As filed with the U.S. Securities and Exchange Commission on November 13, 2023.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________________________________

Form F-1

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

__________________________________________

Samfine Creation Holdings Group Limited

(Exact name of Registrant as specified in its charter)

__________________________________________

Not Applicable

(Translation of Registrant’s name into English)

Flat B, 8/F, Block 4
Kwun Tong Industrial Centre
436-446 Kwun Tong Road
Kwun Tong, Kowloon
Hong Kong
+852 3589 1500

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

__________________________________________

c/o 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)

__________________________________________

With a Copy to:

__________________________________________

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

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended, 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: 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, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to such Section 8(a), may determine.

2,500,000 Ordinary Shares

Samfine Creation Holdings Group Limited

This is the initial public offering on a firm commitment basis of our ordinary shares, par value $0.0000625 per share (the “Ordinary Shares”). We are offering 2,500,000 Ordinary Shares of Samfine Creation Holdings Group Limited (“SFHG”), representing 12.20% of the Ordinary Shares following the completion of this offering, assuming the underwriters do not exercise their over-allotment option.

Prior to this offering, there has been no public market for our Ordinary Shares. The offering price of our Ordinary Shares in this offering is expected to be between $4.00 and $5.00 per Ordinary Share. The offering is being made on a “firm commitment” basis by Revere Securities LLC., the underwriter. See “Underwriting.” We have applied to list our Ordinary Shares on the Nasdaq Capital Market under the symbol “SFHG.” We cannot guarantee that we will be successful in listing our Ordinary Shares on Nasdaq. This offering is conditioned upon the successful listing of our ordinary shares on the Nasdaq Capital Market. If the Nasdaq Capital Market does not approve our listing application this initial public offering will be terminated.

Investing in our Ordinary Shares involves a high degree of risk, including the risk of losing your entire investment. See “Risk Factors” beginning on page 20 to read about factors you should consider before buying our Ordinary Shares.

Investors are cautioned that you are not buying shares of a China-based operating company but instead are buying shares of a Cayman Islands holding company issuer that operates through its subsidiaries. We are a holding company incorporated in the Cayman Islands with no material operations of our own. As a holding company with no material operations of our own, we conduct our operations in Hong Kong and the People’s Republic of China (“PRC”) through our operating subsidiaries, Samfine Creation Limited (“Samfine HK”), Samfine Printing (Shenzhen) Co., Ltd. (“Samfine SZ”), and Shenzhen Samfine Cloud Printing Technology Limited (“Samfine SZ Technology”). This is an offering of ordinary shares of SFHG, the holding company in the Cayman Islands, instead of shares of our operating subsidiaries, Samfine HK, Samfine SZ, and Samfine SZ Technology. You may never directly hold any equity interest in our operating subsidiaries. In addition, we conduct our business of printing publications in the PRC through our wholly-foreign owned enterprise (“WFOE”), Samfine SZ. As such, we are subject to specific risks as a WFOE conducting the business of printing publications in potential contravention of the PRC regulations. See “Risk Factors —Risks Related to Our Operating Subsidiaries’ Business and Industry — Our operating subsidiaries may be denied permits to print publications in light of their wholly foreign-owned status.”

Unless otherwise stated, references to the “Company”, “we”, “us”, and “our” in the prospectus are to SFHG, the Cayman Islands entity that will issue the Ordinary Shares being offered in this prospectus. References to “our PRC operating subsidiaries” refers to Samfine SZ and Samfine SZ Technology. Although our ownership interest in Samfine SZ is held through intermediate companies in the BVI and Hong Kong, and we currently do not have or intend to have any contractual arrangement to establish a variable interest entity (“VIE”) structure with any entity in the PRC, the structure under which we operate involves unique risks to investors. See “Risk Factors” beginning on page 20 of this prospectus for a discussion of risks facing the Company and the offering as a result of this structure.

