As filed with the Securities and Exchange Commission on October 4, 2024

Registration No. 333-          

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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Form F-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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MAJESTIC IDEAL HOLDINGS LTD

(Exact Name of Registrant as Specified in its Charter)

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22/F, China United Plaza, 1008, Tai Nan West Street,
Cheung Sha Wan, Kowloon, Hong Kong
+852 3915 2600
(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

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Cogency Global Inc.
122 East 42nd Street, 18th Floor
New York, NY 10168
+1 800-221-0102
(Name, address, including zip code, and telephone number, including area code, of agent for service)

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Copies to:

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Approximate date of commencement of proposed sale to the public: As soon as practicable after effectiveness of this registration statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☒

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.

Emerging growth company ☒

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

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†         The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission acting pursuant to said Section 8(a), may determine.

MAJESTIC IDEAL HOLDINGS LTD

2,500,0001 ORDINARY SHARES

This is an initial public offering of the ordinary shares, par value US$0.0000625 per share (“Shares”) of Majestic Ideal Holdings Ltd (“MIHL”). We are offering 2,500,000 Shares of MIHL, representing 12.2% of the Shares following the completion of this offering, assuming the underwriters do not exercise the over-allotment option. The Selling Shareholders are offering 1,250,000 Shares to be sold pursuant to the Resale Prospectus. We will not receive any proceeds from the sale of the Ordinary Shares to be sold by the Selling Shareholder.

No public market currently exists for our Shares. The initial public offering price is expected to be between $4.0 and $5.0 per Share. We have applied to list our Shares on the Nasdaq Capital Market under the symbol “MJID”. At this time, Nasdaq Capital Market has not yet approved our application to list our ordinary shares. The closing of this offering is conditioned upon Nasdaq Capital Market’s final approval of our listing application. However, there is no assurance that this offering will be closed and our Shares will be trading on the Nasdaq Capital Market. If the Nasdaq Capital Market does not approve our listing application this initial public offering will be terminated.

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 and will be subject to reduced public company reporting requirements. See “Prospectus Summary — Implications of Being an Emerging Growth Company and a Foreign Private Issuer.”

Upon the completion of this offering and the sale of our Ordinary Shares by the Selling Shareholders pursuant to the Resale Prospectus filed contemporaneously herewith, we will be a “controlled company” as defined under the Nasdaq Stock Market Rules because our Controlling Shareholders will own 74.7%1 of our total issued and outstanding Shares, representing 74.7%1 of the total voting power, assuming that the representatives of the underwriters do not exercise the over-allotment option.

We are not a Chinese operating company, but an offshore holding company incorporated in the Cayman Islands. As a holding company with no material operations of our own, we conduct our operations through our operating company in China, New Brand. This is an offering of the Shares of Majestic Ideal Holdings Ltd, the holding company in the Cayman Islands, instead of the shares of New Brand. References to the “Company”, “we”, “us”, and “our” in the prospectus are to MIHL, the Cayman Island entity that will issue the Shares being offered. References to “New Brand” are to the PRC entity operating the business and generating all the revenue and profit stated in the consolidated financial statements of the Company. The Company’s ownership interest in New Brand is held through intermediate companies in BVI and Hong Kong. Investors in our Shares should be aware that they may never hold equity interests in the Chinese operating company directly. Investors are purchasing equity solely in MIHL, our Cayman Islands holding company, which indirectly owns equity interests in the Chinese operating company. Because of our corporate structure, we as well as our investors are subject to unique risks due to uncertainty of the interpretation and the application of PRC laws and regulations. We are also subject to the risks of uncertainty about any future actions of the PRC government in this regard. We may also be subject to sanctions imposed by PRC regulatory agencies including the China Securities Regulatory Commission (“CSRC”), if we fail to comply with their rules and regulations. PRC regulatory authorities could disallow our operating structure in the future, and this would likely result in a material change in our operations in China and/or the value of our Shares, which could cause the value of such securities to significantly decline or become worthless. See “Risk Factors” beginning on page 16 of this prospectus for a discussion of risks facing the Company and the offering as a result of this structure.

There are legal and operational risks associated with being based in and having the majority of our operations in China. The PRC government may exercise significant oversight and discretion over the conduct of our business and may intervene or influence our operations at any time. Such government actions could result in a material change in our operations and/or the value of the securities we are registering for sale; could significantly limit or completely hinder our ability to continue our operations; could significantly limit or completely hinder our ability to offer or continue to offer our securities to investors; and may cause the value of our securities to significantly decline or be worthless.

Recently, the PRC government initiated a series of regulatory actions and made a number of public statements on the regulation of business operations in certain areas in China, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas using VIE structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. We do not believe that we are directly subject to these regulatory actions or statements, as we do not have a VIE structure and our business does not involve the collection of user data, implicate cybersecurity, or involve any other type of restricted industry. Since these statements and regulatory actions are new, it is highly uncertain how soon the legislative or administrative regulation making bodies will respond and what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, if any, or the potential impact such modified or new laws and regulations will have on our daily business operations or our ability to accept foreign investments and list on a U.S. exchange. Any change in foreign investment regulations, and other policies in China or related enforcement actions by China government could result in a material change in our operations and/or the value of the securities we are registering for sale and could significantly limit or completely hinder our ability to offer or continue to offer our securities to investors or cause the value of our Shares to significantly decline or be worthless.

Pursuant to the Holding Foreign Companies Accountable Act (“HFCA Act”), the Public Company Accounting Oversight Board (the “PCAOB”) issued a Determination Report on December 16, 2021 which found that the PCAOB is unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and in Hong Kong, a Special Administrative Region of the PRC, because of positions taken by PRC authorities in those jurisdictions. In addition, the PCAOB’s report identified the specific registered public accounting firms which are subject to these determinations. Our auditor, WWC, P.C., the independent registered public accounting firm that issued the audit report included in this prospectus, is a PCAOB-registered public accounting firm headquartered in San Mateo, California. Our auditor is subject to laws in the U.S. pursuant to which the PCAOB conducts regular inspections to assess an auditor’s compliance with the applicable professional standards, and has been inspected by the PCAOB on a regular basis. As of the date of this prospectus, our auditor has not been subject to PCAOB’s determinations and our offering has not been affected by the HFCA Act and related regulations. Notwithstanding the foregoing, if the PCAOB is not able to fully conduct inspections of our audit works in China, you may be deprived of the benefits of such inspection which could result in limitation or restriction to our access to the U.S. capital markets and trading of our Shares

TABLE OF CONTENTS

Through and including            2024 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.

You should rely only on the information contained in this prospectus and any related free-writing prospectus that we authorize to be distributed to you. Neither we nor the Selling Shareholders have authorized any person, including any underwriter, to provide you with information different from that contained in this prospectus or any related free-writing prospectus that we authorize to be distributed to you. This prospectus is not an offer to sell, nor is it seeking an offer to buy, the Shares in any state or jurisdiction where such offer or sale is not permitted. The information in this prospectus speaks only as of the date of this prospectus unless the information specifically indicates that another date applies, regardless of the time of delivery of this prospectus or of any sale of the Shares offered hereby. Our business, financial condition, results of operations, and prospects may have changed since that date. Neither we nor the Selling Shareholders take any responsibility for, nor do we or the Selling Shareholders provide any assurance as to the reliability of, any information other than the information in this prospectus and any free writing prospectus prepared by us or on our behalf. Neither the delivery of this prospectus nor the sale of our Shares means that information contained in this prospectus is correct after the date of this prospectus.

You may lose all of your investment in our Shares. If you are uncertain as to our business and operations or you are not prepared to lose all of your investment in our Shares, we strongly urge you not to purchase any of our Shares. We recommend that you consult legal, financial, tax, and other professional advisors or experts for further guidance before participating in the offering of our Shares as further detailed in this prospectus.

We do not recommend that you purchase our Shares unless you have prior experience with investments in capital markets, possess basic knowledge of the apparel supply chain management industry, and have received independent professional advice.

Market and Industry Data

This prospectus includes statistics, other data and descriptive information relating to markets, market sizes, and other industry data pertaining to our business that we have obtained from industry publications and surveys, government publications and other information available to us. Industry publications and surveys generally state that the information contained therein has been obtained from sources believed to be reliable. We have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions relied upon therein. Market data and statistics are inherently predictive and speculative and are not necessarily reflective of actual market conditions. Such statistics are based on market research, which itself is based on sampling and subjective judgments by both the researchers and the respondents, including judgments about what types of products and transactions should be included in the relevant market. In addition, the value of comparisons of statistics for different markets is limited by many factors, including that (i) the markets are defined differently, (ii) the underlying information was gathered by different methods, and (iii) different assumptions were applied in compiling the data. Accordingly, the market statistics included in this prospectus should be viewed with caution. We believe that information from these industry publications included in this prospectus is reliable.

Trademarks, Service Marks, and Trade Names

Solely for convenience, the trademarks, service marks, and trade names referred to in this prospectus are without the ® and TM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks, service marks and trade names. This prospectus contains additional trademarks, service marks, and trade names of others, which are the property of their respective owners. We do not intend our use or display of other companies’ trademarks, service marks, or trade names to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

RISK FACTORS

Investing in our Shares is highly speculative and involves a significant degree of risk. You should carefully consider the following risks, as well as other information contained in this prospectus, before making an investment in our company. The risks discussed below could materially and adversely affect our business, prospects, financial condition, results of operations, cash flows, ability to pay dividends and the trading price of our Shares. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially and adversely affect our business, prospects, financial condition, results of operations, cash flows and ability to pay dividends, and you may lose all or part of your investment.

Risks Related to Doing Business in China

Uncertainties with respect to the PRC legal system, including risks and uncertainties regarding the enforcement of laws, and sudden or unexpected changes in laws and regulations in the PRC with little advance notice could result in a material change in our operations and/or the value of the securities we are registering for sale.

There are substantial uncertainties regarding the interpretation and application of PRC laws and regulations. The PRC legal system is based on written statutes and their legal interpretations by the Standing Committee of the National People’s Congress. Previous court decisions may be cited for reference but have limited precedential value. Since 1979, the PRC government has been developing a comprehensive system of commercial laws, and considerable progress has been made in introducing laws and regulations dealing with economic matters such as foreign investment, corporate organization and governance, commerce, taxation and trade. However, as these laws and regulations are relatively new, and due to the limited volume of published cases and their non-binding nature, interpretation and enforcement of these laws and regulations involve uncertainties. These laws and regulations are sometimes vague and may be subject to future changes, and their official interpretation and enforcement could be unpredictable, with little advance notice which could result in a material change in our operations and/or the value of our Shares. It is also uncertain whether having several of our directors and officers located in Hong Kong will subject us to the oversight of the Chinese authorities in the future.

Furthermore, the PRC legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or at all and may have a retroactive effect. As a result, we may not be aware of our violation of any of these policies and rules until sometime after the violation. In addition, any administrative and court proceedings in China may be protracted, resulting in substantial costs and diversion of resources and management attention.

The PRC government may intervene or influence our operations at any time, which could result in a material change in our operations and/or the value of the securities we are registering for sale.

MIHL is a holding company and we conduct our operations through our PRC subsidiary New Brand in China. Our operations are all located in China, and all of our clients are PRC persons. The PRC government may choose to exercise significant oversight and discretion, and the regulations to which we are subject may change rapidly and with little notice to us or our shareholders. As a result, the application, interpretation, and enforcement of new and existing laws and regulations in China are often uncertain. In addition, these laws and regulations may be interpreted and applied inconsistently by different agencies or authorities, and inconsistently with our current policies and practices. New laws, regulations, and other government directives in China may also be costly to comply with, and such compliance or any associated inquiries or investigations or any other government actions may:

•        delay or impede our development;

•        result in negative publicity or increase our operating costs;

•        require significant management time and attention; and

•        subject us to remedies, administrative penalties and even criminal liabilities that may harm our business, including fines assessed for our current or historical operations, or demands or orders that we modify or even cease our business practices.

The promulgation of new laws or regulations, or the new interpretation of existing laws and regulations, in each case that restrict or otherwise unfavorably impact the ability or manner in which we conduct our business could require us to change certain aspects of our business to ensure compliance, which could decrease demand for our products, increase costs, require us to obtain more licenses, permits, approvals or certificates, or subject us to additional liabilities. To the extent any new or more stringent measures are required to be implemented, our operations could be materially and adversely affected as well as the value of our Shares.

Any actions by the PRC government to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers, such actions could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or become worthless.

Recent statements by the PRC government have indicated an intent to exert more exert oversight and control over offerings that are conducted overseas and/or foreign investments in China based issuers. On December 28, 2021 the CAC, the NDRC, and several other administrations jointly adopted and published the new Measures for Cybersecurity Review (“New Measures”), which came into effect on February 15, 2022. According to the New Measures, an operator of critical information infrastructure who purchase network products or services that affects or may affect national security or a network platform operator who possesses the personal information of more than 1 million users and intends to list in a foreign country shall declare to the Office of Cybersecurity Review for cybersecurity review. Our business belongs to the apparel SCM industry, which does not involve the collection of user data, implicate cybersecurity, or involve any other type of restricted industry. As a result, the likelihood of us being subject to the review of the CAC is remote.

On February 17, 2023, the CSRC issued the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Enterprises, or the Trial Measures, which have become effective on March 31, 2023. According to the Trial Measures, our offering will be identified as an indirect overseas issuance and listing of New Brand by CSRC, we shall fulfill the filing procedure with the CSRC as per requirement of the Trial Measures. On May 11, 2023, the Company submitted the filing materials to the CSRC, and the Company subsequently obtained approval from the CSRC on July 24, 2023. On November 15, 2023, the Company submitted further filing materials to the CSRC as an update. As of the date of this prospectus, the aforementioned approval of the CSRC has exceeded the validity period and has lapsed. The Company will re-submit the filing to the CSRC in accordance with the Trial Measures.

As of the date of this prospectus, except for the filing required by the CSRC, our registered public offering in the U.S. is not subject to the review nor prior approval of the CAC. Uncertainties still exist, however, due to the possibility that laws, regulations, or policies in the PRC could change rapidly in the future. The promulgation of new laws or regulations, or the new interpretation of existing laws and regulations may restrict or otherwise unfavorably impact our ability or way to conduct business and may require us to change certain aspects of our business to ensure compliance, which could decrease demand for our services, reduce revenues, increase costs, require us to obtain more licenses, permits, approvals or certificates, or subject us to additional liabilities.

In the event that (i) the PRC government expands the categories of industries and companies whose foreign securities offerings are subject to review by the CAC that we are required to obtain such permissions or approvals; or (ii) we inadvertently concluded that relevant permissions or approvals were not required or that we did not receive or maintain relevant permissions or approvals required, any action taken by the PRC government could significantly limit or completely hinder our operations, significantly limit or completely hinder our ability to offer our Shares to investors and cause the value of such Shares to significantly decline or become worthless.

Recent joint statement by the SEC and PCAOB, Nasdaq’s proposed rule changes and the HFCA Act all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB.

The HFCA Act was enacted on December 18, 2020. The HFCA Act states if the SEC determines that a company has filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the PCAOB for three consecutive years beginning in 2021, the SEC will prohibit the company’s shares from being traded on a national securities exchange and in over the counter markets in the U.S.

On March 24, 2021, the SEC adopted interim final rules relating to the implementation of certain disclosure and documentation requirements of the HFCA Act. A company will be required to comply with these rules if the SEC

identifies it as having a “non-inspection” year under a process to be subsequently established by the SEC. The SEC is assessing how to implement other requirements of the HFCA Act, including the listing and trading prohibition requirements described above. On December 2, 2021, the SEC adopted final amendments implementing the disclosure and submission requirements of the HFCA Act.

On June 22, 2021, the Senate passed the Accelerating Holding Foreign Companies Accountable Act, which, if enacted, would decrease the number of non-inspection years from three years to two years, and thus, would reduce the time before our securities may be prohibited from trading or delisted.

The SEC adopted rules to implement the HFCA Act and, pursuant to the HFCA Act, the PCAOB issued its report on December 16, 2021, notifying SEC of its determination that it is unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China or Hong Kong because of a position taken by one or more authorities in China or in Hong Kong, respectively. The rules apply to foreign issuers whose registered public accounting firm is located in a foreign jurisdiction that does not permit the PCAOB to inspect or investigate (“Commission-Identified Issuers”). The rules further provides notice regarding the procedures the SEC has established to identify issuers and to impose trading prohibitions on the securities of certain Commission-Identified Issuers, as required by the HFCA Act. Our auditor, WWC, P.C., is an independent registered public accounting firm that issues the audit report included elsewhere in this prospectus. As an auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, it is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards. Our auditor is currently subject to PCAOB inspections and PCAOB is able to inspect our auditor in relation to our U.S. listing. The recent developments therefore would add uncertainties to our offering, and we cannot assure you whether U.S. regulatory authorities would apply additional and more stringent criteria to us after considering the effectiveness of our auditor’s audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach or experience as it relates to the audit of our financial statements.

