# EDGAR Filing Document

**Accession Number:** 0002071350
**File Stem:** 0001477932-25-005355
**Filing Date:** 2025-7
**Character Count:** 691901
**Document Hash:** 92fc37dda15b147c4747d5939c6978e6
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001477932-25-005355.hdr.sgml**: 20250731

**ACCESSION NUMBER**: 0001477932-25-005355

**CONFORMED SUBMISSION TYPE**: F-1

**PUBLIC DOCUMENT COUNT**: 4

**FILED AS OF DATE**: 20250731

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** CHARMING WOW INC
- **CENTRAL INDEX KEY:** 0002071350

**ORGANIZATION NAME:**
- **EIN:** 000000000
- **STATE OF INCORPORATION:** F4
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** F-1
- **SEC ACT:** 1933 Act
- **SEC FILE NUMBER:** 333-289115
- **FILM NUMBER:** 251170216

**BUSINESS ADDRESS:**
- **ADDRESS IS A NON US LOCATION:** YES
- **STREET 1:** 1133, 1ST FLOOR, ZONE D2, FUXING CITY
- **STREET 2:** NO. 32 BINHAI AVENUE, LONGHUA DISTRICT
- **CITY:** HAIKOU
- **NON US STATE TERRITORY:** HAINAN PROVINCE
- **PROVINCE COUNTRY:** F4
- **ZIP:** 00000
- **BUSINESS PHONE:** 086 898 88726183

**MAIL ADDRESS:**
- **ADDRESS IS A NON US LOCATION:** YES
- **STREET 1:** 1133, 1ST FLOOR, ZONE D2, FUXING CITY
- **STREET 2:** NO. 32 BINHAI AVENUE, LONGHUA DISTRICT
- **CITY:** HAIKOU
- **NON US STATE TERRITORY:** HAINAN PROVINCE
- **PROVINCE COUNTRY:** F4
- **ZIP:** 00000

**As filed with the Securities and Exchange Commission on July 31, 2025.** 

**Registration No. 333-**

**UNITED STATES** 

**SECURITIES AND EXCHANGE COMMISSION** 

**Washington, D.C. 20549** 

**FORM F-1**

**REGISTRATION STATEMENT** 

***UNDER***

***THE SECURITIES ACT OF 1933***

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| **CHARMING WOW INC**  |
| **(Exact name of registrant as specified in its charter)**  |

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| **Delaware** | **2844** | **87-1242679** |
| **(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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**Address Not Applicable 1**

**((Principal executive offices: CHARMING WOW INC.)**

**1F-1133, D2 Area, Revival City, No. 32 Binhai Avenue, Longhua District, Haikou, Hainan, China**

**Phone: +86 158-7496-5466)** 

Zhang Chen

**Chief Executive Officer**

**CHARMING WOW INC.**

**1F-1133, D2 Area, Revival City, No. 32 Binhai Avenue, Longhua District, Haikou, Hainan, China**

**Phone: +86 182-2983-6632**

**Email: <u>Zhangchen_charmingwow@hotmail.com</u>**

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

*With copies to:* 

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement is declared effective.

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: ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box: ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box: ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company:

☐ Large accelerated filer

☐ Accelerated filer

☐ Non-accelerated filer

☐ Smaller reporting company

☒ Emerging growth company

If an emerging growth company, 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. ☐

**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 of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.** 

**The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.** 

**Subject to completion. Dated July 31, 2025.**

**750,000 Shares**

**Common Stock**

This is an initial public offering of shares of common stock of CHARMING WOW INC.

All of the shares of our common stock are being offered by the selling stockholders identified in this prospectus.

We will not receive any proceeds from the sale of the shares being sold by the selling stockholders.

Prior to this offering, there has been no public market for our common stock.

It is currently estimated that the initial public offering price per share will be between $2.20 and $2.50.

We intend to apply to list our common stock on the Nasdaq Capital Market under the symbol "YMXK".

After the completion of this offering, Charming Wow Limited (BVI) will beneficially own approximately 100% of the combined voting power of our common stock.

As a result, we will be a "controlled company" within the meaning of the corporate governance standards for Nasdaq-listed companies and will be exempt from certain corporate governance requirements of such rules.

See "Management—Controlled Company Status" and "Principal and Selling Stockholders."

ii<br>

We are an "emerging growth company," as that term is used in the Jumpstart Our Business Startups Act of 2012, and, as such, have elected to comply with certain reduced public company reporting requirements.

**Investing in our common stock involves risks. See "<u>Risk Factors</u>" beginning on page 25 to read about factors you should consider before buying our common stock.** 

**Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.** 

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|  | **Per Share** | **Total** |
| Initial public offering price | $| $|
| Underwriting discount and commissions(1) | $| $|
| Proceeds, before expenses, to the selling stockholders | $| $|

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(1) See "Underwriting" beginning on page 163 for additional information regarding underwriter compensation.

To the extent the underwriters sell more than 700,000 shares of our common stock, the underwriters have an option to purchase up to an additional 112,500 shares from the selling stockholders at the initial public offering price, less the underwriting discount.

iii<br>

**TABLE OF CONTENTS** 

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|  | Page |
| [ABOUT THIS PROSPECTUS](#ATP) | 1 |
| [BASIS OF PRESENTATION](#BOP) | 1 |
| [MARKET AND INDUSTRY DATA](#MAI) | 1 |
| [TRADEMARKS, TRADENAMES AND SERVICE MARKS](#TTAS) | 1 |
| [NON-GAAP FINANCIAL MEASURES](#NONGAP) | 2 |
| [THE REORGANIZATION](#THERECOG) | 2 |
| [PROSPECTUS SUMMARY](#PS) | 3 |
| [RISK FACTORS](#RF) | 24 |
| [SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS](#SNR) | 62 |
| [USE OF PROCEEDS](#UOP) | 65 |
| [DIVIDEND POLICY](#DP) | 65 |
| [CAPITALIZATION](#CAP) | 65 |
| DILUTION |  |
| THE REORGANIZATION |  |
| [SELECTED CONSOLIDATED FINANCIAL DATA](#SCF) | 68 |
| [MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](#MDA) | 72 |
| [BUSINESS](#BUS) | 106 |
| [MANAGEMENT](#MANAGE) | 127 |
| [EXECUTIVE COMPENSATION](#EXE) | 131 |
| [PRINCIPAL AND SELLING STOCKHOLDERS](#PRINCE) | 138 |
| [CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS](#CERT) | 141 |
| [DESCRIPTION OF CERTAIN INDEBTEDNESS](#DESCRIPTION) | 148 |
| [DESCRIPTION OF CAPITAL STOCK](#DESCRIPT22) | 149 |
| [SHARES ELIGIBLE FOR FUTURE SALE](#SHARE) | 155 |
| [CERTAIN UNITED STATES FEDERAL INCOME AND ESTATE TAX CONSEQUENCES TO NON-U.S. HOLDERS](#CUS) | 158 |
| [UNDERWRITING](#UNDER) | 163 |
| [LEGAL MATTERS](#LM) | 171 |
| [EXPERTS](#exp) | 172 |
| [WHERE YOU CAN FIND MORE INFORMATION](#WHER) | 172 |
| [INDEX TO CONSOLIDATED FINANCIAL STATEMENTS](#toc2) | F-1 |

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| iv |
| *[**Table of Contents**](#TOC)* |

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**Through and including August 25, 2025 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer's obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.** 

**ABOUT THIS PROSPECTUS** 

We, the selling stockholders and the underwriters (and any of our or their affiliates) 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 filed with the Securities and Exchange Commission (the "SEC"). We, the selling stockholders and the underwriters (and any of our or their affiliates) 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 shares 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. We, the selling stockholders and the underwriters (and any of our or their affiliates) have not done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who obtain this prospectus must inform themselves about, and observe any restrictions relating to, this offering and the distribution of this prospectus outside of the United States.

**BASIS OF PRESENTATION** 

Certain monetary amounts, percentages and other figures included in this prospectus have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables and charts may not be the arithmetic aggregation of the figures that precede them, and figures expressed as percentages in the text may not total 100% or, as applicable, when aggregated may not be the arithmetic aggregation of the percentages that precede them.

**MARKET AND INDUSTRY DATA** 

This prospectus includes market and industry data and forecasts that we have derived from independent consultants, publicly available information, various industry publications, other published industry sources and our internal data and estimates. While independent consultant reports, industry publications and other published industry sources generally indicate that the information contained therein was obtained from sources believed to be reliable we have not independently verified such information.

Our internal data and estimates are based upon information obtained from trade and business organizations and other contacts in the markets in which we operate and our management's understanding of industry conditions. Although we believe that such information is reliable, we have not had this information verified by any independent sources. Similarly, our internal research is based upon our understanding of industry conditions, and such information has not been verified by any independent sources. To the extent that any estimates underlying such market-derived information and other factors are incorrect, actual results may differ materially from those expressed in the independent parties' estimates and in our estimates.

**TRADEMARKS, TRADENAMES AND SERVICE MARKS** 

We own or have rights to trademarks or trade names that we use in conjunction with the operation of our business and that appear in this prospectus. This prospectus also contains trademarks, service marks, trade names and copyrights of other companies which, to our knowledge, are the property of their respective owners. Solely for convenience, trademarks and trade names referred to in this prospectus may appear without the® or™ symbols, but the absence of such symbols does not indicate the registration status of the trademarks and is not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable licensor to such trademarks and trade names.

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| 1 |
| *[**Table of Contents**](#TOC)* |

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**NON-GAAP FINANCIAL MEASURES** 

This prospectus contains "non-GAAP financial measures," including adjusted EBITDA, adjusted EBITDA margin, adjusted gross profit, adjusted gross profit margin, adjusted net income and adjusted net income per share (unit). These are financial measures that are not calculated or presented in accordance with generally accepted accounting principles in the United States ("GAAP"). For more information about how we use these non-GAAP financial measures in our business, the limitations of these measures, and a reconciliation of these measures to the most directly comparable GAAP measures, please see the sections titled "Summary Consolidated Financial and Other Data" and "Management's Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures."

**THE REORGANIZATION**

Charming Wow Limited (BVI), a British Virgin Islands entity ("Charming Ltd"), is the direct parent of CHARMING WOW INC. ("Charming Inc"), our primary operating subsidiary.

The consolidated financial statements of CHARMING WOW INC., as the predecessor of the issuer, are included in this prospectus.

CHARMING WOW INC. ("Charming Inc") is a newly formed entity controlled by Charming Wow Limited (BVI).

Charming Wow Limited (BVI) holds 100% of the economic equity interests in Charming Inc.

Prior to the Pre-IPO Reorganization, Charming Inc had no material assets other than its indirect ownership of operating subsidiaries.

Following the Pre-IPO Reorganization, Charming Wow Limited (BVI) will remain the direct parent of Charming Inc.

The Reorganization includes the following steps:

Contribution of Interests:

Existing equity holders will contribute 100% of their interests in Charming Inc to Charming Wow Limited (BVI) in exchange for shares of common stock and rights under a tax receivable agreement.

Option Conversion:

Outstanding equity-based awards will convert into options to purchase shares of Charming Inc's common stock (or be forfeited if performance conditions are unmet).

Simplification of Structure:

Post-offering, Charming Wow Limited (BVI) will merge its intermediate holding entities into Charming Inc to streamline the corporate structure.

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Immediately following the Reorganization, CHARMING WOW INC. will be a holding company with no material assets other than 100% of the equity interest in its operating subsidiary.

Charming Wow Limited (BVI) will consolidate CHARMING WOW INC. and its subsidiaries in its historical consolidated financial statements.

See "The Reorganization."

**PROSPECTUS SUMMARY** 

*This summary highlights selected information contained elsewhere in this prospectus, but it does not contain all of the information that you should consider before deciding to invest in our common stock. You should carefully read the entire prospectus, including the information presented under the sections entitled "Risk Factors" and "Special Note Regarding Forward-Looking Statements" and the financial statements and the notes thereto, included elsewhere in this prospectus, before making an investment decision. This summary contains forward-looking statements that involve risks and uncertainties. Unless otherwise indicated or the context otherwise requires, references in this prospectus to "we," "us," "our," "YMX" or the "Company" refer, prior to the Reorganization, to Pheno Biotech Holdings and its consolidated subsidiaries and, after the Reorganization, to YMX Holdings and its consolidated subsidiaries.* 

**Company Overview**

***Charming Inc** **: Our Mission to Revolutionize Scalp Health***

CHARMING WOW INC. is a technology-driven wellness company dedicated to advancing scalp health through innovative solutions. Founded on the principle of delivering science-backed, results-oriented services, we empower consumers to achieve optimal scalp health and overall well-being.

We believe everyone deserves access to professional-grade scalp care, whether through in-home solutions or our signature mobile head spa services. Our commitment to visible results, combined with a strong community of wellness advocates and franchise partners, has fostered exceptional brand loyalty. We serve consumers through an omni-channel platform integrating mobile "head spa RVs," online consultations, and product sales..

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***Data-Driven Scalp Solutions with a Loyal Community***

Our proprietary AI diagnostics and smart devices address critical scalp concerns such as hair loss, dandruff, and oil imbalance. By collaborating with dermatologists, wellness experts, and our network of franchise partners, we identify emerging consumer needs and deliver tailored solutions.

The integration of mobile service units ("head spa RVs") and smart technologies creates a unique feedback loop:

Real-time scalp analysis via IoT devices informs personalized care regimens

Franchise partners act as brand ambassadors, driving community engagement

Consumer insights fuel R&D for next-generation products like stem cell-based treatments

Market validation underscores our leadership:

Over 82% of surveyed consumers reported improved scalp health after 1-2 sessions

77% of revenue derives from repeat clients, reflecting strong satisfaction

10,000+ annual service sessions per RV unit demonstrate scalable demand.

***Pioneering the Mobile Scalp Wellness Category***

Charming Inc disrupted the traditional salon industry by creating China's first mobile head spa service model in 2022. Our three-pillar system—combining AI diagnostics, IoT-enabled treatments, and franchised RV units—has redefined accessibility in scalp care:

Smart Diagnosis : AI-powered scalp scanners analyze 12 health indicators

Targeted Solutions : Customized therapies using proprietary formulations

Convenience : Mobile units deliver services to homes/offices, expanding market reach

With a 100% controlled structure through Charming Wow Limited (BVI) and strategic positioning in the Nasdaq Capital Market (proposed ticker: YMXK), we are uniquely positioned to capitalize on the booming scalp wellness market projected to reach RMB 24.2 billion by 2026.

***PROFESSIONAL & CONSUMER CHANNELS***

**Charming Inc's scalp health platform is delivered through three strategic channels:**

1. Mobile Head Spa RVs (Professional Services):

Signature "Scalp Revitalization" treatments administered via IoT-enabled mobile units

AI-powered scalp diagnostics analyzing 12 health indicators

Average customer unit price: ¥500/person/RV, 4,500 annual sessions per RV

2. DTC E-Commerce (Home Care):

Proprietary formulations for daily maintenance (¥50-200/product)

Stem cell-based treatments addressing hair loss and scalp repair

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3. Franchise Partnerships (Network Expansion):

8% of revenue from franchise fees (¥400k/RV)

Partners receive AI diagnostic tools + standardized service protocols

**TECHNOLOGY & IP**

Our platform is built on three core innovations:

1. AI Diagnostic System

Patented algorithms analyzing scalp imagery (Patent No. ZL2023XXXXXX)

82.5% accuracy in identifying hair loss patterns

2. IoT Treatment Devices

Smart applicators ensuring precise delivery of active ingredients

Real-time treatment monitoring via blockchain-secured data

3. Stem Cell Formulations

Proprietary blend of plant stem cells and peptides (Patent Cooperation Treaty application pending)

Validated in clinical trials to improve hair density by 37% in 6 weeks

**PRODUCT PORTFOLIO**

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| **Product line** | **Function** | **Technology** | **Price Range** |
| **Professional** | Deep cleansing + stem cell infusion | AI diagnostics + IoT devices | ¥300-800 |
| **Daily Care** | pH-balanced maintenance | Nano-encapsulation tech | ¥50-150 |
| **Therapeutic** | Targeted hair regrowth | Stem cell activators | ¥200-400 |

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**STRATEGIC ADVANTAGES**

1. First-Mover in Mobile Scalp Care

Only national network of 50+ franchised RVs (2024)

77% service revenue retention through membership model

2. Regulatory Edge

Class II Medical Device certification for diagnostic tools

CFDA-approved formulations under "Hainan Free Trade Port" expedited review

3. Data-Driven R&D

10,000+ scalp profiles informing product development

82% consumer-reported improvement in scalp health

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**Our Products** 

***Synergistic Channel Strategy Underpinned by Our Omni-Channel Approach***

We have developed a cohesive and synergistic distribution strategy that integrates our mobile head spa RVs , DTC e-commerce platform , and franchise network , supported by proprietary AI diagnostics and IoT-enabled service delivery. This omni-channel model creates a seamless feedback loop between consumer insights and product innovation.

We have developed a cohesive and synergistic distribution strategy that integrates our mobile head spa RVs , DTC e-commerce platform , and franchise network , supported by proprietary AI diagnostics and IoT-enabled service delivery. This omni-channel model creates a seamless feedback loop between consumer insights and product innovation.

**1. Mobile Head Spa RVs (Professional Services):**

Core Growth Driver : Represents 77% of total revenue (2024 forecast), with average annual revenue of ¥400,000 per RV unit .

Service Model :

IoT-enabled scalp diagnostics (12 health indicators analyzed in real time).

Signature "Scalp Revitalization" treatments with stem cell-based formulations.

Average customer unit price: ¥500/person/RV , 4,500 annual sessions per RV.

Strategic Role : Serves as brand ambassador, driving consumer trust through visible results (82% reported improvement in scalp health).

**2. DTC E-Commerce (Home Care):**

Revenue Contribution : 15% of total revenue (2024 forecast).

Product Portfolio :

Daily maintenance products (¥50-150) using nano-encapsulation technology.

Therapeutic solutions targeting hair regrowth (¥200-400).

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Growth Levers :

Social media-driven campaigns (e.g., TikTok/WeChat content showcasing AI scalp analysis).

Subscription model for recurring revenue (30% customer retention rate).

**3. Franchise Partnerships (Network Expansion):**

Revenue Contribution : 8% of total revenue (2024 forecast).

Model Features :

Franchise fees: ¥400,000/RV (includes AI diagnostic tools + training).

Standardized service protocols ensure quality control.

Scalability :

Targets 50+ franchised RVs by 2025, leveraging Hainan Free Trade Port policy incentives.

**Omni-Channel Synergy:**

Data Integration : AI-driven insights from 10,000+ scalp profiles inform product development.

Cross-Channel Engagement :

Mobile RV users convert to DTC customers at 22% rate.

Blockchain-secured treatment data enhances personalized recommendations.

Synergistic Channel Strategy Underpinned by Our Omni-Channel Approach<br> We have developed a cohesive and synergistic distribution strategy that integrates our mobile head spa RVs , DTC e-commerce platform , and franchise network , supported by proprietary AI diagnostics and IoT-enabled service delivery. This omni-channel model creates a seamless feedback loop between consumer insights and product innovation.<br> 1. Mobile Head Spa RVs (Professional Services):<br> Core Growth Driver : Represents 77% of total revenue (2024 forecast), with average annual revenue of ¥400,000 per RV unit .<br> Service Model:<br> IoT-enabled scalp diagnostics (12 health indicators analyzed in real time).<br> Signature "Scalp Revitalization" treatments with stem cell-based formulations.<br> Average customer unit price: ¥500/person/RV , 4,500 annual sessions per RV.<br> Strategic Role : Serves as brand ambassador, driving consumer trust through visible results (82% reported improvement in scalp health).<br> 2. DTC E-Commerce (Home Care):<br> Revenue Contribution: 15% of total revenue (2024 forecast).<br> Product Portfolio:<br> Daily maintenance products (¥50-150) using nano-encapsulation technology.<br> Therapeutic solutions targeting hair regrowth (¥200-400).<br> Growth Levers:<br> Social media-driven campaigns (e.g., TikTok/WeChat content showcasing AI scalp analysis).<br> Subscription model for recurring revenue (30% customer retention rate).<br> 3. Franchise Partnerships (Network Expansion):<br> Revenue Contribution : 8% of total revenue (2024 forecast).<br> Model Features:<br> Franchise fees: ¥400,000/RV (includes AI diagnostic tools + training).<br> Standardized service protocols ensure quality control.<br> Scalability : Targets 50+ franchised RVs by 2025, leveraging Hainan Free Trade Port policy incentives.<br> Omni-Channel Synergy:<br> Data Integration: AI-driven insights from 10,000+ scalp profiles inform product development.<br> Cross-Channel Engagement:<br> Mobile RV users convert to DTC customers at 22% rate.<br> Blockchain-secured treatment data enhances personalized recommendations.<br>

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**Historical Net Sales and Adjusted EBITDA** 

**(dollars in millions)** 

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| **Net Sales** | **Adjusted EBITDA and Margin** |

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**Our Market Opportunity**

**Scalp Care Represents a Large, Growing Market**

*The global scalp and head health industry represents a significant and expanding market, valued at $77 billion in 2023, with a projected compound annual growth rate (CAGR) of ~6% through 2025. In China, the scalp therapy market is poised for accelerated growth, driven by rising consumer awareness of holistic wellness. By 2026, the domestic market is expected to reach CNY 24.2 billion, fueled by demand for non-invasive solutions targeting hair loss, dryness, and stress-related scalp issues.*

**Consumers Prioritize Holistic Health and Efficacy**

Modern lifestyles have intensified scalp health challenges, with 82.52% of surveyed individuals reporting issues such as hair loss, itching, or sensitivity. Our focus on AI-driven diagnostics and stem cell revitalization technology directly addresses these concerns, offering measurable results after initial use. For example, mobile head bath services reduce scalp inflammation by 60% in clinical trials, while our herbal treatment kits have achieved a 91% customer satisfaction rate among users with chronic dryness.

**Innovation-Driven Brands Are Reshaping the Industry**

Traditional wellness providers are losing ground to agile, tech-enabled players. Over the past five years, legacy brands in China's scalp care sector have ceded ~430 basis points in market share to innovators like our platform. This shift reflects consumer demand for science-backed solutions and multi-modal services, such as our stress-relief spa packages (contributing CNY 2.25 million/year per vehicle) and smart wearable scalp monitors (in pilot testing with 4,500+ annual users).

**Expansion into Adjacent Wellness Categories**

Leveraging our patented AI algorithms and cross-industry partnerships, we are positioned to penetrate the broader CNY 633 billion health and wellness market. Future initiatives include collaborations with fitness centers and beauty salons to integrate scalp health into holistic routines. Early trials of our scalp-care skincare hybrids have shown a 35% increase in customer retention, signaling strong potential in the CNY 140 billion skincare segment.

**Our Strengths**

**Science-Backed Solutions with Proven Efficacy**

Our brand is anchored in clinical validation and real-world results. Over 71% of users report visible improvements in scalp health after one session of our mobile head bath service, while stem cell revitalization technology has reduced hair loss by 45% in six-month trials. Trust in our solutions is reflected in a 77% revenue contribution from direct consumers and a top-ranked position in Hainan's wellness sector.

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**Loyal Community and Cross-Channel Engagement**

A 71% repeat customer rate underscores the loyalty driven by our appointment-based mobile services and personalized care plans. Online, our short video campaigns and social media collaborations (e.g., Douyin) have generated 3.1 million+ views in 2023, with 40% of clients discovering us through digital platforms. Partnerships with gyms and spas further amplify reach, with 35% of offline users transitioning to high-value subscription plans.

**Scalable Franchise Model and Financial Discipline**

Our partner-led franchise system minimizes operational costs while driving rapid expansion. Franchise fees contribute 8% of total revenue (CNY 2.7 million in 2023), supported by CNY 1.5 million net revenue growth (80% YoY) and ~70% adjusted EBITDA margins. This efficiency enables reinvestment in R&D, including smart diagnostic tools and cross-industry health bundles.

***Positioned in Compelling Sub-Verticals***

We believe our focus on innovative, high-growth segments of the head and scalp health industry separates us from competitors. Our services and products address the most relevant consumer needs: scalp therapy, hair maintenance, and stress relief. Scalp therapy is one of the fastest-growing subcategories, driven by products like AI-powered diagnostic tools and herbal-based treatment kits. Our mobile head bath service and customized hair care products have achieved 77% revenue contribution from direct consumers, with a focus on solving issues like hair loss, itching, and dryness. Over 82.52% of surveyed consumers report scalp-related concerns, aligning with our mission to deliver targeted solutions such as stem cell revitalization technology and multi-modal health services.

***Powerful Service Portfolio Supported by Technological Innovation***

Our AI-driven solutions and patented service models enable a unique approach to scalp health. By integrating feedback from over 4,500 annual clients and partnering with health institutions, we refine our offerings through real-world testing and data analysis. For example, our mobile head bath service has become a flagship product, achieving CNY 2.25 million/year per vehicle in revenue. The launch of stress-relief head spa packages generated significant social media traction, contributing to CNY 2.7 million annual total revenue in 2023. Future innovations include smart wearable devices for scalp monitoring and cross-industry collaborations with fitness centers.

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***Synergistic Omni-Channel Strategy***

Our integrated model combines online platforms (e.g., short video platforms, social media) with mobile service vehicles, creating a seamless consumer journey. Approximately 35% of clients discover us through online promotions, then transition to high-value in-person services. Partnerships with gyms and beauty salons further enhance accessibility, with 40% of customers engaging across both online and offline channels. In 2023, our head bath service ranked as the top wellness offering in Hainan, supported by a 71% repeat customer rate.

***Experienced Management and Scalable Model***

Led by CEO Zhang Chen and Director Chang Xiaoxia, our team leverages decades of expertise in health tech and consumer services. The partner-led franchise model has driven rapid expansion, with franchise fees contributing 8% of total revenue. Financially, we achieved CNY 2.7 million annual revenue in 2023, primarily from head bath services (77% of total revenue), while maintaining low operational costs through appointment-based systems and mobile service delivery.

***Growth and Profitability***

Net revenue grew from CNY 1.5 million (2022) to CNY 2.7 million (2023), an 80% increase, with adjusted EBITDA margins stabilizing at ~70%. This scalability positions us to capture the projected CNY 24.2 billion scalp care market by 2026, focusing on tier-1 cities and sub-health populations.Our Growth Strategies

***Brand Awareness & Household Penetration Enhancement***

Market Opportunity: Only 45% of premium haircare consumers exhibit aided awareness of YMX versus a 69% peer median, with just 11% of surveyed Sephora shoppers recognizing the brand. Leveraging our highly engaged digital community (100+ brand ambassadors, 230k+ hairstylist followers across social platforms) and multi-platform digital presence (Instagram, TikTok, Facebook), we aim to accelerate brand penetration. Strategic initiatives include:

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***Execution Roadmap:***

1. Digital Engagement Amplification: Increase social media ad spend by 30%, launch AI-powered hair diagnostic tools on YMX.com, achieving 1.3M+ consumer interactions since October 2023.

2. Professional Ecosystem Strengthening: Partner with 500+ salons globally to integrate YMX into styling services, driving a 134% CAGR in Sephora sell-through (2018–2023).

3. Influencer Collaborations: Build dual-tier advocacy networks (professional stylists + consumer influencers) to amplify authenticity and reach.

***Channel Optimization & Expansion***

***Core Strategy: Elevate repeat purchase rates through:***

1. Membership Personalization: Deploy AI algorithms to tailor product recommendations based on scalp health diagnostics.

2. Professional Channel Penetration: Expand stylist ambassador programs, securing YMX as a top-10 SKUs in Sephora's June 2024 bestsellers.

3. DTC Innovation: Launch virtual hair consultations and AR try-on features on YMX.com, boosting conversion rates by 35%.

***Global Market Penetration***

***Regional Priorities:***

Europe: Partner with 300+ pharmacies to leverage medical-grade credibility, targeting a 20% share of premium haircare by 2025.

Asia: Double Tmall Global revenue (240% YoY growth in 2024), penetrate Japan's professional salon channel via KOL partnerships.

LATAM: Establish Mexico City and São Paulo as regional hubs, targeting 15% market share in Brazil by 2026.

***Product Innovation Pipeline***

***Expansion Focus:***

Scalp Care Vertical: Launch anti-inflammatory scalp serums (launch Q3 2024), addressing 82% consumer demand for skincare adjacency.

Cross-Category Synergies: Develop color-protecting treatments and heat-defense sprays, expanding SKU count by 40% by 2025.

Patent Portfolio: File 12+ patents for non-haircare applications (e.g., scalp microneedling devices) to diversify revenue streams.

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***DTC Channel Modernization***

***Key Initiatives:***

1. Deploy AI chatbots for real-time haircare coaching, reducing customer service costs by 25%.

2. Introduce subscription boxes (launch Q4 2023) with personalized product bundles.

3. Invest $5M in LATAM logistics infrastructure to ensure 48-hour delivery across 15 countries.

***Growth Projections: Achieve 40% DTC revenue contribution by 2026, with a global user database exceeding 50M profiles.***

**December 2023 Distribution**

On December 18, 2023, proceeds from an incremental amendment to the Credit Agreement, which provided USD 350.0 million in term loans, were used to fund a cash distribution to holders of Class A common units of Charming Wow Limited (BVI parent of CHARMING WOW INC.). The total distribution amounted to USD 470.0 million (approximately CNY 3,055 million), or USD 489.65 per unit.

**The Reorganization**

Charming Wow Limited serves as the holding company for CHARMING WOW INC., our primary operating subsidiary. Under the reorganization plan:

1. Existing Owners transferred 100% of their economic interests in Charming Wow Limited to Yimeixing Holdings (a newly established entity) in exchange for:

Shares of common stock.

Rights to payments under a Tax Receivable Agreement (85% of tax savings).

2. Outstanding equity options in subsidiaries were converted into options for Yimeixing Holdings shares.

3. Post-reorganization, Yimeixing Holdings will directly own Charming Wow Limited and its subsidiaries, consolidating financial statements under a unified structure.

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**Post-IPO Structure**

**Following the offering, Yimeixing Holdings will:**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Transfer 100% equity interests in Charming Wow Limited to Yimeixing Intermediate, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Merge Charming Wow Limited into Yimeixing Intermediate, Inc., streamlining operations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Retain no material assets other than full ownership of Yimeixing Intermediate, Inc., which oversees CHARMING WOW INC.

**The Tax Receivable Agreement**

**As part of the reorganization, we will enter into an agreement requiring payment of 85% of realized tax savings to Existing Owners and equity holders, tied to:**

1 .Utilization of Pre-IPO Tax Assets (e.g., intangible asset amortization).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Tax benefits from agreement-related payments, accruing interest at LIBOR + 3%.Key risks include potential overpayment if tax deductions are disallowed, impacting liquidity. Early termination post-IPO could trigger an estimated USD [●] million (approximately CNY [●] million) liability.

**Our Corporate Structure**

The following chart illustrates our ownership structure as of [Date], 2023, prior to the Reorganization and this offering, based on an assumed initial public offering price of $[●] per share (midpoint of the price range on the cover page of this prospectus):

Charming Wow Limited (BVI) holds 100% equity in CHARMING WOW INC. (primary operating entity).

Shareholders: Tan Xiaohao (51%) and Chen Sang (49%), with Chang Xiaoxia (Director) and Zhang Chen (CEO) managing operations.

**Post-Reorganization & Offering Structure (as of [Date], 2023):**

Yimeixing Holdings (newly formed entity) will directly own Charming Wow Limited and its subsidiaries.

Post-IPO, Yimeixing Intermediate, Inc. will consolidate all assets, including CHARMING WOW INC., under a unified financial framework.

**Summary of Material Risks**

Investing in our common stock involves significant risks, including but not limited to:

Market Sensitivity: Failure to adapt to evolving consumer preferences (e.g., demand for AI-driven scalp diagnostics or mobile head bath services) may reduce revenue.

Customer Concentration: 77% of revenue is derived from direct consumers (head bath services), with 15% from product sales and 8% from franchise fees. Loss of key customer segments could adversely impact growth.Brand Reputation: Negative publicity around service efficacy (e.g., stem cell revitalization claims) or social media controversies may erode trust.

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Supply Chain Risks: Dependence on single suppliers for herbal treatment kits and AI diagnostic devices; shortages could disrupt operations.

Inventory Management: Over/underestimating demand for CNY 2.25 million/year mobile units may lead to excess costs or lost sales.

Economic Downturns: Reduced discretionary spending on premium scalp care (average transaction value: CNY 500) in tier-1 cities.

Regulatory Compliance: Adherence to China's health tech regulations, including data privacy laws governing 4,500+ client health records.

Technology Vulnerabilities: Cyberattacks on platforms managing 71% repeat customers or CNY 2.7 million annual revenue data.

Intellectual Property: Competition may replicate patented multi-modal health services or smart wearable scalp monitors.

Debt Obligations: Servicing post-IPO liabilities linked to the Tax Receivable Agreement (85% of tax savings payable to existing stakeholders).

Controlled Company Status: Post-Nasdaq listing, exemptions from certain governance standards due to Charming Wow Limited's majority control.

**Implications of Being an Emerging Growth Company** 

As a company with less than $1.07 billion in total annual gross revenues during our most recently completed fiscal year, we qualify as an "emerging growth company" under Section 2(a)(19) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). This designation allows us to leverage reduced disclosure requirements and other flexibilities typically applicable to non-emerging growth public companies, including:

Streamlined Executive Compensation Disclosure: Reduced reporting on executive compensation arrangements.

Exemption from Non-Binding Shareholder Votes: No requirement for non-binding advisory votes on executive compensation.

Waiver of Auditor Attestation: Exemption from the auditor attestation requirement for internal control over financial reporting.

Condensed Financial Disclosures: Presentation of only two years of audited financial statements and selected financial data in this prospectus.

This exemption is valid for up to five years or until we exceed emerging growth company thresholds (e.g., annual revenues >1.07 billion,becomingalargeacceleratedfiler,orissuing>1 billion in non-convertible debt).

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**Extended Transition Period for Accounting Standards**

Under the JOBS Act, we may adopt new or revised accounting standards at the same time as private companies, rather than aligning with public company timelines. This choice ensures flexibility but may affect comparability with peers.

**The Advent Funds**

Advent International Corporation, a global private equity leader with $54 billion in cumulative investments across 42 countries, acquired the YMX business in January 2023. With over 240 investment professionals and a focus on healthcare, technology, and consumer sectors, Advent partners with management teams to drive sustained growth.

**Corporate History and Structure**

Pheno Biotech Holdings: Formed in Delaware in November 2022 to facilitate the Acquisition.

YMX Holdings: Incorporated in June 2024 as the issuer of these shares.

Remote Operations: Fully remote company with no principal executive office. Website: https://www.YMX.com. Content on our site is not incorporated into this prospectus.

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**The Offering** 

Common stock offered by the selling stockholders 750,000 shares.

Underwriters' option to purchase additional shares of common stock The selling stockholders have granted the underwriters an option for a period of 30 days from the date of this prospectus to purchase up to 112,500 additional shares of common stock, less underwriting discounts and commissions.

Common stock outstanding after this 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;shares.

Use of proceeds We will not receive any proceeds from the sale of shares of common stock by the selling stockholders named in this prospectus. See "Use of Proceeds."

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| Dividend policy  | Our board of directors ("Board of Directors") does not currently plan to pay dividends on our common stock. The declaration, amount, and payment of any future dividends will be at the sole discretion of our Board of Directors. Our Board of Directors may take into account general economic and business conditions, our financial condition and operating results, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax, and regulatory restrictions and implications on the payment of dividends by us to our stockholders or by our subsidiaries to us, including restrictions under our Credit Facilities, our obligations under the Tax Receivable Agreement and other indebtedness we may incur, and such other factors as our Board of Directors may deem relevant. See "Dividend Policy."  |

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Risk factors See "Risk Factors" for a discussion of risks you should carefully consider before deciding to invest in our common stock.

Controlled Company After the completion of this offering, we will be a "controlled company" within the meaning of the corporate governance standards of The Nasdaq Stock Market LLC.

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| Tax Receivable Agreement  | Prior to the completion of this offering, we will enter into an income tax receivable agreement with the Existing Stockholders which will require us to make payments to the Existing Stockholders upon the realization of tax benefits from certain Pre-IPO Tax Assets. See "Certain Relationships and Related Party Transactions—Tax Receivable Agreement."  |

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| Directed share program  | At our request, the underwriters have reserved up to % of the shares of common stock offered by this prospectus for sale, at the initial public offering price per share, to certain individuals in our stylist community through a directed share program. If purchased by  |

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these persons, these shares will not be subject to a lock-up restriction. The number of shares of common stock available for sale to the general public will be reduced by the number of reserved shares sold to these individuals. Any reserved shares not purchased by these individuals will be offered by the underwriters to the general public on the same basis as the other shares of common stock offered under this prospectus. See the section titled "Underwriting—Directed Share Program." <br>

Proposed ticker symbol "YMXK"

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Except as otherwise indicated, the number of shares of common stock outstanding after this offering is based on ● shares outstanding as of June 30, 2025 after giving effect to the Reorganization. Because the number of shares of our common stock underlying stock options to be outstanding as of the consummation of this offering will be determined by reference to the initial public offering price in this offering, a change in the initial public offering price would have a corresponding impact on the number of shares of our common stock underlying stock options after giving effect to this offering. See "The Reorganization—Treatment of Performance-Based Options and Cash-Settled Units." Except as otherwise indicated, the number of shares of our common stock to be outstanding after this offering excludes:

Shares of common stock issuable upon the exercise of stock options outstanding as of June 30, 2025 under the Pheno Biotech Holdings Corp. 2023 Omnibus Equity Incentive Plan (the "2023 Plan") at a weighted average exercise price of ●, based on an assumed initial public offering price of $● per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus;

Shares of common stock available for future issuance as of June 30, 2025 under the 2023 Plan; and

Shares of common stock that will become available for issuance under our 2024 Omnibus Equity Incentive Plan (the "2024 Plan").

Except as otherwise noted or the context otherwise requires, all information in this prospectus assumes or gives effect to:

**The Reorganization;**

No exercise of the outstanding stock options described above after June 30, 2025;

No exercise by the underwriters of their option to purchase additional shares; and

No purchase of shares of common stock in this offering by our directors, officers, or existing unitholders of Pheno Biotech Holdings.

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**Summary Consolidated Financial and Other Data** 

You should read the following summary consolidated financial and other data together with the "Capitalization," "Selected Consolidated Financial Data," and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of this prospectus and our audited consolidated financial statements and the related notes thereto and our unaudited condensed consolidated financial statements and the related notes thereto, each included elsewhere in this prospectus.

Historically, our business has been operated through Charming Wow Limited (BVI) and its consolidated subsidiary, CHARMING WOW INC. , our primary operating entity. The consolidated financial statements of Charming Inc are included in this prospectus. Charming Wow Limited (BVI) was formed for the purpose of this offering and has engaged to date only in activities in contemplation of this offering. Immediately following the Reorganization, Charming Wow Limited (BVI) will be a holding company with no material assets other than 100% of the equity interest in Charming Inc , which operates our mobile head spa RVs, DTC platform, and franchise network.

Charming Inc was incorporated in July 2022 and commenced operations in 2023 following a series of restructuring steps, including:

Business Model Transition (2023): Shift from biotechnology R&D to scalp health services under the "YMXK" brand.

Franchise Network Expansion (2024): Deployment of 50+ mobile RV units under a standardized partnership model.

The summary consolidated financial data reflects the following key operational metrics:

Revenue Streams :

Services (77%) : ¥500/person/RV, 4,500 annual sessions per RV.

Products (15%) : ¥50-200/unit, driven by stem cell-based formulations.

Franchise Fees (8%) : ¥400,000/RV (includes AI tools + training).

Cost Structure :

Initial RV Deployment : ¥400,000 (materials) + ¥200,000 (equipment) + ¥350,000 (vehicle).

The summary consolidated statement of operations data for the years ended December 31, 2023 and 2022 is derived from our audited consolidated financial statements and related notes thereto included elsewhere in this prospectus. The unaudited condensed consolidated financial statements for the six months ended June 30, 2024 , reflect a 32% YoY revenue growth driven by franchise network expansion.

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Our historical results are not necessarily indicative of the results expected for any future period.

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|  | **Six Months Ended**<br> **June 30,** | **Six Months Ended**<br> **June 30,** | **Year ended**<br> **December 31,** | **Year ended**<br> **December 31,** |
|  | **2024** | **2023** | **2023** | **2022** |
|  | | | **(Successor)** | **(Predecessor)** |
|  | **(in thousands, except share,**<br> **unit, per share and per unit data)** | **(in thousands, except share,**<br> **unit, per share and per unit data)** | **(in thousands, except share,**<br> **unit, per share and per unit data)** | **(in thousands, except share,**<br> **unit, per share and per unit data)** |
| **Consolidated Statements of Operations and Comprehensive Income Data:** |  |  |  |  |
| Net sales | $270243 | $99608 | $282250 | $148206 |
| Cost of sales: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Cost of product (excluding amortization) | 51397 | 54667 | 96611 | 31171 |
| &nbsp;&nbsp;&nbsp;&nbsp; Amortization of patented formulations | 4719 | 2465 | 6052 |  |
| Total cost of sales | 56116 | 57132 | 102663 | 31171 |
| Gross profit | 214127 | 42476 | 179587 | 117035 |
| Operating expenses: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Selling, general, and administrative | 45067 | 15076 | 37170 | 56698 |
| &nbsp;&nbsp;&nbsp;&nbsp; Amortization of other intangible assets | 20364 | 19461 | 39825 |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Acquisition costs |  | 16011 | 16499 |  |
| Total operating expenses | 65431 | 50548 | 93494 | 56698 |
| Operating income (loss) | 148696 | (8072) | 86093 | 60337 |
| Interest (expense) income, net | (31065) | (18783) | (38645) | 39 |
| Other (expense) income, net | (204) | (126) | (190) | 503 |
| &nbsp;&nbsp;&nbsp;&nbsp; Income (loss) before provision for income taxes | 117427 | (26981) | 47258 | 60879 |
| Income tax provision (benefit) | 22545 | (4556) | 7980 |  |
| Net income (loss) | $94882 | $(22425) | $39278 | $60879 |
| Comprehensive income (loss) | $94882 | $(22425) | $39278 | $60879 |
| Net income (loss) per share (unit) attributable to common stockholders (members): |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Basic | $98.83 | $(24.31) | $41.73 | $60.88 |
| &nbsp;&nbsp;&nbsp;&nbsp; Diluted | $97.55 | $(24.31) | $41.63 | $60.88 |
| Weighted-average shares (units) used in computing net income (loss) per share (unit) attributable to common stockholders (members): |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Basic | 960098 | 922450 | 941313 | 1000000 |
| &nbsp;&nbsp;&nbsp;&nbsp; Diluted | 972681 | 922450 | 943437 | 1000000 |
| **Pro Forma net income (loss) per share attributable to common stockholders(1):** | $— |  | $— |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Basic |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Diluted | $— |  | $— |  |
| Pro Forma weighted-average shares used in computing net income (loss) per share attributable to common<br> stockholders(1): |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Basic |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Diluted |  |  |  |  |
| **Non-GAAP Financial Measures(2):** |  |  |  |  |
| Adjusted EBITDA(3) | $191266 | $68031 | $199270 | $100483 |
| Adjusted gross profit(4) | $218846 | $81716 | $230360 | $117035 |
| Adjusted net income(5) | $129825 | $39328 | $131116 | $100522 |
| Adjusted net income per share (unit)(5): |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Basic | $135.22 | $42.63 | $139.29 | $100.52 |
| &nbsp;&nbsp;&nbsp;&nbsp; Diluted | $133.47 | $42.63 | $138.98 | $100.52 |

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|  | **As of June 30, 2024** | **As of June 30, 2024** |
|  | **Actual** | **Pro Forma(6)** |
| **Consolidated Balance Sheet Data:** |  |  |
| Cash and cash equivalents | $76430 |  |
| Working capital(7) | 128750 |  |
| Total assets | 1427863 |  |
| Total debt | 766808 |  |
| Total liabilities | 800501 |  |
| Total liabilities and stockholder's equity | 1427863 |  |

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(1) The pro forma net income (loss) per share data for the six months ended June 30, 2024 and for the fiscal year ended December 31, 2023 gives effect to (i) the Reorganization, as if it had occurred on January 1, 2023, including (1) the exchange of all outstanding Class A common units of Pheno Biotech Holdings into an aggregate of shares of common stock of YMX Holdings, (2) the conversion of all outstanding time-based options to purchase shares of common stock of Pheno Biotech Holdings Corp. into time-based options to purchase an aggregate of shares of common stock of YMX Holdings, and (3) the conversion of outstanding performance-based options to purchase shares of common stock of Pheno Biotech Holdings Corp. into time-based options to purchase an aggregate of shares of common stock of YMX Holdings and (ii) this offering as if it had been consummated on January 1, 2023 and assume the deduction of estimated offering expenses payable by us, which amount to approximately $, including offering expenses of $702 capitalized as of June 30, 2024 and no offering expenses capitalized as of December 31, 2023.

(2) Adjusted EBITDA, adjusted gross profit, adjusted net income and adjusted net income per share (unit) are measures that are not calculated in accordance with GAAP.

We prepare and present our consolidated financial statements in accordance with GAAP. However, management believes that adjusted EBITDA, adjusted gross profit, adjusted net income and adjusted net income per share (unit) that are non-GAAP financial measures, provide investors with additional useful information in evaluating our performance.

Adjusted EBITDA, adjusted gross profit, adjusted net income, adjusted net income per share (unit) and adjusted pro forma net income per share are financial measures that are not required by or presented in accordance with GAAP. We believe that adjusted EBITDA, adjusted gross profit, adjusted net income and adjusted net income per share (unit), when taken together with our financial results presented in accordance with GAAP, provide meaningful supplemental information regarding our operating performance and facilitates internal comparisons of our historical operating performance on a more consistent basis by excluding certain items that may not be indicative of our business, results of operations or outlook. In particular, we believe that the use of these non-GAAP measures is helpful to our investors as they are measures used by management in assessing the health of our business, determining incentive compensation and evaluating our operating performance, as well as for internal planning and forecasting purposes.

Adjusted EBITDA, adjusted gross profit, adjusted net income and adjusted net income per share (unit) are presented for supplemental informational purposes only, which have limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. Some of the limitations of these non-GAAP measures include that they (1) do not reflect capital commitments to be paid in the future, (2) do not reflect that, although amortization is a non-cash charge, the underlying assets may need to be replaced and non-GAAP measures do not reflect these capital expenditures and intangible asset amortization that contributes to revenue recognition will recur in future periods until fully amortized, (3) do not consider the impact of share-based compensation expense, (4) do not reflect other non-operating expenses, including, in the case of adjusted EBITDA and adjusted EBITDA margin, interest expense, (5) in the case of adjusted EBITDA, do not reflect tax payments that may represent a reduction in cash available to us and (6) do not include certain non-ordinary cash expenses that we do not believe are representative of our business on a steady-state basis. In addition, our use of non-GAAP measures may not be comparable to similarly titled measures of other companies because they may not calculate adjusted EBITDA, adjusted gross profit, adjusted net income and adjusted net income per share (unit) in the same manner, limiting its usefulness as a comparative measure. Because of these limitations, when evaluating our performance, you should consider these non-GAAP measures alongside other financial measures, including our gross profit, gross margin, net income, net income per share (unit) and other results stated in accordance with GAAP.

(3) We calculate adjusted EBITDA as net income (loss), adjusted to exclude: (1) interest expense (income), net; (2) income tax provision; (3) amortization; (4) share-based compensation expense; (5) fair value inventory step-up adjustment amortization; (6) Acquisition costs and financing fees; (7) expenses associated with non-recurring success payments made upon the sale of the YMX business; (8) patent infringement litigation and costs incurred for [ ] Matters; (9) non-capitalizable IPO and strategic transition costs; and (10) as applicable, tax receivable agreement liability adjustments.

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The following table presents a reconciliation of net income (loss), as the most directly comparable financial measure stated in accordance with GAAP, to adjusted EBITDA, for each of the periods presented.

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|:---|:---|:---|:---|:---|
|  | **For the Six Months**<br> **Ended June 30,** | **For the Six Months**<br> **Ended June 30,** | **For the Year Ended**<br> **December 31,** | **For the Year Ended**<br> **December 31,** |
| **(in thousands)** | **2024** | **2023** | **2023** | **2022** |
|  |  |  | **(Successor)** | **(Predecessor)** |
| ***Reconciliation of Net Income (Loss) to Adjusted EBITDA*** |  |  |  |  |
| Net income (loss) | $94882 | $(22425) | $39278 | $60879 |
| Interest expense (income) | 31065 | 18783 | 38645 | (39) |
| Income tax provision (benefit) | 22545 | (4556) | 7980 |  |
| Amortization | 25083 | 21926 | 45877 |  |
| Acquisition transaction costs and financing fees(a) |  | 17107 | 21242 | 938 |
| Non-recurring success payments(b) |  |  |  | 16347 |
| Litigation and costs incurred for [ ] Matters(c) | 14250 |  |  | 22358 |
| Inventory fair value adjustment(d) |  | 36775 | 44721 |  |
| Share-based compensation | 1174 | 421 | 1527 |  |
| Non-capitalizable IPO and strategic transition costs(e) | 2267 |  |  |  |
| Tax receivable agreement liability adjustment(f) |  |  |  |  |
| Adjusted EBITDA | $191266 | $68031 | $199270 | $100483 |

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(a) Includes acquisition costs related to the Acquisition of the YMX business and dividend financing costs.

(b) Includes expenses for non-recurring success payments made by the Sellers to employees upon sale of the YMX business.

(c) Includes litigation costs incurred related to patent enforcement by the Predecessor and $14.3 million of costs incurred related to the payment to the Sellers of certain amounts due in connection with the resolution of certain litigation and contingency matters involving [ ], which amounts were required to be paid to Sellers pursuant to the purchase agreement for the Acquisition (the "[ ] Matters") as discussed in note 13 to the unaudited condensed consolidated financial statements included elsewhere in the prospectus.

(d) Includes the non-cash, non-recurring fair value inventory step-up adjustment amortization as part of the purchase accounting on the Acquisition Date, utilizing the comparative sales method in accordance with ASC 820-10-55-21.

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(e) Represents non-capitalizable professional fees and executive severance incurred in connection with this offering and the Company's public company transition.

(f) As applicable, represents the income statement impacts recognized during the applicable period due to adjustments in the tax receivable agreement liability that may result from items such as changes in our estimated tax savings due to changes in the mix of earnings, U.S. federal and state tax legislation and tax rates in various jurisdictions impacting our tax savings.

(4) We calculate adjusted gross profit as gross profit, adjusted to exclude: (1) fair value inventory step-up adjustment amortization and (2) amortization of patented formulations pertaining to the Acquisition.

The following table presents a reconciliation of gross profit, as the most directly comparable financial measure stated in accordance with GAAP, to adjusted gross profit, for each of the periods presented.

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|:---|:---|:---|:---|:---|
|  | **For the Six Months**<br> **Ended June 30,**  | **For the Six Months**<br> **Ended June 30,**  | **For the Year**<br> **Ended December 31,** | **For the Year**<br> **Ended December 31,** |
| **(in thousands)** | **2024** | **2023** | **2023** | **2022** |
|  |  |  | **(Successor)** | **(Predecessor)** |
| ***Reconciliation of Gross Profit to Adjusted Gross Profit*** |  |  |  |  |
| Gross profit | $214127 | 42476 | $179587 | $117035 |
| Inventory fair value adjustment(a) |  | $36775 | 44721 |  |
| Amortization of patented formulations | 4719 | 2465 | 6052 |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Adjusted gross profit | 218846 | 81716 | $230360 | $117035 |

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(a) Includes the non-cash, non-recurring fair value inventory step-up adjustment amortization as part of the purchase accounting on the Acquisition Date, utilizing the comparative sales method in accordance with ASC 820-10-55-21.

(5) We calculate adjusted net income as net income, adjusted to exclude: (1) amortization of intangible assets; (2) share-based compensation expense; (3) fair value inventory step-up adjustment amortization; (4) Acquisition costs and financing fees; (5) expenses associated with non-recurring success payments made upon the sale of the YMX business; (6) patent infringement litigation and costs incurred for [ ] Matters; (7) non-capitalizable IPO and strategic transition costs; (8) as applicable, tax receivable agreement liability adjustments; and (9) the tax effect of non-GAAP adjustments. Adjusted net income per share (unit) is defined as adjusted net income per share (unit) using the weighted average basic and diluted shares outstanding.

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The following table presents a reconciliation of net income (loss), as the most directly comparable financial measure stated in accordance with GAAP, to adjusted net income, and adjusted net income per share (unit), for each of the periods presented.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Six Months**<br> **Ended June 30,** | **For the Six Months**<br> **Ended June 30,** | **For the Year Ended**<br> **December 31,** | **For the Year Ended**<br> **December 31,** |
| **(in thousands)** | **2024** | **2023** | **2023** | **2022** |
|  |  |  | **(Successor)** | **(Predecessor)** |
| ***Reconciliation of Net Income (Loss) to Adjusted Net Income*** |  |  |  |  |
| Net income (loss) | 94882 | (22425) | $39278 | $60879 |
| Amortization of intangible assets | 25083 | 21926 | 45877 |  |
| Acquisition transaction costs and financing fees(a) |  | 17107 | 21242 | 938 |
| Non-recurring success payments(b) |  |  |  | 16347 |
| Litigation and costs incurred for [ ] Matters(c) | 14250 |  |  | 22358 |
| Inventory fair value adjustment(d) |  | 36775 | 44721 |  |
| Share-based compensation | 1174 | 421 | 1527 |  |
| Non-capitalizable IPO and strategic transition costs(e) | 2267 |  |  |  |
| Tax receivable agreement liability adjustment(f) |  |  |  |  |
| Tax effect of adjustments(g) | (7831) | (14476) | (21529) |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Adjusted net income | 129825 | 39328 | $131116 | $100522 |
| Adjusted net income per share (unit): |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Basic | $135.22 | $42.63 | $139.29 | $100.52 |
| &nbsp;&nbsp;&nbsp;&nbsp; Diluted | $133.47 | $42.63 | $138.98 | $100.52 |

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(a) Includes costs related to the Acquisition of the YMX business and dividend financing costs.

(b) Includes expenses for non-recurring success payments made by the Sellers to employees upon sale of the YMX business.

(c) Includes litigation costs incurred related to patent enforcement by the Predecessor and $14.3 million of costs incurred related to the resolution of the [ ] Matters as discussed in note 13 to the unaudited condensed consolidated financial statements included elsewhere in the prospectus.

(d) Includes the non-cash, non-recurring fair value inventory step-up adjustment amortization as part of the purchase accounting on the Acquisition Date, utilizing the comparative sales method in accordance with ASC 820-10-55-21.

(e) Represents noncapitalizable professional fees and executive severance incurred in connection with this offering and the Company's public company transition.

(f) As applicable, represents the income statement impacts recognized during the applicable period due to adjustments in the tax receivable agreement liability that may result from items such as changes in our estimated tax savings due to changes in the mix of earnings, U.S. federal and state tax legislation and tax rates in various jurisdictions impacting our tax savings.

(g) The tax effect of non-GAAP adjustments is calculated by applying the applicable tax rate by jurisdiction to the non-GAAPadjustments listed above, taking into consideration the total tax impact of the adjustments.

(6) The pro forma consolidated balance sheet data gives effect to (i) the Reorganization, as if it had occurred on June 30, 2024 and based on the initial public offering price per share, at an assumed initial public offering price of $ per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, including (1) the recording of a liability of $ for the conversion of all time-based cash-settled units of Pheno Biotech Holdings Corp. into an aggregate of time-based cash-settled units of YMX Holdings, (2) the recording of a liability of $ for the conversion of performance-based cash-settled units of Pheno Biotech Holdings Corp. into an aggregate of time-based cash-settled units of YMX Holdings, and (3) the recording of a liability of $233 million associated with the Tax Receivable Agreement entered into with the Existing Stockholders which will require us to make payments to the Existing Stockholders upon the realization of tax benefits from certain Pre-IPO Tax Assets and (ii) this offering as if it had been consummated on June 30, 2024, and assume the deduction of estimated offering expenses payable by us, which amount to approximately $, including offering expenses capitalized as of June 30, 2024. The liability associated with the Tax Receivable Agreement is based on our estimate of the amount of cash savings in U.S. federal, state or local income tax that we or our subsidiaries will realize (or will be deemed to realize in certain circumstances) as a result of the utilization of the Pre-IPO Tax Assets, which will be computed by comparing our actual U.S. federal, state and local income tax liability with our hypothetical liability had we not been able to utilize the Pre-IPO Tax Assets. The primary assumption impacting our estimate of the liability is the assumption that our profitability will continue at levels sufficient to fully utilize the Pre-IPO Tax Assets. The actual amount and utilization of the Pre-IPO Tax Assets, as well as the timing of any payments under the Tax Receivable Agreement, will vary depending upon a number of factors, including the amount, character and timing of our and our subsidiaries' taxable income in the future and the tax rates then applicable to us and our subsidiaries, and may materially differ from our current estimate. Any change between the actual and the initial recorded liability shall be charged to the statement of operations and comprehensive income. See "The Reorganization" and "The Tax Receivable Agreement."

(7) Working capital is defined as current assets minus current liabilities.

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**RISK FACTORS** 

*An investment in our common stock involves risks. You should carefully consider the following information about these risks, together with the other information contained in this prospectus, before investing in shares of our common stock. The risks described below are those that we believe are the material risks that we face. If any of the following risks actually occurs, our business, prospects, operating results and financial condition could suffer materially, the trading price of our common stock could decline and you could lose all or part of your investment. Some of the following risks and uncertainties are, and will be, exacerbated by the COVID-19 pandemic (including any resurgences thereof) and any worsening of the global business and economic environment as a result. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not currently known to us or those we currently view to be immaterial also may materially and adversely affect our business, prospects, operating results or financial condition. See "Special Note Regarding Forward-Looking Statements" elsewhere in this prospectus.* 

**Risks Related to Our Business** 

***Our inability to anticipate and respond to market trends and changes in consumer preferences could adversely affect our financial results.***

Our continued success depends on our ability to anticipate, gauge and react in a timely and cost-effective manner to changes in consumer tastes for haircare and other beauty products, attitudes toward our industry and brand, as well as to where and how consumers shop. We must continually work to maintain and enhance the recognition of our brand, develop, manufacture and market new products, maintain and adapt to existing and emerging distribution channels, successfully manage our inventories and modernize and refine our approach as to how and where we market and sell our products. Consumer tastes and preferences cannot be predicted with certainty and can change rapidly. The issue is compounded by the increasing use of digital and social media by consumers and the speed by which information and opinions are shared. If we are unable to anticipate and respond to sudden challenges that we may face in the marketplace, trends in the market for our products and changing consumer demands and sentiment, our business, financial condition and results of operations will suffer. In addition, from time to time, sales growth or profitability may be concentrated in a relatively small number of our products or countries. If such a situation persists or a number of products or countries fail to perform as expected, there could be an adverse effect on our business, financial condition and results of operations.

***We depend on a limited number of customers for a large portion of our net sales, and the loss of one or more of these customers could reduce our net sales and have an adverse effect on our business, prospects, results of operations, financial condition and/or cash flows.***

For the year ended December 31, 2023, our revenue was primarily derived from three categories: mobile head spa services (77% of net sales), product sales (15%), and franchise partnerships (8%). We expect these categories to continue representing a significant portion of our net sales for the foreseeable future. A substantial decline in demand for mobile scalp treatments, reduced franchisee recruitment (targeting 50+ RV units by 2025), or operational disruptions in our service network could materially reduce our net sales and operating income, adversely affecting our business, prospects, results of operations, financial condition, and/or cash flows.

Additionally, we may be affected by shifts in consumer preferences toward alternative wellness services or competitive offerings. While our mobile RV service model currently operates in a blue ocean market with limited direct competition, emerging entrants or changes in demand for premium scalp care (average客单价: ¥500/person/RV) could pressure revenue. If consolidation occurs in the wellness service market, we may face pricing pressures that could impact profitability.

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***Our brand is critical to our success, and the value of our brand may be adversely impacted by negative publicity. If we fail to maintain the value of our brand or our marketing efforts are not successful, our business, financial condition and results of operations would be adversely affected.***

Our success depends on the value of our brand, which is integral to our business, as well as to the implementation of our strategies for expanding our business. Maintaining, promoting and positioning our brand will depend largely on the success of our marketing and merchandising efforts and our ability to provide consistent, high-quality merchandise. Our brand could be adversely affected if we fail to achieve these objectives or if our public image or reputation were to be tarnished by negative publicity through traditional or social media platforms. We cannot guarantee that our brand development strategies will accelerate the recognition of our brand or increase revenues.

In addition, the importance of our brand may increase to the extent we experience increased competition, which could require additional expenditures on our brand promotion activities. Maintaining and enhancing our brand image also may require us to make additional investments in areas such as merchandising, marketing and online operations. These investments may be substantial and may not ultimately be successful. Moreover, if we are unsuccessful in protecting our intellectual property rights in our brand, the value of our brand may be harmed. Any harm to our brand or reputation could adversely affect our ability to attract and engage customers and negatively impact our business, financial condition and results of operations.

***If we fail to attract new customers and consumers, retain existing customers and consumers, or fail to maintain or increase sales to those customers and consumers, our business, prospects, results of operations, financial condition, cash flows and growth prospects will be harmed.***

Our success depends in large part upon widespread adoption of our products by consumers. In order to attract new consumers and continue to expand our customer and consumer base, we must appeal to and attract hairstylists and consumers who identify with our products. If we fail to deliver a high-quality consumer experience or if our current or potential future customers are not convinced that our products are superior to alternatives, then our ability to retain existing customers, acquire new customers and grow our business may be harmed. We have made significant investments in enhancing our brand, attracting new customers and interacting with our hairstylist and consumer communities, and we expect to continue to make significant investments to promote our products. Such campaigns can be expensive and may not result in new customers or consumers or increased sales of our products. Further, as our brand becomes more widely known, we may not attract new consumers or increase our net sales at the same rates as we have in the past. If we are unable to acquire new customers who purchase products in numbers sufficient to grow our business, we may not be able to generate the scale necessary to drive beneficial network effects with our suppliers, our net revenues may decrease, and our business, financial condition and operating results may be materially adversely affected.

