not collect personal data of customers who use their membership cards, which function as reloadable prepaid cards, for purchase; as a result, we possess personal data of fewer than one million individual clients in our business operations as of the date of this prospectus; and (iii) since our PRC subsidiary and the VIEs are in the bakery industry, data processed in our business is unlikely to have a bearing on national security and therefore is unlikely to be classified as core or important data by the authorities. There remains uncertainty, however, as to how the Cybersecurity Review Measures and the Security Administration Draft will be interpreted or implemented and whether the PRC regulatory agencies, including the CAC, may adopt new laws, regulations, rules, or detailed implementation and interpretation related to the Cybersecurity Review Measures and the Security Administration Draft. If any such new laws, regulations, rules, or implementation and interpretation come into effect, we will take all reasonable measures and actions to comply and to minimize the adverse effect of such laws on us. We cannot guarantee, however, that we will not be subject to cybersecurity review and network data security review in the future. During such reviews, we may be required to suspend our operation or experience other disruptions to our operations. Cybersecurity review and network data security review could also result in negative publicity with respect to our Company and diversion of our managerial and financial resources, which could materially and adversely affect our business, financial conditions, and results of operations.

 ***The Opinions, the Trial Measures, and the revised Provisions recently issued by the PRC authorities may subject us to additional compliance requirements in the future.***

The General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued the Opinions, which were made available to the public on July 6, 2021. The Opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by China-based companies. The Opinions proposed to take effective measures, such as promoting the construction of relevant regulatory systems, to deal with the risks and incidents facing China-based overseas-listed companies and the demand for cybersecurity and data privacy protection. The aforementioned policies and any related implementation rules to be enacted may subject us to additional compliance requirements in the future. On February 17, 2023, the CSRC promulgated the Trial Measures and five supporting guidelines, which will come into effect on March 31, 2023. Pursuant to the Trial Measures, domestic companies that seek to offer or list securities overseas, both directly and indirectly, shall complete filing procedures with the CSRC pursuant to the requirements of the Trial Measures within three working days following its submission of initial public offerings or listing application. If a domestic company fails to complete required filing procedures or conceals any material fact or falsifies any major content in its filing documents, such domestic company may be subject to administrative penalties, such as an order to rectify, warnings, fines, and its controlling shareholders, actual controllers, the person directly in charge and other directly liable persons may also be subject to administrative penalties, such as warnings and fines. See "Regulations—Regulations on Mergers & Acquisitions and Overseas Listings."

According to the CSRC Notice, the domestic companies that have already been listed overseas before the effective date of the Trial Measures (namely, March 31, 2023) shall be deemed as Existing Issuers. Existing Issuers are not required to complete the filing procedures immediately, and they shall be required to file with the CSRC for any subsequent offerings. Further, according to the CSRC Notice, domestic companies that have obtained approval from overseas regulatory authorities or securities exchanges (for example, the effectiveness of a registration statement for offering and listing in the U.S. has been obtained) for their indirect overseas offering and listing prior to March 31, 2023 but have not yet completed their indirect overseas issuance and listing, are granted a six-month transition period from March 31, 2023 to September 30, 2023. Those that complete their indirect overseas offering and listing within such six-month period are deemed as Existing Issuers and are not required to file with the CSRC for their indirect overseas offerings and listings. Within such six-month transition period, however, if such domestic companies fail to complete their indirect overseas issuance and listing, they shall complete the filing procedures with the CSRC.

Based on the foregoing, if our registration statement on Form F-1 cannot be declared effective on or before March 31, 2023, or if our registration statement on Form F-1 is declared effective on or before March 31, 2023 but we fail to complete this offering and listing on or before September 30, 2023, we will be required to complete necessary filing procedures pursuant to the Trial Measures.

On February 24, 2023, the CSRC, together with the MOF, National Administration of State Secrets Protection and National Archives Administration of China, revised the Provisions issued by the CSRC and National Administration of State Secrets Protection and National Archives Administration of China in 2009. The revised Provisions were issued under the title the "Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies," and will come into effect on March 31, 2023 together with the Trial Measures. One of the major revisions to the revised Provisions is expanding their application to cover indirect overseas offering and listing, as is consistent with the Trial Measures. The revised Provisions require that, among other things, (a) a domestic company that plans to, either directly or indirectly through its overseas listed entity, publicly disclose or provide to relevant individuals or entities, including securities companies, securities service providers, and overseas regulators, any documents and materials that contain state secrets or working secrets of government agencies, shall first obtain approval from competent authorities according to law, and file with the secrecy administrative department at the same level; and (b) a domestic company that plans to, either directly or indirectly through its overseas listed entity, publicly disclose or provide to relevant individuals and entities, including securities companies, securities service providers, and overseas regulators, any other documents and materials that, if leaked, will be detrimental to national security or public interest, shall strictly fulfill relevant procedures stipulated by applicable national regulations. As of the date of this prospectus, the revised Provisions have not come into effect. On or after March 31, 2023, any failure or perceived failure by our Company, our subsidiaries, or the VIEs to comply with the above confidentiality and archives administration requirements under the revised Provisions and other PRC laws and regulations may result in the relevant entities being held legally liable by competent authorities, and referred to the judicial organ to be investigated for criminal liability if suspected of committing a crime.

The Opinions, the Trial Measures, the revised Provisions and any related implementing rules to be enacted may subject us to additional compliance requirements in the future. As there are still uncertainties regarding the interpretation and implementation of such regulatory guidance, we cannot assure you that we will be able to comply with all new regulatory requirements of the Opinions, the Trial Measures, the revised Provisions, or any future implementing rules on a timely basis, or at all.

***Recent joint statement by the SEC and the PCAOB, rule changes by Nasdaq, and the HFCA Act all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties to our offering.***

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On April 21, 2020, SEC Chairman Jay Clayton and PCAOB Chairman William D. Duhnke III, along with other senior SEC staff, released a joint statement highlighting the risks associated with investing in companies based in or have substantial operations in emerging markets including China. The joint statement emphasized the risks associated with lack of access for the PCAOB to inspect auditors and audit work papers in China and higher risks of fraud in emerging markets.

On May 18, 2020, Nasdaq filed three proposals with the SEC to (i) apply a minimum offering size requirement for companies primarily operating in a "Restrictive Market," (ii) adopt a new requirement relating to the qualification of management or the board of directors for Restrictive Market companies, and (iii) apply additional and more stringent criteria to an applicant or listed company based on the qualifications of the company's auditor. On October 4, 2021, the SEC approved Nasdaq's revised proposal for the rule changes.

On May 20, 2020, the U.S. Senate passed the HFCA Act requiring a foreign company to certify it is not owned or controlled by a foreign government if the PCAOB is unable to audit specified reports because the company uses a foreign auditor not subject to PCAOB inspection. If the PCAOB is unable to inspect the company's auditors for three consecutive years, the issuer's securities are prohibited to trade on a national exchange. On December 2, 2020, the U.S. House of Representatives approved the HFCA Act. On December 18, 2020, the HFCA Act was signed into law.

On March 24, 2021, the SEC announced the adoption of interim final amendments to implement the submission and disclosure requirements of the HFCA Act. In the announcement, the SEC clarifies that before any issuer will have to comply with the interim final amendments, the SEC must implement a process for identifying covered issuers. The announcement also states that the SEC staff is actively assessing how best to implement the other requirements of the HFCA Act, including the identification process and the trading prohibition requirements.

On September 22, 2021, the PCAOB adopted a final rule implementing the HFCA Act, which provides a framework for the PCAOB to use when determining, as contemplated under the HFCA Act, whether the board of directors of a company is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction.

On December 2, 2021, the SEC adopted amendments to finalize rules implementing the submission and disclosure requirements in the HFCA Act.

On December 16, 2021, the PCAOB issued a report on its determinations that it is unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong because of positions taken by PRC and Hong Kong authorities in those jurisdictions.

The lack of access to the PCAOB inspection in China prevents the PCAOB from fully evaluating audits and quality control procedures of the auditors based in China. As a result, investors may be deprived of the benefits of such PCAOB inspections. The inability of the PCAOB to conduct inspections of auditors in China makes it more difficult to evaluate the effectiveness of these accounting firm's audit procedures or quality control procedures as compared to auditors outside of China that are subject to the PCAOB inspections, which could cause investors and potential investors in our Class A Ordinary Shares to lose confidence in our audit procedures and reported financial information and the quality of our financial statements.

Our auditor prior to September 29, 2022, Friedman, the independent registered public accounting firm that issues the audit report included elsewhere in this prospectus, was registered with the PCAOB and had been inspected by the PCAOB on a regular basis in the audit period. Our new auditor, Marcum Asia, as an auditor of companies that are traded publicly in the U.S. and a firm registered with the PCAOB, is subject to laws in the U.S., pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards. Marcum Asia is headquartered in Manhattan, New York, and has been inspected by the PCAOB on a regular basis, with the last inspection in 2020. Neither Friedman nor Marcum Asia is subject to the determinations announced by the PCAOB on December 16, 2021. However, the recent developments would add uncertainties to our offering and we cannot assure you whether the national securities exchange we apply to for listing or regulatory authorities would apply additional and more stringent criteria to us after considering the effectiveness of our auditors' audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach, or experience as it relates to our audit. In addition, the HFCA Act, which requires that the PCAOB be permitted to inspect an issuer's public accounting firm within three years, may result in the delisting of our Company or prohibition of trading in our Class A Ordinary Shares in the future if the PCAOB is unable to inspect our accounting firm at such future time. On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, and on December 29, 2022, the Consolidated Appropriations Act was signed into law by President Biden, which contained, among other things, an identical provision to the Accelerating Holding Foreign Companies Accountable Act and amended the HFCA Act by requiring the SEC to prohibit an issuer's securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three, thus reducing the time period for triggering the prohibition on trading.

On August 26, 2022, the CSRC, the MOF, and the PCAOB signed the Protocol governing inspections and investigations of audit firms based in mainland China and Hong Kong, taking the first step toward opening access for the PCAOB to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong. Pursuant to the fact sheet with respect to the Protocol disclosed by the SEC, the PCAOB shall have independent discretion to select any issuer audits for inspection or investigation and has the unfettered ability to transfer information to the SEC. On December 15, 2022, the PCAOB Board determined that the PCAOB was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and voted to vacate its previous determinations to the contrary. However, should PRC authorities obstruct or otherwise fail to facilitate the PCAOB's access in the future, the PCAOB Board will consider the need to issue a new determination.

***To the extent cash in the business is in the PRC or a PRC entity, the funds may not be available to fund operations or for other use outside of the PRC due to interventions in or the imposition of restrictions and limitations on the ability of our Company, our subsidiaries, or the VIEs by the PRC government to transfer cash.***

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Relevant PRC laws and regulations permit the companies in the PRC to pay dividends only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. Additionally, each of the companies in the PRC are required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. The companies in the PRC are also required to further set aside a portion of their after-tax profits to fund the employee welfare fund, although the amount to be set aside, if any, is determined at their discretion. These reserves are not distributable as cash dividends. Furthermore, in order for us to pay dividends to our shareholders, we will rely on payments made from the VIEs to Xinjiang United Family, pursuant to the VIE Agreements, and the distribution of such payments to Jenyd as dividends from Xinjiang United Family, and then to our Company. If Xinjiang United Family and the VIEs incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments to us.

Our cash dividends, if any, will be paid in U.S. dollars. If we are considered a tax resident enterprise of the PRC for tax purposes, any dividends we pay to our overseas shareholders may be regarded as China-sourced income and as a result may be subject to PRC withholding tax. See "—Under the PRC Enterprise Income Tax Law (the 'EIT Law'), we may be classified as a PRC 'resident enterprise' for PRC enterprise income tax purposes. Such classification would likely result in unfavorable tax consequences to us and our non-PRC shareholders and have a material adverse effect on our results of operations and the value of your investment."

The PRC government also imposes controls on the convertibility of RMB into foreign currencies and, in certain cases, the remittance of currency out of the PRC. The majority of our, Xinjiang United Family's, and the VIEs' income is received in RMB and shortages in foreign currencies may restrict our ability to pay dividends or other payments, or otherwise satisfy our foreign currency denominated obligations, if any. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and expenditures from trade-related transactions, can be made in foreign currencies without prior approval from SAFE as long as certain procedural requirements are met. Approval from appropriate government authorities is required if RMB is converted into foreign currency and remitted out of the PRC to pay capital expenses such as the repayment of loans denominated in foreign currencies. The PRC government may, at its discretion, impose restrictions on access to foreign currencies for current account transactions and if this occurs in the future, we may not be able to pay dividends in foreign currencies to our shareholders.

As a result of the above, to the extent cash in the business is in the PRC or a PRC entity, such funds or assets may not be available to fund operations or for other use outside of the PRC, due to interventions in or the imposition of restrictions and limitations on the ability of us, our subsidiaries, or the VIEs by the PRC government to transfer cash.

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***Failure to obtain requisite approvals, licenses, or permits or failure to comply with any requirements of PRC laws, regulations, and policies may materially and adversely affect our daily operations and hinder our growth.***

The operations of the PRC Stores are subject to extensive legal and regulatory requirements. They are required to hold a number of licenses and permits in connection with their operations, principally including food production permits and food business permits, before commencement of operations. Failure to obtain such permits or loss of or failure to renew them would be in violation of applicable laws and regulations. If the PRC Stores are found to be in violation of applicable laws and regulations, they could be subject to administrative punishment, including fines, injunctions, asset seizures as well as compulsory suspension of business, any of which could have a material adverse effect on their business, financial condition, results of operations, and prospects. As of the date of this prospectus, one UFG Entity is applying for its food business permit and six UFG Entities are applying for the renewal of their food business permits; all the remaining UFG Entities have obtained the food business permit, though some of them did not have the food business permits at the time of opening. The failure of these entities to have the food business permit at the time of opening may subject us to fines or other penalties such as income confiscation, although we have not received any notice of warning or been subject to penalties or other penalties from the relevant governmental authorities regarding conducting our business without the above mentioned permits. The UFG Entities will file renewal requests 30 business days prior to the expiration date of those permits. In general, as long as a business entity operates legally and is in good standing, its renewal request will be approved. The UFG Entities will make their best effort to renew the permits described above but we cannot assure you that they will be able to renew such permits or they will not be subject to any penalties in the future. See "Regulations—PRC Regulations—Regulations on Food Production and Food Business Operation—Food Production Permit and Food Business Permit."

Article 45 of the Environmental Protection Law of the People's Republic of China stipulates that enterprises, institutions, and other producers and operators that implement pollution discharge permit management in China shall discharge pollutants in accordance with the requirements of the pollution discharge license. Based on the situation of the central factory of the PRC Stores, as well as their production equipment and production process, at least a sewage registration is required. As of the date of this prospectus, Xinjiang United Family has completed the sewage registration and obtained the sewage registration receipt. See "Regulations—PRC Regulations—Regulations on Food Production and Food Business Operation—Pollutant Discharge Permit."

***Increases in labor costs in the PRC may adversely affect our business and our profitability.***

China's economy has experienced increases in labor costs in recent years. China's overall economy and the average wage in China are expected to continue to grow. The average wage level for the employees of the PRC Stores has also increased in recent years. We expect that the labor costs of the PRC Stores, including wages and employee benefits, will continue to increase. Unless they are able to pass on these increased labor costs to their customers by increasing prices for their products, our profitability and results of operations may be materially and adversely affected.

In addition, the PRC Stores have been subject to stricter regulatory requirements in terms of entering into labor contracts with their employees and paying various statutory employee benefits, including pensions, housing fund, medical insurance, work-related injury insurance, unemployment insurance, and maternity insurance to designated government agencies for the benefit of their employees. Pursuant to the PRC Labor Contract Law, or the "Labor Contract Law," that became effective in January 2008 and was amended on December 28, 2012, and its implementing rules that became effective in September 2008, employers are subject to stricter requirements in terms of signing labor contracts, minimum wages, paying remuneration, determining the term of employees' probation, and unilaterally terminating labor contracts. In the event that the PRC Stores decide to terminate some of their employees or otherwise change their employment or labor practices, the Labor Contract Law and its implementation rules may limit their ability to effect those changes in a desirable or cost-effective manner, which could adversely affect our business and results of operations.

As the interpretation and implementation of labor-related laws and regulations are still evolving, we cannot assure you that the employment practice of the PRC Stores does not and will not violate labor-related laws and regulations in China, which may subject them to labor disputes or government investigations. If the PRC Stores are deemed to have violated relevant labor laws and regulations, they could be required to provide additional compensation to their employees and our business, financial condition and results of operations could be materially and adversely affected.

 ***Our PRC subsidiary and the VIEs have not made adequate social insurance and housing fund contributions for all employees as required by PRC regulations, which may subject us to penalties.***

According to the *PRC Social Insurance Law* and the *Administrative Regulations on the Housing Funds*, companies operating in China are required to participate in pension insurance, work-related injury insurance, medical insurance, unemployment insurance, maternity insurance (collectively known as "social insurance"), and housing funds plans, and the employers must pay all or a portion of the social insurance premiums and housing funds for their employees. For more details, please see "Regulations—PRC Regulations—Regulations on Employment and Social Welfare—Social Insurance and Housing Fund." Our PRC subsidiary, Xinjiang United Family, and the VIEs have not made adequate social insurance and housing fund contributions for all employees. Xinjiang United Family and the VIEs may be required to make up the social insurance contributions as well as to pay late fees at the rate of 0.05% per day of the outstanding amount from the due date. As of December 2022, we estimate that the amount of outstanding social insurance premiums was approximately $24,898 and the amount of late fees was approximately $2,510. If Xinjiang United Family and the VIEs fail to make up for the shortfalls within the prescribed time limit, the relevant administrative authorities will impose a fine of one to three times the outstanding amount upon them, which potential fine was in the range of $24,898 and $74,695 as of December 2022. With respect to housing fund plans, Xinjiang United Family may be required to pay and deposit housing funds in full and on time within the prescribed time limit. As of December 2022, we estimate that the amount of outstanding housing funds was approximately $34,446 and the amount of late fees was approximately $7,192. If Xinjiang United Family fails to do so, relevant authorities could file applications to competent courts for compulsory enforcement of payment and deposit.

According to our PRC counsel, however, it is unlikely that Xinjiang United Family and the VIEs would be ordered to pay the overdue social insurance premiums or housing funds, considering that (i) some of the employees of Xinjiang United Family and the VIEs are over the age limit to be paid social insurance premiums and housing funds; (ii) some employees chose to not receive social insurance premiums deposited by Xinjiang United Family and the VIEs and decided to participate in their own voluntary social insurance plans instead, and promised not to ask Xinjiang United Family or the VIEs to make up the payment; (iii) the requirement of social insurance and housing fund has not been implemented consistently by the local governments in China given the different levels of economic development in different locations; (iv) pursuant to the Emergency Notice on Practicing Principles of the State Council Executive Meeting and Stabilizing Work on Collecting Social Insurance Premiums promulgated by the Ministry of Human Resources and Social Security on September 21, 2018, local authorities are prohibited from recovering unpaid social insurance premiums from enterprises; (v) as of the date of this prospectus, Xinjiang United Family and the VIEs have not received any notice or order from the relevant government authorities requesting them to pay social insurance premiums or housing funds in full; (vi) as of the date of this prospectus, Xinjiang United Family and the VIEs have not received any complaint or report on outstanding social insurance premiums or housing funds, nor have them had any labor dispute or lawsuit with their employees on payments of social insurance premiums or housing funds; and (vii) the relevant local authorities certified in writing that there were no acts of violating human resources regulations or labor management regulations by Xinjiang United Family. As a result, we did not accrue or record the amounts of outstanding social insurance premiums or housing funds before December 31, 2020, and the amount was deemed not material. Starting from January 1, 2021, we have adequately accrued the social premiums and housing funds and the estimated late fees, if applicable, and have not received any notice or order for payment as of the date of this prospectus.

***PRC regulations relating to offshore investment activities by PRC residents may subject our PRC resident beneficial owners or our PRC subsidiary to liability or penalties, limit our ability to inject capital into our PRC subsidiary, limit our PRC subsidiary's ability to increase its registered capital or distribute profits to us, or may otherwise adversely affect us.***

On July 4, 2014, SAFE issued the *Circular on Issues Concerning Foreign Exchange Control over the Overseas Investment and Financing and Round-trip Investment by Domestic Residents via Special Purpose Vehicles*, or "SAFE Circular 37." According to SAFE Circular 37, prior registration with the local SAFE branch is required for PRC residents, (including PRC individuals and PRC corporate entities as well as foreign individuals that are deemed as PRC residents for foreign exchange administration purpose), in connection with their direct or indirect contribution of domestic assets or interests to offshore special purpose vehicles, or "SPVs." SAFE Circular 37 further requires amendments to the SAFE registrations in the event of any changes with respect to the basic information of the offshore SPV, such as change of a PRC individual shareholder, name and operation term, or any significant changes with respect to the offshore SPV, such as an increase or decrease of capital contribution, share transfer or exchange, or mergers or divisions. SAFE Circular 37 is applicable to our shareholders who are PRC residents and may be applicable to any offshore acquisitions that we make in the future. In February 2015, SAFE promulgated a *Notice on Further Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment*, or "SAFE Notice 13," effective in June 2015. Under SAFE Notice 13, applications for foreign exchange registration of inbound foreign direct investments and outbound overseas direct investments, including those required under SAFE Circular 37, will be filed with qualified banks instead of SAFE. The qualified banks will directly examine the applications and accept registrations under the supervision of SAFE.

In addition to SAFE Circular 37 and SAFE Notice 13, our ability to conduct foreign exchange activities in China may be subject to the interpretation and enforcement of the *Implementation Rules of the Administrative Measures for Individual Foreign Exchange* promulgated by SAFE in January 2007 (as amended and supplemented, the "Individual Foreign Exchange Rules"). Under the Individual Foreign Exchange Rules, any PRC individual seeking to make a direct investment overseas or engage in the issuance or trading of negotiable securities or derivatives overseas must make the appropriate registrations in accordance with SAFE provisions, the failure of which may subject such PRC individual to warnings, fines, or other liabilities.

As of the date of this prospectus, all of our current shareholders who are subject to the SAFE Circular 37 and Individual Foreign Exchange Rules have completed the initial registrations with the qualified banks as required by the regulations. We cannot provide any assurance that our future PRC resident beneficial owners will comply with our request to make or obtain any applicable registrations or continuously comply with all registration procedures set forth in these SAFE regulations, and it remains unclear how these SAFE regulations will be interpreted and implemented in the future. Failure or inability of our PRC resident beneficial owners to comply with these SAFE regulations may subject our PRC resident beneficial owners to fines and legal sanctions, restrict our cross-border investment activities, or limit our PRC subsidiary's ability to distribute dividends to, or obtain foreign-exchange-dominated loans from, our Company, or prevent us from being able to make distributions or pay dividends, as a result of which our business operations and our ability to distribute profits to you could be materially and adversely affected.

***PRC regulation of parent/subsidiary loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from using the proceeds of this offering to make loans or additional capital contributions to our PRC operating subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.***

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Under PRC laws and regulations, we are permitted to utilize the proceeds from this offering to fund our PRC subsidiary by making loans to or additional capital contributions to our PRC subsidiary, subject to applicable government registration, statutory limitations on amount, and approval requirements. The amount of capital contributions that we may make to Xinjiang United Family is RMB6,000,000 (approximately $857,143), without obtaining approvals from SAFE or other government authorities. Additionally, Xinjiang United Family may increase its registered capital to receive additional capital contributions from us and currently there is no statutory limit to increasing its registered capital, subject to satisfaction of applicable government and filing requirements. Pursuant to relevant PRC regulations, we may provide loans to Xinjiang United Family up to the larger amount of (i) the balance between the registered total investment amount and registered capital of Xinjiang United Family, or (ii) twice the amount of the net assets of Xinjiang United Family calculated in accordance with the People's Bank of China Circular 9, subject to satisfaction of applicable government registration or approval requirements. For any amount of loans that we may extend to Xinjiang United Family, such loans must be registered with the local counterpart of SAFE. For more details, see "Regulations—PRC Regulations—Regulations on Foreign Exchange." These PRC laws and regulations may significantly limit our ability to use RMB converted from the net proceeds of this offering to fund the establishment of new entities in China by our PRC subsidiary or to invest in or acquire any other PRC companies through our PRC subsidiary. Moreover, we cannot assure you that we will be able to complete the necessary 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 received or expect to receive from our offshore offerings and to capitalize or otherwise fund our PRC operations may be negatively affected, which could materially and adversely affect our business, including our liquidity and our ability to fund and expand our business.

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 ***Fluctuations in exchange rates could have a material adverse effect on our results of operations and the value of your investment.***

The value of RMB against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in political and economic conditions in China and by China's foreign exchange policies. On July 21, 2005, the PRC government changed its decade-old policy of pegging the value of RMB to the U.S. dollar, and RMB appreciated more than 20% against the U.S. dollar over the following three years. Between July 2008 and June 2010, this appreciation halted and the exchange rate between RMB and the U.S. dollar remained within a narrow band. Since June 2010, RMB has fluctuated against the U.S. dollar, at times significantly and unpredictably. On November 30, 2015, the Executive Board of the International Monetary Fund completed the regular five-year review of the basket of currencies that make up the Special Drawing Right, or the "SDR," and decided that with effect from October 1, 2016, RMB was determined to be a freely usable currency and would be included in the SDR basket as a fifth currency, along with the U.S. dollar, the Euro, the Japanese yen, and the British pound. In the fourth quarter of 2016, RMB depreciated significantly in the backdrop of a surging U.S. dollar and persistent capital outflows of China. This depreciation halted in 2017, and RMB appreciated approximately 7% against the U.S. dollar during this one-year period. In 2020, RMB appreciated approximately 6.9% against the U.S. dollar. In 2021, RMB depreciated approximately 2.6% against the U.S. dollar. With the development of the foreign exchange market and progress towards interest rate liberalization and RMB internationalization, the PRC government may in the future announce further changes to the exchange rate system, and we cannot assure you that RMB will not appreciate or depreciate significantly in value against the U.S. dollar in the future. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between RMB and the U.S. dollar in the future. Since we own and operate stores both in the PRC and the U.S., the fluctuations in exchange rates would have a negative effect on our business and results of operations and financial condition.

Most of our business is conducted in the PRC, and most of our books and records are maintained in RMB, which is the currency of the PRC, and the financial statements that we file with the SEC and provide to our shareholders are presented in U.S. dollars. Changes in the exchange rates between RMB and U.S. dollar affect the value of our assets and the results of our operations, when presented in U.S. dollars. The value of RMB against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in the PRC's political and economic conditions and perceived changes in the economy of the PRC and the U.S. Any significant revaluation of RMB may materially and adversely affect our cash flows, revenue, and financial condition. Further, our Class A Ordinary Shares offered by this prospectus are offered in U.S. dollars, we will need to convert part of the net proceeds we receive into RMB in order to use the funds for our business in the PRC. Changes in the conversion rate between the U.S. dollar and RMB will affect the amount of proceeds we will have available for our business.

Very limited hedging options are available in China to reduce our exposure to exchange rate fluctuations. To date, we have not entered into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we may decide to enter into hedging transactions in the future, the availability and effectiveness of these hedges may be limited and we may not be able to adequately hedge our exposure or at all. In addition, our currency exchange losses may be magnified by PRC exchange control regulations that restrict our ability to convert RMB into foreign currency. As a result, fluctuations in exchange rates may have a material adverse effect on your investment.

 ***Under the EIT Law, we may be classified as a PRC "resident enterprise" for PRC enterprise income tax purposes. Such classification would likely result in unfavorable tax consequences to us and our non-PRC shareholders and have a material adverse effect on our results of operations and the value of your investment.***

Under the EIT Law that became effective in January 2008, an enterprise established outside the PRC with "de facto management bodies" within the PRC is considered a "resident enterprise" for PRC enterprise income tax purposes and is generally subject to a uniform 25% enterprise income tax rate on its worldwide income. Under the implementation rules to the EIT Law, a "de facto management body" is defined as a body that has material and overall management and control over the manufacturing and business operations, personnel and human resources, finances, and properties of an enterprise. In addition, a circular, known as "SAT Circular 82," issued in April 2009 by the State Administration of Taxation, or the "SAT," and partially amended by People's Bank of China Circular 9 promulgated in January 2014, specifies that certain offshore incorporated enterprises controlled by PRC enterprises or PRC enterprise groups will be classified as PRC resident enterprises if the following are located or resident in the PRC: senior management personnel and departments that are responsible for daily production, operation and management; financial and personnel decision making bodies; key properties, accounting books, company seal, and minutes of board meetings and shareholders' meetings; and half or more of the senior management or directors having voting rights. Further to SAT Circular 82, SAT issued a bulletin, known as "SAT Bulletin 45," which took effect in September 2011 and amended on June 1, 2015 and October 1, 2016 to provide more guidance on the implementation of SAT Circular 82 and clarify the reporting and filing obligations of Chinese controlled offshore incorporated resident enterprises, to provide more guidance on the implementation of SAT Circular 82 and clarify the reporting and filing obligations of such "Chinese-controlled offshore incorporated resident enterprises." SAT Bulletin 45 provides procedures and administrative details for the determination of resident status and administration on post-determination matters. Although both SAT Circular 82 and SAT Bulletin 45 only apply to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreign individuals, the determining criteria set forth in SAT Circular 82 and SAT Bulletin 45 may reflect SAT's general position on how the "de facto management body" test should be applied in determining the tax resident status of offshore enterprises, regardless of whether they are controlled by PRC enterprises, PRC enterprise groups, or by PRC or foreign individuals.

If the PRC tax authorities determine that the actual management organ of Chanson International is within the territory of China, Chanson International may be deemed to be a PRC resident enterprise for PRC enterprise income tax purposes and a number of unfavorable PRC tax consequences could follow. First, we will be subject to the uniform 25% enterprise income tax on our world-wide income, which could materially reduce our net income. In addition, we will also be subject to PRC enterprise income tax reporting obligations. Finally, dividends payable by us to our investors and gains on the sale of our shares may become subject to PRC withholding tax, at a rate of 10% in the case of non-PRC enterprises or 20% in the case of non-PRC individuals (in each case, subject to the provisions of any applicable tax treaty), if such gains are deemed to be from PRC sources. It is unclear whether non-PRC shareholders of our Company would be able to claim the benefits of any tax treaties between their country of tax residence and the PRC in the event that we are treated as a PRC resident enterprise. Any such tax may reduce the returns on your investment in our shares. Although up to the date of this prospectus, Chanson International has not been notified or informed by the PRC tax authorities that it has been deemed to be a resident enterprise for the purpose of the EIT Law, we cannot assure you that it will not be deemed to be a resident enterprise in the future.

***We face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies.***

In February 2015, SAT issued a *Public Notice Regarding Certain Corporate Income Tax Matters on Indirect Transfer of Properties by Non-Tax Resident Enterprises*, or "SAT Circular 7." SAT Circular 7 provides comprehensive guidelines relating to indirect transfers of PRC taxable assets (including equity interests and real properties of a PRC resident enterprise) by a non-resident enterprise. In addition, in October 2017, SAT issued an *Announcement on Issues Relating to Withholding at Source of Income Tax of Non-resident Enterprises*, or "SAT Circular 37," effective in December 2017, which, among others, amended certain provisions in SAT Circular 7 and further clarify the tax payable declaration obligation by non-resident enterprise. Indirect transfer of equity interest and/or real properties in a PRC resident enterprise by their non-PRC holding companies are subject to SAT Circular 7 and SAT Circular 37.

SAT Circular 7 provides clear criteria for an assessment of reasonable commercial purposes and has introduced safe harbors for internal group restructurings and the purchase and sale of equity through a public securities market. As stipulated in SAT Circular 7, indirect transfers of PRC taxable assets are considered as reasonable commercial purposes if the shareholding structure of both transaction parties falls within the following situations: i) the transferor directly or indirectly owns 80% or above equity interest of the transferee, or vice versa; ii) the transferor and the transferee are both 80% or above directly or indirectly owned by the same party; iii) the percentages in bullet points i) and ii) shall be 100% if over 50% the share value of a foreign enterprise is directly or indirectly derived from PRC real properties. Furthermore, SAT Circular 7 also brings challenges to both foreign transferor and transferee (or other person who is obligated to pay for the transfer) of taxable assets. Where a non-resident enterprise transfers PRC taxable assets indirectly by disposing of the equity interests of an overseas holding company, which is an indirect transfer, the non-resident enterprise as either transferor or transferee, or the PRC entity that directly owns the taxable assets, may report such indirect transfer to the relevant tax authority and the PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding, or deferring PRC tax. As a result, gains derived from such indirect transfer may be subject to PRC enterprise income tax, and the transferee or other person who is obligated to pay for the transfer is obligated to withhold the applicable taxes, currently at a rate of 10% for the transfer of equity interests in a PRC resident enterprise.

According to SAT Circular 37, where the non-resident enterprise fails to declare the tax payable pursuant to Article 39 of the EIT Law, the tax authority may order it to pay the tax due within required time limits, and the non-resident enterprise shall declare and pay the tax payable within such time limits specified by the tax authority. If the non-resident enterprise, however, voluntarily declares and pays the tax payable before the tax authority orders it to do so within required time limits, it shall be deemed that such enterprise has paid the tax in time.

We face uncertainties as to the reporting and assessment of reasonable commercial purposes and future transactions where PRC taxable assets are involved, such as offshore restructuring, sale of the shares in our offshore subsidiaries, and investments. In the event of being assessed as having no reasonable commercial purposes in an indirect transfer transaction, we may be subject to filing obligations or taxed if we are a transferor in such transactions, and may be subject to withholding obligations (to be specific, a 10% withholding tax for the transfer of equity interests) if we are a transferee in such transactions, under SAT Circular 7 and SAT Circular 37. For transfer of shares by investors who are non-PRC resident enterprises, our PRC subsidiary may be requested to assist in the filing under the SAT circulars. As a result, we may be required to expend valuable resources to comply with the SAT circulars or to request the relevant transferors from whom we purchase taxable assets to comply with these circulars, or to establish that we should not be taxed under these circulars, which may have a material adverse effect on our financial condition and results of operations.

***Our PRC subsidiary is subject to restrictions on paying dividends or making other payments to us, which may have a material adverse effect on our ability to conduct our business.***

We are a holding company incorporated in the Cayman Islands. We may need dividends and other distributions on equity from our PRC subsidiary, Xinjiang United Family, to satisfy our liquidity requirements. Current PRC regulations permit our PRC subsidiary to pay dividends to us only out of its accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, our PRC subsidiary is required to set aside at least 10% of its respective accumulated profits each year, if any, to fund certain reserve funds until the total amount set aside reaches 50% of its respective registered capital. Our PRC subsidiary may also allocate a portion of its respective after-tax profits based on PRC accounting standards to employee welfare and bonus funds at their discretion. These reserves are not distributable as cash dividends. These limitation on the ability of our PRC subsidiary to pay dividends or make other distributions to us could materially and adversely limit our ability to grow, make investments, or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business.

***Governmental control of currency conversion may affect the value of your investment and our payment of dividends.***

The PRC government imposes controls on the convertibility of RMB into foreign currencies and, in certain cases, the remittance of currency out of China. We receive substantially all of our revenue in RMB. Under our current corporate structure, Chanson International may rely on dividend payments from our PRC subsidiary to fund any cash and financing requirements we may have. Under existing PRC foreign exchange regulations, payments of current account items, such as profit distributions and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval from SAFE by complying with certain procedural requirements. Therefore, our PRC subsidiary is able to pay dividends in foreign currencies to us without prior approval from SAFE, subject to the condition that the remittance of such dividends outside of the PRC complies with certain procedures under PRC foreign exchange regulation, such as the overseas investment registrations by our shareholders or the ultimate shareholders of our corporate shareholders who are PRC residents. Approval from or registration with appropriate government authorities is, however, required where RMB is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. The PRC government may also at its discretion restrict access in the future to foreign currencies for current account transactions. If the foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfy our foreign currency demand, we may not be able to pay dividends in foreign currencies to our shareholders.

***There are significant uncertainties under the EIT Law relating to the withholding tax liabilities of our PRC subsidiary, and dividends payable by our PRC subsidiary to our offshore subsidiaries may not qualify to enjoy certain treaty benefits.***

Under the EIT Law and its implementation rules, the profits of a foreign invested enterprise generated through operations, which are distributed to its immediate holding company outside the PRC, will be subject to a withholding tax rate of 10%. Pursuant to the Double Tax Avoidance Arrangement, a withholding tax rate of 10% may be lowered to 5% if the PRC enterprise is at least 25% held by a Hong Kong enterprise for at least 12 consecutive months prior to distribution of the dividends and is determined by the relevant PRC tax authority to have satisfied other conditions and requirements under the Double Tax Avoidance Arrangement and other applicable PRC laws.

However, based on the *Circular on Certain Issues with Respect to the Enforcement of Dividend Provisions in Tax Treaties*, or the "SAT Circular 81," which became effective on February 20, 2009, if the relevant PRC tax authorities determine, in their discretion, that a company benefits from such reduced income tax rate due to a structure or arrangement that is primarily tax-driven, such PRC tax authorities may adjust the preferential tax treatment. According to *Circular on Several Issues regarding the "Beneficial Owner" in Tax Treaties*, which became effective as of April 1, 2018, when determining an applicant's status as the "beneficial owner" regarding tax treatments in connection with dividends, interests, or royalties in the tax treaties, several factors will be taken into account. Such factors include whether the business operated by the applicant constitutes actual business activities, and whether the counterparty country or region to the tax treaties does not levy any tax, grant tax exemption on relevant incomes, or levy tax at an extremely low rate. This circular further requires any applicant who intends to be proved of being the "beneficial owner" to file relevant documents with the relevant tax authorities. Our PRC subsidiary is wholly owned by our Hong Kong subsidiary. However, we cannot assure you that our determination regarding our qualification to enjoy the preferential tax treatment will not be challenged by the relevant PRC tax authority or we will be able to complete the necessary filings with the relevant PRC tax authority and enjoy the preferential withholding tax rate of 5% under the Double Tax Avoidance Arrangement with respect to dividends to be paid by our PRC subsidiary to our Hong Kong subsidiary, in which case, we would be subject to the higher withdrawing tax rate of 10% on dividends received.

***If we become directly subject to the scrutiny, criticism, and negative publicity involving U.S.-listed Chinese companies, we may have to expend significant resources to investigate and resolve the matter which could harm our business operations, stock price, and reputation.***

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U.S. public companies that have substantially all of their operations in China have been the subject of intense scrutiny, criticism, and negative publicity by investors, financial commentators, and regulatory agencies, such as the SEC. Much of the scrutiny, criticism, and negative publicity has centered on financial and accounting irregularities and mistakes, a lack of effective internal controls over financial accounting, inadequate corporate governance policies or a lack of adherence thereto and, in many cases, allegations of fraud. As a result of the scrutiny, criticism, and negative publicity, the publicly traded stock of many U.S. listed Chinese companies sharply decreased in value and, in some cases, has become virtually worthless. Many of these companies are now subject to shareholder lawsuits and SEC enforcement actions and are conducting internal and external investigations into the allegations. It is not clear what effect this sector-wide scrutiny, criticism, and negative publicity will have on us, our business, and the price of our Class A Ordinary Shares. If we become the subject of any unfavorable allegations, whether such allegations are proven to be true or untrue, we will have to expend significant resources to investigate such allegations and/or defend our Company. This situation will be costly and time consuming and distract our management from developing our business. If such allegations are not proven to be groundless, we and our business operations will be severely affected and you could sustain a significant decline in the value of our Class A Ordinary Shares.

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***The disclosures in our reports and other filings with the SEC and our other public pronouncements are not subject to the scrutiny of any regulatory bodies in the PRC.***

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We are regulated by the SEC, and our reports and other filings with the SEC are subject to SEC review in accordance with the rules and regulations promulgated by the SEC under the Securities Act and the Exchange Act. Our SEC reports and other disclosure and public pronouncements are not subject to the review or scrutiny of any PRC regulatory authority. For example, the disclosure in our SEC reports and other filings are not subject to the review by CSRC, a PRC regulator that is responsible for oversight of the capital markets in China. Accordingly, you should review our SEC reports, filings, and our other public pronouncements with the understanding that no local regulator has done any review of us, our SEC reports, other filings, or any of our other public pronouncements.

***The M&A Rules and certain other PRC regulations establish complex procedures for some acquisitions of Chinese companies by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in China.***

*The Regulations on Mergers and Acquisitions of Domestic Companies by Foreign Investors*, or the "M&A Rules," and recently adopted regulations and rules concerning mergers and acquisitions established additional procedures and requirements that could make merger and acquisition activities by foreign investors more time consuming and complex. For example, the M&A Rules require that the Ministry of Commerce of the PRC ("MOFCOM") be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise, if (i) any important industry is concerned, (ii) such transaction involves factors that have or may have impact on the national economic security, or (iii) such transaction will lead to a change in control of a domestic enterprise which holds a famous trademark or PRC time-honored brand. Mergers or acquisitions that allow one market player to take control of or to exert decisive impact on another market player must also be notified in advance to MOFCOM when the threshold under the Provisions on Thresholds for Prior Notification of Concentrations of Undertakings, or the "Prior Notification Rules," issued by the State Council in August 2008 is triggered. In addition, the security review rules issued by MOFCOM that became effective in September 2011 specify that mergers and acquisitions by foreign investors that raise "national defense and security" concerns and mergers and acquisitions through which foreign investors may acquire de facto control over domestic enterprises that raise "national security" concerns are subject to strict review by MOFCOM, and the rules prohibit any activities attempting to bypass a security review, including by structuring the transaction through a proxy or contractual control arrangement. In the future, we may grow our business by acquiring complementary businesses. Complying with the requirements of the above-mentioned regulations and other relevant rules to complete such transactions could be time consuming, and any required approval processes, including obtaining approval from MOFCOM or its local counterparts may delay or inhibit our ability to complete such transactions. It is clear that our business would not be deemed to be in an industry that raises "national defense and security" or "national security" concerns. MOFCOM or other government agencies, however, may publish explanations in the future determining that our business is in an industry subject to the security review, in which case our future acquisitions in the PRC, including those by way of entering into contractual control arrangements with target entities, may be closely scrutinized or prohibited. Our ability to expand our business or maintain or expand our market share through future acquisitions would as such be materially and adversely affected.

**Risks Relating to this Offering and the Trading Market**

***There has been no public market for our Class A Ordinary Shares prior to this offering, and you may not be able to resell our Class A Ordinary Shares at or above the price you pay for them, or at all.***

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Prior to this offering, there has not been a public market for our Class A Ordinary Shares. We have applied for the listing of our Class A Ordinary Shares on the Nasdaq Capital Market. An active public market for our Class A Ordinary Shares, however, may not develop or be sustained after the offering, in which case the market price and liquidity of our Class A Ordinary Shares will be materially and adversely affected.

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***You will experience immediate and substantial dilution in the net tangible book value of Class A Ordinary Shares purchased.***

The initial public offering price of our Class A Ordinary Shares is substantially higher than the (pro forma) net tangible book value per Class A Ordinary Share. Consequently, when you purchase our Class A Ordinary Shares in the offering, upon completion of the offering you will incur immediate dilution of $3.52 per share if the Underwriter does not exercise the over-allotment option and $3.39 if the Underwriter exercises the over-allotment option in full, assuming an initial public offering price of $5.00, which is the midpoint of the estimated initial public offering price range set forth on the front cover of this prospectus. See "Dilution." In addition, you may experience further dilution to the extent that additional Class A Ordinary Shares are issued upon conversion of Class B Ordinary Shares or exercise of options we may grant from time to time.

***If we fail to implement and maintain an effective system of internal controls or fail to remediate the material weaknesses in our internal control over financial reporting that have been identified, we may fail to meet our reporting obligations or be unable to accurately report our results of operations or prevent fraud, and investor confidence and the market price of our Class A Ordinary Shares may be materially and adversely affected.***

Prior to this offering, we have been a private company with limited accounting personnel and other resources with which to address our internal controls and procedures. Our independent registered public accounting firm has not conducted an audit of our internal control over financial reporting. However, in preparing our consolidated financial statements as of and for the years ended December 31, 2021 and 2020, we have identified material weaknesses in our internal control over financial reporting, as defined in the standards established by the PCAOB and other control deficiencies. The material weaknesses identified included a lack of accounting staff and resources with appropriate knowledge of U.S. GAAP and SEC reporting and compliance requirements. Following the identification of the material weaknesses and control deficiencies, we plan to continue to take remedial measures including (i) hiring more qualified accounting personnel with relevant U.S. GAAP and SEC reporting experience and qualifications to strengthen the financial reporting function and to set up a financial and system control framework; (ii) implementing regular and continuous U.S. GAAP accounting and financial reporting training programs for our accounting and financial reporting personnel; (iii) engaging an external consulting firm to assist us with assessment of Sarbanes-Oxley compliance requirements and improvement of overall internal control; and (iv) appointing independent directors, establishing an audit committee, and strengthening corporate governance. However, the implementation of these measures may not fully address the material weaknesses in our internal control over financial reporting. Our failure to correct the material weaknesses or our failure to discover and address any other material weaknesses or control deficiencies could result in inaccuracies in our financial statements and could also impair our ability to comply with applicable financial reporting requirements and related regulatory filings on a timely basis. As a result, our business, financial condition, results of operations and prospects, as well as the trading price of our Class A Ordinary Shares, may be materially and adversely affected. Moreover, ineffective internal control over financial reporting significantly hinders our ability to prevent fraud.

Upon completion of this offering, we will become a public company in the U.S. subject to the Sarbanes-Oxley Act of 2002. Section 404 of the Sarbanes-Oxley Act of 2002 will require that we include a report of management on our internal control over financial reporting in our annual report on Form 20-F beginning with our annual report for the fiscal year ending December 31, 2023. In addition, once we cease to be an "emerging growth company," as such term is defined in the JOBS Act, our independent registered public accounting firm must attest to and report on the effectiveness of our internal control over financial reporting. Our management may conclude that our internal control over financial reporting is not effective. Moreover, even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm, after conducting its own independent testing, may issue a report that is qualified if it is not satisfied with our internal controls or the level at which our controls are documented, designed, operated, or reviewed, or if it interprets the relevant requirements differently from us. In addition, after we become a public company, our reporting obligations may place a significant strain on our management, operational, and financial resources and systems for the foreseeable future. We may be unable to complete our evaluation testing and any required remediation in a timely manner.

***We will incur substantial increased costs as a result of being a public company.***

Upon consummation of this offering, we will incur significant legal, accounting, and other expenses as a public company that we did not incur as a private company. The Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the SEC and Nasdaq, impose various requirements on the corporate governance practices of public companies.

Compliance with these rules and regulations increases our legal and financial compliance costs and makes some corporate activities more time-consuming and costlier. We have incurred additional costs in obtaining director and officer liability insurance. In addition, we incur additional costs associated with our public company reporting requirements. It may also be more difficult for us to find qualified persons to serve on our board of directors or as executive officers.

We are an "emerging growth company," as defined in the JOBS Act and will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our Class A Ordinary Shares that is held by non-affiliates exceeds $700 million as of the prior June 30, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 in the assessment of the emerging growth company's internal control over financial reporting and permission to delay adopting new or revised accounting standards until such time as those standards apply to private companies.

After we are no longer an "emerging growth company," or until five years following the completion of our initial public offering, whichever is earlier, we expect to incur significant additional expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 and the other rules and regulations of the SEC. For example, as a public company, we have been required to increase the number of independent directors and adopt policies regarding internal controls and disclosure controls and procedures.

We are currently evaluating and monitoring developments with respect to these rules and regulations, and we cannot predict or estimate with any degree of certainty the amount of additional costs we may incur or the timing of such costs.

***The dual class structure of our ordinary shares has the effect of concentrating voting control with our Chairman, and his interest may not be aligned with the interests of our other shareholders.***

 ****

We have a dual-class voting structure consisting of Class A Ordinary Shares and Class B Ordinary Shares. Under this structure, holders of Class A Ordinary Shares are entitled to one vote per one Class A Ordinary Share, and holders of Class B Ordinary Shares are entitled to 10 votes per one Class B Ordinary Share, which may cause the holders of Class B Ordinary Shares to have an unbalanced, higher concentration of voting power. Immediately prior to completion of this offering, Mr. Gang Li, our Chairman, beneficially owns 2,700,000, or 88.24% of our issued Class A Ordinary Shares, and 5,670,000, or 95.45%, of our issued Class B Ordinary Shares, representing approximately 95.1% of the voting rights in our Company. After this offering, Mr. Gang Li will hold 2,700,000 Class A Ordinary Shares and 5,670,000 Class B Ordinary Shares, representing approximately 89.7% of the voting rights in our Company, assuming no exercise of the over-allotment option by the Underwriter, or approximately 89.0% assuming full exercise of the over-allotment option by the Underwriter. As a result, until such time as Mr. Gang Li's voting power is below 50%, Mr. Gang Li as the controlling shareholder has substantial influence over our business, including decisions regarding mergers, consolidations and the sale of all or substantially all of our assets, election of directors, and other significant corporate actions. He may take actions that are not in the best interests of us or our other shareholders. These corporate actions may be taken even if they are opposed by our other shareholders. Further, such concentration of voting power may discourage, prevent, or delay the consummation of change of control transactions that shareholders may consider favorable, including transactions in which shareholders might otherwise receive a premium for their shares. Future issuances of Class B Ordinary Shares may also be dilutive to the holders of Class A Ordinary Shares. As a result, the market price of our Class A Ordinary Shares could be adversely affected.

***The dual-class structure of our ordinary shares may adversely affect the trading market for our Class A Ordinary Shares.***

Several shareholder advisory firms have announced their opposition to the use of multiple class structures. As a result, the dual class structure of our ordinary shares may cause shareholder advisory firms to publish negative commentary about our corporate governance practices or otherwise seek to cause us to change our capital structure. Any actions or publications by shareholder advisory firms critical of our corporate governance practices or capital structure could also adversely affect the value of our Class A Ordinary Shares.

 ****

***Since we are a "controlled company" within the meaning of the Nasdaq listing rules, we may follow certain exemptions from certain corporate governance requirements that could adversely affect our public shareholders.***

Following this offering, our largest shareholder will continue to own more than a majority of the voting power of our outstanding ordinary shares. Under the Nasdaq listing rules, a company of which more than 50% of the voting power is held by an individual, group, or another company is a "controlled company" and is permitted to phase in its compliance with the independent committee requirements. Although we do not intend to rely on the "controlled company" exemptions under the Nasdaq listing rules even if we are deemed a "controlled company," we could elect to rely on these exemptions in the future. If we were to elect to rely on the "controlled company" exemptions, a majority of the members of our board of directors might not be independent directors and our nominating and corporate governance and compensation committees might not consist entirely of independent directors. Accordingly, if we rely on the exemptions, during the period we remain a controlled company and during any transition period following a time when we are no longer a controlled company, you would not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of Nasdaq.

 ****

***Substantial future sales of our Class A Ordinary Shares or the anticipation of future sales of our Class A Ordinary Shares in the public market could cause the price of our Class A Ordinary Shares to decline.***

Sales of substantial amounts of our Class A Ordinary Shares in the public market after this offering, or the perception that these sales could occur, could cause the market price of our Class A Ordinary Shares to decline. An aggregate of 3,060,000 Class A Ordinary Shares are outstanding before the consummation of this offering and 6,810,000 Class A Ordinary Shares will be outstanding immediately after the consummation of this offering if the Underwriter's over-allotment option is not exercised, and 7,372,500 Class A Ordinary Shares will be outstanding immediately after the consummation of this offering if the Underwriter's over-allotment option is fully exercised. Sales of these shares into the market could cause the market price of our Class A Ordinary Shares to decline.

***We do not intend to pay dividends for the foreseeable future.***

We currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not expect to declare or pay any dividends in the foreseeable future. As a result, you may only receive a return on your investment in our Class A Ordinary Shares if the market price of our Class A Ordinary Shares increases.

 ****

***If securities or industry analysts do not publish research or reports about our business, or if the publish a negative report regarding our Class A Ordinary Shares, the price of our Class A Ordinary Shares and trading volume could decline.***

Any trading market for our Class A Ordinary Shares may depend in part on the research and reports that industry or securities analysts publish about us or our business. We do not have any control over these analysts. If one or more of the analysts who cover us downgrade us, the price of our Class A Ordinary Shares would likely decline. If one or more of these analysts cease coverage of our Company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause the price of our Class A Ordinary Shares and the trading volume to decline.

 ****

***The market price of our Class A Ordinary Shares may be volatile or may decline regardless of our operating performance, and you may not be able to resell your shares at or above the initial public offering price.***

The initial public offering price for our Class A Ordinary Shares will be determined through negotiations between the Underwriter and us. It may not bear a direct relationship to our earnings, book value, or any other indicia of value and may vary from the market price of our Class A Ordinary Shares following our initial public offering. The market price of our Class A Ordinary Shares may decline significantly below the initial public offering price. The financial markets in the U.S. and other countries have experienced significant price and volume fluctuations in the last few years. Volatility in the price of our Class A Ordinary Shares may be caused by factors outside of our control and may be unrelated or disproportionate to changes in our results of operations.

If you purchase our Class A Ordinary Shares in our initial public offering, you may not be able to resell those shares at or above the initial public offering price. We cannot assure you that the initial public offering price of our Class A Ordinary Shares, or the market price following our initial public offering, will equal or exceed prices in privately negotiated transactions of our shares that have occurred from time to time prior to our initial public offering. The market price of our Class A Ordinary Shares may fluctuate significantly in response to numerous factors, many of which are beyond our control, including:

● actual or anticipated fluctuations in our revenue and other operating results;

● the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;

● actions of securities analysts who initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our Company, or our failure to meet these estimates or the expectations of investors;

● announcements by us or our competitors of significant products or features, technical innovations, acquisitions, strategic partnerships, joint ventures, or capital commitments;

● price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole;

● lawsuits threatened or filed against us; and

● other events or factors, including those resulting from war or incidents of terrorism, or responses to these events.

In addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. Stock prices of many companies have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies. In the past, stockholders have filed securities class action litigation following periods of market volatility. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business, and adversely affect our business.

 ***The price of our Class A Ordinary Shares could be subject to rapid and substantial volatility. Such volatility, including any stock run-ups, may be unrelated to our actual or expected operating performance and financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our Class A Ordinary Shares***

There have been instances of extreme stock price run-ups followed by rapid price declines and strong stock price volatility with recent initial public offerings, especially among those with relatively smaller public floats. As a relatively small-capitalization company with a relatively small public float, we may experience greater share price volatility, extreme price run-ups, lower trading volume, and less liquidity than large-capitalization companies. In particular, our Class A Ordinary Shares may be subject to rapid and substantial price volatility, low volumes of trades, and large spreads in bid and ask prices. Such volatility, including any stock run-ups, may be unrelated to our actual or expected operating performance and financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our Class A Ordinary Shares.

In addition, if the trading volumes of our Class A Ordinary Shares are low, persons buying or selling in relatively small quantities may easily influence the price of our Class A Ordinary Shares. This low volume of trades could also cause the price of our Class A Ordinary Shares to fluctuate greatly, with large percentage changes in price occurring in any trading day session. Holders of our Class A Ordinary Shares may also not be able to readily liquidate their investment or may be forced to sell at depressed prices due to low volume trading. Broad market fluctuations and general economic and political conditions may also adversely affect the market price of our Class A Ordinary Shares. As a result of this volatility, investors may experience losses on their investment in our Class A Ordinary Shares. A decline in the market price of our Class A Ordinary Shares also could adversely affect our ability to issue additional Class A Ordinary Shares or other securities and our ability to obtain additional financing in the future. No assurance can be given that an active market in our Class A Ordinary Shares will develop or be sustained. If an active market does not develop, holders of our Class A Ordinary Shares may be unable to readily sell the shares they hold or may not be able to sell their shares at all.

***Our management has broad discretion to determine how to use the funds raised in the offering and may use them in ways that may not enhance our results of operations or the price of our Class A Ordinary Shares.***

We anticipate that we will use the net proceeds from this offering to open new stores in the U.S. Our management will have significant discretion as to the use of the net proceeds to us from this offering and could spend the proceeds in ways that do not improve our results of operations or enhance the market price of our Class A Ordinary Shares.

***If we cease to qualify as a foreign private issuer, we would be required to comply fully with the reporting requirements of the Exchange Act applicable to U.S. domestic issuers, and we would incur significant additional legal, accounting and other expenses that we would not incur as a foreign private issuer.***

We expect to qualify as a foreign private issuer upon the completion of this offering. As a foreign private issuer, we will be exempt from the rules under the Exchange Act prescribing the furnishing and content of proxy statements, and our officers, directors and principal shareholders will be exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we will not be required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. domestic issuers, and we will not be required to disclose in our periodic reports all of the information that U.S. domestic issuers are required to disclose. While we currently expect to qualify as a foreign private issuer immediately following the completion of this offering, we may cease to qualify as a foreign private issuer in the future, in which case we would incur significant additional expenses that could have a material adverse effect on our results of operations.

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***Because we are a foreign private issuer and are exempt from certain Nasdaq corporate governance standards applicable to U.S. issuers, you will have less protection than you would have if we were a domestic issuer.***

Nasdaq listing rules require listed companies to have, among other things, a majority of its board members be independent. As a foreign private issuer, however, we are permitted to, and we may follow home country practice in lieu of the above requirements, or we may choose to comply with the above requirement within one year of listing. The corporate governance practice in our home country, the Cayman Islands, does not require a majority of our board to consist of independent directors. Thus, although a director must act in the best interests of the Company, it is possible that fewer board members will be exercising independent judgment and the level of board oversight on the management of our Company may decrease as a result. In addition, Nasdaq listing rules also require U.S. domestic issuers to have a compensation committee, a nominating/corporate governance committee composed entirely of independent directors, and an audit committee with a minimum of three members. We, as a foreign private issuer, are not subject to these requirements. Nasdaq listing rules may require shareholder approval for certain corporate matters, such as requiring that shareholders be given the opportunity to vote on all equity compensation plans and material revisions to those plans, certain ordinary share issuances. We intend to comply with the requirements of Nasdaq listing rules in determining whether shareholder approval is required on such matters and to appoint a nominating and corporate governance committee. We may, however, consider following home country practice in lieu of the requirements under Nasdaq listing rules with respect to certain corporate governance standards which may afford less protection to investors.

 ***If we cannot satisfy, or continue to satisfy, the initial listing requirements and other rules of the Nasdaq Capital Market, our securities may not be listed or may be delisted, which could negatively impact the price of our securities and your ability to sell them.***

We will seek to have our securities approved for listing on the Nasdaq Capital Market upon consummation of this offering. We cannot assure you that we will be able to meet those initial listing requirements at that time. Even if our securities are listed on the Nasdaq Capital Market, we cannot assure you that our securities will continue to be listed on the Nasdaq Capital Market.

In addition, following this offering, in order to maintain our listing on the Nasdaq Capital Market, we will be required to comply with certain rules of the Nasdaq Capital Market, including those regarding minimum stockholders' equity, minimum share price, minimum market value of publicly held shares, and various additional requirements. Even if we initially meet the listing requirements and other applicable rules of the Nasdaq Capital Market, we may not be able to continue to satisfy these requirements and applicable rules. If we are unable to satisfy the Nasdaq Capital Market criteria for maintaining our listing, our securities could be subject to delisting.

If the Nasdaq Capital Market does not list our securities, or subsequently delists our securities from trading, we could face significant consequences, including:

● a limited availability for market quotations for our securities;

● reduced liquidity with respect to our securities;

● a determination that our Class A Ordinary Share is a "penny stock," which will require brokers trading in our Class A Ordinary Share to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our Class A Ordinary Share;

● limited amount of news and analyst coverage; and

● a decreased ability to issue additional securities or obtain additional financing in the future.

***Anti-takeover provisions in our amended and restated memorandum and articles of association may discourage, delay, or prevent a change in control.***

Some provisions of our amended and restated memorandum and articles of association may discourage, delay or prevent a change in control of our Company or management that shareholders may consider favorable, including, among other things, the following:

● provisions that authorize our board of directors to issue shares with preferred, deferred or other special rights or restrictions without any further vote or action by our shareholders; and

● provisions that restrict the ability of our shareholders to call meetings and to propose special matters for consideration at shareholder meetings.

***Because we are an "emerging growth company," we may not be subject to requirements that other public companies are subject to, which could affect investor confidence in us and our Class A Ordinary Shares.***

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For as long as we remain an "emerging growth company," as defined in the JOBS Act, we will elect to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies," including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of shareholder approval of any golden parachute payments not previously approved. Because of these lessened regulatory requirements, our shareholders would be left without information or rights available to shareholders of more mature companies. If some investors find our Class A Ordinary Shares less attractive as a result, there may be a less active trading market for our Class A Ordinary Shares and our share price may be more volatile. See "Implications of Our Being an Emerging Growth Company."

***The laws of the Cayman Islands may not provide our shareholders with benefits comparable to those provided to shareholders of corporations incorporated in the U.S.***

We are an exempted company incorporated under the laws of the Cayman Islands with limited liability. Our corporate affairs are governed by our amended and restated memorandum and articles of association, by the Companies Act (2021 Revision) of the Cayman Islands and by the common law of the Cayman Islands. The rights of shareholders to take action against our directors, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law in the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands and from English common law. Decisions of the Privy Council (which is the final Court of Appeal for British overseas territories such as the Cayman Islands) are binding on a court in the Cayman Islands. Decisions of the English courts, and particularly the Supreme Court and the Court of Appeal are generally of persuasive authority but are not binding in the courts of the Cayman Islands. Decisions of courts in other Commonwealth jurisdictions are similarly of persuasive but not binding authority. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedents in the U.S. In particular, the Cayman Islands has a less developed body of securities laws relative to the U.S. Therefore, our public shareholders may have more difficulty protecting their interests in the face of actions by our management, directors or controlling shareholders than would shareholders of a corporation incorporated in a jurisdiction in the U.S.

Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records or to obtain copies of the register of members of these companies. Our directors have discretion under our articles of association to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders, but are not obliged to make them available to our shareholders. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.

As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by our management, members of the board of directors, or controlling shareholders than they would as public shareholders of a company incorporated in the U.S. For a discussion of significant differences between the provisions of the Companies Act of the Cayman Islands and the laws applicable to companies incorporated in the United States and their shareholders, see "Description of Share Capital—Differences in Corporate Law."

***You may be unable to present proposals before annual general meetings or extraordinary general meetings not called by shareholders.***

Cayman Islands law provides shareholders with only limited rights to requisition a general meeting, and does not provide shareholders with any right to put any proposal before a general meeting. These rights, however, may be provided in a company's articles of association. Our articles of association allow our shareholders holding shares representing in aggregate not less than 10% of our voting share capital in issue, to requisition a general meeting of our shareholders, in which case our directors are obliged to call such meeting. Advance notice of at least 21 clear days is required for the convening of our annual general shareholders' meeting and at least 14 clear days' notice any other general meeting of our shareholders. A quorum required for a meeting of shareholders consists of at least one shareholder present or by proxy, representing not less than one-third of the total issued shares carrying the right to vote at a general meeting of the Company. For these purposes, "clear days" means that period excluding (a) the day when the notice is given or deemed to be given and (b) the day for which it is given or on which it is to take effect.

 ***If we are classified as a PFIC, U.S. taxpayers who own our Class A Ordinary Shares may have adverse U.S. federal income tax consequences.***

A non-U.S. corporation such as ourselves will be classified as a PFIC, for any taxable year if, for such year, either:

● At least 75% of our gross income for the year is passive income; or

● The average percentage of our assets (determined at the end of each quarter) during the taxable year which produce passive income or which are held for the production of passive income is at least 50%.

Passive income generally includes dividends, interest, rents and royalties (other than rents or royalties derived from the active conduct of a trade or business) and gains from the disposition of passive assets.

If we are determined to be a PFIC for any taxable year (or portion thereof) that is included in the holding period of a U.S. taxpayer who holds our Class A Ordinary Shares, the U.S. taxpayer may be subject to increased U.S. federal income tax liability and may be subject to additional reporting requirements.

Depending on the amount of cash we raise in this offering, together with any other assets held for the production of passive income, it is possible that, for our 2023 taxable year or for any subsequent year, more than 50% of our assets may be assets which produce passive income, in which case we would be deemed a PFIC, which could have adverse US federal income tax consequences for US taxpayers who are shareholders. We will make this determination following the end of any particular tax year.

Although the law in this regard is unclear, we treat the VIEs as being owned by us for U.S. federal income tax purposes, not only because we exercise effective control over the operations of such entities but also because we are entitled to substantially all of their economic benefits for accounting purposes, and, as a result, we consolidate their operating results in our consolidated financial statements. For purposes of the PFIC analysis, in general, a non-U.S. corporation is deemed to own its pro rata share of the gross income and assets of any entity in which it is considered to own at least 25% of the equity by value.

For a more detailed discussion of the application of the PFIC rules to us and the consequences to U.S. taxpayers if we were or are determined to be a PFIC, see "Material Income Tax Consideration—U.S. Federal Income Taxation—Passive Foreign Investment Company."

***Our pre-IPO shareholders will be able to sell their shares upon completion of this offering subject to restrictions under Rule 144 under the Securities Act.***

3,060,000 of our Class A Ordinary Shares are issued and outstanding before this offering. Our pre-IPO shareholders may be able to sell their Class A Ordinary Shares under Rule 144 after the completion of this offering. See "Shares Eligible for Future Sale" below. Because these shareholders have paid a lower price per Class A Ordinary Share than participants in this offering, when they are able to sell their pre-IPO shares under Rule 144, they may be more willing to accept a lower sales price than the initial public offering price. This fact could impact the trading price of the Class A Ordinary Shares following the completion of the offering, to the detriment of participants in this offering. Under Rule 144, before our pre-IPO shareholders can sell their shares, in addition to meeting other requirements, they must meet the required holding period. We do not expect any of the Class A Ordinary Shares to be sold pursuant to Rule 144 during the pendency of this offering.

**DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS**

This prospectus contains forward-looking statements that reflect our current expectations and views of future events, all of which are subject to risks and uncertainties. Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. You can find many (but not all) of these statements by the use of words such as "approximates," "believes," "hopes," "expects," "anticipates," "estimates," "projects," "intends," "plans," "will," "would," "should," "could," "may" or other similar expressions in this prospectus. These statements are likely to address our growth strategy, financial results and product and development programs. You must carefully consider any such statements and should understand that many factors could cause actual results to differ from our forward-looking statements. These factors may include inaccurate assumptions and a broad variety of other risks and uncertainties, including some that are known and some that are not. No forward-looking statement can be guaranteed and actual future results may vary materially. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to:

● assumptions about our future financial and operating results, including revenue, income, expenditures, cash balances, and other financial items;

● our ability to execute our growth and expansion plan, including our ability to meet our goals;

● current and future economic and political conditions;

● our ability to compete in an industry with low barriers to entry;

● our ability to continue to operate through the VIE structure;

● our capital requirements and our ability to raise any additional financing which we may require;

● our ability to attract customers and further enhance our brand awareness;

● our ability to hire and retain qualified management personnel and key employees in order to enable us to develop our business;

● trends and competition in the bakery industry;

● future developments of the COVID-19 pandemic; and

● other assumptions described in this prospectus underlying or relating to any forward-looking statements.

We describe certain material risks, uncertainties and assumptions that could affect our business, including our financial condition and results of operations, under "Risk Factors." We base our forward-looking statements on our management's beliefs and assumptions based on information available to our management at the time the statements are made. We caution you that actual outcomes and results may, and are likely to, differ materially from what is expressed, implied, or forecast by our forward-looking statements. Accordingly, you should be careful about relying on any forward-looking statements. Except as required under the federal securities laws, we do not have any intention or obligation to update publicly any forward-looking statements after the distribution of this prospectus, whether as a result of new information, future events, changes in assumptions, or otherwise.

**Industry Data and Forecasts**

This prospectus contains data related to the bakery industry in the PRC and the U.S. These industry data include projections that are based on a number of assumptions which have been derived from industry and government sources which we believe to be reasonable. The bakery industry may not grow at the rate projected by industry data, or at all. The failure of the industry to grow as anticipated is likely to have a material adverse effect on our business and the market price of our Class A Ordinary Shares. In addition, the rapidly changing nature of the bakery industry subjects any projections or estimates relating to the growth prospects or future condition of our industry to significant uncertainties. Furthermore, if any one or more of the assumptions underlying the industry data turns out to be incorrect, actual results may, and are likely to, differ from the projections based on these assumptions.

**ENFORCEABILITY OF CIVIL LIABILITIES**

We are incorporated under the laws of the Cayman Islands as an exempted company with limited liability. We incorporated under the laws of the Cayman Islands because of certain benefits associated with being a Cayman Islands company, such as political and economic stability, an effective judicial system, a favorable tax system, the absence of foreign exchange control or currency restrictions, and the availability of professional and support services. The Cayman Islands, however, has a less developed body of securities laws as compared to the U.S. and provides significantly less protection for investors than the U.S. Additionally, Cayman Islands companies may not have standing to sue in the federal courts of the U.S.

Most of our operations are conducted in the PRC and most of our assets are located in the PRC. In addition, all of our directors and officers are nationals or residents of the PRC and all or a substantial portion of their assets are located outside the U.S. As a result, it may be difficult for investors to effect service of process within the U.S. upon us or these persons, or to enforce against us or them judgments obtained in U.S. courts, including judgments predicated upon the civil liability provisions of the U.S. federal securities laws or securities laws of any U.S. state.

We have appointed George Chanson (NY) Corp. as our agent to receive service of process with respect to any action brought against us in the United States District Court for the Southern District of New York under the U.S. federal securities laws or securities laws of any U.S. state or any action brought against us in the Supreme Court of the State of New York in the County of New York under the securities laws of the State of New York.

Ogier (Cayman) LLP ("Ogier"), our counsel with respect to the laws of the Cayman Islands, and Dentons, our counsel with respect to PRC law, have advised us that there is uncertainty as to whether the courts of the Cayman Islands or the PRC would (i) recognize or enforce judgments of U.S. courts obtained against us or our directors or officers predicated upon the civil liability provisions of the U.S. federal securities laws or securities laws of any U.S. state or (ii) entertain original actions brought in the Cayman Islands or the PRC against us or our directors or officers predicated upon the U.S. federal securities laws or securities laws of any U.S. state.

Ogier has further advised us that there is currently no statutory enforcement or treaty between the U.S. and the Cayman Islands providing for enforcement of judgments. A judgment obtained in the U.S., however, may be recognized and enforced in the courts of the Cayman Islands at common law, without any re-examination on the merits of the underlying dispute, by an action commenced on the foreign judgment debt in the Grand Court of the Cayman Islands, provided such judgment: (i) is given by a foreign court of competent jurisdiction; (ii) is final; (iii) is not in respect of taxes, a fine or a penalty; and (iv) was not obtained in a manner and is not of a kind the enforcement of which is contrary to natural justice or public policy of the Cayman Islands. Furthermore, it is uncertain that Cayman Islands courts would enforce: (i) judgments of U.S. courts obtained in actions against us or other persons that are predicated upon the civil liability provisions of the U.S. federal securities laws; or (ii) original actions brought against us or other persons predicated upon the Securities Act. Ogier has informed us that there is uncertainty with regard to Cayman Islands law relating to whether a judgment obtained from the U.S. courts under civil liability provisions of the securities laws will be determined by the courts of the Cayman Islands as penal or punitive in nature.

Dentons has further advised us that the recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedure Law. PRC courts may recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedure Law based either on treaties between China and the country where the judgment is made or on reciprocity between jurisdictions. There are no treaties or other forms of reciprocity between the PRC and the U.S. for the mutual recognition and enforcement of court judgments. Dentons has further advised us that under PRC law, PRC courts will not enforce a foreign judgment against us or our officers and directors if the court decides that such judgment violates the basic principles of PRC law or national sovereignty, security or public interest, thus making the recognition and enforcement of a U.S. court judgment in the PRC difficult.

**USE OF PROCEEDS**

Based upon an assumed initial public offering price of $5.00 per Class A Ordinary Share, which is the midpoint of the estimated initial public offering price range set forth on the cover page of this prospectus, we estimate that we will receive net proceeds from this offering, after deducting the estimated underwriting discounts, non-accountable expense allowance, and the estimated offering expenses payable by us, of approximately $16,027,057 if the Underwriter does not exercise its over-allotment option, and $18,600,495 if the Underwriter exercises its over-allotment option in full.

We plan to use all of the net proceeds we receive from this offering to open new stores in the U.S.

The foregoing represents our current intentions based upon our present plans and business conditions to use and allocate the net proceeds of this offering. Our management, however, will have significant flexibility and discretion to apply the net proceeds of this offering. If an unforeseen event occurs or business conditions change, we may use the proceeds of this offering differently than as described in this prospectus. To the extent that the net proceeds we receive from this offering are not immediately used for the above purposes, we intend to invest our net proceeds in short-term, interest-bearing bank deposits or debt instruments.

**DIVIDEND POLICY**

As of the date of this prospectus, none of our subsidiaries or VIEs have made any dividends or distributions to our Company and our Company has not made any dividends or distributions to our shareholders. We intend to keep any future earnings to finance the expansion of our business, and we do not anticipate that any cash dividends will be paid in the foreseeable future. Subject to the PFIC rules, the gross amount of distributions we make to investors with respect to our Class A Ordinary Shares (including the amount of any taxes withheld therefrom) will be taxable as a dividend, to the extent that the distribution is paid out of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles.

Under the Cayman Islands law, a Cayman Islands company may pay a dividend on its shares out of either profit or share premium amount, provided that in no circumstances may a dividend be paid if this would result in the company being unable to pay its debts due in the ordinary course of business.

If we determine to pay dividends on any of our Class A Ordinary Shares or Class B Ordinary Shares in the future, as a holding company, we will depend on receipt of funds from our PRC subsidiary and from the VIEs to our PRC subsidiary in accordance with the VIE Agreements. Pursuant to the EIT Law and its implementation rules, any dividends paid by Xinjiang United Family to Jenyd will be subject to a withholding tax rate of 10%. However, if Jenyd is determined by the relevant PRC tax authority to have satisfied the relevant conditions and requirements under Double Tax Avoidance Arrangement and other applicable laws, the 10% withholding tax on the dividends Jenyd receives from Xinjiang United Family may be reduced to 5%. See "Risk Factors—Risks Relating to Doing Business in the PRC—There are significant uncertainties under the EIT Law relating to the withholding tax liabilities of our PRC subsidiary, and dividends payable by our PRC subsidiary to our offshore subsidiaries may not qualify to enjoy certain treaty benefits."

Current PRC regulations permit our indirect PRC subsidiary to pay dividends to Jenyd only out of its accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, our PRC subsidiary is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. Each of such entity in the PRC is also required to further set aside a portion of its after-tax profits to fund the employee welfare fund, although the amount to be set aside, if any, is determined at the discretion of its board of directors. Although the statutory reserves can be used, among other ways, to increase the registered capital and eliminate future losses in excess of retained earnings of the respective companies, the reserve funds are not distributable as cash dividends except in the event of liquidation. Furthermore, if our subsidiaries and affiliates in the PRC incur debt on their own in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments. If we or our subsidiaries are unable to receive all of the revenue from our operations, we may be unable to pay dividends on our Class A Ordinary Shares or Class B Ordinary Shares.

Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments, and trade and service-related foreign exchange transactions, can be made in foreign currencies, without prior approval of SAFE, by complying with certain procedural requirements. Specifically, without prior approval of SAFE, cash generated from the operations in PRC may be used to pay dividends to our Company.

**CAPITALIZATION**

The following table sets forth our capitalization as of June 30, 2022:

● on an actual basis; and

● on an as adjusted basis to reflect the issuance and sale of the Class A Ordinary Shares by us in this offering at the assumed initial public offering price of $5.00 per Class A Ordinary Share, which is the midpoint of the estimated initial public offering price range set forth on the cover page of this prospectus, after deducting the estimated underwriting discounts, non-accountable expense allowance, and the estimated offering expenses payable by us.

In addition, we currently have 5,940,000 Class B Ordinary Shares issued and outstanding. Holders of Class A Ordinary Shares and Class B Ordinary Shares have the same rights except for voting and conversion rights. In respect of matters requiring a vote of all shareholders, each holder of Class A Ordinary Shares will be entitled to one vote per one Class A Ordinary Share and each holder of Class B Ordinary Shares will be entitled to 10 votes per one Class B Ordinary Share. The Class A Ordinary Shares are not convertible into shares of any other class. The Class B Ordinary Shares are convertible into Class A Ordinary Shares at any time after issuance at the option of the holder on a one-to-one basis. The Class B Ordinary Shares are not being converted as part of this offering.

You should read this capitalization table in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements and the related notes appearing elsewhere in this prospectus.

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| | | |
|:---|:---|:---|
|  | **June 30, 2022** | **June 30, 2022** |
|  | **Actual** | **As adjusted<sup>(1)</sup>** |
|  | **$** | **$** |
|  Cash and cash equivalents | $393384 | $16420441 |
|  Shareholders' Equity: |  |  |
|  Class A Ordinary Shares, $0.001 par value, 44,000,000 Class A Ordinary Shares authorized, 3,060,000 Class A Ordinary Shares issued and outstanding; 6,810,000 Class A Ordinary Shares issued and outstanding, as adjusted | 3060 | 6810 |
|  Class B Ordinary Shares, $0.001 par value, 6,000,000 Class B Ordinary Shares authorized, 5,940,000 Class B Ordinary Shares issued and outstanding; 5,940,000 Class B Ordinary Shares issued and outstanding, as adjusted | 5940 | 5940 |
| &nbsp;&nbsp;&nbsp; Additional paid-in capital | 869400 | 16892707 |
| &nbsp;&nbsp;&nbsp; Statutory reserve | 447231 | 447231 |
| &nbsp;&nbsp;&nbsp; Retained earnings | 1325156 | 1325156 |
| &nbsp;&nbsp;&nbsp; Accumulated other comprehensive income | 145727 | 145727 |
| &nbsp;&nbsp;&nbsp; Total Shareholders' Equity | 2796514 | 18823571 |
|  Total Capitalization | $2796514 | $18823571 |

---

&nbsp;&nbsp;&nbsp;&nbsp;(1) Reflects
 the sale of Class A Ordinary Shares in this offering at an assumed initial public offering price of $5.00 per share, and after deducting
 the estimated underwriting discounts, non-accountable expense allowance, and estimated offering expenses payable by us. The as adjusted
 information is illustrative only, and we will adjust this information based on the actual initial public offering price and other
 terms of this offering determined at pricing. Additional paid-in capital reflects the net proceeds we expect to receive, after deducting
 the underwriting discounts, non-accountable expense allowance, and estimated offering expenses payable by us. We estimate that such
 net proceeds will be approximately $16,027,057.

A $1.00 increase (decrease) in the assumed initial public offering price of $5.00 per Class A Ordinary Share, which is the midpoint of the estimated range of the initial public offering price set forth on the front cover of this prospectus, would increase (decrease) each of additional paid-in capital, total shareholders' equity and total capitalization by $3,431,250 if the Underwriter's over-allotment option is not exercised or $3,945,938 if the Underwriter's over-allotment option is exercised in full, assuming the number of Class A Ordinary Shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts, non-accountable expense allowance, and estimated expenses payable by us.

**DILUTION**

If you invest in our Class A Ordinary Shares, your interest will be diluted for each Class A Ordinary Share you purchase to the extent of the difference between the initial public offering price per Class A Ordinary Share and our net tangible book value per Class A Ordinary Share after this offering. Dilution results from the fact that the initial public offering price per Class A Ordinary Share is substantially in excess of the net tangible book value per Class A Ordinary Share attributable to the existing shareholders for our presently outstanding Class A Ordinary Shares.

Holders of Class A Ordinary Shares and Class B Ordinary Shares have the same rights except for voting and conversion rights. In respect of matters requiring a vote of all shareholders, each holder of Class A Ordinary Shares will be entitled to one vote per one Class A Ordinary Share and each holder of Class B Ordinary Shares will be entitled to 10 votes per one Class B Ordinary Share. The Class A Ordinary Shares are not convertible into shares of any other class. The Class B Ordinary Shares are convertible into Class A Ordinary Shares at any time after issuance at the option of the holder on a one-to-one basis. The Class B Ordinary Shares are not being converted as part of this offering.

Our net tangible book value as of June 30, 2022, was $2,062,145, or $0.23 per ordinary share (both Class A and Class B Ordinary Share). Net tangible book value represents the amount of our total consolidated tangible assets, less the amount of our total consolidated liabilities. Dilution is determined by subtracting the net tangible book value per ordinary share (as adjusted for the offering) from the initial public offering price per Class A Ordinary Share and after deducting the estimated underwriting discounts, non-accountable expense allowance, and the estimated offering expenses payable by us.

After giving effect to our sale of 3,750,000 Class A Ordinary Shares offered in this offering based on the assumed initial public offering price of $5.00 per Class A Ordinary Share, which is the midpoint of the estimated range of the initial public offering price shown on the front cover of this prospectus, after deduction of the estimated underwriting discounts, non-accountable expense allowance, and the estimated offering expenses payable by us, our as adjusted net tangible book value as of June 30, 2022, would have been $18,823,571, or $1.48 per outstanding ordinary share (both Class A and Class B Ordinary Share). This represents an immediate increase in net tangible book value of $1.25 per ordinary share (both Class A and Class B Ordinary Share) to the existing shareholders, and an immediate dilution in net tangible book value of $3.52 per Class A Ordinary Share to investors purchasing Class A Ordinary Shares in this offering. The as adjusted information discussed above is illustrative only.

A $1.00 change in the assumed public offering price of $5.00 per Class A Ordinary Share would, in the case of an increase, increase and, in the case of a decrease, decrease our pro forma net tangible book value after giving effect to the offering by $3,431,250, the pro forma net tangible book value per ordinary share (both Class A and Class B Ordinary Share) after giving effect to this offering by $0.27 and the dilution in pro forma net tangible book value per Class A Ordinary Share to new investors in this offering by $0.73 assuming no change to the number of Class A Ordinary Shares offered by us as set forth on the cover page of this prospectus, and after deducting underwriting discounts, non-accountable expense allowance, and estimated offering expenses. The pro forma information discussed above is illustrative only. Our net tangible book value following the completion of this offering is subject to adjustment based on the actual initial public offering price of our Class A Ordinary Shares and other terms of this offering determined at pricing.

The following table illustrates such dilution:

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| | |
|:---|:---|
|  | **Per Ordinary Share** |
|  Assumed Initial public offering price per Class A Ordinary Share | $5.00 |
|  Net tangible book value per ordinary share (both Class A and Class B Ordinary Share) as of June 30, 2022 | 0.23 |
|  Increase in net tangible book value per ordinary share (both Class A and Class B Ordinary Share) attributable to payments by new investors | 1.25 |
|  Pro forma net tangible book value per ordinary share (both Class A and Class B Ordinary Share) immediately after this offering | 1.48 |
|  Amount of dilution in net tangible book value per Class A Ordinary Share to new investors in the offering | $3.52 |

---

The following tables summarize, on a pro forma as adjusted basis as of June 30, 2022, the differences between existing shareholders and the new investors with respect to the number of Ordinary Shares purchased from us, the total consideration paid and the average price per Ordinary Share before deducting the estimated underwriting discounts, non-accountable expense allowance, and the estimated offering expenses payable by us.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Class A and Class B <br> Ordinary Shares<br> purchased** | **Class A and Class B <br> Ordinary Shares<br> purchased** | **Total consideration** | **Total consideration** | |
|  | **Number** | **Percent** | **Amount** | **Percent** | **Average<br> price per<br> Ordinary**<br> **Share** |
|  | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** |
| Existing shareholders | 9000000 | 70.59% | $878 | 4.47% | $0.10 |
| New investors | 3750000 | 29.41% | 18750 | 95.53% | 5.00 |
| Total | 12750000 | 100.00% | $19628 | 100.00% | $1.54 |

---

The pro forma as adjusted information as discussed above is illustrative only. Our net tangible book value following the completion of this offering is subject to adjustment based on the actual initial public offering price of our Class A Ordinary Shares and other terms of this offering determined at the pricing.

**CORPORATE HISTORY AND STRUCTURE**

**Our Corporate History**

Xinjiang United Family was established on August 7, 2009, as a limited company pursuant to PRC laws. On April 17, 2015, Xinjiang United Family incorporated a wholly owned subsidiary, Chanson NY, a New York corporation, which in turn incorporated a wholly owned subsidiary, Chanson 23rd Street, a New York limited liability company, on December 17, 2015. On February 20, 2020, our Chairman, Mr. Gang Li, formed Chanson Greenwich, a New York limited liability company, and subsequently assigned his 100% membership interests in Chanson Greenwich to Chanson NY for a consideration of $10 on September 28, 2020. After the transfer, Chanson Greenwich became a wholly owned subsidiary of Chanson NY. On April 21, 2021, Chanson NY formed a wholly owned subsidiary, Chanson Management LLC, a Delaware limited liability company. On August 5, 2021, Chanson NY formed a wholly owned subsidiary, Chanson 3rd Ave, a New York limited liability company. On March 21, 2022, Chanson NY formed a wholly owned subsidiary, Chanson Broadway, a New York limited liability company.

In connection with this offering, we have undertaken a reorganization of our corporate structure (the "Reorganization") in the following steps:

● on July 26, 2019, we incorporated RON Holding Limited, an exempted company with limited liability, under the laws of the Cayman Islands. Effective on December 18, 2020, RON Holding Limited changed its name to Chanson International Holding;

● on August 13, 2019, we incorporated Deen Global in the British Virgin Islands as a wholly owned subsidiary of Chanson International;

● on September 13, 2019, we incorporated Jenyd in Hong Kong as a wholly owned subsidiary of Deen Global;

● on September 27, 2020, the original shareholders of Xinjiang United Family entered into a Share Transfer Agreement with Jenyd to transfer 100% of the equity interests of Xinjiang United Family to Jenyd; and

● in March 2021, we undertook a series of corporate actions, including a forward split of our ordinary shares, the creation of Class A Ordinary Shares and Class B Ordinary Shares, re-designation of our ordinary shares into Class A and Class B Ordinary Shares, and additional share issuances to our existing shareholders. See "Description of Share Capital—History of Share Issuances."

**Our Corporate Structure**

We currently conduct our business through:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) an association with
 29 individually-owned businesses comprising the VIEs known as the "United Family Group" or "UFG": 28 of the
 UFG Entities are owned independently by our Chairman, Mr. Gang Li, and one of the UFG Entities is owned independently by Ms. Hui
 Wang, the Marketing Director of Xinjiang United Family. Our affiliation with UFG is managed through several exclusive agreements
 among Xinjiang United Family, each UFG Entity, and the sole owner of such UFG Entity. For accounting purposes, we control and receive
 the economic benefits of the UFG Entities through the VIE Agreements, which enable us to consolidate the financial results of the
 VIEs in our consolidated financial statements under U.S. GAAP, and the structure involves unique risks to investors;

(ii) Xinjiang United Family
 and its three branch offices; and

(iii) Chanson 23rd Street,
 Chanson Greenwich, Chanson 3rd Ave, and Chanson Broadway.

The following is a complete list of the stores of Xinjiang United Family as of the date of this prospectus, together with their recognized commercial name and relationship to Xinjiang United Family.

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| | | | |
|:---|:---|:---|:---|
|  | **Legal Name of Entity** | **Commercial Name** | **Nature of Entity** |
| 1 | Urumqi Midong District George Chanson Bakery | Midong | Part of UFG – owned 100% by Mr. Li and operated under VIE Agreements between this entity and Xinjiang United Family |
| 2 | Shayibake District Yining Rd. George Chanson Bakery | Dehui Wanda | Same as above |
| 3 | Changji George Chanson Youhao Supermarket Bakery | Changji Youhao | Same as above |
| 4 | Changji George Chanson Bakery | Changji Huijia | Same as above |
| 5 | Tianshan District Xinhua North Rd. George Chanson Bakery | Hongshan | Same as above |
| 6 | Tianshan District Xinmin Rd. George Chanson Bakery | Beimen | Same as above |
| 7 | Tianshan District Minzhu Rd. George Chanson Bakery | Minzhu | Same as above |
| 8 | Tianshan District Jianquan No.3 Rd. George Chanson Bakery | Riyue Xingguang | Same as above |
| 9 | Tianshan District Jiefang North Rd. George Chanson Bakery | Wanyancheng | Same as above |
| 10 | Urumqi Economics and Technology Development District George Chanson Bakery on Kashi West Rd. | Huarun Wanjia | Same as above |
| 11 | Xinshi District Liyushan South Rd. George Chanson Bakery | Medical College | Same as above |
| 12 | Xinshi District Changchun South Rd. George Chanson Bakery | Changchun | Same as above |
| 13 | Xinshi District Beijing Middle Rd. United Family Chanson Bakery | Huijia Third Floor | Same as above |
| 14 | Xinshi District Suzhou East Rd. Chanson Bakery | Baishang | Same as above |
| 15 | Xinshi District Suzhou Rd. Xiaoxigou Chanson Bakery | Xiaoxigou | Same as above |

---

---

| | | | |
|:---|:---|:---|:---|
| 16.0 | Xinshi District South No.3 Rd. Chanson Bakery | Railway Bureau | Same as above |
| 17.0 | Urumqi Economics and Technology Development District George Chanson Bakery on Xuanwuhu Rd. | Economics Development Wanda | Same as above |
| 18.0 | Shayibake District Youhao South Rd. Chanson Bakery | Hongshan Lifestyle Store | Same as above |
| 19.0 | Shuimogou District South Nanhu Rd. George Chanson Bakery | Nanhu | Same as above |
| 20.0 | Xinshi District Hebei East Rd. George Chanson Bakery | Hebei Road Huarun | Same as above |
| 21.0 | Urumqi Toutunhe District George Chanson Bakery on Zhongya South Rd. | Degang Wanda | Same as above |
| 22.0 | Shayibake District Karamay West Rd. Chanson Bakery | Xinbei Yuanchun | Same as above. |
| 23.0 | Shayibake District Qitai Rd. Hemeijia Chanson Bakery | Dehui Wangda Fourth Floor | Same as above |
| 24.0 | Tianshan District Qingnian Rd. Chanson Bakery | Qingnian Road Haojiaxiang | Same as above |
| 25.0 | Xinshi District Liyushan North Rd. Hemeijia Bakery | Vanke Jincheng Huafu | Same as above |
| 26.0 | Xinshi District Changchun North Rd. Chanson Bakery | Gaoxin Wanda | Same as above |
| 27.0 | Tianshan District Guangming Rd. Chanson Coffee Bakery | Shidai Guangchang | Same as above |
| 28.0 | Shayibake District Youhao North Rd. Chanson Coffee Bakery | Meimei No. 2 | Same as above |
| 29.0 | Shihezi Hemeijia Bakery No.1 | Shihezi | Part of UFG – owned 100% by Ms. Hui Wang and operated under agreements between this entity and Xinjiang United Family |
| 30.0 | Xinjiang United Family Trading Co., Ltd. Tianshan District Chanson Bakery | Tianbai | A branch office of Xinjiang United Family |
| 31.0 | Xinjiang United Family Trading Co., Ltd. Chanson Bakery Urumqi Branch | Wenhua | A branch office of Xinjiang United Family |
| 32.0 | Xinjiang United Family Trading Co., Ltd. Urumqi Meimei Chanson Bakery | Meimei | A branch office of Xinjiang United Family |
| 33.0 | Xinjiang United Family Trading Co., Ltd. Ruitai Chanson Bakery | Ruitai | A store operated by Xinjiang United Family, not a separate legal entity |
| 34.0 | Chanson 23rd Street LLC | Chanson 23rd Street | A wholly owned indirect subsidiary of Xinjiang United Family |
| 35.0 | Chanson 355 Greenwich LLC | Chanson Greenwich | Same as above |
| 36.0 | Chanson 1293 3rd Ave LLC | Chanson 3rd Ave | Same as above. We expect Chanson 3rd Ave to open in late March 2023.  |
| 37.0 | Chanson 2040 Broadway LLC | Chanson Broadway | Same as above. We expect Chanson Broadway to open in April 2023.  |

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For ease of reference, unless it is necessary to the understanding of the context to differentiate, throughout this prospectus we will refer to all of the above entities collectively as our "stores" and, to the extent we refer to a specific entity listed in the table above, we refer to such entity by its commercial name.

The following diagram illustrates our corporate structure after the Reorganization and upon completion of this offering based on 3,750,000 Class A Ordinary Shares being offered, assuming no exercise of the over-allotment option:

![](image_003.jpg)

Notes: All percentages reflect the voting ownership interests instead of the equity interests held by each of our shareholders given that each holder of Class B Ordinary Shares will be entitled to 10 votes per one Class B Ordinary Share and each holder of Class A Ordinary Shares will be entitled to one vote per one Class A Ordinary Share.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Represents 2,700,000
 Class A Ordinary Shares and 5,670,000 Class B Ordinary Shares held by Gang Li, the 100% owner of Danton Global Limited, as of the
 date of this prospectus.

(2) Represents 270,000 Class
 B Ordinary Shares held by Jihong Cai, the 100% owner of Haily Global Limited, as of the date of this prospectus.

(3) Represents an aggregate
 of 360,000 Class A Ordinary Shares held equally by two corporate shareholders, each one of which holds less than 5% of our voting
 ownership interests, as of the date of this prospectus.

**The United Family Group**

Each UFG Entity was established as an individually-owned business and, for accounting purposes, Xinjiang United Family controlled the UFG Entities through the VIE Agreements. UFG's revenue accounted for 44%, 86%, and 76% of our total revenue for the six months ended June 30, 2022, and the fiscal years ended December 31, 2021 and 2020, respectively. UFG consists of 29 VIEs. Our Chairman, Mr. Gang Li, is the sole owner of 28 UFG Entities, and Ms. Hui Wang, the Marketing Director of Xinjiang United Family, is the sole owner of one UFG Entity.

Our affiliation with UFG is managed through the VIE Agreements among Xinjiang United Family, each UFG Entity, and the UFG Operators. For accounting purposes, we control and receive the economic benefits of the UFG Entities through the VIE Agreements, which enable us to consolidate the financial results of the VIEs in our consolidated financial statements under U.S. GAAP, and the structure involves unique risks to investors.

Each of the VIE Agreements is described below:

*<u>Exclusive Service Agreement</u>*

Pursuant to the Exclusive Service Agreement between Xinjiang United Family and the applicable UFG Operator, who is the sole operator of the UFG Entity, Xinjiang United Family is in charge of all aspects of the UFG Entity's operation, manages all matters and funds of UFG Entity, and enjoys all the other responsibilities and rights enjoyed by the UFG Operator in accordance with the applicable law, on an exclusive basis. For services rendered to the UFG Entity by Xinjiang United Family under the Exclusive Service Agreement, Xinjiang United Family is entitled to collect a service fee equal to the net profit after tax of the UFG Entity.

The term of the Exclusive Service Agreement is 10 years, unless terminated earlier by Xinjiang United Family with a 30-day prior notice. The UFG Entity does not have the right to terminate that agreement unilaterally. The agreement would renew automatically by 10 years after expiration, with no limit on times of renewal.

Xinjiang United Family has absolute authority over the management of the UFG Entity, including but not limited to decisions with regard to expenses, salary raises and bonuses, hiring, firing, and other operational functions. The Exclusive Service Agreement does not prohibit related party transactions. Upon the establishment of the audit committee at the consummation of this offering, the audit committee of Chanson International will be required to review and approve in advance any related party transactions, including transactions involving the UFG Entity.

*<u>Pledge Agreement</u>*

Under the Pledge Agreement between Xinjiang United Family and the UFG Operator, the UFG Operator pledged all of his or her assets for the business of the UFG Entity to Xinjiang United Family to guarantee the performance of the UFG Operator's obligations under the Transaction Agreements. Under the terms of the Pledge Agreement, in the event that the UFG Entity or the UFG Operator breaches their respective contractual obligations under the Transaction Agreements, Xinjiang United Family, as pledgee, will be entitled to certain rights, including, but not limited to, the right to dispose of the pledged assets in accordance with applicable PRC laws. The UFG Operator further agreed not to dispose of the pledged assets or take any actions that would prejudice Xinjiang United Family's interest.

The Pledge Agreement is effective until the latest date of the following: (1) the secured debt in the scope of pledge is cleared off; (2) Xinjiang United Family, as pledgee, exercise its pledge rights pursuant to provisions and conditions of the Pledge Agreement; and (3) the UFG Operator, as pledger, transfer all the pledged assets to Xinjiang United Family according to the Call Option Agreement, or other entity or individual designated by it.

The purposes of the Pledge Agreement are to (1) guarantee the performance of the UFG Operator's obligations under the Exclusive Service Agreement, (2) make sure the UFG Operator does not transfer or assign the pledged assets, or create or allow any encumbrance that would prejudice Xinjiang United Family's interests without Xinjiang United Family's prior written consent, and (3) provide Xinjiang United Family control over the UFG Entity for accounting purposes. In the event the UFG Entity or UFG Operator breaches its contractual obligations under the Transaction Agreements, Xinjiang United Family will be entitled to foreclose on the UFG Operator's assets in the UFG Entity and may (1) exercise its option to purchase or designate third parties to purchase part or all of the UFG Operator's assets in the UFG Entity and in this situation, Xinjiang United Family may terminate the Pledge Agreement and the other VIE Agreements after acquisition of all assets in the UFG Entity or form a new VIE structure with any third party designated by Xinjiang United Family, or (2) dispose of the pledged assets and be paid in priority out of proceeds from the disposal in which case the existing VIE structure will be terminated.

*<u>Call Option Agreement</u>*

Under the Call Option Agreement, the UFG Operator irrevocably granted Xinjiang United Family an exclusive option to require the UFG Operator to transfer, to the extent permitted under PRC law, once or at multiple times, at any time, part or all of his or her assets in the UFG Entity to Xinjiang United Family (or its designee). The option price is the minimum amount to the extent permitted under PRC law.

Under the Call Option Agreement, Xinjiang United Family may at any time under any circumstances, require the UFG Operator to transfer, at its discretion, to the extent permitted under PRC law, all or part of the UFG Operator's assets in the UFG Entity to Xinjiang United Family (or its designee).

The Call Option Agreement remains effective until all the equity or assets of the UFG Entity is legally transferred under the name of Xinjiang United Family and/or other entity or individual designated by it.

*<u>Operating Rights Proxy Agreement and Powers of Attorney</u>*

Under the Operating Rights Proxy Agreement and the Powers of Attorney, the UFG Operator entrusted Xinjiang United Family or the personnel designated by it then to act as his or her proxy and exercise his or her rights as the sole operator of the UFG Entity, including but not limited to: (a) exercising operating rights; (b) getting access to financial information of the UFG Entity; (c) making resolutions about the disposition of the assets of the UFG Entity; (d) approving annual budgets of the UFG Entity or announcing dividends; (e) making resolutions about dissolution or liquidation of the UFG Entity, forming the liquidating committee, and exercising the authorities in the course of liquidation; (f) filing any required document to the company registration agency or any other relevant agency; and (g) signing any resolution.

The Operating Rights Proxy Agreement and the Powers of Attorney shall be retrospectively effective from their date of execution and maintain the effectiveness so long as the UFG Operator holds the operating rights of the UFG Entity.

*<u>Spousal Consents</u>*

 

The spouses of the UFG Operators, agreed, via spousal consents, to the execution of the "Transaction Documents" including: (a) Exclusive Service Agreement entered into with Xinjiang United Family; (b) Call Option Agreement entered into with Xinjiang United Family; (c) Operating Rights Proxy Agreement entered into with Xinjiang United Family; (d) Pledge Agreement entered into with Xinjiang United Family; and (e) Powers of Attorney executed by the UFG Operators, and the disposal of the operating rights or the assets for the business of the UFG Entity held by the UFG Operators and registered in their names.

The spouses of the UFG Operators further undertake not to make any assertions in connection with the operating rights and assets of the UFG Entity which are held by the UFG Operators. The spouses of the UFG Operators confirm that the UFG Operators can perform their obligations under the Transaction Documents and further amend or terminate the Transaction Documents without their authorization or consent. The spouses of the UFG Operators undertake to execute all necessary documents and take all necessary actions to ensure appropriate performance of the Transaction Documents.

The spouses of the UFG Operators also undertake that if they obtain any operating rights and assets of the UFG Entity which are held by the UFG Operators for any reasons, they shall be bound by the Transaction Documents entered into between the UFG Operators and Xinjiang United Family (as amended time to time) and comply with the obligations thereunder as an operator of the UFG Entity. For this purpose, upon Xinjiang United Family's request, they shall sign a series of written documents in substantially the same format and content as the Transaction Documents (as amended from time to time).

Although each UFG Entity has its own set of agreements with Xinjiang United Family, the terms and conditions of their agreements with Xinjiang United Family are identical. As a result of the understandings and agreements, for accounting purposes, we control and receive the economic benefits of the UFG Entities through the VIE Agreements, which enable us to consolidate the financial results of the VIEs in our consolidated financial statements under U.S. GAAP. Except as set forth in these agreements, the UFG Operators are not entitled to any other compensation in connection with their ownership of all the UFG Entities.

**MANAGEMENT'S DISCUSSION AND ANALYSIS OF<br> FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

*The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes included elsewhere in this prospectus. This discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties. See "Disclosure Regarding Forward-Looking Statements" for a discussion of the uncertainties, risks, and assumptions associated with these statements. Actual results and the timing of events could differ materially from those discussed in our forward-looking statements as a result of many factors, including those set forth under "Risk Factors" and elsewhere in this prospectus.*

*Unless otherwise indicated, all share amounts and per share amounts in this prospectus have been presented giving effect to a forward split of our ordinary shares at a ratio of 1,000-for-1 share and additional share issuances to our existing shareholders approved by our shareholders and board of directors on March 27, 2021.*

**Overview**

The PRC Stores and the U.S. Stores manufacture and sell a wide selection of bakery products, seasonal products (i.e. products sold during particular holiday seasons), and beverage products; some of these stores also offer eat-in services. The PRC Stores and the U.S. Stores aim to make healthy, nutritious, and ready-to-eat food through advanced facilities and industry research and to create a comfortable, yet distinguishable store environment in which customers can enjoy their products.

The PRC Stores are a bakery chain consisting of 33 stores operated by Xinjiang United Family and the VIEs, under the "George●Chanson" brand in Xinjian, and the U.S. Stores sell their products in New York City. Selling through directly-operated stores, instead of franchise stores, allows the operating entities to run their entire operation more efficiently and to exercise greater control over the quality of products and the presentation of their brand, and to better manage customer experience in the stores. The PRC Stores and the U.S. Stores also sell their products on their digital platforms and through third-party online food ordering platforms. The current customer base of the PRC Stores and the U.S. Stores consists of both individual and corporate customers. To expand their customer base, the PRC Stores and the U.S. Stores have developed a variety of marketing and sale strategies, such as increasing their presence on social media platforms, devising pricing and discounting programs, and improving customer in-store experience.

The Company plans to continue its expansions in China and the U.S. In particular, the Company plans to open three to five new stores in China annually during the next five years, which is expected to cost approximately RMB1.5 million to RMB 2.5 million (approximately $0.2 million to $0.4 million) each year. The Company plans to support the expansion plan with its cash on hand and cash flows from operations in PRC. In addition, Chanson 3rd Ave is currently preparing for the opening of a store in late March 2023. The renovation of Chanson Broadway was delayed and the store is expected to be open in April 2023. The total budget for the two new stores is $1 million. The Company also plans to open eight new stores in the U.S. in the next five years, which is expected to cost approximately $3.5 million in total. The Company plans to use its cash on hand, cash flows from operations, and the proceeds it receives from this offering, if successful, to open the new stores in the U.S.

The PRC Stores manufacture the majority of bakery products in their central factory located in Urumqi, Xinjiang, prepare beverage products within the stores, and contract third-party manufacturers to produce seasonal products. The U.S. Stores bake bakery products, prepare breakfast, lunch and all-day brunch, bar food, and other light meals for eat in, and make beverage products all within the kitchen in the store. To ensure the quality and safety of their products, the PRC Stores and the U.S. Stores procure raw materials, including flour, eggs, and milk, from renowned suppliers with a record of consistently supplying high-quality raw materials over decades in the food industry. In addition, the PRC Stores and the U.S. Stores have implemented a rigorous quality control system covering their entire operation process and mandated internal training to improve their employees' awareness and knowledge of food safety.

The PRC Stores and the U.S. Stores have dedicated and highly-experienced product development teams that constantly create new products that reflect market trends and are designed to meet customer demand. As of December 2022, the PRC Stores had more than 707 types of bakery products and seasonal products on sale, including over 145 types of new products introduced to the market since 2021, and the U.S. Stores had 131 types of eat-in menu items and bakery products on sale, including 36 types of new products introduced to the market since 2021. The PRC Stores and the U.S. Stores also offer a large number of beverage products and update their drink menus seasonally and in response to ever changing customer demand. By continuously offering new products and refining their product formulas to enhance existing products, we believe that the PRC Stores and the U.S. Stores are able to steadily bring in new customers and increase the frequency of their existing customers' visits to their stores, digital platforms, and store page on third-party platforms.

For the six months ended June 30, 2022 and 2021, we had total revenue of $8,543,803 and $6,742,121, and net income of $220,793 and $422,685, respectively. The PRC Stores accounted for 78.6% and 89.2% of our total revenue for those periods, respectively, and the U.S. Stores accounted for 21.4% and 10.8%, respectively. For the fiscal years ended December 31, 2021 and 2020, we had total revenue of $14,690,295 and $10,313,512, and net income of $506,769 and a net loss of $164,029, respectively. The PRC Stores accounted for 87.1% and 87.0% of our total revenue for those fiscal years, respectively, and the U.S. Stores accounted for 12.9% and 13.0%, respectively.

The PRC Stores primarily generate revenue through sale of bakery products, seasonal products, and beverage products. For the six months ended June 30, 2022 and 2021, revenue derived from sale of bakery products accounted for 93.8% and 93.4% of the PRC Stores' revenue, revenue derived from sale of seasonal products accounted for 5.4% and 5.4%, and revenue derived from sale of beverage products accounted for 0.8% and 1.2%, respectively. For the fiscal years ended December 31, 2021 and 2020, revenue derived from sale of bakery products accounted for 91.4% and 91.8% of the PRC Stores' revenue, revenue derived from sale of seasonal products accounted for 7.6% and 6.6%, and revenue derived from sale of beverage products accounted for 1.0% and 1.6%, respectively.

The U.S. Stores primarily generate revenue through offering eat-in services and sale of bakery products and beverage products. For the six months ended June 30, 2022 and 2021, revenue derived from offering eat-in services accounted for 27.6% and 25.9% of the U.S. Stores' revenue, revenue derived from sale of bakery products accounted for 18.2% and 31.3%, and revenue derived from sale of beverage products accounted for 54.2% and 42.8%, respectively. For the fiscal years ended December 31, 2021 and 2020, revenue derived from offering eat-in services accounted for 22.2% and 37.9% of the U.S. Stores' revenue, revenue derived from sale of bakery products accounted for 25.0% and 44.6%, and revenue derived from sale of beverage products accounted for 52.8% and 17.5%, respectively.

**Key Factors that Affect Our Results of Operations**

We believe the following key factors may affect our financial condition and results of operations:

 ***The operating entities' business is affected by changes in consumer preferences and discretionary spending.***

The operating entities' success depends, in part, upon the popularity of their bakery products and their ability to develop new bakery products that appeal to consumers. Shifts in consumer preferences away from their bakery stores or their product offerings and mix, their inability to develop new products that appeal to consumers could harm the operating entities' business. The operating entities' success depends in large part on their customers' continued belief that food made with high-quality ingredients, including selected proteins raised without antibiotics, their artisan breads, cakes, pastries, and other bakery treats made without artificial preservatives, flavors, sweeteners, or colors from artificial sources are worth the prices charged at the operating entities' bakery stores relative to the lower prices offered by some of their competitors. The operating entities' inability to successfully educate customers about the quality of their bakery products or their customers' rejection of the operating entities' pricing approach could result in decreased demand for their products or require the operating entities to change their pricing, marketing, or promotional strategies, which could materially and adversely affect our consolidated financial results or the brand identity that the operating entities have created. In addition, the operating entities' success depends to a significant extent on discretionary consumer spending, which is influenced by general economic conditions and the availability of discretionary income. Accordingly, the operating entities may experience declines in sales during economic downturns or during periods of uncertainty. Any material decline in the amount of discretionary spending could have a material adverse effect on the operating entities' sales, results of operations, business, and financial condition.

 ***The operating entities' revenue and growth could be adversely affected if their comparable store sales are less than expected.***

The operating entities' success depends on increasing comparable store sales. To increase sales and profits, and therefore comparable store sales growth, the operating entities must focus on delivering value and generating customer excitement by strengthening opportunistic purchasing, optimizing inventory management, maintaining strong store conditions, and effectively marketing current products and new product offerings. The operating entities may not be able to maintain or improve the levels of comparable store sales that they have experienced in the past, and the operating entities' comparable store sales growth is a significant driver of their profitability and overall business results. In addition, competition and pricing pressures from competitors may materially adversely impact the operating entities' operating margins. The operating entities' comparable store sales growth could be lower than their historical average or their future target for many reasons, including general economic conditions, operational performance, price inflation or deflation, new competitive entrants near their stores, price changes in response to competitive factors, the impact of new stores entering the comparable store base, possible supply shortages or other operational disruptions, the number and dollar amount of customer transactions in their stores, and their ability to provide product or service offerings that generate new and repeat visits to their stores. Opening new stores in the operating entities' established markets may result in inadvertent oversaturation, temporarily or permanently diverting customers and sales from their existing stores to new stores and reduce comparable store sales, thus adversely affecting their overall financial performance. These factors may cause the operating entities' comparable store sales results to be materially lower than in recent periods, which could harm their profitability and business. Changes in their average store sales or their inability to increase their average store sales could cause their operating results to vary adversely from expectations, which could adversely affect their results of operations.

 ***Fluctuations in various food and supply costs, including dairy, could adversely affect the operating entities' operating results.***

Supplies and prices of the various ingredient materials that are used to prepare the operating entities' bakery products (including flour, milk, sugar, and eggs) can be affected by a variety of factors, such as weather, seasonal fluctuations, demand, politics, and economics factors, and such prices may fluctuate. An increase in pricing of any ingredient that is used in the operating entities' bakery products could result in an increase in costs from their suppliers, and the operating entities may not be able to increase prices to cover increased costs which would have an adverse effect on their operating results and profitability.

 

 ***The geographic concentration of the operating entities' stores primarily in Xinjiang and New York City subjects the operating entities to an increased risk of loss of revenue from events beyond their control or conditions affecting that region.***

Currently, our PRC subsidiary and the VIEs operate 33 bakery stores exclusively located in Xinjiang. In addition, the U.S. Stores' current operations are limited to New York City. As a result, they are particularly susceptible to adverse trends, severe weather, competition, and economic conditions in these areas. Any unforeseen events or circumstances that negatively affect these areas could materially adversely affect the operating entities' sales and profitability. These factors include, among other things, epidemics, changes in demographics, population and employee bases, wage increases, changes in economic conditions, severe weather conditions, and climate change. Such conditions may result in reduced customer traffic and spending in the operating entities' stores, physical damage to their stores, loss of inventory, closure of one or more of their stores, inadequate workforce in their markets, temporary disruption in the supply of products, delays in the delivery of goods to their stores, increased expenses, and a reduction in the availability of products in their stores. Any of these factors may disrupt the operating entities' business and materially adversely affect their financial condition and results of operations.

 ***If the operating entities are unable to compete successfully, their financial condition and results of operations may be harmed.***

The industry in which the operating entities conduct their business is intensely competitive. The operating entities' bakery stores compete with well-established national, regional, and locally-owned traditional bakeries, cafés, and other companies providing bakery products. Additionally, the operating entities also compete with certain quick-service restaurants, specialty food stores, supermarkets, and convenience stores. The principal factors on which they compete are taste, quality, prices of products offered, customer service, atmosphere, location, convenience, and overall customer experience. The operating entities also compete for retail space in desirable locations. Many competitors or potential competitors have substantially greater financial and other resources, which may allow them to react more quickly to changes in pricing, marketing, and other changing tastes of consumers. In the event that the operating entities cannot effectively compete on a continuing basis or competitive pressures arise, such inability to compete or competitive pressures could have a material adverse effect on their business, results of operations and financial condition.

 

**Key financial performance indicators**

We consider a variety of financial and operating measures in assessing the performance of our business. The key financial performance measures we use are revenue, comparable store sales, gross profit and gross margin, selling, general, and administrative expenses ("SG&A expenses"), and operating income.