On August 26, 2022, the PCAOB signed the SOP Agreements with the CSRC and China’s Ministry of Finance. Pursuant to the fact sheet with respect to the Protocol disclosed by the SEC, the SOP Agreements established a specific, accountable framework to make possible complete inspections and investigations by the PCAOB of audit firms based in mainland China and Hong Kong, as required under U.S. law. On December 15, 2022, the PCAOB Board determined that the PCAOB was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and voted to vacate its previous determinations to the contrary. However, should PRC authorities obstruct or otherwise fail to facilitate the PCAOB’s access in the future, the PCAOB Board will consider the need to issue a new determination. Notwithstanding the foregoing, in the event it is later determined that the PCAOB is unable to inspect or investigate completely our auditor, then such lack of inspection could cause our securities to be delisted from the stock exchange. On June 22, 2021, the U.S. Senate passed Accelerating Holding Foreign Companies Accountable Act and on December 29, 2022, the Consolidated Appropriations Act was signed into law by President Biden, which contained, among other things, an identical provision to Accelerating Holding Foreign Companies Accountable Act and amended the Holding Foreign Companies Accountable Act by requiring the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three, thus reducing the time before our Ordinary Shares may be prohibited from trading or delisted.

Uncertainties of the ability of auditors to comply with the requirements of the HFCA Act, as well as further rulemakings by U.S, regulators with respect to their work in China, could cause the market price of our Shares to fall. If the PCAOB determines that it cannot inspect the audits of New Brand, our PRC operating subsidiary; or Multi Ridge, our Hong Kong investment holding subsidiary and the sole shareholder of New Brand, the trading of our securities may be prohibited under the HFCA Act and, as a result, the Nasdaq may delist our securities. The delisting of our Ordinary Shares, or the threat of their being delisted, may materially and adversely affect the value of your investment.

In light of recent events indicating greater oversight by the Cyberspace Administration of China over data security, particularly for companies seeking to list on a foreign exchange, we may be subject to a variety of PRC laws and other obligations regarding data protection and any other rules, and any failure to comply with applicable laws and obligations could have a material and adverse effect on our business and the offering.

Our operations are located in China and our clients are PRC persons. As such we are subject to PRC laws relating to the collection, use, sharing, retention, security, and transfer of confidential and private information, such as personal information and other data. These laws apply not only to third-party transactions, but also other parties with which we have commercial relations. These laws continue to develop, and the PRC government may adopt other rules and restrictions in the future. Non-compliance could result in penalties or other significant legal liabilities.

The PRC regulatory requirements regarding cybersecurity are evolving. For instance, various regulatory bodies in the PRC, including the CAC, the Ministry of Public Security, and the SAMR, have enforced data privacy and protection laws and regulations with varying and evolving standards and interpretations. The Cybersecurity Law, which was adopted by the National People’s Congress on November 7, 2016, and the Cybersecurity Review Measures, which were promulgated on April 13, 2020, provide that personal information and important data collected and generated by an operator of critical information infrastructure in the course of its operations in China must be stored in China, and if an operator of critical information infrastructure purchases internet products and services that affect or may affect national security, it will be subject to cybersecurity review by the CAC. On June 10, 2021, the Standing Committee of the National People’s Congress promulgated the Data Security Law, which took effect on September 1, 2021. The Data Security Law requires that data shall not be collected by theft or other illegal means, and also provides for a data classification and hierarchical protection system. The data classification and hierarchical protection system puts data into different groups according to its importance in economic and social development, and the damages it may cause to national security, public interests, or the legitimate rights and interests of individuals and organizations in case the data is falsified, damaged, disclosed, illegally obtained or illegally used. If any of our data processing activities conducted after the Data Security Law became effective were found to be not in compliance with this law, we could be ordered to make corrections, and under certain serious circumstances, such as severe data divulgence, we could be subject to penalties, including the revocation of our business licenses or other permits. Furthermore, the recently issued Opinions on Strictly Cracking Down Illegal Securities Activities in Accordance with the Law require (i) speeding up the revision of the provisions on strengthening the confidentiality and archives management relating to overseas issuance and listing of securities and (ii) improving the laws and regulations relating to data security, cross-border data flow, and management of confidential information. As there remain uncertainties regarding the further interpretation and implementation of those laws and regulations, we cannot assure you that we will be compliant such new regulations in all respects, and we may be ordered to rectify and terminate any actions that are deemed illegal by the regulatory authorities and become subject to fines and other sanctions.

We believe, based on the opinion of our PRC counsel, Commerce & Finance Law Offices, that as of the date of this prospectus, according to the New Measures, if an operator of critical information infrastructure who purchase network products or services that affects or may affect national security or a network platform operator who possesses the personal information of more than 1 million users and intends to list in a foreign country shall declare to the Office of Cybersecurity Review for cybersecurity review. The New Measures further elaborates the factors to be considered when assessing the national security risks of the relevant activities, including, among others, (i) the risk of core data, important data or a large amount of personal information being stolen, leaked, destroyed, and illegally used or exited the country; and (ii) the risk of critical information infrastructure, core data, important data or a large amount of personal information being affected, controlled, or maliciously used by foreign governments after listing abroad. As of the date of this prospectus, the Company and its PRC Subsidiary have possessed substantially less than 1 million users of personal information in their business operations and neither the Company nor its PRC Subsidiary is recognized as an “operator of critical information infrastructure” by any authentic authority. Therefore, we do not believe that New Brand is deemed to be an “operator of critical information infrastructure” or “network platform operator” controlling personal information of no less than one million users. We are required to collect and retain some basic information furnished by our customers, suppliers and employees in accordance with prevailing business practices, but we do not handle a large amount of personal and confidential data in the ordinary course of business. As of the date of this prospectus, we have not been involved in any investigations on cybersecurity or data security initiated by related governmental regulatory authorities, and we have not received any inquiry, notice, warning, or sanction in such respect. Our PRC subsidiary New Brand has received all necessary permissions required to obtain from PRC authorities to operate its current business in China, including Business License, Customs Registration Certificate and Bank Account Open Permit.

However, given the recent events indicating greater oversight by the CAC over data security, particularly for companies seeking to list on a foreign exchange, it remains uncertain as to how the New Measures will be interpreted or implemented. There remains significant uncertainty as to the enactment, interpretation and implementation of regulatory requirements related to current and future PRC laws, overseas securities offerings and other capital markets activities. PRC regulatory agencies, including the CAC, may adopt new laws, regulations, rules, or detailed implementation and interpretation related to the New Measures. They may also take actions requiring us, or making it advisable for us, to halt this offering before the settlement and delivery of the Shares that we are offering. If any such new laws, regulations, rules, or implementation and interpretation come into effect, we expect to take all reasonable measures and actions to comply therewith. In the event of a failure to comply, we may be required to suspend our relevant businesses and become subject to fines and other penalties. If the CAC or other PRC regulatory agencies

later promulgate new rules or explanations requiring that we obtain their approvals for this offering and any follow-on offering, we may be unable to obtain such approvals, which could significantly limit or completely hinder our ability to offer or continue to offer securities to our investors.

You may experience difficulties in effecting service of process, enforcing foreign judgments or bringing actions in China against us or our management named in this prospectus based on foreign laws.

MIHL is incorporated under the laws of the Cayman Islands, but all of our operations and assets are held by our operating subsidiary, New Brand, in China. In addition, substantial amount of our assets is located in China and most of our senior executive officers and directors reside within mainland China or Hong Kong for a significant portion of the time. As a result, it may be difficult or impossible for investors to effect service of process on us inside mainland China. It may also be difficult for you to enforce in U.S. courts judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities laws against us and our officers and directors. Moreover, there is uncertainty as to whether the courts of the PRC would recognize or enforce judgments of U.S. courts against us or such persons predicated upon the civil liability provisions of the securities laws of the United States or any state.

The recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedures Law. PRC courts may recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedures Law based either on treaties between China and the country where the judgment is made or on principles of reciprocity between jurisdictions. China does not have any treaties or other forms of written arrangement with the United States that provide for the reciprocal recognition and enforcement of foreign judgments. In addition, according to the PRC Civil Procedures Law, the PRC courts will not enforce a foreign judgment against us or our directors and officers if they decide that the judgment violates the basic principles of PRC laws or national sovereignty, security or public interest. As a result, it is uncertain whether and on what basis a PRC court would enforce a judgment rendered by a court in the United States or in the Cayman Islands. In addition, it will be difficult for U.S. shareholders to originate actions against us in China in accordance with PRC laws because we are incorporated under the laws of the Cayman Islands and it will be difficult for U.S. shareholders, by virtue only of holding our Shares, to establish a connection to the PRC for a PRC court to have jurisdiction as required under the PRC Civil Procedures Law.

We are a holding company and our ability to pay dividends is primarily dependent upon the earnings of, and distributions by, our PRC subsidiary.

The Shares offered in this prospectus are those of MIHL. MIHL is a holding company incorporated under the laws of the Cayman Islands with limited liability. The majority of our business operations are conducted through our PRC subsidiary New Brand, and hence, our revenue and profit are substantially contributed by our PRC subsidiary. Although we have paid dividends to our Controlling Shareholders in the past, we do not intend to pay dividends in the near future. See “Dividend Policy”.

Our ability to pay dividends to our shareholders is primarily dependent upon the earnings of our PRC subsidiary and its distribution of funds to us, primarily in the form of dividends. The ability of our PRC subsidiary to make distributions to us depends upon, among others, their distributable earnings. Under the PRC laws, payment of dividends is only permitted out of accumulated profits according to PRC accounting standards and regulations, and our PRC subsidiary is also required to set aside part of its after-tax profits to fund certain reserve funds that are not distributable as cash dividends. Other factors such as cash flow conditions, restrictions on distributions contained in our PRC subsidiary’s articles of associations, restrictions contained in any debt instruments, withholding tax and other arrangements will also affect the ability of our PRC subsidiary to make distributions to us. These restrictions could reduce the amount of distributions that we receive from our PRC subsidiary, which in turn would restrict our ability to pay dividends on the Shares. The amounts of distributions that any of MIHL’s subsidiaries declared and made in the past are not indicative of the dividends that we may pay in the future. There is no assurance that we will be able to declare or distribute any dividend in the future.

Furthermore, there can be no assurance that the PRC government will not intervene or impose restrictions to prevent the cash maintained in the PRC or Hong Kong from being transferred out or restrict the deployment of the cash into our business or for the payment of dividends. In response to the persistent capital outflow and the RMB’s depreciation against the USD in the fourth quarter of 2016, the People’s Bank of China and SAFE, have implemented a series of capital control measures, including stricter vetting procedures for China-based companies to remit foreign currency for overseas acquisitions, dividend payments, and shareholder loan repayments. The PRC government may continue to strengthen its capital controls, and our PRC subsidiary’s dividends and other distributions may be subjected

to tighter scrutiny in the future. The PRC government also imposes controls on the conversion of RMB into foreign currencies and the remittance of currencies out of the PRC. Therefore, we may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency for the payment of dividends from its profits of our PRC subsidiary, if any. Any limitation on the ability of our PRC subsidiary to pay dividends or make other kinds of payments to us could have a material adverse effect on our ability to conduct our business.

Our results of operation may be materially and adversely affected by a downturn in China or the global economy.

All of our operations are currently located in China, and all of our revenue was generated in China for the six months ended March 31, 2024 and the years ended September 30, 2023 and 2022. Accordingly, our business, prospects, financial condition and results of operations may be influenced to a significant degree by the political, economic and social conditions in China generally and by the continued economic growth in China as a whole. 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 PRC government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures may benefit the overall Chinese economy, but may have a negative effect on us.

The rapid growth of the Chinese economy has slowed down since 2012 and such slowdown may continue. There exists also uncertainty over the long-term effects of the expansionary monetary and fiscal policies adopted by the central banks and financial authorities of some of the world’s leading economies, including the United States and the PRC, before 2020. Unrest, terrorist threats and the potential for war in the Middle East and elsewhere may increase market volatility across the globe. Any prolonged slowdown in the global or the Chinese economy may affect potential customers’ confidence in the financial market as a whole and have a negative impact on our financial condition. Further, recent global economic conditions including inflationary pressures, have not materially affected our operations in the PRC. However, continued pressure from global economic conditions may the PRC markets in the future and in turn, may affect our operations.

The continued turbulence in the international markets may adversely affect our ability to access the capital markets to meet liquidity needs. We cannot assure that there will not be any unfavorable changes in the PRC economy that could impact the industries in which we operate, which could in turn diminish the demand for our services.

It may be difficult for overseas shareholders and/or regulators to conduct investigation in China.

Shareholder claims or regulatory investigations that are common in the U.S. are typically difficult to pursue as a matter of law or practicality in China. There are significant legal obstacles to providing information needed for regulatory investigations or litigation initiated outside China. Chinese authorities may establish a regulatory cooperation agreement with the securities regulatory authorities of another jurisdiction to implement cross-border supervision and administration which may be difficult to achieve in the absence of mutual and practical cooperation.

We are required to obtain approval from PRC authorities to list on overseas stock exchanges and may not be able to complete the filing because the filing materials are incomplete or do not meet the requirements of the CSRC.

On February 17, 2023, the CSRC issued the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Enterprises, or the Trial Measures, which became effective on March 31, 2023. On the same date of the issuance of the Trial Measures, the CSRC circulated No.1 to No.5 Supporting Guidance Rules, the Notes on the Trial Measures, the Notice on Administration Arrangements for the Filing of Overseas Listings by Domestic Enterprises and the relevant CSRC Answers to Reporter Questions on the official website of the CSRC, or collectively, the Guidance Rules and Notice. Under the Trial Measures and the Guidance Rules and Notice, domestic companies conducting overseas securities offering and listing activities, either in direct or indirect form, shall complete filing procedures with the CSRC pursuant to the requirements of the Trial Measures within three working days following its submission of initial public offerings or listing application. The companies that have already been listed on overseas stock exchanges or have obtained the approval from overseas supervision administrations or stock exchanges for its offering and listing and will complete their overseas offering and listing prior to September 30, 2023 are not required to make immediate filings for its listing yet need to make filings for subsequent offerings in accordance with the Trial Measures. The companies that have already submitted an application for an initial public offering to overseas supervision administrations prior to the effective date of the Trial Measures but have not yet obtained the approval from overseas supervision administrations

or stock exchanges for the offering and listing may arrange for the filing within a reasonable time period and should complete the filing procedure before such companies’ overseas issuance and listing. After obtaining approval from the CSRC and before the overseas offering and listing, the companies that have a major change to the main business or business license qualification, the right of control or equity structure, or the offering and listing plan shall promptly report to the CSRC and update the filing materials within three working days of the occurrence of the relevant matters.

Our PRC counsel, Commerce & Finance Law Offices, has advised us that, based on its understanding of the current PRC laws and regulations, our offering will be identified as an indirect overseas issuance and listing of New Brand by CSRC, in view of the fact that the Trial Measures have come into effect on 31 March 2023. On May 11, 2023, we submitted the filing materials to fulfill the filing procedure with the CSRC as per requirement of the Trial Measures, and we subsequently obtained approval from the CSRC on July 24, 2023. As of the date of this prospectus, the aforementioned approval of the CSRC has exceeded the validity period and has lapsed. The Company will re-submit the filing to the CSRC in accordance with the Trial Measures.

Changes in international trade policies, trade disputes, barriers to trade, or the emergence of a trade war may dampen growth in China.

Political events, international trade disputes, and other business interruptions could harm or disrupt international commerce and the global economy, and could have a material adverse effect on us and our customers, contract manufacturers, raw material vendors, and other partners. International trade disputes could result in tariffs and other protectionist measures which may materially and adversely affect our business.

There have also been concerns about the relationship between the PRC and other countries, including the surrounding Asian countries, which may potentially have economic effects. In particular, there is significant uncertainty about the future relationship between the United States and the PRC with respect to trade policies, treaties, government regulations and tariffs. Economic conditions in China are sensitive to global economic conditions, as well as changes in domestic economic and political policies and the expected or perceived overall economic growth rate in China.

Political uncertainty surrounding international trade disputes and the potential of the escalation to trade war and global recession could have a negative effect on customer confidence. We may have also access to fewer business opportunities, and our operations may be negatively impacted as a result. In addition, the current and future actions or escalations by either the United States or the PRC that affect trade relations may cause global economic turmoil and potentially have a negative impact on our markets, our business, or our results of operations, as well as the financial condition of our clients, and we cannot provide any assurances as to whether such actions will occur or the form that they may take.

Fluctuations in currency exchange rates could have a material and adverse effect on the value of your investment.

Our revenue and expenses have been and are expected to continue to be primarily denominated in RMB, and we are exposed to the risks associated with the fluctuation in the currency exchange rate of RMB. Should RMB appreciate against other currencies, the value of the proceeds from this offering and any future financings, which are to be converted from US dollar or other currencies into RMB, would be reduced and might accordingly hinder our business development due to the lessened amount of funds raised. On the other hand, in the event of the devaluation of RMB, the dividend payments of our Company, which are to be paid in US dollars after the conversion of the distributable profit denominated in RMB, would be reduced. Hence, substantial fluctuation in the currency exchange rate of RMB may have a material adverse effect on our business, operations and financial position and the value of your investment in the Shares.