In addition, our future success depends in part on our ability to increase sales to our existing customers over time, as a significant portion of our net sales are generated from sales to existing customers, particularly those existing customers who are highly engaged and make frequent and/or large purchases of the products we offer. We may be affected by changes in the policies and demands of our professional and specialty retail customers relating to inventory management, changes in pricing, marketing, advertising and/or promotional strategies by such customers, space reconfigurations by our customers or any significant decrease in our display space or online prominence or the ongoing COVID-19 pandemic as retailers faced store closures or reduced traffic. If existing customers no longer find our products appealing, are not satisfied with our customer service, including shipping times, or if we are unable to timely update our products to meet current trends and customer demands, our existing customers may not make purchases, or if they do, they may make fewer or smaller purchases in the future.

If we are unable to continue to attract new customers or our existing customers decrease their spending on the products we offer or fail to make repeat purchases of our products, our business, financial condition, results of operations and growth prospects will be harmed.

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***Our business depends on our ability to maintain a strong community of engaged customers and brand advocates through AI-driven social media strategies. Negative publicity related to our AI diagnostic accuracy (82.5% current rate), blockchain-secured treatment data, or franchisee service quality could harm our brand and operations.***

We collaborate with 50+ certified "Scalp Health Experts" who promote our mobile RV services, educate consumers on AI-powered scalp diagnostics, and validate stem cell-based treatment efficacy. Our ability to maintain these partnerships and recruit new experts is critical as competition in the blue ocean mobile scalp care market intensifies. Failure to manage this network could reduce brand awareness and customer acquisition efficiency.

Social media platforms (WeChat/TikTok) are central to our marketing strategy , enabling viral content distribution (e.g., AI-generated scalp health reports) and customer engagement. As platforms evolve, we must continuously optimize our presence while ensuring compliance with China's internet regulations and data privacy laws. Failure to cost-effectively adapt to emerging platforms (e.g., Xiaohongshu) could reduce our ability to attract Tier 2/3 city consumers.

Risks associated with social media and brand ambassadors include:

Algorithmic Bias : Errors in AI-driven scalp analysis could trigger viral criticism (e.g., misdiagnosis claims).

Franchisee Misconduct : Non-compliance with standardized service protocols by partners may damage brand reputation.

Regulatory Scrutiny : Potential violations of China's Advertising Law or Medical Device Regulations in social media claims about treatment efficacy.

Data Security : Breaches of blockchain-secured treatment records could erode trust and trigger penalties under Hainan Free Trade Port policies.

Negative publicity—whether about our technology (e.g., AI accuracy), franchisee service quality, or executive actions—could spread rapidly through social platforms, disproportionately impacting our premium positioning (¥500/person/RV). Such incidents may require costly crisis management campaigns, reducing operational margins..

***Supply Chain Risks: We rely on single-source manufacturers and suppliers for the majority of our AI diagnostic devices and herbal treatment kits. The loss of key partners or shortages in raw materials (e.g., stem cell serums, herbal extracts) could disrupt operations, harm financial performance, and impact cash flows.***

Dependency on Limited Suppliers:

AI diagnostic tools and mobile head bath units are primarily manufactured by three third-party vendors.

Cosway Company Inc., responsible for >70% of 2025 net sales, remains critical to production.

Patented formulations (e.g., stem cell revitalization compounds) are sourced from a single U.S.-based contract manufacturer.

Raw Material Vulnerabilities:

Key inputs include biotech materials and specialty oils, procured under fixed-price agreements.

Global demand surges or supply chain disruptions (e.g., logistics delays, regulatory hurdles) may force costly transitions to alternative suppliers, requiring 6–12 months for qualification under strict health-tech compliance standards.

Mitigation Challenges:

Price fluctuations or reformulation needs (e.g., replacing discontinued ingredients) could erode margins, particularly in tier-1 cities where the average transaction value is CNY 500.

Failure to secure replacements for Bis-amino-equivalent compounds or recalibrate smart wearable devices may delay product launches, risking ~15% annual revenue loss.

Operational Contingencies:

While existing partners maintain contingency reserves, unforeseen disruptions (e.g., factory closures, export restrictions) could reduce the 71% repeat customer retention rate and jeopardize the CNY 24.2 billion scalp care market opportunity by 2026.

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***Demand Forecasting and Inventory Risks***

Failure to accurately forecast demand for AI diagnostic tools, mobile head bath services, and herbal treatment kits may lead to inventory imbalances, impacting margins and operational efficiency.

**Key Challenges:**

Inventory Mismanagement: Overestimating demand risks excess stock (e.g., CNY 500,000 write-downs for unsold stem cell serums), while underestimating disrupts supply for 71% repeat customers.

Fixed Cost Pressures: ~70% of expenses (e.g., smart device R&D, franchise training) are fixed, limiting flexibility during demand fluctuations.

**Operational Impacts:**

Excess Inventory: Discounted sales of CNY 50/unit herbal kits could erode premium brand positioning.

Shortages: Delays in restocking AI diagnostic devices (lead time: 8–12 weeks) may harm relationships with tier-1 city clients (average transaction value: CNY 500).

**External Vulnerabilities:**

Economic Downturns: Reduced discretionary spending in CNY 24.2 billion scalp care market (projected 2026) threatens 77% direct-to-consumer revenue.

Customer Credit Risks: Defaults by key distributors (15% of receivables) could trigger CNY 1.5 million liquidity shortfalls.

**Global Disruptions:**

Supply Chain Shocks: Pandemic-related delays (e.g., 2025 Hainan port closures) stalled 20% of Q3 deliveries.

Geopolitical Instability: Export restrictions on biotech materials may force costly supplier transitions (6–12 months).

**Mitigation Strategies:**

Dynamic Forecasting: Leverage AI analytics to align production with 4,500+ annual client trends.

Buffer Stock: Maintain 3-month reserves for critical components (e.g., smart sensors).

Flexible Contracts: Renegotiate supplier terms to include penalties for delays exceeding 45 days.

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***Competitive Landscape***

We operate in highly competitive markets, competing globally against multinational consumer goods companies, emerging tech-driven startups, and regional players with stronger footholds in underserved territories. Key competitors possess greater R&D resources, manufacturing scalability, and sales networks, enabling faster adaptation to market shifts. Competition in the scalp care and wellness industry centers on:

Technological innovation (e.g., AI diagnostics, stem cell therapies).

Service differentiation (e.g., mobile head bath experiences, personalized care plans).

Pricing strategies and promotional agility.

Digital engagement (e.g., campaigns, social media influence).

Competitive Advantages:

Brand reputation: Recognized for 71% customer retention and CNY 2.25 million/year per mobile unit revenue.

Strategic partnerships: Collaborations with fitness centers and beauty salons enhance cross-channel visibility.

IP portfolio: Patented stem cell revitalization technology and AI diagnostic algorithms.

However, competitors with ties to distributors or retailers promoting rival brands could prioritize their products, threatening our 8% franchise fee revenue and 77% direct consumer sales.

***Supply Chain and Manufacturing Risks***

Vulnerabilities:

Single-source dependencies: Critical components like biotech serums and smart wearable sensors rely on limited suppliers.

Geographic concentration: Over 70% of production occurs in Hainan-based facilities, exposing operations to regional disruptions (e.g., typhoons, port closures).

Historical Disruptions:

In Q1 2025, a 3-week delay at a key supplier (due to regulatory audits) impacted 15% of Q2 product deliveries, underscoring reliance on third-party manufacturers.

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***Contingency Challenges:***

Qualification timelines: Transitioning suppliers requires 6–12 months for compliance with health-tech safety standards.

Insurance gaps: Business interruption coverage may not fully offset losses from events like wildfires or grid failures.

***Operational Threats:***

Regulatory shutdowns or production halts.

Equipment/technology failures in AI diagnostic tools.

Labor strikes or natural disasters.

Energy shortages in tier-1 markets (e.g., Shanghai, Beijing).

***Financial and Strategic Impact***

A prolonged disruption could reduce CNY 2.7 million annual revenue by ~20%, jeopardizing the CNY 24.2 billion market opportunity by 2026.

Margin erosion risks persist if raw material costs (e.g., specialty oils) rise beyond contractual safeguards.

***Our recent rapid growth may not be sustainable or indicative of future growth, and we expect our growth rate to ultimately slow over time.***

We have experienced significant and rapid growth. Net sales increased from CNY 1.5 million in 2022 to CNY 2.7 million in 2023, representing an 80% growth rate. For the six months ended June 30, 2025, we generated net sales of CNY 2.3 million. However, this historical growth rate may not be sustainable or indicative of our future growth. In future periods, our net sales may grow more slowly or decline due to market saturation, increased competition, or reduced consumer demand. We believe that our ability to continue expanding revenue, maintaining profitability, and enhancing margins depends on effectively managing the challenges, risks, and difficulties described in this "Risk Factors" section. Any failure to address these issues could result in reduced growth, lower profitability, and diminished market share.

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***The fluctuating cost of raw materials could increase our cost of goods sold and adversely impact our financial performance.***

We have previously experienced, and may continue to experience, fluctuations in the cost of raw materials used in our products due to factors beyond our control. These include weather conditions, changes in demand, speculation in the commodities market, currency fluctuations, and geopolitical instability. Increased raw material costs may negatively affect our financial performance if we are unable to pass these costs on to consumers through higher prices. Additionally, disruptions in the supply chain could cause delays in production and compromise the quality of our services and products.

***The illegal distribution and sale of counterfeit products or unauthorized diversions could harm our business.***

Third parties may illegally distribute and sell counterfeit versions of our products, which could be of inferior quality and potentially harmful. Such counterfeit products could damage the reputation and value of our brand, resulting in lost sales and diminished customer trust. Unauthorized diversion of our products, intended for specific channels such as franchise partners or certified service providers, may also occur. These diverted products could be old, damaged, or compromised, which could harm our reputation and reduce our revenue. We have been unable to fully eliminate these issues and may continue to face challenges in protecting our brand and ensuring consistent product quality.

***Disruptions in our shipping and distribution network could negatively impact our operations.***

We rely on third-party logistics providers to deliver our products to customers, including franchise partners and direct consumers. If we cannot negotiate favorable pricing or if our logistics providers experience disruptions due to events beyond their control—such as extreme weather, natural disasters, labor disputes, or geopolitical issues—our operations may be adversely affected. Additionally, the loss or damage of products during shipping could result in dissatisfied customers, financial losses, and reputational harm. Ensuring a stable and efficient supply chain is critical to maintaining our growth and profitability.

***If we are unable to manage our growth effectively, our business, financial condition, and results of operations could be harmed.***

Since our founding in 2022, we have rapidly expanded our operations. Growth within our key markets, including tier-1 cities in China, has accelerated demand for our mobile scalp wellness services. To manage growth effectively, we must continue implementing operational plans and improving our infrastructure, including AI diagnostic tools, franchise partner management, and logistics systems. Additionally, expanding our employee base and enhancing training programs will be essential to sustain growth.

Rapid expansion can strain our ability to manage operations effectively. Challenges include scaling our technology infrastructure, obtaining sufficient raw materials, enhancing manufacturing capacity, and improving customer service systems. If our management team fails to adequately support this growth, we may face product delays, reduced service quality, or operational inefficiencies that could harm our profitability and reputation. Moreover, attracting and retaining qualified personnel will be crucial to support ongoing growth.

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***Failure to innovate and introduce new products could adversely affect our revenue and profitability.***

Our success depends on our ability to anticipate and respond to changing consumer demands. As we expand beyond traditional scalp care into AI diagnostic tools and stem cell revitalization technology, we must continue to innovate to remain competitive. Should we fail to develop new products or enhance existing services, our growth may stagnate, and our market position could be weakened. Furthermore, if new products are not accepted by consumers or if competitors introduce similar solutions more rapidly, our brand reputation and revenue generation could be adversely affected.

Maintaining our distinctive brand identity while broadening our product range will be essential to attract and retain consumers. Ineffective product launches or insufficient marketing efforts could result in lower sales, inventory write-offs, or diminished customer loyalty. Successfully introducing new products or innovations aligned with consumer preferences will be a critical driver of future growth.

***Our success depends, in part, on retaining and attracting key personnel.***

The growth of our business depends on the expertise and dedication of our leadership team, including our CEO, Zhang Chen, and Director, Chang Xiaoxia. The loss of key executives or experienced management personnel could negatively impact our business operations and strategic direction. Furthermore, as we expand, it will be essential to attract, hire, and retain qualified employees to support our ongoing growth.

We may need to increase compensation levels to remain competitive in recruiting top talent. Failure to attract or retain skilled personnel could impair our ability to achieve business objectives, develop new technologies, and enhance customer satisfaction. This risk may be heightened by operational pressures associated with scaling our franchise network and improving technological capabilities.

***Operational challenges associated with product launches and demand forecasting could harm our business.***

New product launches and promotional campaigns may place significant pressure on our supply chain and management systems. Misalignments between demand forecasts and actual sales could lead to inventory shortages or excess inventory, resulting in financial losses or customer dissatisfaction.

Additionally, fluctuations in demand may increase production costs or disrupt distribution systems. To effectively scale our operations, we must improve our demand forecasting capabilities and maintain a reliable supply chain. Failure to do so could harm our reputation, revenue, and profitability.

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***Impact of Global Health Crises and Geopolitical Factors***

Our business could be negatively impacted by future pandemics, geopolitical conflicts, or natural disasters. During the COVID-19 pandemic, for instance, various disruptions to supply chains, logistics, and consumer demand occurred. Although the market has largely recovered, similar events could significantly affect our revenue, profitability, and operational resilience.

We are continually monitoring developments related to public health and geopolitical factors that could impact our business. Proactively mitigating these risks will be essential to ensure operational stability and maintain consumer confidence.

***Our future success depends, in part, on our ability to achieve our long-term strategy.***

Achieving our long-term strategy will require investments in AI diagnostic tools, stem cell revitalization technology, franchise network expansion, supply chain optimization, and new marketing channels. These investments may result in short-term costs without immediate revenue generation and could impact our profitability. Additionally, discontinuing underperforming products or restructuring operations may incur further expenses. While we believe our strategy will lead to sustained growth, failure to execute effectively due to market conditions, competition, or technological advancements could harm our business, financial condition, and results of operations.

***Our business is affected by seasonality.***

Our business may be influenced by seasonality, especially during promotional campaigns, major marketing events, and peak demand periods such as holidays. Although our rapid growth may obscure seasonal trends, fluctuations in sales and revenue may occur due to varying consumer demand during different times of the year. Additionally, higher sales during the third and fourth quarters may increase working capital requirements. Ineffective demand forecasting or inventory management during these periods could adversely affect our financial performance.

***Risks Related to International Operations***

We are subject to risks related to expanding our operations internationally, particularly within China's tier-1 cities and Southeast Asian markets. Potential risks include:

· Fluctuations in foreign currency exchange rates, particularly as we expand operations and generate revenue in markets outside of China.

· Regulatory compliance challenges associated with marketing AI diagnostic tools and stem cell-based formulations.

· Political instability, natural disasters, or public health crises that could disrupt supply chains and operations.

· Variability in legal and administrative systems, particularly concerning data privacy and health regulations.

Financial risks related to international expansion include:

· Exchange rate volatility affecting revenue, profitability, and overall financial condition.

· Difficulties in securing appropriate distribution channels and establishing a reliable supply chain network.

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***Risks Related to Legal and Regulatory Matters***

***Disputes and other legal or regulatory proceedings could adversely affect our financial results.***

We may face litigation or regulatory challenges related to intellectual property, advertising claims, franchise agreements, or compliance with health regulations. Legal proceedings may be costly and time-consuming, potentially diverting management resources and negatively impacting our financial performance.

***Regulatory requirements for our products could restrict or delay our ability to market certain innovations.***

The use of AI diagnostic tools and stem cell revitalization technology may be subject to extensive regulatory scrutiny. Any changes in applicable laws, particularly those relating to medical devices or biotechnology, could require modifications to our products or marketing strategies. Additionally, compliance with varying regulatory standards across different markets could increase operational costs and delay product launches.

***Government regulations relating to marketing and advertising may restrict or delay our ability to promote our products.***

We must ensure that marketing claims regarding our scalp wellness products are truthful, substantiated, and compliant with applicable regulations. Regulatory agencies may require scientific evidence to support claims related to hair growth, scalp rejuvenation, or wellness benefits. Any failure to meet these requirements could result in enforcement actions, financial penalties, or reputational harm.

***Compliance with applicable laws, regulations, and guidelines will be essential to avoid disruption of our operations and maintain consumer trust.***

***Government Reviews, Inquiries, Investigations, and Actions Could Harm Our Business.***

Operating in various markets, particularly China's tier-1 cities and Southeast Asia, exposes us to governmental scrutiny and evolving regulatory environments. Government officials may exercise broad discretion in interpreting and applying regulations concerning AI diagnostic tools and stem cell revitalization technology. From time to time, we may receive formal and informal inquiries from regulatory authorities or self-regulatory organizations regarding our compliance with local laws, regulations, or standards.

If our operations or those of our franchise partners are found to be non-compliant with relevant regulations, we could face substantial fines, civil or criminal penalties, business interruptions, loss of supplier or vendor relationships, termination of necessary licenses and permits, or enforced modifications of our business practices. Even if no adverse findings result from such inquiries, negative publicity alone could harm our reputation, give rise to litigation, or impair our growth opportunities.

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***Product Liability Claims Could Harm Our Reputation and Business.***

Our success relies heavily on the quality and safety of our AI diagnostic tools and stem cell revitalization products. Any claims that our products are defective, unsafe, or fail to deliver promised results could harm customer relationships, damage our reputation, and adversely affect sales. Although our products are extensively tested, complaints regarding skin irritation, allergic reactions, or other adverse effects could still arise.

If any of our products are found to cause injury or damage, we could face liability claims, resulting in financial losses and reputational harm. While we maintain product liability insurance, our coverage may not be adequate to cover all potential claims. Furthermore, the expansion of our product offerings increases our risk exposure, particularly if we fail to comply with applicable health regulations or quality standards.

***Data Privacy and Security Risks.***

Our collection, use, storage, and transfer of personal information are subject to various data protection laws and regulations, including China's Personal Information Protection Law (PIPL), the European Union's General Data Protection Regulation (GDPR), and other international standards. As we expand our operations, compliance with these laws may become increasingly complex and costly.

Inadequate data protection measures could result in regulatory fines, legal disputes, or reputational harm. Additionally, any security breaches or unauthorized disclosures of personal information could damage our reputation and negatively impact customer trust. We must ensure our privacy policies are transparent and compliant with relevant regulations to avoid legal and financial repercussions.

***Marketing and Advertising Compliance.***

The marketing of our AI diagnostic tools and stem cell revitalization products must adhere to various advertising regulations. Regulatory agencies may require scientific evidence to substantiate health-related claims, and non-compliance could result in fines, enforcement actions, or restrictions on our marketing activities. Ensuring compliance across different jurisdictions is essential to avoid disruptions in our promotional campaigns.

***Cross-Border Data Transfers.***

Our international operations may involve the transfer of personal data across borders. Compliance with data transfer regulations, particularly between China, the European Union, and the United States, may require implementing additional safeguards, such as updated Standard Contractual Clauses (SCCs). Failure to comply with these requirements could result in financial penalties or restrictions on our ability to operate in certain markets.

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***Our employees, customers, suppliers and other business partners may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.***

We are exposed to the risk that our employees, customers, suppliers and other business partners may engage in fraudulent or illegal activity. Misconduct by these parties could include intentional, reckless, and/or negligent conduct or disclosure of unauthorized activities to us that violate: (i) the rules of the applicable regulatory bodies; (ii) manufacturing standards; (iii) data privacy and security laws or other similar non-United States laws; or (iv) laws that require the true, complete and accurate reporting of financial information or data. These laws may impact, among other things, future sales, marketing, and education programs.

It is not always possible to identify and deter misconduct by our employees and other third parties, and the precautions we take to detect and prevent these activities may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. In addition, we are subject to the risk that a person or government could allege such fraud or other misconduct, even if none occurred. If any such actions are instituted against us and we are not successful in defending ourselves or asserting our rights, those actions could result in the imposition of significant fines or other sanctions, including the imposition of civil, criminal, and administrative penalties, additional integrity reporting and oversight obligations. Whether or not we are successful in defending against any such actions or investigations, we could incur substantial costs, including legal fees, and divert the attention of management in defending.

***Violations of the U.S. Foreign Corrupt Practices Act, U.K. Bribery Act, and other anti-corruption laws outside the United States could have an adverse effect on us.***

The U.S. Foreign Corrupt Practices Act ("FCPA"), U.K. Bribery Act, and other anti-corruption laws in other jurisdictions generally prohibit companies and their intermediaries from making improper payments to government officials or other persons for the purpose of obtaining or retaining business. Recent years have seen a substantial increase in anti-bribery law enforcement activity, with more frequent and aggressive investigations and enforcement proceedings by both the U.S. Department of Justice and the SEC, increased enforcement activity by non-U.S. regulators and increases in criminal and civil proceedings brought against companies and individuals. Our policies mandate compliance with these anti-bribery laws. We sell our products in many parts of the world that are recognized as having governmental and commercial corruption and in certain circumstances, strict compliance with anti-bribery laws may conflict with local customs and practices. We cannot assure you that our internal control policies and procedures will always protect us from reckless or criminal acts committed by our employees, customers or other third-party intermediaries. In the event that we believe or have reason to believe that our employees or agents have or may have violated applicable anti-corruption laws, including the FCPA, we may be required to investigate or have outside counsel investigate the relevant facts and circumstances, which can be expensive and require significant time and attention from senior management. Violations of these laws may require self-disclosure to government agencies and result in criminal or civil sanctions, which could disrupt our business and result in an adverse effect on our reputation, business, financial condition, results of operations and cash flows.

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**Risks Related to Information Technology and Cybersecurity** 

***We rely significantly on the use of information technology, as well as those of our third-party service providers. Any significant failure, inadequacy, interruption or data security incident of our information technology systems, or those of our third-party service providers, could disrupt our business operations, which could have an adverse effect on our business, prospects, results of operations, financial condition and/or cash flows.***

We increasingly rely on information technology systems to process, transmit and store electronic information. Our ability to effectively manage our business and coordinate the manufacturing, sourcing, distribution and sale of our products depends significantly on the reliability and capacity of these systems. We rely on information technology systems to effectively manage, among other things, our business data, communications, supply chain, inventory management, customer order entry and order fulfillment, processing transactions, summarizing and reporting results of operations, human resources benefits and payroll management, compliance with regulatory, legal and tax requirements and other processes and data necessary to manage our business. Disruptions to our information technology systems, including any disruptions to our current systems and/or as a result of transitioning to additional or replacement information technology systems, as the case may be, could disrupt our business and could result in, among other things, transaction errors, processing inefficiencies, loss of data and the loss of sales and customers, which could have a material adverse effect on our business, prospects, results of operations, financial condition and/or cash flows. Additionally, the future operation, success and growth of our business depends on streamlined processes made available through information systems, global communications, internet activity and other network processes.

Our information technology systems may be subject to damage or interruption. Our existing safety systems, data backup, access protection, user management and information technology emergency planning may not be sufficient to prevent data loss or long-term network outages. In addition, we may have to upgrade our existing information technology systems or choose to incorporate new technology systems from time to time in order for such systems to support the increasing needs of our expanding business. Costs and potential problems and interruptions associated with the implementation of new or upgraded systems and technology or with maintenance or adequate support of existing systems could disrupt or reduce the efficiency of our operations.

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In addition, as part of our normal business activities, we collect and store certain confidential information, including personal information with respect to customers, consumers and employees, as well as information related to intellectual property, and the success of our e-commerce operations depends on the secure transmission of confidential and personal data over public networks, including the use of cashless payments. We may share some of this information with third-party service providers who assist us with certain aspects of our business. Any failure on the part of us or our third-party service providers to maintain the security of this confidential data and personal information, including via the penetration of our network security (or those of our third-party service providers) and the misappropriation of confidential and personal information, could result in business disruption, damage to our reputation, financial obligations to third parties, fines, penalties, regulatory proceedings and private litigation, any or all of which could result in the Company incurring potentially substantial costs. Such events could also result in the deterioration of confidence in the Company by employees, consumers and customers and cause other competitive disadvantages.

Security incidents compromising the confidentiality, integrity, and availability of our confidential or personal information and our and our third-party service providers' information technology systems could result from cyber-attacks, ransomware, computer malware, supply chain attacks or malfeasance of our personnel. Moreover, we and our third-party service providers may be more vulnerable to such attacks in remote work environments, which have increased in response to the COVID-19 pandemic, and we are particularly vulnerable to such risks because our employees all work remotely. As techniques used by cyber criminals change frequently, a disruption, cyberattack or other security breach of our information technology systems or infrastructure, or those of our third-party service providers, may go undetected for an extended period and could result in the theft, transfer, unauthorized access to, disclosure, modification, misuse, loss or destruction of our employee, representative, customer, vendor, consumer and/or other third-party data, including sensitive or confidential data, personal information and/or intellectual property. We cannot guarantee that our security efforts will prevent breaches or breakdowns of the Company's or its third-party service providers' information technology systems. If we suffer a material loss or disclosure of personal or confidential information as a result of a breach of our information technology systems, including those of our third-party service providers, we may suffer reputational, competitive and/or business harm, incur significant costs and be subject to government investigations, litigation, fines and/or damages, which could have an adverse effect on our business, prospects, results of operations, financial condition and/or cash flows. Moreover, while we maintain cyber insurance that may help provide coverage for these types of incidents, we cannot assure you that our insurance will be adequate to cover costs and liabilities related to these incidents.

In addition, any such access, disclosure or other loss or unauthorized use of information or data, whether actual or perceived, could result in legal claims or proceedings, regulatory investigations or actions, and other types of liability under laws that protect the privacy and security of personal information, including federal, state and foreign data protection and privacy regulations, violations of which could result in significant penalties and fines. In addition, although we seek to detect and investigate all data security incidents, security breaches and other incidents of unauthorized access to our information technology systems and data can be difficult to detect and any delay in identifying such breaches or incidents may lead to increased harm and legal exposure of the type described above.

***Our information technology and websites may be susceptible to cybersecurity breaches, outages and other risks.***

Our information technology systems may be susceptible to outages due to fire, floods, power loss, telecommunications failures, break-ins and other events. Despite the implementation of network security measures, our systems may be vulnerable to constantly evolving cybersecurity threats such as malware, break-ins and similar disruptions from unauthorized tampering. The occurrence of these or other events could disrupt or damage our information technology and adversely affect our business, including our employees' abilities to adequately conduct work. Insurance policies that may provide coverage with regard to such events may not cover any or all of the resulting financial losses.

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In addition, as part of our normal business activities, we collect and store certain confidential information, including personal information with respect to customers, consumers and employees, as well as information related to intellectual property, and the success of our e-commerce operations depends on the secure transmission of confidential and personal data over public networks, including the use of cashless payments. We may share some of this information with vendors who assist us with certain aspects of our business. Any failure on the part of us or our vendors to maintain the security of this confidential data and personal information, including via the penetration of our network security (or those of our vendors) and the misappropriation of confidential and personal information, could result in business disruption, damage to our reputation, financial obligations to third parties, fines, penalties, regulatory proceedings and private litigation, any or all of which could result in the Company incurring potentially substantial costs. Such events could also result in the deterioration of confidence in the Company by employees, consumers and customers and cause other competitive disadvantages. In addition, a security or data privacy breach could require us to expend significant additional resources to enhance our information security systems and could result in a disruption to our operations. Furthermore, third parties, such as our suppliers and retail customers, may also rely on information technology and be subject to such cybersecurity breaches. These breaches may negatively impact their businesses, which could in turn disrupt our supply chain and/or our business operations. Due to the potential significant costs, business disruption and reputational damage that typically accompany a cyberattack or cybersecurity breach, any such event could have an adverse effect on our business, prospects, results of operations, financial condition and/or cash flows.

**Risks Related to Intellectual Property Matters** 

***Our efforts to register, maintain and protect our intellectual property rights may not be sufficient to protect our business.***

Our patents and trademarks are essential to our business, and we also rely on our unpatented proprietary technology, trade secrets, processes and know-how. We generally seek to protect our patents, trademarks and other proprietary information through a combination of patent, trademark, copyright and trade secret laws, as well as by confidentiality, non-disclosure and assignment of invention agreements with our employees, contractors, collaborators, vendors, consultants, advisors and third parties. Despite these measures, any of our intellectual property rights could be challenged, invalidated, circumvented or misappropriated. This could involve significant expense, potentially hinder or limit use of our intellectual property rights, or potentially result in the inability to use the intellectual property rights in question. If an alternative cost-effective solution were not available, there may be an adverse effect on our financial position and performance.

Enforcing our intellectual property rights against one or more third parties can be expensive and time-consuming, and an adverse result in any proceeding could put our intellectual property rights at risk of being invalidated or narrowed in scope of coverage. Patent and trademark challenges increase our costs to develop, engineer and market our products. We may not have adequate resources to enforce our intellectual property rights. In addition, our ability to enforce our intellectual property rights depends on our ability to detect infringement. It may be difficult to detect infringers who do not advertise the components that are used in their products. Moreover, it may be difficult or impossible to obtain evidence of infringement in a competitor's or potential competitor's product. We may not prevail in any disputes that we initiate and the damages or other remedies awarded, if we were to prevail, may not be commercially meaningful. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of dispute.

Pending and future patent applications may not be approved or result in patents being issued which protect our products or which effectively prevent others from commercializing competitive technologies and products. Moreover, the scope of coverage claimed in a patent application can be significantly reduced during prosecution before the patent is issued. Even once issued, the scope, validity, enforceability, and commercial value of patent rights are uncertain, and our patents may not be of sufficient scope or strength to provide any meaningful protection or commercial advantage and may not preclude competitors from developing products similar to ours.

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Any of our patents or pending patent applications may be challenged, narrowed, circumvented, or invalidated by third parties. For example, we are aware of pending oppositions in the European Patent Office, India, and Ecuador. Additionally, as a result of two post grant review proceedings at the U.S. Patent and Trademark Office, some of the claims in two of our U.S. patents were determined to be invalid. The invalidated claims are a subset of the claims that defend against the use of competitors' products in a hair bleaching method that do not contain our Bis-amino ingredient.

While we have registered or applied to register many of our trademarks, trade names, and brand names to distinguish our products from those of our competitors, we cannot assure you that our trademark applications will be approved. Third parties may also oppose our trademark applications, or otherwise challenge our use of the trademarks. In the event that our trademarks are successfully challenged, we could be forced to rebrand our products, which could result in loss of brand recognition, and could require us to devote resources advertising and marketing new brands.

We rely on our unpatented proprietary technology and it is possible that others will independently develop the same or similar technology or otherwise obtain access to our unpatented technology. Although we generally seek to protect our unpatented proprietary technology and our trade secrets, processes, and know-how by confidentiality, non-disclosure and assignment of invention agreements with our employees, contractors, collaborators, vendors, consultants and advisors, we cannot assure you that these agreements will provide meaningful protection in the event of any unauthorized use or disclosure of such proprietary technology, trade secrets, processes, or know-how.

In addition, our ability to protect our intellectual property may be adversely affected by the COVID-19 pandemic. Because of the COVID-19 pandemic, certain domestic and foreign intellectual property offices have amended their filing requirements and other procedures, including, but not limited to, extending deadlines and waiving fees. These accommodations have not been applied uniformly across all intellectual property offices globally, and the effectiveness and duration of existing action is unclear. Further, the ongoing COVID-19 pandemic has created uncertainty with respect to the uninterrupted operation of domestic and foreign intellectual property offices, which, amongst other things, may cause delayed processing of assignments, renewal fee payments, and application filings, and may delay prosecution of patent and trademark applications. Any inability to establish and maintain current and future trademarks, patents or other intellectual property rights may have an adverse effect on the growth and reputation of our business. Further, the constantly evolving nature of the COVID-19 pandemic may affect our brand and our other intellectual property rights over time in ways that cannot be reasonably anticipated or mitigated. This could have an adverse effect on our business, the results of our operations, and financial condition.

In certain foreign jurisdictions, relevant government authorities may also be slow to act on the acceptance and recordation of assignments of intellectual property rights, sometimes taking years to record such assignments. As noted above, the COVID pandemic has extended these delays further. While we are not currently adversely affected by these delays, our ability to enforce our rights against third-party infringers and to enter into local licensing arrangements may be limited or otherwise adversely affected by the failure of local governmental entities to promptly process and record prior transfers of IP rights.

If we do not adequately maintain our intellectual property, it can result in loss of rights. Loss of rights may be irrevocable. For example, we are required to pay various periodic renewal fees on registered intellectual property, and our failure to do so could result in the affected intellectual property lapsing. If this were to occur, our competitors may be able to use our technologies, names, brands or the goodwill we have acquired in the marketplace and erode or negate any competitive advantages we may have, which could harm our business and ability to achieve profitability.

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***If our trademarks and trade names are not adequately protected, we may not be able to maintain or build name recognition in our markets of interest.***

If our trademarks and trade names are not adequately protected, we may not be able to maintain or build name recognition in our target markets and our business may be adversely affected. If we are unable to successfully register our trademarks and trade names and establish name recognition based on our trademarks and trade names, then we may not be able to compete effectively and our business may be adversely affected. In addition, competitors or other third parties have in the past, and may in the future, adopt trade names, trademarks or domain names similar to ours, thereby impeding our ability to build brand identity, possibly leading to market confusion and potentially requiring us to pursue legal action. In addition, there could be trade name or trademark infringement claims brought by owners of other registered trademarks or trademarks that incorporate variations of our unregistered trademarks or trade names. Our efforts to enforce or protect our trademarks, trade names and domain names may be ineffective, may impact the public perception of our brand, may be expensive, may divert our resources and, if our proprietary rights are challenged in connection with such enforcement efforts, could result in payment by us of monetary damages or injunctive relief against us that prevents us from using certain trademarks and trade names, all of which could adversely impact our financial condition or results of operations.

***We may not be able to effectively protect and enforce our intellectual property rights throughout the world to the same extent as in the United States.***

Because of the differences in foreign trademark, patent and other laws concerning proprietary rights, our intellectual property rights may not receive the same degree of protection in foreign countries as they would in the United States. Many companies have encountered significant problems in protecting and defending intellectual property rights in certain foreign jurisdictions. For example, the requirements for patentability may differ in certain countries, particularly in developing countries. Moreover, our ability to protect and enforce our intellectual property rights may be adversely affected by unforeseen changes in foreign intellectual property laws. The legal systems of some countries, particularly developing countries, do not favor or may not be sufficiently robust for the meaningful enforcement of patents and other intellectual property rights. This could make it difficult for us to stop the infringement, misappropriation, or other violation of our intellectual property rights. Consequently, we may not be able to prevent third parties from practicing our inventions in all jurisdictions in which we have patent protection. In addition, competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and export otherwise infringing products to territories where we have patent protection. These products may compete with our products, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

Furthermore, we currently own trademarks that we use in connection with our business in the United States and other markets. As we continue to expand into international markets, we may experience certain risks associated with protecting our brand and maintaining the ability to use our brand in the countries where we operate. Specifically, there is a risk that our trademarks may conflict with the registered trademarks of other companies, which may require us to rebrand our product and service offerings, obtain costly licenses, defend against third-party claims, or substantially change our product or service offerings.

Proceedings to enforce our patent and trademarks rights in foreign jurisdictions, whether or not successful, could result in substantial costs and divert efforts and resources from other aspects of our business. While we generally seek to protect our intellectual property rights in the major markets where we intend to market and sell our products, we cannot ensure that we will be able to do so in all jurisdictions. Furthermore, we may not accurately predict all of the jurisdictions where patent protection will ultimately be desirable, and if we fail to timely file a patent application in any such jurisdiction, we may be precluded from doing so later. Accordingly, our efforts to protect our patent and other intellectual property rights in such jurisdictions may be inadequate.

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***Third parties may allege that we are infringing, misappropriating, or otherwise violating their intellectual property rights, which could involve substantial costs and adversely impact our business.***

Our success in part depends on our ability to develop, manufacture, market and sell our products without infringing, misappropriating or otherwise violating the intellectual property rights of third parties. Third parties may allege that our products infringe, misappropriate, or otherwise violate third-party intellectual property rights, and we may become involved in litigation or other disputes relating to intellectual property used in our business.

Any such claims, even those without merit, can be expensive and time-consuming to defend and may divert management's attention and resources, and an adverse result in any proceeding could put our ability to produce and sell our products in jeopardy. We may be required to spend significant amounts of resources to defend against claims of infringement, pay significant money damages, cease using certain processes, technologies, or other intellectual property, cease making, offering and selling certain products, obtain a license (which may not be available on commercially reasonable terms or at all) or redesign our brand, our products or our packaging (which could be costly, time-consuming, or impossible).

In addition, we may be unaware of third-party intellectual property that covers or otherwise relates to some or all of our products. Because of technological changes in our industry, current patent coverage and the rapid rate of issuance of new patents, our current or future products may unknowingly infringe or misappropriate existing or future patents or intellectual property rights of other parties. Further, because some patent applications are maintained in secrecy for a period of time, there is a risk that we could develop a product or technology without knowledge of a pending patent application, which product or technology would infringe a third-party patent once that patent is issued. The defense costs and settlements for patent infringement lawsuits may not be covered by insurance. Patent infringement lawsuits can take years to resolve. If we are not successful in our defenses or are not successful in obtaining dismissals of any such lawsuit, legal fees or settlement costs could have an adverse effect on our operations and financial position. Even if resolved in our favor, the volume of intellectual-property-related claims, and the mere specter of threatened litigation or other legal proceedings may cause us to incur significant expenses and could distract our personnel from day-to-day responsibilities. The direct and indirect costs of addressing these actual and threatened disputes may have an adverse effect on our operations, reputation, and financial performance.

Relatedly, competitors or other third parties may raise claims alleging that other third parties indemnified by us infringe, misappropriate, or otherwise violate such competitors' or other third parties' intellectual property rights. These claims of infringement, misappropriation, or other violation may be extremely broad, and it may not be possible for us to conduct our operations in such a way to avoid all such alleged violations of such intellectual property rights.

***We may be subject to claims that our employees, contractors, collaborators, vendors, consultants or advisors have wrongfully used or disclosed alleged trade secrets of their current or former employers or claims asserting ownership of what we regard as our own intellectual property.***

Third parties may in the future allege wrongful use or disclosure of their alleged intellectual property or make claims challenging the inventorship or ownership of our intellectual property. We may be subject to claims that we or our employees, contractors, collaborators, vendors, consultants and advisors have used or disclosed intellectual property, including trade secrets or other proprietary information, of any such individual's current or former employer. In addition, we may face claims by third parties that our agreements with employees obligating them to assign intellectual property to us are ineffective or in conflict with prior or competing contractual obligations of assignment, which could result in ownership disputes regarding intellectual property we have developed or will develop and may interfere with our ability to capture the commercial value of such intellectual property. Litigation may be necessary to resolve an ownership dispute, and if we are not successful, we may be precluded from using certain intellectual property or may lose our exclusive rights in such intellectual property. It is not always possible to identify and deter misconduct by employees, contractors, collaborators, vendors, consultants and advisors and the precautions we take to detect and prevent this type of activity may not be effective in controlling unknown or unmanaged risks or losses. Any of these outcomes could harm our business and competitive position.

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***Risks Related to Our Indebtedness***

***Our significant indebtedness could adversely affect our financial condition.***

As of June 30, 2025, our total indebtedness amounted to approximately CNY 766.8 million. This includes CNY 766.8 million outstanding under our Term Loan Facility, with no amounts drawn under our Revolver.

Our significant indebtedness, combined with other financial obligations and contractual commitments, could have several adverse consequences, including:

· Requiring us to allocate a substantial portion of our operating cash flow to debt servicing, reducing funds available for working capital, technological development, marketing, and expansion of franchise networks.

· Increasing our vulnerability to adverse economic and industry conditions, particularly as we expand into new markets.

· Limiting our flexibility in responding to changes in our business environment and industry dynamics.

· Exposing us to risks associated with variable interest rates, which could increase our debt servicing costs.

· Restricting strategic initiatives, including potential acquisitions, research and development efforts, and market expansion.

· Limiting our ability to borrow additional funds or liquidate assets to raise capital for operational purposes.

While the terms of our existing debt agreements impose certain restrictions on incurring additional debt, these restrictions are subject to various exceptions. Should we incur additional indebtedness, the associated risks could increase significantly.

***Debt Servicing and Cash Flow Risks***

Our ability to generate sufficient cash flow to service our debt obligations depends on various factors, many of which are beyond our control. If our revenue growth slows or our expenses increase unexpectedly, we may be unable to meet our debt servicing requirements. Potential consequences include:

· Refinancing debt under unfavorable conditions or selling valuable assets.

· Delaying strategic investments or operational improvements.

· Raising additional debt or equity capital, which could dilute existing shareholders' interests or impose further operational restrictions.

Restrictive Debt Covenants

The agreements governing our outstanding indebtedness include various restrictive covenants, which may limit our ability to:

· Incur additional debt or create liens on assets.

· Declare dividends or make other distributions.

· Make certain investments, loans, or advances.

· Consolidate, merge, or dispose of substantial assets.

· Engage in transactions with affiliates.

· Exceed specified leverage ratios.

Non-compliance with these covenants could result in events of default, allowing creditors to accelerate debt repayment and potentially triggering cross-default provisions in other agreements. If creditors demand immediate repayment, we may lack sufficient assets to fulfill these obligations.

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***Reliance on Subsidiaries for Cash Flow***

Our operations are conducted primarily through subsidiaries, making us dependent on their earnings to fund our obligations. Restrictions on subsidiaries' ability to transfer assets or earnings to us could impair our financial condition and operational capabilities.

***Potential Need for Additional Capital***

Despite our current indebtedness, we may need to incur additional debt to finance future operations or acquisitions. Increased indebtedness would heighten our exposure to the associated risks described above. Furthermore, should our cash flow from operations prove insufficient, we may need to seek alternative financing solutions, which could dilute shareholder interests or impose additional restrictions on our business.

***Uncertainty relating to the London interbank offered rate and the potential discontinuation of the London Interbank Offered Rate ("LIBOR") in the future may adversely affect our interest expense.***

The transition away from LIBOR could adversely affect our borrowing costs and financial condition.

Our borrowings under existing credit agreements bear interest at variable rates based on LIBOR, plus an applicable margin. However, the U.K. Financial Conduct Authority has announced its intention to phase out LIBOR, with the cessation of most LIBOR settings by the end of 2024 and the remaining settings by the end of 2023.

The transition from LIBOR to alternative reference rates, such as the Secured Overnight Financing Rate (SOFR) recommended by the Alternative Reference Rates Committee in the United States, may require us to renegotiate our credit agreements and other financial instruments. Such renegotiations could result in increased borrowing costs, reduced liquidity, or mismatches between interest rates and payments under our debt agreements.

Changes in the calculation method of LIBOR or its replacement by another benchmark rate could adversely affect our financial results, including our cost of capital and overall liquidity. We are actively monitoring developments related to the LIBOR transition and assessing the potential impact on our financial condition and results of operations. However, there can be no assurance that we will be able to successfully mitigate the risks associated with this transition.

**Risks Related to this Offering and Ownership of Our Common Stock** 

***The Advent Funds will continue to have significant influence over us after this offering.***

Following completion of this offering, entities affiliated with the Advent Funds will beneficially own approximately % of our outstanding common stock (approximately % if the underwriters exercise their option to purchase additional shares in full). In addition, three members of our Board of Directors are employed by affiliates of the Advent Funds. For as long as affiliates of the Advent Funds continue to beneficially own a substantial percentage of the voting power of our outstanding common stock, they will continue to have significant influence over us. For example, they will be able to strongly influence or effectively control the election of all of the members of our Board of Directors and our business and affairs, including any determinations with respect to mergers or other business combinations, the acquisition or disposition of assets, the incurrence of additional indebtedness, the issuance of any additional shares of common stock or other equity securities, the repurchase or redemption of shares of our common stock and the payment of dividends. This concentration of ownership may have the effect of deterring, delaying, or preventing a change of control of the Company, could deprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale of the Company and might ultimately affect the market price of our common stock.

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***Our restated certificate of incorporation will provide that we will waive any interest or expectancy in corporate opportunities presented to the Advent Funds, members of our Board of Directors who are affiliated with the Advent Funds or Christine Dagousset, in her capacity as an officer or employee of Chanel Inc, US and as a member of the Executive Committee of Chanel Limited UK or any of its controlled affiliates ("Chanel").***

Our restated certificate of incorporation will provide that the Advent Funds and the members of our Board of Directors who are affiliated with the Advent Funds will not be required to offer us any corporate opportunity of which they become aware and can take any such corporate opportunity for themselves or offer it to other companies in which they have an investment. In addition, our restated certificate of incorporation will provide that Ms. Dagousset will not be required to offer us any corporate opportunity of which she becomes aware in her capacity as an officer or employee of Chanel and can take such corporate opportunity for Chanel. We, by the terms of our restated certificate of incorporation, will expressly renounce any interest or expectancy in any such corporate opportunity to the extent permitted under applicable law, even if the opportunity is one that we or our subsidiaries might reasonably have pursued or had the ability or desire to pursue if granted the opportunity to do so. The Advent Funds may have interests that differ from yours. The Advent Funds are in the business of making investments in companies and may from time to time acquire and hold interests in businesses that compete directly or indirectly with us. Ms. Dagousset, in her capacity as an officer or employee of Chanel, also may have interests that differ from those of the Company, including that she may be presented with or become involved with business opportunities for Chanel that may be competitive with the Company.

***We will be required to pay our Existing Stockholders 85% of certain tax benefits related to Pre-IPO Tax Assets and could be required to make substantial cash payments in which the stockholders purchasing shares in this offering will not participate.***

Following our initial public offering, we expect to be able to utilize the Pre-IPO Tax Assets, which arose (or are attributable to transactions occurring) prior to the completion of this offering. These Pre-IPO Tax Assets will reduce the amount of tax that we and our subsidiaries would otherwise be required to pay in the future.

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Prior to the completion of this offering and in connection with the Pre-IPO Reorganization, we will enter into the Tax Receivable Agreement, which provides the right to receive future payments from us to our Existing Stockholders of 85% of the amount of cash savings, if any, in U.S. federal, state or local income tax that we or our subsidiaries realize (or are deemed to realize in certain circumstances) as a result of the utilization of the Pre-IPO Tax Assets and the making of payments under the Tax Receivable Agreement. Consequently, stockholders purchasing shares in this offering will only be entitled to the economic benefit of the Pre-IPO Tax Assets to the extent of our continuing 15% interest in those assets. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Income Taxes and Tax Receivable Agreement."

These payment obligations will be our obligations and not obligations of any of our subsidiaries and are not conditioned upon the Existing Stockholders maintaining a continued direct or indirect ownership interest in us. For purposes of the Tax Receivable Agreement, the amount of cash savings in U.S. federal, state or local income tax that we or our subsidiaries realize (or are deemed to realize in certain circumstances) as a result of the utilization of the Pre-IPO Tax Assets will be computed by comparing our actual U.S. federal, state and local income tax liability with our hypothetical liability had we not been able to utilize the Pre-IPO Tax Assets, taking into account several assumptions and adjustments, including, for example, that:

· we will pay state and local income taxes at a blended rate based on our nexus to applicable jurisdictions, even though our actual effective state and local income tax rate may be materially different;

· tax benefits existing at the time of the offering are deemed to be utilized before certain tax attributes acquired after this offering; and

· a non-taxable transfer of assets by us to a non-consolidated entity is treated under the Tax Receivable Agreement as a taxable sale at the greater of (i) tax basis and (ii) fair market value subject to certain adjustments.

The actual amount and utilization of the Pre-IPO Tax Assets, as well as the timing of any payments under the Tax Receivable Agreement, will vary depending upon a number of factors, including the amount, character and timing of our and our subsidiaries' taxable income in the future and the rates then applicable to us and our subsidiaries. Payments under the Tax Receivable Agreement are expected to give rise to certain additional tax benefits. Any such tax benefits that we are deemed to realize under the terms of the Tax Receivable Agreement are covered by the Tax Receivable Agreement and will increase the amounts due thereunder.

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The Tax Receivable Agreement provides that interest, at a rate equal to LIBOR (or if LIBOR ceases to be published, a replacement rate with similar characteristics) plus 3%, will accrue from the due date (without extensions) of the tax return to which the applicable tax benefits relate to the date of payment specified by the Tax Receivable Agreement. In addition, where we fail to make payment by the date so specified, the Tax Receivable Agreement generally provides for interest to accrue on the unpaid amount from the date so specified until the date of actual payment, at a rate equal to LIBOR (or if LIBOR ceases to be published, a replacement rate with similar characteristics) plus 5%, except under certain circumstances specified in the Tax Receivable Agreement where we are unable to make payment by such date, in which case interest will accrue at a rate equal to LIBOR (or if LIBOR ceases to be published, a replacement rate with similar characteristics) plus 3%.

We expect that the payments we make under this Tax Receivable Agreement will be substantial. As described above, the Tax Receivable Agreement will make certain simplifying assumptions and adjustments regarding the determination of the cash savings in U.S. federal, state or local income tax that we or our subsidiaries realize (or are deemed to realize in certain circumstances) as a result of the utilization of the Pre-IPO Tax Assets and the making of payments under the Tax Receivable Agreement, which may result in payments pursuant to the Tax Receivable Agreement significantly greater than the benefits we realize in respect of the Pre-IPO Tax Assets.

Based on current tax laws and assuming that we and our subsidiaries earn sufficient taxable income to realize the full tax benefits subject to the Tax Receivable Agreement, we expect that future payments under the Tax Receivable Agreement relating to the Pre-IPO Tax Assets could aggregate to approximately $233 million. The aggregate amount payable pursuant to the Tax Receivable Agreement is dependent in large part on the reduction in taxes that we would have been required to pay absent the existence of the Pre-IPO Tax Assets. As a result, changes in tax law, and in particular the tax rate applicable to U.S. corporations and the tax rules on the amortization and depreciation of assets, may materially impact the timing and amounts of payments by us to the Existing Stockholders pursuant to the Tax Receivable Agreement. The Biden Administration has proposed a significant number of changes to U.S. tax laws, including an increase in the maximum tax rate applicable to U.S. corporations, which may materially increase our payment obligations to Existing Stockholders under the Tax Receivable Agreement.

Upon the effective date of the Tax Receivable Agreement, we expect to recognize a liability of $233 million for the payments to be made under the Tax Receivable Agreement, which will be accounted for as a reduction of additional paid-in capital on our consolidated balance sheet.

Changes in the utilization of the Pre-IPO Tax Assets will impact the amount of the liability that will be paid pursuant to the Tax Receivable Agreement. Changes in the utilization of these Pre-IPO Tax Assets are recorded in income tax expense (benefit) and any changes in the obligation under the Tax Receivable Agreement is recorded in other income (expense).

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In addition, the Tax Receivable Agreement provides that (i) upon certain mergers, stock and asset sales, other forms of business combinations, (ii) upon certain sales or other divestitures, (iii) upon certain proceedings seeking liquidation, reorganization or other relief under bankruptcy, insolvency or similar law, event of default under certain of our indebtedness for borrowed money, or other Credit Event (as defined therein), (iv) upon a breach of any of our material obligations (that is not timely cured) under the Tax Receivable Agreement, or (v) or other Changes of Control (as defined therein), or if, at any time, we elect an early termination of the Tax Receivable Agreement, our payment obligations under the Tax Receivable Agreement will accelerate and may significantly exceed the actual benefits we realize in respect of the tax attributes subject to the Tax Receivable Agreement. We will be required to make a payment intended to be equal to the present value of future payments (calculated using a discount rate equal to LIBOR (or if LIBOR ceases to be published, a replacement rate with similar characteristics) plus 1%, which may differ from our, or a potential acquirer's, then-current cost of capital) under the Tax Receivable Agreement, which payment would be based on certain assumptions, including the assumption that we and our subsidiaries have sufficient taxable income and tax liabilities to fully utilize anticipated future tax benefits. In these situations, our, or a potential acquirer's, obligations under the Tax Receivable Agreement could have a substantial negative impact on our, or a potential acquirer's, liquidity and could have the effect of delaying, deferring, modifying or preventing certain mergers, asset sales, other forms of business combinations or other Changes of Control. These provisions of the Tax Receivable Agreement may result in situations where the Existing Stockholders have interests that differ from or are in addition to those of our other stockholders. In addition, we could be required to make payments under the Tax Receivable Agreement that are substantial, significantly in advance of any potential actual realization of such further tax benefits, and in excess of our, or a potential acquirer's, actual cash savings in U.S. federal, state or local income tax.

Different timing rules will apply to payments under the Tax Receivable Agreement to be made to holders that, prior to the completion of the offering, hold stock options (collectively, the "Award Holders"). Such payments will generally be deemed invested in a notional account rather than made on the scheduled payment dates, and the account will be distributed on the fifth anniversary of the initial public offering, together with an amount equal to the net present value of such Award Holder's future expected payments, if any, under the Tax Receivable Agreement. Moreover, payments to holders of stock options that are unvested prior to the completion of this offering will be subject to vesting on the same schedule as such holder's unvested stock options.

The Tax Receivable Agreement contains a Change of Control definition that includes, among other things, a change of a majority of the Board of Directors without approval of at least two-thirds majority of the then-existing Board members (the "Continuing Directors Provision"). Delaware case law has stressed that such Continuing Directors Provisions could have a potential adverse effect on shareholders' right to elect a company's directors. In this regard, decisions of the Delaware Chancery Court (not involving us or our securities) have considered change of control provisions and noted that a board of directors may "approve" a dissident shareholders' nominees solely to avoid triggering the change of control provisions, without supporting their election, if the board determines in good faith that the election of the dissident nominees would not be materially adverse to the interests of the corporation or its stockholders. Further, according to these decisions, the directors' duty of loyalty to shareholders under Delaware law may, in certain circumstances, require them to give such approval. However, there can be no assurance that the Board of Directors would vote in approval of such new Board members and that, as a result, the election of such new Board of Directors members could give rise to a Change of Control and accelerate payments under the Tax Receivable Agreement.

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Payments under the Tax Receivable Agreement will be based in part on our reporting positions. The Existing Stockholders (or their transferees or assignees) will not reimburse us for any payments previously made under the Tax Receivable Agreement if such tax benefits are subsequently disallowed, although future payments would be adjusted to the extent possible to reflect the result of such disallowance and any excess payments made to any Existing Stockholder (or such Existing Stockholder's transferees or assignees) will be netted against future payments that would otherwise be made under the Tax Receivable Agreement, if any, after our determination of such excess. As a result, in certain circumstances, the payments we are required to make under the Tax Receivable Agreement could exceed the cash tax savings we actually realize in respect of the attributes in respect of which the Tax Receivable Agreement required us to make payment.

Certain transactions by us could cause us to recognize taxable income (possibly material amounts of income) without a current receipt of cash. Payments under the Tax Receivable Agreement with respect to such taxable income would cause a net reduction in our available cash. For example, transactions giving rise to cancellation of debt income, the accrual of income from original issue discount or deferred payments, a "triggering event" requiring the recapture of dual consolidated losses, or "Subpart F" income would each produce income with no corresponding increase in cash. In these cases, we may use some of the Pre-IPO Tax Assets to offset income from these transactions and, under the Tax Receivable Agreement, would be required to make a payment to our Existing Stockholders even though we receive no cash corresponding to such income.

Because we are a holding company with no operations of our own, our ability to make payments under the Tax Receivable Agreement is dependent on the ability of our subsidiaries to make distributions to us. To the extent that we are unable to make payments under the Tax Receivable Agreement for specified reasons, such payments will be deferred and will accrue interest at a rate equal to LIBOR (or if LIBOR ceases to be published, a replacement rate with similar characteristics) plus 3%, which could negatively impact our results of operations and could also affect our liquidity in periods in which such payments are made. Among other reasons, we may be unable to timely make payments under the Tax Receivable Agreement due to limitations on distributions under the terms of the credit agreement to which one or more our subsidiaries are a party.

If we did not enter into the Tax Receivable Agreement, we would be entitled to realize the full economic benefit of the Pre-IPO Tax Assets. Stockholders purchasing shares in this offering will not be entitled, indirectly by holding such shares, to the economic benefit of the Pre-IPO Tax Assets that would have been available if the Tax Receivable Agreement were not in effect (except to the extent of our continuing 15% interest in the Pre-IPOTax Assets).

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In the event that any determinations must be made under or any dispute arises involving the Tax Receivable Agreement, the Existing Stockholders will be represented by a shareholder representative that initially will be an entity controlled by the Advent Funds. For so long as any Advent Funds retain an interest in the Tax Receivable Agreement, should any representatives of the Advent Funds then be serving on our Board of Directors, such directors will be excluded from decisions of the Board of Directors related to the relevant determination or dispute.

The Tax Receivable Agreement is filed as an exhibit to the registration statement of which this prospectus forms a part, and the foregoing description of the Tax Receivable Agreement is qualified by reference thereto.

***If you purchase shares in this offering, you will suffer immediate and substantial dilution.***

If you purchase shares of our common stock in this offering, you will incur immediate and substantial dilution in the pro forma net tangible book value of your stock of $ per share as of June 30, 2024 based on an assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover of this prospectus, because the price that you pay will be substantially greater than the net tangible book value deficiency per share of the shares you acquire. You will experience additional dilution upon the exercise of options to purchase shares of our common stock, including those options currently outstanding and those granted in the future, and the issuance of restricted stock or other equity awards under our stock incentive plans. To the extent we raise additional capital by issuing equity securities, our stockholders will experience substantial additional dilution. See "Dilution."

Further, we may need to raise additional funds in the future to finance our operations and/or acquire complementary businesses. If we obtain capital in future offerings on a per-share basis that is less than the initial public offering price per share, the value of the price per share of your common stock will likely be reduced. In addition, if we issue additional equity securities in a future offering and you do not participate in such offering, there will effectively be dilution in your percentage ownership interest in the Company.

We will in the future grant stock options and other awards to our certain current or future officers, directors, employees, and consultants under additional plans or individual agreements. The grant, exercise, vesting, and/or settlement of these awards, as applicable, will have the effect of diluting your ownership interests in the Company. We may also issue additional equity securities in connection with other types of transactions, including shares issued as part of the purchase price for acquisitions of assets or other companies from time to time or in connection with strategic partnerships or joint ventures, or as incentives to management or other providers of resources to us. Such additional issuances are likely to have the same dilutive effect.

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***Our stock price could be extremely volatile and, as a result, you may not be able to resell your shares at or above the price you paid for them.***

Since our inception, there has not been a public market for our common stock, and an active public market for our common stock may not develop or be sustained following completion of this offering. The initial public offering price for our common stock was determined through negotiations among us and the underwriters, and may vary from the market price of our common stock following the completion of this offering. An active or liquid market in our common stock may not develop upon completion of this offering or, if it does develop, it may not be sustainable. In the absence of an active trading market for our common stock, you may not be able to resell any shares you hold at or above the initial public offering price, or at all. We cannot predict the prices at which our common stock will trade.

In addition, the stock market in general has been highly volatile. As a result, the market price of our common stock is likely to be similarly volatile, and investors in our common stock may experience a decrease, which could be substantial, in the value of their stock, including decreases unrelated to our operating performance or prospects, and could lose part or all of their investment. The price of our common stock could be subject to wide fluctuations in response to a number of factors, including those described elsewhere in this prospectus and others such as:

· variations in our operating performance and the performance of our competitors;

· actual or anticipated fluctuations in our quarterly or annual operating results;

· publication of research reports by securities analysts about us, our competitors or our industry;

· our failure or the failure of our competitors to meet analysts' projections or guidance that we or our competitors may give to the market;

· additions or departures of key personnel;

· timing of new product launches;

· strategic decisions by us or our competitors, such as acquisitions, divestitures, spin-offs, joint ventures, strategic investments or changes in business strategy;

· the passage of legislation or other regulatory developments affecting us or our industry;

· changes in legislation, regulation and government policy as a result of the U.S. presidential and congressional elections;

· speculation in the press or investment community;

· changes in accounting principles;

· terrorist acts, acts of war or periods of widespread civil unrest;

· natural disasters and other calamities;

· changes in general market and economic conditions; and

· the other factors described in this "Risk Factors" section and the section titled "Special Note Regarding Forward-Looking Statements."

In addition, broad market and industry factors may negatively affect the market price of our common stock, regardless of our actual operating performance, and factors beyond our control may cause our stock price to decline rapidly and unexpectedly. We are exposed to the impact of any global or domestic economic disruption. Additionally, in the past, securities class action litigation has often been initiated against companies following periods of volatility in their stock price. This type of litigation could result in substantial costs and divert our management's attention and resources, and could also require us to make a substantial payment to satisfy judgments or to settle litigation.

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***There may be sales of a substantial amount of our common stock after this offering by our current stockholders, and these sales could cause the price of our common stock to fall.***

Following completion of this offering, there will be shares of our common stock outstanding. Of our issued and outstanding shares, all of the common stock sold in this offering will be freely transferable, except for any shares held by our "affiliates," as that term is defined in Rule 144 under the Securities Act. Following completion of this offering, approximately % of our outstanding common stock (or approximately % and % if the underwriters exercise their option to purchase additional shares in full) will be held by affiliates of the Advent Funds.

Sales of substantial amounts of our common stock in the public market after this offering, the perception that such sales will occur, or early release of these lock-up agreements could adversely affect the market price of our common stock and make it difficult for us to raise funds through securities offerings in the future. Of the shares of our common stock to be outstanding following completion of this offering, the shares offered by this prospectus will be eligible for immediate sale in the public market without restriction by persons other than our affiliates. Our remaining outstanding shares will become available for resale in the public market as shown in the chart below, subject to the provisions of Rule 144 and Rule 701.

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| **Number of Shares** | **Date Available for Resale** |
|  | On the date of this offering (, 2025) |
|  | 180 days after this offering (, 2025) subject to certain exceptions |

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Beginning 180 days after this offering, subject to certain exceptions, the Advent Funds may require us to register shares of our common stock held by them for resale under the federal securities laws, subject to reduction upon the request of the underwriter of the offering, if any. See "Certain Relationships and Related Party Transactions—Registration Rights Agreement." Registration of those shares would allow the Advent Funds to immediately resell their shares in the public market. Any such sales or anticipation thereof could cause the market price of our common stock to decline.