***Revenue***

Our revenue is derived primarily from sales of bakery and other products under the operating entities' "George●Chanson," "Patisserie Chanson," and "Chanson" brand names. The PRC Stores and the U.S. Stores experienced stable growth prior to the COVID-19 pandemic, resulting from their focus on supporting their best-selling items and the introduction of new products. Our revenue is periodically influenced by the efficiency of sales promotions and the introduction and discontinuance of sales and promotion incentives. Growth of our revenue is primarily driven by expansion of the operating entities' store base in existing and new markets as well as comparable store sales growth, described below under "Comparable Store Sales." Revenue is impacted by competition, current economic conditions, pricing, inflation, product mix and availability, promotion, and spending habits of the operating entities' customers. The product offerings of the PRC Stores and the U.S. Stores across diverse product categories support growth in revenue by attracting new customers and encouraging repeat visits from their existing customers.

 

 

***Comparable Store Sales***

Comparable store sales measure the performance of a store during the current reporting period against the performance of the same store in the corresponding period of the previous year. Comparable store sales are important points of analysis for the operating entities, as comparable store sales can be helpful to them in making future decisions regarding existing stores and new locations. Comparable store sales are impacted by the same factors that impact revenue. The operating entities often drill down into comparable store sales figures to determine the exact cause of changes in revenue. The operating entities also use comparable store sales to evaluate current and likely future performance and as a measure of revenue growth to evaluate how established stores have performed over time compared to new stores.

For simplicity, our comparable store sales consist of revenue from the operating entities' stores only after they have had two full years of operations, which is when we believe comparability is achieved. Our comparable store definition includes stores that have been remodeled, expanded, or relocated in their existing location or respective geographic areas, but excludes stores that have been closed for an extended period or are planned to be closed or disposed of. Comparable store sales figures are presented as a percentage that indicates the relative amount of revenue increase or decrease, excluding the impact of foreign currency translation.

Opening new stores is a primary component of our growth strategy and, as the operating entities continue to execute on their growth strategy, we expect a significant portion of their revenue growth will be attributable to revenue from new stores. Accordingly, comparable store sales are one of the measures the operating entities use to assess the success of their growth strategy.

***Gross Profit and Gross Margin***

Gross profit is the difference between revenue and cost of revenue. Our cost of revenue consists of labor costs, costs of ingredients used to prepare the operating entities' bakery products, inventory write-off due to discarded bakery products, packaging costs, freight charges, utility costs, rent expenses of manufacturing space, depreciation of production equipment, and other overhead costs. Ingredients costs account for the largest portion of our cost of revenue. Supplies and prices of the operating entities' various ingredients can be affected by a variety of factors, such as weather, seasonal fluctuations, demand, political environment, and economic conditions. An increase in the price of any ingredients used in the operating entities' bakery products could result in an increase in costs from their suppliers, and the operating entities may not be able to increase prices to cover increased costs, which would have an adverse effect on their operating results and profitability. In order to negotiate more favorable prices on ingredients, the operating entities have been and will continue to be directly involved in sourcing ingredients from qualified suppliers and try to lock in ingredient prices for typically six to 12 months through non-cancelable purchase commitments, when they expect the price to increase. Over the past years, the operating entities have invested significant time and energy to achieve cost reduction and productivity improvement in their supply chain. The operating entities have focused on reducing ingredient and packaging costs through increased volume buying, direct purchasing, and price negotiations, as well as strengthening inventory management from raw materials to finished goods to reduce the spoilage and wastage. On the other hand, labor is a primary component in the cost of operating the operating entities' business. Increased labor costs due to competition, increased minimum wage or employee benefits costs, or otherwise, would adversely impact the operating entities' operating expenses. In addition, the operating entities' success depends on their ability to attract, motivate, and retain qualified employees, including store managers and staff, to keep pace with their growth strategy.

Gross margin is gross profit divided by revenue. Gross margin is a measure used by management to indicate whether the operating entities are selling their products at an appropriate gross profit. Our gross margin is impacted by the operating entities' product mix and availability, as some products provide higher gross margins, and by their merchandise costs, which may vary. Gross margin is also impacted by prices of the operating entities' products. The operating entities typically evaluate the profitability of their products annually or semi-annually. The operating entities consider many factors such as cost of revenue fluctuations and competitive pricing strategies. The operating entities have historically been able to replace less profitable products with similar new products, and refine their product formulas to enhance existing products with higher prices to cover higher ingredient costs. In addition, the operating entities have a dedicated and highly-experienced product development team that constantly creates brand new products that reflect market trends and are attractive to customers.

***SG&A Expenses***

Our SG&A expenses are comprised of both store-related expenses and corporate expenses. Store-related expenses include payroll and employee benefit expenses and sales commissions paid to sales personnel, store rent, occupancy and maintenance costs, the cost of opening new stores, and marketing and advertising expenses. Corporate expenses include payroll and benefits for corporate and field support, legal, professional, and other consulting fees, travel expenses, and other facility related costs, such as rent and depreciation.

SG&A expenses generally increase as the operating entities grow their store base and invest in corporate infrastructure. The operating entities have made significant investments in talent retention and storefront upgrades over the past years which have resulted in higher SG&A expenses. Our SG&A expenses are expected to continue increasing in the future as the operating entities invest to open new stores, launch new products, increase brand awareness, attract new customers, and increase their market penetration. To support their growth, the operating entities will continue to increase headcount, particularly in the sales and marketing departments. This increase in headcount will drive higher payroll and employee-related expenses. Our operating entities also continue to invest in product innovation and fuel sales growth. We expect our SG&A expenses to continue to increase in absolute dollars as we incur increased costs related to the growth of our business and our operation as a public company.

***Operating Income***

Operating income is the difference between gross profit and SG&A expenses. Operating income excludes interest expenses, other income (expenses), and income tax expenses. We use operating income as an indicator of the productivity of our business and our ability to manage expenses.

**<u>Comparable Store Sales</u>**

A variety of factors affect our comparable store sales, including, among others, consumer trends, competition, current economic conditions, pricing, inflation, changes in the operating entities' product mix, the success of their marketing programs, and the COVID-19 pandemic. During the six months ended June 30, 2022, the comparable store sales in China (excluding the impact of foreign currency translation) increased by 4.1%, which was attributable to the stable growth from the existing PRC Stores. For the six months ended June 30, 2022, the comparable store sales in the U.S. increased by 53.8%, as the U.S. Stores' cocktail bar launched several new types of cocktail products, and Chanson 23rd Street has been allowed to provide indoor dining services at full capacity starting from May 19, 2021. During the year ended December 31, 2021, the comparable store sales in China (excluding the impact of foreign currency translation) increased by 20.7%, as the PRC Stores' business operation gradually recovered from the pandemic in 2021. For fiscal year 2021, the comparable store sales in the U.S. increased by 37.0%, as the U.S. Stores' cocktail bar launched several new types of cocktail products, and Chanson 23rd Street has been allowed to provide indoor dining services at full capacity starting from May 19, 2021.

**COVID-19 Affecting Our Results of Operations**

In 2020, the COVID-19 pandemic spread throughout the world, especially in China and the U.S. The outbreak resulted in the implementation of significant governmental measures, including lockdowns, closures, quarantines, and travel bans, intended to control the spread of the virus. After the store closure between late January and early March of 2020, all of the PRC Stores were closed again on July 17, 2020 due to the resurgence of COVID-19 cases in Xinjiang. The PRC Stores resumed their normal activities in September 2020. As a result of the store closure, the PRC Stores generated no revenue and the estimated loss of revenue was approximately RMB12 million (approximately $1.7 million) during the period of closure. Although the PRC Stores resumed their normal activities in September 2020, the business of the PRC Stores located at shopping centers, school areas, and other commercial districts were still affected by reduced customer traffic due to tightened safety control. In the U.S., Chanson 23rd Street in New York City provided only delivery and pickup services between the end of February 2020 and the end of June 2020, and resumed outdoor dining services at the end of June 2020 and limited indoor dining services at the end of September 2020. Chanson 23rd Street suspended its indoor dining services again between December 14, 2020 and February 11, 2021 according to an indoor dining ban issued by the Governor of New York State. In addition, the renovation of Chanson Greenwich was delayed and the store opened in December 2021. Chanson 23rd Street resumed its indoor dining services on February 12, 2021 at 25 percent capacity, which was increased to 35 percent on February 26, 2021 and further increased to 50 percent and 75 percent on March 19, 2021 and May 7, 2021, respectively. Starting from May 19, 2021, Chanson 23rd Street has been allowed to provide indoor dining services at full capacity, provided that either diners are seated at least six feet apart or tables are separated by physical barriers. The six-feet rule was later lifted for fully vaccinated people and eventually for all people. As of the date of this prospectus, the U.S. Stores are providing indoor dining services at their full capacity. Consequently, the COVID-19 pandemic adversely affected our business operations and operating results for fiscal years 2021 and 2020. Our revenue generated in China increased by approximately $0.7 million, or 11.6%, during the six months ended June 30, 2022 as compared to the same period of last year, primarily due to the increased revenue from newly opened stores as well as a new source of revenue generated from community group purchases during the six months ended June 30, 2022. Our revenue generated in United States increased by approximately $1.1 million, or 152.4%, during the six months ended June 30, 2022 as compared to the same period of last year, because starting from May 19, 2021, Chanson 23rd Street has been allowed to provide indoor dining services at full capacity with certain restrictions, and Chanson Greenwich opened in December 2021 as mentioned above. Overall, our total revenue increased by approximately $1.8 million, or 26.7%, during the six months ended June 30, 2022 as compared to the same period of last year. See "—Results of Operations."

Subsequent to June 30, 2022, due to the 2022 Outbreak, which resulted in the implementation of significant governmental measures, including lockdowns, closures, quarantines, and travel bans, the operations of the PRC Stores and the production of the PRC Stores' central factory were affected starting from August 10, 2022 and all of the PRC Stores and the central factory were closed between October 5, 2022 and November 30, 2022. The PRC Stores and the central factory stared to reopen in early December 2022 and resumed their normal business activities on December 10, 2022. The PRC Stores only managed to generate limited online sales and group sales, and the estimated loss of revenue was approximately RMB18 million (approximately $2.8 million) during the period of closure. Therefore, our business operations and financial results for the second half of the year ending December 31, 2022 are expected to be negatively affected by the 2022 Outbreak. For the three-month period from July 2022 to September 2022, our revenue generated in China decreased by approximately $1.8 million, or 48.7%, as compared to the same period in 2021, as all of the PRC Stores were closed on August 10, 2022 due to the 2022 Outbreak. Our revenue generated in the U.S. increased by approximately $0.5 million, or 98.3%, as compared to the same period in 2021, because Chanson Greenwich opened in December 2021. As a result, our total revenue decreased by approximately $1.3 million, or 32.2%, as compared to the same period in 2021.

In early December 2022, China announced a nationwide loosening of its zero-COVID policy, and the country may face a wave in infections after the lifting of these restrictions. The impact of COVID-19 pandemic still depends on the future developments of the pandemic, including new information concerning the global severity of and actions taken to contain the pandemic, or the appearance of new or more severe strains of the virus, which are highly uncertain and unpredictable. Therefore, while we expect the COVID-19 pandemic to continue negatively impacting our business, results of operations, and financial position, the related financial impact cannot be reasonably estimated at this time.

During the time the stores were closed, the operating entities paid all their employees base salaries in order to satisfy their basic living expenditure needs. After the reopening, the operating entities have taken various preventative and quarantine measures across their stores, including conducting regular nucleic acid tests in accordance with the government requirement, monitoring their employees' health conditions daily, and distributing face masks to all their employees. The operating entities also limit the customer flows in their stores and customers who visit their stores are required to measure temperature and wear masks. In the U.S., Chanson 23rd Street kept its store in New York City open and provided takeout and delivery services. To fulfill its social responsibility, Chanson 23rd Street has offered special discounts on its products to all hospital workers and free pastries to all frontline workers, drivers, and delivery people as a gesture to show its appreciation for what they contributed to the society during the pandemic.

The operating entities have taken actions to preserve their liquidity during the COVID-19 pandemic. On May 7, 2020, Xinjiang United Family entered into a loan agreement with Huaxia Bank, which provided it funding of RMB15 million (approximately $2.3 million) through May 2021 with a favorable fixed interest rate of 4.98%. The loan was subsequently repaid in full upon maturity. On May 31, 2021, Xinjiang United Family entered into a new loan agreement with Huaxia Bank to borrow RMB10 million (approximately $1.6 million) as working capital for one year, with a maturity date of May 31, 2022. The loan bore a fixed interest rate of 5.54%. The loan was subsequently repaid in full upon maturity. In addition, on September 22, 2020, as an effort to support high-quality tax payers, the local government of Xinjiang, through China Construction Bank, granted Xinjiang United Family, and our controlling shareholder and his wife, a maximum line of credit of approximately RMB2.3 million (approximately $0.4 million), with a credit period of one year. On March 12, 2021, Xinjiang United Family borrowed RMB2.3 million (approximately $0.4 million) under this line of credit, with a maturity date on September 22, 2021. The loan bore a fixed interest rate of 4.2525%. The loan was repaid in full upon maturity. On April 29, 2020, our subsidiary Chanson 23rd Street received funding for a loan totaling $209,291 from Cathay Bank under the U.S. Small Business Administration (the "SBA") Paycheck Protection Program ("PPP"), which is part of the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"), enacted on March 27, 2020. Under the terms of the SBA PPP loan, up to 100% of the principal and accrued interest may be forgiven if certain criteria are met and the loan proceeds are used for qualifying expenses such as payroll costs, benefits, rent, and utilities as described in the CARES Act. The loan accrues interest at a rate of 1% and any portion of the principal and accrued interest that is not forgiven is required to be repaid by April 29, 2022. Chanson 23rd Street filed an application for forgiveness of the loan's principal and interests in February 2021, and the application was approved by the bank and the SBA in May 2021. On February 11, 2021, Chanson 23rd Street received funding for a Second Draw PPP loan totaling $293,007 from Cathay Bank. Under the terms of the Second Draw PPP loan, up to 100% of the principal and accrued interest may be forgiven if certain criteria are met and the loan proceeds are used for qualifying expenses such as payroll costs, benefits, rent, and utilities as described in the CARES Act. The loan accrues interest at a rate of 1% and any portion of the principal and accrued interest that is not forgiven is required to be repaid by February 10, 2026. Chanson 23rd Street filed an application for forgiveness of the loan's principal and interests, and the application was approved by the bank and the SBA in November 2021. On May 24, 2021, Chanson 23rd Street received funding of $531,992 under the SBA Restaurant Revitalization Fund program. In addition, we have increased efforts to collect our accounts receivable. As of December 31, 2022, approximately 74.6%, or $1.5 million, of our accounts receivable balance as of June 30, 2022 had been collected. The remaining balance is expected to be collected before June 30, 2023. As of June 30, 2022, we had a negative working capital of approximately $5.8 million, including deferred revenue of approximately $6.8 million, which was reported as current liability, but will not require cash payment in the future. In assessing our liquidity, we monitor and analyze our cash on-hand, our ability to generate sufficient revenue sources and ability to obtain additional financial support in the future, and our operating and capital expenditure commitments. As of June 30, 2022, we only had cash of approximately $0.4 million. The future capital expenditure on the central factory construction is expected to be approximately $0.6 million and $0.4 million in the remainder of fiscal year 2022 and in fiscal year 2023, respectively. However, on December 23, 2022, Xinjiang United Family entered into a new loan agreement with Huaxia Bank for a loan of approximately $0.4 million (RMB3.0 million) with one-year maturity. We believe that we would be able to make additional borrowings from banks based on past experience and our good credit history when necessary. Due to the impact from the resurgence of the 2022 Outbreak cases in Xinjiang, our revenue was negatively impacted and is expected to decrease slightly in fiscal year 2022 as compared to fiscal year 2021. We expect to incur a net loss in fiscal year 2022. However, all of the PRC Stores resumed their normal business activities on December 10, 2022 and are expected to gradually recover from the 2022 Outbreak, and we expect to open three stores in PRC in fiscal year 2023 and two stores in U.S. in late March 2023 and April 2023. In addition, we will further implement initiatives to control costs and improve our operating efficiency in fiscal year 2023. Therefore, revenue and net income are expected to increase significantly in fiscal year 2023 as compared to fiscal year 2022. Furthermore, our controlling shareholder, Mr. Gang Li, has made pledges to provide continuous financial support to us for at least 12 months from the issuance of the unaudited condensed consolidated financial statements as of and for the six months ended June 30, 2022. We believe our cash and cash equivalents on hand, our operating cash flows, debt financing, and financial support from our principal shareholder will be sufficient to meet our working capital needs over the next 12 months.

 **Results of Operations**

 **<u>Comparison of Results of Operations for the Six Months Ended June 30, 2022 and 2021</u>**

The following table summarizes the results of our operations during the six months ended June 30, 2022 and 2021, respectively, and provides information regarding the dollar and percentage increase or decrease during such periods.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Six Months Ended June 30,** | **For the Six Months Ended June 30,** | **Variance** | **Variance** |
|  | **2022** | **2021** | **Amount** | **%** |
| Revenue | $8543803 | $6742121 | $1801682 | 26.7% |
| Cost of revenue | 4396715 | 3604286 | 792429 | 22.0% |
| &nbsp;&nbsp;&nbsp; **Gross profit** | **4147088** | **3137835** | **1009253** | **32.2%** |
| **OPERATING EXPENSES** |  |  |  |  |
| Selling expenses | 2195394 | 1923124 | 272270 | 14.2% |
| General and administrative expenses | 1887285 | 1481445 | 405840 | 27.4% |
| &nbsp;&nbsp;&nbsp; Total operating expenses | 4082679 | 3404569 | 678110 | 19.9% |
| **INCOME (LOSS) FROM OPERATIONS** | **64409** | **(266734)** | **331143** | **124.1%** |
| **OTHER INCOME (EXPENSES)** |  |  |  |  |
| Interest expense, net | (37186) | (48594) | (11408) | (23.5)% |
| Other income, net | 197268 | 745330 | (548062) | (73.5)% |
| &nbsp;&nbsp;&nbsp; Total other income, net | 160082 | 696736 | (536654) | (77.0)% |
| **INCOME BEFORE INCOME TAX PROVISION** | **224491** | **430002** | **(205511)** | **(47.8)%** |
| **INCOME TAX PROVISION** | 3698 | 7317 | (3619) | (49.5)% |
| **NET INCOME** | $**220793** | $**422685** | $**(201892)** | **(47.8)%** |

---

 ***Revenue***

We generate revenue primarily from bakery products and other products sold in China and the U.S. In the PRC Stores, bakery products consist of packaged bakery products (cakes, bread, and snacks), birthday cakes, and made-in-store pastries, and other products consist of seasonal products (mooncakes and zongzi) and beverage products. In the U.S. Stores, bakery products consist of cakes, bread, sweets, birthday cakes, and pastries, and other products consist of eat-in menu items (sandwiches, salads, toasts, croissants, soups, and desserts) and beverage products.

Our total revenue increased by $1,801,682, or 26.7%, from $6,742,121 for the six months ended June 30, 2021 to $8,543,803 for the six months ended June 30, 2022. The increase in our revenue was due to increased revenue from the stores in China and the U.S., as discussed in greater details below.

The following table sets forth the breakdown of our revenue for the six months ended June 30, 2022 and 2021, respectively:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Six Months Ended June 30,** | **For the Six Months Ended June 30,** | **For the Six Months Ended June 30,** | **For the Six Months Ended June 30,** | **Variance** | **Variance** |
|  | **2022** | **%** | **2021** | **%** | **Amount** | **%** |
| **China** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Bakery products | $6295104 | 73.7% | $5624404 | 83.4% | $670700 | 11.9% |
| &nbsp;&nbsp;&nbsp; Other products | 416405 | 4.9% | 391869 | 5.8% | 24536 | 6.3% |
| &nbsp;&nbsp;&nbsp; Subtotal: revenue from China | 6711509 | 78.6% | 6016273 | 89.2% | 695236 | 11.6% |
| **United States** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Bakery products | 332870 | 3.9% | 227159 | 3.4% | 105711 | 46.5% |
| &nbsp;&nbsp;&nbsp; Beverage products | 993504 | 11.6 | 310828 | 4.6% | 682676 | 219.6% |
| &nbsp;&nbsp;&nbsp; Eat-in services | 505920 | 5.9% | 187861 | 2.8% | 318059 | 169.3% |
| &nbsp;&nbsp;&nbsp; Subtotal: revenue from the United States | 1832294 | 21.4% | 725848 | 10.8% | 1106446 | 152.4% |
| **Total Revenue** | $**8543803** | **100.0%** | $**6742121** | **100.0%** | $**1801682** | **26.7%** |

---

 

 

 *<u>China</u>*

The PRC Stores accounted for 78.6% and 89.2% of our total revenue for the six months ended June 30, 2022 and 2021, respectively. Revenue from China increased by $695,236, or 11.6%, from $6,016,273 for the six months ended June 30, 2021 to $6,711,509 for the six months ended June 30, 2022. The increase in our revenue was mainly due to increased revenue from bakery products, as discussed below.

Revenue from bakery products increased by $670,700, or 11.9%, from $5,624,404 for the six months ended June 30, 2021 to $6,295,104 for the six months ended June 30, 2022. The increase was mainly due to the increased revenue of approximately $0.6 million from new PRC stores that were opened since the last quarter of 2020. The increase in bakery products was also due to an increase by approximately $0.2 million, or 4.6%, in comparable store sales in the existing stores as compared to the same period of last year. As the PRC Stores' brand awareness and product popularity grew year by year among their customers, they developed a new source of revenue since the start of fiscal year 2022 by launching community group purchases, which allow a group of residents within the same apartment compound to purchase the PRC Stores' products together in bulk. As a result, the PRC Stores' revenue from bakery products increased during the six months ended June 30, 2022 as compared to the six months ended June 30, 2021.

Revenue from other products increased by $24,536, or 6.3%, from $391,869 for the six months ended June 30, 2021 to $416,405 for the six months ended June 30, 2022. The increase was due to increased revenue from seasonal products, which was partially offset by decreased revenue from beverage products. Revenue from seasonal products increased by $42,151, or 13.1%, from $322,520 for the six months ended June 30, 2021 to $364,671 for the six months ended June 30, 2022. The increase was mainly due to increased group purchases from corporate customers of the PRC Stores; as the business of these corporate customers gradually recovered from the negative impact of the COVID-19 pandemic, they made more group purchases of seasonal products during holidays from the PRC Stores during the six months ended June 30, 2022. The increase was also due to the increased purchases from our existing and new customers as we upgraded the packaging for our seasonal products, which are more appealing to the customers. Revenue from beverage products decreased by $17,615, or 25.4%, from $69,349 for the six months ended June 30, 2021 to $51,734 for the six months ended June 30, 2022. The PRC Stores made and sold beverage products in each individual store, and due to the low sales volume, higher inventory spoilage of fresh ingredients, such as fruits, led to lower profitability. During the six months ended June 30, 2022, the PRC Stores strategically terminated the beverage sales in those bakery stores with low profitability, which resulted in the decrease in revenue from beverage products during the six months ended June 30, 2022 as compared to the same period of 2021. The decrease in revenue from beverage products was partially offset by the increased revenue from freshly brewed coffee products, as the PRC Stores launched new business of coffee beverages during the six months ended June 30, 2022.

 *<u>United States</u>*

Revenue from the U.S. increased by $1,106,446, or 152.4%, from $725,848 for the six months ended June 30, 2021 to $1,832,294 for the six months ended June 30, 2022. The increase was due to increased revenue from bakery products, beverage products, and eat-in services as discussed below.

Revenue from bakery products increased by $105,711, or 46.5%, from $227,159 for the six months ended June 30, 2021 to $332,870 for the six months ended June 30, 2022. The increase was primarily due to the increased revenue from bakery products of $0.15 million, which was generated by Chanson Greenwich, the new store opened in December 2021. The increase in revenue from bakery products was partially offset by the decreased revenue of Chanson 23<sup>rd</sup> Street as a result of increased competition from rivals operating the same area. Some famous bakery brands opened new stores in New York City, and customers now have more choices and sales of Chanson 23<sup>rd</sup> Street's bakery products were negatively affected during the six months ended June 30, 2022.

Revenue from beverage products increased by $682,676, or 219.6%, from $310,828 for the six months ended June 30, 2021 to $993,504 for the six months ended June 30, 2022. The increase was mainly due to the increased revenue from Chanson 23rd Street. During the six months ended June 30, 2021, Chanson 23rd Street only sold bottled cocktails at its outdoor booth since its indoor dining services were suspended. After Chanson 23rd Street resumed its indoor dining services in February 2021, its cocktail bar launched several new types of cocktail products with a variety of new flavors and styles. As Chanson 23rd Street's products became popular among its customers and its cocktail bar was often fully booked by reservation during weekends, Chanson 23rd Street managed to increase the prices of its cocktail products. Meanwhile, the increase was also due to the increased revenue from beverage products of $0.25 million generated by Chanson Greenwich, the new store opened in December 2021. As a result, revenue from beverage products increased significantly during the six months ended June 30, 2022 as compared to the six months ended June 30, 2021.

Revenue from eat-in services increased by $318,059, or 169.3%, from $187,861 for the six months ended June 30, 2021 to $505,920 for the six months ended June 30, 2022. The increase was mainly due to the increased revenue from eat-in services of $0.3 million, which was generated by Chanson Greenwich, the new store opened in December 2021.

 ***Cost of Revenue***

  ****

Our cost of revenue consists of food ingredient costs, packing costs, workforce related costs, overhead costs such as store rental and utilities for food production and processing, depreciation, and amortization. Our overall cost of revenue increased by $792,429, or 22.0%, from $3,604,286 for the six months ended June 30, 2021 to $4,396,715 for the six months ended June 30, 2022. The increase was attributable to the increase in the cost of revenue from both the stores in China and the U.S., as discussed below.

The following table sets forth the breakdown of our cost of revenue for the six months ended June 30, 2022 and 2021, respectively:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Six Months Ended June 30,** | **For the Six Months Ended June 30,** | **For the Six Months Ended June 30,** | **For the Six Months Ended June 30,** | **Variance** | **Variance** |
|  | **2022** | **%** | **2021** | **%** | **Amount** | **%** |
| **China** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Bakery products | $3243658 | 73.9% | $2993571 | 83.0% | $250087 | 8.4% |
| &nbsp;&nbsp;&nbsp; Other products | 150656 | 3.4% | 137223 | 3.8% | 13433 | 9.8% |
| &nbsp;&nbsp;&nbsp; Subtotal: cost of revenue from China | 3394314 | 77.3% | 3130794 | 86.8% | 263520 | 8.4% |
| **United States** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Bakery products | 204208 | 4.6% | 136476 | 3.8% | 67732 | 49.6% |
| &nbsp;&nbsp;&nbsp; Beverage products | 568430 | 12.9% | 212301 | 5.9% | 356129 | 167.7% |
| &nbsp;&nbsp;&nbsp; Eat-in services | 229763 | 5.2% | 124715 | 3.5% | 105048 | 84.2% |
| &nbsp;&nbsp;&nbsp; Subtotal: cost of revenue from the United States | 1002401 | 22.7% | 473492 | 13.2% | 528909 | 111.7% |
| **Total Cost of Revenue** | $**4396715** | **100.0%** | $**3604286** | **100.0%** | $**792429** | **22.0%** |

---

 *<u>China</u>*

Cost of revenue from China increased by $263,520, or 8.4%, from $3,130,794 for the six months ended June 30, 2021 to $3,394,314 for the six months ended June 30, 2022. The increase was due to increased cost of revenue of bakery products and other products, as discussed below.

Cost of revenue from sales of bakery products increased by $250,087, or 8.4%, from $2,993,571 for the six months ended June 30, 2021 to $3,243,658 for the six months ended June 30, 2022 due to the increase in sales of bakery products. The percentage of increase in cost of revenue was less than that in revenue during the same period, due to less wastage of raw materials and bakery products resulted from the implementation of more stringent and accurate inventory management during the six months ended June 30, 2022.

Cost of revenue from other products increased by $13,433, or 9.8%, from $137,223 for the six months ended June 30, 2021 to $150,656 for the six months ended June 30, 2022. The cost of revenue from seasonal products increased by $12,337, or 11.5%, from $107,362 for the six months ended June 30, 2021 to $119,699 for the six months ended June 30, 2022. The increase in cost of revenue of seasonal products was in line with the increase in revenue during the same period. The cost of revenue from beverage products increased by $1,096, or 3.7%, from $29,861 for the six months ended June 30, 2021 to $30,957 for the six months ended June 30, 2022, due to the higher spoilage and wastage of inventory and increased price of raw materials, as discussed in "—Gross Profit and Gross Margin" below in more details.

 

 *<u>United States</u>*

Cost of revenue from the U.S. increased by $528,909, or 111.7%, from $473,492 for the six months ended June 30, 2021 to $1,002,401 for the six months ended June 30, 2022. The increase was due to the increased cost of revenue from beverage products, eat-in services, and bakery products as discussed below.

Cost of revenue from sales of bakery products increased by $67,732, or 49.6%, from $136,476 for the six months ended June 30, 2021 to $204,208 for the six months ended June 30, 2022. The increase in cost of revenue from bakery products was in line with the increase in revenue from bakery products in the U.S. Stores.

Cost of revenue from sales of beverage products increased by $356,129, or 167.7%, from $212,301 for the six months ended June 30, 2021 to $568,430 for the six months ended June 30, 2022, primarily due to the increase in the sales of new cocktail products by Chanson 23rd Street and the increase in revenue from the newly opened store, Chanson Greenwich. The percentage of increase in cost of revenue was less than that in revenue during the same period, which was attributable to the increased sale of new cocktail products that have higher gross margin and the decreased inventory damage, as discussed in "—Gross Profit and Gross Margin" below in more details.

The cost of revenue from eat-in services increased by $105,048, or 84.2%, from $124,715 for the six months ended June 30, 2021 to $229,763 for the six months ended June 30, 2022 due to the increase in sales of eat-in services. The percentage of increase in cost of revenue was less than that in revenue during the same period, due to the decreased inventory spoilage as a result of the stricter inventory management as discussed in "—Gross Profit and Gross Margin" below in more details.

 ***Gross Profit and Gross Margin***

  ****

Our gross profit increased by $1,009,253, or 32.2%, from $3,137,835 for the six months ended June 30, 2021 to $4,147,088 for the six months ended June 30, 2022. The increase was mainly attributable to the overall increase in revenue. Our gross margin increased by 2.0 percentage points from 46.5% for the six months ended June 30, 2021 to 48.5% for the six months ended June 30, 2022.

The following table sets forth the breakdown of our gross profit for the six months ended June 30, 2022 and 2021, respectively:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Six Months Ended June 30,** | **For the Six Months Ended June 30,** | **For the Six Months Ended June 30,** | **For the Six Months Ended June 30,** | **Variance** | **Variance** |
|  | **2022** | **Margin %** | **2021** | **Margin %** | **Amount** | **%** |
| **China** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Bakery products | $3051446 | 48.5% | $2630833 | 46.8% | $420613 | 16.0% |
| &nbsp;&nbsp;&nbsp; Other products | 265749 | 63.8% | 254646 | 65.0% | 11103 | 4.4% |
| &nbsp;&nbsp;&nbsp; Subtotal: gross margin and margin % from China | 3317195 | 49.4% | 2885479 | 48.0% | 431716 | 15.0% |
| **United States** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Bakery products | 128662 | 38.7% | 90683 | 39.9% | 37979 | 41.9% |
| &nbsp;&nbsp;&nbsp; Beverage products | 425074 | 42.8% | 98527 | 31.7% | 326547 | 331.4% |
| &nbsp;&nbsp;&nbsp; Eat-in services | 276157 | 54.6% | 63146 | 33.6% | 213011 | 337.3% |
| &nbsp;&nbsp;&nbsp; Subtotal: gross margin and margin % from the United States | 829893 | 45.3% | 252356 | 34.8% | 577537 | 228.9% |
|  **Total Gross Margin and Margin %** | $**4147088** | **48.5%** | $**3137835** | **46.5%** | $**1009253** | **32.2%** |

---

 

 *<u>China</u>*

Gross profit from China increased by $431,716, or 15.0%, from $2,885,479 for the six months ended June 30, 2021 to $3,317,195 for the six months ended June 30, 2022. The increase was mainly attributable to the overall increase in sales. The gross margin increased by 1.4 percentage points from 48.0% for the six months ended June 30, 2021 to 49.4% for the six months ended June 30, 2022.

The gross profit of bakery products increased by $420,613, or 16.0%, from $2,630,833 for the six months ended June 30, 2021 to $3,051,446 for the six months ended June 30, 2022, and the gross margin of bakery products increased by 1.7 percentage points from 46.8% for the six months ended June 30, 2021 to 48.5% for the six months ended June 30, 2022. As mentioned above, the PRC Stores implemented stricter inventory management, which resulted in less spoiled raw materials and less expired bakery products due to their short storage life. Therefore, the gross margin of bakery products slightly increased during the six months ended June 30, 2022 as compared to the same period of last year.

The gross profit of other products increased by $11,103, or 4.4%, from $254,646 for the six months ended June 30, 2021 to $265,749 for the six months ended June 30, 2022, and the gross margin decreased by 1.2 percentage points from 65.0% for the six months ended June 30, 2021 to 63.8% for the six months ended June 30, 2022. The gross margin of seasonal products remained relatively stable with a slight increase of 0.5 percentage points, from 66.7% for the six months ended June 30, 2021 to 67.2% for the six months ended June 30, 2022. The decrease in gross margin was mainly due to a decrease in gross margin of beverage products by 16.7 percentage points from 56.9% for the six months ended June 30, 2021 to 40.2% for the six months ended June 30, 2022. The decrease was mainly due to higher spoilage and wastage of raw materials during the first few months after we started our new coffee business. Moreover, the decrease in gross margin of beverage products was attributable to increased prices of raw materials such as fresh fruit, and the increased inventory spoilage of fresh ingredients during the six months ended June 30, 2022.

 *<u>United States</u>*

Gross profit from the U.S. increased by $577,537, or 228.9%, from $252,356 for the six months ended June 30, 2021 to $829,893 for the six months ended June 30, 2022. The increase was mainly attributable to the overall increase in revenue. The gross margin increased by 10.5 percentage points from 34.8% for the six months ended June 30, 2021 to 45.3% for the six months ended June 30, 2022.

The gross profit of bakery products increased by $37,979, or 41.9%, from $90,683 for the six months ended June 30, 2021 to $128,662 for the six months ended June 30, 2022, and the gross margin of bakery products remained relatively stable with a slight decrease of 1.2 percentage points, from 39.9% for the six months ended June 30, 2021 to 38.7% for the six months ended June 30, 2022.

The gross profit of beverage products increased by $326,547, or 331.4%, from $98,527 for the six months ended June 30, 2021 to $425,074 for the six months ended June 30, 2022, and the gross margin of beverage products increased by 11.1 percentage points from 31.7% for the six months ended June 30, 2021 to 42.8% for the six months ended June 30, 2022. The increase in gross margin was mainly due to the increased revenue in the U.S. Stores' new cocktail products that have higher gross margin. Since the beginning of fiscal year of 2022, the staff at the U.S. Stores have become more experienced in preparing cocktail products, and the spoilage of raw materials was well controlled and decreased accordingly. Meanwhile, Chanson 23rd Street incurred the bottled wine damage of approximately $38,500 by accident during the six months ended June 30, 2021, which resulted in the lower gross margin in the six months ended June 30, 2021.

The gross profit of eat-in services increased by $213,011, or 337.3%, from $63,146 for the six months ended June 30, 2021 to $276,157 for the six months ended June 30, 2022, and the gross margin of eat-in services increased by 21.0 percentage points from 33.6% for the six months ended June 30, 2021 to 54.6% for the six months ended June 30, 2022. The increase was mainly attributable to the strengthened inventory management and the decreased inventory spoilage during the six months ended June 30, 2022 as mentioned above.

 ***Operating Expenses***

The following table sets forth the breakdown of our operating expenses for the six months ended June 30, 2022 and 2021.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Six Months Ended June 30,** | **For the Six Months Ended June 30,** | **For the Six Months Ended June 30,** | **For the Six Months Ended June 30,** | **For the Six Months Ended June 30,** | **For the Six Months Ended June 30,** |
|  | **2022** | **2022** | **2021** | **2021** | **Variance** | **Variance** |
|  | **Amount** | **% of<br> revenue** | **Amount** | **% of<br> revenue** | **Amount** | **%** |
| **Total revenue** | $8543803 | 100.0% | $6742121 | 100.0% | $1801682 | 26.7% |
| **Total operating expenses:** |  |  |  |  |  |  |
| Selling expenses | 2195394 | 25.7% | 1923124 | 28.5% | 272270 | 14.2% |
|  General and administrative expenses | 1887285 | 22.1% | 1481445 | 22.0% | 405840 | 27.4% |
| Total operating expenses | $4082679 | 47.8% | $3404569 | 50.5% | $678110 | 19.9% |

---

 *<u>Selling Expenses</u>*

Our selling expenses primarily include payroll and sales commission expenses paid to our sales and marketing personnel, store operating expenses, store rental, store decoration and maintenance expenses, utility expenses, and other expenses related to sales activities. Selling expenses increased by $272,270, or 14.2%, from $1,923,124 for the six months ended June 30, 2021 to $2,195,394 for the six months ended June 30, 2022. The increase in selling expenses was primarily due to the increase in salary and social security expenses of $37,891, as the PRC Stores hired more employees for the new stores. The increase was also due to an increase in rental expenses of $194,664 as there were more stores during the six months ended June 30, 2022 as compared to the six months ended June 30, 2021. Meanwhile, the increase in selling expenses was also attributable to the incurred selling expenses of $32,668 for Chanson Greenwich, the new store in the U.S. opened in December 2021. Our selling expenses accounted for 25.7% and 28.5% of our revenue for the six months ended June 30, 2022 and 2021, respectively.

  ****

 *<u>General and Administrative Expenses</u>*

Our general and administrative expenses primarily consist of administrative employee salaries, welfare and insurance expenses, depreciation, and professional service expenses. General and administrative expenses increased by $405,840, or 27.4%, from $1,481,445 for the six months ended June 30, 2021 to $1,887,285 for the six months ended June 30, 2022, primarily due to the operation of the new store, Chanson Greenwich, with general and administrative expenses of $397,789 incurred during the six months ended June 30, 2022. The increase was also attributable to the increased rental expenses of $121,246 for the Chanson 3rd Ave and Chanson Broadway stores incurred during the renovation period. The increase was partially offset by a decrease in professional service fee of $127,836 for the preparation of our initial public offering and accounting service. Our general and administrative expenses accounted for 22.1% and 22.0% of our revenue for the six months ended June 30, 2022 and 2021, respectively.

  ****

 ***Other Income (Expenses), Net***

Our other income (expenses), net primarily consists of interest expenses on our short-term bank loans, gain or loss from disposal of fixed assets, and government subsidies. Other income, net decreased by $536,654, or 77.0%, from other net income of $696,736 for the six months ended June 30, 2021 to other net income of $160,082 for the six months ended June 30, 2022. The decrease in other income, net was mainly due to the funding of $531,992 Chanson 23rd Street received from the SBA under the SBA Restaurant Revitalization Fund program and the forgiveness of a $209,291 loan under the SBA Paycheck Protection Program during the six months ended June 30, 2021, and no such income was received during the six months ended June 30, 2022.

 ***Provision for Income Taxes***

Our provision for income taxes was $3,698 and $7,317 for the six months ended June 30, 2022 and 2021, respectively. Under the EIT Law, domestic enterprises and foreign investment enterprises are usually subject to a unified 25% EIT rate while preferential tax rates, tax holidays, or exemptions may be granted on a case-by-case basis.

Xinjiang United Family and its three branch offices were incorporated in the PRC. During the six months ended June 30, 2022 and 2021, Xinjiang United Family and all its three branch offices qualified as small-scaled minimal profit enterprises. Based on the EIT Law, from January 1, 2019 to December 31, 2021, the portion of its taxable income not more than RMB1 million is subject to a reduced rate of 5% and the portion above RMB1 million was subject to a reduced rate of 10%. According to the Announcement on Implementing the Preferential Income Tax Policies for Small-Scale Minimal Profit Enterprise and Individually-Owned Businesses on April 2, 2021, the tax rate for the portion of its taxable income not more than RMB1 million is further reduced to 2.5% during the period from January 1, 2021 to December 31, 2022 and the tax rate for the portion above RMB1 million remains at a reduced rate of 10%. Xinjiang United Family and all its three branch offices will continue enjoying the favorable tax rate as long as they are qualified as small-scaled minimal profit enterprises.

The UFG Entities are individually-owned businesses, which are not subject to the EIT Law, but Individual Income Tax. The Measures for Individual Income Tax Calculation of Individual Industrial and Commercial Households, or the "Measures," were adopted by the SAT on December 19, 2014 and promulgated on December 27, 2014, and amended on June 15, 2018. According to Article 7 of the Measures, for the income from production and operation of individually-owned businesses, the amount of taxable income shall be the balance of the total income of each tax year after deducting costs, expenses, taxes, losses and other expenditures, and allowable compensation for losses in previous years. Income tax for an individually-owned business can generally be assessed on an actual basis or a deemed basis, which the UFG Entities apply. Therefore, income tax for the UFG Entities is levied as a fixed-rate income tax at 1% of the deemed Taxable Net Income ("TNI") as assessed by the local tax authority. According to Announcement No. 12 [2021] of the SAT, the tax rate is reduced by half to 0.5% during the period from January 1, 2021 to December 31, 2022. For the six months ended June 30, 2022, 13 of these UFG entities were subject to income tax assessed at 0.5% of TNI that ranged from RMB25,000 to RMB180,000 per month. For the six months ended June 30, 2021, 12 of these UFG Entities were subject to income tax assessed at 0.5% of TNI that ranged from RMB33,000 to RMB130,000 per month. The rest of these UFG Entities were exempted from paying income tax. As of June 30, 2022, the tax years ended December 31, 2017 through December 31, 2021 for the UFG Entities remained open for statutory examination by PRC tax authorities. In addition, the TNI and tax rate of the UFG Entities are subject to periodical reassessment by the local tax authority. If the local tax authority determined that income tax for the UFG Entities should be levied at a higher TNI or higher tax rate, the UFG Entities would be obligated to pay additional income tax. Along with the continuing growth of business, we expect that the tax rates of these UFG Entities are likely to increase in the future in the annual assessment by the local tax authority based on past performance. If these UFG Entities change their forms of organization from individually-owned businesses to other corporate forms (such as limited liability company) as a result of their business development requirement, they will no longer enjoy the favorable tax rates and will be subject to the EIT Law, though we currently do not expect their forms of organization to change in the foreseeable future.

For the six months ended June 30, 2022 and 2021, tax savings as the result of the favorable tax rates and tax exemptions amounted to $261,738 and $207,457, respectively, and the per share effect of the favorable tax rate and tax exemptions was $0.03 and $0.02, respectively.

  ****

 ***Net Income***

As a result of the foregoing, we reported net income of $220,793 for the six months ended June 30, 2022 as compared to a net income of $422,685 for the six months ended June 30, 2021.

**<u>Comparison of Results of Operations for the Fiscal Years Ended December 31, 2021 and 2020</u>**

The following table summarizes the results of our operations during the years ended December 31, 2021 and 2020, respectively, and provides information regarding the dollar and percentage increase or decrease during such years.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the years ended<br> December 31,** | **For the years ended<br> December 31,** | **Variance** | **Variance** |
|  | **2021** | **2020** | **Amount** | **%** |
| Revenue | $14690295 | $10313512 | $4376783 | 42.4% |
| Cost of revenue | 7759872 | 5164178 | 2595694 | 50.3% |
| &nbsp;&nbsp;&nbsp;**Gross profit** | **6930423** | **5149334** | **1781089** | **34.6%** |
| **OPERATING EXPENSES** |  |  |  |  |
| Selling expenses | 4126126 | 2947088 | 1179038 | 40.0% |
| General and administrative expenses | 3249181 | 2230893 | 1018288 | 45.6% |
| &nbsp;&nbsp;&nbsp;Total operating expenses | 7375307 | 5177981 | 2197326 | 42.4% |
| **LOSS FROM OPERATIONS** | **(444884)** | **(28647)** | **416237** | **1453.0%** |
| **OTHER INCOME (EXPENSES)** |  |  |  |  |
| Interest expense, net | (98033) | (108852) | (10819) | (9.9)% |
| Other income (expenses), net | 1065963 | (11946) | 1077909 | 9023.2% |
| &nbsp;&nbsp;&nbsp;Total other income (expenses), net | 967930 | (120798) | 1088728 | 901.3% |
| **INCOME (LOSS) BEFORE INCOME TAX PROVISION** | **523046** | **(149445)** | **672491** | **450.0%** |
| **INCOME TAX PROVISION** | 16277 | 14584 | 1693 | 11.6% |
| **NET INCOME (LOSS)** | $**506769** | $**(164029)** | $**670798** | **409.0%** |

---

 ***Revenue***

We generate revenue primarily from bakery products and other products sold in China and the U.S. In the PRC Stores, bakery products consist of packaged bakery products (cakes, bread, and snacks), birthday cakes, and made-in-store pastries, and other products consist of seasonal products (mooncakes and zongzi) and beverage products. In the U.S. Stores, bakery products consist of cakes, bread, sweets, birthday cakes, and pastries, and other products consist of eat-in menu items (sandwiches, salads, toasts, croissants, soups, and desserts) and beverage products.

Our total revenue increased by $4,376,783, or 42.4%, from $10,313,512 for the year ended December 31, 2020 to $14,690,295 for the year ended December 31, 2021. The increase in our revenue was due to increased revenue from the stores in China and the U.S., as discussed in greater details below.

The following table sets forth the breakdown of our revenue for the years ended December 31, 2021 and 2020, respectively:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **Variance** | **Variance** |
|  | **2021** | **%** | **2020** | **%** | **Amount** | **%** |
| **China** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Bakery products | $11694918 | 79.6% | $8245355 | 79.9% | $3449563 | 41.8% |
| &nbsp;&nbsp;&nbsp;Other products | 1101171 | 7.5% | 728388 | 7.1% | 372783 | 51.2% |
| &nbsp;&nbsp;&nbsp;Subtotal: revenue from China | 12796089 | 87.1% | 8973743 | 87.0% | 3822346 | 42.6% |
| **United States** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Bakery products | 473914 | 3.2% | 597072 | 5.8% | (123158) | (20.6)% |
| &nbsp;&nbsp;&nbsp;Beverage products | 1000039 | 6.8% | 233936 | 2.3% | 766103 | 327.5% |
| &nbsp;&nbsp;&nbsp;Eat-in services | 420253 | 2.9% | 508761 | 4.9% | (88508) | (17.4)% |
| &nbsp;&nbsp;&nbsp;Subtotal: revenue from the United States | 1894206 | 12.9% | 1339769 | 13.0% | 554437 | 41.4% |
| **Total Revenue** | $**14690295** | **100.0%** | $**10313512** | **100.0%** | $**4376783** | **42.4%** |

---

 *<u>China</u>*

The PRC Stores accounted for 87.1% and 87.0% of our total revenue for the years ended December 31, 2021 and 2020, respectively. Revenue from China increased by $3,822,346, or 42.6%, from $8,973,743 for the year ended December 31, 2020 to $12,796,089 for the year ended December 31, 2021. The increase in our revenue was mainly due to increased revenue from bakery products, as discussed below.

Revenue from bakery products increased by $3,449,563, or 41.8%, from $8,245,355 for the year ended December 31, 2020 to $11,694,918 for the year ended December 31, 2021. The increase was mainly due to an increase in comparable store sales of 20.1% in bakery products. The COVID-19 pandemic first started to impact the operations of the PRC Stores in January 2020, and the PRC Stores closed during the period between late January and early March of 2020, and closed again between mid-July and September of 2020 due to the resurgence of COVID-19 cases in Xinjiang, which caused the significantly lower comparable store sales during the year ended December 31, 2020. However, since the COVID-19 pandemic in China appeared to be under relative control in 2021, our revenue increased as our business operations gradually recovered during the year ended December 31, 2021. There was also increased revenue of approximately $1.1 million from PRC stores that were opened during the second half of 2020 that generated full year revenue during the year ended December 31, 2021 and also the new stores opened during the fiscal year of 2021. Furthermore, since the start of fiscal year 2021, the PRC Stores have focused more on increasing their market share and there have been increased promotion activities and price discounts given to their customers, which attracted more customers to make purchases at the PRC Stores in 2021. The increase was also partly due to the appreciation of RMB against U.S. dollars. The average translation rate for the years ended December 31, 2021 and 2020 was at $1 to RMB6.4490 and $1 to RMB6.9020, respectively, an increase of 6.6%.

Revenue from other products increased by $372,783, or 51.2%, from $728,388 for the year ended December 31, 2020 to $1,101,171 for the year ended December 31, 2021. The increase was due to increased revenue from seasonal products, which was partially offset by slightly decreased revenue from beverage products. Revenue from seasonal products increased by $379,139, or 64.4%, from $588,531 for the year ended December 31, 2020 to $967,670 for the year ended December 31, 2021. The increase was mainly due to increased group purchases from corporate customers of the PRC Stores; as the business of these corporate customers gradually recovered from the negative impact of the COVID-19 pandemic, they made more group purchases of seasonal products from the PRC Stores during the year ended December 31, 2021. The increase was also due to the increased purchases from our existing and new customers as we updated packaging for our seasonal products and launched more promotion activities and price discounts. Revenue from beverage products remained relatively stable with a slight decrease of $6,356, or 4.5%, from $139,857 for the year ended December 31, 2020 to $133,501 for the year ended December 31, 2021.

 *<u>United States</u>*

Revenue from the U.S. increased by $554,437, or 41.4%, from $1,339,769 for the year ended December 31, 2020 to $1,894,206 for the year ended December 31, 2021. The increase was due to increased revenue from beverage products, which was partially offset by decreased revenue from bakery products and eat-in services as discussed below.

Revenue from bakery products decreased by $123,158, or 20.6%, from $597,072 for the year ended December 31, 2020 to $473,914 for the year ended December 31, 2021. The decrease was due to increased competition from rivals. Between the end of February 2020 and the end of June 2020, most of Chanson 23rd Street's competitors were closed due to the COVID-19 pandemic while Chanson 23rd Street remained one of the few bakery stores that continued their business operations, leading to high demand for its bakery products. During the year ended December 31, 2021, however, since main rivals of Chanson 23rd Street already resumed their business at the end of year 2020 or the beginning of year 2021 and some famous bakery brands opened new stores in New York City, customers had more choices and sales of Chanson 23rd Street's bakery products were negatively affected.

Revenue from beverage products increased by $766,103, or 327.5%, from $233,936 for the year ended December 31, 2020 to $1,000,039 for the year ended December 31, 2021. During the year ended December 31, 2020, Chanson 23rd Street only sold bottled cocktails at its outdoor booth since its indoor dining services were suspended. After Chanson 23rd Street resumed its indoor dining services in February 2021, its cocktail bar launched several new types of cocktail products with a variety of new flavors and styles. As Chanson 23rd Street's products became popular among its customers and its cocktail bar was often fully booked by reservation during weekends, Chanson 23rd Street managed to increase the prices of its cocktail products. As a result, its revenue from beverage products increased significantly during the year ended December 31, 2021 as compared to the year ended December 31, 2020.

Revenue from eat-in services decreased by $88,508, or 17.4%, from $508,761 for the year ended December 31, 2020 to $420,253 for the year ended December 31, 2021. As Chanson 23rd Street is located at central business district, its revenue from eat-in services mainly comes from breakfast and brunch sold to the people working in nearby offices during the weekdays and tourists during the weekends. Before Chanson 23rd Street suspended its eat-in services at the end of February 2020, it had stable customer traffic, which contributed to the majority of its revenue during the year ended December 31, 2020. Even though Chanson 23rd Street gradually resumed its indoor dining services since February 12, 2021, its customer traffic had not recovered because most of the companies were still closed and people remained working from home, and the number of tourists was limited due to travel restrictions. Therefore, its revenue of eat-in services decreased during the year ended December 31, 2021 as compared to the year ended December 31, 2020.

 ***Cost of Revenue***

  ****

Our cost of revenue consists of food ingredient costs, packing costs, workforce related costs, overhead costs such as store rental and utilities for food production and processing, depreciation, and amortization. Our overall cost of revenue increased by $2,595,694, or 50.3%, from $5,164,178 for the year ended December 31, 2020 to $7,759,872 for the year ended December 31, 2021. The increase was attributable to the increase in the cost of revenue from both the stores in China and the U.S., as discussed below.

The following table sets forth the breakdown of our cost of revenue for the years ended December 31, 2021 and 2020, respectively:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **Variance** | **Variance** |
|  | **2021** | **%** | **2020** | **%** | **Amount** | **%** |
| **China** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Bakery products | $6144101 | 79.3% | $4147151 | 80.3% | $1996950 | 48.2% |
| &nbsp;&nbsp;&nbsp;Other products | 438361 | 5.6% | 263137 | 5.1% | 175224 | 66.6% |
| &nbsp;&nbsp;&nbsp;Subtotal: cost of revenue from China | 6582462 | 84.9% | 4410288 | 85.4% | 2172174 | 49.3% |
| **United States** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Bakery products | 305228 | 3.9% | 324636 | 6.3% | (19408) | (6.0)% |
| &nbsp;&nbsp;&nbsp;Beverage products | 528827 | 6.8% | 129227 | 2.5% | 399600 | 309.2% |
| &nbsp;&nbsp;&nbsp;Eat-in services | 343355 | 4.4% | 300027 | 5.8% | 43328 | 14.4% |
| &nbsp;&nbsp;&nbsp;Subtotal: cost of revenue from the United States | 1177410 | 15.1% | 753890 | 14.6% | 423520 | 56.2% |
| **Total Cost of Revenue** | $**7759872** | **100.0%** | $**5164178** | **100.0%** | $**2595694** | **50.3%** |

---

 *<u>China</u>*

Cost of revenue from China increased by $2,172,174, or 49.3%, from $4,410,288 for the year ended December 31, 2020 to $6,582,462 for the year ended December 31, 2021. The increase was due to increased cost of revenue of bakery products and other products, as discussed below.

Cost of revenue from sales of bakery products increased by $1,996,950, or 48.2%, from $4,147,151 for the year ended December 31, 2020 to $6,144,101 for the year ended December 31, 2021 due to the increase in sales of bakery products. The percentage of increase in cost of revenue was more than that in revenue during the same period, due to increased prices of imported raw materials, such as butter and cream, and increased cost of fruit cakes made with fresh fruit instead of canned fruit. Meanwhile, the increase was attributable to the increased promotion activities and price discounts given to customers of the PRC Stores as mentioned above.

Cost of revenue from other products increased by $175,224, or 66.6%, from $263,137 for the year ended December 31, 2020 to $438,361 for the year ended December 31, 2021. The cost of revenue from seasonal products increased by $181,478, or 91.8%, from $197,735 for the year ended December 31, 2020 to $379,213 for the year ended December 31, 2021 due to the increase in sales of seasonal products. The percentage of increase in cost of revenue of seasonal products was more than that in revenue during the same period, due to the increased promotion activities and price discounts given to customers of the PRC Stores, and the increased packing cost as a result of updated packaging of seasonal products. The cost of revenue from beverage products decreased by $6,254, or 9.6%, from $65,402 for the year ended December 31, 2020 to $59,148 for the year ended December 31, 2021 due to the decrease in sales of beverage products. The decrease in cost of revenue from beverage products was in line with the decrease in the revenue from beverage products in the PRC Stores.

 

 *<u>United States</u>*

Cost of revenue from the U.S. increased by $423,520, or 56.2%, from $753,890 for the year ended December 31, 2020 to $1,177,410 for the year ended December 31, 2021. The increase was due to the increased cost of revenue from beverage products and eat-in services, which was partially offset by the deceased cost of revenue from bakery products as discussed below.

Cost of revenue from sales of bakery products decreased by $19,408, or 6.0%, from $324,636 for the year ended December 31, 2020 to $305,228 for the year ended December 31, 2021. The percentage of decrease in cost of revenue was less than that in revenue during the same period, mainly due to the increased cost of ingredient materials and inventory spoilage, as discussed in "—Gross Profit and Gross Margin" below in more details.

Cost of revenue from sales of beverage products increased by $399,600, or 309.2%, from $129,227 for the year ended December 31, 2020 to $528,827 for the year ended December 31, 2021 due to the increase in sales of new cocktail products. The percentage of increase in cost of revenue was less than that in revenue during the same period, due to the increased sale of new cocktail products that have higher gross margin.

The cost of revenue from eat-in services increased by $43,328, or 14.4%, from $300,027 for the year ended December 31, 2020 to $343,355 for the year ended December 31, 2021. The increase was mainly attributable to the increased cost of ingredient materials and inventory spoilage, and the increased wage costs as a result of Chanson Greenwich's trial operation in December 2021 as discussed in "—Gross Profit and Gross Margin" below in more details.

 ***Gross Profit and Gross Margin***

  ****

Our gross profit increased by $1,781,089, or 34.6%, from $5,149,334 for the year ended December 31, 2020 to $6,930,423 for the year ended December 31, 2021. The increase was mainly attributable to the overall increase in revenue. Our gross margin decreased by 2.7 percentage points from 49.9% for the year ended December 31, 2020 to 47.2% for the year ended December 31, 2021.

The following table sets forth the breakdown of our gross profit for the years ended December 31, 2021 and 2020, respectively:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **Variance** | **Variance** |
|  | **2021** | **Margin %** | **2020** | **Margin %** | **Amount** | **%** |
| **China** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Bakery products | $5550817 | 47.5% | $4098204 | 49.7% | $1452613 | 35.4% |
| &nbsp;&nbsp;&nbsp;Other products | 662810 | 60.2% | 465251 | 63.9% | 197559 | 42.5% |
| &nbsp;&nbsp;&nbsp;Subtotal: gross margin and margin % from China | 6213627 | 48.6% | 4563455 | 50.9% | 1650172 | 36.2% |
| **United States** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Bakery products | 168686 | 35.6% | 272436 | 45.6% | (103750) | (38.1)% |
| &nbsp;&nbsp;&nbsp;Beverage products | 471212 | 47.1% | 104709 | 44.8% | 366503 | 350.0% |
| &nbsp;&nbsp;&nbsp;Eat-in services | 76898 | 18.3% | 208734 | 41.0% | (131836) | (63.2)% |
| &nbsp;&nbsp;&nbsp;Subtotal: gross margin and margin % from the United States | 716796 | 37.8% | 585879 | 43.7% | 130917 | 22.3% |
| **Total Gross Margin and Margin %** | $**6930423** | **47.2%** | $**5149334** | **49.9%** | $**1781089** | **34.6%** |

---

 *<u>China</u>*

Gross profit from China increased by $1,650,172, or 36.2%, from $4,563,455 for the year ended December 31, 2020 to $6,213,627 for the year ended December 31, 2021. The increase was mainly attributable to the overall increase in sales. The gross margin decreased by 2.3 percentage points from 50.9% for the year ended December 31, 2020 to 48.6% for the year ended December 31, 2021.

The gross profit of bakery products increased by $1,452,613, or 35.4%, from $4,098,204 for the year ended December 31, 2020 to $5,550,817 for the year ended December 31, 2021, and the gross margin of bakery products decreased by 2.2 percentage points from 49.7% for the year ended December 31, 2020 to 47.5% for the year ended December 31, 2021. As mentioned above, the PRC Stores improved ingredients of fruit cakes by using fresh fruit instead of canned fruit, and high-quality and expensive strawberries instead of kiwi, which made their products taste better. Therefore, their product costs increased slightly in 2021, while the prices were not able to catch up at the same time. Meanwhile, since the start of fiscal year 2021, the PRC Stores have focused more on increasing their market share and there have been increased promotion activities and price discounts given to their customers. Hence, the gross margin of bakery products slightly decreased during the year ended December 31, 2021 as compared to the same period of last year.

The gross profit of other products increased by $197,559, or 42.5%, from $465,251 for the year ended December 31, 2020 to $662,810 for the year ended December 31, 2021, and the gross margin decreased by 3.7 percentage points from 63.9% for the year ended December 31, 2020 to 60.2% for the year ended December 31, 2021. The decrease in gross margin was mainly due to a decrease in gross margin of seasonal products by 5.6 percentage points from 66.4% for the year ended December 31, 2020 to 60.8% for the year ended December 31, 2021. The decrease was mainly due to the increased promotion activities and price discounts given to existing and new customers of the PRC Stores, and the increased packing cost as a result of the updated packaging of seasonal products. Meanwhile, the gross margin of beverage products increased by 2.5 percentage points from 53.2% for the year ended December 31, 2020 to 55.7% for the year ended December 31, 2021. The increase was mainly due to termination of beverage sales in bakery stores with relatively low profitability.

 *<u>United States</u>*

Gross profit from the U.S. increased by $130,917, or 22.3%, from $585,879 for the year ended December 31, 2020 to $716,796 for the year ended December 31, 2021. The increase was mainly attributable to the overall increase in revenue. The gross margin decreased by 5.9 percentage points from 43.7% for the year ended December 31, 2020 to 37.8% for the year ended December 31, 2021.

The gross profit of bakery products decreased by $103,750, or 38.1%, from $272,436 for the year ended December 31, 2020 to $168,686 for the year ended December 31, 2021, and the gross margin of bakery products decreased by 10.0 percentage points from 45.6% for the year ended December 31, 2020 to 35.6% for the year ended December 31, 2021. During the year ended December 31, 2021, the cost of some of the U.S. Stores' main ingredient materials increased by around 30% as a result of shortage in supply due to the impact of COVID-19 pandemic. Meanwhile, the U.S. Stores incurred higher inventory spoilage as the customer demand of their products was harder to estimate, which resulted in excess raw materials and bakery products that were spoiled due to their short storage life.

The gross profit of beverage products increased by $366,503, or 350.0%, from $104,709 for the year ended December 31, 2020 to $471,212 for the year ended December 31, 2021, and the gross margin of beverage products increased by 2.3 percentage points from 44.8% for the year ended December 31, 2020 to 47.1% for the year ended December 31, 2021. The slight increase in gross margin was mainly due to the increased revenue in our new cocktail products that have higher gross margin. The increase was partially offset by the bottled wine damage of approximately $38,500 by accident during the year ended December 31, 2021.

The gross profit of eat-in services decreased by $131,836, or 63.2%, from $208,734 for the year ended December 31, 2020 to $76,898 for the year ended December 31, 2021, and the gross margin of eat-in services decreased by 22.7 percentage points from 41.0% for the year ended December 31, 2020 to 18.3% for the year ended December 31, 2021. The decrease was mainly attributable to the increased cost of ingredient materials and inventory spoilage during the year ended December 31, 2021 as mentioned above.

 ***Operating Expenses***

The following table sets forth the breakdown of our operating expenses for the years ended December 31, 2021 and 2020.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** |
|  | **2021** | **2021** | **2020** | **2020** | **Variance** | **Variance** |
|  | **Amount** | **% of revenue** | **Amount** | **% of revenue** | **Amount** | **%** |
| **Total revenue** | $14690295 | 100.0% | $10313512 | 100.0% | $4376783 | 42.4% |
| **Total operating expenses:** |  |  |  |  |  |  |
| Selling expenses | 4126126 | 28.1% | 2947088 | 28.6% | 1179038 | 40.0% |
| General and administrative expenses | 3249181 | 22.1% | 2230893 | 21.6% | 1018288 | 45.6% |
| Total operating expenses | $7375307 | 50.2% | $5177981 | 50.2% | $2197326 | 42.4% |

---

 *<u>Selling Expenses</u>*

Our selling expenses primarily include payroll and sales commission expenses paid to our sales and marketing personnel, store operating expenses, store rental, store decoration and maintenance expenses, utility expenses, and other expenses related to sales activities. Selling expenses increased by $1,179,038, or 40.0%, from $2,947,088 for the year ended December 31, 2020 to $4,126,126 for the year ended December 31, 2021. The increase in selling expenses was primarily due to the increase in salary and social security expenses of $472,729. During the PRC Stores' store closure periods in China in the year ended December 31, 2020, little sales commissions were generated, and the PRC Stores paid their employees base salaries to satisfy their basic living expenditure needs. In addition, the PRC Stores were exempted from paying work-related injury insurance, endowment insurance, and unemployment insurance for their employees between February 2020 and December 2020, a measurement taken by the Chinese government to support the economy during the pandemic. These expenses increased as the PRC Stores resumed paying full salary and social security during the year ended December 31, 2021. The increase in selling expenses was also due to an increase in rental expenses of $380,815 as we had more stores and received less lease concessions from our landlords during the year ended December 31, 2021 as compared to the year ended December 31, 2020. During the years ended December 31, 2021 and 2020, we received rent concessions of $141,499 and $598,990, respectively. In addition, the PRC Stores' business operation gradually recovered from the pandemic during the year ended December 31, 2021, which resulted in an increase in utility expenses of $32,934, property management fees of $35,396, and handling fees of $43,636 paid to the take-out platforms. Meanwhile, the increase in selling expenses was also attributable to Chanson Greenwich's trial operation in December 2021 with selling expenses of $121,029 incurred. Our selling expenses accounted for 28.1% and 28.6% of our revenue for the years ended December 31, 2021 and 2020, respectively.

 ****

 *<u>General and Administrative Expenses</u>*

Our general and administrative expenses primarily consist of administrative employee salaries, welfare and insurance expenses, depreciation, and professional service expenses. General and administrative expenses increased by $1,018,288, or 45.6%, from $2,230,893 for the year ended December 31, 2020 to $3,249,181 for the year ended December 31, 2021, primarily due to an increase in salaries by $520,768, as we paid full salary and social security during the year ended December 31, 2021. The increase was also due to the increased rental expenses of $234,152 as well as $185,079 professional service, maintenance, and other miscellaneous expenses incurred during the renovation period of our new store, Chanson Greenwich in the U.S. during the year ended December 31, 2021. Our general and administrative expenses accounted for 22.1% and 21.6% of our revenue for the years ended December 31, 2021 and 2020, respectively.

 ****

 ***Other Income (Expenses), Net***

Our other income (expenses), net primarily consists of interest expenses on our short-term bank loans, gain or loss from disposal of fixed assets, and government subsidies. Other income, net increased by $1,088,728, or 901.3%, from other expenses, net of $120,798 for the year ended December 31, 2020 to other income, net of $967,930 for the year ended December 31, 2021. The increase was mainly due to the funding of $531,992 Chanson 23rd Street received from the SBA under the SBA Restaurant Revitalization Fund program and the forgiveness of two loans totaling $502,298 under the SBA Paycheck Protection Program. We filed applications for forgiveness of the loans' principal and interests, and the applications were approved by the bank and the SBA in May 2021 and November 2021, respectively.

 ***Provision for Income Taxes***

Our provision for income taxes was $16,277 and $14,584 for the years ended December 31, 2021 and 2020, respectively. Under the EIT Law, domestic enterprises and foreign investment enterprises are usually subject to a unified 25% EIT rate while preferential tax rates, tax holidays, or exemptions may be granted on a case-by-case basis.

Xinjiang United Family and its three branch offices were incorporated in the PRC. During the years ended December 31, 2021 and 2020, Xinjiang United Family and all its three branch offices qualified as small-scaled minimal profit enterprises. Based on the EIT Law, from January 1, 2019 to December 31, 2021, the portion of its taxable income not more than RMB1 million is subject to a reduced rate of 5% and the portion above RMB1 million was subject to a reduced rate of 10%. According to the Announcement on Implementing the Preferential Income Tax Policies for Small-Scale Minimal Profit Enterprise and Individually-Owned Businesses on April 2, 2021, the tax rate for the portion of its taxable income not more than RMB1 million is further reduced to 2.5% during the period from January 1, 2021 to December 31, 2022 and the tax rate for the portion above RMB1 million remains at a reduced rate of 10%. Xinjiang United Family and all its three branch offices will continue enjoying the favorable tax rate as long as they are qualified as small-scaled minimal profit enterprises.

The UFG Entities are individually-owned businesses, which are not subject to the EIT Law, but Individual Income Tax. The Measures for Individual Income Tax Calculation of Individual Industrial and Commercial Households, or the "Measures," were adopted by the SAT on December 19, 2014 and promulgated on December 27, 2014, and amended on June 15, 2018. According to Article 7 of the Measures, for the income from production and operation of individually-owned businesses, the amount of taxable income shall be the balance of the total income of each tax year after deducting costs, expenses, taxes, losses and other expenditures, and allowable compensation for losses in previous years. Income tax for an individually-owned business can generally be assessed on an actual basis or a deemed basis, which the UFG Entities apply. Therefore, income tax for the UFG Entities is levied as a fixed-rate income tax at 1% of the deemed Taxable Net Income ("TNI") as assessed by the local tax authority. According to Announcement No. 12 [2021] of the SAT, the tax rate is reduced by half to 0.5% during the period from January 1, 2021 to December 31, 2022. For the year ended December 31, 2021, 13 of these UFG entities were subject to income tax assessed at 0.5% of TNI that ranged from RMB25,000 to RMB180,000 per month. For the year ended December 31, 2020, 11 of these UFG Entities were subject to income tax assessed at 1% of TNI that ranged from RMB33,000 to RMB120,000 per month. The rest of these UFG Entities were exempted from paying income tax. As of December 31, 2021, the tax years ended December 31, 2017 through December 31, 2021 for our UFG Entities remained open for statutory examination by PRC tax authorities. In addition, the TNI and tax rate of our UFG Entities are subject to periodical reassessment by the local tax authority. If the local tax authority determined that income tax for the UFG Entities should be levied at a higher TNI or higher tax rate, the UFG Entities would be obligated to pay additional income tax. Along with the continuing growth of business, we expect that the tax rates of these UFG Entities are likely to increase in the future in the annual assessment by the local tax authority based on past performance. If these UFG Entities change their forms of organization from individually-owned businesses to other corporate forms (such as limited liability company) as a result of their business development requirement, they will no longer enjoy the favorable tax rates and will be subject to the EIT Law, though we currently do not expect their forms of organization to change in the foreseeable future.

For the years ended December 31, 2021 and 2020, tax savings as the result of the favorable tax rates and tax exemptions amounted to $494,744 and $358,406, respectively, and the per share effect of the favorable tax rate and tax exemptions was $0.05 and $0.04, respectively.

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 ***Net Income (Loss)***

As a result of the foregoing, we reported net income of $506,769 for the year ended December 31, 2021 as compared to a net loss of $164,029 for the year ended December 31, 2020.

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**Liquidity and Capital Resources**

To date, we have financed our operations primarily through cash flow from operations, bank loans, and shareholder working capital funding, when necessary. We plan to support our future operations primarily from cash flows provided by operating activities.

As of June 30, 2022, we had $393,384 in cash and cash equivalents as compared to $3,896,812 as of December 31, 2021. As of June 30, 2022, we also had $1,985,736 accounts receivable balance, approximately 74.6%, or $1.5 million, of which has been subsequently collected. The remaining balance is expected to be collected before June 30, 2023. The collection of such receivables made cash available for use in our operations as working capital, if necessary.

As of December 31, 2021, we had $3,896,812 in cash and cash equivalents as compared to $4,098,546 as of December 31, 2020. As of December 31, 2021, we also had $1,134,532 accounts receivable balance, approximately 81.8%, or $0.93 million, of which has been subsequently collected. The remaining balance is expected to be collected before December 31, 2022. The collection of such receivables made cash available for use in our operations as working capital, if necessary.

As of December 31, 2021, we had approximately $1.6 million in a short-term bank loan, and the loan was subsequently repaid upon maturity.

On June 30, 2021, Xinjiang United Family entered into a 10-year lease agreement for approximately 54,638 square feet of building space, where it constructed a new central factory, to expand the production capacity. The investment budget for the new central factory is approximately RMB18.0 million (approximately $2.7 million) after VAT deduction. There are two stages for the construction. The first stage includes: 1) construction and renovation that cost approximately RMB13.0 million (approximately $1.9 million); 2) installation of production equipment of approximately RMB1.4 million (approximately $0.2 million); and 3) miscellaneous projects of approximately RMB1.1 million (approximately $0.2 million). The first stage of the construction was completed in June 2022, and passed inspection in July 2022, and the new central factory started the production in early August 2022. The second stage includes the construction of two new production lines of approximately RMB2.5 million (approximately $0.4 million), which is expected to start in fiscal year 2023 and complete in late 2023. As of June 30, 2022, our contractual obligation under the central factory construction was approximately RMB4.1 million (approximately $0.6 million). As of June 30, 2022, we had spent approximately RMB11.4 million (approximately $1.7 million), and from July 2022 to the date of this prospectus, the subsequent payment was nil due to the 2022 Outbreak, and the future minimum expenditure is estimated to be RMB6.6 million (approximately $1 million). We plan to use cash flow from the operations of the PRC Stores to fund the future construction. Our payment made and future payment schedule under the central factory construction project are as follows:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Payment made in** | **Payment made in** | **Future payment** | **Future payment** | **Future payment** | |
|  | **Fiscal year<br> 2021** | **First half of 2022** | **Remainder of<br> 2022** | **Fiscal year<br> 2023** | **Fiscal year<br> 2024** |<br> **Total** |
| **Contracts signed in fiscal year 2021:** | | | | | | |
| Construction and renovation cost | $740686 | $460453 | $543503 | $3695 | $51363 | $1799700 |
| Other expenses related to construction | 95134 | - | - | - | - | 95134 |
| **Subtotal:** | 835820 | 460453 | 543503 | 3695 | 51363 | 1894834 |
| **Contracts signed in fiscal year 2022:** |  |  |  |  |  |  |
| Construction and renovation cost |  | 125934 | 12653 | 2531 |  | 141118 |
| Other expenses related to construction |  | 63971 |  |  |  | 63971 |
| Purchase of production equipment | - | 210067 | - | - | - | 210067 |
| **Subtotal:** |  | 399972 | 12653 | 2531 |  | 415156 |
| **Contracts expected to be signed in fiscal year 2023:** |  |  |  |  |  |  |
| Two production lines construction | - | - | - | 373240 | - | 373240 |
| **Subtotal:** | - | - | - | 373240 | - | 373240 |
| **Total** | $835820 | $860425 | $556156 | $379466 | $51363 | $2683230 |

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Currently, we plan to open two bakery stores in New York City, Chanson 3rd Ave and Chanson Broadway, with a total budget of approximately $1.0 million. Chanson 3rd Ave is currently preparing for the opening in late March 2023. The renovation of Chanson Broadway was delayed and the store is expected to be open in April 2023. We plan to support the remaining renovation using our cash on hand and cash flows from operations. We also intend to open eight additional new stores in the U.S. by fiscal year of 2026, and the expected expenses related to opening these stores are approximately $3.5 million. We plan to use our cash on hand, cash flows from operations, and the net proceeds we receive from this offering, if successful, to open the new stores in the U.S. Meanwhile, we currently plan to open two bakery stores in the PRC with a total budget of approximately RMB1.0 million (approximately $0.1 million). We plan to use our cash on hand and cash flows from operations to fund the new stores.

As of June 30, 2022, we had a negative working capital of approximately $5.8 million, including deferred revenue of approximately $6.8 million, which was reported as current liability, but will not require cash payment in the future. We expect to spend about $2.7 million when we produce and sell the products and realize the deferred revenue. As of December 31, 2021, we had a negative working capital of approximately $5.6 million, including deferred revenue of approximately $6.1 million, which was reported as current liability. We expect to spend about $2.4 million when we produce and sell the products and realize the deferred revenue.

In assessing our liquidity, our management monitors and analyzes our cash on hand, our ability to generate sufficient revenue sources in the future, and our operating and capital expenditure commitments. As of June 30, 2022, we only had cash of approximately $0.4 million. The future capital expenditure on the central factory construction is expected to be approximately $0.6 million and $0.4 million in the remainder of fiscal year 2022 and in fiscal year 2023, respectively. However, on December 23, 2022, Xinjiang United Family entered into a new loan agreement with Huaxia Bank for a loan of approximately $0.4 million (RMB3.0 million) with one-year maturity. We believe that we would be able to make additional borrowings from banks based on past experience and our good credit history when necessary. Due to the impact from the 2022 Outbreak, our revenue was negatively impacted and is expected to decrease slightly in fiscal year 2022 as compared to fiscal year 2021. We expect to incur a net loss in fiscal year 2022. However, all of the PRC stores resumed their normal business activities on December 10, 2022 and are expected to gradually recover from the 2022 Outbreak, and we expect to open three stores in PRC in fiscal year 2023 and two stores in U.S. in late March 2023 and April 2023. In addition, we will further implement initiatives to control costs and improve our operating efficiency in fiscal year 2023. Therefore, revenue and net income are expected to increase significantly in fiscal year 2023 as compared to fiscal year 2022. Furthermore, our controlling shareholder, Mr. Gang Li, has made pledges to provide continuous financial support to our Company for at least 12 months from the issuance of our unaudited consolidated financial statements as of and for the six months ended June 30, 2022. We believe our cash and cash equivalents on hand, our operating cash flows, the available bank facilities and the continuous support from our shareholder will be sufficient to meet our working capital needs over the next 12 months. However, if we were to experience an adverse operating environment, including adverse developments in the ongoing COVID-19 pandemic, or incur unanticipated capital expenditures, or if we decide to accelerate our growth, then additional financing may be required. Our capital expenditures, including development costs related to the opening or acquisition of additional bakery stores and facilities, maintenance and renovation expenditures, and other capital needs such as other infrastructure to support ongoing operational initiatives have been and will continue to be significant. Additional financing, if required, might not be available at all or on favorable terms. Such financing may include the use of additional debt or the sale of additional equity securities. Any financing which involves the sale of equity securities or instruments that are convertible into equity securities could result in immediate and possibly significant dilution to our existing shareholders.

In the coming years, we will be looking to other sources, such as equity financing, to meet our cash needs. While facing uncertainties in regards to the size and timing of capital to be raised, we are confident that we can continue to meet operational needs mainly by utilizing cash flows generated from our operating activities and shareholder working capital funding, as necessary.

Currently, our main operations are conducted in China and a large portion of our revenue, expenses, cash, and cash equivalents are denominated in RMB. Our holding company, however, may need dividends and other distributions on equity from our PRC subsidiary and the VIEs to satisfy its liquidity requirements. Although dividends may be freely remitted in or out of China in RMB or foreign currency according to the PRC regulations, our PRC subsidiary and the VIEs are restricted in their ability to transfer a portion of their net assets, equivalent to their reserves and their share capital, to the holding company in the form of loans, advances, or cash dividends. See "Risk Factors—Risks Relating to Doing Business in the PRC—Our PRC subsidiary is subject to restrictions on paying dividends or making other payments to us, which may have a material adverse effect on our ability to conduct our business." As of June 30, 2022, the total restricted net assets equivalent amounted to $1,325,631. As of December 31, 2021 and 2020, the total restricted net assets equivalent amounted to $1,325,631 and $1,325,631, respectively.

The following table sets forth summary of our cash flows for the periods indicated:

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| | | |
|:---|:---|:---|
|  | **For the Six Months Ended June 30,** | **For the Six Months Ended June 30,** |
|  | **2022** | **2021** |
| Net cash provided by (used in) operating activities | $(359946) | $780626 |
| Net cash used in investing activities | (566439) | (2180507) |
| Net cash used in financing activities | (2196811) | (51672) |
| Effect of exchange rate change on cash | (380232) | 76621 |
| Net decrease in cash and cash equivalents, and restricted cash | (3503428) | (1374932) |
| Cash and cash equivalents, and restricted cash at beginning of period | 3896812 | 4121068 |
| Cash and cash equivalents, and restricted cash at end of period | $393384 | $2746136 |

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| | | |
|:---|:---|:---|
|  | **For the Years Ended<br> December 31,** | **For the Years Ended<br> December 31,** |
|  | **2021** | **2020** |
| Net cash provided by operating activities | $1778246 | $1245677 |
| Net cash used in investing activities | (2030921) | (574333) |
| Net cash used in financing activities | (178240) | (849379) |
| Effect of exchange rate change on cash | 206659 | 413812 |
| Net increase (decrease) in cash and cash equivalents, and restricted cash | (224256) | 235777 |
| Cash and cash equivalents, and restricted cash at beginning of year | 4121068 | 3885291 |
| Cash and cash equivalents, and restricted cash at end of year | $3896812 | $4121068 |

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***Operating Activities***

Net cash used in operating activities was $359,946 for the six months ended June 30, 2022, mainly derived from net income of $220,793 for the period, and net changes in our operating assets and liabilities, which mainly included (i) an increase in accounts receivable of $936,744 due to the increase in sales; (ii) an increase in prepaid expenses and other current assets of $552,985 as a result of the increased short-term security deposits paid to landlords for the Company's PRC new stores; and (iii) an increase in deferred revenue of $1,078,976 due to the growing prepaid membership cards sales during the six months ended June 30, 2022.

Net cash provided by operating activities was $780,626 for the six months ended June 30, 2021, mainly derived from net income of $422,685 for the period, and net changes in our operating assets and liabilities, which mainly included an increase in deferred revenue of $1,286,647 due to the growing prepaid membership cards sales, and an increase in account receivables of $954,666 due to higher sales to corporate customers during the six months ended June 30, 2021.

Net cash provided by operating activities was $1,778,246 for the year ended December 31, 2021, mainly derived from net income of $506,769 for the year, and net changes in our operating assets and liabilities, which mainly included an increase in deferred revenue of $1,252,776 due to the growing prepaid membership cards sales during the year ended December 31, 2021.

Net cash provided by operating activities was $1,245,677 for the year ended December 31, 2020, mainly derived from a net loss of $164,029 for the year, and net changes in our operating assets and liabilities, which mainly included an increase in deferred revenue of $964,663, primarily due to increased membership cards sales. Amounts loaded onto our membership cards are initially recorded at deferred revenue, and recognized as revenue upon redemption, at which point, we also reduce the deferred revenue liability. Trade payable increased by $181,852 due to higher outstanding payments to our suppliers.

 

 

***Investing Activities***

Net cash used in investing activities amounted to $566,439 for the six months ended June 30, 2022, due to purchases of property and equipment and leasehold improvement for the new stores, and payment for construction in progress.

Net cash used in investing activities amounted to $2,180,507 for the six months ended June 30, 2021 due to payment made for a loan to a third party. On June 20, 2021, we entered into a short-term loan agreement with Urumqi Xinhe Agricultural Trade Wholesale Market Company Limited, in an amount of RMB10 million (equivalent to $1,548,491) for working capital for four months, with a maturity date of October 31, 2021. The loan bore a fixed annual interest rate of 8.0%. The loan has been fully collected as of the date of this prospectus. The increase in cash used in investing activities was also due to purchases of property and equipment and leasehold improvement of $635,318 for the new stores.

Net cash used in investing activities amounted to $2,030,921 for the year ended December 31, 2021, due to purchases of property and equipment and leasehold improvement for the new stores, and payment for construction in progress.

Net cash used in investing activities amounted to $574,333 for the year ended December 31, 2020 due to purchases of property and equipment and leasehold improvement for the new stores.

***Financing Activities***

Net cash used in financing activities was $2,196,811 for the six months ended June 30, 2022, which primarily consisted of repayments of short-term bank loans of $1,530,987 and repayment of funds provided by a shareholder of $665,824.

Net cash used in financing activities was $51,672 for the six months ended June 30, 2021, which primarily consisted of repayments of short-term bank loans of $2,337,645 and was partially offset by proceeds from short-term bank loans of $1,896,887 and proceeds from short-term bank loans of $293,007.

Net cash used in financing activities was $178,240 for the year ended December 31, 2021, which primarily consisted of repayments of short-term bank loans of $2,683,814 and was partially offset by proceeds from short-term bank loans of $1,903,563 and funds provided by a shareholder of $572,712.

Net cash used in financing activities was $849,379 for the year ended December 31, 2020, which primarily consisted of repayments of short-term bank loans of $2,168,388 and repayment of a shareholder loan of $791,036 and was partially offset by proceeds from short-term bank loans of $2,175,000.

**Contractual obligations**

As of June 30, 2022, our contractual obligations were as follows:

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **Contractual obligations** | **Total** | **Less than<br> 1 year** | **1-2 years** | **2-3 years** | **3-4 years** | **4-5 years** | **Thereafter** |
|  Future lease payments (1) | 18607918 | 1005201 | 2269116 | 2196332 | 1926583 | 1792486 | 9418200 |
|  Central factory construction (2) | 613745 | 556156 | 6226 | 51363 | - | - | - |
| Total | $19221663 | $1561357 | $2275342 | $2247695 | $1926583 | $1792486 | $9418200 |

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(1) We lease
 office spaces, bakery stores facilities, and employee dormitories, which are classified as operating leases in accordance with ASC
 Topic 842. As of June 30, 2022, our future lease payments totaled $18,607,918.

(2) Payment
 for central factory construction work: as of June 30, 2022, our contractual obligation to pay for central factory construction totaled
 $613,745, as discussed in "—Liquidity and Capital Resources" above mentioned in more details.

As of December 31, 2021, our contractual obligations were as follows:

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **Contractual obligations** | **Total** | **Less than <br> 1 year** | **1-2 years** | **2-3 years** | **3-4 years** | **4-5 years** | **Thereafter** |
| Short-term bank loan (1) | $1559314 | $1559314 | $- | $- | $- | $- | $- |
| Future lease payments (2) | 13732856 | 2144068 | 1827950 | 1680355 | 1431158 | 1291244 | 5358081 |
| Central factory construction (3) | 1115067 | 1057094 | 3891 | 54082 | - | - | - |
| Total | $16407237 | $4760476 | $1831841 | $1734437 | $1431158 | $1291244 | $5358081 |

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&nbsp;&nbsp;&nbsp;&nbsp;(1) Repayment
 of a short-term bank loan: as of December 31, 2021, our contractual obligation to repay outstanding
 short-term bank loans totaled $1,559,314 and related to the following bank loans: On
May 31, 2021, Xinjiang United Family entered into a new loan agreement with Huaxia Bank to borrow RMB10 million ($1,559,314) as working
capital for a year, with a maturity date of May 31, 2022. The loan bears a fixed interest rate of 5.54%. The loan is guaranteed by Ms.
Baolin Wang, the legal representative of Xinjiang United Family, and Xinjiang Financing Guaranty Co., Ltd. ("XJ Financing Guaranty").
In order for XJ Financing Guaranty to endorse the guarantee with the bank, our controlling shareholder, Mr. Gang Li, and his wife, Ms.
Ying Xiong, jointly signed a personal guarantee agreement with XJ Financing Guaranty and pledged their residential property as collateral
to XJ Financing Guaranty. In addition, Xinjiang United Family pledged all its equipment in PRC as collateral to XJ Financing Guaranty.
Three affiliated entities controlled by Mr. Gang Li also signed guarantee agreements with XJ Financing Guaranty. The loan was subsequently
repaid in full upon maturity.

&nbsp;&nbsp;&nbsp;&nbsp;(2) We
 lease office spaces, bakery stores facilities, and employee dormitories, which are classified
 as operating leases in accordance with ASC Topic 842. As of December 31, 2021, our future
 lease payments totaled $13,732,856.

&nbsp;&nbsp;&nbsp;&nbsp;(3) Payment
 for central factory construction work: as of December 31, 2021, our contractual obligation to pay for central factory construction
 totaled $1,115,067, as discussed in "—Liquidity and Capital Resources" above mentioned in more details.

**Trend Information** 

Other than as disclosed elsewhere in this registration statement, we are not aware of any trends, uncertainties, demands, commitments, or events that are reasonably likely to have a material effect on our net revenue, income from continuing operations, profitability, liquidity, or capital resources, or that would cause reported financial information not necessarily to be indicative of future operating results or financial condition.

**Off-Balance Sheet Arrangements** 

We did not have any off-balance sheet arrangements as of June 30, 2022 or December 31, 2021.

**Seasonality** 

Bakery products sold by the PRC Stores and the U.S. Stores and eat-in services offered by the U.S. Stores have not experienced obvious seasonal fluctuations in their sales as these products have been commonly consumed on a daily basis by customers. Beverage products sold by the PRC Stores and the U.S. Stores have experienced in the past, and expect to continuously experience in the future, higher retail sales during summer as a result of higher customer demand. Seasonal products sold by the PRC Stores have experienced in the past, and expect to continuously experience in the future, seasonal fluctuations in their retail sales as a result of customers' increased demand for these seasonal products as gifts and for person consumption during holiday seasons. Historically, the PRC Stores generate almost all the retail sales of their seasonal products during the one or two months before Dragon Boat Festival and Mid-Autumn Festival in China, which respectively take place at the end of the second quarter and the beginning of the third quarter of a year.

**<u>Critical Accounting Policies and Estimates</u>**

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated and unaudited condensed financial statements. These financial statements are prepared in accordance with U.S. GAAP, which requires us to make estimates and assumptions that affect the reported amounts of our assets and liabilities and revenue and expenses, to disclose contingent assets and liabilities on the date of the consolidated and unaudited condensed financial statements, and to disclose the reported amounts of revenue and expenses incurred during the financial reporting period. The most significant estimates and assumptions include the valuation of accounts receivable, advances to suppliers, useful lives of property and equipment, the recoverability of long-lived assets, provision necessary for contingent liabilities, and revenue recognition. We continue to evaluate these estimates and assumptions that we believe to be reasonable under the circumstances. We rely on these evaluations as the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from those estimates. Some of our accounting policies require higher degrees of judgment than others in their application. We believe critical accounting policies as disclosed in this prospectus reflect the more significant judgments and estimates used in preparation of our consolidated and unaudited condensed financial statements.

The following critical accounting policies rely upon assumptions and estimates and were used in the preparation of our consolidated and unaudited condensed financial statements:

 **

***Uses of estimates***

 **

In preparing the consolidated and unaudited condensed financial statements in conformity with U.S. GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. These estimates are based on information as of the date of the consolidated and unaudited condensed financial statements. Significant estimates required to be made by management include, but are not limited to, the valuation of accounts receivable, useful lives of property and equipment, the recoverability of long-lived assets, provision necessary for contingent liabilities, and revenue recognition. Actual results could differ from those estimates. ****

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***Accounts receivable, net***

Accounts receivable are recognized and carried at original invoiced amount less an estimated allowance for uncollectible accounts.

We determine the adequacy of reserves for doubtful accounts based on individual account analysis and historical collection trend. We establish a provision for doubtful receivables when there is objective evidence that we may not be able to collect amounts due. The allowance is based on management's best estimate of specific losses on individual exposures, as well as a provision on historical trends of collections. The provision is recorded against accounts receivable balances, with a corresponding charge recorded in the consolidated and unaudited condensed statements of operations and comprehensive income (loss). Actual amounts received may differ from management's estimate of credit worthiness and the economic environment. Delinquent account balances are written-off against the allowance for doubtful accounts after management has determined that the likelihood of collection is not probable. As of June 30, 2022 and December 31, 2021 and 2020, there was no allowance recorded as we consider all of the accounts receivable fully collectible.

***Inventories***

Inventories consist of ingredient materials, finished goods, packing materials and other materials. Inventories are stated at the lower of cost or net realizable value, on a weighted average basis. Costs include the cost of ingredient materials, direct labor, and related production overhead. Any excess of the cost over the net realizable value of each item of inventories is recognized as a provision for diminution in the value of inventories. Net realizable value is the estimated selling price in the normal course of business less any costs to complete and sell products. We periodically evaluate inventories for their net realizable value adjustments, and reduces the carrying value of those inventories that are obsolete or in excess of the forecasted usage to their estimated net realizable value based on various factors including aging and expiration dates, as applicable, taking into consideration historical and expected future product sales. For the six months ended June 30, 2022 and 2021 and the years ended December 31, 2021 and 2020, no inventory reserve was recorded because no slow-moving, obsolete or damaged inventory was identified.

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***Revenue recognition***

We follow Accounting Standards Codification 606, *Revenue from Contracts with Customers* ("ASC 606"), for revenue recognition. ASC 606 establishes principles for reporting information about the nature, amount, timing, and uncertainty of revenue and cash flows arising from an entity's contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized, as performance obligations are satisfied.

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We currently generate our revenue through our bakery/café stores as well as through online sales. We recognize revenue from bakery/café sales upon delivery of the related food and other products to the customer and fulfillment of all performance obligations. Revenue is recognized net of any discounts, sales incentives, sales taxes, and value added taxes that are collected from customers and remitted to tax authorities.

 

The PRC Stores sell membership cards that do not have an expiration date and from which the PRC Stores do not deduct non-usage fees from outstanding card balances. Membership cards are reloadable and redeemable at any of our store locations. Amounts loaded into these cards are initially recorded as deferred revenue. When membership cards are redeemed at stores, the PRC Stores recognize revenue and reduce the deferred revenue. While the PRC Stores continue to honor all membership cards presented for payments, management determines the likelihood of redemption to be remote for certain cards with long periods of inactivity ("breakage"), which is five years after the last usage based upon our historical redemption patterns. Membership card breakage is recorded as revenue in the consolidated and unaudited condensed statements of operations and comprehensive income (loss). Membership card breakage was immaterial for the six months ended June 30, 2022 and 2021 and the years ended December 31, 2021 and 2020.

The PRC Stores maintain a customer loyalty program in which customers earn free cash vouchers when purchasing or reloading membership cards at certain amount. These cash vouchers typically do not expire, except for certain vouchers given out at special occasions, which usually state an expiration date and can only be exchanged for certain seasonal products or specialty cakes. We establish corresponding liabilities in deferred revenue for the membership cards and the free cash vouchers upon issuance. We allocate the consideration received proportionately between the membership cards and cash vouchers based on their face values. Revenue is recognized at the allocated amount upon redemption of membership cards and cash vouchers, at which point the PRC Stores deliver products to customers and reduce the deferred revenue. Unredeemed cash vouchers will be recognized as revenue upon their expiration dates, if any, or five years after their issuance if there are no stated expiration dates, when management determines the likelihood of redemption to be remote.

*Contract balances and remaining performance obligations*

Contract balances typically arise when a difference in timing between the transfer of control to the customer and receipt of consideration occurs. We did not have contract assets as of June 30, 2022 and December 31, 2021 and 2020. Our contract liabilities, which are reflected in our consolidated balance sheets as deferred revenue of $6,051,683 and $4,657,000 as of December 31, 2021 and 2020, respectively, and in our unaudited condensed consolidated balance sheets as deferred revenue of $6,791,175 as of June 30, 2022 consist primarily of customer payments for the membership cards and the fair value of the cash vouchers under our customer loyalty programs. These amounts represent our unsatisfied performance obligations as of the balance sheet dates. The amount of revenue recognized in the years ended December 31, 2021 and 2020 that was included in the opening deferred revenue was $4,823,134 and $2,936,748, respectively. As of December 31, 2021, the aggregate amount of unredeemed membership cards and cash vouchers was $6,051,683. The amount of revenue recognized in the six months ended June 30, 2022 and 2021 that was included in the opening deferred revenue was $3,899,040 and $3,347,088, respectively. As of June 30, 2022, the aggregate amount of unredeemed membership cards and cash vouchers was $6,791,175. We will recognize revenue when customers redeem the membership cards or cash vouchers for in-store purchases. Based on our historical experience, a significant portion of the redemption is expected to occur during the first two years after June 30, 2022 and the remaining between the third and fifth year.

 

 

***Income taxes***

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We account for current income taxes in accordance with the laws of the relevant tax authorities. Deferred income taxes are recognized when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the consolidated and unaudited condensed financial statements. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

An uncertain tax position is recognized as a benefit only if it is "more likely than not" that the tax position would be sustained in a tax examination. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the "more likely than not" test, no tax benefit is recorded. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. No penalties or interest relating to income taxes were incurred during the six months ended June 30, 2022 and 2021 and the years ended December 31, 2021 and 2020. We do not believe there was any uncertain tax provision at June 30, 2022 and December 31, 2021 and 2020.

Our operating subsidiary in China is subject to the income tax laws of the PRC. Our operating subsidiaries in the U.S. are subject to the tax law of the U.S. As of December 31, 2021, the tax years ended December 31, 2017 through December 31, 2021 for our PRC subsidiary remain open for statutory examination by PRC tax authorities, and the tax years ended December 31, 2019 through December 31, 2021 for our U.S. subsidiaries remain open for statutory examination by U.S. tax authorities. As of June 30, 2022, the tax years ended December 31, 2017 through December 31, 2021 for our PRC subsidiary remained open for statutory examination by PRC tax authorities, and the tax years ended December 31, 2019 through December 31, 2021 for our U.S. subsidiaries remained open for statutory examination by U.S. tax authorities.

 ***Recent accounting pronouncements***

In December 2019, the FASB issued ASU No. 2019-12, *Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes*, as part of its initiative to reduce complexity in accounting standards (the Simplification Initiative). The objective of the Simplification Initiative is to identify, evaluate, and improve areas of U.S. GAAP for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to users of financial statements. The specific areas of potential simplification in this ASU were submitted by stakeholders as part of the Simplification Initiative. For public business entities, the amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. We adopted this ASU on January 1, 2021 and the adoption of this ASU did not have a material impact on our consolidated and unaudited condensed financial statements.

Except for the above-mentioned pronouncements, there are no new recently issued accounting standards that will have material impact on our consolidated and unaudited condensed consolidated financial position, statements of operations, and cash flows.

**INDUSTRY**

*All the information and data presented in this section have been derived from the industry report of Frost & Sullivan (Beijing) Inc., Shanghai Branch Co. ("Frost& Sullivan") commissioned by us in September 2020 entitled "The Xinjiang Province and the United States Bakery Industry Independent Market Research" (the "Frost & Sullivan Report") unless otherwise noted. Frost & Sullivan has advised us that the statistical and graphical information contained herein is drawn from its database and other sources. The following discussion contains projections for future growth, which may not occur at the rates that are projected or at all.*

 

**OVERVIEW OF BAKERY PRODUCTS MANUFACTURING MARKETS IN THE PRC**

**Introduction**

Bakery products are foods made from flour, yeast, salt, and water, together with sugar, oil, milk, eggs, or additives for extra flavor and texture, and cooked in an oven. Bakery products in the PRC include both Western bakery products such as bread, cakes, and biscuits, and traditional Chinese bakery products such as mooncakes, Chinese pancakes, and stuffed pies. As the pace of life becomes faster in the PRC, the demand for bakery products is expected to grow steadily since ready-made bakery products are time saving and convenient to carry.

**Market Size**

Bakery products have become more popular among Chinese consumers. According to the Frost & Sullivan Report, the retail sales value of bakery products in the PRC had increased from approximately $24.30 billion in 2015 to approximately $31.85 billion in 2020, representing a compound annual growth rate ("CAGR") of 5.6%. The rise in retail sales value during the period was mainly due to the rising disposable income, an influx of western pastry, and increasing per capita consumption of bakery products in the PRC. With an optimistic economic outlook highlighted under the Outline of 13<sup>th</sup> Five-Year Plan for the National Economic and Social Development of the PRC by the PRC government and increasing consumption of bakery products among Chinese consumers, the retail sales value of bakery products in the PRC is expected to further increase at a CAGR of 5.7%, reaching approximately $42.34 billion by the end of 2025.

![](image_004.jpg)

*Source: The Frost & Sullivan Report*

*Note: Total Retail Sales Value is converted to USD at RMB/USD of 6.605.*

 

 

According to the Frost & Sullivan Report, from 2015 to 2020, the retail sales value of bakery products in Xinjiang had increased at a CAGR of 7.1% from approximately $0.88 billion to approximately $1.24 billion. The rise in retail sales value during the period was mainly due to the rising disposable income, an influx of western pastry, and increasing per capita consumption of bakery products in the area. It is estimated by Frost & Sullivan that bakery products will become more popular among consumers in Xinjiang and the total consumption of bakery products will further increase, driving the retail sales value of bakery products in Xinjiang to reach approximately $1.70 billion by the end of 2025, representing a CAGR of 6.4%. Such growth in the retail sales value of bakery products will create sufficient room for the industry to develop moderately and market participants may seek opportunities to expand their market presence in Xinjiang in the next few years.

![](image_005.jpg)

*Source: The Frost & Sullivan Report*

*Note: Total retail sales value is converted to USD at RMB/USD of 6.605.*

**Production Analysis**

There are three different production modes for bakery products in the PRC. Most of the bakery product manufacturers produce their products in a central factory and deliver the finished product to chain stores and retail stores for sale. These manufacturers may enjoy lower manufacturing cost but the shelf life of their bakery products is usually shorter (approximately three to five days). Some bakery product manufacturers produce semi-finished products in a central factory and rely on their stores for further processing, such as baking, garnishing, and packaging. The bakery products produced this way are fresher than those delivered from a central factory, since the bakery products are prepared right before being put on the shelf. Lastly, some bakery product manufacturers establish a designated area in their chain stores or retail stores for production in order to offer bakery products with the best quality and freshness. However, as more manpower is needed to produce the same amount of bakery products, the cost of this production model is the highest among three production modes.

**Cost analysis**

 *Labor cost*. According to the National Bureau of Statistics of China, the average annual wage of employed persons in the manufacturing industry in urban areas of the PRC increased from approximately $8,519.9 in 2015 to approximately $12,804.0 in 2020, representing a CAGR of 8.5%, such an increase being mostly attributable to the high demand for labor workers and a rise in the minimum wage level. Besides, driven by the strong economic performance in the PRC, the average annual wage of employed persons in manufacturing industry in urban areas of the PRC is estimated to grow at a CAGR of 1.6 % from 2021 to 2025 and reach approximately $13,841.1 in 2025. On the other hand, the average annual wage of employed persons in the catering service industry in urban areas of the PRC increased at a CAGR of 3.7% from approximately $6,284.1 in 2015 to approximately $7,553 in 2020. With an expansion of the catering service industry and increasing frequency of dining out among Chinese consumers in the recent years, the average annual wage of employed persons in the catering service industry is expected to reach approximately $8,537.5 in 2025, representing a CAGR of 2.4% from 2021 to 2025. The anticipated rising labor cost in the PRC is expected to exert operational pressure on bakery product manufacturers. Small-sized manufacturers without sufficient capital flow may experience difficulties in hiring enough employees and sustain their business.

![](image_006.jpg)

*Source: The National Bureau of Statistics of China, and the Frost & Sullivan Report*

*Note: Total average annual wage is converted to USD at RMB/USD of 6.605.*

 *Raw material cost*. According to the National Bureau of Statistics of China and the China Sugar Association and the estimation of Frost & Sullivan, the average selling prices of eggs, sugar, and flour increased at a CAGR of 1.5%, 1.2%, and 7.8% from 2015 to 2020, respectively. The increase in selling prices of eggs, sugar, and flour were mainly due to a steadily increasing demand for these raw ingredients from the food manufacturing industry and the relatively stable supply of eggs, sugar, and flour due to the removal of excess capacity of production in the PRC. The selling prices of eggs, sugar, and flour are expected to increase and reach approximately $0.87 per pound, $0.51 per pound, and $0.58 per pound respectively in 2025, representing a moderate CAGR of 2.2%, 2.9%, and 4.0%, respectively from 2021 to 2025. As the prices of fundamental ingredients of bakery products increased over the recent years, the cost increase will ultimately be shifted to consumers, which will lead to a rise in the unit price of bakery products.

![](image_007.jpg)

*Source: The National Bureau of Statistics of China, China Sugar Association, and the Frost & Sullivan Report*

*Note: Total average selling prices are converted to USD at RMB/USD of 6.605.*

 

 *Rental cost.* According to the Frost& Sullivan Report, the average monthly rent of retail outlets in Xinjiang increased from approximately $0.95 per square feet in 2015 to approximately $0.99 per square feet in 2020, representing a CAGR of 1.0%. The increase in Xinjiang was mainly due to steady economic growth and stimulating economic policies adopted by the government. Because of urban development and more frequent economic activities in Xinjiang, the average monthly rent of retail outlets in Xinjiang is expected to further increase, reaching approximately $1.04 per square feet in 2025, representing a CAGR of 0.7%. Retail outlet rents often constitute a large part of the business costs of a bakery product retailer, the rising rent will impose higher financial pressure to bakery products retailers.

![](image_008.jpg)

*Source: The Frost & Sullivan Report*

*Note: Average monthly rent is converted to USD at RMB/USD of 6.605.*

 

 

**Market Drivers and Development Trends**

 

 *Improved quality of life.* Over the past five years, the spending power of Chinese residents has increased and Chinese consumers have exhibited a stronger preference for bakery products made from better ingredients and of higher quality even at a higher price. According to the National Bureau of Statistics of China, the amount of disposable income per capita nationwide in the PRC has increased from approximately $3,325.7 in 2015 to approximately $4,873.4 in 2020, representing a CAGR of 7.9%. The improved living standards have therefore stimulated the consumption of staple food, such as bakery products, in the PRC.

 

*Integration of Enterprise Resource Planning (ERP).* ERP generally refers to an integrated application of business management software that fully administers the daily operations of a business, such as procurement procedures, production processes, and the distribution of sales. A holistic ERP enables manufacturers to facilitate information flow and foster error-free transactions, which ultimately enhances the business performance and optimizes operation efficiency. Specifically, ERP, such as Systems Applications and Products in Data Processing (SAP), has been increasingly adopted by business enterprises in the bakery product manufacturing and retail market in the PRC. Market participants use ERP to adjust their business strategies and optimize their operational capabilities in order to manage costs and maximize their profit.

 

*Expansion of E-commerce channels.* The popularity of online and on-demand food delivery platforms, such as Ele.me and Meituan Waimai, in the PRC over the recent years has encouraged bakery product manufacturers and retailers to adjust their business models to suit consumers' demand for convenient food delivery. For example, Ebeecake in Beijing has prioritized the e-commerce channel in their sales methods and has dedicated itself to provide consumers a unique experience through their online platform and third-party platforms, such as JD.com. As the bakery product manufacturers and retailers face more intense competition in the PRC, it is expected that more market participants will expand their e-commerce channels to attract potential consumers.

 

*Changes in marketing strategies.* With a growing awareness of a healthy lifestyle among the Chinese consumers, bakery product manufacturers and retailers have launched low calorie, low carbohydrates, and vegan products with the addition of dietary fiber together with extensive marketing to meet the trend. Additionally, they have focused on the packaging and appearance of bakery products to appeal to consumers and increase the likelihood of their products being shared via social media platforms. Bakery product manufacturers and retailers also conduct advertising campaigns through their own social media accounts.

**Competition Overview**

The bakery product market in the PRC is highly fragmented and competitive with no single leading firm. According to the Frost & Sullivan Report, there were more than 1,600 bakery product manufacturers with more than 9,000 retail outlets in the PRC and the top five market participants contributed to an aggregate market share of approximately 6.8% in terms of revenue in 2020. More specifically, there were more than 50 bakery product manufacturers with over 120 retail outlets in Xinjiang in 2020. The competition among the bakery product manufacturers and retailers in the PRC is expected to become more intense in the future as more international enterprises enter the Chinese market and some other big food manufacturing companies expand their product portfolios and enter the bakery product market to directly compete with existing market participants. In addition, some small-sized manufacturers may enter the bakery product market to provide exotic and unique bakery products.

**OVERVIEW OF BAKERY PRODUCT MARKET IN THE UNITED STATES**

**Market Size**

The bakery product market in the United States is considered as a relatively mature market, as products such as bread, cakes, and pastries have been one of the staple foods in the western culture. According to the Frost & Sullivan Report, commercial bakeries generally refer to establishments that primarily engaged in manufacturing fresh and frozen bread and bread-type rolls and other fresh bakery products, such as bagels, biscuits, and cakes. The COVID-19 pandemic across the United States in 2020 led to temporary shutdown of manufacturing facilities and adoption of lockdown and social-distancing practices, which caused shortage of raw material and labor and disruption to production lines and supply chains of commercial bakeries. On the other hand, commercial bakeries also encountered favorable market opportunities as consumers (i) shifted purchases to online platforms and nearby bakeries without significantly reducing their consumption of bakery products, since bakery products are still regarded as one of the most essential products in the U.S.; (ii) increased purchases of entertainment assortments, such as cakes and pastries, when they are in quarantine at home; and (iii) started to purchase bakery products in quantity. As a result, and according to the U.S. Bureau of Economic Analysis, the consumption expenditures of bakery products increased sharply from $92.82 billion in 2019 to $102.08 billion in 2020, representing a year-on-year growth of 10.0%, which was the highest year-on-year growth rate during the past five years. Overall, the retail sales value of commercial bakeries increased from approximately $28.12 billion in 2015 to $34.22 billion in 2020, representing a CAGR of approximately 4.0%. According to the Frost & Sullivan Report, the retail sales value of commercial bakeries is expected to reach approximately $41.87 billion by the end of 2025, representing a CAGR of approximately 4.1%.

![](image_009.jpg)

*Source: The Frost & Sullivan Report*

The retail sales value of commercial bakeries in New York City has experienced a moderate growth from approximately $1.25 billion in 2015 to approximately $1.73 billion in 2020, representing a CAGR of 6.8%. Commercial bakeries in New York City have been providing a wide range of bakery products, such as cakes, bagels, breads, cookies, and pies, with different flavors, and have remained one of the most popular types of stores in the city. The COVID-19 pandemic adversely affected the production lines and supply chains of commercial bakeries in New York City in 2020. As New York City gradually recovers from its lockdown, the businesses of commercial bakeries are expected to gradually recover and the retail sales value of commercial bakeries in New York City is expected to reach approximately $2.21 billion by the end of 2025, representing a CAGR of 5.4%.

![](image_010.jpg)

*Source: The Frost & Sullivan Report*

**Market Drivers and Development Trends**

 

 *Improving quality of life.* According to the Bureau of Economic Analysis of the United States Department of Commerce, the per capita disposable personal income in the United States increased from approximately $42,953 in 2015 to approximately $53,082 in 2020, representing a CAGR of 4.3%. Because of such an increase in per capital disposable personal income, consumers are more willing to pay more to purchase premium and healthier bakery products, such as low-carbohydrates, gluten-free, and trans-fat-free bakery products, in order to pursue a better lifestyle.

 

*Wide spectrum of distribution network*. Apart from selling their products through traditional brick-and-mortar stores, bakery product manufacturers nowadays also utilize the Internet for marketing and sales. For example, the emergence of online food-ordering platforms, such as Seamless, Postmates, and Uber Eats, has provided an additional business opportunity for bakery product manufacturers and retailers to expand their distribution networks, which ultimately increases their customer bases and sales volumes of their products across the United States.

 

*Rise of social media platforms*. Social media platforms, such as Twitter, Facebook, and Instagram, have served as the fundamental component of digital and social marketing in the retail sector nowadays. It has encouraged customers to post user-generated contents, including product reviews and comments, on the Internet and foster customer-to-customer interactions. As a result, bakery products manufacturers and retailers may understand customers' preferences on the flavor of bakery products and keep updated with the latest consumer market trends through online social media platforms, and develop new recipes and enrich their product portfolio. In addition, as potential customers of a company can be relatively easily reached through social media, successful social media campaigns, such as content promotion and influence of opinion leaders, can spur product sales growth and boost the brand awareness and value proposition of bakery product manufacturers and retailers.

**Competition Overview**

The bakery product market in the United States is highly competitive and fragmented with a number of small to medium size manufacturers specializing in a wide variety of bakery products, such as French patisseries, bread, cookies, and cakes. According to the Frost& Sullivan Report, there are more than 3,000 commercial bakeries and over 7,200 retail bakeries across the United States, of which there are more than 280 commercial bakeries and over 380 retail bakeries in New York City in 2020. The competition among these players mainly focuses on price, quality, product differentiation, marketing strategies, and nutritional values. Successful marketing strategies and product differentiation are the key factors as they facilitate manufacturers to establish their brand image, and customers are more likely to purchase products from a well-known brand.

**OVERVIEW OF RESTAURANT BUSINESS IN NEW YORK CITY**

According to the Frost & Sullivan Report, the retail sales value of restaurant business in New York City had grown at a CAGR of 5.6% from approximately $37.30 billion in 2015 to approximately $46.44 billion in 2019. The increase in retail sales value of restaurant business was mainly due to a growing disposable income per capita of residents in New York City, more diverse restaurant categories available to customers, and a rising number of travelers to New York City. However, due to the COVID-19 pandemic in 2020, residents were asked to comply with social-distancing measures and mass gatherings were limited, which brought tremendous impact to restaurant businesses in New York City and the retail sales value of restaurant business decreased to $30.41 billion in 2020, representing a CAGR of approximately -4.0% between 2015 and 2020. As New York City gradually recovers from its lockdown and mass vaccination is being implemented in 2021, the retail sales of restaurant business in New York City is expected to recover and reach approximately $50.63 billion by the end of 2025, representing a CAGR of 7.5% from 2021 to 2025.