Changes in PRC political, economic and governmental policies may have an adverse impact on our business.

We expect that China will continue to be our principal market and place of operation. Accordingly, our business, financial condition and results of operations are subject to political, economic and legal developments in China to a significant degree. The Chinese economy differs from the economies of most developed countries in many aspects, including the extent of government involvement, growth rate, control of the foreign exchange, allocation of resources and capital investment. We cannot assure there will not be any unfavorable changes in the political, economic and governmental policies and measures promulgated by the PRC government that could impact the industries in which we operate, which could in turn diminish the demand for our services.

be regarded as a PRC tax resident by virtue of having its “de facto management body” in China, and will be subject to PRC enterprise income tax on its global income only if all of the following conditions are met: (i) the primary location of the day-to-day operational management is in China; (ii) decisions relating to the enterprise’s financial and human resource matters are made or are subject to approval by organizations or personnel in China; (iii) the enterprise’s primary assets, accounting books and records, company seals, and board and shareholder resolutions are located or maintained in China; and (iv) at least 50% of voting board members or senior executives habitually reside in China.

We believe that, as a Cayman Islands exempted company, MIHL is not a PRC resident enterprise for PRC tax purposes. However, the tax resident status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term “de facto management body.” If the PRC tax authorities determine that our company is a PRC resident enterprise for enterprise income tax purposes, we would be subject to PRC enterprise income on our worldwide income at the rate of 25%. Furthermore, we would be required to withhold a 10% tax from dividends we pay to our shareholders that are non-resident enterprises, including the holders of our Shares. In addition, non-resident enterprise shareholders may be subject to PRC tax on gains realized on the sale or other disposition of the Shares, if such income is treated as sourced from within the PRC. Furthermore, if we are deemed a PRC resident enterprise, dividends paid to our non-PRC individual shareholders and any gain realized on the transfer of the Shares by such shareholders may be subject to PRC tax at a rate of 20% (which, in the case of dividends, may be withheld at source by us). These rates may be reduced by an applicable tax treaty, but it is unclear whether non-PRC shareholders of our company would be able to claim the benefits of any tax treaties between their country of tax residence and the PRC in the event that we are treated as a PRC resident enterprise. Any such tax may reduce the returns on your investment in our Shares.

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

On February 3, 2015, the SAT issued the Public Notice Regarding Certain Corporate Income Tax Matters on Indirect Transfer of Properties by Non-Tax Resident Enterprises, or SAT Bulletin 7. SAT Bulletin 7 extends its tax jurisdiction to transactions involving the transfer of taxable assets through offshore transfer of a foreign intermediate holding company. In addition, SAT Bulletin 7 has introduced safe harbors for internal group restructurings and the purchase and sale of equity through a public securities market. SAT Bulletin 7 also brings challenges to both foreign transferor and transferee (or other person who is obligated to pay for the transfer) of taxable assets, as such persons need to determine whether their transactions are subject to these rules and whether any withholding obligation applies.

On October 17, 2017, the SAT issued the Announcement of the State Administration of Taxation on Issues Concerning the Withholding of Non-resident Enterprise Income Tax at Source, or SAT Bulletin 37, which came into effect on December 1, 2017. The SAT Bulletin 37 further clarifies the practice and procedure of the withholding of non-resident enterprise income tax.

Where a non-resident enterprise transfers taxable assets indirectly by disposing of the equity interests of an overseas holding company, which is an indirect transfer, the non-resident enterprise as either transferor or transferee, or the PRC entity that directly owns the taxable assets, may report such indirect transfer to the relevant tax authority. Using a “substance over form” principle, the PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding or deferring PRC tax. As a result, gains derived from such indirect transfer may be subject to PRC enterprise income tax, and the transferee or other person who pays for the transfer is obligated to withhold the applicable taxes currently at a rate of 10% for the transfer of equity interests in a PRC resident enterprise. Both the transferor and the transferee may be subject to penalties under PRC tax laws if the transferee fails to withhold the taxes and the transferor fails to pay the taxes.

We face uncertainties as to the reporting and other implications of certain past and future transactions where PRC taxable assets are involved, such as offshore restructuring, sale of the Shares in our offshore subsidiaries and investments. Our company may be subject to filing obligations or may be taxed if our company is a transferor in such transactions, and may be subject to withholding obligations if our company is a transferee in such transactions, under SAT Bulletin 7 and/or SAT Bulletin 37. For transfers of Shares of our company by investors who are non-PRC resident enterprises, our PRC subsidiary may be requested to assist in the filing under SAT Bulletin 7 and/or SAT Bulletin 37. As a result, we may be required to comply with SAT Bulletin 7 and/or SAT Bulletin 37 or to request the relevant

transferors from whom we purchase taxable assets to comply with these circulars, or to establish that our company should not be taxed under these circulars, which may have a material adverse effect on our financial condition and results of operations.

The Hong Kong legal system embodies uncertainties which could limit the availability of legal protections.

Hong Kong is a Special Administrative Region of the PRC and enjoys a high degree of autonomy under the “one country, two systems” principle. The Hong Kong Special Administrative Region’s constitutional document, the Basic Law, ensures that the current political situation will remain in effect for 50 years. Hong Kong has enjoyed the freedom to function in a high degree of autonomy for its affairs, including currencies, immigration and custom, independent judiciary system and parliamentary system. Any changes in the state of political environment in Hong Kong may materially and adversely affect our business and operation. We cannot predict the effect of future developments in the Hong Kong legal system, including the promulgation of new laws, changes to existing laws or the interpretation or enforcement thereof, or the pre-emption of local regulations by national laws. These uncertainties could limit the legal protections available to us.

Risks Related to Our Business

We may be unable to timely and accurately respond to changes in fashion trends and consumer preferences.

We offer in-house product design services to our customers. We must stay abreast of emerging consumer preferences and anticipate product trends that will appeal to existing and potential consumers. We believe that our success is, to an important extent, attributable to the ability of our design and product development personnel to design apparel products that are responsive to changes in consumer preferences. Due to the highly subjective nature of the fashion trends and the rapid change in fashion trends for apparels as well as the preferences of our customers and consumers, we may be unable to capture or predict the future fashion trend and continue to develop appealing designs for our customers and consumers. If we fail to capture, predict or respond timely to changes in market preferences; or introduce appealing and commercially viable apparel designs in a timely manner, our customers may choose to work with our competitors with market-sensitive designs.

We rely on a limited number of major customers, of which may reduce or stop making purchase orders for our services and products.

Revenue generated from our top five customers accounted for 91%, 81% and 88% of our total revenue for the six months ended March 31, 2024 and the years ended September 30, 2023 and 2022, respectively. We do not have long-term agreements with any of our top five customers: their purchases are made on an order-by-order basis. Our business with our customers has been, and we expect it will continue to be, conducted based on the actual orders received from time to time. Our customers are not obligated in any way to continue placing orders with us at the same or increasing levels, or at all. Their level of demand for our apparel products may fluctuate significantly from period to period. Such fluctuation is attributable mainly to changes in customer demand, including their business strategies, operational needs, product portfolio and interpretation of fashion trends.

Customers may choose to do business with suppliers directly through online platforms.

We offer SCM services with ownership in a very limited number of proprietary apparel products. Customers pay for our services to leverage our industry knowledge, market connections and logistics management capability. It has been increasingly common for brand owners and retailers to place their orders directly to manufacturers through online platforms. If we are unable to provide other value-added SCM services such as product design and development, selection of suppliers, production management and logistics management, we face the risk of losing some of our existing customers, especially those with the confidence and savviness to order apparel products online. With the internet becoming more common in the current economic environment, market demand for our apparel SCM services may decrease.

We are exposed to credit risks of our customers.

We are exposed to credit risks of our customers. We do not have access to all the information necessary to form a comprehensive view on the creditworthiness. The complete financial and operational conditions of customers are not always available to us, and we may not be of individual customers in any position to obtain such information. As a result, if any of our major customers experience any financial difficulty and fail to settle the outstanding amounts due to us in accordance with the agreed credit terms, our working capital position may be adversely affected. Provisions for impairment or write-offs may also be required for trade receivables.

In the course of business, we may from time to time engage in actions, legal proceedings to collect unpaid or disputed amounts due from our customers. After all reasonable steps have been taken to attempt to recover outstanding payments, we may need to resolve by commencing legal actions. On September 30, 2021, we filed a civil complaint in the Shanghai Songjiang District People’s Court against our former customer Tianjin Xinfa Knitting Products Co., Ltd., seeking damages of RMB 11,521,595.75 for the unpaid services we rendered pursuant to their company’s orders. On November 8, 2021, we obtained a property preservation order from the court over Tianjin Xinfa Knitting Products Co., Ltd which prevents them from disposal of or transfer of their bank assets.

Any ongoing legal proceedings or disputes with customers may distract our senior management’s attention and consume our time and other resources. In addition, even if we ultimately succeed in our claims, there may be negative publicity attached to such actions, which may materially and adversely affect our reputation and brand names. In the case of an adverse verdict, we may be required to pay significant monetary damages, assume significant liabilities or suspend or terminate parts of our operations.

We may not be able to meet our cash requirements without obtaining additional capital from external sources.

Our audited financial statements have been prepared assuming that we will continue as a going concern, which contemplates the recovery of our assets and the satisfaction of our liabilities in the normal course of business. As of March 31, 2024, most of our current assets consisted of accounts receivables, and our cash level was low relative to our working capital needs. Unless we could collect some of the accounts receivable in time, we may not have sufficient working capital to fund our operations without additional financing. We recorded operating cash inflow for the six months ended March 31, 2024 and the year ended September 30, 2022. For the year ended September 30, 2023, we recorded operating cash outflow. We expect operating and capital expenditures to increase over the next several years as we expand our raw materials inventory and strengthen our SCM services to cover a larger customer base.

While our operations were profitable for the six months ended March 31, 2024 and the year ended September 30, 2022, we had net loss for the year ended September 30, 2023. We anticipate that cash provided by this offering and our operating activities will be sufficient to meet our currently estimated cash requirements for at least the next 12 months. Nonetheless, we operate in a market that makes our prospects difficult to evaluate. Until we could achieve a level of positive operating cash flows adequate to support our cost structure, we would need to rely on additional financing. There is no assurance such financing will be available to us when needed or that such financing would be available on under favorable terms. If we are unable to obtain sufficient funding, we may be required to significantly curtail our planned operations, which may have a material adverse impact on our ability to continue as a going concern.

We recorded net current liabilities and a total deficit as of March 31, 2024, and may continue to record net current liabilities and a total deficit in the foreseeable future, which can expose us to liquidity risks.

We had net current liabilities of RMB8,648,747 (US$1,197,840) as of March 31, 2024. We also had total deficits of RMB5,558,302 (US$769,818) as of March 31, 2024. Although we recorded net income of RMB237,704 (US$32,920) for the six months ended March 31, 2024, we cannot assure you that we will be able to continue to generate net income in the future. We anticipate that our operating cost and expenses will increase in the foreseeable future as we continue to grow our business. Our efforts to grow our business may prove more costly than we currently anticipate, and we may not succeed in increasing our revenue sufficiently to offset these higher expenses.

We cannot assure you that we will not incur net current liabilities in the future. A net current liabilities position can expose us to the risk of shortfalls in liquidity, in which case our ability to raise funds, obtain bank loans and declare and pay dividends will be materially and adversely affected.

Our profitability and liquidity position is dependent on, among other factors, our ability to grow our business and extend our product offering to existing customers and expand our customer base. Any material decrease in our service fees would have a substantial impact on our margin. As a result of the foregoing and other factors, our net income may decline, or we may incur net losses in the future and be unable to achieve or maintain profitability and improve our liquidity position.

Our sales are subject to seasonal fluctuation.

Our sales of finished garment products are generally highest from August to December and expect to continue to experience seasonal fluctuations. In contrast, our sales of yarn products do not exhibit obvious trend of seasonality, but this could change in any given year. Therefore, our operating results for a certain period within a calendar year, or between any interim periods, may not correctly indicate our performance for the entire calendar year. Prospective investors should be aware of this seasonal fluctuation when making any comparison of our operating results.

We rely on third parties for supplies of raw materials, manufacturing services and transport infrastructure.

We have an “asset-light” business model. Substantially all of the apparel products sold by us were produced by third-party contract manufacturers using raw materials that we sourced from raw material vendors. We do not enter into any long-term contracts with suppliers, and the terms of services provided by them may also be susceptible to fluctuations with regard to pricing, timing and quality. Business relationships with our key suppliers could deteriorate, and existing procurement arrangements could change without advance notice. We might have to accept substantial increment in price or a substantial reduction of quantities supplied in some cases, especially when we are unable to locate alternative suppliers in a timely manner and/or on comparable commercial terms. Moreover, as we do not have long-term contracts with our suppliers, we may not be able to exercise adequate control over their operations. As a result, we are not able to ensure their compliance with applicable laws and regulations. We are not in a position to ascertain whether our suppliers have obtained all licenses, permits and approvals necessary for their operations, or complied with all applicable laws and regulations. Failure on the part of any of our suppliers to comply with applicable laws and regulations may damage our corporate image, and adversely affect our customer relationships.

Inconsistent quality control may adversely affect our reputation and customer relationships.

Our customers have specific requirements for their apparel products, and these requirements could change from one carton to another, even for the same types of products with the same design. We rely on our internal quality control personnel to inspect the finished goods and rectify any defectiveness so that the goods can be delivered to our customers in a form that would meet their quality expectations. If we fail to meet the specifications of our customers, we may not be able to monitor the quality of our suppliers at all times. For apparel products that do not satisfy the quality standards or our customers’ specifications, we may be forced to provide products to our customers on a delayed basis or cancel their order, our reputation in the industry and customer relationships would be adversely affected, and we may suffer from loss of sales and be exposed to commercial claims.

Our profit margin may be adversely affected by the increasing costs of raw materials and labor.

Our raw materials include cashmere, wool, silk and cotton for the production of yarn products and finished garment products. Changes in the costs of raw materials or labor indirectly affect our cost structure. Any increase in production costs may be passed on to us, but we might not be able to pass on all or any part of the subsequent increase in costs to our customers, which may have a material adverse effect on our financial performance.

We do not have long-term contracts with third-party contract manufacturers and raw material vendors. We usually enter into fixed-price contracts with vendors and agree on raw materials pricing concurrently with our acceptance of each customer order, but in some cases a short time gap may be inevitable. Where market forces drive up raw material costs, we may from time to time fail to negotiate price terms that are advantageous to us and hence put pressure on our profit margin.

The global commerce chain is facing a shortage of skilled labor. Any increase in the wage of workers in the apparel manufacturing industry and capital expenditures to enhance working conditions could increase the operating costs of our suppliers. This increase may then be passed on to us through an increase in purchase costs. If we are not able to control our costs and/or pass on such additional costs to our customers or allocate such production work to other suppliers of similar quality at comparable terms, our profit margin could decrease, and we could record losses in some of our projects.

We face keen competition from other players in the market.

The apparel SCM industry in China has a large number of participants, which makes the industry highly fragmented and competitive. We compete with other apparel SCM companies on the basis of service quality and pricing. Some of our competitors may have more variety of services, greater pricing flexibility, stronger brand recognition, longer operating history and a more established customer base. As a result, these competitors have greater

credibility with our potential customers in our target market segments. They may have greater resources to support their service offerings, such as better in-house technology infrastructure, stronger brand and pricing flexibility. Unless we remain competitive, we may face increasing pricing pressure and gradual loss of our orders.

We are dependent on our key executives and personnel.

Our future success depends upon our management, as they have critical industry experience and relationships that we need to implement our business strategy. They play a pivotal role in our daily operations and business strategies. They also develop strong bonds with the clients they serve. A loss of the services of any of our management members could negatively affect the implementation of our business plan. The remaining of our workforce are skilled personnel with many duties in their area of specialization. Our competitors may offer more favorable compensation packages to them. The loss of the services of any of our workforce members could negatively impact our operations, making it difficult to move forward with our expansion plan. We cannot assure that we will be able to attract or retain key executives and personnel to maintain or expand our business.

We may be unable to achieve our business objectives.

We accomplish our objectives through the implementation of our future plans. In the event that we fail to implement such growth strategy, or to do so in a timely manner, or on commercially acceptable terms, we may not be able to achieve our projected business growth and it may adversely affect our operating results. Moreover, the successful implementation of our future plans is subject to significant business, economic and competitive uncertainties and contingencies that are beyond our control and could postpone or increase the costs of implementation.

We may be unable to obtain sufficient funding on terms acceptable to us, or at all.

The future expansion of our business may require us to incur additional borrowings and diversify sources of funding. Whether we are able to raise additional capital at costs acceptable to us depends on the financial success of our current business and the successful implementation of our key strategic initiatives. This may be affected by various financial, economic and market conditions and other factors, some of which are beyond our control. If we are unable to obtain sufficient banking facilities on acceptable terms to meet our operational and expansion demands, this may put strains on our cash flow and our ability to successfully implement our expansion plans.