Upon the completion of this offering, the outstanding shares of SFHG will consist of 20,500,000 Ordinary Shares, assuming the underwriters do not exercise their over-allotment option to purchase additional Ordinary Shares, or 20,875,000 Ordinary Shares, assuming the over-allotment option is exercised in full. SFHG will be a “controlled company” as defined under the Nasdaq Stock Market Rules because, immediately after the completion of this offering, our controlling shareholder, Mr. Wing Wah Cheng, Wayne, will own 69.29% of our total issued and outstanding Ordinary Shares (the “Controlling Shareholder”), representing 69.29% of the total voting power, assuming that the underwriters do not exercise their over-allotment option, and may have the ability to determine matters requiring approval by shareholders. However, even if we are deemed as a “controlled company,” we do not intend to avail ourselves of the corporate governance exemptions afforded to a “controlled company” under the Nasdaq Market Rules. See “Risk Factors — We are a “controlled company” within the meaning of the Nasdaq listing rules, and may follow certain exemptions from certain corporate governance requirements that could adversely affect our public shareholders.”

Since our operating subsidiaries are located in Hong Kong and the PRC, we may be subject to unique risks due to uncertainty of the interpretation and the application of the PRC laws and regulations. We do not expect to be materially affected by recent statements by the Chinese government indicating an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers, including, but not limited to the cybersecurity review and regulatory review of overseas listing of our Ordinary Shares through an offshore holding company. However, due to long arm provisions under the current PRC laws and regulations, there remains regulatory uncertainty with respect to the implementation and interpretation of laws in China. Since part of our operations are based in Hong Kong, we are also subject to the risks of uncertainty about any future actions of the PRC government or authorities in Hong Kong in this regard. Should the PRC government choose to exercise significant oversight and discretion over the conduct of our operating subsidiaries’ business, it may intervene in or influence our operating subsidiaries’ operations. Such governmental actions:

•        could result in a material change in our operating subsidiaries’ operations and/or the value of our Ordinary Shares;

•        could significantly limit or completely hinder our operating subsidiaries’ ability to continue their operations;

•        could significantly limit or completely hinder our ability to offer or continue to offer our Ordinary Shares to investors; and

•        may cause the value of our Ordinary Shares to significantly decline or be worthless.

(Prospectus cover continued on the following page.)

We are both an “emerging growth company” and a “foreign private issuer” as defined under the federal securities laws and, as such, will be subject to reduced public company reporting requirements. See “Prospectus Summary — Implications of Being an Emerging Growth Company and a Foreign Private Issuer” and “Prospectus Summary — Implications of Being a Foreign Private Issuer” for additional information.

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(1)        Does not include a non-accountable expense allowance equal to 1% of the gross proceeds of this offering payable to Revere Securities LLC., the representative of the underwriters. Refer to “Underwriting” for additional information regarding underwriting compensation.

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

Revere Securities LLC.

The date of this prospectus is            , 2023.

TABLE OF CONTENTS

Neither we nor any of the underwriters have authorized anyone to provide you with any information or to make any representations other than as contained in this prospectus or in any free writing prospectuses we have prepared. Neither we nor the underwriters take any responsibility for, and provide no assurance about the reliability of, any information that others may give you. This prospectus is an offer to sell only the securities offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of the securities. Our business, financial condition, results of operations and prospects may have changed since that date.

No action is being taken in any jurisdiction outside the U.S. to permit a public offering of our securities or possession or distribution of this prospectus in any such jurisdiction. Persons who come into possession of this prospectus in jurisdictions outside the U.S. are required to inform themselves about and to observe any restrictions about this offering and the distribution of this prospectus applicable to those jurisdictions.

We are incorporated under the laws of the Cayman Islands as an exempted company with limited liability and a majority of our outstanding securities are owned by non-U.S. residents. Under the rules of the U.S. Securities and Exchange Commission, or the SEC, we currently qualify for treatment as a “foreign private issuer.” As a foreign private issuer, we will not be required to file periodic reports and financial statements with the U.S. Securities and Exchange Commission, or the SEC, as frequently or as promptly as domestic registrants whose securities are registered under the Securities Exchange Act of 1934, as amended, or the Exchange Act.

Through and including            , 2023 (25th days after the date of this prospectus), all dealers that effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This delivery requirement is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to unsold allotments or subscriptions.

We obtained statistical data, market data and other industry data and forecasts used in this prospectus from market research, publicly available information and industry publications. While we believe that the statistical data, industry data and forecasts and market research are reliable, we have not independently verified the data.