![](image_011.jpg)

*Source: The Frost & Sullivan Report*

The restaurant market in New York City is highly competitive and fragmented. In 2020, there were more than 6,500 establishments of full-service restaurants across New York City. Market players in the restaurant market compete with their product offerings, such as availability of international cuisines, as well as food quality and prices.

**BUSINESS**

**Overview**

The PRC Stores and the U.S. Stores manufacture and sell a wide selection of bakery products, seasonal products (i.e. products sold during particular holiday seasons), and beverage products; some of these stores also offer eat-in services. The PRC Stores and the U.S. Stores currently focus their business in Xinjiang of the PRC and New York City, respectively, and plan to expand to other regions of the PRC and the U.S., with a goal of opening three to five new stores in China annually and 10 new stores in the U.S. during the next five years. The PRC Stores and the U.S. Stores aim to make healthy, nutritious, and ready-to-eat food through advanced facilities and industry research and to create a comfortable, yet distinguishable store environment in which customers can enjoy their products.

The PRC Stores are a bakery chain consisting of 33 stores operated by Xinjiang United Family and the VIEs, under the "George●Chanson" brand in Xinjiang, and the U.S. Stores sell their products in New York City. Chanson 3rd Ave and Chanson Broadway are currently renovating spaces for the opening of two new stores in New York City. Selling through directly-operated stores, instead of franchise stores, allows the operating entities to run their entire operation more efficiently and to exercise greater control over the quality of products and the presentation of their brand, and to better manage customer experience in the stores. The PRC Stores and the U.S. Stores also sell their products on their digital platforms and through third-party online food ordering platforms. The current customer base of the PRC Stores and the U.S. Stores consists of both individual and corporate customers. To expand their customer base, the PRC Stores and the U.S. Stores have developed a variety of marketing and sale strategies, such as increasing their presence on social media platforms, devising pricing and discounting programs, and improving customer in-store experience.

The PRC Stores manufacture the majority of bakery products in their central factory located in Urumqi, Xinjiang, prepare beverage products within the stores, and contract third-party manufacturers to produce seasonal products. the U.S. Stores bake bakery products, prepare breakfast, lunch and all-day brunch, bar food, and other light meals for eat in, and make beverage products all within the kitchen in the store. To ensure the quality and safety of their products, the PRC Stores and the U.S. Stores procure raw materials, including flour, eggs, and milk, from renowned suppliers with a record of consistently supplying high-quality raw materials over decades in the food industry. In addition, the PRC Stores and the U.S. Stores have implemented a rigorous quality control system covering their entire operation process and mandated internal training to improve their employees' awareness and knowledge of food safety.

The PRC Stores and the U.S. Stores have dedicated and highly-experienced product development teams that constantly create new products that reflect market trends and are designed to meet customer demand. As of December 2022, the PRC Stores had more than 707 types of bakery products and seasonal products on sale, including over 145 types of new products introduced to the market since 2021, and the U.S. Stores had 131 types of eat-in menu items and bakery products on sale, including 36 types of new products introduced to the market since 2021. The PRC Stores and the U.S. Stores also offer a large number of beverage products and update their drink menus seasonally and in response to ever changing customer demand. By continuously offering new products and refining their product formulas to enhance existing products, we believe that the PRC Stores and the U.S. Stores are able to steadily bring in new customers and increase the frequency of their existing customers' visits to their stores, digital platforms, and store page on third-party platforms.

For the six months ended June 30, 2022 and 2021, we had total revenue of $8,543,803 and $6,742,121, and net income of $220,793 and $422,685, respectively. The PRC Stores accounted for 78.6% and 89.2% of our total revenue for those periods, respectively, and the U.S. Stores accounted for 21.4% and 10.8%, respectively.

For the fiscal years ended December 31, 2021 and 2020, we had total revenue of $14,690,295 and $10,313,512, and net income of $506,769 and a net loss of $164,029, respectively. The PRC Stores accounted for 87.1% and 87.0% of our total revenue for those fiscal years, respectively, and the U.S. Stores accounted for 12.9% and 13.0%, respectively.

The PRC Stores primarily generate revenue through sale of bakery products, seasonal products, and beverage products. For the six months ended June 30, 2022 and 2021, revenue derived from sale of bakery products accounted for 93.8% and 93.4% of the PRC Stores' revenue; revenue derived from sale of seasonal products accounted for 5.4% and 5.4%, and revenue derived from sale of beverage products accounted for 0.8% and 1.2%, respectively. For the fiscal years ended December 31, 2021 and 2020, revenue derived from sale of bakery products accounted for 91.4% and 91.8% of the PRC Stores' revenue, revenue derived from sale of seasonal products accounted for 7.6% and 6.6%, and revenue derived from sale of beverage products accounted for 1.0% and 1.6%, respectively.

The U.S. Stores primarily generate revenue through offering eat-in services and sale of bakery products and beverage products. For the six months ended June 30, 2022 and 2021, revenue derived from offering eat-in services accounted for 27.6%% and 25.9% of the U.S. Stores' revenue, revenue derived from sale of bakery products accounted for 18.2% and 31.3%, and revenue derived from sale of beverage products accounted for 54.2% and 42.8%, respectively. For the fiscal years ended December 31, 2021 and 2020, revenue derived from offering eat-in services accounted for 22.2% and 37.9% of the U.S. Stores' revenue, revenue derived from sale of bakery products accounted for 25.0% and 44.6%, and revenue derived from sale of beverage products accounted for 52.8% and 17.5%, respectively.

**Our Competitive Strengths**

We believe we have the following competitive strengths:

***Trendy Brand Reflecting Healthy Food Concepts***

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The PRC Stores and the U.S. Stores aim to promote long-term, healthy diets, and have integrated healthy food concepts and nutritious elements into all lines of their products. They have successfully developed a group of popular products based on the low-fat, low-sugar, low-sodium, and protein-rich principles while adjusting product textures and tastes to accommodate customer preferences. These products, including enzyme bread, high-fiber bread, whole-wheat bread, and calcium bread, have been highly praised by their customers. We believe the differentiated approach of the PRC Stores and the U.S. Stores will continue to strengthen the loyalty of existing customers to their brand and will attract new customers to both their products and brand.

***Strict Quality Control***

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Product quality has always been one of the top priorities of the PRC Stores and the U.S. Stores. The PRC Stores and the U.S. Stores start quality control with their suppliers by procuring raw materials from renowned suppliers that have proven records of supplying high-quality raw materials and complying with food safety standards and measures. The PRC Stores and the U.S. Stores also continuously introduce new production equipment with up-to-date industry technologies while making further improvements and adjustments to existing production equipment based on their product features and actual production needs. As a result, the PRC Stores have effectively decreased defective rates of all product lines in their central factory and enhanced the quality of their products.

The PRC Stores and the U.S. Stores have created and executed a comprehensive system of quality control and performance appraisal, covering a wide range of activities in procurement, production, sale, finance, and day-to-day employee management, among other things. The system includes central factory daily management procedures, employee health review standards, and factory workshop sanitation and inventory management policies. This system has been effectively used to monitor and conduct hazard analyses on raw materials, production, inventory maintenance, and transportation. In addition, the PRC Stores and the U.S. Stores have adopted a set of strictly standardized rules to further refine quality control in every part of the production process, appropriately adjusting management policies, standards, and measures based on distinct features of their production mode. Through such an integrated approach, the operating entities have been able to adopt a science-backed and data-based style of management, resulting in higher-quality products.

***Advanced Industry Research and Constant Product Innovation***

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With a successful history of developing new products based on customer demand and market trends, the PRC Stores and the U.S. Stores focus on constant innovation to improve the taste, texture, formula, and packaging of their products, forming a virtuous cycle that has enabled them to introduce new products periodically. The PRC Stores and the U.S. Stores keep separate product lines. As of December 2022, the PRC Stores had introduced over 145 types of new products and the U.S. Stores had introduced 36 types of new products since 2021. The PRC Stores and the U.S. Stores typically evaluate the profitability of their products annually or semi-annually by considering factors such as cost of revenue increases and competitive pricing strategies. They have historically been able to terminate less profitable products, and launch similar new products and refine their product formulas to enhance existing products with higher prices to cover higher ingredient costs.

To develop product formulas that reflect key market trends and thus enable the operating entities' products to be competitive, the research and development ("R&D") team members of the PRC Stores and the U.S. Stores frequently participate in industry conferences and engage with industry experts. Through years of efforts, the operating entities have also developed a systematic approach to refine product packaging. For instance, the operating entities seamlessly combine functionality with aesthetics by integrating automatic packaging and packaging techniques with a heat-sealing feature and stylish graphic designs. To keep their organization rejuvenated with innovative ideas, the operating entities have not only devised talent strategies to recruit talents from the PRC, Europe, and the U.S., but also increased the strength and scale of their internal training programs to equip their employees with a strong sense of business and competitiveness.

***Advantageous Information Management System***

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To maximize their operation efficiency and distribute their resources based on a data-centric principle, the PRC Stores have adopted the ERP System in their stores and central factory. The ERP System is a business process management software for managing business and automating back office functions related to technology, services, and human resources. The ERP System integrates data collected from every critical aspect of the PRC Stores' production and sale process and facilitates a convenient data exchange process among the management office, the central factory and PRC Stores, and other distributors. Through the ERP System, the PRC Stores are able to locate and verify details of all the processed transactions in the stores and even determine the cost of every single kind of products. The U.S. Stores have not adopted and currently have no plan to adopt the ERP System, since operations of the stores are not as complex as those of the PRC Stores.

***Well-Developed Distribution Network in Xinjiang***

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The PRC Stores highly value the development of their distribution network. With years of experience in marketing and selling products in the food industry in Xinjiang, the PRC Stores have adopted a core strategy that focuses on developing a network of stores and supplementing the network with other distribution channels. The PRC Stores consist of 33 stores in three well-developed cities of Xinjiang, namely Urumqi, Changji, and Shihezi. The relatively low labor cost in Xinjiang and the PRC Stores' long-term, sustainable business relationships with established local supermarkets that enjoy high levels of brand loyalty, such as Youhao Supermarket and Huijia Supermarkets, strengthen their power to control front-end product sales, prepare them with a solid foundation to explore new market opportunities, and improve their operation efficiency. The PRC Stores also sell products through their digital platforms and collaboration with third-party online food ordering platforms such as Meituan-Dianping and Koubei. To maintain a close connection between the point of sale of each distribution channel and their production team, the PRC Stores primarily use their own transportation team to transport products. Third-party companies sometimes provide ancillary logistic support. The PRC stores have designed and effectively implemented various marketing strategies in their distribution network in Xinjiang to introduce new products and promote marketing campaigns within short periods of time.

***Experienced Management and Professional Teams***

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Our senior management team, led by Mr. Gang Li, our chief executive officer, and Ms. Jihong Cai, our chief financial officer, has deep expertise and a proven track of record in managing brands and operating food and retailing businesses. Our professional team is comprised of highly-skilled and dedicated employees with wide ranging experience in services, product development, business development, and marketing. For instance, the R&D department of the PRC Stores is led by Mr. Fufen Wang, Mr. Shangke Zhong, and Mr. Yiguang Mo, all of whom have decades of experience in the bakery industry and are certified by the Ministry of Human Resources and Social Security of the PRC as National Advanced Chefs specializing in pastry and bakery in the PRC. We believe that our management and professional teams will not only be able to effectively grow our business through continued operating improvement and research, but also serve as key drivers of our success and position our Company as an attractive vehicle for future long-term growth in the food industry beyond bakery products.

**Our Growth Strategies**

We intend to develop our business and strengthen brand loyalty by pursuing the following strategies:

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***Expand into New Markets by Opening New Stores***

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The PRC Stores and the U.S. Stores plan to explore new markets while enhancing their current presence in the Xinjiang market and the New York City market by analyzing their sales data and features of customer trends in different regions, continuously focusing on improving customer in-store experience, further expanding their distribution networks, and exploring new partnership opportunities.

After opening Chanson Greenwich in Tribeca in December 2021, the U.S. Stores plan to open 10 additional stores in New York City during the next five years. The cellar space at Chanson Greenwich is designed to be used as the U.S. Stores' central kitchen to produce bakery products, which will be delivered to these future stores on a daily basis. Such a store organization structure, we believe, will significantly reduce the U.S. Stores' costs for equipment and personnel, while satisfying their customers' need for ready-to-eat and high-quality food. We believe that the operation and business concepts of these new stores will allow us to successfully enter other markets underlining urban, fast-paced lifestyles similar to first-tier cities in the U.S. and the PRC.

***Enhance In-Store Customer Experience and Customer Services***

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To improve customer in-store experience and the visibility of their brand image across different regions, the PRC Stores and the U.S. Stores have renovated the majority of their stores during the last five years. Their vision is to create a store environment consisting of a clean, modern interior design, with open kitchens, relaxing background music, soft light, and the smell of freshly-made bakery products. In addition to implanting fundamental brand values into renovation, the PRC Stores and the U.S. Stores also give individual store managers flexibility in decorating their store and arranging the display of their products in ways that match characteristics of the region where the store is located and cater to local customers' needs. To enhance customer services, the PRC Stores and the U.S. Stores have been systematically training and will continuously provide standardized training to their store employees, so they are able to present themselves in consistent manners and provide high-quality services that uphold their brand image. We firmly believe that a relaxing café environment, which allow customers to use the PRC Stores and the U.S. Stores as their go-to places for multiple social purposes, in-store experiences with elements distinctively associated with their brand, and high-quality services will allow the PRC Stores and the U.S. Stores to stand out from their competitors.

***Keep Implementing Healthy and Nutritious Diet Principles in Product Development***

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As a socially responsible company, the corporate mission of the PRC Stores and the U.S. Stores is to promote healthy, nutritious, and conscious eating. To further align their actions with their vision, the PRC Stores and the U.S. Stores have integrated and plan to keep integrating healthy elements and concepts, such as zero fat or low fat, low calorie, zero or low sugar, high fiber, vitamins and minerals, and low oligosaccharide into their existing and future products through measures and procedures that have been approved by industry experts.

***Increase Brand Awareness***

The PRC Stores and the U.S. Stores will continue to increase customer awareness and excitement for the "George●Chanson," "Patisserie Chanson," and "Chanson" brands and drive customer loyalty through their marketing efforts, social media presence, continued store expansion, and growing e-commerce sales. Their marketing programs are designed to develop and foster a personal connection with the community and position Chanson as a high-quality, community-conscious brand that provide healthy, nutritious, and ready-to-eat food. The PRC Stores and the U.S. Stores will also continue to leverage their growing social media presence to increase their online sales and drive additional store visits within existing and new markets. The U.S. Stores see a significant opportunity to increase their brand visibility in the New York City market, which will be a key area of focus in their marketing strategy going forward.

 **The PRC Stores**

***Products***

The PRC Stores currently offer more than 707 types of bakery products and seasonal products, together with a large number of beverage products. The PRC Stores derived 93.8%, 91.4%, and 91.8% of their revenue from the sales of bakery products, 5.4%, 7.6%, and 6.6% of their revenue from the sales of seasonal products, and 0.8%, 1.0%, and 1.6% of their revenue from the sales of beverage products during the six months ended June 30, 2022 and the fiscal years ended December 31, 2021 and 2020, respectively. The PRC Stores constantly research on the latest European pastry and bakery trends to improve their product presentation and packaging. As the result of their effort, the products of the PRC Stores have been consistently praised by their customers as healthy, fresh, and stylish, and are commonly perceived as popular gift choices among their customers.

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Bakery products of the PRC Stores include packaged bakery products (cakes, bread, and snacks), birthday cakes, and made-in-store pastries. The bestselling bakery products are little puffs, chocolate cakes, cheese cakes, whole-wheat bread, multigrain bread, original-flavor cookies, amber-walnut cookies, seven-inch fruit cakes, croissants, and almond pudding.

Seasonal products of the PRC Stores include mooncakes and zongzi (sticky-rice ball stuffed with different fillings and wrapped in bamboo leaves). The bestselling seasonal products are red-bean flavored mooncakes, sweet-date flavored zongzi, and flower flavored zongzi.

Beverage products of the PRC Stores include store-made beverages and juice products. The bestselling beverage products are strawberry flavored latte, orange-and-lemon flavored tea, and freshly squeezed orange juice.

***Manufacturing and Logistics***

The PRC Stores produce packaged bakery products at their central factory before shipping them to the stores. For birthday cakes and made-in-store pastries, the PRC Stores primarily only produce semi-finished products, such as various sweet dough and plain cakes at their central factory and ship them to the stores, leaving the final processing of made-in-store pastries and the decoration of birthday cakes to their employees at the stores. As of December 2022, 30 of the PRC Stores were equipped with ovens to produce made-in-store pastries and to meet additional customer demand for their products on a daily basis, and two stores got made-in-store pastries directly from their central factory.

The PRC Stores contract third-party producers to produce seasonal products, mainly zongzi (sticky-rice ball stuffed with different fillings and wrapped in bamboo leaves) and mooncakes to meet customer demand during Dragon Boat Festival and Mid-Autumn Festival, which are traditional Chinese holidays and respectively take place at the end of the second quarter and the beginning of the third quarter of a year. Typically, third-party producers need a period of 45 to 60 days to process their supply orders, produce seasonal products, and deliver them to the PRC Stores. Customers' demand for these seasonal products usually concentrates on the one or two months before these holidays. The PRC Stores sell seasonal products to individual and corporate customers.

Whether the PRC Stores enter into a supply agreement with a third-party producer for a particular year depends on the selling records of seasonal products in previous years, their sales plan during that year, and the production capacity of the third-party producer. By promptly communicating with and maintaining sustainable relationship with a group of third-party producers, the sales team of the PRC Stores is prepared to deal with additional customer orders during a particular season.

Product transportation to the PRC Stores is carried out by their own transportation team. As of December 2022, their transportation team had seven trucks capable of transporting an aggregate of 9.5 tons of goods per transition per day. All of those trucks have been incorporated into the ERP System. Depending on product features, the PRC Stores' products are shipped at either room temperature, which is suitable for products that can be preserved at room temperature, or through cold-chain transportation, which is applied to semi-finished products such as frozen dough and desserts. The PRC Stores' -32.8 degree Fahrenheit large freezer and their 323 square feet cold-storage facilities can adequately house the operation of cold-chain transportation.

***Distribution Channels***

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<u>Stores</u>

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The PRC Stores consist of 33 stores in three cities of Xinjiang, namely Urumqi, Changji, and Shihezi. Instead of franchising, our PRC subsidiary and the VIEs directly operate all of the PRC Stores because it allows them to exercise greater control over product quality, front-end sales, customer service quality, and overall shopping environment. This model also makes it easier to initiate transparent communication between our central management team and employees at the PRC Stores and to more efficiently manage our entire business operation in the PRC through the ERP System. Our subsidiary and the VIEs plan to continue operating the PRC Stores directly in the foreseeable future.

The PRC Stores employ a rigorous analytical process to identify new store locations, whereby they evaluate locations based on market characteristics, demographic characteristics, including income and education levels, the presence of key anchor stores and co-tenants, population density, convenience for parking and other means of transportation, and the overall surrounding environment, among other factors. Before entering into a lease agreement, their management team conducts comprehensive research on lease prices near the selected location and identify factors causing any price difference. The PRC Stores also actively monitor and manage the performance of their stores and seek to incorporate information learned through the monitoring process into their future site selection decisions. We believe the PRC Stores have a flexible site selection model, whereby their stores can be located in both street and mall locations. The PRC Stores have grown their store base in both locations since their first store opened in 2012, with 14 stores in street locations and 19 stores in malls as of the date of prospectus.

<u>Digital Platforms</u>

Customers can place orders at the website of the PRC Stores, www.xsong.com.cn. On their website, the PRC Stores sell birthday cakes and seasonal products, and promote seasonal and membership deals. The PRC Stores have a team of professionals working on refining the website to improve their online interaction with customers and the efficiency of customers' online ordering process. For the six months ended June 30, 2022 and the fiscal years ended December 31, 2021 and 2020, the product sales made through the website the PRC Stores accounted for 0.04%, 0.06%, and 0.11% of their total sales, respectively.

In February 2020, the PRC Stores launched a new online store, which is linked to the official account of the PRC Stores on WeChat and focuses on selling seven-inch or larger cakes. Customers may place orders directly through their mobile phones and get their cakes quickly delivered by the PRC Stores' own transportation team.

<u>Third-Party Platforms</u>

The PRC Stores list their bakery products on third-party online food ordering platforms such as Meituan-Dianping and Koubei. Customers can order through mobile apps and websites of these platforms, and pick up the ordered bakery products at the PRC Stores or have them delivered by the carriers of these platforms. For the six months ended June 30, 2022 and the fiscal years ended December 31, 2021 and 2020, the sales made through these third-party platforms accounted for 5.23%, 4.19%, and 4.2% of our total sales, respectively.

***Store Experience***

The PRC Stores have sizes ranging from 215 square feet to 2,640 square feet. 33 of the PRC Stores have seats, with an average capacity of eight guests. Their internal teams have designed these stores and coordinated the whole renovation process to ensure the best presentation of their products and brand image. The PRC Stores have been designed to possess a warm, inviting, and modern ambiance, with glass display cases and vintage cake stands showcasing baked goods that sit high upon marble counters. We believe that it is with this inviting and accessible atmosphere that the PRC Stores have cultivated a loyal customer base in residential and commercial markets.

The PRC Stores are generally open from 10:00 a.m. to 10:30 p.m. daily during the summer and from 10:30 a.m. to 11:00 p.m. during the winter, and benefit from a balanced sales mix across operating hours.

 ***The Flagship Store***

On November 29, 2019, the flagship store of the PRC Stores, Hongshan Lifestyle Store, in Urumqi. At approximately 2,640 square feet and with 26 seats, the store features glass display cases, an open kitchen, and a cocktail bar, and sells bread, desserts, sandwiches, custom cakes, and beverages. This flagship store is an important marketing platform that allows the PRC Stores to showcase their vision of a comfortable yet distinguishable store environment and connect with their customers in a new way, and for their customers to immerse themselves in an atmosphere that encompasses who the PRC Stores are.

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***Membership and Customers***

The PRC Stores issue free membership cards that are rechargeable with cash in stores to encourage higher spending by customers and strengthen their loyalty to the PRC Stores' brand. Both corporate and individual customers can get membership cards, add money onto the cards, and use them to purchase products in the PRC Stores. By using these membership cards, customers will enjoy benefits such as free cash vouchers that can be used to purchase products of the PRC Stores and 12% off original prices of all products on member day each week. Once a customer adds at least RMB200 (approximately $29) to a new membership card, the customer is counted as a member of the PRC Stores. As of December 2022, the PRC Stores had approximately 582,000 members. For the six months ended June 30, 2022 and the fiscal years ended December 31, 2021 and 2020, the sales to members collectively accounted for 54%, 52%, and 47% of our total sales, respectively.

The PRC Stores sell bakery products to both individual and corporate customers.

Individual customers of the PRC Stores come from a variety of age groups and social backgrounds. There are three methods for these individual customers to purchase products of the PRC Stores, namely, purchasing products at the stores with cash or credit cards, getting membership cards and using membership cards to make a purchase at the stores, and ordering the products on digital platforms.

Corporate customers of the PRC Stores primarily get membership cards and purchase cash vouchers for products such as seasonal products, cakes, and birthday cakes as part of employment benefits for their employees. During the time of year around Mid-Autumn Festival and Dragon Boat Festival, the majority of customers of the PRC Stores buying seasonal products are corporate customers (though the number of individual customers who purchased zongzi from the PRC Stores increased during Dragon Boat Festival of 2020). The PRC Stores have already developed and maintained stable relationship with several corporate customers over the years. Top corporate customers of the PRC Stores for the six months ended June 30, 2022 included Industrial Bank Co., Ltd. Urumqi Branch Office, China Post Group Corporation Branch Office, Eighth Affiliated Hospital of Xinjiang Medical University, the Labor Union Committee of State Grid Urumqi Electric Power Supply Company, and the Urumqi Branch of China Telecommunications Corporation Labor Union Committee. Top corporate customers of the PRC Stores for the fiscal year ended December 31, 2021 included China Post Group Corporation Branch Office, Industrial Bank Co., Ltd. Urumqi Branch Office, Affiliated Hospital of Traditional Chinese Medicine of Xinjiang Medical University, Labor Union Committee of Urumqi City Rail Group Co., Ltd., and Xinjiang Gas (Group) Limited Company. Top corporate customers of the PRC Stores for the fiscal year ended December 31, 2020 included First Affiliated Hospital of Xinjiang Medical University, Xinjiang Medical University Affiliated Tumor Hospital, Xinjiang Medical University, the Labor Union Committee of Shenhua New Energy Co., Ltd., and the Labor Union Committee of Urumqi City Rail Group Co., Ltd.

***Competition***

The PRC bakery products market is highly fragmented, and competition in this market tends to be regionalized due to customers' localized food preferences. Virtually all of the bakery products of the PRC Stores are sold in Xinjiang. The major competitors of the PRC Stores are international and domestic companies that produce and sell bakery products in Xinjiang, including Tous Les Jours, Vinesweet, Bakery Share, Lanzhou Aili's Food Company Ltd., Maiquer Group Co., and BreadTalk Group Ltd. The PRC Stores compete for customers primarily on the basis of the price and quality of their products, food safety, brand awareness and loyalty, responsiveness to customer demand and market trends, customer experience, the ability to accurately estimate sales quota and control inventory, production capacity, and operation and management of chain stores.

The PRC Stores also potentially compete with bakery product manufacturers, such as Grupo Bimbo, S.A.B. de C.V., and Toly Bread Co., and bakery chain stores, such as Paris Baguette from Korea, Yamazaki Baking from Japan, and Holiland and Wedome, both of which are PRC based. Although none of the above enterprises has built a dominating presence in Xinjiang, the PRC Stores anticipate to directly compete with them when the PRC Stores expand to other regional markets in the PRC in the future.

 **The U.S. Stores**

Chanson 23rd Street, which is located in New York City's Flatiron District, operates Patisserie Chanson on the ground floor and Thyme Bar both on the ground floor and in the underground cellar. Chanson Greenwich, which is located in New York City's Tribeca, operates Chanson Le Salon.

Patisserie Chanson was established in 2016 as a modern European-style café and eatery that specializes in the art of making French-style viennoiseries and pastries. With an open display array of innovative gourmet pastries and piquant coffee brews, Patisserie Chanson is committed to offering eat-in services and serving freshly prepared bakery products and extensive beverage products.

Thyme Bar is a cocktail bar opened in February 2020, which features various to-go cocktails. Every drink on the opening menu was created with a sustainable and low-waste approach, repurposing waste from nearby restaurants, like coffee grounds from Patisserie Chanson. Thyme Bar was one of the first bars in New York City to pivot and offer to-go cocktails and has been able to successfully maintain and evolve this business model through the COVID-19 pandemic. In August 2020, Thyme Bar introduced "The Thyme Bar Experience," a floriography-based cocktail prix-fixe menu with food pairings designed for the outdoor dining age.

Patisserie Chanson and Thyme Bar have both received positive media coverage since their openings. The French-style chocolate fondants of Patisserie Chanson were reported by Vogue on April 14, 2017 as one of the most seasonally appropriate pastel-hued desserts for Easter season in New York City, and Thyme Bar was reported by Forbes on April 16, 2020 to be among 11 of the best cocktails-to-go bars in New York and again on October 28, 2020 for crafting to-go cocktails that are "sippable art."

Chanson Le Salon was opened in December 2021 as a modern French brasserie with a New American approach. Its menu shares both cultures' flavors, serving fast upscale dining with a health-conscious approach. Chanson Le Salon is committed to presenting all-day brunch, varieties of coffees and sandwiches, and afternoon tea.

***Products***

The U.S. Stores currently offer 131 types of eat-in menu items and bakery products, together with a large number of beverage products. The U.S. Stores make these products in the kitchen or bar of the store and serve them to eat-in customers or sell them in store. The U.S. Stores derived 27.6%, 22.2%, and 37.9% of their revenue from offering eat-in services, 18.2%, 25.0%, and 44.6% from the sales of bakery products, and 54.2%, 52.8%, and 17.5% from the sales of beverage products during the six months ended June 30, 2022 and the fiscal years ended December 31, 2021 and 2020, respectively.

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The U.S. Stores' eat-in menu includes sandwiches, salads, toasts, croissants, soups, and desserts. Their bestselling menu items include avocado toast, smoked salmon croissant, and black truffle grilled cheese.

The U.S. Stores' bakery products include cakes, bread, sweets, birthday cakes, and pastries. Their bestselling bakery products include kouign amann, kouign amann (salted caramel), and croissant.

The U.S. Stores' beverage products include store-made coffee, herbal tea, fruit juices, and alcoholic beverages. Their bestselling beverage products include latte, cappuccino, brewed coffee, and "Thyme 2 Go" cocktails, which are bottled cocktails have been pre-chilled and pre-diluted.

***Store Design***

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Chanson 23rd Street has two floors with an aggregate size of approximately 3,900 square feet. Seating in Chanson 23rd Street is comprised of a combination of table seats and bar seats with a capacity of 40 guests.

Chanson Greenwich has two floors with an aggregate size of approximately 4,140 square feet. Seating in Chanson Greenwich's indoor area is comprised of a combination of table seats and bar seats with a capacity of 55 guests. Chanson Greenwich also has an outdoor seating space with a capacity of 30 guests.

The design of the U.S. Stores intends to deliver a modern, clean, and inviting atmosphere with marble tables and counters, enhanced with abundant light and wooden fixture accents, and a layout that optimizes the available space and serves as a setting for a wide variety of occasions. The U.S. Stores' open kitchen showcases their preparation processes and exemplified their commitment to freshness. We believe this layout achieves this atmosphere and makes the U.S. Stores a desirable destination at any time of day.

 ***Dining and Shopping Experience***

The U.S. Stores offer a variety of dining and purchasing options. Customers can either grab their bakery products and beverage products for take-out or take a seat and stay longer for a relaxed and enjoyable eat-in experience. Chanson 23rd Street generally provides bakery products and eat-in services from 7 a.m. to 5 p.m. daily and its bar is open from 5 p.m. to around midnight daily. Chanson 23rd Street is currently providing indoor dining and delivery and pickup services from 8 a.m. to 5 p.m. daily, and its bar is open from 5 p.m. to 1 a.m. from Tuesday to Sunday. Chanson Greenwich is currently providing indoor and outdoor dining services from 8 a.m. to 6 p.m. daily and its bar is open from 5 p.m. to 11 p.m.

The U.S. Stores offer delivery and pickup services within New York City (Manhattan and limited areas in Queens and Brooklyn). Customers may order grab-to-go sandwiches, breakfast, desserts, French pastries, brunch, and beverages via their website, patisseriechanson.com, and through third-party delivery partners, including Grubhub, Uber Eats, Caviar, Doordash, and Seamless.

In addition, the U.S. Stores offer corporate catering services in the New York City area. Their corporate catering focuses on meetings and work celebrations, offering breakfast and lunch boxes, croissant platters, salads, parfaits, sandwiches, sweets, cakes, and beverages. For special events, the U.S. Stores can provide custom cakes with a company logo, personal monogramming, or custom flavors and colors.

Revenue derived from delivery, pickup, and catering services accounted for 5.1%, 12.8%, and 38.13% of the total revenue of the U.S. Stores for the six months ended June 30, 2022 and the fiscal years ended December 31, 2021 and 2020, respectively.

***Éclair Making Class***

Chanson 23rd Street typically offers a 30-minute pastry lesson on filling and decorating éclairs every Sunday from 4 p.m. to 5 p.m. for $29 per person. Participants learn the essential techniques for making éclairs from a chef instructor and may take éclairs they made home to taste with family and friends. Chanson 23rd Street has suspended the éclair making classes due to the COVID-19 pandemic.

***Customers***

The majority of sales of the U.S. Stores are to individual customers and the U.S. Stores also supply bread and desserts to corporate customers, including coffee shops and cafes in New York City. The U.S. Stores generated 100%, 100%, and 71.17% of their revenue from sales to individual customers and 0%, 0%, and 28.83% from sales to corporate customers during the six months ended June 30, 2022 and the fiscal years ended December 31, 2021 and 2020, respectively. Revenue generated from the top three corporate customers accounted for approximately 0%, 0%, and 28% of the revenue of the U.S. Stores during the six months ended June 30, 2022 and the fiscal years ended December 31, 2021 and 2020, respectively. Due to the impact of the COVID-19 pandemic, development of corporate customers has slowed down since 2020. As a result, the U.S. Stores expect sales to individual customers to remain their most significant sales channel for the near future.

***Competition***

The New York City bakery products and restaurant business markets are highly competitive and fragmented with a number of small to medium size manufacturers specializing in a wide variety of bakery products and restaurants. All of the products of the U.S. Stores are sold in New York City. Their major competitors are internationally and domestically renowned bakery chain-stores in New York City, including Paris Baguette, Maison Kayser, and Le Pain Quotidien, and bakery product manufacturers including Grupo Bimbo, S.A.B. de C.V., and Toly Bread Co. In addition, the U.S. Stores face significant competition from a variety of locally owned restaurants and national chain restaurants offering bakery products, as well as take-out options from grocery stores. The U.S. Stores compete for customers primarily on the basis of price, quality, product differentiation, marketing strategies, and nutritional values.

**Suppliers**

The PRC Stores and the U.S. Stores carefully select suppliers based on product quality and authenticity, and they seek to develop long-term relationships with these suppliers. Each year, the PRC Stores and the U.S. Stores conduct a rigorous selection and evaluating process that gives them a chance to review their relationship with current suppliers and to explore relationships with new suppliers who are experienced and professionally trustworthy and strive for providing high-quality raw materials. The PRC Stores and the U.S. Stores have been able to use the information learned from new suppliers to evaluate their agreements with current suppliers. They do not engage in any hedging agreements to manage their exposure to fluctuations in the price of food commodities. The PRC Stores and the U.S. Stores negotiate and manage supply arrangements separately.

The PRC Stores enter into supply agreements in the ordinary course of business with their suppliers, pursuant to a form of supply agreement typically for a one-year term. For some raw materials, such as butter, the suppliers provide a certain quantity of raw materials at a fixed price and deliver them separately based upon the needs of the PRC Stores; for other raw materials, such as eggs, the suppliers provide raw materials at prices determined when the PRC Stores place their orders. If the price of certain imported raw material is expected to rise, suppliers will provide a written notice to the PRC Stores at least one month in advance and the PRC Stores will then decide whether to order additional raw materials before the price increases. Suppliers deliver to the central factory of the PRC Stores approximately twice per week on Mondays and Fridays. After suppliers deliver, the payment per order is calculated based on the actual number of qualified products that meet the PRC Stores' verification standards. Usually, the PRC Stores are given one to three months to complete the payment per order. Top suppliers of the PRC Stores during the six months ended June 30, 2022 included Xinjiang Meishifu Food Co., Ltd. ("Meishifu"), Urumqi Yuxin Commerce and Trade Co., Ltd. ("Yuxin"), Urumqi Junxin Hongye Commerce and Trade Co., Ltd, Pengcheng Fruit Company, and Peimeirun. Their supply constituted 10%, 9%, 8%, 8%, and 7% of the PRC Stores' total raw materials in terms of monetary value in that period, respectively. Top suppliers of the PRC Stores during the fiscal year ended December 31, 2021 included Meishifu, Urumqi Jinda Food Raw Material Co., Ltd. ("Jinda"), Yuxin, and Xinjiang Zhengda Food Co., Ltd. ("Zhengda"). Their supply constituted 17%, 9%, 9%, and 8% of the PRC Stores' total raw materials in terms of monetary value in that fiscal year, respectively. Top suppliers of the PRC Stores during the fiscal year ended December 31, 2020 included Meishifu, Jinda, Yuxin, and Zhengda. Their supply constituted 23%, 8%, 6%, and 6% of the PRC Stores' total raw materials in terms of monetary value in that fiscal year, respectively.

The U.S. Stores order raw materials from suppliers based on their needs, instead of entering into long-term supply agreements with their suppliers. The U.S. Stores are able to ensure consistent delivery and competitive pricing because of their long-term business relationships with these suppliers. Suppliers of sugar and flour deliver to the U.S. Stores weekly and suppliers of vegetables and fruits do so daily. Top suppliers of the U.S. Stores during the six months ended June 30, 2022 included Baldor Specialty Foods, Inc. ("Baldor"), Southern Glazers of NY Metro, and Empire Merchants. Their supply constituted 16%, 5%, and 4% of the U.S. Stores' total raw materials in terms of monetary value in that period, respectively. Top suppliers of the U.S. Stores during the fiscal year ended December 31, 2021 included Baldor, The Chefs' Warehouse, and Southern Glazers of NY Metro. Their supply constituted 19%, 17%, and 13% of the U.S. Stores' total raw materials in terms of monetary value in that fiscal year, respectively. Top suppliers of the U.S. Stores during the fiscal year ended December 31, 2020 included Dairyland USA Corporation, Paris Gourmet, and Baldor. Their supply constituted 29%, 18%, and 15% of the U.S. Stores' total raw materials in terms of monetary value in that fiscal year, respectively.

**Food Safety**

Food safety is essential to the success of the PRC Stores and the U.S. Stores and they have established procedures to help ensure that their customers enjoy safe and quality food.

During the procurement of raw materials, the procurement team and compliance team of the PRC Stores and the U.S. Stores evaluate the quality and applicability of the submitted samples of raw materials, as well as suppliers' capability to meet deadlines. They re-evaluate those suppliers who the PRC Stores and the U.S. Stores have previously collaborated with on a yearly basis to meet the changing production needs. For suppliers who add additives into the products they supply to the PRC Stores or the U.S. Stores, the PRC Stores and the U.S. Stores require them to warrant that additives in their products comply with food safety requirements and standards according to relevant laws and regulations. The PRC Stores and the U.S. Stores also periodically examine the freshness of all raw materials and make sure that their storage conditions are properly to preserve freshness of raw materials.

During the actual production, the PRC Stores and the U.S. Stores have designed and applied rigorous standards and requirements to oversee product formulas, product craftsmanship, and production process. They also regularly organize mandatory firm-wide trainings to teach their employees appropriate ways of applying food safety measures in different scenarios and to enhance awareness and understanding of food safety as a whole. Without the approval of training managers, employees cannot work on production lines or in kitchens. The quality-control team of the PRC Stores and the U.S. Stores also analyzes production sectors that may influence product quality and safety, formulating corresponding methods to prevent potential negative effects. Before transporting or selling their products, the PRC Stores and the U.S. Stores conduct strict final examination on those products according to food industry standards to ensure that their products have high quality and are safe to consume.

The PRC Stores and the U.S. Stores only sell their bakery products on the day when these products are made and their light meals and beverage products on a made-to-order basis, and they make sure that any unsold or leftover products and unused semi-finished products are promptly disposed of, so as to offer their customers the freshest products that conform to stringent food safety standards on a day-to-day basis. The PRC Stores and the U.S. Stores have also established systematic and efficient procedures to swiftly recall any product that imposes potential or existing food safety issues to their customers, whose health and safety are always most important to the PRC Stores and the U.S. Stores. As of the date of this prospectus, the PRC Stores and the U.S. Stores have never had to recall any product. To further improve their quality and safety control, the PRC Stores and the U.S. Stores conduct periodic customer satisfaction surveys to learn about customers' needs and quality of the products from the customers' perspectives.

**Inventory Management**

The PRC Stores and central factory have established policies and management procedures and formed a group of specialists to supervise employees working in the inventory team and to review their job performance. These specialists also design emergency plans to deal with critical circumstances under which inventory runs extremely low and conduct monthly reviews to assess differences between inventory accounts and actual amount of remaining inventory through the ERP System. By using an information and expertise-based management method, we are confident that the PRC Stores can effectively reduce costs and production waste.

● For packaged bakery products, the PRC Stores adopt a sale-history based method to estimate production quota because it allows the PRC Stores to effectively address the short-lived feature of bakery products, to ensure their customers are presented with fresh bakery products, to maintain flexibility in production planning, and to strengthen their ability to effectively reduce inventory; and

● For their made-in-store pastries and birthday cakes, the PRC Stores alternatively adopt a method that combines sale-history based quota estimation and in-time demand. In addition to delivering a certain number of semi-finished products to the stores, the PRC Stores also deliver raw materials to the stores, so store employees can make extra cakes or further decorate delivered cakes if there are excessive or special customer demand on a particular day.

In the U.S. Stores, the store manager or head chef determines the amount of raw materials to be ordered on a weekly or daily basis based on his or her experience and recent sales trends of their products. The U.S. Stores usually keep inventories low and rely on in-time deliveries from suppliers. The U.S. Stores take stock of their inventory at the end of each month to understand the amount of raw material used.

**Marketing and Sale Strategies** 

***Pricing and Discounting***

The PRC Stores and the U.S. Stores determine their product prices on the basis of various factors, including the consumption power of their targeted customer groups, market demand for specific products, product cost, prices of competitive products, and the macroeconomic environment. Such method gives the PRC Stores and the U.S. Stores the space to change prices flexibly if circumstances require them to do so and allows them to better respond to customers' changing sensitivity to price. This advantageous approach has allowed the PRC Stores and the U.S. Stores, and, we expect will continue, to attract more customers and reinforce and further expand brand loyalty. The PRC Stores and the U.S. Stores plan to further refine their calculation formula to ensure that their product prices accurately and cautiously take into consideration both existing and potential market factors.

On a periodic basis, the PRC Stores and the U.S. Stores design and execute discounting strategies to stimulate sales. The PRC Stores and the U.S. Stores have effectively adopted a number of discounting strategies, including: in the PRC Stores, (i) a member day on which members enjoy 12% off original prices of all products each week, (ii) discounting activities on third-party digital platform, and (iii) discounting benefits enjoyable only through using credit cards issued by Shanghai Pudong Development Bank Co., Ltd; in Chanson 23rd Street, (i) an "All Week Brunch" menu from 11:30 a.m. to 4:30 p.m. that allows its customers to try its café items and dessert items at the same time at a discounted price, (ii) a "Dessert Tasting" menu with seasonal selections from its dessert bar, and (ii) discounts to employees of nearby corporations, such as Estee Lauder and Tiffany; and in Chanson Greenwich, (i) a "Weekday Lunch Special" menu from 10 a.m. to 3 p.m. that allows its customers to try its café items and dessert items at the same time at a discounted price and (ii) discounts to employees of nearby corporations, such as Citibank and Goldman Sachs.

***Social Media***

The PRC Stores and the U.S. Stores enhance publicity of their products and the effectiveness of their other marketing strategies on major Chinese and U.S. social media platforms and their own websites.

The PRC Stores operate official accounts on WeChat, Weibo, and Douyin, which had an aggregate of over 24,710 followers as of December 2022, and regularly post information of their new products, discounting activities, and brand development there.

The U.S. Stores operate four official accounts on Instagram, which had over 67,000 followers in total, and four official Facebook accounts, which had over 25,400 followers, as of December 2022. The U.S. Stores regularly post pictures of their stores and products with detailed information of their new products and promotion activities to attract potential customers and promote their image as a modern European-style café and eatery specializing in dessert-making.

Since 2019, the U.S. Stores have partnered with Aranka Media Enterprise, a full-service media agency, to accelerate its brand growth and improve customer relationships. Aranka Media Enterprise oversees the U.S. Stores' media strategy and entire online presence, including their presence on digital booking systems, delivery platforms, and social media. Aranka Media Enterprise also implements data collection systems to provide sales reports and market analyses, which help the U.S. Stores discover new consumer trends and optimize physical storefront operations.

**Properties**

 ***Properties in the PRC***

We maintain our headquarters and the central factory of the PRC Stores in Urumqi, Xinjiang.

The old central factory of the PRC Stores has three production lines, which run 40 to 45 hours per week. Equipped with advanced production equipment, including egg-beating machines, proofing cabinets, dough mixers, ovens, hot stoves, and cold-storage facilities, the old central factory has an annual production capacity of bakery products worth RMB80 million (approximately $12.41 million). During the fiscal year ended December 31, 2021, the old central factory was at approximately 54% of the annual production capacity and produced bakery products and semi-finished products worth RMB43 million (approximately $6.71 million). The PRC Stores stopped their production in this central factory after their new central factory began production in August 2022. Pursuant to a Premises Use Agreement dated April 30, 2020 and a Supplemental Agreement dated June 18, 2020, Urumqi Plastic Surgery Hospital Co., Ltd., a PRC company controlled by our Chairman, Gang Li, provided approximately 5,382 square feet office space for our headquarters and 10,763 square feet for the old central factory without charge. The term of the agreement is from January 1, 2020 to June 25, 2028, unless otherwise terminated by either party.

Xinjiang United Family has constructed a new central factory in Urumqi, Xinjiang, to expand the production capacity of the PRC Stores. On June 30, 2021, Xinjiang United Family entered into a lease agreement for approximately 54,638 square feet of building space and paid a deposit of RMB574,357 (approximately $90,000). The term of the lease agreement is from June 15, 2021 to June 14, 2031, unless otherwise terminated by either party, and the annual rent is RMB1,148,714 (approximately $180,000) for the first year with annual increments of 2.5%. Xinjiang United Family is required to notify the landlord in advance within 90 days prior to the end of the lease term if it would like to renew the lease agreement. The investment budget for the new central factory is approximately RMB17.9 million (approximately $2.8 million) after VAT deduction and the new central factory is designed to have an annual production capacity of bakery products, seasonal products, and beverage products worth (on the raw cost basis) RMB150 million (approximately $23.26 million). As of December 31, 2022, Xinjiang United Family had spent approximately RMB12.9 million (approximately $1.9 million) for the construction. The construction of the production line for bakery products was completed in June 2022 and the new central factory began production in August 2022. Xinjiang United Family plans to start the construction of two additional production lines for beverage products and seasonal products in 2023 and complete them in late 2023. Xinjiang United Family plans to use cash flow from the operations of the PRC Stores to fund the construction. For details, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources."

Our PRC subsidiary and the VIEs currently operate 33 stores in Xinjiang, with individual store sizes ranging from 215 square feet to 2,640 square feet and an average monthly rent of RMB32,335 (approximately $5,092). Our PRC subsidiary and the VIEs lease all these store spaces from third-party individuals and corporations, except that the store space of Wenhua is provided by Urumqi Plastic Surgery Hospital Co., Ltd., pursuant to a Premises Use Agreement and a Supplemental Agreement without charge.

The following table shows the information of the PRC Stores as of the date of prospectus:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Store** | **City** | **Size (Square Feet)** | **Opened** |
| 1 | Midong | Urumqi | 579 | April 2017 |
| 2 | Dehui Wanda | Urumqi | 1111 | January 2018 |
| 3 | Changji Youhao | Changji | 1029 | August 2015 |
| 4 | Changji Huijia | Changji | 861 | September 2015 |
| 5 | Hongshan | Urumqi | 2422 | November 2017 |
| 6 | Beimen | Urumqi | 942 | May 2018 |
| 7 | Minzhu | Urumqi | 1830 | April 2014 |
| 8 | Riyue Xingguang | Urumqi | 1428 | May 2014 |
| 9 | Wanyancheng | Urumqi | 1152 | October 2017 |
| 10 | Huarun Wanjia | Urumqi | 482 | January 2015 |
| 11 | Medical College | Urumqi | 990 | July 2017 |
| 12 | Changchun | Urumqi | 1335 | March 2014 |
| 13 | Huijia Third Floor | Urumqi | 920 | September 2012 |
| 14 | Baishang | Urumqi | 1276 | February 2019 |
| 15 | Xiaoxigou | Urumqi | 1184 | April 2019 |
| 16 | Railway Bureau | Urumqi | 1830 | May 2019 |
| 17 | Economics Development Wanda | Urumqi | 1253 | July 2019 |
| 18 | Hongshan Lifestyle Store | Urumqi | 2640 | November 2019 |
| 19 | Nanhu | Urumqi | 1507 | September 2020 |
| 20 | Hebei Road Huarun | Urumqi | 1033 | October 2020 |
| 21 | Degang Wanda | Urumqi | 1163 | December 2020 |
| 22 | Xinbei Yuanchun | Urumqi | 814 | October 2021 |
| 23 | Dehui Wangda Fourth Floor | Urumqi | 215 | November 2021 |
| 24 | Qingnian Road Haojiaxiang | Urumqi | 861 | November 2021 |
| 25 | Vanke Jincheng Huafu | Urumqi | 910 | November 2021 |
| 26 | Gaoxin Wanda | Urumqi | 1481 | December 2021 |
| 27 | Shidai Guangchang | Urumqi | 1841 | June 2022 |
| 28 | Meimei No. 2 | Urumqi | 239 | March 2023 |
| 29 | Shihezi | Shihezi | 799 | May 2014 |
| 30 | Tianbai | Urumqi | 807 | October 2015 |
| 31 | Wenhua | Urumqi | 1184 | October 2012 |
| 32 | Meimei | Urumqi | 1442 | November 2012 |
| 33 | Ruitai | Urumqi | 1076 | May 2015 |

---

Subject to specific terms of each lease agreement, lease terms range from one to six years. With respect to the payment method of lease fee, some agreements require a minimum rent per month, typically including rent increases after the first year, while the remaining agreements specify a fixed rent per year and requires a first-year deposit in advance. The agreements generally require the PRC Stores to pay insurance, utilities, real estate taxes, and repair and maintenance expenses. The termination clause provides a lessor the right to terminate a lease agreement under different situations, including but not limited to nonpayment of rent, changed purpose of the lease space without the lessor's permission, and illegal conducts at the lease space. Correspondingly, some lease agreements provide the PRC Stores the right to terminate the agreement if the lessor does not provide access to the leased space upon the PRC Stores' payment of lease fee or has not properly repaired broken areas of the leased space.

Tangible properties of the PRC Stores and central factory include production, transportation, and electronic equipment.

 ***Properties in the U.S.*** 

Chanson 23rd Street leases 3,900 square feet of store space in New York City from a third party for a lease term of 15 years starting from January 2017, with a monthly rent of $50,000 and an increase in the monthly base rent every year. The agreement requires Chanson 23rd Street to pay insurance, utilities, and repair and maintenance expenses, and acquire all required licenses and permits from governmental authorities. Chanson 23rd Street may extend the lease for an additional five years upon its expiration.

Chanson Greenwich leases 4,140 square feet of store space in New York City from a third party for a lease term of 10 years starting from July 1, 2020, with an annual rent of $385,000 and an increase in the annual base rent starting from the third year. The agreement requires Chanson Greenwich to pay insurance, utilities, and repair and maintenance expenses, and acquire all required licenses and permits from governmental authorities. Chanson Greenwich may extend the lease for an additional six years upon its expiration.

Chanson 3rd Ave leases 1,069 square feet of store space and 1,041 square feet of storage space in New York City from a third party for a lease term of 15 years starting from August 9, 2021, with an annual rent of $168,000 and an increase in the annual base rent every year. The agreement requires Chanson 3rd Ave to pay insurance, utilities, and repair and maintenance expenses, and acquire all required licenses and permits from governmental authorities.

Chanson Broadway leases 850 square feet of store space in New York City from a third party for a lease term of 10 years starting from April 1, 2022, with an annual rent of $222,000 and an increase in the annual base rent every year. The agreement requires Chanson Broadway to pay insurance, utilities, and repair and maintenance expenses, and acquire all required licenses and permits from governmental authorities.

Chanson NY rents three offices in New York City from a third party pursuant to a month-to-month office agreement starting from August 1, 2021, with a monthly rent of $5,474.

Tangible properties of the U.S. Stores include production, transportation, and electronic equipment. As of December 2022, the transportation team of the U.S. Stores had a cargo van capable of transporting up to 1 ton of goods per transition per day.

**R&D**

A considerable portion of sales of the PRC Stores and the U.S. Stores is driven by the introduction of new products, and as a result, product R&D is, and will continue to be, an important component of their business. The PRC Stores and the U.S. Stores take a deliberate approach to new product development, with a primary focus on enhancing the quality, flavor, texture, presentation, and packaging of their products while adjusting product formulas and evolving production methods to meet customers' demand for healthy, nutritious, and ready-to-eat food. In the realm of experimenting with healthy food concepts, such as low in carb, low in sugar, and high in fiber and vitamins, they have been exploring new product categories, including multi-grain products and products enriched with minerals.

The PRC Stores maintain an in-house R&D team to improve their market research and customer insight capabilities. Currently, the R&D team of the PRC Stores has six employees. The PRC Stores and the U.S. Stores expect to invest resources to retain more qualified employees. Their R&D team members frequently participate in industry conferences and engage with industry experts to develop product formulas that follow key customer trends and to enhance their product quality. Their management team also regularly attends industry exhibits in Japan, the U.S., and the European countries to learn about the most up-to-date industry trends and developments, deepening their expertise in brand building and product diversification.

The passion and dedication for innovation of the PRC Stores and the U.S. Stores has been translated into their ability to develop and introduce new products and ramp them into volume with a fast pace, converting their advantage in R&D into their commercial competitive advantage in the bakery industry. As of December 2022, the PRC Stores had introduced over 145 types of new products and the U.S. Stores had introduced 36 types of new products since 2021.

Through years of effort, the PRC Stores and the U.S. Stores have also developed a systematic approach to refine product packaging. They seamlessly combine functionality with aesthetics by integrating automatic packaging and packaging techniques with an exceptional heat-sealing feature with stylish graphic designs.

**Intellectual Property** 

***Trademark***

Xinjiang United Family has registered the brand name, "George●Chanson," as its trademark in 19 categories, its logo as its trademark in six categories, and "The thyme bar" as its trademark in four categories in the PRC. These registrations allow the PRC Stores to exclusively use the trademark in areas under those categories. Chanson 23rd Street has registered "CHANSON," "PATISSERIE CHANSON," and "CHANSON NEW YORK<sup>TM</sup>" as its trademarks in the U.S. The following tables summarize these trademark registrations:

Trademarks Registered in the PRC

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Registration Number** | **Category** | **Effective Period** | **Trademark Logo** |
| 1 | 17999111 | 40 | 11/07/2016-11/06/2026 | ![](image_016.jpg) |
| 2 | 17999258 | 43 | 11/07/2016-11/06/2026 | ![](image_016.jpg) |
| 3 | 17999032 | 31 | 11/07/2016-11/06/2026 | ![](image_016.jpg) |
| 4 | 17999068 | 33 | 11/14/2016-11/13/2026 | ![](image_016.jpg) |
| 5 | 17998952 | 5 | 11/14/2016-11/13/2026 | ![](image_016.jpg) |
| 6 | 17998971 | 29 | 11/14/2016-11/13/2026 | ![](image_016.jpg) |
| 7 | 13241648 | 30 | 04/14/2015-04/13/2025 | ![](image_016.jpg) |
| 8 | 13241661 | 32 | 04/14/2015-04/13/2025 | ![](image_016.jpg) |
| 9 | 13241679 | 39 | 03/28/2015-03/27/2025 | ![](image_016.jpg) |
| 10 | 12911052 | 35 | 08/07/2017-08/06/2027 | ![](image_016.jpg) |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| 11.0 | 39954090 | 35 | 10/28/2020-10/27/2030 | ![](image_019.jpg) |
| 12.0 | 39954063 | 30 | 11/07/2020-11/06/2030 | ![](image_019.jpg) |
| 13.0 | 44626303 | 30 | 12/07/2020-12/06/2030 | ![](image_020.jpg) |
| 14.0 | 44629314 | 32 | 12/07/2020-12/06/2030 | ![](image_020.jpg) |
| 15.0 | 44623341 | 33 | 12/07/2020-12/06/2030 | ![](image_020.jpg) |
| 16.0 | 44639541 | 35 | 12/21/2020-12/20/2030 | ![](image_020.jpg) |
| 17.0 | 53288503  | 8  | 08/28/2021-08/27/2031  | ![](image_021.jpg) |
| 18.0 | 53317617  | 11  | 08/28/2021-08/27/2031  | ![](image_022.jpg) |
| 19.0 | 53296291  | 21  | 08/28/2021-08/27/2031  | ![](image_023.jpg) |
| 20.0 | 53302745  | 16  | 09/07/2021-09/06/2031  | ![](image_024.jpg) |
| 21.0 | 53157597  | 36  | 09/07/2021-09/06/2031  | ![](image_025.jpg) |
| 22.0 | 53310418 | 44 | 09/07/2021-09/06/2031 | ![](image_026.jpg) |
| 23.0 | 53141021 | 41 | 09/14/2021-09/13/2031 | ![](image_026.jpg) |
| 24.0 | 53140661 | 3 | 09/21/2021-09/20/2031 | ![](image_026.jpg) |
| 25.0 | 56986085 | 25 | 12/28/2021-12/27/2031 | ![](image_027.jpg) |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| 26 | 53129642 | 30 | 03/28/2022-03/27/2032 | ![](image_029.jpg) |
| 27 | 53145548 | 32 | 03/28/2022-03/27/2032 | ![](image_029.jpg) |
| 28 | 53145551 | 33 | 03/28/2022-03/27/2032 | ![](image_029.jpg) |
| 29 | 53145555 | 35 | 03/28/2022-03/27/2032 | ![](image_029.jpg) |

---

Trademarks Registered in the U.S.

---

| | | | |
|:---|:---|:---|:---|
| | **Registration Number** | **Registration Date** | **Trademark Logo** |
| 1 | 5785931 | June 25, 2019 | CHANSON<sup>TM</sup> |
| 2 | 5768100 | June 4, 2019 | ![](image_017.jpg) |
| 3 | 5768096 | June 4, 2019 | ![](image_018.jpg) |

---

Chanson 23rd Street is also currently registering a trademark for Thyme Bar in the U.S. and the trademark was published in the Trademark Official Gazette on March 29, 2022.

  **

***Domain Name***

 **

The operating entities own the internet domain names www.xsong.com.cn in the PRC and www.chanson-international.com, www.patisseriechanson.com, www.thymebarnyc.com, and chansonlesalon.com in the U.S.

  **

***Patent***

 **

As of the date of this prospectus, the operating entities do not own any patent and have not applied for the registration of patent design or any other means of patent protection. Nevertheless, the operating entities plan to actively apply for patent protection with respect to their independently designed packaging methods and production methods.

**Employees**

As of December 31, 2022, 2021, and 2020, our PRC subsidiary and the VIEs had 294, 305, and 272 employees and our subsidiaries in the U.S. had 60, 41, and 18 employees, respectively. The following table sets forth the number of employees of our subsidiaries and the VIEs on December 31, 2022 by area of business:

**Employees based in the PRC**

---

| | |
|:---|:---|
|  | **Number of<br> Employees** |
| Management | 10 |
| Finance | 15 |
| Production and R&D | 68 |
| General and Administration | 8 |
| Logistics | 10 |
| Marketing and Sales | 183 |
| Total | 294 |

---

**Employees based in the U.S.**

---

| | |
|:---|:---|
|  | **Number of Employees** |
| Management | 7 |
| Cooking and Baking | 18 |
| Finance | 1 |
| Logistics | 1 |
| General and Administration | 3 |
| General Store Operation | 30 |
| Total | 60 |

---

***Employment Agreements, Non-competition, and Confidentiality***

 ****

Generally, our PRC subsidiary and the VIEs enter into standard employment agreements with their officers, managers, and other employees, and our subsidiaries in the U.S. enter into at-will employment agreements with their employees. According to the non-competition and confidentiality clause in these agreements, the operating entities ask senior executives and key employees, especially those with the opportunity to deal with their trade secrets and other intellectual property, to enter into separate non-competition ad confidentiality agreements with them.

The non-competition and confidentiality agreements prohibit employees from engaging in any other employment during the period of their employment with the operating entities and from soliciting the operating entities' customers on behalf of themselves or any third party. The agreements restrict employees from making any comments that could defame the operating entities' reputation. The agreements further prohibit employees from disclosing any information and knowledge about the operating entities' business, operation, development, and strategies, including trade secrets and their customers' information, to any third party, as long as employees have acquired the information and knowledge during their employment term at the company. Employees of the PRC Stores whose employment agreements are not renewed are prohibited from working for competitors in two years after they leave the PRC Stores. Employees' obligation to confidentially keep the PRC Stores' trade secrets survives beyond the termination or expiration of their employment agreements.

***Occupational Health and Safety***

 ****

The PRC Stores and the U.S. Stores fulfill their legal responsibility to protect the health and safety of their employees by providing a safe workplace that meets the applicable labor and sanitation standards, controlling risks to health, and ensuring that their plants and machinery are safe and that work safety systems and guidelines are both established and adhered to. The PRC Stores and the U.S. Stores also make sure that dangerous articles and substances are transported, stored, and used safely, provide adequate welfare facilities, provide employees the information, instruction, training, and supervision necessary to preserve their health and safety, and consult with employees on health and safety matters.

In general, the PRC Stores and the U.S. Stores consider their relationship with their employees to be good.

**Seasonality**

Bakery products sold by the PRC Stores and the U.S. Stores and eat-in services offered by the U.S. Stores have not experienced obvious seasonal fluctuations in their sales as these products have been commonly consumed on a daily basis by customers. Beverage products sold by the PRC Stores and the U.S. Stores have experienced in the past, and expect to continuously experience in the future, higher retail sales during summer as a result of higher customer demand. Seasonal products sold by the PRC Stores have experienced in the past, and expect to continuously experience in the future, seasonal fluctuations in their retail sales as a result of customers' increased demand for these seasonal products as gifts and for person consumption during festival seasons. Historically, the PRC Stores generate almost all the retail sales of their seasonal products during the one or two months before Dragon Boat Festival and Mid-Autumn Festival, which respectively take place at the end of the second quarter and the beginning of the third quarter of a year.

**Legal Proceedings**

We are currently not a party to any material legal proceeding. From time to time, however, we may be subject to various claims and legal actions arising in the ordinary course of business.

**REGULATIONS**

This section sets forth a summary of the principal laws and regulations relevant to our business and operations in the PRC and the U.S.

**PRC Regulations**

***Regulations on Food Production and Food Business Operation***

*Food Safety*

 ****

The Food Safety Law of the People's Republic of China, or the "Food Safety Law," was promulgated by the SCNPC on February 28, 2009, and amended on April 24, 2015, and December 29, 2018. The Food Safety Law is formulated for the purposes of ensuring food safety and safeguarding the physical health and life of members of the public. Persons engaging in food manufacturing and processing, circulation of food, and storage and transportation of food in the PRC shall comply with this law. Under the Food Safety Law, food manufacturers and food business operators shall be accountable for the safety of food consumers, comply with food safety standards, and satisfy the specific requirements.

The Food Safety Law establishes a licensing system for food manufacturing and food business operations, which means persons engaging in food manufacturing, foodstuff sale, and food and beverage services shall obtain a permit. According to the Implementation Regulations for the Food Safety Law, which was promulgated by the State Council of the PRC on July 20, 2009, and amended in 2016, a food production permit shall be valid for three years. The Implementation Regulations for the Food Safety Law were amended in 2019, which stipulates that a food production permit shall be valid for five years starting from December 1, 2019.

*Food Production Permit and Food Business Permit*

The Administrative Measures for Food Production Permitting, or the "Food Production Permitting Measures," were promulgated by the China Food and Drug Administration, or "CFDA," on August 31, 2015, and were amended on November 7, 2017 and December 23, 2019. Pursuant to the Food Production Permitting Measures, an enterprise shall obtain a food production permit prior to engaging in food production activities within the territory of the PRC. The principle of one permit per enterprise is applied to food production permitting, and the Market Supervision and Management Department implements classified permitting on food production, according to the degree of risk of food. When applying for the food production permit, food manufacturers should have places for raw material handling, places for processing, packaging, and storage of food, and manufacturing equipment or facilities, compatible with the category and quantity of the food under production, and a reasonable equipment layout and production process, and other conditions required by laws and regulations. Our PRC subsidiary Xinjiang United Family has obtained a food production permit that allows it to manufacture bakery products. The permit will expire on November 23, 2026, and Xinjiang United Family will file a renewal request 30 business days prior to the expiration date. In general, as long as a business entity operates legally and in good standing, its renewal request will be approved.

The Administrative Measures for Food Business Permitting, or the "Food Business Permitting Measures," were promulgated by CFDA on August 31, 2015, and were amended on November 7, 2017 and December 23, 2019. According to the Food Business Permitting Measures, an enterprise shall obtain a food business permit prior to engaging in food sale and catering services within the territory of the PRC. The principle of one permit per enterprise is applied to the food business permitting. When applying for the food business permit, food business operators should meet certain conditions in accordance with laws and regulations, including but not limited to requirements on places for food processing, storing, and selling, operational equipment and facilities, food safety management personnel, regulations and rules on food safety assurance, reasonable equipment layout, and technological processes.

As of the date of this prospectus, (i) the three branch offices of Xinjiang United Family have obtained the food business permits, (ii) one UFG entity is applying for its food business permit and six UFG Entities are applying for the renewal of their food business permits; and (iii) all remaining UFG Entities have obtained the food business permits, which are valid currently, allowing them to retail bakery products and store-made beverages and juice products, although some of them did not have the food business permits at the time of their opening. Pursuant to the Food Safety Law, the failure of these entities to have the food business permit at the time of opening may result in the confiscation of their illegal income, foodstuffs from the illegal business operations, tools, equipment, and ingredients used in the illegal activities. Where the value of foodstuffs from the illegal operations is less than RMB10,000 (approximately $1,446), a fine ranging from RMB50,000 (approximately $7,231) to RMB100,000 (approximately $14,460) shall be imposed; where the value of foodstuffs is RMB10,000 (approximately $1,446) or more, a fine ranging from 10 to 20 times the value of the foodstuffs shall be imposed. Although the PRC Stores have not received any notice of warning or been subject to penalties or other penalties such as income confiscation from the relevant governmental authorities regarding conducting their business without the above mentioned permits, we cannot assure you that the PRC Stores will not be subject to any penalties in the future. The PRC Stores will file a renewal request 30 business days prior to the expiration date of those permits. In general, as long as a business entity operates legally and is in good standing, its renewal request will be approved, but we cannot assure you that the PRC Stores will be able to renew such permits in the future.

*Employee Health Examination System and Health Record System*

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Under the Food Safety Law and the Implementation Regulations for the Food Safety Law, food manufacturers and food business operators are required to establish and implement an employee health examination system and a health record system. Persons suffering from diseases that may cause food safety issues as prescribed by the health administrative department of the State Council shall not engage in work in contact with ready-to-eat food. Personnel of food manufacturers and food business operators shall undergo annual health checks and may undertake duties only upon obtaining health certificates. The PRC Stores have established an employee health examination system and a health record system, and their employees have obtained the health certificates as required. Their employee health examination system and health record system are updated once a year and no employee is allowed to work in the PRC Stores or central factory without first obtaining a health certificate, which is valid for a year.

*Procurement Check Record System and Food Inspection System* 

Under the Food Safety Law and the Implementation Regulations for the Food Safety Law, food manufacturers and food business operators shall examine the relevant licenses and eligibility certification documents of the suppliers when procuring food ingredients, food additives, food-related products, and food. If the relevant eligibility certification documents are unavailable, food ingredients, food additives, food-related products, and food shall be inspected in accordance with food safety standards and shall not be procured or used if they do not meet these standards. Food manufacturers and food business operators are required to establish a record system for inspection of procured food ingredients, food additives, food-related products, and food, and truthfully record the names, specifications, quantities, production date or batch number, shelf life and purchase date, names and contact information of suppliers of food ingredients, food additives, food-related product and food, and retain the relevant certificates. The inspection records for procured food ingredients, food additives, food-related products, and food shall be true and be retained for at least six months after the expiration of the shelf life of the product. If there is no shelf life, the records and certificates shall be kept for at least two years. Food manufacturers are also required to establish a record system for the inspection of food exiting its factory, check its inspection certificate and safety status, and record the information truthfully. The PRC Stores have established a record system and are currently in compliance with the relevant legal requirements.

*Food Recall System* 

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A food recall system has been established in the PRC in accordance with the Food Safety Law and the Implementation Regulations on the Food Safety Law. On March 11, 2015, CFDA promulgated the Administrative Measures for Food Recall, which came into effect on September 1, 2015. The Administrative Measures for Food Recall provides for detailed rules on the food recall system. A food manufacturer shall, upon discovering that the food produced by itself does not comply with the food safety standards, immediately stop production, recall the food from the market, notify the relevant food business operators and consumers, and record information of the recall and notification. A food business operator shall, upon discovering that the food in its business operations does not comply with the food safety standards, immediately cease business operation, notify the relevant food distributors and consumers, and record information of cessation of business operation and notification. Where the food manufacturer deems that recall of the food is necessary, the food shall be recalled immediately. The food manufacturers and food business operators shall carry out innocuous treatment and destruction measures for recalled food to prevent the recalled food from being re-circulated to the market, and report the information of recall and treatment of the food to the local branch of CFDA at or above the county level.

*Pollutant Discharge Permit*

 

Article 45 of the Environmental Protection Law of the People's Republic of China, which became effective on January 1, 2015, stipulates that enterprises, institutions, and other producers and operators that implement pollution discharge permit management in China shall discharge pollutants in accordance with the requirements of the pollution discharge license; those who have not obtained the discharge license shall not discharge pollutants. At the same time, according to the relevant regulations of the "the List of Classification Management of Emission Permit for Fixed Source of Pollution (2019 Edition)," key management, simplified management, and registration management of pollutant discharge permit have been implemented. Pollutant discharge units that implement registration management do not need to apply for a pollutant discharge permit, but should fill in the pollutant discharge registration form on the national pollutant discharge permit management information platform. Based on the situation of the central factory of the PRC Stores, as well as their production equipment and production process, at least a sewage registration is required. As of the date of this prospectus, Xinjiang United Family has completed the sewage registration.

According to Article 63 of the Environmental Protection Law of the People's Republic of China, if an enterprise, institution, or other producer or business operator, in violation of the provisions of the law, discharges pollutants without obtaining a pollutant discharge license, and is ordered to stop discharging pollutants but refuses to carry out the order, which does not constitute a crime, in addition to punishment in accordance with relevant laws and regulations, the Environmental Protection Departments of the People's Governments at or above the county level or other relevant departments shall transfer the case to the Bureau of Public Security. The person in charge and other persons directly responsible shall be detained for not less than 10 days but not more than 15 days; if the circumstances are relatively minor, they shall be detained for not less than five days but not more than 10 days.

***Regulations on Product Quality***

Manufacturers and sellers of defective products in the PRC may incur liability for losses and injuries caused by such products. In accordance with the Product Quality Law of the PRC, or the "Product Quality Law," promulgated on February 22, 1993, and amended on July 8, 2000, August 27, 2009, and December 29, 2018, manufacturers and sellers are responsible for the product quality.

Under the Product Quality Law, manufacturers and sellers shall establish a sound internal product quality control system. Adulteration of, or mixing of improper elements with products produced or sold, selling fake products as genuine products, or selling products of poor quality as high-quality products is prohibited. Substandard products shall not be sold as products that are up to standard. Product shall have no unreasonable danger to personal safety or the safety of property. Where there are national or industry standards for the protection of health, personal safety, and the safety of property, such standards shall be complied with. Manufacturers shall not produce products that the State has determined should be eliminated. Manufacturers shall not falsify the place of origin of products or falsify or imitate the name or address of another factory. Sellers shall adopt measures to maintain the quality of products sold. Sellers shall not sell any products that the State has determined should be eliminated and whose sale has ceased, or any expired products or deteriorated products.

The Consumer Protection Law of the PRC, which was promulgated on October 31, 1993, and amended on October 25, 2013, and came into effect on March 15, 2014, has also provided protection for customers regarding food safety. Food business operators shall ensure the requisite quality, function, use, and shelf life of their goods under normal use, except where a consumer is aware of a defect before purchasing the goods, and the defect does not violate the mandatory provisions of the law. Food business operators demonstrating the quality of their goods or services through advertisements, product demonstrations, actual samples or any other methods shall ensure that the actual quality of their goods is consistent with the demonstrated quality.

***Regulations on Product Liabilities***

The Tort Liability Law, which was promulgated by the SCNPC on December 26, 2009, and became effective on July 1, 2010, provides that where a product endangers life or property due to its defect, the manufacturers and the distributors shall bear the tort liability.

Under the Product Quality Law, if personal injury is caused by a defective product, the manufacturer or seller shall pay for medical expenses, nursing expenses during medical treatment, and lost income due to absence from work to the victim. If the personal injury has resulted in disability, the manufacturer or seller shall also be responsible for the expenses for self-supporting equipment, living allowances, compensations for the disabled person and the living expenses necessary for those supported by the disabled person. If a death is caused by the defect, the manufacturer or seller shall pay for the funeral expenses, compensations, and the living expenses necessary for those supported by the dead. If the defective product causes damage to property, the manufacturer or seller shall restore the property to its original state or compensate for the depreciated price. If the injured party suffers other major losses as a result thereof, the injuring party shall compensate for such losses as well. The authorities shall order suspension of production or sale, confiscate the products illegally produced or sold, impose a fine and confiscate the unlawful proceeds therefrom, if any. Where the case is serious, the business license shall be revoked. Where a criminal offense is constituted, the offenders shall be pursued for criminal liabilities.

***Regulations on Internet Advertising***

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The Interim Measures for the Administration of Internet Advertising, which was promulgated by the SAIC on July 4, 2016 and came into effect on September 1, 2016, governs all advertisements published on the Internet, including but not limited to advertisements in the form of text, image, audio, and video which are published through websites, web pages, and applications. Internet advertisement operators and publishers (1) shall not design, produce, or provide agency services for or publish any advertisements they know or should have known to be false; (2) shall establish a review and file management system, inspect and verify relevant supporting documents, and check content of advertisements; and (3) shall not design, produce, or provide agency services for or publish any advertisements whose content is untrue or without sufficient supporting documents.

***Regulations relating to Information Security and Privacy Protection***

Internet content in China is regulated and restricted from a state security standpoint. On December 28, 2000, the SCNPC enacted the Decisions on Maintaining Internet Security, later amended on August 27, 2009, which subject violators to criminal punishment in China for any effort to: (1) use the Internet to market fake and substandard products or carry out false publicity for any commodity or service; (2) use the Internet for the purpose of damaging the commercial goodwill and product reputation of any other person; (3) use the Internet for the purpose of infringing on the intellectual property of any person; (4) use the Internet for the purpose of fabricating and spreading false information that affects the trading of securities and futures or otherwise jeopardizes the financial order; or (5) create any pornographic website or webpage on the Internet, provide links to pornographic websites, or disseminate pornographic books and magazines, movies, audio-visual products, or images. Pursuant to the Administrative Measures for the Security Protection of Computer Information Networks Linked to the Internet, which was promulgated by the Ministry of Public Security (the "MPS") on December 16, 1997 and later amended and became effective on January 8, 2011, the Internet is prohibited to be used in ways which, among other things, would result in a leakage of state secrets or a spread of socially destabilizing content. On December 13, 2005, the MPS promulgated the Provisions on the Technical Measures for the Protection of the Security of the Internet, which require internet service providers to take proper measures including anti-virus, data back-up, and other related measures, to keep records of certain information about its users (including user registration information, log-in and log-out time, IP address, content, and time of posts by users) for at least 60 days, and to detect illegal information, stop transmission of such information, and keep relevant records. If an Internet information service provider violates these measures, the MPS and the local public security bureaus may recommend that the original certificate examination, approval, and issuing organizations revoke its operating license and shut down its websites. Pursuant to the Circular of the MPS, the State Secrecy Bureau, the State Cipher Code Administration, and the Information Office of the State Council on Printing and Distributing the Administrative Measures for the Graded Protection of Information Security, which was promulgated on June 22, 2007, the state shall, by formulating nationally effective administrative norms and technical standards for the graded protection of information security, organize citizens, legal persons, and other organizations to grade information systems and protect their security, and supervise and administer the graded protection work. The security protection grade of an information system may be classified into the five grades. To newly build an information system of Grade II or above, its operator or user shall, within 30 days after the information system is put into operation, go through the record-filing procedures at the local public security organ at the level of municipality divided into districts or above.

***Regulations on Intellectual Property Rights***

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*Trademarks*

Trademarks are protected by the PRC Trademark Law adopted on August 23, 1982, and subsequently amended on February 22, 1993, October 27, 2001, and August 30, 2013, as well as the Implementation Regulation of the PRC Trademark Law adopted by the State Council in August 3, 2002, and amended on April 29, 2014 and April 23, 2019. The PRC Trademark Office under the State Administration of Market Regulation handles trademark registrations and grants a term of 10 years to registered trademarks and another 10 years if requested upon expiration of the first or any renewed 10-year term. Trademark license agreements must be filed with the PRC Trademark Office for record. The PRC Trademark Law has adopted a "first-to-file" principle with respect to trademark registration. Where a trademark to be registered is identical or similar to another trademark which has already been registered or been subject to a preliminary examination and approval for use on the same kind of or similar goods or services, the application for registration of such trademark may be rejected. Any person applying for the registration of a trademark may not prejudice the existing right first obtained by others, nor may any person register in advance a trademark that has already been used by another party and has already gained a "sufficient degree of reputation" through such party's use. After receiving an application, the PRC Trademark Office will make a public announcement if the relevant trademark passes the preliminary examination. During the three months after this public announcement, any person entitled to prior rights and any interested party may file an objection against the trademark. The PRC Trademark Office's decisions on rejection, objection, or cancellation of an application may be appealed to the PRC Trademark Review and Adjudication Board, whose decision may be further appealed through judicial proceedings. If no objection is filed within three months after the public announcement or if the objection has been overruled, the PRC Trademark Office will approve the registration and issue a registration certificate, at which point the trademark is deemed to be registered and will be effective for a renewable 10-year period, unless otherwise revoked. For licensed use of a registered trademark, the licensor shall file record of the licensing with the PRC Trademark Office, and the licensing shall be published by the PRC Trademark Office. Failure of the licensing of a registered trademark shall not be contested against a good faith third party. As of December 2022, Xinjiang United Family held 29 registered trademarks in the PRC and enjoyed the corresponding rights.

*Copyrights*

In accordance with the Regulations on the Protection of Computer Software promulgated by the State Council on December 20, 2001 and last amended on January 30, 2013, Chinese citizens, legal persons, or other entities own the copyright, including the right of publication, right of authorship, right of modification, right of reproduction, distribution right, rental right, right of network communication, translation right, and other rights software copyright owners shall have in software developed by them, regardless of whether the software has been published. In accordance with the Measures for the Registration of Computer Software Copyright promulgated by the National Copyright Administration on April 6, 1992 and last amended on February 20, 2002, software copyrights, exclusive licensing contracts for software copyrights, and software copyright transfer contracts shall be registered, and the National Copyright Administration shall be the competent authority for the administration of software copyright registration and the Copyright Protection Center of China is designated as a software registration authority. The Copyright Protection Center of China shall grant a registration certification to a computer software copyright applicant who complies with relevant regulations.

*Domain name*

 

In accordance with the Measures for the Administration of Internet Domain Names, which was promulgated by the Ministry of Industry and Information Technology (the "MIIT") on August 24, 2017 and came into effect on November 1, 2017, the Implementing Rules of China Internet Network Information Center on Domain Name Registration, which was promulgated by China Internet Network Information Center (the "CNNIC") on May 28, 2012 and came into effect on May 29, 2012, and the Measures of the China Internet Network Information Center on Domain Name Dispute Resolution, which was promulgated by CNNIC on September 1, 2014 and came into effect on the same date, domain name registrations are handled through domain name service agencies established under relevant regulations, and an applicant becomes a domain name holder upon successful registration, and domain name disputes shall be submitted to an organization authorized by CNNIC for resolution.

In accordance with the Notice from the Ministry of Industry and Information Technology on Regulating the Use of Domain Names in Internet Information Services, which was promulgated by the MIIT on November 27, 2017 and came into effect on January 1, 2018, Internet access service providers shall verify the identity of each Internet information service provider, and shall not provide services to any Internet information service provider which fails to provide real identity information.

*Regulations on Patents*

 

Pursuant to the Patent Law of the PRC, or the "Patent Law," promulgated by the SCNPC on March 12, 1984, most recently amended on December 27, 2008, and effective from October 1, 2009, and the Implementation Rules of the Patent Law of the PRC, promulgated by the State Council on June 15, 2001 and most recently amended on January 9, 2010, there are three types of patents in the PRC: invention patent, utility model patent, and design patent. The protection period is 20 years for invention patent, 10 years for utility model patent, and 15 years for design patent, commencing from their respective application dates. Any individual or entity that utilizes a patent or conducts any other activity in infringement of a patent without prior authorization of the patentee shall pay compensation to the patentee and is subject to a fine imposed by relevant administrative authorities and, if the infringement constitutes a crime, shall be held criminally liable. In the event that a patent is owned by two or more co-owners without an agreement regarding the distribution of revenue generated from the exploitation of any co-owner of the patent, such revenue shall be distributed among all the co-owners.

Existing patents can become narrowed, invalid, or unenforceable due to a variety of grounds, including lack of novelty, creativity, and deficiencies in patent application. In China, a patent must have novelty, creativity, and practical applicability. Under the Patent Law, novelty means that before a patent application is filed, no identical invention or utility model has been publicly disclosed in any publication in China or overseas or has been publicly used or made known to the public by any other means, whether in or outside of China, nor has any other person filed with the patent authority an application that describes an identical invention or utility model and is recorded in patent application documents or patent documents published after the filing date. Creativity means that, compared with existing technology, an invention has prominent substantial features and represents notable progress, and a utility model has substantial features and represents any progress. Practical applicability means an invention or utility model can be manufactured or used and may produce positive results. Patents in China are filed with the State Intellectual Property Office, or the "SIPO." Normally, the SIPO publishes an application for an invention patent within 18 months after the filing date, which may be shortened at the request of applicant. The applicant must apply to the SIPO for a substantive examination within three years from the date of application.

***Regulations on Company Establishment***

The establishment, operation, and management of companies in the PRC is governed by the PRC Company Law, or the "Company Law," as promulgated by the SCNPC on December 29, 1993, effective on July 1, 1994, and subsequently amended in 1999, 2004, 2005, 2013, and 2018. According to the Company Law, companies established in the PRC are either limited liability companies or joint stock limited liability companies. The Company Law applies to both domestic companies and foreign-invested companies.

On March 15, 2019, the National People's Congress approved the Foreign Investment Law of the PRC, or the "Foreign Investment Law," which came into effect on January 1, 2020, repealing simultaneously the Law of the PRC on Sino-foreign Equity Joint Ventures, the Law of the PRC on Wholly Foreign-owned Enterprises, and the Law of the PRC on Sino-foreign Cooperative Joint Ventures. The Foreign Investment Law adopts the management system of pre-establishment national treatment and negative list for foreign investment. Policies in support of enterprises shall apply equally to foreign-funded enterprises according to laws and regulations. Foreign investment enterprises shall be guaranteed that they could equally participate in the setting of standards, and the compulsory standards formulated by the State shall be equally applied. Fair competition for foreign investment enterprises to participate in government procurement activities shall be protected. The Foreign Investment Law also stipulates the protection on intellectual property rights and trade secrets. In addition, Regulations for the Implementation of the Foreign Investment Law of the PRC came into effect as of January 1, 2020.

Notice on the Implementation of Foreign Investment Law and the Registration of Foreign-funded Enterprises was issued by the State Administration for Market Regulation on December 31, 2019. According to such notice, the State Administration for Market Regulation conducts business registration, and the applicant shall apply for the registration of foreign-funded enterprises through the enterprise registration system. The registration authority shall conduct formal examination on relevant application materials. Where a foreign investor or enterprise with foreign investment invests in a field other than those in the negative list, it shall register in accordance with the principle of consistency of domestic and foreign investment.

The Measures for Reporting Foreign Investment Information were adopted by MOFCOM on December 19, 2019, approved by the State Administration for Market Regulation, and became effective on January 1, 2020. According to such measures, when a foreign investor directly or indirectly conducts investment activities in China, the foreign investor or foreign-invested enterprise shall submit investment information to the competent department of commerce in accordance with the measures.

***Regulation on Foreign Investment***

Investment activities in the PRC by foreign investors were principally governed by the Guidance Catalog of Industries for Foreign Investment, promulgated and as amended from time to time by MOFCOM and National Development and Reform Commission ("NDRC"), which was later divided into two legal documents, including the Catalog of Industries for Encouraged Foreign Investment, or the "Encouraged Catalog," and the Special Administrative Measures for Access of Foreign Investment (Negative List), or the "Negative List." The current Encouraged Catalog and Negative List were both promulgated by MOFCOM and NDRC on June 30, 2019, and became effective on July 30, 2019. Industries listed in the Negative List are divided into two categories: restricted and prohibited. Industries not listed in the Negative List are generally constituted "permitted," and are open to foreign investment unless specifically restricted by other PRC regulations. For restricted industries, some are limited to equity or contractual joint ventures, while in some cases Chinese partners are required to hold the majority interests in such joint ventures. In addition, restricted category projects are subject to higher-level government approvals. Foreign investors are not allowed to invest in industries in the prohibited category. The latest Negative List was released by MOFCOM and NDRC on June 30, 2020 and became effective on July 23, 2020. Pursuant to the current and the updated Negative Lists, manufacturing and selling bakery products is an encouraged industry for foreign investment access.

***Regulations on Foreign Exchange***

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*General Administration of Foreign Exchange*

According to the Foreign Exchange Control Regulations of the PRC, which were promulgated by the State Council on January 29, 1996, came into effect on April 1, 1996, and were amended on January 14, 1997, and August 1, 2008 (which amendment came into effect on August 5, 2008), payments for transactions that take place within the PRC must be made in Renminbi. PRC companies or individuals may repatriate foreign exchange receipts received overseas or deposit overseas. Renminbi is freely convertible for current account items, including the distribution of dividends, interest payments, trade and service-related foreign exchange transactions, but not for capital account items, such as direct investments, loans, repatriation of investments and investments in securities outside of the PRC, unless prior approval is obtained from SAFE and prior registration with SAFE is made. Foreign exchange proceeds under the current accounts may be either retained or sold to a financial institution engaged in settlement and sale of foreign exchange. For foreign exchange proceeds under the capital accounts, approval from SAFE is generally required for the retention or sale of such proceeds to a financial institution engaged in settlement and sale of foreign exchange.

*Foreign Investment* 

According to Provisions on Foreign Exchange Control on Direct Investments in China by Foreign Investors, which were promulgated on May 10, 2013, by SAFE, upon establishment of a foreign investment enterprise pursuant to the law, registration formalities shall be completed with SAFE. In the event of subsequent changes in the capital of the foreign investment enterprise such as increase in capital, capital reduction, and equity transfer, registration change formalities shall be completed with SAFE.

Pursuant to the Circular of SAFE on Further Improving and Adjusting Foreign Exchange Administration Policies for Direct Investment, or the "SAFE Circular No. 59," promulgated by SAFE on November 19, 2012, and was further amended on May 4, 2015, as well as October 10, 2018 and December 30, 2019, approval is not required for opening a foreign exchange account and depositing foreign exchange into the account relating to the direct investments. SAFE Circular No. 59 also simplified foreign exchange-related registration required for the foreign investors to acquire the equity interests of Chinese companies and further improve the administration on foreign exchange settlement for foreign investment enterprises.

The Notice of the State Administration of Foreign Exchange on Reforming the Mode of Management of Settlement of Foreign Exchange Capital of Foreign-Funded Enterprises, or the "SAFE Circular No.19," which was promulgated by SAFE on March 30, 2015, and became effective on June 1, 2015, provides that a foreign investment enterprise may, according to its actual business needs, settle with a bank the portion of the foreign exchange capital in its capital account for which the relevant foreign exchange administration has confirmed monetary capital contribution rights and interests (or for which the bank has registered the injection of the monetary capital contribution into the account). Pursuant to the SAFE Circular No.19, for the time being, foreign investment enterprises are allowed to settle 100% of their foreign exchange capitals on a discretionary basis; a foreign-invested enterprise shall truthfully use its capital for its own operational purposes within the scope of business; where an ordinary foreign-invested enterprise makes domestic equity investment with the amount of foreign exchanges settled, the invested enterprise shall first go through domestic re-investment registration and open a corresponding account for foreign exchange settlement pending payment with the foreign exchange administration or the bank at the place where it is registered.

 

*Overseas Investment and Financing and Round-Trip Investment*

Under SAFE Circular 37 issued by SAFE and effective on July 4, 2014, PRC residents are required to register with the local SAFE branch prior to the establishment or control of an offshore SPV, which is defined as offshore enterprises directly established or indirectly controlled by PRC residents for offshore equity financing of the enterprise assets or interests they hold in the PRC. An amendment to registration or subsequent filing with the local SAFE branch by such PRC resident is also required if there is any change in basic information of the offshore company or any material change with respect to the capital of the offshore company. At the same time, SAFE has issued the Operation Guidance for the Issues Concerning Foreign Exchange Administration over Round-trip Investment regarding the procedures for SAFE registration under SAFE Circular 37, which became effective on July 4, 2014, as an attachment of SAFE Circular 37, and provided operational guidance in detail on how to complete the required registration under SAFE Circular 37. Pursuant to the Circular on Further Simplifying and Improving the Foreign Currency Management Policy on Direct Investment, or the "SAFE Circular No. 13," which was promulgated by SAFE and effective from June 1, 2015, the administrative approvals of foreign exchange registration of direct domestic investment and direct overseas investment are canceled and the procedure of foreign exchange-related registration are simplified. The investors shall register with banks for direct domestic investment and direct overseas investment.

As of the date of this prospectus, all of our beneficial shareholders who are PRC residents have completed registrations in accordance with SAFE Circular 37. See "Risk Factors—Risks Relating to Doing Business in the PRC—PRC regulations relating to offshore investment activities by PRC residents may subject our PRC resident beneficial owners or our PRC subsidiary to liability or penalties, limit our ability to inject capital into our PRC subsidiary, limit our PRC subsidiary's ability to increase its registered capital or distribute profits to us, or may otherwise adversely affect us."

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*Dividend Distribution* 

Under the Company Law, the Foreign Investment Law, and Implementation Regulations of Foreign Investment Law, wholly foreign-owned enterprises in the PRC may pay dividends only out of their accumulated after-tax profits, if any, determined in accordance with China accounting standards and regulations. According to the Foreign Investment Law and Implementation Regulations of Foreign Investment Law, foreign investors' investment, profits, capital gains, assets disposal income, intellectual property license fees, compensation or indemnification obtained according to law, and income from liquidation, among other things, may be freely remitted in or out of China in RMB or foreign currency. In addition, under the Company Law, wholly foreign-owned enterprises in the PRC are required to allocate at least 10% of their respective accumulated profits each year, if any, to fund certain reserve funds until these reserves have reached 50% of the registered capital of the enterprises. Wholly foreign-owned enterprises may, at their discretion, allocate a portion of their after-tax profits based on China accounting standards to staff welfare and bonus funds. These reserves are not distributable as cash dividends. See "Risk Factors—Risks Relating to Doing Business in the PRC—Our PRC subsidiary is subject to restrictions on paying dividends or making other payments to us, which may have a material adverse effect on our ability to conduct our business."

 ***Regulations on Mergers & Acquisitions and Overseas Listings***

On August 8, 2006, six PRC regulatory agencies, including the CSRC, MOFCOM, the State-owned Assets Supervision and Administration Commission, the SAT, the State Administration of Industry and Commerce and SAFE, adopted the M&A Rules, which became effective on September 8, 2006, and were amended on June 22, 2009. Foreign investors shall comply with the M&A Rules when they purchase equity interests of a domestic company or subscribe the increased capital of a domestic company, and thus changing the nature of the domestic company into a foreign-invested enterprise, when the foreign investors establish a foreign-invested enterprise in the PRC, purchase the assets of a domestic company and operate the assets, or when the foreign investors purchase the assets of a domestic company, establish a foreign-invested enterprise by injecting such assets, and operate the assets. As for merger and acquisition of a domestic company with a related party relationship by a domestic company, enterprise or natural person in the name of an overseas company legitimately incorporated or controlled by the domestic company, enterprise of natural person, such merger and acquisition shall be subject to examination and approval of MOFCOM. The parties involved shall not use domestic investment by foreign investment enterprises or other methods to circumvent the requirement of examination and approval.

Pursuant to the Manual of Guidance on Administration for Foreign Investment Access, which was issued and became effective on December 18, 2008 by MOFCOM, notwithstanding the fact that (i) the domestic shareholder is connected with the foreign investor or not, or (ii) the foreign investor is the existing shareholder or the new investor, the M&A Rules shall not apply to the transfer of an equity interest in an incorporated foreign-invested enterprise from the domestic shareholder to the foreign investor.

On July 6, 2021, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued the Opinions. The Opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by China-based companies. The Opinions proposed to take effective measures, such as promoting the construction of relevant regulatory systems, to deal with the risks and incidents facing China-based overseas-listed companies and the demand for cybersecurity and data privacy protection.

On February 17, 2023, the CSRC promulgated the Trial Measures and five supporting guidelines, which will come into effect on March 31, 2023. Pursuant to the Trial Measures, domestic companies that seek to offer or list securities overseas, both directly and indirectly, shall complete filing procedures with the CSRC pursuant to the requirements of the Trial Measures within three working days following its submission of initial public offerings or listing application. If a domestic company fails to complete required filing procedures or conceals any material fact or falsifies any major content in its filing documents, such domestic company may be subject to administrative penalties, such as an order to rectify, warnings, fines, and its controlling shareholders, actual controllers, the person directly in charge and other directly liable persons may also be subject to administrative penalties, such as warnings and fines.

The Trial Measures establish a list outlining the circumstances where a PRC enterprise is prohibited from offering and listing securities overseas, and the CSRC has the authority to block offshore listings that: (i) are explicitly prohibited by laws; (ii) may endanger national security as determined by relevant competent departments under the State Council; (iii) involve criminal offenses that disrupting PRC economy such as corruption, bribery, embezzlement, or misappropriation of property by the issuer, the controlling shareholder, and/or actual controller in the recent three years; (iv) involve the issuer under investigations for suspicion of criminal offenses or major violations of laws and regulations; or (v) involve material ownership disputes over the shares held by the controlling shareholder or by other shareholders that are controlled by the controlling shareholder and/or actual controller. An issuer seeking direct or indirect overseas listing is also required to undergo national security review or obtain clearance from relevant authorities if necessary before making any application with overseas regulator or listing venue. Where an overseas securities regulator investigates and collects evidence relating to the overseas offering and listing of a PRC enterprise and related activities, and requests the CSRC for cooperation in accordance with the cross-border supervision and management cooperation mechanism, the CSRC may provide necessary assistance according to law and based on the principle of reciprocity. Our application for listing in Nasdaq does not fall under the circumstance that such overseas listing is prohibited by the Trial Measures, nor do we need to go through the review such as security review or clearance approval from relevant authorities.

According to the CSRC Notice, the domestic companies that have already been listed overseas before the effective date of the Trial Measures (namely, March 31, 2023) shall be deemed as Existing Issuers. Existing Issuers are not required to complete the filing procedures immediately, and they shall be required to file with the CSRC for any subsequent offerings. Further, according to the CSRC Notice, domestic companies that have obtained approval from overseas regulatory authorities or securities exchanges (for example, the effectiveness of a registration statement for offering and listing in the U.S. has been obtained) for their indirect overseas offering and listing prior to March 31, 2023 but have not yet completed their indirect overseas issuance and listing, are granted a six-month transition period from March 31, 2023 to September 30, 2023. Those that complete their indirect overseas offering and listing within such six-month period are deemed as Existing Issuers and are not required to file with the CSRC for their indirect overseas offerings and listings. Within such six-month transition period, however, if such domestic companies fail to complete their indirect overseas issuance and listing, they shall complete the filing procedures with the CSRC.

Based on the foregoing, if our registration statement on Form F-1 cannot be declared effective on or before March 31, 2023, or if our registration statement on Form F-1 is declared effective on or before March 31, 2023 but we fail to complete this offering and listing on or before September 30, 2023, we will be required to complete necessary filing procedures pursuant to the Trial Measures.

On February 24, 2023, the CSRC, together with the MOF, National Administration of State Secrets Protection and National Archives Administration of China, revised the Provisions issued by the CSRC and National Administration of State Secrets Protection and National Archives Administration of China in 2009. The revised Provisions were issued under the title the "Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies," and will come into effect on March 31, 2023 together with the Trial Measures. One of the major revisions to the revised Provisions is expanding their application to cover indirect overseas offering and listing, as is consistent with the Trial Measures. The revised Provisions require that, among other things, (a) a domestic company that plans to, either directly or indirectly through its overseas listed entity, publicly disclose or provide to relevant individuals or entities, including securities companies, securities service providers, and overseas regulators, any documents and materials that contain state secrets or working secrets of government agencies, shall first obtain approval from competent authorities according to law, and file with the secrecy administrative department at the same level; and (b) a domestic company that plans to, either directly or indirectly through its overseas listed entity, publicly disclose or provide to relevant individuals and entities, including securities companies, securities service providers, and overseas regulators, any other documents and materials that, if leaked, will be detrimental to national security or public interest, shall strictly fulfill relevant procedures stipulated by applicable national regulations. As of the date of this prospectus, the revised Provisions have not come into effect. On or after March 31, 2023, any failure or perceived failure by our Company, our subsidiaries, or the VIEs to comply with the above confidentiality and archives administration requirements under the revised Provisions and other PRC laws and regulations may result in the relevant entities being held legally liable by competent authorities, and referred to the judicial organ to be investigated for criminal liability if suspected of committing a crime.

The Opinions, the Trial Measures, the revised Provisions and any related implementing rules to be enacted may subject us to additional compliance requirements in the future. See "Risk Factors—Risks Relating to Doing Business in the PRC—The Opinions, the Trial Measures, and the revised Provisions recently issued by the PRC authorities may subject us to additional compliance requirements in the future."

***Regulations on Taxation***

*Enterprise Income Tax*

According to the EIT Law, which was promulgated by the SCNPC on March 16, 2007, and became effective on January 1, 2008, and then amended on February 24, 2017 as well as December 29, 2018, and the Implementation Rules for the Enterprise Income Tax Law of the PRC, or the Implementation Rules, which were promulgated by the State Council on December 6, 2007, became effective on January 1, 2008, and were amended on April 23, 2019, enterprises are divided into resident enterprises and non-resident enterprises. Resident enterprises pay enterprise income tax on their incomes obtained in and outside the PRC at the rate of 25%. Non-resident enterprises setting up institutions in the PRC pay enterprise income tax on the incomes obtained by such institutions in and outside the PRC at the rate of 25%. Non-resident enterprises with no institutions in the PRC, and non-resident enterprises with income having no substantial connection with their institutions in the PRC, pay enterprise income tax on their income obtained in the PRC at a reduced rate of 10%. An enterprise established outside of the PRC with its "de facto management bodies" located within the PRC is considered a "resident enterprise," meaning that it can be treated in a manner similar to a PRC domestic enterprise for enterprise income tax purposes. The Implementing Rules of the EIT Law define a "de facto management body" as a managing body that in practice exercises "substantial and overall management and control over the production and operations, personnel, accounting, and properties" of the enterprise. It is more likely than not that the Company and its offshore subsidiary would be treated as a non-resident enterprise for PRC tax purposes. Please see "Material Income Tax Consideration—People's Republic of China Enterprise Taxation."

During the year ended December 31, 2018, Xinjiang United Family and two branch offices qualified as small-scaled minimal profit enterprises, and during the year ended December 31, 2019, Xinjiang United Family and all its three branch offices qualified as small-scaled minimal profit enterprises. Based on the EIT Law, and according to the Notice on Further Expanding the Scope of Income Tax Preferential Policies for Small Low Profit Enterprises issued by MOF and the SAT on July 11, 2018, for the year ended December 31, 2018, once an enterprise meets certain requirements and is identified as a small-scale minimal profit enterprise, the portion of its taxable income not more than RMB1 million is subject to a reduced rate of 10%. According to the Announcement on Issues Related to the Implementation of Inclusive Income Tax Reduction and Exemption Policy for Small and Low Profit Enterprises issued by the SAT on January 18, 2019, from January 1, 2019 to December 31, 2021, the portion of its taxable income not more than RMB1 million is subject to a reduced rate of 5%, which rate is further reduced to 2.5% during the period from January 1, 2021 to December 31, 2022, and the portion above RMB1 million is subject to a reduced rate of 10%.

*Individual Income Tax of Individual Industrial and Commercial Households*

 ****

The UFG Entities are individually-owned businesses, which are not subject to the EIT Law. The Measures for Individual Income Tax Calculation of Individual Industrial and Commercial Households, or the "Measures," was adopted by the SAT on December 19, 2014 and promulgated on December 27, 2014. According to Article 7 of the Measures, for the income from production and operation of individually-owned businesses, the amount of taxable income shall be the balance of the total income of each tax year after deducting costs, expenses, taxes, losses and other expenditures, and allowable compensation for losses in previous years, which is generally levied at a fixed-rate income tax at a certain percentage of a deemed TNI as assessed by the local tax authority. For the fiscal year ended December 31, 2021, 12 of the UFG Entities were subject to income tax assessed at 1% of TNI that ranged from RMB33,000 to RMB180,000 per month. For the year ended December 31, 2020, 11 of the UFG Entities were subject to income tax assessed at 1% of TNI that ranged from RMB33,000 to RMB120,000 per month. The rest of the UFG Entities were exempted from paying income tax.

 

*Value-Added Tax*

Pursuant to the Provisional Regulations on Value-added Tax of the PRC, or the "VAT Regulations," which were promulgated by the State Council on December 13, 1993, and took effect on January 1, 1994, and were amended on November 10, 2008, February 6, 2016, and November 19, 2017, respectively, and the Rules for the Implementation of the Provisional Regulations on Value-added Tax of the PRC, which were promulgated by the MOF on December 25, 1993, and were amended on December 15, 2008, and October 28, 2011, respectively, entities and individuals that sell goods or labor services of processing, repair or replacement, sell services, intangible assets, or immovables, or import goods within the territory of the People's Republic of China are taxpayers of value-added tax. The VAT rate is 17% for taxpayers selling goods, labor services, or tangible movable property leasing services or importing goods, except otherwise specified; 11% for taxpayers selling transport services, postal services, basic telecommunications services, construction services, or real property leasing services, selling real property, transferring the land use right, or selling or importing the goods within specified scope listed, except otherwise specified; 6% for taxpayers selling services or intangible assets and not falling within the scope as specified in other items; and 3% for small-scale taxpayers, unless otherwise stipulated by the State Council

According to the Notice on the Adjustment to the Value-added Tax Rates issued by the SAT and the MOF on April 4, 2018, where taxpayers make VAT taxable sales or import goods, the applicable tax rates were adjusted from 17% to 16% and from 11% to 10%, respectively. Subsequently, the Notice on Policies for Deepening Reform of Value-added Tax was issued by SAT, the MOF, and the General Administration of Customs on March 20, 2019, and took effective on April 1, 2019, which further adjusted the applicable tax rates for taxpayers making VAT taxable sales or import goods. The applicable tax rates were adjusted from 16% to 13% and from 10% to 9%, respectively. Pursuant to Announcement on Value-added Tax Policies for Supporting Individual Businesses in Resumption of Business promulgated by SAT and the MOF on February 28, 2020, from March 1, 2020 to May 31, 2020, which was further extended to December 31, 2021, the applicable tax rates for small-scale VAT payers outside Hubei Province were adjusted from 3% to 1%.

Before April 2019, Xinjiang United Family and its branch offices were paying VAT at the rate of 16% for manufacturing and selling bakery products. Currently, Xinjiang United Family and its branch offices are paying VAT at the rate of 13% for manufacturing and selling bakery products. One of the UFG Entities is currently paying VAT at the rate of 1% and the rest of the UFG Entities are exempted from paying VAT.

*Additional Taxes*

 

Before September 1, 2021, the Provisional Regulations of the People's Republic of China on Urban Maintenance and Construction Tax, or the "Provisional Regulations," promulgated by the State Council on February 8, 1985 and revised on January 8, 2011 governs the payment of urban maintenance and construction tax. According to the Provisional Regulations, all units and individuals paying consumption tax, VAT, and business tax are taxpayers of urban maintenance and construction tax, and shall pay urban maintenance and construction tax in accordance with the provisions of these regulations. The Standing Committee of the National People's Congress passed the Tax Law of the People's Republic of China on Urban Maintenance and Construction on August 11, 2020, which will become effective after September 1, 2021. According to this law, the urban maintenance and construction tax is based on VAT and consumption tax actually paid by taxpayers. Therefore, if VAT is exempted, urban construction tax will also be exempted.

The Interim Provisions on Levying Educational Surcharges, or the "Interim Provisions," was issued by the State Council on April 28, 1986 and revised on June 7, 1990, August 20, 2005, and January 8, 2011. According to the Interim Provisions, the educational surcharges shall be calculated and levied on the basis of the actual VAT, business tax, and consumption tax paid by various units and individuals. The education surcharges rate is 3%, which shall be paid at the same time as the VAT, business tax, and consumption tax.

The Notice on Expanding the Exemption Scope of Relevant Government Funds, or "The Notice," was issued by the MOF and the SAT on January 29, 2016 and implemented from February 1, 2016. According to The Notice, with the approval of the State Council, the scope of exemption from education surcharges, local education surcharges, and water conservancy construction funds shall be expanded from the payers whose monthly sales volume or turnover does not exceed RMB30,000 (quarterly sales or turnover paid on a quarterly basis shall not exceed RMB90,000) to RMB100,000 (quarterly sales or turnover paid on a quarterly basis shall not exceed RMB300,000).

Currently, Xinjiang United Family and its branch offices are paying urban maintenance and construction tax at the rate of 7%, educational surcharges at the rate of 3%, and local education surcharges at 2%. All the UFG Entities are exempted from paying such additional taxes.

*Dividend Withholding Tax*

The EIT Law and the Implementation Rules provide that since January 1, 2008, an income tax rate of 10% will normally be applicable to dividends declared to non-PRC resident investors which do not have an establishment or place of business in the PRC, or which have such establishment or place of business but the relevant income is not effectively connected with the establishment or place of business, to the extent such dividends are derived from sources within the PRC.

Pursuant to the Double Tax Avoidance Arrangement and other applicable PRC laws, if a Hong Kong resident enterprise is determined by the competent PRC tax authority to have satisfied the relevant conditions and requirements under such Double Tax Avoidance Arrangement and other applicable laws, the 10% withholding tax on the dividends the Hong Kong resident enterprise receives from a PRC resident enterprise may be reduced to 5%. However, based on the SAT Circular 81 issued on February 20, 2009 by the SAT, if the relevant PRC tax authorities determine, in their discretion, that a company benefits from such reduced income tax rate due to a structure or arrangement that is primarily tax-driven, such PRC tax authorities may adjust the preferential tax treatment. According to the Circular on Several Questions regarding the "Beneficial Owner" in Tax Treaties, which was issued on February 3, 2018, by the SAT and took effect on April 1, 2018, when determining the applicant's status of the "beneficial owner" regarding tax treatments in connection with dividends, interests, or royalties in the tax treaties, several factors, including without limitation, whether the applicant is obligated to pay more than 50% of his or her income in 12 months to residents in third country or region, whether the business operated by the applicant constitutes the actual business activities, and whether the counterparty country or region to the tax treaties does not levy any tax or grant tax exemption on relevant incomes or levy tax at an extremely low rate, will be taken into account, and it will be analyzed according to the actual circumstances of the specific cases. This circular further provides that applicants who intend to prove his or her status of the "beneficial owner" shall submit the relevant documents to the relevant tax bureau according to the Announcement on Issuing the Measures for the Administration of Non-Resident Taxpayers' Enjoyment of the Treatment under Tax Agreements.

***Regulations on Employment and Social Welfare***

*Labor Law of the PRC*

The Labor Law of the PRC, or the "Labor Law," was promulgated on July 5, 1994, and most recently amended on December 29, 2018. The Labor Law stipulates the provisions on the establishment and annulment of employment relationship, essential contents of employment contracts, working hours, remuneration, labor safety and hygiene, social insurance and other welfare, and liabilities for violating the Labor Law. The Labor Contract Law, which was implemented on January 1, 2008, and amended on December 28, 2012, is primarily aimed at regulating the rights and obligations of employers and employees, including the establishment, performance, and termination of labor contracts. Pursuant to the Labor Contract Law, labor contracts shall be in writing if labor relationships are to be or have been established between employers and the employees. Employers are prohibited from forcing employees to work above certain time limit and employers shall pay employees for overtime work in accordance to national regulations. In addition, employee wages shall be no lower than local standards on minimum wages and shall be paid to employees timely. Xinjiang United Family and its branch offices and the UFG Entities have entered into written employment contracts with all employees and performed its obligations required under the relevant PRC laws and regulations.

*Social Insurance and Housing Fund*

As required under the Regulation of Insurance for Labor Injury implemented on January 1, 2004, and amended in 2010, the Provisional Measures for Maternity Insurance of Employees of Corporations implemented on January 1, 1995, the Decisions on the Establishment of a Unified Program for Pension Insurance of the State Council issued on July 16, 1997, the Decisions on the Establishment of the Medical Insurance Program for Urban Workers of the State Council promulgated on December 14, 1998, the Unemployment Insurance Measures promulgated on January 22, 1999, the Interim Regulations Concerning the Collection and Payment of Social Insurance Premiums implemented on January 22, 1999, and the Social Insurance Law of the PRC implemented on July 1, 2011, employers are required to provide their employees in the PRC with welfare benefits covering pension insurance, unemployment insurance, maternity insurance, labor injury insurance, and medical insurance. These payments are made to local administrative authorities and any employer that fails to contribute may be fined and ordered to make up within a prescribed time limit. Xinjiang United Family has not deposited the social insurance fees in full for all the employees in compliance with the relevant regulations.

In accordance with the Regulations on the Management of Housing Fund, which were promulgated by the State Council in 1999 and amended in 2002, employers must register at the designated administrative centers and open bank accounts for depositing employees' housing funds. Employer and employee are also required to pay and deposit housing funds, with an amount no less than 5% of the monthly average salary of the employee in the preceding year in full and on time. Xinjiang United Family has not yet paid housing funds for all employees.

See "Risk Factors—Risks Relating to Doing Business in the PRC—Our PRC subsidiary and the VIEs have not made adequate social insurance and housing fund contributions for all employees as required by PRC regulations, which may subject us to penalties."

**U.S. Regulations**

***Government Regulations on Food Production and Store Operation***

The U.S. Stores are subject to extensive and varied federal, state, and local government regulations, including regulations relating, among others, to public and occupational health and safety, healthcare, environment, sanitation, and fire prevention. The U.S. Stores operate in accordance with standards and procedures designed to comply with applicable codes and regulations. However, an inability to obtain or retain health department or other licenses would adversely affect the operations of the U.S. Stores. Although the U.S. Stores have not experienced, and do not anticipate, any significant difficulties, delays, or failures in obtaining required licenses, permits, or approvals, any such problem could delay or prevent the opening of, or adversely impact the viability of, a particular store or group of stores. Additionally, difficulties, delays, or failures to retain or renew licenses, permits, or approvals, or increased compliance costs due to changed regulations, could adversely affect operations at the U.S. Stores.

In addition, in order to develop and construct additional stores, the U.S. Stores must comply with applicable zoning, land use, and environmental regulations. Federal and state environmental regulations have not had a material effect on our operations to date, but more stringent and varied requirements of local governmental bodies with respect to zoning, land use, and environmental factors could delay or even prevent construction and increase development costs for new stores. The U.S. Stores are also required to comply with the accessibility standards mandated by the U.S. Americans with Disabilities Act, which generally prohibits discrimination in accommodation or employment based on disability. The U.S. Stores may in the future have to modify stores, for example, by adding access ramps or redesigning certain architectural fixtures, to provide service to or make reasonable accommodations for disabled persons. While these expenses could be material, the current expectation is that any such actions will not require the U.S. Stores to expend substantial funds.

A portion of the sales in the U.S. Stores is attributable to the sale of alcoholic beverages. Alcoholic beverage control regulations require the U.S. Stores to apply to the New York State Liquor Authority for a license that must be renewed annually and may be revoked or suspended for cause at any time. Alcoholic beverage control regulations relate to numerous aspects of daily operations of the U.S. Stores, including minimum age of patrons and employees, hours of operation, advertising, trade practices, wholesale purchasing, other relationships with alcohol manufacturers, wholesalers and distributors, inventory control and handling, storage, and dispensing of alcoholic beverages. The U.S. Stores are also subject in certain states to "dram shop" statutes, which generally provide a person injured by an intoxicated person the right to recover damages from an establishment that wrongfully served alcoholic beverages to the intoxicated person. The U.S. Stores carry liquor liability coverage as part of their existing comprehensive general liability insurance. Currently, the U.S. Stores hold liquor licenses.

