10q10k10q10k.net
Chanson International Holding

Chanson International HoldingCHSN決算レポート

Nasdaq · 必須消費財 · 食品及類似製品

Chanson International Holding is a food and beverage enterprise focused on operating premium bakery chains primarily across mainland China. Its product portfolio includes freshly baked bread, handcrafted pastries, custom celebration cakes, specialty beverages, and frozen bakery goods supplied to partnered retail outlets, catering to middle-class consumers with demand for high-quality daily food options.

What changed in Chanson International Holding's 20-F — 2023 vs 2024

Top changes in Chanson International Holding's 2024 20-F

423 paragraphs added · 411 removed · 327 edited across 5 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

86 edited+18 added−16 removed560 unchanged
Joint statement by the SEC and the Public Company Accounting Oversight Board (United States) (the “PCAOB”), rule changes by Nasdaq, and the Holding Foreign Companies Accountable Act (the “HFCA Act”) all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB.
The joint statement by the SEC and the Public Company Accounting Oversight Board (United States) (the “PCAOB”), rule changes by Nasdaq, and the Holding Foreign Companies Accountable Act (the “HFCA Act”) all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB.
On September 22, 2021, the PCAOB adopted a final rule implementing the HFCA Act, which provides a framework for the PCAOB to use when determining, as contemplated under the HFCA Act, whether the board of directors of a company is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction. 21 On December 16, 2021, the PCAOB issued a report on its determinations that it is unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong because of positions taken by PRC and Hong Kong authorities in those jurisdictions.
On September 22, 2021, the PCAOB adopted a final rule implementing the HFCA Act, which provides a framework for the PCAOB to use when determining, as contemplated under the HFCA Act, whether the board of directors of a company is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction. 22 On December 16, 2021, the PCAOB issued a report on its determinations that it is unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong because of positions taken by PRC and Hong Kong authorities in those jurisdictions.
In the event the UFG Entity or UFG Operator breaches its contractual obligations under the Transaction Agreements, Xinjiang United Family will be entitled to foreclose on the UFG Operator’s assets in the UFG Entity and may (1) exercise its option to purchase or designate third parties to purchase part or all of the UFG Operator’s assets in the UFG Entity and in this situation, Xinjiang United Family may terminate the Pledge Agreement and the other VIE agreements after acquisition of all assets in the UFG Entity or form a new VIE structure with any third party designated by Xinjiang United Family, or (2) dispose of the pledged assets and be paid in priority out of proceeds from the disposal in which case the existing VIE structure will be terminated. 6 Call Option Agreement Under the Call Option Agreement, the UFG Operator irrevocably granted Xinjiang United Family an exclusive option to require the UFG Operator to transfer, to the extent permitted under PRC law, once or at multiple times, at any time, part or all of his or her assets in the UFG Entity to Xinjiang United Family (or its designee).
In the event the UFG Entity or UFG Operator breaches its contractual obligations under the Transaction Agreements, Xinjiang United Family will be entitled to foreclose on the UFG Operator’s assets in the UFG Entity and may (1) exercise its option to purchase or designate third parties to purchase part or all of the UFG Operator’s assets in the UFG Entity and in this situation, Xinjiang United Family may terminate the Pledge Agreement and the other VIE agreements after acquisition of all assets in the UFG Entity or form a new VIE structure with any third party designated by Xinjiang United Family, or (2) dispose of the pledged assets and be paid in priority out of proceeds from the disposal in which case the existing VIE structure will be terminated. 7 Call Option Agreement Under the Call Option Agreement, the UFG Operator irrevocably granted Xinjiang United Family an exclusive option to require the UFG Operator to transfer, to the extent permitted under PRC law, once or at multiple times, at any time, part or all of his or her assets in the UFG Entity to Xinjiang United Family (or its designee).
If any such new laws, regulations, rules, or implementation and interpretation come into effect, we will take all reasonable measures and actions to comply and to minimize the adverse effect of such laws on us. We cannot guarantee, however, that we will not be subject to cybersecurity review and network data security review in the future.
If any such new laws, regulations, rules, or implementation and interpretation come into effect, we will take all reasonable measures and actions to comply and to minimize the adverse effect of such laws on us. We cannot guarantee, however, that we will not be subject to cybersecurity review, network data security review and national security review in the future.
However, we cannot assure you that our determination regarding our qualification to enjoy the preferential tax treatment will not be challenged by the relevant PRC tax authority or we will be able to complete the necessary filings with the relevant PRC tax authority and enjoy the preferential withholding tax rate of 5% under the Double Tax Avoidance Arrangement with respect to dividends to be paid by our PRC subsidiary to our Hong Kong subsidiary, in which case, we would be subject to the higher withdrawing tax rate of 10% on dividends received. 28 If we become directly subject to the scrutiny, criticism, and negative publicity involving U.S.-listed Chinese companies, we may have to expend significant resources to investigate and resolve the matter which could harm our business operations, stock price, and reputation.
However, we cannot assure you that our determination regarding our qualification to enjoy the preferential tax treatment will not be challenged by the relevant PRC tax authority or we will be able to complete the necessary filings with the relevant PRC tax authority and enjoy the preferential withholding tax rate of 5% under the Double Tax Avoidance Arrangement with respect to dividends to be paid by our PRC subsidiary to our Hong Kong subsidiary, in which case, we would be subject to the higher withdrawing tax rate of 10% on dividends received. 29 If we become directly subject to the scrutiny, criticism, and negative publicity involving U.S.-listed Chinese companies, we may have to expend significant resources to investigate and resolve the matter which could harm our business operations, stock price, and reputation.
For example, he may determine that it is in UFG’s interests to sever the VIE Agreements with us, irrespective of the effect such action may have on us. Mr. Li has acted guarantor to certain loans of Xinjiang United Family, which may create conflicts of interest with our Company.
For example, he may determine that it is in UFG’s interests to sever the VIE Agreements with us, irrespective of the effect such action may have on us. Mr. Li has acted as guarantor for certain loans of Xinjiang United Family, which may create conflicts of interest with our Company.
Awards of damages, settlement amounts, and fees and expenses resulting from such claims and the public relations implications of any such claims could have an adverse effect on their business. As of the date of this annual report, the PRC Stores do not have insurance to cover claims for damages, and two of the U.S.
Awards of damages, settlement amounts, and fees and expenses resulting from such claims and the public relations implications of any such claims could have an adverse effect on their business. As of the date of this annual report, the PRC Stores do not have insurance to cover claims for damages, and the U.S.
Transfer From Transfer To Approximate Value ($) Note 1 VIEs Xinjiang United Family 1,542,178 Cash (as working capital) 2 VIEs Xinjiang United Family 1,400,536 Raw materials 3 Xinjiang United Family VIEs 1,845,098 Raw materials 4 Xinjiang United Family VIEs 3,413,933 Products 8 For the Year Ended December 31, 2022 No.
Transfer From Transfer To Approximate Value ($) Note 1 VIEs Xinjiang United Family 1,542,178 Cash (as working capital) 2 VIEs Xinjiang United Family 1,400,536 Raw materials 3 Xinjiang United Family VIEs 1,845,098 Raw materials 4 Xinjiang United Family VIEs 3,413,933 Products For the Year Ended December 31, 2022 No.
Although both SAT Circular 82 and SAT Bulletin 45 only apply to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreign individuals, the determining criteria set forth in SAT Circular 82 and SAT Bulletin 45 may reflect SAT’s general position on how the “de facto management body” test should be applied in determining the tax resident status of offshore enterprises, regardless of whether they are controlled by PRC enterprises, PRC enterprise groups, or by PRC or foreign individuals. 26 If the PRC tax authorities determine that the actual management organ of Chanson International is within the territory of China, Chanson International may be deemed to be a PRC resident enterprise for PRC enterprise income tax purposes and a number of unfavorable PRC tax consequences could follow.
Although both SAT Circular 82 and SAT Bulletin 45 only apply to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreign individuals, the determining criteria set forth in SAT Circular 82 and SAT Bulletin 45 may reflect SAT’s general position on how the “de facto management body” test should be applied in determining the tax resident status of offshore enterprises, regardless of whether they are controlled by PRC enterprises, PRC enterprise groups, or by PRC or foreign individuals. 27 If the PRC tax authorities determine that the actual management organ of Chanson International is within the territory of China, Chanson International may be deemed to be a PRC resident enterprise for PRC enterprise income tax purposes and a number of unfavorable PRC tax consequences could follow.
Risk Factors—Risks Relating to Our Corporate Structure—If the PRC government determines that the VIE Agreements do not comply with PRC regulations, or if these regulations change or are interpreted differently in the future, we may be unable to assert our contractual rights over the assets of the VIEs, and our Class A Ordinary Shares may decline in value or become worthless.” Selected Condensed Consolidating Financial Schedule of Chanson International and Its Subsidiaries and the VIEs The following tables present selected condensed consolidating financial data of Chanson International and its subsidiaries and the VIEs for the years ended December 31, 2023, 2022, and 2021.
Risk Factors—Risks Relating to Our Corporate Structure—If the PRC government determines that the VIE Agreements do not comply with PRC regulations, or if these regulations change or are interpreted differently in the future, we may be unable to assert our contractual rights over the assets of the VIEs, and our Class A Ordinary Shares may decline in value or become worthless.” Selected Condensed Consolidating Financial Schedule of Chanson International and Its Subsidiaries and the VIEs The following tables present selected condensed consolidating financial data of Chanson International and its subsidiaries and the VIEs for the years ended December 31, 2024, 2023, and 2022.
Starting from January 1, 2021, we have adequately accrued the social premiums and housing funds and the estimated late fees, if applicable, and have not received any notice or order for payment as of the date of this annual report. 24 PRC regulations relating to offshore investment activities by PRC residents may subject our PRC resident beneficial owners or our PRC subsidiary to liability or penalties, limit our ability to inject capital into our PRC subsidiary, limit our PRC subsidiary’s ability to increase its registered capital or distribute profits to us, or may otherwise adversely affect us.
Starting from January 1, 2021, we have adequately accrued the social premiums and housing funds and the estimated late fees, if applicable, and have not received any notice or order for payment as of the date of this annual report. 25 PRC regulations relating to offshore investment activities by PRC residents may subject our PRC resident beneficial owners or our PRC subsidiary to liability or penalties, limit our ability to inject capital into our PRC subsidiary, limit our PRC subsidiary’s ability to increase its registered capital or distribute profits to us, or may otherwise adversely affect us.
Much of the scrutiny, criticism, and negative publicity has centered on financial and accounting irregularities and mistakes, a lack of effective internal controls over financial accounting, inadequate corporate governance policies or a lack of adherence thereto and, in many cases, allegations of fraud.
Much of the scrutiny, criticism, and negative publicity has centered on financial and accounting irregularities and mistakes, a lack of effective internal controls over financial reporting, inadequate corporate governance policies or a lack of adherence thereto and, in many cases, allegations of fraud.
However, if we change our board composition such that independent directors do not constitute a majority of our board of directors, our shareholders may be afforded less protection than they would otherwise enjoy under Nasdaq’s corporate governance requirements applicable to U.S. domestic issuers. 43 If we cannot continue to satisfy the continued listing requirements and other rules of the Nasdaq Capital Market, our securities may be delisted, which could negatively impact the price of our securities and your ability to sell them.
However, if we change our board composition such that independent directors do not constitute a majority of our board of directors, our shareholders may be afforded less protection than they would otherwise enjoy under Nasdaq’s corporate governance requirements applicable to U.S. domestic issuers. 44 If we cannot continue to satisfy the continued listing requirements and other rules of the Nasdaq Capital Market, our securities may be delisted, which could negatively impact the price of our securities and your ability to sell them.
Except as set forth in these agreements, the UFG Operators are not entitled to any other compensation in connection with their ownership of all the UFG Entities. 7 Risks Associated with our Corporate Structure and the VIE Agreements Because we do not directly hold equity interests in the VIEs, we are subject to risks and uncertainties of the interpretations and applications of PRC laws and regulations, including but not limited to, regulatory review of overseas listing of PRC companies through special purpose vehicles and the validity and enforcement of the VIE Agreements.
Except as set forth in these agreements, the UFG Operators are not entitled to any other compensation in connection with their ownership of all the UFG Entities. 8 Risks Associated with our Corporate Structure and the VIE Agreements Because we do not directly hold equity interests in the VIEs, we are subject to risks and uncertainties of the interpretations and applications of PRC laws and regulations, including but not limited to, regulatory review of overseas listing of PRC companies through special purpose vehicles and the validity and enforcement of the VIE Agreements.
If we or our subsidiaries are unable to receive all of the revenue from our operations, we may be unable to pay dividends on our Class A Ordinary Shares or Class B Ordinary Shares. 9 Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments, and trade and service-related foreign exchange transactions, can be made in foreign currencies, without prior approval of State Administration of Foreign Exchange (“SAFE”), by complying with certain procedural requirements.
If we or our subsidiaries are unable to receive all of the revenue from our operations, we may be unable to pay dividends on our Class A Ordinary Shares or Class B Ordinary Shares. 10 Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments, and trade and service-related foreign exchange transactions, can be made in foreign currencies, without prior approval of State Administration of Foreign Exchange (“SAFE”), by complying with certain procedural requirements.
In the event we are unable to enforce the VIE Agreements, we may not be able to exert effective control over the UFG Entities for accounting purposes, and our ability to conduct our business may be materially and adversely affected. 14 If the PRC government determines that the VIE Agreements do not comply with PRC regulations, or if these regulations change or are interpreted differently in the future, we may be unable to assert our contractual rights over the assets of the VIEs, and our Class A Ordinary Shares may decline in value or become worthless.
In the event we are unable to enforce the VIE Agreements, we may not be able to exert effective control over the UFG Entities for accounting purposes, and our ability to conduct our business may be materially and adversely affected. 15 If the PRC government determines that the VIE Agreements do not comply with PRC regulations, or if these regulations change or are interpreted differently in the future, we may be unable to assert our contractual rights over the assets of the VIEs, and our Class A Ordinary Shares may decline in value or become worthless.
As a result, we may be required to expend valuable resources to comply with the SAT circulars or to request the relevant transferors from whom we purchase taxable assets to comply with these circulars, or to establish that we should not be taxed under these circulars, which may have a material adverse effect on our financial condition and results of operations. 27 Our PRC subsidiary is subject to restrictions on paying dividends or making other payments to us, which may have a material adverse effect on our ability to conduct our business.
As a result, we may be required to expend valuable resources to comply with the SAT circulars or to request the relevant transferors from whom we purchase taxable assets to comply with these circulars, or to establish that we should not be taxed under these circulars, which may have a material adverse effect on our financial condition and results of operations. 28 Our PRC subsidiary is subject to restrictions on paying dividends or making other payments to us, which may have a material adverse effect on our ability to conduct our business.
Some provisions of our amended and restated memorandum and articles of association may discourage, delay, or prevent a change in control of our company or management that shareholders may consider favorable, including, among other things, the following: ● provisions that authorize our board of directors to issue shares with preferred, deferred, or other special rights or restrictions without any further vote or action by our shareholders; and ● provisions that restrict the ability of our shareholders to call meetings and to propose special matters for consideration at shareholder meetings. 45
Some provisions of our amended and restated memorandum and articles of association may discourage, delay, or prevent a change in control of our company or management that shareholders may consider favorable, including, among other things, the following: ● provisions that authorize our board of directors to issue shares with preferred, deferred, or other special rights or restrictions without any further vote or action by our shareholders; and ● provisions that restrict the ability of our shareholders to call meetings and to propose special matters for consideration at shareholder meetings. 46
These uncertainties could limit the legal protections available to us and our investors, including you. 18 Any actions by the Chinese government, including any decision to intervene or influence the operations of our PRC subsidiary or the VIEs or to exert control over any offering of securities conducted overseas and/or foreign investment in China-based issuers, may cause us to make material changes to the operations of our PRC subsidiary or the VIEs, may limit or completely hinder our ability to offer or continue to offer securities to investors, and may cause the value of such securities to significantly decline or be worthless.
These uncertainties could limit the legal protections available to us and our investors, including you. 19 Any actions by the Chinese government, including any decision to intervene or influence the operations of our PRC subsidiary or the VIEs or to exert control over any offering of securities conducted overseas and/or foreign investment in China-based issuers, may cause us to make material changes to the operations of our PRC subsidiary or the VIEs, may limit or completely hinder our ability to offer or continue to offer securities to investors, and may cause the value of such securities to significantly decline or be worthless.
Additionally, Xinjiang United Family may increase its registered capital to receive additional capital contributions from us and currently there is no statutory limit to increasing its registered capital, subject to satisfaction of applicable government and filing requirements.
Xinjiang United Family may increase its registered capital to receive additional capital contributions from us and currently there is no statutory limit to increasing its registered capital, subject to satisfaction of applicable government and filing requirements.
Accordingly, if we rely on the exemptions, during the period we remain a controlled company and during any transition period following a time when we are no longer a controlled company, you would not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of Nasdaq. 41 Substantial future sales of our Class A Ordinary Shares or the anticipation of future sales of our Class A Ordinary Shares in the public market could cause the price of our Class A Ordinary Shares to decline.
Accordingly, if we rely on the exemptions, during the period we remain a controlled company and during any transition period following a time when we are no longer a controlled company, you would not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of Nasdaq. 42 Substantial future sales of our Class A Ordinary Shares or the anticipation of future sales of our Class A Ordinary Shares in the public market could cause the price of our Class A Ordinary Shares to decline.
If we fail to complete such registrations or obtain such approvals, our ability to use the proceeds we received or expect to receive from our offshore offerings and to capitalize or otherwise fund our PRC operations may be negatively affected, which could materially and adversely affect our business, including our liquidity and our ability to fund and expand our business. 25 Fluctuations in exchange rates could have a material adverse effect on our results of operations and the value of your investment.
If we fail to complete such registrations or obtain such approvals, our ability to use the proceeds we received or expect to receive from our offshore offerings and to capitalize or otherwise fund our PRC operations may be negatively affected, which could materially and adversely affect our business, including our liquidity and our ability to fund and expand our business. 26 Fluctuations in exchange rates could have a material adverse effect on our results of operations and the value of your investment.
However, since the amended PRC Company Law is still relatively new and the foregoing draft implementation measures were released for public comment only, there is still uncertainty regarding the implementation and interpretation of the amended PRC Company Law and the adoption and effective date of such implementation measures. 17 You may experience difficulties in effecting service of legal process, enforcing foreign judgments, or bringing actions in China against us or our management based on foreign laws.
However, since the amended PRC Company Law is still relatively new and the foregoing draft implementation measures were released for public comment only, there is still uncertainty regarding the implementation and interpretation of the amended PRC Company Law and the adoption and effective date of such implementation measures. 18 You may experience difficulties in effecting service of legal process, enforcing foreign judgments, or bringing actions in China against us or our management based on foreign laws.
As of the date of this annual report, as a holding company with no material operations of our own, we conduct our business through: (i) an association between Xinjiang United Family and the VIEs known as the “United Family Group” or “UFG”: 30 of the entities that comprise UFG (each a “UFG Entity” and, collectively, the “UFG Entities”) are owned independently by the chairman of our board of directors (“the Chairman”), Mr.
As of the date of this annual report, as a holding company with no material operations of our own, we conduct our business through: (i) an association between Xinjiang United Family and the VIEs known as the “United Family Group” or “UFG”: 50 of the entities that comprise UFG (each a “UFG Entity” and, collectively, the “UFG Entities”) are owned independently by the chairman of our board of directors (“the Chairman”), Mr.
Consequently, we cannot assure you that the operating entities will achieve their planned growth or, even if the operating entities are able to grow their store base as planned, that any new stores will be profitable, which could have a material adverse effect on their results of operations. 30 The operating entities operate in a highly-competitive market and their failure to compete effectively could adversely affect our results of operations.
Consequently, we cannot assure you that the operating entities will achieve their planned growth or, even if the operating entities are able to grow their store base as planned, that any new stores will be profitable, which could have a material adverse effect on their results of operations. 31 The operating entities operate in a highly-competitive market and their failure to compete effectively could adversely affect our results of operations.
The sale of additional equity securities could result in additional dilution to our shareholders. 40 Risks Relating to Our Class A Ordinary Shares and the Trading Market If we fail to establish and maintain an effective system of internal control over financial reporting, our ability to accurately and timely report our financial results or prevent fraud may be adversely affected, and investor confidence and the market price of our Class A Ordinary Shares may be adversely impacted.
The sale of additional equity securities could result in additional dilution to our shareholders. 41 Risks Relating to Our Class A Ordinary Shares and the Trading Market If we fail to establish and maintain an effective system of internal control over financial reporting, our ability to accurately and timely report our financial results or prevent fraud may be adversely affected, and investor confidence and the market price of our Class A Ordinary Shares may be adversely impacted.
Investors and Tax Consequences As of the date of this annual report, none of our subsidiaries or VIEs have made any dividends or distributions to our Company and our Company has not made any dividends or distributions to our shareholders.
Investors and Tax Consequences As of the date of this annual report, none of our subsidiaries or VIEs has made any dividends or distributions to our Company and our Company has not made any dividends or distributions to our shareholders.
The Chinese government also exercises significant control over China’s economic growth by allocating resources, controlling payment of foreign currency-denominated obligations, setting monetary policy, and providing preferential treatment to particular industries or companies. 16 While the Chinese economy has experienced significant growth over the past decades, growth has been uneven, both geographically and among various sectors of the economy.
The Chinese government also exercises significant control over China’s economic growth by allocating resources, controlling payment of foreign currency-denominated obligations, setting monetary policy, and providing preferential treatment to particular industries or companies. 17 While the Chinese economy has experienced significant growth over the past decades, growth has been uneven, both geographically and among various sectors of the economy.
If the operating entities are unable to respond on a timely and appropriate basis to changes in demand or customer preferences, their sales volumes and margins could be adversely affected. 31 The operating entities’ future results and competitive position depend on the successful development of new products and improvement of existing products, which are subject to a number of difficulties and uncertainties.
If the operating entities are unable to respond on a timely and appropriate basis to changes in demand or customer preferences, their sales volumes and margins could be adversely affected. 32 The operating entities’ future results and competitive position depend on the successful development of new products and improvement of existing products, which are subject to a number of difficulties and uncertainties.
See “Item 4. Information on the Company—B. Business Overview—Regulations—Regulations on Mergers & Acquisitions and Overseas Listings.” 20 According to the CSRC Notice, the domestic companies that have already been listed overseas before the effective date of the Trial Measures (namely, March 31, 2023) shall be deemed as existing issuers.
See “Item 4. Information on the Company—B. Business Overview—Regulations—Regulations on Mergers & Acquisitions and Overseas Listings.” 21 According to the CSRC Notice, the domestic companies that have already been listed overseas before the effective date of the Trial Measures (namely, March 31, 2023) shall be deemed as existing issuers.
Any such litigation may result in substantial diversion of financial and management resources and, if decided unfavorably to the operating entities, could have a material adverse effect on their business and financial results. 37 The operating entities are subject to the risks associated with leasing a substantial amount of space and are required to make substantial lease payments under their operating leases.
Any such litigation may result in substantial diversion of financial and management resources and, if decided unfavorably to the operating entities, could have a material adverse effect on their business and financial results. 38 The operating entities are subject to the risks associated with leasing a substantial amount of space and are required to make substantial lease payments under their operating leases.
Any material decline in the amount of discretionary spending could have a material adverse effect on the operating entities’ sales, results of operations, business, and financial condition. 29 The operating entities’ long-term success depends on their ability to successfully identify and secure appropriate sites and timely develop and expand their operations in existing and new markets.
Any material decline in the amount of discretionary spending could have a material adverse effect on the operating entities’ sales, results of operations, business, and financial condition. 30 The operating entities’ long-term success depends on their ability to successfully identify and secure appropriate sites and timely develop and expand their operations in existing and new markets.
Hui Wang, the Marketing Director of Xinjiang United Family, own 100% of the equity interests in 30 and two UFG Entities, respectively, as of the date of this annual report, it may be difficult for us to change our corporate structure if such UFG Operators refuse to cooperate with us.
Hui Wang, the Marketing Director of Xinjiang United Family, own 100% of the equity interests in 35 and two UFG Entities, respectively, as of the date of this annual report, it may be difficult for us to change our corporate structure if such UFG Operators refuse to cooperate with us.
The material weakness identified was that we do not have sufficient in-house personnel in our accounting department with sufficient knowledge of the U.S. GAAP and SEC reporting rules. See “Item 15. Controls and Procedures.” Our management is currently in the process of evaluating the steps necessary to remediate the material weakness.
The material weakness identified was that we do not have sufficient in-house personnel in our accounting department with sufficient knowledge of the U.S. GAAP and SEC reporting rules. See “Item 15. Controls and Procedures.” Our management is currently in the process of implementing the steps necessary to remediate the material weakness.
As a result, their quality of service may deteriorate and their results of operations or profitability could be adversely affected. 38 Any decrease in customer traffic in the shopping malls or other locations in which the operating entities’ stores are located could cause their sales to be less than expected.
As a result, their quality of service may deteriorate and their results of operations or profitability could be adversely affected. 39 Any decrease in customer traffic in the shopping malls or other locations in which the operating entities’ stores are located could cause their sales to be less than expected.