CONVENTIONS THAT APPLY TO THIS PROSPECTUS

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

•        “Articles” or “Articles of Association” are to the amended and restated articles of association of our Company (as amended from time to time) adopted on September 5, 2023 and as amended, supplemented and/or otherwise modified from time to time;

•        “BVI” are to the British Virgin Islands;

•        “Companies Act” are to the Companies Act (as revised) of the Cayman Islands, as amended, supplemented or otherwise modified from time to time;

•        “COVID-19” are to the Coronavirus Disease 2019;

•        “Europe” are to the European Union, excluding the UK;

•        “Exchange Act” are to the U.S. Securities Exchange Act of 1934, as amended;

•        “Hong Kong” are to the Hong Kong Special Administrative Region of the PRC;

•        “HKD” or “HK$” are to the legal currency of Hong Kong;

•        “IPO” are to an initial public offering of securities;

•        ‘‘Memorandum’’ or ‘‘Memorandum of Association’’ are to the amended and restated memorandum of association of our Company (as amended from time to time) adopted on September 5, 2023 and as amended, supplemented and/or otherwise modified from time to time;

•        “New Achiever,” or “Samfine BVI” are to New Achiever Ventures Limited, a BVI business company limited by shares incorporated in BVI, a direct wholly owned subsidiary of SFHG;

•        “Ordinary Shares” or “Shares” are to the ordinary shares of SFHG, par value $0.0000625 per ordinary share;

•        “our operating subsidiaries” or “operating subsidiaries” are to Samfine HK, Samfine SZ, and Samfine SZ Technology;

•        “our PRC operating subsidiaries” are to Samfine SZ and Samfine SZ Technology;

•        “PRC” or “China” are to the People’s Republic of China, excluding, for the purpose of this prospectus, Taiwan;

•        “RMB” are to Renminbi, the legal currency of the PRC;

•        “Samfine HK” are to Samfine Creation Limited, a company incorporated in Hong Kong with limited liability, a directly wholly owned subsidiary of Samfine BVI and an indirect wholly owned subsidiary of Samfine and Samfine’s operating subsidiary in Hong Kong;

•        “Samfine SZ” or “WFOE” are to Samfine Printing (Shenzhen) Co., Ltd., a company established in the PRC with limited liability, a directly wholly owned subsidiary of Samfine HK and an indirect wholly owned subsidiary of Samfine and Samfine’s operating subsidiary in the PRC;

•        “Samfine SZ Technology” are to Shenzhen Samfine Cloud Printing Technology Limited, a company established in the PRC with limited liability, a directly wholly owned subsidiary of Samfine SZ and an indirect wholly owned subsidiary of SFHG;

•        “Securities Act” are to the U.S. Securities Act of 1933, as amended;

•        “Shenzhen Factory” are to the production site of Samfine SZ located in Shenzhen, Guangdong Province, the PRC;

•        “UK” are to the United Kingdom;

•        “U.S. dollars” or “US$” or “dollars” are to the legal currency of the United States; and

•        “we,” “us,” “our,” “our Company,” the “Company,” or “SFHG” in this prospectus are to Samfine Creation Holdings Group Limited, an exempted company incorporated in the Cayman Islands with limited liability under the Companies Act on January 20, 2022, that will issue the Ordinary Shares being offered.

We have made rounding adjustments to some of the figures included in this prospectus. Accordingly, numerical figures shown as totals in some tables may not be an arithmetic aggregation of the figures that preceded them.

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

We are a holding company with operations conducted in Hong Kong and the PRC through our operating subsidiaries, Samfine HK, Samfine SZ, and Samfine SZ Technology, respectively. SFHG’s reporting currency is HKD. This prospectus contains translations of HKD into U.S. dollars solely for the convenience of the reader. Unless otherwise noted, all translations from HKD to U.S. dollars and from U.S. dollars to HKD in this prospectus were calculated at the noon buying rate of US$1 = HK$7.8015 and US$1 = HK$7.8363 on December 30, 2022 and June 30, 2023, respectively, as published in H.10 statistical release of the Board of Governors of the Federal Reserve System. We make no representation that the HKD or U.S. dollar amounts referred to in this prospectus could have been or could be converted into U.S. dollars or HKD, as the case may be, at any particular rate or at all.

SFHG’s fiscal year ends on December 31.

MARKET AND INDUSTRY DATA

Certain market data and forecasts used throughout this prospectus were obtained from internal company surveys, market research, consultant surveys, reports of governmental and international agencies and industry publications and surveys. Industry publications and third-party research, surveys and reports generally indicate that their information has been obtained from sources believed to be reliable. This information involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. Our estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under the heading “Risk Factors” in this prospectus.