Further, the U.S. Stores are subject to the U.S. Fair Labor Standards Act, the U.S. Immigration Reform and Control Act of 1986, the Occupational Safety and Health Act and various other federal and state laws governing similar matters including minimum wages, overtime, workplace safety, and other working conditions. Significant numbers of the food service and preparation personnel employed by the U.S. Stores are paid at rates related to the applicable minimum wage, and further increases in the minimum wage or other changes in these laws could increase its labor costs. The ability of the U.S. Stores to respond to minimum wage increases by increasing menu prices will depend on the responses of their competitors and guests. The suppliers of the U.S. Stores also may be affected by higher minimum wage and benefit standards, which could result in higher costs of goods and services supplied by the U.S. Stores. The U.S. Stores may also be subject to lawsuits from their employees, the U.S. Equal Employment Opportunity Commission, or others alleging violations of federal and state laws regarding workplace and employment matters, discrimination, and similar matters.

There has been increased regulation of certain food establishments in the U.S., and the U.S. Stores may have to expend additional time and resources to comply with new food safety requirements either required by current or future federal food safety regulation or legislation. Additionally, the suppliers of the U.S. Stores may initiate or otherwise be subject to food recalls that may impact the availability of certain products, result in adverse publicity or require the U.S. Stores to take actions that could be costly for them or otherwise harm their business.

***Environmental Matters***

The U.S. Stores are subject to federal, state, and local environment laws and regulations concerning waste disposal, pollution, protection of the environment, and the presence, discharge, storage, handing, release, and disposal of, or exposure to, hazardous or toxic substances. These environmental laws can provide for significant fines and penalties for non-compliance and liabilities for remediation, sometimes without regard to whether the owner or operator of the property knew of, or was responsible for, the release or presence of the hazardous or toxic substances. Third parties may also make claims against owners or operators of properties for personal injuries and property damage associated with releases of, or actual or alleged exposure to, such substances. The U.S. Stores are not aware of any environmental laws that will materially affect their earnings or competitive position, or result in material capital expenditures relating to the U.S. Stores. However, we cannot predict what environmental laws will be enacted in the future, how existing or future environmental laws will be administered, interpreted, or enforced, or the amount of future expenditures that the U.S. Stores may need to make to comply with, or to satisfy claims relating to, environmental laws. It is possible that the U.S. Stores will become subject to environmental liabilities at their properties, and any such liabilities could materially affect their business, financial condition, or results of operation.

***Other Regulations***

The U.S. Stores are also subject to laws and regulations relating to advertising, information security, privacy, cashless payments, online payments, gift cards and consumer credit, protection and fraud, and food delivery, and any failure or perceived failure to comply with these laws could harm their reputation or lead to litigation, which could adversely affect their business, financial condition, or results of operations.

Furthermore, the U.S. Stores are subject to import laws and tariffs which could impact their ability to source and secure food products, other suppliers, and equipment necessary to their operations.

**MANAGEMENT**

Set forth below is information concerning our directors and executive officers.

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| | | |
|:---|:---|:---|
| **Name** | **Age** | **Position(s)** |
| Gang Li | 56 | Chairman and Chief Executive Officer |
| Jihong Cai | 52 | Chief Financial Officer |
| Yong Du | 50 | Independent Director Appointee\* |
| Zhiyuan Wang | 38 | Independent Director Appointee\* |
| Shouhua Nie | 41 | Independent Director Appointee\* |
| Yuchen Liu | 30 | Independent Director Appointee\* |

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\* Yong Du, Zhiyuan Wang, Shouhua Nie, and Yuchen Liu have accepted appointments to be our directors, effective immediately prior to the effectiveness of the registration statement of which this prospectus is a part.

The following is a brief biography of each of the executive officers and directors or director appointees listed above:

Mr. Gang Li has been our chief executive officer since September 2022, our Chairman since September 2020, and our director since July 2019. Mr. Li served as the chief executive officer of Xinjiang United Family from May 2016 to January 2018 and from August 2015 to January 2016. Mr. Li has been the chief executive officer of Urumqi Plastic Surgery Hospital Co., Ltd. since July 2011 and the chief executive officer of Urumqi Marie Gynecological and Obstetrical Hospital (Limited) since August 2009, responsible for the operations and investment of the companies. Mr. Li received his bachelor's degree in Chinese Literature from Xinjiang University in 1989.

Ms. Jihong Cai has been our chief financial officer since September 2020. Ms. Cai has served as the chief financial officer of Xinjiang United Family since September 2018. Prior to joining Xinjiang United Family, Ms. Cai served as the chief financial officer of Xinjiang Dongbao Group from June 2016 to August 2018, as the chief financial officer of Xinjiang Fudiyuan Real Estate Development Co., Ltd. from June 2011 to May 2016, and as the chief financial officer of Xinjiang Osman Biotechnology Co., Ltd. from July 2002 to January 2011. Ms. Cai is a Chinese Certified Tax Agent, accountant, and financial planner. Ms. Cai received her bachelor's degree in Accounting from Hubei University in 1991.

Mr. Yong Du will serve as our independent director starting immediately prior to the effectiveness of the registration statement of which this prospectus is a part. Mr. Du has been an accounting professor, doctorial supervisor, and academic leader in the field of accounting and the director of the New Economics and Management Research Institute at Guangdong University of Foreign Studies South China Business College since September 2019. His research focuses in areas such as accounting and investor protection, budget management, capital market accounting and finance, and capital market auditing. From July 2004 to August 2019, Mr. Du taught at Xinjiang University of Finance and Economics and had been an accounting professor since December 2017, a doctorial supervisor since August 2018, and the academic leader in the field of accounting since March 2019. From October 2013 to November 2015, Mr. Du served as a postdoctoral researcher of Peking University. Mr. Du has served as an expert on the Academic Committee of Silk Road Economics and Management Research Institute at Xinjiang University of Finance and Economics since March 2019, an expert on the Academic Committee of the Commerce Economy Association of China since June 2017, a senior researcher of the Audit Research Institute of WUYIGE Certified Public Accountants LLP since July 2016, a part-time researcher of Financial Analysis and Investment Research Center at Peking University, a researcher of Beijing State-Owned Asset Management and Innovation Center, and a special researcher of Accounting and Investor Protection Research Center at Beijing Technology and Business University since October 2013. Mr. Du received his doctoral degree in Accounting from Central University of Finance and Economics in 2011.

Mr. Zhiyuan Wang will serve as our independent director starting immediately prior to the effectiveness of the registration statement of which this prospectus is a part. Mr. Wang founded Sheng De Han Hua (Beijing) Human Resource Limited Corporation, a human resource online service firm, and has served as its chief executive officer and director since January 2020. Mr. Wang founded Beijing Unique Way Technology Limited Corporation, a company providing customized travel planning, management, and advisory services, served as its chief executive officer from January 2013 to December 2019, and has served as its director since January 2013. From July 2007 to October 2013, Mr. Wang served as a manager at China Development Bank. Mr. Wang has served as a director of Beijing Mission Ding Dong Management Consulting Center (L.P.) since January 2020. Mr. Wang received his bachelor's degree in Communication Engineering from Beijing University of Posts and Telecommunications in 2007.

Mr. Shouhua Nie will serve as our independent director starting immediately prior to the effectiveness of the registration statement of which this prospectus is a part. Mr. Nie is a founding partner of Shenzhen Hanrong Investment Management Co., Ltd., an investment management company, and has served as its chief executive officer since April 2019. Prior to founding Shenzhen Hanrong Investment Management Co., Ltd., Mr. Nie served as a portfolio manager and head of the Derivatives Department of Zhejiang Egret Asset Management Co., Ltd., a hedge fund, from January 2018 to January 2019, and as a portfolio manager at the Quantitative Investment Group of First Seafront Fund Management Co., Ltd., an investment management company. Mr. Nie also worked at BNP Paribas (OTCMKTS: BNPQY), a French international banking group, serving as an interest rate trader from November 2013 to September 2015 and as a quantitative analyst from June 2010 to November 2013. Mr. Nie received his bachelor's degree in Physics from Fudan University in 2003, his Ph.D. in Physics from Florida State University in 2008, and his master's degree in Computational Finance from Carnegie Mellon University, Tepper School of Business, in 2009.

Mr. Yuchen Liu will serve as our independent director starting immediately prior to the effectiveness of the registration statement of which this prospectus is a part. Mr. Liu has been an angel investor of Chenxin Technology Co., Ltd since April 2020, an angel investor of Beijing Xuanyi Technology Limited Corporation since August 2018, the co-founder and chief operating officer of Beijing Dongyishengda Investment Limited Corporation (Farrington International Pre-School) since June 2018, and an angel investor and partner of ICZOOM Electronic Components Exchange since December 2017. Mr. Liu received his bachelor's degree in Electrical Engineering from Beijing Technology and Business University in 2015 and his Master in Science in Financial Management from Boston University in 2017.

Our officers are appointed by and serve at the discretion of our board of directors and the shareholders voting by ordinary resolution. Our directors are not subject to a set term of office and hold office until the next general meeting called for the election of directors and until their successor is duly appointed or such time as they die, resign, or are removed from office by a shareholders' ordinary resolution. The office of a director will be vacated automatically if, among other things, the directors resign in writing, becomes bankrupt or makes any arrangement or composition with his/her creditors generally, or is found to be or becomes of unsound mind.

For additional information, see "Description of Share Capital—Directors."

**Family Relationships**

None of our directors or executive officers has a family relationship as defined in Item 401 of Regulation S-K.

**Involvement in Certain Legal Proceedings** 

To the best of our knowledge, none of our directors or executive officers has, during the past 10 years, been involved in any legal proceedings described in subparagraph (f) of Item 401 of Regulation S-K.

**Controlled Company**

Upon completion of this offering, our Chairman, Mr. Gang Li, will beneficially own approximately 89.7% of the aggregate voting power of our issued and outstanding Class A and Class B Ordinary Shares as a group assuming no exercise of the over-allotment option, or 89.0% assuming full exercise of the over-allotment option. As a result, we will be deemed a "controlled company" for the purpose of the Nasdaq listing rules. As a controlled company, we are permitted to elect to rely on certain exemptions from the obligations to comply with certain corporate governance requirements, including:

● the requirement that our director nominees be selected or recommended solely by independent directors; and

● the requirement that we have a nominating and corporate governance committee and a compensation committee that are composed entirely of independent directors with a written charter addressing the purposes and responsibilities of the committees.

Although we do not intend to rely on the controlled company exemptions under the Nasdaq listing rules even if we are deemed a controlled company, we could elect to rely on these exemptions in the future, and if so, you would not have the same protection afforded to shareholders of companies that are subject to all of the corporate governance requirements of Nasdaq.

**Board of Directors**

Our board of directors will consist of five directors upon closing of this offering. Our board of directors have determined that our four independent director appointees, Yong Du, Zhiyuan Wang, Shouhua Nie, and Yuchen Liu satisfy the "independence" requirements of the Nasdaq corporate governance rules.

**Duties of Directors**

Under Cayman Islands law, all of our directors owe three types of duties to us: (i) statutory duties, (ii) fiduciary duties, and (iii) common law duties. The Companies Act (2021 Revision) of the Cayman Islands imposes a number of statutory duties on a director. A Cayman Islands director's fiduciary duties are not codified, however the courts of the Cayman Islands have held that a director owes the following fiduciary duties: (a) a duty to act in what the director *bona fide* considers to be in the best interests of the company, (b) a duty to exercise their powers for the purposes they were conferred, (c) a duty to avoid fettering his or her discretion in the future and (d) a duty to avoid conflicts of interest and of duty. The common law duties owed by a director are those to act with skill, care and diligence that may reasonably be expected of a person carrying out the same functions as are carried out by that director in relation to the company and, also, to act with the skill, care and diligence in keeping with a standard of care commensurate with any particular skill they have which enables them to meet a higher standard than a director without those skills. In fulfilling their duty of care to us, our directors must ensure compliance with our articles of association, as amended and restated from time to time. We have the right to seek damages if a duty owed by any of our directors is breached.

The functions and powers of our board of directors include, among others:

● appointing officers and determining the term of office of the officers;

● exercising the borrowing powers of the company and mortgaging the property of the company; and

● maintaining or registering a register of mortgages, charges, or other encumbrances of the company.

**Terms of Directors and Executive Officers**

Our officers are appointed by and serve at the discretion of our board of directors and the shareholders voting by ordinary resolution. Our directors are not subject to a set term of office and hold office until the next general meeting called for the election of directors and until their successor is duly appointed or such time as they die, resign, or are removed from office by a shareholders' ordinary resolution. The office of a director will be vacated automatically if, among other things, the directors resign in writing, becomes bankrupt or makes any arrangement or composition with his/her creditors generally, or is found to be or becomes of unsound mind.

**Qualification**

There is currently no shareholding qualification for directors, although a shareholding qualification for directors may be fixed by our shareholders by ordinary resolution.

**Employment Agreements and Indemnification Agreements**

We have entered into employment agreements with each of our executive officers. Pursuant to employment agreements, the form of which is filed as Exhibit 10.1 to this Registration Statement of which this prospectus forms a part, we agree to employ each of our executive officers for a specified time period, which will be automatically renewed unless either party gives the other party a written notice to terminate the agreement six months prior to the end of the current employment term. We may terminate the employment for cause, at any time, without notice or remuneration, for certain acts of the executive officer, including but not limited to the commitments of any serious or persistent breach or non-observance of the terms and conditions of the employment, conviction of a criminal offense, willful disobedience of a lawful and reasonable order, fraud or dishonesty, receipt of bribery, or severe neglect of his or her duties. An executive officer may terminate his or her employment at any time with a three-month prior written notice. Each executive officer agrees to hold, both during and after the employment agreement expires, in strict confidence and not to use or disclose to any person, corporation or other entity without written consent, any confidential information.

We will also enter into indemnification agreements with each of our directors and executive officers. Under these agreements, we agree to indemnify our directors and executive officers against certain liabilities and expenses incurred by such persons in connection with claims made by reason of their being a director or officer of our Company.

**Compensation of Directors and Executive Officers**

For the fiscal year ended December 31, 2022, we paid an aggregate of $206,693 as compensation to our executive officers and directors. We have not set aside or accrued any amount to provide pension, retirement, or other similar benefits to our directors and executive officers. Our PRC subsidiary and the VIEs are required by law to make contributions equal to certain percentages of each employee's salary for his or her pension insurance, medical insurance, unemployment insurance, and other statutory benefits and a housing provident fund.

**Insider Participation Concerning Executive Compensation**

Our Chairman, Mr. Gang Li, is currently making all determinations regarding executive officer compensation. When our Compensation Committee is set up, it will be making all determination regarding executive officer compensation (please see below).

**Committees of the Board of Directors**

We will establish three committees under the board of directors prior to the closing of this offering: an audit committee, a compensation committee, and a nominating and corporate governance committee. Each of the committees will be comprised of our independent directors. The appointment to the committees will be effective immediately prior to the effective date of the registration statement of which this prospectus forms a part. We will adopt a charter for each of the three committees. Each committee's members and functions are described below.

*Audit Committee*. Our audit committee will consist of our three independent director appointees, Yong Du, Shouhua Nie, and Zhiyuan Wang. Yong Du will be the chairperson of our audit committee. We have determined that each of our independent director appointees also satisfy the "independence" requirements of Rule 10A-3 under the Securities Exchange Act. Our board also has determined that Yong Du qualifies as an audit committee financial expert within the meaning of the SEC rules or possesses financial sophistication within the meaning of the Nasdaq listing rules. The audit committee will oversee our accounting and financial reporting processes and the audits of the financial statements of our Company. The audit committee will be responsible for, among other things:

● appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors;

● reviewing with the independent auditors any audit problems or difficulties and management's response;

● discussing the annual audited financial statements with management and the independent auditors;

● reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures;

● reviewing and approving all proposed related party transactions;

● meeting separately and periodically with management and the independent auditors; and

● monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance.

*Compensation Committee.* Our compensation committee will consist of our three independent director appointees, Yong Du, Shouhua Nie, and Zhiyuan Wang. Shouhua Nie will be the chairperson of our compensation committee. The compensation committee will assist the board in reviewing and approving the compensation structure, including all forms of compensation, relating to our directors and executive officers. Our chief executive officer may not be present at any committee meeting during which his compensation is deliberated. The compensation committee will be responsible for, among other things:

● reviewing and approving the total compensation package for our most senior executive officers;

● approving and overseeing the total compensation package for our executives other than the most senior executive officers;

● reviewing and recommending to the board with respect to the compensation of our directors;

● reviewing periodically and approving any long-term incentive compensation or equity plans;

● selecting compensation consultants, legal counsel or other advisors after taking into consideration all factors relevant to that person's independence from management; and

● reviewing programs or similar arrangements, annual bonuses, employee pension and welfare benefit plans.

*Nominating and Corporate Governance Committee.* Our nominating and corporate governance committee will consist of our three independent director appointees, Yong Du, Shouhua Nie, and Zhiyuan Wang. Zhiyuan Wang will be the chairperson of our nominating and corporate governance committee. The nominating and corporate governance committee will assist the board of directors in selecting individuals qualified to become our directors and in determining the composition of the board and its committees. The nominating and corporate governance committee will be responsible for, among other things:

● identifying and recommending nominees for election or re-election to our board of directors or for appointment to fill any vacancy;

● reviewing annually with our board of directors its current composition in light of the characteristics of independence, age, skills, experience and availability of service to us;

● identifying and recommending to our board the directors to serve as members of committees;

● advising the board periodically with respect to significant developments in the law and practice of corporate governance as well as our compliance with applicable laws and regulations, and making recommendations to our board of directors on all matters of corporate governance and on any corrective action to be taken; and

● monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance.

**Code of Business Conduct and Ethics**

Our board of directors has adopted a code of business conduct and ethics, which is filed as Exhibit 99.1 of this registration statement and applicable to all of our directors, officers, and employees. We will make our code of business conduct and ethics publicly available on our website prior to the closing of this offering.

**PRINCIPAL SHAREHOLDERS**

The following table sets forth information with respect to the beneficial ownership, within the meaning of Rule 13d-3 under the Exchange Act, of our Class A Ordinary Shares and Class B Ordinary Shares as of the date of this prospectus, and as adjusted to reflect the sale of the Class A Ordinary Shares offered in this offering for:

● each of our directors and executive officers; and

● each person known to us to own beneficially more than 5% of our Class A Ordinary Shares or Class B Ordinary Shares.

Beneficial ownership includes voting or investment power with respect to the securities. Except as indicated below, and subject to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all Class A Ordinary Shares and Class B Ordinary Shares shown as beneficially owned by them. Percentage of beneficial ownership of each listed person prior to this offering is based on 3,060,000 Class A Ordinary Shares and 5,940,000 Class B Ordinary Shares outstanding (reflecting a 1,000-for-1 forward split of our ordinary shares approved by our shareholders and board of directors on March 27, 2021) as of the date of this prospectus. Percentage of beneficial ownership of each listed person after this offering is based on 6,810,000 Class A Ordinary Shares and 5,940,000 Class B Ordinary Shares outstanding immediately after the completion of this offering, assuming no exercise of over-allotment option, and 7,372,500 Class A Ordinary Shares and 5,940,000 Class B Ordinary Shares assuming full exercise of over-allotment option.

Information with respect to beneficial ownership has been furnished by each director, officer, or beneficial owner of 5% or more of our Class A Ordinary Shares or Class B Ordinary Shares. Beneficial ownership is determined in accordance with the rules of the SEC and generally requires that such person have voting or investment power with respect to securities. In computing the number of Class A Ordinary Shares beneficially owned by a person listed below and the percentage ownership of such person, Class A Ordinary Shares underlying options, warrants, or convertible securities, including Class B Ordinary Shares, held by each such person that are exercisable or convertible within 60 days of the date of this prospectus are deemed outstanding, but are not deemed outstanding for computing the percentage ownership of any other person. As of the date of the prospectus, we have four shareholders of record, one of whom is located in the U.S. We will be required to have at least 300 unrestricted round lot shareholders at closing in order to satisfy the Nasdaq listing rules.

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Class A<br> Ordinary <br> Shares <br> Beneficially <br> Owned Prior to<br> this Offering\*** | **Class A<br> Ordinary <br> Shares <br> Beneficially <br> Owned Prior to<br> this Offering\*** | **Class B<br> Ordinary <br> Shares <br> Beneficially <br> Owned Prior to <br> this Offering** | **Class B<br> Ordinary <br> Shares <br> Beneficially <br> Owned Prior to <br> this Offering** | **Class A<br> Ordinary<br> Shares<br> Beneficially<br> Owned After<br> this Offering<br> (Over-allotment <br> option not <br> exercised)\*** | **Class A<br> Ordinary<br> Shares<br> Beneficially<br> Owned After<br> this Offering<br> (Over-allotment <br> option not <br> exercised)\*** | **Class A<br> Ordinary<br> Shares<br> Beneficially<br> Owned After<br> this Offering<br> (Over-allotment<br> option fully<br> exercised)\*** | **Class A<br> Ordinary<br> Shares<br> Beneficially<br> Owned After<br> this Offering<br> (Over-allotment<br> option fully<br> exercised)\*** | **Class B<br> Ordinary<br> Shares<br> Beneficially<br> Owned After<br> this Offering** | **Class B<br> Ordinary<br> Shares<br> Beneficially<br> Owned After<br> this Offering** | **Voting Power<br> After this<br> Offering<br> (Over-allotment<br> option not<br> exercised)\*** | **Voting Power<br> After this<br> Offering<br> (Over-allotment<br> option fully<br> exercised)\*** |
|  | **Number** | **%** | **Number** | **%** | **Number** | **%** | **Number** | **%** | **Number** | **%** | **%** | **%** |
| **Directors and Executive Officers<sup>(1)</sup>:** | | | | | | | | | | | | |
|  Gang Li<sup>(2)</sup> | 2700000 | 88.24% | 5670000 | 95.45% | 2700000 | 39.65% | 2700000 | 36.62% | 5670000 | 95.45% | 89.71% | 88.96% |
|  Jihong Cai<sup>(3)</sup> |  |  | 270000 | 4.55% |  |  |  |  | 270000 | 4.55% | 4.08% | 4.04% |
|  Yong Du |  |  |  |  |  |  |  |  |  |  |  |  |
|  Zhiyuan Wang |  |  |  |  |  |  |  |  |  |  |  |  |
|  Shouhua Nie |  |  |  |  |  |  |  |  |  |  |  |  |
|  Yuchen Liu |  |  |  |  |  |  |  |  |  |  |  |  |
|  **All directors and executive officers as a group (six individuals):** |  |  |  |  |  |  |  |  |  |  |  |  |
|  | 2700000 | 88.24% | 5940000 | 100.00% | 2700000 | 39.65% | 2700000 | 36.62% | 5940000 | 100.00% | 93.79% | 93.00% |
|  **5% Shareholders:** |  |  |  |  |  |  |  |  |  |  |  |  |
|  Danton Global Limited<sup>(2)</sup> | 2700000 | 88.24% | 5670000 | 95.45% | 2700000 | 39.65% | 2700000 | 36.62% | 5670000 | 95.45% | 89.71% | 88.96% |
|  Yvan Global Limited<sup>(4)</sup> | 180000 | 5.88% | 0 | 0% | 180000 | 2.64% | 180000 | 2.44% | 0 | 0% | 0.27% | 0.27% |
|  Yetta Global Limited<sup>(5)</sup> | 180000 | 5.88% | 0 | 0% | 180000 | 2.64% | 180000 | 2.44% | 0 | 0% | 0.27% | 0.27% |

---

\* The Class B Ordinary Shares are convertible into Class A Ordinary Shares at any time after issuance at the option of the holder on a one-to-one basis. The number and percentage of Class A Ordinary Shares exclude Class A Ordinary Shares convertible from Class B Ordinary Shares as the beneficial ownership of Class B Ordinary Shares is presented separately.

&nbsp;&nbsp;&nbsp;&nbsp;(1) Unless otherwise
 indicated, the business address of each of the individuals is No. 26 Culture Road, Tianshan District, Urumqi, Xinjiang, China.

(2) The number of Class
 A Ordinary Shares and Class B Ordinary Shares beneficially owned prior to this offering represents 2,700,000 Class A Ordinary Shares
 and 5,670,000 Class B Ordinary Shares held by Danton Global Limited, a British Virgin Islands company, which is 100% owned by Mr.
 Gang Li. The registered address of Danton Global Limited is 3rd Floor, J & C Building, Road Town, Tortola, British Virgin Islands,
 VG1110.

(3) The number of Class
 B Ordinary Shares beneficially owned prior to this offering represents 270,000 Class B Ordinary Shares held by Haily Global Limited,
 a British Virgin Islands company, which is 100% owned by Ms. Jihong Cai. The registered address of Haily Global Limited is 3rd Floor,
 J & C Building, Road Town, Tortola, British Virgin Islands, VG1110.

(4) The number of Class
 A Ordinary Shares beneficially owned prior to this offering represents 180,000 Class A Ordinary Shares held by Yvan Global Limited,
 a British Virgin Islands company, which is 100% owned by Ms. Xinxia Hu. The registered address of Yvan Global Limited is 3rd Floor,
 J & C Building, Road Town, Tortola, British Virgin Islands, VG1110.

(5) The number of Class
 A Ordinary Shares beneficially owned prior to this offering represents 180,000 Class A Ordinary Shares held by Yetta Global Limited,
 a British Virgin Islands company, which is 100% owned by Ms. Hui Wang. The registered address of Yetta Global Limited is 3rd Floor,
 J & C Building, Road Town, Tortola, British Virgin Islands, VG1110.

As of the date of this prospectus, 88.24% of our outstanding Class A Ordinary Shares and 95.45% of our outstanding Class B Ordinary Shares are held by one record holder, Mr. Gang Li in the U.S.

We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our Company.

**RELATED PARTY TRANSACTIONS**

**Contractual Arrangements with the UFG Entities and the UFG Operators**

See "Corporate History and Structure."

**Employment Agreements**

See "Management—Employment Agreements and Indemnification Agreements."

**Material Transactions with Related Parties**

The relationship and the nature of related party transactions are summarized as follows:

---

| | |
|:---|:---|
| **Name of Related Party** | **Relationship to Us** |
| Gang Li | Our Chairman |
| Cheng Chen | Our former Chief Executive Officer |
| Jihong Cai | Our Chief Financial Officer |
| Urumqi Plastic Surgery Hospital Co., Ltd. | Controlled by our Chairman |

---

***Share Issuances to Related Parties***

On July 26, 2019, we transferred one Ordinary Share and issued 94 Ordinary Shares (bringing our total issued and outstanding shares to 100 Ordinary Shares) indirectly to some of our executive officers and directors in connection with the formation of the Company, in a private transaction under the Cayman Islands laws, including 92 Ordinary Shares issued to Danton Global Limited (which, together with the transfer of the original subscriber share, brought the number of Ordinary Shares held by Danton Global Limited to 93), an entity 100% controlled by Mr. Gang Li, our Chairman, for a consideration of $92, and three Ordinary Shares issued to Haily Global Limited, an entity 100% controlled by Ms. Jihong Cai, our chief financial officer, for a consideration of $3.

On March 27, 2021, our board of directors approved the issuances of Class A Ordinary Shares and Class B Ordinary Shares to some of our executive officers and directors to increase the number of total ordinary shares issued and outstanding prior to the completion of this offering, including 2,610,000 Class A Ordinary Shares and 5,400,000 Class B Ordinary Shares to Danton Global Limited for a consideration of $8,010, 267,000 Class B Ordinary Shares to Haily Global Limited for a consideration of $267, and 267,000 Class B Ordinary Shares to C&C Capital Investments LLC, an entity 100% controlled by Mr. Cheng Chen, our former chief executive officer, for a consideration of $267.

See "Description of Share Capital—History of Share Issuances."

***Premises Use Agreement***

Pursuant to a Premises Use Agreement dated April 30, 2020 and a Supplemental Agreement dated June 18, 2020, Urumqi Plastic Surgery Hospital Co., Ltd., a PRC company controlled by our Chairman, Mr. Gang Li, provided approximately 5,382 square feet office space for our headquarters and 10,763 square feet for the old central factory of the PRC Stores without charge. The term of the agreement is from January 1, 2020 to June 25, 2028, unless otherwise terminated by either party.

***Due from a Related Party***

As of December 31, 2018, due from a related party in the amount of $1,924,910 represented cash advanced to our Chairman, Mr. Gang Li, mainly as the initial working capital in relation to the opening of five new UFG Entities, such as prepaid rental, renovation, and other start-up expenses in 2019. Such advances were non-interest bearing and were fully utilized or collected by us in 2019.

***Due to a Related Party***

As of December 31, 2022, due to a related party of $1,697,829 primarily represented advances provided by our Chairman, Mr. Gang Li, to fund our operations. These payables were unsecured, non-interest bearing, and due on demand. All expenses and liabilities were paid by Mr. Gang Li on behalf of our Company, and recorded in our unaudited condensed consolidated financial statements in a timely manner. The outstanding amount is expected to be repaid before June 30, 2023.

As of December 31, 2021 and 2020, due to a related party in the amount of $721,921 and $6,316, respectively, represented advances provided by our Chairman, Mr. Gang Li, to fund the Company's operations. These payables are unsecured, non-interest bearing, and due on demand. The amount due to a related party has been fully repaid as of the date of this prospectus.

***Guarantees by Related Parties***

Our Chairman, Mr. Gang Li, together with his wife, Ms. Ying Xiong, and the legal representative of Xinjiang United Family, Ms. Baolin Wang, provided guarantees in connection with Xinjiang United Family's loans borrowed from Huaxia Bank in 2022, 2021, and 2020. See "Note 9—Short-Term Bank Loans" of our unaudited condensed consolidated financial statements and "Note 8—Bank Loans" of our consolidated financial statements.

***Assignment of Limited Liability Company Interest***

On September 28, 2020, our Chairman, Mr. Gang Li, assigned his 100% membership interests in Chanson Greenwich to Chanson NY for a consideration of $10. After the transfer, Chanson Greenwich became a wholly owned subsidiary of Chanson NY.

**DESCRIPTION OF SHARE CAPITAL**

The following description of our share capital and provisions of our amended and restated memorandum and articles of association are summaries and do not purport to be complete. Reference is made to our amended and restated memorandum and articles of association, which will become effective upon or before the completion of this offering, copies of which are filed as an exhibit to the registration statement of which this prospectus is a part (and which is referred to in this section as, respectively, the "memorandum" and the "articles").

We were incorporated as an exempted company with limited liability under the Companies Act (2021 Revision) of the Cayman Islands, or the "Cayman Companies Act," on July 26, 2019. A Cayman Islands exempted company:

● is a company that conducts its business mainly outside the Cayman Islands;

● is prohibited from trading in the Cayman Islands with any person, firm or corporation except in furtherance of the business of the exempted company carried on outside the Cayman Islands (and for this purpose can effect and conclude contracts in the Cayman Islands and exercise in the Cayman Islands all of its powers necessary for the carrying on of its business outside the Cayman Islands);

● does not have to hold an annual general meeting;

● does not have to make its register of members open to inspection by shareholders of that company;

● may obtain an undertaking against the imposition of any future taxation;

● may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands;

● may register as a limited duration company; and

● may register as a segregated portfolio company.

**Ordinary Shares**

As of the date of this prospectus, our authorized share capital is $50,000 divided into 44,000,000 Class A Ordinary Shares, par value $0.001 per share, and 6,000,000 Class B Ordinary Shares, par value $0.001 per share. Holders of Class A Ordinary Shares and Class B Ordinary Shares have the same rights except for voting and conversion rights. In respect of matters requiring a vote of all shareholders, each holder of Class A Ordinary Shares will be entitled to one vote per one Class A Ordinary Share and each holder of Class B Ordinary Shares will be entitled to 10 votes per one Class B Ordinary Share. The Class A Ordinary Shares are not convertible into shares of any other class. The Class B Ordinary Shares are convertible into Class A Ordinary Shares at any time after issuance at the option of the holder on a one-to-one basis.

All of our issued and outstanding Class A Ordinary Shares and Class B Ordinary Shares are fully paid and non-assessable. Our Class A Ordinary Shares and Class B Ordinary Shares are issued in registered form, and are issued when registered in our register of members. Unless the board of directors determine otherwise, each holder of our Class A Ordinary Shares or Class B Ordinary Shares will not receive a certificate in respect of such shares. Our shareholders who are non-residents of the Cayman Islands may freely hold and vote their Class A Ordinary Shares and Class B Ordinary Shares. We may not issue shares or warrants to bearer.

Subject to the provisions of the Cayman Companies Act and our articles regarding redemption and purchase of the shares, the directors have general and unconditional authority to allot (with or without confirming rights of renunciation), grant options over or otherwise deal with any unissued shares to such persons, at such times and on such terms and conditions as they may decide. Such authority could be exercised by the directors to allot shares which carry rights and privileges that are preferential to the rights attaching to Class A Ordinary Shares or Class B Ordinary Shares. No share may be issued at a discount except in accordance with the provisions of the Cayman Companies Act. The directors may refuse to accept any application for shares, and may accept any application in whole or in part, for any reason or for no reason.

At the completion of this offering, there will be 6,810,000 (if the Underwriter's over-allotment option is not exercised) or 7,372,500 (if the Underwriter's over-allotment option is fully exercised) Class A Ordinary Shares issued and outstanding held by at least 300 unrestricted round lot shareholders and beneficial owners which is the minimum requirement by the Nasdaq Capital Market, and 5,940,000 Class B Ordinary Shares issued and outstanding. Class A Ordinary Shares sold in this offering will be delivered against payment from the Underwriter upon the closing of the offering in New York, New York, on or about [●].

**Listing**

We have applied to list our Class A Ordinary Shares on the Nasdaq Capital Market under the symbol "CHSN." At this time, Nasdaq has not yet approved our application to list our Class A Ordinary Shares. The closing of this offering is conditioned upon Nasdaq's final approval of our listing application, and there is no guarantee or assurance that our Class A Ordinary Shares will be approved for listing on Nasdaq.

**Transfer Agent and Registrar**

The transfer agent and registrar for our Class A Ordinary Shares and Class B Ordinary Shares is Transhare Corporation, at 2849 Executive Drive, Suite 200, Clearwater, FL 33762.

**Dividends**

Subject to the provisions of the Cayman Companies Act and any rights attaching to any class or classes of shares under and in accordance with the articles:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the directors may
 declare dividends or distributions out of our funds which are lawfully available for that purpose; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) our shareholders
 may, by ordinary resolution, declare dividends but no such dividend shall exceed the amount recommended by the directors.

Subject to the requirements of the Cayman Companies Act regarding the application of a company's share premium account and with the sanction of an ordinary resolution, dividends may also be declared and paid out of any share premium account. The directors when paying dividends to shareholders may make such payment either in cash or in specie.

Unless provided by the rights attached to a share, no dividend shall bear interest.

**Voting Rights**

On a poll, every shareholder who is present in person and every person representing a shareholder by proxy shall have one vote for each Class A Ordinary Share and 10 votes for each Class B Ordinary Share of which he or the person represented by proxy is the holder. In addition, all shareholders holding shares of a particular class are entitled to vote at a meeting of the holders of that class of shares. Votes may be given either personally or by proxy.

**Conversion Rights**

Class A Ordinary Shares are not convertible. Class B Ordinary Shares are convertible, at the option of the holder thereof, into Class A Ordinary Shares on a one-to-one basis.

**Variation of Rights of Shares**

Whenever our capital is divided into different classes of shares, the rights attaching to any class of share (unless otherwise provided by the terms of issue of the shares of that class) may be varied either with the consent in writing of the holders of not less than two-thirds of the issued shares of that class, or with the sanction of a resolution passed by a majority of not less than two-thirds of the holders of shares of the class present in person or by proxy at a separate general meeting of the holders of shares of that class.

Unless the terms on which a class of shares was issued state otherwise, the rights conferred on the shareholder holding shares of any class shall not be deemed to be varied by the creation or issue of further shares ranking pari passu with the existing shares of that class.

**Alteration of Share Capital**

Subject to the Cayman Companies Act, we may, by ordinary resolution:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) increase our share
 capital by new shares of the amount fixed by that ordinary resolution and with the attached rights, priorities and privileges
 set out in that ordinary resolution;

(b) consolidate and
 divide all or any of our share capital into shares of larger amount than our existing shares;

(c) convert all or any
 of our paid up shares into stock, and reconvert that stock into paid up shares of any denomination;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) sub-divide our shares
 or any of them into shares of an amount smaller than that fixed, so, however, that in the sub-division, the proportion between
 the amount paid and the amount, if any, unpaid on each reduced share shall be the same as it was in case of the share from
 which the reduced share is derived; and

(e) cancel shares which,
 at the date of the passing of that ordinary resolution, have not been taken or agreed to be taken by any person and diminish
 the amount of our share capital by the amount of the shares so cancelled or, in the case of shares without nominal par value,
 diminish the number of shares into which our capital is divided.

Subject to the Cayman Companies Act and to any rights for the time being conferred on the shareholders holding a particular class of shares, we may, by special resolution, reduce our share capital in any way.

**Calls on Shares and Forfeiture**

Subject to the terms of allotment, the directors may make calls on the shareholders in respect of any monies unpaid on their shares including any premium and each shareholder shall (subject to receiving at least 14 clear days' notice specifying when and where payment is to be made), pay to us the amount called on his shares. Shareholders registered as the joint holders of a share shall be jointly and severally liable to pay all calls in respect of the share. If a call remains unpaid after it has become due and payable the person from whom it is due and payable shall pay interest on the amount unpaid from the day it became due and payable until it is paid at the rate fixed by the terms of allotment of the share or in the notice of the call or if no rate is fixed, at the rate of ten percent per annum. The directors may waive payment of the interest wholly or in part.

We have a first and paramount lien on all shares (whether fully paid up or not) registered in the name of a shareholder (whether solely or jointly with others). The lien is for all monies payable to us by the shareholder or the shareholder's estate:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) either alone or jointly with any other person,
 whether or not that other person is a shareholder; and

(b) whether or not those monies are presently payable.

At any time the directors may declare any share to be wholly or partly exempt from the lien on shares provisions of the articles.

We may sell, in such manner as the directors may determine, any share on which the sum in respect of which the lien exists is presently payable, if due notice that such sum is payable has been given (as prescribed by the articles) and, within 14 days of the date on which the notice is deemed to be given under the articles, such notice has not been complied with.

**Unclaimed Dividend**

A dividend that remains unclaimed for a period of six years after it became due for payment shall be forfeited to, and shall cease to remain owing by, our Company.

**Forfeiture or Surrender of Shares**

If a shareholder fails to pay any call, the directors may give to such shareholder not less than 14 clear days' notice requiring payment and specifying the amount unpaid including any interest which may have accrued, any expenses which have been incurred by us due to that person's default and the place where payment is to be made. The notice shall also contain a warning that if the notice is not complied with, the shares in respect of which the call is made will be liable to be forfeited.

If such notice is not complied with, the directors may, before the payment required by the notice has been received, resolve that any share the subject of that notice be forfeited (which forfeiture shall include all dividends or other monies payable in respect of the forfeited share and not paid before such forfeiture).

A forfeited share may be sold, re-allotted or otherwise disposed of on such terms and in such manner as the directors determine and at any time before a sale, re-allotment or disposition the forfeiture may be cancelled on such terms as the directors think fit.

A person whose shares have been forfeited shall cease to be a shareholder in respect of the forfeited shares, but shall, notwithstanding such forfeiture, remain liable to pay to us all monies which at the date of forfeiture were payable by him to us in respect of the shares, together with all expenses and interest from the date of forfeiture or surrender until payment, but his liability shall cease if and when we receive payment in full of the unpaid amount.

A declaration, whether statutory or under oath, made by a director or the secretary shall be conclusive evidence that the person making the declaration is a director or secretary and that the particular shares have been forfeited or surrendered on a particular date.

Subject to the execution of an instrument of transfer, if necessary, the declaration shall constitute good title to the shares.

**Share Premium Account**

The directors shall establish a share premium account and shall carry the credit of such account from time to time to a sum equal to the amount or value of the premium paid on the issue of any share or capital contributed or such other amounts required by the Cayman Companies Act.

**Redemption and Purchase of Own Shares**

Subject to the Cayman Companies Act and any rights for the time being conferred on the shareholders holding a particular class of shares, we may by action of our directors:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) issue shares that
 are to be redeemed or liable to be redeemed, at our option or the shareholder holding those redeemable shares, on the terms
 and in the manner our directors determine before the issue of those shares;

(b) with the consent
 by special resolution of the shareholders holding shares of a particular class, vary the rights attaching to that class of
 shares so as to provide that those shares are to be redeemed or are liable to be redeemed at our option on the terms and in
 the manner which the directors determine at the time of such variation; and

(c) purchase all or
 any of our own shares of any class including any redeemable shares on the terms and in the manner which the directors determine
 at the time of such purchase.

We may make a payment in respect of the redemption or purchase of its own shares in any manner authorized by the Cayman Companies Act, including out of any combination of capital, our profits and the proceeds of a fresh issue of shares.

When making a payment in respect of the redemption or purchase of shares, the directors may make the payment in cash or in specie (or partly in one and partly in the other) if so authorized by the terms of the allotment of those shares or by the terms applying to those shares, or otherwise by agreement with the shareholder holding those shares.

**Transfer of Shares**

Provided that a transfer of Class A Ordinary Shares complies with applicable rules of the Nasdaq Capital Market, a shareholder may transfer Class A Ordinary Shares or Class B Ordinary Shares to another person by completing an instrument of transfer in a common form or, with respect to Class A Ordinary Shares, in a form prescribed by Nasdaq, or in any other form approved by the directors, executed:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) where the Class A Ordinary Shares or Class B
 Ordinary Shares are fully paid, by or on behalf of that shareholder; and

(b) where the Class A Ordinary Shares or Class B
 Ordinary Shares are partly paid, by or on behalf of that shareholder and the transferee.

The transferor shall be deemed to remain the holder of a Class A Ordinary Share or Class B Ordinary Share until the name of the transferee is entered into the register of members of the Company.

Where the Class A Ordinary Shares or Class B Ordinary Shares in question are not listed on or subject to the rules of the Nasdaq Capital Market, our board of directors may, in its absolute discretion, decline to register any transfer of any Class A Ordinary Share or Class B Ordinary Share that has not been fully paid up or is subject to a company lien. Our board of directors may also decline to register any transfer of such Class A Ordinary Share or Class B Ordinary Share unless:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the instrument of
 transfer is lodged with the Company, accompanied by the certificate for the Class A Ordinary Shares or Class B Ordinary Shares
 to which it relates and such other evidence as our board of directors may reasonably require to show the right of the transferor
 to make the transfer;

(b) the instrument of
 transfer is in respect of only one class of shares;

(c) the instrument of
 transfer is properly stamped, if required;

(d) the Class A Ordinary
 Share or Class B Ordinary Share transferred is fully paid and free of any lien in favor of us;

(e) any fee related
 to the transfer has been paid to us; and

(f) the transfer is
 not to more than four joint holders.

If our directors refuse to register a transfer, they are required, within three months after the date on which the instrument of transfer was lodged, to send to each of the transferor and the transferee notice of such refusal.

The registration of transfers may, on 14 calendar days' notice being given by advertisement in such one or more newspapers or by electronic means, be suspended and our register of members closed at such times and for such periods as our board of directors may from time to time determine. The registration of transfers, however, may not be suspended, and the register may not be closed, for more than 30 days in any year.

**Inspection of Books and Records**

Holders of our Class A Ordinary Shares and Class B Ordinary Shares will have no general right under the Cayman Companies Act to inspect or obtain copies of our register of members or our corporate records.

**General Meetings**

As a Cayman Islands exempted company, we are not obligated by the Cayman Companies Act to call shareholders' annual general meetings; accordingly, we may, but shall not be obliged to, in each year hold a general meeting as an annual general meeting. Any annual general meeting held shall be held at such time and place as may be determined by our board of directors. All general meetings other than annual general meetings shall be called extraordinary general meetings.

The directors may convene general meetings whenever they think fit. General meetings shall also be convened on the written requisition of one or more of the shareholders entitled to attend and vote at our general meetings who (together) hold not less than ten percent of the rights to vote at such general meeting in accordance with the notice provisions in the articles, specifying the purpose of the meeting and signed by each of the shareholders making the requisition. If the directors do not convene such meeting for a date not later than 21 clear days' after the date of receipt of the written requisition, those shareholders who requested the meeting may convene the general meeting themselves within three months after the end of such period of 21 clear days in which case reasonable expenses incurred by them as a result of the directors failing to convene a meeting shall be reimbursed by us.

At least 14 days' notice of an extraordinary general meeting and 21 days' notice of an annual general meeting shall be given to shareholders entitled to attend and vote at such meeting. The notice shall specify the place, the day and the hour of the meeting and the general nature of that business. In addition, if a resolution is proposed as a special resolution, the text of that resolution shall be given to all shareholders. Notice of every general meeting shall also be given to the directors and our auditors.

Subject to the Cayman Companies Act and with the consent of the shareholders who, individually or collectively, hold at least 90 percent of the voting rights of all those who have a right to vote at a general meeting, a general meeting may be convened on shorter notice.

A quorum shall consist of the presence (whether in person or represented by proxy) of one or more shareholders holding shares that represent not less than one-third of the outstanding shares carrying the right to vote at such general meeting.

If, within 15 minutes from the time appointed for the general meeting, or at any time during the meeting, a quorum is not present, the meeting, if convened upon the requisition of shareholders, shall be cancelled. In any other case it shall stand adjourned to the same time and place seven days or to such other time or place as is determined by the directors.

The chairman may, with the consent of a meeting at which a quorum is present, adjourn the meeting. When a meeting is adjourned for seven days or more, notice of the adjourned meeting shall be given in accordance with the articles.

At any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands, unless a poll is (before, or on, the declaration of the result of the show of hands) demanded by the chairman of the meeting or by at least two shareholders having the right to vote on the resolutions or one or more shareholders present who together hold not less than ten percent of the voting rights of all those who are entitled to vote on the resolution. Unless a poll is so demanded, a declaration by the chairman as to the result of a resolution and an entry to that effect in the minutes of the meeting, shall be conclusive evidence of the outcome of a show of hands, without proof of the number or proportion of the votes recorded in favor of, or against, that resolution.

If a poll is duly demanded it shall be taken in such manner as the chairman directs and the result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded.

In the case of an equality of votes, whether on a show of hands or on a poll, the chairman of the meeting at which the show of hands takes place or at which the poll is demanded, shall not be entitled to a second or casting vote.

**Directors**

We may by ordinary resolution, from time to time, fix the maximum and minimum number of directors to be appointed. Under the Articles, we are required to have a minimum of one director and the maximum number of directors shall be unlimited.

A director may be appointed by ordinary resolution or by the directors. Any appointment may be to fill a vacancy or as an additional director.

Unless the remuneration of the directors is determined by the shareholders by ordinary resolution, the directors shall be entitled to such remuneration as the directors may determine.

The shareholding qualification for directors may be fixed by our shareholders by ordinary resolution and unless and until so fixed no share qualification shall be required.

Unless removed or re-appointed, each director shall be appointed for a term expiring at the next-following annual general meeting, if one is held. At any annual general meeting held, our directors will be elected by an ordinary resolution of our shareholders. At each annual general meeting, each director so elected shall hold office for a one-year term and until the election of their respective successors in office or removed.

A director may be removed by ordinary resolution.

A director may at any time resign or retire from office by giving us notice in writing. Unless the notice specifies a different date, the director shall be deemed to have resigned on the date that the notice is delivered to us.

Subject to the provisions of the articles, the office of a director may be terminated forthwith if:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) he is prohibited
 by the law of the Cayman Islands from acting as a director;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) he is made bankrupt
 or makes an arrangement or composition with his creditors generally;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) he resigns his office
 by notice to us;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) he only held office
 as a director for a fixed term and such term expires;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) in the opinion of
 a registered medical practitioner by whom he is being treated he becomes physically or mentally incapable of acting as a director;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) he is given notice
 by the majority of the other directors (not being less than two in number) to vacate office (without prejudice to any claim
 for damages for breach of any agreement relating to the provision of the services of such director);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) he is made subject
 to any law relating to mental health or incompetence, whether by court order or otherwise; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) without the consent
 of the other directors, he is absent from meetings of directors for continuous period of six months.

Each of the compensation committee and the nominating and corporate governance committee shall consist of at least three directors and the majority of the committee members shall be independent within the meaning of Section 5605(a)(2) of the Nasdaq listing rules. The audit committee shall consist of at least three directors, all of whom shall be independent within the meaning of Section 5605(a)(2) of the Nasdaq listing rules and will meet the criteria for independence set forth in Rule 10A-3 or Rule 10C-1 of the Exchange Act.

**Powers and Duties of Directors**

Subject to the provisions of the Cayman Companies Act and our amended and restated memorandum and articles of association, our business shall be managed by the directors, who may exercise all our powers. No prior act of the directors shall be invalidated by any subsequent alteration of our memorandum or articles of association. To the extent allowed by the Cayman Companies Act, however, shareholders may by special resolution validate any prior or future act of the directors which would otherwise be in breach of their duties.

The directors may delegate any of their powers to any committee consisting of one or more persons who need not be shareholders and may include non-directors so long as the majority of those persons are directors; any committee so formed shall in the exercise of the powers so delegated conform to any regulations that may be imposed on it by the directors. Upon the closing of this offering, our board of directors will have established an audit committee, compensation committee, and nomination and corporate governance committee.

The board of directors may establish any local or divisional board of directors or agency and delegate to it its powers and authorities (with power to sub-delegate) for managing any of our affairs whether in the Cayman Islands or elsewhere and may appoint any persons to be members of a local or divisional board of directors, or to be managers or agents, and may fix their remuneration.

The directors may from time to time and at any time by power of attorney or in any other manner they determine appoint any person, either generally or in respect of any specific matter, to be our agent with or without authority for that person to delegate all or any of that person's powers.

The directors may from time to time and at any time by power of attorney or in any other manner they determine appoint any person, whether nominated directly or indirectly by the directors, to be our attorney or our authorized signatory and for such period and subject to such conditions as they may think fit. The powers, authorities and discretions, however, must not exceed those vested in, or exercisable, by the directors under the articles.

The board of directors may remove any person so appointed and may revoke or vary the delegation.

The directors may exercise all of our powers to borrow money and to mortgage or charge its undertaking, property and assets both present and future and uncalled capital or any part thereof, to issue debentures and other securities whether outright or as collateral security for any debt, liability or obligation of ours or our parent undertaking (if any) or any subsidiary undertaking of us or of any third party.

A director shall not, as a director, vote in respect of any contract, transaction, arrangement or proposal in which he has an interest which (together with any interest of any person connected with him) is a material interest (otherwise than by virtue of his interests, direct or indirect, in shares or debentures or other securities of, or otherwise in or through, us) and if he shall do so his vote shall not be counted, nor in relation thereto shall he be counted in the quorum present at the meeting, but (in the absence of some other material interest than is mentioned below) none of these prohibitions shall apply to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the giving of any
 security, guarantee or indemnity in respect of:

(i) money lent or obligations
 incurred by him or by any other person for our benefit or any of our subsidiaries; or

(ii) a debt or obligation
 of ours or any of our subsidiaries for which the director himself has assumed responsibility in whole or in part and whether
 alone or jointly with others under a guarantee or indemnity or by the giving of security;

(b) where we or any
 of our subsidiaries is offering securities in which offer the director is or may be entitled to participate as a holder of
 securities or in the underwriting or sub-underwriting of which the director is to or may participate;

(c) any contract, transaction,
 arrangement or proposal affecting any other body corporate in which he is interested, directly or indirectly and whether as
 an officer, shareholder, creditor or otherwise howsoever, provided that he (together with persons connected with him) does
 not to his knowledge hold an interest representing one percent or more of any class of the equity share capital of such body
 corporate (or of any third body corporate through which his interest is derived) or of the voting rights available to shareholders
 of the relevant body corporate;

(d) any act or thing
 done or to be done in respect of any arrangement for the benefit of the employees of us or any of our subsidiaries under which
 he is not accorded as a director any privilege or advantage not generally accorded to the employees to whom such arrangement
 relates; or

(e) any matter connected
 with the purchase or maintenance for any director of insurance against any liability or (to the extent permitted by the Cayman
 Companies Act) indemnities in favor of directors, the funding of expenditure by one or more directors in defending proceedings
 against him or them or the doing of anything to enable such director or directors to avoid incurring such expenditure.

A director may, as a director, vote (and be counted in the quorum) in respect of any contract, transaction, arrangement or proposal in which he has an interest which is not a material interest or as described above.

**Capitalization of Profits**

The directors may resolve to capitalize:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) any part of our
 profits not required for paying any preferential dividend (whether or not those profits are available for distribution); or

(b) any sum standing to the credit of our share
 premium account or capital redemption reserve, if any.

The amount resolved to be capitalized must be appropriated to the shareholders who would have been entitled to it had it been distributed by way of dividend and in the same proportions.

**Liquidation Rights**

If we are wound up, the shareholders may, subject to the articles and any other sanction required by the Cayman Companies Act, pass a special resolution allowing the liquidator to do either or both of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) to divide in specie
 among the shareholders the whole or any part of our assets and, for that purpose, to value any assets and to determine how
 the division shall be carried out as between the shareholders or different classes of shareholders; and

(b) to vest the whole
 or any part of the assets in trustees for the benefit of shareholders and those liable to contribute to the winding up.

The directors have the authority to present a petition for our winding up to the Grand Court of the Cayman Islands on our behalf without the sanction of a resolution passed at a general meeting.

**Register of Members**

Under the Cayman Companies Act, we must keep a register of members and there should be entered therein:

● the names and addresses of the members of the company, a statement of the shares held by each member, which: distinguishes each share by its number (so long as the share has a number); confirms the amount paid, or agreed to be considered as paid, on the shares of each member; confirms the number and category of shares held by each member; and confirms whether each relevant category of shares held by a member carries voting rights under the Articles, and if so, whether such voting rights are conditional;

● the date on which the name of any person was entered on the register as a member; and

● the date on which any person ceased to be a member.

For these purposes, "voting rights" means rights conferred on shareholders, including the right to appoint or remove directors, in respect of their shares to vote at general meetings of the company on all or substantially all matters. A voting right is conditional where the voting right arises only in certain circumstances.

Under the Cayman Companies Act, the register of members of our Company is prima facie evidence of the matters set out therein (that is, the register of members will raise a presumption of fact on the matters referred to above unless rebutted) and a shareholder registered in the register of members is deemed as a matter of the Cayman Companies Act to have legal title to the shares as set against its name in the register of members. Upon the completion of this offering, the register of members will be immediately updated to record and give effect to the issuance of shares by us to the custodian or its nominee. Once our register of members has been updated, the shareholders recorded in the register of members will be deemed to have legal title to the shares set against their name.

If the name of any person is incorrectly entered in or omitted from our register of members, or if there is any default or unnecessary delay in entering on the register the fact of any person having ceased to be a shareholder of our company, the person or shareholder aggrieved (or any shareholder of our Company or our Company itself) may apply to the Grand Court of the Cayman Islands for an order that the register be rectified, and the Court may either refuse such application or it may, if satisfied of the justice of the case, make an order for the rectification of the register.

**Differences in Corporate Law**

The Cayman Companies Act is derived, to a large extent, from the older Companies Acts of England and Wales but does not follow recent United Kingdom statutory enactments, and accordingly there are significant differences between the Cayman Companies Act and the current Companies Act of England and Wales. In addition, the Cayman Companies Act differs from laws applicable to United States corporations and their shareholders. Set forth below is a summary of certain significant differences between the provisions of the Cayman Companies Act applicable to us and the comparable laws applicable to companies incorporated in the State of Delaware in the United States.

*Mergers and Similar Arrangements*

The Cayman Companies Act permits mergers and consolidations between Cayman Islands companies and between Cayman Islands companies and non-Cayman Islands companies. For these purposes, (a) "merger" means the merging of two or more constituent companies and the vesting of their undertaking, property, and liabilities in one of such companies as the surviving company, and (b) a "consolidation" means the combination of two or more constituent companies into a consolidated company and the vesting of the undertaking, property and liabilities of such companies to the consolidated company. In order to effect such a merger or consolidation, the directors of each constituent company must approve a written plan of merger or consolidation, which must then be authorized by (a) a special resolution of the shareholders of each constituent company, and (b) such other authorization, if any, as may be specified in such constituent company's articles of association. The plan must be filed with the Registrar of Companies together with a declaration as to the solvency of the consolidated or surviving company, a list of the assets and liabilities of each constituent company, and an undertaking that a copy of the certificate of merger or consolidation will be given to the shareholders and creditors of each constituent company and that notification of the merger or consolidation will be published in the Cayman Islands Gazette. Court approval is not required for a merger or consolidation which is effected in compliance with these statutory procedures.

A merger between a Cayman Islands parent company and its Cayman Islands subsidiary or subsidiaries does not require authorization by a resolution of shareholders. For this purpose, a subsidiary is a company of which at least 90% of the issued shares entitled to vote are owned by the parent company.

The consent of each holder of a fixed or floating security interest of a constituent company is required unless this requirement is waived by a court in the Cayman Islands.

Except in certain limited circumstances, a dissenting shareholder of a Cayman Islands constituent company is entitled to payment of the fair value of his or her shares upon dissenting from a merger or consolidation. The exercise of such dissenter rights will preclude the exercise by the dissenting shareholder of any other rights to which he or she might otherwise be entitled by virtue of holding shares, except for the right to seek relief on the grounds that the merger or consolidation is void or unlawful.

In addition, there are statutory provisions that facilitate the reconstruction and amalgamation of companies, provided that the arrangement is approved by a majority in number of each class of shareholders and creditors with whom the arrangement is to be made, and who must, in addition, represent three-fourths in value of each such class of shareholders or creditors, as the case may be, that are present and voting either in person or by proxy at a meeting, or meetings, convened for that purpose. The convening of the meetings and subsequently the arrangement must be sanctioned by the Grand Court of the Cayman Islands. While a dissenting shareholder has the right to express to the court the view that the transaction ought not to be approved, the court can be expected to approve the arrangement if it determines that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the statutory provisions
 as to the required majority vote have been met;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the shareholders
 have been fairly represented at the meeting in question and the statutory majority are acting bona fide without coercion of
 the minority to promote interests adverse to those of the class;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) the arrangement
 is such that may be reasonably approved by an intelligent and honest man of that class acting in respect of his interest;
 and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) the arrangement
 is not one that would more properly be sanctioned under some other provision of the Cayman Companies Act.

When a takeover offer is made and accepted by holders of 90% of the shares affected within four months, the offeror may, within a two-month period commencing on the expiration of such four month period, require the holders of the remaining shares to transfer such shares on the terms of the offer. An objection can be made to the Grand Court of the Cayman Islands but this is unlikely to succeed in the case of an offer which has been so approved unless there is evidence of fraud, bad faith or collusion.

If an arrangement and reconstruction is thus approved, or if a takeover offer is made and accepted, a dissenting shareholder would have no rights comparable to appraisal rights, which would otherwise ordinarily be available to dissenting shareholders of Delaware corporations, providing rights to receive payment in cash for the judicially determined value of the shares.

*Shareholders' Suits* 

In principle, we will normally be the proper plaintiff to sue for a wrong done to us as a company, and as a general rule, a derivative action may not be brought by a minority shareholder. However, based on English law authorities, which would in all likelihood be of persuasive authority in the Cayman Islands, the Cayman Islands courts can be expected to follow and apply the common law principles (namely the rule in *Foss v. Harbottle* and the exceptions thereto) so that a non-controlling shareholder may be permitted to commence a class action against or derivative actions in the name of the company to challenge:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) an act which is
 illegal or ultra vires with respect to the company and is therefore incapable of ratification by the shareholders;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) an act which, although
 not ultra vires, requires authorization by a qualified (or special) majority (that is, more than a simple majority) which
 has not been obtained; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) an act which constitutes
 a "fraud on the minority" where the wrongdoers are themselves in control of the company.

*Indemnification of Directors and Executive Officers and Limitation of Liability*

The Cayman Islands law does not limit the extent to which a company's articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime. Our articles of association provide to the extent permitted by law, we shall indemnify each existing or former secretary, director (including alternate director), and any of our other officers (including an investment adviser or an administrator or liquidator) and their personal representatives against:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) all actions, proceedings,
 costs, charges, expenses, losses, damages, or liabilities incurred or sustained by the existing or former director (including
 alternate director), secretary, or officer in or about the conduct of our business or affairs or in the execution or discharge
 of the existing or former director (including alternate director), secretary's or officer's duties, powers, authorities,
 or discretions; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) without limitation
 to paragraph (a) above, all costs, expenses, losses, or liabilities incurred by the existing or former director (including
 alternate director), secretary, or officer in defending (whether successfully or otherwise) any civil, criminal, administrative,
 or investigative proceedings (whether threatened, pending or completed) concerning us or our affairs in any court or tribunal,
 whether in the Cayman Islands or elsewhere.

No such existing or former director (including alternate director), secretary, or officer, however, shall be indemnified in respect of any matter arising out of his own dishonesty.

To the extent permitted by law, we may make a payment, or agree to make a payment, whether by way of advance, loan, or otherwise, for any legal costs incurred by an existing or former director (including alternate director), secretary, or any of our officers in respect of any matter identified in above on condition that the director (including alternate director), secretary, or officer must repay the amount paid by us to the extent that it is ultimately found not liable to indemnify the director (including alternate director), the secretary, or that officer for those legal costs.

This standard of conduct is generally the same as permitted under the Delaware General Corporation Law for a Delaware corporation. In addition, we intend to enter into indemnification agreements with our directors and executive officers that will provide such persons with additional indemnification beyond that provided in our articles of association.

*Anti-Takeover Provisions in Our Articles* 

 

Some provisions of our articles of association may discourage, delay, or prevent a change in control of our company or management that shareholders may consider favorable, including provisions that authorize our board of directors to issue shares at such times and on such terms and conditions as the board of directors may decide without any further vote or action by our shareholders.

Under the Cayman Companies Act, our directors may only exercise the rights and powers granted to them under our articles of association for what they believe in good faith to be in the best interests of our company and for a proper purpose.

*Directors' Fiduciary Duties*

Under Delaware corporate law, a director of a Delaware corporation has a fiduciary duty to the corporation and its shareholders. This duty has two components: the duty of care and the duty of loyalty. The duty of care requires that a director act in good faith, with the care that an ordinarily prudent person would exercise under similar circumstances. Under this duty, a director must inform himself of, and disclose to shareholders, all material information reasonably available regarding a significant transaction. The duty of loyalty requires that a director act in a manner he or she reasonably believes to be in the best interests of the corporation. He or she must not use his or her corporate position for personal gain or advantage. This duty prohibits self-dealing by a director and mandates that the best interests of the corporation and its shareholders take precedence over any interest possessed by a director, officer, or controlling shareholder and not shared by the shareholders generally. In general, actions of a director are presumed to have been made on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the corporation. However, this presumption may be rebutted by evidence of a breach of one of the fiduciary duties. Should such evidence be presented concerning a transaction by a director, a director must prove the procedural fairness of the transaction, and that the transaction was of fair value to the corporation.

As a matter of Cayman Islands law, a director owes three types of duties to the company: (i) statutory duties, (ii) fiduciary duties, and (iii) common law duties. The Cayman Companies Act imposes a number of statutory duties on a director. A Cayman Islands director's fiduciary duties are not codified, however the courts of the Cayman Islands have held that a director owes the following fiduciary duties (a) a duty to act in what the director bona fide considers to be in the best interests of the company, (b) a duty to exercise their powers for the purposes they were conferred, (c) a duty to avoid fettering his or her discretion in the future, and (d) a duty to avoid conflicts of interest and of duty. The common law duties owed by a director are those to act with skill, care, and diligence that may reasonably be expected of a person carrying out the same functions as are carried out by that director in relation to the company and, also, to act with the skill, care, and diligence in keeping with a standard of care commensurate with any particular skill they have which enables them to meet a higher standard than a director without those skills. In fulfilling their duty of care to us, our directors must ensure compliance with our articles of association, as amended and restated from time to time. We have the right to seek damages if a duty owed by any of our directors is breached.

*Shareholder Proposals*

Under the Delaware General Corporation Law, a shareholder has the right to put any proposal before the annual meeting of shareholders, provided it complies with the notice provisions in the governing documents. The Delaware General Corporation Law does not provide shareholders an express right to put any proposal before the annual meeting of shareholders, but in keeping with common law, Delaware corporations generally afford shareholders an opportunity to make proposals and nominations provided that they comply with the notice provisions in the certificate of incorporation or bylaws. A special meeting may be called by the board of directors or any other person authorized to do so in the governing documents, but shareholders may be precluded from calling special meetings.

The Cayman Companies Act provides shareholders with only limited rights to requisition a general meeting, and does not provide shareholders with any right to put any proposal before a general meeting. However, these rights may be provided in a company's articles of association. Our articles of association provide that general meetings shall be convened on the written requisition of one or more of the shareholders entitled to attend and vote at our general meetings who (together) hold not less than 10 percent of the rights to vote at such general meeting in accordance with the notice provisions in the articles of association, specifying the purpose of the meeting and signed by each of the shareholders making the requisition. If the directors do not convene such meeting for a date not later than 21 clear days' after the date of receipt of the written requisition, those shareholders who requested the meeting may convene the general meeting themselves within three months after the end of such period of 21 clear days in which case reasonable expenses incurred by them as a result of the directors failing to convene a meeting shall be reimbursed by us. Our articles of association provide no other right to put any proposals before annual general meetings or extraordinary general meetings. As a Cayman Islands exempted company, we are not obligated by law to call shareholders' annual general meetings.

*Cumulative Voting*

Under the Delaware General Corporation Law, cumulative voting for elections of directors is not permitted unless the corporation's certificate of incorporation specifically provides for it. Cumulative voting potentially facilitates the representation of minority shareholders on a board of directors since it permits the minority shareholder to cast all the votes to which the shareholder is entitled on a single director, which increases the shareholder's voting power with respect to electing such director. As permitted under the Cayman Companies Act, our articles of association do not provide for cumulative voting. As a result, our shareholders are not afforded any less protections or rights on this issue than shareholders of a Delaware corporation.

*Removal of Directors*

Under the Delaware General Corporation Law, a director of a corporation with a classified board may be removed only for cause with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. Subject to the provisions of our articles of association (which include the removal of a director by ordinary resolution), the office of a director may be terminated forthwith if (a) he is prohibited by the laws of the Cayman Islands from acting as a director, (b) he is made bankrupt or makes an arrangement or composition with his creditors generally, (c) he resigns his office by notice to us, (d) he only held office as a director for a fixed term and such term expires, (e) in the opinion of a registered medical practitioner by whom he is being treated he becomes physically or mentally incapable of acting as a director, (f) he is given notice by the majority of the other directors (not being less than two in number) to vacate office (without prejudice to any claim for damages for breach of any agreement relating to the provision of the services of such director), (g) he is made subject to any law relating to mental health or incompetence, whether by court order or otherwise, or (h) without the consent of the other directors, he is absent from meetings of directors for continuous period of six months.

*Transactions with Interested Shareholders*

The Delaware General Corporation Law contains a business combination statute applicable to Delaware public corporations whereby, unless the corporation has specifically elected not to be governed by such statute by amendment to its certificate of incorporation or bylaws that is approved by its shareholders, it is prohibited from engaging in certain business combinations with an "interested shareholder" for three years following the date that such person becomes an interested shareholder. An interested shareholder generally is a person or a group who or which owns or owned 15% or more of the target's outstanding voting stock or who or which is an affiliate or associate of the corporation and owned 15% or more of the corporation's outstanding voting stock within the past three years. This has the effect of limiting the ability of a potential acquirer to make a two-tiered bid for the target in which all shareholders would not be treated equally. The statute does not apply if, among other things, prior to the date on which such shareholder becomes an interested shareholder, the board of directors approves either the business combination or the transaction which resulted in the person becoming an interested shareholder. This encourages any potential acquirer of a Delaware corporation to negotiate the terms of any acquisition transaction with the target's board of directors.

The Cayman Companies Act has no comparable statute. As a result, we cannot avail ourselves of the types of protections afforded by the Delaware business combination statute. However, although the Cayman Companies Act does not regulate transactions between a company and its significant shareholders, under Cayman Islands law such transactions must be entered into bona fide in the best interests of the company and for a proper corporate purpose and not with the effect of constituting a fraud on the minority shareholders.

*Dissolution; Winding Up*

Under the Delaware General Corporation Law, unless the board of directors approves the proposal to dissolve, dissolution must be approved by shareholders holding 100% of the total voting power of the corporation. Only if the dissolution is initiated by the board of directors may it be approved by a simple majority of the corporation's outstanding shares. Delaware law allows a Delaware corporation to include in its certificate of incorporation a supermajority voting requirement in connection with dissolutions initiated by the board of directors.

Under the Cayman Companies Act and our articles of association, the Company may be wound up by a special resolution of our shareholders, or if the winding up is initiated by our board of directors, by either a special resolution of our members or, if our company is unable to pay its debts as they fall due, by an ordinary resolution of our members. In addition, a company may be wound up by an order of the courts of the Cayman Islands. The court has authority to order winding up in a number of specified circumstances including where it is, in the opinion of the court, just and equitable to do so.

*Variation of Rights of Shares*

Under the Delaware General Corporation Law, a corporation may vary the rights of a class of shares with the approval of a majority of the outstanding shares of such class, unless the certificate of incorporation provides otherwise. Under the Cayman Companies Act and our articles of association, if our share capital is divided into more than one class of shares, the rights attaching to any class of share (unless otherwise provided by the terms of issue of the shares of that class) may be varied either with the consent in writing of the holders of not less than two-thirds of the issued shares of that class, or with the sanction of a resolution passed by a majority of not less than two-thirds of the holders of shares of the class present in person or by proxy at a separate general meeting of the holders of shares of that class.

*Amendment of Governing Documents*

Under the Delaware General Corporation Law, a corporation's certificate of incorporation may be amended only if adopted and declared advisable by the board of directors and approved by a majority of the outstanding shares entitled to vote, and the bylaws may be amended with the approval of a majority of the outstanding shares entitled to vote and may, if so provided in the certificate of incorporation, also be amended by the board of directors. Under the Cayman Companies Act, our articles of association may only be amended by special resolution of our shareholders.

**Anti-money Laundering—Cayman Islands**

In order to comply with legislation or regulations aimed at the prevention of money laundering, we may be required to adopt and maintain anti-money laundering procedures and may require subscribers to provide evidence to verify their identity. Where permitted, and subject to certain conditions, we may also delegate the maintenance of our anti-money laundering procedures (including the acquisition of due diligence information) to a suitable person.

We reserve the right to request such information as is necessary to verify the identity of a subscriber. In the event of delay or failure on the part of the subscriber in producing any information required for verification purposes, we may refuse to accept the application, in which case any funds received will be returned without interest to the account from which they were originally debited.

We also reserve the right to refuse to make any redemption payment to a shareholder if our directors or officers suspect or are advised that the payment of redemption proceeds to such shareholder might result in a breach of applicable anti-money laundering or other laws or regulations by any person in any relevant jurisdiction, or if such refusal is considered necessary or appropriate to ensure our compliance with any such laws or regulations in any applicable jurisdiction.

If any person resident in the Cayman Islands knows or suspects or has reason for knowing or suspecting that another person is engaged in criminal conduct or is involved with terrorism or terrorist property and the information for that knowledge or suspicion came to their attention in the course of their business in the regulated sector, or other trade, profession, business or employment, the person will be required to report such knowledge or suspicion to (i) a nominated officer (appointed in accordance with the Proceeds of Crime Act (Revised) of the Cayman Islands) or the Financial Reporting Authority of the Cayman Islands, pursuant to the Proceeds of Crime Act (Revised), if the disclosure relates to criminal conduct or money laundering or (ii) to a police constable or a nominated officer (pursuant to the Terrorism Act (Revised) of the Cayman Islands) or the Financial Reporting Authority, pursuant to the Terrorism Act (Revised), if the disclosure relates to involvement with terrorism or terrorist financing and terrorist property. Such a report shall not be treated as a breach of confidence or of any restriction upon the disclosure of information imposed by any enactment or otherwise.

**Data Protection in the Cayman Islands – Privacy Notice**

This privacy notice explains the manner in which we collect, process, and maintain personal data about investors of the Company pursuant to the Data Protection Law, 2021 of the Cayman Islands, as amended from time to time and any regulations, codes of practice, or orders promulgated pursuant thereto (the "DPL").

We are committed to processing personal data in accordance with the DPL. In our use of personal data, we will be characterized under the DPL as a "data controller," whilst certain of our service providers, affiliates, and delegates may act as "data processors" under the DPL. These service providers may process personal information for their own lawful purposes in connection with services provided to us.

By virtue of your investment in the Company, we and certain of our service providers may collect, record, store, transfer, and otherwise process personal data by which individuals may be directly or indirectly identified.

Your personal data will be processed fairly and for lawful purposes, including (a) where the processing is necessary for us to perform a contract to which you are a party or for taking pre-contractual steps at your request, (b) where the processing is necessary for compliance with any legal, tax, or regulatory obligation to which we are subject, or (c) where the processing is for the purposes of legitimate interests pursued by us or by a service provider to whom the data are disclosed. As a data controller, we will only use your personal data for the purposes for which we collected it. If we need to use your personal data for an unrelated purpose, we will contact you.

We anticipate that we will share your personal data with our service providers for the purposes set out in this privacy notice. We may also share relevant personal data where it is lawful to do so and necessary to comply with our contractual obligations or your instructions or where it is necessary or desirable to do so in connection with any regulatory reporting obligations. In exceptional circumstances, we will share your personal data with regulatory, prosecuting, and other governmental agencies or departments, and parties to litigation (whether pending or threatened), in any country or territory including to any other person where we have a public or legal duty to do so (e.g. to assist with detecting and preventing fraud, tax evasion, and financial crime or compliance with a court order).

Your personal data shall not be held by the Company for longer than necessary with regard to the purposes of the data processing.

We will not sell your personal data. Any transfer of personal data outside of the Cayman Islands shall be in accordance with the requirements of the DPL. Where necessary, we will ensure that separate and appropriate legal agreements are put in place with the recipient of that data.

We will only transfer personal data in accordance with the requirements of the DPL, and will apply appropriate technical and organizational information security measures designed to protect against unauthorized or unlawful processing of the personal data and against the accidental loss, destruction, or damage to the personal data.

If you are a natural person, this will affect you directly. If you are a corporate investor (including, for these purposes, legal arrangements such as trusts or exempted limited partnerships) that provides us with personal data on individuals connected to you for any reason in relation to your investment into the Company, this will be relevant for those individuals and you should inform such individuals of the content.

You have certain rights under the DPL, including (a) the right to be informed as to how we collect and use your personal data (and this privacy notice fulfils our obligation in this respect), (b) the right to obtain a copy of your personal data, (c) the right to require us to stop direct marketing, (d) the right to have inaccurate or incomplete personal data corrected, (e) the right to withdraw your consent and require us to stop processing or restrict the processing, or not begin the processing of your personal data, (f) the right to be notified of a data breach (unless the breach is unlikely to be prejudicial), (g) the right to obtain information as to any countries or territories outside the Cayman Islands to which we, whether directly or indirectly, transfer, intend to transfer, or wish to transfer your personal data, general measures we take to ensure the security of personal data, and any information available to us as to the source of your personal data, (h) the right to complain to the Office of the Ombudsman of the Cayman Islands, and (i) the right to require us to delete your personal data in some limited circumstances.

If you consider that your personal data has not been handled correctly, or you are not satisfied with our responses to any requests you have made regarding the use of your personal data, you have the right to complain to the Cayman Islands' Ombudsman. The Ombudsman can be contacted by calling +1 (345) 946-6283 or by email at info@ombudsman.ky.

**History of Share Issuances**

The following is a summary of our share issuances since incorporation.

As part of the Reorganization, we undertook the following corporate actions:

On July 26, 2019, we issued the following ordinary shares to certain founding shareholders of Chanson International:

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| | | | |
|:---|:---|:---|:---|
| **Purchaser** | **Date of Issuance** | **Number of Ordinary Shares** | **Number of Ordinary Shares** |
| Danton Global Limited | July 26, 2019 |  | 93 |
| Haily Global Limited | July 26, 2019 |  | 3 |
| Yetta Global Limited | July 26, 2019 |  | 2 |
| Yvan Global Limited | July 26, 2019 |  | 2 |

---

On March 27, 2021, our shareholders and board of directors approved (i) a forward split of our outstanding ordinary shares at a ratio of 1,000-for-1 share, and (ii) the creation of Class A Ordinary Shares and Class B Ordinary Shares. On March 29, 2021, we filed our second amended and restated memorandum and articles of association with the Cayman Registrar to effect such corporate actions, which filing became effective on March 31, 2021.

On March 27, 2021, our shareholders approved the re-designation of already issued ordinary shares into Class A Ordinary Shares as set out in the table below:

---

| | | |
|:---|:---|:---|
| **Shareholder** | **Number of<br> Class A<br> Ordinary<br> Shares** | **Number of<br> Class A<br> Ordinary<br> Shares** |
| Danton Global Limited |  | 90000 |
| Yetta Global Limited |  | 2000 |
| Yvan Global Limited |  | 2000 |

---

On March 27, 2021, our shareholders approved the re-designation of already issued ordinary shares into Class B Ordinary Shares as set out in the table below:

---

| | | | |
|:---|:---|:---|:---|
| **Shareholder** | **Number of<br> Class B<br> Ordinary<br> Shares** | **Number of<br> Class B<br> Ordinary<br> Shares** |  |
| Haily Global Limited |  | 3000 |  |
| C&C Capital Investments LLC |  | 3000 | \* |

---

\* Transferred to Danton Global Limited on September 23, 2022.

On March 27, 2021, our board of directors approved the issuances of Class A Ordinary Shares and Class B Ordinary Shares to the following shareholders to increase the number of total ordinary shares issued and outstanding prior to the completion of this offering from 100,000 to 9,000,000:

---

| | | |
|:---|:---|:---|
| **Purchaser** | **Securities** | **Number of Securities** |
| Danton Global Limited | Class A Ordinary Shares | 2610000 |
| Danton Global Limited | Class B Ordinary Shares | 5400000 |
| Haily Global Limited | Class B Ordinary Shares | 267000 |
| Yetta Global Limited | Class A Ordinary Shares | 178000 |
| Yvan Global Limited | Class A Ordinary Shares | 178000 |
| C&C Capital Investments LLC | Class B Ordinary Shares | 267000 \* |

---

\* Transferred to Danton Global Limited on September 23, 2022.

**SHARES ELIGIBLE FOR FUTURE SALE**

Before our initial public offering, there has not been a public market for our Class A Ordinary Shares, and although we expect to make an application for the Class A Ordinary Shares to be listed on the Nasdaq Capital Market, a regular trading market for our Class A Ordinary Shares may not develop. Future sales of substantial amounts of shares of our Class A Ordinary Shares in the public market after our initial public offering, or the possibility of these sales occurring, could cause the prevailing market price for our Class A Ordinary Shares to fall or impair our ability to raise equity capital in the future. Upon completion of this offering, we will have outstanding Class A Ordinary Shares held by public shareholders representing approximately 49.5% of our Class A Ordinary Shares in issue if the Underwriter does not exercise its over-allotment option, and approximately 53.0% of our Class A Ordinary Shares in issue if the Underwriter exercises its over-allotment option in full. All of the Class A Ordinary Shares sold in this offering will be freely transferable by persons other than our "affiliates" without restriction or further registration under the Securities Act.

**Lock-Up Agreements**

Each of our directors, executive officers, and shareholders owning 5% or more of our Class A Ordinary Shares has agreed, for a period of 180 days from the date of this prospectus, subject to certain exceptions, not to offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right, or warrant to purchase, lend, or otherwise to transfer or dispose of, directly or indirectly, any of our Class A Ordinary Shares, Class B Ordinary Shares, or securities convertible into or exercisable or exchangeable for our Class A Ordinary Shares or Class B Ordinary Shares, without the prior written consent of the Underwriter.

We are not aware of any plans by any significant shareholders to dispose of significant numbers of our Class A Ordinary Shares. However, one or more existing shareholders or owners of securities convertible or exchangeable into or exercisable for our Class A Ordinary Shares may dispose of significant numbers of our Class A Ordinary Shares in the future. We cannot predict what effect, if any, future sales of our Class A Ordinary Shares, or the availability of Class A Ordinary Shares for future sale, will have on the trading price of our Class A Ordinary Shares from time to time. Sales of substantial amounts of our Class A Ordinary Shares in the public market, or the perception that these sales could occur, could adversely affect the trading price of our Class A Ordinary Shares.

**Rule 144**

All of our Class A Ordinary Shares outstanding prior to the closing of this offering are "restricted securities" as that term is defined in Rule 144 under the Securities Act and may be sold publicly in the U.S. only if they are subject to an effective registration statement under the Securities Act or pursuant to an exemption from the registration requirement such as those provided by Rule 144 and Rule 701 promulgated under the Securities Act.

In general, under Rule 144 as currently in effect, beginning 90 days after the date of this prospectus, a person who is not deemed to have been our affiliate at any time during the three months preceding a sale and who has beneficially owned restricted securities within the meaning of Rule 144 for more than six months would be entitled to sell an unlimited number of those shares, subject only to the availability of current public information about us. A non-affiliate who has beneficially owned restricted securities for at least one year from the later of the date these shares were acquired from us or from our affiliate would be entitled to freely sell those shares.

A person who is deemed to be an affiliate of ours and who has beneficially owned "restricted securities" for at least six months would be entitled to sell, within any three-month period, a number of shares that is not more than the greater of:

● 1% of the number of Class A Ordinary Shares then outstanding, in the form of Class A Ordinary Shares or otherwise, which will equal approximately 6,810,000 shares immediately after this offering, assuming the Underwriter does not exercise its over-allotment option; or

● the average weekly trading volume of the Class A Ordinary Shares on the Nasdaq Capital Market during the four calendar weeks preceding the filing of a notice on Form 144 with respect to such sale.

Sales under Rule 144 by our affiliates or persons selling shares on behalf of our affiliates are also subject to certain manner of sale provisions and notice requirements and to the availability of current public information about us.

**Rule 701**

In general, under Rule 701 of the Securities Act as currently in effect, each of our employees, consultants, or advisors who purchases our Class A Ordinary Shares from us in connection with a compensatory stock plan or other written agreement executed prior to the completion of this offering is eligible to resell those Class A Ordinary Shares in reliance on Rule 144, but without compliance with some of the restrictions, including the holding period, contained in Rule 144. However, the Rule 701 shares would remain subject to lock-up arrangements and would only become eligible for sale when the lock-up period expires.

**Regulation S**

Regulation S provides generally that sales made in offshore transactions are not subject to the registration or prospectus-delivery requirements of the Securities Act.

**MATERIAL INCOME TAX CONSIDERATION**

**<u>People's Republic of China Enterprise Taxation</u>**

The following brief description of Chinese enterprise income taxation is designed to highlight the enterprise-level taxation on our earnings, which will affect the amount of dividends, if any, we are ultimately able to pay to our shareholders. See "Dividend Policy."

According to the EIT Law, which was promulgated by the SCNPC on March 16, 2007, became effective on January 1, 2008, amended on February 24, 2017, and most recently amended on December 29, 2018, and the *Implementation Rules of the EIT Law*, which were promulgated by the State Council on December 6, 2007, and became effective on January 1, 2008, enterprises are divided into resident enterprises and non-resident enterprises. Resident enterprises pay enterprise income tax on their incomes obtained in and outside the PRC at the rate of 25%. Non-resident enterprises setting up institutions in the PRC pay enterprise income tax on the incomes obtained by such institutions in and outside the PRC at the rate of 25%. Non-resident enterprises with no institutions in the PRC, and non-resident enterprises with income having no substantial connection with their institutions in the PRC, pay enterprise income tax on their income obtained in the PRC at a reduced rate of 10%.

We are a holding company incorporated in the Cayman Islands and we gain substantial income by way of dividends paid to us from our PRC subsidiary. The EIT Law and its implementation rules provide that China-sourced income of foreign enterprises, such as dividends paid by a PRC subsidiary to its equity holders that are non-resident enterprises, will normally be subject to PRC withholding tax at a rate of 10%, unless any such foreign investor's jurisdiction of incorporation has a tax treaty with China that provides for a preferential tax rate or a tax exemption.

Under the EIT Law, an enterprise established outside of China with a "de facto management body" within China is considered a "resident enterprise," which means that it is treated in a manner similar to a Chinese enterprise for enterprise income tax purposes. Although the implementation rules of the EIT Law define "de facto management body" as a managing body that in practice exercises "substantial and overall management and control over the production and operations, personnel, accounting, and properties" of the enterprise, the only official guidance for this definition currently available is set forth in SAT Notice 82, which provides guidance on the determination of the tax residence status of a PRC-controlled offshore incorporated enterprise, defined as an enterprise that is incorporated under the laws of a foreign country or territory and that has a PRC enterprise or enterprise group as its primary controlling shareholder. Although Chanson International does not have a PRC enterprise or enterprise group as our primary controlling shareholder and is therefore not a PRC-controlled offshore incorporated enterprise within the meaning of SAT Notice 82, in the absence of guidance specifically applicable to us, we have applied the guidance set forth in SAT Notice 82 to evaluate the tax residence status of Chanson International and its subsidiaries organized outside the PRC.

According to SAT Notice 82, a PRC-controlled offshore incorporated enterprise will be regarded as a PRC tax resident by virtue of having a "de facto management body" in China and will be subject to PRC enterprise income tax on its worldwide income only if all of the following criteria are met: (i) the places where senior management and senior management departments that are responsible for daily production, operation and management of the enterprise perform their duties are mainly located within the territory of China; (ii) financial decisions (such as money borrowing, lending, financing and financial risk management) and personnel decisions (such as appointment, dismissal and salary and wages) are decided or need to be decided by organizations or persons located within the territory of China; (iii) main property, accounting books, corporate seal, the board of directors and files of the minutes of shareholders' meetings of the enterprise are located or preserved within the territory of China; and (iv) one half (or more) of the directors or senior management staff having the right to vote habitually reside within the territory of China.

We believe that we do not meet some of the conditions outlined in the immediately preceding paragraph. For example, as a holding company, the key assets and records of Chanson International, including the resolutions and meeting minutes of our board of directors and the resolutions and meeting minutes of our shareholders, are located and maintained outside the PRC. For the same reasons, we believe our other entities outside China are not PRC resident enterprises either. In addition, we are not aware of any offshore holding companies with a corporate structure similar to ours that has been deemed a PRC "resident enterprise" by the PRC tax authorities. Accordingly, we believe that Chanson International and its offshore subsidiaries should not be treated as a "resident enterprise" for PRC tax purposes if the criteria for "de facto management body" as set forth in SAT Notice 82 were deemed applicable to us. However, the tax resident status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term "de facto management body" as applicable to our offshore entities, we will continue to monitor our tax status.

The implementation rules of the EIT Law provide that, (i) if an enterprise that distributes dividends is domiciled in the PRC or (ii) if gains are realized from transferring equity interests of enterprises domiciled in the PRC, then such dividends or gains are treated as PRC-sourced income. It is not clear how "domicile" may be interpreted under the EIT Law, and it may be interpreted as the jurisdiction where the enterprise is a tax resident. Therefore, if we are considered as a PRC tax resident enterprise for PRC tax purposes, any dividends we pay to our overseas shareholders which are non-resident enterprises as well as gains realized by such shareholders from the transfer of our shares may be regarded as PRC-sourced income and as a result become subject to PRC withholding tax at a rate of up to 10%. Dentons, our PRC counsel, is unable to provide a "will" opinion because it believes that it is more likely than not that we and our offshore subsidiaries would be treated as non-resident enterprises for PRC tax purposes because we do not meet some of the conditions outlined in SAT Notice 82. In addition, Dentons is not aware of any offshore holding companies with a corporate structure similar to ours that has been deemed a PRC "resident enterprise" by the PRC tax authorities as of the date of the prospectus. Therefore, Dentons believes that it is possible but highly unlikely that income received by our overseas shareholders will be regarded as PRC-sourced income.

See "Risk Factors—Risks Relating to Doing Business in the PRC—Under the PRC Enterprise Income Tax Law, we may be classified as a PRC 'resident enterprise' for PRC enterprise income tax purposes. Such classification would likely result in unfavorable tax consequences to us and our non-PRC shareholders and have a material adverse effect on our results of operations and the value of your investment."

If the PRC tax authorities determine that Chanson International is a PRC resident enterprise for enterprise income tax purposes, a number of unfavorable PRC tax consequences could follow. First, we will be subject to the uniform 25% enterprise income tax on our world-wide income. In addition, we will also be subject to PRC enterprise income tax reporting obligations. Finally, we may be required to withhold a 10% withholding tax from dividends we pay to our shareholders that are non-resident enterprises. In addition, non-resident enterprise shareholders may be subject to a 10% PRC tax on gains realized on the sale or other disposition of Class A Ordinary Shares or Class B Ordinary Shares, if such income is treated as sourced from within the PRC. It is unclear whether our non-PRC individual shareholders would be subject to any PRC tax on dividends or gains obtained by such non-PRC individual shareholders in the event we are determined to be a PRC resident enterprise. If any PRC tax were to apply to such dividends or gains, it would generally apply at a rate of 20% unless a reduced rate is available under an applicable tax treaty. It is also unclear whether non-PRC shareholders of Chanson International would be able to claim the benefits of any tax treaties between their country of tax residence and the PRC in the event that Chanson International is treated as a PRC resident enterprise.

**Hong Kong Taxation**

Entities incorporated in Hong Kong are subject to profits tax in Hong Kong at the rate of 16.5%.

**<u>British Virgin Islands Taxation</u>**

The British Virgin Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to us levied by the Government of the British Virgin Islands except for stamp duties which may be applicable on instruments executed in, or after execution brought within the jurisdiction of the British Virgin Islands. No stamp duty is payable in the British Virgin Islands on the issue of shares by, or any transfers of shares of, British Virgin Islands companies (except those which hold interests in land in the British Virgin Islands). The British Virgin Islands is not party to any double tax treaties that are applicable to any payments made to or by us. There are no exchange control regulations or currency restrictions in the British Virgin Islands.

Payments of dividends and capital in respect of our Class A Ordinary Shares or Class B Ordinary Shares will not be subject to taxation in the British Virgin Islands and no withholding will be required on the payment of a dividend or capital to any holder of our Class A Ordinary Shares or Class B Ordinary Shares, as the case may be, nor will gains derived from the disposal of our Class A Ordinary Shares or Class B Ordinary Shares be subject to British Virgin Islands income or corporation tax.

**<u>Cayman Islands Taxation</u>**

The following is a discussion on certain Cayman Islands income tax consequences of an investment in the Class A Ordinary Shares or Class B Ordinary Shares. The discussion is a general summary of the present law, which is subject to prospective and retroactive changes. It is not intended as tax advice, does not consider any investor's particular circumstances, and does not consider tax consequences other than those arising under Cayman Islands law.

The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to us levied by the Government of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or, after execution, brought within the jurisdiction of the Cayman Islands. No stamp duty is payable in the Cayman Islands on the issue of shares by, or any transfers of shares of, Cayman Islands companies (except those which hold interests in land in the Cayman Islands). There are no exchange control regulations or currency restrictions in the Cayman Islands.

Payments of dividends and capital in respect of our Class A Ordinary Shares or Class B Ordinary Shares will not be subject to taxation in the Cayman Islands and no withholding will be required on the payment of a dividend or capital to any holder of our Class A Ordinary Shares or Class B Ordinary Shares, as the case may be, nor will gains derived from the disposal of our Class A Ordinary Shares or Class B Ordinary Shares be subject to Cayman Islands income or corporation tax.

**<u>U.S. Federal Income Taxation</u>**

The following does not address the tax consequences to any particular investor or to persons in special tax situations such as:

● banks;

● financial institutions;

● insurance companies;

● regulated investment companies;

● real estate investment trusts;

● broker-dealers;

● persons that elect to mark their securities to market;

● U.S. expatriates or former long-term residents of the U.S.;

● governments or agencies or instrumentalities thereof;

● tax-exempt entities;

● persons liable for alternative minimum tax;

● persons holding our Class A Ordinary Shares as part of a straddle, hedging, conversion or integrated transaction;

● persons that actually or constructively own 10% or more of our voting power or value (including by reason of owning our Class A Ordinary Shares);

● persons who acquired our Class A Ordinary Shares pursuant to the exercise of any employee share option or otherwise as compensation;

● persons holding our Class A Ordinary Shares through partnerships or other pass-through entities;

● beneficiaries of a Trust holding our Class A Ordinary Shares; or

● persons holding our Class A Ordinary Shares through a Trust.

The discussion set forth below is addressed only to U.S. Holders that purchase Class A Ordinary Shares in this offering. Prospective purchasers are urged to consult their own tax advisors about the application of the U.S. federal income tax rules to their particular circumstances as well as the state, local, foreign and other tax consequences to them of the purchase, ownership and disposition of our Class A Ordinary Shares.

***Material Tax Consequences Applicable to U.S. Holders of Our Class A Ordinary Shares***

The following sets forth the material U.S. federal income tax consequences related to the ownership and disposition of our Class A Ordinary Shares. It is directed to U.S. Holders (as defined below) of our Class A Ordinary Shares and is based upon laws and relevant interpretations thereof in effect as of the date of this prospectus, all of which are subject to change. This description does not deal with all possible tax consequences relating to ownership and disposition of our Class A Ordinary Shares or U.S. tax laws, other than the U.S. federal income tax laws, such as the tax consequences under non-U.S. tax laws, state, local and other tax laws.

The following brief description applies only to U.S. Holders that hold Class A Ordinary Shares as capital assets and that have the U.S. dollar as their functional currency. This brief description is based on the federal income tax laws of the U.S. in effect as of the date of this prospectus and on U.S. Treasury regulations in effect or, in some cases, proposed, as of the date of this prospectus, as well as judicial and administrative interpretations thereof available on or before such date. All of the foregoing authorities are subject to change, which change could apply retroactively and could affect the tax consequences described below.

The brief description below of the U.S. federal income tax consequences to "U.S. Holders" will apply to you if you are a beneficial owner of Class A Ordinary Shares and you are, for U.S. federal income tax purposes,

● an individual who is a citizen or resident of the U.S.;

● a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) organized under the laws of the U.S., any state thereof or the District of Columbia;

● an estate whose income is subject to U.S. federal income taxation regardless of its source; or

● a trust that (1) is subject to the primary supervision of a court within the U.S. and the control of one or more U.S. persons for all substantial decisions or (2) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.

If a partnership (or other entities treated as a partnership for U.S. federal income tax purposes) is a beneficial owner of our Class A Ordinary Shares, the tax treatment of a partner in the partnership will depend upon the status of the partner and the activities of the partnership. Partnerships and partners of a partnership holding our Class A Ordinary Shares are urged to consult their tax advisors regarding an investment in our Class A Ordinary Shares.

 ****

An individual is considered a resident of the U.S. for federal income tax purposes if he or she meets either the "Green Card Test" or the "Substantial Presence Test" described as follows:

The Green Card Test: You are a lawful permanent resident of the United States, at any time, if you have been given the privilege, according to the immigration laws of the United States, of residing permanently in the United States as an immigrant. You generally have this status if the U.S. Citizenship and Immigration Services issued you an alien registration card, Form I-551, also known as a "green card."

The Substantial Presence Test: If an alien is present in the United States on at least 31 days of the current calendar year, he or she will (absent an applicable exception) be classified as a resident alien if the sum of the following equals 183 days or more (*See* §7701(b)(3)(A) of the Internal Revenue Code and related Treasury Regulations):

&nbsp;&nbsp;&nbsp;&nbsp;1. The actual days in the United
 States in the current year; plus

&nbsp;&nbsp;&nbsp;&nbsp;2. One-third of his or her days in
 the United States in the immediately preceding year; plus

&nbsp;&nbsp;&nbsp;&nbsp;3. One-sixth of his or her days in
 the United States in the second preceding year.

 ****

***Taxation of Dividends and Other Distributions on our Class A Ordinary Shares***

Subject to the PFIC rules discussed below, the gross amount of distributions made by us to you with respect to the Class A Ordinary Shares (including the amount of any taxes withheld therefrom) will generally be includable in your gross income as dividend income on the date of receipt by you, but only to the extent that the distribution is paid out of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles). With respect to corporate U.S. Holders, the dividends will not be eligible for the dividends-received deduction allowed to corporations in respect of dividends received from other U.S. corporations.

With respect to non-corporate U.S. Holders, including individual U.S. Holders, dividends will be taxed at the lower capital gains rate applicable to qualified dividend income, provided that (1) the Class A Ordinary Shares are readily tradable on an established U.S. securities market., or we are eligible for the benefits of an approved qualifying income tax treaty with the U.S. that includes an exchange of information program, (2) we are not a PFIC for either our taxable year in which the dividend is paid or the preceding taxable year, and (3) certain holding period requirements are met. Because there is no income tax treaty between the U.S. and the Cayman Islands, clause (1) above can be satisfied only if the Class A Ordinary Shares are readily tradable on an established U.S. securities market. Under U.S. Internal Revenue Service authority, Class A Ordinary Shares are considered for purpose of clause (1) above to be readily tradable on an established U.S. securities market if they are listed on certain exchanges, which presently include the NYSE and the Nasdaq Stock Market. You are urged to consult your tax advisors regarding the availability of the lower rate for dividends paid with respect to our Class A Ordinary Shares, including the effects of any change in law after the date of this prospectus.

Dividends will constitute foreign source income for foreign tax credit limitation purposes. If the dividends are taxed as qualified dividend income (as discussed above), the amount of the dividend taken into account for purposes of calculating the foreign tax credit limitation will be limited to the gross amount of the dividend, multiplied by the reduced rate divided by the highest rate of tax normally applicable to dividends. The limitation on foreign taxes eligible for credit is calculated separately with respect to specific classes of income. For this purpose, dividends distributed by us with respect to our Class A Ordinary Shares will constitute "passive category income" but could, in the case of certain U.S. Holders, constitute "general category income."

To the extent that the amount of the distribution exceeds our current and accumulated earnings and profits (as determined under U.S. federal income tax principles), it will be treated first as a tax-free return of your tax basis in your Class A Ordinary Shares, and to the extent the amount of the distribution exceeds your tax basis, the excess will be taxed as capital gain. We do not intend to calculate our earnings and profits under U.S. federal income tax principles. Therefore, a U.S. Holder should expect that a distribution will be treated as a dividend even if that distribution would otherwise be treated as a non-taxable return of capital or as capital gain under the rules described above.

***Taxation of Dispositions of Class A Ordinary Shares***

Subject to the PFIC rules discussed below, you will recognize taxable gain or loss on any sale, exchange or other taxable disposition of a share equal to the difference between the amount realized (in U.S. dollars) for the share and your tax basis (in U.S. dollars) in the Class A Ordinary Shares. The gain or loss will be capital gain or loss. If you are a non-corporate U.S. Holder, including an individual U.S. Holder, who has held the Class A Ordinary Shares for more than one year, you will generally be eligible for reduced tax rates. The deductibility of capital losses is subject to limitations. Any such gain or loss that you recognize will generally be treated as U.S. source income or loss for foreign tax credit limitation purposes which will generally limit the availability of foreign tax credits.

 ***Passive Foreign Investment Company***

A non-U.S. corporation is considered a PFIC, as defined in Section 1297(a) of the US Internal Revenue Code, for any taxable year if either:

● at least 75% of its gross income for such taxable year is passive income; or

● at least 50% of the value of its assets (based on an average of the quarterly values of the assets during a taxable year) is attributable to assets that produce or are held for the production of passive income (the "asset test").

Passive income generally includes dividends, interest, rents and royalties (other than rents or royalties derived from the active conduct of a trade or business) and gains from the disposition of passive assets. We will be treated as owning our proportionate share of the assets and earning our proportionate share of the income of any other corporation in which we own, directly or indirectly, at least 25% (by value) of the stock. In determining the value and composition of our assets for purposes of the PFIC asset test, (1) the cash we raise in this offering will generally be considered to be held for the production of passive income and (2) the value of our assets must be determined based on the market value of our Class A Ordinary Shares from time to time, which could cause the value of our non-passive assets to be less than 50% of the value of all of our assets (including the cash raised in this offering) on any particular quarterly testing date for purposes of the asset test.

Based on our operations and the composition of our assets we do not expect to be treated as a PFIC under the current PFIC rules. We must make a separate determination each year as to whether we are a PFIC, however, and there can be no assurance with respect to our status as a PFIC for our current taxable year or any future taxable year. Depending on the amount of cash we raise in this offering, together with any other assets held for the production of passive income, it is possible that, for our current taxable year or for any subsequent taxable year, more than 50% of our assets may be assets held for the production of passive income. We will make this determination following the end of any particular tax year. Although the law in this regard is unclear, we are treating the UFG Entities as being owned by us for U.S. federal income tax purposes, not only because we control their management decisions, but also because we are entitled to the economic benefits associated with the UFG Entities, and as a result, we are treating the UFG Entities as our wholly-owned subsidiaries for U.S. federal income tax purposes. If we are not treated as owning the UFG Entities for U.S. federal income tax purposes, we would likely be treated as a PFIC. In addition, because the value of our assets for purposes of the asset test will generally be determined based on the market price of our Class A Ordinary Shares and because cash is generally considered to be an asset held for the production of passive income, our PFIC status will depend in large part on the market price of our Class A Ordinary Shares and the amount of cash we raise in this offering. Accordingly, fluctuations in the market price of the Class A Ordinary Shares may cause us to become a PFIC. In addition, the application of the PFIC rules is subject to uncertainty in several respects and the composition of our income and assets will be affected by how, and how quickly, we spend the cash we raise in this offering. We are under no obligation to take steps to reduce the risk of our being classified as a PFIC, and as stated above, the determination of the value of our assets will depend upon material facts (including the market price of our Class A Ordinary Shares from time to time and the amount of cash we raise in this offering) that may not be within our control. If we are a PFIC for any year during which you hold Class A Ordinary Shares, we will continue to be treated as a PFIC for all succeeding years during which you hold Class A Ordinary Shares. If we cease to be a PFIC and you did not previously make a timely "mark-to-market" election as described below, however, you may avoid some of the adverse effects of the PFIC regime by making a "purging election" (as described below) with respect to the Class A Ordinary Shares.

If we are a PFIC for your taxable year(s) during which you hold Class A Ordinary Shares, you will be subject to special tax rules with respect to any "excess distribution" that you receive and any gain you realize from a sale or other disposition (including a pledge) of the Class A Ordinary Shares, unless you make a "mark-to-market" election as discussed below. Distributions you receive in a taxable year that are greater than 125% of the average annual distributions you received during the shorter of the three preceding taxable years or your holding period for the Class A Ordinary Shares will be treated as an excess distribution. Under these special tax rules:

● the excess distribution or gain will be allocated ratably over your holding period for the Class A Ordinary Shares;

● the amount allocated to your current taxable year, and any amount allocated to any of your taxable year(s) prior to the first taxable year in which we were a PFIC, will be treated as ordinary income, and

● the amount allocated to each of your other taxable year(s) will be subject to the highest tax rate in effect for that year and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year.

The tax liability for amounts allocated to years prior to the year of disposition or "excess distribution" cannot be offset by any net operating losses for such years, and gains (but not losses) realized on the sale of the Class A Ordinary Shares cannot be treated as capital, even if you hold the Class A Ordinary Shares as capital assets.

A U.S. Holder of "marketable stock" (as defined below) in a PFIC may make a mark-to-market election under Section 1296 of the US Internal Revenue Code for such stock to elect out of the tax treatment discussed above. If you make a mark-to-market election for first taxable year which you hold (or are deemed to hold) Class A Ordinary Shares and for which we are determined to be a PFIC, you will include in your income each year an amount equal to the excess, if any, of the fair market value of the Class A Ordinary Shares as of the close of such taxable year over your adjusted basis in such Class A Ordinary Shares, which excess will be treated as ordinary income and not capital gain. You are allowed an ordinary loss for the excess, if any, of the adjusted basis of the Class A Ordinary Shares over their fair market value as of the close of the taxable year. Such ordinary loss, however, is allowable only to the extent of any net mark-to-market gains on the Class A Ordinary Shares included in your income for prior taxable years. Amounts included in your income under a mark-to-market election, as well as gain on the actual sale or other disposition of the Class A Ordinary Shares, are treated as ordinary income. Ordinary loss treatment also applies to any loss realized on the actual sale or disposition of the Class A Ordinary Shares, to the extent that the amount of such loss does not exceed the net mark-to-market gains previously included for such Class A Ordinary Shares. Your basis in the Class A Ordinary Shares will be adjusted to reflect any such income or loss amounts. If you make a valid mark-to-market election, the tax rules that apply to distributions by corporations which are not PFICs would apply to distributions by us, except that the lower applicable capital gains rate for qualified dividend income discussed above under "—Taxation of Dividends and Other Distributions on our Class A Ordinary Shares" generally would not apply.

The mark-to-market election is available only for "marketable stock," which is stock that is traded in other than de minimis quantities on at least 15 days during each calendar quarter ("regularly traded") on a qualified exchange or other market (as defined in applicable U.S. Treasury regulations), including the Nasdaq Capital Market. If the Class A Ordinary Shares are regularly traded on the Nasdaq Capital Market and if you are a holder of Class A Ordinary Shares, the mark-to-market election would be available to you were we to be or become a PFIC.

Alternatively, a U.S. Holder of stock in a PFIC may make a "qualified electing fund" election under Section 1295(b) of the US Internal Revenue Code with respect to such PFIC to elect out of the tax treatment discussed above. A U.S. Holder who makes a valid qualified electing fund election with respect to a PFIC will generally include in gross income for a taxable year such holder's pro rata share of the corporation's earnings and profits for the taxable year. The qualified electing fund election, however, is available only if such PFIC provides such U.S. Holder with certain information regarding its earnings and profits as required under applicable U.S. Treasury regulations. We do not currently intend to prepare or provide the information that would enable you to make a qualified electing fund election. If you hold Class A Ordinary Shares in any taxable year in which we are a PFIC, you will be required to file U.S. Internal Revenue Service Form 8621 in each such year and provide certain annual information regarding such Class A Ordinary Shares, including regarding distributions received on the Class A Ordinary Shares and any gain realized on the disposition of the Class A Ordinary Shares.

If you do not make a timely "mark-to-market" election (as described above), and if we were a PFIC at any time during the period you hold our Class A Ordinary Shares, then such Class A Ordinary Shares will continue to be treated as stock of a PFIC with respect to you even if we cease to be a PFIC in a future year, unless you make a "purging election" for the year we cease to be a PFIC. A "purging election" creates a deemed sale of such Class A Ordinary Shares at their fair market value on the last day of the last year in which we are treated as a PFIC. The gain recognized by the purging election will be subject to the special tax and interest charge rules treating the gain as an excess distribution, as described above. As a result of the purging election, you will have a new basis (equal to the fair market value of the Class A Ordinary Shares on the last day of the last year in which we are treated as a PFIC) and holding period (which new holding period will begin the day after such last day) in your Class A Ordinary Shares for tax purposes.

IRC Section 1014(a) provides for a step-up in basis to the fair market value for our Class A Ordinary Shares when inherited from a decedent that was previously a holder of our Class A Ordinary Shares. However, if we are determined to be a PFIC and a decedent that was a U.S. Holder did not make either a timely qualified electing fund election for our first taxable year as a PFIC in which the U.S. Holder held (or was deemed to hold) our Class A Ordinary Shares, or a mark-to-market election and ownership of those Class A Ordinary Shares are inherited, a special provision in IRC Section 1291(e) provides that the new U.S. Holder's basis should be reduced by an amount equal to the Section 1014 basis minus the decedent's adjusted basis just before death. As such if we are determined to be a PFIC at any time prior to a decedent's passing, the PFIC rules will cause any new U.S. Holder that inherits our Class A Ordinary Shares from a U.S. Holder to not get a step-up in basis under Section 1014 and instead will receive a carryover basis in those Class A Ordinary Shares.

You are urged to consult your tax advisors regarding the application of the PFIC rules to your investment in our Class A Ordinary Shares and the elections discussed above.

***Information Reporting and Backup Withholding***

Dividend payments with respect to our Class A Ordinary Shares and proceeds from the sale, exchange or redemption of our Class A Ordinary Shares may be subject to information reporting to the U.S. Internal Revenue Service and possible U.S. backup withholding under Section 3406 of the US Internal Revenue Code with at a current flat rate of 24%. Backup withholding will not apply, however, to a U.S. Holder who furnishes a correct taxpayer identification number and makes any other required certification on U.S. Internal Revenue Service Form W-9 or who is otherwise exempt from backup withholding. U.S. Holders who are required to establish their exempt status generally must provide such certification on U.S. Internal Revenue Service Form W-9. U.S. Holders are urged to consult their tax advisors regarding the application of the U.S. information reporting and backup withholding rules.

Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited against your U.S. federal income tax liability, and you may obtain a refund of any excess amounts withheld under the backup withholding rules by filing the appropriate claim for refund with the U.S. Internal Revenue Service and furnishing any required information. We do not intend to withhold taxes for individual shareholders. Transactions effected through certain brokers or other intermediaries, however, may be subject to withholding taxes (including backup withholding), and such brokers or intermediaries may be required by law to withhold such taxes.

Under the Hiring Incentives to Restore Employment Act of 2010, certain U.S. Holders are required to report information relating to our Class A Ordinary Shares, subject to certain exceptions (including an exception for Class A Ordinary Shares held in accounts maintained by certain financial institutions), by attaching a complete Internal Revenue Service Form 8938, Statement of Specified Foreign Financial Assets, with their tax return for each year in which they hold Class A Ordinary Shares. Failure to report such information could result in substantial penalties. You should consult your own tax advisor regarding your obligation to file a Form 8938.

**UNDERWRITING**

We expect to enter into an underwriting agreement with EF Hutton, division of Benchmark Investments, LLC, as the Underwriter named therein, with respect to the Class A Ordinary Shares in this offering. Under the terms and subject to the conditions contained in the underwriting agreement, the Underwriter has agreed to purchase, and we have agreed to sell to it, 3,750,000 Class A Ordinary Shares.

The Underwriter is offering the Class A Ordinary Shares subject to its acceptance of the Class A Ordinary Shares from us and subject to prior sale. The underwriting agreement provides that the obligations of the Underwriter to pay for and accept delivery of the Class A Ordinary Shares offered by this prospectus are subject to the approval of certain legal matters by its counsel and to other conditions. The Underwriter is obligated to take and pay for all of the Class A Ordinary Shares offered by this prospectus if any such Class A Ordinary Shares are taken. However, the Underwriter is not required to take or pay for the Class A Ordinary Shares covered by the Underwriter's option to purchase additional Class A Ordinary Shares described below.

We have granted the Underwriter an option, exercisable during the 45-day period after the closing of this offering, to purchase up to 450,000 additional Class A Ordinary Shares at the initial public offering price listed on the cover page of this prospectus, less underwriting discounts. The Underwriter may exercise this option solely for the purpose of covering over-allotments, if any, made in connection with the offering contemplated by this prospectus.

The Underwriter will offer the Class A Ordinary Shares to the public at the initial public offering price set forth on the cover of this prospectus and to selected dealers at the initial public offering price less a selling concession. After this offering, the initial public offering price, concession, and reallowance to dealers may be reduced by the Underwriter. No change in those terms will change the amount of proceeds to be received by us as set forth on the cover page of this prospectus. The securities are offered by the Underwriter as stated herein, subject to receipt and acceptance by it and subject to its right to reject any order in whole or in part.

**Discounts and Expenses**

The underwriting discounts are equal to 4.5% of the gross proceeds of this offering raised from investors that are introduced by the Company and 8% of the gross proceeds of this offering raised from investors that are introduced directly or indirectly by any party or entity which is not the Company.

The following table shows the per Class A Ordinary Share and total initial public offering price, underwriting discounts, and proceeds before expenses to us. These amounts are shown assuming both no exercise and full exercise of the Underwriter's option to purchase up to additional 562,500 Class A Ordinary Shares.

---

| | | | |
|:---|:---|:---|:---|
|  | **Per <br> Share** | **Total<br> Without<br> Exercise of<br> Over-<br> Allotment<br> Option** | **Total With<br> Full<br> Exercise of<br> Over-<br> Allotment<br> Option** |
| Initial public offering price |  |  |  |
| Underwriting discounts to be paid by us |  |  |  |
| Proceeds, before expenses, to us |  |  |  |

---

We have agreed to reimburse the Underwriter up to a maximum of $204,500 for out-of-pocket accountable expenses, including but not limited to reasonable fees and expenses of its legal counsel, due diligence and background check expenses, reasonable cost for roadshows, cost of book building, prospectus tracking and compliance software for the offering, and costs associated with bound volumes of the offering materials and commemorative mementos and lucite tombstones.