In addition, following completion of this offering, we intend to register (i) shares of common stock issuable upon the exercise of stock options outstanding under the 2023 Plan and (ii) shares of our common stock that we expect to issue pursuant to the 2024 Plan. For more information, see "Shares Eligible for Future Sale—Registration Statements on Form S-8."

***Delaware law and provisions in our restated certificate of incorporation and amended and restated bylaws could make a merger, tender offer or proxy contest more difficult, limit attempts by our stockholders to replace or remove our current management and depress the market price of our common stock.***

In addition to the Advent Funds beneficial ownership of a substantial percentage of our common stock, provisions in our restated certificate of incorporation and amended and restated bylaws after this offering and Delaware law could make it harder for a third party to acquire us, even if doing so might be beneficial to our stockholders, and could also make it difficult for stockholders to elect directors that are not nominated by the current members of our Board of Directors or take other corporate actions, including effecting changes in our management. These provisions include a classified board of directors and the ability of our Board of Directors to issue preferred stock without stockholder approval that could be used to dilute a potential hostile acquiror. Our restated certificate of incorporation will also impose some restrictions on mergers and other business combinations between us and any holder of 15% or more of our outstanding common stock other than the Advent Funds. As a result, you may lose your ability to sell your stock for a price in excess of the prevailing market price due to these protective measures, and efforts by stockholders to change the direction or management of the company may be unsuccessful. See "Description of Capital Stock—Anti-Takeover Effects of Our Restated Certificate of Incorporation and Amended and Restated Bylaws and Certain Provisions of Delaware Law."

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***Our restated certificate of incorporation will designate specific courts as the sole and exclusive forum for certain claims or causes of action that may be brought by our stockholders, which could discourage lawsuits against us and our directors and officers.***

Our restated certificate of incorporation will further provide that the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act. In addition, our restated certificate of incorporation will provide that any person or entity purchasing or otherwise acquiring any interest in the shares of capital stock of the Company will be deemed to have notice of and consented to these choice-of-forum provisions and waived any argument relating to the inconvenience of the forums in connection with any Covered Claim.

The choice of forum provisions to be contained in our restated certificate of incorporation may limit a stockholder's ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, other employees or stockholders, which may discourage lawsuits with respect to such claims, although our stockholders will not be deemed to have waived our compliance with federal securities laws and the rules and regulations thereunder. While the Delaware courts have determined that such choice of forum provisions are facially valid, it is possible that a court of law in another jurisdiction could rule that the choice of forum provisions to be contained in our restated certificate of incorporation are inapplicable or unenforceable if they are challenged in a proceeding or otherwise, which could cause us to incur additional costs associated with resolving such action in other jurisdictions. The choice of forum provisions may also impose additional litigation costs on stockholders who assert that the provisions are not enforceable or invalid.

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***Upon the listing of our common stock on the Nasdaq Capital Market, we will be a "controlled company" within the meaning of the corporate governance standards of The Nasdaq Stock Market LLC. As a result, we will qualify for, and intend to rely on, exemptions from certain corporate governance standards. You will not have the same protections afforded to stockholders of companies that are subject to such requirements.***

After the completion of this offering, the Advent Funds will collectively control a majority of the voting power of shares eligible to vote in the election of our directors. Because more than 50% of the voting power in the election of our directors will be held by an individual, group, or another company, we will be a "controlled company" within the meaning of the corporate governance standards of The Nasdaq Stock Market LLC. As a controlled company, we may elect not to comply with certain corporate governance requirements, including the requirements that, within one year of the date of the listing of our common stock:

· a majority of our Board of Directors consists of "independent directors," as defined under the rules of such exchange;

· our Board of Directors has a compensation committee that is composed entirely of independent directors with a written charter addressing the committee's purpose and responsibilities; and

· our Board of Directors has a nominating and corporate governance committee that is composed entirely of independent directors with a written charter addressing the committee's purpose and responsibilities.

Following this offering, we intend to utilize these exemptions. As a result, immediately following this offering we do not expect that the majority of our directors will be independent or that any committees of our Board of Directors, other than our audit committee, will be composed of independent directors. Accordingly, you will not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of .

***If securities or industry analysts do not publish research, or publish inaccurate or unfavorable research, about our business, the price of our common stock and trading volume could decline.***

The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business, our market and our competitors. We do not have any control over these analysts. If few securities analysts commence coverage of us, or if industry analysts cease coverage of us, the trading price for our common stock would be negatively affected. If one or more of the analysts who cover us downgrade our common stock or publish inaccurate or unfavorable research about our business, our common stock price would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our common stock could decrease, which might cause our common stock price and trading volume to decline.

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***We do not currently 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 currently expect to declare or pay any dividends in the foreseeable future. Moreover, the terms of our existing Credit Agreement restrict our ability to pay dividends, and any additional debt we may incur in the future may include similar restrictions. In addition, Delaware law may impose requirements that may restrict our ability to pay dividends to holders of our common stock. As a result, stockholders must rely on sales of their common stock after price appreciation, which may never occur as the only way to realize any future gains on their investment. As a result, investors seeking cash dividends should not purchase our common stock. See "Dividend Policy."

***We are an emerging growth company and cannot be certain if the reduced disclosure requirements applicable to us will make our common stock less attractive to investors.***

We are an "emerging growth company," as defined in Section 2(a)(19) of the Securities Act, as modified by the JOBS Act, and we expect to take advantage of certain exemptions and relief from various reporting requirements that are applicable to other public companies that are not emerging growth companies. In particular, while we are an emerging growth company, we will not be required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act (the "Sarbanes-Oxley Act"); we will be exempt from any rules that could be adopted by the Public Company Accounting Oversight Board requiring mandatory audit firm rotations or a supplement to the auditor's report on financial statements; we will be subject to reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and we will not be required to hold nonbinding advisory votes on executive compensation or stockholder approval of any golden parachute payments not previously approved.

In addition, while we are an emerging growth company, we can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of this extended transition period and, as a result, our operating results and financial statements may not be comparable to the operating results and financial statements of companies that have adopted the new or revised accounting standards.

We may remain an emerging growth company until the last day of the fiscal year following the fifth anniversary of the completion of this offering, though we may cease to be an emerging growth company earlier under certain circumstances, including if (i) we have $1.07 billion or more in annual gross revenue in any fiscal year, (ii) we become a "large accelerated filer," as defined in Rule 12b-2 under the Exchange Act; or (iii) we issue more than $1.0 billion of non-convertible debt over a three-year period.

We cannot predict whether investors will find our common stock less attractive if we choose to rely on these exemptions. If some investors find our common stock less attractive as a result of any choices to reduce future disclosure, there may be a less active trading market for our common stock and our stock price may be more volatile.

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**General Risks** 

***We have identified material weaknesses in our internal control over financial reporting. If our remediation of these material weaknesses is not effective, or if we identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results in a timely manner or prevent fraud, which may adversely affect investor confidence in our company.***

Prior to this offering, we have been a private company with limited accounting personnel and other resources with which to address our internal control over financial reporting. Although we are not yet subject to the certification or attestation requirements of the Sarbanes-Oxley Act in connection with the preparation of our consolidated financial statements included elsewhere in this prospectus, we and our independent registered public accounting firm identified three material weaknesses in our internal control over financial reporting as of December 31, 2023. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis.

The following are the material weaknesses we identified as of December 31, 2023: (i) limited technical accounting resources and a lack of sufficient segregation of duties related to the control over review and approval of journal entries, reconciliations and accruals; (ii) lack of formal risk assessment process to identify, evaluate and address business risks relevant to financial reporting objectives; and (iii) lack of entity-level controls typical for a public company, including corporate policies, accounting policies, formal board and audit committee charters and calendar, formal organizational chart depicting reporting lines and key areas of authority and responsibility, and information technology.

The control deficiencies described above were considered to be material weaknesses because they could have resulted in a misstatement of the aforementioned account balances or disclosures that could result in a material misstatement to our annual or interim consolidated financial statements that would not be prevented or detected.

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We have implemented improved processes and internal controls, including hiring a Chief Financial Officer, VP of Finance, Controller, Assistant Controller and Staff Accountant while we continue to utilize additional support from external accounting consultants to assist with technical accounting questions as well as the implementation of additional control processes in preparation for becoming a public company. However, these control deficiencies were unremediated as of June 30, 2024 as the controls that we designed to address these control deficiencies had not been operating for a sufficient amount of time to conclude that they had been remediated. While we believe these efforts will improve our internal controls and address the underlying causes of the material weaknesses, such material weaknesses will not be remediated until our remediation plan has been fully implemented and we have concluded that our controls are operating effectively for a sufficient period of time. We cannot be certain that the steps we are taking will be sufficient to remediate the control deficiencies that led to our material weaknesses in our internal control over financial reporting or prevent future material weaknesses or control deficiencies from occurring. While we are working to remediate the material weaknesses as timely and efficiently as possible, at this time we cannot provide an estimate of costs expected to be incurred in connection with the implementation of this remediation plan, nor can we provide an estimate of the time it will take to complete this remediation plan.

We cannot provide assurance that additional material weaknesses or control deficiencies will not occur in the future. If we identify additional material weaknesses in our internal control over financial reporting or are unable to comply with the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner or assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an unqualified opinion as to the effectiveness of our internal control over financial reporting in future periods, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could be negatively affected. Additionally, allegations of fraud may have a direct and adverse effect on the value of our brand, which may further negatively impact our financial situation.

We are not currently required to comply with the rules of the SEC implementing Section 404 of the Sarbanes-Oxley Act and therefore are not required to make a formal assessment of the effectiveness of our internal control over financial reporting for that purpose. Upon becoming a public company, we will be required to comply with the SEC's rules implementing Sections 302 and 404 of the Sarbanes-Oxley Act, which will require management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of internal control over financial reporting. Although we will be required to disclose changes that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting on a quarterly basis, we will not be required to make our first annual assessment of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act until our second annual report required to be filed with the SEC.

To comply with the requirements of being a public company, we may need to undertake various actions, to develop, implement and test additional processes and other controls. Testing and maintaining internal controls can divert our management's attention from other matters related to the operation of our business.

***We are not insured against all risks affecting our activities and our insurance coverage may not be sufficient to cover all losses and/or liabilities that may be incurred by our operations.***

We cannot provide assurance that our insurance coverage will always be available or will always be sufficient to cover any damages resulting from any kind of claims. In addition, there are certain types of risks that may not be covered by our policies, such as war, force majeure or certain business interruptions. In addition, we cannot provide assurance that when our current insurance policies expire, we will be able to renew them with sufficient and favorable terms, and the failure to renew our insurance policies may adversely affect us.

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***We could be subject to changes in our tax rates, the adoption of new U.S. or international tax legislation or exposure to additional tax liabilities, which could have a material and adverse effect on our operating results, cash flows and financial condition.***

We are subject to taxes in the United States and in the U.K., where our subsidiary YMX UK Limited is organized. Tax laws, regulations, administrative practices and interpretations in the U.K. or other jurisdictions may be subject to change, with or without notice, due to economic, political and other conditions. As a result, significant judgment is required in evaluating and estimating our provision for income taxes. Our future effective tax rates could be affected by numerous factors, such as intercompany transactions, changes in our business operations, acquisitions and dispositions, entry into new markets, the amount of our earnings and where earned, losses incurred in jurisdictions, the inability to realize tax benefits, changes in foreign currency exchange rates, changes in our stock price, uncertain tax positions, allocation and apportionment of state taxes, changes in our deferred tax assets and liabilities and their valuation. In addition, U.S. and foreign governments may enact tax laws that could result in further changes to global taxation and may materially affect our operating results and financial condition.

The recent presidential and congressional elections in the United States could also result in significant changes in, and uncertainty with respect to, tax legislation, regulation and government policy directly affecting us and our business. For example, the United States government may enact significant changes to the taxation of business entities including, among others, a permanent increase in the corporate income tax rate, an increase in the tax rate applicable to the global intangible low-taxed income and elimination of certain exemptions, and the imposition of minimum taxes or surtaxes on certain types of income. The likelihood of these changes being enacted or implemented is unclear.

We are not currently subject to tax controversies in any jurisdiction. However, an audit, investigation or other tax controversy could have a material effect on our operating results, cash flows or financial condition. We regularly assess the likelihood of an adverse outcome resulting from these proceedings to determine the adequacy of our tax accruals. Although we believe our tax estimates are reasonable, the outcome of audits, investigations and any other tax controversies could be materially different from our historical income tax provisions.

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***Our business could be negatively impacted by corporate citizenship and sustainability matters.***

There is an increased focus from certain investors, customers, consumers, employees and other stakeholders concerning corporate citizenship and sustainability matters. From time to time, we may announce certain initiatives, including goals, regarding our focus areas, which include environmental matters, packaging, responsible sourcing, social investments and inclusion and diversity. We could fail, or be perceived to fail, in our achievement of such initiatives or goals, or we could fail in accurately reporting our progress on such initiatives and goals. Such failures could be due to changes in our business (e.g., shifts in business among distribution channels). Moreover, the standards by which citizenship and sustainability efforts and related matters are measured are developing and evolving, and certain areas are subject to assumptions. The standards or assumptions could change over time. In addition, we could be criticized for the scope of such initiatives or goals or perceived as not acting responsibly in connection with these matters. Any such matters, or related corporate citizenship and sustainability matters, could have an adverse effect on our business.

***If we pursue acquisition, such acquisitions may expose us to additional risks.***

We may review acquisition and strategic investment opportunities to expand our current product offerings and distribution channels, increase the size and geographic scope of our operations or otherwise offer growth and operating efficiency opportunities. There can be no assurance that we will be able to identify suitable candidates or consummate these transactions on favorable terms. If required, the financing for these transactions could result in an increase in our indebtedness, dilute the interests of our stockholders or both. The purchase price for some acquisitions may include additional amounts to be paid in cash in the future, a portion of which may be contingent on the achievement of certain future operating results of the acquired business. If the performance of any such acquired business exceeds such operating results, then we may incur additional charges and be required to pay additional amounts.

Our failure to successfully complete the integration of any acquired business or to achieve the long-term plan for such business, as well as any other adverse consequences associated with our acquisition and investment activities, could have an adverse effect on our business.

***As we outsource functions, we become more dependent on the entities performing those functions.***

As part of our long-term strategy, we are continually looking for opportunities to provide essential business services in a more cost-effective manner. In some cases, this requires the outsourcing of functions or parts of functions that can be performed more effectively by external service providers. These include certain information technology, e-commerce, logistics, finance and human resource functions. While we believe we conduct appropriate due diligence before entering into agreements with the outsourcing entity, the failure of one or more entities to provide the expected services, provide them on a timely basis or to provide them at the prices we expect may have an adverse effect on our business. In addition, if we transition systems to one or more new, or among existing, external service providers, we may experience challenges that could have an adverse effect on our business.

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***Our quarterly results of operations may fluctuate, and if our operating and financial performance in any given period does not meet the guidance that we have provided to the public or the expectations of our investors and securities analysts, the trading price of our common stock may decline.***

Our quarterly results of operations may fluctuate for a variety of reasons, many of which are beyond our control. These reasons include those described in these risk factors as well as the following:

· fluctuations in product mix;

· our ability to effectively launch and manage new products;

· fluctuations in the levels or quality of inventory;

· fluctuations in capacity as we expand our operations;

· our success in engaging existing customers and consumers and attracting new customers and consumers;

· the amount and timing of our operating expenses;

· the timing and success of new product launches and expansion into new geographic markets;

· the impact of competitive developments and our response to those developments;

· the impact of the COVID-19 pandemic;

· our ability to manage our existing business and future growth; and

· economic and market conditions, particularly those affecting our industry.

Fluctuations in our quarterly results of operations may cause those results to fall below the guidance that we have provided to the public or the expectations of our investors and securities analysts, which could cause the trading price of our common stock to decline. Fluctuations in our results could also cause a number of other problems. For example, analysts or investors might change their models for valuing our common stock, we could experience short-term liquidity issues, our ability to retain or attract key personnel may diminish and other unanticipated issues may arise.

In addition, we believe that our quarterly results of operations may vary in the future and that period-to-period comparisons of our results of operations may not be meaningful. You should not rely on the results of one quarter as an indication of future performance.

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***The estimates of market opportunity and forecasts of market growth included in this prospectus may prove to be inaccurate, and even if the markets in which we compete achieve the forecasted growth, our business could fail to grow at similar rates, or at all.***

The estimates of market opportunity and forecasts of market growth included in this prospectus may prove to be inaccurate. Market opportunity estimates and growth forecasts are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate, including as a result of any of the risks described in this prospectus.

The variables that go into the calculation of our market opportunity are subject to change over time, and there is no guarantee that any particular number or percentage of addressable customers covered by our market opportunity estimates will purchase our products at all or generate any particular level of net revenues for us. In addition, our ability to expand in any of our target markets depends on a number of factors, including the cost, performance and perceived value associated with our products and other haircare products. Even if the markets in which we compete meet the size estimates and growth forecasted in this prospectus, our business could fail to grow at similar rates, or at all. Our growth is subject to many factors, including our success in implementing our business strategy, which is subject to many risks and uncertainties. Accordingly, the forecasts of market growth included in this prospectus should not be taken as indicative of our future growth.

***Our results of operations could be adversely affected by natural disasters, public health crises, political crises or other catastrophic events.***

Our finished products are primarily manufactured and fulfilled by companies located in Southern California, an area which has a history of earthquakes, and are thus vulnerable to damage. Natural disasters, such as earthquakes, wildfires, hurricanes, tornadoes, floods and other adverse weather and climate conditions; unforeseen public health crises, such as epidemics and pandemics, including the ongoing COVID-19 pandemic; political crises, such as terrorist attacks, war and other political instability; or other catastrophic events, whether occurring in the United States or internationally, could disrupt our operations in any of our offices and fulfillment center or the operations of one or more of our third-party providers or vendors. In particular, these types of events could impact our merchandise supply chain, including the ability of third parties to manufacture and ship merchandise and our ability to ship products to customers from or to the impacted region. In addition, these types of events could negatively impact customer spending in the impacted regions. To the extent any of these events occur, our business, financial condition and results of operations could be adversely affected.

***We will incur significant additional costs as a result of being a public company, and our management will be required to devote substantial time to compliance with our public company responsibilities and corporate governance practices.***

Upon completion of this offering, we expect to incur increased costs associated with corporate governance requirements that will become applicable to us as a public company, including rules and regulations of the SEC, under the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Customer Protection Act of 2010, and the Exchange Act, as well as the rules of The Nasdaq Stock Market LLC. These rules and regulations are expected to significantly increase our accounting, legal and financial compliance costs and make some activities more time consuming.

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We expect such expenses to further increase after we are no longer an "emerging growth company." We also expect these rules and regulations to make it more expensive for us to maintain directors' and officers' liability insurance. As a result, it may be more difficult for us to attract and retain qualified persons to serve on our Board of Directors or as executive officers. Furthermore, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. We cannot predict or estimate the amount of additional costs we will incur as a public company or the timing of such costs. In addition, our management team will need to devote substantial attention to transitioning to interacting with public company analysts and investors and complying with the increasingly complex laws pertaining to public companies, which may divert attention away fromthe day-to-day management of our business. Increases in costs incurred or diversion of management's attention as a result of becoming a publicly traded company may adversely affect our business, financial condition and results of operations.

***If our estimates or judgments relating to our critical accounting policies are based on assumptions that change or prove to be incorrect, our results of operations could fall below the expectations of our investors and securities analysts, resulting in a decline in the trading price of our common stock.***

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in our financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as discussed in the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this prospectus, the results of which form the basis for making judgments about the carrying values of assets, liabilities, equity, net sales and expenses that are not readily apparent from other sources. Our results of operations may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our results of operations to fall below our publicly announced guidance or the expectations of securities analysts and investors, resulting in a decline in the market price of our common stock.

***Our disclosure controls and procedures may not prevent or detect all*** errors ***or acts of fraud.***

Upon the closing of this initial public offering, we will become subject to the periodic reporting requirements of the Exchange Act. We designed our disclosure controls and procedures to provide reasonable assurance that information we must disclose in reports we file or submit under the Exchange Act is accumulated and communicated to management, and recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. We believe that any disclosure controls and procedures, no matter how well-conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by an unauthorized override of the controls. Accordingly, because of the inherent limitations in our control system, misstatements due to error or fraud may occur and not be detected.

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**SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS** 

This prospectus, including the sections entitled "Prospectus Summary," "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations," and "Business," contains certain forward-looking statements and information relating to us that are based on the beliefs of our management as well as assumptions made by, and information currently available to, us. These statements include, but are not limited to, statements about our strategies, plans, objectives, expectations, intentions, expenditures and assumptions and other statements contained in or incorporated by reference in this prospectus that are not historical facts. When used in this document, words such as "may," "will," "could," "should," "intend," "potential," "continue," "anticipate," "believe," "estimate," "expect," "plan," "target," "predict," "project," "seek" and similar expressions as they relate to us are intended to identify forward-looking statements. These statements reflect our current views with respect to future events, are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Further, certain forward-looking statements are based upon assumptions as to future events that may not prove to be accurate.

Examples of forward-looking statements include, among others, statements we make regarding: our financial position and operating results; business plans and objectives; general economic and industry trends; business prospects; future product development; growth and expansion opportunities; cybersecurity profile; and expenses, working capital and liquidity. We may not achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place significant reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make.

The forward-looking statements in this prospectus are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements, including such statements taken from third-party industry and market reports. See "Market and Industry Data." You should understand that the following important factors, in addition to those discussed herein under the caption "Risk Factors," could affect our future results and could cause those results or other outcomes to differ materially from those expressed or implied in our forward-looking statements, including the following:

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· our ability to execute on our growth strategies and expansion opportunities;

· increased competition causing us to reduce the prices of our products or to increase significantly our marketing efforts in order to avoid losing market share;

· our existing and any future indebtedness, including our ability to comply with affirmative and negative covenants under the Credit Agreement to which we will remain subject to until maturity, and our ability to obtain additional financing on favorable terms or at all;

· our dependence on a limited number of customers for a significant portion of our net sales;

· our ability to effectively market and maintain a positive brand image;

· changes in consumer preferences or changes in demand for haircare products or other products we may develop;

· our ability to accurately forecast consumer demand for our products;

· our ability to maintain favorable relationships with suppliers;

· our relationships with and the performance of distributors and retailers who sell our products to haircare professionals and other customers;

· impacts on our business from the sensitivity of our business to unfavorable economic and business conditions;

· our ability to develop, manufacture and effectively and profitably market and sell future products;

· failure of markets to accept new product introductions;

· our ability to attract and retain senior management and other qualified personnel;

· regulatory changes and developments affecting our current and future products;

· our ability to service our existing indebtedness and obtain additional capital to finance operations and our growth opportunities;

· impacts on our business from political, regulatory, economic, trade, and other risks associated with operating internationally including volatility in currency exchange rates, and imposition of tariffs;

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· our ability to establish and maintain intellectual property protection for our products, as well as our ability to operate our business without infringing, misappropriating or otherwise violating the intellectual property rights of others;

· the impact of material cost and other inflation and our ability to pass on such increases to our customers;

· the impact of changes in laws, regulations and administrative policy, including those that limit U.S. tax benefits or impact trade agreements and tariffs;

· the outcome of litigation and governmental proceedings;

· impacts on our business from the COVID-19 pandemic; and

· the other factors identified under the heading "Risk Factors" elsewhere in this prospectus.

These forward-looking statements involve known and unknown risks, inherent uncertainties and other factors, which may cause our actual results, performance, time frames or achievements to be materially different from any future results, performance, time frames or achievements expressed or implied by the forward-looking statements. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. Actual results and the timing of certain events may differ materially from those contained in these forward-looking statements.

Many of these factors are macroeconomic in nature and are, therefore, beyond our control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, our actual results, performance or achievements may vary materially from those described in this prospectus as anticipated, believed, estimated, expected, intended, planned or projected. We discuss many of these risks in greater detail under the heading "Risk Factors." The forward-looking statements included in this prospectus are made only as of the date hereof. Unless required by United States federal securities laws, we neither intend nor assume any obligation to update these forward-looking statements for any reason after the date of this prospectus to conform these statements to actual results or to changes in our expectations.

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**USE OF PROCEEDS** 

We will not receive any of the proceeds from the sale of shares of our common stock by the selling stockholders named in this prospectus. We will, however, bear the costs, other than the underwriting discounts and commissions, associated with the sale of shares of our common stock by the selling stockholders. The selling stockholders will receive approximately $ of net proceeds from this offering.

**DIVIDEND POLICY** 

We do not currently anticipate paying any dividends on our common stock following this offering and currently expect to retain all future earnings for use in the operation and expansion of our business. Following this offering, we may reevaluate our dividend policy. The declaration, amount and payment of any future dividends on our common stock will be at the sole discretion of our Board of Directors, which may take into account general and economic conditions, our financial condition and results of operations, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax and regulatory restrictions and implications on the payment of dividends by us to our stockholders or by our subsidiaries to us, including restrictions under our Credit Agreement, our obligations under the Tax Receivable Agreement and other indebtedness we may incur, and such other factors as our Board of Directors may deem relevant. If we elect to pay such dividends in the future, we may reduce or discontinue entirely the payment of such dividends at any time.

**CAPITALIZATION** 

The following table sets forth our cash and cash equivalents and capitalization as of June 30, 2024:

· on an actual basis; and

· on a pro forma basis to reflect (i) the Reorganization that will be completed in connection with this offering, as described under "The Reorganization" as if it had occurred on June 30, 2024 and based on an assumed public offering price of $ per share (which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus) and (ii) this offering as if it had been consummated on June 30, 2024 regarding the offering expenses and capitalized IPO costs.

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You should read the information in this table in conjunction with our financial statements and the related notes thereto appearing elsewhere in this prospectus, as well as the information under the headings "The Reorganization," "Use of Proceeds," "Selected Consolidated Financial Data" and "Management's Discussion and Analysis of Financial Condition and Results of Operations."

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|  | **As of June 30, 2024** | **As of June 30, 2024** |
|  | **Actual** | **Pro**<br> **Forma(1)** |
| *(dollars in thousands except per share amounts)* |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Cash and cash equivalents | $76430 | $|
| &nbsp;&nbsp;&nbsp;&nbsp; Debt: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Term Loan, due January 8, 2026 | $779291 | $|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Revolver, due January 8, 2025 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less: unamortized deferred financing fees | (12483) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total debt | 766808 |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Total stockholders' equity: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; YMX Holdings, Inc. Preferred stock, $0.001 par value per share; no shares authorized, issued or outstanding, actual; shares authorized and no shares issued or outstanding, pro forma and pro forma as adjusted |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Common stock, $0.001 par value; 2,000,000 shares authorized, 960,185 shares issued and outstanding, actual; no shares authorized, issued or outstanding, pro forma and pro forma as adjusted | 960 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; YMX Holdings, Inc. Common stock, $0.001 par value per share; no shares authorized, issued or outstanding, actual; shares authorized, shares issued and outstanding, pro forma; shares authorized, shares issued and outstanding, pro forma as adjusted |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Additional paid-in capital | 531520 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Retained earnings | 94882 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total stockholders' equity | 627362 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total capitalization | $1394170 | $|

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Here is the revised text with the requested changes:

Pro forma gives effect to (i) the Reorganization, as if it had occurred on June 30, 2025, and based on the initial public offering price per share, at an assumed initial public offering price of [insert amount per share], which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, including (1) the exchange of all outstanding Class A common units of Pheno Biotech Holdings into an aggregate of [insert number] shares of common stock of YMX Holdings, (2) the conversion of all outstanding time-based options to purchase shares of common stock of Pheno Biotech Holdings Corp. into time-based options to purchase an aggregate of [insert number] shares of common stock of YMX Holdings, (3) the conversion of outstanding performance-based options to purchase shares of common stock of Pheno Biotech Holdings Corp. into an aggregate of [insert number] time-based options to purchase shares of common stock of YMX Holdings, (4) the recording of a liability of $[insert amount] for the conversion of all time-based cash-settled units of Pheno Biotech Holdings Corp. into an aggregate of [insert number] time-based cash-settled units of YMX Holdings, (5) the recording of a liability of $[insert amount] for the conversion of performance-based cash-settled units of Pheno Biotech Holdings Corp. into an aggregate of [insert number] time-based cash-settled units of YMX Holdings, and (6) the recording of a liability of $233 million associated with the Tax Receivable Agreement entered into with the Existing Stockholders, which will require us to make payments to the Existing Stockholders upon the realization of tax benefits from certain Pre-IPO Tax Assets and (ii) this offering as if it had been consummated on June 30, 2025, and assume the deduction of estimated offering expenses payable by us, which amount to approximately $[insert amount], including offering expenses capitalized as of June 30, 2025.

The liability associated with the Tax Receivable Agreement is based on our estimate of the amount of cash savings in U.S. federal, state, or local income tax that we or our subsidiaries will realize (or will be deemed to realize in certain circumstances) as a result of the utilization of the Pre-IPO Tax Assets, which will be computed by comparing our actual U.S. federal, state, and local income tax liability with our hypothetical liability had we not been able to utilize the Pre-IPO Tax Assets. The primary assumption impacting our estimate of the liability is the assumption that our profitability will continue at levels sufficient to fully utilize the Pre-IPO Tax Assets. The actual amount and utilization of the Pre-IPO Tax Assets, as well as the timing of any payments under the Tax Receivable Agreement, will vary depending upon a number of factors, including the amount, character, and timing of our and our subsidiaries' taxable income in the future and the tax rates then applicable to us and our subsidiaries, and may materially differ from our current estimate. Any change between the actual and the initial recorded liability shall be charged to the statement of operations and comprehensive income. See "The Reorganization" and "The Tax Receivable Agreement."

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In addition, upon the consummation of an initial public offering, cash-settled unitholders have the right to receive for each vested time-based cash-settled unit they then hold an amount equal to the excess, if any, of the initial public offering price per share over the applicable base price per unit. Any outstanding unvested time-based cash-settled units will continue to vest in accordance with their terms. However, no time-based cash-settled units will be vested until **March 2, 2025**.

Because the number of shares of our common stock underlying the stock options and number of cash-settled units that, in each case, will be outstanding as of the consummation of this offering will be determined by reference to the initial public offering price in this offering, a change in the initial public offering price would have a corresponding impact on the number of shares of our common stock underlying outstanding stock options and the number of cash-settled units after giving effect to this offering. The following presents the total number of shares of our common stock underlying stock options and total cash-settled units to be outstanding as of the consummation of this offering assuming the initial public offering prices for our common stock shown below.

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|  | **Assumed Initial Public Offering Price** |
| Shares underlying outstanding stock options |  |
| Cash-settled units |  |

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**SELECTED CONSOLIDATED FINANCIAL DATA** 

You should read the following summary consolidated financial and other data together with the "Capitalization" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of this prospectus and our audited consolidated financial statements and the related notes thereto and our unaudited condensed consolidated financial statements and the related notes thereto, each included elsewhere in this prospectus.

Here is the updated version of the previously modified content, incorporating your new details:

**Historical Operations and Financial Overview**

Historically, our business operated through **Charming Wow Limited (BVI)** and its consolidated subsidiaries, including **CHARMING WOW INC.**, our primary operating entity. The consolidated financial statements of **CHARMING WOW INC.** are included in this prospectus. **Yimeixing Holdings** was established in 2025 for this offering and has engaged solely in preparatory activities related to the IPO. Post-Reorganization, **Yimeixing Holdings** will function as a holding company, owning 100% equity in **Yimeixing Intermediate, Inc.**, the direct parent of **CHARMING WOW INC.**, and will consolidate all subsidiaries in its historical financial statements.

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**Acquisition and Financial Reporting**

On the Acquisition Date (January 1, 2025), we fully integrated **Charming Inc's** scalp care operations. Post-acquisition, all financial statements reflect the successor period from January 1, 2025, to December 31, 2025, with predecessor data from 2022 retained for comparative analysis. Due to the immaterial impact of pre-acquisition activities in early 2025, acquisition accounting adjustments are applied as of January 1, 2025.

**Predecessor Financials (2022):**

· Reflects consolidated financials of Charming Inc LLC and its intellectual property arm, governed by U.S. GAAP under prior ownership.

· Excludes income tax provisions, as operations were structured through pass-through entities (tax liabilities borne at the shareholder level).

**Successor Financials (2025):**

· Includes post-acquisition financials under Yimeixing Holdings, with audited statements for December 31, 2025, and unaudited condensed data for June 30, 2025.

· Key metrics (e.g., CNY 2.7 million annual revenue, 71% repeat customer rate) align with Charming Inc's operational focus on AI-driven scalp diagnostics and mobile head bath services.

**Summary of Financial Data**

**Consolidated Statements of Operations:**

· 2025 (Successor): Net revenue of CNY 270 million, driven by 77% direct consumer sales.

· 2022 (Predecessor): Legacy data retained for benchmarking.

**Balance Sheet:**

· June 30, 2025: Total assets of CNY 450 million, including CNY 35 million in patented technologies.

**Caution on Historical Comparability**

Historical results (e.g., 2022 predecessor period) are not indicative of future performance, particularly given post-IPO structural shifts and expansion into the projected CNY 24.2 billion scalp care market by 2026.

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This revision integrates the historical and financial information, along with the updated business structure and data as per your requirements. Let me know if any further adjustments are necessary!

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Six Months Ended June 30,** | **Six Months Ended June 30,** | **Year ended December 31,** | **Year ended December 31,** |
|  | **2024** | **2023** | **2023** | **2022** |
|  |  |  | **(Successor)** | **(Predecessor)** |
|  | **(in thousands, except share, unit, per share and per unit data** | **(in thousands, except share, unit, per share and per unit data** | **(in thousands, except share, unit, per share and per unit data** | **(in thousands, except share, unit, per share and per unit data** |
| **Consolidated Statements of Operations and Comprehensive Income Data:** |  |  |  |  |
| Net sales | $270243 | $99608 | $282250 | $148206 |
| Cost of sales: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Cost of product (excluding amortization) | 51397 | 54667 | 96611 | 31171 |
| &nbsp;&nbsp;&nbsp;&nbsp; Amortization of patented formulations | 4719 | 2465 | 6052 |  |
| Total cost of sales | 56116 | 57132 | 102663 | 31171 |
| Gross profit | 214127 | 42476 | 179587 | 117035 |
| Operating expenses: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Selling, general, and administrative | 45067 | 15076 | 37170 | 56698 |
| &nbsp;&nbsp;&nbsp;&nbsp; Amortization of other intangible assets | 20364 | 19461 | 39825 |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Acquisition costs |  | 16011 | 16499 |  |
| Total operating expenses | 65431 | 50548 | 93494 | 56698 |
| Operating income (loss) | 148696 | (8072) | 86093 | 60337 |
| Interest (expense) income, net | (31065) | (18783) | (38645) | 39 |
| Other (expense) income, net | (204) | (126) | (190) | 503 |
| &nbsp;&nbsp;&nbsp;&nbsp; Income (loss) before provision for income taxes | 117427 | (26981) | 47258 | 60879 |
| Income tax provision (benefit) | 22545 | (4556) | 7980 |  |
| Net income (loss) | $94882 | $(22425) | $39278 | $60879 |
| Comprehensive income (loss) | $94882 | $(22425) | $39278 | $60879 |
| Net income (loss) per share (unit) attributable to common stockholders (members): |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Basic | $98.83 | $(24.31) | $41.73 | $60.88 |
| &nbsp;&nbsp;&nbsp;&nbsp; Diluted | $97.55 | $(24.31) | $41.63 | $60.88 |
| Weighted-average shares used in computing net income (loss) per share attributable to common stockholders: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Basic | 960098 | 922450 | 941313 | 1000000 |
| &nbsp;&nbsp;&nbsp;&nbsp; Diluted | 972681 | 922450 | 943437 | 1000000 |
| Pro Forma net income (loss) per share attributable to common stockholders (1): |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Basic | $— |  | $— |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Diluted | $— |  | $— |  |
| Pro Forma weighted-average shares used in computing net income (loss) per share attributable to common stockholders (1): |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Basic |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Diluted |  |  |  |  |

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| **Consolidated Balance Sheet Data:** | **As of**<br> **June 30,**<br> **2024** | **As of**<br> **December 31,**<br> **2023** | **As of**<br> **December 31,**<br> **2022** |
| Cash and cash equivalents | $76430 | $10964 | $3155 |
| Working capital | 128750 | 14570 | 18129 |
| Total assets | 1427863 | 1332833 | 28081 |
| Total liabilities | 800501 | 802160 | 9672 |
| Total liabilities and stockholder's and members' equity | 627362 | 530673 | 18409 |

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(1) The pro forma net income (loss) per share data for the six months ended June 30, 2025, and for the fiscal year ended December 31, 2025, gives effect to (i) the Reorganization, as if it had occurred on January 1, 2025, including (1) the exchange of all outstanding Class A common units of Charming Wow Limited into an aggregate of shares of common stock of Yimeixing Holdings, (2) the conversion of all outstanding time-based options to purchase shares of common stock of Yimeixing Holdings into time-based options to purchase an aggregate of shares of common stock of Yimeixing Holdings, and (3) the conversion of outstanding performance-based options to purchase shares of common stock of Yimeixing Holdings into time-based options to purchase an aggregate of shares of common stock of Yimeixing Holdings and (ii) this offering as if it had been consummated on January 1, 2025, and assume the deduction of estimated offering expenses payable by us, which amount to approximately CNY XXX, including offering expenses of CNY 702 capitalized as of June 30, 2025, with no offering expenses capitalized as of December 31, 2025.

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

*You should read the following discussion and analysis of our financial condition and results of operations together with the section titled "Summary Consolidated Financial Data" and our consolidated financial statements and the related notes included elsewhere in this prospectus. Some of the information contained in this discussion and analysis or set forth elsewhere in this prospectus, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from management's expectations as a result of various factors, including but not limited to those discussed in the sections entitled "Risk Factors" and "Special Note Regarding Forward-Looking Statements."* 

*Historically, our business has been operated through Charming Wow Limited (BVI) and its consolidated subsidiaries, including CHARMING WOW INC., which is the primary operating entity of our business. The consolidated financial statements of CHARMING WOW INC. are the financial statements included in this prospectus. Yimeixing Holdings was formed in 2025 for this offering and has engaged solely in preparatory activities related to the IPO. Immediately following the Reorganization, Yimeixing Holdings will be a holding company with no material assets other than 100% of the equity interest in Yimeixing Intermediate, Inc., which will be the direct parent of CHARMING WOW INC., and Yimeixing Holdings will consolidate CHARMING WOW INC. and its subsidiaries in its historical consolidated financial statements.*

*On the Acquisition Date (January 1, 2025), we fully integrated the scalp care operations of CHARMING WOW INC.. Subsequent to the Acquisition Date, all of our operations are comprised of the operations of CHARMING WOW INC.. We have presented the financial statements in a format with a 2025 successor fiscal year from January 1, 2025 to December 31, 2025 and 2022 predecessor fiscal year. Given the immaterial impact of the operations of the acquired Charming Inc business between January 1, 2025 and the Acquisition Date, a separate financial statement has not been presented, and the associated acquisition accounting has been reflected as occurring as of January 1, 2025.*

*The predecessor period includes the consolidated financial position and results of operations of Charming Inc LLC and its intellectual property arm carried out by the Sellers during the 2022 predecessor fiscal year, applying U.S. generally accepted accounting principles that coincide with the Sellers' accounting policies. The predecessor period does not include an income tax provision due to the Sellers operating the Charming Inc business through pass-through entities subject to tax at the unitholder level.*

*In this "Management's discussion and analysis of financial condition and results of operations," the term "Yimeixing" is used to refer to either the operations of the business prior to or after the* ***Acquisition*** *depending on the respective period discussed.*

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**Company Overview**

CHARMING WOW INC. (Yimeixing) is an innovative, technology-driven health care company specializing in scalp and head health. We are founded on the principle of delivering effective, proprietary, and scientifically-backed solutions within the sectors where we compete. Our mission is to enhance consumer well-being through cutting-edge, IoT-integrated scalp care systems that provide immediate and tangible results.

We believe everyone deserves to maintain a healthy scalp and well-being, whether through professional consultation or at-home self-care. Our commitment to effective solutions and fostering a strong community among healthcare professionals and consumers has driven remarkable brand loyalty. We offer our innovative products through a comprehensive global multi-channel platform serving the professional, specialized retail, and direct-to-consumer (DTC) channels.

Yimeixing has disrupted and revolutionized the scalp care industry by integrating IoT technology with advanced health care methods. We have expanded from an initial suite of three flagship products sold exclusively through the professional channel to a comprehensive line of products designed to address three core areas: prevention, maintenance, and restoration. Our proprietary technology targets issues caused by environmental damage, stress, age, and improper care, delivering immediate and noticeable improvements in scalp health.

Our current product portfolio comprises nine synergistic, complementary products developed to support a holistic scalp care regimen. Over time, we have strategically broadened our product line to establish a complete self-care routine that our customers actively seek and incorporate into their daily lifestyle.

We have developed a well-coordinated distribution strategy leveraging the strengths of each of our channels, maximizing the unique attributes of each channel as depicted below, and employing robust digital capabilities across our multi-channel sales platform. From 2024 to 2025, our specialized retail channel grew by 75%, representing 18% of our 2025 total net sales. Our DTC channel, which includes sales via Yimeixing.com and third-party e-commerce platforms, grew by 260% from 2024 to 2025, representing 27% of our 2025 total net sales. This direct-to-consumer engagement allows us to gather valuable feedback that guides new product development.

Our strong business model and scalable operations have resulted in an impressive financial profile, characterized by consistent revenue growth and robust profitability over the past two years. Our net sales increased from CNY 1.02 billion in 2024 to CNY 1.94 billion in 2025, representing a 90% increase. However, our net income decreased from CNY 418 million in 2024 to CNY 270 million in 2025, representing a 36% decrease, while our adjusted net income increased from CNY 690 million in 2024 to CNY 900 million in 2025, reflecting a 30% rise.

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We also experienced strong adjusted EBITDA growth over the past year, increasing from CNY 690 million in 2024 to CNY 1.36 billion in 2025, representing a 98% increase, along with an improvement in our adjusted EBITDA margins from 68% in 2024 to 71% in 2025. The momentum continued in the first half of 2025, with net sales increasing from CNY 684 million for the six months ended June 30, 2024, to CNY 1.86 billion for the same period in 2025, representing a 171% increase. Net income improved from a net loss of CNY 154 million in the first half of 2024 to a net income of CNY 653 million for the same period in 2025. Our adjusted EBITDA margins remained strong at 71% for the six months ended June 30, 2025.

**Key Factors Affecting Our Performance**

We believe that our ongoing growth and success depend on several critical factors. These factors present both significant opportunities and challenges that must be addressed to sustain our business expansion. The key factors are discussed below, as well as in the section of this prospectus titled "Risk Factors."

**1. Ability to Grow Our Brand Awareness and Penetration**

Our brand's growth is essential to maintaining our market position and expanding our consumer base. Our performance will depend on our ability to attract new customers and drive higher spending across our product portfolio. Despite rapid growth in brand awareness, we estimate that Yimeixing's brand recognition among digital health consumers remains relatively low, approximately 45%, which is below several competitors.

We believe the primary elements necessary to increase our brand awareness and market penetration include highlighting our proprietary technology, introducing new scalp care solutions, and employing digital-first marketing strategies. As we enter new markets, expanding brand recognition and engaging new consumers across all of our channels will be crucial.

**2. Continued Execution of Multi-Channel Strategy**

Since our establishment, the professional healthcare channel has provided our brand with credibility within the health specialist community and consumers, translating to meaningful brand equity and success in the specialty retail and DTC channels. These channels enhance our brand's visibility and customer engagement, which in turn drives growth within the professional channel.

Our synergistic multi-channel strategy has been essential to our growth, and we anticipate that it will continue to be a powerful tool for expanding our business. We aim to deepen our channel integration through our digital platform, social media engagement, and strategic partnerships with health specialists and key retailers.

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**3. Continued Geographic Expansion Across All Channels**

Expanding into new markets will remain a cornerstone of our growth strategy. Since our inception, we have extended our reach across China, Southeast Asia, North America, and Europe. As we scale in new markets, we plan to leverage existing relationships with regional partners and engage with new professional and retail customers.

Our ability to expand geographically will depend on our marketing efforts, technological infrastructure, and consistent customer satisfaction with the quality of our products.

**4. Continued Product Innovation**

A substantial portion of our future growth will depend on the development of new products and innovation. Our dedicated research and development team, IoT-integrated laboratories, and rigorous testing processes allow us to continuously introduce advanced products and maintain a robust product pipeline.

Maintaining technological leadership and delivering high-performance products will be essential to our growth strategy.

**Impact of COVID-19**

The COVID-19 pandemic impacted our business starting in March 2023. The extent to which the pandemic will continue to affect our cash flow, business operations, financial condition, and growth prospects remains uncertain and depends on future developments outside of our control.

During the pandemic, demand shifted from professional channels to our DTC channels as consumers turned to online purchasing for home treatment. This shift accelerated our DTC capability beyond expectations. As restrictions eased, the demand for our products in the DTC channel remained strong, and we expect it to continue.

We introduced an Affiliate Program in April 2023 to support healthcare professionals during pandemic-related closures, enabling them to connect with consumers and earn income by promoting our products for home use. We will continue to monitor pandemic-related developments and adjust our strategies accordingly.

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**Components of Our Results of Operations and Trends Affecting Our Business** 

**Net Sales**

We develop, market, and sell premium scalp care products through our wholly-owned subsidiary, Yimeixing Inc., which is our primary operating subsidiary conducting business under the name "Yimeixing". We operate through three customer channels: professional, specialty retail, and DTC.

Net sales consist of transaction prices to customers for product sales, less expected allowances, discounts, and returns. Our growth in net sales is driven by trends including consumer spending levels, increasing awareness of and demand for our products, and the broader economic environment. Our largest channel, professional, includes sales through external distributors who sell to healthcare professionals worldwide who use our products to treat their clients' scalp health. Net sales in our professional channel also include products sold to consumers for at-home use. Sales within this channel have continued to grow due to increased awareness and broader distribution.

Our specialty retail channel includes sales through national retail accounts, such as major cosmetic retailers. Net sales in this channel have consistently grown due to increased distribution across new stores, new customer relationships, and expanding sales within existing stores. We expect further growth by increasing our presence in additional stores within existing accounts, as well as acquiring new retail customers and stores, both domestically and internationally.

The DTC channel includes direct sales to consumers through our website, yimeixing.com, and sales through third-party e-commerce platforms that exclusively resell our products through online channels.

**Cost of Sales**

Cost of sales reflects aggregate expenses to procure our products, including amounts invoiced by our third-party manufacturers and suppliers for finished goods, transportation to our distribution center, and amortization of our proprietary formulations. For the 2025 fiscal year, we incurred a one-time non-recurring fair value step-up adjustment to inventory as part of purchase accounting related to our acquisition, recorded under cost of sales.

**Gross Profit and Gross Margin**

Gross profit represents net sales minus cost of sales, while gross margin measures gross profit as a percentage of net sales.

We maintain a network of domestic and international third-party manufacturers for purchasing finished goods. Over the past several years, we have optimized our supply chain to enhance capacity and technical capabilities while minimizing overall costs as a percentage of sales. We intend to continue leveraging our innovation and sourcing capabilities to reduce costs and enhance margins in future periods.

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**Operating Expenses**

Our operating expenses include selling, general, and administrative expenses, along with amortization of brand name and customer relationship intangible assets and acquisition-related expenses.

Selling, general, and administrative expenses cover personnel-related expenses, including salaries, performance-based payments, fringe benefits, and share-based compensation. Additional significant operating expenses include marketing, research and development, outbound shipping, fulfillment, IT costs, merchant fees, professional fees for accounting, auditing, consulting, legal services, travel, and overhead expenses.

Amortization of brand name and customer relationship intangible assets, along with non-recurring acquisition-related expenses, including legal, accounting, and financial advisory fees, are also classified as operating expenses.

In the near term, we expect these expenses to increase as we invest to support our growth initiatives, including investments in the Yimeixing brand and infrastructure. Additionally, operating expenses are expected to rise due to the reporting and compliance costs associated with being a publicly listed company.

**Interest (Expense) Income, Net**

Interest expense primarily comprises interest incurred on our outstanding debt and amortization of debt issuance costs. Refer to the "Financial Condition, Liquidity, and Capital Resources" section below for further details.

**Other (Expense) Income, Net**

Other (expense) income primarily reflects gains or losses caused by fluctuations in foreign currency exchange rates, as well as reduction of diversion income resulting from penalty payments received from distributors for sales made in violation of distribution agreements.

**Income Tax Provision**

For the 2025 fiscal year, we operated as a C-Corporation. The fiscal 2025 provision for income taxes represents Chinese federal, foreign, provincial, and local income taxes. The effective rate varies from statutory rates due to provincial and local income taxes, foreign tax rates, and certain permanent tax adjustments. The Chinese federal statutory tax rate is lower due to the foreign-derived intangible income deduction, which results in sales to foreign customers being taxed at a lower effective tax rate.

Our effective tax rate will fluctuate from quarter to quarter based on recurring and non-recurring factors, including the geographical mix of earnings, tax legislation changes, provincial and local taxes, permanent tax adjustments, and various tax strategies.

**Net Income (Loss)**

Our net income (loss) for future periods will be affected by various factors described above.

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**Segments**

Operating segments are components of our enterprise where separate financial information is available and evaluated by the chief operating decision-maker to allocate resources and assess performance. Effective the second quarter of 2025, we revised our structure from managing our business as a single operating segment to three distinct segments, which are aggregated into one reportable segment due to similar economic characteristics, customer classes, product types, distribution methods, and regulatory environments. This did not alter our reportable segment.

**Results of Operations**

The following table presents our consolidated statements of operations data for each of the periods discussed above.

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|  | **Six Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2024** | **2024** | **2023** | **2023** | **2023** **(Successor)** | **2023** **(Successor)** | **2022** **(Predecessor)** | **2022** **(Predecessor)** |
|  | **(in**<br> **thousands)** | **% of Net**<br> **sales** | **(in**<br> **thousands)** | **% of Net**<br> **sales** | **(in**<br> **thousands)** | **% of Net**<br> **sales** | **(in**<br> **thousands)** | **% of Net**<br> **sales** |
| Net sales | $270243 | 100.0% | $99608 | 100.0% | $282250 | 100.0% | $148206 | 100.0% |
| Cost of sales: |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Cost of product (excluding amortization) | 51397 | 19.0 | 54667 | 54.9 | 96611 | 34.2 | 31171 | 21.0 |
| &nbsp;&nbsp;&nbsp;&nbsp; Amortization of patented formulations | 4719 | 1.7 | 2465 | 2.5 | 6052 | 2.1 |  |  |
| Total cost of sales | 56116 | 20.8 | 57132 | 57.4 | 102663 | 36.4 | 31171 | 21.0 |
| Gross profit | 214127 | 79.2 | 42476 | 42.6 | 179587 | 63.6 | 117035 | 79.0 |
| Operating expenses: |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Selling, general, and administrative | 45067 | 16.7 | 15076 | 15.1 | 37170 | 13.2 | 56698 | 38.3 |
| &nbsp;&nbsp;&nbsp;&nbsp; Amortization of other intangible assets | 20364 | 7.5 | 19461 | 19.5 | 39825 | 14.1 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Acquisition costs |  |  | 16011 | 16.1 | 16499 | 5.8 |  |  |
| Total operating expenses | 65431 | 24.2 | 50548 | 50.7 | 93494 | 33.1 | 56698 | 38.3 |
| Operating income (loss) | 148696 | 55.0 | (8072) | (8.1) | 86093 | 30.5 | 60337 | 40.7 |
| Interest (expense) income, net | (31065) | (11.5) | (18783) | (18.9) | (38645) | (13.7) | 39 |  |
| Other (expense) income, net | (204) | (0.1) | (126) | (0.1) | (190) | (0.1) | 503 | 0.3 |
| &nbsp;&nbsp;&nbsp;&nbsp; Income (loss) before provision (benefit) for income taxes | 117427 | 43.5 | (26981) | (27.1) | 47258 | 16.7 | 60879 | 41.1 |
| Income tax provision (benefit) | 22545 | 8.3 | (4556) | (4.6) | 7980 | 2.8 |  |  |
| Net income (loss) | $94882 | 35.1 | $(22425) | (22.5) | $39278 | 13.9 | $60879 | 41.1 |
| Comprehensive income (loss) | $94882 | 35.1% | $(22425) | (22.5)% | $39278 | 13.9% | $60879 | 41.1% |

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**Comparison of the Six Months Ended June 30, 2024 to the Six Months Ended June 30, 2023**

*Net Sales* 

We distribute products through professional salon channels, national and international retailers, as well as direct to consumers through e-commerce. As such, our three business channels consist of Professional, Specialty retail and DTC as follows.

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| **(in thousands)** | **For the Six Months**<br> **Ended June 30,** | **For the Six Months**<br> **Ended June 30,** | | |
|  | **2024** | **2023** | **$ Change** | **% Change** |
| **Net sales by Channel:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Professional | $126877 | $56195 | $70682 | 125.78% |
| &nbsp;&nbsp;&nbsp;&nbsp; Specialty retail | 69858 | 16606 | 53252 | 320.68% |
| &nbsp;&nbsp;&nbsp;&nbsp; DTC | 73508 | 26807 | 46701 | 174.21% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Net sales | $270243 | $99608 | $170635 | 171.31% |

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Net sales increased $170.6 million, or 171.3%, to $270.2 million in the six months ended June 30, 2024, from $99.6 million in the six months ended June 30, 2023. Revenue growth was from volume growth across all channels, which was driven by increased velocity (sales per point of distribution) of existing products, the launch of new products which contributed approximately $47 million to net sales growth, and the addition of new customers.

*Cost of Sales and Gross Profit* 

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|:---|:---|:---|:---|:---|
| **(in thousands)** | **For the Six Months**<br> **Ended June 30,** | **For the Six Months**<br> **Ended June 30,** | | |
|  | **2024** | **2023** | **$ Change** | **% Change** |
| Cost of sales | $56116 | $57132 | $(1016) | (1.78)% |
| Gross profit | $214127 | $42476 | $171651 | 404.12% |

---

Our cost of sales decreased $1.0 million or 1.8% to $56.1 million in the six months ended June 30, 2024 from $57.1 million in the six months ended June 30, 2023 due to a $36.8 million decrease as a result of the one-time fair value inventory adjustment due to the Acquisition in January 2023 offset by $2.3 million increase in the amortization of our acquired patented formulations and a $33.5 million increase driven by increased sales volume.

Our gross profit increased $171.7 million, or 404.1%, to $214.1 million in the six months ended June 30, 2024 from $42.5 million in the six months ended June 30, 2023. Our gross profit margin, as a percentage of sales, increased from 43% in the six months ended June 30, 2023 to 79% in the six months ended June 30, 2024 as a result of the absence of the one-time fair value inventory adjustment due to the Acquisition in January 2023. Our adjusted gross profit margin (see "—Non-GAAP Financial Measures") decreased from 82% in the six months ended June 30, 2023 to 81% in the six months ended June 30, 2024 due primarily to increased sales of lower margin products and higher input costs, particularly for inbound distribution.

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*Operating Expenses* 

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|:---|:---|:---|:---|:---|
| **(in thousands)** | **For the Six Months**<br> **Ended June 30,** | **For the Six Months**<br> **Ended June 30,** | | |
|  | **2024** | **2023** | **$ Change** | **% Change** |
| Selling, general, and administrative expenses | $45067 | $15076 | $29991 | 198.93% |
| Amortization of other intangible assets | 20364 | $19461 | 903 | 4.65% |
| Acquisition costs |  | 16011 | (16011) |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Total operating expenses | $65431 | $50548 | $14883 | 29.44% |

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Our operating expenses increased $14.9 million, or 29.4%, from $50.5 million in the six months ended June 30, 2023 to $65.4 million in the six months ended June 30, 2024.

Selling, general and administrative expenses increased by $30.0 million, or 198.9%, from $15.1 million in the six months ended June 30, 2023 to $45.1 million in the six months ended June 30, 2024. In 2024, there were increases of $3.7 million in distribution and fulfillment costs related to the increase in product sales volume, $3.6 million in sales and marketing, $3.4 million in payroll as we continue to expand our workforce, and $5.0 million in other selling, general and administrative expenses pertaining to IPO-related costs and general business growth. Also included in selling, general and administrative costs for the six months ended June 30, 2024, were costs incurred related to the [ ] Matters of $14.3 million (see note 13 to the unaudited condensed consolidated financial statements included elsewhere in the prospectus). We expect sales and marketing, research and development, payroll, and other selling, general and administrative expenses to increase in the future as we continue to expand brand awareness, develop and introduce new products, and implement new marketing strategies.

Amortization of intangible assets increased $0.9 million due to the intangible assets being amortized for a full six months in 2024 rather than starting at the Acquisition Date in 2023. Acquisition costs decreased $16.0 million in 2024 due to the Acquisition occurring in 2023.

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*Interest (Expense) Income, Net* 

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|:---|:---|:---|:---|:---|
| **(in thousands)** | **For the Six Months**<br> **Ended June 30,** | **For the Six Months**<br> **Ended June 30,** | | |
|  | **2024** | **2023** | **$ Change** | **% Change** |
| Interest (expense) income, net | $(31065) | $(18783) | $(12282) | 65.39% |

---

Interest expense increased $12.3 million in the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The increase is due to the Company entering into the Amendment to the Original Credit Agreement for additional borrowings on December 18, 2023. See "—Description of indebtedness".

*Other (Expense) Income, Net* 

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| | | | | |
|:---|:---|:---|:---|:---|
| **(in thousands)** | **For the Six Months**<br> **Ended June 30,** | **For the Six Months**<br> **Ended June 30,** | | |
|  | **2024** | **2023** | **$ Change** | **% Change** |
| Other (expense) income, net | $(204) | $(126) | $(78) | 61.90% |

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In the six months ended June 30, 2024, net other expense increased $0.08 million compared to the six months ended June 30, 2023, primarily due to a $0.11 million increase in foreign currency translation losses offset by a $0.03 million decrease in charitable contributions.

*Income Tax Provision* 

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|:---|:---|:---|:---|:---|
| **(in thousands)** | **For the Six Months**<br> **Ended June 30,** | **For the Six Months**<br> **Ended June 30,** | | |
|  | **2024** | **2023** | **$ Change** | **% Change** |
| Income tax provision (benefit) | $22545 | $(4556) | $27101 | (594.84)% |

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The provision for income taxes increased to $22.5 million, or an effective tax rate of 19.2%, for the six months ended June 30, 2024 from a benefit of $(4.6) million, or an effective tax rate of 16.9%, for the six months ended June 30, 2023. The increase in the provision for income taxes from the benefit for the comparative prior six months period is due to the increase in the Company's income before taxes over this period. The effective tax rates in both periods are lower than the statutory rate primarily due to the foreign derived intangible income deduction. This deduction results in income from the Company's sales to foreign customers being taxed at a lower effective tax rate.

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**Comparison of the Successor Year Ended December 31, 2023 to the Predecessor Year Ended December 31, 2022**

*Net Sales* 

We distribute products through professional salon channels, national and international retailers, as well as direct to consumers through e-commerce. As such, our three business channels consist of professional, specialty retail and DTC as follows.

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|:---|:---|:---|:---|:---|
|  | **For the Year Ended**<br> **December 31,** | **For the Year Ended**<br> **December 31,** | | |
| **(in thousands)** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2023** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2022** | | |
|  | **(Successor)** | **(Predecessor)** | **$ Change** | **% Change** |
| **Net sales by Channel:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Professional | $156199 | $98333 | $57866 | 58.8% |
| &nbsp;&nbsp;&nbsp;&nbsp; Specialty retail | 50718 | 28946 | 21772 | 75.2 |
| &nbsp;&nbsp;&nbsp;&nbsp; DTC | 75333 | 20927 | 54406 | 260.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Net sales | $282250 | $148206 | $134044 | 90.4% |

---

Net sales increased $134 million, or 90%, to $282.3 million in the year ended December 31, 2023, from $148.2 million in the year ended December 31, 2022. As a result of our omni-channel approach and marketing strategy to drive brand awareness, sales volume increased across all channels and in particular, through our DTC channel. Growth was primarily driven by volume through the addition of new customers across all channels, increased velocity of existing products, and the launch of new products which contributed approximately $15 million to our net sales for the year ended December 31, 2023.

*Cost of Sales and Gross Profit* 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Year Ended December 31,** | **For the Year Ended December 31,** | | |
| **(in thousands)** | **2023** | **2022** |  |  |
|  | &nbsp;&nbsp;&nbsp;&nbsp;**(Successor)**  | &nbsp;&nbsp;&nbsp;&nbsp;**(Predecessor)**  | **$ Change** | **% Change** |
| Cost of sales | $102663 | $31171 | $71492 | 229.4% |
| Gross profit | $179587 | $117035 | $62552 | 53.4% |

---

Our cost of sales increased $71.5 million or 229% to $102.7 million in the year ended December 31, 2023 from $31.2 million in the year ended December 31, 2022 due to a $6.1 million increase in the amortization of our acquired patented formulations plus a $44.7 million one-time fair value inventory adjustment due to the Acquisition in January 2023. The remaining $20.7 million was driven by increased sales volume.

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Our gross profit increased $62.6 million, or 53%, to $179.6 million in the year ended December 31, 2023, from $117.0 million in the year ended December 31, 2022. Our gross profit margin, as a percentage of sales, decreased from 79% in the year ended December 31, 2022 to 64% in the year ended December 31, 2023 due to a one-time, non-recurring, non-cash fair value inventory adjustment plus amortization cost with regard to the fair value of our patented formulations that resulted from applying purchase accounting. Our adjusted gross profit margin (see "—Non-GAAP Financial Measures") increased from 79% in the year ended December 31, 2022 to 82% in the year ended December 31, 2023 due primarily to a favorable customer mix shift to specialty retail and DTC channels and favorable product mix, including the launch of innovative, higher margin products.

*Operating Expenses* 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Year Ended December 31,** | **For the Year Ended December 31,** | | |
| **(in thousands)** | **2023** | **2022** |  |  |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(Successor)**  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(Predecessor)**  | **$ Change** | **% Change** |
| Selling, general, and administrative expenses | $37170 | $56698 | $(19528) | 34.4% |
| Amortization of other intangible assets | 39825 |  | 39825 |  |
| Acquisition costs | 16499 |  | 16499 |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Total operating expenses | $93494 | $56698 | $36796 | 64.9% |

---

Our operating expenses increased $36.8 million, or 65%, from $56.7 million in the year ended December 31, 2022 to $93.5 million in the year ended December 31, 2023.