RISK FACTORS

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

Risks Related to Doing Business in the PRC and Hong Kong

We conduct part of our operations in Hong Kong. However, due to the long arm provisions under the current PRC laws and regulations, the PRC government may exercise significant oversight and discretion over the conduct of our HK operating subsidiary’ business and may intervene in or influence its operations at any time, which could result in a material change in its operations and/or the value of our Ordinary Shares. Changes in the policies, regulations, rules, and the enforcement of laws of the PRC government may also be implemented quickly with little advance notice. Therefore, our assertions and beliefs of the risk imposed by the PRC legal and regulatory system cannot be certain.

SFHG is a holding company, and we conduct part of our operations in Hong Kong through our operating subsidiary Samfine HK. As of the date of this prospectus, we are not materially affected by recent statements by the PRC government indicating an intention to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers. However, due to certain long arm provisions in the current PRC laws and regulations, there remains regulatory uncertainty with respect to the implementation and interpretation of laws in the PRC as they may affect Hong Kong. The PRC government may choose to exercise significant oversight and discretion, and the regulations to which our operating subsidiaries are subject may change rapidly and with little notice to us and our operating subsidiaries or our shareholders. As a result, the application, interpretation, and enforcement of new and existing laws and regulations in the PRC are often uncertain. In addition, these laws and regulations may be interpreted and applied inconsistently by different agencies or authorities, and inconsistently with our and our operating subsidiaries’ current policies and practices. New laws, regulations, and other government directives in the PRC 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 operating subsidiaries’ development;

•        result in negative publicity or increase our operating subsidiaries’ operating costs;

•        require significant management time and attention; and

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

We are aware that recently, the PRC government initiated a series of regulatory actions and statements to regulate business operations in certain areas in the PRC with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas using a VIE structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement.

Since these statements and regulatory actions are new, it is highly uncertain how soon the PRC legislative or administrative regulation making bodies will respond or what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, if any, or what the potential impact that any such modified or new laws and regulations would have on our operating subsidiaries’ daily business operation, the ability to accept foreign investments and list on an U.S. or other foreign exchange.

The PRC government may intervene or influence our operating subsidiaries’ operations at any time and may exert more control over offerings conducted overseas and foreign investment in China-based issuers, which may result in a material change in our operating subsidiaries’ operations and/or the value of our Ordinary Shares. Any legal or regulatory changes that restrict or otherwise unfavorably impact our operating subsidiaries’ ability to conduct their business could decrease demand for their services, reduce revenues, increase costs, require our operating subsidiaries to obtain more licenses, permits, approvals or certificates, or subject them to additional liabilities. To the extent any new or more stringent measures are implemented, our operating subsidiaries’ business, financial condition and results of operations could be adversely affected, and the value of our Ordinary Shares could decrease or become worthless.

If the PRC government chooses to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China based issuers, such action may significantly limit or completely hinder our ability to offer or continue to offer Ordinary Shares to investors and cause the value of our Ordinary Shares to significantly decline or be worthless.

Recent statements by the PRC government have indicated an intent to exert more oversight and control over offerings conducted overseas and/or over foreign investments in China-based issuers. On July 6, 2021, the General Office of the Communist Party of China Central Committee and the General Office of the State Council jointly issued a document to crack down on illegal activities in the securities market and promote the high-quality development of the capital market, which, among other things, requires the relevant governmental authorities to strengthen cross-border oversight of law-enforcement and judicial cooperation, to enhance supervision over China-based companies listed overseas, and to establish and improve the system of extraterritorial application of the PRC securities laws. 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 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. The New Measures reiterate that, 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.

Given the nature of our business, we believe this risk is not significant. Our PRC subsidiaries may collect and store certain data (including certain personal information) from our clients for “Know Your Customers” purpose, who may be PRC individuals. We do not currently expect the New Measures to have an impact on our business, operations or this offering as we do not believe that Our PRC subsidiaries is deemed to be an “operator of critical information infrastructure” or “network platform operator” controlling personal information of no less than one million users, that are required to file for cybersecurity review before listing in the U.S., because (i) as of date of this prospectus, we and our PRC Subsidiary have possessed substantially less than 1 million users of personal information in our business operations; and (ii) as of the date of this prospectus, neither the Company nor Our PRC subsidiaries has 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. Therefore, we are not covered by the permission and requirements from the CAC.