Our insurance coverage may be inadequate to protect us from potential losses.

We may not be fully insured for our losses under our current insurance policy. We do not maintain any business interruption or key person life insurance. If any of these occurs, it may result in us incurring substantial costs and the diversion of our resources, which are not covered by our insurance. It may in turn materially and adversely affect our business and financial condition.

Unforeseeable events, such as the global COVID-19 outbreak and local energy efficiency measures, could significantly disrupt our supply chain for a prolonged period of time.

Supply chain disruptions have become a major challenge for the global economy since the start of the COVID-19 pandemic. Shortages and slippage in production are significant and widespread in many industries. Lockdowns in several countries across the world, labor shortages, robust demand for tradable goods, disruptions to logistics networks, and capacity constraints have resulted in increases in freight costs and delivery times. Companies that are reliant on production or suppliers may suffer from plant closures and supply shortages across the extended supply network.

The PRC has already seen a rebound and a degree of normalization of supply and demand. The extent to which a COVID-19 outbreak may impact supply chain, however, remains highly uncertain and unpredictable and the medical and other interventions to control the outbreak, as it depends on factors such as the geographic spread of COVID-19, mutation of the virus, duration of the outbreak, governmental actions to contain the outbreak, such as travel restrictions, quarantines, lockdowns, business closures, and their impact on commercial activities. At the same time, coal shortage and attempts to meet carbon emissions targets have resulted in strict power-rationing measures being imposed to energy intensive sectors like textile manufacturing in many PRC provinces and cities. The power rationing is creating delays in supply chains that rely on Chinese factories. This may directly affect our suppliers’ production capacity and the transportation network, which may in turn affect our ability to obtain safe and high-quality raw materials at reasonable costs, manufacture and transport our products in China, as well as cause temporary closure of our suppliers’ manufacturing facilities.

As of the date of this prospectus, our business has been adversely affected by COVID-19 pandemic primarily in the following aspects:

•        We temporarily closed our office in Shanghai and implemented a work-from-home policy for a period in early February, 2020, as required by relevant PRC regulatory authorities. We temporarily closed our office again in Shanghai during the months of April, 2022 and May, 2022, due to a resurgence in COVID-19 in the PRC, and the employees at our Shanghai offices were working from home, as required by relevant PRC regulatory authorities. Such closures and operation interruptions adversely affected our sales during the lockdown period.

•        Some of our customers for finished products have been negatively impacted and the demand for has been decreased. The pandemic also created short term adverse impacts on our supply chain such as warehousing and shipping of our products during the lock down period. We believe the negative impact on our business by the COVID-19 pandemic has been moderate due to occasional small outbreaks, which are usually under control quickly.

•        Our operating subsidiaries’ business depends on our employees. Due to the travel restrictions imposed by the local governments, some of our employees have not been able to get back to work during the lock down period in April 2022. The travel restrictions were eased due to the gradual control of the COVID-19 pandemic.

The extent to which COVID-19 impacts our operating subsidiaries’ business in the future will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others. If the disruptions posed by COVID-19 or other matters of global concern continue for an extended period of time, our operating subsidiaries’ ability to pursue their business objectives may be materially adversely affected. In addition, our ability to raise equity and debt financing which may be adversely impacted by COVID-19 and other events, including as a result of increased market volatility, decreased market liquidity and third-party financing being unavailable on terms acceptable to us or at all.

Any future impact on the results of operations of our operating subsidiaries will depend on, to a large extent, future developments and new information that may emerge regarding the duration and severity of the COVID-19 pandemic and the actions taken by government authorities and other entities to contain the spread or treat its impact, almost all of which are beyond our control. Given the general slowdown in economic conditions globally, volatility in the capital markets as well as the general negative impact of the COVID-19 outbreak on the clothing market, we cannot assure you that we will be able to maintain the growth rate we have experienced or projected. We will continue to closely monitor the situation throughout the rest of 2024 and beyond.

The war in Ukraine could materially and adversely affect our business and results of operations.

The recent outbreak of war in Ukraine has already affected global economic markets, including a dramatic increase in the price of oil and gas, and the uncertain resolution of this conflict could result in protracted and/or severe damage to the global economy. Russia’s recent military interventions in Ukraine have led to, and may lead to, additional sanctions being levied by the United States, European Union and other countries against Russia. Russia’s military incursion and the resulting sanctions could adversely affect global energy and financial markets and thus could affect the global markets, our customers’ businesses and potentially our business. As at the date of this prospectus, to the best knowledge of the Company, we and our PRC subsidiaries (i) do not have any direct business or contracts with any Russian or Ukraine entity as a supplier or customer, (ii) do not have any knowledge whether any our customers or suppliers have any direct business or contracts with any Russian entity, (iii) our business segments, products, lines of service, projects, or operations are not materially impacted by supply chain disruptions by the war in Ukraine, and (iv) have not been financially affected by the war in Ukraine. The extent and duration of the military action, sanctions and resulting market disruptions are impossible to predict, but could be substantial. Any such disruptions caused by Russian military action or resulting sanctions may magnify the impact of other risks described in this section. We cannot predict the progress or outcome of the situation in Ukraine, as the conflict and governmental reactions are rapidly developing and beyond their control. Prolonged unrest, intensified military activities or more extensive sanctions impacting the region could have a material adverse effect on the global economy, and such effect could in turn have a material adverse effect on our business, financial condition, results of operations, and prospects.

We do not anticipate any new or heightened risk of potential cyberattacks by state actors or others since Russia’s invasion of Ukraine, and we have not taken any actions to mitigate such potential risks. Our board of directors will continue to monitor any potential risks that might arise due to the war in Ukraine which are specific to the Company, including but not limited to risks related to cybersecurity, sanctions, and supply chain, suppliers, or service providers in affected regions as well as risks connected with ongoing or halted operations or investments in affected regions.

Our lack of effective internal controls over financial reporting may affect our ability to accurately report our financial results or prevent fraud.

Prior to filing the registration statement of which this prospectus is a part, we were a private company with limited accounting personnel and resources to address our internal control over financial reporting. Our management has not completed an assessment of the effectiveness of our internal control over financial reporting and our independent registered public accounting firm has not conducted an audit of our internal control over financial reporting. However, in connection with the audits of our consolidated financial statements for the years ended September 30, 2023 and 2022, we and our independent registered public accounting firm identified material weaknesses in our internal control over financial reporting as well as other control deficiencies for the above mentioned periods. As defined in the standards established by the PCAOB, a “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting. There is a reasonable possibility that a material misstatement in our annual or interim financial statements may not be prevented or detected on a timely basis. The material weakness identified is related to (i) inadequate segregation of duties for certain key functions due to limited staff and resources; and (ii) a lack of independent directors and an audit committee.

We intend to implement measures designed to improve our internal control over financial reporting to address the underlying causes of these material weaknesses, including (i) hiring more qualified staff to fill up the key roles in the operations; (ii) appointing independent directors; (iii) establishing an audit committee; and (iv) strengthening our corporate governance. We intend to implement the above measures prior to the listing and we expect the remediation to be completed upon listing.

Effective internal control over financial reporting is important to prevent fraud. The market for and trading price of our Shares may be materially and adversely affected if we do not have effective internal controls. We may not be able to discover problems in a timely manner and our current and potential shareholders may lose confidence in our financial reporting, which may harm our business and the trading price of our Shares. The absence of internal controls over financial reporting may inhibit investors from purchasing our Shares and may make it more difficult for us to raise funds in debt or equity financing. Additional material weaknesses or significant deficiencies may be identified in the future. If we identify such issues or if we are unable to produce accurate and timely financial statements, our stock price may decline and we may be unable to maintain compliance with the Nasdaq rules.

Our board of directors may decline to register the transfer of Shares in certain circumstances.

Our board of directors may, in its sole discretion, decline to register any transfer of any Share which is not fully paid up or on which we have a lien. Our directors may also decline to register any transfer of any Share unless (i) the instrument of transfer is lodged with us, accompanied by the certificate for the Shares to which it relates and such other evidence as our board of directors may reasonably require to show the right of the transferor to make the transfer; (ii) the instrument of transfer is in respect of our class of ordinary shares; (iii) the instrument of transfer is properly stamped, if required; (iv) in the case of a transfer to joint holders, the number of joint holders to whom the Share is to be transferred does not exceed four; (v) the Shares conceded are free of any lien in favor of us; or (vi) a fee of such maximum sum as Nasdaq may determine to be payable, or such lesser sum as our board of directors may from time to time require, is paid to us in respect thereof. If our directors refuse to register a transfer they shall, within one month after the date on which the instrument of transfer was lodged, send to each of the transferor and the transferee notice of such refusal.

Risks Related to Our Shares

There has been no public market for our Shares prior to this offering; if an active trading market does not develop you may not be able to resell our Shares at any reasonable price.

The offering under this prospectus is an initial public offering of our Shares. Prior to the closing of the offering, there was no public market for our Shares. While we plan to list our Shares on the Nasdaq Capital Market, our listing application may not be approved. If our application to the Nasdaq Capital Market is not approved or we otherwise determine that we will not be able to secure the listing of the Shares on the Nasdaq Capital Market, we will not

complete the offering. In addition, an active trading market may not develop following the closing or, if developed, may not be sustained. The lack of an active market may impair your ability to sell your Shares at the time you wish to sell them or at a price that you consider reasonable. An inactive market may also impair our ability to raise capital by selling Shares and may impair our ability to acquire other companies by using our Shares as consideration.

Our Shares price may never trade at or above the price in this offering.

Stock markets generally have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies. Broad market and industry factors may significantly affect the market price of our Shares, regardless of our actual operating performance. These fluctuations may be even more pronounced in the trading market for our Shares shortly following this offering. If the market price of our Shares after this offering does not ever exceed the initial public offering price, you may not realize any return on your investment in us and may lose some or all of your investment.

The initial public offering price for our Shares may not reflect their actual value.

The initial public offering price for our Shares is and will be determined through negotiations between us and representatives of the underwriters. The price of our Shares may not be indicative of their actual value or any future market price for our securities. This price may not accurately reflect the value of the Shares or the value that potential investors will realize upon their disposition of Shares. The price does not necessarily bear any relationship to our assets, earnings, book value per Share or other generally accepted criteria of value.

Our Share price may be volatile, and you may lose all or part of your investment. Such rapid and substantial price volatility, including any stock run-up, may be unrelated to our actual or expected operating performance and financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our ordinary shares.

As mentioned above, the initial public offering price for our Shares will be determined by negotiations between us and representatives of the underwriters based on several factors. This price may vary from the market price of our Shares after this offering and the price for our Shares may be volatile and subject to wide fluctuations in response to factors including the following:

•        actual or anticipated fluctuations in results of operations;

•        actual or anticipated changes in our growth rate relative to our competitors, as well as announcements by us or our competitors of significant business developments, changes in relationships with our target customers, manufacturers or suppliers, acquisitions or expansion plans;

•        failure to meet or exceed financial estimates and projections of the investment community or that we provide to the public, as well as variance in our financial performance from the expectations of market analysts;

•        issuance of new or updated research or reports by securities analysts;

•        Share price and volume fluctuations attributable to inconsistent trading volume levels of our Shares;

•        additions or departures of key management or other personnel;

•        our involvement in litigation;

•        disputes or other developments related to proprietary rights, including patents, litigation matters, and our ability to obtain patent protection for our technology;

•        announcement or expectation of additional debt or equity financing efforts;

•        sales of our Shares or other securities by us, our insiders or our other shareholders, or the perception that these sales may occur in the future;

•        the trading volume of our Shares;

•        market conditions in our industry;

•        changes in the estimation of the future size and growth rate of our markets;

•        market conditions in our industry;

•        changes in the estimation of the future size and growth rate of our markets; and

•        general economic, market or political conditions in the United States or elsewhere.

These and other market and industry factors may cause the market price and demand for our Shares to fluctuate substantially, regardless of our actual operating performance, which may limit or prevent investors from readily selling their Shares and may otherwise negatively affect the liquidity of our Shares. In addition, the stock market in general, and Nasdaq Capital Market and emerging growth companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies. Such rapid and substantial price volatility, including any stock run-up, may be unrelated to our actual or expected operating performance and financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our ordinary shares. Such broad market fluctuations, and other factors (such as variations in operating results, and changes in regulations affecting us and our industry) may adversely affect the market price of our Shares, if a market for them develops.

Volatility in our Share price may subject us to securities litigation.

The market for our Shares may have, when compared to seasoned issuers, significant price volatility and we expect that our Share price may continue to be more volatile than that of a seasoned issuer for the indefinite future. In the past, plaintiffs have often initiated securities class action litigation against a company following periods of volatility in the market price of its securities. We may, in the future, be the target of similar litigation, which could result in substantial costs and liabilities and could divert management’s attention and resources.

Our Shares are expected to initially trade under $5.00 per Share and thus would be known as a penny stock. Trading in penny stocks has certain restrictions and these restrictions could negatively affect the price and liquidity of our Shares.

Our Shares are expected to initially trade below $5.00 per Share. As a result, our Shares would be known as a “penny stock”, which is subject to various regulations involving disclosures to be given to you prior to the purchase of any penny stock. The SEC has adopted regulations which generally define a “penny stock” to be any equity security that has a market price of less than $5.00 per Share, subject to certain exceptions. Depending on market fluctuations, our Shares could be considered to be a “penny stock”. A penny stock is subject to rules that impose additional sales practice requirements on brokers/dealers who sell these securities to persons other than established Members and accredited investors. For transactions covered by these rules, the broker/dealer must make a special suitability determination for the purchase of these securities. In addition, a broker/dealer must receive the purchaser’s written consent to the transaction prior to the purchase and must also provide certain written disclosures to the purchaser. Consequently, the “penny stock” rules may restrict the ability of broker/dealers to sell our Shares, and may negatively affect the ability of holders of our Shares to resell them. These disclosures require you to acknowledge that you understand the risks associated with buying penny stocks and that you can absorb the loss of your entire investment. Penny stocks generally do not have a very high trading volume. Consequently, the price of the stock is often volatile and you may not be able to buy or sell the stock when you want to.

If we fail to meet applicable listing requirements, Nasdaq may delist our Shares from trading, in which case the liquidity and market price of our Shares could decline.

Assuming our Shares are listed on Nasdaq, we cannot assure you that we will be able to meet the continued listing standards of Nasdaq in the future. If we fail to comply with the applicable listing standards and Nasdaq delists our Shares, we and our shareholders could face significant material adverse consequences, including:

•        a limited availability of market quotations for our Shares;

•        reduced liquidity for our Shares;

•        a determination that our Shares are “penny stock”, which would require brokers trading in our Shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our Shares;

•        a limited amount of news about us and analyst coverage of us; and

•        a decreased ability for us to issue additional equity securities or obtain additional equity or debt financing in the future.

The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered securities.” Because we expect that our Shares will be listed on Nasdaq, such securities will be covered securities. Although the states are preempted from regulating the sale of our securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. Further, if we were no longer listed on Nasdaq, our securities would not be covered securities and we would be subject to regulations in each state in which we offer our securities.

Our pre-IPO shareholders will be able to sell their Shares after completion of this offering subject to restrictions under the Rule 144.

Under Rule 144 of the Securities Act, once we have been a reporting company subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act for 90 days and assuming the availability of certain public information about us, (i) a non-affiliate who has beneficially owned our Shares for at least six months may rely on Rule 144 to sell their Shares in the U.S. public markets, and (ii) an affiliate who has beneficially owned our Shares for at least six months, would be entitled to sell in the U.S. public markets within any three-month period a number of Shares that does not exceed the greater of either of the following: (a) 1% of the number of Shares then outstanding, and (b) the average weekly reported volume of trading of our Shares during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale.

These shareholders may be more willing to accept a lower sales price than the IPO price. This fact could impact the trading price our Shares, to the detriment of participants in this offering. Under rule 144, before our pre-IPO shareholders can sell their Shares, in addition to meeting other requirements, they must meet the required holding period. We do not expect any of the Shares to be sold pursuant to Rule 144 during the pendency of this offering.

Immediately after the completion of the offering, our officers, directors and principal shareholders, excluding the resale shares to be registered by the Selling Shareholders pursuant to this prospectus, will be subject to a contractual lock-up, which prohibits them generally from selling our Shares in the private and public markets. Our pre-IPO shareholders will be unable to sell our Shares in the public market as their holding period under Rule 144 has not expired. These restrictions, however, will end within six months of this offering. We cannot predict the timing or amount of future sales of their Shares. The sales of their Shares, or the perception that such sales could occur, may adversely affect prevailing market prices for our Shares.

The future sales of Ordinary Shares by existing shareholders, including the sales pursuant to the Resale Prospectus, may adversely affect the market price of our Ordinary Share.