Stores to pass through price increases in raw materials and preserve their profit margins in the future could materially and adversely affect their business, financial condition, and results of operations. 32 The operating entities rely on their central factory and a limited number of third-party producers and suppliers.
Stores to pass through price increases in raw materials and preserve their profit margins in the future could materially and adversely affect their business, financial condition, and results of operations. 33 The operating entities rely on their central factory and a limited number of third-party producers and suppliers.
Events such as terrorist and ethnic extremist attacks as well as riots and the resulting political instability, economy suspension, and concerns over safety in Xinjiang could have a significant adverse impact on the PRC Stores’ business, financial condition, and results of operation. 33 The PRC Stores and the U.S.
Events such as terrorist and ethnic extremist attacks as well as riots and the resulting political instability, economy suspension, and concerns over safety in Xinjiang could have a significant adverse impact on the PRC Stores’ business, financial condition, and results of operation. 34 The PRC Stores and the U.S.
Due to the material weakness in our internal control over financial reporting as described above, our management concluded that our internal control over financial reporting was not effective as of December 31, 2023. This could adversely affect the market price of our Class A Ordinary Shares due to a loss of investor confidence in the reliability of our reporting processes.
Due to the material weakness in our internal control over financial reporting as described above, our management concluded that our internal control over financial reporting was not effective as of December 31, 2024. This could adversely affect the market price of our Class A Ordinary Shares due to a loss of investor confidence in the reliability of our reporting processes.
Business Overview—Regulations—PRC Regulations—Regulations on Food Production and Food Business Operation—Pollutant Discharge Permit.” 23 Increases in labor costs in the PRC may adversely affect our business and our profitability. China’s economy has experienced increases in labor costs in recent years. China’s overall economy and the average wage in China are expected to continue to grow.
Business Overview—Regulations—PRC Regulations—Regulations on Food Production and Food Business Operation—Pollutant Discharge Permit.” 24 Increases in labor costs in the PRC may adversely affect our business and our profitability. China’s economy has experienced increases in labor costs in recent years. China’s overall economy and the average wage in China are expected to continue to grow.
Stores’ business, financial condition, or results of operations. 35 Increased distribution costs or disruption of product transportation could adversely affect the operating entities’ business and financial results. Distribution costs have historically fluctuated significantly over time, particularly in connection with oil prices, and increases in such costs could result in reduced profits.
Stores’ business, financial condition, or results of operations. 36 Increased distribution costs or disruption of product transportation could adversely affect the operating entities’ business and financial results. Distribution costs have historically fluctuated significantly over time, particularly in connection with oil prices, and increases in such costs could result in reduced profits.
Our Class A Ordinary Shares are listed on the Nasdaq Capital Market. In order to maintain our listing on the Nasdaq Capital Market, we are required to comply with certain rules of the Nasdaq Capital Market, including those regarding minimum stockholders’ equity, minimum share price, minimum market value of publicly held shares, and various additional requirements.
Our Class A Ordinary Shares are listed on the Nasdaq Capital Market. In order to maintain our listing on the Nasdaq Capital Market, we are required to comply with certain rules of the Nasdaq Capital Market, including those regarding minimum shareholders’ equity, minimum share price, minimum market value of publicly held shares, and various additional requirements.
If Xinjiang United Family and the VIEs incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments to us. 22 Our cash dividends, if any, will be paid in U.S. dollars.
If Xinjiang United Family and the VIEs incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments to us. 23 Our cash dividends, if any, will be paid in U.S. dollars.
As a result, the operating entities may become subject to more extensive requirements to protect the customer information that they process in connection with the purchase of their products, resulting in increased compliance costs. 36 A breach of security of confidential customer information related to the U.S.
As a result, the operating entities may become subject to more extensive requirements to protect the customer information that they process in connection with the purchase of their products, resulting in increased compliance costs. 37 A breach of security of confidential customer information related to the U.S.
Stores attempt, through contractual relationships and regular inspections, to control the risk of contamination caused by third parties in relation to the manufacturing processes they outsource, their efforts might not be successful and contamination of their products by third parties might materialize. 34 The PRC Stores and the U.S.
Stores attempt, through contractual relationships and regular inspections, to control the risk of contamination caused by third parties in relation to the manufacturing processes they outsource, their efforts might not be successful and contamination of their products by third parties might materialize. 35 The PRC Stores and the U.S.
If we fail to retain our senior management, our business and results of operations could be materially and adversely affected. 39 The market for technicians and other individuals with the required technical expertise to succeed in the operating entities’ business is highly competitive.
If we fail to retain our senior management, our business and results of operations could be materially and adversely affected. 40 The market for technicians and other individuals with the required technical expertise to succeed in the operating entities’ business is highly competitive.
However, in preparing our consolidated financial statements as of and for the years ended December 31, 2023, 2022, and 2021, we have identified a material weakness in our internal control over financial reporting, as defined in the standards established by the PCAOB, and other control deficiencies.
However, in preparing our consolidated financial statements as of and for the years ended December 31, 2024, 2023, and 2022, we have identified a material weakness in our internal control over financial reporting, as defined in the standards established by the PCAOB, and other control deficiencies.
Our controlling shareholder has potential conflicts of interest with our Company which may adversely affect our business. Mr. Gang Li is our controlling shareholder and Chairman. As of the date of this annual report, 30 of the UFG Entities are owned independently by Mr. Li.
Our controlling shareholder has potential conflicts of interest with our Company which may adversely affect our business. Mr. Gang Li is our controlling shareholder and Chairman. As of the date of this annual report, 50 of the UFG Entities are owned independently by Mr. Li.
Under this structure, holders of Class A Ordinary Shares are entitled to one vote per one Class A Ordinary Share, and holders of Class B Ordinary Shares are entitled to 10 votes per one Class B Ordinary Share, which may cause the holders of Class B Ordinary Shares to have an unbalanced, higher concentration of voting power.
Under this structure, holders of Class A Ordinary Shares are entitled to one vote per one Class A Ordinary Share, and holders of Class B Ordinary Shares are entitled to 50 votes per one Class B Ordinary Share, which may cause the holders of Class B Ordinary Shares to have an unbalanced, higher concentration of voting power.
Assentsure is headquartered in Singapore, and will be inspected by the PCAOB on a regular basis. None of Friedman, Marcum Asia, or Assentsure is subject to the determinations issued by the PCAOB on December 16, 2021.
Assentsure is headquartered in Singapore, and is inspected by the PCAOB on a regular basis. None of Friedman, Marcum Asia, or Assentsure is subject to the determinations issued by the PCAOB on December 16, 2021.
Our articles of association allow our shareholders holding shares representing in aggregate not less than 10% of our voting share capital in issue, to requisition a general meeting of our shareholders, in which case our directors are obliged to call such meeting within 21 clear days’ from the date of receipt of a requisition.
Our amended and restated articles of association allow our shareholders holding shares representing in aggregate not less than 10% of our voting share capital in issue, to requisition a general meeting of our shareholders, in which case our directors are obliged to call such meeting within 21 clear days’ from the date of receipt of a requisition.
During the years ended December 31, 2023, 2022, and 2021, cash transfers and transfers of other assets between our Company, our subsidiaries, and the VIEs were as follows: For the Year Ended December 31, 2023 No.
During the years ended December 31, 2024, 2023, and 2022, cash transfers and transfers of other assets between our Company, our subsidiaries, and the VIEs were as follows: For the Year Ended December 31, 2024 No.
Even if you are successful in bringing an action, the PRC laws may render you unable to enforce a judgment against our assets and management, most of which are located in the PRC. 15 We rely on the approval certificates and business license held by UFG, and any deterioration of the relationship between Xinjiang United Family and UFG could materially and adversely affect our overall business operations.
Even if you are successful in bringing an action, the PRC laws may render you unable to enforce a judgment against our assets and management, most of which are located in the PRC. 16 We rely on the approval certificates and business licenses held by UFG, and any deterioration of the relationship between Xinjiang United Family and UFG could materially and adversely affect our overall business operations.
Pursuant to our articles of association, shareholders will not have any right to inspect any account or book or document of the Company except as conferred by Companies Act (Revised) of the Cayman Islands or as authorized by our directors or by ordinary resolution of our shareholders.
Pursuant to our amended and restated articles of association, shareholders will not have any right to inspect any account or book or document of the Company except as conferred by Companies Act (Revised) of the Cayman Islands or as authorized by our directors or by ordinary resolution of our shareholders.
Pursuant to the VIE Agreements, a substantial part of our business in the PRC will be undertaken on the basis of the approvals, certificates, business licenses, and other requisite licenses held by each UFG Entity.
Pursuant to the VIE Agreements, a substantial part of our business in the PRC is undertaken on the basis of the approvals, certificates, business licenses, and other requisite licenses held by each UFG Entity.
The PRC Stores derived 96.6%, 95%, and 95% of their revenue from stores in Urumqi in the years ended December 31, 2023, 2022, and 2021, respectively. In addition, the U.S. Stores’ current operations are limited to New York City.
The PRC Stores derived 98.2%, 96.6%, and 95% of their revenue from stores in Urumqi in the years ended December 31, 2024, 2023, and 2022, respectively. In addition, the U.S. Stores’ current operations are limited to New York City.
There remains uncertainty, however, as to how the Cybersecurity Review Measures, the Measures for the Security Assessment of Cross-border Data Transfer, the Trial Measures and the Security Administration Draft will be interpreted or implemented and whether the PRC regulatory agencies, including the CAC, may adopt new laws, regulations, rules, or detailed implementation and interpretation related to the Cybersecurity Review Measures and the Security Administration Draft.
There remains uncertainty, however, as to how the Cybersecurity Review Measures, the Measures for the Security Assessment of Cross-border Data Transfer, the Trial Measures and the Regulation on Network Data Security Management will be interpreted or implemented and whether the PRC regulatory agencies, including the CAC, may adopt new laws, regulations, rules, or detailed implementation and interpretation related to the Cybersecurity Review Measures and the Regulation on Network Data Security Management.
We are a holding company and during the years ended December 31, 2023, 2022, and 2021, approximately 54%, 39%, and 56% of our revenue was derived from the UFG Entities, respectively.
We are a holding company and during the years ended December 31, 2024, 2023 and 2022, approximately 62%, 54%, and 39%, of our revenue was derived from the UFG Entities, respectively.
As of the date of this annual report, the operations of our PRC subsidiary and the VIEs are geographically limited to two cities in Xinjiang, and 36 of the 37 PRC Stores are located in Urumqi, the capital city of Xinjiang.
As of the date of this annual report, the operations of our PRC subsidiary and the VIEs are geographically limited to two cities in Xinjiang, and 54 of the 55 PRC Stores are located in Urumqi, the capital city of Xinjiang.
As of the date of this annual report, Mr. Gang Li, our Chairman, beneficially owns 2,700,000, or approximately 39.97% of our issued Class A Ordinary Shares, and 5,670,000, or 100%, of our issued Class B Ordinary Shares, representing approximately 93.61% of the voting rights in our Company. As a result, until such time as Mr.
As of the date of this annual report, Mr. Gang Li, our Chairman, beneficially owns 2,700,000, or approximately 12.48% of our issued Class A Ordinary Shares, and 5,670,000, or 100%, of our issued Class B Ordinary Shares, representing approximately 93.80% of the voting rights in our Company. As a result, until such time as Mr.
Sales of substantial amounts of our Class A Ordinary Shares in the public market, or the perception that these sales could occur, could cause the market price of our Class A Ordinary Shares to decline. An aggregate of 6,755,319 Class A Ordinary Shares are outstanding as of the date of this annual report.
Sales of substantial amounts of our Class A Ordinary Shares in the public market, or the perception that these sales could occur, could cause the market price of our Class A Ordinary Shares to decline. An aggregate of 21,629,707 Class A Ordinary Shares are outstanding as of the date of this annual report.
With the development of the foreign exchange market and progress towards interest rate liberalization and RMB internationalization, the PRC government may in the future announce further changes to the exchange rate system, and we cannot assure you that RMB will not appreciate or depreciate significantly in value against the U.S. dollar in the future.
In 2022, RMB depreciated approximately 5.5% against the U.S. dollar; in 2023, RMB depreciated approximately 2.6% against the U.S. dollar; and in 2024, the RMB appreciated by approximately 5% against the U.S. dollar With the development of the foreign exchange market and progress towards interest rate liberalization and RMB internationalization, the PRC government may in the future announce further changes to the exchange rate system, and we cannot assure you that RMB will not appreciate or depreciate significantly in value against the U.S. dollar in the future.
GAAP to consolidate the VIEs. 5 UFG’s revenue accounted for 54%, 39%, and 56% of our total revenue for the years ended December 31, 2023, 2022, and 2021, respectively. UFG consists of 32 VIEs. Our Chairman, Mr. Gang Li, is the sole owner of 30 UFG Entities, and Ms.
GAAP to consolidate the VIEs. 6 UFG’s revenue accounted for 62%, 54%, and 39% of our total revenue for the years ended December 31, 2024, 2023, and 2022, respectively. UFG consists of 52 VIEs. Our Chairman, Mr. Gang Li, is the sole owner of 50 UFG Entities, and Ms.
As of the date of this annual report, two UFG Entities and one branch office of Xinjiang United Family are applying for the renewal of their food business permits; all the remaining UFG Entities have obtained the food business permit, though some of them did not have the food business permits at the time of opening.
As of the date of this annual report, except one UFG Entity which is applying for the food business permit, all other remaining UFG Entities and branches of Xinjiang United Family have obtained the food business permit, though some of them did not have the food business permits at the time of opening.
Stores, Chanson 23rd Street and Chanson 3rd Ave, have general liability insurance to cover certain loss due to the discovery of or the suspicion of food contamination, subject to the terms of their respective insurance policies. If the PRC Stores and the U.S.
Stores, Chanson 23rd Street and Chanson 3rd Ave, have general liability insurance subject to the terms of their respective insurance policies. If the PRC Stores and the U.S.
Heimeijie Coffee and Food Store Soul●Song Minzhu Road Same as above 28 Tianshan District Cuiquan Rd. George Chanson Bakery Vanke Tianshanli Same as above 29 Tianshan District Cuiquan Rd. Coffee and Food Store Soul●Song Vanke Tianshanli Same as above 30 Xinshi District Changchun North Rd.
Chanson Coffee Bakery Soul●Song Wanyan Cheng Same as above 26 Tianshan District Wenhua Rd. Chanson Coffee Bakery Soul●Song Wenhua Road Same as above 27 Tianshan District Minzhu Rd. Heimeijie Coffee and Food Soul●Song Minzhu Road Same as above 28 Tianshan District Cuiquan Rd. George Chanson Bakery Vanke Tianshanli Same as above 29 Tianshan District Cuiquan Rd.
Therefore, our public shareholders may have more difficulty protecting their interests in the face of actions by our management, directors or controlling shareholders than would shareholders of a corporation incorporated in a jurisdiction in the U.S.
As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by our management, members of the board of directors, or controlling shareholders than they would as public shareholders of a company incorporated in the U.S.
Urumqi Meimei Chanson Bakery Meimei A branch office of Xinjiang United Family 36 Xinjiang United Family Trading Co., Ltd. Coffee Bakery Branch Meimei No. 3 A branch office of Xinjiang United Family 37 Xinjiang United Family Trading Co., Ltd.
Tianshan District Chanson Bakery Tianbai A branch office of Xinjiang United Family 54 Xinjiang United Family Trading Co., Ltd. Coffee Bakery Branch Meimei No. 3 A branch office of Xinjiang United Family 55 Xinjiang United Family Trading Co., Ltd.
Transfer From Transfer To Approximate Value ($) Note 1 VIEs Xinjiang United Family 159,715 Cash (as working capital) 2 VIEs Xinjiang United Family 1,953,748 Raw materials 3 Xinjiang United Family VIEs 1,766,804 Raw materials 4 Xinjiang United Family VIEs 2,855,345 Products Dividends or Distributions Made to our Company and U.S.
Transfer From Transfer To Approximate Value ($) Note 1 VIEs Xinjiang United Family 414,920 Cash (as working capital) 2 VIEs Xinjiang United Family 1,292,682 Raw materials 3 Xinjiang United Family VIEs 1,419,306 Raw materials 4 Xinjiang United Family VIEs 2,163,465 Products Dividends or Distributions Made to our Company and U.S.
George Chanson Bakery Wanyancheng Same as above 9 Urumqi Economics and Technology Development District George Chanson Bakery on Kashi West Rd. Huarun Wanjia Same as above 10 Xinshi District Changchun South Rd. George Chanson Bakery Changchun Same as above 11 Xinshi District Beijing Middle Rd.
George Chanson Bakery Minzhu Same as above 7 Tianshan District Jianquan No.3 Rd. George Chanson Bakery Riyue Xingguang Same as above 8 Tianshan District Jiefang North Rd. George Chanson Bakery Wanyancheng Same as above 9 Urumqi Economics and Technology Development District George Chanson Bakery on Kashi West Rd. Huarun Wanjia Same as above 10 Xinshi District Changchun South Rd.
If our directors fail to call a properly requisitioned meeting, the requisitioners or any of them may call a general meeting within three months. Advance notice of at least 21 clear days is required for the convening of our annual general shareholders’ meeting and at least 14 clear days’ notice any other general meeting of our shareholders.
Advance notice of at least 21 clear days is required for the convening of our annual general shareholders’ meeting and at least 14 clear days’ notice any other general meeting of our shareholders.
Transfer From Transfer To Approximate Value ($) Note 1 VIEs Xinjiang United Family 414,920 Cash (as working capital) 2 VIEs Xinjiang United Family 1,292,682 Raw materials 3 Xinjiang United Family VIEs 1,419,306 Raw materials 4 Xinjiang United Family VIEs 2,163,465 Products For the Year Ended December 31, 2021 No.
Transfer From Transfer To Approximate Value ($) Note 1 Xinjiang United Family VIEs 661,983 Cash (as working capital) 2 VIEs Xinjiang United Family 4,197,240 Raw materials 3 Xinjiang United Family VIEs 1,603,664 Raw materials 4 Xinjiang United Family VIEs 2,983,019 Products 9 For the Year Ended December 31, 2023 No.
Chanson Coffee and Food Store Soul●Song Gaoxin Wanda Same as above 4 31 Shuimogou District Hongguangshan Rd. Chanson Bakery Wuyue Square Part of UFG – owned 100% by Ms. Hui Wang and operated under agreements among Ms. Hui Wang, this entity, and Xinjiang United Family 32 Xinshi District Beijing South Rd.
Chanson Bakery Wuyue Square Part of UFG – owned 100% by Ms. Hui Wang and operated under agreements among Ms. Hui Wang, this entity, and Xinjiang United Family 50 Xinshi District Beijing South Rd. George Chanson Bakery Xidan Same as above 5 51 Xinjiang United Family Trading Co., Ltd.
Ruitai Chanson Bakery Ruitai A store operated by Xinjiang United Family, not a separate legal entity 38 Chanson 23rd Street LLC Chanson 23rd Street A wholly owned indirect subsidiary of Xinjiang United Family 39 Chanson 1293 3rd Ave LLC Chanson 3rd Ave Same as above. 40 Chanson 2040 Broadway LLC Chanson Broadway Same as above.
Ruitai Chanson Bakery Ruitai A branch office of Xinjiang United Family 56 Chanson 23rd Street LLC Chanson 23rd Street A wholly owned indirect subsidiary of Xinjiang United Family 57 Chanson 1293 3rd Ave LLC Chanson 3rd Ave Same as above. 58 Chanson 2040 Broadway LLC Chanson Broadway Same as above.
The following is a complete list of the stores of Xinjiang United Family and UFG as of the date of this annual report, together with their recognized commercial name and relationship to Xinjiang United Family. Legal Name of Entity Commercial Name Nature of Entity 1 Urumqi Midong District George Chanson Bakery Midong Part of UFG – owned 100% by Mr.
The following is a complete list of the stores of Xinjiang United Family and UFG in business as of the date of this annual report, together with their recognized commercial name and relationship to Xinjiang United Family.
SELECTED CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS For the Year Ended December 31, 2023 Chanson International (Cayman Islands) Subsidiaries (British Virgin Islands/Hong Kong) Xinjiang United Family (PRC) Xinjiang United Family’s Subsidiaries (USA) VIEs (PRC) Eliminations Consolidated Total Revenue $ - $ - $ 4,948,427 $ 2,938,505 $ 9,365,730 $ - $ 17,252,662 Cost of revenue $ - $ - $ 2,447,095 $ 1,909,026 $ 4,749,216 $ - $ 9,105,337 Income from VIEs $ - $ - $ 1,765,358 $ - $ - $ (1,765,358 ) $ - Loss for equity method investment $ (567,809 ) $ (567,809 ) $ - $ - $ - $ 1,135,618 $ - Net income (loss) $ 33,588 $ (567,809 ) $ 1,716,755 $ (2,284,564 ) $ 1,765,358 $ (629,740 ) $ 33,588 Comprehensive income (loss) $ 33,588 $ (302,426 ) $ 9,892,175 $ (10,194,601 ) $ 1,499,301 $ (1,025,227 ) $ (97,190 ) 10 For the Year Ended December 31, 2022 Chanson International (Cayman Islands) Subsidiaries (British Virgin Islands/Hong Kong) Xinjiang United Family (PRC) Xinjiang United Family’s Subsidiaries (USA) VIEs (PRC) Eliminations Consolidated Total Revenue $ - $ - $ 4,292,218 $ 3,780,867 $ 5,198,990 $ - $ 13,272,075 Cost of revenue $ - $ - $ 2,598,039 $ 2,088,788 $ 2,482,577 $ - $ 7,169,404 Income from VIEs $ - $ - $ 829,557 $ - $ - $ (829,557 ) $ - Loss for equity method investment $ (1,288,205 ) $ (1,288,205 ) $ - $ - $ - $ 2,576,410 $ - Net income (loss) $ (1,288,205 ) $ (1,288,205 ) $ 924,321 $ (2,212,526 ) $ 829,557 $ 1,746,853 $ (1,288,205 ) Comprehensive income (loss) $ (1,288,205 ) $ (841,074 ) $ 1,439,330 $ (2,280,404 ) $ 12,721 $ 1,299,722 $ (1,657,910 ) For the Year Ended December 31, 2021 Chanson International (Cayman Islands) Subsidiaries (British Virgin Islands/Hong Kong) Xinjiang United Family (PRC) Xinjiang United Family’s Subsidiaries (USA) VIEs (PRC) Eliminations Consolidated Total Revenue $ - $ - $ 4,544,478 $ 1,894,207 $ 8,251,610 $ - $ 14,690,295 Cost of revenue $ - $ - $ 2,516,966 $ 1,177,410 $ 4,065,496 $ - $ 7,759,872 Income from VIEs $ - $ - $ 1,875,684 $ - $ - $ (1,875,684 ) $ - Income for equity method investment $ 506,769 $ 506,769 $ - $ - $ - $ (1,013,538 ) $ - Net income (loss) $ 506,769 $ 506,769 $ 2,027,809 $ (1,521,040 ) $ 1,875,684 $ (2,889,222 ) $ 506,769 Comprehensive income (loss) $ 506,769 $ 328,920 $ 1,849,960 $ (1,521,040 ) $ 2,142,485 $ (2,711,373 ) $ 595,721 11 SELECTED CONDENSED CONSOLIDATING BALANCE SHEETS As of December 31, 2023 Chanson International (Cayman Islands) Subsidiaries (British Virgin Islands/ Hong Kong) Xinjiang United Family (PRC) Xinjiang United Family’s Subsidiaries (USA) VIEs (PRC) Eliminations Consolidated Total Cash and cash equivalents $ 30,269 $ - $ 21,340 $ 562,267 $ 867,426 $ - $ 1,481,302 Intercompany receivable $ 4,009,100 $ - $ 414,424 $ 746,500 $ 7,748,737 $ (12,918,761 ) $ - Total current assets $ 4,039,369 $ - $ 2,269,219 $ 3,610,137 $ 16,386,644 $ (16,970,922 ) $ 9,334,447 Investment in subsidiaries, equity method $ (6,202,086 ) $ (5,690,844 ) $ - $ - $ - $ 11,892,930 $ - Financial interest in VIEs $ - $ - $ 5,476,107 $ - $ - $ (5,476,107 ) $ - Total non-current assets $ 2,399,311 $ (5,690,844 ) $ 7,224,733 $ 13,984,265 $ 4,765,561 $ 6,416,823 $ 29,099,849 Total Assets $ 6,438,680 $ (5,690,844 ) $ 9,493,952 $ 17,594,402 $ 21,152,205 $ (10,554,099 ) $ 38,434,296 Intercompany payable $ 1,095,872 $ - $ 7,632,749 $ 4,060,036 $ - $ (12,788,657 ) $ - Total Liabilities $ 1,095,872 $ - $ 1,075,811 $ 31,703,387 $ 9,385,688 $ (16,840,818 ) $ 26,419,940 Total Shareholders’ Equity (Deficit) $ 5,342,808 $ (5,690,844 ) $ 8,418,141 $ (14,108,985 ) $ 11,766,517 $ 6,286,719 $ 12,014,356 Total Liabilities and Shareholders’ Equity (Deficit) $ 6,438,680 $ (5,690,844 ) $ 9,493,952 $ 17,594,402 $ 21,152,205 $ (10,554,099 ) $ 38,434,296 As of December 31, 2022 Chanson International (Cayman Islands) Subsidiaries (British Virgin Islands/ Hong Kong) Xinjiang United Family (PRC) Xinjiang United Family’s Subsidiaries (USA) VIEs (PRC) Eliminations Consolidated Total Cash and cash equivalents $ - $ - $ 499,696 $ 121,719 $ 2,294,055 $ - $ 2,915,470 Intercompany receivable $ 9,000 $ - $ - $ - $ 6,371,993 $ (6,380,993 ) $ - Total current assets $ 9,000 $ - $ 1,692,294 $ 741,891 $ 13,495,628 $ (9,472,535 ) $ 6,466,278 Investment in subsidiaries, equity method $ (5,634,277 ) $ (5,388,418 ) $ - $ - $ - $ 11,022,695 $ - Financial interest in VIEs $ - $ - $ 3,710,749 $ - $ - $ (3,710,749 ) $ - Total non-current assets $ (5,634,277 ) $ (5,388,418 ) $ 5,612,115 $ 14,882,563 $ 4,078,979 $ 7,311,946 $ 20,862,908 Total Assets $ (5,625,277 ) $ (5,388,418 ) $ 7,304,409 $ 15,624,454 $ 17,574,607 $ (2,160,589 ) $ 27,329,186 Intercompany payable $ - $ - $ 6,380,993 $ - $ - $ (6,380,993 ) $ - Total Liabilities $ - $ - $ 8,778,443 $ 19,538,838 $ 7,307,391 $ (9,472,535 ) $ 26,152,137 Total Shareholders’ Equity (Deficit) $ (5,625,277 ) $ (5,388,418 ) $ (1,474,034 ) $ (3,914,384 ) $ 10,267,216 $ 7,311,946 $ 1,177,049 Total Liabilities and Shareholders’ Equity (Deficit) $ (5,625,277 ) $ (5,388,418 ) $ 7,304,409 $ 15,624,454 $ 17,574,607 $ (2,160,589 ) $ 27,329,186 12 SELECTED CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS For the Year Ended December 31, 2023 Chanson International (Cayman Islands) Subsidiaries (British Virgin Islands/ Hong Kong) Xinjiang United Family (PRC) Xinjiang United Family’s Subsidiaries (USA) VIEs (PRC) Eliminations Consolidated Total Net cash (used in) provided by operating activities $ - $ - $ (1,345,862 ) $ (2,476,288 ) $ 868,297 $ - $ (2,953,853 ) Net cash used in investing activities $ (12,000,100 ) $ - $ (99,784 ) $ (1,776,975 ) $ (586,657 ) $ 4,000,100 $ (10,463,416 ) Net cash provided by (used in) financing activities $ 12,030,369 $ - $ 960,974 $ 4,693,811 $ (1,626,029 ) $ (4,000,100 ) $ 12,059,025 For the Year Ended December 31, 2022 Chanson International (Cayman Islands) Subsidiaries (British Virgin Islands/ Hong Kong) Xinjiang United Family (PRC) Xinjiang United Family’s Subsidiaries (USA) VIEs (PRC) Eliminations Consolidated Total Net cash (used in) provided by operating activities $ - $ - $ (243,785 ) $ (1,349,539 ) $ 2,144,672 $ - $ 551,348 Net cash used in investing activities $ - $ - $ (473,486 ) $ (188,069 ) $ (198,479 ) $ - $ (860,034 ) Net cash provided by (used in) financing activities $ - $ - $ 1,446,025 $ 1,491,643 $ (2,927,739 ) $ - $ 9,929 For the Year Ended December 31, 2021 Chanson International (Cayman Islands) Subsidiaries (British Virgin Islands/ Hong Kong) Xinjiang United Family (PRC) Xinjiang United Family’s Subsidiaries (USA) VIEs (PRC) Eliminations Consolidated Total Net cash (used in) provided by operating activities $ - $ - $ (953,910 ) $ (1,704,654 ) $ 4,436,810 $ - $ 1,778,246 Net cash used in investing activities $ - $ - $ (799,123 ) $ (942,003 ) $ (289,795 ) $ - $ (2,030,921 ) Net cash provided by (used in) financing activities $ - $ - $ 1,534,818 $ 1,965,970 $ (3,679,028 ) $ - $ (178,240 ) 13 ROLL-FORWARD OF INVESTMENT IN SUBSIDIARIES AND VIES Balance, December 31, 2020 $ (4,852,841 ) Comprehensive income for the year 506,769 Balance, December 31, 2021 $ (4,346,072 ) Comprehensive loss for the year (1,288,205 ) Balance, December 31, 2022 $ (5,634,277 ) Comprehensive loss for the year (567,809 ) Balance, December 31, 2023 $ (6,202,086 ) A. [Reserved] B.