As advised by our PRC counsel, Commerce & Finance Law Offices, as of the date of this prospectus, this offering is not subject to the review or prior approval of the CAC. 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. Our offering will be identified as an indirect overseas issuance and listing of our PRC subsidiaries by CSRC, and our subsidiaries shall fulfill the filing procedure with the CSRC as per the requirement of the Trial Measures. Uncertainties still exist, however, due to the possibility that laws, regulations, or policies in the PRC could change rapidly in the future. Any future action by the PRC government expanding the categories of industries and companies whose foreign securities offerings are subject to review by the CSRC or the CAC could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and could cause the value of such securities to significantly decline or be worthless. In the event that (i) the PRC government expanded the categories of industries and companies whose foreign securities offerings are subject to review by the CAC and that we are required

to obtain such permissions or approvals, or (ii) we inadvertently conclude that such permissions or approvals are not required or that we did not receive or maintain relevant permissions or approvals required, we may face sanctions by the CAC, or other PRC regulatory agencies. These regulatory agencies may impose fines and penalties on our operating subsidiaries’ operations in the PRC, limit our operating subsidiaries’ ability to pay dividends outside of the PRC, limit our operating subsidiaries’ operations in the PRC, delay or restrict the repatriation of the proceeds from this offering into the PRC or take other actions that could have a material adverse effect on our operating subsidiaries’ business as well as the trading price of our Ordinary Shares. We could be required to restructure our operations to comply with such regulations or potentially cease operations in the PRC entirely. The CAC, or other PRC regulatory agencies also may take actions requiring or making it advisable for us, to halt this offering before settlement and delivery of our Ordinary Shares. Any action taken by the PRC government could significantly limit or completely hinder our operating subsidiaries’ operations in the PRC and our ability to offer or continue to offer securities to investors and could cause the value of such securities to significantly decline or be worthless.

Although the audit report included in this prospectus is prepared by U.S. auditors who are subject to inspections by the PCAOB, there is no guarantee that future audit reports will be prepared by auditors inspected by the PCAOB and, as such, in the future investors may be deprived of the benefits of such inspection. Furthermore, trading in our Ordinary Shares may be prohibited under the HFCA Act if the SEC subsequently determines our audit work is performed by auditors that the PCAOB is unable to inspect or investigate completely, and as a result, U.S. national securities exchanges, such as the Nasdaq, may determine to delist our securities. Furthermore, 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, and thus, reduced the time before our Ordinary Shares may be prohibited from trading or delisted.

As an auditor of companies that are registered with the SEC and publicly traded in the United States and a firm registered with the PCAOB, our auditor is required under the laws of the United States to undergo regular inspections by the PCAOB to assess their compliance with the laws of the United States and professional standards. The PCAOB is currently unable to conduct inspections without the approval of the Chinese government authorities. Currently, our U.S. auditor is inspected by the PCAOB, and we have no operations in mainland China. However, if there is significant change to current political arrangements between mainland China and Hong Kong, Hong Kong companies may face similar regulatory risks as those operating in the PRC and we cannot assure you that our auditor’s work will continue to be able to be inspected by the PCAOB.

Inspections of other auditors conducted by the PCAOB outside mainland China have at times identified deficiencies in those auditors’ audit procedures and quality control procedures, which may be addressed as part of the inspection process to improve future audit quality. The lack of PCAOB inspections of audit work undertaken in mainland China prevents the PCAOB from regularly evaluating auditors’ audits and their quality control procedures. As a result, if there is any component of our auditor’s work papers become located in mainland China in the future, such work papers will not be subject to inspection by the PCAOB. As a result, investors would be deprived of such PCAOB inspections, which could result in limitations or restrictions to our access of the U.S. capital markets.