As a relatively small-capitalization company with relatively small public float we may experience greater stock price volatility, extreme price run-ups, lower trading volume and less liquidity than large-capitalization companies. The Ordinary Shares registered for resale as part of the Resale Prospectus, once registered, will constitute a considerable percentage of our public float. Sales of a substantial number of our Ordinary Shares in the public market could occur at any time. The sales of a substantial number of registered shares could result in a significant decline in the public trading price of our Ordinary Shares and could impair our ability to raise capital through the sale or issuance of additional Ordinary Shares. We are unable to predict the effect that such sales may have on the prevailing market price of our Ordinary Shares. Despite such a decline in the public trading price, certain Selling Shareholders may still experience a positive rate of return on the Ordinary Shares due to the lower price that they purchased the Ordinary Shares compared to other public investors and may be incentivized to sell their Ordinary Shares when others are not.

If you purchase our Shares in this offering, you will incur immediate and substantial dilution in the book value of your Shares.

Investors purchasing our Shares in this offering will pay a price per Share that substantially exceeds the pro forma as adjusted net tangible book value per Share. As a result, investors purchasing Shares in this offering will incur immediate dilution. For more information on the dilution you may experience as a result of investing in this offering, see “Dilution”.

Our Controlling Shareholders have significant voting power and may take actions that may not be in the best interests of our other shareholders.

As of the date of this prospectus, our Controlling Shareholders hold 92.0% or more of our Shares. After this offering and the sale of our Ordinary Shares by the Selling Shareholders pursuant to the Resale Prospectus, the Controlling Shareholders will hold 74.7% or more of our Shares. As a result, these shareholders will be able to control the management and affairs of our Company and most matters requiring shareholder approval, including the election of directors and approval of significant corporate transactions. The interests of these shareholders may not be the same as or may even conflict with your interests. For example, these shareholders could attempt to delay or prevent a change in control of us, even if such change in control would benefit our other shareholders, which could deprive our shareholders of an opportunity to receive a premium for their Shares as part of a sale of us or our assets, and might affect the prevailing market price of our Shares due to investors’ perceptions that conflicts of interest may exist or arise. As a result, this concentration of ownership may not be in the best interests of our other shareholders.

Nasdaq may apply additional and more stringent criteria for our initial and continued listing because we plan to have a small public offering and our insiders will hold a large portion of our listed securities.

Under Listing Rule 5101, Nasdaq has discretionary authority to deny initial listing, apply additional or more stringent criteria for the initial or continued listing of particular securities, or suspend or delist particular securities based on any event, condition, or circumstance that exists or occurs that makes initial or continued listing of the securities on Nasdaq inadvisable or unwarranted in the opinion of Nasdaq, even though the securities meet all enumerated criteria for initial or continued listing on Nasdaq.

Additionally, Nasdaq has used its discretion to deny initial or continued listing or to apply additional and more stringent criteria in the instances, including but not limited to: (i) where the company engaged an auditor that has not been subject to an inspection by PCAOB, an auditor that PCAOB cannot inspect, or an auditor that has not demonstrated sufficient resources, geographic reach, or experience to adequately perform the company’s audit; (ii) where the company planned a small public offering, which would result in insiders holding a large portion of the company’s listed securities. Nasdaq was concerned that the offering size was insufficient to establish the company’s initial valuation, and there would not be sufficient liquidity to support a public market for the company; and (iii) where the company did not demonstrate sufficient nexus to the U.S. capital market, including having no U.S. shareholders, operations, or members of the board of directors or management. Our initial public offering will be relatively small and the insiders of our company will hold a large portion of the company’s listed securities following the consummation of the offering. Therefore, we may be subject to the additional and more stringent criteria of Nasdaq for our initial and continued listing.

We have no immediate plans to pay dividends.

We plan to reinvest all of our future earnings, to the extent we have earnings, in order to expand our product offering and to cover operating costs, finance operations and to otherwise become and remain competitive. We do not plan to pay any cash dividends with respect to our securities in the foreseeable future. As we are a company with a limited operating history, we may not be able to generate, at any time, sufficient surplus cash that would be available for distribution to the holders of our Shares as a dividend. Therefore, you should not expect to receive immediate cash dividends on the Shares we are offering. Consequently, investors may need to rely on sales of their Shares after price appreciation, which may never occur, as the only way to realize any future gains on their investment. In addition, the laws of the Cayman Islands impose restrictions on our ability to declare and pay dividends.

Securities analysts may not publish favorable research or reports about our business or may publish no information at all, which could cause our Share price or trading volume to decline.

If a trading market for our Shares develops, the trading market will be influenced to some extent by the research and reports that industry or financial analysts publish about us and our business. We do not control these analysts. As a newly public company, we may be slow to attract research coverage and the analysts who publish information about our Shares will have had relatively little experience with us or our industry, which could affect their ability to accurately forecast our results and could make it more likely that we fail to meet their estimates. In the event we obtain securities or industry analyst coverage, if any of the analysts who cover us provide inaccurate or unfavorable research or issue an adverse opinion regarding our Share price, our Share price could decline. If one or more of these analysts cease coverage of us or fail to publish reports covering us regularly, we could lose visibility in the market, which in turn could cause our Share price or trading volume to decline and result in the loss of all or a part of your investment in us.

Investors may have difficulty enforcing judgments against us, our directors and management.

MIHL is incorporated under the laws of the Cayman Islands and a majority of our directors and officers reside outside the United States. Moreover, many of these persons do not have significant assets in the United States. As a result, it may be difficult or impossible to effect service of process within the United States upon these persons, or to recover against us or them on judgments of U.S. courts, including judgments predicated upon the civil liability provisions of the U.S. federal securities laws.

There is uncertainty as to whether the courts of the Cayman Islands would recognize or enforce judgments of U.S. courts obtained in actions against us or our directors and officers predicated upon the civil liability provisions of the U.S. federal securities laws, or entertain original actions brought in the Cayman Islands against us or our directors and officers predicated solely upon U.S. federal securities laws. Further, there is no treaty in effect between the United States and the Cayman Islands providing for the enforcement of judgments of U.S. courts in civil and commercial matters, and there is no statutory enforcement in the Cayman Islands of judgments obtained in the United States. Some remedies available under the laws of U.S. jurisdictions, including remedies available under the U.S. federal securities laws, may not be allowed in the Cayman Islands courts if contrary to public policy in the Cayman Islands. As a result of all of the above, it may be difficult for you to recover against us or our directors and officers based upon such judgments.

The laws of the Cayman Islands relating to the protection of the interest of minority shareholders are different from those in the United States.

Our corporate affairs are governed by the Memorandum of Association and Articles of Association, and by the Cayman Islands Companies Act (Revised) and common law of Cayman Islands. The rights of shareholders to take action against our directors, action by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands and the Articles of Association. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common law, the decisions of whose courts are of persuasive authority, but are not binding, on a court in the Cayman Islands.

The laws of the Cayman Islands relating to the protection of the interests of minority shareholders differ in certain respects from those established under statutes or judicial precedent in existence in the United States and other jurisdictions. Such differences may mean that the remedies available to our minority shareholders may be different from those they would have under the laws of other jurisdictions, including the United States. Potential investors should be aware that there is a risk that provisions of the Companies Act may not offer the same protection as the relevant laws and regulations in the United States may offer, and should consider obtaining independent legal advice on the implications of investing in foreign-incorporated companies.

Our status as a “foreign private issuer” under the SEC rules will exempt us from the U.S. proxy rules and the more detailed and frequent Exchange Act, reporting obligations applicable to a U.S. domestic public company.

Upon the closing of this offering, we will report under the Exchange Act as a non-U.S. company with foreign private issuer status. Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including (i) the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; (ii) the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and (iii) the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified information, or current reports on Form 8-K upon the occurrence of specified significant events. In addition, our officers, directors and principal shareholders are exempt from the reporting and “short-swing” profit recovery provisions of Section 16 of the Exchange Act and the rules thereunder. Therefore, our shareholders may not know on a timely basis when our officers, directors and principal shareholders purchase or sell our Shares. In addition, foreign private issuers are not required to file their annual report on Form 20-F until 120 days after the end of each fiscal year, while U.S. domestic issuers that are accelerated filers are required to file their annual report on Form 10-K within 75 days after the end of each fiscal year. Foreign private issuers also are exempt from Regulation Fair Disclosure, aimed at preventing issuers from making selective disclosures of material information. As a result of the above, you may not have the same protections afforded to shareholders of companies that are not foreign private issuers.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

•        our future financial and operating results, including revenues, income, expenditures, cash balances and other financial items;

•        our ability to execute our growth, expansion and acquisition strategies, including our ability to meet our goals;

•        current and future economic and political conditions;

•        our expectations regarding demand for and market acceptance of our services and the products and services we assist the distributions of;

•        our expectations regarding our client base;

•        competition in our industry;

•        relevant government policies and regulations relating to our industry;

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

•        overall industry and market performance; and

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

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

Industry Data and Forecasts

This prospectus contains certain data and information that we obtained from various government and industry publications through publicly available sources. Statistical data in these publications may include projections based on a number of assumptions. Our industry may not grow at the rate projected by market data, or at all. Failure of this industry to grow at the projected rate may have a material and adverse effect on our business and the market price of our Shares. In addition, the new and rapidly changing nature of the apparel industry, especially the increase in online activities among players at different stages of the production chain results in significant uncertainties for any projections or estimates relating to the growth prospects or future condition of our SCM operations. Furthermore, if any one or more of the assumptions underlying the market data are later found to be incorrect, actual results may differ from the projections based on these assumptions. You should not place undue reliance on these forward-looking statements.

USE OF PROCEEDS

We expect that we will receive net proceeds from this offering of approximately $8,864,484, based on an assumed initial public offering price of $4.5 per Share, the mid-point of the estimated range of the initial public offering price shown on the cover page of this prospectus, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. If the representatives of the underwriters exercise the option to purchase additional Shares in full, our net proceeds will be approximately $10,416,984 after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. We will not receive any proceeds from the sale of Shares by the Selling Shareholders pursuant to the Resale Prospectus.

We intend to use the net proceeds from our sale of Shares in this offering as follows:

•        20% to procure raw materials used in textile and garment manufacturing, including fiber and yarn, for upstream vertical expansion and lead time reduction;

•        20% to broaden our customer base and develop new customers through marketing and/or to increase our market presence in other key markets such as the United States or Europe;

•        20% to enhance our efficiency and our SCM service capabilities by enhancing our collaboration with our suppliers and logistic service providers or make investments in these areas;

•        10% to explore and introduce eco-friendly and sustainable raw materials for our customers’ consideration and to broaden our sourcing chain to cover quality suppliers of these materials; and

•        30% to fund other general working capital needs.

Pending such use of the net proceeds from this offering, we intend to hold some amounts as cash and to invest the remaining net proceeds in a variety of capital preservation investments, including short-term, investment-grade, interest-bearing instruments denominated in currencies and with maturities that match our contracted expenditures and financial plans.

The amounts and timing of our actual expenditures will depend on numerous factors, including market conditions, results from our research and development efforts, business developments and opportunities and customer-facing and product support activities. Accordingly, our management will have broad discretion in the application of the net proceeds, and investors will be relying on the judgment of our management regarding the application of the proceeds from this offering. We may find it necessary or advisable to use portions of the proceeds from this offering for other purposes. Circumstances that may give rise to a change in the use of proceeds and the alternate purposes for which the proceeds may be used include:

•        the existence of unforeseen or other opportunities or the need to take advantage of changes in timing of our existing activities;

•        the need or desire on our part to accelerate, increase, reduce, or eliminate one or more existing initiatives due to, among other things, changing market conditions or competitive developments or interim results of research and development efforts;

•        results from our business development and marketing efforts;

•        the effect of relevant laws and regulations on our business; and

•        the presentation of strategic opportunities of which we are not currently aware (including acquisitions, joint ventures, licensing, and other similar transactions).

From time to time, we evaluate these and other factors and we anticipate continuing to make such evaluations to determine if the existing allocation of resources, including the proceeds of this offering, is being optimized.

A $1 increase or decrease in the assumed initial public offering price of $4.5 per Share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase or decrease, as applicable, the net proceeds to us from this offering by approximately $2,300,000, assuming the number of Shares offered by us remains the same as set forth on the cover page of this prospectus and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

DIVIDEND POLICY

We currently intend to retain all available funds and future earnings, if any, for the operation and expansion of our business and do not anticipate declaring or paying any dividends in the foreseeable future. Any future determination related to our dividend policy will be made at the discretion of our board of directors after considering our financial condition, results of operations, capital requirements, contractual requirements, business prospects and other factors the board of directors deems relevant, and subject to the restrictions contained in any future financing instruments.

As required under the PRC Enterprise Income Tax Law, the dividends paid by New Brand to Multi Ridge were subject to a withholding tax rate of 10%. On December 13, 2022, New Brand declared and paid dividends in the amount of RMB6,308,093, as net of withholding PRC tax, to Multi Ridge. On May 4, 2023, New Brand declared and paid dividends in the amount of RMB3,882,068, as net of withholding PRC tax, to Multi Ridge. On June 25, 2021, Multi Ridge declared dividends in the amount of HKD5,820,000, and such amount was paid on February 14, 2022. On December 14, 2022, Multi Ridge declared and paid dividends in the amount of HKD6,400,000. On May 5, 2023, Multi Ridge declared and paid dividends in the amount of HKD3,900,000. Historical dividend distributions are not indicative of our future distribution policy and we give no assurance that dividends of similar amounts or at similar rates will be paid in the future.

Current PRC regulations permit New Brand to pay dividend to Multi Ridge only out of its accumulated profits which is determined in accordance with Chinese accounting standards and regulations. New Brand is required to set aside at least 10% of its after-tax profits as the statutory common reserve fund until the cumulative amount of the statutory common reserve fund reaches 50% or more of its registered capital, if any, to fund its statutory common reserves, which are not available for distribution as cash dividends. A PRC company is also not permitted to distribute any profits until any losses from prior fiscal years have been offset. Profits retained from prior fiscal years may be distributed together with distributable profits from the current fiscal year. In addition, registered share capital and capital reserve accounts are also restricted from withdrawal in the PRC, up to the amount of net assets held in each operating subsidiary.

Our PRC subsidiary New Brand generates substantially all of its revenue in RMB, which is, in general, freely convertible into other currencies. However, any restriction on currency exchange may limit the ability of our PRC subsidiaries to use their RMB revenues to pay dividends to us. In addition, under the PRC Enterprise Income Tax Law and its implementation rules, the profits of a foreign-invested enterprise generated through operations, which are distributed to its immediate holding company outside the PRC, will be subject to a withholding tax rate of 10%. Pursuant to a special arrangement between Hong Kong and the PRC, such rate may be reduced to 5% if a Hong Kong resident enterprise owns more than 25% of the equity interest in China company. Our current PRC subsidiary is wholly-owned by our Hong Kong subsidiary, Multi Ridge. Accordingly, Multi Ridge may qualify for a 5% tax rate in respect of distributions from its PRC subsidiary.

Furthermore, if certain procedural requirements are satisfied, the payment of current account items, as defined in the relevant PRC laws and regulations, including profit distributions and trade and service related foreign exchange transactions, can be made in foreign currencies without prior approval from SAFE or its local branches. However, where RMB is to be converted into foreign currency and remitted out of the PRC to pay capital expenses, such as the repayment of loans denominated in foreign currencies, approval from or registration with competent government authorities or their authorized banks is required. The PRC government may take measures at its discretion from time to time to restrict access to foreign currencies for current account or capital account transactions. To the extent that the foreign exchange control system prevents us from obtaining sufficient foreign currency to satisfy our currency demands, we may not be able to pay dividends in foreign currencies to our shareholders.

The declaration, amount and payment of any future dividends will be at the sole discretion of our board of directors, subject to compliance with applicable Cayman Islands laws regarding solvency. Our board of directors will take into account general economic and business conditions, our financial condition and results of operations, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax and regulatory restrictions and other implications on the payment of dividends by us to our shareholders or by MIHL’s subsidiaries to us, and such other factors as our board of directors may deem relevant.

Under Cayman Islands law, our board of directors may authorize payment of a dividend to shareholders at such time and of such an amount out of profits or our share premium account, if shares have been issued at a premium. No dividend may be paid out of our share premium account unless immediately following the payment we are able

to pay its debts as they fall due in the ordinary course of business. Subject to compliance with applicable solvency requirements, there is no further Cayman Islands statutory restriction on the amount of funds which may be distributed by us by dividend.

As we are a holding company, we rely on dividends paid to us by our subsidiaries for our cash requirements, including funds to pay any dividends and other cash distributions to our shareholders, service any debt we may incur and pay our operating expenses. Our ability to pay dividends to our shareholders will depend on, among other things, the availability of dividends from our PRC subsidiary New Brand.

Cash dividends, if any, on our Shares will be paid in U.S. dollars.

As an exempted company, we are not subject to any income, withholding or capital gains taxes in the Cayman Islands. Our shareholders will not be subject to any income, withholding or capital gains taxes in the Cayman Islands with respect to their shares and dividends received on those shares, nor will they be subject to any estate or inheritance taxes in the Cayman Islands.