We have also agreed to pay the Underwriter a non-accountable expense allowance in the amount equal to 0.5% of the gross proceeds of this offering raised from investors that are introduced directly or indirectly by any party or entity which is not the Company.

We have agreed to pay expenses relating to the offering, including: (i) all filing fees and expenses relating to the registration of the Class A Ordinary Shares to be sold in this offering with the SEC and the filing of the offering materials with FINRA; (ii), all fees and expenses relating to the listing of the Class A Ordinary Shares on the Nasdaq Capital Market, (iii) all fees, expenses, and disbursements relating to the registration or qualification of such Class A Ordinary Shares under the "blue sky" securities laws of such states and other jurisdictions as the Underwriter may reasonably designate (including, without limitation, all filing and registration fees, and the reasonable fees and disbursements of Underwriter's counsel); (iv) all fees, expenses, and disbursements relating to the registration, qualification, or exemption of the Class A Ordinary Shares under the securities laws of such foreign jurisdictions as the Underwriter may reasonably designate; (v) the costs of all mailing and printing of the offering documents, registration statements, prospectuses, and all amendments, supplements, and exhibits thereto, and as many preliminary and final prospectuses as the Underwriter may reasonably deem necessary; (vi) transfer and/or stamp taxes, if any, payable upon the transfer of Class A Ordinary Shares from the Company to the Underwriter; and (vii) the fees and expenses of the Company's accountants.

We have applied to list our Class A Ordinary Shares on the Nasdaq Capital Market under the symbol "CHSN." At this time, Nasdaq has not yet approved our application to list our Class A Ordinary Shares. The closing of this offering is conditioned upon Nasdaq's final approval of our listing application, and there is no guarantee or assurance that our Class A Ordinary Shares will be approved for listing on Nasdaq.

 **Underwriter's Warrants**

In addition, we have agreed to issue warrants to the Underwriter to purchase a number of Class A Ordinary Shares equal to 2% of the Class A Ordinary Shares sold in this offering, including any Class A Ordinary Shares sold as a result of the exercise of the Underwriter's over-allotment option. The exercise price of the Underwriter's warrants is equal to 100% of the offering price of the Class A Ordinary Shares offered in this offering. The Underwriter's warrants will be exercisable for a period of four and a half years commencing six months from the date of commencement of sales of the offering. The Underwriter's warrants and the underlying Class A Ordinary Shares have been deemed compensation by FINRA and are therefore subject to FINRA Rule 5110(e)(1). In accordance with FINRA Rule 5110(e)(2), and except as otherwise permitted by FINRA rules, neither the Underwriter's warrants nor any of our Class A Ordinary Shares issued upon exercise of the Underwriter's warrants may be sold, transferred, assigned, pledged, or hypothecated, or be the subject of any hedging, short sale, derivative, put, or call transaction that would result in the effective economic disposition of such securities by any person, for a period of 180 days beginning on the date of commencement of sales of this offering. In addition, since the Underwriter's warrants and the underlying Class A Ordinary Shares will be registered in the registration statement of which this prospectus forms a part, the Underwriter will not receive any demand or piggyback registration rights in connection with the Underwriter's warrants.

We will bear all fees and expenses attendant to registering the Class A Ordinary Shares issuable upon exercise of the warrants, other than underwriting commissions incurred and payable by the holders. The exercise price and number of Class A Ordinary Shares issuable upon exercise of the warrants may be adjusted in certain circumstances, including in the event of a stock dividend, extraordinary cash dividend, or our recapitalization, reorganization, merger, or consolidation. The warrant exercise price and/or underlying shares may also be adjusted for issuances of Class A Ordinary Shares at a price below the warrant exercise price.

Prior to this offering, there has been no public market for the Class A Ordinary Shares. The initial public offering price will be determined by negotiations between us and the Underwriter. In determining the initial public offering price, we and the Underwriter expect to consider a number of factors, including:

● the information set forth in this prospectus and otherwise available to the representatives;

● our prospects and the history and prospects for the industry in which we compete;

● an assessment of our management;

● our prospects for future earnings;

● the general condition of the securities markets at the time of this offering;

● the recent market prices of, and demand for, publicly traded securities of generally comparable companies; and

● other factors deemed relevant by the Underwriter and us.

The estimated initial public offering price set forth on the cover page of this preliminary prospectus is subject to change as a result of market conditions and other factors. Neither we nor the Underwriter can assure investors that an active trading market will develop for our Class A Ordinary Shares, or that the shares will trade in the public market at or above the initial public offering price.

**Right of First Refusal**

We have agreed, provided that this offering is completed, that until 12 months after the date of the underwriting agreement, the Underwriter shall have a right of first refusal to act as sole investment banker, sole book-runner, and/or sole placement agent at its sole discretion, for each and every future public equity and debt offering, including all public equity linked financings (each a "Subject Transaction"), during such 12-month period, of our Company, or any successor to or any current or future subsidiary of our Company, provided, however, that such right shall be subject to FINRA Rule 5110(g). In the event the Underwriter waives such right of first refusal and does not act as an investment banker, book-runner, or sole placement agent for a Subject Transaction, it will be entitled to a cash fee equal to 4.5% of the gross proceeds received by us in such Subject Transaction.

**Indemnification**

We have agreed to indemnify the Underwriter against certain liabilities, including liabilities under the Securities Act. If we are unable to provide this indemnification, we will contribute to payments that the Underwriter may be required to make for these liabilities.

 **Company Lock-Up**

We, on behalf of ourselves and any successor entity, have agreed that, without the prior written consent of the Underwriter, we will not, for a period of 180 days from the commencement of sale of this offering, (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right, or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, our Class A Ordinary Shares or Class B Ordinary Shares or any securities convertible into or exercisable or exchangeable for our Class A Ordinary Shares or Class B Ordinary Shares; (ii) file or cause to be filed any registration statement with the SEC relating to the offering of our Class A Ordinary Shares or Class B Ordinary Shares or any securities convertible into or exercisable or exchangeable for our Class A Ordinary Shares or Class B Ordinary Shares; (iii) complete any offering of debt securities of the Company, other than entering into a line of credit with a traditional bank, or (iv) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of capital shares of the Company, whether any such transaction described in (i), (ii), (iii), or (iv) above is to be settled by delivery of our Class A Ordinary Shares or such other securities, in cash, or otherwise.

**Lock-Up Agreements** 

Except as disclosed below, each of our officers, directors, and shareholders owning 5% or more of our Class A Ordinary Shares have agreed with the Underwriter not to offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right, or warrant to purchase, lend, or otherwise to transfer or dispose of, directly or indirectly, any Class A Ordinary Shares, Class B Ordinary Shares, or other securities convertible into or exercisable or exchangeable for Class A Ordinary Shares or Class B Ordinary Shares for a period of 180 days from the date of this prospectus without the prior written consent of the Underwriter.

The Underwriter may in its sole direction and at any time without notice release some or all of the shares subject to lock-up agreements prior to the expiration of the lock-up period. When determining whether or not to release shares from the lock-up agreements, the Underwriter will consider, among other factors, the security holder's reasons for requesting the release, the number of shares for which the release is being requested, and market conditions at the time.

**Electronic Offer, Sale and Distribution of Class A Ordinary Shares**

A prospectus in electronic format may be made available on the websites maintained by the Underwriter. In addition, Class A Ordinary Shares may be sold by the Underwriter to securities dealers who resell Class A Ordinary Shares to online brokerage account holders. Other than the prospectus in electronic format, the information on the Underwriter's website and any information contained in any other website maintained by the Underwriter is not part of the prospectus or the registration statement of which this prospectus forms a part, has not been approved and/or endorsed by us or the Underwriter in its capacity as Underwriter and should not be relied upon by investors.

**Price Stabilization, Short Positions, and Penalty Bids**

In connection with this offering, the Underwriter may engage in transactions that stabilize, maintain, or otherwise affect the price of our Class A Ordinary Shares. Specifically, the Underwriter may sell more Class A Ordinary Shares than it is obligated to purchase under the underwriting agreement, creating a short position. A short sale is covered if the short position is no greater than the number of Class A Ordinary Shares available for purchase by the Underwriter under option to purchase additional Class A Ordinary Shares. The Underwriter can close out a covered short sale by exercising the option to purchase additional Class A Ordinary Shares or purchasing Class A Ordinary Shares in the open market. In determining the source of Class A Ordinary Shares to close out a covered short sale, the Underwriter will consider, among other things, the open market price of Class A Ordinary Shares compared to the price available under the option to purchase additional Class A Ordinary Shares. The Underwriter may also sell Class A Ordinary Shares in excess of the option to purchase additional Class A Ordinary Shares, creating a naked short position. The Underwriter must close out any naked short position by purchasing Class A Ordinary Shares in the open market. A naked short position is more likely to be created if the Underwriter is concerned that there may be downward pressure on the price of the Class A Ordinary Shares in the open market after pricing that could adversely affect investors who purchase in the offering.

The Underwriter may also impose a penalty bid. This occurs when a particular Underwriter or dealer repays selling concessions allowed to it for distributing our Class A Ordinary Shares in this offering because such Underwriter repurchases those Class A Ordinary Shares in stabilizing or short covering transactions.

Finally, the Underwriter may bid for, and purchase, our Class A Ordinary Shares in market making transactions, including "passive" market making transactions as described below.

These activities may stabilize or maintain the market price of our Class A Ordinary Shares at a price that is higher than the price that might otherwise exist in the absence of these activities. The Underwriter is not required to engage in these activities, and may discontinue any of these activities at any time without notice. These transactions may be effected on the Nasdaq Capital Market, in the over-the-counter market, or otherwise.

**Passive Market Making**

In connection with this offering, the Underwriter may engage in passive market making transactions in our Class A Ordinary Shares on the Nasdaq Capital Market in accordance with Rule 103 of Regulation M under the Exchange Act, during a period before the commencement of offers or sales of the Class A Ordinary Shares and extending through the completion of the distribution. A passive market maker must display its bid at a price not in excess of the highest independent bid of that security. However, if all independent bids are lowered below the passive market maker's bid, then that bid must then be lowered when specified purchase limits are exceeded.

**Potential Conflicts of Interest**

The Underwriter and its affiliates may, from time to time, engage in transactions with and perform services for us in the ordinary course of its business for which it may receive customary fees and reimbursement of expenses. In the ordinary course of its various business activities, the Underwriter and its affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for its own accounts and for the accounts of its customers and such investment and securities activities may involve securities and/or instruments of our Company. The Underwriter and its affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.

**Stamp Taxes**

If you purchase Class A Ordinary Shares offered in this prospectus, you may be required to pay stamp taxes and other charges under the laws and practices of the country of purchase, in addition to the offering price listed on the cover page of this prospectus.

 **Offer Restrictions outside the United States**

Other than in the United States, no action has been taken by us or the Underwriter that would permit a public offering of the securities offered by this prospectus in any jurisdiction where action for that purpose is required. The securities offered by this prospectus may not be offered or sold, directly or indirectly, nor may this prospectus or any other offering material or advertisements in connection with the offer and sale of any such securities be distributed or published in any jurisdiction, except under circumstances that will result in compliance with the applicable rules and regulations of that jurisdiction. Persons into whose possession this prospectus comes are advised to inform themselves about and to observe any restrictions relating to the offering and the distribution of this prospectus. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities offered by this prospectus in any jurisdiction in which such an offer or a solicitation is unlawful.

*Australia.* This prospectus is not a product disclosure statement, prospectus or other type of disclosure document for the purposes of Corporations Act 2001 (Commonwealth of Australia) (the "Act") and does not purport to include the information required of a product disclosure statement, prospectus or other disclosure document under Chapter 6D.2 of the Act. No product disclosure statement, prospectus, disclosure document, offering material or advertisement in relation to the offer of the shares has been or will be lodged with the Australian Securities and Investments Commission or the Australian Securities Exchange.

Accordingly, (1) the offer of the shares under this prospectus may only be made to persons: (i) to whom it is lawful to offer the shares without disclosure to investors under Chapter 6D.2 of the Act under one or more exemptions set out in Section 708 of the Act, and (ii) who are "wholesale clients" as that term is defined in section 761G of the Act, (2) this prospectus may only be made available in Australia to persons as set forth in clause (1) above, and (3) by accepting this offer, the offeree represents that the offeree is such a person as set forth in clause (1) above, and the offeree agrees not to sell or offer for sale any of the shares sold to the offeree within 12 months after their issue except as otherwise permitted under the Act.

*Canada.* The shares may not be offered, sold or distributed, directly or indirectly, in any province or territory of Canada other than the provinces of Ontario and Quebec or to or for the benefit of any resident of any province or territory of Canada other than the provinces of Ontario and Quebec, and only on a basis that is pursuant to an exemption from the requirement to file a prospectus in such province, and only through a dealer duly registered under the applicable securities laws of such province or in accordance with an exemption from the applicable registered dealer requirements.

 *Cayman Islands.* This prospectus does not constitute a public offer of the shares, whether by way of sale or subscription, in the Cayman Islands. The Underwriter has represented and agreed that it has not offered or sold, and will not offer or sell, directly or indirectly, any shares to any member of the public in the Cayman Islands.

*European Economic Area.* In relation to each Member State of the European Economic Area that has implemented the Prospectus Directive, or a Relevant Member State, from and including the date on which the Prospectus Directive is implemented in that Relevant Member State, or the Relevant Implementation Date, an offer of the shares to the public may not be made in that Relevant Member State prior to the publication of a prospectus in relation to the shares that has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and the competent authority in that Relevant Member State has been notified, all in accordance with the Prospectus Directive, except that it may, with effect from and including the Relevant Implementation Date, make an offer of the Class A Ordinary Share to the public in that Relevant Member State at any time,

● a project capital fund (defined as an entity primarily involved in investments in companies which, at the time of investment, (i) are primarily engaged in R&D or manufacture of new technological products or processes and (ii) involve above-average risk);

● an entity primarily engaged in capital markets activities in which all of the equity owners meet one or more of the above criteria;

● an entity, other than an entity formed for the purpose of purchasing the shares in this offering, in which the shareholders equity (including pursuant to foreign accounting rules, international accounting regulations and U.S. generally accepted accounting rules, as defined in the Securities Law Regulations (Preparation of Annual Financial Statements), 1993) is in excess of NIS 250 million.

provided that no such offer of shares shall result in a requirement for the publication by the Company of a prospectus pursuant to Article 3 of the Prospectus Directive.

For purposes of the above provision, the expression "an offer of shares to the public" in relation to any shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the shares to be offered so as to enable an investor to decide to purchase or subscribe the shares, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State, and the expression "Prospectus Directive" means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.

*Hong Kong.* The shares may not be offered or sold by means of this document or any other document other than (i) in circumstances that do not constitute an offer or invitation to the public within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong) or the Securities and Futures Ordinance (Cap.571, Laws of Hong Kong), or (ii) to "professional investors" within the meaning of the Securities and Futures Ordinance (Cap.571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances that do not result in the document being a "prospectus" within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), and no advertisement, invitation or document relating to the shares may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), that is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to the shares which are or are intended to be disposed of only to persons outside Hong Kong or only to "professional investors" within the meaning of the Securities and Futures Ordinance (Cap.571, Laws of Hong Kong) and any rules made thereunder.

*Japan.* The Underwriter will not offer or sell any of the shares directly or indirectly in Japan or to, or for the benefit of any Japanese person or to others, for re-offering or re-sale directly or indirectly in Japan or to any Japanese person, except, in each case, pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Securities and Exchange Law of Japan and any other applicable laws and regulations of Japan. For purposes of this paragraph, "Japanese person" means any person resident in Japan, including any corporation or other entity organized under the laws of Japan.

*People's Republic of China.* This prospectus may not be circulated or distributed in the PRC and the shares may not be offered or sold, and will not offer or sell to any person for re-offering or resale directly or indirectly to any resident of the PRC except pursuant to applicable laws and regulations of the PRC. For the purpose of this paragraph, PRC does not include Taiwan and the special administrative regions of Hong Kong and Macau.

*Singapore.* This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the shares may not be circulated or distributed, nor may the shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore, or the SFA, (ii) to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Where the shares are subscribed or purchased under Section 275 by a relevant person that is: (a) a corporation (that is not an accredited investor) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an accredited investor, shares, debentures and units of shares and debentures of that corporation or the beneficiaries' rights and interest in that trust shall not be transferable for six months after that corporation or that trust has acquired the shares under Section 275 except: (1) to an institutional investor (for corporations, under 274 of the SFA) or to a relevant person defined in Section 275(2) of the SFA, or to any person pursuant to an offer that is made on terms that such shares, (2) debentures and units of shares and debentures of that corporation or such rights and interest in that trust are acquired at a consideration of not less than S$200,000 (or its equivalent in a foreign currency) for each transaction, whether such amount is to be paid for in cash or by exchange of securities or other assets, and further for corporations, in accordance with the conditions specified in Section 275 of the SFA; (3) where no consideration is or will be given for the transfer; or (4) where the transfer is by operation of law.

*South Korea.* The Class A Ordinary Shares may not be offered, sold and delivered directly or indirectly, or offered or sold to any person for re-offering or resale, directly or indirectly, in South Korea or to any resident of South Korea except pursuant to the applicable laws and regulations of South Korea, including the Financial Investment Services and Capital Markets Act and the Foreign Exchange Transaction Law and the decrees and regulations thereunder. The Class A Ordinary Shares have not been registered with the Financial Services Commission of South Korea for public offering in South Korea. Furthermore, the Class A Ordinary Shares may not be re-sold to South Korean residents unless the purchaser of the shares complies with all applicable regulatory requirements (including but not limited to government approval requirements under the Foreign Exchange Transaction Law and its subordinate decrees and regulations) in connection with their purchase.

*Taiwan.* The shares have not been and will not be registered or filed with, or approved by, the Financial Supervisory Commission of Taiwan pursuant to relevant securities laws and regulations and may not be offered or sold in Taiwan through a public offering or in circumstances which constitute an offer within the meaning of the Securities and Exchange Act of Taiwan or relevant laws and regulations that require a registration, filing or approval of the Financial Supervisory Commission of Taiwan. No person or entity in Taiwan has been authorized to offer or sell the shares in Taiwan.

*United Kingdom.* An offer of the shares may not be made to the public in the United Kingdom within the meaning of Section 102B of the Financial Services and Markets Act 2000, as amended, or the FSMA, except to legal entities that are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities or otherwise in circumstances that do not require the publication by the company of a prospectus pursuant to the Prospectus Rules of the Financial Services Authority, or the FSA.

An invitation or inducement to engage in investment activity (within the meaning of Section 21 of FSMA) may only be communicated to persons who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 or in circumstances in which Section 21 of FSMA does not apply to the company.

All applicable provisions of the FSMA with respect to anything done by the Underwriter in relation to the shares must be complied with in, from or otherwise involving the United Kingdom.

**EXPENSES RELATING TO THIS OFFERING**

Set forth below is an itemization of the total expenses, excluding underwriting discounts and the non-accountable expense allowance that we expect to incur in connection with this offering. With the exception of the SEC registration fee, the FINRA filing fee, and the Nasdaq Capital Market listing fee, all amounts are estimates.

---

| | |
|:---|:---|
| Securities and Exchange Commission Registration Fee | $2388 |
| Nasdaq Capital Market Listing Fee | $50000 |
| FINRA Filing Fee | $3784 |
| Legal Fees and Expenses | $395493 |
| Accounting Fees and Expenses | $234375 |
| Printing and Engraving Expenses | $20000 |
| Transfer Agent Expenses | $19000 |
| Underwriter Out-of-Pocket Accountable Expenses | $204500 |
| Investor Relations Fee | $131270 |
| Miscellaneous Expenses | $68383 |
| **Total Expenses** | $**1129193** |

---

These expenses will be borne by us. Underwriting discounts and the non-accountable expense allowance will be borne by us in proportion to the numbers of Class A Ordinary Shares sold in the offering.

**LEGAL MATTERS**

We are being represented by Hunter Taubman Fischer & Li LLC with respect to certain legal matters as to United States federal securities and New York State law. The validity of the Class A Ordinary Shares offered in this offering and certain other legal matters as to Cayman Islands law will be passed upon for us by Ogier, our counsel as to Cayman Islands law. Legal matters as to PRC law will be passed upon for us by Dentons Law Offices, LLP (Guangzhou). Ortoli Rosenstadt LLP is acting as counsel to the Underwriter.

**EXPERTS**

The consolidated financial statements for the years ended December 31, 2021 and 2020, included in this prospectus have been so included in reliance on the report of Friedman, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting. The office of Friedman is located at One Liberty Plaza, 165 Broadway, Floor 21, New York, NY 10006.

 **CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT**

Effective September 1, 2022, Friedman, our then independent registered public accounting firm, combined with Marcum LLP and continued to operate as an independent registered public accounting firm. On September 29, 2022, we engaged Marcum Asia to serve as our independent registered public accounting firm. The services previously provided by Friedman are now provided by Marcum Asia.

Friedman's reports on our consolidated financial statements for the years ended December 31, 2021 and 2020 did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope, or accounting principles. Furthermore, during our two most recent fiscal years and through September 29, 2022, there have been no disagreements with Friedman on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to Friedman's satisfaction, would have caused Friedman to make reference to the subject matter of the disagreement in connection with its reports on our financial statements for such periods.

For our two most recent fiscal years and the subsequent interim period through September 29, 2022, there were no "reportable events" as that term is described in Item 16F(a)(1)(v) of the Form 20-F, other than the material weaknesses reported by management in the Risk Factors section of our Amendment No. 5 to Registration Statement on Form F-1 filed with the SEC on September 2, 2022.

We provided Friedman with a copy of the above disclosure and requested that Friedman furnish us with a letter addressed to the U.S. Securities and Exchange Commission stating whether or not it agrees with the above statement. A copy of Friedman's letter is filed as Exhibit 16.1 to the registration statement of which this prospectus is a part.

During our two most recent fiscal years and through September 29, 2022, neither our Company nor anyone acting on our behalf consulted Marcum Asia with respect to any of the matters or reportable events set forth in Item 16F(a)(2)(i) and (ii) of the Form 20-F.

**WHERE YOU CAN FIND ADDITIONAL INFORMATION**

We have filed with the SEC a registration statement on Form F-1, including relevant exhibits and schedules under the Securities Act, covering the Class A Ordinary Shares offered by this prospectus. You should refer to our registration statements and their exhibits and schedules if you would like to find out more about us and about the Class A Ordinary Shares. This prospectus summarizes material provisions of contracts and other documents that we refer you to. Since the prospectus may not contain all the information that you may find important, you should review the full text of these documents.

Immediately upon the completion of this offering, we will be subject to periodic reporting and other informational requirements of the Exchange Act, as applicable to foreign private issuers. Accordingly, we will be required to file reports, including annual reports on Form 20-F, and other information with the SEC. As a foreign private issuer, we are exempt from the rules of the Exchange Act prescribing the furnishing and content of proxy statements to shareholders under the federal proxy rules contained in Sections 14(a), (b) and (c) of the Exchange Act, and our executive officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act.

The registration statements, reports and other information so filed can be inspected and copied at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. You can request copies of these documents upon payment of a duplicating fee, by writing to the SEC. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference rooms. The SEC also maintains a website that contains reports, proxy statements and other information about issuers, such as us, who file electronically with the SEC. The address of that website is http://www.sec.gov. The information on that website is not a part of this prospectus.

No dealer, salesperson, or other person is authorized to give any information or to represent anything not contained in this prospectus. You must not rely on any unauthorized information or representations. This prospectus is an offer to sell only the securities offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date.

**INDEX TO CONSOLIDATED FINANCIAL STATEMENTS**

**CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES**

**TABLE OF CONTENTS**

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| | |
|:---|:---|
| **Consolidated Financial Statements** |  |
| [Report of Independent Registered Public Accounting Firm](#fin_001) | F-2 |
| [Consolidated Balance Sheets as of December 31, 2021 and 2020](#fin_002) | F-3 |
| [Consolidated Statements of Operations and Comprehensive Income (Loss) for the Years Ended December 31, 2021 and 2020](#fin_003) | F-4 |
| [Consolidated Statements of Changes in Shareholders' Equity for the Years Ended December 31, 2021 and 2020](#fin_004) | F-5 |
| [Consolidated Statements of Cash Flows for the Years Ended December 31, 2021 and 2020](#fin_005) | F-6 |
| [Notes to Consolidated Financial Statements](#fin_006) | F-7 – F-27 |
| **Unaudited Condensed Consolidated Financial Statements** |  |
| [Unaudited Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021](#e_001) | F-28 |
| [Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the six months ended June 30, 2022 and 2021](#e_002) | F-29 |
| [Unaudited Condensed Consolidated Statements of Changes in Shareholders' Equity for the six months ended June 30, 2022 and 2021](#e_003) | F-31 |
| [Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021](#e_004) | F-30 |
| [Notes to Unaudited Condensed Consolidated Financial Statements](#e_005) | F-32 - F-51 |

---

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

To the Shareholders and the Board of Directors of

Chanson International Holding and Subsidiaries

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Chanson International Holding and Subsidiaries (collectively, the "Company") as of December 31, 2021 and 2020, and the related consolidated statements of operations and comprehensive income (loss), changes in shareholders' equity, and cash flows for each of the years in the two-year period ended December 31, 2021, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statement. We believe that our audits provide a reasonable basis for our opinion.

/s/ Friedman LLP

We have served as the Company's auditor from 2019 to 2022.

New York, New York

September 2, 2022

**CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES**

**CONSOLIDATED BALANCE SHEETS**

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| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2021** | **December 31,**<br>**2020** |
| **ASSETS** |  |  |
| **CURRENT ASSETS:** |  |  |
| Cash and cash equivalents | $3896812 | $4098546 |
| Accounts receivable, net | 1134532 | 713389 |
| Prepaid expenses and other current assets | 438045 | 255370 |
| Deferred offering costs | 749605 | 479226 |
| Inventories | 526862 | 469370 |
| **TOTAL CURRENT ASSETS** | **6745856** | **6015901** |
| Operating lease right-of-use assets | 11644192 | 10824945 |
| Property and equipment, net | 5447718 | 3322671 |
| Long term security deposits | 1066027 | 823457 |
| Long term prepaid expenses | 92301 | 127883 |
| Restricted cash | - | 22522 |
| **TOTAL ASSETS** | $**24996094** | $**21137379** |
| **CURRENT LIABILITIES:** |  |  |
| Deferred revenue | $6051683 | $4657000 |
| Operating lease liabilities, current | 1622642 | 1105664 |
| Short-term bank loans | 1559314 | 2289038 |
| Accounts payable | 1273313 | 920870 |
| Other current liabilities | 1055199 | 400425 |
| Due to related party | 721921 | 6316 |
| Taxes payable | 30839 | 56350 |
| **TOTAL CURRENT LIABILITIES** | **12314911** | **9435663** |
| Operating lease liabilities, non-current | 9846224 | 9253187 |
| Long-term bank loan | - | 209291 |
| **TOTAL LIABILITIES** | **22161135** | **18898141** |
| **COMMITMENTS AND CONTINGENCIES** |  |  |
| **SHAREHOLDERS' EQUITY** |  |  |
| Ordinary shares, $0.001 par value, 50,000,000 shares authorized; 9,000,000 shares issued and outstanding as of December 31, 2021 and 2020, respectively:\* |  |  |
| Class A ordinary share, $0.001 par value, 44,000,000 shares authorized; 3,060,000 shares issued and outstanding as of December 31, 2021 and 2020, respectively | 3060 | 3060 |
| Class B ordinary share, $0.001 par value, 6,000,000 shares authorized; 5,940,000 shares issued and outstanding as of December 31, 2021 and 2020, respectively | 5940 | 5940 |
| Additional paid-in capital | 869400 | 869400 |
| Statutory reserve | 447231 | 447231 |
| Retained earnings | 1104363 | 597594 |
| Accumulated other comprehensive income | 404965 | 316013 |
| **TOTAL SHAREHOLDERS' EQUITY** | **2834959** | **2239238** |
| **TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY** | $**24996094** | $**21137379** |

---

\* Retrospectively restated for effect of 1,000-for-1 forward split and share issuances on March 27, 2021 (see Note 11)

The accompanying notes are an integral part of these consolidated financial statements.

**CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)**

---

| | | |
|:---|:---|:---|
|  | **For the Years Ended<br> December 31,** | **For the Years Ended<br> December 31,** |
|  | **2021** | **2020** |
| REVENUE | $14690295 | $10313512 |
| COST OF REVENUE | 7759872 | 5164178 |
| GROSS PROFIT | 6930423 | 5149334 |
| **OPERATING EXPENSES** |  |  |
| Selling expenses | 4126126 | 2947088 |
| General and administrative expenses | 3249181 | 2230893 |
| Total operating expenses | **7375307** | **5177981** |
| **LOSS FROM OPERATIONS** | **(444884)** | **(28647)** |
| **OTHER INCOME (EXPENSE)** |  |  |
| Interest expense | (98033) | (108852) |
| Other income (expense), net | 1065963 | (11946) |
| &nbsp;&nbsp;&nbsp;Total other income (expenses), net | 967930 | (120798) |
| **INCOME (LOSS) BEFORE INCOME TAX PROVISION** | **523046** | **(149445)** |
| **PROVISION FOR INCOME TAXES** | 16277 | 14584 |
| **NET INCOME (LOSS)** | **506769** | **(164029)** |
| Foreign currency translation gain | 88952 | 132207 |
| **TOTAL COMPREHENSIVE INCOME (LOSS)** | $**595721** | $**(31822)** |
| **Earnings (loss) per ordinary share - basic and diluted** | $0.06 | $(0.02) |
| **Weighted average shares - basic and diluted\*** | **9000000** | **9000000** |

---

\* Retrospectively restated for effect of 1,000-for-1 forward split and share issuances on March 27, 2021 (see Note 11)

The accompanying notes are an integral part of these consolidated financial statements.

**CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY**

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| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Ordinary Shares\*** | **Ordinary Shares\*** | **Ordinary Shares\*** | **Ordinary Shares\*** | **Additional** | | | | |
|  | **Class A Shares** | **Amount** | **Class B Shares** | **Amount** | **Paid-in Capital** |<br>**Statutory<br> Reserve** |<br>**Retained<br> Earnings** | **Accumulated <br>Other**<br>**Comprehensive<br> Income** | **Total**<br>**Shareholders' <br> Equity** |
| **Balance, December 31, 2019** | **3060000** | $**3060** | **5940000** | $**5940** | $**869400** | $**447231** | $**761623** | $**183806** | $**2271060** |
| Net loss |  |  |  |  |  |  | (164029) |  | (164029) |
| Foreign currency translation gain |  |  |  |  |  |  |  | 132207 | 132207 |
| **Balance, December 31, 2020** | **3060000** | $**3060** | **5940000** | $**5940** | $**869400** | $**447231** | $**597594** | $**316013** | $**2239238** |
| Net income |  |  |  |  |  |  | 506769 |  | 506769 |
| Foreign currency translation gain |  |  |  |  |  |  |  | 88952 | 88952 |
| **Balance, December 31, 2021** | **3060000** | $**3060** | **5940000** | $**5940** | $**869400** | $**447231** | $**1104363** | $**404965** | $**2834959** |

---

\* Retrospectively restated for effect of 1,000-for-1 forward split and share issuances on March 27, 2021 (see Note 11)

The accompanying notes are an integral part of these consolidated financial statements.

**CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

---

| | | |
|:---|:---|:---|
|  | **For the Years Ended<br> December 31,** | **For the Years Ended<br> December 31,** |
|  | **2021** | **2020** |
| **Cash flows from operating activities:** |  |  |
| **Net Income (Loss)** | $506769 | $(164029) |
| **Adjustments to reconcile net income (loss) to net cash provided by operating activities:** |  |  |
| Amortization of operating lease right-of-use assets | 2226128 | 1387154 |
| Depreciation | 605253 | 485826 |
| Gain on forgiveness of loan under Paycheck Protection Program | (502298) |  |
| Loss from disposal of equipment | 27325 | 273 |
| **Changes in operating assets and liabilities:** |  |  |
| Accounts receivable, net | (397872) | (217961) |
| Prepaid expenses and other current assets | (175630) | 46881 |
| Long term Security deposits | (236020) | (222806) |
| Inventories | (46384) | (94227) |
| Long term prepaid expenses | 38476 | 55347 |
| Deferred revenue | 1252776 | 964663 |
| Accounts payable | 325803 | 181852 |
| Taxes payable | (26347) | (73994) |
| Other current liabilities | 98362 | 27689 |
| Operating lease liabilities | (1918095) | (1130991) |
| **Net cash provided by operating activities** | **1778246** | **1245677** |
| **Cash flows from investing activities:** |  |  |
| Purchase of property and equipment | (2038054) | (574333) |
| Proceeds from disposal of equipment | 7133 |  |
| Payments made for loan to third party | (1550628) |  |
| Proceeds from loan to third party repayment | 1550628 | - |
| **Net cash used in investing activities** | **(2030921)** | **(574333)** |
| **Cash flows from financing activities:** |  |  |
| Proceeds from short-term bank loans | 1903563 | 2175000 |
| Repayments of short-term bank loans | (2683814) | (2168388) |
| Proceeds from long-term bank loan | 293007 | 209291 |
| Advances received from (payments made to) related party | 572712 | (791036) |
| Payments made for deferred offering costs | (263708) | (274246) |
| **Net cash provided by (used in) financing activities** | **(178240)** | **(849379)** |
| **Effect of exchange rate fluctuation on cash and cash equivalents** | **206659** | **413812** |
| **Net (decrease) increase in cash, cash equivalents and restricted cash** | **(224256)** | **235777** |
| **Cash, cash equivalents and restricted cash, beginning of year** | **4121068** | **3885291** |
| **Cash, cash equivalents and restricted cash, end of year** | $**3896812** | $**4121068** |
| **Reconciliation of Cash, cash equivalents and restricted cash, beginning of year** |  |  |
| Cash and cash equivalents | $4098546 | $3874288 |
| Restricted cash | 22522 | 11003 |
| **Cash, cash equivalents and restricted cash, end of year** | $**4121068** | $**3885291** |
| **Reconciliation of Cash, cash equivalents and restricted cash, end of year** |  |  |
| Cash and cash equivalents | $3896812 | $4098546 |
| Restricted cash | - | 22522 |
| **Cash, cash equivalents and restricted cash, end of year** | $**3896812** | $**4121068** |
| **Supplemental cash flow information** |  |  |
| Cash paid for income taxes | $**9981** | $**103160** |
| Cash paid for interest | $**66688** | $**113848** |
| **Non-cash investing and financing activities** |  |  |
| Payable for purchase of property and equipment | $682618 | $7283 |
| Right of use assets obtained in exchange for operating lease liabilities | $2420359 | $4687623 |
| PPP loan forgiveness | $502298 | $- |

---

The accompanying notes are an integral part of these consolidated financial statements.

**CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 1 — ORGANIZATION AND BUSINESS DESCRIPTION**

 ****

Chanson International Holding ("Chanson International," or the "Company"), formerly known as RON Holding Limited, was established under the laws of the Cayman Islands on July 26, 2019 as a holding company. Chanson International owns 100% of the equity interests of Deen Global Limited ("Deen Global"), a limited liability company incorporated under the laws of British Virgin Islands ("BVI") on August 13, 2019. Deen Global owns 100% of the equity interests of Jenyd Holdings Limited ("Jenyd"), a business company incorporated in accordance with the laws and regulations of Hong Kong on September 13, 2019.

Chanson International, Deen Global, and Jenyd are currently not engaging in any active business operations and merely acting as holding companies.

Xinjiang United Family Trading Co., Ltd. ("Xinjiang United Family"), is a company incorporated on August 7, 2009 in the People's Republic of China (the "PRC"), with a registered capital of RMB6 million (approximately $0.88 million). On September 27, 2019, the original shareholders of Xinjiang United Family signed a share transfer agreement and transferred their 100% ownership interest in Xinjiang United Family to Jenyd, and accordingly Xinjiang United Family became a wholly foreign-owned enterprise ("WFOE") and a wholly-owned subsidiary of Jenyd.

Xinjiang United Family operates a bakery chain in China's Xinjiang autonomous region under the brand name of "George●Chanson." The chain currently consists of four directly-owned high-end bakery stores in the City of Urumqi and 28 bakery stores organized as individually-owned businesses known as the United Family Group (each a "UFG entity" and, collectively, the "UFG entities") in Xinjiang region. The UFG entities are owned by the original shareholders of Xinjiang United Family but operated under a series of contractual agreements signed between the owners of these UFG entities and Xinjiang United Family.

On April 17, 2015, Xinjiang United Family incorporated a wholly-owned subsidiary, George Chanson (NY) Corp. ("Chanson NY"), in the State of New York, which owns and operates Chanson 23rd Street LLC ("Chanson 23rd Street"), a modern European-style café and eatery that specializes in the art of making French-style viennoiseries and pastries in the heart of Manhattan's Flatiron District. On February 20, 2020, the Company's Chairman, Mr. Gang Li, formed Chanson 355 Greenwich LLC ("Chanson Greenwich"), a New York limited liability company, and subsequently assigned his membership interests in Chanson Greenwich to Chanson NY on September 28, 2020. After the transfer, Chanson Greenwich became a wholly owned subsidiary of Chanson NY. Chanson Greenwich is another boutique café in Manhattan opened in December 2021. On April 21, 2021, Chanson NY formed a wholly owned subsidiary, Chanson Management LLC, a Delaware limited liability company. On August 5, 2021, Chanson NY formed a wholly owned subsidiary, Chanson 1293 3rd Ave LLC ("Chanson 3rd Ave"), a New York limited liability company.

 **

***Reorganization***

 **

In connection with its initial public offering, the Company has undertaken a reorganization of its legal structure (the "Reorganization"). The Reorganization involved the incorporation of Chanson International, Deen Global, and Jenyd, the entry into a Share Transfer Agreement to transfer the ownership interest in Xinjiang United Family from its original shareholders to Jenyd, and the signing of a series of contractual agreements between Xinjiang United Family and the owners of the UFG entities. After the Reorganization, Chanson International became the ultimate holding company of Xinjiang United Family and Xinjiang United Family became the primary beneficiary of the UFG entities through the VIE Agreements, as further discussed below.

Xinjiang United Family entered into a series of contractual arrangements with the owners of the 22 UFG entities on May 2, 2020, and with the owners of three newly established UFG entities in fiscal year 2020, five newly established UFG entities in fiscal year 2021, and one newly established UFG entity in fiscal year 2022, respectively. Three of these UFG entities were closed in 2021. These agreements include Exclusive Service Agreements, Pledge Agreements, Call Option Agreements, Operating Rights Proxy and Powers of Attorney Agreements and Spousal Consents (collectively, the "VIE Agreements"). Pursuant to the above VIE Agreements, Xinjiang United Family has the exclusive right to provide the UFG entities with consulting services related to business operations including operational and management consulting services. The VIE Agreements obligate Xinjiang United Family to absorb all of the risk of loss from business activities of these UFG entities and entitle Xinjiang United Family to receive all of their residual returns. In essence, Xinjiang United Family has gained the power to direct activities of the UFG entities that most significantly impact their economic performance, and the right to receive benefits from the UFG entities that could potentially be significant to them. Therefore, the Company believes that Xinjiang United Family has a controlling financial interest in and is the primary beneficiary of the UFG entities and these UFG entities should be considered as Variable Interest Entities ("VIEs") under the Statement of Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 810 *Consolidation*. Hereinafter, the four bakery stores directly owned by Xinjiang United Family and the UFG entities controlled through the VIE Agreements are collectively referred to as the "PRC Stores."

**CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 1 — ORGANIZATION AND BUSINESS DESCRIPTION (continued)**

***Reorganization (continued)***

The Company, together with its wholly-owned subsidiaries are under common control by the same shareholders before and after the Reorganization and therefore the consolidation of the Company and its subsidiaries has been accounted for at historical cost as of the beginning of the first period presented in the accompanying consolidated financial statements.

After the Reorganization, the consolidated financial statements of the Company include the following entities:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Name of Entity** | **Date of<br> Incorporation** | **Place of<br> Incorporation** | **% of <br> Ownership** | **Principal Activities** |
| Chanson International | July 26, 2019 | Cayman Islands | Parent, 100% | Investment holding |
| Deen Global | August 13, 2019 | British Virgin Islands | 100% | Investment holding |
| Jenyd | September 13, 2019 | Hong Kong | 100% | Investment holding |
| Xinjiang United Family | August 7, 2009 | PRC | 100% | Consultancy and information technology support; sells bakery products to customers |
| 28 UFG entities | 2012 to 2022 | PRC | VIEs | Sells bakery products to customers |
| Chanson NY | April 17, 2015 | New York | 100% | Holding company. Consultancy and information technology support |
| Chanson 23rd Street | December 18, 2015 | New York | 100% | Eat-in services and bakery products and beverage products |
| Chanson Greenwich | February 20, 2020 | New York | 100% | Eat-in services and bakery products and beverage products |
| Chanson Management LLC | April 21, 2021 | Delaware | 100% | Consultancy and management support |
| Chanson 3rd Ave | August 5, 2021 | New York | 100% | Newly incorporated – not in operation yet |

---

<u>The VIE contractual arrangements</u>

The UFG entities are controlled by the Company through contractual arrangements in lieu of direct equity ownership by the Company or any of its subsidiaries.

A VIE is an entity that either has a total equity investment that is insufficient to finance its activities without additional subordinated financial support, or whose equity investors lack the characteristics of a controlling financial interest, such as through voting rights, right to receive the expected residual returns of the entity, or obligation to absorb the expected losses of the entity. The variable interest holder, if any, that has a controlling financial interest in a VIE is deemed to be the primary beneficiary of, and must consolidate, the VIE.

**CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 1 — ORGANIZATION AND BUSINESS DESCRIPTION (continued)**

***Reorganization (continued)***

Xinjiang United Family is deemed to have a controlling financial interest in and be the primary beneficiary of the UFG entities because it has both of the following characteristics:

● The power to direct activities at the UFG entities that most significantly impact such entities' economic performance, and

● The obligation to absorb losses of, and the right to receive benefits from, the UFG entities that could potentially be significant to such entities.

Pursuant to the contractual arrangements with the UFG entities, the UFG entities pay service fees equal to all of their net profit after tax payments to Xinjiang United Family. At the same time, Xinjiang United Family is obligated to absorb all of their losses. Such contractual arrangements are designed so that the operation of the UFG entities is for the benefit of Xinjiang United Family and, ultimately, the Company.

<u>Risks associated with the VIE structure</u>

The Company believes that the contractual arrangements with the UFG entities and their respective owners are in compliance with PRC laws and regulations and are legally enforceable. However, uncertainties in the PRC legal system could limit the Company's ability to enforce such contractual arrangements. If the legal structure and contractual arrangements were found to be in violation of PRC laws and regulations, the PRC government could:

● revoke the business and operating licenses of the Company's PRC subsidiary and the UFG entities;

● discontinue or restrict the operations of any related-party transactions between the Company's PRC subsidiary and the UFG entities;

● limit the Company's business expansion in China by way of entering into contractual arrangements;

● impose fines or other requirements with which the Company's PRC subsidiary and the UFG entities may not be able to comply;

 ****

● require the Company or the Company's PRC subsidiary and the UFG entities to restructure the relevant ownership structure or operations; or

● restrict or prohibit the Company's use of the proceeds from its public offering to finance the Company's business and operations in China.

The Company's ability to conduct its consulting services business may be negatively affected if the PRC government were to carry out of any of the aforementioned actions. As a result, the Company may not be able to consolidate the UFG entities in its consolidated financial statements as it may lose the ability to direct activities of the UFG entities and receive economic benefits from the UFG entities. The Company, however, does not believe such actions would result in the liquidation or dissolution of the Company and its PRC subsidiary and the UFG entities. The financial position, operation, and cash flow of the UFG entities are material to total assets and liabilities presented on the consolidated balance sheets and revenue, expenses, and net income (loss) presented on the consolidated statements of operations and other comprehensive income (loss) as well as the cash flows from operating, investing, and financing activities presented on the consolidated statements of cash flows. The Company did not provide any financial support to the UFG entities for the years ended December 31, 2021 and 2020. The following financial statement amounts and balances of the UFG entities were included in the accompanying consolidated financial statements after elimination of intercompany transactions and balances:

---

| | | |
|:---|:---|:---|
|  | **December 31, 2021** | **December 31, 2020** |
| Current assets | $6574394 | $3852672 |
| Non-current assets | 6191804 | 4001163 |
| Total assets | $12766198 | $7853835 |
| Current liabilities | $6619273 | $4500201 |
| Non-current liabilities | 2362218 | 1385054 |
| Total liabilities | $8981491 | $5885255 |

---

---

| | | |
|:---|:---|:---|
|  | **For the Years Ended**<br> **December 31,** | **For the Years Ended**<br> **December 31,** |
|  | **2021** | **2020** |
| Net revenue | $8251610 | $7831994 |
| Net income | $1875684 | $1288630 |

---

**CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

***Basis of presentation and principles of consolidation***

 ****

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and pursuant to the rules and regulations of the Securities Exchange Commission and have been consistently applied. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The accompanying consolidated financial statements include the financial statements of the Company and its subsidiaries and the VIEs. All intercompany balances and transactions are eliminated upon consolidation.

***Uses of estimates***

 ****

In preparing the consolidated financial statements in conformity with U.S. GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. These estimates are based on information as of the date of the consolidated financial statements. Significant estimates required to be made by management include, but are not limited to, the valuation of accounts receivable, useful lives of property and equipment, the recoverability of long-lived assets, provision necessary for contingent liabilities, and revenue recognition. Actual results could differ from those estimates.

***Cash and cash equivalents***

Cash includes currency on hand and deposits held by banks that can be added or withdrawn without limitation. The Company maintains a significant amount of its bank accounts in the PRC. The Company considers all highly liquid investment instruments with an original maturity of three months or less from the date of purchase to be cash equivalents.

***Restricted cash***

Restricted cash represents funds set aside and placed with the bank and serves as the security deposit which is not available to fund general liquidity needs of the Company.

***Accounts receivable, net***

Accounts receivable are recognized and carried at original invoiced amount less an estimated allowance for uncollectible accounts.

The Company determines the adequacy of reserves for doubtful accounts based on individual account analysis and historical collection trend. The Company establishes a provision for doubtful receivables when there is objective evidence that the Company may not be able to collect amounts due. The allowance is based on management's best estimate of specific losses on individual exposures, as well as a provision on historical trends of collections. The provision is recorded against accounts receivable balances, with a corresponding charge recorded in the consolidated statements of operations and comprehensive income (loss). Actual amounts received may differ from management's estimate of credit worthiness and the economic environment. Delinquent account balances are written-off against the allowance for doubtful accounts after management has determined that the likelihood of collection is not probable. As of December 31, 2021 and 2020, there was no allowance recorded as the Company considers all of the accounts receivable fully collectible.

 **

***Leases***

 **

The Company follows FASB ASC No. 842, *Leases* ("Topic 842"). The Company leases office spaces, bakery store facilities, employee dormitories, and a vehicle, which are classified as operating leases in accordance with Topic 842. Under Topic 842, lessees are required to recognize the following for all leases (with the exception of short-term leases, usually with initial term of 12 months or less) on the commencement date: (i) lease liability, which is a lessee's obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) right-of-use ("ROU") asset, which is an asset that represents the lessee's right to use, or control the use of, a specified asset for the lease term.

At the commencement date, the Company recognizes the lease liability at the present value of the lease payments not yet paid, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company's incremental borrowing rate for the same term as the underlying lease. The ROU asset is recognized initially at cost, which primarily comprises the initial amount of the lease liability, plus any initial direct costs incurred, consisting mainly of brokerage commissions, less any lease incentives received. All ROU assets are reviewed for impairment annually. There was no impairment for ROU lease assets as of December 31, 2021 and 2020.

 ****

**CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**

***Leases (continued)***

In response to the large volume of anticipated lease concessions to be granted related to the effects of the COVID-19 pandemic, and the resultant expected cost and complexity of applying the lease modification requirements in Topic 842, the FASB issued Staff Q&A—Topic 842 and Topic 840: *Accounting for Lease Concessions Related to the Effects of the COVID-19 Pandemic* in April 2020 as interpretive guidance to provide clarity in response to the crisis. The FASB staff indicated that it would be acceptable for entities to make an election to account for lease concessions related to the effects of the COVID-19 pandemic consistent with how they would be accounted for as though enforceable rights and obligations for those concessions existed in the original contract. Consequently, for such lease concessions, an entity will not need to reassess each existing contract to determine whether enforceable rights and obligations for concessions exist and an entity can elect to apply or not to apply the lease modification guidance in Topic 842 to those contracts. The election is available for concessions related to the effects of the COVID-19 pandemic that result in the total payments required by the modified contract being substantially the same as or less than total payments required by the original contract.

Due to the COVID-19 pandemic, the Company renegotiated the leases for some of its PRC stores and New York stores. Based on the nature of the agreements reached with the landlords, the Company has accounted for rent concessions as if they were part of the enforceable rights and obligations of the existing lease contracts and did not account for the concessions as lease modifications. As the date of this report, the Company has received a total of lease concessions amounting to $751,801, and among which, $141,499 and $598,990 was received during the years ended December 31, 2021 and 2020, respectively. The Company accounted for the concession as negative variable lease payments with a corresponding reduction in the lease liability. The Company has continued to recognize lease expenses on a straight-line basis for its leases over the related lease terms.

 ****

***Inventories***

Inventories of the Company consist of ingredient materials, finished goods, packing materials, and other materials. Inventories are stated at the lower of cost or net realizable value, on a weighted average basis. Costs include the cost of ingredient materials, direct labor, and related production overhead. Any excess of the cost over the net realizable value of each item of inventories is recognized as a provision for diminution in the value of inventories. Net realizable value is the estimated selling price in the normal course of business less any costs to complete and sell products. The Company periodically evaluates inventories for their net realizable value adjustments, and reduces the carrying value of those inventories that are obsolete or in excess of the forecasted usage to their estimated net realizable value based on various factors including aging and expiration dates, as applicable, taking into consideration historical and expected future product sales. For the years ended December 31, 2021 and 2020, no inventory reserve was recorded because no slow-moving, obsolete, or damaged inventory was identified.

***Property and equipment***

 ****

Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization of property and equipment are provided using the straight-line method over their expected useful lives, as follows:

---

| | |
|:---|:---|
|  | **Useful life** |
| Bakery production equipment | 5-8 years |
| Office equipment and furniture | 3-5 years |
| Transportation vehicles | 5 years |
| Leasehold improvement | Lesser of useful life and lease term |

---

Expenditures for repair and maintenance, which do not materially extend the useful lives of the assets, are charged to expenses as incurred. Expenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized. The cost and related accumulated depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the consolidated statements of operations and comprehensive income (loss) in other income or expenses.

 ****

***Impairment of long-lived assets***

Long-lived assets with finite lives, primarily property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the estimated cash flows from the use of the asset and its eventual disposition are below the asset's carrying value, then the asset is deemed to be impaired and written down to its fair value. There were no impairments of these assets as of December 31, 2021 and 2020.

 ****

**CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**

 ****

***Revenue recognition***

The Company follows ASC 606, *Revenue from Contracts with Customers* ("ASC 606"), for revenue recognition. ASC 606 establishes principles for reporting information about the nature, amount, timing, and uncertainty of revenue and cash flows arising from an entity's contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized, as performance obligations are satisfied.

The Company currently generates its revenue through its bakery/café stores as well as through online sales. The Company recognizes revenue from bakery/café sales upon delivery of the related food and other products to the customer and fulfillment of all performance obligations. Revenue is recognized net of any discounts, sales incentives, sales taxes, and value added taxes that are collected from customers and remitted to tax authorities.

 

In the PRC Stores, the Company sells membership cards that do not have an expiration date and from which the Company does not deduct non-usage fees from outstanding card balances. Membership cards are reloadable and redeemable at any of the Company's store locations. Amounts loaded into these cards are initially recorded as deferred revenue. When membership cards are redeemed at stores, the Company recognizes revenue and reduces the deferred revenue. While the Company continues to honor all membership cards presented for payments, management determines the likelihood of redemption to be remote for certain cards with long periods of inactivity ("breakage"), which is five years after the last usage, based upon the Company's historical redemption patterns. Membership card breakage is recorded as revenue in the consolidated statements of operations and comprehensive income (loss). Membership card breakage was immaterial for the years ended December 31, 2021 and 2020.

In the PRC Stores, the Company maintains a customer loyalty program in which customers earn free cash vouchers when purchasing or reloading membership cards at certain amount. These cash vouchers typically do not expire, except for certain vouchers given out at special occasions, which usually state an expiration date and can only be exchanged for certain seasonal products or specialty cakes. The Company establishes corresponding liabilities in deferred revenue for the membership cards and the free cash vouchers upon issuance. The Company allocates the consideration received proportionately between the membership cards and cash vouchers based on their face values. Revenue is recognized at the allocated amount upon redemption of membership cards and cash vouchers, at which point, the Company delivers products to customers and reduces the deferred revenue. Unredeemed cash vouchers will be recognized as revenue upon their expiration dates, if any, or five years after their issuance if there are no stated expiration dates, when management determines the likelihood of redemption to be remote.

*Contract balances and remaining performance obligations*

Contract balances typically arise when a difference in timing between the transfer of control to the customer and receipt of consideration occurs. The Company did not have contract assets as of December 31, 2021 and 2020. The Company's contract liabilities, which are reflected in its consolidated balance sheets as deferred revenue of $6,051,683 and $4,657,000 as of December 31, 2021 and 2020, respectively, consist primarily of customer payments for the membership cards and the fair value of the cash vouchers under the Company's customer loyalty programs. These amounts represent the Company's unsatisfied performance obligations as of the balance sheet dates. The amount of revenue recognized in the years ended December 31, 2021 and 2020 that was included in the opening deferred revenue was $4,823,134 and $2,936,748, respectively. As of December 31, 2021, the aggregate amount of unredeemed membership cards and cash vouchers was $6,051,683. The Company will recognize revenue when customers redeem the membership cards or cash vouchers in store purchases. Based on the Company's historical experience, a significant portion of the redemption is expected to occur during the first two years after December 31, 2021 and the remaining between the third and fifth year.

*Disaggregation of revenue*

 

The Company disaggregates its revenue by geographic areas, as the Company believes it best depicts how the nature, amount, timing, and uncertainty of the revenue and cash flows are affected by economic factors. The Company's disaggregation of revenue for the years ended December 31, 2021 and 2020 is disclosed in Note 12 of the consolidated financial statements. ****

**CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**

 ****

***Fair value of financial instruments***

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

● Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

● Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted market prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.

● Level 3 — inputs to the valuation methodology are unobservable.

Unless otherwise disclosed, the fair value of the Company's financial instruments, including cash and cash equivalents, accounts receivable, net, prepaid expenses and other current assets, short-term bank loans, accounts payable, due to related party, taxes payable, operating lease liabilities, current and other current liabilities, approximates the fair value of the respective assets and liabilities as of December 31, 2021 and 2020 based upon the short-term nature of the assets and liabilities. The fair value of longer-term operating lease liabilities approximates their recorded values as their stated interest rates approximate the rates currently available.

 ****

***Foreign currency translation***

The functional currency of the Company's PRC subsidiary and the UFG entities is the Chinese Yuan ("RMB") and the functional currency of the Company's U.S. subsidiaries is the U.S. Dollars ("US$"). RMB amounts in the Company's consolidated financial statements have been translated into the reporting currency US$. Assets and liabilities of the Company are translated at the exchange rate at each reporting period end date. Equity is translated at historical rates. Income and expense accounts are translated at the average rate of exchange during the reporting period. The resulting translation adjustments are reported under other comprehensive income (loss). Because cash flows are translated based on the average translation rate, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheets. Gains and losses resulting from the translations of foreign currency transactions and balances are reflected in the results of operations.

RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into US$ at the rates used in translation.

The following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this report:

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| | | |
|:---|:---|:---|
|  | **December 31,<br> 2021** | **December 31,<br> 2020** |
| Year-end spot rate | US$1=RMB6.3614 | US$1=RMB6.5326 |
| Average rate | US$1=RMB6.4490 | US$1=RMB6.9020 |

---

 **

***Income taxes***

 **

The Company accounts for current income taxes in accordance with the laws of the relevant tax authorities. Deferred income taxes are recognized when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the consolidated financial statements. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

An uncertain tax position is recognized as a benefit only if it is "more likely than not" that the tax position would be sustained in a tax examination. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the "more likely than not" test, no tax benefit is recorded. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. No penalties or interest relating to income taxes were incurred during the years ended December 31, 2021 and 2020. The Company does not believe there was any uncertain tax provision at December 31, 2021 and 2020.

**CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**

***Income taxes (continued)***

The Company's operating subsidiary in China is subject to the income tax laws of the PRC. The Company's operating subsidiary in United States is subject to the tax law of the United States. As of December 31, 2021, the tax years ended December 31, 2017 through December 31, 2021 for the Company's PRC subsidiary remain open for statutory examination by PRC tax authorities, and the tax years ended December 31, 2019 through December 31, 2021 for the Company's United States subsidiary remain open for statutory examination by U.S. tax authorities.

***Value added tax ("VAT")***

The Company's subsidiary Xinjiang United Family and its three branch offices are general tax payers. The applicable VAT rate is 13% based on the Chinese tax law. VAT is reported as a deduction to revenue when incurred. Entities that are VAT general taxpayers are allowed to offset qualified input VAT paid to suppliers against their output VAT liabilities. The UFG entities were formed as individually-owned businesses, which are generally subject to a lower VAT rate of 3% and the local PRC tax authority has the jurisdiction to assess and determine their VAT obligation or exemption on a case-by-case basis. Before April 1, 2021, 16 of the UFG entities were exempted from paying VAT while nine of these UFG entities were subject to VAT rate of 3% as determined by the local tax authority. From April 1, 2021 to December 31, 2022, based on the new tax regulation, individually-owned businesses whose monthly deemed Taxable Net Income ("TNI") is less than RMB150,000 are exempted from paying VAT. All but one of the UFG entities are currently exempted from paying VAT, since the deemed TNI of each of these UFG entities is currently less than RMB150,000. Their VAT eligibility is subject to periodical reassessment, and they may lose or regain the exemption status as determined by the tax authorities on a case-by-case basis.

***Earnings (loss) per share***

The Company computes earnings (loss) per share ("EPS") in accordance with ASC 260, *Earnings per Share* ("ASC 260"). ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average ordinary shares outstanding for the period. Diluted presents the dilutive effect on a per share basis of potential ordinary shares (e.g., convertible securities, options, and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential ordinary shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. As of December 31, 2021 and 2020, there were no dilutive shares.

***Comprehensive income (loss)***

Comprehensive income (loss) consists of two components, net income (loss) and other comprehensive income. The foreign currency translation gain resulting from the translation of the financial statements expressed in RMB to US$ is reported in other comprehensive income in the consolidated statements of operations and comprehensive income (loss).

***Risks and uncertainties***

*Political and economic risk*

 

The operations of the Company are located in the PRC and United States. Accordingly, the Company's business, financial condition, and results of operations may be influenced by political, economic, and legal environments in the PRC and United States, as well as by the general state of the PRC and United States economy. The Company's results may be adversely affected by changes in the political, regulatory, and social conditions in the PRC and United States. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations including its organization and structure disclosed in Note 1, such experience may not be indicative of future results.

 

*Foreign currency exchange risk*

A majority of the Company's revenue and expense transactions are denominated in RMB and most of the Company and its subsidiaries' assets and liabilities are denominated in RMB. RMB is not freely convertible into foreign currencies. In the PRC, certain foreign exchange transactions are required by law to be transacted only by authorized financial institutions at exchange rates set by the People's Bank of China ("PBOC"). Remittances in currencies other than RMB by the Company in China must be processed through the PBOC or other China foreign exchange regulatory bodies which require certain supporting documentation in order to effect the remittance.

**CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**

***Risks and uncertainties (continued)***

*Credit risk*

 

As of December 31, 2021 and 2020, $3,647,342 and $3,184,855 of the Company's cash was on deposit at financial institutions in the PRC where there currently is no rule or regulation requiring such financial institutions to maintain insurance to cover bank deposits in the event of bank failure. As of December 31, 2021 and 2020, $162,018 and $844,516 of the Company's cash was on deposit at financial institutions in the U.S. which were insured by the Federal Deposit Insurance Corporation subject to certain limitations. The Company has not experienced any losses in such accounts.

For the years ended December 31, 2021 and 2020, the Company's substantial assets were located in the PRC and the Company's substantial revenue was derived from its subsidiary and the UFG entities located in the PRC.

 ****

Accounts receivable are typically unsecured and derived from revenue earned from customers, thereby exposed to credit risk. The risk is mitigated by the Company's assessment of its customers' creditworthiness and its ongoing monitoring of outstanding balances.

*Concentrations*

No single customer accounted for more than 10% of the Company's revenue for the years ended December 31, 2021 and 2020.

As of December 31, 2021, one customer accounted for 11.6% of the Company's total accounts receivable balance. As of December 31, 2020, two customers accounted for 15.1% and 12.6% of the Company's total accounts receivable balance, respectively.

For the years ended December 31, 2021 and 2020, one supplier accounted for 14.7% and 21.5% of the Company's total purchases, respectively.

 ****

***Recent accounting pronouncements***

In December 2019, the FASB issued ASU No. 2019-12, *Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes*, as part of its initiative to reduce complexity in accounting standards (the "Simplification Initiative"). The objective of the Simplification Initiative is to identify, evaluate, and improve areas of U.S. GAAP for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to users of financial statements. The specific areas of potential simplification in this ASU were submitted by stakeholders as part of the Simplification Initiative. For public business entities, the amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The Company adopted this ASU on January 1, 2021 and the adoption of this ASU did not have a material impact on its consolidated financial statements.

Except for the above-mentioned pronouncement, there are no new recently issued accounting standards that will have material impact on the Company's consolidated financial position, statements of operations, and cash flows.

**CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 3 — ACCOUNTS RECEIVABLE, NET**

The Company's accounts receivable primarily include balance generated from selling bakery products to local corporate customers, billed but has not been collected as of the balance sheet dates. Accounts receivable consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **December 31, <br> 2021** | **December 31, <br> 2020** |
| Accounts receivable | $1134532 | $713389 |
| Less: allowance for doubtful accounts | - | - |
| Accounts receivable, net | $1134532 | $713389 |

---

As of the date of the consolidated financial statements, approximately 79.9%, or $0.91 million, of the December 31, 2021 balance have been subsequently collected. The remaining balance of approximately $0.23 million is expected to be collected before December 31, 2022.

**NOTE 4 — INVENTORIES**

Inventories consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **December 31, <br> 2021** | **December 31, <br> 2020** |
| Ingredient materials | $418247 | $338414 |
| Package and other materials | 38959 | 32353 |
| Finished goods | 69656 | 98603 |
| Total Inventories | $526862 | $469370 |

---

**NOTE 5 — LOAN TO THIRD PARTY**

On June 20, 2021, the Company entered into a short-term loan agreement with Urumqi Xinhe Agricultural Trade Wholesale Market Company Limited in an amount of RMB10 million (equivalent to $1,571,981) for working capital for four months, with a maturity date of October 31, 2021. The loan bore a fixed annual interest rate of 8.0%. The principal and interest of RMB202,144 (equivalent to $31,345) of the loan was fully collected by the Company upon maturity.

**CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 6 — LEASES**

The Company leases office spaces, bakery store facilities, employee dormitories and a vehicle under non-cancelable operating leases, with terms ranging from 1 to 15 years. The Company considers those renewal or termination options that are reasonably certain to be exercised in the determination of the lease term and initial measurement of ROU assets and lease liabilities. Lease expenses are recognized on a straight-line basis over the lease term. Leases with initial term of 12 months or less are not recorded on the balance sheet.

The Company determines whether a contract is or contains a lease at inception of the contract and whether that lease meets the classification criteria of a finance or operating lease. When available, the Company uses the rate implicit in the lease to discount lease payments to present value; however, most of the Company's leases do not provide a readily determinable implicit rate. Therefore, the Company discounts lease payments based on an estimate of its incremental borrowing rate.

The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The table below presents the operating lease related assets and liabilities recorded on the balance sheets.

---

| | | |
|:---|:---|:---|
|  | **December 31, <br> 2021** | **December 31, <br> 2020** |
| ROU lease assets | $11644192 | $10824945 |
| Operating lease liabilities – current | $1622642 | $1105664 |
| Operating lease liabilities – non-current | 9846224 | 9253187 |
| Total operating lease liabilities | $11468866 | $10358851 |

---

The weighted average remaining lease terms and discount rates for all of operating leases were as follows as of December 31, 2021 and 2020:

---

| | | |
|:---|:---|:---|
|  | **December 31, <br> 2021** | **December 31, <br> 2020** |
| Remaining lease term and discount rate: |  |  |
| Weighted average remaining lease term (years) | 7.22 | 8.03 |
| Weighted average discount rate \* | 4.87% | 4.57% |

---

\* The Company used incremental borrowing rate of 6.98% and 3.75% for its lease contracts in the PRC and United States, respectively.

During the years ended December 31, 2021 and 2020, the Company incurred total operating lease expenses of $2,636,019 and $1,749,258, respectively.

The following is a schedule, by years, of maturities of lease liabilities as of December 31, 2021:

---

| | |
|:---|:---|
| 2022 | $2144068 |
| 2023 | 1827950 |
| 2024 | 1680355 |
| 2025 | 1431158 |
| 2026 | 1291244 |
| Thereafter | 5358081 |
| Total lease payments | 13732856 |
| Less: imputed interest | (2263990) |
| Present value of lease liabilities | $11468866 |

---

**CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 7 — PROPERTY AND EQUIPMENT, NET**

Property and equipment, net, consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **December 31, <br> 2021** | **December 31,<br> 2020** |
| Bakery production equipment | $1333182 | $821873 |
| Automobiles | 65471 | 56602 |
| Office equipment and furniture | 509426 | 414664 |
| Leasehold improvements | 4307500 | 3582866 |
| Construction in progress\* | 1337565 | - |
| Subtotal | 7553144 | 4876005 |
| Less: accumulated depreciation | (2105426) | (1553334) |
| Property and equipment, net | $5447718 | $3322671 |

---

\* The Company constructed a new central factory in Urumqi, Xinjiang, to expand the production capacity of its PRC Stores. The investment budget for the new central factory is approximately RMB17.9 million (approximately $2.8 million) after VAT deduction. The construction has two stages. The first stage includes: 1) construction and renovation that cost approximately RMB13.0 million (approximately $2.0 million); 2) installation of production equipment of approximately RMB1.4 million (approximately $0.2 million); and 3) miscellaneous projects of approximately RMB1.0 million (approximately $0.2 million). The first stage of the construction was completed in June 2022, and the Company started production in the new central factory in August 2022. The second stage is expected to start in 2023, and includes construction of two new production lines of approximately RMB2.5 million (approximately $0.4 million). As of December 31, 2021, total cost incurred for the construction was $1,337,565 (approximately RMB8.5 million).

Depreciation expenses were $605,253 and $485,826 for the years ended December 31, 2021 and 2020, respectively.

In connection with the Company's RMB10 million and RMB15 million short-term loans from Huaxia Bank as of December 31, 2021 and 2020, the Company pledged its property and equipment with net book values of $319,832 and $302,434, respectively, as collateral for these loans (see Note 8).

**CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 8 — BANK LOANS**

***a.***  ***Short-term bank loans*** 

On May 7, 2020, Xinjiang United Family entered into a loan agreement with Huaxia Bank to borrow RMB15 million ($2,289,038) as working capital for a year, with a maturity date of May 7, 2021. The loan bore a favorable fixed interest rate of 4.98%. The loan was repaid in full upon maturity. This loan was guaranteed by Ms. Baolin Wang, the legal representative of Xinjiang United Family, and Xinjiang Financing Guaranty Co., Ltd. ("XJ Financing Guaranty"). In order for XJ Financing Guaranty to endorse the guarantee with the bank, the Company's controlling shareholder Mr. Gang Li and his wife, Ms. Ying Xiong, jointly signed a personal guarantee agreement with XJ Financing Guaranty and pledged their residential property as collateral to XJ Financing Guaranty. In addition, Xinjiang United Family pledged all its equipment in the PRC and the operating rights of two bakery stores as collateral to XJ Financing Guaranty. Three affiliated entities controlled by Mr. Gang Li also signed guarantee agreements with XJ Financing Guaranty.

On May 31, 2021, Xinjiang United Family entered into a new loan agreement with Huaxia Bank to borrow RMB10 million ($1,559,314) as working capital for a year, with a maturity date of May 31, 2022. The loan bore a fixed interest rate of 5.54%. The loan was repaid in full upon maturity. The loan was guaranteed by Ms. Baolin Wang, the legal representative of Xinjiang United Family, and XJ Financing Guaranty. In order for XJ Financing Guaranty to endorse the guarantee with the bank, the Company's controlling shareholder Mr. Gang Li and his wife, Ms. Ying Xiong, jointly signed a personal guarantee agreement with XJ Financing Guaranty and pledged their residential property as collateral to XJ Financing Guaranty. In addition, Xinjiang United Family pledged all its equipment in the PRC as collateral to XJ Financing Guaranty. Three affiliated entities controlled by Mr. Gang Li also signed guarantee agreements with XJ Financing Guaranty.

***b.***  ***Long-term bank loan*** 

On April 29, 2020, the Company's subsidiary Chanson 23rd Street received a loan totaling $209,291 from Cathay Bank under the U.S. Small Business Administration (the "SBA") Paycheck Protection Program ("PPP"), which is part of the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"), enacted on March 27, 2020. Under the terms of the PPP loan, up to 100% of the principal and accrued interest may be forgiven if certain criteria are met and the loan proceeds are used for qualifying expenses such as payroll costs, benefits, rent, and utilities as described in the CARES Act. The loan accrues interest at a rate of 1% and any portion of the principal and accrued interest that is not forgiven is required to be repaid by April 29, 2022. The Company filed an application for forgiveness of the loan's principal and interests in February 2021, and the application was approved by the bank and the SBA in May 2021.

On February 11, 2021, Chanson 23rd Street received funding for a Second Draw PPP loan totaling $293,007 from Cathay Bank. Under the terms of the Second Draw PPP loan, up to 100% of the principal and accrued interest may be forgiven if certain criteria are met and the loan proceeds are used for qualifying expenses such as payroll costs, benefits, rent, and utilities as described in the CARES Act. The loan accrues interest at a rate of 1% and any portion of the principal and accrued interest that is not forgiven is required to be repaid by February 10, 2026. The Company filed an application for forgiveness of the loan's principal and interests, and the application was approved by the bank and the SBA in November 2021.

The Company incurred interest expense of $98,033 and $108,852 for the years ended December 31, 2021 and 2020, respectively.

**NOTE 9 — RELATED PARTY TRANSACTIONS**

***a.***  ***Due to related party*** 

As of December 31, 2021, due to related party of $721,921 primarily represented advances provided by Mr. Gang Li, Chairman of the Company, to fund the Company's operations. These payables were unsecured, non-interest bearing, and due on demand. All expenses and liabilities were paid by Mr. Gang Li on behalf of the Company, and recorded in the Company's consolidated financial statements in a timely manner. The outstanding amount has been subsequently repaid as of the date of this consolidated financial statements.

***b.***  ***Other related party transaction*** s

Several related parties provided guarantees in connection with the Company's loans borrowed from Huaxia Bank (see Note 8).

**CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**NOTE 10 — TAXES**

**(a)** **Corporate Income Taxes ("CIT")** 

*<u>Cayman Islands</u>*

Under the current tax laws of the Cayman Islands, the Company is not subject to tax on its income or capital gains. In addition, no Cayman Islands withholding tax will be imposed upon the payment of dividends by the Company to its shareholders.

 

*<u>British Virgin Islands</u>*

Deen Global is incorporated in the BVI as an offshore holding company and is not subject to tax on income or capital gain under the laws of BVI.

<u>Hong Kong</u>

Jenyd is incorporated in Hong Kong and is subject to profit taxes in Hong Kong at a rate of 16.5%. However, Jenyd did not generate any assessable profits arising in or derived from Hong Kong for the years ended December 31, 2021 and 2020, and accordingly no provision for Hong Kong profits tax was made in these periods.

<u>PRC</u>

Under the Enterprise Income Tax ("EIT") Law of the PRC, domestic enterprises and Foreign Investment Enterprises (the "FIE") are usually subject to a unified 25% enterprise income tax rate while preferential tax rates, tax holidays, or exemptions may be granted on a case-by-case basis. The Company's subsidiary Xinjiang United Family and its three branch offices are incorporated in the PRC. During the years ended December 31, 2021 and 2020, Xinjiang United Family and all its three branch offices qualified as small-scaled minimal profit enterprises. Based on the EIT Law of PRC, and according to the Announcement on Issues Related to the Implementation of Inclusive Income Tax Reduction and Exemption Policy for Small and Low Profit Enterprises issued by the State Administration of Taxation on January 18, 2019, from January 1, 2019 to December 31, 2021, once an enterprise meets certain requirements and is identified as a small-scale minimal profit enterprise, the portion of its taxable income not more than RMB1 million is subject to a reduced rate of 5% and the portion between RMB1 million and RMB3 million is subject to a reduced rate of 10%. Furthermore, according to the Announcement on Implementing the Preferential Income Tax Policies for Small-Scale Minimal Profit Enterprise and Individually-Owned Businesses on April 2, 2021, the portion of its taxable income not more than RMB1 million is further reduced to 2.5% during the period from January 1, 2021 to December 31, 2022 and the portion between RMB1 million and RMB3 million remained at a reduced rate of 10%.

The UFG entities are individually-owned businesses, which are not subject to the EIT Law of the PRC, but the Individual Income Tax. The Measures for Individual Income Tax Calculation of Individual Industrial and Commercial Households, or the "Measures," were adopted by the State Administration of Taxation on December 19, 2014 and promulgated on December 27, 2014, and amended on June 15, 2018. According to Article 7 of the Measures, for the income from production and operation of individually-owned businesses, the amount of taxable income shall be the balance of the total income of each tax year after deducting costs, expenses, taxes, losses and other expenditures, and allowable compensation for losses in previous years. Income tax for an individually-owned business can generally be assessed on an actual basis or a deemed basis, which the UFG entities apply. Therefore, income tax for the UFG entities is levied as a fixed-rate income tax at 1% of TNI as assessed by the local tax authority. According to Announcement No. 12 [2021] of the State Taxation Administration, the tax rate is reduced by half to 0.5% during the period from January 1, 2021 to December 31, 2022. For the year ended December 31, 2021, 13 of these UFG entities were subject to income tax assessed at 0.5% of TNI that ranged from RMB25,000 to RMB180,000 per month. For the year ended December 31, 2020, 11 of these UFG entities were subject to income tax assessed at 1% of TNI that ranged from RMB33,000 to RMB120,000 per month. The rest of these UFG entities were exempted from paying income tax. During the years ended December 31, 2021 and 2020, the total tax exemption of the UFG entities were $15,001 and $3,480, respectively. As of December 31, 2021, the tax years ended December 31, 2017 through December 31, 2021 for the Company's UFG entities remain open for statutory examination by PRC tax authorities. In addition, the TNI and tax rate of the Company's UFG entities are subject to periodical reassessment by the local tax authority. If the local tax authority determined that income tax for the UFG entities should be levied at a higher TNI or higher tax rate, the Company would be obligated to pay additional income tax for the UFG entities. Along with the continuing growth of business, the Company expects that the tax rates of these UFG entities are likely to increase in the future in the annual assessment based on the past performance.

**CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 10 — TAXES (continued)**

**(a)** **Corporate Income Taxes ("CIT") (continued)** 

<u>United States</u>

The Company's subsidiaries in the U.S. are subject to a U.S. federal corporate income tax rate of 21%.

The components of the income tax provision were as follows:

---

| | | |
|:---|:---|:---|
|  | **For the Years Ended <br> December 31,** | **For the Years Ended <br> December 31,** |
|  | **2021** | **2020** |
| Current tax provision |  |  |
| Cayman Islands | $- | $- |
| BVI |  |  |
| Hong Kong |  |  |
| PRC | 16277 | 14584 |
| United States | - | - |
|  | $16277 | $14584 |
| Deferred tax provision |  |  |
| Cayman Islands | $- | $- |
| BVI |  |  |
| Hong Kong |  |  |
| PRC |  |  |
| United States | - | - |
|  | - | - |
| Income tax provisions | $16277 | $14584 |

---

The Company's deferred tax assets, net were comprised of the following:

---

| | | |
|:---|:---|:---|
|  | **December 31, <br> 2021** | **December 31, <br> 2020** |
| Net operating loss | $1802625 | $1483207 |
| Total deferred tax assets | 1802625 | 1483207 |
| Valuation allowance | (1802625) | (1483207) |
| Deferred tax assets, net | $- | $- |

---

The Company's operations in the U.S. incurred a cumulative net operating loss ("NOL") which may reduce future federal taxable income. As of December 31, 2020, the cumulative NOL was $7,062,892. During the year ended December 31, 2021, the U.S. operations incurred an additional NOL of $1,521,039, resulting in a cumulative NOL of $8,583,931 as of December 31, 2021, among which approximately $2,882,465 will expire in 2037 and the remaining balance is carried forward indefinitely.

The Company periodically evaluates the likelihood of the realization of deferred tax assets, and reduces the carrying amount of the deferred tax assets by a valuation allowance to the extent it believes a portion will not be realized. Management considers new evidence, both positive and negative, that could affect the Company's future realization of deferred tax assets including its recent cumulative earnings experience, expectation of future income, the carry forward periods available for tax reporting purposes and other relevant factors. The Company determined that it is more likely than not its deferred tax assets could not be realized due to uncertainty on future earnings in the U.S. operations. The Company provided a 100% allowance for its deferred tax assets as of December 31, 2021 and 2020, respectively.

**CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 10 — TAXES (continued)**

**(a)** **Corporate Income Taxes ("CIT") (continued)** 

Reconciliation of the differences between the income tax provision computed based on PRC statutory income tax rate and the Company's actual income tax provision for the years ended December 31, 2021 and 2020 are as follows:

---

| | | |
|:---|:---|:---|
|  | **For the Years Ended<br> December 31,** | **For the Years Ended<br> December 31,** |
|  | **2021** | **2020** |
| Income tax expense (benefit) computed based on PRC statutory rate | $130761 | $(37361) |
| Favorable tax rate and tax exemption impact in PRC entities (a) | (494744) | (358406) |
| Effect of rate differential for U.S. subsidiaries | 60842 | 65656 |
| Change in valuation allowance | 319418 | 344695 |
| Actual income tax provision | $16277 | $14584 |

---

(a) During
 the years ended December 31, 2021 and 2020, the Company's subsidiary, Xinjiang United
 Family, and its three branch offices, were subject to a favorable tax rate of 2.5% and 5%,
 respectively. For the year ended December 31, 2021, 13 of these UFG entities were subject
 to income tax assessed at 0.5% of TNI that ranged from RMB25,000 to RMB180,000 per month.
 During the year ended December 31, 2020, 11 of the UFG entities were subject to income tax
 assessed at 1% of TNI ranging from RMB33,000 to RMB120,000 per month. The rest of the UFG
 entities were exempted from paying income tax. For the years ended December 31, 2021 and
 2020, the tax saving as the result of the favorable tax rates and tax exemption amounted
 to $494,744 and $358,406, respectively, and per share effect of the favorable tax rate and
 tax exemption was $0.05 and $0.04, respectively.

Taxes payable consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **December 31, <br> 2021** | **December 31, <br> 2020** |
| Income tax payable | $1463 | $4216 |
| Value added tax payable | 4850 | 32249 |
| Other taxes payable | 24526 | 19885 |
| Total taxes payable | $30839 | $56350 |

---

**NOTE 11 – SHAREHOLDERS' EQUITY**

 ****

***Ordinary shares***

Chanson International was established under the laws of the Cayman Islands on July 26, 2019. The authorized number of ordinary shares was 50,000 shares with par value of $1 per share and 100 ordinary shares were issued, prior to the 1,000-for-1 forward split and the share issuances described below. The issuance of these 100 ordinary shares, and the 1,000-for-1 forward split and the share issuances are considered as a part of the Reorganization of the Company, which was retroactively applied as if the transaction occurred at the beginning of the period presented (see Note 1).

On March 27, 2021, the Company's shareholders and board of directors approved (i) a forward split of the Company's ordinary shares at a ratio of 1,000-for-1 share to increase the authorized ordinary shares from 50,000 shares to 50,000,000 shares and subdivide the 100 ordinary shares of a par value of $1 then outstanding into 100,000 ordinary shares of a par value of $0.001 (the "1,000-for-1 forward split"); (ii) the creation of Class A Ordinary Shares and Class B Ordinary Shares. Holders of Class A Ordinary Shares and Class B Ordinary Shares have the same rights except for voting and conversion rights. In respect of matters requiring a vote of all shareholders, each holder of Class A Ordinary Shares will be entitled to one vote per one Class A Ordinary Share and each holder of Class B Ordinary Shares will be entitled to 10 votes per one Class B Ordinary Share. The Class A Ordinary Shares are not convertible into shares of any other class. The Class B Ordinary Shares are convertible into Class A Ordinary Shares at any time after issuance at the option of the holder on a one-to-one basis; and (iii) issuances of Class A Ordinary Shares and Class B Ordinary Shares to the existing shareholders, to increase the number of total ordinary shares issued and outstanding prior to the completion of this offering from 100,000 to 9,000,000 (the "share issuances"). The Company believes the 1,000-for-1 forward split and the share issuances should be considered as a part of the Reorganization of the Company and accounted for on a retroactive basis pursuant to ASC 260. The Company has retroactively restated all shares and per share data for all periods presented. As a result, the Company had 44,000,000 authorized Class A Ordinary Shares of a par value of $0.001, of which 3,060,000 Class A Ordinary Shares were issued and outstanding as of December 31, 2021 and 2020, and the Company had 6,000,000 authorized Class B Ordinary Shares of a par value of $0.001, of which 5,940,000 Class B Ordinary Shares were issued and outstanding as of December 31, 2021 and 2020. In total, the Company had 50,000,000 authorized ordinary shares of a par value of $0.001, of which 9,000,000 were issued and outstanding as of December 31, 2021 and 2020.

**CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 11 – SHAREHOLDERS' EQUITY (continued)**

 ****

***Statutory Reserve***

The Company's PRC subsidiary is required to make appropriations to certain reserve funds, comprising the statutory surplus reserve and the discretionary surplus reserve, based on after-tax net income determined in accordance with generally accepted accounting principles of the PRC ("PRC GAAP"). Appropriations to the statutory surplus reserve are required to be at least 10% of the after-tax net income determined in accordance with PRC GAAP until the reserve is equal to 50% of the entity's registered capital. Appropriations to the discretionary surplus reserve are made at the discretion of the Board of Directors. The statutory reserve may be applied against prior year losses, if any, and may be used for general business expansion and production or increase in registered capital, but are not distributable as cash dividends. As of December 31, 2021 and 2020, the balance of the statutory reserves was $447,231 and $447,231, respectively, which is equal to 50% of the entity's registered capital.

 ****

***Restricted net assets***

The Company's PRC subsidiary and the UFG entities are restricted in their ability to transfer a portion of their net assets, equivalent to their statutory reserves and their share capital to the Company in the form of loans, advances, or cash dividends. The payment of dividends by entities organized in China is subject to limitations, procedures, and formalities. Regulations in the PRC currently permit payment of dividends only out of accumulated profits as determined in accordance with accounting standards and regulations in China. As of December 31, 2021 and 2020, the total restricted net assets amounted to $1,325,631 and $1,325,631, respectively.

**NOTE 12 – COMMITMENTS AND CONTINGENCIES**

***Contingencies***

 ****

From time to time, the Company is a party to various legal actions arising in the ordinary course of business. The Company accrues costs associated with these matters when they become probable and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. As of December 31, 2021 and 2020, there were no legal claims and litigation against the Company.

**NOTE 13 – SEGMENT REPORTING**

In accordance with ASC 280, *Segment Reporting*, operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (the "CODM"), or decision making group, in deciding how to allocate resources and in assessing performance. The Company uses the "management approach" in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company's CODM for making operating decisions and assessing performance as the source for determining the Company's reportable segments. Management, including the CODM, reviews operation results by locations. Based on management's assessment, the Company has determined that it has two operating segments, China and the United States.

The following table presents the segment information for the years ended December 31, 2021 and 2020, respectively:

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Year Ended December 31, 2021** | **For the Year Ended December 31, 2021** | **For the Year Ended December 31, 2021** |
|  | **China** | **United<br> States** | **Total** |
| Revenue | $12796089 | $1894206 | $14690295 |
| Cost of revenue | 6582462 | 1177410 | 7759872 |
| Gross profit | $6213627 | $716796 | $6930423 |
| Net income (loss) | $2027809 | $(1521040) | $506769 |
| Interest expense | (98033) | - | (98033) |
| Provision for income tax | 16277 | - | 16277 |
| Depreciation and amortization | $317702 | $287551 | $605253 |
| Capital expenditures | $1096051 | $942003 | $2038054 |

---

**CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

 ****

**NOTE 13 – SEGMENT REPORTING (continued)**

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Year Ended December 31, 2020** | **For the Year Ended December 31, 2020** | **For the Year Ended December 31, 2020** |
|  | **China** | **United<br> States** | **Total** |
| Revenue | $8973742 | $1339770 | $10313512 |
| Cost of revenue | 4410288 | 753890 | 5164178 |
| Gross profit | $4563454 | $585880 | $5149334 |
| Net income (loss) | $1477377 | $(1641406) | $(164029) |
| Interest expense | (108852) | - | (108852) |
| Provision for income tax | 14584 | - | 14584 |
| Depreciation and amortization | $276981 | $208845 | $485826 |
| Capital expenditures | $262284 | $312049 | $574333 |

---

---

| | | |
|:---|:---|:---|
|  | **December 31, <br> 2021** | **December 31,<br> 2020** |
| Total assets: |  |  |
| &nbsp;&nbsp;&nbsp;China | $12625783 | $8798180 |
| &nbsp;&nbsp;&nbsp;United Stated | 12370311 | 12339199 |
| Total assets | $24996094 | $21137379 |
| Total liabilities: |  |  |
| &nbsp;&nbsp;China | $13163745 | $10185536 |
| &nbsp;&nbsp;United Stated | 8997390 | 8712605 |
| Total liabilities | $22161135 | $18898141 |

---

**NOTE 14 – SUBSEQUENT EVENTS**

On March 21, 2022, Chanson NY formed a wholly owned subsidiary, Chanson 2040 Broadway LLC, a New York limited liability company.

The Company evaluated the subsequent events through September 2, 2022, which is the date of the issuance of these consolidated financial statements, and concluded that there are no additional subsequent events except disclosed above that would have required adjustment or disclosure in the consolidated financial statements.

**NOTE 15 – CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY**

Pursuant to the requirements of Rules 12-04(a), 5-04(c), and 4-08(e)(3) of Regulation S-X, the condensed financial information of the parent company shall be filed when the restricted net assets of consolidated subsidiaries exceed 25 percent of consolidated net assets as of the end of the most recently completed fiscal year. The Company performed a test on the restricted net assets of consolidated subsidiaries in accordance with such requirements and concluded that it was applicable to the Company as the restricted net assets of the Company's PRC subsidiary and the UFG entities exceeded 25% of the consolidated net assets of the Company. Therefore, the condensed financial statements for the parent company are included herein.

For purposes of the above test, restricted net assets of consolidated subsidiaries and VIEs shall mean that amount of the Company's proportionate share of net assets of consolidated subsidiaries (after intercompany eliminations) which as of the end of the most recent fiscal year may not be transferred to the parent company by subsidiaries and VIEs in the form of loans, advances, or cash dividends without the consent of a third party.

The condensed financial information of the parent company has been prepared using the same accounting policies as set out in the Company's consolidated financial statements except that the parent company used the equity method to account for investment in its subsidiaries and VIEs. Such investment is presented on the condensed balance sheets as "Investment in subsidiaries and VIEs" and the respective profit or loss as "Equity in earnings of subsidiaries and VIEs" on the condensed statements of operations and comprehensive income (loss).

The footnote disclosures contain supplemental information relating to the operations of the Company and, as such, these statements should be read in conjunction with the notes to the consolidated financial statements of the Company. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted.

The Company did not pay any dividend for the periods presented. As of December 31, 2021 and 2020, there were no material contingencies, significant provisions for long-term obligations, or guarantees of the Company, except for those which have been separately disclosed in the consolidated financial statements, if any.

**CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 15 – CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY (continued)**

**CHANSON INTERNATIONAL HOLDING**

**PARENT COMPANY BALANCE SHEETS**

---

| | | |
|:---|:---|:---|
|  | **December 31, <br> 2021** | **December 31,<br> 2020** |
| ASSETS |  |  |
| **Current assets** | **Current assets** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Intercompany receivable | $9000 | $9000 |
| Total current assets | 9000 | 9000 |
| **Non-current assets** | **Non-current assets** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss from investment in subsidiaries | $(4346072) | $(4852841 |
| &nbsp;&nbsp;&nbsp;Total assets | $(4337072) | $(4843841 |
| LIABILITIES AND SHAREHOLDERS' DEFICIT |  |  |
| LIABILITIES | $- | $- |
| COMMITMENTS AND CONTINGENCIES |  |  |
| SHAREHOLDERS' DEFICIT |  |  |
| &nbsp;&nbsp;&nbsp;Ordinary shares, $0.001 par value, 50,000,000 shares authorized; 9,000,000 shares issued and outstanding as of December 31, 2021 and 2020, respectively: \* |  |  |
| &nbsp;&nbsp;&nbsp;Class A ordinary share, $0.001 par value, 44,000,000 shares authorized; 3,060,000 shares issued and outstanding as of December 31, 2021 and 2020, respectively | 3060 | 3060 |
| &nbsp;&nbsp;&nbsp;Class B ordinary share, $0.001 par value, 6,000,000 shares authorized; 5,940,000 shares issued and outstanding as of December 31, 2021 and 2020, respectively | 5940 | 5940 |
| &nbsp;&nbsp;&nbsp;Additional paid-in capital |  |  |
| &nbsp;&nbsp;&nbsp;Accumulated deficit | (4346072) | $(4852841) |
| &nbsp;&nbsp;&nbsp;Accumulated other comprehensive income | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total shareholders' deficit | (4337072) | $(4843841 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities and shareholders' deficit | $(4337072) | $(4843841 |

---

\* Retrospectively restated for effect of 1,000-for-1 forward split and share issuances (see Note 11)

**CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 15 – CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY (continued)**

**CHANSON INTERNATIONAL HOLDING**

**PARENT COMPANY STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)**

---

| | | |
|:---|:---|:---|
|  | **For the Years Ended<br> December 31,** | **For the Years Ended<br> December 31,** |
|  | **2021** | **2020** |
| EQUITY IN EARNINGS (LOSS) OF SUBSIDIARIES AND VIES | $506769 | $(447151) |
| NET INCOME (LOSS) | 506769 | (447151) |
| FOREIGN CURRENCY TRANSLATION ADJUSTMENTS | - | - |
| COMPREHENSIVE INCOME (LOSS) | $506769 | (447151) |

---

**CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 15 – CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY (continued)**

**CHANSON INTERNATIONAL HOLDING**

**PARENT COMPANY STATEMENTS OF CASH FLOWS**

---

| | | |
|:---|:---|:---|
|  | **For the Years Ended<br> December 31,** | **For the Years Ended<br> December 31,** |
|  | **2021** | **2020** |
| CASH FLOWS FROM OPERATING ACTIVITIES: |  |  |
| &nbsp;&nbsp;&nbsp;Net income (loss) | $506769 | (447151) |
| &nbsp;&nbsp;&nbsp;Adjustments to reconcile net cash flows from operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Equity in earnings (loss) of subsidiaries and VIEs | (506769) | 447151 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in operating activities | - | - |
| CHANGES IN CASH |  |  |
| CASH, beginning of year | - | - |
| CASH, end of year | $- | $- |

---

 **CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES**

 **UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS** 

---

| | | |
|:---|:---|:---|
|  | **June 30,**<br> **2022** | **December 31,**<br> **2021** |
| **ASSETS** |  |  |
| **CURRENT ASSETS:** |  |  |
| Cash and cash equivalents | $393384 | $3896812 |
| Accounts receivable, net | 1985736 | 1134532 |
| Prepaid expenses and other current assets, net | 954954 | 438045 |
| Deferred offering costs | 734369 | 749605 |
| Inventories | 556985 | 526862 |
| **TOTAL CURRENT ASSETS** | **4625428** | **6745856** |
| Operating lease right-of-use assets | 15277484 | 11644192 |
| Property and equipment, net | 5701812 | 5447718 |
| Long term security deposits | 1023985 | 1066027 |
| Long term prepaid expenses | 86237 | 92301 |
| **TOTAL ASSETS** | $**26714946** | $**24996094** |
| **CURRENT LIABILITIES:** |  |  |
| Deferred revenue | $6791175 | $6051683 |
| Operating lease liabilities, current | 1695597 | 1622642 |
| Short-term bank loans |  | 1559314 |
| Accounts payable | 1118138 | 1273313 |
| Other current liabilities | 642202 | 1055199 |
| Due to a related party | 47507 | 721921 |
| Taxes payable | 83854 | 30839 |
| **TOTAL CURRENT LIABILITIES** | **10378473** | **12314911** |
| Operating lease liabilities, non-current | 13539959 | 9846224 |
| **TOTAL LIABILITIES** | **23918432** | **22161135** |
| **COMMITMENTS AND CONTINGENCIES** |  |  |
| **SHAREHOLDERS' EQUITY** |  |  |
| Ordinary shares, $0.001 par value, 50,000,000 shares authorized; 9,000,000 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively: |  |  |
| Class A ordinary share, $0.001 par value, 44,000,000 shares authorized; 3,060,000 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively | 3060 | 3060 |
| Class B ordinary share, $0.001 par value, 6,000,000 shares authorized; 5,940,000 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively | 5940 | 5940 |
| Additional paid-in capital | 869400 | 869400 |
| Statutory reserve | 447231 | 447231 |
| Retained earnings | 1325156 | 1104363 |
| Accumulated other comprehensive income | 145727 | 404965 |
| **TOTAL SHAREHOLDERS' EQUITY** | **2796514** | **2834959** |
| **TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY** | $**26714946** | $**24996094** |

---

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 **CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES**

 **UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)**

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended June 30,** | **For the Six Months Ended June 30,** |
|  | **2022** | **2021** |
| REVENUE | $8543803 | $6742121 |
| COST OF REVENUE | 4396715 | 3604286 |
| GROSS PROFIT | 4147088 | 3137835 |
| **OPERATING EXPENSES** |  |  |
| Selling expenses | 2195394 | 1923124 |
| General and administrative expenses | 1887285 | 1481445 |
| Total operating expenses | **4082679** | **3404569** |
| **INCOME (LOSS) FROM OPERATIONS** | **64409** | **(266734)** |
| **OTHER INCOME (EXPENSE)** |  |  |
| Interest expense | (37186) | (48594) |
| Other income, net | 197268 | 745330 |
| &nbsp;&nbsp;&nbsp; Total other income, net | 160082 | 696736 |
| **INCOME BEFORE INCOME TAX PROVISION** | **224491** | **430002** |
| **PROVISION FOR INCOME TAXES** | 3698 | 7317 |
| **NET INCOME** | **220793** | **422685** |
| Foreign currency translation gain (loss) | (259238) | 26788 |
| **TOTAL COMPREHENSIVE INCOME (LOSS)** | $**(38445)** | $**449473** |
| **Earnings per ordinary share - basic and diluted** | $0.02 | $0.05 |
| **Weighted average shares - basic and diluted\*** | **9000000** | **9000000** |

---

\* Retrospectively restated for effect of 1,000-for-1 forward split and share issuances on March 27, 2021 (see Note 12)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 **CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES**

 **UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended June 30,** | **For the Six Months Ended June 30,** |
|  | **2022** | **2021** |
| **Cash flows from operating activities:** |  |  |
| **Net Income** | $220793 | $422685 |
| **Adjustments to reconcile net income to net cash provided by operating activities:** |  |  |
| Amortization of operating lease right-of-use assets | 1455762 | 1038838 |
| Depreciation | 351395 | 288479 |
| Gain on forgiveness of loan under Paycheck Protection Program |  | (209291) |
| **Changes in operating assets and liabilities:** |  |  |
| Accounts receivable, net | (936744) | (954666) |
| Prepaid expenses and other current assets | (552985) | (58027) |
| Inventories | (53880) | (18460) |
| Long term security deposits | 27458 | (109359) |
| Long term prepaid expenses | 1472 | 24912 |
| Deferred revenue | 1078976 | 1286647 |
| Accounts payable | (97463) | 168278 |
| Taxes payable | 55142 | (2383) |
| Other current liabilities | (556361) | 12125 |
| Operating lease liabilities | (1353511) | (1109152) |
| **Net cash provided by (used in) operating activities** | **(359946)** | **780626** |
| **Cash flows from investing activities:** |  |  |
| Purchase of property and equipment | (566439) | (635318) |
| Payments made for loan to a third party | - | (1545189) |
| **Net cash used in investing activities** | **(566439)** | **(2180507)** |
| **Cash flows from financing activities:** |  |  |
| Proceeds from short-term bank loans |  | 1896887 |
| Repayments of short-term bank loans | (1530987) | (2337645) |
| Proceeds from long-term bank loan |  | 293007 |
| Advances received from (payments made to) a related party | (665824) | 214184 |
| Payments made for deferred offering costs | - | (118105) |
| **Net cash used in financing activities** | **(2196811)** | **(51672)** |
| **Effect of exchange rate fluctuation on cash and cash equivalents** | **(380232)** | **76621** |
| **Net decrease in cash and cash equivalents** | **(3503428)** | **(1374932)** |
| **Cash and cash equivalents, beginning of period** | **3896812** | **4121068** |
| **Cash and cash equivalents, end of period** | $**393384** | $**2746136** |
| **Supplemental cash flow information** |  |  |
| Cash paid for income taxes | $**1833** | $**9225** |
| Cash paid for interest | $**38715** | $**50944** |
| **Non-cash operating and investing activities** |  |  |
| Payable for purchase of property and equipment | $169777 | $- |
| Right of use assets obtained in exchange for operating lease liabilities | $4902529 | $528268 |

---

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

**CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES** 

 **UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY** 

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Ordinary Shares\*** | **Ordinary Shares\*** | **Ordinary Shares\*** | **Ordinary Shares\*** | | | | | |
|  | **Class A<br> Shares** | **Amount** | **Class B<br> Shares** | **Amount** |<br> **Additional<br> Paid-in<br> Capital** |<br> **Statutory<br> Reserve** |<br> **Retained<br> Earnings** |<br> **Accumulated<br> Other<br> Comprehensive<br> Income** |<br> **Total<br> Shareholders'<br> Equity** |
| **Balance, December 31, 2020** | **3060000** | $**3060** | **5940000** | $**5940** | $**869400** | $**447231** | $**597594** | $**316013** | $**2239238** |
| Net income |  |  |  |  |  |  | 422685 |  | 422685 |
| Foreign currency translation gain | - | - | - | - | - | - | - | 26788 | 26788 |
| **Balance, June 30, 2021** | **3060000** | $**3060** | **5940000** | $**5940** | $**869400** | $**447231** | $**1020279** | $**342801** | $**2688711** |
| **Balance, December 31, 2021** | **3060000** | $**3060** | **5940000** | $**5940** | $**869400** | $**447231** | $**1104363** | $**404965** | $**2834959** |
| Net income |  |  |  |  |  |  | 220793 |  | 220793 |
| Foreign currency translation loss | - | - | - | - | - | - | - | (259238) | (259238) |
| **Balance, June 30, 2022** | **3060000** | $**3060** | **5940000** | $**5940** | $**869400** | $**447231** | $**1325156** | $**145727** | $**2796514** |

---

\* Retrospectively restated for effect of 1,000-for-1 forward split and share issuances on March 27, 2021 (see Note 11)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 **CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES**

 **NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

 **NOTE 1 — ORGANIZATION AND BUSINESS DESCRIPTION**

  ****

Chanson International Holding ("Chanson International," or the "Company"), formerly known as RON Holding Limited, was established under the laws of the Cayman Islands on July 26, 2019 as a holding company. Chanson International owns 100% of the equity interests of Deen Global Limited ("Deen Global"), a limited liability company incorporated under the laws of British Virgin Islands ("BVI") on August 13, 2019. Deen Global owns 100% of the equity interests of Jenyd Holdings Limited ("Jenyd"), a business company incorporated in accordance with the laws and regulations of Hong Kong on September 13, 2019.

Chanson International, Deen Global, and Jenyd are currently not engaging in any active business operations and merely acting as holding companies.

Xinjiang United Family Trading Co., Ltd. ("Xinjiang United Family"), is a company incorporated on August 7, 2009 in the People's Republic of China (the "PRC"), with a registered capital of RMB6 million (approximately $0.88 million). On September 27, 2019, the original shareholders of Xinjiang United Family signed a share transfer agreement and transferred their 100% ownership interest in Xinjiang United Family to Jenyd, and accordingly Xinjiang United Family became a wholly foreign-owned enterprise ("WFOE") and a wholly-owned subsidiary of Jenyd.

Xinjiang United Family operates a bakery chain in China's Xinjiang autonomous region under the brand name of "George●Chanson." The chain currently consists of four directly-owned high-end bakery stores in the City of Urumqi and 28 bakery stores organized as individually-owned businesses known as the United Family Group (each a "UFG entity" and, collectively, the "UFG entities") in Xinjiang region. The UFG entities are owned by the original shareholders of Xinjiang United Family but operated under a series of contractual agreements signed between the owners of these UFG entities and Xinjiang United Family.

On April 17, 2015, Xinjiang United Family incorporated a wholly-owned subsidiary, George Chanson (NY) Corp. ("Chanson NY"), in the State of New York, which owns and operates Chanson 23rd Street LLC ("Chanson 23rd Street"), a modern European-style café and eatery that specializes in the art of making French-style viennoiseries and pastries in the heart of Manhattan's Flatiron District. On February 20, 2020, the Company's Chairman, Mr. Gang Li, formed Chanson 355 Greenwich LLC ("Chanson Greenwich"), a New York limited liability company, and subsequently assigned his membership interests in Chanson Greenwich to Chanson NY on September 28, 2020. After the transfer, Chanson Greenwich became a wholly owned subsidiary of Chanson NY. Chanson Greenwich is another boutique café in Manhattan opened in December 2021. On April 21, 2021, Chanson NY formed a wholly owned subsidiary, Chanson Management LLC, a Delaware limited liability company. On August 5, 2021, Chanson NY formed a wholly owned subsidiary, Chanson 1293 3rd Ave LLC ("Chanson 3rd Ave"), a New York limited liability company. On March 21, 2022, Chanson NY formed a wholly owned subsidiary, Chanson 2040 Broadway LLC ("Chanson Broadway"), a New York limited liability company.

  **

 ***Reorganization***

  **

In connection with its initial public offering, the Company has undertaken a reorganization of its legal structure (the "Reorganization"). The Reorganization involved the incorporation of Chanson International, Deen Global, and Jenyd, the entry into a Share Transfer Agreement to transfer the ownership interest in Xinjiang United Family from its original shareholders to Jenyd, and the signing of a series of contractual agreements between Xinjiang United Family and the owners of the UFG entities. After the Reorganization, Chanson International became the ultimate holding company of Xinjiang United Family and Xinjiang United Family became the primary beneficiary of the UFG entities through the VIE Agreements, as further discussed below.

Xinjiang United Family entered into a series of contractual arrangements with the owners of the 22 UFG entities on May 2, 2020, and with the owners of three newly established UFG entities in fiscal year 2020, five newly established UFG entities in fiscal year 2021, and one newly established UFG entity in fiscal year 2022, respectively. Three of these UFG entities were closed in 2021. These agreements include Exclusive Service Agreements, Pledge Agreements, Call Option Agreements, Operating Rights Proxy and Powers of Attorney Agreements and Spousal Consents (collectively, the "VIE Agreements"). Pursuant to the above VIE Agreements, Xinjiang United Family has the exclusive right to provide the UFG entities with consulting services related to business operations including operational and management consulting services. The VIE Agreements obligate Xinjiang United Family to absorb all of the risk of loss from business activities of these UFG entities and entitle Xinjiang United Family to receive all of their residual returns. In essence, Xinjiang United Family has gained the power to direct activities of the UFG entities that most significantly impact their economic performance, and the right to receive benefits from the UFG entities that could potentially be significant to them. Therefore, the Company believes that Xinjiang United Family has a controlling financial interest in and is the primary beneficiary of the UFG entities and these UFG entities should be considered as Variable Interest Entities ("VIEs") under the Statement of Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 810 *Consolidation*. Hereinafter, the four bakery stores directly owned by Xinjiang United Family and the UFG entities controlled through the VIE Agreements are collectively referred to as the "PRC Stores."

 **CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES**

 **NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

 **NOTE 1 — ORGANIZATION AND BUSINESS DESCRIPTION (continued)**

 ***Reorganization (continued)***

The Company, together with its wholly-owned subsidiaries are under common control by the same shareholders before and after the Reorganization and therefore the consolidation of the Company and its subsidiaries has been accounted for at historical cost as of the beginning of the first period presented in the accompanying unaudited condensed consolidated financial statements.

After the Reorganization, the unaudited condensed consolidated financial statements of the Company include the following entities:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Name of Entity** | **Date of<br> Incorporation** | **Place of<br> Incorporation** | **% of <br> Ownership** | **Principal Activities** |
|  Chanson International | July 26, 2019 | Cayman Islands | Parent, 100% | Investment holding |
|  Deen Global | August 13, 2019 | British Virgin Islands | 100% | Investment holding |
|  Jenyd | September 13, 2019 | Hong Kong | 100% | Investment holding |
|  Xinjiang United Family | August 7, 2009 | PRC | 100% | Consultancy and information technology support; sells bakery products to customers |
|  28 UFG entities | 2012 to 2022 | PRC | VIEs | Sells bakery products to customers |
|  Chanson NY | April 17, 2015 | New York | 100% | Holding company. Consultancy and information technology support |
|  Chanson 23rd Street | December 18, 2015 | New York | 100% | Eat-in services and bakery products and beverage products |
|  Chanson Greenwich | February 20, 2020 | New York | 100% | Eat-in services and bakery products and beverage products |
|  Chanson Management LLC | April 21, 2021 | Delaware | 100% | Consultancy and management support |
|  Chanson 3rd Ave | August 5, 2021 | New York | 100% | Newly incorporated – not in operation yet |
|  Chanson Broadway | March 21, 2022 | New York | 100% | Newly incorporated – not in operation yet |

---

 <u>The VIE contractual arrangements</u>

The UFG entities are controlled by the Company through contractual arrangements in lieu of direct equity ownership by the Company or any of its subsidiaries.

A VIE is an entity that either has a total equity investment that is insufficient to finance its activities without additional subordinated financial support, or whose equity investors lack the characteristics of a controlling financial interest, such as through voting rights, right to receive the expected residual returns of the entity, or obligation to absorb the expected losses of the entity. The variable interest holder, if any, that has a controlling financial interest in a VIE is deemed to be the primary beneficiary of, and must consolidate, the VIE.

 **CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES**

 **NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

 **NOTE 1 — ORGANIZATION AND BUSINESS DESCRIPTION (continued)**

 ***Reorganization (continued)***

Xinjiang United Family is deemed to have a controlling financial interest in and be the primary beneficiary of the UFG entities because it has both of the following characteristics:

● The power to direct activities at the UFG entities that most significantly impact such entities' economic performance, and

● The obligation to absorb losses of, and the right to receive benefits from, the UFG entities that could potentially be significant to such entities.

Pursuant to the contractual arrangements with the UFG entities, the UFG entities pay service fees equal to all of their net profit after tax payments to Xinjiang United Family. At the same time, Xinjiang United Family is obligated to absorb all of their losses. Such contractual arrangements are designed so that the operation of the UFG entities is for the benefit of Xinjiang United Family and, ultimately, the Company.

 <u>Risks associated with the VIE structure</u>

The Company believes that the contractual arrangements with the UFG entities and their respective owners are in compliance with PRC laws and regulations and are legally enforceable. However, uncertainties in the PRC legal system could limit the Company's ability to enforce such contractual arrangements. If the legal structure and contractual arrangements were found to be in violation of PRC laws and regulations, the PRC government could:

● revoke the business and operating licenses of the Company's PRC subsidiary and the UFG entities;

● discontinue or restrict the operations of any related-party transactions between the Company's PRC subsidiary and the UFG entities;

● limit the Company's business expansion in China by way of entering into contractual arrangements;

● impose fines or other requirements with which the Company's PRC subsidiary and the UFG entities may not be able to comply;

  ****

● require the Company or the Company's PRC subsidiary and the UFG entities to restructure the relevant ownership structure or operations; or

● restrict or prohibit the Company's use of the proceeds from its public offering to finance the Company's business and operations in China.

The Company's ability to conduct its consulting services business may be negatively affected if the PRC government were to carry out of any of the aforementioned actions. As a result, the Company may not be able to consolidate the UFG entities in its unaudited condensed consolidated financial statements as it may lose the ability to direct activities of the UFG entities and receive economic benefits from the UFG entities. The Company, however, does not believe such actions would result in the liquidation or dissolution of the Company and its PRC subsidiary and the UFG entities. The financial position, operation, and cash flow of the UFG entities are material to total assets and liabilities presented on the unaudited condensed consolidated balance sheets and revenue, expenses, and net income presented on the unaudited condensed consolidated statements of operations and other comprehensive income (loss) as well as the cash flows from operating, investing, and financing activities presented on the unaudited condensed consolidated statements of cash flows. The Company did not provide any financial support to the UFG entities for the six months ended June 30, 2022 and 2021. The Company had no contractual obligation to provide financial support to the VIEs as of June 30, 2022. The amount of the recognized and unrecognized revenue-producing assets held by the VIEs was $1,611,962, including $349,499 of bakery production equipment, $67,968 of office equipment and furniture, $1,068,976 of leasehold improvement, and $125,519 of construction in progress, with the accumulated depreciation of $763,237, so net of these property, plant, and equipment was $848,725 as of June 30, 2022. The amount of the recognized and unrecognized revenue-producing assets held by the VIEs was $1,692,838, including $323,931 of bakery production equipment, $63,643 of office equipment and furniture, and $1,305,264 of leasehold improvement, with the accumulated depreciation of $762,803, so net of these property, plant, and equipment was $930,035 as of December 31, 2021. The following financial statement amounts and balances of the UFG entities were included in the accompanying unaudited condensed consolidated financial statements after elimination of intercompany transactions and balances:

---

| | | |
|:---|:---|:---|
|  | **June 30,** <br> **2022**  | **December 31, <br> 2021** |
| Current assets | $6687702 | $6574394 |
| Non-current assets | 4734863 | 6191804 |
| Total assets | $11422565 | $12766198 |
| Current liabilities | $5369282 | $6619273 |
| Non-current liabilities | 1781806 | 2362218 |
| Total liabilities | $7151088 | $8981491 |

---

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended<br> June 30,** | **For the Six Months Ended<br> June 30,** |
|  | **2022** | **2021** |
| Net revenue | $3754826 | $3830039 |
| Net income | $959198 | $854712 |

---

 **CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES**

 **NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

 **NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

 ***Basis of presentation and principles of consolidation***

  ****

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and pursuant to the rules and regulations of the Securities Exchange Commission and have been consistently applied. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the fiscal years ended December 31, 2021 and 2020. Operating results for the six-month period ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

The accompanying unaudited condensed consolidated financial statements include the financial statements of the Company and its subsidiaries and the VIEs. All intercompany balances and transactions are eliminated upon consolidation.

 ***Uses of estimates***

  ****

In preparing the unaudited condensed consolidated financial statements in conformity with U.S. GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. These estimates are based on information as of the date of the unaudited condensed consolidated financial statements. Significant estimates required to be made by management include, but are not limited to, the valuation of accounts receivable, useful lives of property and equipment, the recoverability of long-lived assets, provision necessary for contingent liabilities, and revenue recognition. Actual results could differ from those estimates.

 ***Cash and cash equivalents***

Cash includes currency on hand and deposits held by banks that can be added or withdrawn without limitation. The Company maintains a significant amount of its bank accounts in the PRC. The Company considers all highly liquid investment instruments with an original maturity of three months or less from the date of purchase to be cash equivalents.

 ***Restricted cash***

Restricted cash represents funds set aside and placed with the bank and serves as the security deposit which is not available to fund general liquidity needs of the Company.