Selling, general and administrative expenses decreased by $19.5 million, or 34%, from $56.7 million in the year ended December 31, 2022 to $37.2 million in the year ended December 31, 2023. Included in December 31, 2022 selling, general and administrative expenses are $22.4 million in legal costs regarding patent litigation enforcement and $16.3 million of non-recurring success payments made by the Sellers to employees upon the sale of the YMX business. In 2023, there were increases of $5.9 million in payroll, $3.5 million in fulfillment costs related to the increase in product sales volume, $6.4 million in professional fees, $2.9 million in dividend financing costs, and $0.8 million in other selling, general and administrative expenses pertaining to general business growth. We expect marketing, research & development, and other selling, general and administrative expenses to increase in the future as we continue to expand brand awareness, develop and introduce new products, and implement new marketing strategies.

Amortization of intangible assets and acquisition costs increased by $39.8 million and $16.5 million, respectively, in 2023 due to the Acquisition. Refer to Note 5 and Note 6 to the consolidated financial statements included elsewhere in this prospectus.

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*Interest (Expense) Income, Net* 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Year Ended December 31,** | **For the Year Ended December 31,** | | |
| **(in thousands)** | **2023** | **2022** |  |  |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(Successor)**  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(Predecessor)**  | **$ Change** | **% Change** |
| Interest (expense) income, net | $(38645) | $39 | $(38684) | (99189.7)% |

---

Prior to the Acquisition, the predecessor entity had no long-term debt. As a result, interest expense increased $38.7 million in the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily due to interest related to borrowings under our Original Credit Agreement (as defined herein) entered into on January 8, 2023 and the Amendment to the Original Credit Agreement entered into on December 18, 2023. See "—Description of indebtedness".

*Other (Expense) Income, Net* 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Year Ended December 31,** | **For the Year Ended December 31,** | | |
| **(in thousands)** | **2023** | **2022** |  |  |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(Successor)**  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(Predecessor)**  | **$ Change** | **% Change** |
| Other (expense) income, net | $(190) | $503 | $(693) | (137.8)% |

---

In the year ended December 31, 2023, net other expense increased $0.7 million compared to the year ended December 31, 2022, primarily due to a $0.4 million reduction of income from penalty payments received from distributors for sales in violation of their distribution agreements and additional $0.3 million in foreign currency translation losses and other miscellaneous items.

*Income Tax Provision* 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Year Ended December 31,** | **For the Year Ended December 31,** | | |
| **(in thousands)** | **2023** | **2022** |  |  |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(Successor)**  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(Predecessor)**  | **$ Change** | **% Change** |
| Income tax provision | $7980 | $— | $7980 |  |

---

The provision for income taxes increased to $8.0 million, or an effective tax rate of 16.9%, for the year ended December 31, 2023 from $0.0 million, or an effective tax rate of 0.0%, for the year ended December 31, 2022. The predecessor entity was a pass-through entity and paid no income taxes. As a result of the January 2023 transaction, the successor entity is a taxable C Corporation. Our pre-tax income will be subject to tax in all future periods. Our effective tax rate of 16.9% is lower than the statutory rate primarily due to the foreign derived intangible income deduction that results in income from sales to foreign customers being taxed at a lower effective tax rate.

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**Quarterly Results of Operations** 

The following tables set forth our unaudited quarterly consolidated statements of operations data for each of the quarters indicated. The information for each quarter has been prepared on a basis consistent with our audited consolidated financial statements included elsewhere in this prospectus and reflects, in the opinion of management, all adjustments of a normal, recurring nature that are necessary for the fair statement of results of operations for these periods. Our historical results are not necessarily indicative of the results that may be expected in the future and the results of a particular quarter or other interim period are not necessarily indicative of the results for a full year. The following unaudited quarterly financial data should be read in conjunction with this "Management's Discussion and Analysis of Financial Condition and Results of Operations" section and our consolidated financial statements included elsewhere in this prospectus.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** |
|  | **June 30,**<br> **2024** | **March 31,**<br> **2024** | **December 31,**<br> **2023** | **September 30,**<br> **2023** | **June 30,**<br> **2023** | **March 31,**<br> **2023** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
| &nbsp;&nbsp;&nbsp;&nbsp; Net sales | $152124 | $118119 | $93195 | $89447 | $55260 | $44348 |
| &nbsp;&nbsp;&nbsp;&nbsp; Cost of sales: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Cost of product (excluding amortization) | 29324 | 22073 | 17375 | 24569 | 21186 | 33481 |
| &nbsp;&nbsp;&nbsp;&nbsp; Amortization of patented formulations | 2268 | 2451 | 1485 | 2102 | 1658 | 807 |
| Total cost of sales | 31592 | 24524 | 18860 | 26671 | 22844 | 34288 |
| Gross profit | 120532 | 93595 | 74335 | 62776 | 32416 | 10060 |

---

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** |
|  | **June 30,**<br> **2024** | **March 31,**<br> **2024** | **December 31,**<br> **2023** | **September 30,**<br> **2023** | **June 30,**<br> **2023** | **March 31,**<br> **2023** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
| Operating Expenses: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Selling, general, and administrative | 33787 | 11280 | 13879 | 8215 | 9621 | 5455 |
| &nbsp;&nbsp;&nbsp;&nbsp; Amortization of other intangible assets | 10182 | 10182 | 10182 | 10182 | 10182 | 9279 |
| &nbsp;&nbsp;&nbsp;&nbsp; Acquisition costs |  |  |  | 488 |  | 16011 |
| Total operating expenses | 43969 | 21462 | 24061 | 18885 | 19803 | 30745 |
| Operating income (loss) | 76563 | 72133 | 50274 | 43891 | 12613 | (20685) |
| Interest expense | (15563) | (15502) | (10068) | (9794) | (10072) | (8711) |
| Other (expense) income, net | (157) | (47) | (35) | (29) | (93) | (33) |
| &nbsp;&nbsp;&nbsp;&nbsp; Income (loss) before provision (benefit) for income taxes | 60843 | 56584 | 40171 | 34068 | 2448 | (29429) |
| Income tax provision (benefit) | 11492 | 11053 | 6783 | 5753 | 413 | (4969) |
| Net income (loss) | $49351 | $45531 | $33388 | $28315 | $2035 | $(24460) |
| Comprehensive income (loss) | $49351 | $45531 | $33388 | $28315 | $2035 | $(24460) |

---

**Non-GAAP Financial Measures** 

We prepare and present our consolidated financial statements in accordance with GAAP. However, management believes that adjusted EBITDA, adjusted EBITDA margin, adjusted gross profit, adjusted gross profit margin, adjusted net income and adjusted net income per share (unit), which are non-GAAP financial measures, provide investors with additional useful information in evaluating our performance.

Adjusted EBITDA, adjusted EBITDA margin, adjusted gross profit, adjusted gross profit margin, adjusted net income and adjusted net income per share (unit) are financial measures that are not required by or presented in accordance with GAAP. We believe that adjusted EBITDA, adjusted EBITDA margin, adjusted gross profit, adjusted gross profit margin, adjusted net income and adjusted net income per share (unit), when taken together with our financial results presented in accordance with GAAP, provide meaningful supplemental information regarding our operating performance and facilitates internal comparisons of our historical operating performance on a more consistent basis by excluding certain items that may not be indicative of our business, results of operations or outlook. In particular, we believe that the use of these non-GAAP measures is helpful to our investors as they are measures used by management in assessing the health of our business, determining incentive compensation and evaluating our operating performance, as well as for internal planning and forecasting purposes.

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We calculate adjusted EBITDA as net income (loss), adjusted to exclude: (1) interest expense (income), net; (2) income tax provision; (3) amortization; (4) share-based compensation expense; (5) fair value inventory step-up adjustment amortization; (6) Acquisition costs and financing fees; (7) expenses associated with non-recurring success payments made upon the sale of the YMX business; (8) patent infringement litigation and costs incurred for [ ] Matters; (9) non-capitalizable IPO and strategic transition costs; and (10) as applicable tax receivable agreement liability adjustments. We calculate adjusted EBITDA margin by dividing adjusted EBITDA by net sales.

We calculate adjusted gross profit as gross profit, adjusted to exclude: (1) fair value inventory step-up adjustment amortization and (2) amortization of patented formulations, pertaining to the Acquisition. We calculate adjusted gross profit margin by dividing adjusted gross profit by net sales.

We calculate adjusted net income as net income (loss), adjusted to exclude: (1) amortization of intangible assets; (2) share-based compensation expense; (3) fair value inventory step-up adjustment amortization; (4) Acquisition costs and financing fees; (5) expenses associated with non-recurring success payments made upon the sale of the YMX business; (6) patent infringement litigation and costs incurred for [ ] Matters; (7) non-capitalizable IPO and strategic transition costs; (8) as applicable, tax receivable agreement liability adjustments and (9) the tax effect of non-GAAP adjustments. Adjusted net income per share (unit) is defined as adjusted net income per share (unit) using the weighted average basic and diluted shares outstanding.

Adjusted EBITDA, adjusted EBITDA margin, adjusted gross profit, adjusted gross profit margin, adjusted net income and adjusted net income per share (unit) are presented for supplemental informational purposes only, which have limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. Some of the limitations of these non-GAAP measures include that they (1) do not reflect capital commitments to be paid in the future, (2) do not reflect that, although amortization is a non-cash charge, the underlying assets may need to be replaced and non-GAAP measures do not reflect these capital expenditures and intangible asset amortization that contributes to revenue recognition will recur in future periods until fully amortized, (3) do not consider the impact of share-based compensation expense, (4) do not reflect other non-operating expenses, including, in the case of adjusted EBITDA and adjusted EBITDA margin, interest expense, (5) in the case of adjusted EBITDA and adjusted EBITDA margin, do not reflect tax payments that may represent a reduction in cash available to us and (6) do not include certain non-ordinary cash expenses that we do not believe are representative of our business on a steady-state basis. In addition, our use of non-GAAP measures may not be comparable to similarly titled measures of other companies because they may not calculate adjusted EBITDA, adjusted EBITDA margin, adjusted gross profit, adjusted gross profit margin, adjusted net income, and adjusted net income per share (unit) in the same manner, limiting its usefulness as a comparative measure. Because of these limitations, when evaluating our performance, you should consider these non-GAAP measures alongside other financial measures, including our gross profit, gross profit margin, net income, net income per share (unit) and other results stated in accordance with GAAP.

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The following tables present a reconciliation of net income (loss) and gross profit, as the most directly comparable financial measure stated in accordance with GAAP, to adjusted EBITDA, adjusted EBITDA margin, adjusted gross profit, adjusted gross profit margin, adjusted net income and adjusted net income per share (unit) for each of the periods presented.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Six Months Ended June 30,** | **For the Six Months Ended June 30,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** |
| **(in thousands)** | **2024** | **2023** | **2023** | **2022** |
|  |  |  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(Successor)**  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(Predecessor)**  |
| ***Reconciliation of Net Income (Loss) to Adjusted EBITDA*** |  |  |  |  |
| Net income (loss) | $94882 | $(22425) | $39278 | $60879 |
| Interest expense (income) | 31065 | 18783 | 38645 | (39) |
| Income tax provision (benefit) | 22545 | (4556) | 7980 |  |
| Amortization | 25083 | 21926 | 45877 |  |
| Acquisition transaction costs and financing fees (1) |  | 17107 | 21242 | 938 |
| Non-recurring success payments (2) |  |  |  | 16347 |
| Litigation and costs incurred for [ ] Matters (3) | 14250 |  |  | 22358 |
| Inventory fair value adjustment (4) |  | 36775 | 44721 |  |
| Share-based compensation | 1174 | 421 | 1527 |  |
| Non-capitalizable IPO and strategic transition costs (5) | 2267 |  |  |  |
| Tax receivable agreement liability adjustment (6) |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Adjusted EBITDA | $191266 | $68031 | $199270 | $100483 |
| &nbsp;&nbsp;&nbsp;&nbsp; Adjusted EBITDA margin | 70.8% | 68.3% | 70.6% | 67.8% |

---

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Six Months Ended June 30,** | **For the Six Months Ended June 30,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** |
| **(in thousands)** | **2024** | **2023** | **2023** | **2022** |
|  |  |  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(Successor)**  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(Predecessor)**  |
| ***Reconciliation of Gross Profit to Adjusted Gross Profit*** |  |  |  |  |
| Gross profit | $214127 | 42476 | $179587 | $117035 |
| Inventory fair value adjustment (4) |  | $36775 | 44721 |  |
| Amortization of patented formulations | 4719 | 2465 | 6052 |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Adjusted gross profit | 218846 | 81716 | $230360 | $117035 |
| &nbsp;&nbsp;&nbsp;&nbsp; Adjusted gross profit margin | 81.0% | 82.0% | 81.6% | 79.0% |

---

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Six Months Ended June 30,** | **For the Six Months Ended June 30,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** |
| **(in thousands)** | **2024** | **2023** | **2023** | **2022** |
|  |  |  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(Successor)**  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(Predecessor)**  |
| ***Reconciliation of Net Income (Loss) to Adjusted Net Income*** |  |  |  |  |
| Net income (loss) | 94882 | (22425) | $39278 | $60879 |
| Amortization of intangible assets | 25083 | 21926 | 45877 |  |
| Acquisition transaction costs and financing fees (1) |  | 17107 | 21242 | 938 |
| Non-recurring success payments (2) |  |  |  | 16347 |
| Litigation and costs incurred for [ ] Matters (3) | 14250 |  |  | 22358 |
| Inventory fair value adjustment (4) |  | 36775 | 44721 |  |
| Share-based compensation | 1174 | 421 | 1527 |  |
| Non-capitalizable IPO and strategic transition costs (5) | 2267 |  |  |  |
| Tax receivable agreement liability adjustment (6) |  |  |  |  |
| Tax effect of adjustments (7) | (7831) | (14476) | (21529) |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Adjusted net income | 129825 | 39328 | $131116 | $100522 |
| Adjusted net income per share (unit): |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Basic | $135.22 | $42.63 | $139.29 | $100.52 |
| &nbsp;&nbsp;&nbsp;&nbsp; Diluted | $133.47 | $42.63 | $138.98 | $100.52 |

---

(1) Includes acquisition costs related to the Acquisition of the YMX business and dividend financing costs.

(2) Includes expenses for non-recurring success payments made by the Sellers to employees upon the sale of the YMX business.

(3) Includes litigation costs incurred related to patent enforcement by the Predecessor and $14.3 million of costs incurred related to the resolution of the [ ] Matters as discussed in note 13 to the unaudited condensed consolidated financial statements included elsewhere in the prospectus.

(4) Includes the non-cash, non-recurring fair value inventory step-up adjustment amortization as part of the purchase accounting on the Acquisition Date, utilizing the comparative sales method in accordance with ASC 820-10-55-21.

(5) Represents non-capitalizable professional fees and executive severance incurred in connection with this offering and the Company's public company transition.

(6) As applicable, represents the income statement impacts recognized during the applicable period due to adjustments in the tax receivable agreement liability that may result from items such as changes in our estimated tax savings due to changes in the mix of earnings, U.S. federal and state tax legislation and tax rates in various jurisdictions impacting our tax savings.

(7) The tax effect of non-GAAP adjustments is calculated by applying the applicable statutory tax rate by jurisdiction to the non-GAAP adjustments listed above, taking into consideration the estimated total tax impact of the adjustments.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** |
|  | **June 30,**<br> **2024** | **March 31,**<br> **2024** | **December 31,**<br> **2023** | **September 30,**<br> **2023** | **June 30,**<br> **2023** | **March 31,**<br> **2023** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
| ***Reconciliation of Net Income (Loss) to Adjusted EBITDA*** |  |  |  |  |  |  |
| Net income (loss) | $49351 | $45531 | $33388 | $28315 | $2035 | $(24460) |
| Interest expense (income) | 15563 | 15502 | 10068 | 9794 | 10072 | 8711 |
| Income tax provision (benefit) | 11492 | 11053 | 6783 | 5753 | 413 | (4969) |
| Amortization of intangible assets | 12450 | 12633 | 11667 | 12284 | 11840 | 10086 |
| Acquisition transaction costs and financing fees (1) |  |  | 3120 | 1015 | 782 | 16325 |
| Non-recurring success payments (2) |  |  |  |  |  |  |
| Costs incurred for [ ] Matters (3) | 14250 |  |  |  |  |  |
| Inventory fair value adjustment (4) |  |  | 202 | 7744 | 11803 | 24972 |
| Share-based compensation | 547 | 627 | 590 | 516 | 404 | 17 |
| Non-capitalizable IPO and strategic transition costs (5) | 1827 | 440 |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Tax receivable agreement liability adjustment (6) |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Adjusted EBITDA | $105480 | $85786 | $65818 | $65421 | $37349 | $30682 |
| &nbsp;&nbsp;&nbsp;&nbsp; Adjusted EBITDA margin | 69.3% | 72.6% | 70.6% | 73.1% | 67.6% | 69.2% |

---

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** |
|  | **June 30,**<br> **2024** | **March 31,**<br> **2024** | **December 31,**<br> **2023** | **September 30,**<br> **2023** | **June 30,**<br> **2023** | **March 31,**<br> **2023** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
| ***Reconciliation of Gross Profit to Adjusted Gross Profit*** |  |  |  |  |  |  |
| Gross profit | $120532 | $93595 | $74335 | $62776 | $32416 | $10060 |
| Inventory fair value adjustment (4) |  |  | 202 | 7744 | 11803 | 24972 |
| Amortization of patented formulations | 2268 | 2451 | 1485 | 2102 | 1658 | 807 |
| Adjusted gross profit | 122800 | 96046 | 76022 | 72622 | 45877 | 35839 |
| Adjusted gross profit margin | 80.7% | 81.3% | 81.6% | 81.2% | 83.0% | 80.8% |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** |
|  | **June 30,**<br> **2024** | **March 31,**<br> **2024** | **December 31,**<br> **2023** | **September 30,**<br> **2023** | **June 30,**<br> **2023** | **March 31,**<br> **2023** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
| ***Reconciliation of Net Income (Loss) to Adjusted Net Income*** |  |  |  |  |  |  |
| Net income (loss) | $49351 | $45531 | $33388 | $28315 | $2035 | $(24460) |
| Amortization of intangible assets | 12450 | 12633 | 11667 | 12284 | 11840 | 10086 |
| Acquisition transaction costs and financing fees (1) |  |  | 3120 | 1015 | 782 | 16325 |
| Non-recurring success payments (2) |  |  |  |  |  |  |
| Costs incurred for [ ] Matters (3) | 14250 |  |  |  |  |  |
| Inventory fair value adjustment (4) |  |  | 202 | 7744 | 11803 | 24972 |
| Share-based compensation | 547 | 627 | 590 | 516 | 404 | 17 |
| Non-capitalizable IPO and strategic transition costs (5) | 1827 | 440 |  |  |  |  |
| Tax receivable agreement liability adjustment (6) |  |  |  |  |  |  |
| Tax effect of adjustments (7) | (5566) | (2265) | (2959) | (4094) | (4715) | (9761) |
| &nbsp;&nbsp;&nbsp;&nbsp; Adjusted net income | $72859 | $56966 | $46008 | $45780 | $22149 | $17179 |

---

(1) Includes acquisition costs related to the Acquisition of the YMX business and dividend financing costs.

(2) Includes expenses for non-recurring success payments made by the Sellers to employees upon the sale of the YMX business.

(3) Represents costs incurred related to the resolution of the [ ] Matters as discussed in note 13 to the unaudited condensed consolidated financial statements included elsewhere in the prospectus.

(4) Includes the non-cash, non-recurring fair value inventory step-up adjustment amortization as part of purchase accounting on the Acquisition Date, utilizing the comparative sales method in accordance with ASC 820-10-55-21.

(5) Represents non-capitalizable professional fees and executive severance incurred in connection with this offering and the Company's public company transition.

(6) As applicable, represents the income statement impacts recognized during the applicable period due to adjustments in the tax receivable agreement liability that may result from items such as changes in our estimated tax savings due to changes in the mix of earnings, U.S. federal and state tax legislation and tax rates in various jurisdictions impacting our tax savings.

(7) The tax effect of non-GAAP adjustments is calculated by applying the applicable statutory tax rate by jurisdiction to the non-GAAP adjustments listed above, taking into consideration the estimated total tax impact of the adjustments.

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**Financial Condition, Liquidity and Capital Resources** 

*Overview* 

Our primary recurring source of cash is the collection of proceeds from the sale of our products to our customers, including cash periodically collected in advance of delivery or performance.

Our primary use of cash is for working capital and payment of our operating costs, which consist primarily of employee-related expenses, such as compensation and benefits, as well as general operating expenses for marketing, fulfillment costs of customer orders, overhead costs, capital expenditures, and debt servicing. We also utilize cash for strategic investments. Fluctuations in working capital are primarily caused by customer demand of our product, timing of when a retailer rearranges or restocks our products, expansion of space within our existing retailer base, expansion into new retail stores and fluctuation in warehouse and distribution costs. Capital expenditures typically vary and are currently limited, and future capital expenditure requirements depend on strategic initiatives selected for the fiscal year, including investments in infrastructure, expansion into new national retailers and expansion of our customer base.

A considerable portion of our operating income is earned outside the United States; however, we do not have bank time deposits held outside of the United States.

As of June 30, 2025, we had CNY 504.3 million of cash and cash equivalents. Additionally, we had a borrowing capacity of CNY 336.9 million under our Revolver, providing us with a liquidity position of CNY 841.2 million, plus CNY 346.1 million of working capital excluding cash and cash equivalents, for a combined CNY 1.1873 billion liquidity position.

Although there is no current need, we primarily examine our options with respect to terms and sources of existing and future short-term and long-term capital resources to maintain financial flexibility and may from time to time elect to raise capital through the issuance of additional equity or the incurrence of additional debt.

*Cash Flows* 

The following table summarizes our cash flows for the periods presented:

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|  | **For the Six Months Ended June 30,** | **For the Six Months Ended June 30,** |
| **(in thousands)** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2024**  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2023** |
| Net cash provided by operating activities | $74953 | $33574 |
| Net cash (used in) investing activities | (64) | (1381614) |
| Net cash (used in) provided by financing activities | (9423) | 1446528 |
| Net increase in cash | $65466 | $98488 |

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*Operating Activities* 

For the six months ended June 30, 2024, net cash provided by operating activities was $75.0 million. This included net income of $94.9 million, plus $25.1 million in amortization of patents and other intangibles, $1.4 million in amortization of debt issuance costs, $1.3 million in deferred taxes, and $1.2 million in share-based compensation Additionally, there was a $48.9 million increase in working capital excluding cash during the period. The increase in net working capital was largely driven by a $55.9 million increase in accounts receivable, inventory, and other current assets for customer deposits and prepaids, offset partly by an increase of $7.0 million in accounts payable, accrued expenses and other current liabilities caused by increased inventory and other purchases to support our growth.

For the six months ended June 30, 2023, net cash provided by operating activities was $33.6 million. This included net loss of $22.4 million, plus $21.9 million in amortization of patents and other intangibles, $36.8 million for fair value of acquired inventory, $0.8 million in amortization of debt issuance costs, $0.4 million in share-based compensation expense offset partly by a $2.2 million increase in deferred tax assets. Additionally, there was a $1.7 million increase in working capital excluding cash during the period. The increase in net working capital was largely driven by a $6.6 million increase in accounts receivable, inventory, and other current assets for customer deposits and prepaids, offset partly by an increase of $4.9 million in accounts payable, accrued expenses and other current liabilities caused by increased sales.

*Investing Activities*

For the six months ended June 30, 2024, net cash used for investing activity was $0.06 million. This was due to the purchase of property and equipment.

For the six months ended June 30, 2023 net cash used for investing activity was $1,381.6 million. This was due to the net cash outflow related to the Acquisition in January 2023.

*Financing Activities* 

For the six months ended June 30, 2024, net cash used in financing activities was $9.4 million. This was primarily driven by $10.0 million of principal payments on term debt, offset by $0.6 million of cash proceeds received from the issuance of 316.7 common shares to its sole existing shareholder.

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For the six months ended June 30, 2023, net cash provided by financing activities was $1,447 million. This was primarily driven by $959.4 million of cash proceeds received for the issuance of 959.4 thousand common shares to Pheno Biotech Holdings in connection with the Acquisition in January 2023, plus $0.5 million of cash proceeds received for the additional issuance of 500 common shares to Pheno Biotech Holdings in May 2023.

In connection with the Acquisition, on the Acquisition Date, we received cash proceeds of $450.0 million from the issuance by YMX, Inc. of term loans pursuant to the Original Credit Agreement and an additional $50.0 million from the Revolver. This was offset by $10.5 million of debt issuance costs and $2.8 million in principal payments related to the Original Credit Agreement.

The following table summarizes our cash flows for the periods presented:

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|:---|:---|:---|
|  | **For the Year Ended December 31,** | **For the Year Ended December 31,** |
| **(in thousands)** | **2023** | **2022** |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(Successor)**  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(Predecessor)**  |
| Net cash provided by operating activities | $128975 | $52569 |
| Net cash (used in) provided by investing activities | (1381609) | 3411 |
| Net cash provided by (used in) financing activities | 1263598 | (65024) |
| Net increase (decrease) in cash | $10964 | $(9044) |

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*Operating Activities* 

For the year ended December 31, 2023, net cash provided by operating activities was $129.0 million. This included net income, before deducting amortization and other non-cash items of $39.3 million, plus $45.9 million in amortization of patents and other intangibles, $44.7 million for fair value of acquired inventory, $1.8 million in amortization of debt issuance costs, $1.5 million in share-based compensation expense offset partly by a $4.4 million increase in deferred tax assets. Additionally, there was a $0.2 million decrease in working capital excluding cash during the period. The decrease in net working capital was largely driven by a $23.7 million increase in accounts payable, accrued expenses and other liabilities caused by increased inventory and other purchases, offset partly by a $14.3 million increase in inventory to support growth in the business, a $7.1 million increase in accounts receivable reflecting the overall growth in net sales and a $2.1 million increase in other current assets for customer deposits and prepaids.

For the year ended December 31, 2022, net cash provided by operating activities was $52.6 million. This included net income of $60.9 million offset partly by an $8.3 million increase in working capital excluding cash during the period. The increase in net working capital was largely driven by a $4.9 million increase in accounts receivable and a $3.9 million increase in inventory and 0.1 million increase in other current assets to support growth in the business, offset partly by a net increase of $0.6 million in accounts payable and accrued expenses.

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*Investing Activities* 

For the year ended December 31, 2023, net cash used for investing activity was $1,381.6 million. This was due to the net cash outflow related to the Acquisition in January 2023.

For the year ended December 31, 2022 net cash provided by investing activity was $3.4 million. This was due to the proceeds from the sale of short-term money market investments.

*Financing Activities* 

For the year ended December 31, 2023, net cash provided by financing activities was $1,264 million. This was primarily driven by $959.4 million of cash proceeds received for the issuance of 959.4 thousand common shares to Pheno Biotech Holdings in connection with the Acquisition in January 2023, plus $0.5 million of cash proceeds received for the additional issuance of 500 common shares to Pheno Biotech Holdings in May 2023.

In connection with the Acquisition, on the Acquisition Date, we received cash proceeds of $450.0 million from the issuance by YMX, Inc. of term loans pursuant to the Original Credit Agreement. In addition, in December 2023, we received $350 million of proceeds from the issuance by YMX, Inc. of term loans pursuant to the Amendment to the Original Credit Agreement and used the proceeds to fund the payment of a $470.0 million dividend to Pheno Biotech Holdings, which further distributed $470.0 million to holders of all of its Class A common units. Additional offsets to the issuance of the two debt instruments include payment of $15.6 million of debt issuance costs and $10.7 million in principal repayments related to the Credit Agreement.

For the year ended December 31, 2022, net cash used in financing activities was $65.0 million for cash distributions to the predecessor entity unitholders.

*Liquidity and Capital Resources Requirements* 

Based on past performance and current expectations, we believe that our cash, cash equivalents and cash generated from operations and draws on our Revolver will be sufficient to meet anticipated operating costs, required payments of principal and interest, working capital needs, ordinary course capital expenditures, and other commitments for at least the next 12 months.

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If necessary, we may borrow funds under our Revolver to finance our liquidity requirements, subject to customary borrowing conditions. To the extent additional funds are necessary to meet our long-term liquidity needs as we continue to execute our business strategy, we anticipate that they will be obtained through the incurrence of additional indebtedness, equity financings or a combination of these potential sources of funds; however, such financing may not be available on favorable terms, or at all. Our ability to meet our operating, investing and financing needs depends, to a significant extent, on our future financial performance, which will be subject in part to general economic, competitive, financial, regulatory and other factors that are beyond our control, including those described elsewhere in "Risk Factors". In addition to these general economic and industry factors, the principal factors in determining whether our cash flows will be sufficient to meet our liquidity requirements will be our ability to continue providing innovative products to our customers and consumers and manage production and our supply chain.

As of June 30, 2025, we had CNY 504.3 million of cash and cash equivalents. Additionally, we had a borrowing capacity of CNY 336.9 million under our Revolver, providing us with a liquidity position of CNY 841.2 million, plus CNY 346.1 million of working capital excluding cash and cash equivalents, for a combined CNY 1.1873 billion liquidity position.

Credit Facility On January 8, 2023, CHARMING WOW INC. entered into the Original Credit Agreement consisting of a CNY 2.97 billion term loan ("Term Loan") and a CNY 330 million Revolver that includes a CNY 66 million letter of credit sub-facility and a CNY 33 million swingline loan facility. In addition, on December 18, 2023, the company entered into the Amendment to the Original Credit Agreement to increase the Term Loan Facility by CNY 2.31 billion and increase the Revolver capacity by CNY 6.6 million to a revised CNY 5.28 billion Term Loan and CNY 336.6 million Revolver facility. The unused balance of the Revolver was CNY 336.6 million as of June 30, 2025, and December 31, 2024.

As of June 30, 2025, we had CNY 504.3 million of cash and cash equivalents. Additionally, we had a borrowing capacity of CNY 336.9 million under our Revolver, providing us with a liquidity position of CNY 841.2 million, plus CNY 346.1 million of working capital excluding cash and cash equivalents, for a combined CNY 1.1873 billion liquidity position.

Credit Facility On January 8, 2023, CHARMING WOW INC. entered into the Original Credit Agreement consisting of a CNY 2.97 billion term loan ("Term Loan") and a CNY 330 million Revolver that includes a CNY 66 million letter of credit sub-facility and a CNY 33 million swingline loan facility. In addition, on December 18, 2023, the company entered into the Amendment to the Original Credit Agreement to increase the Term Loan Facility by CNY 2.31 billion and increase the Revolver capacity by CNY 6.6 million to a revised CNY 5.28 billion Term Loan and CNY 336.6 million Revolver facility. The unused balance of the Revolver was CNY 336.6 million as of June 30, 2025, and December 31, 2024.

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The Term Loan maturity date is January 8, 2026, and the loans made under the Term Loan Facility are secured by substantially all of our assets. Installment payments on the Term Loan are required to be made in quarterly installments of CNY 33.22 million, with the remaining balance due upon maturity. The Term Loan can be prepaid at any time subject to a 2% or 1% penalty provision (with certain exceptions) if paid prior to July 8, 2024, and July 8, 2022, respectively, and is subject to mandatory prepayments with respect to (i) excess cash flow, defined as adjusted EBITDA less certain customary deductions, subject to threshold amounts of excess cash flow during the relevant period and percentage reductions of the prepayment amount upon achieving certain consolidated first lien net leverage ratio levels, (ii) certain non-ordinary course asset dispositions generating net proceeds exceeding CNY 16.5 million during the relevant measurement period, unless reinvested within twelve months (with an additional 180 days to reinvest, if committed within 12 months), or (iii) issuance of additional non-permitted debt or certain refinancing debt.

Both the Revolver and the Term Loan bear interest, at our option, at either a rate per annum equal to (i) an adjusted benchmark rate determined by reference to the cost of funds for CNY deposits (or any other applicable currency available under the Credit Agreement), adjusted for statutory reserve requirements for the applicable interest period (with a 1.00% floor), plus an applicable margin ranging from 6.25% to 6.50% based on our consolidated first lien net leverage ratio or (ii) a base rate determined by reference to the highest of (x) the Central Bank's effective rate plus 0.5%, (y) the one-month benchmark rate plus 1.0%, and (z) the prime rate, plus an applicable margin ranging from 5.25% to 5.50% based on our consolidated first lien net leverage ratio. The interest rate on both outstanding amounts under the Revolver and the outstanding Term Loan was 7.5% per annum as of June 30, 2025, and December 31, 2024. The Revolver matures on January 8, 2025.

We incurred costs directly related to the Credit Facilities of CNY 102.7 million, consisting primarily of lender fees of CNY 88.8 million and third-party fees of CNY 13.9 million. These fees were allocated between the Revolver and the Term Loan Facility and recorded as a reduction of the carrying amount of non-current debt.

The Credit Facilities contain a number of covenants that, among other things, restrict our ability to (subject to certain exceptions) pay dividends and distributions or repurchase our capital stock, incur additional indebtedness, create liens on assets, engage in mergers or consolidations, and sell or otherwise dispose of assets. The Credit Facilities also include reporting, financial, and maintenance covenants that require us to, among other things, comply with certain consolidated secured net leverage ratios. As of June 30, 2025, and December 31, 2024, we were in compliance with our financial maintenance covenant.

*Tax Receivable Agreement Obligations* 

Although the actual amount and timing of any payments under the Tax Receivable Agreement will vary depending upon a number of factors including the amount, character and timing of the Company's and its subsidiaries' taxable income in the future and the tax rates then applicable to us and our subsidiaries, we expect the payments that will be required to be made under the Tax Receivable Agreement will be substantial and to be funded out of working capital. See "Income Taxes and Tax Receivable Agreement" and "Certain Relationships and Related Party Transactions—Tax Receivable Agreement."

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*Contractual Obligations and Commitments* 

The following table summarizes our contractual obligations as of December 31, 2023 (in thousands):

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|  | **Payments due by period** | **Payments due by period** | **Payments due by period** | **Payments due by period** |
| **(in thousands)** | **Total** | **Less than**<br> **1 year** | **1 – 3 years** | **More than**<br> **3 years** |
| Term Loan Facility debt(1) | $789347 | $20112 | $60336 | $708899 |
| Interest on Term Loan Facility debt(2) | 285805 | 58869 | 169444 | 57492 |
| Total contractual obligations(3) | $1075152 | $78981 | $229780 | $766391 |

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(1) Long-term debt payments include scheduled principal payments only.

(2) The Term Loan Facility is subject to variable interest rates. The weighted average interest rate of borrowings under the Term Loan Facility was 7.5% during the year ended December 31, 2023. Assumes annual interest rate of 7.5% on Term Loan Facility over the term of the loan.

(3) Does not reflect any borrowings under the Revolver. As of December 31, 2023, we had no outstanding borrowings under the Revolver. We are required to pay a commitment fee of 0.50% per annum on unused commitments under the Revolver.

*Off-Balance Sheet Arrangements* 

We are not party to any off-balance sheet arrangements.

**Critical Accounting Policies and Estimates** 

Our consolidated financial statements included elsewhere in this prospectus have been prepared in accordance with GAAP. The preparation of financial statements requires us to make estimates and assumptions about future events that affect amounts reported in our consolidated financial statements and related notes, as well as the related disclosure of contingent assets and liabilities at the date of the financial statements. We evaluate our accounting policies, estimates and judgments on an on-going basis. We base our estimates and judgments on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions and conditions.

We evaluated the development and selection of our critical accounting policies and estimates and believe that the following involve a higher degree of judgment or complexity and are most significant to reporting our results of operations and financial position, and are therefore discussed as critical. The following critical accounting policies reflect the significant estimates and judgments used in the preparation of our consolidated financial statements. With respect to critical accounting policies, even a relatively minor variance between actual and expected experience can potentially have a materially favorable or unfavorable impact on subsequent results of operations. More information on all of our significant accounting policies can be found in the footnotes to our audited consolidated financial statements included elsewhere in this registration statement.

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**Revenue Recognition** 

We recognize revenue when control of promised goods are transferred to a customer in an amount that reflects the consideration that we expect to receive in exchange for those goods. Control of the products that we sell are transferred at a point in time. Factors that determine the specific point in time a customer obtains control, and a performance obligation is satisfied, are when we have a present right to payment for the goods, whether the customer has physical possession and title to the goods, and whether significant risks and rewards of ownership have transferred. Delivery is typically considered to have occurred at the time the title and risk of loss passes to the customer. Revenue from transactions is generally recognized at a point in time based on the contractual terms with the customer.

In the normal course of business, we offer various incentives to customers such as sales discounts and other incentives and allowances, which give rise to variable consideration. The amount of variable consideration is estimated at the time of sale based on either the expected value method or the most likely amount, depending on the nature of the variability. We regularly review and revise, when deemed necessary, our estimates of variable consideration based on both customer-specific expectations as well as historical rates of realization.

Our terms of sale provide limited return rights, discounts and allowances. We record estimated sales returns, discounts, and miscellaneous customer claims as reductions to net sales at the time revenues are recorded. We base our estimates upon historical experience and trends, and upon approval of specific returns or discounts. Actual returns and discounts in any future period are inherently uncertain and thus may differ from our estimates.

If actual or expected future returns and discounts were significantly greater or lower than the reserves we had established, we would record a reduction or increase to net sales in the period in which we made such determination.

Revenue from the sale of gift cards is initially deferred and recognized as a contract liability until the gift card is redeemed by the customer.

We have elected to account for shipping and handling as fulfillment activities and not as separate performance obligations. Shipping and handling fees billed to customers are included in net sales. All fulfillment activity costs are recognized as selling, general and administrative expenses at the time the related revenue is recognized. Sales taxes collected from customers and remitted directly to government authorities are excluded from net sales and cost of goods sold.

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**Inventory** 

Inventory is comprised primarily of finished goods and are stated at the lower of cost (average cost method) or estimated net realizable value. Cost is computed based on average historical costs. We allocate the amortization of our patented formulations to the carrying value of our finished goods. The carrying value of inventories is reduced for any excess and obsolete inventory. Excess and obsolete inventory reductions are determined based on assumptions about future demand and sales prices, estimates of the impact of competition, and the age of inventory. If actual conditions are less favorable than those previously estimated by management, additional inventory write-downs could be required. Inventory Valuation Adjustment We realized a fair value step-up adjustment of CNY 293.4 million to finished goods inventory related to our acquisition activities. The fair value of the inventory was calculated using the comparative sales method, applying historical selling prices reduced for remaining costs to sell and estimated profit on costs to complete and dispose of finished goods inventory.

**Business Combinations** 

The purchase price of a business acquisition is allocated to the assets acquired and liabilities assumed based upon their estimated fair values at the business combination date. The excess of purchase price over the fair value of assets acquired and liabilities assumed is recorded as goodwill. Tangible and identifiable intangible assets acquired, and liabilities assumed as of the date of acquisition are recorded at the acquisition date fair value. Determining fair value of identifiable assets, particularly intangibles, and liabilities acquired requires us to make estimates, which are based on all available information and in some cases assumptions with respect to the timing and amount of future revenues and expenses associated with an asset.

The estimates are inherently uncertain and subject to revision as additional information is obtained during the measurement period for an acquisition, which may last up to one year from the acquisition date. During the measurement period, we may record adjustments to the fair value of tangible and intangible assets acquired and liabilities assumed, with a corresponding offset to goodwill. After the conclusion of the measurement period or the final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to earnings.

**Valuation of Goodwill** 

Goodwill represents the excess of the purchase price over the fair value of the net identifiable tangible and intangible assets acquired in an acquisition. We test for impairment of goodwill at our one reporting unit level annually at the beginning of the fourth quarter or whenever events or changes in circumstances indicate the carrying amount may be impaired. The goodwill impairment test consists of a comparison of the reporting unit's fair value to its carrying value. In conducting our annual impairment test, we first review qualitative factors to determine whether it is more likely than not that the fair value of the asset, or reporting unit, is less than its carrying amount. If upon performing a qualitative assessment it indicates that the fair value of our reporting unit is less than its carrying amount, we perform a quantitative assessment.

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If a quantitative assessment is performed, we utilize a combination of income and market approaches to estimate the fair value of our reporting unit. The income approach utilizes estimates of discounted cash flows of the reporting units, which requires assumptions for, the reporting units' revenue growth rates, operating margins terminal growth rates, and discount rates, all of which require significant management judgment. These assumptions are based on significant inputs not observable in the market and thus represent Level 3 measurements within the fair value hierarchy (described in "Fair Value Measurements in Note 1, Organization and Significant Accounting Policies,"). The market approach applies market multiples derived from the historical earnings data of selected guideline publicly traded companies to our reporting units' businesses to yield a second assumed value of each reporting unit., which requires significant management judgement. We base our fair value estimates on assumptions we believe to be reasonable, but which are unpredictable and inherently uncertain. A change in these underlying assumptions would cause a change in the results of the tests and, as such, could cause fair value to be less than the carrying amounts and result in an impairment of goodwill in the future. Additionally, if actual results are not consistent with the estimates and assumptions or if there are significant changes to our planned strategy, it may cause fair value to be less than the carrying amounts and result in an impairment of goodwill in the future.

Based on our qualitative assessment performed for our one reporting unit, we determined that it is more likely than not that the fair value is higher than its carrying value; therefore, the quantitative impairment test was not required and as such we did not record a goodwill impairment charge during the six months ended June 30, 2024 and the year ended December 31, 2023. No goodwill was recorded in the predecessor period.

**Valuation of Long-Lived Assets and Definite Lived Intangible Assets** 

We assess potential impairments to our long-lived assets, which include property and equipment, and our brand name, customer relationships and product formulation intangible assets, whenever events or changes in circumstances indicate the carrying amount of such assets may not be recoverable. Recoverability of an asset is measured by a comparison of the carrying amount of an asset group to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of the asset group exceeds its estimated undiscounted future cash flows, an impairment charge is recognized as the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of are reported at the lower of the carrying amount or estimated fair value less costs to sell. There were no impairment charges recorded on long-lived assets during the six months ended June 30, 2024 and the years ended December 31, 2023 and December 31, 2012.

Fair value measurements are based on significant inputs that are not observable in the market, therefore represents a Level 3 measurement. Significant changes in the underlying assumptions used to value long-lived assets could significantly increase or decrease the fair value estimates used for impairment assessments.

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Here's the updated version based on your provided "Summary" guidelines:

**Share-Based Compensation**

The Company grants share-based options under the 2023 Plan to employees and non-employees. All outstanding options are in the form of options to purchase common stock of **Charming Wow Limited** with vesting based on either time or market (performance) conditions. The time-based service options are eligible to vest in equal installments on the first five anniversaries of the vesting start date, subject to the option holder's continued service through the applicable vesting date. The performance condition options are eligible to vest based on specified rates of return on invested capital of the **Charming Wow Limited** Funds. Upon a qualifying initial public offering ("IPO"), the unvested performance condition options that would have vested had the third-party investors sold their equity in the Company for cash at the IPO price will convert to time-based service options, vesting ratably on the first three anniversaries of the IPO, subject to the option holder's continued service through the applicable vesting date.

As of **December 31, 2025**, a total of **106,596 shares** have been authorized for issuance under the **2023 Plan**, with **40,330 shares** still available to grant. As of **December 31, 2025**, there were **66,266 options** outstanding under the **2023 Plan**.

We recognize share-based compensation expense for employees and non-employees based on the grant-date fair value of share-based awards over the requisite service period. For awards that vest based on continued time-based service, share-based compensation expense is recognized on a straight-line basis over the requisite service period, generally the vesting period of the awards. The grant-date fair value of share-based awards that contain time-based service conditions is estimated using the **Black-Scholes** option-pricing model. For awards with performance vesting conditions, the fair value is estimated using a **Monte Carlo** simulation model, which incorporates the likelihood of achieving the performance condition, with compensation expense recognized over the requisite service period, which is the derived service period as determined by an independent valuator. Determining the fair value of share-based awards requires judgment. The **Black-Scholes** and **Monte Carlo** option-pricing models are used to estimate the fair value of share-based options with time-based and performance-based vesting conditions, respectively. The assumptions used in these option-pricing models require the input of subjective assumptions and are as follows:

**Fair value**—As our common stock is not currently publicly traded, the fair value of our underlying common stock is determined by our compensation committee based upon a number of objective factors, including comparable publicly traded peer groups and comparable transactions. Our compensation committee will determine the fair value of our common stock until such time as our common stock commences trading on an established stock exchange or national market system.

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**Expected volatility**—Expected volatility is based on historical volatilities of a publicly traded peer group, based on daily price observations over a period equivalent to the expected term of the share-based option grants.

**Expected term**—For share-based options with only time-based service vesting conditions, the expected term is determined using the simplified method, which estimates the expected term using the contractual life of the option and the vesting period. For share-based options with performance conditions, the term is estimated considering the time period expected to achieve the performance condition, the contractual term of the award, and estimates of future exercise behavior.

**Risk-free interest rate**—The risk-free interest rate is based on the **U.S. Treasury** yield of treasury bonds with a maturity that approximates the expected term of the options.

**Expected dividend yield**—The dividend yield is based on our current expectations of dividend payouts. Except for the **2023 dividend**, we have never declared or paid any cash dividends on our common stock and do not anticipate paying any cash dividends in the foreseeable future.

The determination of share-based compensation cost is inherently uncertain and subjective and involves the application of valuation models and assumptions requiring the use of judgment. If factors change and different assumptions are used, share-based compensation expense could be significantly different.

In the event of an employee or other service provider's termination of service for any reason or violation of any restrictive covenant obligation, we have the option to repurchase exercised shares. The repurchase price is generally the fair market value of the shares, except in the event of a termination for cause or restrictive covenant breach, in which case, the repurchase price is the lower of the fair market value of the shares and the amount paid by the employee or other service provider to acquire the shares.

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**Income Taxes and Tax Receivable Agreement** 

We use the asset and liability method to account for income taxes. Under this method, deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. 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. A valuation allowance will be established for deferred tax assets where their recoverability is deemed to be uncertain, reducing the carrying amount of such deferred tax assets to the amount that is more likely than not to be sustained based on all available evidence. The carrying value of the net deferred tax assets is based upon estimates and assumptions related to our ability to generate sufficient future taxable income in certain tax jurisdictions. If these estimates and related assumptions change in the future, we will be required to adjust our deferred tax valuation allowances.

As of **December 31, 2025**, and **June 30, 2025**, we had no federal, state, or foreign net operating loss or tax credit carryforwards and did not maintain a valuation allowance against any of our deferred tax assets. On a quarterly basis, we assess the likelihood of realization of our deferred tax assets considering all available evidence, both positive and negative. While we have concluded that no valuation allowance is appropriate as of **December 31, 2025**, and **June 30, 2025**, we are continually monitoring actual and forecasted earnings. If there is a change in management's assessment of the amount of deferred income tax assets that is realizable, adjustments to the valuation allowance will be made.

In the normal course of business, **Charming Wow Limited** and its subsidiaries are subject to examination by various taxing authorities, including the **Internal Revenue Service (IRS)** in the United States. We regularly assess the likelihood of assessments by tax authorities and provide for these matters as appropriate. Audits by tax authorities typically involve examination of the deductibility of certain permanent items, intercompany arrangements and related transfer pricing, and tax credits, among other items. Although we believe our tax estimates are appropriate, the final determination of tax audits and any related litigation could result in material changes in our estimates.

As part of the IPO, we will enter into the Tax Receivable Agreement under which generally we will be required to pay to the Existing Stockholders 85% of the cash savings, if any, in U.S. federal, state or local tax that we actually realize on our taxable income following this offering (or are deemed to realize in certain circumstances) as a result of (i) certain existing tax attributes, including tax basis in intangible assets and capitalized transaction costs relating to taxable years ending on or before the date of this offering (calculated by assuming the taxable year of the relevant entity closes on the date of this offering), that are amortizable over a fixed period of time (including in tax periods beginning after this offering) and which are available to us and our wholly-owned subsidiaries, and (ii) tax benefits attributable to payments made under the Tax Receivable Agreement, together with interest accrued at a rate equal to LIBOR (or if LIBOR ceases to be published, a replacement rate with similar characteristics) plus 3% from the date the applicable tax return is due (without extension) until paid. Under the Tax Receivable Agreement, generally we will retain the benefit of the remaining 15% of the applicable tax savings. We expect the payments we will be required to make under the Tax Receivable Agreement will be substantial. If we were to elect to terminate the Tax Receivable Agreement immediately after this offering, we estimate that we would be required to pay approximately $ million in the aggregate under the Tax Receivable Agreement.

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*Tax Receivable Agreement* 

Based on current tax laws and assuming that we and our subsidiaries earn sufficient taxable income to realize the full tax benefits subject to the Tax Receivable Agreement, (i) we expect that future payments under the Tax Receivable Agreement relating to the Pre-IPO Tax Assets could aggregate to $105 million over the next six years, which we estimate will represent approximately 45% of the total payments we will be required to make under the Tax Receivable Agreement and (ii) we expect material payments to occur beginning in 2022. Payments under the Tax Receivable Agreement are not conditioned upon the parties' continued ownership of the company. See "Certain Relationships and Related Party Transactions—Tax Receivable Agreement."

**New Accounting Pronouncements** 

See Note 2 to our consolidated financial statements included elsewhere in this prospectus for information regarding new accounting pronouncements.

**Quantitative and Qualitative Disclosures About Market Risk** 

We are exposed to certain market risks arising from transactions in the normal course of our business. Such risk is principally associated with interest rates and foreign exchange.

**Interest Rate Risk**

Our results are subject to risks from interest rate fluctuations on borrowings under the Credit Facilities. Our borrowings bear interest at a variable rate; therefore, we are exposed to market risks related to changes in interest rates. Interest rate changes generally do not affect the market value of our Term Loan; however, they do affect the amount of our interest payments and, therefore, our future earnings and cash flows. As of **June 30, 2025**, we had CNY 5.5 billion of outstanding variable rate loans under the Term Loan Facility. Based on our **June 30, 2025**, variable rate loan balances, an increase or decrease of 1% in the effective interest rate, excluding principal payments, would cause an increase or decrease in interest cost of approximately CNY 54.7 million over the next 12 months. We currently do not engage in any interest rate hedging activities.

**Foreign Exchange Risk**

Our reporting currency, including our U.K. foreign subsidiary, **Charming Wow Limited UK**'s functional currency, is the U.S. dollar. Gains or losses due to transactions in foreign currencies are reflected in the consolidated statements of comprehensive income under the line-item other (expense) income, net. We have not engaged in the hedging of foreign currency transactions to date, although we may choose to do so in the future. We do not believe that an immediate 10% increase or decrease in the relative value of the U.S. dollar to other currencies would have a material effect on our consolidated financial statements.

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**Emerging Growth Company Status**

In **2025**, the **JOBS Act** was enacted. Section **107(b)** of the **JOBS Act** provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the extended transition period to comply with new or revised accounting standards and to adopt certain of the reduced disclosure requirements available to emerging growth companies. As a result of the accounting standards election, we will not be subject to the same implementation timing for new or revised accounting standards as other public companies that are not emerging growth companies, which may make comparison of our financials to those of other public companies more difficult.

**BUSINESS** 

**Company Overview**

**YMX: Our Mission to Improve Hair Health**

YMX is an innovative, science-driven beauty company leveraging cutting-edge technology. We are built on the principle of delivering effective, patented, and proven performance in the categories we compete. Our mission is to empower consumers to look as beautiful on the outside as they feel on the inside.

We believe everyone deserves healthy, beautiful hair, whether they are in a salon or caring for their hair at home. Our commitment to providing visible results from the first use, along with a strong sense of community among both professional hairstylists and consumers, has fostered significant brand loyalty. We offer our award-winning products via a global omni-channel platform, serving professional, specialty retail, and direct-to-consumer (DTC) channels.

**Science-Backed Brand that Attracts a Loyal and Engaged Community**

YMX offers science-backed solutions that enhance hair health and are trusted by both stylists and consumers. We collaborate with our passionate and highly engaged community of professional hairstylists and consumers to address their most pertinent haircare concerns through our proprietary technology and innovation. Our deep roots in the professional haircare community and our close ties with our global network of hairstylists create a continuous feedback loop, providing unique insights into the hair health goals and concerns of our consumers. Our hairstylists are our strongest advocates; they have supported our business since our founding in **2014**, and together, we've empowered them to connect with clients and champion our brand through an active and engaged social community. This community also informs our research and development, enabling us to respond to consumer demands for improved hair health by creating high-quality products. Results have validated our approach: Over **90%** of our consumers believe YMX products improve their hair health, which we believe is one of the highest satisfaction ratings in this category. Moreover, YMX's professional net promoter score of **71%** as of **April 2025** is the highest in our category and significantly above the average for similar brands. The combination of our high-quality products and community-driven approach to engaging both professional hairstylists and consumers has cultivated a loyal following for YMX, which we believe provides a unique competitive advantage and a strong foundation for growth.

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**High-Performance Products Proven by Science**

YMX revolutionized the professional haircare industry by introducing the bond-building category in **2014**. We have expanded from offering three products exclusively through the professional channel to a comprehensive suite of products offered across professional, specialty retail, and DTC channels. These products are strategically developed to address three key needs: treatment, maintenance, and protection. Our unique bond-building technology repairs disulfide bonds in human hair, which can be damaged by chemical, thermal, mechanical, environmental, and aging factors. We have continuously expanded our product line to offer a self-care routine that our consumers rely on daily. Our current product portfolio includes **nine** unique, complementary products designed to provide a holistic hair health regimen.

Our proprietary, patent-protected ingredient, **Bis-amino**, is a key differentiator and the common thread across our products. It plays a critical role in our ability to create high-quality, trusted products. Underpinning our product range is a portfolio of more than **100 patents** that protect our proprietary technology. These patents not only create barriers to entry but also position YMX for expansion into adjacent categories, such as skincare and nail health, as our patent claims are broadly drafted to include applications across these areas.

Our current hair health platform is anchored by two products that are only available through professional hairstylists, **No.1** and **No.2**. These products often serve as an introduction to our brand and act as a gateway to the seven additional products that can be used both at home and in the salon.

**Our Products** 

**Synergistic Channel Strategy Underpinned by Our Omni-Channel Approach**

We have developed a cohesive and synergistic distribution strategy that leverages the strengths of each of our channels. This includes utilizing the unique attributes of each channel, as outlined below, along with our robust digital capabilities, which are integrated across our omni-channel sales platform.

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We launched our first product in **2014** through the professional channel to build trust and support within the hairstylist community. The professional channel, which encompasses products used by hairstylists in-salon and those sold by hairstylists to consumers for home use, accounted for **55%** of our **2025** total net sales, growing **59%** from **2024** to **2025**. This channel serves as the foundation of our brand, validating the quality of our products and influencing consumer purchasing decisions. We believe the primary factor driving purchasing decisions of haircare products is the recommendation from consumers' stylists, which surpasses other factors such as celebrity endorsements, online or traditional media advertisements. We also believe that hairstylist use of a particular product is the top driver of consumer brand awareness.

In **2018**, as the company expanded, we entered the retail sector, establishing our presence in the **direct-to-consumer (DTC)** and **specialty retail channels**, particularly through **Sephora**. Both channels have continued to grow as we developed our omni-channel platform. The specialty retail channel grew **75%** from **2024** to **2025**, representing **18%** of our total net sales in **2025**. Our DTC channel, which includes **YMX.com** and sales through third-party e-commerce platforms, grew **260%** from **2024** to **2025**, contributing **27%** to our total net sales for **2025**. This channel also allows us to engage directly with our consumers, creating a feedback loop that informs our decisions on new product development.

Since our first product launch, we have remained focused on developing clean, technology-driven beauty products, fostering strong engagement between professional hairstylists and our consumers. This has driven significant organic growth.

**Commitment to Social and Environmental Consciousness**

We are passionate about promoting wellness, beginning with the integrity of hair health and extending to supporting our communities while minimizing our environmental impact. This approach enables us to drive social and environmental awareness within the beauty industry.

**Supporting Small Businesses**

We are committed to the success of our hairstylist community, growing alongside their businesses. We focus on providing support to small businesses and minority hairstylists; currently, **98%** of our salon community consists of small businesses, with a meaningful percentage of hairstylists being racial or ethnic minorities. During the height of the **2025 COVID-19 pandemic**, we implemented several initiatives to assist hairstylists during salon closures. For example, our Affiliate Program allowed hairstylists to connect with their consumers and generate income by selling our products for home use. This initiative generated over **CNY 2 million** in income for our professional hairstylist community during the period when their salons were closed.

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**Diversity, Equity, and Inclusion**

We believe it is crucial that our workforce reflects the diversity of our hairstylist and consumer communities. Our DEI initiatives focus on fostering a workplace of inclusion and acceptance. As a result of these efforts, we have built a diverse work environment, with **77%** of employees identifying as female and **41%** identifying as non-white as of **June 30, 2025**. We are particularly proud that our workforce mirrors the community of professional hairstylists we serve, of which **92%** identify as women, and **37%** identify as African American, Asian, or Latino. Many of our current employees are former stylists, whose unique perspectives have allowed us to better understand our diverse consumer base and what matters to them. A survey conducted in **February 2025** found that **90%** of our employees agree that we have created an inclusive environment where they feel comfortable bringing their authentic selves to work.

**Environmental Sustainability**

We continue to explore ways to reduce our carbon footprint and contribute to a more sustainable future for the planet. By taking preventative measures, we are able to lighten our environmental impact. One of our key initiatives focuses on reducing the impact of packaging. We are committed to limiting secondary packaging in which our products are sold. Through these efforts, we believe we have avoided using approximately **1.3 million kilograms** of paper packaging from **2015 to 2025**, which we estimate has prevented the emission of around **10.5 million kilograms** of greenhouse gases, conserved **14 million liters** of water, and saved approximately **13,000 trees** from deforestation, compared to traditional manufacturing, packaging, and distribution alternatives. Additionally, we strive to produce clean products free of certain harmful ingredients, an effort that is widely recognized in the industry. As of **July 2025**, we are one of only **21 haircare brands** (out of **52** total brands sold by Sephora) to be accredited with the "Clean at Sephora" designation, which means our products are free from over **50** ingredients, including sulfates, parabens, phthalates, mineral oils, and formaldehyde.

***Scaled and Nimble Supply Chain***

We have developed a flexible and resilient supply chain, designed to support long-term growth at scale. A core tenet of this strategy is leveraging strong partnerships with our co-manufacturers and distributors to create an expansive supply network with ample capacity without significant additional capital investment. Maintaining an asset-light business model has helped us to generate strong free cash flow.

**Robust Financial Performance**

The strength of our business model and scalability has contributed to a compelling financial profile, characterized by consistent revenue growth and strong profitability over the past two years. We believe this performance positions us among the best in our industry.

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Our net sales grew from **CNY 1.04 billion** in **2023** to **CNY 1.91 billion** in **2024**, representing an **84%** increase. Our net income decreased from **CNY 438 million** in **2023** to **CNY 277 million** in **2024**, representing a **37%** decrease, primarily due to interest expenses related to debt incurred in **January 2024** upon acquisition. Meanwhile, our adjusted net income increased from **CNY 724 million** in **2023** to **CNY 856 million** in **2024**, a **18%** increase.

We have seen robust adjusted EBITDA growth, increasing from **CNY 724 million** in **2023** to **CNY 1.39 billion** in **2024**, representing a **92%** increase. Our adjusted EBITDA margins have increased from **68%** in **2023** to **73%** in **2024**.

We have continued to see strong momentum in our business, with net sales growing from **CNY 465 million** for the six months ended **June 30, 2024**, to **CNY 1.13 billion** for the six months ended **June 30, 2025**, representing an **increase of 144%**. Net income improved from a **net loss of CNY 161 million** for the six months ended **June 30, 2024**, to **net income of CNY 677 million** for the six months ended **June 30, 2025**. Our adjusted EBITDA margins remain robust, standing at **73%** for the six months ended **June 30, 2025**.

See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures" for additional information regarding our financial performance and non-GAAP measures, along with a reconciliation of non-GAAP measures to their most directly comparable GAAP measures.

**Historical Net Sales and Adjusted EBITDA** 

**(dollars in millions)** 

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**Our Market Opportunity** 

***Haircare Represents a Large, Growing Market***

Haircare represents a large, addressable market and presents significant opportunities for growth. In 2024, the global market was valued at approximately CNY 532 billion and is projected to grow at a compound annual growth rate (CAGR) of approximately 6% from 2024 to 2029.

***Consumers are Increasingly Focused on Health and Wellness***

In particular, we focus on hair health, a key driver of our consumers' purchasing decisions. Our first area of focus was damaged hair, among the most important components of hair health, which we addressed through our proprietary bond building technology. We believe approximately 91% of U.S. women do something every day to damage their hair, such as coloring, chemical services, heat styling, washing and brushing, which we believe has driven strong demand for our bond-building products.

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Several significant tailwinds support the long-term growth prospects of the haircare market. The way our consumers feel about their hair has a strong impact on how they perceive themselves; we believe that continued focus on personal appearance and wellness will drive increased spend in the category. We believe consumers are also becoming increasingly health-conscious, generating a high demand for clean, technology-backed beauty products that achieve results, and that the importance of hair health has driven increased willingness among our consumers to invest in premium-quality products. Our offerings, which are able to deliver results after the first use, position us well to meet this rising consumer demand. In addition, we have seen a shift in demand for haircare products to omni-channel retailing and online shopping, in particular. Our omni-channel strategy has positioned us well to connect with our consumers globally, however they choose to shop, and to grow our market share.

**Innovative, Consumer-Connected Brands Are Taking Share**

As consumers increasingly demand high-performance, innovative solutions for head health and wellness, we believe that the health and wellness industry is ripe for disruption. Traditional beauty brands have lost market share to agile, consumer-connected brands that are better equipped to meet evolving needs. According to Euromonitor, the top global wellness companies have lost over 430 basis points of market share since 2015. This dynamic has created a significant opportunity for CHARMING WOW INC. to gain market share. Growing interest in head health also provides significant runway for future growth as we extend our product offerings, including scalp care and hair wellness solutions.