As part of a continued regulatory focus in the United States on access to audit and other information currently protected by national law, in particular mainland China’s, in June 2019, a bipartisan group of lawmakers introduced bills in both houses of the U.S. Congress which, if passed, would require the SEC to maintain a list of issuers for which PCAOB is not able to inspect or investigate the audit work performed by a foreign public accounting firm completely. The proposed Ensuring Quality Information and Transparency for Abroad-Based Listings on our Exchanges (“EQUITABLE”) Act prescribes increased disclosure requirements for these issuers and, beginning in 2025, the delisting from U.S. national securities exchanges such as the Nasdaq of issuers included on the SEC’s list for three consecutive years. It is unclear if this proposed legislation will be enacted. Furthermore, there have been recent deliberations within the U.S. government regarding potentially limiting or restricting China-based companies from accessing U.S. capital markets.

On May 20, 2020, the U.S. Senate passed the HFCA Act, which includes requirements for the SEC to identify issuers whose audit work is performed by auditors that the PCAOB is unable to inspect or investigate completely because of a restriction imposed by a non-U.S. authority in the auditor’s local jurisdiction. The U.S. House of Representatives passed the HFCA Act on December 2, 2020, and the HFCA Act was signed into law on December 18,

2020. Additionally, in July 2020, the U.S. President’s Working Group on Financial Markets issued recommendations for actions that can be taken by the executive branch, the SEC, the PCAOB or other federal agencies and department with respect to Chinese companies listed on U.S. stock exchanges and their audit firms, in an effort to protect investors in the United States. In response, on November 23, 2020, the SEC issued guidance highlighting certain risks (and their implications to U.S. investors) associated with investments in China-based issuers and summarizing enhanced disclosures the SEC recommends China-based issuers make regarding such risks.

On March 24, 2021, the SEC adopted interim final rules relating to the implementation of certain disclosure and documentation requirements in the HFCA Act. On December 2, 2021, the SEC adopted amendments to finalize rules implementing the submission and disclosure requirements in the HFCA Act. The rules apply to registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that PCAOB is unable to inspect or investigate. We will be required to comply with these rules if the SEC identifies us as having a “non-inspection” year under a process to be subsequently established by the SEC. The final amendments require any identified registrant to submit documentation to the SEC establishing that the registrant is not owned or controlled by a government entity in the public accounting firm’s foreign jurisdiction, and also require, among other things, disclosure in the registrant’s annual report regarding the audit arrangements of, and government influence on, such registrants. Under the HFCA Act, our securities may be prohibited from trading on the Nasdaq or other U.S. stock exchanges if our auditor is not inspected by the PCAOB for three consecutive years, and this ultimately could result in our Ordinary Shares being delisted.

On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, which, if enacted, would amend the HFCA Act and require 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, and thus, would reduce the time before our Ordinary Shares may be prohibited from trading or delisted.

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

On November 5, 2021, the SEC approved the PCAOB’s Rule 6100, Board Determinations Under the Holding Foreign Companies Accountable Act. Rule 6100 provides a framework for the PCAOB to use when determining, as contemplated under the HFCA Act, whether it is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction.

On December 16, 2021, the PCAOB issued a report on its determinations that it was unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong, because of positions taken by PRC authorities in those jurisdictions. The PCAOB made its determinations pursuant to PCAOB Rule 6100. The report further listed in its appendix A and appendix B, registered public accounting firms subject to the mainland China determination and registered public accounting firms subject to the Hong Kong determination, respectively. Our auditor, WWC, P.C., is headquartered in San Mateo, California, and did not appear as part of the report under the lists in its appendix A or appendix B.

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, and thus, reduced the time before our Ordinary Shares may be prohibited from trading or delisted.

The SEC is assessing how to implement other requirements of the HFCA Act, including the listing and trading prohibition requirements described above. Future developments in respect of increasing U.S. regulatory access to audit information are uncertain, as the legislative developments are subject to the legislative process and the regulatory developments are subject to the rule-making process and other administrative procedures.

On August 26, 2022, the CSRC, the MOF, and the PCAOB signed the Protocol, which is a specific accountable framework. The Protocol remains unpublished and is subject to further explanation and implementation. Pursuant to the fact sheet with respect to the Protocol disclosed by the SEC, the PCAOB shall have independent discretion to select any issuer audits for inspection or investigation and has the unfettered ability to transfer information to the SEC. There

can be no assurance that we will be able to comply with requirements imposed by U.S. regulators if any component of our auditor’s work papers become located in mainland China in the future. Delisting of our Ordinary Shares would force holders of our Ordinary Shares to sell their Ordinary Shares. The market price of our Ordinary Shares could be adversely affected as a result of anticipated negative impacts of these executive or legislative actions upon, regardless of whether these executive or legislative actions are implemented and regardless of our actual operating performance.