 ***Accounts receivable, net***

Accounts receivable are recognized and carried at original invoiced amount less an estimated allowance for uncollectible accounts.

The Company determines the adequacy of reserves for doubtful accounts based on individual account analysis and historical collection trend. The Company establishes a provision for doubtful receivables when there is objective evidence that the Company may not be able to collect amounts due. The allowance is based on management's best estimate of specific losses on individual exposures, as well as a provision on historical trends of collections. The provision is recorded against accounts receivable balances, with a corresponding charge recorded in the consolidated statements of operations and comprehensive income (loss). Actual amounts received may differ from management's estimate of credit worthiness and the economic environment. Delinquent account balances are written-off against the allowance for doubtful accounts after management has determined that the likelihood of collection is not probable. As of June 30, 2022 and December 31, 2021, there was no allowance recorded as the Company considers all of the accounts receivable fully collectible.

  **

 ***Leases***

  **

The Company follows FASB ASC No. 842, *Leases* ("Topic 842"). The Company leases office spaces, bakery store facilities, employee dormitories, and a vehicle, which are classified as operating leases in accordance with Topic 842. Under Topic 842, lessees are required to recognize the following for all leases (with the exception of short-term leases, usually with initial term of 12 months or less) on the commencement date: (i) lease liability, which is a lessee's obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) right-of-use ("ROU") asset, which is an asset that represents the lessee's right to use, or control the use of, a specified asset for the lease term.

At the commencement date, the Company recognizes the lease liability at the present value of the lease payments not yet paid, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company's incremental borrowing rate for the same term as the underlying lease. The ROU asset is recognized initially at cost, which primarily comprises the initial amount of the lease liability, plus any initial direct costs incurred, consisting mainly of brokerage commissions, less any lease incentives received. All ROU assets are reviewed for impairment annually. There was no impairment for ROU lease assets as of June 30, 2022 and December 31, 2021.

 **CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES**

 **NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

 **NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**

 ***Leases (continued)***

In response to the large volume of anticipated lease concessions to be granted related to the effects of the COVID-19 pandemic, and the resultant expected cost and complexity of applying the lease modification requirements in Topic 842, the FASB issued Staff Q&A—Topic 842 and Topic 840: *Accounting for Lease Concessions Related to the Effects of the COVID-19 Pandemic* in April 2020 as interpretive guidance to provide clarity in response to the crisis. The FASB staff indicated that it would be acceptable for entities to make an election to account for lease concessions related to the effects of the COVID-19 pandemic consistent with how they would be accounted for as though enforceable rights and obligations for those concessions existed in the original contract. Consequently, for such lease concessions, an entity will not need to reassess each existing contract to determine whether enforceable rights and obligations for concessions exist and an entity can elect to apply or not to apply the lease modification guidance in Topic 842 to those contracts. The election is available for concessions related to the effects of the COVID-19 pandemic that result in the total payments required by the modified contract being substantially the same as or less than total payments required by the original contract.

Due to the COVID-19 pandemic, the Company renegotiated the leases for some of its PRC stores and New York stores. Based on the nature of the agreements reached with the landlords, the Company has accounted for rent concessions as if they were part of the enforceable rights and obligations of the existing lease contracts and did not account for the concessions as lease modifications. As the date of this report, the Company has received a total of lease concessions amounting to $860,575, and among which, $109,719 and $45,831 was received during the six months ended June 30, 2022 and 2021, respectively. The Company accounted for the concession as negative variable lease payments with a corresponding reduction in the lease liability. The Company has continued to recognize lease expenses on a straight-line basis for its leases over the related lease terms.

  ****

 ***Inventories***

Inventories of the Company consist of ingredient materials, finished goods, packing materials, and other materials. Inventories are stated at the lower of cost or net realizable value, on a weighted average basis. Costs include the cost of ingredient materials, direct labor, and related production overhead. Any excess of the cost over the net realizable value of each item of inventories is recognized as a provision for diminution in the value of inventories. Net realizable value is the estimated selling price in the normal course of business less any costs to complete and sell products. The Company periodically evaluates inventories for their net realizable value adjustments, and reduces the carrying value of those inventories that are obsolete or in excess of the forecasted usage to their estimated net realizable value based on various factors including aging and expiration dates, as applicable, taking into consideration historical and expected future product sales. For the six months ended June 30, 2022 and 2021, no inventory reserve was recorded because no slow-moving, obsolete, or damaged inventory was identified.

 ***Property and equipment***

  ****

Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization of property and equipment are provided using the straight-line method over their expected useful lives, as follows:

---

| | |
|:---|:---|
|  | **Useful life** |
| Bakery production equipment | 5-8 years |
| Office equipment and furniture | 3-5 years |
| Transportation vehicles | 5 years |
| Leasehold improvement | Lesser of useful life and lease term |

---

Expenditures for repair and maintenance, which do not materially extend the useful lives of the assets, are charged to expenses as incurred. Expenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized. The cost and related accumulated depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the consolidated statements of operations and comprehensive income (loss) in other income or expenses.

  ****

 ***Impairment of long-lived assets***

Long-lived assets with finite lives, primarily property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the estimated cash flows from the use of the asset and its eventual disposition are below the asset's carrying value, then the asset is deemed to be impaired and written down to its fair value. There were no impairments of these assets as of June 30, 2022 and December 31, 2021.

  ****

 **CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES**

 **NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

 **NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**

  ****

 ***Revenue recognition***

The Company follows ASC 606, *Revenue from Contracts with Customers* ("ASC 606"), for revenue recognition. ASC 606 establishes principles for reporting information about the nature, amount, timing, and uncertainty of revenue and cash flows arising from an entity's contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized, as performance obligations are satisfied.

The Company currently generates its revenue through its bakery/café stores as well as through online sales. The Company recognizes revenue from bakery/café sales upon delivery of the related food and other products to the customer and fulfillment of all performance obligations. Revenue is recognized net of any discounts, sales incentives, sales taxes, and value added taxes that are collected from customers and remitted to tax authorities.

 

In the PRC Stores, the Company sells membership cards that do not have an expiration date and from which the Company does not deduct non-usage fees from outstanding card balances. Membership cards are reloadable and redeemable at any of the Company's store locations. Amounts loaded into these cards are initially recorded as deferred revenue. When membership cards are redeemed at stores, the Company recognizes revenue and reduces the deferred revenue. While the Company continues to honor all membership cards presented for payments, management determines the likelihood of redemption to be remote for certain cards with long periods of inactivity ("breakage"), which is five years after the last usage, based upon the Company's historical redemption patterns. Membership card breakage is recorded as revenue in the consolidated statements of operations and comprehensive income (loss). Membership card breakage was immaterial for the six months ended June 30, 2022 and 2021.

In the PRC Stores, the Company maintains a customer loyalty program in which customers earn free cash vouchers when purchasing or reloading membership cards at certain amount. These cash vouchers typically do not expire, except for certain vouchers given out at special occasions, which usually state an expiration date and can only be exchanged for certain seasonal products or specialty cakes. The Company establishes corresponding liabilities in deferred revenue for the membership cards and the free cash vouchers upon issuance. The Company allocates the consideration received proportionately between the membership cards and cash vouchers based on their face values. Revenue is recognized at the allocated amount upon redemption of membership cards and cash vouchers, at which point, the Company delivers products to customers and reduces the deferred revenue. Unredeemed cash vouchers will be recognized as revenue upon their expiration dates, if any, or five years after their issuance if there are no stated expiration dates, when management determines the likelihood of redemption to be remote.

 *Contract balances and remaining performance obligations*

Contract balances typically arise when a difference in timing between the transfer of control to the customer and receipt of consideration occurs. The Company did not have contract assets as of June 30, 2022 and December 31, 2021. The Company's contract liabilities, which are reflected in its unaudited condensed consolidated balance sheets as deferred revenue of $6,791,175 and $6,051,683 as of June 30, 2022 and December 31, 2021, respectively, consist primarily of customer payments for the membership cards and the fair value of the cash vouchers under the Company's customer loyalty programs. These amounts represent the Company's unsatisfied performance obligations as of the balance sheet dates. The amount of revenue recognized in the six months ended June 30, 2022 and 2021 that was included in the opening deferred revenue was $3,899,040 and $3,347,088, respectively. As of June 30, 2022, the aggregate amount of unredeemed membership cards and cash vouchers was $6,791,175. The Company will recognize revenue when customers redeem the membership cards or cash vouchers in store purchases. Based on the Company's historical experience, a significant portion of the redemption is expected to occur during the first two years after June 30, 2022 and the remaining between the third and fifth year.

 *Disaggregation of revenue*

 

The Company disaggregates its revenue by geographic areas, as the Company believes it best depicts how the nature, amount, timing, and uncertainty of the revenue and cash flows are affected by economic factors. The Company's disaggregation of revenue for the six months ended June 30, 2022 and 2021 is disclosed in Note 14 of the unaudited condensed consolidated financial statements. ****

 **CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES**

 **NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

 **NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**

  ****

 ***Fair value of financial instruments***

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

● Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

● Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted market prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.

● Level 3 — inputs to the valuation methodology are unobservable.

Unless otherwise disclosed, the fair value of the Company's financial instruments, including cash and cash equivalents, accounts receivable, net, prepaid expenses and other current assets, short-term bank loans, accounts payable, due to related party, taxes payable, operating lease liabilities, current and other current liabilities, approximates the fair value of the respective assets and liabilities as of June 30, 2022 and December 31, 2021 based upon the short-term nature of the assets and liabilities. The fair value of longer-term operating lease liabilities approximates their recorded values as their stated interest rates approximate the rates currently available.

  ****

 ***Foreign currency translation***

The functional currency of the Company's PRC subsidiary and the UFG entities is the Chinese Yuan ("RMB") and the functional currency of the Company's U.S. subsidiaries is the U.S. Dollars ("US$"). RMB amounts in the Company's unaudited condensed consolidated financial statements have been translated into the reporting currency US$. Assets and liabilities of the Company are translated at the exchange rate at each reporting period end date. Equity is translated at historical rates. Income and expense accounts are translated at the average rate of exchange during the reporting period. The resulting translation adjustments are reported under other comprehensive income (loss). Because cash flows are translated based on the average translation rate, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheets. Gains and losses resulting from the translations of foreign currency transactions and balances are reflected in the results of operations.

RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into US$ at the rates used in translation.

The following table outlines the currency exchange rates that were used in creating the unaudited condensed consolidated financial statements in this report:

---

| | | | |
|:---|:---|:---|:---|
|  | **For the<br> Six Months Ended<br> June 30,** | **For the<br> Six Months Ended<br> June 30,** | **For the<br> Year Ended<br> December 31,** |
|  | **2022** | **2021** | **2021** |
| Period/Year-end spot rate | US$1=RMB6.6981 | US$1=RMB6.4579 | US$1=RMB6.3614 |
| Average rate | US$1=RMB6.4791 | US$1=RMB6.4717 | US$1=RMB6.4490 |

---

 ***Income taxes***

  ****

The Company accounts for current income taxes in accordance with the laws of the relevant tax authorities. Deferred income taxes are recognized when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the unaudited condensed consolidated financial statements. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

An uncertain tax position is recognized as a benefit only if it is "more likely than not" that the tax position would be sustained in a tax examination. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the "more likely than not" test, no tax benefit is recorded. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. No penalties or interest relating to income taxes were incurred during the six months ended June 30, 2022 and 2021. The Company does not believe there was any uncertain tax provision at June 30, 2022 and December 31, 2021.

 **CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES**

 **NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

 **NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**

 ***Income taxes (continued)***

The Company's operating subsidiary in China is subject to the income tax laws of the PRC. The Company's operating subsidiary in United States is subject to the tax law of the United States. As of June 30, 2022, the tax years ended December 31, 2017 through December 31, 2021 for the Company's PRC subsidiary remain open for statutory examination by PRC tax authorities, and the tax years ended December 31, 2019 through December 31, 2021 for the Company's United States subsidiary remain open for statutory examination by U.S. tax authorities.

 ***Value added tax ("VAT")***

The Company's subsidiary Xinjiang United Family and its three branch offices are general tax payers. The applicable VAT rate is 13% based on the Chinese tax law. VAT is reported as a deduction to revenue when incurred. Entities that are VAT general taxpayers are allowed to offset qualified input VAT paid to suppliers against their output VAT liabilities. The UFG entities were formed as individually-owned businesses, which are generally subject to a lower VAT rate of 3% and the local PRC tax authority has the jurisdiction to assess and determine their VAT obligation or exemption on a case-by-case basis. Before April 1, 2021, 16 of the UFG entities were exempted from paying VAT while nine of these UFG entities were subject to VAT rate of 3% as determined by the local tax authority. From April 1, 2021 to December 31, 2022, based on the new tax regulation, individually-owned businesses whose monthly deemed Taxable Net Income ("TNI") is less than RMB150,000 are exempted from paying VAT. All but one of the UFG entities are currently exempted from paying VAT, since the deemed TNI of each of these UFG entities is currently less than RMB150,000. Their VAT eligibility is subject to periodical reassessment, and they may lose or regain the exemption status as determined by the tax authorities on a case-by-case basis.

 ***Earnings per share***

The Company computes earnings per share ("EPS") in accordance with ASC 260, *Earnings per Share* ("ASC 260"). ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average ordinary shares outstanding for the period. Diluted presents the dilutive effect on a per share basis of potential ordinary shares (e.g., convertible securities, options, and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential ordinary shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. As of June 30, 2022 and December 31, 2021, there were no dilutive shares.

 ***Comprehensive income (loss)***

Comprehensive income (loss) consists of two components, net income and other comprehensive income (loss). The foreign currency translation gain (loss) resulting from the translation of the financial statements expressed in RMB to US$ is reported in other comprehensive income (loss) in the unaudited condensed consolidated statements of operations and comprehensive income (loss).

 ***Risks and uncertainties***

 *Political and economic risk*

 

The operations of the Company are located in the PRC and United States. Accordingly, the Company's business, financial condition, and results of operations may be influenced by political, economic, and legal environments in the PRC and United States, as well as by the general state of the PRC and United States economy. The Company's results may be adversely affected by changes in the political, regulatory, and social conditions in the PRC and United States. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations including its organization and structure disclosed in Note 1, such experience may not be indicative of future results.

 

 *Foreign currency exchange risk*

A majority of the Company's revenue and expense transactions are denominated in RMB and most of the Company and its subsidiaries' assets and liabilities are denominated in RMB. RMB is not freely convertible into foreign currencies. In the PRC, certain foreign exchange transactions are required by law to be transacted only by authorized financial institutions at exchange rates set by the People's Bank of China ("PBOC"). Remittances in currencies other than RMB by the Company in China must be processed through the PBOC or other China foreign exchange regulatory bodies which require certain supporting documentation in order to effect the remittance.

 **CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES**

 **NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

 **NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**

 ***Risks and uncertainties (continued)***

 *Credit risk*

 

As of June 30, 2022 and December 31, 2021, $240,411 and $3,647,342 of the Company's cash was on deposit at financial institutions in the PRC where there currently is no rule or regulation requiring such financial institutions to maintain insurance to cover bank deposits in the event of bank failure. As of June 30, 2022 and December 31, 2021, $97,004 and $162,018 of the Company's cash was on deposit at financial institutions in the U.S. which were insured by the Federal Deposit Insurance Corporation subject to certain limitations. The Company has not experienced any losses in such accounts.

For the six months ended June 30, 2022 and 2021, the Company's substantial assets were located in the PRC and the Company's substantial revenue was derived from its subsidiary and the UFG entities located in the PRC.

  ****

Accounts receivable are typically unsecured and derived from revenue earned from customers, thereby exposed to credit risk. The risk is mitigated by the Company's assessment of its customers' creditworthiness and its ongoing monitoring of outstanding balances.

 *Concentrations*

No single customer accounted for more than 10% of the Company's revenue for the six months ended June 30, 2022 and 2021.

As of June 30, 2022, no customer accounted for more than 10% of the Company's total accounts receivable balance. As of December 31, 2021, one customer accounted for 11.6% of the Company's total accounts receivable balance.

For the six months ended June 30, 2022, no supplier accounted for more than 10% of the Company's total purchases, respectively. For the six months ended June 30, 2021, one supplier accounted for 14.8% of the Company's total purchases, respectively.

  ****

 ***Recent accounting pronouncements***

In December 2019, the FASB issued ASU No. 2019-12, *Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes*, as part of its initiative to reduce complexity in accounting standards (the "Simplification Initiative"). The objective of the Simplification Initiative is to identify, evaluate, and improve areas of U.S. GAAP for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to users of financial statements. The specific areas of potential simplification in this ASU were submitted by stakeholders as part of the Simplification Initiative. For public business entities, the amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The Company adopted this ASU on January 1, 2021 and the adoption of this ASU did not have a material impact on its consolidated financial statements.

Except for the above-mentioned pronouncement, there are no new recently issued accounting standards that will have material impact on the Company's unaudited condensed consolidated financial position, statements of operations, and cash flows.

 **NOTE 3 — LIQUIDITY**

As reflected in the unaudited condensed consolidated financial statements, the Company's cash used in operating activities was $359,946 for the six months ended June 30, 2022 as compared to cash provided by operating activities of 780,626 for the same period last year. Total cash and cash equivalents decreased by $3,503,428 and $1,374,932 for the six months ended June 30, 2022 and June 30, 2021, respectively. As of June 30, 2022, negative working capital was approximately $5.8 million, including deferred revenue of approximately $6.8 million, which was reported as current liability, but will not require cash payment in the future. Management expects to spend about $2.7 million when the Company produces and sells the products and realizes the deferred revenue. In addition, the ongoing COVID-19 pandemic may continue to negatively impact the Company's business operations. A resurgence of the COVID-19 outbreak may again give rise to economic downturns and other significant changes in regional and global economic conditions, and negatively affect the Company's ability to execute the sales contract, fulfil customer orders, and collect customer payments timely. As a result, there is a possibility that the Company's revenue and cash flows may underperform in the next 12 months.

 **CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES**

 **NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

 **NOTE 3 — LIQUIDITY (continued)**

In assessing its liquidity, management monitors and analyzes the Company's cash on-hand, its ability to generate sufficient revenue sources and ability to obtain additional financial support in the future, and its operating and capital expenditure commitments. As of June 30, 2022, the Company only had cash of approximately $0.4 million. The future capital expenditure on the central factory construction is expected to be approximately $0.6 million and $0.4 million in the remainder of fiscal year 2022 and in fiscal year 2023, respectively. The management believes that it would be able to make borrowings from banks based on past experience and the Company's good credit history when necessary. Due to the impact from a resurgence of the COVID-19 pandemic in August 2022 in Xinjiang (the "2022 Outbreak"), the Company's revenue was negatively impacted and is expected to decrease slightly in fiscal year 2022 as compared to fiscal year 2021. The Company expects to incur a net loss in fiscal year 2022. However, all of the PRC stores resumed their normal business activities on December 10, 2022 and are expected to recover from the 2022 Outbreak, and the Company expects to open three stores in PRC in fiscal year 2023 and two stores in U.S. in January 2023 and February 2023. In addition, the Company will further implement initiatives to control costs and improve its operating efficiency in fiscal year 2023. Therefore, revenue and net income are expected to increase significantly in fiscal year 2023 as compared to fiscal year 2022. Furthermore, the Company's controlling shareholder, Mr. Gang Li, has made pledges to provide continuous financial support to the Company for at least 12 months from the issuance of the unaudited condensed consolidated financial statements.

Currently, the Company is working to improve its liquidity and capital sources primarily through cash flows from operation, debt financing, and financial support from its principal shareholder. In order to fully implement its business plan and sustain continued growth, the Company may also seek equity financing from outside investors when necessary. Based on the current operating plan, management believes that the above-mentioned measures collectively will provide sufficient liquidity for the Company to meet its future liquidity and capital requirement for at least 12 months from the date the unaudited condensed consolidated financial statements are issued.

 **NOTE 4 — ACCOUNTS RECEIVABLE, NET**

The Company's accounts receivable primarily include balance generated from selling bakery products to local corporate customers, billed but has not been collected as of the balance sheet dates. Accounts receivable consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **June 30,** <br> **2022**  | **December 31,<br> 2021** |
| Accounts receivable | $1985736 | $1134532 |
| Less: allowance for doubtful accounts | - | - |
| Accounts receivable, net | $1985736 | $1134532 |

---

As of the date of the unaudited condensed consolidated financial statements, approximately 74.6%, or $1.5 million, of the June 30, 2022 balance have been subsequently collected. The remaining balance of approximately $1.35 million is expected to be collected before June 30, 2023.

 **NOTE 5 — PREPAID EXPENSES AND OTHER CURRENT ASSETS, NET**

Prepaid expenses and other current assets consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **June 30,** <br> **2022**  | **December 31,<br> 2021** |
| Deposits (1) | $404495 | $- |
| Advance to suppliers (2) | 91975 | 70228 |
| Prepaid expenses (3) | 237642 | 257479 |
| Other receivables (4) | 220842 | 110338 |
| Less: allowance for doubtful accounts | - | - |
| Prepaid expenses and other current assets, net | $954954 | $438045 |

---

(1) Deposits primarily
 represent security deposits paid to landlords for the Company's new PRC stores.

(2) Advance to suppliers primarily consists
 of advance payments paid to suppliers for purchases
 of raw materials for bakery products.

(3) Prepaid expenses primarily
 represent prepaid rental expenses and other miscellaneous expenses for the Company's
 bakery stores.

(4) Other receivables are
 mainly business advances to officers and staffs for business travel and sundry expenses.

 **CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES**

 **NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

 **NOTE 6 — INVENTORIES**

Inventories consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **June 30,** <br> **2022**  | **December 31,<br> 2021** |
| Ingredient materials | $412063 | $418247 |
| Package and other materials | 30814 | 38959 |
| Finished goods | 114108 | 69656 |
| Total inventories | $556985 | $526862 |

---

 **NOTE 7 — LEASES**

The Company leases office spaces, bakery store facilities, employee dormitories and a vehicle under non-cancelable operating leases, with terms ranging from 1 to 15 years. The Company considers those renewal or termination options that are reasonably certain to be exercised in the determination of the lease term and initial measurement of ROU assets and lease liabilities. Lease expenses are recognized on a straight-line basis over the lease term. Leases with initial term of 12 months or less are not recorded on the balance sheet.

The Company determines whether a contract is or contains a lease at inception of the contract and whether that lease meets the classification criteria of a finance or operating lease. When available, the Company uses the rate implicit in the lease to discount lease payments to present value; however, most of the Company's leases do not provide a readily determinable implicit rate. Therefore, the Company discounts lease payments based on an estimate of its incremental borrowing rate.

The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The table below presents the operating lease related assets and liabilities recorded on the balance sheets.

---

| | | |
|:---|:---|:---|
|  | **June 30,** <br> **2022**  | **December 31,<br> 2021** |
| ROU lease assets | $15277484 | $11644192 |
| Operating lease liabilities – current | $1695597 | $1622642 |
| Operating lease liabilities – non-current | 13539959 | 9846224 |
| Total operating lease liabilities | $15235556 | $11468866 |

---

The weighted average remaining lease terms and discount rates for all of operating leases were as follows as of June 30, 2022 and December 31, 2021:

---

| | | |
|:---|:---|:---|
|  | **June 30,** <br> **2022**  | **December 31,<br> 2021** |
| Remaining lease term and discount rate: |  |  |
| Weighted average remaining lease term (years) | 8.73 | 7.22 |
| Weighted average discount rate \* | 4.47% | 4.87% |

---

\* The Company used incremental borrowing rate of 6.98% and 3.75% for its lease contracts in the PRC and United States, respectively.

During the six months ended June 30, 2022 and 2021, the Company incurred total operating lease expenses of $1,524,429 and $1,181,707, respectively.

The following is a schedule, by years, of maturities of lease liabilities as of June 30, 2022:

---

| | |
|:---|:---|
| Remainder of 2022 | $1005201 |
| 2023 | 2269116 |
| 2024 | 2196332 |
| 2025 | 1926583 |
| 2026 | 1792486 |
| Thereafter | 9418200 |
| Total lease payments | 18607918 |
| Less: imputed interest | (3372362) |
| Present value of lease liabilities | $15235556 |

---

 **CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES**

 **NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

 **NOTE 8 — PROPERTY AND EQUIPMENT, NET**

Property and equipment, net, consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **June 30,** <br> **2022**  | **December 31,<br> 2021** |
| Bakery production equipment | $1367393 | $1333182 |
| Automobiles | 62180 | 65471 |
| Office equipment and furniture | 661035 | 509426 |
| Leasehold improvements | 4364478 | 4307500 |
| Construction in progress\* | 1750533 | 1337565 |
| Subtotal | 8205619 | 7553144 |
| Less: accumulated depreciation | (2503807) | (2105426) |
| Property and equipment, net | $5701812 | $5447718 |

---

\* The Company constructed a new central factory in Urumqi, Xinjiang, to expand the production capacity of its PRC Stores. The investment budget for the new central factory is approximately RMB18.0 million (approximately $2.7 million) after VAT deduction. The construction has two stages. The first stage includes: 1) construction and renovation that cost approximately RMB13.0 million (approximately $1.9 million); 2) installation of production equipment of approximately RMB1.4 million (approximately $0.2 million); and 3) miscellaneous projects of approximately RMB1.1 million (approximately $0.2 million). The first stage of the construction was completed in June 2022, and the Company started production in the new central factory in August 2022. The second stage is expected to start in 2023, and includes construction of two new production lines of approximately RMB2.5 million (approximately $0.4 million). As of June 30, 2022, total cost incurred for the construction was $1,750,533 (approximately RMB11.7 million).

Depreciation expenses were $351,395 and $288,479 for the six months ended June 30, 2022 and 2021, respectively.

In connection with the Company's RMB10 million short-term loans from Huaxia Bank as of December 31, 2021, the Company pledged its property and equipment with net book values of $319,832 as collateral for these loans (see Note 9).

 **NOTE 9 — SHORT-TERM BANK LOANS**

On May 31, 2021, Xinjiang United Family entered into a new loan agreement with Huaxia Bank to borrow RMB10 million ($1,559,314) as working capital for a year, with a maturity date of May 31, 2022. The loan bore a fixed interest rate of 5.54%. The loan was repaid in full upon maturity. The loan was guaranteed by Ms. Baolin Wang, the legal representative of Xinjiang United Family, and XJ Financing Guaranty. In order for XJ Financing Guaranty to endorse the guarantee with the bank, the Company's controlling shareholder Mr. Gang Li and his wife, Ms. Ying Xiong, jointly signed a personal guarantee agreement with XJ Financing Guaranty and pledged their residential property as collateral to XJ Financing Guaranty. In addition, Xinjiang United Family pledged all its equipment in the PRC as collateral to XJ Financing Guaranty. Three affiliated entities controlled by Mr. Gang Li also signed guarantee agreements with XJ Financing Guaranty.

The Company incurred interest expense of $38,715 and $50,944 for the six months ended June 30, 2022 and 2021, respectively.

 **NOTE 10 — RELATED PARTY TRANSACTIONS**

***a. Due to a related party***

As of June 30, 2022, due to a related party of $47,507 primarily represented advances provided by Mr. Gang Li, Chairman of the Company, to fund the Company's operations. These payables were unsecured, non-interest bearing, and due on demand. All expenses and liabilities were paid by Mr. Gang Li on behalf of the Company, and recorded in the Company's unaudited condensed consolidated financial statements in a timely manner. The outstanding amount is expected to be repaid before December 31, 2022.

***b. Other related party transaction***s

Several related parties provided guarantees in connection with the Company's loans borrowed from Huaxia Bank (see Note 9).

 **CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES**

 **NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

 **NOTE 11 — TAXES**

**(a) Corporate Income Taxes ("CIT")**

 *<u>Cayman Islands</u>*

Under the current tax laws of the Cayman Islands, the Company is not subject to tax on its income or capital gains. In addition, no Cayman Islands withholding tax will be imposed upon the payment of dividends by the Company to its shareholders.

 

 *<u>British Virgin Islands</u>*

Deen Global is incorporated in the BVI as an offshore holding company and is not subject to tax on income or capital gain under the laws of BVI.

 <u>Hong Kong</u>

Jenyd is incorporated in Hong Kong and is subject to profit taxes in Hong Kong at a rate of 16.5%. However, Jenyd did not generate any assessable profits arising in or derived from Hong Kong for the six months ended June 30, 2022 and 2021, and accordingly no provision for Hong Kong profits tax was made in these periods.

 <u>PRC</u>

Under the Enterprise Income Tax ("EIT") Law of the PRC, domestic enterprises and Foreign Investment Enterprises (the "FIE") are usually subject to a unified 25% enterprise income tax rate while preferential tax rates, tax holidays, or exemptions may be granted on a case-by-case basis. The Company's subsidiary Xinjiang United Family and its three branch offices are incorporated in the PRC. During the six months ended June 30, 2022 and 2021, Xinjiang United Family and all its three branch offices qualified as small-scaled minimal profit enterprises. Based on the EIT Law of PRC, and according to the Announcement on Issues Related to the Implementation of Inclusive Income Tax Reduction and Exemption Policy for Small and Low Profit Enterprises issued by the State Administration of Taxation on January 18, 2019, from January 1, 2019 to December 31, 2021, once an enterprise meets certain requirements and is identified as a small-scale minimal profit enterprise, the portion of its taxable income not more than RMB1 million is subject to a reduced rate of 5% and the portion between RMB1 million and RMB3 million is subject to a reduced rate of 10%. Furthermore, according to the Announcement on Implementing the Preferential Income Tax Policies for Small-Scale Minimal Profit Enterprise and Individually-Owned Businesses on April 2, 2021, the portion of its taxable income not more than RMB1 million is further reduced to 2.5% during the period from January 1, 2021 to December 31, 2022 and the portion between RMB1 million and RMB3 million remained at a reduced rate of 10%.

The UFG entities are individually-owned businesses, which are not subject to the EIT Law of the PRC, but the Individual Income Tax. The Measures for Individual Income Tax Calculation of Individual Industrial and Commercial Households, or the "Measures," were adopted by the State Administration of Taxation on December 19, 2014 and promulgated on December 27, 2014, and amended on June 15, 2018. According to Article 7 of the Measures, for the income from production and operation of individually-owned businesses, the amount of taxable income shall be the balance of the total income of each tax year after deducting costs, expenses, taxes, losses and other expenditures, and allowable compensation for losses in previous years. Income tax for an individually-owned business can generally be assessed on an actual basis or a deemed basis, which the UFG entities apply. Therefore, income tax for the UFG entities is levied as a fixed-rate income tax at 1% of TNI as assessed by the local tax authority. According to Announcement No. 12 [2021] of the State Taxation Administration, the tax rate is reduced by half to 0.5% during the period from January 1, 2021 to December 31, 2022. For the six months ended June 30, 2022, 13 of these UFG entities were subject to income tax assessed at 0.5% of TNI that ranged from RMB25,000 to RMB180,000 per month. For the six months ended June 30, 2021, 12 of these UFG entities were subject to income tax assessed at 0.5% of TNI that ranged from RMB33,000 to RMB130,000 per month. The rest of these UFG entities were exempted from paying income tax. During the six months ended June 30, 2022 and 2021, the total tax exemption of the UFG entities were $8,558 and $7,640, respectively. As of June 30, 2022, the tax years ended December 31, 2017 through December 31, 2021 for the Company's UFG entities remain open for statutory examination by PRC tax authorities. In addition, the TNI and tax rate of the Company's UFG entities are subject to periodical reassessment by the local tax authority. If the local tax authority determined that income tax for the UFG entities should be levied at a higher TNI or higher tax rate, the Company would be obligated to pay additional income tax for the UFG entities. Along with the continuing growth of business, the Company expects that the tax rates of these UFG entities are likely to increase in the future in the annual assessment based on the past performance.

 **CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES**

 **NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

 **NOTE 11 — TAXES (continued)**

**(a) Corporate Income Taxes ("CIT") (continued)**

 <u>United States</u>

The Company's subsidiaries in the U.S. are subject to a U.S. federal corporate income tax rate of 21%.

The components of the income tax provision were as follows:

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended June 30,** | **For the Six Months Ended June 30,** |
|  | **2022** | **2021** |
| Current tax provision |  |  |
| Cayman Islands | $- | $- |
| BVI |  |  |
| Hong Kong |  |  |
| PRC | 3698 | 7317 |
| United States | - | - |
|  | $3698 | $7317 |
| Deferred tax provision |  |  |
| Cayman Islands | $- | $- |
| BVI |  |  |
| Hong Kong |  |  |
| PRC |  |  |
| United States | - | - |
|  | - | - |
| Income tax provisions | $3698 | $7317 |

---

The Company's deferred tax assets, net were comprised of the following:

---

| | | |
|:---|:---|:---|
|  | **June 30,** <br> **2022**  | **December 31,<br> 2021** |
| Net operating loss | $1978448 | $1802625 |
| Total deferred tax assets | 1978448 | 1802625 |
| Valuation allowance | (1978448) | (1802625) |
| Deferred tax assets, net | $- | $- |

---

The Company's operations in the U.S. incurred a cumulative net operating loss ("NOL") which may reduce future federal taxable income. As of December 31, 2021, the cumulative NOL was $8,583,931. During the six months ended June 30, 2022, the U.S. operations incurred an additional NOL of $837,253, resulting in a cumulative NOL of $9,421,184 as of June 30, 2022, among which approximately $2,882,465 will expire in 2037 and the remaining balance is carried forward indefinitely.

The Company periodically evaluates the likelihood of the realization of deferred tax assets, and reduces the carrying amount of the deferred tax assets by a valuation allowance to the extent it believes a portion will not be realized. Management considers new evidence, both positive and negative, that could affect the Company's future realization of deferred tax assets including its recent cumulative earnings experience, expectation of future income, the carry forward periods available for tax reporting purposes and other relevant factors. The Company determined that it is more likely than not its deferred tax assets could not be realized due to uncertainty on future earnings in the U.S. operations. The Company provided a 100% allowance for its deferred tax assets as of June 30, 2022 and December 31, 2021, respectively.

 **CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES**

 **NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

 **NOTE 11 — TAXES (continued)**

**(a) Corporate Income Taxes ("CIT") (continued)**

Reconciliation of the differences between the income tax provision computed based on PRC statutory income tax rate and the Company's actual income tax provision for the six months ended June 30, 2022 and 2021 are as follows:

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended June 30,** | **For the Six Months Ended June 30,** |
|  | **2022** | **2021** |
| Income tax expense computed based on PRC statutory rate | $56123 | $107500 |
| Favorable tax rate and tax exemption impact in PRC entities (a) | (261738) | (207457) |
| Effect of rate differential for U.S. subsidiaries | 33490 | 17164 |
| Change in valuation allowance | 175823 | 90110 |
| Actual income tax provision | $3698 | $7317 |

---

(a) During
 the six months ended June 30, 2022 and 2021, the Company's subsidiary, Xinjiang United Family, and its three branch offices,
 were subject to a favorable tax rate of 2.5%. For the six months ended June 30, 2022, 13 of these UFG entities were subject to income
 tax assessed at 0.5% of TNI that ranged from RMB25,000 to RMB180,000 per month. For the six months ended June 30, 2021, 12 of these
 UFG entities were subject to income tax assessed at 0.5% of TNI that ranged from RMB33,000 to RMB130,000 per month. The rest of the
 UFG entities were exempted from paying income tax. For the six months ended June 30, 2022 and 2021, the tax saving as the result
 of the favorable tax rates and tax exemption amounted to $261,738 and $207,457, respectively, and per share effect of the favorable
 tax rate and tax exemption was $0.03 and $0.02, respectively.

Taxes payable consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **June 30,** <br> **2022**  | **December 31,<br> 2021** |
| Income tax payable | $803 | $1463 |
| Value added tax payable | 50454 | 4850 |
| Other taxes payable | 32597 | 24526 |
| Total taxes payable | $83854 | $30839 |

---

 **NOTE 12 – SHAREHOLDERS' EQUITY**

  ****

 ***Ordinary shares***

Chanson International was established under the laws of the Cayman Islands on July 26, 2019. The authorized number of ordinary shares was 50,000 shares with par value of $1 per share and 100 ordinary shares were issued, prior to the 1,000-for-1 forward split and the share issuances described below. The issuance of these 100 ordinary shares, and the 1,000-for-1 forward split and the share issuances are considered as a part of the Reorganization of the Company, which was retroactively applied as if the transaction occurred at the beginning of the period presented (see Note 1).

On March 27, 2021, the Company's shareholders and board of directors approved (i) a forward split of the Company's ordinary shares at a ratio of 1,000-for-1 share to increase the authorized ordinary shares from 50,000 shares to 50,000,000 shares and subdivide the 100 ordinary shares of a par value of $1 then outstanding into 100,000 ordinary shares of a par value of $0.001 (the "1,000-for-1 forward split"); (ii) the creation of Class A Ordinary Shares and Class B Ordinary Shares. Holders of Class A Ordinary Shares and Class B Ordinary Shares have the same rights except for voting and conversion rights. In respect of matters requiring a vote of all shareholders, each holder of Class A Ordinary Shares will be entitled to one vote per one Class A Ordinary Share and each holder of Class B Ordinary Shares will be entitled to 10 votes per one Class B Ordinary Share. The Class A Ordinary Shares are not convertible into shares of any other class. The Class B Ordinary Shares are convertible into Class A Ordinary Shares at any time after issuance at the option of the holder on a one-to-one basis; and (iii) issuances of Class A Ordinary Shares and Class B Ordinary Shares to the existing shareholders, to increase the number of total ordinary shares issued and outstanding prior to the completion of this offering from 100,000 to 9,000,000 (the "share issuances"). The Company believes the 1,000-for-1 forward split and the share issuances should be considered as a part of the Reorganization of the Company and accounted for on a retroactive basis pursuant to ASC 260. The Company has retroactively restated all shares and per share data for all periods presented. As a result, the Company had 44,000,000 authorized Class A Ordinary Shares of a par value of $0.001, of which 3,060,000 Class A Ordinary Shares were issued and outstanding as of June 30, 2022 and December 31, 2021, and the Company had 6,000,000 authorized Class B Ordinary Shares of a par value of $0.001, of which 5,940,000 Class B Ordinary Shares were issued and outstanding as of June 30, 2022 and December 31, 2021. In total, the Company had 50,000,000 authorized ordinary shares of a par value of $0.001, of which 9,000,000 were issued and outstanding as of June 30, 2022 and December 31, 2021.

 **CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES**

 **NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

 **NOTE 12 – SHAREHOLDERS' EQUITY (continued)**

 ***Statutory Reserve***

The Company's PRC subsidiary is required to make appropriations to certain reserve funds, comprising the statutory surplus reserve and the discretionary surplus reserve, based on after-tax net income determined in accordance with generally accepted accounting principles of the PRC ("PRC GAAP"). Appropriations to the statutory surplus reserve are required to be at least 10% of the after-tax net income determined in accordance with PRC GAAP until the reserve is equal to 50% of the entity's registered capital. Appropriations to the discretionary surplus reserve are made at the discretion of the Board of Directors. The statutory reserve may be applied against prior year losses, if any, and may be used for general business expansion and production or increase in registered capital, but are not distributable as cash dividends. As of June 30, 2022 and December 31, 2021, the balance of the statutory reserves was $447,231 and $447,231, respectively, which is equal to 50% of the entity's registered capital.

  ****

 ***Restricted net assets***

The Company's PRC subsidiary and the UFG entities are restricted in their ability to transfer a portion of their net assets, equivalent to their statutory reserves and their share capital to the Company in the form of loans, advances, or cash dividends. The payment of dividends by entities organized in China is subject to limitations, procedures, and formalities. Regulations in the PRC currently permit payment of dividends only out of accumulated profits as determined in accordance with accounting standards and regulations in China. As of June 30, 2022 and December 31, 2021, the total restricted net assets amounted to $1,325,631 and $1,325,631, respectively.

 **NOTE 13 – COMMITMENTS AND CONTINGENCIES**

 ***Contingencies***

  ****

From time to time, the Company is a party to various legal actions arising in the ordinary course of business. The Company accrues costs associated with these matters when they become probable and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. As of June 30, 2022 and December 31, 2021, there were no legal claims and litigation against the Company.

 **CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES**

 **NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

 **NOTE 14 – SEGMENT REPORTING**

In accordance with ASC 280, *Segment Reporting*, operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (the "CODM"), or decision making group, in deciding how to allocate resources and in assessing performance. The Company uses the "management approach" in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company's CODM for making operating decisions and assessing performance as the source for determining the Company's reportable segments. Management, including the CODM, reviews operation results by locations. Based on management's assessment, the Company has determined that it has two operating segments, China and the United States.

The following table presents the segment information for the six months ended June 30, 2022 and 2021, respectively:

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Six Months Ended<br> June 30, 2022** | **For the Six Months Ended<br> June 30, 2022** | **For the Six Months Ended<br> June 30, 2022** |
|  | **China** | **United<br> States** | **Total** |
| Revenue | $6711509 | $1832294 | $8543803 |
| Cost of revenue | 3394314 | 1002401 | 4396715 |
| Gross profit | $3317195 | $829893 | $4147088 |
| Net income (loss) | $1058046 | $(837253) | $220793 |
| Interest expense | (37186) | - | (37186) |
| Provision for income tax | 3698 | - | 3698 |
| Depreciation and amortization | $178046 | $173349 | $351395 |
| Capital expenditures | $448386 | $118053 | $566439 |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Six Months Ended<br> June 30, 2021** | **For the Six Months Ended<br> June 30, 2021** | **For the Six Months Ended<br> June 30, 2021** |
|  | **China** | **United<br> States** | **Total** |
| Revenue | $6016271 | $725850 | $6742121 |
| Cost of revenue | 3130792 | 473494 | 3604286 |
| Gross profit | $2885479 | $252356 | $3137835 |
| Net income (loss) | $851779 | $(429094) | $422685 |
| Interest expense, net | (48594) | - | (48594) |
| Provision for income tax | 7317 | - | 7317 |
| Depreciation and amortization | $160928 | $127551 | $288479 |
| Capital expenditures | $11552 | $312049 | $574333 |

---

---

| | | |
|:---|:---|:---|
|  | **June 30,** <br> **2022**  | **December 31,<br> 2021** |
| Total assets: |  |  |
| &nbsp;&nbsp;&nbsp; China | $10284597 | $12625783 |
| &nbsp;&nbsp;&nbsp; United Stated | 16430349 | 12370311 |
| Total assets | $26714946 | $24996094 |
| Total liabilities: |  |  |
| &nbsp;&nbsp; China | $11076133 | $13163745 |
| &nbsp;&nbsp; United Stated | 12842299 | 8997390 |
| Total liabilities | $23918432 | $22161135 |

---

 **CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES**

 **NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

 **NOTE 15 – SUBSEQUENT EVENTS**

Due to the 2022 Outbreak, which resulted in the implementation of significant governmental measures, including lockdowns, closures, quarantines, and travel bans, the operations of the PRC Stores and the production of the PRC Stores' central factory were affected starting from August 10, 2022 and all of the PRC Stores and the central factory were closed between October 5, 2022 and November 30, 2022. All of the PRC Stores and the central factory resumed their normal business activities on December 10, 2022. The Company only managed to generate limited online sales and group sales. Therefore, the Company's business operations and financial results for the second half of the year ending December 31, 2022 are expected to be negatively affected by the 2022 Outbreak.

On December 23, 2022, Xinjiang United Family entered into a new loan agreement with Huaxia Bank to borrow RMB3 million ($447,888) as working capital for a year, with a maturity date of December 23, 2023. The loan bears a fixed interest rate of 3.95%. The loan is guaranteed by Ms. Baolin Wang, the legal representative of Xinjiang United Family, and Urumqi Plastic Surgery Hospital Co., Ltd., a related party that is controlled by the Chairman of the Company.

The Company evaluated the subsequent events through December 15, 2022, which is the date of the issuance of these unaudited condensed consolidated financial statements, and concluded that there are no additional subsequent events except disclosed above that would have required adjustment or disclosure in the unaudited condensed consolidated financial statements.

 **NOTE 16 – CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY**

Pursuant to the requirements of Rules 12-04(a), 5-04(c), and 4-08(e)(3) of Regulation S-X, the condensed financial information of the parent company shall be filed when the restricted net assets of consolidated subsidiaries exceed 25 percent of consolidated net assets as of the end of the most recently completed fiscal year. The Company performed a test on the restricted net assets of consolidated subsidiaries in accordance with such requirements and concluded that it was applicable to the Company as the restricted net assets of the Company's PRC subsidiary and the UFG entities exceeded 25% of the consolidated net assets of the Company. Therefore, the condensed financial statements for the parent company are included herein.

For purposes of the above test, restricted net assets of consolidated subsidiaries and VIEs shall mean that amount of the Company's proportionate share of net assets of consolidated subsidiaries (after intercompany eliminations) which as of the end of the most recent fiscal year may not be transferred to the parent company by subsidiaries and VIEs in the form of loans, advances, or cash dividends without the consent of a third party.

The condensed financial information of the parent company has been prepared using the same accounting policies as set out in the Company's unaudited condensed consolidated financial statements except that the parent company used the equity method to account for investment in its subsidiaries and VIEs. Such investment is presented on the condensed balance sheets as "Investment in subsidiaries and VIEs" and the respective profit or loss as "Equity in earnings of subsidiaries and VIEs" on the condensed statements of operations and comprehensive income (loss).

The footnote disclosures contain supplemental information relating to the operations of the Company and, as such, these statements should be read in conjunction with the notes to the unaudited condensed consolidated financial statements of the Company. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted.

The Company did not pay any dividend for the periods presented. As of June 30, 2022 and December 31, 2021, there were no material contingencies, significant provisions for long-term obligations, or guarantees of the Company, except for those which have been separately disclosed in the unaudited condensed consolidated financial statements, if any.

 **CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES**

 **NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

 **NOTE 16 – CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY (continued)**

 **CHANSON INTERNATIONAL HOLDING**

 **PARENT COMPANY BALANCE SHEETS**

---

| | | |
|:---|:---|:---|
|  | **June 30,<br> 2022** | **December 31,<br> 2021** |
| ASSETS |  |  |
| **Current assets** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intercompany receivable | $9000 | $9000 |
| Total current assets | 9000 | 9000 |
| **Non-current assets** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss from investment in subsidiaries | $(4125279) | $(4346072) |
| &nbsp;&nbsp;&nbsp; Total assets | $(4116279) | $(4337072) |
| LIABILITIES AND SHAREHOLDERS' DEFICIT |  |  |
| LIABILITIES | $- | $- |
| COMMITMENTS AND CONTINGENCIES |  |  |
| SHAREHOLDERS' DEFICIT |  |  |
| &nbsp;&nbsp;&nbsp; Ordinary shares, $0.001 par value, 50,000,000 shares authorized; 9,000,000 shares issued and outstanding as of June 30, 2022 and December 31, 2021: |  |  |
| &nbsp;&nbsp;&nbsp; Class A ordinary share, $0.001 par value, 44,000,000 shares authorized; 3,060,000 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively | 3060 | 3060 |
| &nbsp;&nbsp;&nbsp; Class B ordinary share, $0.001 par value, 6,000,000 shares authorized; 5,940,000 shares issued and outstanding as of June 30, 2022 and December 31, 2021 | 5940 | 5940 |
| &nbsp;&nbsp;&nbsp; Additional paid-in capital |  |  |
| &nbsp;&nbsp;&nbsp; Accumulated deficit | (4125279) | $(4346072) |
| &nbsp;&nbsp;&nbsp; Accumulated other comprehensive income | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total shareholders' deficit | (4116279) | $(4337072) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities and shareholders' deficit | $(4116279) | $(4337072) |

---

 **CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES**

 **NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

 **NOTE 16 – CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY (continued)**

 **CHANSON INTERNATIONAL HOLDING**

 **PARENT COMPANY STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME**

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended June 30,** | **For the Six Months Ended June 30,** |
|  | **2022** | **2021** |
| EQUITY IN EARNINGS OF SUBSIDIARIES AND VIES | $220793 | $422685 |
| NET INCOME | 220793 | 422685 |
| FOREIGN CURRENCY TRANSLATION ADJUSTMENTS | - | 26788 |
| COMPREHENSIVE INCOME | $220793 | 449473 |

---

 **CHANSON INTERNATIONAL HOLDING**

 **PARENT COMPANY STATEMENTS OF CASH FLOWS**

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended June 30,** | **For the Six Months Ended June 30,** |
|  | **2022** | **2021** |
| CASH FLOWS FROM OPERATING ACTIVITIES: |  |  |
| &nbsp;&nbsp;&nbsp; Net income | $220793 | 422685 |
| &nbsp;&nbsp;&nbsp; Adjustments to reconcile net cash flows from operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Equity in loss of subsidiaries and VIEs | (220793) | (422685) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash used in operating activities | - | - |
| CHANGES IN CASH |  |  |
| CASH, beginning of period | - | - |
| CASH, end of period | $- | $- |

---

Until [ ] (the 25th day after the date of this prospectus), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

 ***3,750,000 Class A Ordinary Shares***

 ****

![](image_028.jpg)

**Chanson International Holding** 

 **EF HUTTON**

division of Benchmark Investments, LLC

Prospectus dated [●]

**PART II**

**INFORMATION NOT REQUIRED IN PROSPECTUS**

**ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.**

The Cayman Islands law does not limit the extent to which a company's articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime. Our amended and restated articles of association, which will become effective upon or before completion of this offering, provide that, to the extent permitted by law, we shall indemnify each existing or former secretary, director (including alternate director), and any of our other officers (including an investment adviser or an administrator or liquidator) and their personal representatives against:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) all actions, proceedings, costs, charges, expenses, losses, damages, or liabilities incurred or sustained by the existing or former director (including alternate director), secretary, or officer in or about the conduct of our business or affairs or in the execution or discharge of the existing or former director (including alternate director)'s, secretary's, or officer's duties, powers, authorities or discretions; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) without limitation to paragraph (a) above, all costs, expenses, losses, or liabilities incurred by the existing or former director (including alternate director), secretary, or officer in defending (whether successfully or otherwise) any civil, criminal, administrative or investigative proceedings (whether threatened, pending or completed) concerning us or our affairs in any court or tribunal, whether in the Cayman Islands or elsewhere.

No such existing or former director (including alternate director), secretary, or officer, however, shall be indemnified in respect of any matter arising out of his own dishonesty.

To the extent permitted by law, we may make a payment, or agree to make a payment, whether by way of advance, loan or otherwise, for any legal costs incurred by an existing or former director (including alternate director), secretary, or any of our officers in respect of any matter identified in above on condition that the director (including alternate director), secretary, or officer must repay the amount paid by us to the extent that it is ultimately found not liable to indemnify the director (including alternate director), the secretary or that officer for those legal costs.

Pursuant to indemnification agreements, the form of which is filed as Exhibit 10.2 to this registration statement, we will agree to indemnify our directors and officers against certain liabilities and expenses incurred by such persons in connection with claims made by reason of their being such a director or officer.

The Underwriting Agreement, the form of which will be filed as Exhibit 1.1 to this registration statement, will also provide for indemnification of us and our officers and directors.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

**ITEM 7. RECENT SALES OF UNREGISTERED SECURITIES.**

During the past three years, we have issued the following securities which were not registered under the Securities Act. We believe that each of the following issuance was exempt from registration under the Securities Act in reliance on Regulation D under the Securities Act or pursuant to Section 4(2) of the Securities Act regarding transactions not involving a public offering or in reliance on Regulation S under the Securities Act regarding sales by an issuer in offshore transactions. No underwriters were involved in these issuances of securities.

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Securities/Purchaser** | **Date of Issuance** | **Number of<br> Securities\*** |  | **Consideration** |
| **Ordinary Shares\*\*** |  |  |  |  |
| Danton Global Limited | July 26, 2019 | 93000 |  | $93 |
| Haily Global Limited | July 26, 2019 | 3000 |  | $3 |
| Yetta Global Limited | July 26, 2019 | 2000 |  | $2 |
| Yvan Global Limited | July 26, 2019 | 2000 |  | $2 |
| **Class A Ordinary Shares** |  |  |  |  |
| Danton Global Limited | March 27, 2021 | 2610000 |  | $2610 |
| Yetta Global Limited | March 27, 2021 | 178000 |  | $178 |
| Yvan Global Limited | March 27, 2021 | 178000 |  | $178 |
| **Class B Ordinary Shares** |  |  |  |  |
| Danton Global Limited | March 27, 2021 | 5400000 |  | $5400 |
| Haily Global Limited | March 27, 2021 | 267000 |  | $267 |
| C&C Capital Investments LLC | March 27, 2021 | 267000 | \*\*\* | $267 |

---

\* The number of securities reflects a 1,000-for-1 forward split of our ordinary shares approved by our shareholders and board of directors on March 27, 2021. <br>

\*\* On March 27, 2021, our shareholder approved the re-designation of 90,000 of our issued ordinary shares held by Danton Global Limited into 90,000 Class A Ordinary Shares, 2,000 of our issued ordinary shares held by Yetta Global Limited into 2,000 Class A Ordinary Shares, 2,000 of our issued ordinary shares held by Yvan Global Limited into 2,000 Class A Ordinary Shares, and 3,000 of our issued ordinary shares held by Haily Global Limited into 3,000 Class B Ordinary Shares.

\*\*\* Transferred to Danton Global Limited on September 23, 2022.

**ITEM 8. *EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.***

**(a)** **Exhibits** 

See Exhibit Index beginning on page II-5 of this registration statement.

**(b)** **Financial Statement Schedules** 

Schedules have been omitted because the information required to be set forth therein is not applicable or is shown in the Consolidated Financial Statements or the Notes thereto.

**ITEM 9. *UNDERTAKINGS.***

The undersigned registrant hereby undertakes to provide to the Underwriter at the closing specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the Underwriter to permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described in Item 6, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant under Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) For the purpose of determining liability under the Securities Act to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) For the purpose of determining any liability of the registrant under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

**SIGNATURES**

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-1 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Urumqi, People's Republic of China, on March 20, 2023.

---

| | |
|:---|:---|
| Chanson International Holding | Chanson International Holding |
| By: | /s/ Gang Li |
|  | Gang Li |
|  | Chief Executive Officer, Director, and<br> Chairman of the Board of Directors |
|  | (Principal Executive Officer) |

---

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

---

| | | |
|:---|:---|:---|
| **Signature** | **Title** | **Date** |
| /s/ Gang Li | Chief Executive Officer, Director, and | March 20, 2023 |
| Name: Gang Li | Chairman of the Board of Directors (Principal Executive Officer) |  |
| /s/ Jihong Cai | Chief Financial Officer | March 20, 2023 |
| Name: Jihong Cai | (Principal Accounting and Financial Officer) |  |

---

**SIGNATURE OF AUTHORIZED REPRESENTATIVE IN THE UNITED STATES**

Pursuant to the Securities Act of 1933, as amended, the undersigned, the duly authorized representative in the United States of America of Chanson International Holding, has signed this registration statement or amendment thereto in New York, NY on March 20, 2023.

---

| | |
|:---|:---|
|  | Gang Li |
|  | Authorized U.S. Representative |
| By: | /s/ Gang Li |
|  | Name: Gang Li |
|  | Title: Chief Executive Officer, Director, and<br> Chairman of the Board of Directors |

---

**EXHIBIT INDEX**

---

| | |
|:---|:---|
| **Description** |  |
| 1.1\* | [Form of Underwriting Agreement](ea175460ex1-1_chansoninter.htm) |
| 3.1\*\* | [Second Amended and Restated Memorandum and Articles of Association](http://www.sec.gov/Archives/edgar/data/1825349/000121390021019164/ea138629ex3-1_chansoninter.htm) |
| 4.1\*\* | [Specimen Certificate for Class A Ordinary Shares](http://www.sec.gov/Archives/edgar/data/1825349/000121390021019164/ea138629ex4-1_chansoninter.htm) |
| 4.2\* | [Form of Underwriter's Warrant](ea175460ex4-2_chansoninter.htm) |
| 5.1\*\* | [Opinion of Ogier regarding the validity of the Ordinary Shares being registered](http://www.sec.gov/Archives/edgar/data/1825349/000121390023008473/ea172588ex5-1_chansoninter.htm) |
| 5.2\*\* | [Opinion of Hunter Taubman Fischer & Li LLC regarding the enforceability of Underwriter's Warrants](http://www.sec.gov/Archives/edgar/data/1825349/000121390023008473/ea172588ex5-2_chansoninter.htm) |
| 8.1\* | [Opinion of Dentons regarding certain PRC tax matters (included in Exhibit 99.7)](ea175460ex99-7_chansoninter.htm) |
| 10.1\*\* | [Form of Employment Agreement by and between executive officers and the Registrant](http://www.sec.gov/Archives/edgar/data/1825349/000121390021019164/ea138629ex10-1_chansoninter.htm) |
| 10.2\*\* | [Form of Indemnification Agreement with the Registrant's directors and officers](http://www.sec.gov/Archives/edgar/data/1825349/000121390021019164/ea138629ex10-2_chansoninter.htm) |
| 10.3\* | [English Translation of the Form of Exclusive Service Agreement between each UFG Operator and Xinjiang United Family, as currently in effect, and a schedule of all executed Exclusive Service Agreements adopting the same form](ea175460ex10-3_chansoninter.htm) |
| 10.4\* | [English Translation of the Form of Operating Rights Proxy Agreement between each UFG Operator and Xinjiang United Family, as currently in effect, and a schedule of all executed Operating Rights Proxy Agreements adopting the same form](ea175460ex10-4_chansoninter.htm) |
| 10.5\* | [English Translation of the Form of Pledge Agreement between each UFG Operator and Xinjiang United Family, as currently in effect, and a schedule of all executed Pledge Agreements adopting the same form](ea175460ex10-5_chansoninter.htm) |
| 10.6\* | [English Translation of the Form of Call Option Agreement between each UFG Operator and Xinjiang United Family, as currently in effect, and a schedule of all executed Call Option Agreements adopting the same form](ea175460ex10-6_chansoninter.htm) |
| 10.7\* | [English Translation of the Form of Spousal Consent granted by the spouse of each UFG Operator, as currently in effect, and a schedule of all executed Spousal Consents adopting the same form](ea175460ex10-7_chansoninter.htm) |
| 10.8\*\* | [English Translation of Premises Use Agreement dated April 30, 2020, and Supplemental Agreement dated June 18, 2020, between Xinjiang United Family and Urumqi Plastic Surgery Hospital Co., Ltd.](http://www.sec.gov/Archives/edgar/data/1825349/000121390021019164/ea138629ex10-8_chansoninter.htm) |
| 10.9\*\* | [English Translation of Working Capital Loan Agreement dated May 31, 2021, between Xinjiang United Family and Huaxia Bank Co., Ltd.](http://www.sec.gov/Archives/edgar/data/1825349/000121390021019164/ea138629ex10-9_chansoninter.htm) |
| 10.10\*\* | [English Translation of Guarantee Agreement dated June 2, 2021, between Xinjiang United Family and XJ Financing Guaranty](http://www.sec.gov/Archives/edgar/data/1825349/000121390021019164/ea138629ex10-10_chansoninter.htm) |
| 10.11\*\* | [English Translation of Counter Guarantee Agreement dated June 2, 2021, between Xinjiang United Family and XJ Financing Guaranty](http://www.sec.gov/Archives/edgar/data/1825349/000121390021019164/ea138629ex10-11_chansoninter.htm) |
| 10.12\*\* | [Business Loan Agreement and Promissory Note dated April 29, 2020, between Chanson 23rd Street and Cathay Bank](http://www.sec.gov/Archives/edgar/data/1825349/000121390021019164/ea138629ex10-13_chansoninter.htm) |
| 10.13\*\* | [Assignment of Limited Liability Company Interest dated September 28, 2020, between Gang Li and Chanson NY](http://www.sec.gov/Archives/edgar/data/1825349/000121390021019164/ea138629ex10-14_chansoninter.htm) |
| 10.14\*\* | [Note dated February 10, 2021, between Chanson 23rd Street and Cathay Bank](http://www.sec.gov/Archives/edgar/data/1825349/000121390021045366/ea146563ex10-15_chansoninter.htm) |
| 10.15\*\* | [English Translation of Lease Agreement dated June 30, 2021, between Xinjiang United Family and Xinjiang Chuangbo Park Development Co., Ltd.](http://www.sec.gov/Archives/edgar/data/1825349/000121390021045366/ea146563ex10-16_chansoninter.htm) |
| 10.16\*\* | [English Translation of Loan Agreement dated July 15, 2021, between Xinjiang United Family and China Construction Bank Corporation Urumqi Renmin Road Branch](http://www.sec.gov/Archives/edgar/data/1825349/000121390021045366/ea146563ex10-17_chansoninter.htm) |
| 10.17\*\* | [Office Agreement dated July 28, 2021, between Chanson NY and Regus Management Group, LLC](http://www.sec.gov/Archives/edgar/data/1825349/000121390021045366/ea146563ex10-18_chansoninter.htm) |
| 10.18\*\* | [English Translation of Working Capital Loan Agreement dated December 23, 2022, between Xinjiang United Family and Huaxia Bank Co., Ltd.](http://www.sec.gov/Archives/edgar/data/1825349/000121390023008473/ea172588ex10-18_chansoninter.htm) |
| 16.1\*\* | [Letter of Friedman LLP to the U.S. Securities and Exchange Commission](http://www.sec.gov/Archives/edgar/data/1825349/000121390022076848/ea169180ex16-1_chansoninter.htm) |

---

---

| | |
|:---|:---|
| 21.1\* | [Subsidiaries](ea175460ex21-1_chansoninter.htm) |
| 23.1\* | [Consent of Friedman LLP](ea175460ex23-1_chansoninter.htm) |
| 23.2\*\* | [Consent of Ogier (included in Exhibit 5.1)](http://www.sec.gov/Archives/edgar/data/1825349/000121390023008473/ea172588ex5-1_chansoninter.htm) |
| 23.3\* | [Consent of Dentons (included in Exhibit 99.7)](ea175460ex99-7_chansoninter.htm) |
| 23.4\*\* | [Consent of Hunter Taubman Fischer & Li LLC (included in Exhibit 5.2)](http://www.sec.gov/Archives/edgar/data/1825349/000121390023008473/ea172588ex5-2_chansoninter.htm) |
| 99.1\*\* | [Code of Business Conduct and Ethics of the Registrant](http://www.sec.gov/Archives/edgar/data/1825349/000121390021019164/ea138629ex99-1_chansoninter.htm) |
| 99.2\*\* | [Consent of Frost & Sullivan (Beijing) Inc., Shanghai Branch Co.](http://www.sec.gov/Archives/edgar/data/1825349/000121390021019164/ea138629ex99-2_chansoninter.htm) |
| 99.3\*\* | [Consent of Yong Du](http://www.sec.gov/Archives/edgar/data/1825349/000121390021019164/ea138629ex99-3_chansoninter.htm) |
| 99.4\*\* | [Consent of Zhiyuan Wang](http://www.sec.gov/Archives/edgar/data/1825349/000121390021019164/ea138629ex99-4_chansoninter.htm) |
| 99.5\*\* | [Consent of Shouhua Nie](http://www.sec.gov/Archives/edgar/data/1825349/000121390021019164/ea138629ex99-5_chansoninter.htm) |
| 99.6\*\* | [Consent of Yuchen Liu](http://www.sec.gov/Archives/edgar/data/1825349/000121390021019164/ea138629ex99-6_chansoninter.htm) |
| 99.7\* | [Opinion of Dentons, People's Republic of China counsel to the Registrant, regarding certain PRC law matters and the validity of the VIE agreements](ea175460ex99-7_chansoninter.htm) |
| 99.8\*\* | [Request for Waiver and Representation under Item 8.A.4 of Form 20-F](http://www.sec.gov/Archives/edgar/data/1825349/000121390022080054/ea170000ex99-8_chansoninter.htm) |
| 107\*\* | [Filing Fee Table](http://www.sec.gov/Archives/edgar/data/1825349/000121390023008473/ea172588ex-fee_chansoninter.htm) |

---

\* Filed herewith. <br>\*\* Previously filed.

## Exhibit 1.1

**Exhibit 1.1**

**CHANSON INTERNATIONAL HOLDING**

**UNDERWRITING AGREEMENT**

**[●], 2023**

**EF Hutton,** 

**division of Benchmark Investments, LLC**

590 Madison Avenue, 39<sup>th</sup> Floor

New York, NY 10022

Ladies and Gentlemen:

The undersigned, **CHANSON INTERNATIONAL HOLDING**, a Cayman Islands exempted company (collectively with its subsidiaries and affiliates, including, without limitation, all entities disclosed or described in the Registration Statement (as hereinafter defined) as being subsidiaries or affiliates of the Company, the "**Company**"), hereby confirms its agreement (this "**Agreement**") with several underwriters (such underwriters, including the Representative (as defined below), the "**Underwriters**" and each an "**Underwriter**") named in <u>Schedule A</u> hereto for which EF Hutton, division of Benchmark Investments, LLC is acting as the representative (in such capacity, the "**Representative**") to issue and sell an aggregate of [●] Class A ordinary shares of the Company ("**Firm Shares**"), par value $0.001 per share ("**Class A Ordinary Shares**"). The Company has also granted to the Representative an option to purchase up to [●] additional Class A Ordinary Shares, on the terms and for the purposes set forth in <u>Section 2(c)</u> hereof (the "**Additional Shares**"). The Firm Shares and any Additional Shares purchased pursuant to this Agreement are herein collectively referred to as the "**Offered Securities**." The offering and sale of the Offered Securities contemplated by this Agreement is referred to herein as the "**Offering**."

The Company confirms its agreement with the Underwriters as follows:

SECTION 1. *Representations and Warranties of the Company*.

The Company represents and warrants to the Underwriters as follows with the understanding that the same may be relied upon by the Underwriters in this offering, as of the date hereof and as of the Closing Date (as defined below) and each Option Closing Date (as defined below), if any:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) *Filing of the Registration Statement*. The Company has prepared and filed with the U.S. Securities and Exchange Commission (the "**Commission**") a registration statement on Form F-1 (File No. 333- 254909), which contains a form of prospectus to be used in connection with the public offering and sale of the Offered Securities. Such registration statement, as amended, including the financial statements, exhibits and schedules thereto contained in the registration statement at the time such registration statement became effective, in the form in which it was declared effective by the Commission under the Securities Act of 1933, as amended (the "**Securities Act**"), and the rules and regulations promulgated thereunder (the "**Securities Act Regulations**"), and including any required information deemed to be a part thereof at the time of effectiveness pursuant to Rule 430A under the Securities Act, or pursuant to the Securities Exchange Act of 1934, as amended (collectively, the "**Exchange Act**") and the rules and regulations promulgated thereunder (the "**Exchange Act Regulations**"), is called the "**Registration Statement**." Any registration statement filed by the Company pursuant to Rule 462(b) under the Securities Act is called the "**Rule 462(b) Registration Statement**," and from and after the date and time of filing of the Rule 462(b) Registration Statement, the term "**Registration Statement**" shall include the Rule 462(b) Registration Statement. Such prospectus, in the form first filed pursuant to Rule 424(b) under the Securities Act after the date and time that this Agreement is executed and delivered by the parties hereto, or, if no filing pursuant to Rule 424(b) under the Securities Act is required, the form of final prospectus relating to the Offered Securities included in the Registration Statement at the effective date of the Registration Statement, is called the "**Prospectus**." All references in this Agreement to the Registration Statement, the Rule 462(b) Registration Statement, the preliminary prospectus included in the Registration Statement (each, a "**preliminary prospectus**"), the Prospectus, or any amendments or supplements to any of the foregoing, shall include any copy thereof filed with the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval System ("**EDGAR**"). The preliminary prospectus that was included in the Registration Statement immediately prior to the Applicable Time (as defined below) is hereinafter called the "**Pricing Prospectus**." Any reference to the "most recent preliminary prospectus" shall be deemed to refer to the latest preliminary prospectus included in the registration statement. Any reference herein to any preliminary prospectus or the Prospectus or any supplement or amendment to either thereof shall be deemed to refer to and include any documents incorporated by reference therein as of the date of such reference.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) "**Applicable Time**" means 5:00 pm, Eastern Time, on the date of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) *Compliance with Registration Requirements*. The Registration Statement has been declared effective by the Commission under the Securities Act and the Securities Act Regulations on [●], 2023. The Company has complied, to the Commission's satisfaction, with all requests of the Commission for additional or supplemental information. No stop order preventing or suspending the effectiveness of the Registration Statement or any Rule 462(b) Registration Statement is in effect and no proceedings for such purpose have been instituted or are pending or, to the knowledge of the Company, are contemplated or threatened by the Commission.

Each preliminary prospectus and the Prospectus when filed complied or will comply in all material respects with the Securities Act and, if filed by electronic transmission pursuant to EDGAR (except as may be permitted by Regulation S-T under the Securities Act), was identical in content to the copy thereof delivered to the Underwriters for use in connection with the offer and sale of the Offered Securities, other than with respect to any artwork and graphics that were not filed. Each of the Registration Statement, any Rule 462(b) Registration Statement, and any post-effective amendment to either the Registration Statement or the Rule 462(b) Registration Statement, at the time it became effective and at all subsequent times until the expiration of the prospectus delivery period required under Section 4(3) of the Securities Act, complied and will comply in all material respects with the Securities Act and the Securities Act Regulations and did not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. The Prospectus, as amended or supplemented, as of its date and at all subsequent times until the Underwriters have completed the placement of the offering of the Offered Securities, did not and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The representations and warranties set forth in the two immediately preceding sentences do not apply to statements in or omissions from the Registration Statement or any Rule 462(b) Registration Statement, or any post-effective amendment to either the Registration Statement or the Rule 462(b) Registration Statement, or in the Pricing Prospectus or the Prospectus, or any amendment or supplement thereto, made in reliance upon and in conformity with information relating to the Underwriters furnished to the Company in writing expressly for use therein, it being understood and agreed that the only such information furnished on behalf of the Underwriters consists of (i) the name of the Underwriters contained on the cover page of the Pricing Prospectus and Prospectus and (ii) the sub-sections titled "Underwriter's Warrant," "Price Stabilization, Short Positions, and Penalty Bids," "Electronic Offer, Sale and Distribution of Class A Ordinary Shares," and "Offer Restrictions outside of the United States" in each case under the caption "Underwriting" in the Prospectus (the "**Underwriters Information**"). There are no contracts or other documents required to be described in the Pricing Prospectus or the Prospectus or to be filed as exhibits to the Registration Statement that have not been fairly and accurately described in all material respects or filed as required.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) *Disclosure Package*. The term "**Disclosure Package**" shall mean (i) the Pricing Prospectus, as amended or supplemented, (ii) each issuer free writing prospectus, as defined in Rule 433 under the Securities Act (each, an "**Issuer Free Writing Prospectus**"), if any, identified in <u>Schedule B</u> hereto, (iii) the pricing terms set forth in <u>Schedule C</u> to this Agreement, and (iv) any other free writing prospectus that the parties hereto shall hereafter expressly agree in writing to treat as part of the Disclosure Package. As of the Applicable Time, the Disclosure Package did not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The preceding sentence does not apply to statements in or omissions from the Disclosure Package based upon and in conformity with the Underwriters Information.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) *Company Not Ineligible Issuer*. (i) At the time of filing the Registration Statement and (ii) as of the date of the execution and delivery of this Agreement, the Company was not and is not an Ineligible Issuer (as defined in Rule 405 under the Securities Act), without taking account any determination by the Commission pursuant to Rule 405 under the Securities Act that it is not necessary that the Company be considered an Ineligible Issuer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) *Issuer Free Writing Prospectuses*. No Issuer Free Writing Prospectus includes any information that conflicts with the information contained in the Registration Statement, including any document incorporated by reference therein that has not been superseded or modified. The foregoing sentence does not apply to statements in or omissions from any Issuer Free Writing Prospectus based upon and in conformity with the Underwriters Information.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) *Offering Materials Furnished to the Underwriters*. The Company has delivered to the Underwriters copies of the Registration Statement and of each consent and certificate of experts filed as a part thereof, and each preliminary prospectus and the Prospectus, as amended or supplemented, in such quantities and at such places as the Underwriters have reasonably requested in writing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) *Distribution of Offering Material by the Company*. The Company has not distributed and will not distribute, prior to the completion of the Underwriters' purchase of the Offered Securities, any offering material in connection with the offering and sale of the Offered Securities other than a preliminary prospectus, the Prospectus, any Issuer Free Writing Prospectus reviewed and consented to by the Underwriters, and the Registration Statement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) *The Underwriting Agreement*. This Agreement has been duly authorized, executed and delivered by, and is a valid and binding agreement of, the Company, enforceable in accordance with its terms, except as rights to indemnification hereunder may be limited by applicable law and except as the enforcement hereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights and remedies of creditors or by general equitable principles.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) *Authorization of the Offered Securities*. The Offered Securities to be sold by the Company through the Underwriters have been duly and validly authorized by all required corporate action and have been reserved for issuance and sale pursuant to this Agreement and, when so issued and delivered by the Company, will be validly issued, fully paid and non-assessable, free and clear of all Liens imposed by the Company. The Ordinary Shares underlying the Underwriter's Warrants (the "**Underlying Shares**" and together with the Underwriter's Warrants, the "**Underwriter's Securities**") are duly authorized and, when issued and paid for in accordance the terms of the Underwriter's Warrants, as applicable, will be duly and validly issued, fully paid and non-assessable, free and clear of all Liens imposed by the Company. The Company has sufficient Class A Ordinary Shares for the issuance of the maximum number of Offered Securities and Underlying Shares issuable pursuant to the Offering as described in the Prospectus.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) *No Applicable Registration or Other Similar Rights*. There are no persons with registration or other similar rights to have any securities of the Company registered for sale under the Registration Statement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) *No Material Adverse Change*. Except as otherwise disclosed in the Disclosure Package, subsequent to the respective dates as of which information is given in the Disclosure Package: (i) there has been no material adverse change, or any development that could reasonably be expected to result in a material adverse change, in the condition, financial or otherwise, or in the earnings, business, prospects or operations, whether or not arising from transactions in the ordinary course of business, of the Company (any such change, a "**Material Adverse Change**"); (ii) the Company has not incurred any material liability or obligation, indirect, direct or contingent, not in the ordinary course of business nor entered into any material transaction or agreement not in the ordinary course of business; and (iii) there has been no dividend or distribution of any kind declared, paid or made by the Company in respect of its capital stock.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) *Independent Accountant*. Friedman LLP (the "**Accountant**"), which has expressed its opinions with respect to the audited financial statements (which term as used in this Agreement includes the related notes thereto) of the Company filed with the Commission as a part of the Registration Statement and included in the Disclosure Package and the Prospectus, is an independent registered public accounting firm as required by the Securities Act and the Exchange Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) *Preparation of the Financial Statements*. Each of the historical financial statements of the Company, respectively, filed with the Commission as a part of the Registration Statement and included in the Disclosure Package and the Prospectus, presents fairly the information provided as of and at the dates and for the periods indicated. Such financial statements comply as to form with the applicable accounting requirements of the Securities Act and the Securities Act Regulations and have been prepared in conformity with generally accepted accounting principles applied on a consistent basis throughout the periods involved, except as may be expressly stated in the related notes thereto. No other financial statements or supporting schedules are required to be included or incorporated by reference in the Registration Statement. Each item of historical financial data relating to the operations, assets or liabilities of the Company set forth in summary form in each of the preliminary prospectuses and the Prospectus fairly presents such information on a basis consistent with that of the complete financial statements contained in the Registration Statement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) *Incorporation and Good Standing*. The Company has been duly incorporated or formed and is validly existing and in good standing as a company limited by shares under the laws of the jurisdiction of its formation and has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Disclosure Package and the Prospectus and to enter into and perform its obligations under this Agreement. As of the Closing, the Company does not own or control, directly or indirectly, any corporation, association or other entity that is not otherwise disclosed in the Disclosure Package.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) *Capitalization and Other Capital Stock Matters*. The authorized, issued and outstanding capital stock of the Company is as set forth in each of the Disclosure Package and the Prospectus (other than for subsequent issuances, if any, pursuant to employee benefit plans described in each of the Disclosure Package and the Prospectus or upon exercise of outstanding options or warrants described in the Disclosure Package and Prospectus, as the case may be). The Class A Ordinary Shares conform, and, when issued and delivered as provided in this Agreement, the Offered Securities will conform, in all material respects to the description thereof contained in each of the Disclosure Package and Prospectus. All of the issued and outstanding Class A Ordinary Shares and Class B ordinary shares, par value $0.001 per share (the "**Class B Ordinary Shares**," and collectively with the Class A Ordinary Shares, the "**Ordinary Shares**") have been duly authorized and validly issued, are fully paid and non-assessable and have been issued in compliance with applicable laws. None of the outstanding Ordinary Shares were issued in violation of any preemptive rights, rights of first refusal or other similar rights to subscribe for or purchase securities of the Company. There are no authorized or outstanding options, warrants, preemptive rights, rights of first refusal or other rights to purchase, or equity or debt securities convertible into or exchangeable or exercisable for, any capital stock of the Company other than those described in the Disclosure Package and the Prospectus. The description of the Company's stock option and other stock plans or arrangements, and the options or other rights granted thereunder, set forth in the Disclosure Package and the Prospectus accurately and fairly presents the information required to be shown with respect to such plans, arrangements, options and rights. No further approval or authorization of any shareholder, the Board of Directors or others is required for the issuance and sale of the Offered Securities and the Underlying Shares. Except as set forth in the Disclosure Package and the Prospectus, there are no shareholders agreements, voting agreements or other similar agreements with respect to the Company's Ordinary Shares to which the Company is a party or, to the knowledge of the Company, between or among any of the Company's shareholders.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) *Non-Contravention of Existing Instruments; No Further Authorizations or Approvals Required*. The Company is not in violation of its memorandum of association or in default (or, with the giving of notice or lapse of time, would be in default) ("**Default**") under any indenture, mortgage, loan or credit agreement, note, contract, franchise, lease or other instrument to which it is a party or by which it may be bound (including, without limitation, any agreement or contract filed as an exhibit to the Registration Statement or to which any of the property or assets of the Company are subject (each, an "**Existing Instrument**")), except for such Defaults as would not, individually or in the aggregate, result in a Material Adverse Change. The Company's execution, delivery and performance of this Agreement and consummation of the transactions contemplated hereby and by the Disclosure Package and the Prospectus (i) have been duly authorized by all necessary corporate action and will not result in any violation of the provisions of the memorandum of association of the Company, (ii) will not conflict with or constitute a breach of, or Default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company pursuant to, or require the consent of any other party to, any Existing Instrument and (iii) will not result in any violation of any law, administrative regulation or administrative or court decree applicable to the Company, except in the case of each of clauses (ii) and (iii), to the extent such conflict, breach Default or violation could not reasonably be expected to result in a Material Adverse Effect. No consent, approval, authorization or other order of, or registration or filing with, any court or other governmental or regulatory authority or agency, is required for the Company's execution, delivery and performance of this Agreement and consummation of the transactions contemplated hereby and by the Disclosure Package and the Prospectus, except the registration or qualification of the Offered Securities under the Securities Act and applicable state securities or blue sky laws and from the Financial Industry Regulatory Authority ("**FINRA**").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r) *Subsidiaries and Consolidated Affiliated Entities.* Each of the Company's direct and indirect subsidiaries (each a "**Subsidiary**" and collectively, the "**Subsidiaries**") and the entities which the Company indirectly controls through contractual arrangements (each a "**Consolidated Affiliated Entity**" and collectively, the "**Consolidated Affiliated Entities**") has been identified on <u>Schedule E</u> hereto. Each of the Subsidiaries and the Consolidated Affiliated Entities has been duly formed, is validly existing under the laws of Hong Kong, the United States, the British Virgin Islands or the People's Republic of China (the "**PRC**"), as the case may be, and in good standing under the laws of the jurisdiction of its incorporation, has full power and authority (corporate or otherwise) to own its property and to conduct its business as described in the Prospectus, and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not result in a Material Adverse Change on the Company, its Subsidiaries and the Consolidated Affiliated Entities, taken as a whole. Except as otherwise disclosed in the Disclosure Package and the Prospectus, all of the equity interests of each Subsidiary have been duly and validly authorized and issued, are owned directly or indirectly by the Company, are fully paid in accordance with its articles of association and non-assessable and are free and clear of all liens, encumbrances, equities or claims ("**Liens**"); all of the equity or sponsorship interests in each Consolidated Affiliated Entity have been duly and validly authorized and issued, are fully paid in accordance with its articles of association and non-assessable and are owned as described in the Prospectus, and, except as described in the Prospectus, free and clear of all Liens. None of the outstanding share capital or equity interest in any Subsidiary or Consolidated Affiliated Entity was issued in violation of preemptive or similar rights of any security holder of such Subsidiary or Consolidated Affiliated Entity. All of the constitutive or organizational documents of each of the Subsidiaries and the Consolidated Affiliated Entities comply with the requirements of applicable laws of its jurisdiction of incorporation or organization and are in full force and effect. Apart from the Subsidiaries, the Company has no direct or indirect subsidiaries or any other company over which it has direct or indirect effective control. Other than the Subsidiaries and the Consolidated Affiliated Entities, the Company does not directly or indirectly control any entity through contractual arrangements or otherwise such that the entity would be deemed a consolidated affiliated entity whose financial results would be consolidated under U.S. GAAP with the financial results of the Company on the consolidated financial statements of the Company, regardless of whether the Company directly or indirectly owns less than a majority of the equity interests of such person.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s) *No Material Actions or Proceedings*. Except as otherwise disclosed in the Disclosure Package and the Prospectus, there are no legal, governmental or regulatory investigations, actions, demands, claims, suits, arbitrations, inquiries or proceedings (collectively, "**Actions**") pending or, to the Company's knowledge, threatened (i) against the Company, any Subsidiary or Consolidated Affiliated Entity, (ii) which have as the subject thereof any officer or director (in such capacities) of, or property owned or leased by, the Company, where in any such case (A) there is a reasonable possibility that such Action might be determined adversely to the Company, any Subsidiary or Consolidated Affiliated Entity, and (B) any such Action, if so determined adversely, would reasonably be expected to result in a Material Adverse Change or adversely affect the consummation of the transactions contemplated by this Agreement. Except as otherwise disclosed in the Disclosure Package and the Prospectus, no material labor dispute with the employees of the Company, any Subsidiary or Consolidated Affiliated Entity exists or, to the Company's knowledge, is threatened or imminent. None of the Company's or its Subsidiaries' or the Consolidated Affiliated Entities' employees is a member of a union that relates to such employee's relationship with the Company or such Subsidiary or Consolidated Affiliated Entity, and neither the Company nor any of its Subsidiaries nor any of its Consolidated Affiliated Entities is a party to a collective bargaining agreement, and the Company, its Subsidiaries and the Consolidated Affiliated Entities believe that their relationships with their employees are good. No executive officer, to the knowledge of the Company, is in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of any third party, and the continued employment of each such executive officer does not subject the Company or any of its Subsidiaries or any of the Consolidated Affiliated Entities to any liability with respect to any of the foregoing matters. Except as otherwise disclosed in the Disclosure Package and the Prospectus, the Company, its Subsidiaries and the Consolidated Affiliated Entities are in compliance with all applicable laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Change. Neither the Company or any Subsidiary or any Consolidated Affiliated Entity, nor any director or officer thereof, is or has within the last 10 years been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director or officer of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t) *Intellectual Property Rights*. The Company, each Subsidiary and each Consolidated Affiliated Entity owns, possesses or licenses, and otherwise has legally enforceable rights to use all patents, patent applications, trademarks, trade names, copyrights, domain names, licenses, approvals and trade secrets (collectively, "**Intellectual Property Rights**") reasonably necessary to conduct its business as now conducted or, otherwise, as disclosed in the Registration Statement, the Disclosure Package and the Prospectus, except to the extent such failure to own, possess or have other rights to use such Intellectual Property would not be expected to result in a Material Adverse Change. Except as otherwise disclosed in the Registration Statement, the Disclosure Package and the Prospectus: (i) the Company, its Subsidiaries and the Consolidated Affiliated Entities have not received any written notice of infringement or conflict with asserted Intellectual Property Rights of others; (ii) the Company, its Subsidiaries and the Consolidated Affiliated Entities are not a party to or bound by any options, licenses or agreements with respect to the Intellectual Property Rights of any other person or entity that are required to be set forth in the Registration Statement, Disclosure Package and the Prospectus and are not described in all material respects; (iii) none of the technology employed by the Company, its Subsidiaries and the Consolidated Affiliated Entities has been obtained or is being used by the Company, its Subsidiaries and the Consolidated Affiliated Entities in violation of any contractual obligation binding on the Company, its Subsidiaries and the Consolidated Affiliated Entities or, to the Company's knowledge, in violation of the rights of any persons; and (iv) the Company, its Subsidiaries and the Consolidated Affiliated Entities are not subject to any judgment, order, writ, injunction or decree of any court or any governmental department, commission, board, bureau, agency or instrumentality, or any arbitrator, nor has it entered into nor is it a party to any agreement made in settlement of any pending or threatened litigation, which materially restricts or impairs its use of any Intellectual Property Rights.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(u) *All Necessary Permits, etc*. Except as otherwise disclosed in the Disclosure Package and the Prospectus, the Company, its Subsidiaries and the Consolidated Affiliated Entities possess such valid and current certificates, authorizations or permits issued by the applicable regulatory agencies or bodies necessary to conduct their respective business, and the Company, its Subsidiaries and the Consolidated Affiliated Entities have not received any notice of proceedings relating to the revocation or modification of, or non-compliance with, any such certificate, authorization or permit.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) *Title to Properties*. Except as otherwise disclosed in the Disclosure Package and the Prospectus, the Company, its Subsidiaries and the Consolidated Affiliated Entities have good and marketable title to all the properties and assets reflected as owned by it in the financial statements referred to in <u>Section 1(n)</u> above (or elsewhere in the Disclosure Package and the Prospectus), in each case free and clear of any security interest, mortgage, lien, encumbrance, equity, adverse claim or other defect, except such as do not materially and adversely affect the value of such property and do not materially interfere with the use made or proposed to be made of such property by the Company, its Subsidiaries and the Consolidated Affiliated Entities. The real property, improvements, equipment and personal property held under lease by the Company, its Subsidiaries and the Consolidated Affiliated Entities are held under valid and enforceable leases, with such exceptions as are not material and do not materially interfere with the use made or proposed to be made of such real property, improvements, equipment or personal property by the Company, its Subsidiaries and the Consolidated Affiliated Entities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(w) *Tax Law Compliance*. The Company, its Subsidiaries and the Consolidated Affiliated Entities have filed all necessary income tax returns or has timely and properly filed requested extensions thereof and has paid all taxes required to be paid by it and, if due and payable, any related or similar assessment, fine or penalty levied against it. Specifically, all the Company's Subsidiaries and the Consolidated Affiliated Entities, including Xinjiang United Family Trading Co., Ltd. ("**Xinjiang United Family**"), Dean Global Limited, Jenyd Holdings Limited, George Chanson (NY) Corp., Chanson 23<sup>rd</sup> Street LLC, Chanson 355 Greenwich LLC, Chanson 1293 3rd Ave LLC, Chanson Management LLC, Chanson 2040 Broadway LLC and the Company's 28 "United Family Group Entities" ("**UFG Entities**"), have filed their tax returns for the fiscal years 2021 and 2020 and no taxes or duties with respect to such years are outstanding in China to any Chinese taxing authority. The Company has made adequate charges, accruals and reserves in the applicable financial statements referred to in <u>Section 1(n)</u> above in respect of all federal, state and foreign income and franchise taxes for all periods as to which the tax liability of the Company has not been finally determined.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) *Company Not an "Investment Company."* The Company is not, and after giving effect to payment for the Offered Securities and the application of the proceeds as contemplated under the caption "Use of Proceeds" in each of the Disclosure Package and the Prospectus will not be, required to register as an "investment company" within the meaning of the Investment Company Act of 1940, as amended (the "**Investment Company Act**").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(y) *Intentionally Omitted.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(z) *No Price Stabilization or Manipulation*. The Company has not taken and will not take, directly or indirectly, any action designed to, or that might be reasonably expected to cause or result in, stabilization or manipulation of the price of any securities of the Company to facilitate the sale or resale of the Offered Securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(aa) *Related Party Transactions*. There are no business relationships or related-party transactions involving the Company or any other person required to be described or filed in the Registration Statement, or described in the Disclosure Package or the Prospectus, that have not been as set forth in the Registration Statement, the Prospectus and the Pricing Prospectus.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(bb) *Disclosure Controls and Procedures*. Except as otherwise disclosed in the Disclosure Package and the Prospectus, the Company has established and maintains disclosure controls and procedures (as such term is defined in Rule 13a-15(e) of the Exchange Act Regulations) designed to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms. Except as otherwise disclosed in the Disclosure Package and the Prospectus, the Company is not aware of (a) any significant deficiency in the design or operation of internal controls which could adversely affect the Company's ability to record, process, summarize and report financial data or any material weaknesses in internal controls or (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal controls.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(cc) *Company's Accounting System*. Except as otherwise disclosed in the Disclosure Package and the Prospectus, the Company maintains a system of accounting controls designed to provide reasonable assurances that (i) transactions are executed in accordance with management's general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management's general or specific authorization; and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(dd) *Money Laundering Law Compliance*. The operations of the Company are and have been conducted at all times in material compliance with all applicable financial recordkeeping and reporting requirements, including those of the Bank Secrecy Act, as amended by Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act), and the applicable anti-money laundering statutes of jurisdictions where the Company conducts business, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any competent governmental agency (collectively, the "**Anti-Money Laundering Laws**"), and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company with respect to the Anti-Money Laundering Laws is pending or, to the knowledge of the Company, threatened.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ee) *OFAC*. (i) Neither the Company, its Subsidiaries and the Consolidated Affiliated Entities nor, to the knowledge of the Company, any director, officer, employee or affiliate of the Company, its Subsidiaries and the Consolidated Affiliated Entities, of any other person authorized to act on behalf of the Company, is an individual or entity ("**Person**") that is, or is owned or controlled by a Person that is:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. the subject of any sanctions administered or enforced by the U.S. Department of Treasury's Office of Foreign Assets Control ("**OFAC**"), the United Nations Security Council ("**UNSC**"), the European Union ("**EU**"), His Majesty's Treasury ("**HMT**"), or other relevant sanctions authority (collectively, "**Sanctions**"), nor

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. located, organized or resident in a country or territory that is the subject of Sanctions (including, without limitation, Burma/Myanmar, Cuba, Iran, Libya, North Korea, Sudan and Syria).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The Company will not, directly or indirectly, use the proceeds of the offering, or lend, contribute or otherwise make available such proceeds to any Subsidiary or any Consolidated Affiliated Entity, joint venture partner or other Person:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. to fund or facilitate any activities or business of or with any Person or in any country or territory that, at the time of such funding or facilitation, is the subject of Sanctions; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. in any other manner that will result in a violation of Sanctions by any Person (including any Person participating in the offering, whether as underwriter, advisor, investor or otherwise).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ff) *Foreign Corrupt Practices Act.* Neither the Company, its Subsidiaries and the Consolidated Affiliated Entities nor, to the knowledge of the Company, any director, officer, employee or affiliate of the Company or any other person authorized to act on behalf of the Company has, directly or indirectly, knowingly given or agreed to give any money, gift or similar benefit (other than legal price concessions to customers in the ordinary course of business) to any customer, supplier, employee or agent of a customer or supplier, or official or employee of any governmental agency or instrumentality of any government (domestic or foreign) or any political party or candidate for office (domestic or foreign) or other person who was, is, or may be in a position to help or hinder the business of the Company (or assist it in connection with any actual or proposed transaction) that might subject the Company to any damage or penalty in any civil, criminal or governmental litigation or proceeding.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(gg) *Compliance with Sarbanes-Oxley Act of 2002*. The Company has taken all necessary actions to ensure that, upon the effectiveness of the Registration Statement, it will be in compliance with any provision applicable to it of the Sarbanes-Oxley Act of 2002 (the "**Sarbanes-Oxley Act**") and the rules and regulations promulgated in connection therewith, including, without limitation, Section 402 related to loans and Sections 302 and 906 related to certifications of the Sarbanes-Oxley Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(hh) *Exchange Act Filing*. A registration statement in respect of the Class A Ordinary Shares has been filed on Form 8-A pursuant to Section 12(b) of the Exchange Act, which registration statement complies in all material respects with the Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Class A Ordinary Shares under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating such registration.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) *Foreign Private Issuer Status*. The Company is a "foreign private issuer" within the meaning of Rule 405 under the Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(jj) *Earning Statements*. The Company will make generally available (which includes filings pursuant to the Exchange Act made publicly through the EDGAR system) to its security holders as soon as practicable, but in any event not later than 16 months after the end of the Company's current fiscal year, an earnings statement (which need not be audited) covering a 12-month period that shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 of the Rules and Regulations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(kk) *Periodic Reporting Obligations*. During the Prospectus Delivery Period, the Company shall file, on a timely basis, with the Commission all reports and documents required to be filed under the Exchange Act. Additionally, the Company shall report the use of proceeds from the issuance of the Firm Shares as may be required under Rule 463 under the Securities Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ll) *Intentionally Omitted*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(mm) *Foreign Tax Compliance*. Except as otherwise disclosed in the Disclosure Package and the Prospectus, including the risk factor set forth in "*Risk Factors—Under the PRC Enterprise Income Tax Law, we may be classified as a PRC 'resident enterprise' for PRC enterprise income tax purposes. Such classification would likely result in unfavorable tax consequences to us and our non-PRC shareholders and have a material adverse effect on our results of operations and the value of your investment.*" no transaction, stamp, capital or other issuance, registration, transaction, transfer or withholding taxes or duties are payable in China, Hong Kong or the Cayman Islands to any Chinese, Hong Kong or Cayman Islands taxing authority in connection with the issuance, sale and delivery of the Offered Securities, and the delivery of the Offered Securities to or for the account of the Investors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(nn) *Compliance with SAFE Rules and Regulations*. Except as otherwise disclosed in Disclosure Package and the Prospectus, the Company has taken reasonable steps to cause the Company's shareholders who are residents or citizens of the PRC, to comply with any applicable rules and regulations of the State Administration of Foreign Exchange ("**SAFE**") relating to such shareholders' shareholding with the Company (the "**SAFE Rules and Regulations**"), including, without limitation, taking reasonable steps to require each shareholder that is, or is directly or indirectly owned or controlled by, a resident or citizen of the PRC to complete any registration and other procedures required under applicable SAFE Rules and Regulations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(oo) *M&A Rules*. The Company is aware of and has been advised as to the content of the Rules on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors jointly promulgated by the Ministry of Commerce, the State Assets Supervision and Administration Commission, the State Tax Administration, the State Administration of Industry and Commerce, the China Securities Regulatory Commission ("**CSRC**") and SAFE on August 8, 2006 (the "**M&A Rules**"), in particular the relevant provisions thereof that purport to require offshore special purpose vehicles formed for the purpose of obtaining a stock exchange listing outside of the PRC and controlled directly or indirectly by companies or natural persons of the PRC, to obtain the approval of the CSRC prior to the listing and trading of their securities on a stock exchange located outside of the PRC; the Company has received legal advice specifically with respect to the M&A Rules from its PRC counsel and based on such legal advice, the Company confirms with the Underwriters:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Except as disclosed in the Disclosure Materials, Registration Statement and the Prospectus, the issuance and sale of the Offered Securities, the listing and trading of the Offered Securities on the Nasdaq Capital Market and the consummation of the transactions contemplated by this Agreement are not and will not be, as of the date hereof, at the Closing Date or the Option Closing Date, materially affected by the M&A Rules or any official clarifications, guidance, interpretations or implementation rules in connection with or related to the M&A Rules as amended as of the date hereof (collectively, the "**M&A Rules and Related Clarifications**").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Except as disclosed in the Disclosure Materials, Registration Statement and the Prospectus, as of the date hereof, the M&A Rules and Related Classifications did not and do not require the Company to obtain the approval of the CSRC prior to the issuance and sale of the Offered Securities, the listing and trading of the Offered Securities on the Nasdaq Capital Market, or the consummation of the transactions contemplated by this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(pp) *D&O Questionnaires*. To the Company's knowledge, all information contained in the questionnaires (the "**Questionnaires**") completed by each of the Company's directors and officers prior to the Offering (the "**Insiders**") as well as in the Lock-Up Agreement in the form attached hereto as <u>Exhibit B</u> provided to the Representative is true and correct in all respects and the Company has not become aware of any information which would cause the information disclosed in the Questionnaires completed by each Insider to become inaccurate and incorrect.

Any certificate signed by an officer of the Company and delivered to the Representative or to counsel for the Representative shall be deemed to be a representation and warranty by the Company to the Underwriters as to the matters set forth therein. The Company acknowledges that the Underwriters and, for purposes of the opinions to be delivered pursuant to <u>Section 5</u> hereof, counsel to the Company, will rely upon the accuracy and truthfulness of the foregoing representations and hereby consents to such reliance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(qq) *Solvency*. Based on the consolidated financial condition of the Company as of each Closing Date, after giving effect to the receipt by the Company of the proceeds from the sale of the Offered Securities hereunder, the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate all of its assets, after taking into account all anticipated uses of the cash, are sufficient to pay all amounts on or in respect of its liabilities when such amounts are required to be paid. The Company does not intend to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt). Except as set forth in the Registration Statement and the Prospectus, the Company has no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction within one year from each Closing Date. The Registration Statement and the Prospectus set forth as of the date hereof all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary or any Consolidated Affiliated Entity, or for which the Company or any Subsidiary or any Consolidated Affiliated Entity has commitments. For the purposes of this Agreement, "**Indebtedness**" means (x) any liabilities for borrowed money or amounts owed in excess of $50,000 (other than trade accounts payable incurred in the ordinary course of business), (y) all guaranties, endorsements and other contingent obligations in respect of indebtedness of others, whether or not the same are or should be reflected in the Company's consolidated balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (z) the present value of any lease payments in excess of $50,000 due under leases required to be capitalized in accordance with U.S. GAAP. Except as set forth in the Registration Statement and the Prospectus, neither the Company nor any Subsidiary nor any Consolidated Affiliated Entity is in default with respect to any Indebtedness.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(rr) *Regulation M Compliance*. The Company has not, and to its knowledge no one authorized to act on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Offered Securities or Underlying Shares, (ii) sold, bid for, purchased, or, paid any compensation for soliciting purchases of, any of the Offered Securities of the Underlying Shares, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company, other than, in the case of clauses (ii) and (iii), compensation paid to the Underwriters in connection with the Offering.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ss) *Testing the Waters Communications*. The Company (a) has not alone engaged in any Testing-the-Waters Communication other than Testing-the-Waters Communications with the consent of the Underwriters with entities that are qualified institutional buyers within the meaning of Rule 144A under the Securities Act or institutions that are accredited investors within the meaning of Rule 501 under the Securities Act and (b) has not authorized anyone other than the Underwriters to engage in Testing-the-Waters Communications. The Company reconfirms that the Underwriters have been authorized to act on its behalf in undertaking Testing-the-Waters Communications. The Company has not distributed any Written Testing-the-Waters Communications.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(tt) *Bank Holding Company Act*. Neither the Company nor any of its Subsidiaries nor any of its Consolidated Affiliated Entities is subject to the Bank Holding Company Act of 1956, as amended (the "**BHCA**") and to regulation by the Board of Governors of the Federal Reserve System (the "**Federal Reserve**"). Neither the Company nor any of its Subsidiaries nor any of its Consolidated Affiliated Entities owns or controls, directly or indirectly, five percent or more of the outstanding shares of any class of voting securities or 25% or more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither the Company nor any of its Subsidiaries nor any of its Consolidated Affiliated Entities exercises a controlling influence over the management or policies of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(uu) *U.S. Real Property Holding Corporation*. The Company is not and has never been a U.S. real property holding corporation within the meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company shall so certify upon the Underwriters' request.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vv) *Margin Securities*. The Company owns no "margin securities" as that term is defined in Regulation U of the Board of Governors of the Federal Reserve System (the "**Federal Reserve Board**"), and none of the proceeds of Offering will be used, directly or indirectly, for the purpose of purchasing or carrying any margin security, for the purpose of reducing or retiring any indebtedness which was originally incurred to purchase or carry any margin security or for any other purpose which might cause any of the Offered Securities or Warrants to be considered a "purpose credit" within the meanings of Regulation T, U or X of the Federal Reserve Board.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ww) *Integration*. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause the Offering to be integrated with prior offerings by the Company for purposes of the Securities Act that would require the registration of any such securities under the Securities Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xx) *No Fiduciary Duties*. The Company acknowledges and agrees that the Underwriters' responsibility to the Company is solely contractual in nature and that none of the Underwriters or their respective affiliates or any selling agent shall be deemed to be acting in a fiduciary capacity, or otherwise owes any fiduciary duty to the Company or any of its affiliates in connection with the Offering and the other transactions contemplated by this Agreement. Notwithstanding anything in this Agreement to the contrary, the Company acknowledges that the Underwriters may have financial interests in the success of the Offering that are not limited to the difference between the price to the public and the purchase price paid to the Company by the Underwriters for the Offered Securities and the Underwriters have no obligation to disclose, or account to the Company for, any of such additional financial interests. The Company hereby waives and releases, to the fullest extent permitted by law, any claims that the Company may have against the Underwriters with respect to any breach or alleged breach of fiduciary duty.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(yy) *VIE Structure and Valid Title*. Xinjiang United Family is a limited liability company organized under the laws of the PRC and has legal and valid title to all of its properties and assets, free and clear of all liens, charges, encumbrances, equities, claims, options and restrictions except such as do not materially and adversely affect the value of such property and do not materially interfere with the use made or proposed to be made of such property by such entity; each lease agreement to which it is a party is duly executed and legally binding; its leasehold interests are set forth in and governed by the terms of any lease agreements, and, to the knowledge of the Company such agreements are valid, binding and enforceable in accordance with their respective terms under PRC law; and Xinjiang United Family does not own, operate, manage or has any other right or interest in any other material real property of any kind, except as described in the Prospectus or the Disclosure Package.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(zz) *VIE Agreements*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. The description of the corporate structure of the Company and each of the contracts among Xinjiang United Family, the UFG Entities and the UFG Entities' shareholders (each a "**VIE Agreement**" and collectively the "**VIE Agreements**"), as set forth in the Prospectus under the caption "Corporate History and Structure—The United Family Group" and filed as Exhibits 10.3 through 10.7 to the Registration Statement, is true and accurate in all material respects and nothing has been omitted from such description which would make it misleading. There is no other material agreement, contract or other document relating to the corporate structure or the operation of the Company together with its Subsidiaries and the Consolidated Affiliated Entities taken as a whole, which has not been previously disclosed or made available to the Underwriters and disclosed in the Prospectus.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii. Each VIE Agreement has been duly authorized, executed and delivered by Xinjiang United Family and the applicable UFG Entities or its shareholders and constitutes a valid and legally binding obligation of Xinjiang United Family and UFG Entities, enforceable in accordance with its terms, subject, as to enforceability, to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. No consent, approval, authorization, or order of, or filing or registration with, any person (including any governmental agency or body or any court) is required for the performance of the obligations under any VIE Agreement by the parties thereto, other than those as described in the Registration Statement, the Disclosure Package and the Prospectus; and no consent, approval, authorization, order, filing or registration that has been obtained is being withdrawn or revoked or is subject to any condition precedent which has not been fulfilled or performed. Except as disclosed in the Registration Statement, the Disclosure Package or the Prospectus, the corporate structure of the Company complies with all applicable laws and regulations of the PRC, and neither the corporate structure nor the VIE Agreements violate, breach, contravene or otherwise conflict with any applicable laws of the PRC. There is no legal or governmental proceeding, inquiry or investigation pending against the Company or the Subsidiaries or the Consolidated Affiliated Entities in any jurisdiction challenging the validity of any of the VIE Agreements, and to the knowledge of the Company, no such proceeding, inquiry or investigation is threatened in any jurisdiction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iii. The execution, delivery and performance of each VIE Agreement by the parties thereto do not and will not result in a breach or violation of any of the terms and provisions of, or constitute a default under, or result in the imposition of any lien, encumbrance, equity or claim upon any property or assets of the Company or any of the Subsidiaries or any of the Consolidated Affiliated Entities pursuant to (A) the constitutive or organizational documents of the Company or any of the Subsidiaries or any of the Consolidated Affiliated Entities, (B) any statute, rule, regulation or order of any governmental agency or body or any court, domestic or foreign, having jurisdiction over the Company or any of the Subsidiaries or any of the Consolidated Affiliated Entities or any of their properties, or any arbitration award, or (C) any indenture, mortgage, deed of trust, loan agreement or other material agreement or instrument to which the Company or any of the Subsidiaries or any of the Consolidated Affiliated Entities is a party or by which the Company or any of the Subsidiaries or any of the Consolidated Affiliated Entities is bound or to which any of the properties of the Company or any of the Subsidiaries or any of the Consolidated Affiliated Entities is subject. Each VIE Agreement is in full force and effect and none of Xinjiang United Family and UFG Entities is in breach or default in the performance of any of the terms or provisions of such VIE Agreement. None of Xinjiang United Family and UFG Entities has sent or received any communication regarding termination of, or intention not to renew, any of the VIE Agreements, and no such termination or non-renewal has been threatened by any of the parties thereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(aaa) *<u>Scheme or Arrangement with Shareholders</u>*. None of the Company, its Subsidiaries, the Consolidated Affiliated Entities or its affiliates is a party to any scheme or arrangement through which shareholders or potential shareholders are being loaned, given or otherwise having money made available for the purchase of shares whether before, in or after the Offering. None of the Company, its Subsidiaries, the Consolidated Affiliated Entities or its affiliates is aware of any such scheme or arrangement, regardless of whether it is a party to a formal agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(bbb) *<u>D&O Insurance</u>*. As of the date of this Agreement, the Company shall have procured, and shall maintain officers' and directors' insurance for each of the officers and directors of the Company in a manner consistent with the Company's business and industry standards.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ccc) *<u>Financial Republic Relations Firm</u>*. As of the date of this Agreement, the Company shall have retained a financial public relations firm reasonably acceptable to the Representative and the Company, which firm shall be experienced in assisting issuers in initial public offerings of securities and in their relations with their security holders. The Representative acknowledges that Ascent Investor Relations LLC is acceptable to the Representative.

SECTION 2. *Firm Shares; Additional Shares and Underwriter's Warrants*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) *Purchase of Firm Shares*. On the basis of the representations and warranties herein contained, but subject to the terms and conditions herein set forth, the Company agrees to issue and sell to the Underwriter an aggregate of [●] Ordinary Shares (the "**Firm Shares**") at a purchase price (net of discounts)<sup>1</sup> of $[●] per Share. The Underwriters agree to purchase from the Company the Firm Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) *Delivery of and Payment for Firm Shares*. Delivery of and payment for the Firm Shares shall be made at 10:00 A.M., Eastern time, on the third (3<sup>rd</sup>) Business Day following the Applicable Time, or at such time as shall be agreed upon by the Representative and the Company, at the offices of the Representative's counsel or at such other place as shall be agreed upon by the Representative and the Company. The hour and date of delivery of and payment for the Firm Shares is called the "**Closing Date**." The closing of the payment of the purchase price for is referred to herein as the "**Closing**." Payment for the Firm Shares shall be made on the Closing Date by wire transfer in Federal (same day) funds upon delivery to the Underwriters of certificates (in form and substance reasonably satisfactory to the Underwriters) representing the Firm Shares (or if uncertificated through the full fast transfer facilities of the Depository Trust Company (the "**DTC**")) for the account of the Underwriters. The Firm Shares shall be registered in such names and in such denominations as the Underwriters may request in writing at least two Business Days prior to the Closing Date. If certificated, the Company will permit the Underwriters to examine and package the Firm Shares for delivery at least one full Business Day prior to the Closing Date. The Company shall not be obligated to sell or deliver the Firm Shares except upon tender of payment by the Underwriters for all the Firm Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) *Additional Shares*. The Company hereby grants to the Representative an option (the "**Over-allotment Option**") to purchase up to an additional [●]<sup>2</sup> Class A Ordinary Shares (the "**Additional Shares**"), in each case solely for the purpose of covering over-allotments of such securities, if any. The Over-allotment Option is, at the Representative's sole discretion, for Additional Shares.

<sup>1</sup> The underwriting discounts are equal to 4.5% of the gross proceeds of this offering raised from investors that are introduced by the Company and 8% of the gross proceeds of this offering raised from investors that are introduced directly or indirectly by any party or entity which is not the Company

<sup>2</sup> 15% of the Firm Shares

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) *Exercise of Over-allotment Option*. The Over-allotment Option granted pursuant to <u>Section 2(c)</u> hereof may be exercised by the Representative on or within 45 days after the Closing Date. The purchase price to be paid per Additional Shares shall be equal to the price per Firm Share in <u>Section 2(a)</u>. The Representative shall not be under any obligation to purchase any Additional Shares prior to the exercise of the Over-allotment Option. The Over-allotment Option granted hereby may be exercised by the giving of oral notice to the Company from the Representative, which shall be confirmed in writing via overnight mail or facsimile or other electronic transmission, setting forth the number of Additional Shares to be purchased and the date and time for delivery of and payment for the Additional Shares (the "**Option Closing Date**"), which shall not be later than five (5) full Business Days after the date of the notice or such other time as shall be agreed upon by the Company and the Representative, at the offices of the Representative's counsel or at such other place (including remotely by facsimile or other electronic transmission) as shall be agreed upon by the Company and the Representative. If such delivery and payment for the Additional Shares does not occur on the Closing Date, the Option Closing Date will be as set forth in the notice. Upon exercise of the Over-allotment Option with respect to all or any portion of the Additional Shares, subject to the terms and conditions set forth herein, (i) the Company shall become obligated to sell to the Representative the number of Additional Shares specified in such notice and (ii) the Representative shall purchase that portion of the total number of Additional Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) *Delivery and Payment of Additional Shares*. Payment for the Additional Shares shall be made on the Option Closing Date by wire transfer in Federal (same day) funds, upon delivery to the Representative of certificates (in form and substance satisfactory to the Representative) representing the Additional Shares (or through the facilities of DTC) for the account of the Representative. The Additional Shares shall be registered in such name or names and in such authorized denominations as the Representative may request in writing at least two (2) full Business Days prior to the Option Closing Date. The Company shall not be obligated to sell or deliver the Additional Shares except upon tender of payment by the Representative for applicable Additional Shares. The Option Closing Date may be simultaneous with, but not earlier than, the Closing Date; and in the event that such time and date are simultaneous with the Closing Date, the term "**Closing Date**" shall refer to the time and date of delivery of the Firm Shares and Additional Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) *Underwriting Discount*. In consideration of the services to be provided for hereunder, the Company shall pay to the Underwriters, with respect to any Offered Securities sold to investors in this Offering, 4.5% of the gross proceeds of this Offering raised from investors that are introduced by the Company and 8% of the gross proceeds of this Offering raised from investors that are introduced directly or indirectly by any party or entity which is not the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) *Underwriter's Warrant*. The Company hereby agrees to issue to the Representative (and/or its designees) on the applicable Closing Date, Warrants, substantially in the form of <u>Exhibit A</u> attached hereto, to purchase such number of Shares equal to two percent (2%) of the Offered Securities sold by the Company (the "**Underwriter's Warrant**"), including any Class A Ordinary Shares sold as a result of the exercise of the Underwriter's Over-allotment Option. The Underwriter's Warrant shall be exercisable, in whole or in part, commencing anytime from the date of issuance and expiring on the fifth-year anniversary of the commencement of sale of the Offering at an initial exercise price of $[----] per Ordinary Share, which is equal to one hundred twenty-five percent (100%) of the initial public offering price of a Firm Share.

The Firm Shares, the Additional Shares and the Underwriter's Securities are hereinafter referred to collectively as the "**Securities**."

SECTION 3. *Covenants of the Company*.