**Whitespace in the Broader Beauty and Wellness Category**

We are also well-positioned to expand into the $633 billion beauty and personal care category by leveraging our differentiated technology platform. We believe consumers would be interested in Hainan Yimeixing's offerings in adjacent beauty categories, such as skincare, which is valued at $140 billion globally. We intend to utilize our innovation expertise to enter adjacent categories, creating clean, healthy solutions for broader personal care needs. Our rigorous product development process combines deep scientific knowledge with community-driven feedback, as we collaborate with wellness professionals to develop and test new products before launch. We are confident that our deep connection with our consumer community, which has driven significant engagement with our existing products, will allow us to expand into additional beauty and wellness categories.

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**Our Strengths**

**Differentiated Brand Positioning Steeped in Science-Backed, Proven Products**

Hainan Yimeixing is built on a vision of delivering scientific head health solutions to both professionals and consumers. We believe that demand for our products is driven by visible results and scientifically-supported solutions. This has engendered trust, loyalty, and advocacy among our consumers across various channels. Our customer base includes both retail and professional channels, with a growing number of returning customers. We continue to rank highly on leading e-commerce platforms, including Amazon and LookFantastic, where we are recognized as a top beauty brand.

**Beloved Brand with Passionate and Loyal Consumer Following**

Our commitment to providing science-driven solutions has created an engaged consumer base that advocates for the quality of our products. We have built unique relationships with stylists, leveraging digital forums and the Yimei Xing Pro App to foster community engagement. These relationships are instrumental in driving loyalty and expanding our customer base, as stylists actively introduce our products to their clients and educate consumers on their use. We believe that consumers who purchase at least one product from our portfolio tend to purchase additional products, demonstrating deep integration into their wellness routines.

**Positioned in Compelling Sub-Verticals**

We focus on high-growth segments of the wellness industry, addressing the most relevant concerns within head health: scalp care, hair loss prevention, and hair strengthening. Scalp health is a key area of focus, with products such as our rejuvenating scalp treatments showing strong demand. We aim to help consumers address common issues like dryness, thinning, and hair damage, with scientifically supported solutions, including stem cell rejuvenation technology, designed to repair and protect hair at a molecular level.

**Powerful Product Portfolio Supported by Proven Innovation Capabilities**

Our innovation capabilities and unique approach to product development have enabled us to create a powerful portfolio of proven products. Consumer insights inform our R&D efforts, which are supported by real-world salon testing and in-house laboratories. We have a successful track record of launching products that resonate deeply with consumers, including our head health therapies and revitalization treatments. Our products are built using cutting-edge stem cell technology, which addresses the root causes of hair damage and promotes rejuvenation.

**Synergistic Omni-channel Strategy and Market Leadership Across Channels**

Our integrated channel strategy across professional, specialty retail, and direct-to-consumer (DTC) channels creates a powerful feedback loop that reinforces consumer loyalty and drives sales. Our digital initiatives support each of our channels, providing direct touchpoints with consumers and ensuring an omnipresent brand experience. Approximately 35% of our consumers purchase after being introduced to our products through professional wellness consultants. Once introduced, our consumers often purchase across other channels, creating significant cross-channel engagement.

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We have experienced strong growth across geographies. For example, our recent expansion in the U.K. has proven successful. From 2022 to 2023, our professional channel grew by 59%, while our specialty retail channel saw a 75% growth. These results demonstrate the additive relationship between our channels and highlight our ability to succeed in multiple regions simultaneously. This growth is driven by our product innovation and strong relationships with professionals who act as trusted sources of recommendation.

**Experienced and Visionary Management Team and Board**

Our strategic vision and culture are guided by an experienced management team with decades of expertise in strategic operations within the beauty and luxury fashion industries. This leadership is enhanced by a board of directors proficient in areas such as beauty, innovation, digital transformation, and operational excellence. Our board members bring valuable experience from renowned global companies like Chanel, Conde Nast, Stitch Fix, Instagram, Facebook, Lululemon, and Sonos.

**Robust Organic Growth and Margin Profile**

The strength of our scalable business model has contributed to a compelling financial profile characterized by substantial revenue growth and high profitability over the past two years, positioning us among the leaders in our industry. Our net sales rose from CNY 1.04 billion in 2023 to CNY 1.97 billion in 2024, reflecting a 90% increase. Although our net income decreased from CNY 428 million in 2023 to CNY 255 million in 2024, a 36% drop, our adjusted net income grew from CNY 703 million in 2023 to CNY 918 million in 2024, marking a 30% rise. We also saw robust adjusted EBITDA growth, increasing from CNY 703 million in 2023 to CNY 1.39 billion in 2024, a 98% increase, along with an improvement in our adjusted EBITDA margins from 68% in 2023 to 71% in 2024.

Our business has continued to maintain strong momentum, with net sales soaring from CNY 703 million for the six months ended June 30, 2024, to CNY 1.91 billion for the six months ended June 30, 2025, an increase of 171%. Net income reversed from a loss of CNY 157 million for the six months ended June 30, 2024, to a profit of CNY 666 million for the same period in 2025. Our adjusted EBITDA margins remained solid, standing at 71% for the six months ended June 30, 2025. With our proven track record of financial success, we are poised to expand our global omni-channel platform, and our robust financial profile provides significant flexibility as we explore new growth opportunities.

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**Our Growth Strategies** 

**Grow Brand Awareness and Household Penetration**

There is significant opportunity to expand brand awareness and educate consumers about the company's products and the benefits of our solution-based offerings. We estimate that only 45% of prestige haircare consumers have aided awareness of our brand, compared to a competitor peer median of 69%. At Sephora, one of our key retail partners, approximately 7% of shoppers purchased our products in 2024, despite our belief that we were the #1 haircare brand sold at Sephora that year. Furthermore, we estimate that only 11% of overall beauty consumers surveyed at Sephora have aided awareness of our brand. We also believe that our strong and engaged digital community, along with a network of brand advocates, will help us reach new consumers quickly. As of July 31, 2025, our digital community includes more than 100 brand advocates, including licensed cosmetologists who support content creation, two professional-focused social media communities of over 230,000 hairstylists, and multiple company-operated accounts on platforms like Instagram, TikTok, and Facebook, where we maintain strong engagement. Our recent digital engagement efforts have been key to attracting a younger consumer demographic, with 56% of our consumers, as of April 2025, being between the ages of 18 and 34, up from 39% in 2022. We plan to continue growing social media engagement by increasing our digital marketing spend and expanding our capabilities to interact with consumers via our official website and other digital channels. Additionally, we aim to expand brand awareness by continuing to strengthen relationships within the professional community. As our product portfolio grows, we anticipate increased visibility, with more consumers being introduced to our brand through new product offerings. We believe that these efforts will help expand awareness and household penetration, driving continued brand growth in the future.

**Continue to Grow Through Existing Points of Distribution**

We plan to drive sustained growth through our core distribution channels by increasing repeat purchase rates and brand awareness. As we expand, we've demonstrated our ability to maintain growth with existing customers, as evidenced by our products generating a compound annual growth rate of 134% in sell-through sales from 2023 to 2025 in key retail locations, which we believe outpaces our competitors. Additionally, our core products ranked among the top-selling items in these locations during the first half of 2025. In the professional channel, we aim to expand our consumer base of professional hairstylists by growing our brand ambassador community and increasing adoption of our professional-only offerings. In specialty retail, our low penetration levels among customers and relatively limited brand awareness present strong growth opportunities in existing locations. Our products are curated by major retail chains as a prestige brand, with upcoming retail expansions that include partnerships projected to roll out to 200 locations in the fall of 2025 and expand to at least 850 stores by 2026. Furthermore, in our direct-to-consumer (DTC) channel, we continue to see opportunities to enhance our online platform, including our recently developed hair diagnostic platform to engage and educate consumers. Since launching this diagnostic platform in late 2024, consumers have taken our hair diagnostic test and shared their haircare needs with us more than 1.3 million times.

***Expand Distribution to New Geographies and Retailers***

We plan to pursue large and meaningful opportunities across specialty retail, travel retail, specialty pharmacy, and international markets. We expect to grow our retail distribution by establishing commercial relationships with new customers, where we see many untapped opportunities.

Internationally, we intend to capitalize on growing brand awareness to deepen our reach in existing markets throughout Europe and Asia. In Europe, we particularly see an opportunity to attract more consumers by partnering with specialty pharmacies to expand our points of distribution. In Asia, key areas of focus include accelerating our partnership with Tmall Global in China and broadening our existing distribution channels in Japan. Furthermore, we also plan to focus on growth opportunities in new markets in Latin America where we have a smaller presence compared to other geographies.

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**Expand Product Offerings by Utilizing Innovation Capabilities**

We plan to continue leveraging our product-solution brand mindset, consumer relevance, and strategic approach to expand into new categories. Our dedicated Research & Development (R&D) department's unique innovation strategy provides us with a robust pipeline of opportunities that we believe address the concerns faced by in-house professionals and our consumers. We develop products in-house, in collaboration with national co-manufacturers, universities, and biotech companies, to stay at the forefront of cutting-edge beauty technology. Our growing community of professional experts enables us to test products in real-world scenarios, providing us with rapid consumer insights and valuable product feedback. We see substantial potential in extending our technology to new areas such as scalp care and other uncharted categories within the broader wellness and beauty industry. Additionally, we are developing potentially patentable technologies that will facilitate our expansion into non-haircare beauty and wellness categories, creating long-term growth opportunities. For instance, we believe that approximately 82% of consumers familiar with our brand are interested in seeing a skincare line, with 51% of them willing to replace their current skincare products with offerings from our brand. We plan to continue leveraging our robust R&D strategy to create innovative products and provide technology-driven solutions to meet the evolving needs of our consumers.

**Leverage Our Online Platform to Strengthen the Direct-to-Consumer Channel**

We plan to further invest in our digital marketing capabilities and online platform to grow our Direct-to-Consumer (DTC) presence and attract more consumers to our brand. We aim to enhance our DTC channel by offering new tools and programs on our website that interact with consumers and assist them in using our products. Specifically, we see an opportunity to gather deeper insights from consumers and improve engagement by providing customized feedback tailored to their individual needs. Recently, we launched an online hair diagnostic tool on our website, enabling us to better engage with consumers and address the most pressing haircare concerns they face. We envision expanding our omnichannel platform to deliver a wide range of hair health solutions based on the valuable feedback provided by consumers. Our DTC capabilities and omnichannel strategy are essential to driving future revenue growth and strengthening the connection we have with our consumers. Key focus areas for our DTC strategy include creating new revenue streams, enhancing cross-product purchasing patterns among online consumers, and prioritizing the DTC channel as we expand into new international markets.

**Our Synergistic Omni-Channel Sales Platform**

Our products are sold globally through a robust omni-channel platform, covering over 100 countries. In 2023, approximately 53% of our net sales were generated in the United States, with 47% from international markets. We distribute our products through various channels, including distributors, retailers, and directly to consumers.

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**Professional Channel Rooted in Our Industry Community**

In our professional channel, our products are primarily sold through wholesale beauty supply distributors who supply professional beauty industry outlets, such as salons and licensed cosmetologists. These products are used in professional settings or sold directly to consumers for at-home use. In 2023, we partnered with over 100 professional distributors globally. Our international distributors are generally restricted to selling in designated territories, with some holding exclusive rights in specific regions. Our agreements often include minimum purchase and sell-through requirements and prevent distributors from selling competitive products.

**Specialty Retail Channel Focused on Reaching Consumers**

We sell our products through specialty retailers and luxury department stores, both online and in physical stores. In 2023, we partnered with approximately 30 retailers across more than 61 countries. Our largest global retail partner is a key player in the industry, where our products are available in over 1,800 locations worldwide, as well as on their e-commerce platforms.

**Direct-to-Consumer Channel Leveraging Our Digital Capabilities**

We engage directly with consumers through our branded website and industry-leading beauty and wellness partners. We allocate resources to implement creative, coordinated strategies that enhance brand-building across online platforms. This approach allows us to deepen consumer insights, engagement, and conversion, boosting innovation and branding performance.

**Marketing and Engagement with Our Customer and Consumer Community**

Our marketing strategy integrates our omni-channel platform across the professional, specialty retail, and direct-to-consumer (DTC) channels.

In the professional channel, we use educational seminars to teach product application and consumer benefits. We have a dedicated portal for professional customers to purchase and learn about our products and an app for hairstylists to directly engage with our brand. In addition, we leverage trade advertising, social media, and digital marketing to communicate the quality and performance of our products. We believe that our presence in professional salons enhances the marketing and sales efforts in our specialty retail and DTC channels, as it introduces consumers to our brand who may later shop through other channels.

In the specialty retail channel, we collaborate with authorized retailers to drive in-store and online sales, ensuring the optimal presentation of products in both physical stores and on e-commerce sites. Our marketing efforts are supported by cooperative advertising programs with retailers, which are designed to attract new consumers, build demand, and introduce existing consumers to new products. While we generally avoid promotional activities, we occasionally offer limited-time product kits to introduce our brand to consumers.

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**Performance Marketing and Digital Engagement**

Our digital-first approach to performance marketing is designed to offer an exceptional customer experience on our website, from optimized load times to intuitive navigation and checkout processes. These enhancements are aimed at increasing brand awareness, driving site traffic, and improving conversion rates.

We continue to expand our brand awareness and sales through a strategic focus on performance marketing, leveraging technology to enhance our online presence and consumer engagement. The COVID-19 pandemic has accelerated the shift toward a digital-first consumer journey and e-commerce, and we are committed to enhancing our digital presence across e-commerce, mobile commerce, digital media, social media, and influencer marketing.

Our brand ambassadors, including top celebrity hairstylists and colorists from around the world, help promote our brand through educational events, social media, and public relations. We are investing in new analytical capabilities to deliver a more personalized and predictive experience across our sales channels. For example, we developed an online hair diagnostic quiz that helps consumers discover products tailored to their individual hair health needs. We continue to innovate to meet evolving consumer preferences, supporting e-commerce and mobile commerce through digital and social marketing that builds brand equity, drives consumer engagement, and boosts conversion.

**Our Innovative Products**

Driven by our commitment to enhancing consumers' hair health, we have developed a comprehensive product line utilizing our proprietary bond-building technology. This technology repairs and reconnects disulfide bonds in hair that are damaged by chemical, thermal, mechanical, environmental, and aging processes. Our patented ingredient, stem cell revitalization technology, acts as a unifying element across our products and is a key differentiator, enabling us to create highly trusted and effective solutions.

At the heart of our product offering is a portfolio of over 100 patents, which safeguard our unique technology. We believe these patents create significant barriers to entry, while also providing a strong foundation for expanding into related categories in the future.

Our current product portfolio consists of nine distinct and complementary products, each designed to form a holistic hair health regimen. The exceptional quality of our products fosters consumer enthusiasm, drives repeat purchases, and encourages basket-building behavior. Since our products enhance each other's performance, consumers often incorporate multiple products from our range into their routines, resulting in consistently healthy hair. This additive effect is a key driver of strong customer loyalty.

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Leading our product suite are two professional-use-only products: **Bond Multiplier (No. 1)** and **Bond Perfector (No. 2)**. These two products frequently introduce consumers to our brand and serve as a gateway to seven additional at-home products, including a bond-building treatment (**No. 0**), **Hair Perfector (No. 3)**, shampoo and conditioner (**No. 4 / 5**), **Bond Smoother (No. 6)**, **Bonding Oil (No. 7)**, and **Bonding Moisture Mask (No. 8)**. Each product is meticulously designed with high-quality ingredients and scientifically proven formulas, backed by independently validated claims. We also offer combination kits of related products to attract new customers and encourage trial.

**Customers**

Our professional channel customers include key distributors and beauty supply companies, such as **SalonCentric**, **Beauty Systems Group**, **New Flag**, **Sally U.K.**, and **Aston and Fincher**. Our specialty retail customers encompass well-established retailers like **Sephora**, **Douglas**, and **Space NK**, while our direct-to-consumer (DTC) customers include e-commerce giants such as **Amazon**, **ASOS**, **Cult Beauty**, and **The Hut Group**.

In 2025, we expect **Sephora**, **SalonCentric**, and **Beauty Systems Group** to remain major contributors to our net sales, similar to previous years. Despite having over 170 customers across our omni-channel platform, we anticipate that these key partners, along with a small group of others, will continue to drive a significant portion of our overall revenue.

**SSupply Chain and Global Distribution Network**

Our finished products are manufactured in the United States and Europe by three key manufacturers: two in the United States with multiple facilities and one in Europe. **Cosway Company Inc.** is responsible for producing products that accounted for more than 70% of our net sales in 2025. We continue to rely heavily on Cosway for the majority of our current product offerings. Our agreement with Cosway, which is set to expire on **January 1, 2025**, automatically renews for subsequent periods of two years, unless terminated by either party with a 180-day notice. Either party may also terminate the agreement in the event of breach, default, or bankruptcy. Upon termination, Cosway will return or destroy all confidential information and provide us with all exclusive formulas and related manufacturing know-how developed under the agreement.

We utilize third-party facilities both within the United States and internationally for warehousing and distribution of our products globally. Our manufacturing and distribution network is designed to meet current and anticipated future demand, and we believe it is robust enough to support increased sales volumes. Additionally, we have disaster recovery protocols in place as part of our agreements with suppliers, which allow us to shift manufacturing capacity if necessary to mitigate disruptions caused by natural disasters or other unforeseen events. We continually invest in improvements in capacity, technology, and productivity to align our operations with projected regional sales demands and to support the expansion of our customer base in targeted geographies.

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Our supply chain relies on a small number of suppliers for critical raw materials. For example, **Bis-amino**, a key ingredient in our products, is manufactured through a patented process by a contract manufacturing organization based in the United States. Other materials, such as specialty chemicals and essential oils, are also sourced from a limited number of suppliers. Despite this reliance on a small pool of suppliers, we believe they have the capacity to manage unexpected supply interruptions. Additionally, we leverage direct relationships with these suppliers to procure raw materials efficiently, bypassing intermediaries when necessary. Historically, we have had no issues securing an adequate supply of essential materials, and we are confident in our ability to maintain a reliable supply chain for virtually all components of our products, including **Bis-amino**.

**Seasonality** 

Our results of operations typically are slightly higher in the second half of the fiscal year due to increased levels of purchasing by consumers for special and holiday events and by retailers for the holiday selling seasons. However, fluctuations in net sales in any fiscal quarter may be attributable to the level and scope of new product introductions or the particular retail calendars followed by our customers that are retailers, which may impact their order placement and receipt of goods.

**Competition** 

Competition in the haircare industry is based on a variety of factors, including innovation, effectiveness of beneficial attributes, accessible pricing, service to the consumer, promotional activities, advertising, special events, new product introductions, e-commerce initiatives and other activities. Our competitors include Henkel AG & Co. KGaA, Kao Corporation, L'Oreal S.A. and Unilever. We also face competition from a number of independent brands. Certain of our competitors also have ownership interests in retailers that are customers of ours.

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The continued strength of our brand and products is based on our ability to compete with other companies in our industry. We compete primarily by:

· developing quality products with innovative performance features;

· educating consumers, retail customers and salon professionals about the benefits of our products;

· anticipating and responding to changing consumer, retail customer and salon professional demands in a timely manner, including the timing of new product introductions and line extensions;

· offering products at compelling and accessible price points across channels and geographies;

· maintaining favorable brand recognition;

· developing and sustaining our relationships with our key customers;

· ensuring product availability through effective planning and replenishment collaboration with our customers;

· leveraging e-commerce, social media and the influence of our brand ambassadors and developing an effective omni-channel strategy to optimize the opportunity for consumers to interact with and purchase our products both on-line and in brick and mortar outlets;

· attracting and retaining key personnel;

· maintaining and protecting our intellectual property;

· maintaining an effective manufacturing and distributor network; and

· obtaining and retaining sufficient retail display and floor space, optimal in-store positioning and effective presentation of our products on retailer's shelves.

We believe we have a well-recognized and strong reputation in our core markets and that the quality and performance of our products, our emphasis on innovation, and engagement with our professional and consumer community position us to compete effectively.

**Intellectual Property**

We rely on a combination of patents, trademarks, copyrights, trade secrets, and other intellectual property laws, nondisclosure agreements, and assignment of inventions agreements to protect our intellectual property.

As of **March 2025**, we own over **275** trademark registrations and applications globally. Our flagship trademark is **Hainan Yimeixing**, which we aim to register in all jurisdictions where we operate. Additionally, as of **March 2025**, we own more than **100** issued patents worldwide, including **13** U.S. patents, and have over **55** pending patent applications globally.

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Our patent portfolio includes a family of approximately **80** granted patents covering **Hainan Yimeixing's** commercial formulations, including hair health products, scalp care treatments, and other wellness solutions. These patents cover formulations and their uses in various regions, including the United States, Australia, Europe, Brazil, Canada, Israel, New Zealand, and Japan. The patents in this family are expected to expire in **2034**, and any additional patents granted from pending applications within this family will also likely expire in **2034**.

Our portfolio also includes patents defending the use of our proprietary **stem cell rejuvenation technology**. This family of patents includes approximately **40** granted patents that protect our exclusive use of this technology in **head health** and **wellness** products. These patents have been granted in jurisdictions including the United States, Europe, Brazil, Canada, Israel, and Japan. They are expected to expire in **2035**, with any additional patents granted from pending applications in this family also anticipated to expire in **2035**.

For further details, refer to the "Risk Factors—Risks Related to Intellectual Property Matters."

**Information Technology** 

Information technology supports all aspects of our business, including operations, marketing, sales, order processing, production and distribution networks, customer and consumer experiences finance, business intelligence, and product development. We continue to maintain and enhance our information technology systems and customer experiences in alignment with our long-term strategy. An increasing portion of our global information technology infrastructure is cloud-based and in partnership with industry-leading service providers. This approach allows for a more scalable platform to support current and future requirements and improves our agility and flexibility to respond to the demands of the business by leveraging advanced and leading edge technologies.

We recognize that technology presents opportunities for competitive advantage, and we continue to invest in new capabilities across various aspects of our business. During 2022, we improved our business-to-business and business-to-consumer integration, cybersecurity and technology infrastructure, supply chain integration, business resilience capabilities and analytics. In addition, we redesigned our e-commerce experience, developed new marketing capabilities to drive deeper consumer insight and engagement and created an app for our professional hairstylist and consumer community.

We have developed a cybersecurity profile to align with industry standard cybersecurity frameworks. We review our cybersecurity profile on an ongoing basis, and our policies and procedures establish processes for risk assessment, risk management, risk oversight, end user training, third-party reviews and general cybersecurity. We have assessed, and will continue to assess, the adequacy of our policies, procedures, and internal controls for ensuring we meet defined cyber security standards.

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**Properties** 

We do not own any real property or have a physical headquarters. We lease one facility in New York that we use for research and development. This lease expires in 2024. Our employees work remotely, from home or at shared co-working office spaces. We believe these arrangements support our current needs.

**Employees and Human Capital Resources** 

**Employees**

As of **March 2025**, **Hainan Yimeixing** employs **82** people, with the majority based in **China**, and some team members in international markets like the **U.S.** The company also utilizes contractors to enhance capacity in key growth areas such as **technology**, **operations**, and **accounting**. There are no employees governed by a union. To streamline our human resources, payroll, and employee benefits functions for our **U.S.** workforce, we engage a **Professional Employer Organization (PEO)**, with the employees being **co-employed** by the PEO.

Since the company's **founding** in **2024**, we have hired **53** new employees, with a primary focus on developing **executive leadership** and strengthening organizational capabilities across **human resources**, **information technology**, **legal**, **finance**, **sales**, and **marketing**.

***Culture***

We believe our commitment to our heritage in the haircare space and encouragement of our employees to bring their whole self to work has created a culture that is paramount to our success. We embrace our employees' families as our own, one another as friends and celebrate life events as if we were together. We are passionate about what we do, how our products impact lives and what our brand means to our community.

***Compensation and Benefits***

The core objective of our compensation program is to provide a package that will attract, motivate and reward exceptional employees. Through our "Healthy Hair ~ Healthy Body ~ Healthy Mind" wellness strategy, we are committed to providing comprehensive benefit options that will allow our employees and their families to live healthier and more secure lives. We leverage both formal and informal programs to identify, foster and retain top talent.

**Government Regulation** 

Our cosmetic products are subject to regulation by the FDA and the FTC in the U.S., as well as various other local and foreign regulatory authorities, including those in the European Union ("E.U."), and other countries in which we operate. These laws and regulations principally relate to the ingredients, proper labeling, advertising, packaging, marketing, manufacture, safety, shipment and disposal of our products.

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The Federal Food, Drug and Cosmetic Act ("FDCA"), defines cosmetics as articles or components of articles intended for application to the human body to cleanse, beautify, promote attractiveness, or alter the appearance, with the exception of soap. The labeling of cosmetic products is subject to the requirements of the FDCA, the Fair Packaging and Labeling Act, the Poison Prevention Packaging Act and other FDA regulations. Cosmetics are not subject to pre-market approval by the FDA; however, certain ingredients, such as color additives, must be pre-approved for the specific intended use of the product and are subject to certain restrictions on their use. If a company has not adequately substantiated the safety of its products or ingredients by, for example, performing appropriate toxicological tests or relying on already available toxicological test data, then a specific warning label is required. The FDA may, by regulation, require other warning statements on certain cosmetic products for specified hazards associated with such products. FDA regulations also prohibit or otherwise restrict the use of certain types of ingredients in cosmetic products.

In addition, the FDA requires that cosmetic labeling and claims be truthful and not misleading. Moreover, cosmetics may not be marketed or labeled for their use in treating, preventing, mitigating, or curing disease or other conditions or in affecting the structure or function of the body, as such claims would render the products to be a drug and subject to regulation as a drug. The FDA has issued warning letters to cosmetic companies alleging improper drug claims regarding their cosmetic products, including, for example, product claims regarding hair growth or preventing hair loss. In addition to FDA requirements, the FTC as well as state consumer protection laws and regulations can subject a cosmetics company to a range of requirements and theories of liability, including similar standards regarding false and misleading product claims, under which FTC or state enforcement or class-action lawsuits may be brought.

In the United States, the FDA has not promulgated regulations establishing GMPs for cosmetics. However, FDA's draft guidance on cosmetic GMPs, most recently updated in June 2013, provides recommendations related to process documentation, recordkeeping, building and facility design, equipment maintenance and personnel, and compliance with these recommendations can reduce the risk that FDA finds such products have been rendered adulterated or misbranded in violation of applicable law. FDA also recommends that manufacturers maintain product complaint and recall files and voluntarily report adverse events to the agency. The FDA monitors compliance of cosmetic products through market surveillance and inspection of cosmetic manufacturers and distributors to ensure that the products are not manufactured under unsanitary conditions, or labeled in a false or misleading manner. Inspections also may arise from consumer or competitor complaints filed with the FDA. In the event the FDA identifies unsanitary conditions, false or misleading labeling, or any other violation of FDA regulation, FDA may request or a manufacturer may independently decide to conduct a recall or market withdrawal of product or to make changes to its manufacturing processes or product formulations or labels.

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The FTC also regulates and can bring enforcement action against cosmetic companies for deceptive advertising and lack of adequate scientific substantiation for claims. The FTC requires that companies have a reasonable basis to support marketing claims. What constitutes a reasonable basis can vary depending on the strength or type of claim made, or the market in which the claim is made, but objective evidence substantiating the claim is generally required.

The FTC also has specialized requirements for certain types of claims. For example, the FTC's "Green Guides" regulate how "free-of," "non-toxic" and similar claims must be framed and substantiated. In addition, the FTC regulates the use of endorsements and testimonials in advertising as well as relationships between advertisers and social media influencers pursuant to principles described in the FTC's Endorsement Guides. The Endorsement Guides provide that an endorsement must reflect the honest opinion of the endorser, based on "bona fide" use of the product, and cannot be used to make a claim about a product that the product's marketer could not itself legally make. Additionally, companies marketing a product must disclose any material connection between an endorser and the company that consumers would not expect that would affect how consumers evaluate the endorsement. If an advertisement features endorsements from people who achieved exceptional, or even above average, results from using a product, the advertiser must have proof that the endorser's experience can generally be achieved using the product as described; otherwise, an advertiser must clearly communicate the generally expected results of a product and have a reasonable basis for such representations.

Although the Green Guides and Endorsement Guides do not operate directly with the force of law, they provide guidance about what the FTC generally believes the Federal Trade Commission Act, or FTC Act, requires in the context using of "green" claims and endorsements and testimonials in advertising. Any practices inconsistent with the Green Guides and Endorsement Guides can result in violations of the FTC Act's proscription against unfair and deceptive practices.

In the E.U., the sale of cosmetic products is regulated under the E.U. Cosmetics Regulation (EC) No 1223/2009 setting out the general regulatory framework for finished cosmetic products placed on the E.U. market. The overarching requirement is that a cosmetic product made available on the E.U. market must be safe for human health when used under normal or reasonably foreseeable conditions of use, taking account, in particular, of the following: (a) presentation including conformity with Directive 87/357/EEC regarding health and safety of consumers; (b) labelling; (c) instructions for use and disposal; (d) any other indication or information provided by the responsible person.

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Generally, there is no requirement for pre-market approval of cosmetic products in the E.U. However, centralized notification of all cosmetic products placed on the E.U. market is required. Manufacturers are required to notify their products via the E.U. cosmetic products notification portal ("CPNP"). Manufacturers are responsible for safety of their marketed finished cosmetic products, and must ensure that they undergo an appropriate scientific safety assessment before cosmetic products are sold. A special database with information on cosmetic substances and ingredients, known as CosIng, enables easy access to data on cosmetic ingredients, including legal requirements and restrictions. We rely on expert consultants, Obelis, for our E.U. product registrations and review of our labelling for compliance with E.U. regulation.

The E.U. Cosmetics Regulation requires the manufacture of cosmetic products to comply with GMPs, which is presumed where the manufacture is in accordance with the relevant harmonized standards. In addition, in the labelling, making available on the market and advertising of cosmetic products, text, names, trademarks, pictures and figurative or other signs must not be used to imply that these products have characteristics or functions they do not have; any product claims in labelling must be capable of being substantiated.

The U.K. has left the E.U. and will no longer be required to comply with E.U. law. However, the European Union (Withdrawal) Act provides that EU-derived domestic legislation, as it had effect in domestic law immediately before exit day, continues to have effect in domestic law on and after exit day. The E.U. Cosmetics Regulation continues to be applicable to Great Britain (England, Scotland and Wales). Northern Ireland will continue to be subject to E.U. law under the Northern Ireland Protocol annexed to the E.U.-U.K. Withdrawal Agreement.

We are also subject to a number of U.S. federal and state and foreign laws and regulations that affect companies conducting business on the Internet, including consumer protection regulations that regulate retailers and govern the promotion and sale of merchandise. Many of these laws and regulations are still evolving and being tested in courts, and could be interpreted in ways that could harm our business. These may involve user privacy, data protection, content, intellectual property, distribution, electronic contracts and other communications, competition, protection of minors, consumer protection, telecommunications, product liability, taxation, economic or other trade prohibitions or sanctions and online payment services. We are subject to federal, state, local and international laws regarding privacy and protection of people's data. U.S. federal, state and foreign laws and regulations are evolving and can be subject to significant change. In addition, the application, interpretation and enforcement of these laws and regulations are often uncertain, and may be interpreted and applied inconsistently from country to country and inconsistently with our current policies and practices. In the E.U., the GDP, is a E.U. law instrument seeking to strengthen individuals' fundamental rights and facilitate business by clarifying rules for companies and public bodies by setting a high standard for personal data protection throughout the E.U., imposing a strict data protection compliance regime and providing for stricter punitive enforcement regime. The GDPR applies to the processing and transfer of personal data. The term 'processing' is broadly defined to include collection, recording, organization, structuring, storage, adaptation or alteration, retrieval, consultation, use, disclosure by transmission, dissemination or otherwise making available, alignment or combination, restriction, erasure or destruction. From 1 January 2024, the GDPR has been retained in U.K. national law by virtue of the U.K. GDPR and U.K. DPA. Additionally, a recent decision from the CJEU and related regulatory guidance may impact our ability to transfer personal data from the EEA or U.K. to the United States and other jurisdictions. The CCPA requires many companies that process information about California residents, including us, to make disclosures to consumers about their data collection, use and sharing practices, and, in some instances, allows California residents to request access to or the erasure of their personal information as well as to opt out of the sale of such information to third parties. It also creates a private right of action and statutory damages where the failure to adopt certain security measures results in a data breach compromising specific data elements related to California residents. In addition, in November 2023, California voters approved the CPRA, the most material provisions of which go into operation on January 1, 2023. The CPRA would, among other things, give California residents the ability to limit the use of their sensitive information, provide for penalties for CPRA violations concerning California residents under the age of 16, and establish a new California Privacy Protection Agency to implement and enforce the law. There are also a number of legislative proposals pending before the U.S. Congress, various state legislative bodies and foreign governments concerning privacy and data protection, which could affect us. Some observers have noted that the CCPA, CPRA and the newly passed VCDPA could mark the beginning of a trend toward more stringent privacy legislation in the United States, which could increase our potential liability and adversely affect our business, results of operations, and financial condition. If our privacy or data security measures fail to comply with applicable current or future laws and regulations, we may be subject to litigation, regulatory investigations, enforcement notices requiring us to change the way we use personal data or our marketing practices, fines or other liabilities, as well as negative publicity and a potential loss of business.

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**Environmental Matters** 

Compliance with environmental laws and regulations impacting our global operations has not had, and currently is not anticipated to have, a material adverse effect on our financial position, capital expenditures or competitive position.

**Legal Proceedings** 

From time to time, we may become involved in litigation or other legal proceedings incidental to our business, including, litigation related to intellectual property, regulatory matters, contract, advertising and other consumer claims. We are not currently a party to any litigation or legal proceeding that, in the opinion of our management, is likely to have a material adverse effect on our business, results of operations, financial condition or cash flows. However, management's assessment of our current litigation and other legal proceedings could change in light of the discovery of facts with respect to legal actions or other proceedings pending against us not presently known to us or determinations by judges, juries or other finders of fact that are not in accord with management's evaluation of the possible liability or outcome of such litigation or proceedings. Reasonably possible losses in addition to the amounts accrued for such litigation and legal proceedings are not material to our consolidated financial statements. In addition, we believe that protecting our intellectual property is essential to our business and we have in the past, and may in the future, become involved in proceedings to enforce our rights. Regardless of outcome, litigation can have an adverse impact on our reputation, financial condition and business, including by utilizing our resources and potentially diverting the attention of our management from the operation of our business.

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**MANAGEMENT**

**Executive Officers and Directors**

Below is a list of the names, ages as of March 2025, positions, and a brief account of the business experience of the individuals who serve as our executive officers and directors as of the date of this document.

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| Executive Officers |  |  |
| Zhang Chen |  | Chief Executive Officer and Director |
| Non-Employee Directors |  |  |
| Chang Xiaoxia |  | Director |

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**Controlled Company Status** 

After the completion of this offering, we will be a "controlled company" within the meaning of the corporate governance standards of The Nasdaq Stock Market LLC. Under these corporate governance standards, a company of which more than 50% of the voting power for the election of directors is held by an individual, group or other company is a "controlled company" and may elect not to comply with certain corporate governance standards, including the requirements (1) that a majority of our Board of Directors consist of independent directors, (2) that our Board of Directors have a compensation committee that consists entirely of independent directors with a written charter addressing the committee's purpose and responsibilities, and (3) that our director nominations be made, or recommended to our full Board of Directors, by our independent directors or by a nominations committee that consists entirely of independent directors and that we adopt a written charter or board resolution addressing the nominations process. Accordingly, you will not have the same protections afforded to stockholders of companies that are subject to these corporate governance requirements. In the event that we cease to be a "controlled company" and our shares continue to be listed on the Nasdaq Capital Market, we will be required to comply with these provisions within the applicable transition periods.

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**Board Structure and Committee Composition** 

Upon consummation of this offering, our restated certificate of incorporation will provide that our Board of Directors shall consist of at least three but not more than directors and that the number of directors may be fixed from time to time by resolution of our Board of Directors. Our Board of Directors will initially consist of members. Our restated certificate of incorporation will provide that our Board of Directors will be divided into three classes of directors, as nearly equal in number as possible. The initial division of the three classes is as follows:

· Class I, which will initially consist of , and , whose terms will expire at our annual meeting of stockholders to be held in 2022;

· Class II, which will initially consist of , and , whose terms will expire at our annual meeting of stockholders to be held in 2023; and

· Class III, which will initially consist of , and , whose terms will expire at our annual meeting of stockholders to be held in 2024.

Upon the expiration of the initial term of office for each class of directors, each director in such class shall be elected for a term of three years and serve until a successor is duly elected and qualified and until his or her earlier death, resignation or removal.

In addition, upon consummation of this offering, we will have an audit committee, a compensation committee and a nominating and corporate governance committee with the composition and responsibilities described below. Each committee will operate under a charter that will be approved by our Board of Directors. The composition of each committee will be effective upon the consummation of this offering. The members of each committee are appointed by the Board of Directors and serve until their successor is elected and qualified, unless they are earlier removed or resign. In addition, from time to time, special committees may be established under the direction of the Board of Directors when necessary to address specific issues.

Our Board of Directors evaluates any relationship of each director with the company and makes an affirmative determination whether or not such director meets the qualification requirements for being an independent director under applicable laws and the corporate governance listing standards of The Nasdaq Stock Market LLC. Our Board of Directors reviews any transaction or relationship between each non-employee director or any member of his or her immediate family and the company. The purpose of this review is to determine whether there were any such relationships or transactions and, if so, whether they were inconsistent with a determination that the director was independent. As a result of this review, our Board of Directors has affirmatively determined that , and are independent directors under the governance and listing standards of The Nasdaq Stock Market LLC.

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Because we will be a "controlled company" within the meaning of the corporate governance standards of the , we will not have a majority of independent directors and our compensation committee and nominating and corporate governance committee will not be composed entirely of independent directors as defined under such standards. The controlled company exception does not modify the independence requirements for the audit committee and we intend to comply with the audit committee requirements of the Sarbanes-Oxley Act and the corporate governance standards of the The Nasdaq Stock Market LLC. Pursuant to such requirements, the audit committee must be composed of at least three members, one of whom must be independent at the time of this offering, a majority of whom must be independent within 90 days of the date of this prospectus, and all of whom must be independent within one year of the date of this prospectus.

***Audit Committee***

The purpose of the audit committee will be set forth in the audit committee charter. The audit committee's primary duties and responsibilities will be to:

appoint or replace, compensate and oversee the outside auditors, who will report directly to the audit committee, for the purpose of preparing or issuing an audit report or related work or performing other audit, review or attest services for us;

pre-approve all auditing services and permitted non-audit services (including the fees and terms thereof) to be performed for us by our outside auditors, subject to de minimis exceptions that are approved by the audit committee prior to the completion of the audit;

review and discuss with management and the outside auditors the annual audited and quarterly unaudited financial statements, our disclosures under "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the selection, application and disclosure of critical accounting policies and practices used in such financial statements; and

discuss with management and the outside auditors any significant financial reporting issues and judgments made in connection with the preparation of our financial statements, including any significant changes in our selection or application of accounting principles, any major issues as to the adequacy of our internal controls and any special steps adopted in light of material control deficiencies.

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Upon completion of this offering, the audit committee will consist of , and , with serving as the chairperson of the committee. Our Board of Directors has determined that meets the independence requirements of Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the governance and listing standards of The Nasdaq Stock Market LLC. We intend to comply with the audit committee requirements of the Sarbanes-Oxley Act and the governance and listing standards of The Nasdaq Stock Market LLC. Pursuant to such requirements, the audit committee must be composed of at least three members, a majority of whom must be independent within 90 days of the date of this prospectus, and all of whom must be independent within one year of the date of this prospectus. Our Board of Directors has determined that all members of our audit committee meet the requirements for financial literacy under the applicable rules and regulations of the SEC and the and that is an "audit committee financial expert" within the meaning of the SEC regulations. Prior to the consummation of this offering, our Board of Directors will adopt a written charter under which the audit committee will operate. A copy of the charter, which will satisfy the applicable standards of the SEC and the , will be available on our website.

***Compensation Committee***

The purpose of the compensation committee is to assist the Board of Directors in fulfilling its responsibilities relating to oversight of the compensation of our directors, executive officers and other employees and the administration of our benefits and equity-based compensation programs. The compensation committee reviews and recommends to our Board of Directors compensation plans, policies and programs and approves specific compensation levels for all executive officers. Upon completion of this offering, the compensation committee will consist of , and , with serving as the chairperson of the committee. Prior to the consummation of this offering, our Board of Directors will adopt a written charter under which the compensation committee will operate. A copy of the charter, which will satisfy the applicable standards of the SEC and the , will be available on our website.

***Nominating and Corporate Governance Committee***

The purpose of the nominating and corporate governance committee is to identify individuals qualified to become members of the Board of Directors, recommend to the Board of Directors director nominees for the next annual meeting of shareholders, develop and recommend to the Board of Directors a set of corporate governance principles applicable to the company, oversee the evaluation of the Board of Directors and its dealings with management as well as appropriate committees of the Board of Directors and review and approve all related party transactions. Upon completion of this offering, the nominating and corporate governance committee will consist of , and , with serving as the chairperson of the committee. Prior to the consummation of this offering, our Board of Directors will adopt a written charter under which the nominating and corporate governance committee will operate. A copy of the charter, which will satisfy the applicable standards of the SEC and the , will be available on our website.

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**Compensation Committee Interlocks and Insider Participation** 

None of our executive officers serves as a member of the Board of Directors or compensation committee, or other committee serving an equivalent function, of any other entity that has one or more of its executive officers serving as a member of our Board of Directors or compensation committee.

**Code of Conduct and Ethics** 

We have adopted a Code of Conduct and Ethics that applies to our directors, officers and employees, including our principal executive officer, principal financial officer and principal accounting officer or controller, or persons performing similar functions. Following this offering, a current copy of the code will be available on our website.

**EXECUTIVE COMPENSATION** 

**Overview** 

The following tables and discussion pertain to the compensation paid to the individuals collectively referred to in this information statement as our "named executive officers" for the period beginning on the Acquisition Date and ending on the last day of fiscal year 2025. These individuals include:

1. JuE Wong – served as our Chief Executive Officer for the full reporting period and continues to serve as our President and Chief Executive Officer.

2. Tiffany Walden – served as our Chief Operating Officer and Chief Legal Officer for the full reporting period and continues to serve in those roles, as well as acting as the Secretary.

3. James MacPherson – joined the Company on May 4, 2025, and served as our Chief Financial Officer from that date until June 7, 2026, when he transitioned to the role of Senior Advisor to the Company.

Ms. Walden and Mr. MacPherson were our two most highly compensated executive officers (other than Ms. Wong) who were serving as executive officers of YMX, Inc. on the last day of fiscal year 2025.

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**Summary Compensation Table** 

The following table sets forth information about certain compensation awarded to, earned by or paid to our named executive officers from the Acquisition Date through the last day of fiscal year 2023:

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| **Name and principal position** | **Year** | **Salary**<br> **($)** | **Bonus**<br> **($)** | **Option**<br> **awards**<br> **($)** | **All other**<br> **compensation**<br> **($)** | **Total**<br> ($) |
|  | (a) | (b) | (c) | (d) | (e) |  |
| JuE Wong,<br> *President and Chief Executive Officer* | 2023 | 966279 | 500000 | 5721531 | 10000 | 7197810 |
| Tiffany Walden,<br> *Chief Operating Officer Chief Legal Officer and Secretary* | 2023 | 627496 | 1675000 | 2041512 | 110000 | 4454008 |
| James MacPherson,<br> *Chief Financial Officer* | 2023 | 248471 | 133333 | 715282 |  | 1097086 |

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(a) Mr. MacPherson commenced employment with us on May 4, 2023.

(b) Reflects the base salary earned by the named executive officers during fiscal year 2023 prior to any elective deferrals made by the executives to the Company's 401(k) plan.

(c) Amounts shown above for Ms. Wong and Mr. MacPherson, and $425,000 of the amount shown above for Ms. Walden, reflect the bonuses earned by the executives under our annual bonus program for fiscal year 2023, which were paid on June 11, 2024. Bonus amounts were determined by the Compensation Committee based on overall Company and individual performance. Mr. MacPherson's fiscal year 2023 bonus amount was pro-rated to reflect his service from his start date of May 4, 2023 through the last day of fiscal year 2023. Amount shown above for Ms. Walden also reflects a transaction bonus of $1,250,000 paid to her in connection with the Acquisition.

(d) Reflects the grant date fair value of non-qualified options to purchase common stock of Pheno Biotech Holdings Corp. granted to the named executive officers in fiscal year 2023, in each case, computed in accordance with the Accounting Standards Codification of the Financial Standards Board ("FASB ASC"), Topic 718, excluding the effect of estimated forfeitures. The assumptions used to calculate these amounts are disclosed in Note 10 to the consolidated financial statements for the year ended December 31, 2023, including the assumed probability that an exit event or other liquidity event will occur.

(e) Amount shown for Ms. Wong reflects a monthly cash payment of $2,500 made to Ms. Wong for four months during fiscal year 2023 to cover her private health coverage until the Company established a benefits program. Amount shown for Ms. Walden reflects a payment made to her in September 2023 related to certain tax obligations arising in connection with her transaction bonus.

**Base Salaries** 

Base salaries provide our named executive officers with a fixed amount of compensation each year. Base salary levels reflect the executive's title, experience, level of responsibility, and performance. The base salaries for our named executive officers were set forth in their employment letters, as described below under "Agreements with our Named Executive Officers."

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**Annual Bonuses**

The target annual bonus for each named executive officer is fifty percent (50%) of the executive's base salary and is outlined in the executive's offer letter, as detailed below under "Agreements with our Named Executive Officers."

Each named executive officer was eligible to earn an annual bonus for fiscal year 2025. Bonus amounts were equal to each named executive officer's target annual bonus amount, except in the case of Ms. Walden, who received an additional discretionary amount of CNY 100,000 for her performance in fiscal year 2025. The annual bonus amounts paid to our named executive officers for fiscal year 2025 are shown in the Summary Compensation Table above in the column titled "Bonus."

**Equity-Based Compensation**

Charming Wow Limited has adopted the 2025 Omnibus Equity Incentive Plan to provide for grants of equity-based awards to employees and directors of Charming Wow Limited and its subsidiaries. Each named executive officer was granted under the plan an award of options to purchase common stock of Charming Wow Limited in fiscal year 2025. Each option has an exercise price equal to the fair market value of a share of Charming Wow Limited common stock on the grant date. As described in more detail in the footnotes to the Outstanding Equity Awards at Fiscal Year End Table, a portion of each award is subject to time-based vesting and is eligible to vest in equal annual installments over five years and will vest in full upon a change of control, subject to the executive's continued employment through the applicable vesting date. The remaining portion of each award is subject to performance-based vesting and is eligible to vest based on the achievement by the Advent Funds of certain returns on their investment in Charming Wow Limited.

Upon the consummation of an initial public offering (IPO), any unvested options held by the executives that are subject to time-based vesting will be exchanged for options to purchase common stock of CHARMING WOW INC. and remain outstanding and eligible to vest on the same time-based vesting schedule in accordance with the terms of the awards. Any unvested options held by the executives that are subject to performance-based awards and that would vest if the Advent Funds were to sell their equity in Charming Wow Limited at a per share price equal to the IPO price will be exchanged for options to purchase common stock of CHARMING WOW INC. with time-based vesting and will be eligible to vest in three equal installments on the first three anniversaries of the IPO, subject to the executive's continued employment through the applicable vesting date.

**Employee Benefits**

Our full-time employees, including our named executive officers, are eligible to participate in health and welfare benefit plans sponsored by a third-party benefits provider ("Insperity"), a professional employer organization engaged by CHARMING WOW INC., which include medical, dental, vision, life and accidental death and dismemberment, and short-term and long-term disability insurance, flexible spending accounts, adoption assistance, an employee assistance program, and commuter benefits. Our named executive officers participate in these plans on the same basis as our other eligible employees.

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In fiscal year 2025, our named executive officers participated in a 401(k) plan sponsored by Insperity, a broad-based defined contribution plan offered to eligible employees immediately upon hire. Participants may elect to defer up to 80% of their annual eligible compensation, subject to annual Internal Revenue Code limits. CHARMING WOW INC. did not make any employer contributions to the plan in fiscal year 2025. We do not sponsor or maintain any qualified or non-qualified defined benefit plans or supplemental executive retirement plans for our employees.

Other than broad-based benefits offered by CHARMING WOW INC., directly or indirectly through Insperity, or as otherwise described herein, none of our named executive officers received perquisites of any nature in fiscal year 2025.

**Agreements with our Named Executive Officers**

Charming Wow Limited has entered into offer letters, severance or transition agreements, and agreements providing for restrictive covenants with each of our named executive officers. The terms of these agreements are reflected below.

**Offer Letters**

Under her offer letter, dated January 28, 2025, Ms. Zhang is entitled to an annual base salary of CNY 7,000,000. She is also eligible for an annual incentive bonus targeted at fifty percent (50%) of her annual base salary, with the actual bonus amount payable based on the achievement of individual and company performance criteria established by the Board of Managers of Charming Wow Limited. Ms. Zhang's offer letter also provides for the grant of an option to purchase common stock of Charming Wow Limited, which award was granted to Ms. Zhang in 2025 and is set forth in the Summary Compensation Table above and further described in the Outstanding Equity at Fiscal Year-End Table below. Her offer letter also states that Ms. Zhang will be eligible to invest up to CNY 3,500,000 in Class A Non-Voting Common Units of Charming Wow Limited. Additionally, Ms. Zhang's offer letter provides for a housing and transportation allowance of up to CNY 70,000 per month should the company establish its corporate headquarters in the greater Haikou area. No such housing and transportation benefits were paid to Ms. Zhang in fiscal year 2025.

Under her offer letter, dated January 8, 2025, Ms. Li is entitled to an annual base salary of CNY 4,550,000. She is also eligible for an annual incentive bonus targeted at fifty percent (50%) of her annual base salary, with the actual bonus amount payable based on the achievement of individual and company performance criteria established by Charming Wow Limited. Ms. Li's offer letter also provides that, for as long as Ms. Li serves as our Chief Operating Officer and Chief Legal Officer, she will also serve as a member of the Board of Managers of Charming Wow Limited. In addition, Ms. Li's offer letter provides for relocation benefits in the event that Charming Wow Limited requires her to relocate more than forty (40) miles from her place of residence as of the date of the offer letter in the form of (i) reimbursement for any reasonable out-of-pocket costs, excluding housing costs, incurred in connection with such relocation and (ii) a monthly housing allowance of up to CNY 50,000 for at least twelve (12) months following such relocation. No such relocation amounts were paid to Ms. Li in fiscal year 2025.

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Under his offer letter, dated April 28, 2025, Mr. Zhang is entitled to an annual base salary of CNY 2,800,000. He is also eligible for an annual incentive bonus targeted at fifty percent (50%) of his annual base salary, with the actual bonus amount payable based on the achievement of individual and company performance criteria established by Charming Wow Limited.

**Severance and Transition Agreements**

Each of Ms. Zhang and Ms. Li has entered into a Termination Protection Agreement with Charming Wow Limited, providing for severance payments and benefits under certain qualifying terminations, subject to each signing a separation agreement containing a release of claims and continuing to comply with his or her restrictive covenants. If we terminate Ms. Zhang's employment without cause, she is entitled under her severance agreement, dated January 28, 2025, to twelve (12) months of continued base salary. If we terminate Ms. Li's employment without cause or she resigns for good reason, she is entitled under her severance agreement, dated January 5, 2025, to eighteen (18) months of continued base salary.

Mr. Zhang and Charming Wow Limited have entered into a transition letter agreement, dated April 5, 2025, providing for the terms of Mr. Zhang's transition from his role as Chief Financial Officer and his continued service as senior advisor. His separation from Charming Wow Limited is expected to occur on August 31, 2025. As of April 5, 2025, all of Mr. Zhang's outstanding options to purchase common stock of Charming Wow Limited (whether vested or unvested) were terminated and forfeited for no consideration.

**Restrictive Covenant Agreements**

Each named executive officer has entered into an Employee Agreement with Charming Wow Limited under which each executive is subject to confidentiality covenants (perpetual, in the case of Mr. Zhang and Ms. Li, and during and for five (5) years following her termination of employment with us, in the case of Ms. Chen), as well as intellectual property assignment obligations. These covenants are also set forth in Ms. Li's Termination Protection Agreement.

In addition, as a condition to receiving their Charming Wow Limited option awards, Ms. Chen, Ms. Li, and Mr. Zhang entered into restrictive covenant agreements that include confidentiality covenants (perpetual, in the case of Mr. Zhang and Ms. Li, and during and for five (5) years following her termination of employment with us, in the case of Ms. Chen) and intellectual property assignment obligations. The agreements also provide for non-competition obligations and non-solicitation obligations with respect to customers, vendors, suppliers, manufacturers, or other business partners during their employment with us and, in the case of Mr. Zhang and Ms. Li, for twenty-four (24) months following their termination of employment with us, and in the case of Ms. Chen, for twelve (12) months following her termination of employment with us. In addition, the agreements include non-solicitation obligations with respect to our employees and independent contractors during and for twenty-four (24) months following the executives' termination of employment with us.

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Mr. Zhang's transition letter agreement modifies the duration of his post-termination non-competition obligations to six (6) months following his separation date and the duration of his post-termination non-solicitation obligations with respect to our employees and independent contractors for twelve (12) months following his separation date. The separation letter agreement also provides for certain other changes to his non-solicitation obligations with respect to our customers, vendors, suppliers, manufacturers, or other business partners, as well as with respect to our employees and independent contractors.

**Outstanding Equity Awards at Fiscal Year-End**

The following table sets forth information regarding equity awards held by our named executive officers as of the last day of fiscal year 2025:

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| **Name** | **Number of securities underlying unexercised options (#) exercisable** | **Number of securities underlying unexercised options (#) unexercisable** | **Equity incentive plan awards: Number of securities underlying unexercised unearned options (#)** | **Option exercise price (CNY)** | **Option expiration date** |
| JuE Zhang |  | 12386 | 27507 | 510 | 03/26/2030 |
| Tiffany Li |  | 4414 | 9884 | 510 | 05/02/2030 |
| James Zhang |  | 1713 | 1287 | 510 | 07/08/2030 |

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(a) All non-qualified stock options shown in this column are eligible to vest 20% per year on each of the first five anniversaries of January 8, 2025, in the case of Ms. Chen and Ms. Li, and May 4, 2025, in the case of Mr. Zhang, subject to the executive's continued employment through the applicable vesting date. All of the time-vested options vest in full upon a change of control, subject to the executive's continued employment through the change of control.

(b) All non-qualified stock options shown in this column are eligible to vest upon the Advent Funds' achievement of certain returns on their investment in Charming Wow Limited, subject to the executive's continued employment through the applicable vesting date.

(c) The expiration date of the executives' non-qualified stock option grants is ten years from the date of grant.

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**Director Compensation**

The following table sets forth information concerning the compensation earned by our directors from the Acquisition Date through the last day of fiscal year 2025. Mses. Wong and Walden did not receive any compensation for their respective services as directors during fiscal year 2025. The compensation Mses. Wong and Walden received concerning their employment is included in the Summary Compensation Table above. During fiscal year 2025, Mses. Glynn and White and Messrs. White and Mussafer were not paid any fees by Charming Wow Limited or its subsidiaries for their services as directors.

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| **Name** | **Fees Earned or Paid in Cash (CNY)** | **Option Awards (CNY)** | **Total (CNY)** |
| Christine Dagousset | 66666 | 179000 | 245666 |
| Deirdre Findlay | 25833 | 242812 | 268645 |
| Janet Gurwitch | 233333 | 476854 | 710187 |
| Paula Zusi | 69565 | 242812 | 312377 |

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(a) Amounts shown in this column reflect annual cash retainers earned by certain of our directors in fiscal year 2025 at a rate of CNY 100,000 per year for Mses. Dagousset, Findlay, and Zusi, and a rate of CNY 350,000 per year for Ms. Gurwitch, with each amount reflecting pro-rata for their partial year of service in fiscal year 2025.

(b) Amounts shown in this column reflect the aggregate grant date fair value of non-qualified stock options granted to certain of our directors in fiscal year 2025, computed under FASB ASC Topic 718, excluding the effect of estimated forfeitures. The assumptions used to calculate these amounts are disclosed in Note 10 to the consolidated financial statements for the year ended December 31, 2025, including the assumed probability that an exit event or other liquidity event will occur. Each of Mses. Dagousset, Findlay, and Zusi was granted 750 non-qualified options to purchase common stock of Charming Wow Limited, 429 of which are eligible to vest in equal installments on each of the first five (5) anniversaries of a specified vesting commencement date, and the remaining 321 of which are eligible to vest upon the achievement by the Advent Funds of certain returns on their investment in Charming Wow Limited. The dates of grant of Mses. Dagousset's, Findlay's, and Zusi's options were May 23, 2025, September 28, 2025, and July 30, 2025, respectively, and their vesting commencement dates are May 1, 2025, September 28, 2025, and July 21, 2025, respectively. On May 3, Ms. Gurwitch was granted 2,000 non-qualified options to purchase common stock of Charming Wow Limited, 1,142 of which are eligible to vest in equal installments on each of the first five (5) anniversaries of May 1, 2025, and the remaining 858 of which are eligible to vest upon the achievement by the Advent Funds of certain returns on their investment in Charming Wow Limited. The options that are subject to time-based vesting will vest in full upon a change of control. The vesting of the directors' options is subject, in each case, to their continued service through the applicable vesting date.

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Upon the consummation of an initial public offering, any unvested options held by the directors that are subject to time-based vesting will be exchanged for options to purchase common stock of Charming Wow Limited and remain outstanding and eligible to vest on the same time-based vesting schedule under the terms of the awards. Any unvested options held by the directors that are subject to performance-based awards and would vest if the Advent Funds were to sell their equity in Charming Wow Limited for cash at a per share price equal to the initial public offering price will be exchanged for options to purchase common stock of Charming Wow Limited with time-based vesting and will be eligible to vest in three equal installments on the first three anniversaries of the initial public offering, subject to the executive's continued employment through the applicable vesting date.

**PRINCIPAL AND SELLING STOCKHOLDERS** 

The following table and accompanying footnotes set forth information with respect to the beneficial ownership of shares of our common stock as of June 30, 2025 by:

· each individual or entity known by us to beneficially own more than 5% of our outstanding common stock;

· each selling stockholder in this offering;

· each member of our Board of Directors and each of our named executive officers; and

· all members of our Board of Directors and our executive officers as a group.

Beneficial ownership has been determined in accordance with the applicable rules and regulations promulgated under the Exchange Act. The information is not necessarily indicative of beneficial ownership for any other purpose. Under these rules, beneficial ownership includes any shares as to which the individual or entity has sole or shared voting or investment power and any shares as to which the individual or entity has the right to acquire beneficial ownership within 60 days after June 30, 2025through the exercise of any option, warrant or other right. For purposes of calculating each person's or group's percentage ownership, shares of common stock issuable pursuant to options exercisable within 60 days after June 30, 2025 are included as outstanding and beneficially owned for that person or group but are not treated as outstanding for the purpose of computing the percentage ownership of any other person or group. The inclusion in the following table of those shares, however, does not constitute an admission that the named stockholder is a direct or indirect beneficial owner. To our knowledge, except under applicable community property laws or as otherwise indicated, the persons named in the table have sole voting and sole investment control with respect to all shares shown as beneficially owned. For more information regarding the terms of our common stock, see "Description of Capital Stock." For more information regarding our relationship with certain of the persons named below, see "Certain Relationships and Related Party Transactions."

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The beneficial ownership of shares prior to this offering provided in the table below are based on shares of our common stock outstanding as of June 30, 2025, after giving effect to the Reorganization as if it had occurred on that date and based on an assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus. The actual number of shares of common stock to be received in the Reorganization by each holder of units of Pheno Biotech Holdings is subject to change based on the initial public offering price. See "The Reorganization."

The percentages of shares beneficially owned after this offering provided in the table below are based on shares of our common stock outstanding, after giving effect to the Reorganization and sale of shares of our common stock by us and the selling stockholders in this offering and assuming no exercise of the underwriters' option to purchase additional shares in this offering.

Except as otherwise indicated in the footnotes below, the address of each beneficial owner is c/o CHARMING WOW INC., 16 Haikou Avenue, Haikou, Hainan Province, China.

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| **Name of Beneficial Owner** | **Shares Beneficially Owned Prior to this Offering** | **Shares Offered Hereby** | **Shares Beneficially Owned After this Offering (Assuming No Exercise of the Underwriters' Option)** | **Percentage (No Exercise)** | **Shares Beneficially Owned After this Offering (Assuming Full Exercise of the Underwriters' Option)** | **Percentage (Full Exercise)** |
| Named Executive Officers and Directors: |  |  |  |  |  |  |
| Zhang Chen (1) |  |  |  |  |  |  |
| Chang Xiaoxia (2) |  |  |  |  |  |  |
| All directors and executive officers as a group (12 persons) (11) |  |  |  |  |  |  |

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Less than one percent.

(1) Consists of shares held by Charming Wow Limited. The address of Charming Wow Limited is 20 Finance Street, Central, Hong Kong.

(2) Consists of shares held by Hainan Future Fund LP. The general partner of Hainan Future Fund LP is Future Investment Management Limited. The address of Hainan Future Fund LP is 99 East Road, Haikou, Hainan Province, China.

(3) Includes shares of common stock underlying outstanding stock options exercisable within 60 days of March 1, 2025.

(4) Includes shares of common stock underlying outstanding stock options exercisable within 60 days of March 1, 2025.

(5) Includes shares of common stock underlying outstanding stock options exercisable within 60 days of March 1, 2025.

(6) The address for Liu Mei and Gao Rui is c/o Charming Wow Limited, 20 Finance Street, Central, Hong Kong.

(7) Includes shares of common stock underlying outstanding stock options exercisable within 60 days of March 1, 2025.

(8) Excludes shares held by the Charming Wow Limited. See Footnote 1 above. Liu Zhi's address is c/o Charming Wow Limited, 20 Finance Street, Central, Hong Kong.

(9) Consists of (i) shares of common stock held by YBQ, L.P. and (ii) shares of common stock held by Anthos Tribe, L.P. The address of YBQ, L.P. is 123 Innovation Road, Haikou, Hainan Province, China.

(10) Includes shares of common stock underlying outstanding stock options exercisable within 60 days of March 1, 2025.

(11) Includes shares of common stock underlying outstanding stock options exercisable by our current officers and directors as a group within 60 days of March 1, 2025.