Accordingly, for the years ended December 31, 2024 , 2023, and 2022, Xinjiang United Family recognized the income from VIEs representing net income of the VIEs and financial interest in VIEs since the commencement of the VIE Agreements. 11 SELECTED CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS For the Year Ended December 31, 2024 Chanson International (Cayman Islands) Subsidiaries (British Virgin Islands/Hong Kong) Xinjiang United Family (PRC) Xinjiang United Family’s Subsidiaries (USA) VIEs (PRC) Eliminations Consolidated Total Revenue $ - $ - $ 4,798,614 $ 2,084,844 $ 11,344,079 $ - $ 18,227,537 Cost of revenue $ - $ - $ 2,320,657 $ 2,071,982 $ 6,640,580 $ - $ 11,033,219 Income from VIEs $ - $ - $ 2,060,482 $ - $ - $ (2,060,482 ) $ - Loss for equity method investment $ (37,073 ) $ (37,073 ) $ - $ - $ - $ 74,146 $ - Net income (loss) $ 756,285 $ (37,073 ) $ 2,146,934 $ (2,184,007 ) $ 2,060,482 $ (1,986,336 ) $ 756,285 Comprehensive income $ 756,285 $ 1,849,394 $ 1,765,196 $ 84,198 $ 1,731,759 $ (5,714,736 ) $ 472,096 For the Year Ended December 31, 2023 Chanson International (Cayman Islands) Subsidiaries (British Virgin Islands/Hong Kong) Xinjiang United Family (PRC) Xinjiang United Family’s Subsidiaries (USA) VIEs (PRC) Eliminations Consolidated Total Revenue $ - $ - $ 4,948,427 $ 2,938,505 $ 9,365,730 $ - $ 17,252,662 Cost of revenue $ - $ - $ 2,447,095 $ 1,909,026 $ 4,749,216 $ - $ 9,105,337 Income from VIEs $ - $ - $ 1,765,358 $ - $ - $ (1,765,358 ) $ - Loss for equity method investment $ (567,809 ) $ (567,809 ) $ - $ - $ - $ 1,135,618 $ - Net income (loss) $ 33,588 $ (567,809 ) $ 1,716,755 $ (2,284,564 ) $ 1,765,358 $ (629,740 ) $ 33,588 Comprehensive income (loss) $ 33,588 $ (302,426 ) $ 9,892,175 $ (10,194,601 ) $ 1,499,301 $ (1,025,227 ) $ (97,190 ) For the Year Ended December 31, 2022 Chanson International (Cayman Islands) Subsidiaries (British Virgin Islands/Hong Kong) Xinjiang United Family (PRC) Xinjiang United Family’s Subsidiaries (USA) VIEs (PRC) Eliminations Consolidated Total Revenue $ - $ - $ 4,292,218 $ 3,780,867 $ 5,198,990 $ - $ 13,272,075 Cost of revenue $ - $ - $ 2,598,039 $ 2,088,788 $ 2,482,577 $ - $ 7,169,404 Income from VIEs $ - $ - $ 829,557 $ - $ - $ (829,557 ) $ - Loss for equity method investment $ (1,288,205 ) $ (1,288,205 ) $ - $ - $ - $ 2,576,410 $ - Net income (loss) $ (1,288,205 ) $ (1,288,205 ) $ 924,321 $ (2,212,526 ) $ 829,557 $ 1,746,853 $ (1,288,205 ) Comprehensive income (loss) $ (1,288,205 ) $ (841,074 ) $ 1,439,330 $ (2,280,404 ) $ 12,721 $ 1,299,722 $ (1,657,910 ) 12 SELECTED CONDENSED CONSOLIDATING BALANCE SHEETS As of December 31, 2024 Chanson International (Cayman Islands) Subsidiaries (British Virgin Islands/ Hong Kong) Xinjiang United Family (PRC) Xinjiang United Family’s Subsidiaries (USA) VIEs (PRC) Eliminations Consolidated Total Cash and cash equivalents $ 16,575 $ - $ 47,479 $ 108,150 $ 11,930,559 $ - $ 12,102,763 Intercompany receivable $ 9,013,055 $ - $ 338,903 $ 746,500 $ 2,069,015 $ (12,167,473 ) $ - Total current assets $ 11,029,630 $ - $ 2,240,578 $ 2,382,177 $ 17,653,086 $ (14,877,051 ) $ 18,428,420 Investment in subsidiaries, equity method $ (6,239,159 ) $ (3,841,450 ) $ - $ - $ - $ 10,080,609 $ - Financial interest in VIEs $ - $ - $ 7,536,589 $ - $ - $ (7,536,589 ) $ - Total non-current assets $ 2,110,382 $ (3,841,450 ) $ 9,297,626 $ 9,262,717 $ 5,950,096 $ 568,043 $ 23,347,414 Total Assets $ 13,140,012 $ (3,841,450 ) $ 11,538,204 $ 11,644,894 $ 23,603,182 $ (14,309,008 ) $ 41,775,834 Intercompany payable $ 1,101,925 $ - $ 5,384,558 $ 5,684,930 $ - $ (12,171,413 ) $ - Total Liabilities $ 1,101,925 $ - $ 1,354,867 $ 25,669,681 $ 10,104,906 $ (14,880,991 ) $ 23,350,388 Total Shareholders’ Equity (Deficit) $ 12,038,087 $ (3,841,450 ) $ 10,183,337 $ (14,024,787 ) $ 13,498,276 $ 571,983 $ 18,425,446 Total Liabilities and Shareholders’ Equity (Deficit) $ 13,140,012 $ (3,841,450 ) $ 11,538,204 $ 11,644,894 $ 23,603,182 $ (14,309,008 ) $ 41,775,834 As of December 31, 2023 Chanson International (Cayman Islands) Subsidiaries (British Virgin Islands/ Hong Kong) Xinjiang United Family (PRC) Xinjiang United Family’s Subsidiaries (USA) VIEs (PRC) Eliminations Consolidated Total Cash and cash equivalents $ 30,269 $ - $ 21,340 $ 562,267 $ 867,426 $ - $ 1,481,302 Intercompany receivable $ 4,009,100 $ - $ 414,424 $ 746,500 $ 7,748,737 $ (12,918,761 ) $ - Total current assets $ 4,039,369 $ - $ 2,269,219 $ 3,610,137 $ 16,386,644 $ (16,970,922 ) $ 9,334,447 Investment in subsidiaries, equity method $ (6,202,086 ) $ (5,690,844 ) $ - $ - $ - $ 11,892,930 $ - Financial interest in VIEs $ - $ - $ 5,476,107 $ - $ - $ (5,476,107 ) $ - Total non-current assets $ 2,399,311 $ (5,690,844 ) $ 7,224,733 $ 13,984,265 $ 4,765,561 $ 6,416,823 $ 29,099,849 Total Assets $ 6,438,680 $ (5,690,844 ) $ 9,493,952 $ 17,594,402 $ 21,152,205 $ (10,554,099 ) $ 38,434,296 Intercompany payable $ 1,095,872 $ - $ 7,632,749 $ 4,060,036 $ - $ (12,788,657 ) $ - Total Liabilities $ 1,095,872 $ - $ 1,075,811 $ 31,703,387 $ 9,385,688 $ (16,840,818 ) $ 26,419,940 Total Shareholders’ Equity (Deficit) $ 5,342,808 $ (5,690,844 ) $ 8,418,141 $ (14,108,985 ) $ 11,766,517 $ 6,286,719 $ 12,014,356 Total Liabilities and Shareholders’ Equity (Deficit) $ 6,438,680 $ (5,690,844 ) $ 9,493,952 $ 17,594,402 $ 21,152,205 $ (10,554,099 ) $ 38,434,296 13 SELECTED CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS For the Year Ended December 31, 2024 Chanson International (Cayman Islands) Subsidiaries (British Virgin Islands/ Hong Kong) Xinjiang United Family (PRC) Xinjiang United Family’s Subsidiaries (USA) VIEs (PRC) Eliminations Consolidated Total Net cash (used in) provided by operating activities $ (36,123 ) $ - $ (5,782,130 ) $ (1,017,590 ) $ 10,373,881 $ - $ 3,538,038 Net cash (used in) provided by investing activities $ (5,916,565 ) $ - $ 1,922,774 $ 1,394,709 $ (489,361 ) $ 4,997,903 $ 1,909,460 Net cash provided by (used in) financing activities $ 5,938,994 $ - $ 3,832,063 $ (831,236 ) $ 1,408,828 $ (4,997,903 ) $ 5,350,746 For the Year Ended December 31, 2023 Chanson International (Cayman Islands) Subsidiaries (British Virgin Islands/ Hong Kong) Xinjiang United Family (PRC) Xinjiang United Family’s Subsidiaries (USA) VIEs (PRC) Eliminations Consolidated Total Net cash (used in) provided by operating activities $ - $ - $ (1,345,862 ) $ (2,476,288 ) $ 868,297 $ - $ (2,953,853 ) Net cash used in investing activities $ (12,000,100 ) $ - $ (99,784 ) $ (1,776,975 ) $ (586,657 ) $ 4,000,100 $ (10,463,416 ) Net cash provided by (used in) financing activities $ 12,030,369 $ - $ 960,974 $ 4,693,811 $ (1,626,029 ) $ (4,000,100 ) $ 12,059,025 For the Year Ended December 31, 2022 Chanson International (Cayman Islands) Subsidiaries (British Virgin Islands/ Hong Kong) Xinjiang United Family (PRC) Xinjiang United Family’s Subsidiaries (USA) VIEs (PRC) Eliminations Consolidated Total Net cash (used in) provided by operating activities $ - $ - $ (243,785 ) $ (1,349,539 ) $ 2,144,672 $ - $ 551,348 Net cash used in investing activities $ - $ - $ (473,486 ) $ (188,069 ) $ (198,479 ) $ - $ (860,034 ) Net cash provided by (used in) financing activities $ - $ - $ 1,446,025 $ 1,491,643 $ (2,927,739 ) $ - $ 9,929 14 ROLL-FORWARD OF INVESTMENT IN SUBSIDIARIES AND VIES Balance, December 31, 2022 $ (5,634,277 ) Comprehensive loss for the year (567,809 ) Balance, December 31, 2023 $ (6,202,086 ) Comprehensive income/loss for the year (37,073 ) Balance, December 31, 2024 $ (6,239,159 ) A. [Reserved] B.
United Family Chanson Bakery Huijia Third Floor Same as above 12 Xinshi District Suzhou East Rd. Chanson Bakery Baishang Same as above 13 Xinshi District South No.3 Rd. Chanson Bakery Railway Bureau Same as above 14 Urumqi Economics and Technology Development District George Chanson Bakery on Xuanwuhu Rd. Economics Development Wanda Same as above 15 Shayibake District Youhao South Rd.
Chanson Bakery Railway Bureau Same as above 14 Urumqi Economics and Technology Development District George Chanson Bakery on Xuanwuhu Rd. Economics Development Wanda Same as above 15 Shayibake District Youhao South Rd. Chanson Bakery Hongshan Lifestyle Same as above 16 Shuimogou District South Nanhu Rd. George Chanson Bakery Nanhu Same as above 17 Xinshi District Hebei East Rd.
Chanson Bakery Gaoxin Wanda Same as above 24 Shayibake District Youhao North Rd. Chanson Coffee Bakery Soul●Song Meimei No. 2 Same as above 25 Tianshan District Jiefang North Rd. Chanson Coffee Bakery Soul●Song Wanyan Cheng Same as above 26 Tianshan District Wenhua Rd. Chanson Coffee Bakery Soul●Song Wenhua Road Same as above 27 Tianshan District Minzhu Rd.
Chanson Bakery Qingnian Road Haojiaxiang Same as above 22 Xinshi District Liyushan North Rd. Hemeijia Bakery Vanke Jincheng Huafu Same as above 23 Xinshi District Changchun North Rd. Chanson Bakery Gaoxin Wanda Same as above 24 Shayibake District Youhao North Rd. Chanson Coffee Bakery Soul●Song Meimei No. 2 Same as above 25 Tianshan District Jiefang North Rd.
Chanson Bakery Hongshan Lifestyle Store Same as above 16 Shuimogou District South Nanhu Rd. George Chanson Bakery Nanhu Same as above 17 Xinshi District Hebei East Rd. George Chanson Bakery Hebei Road Huarun Same as above 18 Urumqi Toutunhe District George Chanson Bakery on Zhongya South Rd. Degang Wanda Same as above 3 19 Shayibake District Karamay West Rd.
George Chanson Bakery Hebei Road Huarun Same as above 18 Urumqi Toutunhe District George Chanson Bakery on Zhongya South Rd. Degang Wanda Same as above 19 Shayibake District Karamay West Rd. Chanson Bakery Xinbei Yuanchun Same as above 3 20 Shayibake District Qitai Rd. Hemeijia Chanson Bakery Dehui Wangda Fourth Floor Same as above 21 Tianshan District Qingnian Rd.
The Chanson Greenwich store has been permanently closed since October 31, 2023 and Chanson 355 Greenwich LLC is expected to be dissolved by July 31, 2024. 1 The following diagram illustrates our corporate structure as of the date of this annual report: Note: All percentages reflect the voting ownership interests instead of the equity interests held by each of our shareholders given that each holder of Class B Ordinary Shares will be entitled to 10 votes per one Class B Ordinary Share and each holder of Class A Ordinary Shares will be entitled to one vote per one Class A Ordinary Share.
As a result of our use of the VIE structure, investors may never directly hold equity interests in the UFG Entities; (ii) Xinjiang United Family and its three branches; and (iii) Chanson 23rd Street, Chanson 3rd Ave and Chanson Broadway. 1 The following diagram illustrates our corporate structure as of the date of this annual report: Note: All percentages reflect the voting ownership interests instead of the equity interests held by each of our shareholders given that each holder of Class B Ordinary Shares will be entitled to 50 votes per one Class B Ordinary Share and each holder of Class A Ordinary Shares will be entitled to one vote per one Class A Ordinary Share.
This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest. 44 As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by our management, members of the board of directors, or controlling shareholders than they would as public shareholders of a company incorporated in the U.S.
This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.

… 40 more changes not shown on this page.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

80 edited+4 added−4 removed305 unchanged
Pursuant to the SAFE Circular No.19, for the time being, foreign investment enterprises are allowed to settle 100% of their foreign exchange capitals on a discretionary basis; a foreign-invested enterprise shall truthfully use its capital for its own operational purposes within the scope of business; where an ordinary foreign-invested enterprise makes domestic equity investment with the amount of foreign exchanges settled, the invested enterprise shall first go through domestic re-investment registration and open a corresponding account for foreign exchange settlement pending payment with the foreign exchange administration or the bank at the place where it is registered. 70 Overseas Investment and Financing and Round-Trip Investment Under SAFE Circular 37 issued by SAFE and effective on July 4, 2014, PRC residents are required to register with the local SAFE branch prior to the establishment or control of an offshore SPV, which is defined as offshore enterprises directly established or indirectly controlled by PRC residents for offshore equity financing of the enterprise assets or interests they hold in the PRC.
Pursuant to the SAFE Circular No.19, for the time being, foreign investment enterprises are allowed to settle 100% of their foreign exchange capitals on a discretionary basis; a foreign-invested enterprise shall truthfully use its capital for its own operational purposes within the scope of business; where an ordinary foreign-invested enterprise makes domestic equity investment with the amount of foreign exchanges settled, the invested enterprise shall first go through domestic re-investment registration and open a corresponding account for foreign exchange settlement pending payment with the foreign exchange administration or the bank at the place where it is registered. 73 Overseas Investment and Financing and Round-Trip Investment Under SAFE Circular 37 issued by SAFE and effective on July 4, 2014, PRC residents are required to register with the local SAFE branch prior to the establishment or control of an offshore SPV, which is defined as offshore enterprises directly established or indirectly controlled by PRC residents for offshore equity financing of the enterprise assets or interests they hold in the PRC.
Domain Name In accordance with the Measures for the Administration of Internet Domain Names, which was promulgated by the Ministry of Industry and Information Technology (the “MIIT”) on August 24, 2017 and came into effect on November 1, 2017, and the Implementation Rules for National Top-level Domain Name Registration, which were promulgated by China Internet Network Information Center (the “CNNIC”) on June 18, 2019 and came into effect on the same day, domain name registrations are handled through domain name service agencies established under relevant regulations, and an applicant becomes a domain name holder upon successful registration, and domain name disputes shall be submitted to an organization authorized by CNNIC for resolution. 68 In accordance with the Notice from the Ministry of Industry and Information Technology on Regulating the Use of Domain Names in Internet Information Services, which was promulgated by the MIIT on November 27, 2017 and came into effect on January 1, 2018, Internet access service providers shall verify the identity of each Internet information service provider, and shall not provide services to any Internet information service provider which fails to provide real identity information.
Domain Name In accordance with the Measures for the Administration of Internet Domain Names, which was promulgated by the Ministry of Industry and Information Technology (the “MIIT”) on August 24, 2017 and came into effect on November 1, 2017, and the Implementation Rules for National Top-level Domain Name Registration, which were promulgated by China Internet Network Information Center (the “CNNIC”) on June 18, 2019 and came into effect on the same day, domain name registrations are handled through domain name service agencies established under relevant regulations, and an applicant becomes a domain name holder upon successful registration, and domain name disputes shall be submitted to an organization authorized by CNNIC for resolution. 71 In accordance with the Notice from the Ministry of Industry and Information Technology on Regulating the Use of Domain Names in Internet Information Services, which was promulgated by the MIIT on November 27, 2017 and came into effect on January 1, 2018, Internet access service providers shall verify the identity of each Internet information service provider, and shall not provide services to any Internet information service provider which fails to provide real identity information.
Employees of the PRC Stores whose employment agreements are not renewed are prohibited from working for competitors in two years after they leave the PRC Stores. Employees’ obligation to confidentially keep the PRC Stores’ trade secrets survives beyond the termination or expiration of their employment agreements. 63 Occupational Health and Safety The PRC Stores and the U.S.
Employees of the PRC Stores whose employment agreements are not renewed are prohibited from working for competitors in two years after they leave the PRC Stores. Employees’ obligation to confidentially keep the PRC Stores’ trade secrets survives beyond the termination or expiration of their employment agreements. Occupational Health and Safety The PRC Stores and the U.S.
The VAT rate is 17% for taxpayers selling goods, labor services, or tangible movable property leasing services or importing goods, except otherwise specified; 11% for taxpayers selling transport services, postal services, basic telecommunications services, construction services, or real property leasing services, selling real property, transferring the land use right, or selling or importing the goods within specified scope listed, except otherwise specified; 6% for taxpayers selling services or intangible assets and not falling within the scope as specified in other items; and 3% for small-scale taxpayers, unless otherwise stipulated by the State Council. 73 According to the Notice on the Adjustment to the Value-added Tax Rates issued by the SAT and the MOF on April 4, 2018, where taxpayers make VAT taxable sales or import goods, the applicable tax rates were adjusted from 17% to 16% and from 11% to 10%, respectively.
The VAT rate is 17% for taxpayers selling goods, labor services, or tangible movable property leasing services or importing goods, except otherwise specified; 11% for taxpayers selling transport services, postal services, basic telecommunications services, construction services, or real property leasing services, selling real property, transferring the land use right, or selling or importing the goods within specified scope listed, except otherwise specified; 6% for taxpayers selling services or intangible assets and not falling within the scope as specified in other items; and 3% for small-scale taxpayers, unless otherwise stipulated by the State Council. 76 According to the Notice on the Adjustment to the Value-added Tax Rates issued by the SAT and the MOF on April 4, 2018, where taxpayers make VAT taxable sales or import goods, the applicable tax rates were adjusted from 17% to 16% and from 11% to 10%, respectively.