CAPITALIZATION

The following table sets forth our capitalization as of March 31, 2024:

•        an actual basis, giving effect to the share split at a ratio of 1-to-1.6 and the increase of the authorized shares to 800,000,000 Ordinary Shares, which was approved and effected on July 3, 2023; and;

•        a pro forma as adjusted basis to give effect to the sale of 2,500,000 Shares in this offering at the assumed initial public offering price of $4.5 per Share (the midpoint of the price range set forth on the cover page of this prospectus) after deducting the underwriting discounts and commissions, non-accountable expense allowance and estimated offering expenses payable by us, assuming the representatives of the underwriters do not exercise the over-allotment option.

You should read this information together with our audited consolidated financial statements appearing elsewhere in this prospectus and the information set forth under the sections titled “Summary Consolidated Financial Data,” “Use of Proceeds” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

____________

(1)      Reflects the sale of Shares in this offering at an assumed initial public offering price of $4.5 per Share (the midpoint of the price range set forth on the cover page of this prospectus), and after deducting the underwriting discounts and commissions, non-accountable expense allowance and estimated offering expenses payable by us. The pro forma as adjusted information is illustrative only, and we will adjust this information based on the actual initial public offering price and other terms of this offering determined at pricing. Additional paid-in capital reflects the net proceeds we expect to receive, after deducting the underwriting discounts and commissions (underwriting discount equal to 7.0% per Share, non-accountable expense allowance (1.0%) and estimated offering expenses payable by us ($1,485,516). We estimate that such net proceeds will be approximately $8,864,484. For an itemization of an estimation of the total offering expenses payable by us, see “Expenses Related to Offering”.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of its financial condition and results of operations should be read in conjunction with the financial statements and the related notes included elsewhere in this prospectus. This discussion contains forward-looking statements that involve risks and uncertainties. Its actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” and elsewhere in this prospectus.

Overview

We are a provider of SCM services in the apparel industry delivering one-stop solution to our customers for a broad range of yarn products, textiles and finished garments. We conduct our operations through our PRC subsidiary New Brand, which is headquartered in Hong Kong. Through our integrated capabilities, we provide end-to-end supply chain solutions that are tailored to meet our customers’ unique needs.

Apparel products handled by us mainly comprise of yarn products and finished garments. Our customers span across different stages of the apparel supply chain, including brand owners, textile manufacturers, apparel sourcing agents and online fashion and garment retailers. We rely on raw material vendors, contract manufacturers and logistics service providers to produce and deliver customized apparel products to destinations designated by our customers.

Key Factors that Affect Results of Operations

Our results of operations have been and will continue to be affected by a number of factors, including those set out below:

Economic, political and social conditions in China, as well as its government policies, laws and regulations

All of our operations are currently located in China, and all of our revenue was generated in China for the six months ended March 31, 2024 and the years ended September 30, 2023 and 2022. Accordingly, our business, prospects, financial condition and results of operations may be influenced to a significant degree by the political, economic and social conditions in the PRC generally and by the continued economic growth in China as a whole. Accordingly, our results of operations and prospects are, to a significant degree, subject to economic, political and legal developments in the PRC. The economy of China differs from the economies of most developed countries in many respects, including the extent of government involvement, its level of development, its growth rate and its control over foreign exchange. China’s economy has been transitioning from a planned economy to a more market-oriented economy. In recent years, the PRC government has implemented measures emphasizing market forces for economic reform, however, a significant portion of productive assets in China is still owned by the PRC government. The PRC government continues to play a significant role in regulating industrial development. It also exercises significant control over China’s economic growth through the allocation of resources, controlling payment of foreign currency-denominated obligations, setting monetary policies and providing preferential treatments to particular industries or companies. All of these factors could affect the economic conditions in China and, in turn, our business.

Competition from other players in the market

The apparel SCM industry in China has a large number of participants, which makes the industry highly fragmented and competitive. We compete with other apparel SCM companies on the basis of service quality and pricing. Some of our competitors may have more variety of services, greater pricing flexibility, stronger brand recognition, longer operating history and a more established customer base. As a result, these competitors have greater credibility with our potential customers in our target market segments. They may have greater resources to support their service offerings, such as better in-house technology infrastructure, stronger brand and pricing flexibility.

As the apparel SCM market in China is very large and fragmented, we face fierce competition among service providers in terms of product design, price, quality control and delivery of products. Our ability to compete against other market players is, to a significant extent, dependent on our ability to distinguish our services and products from those of our competitors by providing high quality products that appeal to consumers’ preferences at competitive prices. Our competitors may provide products comparable or superior to those we provide, and our competitors may adapt more quickly than we do to evolving industry trends or changing market requirements.

Critical Accounting Policies, Judgments and Estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Actual results and outcomes may differ from management’s estimates and assumptions. In particular, the COVID-19 pandemic and the resulting adverse impacts to global economic conditions, as well as our operations, may impact future estimates including, but not limited to, useful lives of property and equipment, impairment of long-lived assets, allowance for doubtful accounts, provision for contingent liabilities, revenue recognition, deferred taxes uncertain tax position and going concern. Actual results could differ from these estimates.

We believe the following critical accounting policies reflect the more significant judgments and estimates we used in the preparations of our combined and consolidated financial statements.

Revenue recognition

Our revenues consist of sales of yarns and sales of finished garments to third party customers. We adopted Accounting Standards Update (“ASU”) 2014-09 Revenue from Contracts with Customers (ASC 606). The ASU requires the use of a new five-step model to recognize revenue from customer contracts. The five-step model requires that we (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) we satisfy the performance obligation.

We recognize sales at the point in time when we transfer physical possession of the goods to the customer who accepts, an event which indicates a transfer of control of the goods. Transaction price is determined and allocated to the goods prior to their transfer to the customer.

Accounts Receivable

Accounts receivable are recorded at the net value less provision for doubtful accounts. The management regularly reviews outstanding accounts and provides an allowance for doubtful accounts. Their reviews generally include ongoing credit evaluations of our customers, such as the existence of an ongoing relationships, financial standing and previous settlements. Account balances outstanding longer than the payment terms are considered past due and provisions are made for estimated uncollectible receivables. Such estimates are based on historical collection experience, a review of the current status of receivables, judgment of the credit quality of our customer and the condition of the general economy and the industry. Decisions to charge off receivables are based on management’s judgment after consideration of facts and circumstances surrounding potential uncollectible accounts. The allowance is based on management’s best estimates of specific losses on individual customer exposures. When collection of the original invoice amounts is no longer probable, we will either partially or fully write-off the balance against the allowance for doubtful accounts.

We estimate potential returns and record such estimates against its gross revenue to arrive at its reported net sales revenue. We have not encountered any incidents of sales returns.

Provision for doubtful accounts

We established a provision for doubtful accounts when there is objective evidence that we may not be able to collect amounts due.

Pursuant to Accounting Standards Codification 310-10-35-41, account balances are charged off against the provision for doubtful accounts when the accounts receivables and other receivables are deemed uncollectible.

Six months ended March 31, 2024

The table below sets forth the age analysis of our gross accounts receivable at the end of each period:

The table below sets forth the subsequent settlements related to our accounts receivable as of March 31, 2024:

The table below sets forth the accounts receivable balance net of subsequent settlements as at August 31, 2024:

The table below sets forth the percentage of provision for doubtful accounts for each aging group of our accounts receivable at the end of each period:

The table below sets forth the provision of doubtful accounts for each aging group of our gross accounts receivable at the end of each period:

Year ended September 30, 2023 and 2022

The table below sets forth the age analysis of our gross accounts receivable at the end of each period:

The table below sets forth the subsequent settlements related to our accounts receivable as of September 30, 2023:

The table below sets forth the accounts receivable balance net of subsequent settlements as at December 15, 2023:

The table below sets forth the percentage of provision for doubtful accounts for each aging group of our accounts receivable at the end of each period:

The table below sets forth the provision of doubtful accounts for each aging group of our gross accounts receivable at the end of each period:

Taxes

Cayman Islands

We are incorporated in the Cayman Islands. The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is no taxation in the nature of inheritance tax or estate duty. The Cayman Islands does not impose a withholding tax on payments of dividends to shareholders.

BVI

We own Nifty Holdings, which incorporated in the BVI and is not subject to tax on income or capital gains under current BVI law. In addition, upon payments of dividends by these entities to their shareholders, no BVI withholding tax will be imposed.

Hong Kong

Nifty Holdings owns New Brand, our operating subsidiary, through Multi Ridge. Multi Ridge was incorporated in Hong Kong and is subject to Hong Kong profit tax at a rate of 16.5%. Under Hong Kong tax law, Multi Ridge is exempted from income tax on is foreign-derived income and there is no withholding tax in Hong Kong on remittance of dividends.

China

New Brand is subject to enterprise income tax on their worldwide taxable income as determined under PRC tax laws and accounting standards at a rate of 25%.

New Brand is a value-added tax (“VAT”) general taxpayer. Products sold by New Brand in the PRC are subject to VAT. Revenue represents the invoiced value of service, net of VAT. VAT is based on gross sales price and VAT rates range up to 13%, depending on the type of service provided. Entities that are VAT general taxpayers are allowed to offset qualified input VAT paid to suppliers against their output VAT liabilities. Net VAT balance between input VAT and output VAT is recorded in tax payable. All of the VAT returns are subject to examination by the tax authorities for five years from the date of filing.

Dividends paid by New Brand to Multi Ridge will be subject to a withholding tax rate of 10%, unless Multi Ridge satisfies all the requirements under the Arrangement between the Mainland of China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and receives approval from the relevant tax authority. If Multi Ridge satisfies all the requirements under the tax arrangement and receives approval from the relevant tax authority, then the dividends paid to Multi Ridge would be subject to withholding tax at the standard rate of 5%.

If our holding company in the Cayman Islands or any of the subsidiaries outside of China were deemed to be a “resident enterprise” under the PRC Enterprise Income Tax Law, it would be subject to enterprise income tax on its worldwide income at a rate of 25%. See “Regulations — Regulations on Tax” for more information.

Recently issued accounting pronouncements

See the discussion of the recent accounting pronouncements contained in Note 2 to the consolidated financial statements, “Summary of Significant Accounting Policies”.

Results of Operations

Year ended September 30, 2022 compared to year ended September 30, 2023

The following table sets forth a summary of the consolidated results of operations of us for the periods indicated.

Revenue

For the years ended September 30, 2023 and 2022, we generated our revenue through two revenue streams: sales of yarns and sales of finished garments.

The following table presented our revenue disaggregated by service lines for the years ended September 30, 2023 and 2022:

Our revenue decreased by 27.9% to RMB82,563,751 (US$11,316,304) for the year ended September 30, 2023 from RMB114,548,334 for the year ended September 30, 2022 mainly due to the decrease in sales of yarns. Our sales of yarns decreased by 29.3% to RMB77,040,009 (US$10,559,212) for the year ended September 30, 2023 from RMB108,993,087 for year ended September 30, 2022 due to the decrease in average selling price of yarns resulting from sluggish economy and lower market demand.

Gross profit and gross profit margin

The following table presented our gross profit and gross profit margin disaggregated by products for the years ended September 30, 2023 and 2022:

Our overall gross profit decreased by 70.0% to RMB4,240,168 (US$581,164) for the year ended September 30, 2023 from RMB14,143,430 for the year ended September 30, 2022. Our overall gross profit margin decreased by 7.2 percentage points to 5.1% for the year ended September 30, 2023 from 12.3% for the year ended September 30, 2022.

The gross profit of yarns decreased by 76.8% to RMB3,137,899 (US$430,085) for the year ended September 30, 2023 from RMB13,531,753 for the year ended September 30, 2022. The gross profit margin of yarns decreased by 8.3 percentage points to 4.1% for the year ended September 30, 2023 from 12.4% for the year ended September 30, 2022 mainly due to the decrease in average selling price of yarns resulting from sluggish economy and lower market demand.

Our gross profit of finished garments increased by 80.2% to RMB1,102,269 (US$151,079) for the year ended September 30, 2023 from RMB611,677 for the year ended September 30, 2022. Our gross profit margin of finished garments increased by 9.0 percentage points to 20.0% for the year ended September 30, 2023 from 11.0% for the year ended September 30, 2022. This increase was due to our strategy to sell more profitable products during the year.

Selling and marketing expenses

For the years ended September 30, 2023 and 2022, our selling and marketing expenses consisted of exhibition expense and other miscellaneous expenses. The following table sets forth a breakdown of our selling and marketing expenses for the years ended September 30, 2023 and 2022:

Our selling and marketing remained relatively stable at RMB350,209 and RMB332,508 (US$45,574) for the year ended September 30, 2022 and 2023.

General and administrative expenses

For the years ended September 30, 2023 and 2022, our general and administrative expenses consisted of rental and office expense, travelling expenses, depreciation and amortization, legal and professional fee, staff costs and other miscellaneous expenses. The following table sets forth a breakdown of our general and administrative expenses for the years ended September 30, 2023 and 2022:

Our general and administrative expenses remained relatively stable at RMB3,170,139 and RMB3,265,341 (US$447,552) for the year ended September 30, 2022 and 2023, respectively.

Reversal of (provision for) doubtful accounts

The allowance for doubtful debts is based on management’s best estimates of specific losses on individual customer exposures by referring to credit periods, subsequent settlements, business relation and history, customer reputation, etc. at the end of the periods indicated.

The following table sets forth a breakdown of its reversal of (provision for) doubtful accounts for years ended September 30, 2023 and 2022:

On September 30, 2021, we filed a civil complaint in the Shanghai Songjiang District People’s Court against a former customer Tianjin Xinfa Knitting Products Co., Ltd., seeking damages of RMB11,521,595.75 in total for the unpaid services rendered. The provision for doubtful accounts for the years ended September 30, 2021 was related to the accounts receivable from Tianjin Xinfa Knitting Products Co., Ltd. The court ruling was in favor of us and as of the date of this prospectus, RMB246,704 was recovered. The provision of doubtful accounts for the year ended September 30, 2022 related to a customer with insignificant overdue accounts receivable balance which remained unsettled.

Interest expense

Our interest expense represented interest expense for our short-term bank borrowings, which increased by 11.1% to RMB1,740,259 (US$238,522) for the year ended September 30, 2023 from RMB1,566,397 for the year ended September 30, 2022. The increase was principally attributable to the increase in our average bank borrowing balance for the year ended September 30, 2023.

Other income, net

Other income, net primarily comprised of government subsidies, exchange (loss) gain, net and other miscellaneous income.

The following table sets forth a breakdown of other income, net for the years ended September 30, 2023 and 2022:

Our other income, net increased by 203.4% to RMB1,013,322 (US$138,887) for the year ended September 30, 2023, from RMB334,030 for the year ended September 30, 2022, mainly attributable to the increase in government subsidies received. There were no unfulfilled conditions or other contingencies relating to the government subsidies.

Provision for income tax expense

The following table sets forth a breakdown of provision for income tax expense for the years ended September 30, 2023 and 2022:

Provision for income tax expense primarily comprised current profit tax and deferred expense (credit). Current profit tax included tax recorded in Hong Kong and the PRC.

PRC current profit tax represented 25% of Enterprise Income Tax (“EIT”), resulting from the operations of New Brand in China and the 10% withholding tax levied by the PRC government when dividends were distributed by New Brand, our PRC subsidiary to its sole shareholder, Multi Ridge, in 2023.

Deferred tax expense (credit) arose from the (provision for) reversal of provision for doubtful accounts in the same periods. The amount was computed based on 25% of EIT on the amount of (provision) reversal recorded by us.

Income tax expenses decreased by 56.8% to RMB1,035,623 (US$141,944) for the year ended September 30, 2023 from RMB2,398,240 for the year ended September 30, 2022.

Net income (loss)

We recorded net loss of RMB993,937 (US$136,230) for the year ended September 30, 2023 mainly due to the decrease in revenue from sales of yarns.

Gross profit and gross profit margin

The following table presented our gross profit and gross profit margin disaggregated by products for the six months ended March 31, 2024 and 2023:

Our overall gross profit increased by 52.2% to RMB3,684,506 (US$510,298) for the six months ended March 31, 2024 from RMB2,421,452 for the six months ended March 31, 2023. Our overall gross profit margin increased by 0.5 percentage points to 8.1% for the six months ended March 31, 2024 from 7.6% for the six months ended March 31, 2023.

The gross profit of yarns increased by 58.2% to RMB3,112,979 (US$432,528) for the six months ended March 31, 2024 from RMB1,974,390 for the six months ended March 31, 2023. The gross profit margin of yarns increased by 0.5 percentage points to 7.3% for the six months ended March 31, 2024 from 6.8% for the six months ended March 31, 2023. The increase was mainly due to the increase in sales of yarn.

The gross profit of finished garments increased by 25.6% to RMB561,527 (US$77,770) for the six months ended March 31, 2024 from RMB447,062 for the six months ended March 31, 2023. The gross profit margin of finished garments increased by 3.6 percentage points to 18.2% for the six months ended March 31, 2024 from 14.6% for the six months ended March 31, 2023 mainly due to the cost control on production.