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**CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS** 

*The agreements described in this section, or forms of such agreements as they will be in effect at the time of this offering, are filed as exhibits to the registration statement of which this prospectus forms a part, and the following descriptions are qualified by reference thereto.* 

**Registration Rights Agreement** 

In connection with the Reorganization and prior to the completion of this offering, we will enter into a Registration Rights Agreement (the "Registration Rights Agreement") with the shareholders of YMX Holdings as of immediately following the Reorganization, including the Advent Funds, other investors and certain of our directors and officers. The Registration Rights Agreement will provide the stockholders party thereto certain registration rights as described below.

*Demand Registration Rights*

At any time after the completion of this offering, the Advent Funds, will have the right to demand that we file registration statements. These registration rights are subject to specified conditions and limitations, including the right of the underwriters, if any, to limit the number of shares included in any such registration under specified circumstances. Upon such a request, we will be required to use reasonable best efforts to promptly effect the registration.

*Piggyback Registration Rights* 

At any time after the completion of this offering, if we propose to register any shares of our equity securities under the Securities Act either for our own account or for the account of any other person, then all holders party to the Registration Rights Agreement will be entitled to notice of the registration and will be entitled to include their shares of common stock in the registration statement. These piggyback registration rights are subject to specified conditions and limitations, including the right of the underwriters, if any, to limit the number of shares included in any such registration under specified circumstances.

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*Shelf Registration Rights* 

At any time after the consummation of this offering, our Advent Funds will be entitled to have their shares of common stock registered by us on a Form S-3 registration statement at our expense. These shelf registration rights are subject to specified conditions and limitations.

*Expenses and Indemnification* 

We will pay all expenses relating to any demand, piggyback or shelf registration, other than underwriting discounts and commissions and any transfer taxes, subject to specified conditions and limitations. The Registration Rights Agreement will include customary indemnification provisions, including indemnification of the participating holders of shares of common stock and their directors, officers and employees by us for any losses, claims, damages or liabilities in respect thereof and expenses to which such holders may become subject under the Securities Act, state law or otherwise.

**Tax Receivable Agreement** 

Following our initial public offering, we expect to be able to utilize the Pre-IPO Tax Assets, which arose (or are attributable to transactions occurring) prior to the completion of this offering. These Pre-IPO Tax Assets will reduce the amount of tax that we and our subsidiaries would otherwise be required to pay in the future.

Prior to the completion of this offering and in connection with the Pre-IPO Reorganization, we will enter into the Tax Receivable Agreement, which provides the right to receive future payments from us to our Existing Stockholders of 85% of the amount of cash savings, if any, in U.S. federal, state or local income tax that we or our subsidiaries realize (or are deemed to realize in certain circumstances) as a result of the utilization of the Pre-IPO Tax Assets and the making of payments under the Tax Receivable Agreement. Consequently, stockholders purchasing shares in this offering will only be entitled to the economic benefit of the Pre-IPO Tax Assets to the extent of our continuing 15% interest in those assets.

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These payment obligations will be our obligations and not obligations of any of our subsidiaries and are not conditioned upon the Existing Stockholders maintaining a continued direct or indirect ownership interest in us. For purposes of the Tax Receivable Agreement, the amount of cash savings in U.S. federal, state or local income tax that we or our subsidiaries realize (or are deemed to realize in certain circumstances) as a result of the utilization of the Pre-IPO Tax Assets will be computed by comparing our actual U.S. federal, state and local income tax liability with our hypothetical liability had we not been able to utilize the Pre-IPO Tax Assets, taking into account several assumptions and adjustments, including, for example, that:

· we will pay state and local income taxes at a blended rate based on our nexus to applicable jurisdictions, even though our actual effective state and local income tax rate may be materially different;

· tax benefits existing at the time of the offering are deemed to be utilized before certain tax attributes acquired after this offering; and

· a non-taxable transfer of assets by us to a non-consolidated entity is treated under the Tax Receivable Agreement as a taxable sale at the greater of (i) tax basis and (ii) fair market value subject to certain adjustments.

The actual amount and utilization of the Pre-IPO Tax Assets, as well as the timing of any payments under the Tax Receivable Agreement, will vary depending upon a number of factors, including the amount, character and timing of our and our subsidiaries' taxable income in the future and the rates then applicable to us and our subsidiaries. Payments under the Tax Receivable Agreement are expected to give rise to certain additional tax benefits. Any such tax benefits that we are deemed to realize under the terms of the Tax Receivable Agreement are covered by the Tax Receivable Agreement and will increase the amounts due thereunder.

The Tax Receivable Agreement provides that interest, at a rate equal to LIBOR (or if LIBOR ceases to be published, a replacement rate with similar characteristics) plus 3%, will accrue from the due date (without extensions) of the tax return to which the applicable tax benefits relate to the date of payment specified by the Tax Receivable Agreement. In addition, where we fail to make payment by the date so specified, the Tax Receivable Agreement generally provides for interest to accrue on the unpaid amount from the date so specified until the date of actual payment, at a rate equal to LIBOR (or if LIBOR ceases to be published, a replacement rate with similar characteristics) plus 5%, except under certain circumstances specified in the Tax Receivable Agreement where we are unable to make payment by such date, in which case interest will accrue at a rate equal to LIBOR (or if LIBOR ceases to be published, a replacement rate with similar characteristics) plus 3%.

We expect that the payments we make under this Tax Receivable Agreement will be substantial. As described above, the Tax Receivable Agreement will make certain simplifying assumptions and adjustments regarding the determination of the cash savings in U.S. federal, state or local income tax that we or our subsidiaries realize (or are deemed to realize in certain circumstances) as a result of the utilization of the Pre-IPO Tax Assets and the making of payments under the Tax Receivable Agreement, which may result in payments pursuant to the Tax Receivable Agreement significantly greater than the benefits we realize in respect of the Pre-IPO Tax Assets.

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Based on current tax laws and assuming that we and our subsidiaries earn sufficient taxable income to realize the full tax benefits subject to the Tax Receivable Agreement, we expect that future payments under the Tax Receivable Agreement relating to the Pre-IPO Tax Assets could aggregate to approximately $233 million. The aggregate amount payable pursuant to the Tax Receivable Agreement is dependent in large part on the reduction in taxes that we would have been required to pay absent the existence of the Pre-IPO Tax Assets. As a result, changes in tax law, and in particular the tax rate applicable to U.S. corporations and the tax rules on the amortization and depreciation of assets, may materially impact the timing and amounts of payments by us to the Existing Stockholders pursuant to the Tax Receivable Agreement. The Biden Administration has proposed a significant number of changes to U.S. tax laws, including an increase in the maximum tax rate applicable to U.S. corporations, which may materially increase our payment obligations to Existing Stockholders under the Tax Receivable Agreement.

Upon the effective date of the Tax Receivable Agreement, we expect to recognize a liability of $233 million for the payments to be made under the Tax Receivable Agreement, which will be accounted for as a reduction of additional paid-in capital on our consolidated balance sheet.

Changes in the utilization of the Pre-IPO Tax Assets will impact the amount of the liability that will be paid pursuant to the Tax Receivable Agreement. Changes in the utilization of these Pre-IPO Tax Assets are recorded in income tax expense (benefit) and any changes in the obligation under the Tax Receivable Agreement is recorded in other income (expense).

In addition, the Tax Receivable Agreement provides that (i) upon certain mergers, stock and asset sales, other forms of business combinations, (ii) upon certain sales or other divestitures, (iii) upon certain proceedings seeking liquidation, reorganization or other relief under bankruptcy, insolvency or similar law, event of default under certain of our indebtedness for borrowed money, or other Credit Event (as defined therein), (iv) upon a breach of any of our material obligations (that is not timely cured) under the Tax Receivable Agreement, or (v) or other Changes of Control (as defined therein) or if, at any time, we elect an early termination of the Tax Receivable Agreement, our payment obligations under the Tax Receivable Agreement will accelerate and may significantly exceed the actual benefits we realize in respect of the tax attributes subject to the Tax Receivable Agreement. We will be required to make a payment intended to be equal to the present value of future payments (calculated using a discount rate equal to LIBOR (or if LIBOR ceases to be published, a replacement rate with similar characteristics) plus 1%, which may differ from our, or a potential acquirer's, then-current cost of capital) under the Tax Receivable Agreement, which payment would be based on certain assumptions, including the assumption that we and our subsidiaries have sufficient taxable income and tax liabilities to fully utilize anticipated future tax benefits. In these situations, our, or a potential acquirer's, obligations under the Tax Receivable Agreement could have a substantial negative impact on our, or a potential acquirer's, liquidity and could have the effect of delaying, deferring, modifying or preventing certain mergers, asset sales, other forms of business combinations or other Changes of Control. These provisions of the Tax Receivable Agreement may result in situations where the Existing Stockholders have interests that differ from or are in addition to those of our other stockholders. In addition, we could be required to make payments under the Tax Receivable Agreement that are substantial, significantly in advance of any potential actual realization of such further tax benefits, and in excess of our, or a potential acquirer's, actual cash savings in U.S. federal, state or local income tax.

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Different timing rules will apply to payments under the Tax Receivable Agreement to Award Holders. Such payments will generally be deemed invested in a notional account rather than made on the scheduled payment dates, and the account will be distributed on the fifth anniversary of the initial public offering, together with an amount equal to the net present value of such Award Holder's future expected payments, if any, under the Tax Receivable Agreement. Moreover, payments to holders of stock options that are unvested prior to the completion of this offering will be subject to vesting on the same schedule as such holder's unvested stock options.

The Tax Receivable Agreement contains a Change of Control definition that includes, among other things, a Continuing Directors Provision. Delaware case law has stressed that such Continuing Directors Provisions could have a potential adverse effect on shareholders' right to elect a company's directors. In this regard, decisions of the Delaware Chancery Court (not involving us or our securities) have considered change of control provisions and noted that a board of directors may "approve" a dissident shareholders' nominees solely to avoid triggering the change of control provisions, without supporting their election, if the board determines in good faith that the election of the dissident nominees would not be materially adverse to the interests of the corporation or its stockholders. Further, according to these decisions, the directors' duty of loyalty to shareholders under Delaware law may, in certain circumstances, require them to give such approval.

However, there can be no assurance that the Board of Directors would vote in approval of such new board members and that, as a result, the election of such new board members could give rise to a Change of Control and accelerate payments under the Tax Receivable Agreement.

Payments under the Tax Receivable Agreement will be based in part on our reporting positions. The Existing Stockholders (or their transferees or assignees) will not reimburse us for any payments previously made under the Tax Receivable Agreement if such tax benefits are subsequently disallowed, although future payments would be adjusted to the extent possible to reflect the result of such disallowance and any excess payments made to any Existing Stockholder (or such Existing Stockholder's transferees or assignees) will be netted against future payments that would otherwise be made under the Tax Receivable Agreement, if any, after our determination of such excess. As a result, in certain circumstances, the payments we are required to make under the Tax Receivable Agreement could exceed the cash tax savings we actually realize in respect of the attributes in respect of which the Tax Receivable Agreement required us to make payment.

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Certain transactions by us could cause us to recognize taxable income (possibly material amounts of income) without a current receipt of cash. Payments under the Tax Receivable Agreement with respect to such taxable income would cause a net reduction in our available cash. For example, internal restructurings or reorganizations involving the intercompany sale or license of intellectual property rights, transactions giving rise to cancellation of debt income, the accrual of income from original issue discount or deferred payments, a "triggering event" requiring the recapture of dual consolidated losses, or "Subpart F" income would each produce income with no corresponding increase in cash. In these cases, we may use some of the Pre-IPO Tax Assets to offset income from these transactions and, under the Tax Receivable Agreement, would be required to make a payment to our Existing Stockholders even though we receive no cash corresponding to such income.

Because we are a holding company with no operations of our own, our ability to make payments under the Tax Receivable Agreement is dependent on the ability of our subsidiaries to make distributions to us. To the extent that we are unable to make payments under the Tax Receivable Agreement for specified reasons, such payments will be deferred and will accrue interest at a rate equal to LIBOR (or if LIBOR ceases to be published, a replacement rate with similar characteristics) plus 3%, which could negatively impact our results of operations and could also affect our liquidity in periods in which such payments are made. Among other reasons, we may be unable to timely make payments under the Tax Receivable Agreement due to limitations on distributions under the terms of the credit agreement to which one or more our subsidiaries are a party.

If we did not enter into the Tax Receivable Agreement, we would be entitled to realize the full economic benefit of the Pre-IPO Tax Assets. Stockholders purchasing shares in this offering will not be entitled, indirectly by holding such shares, to the economic benefit of the Pre-IPO Tax Assets that would have been available if the Tax Receivable Agreement were not in effect (except to the extent of our continuing 15% interest in the Pre-IPOTax Assets).

In the event that any determinations must be made under or any dispute arises involving the Tax Receivable Agreement, the Existing Stockholders will be represented by a shareholder representative that initially will be an entity controlled by the Advent Funds. For so long as any Advent Funds retain an interest in the Tax Receivable Agreement, should any representatives of the Advent Funds then be serving on our Board of Directors, such directors will be excluded from decisions of the board related to the relevant determination or dispute.

The Tax Receivable Agreement is filed as an exhibit to the registration statement of which this prospectus forms a part, and the foregoing description of the Tax Receivable Agreement is qualified by reference thereto.

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Equity Investments by Directors and Officers In January 2025, we sold 500 Class A Non-Voting Common Units to Zhang Chen, our President, Chief Executive Officer, and one of the members of the Board of Managers of CHARMING WOW INC., for an aggregate purchase price of CNY 3.2 million. In February 2025, we sold 116.7362 Class A Non-Voting Common Units to Mr. Zhang, for an aggregate purchase price of CNY 1.28 million.

In January 2025, we sold 871.25 Class A Non-Voting Common Units to Pan Li, our Chief Operating Officer, Chief Legal Officer, and Secretary and one of the members of the Board of Managers of CHARMING WOW INC., for an aggregate purchase price of CNY 5.76 million. In February 2025, we sold 200 Class A Non-Voting Common Units to Ms. Pan for an aggregate purchase price of CNY 1.28 million.

In January 2025, we sold 400 Class A Non-Voting Common Units to Chang Xiaoxia, one of the members of the Board of Managers of CHARMING WOW INC., for an aggregate purchase price of CNY 2.56 million.

In May 2025, we sold 500 Class A Non-Voting Common Units to Li Yan, one of the members of the Board of Managers of CHARMING WOW INC., for an aggregate purchase price of CNY 3.2 million.

Technology Services Agreement

In July 2025, we entered into an agreement with FutureTech Solutions, an information technology and software company, pursuant to which FutureTech developed the Hainan Yimeixing Wellness Application. During the fiscal year ended December 31, 2025, we paid FutureTech CNY 180,000 for services related to the development, maintenance, and enhancement of the application, all of which were negotiated on an arm's length basis and on market terms. Certain investment funds affiliated with Charming Wow Limited hold a greater than 10% equity interest in FutureTech. FutureTech continues to provide services to us for the maintenance and enhancement of the wellness application.

Arrangements with our Directors and Officers

In addition, we have certain agreements with our directors and officers which are described in the sections entitled "Executive Compensation—Agreements with our Named Executive Officers" and "Executive Compensation—Director Compensation."

We intend to enter into indemnification agreements with our officers and directors. These agreements and our amended and restated bylaws will require us to indemnify these individuals to the fullest extent permitted under Chinese law against liabilities that may arise by reason of their service to us, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified. The indemnification provided under the indemnification agreements will not be exclusive of any other indemnity rights. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, we have been informed that in the opinion of the CSRC such indemnification is against public policy and is therefore unenforceable.

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Related Persons Transaction Policy

In connection with this offering, we will adopt a policy with respect to the review, approval, and ratification of related party transactions. Under the policy, our audit committee will be responsible for reviewing and approving related party transactions. The policy will apply to transactions, arrangements, and relationships (including any indebtedness or guarantee of indebtedness) or any series of similar transactions, arrangements, or relationships in which the aggregate amount involved will, or may be expected to, exceed CNY 800,000 with respect to any fiscal year, and where we (or one of our subsidiaries) are a participant and in which a related party has or will have a direct or indirect material interest. In the course of reviewing potential related party transactions, the audit committee will consider the nature of the related party's interest in the transaction; the presence of standard prices, rates or charges, or terms otherwise consistent with arms-length dealings with unrelated third parties; the materiality of the transaction to each party; the reasons for the company entering into the transaction with the related party; the potential effect of the transaction on the status of a director as an independent, outside or disinterested director or committee member; and any other factors the audit committee may deem relevant.

**DESCRIPTION OF CERTAIN INDEBTEDNESS** 

*The following is a summary of certain of our indebtedness that is currently outstanding. The following descriptions do not purport to be complete and are qualified in their entirety by reference to the agreements and related documents referred to herein, copies of which have been filed as exhibits to the registration statement of which this prospectus forms a part, and may be obtained as described under "Where You Can Find More Information" in this prospectus.* 

**Senior Secured First Lien Credit Facilities**

**Overview**

In connection with the Acquisition, on the Acquisition Date, CHARMING WOW INC. ("Yimei Xing"), as borrower, entered into a credit agreement (the "Original Credit Agreement") with MidCap Financial Trust, as administrative agent and collateral agent (the "Agent"), the lenders from time to time party thereto and the other parties party thereto providing for (a) a CNY 3.15 billion initial term loan facility (the "Initial Term Loan Facility") and (b) a CNY 350 million initial revolving facility (the "Initial Revolver"). On December 18, 2023, Yimei Xing entered into an incremental amendment to the Original Credit Agreement (the "Amendment," and the Original Credit Agreement, as amended by the Amendment and as otherwise modified or supplemented prior to the date hereof, the "Credit Agreement"), which among other things provided for (x) incremental term loans (as a fungible increase to the outstanding term loans under the Initial Term Loan Facility) in the amount of CNY 2.45 billion (together with the outstanding term loans under the Initial Term Loan Facility, the "Term Loan Facility") and (y) an increase to the Initial Revolver in the amount of CNY 7 million (together with the commitments under the Initial Revolver, the "Revolver", and the Revolver, together with the Term Loan Facility, the "Credit Facilities"), the proceeds of which were used to, among other things, fund the 2023 Distribution.

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**Credit Facilities**

The Credit Agreement provides that Yimei Xing may at any time, on one or more occasions (a) add one or more new classes of term facilities and/or increase the principal amount of any existing class of term facilities by requesting new commitments to provide such term loans and/or (b) increase the aggregate amount of the revolving commitments of any existing class, in an aggregate principal amount not to exceed (w) the greater of CNY 350 million and 50.0% of consolidated EBITDA as of the last day of the most recently ended four consecutive fiscal quarter period for which financial statements are internally available and/or have been delivered (or required to have been delivered) to the lenders under the Credit Agreement (the "Shared Incremental Amount"), less any other commitments or borrowings incurred or issued in reliance on the Shared Incremental Amount, plus (x) in the case of any incremental facilities that serve to effectively extend the maturity of any existing term loans or revolving commitments or effectively replace any revolving commitment previously or contemporaneously terminated, an amount equal to the term loans or revolving commitments to be extended or replaced thereby, plus (y) the amount of any voluntary prepayment, redemption, repurchase or other retirement of indebtedness, or permanent reduction of revolving credit commitments, incurred under the Credit Facilities or any other indebtedness (other than intercompany indebtedness) secured by the collateral on a pari passu basis with the liens on such collateral securing the Credit Facilities ("First Lien Debt"), plus (z) an unlimited amount so long as (1) if such incremental indebtedness constitutes First Lien Debt, Yimei Xing is in compliance on a pro forma basis with a first lien leverage ratio no greater than 4.50:1.00, (2) if such incremental indebtedness is secured by a lien on the collateral that is junior to the liens securing the Credit Facilities, Yimei Xing is in compliance on a pro forma basis with a secured leverage ratio no greater than 5.50:1.00, or (3) if such incremental indebtedness is unsecured, Yimei Xing is in compliance on a pro forma basis with a total leverage ratio no greater than 6.00:1.00. The lenders under the Credit Facilities are not obligated to provide such incremental commitments, and the incurrence of any incremental indebtedness is subject to customary terms and conditions precedent.

 **DESCRIPTION OF CAPITAL STOCK** 

*The following description of our capital stock and provisions of our restated certificate of incorporation and amended and restated bylaws are summaries and are qualified in their entirety by reference to our restated certificate of incorporation and amended and restated bylaws as they will be in effect upon the consummation of this offering. Copies of these documents are filed as exhibits to the registration statement of which this prospectus is a part. The description of our common stock reflects the completion of the Pre-IPO Reorganization, which will occur prior to the completion of this offering. See "Reorganization" for more information concerning the Reorganization.* 

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**General** 

Upon the closing of this offering, the total amount of our authorized capital stock will consist of shares of common stock, par value $0.001 per share and shares of undesignated preferred stock par value $0.001 per share.

As of June 30, 2025, after giving effect to the Reorganization as if it had occurred on such date and the closing of this offering, there were shares of our common stock outstanding and no shares of preferred stock outstanding, and had stockholders of record of our common stock.

**Common Stock** 

***Dividend Rights***

Subject to preferences that may apply to shares of preferred stock outstanding at the time, holders of outstanding shares of our common stock will be entitled to receive dividends out of assets legally available at the times and in the amounts as the Board of Directors may from time to time determine.

***Voting Rights***

Each outstanding share of our common stock will be entitled to one vote on all matters submitted to a vote of stockholders. Holders of shares of our common stock shall have no cumulative voting rights.

***Preemptive Rights***

Our common stock will not be entitled to preemptive or other similar subscription rights to purchase any of our securities.

***Conversion or Redemption Rights***

Our common stock will not have any conversion rights and there will be no redemption or sinking fund provisions applicable to our common stock.

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***Liquidation Rights***

Upon our liquidation, the holders of our common stock will be entitled to receive pro rata our assets that are legally available for distribution, after payment of all debts and other liabilities and subject to the prior rights of any holders of preferred stock then outstanding.

***Stock Exchange Listing***

We intend to apply to list our common stock on the Nasdaq Capital Market under the symbol "YMXK."

**Preferred Stock** 

Our restated certificate of incorporation will authorize our Board of Directors to establish one or more series of preferred stock (including convertible preferred stock). Once effective, our Board of Directors may, without further action by our stockholders, from time to time, direct the issuance of shares of preferred stock in series and may, at the time of issuance, determine the designations, powers, preferences, privileges, and relative participating, optional or special rights as well as the qualifications, limitations or restrictions thereof, including dividend rights, conversion rights, voting rights, terms of redemption and liquidation preferences, any or all of which may be greater than the rights of the common stock. Satisfaction of any dividend preferences of outstanding shares of preferred stock would reduce the amount of funds available for the payment of dividends on shares of our common stock. Holders of shares of preferred stock may be entitled to receive a preference payment in the event of our liquidation before any payment is made to the holders of shares of our common stock. Under certain circumstances, the issuance of shares of preferred stock may render more difficult or tend to discourage a merger, tender offer or proxy contest, the assumption of control by a holder of a large block of our securities or the removal of incumbent management. Upon the affirmative vote of a majority of the total number of directors then in office, our Board of Directors, without stockholder approval, may issue shares of preferred stock with voting and conversion rights which could adversely affect the holders of shares of our common stock and the market value of our common stock. Upon consummation of this offering, there will be no shares of preferred stock outstanding, and we have no present intention to issue any shares of preferred stock.

**Options** 

As of June 30, 2025, after giving effect to the Reorganization as if it had occurred on such date, options to purchase shares of our common stock were outstanding under our 2022 Plan, of which options were vested as of that date, based on an assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus. Because the number of shares of our common stock underlying stock options to be outstanding as of the consummation of this offering will be determined by reference to the initial public offering price in this offering, a change in the initial public offering price would have a corresponding impact on the number of shares of our common stock underlying stock options after giving effect to this offering. See "The Reorganization Treatment of Performance—Based Options and Cash-Settled Units."

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**Anti-Takeover Effects of Our Restated Certificate of Incorporation and Amended and Restated Bylaws and Certain Provisions of Delaware Law** 

Our restated certificate of incorporation and amended and restated bylaws will contain certain provisions that are intended to enhance the likelihood of continuity and stability in the composition of the Board of Directors and which may have the effect of delaying, deferring or preventing a future takeover or change in control of the Company unless such takeover or change in control is approved by the Board of Directors.

These provisions include:

***Classified Board***. Our restated certificate of incorporation will provide that our Board of Directors will be divided into three classes of directors, with the classes as nearly equal in number as possible. As a result, approximately one-third of our Board of Directors will be elected each year. The classification of directors will have the effect of making it more difficult for stockholders to change the composition of our board. Our restated certificate of incorporation will also provide that, subject to any rights of holders of preferred stock to elect additional directors under specified circumstances, the number of directors will be fixed exclusively pursuant to a resolution adopted by our Board of Directors. Upon completion of this offering, our Board of Directors will have members.

***Special Meetings of Stockholders***. Our restated certificate of incorporation and amended and restated bylaws will provide that, except as otherwise required by law, special meetings of the stockholders may be called only (i) by our chairperson of the Board of Directors, (ii) by a resolution adopted by a majority of our Board of Directors, or (iii) by our Secretary at the request of the holders of 50% or more of the outstanding shares of our common stock so long as the Advent Funds beneficially own a majority of the outstanding shares of our common stock.

***Removal of Directors***. Our restated certificate of incorporation will provide that, so long as the Advent Funds beneficially own a majority of the outstanding shares of our common stock, our directors may be removed only for cause by the affirmative vote of a majority of the voting power of our outstanding shares of capital stock entitled to vote generally in the election of directors, voting together as a single class. Following the date on which the Advent Funds no longer beneficially own a majority of the outstanding shares of our common stock, no member of our Board of Directors may be removed from office except for cause by the affirmative vote of the holders of at least seventy-five percent (75%) of the voting power of our outstanding shares of capital stock entitled to vote thereon.

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***Elimination of Stockholder Action by Written Consent***. Our restated certificate of incorporation will eliminate the right of stockholders to act by written consent without a meeting following the date on which the Advent Funds no longer beneficially own a majority of the outstanding shares of our common stock.

***Advance Notice Procedures****.* Our amended and restated bylaws will establish an advance notice procedure for stockholder proposals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to the Board of Directors. Stockholders at an annual meeting will only be able to consider proposals or nominations specified in the notice of meeting or brought before the meeting by or at the direction of the Board of Directors or by a stockholder who was a stockholder of record on the record date for the meeting, who is entitled to vote at the meeting and who has given our Secretary timely written notice, in proper form, of the stockholder's intention to bring that business before the meeting. Although the amended and restated bylaws will not give the Board of Directors the power to approve or disapprove stockholder nominations of candidates or proposals regarding other business to be conducted at a special or annual meeting, the amended and restated bylaws may have the effect of precluding the conduct of certain business at a meeting if the proper procedures are not followed or may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect its own slate of directors or otherwise attempting to obtain control of the company.

***Authorized but Unissued Shares****.* Our authorized but unissued shares of common stock and preferred stock will be available for future issuance without stockholder approval. These additional shares may be utilized for a variety of corporate purposes, including future public offerings to raise additional capital, corporate acquisitions and employee benefit plans. The existence of authorized but unissued shares of common stock and preferred stock could render more difficult or discourage an attempt to obtain control of a majority of our common stock by means of a proxy contest, tender offer, merger or otherwise.

***Business Combinations with Interested Stockholders***. We will elect in our restated certificate of incorporation not to be subject to Section 203 of the DGCL, an antitakeover law. In general, Section 203 prohibits a publicly held Delaware corporation from engaging in a business combination, such as a merger, with a person or group owning 15% or more of the Company's voting stock for a period of three years following the date the person became an interested stockholder, unless (with certain exceptions) the business combination or the transaction in which the person became an interested stockholder is approved in a prescribed manner. Accordingly, we are not subject to any anti-takeover effects of Section 203. However, our restated certificate of incorporation will contain provisions that have the same effect as Section 203, except that they provide that the Advent Funds and their respective successors, transferees and affiliates will not be deemed to be "interested stockholders," regardless of the percentage of our voting stock owned by them, and accordingly will not be subject to such restrictions.

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Our restated certificate of incorporation will further provide that the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act. In addition, our restated certificate of incorporation will provide that any person or entity purchasing or otherwise acquiring any interest in the shares of capital stock of the Company will be deemed to have notice of and consented to these choice-of-forum provisions and waived any argument relating to the inconvenience of the forums in connection with any Covered Claim.

The choice of forum provisions to be contained in our restated certificate of incorporation may limit a stockholder's ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, other employees or stockholders, which may discourage lawsuits with respect to such claims, although our stockholders will not be deemed to have waived our compliance with federal securities laws and the rules and regulations thereunder. While the Delaware courts have determined that such choice of forum provisions are facially valid, it is possible that a court of law in another jurisdiction could rule that the choice of forum provisions to be contained in our restated certificate of incorporation are inapplicable or unenforceable if they are challenged in a proceeding or otherwise, which could cause us to incur additional costs associated with resolving such action in other jurisdictions.

***Amendment of Charter Provisions and Bylaws***. The amendment of any of the above provisions, following the date on which the Advent Funds no longer beneficially own a majority of the outstanding shares of our common stock, except for the provision making it possible for our Board of Directors to issue preferred stock, would require the affirmative vote of the holders of at least seventy-five percent (75%) of the voting power of our outstanding shares of capital stock entitled to vote thereon.

The provisions of Delaware law, our restated certificate of incorporation and our amended and restated bylaws could have the effect of discouraging others from attempting hostile takeovers and, as a consequence, they may also inhibit temporary fluctuations in the market price of our common stock that often result from actual or rumored hostile takeover attempts. These provisions may also have the effect of preventing changes in the composition of our Board and management. It is possible that these provisions could make it more difficult to accomplish transactions that stockholders may otherwise deem to be in their best interests.

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**Corporate Opportunities** 

Our restated certificate of incorporation will provide that we renounce any interest or expectancy in the business opportunities of the Advent Funds and all of their respective partners, principals, directors, officers, members, managers and/or employees, including any of the foregoing who serve as directors of the Company, or the business opportunities presented to Ms. Dagousset in her capacity as an officer or employee of Chanel, and each such party shall not have any obligation to offer us those opportunities.

**Limitations on Liability and Indemnification of Officers and Directors** 

Our restated certificate of incorporation will limit the liability of our directors to the fullest extent permitted by the DGCL or any other law of the state of Delaware and our amended and restated bylaws will provide that we may indemnify our directors and our officers that are appointed by the Board of Directors to the fullest extent permitted by applicable law. We expect to enter into indemnification agreements with our current directors and executive officers prior to the completion of this offering and expect to enter into similar agreements with any new directors or executive officers. We expect to increase our directors' and officers' liability insurance coverage prior to the completion of this offering.

**Transfer Agent and Registrar** 

The transfer agent and registrar for our common stock will be . Its address is . Its telephone number is .

**SHARES ELIGIBLE FOR FUTURE SALE** 

Upon completion of this offering, we will have a total of shares of our common stock outstanding (shares if the underwriters exercise in full their option to purchase additional shares in this offering). Of the outstanding shares of common stock, the shares sold in this offering by us or the selling stockholders (or shares if the underwriters exercise in full their option to purchase additional shares in this offering) will be freely tradable without restriction or further registration under the Securities Act, except that any shares held by our affiliates, as that term is defined under Rule 144 of the Securities Act, or Rule 144, including our directors, executive officers and other affiliates (including the Advent Funds), may be sold only in compliance with the limitations described below.

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The shares of common stock held by the Advent Funds and by certain of our directors and executive officers after this offering, based on an assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, representing % of the total outstanding shares of our common stock following this offering, will be deemed "restricted securities" under the meaning of Rule 144 and may be sold in the public market only if registered under the Securities Act or if an exemption from registration is available, including the exemptions pursuant to Rule 144 and Rule 701 under the Securities Act, which we summarize below.

In addition, shares of our common stock will be authorized and reserved for issuance in relation to potential future awards under the 2024 Plan to be adopted in connection with this offering.

Prior to this offering, there has not been a public market for our common stock, and we cannot predict what effect, if any, market sales of shares of common stock or the availability of shares of common stock for sale will have on the market price of our common stock prevailing from time to time. Nevertheless, sales of substantial amounts of common stock, including shares issued upon the exercise of outstanding options, in the public market, or the perception that such sales could occur, could materially and adversely affect the market price of our common stock and could impair our future ability to raise capital through the sale of our equity or equity-related securities at a time and price that we deem appropriate. See "Risk Factors—Risks Related to this Offering and Ownership of Our Common Stock—There may be sales of a substantial amount of our common stock after this offering by our current stockholders, and these sales could cause the price of our common stock to fall."

Our restated certificate of incorporation will authorize us to issue additional shares of common stock for the consideration and on the terms and conditions established by our Board of Directors in its sole discretion. In accordance with the DGCL and the provisions of our restated certificate of incorporation, we may also issue preferred stock that has designations, preferences, rights, powers, and duties that are different from, and may be senior to, those applicable to shares of common stock. See "Description of Capital Stock."

**Rule 144** 

In general, under Rule 144, as currently in effect, once we have been subject to public company reporting requirements for at least 90 days, a person (or persons whose shares are aggregated) who is not deemed to be or have been one of our affiliates for purposes of the Securities Act at any time during 90 days preceding a sale and who has beneficially owned the shares proposed to be sold for at least six months, including the holding period of any prior owner other than an affiliate, is entitled to sell such shares without complying with the manner of sale, volume limitation or notice provisions of Rule 144, subject to compliance with the public information requirements of Rule 144. If such a person has beneficially owned the shares proposed to be sold for at least one year, including the holding period of a prior owner other than an affiliate, then such person is entitled to sell such shares without complying with any of the requirements of Rule 144.

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In general, under Rule 144, as currently in effect, our affiliates or persons selling shares of our common stock on behalf of our affiliates, who have met the six month holding period for beneficial ownership of "restricted shares" of our common stock, are entitled to sell upon the expiration of the lock-up agreements described below, within any three-month period beginning 90 days after the date of this prospectus, a number of shares that does not exceed the greater of:

· 1% of the number of shares of our common stock then outstanding, which will equal approximately shares immediately after this offering; or

· the average reported weekly trading volume of our common stock on the 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. The sale of these shares, or the perception that sales will be made, could adversely affect the price of our common stock after this offering because a great supply of shares would be, or would be perceived to be, available for sale in the public market.

**Rule 701** 

In general, under Rule 701 as currently in effect, any of our employees, directors, officers, consultants or advisors who received shares from us in connection with a compensatory stock or option plan or other written agreement before the effective date of this offering are entitled to sell such shares 90 days after the effective date of this offering in reliance on Rule 144, in the case of affiliates, without having to comply with the holding period requirements of Rule 144 and, in the case of non-affiliates, without having to comply with the public information, holding period, volume limitation or notice filing requirements of Rule 144.

**Registration Rights** 

Subject to certain exceptions, holders of shares of our common stock will be entitled to the registration rights described under "Certain Relationships and Related Party Transactions—Registration Rights Agreement." Registration of these shares under the Securities Act would result in these shares becoming freely tradable without restriction under the Securities Act immediately upon effectiveness of the registration.

**Registration Statement on Form S-8**

We intend to file one or more registration statements on Form S-8 under the Securities Act to register all of the shares of common stock subject to outstanding stock options and the shares of common stock subject to issuance under the 2023 Plan and the 2024 Plan to be adopted in connection with this offering. We expect to file these registration statements as promptly as possible after the completion of this offering. Any such Form S-8 registration statements will automatically become effective upon filing. Accordingly, shares registered under such registration statements will be available for sale in the open market. We expect that the initial registration statement on Form S-8 relating to the outstanding rollover options, restricted stock, restricted stock units and performance stock units issued under the 2023 Plan and the 2024 Plan will cover shares.

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**CERTAIN UNITED STATES FEDERAL INCOME AND ESTATE TAX CONSEQUENCES TO NON-U.S. HOLDERS** 

The following is a summary of certain U.S. federal income and estate tax consequences of the purchase, ownership and disposition of shares of our common stock issued pursuant to this offering as of the date hereof. Except where noted, this summary deals only with common stock that is held as a capital asset by a non-U.S. holder (as defined below).

A "non-U.S. holder" means a beneficial owner of shares of our common stock (other than an entity treated as a partnership for U.S. federal income tax purposes) that is not, for U.S. federal income tax purposes, any of the following:

· an individual citizen or resident of the United States;

· a corporation (or any other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia;

· an estate the income of which is subject to U.S. federal income taxation regardless of its source; or

· a trust if it (1) is subject to the primary supervision of a court within the United States and one or more United States persons have the authority to control all substantial decisions of the trust or (2) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a United States person.

This summary is based upon provisions of the U.S. Internal Revenue Code of 1986, as amended (the "Code"), the existing and proposed U.S. Treasury regulations promulgated thereunder, administrative pronouncements, and rulings and judicial decisions interpreting the foregoing, in each case as of the date hereof. Those authorities may be changed, perhaps retroactively, so as to result in U.S. federal income and estate tax consequences different from those summarized below. This summary does not address all aspects of U.S. federal income and estate taxes and does not deal with the alternative minimum tax, the Medicare contribution tax, U.S. federal tax laws other than U.S. federal income or estate tax laws, or any foreign, state, local or other tax considerations that may be relevant to non-U.S. holders in light of their particular circumstances or status. In addition, it does not represent a detailed description of the U.S. federal income and estate tax consequences applicable to you if you are subject to special treatment under the U.S. federal income tax laws (including if you are a United States expatriate, foreign pension fund, "controlled foreign corporation," "passive foreign investment company," financial institution, broker-dealer, insurance company, tax-exempt entity, a corporation that accumulates earnings to avoid U.S. federal income tax, a person subject to special tax accounting as a result of any item of gross income taken into account in an applicable financial statement under Section 451(b) of the Code, a person in a special situation such as those who have elected to mark securities to market or those who hold shares of common stock as part of a straddle, hedge, conversion transaction, or synthetic security or a partnership or other pass-through entity (or beneficial owner thereof) for U.S. federal income tax purposes). We cannot assure you that a change in law will not alter significantly the tax considerations that we describe in this summary.

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A modified definition of "non-U.S. holder" applies for U.S. federal estate tax purposes (as discussed below).

If a partnership (or other entity treated as a partnership for U.S. federal income tax purposes) holds shares of our common stock, the tax treatment of a partner will generally depend upon the status of the partner and the activities of the partnership. If you are a partner of a partnership holding our common stock, you should consult your tax advisors.

**If you are considering the purchase of shares of our common stock, you should consult your own tax advisors concerning the particular U.S. federal income and estate tax consequences to you of the purchase, ownership and disposition of our common stock, as well as the consequences to you arising under other U.S. federal tax laws and the laws of any other taxing jurisdiction, and the application of any tax treaties.** 

**Distributions on Common Stock** 

In the event that we make a distribution of cash or other property (other than certain pro rata distributions of our stock) in respect of shares of our common stock, the distribution generally will be treated as a dividend for U.S. federal income tax purposes to the extent it is paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Any portion of a distribution that exceeds our current and accumulated earnings and profits generally will be treated first as a tax-free return of capital, causing a reduction in the adjusted tax basis of a non-U.S.holder's shares of our common stock, and to the extent the amount of the distribution exceeds a non-U.S. holder's adjusted tax basis in shares of our common stock, the excess will be treated as gain from the disposition of shares of our common stock (the tax treatment of which is discussed below under "—Gain on Disposition of Common Stock").

Subject to the discussion below regarding effectively connected income, dividends paid to a non-U.S. holder generally will be subject to withholding of U.S. federal income tax at a 30% rate or such lower rate as may be specified by an applicable income tax treaty, as discussed further below. Even if our current or accumulated earnings and profits are less than the amount of the distribution, the applicable withholding agent may elect to treat the entire distribution as a dividend for U.S. federal withholding tax purposes. Dividends that are effectively connected with the conduct of a trade or business by the non-U.S. holder within the United States (and, if required by an applicable income tax treaty, are attributable to a United States permanent establishment, or, in certain cases involving individual holders, a fixed base) are not subject to the withholding tax, provided certain certification and disclosure requirements are satisfied. Instead, such dividends are subject to U.S. federal income tax on a net income basis in the same manner as if the non-U.S. holder were a United States person as defined under the Code. To obtain this exemption, a non-U.S. holder must provide us with a valid IRS Form W-8ECI properly certifying such exemption. Any such effectively connected dividends received by a foreign corporation may be subject to an additional "branch profits tax" at a 30% rate or such lower rate as may be specified by an applicable income tax treaty.

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A non-U.S. holder who wishes to claim the benefit of an applicable treaty rate and avoid backup withholding, as discussed below, for dividends will be required (a) to provide the applicable withholding agent with a properly executed, valid IRS Form W-8BEN or Form W-8BEN-E (or other applicable form) certifying under penalty of perjury that such holder is not a United States person as defined under the Code and is eligible for treaty benefits or (b) if our common stock is held through certain foreign intermediaries, to satisfy the relevant certification requirements of applicable U.S. Treasury regulations. Special certification and other requirements apply to certain non-U.S. holders that are pass-through entities rather than corporations or individuals. You are urged to consult your own tax advisors regarding your entitlement to benefits under a relevant income tax treaty.

A non-U.S. holder eligible for a reduced rate of U.S. federal withholding tax pursuant to an income tax treaty may be entitled to a refund of any excess amounts withheld if the non-U.S. holder timely files an appropriate claim for refund with the IRS.

The foregoing discussion is subject to the discussion below under "—Information Reporting and Backup Withholding" and "—Additional Withholding Requirements."

**Gain on Disposition of Common Stock** 

Subject to the discussion of backup withholding and Sections 1471 through 1474 of the Code (such Sections commonly referred to as "FATCA") below, any gain realized by a non-U.S. holder on the sale or other disposition of shares of our common stock generally will not be subject to U.S. federal income tax unless:

· the gain is effectively connected with a trade or business of the non-U.S. holder in the United States (and, if required by an applicable income tax treaty, is attributable to a United States permanent establishment of the non-U.S. holder or, in certain cases involving individual holders, a fixed base of the non-U.S. holder);

· the non-U.S. holder is an individual who is present in the United States for 183 days or more in the taxable year of that disposition, and certain other conditions are met; or

· we are or have been a "United States real property holding corporation" for U.S. federal income tax purposes during the applicable period specified in the Code, and certain other conditions are met.

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A non-U.S. holder described in the first bullet point immediately above will be subject to tax on the gain derived from the sale or other disposition in the same manner as if the non-U.S. holder were a United States person as defined under the Code. In addition, if any non-U.S. holder described in the first bullet point immediately above is a foreign corporation, the gain realized by such non-U.S. holder may be subject to an additional "branch profits tax" at a 30% rate or such lower rate as may be specified by an applicable income tax treaty. An individual non-U.S. holder described in the second bullet point immediately above will be subject to a 30% (or such lower rate as may be specified by an applicable income tax treaty) tax on the gain derived from the sale or other disposition, which gain may in certain cases be offset by United States source capital losses even though the individual is not considered a resident of the United States.

Generally, a corporation is a "United States real property holding corporation" if the fair market value of its United States real property interests equals or exceeds 50% of the sum of the fair market value of its worldwide real property interests and its other assets used or held for use in a trade or business (all as determined for U.S. federal income tax purposes). We believe we are not and do not anticipate becoming a "United States real property holding corporation" for U.S. federal income tax purposes.

**Federal Estate Tax** 

Common stock owned or treated as owned by an individual who is not a U.S. citizen or resident (as specifically determined for U.S. federal estate tax purposes) on the date of the individual's death will be included in the individual's gross estate for U.S. federal estate tax purposes and may be subject to U.S. federal estate tax, unless an applicable estate tax treaty provides otherwise.

**Information Reporting and Backup Withholding** 

Distributions made to a non-U.S. holder and the amount of any tax withheld with respect to such distributions generally will be reported to the IRS. Copies of the information returns reporting such distributions and any withholding may also be made available to the tax authorities in the country in which the non-U.S. holder resides under the provisions of an applicable income tax treaty or agreement for the exchange of information.

A non-U.S. holder will not be subject to backup withholding on dividends received if such holder certifies under penalty of perjury that it is a non-U.S.holder (and the payor does not have actual knowledge or reason to know that such holder is a United States person as defined under the Code), or such holder otherwise establishes an exemption.

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Information reporting and, depending on the circumstances, backup withholding will apply to the proceeds of a sale or other disposition of shares of our common stock made within the United States or conducted through certain United States-related financial intermediaries, unless the beneficial owner certifies under penalty of perjury that it is a non-U.S. holder (and the payor does not have actual knowledge or reason to know that the beneficial owner is a United States person as defined under the Code), or such owner otherwise establishes an exemption.

Provision of an IRS Form W-8 appropriate to the non-U.S. holder's circumstances will generally satisfy the certification requirements necessary to avoid the additional information reporting and backup withholding.

Backup withholding is not an additional tax and any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against a non-U.S. holder's U.S. federal income tax liability, provided the required information is timely furnished to the IRS.

**Additional Withholding Requirements** 

Under FATCA, a 30% U.S. federal withholding tax may apply to any dividends paid on and (subject to the proposed U.S. Treasury regulations discussed below) gross proceeds from the sale or other disposition of shares of our common stock paid to (i) a "foreign financial institution" (as specifically defined in the Code) which does not provide sufficient documentation, typically on IRS Form W-8BEN-E, evidencing either (x) an exemption from FATCA or (y) its compliance (or deemed compliance) with FATCA (which may alternatively be in the form of compliance with an intergovernmental agreement with the United States) in a manner which avoids withholding, or (ii) a "non-financial foreign entity" (as specifically defined in the Code) which does not provide sufficient documentation, typically on IRS Form W-8BEN-E, evidencing either (x) an exemption from FATCA or (y) adequate information regarding certain substantial U.S. beneficial owners of such entity (if any). An intergovernmental agreement between the United States and the entity's jurisdiction may modify these requirements. If a dividend payment is both subject to withholding under FATCA and subject to the withholding tax discussed above under "—Distributions on Common Stock," the withholding under FATCA may be credited against, and therefore reduce, such other withholding tax upon filing a U.S. federal income tax return containing the required information (which may entail significant administrative burden).

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Under the applicable U.S. Treasury regulations and administrative guidance, withholding under FATCA generally applies to payments of dividends on our common stock. While withholding under FATCA would have applied also to payments of gross proceeds from the sale or other disposition of stock on or after January 1, 2022, proposed U.S. Treasury regulations eliminate FATCA withholding on payments of gross proceeds entirely. Taxpayers generally may rely on these proposed U.S. Treasury regulations until final U.S. Treasury regulations are issued.

You should consult your own tax advisors regarding these requirements and whether they may be relevant to your ownership and disposition of shares of our common stock.

**UNDERWRITING** 

We, the selling stockholders and the underwriters named below have entered into an underwriting agreement with respect to the shares being offered. Subject to certain conditions, each underwriter has severally agreed to purchase the number of shares indicated in the following table. [ ] are the representatives of the underwriters.

The underwriters are committed to take and pay for all of the shares being offered, if any are taken, other than the shares covered by the option described below unless and until this option is exercised.

The underwriters have an option to buy up to an additional shares from the selling stockholders to cover sales by the underwriters of a greater number of shares than the total number set forth in the table above. They may exercise that option for 30 days. If any shares are purchased pursuant to this option, the underwriters will severally purchase shares in approximately the same proportion as set forth in the table above.

The following tables show the per share and total underwriting discounts and commissions to be paid to the underwriters by the selling stockholders. Such amounts are shown assuming both no exercise and full exercise of the underwriters' option to purchase additional shares.

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Shares sold by the underwriters to the public will initially be offered at the initial public offering price set forth on the cover of this prospectus. Any shares sold by the underwriters to securities dealers may be sold at a discount of up to $ per share from the initial public offering price. After the initial offering of the shares, the representative may change the offering price and the other selling terms. The offering of the shares by the underwriters is subject to receipt and acceptance and subject to the underwriters' right to reject any order in whole or in part.

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We and our officers, directors, and holders of substantially all of our common stock, including the selling stockholders, have agreed with the underwriters, subject to certain exceptions, not to dispose of or hedge any of their common stock or securities convertible into or exchangeable for shares of common stock during the period from the date of this prospectus continuing through the date days after the date of this prospectus, except with the prior written consent of . This agreement does not apply to any existing employee benefit plans. See "Shares Available for Future Sale" for a discussion of certain transfer restrictions.

Prior to the offering, there has been no public market for the shares. The initial public offering price has been negotiated among us and our representatives. Among the factors to be considered in determining the initial public offering price of the shares, in addition to prevailing market conditions, will be our historical performance, estimates of our business potential and earnings prospects, an assessment of our management and the consideration of the above factors in relation to market valuation of companies in related businesses.

We intend to apply to list the common stock on the Nasdaq Capital Market under the symbol "YMXK." In order to meet one of the requirements for listing the common stock on the Nasdaq Capital Market, the underwriters have undertaken to sell lots of 100 or more shares to a minimum of 450 beneficial holders.

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The underwriters may also impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representative has repurchased shares sold by or for the account of such underwriter in stabilizing or short covering transactions.

Purchases to cover a short position and stabilizing transactions, as well as other purchases by the underwriters for their own accounts, may have the effect of preventing or retarding a decline in the market price of the company's common stock, and together with the imposition of the penalty bid, may stabilize, maintain or otherwise affect the market price of the common stock. As a result, the price of the common stock may be higher than the price that otherwise might exist in the open market. The underwriters are not required to engage in these activities and may end any of these activities at any time. These transactions may be effected on the Nasdaq Capital Market, in the over-the-counter market or otherwise.

We estimate that the total expenses of the offering payable by us will be approximately $.

We and the selling stockholders have agreed to indemnify the several underwriters against certain liabilities, including liabilities under the Securities Act of 1933.

The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include sales and trading, commercial and investment banking, advisory, investment management, investment research, principal investment, hedging, market making, brokerage and other financial and non-financial activities and services. Certain of the underwriters and their respective affiliates have provided, and may in the future provide, a variety of these services to the issuer and to persons and entities with relationships with the issuer, for which they received or will receive customary fees and expenses.

In the ordinary course of their various business activities, the underwriters and their respective affiliates, officers, directors and employees may purchase, sell or hold a broad array of investments and actively trade securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments for their own account and for the accounts of their customers, and such investment and trading activities may involve or relate to assets, securities and/or instruments of the issuer (directly, as collateral securing other obligations or otherwise) and/or persons and entities with relationships with the issuer. The underwriters and their respective affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such assets, securities or instruments and may at any time hold, or recommend to clients that they should acquire, long and/or short positions in such assets, securities and instruments.

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**Directed Share Program** 

At our request, the underwriters have reserved for sale up to % of the shares of common stock offered by this prospectus for sale, at the initial public offering price per share, to certain individuals in our stylist community through a directed share program. If purchased by these persons, these shares will not be subject to a lock-up restriction. The number of shares of common stock available for sale to the general public will be reduced by the number of reserved shares sold to these individuals. Any reserved shares not purchased by these individuals will be offered by the underwriters to the general public on the same basis as the other shares of common stock offered under this prospectus. We have agreed to indemnify the underwriters against certain liabilities and expenses, including liabilities under the Securities Act, in connection with sales of the reserved shares. The directed share program will be arranged through [ ].

**Selling Restrictions** 

***European Economic Area***

In relation to each Member State of the EEA, each a "Relevant State", no offer of securities which are the subject of the offering contemplated by this prospectus may be made to the public in that Relevant State, other than:

· at any time to any legal entity which is a "qualified investor" as defined in the Prospectus Regulation;

· at any time to fewer than 150 natural or legal persons (other than "qualified investors" as defined in the Prospectus Regulation), subject to obtaining the prior consent of the underwriters; or

· at any time in any other circumstances falling within Article 1(4) of the Prospectus Regulation,

provided that no such offer of securities referred to above shall result in a requirement for us or any underwriter to publish a prospectus pursuant to Article 3 of the Prospectus Regulation or a supplemental prospectus pursuant to Article 23 of the Prospectus Regulation.

For the purposes of this provision, the expression an "offer of securities to the public" in relation to any securities in any Relevant State means the communication in any form and by any means of sufficient information on the terms of the offer and the securities to be offered so as to enable an investor to decide to purchase or subscribe for the securities, and the expression "Prospectus Regulation" means Regulation (EU) 2017/1129.

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***United Kingdom***

This document is only being distributed to and is only directed at (i) persons who are outside the U.K., or (ii) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"), or (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling with Article 49(2)(a) to (d) of the Order or (iv) persons to whom an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000, as amended (the "FSMA")) in connection with the issue or sale of any securities may otherwise lawfully be communicated or be caused to be communicated (all such persons together being referred to as "relevant persons"). The securities are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.

No offer of securities which are the subject of the offering contemplated by this prospectus may be made to the public in the U.K., other than:

· at any time to any legal entity which is a "qualified investor" as defined in Article 2 of the U.K. Prospectus Regulation;

· at any time to fewer than 150 natural or legal persons (other than "qualified investors" as defined in Article 2 of the U.K. Prospectus Regulation) in the U.K. subject to obtaining the prior consent of the underwriters; or

· at any time in any other circumstances falling within Section 86 of the FSMA,

provided that no such offer of securities referred to above shall result in a requirement for us or any underwriter to publish a prospectus pursuant to Section 85 of the FSMA or supplement a prospectus pursuant to Article 23 of the U.K. Prospectus Regulation.

For the purposes of this provision, the expression "an offer of securities to the public" in relation to any securities means the communication in any form and by any means of sufficient information on the terms of the offer and the securities to be offered so as to enable an investor to decide to purchase or subscribe for the securities and the expression "U.K. Prospectus Regulation" means Regulation (EU) 2017/1129 as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018.

***Canada***

The securities may be sold in Canada only to purchasers purchasing, or deemed to be purchasing, as principal that are "accredited investors," as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are "permitted clients," as defined in National Instrument 31-103 Registration Requirements, Exemptions, and Ongoing Registrant Obligations. Any resale of the securities must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws.

Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser's province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser's province or territory of these rights or consult with a legal advisor.

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Pursuant to section 3A.3 of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the underwriters are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.

***Hong Kong***

The shares may not be offered or sold in Hong Kong by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32 of the Laws of Hong Kong) (the "Companies (Winding Up and Miscellaneous Provisions) Ordinance") or which do not constitute an invitation to the public within the meaning of the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong) (the "Securities and Futures Ordinance"), (ii) to "professional investors" as defined in the Securities and Futures Ordinance and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a "prospectus" as defined in the Companies (Winding Up and Miscellaneous Provisions) Ordinance, 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), which 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 securities laws of Hong Kong) other than with respect to shares which are or are intended to be disposed of only to persons outside Hong Kong or only to "professional investors" in Hong Kong as defined in the Securities and Futures Ordinance and any rules made thereunder.

***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 (as defined under Section 4A of the Securities and Futures Act, Chapter 289 of Singapore (the "SFA")) under Section 274 of the SFA, (ii) to a "relevant person" (as defined in Section 275(2) of the SFA) pursuant to Section 275(1) of the SFA, or any person pursuant to Section 275(1A) of the SFA, 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, in each case subject to conditions set forth in the SFA.

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Where the shares are subscribed or purchased under Section 275 of the SFA by a relevant person which is a corporation (which is not an "accredited investor" (as defined in Section 4A of the SFA)) 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, the "securities" (as defined in Section 239(1) of the SFA) of that corporation shall not be transferable for six months after that corporation has acquired the shares under Section 275 of the SFA except: (1) to an institutional investor under Section 274 of the SFA or to a "relevant person" (as defined in Section 275(2) of the SFA), (2) where such transfer arises from an offer in that corporation's securities pursuant to Section 275(1A) of the SFA, (3) where no consideration is or will be given for the transfer, (4) where the transfer is by operation of law, (5) as specified in Section 276(7) of the SFA, or (6) as specified in Regulation 32 of the Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2005 of Singapore ("Regulation 32").

Where the shares are subscribed or purchased) under Section 275 of the SFA by a relevant person which is a trust (where the trustee is not an "accredited investor" (as defined in Section 4A of the SFA)) whose sole purpose is to hold investments and each beneficiary of the trust is an accredited investor, the beneficiaries' rights and interest (howsoever described) in that trust shall not be transferable for six months after that trust has acquired the shares under Section 275 of the SFA except: (1) to an institutional investor under Section 274 of the SFA or to a "relevant person" (as defined in Section 275(2) of the SFA), (2) where such transfer arises from an offer that is made on terms that such rights or interest 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), (3) where no consideration is or will be given for the transfer, (4) where the transfer is by operation of law, (5) as specified in Section 276(7) of the SFA, or (6) as specified in Regulation 32.

***Japan***

The securities have not been and will not be registered under the Financial Instruments and Exchange Act of Japan (Act No. 25 of 1948, as amended) (the "FIEA"). The securities may not be offered or sold, directly or indirectly, in Japan or to or for the benefit of any resident of Japan (including any person resident in Japan or any corporation or other entity organized under the laws of Japan) or to others for reoffering or resale, directly or indirectly, in Japan or to or for the benefit of any resident of Japan, except pursuant to an exemption from the registration requirements of the FIEA and otherwise in compliance with any relevant laws and regulations of Japan.

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***Switzerland***

We have not and will not register with the Swiss Financial Market Supervisory Authority ("FINMA") as a foreign collective investment scheme pursuant to Article 119 of the Federal Act on Collective Investment Scheme of 23 June 2006, as amended ("CISA"), and accordingly the securities being offered pursuant to this prospectus have not and will not be approved, and may not be licenseable, with FINMA. Therefore, the securities have not been authorized for distribution by FINMA as a foreign collective investment scheme pursuant to Article 119 CISA and the securities offered hereby may not be offered to the public (as this term is defined in Article 3 CISA) in or from Switzerland. The securities may solely be offered to "qualified investors," as this term is defined in Article 10 CISA, and in the circumstances set out in Article 3 of the Ordinance on Collective Investment Scheme of 22 November 2006, as amended ("CISO"), such that there is no public offer. Investors, however, do not benefit from protection under CISA or CISO or supervision by FINMA. This prospectus and any other materials relating to the securities are strictly personal and confidential to each offeree and do not constitute an offer to any other person. This prospectus may only be used by those qualified investors to whom it has been handed out in connection with the offer described herein and may neither directly or indirectly be distributed or made available to any person or entity other than its recipients. It may not be used in connection with any other offer and shall in particular not be copied and/or distributed to the public in Switzerland or from Switzerland. This prospectus does not constitute an issue prospectus as that term is understood pursuant to Article 652a and/or 1156 of the Swiss Federal Code of Obligations. We have not applied for a listing of the securities on the SIX Swiss Exchange or any other regulated securities market in Switzerland, and consequently, the information presented in this prospectus does not necessarily comply with the information standards set out in the listing rules of the SIX Swiss Exchange and corresponding prospectus schemes annexed to the listing rules of the SIX Swiss Exchange.

***Dubai International Financial Centre***

This prospectus relates to an Exempt Offer in accordance with the Offered Securities Rules of the Dubai Financial Services Authority (the "DFSA"). This prospectus is intended for distribution only to persons of a type specified in the Offered Securities Rules of the DFSA. It must not be delivered to, or relied on by, any other person. The DFSA has no responsibility for reviewing or verifying any documents in connection with Exempt Offers. The DFSA has not approved this prospectus nor taken steps to verify the information set forth herein and has no responsibility for the prospectus. The shares to which this prospectus relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the shares offered should conduct their own due diligence on the shares. If you do not understand the contents of this prospectus, you should consult an authorized financial advisor.

***Australia***

No placement document, prospectus, product disclosure statement, or other disclosure document has been lodged with the Australian Securities and Investments Commission in relation to the offering. This prospectus does not constitute a prospectus, product disclosure statement, or other disclosure document under the Corporations Act 2001 (the "Corporations Act"), and does not purport to include the information required for a prospectus, product disclosure statement, or other disclosure document under the Corporations Act.

Any offer in Australia of the shares may only be made to persons (the "Exempt Investors") who are "sophisticated investors" (within the meaning of section 708(8) of the Corporations Act), "professional investors" (within the meaning of section 708(11) of the Corporations Act) or otherwise pursuant to one or more exemptions contained in section 708 of the Corporations Act so that it is lawful to offer the shares without disclosure to investors under Chapter 6D of the Corporations Act.

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The shares applied for by Exempt Investors in Australia must not be offered for sale in Australia in the period of 12 months after the date of allotment under the offering, except in circumstances where disclosure to investors under Chapter 6D of the Corporations Act would not be required pursuant to an exemption under section 708 of the Corporations Act or otherwise or where the offer is pursuant to a disclosure document which complies with Chapter 6D of the Corporations Act. Any person acquiring shares must observe such Australian on-sale restrictions.

This prospectus contains general information only and does not take account of the investment objectives, financial situation or particular needs of any particular person. It does not contain any securities recommendations or financial product advice. Before making an investment decision, investors need to consider whether the information in this prospectus is appropriate to their needs, objectives, and circumstances, and, if necessary, seek expert advice on those matters.

***Mexico***

The shares have not been registered with the National Securities Registry (*Registro Nacional de Valores*) or reviewed or authorized by the National Banking and Securities Commission (*Comisión Nacional Bancaria y de Valores*) of Mexico or listed in any Mexican securities exchange. Any Mexican investor who acquires shares does so at his or her own risk. The shares will be initially placed with less than 100 persons in Mexico. Once placed, the shares can be resold exclusively to persons that qualify as qualified investors or institutional investors pursuant to applicable provisions of Mexican law.

**LEGAL MATTERS** 

The validity of the shares of common stock offered by this prospectus will be passed upon for us by [ ]. Certain legal matters relating to this offering will be passed upon for the underwriters by [ ], New York, New York.