The following tables summarize these trademark registrations: Trademarks Registered in the PRC Registration Number Category Effective Period Trademark Logo 1 17999111 40 11/07/2016-11/06/2026 2 17999258 43 11/07/2016-11/06/2026 3 17999032 31 11/07/2016-11/06/2026 4 17999068 33 11/14/2016-11/13/2026 5 17998952 5 11/14/2016-11/13/2026 6 17998971 29 11/14/2016-11/13/2026 7 13241648 30 04/14/2015-04/13/2025 8 13241661 32 04/14/2015-04/13/2025 9 13241679 39 03/28/2015-03/27/2025 10 12911052 35 08/07/2017-08/06/2027 59 Registration Number Category Effective Period Trademark Logo 11 39954090 35 10/28/2020-10/27/2030 12 39954063 30 11/07/2020-11/06/2030 13 44626303 30 12/07/2020-12/06/2030 14 44629314 32 12/07/2020-12/06/2030 15 44623341 33 12/07/2020-12/06/2030 16 44639541 35 12/21/2020-12/20/2030 17 53288503 8 08/28/2021-08/27/2031 18 53317617 11 08/28/2021-08/27/2031 19 53296291 21 08/28/2021-08/27/2031 20 53302745 16 09/07/2021-09/06/2031 60 Registration Number Category Effective Period Trademark Logo 21 53157597 36 09/07/2021-09/06/2031 22 53310418 44 09/07/2021-09/06/2031 23 53141021 41 09/14/2021-09/13/2031 24 53140661 3 09/21/2021-09/20/2031 25 56986085 25 12/28/2021-12/27/2031 26 53129642 30 03/28/2022-03/27/2032 27 53145548 32 03/28/2022-03/27/2032 28 53145551 33 03/28/2022-03/27/2032 29 53145555 35 03/28/2022-03/27/2032 30 57960943 30 05/07/2022-05/06/2032 31 60683235 32 06/07/2022-06/06/2032 61 Registration Number Category Effective Period Trademark Logo 32 60681958 35 06/07/2022-06/06/2032 33 60676076 32 05/21/2022-05/20/2032 34 60707165 30 05/21/2022-05/20/2032 35 60676442 30 06/07/2022-06/06/2032 36 60707345 35 06/07/2022-06/06/2032 Trademarks Registered in the U.S.
The following tables summarize these trademark registrations: Trademarks Registered in the PRC Registration Number Category Effective Period Trademark Logo 1 17999111 40 11/07/2016-11/06/2026 2 17999258 43 11/07/2016-11/06/2026 3 17999032 31 11/07/2016-11/06/2026 4 17999068 33 11/14/2016-11/13/2026 5 17998952 5 11/14/2016-11/13/2026 6 17998971 29 11/14/2016-11/13/2026 7 13241648 30 04/14/2015-04/13/2025 8 13241661 32 04/14/2015-04/13/2025 9 13241679 39 03/28/2015-03/27/2025 10 12911052 35 08/07/2017-08/06/2027 60 Registration Number Category Effective Period Trademark Logo 1 17999111 40 11/07/2016-11/06/2026 2 17999258 43 11/07/2016-11/06/2026 3 17999032 31 11/07/2016-11/06/2026 4 17999068 33 11/14/2016-11/13/2026 5 17998952 5 11/14/2016-11/13/2026 6 17998971 29 11/14/2016-11/13/2026 7 13241648 30 04/14/2015-04/13/2025 8 13241661 32 04/14/2015-04/13/2025 9 13241679 39 03/28/2015-03/27/2025 10 12911052 35 08/07/2017-08/06/2027 61 Registration Number Category Effective Period Trademark Logo 11 39954090 35 10/28/2020-10/27/2030 12 39954063 30 11/07/2020-11/06/2030 13 44626303 30 12/07/2020-12/06/2030 14 44629314 32 12/07/2020-12/06/2030 15 44623341 33 12/07/2020-12/06/2030 16 44639541 35 12/21/2020-12/20/2030 17 53288503 8 08/28/2021-08/27/2031 18 53317617 11 08/28/2021-08/27/2031 19 53296291 21 08/28/2021-08/27/2031 20 53302745 16 09/07/2021-09/06/2031 Registration Number Category Effective Period Trademark Logo 11 39954090 35 10/28/2020-10/27/2030 12 39954063 30 11/07/2020-11/06/2030 13 44626303 30 12/07/2020-12/06/2030 14 44629314 32 12/07/2020-12/06/2030 15 44623341 33 12/07/2020-12/06/2030 62 16 44639541 35 12/21/2020-12/20/2030 17 53288503 8 08/28/2021-08/27/2031 18 53317617 11 08/28/2021-08/27/2031 19 53296291 21 08/28/2021-08/27/2031 20 53302745 16 09/07/2021-09/06/2031 Registration Number Category Effective Period Trademark Logo 21 53157597 36 09/07/2021-09/06/2031 22 53310418 44 09/07/2021-09/06/2031 23 53141021 41 09/14/2021-09/13/2031 24 53140661 3 09/21/2021-09/20/2031 25 56986085 25 12/28/2021-12/27/2031 26 53129642 30 03/28/2022-03/27/2032 27 53145548 32 03/28/2022-03/27/2032 28 53145551 33 03/28/2022-03/27/2032 29 53145555 35 03/28/2022-03/27/2032 30 57960943 30 05/07/2022-05/06/2032 31 60683235 32 06/07/2022-06/06/2032 63 Registration Number Category Effective Period Trademark Logo 32 60681958 35 06/07/2022-06/06/2032 33 60676076 32 05/21/2022-05/20/2032 34 60707165 30 05/21/2022-05/20/2032 35 60676442 30 06/07/2022-06/06/2032 36 60707345 35 06/07/2022-06/06/2032 Trademarks Registered in the U.S.
To newly build an information system of Grade II or above, its operator or user shall, within 30 days after the information system is put into operation, go through the record-filing procedures at the local public security organ at the level of municipality divided into districts or above. 67 Regulations on Intellectual Property Rights Trademarks Trademarks are protected by the PRC Trademark Law adopted on August 23, 1982, and subsequently amended on February 22, 1993, October 27, 2001, August 30, 2013, and April 23, 2019, as well as the Implementation Regulation of the PRC Trademark Law adopted by the State Council on August 3, 2002, and amended on April 29, 2014.
To newly build an information system of Grade II or above, its operator or user shall, within 30 days after the information system is put into operation, go through the record-filing procedures at the local public security organ at the level of municipality divided into districts or above. 70 Regulations on Intellectual Property Rights Trademarks Trademarks are protected by the PRC Trademark Law adopted on August 23, 1982, and subsequently amended on February 22, 1993, October 27, 2001, August 30, 2013, and April 23, 2019, as well as the Implementation Regulation of the PRC Trademark Law adopted by the State Council on August 3, 2002, and amended on April 29, 2014.
The parties involved shall not use domestic investment by foreign investment enterprises or other methods to circumvent the requirement of examination and approval. 71 Pursuant to the Manual of Guidance on Administration for Foreign Investment Access, which was issued and became effective on December 18, 2008 by MOFCOM, notwithstanding the fact that (i) the domestic shareholder is connected with the foreign investor or not, or (ii) the foreign investor is the existing shareholder or the new investor, the M&A Rules shall not apply to the transfer of an equity interest in an incorporated foreign-invested enterprise from the domestic shareholder to the foreign investor.
The parties involved shall not use domestic investment by foreign investment enterprises or other methods to circumvent the requirement of examination and approval. 74 Pursuant to the Manual of Guidance on Administration for Foreign Investment Access, which was issued and became effective on December 18, 2008 by MOFCOM, notwithstanding the fact that (i) the domestic shareholder is connected with the foreign investor or not, or (ii) the foreign investor is the existing shareholder or the new investor, the M&A Rules shall not apply to the transfer of an equity interest in an incorporated foreign-invested enterprise from the domestic shareholder to the foreign investor.
This circular further provides that applicants who intend to prove his or her status of the “beneficial owner” shall submit the relevant documents to the relevant tax bureau according to the Announcement on Issuing the Measures for the Administration of Non-Resident Taxpayers’ Enjoyment of the Treatment under Tax Agreements. 74 Regulations on Employment and Social Welfare Labor Law of the PRC The Labor Law of the PRC, or the “Labor Law,” was promulgated on July 5, 1994, and most recently amended on December 29, 2018.
This circular further provides that applicants who intend to prove his or her status of the “beneficial owner” shall submit the relevant documents to the relevant tax bureau according to the Announcement on Issuing the Measures for the Administration of Non-Resident Taxpayers’ Enjoyment of the Treatment under Tax Agreements. 77 Regulations on Employment and Social Welfare Labor Law of the PRC The Labor Law of the PRC, or the “Labor Law,” was promulgated on July 5, 1994, and most recently amended on December 29, 2018.
Sellers shall not sell any products that the State has determined should be eliminated and whose sale has ceased, or any expired products or deteriorated products. 66 The Consumer Protection Law of the PRC, which was promulgated on October 31, 1993, and amended on October 25, 2013, and came into effect on March 15, 2014, has also provided protection for customers regarding food safety.
Sellers shall not sell any products that the State has determined should be eliminated and whose sale has ceased, or any expired products or deteriorated products. 69 The Consumer Protection Law of the PRC, which was promulgated on October 31, 1993, and amended on October 25, 2013, and came into effect on March 15, 2014, has also provided protection for customers regarding food safety.
Stores aim to make healthy, nutritious, and ready-to-eat food through advanced facilities and industry research and to create a comfortable, yet distinguishable store environment in which customers can enjoy their products. The PRC Stores are a bakery chain consisting of 37 stores operated by Xinjiang United Family and the VIEs, under the “George●Chanson” brand in Xinjiang, and the U.S.
Stores aim to make healthy, nutritious, and ready-to-eat food through advanced facilities and industry research and to create a comfortable, yet distinguishable store environment in which customers can enjoy their products. The PRC Stores are a bakery chain consisting of 55 stores operated by Xinjiang United Family and the VIEs, under the “George●Chanson” brand in Xinjiang, and the U.S.
Where a foreign investor or enterprise with foreign investment invests in a field other than those in the negative list, it shall register in accordance with the principle of consistency of domestic and foreign investment. 69 The Measures for Reporting Foreign Investment Information were adopted by MOFCOM on December 19, 2019, approved by the State Administration for Market Regulation, and became effective on January 1, 2020.
Where a foreign investor or enterprise with foreign investment invests in a field other than those in the negative list, it shall register in accordance with the principle of consistency of domestic and foreign investment. 72 The Measures for Reporting Foreign Investment Information were adopted by MOFCOM on December 19, 2019, approved by the State Administration for Market Regulation, and became effective on January 1, 2020.
They seamlessly combine functionality with aesthetics by integrating automatic packaging and packaging techniques with an exceptional heat-sealing feature with stylish graphic designs. 58 Intellectual Property Trademarks Xinjiang United Family has registered the brand name, “George●Chanson,” as its trademark in 19 categories, its logo as its trademark in six categories, and “The thyme bar” as its trademark in four categories in the PRC.
They seamlessly combine functionality with aesthetics by integrating automatic packaging and packaging techniques with an exceptional heat-sealing feature with stylish graphic designs. 59 Intellectual Property Trademarks Xinjiang United Family has registered the brand name, “George●Chanson,” as its trademark in 19 categories, its logo as its trademark in six categories, and “The thyme bar” as its trademark in four categories in the PRC.
The PRC stores have designed and effectively implemented various marketing strategies in their distribution network in Xinjiang to introduce new products and promote marketing campaigns within short periods of time. 48 Experienced Management and Professional Teams Our senior management team, led by Mr. Gang Li, our Chief Executive Officer and Chairman, and Ms.
The PRC stores have designed and effectively implemented various marketing strategies in their distribution network in Xinjiang to introduce new products and promote marketing campaigns within short periods of time. 49 Experienced Management and Professional Teams Our senior management team, led by Mr. Gang Li, our Chief Executive Officer and Chairman, and Ms.
In general, as long as a business entity operates legally and in good standing, its renewal request will be approved. 64 The Measures for the Administration of Food Trade Licensing and Registration, or the “Food Trade Licensing and Filing”, were promulgated by SAMR on June 15, 2023, and became effective on December 1, 2023.
In general, as long as a business entity operates legally and in good standing, its renewal request will be approved. 67 The Measures for the Administration of Food Trade Licensing and Registration, or the “Food Trade Licensing and Filing”, were promulgated by SAMR on June 15, 2023, and became effective on December 1, 2023.
Additionally, difficulties, delays, or failures to retain or renew licenses, permits, or approvals, or increased compliance costs due to changed regulations, could adversely affect operations at the U.S. Stores. 75 In addition, in order to develop and construct additional stores, the U.S. Stores must comply with applicable zoning, land use, and environmental regulations.
Additionally, difficulties, delays, or failures to retain or renew licenses, permits, or approvals, or increased compliance costs due to changed regulations, could adversely affect operations at the U.S. Stores. 78 In addition, in order to develop and construct additional stores, the U.S. Stores must comply with applicable zoning, land use, and environmental regulations.
Stores conduct periodic customer satisfaction surveys to learn about customers’ needs and quality of the products from the customers’ perspectives. 54 Inventory Management The PRC Stores and central factory have established policies and management procedures and formed a group of specialists to supervise employees working in the inventory team and to review their job performance.
Stores conduct periodic customer satisfaction surveys to learn about customers’ needs and quality of the products from the customers’ perspectives. 55 Inventory Management The PRC Stores and central factory have established policies and management procedures and formed a group of specialists to supervise employees working in the inventory team and to review their job performance.
The PRC Stores’ -32.8 degree Fahrenheit large freezer and their 323 square feet cold-storage facilities can adequately house the operation of cold-chain transportation. Distribution Channels PRC Stores The PRC Stores consist of 37 stores in two cities of Xinjiang, namely Urumqi and Changji.
The PRC Stores’ -32.8 degree Fahrenheit large freezer and their 323 square feet cold-storage facilities can adequately house the operation of cold-chain transportation. Distribution Channels PRC Stores The PRC Stores consist of 55 stores in two cities of Xinjiang, namely Urumqi and Changji.
Although none of the above enterprises has built a dominating presence in Xinjiang, the PRC Stores anticipate to directly compete with them when the PRC Stores expand to other regional markets in the PRC in the future. 51 The U.S. Stores The U.S. Stores currently consist of three stores in New York City.
Although none of the above enterprises has built a dominating presence in Xinjiang, the PRC Stores anticipate to directly compete with them when the PRC Stores expand to other regional markets in the PRC in the future. 52 The U.S. Stores The U.S. Stores currently consist of three stores in New York City.
In the year ended December 31, 2023, the operating entities did not hire any temporary employees. In general, the PRC Stores and the U.S. Stores consider their relationship with their employees to be good. Seasonality Bakery products sold by the PRC Stores and the U.S. Stores and eat-in services offered by the U.S.
In the year ended December 31, 2024, the operating entities did not hire any temporary employees. In general, the PRC Stores and the U.S. Stores consider their relationship with their employees to be good. Seasonality Bakery products sold by the PRC Stores and the U.S. Stores and eat-in services offered by the U.S.
Our subsidiary and the VIEs plan to continue operating the PRC Stores directly in the foreseeable future. 50 Digital Platforms The PRC Stores operate an online store that is linked to the official account of the PRC Stores on WeChat and focuses on selling cakes.
Our subsidiary and the VIEs plan to continue operating the PRC Stores directly in the foreseeable future. 51 Digital Platforms The PRC Stores operate an online store that is linked to the official account of the PRC Stores on WeChat and focuses on selling cakes.
Patisserie Chanson (Broadway) opened in July 2023 and serves freshly prepared bakery products and extensive beverage products. Products The U.S. Stores currently offer 108 types of eat-in menu items and bakery products, together with a large number of beverage products. The U.S.
Patisserie Chanson (Broadway) opened in July 2023 and serves freshly prepared bakery products and extensive beverage products. Products The U.S. Stores currently offer 100 types of eat-in menu items and bakery products, together with a large number of beverage products. The U.S.
Stores will become subject to environmental liabilities at their properties, and any such liabilities could materially affect their business, financial condition, or results of operation. 76 Other Regulations The U.S.
Stores will become subject to environmental liabilities at their properties, and any such liabilities could materially affect their business, financial condition, or results of operation. 79 Other Regulations The U.S.
Chanson 3rd Avenue is currently selling bakery and beverage products and provide delivery and pickup services from 8 a.m. to 6 p.m. from Tuesday to Sunday. Chanson Broadway is currently selling bakery and beverage products and provide delivery and pickup services from 8 a.m. to 6 p.m. from Tuesday to Sunday. 52 The U.S.
Chanson 3rd Avenue is currently selling bakery and beverage products and provide delivery and pickup services from 8 a.m. to 6 p.m. from Tuesday to Sunday. Chanson Broadway is currently selling bakery and beverage products and provide delivery and pickup services from 8 a.m. to 6 p.m. from Tuesday to Sunday. 53 The U.S.
The PRC Stores have established a record system and are currently in compliance with the relevant legal requirements. 65 Food Recall System A food recall system has been established in the PRC in accordance with the Food Safety Law and the Implementation Regulations on the Food Safety Law.
The PRC Stores have established a record system and are currently in compliance with the relevant legal requirements. 68 Food Recall System A food recall system has been established in the PRC in accordance with the Food Safety Law and the Implementation Regulations on the Food Safety Law.
As a result, the PRC Stores have effectively decreased defective rates of all product lines in their central factory and enhanced the quality of their products. 47 The PRC Stores and the U.S.
As a result, the PRC Stores have effectively decreased defective rates of all product lines in their central factory and enhanced the quality of their products. 48 The PRC Stores and the U.S.
Risk Factors—Risks Relating to Doing Business in the PRC—The Opinions, the Trial Measures, and the revised Provisions recently issued by the PRC authorities may subject us to additional compliance requirements in the future.” 72 Regulations on Taxation Enterprise Income Tax According to the EIT Law, which was promulgated by the SCNPC on March 16, 2007, and became effective on January 1, 2008, and then amended on February 24, 2017 as well as December 29, 2018, and the Implementation Rules for the Enterprise Income Tax Law of the PRC, or the Implementation Rules, which were promulgated by the State Council on December 6, 2007, became effective on January 1, 2008, and were amended on April 23, 2019, enterprises are divided into resident enterprises and non-resident enterprises.
Risk Factors—Risks Relating to Doing Business in the PRC—The Opinions, the Trial Measures, and the revised Provisions recently issued by the PRC authorities may subject us to additional compliance requirements in the future.” 75 Regulations on Taxation Enterprise Income Tax According to the EIT Law, which was promulgated by the SCNPC on March 16, 2007, and became effective on January 1, 2008, and then amended on February 24, 2017 as well as December 29, 2018, and the Implementation Rules for the Enterprise Income Tax Law of the PRC, or the Implementation Rules, which were promulgated by the State Council on December 6, 2007, became effective on January 1, 2008, and were amended on April 23, 2019 as well as December 6, 2024, which came into effect on January 20, 2025, enterprises are divided into resident enterprises and non-resident enterprises.
These specialists also design emergenc y plans to deal with critical circumstances under which inventory runs extremely low and conduct monthly reviews to assess differences between inventory accounts and actual amount of remaining inventory through the ERP System.
These specialists also design emergency plans to deal with critical circumstances under which inventory runs extremely low and conduct monthly reviews to assess differences between inventory accounts and actual amount of remaining inventory through the ERP System.
As of the date of this annual report, the PRC Stores consist of 37 stores in two well-developed cities of Xinjiang, namely Urumqi and Changji.
As of the date of this annual report, the PRC Stores consist of 55 stores in two well-developed cities of Xinjiang, namely Urumqi and Changji.
On December 29, 2023, the Standing Committee of the National People’s Congress promulgated the amended PRC Company Law, or the Amended PRC Company Law, which will come into effect on July 1, 2024, to supersede the existing PRC Company Law which was amended in October 2018.
On December 29, 2023, the Standing Committee of the National People’s Congress promulgated the amended PRC Company Law, or the Amended PRC Company Law, which came into effect on July 1, 2024, to supersede the existing PRC Company Law which was amended in October 2018.
Stores have previously collaborated with on a yearly basis to meet the changing production needs. For suppliers who add additives into the products they supply to the PRC Stores or the U.S. Stores, the PRC Stores and the U.S.
They re-evaluate those suppliers who the PRC Stores and the U.S. Stores have previously collaborated with on a yearly basis to meet the changing production needs. For suppliers who add additives into the products they supply to the PRC Stores or the U.S. Stores, the PRC Stores and the U.S.
For the year ended December 31, 2023, the product sales made through the online store of the PRC Stores accounted for approximately 0.05% of their total sales. Third-Party Platforms The PRC Stores list their bakery products on third-party online food ordering platforms such as Meituan-Dianping.
For the year ended December 31, 2024, the product sales made through the online store of the PRC Stores accounted for approximately 0.35% of their total sales. Third-Party Platforms The PRC Stores list their bakery products on third-party online food ordering platforms such as Meituan-Dianping.
For special events, the U.S. Stores can provide custom cakes with a company logo, personal monogramming, or custom flavors and colors. Revenue derived from delivery, pickup, and catering services accounted for 15.2%, 15.5%, and 12.8% of the total revenue of the U.S. Stores for the years ended December 31, 2023, 2022, and 2021, respectively.
For special events, the U.S. Stores can provide custom cakes with a company logo, personal monogramming, or custom flavors and colors. Revenue derived from delivery, pickup, and catering services accounted for 13.2%, 15.2%, and 15.5% of the total revenue of the U.S. Stores for the years ended December 31, 2024, 2023, and 2022, respectively.
For the years ended December 31, 2023, 2022, and 2021, revenue derived from sale of bakery products accounted for 87.6%, 91.7%, and 91.4% of the PRC Stores’ revenue, respectively, revenue derived from sale of seasonal products accounted for 9.1%, 7.3%, and 7.6%, respectively, and revenue derived from sale of beverage products accounted for 3.3%, 1.0%, and 1.0%, respectively. The U.S.
For the years ended December 31, 2024, 2023, and 2022, revenue derived from sale of bakery products accounted for 91.6%, 87.6%, and 91.7%, of the PRC Stores’ revenue, respectively, revenue derived from sale of seasonal products accounted for 6.1%, 9.1%, and 7.3%, respectively, and revenue derived from sale of beverage products accounted for 2.3%, 3.3%, and 1.0%, respectively. The U.S.
Customers can order through these platforms, and pick up the ordered bakery products at the PRC Stores or have them delivered by the carriers of these platforms. For the years ended December 31, 2023, 2022, and 2021, the sales made through these third-party platforms accounted for approximately 6.69%, 5.32%, and 4.19% of our total sales, respectively.
Customers can order through these platforms, and pick up the ordered bakery products at the PRC Stores or have them delivered by the carriers of these platforms. For the years ended December 31, 2024, 2023, and 2022, the sales made through these third-party platforms accounted for approximately 8.26%, 6.69%, and 5.32% of our total sales, respectively.
In accordance with the Regulations on the Management of Housing Fund, which were promulgated by the State Council in 1999 and amended in 2002, employers must register at the designated administrative centers and open bank accounts for depositing employees’ housing funds.
In accordance with the Regulations on the Management of Housing Fund, which were promulgated by the State Council in April 3, 1999 and amended in March 24, 2002 and March 24, 2019, employers must register at the designated administrative centers and open bank accounts for depositing employees’ housing funds.
Stores see a significant opportunity to increase their brand visibility in the New York City market, which will be a key area of focus in their marketing strategy going forward. 49 The PRC Stores Products The PRC Stores currently offer more than 707 types of bakery products and seasonal products, together with more than 40 types of beverage products.
Stores see a significant opportunity to increase their brand visibility in the New York City market, which will be a key area of focus in their marketing strategy going forward. 50 The PRC Stores Products The PRC Stores currently offer more than 1073 types of bakery products and seasonal products, together with more than 119 types of beverage products.
For the years ended December 31, 2023, 2022, and 2021, the sales to members collectively accounted for 51.47%, 54%, and 52% of our total sales, respectively. Individual customers of the PRC Stores come from a variety of age groups and social backgrounds.
For the years ended December 31, 2024, 2023, and 2022, the sales to members collectively accounted for 49.40%, 51.47%, and 54% of our total sales, respectively. Individual customers of the PRC Stores come from a variety of age groups and social backgrounds.
Stores regularly post pictures of their stores and products with detailed information of their new products and promotion activities to attract potential customers and promote their image as a modern European-style café and eatery specializing in dessert-making. Since 2019, the U.S. Stores have partnered with Aranka Media Enterprise, a full-service media agency, to accelerate brand growth and improve customer relationships.
Stores regularly post pictures and short videos of their stores and products with detailed information about their new products and promotion activities to attract potential customers and promote their image as a modern European-style café and eatery. Since 2019, the U.S. Stores have partnered with Aranka Media Enterprise, a full-service media agency, to accelerate brand growth and improve customer relationships.
Chanson Broadway leases 850 square feet of store space in New York City from a third party for a lease term of 10 years starting from April 1, 2022. Chanson NY rents one office in New York City from a third party for a lease term that expires in April 2024.
Chanson Broadway leases 850 square feet of store space in New York City from a third party for a lease term of 10 years starting from April 1, 2022. Chanson NY rents one office in New York City from a third party for a lease term that expired on March 31, 2024.
As of the date of this annual report, (i) the four branch offices of Xinjiang United Family have obtained the food business permits, (ii) two UFG Entities and one branch office of Xinjiang United Family are applying for the renewal of their food business permits; and (iii) all remaining UFG Entities have obtained the food business permits, which are valid currently, allowing them to retail bakery products and store-made beverages and juice products, although some of them did not have the food business permits at the time of their opening.
As of the date of this annual report, (i) the five branch offices of Xinjiang United Family have obtained the food business permits, and (ii) except one UFG Entity which is applying for the renewal of their food business permits, all remaining UFG Entities have obtained the food business permits, which are valid currently, allowing them to retail bakery products and store-made beverages and juice products, although some of them did not have the food business permits at the time of their opening.