Selling and marketing expenses

For the six months ended March 31, 2024 and 2023, our selling and marketing expenses consisted of exhibition and advertising expenses and other miscellaneous expenses. The following table sets forth a breakdown of our selling and marketing expenses for the six months ended March 31, 2024 and 2023:

Our selling and marketing expenses remained relatively stable at RMB1,509 (US$209) and RMB805 for the six months ended March 31, 2024 and 2023, respectively.

General and administrative expenses

For the six months ended March 31, 2024 and 2023, our general and administrative expenses consisted of rental and office expenses, travelling expenses, depreciation and amortization, legal and professional fee, staff costs, bad debt and other miscellaneous expenses. The following table sets forth a breakdown of our general and administrative expenses for the six months ended March 31, 2024 and 2023:

Our general and administrative expenses increased by 35.9% to RMB2,583,399 (US$357,797) for the six months ended March 31, 2024 from RMB1,901,378 for the six months ended March 31, 2023. The increase was mainly due to (i) the increase in staff costs as a result of salary increment of management; and (ii) the increase in legal and professional fee.

Interest expense

Our interest expense represented interest expense for our short-term bank borrowings, which decreased by 48.4% to RMB510,699 (US$70,731) for the six months ended March 31, 2024 from RMB989,085 for the six months ended March 31, 2023. The decrease was principally attributable to the decrease in our average bank borrowing balance and average interest rate for the six months ended March 31, 2024.

Other (loss) gain, net

Other (loss) gain, net primarily comprised of government subsidies, exchange (loss) gain, net and other miscellaneous expenses.

The following table sets forth a breakdown of other (loss) gain, net for the six months ended March 31, 2024 and 2023:

We recorded other (loss) gain, net of RMB145,737 (US$20,184) for the six months ended March 31, 2024 mainly represented other gain of RMB138,369 (US$19,164). There were no unfulfilled conditions or other contingencies relating to the government subsidies.

Provision for income tax expense

The following table sets forth a breakdown of provision for income tax expense for the six months ended March 31, 2024 and 2023:

Provision for income tax expense represented current profit tax and deferred tax credit. Both the current profit tax and deferred tax credit were recorded in the PRC.

PRC current profit tax represented 25% of Enterprise Income Tax (“EIT”), resulting from the operations of New Brand in China. EIT decreased by 27.3% to RMB498,126 (US$68,990) for the six months ended March 31, 2024 from RMB685,115 for the six months ended March 31, 2023. Our overall effective tax rate increased to 67.7% for the six months ended March 31, 2024 from (105.9)% for the six months ended March 31, 2023. The decrease in EIT was mainly due to the withholding tax on dividend for the six months ended March 31, 2023.

Net (loss) income

We recorded a net income of RMB237,704 (US$32,920) for the six months ended March 31, 2024 from a net loss of RMB 1,317,508 for the six months ended March 31, 2023, which was mainly due to the increase in assessable profit resulting from the increase in revenue.

LIQUIDITY AND CAPITAL RESOURCES

The following table sets forth a breakdown of our current assets and liabilities as of the dates indicated.

Other receivables — related parties

The following table set forth the breakdown of our other receivables — related parties as of the dates indicated:

The amounts due from Action Holdings Limited and Easy Rich SH represented fund advances to them. The balances were unsecured, interest free with no specific repayment terms and of non-trade nature. All balances with related parties will be repaid by the related parties upon listing.

Inventories

Our inventories consisted of raw materials and finished garments. Our inventories decreased by 31.1% to RMB3,188,932 (US$437,039) as of September 30, 2023 from RMB4,626,020 as of September 30, 2022. The decrease was mainly due to the delivery of yarns to our customers prior to year end.

Our inventories decreased by 28.1% to RMB2,293,096 (US$317,590) as of March 31, 2024 from RMB3,188,932 as of September 30, 2023, due to the delivery of yarns to our customers prior to period end.

We review our inventory levels on a regular basis. We believe that maintaining appropriate levels of inventories can help us better plan raw material procurement and deliver our products to meet customer demand in a timely manner without straining our liquidity.

During the six months ended March 31, 2024 and the years ended September 30, 2023 and 2022, we experienced no obsolete and slow-moving inventories. We had no provision for inventories for the six months ended March 31, 2024 and the years ended September 30, 2023 and 2022.

Accounts payable

Our accounts payable mainly related to the purchase of raw materials from our suppliers. Our yarn suppliers usually granted us a credit period between 30 and 45 days. Certain suppliers, especially cashmere suppliers, may request prepayment before delivery.

Our accounts payable decreased by 48.6% to RMB9,272,389 (US$1,270,887) as of September 30, 2023 from RMB18,035,360 as of September 30, 2022, which was due to our decrease in purchase of raw materials and our increase in prepayments to suppliers during the year.

Our accounts payable increased by 158.9% to RMB24,010,657 (US$3,325,438) as of March 31, 2024 from RMB9,272,389 as of September 30, 2023, mainly due to (i) the delay in settlement as part of our strategy to strengthen our liquidity; and (ii) our increase in purchase of yarns to cope with the increase in sales of yarns.

Accruals and other payables

Our accruals and other payables were comprised of interest payables, VAT payables, and other taxes and levies. Our accruals and other payables decreased by 51.8% to RMB864,441 (US$118,481) as of September 30, 2023 from RMB1,794,441 as of September 30, 2022, principally due to the decrease in VAT payable by 58.9% to RMB528,482 (US$72,434) as of September 30, 2023 from RMB1,287,347 as of September 30, 2022.

Our accruals and other payables decreased by 90.6% to RMB81,620 (US$11,305) as of March 31, 2024 from RMB864,441 as of September 30, 2023, which was principally due to (i) the decrease in VAT payables; and (ii) the decrease in interest payable.

Other payables — related parties

The following table set forth the breakdown of our other payables — related parties as of the dates indicated:

The amounts due to Ms. Li consisted of fund advances to us. The balance was unsecured, interest free with no specific repayment terms and of non-trade nature. Ms. Li is one of our Controlling Shareholders.

The amount due to MIL and MDSZ represented fund advances to us. The balance was unsecured, interest free with no specific repayment terms and of non-trade nature. MIL is our affiliate under common control by both of our Controlling Shareholders and MDSZ is a subsidiary company of MIL.

The amount due to MDIGH represented advances to us for operational purposes. The balance was unsecured, interest free with no specific repayment terms and of non-trade nature. MDIGH is an intermediate holding company of us.

The amount due to Leisure Bright principally represented rent payable for our office premises in Shanghai. Our PRC subsidiary New Brand is a party to an office lease agreement with Leisure Bright Trading Limited dated February 25, 2020, pursuant to which Leisure Bright Trading Limited has agreed to lease to New Brand a property situated at room 1703B, Changtai Enterprise World Plaza, 899 Haining Road, Shanghai, China. Ms. Li is the sole shareholder of Leisure Bright. The term of the lease is three years, commencing from February 2, 2020 and ended on January 31, 2023. The monthly rental cost is RMB33,630. The lease was subsequently further extended on January 15, 2023 for a term of two years, commencing from February 1, 2023 to January 31, 2025, with the monthly rental remaining unchanged at RMB33,630. The lease with Leisure Bright was subsequently terminated in December 2023. See “Certain Relationships and Related-Party Transactions” and Note 11 to the consolidated financial statements, respectively.

The amount due to Wisewing principally represented rent payable for our office premises in Hong Kong. We are a party to an office lease agreement with Wisewing dated December 2, 2023, pursuant to which Wisewing has agreed to lease to us a property situated at 22 Floor, China United Plaza, 1008 Tai Nam West Road, Hong Kong. Mr. Ko is the sole shareholder of Wisewing. The term of the lease is three years, commencing from January 1, 2024 and ending on December 31, 2026. The monthly rental cost is HKD35,000. See “Certain Relationships and Related-Party Transactions” and Note 11 to the consolidated financial statements, respectively.

All balances with related parties will be repaid upon listing.

Contract liabilities

Our contract liabilities mainly relate to the receipt in advance from customers of our finished garments. Our contract liabilities increased by 94.9% to RMB531,326 (US$72,824) as of September 30, 2023 from RMB272,647 as of September 30, 2022 because of the increase in prepayments received from customers.

Our contract liabilities decreased by 81.3% to RMB99,479 (US$13,778) as of March 31, 2024 from RMB531,326 as of September 30, 2023 because of the decrease in prepayments from our customers.

Cash Flows

Our use of cash primarily related to operating activities and payment of dividends. We have historically financed our operations primarily through our cash flow generated from our operations and advances from related parties.

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

Cash generated from (used in) operating activities

Our cash inflow from operating activities was principally from receipt of sales. Our cash outflow used in operating activities was principally for payment of purchases of raw materials and contract manufacturing services, staff costs and other operating expenses.

For the year ended September 30, 2022, we had net cash generated from operating activities of RMB21,088,103, reflecting our net profit of RMB7,226,857, as adjusted for non-cash items, the effects of which were offset by cash used due to change in operating activities of RMB13,590,847. Adjustments for non-cash items consisted of (i) depreciation or plant and equipment of RMB24,651; (ii) amortization of right-of-use assets-operating lease of RMB389,792; (iii) reversal of doubtful accounts of RMB192,045; and (iv) deferred tax expense of RMB48,001. Changes in operating assets and liabilities mainly include (i) decrease in inventories of RMB11,388,945 because we speed up the inventory turnover to enhance our liquidity, (ii) increase of accounts payable of RMB10,898,248 mainly due to our increase in purchase during the year, and (iii) increase in accruals and other payables of RMB1,500,943 due to an increase of VAT payable, and partially offset by (i) increase in accounts receivable of RMB7,788,749 which was in line with our increase in revenue, (ii) increase of deposits, prepayments and other receivables of RMB1,063,243 due to the deferred IPO costs in relation to our proposed listing; and (iii) decrease in contract liabilities of RMB1,396,634 due to the decrease in prepayments from customers.

For the year ended September 30, 2023, we had net cash used in operating activities of RMB6,082,836, reflecting our net loss of RMB993,937, as adjusted for non-cash items, the effects of which were offset by cash used due to change in operating activities of RMB5,528,027. Adjustments for non-cash items consisted of (i) depreciation of plant and equipment of RMB32,756; (ii) amortization of right-of-use assets-operating lease of RMB383,994; (iii) provision for doubtful accounts of RMB29,837; and (iv) deferred tax benefit of RMB7,459. Changes in operating assets and liabilities mainly include (i) increase in deposits, prepayments and other receivables of RMB5,941,561 due to the increase in deferred IPO costs in relation to our proposed listing and the increase in prepayments to suppliers to secure raw materials, (ii) decrease in accounts payable of RMB8,762,971 mainly due to the decrease in purchase of raw materials and our increase in prepayments to suppliers during the year; (iii) decrease in accruals and other payables of RMB930,000 mainly due to decrease in VAT payable; and (iv) decrease in tax payable of RMB1,081,250, and partially offset by (i) the decrease in inventories of RMB1,437,088 which was mainly due

INDUSTRY

Introduction of apparel supply chain management

Apparel SCM is a planning and managing process consisting mainly of market trend analysis, product design and development, raw material sourcing, production and quality control and logistics management. The business scope of an apparel SCM company depends on its management capability over each step of the process. Raw material and production sourcing are the core services provided by apparel SCM companies. An apparel SCM company should have strong production and raw material know-hows, in-house designers who can keep abreast of market trends in order to meet customers’ needs on a timely basis, be capable of controlling quality of the products, and have the flexibility to cater to different lead times with short notice in a cost-effective manner.

SCM services are designed for retailers that want to focus on their core competencies. The increasing focus on fashion and speed has increased demand for quick turnaround and flexibility in order to respond to evolving consumer trends. Some of these retailers see strategic value in finding a partner to outsource their buying and sourcing operations so that they can refocus on their strengths to compete effectively on the other sections of the apparel business. SCM services in the apparel industry in China can be broadly categorized into three sections based on their ordering in the process chain: upstream, midstream and downstream. Apparel SCM service providers play an important role in connecting the upstream and downstream.

Upstream

Raw material vendors, raw material traders and SCM service providers are involved in, and play different roles, in the upstream section. Some apparel companies outsource their production to service providers that offer a one-stop service, including product design, raw material sourcing, and production management. Individual retailers or wholesalers, acting through sourcing agents, usually group together as a single purchasing unit so that they have stronger bargaining power when negotiating with raw material suppliers. Some parties in the value chain may also choose to engage in the trading of raw materials as commodities.

Midstream

The midstream section consists of SCM service providers and manufacturers of apparel products. Some of the manufacturers offer services to different customers on a project-by-project basis, while some manufacture only their own designs. The service scope of SCM service providers varies, mostly driven by their core strengths and business strategy. Some service providers outsource apparel production process to contract manufacturers in other regions where labor cost is lower. Contract manufacturers purchase raw materials from raw material vendors for further processing. For service providers with their own manufacturing plants, products are shipped to warehouses and apparel distributors directly. For service providers that receive products from third-party manufacturing contractors, they will conduct their own quality checks before packaging.

Downstream

The downstream section involves distributors and retailers. Due to differences in their market positioning and retail strategies, the types and sizes of distribution channels vary quite significantly between branded apparel companies and regional apparel distributors. Typically, high-quality finished garments are sold as branded fashion in department stores and boutiques, whereas lower-priced apparels are sold in local marketplaces and online.

Market size of the apparel SCM industry in China

The apparel retail market in China is large and fast-growing. It has expanded rapidly in the past decades with the increased purchasing power of domestic consumers. According to the National Bureau of Statistics of China, the turnover of Chinese apparel retail market increased from RMB47.6 billion in 2009 to RMB71.0 billion in 2019, representing a CAGR of 4.08%.

Major market drivers of SCM market in China

Transition towards a consumption-driven economy

Under the 14th Five-Year Plan (2021-2025), the national strategy of China is to transit into an economy more dependent on consumption-driven growth. This would require increasing the PRC citizens’ income level by diversifying and expanding their income portfolio. Based on the statistics from the National Bureau of Statistics of China, between 2016 and 2020, disposable income per capita has increased from 23,821 in 2016 to 32,189 in 2020, with a CAGR of 7.82%, while consumption expenditure per capita increased from 17,111 in 2016 to 21,210 in 2020, with a CAGR of 5.52%. As a result, consumer attitudes, behaviors and purchasing habits are expected to shift to a more consumption-focused direction. With stronger purchasing power, these consumers are more willing to spend more for a fashionable outlook through high-quality and branded apparels. At the same time, many online retailers are also launching their own private label line, which is a major trend with the pure play online retailers and will present significant opportunities for the SCM market.

Set out below are the salient terms of our supplier orders with logistics service providers:

•        Service description.    The order must contain a description of services. Logistics service providers normally agree to furnish all labor, vehicles, equipment and customary work necessary to fully and adequately provide the services.

•        Delivery.    The order must indicate an estimated delivery time. The delivery method is mainly by ground transportation.

•        Termination.    The order must indicate the circumstances under which the legal relationship can be terminated.

•        Payment terms.    The order must specify the payment due dates and total amount. We usually settle the payment in full upfront by wire transfer directly to logistics service providers.

•        Liability Limitation.    The order will specify the maximum amount of liability the logistics service provider will be exposed to if a claim arises from the provision of transportation services.

PRODUCT RETURN

We do not have a product return or warranty policy. Customers have the right to inspect the finished goods before delivery for defects and deviation from specifications. We do not assume the risk of damages or losses after the finished goods are delivered to the place designated by our customers. Like all responsible SCM service providers, however, we value the importance of maintaining a positive and long-term business relationship with our customers. After the completion of a project, we follow up with our customers to gauge their level of satisfaction and solicit feedback on specific aspects of the project. We take each customer complaint seriously and are willing to discuss and agree on a feasible commercial solution to address the complaint by references to the facts and circumstances of the case. Where quality issue is concerned, we follow up closely with our customers on any claims or requests for product return, payment refund, rectification or price discount. Where our supplier is at fault, we usually exercise the contractual right to return substandard products and to rectify product defects on a timely basis.

For the six months ended March 31, 2024 and the years ended September 30, 2023 and 2022, we were not aware of any material claims against us in relation to defective products, nor any material product returns from our customers.

MARKETING

We implement a number of marketing and promotion measures to source new customers. We regularly attend fashion shows and trade shows in China to promote our apparel products and yarn fiber products and identify potential customers. Our new customers are primarily referrals from our existing customers which, in our view, are a reflection of our existing customers’ satisfaction with our services. We also approach potential customers for business opportunities by contacting them through our business network and through business referrals that we receive from time to time from our customers.

Our marketing activities also include paying visits to potential and existing customers as well as inviting them to our showroom in China to present to them our new product samples. We believe that a well decorated and inspiring showroom is a great marketing tool for an apparel SCM company, for business development and brand image. By displaying our visually compelling new product samples in our showroom, we can demonstrate our capability of production development via visual experience. Our showroom has served as an effective platform for customer relationship development, as it facilitates face-to-face meetings, allows our customer to understand our latest design collections and significantly enhances customer experience with us. Our business strategy is to enhance mutual understanding with our customers regarding the products and services they require and our ability to meet their requirements, thereby maintaining long-term business relationships with existing customers and generating sales from new customers.