The Company covenants and agrees with the Underwriters as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) *Underwriters' Review of Proposed Amendments and Supplements*. During the period beginning at the Applicable Time and ending on the later of the Closing Date or such date as, in the opinion of counsel for the Representative, the Prospectus is no longer required by law to be delivered in connection with sales by the Underwriters or selected dealers, including under circumstances where such requirement may be satisfied pursuant to Rule 172 under the Securities Act (the "**Prospectus Delivery Period**"), prior to amending or supplementing the Registration Statement or the Prospectus, including any amendment or supplement through incorporation by reference of any report filed under the Exchange Act, the Company shall furnish to the Underwriters for review a copy of each such proposed amendment or supplement, and the Company shall not file any such proposed amendment or supplement to which the Underwriters reasonably objects.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) *Securities Act Compliance*. After the date of this Agreement, during the Prospectus Delivery Period, the Company shall promptly advise the Underwriters in writing (i) of the receipt of any comments of, or requests for additional or supplemental information from, the Commission, (ii) of the time and date of any filing of any post-effective amendment to the Registration Statement or any amendment or supplement to the Pricing Prospectus or the Prospectus, (iii) of the time and date that any post-effective amendment to the Registration Statement becomes effective and (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto or of any order or notice preventing or suspending the use of the Registration Statement, the Pricing Prospectus or the Prospectus, or of any proceedings to remove, suspend or terminate from listing or quotation the Offered Securities from any securities exchange upon which it is listed for trading or included or designated for quotation, or of the threatening or initiation of any proceedings for any of such purposes. If the Commission shall enter any such stop order or order or notice of prevention or suspension at any time, the Company will use commercially reasonable efforts to obtain the lifting of such order at the earliest possible moment or will file a new registration statement and use commercially reasonable efforts to have such new registration statement declared effective as soon as practicable. Additionally, the Company agrees that it shall comply with the provisions of Rules 424(b) and 430A, as applicable, under the Securities Act, including with respect to the timely filing of documents thereunder and will confirm that any filings made by the Company under such Rule 424(b) were received in a timely manner by the Commission.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) *Exchange Act Compliance*. During the Prospectus Delivery Period, to the extent the Company becomes subject to reporting obligation under the Exchange Act, the Company will file all documents required to be filed with the Commission pursuant to Sections 13, 14 or 15 of the Exchange Act in the manner and within the time periods required by the Exchange Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) *Amendments and Supplements to the Registration Statement, Prospectus and Other Securities Act Matters*. If, during the Prospectus Delivery Period, any event or development shall occur or condition exist as a result of which the Disclosure Package or the Prospectus as then amended or supplemented would include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein in the light of the circumstances under which they were made, as the case may be, not misleading, or if it shall be necessary to amend or supplement the Disclosure Package or the Prospectus, in order to make the statements therein, in the light of the circumstances under which they were made, as the case may be, not misleading, or if in the opinion of the Underwriters it is otherwise necessary to amend or supplement the Registration Statement, the Disclosure Package or the Prospectus, or to file a new registration statement containing the Prospectus, in order to comply with law, including in connection with the delivery of the Prospectus, the Company agrees to (i) notify the Underwriters of any such event or condition (unless such event or condition was previously brought to the Company's attention by the Underwriters during the Prospectus Delivery Period) and (ii) promptly prepare (subject to <u>Section 3(a)</u> and <u>Section 3(f)</u> hereof), file with the Commission (and use its commercially reasonable efforts to have any amendment to the Registration Statement or any new registration statement to be declared effective) and furnish at its own expense to the Underwriters and to dealers, amendments or supplements to the Registration Statement, the Disclosure Package or the Prospectus, or any new registration statement, necessary in order to make the statements in the Disclosure Package or the Prospectus as so amended or supplemented, in the light of the circumstances under which they were made, as the case may be, not misleading or so that the Registration Statement, the Disclosure Package or the Prospectus, as amended or supplemented, will comply with law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) *Permitted Free Writing Prospectuses*. The Company represents that it has not made, and agrees that, unless it obtains the prior written consent of the Underwriters, it will not make, any offer relating to the Offered Securities that would constitute an Issuer Free Writing Prospectus or that would otherwise constitute a "**free writing prospectus**" (as defined in Rule 405 under the Securities Act) required to be filed by the Company with the Commission or retained by the Company under Rule 433 under the Securities Act; provided that the prior written consent of the Underwriters hereto shall be deemed to have been given in respect of each free writing prospectuses listed on <u>Schedule B</u> hereto. Any such free writing prospectus consented to by the Underwriters is hereinafter referred to as a "**Permitted Free Writing Prospectus**." The Company agrees that (i) it has treated and will treat, as the case may be, each Permitted Free Writing Prospectus as an Issuer Free Writing Prospectus, and (ii) has complied and will comply, as the case may be, with the requirements of Rules 164 and 433 under the Securities Act applicable to any Permitted Free Writing Prospectus, including in respect of timely filing with the Commission, legending and record keeping.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) *Copies of any Amendments and Supplements to the Prospectus*. The Company agrees to furnish the Underwriters, without charge, during the Prospectus Delivery Period, as many copies of each of the preliminary prospectuses, the Prospectus and the Disclosure Package and any amendments and supplements thereto (including any documents incorporated or deemed incorporated by reference therein) as the Underwriters may reasonably request.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) *Use of Proceeds*. The Company shall apply the net proceeds from the sale of the Offered Securities sold by it in the manner described under the caption "Use of Proceeds" in the Disclosure Package and the Prospectus.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) *Transfer Agent*. The Company shall engage and maintain, at its expense, a registrar and transfer agent for the Offered Securities for at least three (3) years after the Closing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) *Internal Controls*. The Company will maintain a system of internal accounting controls designed to provide reasonable assurances that: (i) transactions are executed in accordance with management's general or specific authorization; (ii) transactions are recorded as necessary in order to permit preparation of financial statements in accordance with U.S. GAAP and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management's general or specific authorization; and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The internal controls, upon consummation of the offering of the Offered Securities, will be, overseen by the Audit Committee (the "**Audit Committee**") of the Board in accordance with the rules of the Nasdaq Stock Market ("**Nasdaq**").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) *Exchange Listing*. The Class A Ordinary Shares has been duly authorized for listing on the Nasdaq Capital Market, subject to official notice of issuance. The Company is in material compliance with the provisions of the rules and regulations promulgated by Nasdaq and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements (to the extent applicable to the Company as of the date hereof, the Closing Date or the Option Closing Date; and subject to all exemptions and exceptions from the requirements thereof as are set forth therein, to the extent applicable to the Company). Without limiting the generality of the foregoing and subject to the qualifications above: (i) all members of the Company's board of directors who are required to be "independent" (as that term is defined under applicable laws, rules and regulations), including, without limitation, all members of each of the audit committee, compensation committee and nominating committee of the Company's board of directors, meet the qualifications of independence as set forth under such laws, rules and regulations, (ii) the audit committee of the Company's board of directors has at least one member who is an "audit committee financial expert" (as that term is defined under such laws, rules and regulations), and (iii) that, based on discussions with Nasdaq, the Company meets all requirements for listing on the Nasdaq Capital Market.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) *Future Reports to the Underwriters*. For one year after the date of this Agreement, the Company will furnish, if not otherwise available on EDGAR, to the Representative at 590 Madison Avenue 39<sup>th</sup> Floor, New York, NY, 10022 Attn: Joseph Rallo (i) as soon as practicable after the end of each fiscal year, copies of the Annual Report of the Company containing the balance sheet of the Company as of the close of such fiscal year and statements of income, stockholders' equity and cash flows for the year then ended and the opinion thereon of the Company's independent public or certified public accountants; (ii) as soon as practicable after the filing thereof, copies of each proxy statement, Annual Report on Form 20-F, quarterly financial statements using a Form 6-K or other report filed by the Company with the Commission; and (iii) as soon as available, copies of any report or communication of the Company mailed generally to holders of its capital stock.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) *No Manipulation of Price*. The Company will not take, directly or indirectly, any action designed to cause or result in, or that has constituted or might reasonably be expected to constitute, the stabilization or manipulation of the price of any securities of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) *Existing Lock-Up Agreements*. Except as described in the Registration Statement, the Disclosure Package and the Prospectus, there are no existing agreements between the Company and its security holders that prohibit the sale, transfer, assignment, pledge or hypothecation of any of the Company's securities. The Company will direct the transfer agent to place stop transfer restrictions upon the securities of the Company that are bound by such "lock-up" agreements for the duration of the periods contemplated therein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) *Company Lock-Up.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The Company will not, without the prior written consent of the Representative, from the date of execution of this Agreement and continuing for a period of 180 days from the commencement of the Company's first day of trading (the "**Lock-Up Period**"), (i) offer, pledge, announce the intention to sell, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or otherwise transfer or dispose of, directly or indirectly, or file with the Commission a registration statement under the Securities Act relating to, any Ordinary Shares or any securities convertible into or exercisable or exchangeable for Ordinary Shares of the Company; (ii) file or caused to be filed any registration statement with the Commission relating to the offering of any Ordinary Shares of the Company or any securities convertible into or exercisable or exchangeable for Ordinary Shares of the Company; (iii) complete any offering of debt securities of the Company, other than entering into a line of credit with a traditional bank or (iv) enter into any swap or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of the Ordinary Shares or any such other securities of the Company, whether any such transaction described in clause (i), (ii), (iii) or (iv) above is to be settled by delivery of Ordinary Shares or such other securities of the Company, in cash or otherwise, except to the Underwriter pursuant to this Agreement. The Company agrees not to accelerate the vesting of any option or warrant or the lapse of any repurchase right prior to the expiration of the Lock-Up Period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The restrictions contained in Section 3(n)(i) hereof shall not apply to: (A) the Offered Securities, (B) the Underlying Shares, (C) any Class A Ordinary Shares issued under a company stock plan or warrants issued by the Company, in each case, described as outstanding in the Registration Statement, the Disclosure Package or the Prospectus, (D) any options and other awards granted under a company stock plan or Class A Ordinary Shares issued pursuant to an employee stock purchase plan, in each case, as described in the Registration Statement, the Disclosure Package or the Prospectus, and (E) Class A Ordinary Shares or other securities issued in connection with a transaction with an unaffiliated third party that includes a bona fide commercial relationship (including joint ventures, marketing or distribution arrangements, collaboration agreements or intellectual property license agreements) or any acquisition of assets or acquisition of not less than a majority or controlling portion of the equity of another entity; provided that (x) the aggregate number of Class A Ordinary Shares issued pursuant to clause (E) shall not exceed five percent (5%) of the total number of outstanding Class A Ordinary Shares immediately following the issuance and sale of the Offered Securities pursuant hereto and (y) the recipient of any such Class A Ordinary Shares or other securities issued or granted pursuant to clause (E) during the Lock-Up Period shall enter into an agreement substantially in the form of <u>Exhibit B</u> hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) *Restriction on Continuous Offerings*. Notwithstanding the restrictions contained in <u>Section 3(n),</u> the Company, on behalf of itself and any successor entity, agrees that, without the prior written consent of the Representative, it will not, for a period of 180 days from the Applicable Time, directly or indirectly in any "at-the-market" or continuous equity transaction, offer to sell, sell, contract to sell, grant any option to sell or otherwise dispose of shares of the Company or any securities convertible into or exercisable or exchangeable for shares of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) *Exchange Listing*. The Company shall use its reasonable best efforts to maintain the listing of the Class A Ordinary Shares on Nasdaq Capital Market, and shall not voluntarily delist the Class A Ordinary Shares on Nasdaq Capital Market for at least three (3) years from the Closing. The Company further agrees, if the Company applies to have the Class A Ordinary Shares traded on any of the following markets or exchange, including the NYSE American, the Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock Exchange (or any successors to any of the foregoing) (each "**Other Trading Market**"), it will then include in such application all of the Securities, and will take such other action as is necessary to cause all of such securities to be listed or quoted on such Other Trading Market as promptly as possible. The Company will then take all action reasonably necessary to continue the listing and trading of its Class A Ordinary Shares on such Other Trading Market and will comply in all respects with the Company's reporting, filing and other obligations under the bylaws or rules of such Other Trading Market. The Company agrees to maintain the eligibility of the Class A Ordinary Shares for electronic transfer through the Depository Trust Company or another established clearing corporation, including, without limitation, by timely payment of fees to the Depository Trust Company or such other established clearing corporation in connection with such electronic transfer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) *Independent Accountant*. The Company shall continue to retain a nationally recognized independent registered public accounting firm for a period of at least three (3) years after the Closing. The Representative acknowledges that the Accountant and Marcum Asia CPAs LLP are acceptable to the Representative.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r) *Financial Republic Relations Firm*. The Company shall continue to retain a financial public relations firm reasonably acceptable to the Representative and the Company for at least three (3) years after the Closing. The Representative acknowledges that Ascent Investor Relations LLC is acceptable to the Representative.

SECTION 4. *Payment of Fees and Expenses*. Whether or not the transactions contemplated in this Agreement are consummated or this Agreement is terminated, the Company agrees to pay all costs, fees and expenses incurred in connection with the transactions contemplated hereby, including without limitation (i) all of the reasonable and documented out-of-pocket expenses (including, but not limited to, travel, due diligence expenses, reasonable fees and expenses of its legal counsel, roadshow, cost of book building, prospectus tracking and compliance software for the offering, and costs associated with bound volumes of the offering materials and commemorative mementos and lucite tombstones) incurred by the Representative in an aggregate amount not to exceed $204,500, (ii) expenses associated with background check on the Company's senior management and board of directors by a background search firm acceptable to the Representative, (iii) all expenses incident to the issuance and delivery of the Offered Securities (including all printing and engraving costs, if any), (iv) all fees and expenses of the clearing firm, registrar and transfer agent of the Offered Securities, (v) all necessary issue, transfer and other stamp taxes in connection with the issuance and sale of the Offered Securities, (vi) all fees and expenses of the Company's counsel, independent public or certified public accountants and other advisors, (vii) all costs and expenses incurred in connection with the preparation, printing, filing, shipping and distribution of the Registration Statement (including financial statements, exhibits, schedules, consents and certificates of experts), each Issuer Free Writing Prospectus, each preliminary prospectus and the Prospectus, and all amendments and supplements thereto, and this Agreement, and (viii) all filing fees, attorneys' fees and expenses incurred by the Company, or the Representative, in connection with qualifying or registering (or obtaining exemptions from the qualification or registration of) all or any part of the Offered Securities for offer and sale under the state securities or blue sky laws, and, if requested by the Representative, preparing and printing a "Blue Sky Survey" or memorandum, and any supplements thereto, advising the Representative of such qualifications, registrations and exemptions. For the sake of clarity, it is understood and agreed that the Company shall be responsible for the Representative's external counsel legal costs detailed in this Section irrespective of whether the Offering is consummated or not, subject to a maximum amount of $50,000 in the event that there is not a Closing. Additionally, the Company shall pay the Representative a non-accountable expense allowance in the amount equal to 0.5% of the gross proceeds of this Offering raised from investors that are introduced directly or indirectly by any party or entity which is not the Company (including but without limitation to the Representative).

SECTION 5. *Conditions of the Obligations of the Underwriters*. The obligations of the Underwriters to purchase the Offered Securities as provided herein on the Closing Date or the Option Closing Date shall be subject to (1) the accuracy of the representations and warranties on the part of the Company set forth in <u>Section 1</u> hereof as of the date hereof and as of the Closing Date or the Option Closing Date as though then made; (2) the timely performance by the Company of its covenants and other obligations hereunder; and (3) each of the following additional conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) *Accountant's Comfort Letter*. On the date hereof, the Representative shall have received from the Accountant, a letter dated the date hereof addressed to the Representative, in form and substance satisfactory to the Representative, containing statements and information of the type ordinarily included in accountants' "comfort letters" to Representative, delivered according to Statement of Auditing Standards No. 72 (or any successor bulletin), with respect to the audited and unaudited financial statements and certain financial information contained in the Registration Statement and the Prospectus.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) *Effectiveness of Registration Statement; Compliance with Registration Requirements; No Stop Order*. During the period from and after the execution of this Agreement to and including the Closing Date or the Option Closing Date, as applicable:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the Company shall have filed the Prospectus with the Commission (including the information required by Rule 430A under the Securities Act) in the manner and within the time period required by Rule 424(b) under the Securities Act; or the Company shall have filed a post-effective amendment to the Registration Statement containing the information required by such Rule 430A, and such post-effective amendment shall have become effective; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) no stop order suspending the effectiveness of the Registration Statement, or any post-effective amendment to the Registration Statement, shall be in effect and no proceedings for such purpose shall have been instituted or threatened by the Commission.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) *No Material Adverse Change*. For the period from and after the date of this Agreement to and including the Closing Date or the Option Closing Date, in the reasonable judgment of the Representative there shall not have occurred any Material Adverse Change.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) *CFO Certificate*. On the Closing Date and/or the Option Closing Date, the Representative shall have received a written certificate executed by the Chief Financial Officer of the Company, dated as of such date, on behalf of the Company, with respect to certain financial data contained in the Registration Statement, Disclosure Package and the Prospectus, providing "management comfort" with respect to such information, in form and substance reasonably satisfactory to the Representative.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) *Officers' Certificate*. On the Closing Date and/or the Option Closing Date, the Representative shall have received a written certificate executed by the Chief Executive Officer and the Chief Financial Officer of the Company, dated as of such date, to the effect that the signers of such certificate have reviewed the Registration Statement, the Disclosure Package and the Prospectus and any amendment or supplement thereto, each Issuer Free Writing Prospectus and this Agreement, to the effect that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The representations and warranties of the Company in this Agreement are true and correct, as if made on and as of such Closing Date, and the Company has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to such Closing Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) No stop order suspending the effectiveness of the Registration Statement or the use of the Prospectus has been issued and no proceedings for that purpose have been instituted or are pending or, to the Company's knowledge, threatened under the Securities Act; no order having the effect of ceasing or suspending the distribution of the Offered Securities or any other securities of the Company has been issued by any securities commission, securities regulatory authority or stock exchange in the United States and no proceedings for that purpose have been instituted or are pending or, to the knowledge of the Company, contemplated by any securities commission, securities regulatory authority or stock exchange in the United States; and

(iii Subsequent to the respective dates as of which information is given in the Registration Statement and the Prospectus, there has not been: (a) any Material Adverse Change; (b) any transaction that is material to the Company, the Subsidiaries and the Consolidated Affiliated Entities taken as a whole, except transactions entered into in the ordinary course of business; (c) any obligation, direct or contingent, that is material to the Company, the Subsidiaries the Consolidated Affiliated Entities taken as a whole, incurred by the Company or any Subsidiary or any Consolidated Affiliated Entity, except obligations incurred in the ordinary course of business; (d) any material change in the capital stock (except changes thereto resulting from the exercise of outstanding options or warrants or conversion of outstanding indebtedness into Ordinary Shares of the Company) or outstanding indebtedness of the Company or any Subsidiary or any Consolidated Affiliated Entity (except for the conversion of such indebtedness into Ordinary Shares of the Company); (e) any dividend or distribution of any kind declared, paid or made on Ordinary Shares of the Company; or (f) any loss or damage (whether or not insured) to the property of the Company or any Subsidiary or any Consolidated Affiliated Entity which has been sustained or will have been sustained which has a Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) *Secretary's Certificate*. On the Closing Date and/or the Option Closing Date, the Representative shall have received a certificate of the Company signed by the Secretary of the Company, dated such Closing Date, certifying: (i) that each of the Company's Second Amended and Restated Articles of Association and Memorandum of Association attached to such certificate is true and complete, has not been modified and is in full force and effect; (ii) that each of the Subsidiaries' and each of the Consolidated Affiliated Entities' articles of association, memorandum of association or charter documents attached to such certificate is true and complete, has not been modified and is in full force and effect; (iii) that the resolutions of the Company's Board of Directors relating to the Offering attached to such certificate are in full force and effect and have not been modified; and (iv) the good standing of the Company and each of the Subsidiaries and each of the Consolidated Affiliated Entities (except in such jurisdictions where the concept of good standing is not applicable). The documents referred to in such certificate shall be attached to such certificate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) *Bring-down Comfort Letter*. On the Closing Date and/or the Option Closing Date, the Representative shall have received from the Accountant, a letter dated such date, in form and substance satisfactory to the Representative, to the effect that the Accountant reaffirms the statements made in the letter furnished by it pursuant to subsection (a) of this <u>Section 5</u>, except that the specified date referred to therein for the carrying out of procedures shall be no more than three business days prior to the Closing Date and/or the Option Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) *Lock-Up Agreement from Certain Securityholders of the Company*. On or prior to the date hereof, the Company shall have furnished to the Representative an agreement substantially in the form of <u>Exhibit B</u> hereto from each of the Company's officers, directors, security holders of 5% or more of the Company's Class A Ordinary Shares or Class B Ordinary Shares or securities convertible into or exercisable for the Company's Class A Ordinary Shares or Class B Ordinary Shares listed on <u>Schedule D</u> hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) *Exchange Listing*. The Offered Securities to be delivered on the Closing Date and/or the Option Closing Date shall have been approved for listing on the Nasdaq Capital Market, subject to official notice of issuance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) *Company Counsel Opinions*. On the Closing Date and/or the Option Closing Date, the Representative shall have received

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the favorable opinion of Hunter Taubman Fischer & Li LLC, U.S. securities counsel to the Company,
dated as of such date, addressed to the Representative, including negative assurances, in form and substance reasonably satisfactory to
the Representative;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) the favorable opinion of Ogier (Cayman) LLP, Cayman Islands counsel to the Company, in form and substance
reasonably satisfactory to the Representative; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) the favorable opinion of Dentons Law Offices, LLP (Guangzhou), PRC counsel to the Company, in form and
substance reasonably satisfactory to the Representative.

The Representative shall rely on the opinions of (i) the Company's Cayman Islands counsel, Ogier (Cayman) LLP, filed as Exhibit 5.1 to the Registration Statement, as to the due incorporation, validity of the Offered Securities and the Underlying Shares and due authorization, execution and delivery of the Agreement and (ii) the Company's PRC counsel, Dentons Law Offices, LLP (Guangzhou), filed as Exhibit 99.7 to the Registration Statement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) Financial Projection. On or prior to the Closing Date, the Representative shall have received the Company's projected financial results for the fiscal years ending December 31, 2023 through 2026.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) *Additional Documents*. On or before the Closing Date and/or the Option Closing Date, the Representative and counsel for the Representative shall have received such information, documents and opinions as they may reasonably require for the purposes of enabling them to pass upon the issuance and sale of the Offered Securities as contemplated herein, or in order to evidence the accuracy of any of the representations and warranties, or the satisfaction of any of the conditions or agreements, herein contained.

If any condition specified in this <u>Section 5</u> is not satisfied when and as required to be satisfied, this Agreement may be terminated by the Representative by written notice to the Company at any time on or prior to the Closing Date and/or the Option Closing Date, which termination shall be without liability on the part of any party to any other party, except that <u>Section 4</u> (with respect to the reimbursement of out-of-pocket accountable, bona fide expenses actually incurred by the Representative) and <u>Section 7</u> shall at all times be effective and shall survive such termination.

SECTION 6. *Effectiveness of this Agreement*. This Agreement shall not become effective until the later of (i) the execution of this Agreement by the parties hereto and (ii) notification (including by way of oral notification from the reviewer at the Commission) by the Commission to the Company of the effectiveness of the Registration Statement under the Securities Act.

SECTION 7. *Indemnification*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) *Indemnification by the Company*. The Company shall indemnify and hold harmless the Underwriters, its respective affiliates and each of its respective directors, officers, members, employees and agents and each person, if any, who controls such Underwriters within the meaning of Section 15 of the Securities Act of or Section 20 of the Exchange Act (collectively the "**Underwriters Indemnified Parties**," and each a "**Underwriters Indemnified Party**") from and against any losses, claims, damages or liabilities (including in settlement of any litigation if such settlement is effected with the prior written consent of the Company) arising out of (i) an untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, including the information deemed to be a part of the Registration Statement at the time of effectiveness and at any subsequent time pursuant to Rules 430A and 430B of the Securities Act Regulations, or arise out of or are based upon the omission from the Registration Statement, or alleged omission to state therein, a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; or (ii) an untrue statement or alleged untrue statement of a material fact contained in the Prospectus, or any amendment or supplement thereto, or in any other materials used in connection with the Offering, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and shall reimburse such Underwriters Indemnified Party for any legal or other expenses reasonably incurred by it in connection with evaluating, investigating or defending against such loss, claim, damage, liability or action; *provided, however*, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage, expense or liability arises out of or is based upon an untrue statement in, or omission from any preliminary prospectus, any Registration Statement or the Prospectus, or any such amendment or supplement thereto, or any Issuer Free Writing Prospectus or in any other materials used in connection with the Offering made in reliance upon and in conformity with the Underwriters Information. The indemnification obligations under this <u>Section 7(a)</u> are not exclusive and will be in addition to any liability, which the Underwriters might otherwise have and shall not limit any rights or remedies which may otherwise be available at law or in equity to each Underwriters Indemnified Party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) *Indemnification by the Underwriters*. The Underwriters shall indemnify and hold harmless the Company and the Company's affiliates and each of their respective directors, officers, employees, agents and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (collectively the "**Company Indemnified Parties**" and each a "**Company Indemnified Party**") from and against any losses, claims, damages or liabilities (including in settlement of any litigation if such settlement is effected with the prior written consent of the Underwriters) arising out (i) any untrue statement of a material fact contained in any preliminary prospectus, any Issuer Free Writing Prospectus, any "issuer information" filed or required to be filed pursuant to Rule 433(d) of the Securities Act Regulations, any Registration Statement or the Prospectus, or in any amendment or supplement thereto, or (ii) the omission to state in any preliminary prospectus, any Issuer Free Writing Prospectus, any "issuer information" filed or required to be filed pursuant to Rule 433(d) of the Securities Act Regulations, any Registration Statement or the Prospectus, or in any amendment or supplement thereto, a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, but in each case only to the extent that the untrue statement or omission was made in reliance upon and in conformity with the Underwriters Information and shall reimburse the Company for any legal or other expenses reasonably incurred by such party in connection with investigating or preparing to defend or defending against or appearing as third party witness in connection with any such loss, claim, damage, liability, action, investigation or proceeding, as such fees and expenses are incurred. Notwithstanding the provisions of this <u>Section 7(b)</u>, in no event shall any indemnity by the Underwriters under <u>this Section 7(b)</u> exceed the total discounts received by the Underwriters in connection with the Offering. The indemnification obligations under this <u>Section 7(b)</u> are not exclusive and will be in addition to any liability, which the Company might otherwise have and shall not limit any rights or remedies which may otherwise be available at law or in equity to each Company Indemnified Party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) *Procedure*. Promptly after receipt by an indemnified party under this <u>Section 7</u> of notice of the commencement of any action, the indemnified party shall, if a claim in respect thereof is to be made against an indemnifying party under this <u>Section 7</u>, notify such indemnifying party in writing of the commencement of that action; provided, however, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have under this Section 7 except to the extent it has been materially adversely prejudiced by such failure; and, provided, further, that the failure to notify an indemnifying party shall not relieve it from any liability which it may have to an indemnified party otherwise than under this <u>Section 7</u>. If any such action shall be brought against an indemnified party, and it shall notify the indemnifying party thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it wishes, jointly with any other similarly notified indemnifying party, to assume the defense of such action with counsel reasonably satisfactory to the indemnified party (which counsel shall not, except with the written consent of the indemnified party, be counsel to the indemnifying party). After notice from the indemnifying party to the indemnified party of its election to assume the defense of such action, except as provided herein, the indemnifying party shall not be liable to the indemnified party under <u>Section 7(a)</u> or <u>7(b)</u>, as applicable, for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense of such action other than reasonable costs of investigation; *provided, however*, that any indemnified party shall have the right to employ separate counsel in any such action and to participate in the defense of such action but the fees and expenses of such counsel (other than reasonable costs of investigation) shall be at the expense of such indemnified party unless (i) the employment thereof has been specifically authorized in writing by the Company in the case of a claim for indemnification under <u>Section 7(a)</u>, (ii) such indemnified party shall have been advised by its counsel that there may be one or more legal defenses available to it which are different from or additional to those available to the indemnifying party, or (iii) the indemnifying party has failed to assume the defense of such action and employ counsel reasonably satisfactory to the indemnified party within a reasonable period of time after notice of the commencement of the action or the indemnifying party does not diligently defend the action after assumption of the defense, in which case, if such indemnified party notifies the indemnifying party in writing that it elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of (or, in the case of a failure to diligently defend the action after assumption of the defense, to continue to defend) such action on behalf of such indemnified party and the indemnifying party shall be responsible for legal or other expenses subsequently incurred by such indemnified party in connection with the defense of such action; *provided, however,* that the indemnifying party shall not, in connection with any one such action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys at any time any such indemnified party (in addition to any local counsel), which firm shall be designated in writing by the Underwriters if the indemnified party under this <u>Section 7</u> is an Underwriters Indemnified Party or by the Company if an indemnified party under this <u>Section 7</u> is a Company Indemnified Party. Subject to this <u>Section 7(c)</u>, the amount payable by an indemnifying party under <u>Section 7</u> shall include, but not be limited to, (x) reasonable legal fees and expenses of counsel to the indemnified party and any other expenses in investigating, or preparing to defend or defending against, or appearing as a third party witness in respect of, or otherwise incurred in connection with, any action, investigation, proceeding or claim, and (y) all amounts paid in settlement of any of the foregoing. No indemnifying party shall, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of judgment with respect to any pending or threatened action or any claim whatsoever, in respect of which indemnification or contribution could be sought under this <u>Section 7</u> (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement, compromise or consent (i) includes an unconditional release of each indemnified party in form and substance reasonably satisfactory to such indemnified party from all liability arising out of such action or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party. Subject to the provisions of the following sentence, no indemnifying party shall be liable for settlement of any pending or threatened action or any claim whatsoever that is effected without its written consent (which consent shall not be unreasonably withheld or delayed), but if settled with its written consent, if its consent has been unreasonably withheld or delayed or if there be a judgment for the plaintiff in any such matter, the indemnifying party agrees to indemnify and hold harmless any indemnified party from and against any loss or liability by reason of such settlement or judgment. In addition, if at any time an indemnified party shall have requested that an indemnifying party reimburse the indemnified party for fees and expenses of counsel, such indemnifying party agrees that it shall be liable for any settlement of the nature contemplated herein effected without its written consent if (i) such settlement is entered into more than forty-five (45) days after receipt by such indemnifying party of the request for reimbursement, (ii) such indemnifying party shall have received notice of the terms of such settlement at least thirty (30) days prior to such settlement being entered into and (iii) such indemnifying party shall not have reimbursed such indemnified party in accordance with such request prior to the date of such settlement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) *Contribution*. If the indemnification provided for in this <u>Section 7</u> is unavailable or insufficient to hold harmless an indemnified party under <u>Section 7(a)</u> or <u>Section 7(b)</u>, then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid, payable or otherwise incurred by such indemnified party as a result of such loss, claim, damage, expense or liability (or any action, investigation or proceeding in respect thereof), as incurred, (i) in such proportion as shall be appropriate to reflect the relative benefits received by the indemnifying party or parties on the one hand and the indemnified parry or parties on the other hand from the offering of the Offered Securities, or (ii) if the allocation provided by clause (i) of this <u>Section 7(d)</u> is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) of this <u>Section 7(d)</u> but also the relative fault of the indemnifying party or parties on the one hand and the indemnified party or parties on the other with respect to the statements, omissions, acts or failures to act which resulted in such loss, claim, damage, expense or liability (or any action, investigation or proceeding in respect thereof) as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Underwriters on the other with respect to such offering shall be deemed to be in the same proportion as the total proceeds from the offering of the Offered Securities purchased by investors as contemplated by this Agreement (before deducting expenses) received by the Company bear to the total underwriting discounts received by the Underwriters in connection with the Offering, in each case as set forth in the table on the cover page of the Prospectus. The relative fault of the Company on the one hand and the Underwriters on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand or the Underwriters on the other, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such untrue statement, omission, act or failure to act; provided that the parties hereto agree that the written information furnished to the Company by the Underwriters for use in any preliminary prospectus, any Registration Statement or the Prospectus, or in any amendment or supplement thereto, consists solely of the Underwriters Information. The Company and the Underwriters agree that it would not be just and equitable if contributions pursuant to this <u>Section 7(d)</u> be determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to herein. The amount paid or payable by an indemnified party as a result of the loss, claim, damage, expense, liability, action, investigation or proceeding referred to above in this <u>Section 7(d)</u> shall be deemed to include, for purposes of this <u>Section 7(d)</u>, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating, preparing to defend or defending against or appearing as a third party witness in respect of, or otherwise incurred in connection with, any such loss, claim, damage, expense, liability, action, investigation or proceeding. Notwithstanding the provisions of this <u>Section 7(d)</u>, the Underwriters shall not be required to contribute any amount in excess of the total discounts received in cash by the Underwriters in connection with the Offering less the amount of any damages that the Underwriters have otherwise paid or become liable to pay by reason of any untrue or alleged untrue statement, omission or alleged omission, act or alleged act or failure to act or alleged failure to act. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

SECTION 8. *Termination of this Agreement*. Prior to the Closing Date, whether before or after notification by the Commission to the Company of the effectiveness of the Registration Statement under the Securities Act, this Agreement may be terminated by the Representative by written notice given to the Company if at any time (i) trading or quotation in any of the Company's securities shall have been suspended or limited by the Commission or by Nasdaq; (ii) a general banking moratorium shall have been declared by any U.S. federal or Cayman Islands authorities; (iii) there shall have occurred any outbreak or escalation of national or international hostilities or any crisis or calamity, or any change in the United States or international financial markets, or any substantial change or development involving a prospective substantial change in United States' or international political, financial or economic conditions that, in the reasonable judgment of the Representative, is material and adverse and makes it impracticable to market the Offered Securities in the manner and on the terms described in the Prospectus or to enforce contracts for the sale of securities, or (iv) the Company fails or refuses to comply with the material terms or to fulfill any of the material conditions of this Agreement, or for any reason the Company shall be unable to perform its obligations under this Agreement. Any termination pursuant to this <u>Section 8</u> and <u>Section 14</u> shall be without liability on the part of (a) the Company to any of the Underwriters, except that the Company shall be, subject to demand by the Underwriters, obligated to reimburse the Representative for only those documented out-of-pocket expenses (including the reasonable fees and expenses of their counsel, which shall not exceed $50,000 in the event that there is not a Closing, and other out-of-pocket expenses including, but not limited to, travel, due diligence expenses, roadshow, cost of book building, prospectus tracking and compliance software for the offering, and costs associated with bound volumes of the offering materials and commemorative mementos and lucite tombstones), actually incurred by the Representative in connection herewith as allowed under FINRA Rule 5110, less any amounts previously paid by the Company; *provided, however,* that all such expenses shall not exceed $104,500 in the aggregate, (b) the Underwriters to the Company, or (c) of any party hereto to any other party except that the provisions of <u>Section 4</u> (with respect to the reimbursement of out-of-pocket accountable, bona fide expenses actually incurred by the Representative) and <u>Section 7</u> shall at all times be effective and shall survive such termination.

SECTION 9. *No Advisory or Fiduciary Responsibility*. The Company hereby acknowledges that the Underwriters are acting solely as Underwriters in connection with the offering of the Offered Securities. The Company further acknowledges that the Underwriters are acting pursuant to a contractual relationship created solely by this Agreement entered into on an arm's-length basis and in no event do the parties intend that the Underwriters act or be responsible as a fiduciary to the Company, its management, shareholders, creditors or any other person in connection with any activity that the Underwriters may undertake or have undertaken in furtherance of the offering of the Offered Securities, either before or after the date hereof. The Underwriters hereby expressly disclaim any fiduciary or similar obligations to the Company, either in connection with the transactions contemplated by this Agreement or any matters leading up to such transactions, and the Company hereby confirms its understanding and agreement to that effect. The Company hereby further confirms its understanding that no Underwriter has assumed an advisory or fiduciary responsibility in favor of the Company with respect to the Offering contemplated hereby or the process leading thereto, including, without limitation, any negotiation related to the pricing of the Offered Securities; and the Company has consulted its own legal and financial advisors to the extent it has deemed appropriate in connection with this Agreement and the Offering. The Company and the Underwriters agree that they are each responsible for making their own independent judgments with respect to any such transactions, and that any opinions or views expressed by the Underwriters to the Company regarding such transactions, including but not limited to any opinions or views with respect to the price or market for the Company's securities, do not constitute advice or recommendations to the Company. The Company hereby waives and releases, to the fullest extent permitted by law, any claims that the Company may have against the Underwriters with respect to any breach or alleged breach of any fiduciary or similar duty to the Company in connection with the transactions contemplated by this Agreement or any matters leading up to such transactions.

SECTION 10. *Representations and Indemnities to Survive Delivery; Third Party Beneficiaries*. The respective indemnities, agreements, representations, warranties and other statements of the Company, of its officers, and of the Underwriters set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of the Underwriters or the Company or any of its or their partners, officers or directors or any controlling person, as the case may be, and will survive delivery of and payment for the Offered Securities sold hereunder and any termination of this Agreement. Each Investor shall be a third-party beneficiary with respect to the representations, warranties, covenants and agreements of the Company set forth herein.

Section 11. *Tail Financing.* The Representative shall be entitled to a cash fee equal to eight percent (8%) of the gross proceeds received by the Company (x) from the sale of any equity, debt and/or equity derivative instruments (each, a "**Tail Financing**") to any investor actually introduced by the Representative to the Company during the period from January 20, 2023, the date of the engagement letter by and between the Company and the Representative (the "**Engagement Letter**") until the earlier of (i) twelve (12) months from the date of the Engagement Letter, or (ii) the later of the Closing Date or the Option Closing Date, if any, of the Offering (the "**Engagement Period**") (excluding any existing investors of the Company or its subsidiaries or Consolidated Affiliated Entities or affiliates provided that the Company provides a list of its existing shareholders upon the execution the Engagement Letter), or (y) for any merger, acquisition or sale of equity securities or assets (in which the Company may be the acquiring or the acquired entity), joint-venture, strategic alliance or other similar transaction (any such transaction, an "**M&A Transaction**") with any investor actually introduced by the Representative to the Company during the Engagement Period (excluding any existing investors of the Company or its subsidiaries or Consolidated Affiliated Entities or affiliates provided that the Company provides a list of its existing shareholders upon the execution the Engagement Letter), provided (i) that such Trail Financing or M&A Transaction is consummated at any time during the Engagement Period or within the twelve (12) month period following the expiration or termination of the Engagement Period, and (ii) that such financing is by a party actually introduced to the Company by the Representative in an offering in which the Company has direct knowledge of such party's participation.

Section 12. *Right of First Refusal.* The Company agrees that it shall provide the Representative the right of first refusal ("**Right of First Refusal**") until 12 months after the date the Offering is completed to act as sole investment banker, sole book-runner, and/or sole placement agent (collectively, "**Future Services**"), at the Representative's sole discretion, for each and every future public equity and debt offering, including all public equity linked financings (each, a "**Subject Transaction**"),during such 12 month period, of the Company, or any successor to or any current or future subsidiary of the Company. For the avoidance of doubt, the Company shall not retain, engage, or solicit any additional investment banker, book-runner, financial advisor, underwriter and/or placement agent for Future Services without the express written consent of the Representative. In the event the Company notifies the Representative of its intention to pursue an activity that would enable the Representative to exercise its Right of First Refusal to provide Future Services, the Representative shall notify the Company of its election to provide such Future Services, including notification of the compensation and other terms to which the Representative claims to be entitled, within fifteen (15) days of written notice by the Company. In the event the Company engages the Representative to provide such Future Services, the Representative will be compensated as mutually agreed by the Company and the Representative. In the event that the Representative waives such Right of First Refusal and does not act as an investment banker, book-runner, or placement agent for a Subject Transaction, the Representative shall be entitled to a cash fee equal to four and a half (4.5%) of the gross proceeds received by the Company in such Subject Transaction. Pursuant to FINRA Rule 5110, the Company shall have the right to terminate this Right of First Refusal for cause if the Representative materially fails to provide the services set forth in this Agreement.

SECTION 13. *Notices*. All communications hereunder shall be in writing and shall be mailed, hand delivered, emailed or telecopied and confirmed to the parties hereto as follows:

**If to the Representative:**

EF Hutton,

division of Benchmark Investments, LLC

590 Madison Avenue, 39th Floor

New York, NY 10022

Attn: Joseph Rallo

Email: jrallo@efhuttongroup.com

Phone No.: (212) 404-7002

**With a copy (*which shall not constitute notice*) to:**

Ortoli Rosenstadt LLP

366 Madison Avenue, 3<sup>rd</sup> Floor

New York, NY 10017

Attn: William S. Rosenstadt, Esq.

Attn: Mengyi "Jason" Ye, Esq.

Email: wsr@orllp.legal

jye@orllp.legal

Fax No.: (212) 826-9307

**If to the Company:**

Chanson International Holding

20 West 23rd St

New York, NY 10010

Attn: Gang Li , CEO

Email: g24han@gmail.com

Phone: (631)-464-1388

**With a copy (*which shall not constitute notice*) to:**

Hunter Taubman Fischer & Li LLC

950 Third Avenue, 19th Floor<br> New York, NY 10022<br> Attn: Ying Li, Esq.

Email: yli@htflawyers.com

Fax No.: (212) 202 6380

Any party hereto may change the address for receipt of communications by giving written notice to the others.

SECTION 14. *Defaulting Underwriters*. If, on the Closing Date, any one or more of the Underwriters shall fail or refuse to purchase the Firm Shares that it has or they have agreed to purchase hereunder on the Closing Date, and the aggregate number of the Firm Shares which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase is not more than one-tenth (10%) of the aggregate number of the Firm Shares to be purchased on the Closing Date, the other Underwriters shall be obligated severally in the proportions that the number of Firm Shares set forth opposite their respective names in <u>Schedule A</u> bears to the aggregate number of Firm Shares set forth opposite the names of all such non-defaulting Underwriters, or in such other proportions as the Representatives may specify, to purchase the Firm Shares which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase on the Closing Date; provided that<u>,</u> in no event shall the number of Firm Shares that any Underwriter has agreed to purchase pursuant to this Agreement be increased pursuant to this Section 14 by an amount in excess of one-ninth (1/9) of such number of Firm Shares without the written consent of such Underwriter.

If, on the Closing Date, any Underwriter or Underwriters shall fail or refuse to purchase Firm Shares and the aggregate number of Firm Shares with respect to which such default occurs is more than one-tenth (10%) of the aggregate number of Firm Shares to be purchased on the Closing Date, and arrangements satisfactory to the Representatives and the Company for the purchase of such Firm Shares are not made within thirty six (36) hours after such default, this Agreement shall terminate without liability on the part of any non-defaulting Underwriter or the Company. In any such case, either the Representatives or the Company shall have the right to postpone the Closing Date, but in no event for longer than seven days, in order that the required changes, if any, in the Registration Statement, the Pricing Prospectus or the Prospectus or in any other documents or arrangements may be effected.

SECTION 15. *Successors*. This Agreement will inure to the benefit of and be binding upon the parties hereto and to the benefit of the employees, officers and directors and controlling persons referred to in <u>Section 7</u>, and in each case their respective successors, and no other person will have any right or obligation hereunder. The term "**successors**" shall not include any purchaser of the Offered Securities as such merely by reason of such purchase.

SECTION 16. *Partial Unenforceability*. The invalidity or unenforceability of any Section, paragraph or provision of this Agreement shall not affect the validity or enforceability of any other Section, paragraph or provision hereof. If any Section, paragraph or provision of this Agreement is for any reason determined to be invalid or unenforceable, there shall be deemed to be made such minor changes (and only such minor changes) as are necessary to make it valid and enforceable.

SECTION 17. *Governing Law Provisions*. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York, without giving effect to conflict of laws principles thereof.

SECTION 18. *Consent to Jurisdiction*. No legal suit, action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby (each, a "**Related Proceeding**") may be commenced, prosecuted or continued in any court other than the courts of the State of New York located in the City and County of New York or in the United States District Court for the Southern District of New York, which courts (collectively, the "**Specified Courts**") shall have jurisdiction over the adjudication of any Related Proceeding, and the parties to this Agreement hereby irrevocably consent to the exclusive jurisdiction the Specified Courts and personal service of process with respect thereto. The parties to this Agreement hereby irrevocably waive any objection to the laying of venue of any Related Proceeding in the Specified Courts and irrevocably waive and agree not to plead or claim in any Specified Court that any Related Proceeding brought in any Specified Court has been brought in an inconvenient forum.

SECTION 19. *General Provisions*. This Agreement constitutes the entire agreement of the parties to this Agreement and supersedes all prior written or oral and all contemporaneous oral agreements, understandings and negotiations with respect to the Offering. This Agreement may be executed in two or more counterparts, each one of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement may not be amended or modified unless in writing by all of the parties hereto, and no condition herein (express or implied) may be waived unless waived in writing by each party whom the condition is meant to benefit. The section headings herein are for the convenience of the parties only and shall not affect the construction or interpretation of this Agreement.

Each of the parties hereto acknowledges that it is a sophisticated business person who was adequately represented by counsel during negotiations regarding the provisions hereof, including, without limitation, the indemnification and contribution provisions of <u>Section 7</u>, and is fully informed regarding said provisions. Each of the parties hereto further acknowledges that the provisions of <u>Section 7</u> hereto fairly allocate the risks in light of the ability of the parties to investigate the Company, its affairs and its business in order to assure that adequate disclosure has been made in the Registration Statement, any preliminary prospectus and the Prospectus (and any amendments and supplements thereto), as required by the Securities Act and the Exchange Act.

The respective indemnities, contribution agreements, representations, warranties and other statements of the Company and the Underwriters set forth in or made pursuant to this Agreement shall remain operative and in full force and effect, regardless of (i) any investigation, or statement as to the results thereof, made by or on behalf of the Underwriters, the officers or employees of the Underwriters, any person controlling any of the Underwriters, the Company, the officers or employees of the Company, or any person controlling the Company, (ii) acceptance of the Offered Securities and payment for them as contemplated hereby and (iii) termination of this Agreement.

Except as otherwise provided, this Agreement has been and is made solely for the benefit of and shall be binding upon the Company, the Underwriters, the Underwriters' officers and employees, any controlling persons referred to herein, the Company's directors and the Company's officers who sign the Registration Statement and their respective successors and assigns, all as and to the extent provided in this Agreement, and no other person shall acquire or have any right under or by virtue of this Agreement. The term "**successors and assigns**" shall not include a purchaser of any of the Offered Securities from the Underwriters merely because of such purchase.

[*Signature Page Follows*]

If the foregoing is in accordance with your understanding of our agreement, kindly sign and return to the Company the enclosed copies hereof, whereupon this instrument, along with all counterparts hereof, shall become a binding agreement in accordance with its terms.

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| | |
|:---|:---|
| Very truly yours, | Very truly yours, |
| CHANSON INTERNATIONAL HOLDING | CHANSON INTERNATIONAL HOLDING |
| By: |  |
|  | Name: Gang Li |
|  | Title: CEO |

---

The foregoing Underwriting Agreement is hereby confirmed and accepted by the Representative as of the date first above written.

---

| | |
|:---|:---|
| **EF HUTTON, <br> DIVISION OF BENCHMARK INVESTMENTS, LLC** | **EF HUTTON, <br> DIVISION OF BENCHMARK INVESTMENTS, LLC** |
| By: |  |
|  | Name: Sam Fleischmann |
|  | Title: Supervisory Principal |

---

**SCHEDULE A**

---

| | |
|:---|:---|
| **Underwriters** | **Number of Firm Shares** |
| EF Hutton, division of Benchmark Investments, LLC |  |
| [ ] |  |

---

**SCHEDULE B**

**<u>Issuer Free Writing Prospectus(es)</u>**

**SCHEDULE C**

**Pricing Information**

Number of Firm Shares:

Number of Additional Shares:

Public Offering Price per one Share:

Underwriting Discount per one Share:

Proceeds to Company per one Share (before expenses):

**SCHEDULE D**

**Lock-Up Parties**

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| | |
|:---|:---|
| &nbsp;&nbsp;**Name** | &nbsp;&nbsp;**# of Shares** |
| &nbsp;&nbsp;Gang Li | &nbsp;&nbsp;2,700,000 Class A Ordinary Shares and 5,670,000 Class B Ordinary Shares |
| &nbsp;&nbsp;Danton Global Limited | &nbsp;&nbsp;2,700,000 Class A Ordinary Shares and 5,670,000 Class B Ordinary Shares |
| &nbsp;&nbsp;Yvan Global Limited | &nbsp;&nbsp;180,000 Class A Ordinary Shares |
| &nbsp;&nbsp;Yetta Global Limited | &nbsp;&nbsp;180,000 Class A Ordinary Shares |
| &nbsp;&nbsp;Jihong Cai | &nbsp;&nbsp;270,000 Class B Ordinary Shares |
| &nbsp;&nbsp;Haily Global Limited | &nbsp;&nbsp;270,000 Class B Ordinary Shares |
| &nbsp;&nbsp;Yong Du | &nbsp;&nbsp;0 |
| &nbsp;&nbsp;Zhiyuan Wang | &nbsp;&nbsp;0 |
| &nbsp;&nbsp;Shouhua Nie | &nbsp;&nbsp;0 |
| &nbsp;&nbsp;Yuchen Liu | &nbsp;&nbsp;0 |

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**SCHEDULE E**

**Subsidiaries and Consolidated Affiliated Entities**

---

| | |
|:---|:---|
| **Subsidiaries** | **Jurisdiction of Incorporation** |
| Dean Global Limited | British Virgin Islands |
| Jenyd Holdings Limited | Hong Kong |
| Xinjiang United Family Trading Co., Ltd. | PRC |
| George Chanson (NY) Corp. | New York |
| Chanson 23rd Street LLC | New York |
| Chanson 355 Greenwich LLC | New York |
| Chanson 1293 3rd Ave LLC | New York |
| Chanson Management LLC | Delaware |
| Chanson 2040 Broadway LLC | New York |

---

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| | |
|:---|:---|
| **Consolidated Affiliated Entities** | **Place of Incorporation** |
| Urumqi Midong District George Chanson Bakery | PRC |
| Shayibake District Yining Rd. George Chanson Bakery | PRC |
| Changji George Chanson Youhao Supermarket Bakery | PRC |
| Changji George Chanson Bakery | PRC |
| Tianshan District Xinhua North Rd. George Chanson Bakery | PRC |
| Tianshan District Xinmin Rd. George Chanson Bakery | PRC |
| Tianshan District Minzhu Rd. George Chanson Bakery | PRC |
| Tianshan District Jianquan No.3 Rd. George Chanson Bakery | PRC |
| Tianshan District Jiefang North Rd. George Chanson Bakery | PRC |
| Urumqi Economics and Technology Development District George Chanson Bakery on Kashi West Rd. | PRC |
| Xinshi District Liyushan South Rd. George Chanson Bakery | PRC |
| Xinshi District Changchun South Rd. George Chanson Bakery | PRC |
| Xinshi District Beijing Middle Rd. United Family Chanson Bakery | PRC |
| Xinshi District Suzhou East Rd. Chanson Bakery | PRC |
| Xinshi District Suzhou Rd. Xiaoxigou Chanson Bakery | PRC |
| Xinshi District South No.3 Rd. Chanson Bakery | PRC |
| Urumqi Economics and Technology Development District George Chanson Bakery on Xuanwuhu Rd. | PRC |
| Shayibake District Youhao South Rd. Chanson Bakery | PRC |
| Shuimogou District South Nanhu Rd. George Chanson Bakery | PRC |
| Xinshi District Hebei East Rd. George Chanson Bakery | PRC |
| Urumqi Toutunhe District George Chanson Bakery on Zhongya South Rd. | PRC |
| Shihezi Hemeijia Bakery No.1 | PRC |
| Shayibake District Karamay West Rd. Chanson Bakery | PRC |
| Shayibake District Qitai Rd. Hemeijia Chanson Bakery | PRC |
| Tianshan District Qingnian Rd. Chanson Bakery | PRC |
| Xinshi District Liyushan North Rd. Hemeijia Bakery | PRC |
| Xinshi District Changchun North Rd. Chanson Bakery | PRC |
| Tianshan District Guangming Rd. Chanson Coffee Bakery | PRC |

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**EXHIBIT A**

**Form of Warrant**

As attached.

**EXHIBIT B**

**Form of Lock-Up Agreement**

**[●]**, 2023

**EF Hutton,** 

**division of Benchmark Investments, LLC**

590 Madison Avenue, 39<sup>th</sup> Floor

New York, NY 10022

Ladies and Gentlemen:

This Lock-Up Agreement (this "**Agreement**") is being delivered to EF Hutton, division of Benchmark Investments, LLC, acting as the representative (the "**Representative**") to the several underwriters (the "**Underwriters**") in connection with the proposed Underwriting Agreement (the "**Underwriting Agreement**") between Chanson International Holding, a Cayman Islands exempted company limited by shares (the "**Company**"), and the Underwriters, relating to the proposed public offering (the "**Offering**") of Class A ordinary shares, par value $0.001 per share (the "**Class A Ordinary Shares**"), of the Company.

In order to induce the Underwriters to continue their efforts in connection with the Offering, and in light of the benefits that the offering of the Class A Ordinary Shares will confer upon the undersigned in its capacity as a shareholder and/or an officer, director or employee of the Company, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned agrees with the Representative that, during the period beginning on and including the date of this Agreement through and including the date that is 180 days from the commencement of the Company's first day of trading (the "**Lock-Up Period**"), the undersigned will not, without the prior written consent of Representative, directly or indirectly, (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, or announce the intention to otherwise dispose of, any Class A Ordinary Shares and/or Class B ordinary shares, par value $0.001 per share (collectively, the "**Ordinary Shares**") now owned or hereafter acquired by the undersigned or with respect to which the undersigned has or hereafter acquires the power of disposition (including, without limitation, Ordinary Shares which may be deemed to be beneficially owned by the undersigned in accordance with the rules and regulations promulgated under the Securities Act of 1933, as amended, and as the same may be amended or supplemented on or after the date hereof from time to time (the "**Securities Act**") (such shares, the "**Beneficially Owned Shares**") or securities convertible into or exercisable or exchangeable for Ordinary Shares, (ii) enter into any swap, hedge or similar agreement or arrangement that transfers in whole or in part, the economic risk of ownership of the Beneficially Owned Shares or securities convertible into or exercisable or exchangeable for Ordinary Shares, whether now owned or hereafter acquired by the undersigned or with respect to which the undersigned has or hereafter acquires the power of disposition, or (iii) engage in any short selling of the Ordinary Shares.

The restrictions set forth in the immediately preceding paragraph shall not apply to**:**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) if the undersigned is a natural person, any transfers made by the undersigned (a) as a bona fide gift to any member of the immediate family (as defined below) of the undersigned or to a trust the beneficiaries of which are exclusively the undersigned or members of the undersigned's immediate family, (b) by will or intestate succession upon the death of the undersigned, (c) as a bona fide gift to a charity or educational institution, (d) any transfer pursuant to a qualified domestic relations order or in connection with a divorce; or (e) if the undersigned is or was an officer, director or employee of the Company, to the Company pursuant to the Company's right of repurchase upon termination of the undersigned's service with the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) if the undersigned is a corporation, partnership, limited liability company or other business entity, any transfers to any shareholder, partner or member of, or owner of a similar equity interest in, the undersigned, as the case may be, if, in any such case, such transfer is not for value;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) if the undersigned is a corporation, partnership, limited liability company or other business entity, any transfer made by the undersigned (a) in connection with the sale or other bona fide transfer in a single transaction of all or substantially all of the undersigned's capital stock, partnership interests, membership interests or other similar equity interests, as the case may be, or all or substantially all of the undersigned's assets, in any such case not undertaken for the purpose of avoiding the restrictions imposed by this Agreement or (b) to another corporation, partnership, limited liability company or other business entity so long as the transferee is an affiliate (as defined below) of the undersigned and such transfer is not for value;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) (a) exercises of stock options or equity awards granted pursuant to an equity incentive or other plan or warrants to purchase Ordinary Shares or other securities (including by cashless exercise to the extent permitted by the instruments representing such stock options or warrants so long as such cashless exercise is effected solely by the surrender of outstanding stock options or warrants to the Company and the Company's cancellation of all or a portion thereof to pay the exercise price), provided that in any such case the securities issued upon exercise shall remain subject to the provisions of this Agreement (as defined below); (b) transfers of Ordinary Shares or other securities to the Company in connection with the vesting or exercise of any equity awards granted pursuant to an equity incentive or other plan and held by the undersigned to the extent, but only to the extent, as may be necessary to satisfy tax withholding obligations pursuant to the Company's equity incentive or other plans;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) the exercise by the undersigned of any warrant(s) issued by the Company prior to the date of this Agreement, including any exercise effected by the delivery of shares of Ordinary Shares of the Company held by the undersigned; provided, that, the Ordinary Shares received upon such exercise shall remain subject to the restrictions provided for in this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) the occurrence after the date hereof of any of (a) an acquisition by an individual or legal entity or "group" (as described in Rule 13d-5(b)(1) promulgated under the Securities Exchange Act of 1934, as amended (the "**Exchange Act**")) of effective control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of 100% of the voting securities of the Company, (b) the Company merges into or consolidates with any other entity, or any entity merges into or consolidates with the Company, (c) the Company sells or transfers all or substantially all of its assets to another person, or (d) provided, that, the Ordinary Shares received upon any of the events set forth in clauses (a) through (c) above shall remain subject to the restrictions provided for in this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) the Offering;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8) transfers consented to, in writing by the Representative;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(9) transactions relating to Ordinary Shares acquired in open market transactions after the completion of the Public Offering; provided that, no filing by any party under the Exchange Act or other public announcement shall be required or shall be voluntarily made in connection with such transfer;

 

*provided however*, that in the case of any transfer described in clause (1), (2) or (3) above, it shall be a condition to the transfer that the transferee executes and delivers to the Representative, acting on behalf of the Underwriters, not later than one business day prior to such transfer, a written agreement, in substantially the form of this Agreement (it being understood that any references to "immediate family" in the agreement executed by such transferee shall expressly refer only to the immediate family of the undersigned and not to the immediate family of the transferee) and otherwise satisfactory in form and substance to the Representative.

In addition, the restrictions set forth herein shall not prevent the undersigned from entering into a sales plan pursuant to Rule 10b5-1 under the Exchange Act after the date hereof, <u>provided</u> that (i) a copy of such plan is provided to the Representative promptly upon entering into the same and (ii) no sales or transfers may be made under such plan until the Lock-Up Period ends or this Agreement is terminated in accordance with its terms. For purposes of this paragraph, "immediate family" shall mean a spouse, child, grandchild or other lineal descendant (including by adoption), father, mother, brother or sister of the undersigned; and "affiliate" shall have the meaning set forth in Rule 405 under the Securities Act.

If (i) during the last 17 days of the Lock-Up Period, the Company issues an earnings release or material news or a material event relating to the Company occurs, or (ii) prior to the expiration of the Lock-Up Period, the Company announces that it will release earnings results or becomes aware that material news or a material event will occur during the 16-day period beginning on the last day of the Lock-Up Period, the restrictions imposed by this Agreement shall continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of such material news or material event, as applicable, unless the Representative waives, in writing, such extension.

If the undersigned is an officer or director of the Company, (i) the Representative agrees that, at least three business days before the effective date of any release or waiver of the foregoing restrictions in connection with a transfer of Ordinary Shares, the Representative will notify the Company of the impending release or waiver Any release or waiver granted by the Representative hereunder to any such officer or director shall only be effective two business days after the publication date of such press release; provided, that such press release is not a condition to the release of the aforementioned lock-up provisions due to the expiration of the Lock-Up Period. The provisions of this paragraph will also not apply if (a) the release or waiver is effected solely to permit a transfer not for consideration and (b) the transferee has agreed in writing to be bound by the same terms described in this Agreement to the extent and for the duration that such terms remain in effect at the time of such transfer.

In furtherance of the foregoing, (1) the undersigned also agrees and consents to the entry of stop transfer instructions with any duly appointed transfer agent for the registration or transfer of the securities described herein against the transfer of any such securities except in compliance with the foregoing restrictions, and (2) the Company, and any duly appointed transfer agent for the registration or transfer of the securities described herein, are hereby authorized to decline to make any transfer of securities if such transfer would constitute a violation or breach of this Agreement.

The undersigned hereby represents and warrants that the undersigned has full power and authority to enter into this Agreement and that this Agreement has been duly authorized (if the undersigned is not a natural person), executed and delivered by the undersigned and is a valid and binding agreement of the undersigned. This Agreement and all authority herein conferred are irrevocable and shall survive the death or incapacity of the undersigned (if a natural person) and shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned for the term of the Lock-Up Period.

This Agreement shall automatically terminate upon the earliest to occur, if any, of (1) either the Representative, on the one hand, or the Company, on the other hand, advising the other in writing, they have determined not to proceed with the Offering, (2) termination of the Underwriting Agreement before the sale of the Class A Ordinary Shares, or (3) the withdrawal of the Registration Statement.

This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to the conflict of laws principles thereof.

 

*[Signature Page Follows]*

 

 

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| |
|:---|
| Very truly yours, |
| (Name - Please Print) |
| (Signature) |
| (Name of Signatory, in the case of entities - Please Print) |
| (Title of Signatory, in the case of entities - Please Print) |

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Address:

---

| |
|:---|
| # of Class A Ordinary Shares Held by Signatory: |
| # of Class B Ordinary Shares Held by Signatory: |

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## Exhibit 4.2

**Exhibit 4.2**

THE REGISTERED HOLDER OF THIS PURCHASE WARRANT AGREES BY HIS, HER OR ITS ACCEPTANCE HEREOF, THAT SUCH HOLDER WILL NOT FOR A PERIOD OF one hundred and eighty (180) DAYS FOLLOWING THE date of commencement of sales of the offering PURSUANT TO THE REGISTRATION STATEMENT NO.: 333-267483 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION: (A) exercise, SELL, TRANSFER, ASSIGN, PLEDGE OR HYPOTHECATE THIS PURCHASE WARRANT TO ANYONE OTHER THAN (i) an underwriter or a selected dealer in connection with the offering, or (ii) bona fide OFFICERS OR PARTNERS OF any such underwriter or selected dealer, EACH OF WHOM SHALL HAVE AGREED TO THE RESTRICTIONS CONTAINED HEREIN, IN ACCORDANCE WITH FINRA (as defined below) CONDUCT RULE 5110(E)(1), or (B) CAUSE THIS PURCHASE WARRANT OR THE SECURITIES ISSUABLE HEREUNDER TO BE THE SUBJECT OF ANY HEDGING, SHORT SALE, DERIVATIVE, PUT OR CALL TRANSACTION THAT WOULD RESULT IN THE EFFECTIVE ECONOMIC DISPOSITION OF THIS PURCHASE WARRANT OR THE SECURITIES HEREUNDER, EXCEPT AS PROVIDED FOR IN FINRA RULE 5110(E)(2).

VOID AFTER 5:00 P.M., EASTERN TIME, [●], 2028<sup>1</sup>

WARRANT

For the Purchase of [●]<sup>2</sup> Class A Ordinary Shares

of

Chanson International Holding

1. <u>Warrant</u>. THIS WARRANT (this "**Warrant**") certifies that, pursuant to that certain underwriting agreement by and among Chanson International Holding., a Cayman Islands exempted company (the "**Company**"), and EF Hutton, a division of Benchmark Investments, LLC (the "**Representatives**" and each, a "**Representative**"), dated [●], 2023 (the "**Underwriting Agreement**"), EF Hutton, a division of Benchmark Investments, LLC (in such capacity with its permitted successors or assignees, the "**Holder**"), as registered owner of this Warrant, is entitled, subject to Section 3 hereof, at any time or from time to time from [●], 2023 (the "**Exercise Date**"), and at or before 5:00 p.m., Eastern time, [●], 2028 (the "**Expiration Date**"), but not thereafter, to subscribe for, purchase and receive, in whole or in part, up to [●] Class A ordinary shares (the "**Shares**"), par value $0.0001 per share, of the Company, subject to adjustment as provided in <u>Section 5</u> hereof. If the Expiration Date is a day on which banking institutions are authorized by law or executive order to close, then this Warrant may be exercised on the next succeeding day which is not such a day in accordance with the terms herein. During the period commencing on the date hereof and ending on the Expiration Date, the Company agrees not to take any action that would terminate this Warrant. This Warrant is initially exercisable at $[●] per Share (100% of the initial public offering price of the Shares sold in the Offering); provided, however, that upon the occurrence of any of the events specified in <u>Section 5</u> hereof, the rights granted by this Warrant, including the exercise price per Share and the number of Shares to be received upon such exercise, shall be adjusted as therein specified. The term "**Exercise Price**" shall mean the exercise price in effect at the date the Exercise Price is determined, after giving effect to any adjustment pursuant to <u>Section 5</u>. Any term not defined herein shall have the meaning ascribed thereto in the Underwriting Agreement.

2. <u>Exercise</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1 <u>Exercise Form</u>. In order to exercise this Warrant, the exercise form attached hereto as <u>Exhibit I</u> (the "**Exercise Form**") must be duly executed and completed and delivered to the Company, together with this Warrant and payment of the Exercise Price for the Shares being purchased payable in cash by wire transfer of immediately available funds to an account designated by the Company or by certified check or official bank check, subject to <u>Section 2.2</u> below. If the subscription rights represented hereby shall not be exercised at or before 5:00 p.m., Eastern time, on the Expiration Date, this Warrant shall become and be void without further force or effect, and all rights represented hereby shall cease and expire.

<sup>1</sup> The Underwriter's warrants will be exercisable for a period of four and a half years commencing six months from the date of commencement of sales of the public offering.

<sup>2</sup> 4% of the Class A Ordinary Shares sold in this offering.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2 <u>Cashless Exercise</u>. In lieu of exercising this Warrant by payment of cash or check payable pursuant to <u>Section 2.1</u> above, Holder may elect to receive the number of Shares equal to the value of this Warrant (or the portion thereof being exercised), by surrender of this Warrant to the Company, together with the Exercise Form, in which event the Company shall issue to Holder, Shares in accordance with the following formula:

X = <u> Y (A – B) </u> <br> A

&nbsp;&nbsp;&nbsp;&nbsp;Where, X = The number of Shares to be issued to Holder;

Y = The number of Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise;

A = The fair market value of one Share; and

B = The Exercise Price of this Warrant in effect on the date of exercise.

For purposes of this <u>Section 2.2</u>, the fair market value of one Share is defined as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) if the Company's Shares are traded on a securities exchange, the value shall be deemed to be the last sale price on such exchange on the trading day immediately prior to the day on which the Exercise Form is submitted in connection with the exercise of this Warrant;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) if the Company's Shares are quoted over-the-counter, the value shall be deemed to be the last sale price on the trading day immediately prior to the day on which the Exercise Form is submitted in connection with the exercise of the Warrant; provided, that if there is no reported sale on such date the average of the closing bid and asked prices, in each case as reported by OTC Markets Group or its successor; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) if there is no active public market, the value shall be the fair market value thereof, as determined in good faith by the Company's Board of Directors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.3 <u>Legend</u>. Each certificate for the securities purchased under this Warrant shall bear a legend as follows unless such securities have been sold pursuant to a registration statement under the Securities Act of 1933, as amended (the "**Act**"):

"The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended (the "Act"), or applicable state law. Neither the securities nor any interest therein may be offered for sale, sold or otherwise transferred except pursuant to an effective registration statement under the Act, or pursuant to an exemption from registration under the Act and applicable state law which, in the opinion of counsel to the Holder, reasonably satisfactory to the Company, is available."

3. <u>Transfer</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1 <u>General Restrictions</u>. The registered Holder of this Warrant agrees by his, her or its acceptance hereof, that such Holder will not for a period of one hundred and eighty (180) days following the date of commencement of sales of the offering (the "**Commencement Date**"): (a) exercise, sell, transfer, assign, pledge or hypothecate this Warrant to anyone other than: (i) an Underwriter or a selected dealer participating in the Offering contemplated by the Underwriting Agreement, or (ii) bona fide officers or partners of any such Underwriter or selected dealer, each of whom shall have agreed to the restrictions contained herein, in accordance with FINRA Rule 5110(e)(1), and (b) cause this Warrant or the securities issuable hereunder to be the subject of any hedging, short sale, derivative, put or call transaction that would result in the effective economic disposition of this Warrant or the securities hereunder, except as provided for in FINRA Rule 5110(e)(2). On and after the expiration of the one hundred and eighty (180) days following the Commencement Date (such period, the "**Lock-Up Period**"), transfers to others may be made subject to compliance with or exemptions from applicable securities laws. In order to make any permitted assignment, the Holder must deliver to the Company the assignment form attached hereto as <u>Exhibit B</u> duly executed and completed, together with this Warrant and payment of all transfer taxes, if any, payable in connection therewith. The Company shall within five (5) Business Days transfer this Warrant on the books of the Company and shall execute and deliver a new Warrant or Warrants of like tenor to the appropriate assignee(s) expressly evidencing the right to purchase the aggregate number of Shares purchasable hereunder or such portion of such number as shall be contemplated by any such assignment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3.2 <u>Restrictions Imposed by the Act</u>. The securities evidenced by this Warrant shall not be transferred unless and until: (i) the Company has received the opinion of counsel for the Holder reasonably satisfactory to the Company that the securities may be transferred pursuant to an exemption from registration under the Act and applicable state securities laws, or (ii) a registration statement relating to the offer and sale of such securities that includes a current prospectus has been filed and declared effective by the Securities and Exchange Commission (the "**Commission**") and compliance with applicable state securities law has been established.

4. <u>New Warrants to be Issued</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1 <u>Partial Exercise or Transfer</u>. Subject to the restrictions in <u>Section 3</u> hereof, this Warrant may be exercised or assigned in whole or in part. In the event of the exercise or assignment hereof in part only, upon surrender of this Warrant for cancellation, together with the duly executed exercise or assignment form (as attached hereto) and funds sufficient to pay any Exercise Price and/or transfer tax if exercised pursuant to <u>Section 2.1</u> hereof, the Company shall cause to be delivered to the Holder without charge a new Warrant of like tenor to this Warrant in the name of the Holder evidencing the right of the Holder to purchase the number of Shares purchasable hereunder as to which this Warrant has not been exercised or assigned.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2 <u>Lost Certificate</u>. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Warrant and of reasonably satisfactory indemnification or the posting of a bond, the Company shall execute and deliver a new Warrant of like tenor and date. Any such new Warrant executed and delivered as a result of such loss, theft, mutilation or destruction shall constitute a substitute contractual obligation on the part of the Company.

5. <u>Adjustments</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1 <u>Adjustments to Exercise Price and Number of Shares</u>. The Exercise Price and the number of Shares underlying this Warrant shall be subject to adjustment from time to time as hereinafter set forth:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1.1 <u>Dividends paid in Shares; Split Ups</u>. If, after the date hereof, and subject to the provisions of <u>Section 5.3</u> below, the number of outstanding shares is increased by a stock dividend payable in Shares or by a split up of Shares or other similar event, then, on the effective day thereof, the number of Shares purchasable hereunder shall be increased in proportion to such increase in outstanding shares, and the Exercise Price shall be proportionately decreased.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1.2 <u>Aggregation of Shares</u>. If, after the date hereof, and subject to the provisions of <u>Section 5.3</u> below, the number of outstanding shares is decreased by a consolidation, combination, reverse stock split or reclassification of shares or other similar event, then, on the effective date thereof, the number of Shares purchasable hereunder shall be decreased in proportion to such decrease in outstanding shares, and the Exercise Price shall be proportionately increased.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1.3 <u>Replacement of Shares upon Reorganization, etc</u>. In case of any reclassification or reorganization of the outstanding shares other than a change covered by <u>Section 5.1.1</u> or <u>Section 5.1.2</u> hereof or that solely affects the par value of such shares, or in the case of any share reconstruction or amalgamation or consolidation of the Company with or into another corporation (other than a consolidation or share reconstruction or amalgamation in which the Company is the continuing corporation and that does not result in any reclassification or reorganization of the outstanding shares), or in the case of any sale or conveyance to another corporation or entity of the property of the Company as an entirety or substantially as an entirety in connection with which the Company is dissolved, the Holder of this Warrant shall have the right thereafter (until the expiration of the right of exercise of this Warrant) to receive upon the exercise hereof, for the same aggregate Exercise Price payable hereunder immediately prior to such event, the kind and amount of Shares or other securities or property (including cash) receivable upon such reclassification, reorganization, share reconstruction or amalgamation, or consolidation, or upon a dissolution following any such sale or transfer, by a Holder of the number of Shares obtainable upon exercise of this Warrant immediately prior to such event; and if any reclassification also results in a change in Shares covered by <u>Section 5.1.1</u> or <u>Section 5.1.2</u>, then such adjustment shall be made pursuant to <u>Section 5.1.1</u>, <u>Section 5.1.2</u> and this <u>Section 5.1.3</u>. The provisions of this <u>Section 5.1.3</u> shall similarly apply to successive reclassifications, reorganizations, share reconstructions or amalgamations, or consolidations, sales or other transfers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5.1.4 <u>Changes in Form of Warrant</u>. This form of Warrant need not be changed because of any change pursuant to this <u>Section 5.1</u>, and Warrants issued after such change may state the same Exercise Price and the same number of Shares as are stated in the Warrants initially issued pursuant to this Agreement. The acceptance by any Holder of the issuance of new Warrants reflecting a required or permissive change shall not be deemed to waive any rights to an adjustment occurring after the date hereof or the computation thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2 <u>Substitute Warrant</u>. In case of any consolidation of the Company with, or share reconstruction or amalgamation of the Company with or into, another corporation (other than a consolidation or share reconstruction or amalgamation which does not result in any reclassification or change of the outstanding Shares), the corporation formed by such consolidation or share reconstruction or amalgamation shall execute and deliver to the Holder an amendment to this Warrant that provides that the Holder of this Warrant, to the extent outstanding, shall have the right thereafter (until the stated expiration of this Warrant) to receive, upon exercise of such Warrant, the kind and amount of Shares and other securities and property receivable upon such consolidation or share reconstruction or amalgamation, by a Holder of the number of Shares or other securities of the successor to the Company, as the case may be, for which such Warrant might have been exercised immediately prior to the effective time of such consolidation, share reconstruction or amalgamation, sale or transfer. Such amendment to this Warrant shall provide for adjustments which shall be identical to the adjustments provided for in this <u>Section 5</u>. The above provision of this <u>Section 5</u> shall similarly apply to successive consolidations or share reconstructions or amalgamations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.3 <u>Elimination of Fractional Interests</u>. The Company shall not be required to issue certificates representing fractions of Shares upon the exercise of the Warrant. As to any fraction of a Share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the fair market value as of the date of exercise pursuant to <u>Section 2.1</u> or <u>Section 2.2</u>, as applicable, or round up to the next whole Share.

6. <u>Registration Rights</u>. The Company has filed the Registration Statement on Form F-1 (File No. 333-254909) with the Commission, which has been declared effective, and registers the underlying Shares the Warrant(s) granted to the Holder(s) in connection with the Offering, under the terms of the Underwriting Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1 <u>Demand Registration</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1.1 <u>Grant of Right</u>. Unless all of the Registrable Securities (defined as below) are included in an effective registration statement with a current prospectus, the Company, upon written demand ("**Demand Notice**") of the Holder(s) of at least 51% of the Warrants issued and outstanding as the date hereof and/or the related underlying Shares ("**Majority Holder(s)**"), agrees to register on one occasion, all or any portion of the outstanding Registrable Securities (as defined below) as requested by the Majority Holder(s) in the Demand Notice (each such registration, a "**Demand Registration**"). On such occasion, the Company will file a new registration statement or a post-effective amendment to the Registration Statement covering the Registrable Securities within sixty (60) days after receipt of the Demand Notice and use its best efforts to have such registration statement or post-effective amendment declared effective as soon as possible thereafter. The demand for registration may be made at any time after the Commencement Date, but no later than five (5) years therefrom. The Company covenants and agrees to give written notice of its receipt of any Demand Notice by any Holder(s) to all other registered Holders of the Underwriter's Warrants and/or the Registrable Securities within ten (10) days from the date of the receipt of any such Demand Notice, who shall have five (5) days from the receipt of such Notice in which to notify the Company of their desire to have their Registrable Securities included in the registration statement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 6.1.2 <u>Terms</u>. The Company shall bear all fees and expenses attendant to registering the Registrable Securities upon the first Demand Notice, including the reasonable expenses of any legal counsel selected by the Holders to represent them in connection with the sale of the Registrable Securities, but the Holders shall pay any and all underwriting or brokerage commissions and other selling expenses, if any. The Company agrees to use its best efforts to cause any filings required herein to become effective as promptly as possible and to qualify or register the Registrable Securities in such States as are reasonably requested by the Majority Holder(s); provided, however, that in no event shall the Company be required to register the Registrable Securities in a State in which such registration would cause (i) the Company to be obligated to qualify to do business in such State or execute a general consent to service of process, or (ii) the principal shareholders of the Company to be obligated to escrow their Shares. The Company shall cause any registration statement or post-effective amendment filed pursuant to the demand rights granted under <u>Section 6.1.1</u> to remain effective for a period of twelve (12) consecutive months from the effective date of such registration statement or post-effective amendment or until the Holders have completed the distribution of the Registrable Securities included in such registration statement, whichever occurs first.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2 <u>"Piggy-Back" Registration</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2.1 <u>Grant of Right</u>. Unless all of the Registrable Securities are included in an effective registration statement with a current prospectus, the Holders of the Underwriter's Warrants shall have the right for a period of not more than three (3) years from the expiration of the Lock-Up Period, to include the remaining Registrable Securities as part of any other registration of securities filed by the Company (other than in connection with a transaction contemplated by Rule 145(a) promulgated under the Act or pursuant to Form S-8 or S-4 or any successor or equivalent form); provided, however, that if, in the opinion of the Company's managing underwriters or underwriters, if any, for such offering, the inclusion of the Registrable Securities, when added to the securities being registered by the Company or the selling shareholder(s), will exceed the maximum amount of the Company's securities which can be marketed (i) at a price reasonably related to their then current market value, and (ii) without materially and adversely affecting the entire offering, then the Company will still be required to include the Registrable Securities, but may require the Holders to agree, in writing, to delay the sale of all or any portion of the Registrable Securities for a such period, not to exceed one hundred eighty (180) days from the effective date of the offering as the managing underwriters or underwriters may require, provided, further, that if the sale of any Registrable Securities is so delayed, then the number of securities to be sold by each Holder of the Registrable Securities in such public offering shall be made pro rata among them, in proportion to the total amount of securities of the Company owned by said Holders seeking to include Registrable Securities; provided, however, that the Company shall not exclude any Registrable Securities unless the Company has first excluded all outstanding securities, the holders of which are not entitled to inclusion of such securities in such registration statement or are not entitled to pro rata inclusion with the Registrable Securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2.2 <u>Terms</u>. The Company shall bear all fees and expenses attendant to registering the Registrable Securities, including the expenses of any legal counsel selected by the Holders to represent them in connection with the sale of the Registrable Securities, but the Holders shall pay any and all underwriting or brokerage commissions and other selling expenses, if any. In the event of such a proposed registration, the Company shall furnish the then Holders of outstanding Registrable Securities with not less than ten (10) days written notice prior to the proposed date of filing of such registration statement. Such notice to the Holders shall continue to be given for each applicable registration statement filed (during the period in which the Underwriter's Warrant is exercisable) by the Company until such time as all of the Registrable Securities have been registered and sold. The Holders of the Registrable Securities shall exercise the "piggy back" rights provided for herein by giving written notice, within seven (7) business days of the receipt of the Company's notice of its intention to file a registration statement. The Company shall use its best efforts to cause any registration statement filed pursuant to the above "piggyback" rights that does not relate to a firm commitment underwritten offering to remain effective for at least nine (9) consecutive months from the effective date of such registration statement or until the Holders have completed the distribution of the Registrable Securities in the registration statement, whichever occurs first. Except as otherwise provided in this Warrant, there shall be no limit on the number of times the Holders may request registration under this <u>Section 6.2.2</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3 <u>General Terms</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3.1 <u>Registrable Securities</u>. For purposes of this Section 6, the term "Registrable Securities" shall mean the Shares underlying the Warrants, provided, however, that such securities shall cease to be Registrable Securities when: (i) the date that such securities shall have been sold, transferred, disposed of or exchanged in accordance with an effective registration statement; (ii) such securities may otherwise be transferred, new certificates or book entries credits for such securities not bearing a legend restricting further transfer shall have been delivered by the Company and subsequent public distribution of such securities shall not require registration under the Act; or (iii) such securities shall have ceased to be outstanding.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3.2 <u>Indemnification</u>. The Company shall indemnify the Holder(s) of the Registrable Securities to be sold pursuant to any registration statement hereunder and each person, if any, who controls such Holders within the meaning of Section 15 of the Act or Section 20(a) of the Securities Exchange Act of 1934, as amended ("**Exchange Act**"), against all loss, claim, damage, expense or liability (including all reasonable attorneys' fees and other expenses reasonably incurred in investigating, preparing or defending against any claim whatsoever) to which any of them may become subject under the Act, the Exchange Act or otherwise, arising from such registration statement but only to the same extent and with the same effect as the provisions pursuant to which the Company has agreed to indemnify the Underwriters contained in Section 7(a) of the Underwriting Agreement. The Holder(s) of the Registrable Securities to be sold pursuant to such registration statement, and their successors and assignees, shall severally, and not jointly, indemnify the Company, against all loss, claim, damage, expense or liability (including all reasonable attorneys' fees and other expenses reasonably incurred in investigating, preparing or defending against any claim whatsoever) to which they may become subject under the Act, the Exchange Act or otherwise, arising from information furnished by or on behalf of such Holder(s), or their successors or assigns, in writing, for specific inclusion in such registration statement to the same extent and with the same effect as the provisions contained in Section 7(b) of the Underwriting Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3.3 <u>Exercise of Warrants</u>. Unless a registration statement with a current prospectus relating to the issuance of the Shares issuable upon the exercise of this Warrant has been filed and declared effective, the Warrants shall only be exercisable on a "cashless basis" pursuant to subsection 2.2. Nothing contained in this Warrant shall be construed as requiring the Holder(s) to exercise their Warrants prior to or after the initial filing of any registration statement or the effectiveness thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3.4 <u>Documents Delivered to Holders</u>. The Company shall deliver as promptly as possible to each Holder participating in the offering and to the managing underwriter(s), if any, upon request of the Holder, the following correspondence and memoranda relating to the offering: copies of all correspondence between the Commission and the Company, its counsel or auditors and all memoranda relating to discussions with the Commission or its staff with respect to the registration statement. The Company shall permit each Holder and the underwriter(s), if any, to do such investigation upon reasonable advance notice, with respect to information contained in or omitted from the registration statement as it deems reasonably necessary to comply with applicable securities laws or rules of FINRA. Such investigation shall include access to books, records and properties and opportunities to discuss the business of the Company with its officers and independent auditors, all to such reasonable extent and at such reasonable times as any such Holder shall reasonably request in connection with the underwritten offering.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3.5 <u>Documents to be Delivered by Holder(s)</u>. It shall be a condition precedent to the obligations of the Company to complete any registration pursuant to this Section 6 that each Holder participating in the Offering shall furnish to the Company in a timely manner such information regarding such Holder, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it as shall be reasonably required to effect and maintain the effectiveness of the registration of such Registrable Securities and shall execute such documents in connection with such registration as the Company may reasonably request In furtherance of the foregoing, each of the Holder(s) participating in any of the foregoing offerings shall furnish to the Company a completed and executed questionnaire provided by the Company requesting information customarily sought of selling security holders.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3.6 <u>Damages</u>. Should the registration or the effectiveness thereof required by <u>Section 6.1</u> and <u>Section 6.2</u> hereof be delayed by the Company or the Company otherwise fail to comply with such provisions, the Holder(s) shall, in addition to any other legal or other relief available to the Holder(s), be entitled to obtain specific performance or other equitable (including injunctive) relief against the threatened breach of such provisions or the continuation of any such breach, without the necessity of proving actual damages and without the necessity of posting bond or other security.

7. <u>Reservation and Listing</u>. The Company shall at all times reserve and keep available out of its authorized Shares, solely for the purpose of issuance upon exercise of this Warrant, such number of Shares or other securities, properties or rights as shall be issuable upon the exercise thereof. The Company covenants and agrees that, upon exercise of this Warrant and payment of the Exercise Price therefor, in accordance with the terms hereby, all Shares and other securities issuable upon such exercise shall be duly and validly issued, fully paid and non-assessable and not subject to preemptive rights of any shareholder. As long as this Warrant shall be outstanding, the Company shall use its best efforts to cause all Shares issuable upon exercise of this Warrant to be listed (subject to official notice of issuance) on a national securities exchange (or, if applicable, on the OTC Bulletin Board or any successor trading market) on which the Shares issued to the public in the offering may then be listed and/or quoted.

8. <u>Certain Notice Requirements</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.1 <u>Holder's Right to Receive Notice</u>. Nothing herein shall be construed as conferring upon the Holders the right to vote or consent or to receive notice as a shareholder for the election of directors or any other matter, or as having any rights whatsoever as a shareholder of the Company. If, however, at any time prior to the expiration of the Warrants and their exercise, any of the events described in <u>Section 8.2</u> shall occur, then, in one or more of said events, the Company shall give written notice of such event at least fifteen (15) days prior to the date fixed as a record date or the date of closing the transfer books (the "**Notice Date**") for the determination of the shareholders entitled to such dividend, distribution, conversion or exchange of securities or subscription rights, or entitled to vote on such proposed dissolution, liquidation, winding up or sale. Such notice shall specify such record date or the date of the closing of the transfer books, as the case may be. Notwithstanding the foregoing, the Company shall deliver to each Holder a copy of each notice given to the other shareholders of the Company at the same time and in the same manner that such notice is given to the shareholders.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.2 <u>Events Requiring Notice</u>. The Company shall be required to give the notice described in this <u>Section 8</u> upon one or more of the following events: (i) if the Company shall take a record of the holders of its shares for the purpose of entitling them to receive a dividend or distribution payable otherwise than in cash, or a cash dividend or distribution payable otherwise than out of retained earnings, as indicated by the accounting treatment of such dividend or distribution on the books of the Company, (ii) the Company shall offer to all the holders of its shares any additional shares of capital stock of the Company or securities convertible into or exchangeable for shares of capital stock of the Company, or any option, right or warrant to subscribe therefor, or (iii) a dissolution, liquidation or winding up of the Company (other than in connection with a consolidation or share reconstruction or amalgamation) or a sale of all or substantially all of its property, assets and business shall be proposed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.3 <u>Notice of Change in Exercise Price</u>. The Company shall, promptly after an event requiring a change in the Exercise Price pursuant to <u>Section 5</u> hereof, send notice to the Holders of such event and change ("**Price Notice**"). The Price Notice shall describe the event causing the change and the method of calculating same and shall be certified as being true and accurate by the Company's Chief Financial Officer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.4 <u>Transmittal of Notices</u>. All notices, requests, consents and other communications under this Warrant shall be in writing and shall be deemed to have been duly made (1) when hand delivered, (2) when mailed by express mail or private courier service, (3) if sent by electronic mail, on the day the notice was sent if during regular business hours and, if sent outside of regular business hours, on the following business day, or (4) when the event requiring notice is disclosed in all material respects and filed in a Current Report on Form 8-K prior to the Notice Date: (i) if to the registered Holder of the Warrant, to the address of such Holder as shown on the books of the Company, or (ii) if to the Company, to following address or to such other address as the Company may designate by notice to the Holders:

If to the Holder:

EF Hutton, division of Benchmark Investments, LLC

590 Madison Avenue, 39th Floor

New York, NY 10022

Attention: David W. Boral

Email: dboral@efhuttongroup.com

*with a copy (which shall not constitute notice) to:*

Ortoli Rosenstadt LLP

366 Madison Avenue, 3rd Floor

New York, NY 10017

Attn: William S. Rosenstadt, Esq.

Attn: Mengyi "Jason" Ye, Esq.

Email: wsr@orllp.legal

jye@orllp.legal

If sent to the Company, shall be mailed, delivered, or emailed, to the Company:

Chanson International Holding

20 West 23rd St

New York, NY 10010

Attn: Gang Li, CEO

Email: g24han@gmail.com

Phone: (631)-464-1388

*with a copy (which shall not constitute notice) to the Company's Counsel at:*

 

Hunter Taubman Fischer & Li LLC

950 Third Avenue, 19th Floor

New York, NY 10022

Attn: Ying Li, Esq.

Email: yli@htflawyers.com

Fax No.: (212) 202 6380

9. <u>Miscellaneous</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.1 <u>Amendments</u>. The Company and the Representatives may from time to time supplement or amend this Warrant without the approval of any of the Holders in order to cure any ambiguity, to correct or supplement any provision contained herein that may be defective or inconsistent with any other provisions herein, or to make any other provisions in regard to matters or questions arising hereunder that the Company and Representatives may deem necessary or desirable and that the Company and the Representatives deem shall not adversely affect the interest of the Holders. All other modifications or amendments shall require the written consent of and be signed by the party against whom enforcement of the modification or amendment is sought.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.2 <u>Headings</u>. The headings contained herein are for the sole purpose of convenience of reference, and shall not in any way limit or affect the meaning or interpretation of any of the terms or provisions of this Warrant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.3 <u>Entire Agreement</u>. This Warrant (together with the other agreements and documents being delivered pursuant to or in connection with this Warrant to the extent provided in this Warrant) constitutes the entire agreement of the parties hereto with respect to the subject matter hereof, and supersedes all prior agreements and understandings of the parties, oral and written, with respect to the subject matter hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.4 <u>Binding Effect</u>. This Warrant shall inure solely to the benefit of and shall be binding upon, the Holder and the Company and their permitted assignees and respective successors and no other person shall have or be construed to have any legal or equitable right, remedy or claim under or in respect of or by virtue of this Warrant or any provisions herein contained.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.5 <u>Governing Law; Submission to Jurisdiction</u>. This Warrant shall be governed by and construed and enforced in accordance with the laws of the State of New York, without giving effect to conflict of laws principles thereof. The Company hereby agrees that any action, proceeding or claim against it arising out of, or relating in any way to this Warrant shall be brought and enforced in the Borough of Manhattan in The City of New York (each, a "**New York Court**"), and irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive. Each of the Holder and the Company hereby waives any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum. Any process or summons to be served upon the Company or the Holder may be served by transmitting a copy thereof by registered or certified mail, return receipt requested, postage prepaid, addressed to it at their respective addresses set forth in <u>Section 8.4</u> hereof. Such mailing shall be deemed personal service and shall be legal and binding upon the Company or the Holder in any action, proceeding or claim.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.6 <u>Waiver, etc</u>. The failure of the Company or the Holder to at any time enforce any of the provisions of this Warrant shall not be deemed or construed to be a waiver of any such provision, nor to in any way affect the validity of this Warrant or any provision hereof or the right of the Company or any Holder to thereafter enforce each and every provision of this Warrant. No waiver of any breach, non-compliance or non-fulfillment of any of the provisions of this Warrant shall be effective unless set forth in a written instrument executed by the party or parties against whom or which enforcement of such waiver is sought; and no waiver of any such breach, non-compliance or non-fulfillment shall be construed or deemed to be a waiver of any other or subsequent breach, non-compliance or non-fulfillment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.7 <u>Exchange Agreement</u>. As a condition of the Holder's receipt and acceptance of this Warrant, Holder agrees that, at any time prior to the complete exercise of this Warrant by Holder, if the Company and the Representatives (to the extent that they and their affiliates (as defined by the United States securities laws) are Holders of Warrants) enter into an agreement ("**Exchange Agreement**") pursuant to which they agree that all outstanding Warrants will be exchanged for securities or cash or a combination of both, then Holder shall agree to such exchange and become a party to the Exchange Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.8 <u>Restrictions</u>. The Holder acknowledges that the Shares acquired upon the exercise of this Warrant, if not registered, and if the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.9 <u>Severability</u>. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Warrant.

 *[ Remainder of Page Intentionally Left Blank ]*

**IN WITNESS WHEREOF**, the Company has caused this Warrant to be signed by its duly authorized officer as of the ____ day of _______, 2023.

---

| | |
|:---|:---|
| **CHANSON INTERNATIONAL HOLDING** | **CHANSON INTERNATIONAL HOLDING** |
| By: |  |
|  | Name:<br> Title: |

---

[SIGNATURE PAGE TO WARRANT]

**EXHIBIT I**

**EXERCISE FORM**

Form to be used to exercise Warrant:

Date: __________, 20_____

The undersigned hereby elects irrevocably to exercise the Warrant for ______ shares (the "**Shares**") of Class A ordinary shares of Chanson International Holding, a Cayman Islands exempted company (the "**Company**"), and hereby makes payment of $____ (at the price of $____ per Share) in payment of the Exercise Price pursuant thereto. Please issue the Shares as to which this Warrant is exercised in accordance with the instructions given below and, if applicable, a new Warrant representing the number of Shares for which this Warrant has not been exercised.

or

The undersigned hereby elects irrevocably to convert its right to purchase ___ Shares under the Warrant for ______ Shares, as determined in accordance with the following formula:

---

| | | |
|:---|:---|:---|
| | X = | Y(A-B) |
| |  | A |
| Where, | | |

---

X = The number of Shares to be issued to Holder;

Y = The number of Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise;

A = The fair market value of one Share (as determined pursuant to Section 2.2 of the Warrant); and

B = The Exercise Price of this Warrant in effect on the date of exercise

The undersigned agrees and acknowledges that the calculation set forth above is subject to confirmation by the Company and any disagreement with respect to the calculation shall be resolved by the Company in its sole discretion.

Please issue the Shares as to which this Warrant is exercised in accordance with the instructions given below and, if applicable, a new Warrant representing the number of Shares for which this Warrant has not been exercised.

Signature:

Signature Guaranteed:

**INSTRUCTIONS FOR REGISTRATION OF SECURITIES**

Name:

(Print in Block Letters)

Address:

NOTICE: The signature to this form must correspond with the name as written upon the face of the Warrant without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank, other than a savings bank, or by a trust company or by a firm having membership on a registered national securities exchange.

**EXHIBIT II**

**ASSIGNMENT FORM**

Form to be used to assign Warrant:

(To be executed by the registered Holder to effect a transfer of the within Warrant):

FOR VALUE RECEIVED,<u> </u>does hereby sell, assign and transfer unto the right to purchase shares of Class A ordinary shares of Chanson International Holding., a Cayman Islands exempted company (the "**Company**"), evidenced by the Warrant and does hereby authorize the Company to transfer such right on the books of the Company to

_______________________________________________ whose address is

_______________________________________________________________.

_______________________________________________________________

Dated: ____________, 20__

Holder's Signature: _____________________________

Holder's Address: _____________________________

_____________________________

Signature Guaranteed: ___________________________________________

NOTICE: The signature to this form must correspond with the name as written upon the face of the within Warrant without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.

## Exhibit 10.3

**Exhibit 10.3**

EXCLUSIVE SERVICE AGREEMENT

BETWEEN

XINJIANG UNITED FAMILY TRADING CO., LTD

AND

[NAME OF OPERATOR]

ON

**[NAME OF BAKERY]**

**[Date of Agreement]**

**EXCLUSIVE SERVICE AGREEMENT**

This EXCLUSIVE SERVICE AGREEMENT (this "**AGREEMENT**") is entered into as of [Date of Agreement]("**SIGNING DATE**") in Urumqi, Xinjiang, the People's Republic of China ("**CHINA**" or the "**PRC**") by and between the following two Parties:

(1) **XINJIANG UNITED FAMILY TRADING CO., LTD ("XINJIANG UNITED FAMILY")**, a limited liability company legally established under the laws of the PRC,

REGISTERED ADDRESS: No. 26 Culture Road, Tianshan District, Urumqi, Xinjiang, China，

UNIFIED SOCIAL CREDIT CODE：[\*].

(2) **[Name of Operator] ("Operator"),** a Chinese citizen, and the operator of [Name of Bakery]

IDENTITY CARD NUMBER: [ID Card No. of Operator]

(In this Agreement, Xinjiang United Family and Operator shall hereinafter be referred to as a "**PARTY**" individually, and collectively "**PARTIES**".)

WHEREAS:

1. Xinjiang United Family is a limited liability company legally established and validly existing in China that mainly engages in management and consulting, and it provides management and consulting services;

2. [Name of Bakery] ("**Bakery**")is an individually-owned business legally established and validly existing in China that is mainly engaged in retailing the prepackaged food and bulk food with relevant authorization and with a food business permit, and [Name of Operator] is the sole operator of Bakery;

3. As agreed by the Parties, Operator expects that Xinjiang United Family will provide Operator with bakery advisory services, as well as other services in relation to the operation of bakery.

The Parties sign this Agreement to confirm the provisions and conditions. Whereas, Xinjiang United Family would provide Bakery with consulting and other relevant services:

**ARTICLE 1 - DEFINITION AND INTERPRETATION**

1.1 Unless to be otherwise interpreted by the terms or in the context herein, the following terms in this Agreement shall be interpreted to have the following meanings:

"BAKERY" means [Name of Bakery], an individually-owned business legally established and validly existing in China, whose sole operator is [Name of Operator], registered address is [Address of Bakery], and unified social code is [Unified Social Code of Bakery].

"BAKERY BUSINESS" means all the business actions legally performed by Bakery, currently or at any time during term of validity of this Agreement;

"SERVICE" means the services in relation and exclusively provided to Bakery within the approved business scope of Xinjiang United Family, as stipulated by Article 2.3 of this Agreement;

"SERVICE FEES" means the fees for services charged by Xinjiang United Family, as stipulated by Article 3.1 of this Agreement;

"CHINA" or the "PRC" means the People's Republic of China (excluding Hong Kong Special Administrative Region, Macao Special Administrative Region and Taiwan Region);

1.2 References in this Agreement to any laws and regulations (the "LAWS") shall include reference:

&nbsp;&nbsp;&nbsp;&nbsp;(1) at the same time to the amendments, changes, supplements and reformulations of such Laws, whether or not the effectiveness of the
same is prior to or after the execution of this Agreement; and

&nbsp;&nbsp;&nbsp;&nbsp;(2) at the same time to other decisions, notices and rules formulated or becoming effective according to such Laws.

1.3 Unless otherwise specified in the context of this Agreement, the Article, sub-article, section or paragraph mentioned herein shall refer to the corresponding content in this Agreement accordingly.

**ARTICLE 2 - SERVICES**

2.1 During the term of validity of this Agreement, Operator exclusively entrusts management and consulting services to Xinjiang United Family, agrees to irrevocably entrust the right of management and operations of Bakery to Xinjiang United Family. Xinjiang United Family shall provide the aforesaid services diligently, in accordance with the business requirements and specific requests at any time from Bakery.

2.2 The purpose of the entrusted operation is that Xinjiang United Family shall be in charge of the normal operations of Bakery, and provide full managements to Bakery's operation.

2.3 The contents of the entrusted operation shall include but not be limited to the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Xinjiang United Family shall be in charge of all aspects of Bakery's operation; engage Bakery's management staff and decide their remuneration;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Xinjiang United Family shall control and manage all the matters of Bakery, including but not limited to internal financial management, day-to-day operation, external contract execution and performance, tax filing and payment, and change of rights and personnel;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Xinjiang United Family shall manage and control all the funds of Bakery, including but not limited to current working capital, recovered account receivables, and the payment of all account payables and operation expenses, employee salaries and asset purchases. The accounts of Bakery shall be managed solely by Xinjiang United Family;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) Xinjiang United Family shall enjoy all the other responsibilities and rights enjoyed by Bakery's operator in accordance with the applicable law, including but not limited to the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) Deciding Bakery's operation principles, operation plan, investment plan and investment scheme;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) Discussing and approving the report of the executive officers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c) Discussing and approving the annual financial budget and settlement plan;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d) Discussing and approving the profit distribution plan and the loss compensation plan;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e) Resolving on the matters including change of corporate form, dissolution and liquidation of Bakery;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f) Formulating the basic rules and regulations of Bakery;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;g) Representing Bakery to sign relative documents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;h) Other responsibilities and rights.

2.4 As the Parties understand, the scope of services that Xinjiang United Family provides shall subject to its approved business scope; as Bakery requires services out of the approved business scope of Xinjiang United Family, Xinjiang United Family would apply to enlarge its business scope to the maximum extent permitted by law, and provide the required services after being approved.

2.5 The said entrustment is irrevocable and shall not be withdrawn, unless this Agreement is terminated pursuant to written agreement of both parties.

**ARTICLE 3 - SERVICE FEES**

3.1 As consideration of the management and consulting services that Xinjiang United Family provides, Bakery shall pay service fees to Xinjiang United Family. The amount of service fees shall be the remaining amount of Bakery's profit before tax after deducting relevant costs and reasonable expenses.

3.2 The amount of Service Fees agreed above shall be paid to Xinjiang United Family by Bakery, following the proportion on a monthly basis according to the actual incomes from main business in the current month.

3.3 All the bank charges due to the occurrence of payment shall be borne by Bakery. All the amount of payment shall be transferred to the bank account designated by Xinjiang United Family, by remittance or other means agreed by the Parties. The Parties agree that Xinjiang United Family could also notify Bakery to change such payment order at any time.

3.4 Upon written agreement between Xinjiang United Family and Operator, the fees agreed in Article 3.1 or their calculation percentage may be adjusted according to the circumstances in the actual performance, with particulars thereof to be stipulated in separate supplementary agreements to be entered into between the Parties as an appendix hereto.

3.5 Each Party shall respectively pay the tax related to their execution and performance of this Agreement. As Xinjiang United Family requires, in relation to all or part of the service fee incomes, Operator shall try its best to assist Xinjiang United Family in enjoying the tax exemption or reduction treatment hereunder.

**ARTICLE 4 – EXCLUSIVITY**

The service provided by Xinjiang United Family in this Agreement shall be exclusive. During the term of validity of this Agreement, unless with consent of Xinjiang United Family, Operator shall not sign any contract with any third party, or accept services same as or similar with those provided by Xinjiang United Family, from any third party in any form. Without prior written consent of Xinjiang United Family, Operator shall not accept management and consulting services from any third party.

**ARTICLE 5 - UNDERTAKINGS AND GUARANTEES**

5.1 For execution of this Agreement, the Parties hereby undertake and guarantee for each of its own that:

&nbsp;&nbsp;&nbsp;&nbsp;(1) Xinjiang United Family is a company of limited liabilities duly registered and legally existing under the PRC laws with independent
legal person status, and with full and independent status and legal capacity to execute, deliver and perform this Agreement, and may act
independently as a subject of actions;

&nbsp;&nbsp;&nbsp;&nbsp;(2) Bakery is the individually-owned business duly registered and legally existing under the PRC laws. Operator is the operator of Bakery,
with full and independent status and legal capacity to execute, deliver and perform this Agreement, and may act independently as a subject
of actions;

&nbsp;&nbsp;&nbsp;&nbsp;(3) Xinjiang United Family has full internal power and authority within its company to execute, deliver and perform this Agreement and
all the other documents to be entered into by it in relation to the transaction referred to herein. This Agreement shall be executed and
delivered by it legally and properly, and constitutes the legal and binding obligations on it and is enforceable on it in accordance with
its terms and conditions;

&nbsp;&nbsp;&nbsp;&nbsp;(4) it would not violate the binding or influential laws or contracts on it as executing and performing this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;(5) for the purpose of performing and achieving the goal of this Agreement, it guarantees for its own to other Party that, it would execute
all necessary and reasonable documents and take all necessary and reasonable actions, including but not limited to issuing necessary authorization
documents;

&nbsp;&nbsp;&nbsp;&nbsp;(6) it shall inform promptly the other Party of any litigation it is involved in and other disadvantageous circumstances that may affect
the performance hereof, and shall endeavor at its best efforts to prevent the deterioration of losses caused by such litigation or other
disadvantageous circumstances.

5.2 Operator further guarantees to Xinjiang United Family that:

&nbsp;&nbsp;&nbsp;&nbsp;(1) it will pay service fees in full to Xinjiang United Family promptly, in accordance with the provisions in this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;(2) it will maintain the validity of all licenses and qualifications in relation to Bakery's business, and it will corporate actively
with Xinjiang United Family to provide services.

5.3 During the term of this Agreement, Bakery agrees to corporate with Xinjiang United Family and the parent company of Xinjiang United Family (directly or indirectly) to conduct audits on relevant party transactions and other kinds of audits, provide Xinjiang United Family or its entrusted auditors with information and data in relation to Bakery's operation, business, clients, finance, staff, etc. Bakery also agrees that the parent company of Xinjiang United Family could disclose such information and data, in order to meet the supervision requirement at its securities' listing spot.

**ARTICLE 6 - INTELLECTUAL PROPERTY**

6.1 The rights of intellectual property concerning the work product created during the process of services provision by Xinjiang United Family hereunder shall belong to Xinjiang United Family.

6.2 If business is based on the intellectual property owned by Operator, Operator shall ensure there is no defect on the intellectual property. Operator shall be liable for all damages and losses of Xinjiang United Family incurred by defects of intellectual property rights. Xinjiang United Family is entitled to compensation from Operator concerning all of its losses.

6.3 Notwithstanding any other provisions herein, the validity of this Article shall not be affected by the suspension or termination of this Agreement.

**ARTICLE 7 – CONFIDENTIALITY**

7.1 No matter if this Agreement is terminated or not, the Parties shall be obliged to keep in strict confidence the commercial secret, proprietary information and customer information in relation to other Party and any other non-open information of other Party which it may become aware of as the result of the performance hereof (collectively, "**CONFIDENTIAL INFORMATION**").

7.2 Unless with prior consent of such other Party in writing or required to disclose to parties other than Parties hereof according to relevant laws, regulations or listing rules, no Party shall disclose the Confidential Information or any part thereof to any parties other than Parties hereof; unless for the purpose of performance hereof, no Party shall use directly or indirectly the Confidential Information or any part thereof for any other purposes, or it shall bear the default liability and indemnify the losses.

7.3 Upon termination of this Agreement, the Party shall, upon demand by other Party, provide the Confidential Information, return, destroy or otherwise dispose of all the documents, materials or software containing the Confidential Information and suspend using such Confidential Information.

7.4 Notwithstanding any other provisions herein, the validity of this Article shall not be affected by the suspension or termination of this Agreement.

**ARTICLE 8 - AGREEMENT TERM**

8.1 The Parties hereby confirm that, once this Agreement is formally signed by the Parties, this Agreement shall be retrospectively effective as far as the signing date.

8.2 Unless terminated earlier by the Parties in writing, this Agreement shall be valid for a term of ten (10) years, and renew automatically by ten (10) years after expiration, with no limit on times of renewal.

8.3 Notwithstanding the provisions in the preceding sentence, Xinjiang United Family has the right to terminate this Agreement at any time on its sole discretion, provided that it has notified Operator in written form thirty (30) days in advance.

**ARTICLE 9 – NOTICE**

9.1 Any notice, request, demand and other correspondences made as required by or in accordance with this Agreement shall be made in writing and delivered to the relevant Party.

9.2 The abovementioned notice or other correspondences shall be deemed to have been delivered when it is transmitted if transmitted by facsimile or telex; it shall be deemed to have been delivered when it is delivered if delivered in person; it shall be deemed to have been delivered five (5) days after posting the same if posted by mail.

**ARTICLE 10 - DEFAULT LIABILITY**

10.1 The Parties agree and confirm that, if any Party (the "**DEFAULTING PARTY**") breaches substantially any of the agreements made under this Agreement, or fails substantially to perform any of the obligations under this Agreement, such a breach shall constitute a default under this Agreement (a "**DEFAULT**"), then the non-defaulting Party whose interest is damaged thereby shall have the right to require the Defaulting Party to rectify such Default or take remedial measures within a reasonable period. If the Defaulting Party fails to rectify such Default or take remedial measures within such reasonable period or within ten (10) days of the non-defaulting Party notifying the Defaulting Party in writing and requiring it to rectify the Default, then the non-defaulting Party shall have the right, at its own discretion, to:

&nbsp;&nbsp;&nbsp;&nbsp;(1) terminate this Agreement and require the Defaulting Party to indemnify it fully for the damage; or

&nbsp;&nbsp;&nbsp;&nbsp;(2) demand the enforcement of the Defaulting Party's obligations hereunder and require the Defaulting Party to indemnify it fully
for the damage.

10.2 Notwithstanding any other provisions herein, the validity of this Article 10 shall not be affected by the suspension or termination of this Agreement.

**ARTICLE 11 - GOVERNING LAW AND DISPUTE RESOLUTION**

11.1 The formation, validity, execution, amendment, interpretation and termination of this Agreement shall be subject to the PRC Laws.

11.2 Any dispute arising hereunder and in connection herewith shall be settled through consultations between the Parties, and if the Parties cannot reach an agreement regarding such disputes within thirty (30) days of their occurrence, such disputes shall be submitted to Urumqi Arbitration Commission in Urumqi for arbitration in accordance with the arbitration rules of such Commission, and the arbitration award shall be final and binding on the Parties involved in such dispute.

11.3 Unless otherwise awarded by the arbitration commission, the losing party should bear all the arbitration or prepaid expenses (including but not limited to arbitration expense, arbitrator and lawyer's fee, travelling expense, etc.).

**ARTICLE 12 - FORCE MAJEURE**

In the event of earthquake, typhoon, flood, fire, war, computer virus, loophole in the design of tooling software, internet system encountering hacker's invasion, change of policies or laws, and other unforeseeable or unpreventable or unavoidable event of force majeure, which directly prevents a Party from performing this Agreement or performing the same on the agreed condition, the Party encountering such a force majeure event shall forthwith issue a notice by a facsimile and, within thirty (30) days, present the documents proving the details of such force majeure event and the reasons for which this Agreement is unable to be performed or is required to be postponed in its performance, and such proving documents shall be issued by the notaries office of the area where such force majeure event takes place. The Parties shall consult each other and decide whether this Agreement shall be waived in part or postponed in its performance with regard to the extent of impact of such force majeure event on the performance of this Agreement. No Party shall be liable to compensate for the economic losses brought to the other Party by the force majeure event.

**ARTICLE 13 – TRANSFER**

13.1 No Party shall assign any of its rights and/or obligations hereunder to any third parties without the prior written consent from the other Party.

13.2 As for transfer with the consent, this Agreement shall be binding on the legal successors of the Parties.

**ARTICLE 14 - SEVERABILITY**

Each provision contained herein shall be severable and independent from each of other provisions, and if at any time any one or more articles herein become invalid, illegal or unenforceable, the validity, legality or enforceability of the remaining provisions herein shall not be affected as a result thereof.

**ARTICLE 15 - AMENDMENT AND SUPPLEMENT**

Any amendment or supplement to this Agreement shall be made in writing and take effect as part of this Agreement when properly signed by the Parties, which shall have the same legal effect as this Agreement.

**ARTICLE 16 - TEXT**

This Agreement shall be prepared in the English language in two (2) original copies, with each involved Party holding one (1) copy hereof. Each original copy has the same legal effect.

**ARTICLE 17 - MISCELLANEOUS**

17.1 Any failure or delay by a Party in exercising any of its rights, powers and remedies hereunder or in accordance with laws (the "**PARTY'S RIGHTS**") shall not lead to a waiver of such rights, and the waiver of any single or partial exercise of the Party's Rights shall not preclude such Party from exercising such rights in any other way and exercising the remaining part of the Party's Rights.

17.2 The titles of the Articles contained herein shall be for reference only, and in no circumstance shall such titles be used in or affect the interpretation of the provisions hereof.

[THE REMAINDER IS THE SIGNATURE PAGE]

IN WITNESS HEREOF, the Parties have caused this Exclusive Service Agreement to be executed as of the signing date.