Store Design Chanson 23rd Street has two floors with an aggregate size of approximately 3,900 square feet. Seating in Chanson 23rd Street is comprised of a combination of table seats and bar seats with a capacity of 40 guests. Chanson 3rd Ave has two floors with an aggregate size of approximately 2,461 square feet.
Seating in Chanson 23rd Street is comprised of a combination of table seats and bar seats with a capacity of 40 guests. Chanson 3rd Ave has two floors with an aggregate size of approximately 2,461 square feet. Seating in Chanson 3rd Ave is comprised of table seats with a capacity of 14 guests.
Number of Employees Management 2 Cooking and Baking 6 Finance 1 Logistics 5 General and Administration 2 General Store Operation 38 Total 54 Employment Agreements, Non-competition, and Confidentiality Generally, our PRC subsidiary and the VIEs enter into standard employment agreements with their officers, managers, and other employees, and our subsidiaries in the U.S. enter into at-will employment agreements with their employees.
Number of Employees Management 2 Cooking and Baking 5 Finance 1 Logistics 3 General and Administration 2 General Store Operation 23 Total 36 65 Employment Agreements, Non-competition, and Confidentiality Generally, our PRC subsidiary and the VIEs enter into standard employment agreements with their officers, managers, and other employees, and our subsidiaries in the U.S. enter into at-will employment agreements with their employees.
The PRC Stores operate official accounts on WeChat, Weibo, and Douyin, which had an aggregate of over 24,710 followers as of December 31, 2023, and regularly post information of their new products, discounting activities, and brand development there. The U.S.
The PRC Stores operate official accounts on WeChat, Weibo, and Douyin, which had an aggregate of over 59,825 followers as of December 31, 2024, and regularly post information of their new products, discounting activities, and brand development there. The U.S.
(“Baldor”), Southern Glazers of NY Metro, and The Chefs’ Warehouse. Their supply constituted 28%, 12%, and 13% of the U.S. Stores’ total raw materials in terms of monetary value in that fiscal year, respectively. Top suppliers of the U.S. Stores during the year ended December 31, 2022 included Baldor, Southern Glazers of NY Metro, and Empire Merchants.
Top suppliers of the U.S. Stores during the year ended December 31, 2023 included Baldor Specialty Foods, Inc. (“Baldor”), Southern Glazers of NY Metro, and The Chefs’ Warehouse. Their supply constituted 28%, 12%, and 13% of the U.S. Stores’ total raw materials in terms of monetary value in that fiscal year, respectively. Top suppliers of the U.S.
Stores’ revenue, respectively, revenue derived from sale of bakery products accounted for 15.1%, 16.2%, and 25.0%, respectively, and revenue derived from sale of beverage products accounted for 57.9%, 54.2%, and 52.8%, respectively. Our Competitive Strengths We believe we have the following competitive strengths: Trendy Brand Reflecting Healthy Food Concepts The PRC Stores and the U.S.
Stores’ revenue, respectively, revenue derived from sale of bakery products accounted for 24.3%, 15.1%, and 16.2%, respectively, and revenue derived from sale of beverage products accounted for 61.2%, 57.9%, and 54.2%, respectively. Our Competitive Strengths We believe we have the following competitive strengths: Trendy Brand Reflecting Healthy Food Concepts The PRC Stores and the U.S.
Their supply constituted 11.93%, 6.85%, 6.27%, and 6.05% of the PRC Stores’ total raw materials in terms of monetary value in that fiscal year, respectively. Top suppliers of the PRC Stores during the year ended December 31, 2022 included Urumqi Yuxin Commerce and Trade Co., Ltd. (“Yuxin”), Meishifu, Pengcheng Fruit Company, Xinjiang Zhengda Food Co., Ltd. (“Zhengda”), and Peimeirun.
(“Meishifu”), and Pengcheng Fruit Company. Their supply constituted 11.93%, 6.85%, 6.27%, and 6.05% of the PRC Stores’ total raw materials in terms of monetary value in that fiscal year, respectively. Top suppliers of the PRC Stores during the year ended December 31, 2022 included Urumqi Yuxin Commerce and Trade Co., Ltd.
Stores primarily generate revenue through offering eat-in services and sale of bakery products and beverage products. For the years ended December 31, 2023, 2022, and 2021, revenue derived from offering eat-in services accounted for 27.0%, 29.6%, and 22.2% of the U.S.
Stores primarily generate revenue through offering eat-in services and sale of bakery products and beverage products. For the years ended December 31, 2024, 2023, and 2022, revenue derived from offering eat-in services accounted for 14.5%, 27.0%, and 29.6% of the U.S.
Stores accounted for 17.1%, 28.4%, and 12.9%, respectively. The PRC Stores primarily generate revenue through sale of bakery products, seasonal products, and beverage products.
Stores accounted for 11.5%, 17.1%, and 28.4%, respectively. The PRC Stores primarily generate revenue through sale of bakery products, seasonal products, and beverage products.
Stores generated 100%, 100%, and 100% of their revenue from sales to individual customers and 0%, 0%, and 0% from sales to corporate customers during the years ended December 31, 2023, 2022, and 2021, respectively.
Stores generated 99.85%, 100%, and 100% of their revenue from sales to individual customers and 0.15%, 0%, and 0% from sales to corporate customers during the years ended December 31, 2024, 2023, and 2022, respectively.
Stores have effectively adopted a number of discounting strategies, including: in the PRC Stores, (i) a member day on which members enjoy 12% off original prices of all products each week, (ii) discounting activities on third-party online food ordering platforms, and (iii) discounting benefits enjoyable only through using credit cards issued by Shanghai Pudong Development Bank Co., Ltd; in Chanson 23rd Street, (i) $1 Barista Beverage with purchase of any sandwiches to help increase lunch sales, (ii) 50% off on all desserts after 3 p.m. on Wednesday, Friday and Sunday to help reduce waste and increase foot traffic, and (iii) 20% off on the first catering order, and (iv) discounts to employees of nearby corporations. 55 Social Media The PRC Stores and the U.S.
Stores have effectively adopted a number of discounting strategies, including: in the PRC Stores, (i) a member day on which members enjoy 12% off original prices of all products each week, (ii) discounting activities on third-party online food ordering platforms, and (iii) discounting benefits enjoyable only through using credit cards issued by Shanghai Pudong Development Bank Co., Ltd; in Chanson 23rd Street, (i) Seasonal Combo ($16) : Any Sandiwch + Any Hot Barista Drink + Any Macaron (1 piece), (ii) 50% off on all desserts after 3 p.m. on Wednesday, Friday and Sunday to help reduce waste and increase foot traffic, and (iii) 20% off on the first catering order, (iv) discounts to employees of nearby corporations and (v) 20% off first catering order if order through the Patisserie Chanson App. 56 Social Media The PRC Stores and the U.S.
Stores have implemented a rigorous quality control system covering their entire operation process and mandated internal training to improve their employees’ awareness and knowledge of food safety. 46 As of December 31, 2023, the PRC Stores had more than 707 types of bakery products and seasonal products on sale, including over 145 types of new products introduced to the market since 2023, and the U.S.
Stores have implemented a rigorous quality control system covering their entire operation process and mandated internal training to improve their employees’ awareness and knowledge of food safety. 47 As of December 31, 2024, the PRC Stores had more than 1027 types of bakery products , seasonal products and beverage products on sale, including over 93 types of new products introduced to the market since January 1, 2024, and the U.S.
Regulations on Patents Pursuant to the Patent Law of the PRC, or the “Patent Law,” promulgated by the SCNPC on March 12, 1984, most recently amended on October 17, 2020, and effective from June 1, 2021, and the Implementation Rules of the Patent Law of the PRC, promulgated by the State Council on June 15, 2001 and most recently amended on January 9, 2010, there are three types of patents in the PRC: invention patent, utility model patent, and design patent.
Regulations on Patents Pursuant to the Patent Law of the PRC, or the “Patent Law,” promulgated by the SCNPC on March 12, 1984, most recently amended on October 17, 2020, and effective from June 1, 2021, and the Implementation Rules of the Patent Law of the PRC, promulgated by the State Council on June 15, 2001 and most recently amended on December 11, 2023, which came into effect on January 20, 2024, there are three types of patents in the PRC: invention patent, utility model patent, and design patent.
The current Negative List was promulgated by MOFCOM and NDRC on December 27, 2021, and became effective on January 1, 2022. Industries listed in the Negative List are divided into two categories: restricted and prohibited. Industries not listed in the Negative List are generally constituted “permitted,” and are open to foreign investment unless specifically restricted by other PRC regulations.
The current Negative List was promulgated by MOFCOM and NDRC on September 6, 2024, and became effective on November 1, 2024. Industries listed in the Negative List are divided into two categories: restricted and prohibited. Industries not listed in the Negative List are generally constituted “permitted,” and are open to foreign investment unless specifically restricted by other PRC regulations.
Once a customer adds at least RMB200 (approximately $29) to a new membership card, the customer is counted as a member of the PRC Stores. As of December 31, 2023, the PRC Stores had approximately 582,000 members.
Once a customer adds at least RMB200 (approximately $29) to a new membership card, the customer is counted as a member of the PRC Stores. As of December 31, 2024, the PRC Stores had approximately 987 , 196 members.
Stores had 108 types of eat-in menu items and bakery products on sale, including 20 types of new products introduced to the market since 2023. The PRC Stores and the U.S. Stores also offer a large number of beverage products.
Stores had 100 types of eat-in menu items and bakery products on sale, including 30 types of new products introduced to the market since January 1, 2024. The PRC Stores and the U.S. Stores also offer a large number of beverage products.
Store Experience Approximately 37 of the PRC Stores have seats, with an average capacity of approximately eight guests.
Store Experience Approximately 24 of the PRC Stores have seats, with an average capacity of approximately 5-10 guests.
For the years ended December 31, 2023, 2022, and 2021, we had total revenue of $17,252,662, $13,272,075, and $14,690,295, respectively, and net income of $33,588, net loss of $1,288,205, and net income of $506,769, respectively. The PRC Stores accounted for 82.9%, 71.6%, and 87.1% of our total revenue for those fiscal years, respectively, and the U.S.
For the years ended December 31, 2024, 2023, and 2022, we had total revenue of $18,227,537, $17,252,662, and $13,272,075 , respectively, and net income of $756,285, net income of $33,588, and net loss of $1,288,205 , respectively. The PRC Stores accounted for 88.5%, 82.9%, and 71.6% of our total revenue for those fiscal years, respectively, and the U.S.
Stores keep separate product lines. As of December 31, 2023, the PRC Stores had introduced over 145 types of new products and the U.S. Stores had introduced 20 types of new products since 2023. The PRC Stores and the U.S.
Stores keep separate product lines. As of December 31, 2024, the PRC Stores had introduced over 193 types of new products and the U.S. Stores had introduced 123 types of new products since January 1, 2024. The PRC Stores and the U.S.
Registration Number Registration Date Trademark Logo 1 5785931 June 25, 2019 CHANSON TM 2 5768100 June 4, 2019 3 5768096 June 4, 2019 Chanson 23rd Street is also currently registering a trademark for Thyme Bar in the U.S. and the trademark was published in the Trademark Official Gazette on March 29, 2022. 62 Domain Names The operating entities own the internet domain names ir.chanson-international.net, www.patisseriechanson.us, and www.thymebarnyc.com in the U.S.
Registration Number Registration Date Trademark Logo 1 5785931 June 25, 2019 CHANSON TM 2 5768100 June 4, 2019 3 5768096 June 4, 2019 64 Registration Number Registration Date Trademark Logo 1 5785931 June 25, 2019 CHANSON TM 2 5768100 June 4, 2019 3 5768096 June 4, 2019 Chanson 23rd Street is also currently registering a trademark for Thyme Bar in the U.S. and the trademark was published in the Trademark Official Gazette on March 29, 2022.
The following table sets forth the number of employees of our subsidiaries and the VIEs on December 31, 2023 by area of business: Employees based in the PRC Number of Employees Management 4 Finance 16 Production and R&D 77 General and Administration 4 Logistics 5 Marketing and Sales 250 Total 356 Employees based in the U.S.
The following table sets forth the number of employees of our subsidiaries and the VIEs on December 31, 2024 by area of business: Employees based in the PRC Number of Employees Management 8 Finance 13 Production and R&D 63 General and Administration 17 Logistics 17 Marketing and Sales 251 Total 369 Employees based in the U.S.
For additional information on our past and expected capital expenditures on the central factory, see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources.” Our PRC subsidiary and the VIEs currently operate 37 stores in Xinjiang.
Xinjiang United Family plans to use cash flow from the operations of the PRC Stores to fund the future construction. For additional information on our past and expected capital expenditures on the central factory, see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources.” Our PRC subsidiary and the VIEs currently operate 55 stores in Xinjiang.
Seating in Chanson 3rd Ave is comprised of table seats with a capacity of 14 guests. Chanson Broadway has one floor with an aggregate size of approximately 850 square feet. Seating in Chanson Broadway is comprised of table seats with a capacity of ten guests. For further details on the U.S.
Chanson Broadway has one floor with an aggregate size of approximately 850 square feet. Seating in Chanson Broadway is comprised of table seats with a capacity of ten guests. For further details on the U.S. Stores, see “—Properties—Properties in the U.S.” Dining and Shopping Experience The U.S. Stores offer a variety of dining and purchasing options.
PRC Regulations Regulations on Food Production and Food Business Operation Food Safety The Food Safety Law of the People’s Republic of China, or the “Food Safety Law,” was promulgated by the SCNPC on February 28, 2009, and amended on April 24, 2015, December 29, 2018 and April 29, 2021.
Regulations This section sets forth a summary of the principal laws and regulations relevant to our business and operations in the PRC and the U.S. 66 PRC Regulations Regulations on Food Production and Food Business Operation Food Safety The Food Safety Law of the People’s Republic of China, or the “Food Safety Law,” was promulgated by the SCNPC on February 28, 2009, and amended on April 24, 2015, December 29, 2018 and April 29, 2021.
Their supply constituted 10%, 10%, 7%, 7%, and 7% of the PRC Stores’ total raw materials in terms of monetary value in that fiscal year, respectively. Top suppliers of the PRC Stores during the year ended December 31, 2021 included Meishifu, Urumqi Jinda Food Raw Material Co., Ltd., Yuxin, and Zhengda.
Their supply constituted 15.30%, 14.02% and 9.10% of the PRC Stores’ total raw materials in terms of monetary value in that fiscal year, respectively. Top suppliers of the PRC Stores during the year ended December 31, 2023 included Urumqi Yuxin Jiayuan Commerce and Trade Co., Ltd., Urumqi Junxin Hongye Commerce and Trade Co., Ltd., Xinjiang Meishifu Food Co., Ltd.
Their supply constituted 30%, 7%, and 5% of the U.S. Stores’ total raw materials in terms of monetary value in that fiscal year, respectively. Top suppliers of the U.S. Stores during the year ended December 31, 2021 included Baldor, The Chefs’ Warehouse, and Southern Glazers of NY Metro. Their supply constituted 19%, 17%, and 13% of the U.S.
Stores during the year ended December 31, 2022 included Baldor, Southern Glazers of NY Metro, and Empire Merchants. Their supply constituted 30%, 7%, and 5% of the U.S. Stores’ total raw materials in terms of monetary value in that fiscal year, respectively. Food Safety Food safety is essential to the success of the PRC Stores and the U.S.
Stores make these products in the kitchen or bar of the store and serve them to eat-in customers or sell them in store. The U.S. Stores’ eat-in menu includes sandwiches, salads, toasts, croissants, soups, and desserts. Their bestselling menu items include Jambon Egg & Cheese, Tomato Soup, and Avocado Toast. The U.S.
Stores make these products in the kitchen or bar of the store and serve them to eat-in customers or sell them in store. The U.S. Stores’ eat-in menu includes sandwiches, éclairs, tarts, cakes, cookies, croissants, and pastries. Their bestselling menu items include Jambon Eggs & Cheese, Tomato Soup & Grilled Cheese, and Crème Brûlée French Toast. The U.S.
During the procurement of raw materials, the procurement team and compliance team of the PRC Stores and the U.S. Stores evaluate the quality and applicability of the submitted samples of raw materials, as well as suppliers’ capability to meet deadlines. They re-evaluate those suppliers who the PRC Stores and the U.S.
Stores and they have established procedures to help ensure that their customers enjoy safe and quality food. During the procurement of raw materials, the procurement team and compliance team of the PRC Stores and the U.S. Stores evaluate the quality and applicability of the submitted samples of raw materials, as well as suppliers’ capability to meet deadlines.
Our PRC subsidiary and the VIEs lease all these store spaces from third-party individuals and corporations, except that the store space of Wenhua is provided by Urumqi Plastic Surgery Hospital Co., Ltd., pursuant to a Premises Use Agreement and a Supplemental Agreement without charge. 56 The following table shows the information of the PRC Stores as of the date of this annual report: Store City Size (Square Feet) Opened 1 Midong Urumqi 579 April 2017 2 Dehui Wanda Urumqi 1,111 January 2018 3 Changji Huijia Changji 861 September 2015 4 Hongshan Urumqi 2,422 November 2017 5 Beimen Urumqi 942 May 2018 6 Minzhu Urumqi 1,830 April 2014 7 Riyue Xingguang Urumqi 1,428 May 2014 8 Wanyancheng Urumqi 1,152 October 2017 9 Huarun Wanjia Urumqi 482 January 2015 10 Changchun Urumqi 1,335 March 2014 11 Huijia Third Floor Urumqi 920 September 2012 12 Baishang Urumqi 1,276 February 2019 13 Railway Bureau Urumqi 1,830 May 2019 14 Economics Development Wanda Urumqi 1,253 July 2019 15 Hongshan Lifestyle Store Urumqi 2,640 November 2019 16 Nanhu Urumqi 1,507 September 2020 17 Hebei Road Huarun Urumqi 1,033 October 2020 18 Degang Wanda Urumqi 1,163 December 2020 19 Xinbei Yuanchun Urumqi 814 October 2021 20 Dehui Wangda Fourth Floor Urumqi 215 November 2021 21 Qingnian Road Haojiaxiang Urumqi 861 November 2021 22 Vanke Jincheng Huafu Urumqi 910 November 2021 23 Gaoxin Wanda Urumqi 1,481 December 2021 24 Soul●Song Meimei No. 2 Urumqi 239 March 2023 25 Soul●Song Wanyan Cheng Urumqi 206 May 2023 26 Soul●Song Wenhua Road Urumqi 100 July 2023 27 Soul●Song Minzhu Road Urumqi 20 July 2023 28 Vanke Tianshanli Urumqi 190 September 2023 29 Soul●Song Vanke Tianshanli Urumqi 170 September 2023 30 Soul●Song Gaoxin Wanda Urumqi 188 September 2023 31 Wuyue Square Urumqi 164.5 August 2023 32 Xidan Urumqi 112 January 2024 33 Tianbai Urumqi 807 October 2015 34 Wenhua Urumqi 1,184 October 2012 35 Meimei Urumqi 1,442 November 2012 36 Meimei No. 3 Urumqi 162 August 2023 37 Ruitai Urumqi 1,076 May 2015 57 Subject to specific terms of each lease agreement, lease terms generally range from one to six years.
Our PRC subsidiary and the VIEs lease all these store spaces from third-party individuals and corporations, except that the store space of Wenhua is provided by Urumqi Plastic Surgery Hospital Co., Ltd., pursuant to a Premises Use Agreement and a Supplemental Agreement without charge. 57 The following table shows the information of the 55 PRC Stores in operation as of the date of this annual report: City Size (Square Feet) Opened 1 Midong Urumqi 1,506 April 2017 2 Dehui Wanda Urumqi 1,111 January 2018 3 Changji Huijia Changji 861 September 2015 4 Hongshan Urumqi 1,377 November 2017 5 Beimen Urumqi 936 May 2018 6 Minzhu Urumqi 1,830 April 2014 7 Riyue Xingguang Urumqi 1,428 May 2014 8 Wanyancheng Urumqi 1,152 October 2017 9 Huarun Wanjia Urumqi 479 January 2015 10 Changchun Urumqi 1,335 March 2014 11 Huijia Third Floor Urumqi 920 September 2012 12 Baishang Urumqi 1,658 February 2019 13 Railway Bureau Urumqi 1,830 May 2019 14 Economics Development Wanda Urumqi 1,253 July 2019 15 Hongshan Lifestyle Urumqi 2,640 November 2019 16 Nanhu Urumqi 1,291 September 2020 17 Hebei Road Huarun Urumqi 861 October 2020 18 Degang Wanda Urumqi 1,153 December 2020 19 Xinbei Yuanchun Urumqi 807 October 2021 20 Dehui Wangda Fourth Floor Urumqi 215 November 2021 21 Qingnian Road Haojiaxiang Urumqi 861 November 2021 22 Vanke Jincheng Huafu Urumqi 910 November 2021 23 Gaoxin Wanda Urumqi 1,481 December 2021 24 Soul●Song Meimei No. 2 Urumqi 239 March 2023 25 Soul●Song Wanyan Cheng Urumqi 2,217 May 2023 26 Soul●Song Wenhua Road Urumqi 1,076 July 2023 27 Soul●Song Minzhu Road Urumqi 215 July 2023 28 Vanke Tianshanli Urumqi 2,045 September 2023 29 Soul●Song Vanke Tianshanli Urumqi 1,829 September 2023 30 Soul●Song Gaoxin Wanda Urumqi 2,023 September 2023 31 Wuyue Square Urumqi 1,770 August 2023 32 Xidan Urumqi 1,205 January 2024 33 Tianbai Urumqi 650 October 2015 34 Wenhua Urumqi 645 October 2012 35 Meimei Urumqi 824 November 2012 36 Meimei No. 3 Urumqi 1,743 August 2023 37 Ruitai Urumqi 538 May 2015 38 Soul●Song Mali Hospital Urumqi 215 July 2024 39 Soul●Song Aidi Dajiang Urumqi 1,582 September 2024 40 World Champion County No. 1 Urumqi 538 September 2024 41 World Champion County No. 2 Urumqi 874 September 2024 42 World Gongyuan Urumqi 980 November 2024 43 Mercure Phase 3 Urumqi 664 August 2024 44 Zhongnan Shangyue City Urumqi 794 September 2024 45 Rhine Manor Urumqi 369 September 2024 46 Xinzhou City Garden Urumqi 807 September 2024 47 Tianshan Vanke Urumqi 1,385 November 2024 48 Zijin Hui Urumqi 161 February 2025 49 Soul●Song Zijin Hui Urumqi 597 February 2025 50 Tongjia Peacock Mansion Urumqi 868 January 2025 51 Karamay West Street Urumqi 803 December 2024 52 Jiaheyuan Urumqi 468 December 2024 53 Yangtze River Road Urumqi 879 December 2024 54 Kangcheng Golf Urumqi 485 December 2024 55 Soul●Song Zhongqiao Second Alley Urumqi 362 December 2024 58 Subject to specific terms of each lease agreement, lease terms generally range from one to six years.
As of April 1, 2024, their transportation team had the capacity of transporting an aggregate of 13 tons of goods per transition per day.
As of March 31, 2025, their transportation team had the capacity of transporting an aggregate of 22 tons of goods per transition.
Stores, see “—Properties—Properties in the U.S.” Dining and Shopping Experience The U.S. Stores offer a variety of dining and purchasing options. Customers can either grab their bakery products and beverage products for take-out or take a seat and stay longer for a relaxed and enjoyable eat-in experience.
Customers can either grab their bakery products and beverage products for take-out or take a seat and stay longer for a relaxed and enjoyable eat-in experience.
Top suppliers of the PRC Stores during the year ended December 31, 2023 included Urumqi Yuxin Jiayuan Commerce and Trade Co., Ltd., Urumqi Junxin Hongye Commerce and Trade Co., Ltd., Xinjiang Meishifu Food Co., Ltd. (“Meishifu”), and Pengcheng Fruit Company.
Top suppliers of the PRC Stores during the year ended December 31, 2024 included Urumqi Junxin Hongye Commerce and Trade Co., Ltd., Urumqi Zhixin Jiamei Commerce and Trade Co., Ltd., and Xinjiang Zhicheng Dingli Commerce and Trade Co., Ltd..
The central factory is designed to have an annual production capacity of bakery products, seasonal products, and beverage products worth (on the raw cost basis) RMB150 million. The investment budget for the central factory is approximately RMB17.8 million (approximately $2.5 million) after VAT deduction.
The central factory is designed to have an annual production capacity of bakery products, seasonal products, and beverage products worth (on the raw cost basis) RMB150 million. We have put the bakery production line of the central factory int operation.
Item 4. INFORMATION ON THE COMPANY A. History and Development of the Company The Chanson Greenwich store has been permanently closed since October 31, 2023 and Chanson 355 Greenwich LLC is expected to be dissolved by July 31, 2024.
Item 4. INFORMATION ON THE COMPANY A. History and Development of the Company The Chanson Greenwich store has been permanently closed since October 31, 2023 and Chanson 355 Greenwich LLC was dissolved on August 28, 2024. Corporate Information We are an exempted company with limited liability incorporated and registered under the laws of the Cayman Islands on July 26, 2019.