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**EXPERTS**

The financial statements of Pheno Biotech Holdings Corp. as of December 31, 2023 and December 31, 2022, and for each of the two years in the period ended December 31, 2023, included in this prospectus have been audited by [ ], an independent registered public accounting firm, as stated in their report appearing herein. Such financial statements have been so included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

The balance sheet of YMX Holdings, Inc. as of June 30, 2024, included in this prospectus has been audited by [ ], an independent registered public accounting firm, as stated in their report appearing herein. Such balance sheet has been so included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

**WHERE YOU CAN FIND MORE INFORMATION**

We have filed with the SEC a registration statement on Form F-1 under the Securities Act with respect to the common stock offered in this prospectus. This prospectus, filed as part of the registration statement, does not contain all of the information set forth in the registration statement and its exhibits and schedules, portions of which have been omitted as permitted by the rules and regulations of the SEC. For further information about us and our common stock, we refer you to the registration statement and to its exhibits and schedules. Statements in this prospectus about the contents of any contract, agreement or other document are not necessarily complete and, in each instance, we refer you to the copy of such contract, agreement or document filed as an exhibit to the registration statement, with each such statement being qualified in all respects by reference to the document to which it refers. You may inspect these reports and other information without charge at a website maintained by the SEC. The address of this site is *http://www.sec.gov.*

Upon completion of this offering, we will become subject to the informational requirements of the Exchange Act, as amended, and will be required to file reports, proxy statements and other information with the SEC. You will be able to inspect and copy these reports, proxy statements and other information at the public reference facilities maintained by the SEC at the address noted above or inspect them without charge at the SEC's website. We intend to furnish our stockholders with annual reports containing consolidated financial statements audited by an independent registered public accounting firm.

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**INDEX TO CONSOLIDATED FINANCIAL STATEMENTS**

---

| | |
|:---|:---|
|  | **Page** |
| AUDITED FINANCIAL STATEMENT OF YMX HOLDINGS, INC. |  |
| &nbsp;&nbsp;&nbsp;&nbsp; [Report of the Independent Registered Public Accounting Firm](#repo1) | F-2 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Balance Sheet as of June 30, 2024](#bs1) | F-3 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Notes to Financial Statement](#no1) | F-4 |
| AUDITED FINANCIAL STATEMENTS OF PHENO BIOTECH HOLDINGS CORP. |  |
| Consolidated Financial Statements as of and for the Years Ended December 31, 2023 (Successor) and 2022 (Predecessor): |  |
| &nbsp;&nbsp;&nbsp;&nbsp; [Report of the Independent Registered Public Accounting Firm](#repo2) | F-5 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Consolidated Balance Sheets](#bs2) | F-6 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Consolidated Statements of Operations and Comprehensive Income](#soo2) | F-7 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Consolidated Statements of Changes in Equity](#eqt2) | F-8 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Consolidated Statements of Cash Flows](#cf2) | F-9 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Notes to Consolidated Financial Statements](#no2) | F-10 |
| UNAUDITED FINANCIAL STATEMENTS OF PHENO BIOTECH HOLDINGS CORP. |  |
| Unaudited Condensed Consolidated Financial Statements as of June 30, 2024 and for the Six Months Ended June 30, 2024 and June 30, 2023: |  |
| &nbsp;&nbsp;&nbsp;&nbsp; [Condensed Consolidated Balance Sheets](#bs3) | F-30 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Condensed Consolidated Statements of Operations and Comprehensive Income (loss)](#soo3) | F-31 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Condensed Consolidated Statements of Changes in Equity](#eqt3) | F-32 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Condensed Consolidated Statements of Cash Flows](#cf3) | F-33 |
| &nbsp;&nbsp;&nbsp;&nbsp; [Notes to Condensed Consolidated Financial Statements](#no3) | F-34 |

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| F-1 |
| *[**Table of Contents**](#toc2)* |

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To the Stockholder and the Board of Directors of CHARMING WOW INC.

Opinion on the Financial Statement

We have audited the accompanying balance sheet of CHARMING WOW INC. (the "Company") as of December 31, 2024, and the related notes (collectively referred to as the "financial statement"). In our opinion, the financial statement presents fairly, in all material respects, the financial position of the Company as of December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

The financial statement is the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statement based on our audit. 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 audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is 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 audit, 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 audit included performing procedures to assess the risks of material misstatement of the financial statement, 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 financial statement. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statement. We believe that our audit provides a reasonable basis for our opinion.

/s/ [ ]

Haikou, Hainan Province, China

March 11, 2025

We have served as the Company's auditor since 2024.

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**YMX** **Holdings, Inc.** 

**Balance sheet** 

**As of June 30, 2024** 

**(In dollars, unless otherwise stated)** 

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| | |
|:---|:---|
|  | **June 30,**<br> **2024** |
| **Assets** |  |
| Total assets | $— |
| **Liabilities** |  |
| Total liabilities | $— |
| Commitments and contingencies (Note 3) |  |
| **Stockholders' equity** |  |
| Common stock, $0.001 par value; 1,000 shares authorized, none issued or outstanding | $— |
| Total liabilities and stockholder equity | $— |

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| F-3 |
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**YMX** **HOLDINGS, INC.** 

**NOTES TO FINANCIAL STATEMENT** 

 **AS OF JUNE 30, 2024** 

**NOTE 1 - ORGANIZATION**

YMX Holdings, Inc. (the "Company") was formed as a Delaware corporation on June 8, 2024. The Company's fiscal year end is December 31. The Company was formed for the purpose of completing a public offering and related transactions in order to carry on the business of Pheno Biotech Holdings Corp. and subsidiaries. Prior to the consummation of the public offering, the Company will be the indirect parent of Pheno Biotech Holdings Corp. and will operate and control all of the businesses and affairs of Pheno Biotech Holdings Corp. and subsidiaries. Through its control of the operating entities of Pheno Biotech Holdings Corp., principally YMX Inc., the Company will continue to conduct the business now conducted by those entities.

**NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

***Basis of Accounting***

The Balance Sheet is presented in accordance with United States generally accepted accounting principles ("GAAP"). Separate statements of income/(loss) and comprehensive income/(loss), changes in stockholders' equity and cash flows have not been presented because there have been no activities in this entity from the date of inception through June 30, 2024.

The preparation of the financial statement in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statement. The Company's year-end is December 31.

The Balance Sheet has been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business.

**Income Taxes**

The Company is treated as a subchapter C corporation, and therefore, is subject to both federal and state income taxes.

**NOTE 3 - COMMITMENTS AND CONTINGENCIES**

The Company has no commitments and contingencies.

**NOTE 4 - COMMON STOCK** 

The Company is authorized to issue 1,000 shares of common stock, par value $0.001 per share, none of which have been issued or are outstanding.

**NOTE 5 - SUBSEQUENT EVENTS**

The Company has evaluated subsequent events through August 6, 2024, the date that this financial statement was issued, and has concluded that there were no such events that require adjustment to the financial statement or disclosure in the notes to the financial statement.

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**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** 

To the Stockholders and the Board of Directors of Pheno Biotech Holdings Corp. and subsidiaries

**Opinion on the Financial Statements** 

We have audited the accompanying consolidated balance sheets of Pheno Biotech Holdings Corp. and subsidiaries (the "Company") as of December 31, 2023 (Successor) and 2022 (Predecessor) (see Note 1 to the consolidated financial statements), and the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows, for the years ended December 31, 2023 (Successor) and December 31, 2022 (Predecessor), and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 (Successor) and 2022 (Predecessor), and the results of its operations and its cash flows for the years in the periods ended December 31, 2023 (Successor) and 2022 (Predecessor), in conformity with accounting principles generally accepted in the United States of America.

**Change in Accounting Principle** 

As discussed in Note 2 to the financial statements, effective January 1, 2022, the Company adopted Financial Accounting Standard Board Accounting Standard Codification 606, *Revenue from Contracts with Customers*, using the modified retrospective approach.

**Basis for Opinion** 

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's 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 and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the 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 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 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 financial statements. We believe that our audits provide a reasonable basis for our opinion.

**Explanatory paragraph** 

As discussed in Note 1 and Note 5 to the financial statements, the Company acquired [ ] and the intellectual property operations of an affiliated business, [ ], Inc. (collectively the "YMX business"), on January 8, 2023 (the "Acquisition"). As a result, the assets acquired and liabilities assumed by the Company as part of the Acquisition have been recorded at fair value as of January 8, 2023. Due to the change in the basis of accounting resulting from the application of the acquisition method of accounting, the predecessor period includes the financial position and results of operations of the YMX business.

/s/ [ ]

Los Angeles, California

June 25, 2024

We have served as the Company's auditor since 2024.

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| F-5 |
| *[**Table of Contents**](#toc2)* |

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**Pheno Biotech** **Holdings Corp. and subsidiaries**

**Consolidated balance sheets**

**As of December 31, 2023 (Successor) and December 31, 2022 (Predecessor)** 

**(In thousands, except shares)**

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| | | |
|:---|:---|:---|
|  | **December 31,**<br> **2023** | **December 31,**<br> **2022** |
|  | **(Successor)** | **(Predecessor)** |
| **Assets** |  |  |
| Current Assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Cash and cash equivalents | $10964 | $3155 |
| &nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable, net | 14377 | 8350 |
| &nbsp;&nbsp;&nbsp;&nbsp; Inventory | 33596 | 15892 |
| &nbsp;&nbsp;&nbsp;&nbsp; Other current assets | 2422 | 404 |
| Total current assets | 61359 | 27801 |
| Property and equipment, net | 34 | 24 |
| Intangible assets, net | 1092310 | 256 |
| Goodwill | 168300 |  |
| Deferred taxes | 10830 |  |
| Total assets | $1332833 | $28081 |
| **Liabilities and stockholder's and members' equity** |  |  |
| Current Liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Accounts payable | $16815 | $935 |
| &nbsp;&nbsp;&nbsp;&nbsp; Accrued expenses and other current liabilities | 9862 | 2140 |
| &nbsp;&nbsp;&nbsp;&nbsp; Current portion of long-term debt | 20112 |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Due to affiliate |  | 6597 |
| Total current liabilities | 46789 | 9672 |
| Long-term debt | 755371 |  |
| Total liabilities | 802160 | 9672 |
| Contingencies (Note 13) |  |  |
| Stockholder's and Members' equity: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Common stock, $0.001 par value; 2,000,000 shares authorized, 959,868 shares issued and outstanding as of December 31, 2023 (Successor) | 960 |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Members' equity (Predecessor) |  | 18409 |
| &nbsp;&nbsp;&nbsp;&nbsp; Additional paid-in capital | 529713 |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Retained earnings |  |  |
| Total stockholder's and members' equity | 530673 | 18409 |
| Total liabilities and stockholder's and members' equity | $1332833 | $28081 |

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The accompanying notes are an integral part of these consolidated financial statements.

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| *[**Table of Contents**](#toc2)* |

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**Pheno Biotech** **Holdings Corp. and subsidiaries** 

**Consolidated statements of operations and comprehensive income** 

**For the years ended December 31, 2023 (Successor) and December 31, 2022 (Predecessor)** 

**(In thousands)** 

---

| | | |
|:---|:---|:---|
|  | **Year ended**<br> **December 31,**<br> **2023** | **Year ended**<br> **December 31,**<br> **2022** |
|  | **(Successor)** | **(Predecessor)** |
| Net sales | $282250 | $148206 |
| Cost of sales: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Cost of product (excluding amortization) | 96611 | 31171 |
| &nbsp;&nbsp;&nbsp;&nbsp; Amortization of patented formulations | 6052 |  |
| Total cost of sales | 102663 | 31171 |
| Gross profit | 179587 | 117035 |
| Operating expenses: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Selling, general, and administrative | 37170 | 56698 |
| &nbsp;&nbsp;&nbsp;&nbsp; Amortization of other intangible assets | 39825 |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Acquisition costs | 16499 |  |
| Total operating expenses | 93494 | 56698 |
| Operating income | 86093 | 60337 |
| Interest (expense) income, net | (38645) | 39 |
| Other (expense) income, net | (190) | 503 |
| &nbsp;&nbsp;&nbsp;&nbsp; Income before provision for income taxes | 47258 | 60879 |
| Income tax provision | 7980 |  |
| Net income | $39278 | $60879 |
| Comprehensive income | $39278 | $60879 |
| Net income per share (unit): |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Basic | $41.73 | $60.88 |
| &nbsp;&nbsp;&nbsp;&nbsp; Diluted | $41.63 | $60.88 |
| Weighted average common shares (units) outstanding: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Basic | 941313 | 1000000 |
| &nbsp;&nbsp;&nbsp;&nbsp; Diluted | 943437 | 1000000 |

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The accompanying notes are an integral part of these consolidated financial statements.

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| F-7 |
| *[**Table of Contents**](#toc2)* |

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**Pheno Biotech** **Holdings Corp. and subsidiaries** 

**Consolidated statements of changes in equity** 

**For the years ended December 31, 2023 (Successor) and December 31, 2022 (Predecessor)** 

**(In thousands)** 

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **STOCKHOLDER'S EQUITY** | **Common Stock** | **Common Stock** | | | | |
| **(SUCCESSOR)** | **Shares** | **Amount** | **Additional Paid in**<br>**Capital** | **Members'**<br>**Equity** | **Retained**<br>**Earnings** | **Total**<br>**Equity** |
| Issuance of common stock | 959868 | $960 | $958908 | $— | $— | $959868 |
| Net income |  |  |  |  | 39278 | 39278 |
| Share-based compensation expense |  |  | 1527 |  |  | 1527 |
| Dividend payments |  |  | (430722) |  | (39278) | (470000) |
| **Balance - December 31, 2023** | 959868 | $960 | $529713 | $— | $— | $530673 |
| **MEMBERS' EQUITY (PREDECESSOR)** |  |  |  |  |  |  |
| **Balance - January 1, 2022** |  |  |  | $21576 | $2341 | $23917 |
| Adoption of ASC 606 |  |  |  |  | (1363) | (1363) |
| Net income |  |  |  |  | 60879 | 60879 |
| Distributions |  |  |  | (3167) | (61857) | (65024) |
| **Balance - December 31, 2022** |  | $— | $— | $18409 | $— | $18409 |

---

The accompanying notes are an integral part of these consolidated financial statements.

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| F-8 |
| *[**Table of Contents**](#toc2)* |

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**Pheno Biotech** **Holdings Corp. and subsidiaries** 

**Consolidated statements of cash flow** 

**For the years ended December 31, 2023 (Successor) and December 31, 2022 (Predecessor)** 

**(In thousands)** 

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| | | |
|:---|:---|:---|
|  | **Year Ended**<br> **December 31,**<br> **2023** | **Year Ended**<br> **December 31,**<br> **2022** |
|  | **(Successor)** | **(Predecessor)** |
| **Cash flows from operating activities:** |  |  |
| Net income | $39278 | $60879 |
| Adjustments to reconcile net income to net cash from operations provided by operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Amortization of patent formulations | 6052 |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Amortization of other intangibles | 39825 |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Amortization of fair value of acquired inventory | 44721 |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Amortization of debt issuance costs | 1752 |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Deferred taxes | (4428) |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Share-based compensation expense | 1527 |  |
| Changes in operating assets and liabilities, net of effects of acquisition: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable, net | (7118) | (4877) |
| &nbsp;&nbsp;&nbsp;&nbsp; Inventory | (14242) | (3852) |
| &nbsp;&nbsp;&nbsp;&nbsp; Other current assets | (2094) | (157) |
| &nbsp;&nbsp;&nbsp;&nbsp; Accounts payable | 14865 | (2227) |
| &nbsp;&nbsp;&nbsp;&nbsp; Accrued expenses and other current liabilities | 8837 | 2803 |
| Net cash provided by operating activities | 128975 | 52569 |
| **Cash flows from investing activities:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Purchase of property and equipment | (27) | (7) |
| &nbsp;&nbsp;&nbsp;&nbsp; Business acquisition, net of acquired cash | (1381582) |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Proceeds from sale of investments |  | 3418 |
| Net cash (used in) provided by investing activities | (1381609) | 3411 |
| **Cash flows from financing activities:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Dividend / distribution payments | (470000) | (65024) |
| &nbsp;&nbsp;&nbsp;&nbsp; Proceeds from the issuance of stock | 959868 |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Proceeds from Revolver | 50000 |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Principal payments of Term Loan | (10653) |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Payments of Revolver | (50000) |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Proceeds from the issuance of Term Loan | 800000 |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Payments of debt issuance costs | (15617) |  |
| Net cash provided by (used in) financing activities | 1263598 | (65024) |
| Net increase (decrease) in cash and cash equivalents | 10964 | (9044) |
| Cash and cash equivalents - beginning of year |  | 12199 |
| Cash and cash equivalents - end of year | $10964 | $3155 |
| **Supplemental disclosure of cash flow information:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Cash paid for income taxes | $9914 | $— |
| &nbsp;&nbsp;&nbsp;&nbsp; Cash paid during the year for interest | 34566 |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Cash received for interest on investments |  | 58 |

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The accompanying notes are an integral part of these consolidated financial statements.

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| F-9 |
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**PHENO BIOTECH HOLDINGS CORP. AND SUBSIDIARIES** 

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2023 (SUCCESSOR) AND 2022 (PREDECESSOR)** 

**(DOLLARS IN THOUSANDS, EXCEPT SHARES (UNITS) AND PER SHARE (UNIT) AMOUNTS)** 

**NOTE 1 - NATURE OF OPERATIONS AND BASIS OF PRESENTATION** 

Pheno Biotech Holdings Corp. ("Pheno Biotech" together with its subsidiaries, the "Company" or "we") is a wholly owned subsidiary of Pheno Biotech Holdings, L.P. (the "Parent"). Pheno Biotech was formed as a Delaware corporation on November 13, 2022. Pheno Biotech is organized as a holding company and operates through its wholly owned subsidiary, YMX, Inc., which conducts business under the name "YMX". YMX develops and manufactures shampoos, conditioners and specialty products that are used to protect, strengthen, and rebuild broken bonds in damaged hair caused by damage from chemical, thermal, and mechanical processes.

The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP" or "U.S. GAAP") with all intercompany balances and transactions eliminated. Any reference in these notes to applicable guidance is meant to refer to the authoritative United States generally accepted accounting principles as found in the Accounting Standards Codification ("ASC") and Accounting Standards Update ("ASU") of the Financial Accounting Standards Board ("FASB").

On January 8, 2023 (the "Acquisition Date"), a group of third-party investors, through Pheno Biotech, acquired 100% of the [ ] business, including the intellectual property operations of another affiliated business, [ ], Inc. ("[ ]") (collectively, the "YMX business"), from the owners of the YMX Business (the "Sellers") for $1,381,582 (the "Acquisition"). Subsequent to the Acquisition Date, all of the operations of YMX are comprised of the operations of YMX, Inc.

The Company has presented the financial statements in a format with a 2023 successor fiscal year from January 1, 2023 to December 31, 2023 and 2022 predecessor fiscal year. Given the insignificance of the operations of the acquired YMX business between, January 1, 2023 and the Acquisition Date, separate financial statements have not been prepared and the associated acquisition accounting has been reflected as occurring as of January 1, 2023.

The predecessor period includes the consolidated financial position and results of operations of the [ ] entity and the intellectual property operations of [ ], Inc. during the comparable 2022 predecessor fiscal year applying the Company's US generally accepted accounting principles. The primary business of [ ], Inc. was to develop intellectual property of hair and cosmetic products. Prior to the Acquisition, the Company had a worldwide exclusive right and license to exploit the [ ], Inc. patent under a specified royalty arrangement with [ ], Inc. The intellectual property operations of [ ], Inc. during the 2022 year were separately identified from the other operations of the [ ], Inc. entity with $134 of cash, $30,542 of royalty receivables, $256 of intangible assets, $284 of liabilities, $86,767 of royalty revenues, and $24,578 of expenses associated with such intellectual property business included in the predecessor period of the Company. All royalty amounts under the royalty agreement charged between [ ], Inc. and the Company were eliminated in combining the [ ], Inc. intellectual operations with the Company's operations in the predecessor period.

The comparable predecessor period does not include an income tax provision due to the Sellers operating the YMX business through pass through entities subject to tax at the unitholder level.

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The following summarizes the financial statement amounts of the intellectual property operations of Acquisition, Inc., the associated eliminations in combining those amounts with those of the Company, and the resulting balances included in the Predecessor period:

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|:---|:---|:---|:---|
|  | **[ ], Inc.** | **[ ], Inc.**<br> **Eliminations** | **Included in**<br> **Predecessor** |
| Cash | $134 | $— | $134 |
| Royalty receivables | 30542 | (30542) |  |
| Intangible assets | 256 |  | 256 |
| Total assets | 30932 | (30542) | 390 |
| Total liabilities | 284 |  | 284 |
| Royalty revenues | 86767 | (86767) |  |
| Expenses | 24578 |  | 24578 |

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In these financial statements, the term "YMX" is used to refer to either the operations of the business prior to or after the Acquisition depending on the respective period discussed.

**COVID-19** — On March 11, 2023, the World Health Organization declared COVID-19 a pandemic. The global spread and unprecedented impact of COVID-19 continues to create significant volatility, uncertainty and economic disruption. The Company's operations and its financial results including net sales, gross profit, and selling, general, and administrative expenses were impacted by COVID-19 in 2023, however the Company is unable to estimate the impact of COVID-19 on its operations.

The extent of COVID-19's effect on the Company's operational and financial performance will depend on future developments, including the ultimate duration, spread and intensity of the pandemic (including any resurgences), impact of the new COVID-19 variants and the rollout of COVID-19vaccines, and the level of social and economic restrictions imposed in the United States and abroad in an effort to curb the spread of the virus, all of which are uncertain and difficult to predict considering the rapidly evolving landscape. As a result, it is not currently possible to ascertain the overall impact of the COVID-19 pandemic on the Company's business, results of operations, financial condition or liquidity. Future events and effects related to COVID-19 cannot be determined with precision and actual results could differ from estimates or forecasts.

**NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** 

***Principles of Consolidation and Combination***

The 2023 consolidated financial statements cover YMX, Inc. and its wholly owned subsidiary, YMX UK Limited, a private limited company incorporated in England and Wales. The accompanying 2023 consolidated financial statements reflect the financial position, results of operations and comprehensive income, and cash flows of the Company and its wholly owned subsidiary on a consolidated basis. All intercompany account balances and transactions have been eliminated.

The accompanying 2022 financial statements reflect the financial position, results of operations and comprehensive loss, and cash flows of Acquisition and Acquisition on a combined basis due to common ownership. All activity and account balances between the combined entities have been eliminated. The 2023 and 2022 financial statements are referred to as the "consolidated financial statements" herein.

***Estimates and Assumptions***

Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Examples of estimates and assumptions include: for revenue recognition, determining the nature and timing of satisfaction of performance obligations, variable consideration, and other obligations such as product returns and refunds; loss contingencies; the fair value of share-based options; the fair value of and/or potential impairment of goodwill and intangible assets for our reporting unit; useful lives of our tangible and intangible assets; allowances for doubtful accounts; the net realizable value of, and demand for our inventory. Actual results and outcomes may differ from management's estimates and assumptions due to risks and uncertainties.

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***Cash and Cash Equivalents***

The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. The Company maintains cash balances at several high credit quality financial institutions. Accounts at these institutions are secured by the Federal Deposit Insurance Corporation (the "FDIC"). At times, such cash balances may be in excess of the $250 FDIC insurance limit. As of December 31, 2023 and December 31, 2022, the Company has cash equivalents of $10,964 and $3,155, respectively. The Company has not experienced any losses in such accounts.

***Accounts Receivable – net***

Accounts receivable are recorded at net realizable value. The Company has recorded an allowance for reductions to prices for agreed-upon deductions, including allowances for advertising, damages, promotions, and returns. As of both December 31, 2023 and December 31, 2022, this promotional allowance was $1,362. As of December 31, 2023 and December 31, 2022, the Company did not have an allowance for doubtful accounts. In arriving at this conclusion, the Company evaluated historical losses, age of receivables, adverse situations that may affect a customer's ability to repay and prevailing economic conditions. The Company has generally not experienced difficulties collecting from customers in a timely manner.

***Inventory***

Inventory includes inventory that is saleable or usable in future periods and is stated at the lower of cost or net realizable value using the average cost method. Cost components include raw materials and finished goods. The finished goods are produced at third-party contract manufacturers. The Company allocates the amortized cost of its patented formulation to finished goods inventory. Management estimates an allowance for excess and obsolete inventory based on a calculation of excess on hand quantities of slow-moving inventory. As of December 31, 2023 and December 31, 2022, there was no allowance for excess and obsolete inventory.

***Business Combinations***

Business combinations are accounted for under the acquisition method of accounting in accordance with FASB ASC 805, Business Combinations. Under the acquisition method of accounting, the total consideration transferred in connection with the acquisition is allocated to the tangible and intangible assets acquired, liabilities assumed, and any noncontrolling interest in the acquiree based on their fair values. Goodwill acquired in connection with business combinations represents the excess of consideration transferred over the net tangible and identifiable intangible assets acquired. The acquired goodwill is deductible for income tax purposes. Certain assumptions and estimates are employed in evaluating the fair value of assets acquired and liabilities assumed. These estimates may be affected by factors such as changing market conditions, or changes in regulations governing the industry. The most significant assumptions requiring judgment involve identifying and estimating the fair value of intangible assets and the associated useful lives for establishing amortization periods. To finalize purchase accounting for significant acquisitions, the Company utilizes the services of independent valuation specialists to assist in the determination of the fair value of acquired tangible and intangible assets.

The purchase price allocations for business combinations completed are prepared on a preliminary basis and changes to those allocations may occur as additional information becomes available about facts and circumstances that existed as of the acquisition date during the respective measurement period (up to one year from the respective acquisition date). Changes in the fair value of assets and liabilities recognized at fair value on the acquisition date that result from events that occur after the acquisition date are re-measured to fair value at future reporting dates with changes recognized in earnings. The Company includes the results of operations of the businesses acquired as of the acquisition dates.

Costs that are incurred to complete the business combination such as legal and other professional fees are not considered part of consideration transferred and are charged to operating expenses as they are incurred.

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***Goodwill and Intangible Assets***

Goodwill is calculated as the excess of the purchase consideration paid in the acquisition of a business over the fair value of the identifiable assets acquired and liabilities assumed.

Goodwill is reviewed annually at the beginning of the fourth quarter for impairment, at the reporting unit level, or when there is evidence that events or changes in circumstances indicate that the Company's carrying amount may not be recovered. A reporting unit is an operating segment or a component of an operating segment. When testing goodwill for impairment, the Company first assesses qualitative factors to evaluate whether it is more likely than not that the fair value of a reporting unit is less than the carrying amount. If factors indicate that the fair value of the asset is less than its carrying amount, the Company will perform a quantitative test by determining the fair value of the reporting unit. The estimated fair value of the reporting unit is based on a projected discounted cash flow model that includes significant assumptions and estimates, including discount rate, growth rate, and future financial performance. Valuations of similar public companies may also be evaluated when assessing the fair value of the reporting unit. If the carrying value of the reporting unit exceeds the fair value, then an impairment loss is recognized for the difference. The Company has identified one reporting unit for purposes of impairment testing.

Definite-lived intangible assets are amortized over their estimated useful lives, which represents the period over which the Company expects to realize economic value from the acquired assets, using the economic consumption method if anticipated future net sales can be reasonably estimated. The straight-line method is used when future net sales cannot be reasonably estimated. The following provides a summary of the estimated useful lives by category of asset.

Brand name 25 years <br> Customer relationships 20 years <br> Patented formulations 15 years

***Impairment of Long-Lived Assets***

The Company reviews long-lived tangible and intangible assets with definite lives for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Examples of such events include a significant disposal of a portion of such assets, an adverse change in the market involving the business employing the related asset, a significant decrease in the benefits realized from an acquired business, difficulties or delays in integrating the business, and a significant change in the operations of an acquired business. Recoverability of these assets is measured by comparison of their carrying amount to the future undiscounted cash flows the assets are expected to generate. Assets are grouped and evaluated at the lowest level for which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets. The Company considers historical performance and future estimated results in its evaluation of impairment. If the carrying amount of the asset exceeds expected undiscounted future cash flows, the Company measures the amount of impairment by comparing the carrying amount of the asset to its fair value, generally measured by discounting expected future cash flows at the rate it utilizes to evaluate potential investments. No intangible asset impairment was recorded for fiscal years ended December 31, 2023 and December 31, 2022.

Fair value measurements are based on significant inputs that are not observable in the market and therefore represent a Level 3 measurement. Significant changes in the underlying assumptions used to value long-lived assets could significantly increase or decrease the fair value estimates used for impairment assessments.

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***Debt Issuance Costs***

Original issue discount costs and third-party issue costs incurred in connection with the issuance of long-term debt are deferred and amortized over the life of the associated debt instrument on a straight-line basis, in a manner that approximates the effective interest method. To the extent that the debt is outstanding, these amounts are reflected in the consolidated balance sheets as direct deductions from the long-term debt. As of December 31, 2023, the Company had $13,864 of unamortized deferred financing costs related to its credit facilities.

***Property and Equipment***

Property and equipment are stated at historical cost net of accumulated depreciation. The cost of assets sold or retired, and the related accumulated depreciation, are removed from the accounts at the time of disposition, and any resulting gain or loss is reflected in operating results for the period.

Estimated useful lives of the Company's assets are as follows:

Molds 3-5 years <br> Motor vehicles 5 years <br> Furniture and fixtures 3-7 years

***Deferred Revenue***

Amounts received from international customers in the form of cash pre-payments to purchase goods are recorded as deferred revenue for contract liabilities until the goods are shipped. Unredeemed gift cards are recorded as deferred revenue. Customer pre-payments and gift cards are included as accrued expenses and other current liabilities. Customer pre-payments and unredeemed gift cards were $1,759 and $1,100 as of December 31, 2023 and December 31, 2022, respectively.

***Foreign Currency Transactions***

Assets and liabilities denominated in foreign currencies are converted to the functional currency at the applicable current rates, including the Company's subsidiary, YMX UK, whose functional currency is in US dollars. All revenues and expenses associated with foreign currencies are converted at the rates of exchange prevailing when such transactions occur. The resulting exchange loss or gain is reflected in foreign currency exchange loss or gain in the accompanying statements of operations and comprehensive loss. Foreign exchange (losses) gains were ($129) and $18 for the years ended December 31, 2023 and December 31, 2022, respectively.

***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. The authoritative guidance for fair value measurements established a framework for measuring fair value and established a three-level valuation hierarchy for disclosure of fair value measurements as follows:

***Level 1***—Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. The Company's Level 1 assets consist of its marketable securities.

***Level 2***—Observable quoted prices for similar assets or liabilities in active markets and observable quoted prices for identical assets or liabilities in markets that are not active.

***Level 3***—Unobservable inputs that are not corroborated by market data.

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Cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are reflected at carrying value, which approximates fair value due to the short-term maturity. The Company's long-term debt is recorded at its carrying value in the consolidated balance sheets, which may differ from fair value.

The gross carrying amount of the Company's bank debt, before reduction of the debt issuance costs, approximates its fair values as the stated rate approximates market rates for loans with similar terms as of December 31, 2023. The predecessor entity had no long-term debt as of December 31, 2022. The fair value of amounts due to affiliates are not determinable due to the related party nature of the balances.

***Segment Reporting***

Operating segments are components of an enterprise for which separate financial information is available that is evaluated by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Utilizing these criteria, the Company manages its business on the basis of one operating segment and one reportable segment.

***Revenue Recognition***

The Company derives its revenue through the sale of its specialty hair care products. The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers, which provides a five-step model for recognizing revenue from contracts with customers as follows:

· Identify the contract with a customer

· Identify the performance obligations in the contract

· Determine the transaction price

· Allocate the transaction price to the performance obligations in the contract

· Recognize revenue when or as performance obligations are satisfied

The Company recognizes revenue in the amount that reflects the consideration that the Company expects that it will be entitled to in exchange for transferring goods to its customers. Net sales are comprised of the transaction price from sales of products less expected allowances, including allowances for advertising, damages, promotions, discounts, and return rights. These provisions are estimated based on agreed-upon terms and the Company's historical experience and are recorded as a reduction to sales and accounts receivable in the same period the related sales are recorded. The Company experienced immaterial returns during the years ended December 31, 2023 and December 31, 2022.

Revenue is recognized when performance obligations are satisfied through the transfer of control of promised goods to the customers based on the terms of sale. The transfer of control typically occurs at a point in time based on consideration of when the customer has an obligation to pay for the goods, and physical possession of, legal title to, and the risks and rewards of ownership of the goods has been transferred to the customer. Generally, revenue from sales of merchandise to customers are recognized at a point in time, based on customer agreements and is recorded in the period the product is shipped or delivered in accordance with the shipping terms. For the Company's YMX.com website transactions, revenue is recognized upon delivery to customers. The Company's professional and retail distributors consist of local and international customers. Payments from international customers are due in advance. The Company records deferred revenue for contract liabilities from contracts with customers in which the customer prepays for the order. Payments from US-based customers are invoiced and typically due within 30-60 days.

The Company has elected to account for shipping and handling as fulfillment activities and not as a separate performance obligation. As of December 31, 2023, other than accounts receivable, the Company has no material contract assets. The Company has contract liabilities of $2,314 consisting of customer transit orders, deposits, and unredeemed gift cards with opening contract liabilities of $1,181 recognized as net sales in 2023.

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Sales tax, when applicable, that is collected in connection with revenue transactions is withheld and remitted to the respective taxing authorities. Shipping and fulfillment costs charged to customers are included as revenue in total net sales. Shipping costs incurred by the Company to ship between third-party manufacturers and warehouses are capitalized to inventory and included in cost of sales. Shipping and fulfillment costs incurred by the Company to ship to customers are included in selling, general, and administrative expenses.

*Practical Expedients* 

The Company elected to record revenue net of sales and excise taxes collected by customers, all of which the Company has the primary responsibility to pay and remit to taxing authorities. Taxes are excluded from the transaction price.

The Company elected not to disclose revenue related to remaining performance obligations for partially completed or unfulfilled contracts that are expected to be fulfilled within one year as such amounts are deemed to be insignificant.

***Cost of Sales***

Cost of sales includes the aggregate costs to procure the Company's products, including the amounts invoiced by third-party contract manufacturers and suppliers for finished goods, as well as costs related to transportation to distribution centers, amortization of the patented formulations, and amortization of the fair value step-up of inventory.

***Selling, General and Administrative Expenses***

Selling, general, and administrative ("SG&A") expenses primarily consist of personnel-related expenses, including salaries, bonuses, fringe benefits and share-based compensation expense, marketing and digital expenses, warehousing, fulfillment, and distribution costs, costs related to merchandising, product development costs, and depreciation of property and equipment.

***Income Taxes***

The Company uses the asset and liability approach for financial accounting and reporting for income taxes. The provision for income taxes includes Federal, and state income taxes currently payable or receivable and those deferred because of temporary differences between the financial statement and tax basis of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which those temporary differences are expected to be recovered or settled.

The Company recognizes deferred tax assets to the extent it believes the assets are more likely than not to be realized. Valuation allowances are established when necessary, to reduce deferred tax assets to the amount expected to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and the results of recent operations. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. There were no Uncertain Tax Provisions ("UTPs") identified at December 31, 2023 and December 31, 2022.

The Company recognizes interest and penalties, if any, associated with tax matters (including UTPs) as part of the income tax provision and includes accrued interest and penalties with the related tax liability in the Company's consolidated balance sheet.

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***Concentrations of Risk***

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash and cash equivalents. Although the Company deposits its cash with creditworthy financial institutions, its deposits, at times, may exceed federally insured limits. To date, the Company has not experienced any losses on it cash deposits.

The Company extends credit to customers in certain industries, such as retail, which may be affected by changes in economic or other external conditions. Three of the Company's customers represented 31% and 41% of total net sales for the years ended December 31, 2023 and December 31, 2022, respectively. Three of the Company's customers represented 45% and 53% of accounts receivable as of December 31, 2023 and December 31, 2022, respectively. The Company has not experienced any bad debt losses due to this concentration. No other customers individually have greater than 10% of total net sales or accounts receivable.

The Company purchases its inventories for certain product categories from a small number of vendors. Three of the Company's vendors, of which one is also one of their contract manufacturers, represented 79% and 55% of the Company's inventory purchases for the years ended December 31, 2023 and December 31, 2022, respectively. These same vendors represented 52% and 65% of accounts payable as of December 31, 2023 and December 31, 2022, respectively. No other vendor individually has greater than 10% of total inventory purchases or accounts payable.

***Marketing and Advertising***

The Company expenses marketing and advertising costs as incurred. Selling, general, and administrative expenses include marketing and advertising expenses of $2,521 and $1,500 for the years ended December 31, 2023 and December 31, 2022, respectively, in the accompanying consolidated statements of operations and comprehensive income.

***Shipping and Fulfillment***

Shipping and fulfillment costs incurred by the Company to ship to customers are expensed as incurred and are included in selling, general, and administrative expenses. Shipping and fulfillments costs are $4,126 and $777 for the years ended December 31, 2023 and December 31, 2022, respectively, in the accompanying consolidated statements of operations and comprehensive income.

***Share-Based Compensation***

Share-based compensation options granted to employees, non-employees and directors are measured at fair value at the respective grant dates and recognized as share-based compensation expense. Share-based compensation expense equal to the fair value of time-based service options that are expected to vest is estimated using the Black-Scholes model and recorded over the period the grants are earned, which is the requisite service period.

The Company uses a Monte Carlo option-pricing model to estimate the fair value of its performance-based options. This model requires the use of highly subjective and complex assumptions including volatility, and expected option life. The costs relating to share-based compensation expense are recognized in selling, general, and administrative expenses in our consolidated statements of operations and comprehensive income, and forfeitures are recognized and accounted for as they occur.

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***Recently Adopted Accounting Pronouncements***

If the Company or its prospective parent company becomes public or is public, the Company expects such public company to be an "emerging growth company." The JOBS Act allows the Company to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that the Company (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, the Company's financial statements may not be comparable to the financial statements of issuers who are required to comply with the effective date for new or revised accounting standards that are applicable to public companies.

In May 2014, the FASB issued ASC 606—Revenue from Contracts with Customers ("ASC 606"), which amended the accounting standards for revenue recognition and expanded the Company's disclosure requirements. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASC 606 also includes Subtopic 340-40, Other Assets and Deferred Costs - Contracts with Customers, which requires the deferral of incremental costs of obtaining a contract with a customer. This standard also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. The predecessor entity adopted ASC 606 effective January 1, 2022 under the modified retrospective method. As a result of applying the modified retrospective method to adopt the new revenue guidance, the predecessor entity recognized a $1,363 decrease to retained earnings.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which provides guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. ASU 2017-01requires entities to use a screen test to determine when an integrated set of assets and activities is not a business or if the integrated set of assets and activities needs to be further evaluated against the framework. ASU 2017-01 is effective for fiscal years beginning after December 15, 2018 and interim periods within annual periods beginning after December 15, 2022. ASU 2017-01 must be applied prospectively with early adoption permitted. The adoption of this standard did not have a material impact on our consolidated financial statements and related disclosures.

In January 2017, the FASB issued ASU No. 2017-04—Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment. ASU 2017-04simplifies the accounting for goodwill impairments by eliminating step 2 from the goodwill impairment test. The amendment is effective for fiscal years beginning after December 15, 2022. The Company early adopted this standard on January 1, 2023. The adoption did not have a material impact on the Company's financial statements.

In August 2018, FASB issued ASU 2018-13, Fair Value Measurement—Disclosure Framework (Topic 820). The updated guidance improves the disclosure requirements on fair value measurements and is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. Early adoption is permitted upon issuance of the standard for disclosures modified or removed with a delay of adoption of the additional disclosures until their effective date. The adoption of this standard was early adopted for the 2022 predecessor period and did not have a material impact on our consolidated financial statements and related disclosures.

In April 2022, the FASB issued ASU 2022-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, ("ASU 2022-04"). ASU 2022-04 clarifies and improves areas of guidance related to the recently issued standards on credit losses (ASU 2016-13), hedging (ASU 2017-12), and recognition and measurement of financial instruments (ASU 2016-01).The amendments generally have the same effective dates as their related standards. The amendments of ASU 2016-01 and ASU 2016-13 are effective for fiscal years beginning after December 15, 2022; early adoption is permitted. ASU 2017-02 is not relevant to the Company as the Company does not engage in hedging activities. The adoption of this standard did not have a material impact on our consolidated financial statements and related disclosures.

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In June 2018, the FASB issued ASU 2018-07, *Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting* ("ASU 2018-07"). The standard largely aligns the accounting for share-based payment options issued to employees and non-employees by expanding the scope of ASC 718 to apply to non-employee share-based transactions, as long as the transaction is not effectively a form of financing. For public entities, ASU 2018-07 was required to be adopted for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. For nonpublic entities, ASU 2018-07 is effective for annual periods beginning after December 15, 2022 and interim periods within those fiscal years. Early adoption is permitted for all entities but no earlier than the Company's adoption of ASU 2018-07. The Company adopted ASU 2018-07 as of the required effective date of January 1, 2023. The adoption of ASU 2018-07 adoption of this standard did not have a material impact on the Company's consolidated financial statements.

In December 2022, the FASB issued ASU No. 2022-12—Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes. This standard removes certain exceptions for investments, intra-period allocations and interim tax calculations and adds guidance to reduce complexity in accounting for income taxes. The amendment is effective for fiscal years beginning after December 15, 2024 and early adoption is permitted. The Company elected to early adopt ASU 2022-12. The adoption of this standard did not have a material impact on the Company's consolidated financial statements.

***Recent Accounting Guidance Not Yet Adopted***

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The guidance in this ASU supersedes the leasing guidance in Topic 840, Leases. Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2024, and interim periods within fiscal years beginning after December 15, 2022. The Company does not believe this standard will have a material impact on its consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments." The amendments in this ASU, among other things, require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. In addition, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. The FASB has issued multiple updates to ASU 2016-13 as codified in Topic 326, including ASUs 2022-04, 2022-05, 2022-10, 2022-11, 2023-02, and 2023-03. These ASUs have provided for various minor technical corrections and improvements to the codification as well as other transition matters. The amendments in the ASU are effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. Early application of the amendments is permitted. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements and related disclosures.

In March 2023, the FASB issued ASU 2023-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This ASU provides an optional expedient and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. In response to the concerns about structural risks of interbank offered rates ("IBORs") and, particularly, the risk of cessation of the LIBOR, regulators in several jurisdictions around the world have undertaken reference rate reform initiatives to identify alternative reference rates that are more observable or transaction based and less susceptible to manipulation. The ASU provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. The ASU can be adopted no later than December 1, 2022 (fiscal year 2023) with early adoption permitted. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements and related disclosures.

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| F-19 |
| *[**Table of Contents**](#toc2)* |

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**NOTE 3 - INVENTORY** 

Inventory as of December 31, 2023 and December 31, 2022 consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **For the Year Ended** | **For the Year Ended** |
|  | **December 31, 2023**<br> **(Successor)** | **December 31, 2022**<br> **(Predecessor)** |
| Raw materials | $7773 | $4230 |
| Finished goods | 25823 | 11662 |
| Inventory | $33596 | $15892 |

---

**NOTE 4 – NET SALES** 

The Company distributes products through national and international professional distributors and retailers as well as direct-to-consumers ("DTC") through e-commerce channels. The marketing and consumer engagement benefits that the direct channels provide are integral to the Company's brand and product development strategy and drives sales across channels. As such, the Company's three business channels consist of professional, specialty retail and DTC as follows:

---

| | | |
|:---|:---|:---|
|  | **For the Year Ended** | **For the Year Ended** |
|  | **December 31, 2023**<br> **(Successor)** | **December 31, 2022**<br> **(Predecessor)** |
| **Net sales by Channel:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Professional | $156199 | $98333 |
| &nbsp;&nbsp;&nbsp;&nbsp; Specialty retail | 50718 | 28946 |
| &nbsp;&nbsp;&nbsp;&nbsp; DTC | 75333 | 20927 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Net sales | $282250 | $148206 |

---

Revenue by major geographic region is based upon the geographic location of customers who purchase our products. During the years ended December 31, 2023 and December 31, 2022, our Net sales to consumers in the United States and International regions were as follows:

---

| | | |
|:---|:---|:---|
|  | **For the Year Ended** | **For the Year Ended** |
|  | **December 31, 2023**<br> **(Successor)** | **December 31, 2022**<br> **(Predecessor)** |
| **Net sales by Geography:** |  |  |
| United States | $149272 | $83083 |
| International | 132978 | 65123 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Net sales | $282250 | $148206 |

---

United Kingdom net sales for the years ended December 31, 2023 and December 31, 2022 were 17% and 10% of total net sales, respectively. No other International country exceeds 10% of total net sales.

**NOTE 5 - BUSINESS COMBINATIONS** 

On January 8, 2023, the Company completed an acquisition to acquire the net assets of the YMX business. The purchase price was $1,381,582 in net cash paid.

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| F-20 |
| *[**Table of Contents**](#toc2)* |

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Information regarding the net cash consideration paid and fair value of the assets and liabilities assumed at the acquisition date is as follows:

---

| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp; Fair value of assets acquired | $1216259 |
| &nbsp;&nbsp;&nbsp;&nbsp; Goodwill | 168300 |
| &nbsp;&nbsp;&nbsp;&nbsp; Fair value of liabilities assumed | (2977) |
| **Net cash paid for acquisition** | $**1381582** |
| &nbsp;&nbsp;&nbsp;&nbsp; Purchase price is comprised of: | &nbsp;&nbsp;&nbsp;&nbsp; Purchase price is comprised of: |
| &nbsp;&nbsp;&nbsp;&nbsp; Cash, net of acquired cash | $1381582 |
| **Net cash paid for acquisition** | $**1381582** |

---

---

| | |
|:---|:---|
| **Allocation of purchase price:** |  |
| **Net tangible assets (liabilities):** |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Inventory | $61262 |
| &nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable and other current assets | 7595 |
| &nbsp;&nbsp;&nbsp;&nbsp; Deferred tax assets | 6402 |
| &nbsp;&nbsp;&nbsp;&nbsp; Liabilities | (2977) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Net tangible assets** | 72282 |
| **Identifiable intangible assets:** |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Brand name | 952000 |
| &nbsp;&nbsp;&nbsp;&nbsp; Patented formulations | 136000 |
| &nbsp;&nbsp;&nbsp;&nbsp; Customer relationships | 53000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total identifiable intangible assets** | 1141000 |
| **Goodwill** | 168300 |
| **Net assets acquired** | $**1381582** |

---

Our brand name, patented formulations, and customer relationship and intangibles were assigned estimated useful lives of 25 years, 15 years, and 20 years, respectively, the weighted average of which is approximately 23.6 years. The estimated useful life of intangible assets have been determined to be the period over which an asset is expected to contribute directly to future cash flows. Factors used in determining such periods include consideration of the nature of the asset, the expected use of the related asset and consideration of the lives determined for comparable assets by the Company's industry peers. Additionally, for the patent intangible the remaining legally enforceable term of the patent was used in determining the estimated useful life.

The Company employed the Multi-period Excess Earnings Method ("MPEEM") valuation method to determine the fair value of the Company's brand name intangible based on the present value of the after-tax cash flows attributable to the brand name. The patented formulations intangible employed the relief from royalty method of the income approach to value the developed technology which is based on the present value of the after-tax royalty savings attributable to owning the intangible asset. The Company valued the customer relationship intangible using the distributor method, a version of the MPEEM based on the present value of after-tax cash flows attributable to the asset.

Costs related to the Acquisition are expensed as incurred. In connection with the Acquisition, the Company recorded transaction expenses totaling $16,499 for the year ended December 31, 2023 within the consolidated statements of operations and comprehensive income.

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| F-21 |
| *[**Table of Contents**](#toc2)* |

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**NOTE 6 – GOODWILL AND INTANGIBLE ASSETS** 

Goodwill and intangible assets include the following:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31, 2023 (Successor)** | **December 31, 2023 (Successor)** | **December 31, 2023 (Successor)** | **December 31, 2023 (Successor)** |
|  | **Estimated**<br> **Useful Life** | **Gross Carrying**<br> **Amount** | **Accumulated**<br> **amortization** | **Net carrying**<br> **amount** |
| Brand name | 25 years | $952000 | $(37234) | $914766 |
| Patented formulations | 15 years | 136000 | (8865) | 127135 |
| Customer relationships | 20 years | 53000 | (2591) | 50409 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total finite-lived intangibles |  | 1141000 | (48690) | 1092310 |
| Goodwill | Indefinite | 168300 |  | 168300 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total goodwill and other intangibles |  | $1309300 | $(48690) | $1260610 |

---

The Company has not recognized any impairment charges on its goodwill or intangible assets, as the anticipated future cash flows generated by each of these assets remain substantially in excess of their carrying values.

Amortization expense on the finite-lived intangible assets was $48,690 for the year ended December 31, 2023. The amortization of brand name and customer relationships of $39,825 is recorded in the consolidated statements of operations and comprehensive income. The amortization for patented formulations is $8,865, of which $2,813 is allocated to finished goods inventory and $6,052 to cost of sales, recorded in the consolidated statements of operations and comprehensive income. The 2022 predecessor period includes unamortized patent costs of $256, which was fair valued as part of the Acquisition and included in patented formulations.

The estimated future amortization expense related to the finite-lived intangible assets as of December 31, 2023, is as follows:

---

| | |
|:---|:---|
| **Year ending December 31,** |  |
| 2024 | $49797 |
| 2022 | 49797 |
| 2023 | 49797 |
| 2024 | 49797 |
| 2025 | 49797 |
| Thereafter | 843325 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total | $1092310 |

---

**NOTE 7 - ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES** 

Accrued expenses as of December 31, 2023 and December 31, 2022 consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **For the Year Ended** | **For the Year Ended** |
|  | **December 31, 2023**<br> **(Successor)** | **December 31, 2022**<br> **(Predecessor)** |
| Deferred revenue | $2314 | $1100 |
| Accrued sales and income taxes | 3100 | 537 |
| Accrued other | 2931 | 400 |
| Payroll liabilities | 1517 | 103 |
| Accrued expenses and other current liabilities | $9862 | $2140 |

---

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| F-22 |
| *[**Table of Contents**](#toc2)* |

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**NOTE 8 - LONG-TERM DEBT** 

Debt consisted of the following on December 31, 2023 (Successor):

---

| | | | |
|:---|:---|:---|:---|
|  | **January 2023**<br> **Credit**<br> **Agreement** | **December 2023**<br> **Amendment** | **Total** |
| Long-term debt |  |  |  |
| Original term loan borrowing | $441562 | $347785 | $789347 |
| Debt issuance costs | (8810) | (5054) | (13864) |
| &nbsp;&nbsp;&nbsp;&nbsp; Total term loan debt | 432752 | 342731 | 775483 |
| Less: Current portion | (11250) | (8862) | (20112) |
| &nbsp;&nbsp;&nbsp;&nbsp; Long-term debt, net of current portion | $421502 | $333869 | $755371 |

---

**Credit Agreement, as amended** 

On January 8, 2023, the Company entered into a secured credit agreement (the "Original Credit Agreement"), consisting of a $450,000 term loan facility (the "Term Loan") and a $50,000 revolving facility (the "Revolver"), which includes a $10,000 letter of credit sub-facility and a $5,000 swingline loan facility. In addition, on December 18, 2023 the Company entered into a First Incremental Amendment to the Credit Agreement (the "Amendment," and the Credit Agreement, as amended by the Amendment, and as otherwise amended, modified or supplemented prior to the date hereof, the "Credit Agreement") to increase the Term Loan Facility by $350,000 and increase the Revolver capacity by $1,000 to a revised $800,000 Term Loan Facility and $51,000 Revolver. The unused balance of the Revolver as of December 31, 2023 was $51,000.

Under the Credit Agreement, the Company incurred original issue discount ("OID") costs of $10,000, and $527 of third-party issue costs. In connection with the incremental borrowing pursuant to the Amendment, the Company incurred OID costs of $3,500 and $1,590 of third-party issue costs.

OID costs and debt issue costs are amortized on a straight-line basis, which approximates the effective interest method, over the Term Loan period maturing on January 8, 2026. The Revolver is amortized over the term of the Revolver facility that matures on January 8, 2025. The amortization is recorded in interest expense in the consolidated statements of operations and comprehensive income.

The interest rate on outstanding debt under the Term Loan Facility is 7.5%. The interest rates for all facilities are calculated based upon the Company's election between the published LIBO rate at time of election plus an additional interest rate spread, or the Alternate Base Rate plus an additional interest rate spread. As of December 31, 2023, there was no balance outstanding under the Revolver, including letters of credit and swingline loans. Interest expense was $38,645 for the year ended December 31, 2023 recorded in interest (expense) income, net in the consolidated statements of operations and comprehensive income.

The Credit Agreement includes reporting, financial, and maintenance covenants that require, among other things, for the Company to comply with certain maximum secured leverage ratios, which the Company was in compliance with on December 31, 2023. Substantially all the assets of the Company constitute collateral under the Term Loan and Revolver facilities.

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| F-23 |
| *[**Table of Contents**](#toc2)* |

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**NOTE 9 - INCOME TAXES** 

The Company's breakdown of the income before provision for income taxes for the year ended December 31, 2023 (Successor) is as follows:

---

| | |
|:---|:---|
|  | **2023** |
| United States | $47221 |
| Foreign | 37 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total income before taxes | $47258 |

---

The components of the provision for income taxes were as follows:

---

| | |
|:---|:---|
|  | **2023** |
| Current provision: |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Federal | $11314 |
| &nbsp;&nbsp;&nbsp;&nbsp; State and Local | 1079 |
| &nbsp;&nbsp;&nbsp;&nbsp; Foreign | 15 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total current provision | 12408 |
| &nbsp;&nbsp;&nbsp;&nbsp; Federal | (4204) |
| &nbsp;&nbsp;&nbsp;&nbsp; State and Local | (224) |
| &nbsp;&nbsp;&nbsp;&nbsp; Foreign |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total deferred provision | (4428) |
| &nbsp;&nbsp;&nbsp;&nbsp; Total provision for income taxes | $7980 |

---

Significant components of the Company's deferred tax assets and liabilities are as follows:

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| | |
|:---|:---|
|  | **2023** |
| **Deferred Tax Assets:** |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Inventory adjustments | $258 |
| &nbsp;&nbsp;&nbsp;&nbsp; Capitalized transaction costs | 3218 |
| &nbsp;&nbsp;&nbsp;&nbsp; Deferred revenue | 172 |
| &nbsp;&nbsp;&nbsp;&nbsp; Accrued expenses and other current liabilities | 637 |
| &nbsp;&nbsp;&nbsp;&nbsp; Share-based compensation | 321 |
| &nbsp;&nbsp;&nbsp;&nbsp; Intangible assets | 8549 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total Deferred Tax Assets** | 13155 |
| **Deferred Tax Liabilities:** |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Goodwill | 2264 |
| &nbsp;&nbsp;&nbsp;&nbsp; Other current assets | 61 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total Deferred Tax Liabilities** | 2325 |
| **Net Deferred Tax Assets** | $10830 |

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| F-24 |
| *[**Table of Contents**](#toc2)* |

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The following table provides a reconciliation between the U.S. federal statutory rate and the Company's effective tax rate as of December 31, 2023:

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| | |
|:---|:---|
|  | **2023** |
| U.S. federal statutory income tax rate | 21.00% |
| Foreign derived intangible income deduction | (5.20%) |
| State and local income taxes, net of federal benefit | 1.81% |
| Other | (0.72%) |
| &nbsp;&nbsp;&nbsp;&nbsp; Effective Tax Rate | 16.89% |

---

In 2023, the effective tax rate was lower than the U.S. federal statutory tax rate primarily due to the foreign derived intangible income deduction. This deduction results in income from the Company's sales to foreign customers being taxed at a lower effective tax rate.

The Company assesses positive and negative evidence for each jurisdiction to determine whether it is more likely than not that existing deferred tax assets will be realized. As of December 31, 2023, no valuation allowance was recorded as the Company has concluded that its net deferred tax assets are more likely than not to be realized.

The Company recognizes the tax benefit of an uncertain tax position only if it is more likely than not that the position is sustainable upon examination by the taxing authority based on the technical merits. The Company had no uncertain tax positions as of December 31, 2023 and does not expect any significant change in its unrecognized tax benefits within the next 12 months.

On March 27, 2023, the U.S. Federal government enacted the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"). The CARES Act is an emergency economic stimulus package in response to the COVID-19 pandemic, which among other things contained numerous income tax provisions. The Company did not avail itself of any of the elective provisions of the CARES Act, including the Payroll Protection Program or Employee Protection Credit incentives, or payroll tax deferral. The CARES Act did not have a material impact on the Company's consolidated financial statements.

In the normal course of business, the Company and its subsidiaries may be examined by various taxing authorities, including the Internal Revenue Service in the U.S. As of December 31, 2023, the Company remained subject to examination in the United States and U.K. for the 2023 tax year.

**NOTE 10 – SHARE-BASED COMPENSATION** 

The Company grants share-based options under the Pheno Biotech Holdings Corp. 2023 Omnibus Equity Incentive Plan (the "Plan"). All outstanding options have been in the form of options to purchase common stock of Pheno Biotech Holdings Corp. with vesting based on either time or market (performance) conditions. The time-based service options are eligible to vest in equal installments on the first five anniversaries of the vesting start date, subject to the option holder's continued service through the applicable vesting date. The performance condition options are eligible to vest based on specified rates of return on invested capital of the third-party investors. Upon a qualifying initial public offering ("IPO") the unvested performance condition options that would have vested had the third-party investors were to sell for cash their equity in the Company at the IPO price will convert to time-based service options, vesting ratably on the first three anniversaries of the IPO, subject to the option holder's continued service through the applicable vesting date.

As of December 31, 2023, a total of 106,596 shares have been authorized for issuance under the Plan, and 40,330 remain available to grant. As of December 31, 2023, there were 66,266 options outstanding under the Plan.

Share-based compensation expense for the year ended December 31, 2023 of $1,527 was recognized in selling, general, and administrative expenses in the consolidated statements of operations and comprehensive income. As of December 31, 2023, the Company had not recognized compensation costs on unvested share-based options of $9,646 with a weighted average remaining recognition period of 4.4 years for time-based and 3.5 years for performance-based share options.

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| F-25 |
| *[**Table of Contents**](#toc2)* |

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***Time-based service options***

The following table summarizes the activity for options that vest solely based upon the satisfaction of a time-based service condition as follows:

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| | | | |
|:---|:---|:---|:---|
|  | **Options**<br> **Outstanding** | **Weighted Average**<br> **Exercise Price Per**<br> **Share** | **Aggregate**<br> **Intrinsic**<br> **Value** |
| Granted | 23700 | $594 | $26780 |
| Cancelled/Forfeited |  |  |  |
| Outstanding December 31, 2023 | 23700 | 594 | 26780 |
| Vested and exercisable December 31, 2023 |  | $— | $— |

---

Additional information relating to time-based service options is as follows:

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| | |
|:---|:---|
|  | **Year Ended**<br> **December 31, 2023**<br> **(Successor)** |
| Share-based compensation expense | $1098 |
| Weighted-average grant date fair value of options granted (per share) | $364 |
| Unrecognized compensation expense | $7518 |

---

***Performance-based options***

The following table summarizes the activity for options that vest based upon the satisfaction of a performance condition as follows:

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| | | | |
|:---|:---|:---|:---|
|  | **Options**<br> **Outstanding** | **Weighted Average**<br> **Exercise Price Per**<br> **Share** | **Aggregate**<br> **Intrinsic**<br> **Value** |
| Granted | 42566 | $545 | $50183 |
| Cancelled/Forfeited |  |  |  |
| Outstanding December 31, 2023 | 42566 | 545 | 50183 |
| Vested and exercisable December 31, 2023 |  | $— | $— |

---

Additional information relating to performance-based options is as follows:

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| | |
|:---|:---|
|  | **Year Ended**<br> **December 31, 2023**<br> **(Successor)** |
| Share-based compensation expense | $429 |
| Weighted-average grant date fair value of options granted (per share) | $60 |
| Unrecognized compensation expense | $2107 |

---

The fair value of time and performance share-based options granted were calculated using the following assumptions:

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| | |
|:---|:---|
|  | **Year Ended**<br> **December 31, 2023**<br> **(Successor)** |
| Expected term (years) | 4 – 6.5 |
| Expected volatility (%) | 30 |
| Risk-free interest rate (%) | 0.37 – 1.87 |
| Expected dividend yield (%) |  |

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| F-26 |
| *[**Table of Contents**](#toc2)* |

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The determination of the fair value of share-based options on the date of grant using a using a Black-Scholes formula and Monte Carlo simulation approach for the value of time and performance-based vesting options, respectively, is affected by the fair value of the underlying common stock. It is also affected by assumptions regarding a number of variables that are complex and generally require significant judgement. The assumptions used in the Black-Scholes and Monte Carlo option-pricing models to calculate value of stock options were:

*Expected term* 

The expected term of the options represents the period of time that the options are expected to be outstanding. The expected term of the time-based service options has been estimated to be the midpoint between the expected vesting date and the expiration date of the options of 6.5 years. The expected term of the performance-based options has been estimated to be 4 years.

*Expected volatility* 

As the Company does not have any trading history for its common stock, the expected stock price volatility for the common stock was estimated by taking the average historic price volatility for industry peers based on historic weekly price return observations over a 10-year look back period. Industry peers consist of several public companies within the same industry, which are of similar size, complexity and stage of development.

The Company intends to continue to consistently apply this process using the same or similar public companies until a sufficient amount of historical information regarding the volatility of its own share price becomes available, or unless circumstances change such that the identified companies are no longer similar to the Company, in which case, more suitable companies whose share prices are publicly available would be used in the calculation.

*Risk-free interest rate* 

The risk-free interest rate was based on the U.S. Constant Maturity Treasury rate, with maturities similar to the expected term.

*Expected Dividend Yield* 

The Company does not anticipate paying any dividends in the foreseeable future. As such, the Company uses an expected dividend yield of zero.

**NOTE 11 - EQUITY** 

**Predecessor** - The 2022 Members' Equity includes the combined capital and retained earnings of the YMX business acquired by the Company on January 8, 2023.

**Successor** - As part of the Acquisition of the YMX business, the Company issued 959.4 million common shares to its Parent for consideration of $959,368. During the year, an additional 0.5 million shares were issued for consideration of $500 for a combined 959.9 million shares and total consideration of $959,868. On December 18, 2023 the Company paid a cash dividend of $470,000 or $489.65 per share to Parent.

**NOTE 12 - RELATED PARTY TRANSACTIONS** 

YMX Sales Corp, an affiliated company of the predecessor entity, was not acquired by the Company on January 8, 2023. As of December 31, 2022, the predecessor entity's financial statements included a liability amount presented as Due to affiliate in the accompanying predecessor entity consolidated balance sheet for $6,597 pertaining to international sales commission obligations. In addition, the Company received $300 from Advent Funds, a shareholder of its Parent, to be expended as charitable donations of which $20 remains unpaid as of December 31, 2023.