SEASONALITY

The apparel market exhibits seasonality with dynamic changes in trends and consumers’ preferences. Our sales of garment products are generally highest from August to December, mainly attributable to climate change and frequent online sales events during these months. Our garment products are mainly sold domestically in China. In contrast, our sales of yarn products do not exhibit seasonality. The sales generated in these months in aggregate accounted for approximately 93%, 94% and 95% of our total revenue for the six months ended March 31, 2024 and the years ended September 30, 2023 and 2022, respectively.

COMPETITION

We face fierce competition among service providers in terms of the product design, the price, the quality control and delivery of products. The apparel SCM market in China is very large and fragmented. Our ability to compete against other market players is, to a significant extent, dependent on our ability to distinguish our services and products from those of our competitors by providing high quality products that appeal to consumers’ preferences at competitive prices. Our competitors may provide products comparable or superior to those we provide, and our competitors may adapt more quickly than we do to evolving industry trends or changing market requirements.

Moreover, the changing demands from the consumption market drive various retail brands to require for higher quality, shorter lead time and competitive prices in the apparel SCM market. We believe that the leading players in the apparel SCM market of China share some common characteristics: the provision of integrated SCM solutions along with comprehensive value-added services such as the procurement of raw materials, the design and consulting of products are involved. Based on our extensive operations experience in the apparel market, we have established long-term cooperative relationships with raw material suppliers from the upstream, which provide us with a sufficient supply for mass production. The lower sourcing cost and the high large-volume production capacity further lead to more stable lead time and competitive price.

INTELLECTUAL PROPERTY

To date, we do not own any patents, copyrights, domains or license agreements. We own one China trademark.

INSURANCE

We believe our insurance coverage is adequate to insure against the risks relating to our operations, given the size and nature of our business. Our insurance coverage includes, among others, employees’ compensation, business interruption and fire. We believe that our insurance coverage is in line with our industry norm. We review our insurance policies from time to time for adequacy in the breadth of coverage.

FACILITIES

We do not own any real property. Our principal executive office is located in Kowloon, Hong Kong. The office has a size of approximately 2833 square feet, which we use as office space. We have signed a three year lease agreement which will expire on December 31, 2026.

We had signed a one year lease agreement for a warehouse located in Zhongshan, China, which will expire on November 30, 2024. The warehouse had a size of approximately 6458.4 square feet, which we used for raw materials inventory storage such inventory largely consists of raw yarn, such as cashmere wool, that was used in the production our yarn products.

LICENSES, PERMITS AND APPROVALS

We have obtained all necessary licenses, permits and approvals that are material to our business operations, all of which are valid and current as of March 31, 2024. We are not aware of any circumstances that would significantly hinder or delay the renewal of such licenses, permits and approvals.

EMPLOYEES

As of March 31, 2024, we employed a total number of seven full-time employees, all of whom are based in China. Our employees are employed in the areas of human resources and administration, management, product design and development, sourcing and logistics, and quality control.

We have employment contracts with each of our employees in accordance with the applicable employment laws in China. The remuneration package offered to our employees generally includes basic salary, bonuses and cash allowances or subsidies. The salary assigned is determined on the basis of the employee’s qualifications, position, relevant experience and seniority. We conduct an annual review on salary adjustment and promotions based on each employee’s performance.

We provide our employees with on-the-job training as part of our continuing efforts to provide training to our high caliber employees. We also regularly conduct employee trainings in the areas of risk management, company culture and communications. We occasionally provide financial support to our employees to attend external courses relevant to their job duties for further improvement in their skills and knowledge. We also provide training about new apparel products and yarn fiber products to our employees in the design and development team.

As required by regulations in China, we participate in various government statutory social security plans for our employees that are administered by local governments, including pension, medical insurance, unemployment insurance, work-related injury insurance, maternity insurance, and housing provident fund. We are required under PRC law to contribute to social security plans at specified percentages of the salaries, bonuses and certain allowances of our employees up to a maximum amount specified by the local government from time to time.

LEGAL PROCEEDINGS

On September 30, 2021, we filed a civil complaint in the Shanghai Songjiang District People’s Court against our former customer Tianjin Xinfa Knitting Products Co., Ltd., seeking damages of RMB 11,521,595.75 for the unpaid services we rendered pursuant to its orders. On October 22, 2021, the court issued a summon requiring the parties to appear before the court on December 9, 2021. On November 8, 2021, we obtained a property preservation order from the court over Tianjin Xinfa Knitting Products Co., Ltd which prevents them from disposal of or transfer of their bank assets. The court issued a civil mediation on August 26, 2022, which has taken legal effect. Since Tianjin Xinfa Knitting Products Co., Ltd. did not fulfill the obligations determined by the effective legal documents, we applied to the court for enforcement on October 24, 2022. During the execution, the court withheld the deposit of RMB 216,867 from Tianjin Xinfa Knitting Products Co., Ltd., apart from that, no other property in the name of the executor was found available for execution. The court has listed Tianjin Xinfa Knitting Products Co., Ltd. as defaulted execute, and issued a consumption restriction order against its legal representative. On February 15, 2023, the court ruled to terminate the execution procedure, and the executor has the obligation to continue to perform its debts to us. If we find that the executor has property available for execution, we can apply to the court to resume execution. The application for resumption of execution is not subject to the limitation period for application for execution.

From time to time, we may become involved in legal proceedings arising in the ordinary course of business. Other than the civil proceeding mentioned above, we are not involved in any litigation, arbitration or claim of material importance, nor any material impact non-compliance incidents or systemic non-compliance incidents in respect of applicable laws and regulations.

REGULATIONS

This section sets forth a summary of the most significant rules and regulations that affect our business in China.

Regulations in China

We principally operate through our PRC subsidiary New Brand. Set out below are summaries of certain aspects of the PRC laws and regulations which are relevant to the operation and business of our PRC subsidiary.

Regulations Relating to Foreign Investments

Investment activities in China by foreign investors are principally governed by the Industry Guidelines of Encouraged Foreign Investment, or the Industry Guidelines, and the Special Administrative Measures for Entrance of Foreign Investment (Negative List), or the Negative List, which are promulgated and amended from time to time by MOFCOM, and National Development and Reform Commission (“NDRC”), and together with the PRC Foreign Investment Law and its respective implementation rules and ancillary regulations. The Industry Guidelines and the Negative List lay out the basic framework for foreign investments in China, classifying businesses into three categories with regard to foreign investments: “encouraged”, “restricted” and “prohibited”. Industries not listed in the Industry Guidelines or the Negative List are generally deemed as falling into a fourth category “permitted” unless specifically restricted by other PRC laws.

On December 27, 2020, MOFCOM and NDRC released Industry Guidelines of Encouraged Foreign Investment (2020 Version), which took effect on January 27, 2021. On November 27, 2021, MOFCOM and NDRC promulgated the Special Administrative Measures for Entrance of Foreign Investment (Negative List) (2021 Version), which became effective on January 1, 2022. On September 6, 2024, MOFCOM and NDRC promulgated the Special Administrative Measures for Entrance of Foreign Investment (Negative List) (2024 Version), which will become effective on November 11, 2024.

On March 15, 2019, the National People’s Congress, or NPC, approved the PRC Foreign Investment Law, which took effect on January 1, 2020 and replaced three then existing laws on foreign investments in China, namely, the PRC Sino-Foreign Equity Joint Venture Enterprise Law, the PRC Sino-Foreign Cooperative Joint Venture Enterprise Law and the PRC Wholly Foreign-invested Enterprise Law. The PRC Foreign Investment Law embodies an expected PRC regulatory trend to rationalize its foreign investment regulatory regime in line with prevailing international practice and the legislative efforts to unify the corporate legal requirements for both foreign and domestic invested enterprises in China. The PRC Foreign Investment Law establishes the basic framework for the access to and the promotion, protection and administration of foreign investments in view of investment protection and fair competition.

According to the PRC Foreign Investment Law, foreign investments shall enjoy pre-entry national treatment, except for those foreign-invested entities that operate in industries deemed to be either “restricted” or “prohibited” in the “negative list.” While foreign investors shall refrain from investing in any of the foreign “prohibited” industries, foreign-invested entities operating in foreign “restricted” industries shall require market entry clearance and other approvals from relevant PRC governmental authorities. The PRC Foreign Investment Law does not comment on the concept of “de facto control” or contractual arrangements with variable interest entities, however, it has a catch-all provision under the definition of “foreign investment” to include investments made by foreign investors in China through means stipulated by laws or administrative regulations or other methods prescribed by the PRC State Council. Furthermore, the PRC Foreign Investment Law provides that foreign-invested enterprises that have been established before the implementation of PRC Foreign Investment Law according to the said three existing laws regulating foreign investments may maintain their structure and corporate governance within five years after the implementation of the PRC Foreign Investment Law.

On December 26, 2019, the State Council promulgated the Regulations for Implementing the PRC Foreign Investment Law, which took effect on January 1, 2020. The implementation regulations further clarified that the State encourages and promotes foreign investments, protects the lawful rights and interests of foreign investors, regulates foreign investment administration, continues to optimize foreign investment environment, and advances a higher-level opening.

On December 30, 2019, MOFCOM and the State Administration for Market Regulation, or SAMR, jointly promulgated the Measures for Information Reporting on Foreign Investment, which became effective on January 1, 2020. Pursuant to the Measures for Information Reporting on Foreign Investment, where a foreign investor carries out investment activities in China directly or indirectly, the foreign investor or the foreign-invested enterprise shall submit the investment information to the competent commerce department.

Regulations Relating to Product Quality and Consumer Protection

The Product Quality Law, which was promulgated by Standing Committee of NPC on February 22, 1993 and most recently amended on December 29, 2018, applies to all production and sale activities in China. Pursuant to this law, products offered for sale must satisfy relevant quality and safety standards. Enterprises may not produce or sell counterfeit products in any fashion, including forging brand labels or giving false information regarding a product’s manufacturer. Violations of state or industrial standards for health and safety and any other related violations may result in civil liabilities and administrative penalties, such as compensation for damages, fines, suspension or shutdown of business, as well as confiscation of products illegally produced and sold and the proceeds from such sales. Severe violations may subject the responsible individual or enterprise to criminal liabilities. Where a defective product causes physical injury to a person or damage to another person’s property, the victim may claim compensation from the manufacturer or from the seller of the product. If the seller pays compensation and it is the manufacturer that should bear the liability, the seller has a right of recourse against the manufacturer. Similarly, if the manufacturer pays compensation and it is the seller that should bear the liability, the manufacturer has a right of recourse against the seller.

Pursuant to the Civil Code of the PRC, or the Civil Code, which was promulgated on May 28, 2020 and became effective on January 1, 2021, the infringed party may claim for compensation from the manufacturer or the seller of the relevant product in which the defects have caused damage. Where the product defects are caused by the producers, the sellers shall have the right to recover the same from the producers after paying compensation. If the products are defective due to the fault of the seller, the producer may, after paying compensation, claim the same from the seller.

According to the Standardization Law of the PRC (中華人民共和國標準化法), which was promulgated on 29 December 1988 and came into effect on 1 April 1989 and amended on 4 November 2017, and Regulations for the Implementation of the Standardization Law of the PRC (中華人民共和國標準化法實施條例), which was promulgated and came into effect on 6 April 1990, the enterprises must comply with the compulsory standards and shall comply with the national standards or trade standards when produce, sell or import relevant products.

Where the product of an enterprise fails to meet the compulsory standards, the competent authority has the power to suspend its production or sales, confiscate the product, supervise the destruction or conduct the necessary technical treatment; impose fines or administrative sanction; where serious consequences are caused and a crime is constituted, the authority shall investigate, according to the laws, the criminal responsibility of the persons held directly responsible.

Pursuant to the GB/T8685-2008 Textiles — Regulation on Standardized Symbols for Care Labels, which was promulgated by the General Administration of Quality Supervision, Inspection and Quarantine of the People’s Republic of China and the Standardization Administration of the People’s Republic of China on 18 June 2008 and was implemented on 1 March 2009, the standard system of symbols for the labels of textile products was established. It also provides information on the most stringent care procedures that will not cause any irreversible damage to the products and specifies the methods of use of these symbols on the care labels. This standard includes the domestic care methods, like washing, bleaching, drying and ironing and pressing as well as professional textile care methods, such as dry cleaning and wet cleaning, but excluding industrial laundering.

Pursuant to the GB 18401-2010 National General Safety Technical Code for Textile Products promulgated by the Standardization Institute of Textile Industry and China National Textiles Supervision Testing Center on 14 January 2011 and implemented on 1 August 2012, the textile products shall comply with the basic safety technical requirements, test methods and inspection rules. This code is applicable to the production and sales of garment, decorations and domestic textile products in China. Products can be exported according to the terms of the respective agreements.

According to the GB 5296.4-2012 Instructions for Use of Consumer Products — Part 4: Textiles and Apparel promulgated by the General Administration of Quality Supervision, Inspection and Quarantine of the People’s Republic of China and the Standardization Administration of the People’s Republic of China on 31 December 2012

and implemented on 1 May 2014, the “GB 5296.4-1998 Instructions for Use of Consumer Products — Instructions for Use of Textiles and Apparel” was replaced and the basic principles, contents and requirements of the instructions for use of textiles and apparel, which is applicable to the textiles and apparel sold in the domestic market was specified.

The Consumer Rights and Interests Protection Law or the Consumer Protection Law, which was promulgated by Standing Committee of NPC on October 31, 1993 and most recently amended on October 25, 2013, sets out the obligations of business operators and the rights and interests of the consumers in China. Pursuant to this law, business operators must guarantee that the commodities they sell satisfy the requirements for personal or property safety, provide consumers with authentic information about the commodities, and guarantee the quality, function, usage and term of validity of the commodities. Failure to comply with the Consumer Protection Law may subject business operators to civil liabilities such as refunding purchase prices, replacement of commodities, repairing, ceasing damages, compensation, and restoring reputation, and even subject the business operators or the responsible individuals to criminal penalties when personal damages are involved or if the circumstances are severe. The Consumer Protection Law was further amended in October 2013 and became effective in March 2014. The amended Consumer Protection Law further strengthens the protection of consumers and imposes more stringent requirements and obligations on business operators, especially on the business operators through the internet. For example, the consumers are entitled to return the goods (except for certain specific goods, such as custom-made goods, fresh and perishable goods, digital products (e.g. audio-visual products, computer software downloaded online or unpacked by the consumer), newspapers and periodicals delivered and other goods for which non-return of goods is confirmed by the consumer at the time of purchase based on the characteristics of the goods) within seven days upon receipt without any reasons when they purchase the goods from business operators on the internet. The consumers whose interests have been damaged due to their purchase of goods or acceptance of services on online marketplace platforms may claim damages from sellers or service providers. Where the providers of the online marketplace platforms are unable to provide the real names, addresses and valid contact details of the sellers or service providers, the consumers may also claim damages from the providers of the online marketplace platforms. Providers of online marketplace platforms that know or should have known that sellers or service providers use their platforms to infringe upon the legitimate rights and interests of consumers but fail to take necessary measures must bear joint and several liabilities with the sellers or service providers. Moreover, if business operators deceive consumers or knowingly sell substandard or defective products, they should not only compensate consumers for their losses, but also pay additional damages equal to three times the price of the goods or services.

Regulations on Leasing

The Urban Real Estate Administration Law of the PRC, which took effect in January 1995 with the latest amendment on August 26, 2019, provides that lessors and lessees are required to enter into a written lease contract, containing such provisions as the term of the lease, the use of the premises, rental price, liability for repair, and other rights and obligations of both parties. Both lessor and lessee are also required to file for registration and record the lease contract with the real estate administration department. Pursuant to Administrative Measures for Commodity Housing Leasing, which took effect in February 1, 2011, if the lessor and lessee fail to go through the registration procedures timely provided that the competent administrative authority ordered to rectify within a time limit, both lessor and lessee may be subject to fines. According to the Civil Code, the validity of the lease contract shall not be affected due to the failure of registration and record of lease contract.

Pursuant to the Civil Code, the lessee may sublease the leased premises to a third party, subject to the consent of the lessor. Where the lessee subleases the premises, the lease contract between the lessee and the lessor remains valid. The lessor is entitled to terminate the lease contract if the lessee subleases the premises without the consent of the lessor. In addition, if the lessor transfers the premises, the lease contract between the lessee and the lessor will still remain valid.

Regulations Relating to Intellectual Property Rights

The PRC has adopted comprehensive legislation governing intellectual property rights, including trademarks.

Trademark

Registered Trademarks are protected by the PRC Trademark Law which was adopted by the Standing Committee of NPC on August 23, 1982 and most recently amended on April 23, 2019 as well as the Implementation Regulation of the PRC Trademark Law which was adopted by the State Council on August 3, 2002 and amended