Chanson NY does not intend to renew the lease and has moved to a new location under a one-year lease starting from April 1, 2024. Tangible properties of the U.S. Stores include production, transportation, and electronic equipment. R&D A considerable portion of sales of the PRC Stores and the U.S.
Chanson NY is in the process of communications with the landlord to extend that lease. Tangible properties of the U.S. Stores include production, transportation, and electronic equipment. R&D A considerable portion of sales of the PRC Stores and the U.S.
Employees As of December 31, 2023, 2022, and 2021, our PRC subsidiary and the VIEs had 356, 294, and 305 employees and our subsidiaries in the U.S. had 54, 60, and 41 employees, respectively.
Nevertheless, the operating entities plan to actively apply for patent protection with respect to their independently designed packaging methods and production methods. Employees As of December 31, 2024, 2023, and 2022, our PRC subsidiary and the VIEs had 369, 356, and 294 employees and our subsidiaries in the U.S. had 36, 54, and 60 employees, respectively.
Patents As of the date of this annual report, the operating entities do not own any patent and have not applied for the registration of patent design or any other means of patent protection. Nevertheless, the operating entities plan to actively apply for patent protection with respect to their independently designed packaging methods and production methods.
Domain Names The operating entities own the internet domain names ir.chanson-international.net, www.patisseriechanson.us, and www.thymebarnyc.com in the U.S. Patents As of the date of this annual report, the operating entities do not own any patent and have not applied for the registration of patent design or any other means of patent protection.
Stores are able to ensure consistent delivery and competitive pricing because of their long-term business relationships with these suppliers. Suppliers of sugar and flour deliver to the U.S. Stores weekly and suppliers of vegetables and fruits do so daily. Top suppliers of the U.S. Stores during the year ended December 31, 2023 included Baldor Specialty Foods, Inc.
Stores order raw materials from suppliers based on their needs, instead of entering into long-term supply agreements with their suppliers. The U.S. Stores are able to ensure consistent delivery and competitive pricing because of their long-term business relationships with these suppliers. Suppliers of sugar and flour deliver to the U.S.
Stores operate four official accounts on Instagram, which had over 75,000 followers in total, and four official Facebook accounts, which had over 25,600 followers, as of December 31, 2023. The U.S.
Stores operate ten official accounts across different brands and social media platforms (Instagram, Facebook & Tiktok), which had over 103,222 followers in total, as of December, 2024. Overall impressions across all social media platforms have consistently averaged 300,000 per month throughout. The U.S.
Corporate Information We are an exempted company with limited liability incorporated and registered under the laws of the Cayman Islands on July 26, 2019. Our principal executive offices are located at No. 26 Culture Road, Tianshan District, Urumqi, Xinjiang, China, and our phone number is +86-0991-2302709.
Our principal executive offices are located at B9 Xinjiang Chuangbo Zhigu Industrial Park, No.100 Guangyuan Road, Shuimogou District, Urumqi, Xinjiang, China, and our phone number is +86-0991-2302709.
Their supply constituted 17%, 9%, 9%, and 8% of the PRC Stores’ total raw materials in terms of monetary value in that fiscal year, respectively. 53 The U.S. Stores order raw materials from suppliers based on their needs, instead of entering into long-term supply agreements with their suppliers. The U.S.
(“Yuxin”), Meishifu, Pengcheng Fruit Company, Xinjiang Zhengda Food Co., Ltd. (“Zhengda”), and Peimeirun. Their supply constituted 10%, 10%, 7%, 7%, and 7% of the PRC Stores’ total raw materials in terms of monetary value in that fiscal year, respectively. 54 The U.S.

… 8 more changes not shown on this page.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

131 edited+60 added−58 removed117 unchanged
Investing Activities Net cash used in investing activities amounted to $10,463,416 for the year ended December 31, 2023, which primarily consisted of payment made for long term debt investment of $6,000,000, payments made for loans to third parties of $3,900,000, prepayments for the software, equipment and product development of $1,190,000, purchase of property and equipment of $773,964 and purchase of intangible assets of $150,000, which was partially offset by the repayment from loans to third parties of $1,150,104.
Net cash used in investing activities amounted to $10,463,416 for the year ended December 31, 2023, which primarily consisted of payment made for long term debt investment of $6,000,000, payments made for loans to third parties of $3,900,000, prepayments for the software, equipment and product development of $1,190,000, purchase of property and equipment of $773,964 and purchase of intangible assets of $150,000, which was partially offset by the repayment from loans to third parties of $1,150,104.
Financing Activities Net cash provided by financing activities was $12,059,025 for the year ended December 31, 2023, which primarily consisted of gross proceeds from IPO of $13,560,000 and proceeds from short-term bank loans of $2,685,588, which was partially offset by costs disbursed from IPO proceeds of $1,529,631 and repayment of funds provided by a shareholder of $1,892,423.
Net cash provided by financing activities was $12,059,025 for the year ended December 31, 2023, which primarily consisted of gross proceeds from IPO of $13,560,000 and proceeds from short-term bank loans of $2,685,588, which was partially offset by costs disbursed from IPO proceeds of $1,529,631 and repayment of funds provided by a shareholder of $1,892,423.
Revenue is recognized net of any discounts, sales incentives, sales taxes, and value added taxes that are collected from customers and remitted to tax authorities. The PRC Stores sell membership cards that do not have an expiration date and from which the PRC Stores do not deduct non-usage fees from outstanding card balances.
Revenue is recognized net of any discounts, sales incentives, sales taxes, and value added taxes that are collected from customers and remitted to tax authorities. 99 The PRC Stores sell membership cards that do not have an expiration date and from which the PRC Stores do not deduct non-usage fees from outstanding card balances.
Gross Profit and Gross Margin Our gross profit increased by $2,044,654, or 33.5%, from $6,102,671 for the year ended December 31, 2022 to $8,147,325 for the year ended December 31, 2023. The increase was mainly attributable to the increase in revenue from the PRC Stores, and partially offset by the decrease in revenue from the U.S. Stores.
Our gross profit increased by $2,044,654, or 33.5%, from $6,102,671 for the year ended December 31, 2022 to $8,147,325 for the year ended December 31, 2023. The increase was mainly attributable to the increase in revenue from the PRC Stores, and partially offset by the decrease in revenue from the U.S. Stores.
In addition, the operating entities have a dedicated and highly-experienced product development team that constantly creates brand new products that reflect market trends and are attractive to customers. 78 SG&A Expenses Our SG&A expenses are comprised of both store-related expenses and corporate expenses.
In addition, the operating entities have a dedicated and highly-experienced product development team that constantly creates brand new products that reflect market trends and are attractive to customers. SG&A Expenses Our SG&A expenses are comprised of both store-related expenses and corporate expenses.
The key factors considered when determining the above allowances for credit losses include estimated loan collection schedule, discount rate, and assets and financial performance of the borrowers. Expected credit losses are recorded as allowance for credit losses on the consolidated statements of operations and comprehensive income (loss).
The key factors considered when determining the above allowances for credit losses include estimated loan collection schedule, discount rate, and assets and financial performance of the borrowers. Current expected credit losses are recorded as allowance for credit losses on the consolidated statements of operations and comprehensive income (loss).
Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. An uncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination.
Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. 100 An uncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination.
Trend Information Other than as disclosed elsewhere in this annual report on Form 20-F, we are not aware of any trends, uncertainties, demands, commitments, or events for the period from January 1, 2023 to December 31, 2023 that are reasonably likely to have a material adverse effect on our net revenue, income, profitability, liquidity, or capital resources, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial condition.
Trend Information Other than as disclosed elsewhere in this annual report on Form 20-F, we are not aware of any trends, uncertainties, demands, commitments, or events for the period from January 1, 2024 to December 31, 2024 that are reasonably likely to have a material adverse effect on our net revenue, income, profitability, liquidity, or capital resources, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial condition.
Membership card breakage is recorded as revenue in the consolidated statements of operations and comprehensive income (loss). Membership card breakage was immaterial for the years ended December 31, 2023, 2022 and 2021. The PRC Stores maintain a customer loyalty program in which customers earn free cash vouchers when purchasing or reloading membership cards at certain amount.
Membership card breakage is recorded as revenue in the consolidated statements of operations and comprehensive income (loss). Membership card breakage was immaterial for the years ended December 31, 2024, 2023 and 2022. The PRC Stores maintain a customer loyalty program in which customers earn free cash vouchers when purchasing or reloading membership cards at certain amount.
However, during the year ended December 31, 2023, our rivals operating in the same area also launched many types of attractive cocktail products, so customers currently have more choices and revenue from beverage products were adversely affected. In addition, the decrease in revenue from beverage products was attributable to the closure of Chanson Greenwich as mentioned above.
However, during the year ended December 31, 2023, our competitors operating in the same area also launched many types of attractive cocktail products, so customers currently have more choices and revenue from beverage products were adversely affected. In addition, the decrease in revenue from beverage products was attributable to the closure of Chanson Greenwich as mentioned above.
We will recognize revenue when customers redeem the membership cards or cash vouchers in store purchases. Based on our historical experience, a significant portion of the redemption is expected to occur during the first two years after December 31, 2023 and the remaining between the third and fifth year.
We will recognize revenue when customers redeem the membership cards or cash vouchers in store purchases. Based on our historical experience, a significant portion of the redemption is expected to occur during the first two years after December 31, 2024 and the remaining between the third and fifth year.
In order to negotiate more favorable prices on ingredients, the operating entities have been and will continue to be directly involved in sourcing ingredients from qualified suppliers and try to lock in ingredient prices for typically six to 12 months through non-cancelable purchase commitments, when they expect the price to increase.
In order to negotiate more favorable prices on ingredients, the operating entities have been and will continue to be directly involved in sourcing ingredients from qualified suppliers and try to lock in ingredient prices for typically six to twelve months through non-cancelable purchase commitments, when they expect the price to increase.
No penalties or interest relating to income taxes were incurred during the years ended December 31, 2023, 2022 and 2021. We do not believe there was any uncertain tax provision at December 31, 2023 and 2022. Our operating subsidiary in China is subject to the income tax laws of the PRC.
No penalties or interest relating to income taxes were incurred during the years ended December 31, 2024, 2023 and 2022. We do not believe there was any uncertain tax provision at December 31, 2024 and 2023. Our operating subsidiary in China is subject to the income tax laws of the PRC.
The adoption of the credit loss accounting standard has no material impact on the Company’s consolidated financial statements as of January 1, 2023. 94 The Company’s account receivables and other receivables included in prepaid expenses and other current assets on the consolidated balance sheets are within the scope of ASC Topic 326.
The adoption of the credit loss accounting standard has no material impact on the Company’s consolidated financial statements as of January 1, 2023. 98 The Company’s account receivables and other receivables included in prepaid expenses and other current assets on the consolidated balance sheets are within the scope of ASC Topic 326.
Credit Losses On January 1, 2023, the Company adopted Accounting Standards Update 2016-13 “Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments,” which replaces the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology.
Credit Losses On January 1, 2023, the Company adopted Accounting Standards Update 2016-13 “Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments,” which replaces the incurred loss methodology with a current expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology.
Accounts receivable Accounts receivable are recognized and carried at original invoiced amount less an estimated allowance for credit losses, as necessary. Accounts are written off against the allowance after efforts at collection prove unsuccessful. As of December 31, 2023 and 2022, the allowance for credit losses was both $nil.
Accounts receivable Accounts receivable are recognized and carried at original invoiced amount less an estimated allowance for credit losses, as necessary. Accounts are written off against the allowance after efforts at collection prove unsuccessful. As of December 31, 2024 and 2023, the allowance for credit losses was both $nil.
We believe our cash and cash equivalents on hand, our operating cash flows, the available bank facilities, the continuous support from our shareholder, and the proceeds we received from the IPO will be sufficient to meet our working capital needs over the next 12 months.
We believe our cash and cash equivalents on hand, our operating cash flows, the available bank facilities, the continuous support from our shareholder, the proceeds we received from the IPO and equity financing will be sufficient to meet our working capital needs over the next 12 months.
In early December 2022, China announced a nationwide loosening of its zero-COVID policy, and the country faced a wave in infections after the lifting of these restrictions, but the spread of the COVID-19 appeared to be under control currently.
In early December 2022, China announced a nationwide loosening of its zero-COVID policy, and the country faced a wave in infections after the lifting of these restrictions, but the spread of the COVID-19 appears to be under control currently.
Except for the above-mentioned pronouncements, there are no new recently issued accounting standards that will have material impact on our consolidated financial position, statements of operations, and cash flows. 96
Except for the above-mentioned pronouncements, there are no new recently issued accounting standards that will have material impact on our consolidated financial position, statements of operations, and cash flows 101
Comparison of Results of Operations for the Years Ended December 31, 2023, 2022, and 2021 The following table summarizes the results of our operations during the years ended December 31, 2023, 2022, and 2021, respectively, and provides information regarding the dollar and percentage increase or decrease during such years.
Comparison of Results of Operations for the Years Ended December 31, 2024, 2023 and 2022 The following table summarizes the results of our operations during the years ended December 31, 2024, 2023 and 2022, respectively, and provides information regarding the dollar and percentage increase or decrease during such years.
In assessing our liquidity, our management monitors and analyzes our cash on hand, the proceeds we received from our IPO, our ability to generate sufficient revenue sources in the future, and our operating and capital expenditure commitments. As of December 31, 2023, we had cash and cash equivalents of approximately $1.5 million.
In assessing our liquidity, our management monitors and analyzes our cash on hand, the proceeds we received from our IPO, our ability to generate sufficient revenue sources in the future, and our operating and capital expenditure commitments. As of December 31, 2024, we had cash and cash equivalents of approximately $12.1 million.
The decrease in our revenue was due to decreased revenue from the PRC Stores, which was partially offset by increased revenue from the U.S. Stores.
The increase in our revenue was due to increased revenue from the PRC Stores, which was partially offset by decreased revenue from the U.S. Stores.
Income tax for an individually-owned business can generally be assessed on an actual basis or a deemed basis, which the UFG Entities apply. Therefore, income tax for the UFG Entities is levied as a fixed-rate income tax at 1% of the deemed Taxable Net Income (“TNI”) as assessed by the local tax authority.
Income tax for an individually-owned business can generally be assessed on an actual basis or a deemed basis, which the UFG entities apply. Therefore, income tax for the UFG entities is levied as a fixed-rate income tax at 1% of TNI as assessed by the local tax authority.
For the year ended December 31, 2022, 13 of these UFG entities were subject to income tax assessed at 0.5% of TNI that ranged from RMB33,000 to RMB180,000 per month. For the year ended December 31, 2021, 13 of these UFG entities were subject to income tax assessed at 0.5% of TNI that ranged from RMB25,000 to RMB180,000 per month.
For the year ended December 31, 2024, 13 of these UFG entities were subject to income tax assessed at 0.5% of TNI that ranged from RMB33,000 to RMB180,000 per month.
We expect our SG&A expenses to continue to increase in absolute dollars as we incur increased costs related to the growth of our business and our operation. Operating Income Operating income is the difference between gross profit and SG&A expenses. Operating income excludes interest income (expenses), other income (expenses), and income tax expenses.
We expect our SG&A expenses to continue to increase in absolute dollars as we incur increased costs related to the growth of our business and our operation. Operating Income Operating income is the difference between gross profit and SG&A expenses. Operating income excludes interest income (expenses), other income, interest income from long term debt investment, and income tax expenses.
Due to increased competition from rivals operating in the same area, the U.S. Stores launched more promotions and offered more discounts in order to make their beverage products more appealing to the customers. Therefore, the gross margin of beverage products decreased during the year ended December 31, 2023.
Due to increased competition, the U.S. Stores launched more promotions and offered more discounts in order to make their beverage products more appealing to the customers. Therefore, the gross margin of beverage products decreased during the year ended December 31, 2023.
Our contract liabilities, which are reflected in its consolidated balance sheets as deferred revenue of $7,085,696 and $6,958,160 as of December 31, 2023 and 2022, respectively, consist primarily of customer payments for the membership cards and the fair value of the cash vouchers under our customer loyalty programs.
Our contract liabilities, which are reflected in its consolidated balance sheets as deferred revenue of $6,697,964 and $7,085,696 as of December 31, 2024 and 2023, respectively, consist primarily of customer payments for the membership cards and the fair value of the cash vouchers under our customer loyalty programs.
General and Administrative Expenses Our general and administrative expenses primarily consist of administrative employee salaries, welfare and insurance expenses, depreciation, and professional service expenses. Our general and administrative expenses accounted for 22.5%, 29.0%, and 22.1% of our revenue for the years ended December 31, 2023, 2022, and 2021, respectively.
General and Administrative Expenses Our general and administrative expenses primarily consist of administrative employee salaries, welfare and insurance expenses, depreciation, and professional service expenses. Our general and administrative expenses accounted for 16.3%, 22.5% and 29.0% of our revenue for the years ended December 31, 2024, 2023 and 2022, respectively.
Moreover, the decrease in gross margin of beverage products was also attributable to increased prices of raw materials such as fresh fruit during the year ended December 31, 2022, as well as the increased inventory spoilage of fresh ingredients caused by the irregular opening hours and store closure during the 2022 Outbreak.
Moreover, due to the increased prices of raw materials such as fresh fruit and the increased inventory spoilage of fresh ingredients caused by the irregular opening hours and store closure during the 2022 Outbreak, the gross margin of beverage products decreased in the year ended December 31, 2022.
As of December 31, 2023, we had $1,995,067 accounts receivable balance, approximately 21.9%, or $0.4 million, of which has been subsequently collected. The remaining balance is expected to be collected before December 31, 2024. The collection of such receivables made cash available for use in our operations as working capital, if necessary.
As of December 31, 2024, we had $991,467 accounts receivable balance, approximately 35.9%, or $0.4 million, of which has been subsequently collected. The remaining balance is expected to be collected before December 31, 2025. The collection of such receivables made cash available for use in our operations as working capital, if necessary.
During the year ended December 31, 2023, Xinjiang United Family and all its four branch offices did not qualify as small-scaled minimal profit enterprises and were subject to 25% income tax rate. During the years ended December 31, 2022, and 2021, Xinjiang United Family and all its three branch offices qualified as small-scaled minimal profit enterprises.
During the years ended December 31, 2024 and 2023, Xinjiang United Family and all its branch offices did not qualify as small-scaled minimal profit enterprises and were subject to 25% income tax rate.
Revenue Our revenue is derived primarily from sales of bakery and other products under the operating entities’ “George●Chanson,” “Patisserie Chanson,” and “Chanson” brand names. As of December 31, 2023, the operating entities managed and operated 37 PRC Stores and three U.S. Stores.
Revenue Our revenue is derived primarily from sales of bakery and other products under the operating entities’ “George●Chanson,” “Patisserie Chanson,” and “Chanson” brand names. As of December 31, 2024, the operating entities managed and operated 55 stores in the PRC (the “PRC Stores”) and three stores in the U.S. (the “U.S. Stores”).
Our Class A ordinary shares began trading on the Nasdaq Capital Market under the ticker symbol “CHSN” on March 30, 2023. As of December 31, 2023, we had $1,481,302 in cash and cash equivalents as compared to $2,915,470 as of December 31, 2022.
Our Class A ordinary shares began trading on the Nasdaq Capital Market under the ticker symbol “CHSN” on March 30, 2023. As of December 31, 2024, we had $12,102,763 in cash and cash equivalents as compared to $1,481,302 as of December 31, 2023.
Under the EIT Law, domestic enterprises and foreign investment enterprises are usually subject to a unified 25% EIT rate while preferential tax rates, tax holidays, or exemptions may be granted on a case-by-case basis. Xinjiang United Family and its three branch offices were incorporated in the PRC.
Under the PRC Enterprise Income Tax Law (the “EIT Law”), domestic enterprises and foreign investment enterprises are usually subject to a unified 25% EIT rate while preferential tax rates, tax holidays, or exemptions may be granted on a case-by-case basis. Xinjiang United Family Trading Co., Ltd. (“Xinjiang United Family”) and its five branch offices were incorporated in the PRC.
The decrease in general and administrative expenses from the U.S. Stores was primarily due to decreased salary and social security expenses, mainly resulting from optimization of management team of our U.S. Stores.
The increase was partially offset by the decreased general and administrative expenses of $348,834 incurred by the U.S. Stores. The decrease in general and administrative expenses from the U.S. Stores was primarily due to decreased salary and social security expenses, mainly resulting from optimization of management team of our U.S. Stores.
The increase was mainly attributable to the overall increase in sales. The gross margin increased by 3.2 percentage points from 46.5% for the year ended December 31, 2022 to 49.7% for the year ended December 31, 2023.
The increase was mainly attributable to the overall increase in sales. The gross margin decreased by 5.2% percentage points from 49.7% for the year ended December 31, 2023 to 44.5% for the year ended December 31, 2024.
Revenue from bakery products decreased by $167,861, or 27.4%, from $612,819 for the year ended December 31, 2022 to $444,958 for the year ended December 31, 2023, primarily due to increased competition from rivals operating in the same area.
The decrease was mainly due to decreased revenue from beverage products, bakery products, and eat-in services. Revenue from bakery products decreased by $167,861, or 27.4%, from $612,819 for the year ended December 31, 2022 to $444,958 for the year ended December 31, 2023, primarily due to increased competition from competitors operating in the same area.
These amounts represent our unsatisfied performance obligations as of the balance sheet dates. The amount of revenue recognized in the years ended December 31, 2023, 2022 and 2021 that was included in the opening deferred revenue was $6,559,028, $4,920,442 and $4,823,134, respectively. As of December 31, 2023, the aggregate amount of unredeemed membership cards and cash vouchers was $7,085,696.
These amounts represent our unsatisfied performance obligations as of the balance sheet dates. The amount of revenue recognized in the years ended December 31, 2024, 2023 and 2022 that was included in the opening deferred revenue was $5,449,243, $6,559,028 and $4,920,442, respectively. As of December 31, 2024, the aggregate amount of unredeemed membership cards and cash vouchers was $6,697,964.
For the years ended December 31, 2023, 2022, and 2021, the tax saving as the result of the favorable tax rates and tax exemption amounted to $339,626, $223,920, and $494,744, respectively, and per share effect of the favorable tax rate and tax exemption was $0.03, $0.02, and $0.05, respectively. 87 Net Income (Loss) As a result of the foregoing, we reported net income of $33,588 for the year ended December 31, 2023, net loss of $1,288,205 for the year ended December 31, 2022, and net income of $506,769 for the year ended December 31, 2021.
For the years ended December 31, 2024, 2023 and 2022, the tax saving as the result of the favorable tax rates and tax exemption amounted to $480,781, $339,626 and $223,920, respectively, and per share effect of the favorable tax rate and tax exemption was $0.03, $0.03 and $0.02, respectively. 92 Net Income As a result of the foregoing, we reported net income of $756,285 for the year ended December 31, 2024, net income of $33,588 for the year ended December 31, 2023, and net loss of $1,288,205 for the year ended December 31, 2022.
For the Years Ended December 31, 2023 2022 2021 Amount % of revenue Amount % of revenue Amount % of revenue Total revenue $ 17,252,662 100.0 % $ 13,272,075 100.0 % $ 14,690,295 100.0 % Total operating expenses: Selling expenses 4,882,958 28.3 % 3,697,909 27.9 % 4,126,126 28.1 % General and administrative expenses 3,874,868 22.5 % 3,842,787 29.0 % 3,249,181 22.1 % Total operating expenses $ 8,757,826 50.8 % $ 7,540,696 56.9 % $ 7,375,307 50.2 % Selling Expenses Our selling expenses primarily include payroll and sales commission expenses paid to our sales and marketing personnel, store operating expenses, store rental, store decoration and maintenance expenses, utility expenses, and other expenses related to sales activities.
For the Years Ended December 31, 2024 2023 2022 Amount % of revenue Amount % of revenue Amount % of revenue Total revenue $ 18,227,537 100.0 % $ 17,252,662 100.0 % $ 13,272,075 100.0 % Total operating expenses: Selling expenses 4,757,279 26.1 % 4,882,958 28.3 % 3,697,909 27.9 % General and administrative expenses 2,966,659 16.3 % 3,874,868 22.5 % 3,842,787 29.0 % Total operating expenses $ 7,723,938 42.4 % $ 8,757,826 50.8 % $ 7,540,696 56.9 % Selling Expenses Our selling expenses primarily include payroll and sales commission expenses paid to our sales and marketing personnel, store operating expenses, store rental, store decoration and maintenance expenses, utility expenses, and other expenses related to sales activities.
Significant estimates required to be made by management include, but are not limited to, the valuation of accounts receivable and inventories, useful lives of property and equipment and intangible assets, the recoverability of long-lived assets, provision necessary for contingent liabilities, realization of deferred tax assets and revenue recognition. Actual results could differ from those estimates.
Significant estimates required to be made by management include, but are not limited to, the assessment of the current expected credit losses for receivables, valuation of inventories, useful lives of property and equipment and intangible assets, the recoverability of long-lived assets, realization of deferred tax assets and revenue recognition. Actual results could differ from those estimates.
ASC 606 establishes principles for reporting information about the nature, amount, timing, and uncertainty of revenue and cash flows arising from an entity’s contracts to provide goods or services to customers.