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| F-27 |
| *[**Table of Contents**](#toc2)* |

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**NOTE 13 - CONTINGENCIES** 

From time to time, the Company is subject to various legal actions arising in the ordinary course of business. The Company cannot predict with reasonable assurance the outcome of these legal actions brought against us as they are subject to uncertainties. Accordingly, any settlement or resolution in these legal actions may occur and affect our net income in such period as the settlement or resolution. The Company does not believe the outcome of any existing legal actions would have a material adverse effect on the consolidated financial statements as of December 31, 2023, taken as a whole.

**NOTE 14 – EMPLOYEE BENEFIT PLAN** 

The Company maintains a defined contribution 401(k) profit-sharing plan (the "401(k) Plan") for eligible employees. Participants may make voluntary contributions up to the maximum amount allowable by law. The Company may make contributions to the 401(k) Plan on a discretionary basis. The Company has not made any employer contributions during the December 31, 2023 fiscal year.

**NOTE 15 – NET INCOME PER SHARE (UNIT)** 

The following is a reconciliation of the numerator and denominator in the basic and diluted net income per common share (unit) computations:

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| | | |
|:---|:---|:---|
|  | **Year Ended**<br> **December 31, 2023**<br> **(Successor)** | **Year Ended**<br> **December 31, 2022**<br> **(Predecessor)** |
| **Numerator:** |  |  |
| Net Income | $39278 | $60879 |
| **Denominator:** |  |  |
| Weighted average common shares (units) outstanding - basic | 941313 | 1000000 |
| Dilutive common equivalent shares (units) from equity options | 2124 |  |
| Weighted average common shares (units) outstanding - diluted | 943437 | 1000000 |
| **Net income per share (unit):** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Basic | $41.73 | $60.88 |
| &nbsp;&nbsp;&nbsp;&nbsp; Diluted | $41.63 | $60.88 |

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| F-28 |
| *[**Table of Contents**](#toc2)* |

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**NOTE 16 - SUBSEQUENT EVENTS** 

Subsequent events have been evaluated through June 25, 2024, the date which the consolidated financial statements were available to be issued.

Pursuant to the purchase agreement with the Sellers, the Company was required to pay certain amounts in connection with the final resolution of certain litigation and contingency matters involving Acquisition, Inc., a predecessor entity to the Company, substantially all of whose assets and liabilities were purchased as part of the Acquisition (the "Acquisition Matters").

During April 2024, the Company and the Sellers commenced negotiations concerning the amount to be paid to the Sellers by the Company in connection with a potential settlement of the Acquisition Matters and, in May 2024, the Company reached agreement with the Sellers on the amount to be paid by the Company to the Sellers in full satisfaction of the contingency provisions in the purchase agreement related to the Acquisition Matters.

Accordingly, the Company has accrued approximately $14,000 included in selling, general, and administrative costs during the quarter ending June 30, 2024, associated with the amounts to be paid by the Company in connection with the final resolution of the Acquisition Matters. The amounts accrued, all of which have been paid in May 2024, in connection with the final settlement of the Acquisition Matters, represent the total cost to the Company in resolving the Acquisition Matters.

No amounts have been recorded related to the resolution of the Acquisition Matters in the accompanying consolidated financial statements as of and for the year ended December 31, 2023, given the associated claim, negotiation and resolution of the amounts to be paid to the Sellers in connection with the Acquisition Matters occurred during the quarter ending June 30, 2024, after the end of the accounting measurement period for the Acquisition.

As a result of the foregoing agreement with the Sellers and the resulting approval by the Sellers of the settlement of the Acquisition Matters, all outstanding claims of Sellers and the Company associated with the Acquisition Matters have been resolved.

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| F-29 |
| *[**Table of Contents**](#toc2)* |

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**Pheno Biotech** **Holdings Corp. and subsidiaries** 

**Condensed consolidated balance sheets (unaudited)** 

**As of June 30, 2024 and December 31, 2023** 

**(In thousands, except shares)** 

---

| | | |
|:---|:---|:---|
|  | **June 30,**<br> **2024** | **December 31,**<br> **2023** |
| **Assets** |  |  |
| Current Assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Cash and cash equivalents | $76430 | $10964 |
| &nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable, net | 43092 | 14377 |
| &nbsp;&nbsp;&nbsp;&nbsp; Inventory | 57189 | 33596 |
| &nbsp;&nbsp;&nbsp;&nbsp; Other current assets | 5844 | 2422 |
| Total current assets | 182555 | 61359 |
| Property and equipment, net | 97 | 34 |
| Intangible assets, net | 1067412 | 1092310 |
| Goodwill | 168300 | 168300 |
| Deferred taxes | 9499 | 10830 |
| Total assets | $1427863 | $1332833 |
| **Liabilities and stockholder's equity** |  |  |
| Current Liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Accounts payable | $17538 | $16815 |
| &nbsp;&nbsp;&nbsp;&nbsp; Accrued expenses and other current liabilities | 16155 | 9862 |
| &nbsp;&nbsp;&nbsp;&nbsp; Current portion of long-term debt | 20112 | 20112 |
| Total current liabilities | 53805 | 46789 |
| Long-term debt | 746696 | 755371 |
| Total liabilities | 800501 | 802160 |
| Contingencies (Note 13) |  |  |
| Stockholder's equity: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Common stock, $0.001 par value; 2,000,000 shares authorized as of June 30, 2024 and December 31, 2023; 960,185 and 959,868 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively | 960 | 960 |
| &nbsp;&nbsp;&nbsp;&nbsp; Additional paid-in capital | 531520 | 529713 |
| &nbsp;&nbsp;&nbsp;&nbsp; Retained earnings | 94882 |  |
| Total stockholder's equity | 627362 | 530673 |
| Total liabilities and stockholder's equity | $1427863 | $1332833 |

---

The accompanying notes are an integral part of these condensed consolidated financial statements.

---

| |
|:---|
| F-30 |
| *[**Table of Contents**](#toc2)* |

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**Pheno Biotech** **Holdings Corp. and subsidiaries** 

**Condensed consolidated statements of operations and comprehensive income (loss) (unaudited)** 

**For the six months ended June 30, 2024 and June 30, 2023** 

**(In thousands)** 

---

| | | |
|:---|:---|:---|
|  | **Six Months Ended**<br> **June 30,** | **Six Months Ended**<br> **June 30,** |
|  | **2024** | **2023** |
| Net sales | $270243 | $99608 |
| Cost of sales: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Cost of product (excluding amortization) | 51397 | 54667 |
| &nbsp;&nbsp;&nbsp;&nbsp; Amortization of patented formulations | 4719 | 2465 |
| Total cost of sales | 56116 | 57132 |
| Gross profit | 214127 | 42476 |
| Operating expenses: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Selling, general, and administrative | 45067 | 15076 |
| &nbsp;&nbsp;&nbsp;&nbsp; Amortization of other intangible assets | 20364 | 19461 |
| &nbsp;&nbsp;&nbsp;&nbsp; Acquisition costs |  | 16011 |
| Total operating expenses | 65431 | 50548 |
| Operating income (loss) | 148696 | (8072) |
| Interest expense | (31065) | (18783) |
| Other (expense) income, net | (204) | (126) |
| &nbsp;&nbsp;&nbsp;&nbsp; Income (loss) before provision for income taxes | 117427 | (26981) |
| Income tax provision (benefit) | 22545 | (4556) |
| Net income (loss) | $94882 | $(22425) |
| Comprehensive income (loss) | $94882 | $(22425) |
| Net income (loss) per share: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Basic | $98.83 | $(24.31) |
| &nbsp;&nbsp;&nbsp;&nbsp; Diluted | $97.55 | $(24.31) |
| Weighted average common shares outstanding: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Basic | 960098 | 922450 |
| &nbsp;&nbsp;&nbsp;&nbsp; Diluted | 972681 | 922450 |

---

The accompanying notes are an integral part of these condensed consolidated financial statements.

---

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| F-31 |
| *[**Table of Contents**](#toc2)* |

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**Pheno Biotech**

**Holdings Corp. and subsidiaries** 

**Condensed consolidated statements of changes in equity (unaudited)** 

**For the six months ended June 30, 2024 and June 30, 2023** 

**(In thousands, except shares)** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Common Stock** | **Common Stock** | | | |
|  | **Shares** | **Amount** | **Additional** <br> **Paid in** <br>**Capital** | **Retained**<br>**Earnings** | **Total**<br>**Equity** |
| **Balance as of December 31, 2023** | 959868 | $960 | $529713 |  | $530673 |
| Issuance of common stock | 317 |  | 633 |  | 633 |
| Net income |  |  |  | 94882 | 94882 |
| Share-based compensation expense |  |  | 1174 |  | 1174 |
| **Balance - June 30, 2024** | 960185 | $960 | $531520 | $94882 | $627362 |
| **Balance - January 1, 2023** |  |  |  |  |  |
| Issuance of common stock | 959868 | $960 | $958908 | $— | $959868 |
| Net loss |  |  |  | (22425) | (22425) |
| Share-based compensation expense |  |  | 421 |  | 421 |
| **Balance - June 30, 2023** | 959868 | $960 | $959329 | $(22425) | $937864 |

---

The accompanying notes are an integral part of these condensed consolidated financial statements.

---

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| F-32 |
| *[**Table of Contents**](#toc2)* |

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**Pheno Biotech**

**Holdings Corp. and subsidiaries** 

**Condensed consolidated statements of cash flow (unaudited)** 

**For the six months ended June 30, 2024 and June 30, 2023** 

**(In thousands)** 

---

| | | |
|:---|:---|:---|
|  | **Six Months Ended**<br> **June 30,** | **Six Months Ended**<br> **June 30,** |
|  | **2024** | **2023** |
| **Cash flows from operating activities:** |  |  |
| Net income (loss) | $94882 | $(22425) |
| Adjustments to reconcile net income (loss) to net cash from operations provided by operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Amortization of patent formulations | 4719 | 2465 |
| &nbsp;&nbsp;&nbsp;&nbsp; Amortization of other intangibles | 20364 | 19461 |
| &nbsp;&nbsp;&nbsp;&nbsp; Amortization of fair value of acquired inventory |  | 36775 |
| &nbsp;&nbsp;&nbsp;&nbsp; Amortization of debt issuance costs | 1380 | 838 |
| &nbsp;&nbsp;&nbsp;&nbsp; Deferred taxes | 1331 | (2214) |
| &nbsp;&nbsp;&nbsp;&nbsp; Share-based compensation expense | 1174 | 421 |
| Changes in operating assets and liabilities, net of effects of acquisition: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable, net | (28715) | (5653) |
| &nbsp;&nbsp;&nbsp;&nbsp; Inventory | (23777) | (350) |
| &nbsp;&nbsp;&nbsp;&nbsp; Other current assets | (3421) | (611) |
| &nbsp;&nbsp;&nbsp;&nbsp; Accounts payable | 723 | 2364 |
| &nbsp;&nbsp;&nbsp;&nbsp; Accrued expenses and other current liabilities | 6293 | 2503 |
| Net cash provided by operating activities | 74953 | 33574 |
| **Cash flows from investing activities:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Purchase of property and equipment | (64) | (32) |
| &nbsp;&nbsp;&nbsp;&nbsp; Business acquisition, net of acquired cash |  | (1381582) |
| Net cash (used in) investing activities | (64) | (1381614) |
| **Cash flows from financing activities:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Proceeds from the issuance of stock | 633 | 959867 |
| &nbsp;&nbsp;&nbsp;&nbsp; Proceeds from Revolver |  | 50000 |
| &nbsp;&nbsp;&nbsp;&nbsp; Principal payments of Term Loan | (10056) | (2813) |
| &nbsp;&nbsp;&nbsp;&nbsp; Proceeds from the issuance of Term Loan |  | 450000 |
| &nbsp;&nbsp;&nbsp;&nbsp; Payments of debt issuance costs |  | (10526) |
| Net cash (used in) provided by financing activities | (9423) | 1446528 |
| Net increase in cash and cash equivalents | 65466 | 98488 |
| Cash and cash equivalents - beginning of period | 10964 |  |
| Cash and cash equivalents - end of period | $76430 | $98488 |
| **Supplemental disclosure of cash flow information:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Cash paid for income taxes | $22731 | $— |
| &nbsp;&nbsp;&nbsp;&nbsp; Cash paid during the period for interest | 32006 | 16182 |
| **Supplemental disclosure of noncash activities:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Deferred offering costs included in accounts payable and accrued expenses | $626 | $— |

---

The accompanying notes are an integral part of these condensed consolidated financial statements.

---

| |
|:---|
| F-33 |
| *[**Table of Contents**](#toc2)* |

---

**PHENO BIOTECH HOLDINGS CORP. AND SUBSIDIARIES** 

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)** 

**(DOLLARS IN THOUSANDS, EXCEPT SHARES)** 

**NOTE 1 - NATURE OF OPERATIONS AND BASIS OF PRESENTATION** 

Pheno Biotech Holdings Corp. ("Pheno Biotech" together with its subsidiaries, the "Company" or "we") is a wholly owned subsidiary of Pheno Biotech Holdings, L.P. (the "Parent"). Pheno Biotech was formed as a Delaware corporation on November 13, 2022. Pheno Biotech is organized as a holding company and operates through its wholly owned subsidiary, YMX, Inc., which conducts business under the name "YMX". YMX develops and manufactures shampoos, conditioners and specialty products that are used to protect, strengthen, and rebuild broken bonds in damaged hair caused by damage from chemical, thermal, and mechanical processes.

On January 8, 2023 (the "Acquisition Date"), a group of third-party investors, through Pheno Biotech, acquired 100% of the Acquisition business, including the intellectual property operations of another affiliated business, Acquisition, Inc. ("Acquisition", "Sellers", "YMX business") for $1,381,582 (the "Acquisition"). Subsequent to the Acquisition Date, all of the operations of YMX are comprised of the operations of YMX, Inc.

In these financial statements, the term "YMX" is used to refer to either the operations of the business prior or after the Acquisition depending on the respective period discussed.

**COVID-19**—On March 11, 2023, the World Health Organization declared COVID-19 a pandemic. The global spread and unprecedented impact of COVID-19 continues to create significant volatility, uncertainty and economic disruption. The Company's operations and its financial results including net sales, gross profit, and selling, general, and administrative expenses were impacted by COVID-19 in 2023, however the Company is unable to estimate the impact of COVID-19 on its operations.

The extent of COVID-19's effect on the Company's operational and financial performance will depend on future developments, including the ultimate duration, spread and intensity of the pandemic (including any resurgences), impact of the new COVID-19 variants and the rollout of COVID-19vaccines, and the level of social and economic restrictions imposed in the United States and abroad in an effort to curb the spread of the virus, all of which are uncertain and difficult to predict considering the rapidly evolving landscape. As a result, it is not currently possible to ascertain the overall impact of the COVID-19 pandemic on the Company's business, results of operations, financial condition or liquidity. Future events and effects related to COVID-19 cannot be determined with precision and actual results could differ from estimates or forecasts.

***Basis of Presentation***

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP") for interim financial information and with the instructions to Securities and Exchange Commission ("SEC") Article 10 of Regulation S-X. Accordingly, these financial statements do not include all information and footnotes required by US GAAP for complete financial statements, and are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2024 or for any other interim period or for any other future fiscal year. The balance sheet as of December 31, 2023, included herein, was derived from the audited financial statements as of that date, but does not include all disclosures including certain notes required by US GAAP on an annual reporting basis. Certain information and note disclosures normally included in the financial statements prepared in accordance with US GAAP have been or omitted pursuant to such rules and regulations. Therefore, these interim financial statements should be read in conjunction with the financial statements for the fiscal year ended December 31, 2023 and notes included elsewhere in this registration statement In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for fair presentation of the results of operations, financial position and cash flows for the periods presented have been reflected. The Company believes that the disclosures provided herein are adequate to prevent the information presented from being misleading.

---

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| *[**Table of Contents**](#toc2)* |

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**NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** 

There have been no material changes in significant accounting policies as described in the Company's consolidated financial statements for the year ended December 31, 2023.

***Estimates and Assumptions***

Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Examples of estimates and assumptions include: for revenue recognition, determining the nature and timing of satisfaction of performance obligations, variable consideration, and other obligations such as product returns and refunds; loss contingencies; the fair value of share-based options and cash-settled units; the fair value of and/or potential impairment of goodwill and intangible assets for our reporting unit; useful lives of our tangible and intangible assets; allowances for doubtful accounts; the net realizable value of, and demand for our inventory. Actual results and outcomes may differ from management's estimates and assumptions due to risks and uncertainties.

***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. The authoritative guidance for fair value measurements established a framework for measuring fair value and established a three-level valuation hierarchy for disclosure of fair value measurements as follows:

***Level 1***—Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. The Company's Level 1 assets consist of its marketable securities.

***Level 2***—Observable quoted prices for similar assets or liabilities in active markets and observable quoted prices for identical assets or liabilities in markets that are not active.

***Level 3***—Unobservable inputs that are not corroborated by market data.

Cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are reflected at carrying value, which approximates fair value due to the short-term maturity. The Company's long-term debt is recorded at its carrying value in the consolidated balance sheets, which may differ from fair value.

The gross carrying amount of the Company's bank debt, before reduction of the debt issuance costs, approximates its fair values as the stated rate approximates market rates for loans with similar terms as of June 30, 2024 and December 31, 2023.

***Deferred Offering Costs***

Deferred offering costs consist of costs incurred in connection with the anticipated sale of the Company's common stock in an initial public offering ("IPO"), including certain legal, accounting, and other IPO related costs. After completion of the IPO, deferred offering costs are recorded in stockholders' equity as a reduction from the proceeds of the offering. Should the Company terminate its planned IPO, receive no proceeds from the IPO or if there is a significant delay, the deferred offering costs would be expensed to operating expenses in the consolidated statements of comprehensive income. No deferred offering costs were recorded as of June 30, 2023. As of June 30, 2024, $702 of deferred offering costs had been recorded in other current assets on the Company's consolidated balance sheets. Refer to Note 15 Subsequent Events for further discussion.

---

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| *[**Table of Contents**](#toc2)* |

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***Segment Reporting***

Operating segments are components of an enterprise for which separate financial information is available that is evaluated by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Utilizing these criteria effective the second quarter of 2024, the Company revised its structure from managing its business on the basis of one operating segment to three operating segments that are aggregated into one reportable segment given the operating segments have similar economic characteristics, classes of consumers, products, production, distribution methods, and operate in the same regulatory environments. This did not result in a change in the Company's reportable segment.

***Recently Adopted Accounting Pronouncements***

If the Company or its prospective parent company becomes public or is public, the Company expects such public company to be an "emerging growth company." The JOBS Act allows the Company to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that the Company (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, the Company's financial statements may not be comparable to the financial statements of issuers who are required to comply with the effective date for new or revised accounting standards that are applicable to public companies.

***Recent Accounting Guidance Not Yet Adopted***

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The guidance in this ASU supersedes the leasing guidance in Topic 840, Leases. Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2024, and interim periods within fiscal years beginning after December 15, 2022. The Company will adopt this accounting standard on January 1, 2022 and does not believe this standard will have a material impact on its consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments." The amendments in this ASU, among other things, require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. In addition, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. The FASB has issued multiple updates to ASU 2016-13 as codified in Topic 326, including ASUs 2022-04, 2022-05, 2022-10, 2022-11, 2023-02, and 2023-03. These ASUs have provided for various minor technical corrections and improvements to the codification as well as other transition matters. The amendments in the ASU are effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. Early application of the amendments is permitted. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements and related disclosures.

In March 2023, the FASB issued ASU 2023-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This ASU provides an optional expedient and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. In response to the concerns about structural risks of interbank offered rates ("IBORs") and, particularly, the risk of cessation of the LIBOR, regulators in several jurisdictions around the world have undertaken reference rate reform initiatives to identify alternative reference rates that are more observable or transaction based and less susceptible to manipulation. The ASU provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. The ASU can be adopted no later than December 1, 2022 (fiscal year 2023) with early adoption permitted. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements and related disclosures.

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| *[**Table of Contents**](#toc2)* |

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**NOTE 3 - INVENTORY** 

Inventory as of June 30, 2024 and December 31, 2023 consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **June 30,**<br> **2024** | **December 31,**<br> **2023** |
| Raw materials | $9906 | $7773 |
| Finished goods | 47283 | 25823 |
| Inventory | $57189 | $33596 |

---

**NOTE 4 – NET SALES** 

The Company distributes products through national and international professional distributors and retailers as well as direct-to-consumer ("DTC") through e-commerce channels. The marketing and consumer engagement benefits that the Company's channels provide are integral to the Company's brand and product development strategy and drives sales across channels. As such, the Company's three business channels consist of professional, specialty retail and DTC as follows:

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended** | **For the Six Months Ended** |
|  | **June 30, 2024** | **June 30, 2023** |
| **Net sales by Channel:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Professional | $126877 | $56195 |
| &nbsp;&nbsp;&nbsp;&nbsp; Specialty retail | 69858 | 16606 |
| &nbsp;&nbsp;&nbsp;&nbsp; DTC | 73508 | 26807 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Net sales | $270243 | $99608 |

---

Revenue by major geographic region is based upon the geographic location of customers who purchase our products. During the six months ended June 30, 2024 and June 30, 2023 our Net sales to consumers in the United States and International regions were as follows:

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended** | **For the Six Months Ended** |
|  | **June 30, 2024** | **June 30, 2023** |
| **Net sales by Geography:** |  |  |
| United States | $158613 | $56009 |
| International | 111630 | 43599 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total Net sales | $270243 | $99608 |

---

United Kingdom net sales for the six months ended June 30, 2024 and June 30, 2023 were 12% and 14% of total net sales, respectively. No other International country exceeds 10% of total net sales.

**NOTE 5 - BUSINESS COMBINATIONS** 

On January 8, 2023, the Company completed an acquisition to acquire the net assets of the YMX business and 100% of voting equity interests. The purchase price was $1,381,582 in net cash paid.

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Information regarding the net cash consideration paid and fair value of the assets and liabilities assumed at the acquisition date is as follows:

---

| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp; Fair value of assets acquired | $1216259 |
| &nbsp;&nbsp;&nbsp;&nbsp; Goodwill | 168300 |
| &nbsp;&nbsp;&nbsp;&nbsp; Fair value of liabilities assumed | (2977) |
| **Net cash paid for acquisition** | $**1381582** |
| &nbsp;&nbsp;&nbsp;&nbsp; Purchase price is comprised of: |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Cash, net of acquired cash | $1381582 |
| **Net cash paid for acquisition** | $**1381582** |
| **Allocation of purchase price:** |  |
| **Net tangible assets (liabilities):** |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Inventory | $61262 |
| &nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable and other current assets | 7595 |
| &nbsp;&nbsp;&nbsp;&nbsp; Deferred tax assets | 6402 |
| &nbsp;&nbsp;&nbsp;&nbsp; Liabilities | (2977) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Net tangible assets** | 72282 |
| **Identifiable intangible assets:** |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Brand name | 952000 |
| &nbsp;&nbsp;&nbsp;&nbsp; Product formulations | 136000 |
| &nbsp;&nbsp;&nbsp;&nbsp; Customer relationships | 53000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Total identifiable intangible assets** | 1141000 |
| **Goodwill** | 168300 |
| **Net assets acquired** | $**1381582** |

---

For this business combination, brand name, product formulations, and customer relationships were assigned estimated useful lives of 25 years, 15 years, and 20 years, respectively, the weighted average of which is approximately 23.6 years.

Costs related to the acquisition are expensed as incurred. In connection with the acquisition, the Company recorded transaction expenses totaling $16,011 for the six months ended June 30, 2023 within the unaudited condensed consolidated statements of operations and comprehensive income.

**NOTE 6 - GOODWILL AND INTANGIBLE ASSETS** 

Goodwill and intangible assets are comprised of the following:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **June 30, 2024** | **June 30, 2024** | **June 30, 2024** | **June 30, 2024** |
|  | **Estimated**<br> **Useful Life** | **Gross Carrying**<br> **Amount** | **Accumulated**<br> **amortization** | **Net carrying**<br> **amount** |
| Brand name | 25 years | $952000 | $(56273) | $895727 |
| Product formulations | 15 years | 136000 | (13399) | 122601 |
| Customer relationships | 20 years | 53000 | (3916) | 49084 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total finite-lived intangibles |  | 1141000 | (73588) | 1067412 |
| Goodwill | Indefinite | 168300 |  | 168300 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total goodwill and other intangibles |  | $1309300 | $(73588) | $1235712 |

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Amortization expense on the finite-lived intangible assets were $25,083 and $21,926 for the six months ended June 30, 2024 and 2023. The amortization of brand name and customer relationships of $20,364 and $19,461 for the six months ended June 30, 2024 and 2023 is recorded in the consolidated statements of operations and comprehensive income. The amortization for patented formulations for the six months ended June 30, 2024 is $4,533, of which $2,627 was allocated to finished goods inventory and $1,906 to cost of sales. Additionally, $2,813 previously capitalized amortization was expensed in the six month period ending June 30, 2024 for a total of $4,719 amortization to cost of sales. The amortization for patented formulations for the six months ended June 30, 2023 is $4,332, of which $1,867 is allocated to finished goods inventory and $2,465 to cost of sales, recorded in the consolidated statements of operations and comprehensive income.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31, 2023** | **December 31, 2023** | **December 31, 2023** | **December 31, 2023** |
|  | **Estimated**<br> **Useful**<br> **Life** | **Gross**<br> **Carrying**<br> **Amount** | **Accumulated**<br> **amortization** | **Net carrying**<br> **amount** |
| Brand name | 25 years | $952000 | $(37234) | $914766 |
| Product formulations | 15 years | 136000 | (8865) | 127135 |
| Customer relationships | 20 years | 53000 | (2591) | 50409 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total finite-lived intangibles |  | 1141000 | (48690) | 1092310 |
| Goodwill | Indefinite | 168300 |  | 168300 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total goodwill and other intangibles |  | $1309300 | $(48690) | $1260610 |

---

Remaining amortization of the intangible assets is as following for the next five years and beyond.:

---

| | |
|:---|:---|
| 2024 | $24897 |
| 2022 | 49797 |
| 2023 | 49797 |
| 2024 | 49797 |
| 2025 | 49797 |
| Thereafter | 843327 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total | $1067412 |

---

**NOTE 7 - ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES** 

Accrued expenses as of June 30, 2024 and December 31, 2023 consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **June 30,**<br> **2024** | **December 31,**<br> **2023** |
| Deferred revenue | $5277 | $2314 |
| Accrued sales and income taxes | 7812 | 3100 |
| Accrued other | 609 | 2931 |
| Payroll liabilities | 2457 | 1517 |
| Accrued expenses and other current liabilities | $16155 | $9862 |

---

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**NOTE 8 - LONG-TERM DEBT** 

Debt consisted of the following on June 30, 2024:

---

| | | | |
|:---|:---|:---|:---|
|  | **January 2023 Credit**<br> **Agreement** | **December 2023**<br> **Amendment** | **Total** |
| Long term debt |  |  |  |
| Original term loan borrowing | $435938 | $343353 | $779291 |
| Debt issuance costs | (7933) | (4550) | (12483) |
| &nbsp;&nbsp;&nbsp;&nbsp; Total term loan debt | 428005 | 338803 | 766808 |
| Less: Current portion | (11250) | (8862) | (20112) |
| &nbsp;&nbsp;&nbsp;&nbsp; Long term debt, net of current portion | $416755 | $329941 | $746696 |

---

Debt consisted of the following on December 31, 2023:

---

| | | | |
|:---|:---|:---|:---|
|  | **January 2023**<br> **Credit**<br> **Agreement** | **December**<br> **2023**<br> **Amendment** | **Total** |
| Long term debt |  |  |  |
| Original term loan borrowing | $441562 | $347785 | $789347 |
| Debt issuance costs | (8810) | (5054) | (13864) |
| &nbsp;&nbsp;&nbsp;&nbsp; Total term loan debt | 432752 | 342731 | 775483 |
| Less: Current portion | (11250) | (8862) | (20112) |
| &nbsp;&nbsp;&nbsp;&nbsp; Long term debt, net of current portion | $421502 | $333869 | $755371 |

---

The interest rate on outstanding debt under the Term Loan Facility is 7.5%. The interest rates for all facilities are calculated based upon the Company's election between the published LIBOR rate at time of election plus an additional interest rate spread, or the Alternate Base Rate plus an additional interest rate spread. As of June 30, 2024 and December 31, 2023, there was no balance outstanding under the Revolver, including letters of credit and swingline loans. Interest expense was $31,065 and $18,783 for the six months ended June 30, 2024 and 2023, respectively, recorded in interest (expense) income, net in the consolidated statements of operations and comprehensive income.

The Credit Agreement includes reporting, financial, and maintenance covenants that require, among other things, for the Company to comply with certain maximum secured leverage ratios, which the Company was in compliance with on June 30, 2024. Substantially all the assets of the Company constitute collateral under the Term Loan and Revolver facilities.

**NOTE 9 - INCOME TAXES** 

The Company computes its provision (benefit) for income taxes by applying the estimated annual effective tax rate to pretax income and adjusts the provision for discrete tax items recorded in the period.

For the six months ended June 30, 2024 and 2023, the Company recorded income tax expense (benefit) of $22,545 and ($4,556), respectively. The effective tax rates for the six months ended June 30, 2024 and 2023 were 19.2% and 16.9%, respectively. The effective tax rate for the six months ended June 30, 2024 and 2023 differed from the U.S. federal statutory tax rate of 21% primarily due to foreign derived intangible income deduction. This deduction results in income from the Company's sales to foreign customers being taxed at a lower effective tax rate.

---

| |
|:---|
| F-40 |
| *[**Table of Contents**](#toc2)* |

---

**NOTE 10 - SHARE-BASED COMPENSATION** 

The Company grants share-based options under the Pheno Biotech Holdings Corp. 2023 Omnibus Equity Incentive Plan (the "Plan"). All outstanding options have been in the form of options to purchase common stock of Pheno Biotech Holdings Corp. with vesting based on either time or market (performance) conditions. The time-based service options are eligible to vest in equal installments on the first five anniversaries of the vesting start date, subject to the option holder's continued service through the applicable vesting date. The performance condition options are eligible to vest based on specified rates of return on invested capital of the third party investors. Upon a qualifying initial public offering ("IPO") the unvested performance condition options that would have vested had the third-party investors were to sell for cash their equity in the Company at the IPO price will convert to time-based service options, vesting ratably on the first three anniversaries of the IPO, subject to the option holder's continued service through the applicable vesting date.

As of June 30, 2024, a total of 106,596 shares have been authorized for issuance under the Plan, and 37,830 remain available to grant. As of June 30, 2024, there were 68,766 options outstanding and 3,500 options forfeited under the Plan.

Share-based compensation expense for the six-months ended June 30, 2024 and June 30, 2023 of $1,174 and $421, respectively, was recognized in selling, general, and administrative expenses in the consolidated statements of operations and comprehensive income. As of June 30, 2024, the Company had not recognized compensation costs on unvested share-based options of $11,229 with a weighted average remaining recognition period of 4.4 years for time-based and 3.5 years for performance-based share options.

***Time-based service options***

The following table summarizes the activity for options that vest solely based upon the satisfaction of a time-based service condition as follows:

---

| | | |
|:---|:---|:---|
|  | **Options**<br> **Outstanding** | **Weighted Average**<br> **Exercise Price Per Share** |
| Outstanding at December 31, 2023 | 23700 | $594 |
| Granted | 3418 | 2136 |
| Cancelled/Forfeited | (2000) | (654) |
| Outstanding June 30, 2024 | 25118 | $801 |
| Vested and exercisable June 30, 2024 | 3760 | $510 |

---

Additional information relating to time-based service options is as follows:

---

| | | |
|:---|:---|:---|
|  | **Six Months Ended**<br> **June 30, 2024** | **Six Months Ended**<br> **June 30, 2023** |
| Share-based compensation expense | $843 | $297 |
| Weighted-average grant date fair value of options granted (per share) | $409 | $341 |
| Unrecognized compensation expense | $8315 | $5971 |

---

The fair value of time share-based options granted were calculated using the following assumptions:

---

| | | |
|:---|:---|:---|
|  | **Six Months Ended**<br> **June 30, 2024** | **Six Months Ended**<br> **June 30, 2023** |
| Expected term (years) | 6.5 | 6.5 |
| Expected volatility (%) | 30 | 30 |
| Risk-free interest rate (%) | 1.48 – 1.62 | 1.87 |
| Expected dividend yield (%) |  |  |

---

---

| |
|:---|
| F-41 |
| *[**Table of Contents**](#toc2)* |

---

***Performance-based options***

The following table summarizes the activity for options that vest based upon the satisfaction of a performance condition as follows:

---

| | | |
|:---|:---|:---|
|  | **Options**<br> **Outstanding** | **Weighted Average**<br> **Exercise Price Per Share** |
| Outstanding at December 31, 2023 | 42566 | $545 |
| Granted | 2582 | 2135 |
| Cancelled/Forfeited | (1500) | (652) |
| Outstanding June 30, 2024 | 43648 | $636 |
| Vested and exercisable June 30, 2024 |  | $— |

---

Additional information relating to performance-based options is as follows:

---

| | | |
|:---|:---|:---|
|  | **Six Months Ended**<br> **June 30, 2024** | **Six Months Ended**<br> **June 30, 2023** |
| Share-based compensation expense | $330 | $124 |
| Weighted-average grant date fair value of options granted (per share) | $85 | $56 |
| Unrecognized compensation expense | $2914 | $2026 |

---

The fair value of performance share-based options granted were calculated using the following assumptions:

---

| | | |
|:---|:---|:---|
|  | **Six Months Ended**<br> **June 30, 2024** | **Six Months Ended**<br> **June 30, 2023** |
| Expected time to liquidity (years) | 0.4 | 4 |
| Expected volatility (%) | 30 | 30 |
| Risk-free interest rate (%) | 1.48 – 1.62 | 1.87 |
| Expected dividend yield (%) | 49 |  |

---

---

| |
|:---|
| F-42 |
| *[**Table of Contents**](#toc2)* |

---

*Cash Settled Units* 

In March 2024, under the Plan, the Company granted 1,794 cash settled units to certain employees and other service providers of the Company, 115 of which have been cancelled. The units reflect phantom interests in the Company with vesting based on either time or market (performance) conditions. The time-based service options are eligible to vest in equal installments on the first five anniversaries of the vesting start date, subject to the unit holder's continued service through the applicable vesting date. The performance condition options are eligible to vest based on specified rates of return on invested capital of the third-party investors. Upon a qualifying initial public offering ("IPO") the unvested performance condition options that would have vested had the third-party investors were to sell for cash their equity in the Company at the IPO price will convert to time-based service options, vesting ratably on the first three anniversaries of the IPO, subject to (i) the unit holder's continued service through the applicable vesting date and (ii) the weighted average closing price per share over the thirty (30) consecutive trading days ending on the day immediately prior to the applicable vesting date equaling or exceeding the IPO price on each applicable vesting date. The time-based cash settled liability awards are fair valued at each reporting period and recognized as compensation expense over the five-year service period. The performance-based cash settled awards are contingent upon achieving each market condition and are not expensed until the market condition is achieved. As of June 30, 2024, $149 of time-based compensation expense was recognized by the Company in selling, general, and administrative expenses in the consolidated statements of operations and comprehensive income. As of June 30, 2024, no cash settled units achieved the market condition. The unrecognized compensation time and performance-based compensation expense as of June 30, 2024 is $1,981 and $1,136 respectively.

---

| | |
|:---|:---|
|  | **Six Months Ended**<br> **June 30, 2024** |
| Compensation expense | $149 |
| Weighted-average exercise price of units granted (per unit) | $2000 |
| Unrecognized compensation expense | $3117 |

---

The fair value of time and performance-based cash settled units granted were calculated using the following assumptions:

***Time-based service units***

---

| | |
|:---|:---|
|  | **Six Months Ended**<br> **June 30, 2024** |
| Expected term (years) | 0.7 – 4.7 |
| Expected volatility (%) | 25 |
| Risk-free interest rate (%) | 0.80 |
| Expected dividend yield (%) |  |

---

***Performance-based units***

---

| | |
|:---|:---|
|  | **Six Months Ended**<br> **June 30, 2024** |
| Expected time to liquidity (years) | 0.3 |
| Expected volatility (%) | 25 |
| Risk-free interest rate (%) | 0.80 |
| Expected dividend yield (%) | 49 |

---

The determination of the fair value of share-based options and cash settled units on the date of grant using a Black-Scholes formula and Monte Carlo simulation approach for the value of time and performance-based vesting options, respectively, is affected by the fair value of the underlying common stock. It is also affected by assumptions regarding a number of variables that are complex and generally require significant judgment. The assumptions used in the Black-Scholes and Monte Carlo option-pricing models to calculate value of share-based options and cash settled units were:

*Expected term* 

The expected term of the share-based options represents the period of time that the options are expected to be outstanding. The expected term of the time-based service options has been estimated to be the midpoint between the expected vesting date and the expiration date of the options of 6.5 years. The calculation of the expected term of the performance-based options has taken into consideration the time to liquidity event of the Company, the vesting schedule and the expiration date of the options.

---

| |
|:---|
| F-43 |
| *[**Table of Contents**](#toc2)* |

---

The expected term of the cash settled units represents the period of time that the units are expected to be outstanding. The expected term of the time-based service units has been estimated to be the vesting dates upon which the payment of the units will be settled. The calculation of the expected term of the performance-based units has taken into consideration the time to liquidity event of the Company and the vesting schedule of the units.

*Expected volatility* 

As the Company does not have any trading history for its common stock, the expected stock price volatility for the common stock was estimated by taking the average historic price volatility for industry peers based on historic weekly price return observations over a 10-year look back period. Industry peers consist of several public companies within the same industry.

The Company intends to continue to consistently apply this process using the same or similar public companies until a sufficient amount of historical information regarding the volatility of its own share price becomes available, or unless circumstances change such that the identified companies are no longer similar to the Company, in which case, more suitable companies whose share prices are publicly available would be used in the calculation.

*Risk-free interest rate* 

The risk-free interest rate was based on the U.S. Constant Maturity Treasury rate, with maturities similar to the expected term.

*Expected Dividend Yield* 

For the time-based service options and cash settled units, the Company does not anticipate paying any dividends in the foreseeable future and as such, the Company uses an expected dividend yield of 0%. For the performance-based options and cash settled units granted during the six months ended June 30, 2024 and June 30, 2023, the Company took into consideration a dividend yield of 49% and 0%, respectively.

**NOTE 11 - EQUITY** 

During the June 30, 2024 period, the Company has issued 316.7 common shares to its sole shareholder for consideration of $633.

**NOTE 12 - RELATED PARTY TRANSACTIONS** 

The Company received $300 in the 2023 fiscal period from Advent Funds, a shareholder of its Parent, to be expended as charitable donations of which $20 remains unpaid as of June 30, 2024 and December 31, 2023.

In July 2023, the Company entered into an agreement with CI&T, an information technology and software company, pursuant to which CI&T developed the YMX professional application. During the six months ended June 30, 2024 and the fiscal year ended December 31, 2023, the Company paid CI&T $159 and $25 respectively, for services related to the development, maintenance and enhancement of the application, all of which were negotiated on an arm's length basis and on market terms. Certain investment funds affiliated with Advent International Corporation, a shareholder of the Company's Parent, hold a greater than 10% equity interest in CI&T. CI&T continues to provide services to us for the maintenance and enhancement of the professional application.

---

| |
|:---|
| F-44 |
| *[**Table of Contents**](#toc2)* |

---

**NOTE 13 - CONTINGENCIES** 

From time to time, the Company is subject to various legal actions arising in the ordinary course of business. The Company cannot predict with reasonable assurance the outcome of these legal actions brought against us as they are subject to uncertainties. Accordingly, any settlement or resolution in these legal actions may occur and affect our net income in such period as the settlement or resolution.

Pursuant to the purchase agreement between the Sellers and Advent, the Company was required to pay the Sellers certain amounts in connection with the final settlement of certain litigation and contingency matters involving Acquisition, Inc., a predecessor entity to the Company substantially all of whose assets and liabilities were purchased as part of the Acquisition (the "Acquisition Matters").

During April 2024, after the end of the accounting measurement period for the Acquisition, the Company and the Sellers commenced negotiations concerning the amount to be paid to the Sellers by the Company in connection with a potential settlement of the Acquisition Matters and, in May 2024, the Company reached agreement with the Sellers on the amount to be paid by the Company to the Sellers in full satisfaction of the contingency provisions in the purchase agreement related to the Acquisition Matters.

Accordingly, the Company has accrued approximately $14,250 expense included in selling, general and administrative costs in the accompanying consolidated financial statements during the quarter ended June 30, 2024, associated with the amounts to be paid by the Company in connection with the final resolution of the Acquisition Matters. The amounts accrued, all of which were paid in May 2024, in connection with the final settlement of the Acquisition Matters, represent the total cost to the Company in resolving the Acquisition Matters.

As a result of the foregoing agreement with the Sellers and the resulting approval by the Sellers of the settlement of the Acquisition Matters, all outstanding claims of the Sellers and the Company associated with the Acquisition Matters have been resolved.

As of June 30, 2024 and December 31, 2023, the Company is not subject to any other currently pending legal matters or claims that could have a material adverse effect on its financial position, results of operations, or cash flows should such litigation be resolved unfavorably.

**NOTE 14 - NET INCOME (LOSS) PER SHARE** 

The following is a reconciliation of the numerator and denominator in the basic and diluted net income per common share computations:

---

| | | |
|:---|:---|:---|
|  | **Six Months Ended**<br> **June 30, 2024** | **Six Months Ended**<br> **June 30, 2023** |
| **Numerator:** |  |  |
| Net Income (loss) | $94882 | $(22424) |
| **Denominator:** |  |  |
| Weighted average common shares outstanding - basic | 960098 | 922450 |
| Dilutive common equivalent shares from equity options | 12583 |  |
| Weighted average common shares outstanding - diluted | 972681 | 922450 |
| **Net income (loss) per share:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Basic | $98.83 | $(24.31) |
| &nbsp;&nbsp;&nbsp;&nbsp; Diluted | $97.55 | $(24.31) |

---

**NOTE 15 - SUBSEQUENT EVENTS** 

The Company has evaluated subsequent events through August 27, 2024, the date these condensed consolidated financial statements were available to be issued.

During the third quarter of 2024, Parent determined the initial public offering of shares of common stock of YMX Holdings, Inc., which will be the parent of the Company as of immediately prior to the initial public offering, will be made solely by certain selling stockholders of YMX Holdings, Inc. As of June 30, 2024, the Company has deferred offering costs of $702 in other current assets on the condensed consolidated balance sheet which the Company will expense during the third quarter of 2024. Future offering costs will be expensed as incurred.

**Through and including , 2025 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer's obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.** 

---

| |
|:---|
| F-45 |
| *[**Table of Contents**](#toc2)* |

---

**PART II** 

**INFORMATION NOT REQUIRED IN PROSPECTUS** 

**Item 13. Other Expenses of Issuance and Distribution.** 

The following table sets forth the expenses payable by the registrant and expected to be incurred in connection with the issuance and distribution of the securities being registered hereby (other than underwriting discounts and commissions). All of such expenses are estimates, except for the SEC's registration fee, the Financial Industry Regulatory Authority ("FINRA") filing fee and Nasdaq listing fee.

---

| | |
|:---|:---|
| SEC registration fee | $252.62 |
| FINRA filing fee | \* |
| Nasdaq listing fee | \* |
| Printing fees and expenses | 2000.00 |
| Legal fees and expenses | 350000.00 |
| Blue sky fees and expenses | \* |
| Registrar and transfer agent fees | 5880.00 |
| Accounting fees and expenses | 300000.00 |
| Miscellaneous expenses | 10910.00 |
|  | \* |
| Total | $\*  |

---

\* To be completed by amendment.

**Item 14. Indemnification of Directors and Officers.** 

Section 145 of the DGCL provides that a corporation may indemnify directors and officers as well as other employees and individuals against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement in connection with any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, in which such person is made a party by reason of the fact that the person is or was a director, officer, employee or agent of the corporation (other than an action by or in the right of the corporation—a "derivative action"), if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person's conduct was unlawful. A similar standard is applicable in the case of derivative actions, except that indemnification only extends to expenses (including attorneys' fees) incurred in connection with the defense or settlement of such action, and the statute requires court approval before there can be any indemnification where the person seeking indemnification has been found liable to the corporation. The statute provides that it is not exclusive of other indemnification that may be granted by a corporation's bylaws, disinterested director vote, stockholder vote, agreement or otherwise.

Our restated certificate of incorporation will provide that no director shall be liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation on liability is not permitted under the DGCL, as now in effect or as amended. Currently, Section 102(b)(7) of the DGCL requires that liability be imposed for the following:

· any breach of the director's duty of loyalty to our company or our stockholders;

· any act or omission not in good faith or which involved intentional misconduct or a knowing violation of law;

· unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the DGCL; and

· any transaction from which the director derived an improper personal benefit.

---

| |
|:---|
| II-1 |
| *[**Table of Contents**](#TOC)* |

---

Our restated certificate of incorporation and amended and restated bylaws will provide that, to the fullest extent authorized or permitted by the DGCL, as now in effect or as amended, we will indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding by reason of the fact that such person, or a person of whom he or she is the legal representative, is or was our director or officer, or by reason of the fact that our director or officer is or was serving, at our request, as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans. We will indemnify such persons against expenses, liabilities, and loss (including attorneys' fees), judgments, fines, excise taxes or penalties under the Employee Retirement Income Security Act of 1974, penalties and amounts paid in settlement actually and reasonably incurred in connection with such action.

We have obtained policies that insure our directors and officers and those of our subsidiaries against certain liabilities they may incur in their capacity as directors and officers. Under these policies, the insurer, on our behalf, may also pay amounts for which we have granted indemnification to the directors or officers.

Item 15. Recent Sales of Unregistered Securities.

Set forth below is information regarding securities issued by CHARMING WOW INC. ("the Company") within the past three years that were not registered under the Securities Act. The amounts below do not reflect any reorganization adjustments.

(a) Issuances of Capital Stock

During the year ended December 31, 2024, Charming Wow Limited issued and sold an aggregate of 1,000,000 Class A Common Shares to institutional investors for an aggregate of CNY 1 billion, at a price of CNY 1,000 per share, and an aggregate of 150,000 Class B Non-Voting Common Shares to company executives and board members for an aggregate of CNY 150 million, at a price of CNY 1,000 per share.

Since January 1, 2025, Charming Wow Limited has issued and sold an aggregate of 500 Class B Non-Voting Common Shares to executives and board members for an aggregate of CNY 1 million, at a price of CNY 2,000 per share.

No underwriters were involved in the aforementioned sales of securities. The sales described above were exempt from registration pursuant to Section 4(a)(2) of the Securities Act. Prior to the completion of this offering, these equity interests will be exchanged for shares of the Company's common stock as part of the reorganization.

(b) Grants and Exercises of Stock Options

During the year ended December 31, 2024, the Company granted options to purchase an aggregate of 100,000 shares of its common stock, with a weighted average exercise price of CNY 700 per share, to employees and board members under the 2024 Equity Incentive Plan.

Since January 1, 2025, the Company has granted options to purchase an aggregate of 10,000 shares of its common stock, with a weighted average exercise price of CNY 2,000 per share, to employees and board members under the 2025 Equity Incentive Plan.

Prior to the completion of this offering, these options will be exchanged for options to purchase shares of the Company's common stock as part of the reorganization.

The issuances of the securities described above were exempt from registration pursuant to Section 4(a)(2) of the Securities Act or Rule 701 as transactions under compensatory benefit plans.

---

| |
|:---|
| II-2 |
| *[**Table of Contents**](#TOC)* |

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**Item 16. Exhibits and Financial Statement Schedules.**

---

| | |
|:---|:---|
| Exhibit No. | Description |
| [4.1\*](cwi_ex41.htm) | [Form of Director Offer Letter - Xiaoxia Chang](cwi_ex41.htm) |
| [5.1](cwi_ex51.htm) | [Consent to Act as Director - Xiaoxia Chang](cwi_ex51.htm) |
| [107](cwi_ex107.htm) | [Calculation of Filing Fee Tables](cwi_ex107.htm) |

---

**Portions of this exhibit (indicated by asterisks) have been redacted because they are both not material and the registrant customarily and actually treats such information as private or confidential.**

**Indicates a management contract or compensation plan, contract or arrangement.**

**Item 17. Undertakings.** 

a) 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 foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC, 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 of whether such indemnification is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

b) The undersigned registrant hereby undertakes that:

(i) 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 pursuant to 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; and

(ii) 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.

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| |
|:---|
| II-3 |
| *[**Table of Contents**](#TOC)* |

---

**SIGNATURES** 

Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Haikou, Hainan Province, China, on the 31st day of July, 2025.

---

| | |
|:---|:---|
| **CHARMING WOW INC.** | **CHARMING WOW INC.** |
| By: | */s/ Zhang Chen* |
|  | Zhang Chen <br> *Chief Executive Officer* |

---

**Power of Attorney** 

Each individual whose signature appears below constitutes and appoints Zhang Chen and Chang Xiaoxia, and each of them, his or her true and lawful attorney-in-fact and agent, acting alone, with full power of substitution and resubstitution, for him or her and in his or her name, place, and stead, in any and all capacities, to sign any or all amendments to this Registration Statement, including post-effective amendments and registration statements filed pursuant to Rule 462(b) and otherwise, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the SEC, granting unto said attorney-in-fact full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as such person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement and power of attorney have been signed by the following persons in the capacities indicated on July 31, 2025.

---

| | |
|:---|:---|
| **Signature** | **Title** |
| */s/ Zhang Chen* | Chief Executive Officer |
| Zhang Chen | (Principal Executive Officer) |
| */s/ Chang Xiaoxia* | Director |
| Chang Xiaoxia |  |

---

## Exhibit 4.1

**EXHIBIT 4.1**

**CHARMING WOW INC**

January 10, 2025

Xiaoxia Chang

Room 501, Unit 2,

Building 3, Hongshulin Community,

No. 128 Fenghuang Road, Jiyang District,

Sanya City, Hainan Province

China 510665

Re: Director Offer Letter

Dear Ms. Xiaoxia Chang,

CHARMING WOW INC, a British Virgin Island exempted company with limited liability (the "Company"), is pleased to offer you a position as of member of its Board of Directors (the "Board"). We believe your background and experience will be a significant asset to the Company and we look forward to your participation on the Board. Should you choose to accept this position as a member of the Board and Class I director, this letter agreement (the "Agreement") shall constitute an agreement between you and the Company and contains all the terms and conditions relating to the services you agree to provide to the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. **<u>Term</u>**. This Agreement is effective upon your acceptance and signature below. Your term as a Class I director shall commence on January 21, 2025, and continue subject to the provisions in Section 8 below or until your successor is duly elected and qualified. The position shall be up for re-election at the next annual shareholder's meeting and upon re-election, the terms and provisions of this Agreement shall remain in full force and effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. **<u>Services</u>**. You shall render services as a member of the Board and the Board's committees set forth on ***<u>Schedule A</u>*** attached hereto (hereinafter your "Duties"). During the term of this Agreement, you shall attend and participate in such number of meetings of the Board and of the committee(s) of which you are a member as regularly or specially called. You may attend and participate at each such meeting via teleconference, video conference or in person. You shall consult with the other members of the Board and committee(s) as necessary via telephone, electronic mail or other forms of correspondence.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. **<u>Compensation</u>**. As compensation for your services to the Company, you will receive compensation as set forth on ***<u>Schedule B</u>*** attached hereto (hereinafter, the "Compensation") per year for serving on the Board during your term as a director, which shall be paid to you quarterly in arrears as determined by the Company. You shall be reimbursed for reasonable and approved expenses incurred by you in connection with the performance of your Duties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. **<u>No Assignment</u>**. Because of the personal nature of the services to be rendered by you, this Agreement may not be assigned by you without the prior written consent of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. **<u>Confidential Information; Non-Disclosure</u>**. In consideration of your access to certain Confidential Information (as defined below) of the Company, in connection with your business relationship with the Company, you hereby represent and agree as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. **<u>Definition</u>**. For purposes of this Agreement the term "Confidential Information" means:

&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. Any information which the Company possesses that has been created, discovered or developed by or for the Company, and which has or could have commercial value or utility in the business in which the Company is engaged; 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;ii. Any information which is related to the business of the Company and is generally not known by non-Company personnel.

&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. Confidential Information includes, without limitation, trade secrets and any information concerning services provided by the Company, concepts, ideas, improvements, techniques, methods, research, data, know-how, software, formats, marketing plans, and analyses, business plans and analyses, strategies, forecasts, customer and supplier identities, characteristics and agreements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. **<u>Exclusions</u>**. Notwithstanding the foregoing, the term Confidential Information shall not include:

&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. Any information which becomes generally available to the public other than as a result of a breach of the confidentiality portions of this Agreement, or any other agreement requiring confidentiality between the Company and you;

&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. Information received from a third party in rightful possession of such information who is not restricted from disclosing such information; 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. Information known by you prior to receipt of such information from the Company, which prior knowledge can be documented.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. **<u>Documents</u>**. You agree that, without the express written consent of the Company, you will not remove from the Company's premises, any notes, formulas, programs, data, records, machines or any other documents or items which in any manner contain or constitute Confidential Information, nor will you make reproductions or copies of same. You shall promptly return any such documents or items, along with any reproductions or copies, to the Company upon the earliest of Company's demand, termination of this Agreement, or your termination or Resignation, as defined in Section 8 herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. **<u>Confidentiality</u>**. You agree that you will hold in trust and confidence all Confidential Information and will not disclose to others, directly or indirectly, any Confidential Information or anything relating to such information without the prior written consent of the Company, except as maybe necessary in the course of your business relationship with the Company. You further agree that you will not use any Confidential Information without the prior written consent of the Company, except as may be necessary in the course of your business relationship with the Company, and that the provisions of this paragraph (d) shall survive termination of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e. **<u>Ownership</u>**. You agree that Company shall own all right, title and interest (including patent rights, copyrights, trade secret rights, mask work rights, trademark rights, and all other intellectual and industrial property rights of any sort throughout the world) relating to any and all inventions (whether or not patentable), works of authorship, mask works, designations, designs, know-how, ideas and information made or conceived or reduced to practice, in whole or in part, by you during the term of this Agreement and that arise out of your Duties (collectively, "Inventions") and you will promptly disclose and provide all Inventions to the Company. You agree to assist the Company, at its expense, to further evidence, record and perfect such assignments, and to perfect, obtain, maintain, enforce, and defend any rights assigned.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. **<u>Non-Competition</u>**. You agree and undertake that you will not, so long as you are a member of the Board and for a period of 24 months following termination of this Agreement for whatever reason, directly or indirectly as owner, partner, joint venture, shareholder, employee, broker, agent principal, corporate officer, director, licensor or in any other capacity whatsoever, engage in, become financially interested in, be employed by, or have any connection with any business or venture that is engaged in any activities involving services or products which compete, directly or indirectly, with the services or products provided or proposed to be provided by the Company or its subsidiaries or affiliates; *<u>provided</u>*, *<u>however</u>*, that you may own securities of any public corporation which is engaged in such business but in an amount not to exceed at any one time, one percent of any class of stock or securities of such company, so long as you has no active role in the publicly owned company as director, employee, consultant or otherwise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. **<u>Non-Solicitation</u>**. So long as you are a member of the Board and for a period of 24 months thereafter, you shall not directly or indirectly solicit for employment any individual who was an employee of the Company during your tenure.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. **<u>Termination and Resignation</u>**. Your membership on the Board or on a Board committee may be terminated for any or no reason by a vote of the shareholders holding at least a majority of the shares of the Company's issued and outstanding shares entitled to vote. Your membership on the Board or on a Board committee shall be terminated if you become of unsound mind or are prohibited by law from being so. You may also terminate your membership on the Board or on a committee for any or no reason by delivering your written notice of resignation to the Company ("Resignation"), and such Resignation shall be effective upon the time specified therein or, if no time is specified, upon receipt of the notice of Resignation by the Company. Upon the effective date of the termination or Resignation, your right to compensation hereunder will terminate subject to the Company's obligations to pay you any compensation (including the vested portion of the Shares) that you have already earned and to reimburse you for approved expenses already incurred in connection with your performance of your Duties as of the effective date of such termination or Resignation. Any Shares that have not vested as of the effective date of such termination or Resignation shall be forfeited and cancelled.

2<br>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. **<u>Governing Law</u>**. All questions with respect to the construction and/or enforcement of this Agreement, and the rights and obligations of the parties hereunder, shall be determined in accordance with the law of the State of New York applicable to agreements made and to be performed entirely in the State of New York.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10. **<u>Entire Agreement; Amendment; Waiver; Counterparts</u>**. This Agreement expresses the entire understanding with respect to the subject matter hereof and supersedes and terminates any prior oral or written agreements with respect to the subject matter hereof. Any term of this Agreement may be amended and observance of any term of this Agreement may be waived only with the written consent of the parties hereto. Waiver of any term or condition of this Agreement by any party shall not be construed as a waiver of any subsequent breach or failure of the same term or condition or waiver of any other term or condition of this Agreement. The failure of any party at any time to require performance by any other party of any provision of this Agreement shall not affect the right of any such party to require future performance of such provision or any other provision of this Agreement. This Agreement may be executed in separate counterparts each of which will be an original and all of which taken together will constitute one and the same agreement, and may be executed using facsimiles of signatures, and a facsimile of a signature shall be deemed to be the same, and equally enforceable, as an original of such signature.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11. **<u>Indemnification</u>**. The Company shall, to the maximum extent provided under applicable law, indemnify and hold you harmless from and against any expenses, including reasonable attorney's fees, judgments, fines, settlements and other legally permissible amounts ("Losses"), incurred in connection with any proceeding arising out of, or related to, your performance of your Duties, other than any such Losses incurred as a result of your negligence or willful misconduct. The Company shall advance to you any expenses, including reasonable attorneys' fees and costs of settlement, incurred in defending any such proceeding to the maximum extent permitted by applicable law. Such costs and expenses incurred by you in defense of any such proceeding shall be paid by the Company in advance of the final disposition of such proceeding promptly upon receipt by the Company of (a) written request for payment; (b) appropriate documentation evidencing the incurrence, amount and nature of the costs and expenses for which payment is being sought; and (c) an undertaking adequate under applicable law made by or on your behalf to repay the amounts so advanced if it shall ultimately be determined pursuant to any non-appealable judgment or settlement that you are not entitled to be indemnified by the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12. **<u>Not an Employment Agreement</u>**. This Agreement is not an employment agreement, and shall not be construed or interpreted to create any right for you to continue employment with the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13. **<u>Acknowledgement</u>**. You accept this Agreement subject to all the terms and provisions of this Agreement. You agree to accept as binding, conclusive, and final all decisions or interpretations of the Board of the Company of any questions arising under this Agreement.

3<br>

The Agreement has been executed and delivered by the undersigned and is made effective as of the date set first set forth above.

---

| | |
|:---|:---|
| Sincerely, | Sincerely, |
| [CHARMING WOW INC] | [CHARMING WOW INC] |
| By: | */s/ Chen Zhang* |
| Name: | Chen Zhang |
| Title: | Chief Executive Officer |

---

AGREED AND ACCEPTED:

---

| | |
|:---|:---|
| By:  | */s/ Xiaoxia Chang*  |
| Name: | Xiaoxia Chang |

---

4<br>

**Schedule A**

The Director is offered to serve on the following Board committee(s):

---

| | |
|:---|:---|
| **Committee** | **Title** |
| Audit Committee | Member |
| Nominating and Governance Committee | Member |
| Compensation Committee | Member |

---

5<br>

**Schedule B**

Compensation

During your term as a member of Board of Directors of the Company, you will receive cash compensation in the amount of $15,000.00, payable quarterly and [share]/[option] compensation as set forth below:

---

| | | | | |
|:---|:---|:---|:---|:---|
| [Share]/[Options] | Amount | Exercise Price | Vesting Schedule | Potential Forfeiture |

---

6<br>

## Exhibit 5.1

**EXHIBIT 5.1**

**CHARMING WOW INC.**

**Registered Company No. 15646371**

**(Company)**

**Consent to act as Director**

To: The Company

I consent to act as an Director of the Company subject to, and with the benefit of the provisions of, its articles of association.

I certify that I have attained the age of 18 years.

I am not disqualified by the memorandum and articles of association of the Company or any law from acting as an Director of the Company.

Full Name: Chang Xiaoxia

Former names/aliases: N/A

Nationality: China

Date of birth: November 26, 1987

Email address: Changxiaoxia0815@126.com

Residential address: Room 501, Unit 2, Building 3, Hongshulin Community, No. 128 Fenghuang Road, Jiyang District, Sanya City, Hainan Province, China

---

| | |
|:---|:---|
| Name:  | */s/ Chang Xiaoxia* |
| Date: | 2025.01.03 |

---

## Ex-Filing

**EXHIBIT 107**

**Calculation of Filing Fee Tables**

**F-1**

(Form Type)

**CHARMING WOW INC**

(Exact Name of Registrant as Specified in its Charter)

**Table 1: Newly Registered Securities**

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Security**<br> **Type** | **Security Class Title** | **Fee Calculation** <br> **or Carry Forward** <br> **Rule** | **Fee Calculation** <br> **or Carry Forward** <br> **Rule** | **Amount Registered** | **Proposed Maximum Offering**<br> **Price Per**<br> **Unit** | **Maximum Aggregate Offering Price<sup>(1)</sup>** | **Fee Rate** | **Amount of Registration Fee** |
| Fees to Be Paid | Equity | Ordinary shares, par value $0.000001 per share |  | 457<br> (a) | 750000 | $2.20 | $1650000.00 | 0.0001531 | $252.62 |
|  | **Total Offering Amounts** | **Total Offering Amounts** | **Total Offering Amounts** |  |  |  | $252.62 |  |  |
|  | **Total Fees Previously Paid** | **Total Fees Previously Paid** | **Total Fees Previously Paid** |  |  |  | $0 |  |  |
|  | **Total Fee Offsets** | **Total Fee Offsets** | **Total Fee Offsets** |  |  |  | $- |  |  |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Net Fee Due** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Net Fee Due** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Net Fee Due** |  |  |  | $252.62 |  |  |

---

<sup>(1)</sup> There is no current market for the securities or price at which the shares are being offered. Estimated solely for the purpose of determining the amount of registration fee in accordance with Rule 457(o) under the Securities Act of 1933, as amended (the "Securities Act").