---

| | |
|:---|:---|
| [Name of Operator] | [Name of Operator] |
| Signature by: | /s/ [Name of Operator] |

---

---

| | |
|:---|:---|
| Xinjiang United Family Trading Co., Ltd (Company chop) | Xinjiang United Family Trading Co., Ltd (Company chop) |
| Signed by: | /s/ Baolin Wang |
| Name: | Baolin Wang |
| Position: | |

---

**Schedule of Material Differences**

One or more person signed an exclusive service agreement under this form. Pursuant to Instruction ii to Item 601 of Regulation S-K, the Registrant may only file this form as an exhibit with a schedule setting forth the material details in which the executed agreements differ from this form:

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **No.** | **Name of Bakery** | **Date of<br> Agreement** | **ID Card <br> No. of<br> Operator** | **Address of<br> Bakery** | **Unified<br> Social <br> Code of<br> Bakery** |
| 1. | Urumqi Midong District George Chanson Bakery Gang Li | May 2, 2020 | [\*] | No. 118, 1<sup>st</sup> FL, Baishang Shopping Center, 255 Suzhou East St., Gaoxin Dist., Urumqi, Xinjiang | [\*] |
| 2. | Shayibake District Yining Rd. George Chanson Bakery Gang Li | May 2, 2020 | [\*] | Store 1F1037, Shopping Center, Dehui Wanda Plaza, No. 405, Yining Rd., Shaybak Dist., Urumqi, Xinjiang | [\*] |
| 3. | Changji George Chanson Youhao Supermarket Bakery Gang Li | May 2, 2020 | [\*] | 1<sup>st</sup> FL, Youhaoshishang Shopping Center, Jianguo West Rd., Changji, Changji Prefecture, Xinjiang (Building 46, 2<sup>nd</sup> Hill, area 125) | [\*] |
| 4. | Changji George Chanson Bakery Gang Li | May 2, 2020 | [\*] | 1<sup>st</sup> FL, Huijia Times, 198 Yanan North Rd., Changji, Changji Prefecture, Xinjiang | [\*] |
| 5. | Tianshan District Xinhua North Rd. George Chanson Bakery Gang Li | May 2, 2020 | [\*] | 1<sup>st</sup> FL, Shopping Square, Hongshan Xinshiji, No. 38 North Xinhua Rd., Tianshan Dist., Urumqi, Xinjiang | [\*] |
| 6. | Shayibake District Youhao South Rd. Chanson Bakery Store Gang Li | May 2, 2020 | [\*] | 1/F, Friendly, Baisheng, No. 668, Youhao South Rd., Shaibuk Dist., Urumqi, Xinjiang | [\*] |
| 7. | Tianshan District Xinmin Rd. George Chanson Bakery Gang Li | May 2, 2020 | [\*] | Shop No. 2, Rongsheng Garden, No. 81 Xinmin Rd., Tianshan Dist., Urumqi, Xinjiang | [\*] |
| 8. | Tianshan District Minzhu Rd. George Chanson Bakery Gang Li | May 2, 2020 | [\*] | 1<sup>st</sup> FL, No. 148 Minzhu Rd., Tianshan Dist., Urumqi, Xinjiang | [\*] |
| 9. | Tianshan District Jianquan No. 3 Rd. George Chanson Bakery Gang Li | May 2, 2020 | [\*] | No. 215, Jianquan No. 3 Rd., Tianshan Dist., Urumqi, Xinjiang | [\*] |
| 10. | Tianshan District Jiefang North Rd. George Chanson Bakery Gang Li | May 2, 2020 | [\*] | No. 222, Jiefang North Rd., Tianshan Dist., Urumqi, Xinjiang 1F-2B | [\*] |
| 11. | Urumqi Economics and Technology Development District George Chanson Bakery on Kashi West Rd. Gang Li | May 2, 2020 | [\*] | 1-43, Longhai Commercial Building, 499 Kashi West Rd., Urumqi Economic and Technological Development Zone, Xinjiang | [\*] |
| 12. | Xinshi District Liyushan South Rd. George Chanson Bakery Gang Li | May 2, 2020 | [\*] | No. 66 Liyushan South Rd., Xinshi Area, Urumqi, Xinjiang | [\*] |
| 13. | Xinshi District Changchun South Rd. George Chanson Bakery Gang Li | May 2, 2020 | [\*] | 1<sup>st</sup> FL, Youhaoshishang Shopping Center, No. 136 Changchun South Rd., East First Lane, Gaoxin Dist., Urumqi, Xinjiang | [\*] |
| 14. | Xinshi District Beijing Middle Rd. United Family Chanson Bakery Gang Li | May 2, 2020 | [\*] | 3<sup>rd</sup> FL, Huijia Times, No. 147 Beijing Middle Rd., Xinshi Dist., Urumqi, Xinjiang | [\*] |

---

15. Xinshi District Suzhou East Rd. Chanson Bakery Gang Li May 2, 2020 [\*] No. 118, 1<sup>st</sup> FL, Baishang Shopping Center, 255 Suzhou East Street, Gaoxin Dist., Urumqi, Xinjiang [\*]

16. Xinshi District Suzhou Rd. Xiaoxigou Chanson Bakery Gang Li May 2, 2020 [\*] Store No. 53, Xiaoxigou Pedestrian St., Suzhou Rd., Xincheng Dist., Urumqi, Xinjiang [\*]

17. Xinshi District South No. 3 Rd. Chanson Bakery Gang Li May 2, 2020 [\*] No. 169, Nanwei San Rd., Gaoxin Dist., Urumqi, Xinjiang [\*]

18. Urumqi Economics and Technology Development District George Chanson Bakery on Xuanwuhu Rd. Gang Li May 2, 2020 [\*] No. 26 Culture Road, Tianshan District, Urumqi, Xinjiang [\*]

19. Shuimogou District South Nanhu Road George Chanson Bakery Gang Li June 17, 2020 [\*] 1F, No. 68 Nanhu Rd., Shuimogou Dist., Urumqi, Xinjiang [\*]

20. Xinshi District Hebei East Rd. George Chanson Bakery Gang Li October 14, 2020 [\*] No. 1046, 1/F, Vanguard Supermarket, No. 996 Hebei East Rd., Gaoxin Dist., Urumqi, Xinjiang [\*]

21. Urumqi Toutunhe District George Chanson Bakery on Zhongya South Rd. Gang Li November 6, 2020 [\*] No. 5009, 5/F, Degang Wanda Plaza, No. 268 Zhongya South Rd., Economic and Technological Development Zone, Urumqi, Xinjiang [\*]

22. Shayibake District Karamay West Rd. Chanson Bakery Gang Li September 7, 2021 [\*] Shop No. 9-11, Hengchang Hengye Garden, No. 2557 Karamay West Street, Shayibak District, Urumqi, Xinjiang [\*]

23. Shayibake District Qitai Rd. Hemeijia Chanson Bakery Gang Li December 4, 2021 [\*] No. JY-GQ-054, Floor 4, Urumqi Dehuiwanda Plaza, No. 133 Qitai Road, Shayibake District, Urumqi, Xinjiang [\*]

24. Tianshan District Qingnian Rd. Chanson Bakery Gang Li December 11, 2021 [\*] No. 1F-6, No. 219 Qiannian Road, Tianshan District, Urumqi, Xinjiang [\*]

25. Xinshi District Liyushan North Rd. Hemeijia Bakery Gang Li October 27, 2021 [\*] Shop No. S11-123, Commercial Building NO. S7-S11, Huafuli Community, No. 136 North Liyuanshan Road, Xinshi District, Urumqi, Xinjiang [\*]

26. Xinshi District Changchun North Rd. Chanson Bakery Gang Li October 25, 2021 [\*] Shop No. 4050, Floor 4, Urumqi Wanda Plaza, No. 668 North Changchun Road, Xinshi District, Urumqi, Xinjiang [\*]

27. Tianshan District Guangming Rd. Chanson Coffee Bakery Gang Li April 8, 2022 [\*] F5-009, Times Square, No. 39 Guangming Road, Tianshan District, Urumqi, Xinjiang [\*]

28. Shayibake District Youhao North Rd. Chanson Coffee Bakery Gang Li February 23, 2023 [\*] Island Shop No. 110, 1st Floor, MM2 Shopping Center, No. 688 Youhao North Road, Shayibake District, Urumqi, Xinjiang [\*]

29. Shihezi Hemeijia Bakery No.1 Hui Wang May 2, 2020 [\*] Youhaoshishang Shopping Center, 91 Beishsan Rd., 40 Dist., Shihezi, Xinjiang [\*]

## Exhibit 10.4

**Exhibit 10.4**

OPERATING RIGHTS PROXY AGREEMENT

ON

[NAME OF BAKERY]

BETWEEN

[NAME OF OPERATOR]

AND

XINJIANG UNITED FAMILY TRADING CO., LTD

[Date of Agreement]

**OPERATING RIGHTS PROXY AGREEMENT**

This OPERATING RIGHTS PROXY AGREEMENT (this "AGREEMENT") is entered into as of [Date of Agreement] ("SIGNING DATE") in Urumqi, Xinjiang, the People's Republic of China ("CHINA" or the "PRC") by and between the following parties:

**(1) [Name of Operator] ("Operator"),** a Chinese citizen, and the operator of [Name of Bakery] IDENTITY CARD NUMBER: [Unified Social Credit Code of Bakery]

(2) **XINJIANG UNITED FAMILY TRADING CO., LTD ("Xinjiang United Family"),** a limited liability company legally established under the laws of PRC, REGISTERED ADDRESS: No. 26 Culture Road, Tianshan District, Urumqi, Xinjiang, China,

UNIFIED SOCIAL CREDIT CODE: [\*].

(The above parties shall hereinafter be individually referred to as a "PARTY" and collectively, "PARTIES".)

WHEREAS:

1. [Name of Bakery] ("Bakery") is an individually-owned business legally established and validly existing in China, mainly engaged in retailing the prepackaged food and bulk food with relevant authorization and a food business permit, and [Name of Operator] is the sole operator of Bakery;

2. Operator intends to entrust Xinjiang United Family or the individual designated by it with the exercises of the operating rights and other relevant rights of operator in Bakery while Xinjiang United Family is willing to accept such entrustment.

The Parties hereby have reached the following agreement upon friendly consultations:

**ARTICLE 1 - OPERATING RIGHTS ENTRUSTMENT**

1.1 Operator hereby irrevocably undertakes to sign the Power of Attorney (the content and form of which are set out as <u>Appendix I</u> hereto) after the execution of this Agreement to entrust Xinjiang United Family or the personnel designated by it then (including the liquidator taking place of such personnel) ("TRUSTEES") to exercise the following rights enjoyed by him as Operator of Bakery (collectively, the "ENTRUSTED RIGHTS"):

&nbsp;&nbsp;&nbsp;&nbsp;(1) Exercising operating rights as proxy of Operator, including but not limited to the appointment and election
for management personnel of Bakery;

&nbsp;&nbsp;&nbsp;&nbsp;(2) Getting access to financial information of Bakery as proxy of Operator;

&nbsp;&nbsp;&nbsp;&nbsp;(3) Making resolutions about disposing of Bakery's assets as proxy of Operator;

&nbsp;&nbsp;&nbsp;&nbsp;(4) Approving annual budgets of Bakery or announcing dividends as proxy of Operator;

&nbsp;&nbsp;&nbsp;&nbsp;(5) Making resolutions about dissolution and liquidation of Bakery, forming the liquidating committee and
exercising the authorities in the course of liquidation as proxy of Operator, including but not limited to making resolutions about disposing
of Bakery's assets;

&nbsp;&nbsp;&nbsp;&nbsp;(6) Filing any required document to the company registration agency or any other relevant agency as proxy
of Operator;

&nbsp;&nbsp;&nbsp;&nbsp;(7) Signing any resolution as proxy of Operator; and

&nbsp;&nbsp;&nbsp;&nbsp;(8) all the operating rights and other rights of operator stipulated by PRC laws.

1.2 Xinjiang United Family shall have the right to dismiss and replace Trustees by written notice to Operator, while the new entrustment is granted subject to the status of Trustees as PRC citizens and the approval by Xinjiang United Family. Once new entrustment is made, the original entrustment shall be replaced; Operator shall not cancel the authorization and entrustment of the Trustees otherwise.

1.3 The Trustees shall perform the entrusted obligations within the scope of entrustment in due care and prudence and in compliance with laws; Operator acknowledges and assumes relevant liabilities for any legal consequences of the Trustees' exercise of the foregoing Entrusted Rights.

1.4 Operator hereby acknowledges that the Trustees are not required to seek advice from Operator prior to the respective exercise of the foregoing Entrusted Rights. However, the Trustees shall inform Operator in a timely manner after such resolution or proposal is made.

**ARTICLE 2 - RIGHT TO INFORMATION**

For the purpose of exercising the Entrusted Rights under this Agreement, the Trustees are entitled to know the information with regard to Bakery's operation, business, clients, finance, staff, etc., and shall have access to relevant materials of Bakery. Bakery shall adequately cooperate with the Trustees in this regard.

**ARTICLE 3 - EXERCISE OF ENTRUSTED RIGHTS**

3.1 Operator will provide adequate assistance to the exercise of the Entrusted Rights by the Trustees, including execution of the resolutions of Operator or other pertinent legal documents made by the Trustees when necessary (e.g., when it is necessary for examination and approval of or registration or filing with governmental departments).

3.2 If at any time during the term of this Agreement, the entrustment or exercise of the Entrusted Rights under this Agreement is unenforceable for any reason except for default of Operator or Bakery, the Parties shall immediately seek a most similar substitute for the unenforceable provision and, if necessary, enter into supplementary agreement to amend or adjust the provisions herein, in order to ensure the realization of the purpose of this Agreement.

**ARTICLE 4 - EXEMPTION AND COMPENSATION**

4.1 The Parties acknowledge that the Trustees shall not be requested to be liable for or compensate (monetary or otherwise) other Party or any third party due to exercise of Entrusted Rights by the Trustees designated by Operator under this Agreement.

4.2 Operator agrees to compensate the Trustees for and hold it harmless against all losses incurred or likely to be incurred by it due to exercise of the Entrusted Rights by the Trustees designated by Operator, including without limitation any loss resulting from any litigation, demand arbitration or claim initiated or raised by any third party against it or from administrative investigation or penalty of governmental authorities. However, Operator will not compensate for losses incurred due to willful misconduct or gross negligence of the Trustees.

**ARTICLE 5 - REPRESENTATIONS AND WARRANTIES**

5.1 Operator hereby represents and warrants that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Operator is with full capacity and full and independent legal status and legal capacity to execute, deliver and perform this Agreement, and may act independently as a subject of actions. Bakery is an individually-owned business duly registered and legally existing under the PRC laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Operator has full right to execute and deliver this Agreement and other documents that are related to the transaction referred to herein. Operator has full right and authorization with respect to consummate the transaction referred to herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) This Agreement shall be executed and delivered by Operator lawfully and properly. This Agreement constitutes the legal and binding obligations on him and is enforceable on him in accordance with its terms and conditions hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) The execution, delivery and performance of this Agreement by Operator, do not violate regulations of the PRC Law, or any binding agreement, contract or other arrangement made with any third party.

5.2 Xinjiang United Family hereby represents and warrants that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) it is a company with limited liability properly registered and legally existing under PRC laws, with an independent corporate legal person status, and with full and independent legal status and legal capacity to execute, deliver and perform this Agreement and may act independently as a subject of actions; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) it has the full corporate power and authority to execute and deliver this Agreement and all the other documents to be entered into by it in relation to the transaction contemplated hereunder, and the full power and authority to consummate such transaction.

**ARTICLE 6 - TERM OF AGREEMENT**

6.1 The Parties hereby confirm that, once this Agreement is formally signed by the Parties, this Agreement shall be retrospectively effective as far as the signing date, and maintains the validity as long as Operator holds the operating rights of Bakery.

6.2 Notwithstanding the preceding sentence, under any of the following circumstances, the Trustees have sole discretion to terminate this Agreement by giving a thirty-day (30) notice in writing to Operator.

**ARTICLE 7 - NOTICE**

7.1 Any notice, request, demand and other correspondences made as required by or in accordance with this Agreement shall be made in writing and delivered to the relevant Party.

7.2 The abovementioned notice or other correspondences shall be deemed to have been delivered when (i) it is transmitted if transmitted by facsimile or telex, or (ii) it is delivered if delivered in person, or (iii) when five (5) days have elapsed after posting the same if posted by mail.

**ARTICLE 8 - DEFAULT LIABILIT**Y

8.1 The Parties agree and confirm that, if any of the Parties (the "DEFAULTING PARTY") breaches substantially any of the provisions herein or fails substantially to perform any of the obligations hereunder, such a breach or failure shall constitute a default under this Agreement (a "DEFAULT"). In such event any of the other Party without default (a "NON-DEFAULTING PARTY") who incurs losses arising from such a Default shall have the right to require the Defaulting Party to rectify such Default or take remedial measures within a reasonable period. If the Defaulting Party fails to rectify such Default or take remedial measures within such reasonable period or within ten (10) days of a Non-defaulting Party's notifying the Defaulting Party in writing and requiring it to rectify the Default, then the relevant Non-defaulting Party shall be entitled to choose at its discretion to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) terminate this Agreement and require the Defaulting Party to indemnify all damages, or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) require specific performance by the Defaulting Party of this Agreement and indemnification against all damages.

8.2 Without limiting the generality of Article 8.1 above, any breach by Operator of the Exclusive Service Agreement, Call Option Agreement or Pledge Agreement shall be deemed as having constituted the breach by such Operator of this Agreement.

8.3 Notwithstanding any other provisions herein, the validity of this Article shall not be affected by the suspension or termination of this Agreement.

**ARTICLE 9 - GOVERNING LAW AND DISPUTE RESOLUTION**

9.1 The conclusion, validity, execution, amendment, interpretation and termination of this Agreement shall be governed by laws of the PRC.

9.2 Any disputes arising from and in connection with this Agreement shall be settled through consultations between the Parties involved, and if the Parties involved fail to reach an agreement regarding such a dispute within thirty (30) days of its occurrence, such dispute shall be submitted to Urumqi Arbitration Commission in Urumqi for arbitration in accordance with the arbitration rules of such Commission, and the arbitration award shall be final and binding on all the Parties involved.

9.3 Unless otherwise awarded by the arbitration commission, the losing party should bear all the arbitration or prepaid expenses (including but not limited to arbitration expense, arbitrator and lawyer's fee, travelling expense, etc.).

**ARTICLE 10 - FORCE MAJEURE**

In the event of earthquake, typhoon, flood, fire, war, computer virus, loophole in the design of tooling software, internet system encountering hacker's invasion, change of policies or laws, and other unforeseeable or unpreventable or unavoidable event of force majeure, which directly prevents a Party from performing this Agreement or performing the same on the agreed condition, the Party encountering such a force majeure event shall forthwith issue a notice by a facsimile and, within thirty (30) days, present the documents proving the details of such force majeure event and the reasons for which this Agreement is unable to be performed or is required to be postponed in its performance, and such proving documents shall be issued by the notaries office of the area where such force majeure event takes place. The Parties shall consult each other and decide whether this Agreement shall be waived in part or postponed in its performance with regard to the extent of impact of such force majeure event on the performance of this Agreement. No Party shall be liable to compensate for the economic losses brought to the other Party by the force majeure event.

**ARTICLE 11 – TRANSFER**

11.1 Operator shall not assign any of its rights and/or obligations hereunder to any third parties without the prior written consent from Xinjiang United Family，and Xinjiang United Family is entitled to transfer its rights and/or obligations to the third party designated by it after notifying Operator.

11.2 As for transfer with the consent, this Agreement shall be binding on the legal successors of the Parties.

**ARTICLE 12 - SEVERABILITY**

Each provision contained herein shall be severable and independent from each of other provisions, and if at any time any one or more articles herein become invalid, illegal or unenforceable, the validity, legality or enforceability of the remaining provisions herein shall not be affected as a result thereof.

**ARTICLE 13 - AMENDMENT AND SUPPLEMENT**

Any amendment or supplement to this Agreement shall be made in writing and take effect as part of this Agreement when properly signed by the Parties, which shall have the same legal effect as this Agreement.

**ARTICLE 14 - TEXT**

This Agreement shall be prepared in the English language in two (2) original copies, with each involved Party holding one (1) copy hereof. Each original copy has the same legal effect.

**ARTICLE 15 - MISCELLANEOUS**

15.1 Any failure or delay by a Party in exercising any of its rights, powers and remedies hereunder or in accordance with laws (the "PARTY'S RIGHTS") shall not lead to a waiver of such rights, and the waiver of any single or partial exercise of the Party's Rights shall not preclude such Party from exercising such rights in any other way and exercising the remaining part of the Party's Rights.

15.2 The titles of the Articles contained herein shall be for reference only, and in no circumstances shall such titles be used in or affect the interpretation of the provisions hereof.

[THE REMAINDER IS THE SIGNATURE PAGE]

IN WITNESS HEREOF, the following Parties have caused this Operating Rights Proxy Agreement to be executed as of the date first here above mentioned.

---

| | |
|:---|:---|
| [Name of Operator] | [Name of Operator] |
| Signature by: | <u>/s/ [Name of Operator]</u> |

---

Xinjiang United Family Trading Co., Ltd (Company chop)

---

| | |
|:---|:---|
| Signed by: | /s/ Baolin Wang |
| Name: | Baolin Wang |
| Position: |  |

---

APPENDIX Ⅰ

POWER OF ATTORNEY

[Name of Operator], ("Operator," Chinese citizen, Identity Card number: [ID Card No. of Operator]) hereby irrevocably entrusts Xinjiang United Family Trading Co., Ltd. or the personnel designated by it (the "Trustees") a comprehensive proxy, to exercise my following rights as the operator of [Name of Bakery] ("Bakery") in my name, as the only and exclusive proxy of me during the term of this Power of Attorney:

&nbsp;&nbsp;&nbsp;&nbsp;(1) Exercising operating rights as proxy of Operator, including but not limited to the appointment and election
for management personnel of Bakery;

&nbsp;&nbsp;&nbsp;&nbsp;(2) Getting access to financial information of Bakery as proxy of Operator;

&nbsp;&nbsp;&nbsp;&nbsp;(3) Making resolutions about disposing of Bakery's assets as proxy of Operator;

&nbsp;&nbsp;&nbsp;&nbsp;(4) Approving annual budgets of Bakery or announcing dividends as proxy of Operator;

&nbsp;&nbsp;&nbsp;&nbsp;(5) Making resolutions about dissolution and liquidation of Bakery, forming the liquidating committee and
exercising the authorities in the course of liquidation as proxy of Operator, including but not limited to making resolutions about disposing
of Bakery's assets;

&nbsp;&nbsp;&nbsp;&nbsp;(6) Filing any required document to the company registration agency or any other relevant agency as proxy
of Operator;

&nbsp;&nbsp;&nbsp;&nbsp;(7) Signing any resolution as proxy of Operator; and

&nbsp;&nbsp;&nbsp;&nbsp;(8) all the operating rights and other rights of operator stipulated by PRC laws.

Unless the Operating Rights Proxy Agreement entered into by Operator and Xinjiang United Family Trading Co., Ltd. as of [Date of Agreement] expires or terminated earlier, this Power of Attorney shall be retrospectively effective.

Authorization is hereby given.

Operator (Signature and Impress): <u>/s/ [Name of Operator]</u>

<u> </u>

Date:[ ]

**Schedule of Material Differences**

One or more person signed an operating rights proxy agreement under this form. Pursuant to Instruction ii to Item 601 of Regulation S-K, the Registrant may only file this form as an exhibit with a schedule setting forth the material details in which the executed agreements differ from this form:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **No.** | **Name of Bakery** | **Date of Agreement** | **ID Card No. of Operator** | **Address of Bakery** | **Unified Social Code of Bakery** |
| 1. | Urumqi Midong District George Chanson Bakery Gang Li | May 2, 2020 | [\*] | No. 118, 1<sup>st</sup> FL, Baishang Shopping Center, 255 Suzhou East St., Gaoxin Dist., Urumqi, Xinjiang | [\*] |
| 2. | Shayibake District Yining Rd. George Chanson Bakery Gang Li | May 2, 2020 | [\*] | Store 1F1037, Shopping Center, Dehui Wanda Plaza, No. 405, Yining Rd., Shaybak Dist., Urumqi, Xinjiang | [\*] |
| 3. | Changji George Chanson Youhao Supermarket Bakery Gang Li | May 2, 2020 | [\*] | 1<sup>st</sup> FL, Youhaoshishang Shopping Center, Jianguo West Rd., Changji, Changji Prefecture, Xinjiang (Building 46, 2<sup>nd</sup> Hill, area 125) | [\*] |
| 4. | Changji George Chanson Bakery Gang Li | May 2, 2020 | [\*] | 1<sup>st</sup> FL, Huijia Times, 198 Yanan North Rd., Changji, Changji Prefecture, Xinjiang | [\*] |
| 5. | Tianshan District Xinhua North Rd. George Chanson Bakery Gang Li | May 2, 2020 | [\*] | 1<sup>st</sup> FL, Shopping Square, Hongshan Xinshiji, No. 38 North Xinhua Rd., Tianshan Dist., Urumqi, Xinjiang | [\*] |
| 6. | Shayibake District Youhao South Rd. Chanson Bakery Store Gang Li | May 2, 2020 | [\*] | 1/F, Friendly, Baisheng, No. 668, Youhao South Rd., Shaibuk Dist., Urumqi, Xinjiang | [\*] |

---

7. Tianshan District Xinmin Rd. George Chanson Bakery Gang Li May 2, 2020 [\*] Shop No. 2, Rongsheng Garden, No. 81 Xinmin Rd., Tianshan Dist., Urumqi, Xinjiang [\*]

8. Tianshan District Minzhu Rd. George Chanson Bakery Gang Li May 2, 2020 [\*] 1<sup>st</sup> FL, No. 148 Minzhu Rd., Tianshan Dist., Urumqi, Xinjiang [\*]

9. Tianshan District Jianquan No. 3 Rd. George Chanson Bakery Gang Li May 2, 2020 [\*] No. 215, Jianquan No. 3 Rd., Tianshan Dist., Urumqi, Xinjiang [\*]

10. Tianshan District Jiefang North Rd. George Chanson Bakery Gang Li May 2, 2020 [\*] No. 222, Jiefang North Rd., Tianshan Dist., Urumqi, Xinjiang 1F-2B [\*]

11. Urumqi Economics and Technology Development District George Chanson Bakery on Kashi West Rd. Gang Li May 2, 2020 [\*] 1-43, Longhai Commercial Building, 499 Kashi West Rd., Urumqi Economic and Technological Development Zone, Xinjiang [\*]

12. Xinshi District Liyushan South Rd. George Chanson Bakery Gang Li May 2, 2020 [\*] No. 66 Liyushan South Rd., Xinshi Area, Urumqi, Xinjiang [\*]

13. Xinshi District Changchun South Rd. George Chanson Bakery Gang Li May 2, 2020 [\*] 1<sup>st</sup> FL, Youhaoshishang Shopping Center, No. 136 Changchun South Rd., East First Lane, Gaoxin Dist., Urumqi, Xinjiang [\*]

14. Xinshi District Beijing Middle Rd. United Family Chanson Bakery Gang Li May 2, 2020 [\*] 3<sup>rd</sup> FL, Huijia Times, No. 147 Beijing Middle Rd., Xinshi Dist., Urumqi, Xinjiang [\*]

15. Xinshi District Suzhou East Rd. Chanson Bakery Gang Li May 2, 2020 [\*] No. 118, 1<sup>st</sup> FL, Baishang Shopping Center, 255 Suzhou East Street, Gaoxin Dist., Urumqi, Xinjiang [\*]

16. Xinshi District Suzhou Rd. Xiaoxigou Chanson Bakery Gang Li May 2, 2020 [\*] Store No. 53, Xiaoxigou Pedestrian St., Suzhou Rd., Xincheng Dist., Urumqi, Xinjiang [\*]

17. Xinshi District South No. 3 Rd. Chanson Bakery Gang Li May 2, 2020 [\*] No. 169, Nanwei San Rd., Gaoxin Dist., Urumqi, Xinjiang [\*]

18. Urumqi Economics and Technology Development District George Chanson Bakery on Xuanwuhu Rd. Gang Li May 2, 2020 [\*] No. 26 Culture Road, Tianshan District, Urumqi, Xinjiang [\*]

19. Shuimogou District South Nanhu Road George Chanson Bakery Gang Li June 17, 2020 [\*] 1F, No. 68 Nanhu Rd., Shuimogou Dist., Urumqi, Xinjiang [\*]

20. Xinshi District Hebei East Rd. George Chanson Bakery Gang Li October 14, 2020 [\*] No. 1046, 1/F, Vanguard Supermarket, No. 996 Hebei East Rd., Gaoxin Dist., Urumqi, Xinjiang [\*]

21. Urumqi Toutunhe District George Chanson Bakery on Zhongya South Rd. Gang Li November 6, 2020 [\*] No. 5009, 5/F, Degang Wanda Plaza, No. 268 Zhongya South Rd., Economic and Technological Development Zone, Urumqi, Xinjiang [\*]

22. Shayibake District Karamay West Rd. Chanson Bakery Gang Li September 7, 2021 [\*] Shop No. 9-11, Hengchang Hengye Garden, No. 2557 Karamay West Street, Shayibak District, Urumqi, Xinjiang [\*]

23. Shayibake District Qitai Rd. Hemeijia Chanson Bakery Gang Li December 4, 2021 [\*] No. JY-GQ-054, Floor 4, Urumqi Dehuiwanda Plaza, No. 133 Qitai Road, Shayibake District, Urumqi, Xinjiang [\*]

24. Tianshan District Qingnian Rd. Chanson Bakery Gang Li December 11, 2021 [\*] No. 1F-6, No. 219 Qiannian Road, Tianshan District, Urumqi, Xinjiang [\*]

25. Xinshi District Liyushan North Rd. Hemeijia Bakery Gang Li October 27, 2021 [\*] Shop No. S11-123, Commercial Building NO. S7-S11, Huafuli Community, No. 136 North Liyuanshan Road, Xinshi District, Urumqi, Xinjiang [\*]

26. Xinshi District Changchun North Rd. Chanson Bakery Gang Li October 25, 2021 [\*] Shop No. 4050, Floor 4, Urumqi Wanda Plaza, No. 668 North Changchun Road, Xinshi District, Urumqi, Xinjiang [\*]

27. Tianshan District Guangming Rd. Chanson Coffee Bakery Gang Li April 8, 2022 [\*] F5-009, Times Square, No. 39 Guangming Road, Tianshan District, Urumqi, Xinjiang [\*]

28. Shayibake District Youhao North Rd. Chanson Coffee Bakery Gang Li February 23, 2023 [\*] Island Shop No. 110, 1st Floor, MM2 Shopping Center, No. 688 Youhao North Road, Shayibake District, Urumqi, Xinjiang [\*]

29. Shihezi Hemeijia Bakery No.1 Hui Wang May 2, 2020 [\*] Youhaoshishang Shopping Center, 91 Beishsan Rd., 40 Dist., Shihezi, Xinjiang [\*]

## Exhibit 10.5

**Exhibit 10.5**

PLEDGE AGREEMENT

ON

[NAME OF BAKERY]

BETWEEN

[NAME OF PLEDGOR]

AND

XINJIANG UNITED FAMILY TRADING CO., LTD

[Date of Agreement]

**PLEDGE AGREEMENT**

This PLEDGE AGREEMENT (hereinafter, this "AGREEMENT") is entered into in Urumqi, Xinjiang, the People's Republic of China (hereinafter, "PRC") as of [Date of Agreement] (the "SIGNING DATE") by and between the following parties:

(1) **[Name of Pledgor] (the "PLEDGOR"),** a Chinese citizen, and the sole operator of [Name of Bakery]

IDENTITY CARD NUMBER: [ID Card No. of Pledgor]

(2) **XINJIANG UNITED FAMILY TRADING CO., LTD (the "PLEDGEE")**, a limited liability company legally established under the laws of PRC,

REGISTERED ADDRESS: No. 26 Culture Road, Tianshan District, Urumqi, Xinjiang, China，

UNIFIED SOCIAL CREDIT CODE: [\*].

(The above parties hereinafter each referred to as a "PARTY" individually, and collectively, the "PARTIES.")

**WHEREAS:** 

1. [Name of Bakery] ("Bakery") is an individually-owned business legally established and validly existing in China, and the Pledgor is the sole operator of Bakery and owns the whole operating rights until the Signing Date.

2. The Pledgee and the Pledgor entered into an Exclusive Service Agreement dated [Date of Agreement]; the Pledgor and the Pledgee entered into a Call Option Agreement and the Operating Rights Proxy Agreement dated [Date of Agreement];

3. As security for performance by the Pledgor of the Contract Obligations (as defined below), the Pledgor agrees to pledge all of his assets in Bakery to the Pledgee and grant the Pledgee the right to request for repayment in first priority.

THEREFORE, the Parties hereby have reached the following agreement upon mutual consultations:

**ARTICLE 1 – DEFINITION**

1.1 Except as otherwise construed in the context, the following terms in this Agreement shall be interpreted to have the following meanings:

"TRANSACTION AGREEMENTS" shall mean the Exclusive Service Agreement dated [Date of Agreement] between the Pledgor and the Pledgee; the Call Option Agreement and the Operating Rights Proxy Agreement dated [Date of Agreement] between the Pledgor and the Pledgee; as well as other agreements dated [Date of Agreement] between the Pledgor and the Pledgee, for performance of the above-mentioned agreements.

"BAKERY" means [Name of Bakery], an individually-owned business legally established and validly existing in China, whose operator is [Name of Pledgor], and registered address is [Address of Bakery], the unified social code is [Unified Social Code of Store].

"CONTRACT OBLIGATIONS" shall mean all contractual obligations of the Pledgor under the Transaction Agreements.

"DEBTOR" shall mean the debtors under provisions of the Transaction Agreements, including the Pledgor.

"CREDITORS" shall mean the creditors under provisions of the Transaction Agreements, including Xinjiang United Family and its successors.

"PRINCIPLE CREDITOR'S RIGHTS" shall mean the creditor's rights owned by Creditors towards Debtor according to the Transaction Agreements.

"PLEADGED ASSET" shall mean the asset for Bakery's business held by Pledgor.

"BREACHING EVENT" shall mean any breach by Pledgor of his Contract Obligations under the Transaction Agreements.

"PRC LAW" shall mean the then valid laws, administrative regulations, administrative rules, local regulations, judicial interpretations and other binding regulatory documents of the People's Republic of China (excluding Hong Kong Special Administrative Region, Macao Special Administrative Region and Taiwan Region).

1.2 The references to any laws and regulations (the "LAWS") herein shall be deemed:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) to include the references to the amendments, changes, supplements and reenactments of such law, irrespective of whether they take effect before or after the formation of this Agreement; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) to include the references to other decisions, notices or regulations enacted in accordance therewith or effective as a result thereof.

1.3 Except as otherwise stated in the context herein, all references to an Article, clause, item or paragraph shall refer to the relevant part of this Agreement.

**ARTICLE 2 - ASSET PLEDGE**

2.1 Pledgor hereby agrees to pledge the Pledged Asset, which he legally owns and has the right to dispose of, to the Pledgee according to the provisions hereof as security for performance of the Contract Obligations and repayment of the guaranteed liabilities. The Pledgee agree to accept such pledge.

2.2 Under the provisions of this Agreement, the guaranteed liabilities and guaranteed scope of the asset pledge include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) All the obligations under the provisions of the Transaction Agreements, including but not limited to, all the principle and profit of the payable expenses to the Creditors under the provisions of the Transaction Agreement, and the payable interest penalties, compound interests, liquidated damages, compensations, as well as the expenses owed by the Debtor to the Creditors and the expenses to excise the Creditors rights and encumbrance rights, due to Breaching Events of the Debtor; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) All the expenses for the exercise of the Debtor' rights, including but not limited to litigation fees (or arbitration fees), lawyers' fees, assessment fees, auction fees and travelling expenses, etc.

2.3 The Pledgor hereby undertakes that the pledged asset will be occupied by the Pledgee and will be in charge of by the assigned manager of the Pledgee after the Agreement came into effect, and secures that the Pledgee is the only pledgee of the pledged asset.

2.4 During the valid term of this Agreement, except for the willful misconduct or gross negligence of the Pledgee, the Pledgee shall not be liable in any way to, nor shall the Pledgor have any right to claim in any way or propose any demands on the Pledgee, in respect of the reduction in value of the Pledged Asset.

2.5 Only upon prior consent by Pledgee shall the Pledgor be able to increase the asset for Bakery's business. Further asset purchased by the Pledgor in Bakery shall also be part of the Pledged Asset.

2.6 Upon prior written notice to the Pledgor, the Pledgee may transfer the main principle creditor's rights as well as other rights and interests under this Agreement, without being required the consent of the Pledgor. The Pledgor shall do its best to cooperate with the Pledgee or the transferees to complete all the required approval or registration procedures.

**ARTICLE 3 - TERM OF PLEDGE**

3.1 The term of pledge shall terminate as of the latest date of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) the secured debts in the scope of pledge is cleared off;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The Pledgee exercises its pledge rights pursuant to provisions and conditions of this Agreement, in order to fully realize its principle creditor's rights and other rights related to the guaranteed liabilities; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) The Pledgor transferred all the pledged asset to the Pledgee according to the Call Option Agreement, or other entity or individual designated by it, no longer holding asset of Bakery.

3.2 In respect of asset interest of the Pledgor, upon full and complete performance by the Pledgor of all of the Contractual Obligations, the Pledgee shall, at the request of the Pledgor, release the pledge created on such asset under this Agreement, and shall return the pledged asset to the Pledgor.

**ARTICLE 4 - REALIZATION OF RIGHT OF PLEDGE**

4.1 Under any of the following circumstances, the Pledgee is entitled to exercise the rights of pledge immediately:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Debtor violates any provisions of the Transaction Agreements or the Pledgor violates any provisions of this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The Pledgor or Debtor applies (or applied) for bankruptcy, reorganization or reconciliation, or is announced bankruptcy, reorganization or reconciliation, or dismissed, canceled, withdrawn, closed, suspended, out of business, merged, divided or there are other changes or similar circumstances concerning its structures.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Other events detrimental to the Pledgee's rights and interests happen to the Pledgor or Debtor.

4.2 The Pledgor and the Pledgee hereby agree that, in case of any Breaching Event, the Pledgee shall give written notice to the Pledgor. Unless the Breaching Event has been rectified, the Pledgee shall have the right to exercise all of the remedial rights and powers enjoyable by it under PRC Law, including but not limited to selling off and auctioning all or part of the pledged asset, publicly or privately.

4.3 The reasonable costs incurred by the Pledgee in connection with the exercise of any and all rights and powers set out above shall be borne by the Pledgor, and the Pledgee shall have the right to deduct the costs actually incurred from the proceeds that it acquires from the exercise of the rights and powers.

4.4 The proceeds that the Pledgee acquires from the exercise of the respective rights and powers shall be used in the priority order as follows:

- First, to pay any cost incurred in connection with the disposal of the Pledged Asset and the exercise by the Pledgee of its respective rights and powers (including remuneration paid to its respective legal counsels and agents);

- Second, to pay any taxes and levies payable for the disposal of the Pledged Asset; and

- Third, to repay the Pledgee for the Guaranteed Liabilities.

In case of any balance after payment of the above amounts, the Pledgee shall return the same to the Pledgor or other persons entitled thereto according to the relevant laws and rules or submit the same to the local notary institution where the Pledgee is domiciled (any fees incurred in relation thereto shall be borne by the Pledgor).

4.5 The Pledgee shall have the option to exercise, simultaneously or in certain sequence, any of the remedies at breaching that it is entitled to in respect of the asset interest of Bakery held by the Pledgor. The Pledgor shall not oppose to whether the Pledgee exercises any part of the right to the pledge or the sequence of exercising the pledge interest.

**ARTICLE 5 - FEES AND COSTS**

All costs actually incurred in connection with the establishment of the Asset Pledge hereunder, including but not limited to stamp duties, any other taxes, all legal fees, shall be borne by the Pledgee.

**ARTICLE 6 - RESTIRCTION ON RIGHTS**

During existence of the right of pledge, unless with written consent of the Pledgee, the Pledgor shall not dispose of all or part of its pledged asset in any form (including but not limited to, sale, transfer, donation, re-pledge)

**ARTICLE 7 - REPRESENTATIONS AND WARRANTIES BY THE PLEDGOR**

The Pledgor hereby, represents and warrants to the Pledgee as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The Pledgor is a PRC citizen with full capacity of disposition and has obtained due authorization to execute, deliver and perform this Agreement and can independently be a subject of actions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The Pledgor has full right and authorization to execute and deliver this Agreement and other documents relating to the transaction. He has full right and authorization to complete the transaction stipulated in this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) This Agreement is legally and properly executed by the Pledgor. This Agreement is binding on him legally and effectively. According to provisions and conditions of this Agreement, this Agreement is enforceable on him.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) All certificates, documents and information submitted to the Pledgee by the Pledgor for execution and performance of this Agreement are true, correct and sufficient, with no concealment or fraudulence.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) Concerning the pledged asset, the Pledgor has full legal rights of ownership and disposition, as well as other rights and interests. There is no right of mortgage or pledge, or other burden of rights concerning the pledged asset.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) The execution, delivery and performance by the Pledgor of this Agreement are not in violation of or conflict with any laws applicable to him, or any agreement to which he is a party or which has binding effect on his assets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) The pledged asset is not sealed up, distrained or frozen or otherwise disposed for asset preservation or performance, without any existing litigation, arbitration or administrative procedure concerning it. In addition, no such event would take place after execution of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8) Notwithstanding the pledge under this Agreement, the Pledgor shall still comply with and perform all the obligations under the articles and/or relevant laws and government branches' approval.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(9) The Pledgor would not take, or agree on, any actions or measures which are likely to be of detrimental effect on the Pledgor' s rights, interests or pledged asset.

**ARTICLE 8 - NOTICE**

8.1 Any notice, request, demand and other correspondences made as required by or in accordance with this Agreement shall be made in writing and delivered to the relevant Party.

8.2 The above-mentioned notice or other correspondences shall be deemed to have been delivered when (i) it is transmitted if transmitted by facsimile or telex, or (ii) it is delivered if delivered in person, or (iii) when five (5) days have elapsed after posting the same if posted by mail.

**ARTICLE 9 - DEFAULT LIABILIT**Y

9.1 The Parties agree and confirm that, if any of the Parties (the "DEFAULTING PARTY") breaches substantially any of the provisions herein or fails substantially to perform any of the obligations hereunder, such a breach or failure shall constitute a default under this Agreement (a "DEFAULT"). In such event any of the other Parties without default (a "NON-DEFAULTING PARTY") who incurs losses arising from such a Default shall have the right to require the Defaulting Party to rectify such Default or take remedial measures within a reasonable period. If the Defaulting Party fails to rectify such Default or take remedial measures within such reasonable period or within ten (10) days of a Non-defaulting Party's notifying the Defaulting Party in writing and requiring it to rectify the Default, then the relevant Non-defaulting Party shall be entitled to choose at its discretion to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) terminate this Agreement and require the Defaulting Party to indemnify all damages, or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) require specific performance by the Defaulting Party of this Agreement and indemnification against all damages.

9.2 Notwithstanding any other provisions herein, the validity of this Article shall not be affected by the suspension or termination of this Agreement.

**ARTICLE 10 - GOVERNING LAW AND DISPUTE RESOLUTION**

10.1 The conclusion, validity, execution, amendment, interpretation and termination of this Agreement shall be governed by laws of the PRC.

10.2 Any disputes arising from and in connection with this Agreement shall be settled through consultations between the Parties involved, and if the Parties involved fail to reach an agreement regarding such a dispute within thirty (30) days of its occurrence, such dispute shall be submitted to Urumqi Arbitration Commission for arbitration in Urumqi in accordance with the arbitration rules of such commission, and the arbitration award shall be final and binding on all the Parties involved.

10.3 Unless otherwise awarded by the arbitration commission, the losing party should bear all the arbitration or prepaid expenses (including but not limited to arbitration expense, arbitrator and lawyer's fee, travelling expense).

**ARTICLE 11 - FORCE MAJEURE**

In the event of earthquake, typhoon, flood, fire, war, computer virus, loophole in the design of tooling software, internet system encountering hacker's invasion, change of policies or laws, and other unforeseeable or unpreventable or unavoidable event of force majeure, which directly prevents a Party from performing this Agreement or performing the same on the agreed condition, the Party encountering such a force majeure event shall forthwith issue a notice by a facsimile and, within thirty (30) days, present the documents proving the details of such force majeure event and the reasons for which this Agreement is unable to be performed or is required to be postponed in its performance, and such proving documents shall be issued by the notaries office of the area where such force majeure event takes place. The Parties shall consult each other and decide whether this Agreement shall be waived in part or postponed in its performance with regard to the extent of impact of such force majeure event on the performance of this Agreement. No Party shall be liable to compensate for the economic losses brought to the other Party by the force majeure event.

**ARTICLE 12 – TRANSFER**

12.1 The Pledgor shall not assign any of its rights and/or obligations hereunder to any third parties without the prior written consent from the Pledgee, and the Pledgee is entitled to transfer its rights and/or obligations to the third party designated by it after notifying the Pledgor.

12.2 As for transfer with the consent, this Agreement shall be binding on the legal successors of the Parties.

**ARTICLE 13 - SEVERABILITY**

Each provision contained herein shall be severable and independent from each of other provisions, and if at any time any one or more articles herein become invalid, illegal or unenforceable, the validity, legality or enforceability of the remaining provisions herein shall not be affected as a result thereof.

**ARTICLE 14 - AMENDMENT AND SUPPLEMENT**

Any amendment or supplement to this Agreement shall be made in writing and take effect as part of this Agreement when properly signed by the Parties, which shall have the same legal effect as this Agreement.

**ARTICLE 15 - TEXT**

This Agreement shall be prepared in the English language in two (2) original copies, with each involved Party holding one (1) copy hereof. Each original copy has the same legal effect.

**ARTICLE 16 - MISCELLANEOUS**

16.1 Any failure or delay by a Party in exercising any of its rights, powers and remedies hereunder or in accordance with laws (the "PARTY'S RIGHTS") shall not lead to a waiver of such rights, and the waiver of any single or partial exercise of the Party's Rights shall not preclude such Party from exercising such rights in any other way and exercising the remaining part of the Party's Rights.

16.2 The titles of the Articles contained herein shall be for reference only, and in no circumstance shall such titles be used in or affect the interpretation of the provisions hereof.

[THE REMAINDER IS THE SIGNATURE PAGE]

IN WITNESS HEREOF, the following Parties have caused this Pledge Agreement to be executed as of the date and in the place first here above-mentioned.

---

| | |
|:---|:---|
| [Name of Pledgor] | [Name of Pledgor] |
| Signature by: | /s/ [Name of Pledgor] |

---

---

| | |
|:---|:---|
| Xinjiang United Family Trading Co., Ltd (Company chop) | Xinjiang United Family Trading Co., Ltd (Company chop) |
| Signed by: | /s/ Baolin Wang |
| Name: | Baolin Wang |
| Position: |  |

---

**Schedule of Material Differences**

One or more person signed a pledge agreement under this form. Pursuant to Instruction ii to Item 601 of Regulation S-K, the Registrant may only file this form as an exhibit with a schedule setting forth the material details in which the executed agreements differ from this form:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **No.** | **Name of Bakery** | **Date of<br> Agreement** | **ID Card<br> No. of<br> Pledgor** | **Address of<br> Bakery** | **Unified<br> Social<br> Code of<br> Store** |
| 1. | Urumqi Midong District George Chanson Bakery Gang Li | May 2, 2020 | [\*] | No. 118, 1<sup>st</sup> FL, Baishang Shopping Center, 255 Suzhou East St., Gaoxin Dist., Urumqi, Xinjiang | [\*] |
| 2. | Shayibake District Yining Rd. George Chanson Bakery Gang Li | May 2, 2020 | [\*] | Store 1F1037, Shopping Center, Dehui Wanda Plaza, No. 405, Yining Rd., Shaybak Dist., Urumqi, Xinjiang | [\*] |
| 3. | Changji George Chanson Youhao Supermarket Bakery Gang Li | May 2, 2020 | [\*] | 1<sup>st</sup> FL, Youhaoshishang Shopping Center, Jianguo West Rd., Changji, Changji Prefecture, Xinjiang (Building 46, 2<sup>nd</sup> Hill, area 125) | [\*] |
| 4. | Changji George Chanson Bakery Gang Li | May 2, 2020 | [\*] | 1<sup>st</sup> FL, Huijia Times, 198 Yanan North Rd., Changji, Changji Prefecture, Xinjiang | [\*] |
| 5. | Tianshan District Xinhua North Rd. George Chanson Bakery Gang Li | May 2, 2020 | [\*] | 1<sup>st</sup> FL, Shopping Square, Hongshan Xinshiji, No. 38 North Xinhua Rd., Tianshan Dist., Urumqi, Xinjiang | [\*] |
| 6. | Shayibake District Youhao South Rd. Chanson Bakery Store Gang Li | May 2, 2020 | [\*] | 1/F, Friendly, Baisheng, No. 668, Youhao South Rd., Shaibuk Dist., Urumqi, Xinjiang | [\*] |
| 7. | Tianshan District Xinmin Rd. George Chanson Bakery Gang Li | May 2, 2020 | [\*] | Shop No. 2, Rongsheng Garden, No. 81 Xinmin Rd., Tianshan Dist., Urumqi, Xinjiang | [\*] |
| 8. | Tianshan District Minzhu Rd. George Chanson Bakery Gang Li | May 2, 2020 | [\*] | 1<sup>st</sup> FL, No. 148 Minzhu Rd., Tianshan Dist., Urumqi, Xinjiang | [\*] |
| 9. | Tianshan District Jianquan No. 3 Rd. George Chanson Bakery Gang Li | May 2, 2020 | [\*] | No. 215, Jianquan No. 3 Rd., Tianshan Dist., Urumqi, Xinjiang | [\*] |
| 10. | Tianshan District Jiefang North Rd. George Chanson Bakery Gang Li | May 2, 2020 | [\*] | No. 222, Jiefang North Rd., Tianshan Dist., Urumqi, Xinjiang 1F-2B | [\*] |
| 11. | Urumqi Economics and Technology Development District George Chanson Bakery on Kashi West Rd. Gang Li | May 2, 2020 | [\*] | 1-43, Longhai Commercial Building, 499 Kashi West Rd., Urumqi Economic and Technological Development Zone, Xinjiang | [\*] |
| 12. | Xinshi District Liyushan South Rd. George Chanson Bakery Gang Li | May 2, 2020 | [\*] | No. 66 Liyushan South Rd., Xinshi Area, Urumqi, Xinjiang | [\*] |
| 13. | Xinshi District Changchun South Rd. George Chanson Bakery Gang Li | May 2, 2020 | [\*] | 1<sup>st</sup> FL, Youhaoshishang Shopping Center, No. 136 Changchun South Rd., East First Lane, Gaoxin Dist., Urumqi, Xinjiang | [\*] |
| 14. | Xinshi District Beijing Middle Rd. United Family Chanson Bakery Gang Li | May 2, 2020 | [\*] | 3<sup>rd</sup> FL, Huijia Times, No. 147 Beijing Middle Rd., Xinshi Dist., Urumqi, Xinjiang | [\*] |
| 15. | Xinshi District Suzhou East Rd. Chanson Bakery Gang Li | May 2, 2020 | [\*] | No. 118, 1<sup>st</sup> FL, Baishang Shopping Center, 255 Suzhou East Street, Gaoxin Dist., Urumqi, Xinjiang | [\*] |

---

16. Xinshi District Suzhou Rd. Xiaoxigou Chanson Bakery Gang Li May 2, 2020 [\*] Store No. 53, Xiaoxigou Pedestrian St., Suzhou Rd., Xincheng Dist., Urumqi, Xinjiang [\*]

17. Xinshi District South No. 3 Rd. Chanson Bakery Gang Li May 2, 2020 [\*] No. 169, Nanwei San Rd., Gaoxin Dist., Urumqi, Xinjiang [\*]

18. Urumqi Economics and Technology Development District George Chanson Bakery on Xuanwuhu Rd. Gang Li May 2, 2020 [\*] [\*] [\*]

19. Shuimogou District South Nanhu Road George Chanson Bakery Gang Li June 17, 2020 [\*] 1F, No. 68 Nanhu Rd., Shuimogou Dist., Urumqi, Xinjiang [\*]

20. Xinshi District Hebei East Rd. George Chanson Bakery Gang Li October 14, 2020 [\*] No. 1046, 1/F, Vanguard Supermarket, No. 996 Hebei East Rd., Gaoxin Dist., Urumqi, Xinjiang [\*]

21. Urumqi Toutunhe District George Chanson Bakery on Zhongya South Rd. Gang Li November 6, 2020 [\*] No. 5009, 5/F, Degang Wanda Plaza, No. 268 Zhongya South Rd., Economic and Technological Development Zone, Urumqi, Xinjiang [\*]

22. Shayibake District Karamay West Rd. Chanson Bakery Gang Li September 7, 2021 [\*] Shop No. 9-11, Hengchang Hengye Garden, No. 2557 Karamay West Street, Shayibak District, Urumqi, Xinjiang [\*]

23. Shayibake District Qitai Rd. Hemeijia Chanson Bakery Gang Li December 4, 2021 [\*] No. JY-GQ-054, Floor 4, Urumqi Dehuiwanda Plaza, No. 133 Qitai Road, Shayibake District, Urumqi, Xinjiang [\*]

24. Tianshan District Qingnian Rd. Chanson Bakery Gang Li December 11, 2021 [\*] No. 1F-6, No. 219 Qiannian Road, Tianshan District, Urumqi, Xinjiang [\*]

25. Xinshi District Liyushan North Rd. Hemeijia Bakery Gang Li October 27, 2021 [\*] Shop No. S11-123, Commercial Building NO. S7-S11, Huafuli Community, No. 136 North Liyuanshan Road, Xinshi District, Urumqi, Xinjiang [\*]

26. Xinshi District Changchun North Rd. Chanson Bakery Gang Li October 25, 2021 [\*] Shop No. 4050, Floor 4, Urumqi Wanda Plaza, No. 668 North Changchun Road, Xinshi District, Urumqi, Xinjiang [\*]

27. Tianshan District Guangming Rd. Chanson Coffee Bakery Gang Li April 8, 2022 [\*] F5-009, Times Square, No. 39 Guangming Road, Tianshan District, Urumqi, Xinjiang [\*]

28. Shayibake District Youhao North Rd. Chanson Coffee Bakery Gang Li February 23, 2023 [\*] Island Shop No. 110, 1st Floor, MM2 Shopping Center, No. 688 Youhao North Road, Shayibake District, Urumqi, Xinjiang [\*]

29. Shihezi Hemeijia Bakery No.1 Hui Wang May 2, 2020 [\*] Youhaoshishang Shopping Center, 91 Beishsan Rd., 40 Dist., Shihezi, Xinjiang [\*]

## Exhibit 10.6

**Exhibit 10.6**

CALL OPTION AGREEMENT

ON

[NAME OF BAKERY]

BETWEEN

[NAME OF OPERATOR]

AND

XINJIANG UNITED FAMILY TRADING CO., LTD

[**Date of Agreement]**

**CALL OPTION AGREEMENT**

This CALL OPTION AGREEMENT (this "AGREEMENT") is entered into as of [Date of Agreement] ("SIGNING DATE") in Urumqi, Xinjiang, the People's Republic of China ("CHINA" or the "PRC") by and between the following Parties:

(1) **[Name of Operator] ("Operator"),** a Chinese citizen, and the sole operator of [Name of Bakery] IDENTITY CARD NUMBER: [ID Card No. of Operator]

(2) **XINJIANG UNITED FAMILY TRADING CO., LTD ("Xinjiang United Family")**, a limited liability company legally established under the laws of PRC, REGISTERED ADDRESS: No. 26 Culture Road, Tianshan District, Urumqi, Xinjiang, China， UNIFIED SOCIAL CREDIT CODE: [\*].

(In this Agreement, Operator and Xinjiang United Family shall hereinafter be referred to as a "PARTY" individually, and collectively "PARTIES".)

WHEREAS

1. [Name of Bakery] ("Bakery") is an individually-owned business legally established and validly existing in China, mainly engaged in retailing the prepackaged food and bulk food with relevant authorization, with a food business permit, and [Name of Operator] is the sole operator of Bakery;

2. Operator intends to transfer to Xinjiang United Family/or any other entity/natural person designated by it, and Xinjiang United Family is willing to accept, all the assets in Bakery, to the extent not violating PRC Law.

3. In order to conduct the above transfer, Operator agrees to grant Xinjiang United Family an irrevocable call option for asset transfer (hereinafter collectively the "CALL OPTION"), under which and to the extent permitted by PRC Law, Operator shall on demand of Xinjiang United Family transfer the assets to Xinjiang United Family and/or any other entity or individual designated by it in accordance with the provisions contained herein.

THEREFORE, the Parties hereby have reached the following agreement upon mutual consultations:

**ARTICLE 1 - DEFINITION**

1.1 Except as otherwise construed in the context, the following terms in this Agreement shall be interpreted to have the following meanings:

"PRC LAW" shall mean the then valid laws, administrative regulations, administrative rules, local regulations, judicial interpretations and other binding regulatory documents of the People's Republic of China.

"BAKERY" means [Name of Bakery], an individually-owned business legally established and validly existing in China, whose operator is [Name of Operator], and registered address is [Address of Bakery], the unified social code is [Unified Social Code of Bakery].

"CALL OPTION" shall mean the call option Operator grants to Xinjiang United Family for the purchase of Bakery's assets, according to provisions and conditions of this Agreement.

"TRANSFERRED ASSET" shall mean the assets of Bakery which Xinjiang United Family has the right to require Operator to transfer to it or its designated entity or individual when Xinjiang United Family exercises its Transferred Asset Option in accordance with Article 3 herein, the amount of which may be all or part of Bakery's assets and liabilities and the details of which shall be determined by Xinjiang United Family at its sole discretion in accordance with the then valid PRC Law and from its commercial consideration.

"EXERCISE OF OPTION" shall mean Xinjiang United Family exercising its Call Option.

"TRANSFER PRICE" shall mean all the consideration that Xinjiang United Family or its designated entity or individual is required to pay to Operator in order to obtain the Transferred Assets upon each Exercise of Option, as defined in Article 2.2 of this Agreement.

"BUSINESS PERMITS" shall mean any approvals, permits, filings, registrations which Bakery is required to have for legally and validly operating its businesses, including but not limited to the Business License of the Cooperate Legal Person, the Tax Registration Certificate and such other relevant licenses and permits as required by the then PRC Law.

"Bakery ASSETS" shall mean, in respect of any Bakery, all the tangible and intangible assets which such Operator owns or has the right to use during the term of this Agreement, including but not limited to any immoveable and moveable assets, and such intellectual property rights as trademarks, copyrights, patents, proprietary know-how, domain names and software use rights.

"THE EXCLUSIVE SERVICE AGREEMENT" shall mean the Exclusive Service Agreement entered into between Operator and Xinjiang United Family dated [Date of Agreement].

"MATERIAL AGREEMENT" shall mean an agreement to which Operator is a party and which has a material impact on the businesses or assets of Bakery.

"CHINA" shall mean People's Republic of China (excluding Hong Kong Special Administrative Region, Macao Special Administrative Region and Taiwan Region).

1.2 The references to any PRC Law (the "LAW") herein shall be deemed：

&nbsp;&nbsp;&nbsp;&nbsp;(1) to include the references to the amendments, changes, supplements and reenactments of such law, irrespective of whether they take effect before or after the formation of this Agreement; and

&nbsp;&nbsp;&nbsp;&nbsp;(2) to include the references to other decisions, notices or regulations enacted in accordance therewith or effective as a result thereof.

1.3 Except as otherwise stated in the context herein, all references to an Article, clause, item or paragraph shall refer to the relevant part of this Agreement.

**ARTICLE 2 - GRANT OF CALL OPTION**

2.1 Operator agrees that Operator hereby exclusively, irrevocably, and without any additional conditions grants Xinjiang United Family with a Call Option, under which Xinjiang United Family shall have the right to require Operator to transfer the Transferred Asset to Xinjiang United Family or its designated entity or individual in such method as set out herein and as permitted by PRC Law. Xinjiang United Family also agrees to accept such a Call Option.

2.2 In case of Xinjiang United Family exercising the Call Option in its sole discretion upon the occurrence of the situation in which such call option exercise become feasible under the relevant laws in PRC, any additional consideration paid other than the $1.00 which may be required under PRC Law to effect such purchase to comply with such legal formalities shall be either canceled or returned to Xinjiang United Family immediately with no additional compensation to Operator. Operator hereby acknowledges the purpose of such provisions and hereby agrees and authorizes Xinjiang United Family to take any and all actions to effect such transaction and agrees irrevocably to execute any and all documents and instruments and authorizes Xinjiang United Family's relevant officers to sign on his or her behalf and hereby gives Xinjiang United Family and any of its relevant officers a proxy to execute and deliver such documents and instruments to effect the purpose of this provision and hereby waives any defense or claim of causes of action to challenge or defeat this provision.

**ARTICLE 3 - METHOD OF EXERCISE OF OPTION**

3.1 To the extent permitted by PRC Law, Xinjiang United Family shall have the sole discretion to determine the specific time, method and times of its Exercise of Option.

3.2 On deciding each Exercise of Option, Xinjiang United Family shall issue to Operator a notice for exercising the Call Option (hereinafter the "EXERCISE NOTICE", the form of which is set out as <u>Appendix I</u> hereto). Operator shall, upon receipt of the Exercise Notice, forthwith transfer all the Transferred Asset in accordance with the Exercise Notice to Xinjiang United Family and/or other entity or individual designated by it.

3.3 Operator hereby undertakes and guarantees that once Xinjiang United Family issues the Exercise Notice:

&nbsp;&nbsp;&nbsp;&nbsp;(1) Operator shall immediately enter into an asset transfer agreement with Xinjiang United Family and/or other entity or individual designated by it;

&nbsp;&nbsp;&nbsp;&nbsp;(2) Operator shall provide Xinjiang United Family with necessary support (including providing and executing all the relevant legal documents, processing all the procedures for government approvals and registrations and bearing all the relevant obligations) in accordance with the requirements of Xinjiang United Family and of the laws and regulations, in order that Xinjiang United Family and/or other entity or individual designated by it may take all the Transferred Asset free from any legal defect.

**ARTICLE 4 - TRANSFER PRICE**

4.1 Xinjiang United Family and other entity or individual designated by it shall pay the Transfer Price to Operator who has transferred the Transferred Equity. Xinjiang United Family shall have the right to elect to pay the purchase price by settlement of certain credits held by it or its affiliates to Operator.

4.2 If there exists any regulatory provision with respect to Transfer Price under the then PRC Law, Xinjiang United Family or its designated entity or individual shall be entitled to determine the lowest price permitted by PRC Law as the Transfer Price.

**ARTICLE 5 - REPRESENTATIONS AND WARRANTIES**

5.1 Operator hereby represents and warrants as follows:

&nbsp;&nbsp;&nbsp;&nbsp;(1) Operator is a PRC citizen with full capacity, full and independent legal status and legal capacity to execute, deliver and perform this Agreement, and may act independently as a litigant party；

&nbsp;&nbsp;&nbsp;&nbsp;(2) This Agreement is executed and delivered by Operator legally and properly；

&nbsp;&nbsp;&nbsp;&nbsp;(4) In accordance with this Agreement, Xinjiang United Family and/or other entity or individual designated by it may, after the Exercise of Option, obtain the proper title to the Transferred Assets free from any lien, pledge, claim and other encumbrances and third party rights；

&nbsp;&nbsp;&nbsp;&nbsp;(5) Operator has full power and authorization to execute and deliver this Agreement and all the other documents to be entered into by it in relation to the transaction referred to herein, and it has the full power and authorization to complete the transaction referred to herein. The execution, delivery and performance of this Agreement, as well as completion of transaction, do not violate regulations of the PRC Law, or any binding agreement, contract or other arrangement made with any third party.

5.2 Xinjiang United Family hereby represents and warrants as follows:

&nbsp;&nbsp;&nbsp;&nbsp;(1) Xinjiang United Family is a company with limited liability properly registered and legally existing under PRC Law, with an independent status as a legal person. Xinjiang United Family has full and independent legal status and legal capacity to execute, deliver and perform this Agreement and may act independently as a subject of actions；

&nbsp;&nbsp;&nbsp;&nbsp;(2) Xinjiang United Family has full power and authorization to execute and deliver this Agreement and all the other documents to be entered into by it in relation to the transaction referred to herein, and it has the full power and authorization to complete the transaction referred to herein.

**ARTICLE 6 - UNDERTAKINGS BY OPERATOR** 

Operator hereby individually undertakes within the term of this Agreement as follows:

6.1 Operator must ensure that Bakery would validly exist and prevent it from being terminated, liquidated or dissolved, and take all necessary measures to ensure that Bakery is able to obtain all the Business Permits necessary for its business in a timely manner and all the Business Permits remain in effect at any time.

6.2 Operator hereby individually undertakes within the term of this Agreement that without the prior written consent by Xinjiang United Family,

&nbsp;&nbsp;&nbsp;&nbsp;(1) shall not transfer or otherwise dispose of any Option Assets or create any encumbrance or other third party's rights on any Option Assets;

&nbsp;&nbsp;&nbsp;&nbsp;(2) it shall not terminate or cause to terminate any Material Agreements entered into by Operator, or enter into any other Agreements in conflict with the existing Material Agreements;

&nbsp;&nbsp;&nbsp;&nbsp;(3) it shall not appoint or cancel or replace any management personnel of Bakery;

&nbsp;&nbsp;&nbsp;&nbsp;(4) it shall not individually or collectively cause Bakery to conduct any transactions that may substantively affect the asset, liability, business operation, equity structure, equity of a third party and other legal rights (except those occurring during the arm's length operations or daily operation, or having been disclosed to and approved by Xinjiang United Family in writing);

&nbsp;&nbsp;&nbsp;&nbsp;(5) it shall ensure that Bakery shall not lend or borrow any money, or provide guarantee with Assets of Bakery or engage in security activities in any other forms, or bear any substantial obligations other than on the arm's length basis.

6.3 Operator hereby individually undertakes that it must make all its efforts during the term of this Agreement to develop the business of Bakery, and ensures that the operations of Bakery are legal and in compliance with the regulations and that it shall not engage in any actions or omissions which might harm the Assets of Bakery or its credit standing or affect the validity of the Business Permits of Bakery.

6.4 Without limiting the generality of Article 6.2 above, Operator undertakes to, within the term of this Agreement, make full and due performance of any and all of the obligations on the part thereof under the Operating Rights Proxy Agreement, and to procure the full and due performance of any and all of its obligations under the Exclusive Service Agreement and warrants that no adverse impact on exercising the rights under this Agreement by Xinjiang United Family will be incurred due to the breach by Operator of the Operating Rights Proxy Agreement or the Exclusive Service Agreement.

**ARTICLE 7 - TAXATION**

Each Party shall pay the due tax fees in relation to execution and performance of this Agreement respectively.

**ARTICLE 8 - CONFIDENTIALITY**

8.1 Notwithstanding the termination of this Agreement, Operator shall be obligated to keep in strict confidence the commercial secret, proprietary information and customer information in relation to other parties and any unreleased information of which the performance result might be known to other parties (hereinafter collectively the "CONFIDENTIAL INFORMATION").

8.2 Each Party shall not disclose the confidential information or provide any other party other than the Parties in this Agreement with any confidential information, unless with prior written consent of the other Party or in accordance with relevant laws, regulations or listing rules. Except for the purpose of performing its obligations under this Agreement, Operator shall not use or partly use such Confidential Information directly or indirectly, or it shall bear the default liability and indemnify the losses.

8.3 Upon termination of this Agreement, each Party shall, upon demand by the Disclosing Party, return, destroy or otherwise dispose of all the documents, materials or software containing the Confidential Information and suspend using such Confidential Information.

8.4 Notwithstanding any other provisions herein, the validity of this Article shall not be affected by the suspension or termination of this Agreement.

**ARTICLE 9 - TERM OF AGREEMENT**

9.1 The Parties hereby confirms, on execution by the Parties, this Agreement shall take effect irrevocably as of the date of formal execution by the Parties.

9.2 Unless the Parties otherwise make agreement on termination in writing, this Agreement shall terminate when all the Transferred Asset of Bakery is legally transferred under the name of Xinjiang United Family and/or other entity or individual designated by it in accordance with the provisions of this Agreement.

**ARTICLE 10 – NOTICE**

10.1 Any notice, request, demand and other correspondences made as required by or in accordance with this Agreement shall be made in writing and delivered to the relevant Party.

10.2 The above-mentioned notice or other correspondences shall be deemed to have been delivered when it is transmitted if transmitted by facsimile or telex; it shall be deemed to have been delivered when it is delivered if delivered in person; it shall be deemed to have been delivered five (5) days after posting the same if posted by mail.

**ARTICLE 11 - LIABILITY FOR BREACH OF CONTRACT**

11.1 The Parties agree and confirm that, if any party (hereinafter the "DEFAULTING PARTY") breaches substantially any of the provisions herein or fails substantially to perform any of the obligations under this Agreement, such a breach or omission shall constitute a default under this Agreement, then non-defaulting Party shall have the right to require the Defaulting Party to rectify such Default or take remedial measures within a reasonable period. If the Defaulting Party fails to rectify such Default or take remedial measures within such reasonable period or within ten (10) days of non-defaulting Party's notifying the Defaulting Party in writing and requiring it to rectify the Default, then non-defaulting Party shall have the right at its own discretion to select any of the following remedial measures:

&nbsp;&nbsp;&nbsp;&nbsp;(1) to terminate this Agreement and require the Defaulting Party to indemnify it for all the damage; or

&nbsp;&nbsp;&nbsp;&nbsp;(2) mandatory performance of the obligations of the Defaulting Party hereunder and require the Defaulting Party to indemnify it for all the damage.

11.2 Without limiting the generality of Article 11.1, any breach of the Operating Rights Proxy Agreement, the Pledge Agreement shall be deemed as having constituted the breach by Operator of this Agreement.

11.3 Notwithstanding any other provisions herein, the validity of this Article shall stand disregarding the suspension or termination of this Agreement.

**ARTICLE 12 - GOVERNING LAW AND DISPUTE RESOLUTION**

12.1 The formation, validity, execution, amendment, interpretation and termination of this Agreement shall be subject to PRC Law.

12.2 Any disputes arising hereunder and in connection herewith shall be settled through consultations between the Parties, and if the Parties cannot reach an agreement regarding such disputes within thirty (30) days of their occurrence, such disputes shall be submitted to Urumqi Arbitration Commission in Urumqi for arbitration in accordance with the arbitration rules of such Commission, and the arbitration award shall be final and binding on all Parties.

12.3 Unless otherwise awarded by the arbitration commission, the losing party shall bear all the arbitration or prepaid expenses (including but not limited to arbitration expense, arbitrator and lawyer's fee, travelling expense, etc.).

**ARTICLE 13 - FORCE MAJEURE**

In the event of earthquake, typhoon, flood, fire, war, computer virus, loophole in the design of tooling software, internet system encountering hacker's invasion, change of policies or laws, and other unforeseeable or unpreventable or unavoidable event of force majeure, which directly prevents a Party from performing this Agreement or performing the same on the agreed condition, the Party encountering such a force majeure event shall forthwith issue a notice by a facsimile and, within thirty (30) days, present the documents proving the details of such force majeure event and the reasons for which this Agreement is unable to be performed or is required to be postponed in its performance, and such proving documents shall be issued by the notaries office of the area where such force majeure event takes place. The Parties shall consult each other and decide whether this Agreement shall be waived in part or postponed in its performance with regard to the extent of impact of such force majeure event on the performance of this Agreement. No Party shall be liable to compensate for the economic losses brought to the other Party by the force majeure event.

**ARTICLE 14 – TRANSFER**

14.1 Operator shall not assign any of its rights and/or obligations hereunder to any third party without the prior written consent from Xinjiang United Family. Xinjiang United Family has the right to assign its rights and/or obligations hereunder to the third party designated by it after notifying Operator.

14.2 As for transfer with the consent, this Agreement shall be binding on the legal successors of the Parties.

**ARTICLE 15 - SEVERABILITY**

Each provision contained herein shall be severable and independent from each of other provisions, and if at any time any one or more articles herein become invalid, illegal or unenforceable, the validity, legality or enforceability of the remaining provisions herein shall not be affected as a result thereof.

**ARTICLE 16 - AMENDMENT AND SUPPLEMENT**

Any amendment or supplement to this Agreement shall be made in writing and take effect as part of this Agreement when properly signed by the Parties, which shall have the same legal effect as this Agreement.

**ARTICLE 17 - TEXT**

This Agreement shall be prepared in the English language in two (2) original copies, with each involved Party holding one (1) copy hereof. Each original copy has the same legal effect.

**ARTICLE 18 - MISCELLANEOUS**

18.1 Any failure or delay by a Party in exercising any of its rights, powers and remedies hereunder or in accordance with laws (the "PARTY'S RIGHTS") shall not lead to a waiver of such rights, and the waiver of any single or partial exercise of the Party's Rights shall not preclude such Party from exercising such rights in any other way and exercising the remaining part of the Party's Rights.

18.2 The titles of the Articles contained herein shall be for reference only, and in no circumstances shall such titles be used in or affect the interpretation of the provisions hereof.

[THE REMAINDER IS THE SIGNATURE PAGE]

IN WITNESS HEREOF, the following Parties have caused this Call Option Agreement to be executed as of the date and in the place first here above mentioned.

---

| | |
|:---|:---|
| [Name of Operator] | [Name of Operator] |
| Signature by: | <u>/s/ [Name of Operator]</u> |

---

Xinjiang United Family Trading Co., Ltd (Company chop)

---

| | |
|:---|:---|
| Signed by: | /s/ Baolin Wang |
| Name: | Baolin Wang |
| Position: |  |

---

**APPENDIX I:** 

**FORMAT OF THE OPTION EXERCISE NOTICE**

To:

As our company and you signed an Call Option Agreement as of [Date of Agreement] (hereinafter the "OPTION AGREEMENT"), and reached an agreement that you shall transfer the assets you hold in [Name of Bakery] (hereinafter the "BAKERY") to our company or any third parties designated by our company on demand of our company to the extent as permitted by PRC Law and regulations.

Therefore, our company hereby gives this Notice to you as follows:

Our company hereby requires to exercise the Call Option under the Option Agreement and [our company]/[company/individual designated by our company] shall accept the assets of the Bakery you hold. You is required to forthwith transfer all the Proposed Accepted Assets to [our company]/[designated company/individual] upon receipt of this Notice in accordance with the agreed terms in the Option Agreement.

Best regards,

XINJIANG UNITED FAMILY CO., LTD. (Chop)

Authorized Representative: <br>Date:

**Schedule of Material Differences**

One or more person signed a call option agreement under this form. Pursuant to Instruction ii to Item 601 of Regulation S-K, the Registrant may only file this form as an exhibit with a schedule setting forth the material details in which the executed agreements differ from this form:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **No.** | **Name of Bakery** | **Date of Agreement** | **ID Card No. of Operator** | **Address of Bakery** | **Unified Social Code of Bakery** |
| 1. | Urumqi Midong District George Chanson Bakery Gang Li | May 2, 2020 | [\*] | No. 118, 1<sup>st</sup> FL, Baishang Shopping Center, 255 Suzhou East St., Gaoxin Dist., Urumqi, Xinjiang | [\*] |
| 2. | Shayibake District Yining Rd. George Chanson Bakery Gang Li | May 2, 2020 | [\*] | Store 1F1037, Shopping Center, Dehui Wanda Plaza, No. 405, Yining Rd., Shaybak Dist., Urumqi, Xinjiang | [\*] |
| 3. | Changji George Chanson Youhao Supermarket Bakery Gang Li | May 2, 2020 | [\*] | 1<sup>st</sup> FL, Youhaoshishang Shopping Center, Jianguo West Rd., Changji, Changji Prefecture, Xinjiang (Building 46, 2<sup>nd</sup> Hill, area 125) | [\*] |
| 4. | Changji George Chanson Bakery Gang Li | May 2, 2020 | [\*] | 1<sup>st</sup> FL, Huijia Times, 198 Yanan North Rd., Changji, Changji Prefecture, Xinjiang | [\*] |
| 5. | Tianshan District Xinhua North Rd. George Chanson Bakery Gang Li | May 2, 2020 | [\*] | 1<sup>st</sup> FL, Shopping Square, Hongshan Xinshiji, No. 38 North Xinhua Rd., Tianshan Dist., Urumqi, Xinjiang | [\*] |
| 6. | Shayibake District Youhao South Rd. Chanson Bakery Store Gang Li | May 2, 2020 | [\*] | 1/F, Friendly, Baisheng, No. 668, Youhao South Rd., Shaibuk Dist., Urumqi, Xinjiang | [\*] |
| 7. | Tianshan District Xinmin Rd. George Chanson Bakery Gang Li | May 2, 2020 | [\*] | Shop No. 2, Rongsheng Garden, No. 81 Xinmin Rd., Tianshan Dist., Urumqi, Xinjiang | [\*] |
| 8. | Tianshan District Minzhu Rd. George Chanson Bakery Gang Li | May 2, 2020 | [\*] | 1<sup>st</sup> FL, No. 148 Minzhu Rd., Tianshan Dist., Urumqi, Xinjiang | [\*] |
| 9. | Tianshan District Jianquan No. 3 Rd. George Chanson Bakery Gang Li | May 2, 2020 | [\*] | No. 215, Jianquan No. 3 Rd., Tianshan Dist., Urumqi, Xinjiang | [\*] |
| 10. | Tianshan District Jiefang North Rd. George Chanson Bakery Gang Li | May 2, 2020 | [\*] | No. 222, Jiefang North Rd., Tianshan Dist., Urumqi, Xinjiang 1F-2B | [\*] |
| 11. | Urumqi Economics and Technology Development District George Chanson Bakery on Kashi West Rd. Gang Li | May 2, 2020 | [\*] | 1-43, Longhai Commercial Building, 499 Kashi West Rd., Urumqi Economic and Technological Development Zone, Xinjiang | [\*] |

---

12. Xinshi District Liyushan South Rd. George Chanson Bakery Gang Li May 2, 2020 [\*] No. 66 Liyushan South Rd., Xinshi Area, Urumqi, Xinjiang [\*]

13. Xinshi District Changchun South Rd. George Chanson Bakery Gang Li May 2, 2020 [\*] 1<sup>st</sup> FL, Youhaoshishang Shopping Center, No. 136 Changchun South Rd., East First Lane, Gaoxin Dist., Urumqi, Xinjiang [\*]

14. Xinshi District Beijing Middle Rd. United Family Chanson Bakery Gang Li May 2, 2020 [\*] 3<sup>rd</sup> FL, Huijia Times, No. 147 Beijing Middle Rd., Xinshi Dist., Urumqi, Xinjiang [\*]

15. Xinshi District Suzhou East Rd. Chanson Bakery Gang Li May 2, 2020 [\*] No. 118, 1<sup>st</sup> FL, Baishang Shopping Center, 255 Suzhou East Street, Gaoxin Dist., Urumqi, Xinjiang [\*]

16. Xinshi District Suzhou Rd. Xiaoxigou Chanson Bakery Gang Li May 2, 2020 [\*] Store No. 53, Xiaoxigou Pedestrian St., Suzhou Rd., Xincheng Dist., Urumqi, Xinjiang [\*]

17. Xinshi District South No. 3 Rd. Chanson Bakery Gang Li May 2, 2020 [\*] No. 169, Nanwei San Rd., Gaoxin Dist., Urumqi, Xinjiang [\*]

18. Urumqi Economics and Technology Development District George Chanson Bakery on Xuanwuhu Rd. Gang Li May 2, 2020 [\*] No. 26 Culture Road, Tianshan District, Urumqi, Xinjiang [\*]

19. Shuimogou District South Nanhu Road George Chanson Bakery Gang Li June 17, 2020 [\*] 1F, No. 68 Nanhu Rd., Shuimogou Dist., Urumqi, Xinjiang [\*]

20. Xinshi District Hebei East Rd. George Chanson Bakery Gang Li October 14, 2020 [\*] No. 1046, 1/F, Vanguard Supermarket, No. 996 Hebei East Rd., Gaoxin Dist., Urumqi, Xinjiang [\*]

21. Urumqi Toutunhe District George Chanson Bakery on Zhongya South Rd. Gang Li November 6, 2020 [\*] No. 5009, 5/F, Degang Wanda Plaza, No. 268 Zhongya South Rd., Economic and Technological Development Zone, Urumqi, Xinjiang [\*]

22. Shayibake District Karamay West Rd. Chanson Bakery Gang Li September 7, 2021 [\*] Shop No. 9-11, Hengchang Hengye Garden, No. 2557 Karamay West Street, Shayibak District, Urumqi, Xinjiang [\*]

23. Shayibake District Qitai Rd. Hemeijia Chanson Bakery Gang Li December 4, 2021 [\*] No. JY-GQ-054, Floor 4, Urumqi Dehuiwanda Plaza, No. 133 Qitai Road, Shayibake District, Urumqi, Xinjiang [\*]

24. Tianshan District Qingnian Rd. Chanson Bakery Gang Li December 11, 2021 [\*] No. 1F-6, No. 219 Qiannian Road, Tianshan District, Urumqi, Xinjiang [\*]

25. Xinshi District Liyushan North Rd. Hemeijia Bakery Gang Li October 27, 2021 [\*] Shop No. S11-123, Commercial Building NO. S7-S11, Huafuli Community, No. 136 North Liyuanshan Road, Xinshi District, Urumqi, Xinjiang [\*]

26. Xinshi District Changchun North Rd. Chanson Bakery Gang Li October 25, 2021 [\*] Shop No. 4050, Floor 4, Urumqi Wanda Plaza, No. 668 North Changchun Road, Xinshi District, Urumqi, Xinjiang [\*]

27. Tianshan District Guangming Rd. Chanson Coffee Bakery Gang Li April 8, 2022 [\*] F5-009, Times Square, No. 39 Guangming Road, Tianshan District, Urumqi, Xinjiang [\*]

28. Shayibake District Youhao North Rd. Chanson Coffee Bakery Gang Li February 23, 2023 [\*] Island Shop No. 110, 1st Floor, MM2 Shopping Center, No. 688 Youhao North Road, Shayibake District, Urumqi, Xinjiang [\*]

29. Shihezi Hemeijia Bakery No.1 Hui Wang May 2, 2020 [\*] Youhaoshishang Shopping Center, 91 Beishsan Rd., 40 Dist., Shihezi, Xinjiang [\*]

## Exhibit 10.7

**Exhibit 10.7**

**Spousal Consent**

The undersigned, [Name of Spouse] (ID card No. [ID Card No. of Spouse]), is the lawful spouse of [Name of Operator] (ID card No. [ID Card No. of Operator]) (hereinafter referred to as "**My Spouse**"). I hereby unconditionally and irrevocably agree to the execution of the following documents (hereinafter referred to as the "**Transaction Documents**") by My Spouse, and the disposal of the operating rights or the assets for the business of [Name of Bakery] ("**Bakery**") held by My Spouse and registered in his name according to the following documents:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Exclusive Service Agreement entered into with Xinjiang United Family Trading Co., Ltd. (hereinafter referred to as the "**Xinjiang United Family**");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Call Option Agreement entered into with Xinjiang United Family；

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Operating Rights Proxy Agreement entered into with Xinjiang United Family;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) Pledge Agreement entered into with Xinjiang United Family; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) Power of Attorney executed by My Spouse.

I hereby undertake not to make any assertions in connection with the operating rights and assets of Bakery which are held by My Spouse. I hereby further confirm that My Spouse can perform his obligations under the Transaction Documents and further amend or terminate the Transaction Documents without authorization or consent from me.

I hereby undertake to execute all necessary documents and take all necessary actions to ensure appropriate performance of the Transaction Documents (as amended from time to time).

I hereby agree and undertake that if I obtain any operating rights and assets of Bakery which are held by My Spouse for any reasons, I shall be bound by the Transaction Documents entered into between My Spouse and Xinjiang United Family (as amended time to time) and comply with the obligations thereunder as an operator of Bakery. For this purpose, upon Xinjiang United Family's request, I shall sign a series of written documents in substantially the same format and content as the Transaction Documents (as amended from time to time).

---

| | |
|:---|:---|
| Signature: | /s/ [Name of Spouse] |
| Date: | [Date of Consent] |

---

**Schedule of Material Differences**

One or more person signed a spousal consent under this form. Pursuant to Instruction ii to Item 601 of Regulation S-K, the Registrant may only file this form as an exhibit with a schedule setting forth the material details in which the executed agreements differ from this form:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **No.** | **Name of Bakery** | **Name of<br> Spouse** | **ID Card <br> No. of <br> Spouse** | **Name of<br> Operator** | **ID Card No. <br> of Operator** | **Date of<br> Consent** |
| 1. | Urumqi Midong District George Chanson Bakery | Ying Xiong | [\*] | Gang Li | [\*] | May 2, 2020 |
| 2. | Shayibake District Yining Rd. George Chanson Bakery | Ying Xiong | [\*] | Gang Li | [\*] | May 2, 2020 |
| 3. | Changji George Chanson Youhao Supermarket Bakery | Ying Xiong | [\*] | Gang Li | [\*] | May 2, 2020 |
| 4. | Changji George Chanson Bakery | Ying Xiong | [\*] | Gang Li | [\*] | May 2, 2020 |
| 5. | Tianshan District Xinhua North Rd. George Chanson Bakery | Ying Xiong | [\*] | Gang Li | [\*] | May 2, 2020 |
| 6. | Shayibake District Youhao South Rd. Chanson Bakery Store | Ying Xiong | [\*] | Gang Li | [\*] | May 2, 2020 |
| 7. | Tianshan District Xinmin Rd. George Chanson Bakery | Ying Xiong | [\*] | Gang Li | [\*] | May 2, 2020 |
| 8. | Tianshan District Minzhu Rd. George Chanson Bakery | Ying Xiong | [\*] | Gang Li | [\*] | May 2, 2020 |
| 9. | Tianshan District Jianquan No.3 Rd. George Chanson Bakery | Ying Xiong | [\*] | Gang Li | [\*] | May 2, 2020 |
| 10. | Tianshan District Jiefang North Rd. George Chanson Bakery | Ying Xiong | [\*] | Gang Li | [\*] | May 2, 2020 |
| 11. | Urumqi Economics and Technology Development District George Chanson Bakery on Kashi West Rd. | Ying Xiong | [\*] | Gang Li | [\*] | May 2, 2020 |
| 12. | Xinshi District Liyushan South Rd. George Chanson Bakery | Ying Xiong | [\*] | Gang Li | [\*] | May 2, 2020 |
| 13. | Xinshi District Changchun South Rd. George Chanson Bakery | Ying Xiong | [\*] | Gang Li | [\*] | May 2, 2020 |
| 14. | Xinshi District Beijing Middle Rd. United Family Chanson Bakery | Ying Xiong | [\*] | Gang Li | [\*] | May 2, 2020 |
| 15. | Xinshi District Suzhou East Rd. Chanson Bakery | Ying Xiong | [\*] | Gang Li | [\*] | May 2, 2020 |
| 16. | Xinshi District Suzhou Rd. Xiaoxigou Chanson Bakery | Ying Xiong | [\*] | Gang Li | [\*] | May 2, 2020 |
| 17. | Xinshi District South No.3 Rd. Chanson Bakery | Ying Xiong | [\*] | Gang Li | [\*] | May 2, 2020 |
| 18. | Urumqi Economics and Technology Development District George Chanson Bakery on Xuanwuhu Rd. | Ying Xiong | [\*] | Gang Li | [\*] | May 2, 2020 |
| 19. | Shuimogou District South Nanhu Road George Chanson Bakery | Ying Xiong | [\*] | Gang Li | [\*] | June 17, 2020 |
| 20. | Xinshi District Hebei East Rd. George Chanson Bakery | Ying Xiong | [\*] | Gang Li | [\*] | October 14, 2020 |
| 21. | Urumqi Toutunhe District George Chanson Bakery on Zhongya South Rd. | Ying Xiong | [\*] | Gang Li | [\*] | November 6, 2020 |
| 22. | Shayibake District Karamay West Rd. Chanson Bakery | Ying Xiong | [\*] | Gang Li | [\*] | September 7, 2021 |
| 23. | Shayibake District Qitai Rd. Hemeijia Chanson Bakery | Ying Xiong | [\*] | Gang Li | [\*] | December 4, 2021 |
| 24. | Tianshan District Qingnian Rd. Chanson Bakery | Ying Xiong | [\*] | Gang Li | [\*] | December 11, 2021 |
| 25. | Xinshi District Liyushan North Rd. Hemeijia Bakery | Ying Xiong | [\*] | Gang Li | [\*] | October 27, 2021 |
| 26. | Xinshi District Changchun North Rd. Chanson Bakery | Ying Xiong | [\*] | Gang Li | [\*] | October 25, 2021 |
| 27. | Tianshan District Guangming Rd. Chanson Coffee Bakery | Ying Xiong | [\*] | Gang Li | [\*] | April 8, 2022 |
| 28. | Shayibake District Youhao North Rd. Chanson Coffee Bakery | Ying Xiong | [\*] | Gang Li | [\*] | February 23, 2023 |
| 29. | Shihezi Hemeijia Bakery No.1 | Xianxue Zhou | [\*] | Hui Wang | [\*] | May 2, 2020 |

---

## Exhibit 21.1

**Exhibit 21.1**

**Subsidiaries of the Registrant**

---

| | |
|:---|:---|
| **Subsidiaries** | **Place of Incorporation** |
| Dean Global Limited | British Virgin Islands |
| Jenyd Holdings Limited | Hong Kong |
| Xinjiang United Family Trading Co., Ltd. | PRC |
| George Chanson (NY) Corp. | New York |
| Chanson 23rd Street LLC | New York |
| Chanson 355 Greenwich LLC | New York |
| Chanson 1293 3rd Ave LLC | New York |
| Chanson 2040 Broadway LLC | New York |
| Chanson Management LLC | Delaware |
| **Variable Interest Entities** | **Place of Incorporation** |
| Urumqi Midong District George Chanson Bakery | PRC |
| Shayibake District Yining Rd. George Chanson Bakery | PRC |
| Changji George Chanson Youhao Supermarket Bakery | PRC |
| Changji George Chanson Bakery | PRC |
| Tianshan District Xinhua North Rd. George Chanson Bakery | PRC |
| Tianshan District Xinmin Rd. George Chanson Bakery | PRC |
| Tianshan District Minzhu Rd. George Chanson Bakery | PRC |
| Tianshan District Jianquan No.3 Rd. George Chanson Bakery | PRC |
| Tianshan District Jiefang North Rd. George Chanson Bakery | PRC |
| Urumqi Economics and Technology Development District George Chanson Bakery on Kashi West Rd. | PRC |
| Xinshi District Liyushan South Rd. George Chanson Bakery | PRC |
| Xinshi District Changchun South Rd. George Chanson Bakery | PRC |
| Xinshi District Beijing Middle Rd. United Family Chanson Bakery | PRC |
| Xinshi District Suzhou East Rd. Chanson Bakery | PRC |
| Xinshi District Suzhou Rd. Xiaoxigou Chanson Bakery | PRC |
| Xinshi District South No.3 Rd. Chanson Bakery | PRC |
| Urumqi Economics and Technology Development District George Chanson Bakery on Xuanwuhu Rd. | PRC |
| Shayibake District Youhao South Rd. Chanson Bakery | PRC |
| Shuimogou District South Nanhu Rd. George Chanson Bakery | PRC |
| Xinshi District Hebei East Rd. George Chanson Bakery | PRC |
| Urumqi Toutunhe District George Chanson Bakery on Zhongya South Rd. | PRC |
| Shayibake District Karamay West Rd. Chanson Bakery | PRC |
| Shayibake District Qitai Rd. Hemeijia Chanson Bakery | PRC |
| Tianshan District Qingnian Rd. Chanson Bakery | PRC |
| Xinshi District Liyushan North Rd. Hemeijia Bakery | PRC |
| Xinshi District Changchun North Rd. Chanson Bakery | PRC |
| Tianshan District Guangming Rd. Chanson Coffee Bakery | PRC |
| Shayibake District Youhao North Rd. Chanson Coffee Bakery | PRC |
| Shihezi Hemeijia Bakery No.1 | PRC |

---

## Exhibit 23.1

**Exhibit 23.1**

![](ex23-1_001.jpg)

**CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

We consent to the use in this Registration Statement on Amendment No. 9 to Form F-1 of Chanson International Holding of our report dated September 2, 2022, with respect to the consolidated balance sheets of Chanson International Holding and its subsidiaries as of December 31, 2021 and 2020, and the related consolidated statements of operations and comprehensive income (loss), changes in shareholders' equity and cash flows for each of the years in the two-year period ended December 31, 2021, and the related notes, included in this Registration Statement. We also consent to the reference to our firm under the heading "Experts" in the Prospectus.

/s/ Friedman LLP

New York, New York

March 20, 2023

![](ex23-2_001.jpg)

## Exhibit 99.7

**Exhibit 99.7**

---

| | | |
|:---|:---|:---|
| ![](ex99-7_001.jpg) |  |  |
| ![](ex99-7_001.jpg) | 北京大成（广州）律师事务所<br> 广州市珠江新城珠江东路6号<br> 周大福金融中心14层、15层（07-12）单元<br> 邮编：510623 | 14/F, 15/F (Unit 07-12),<br> CTF Finance Centre,<br> No.6, Zhujiang East Road,<br> Zhujiang New Town<br> Guangzhou 510623 China |
| <br> dentons.cn | <br> dentons.cn | <br> dentons.cn |

---

**March 20, 2023** 

**Chanson International Holding (the "Company")**

No. 26 Culture Road, Tianshan District

Urumqi, Xinjiang, People's Republic of China

**Dear Sirs or Madams,**

We are qualified lawyers of the People's Republic of China (the "PRC" or "China") and are qualified to issue this opinion on the laws and regulations of the PRC effective as of the date hereof. For this opinion (this "Opinion") only, the PRC does not include the Hong Kong Special Administrative Region, the Macau Special Administrative Region, and Taiwan.

We act as the PRC counsel to the Company, a company incorporated under the laws of the Cayman Islands solely in connection with (i) the proposed initial public offering (the "Offering") of Class A ordinary shares of the Company, par value $0.001 per share (the "Ordinary Shares"), by the Company as set forth in the Company's registration statement on Form F-1, including all amendments or supplements thereto (the "Registration Statement"), filed by the Company with the Securities and Exchange Commission under the U.S. Securities Act of 1933 (as amended) concerning the Offering, and (ii) the Company's proposed listing of the Ordinary Shares on the Nasdaq Capital Market.

**A. Documents and Assumptions** 

In rendering this Opinion, we have examined originals or copies of the due diligence documents and other materials provided to us by the Company, the PRC Subsidiary and other UFG Entities (as defined below), and such other documents, corporate records and certificates issued by the relevant Governmental Agencies (as defined below) in the PRC (collectively, the "Documents").

In reviewing the Documents and for this Opinion, we have assumed without independent investigation that (the "Assumptions"):

(i) all signatures, seals and chops are genuine, each signature on behalf of a party thereto is that of a person duly authorized by such party to execute the same, all Documents submitted to us as originals are authentic, and all Documents submitted to us as certified or photostatic copies conform to the originals;

(ii) each of the parties to the Documents, other than the PRC Subsidiary and other UFG Entities, is duly organized and validly existing in good standing under the laws of its jurisdiction of organization and/or incorporation, and has full power and authority to execute, deliver and perform its obligations under the Documents to which it is a party by the laws of its jurisdiction of organization;

(iii) unless otherwise indicated in the Documents, the Documents presented to us remain in full force and effect on the date of this Opinion and have not been revoked, amended or supplemented, and no amendments, revisions, supplements, modifications or other changes have been made, and no revocation or termination has occurred, with respect to any of the Documents after they were submitted to us for this Opinion;

(iv) the laws of jurisdictions other than the PRC which may apply to the execution, delivery, performance or enforcement of the Documents are complied with;

(v) all requested Documents have been provided to us and all factual statements made to us by the Company, the PRC Subsidiary and other UFG Entities in connection with this Opinion are true, correct and complete; and

(vi) each of the Documents governed by laws other than the PRC Laws is legal, valid, binding and enforceable per their respective governing laws in all material respects.

**Lee International > Kensington Swan > Bingham Greenebaum > Cohen & Grigsby > Sayarh & Menjra > Larraín Rencoret > Hamilton Harrison & Mathews > Mardemootoo Balgobin > HPRP > Zain & Co. > Delany Law > Dinner Martin > For more information on the firms that have come together to form Dentons, go to dentons.com/legacyfirms**

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**B. Definitions**

In addition to the terms defined in the context of this Opinion, the following capitalized terms used in this Opinion shall have the meanings ascribed to them as follows.

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|:---|:---|
| "Chanson International"<br> Or "the Company"<br>| means Chanson International Holding, an exempted company with limited liability incorporated under the laws of the Cayman Islands and formerly known as RON Holding Limited. |
| "Deen Global" | means Deen Global Limited, Chanson International's wholly owned subsidiary and a British Virgin Islands company. |
| "Jenyd"<br>| means Jenyd Holdings Limited, Deen Global's wholly owned subsidiary and a Hong Kong company with limited liability. |
| "the PRC Subsidiary"<br> or "Xinjiang United Family"<br>| means Xinjiang United Family Trading Co., Ltd., a limited liability company organized under the PRC laws, and a direct wholly-owned PRC subsidiary of Jenyd. |
| "BVI" | means the British Virgin Islands. |
| "VIE" | means variable interest entity. |
| "United Family Group" or "UFG"<br>| means 29 individually-owned businesses comprising the VIEs known as the "United Family Group" or "UFG" in the PRC as listed on Appendix A hereto, each a "UFG Entity" and, collectively, the "UFG Entities". |
| "Governmental Agency" | means any national, provincial or local governmental, regulatory or administrative authority, agency or commission in the PRC, or any court, tribunal or any other judicial or arbitral body in the PRC, or anybody exercising or entitled to exercise, any administrative, judicial, legislative, police, regulatory, or taxing authority or power of similar nature in the PRC. |
| "Governmental Authorization" | means any license, approval, consent, waiver, order, sanction, certificate, authorization, filing, declaration, disclosure, registration, exemption, permission, endorsement, annual inspection, clearance, qualification, permit or license by, from or with any Governmental Agency pursuant to any PRC Laws. |
| "M&A Rules" | means the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, which was issued by six PRC regulatory agencies, namely, Ministry of Commerce of the PRC, State-owned Assets Supervision and Administration Commission, State Taxation Administration, State Administration for Industry and Commerce, China Securities Regulatory Commission, and State Administration for Foreign Exchange, on August 8, 2006, and became effective on September 8, 2006, as amended by Ministry of Commerce of the PRC on June 22, 2009. |
| "the PRC Laws" | means all applicable national, provincial and local laws, regulations, rules, notices, orders, decrees and supreme court judicial interpretations in the PRC currently in effect and publicly available on the date of this Opinion. |
| "Prospectus" | means the prospectus, including all amendments or supplements thereto, that forms part of the Registration Statement. |

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**Lee International > Kensington Swan > Bingham Greenebaum > Cohen & Grigsby > Sayarh & Menjra > Larraín Rencoret > Hamilton Harrison & Mathews > Mardemootoo Balgobin > HPRP > Zain & Co. > Delany Law > Dinner Martin > For more information on the firms that have come together to form Dentons, go to dentons.com/legacyfirms**

**2 / 8**

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**C. Opinions**

Based on our review of the Documents and subject to the Assumptions and the Qualifications, we are of the opinion that:

(1) *<u>Corporate Structure.</u>* Xinjiang United Family as the PRC Subsidiary has been duly organized
and is validly existing as a limited liability company with full legal person status, and has received all relevant approvals for its
establishment to the extent such approvals are required under applicable PRC Laws. Xinjiang United Family has the capacity and authority
to own assets, conduct businesses, and sue and be sued in its own name under the PRC laws. The articles of association, business license
and other constitutional documents (if any) comply with the requirements under applicable PRC Laws in all material respects. All the documents
(if any) have been approved by relevant competent Governmental Agencies to the extent such approval is required, and are in full force
and effect. To the best of our knowledge after due inquiry, Xinjiang United Family has not taken any corporate action or had any legal
proceedings commenced against it for its liquidation, winding up, dissolution, or bankruptcy, for the appointment of a liquidation committee,
a team of receivers or similar officers in respect of its assets or for any adverse suspension, withdrawal, revocation or cancellation
of any of its Governmental Authorizations.

Based on our understanding of the current PRC Laws, (a) the ownership structure of the PRC Subsidiary and the VIE arrangements between the PRC Subsidiary and the UFG Entities to control and operate their business, both currently and immediately after giving effect to this Offering, will not result in any violation of the PRC laws or regulations currently in effect; (b) Deen Global is a direct wholly-owned subsidiary of the Company incorporated in the BVI, Jenyd is a direct wholly-owned subsidiary of Deen Global and an indirect wholly owned subsidiary of the Company. In September 2020, Jenyd acquired 100% of the equity interests of Xinjiang United Family. Xinjiang United Family conducts its business through an association with 29 individually-owned businesses comprising the VIEs known as the "United Family Group" or "UFG", among which 28 of the UFG Entities are owned independently by the Chairman, Mr. Gang Li, and one of the UFG Entities is owned independently by Ms. Hui Wang, the Marketing Director of Xinjiang United Family. According to the "Special Administrative Measures for Access of Foreign Investment (Negative List) (2021 Version)", the Company's business operation is not subject to regulatory restrictions on foreign-invested enterprises.

Each UFG Entity has been duly organized and is validly existing as an individually-owned business, and has received all relevant approvals for its establishment to the extent such approvals are required under applicable PRC Laws. Each UFG Entity has the capacity and authority to own assets, conduct businesses, and sue and be sued in its own name (if the UFG Entity has its own registered store name) or in the name of the operator who is registered on the business license (if the UFG Entity has no registered store name) under the PRC laws. Except for one food business permit under application and six under renewal, the food business permit, the business license and other constitutional documents (if any) of each UFG Entity comply with the requirements under applicable PRC Laws in all material respects and have been approved by relevant competent Governmental Agencies to the extent such approval is required, and are in full force and effect.

However, since the licensing requirements in the food production and food business industry, particularly in China, are constantly evolving and subject to the interpretation of the competent authorities, the Company may be subject to more stringent regulatory requirements due to changes in the political or economic policies in the relevant jurisdictions or the changes in the interpretation of the scope of food production and food business. We cannot assure that the Company will be able to satisfy such regulatory requirements and the Company may be unable to retain, obtain or renew relevant licenses, permits or approvals in the future.

(2) *<u>M&A Rules.</u>* According to the Guidance Manual for Foreign Investment Access Management
(2008 Edition), the established foreign-invested enterprises that transfer equity to foreign parties do not refer to M&A Rules, regardless
of whether there is a relationship between the Chinese and foreign parties, or whether the foreign party is an original shareholder or
a new investor. Since the PRC Subsidiary was already a foreign-invested enterprise given that the time its equity was totally acquired
by Jenyd, we are of the opinion that the Company is not required to obtain the approval under M&A Rules for the Offering, the listing
and trading of the Ordinary Shares on the Nasdaq Capital Market.

**Lee International > Kensington Swan > Bingham Greenebaum > Cohen & Grigsby > Sayarh & Menjra > Larraín Rencoret > Hamilton Harrison & Mathews > Mardemootoo Balgobin > HPRP > Zain & Co. > Delany Law > Dinner Martin > For more information on the firms that have come together to form Dentons, go to dentons.com/legacyfirms**

**3 / 8**

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(3) *<u>Enforceability of Civil Procedures</u>.* The recognition and enforcement of foreign judgments
are provided for under the PRC Civil Procedures Law. The PRC courts may recognize and enforce foreign judgments in accordance with the
requirements of the PRC Civil Procedures Law based either on treaties between China and the country where the judgment is made or on reciprocity
between jurisdictions. China does not have any treaties or other forms of reciprocity with the United States or the Cayman Islands that
provide for the reciprocal recognition and enforcement of foreign judgments. In addition, according to the PRC Civil Procedures Law, courts
in the PRC will not enforce a foreign judgment against a company or its directors and officers if they decide that the judgment violates
the basic principles of the PRC Laws or sovereignty, national security or public interest. As a result, it is uncertain whether and on
what basis a PRC court would enforce a judgment rendered by a court in the United States or the Cayman Islands.

(4) *<u>Taxation</u>* . The statements made in the Registration Statement under the caption "Taxation",
with respect to the PRC tax laws and regulations, constitute our opinions on such matters described therein in all material aspects.

(5) *<u>Social Insurance and Housing Fund.</u>* With respect to social insurance, as the PRC Subsidiary
and the UFG Entities have not made adequate social insurance for all its employees, the PRC Subsidiary and the UFG Entities, according
to the PRC Social Insurance Law, may be required to make up the social insurance contributions as well as to pay late fees at the rate
of 0.05% per day of the outstanding amount from the due date by relevant administrative authorities, and be imposed a fine of one to three
times the outstanding amount if the PRC Subsidiary fails to make up for the shortfalls within the prescribed time limit by relevant administrative
authorities. As the PRC Subsidiary and the UFG Entities have neither made adequate housing fund contributions for all its employees, the
PRC Subsidiary and the UFG Entities, according to the Administrative Regulations on the Housing Funds, may be required to make up housing
fund contributions within the prescribed time limit or otherwise be applied by relevant administrative authorities for housing fund contributions
enforcement by the PRC courts.

(6) *<u>Statements in the Prospectus</u>.* All statements set forth in the Prospectus under the captions
"Prospectus Summary", "Risk Factors", "Dividend Policy", "Business", and "Regulations",
and "Material Income Tax Consideration" in each case insofar as such statements describe or summarize the PRC legal or regulatory
matters, constitute our opinions on such matters in all material aspects, and are fairly disclosed and correctly set forth therein, and
nothing has been omitted from such statements which would make the same misleading in any material aspects.

*D. <u>Qualifications</u>*

Our opinions expressed above are subject to the following qualifications (the "<u>Qualifications</u>"):

(1) Our opinions are limited to the PRC laws of general application on the date hereof. We have made no investigation
of, and do not express or imply any views on, the laws of any jurisdiction other than the PRC.

(2) The PRC laws and regulations referred to herein are laws and regulations publicly available and currently
in force on the date hereof and there is no guarantee that any of such laws and regulations, or the interpretation or enforcement thereof,
will not be changed, amended, or revoked in the future with or without retrospective effect.

(3) Our opinions are subject to the effects of (i) certain legal or statutory principles affecting the enforceability
of contractual rights generally under the concepts of public interest, social ethics, national security, good faith, fair dealing, and
applicable statutes of limitation, (ii) any circumstance in connection with formulation, execution or performance of any legal documents
that would be deemed materially mistaken, clearly unconscionable, fraudulent, coercionary or concealing illegal intentions with a lawful
form, (iii) judicial discretion with respect to the availability of specific performance, injunctive relief, remedies or defenses, or
calculation of damages, and (iv) the discretion of any competent PRC legislative, administrative or judicial bodies in exercising their
authority in the PRC.

**Lee International > Kensington Swan > Bingham Greenebaum > Cohen & Grigsby > Sayarh & Menjra > Larraín Rencoret > Hamilton Harrison & Mathews > Mardemootoo Balgobin > HPRP > Zain & Co. > Delany Law > Dinner Martin > For more information on the firms that have come together to form Dentons, go to dentons.com/legacyfirms**

**4 / 8**

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(4) This Opinion is issued on the basis of our understanding of the current PRC Laws. For matters not explicitly
provided under the current PRC Laws, the interpretation, implementation and application of the specific requirements under the PRC Laws
are subject to the final discretion of competent legislative, administrative and judicial authorities in the PRC, and there can be no
assurance that the Governmental Agencies will ultimately take a view that is not contrary to our opinion stated above.

(5) We may rely, as to matters of fact (but not as to legal conclusions), to the extent we deem proper, on
certificates and confirmations of responsible officers of the PRC Subsidiary and other UFG Entities and the PRC government officials.

(6) This Opinion is intended to be used in the context which is specifically referred to herein and each paragraph
should be looked at as a whole and no one part should be extracted and referred to independently.

This Opinion is strictly limited to the matters stated herein and no opinion is implied or may be inferred beyond the matters expressly stated herein. The opinion expressed herein is rendered only as of the date hereof, and we assume no responsibility to advise you of facts, circumstances, events or developments that hereafter may be brought to our attention and that may alter, affect or modify the opinion expressed herein.

We hereby consent to the use of this Opinion in, and the filing hereof as an exhibit to the Registration Statement, and to the reference to our name in such Registration Statement.

**Lee International > Kensington Swan > Bingham Greenebaum > Cohen & Grigsby > Sayarh & Menjra > Larraín Rencoret > Hamilton Harrison & Mathews > Mardemootoo Balgobin > HPRP > Zain & Co. > Delany Law > Dinner Martin > For more information on the firms that have come together to form Dentons, go to dentons.com/legacyfirms**

**5 / 8**

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[SIGNATURE PAGE FOLLOWS]

Yours faithfully,

/s/ Dentons Law Offices, LLP (Guangzhou)

Dentons Law Offices, LLP (Guangzhou)

**Lee International > Kensington Swan > Bingham Greenebaum > Cohen & Grigsby > Sayarh & Menjra > Larraín Rencoret > Hamilton Harrison & Mathews > Mardemootoo Balgobin > HPRP > Zain & Co. > Delany Law > Dinner Martin > For more information on the firms that have come together to form Dentons, go to dentons.com/legacyfirms**

**6 / 8**

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**Appendix A**

**List of the UFG Entities** 

The following is a complete list of the UFG Entities as of the date of this Opinion, together with their recognized commercial name and relationship to Xinjiang United Family.

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|  | **Legal Name of Entity** | **Commercial Name** | **Nature of Entity** |
| 1 | Urumqi Midong District George Chanson Bakery | Midong | Part of UFG – owned 100% by Mr. Gang Li and operated under VIE agreements among Mr. Gang Li, this entity, and Xinjiang United Family |
| 2 | Shayibake District Yining Rd. George Chanson Bakery | Dehui Wanda | Same as above |
| 3 | Changji George Chanson Youhao Supermarket Bakery | Changji Youhao | Same as above |
| 4 | Changji George Chanson Bakery | Changji Huijia | Same as above |
| 5 | Tianshan District Xinhua North Rd. George Chanson Bakery | Hongshan | Same as above |
| 6 | Tianshan District Xinmin Rd. George Chanson Bakery | Beimen | Same as above |
| 7 | Tianshan District Minzhu Rd. George Chanson Bakery | Minzhu | Same as above |
| 8 | Tianshan District Jianquan No.3 Rd. George Chanson Bakery | Riyue Xingguang | Same as above |
| 9 | Tianshan District Jiefang North Rd. George Chanson Bakery | Wanyancheng | Same as above |
| 10 | Urumqi Economics and Technology Development District George Chanson Bakery on Kashi West Rd. | Huarun Wanjia | Same as above |
| 11 | Xinshi District Liyushan South Rd. George Chanson Bakery | Medical College | Same as above |
| 12 | Xinshi District Changchun South Rd. George Chanson Bakery | Changchun | Same as above |
| 13 | Xinshi District Beijing Middle Rd. United Family Chanson Bakery | Huijia Third Floor | Same as above |
| 14 | Xinshi District Suzhou East Rd. Chanson Bakery | Baishang | Same as above |
| 15 | Xinshi District Suzhou Rd. Xiaoxigou Chanson Bakery | Xiaoxigou | Same as above |
| 16 | Xinshi District South No.3 Rd. Chanson Bakery | Railway Bureau | Same as above |
| 17 | Urumqi Economics and Technology Development District George Chanson Bakery on Xuanwuhu Rd. | Economics Development Wanda | Same as above |

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**Lee International > Kensington Swan > Bingham Greenebaum > Cohen & Grigsby > Sayarh & Menjra > Larraín Rencoret > Hamilton Harrison & Mathews > Mardemootoo Balgobin > HPRP > Zain & Co. > Delany Law > Dinner Martin > For more information on the firms that have come together to form Dentons, go to dentons.com/legacyfirms**

**7 / 8**

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| 18 | Shayibake District Youhao South Rd. Chanson Bakery | Hongshan Lifestyle Store | Same as above |
| 19 | Shuimogou District South Nanhu Rd. George Chanson Bakery | Nanhu | Same as above |
| 20 | Xinshi District Hebei East Rd. George Chanson Bakery | Hebei Road Huarun | Same as above |
| 21 | Urumqi Toutunhe District George Chanson Bakery on Zhongya South Rd. | Degang Wanda | Same as above |
| 22 | Shayibake District Karamay West Rd. Chanson Bakery | Xinbei Yuanchun | Same as above |
| 23 | Shayibake District Qitai Rd. Hemeijia Chanson Bakery | Dehui Wangda Fourth Floor | Same as above |
| 24 | Tianshan District Qingnian Rd. Chanson Bakery | Qingnian Road Haojiaxiang | Same as above |
| 25 | Xinshi District Liyushan North Rd. Hemeijia Bakery | Vanke Jincheng Huafu | Same as above |
| 26 | Xinshi District Changchun North Rd. Chanson Bakery | Gaoxin Wanda | Same as above |
| 27 | Tianshan District Guangming Rd. Chanson Coffee Bakery | Shidai Guangchang | Same as above |
| 28 | Shayibake District Youhao North Road Chanson Coffee Bakery | Meimei No.2 | Same as above |
| 29 | Shihezi Hemeijia Bakery No.1 | Shihezi | Part of UFG – owned 100% by Ms. Hui Wang and operated under agreements among Ms. Hui Wang, this entity, and Xinjiang United Family |

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**Lee International > Kensington Swan > Bingham Greenebaum > Cohen & Grigsby > Sayarh & Menjra > Larraín Rencoret > Hamilton Harrison & Mathews > Mardemootoo Balgobin > HPRP > Zain & Co. > Delany Law > Dinner Martin > For more information on the firms that have come together to form Dentons, go to dentons.com/legacyfirms**

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