Revenue recognition We follow Accounting Standards Codification 606, Revenue from Contracts with Customers (“ASC 606”), for revenue recognition. ASC 606 establishes principles for reporting information about the nature, amount, timing, and uncertainty of revenue and cash flows arising from an entity’s contracts to provide goods or services to customers.
In the event that the operating entities cannot effectively compete on a continuing basis or competitive pressures arise, such inability to compete or competitive pressures could have a material adverse effect on their business, results of operations and financial condition. COVID-19 Affecting Our Results of Operations Our business was adversely affected by the COVID-19 pandemic.
In the event that the operating entities cannot effectively compete on a continuing basis or competitive pressures arise, such inability to compete or competitive pressures could have a material adverse effect on their business, results of operations and financial condition. COVID-19 Affecting Our Results of Operations In December 2019, a novel strain of coronavirus was reported in Wuhan, China.
The gross margin decreased by 9.8 percentage points from 44.8% for the year ended December 31, 2022 to 35.0% for the year ended December 31, 2023.
The decrease was mainly attributable to the overall decrease in revenue. The gross margin decreased by 9.8 percentage points from 44.8% for the year ended December 31, 2022 to 35.0% for the year ended December 31, 2023.
In addition, the TNI and tax rate of the UFG Entities are subject to periodical reassessment by the local tax authority. If the local tax authority determined that income tax for the UFG Entities should be levied at a higher TNI or higher tax rate, the UFG Entities would be obligated to pay additional income tax.
If the local tax authority determined that income tax for the UFG Entities should be levied at a higher TNI or higher tax rate, the UFG Entities would be obligated to pay additional income tax.
As of December 31, 2023, the tax years ended December 31, 2019 through December 31, 2023 for our PRC subsidiary remain open for statutory examination by PRC tax authorities, and the tax years ended December 31, 2021 through December 31, 2023 for our United States subsidiaries remain open for statutory examination by U.S. tax authorities.
As of December 31, 2024, for the tax years ended December 31, 2020 through December 31, 2024, our PRC subsidiaries remained open for statutory examination by PRC tax authorities, and for the tax years ended December 31, 2022 through December 31, 2024, our United States subsidiaries remained open for statutory examination by U.S. tax authorities.
The Company recorded interest income of $534,575 for the year ended December 31, 2023. Provision for Income Taxes Our provision for income taxes was $119,416, $9,547, and $16,277 for the years ended December 31, 2023, 2022, and 2021, respectively.
The Company recorded interest income of $723,945, $534,575 and $nil for the years ended December 31, 2024, 2023 and 2022, respectively. Provision for Income Taxes Our provision for income taxes was $74,604, $119,416 and $9,547 for the years ended December 31, 2024, 2023 and 2022, respectively.
The percentage of decrease in cost of revenue was less than that in revenue, due to the increased spoilage and wastage of inventory, and the fixed costs of the two new stores with higher proportion, as discussed in “—Gross Profit and Gross Margin” below.
The percentage of decrease in cost of revenue was less than that in revenue, due to the increased spoilage and wastage of inventory, and the high fixed costs of Chanson 3rd Ave and Chanson Broadway, as discussed in “—Gross Profit and Gross Margin” below.
Stores, bakery products consist of cakes, bread, sweets, birthday cakes, and pastries, and other products consist of eat-in menu items (sandwiches, salads, toasts, croissants, soups, and desserts) and beverage products. Our total revenue increased by $3,980,587, or 30.0%, from $13,272,075 for the year ended December 31, 2022 to $17,252,662 for the year ended December 31, 2023.
Stores, bakery products consist of cakes, bread, sweets, birthday cakes, and pastries, and other products consist of eat-in menu items (sandwiches, salads, toasts, croissants, soups, and desserts) and beverage products. Our total revenue increased by $974,875, or 5.7%, from $17,252,662 for the year ended December 31, 2023 to $18,227,537 for the year ended December 31, 2024.
The following table sets forth the breakdown of our revenue for the years ended December 31, 2023, 2022, and 2021, respectively: For the Years Ended December 31, 2023 % 2022 % 2021 % China Bakery products $ 12,532,127 72.6 % $ 8,705,218 65.7 % $ 11,694,918 79.6 % Other products 1,782,030 10.3 % 785,990 5.9 % 1,101,171 7.5 % Subtotal: revenue from China 14,314,157 82.9 % 9,491,208 71.6 % 12,796,089 87.1 % United States Bakery products 444,958 2.6 % 612,819 4.6 % 473,914 3.2 % Beverage products 1,700,974 9.9 % 2,047,670 15.4 % 1,000,039 6.8 % Eat-in services 792,573 4.6 % 1,120,378 8.4 % 420,253 2.9 % Subtotal: revenue from the United States 2,938,505 17.1 % 3,780,867 28.4 % 1,894,206 12.9 % Total Revenue $ 17,252,662 100.0 % $ 13,272,075 100.0 % $ 14,690,295 100.0 % China The PRC Stores accounted for 82.9%, 71.6% and 87.1% of our total revenue for the years ended December 31, 2023, 2022 and 2021, respectively.
The following table sets forth the breakdown of our revenue for the years ended December 31, 2024, 2023 and 2022, respectively: For the Years Ended December 31, 2024 % 2023 % 2022 % China Bakery products $ 14,793,850 81.1 % $ 12,532,127 72.6 % $ 8,705,218 65.7 % Other products 1,348,844 7.4 % 1,782,030 10.3 % 785,990 5.9 % Subtotal: revenue from China 16,142,694 88.5 % 14,314,157 82.9 % 9,491,208 71.6 % United States Bakery products 506,264 2.8 % 444,958 2.6 % 612,819 4.6 % Beverage products 1,276,306 7.0 % 1,700,974 9.9 % 2,047,670 15.4 % Eat-in services 302,273 1.7 % 792,573 4.6 % 1,120,378 8.4 % Subtotal: revenue from the United States 2,084,843 11.5 % 2,938,505 17.1 % 3,780,867 28.4 % Total Revenue $ 18,227,537 100.0 % $ 17,252,662 100.0 % $ 13,272,075 100.0 % 83 China The PRC Stores accounted for 88.5%, 82.9% and 71.6% of our total revenue for the years ended December 31, 2024, 2023 and 2022, respectively.
The decrease was due to the decreased cost of revenue from beverage products and eat-in services, which was partially offset by the increased cost of revenue from bakery products. Cost of revenue from sales of bakery products increased by $5,017, or 1.2%, from $404,535 for the year ended December 31, 2022 to $409,552 for the year ended December 31, 2023.
Cost of revenue from sales of bakery products increased by $5,017, or 1.2%, from $404,535 for the year ended December 31, 2022 to $409,552 for the year ended December 31, 2023.
These factors may cause the operating entities’ comparable store sales results to be materially lower than in recent periods, which could harm their profitability and business. Changes in their average store sales or their inability to increase their average store sales could cause their operating results to vary adversely from expectations, which could adversely affect their results of operations.
These factors may cause the operating entities’ comparable store sales results to be materially lower than in recent periods, which could harm their profitability and business.
Our gross margin remained relatively stable with a slight increase by 1.2 percentage points from 46.0% for the year ended December 31, 2022 to 47.2% for the year ended December 31, 2023. Our gross profit decreased by $827,752, or 11.9%, from $6,930,423 for the year ended December 31, 2021 to $6,102,671 for the year ended December 31, 2022.
Our gross margin remained relatively stable with a slight increase by 1.2 percentage points from 46.0% for the year ended December 31, 2022 to 47.2% for the year ended December 31, 2023.
Increased labor costs due to competition, increased minimum wage or employee benefits costs, or otherwise, would adversely impact the operating entities’ operating expenses. In addition, the operating entities’ success depends on their ability to attract, motivate, and retain qualified employees, including store managers and staff, to keep pace with their growth strategy. Gross margin is gross profit divided by revenue.
In addition, the operating entities’ success depends on their ability to attract, motivate, and retain qualified employees, including store managers and staff, to keep pace with their growth strategy. 81 Gross margin is gross profit divided by revenue.
United States Gross profit from the U.S. decreased by $662,600, or 39.2%, from $1,692,079 for the year ended December 31, 2022 to $1,029,479 for the year ended December 31, 2023. The decrease was mainly attributable to the overall decrease in revenue.
United States Gross profit from the U.S. decreased by $1,016,619, or 98.8%, from $1,029,479 for the year ended December 31, 2023 to $12,860 for the year ended December 31, 2024. The decrease was mainly attributable to the overall decrease in revenue.
As of December 31, 2023, we had approximately $2.7 million in short-term bank loans. We expect that we will be able to renew all of the existing bank loans upon their maturity based on our past experience and outstanding credit history.
As of December 31, 2024, we had approximately $1.5 million in short-term bank loans. We expect that we will be able to renew all of the existing bank loans upon their maturity based on our past experience and credit history. During the year ended December 31, 2024, five coffee bakery stores and fifteen bakery stores were opened.
C. Research and Development, Patents and Licenses, etc. See “Item 4. Information on the Company—B. Business Overview—R&D” and “Item 4. Information on the Company—B. Business Overview—Intellectual Property.” D.
Business Overview—R&D” and “Item 4. Information on the Company—B. Business Overview—Intellectual Property.” 97 D.
An increase in pricing of any ingredient that is used in the operating entities’ bakery products could result in an increase in costs from their suppliers, and the operating entities may not be able to increase prices to cover increased costs which would have an adverse effect on their operating results and profitability. 88 The geographic concentration of the operating entities’ stores primarily in Xinjiang and New York City subjects the operating entities to an increased risk of loss of revenue from events beyond their control or conditions affecting that region.
An increase in pricing of any ingredient that is used in the operating entities’ bakery products could result in an increase in costs from their suppliers, and the operating entities may not be able to increase prices to cover increased costs which would have an adverse effect on their operating results and profitability.
For the years ended December 31, 2023 2022 2021 Revenue $ 17,252,662 $ 13,272,075 $ 14,690,295 Cost of revenue 9,105,337 7,169,404 7,759,872 Gross profit 8,147,325 6,102,671 6,930,423 OPERATING EXPENSES Selling expenses 4,882,958 3,697,909 4,126,126 General and administrative expenses 3,874,868 3,842,787 3,249,181 Total operating expenses 8,757,826 7,540,696 7,375,307 LOSS FROM OPERATIONS (610,501 ) (1,438,025 ) (444,884 ) OTHER INCOME (EXPENSES) Interest income (expense), net 35,505 (35,457 ) (98,033 ) Other income, net 193,425 194,824 1,065,963 Interest income from long term debt investment 534,575 - - Total other income, net 763,505 159,367 967,930 INCOME (LOSS) BEFORE INCOME TAX EXPENSE 153,004 (1,278,658 ) 523,046 INCOME TAX EXPENSE 119,416 9,547 16,277 NET INCOME (LOSS) $ 33,588 $ (1,288,205 ) $ 506,769 79 Revenue We generate revenue primarily from bakery products and other products sold in China and the U.S.
For the years ended December 31, 2024 2023 2022 Revenue $ 18,227,537 $ 17,252,662 $ 13,272,075 Cost of revenue 11,033,219 9,105,337 7,169,404 Gross profit 7,194,318 8,147,325 6,102,671 OPERATING EXPENSES Selling expenses 4,757,279 4,882,958 3,697,909 General and administrative expenses 2,966,659 3,874,868 3,842,787 Total operating expenses 7,723,938 8,757,826 7,540,696 LOSS FROM OPERATIONS (529,620 ) (610,501 ) (1,438,025 ) OTHER INCOME (EXPENSES) Interest (expense) income, net (50,928 ) 35,505 (35,457 ) Other income, net 687,492 193,425 194,824 Interest income from long term debt investment 723,945 534,575 - Total other income, net 1,360,509 763,505 159,367 INCOME (LOSS) BEFORE INCOME TAX EXPENSE 830,889 153,004 (1,278,658 ) INCOME TAX EXPENSE 74,604 119,416 9,547 NET INCOME (LOSS) $ 756,285 $ 33,588 $ (1,288,205 ) 82 Revenue We generate revenue primarily from bakery products and other products sold in China and the U.S.
Meanwhile, due to the increased competition from rivals operating in the same area as mentioned above, customer demand was harder to estimate and higher spoilage of inventory, excess raw materials and bakery products with short storage life was incurred.
Meanwhile, due to the increased competition as mentioned above, customer demand was harder to estimate and higher spoilage of inventory, excess raw materials and bakery products with short storage life was incurred. Together with the increased price of raw materials, the gross margin of bakery products significantly decreased in the year ended December 31, 2024.
Stores. 81 The following table sets forth the breakdown of our cost of revenue for the years ended December 31, 2023, 2022, and 2021, respectively: For the Years Ended December 31, 2023 % 2022 % 2021 % China Bakery products $ 6,459,617 70.9 % $ 4,686,808 65.4 % $ 6,144,101 79.3 % Other products 736,694 8.1 % 393,808 5.5 % 438,361 5.6 % Subtotal: cost of revenue from China 7,196,311 79.0 % 5,080,616 70.9 % 6,582,462 84.9 % United States Bakery products 409,552 4.5 % 404,535 5.6 % 305,228 3.9 % Beverage products 891,033 9.8 % 1,013,181 14.1 % 528,827 6.8 % Eat-in services 608,441 6.7 % 671,072 9.4 % 343,355 4.4 % Subtotal: cost of revenue from the United States 1,909,026 21.0 % 2,088,788 29.1 % 1,177,410 15.1 % Total Cost of Revenue $ 9,105,337 100.0 % $ 7,169,404 100.0 % $ 7,759,872 100.0 % China Cost of revenue from China increased by $2,115,695, or 41.6%, from $5,080,616 for the year ended December 31, 2022 to $7,196,311 for the year ended December 31, 2023.
The following table sets forth the breakdown of our cost of revenue for the years ended December 31, 2024, 2023 and 2022, respectively: For the Years Ended December 31, 2024 % 2023 % 2022 % China Bakery products $ 8,345,235 75.6 % $ 6,459,617 70.9 % $ 4,686,808 65.4 % Other products 616,001 5.6 % 736,694 8.1 % 393,808 5.5 % Subtotal: cost of revenue from China 8,961,236 81.2 % 7,196,311 79.0 % 5,080,616 70.9 % United States Bakery products 646,945 5.9 % 409,552 4.5 % 404,535 5.6 % Beverage products 876,237 7.9 % 891,033 9.8 % 1,013,181 14.1 % Eat-in services 548,801 5.0 % 608,441 6.7 % 671,072 9.4 % Subtotal: cost of revenue from the United States 2,071,983 18.8 % 1,909,026 21.0 % 2,088,788 29.1 % Total Cost of Revenue $ 11,033,219 100.0 % $ 9,105,337 100.0 % $ 7,169,404 100.0 % China Cost of revenue from China increased by $1,764,925, or 24.5%, from $7,196,311 for the year ended December 31, 2023 to $8,961,236 for the year ended December 31, 2024.
According to the Announcement on Implementing the Preferential Income Tax Policies for Small-Scale Minimal Profit Enterprise and Individually-Owned Businesses on April 2, 2021, the tax rate for the portion of its taxable income not more than RMB1 million is further reduced to 2.5% during the period from January 1, 2021 to December 31, 2022 and the tax rate for the portion above RMB1 million remains at a reduced rate of 10%.
According to the Announcement on Implementing the Preferential Income Tax Policies for Small-Scale Minimal Profit Enterprise on March 14, 2022, March 26, 2023 and August 2, 2023, the taxable income not more than RMB3 million is subject to a reduced rate of 5% during the period from January 1, 2023 to December 31, 2027.
The decreased gross margin was mainly due to the negative gross margin contributed from Chanson 3rd Ave and Chanson Broadway, higher spoilage of inventory as well as increased price of raw materials as mentioned above.
The decreased gross margin was mainly due to the negative gross margin contributed from Chanson 3rd Ave and Chanson Broadway, higher spoilage of inventory as well as increased price of raw materials as mentioned above. Operating Expenses The following table sets forth the breakdown of our operating expenses for the years ended December 31, 2024, 2023 and 2022.
We currently plan to open another four stores, with a total budget of approximately RMB2.0 million (approximately $0.3 million) during fiscal year 2024. We plan to use our cash on hand and cash flows from operations to fund the new stores.
We currently plan to open another ten stores, with a total budget of approximately RMB5.0 million (approximately $0.7 million) in fiscal year 2025. We plan to use our cash on hand, cash flows from operations and equity financing from outside investors to fund the new stores. As of December 31, 2024, our working capital of approximately $4.3 million.
Our selling expenses accounted for 28.3%, 27.9%, and 28.1% of our revenue for the years ended December 31, 2023, 2022, and 2021, respectively. Selling expenses increased by $1,185,049, or 32.0%, from $3,697,909 for the year ended December 31, 2022 to $4,882,958 for the year ended December 31, 2023.
Our selling expenses accounted for 26.1%, 28.3% and 27.9%, of our revenue for the years ended December 31, 2024, 2023 and 2022, respectively. Selling expenses decreased by $125,679, or 2.6%, from $4,882,958 for the year ended December 31, 2023 to $4,757,279 for the year ended December 31, 2024.
Gang Li, has made pledges to provide continuous financial support to our Company for at least 12 months from the issuance of our consolidated financial statements as of and for the year ended December 31, 2023.
Therefore, revenue and net income are expected to increase in fiscal year 2025 as compared to fiscal year 2024. Furthermore, our controlling shareholder, Mr. Gang Li, has made pledges to provide continuous financial support to our Company for at least 12 months from the issuance of our consolidated financial statements as of and for the year ended December 31, 2024.
The increase in our revenue was due to increased revenue from the PRC Stores, which was partially offset by decreased revenue from the U.S. Stores. Our total revenue decreased by $1,418,220, or 9.7%, from $14,690,295 for the year ended December 31, 2021 to $13,272,075 for the year ended December 31, 2022.
The increase in our revenue was due to increased revenue from the PRC Stores, which was partially offset by decreased revenue from the U.S. Stores. Our total revenue increased by $3,980,587, or 30.0%, from $13,272,075 for the year ended December 31, 2022 to $17,252,662 for the year ended December 31, 2023.
On March 31, 2023, the Company entered into a five-year agreement with Worthy Credit Limited (“Worthy Credit”), pursuant to which, the Company made payment of $6.0 million to Worthy Credit, and authorized Worthy Credit to invest the Company’s funds to provide loan services for housing mortgage applicants, with rates of return of 12% per annum.
Other income, net remained relatively stable with a slight decrease by $1,399, or 0.7%, from other income, net of $194,824 for the year ended December 31, 2022 to other income, net of $193,425 for the year ended December 31, 2023. 91 Interest Income from Long Term Debt Investment On March 31, 2023, the Company entered into a five-year agreement with Worthy Credit Limited (“Worthy Credit”), pursuant to which, the Company made payment of $6.0 million to Worthy Credit, and authorized Worthy Credit to invest the Company’s funds to provide loan services for housing mortgage applicants, with rates of return of 12% per annum.
The increase in general and administrative expenses from the PRC Stores was mainly because the business operations in China fully recovered from the negative impact of the 2022 Outbreak. The increase was also due to the increased salaries related costs, as more employees were hired for the newly opened stores.
The increase was mainly due to the increased general and administrative expenses of $380,915 incurred by the PRC Stores. The increase in general and administrative expenses from the PRC Stores was mainly because the business operations in China fully recovered from the negative impact of the 2022 Outbreak.
Unredeemed cash vouchers will be recognized as revenue upon their expiration dates, if any, or five years after their issuance if there are no stated expiration dates, when management determines the likelihood of redemption to be remote. 95 Contract balances and remaining performance obligations Contract balances typically arise when a difference in timing between the transfer of control to the customer and receipt of consideration occurs.
Unredeemed cash vouchers will be recognized as revenue upon their expiration dates, if any, or five years after their issuance if there are no stated expiration dates, when management determines the likelihood of redemption to be remote.
The UFG Entities are individually-owned businesses, which are not subject to the EIT Law of the PRC, but the Individual Income Tax. The Measures for Individual Income Tax Calculation of Individual Industrial and Commercial Households, or the “Measures,” were adopted by the SAT on December 19, 2014 and promulgated on December 27, 2014, and amended on June 15, 2018.
The Measures for Individual Income Tax Calculation of Individual Industrial and Commercial Households, or the “Measures,” were adopted by the State Administration of Taxation on December 19, 2014 and promulgated on December 27, 2014, and amended on June 15, 2018.
The decrease in revenue from eat-in services was partially offset by the increased revenue from eat-in services of approximately $41,000, generated by the two newly opened stores, Chanson 3rd Ave and Chanson Broadway. Revenue from the U.S. increased by $1,886,661, or 99.6%, from $1,894,206 for the year ended December 31, 2021 to $3,780,867 for the year ended December 31, 2022.
The decrease in revenue from eat-in services was partially offset by the increased revenue from eat-in services of approximately $104,000, generated by Chanson 3rd Ave and Chanson Broadway. Revenue from the U.S. decreased by $842,362, or 22.3%, from $3,780,867 for the year ended December 31, 2022 to $2,938,505 for the year ended December 31, 2023.
Cost of revenue from the U.S. increased by $911,378, or 77.4%, from $1,177,410 for the year ended December 31, 2021 to $2,088,788 for the year ended December 31, 2022. The increase was due to the increased cost of revenue from beverage products, bakery products, and eat-in services.
Cost of revenue from the U.S. decreased by $179,762, or 8.6%, from $2,088,788 for the year ended December 31, 2022 to $1,909,026 for the year ended December 31, 2023. The decrease was due to the decreased cost of revenue from beverage products and eat-in services, which was partially offset by the increased cost of revenue from bakery products.
Our gross margin decreased slightly by 1.2 percentage points from 47.2% for the year ended December 31, 2021 to 46.0% for the year ended December 31, 2022. 83 The following table sets forth the breakdown of our gross profit for the years ended December 31, 2023, 2022, and 2021, respectively: For the Years Ended December 31, 2023 Margin % 2022 Margin % 2021 Margin % China Bakery products $ 6,072,510 48.5 % $ 4,018,410 46.2 % $ 5,550,817 47.5 % Other products 1,045,336 58.7 % 392,182 49.9 % 662,810 60.2 % Subtotal: gross margin and margin % from China 7,117,846 49.7 % 4,410,592 46.5 % 6,213,627 48.6 % United States Bakery products 35,406 8.0 % 208,284 34.0 % 168,686 35.6 % Beverage products 809,941 47.6 % 1,034,489 50.5 % 471,212 47.1 % Eat-in services 184,132 23.2 % 449,306 40.1 % 76,898 18.3 % Subtotal: gross margin and margin % from the United States 1,029,479 35.0 % 1,692,079 44.8 % 716,796 37.8 % Total Gross Margin and Margin % $ 8,147,325 47.2 % $ 6,102,671 46.0 % $ 6,930,423 47.2 % China Gross profit from China increased by $2,707,254, or 61.4%, from $4,410,592 for the year ended December 31, 2022 to $7,117,846 for the year ended December 31, 2023.
The following table sets forth the breakdown of our gross profit for the years ended December 31, 2024, 2023 and 2022, respectively: For the Years Ended December 31, 2024 Margin % 2023 Margin % 2022 Margin % China Bakery products $ 6,448,615 43.6 % $ 6,072,510 48.5 % $ 4,018,410 46.2 % Other products 732,843 54.3 % 1,045,336 58.7 % 392,182 49.9 % Subtotal: gross profit and margin % from China 7,181,458 44.5 % 7,117,846 49.7 % 4,410,592 46.5 % United States Bakery products (140,681 ) (27.8 )% 35,406 8.0 % 208,284 34.0 % Beverage products 400,069 31.3 % 809,941 47.6 % 1,034,489 50.5 % Eat-in services (246,528 ) (81.6 )% 184,132 23.2 % 449,306 40.1 % Subtotal: gross profit and margin % from the United States 12,860 0.6 % 1,029,479 35.0 % 1,692,079 44.8 % Total Gross Profit and Margin % $ 7,194,318 39.5 % $ 8,147,325 47.2 % $ 6,102,671 46.0 % China Gross profit from China remained relatively stable with a slight increase by $63,612, or 0.9%, from $7,117,846 for the year ended December 31, 2023 to $7,181,458 for the year ended December 31, 2024.
In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”. This ASU requires additional quantitative and qualitative income tax disclosures to enable financial statements users better assess how an entity’s operations and related tax risks and tax planning and operational opportunities affect its tax rate and prospects for future cash flows.
This ASU requires additional quantitative and qualitative income tax disclosures to enable financial statements users better assess how an entity’s operations and related tax risks and tax planning and operational opportunities affect its tax rate and prospects for future cash flows. This ASU is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted.
The gross margin increased by 7.0 percentage points from 37.8% for the year ended December 31, 2021 to 44.8% for the year ended December 31, 2022.
The gross margin increased by 3.2 percentage points from 46.5% for the year ended December 31, 2022 to 49.7% for the year ended December 31, 2023.
During the year ended December 31, 2023, the comparable store sales in China (excluding the impact of foreign currency translation) increased by 48.7%, as the PRC Stores have fully recovered from the COVID-19 pandemic.
During the year ended December 31, 2024, the comparable store sales in China (excluding the impact of foreign currency translation) increased by 10.7%.
The operating entities also use comparable store sales to evaluate current and likely future performance and as a measure of revenue growth to evaluate how established stores have performed over time compared to new stores. 77 For simplicity, our comparable store sales consist of revenue from the operating entities’ stores only after they have had two full years of operations, which is when we believe comparability is achieved.
The operating entities also use comparable store sales to evaluate current and likely future performance and as a measure of revenue growth to evaluate how established stores have performed over time compared to new stores.
This ASU is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. We plan to adopt this guidance effective January 1, 2025 and the adoption of this ASU is not expected to have a material impact on our financial statements.
This guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, on a retrospective or prospective basis, with early adoption permitted. We plan to adopt this guidance effective January 1, 2027 and we are currently evaluating the impact of adopting this ASU on our financial statements.
According to Announcement No. 12 [2021] of the SAT, the tax rate is reduced by half to 0.5% during the period from January 1, 2021 to December 31, 2023. For the year ended December 31, 2023, 13 of these UFG entities were subject to income tax assessed at 0.5% of TNI that ranged from RMB33,000 to RMB180,000 per month.
For the years ended December 31, 2023 and 2022, 13 of these UFG entities were subject to income tax assessed at 0.5% of TNI that ranged from RMB33,000 to RMB180,000 per month. The rest of these UFG entities were exempted from paying income tax.

… 169 more changes not shown on this page.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

21 edited+8 added−6 removed41 unchanged
The compensation committee is responsible for, among other things: ● reviewing and approving the total compensation package for our most senior executive officers; ● approving and overseeing the total compensation package for our executives other than the most senior executive officers; ● reviewing and recommending to the board with respect to the compensation of our directors; ● reviewing periodically and approving any long-term incentive compensation or equity plans; ● selecting compensation consultants, legal counsel or other advisors after taking into consideration all factors relevant to that person’s independence from management; and ● reviewing programs or similar arrangements, annual bonuses, employee pension and welfare benefit plans. 101 Nominating and Corporate Governance Committee .
The compensation committee is responsible for, among other things: ● reviewing and approving the total compensation package for our most senior executive officers; ● approving and overseeing the total compensation package for our executives other than the most senior executive officers; ● reviewing and recommending to the board with respect to the compensation of our directors; ● reviewing periodically and approving any long-term incentive compensation or equity plans; ● selecting compensation consultants, legal counsel or other advisors after taking into consideration all factors relevant to that person’s independence from management; and ● reviewing programs or similar arrangements, annual bonuses, employee pension and welfare benefit plans. 106 Nominating and Corporate Governance Committee .
Although we do not intend to rely on the controlled company exemptions under the Nasdaq listing rules even if we are a controlled company, we could elect to rely on these exemptions in the future, and if so, you would not have the same protection afforded to shareholders of companies that are subject to all of the corporate governance requirements of Nasdaq.
Although we do not intend to rely on the controlled company exemptions under the Nasdaq listing rules even if we are a controlled company, we could elect to rely on these exemptions in the future, and if so, you would not have the same protection afforded to shareholders of companies that are subject to all of the corporate governance requirements of Nasdaq. 103 B.
Mr. Du received his doctoral degree in Accounting from Central University of Finance and Economics in 2011. 97 Mr. Shuaiheng Zhang has served as our independent director since August 2023. Mr. Zhang has over 40 years of business and managerial experience in electronic components manufacturing and new energy industries. Since September 2019, Mr.
Mr. Du received his doctoral degree in Accounting from Central University of Finance and Economics in 2011. 102 Mr. Shuaiheng Zhang has served as our independent director since August 2023. Mr. Zhang has over 40 years of business and managerial experience in electronic components manufacturing and new energy industries. Since September 2019, Mr.
Gang Li, our chief executive officer, director, and Chairman, beneficially own approximately 93.61% of the aggregate voting power of our outstanding ordinary shares as of the date of this annual report. As a result, we are a “controlled company” within the meaning of the Nasdaq listing rules.
Gang Li, our chief executive officer, director, and Chairman, beneficially own approximately 93.80% of the aggregate voting power of our outstanding ordinary shares as of the date of this annual report. As a result, we are a “controlled company” within the meaning of the Nasdaq listing rules.
After March 2023, when our compensation committee was set up, the compensation committee is making all determination regarding executive officer compensation (please see below). 100 Committees of the Board of Directors We have established three committees under the board of directors: an audit committee, a compensation committee, and a nominating and corporate governance committee.
After March 2023, when our compensation committee was set up, the compensation committee is making all determination regarding executive officer compensation (please see below). 105 Committees of the Board of Directors We have established three committees under the board of directors: an audit committee, a compensation committee, and a nominating and corporate governance committee.
The registered address of Danton Global Limited is 3rd Floor, J & C Building, Road Town, Tortola, British Virgin Islands, VG1110. (3) Represents 270,000 Class A Ordinary Shares held by Haily Global Limited, a British Virgin Islands company, which is 100% owned by Ms. Jihong Cai.
The registered address of Danton Global Limited is 3 rd Floor, J & C Building, Road Town, Tortola, British Virgin Islands, VG1110. (3) Represents 270,000 Class A Ordinary Shares held by Haily Global Limited, a British Virgin Islands company, which is 100% owned by Ms. Jihong Cai.
Our board of directors have determined that our four independent directors, Yong Du, Shuaiheng Zhang, Shouhua Nie, and Jin Wang satisfy the “independence” requirements of the Nasdaq corporate governance rules. Duties of Directors Under Cayman Islands law, all of our directors owe three types of duties to us: (i) statutory duties, (ii) fiduciary duties, and (iii) common law duties.
Our board of directors have determined that our four independent directors, Yong Du, Shuaiheng Zhang, Jie Li, and Jin Wang satisfy the “independence” requirements of the Nasdaq corporate governance rules. Duties of Directors Under Cayman Islands law, all of our directors owe three types of duties to us: (i) statutory duties, (ii) fiduciary duties, and (iii) common law duties.
As of the date of this annual report, approximately 96.00% of our issued and outstanding Class A Ordinary Shares are held in the United States by two record holders, Danton Global Limited, a British Virgin Islands company which is 100% owned by Mr.
As of the date of this annual report, approximately 98.8% of our issued and outstanding Class A Ordinary Shares are held in the United States by two record holders, Danton Global Limited, a British Virgin Islands company which is 100% owned by Mr.
Each holder of Class A Ordinary Shares is entitled to one vote per one Class A Ordinary Share and each holder of Class B Ordinary Shares is entitled to 10 votes per one Class B Ordinary Share.
Each holder of Class A Ordinary Shares is entitled to one vote per one Class A Ordinary Share and each holder of Class B Ordinary Shares is entitled to 50 votes per one Class B Ordinary Share.
Each of the committees is comprised of our independent directors. We have adopted a charter for each of the three committees. Each committee’s members and functions are described below. Audit Committee . Our audit committee consists of our three independent directors, Yong Du, Shouhua Nie, and Shuaiheng Zhang. Yong Du is the chairperson of our audit committee.
Each of the committees is comprised of our independent directors. We have adopted a charter for each of the three committees. Each committee’s members and functions are described below. Audit Committee . Our audit committee consists of our three independent directors, Yong Du, Jie Li, and Shuaiheng Zhang. Yong Du is the chairperson of our audit committee.
Compensation Committee. Our compensation committee consists of our three independent directors, Yong Du, Shouhua Nie, and Shuaiheng Zhang. Shouhua Nie is the chairperson of our compensation committee. The compensation committee assists the board in reviewing and approving the compensation structure, including all forms of compensation, relating to our directors and executive officers.
Compensation Committee. Our compensation committee consists of our three independent directors, Yong Du, Jie Li, and Shuaiheng Zhang. Jie Li is the chairperson of our compensation committee. The compensation committee assists the board in reviewing and approving the compensation structure, including all forms of compensation, relating to our directors and executive officers.
Zhang served as the General Manager of Shenzhen SI Semiconductors Co., Ltd, a power semiconductor device manufacturer with international presence from July 2013 to December 2015. Mr. Zhang received his EMBA degree from Tsinghua University in 1998 and a bachelor’s degree from Xidian University in 1986. Mr. Shouhua Nie has served as our independent director since March 2023. Mr.
Zhang served as the General Manager of Shenzhen SI Semiconductors Co., Ltd, a power semiconductor device manufacturer with international presence from July 2013 to December 2015. Mr. Zhang received his EMBA degree from Tsinghua University in 1998 and a bachelor’s degree from Xidian University in 1986. Mr. Jie Li has served as our independent director since August 2024. Mr.
B. Compensation For the year ended December 31, 2023, we paid an aggregate of approximately $217,000 as compensation to our executive officers and directors. None of our non-employee directors have any service contracts with us that provide for benefits upon termination of employment.
Compensation For the year ended December 31, 2024, we paid an aggregate of approximately $235,750 as compensation to our executive officers and directors. None of our non-employee directors have any service contracts with us that provide for benefits upon termination of employment.
Our nominating and corporate governance committee consists of our three independent directors, Yong Du, Shouhua Nie, and Shuaiheng Zhang. Shuaiheng Zhang is the chairperson of our nominating and corporate governance committee.
Our nominating and corporate governance committee consists of our three independent directors, Yong Du, Jie Li, and Shuaiheng Zhang. Shuaiheng Zhang is the chairperson of our nominating and corporate governance committee.
(1) Unless otherwise indicated, the business address of each of the individuals is No. 26 Culture Road, Tianshan District, Urumqi, Xinjiang, China. (2) Represents 2,700,000 Class A Ordinary Shares and 5,670,000 Class B Ordinary Shares held by Danton Global Limited, a British Virgin Islands company, which is 100% owned by Mr. Gang Li.
(1) Unless otherwise indicated, the business address of each of the individuals is B9 Xinjiang Chuangbo Zhigu Industrial Park, No. 100 Guangyuan Road, Shuimogou District, Urumqi, Xinjiang, China. (2) Represents 2,700,000 Class A Ordinary Shares and 5,670,000 Class B Ordinary Shares held by Danton Global Limited, a British Virgin Islands company, which is 100% owned by Mr. Gang Li.
Percentage of beneficial ownership of each listed person is based on 6,755,319 Class A Ordinary Shares and 5,670,000 Class B Ordinary Shares outstanding as of the date of this annual report.
Percentage of beneficial ownership of each listed person is based on 21,629,707 Class A Ordinary Shares and 5,670,000 Class B Ordinary Shares outstanding as of the date of this annual report.
Name Age Position(s) Gang Li 57 Chairman and Chief Executive Officer Jihong Cai 53 Chief Financial Officer Yong Du 51 Independent Director Shuaiheng Zhang 60 Independent Director Shouhua Nie 43 Independent Director Jin Wang 44 Independent Director The following is a brief biography of each of the executive officers and directors listed above: Mr.
Name Age Position(s) Gang Li 58 Chairman and Chief Executive Officer Jihong Cai 54 Chief Financial Officer Yong Du 52 Independent Director Shuaiheng Zhang 61 Independent Director Jie Li 37 Independent Director Jin Wang 45 Independent Director The following is a brief biography of each of the executive officers and directors listed above: Mr.
In computing the number of Class A Ordinary Shares beneficially owned by a person listed below and the percentage ownership of such person, Class A Ordinary Shares underlying options, warrants, or convertible securities, including Class B Ordinary Shares, held by each such person that are exercisable or convertible within 60 days of the date of this annual report are deemed outstanding, but are not deemed outstanding for computing the percentage ownership of any other person. 102 Class A Ordinary Shares Beneficially Owned Class B Ordinary Shares Beneficially Owned Voting Power* Number % Number % % Directors and Executive Officers (1) : Gang Li (2) 2,700,000 39.97 % 5,670,000 100 % 93.61 % Jihong Cai (3) 270,000 4.00 % — — 0.43 % Yong Du — — — — — Shuaiheng Zhang — — — — — Shouhau Nie — — — — — Jin Wang — — — — — All directors and executive officers as a group (six individuals): 2,970,000 43.97 % 5,670,000 100 % 94.04 % 5% Shareholders: Danton Global Limited (2) 2,700,000 39.97 % 5,670,000 100 % 93.61 % * Represents the voting power with respect to all of our Class A Ordinary Shares and Class B Ordinary Shares, voting as a single class.
In computing the number of Class A Ordinary Shares beneficially owned by a person listed below and the percentage ownership of such person, Class A Ordinary Shares underlying options, warrants, or convertible securities, including Class B Ordinary Shares, held by each such person that are exercisable or convertible within 60 days of the date of this annual report are deemed outstanding, but are not deemed outstanding for computing the percentage ownership of any other person. 107 Class A Ordinary Shares Beneficially Owned Class B Ordinary Shares Beneficially Owned Voting Power# Number % Number % % Directors and Executive Officers (1) : Gang Li (2) 2,700,000 12.5 5,670,000 100.0 93.8 Jihong Cai (3) 270,000 1.2 — — * Yong Du — — — — — Shuaiheng Zhang — — — — — Jie Li — — — — — Jin Wang — — — — — All directors and executive officers as a group (six individuals): 2,970,000 13.7 5,670,000 100.0 93.9 5% Shareholders: Danton Global Limited (2) 2,700,000 12.5 5,670,000 100.0 93.8 Ma Jingjing (4) 1,234,568 7.8 — — * Wang Gehuang (5) 1,838,452 11.2 — — * Zhou Yingjia (6) 1,639,645 10.0 — — * Kong Yong (7) 2,016,762 12.2 — — * Zhang Minghui (8) 1,972,840 11.8 — — * Wei Xiushen (9) 1,627,347 9.9 — — * * Less than 1% # Represents the voting power with respect to all of our Class A Ordinary Shares and Class B Ordinary Shares, voting as a single class.
In fulfilling their duty of care to us, our directors must ensure compliance with our amended and restated articles of association. We have the right to seek damages if a duty owed by any of our directors is breached. 99 Our board of directors have all powers necessary for managing, directing and supervising our business affairs.
We have the right to seek damages if a duty owed by any of our directors is breached. 104 Subject to the Companies Act and our amended and restated memorandum and articles of association, our business shall be managed by our board of directors who may for that purpose exercise all the powers of the Company.
The registered address of Haily Global Limited is 3rd Floor, J & C Building, Road Town, Tortola, British Virgin Islands, VG1110. On February 5, 2024, Haily Global Limited elected to convert on a one-for-one basis 270,000 Class B Ordinary Shares into 270,000 Class A Ordinary Shares, which was duly approved by our board of directors.
(9) Information regarding beneficial ownership is based on the information contained in Schedule 13G/A filed by Wei Xiushen, whose address is 22 Fourth Avenue, Singapore 268663, with the SEC on September 27, 2024. 108 On February 5, 2024, Haily Global Limited elected to convert on a one-for-one basis 270,000 Class B Ordinary Shares into 270,000 Class A Ordinary Shares, which was duly approved by our board of directors.
Nie received his bachelor’s degree in Physics from Fudan University in 2003, his Ph.D. in Physics from Florida State University in 2008, and his master’s degree in Computational Finance from Carnegie Mellon University, Tepper School of Business, in 2009. Mr. Jin Wang has served as our independent director since November 2023. Mr.
Li has worked as a lawyer at Beijing DeHeng Law Offices (Urumqi) since April 2016. He received his Bachelor of Laws degree from Shandong University of Finance and Economics in 2008. Mr. Jin Wang has served as our independent director since November 2023. Mr.
Removed
Nie is a founding partner of Shenzhen Hanrong Investment Management Co., Ltd., an investment management company, and has served as its chief executive officer since April 2019. Prior to founding Shenzhen Hanrong Investment Management Co., Ltd., Mr.
Added
He received his Bachelor of Arts degree in Literature from Xiangtan University in 2002. Family Relationships None of our directors or executive officers has a family relationship as defined in Item 401 of Regulation S-K. Controlled Company Mr.
Removed
Nie served as a portfolio manager and head of the Derivatives Department of Zhejiang Egret Asset Management Co., Ltd., a hedge fund, from January 2018 to January 2019, and as a portfolio manager at the Quantitative Investment Group of First Seafront Fund Management Co., Ltd., an investment management company. Mr.
Added
In fulfilling their duty of care to us, our directors must ensure compliance with our amended and restated articles of association.
Removed
Nie also worked at BNP Paribas (OTCMKTS: BNPQY), a French international banking group, serving as an interest rate trader from November 2013 to September 2015 and as a quantitative analyst from June 2010 to November 2013. Mr.
Added
The registered address of Haily Global Limited is 3 rd Floor, J & C Building, Road Town, Tortola, British Virgin Islands, VG1110.
Removed
He received his Bachelor of Arts degree in Literature from Xiangtan University in 2002. Board Diversity The table below provides certain information regarding the diversity of our board of directors as of the date of this annual report.
Added
(4) Information regarding beneficial ownership is based on the information contained in Schedule 13G/A filed by Ma Jingjing, whose address is Building 48, No. 60, Lane 399, Jiangwancheng Road, Yangpu District, Shanghai, China 200438, with the SEC on September 27, 2024.
Removed
Board Diversity Matrix Country of Principal Executive Offices: China Foreign Private Issuer Yes Disclosure Prohibited under Home Country Law No Total Number of Directors 5 Female Male Non- Binary Did Not Disclose Gender Part I: Gender Identity Directors 0 5 0 0 Part II: Demographic Background Underrepresented Individual in Home Country Jurisdiction 0 LGBTQ+ 0 Did Not Disclose Demographic Background 0 Family Relationships None of our directors or executive officers has a family relationship as defined in Item 401 of Regulation S-K. 98 Controlled Company Mr.
Added
(5) Information regarding beneficial ownership is based on the information contained in Schedule 13G/A filed by Wang Gehuang, whose address is No.153, Wang Jia Wan Zu, Wang Jia Wan Cun, Yun Hu Qiao Zhen, Xian Tan County, Hunan Province, China 411100, with the SEC on September 27, 2024.
Removed
The functions and powers of our board of directors include, among others: ● convening shareholders’ general meetings of shareholders; ● declaring dividends and distributions; ● appointing officers and determining the term of office of the officers; ● exercising the borrowing powers of the company and mortgaging the property of the company; and ● maintaining or registering a register of mortgages, charges, or other encumbrances of the company.
Added
(6) Information regarding beneficial ownership is based on the information contained in Schedule 13G/A filed by Zhou Yingjia, whose address is 28F, Block A, Yuan Zhong Hua Yuan, 6 Yuan Ling Si Street, Fu Tian District, Shenzhen City, Guangdong Province, China 518000, with the SEC on September 27, 2024.
Added
(7) Information regarding beneficial ownership is based on the information contained in Schedule 13G/A filed by Kong Yong, whose address is Group 3, Ping’ao Village, Shadui Town, Tongcheng County, Hubei Province, China 437400, with the SEC on September 27, 2024.
Added
(8) Information regarding beneficial ownership is based on the information contained in Schedule 13G filed by Zhang Minghui, whose address is No.2713, Block 2, Jin Run Dong Fang Gong Yu, 3 Da Ya Wan Road, Da Ya Wan District, Huizhou City, Guangdong Province, China 516200, with the SEC on September 24, 2024.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

9 edited+6 added−0 removed3 unchanged
Key Information—Our Corporate Structure—The United Family Group.” 103 Material Transactions with Related Parties During the year ended December 31, 2023 and as of the date of this annual report, we have engaged in the following related party transactions.
Key Information—Our Corporate Structure—The United Family Group.” Material Transactions with Related Parties During the year ended December 31, 2024 and as of the date of this annual report, we have engaged in the following related party transactions.
On September 7, 2023, Xinjiang United Family entered into a loan agreement with Bank of China to borrow RMB10.0 million ($1,412,469) as working capital for a year, with a maturity date of September 6, 2024. The loan bears a fixed interest rate of 3.55% per annum. The loan is guaranteed by Mr. Gang Li and Ms. Ying Xiong.
Guarantees by Related Parties On September 7, 2023, Xinjiang United Family entered into a loan agreement with Bank of China to borrow RMB10.0 million ($1,412,469) as working capital for a year, with a maturity date of September 6, 2024. The loan bears a fixed interest rate of 3.55% per annum. The loan is guaranteed by Mr.
Gang Li on behalf of the Company, and recorded in the Company’s consolidated financial statements in a timely manner. The outstanding amount is expected to be repaid before June 30, 2024.
These payables were unsecured, non-interest bearing, and due on demand. All expenses and liabilities were paid by Mr. Gang Li on behalf of the Company, and recorded in the Company’s consolidated financial statements in a timely manner. The outstanding amount is expected to be repaid before June 30, 2025.
Gang Li, provided approximately 5,382 square feet office space for our headquarters and 10,763 square feet for the old central factory of the PRC Stores without charge. The term of the agreement is from January 1, 2020 to June 25, 2028, unless otherwise terminated by either party.
Gang Li, provided approximately 5,382 square feet office space for our headquarters and 10,763 square feet for the old central factory of the PRC Stores without charge.
In addition, Xinjiang United Family pledged its trademark rights as collateral to guarantee the Company’s loan from Bank of China. On November 15, 2023, Xinjiang United Family entered into a loan agreement with Tianshan Rural Commercial Bank to borrow RMB3.0 million ($423,741) as working capital for a year, with a maturity date of November 14, 2024.
Ying Xiong. The loan was repaid in full upon maturity. On December 19, 2023, Xinjiang United Family entered into another loan agreement with Tianshan Rural Commercial Bank to borrow RMB3.0 million ($423,741) as working capital for a year, with a maturity date of December 18, 2024.
On December 22, 2023, Xinjiang United Family entered into another loan agreement with Huaxia Bank to borrow RMB3.0 million ($423,741) as working capital for a year, with a maturity date of December 20, 2024. The loan bears a fixed interest rate of 5.00% per annum. Both loans were guaranteed by Ms. Baolin Wang, and Urumqi Plastic Surgery Hospital Co., Ltd.
On November 15, 2023, Xinjiang United Family entered into a loan agreement with Tianshan Rural Commercial Bank to borrow RMB3.0 million ($423,741) as working capital for a year, with a maturity date of November 14, 2024. The loan bears a fixed interest rate of 5.50% per annum. The loan is guaranteed by Mr. Gang Li and his family member, Ms.
Guarantees by Related Parties On December 23, 2022, Xinjiang United Family entered into a loan agreement with Huaxia Bank to borrow RMB3.0 million ($434,959) as working capital for a year, with a maturity date of December 23, 2023. The loan bears a fixed interest rate of 3.95% per annum. The loan was repaid in full upon maturity.
On December 22, 2023, Xinjiang United Family entered into a loan agreement with Huaxia Bank to borrow RMB3.0 million ($423,741) as working capital for a year, with a maturity date of December 20, 2024. The loan was repaid on December 17, 2024.
The loan bears a fixed interest rate of 5.50% per annum. The loan is guaranteed by Mr. Gang Li and Ms. Ying Xiong. C. Interests of Experts and Counsel Not applicable.
The loan was withdrawn on January 29, 2024 and bears a fixed interest rate of 5.50% per annum. The loan is guaranteed by Mr. Gang Li and his family member, Ms. Ying Xiong, and two third parties. The loan was repaid in full upon maturity.
Due to a Related Party As of December 31, 2023, due to a related party of $48,042 primarily represented advances provided by Mr. Gang Li, to fund the Company’s operations. These payables were unsecured, non-interest bearing, and due on demand. All expenses and liabilities were paid by Mr.
The term of the agreement is from January 1, 2020 to June 25, 2028, unless otherwise terminated by either party. 109 Due to a Related Party As of December 31, 2024, due to a related party of $772,489 primarily represented advances provided by Mr. Gang Li, to fund the Company’s operations.
Added
Gang Li and his family member, Ms. Ying Xiong. In addition, Xinjiang United Family pledged its trademark rights as collateral to guarantee the Company’s loan from Bank of China. The loan was repaid in full upon maturity.
Added
Subsequently, on December 20, 2024, Xinjiang United Family entered into another loan agreement with Huaxia Bank to borrow RMB3.0 million ($411,043) as working capital for three months, with a maturity date of March 19, 2025. The loan was also repaid on March 19, 2025. These two loans both bear a fixed interest rate of 5.00% per annum.
Added
The loans were guaranteed by Ms. Baolin Wang, the legal representative of Xinjiang United Family, and Urumqi Plastic Surgery Hospital Co., Ltd., a related party that is controlled by Mr. Gang Li, the Chairman of the Company.
Added
On September 12, 2024, Xinjiang Xinjiang United Family entered into a loan agreement with Bank of China to borrow RMB10.0 million ($1,370,145) as working capital for a year, with a maturity date of September 11, 2025. The loan bears a fixed interest rate of 3.45% per annum.
Added
The Company is required to make a quarterly installment payment of RMB 2.0 million ($274,029) within the term of the loan, with last installment of RMB 4.0 million ($548,058) to be paid at maturity date. The loan is guaranteed by Mr. Gang Li and his family member, Ms. Ying Xiong.
Added
In addition, Xinjiang United Family pledged its trademark rights as collateral to guarantee the Company’s loan from Bank of China. As of date of this annual report, the loan was repaid as scheduled. C. Interests of Experts and Counsel Not applicable.