Regulatory developments in the PRC may subject us to additional regulatory review, and additional disclosure requirements and regulatory scrutiny to be adopted by the SEC in response to risks related to recent regulatory developments in the PRC may impose additional compliance requirements for companies like us with operations in Hong Kong and the PRC, all of which could increase our compliance costs, subject us to additional disclosure requirements.

The recent regulatory developments in the PRC, in particular with respect to restrictions on China-based companies raising capital offshore, may lead to additional regulatory review in the PRC over our financing and capital raising activities in the United States. In addition, we may be subject to industry-wide regulations that may be adopted by the relevant PRC authorities, which may have the effect of limiting our service offerings, restricting the scope of our operations in Hong Kong and in Mainland China, or causing the suspension or termination of our business operations in Hong Kong and Mainland China entirely, all of which will materially and adversely affect our business, financial condition and results of operations. We may have to adjust, modify, or completely change our business operations in response to adverse regulatory changes or policy developments, and we cannot assure you that any remedial action adopted by us can be completed in a timely, cost efficient, or liability-free manner or at all or at all.

On July 30, 2021, in response to the recent regulatory developments in the PRC and actions adopted by the PRC government, the Chairman of the SEC issued a statement asking the SEC staff to seek additional disclosures from offshore issuers associated with China-based operating companies (including Hong Kong) before their registration statements will be declared effective. On August 1, 2021, the CSRC stated in a statement that it had taken note of the new disclosure requirements announced by the SEC regarding the listings of Chinese companies and the recent regulatory development in the PRC, and that both countries should strengthen communications on regulating China-related issuers. We cannot guarantee that operating subsidiaries in HK and the PRC will not be subject to tightened regulatory review and we could be exposed to government interference from the PRC and U.S.

We may become subject to a variety of PRC laws and other obligations regarding data protection and security offerings that are conducted overseas and/or foreign investment in China-based issuers, and any failure to comply with applicable laws and obligations could have a material and adverse effect on our business, financial condition and results of operations and may hinder our ability to offer or continue to offer Ordinary Shares to investors and cause the value of our Ordinary Shares to significantly decline or be worthless.

On June 10, 2021, the Standing Committee of the National People’s Congress enacted the PRC Data Security Law, which took effect on September 1, 2021. The law requires data collection to be conducted in a legitimate and proper manner, and stipulates that, for the purpose of data protection, data processing activities must be conducted based on data classification and hierarchical protection system for data security.

On July 6, 2021, the General Office of the Communist Party of China Central Committee and the General Office of the State Council jointly issued a document to crack down on illegal activities in the securities market and promote the high-quality development of the capital market, which, among other things, requires the relevant governmental authorities to strengthen cross-border oversight of law-enforcement and judicial cooperation, to enhance supervision over China-based companies listed overseas, and to establish and improve the system of extraterritorial application of the PRC securities laws.

Failure to make adequate contributions to various employee benefit plans as required by PRC regulations may subject us to penalties.

Our PRC operating subsidiaries are required under PRC laws and regulations to participate in various government sponsored employee benefit plans, including certain social insurance, housing funds and other welfare-oriented payment obligations, and contribute to the plans in amounts equal to certain percentages of salaries, including bonuses and allowances, of its employees up to a maximum amount specified by the local government from time to time at locations where each of our PRC operating subsidiaries operate its businesses. The requirement of employee benefit plans has not been implemented consistently by the local governments in the PRC given the different levels of economic development

in different locations. We have not adequately paid social insurance and housing provident fund contributions for our employees. According to the Social Insurance Law of the People’s Republic of China, we may be ordered to pay the outstanding social insurance contributions within a prescribed deadline and liable for a late payment fee equal to 0.05% of the outstanding amount for each day of delay. Further, we may be liable for a fine of one to three times the amount of the outstanding contributions, provided that we still fail to pay the outstanding social insurance contributions within the prescribed deadline. In addition, according to the Regulations on the Administration of Housing Provident Fund, we may be ordered by the Housing Accumulation Fund Management Center to deposit the outstanding funds within a time limit. If we fail to deposit such amounts within the time limit, the Center may petition a people’s court to enforce the payment. As of the date of the prospectus, we are not aware of any action, claim, investigation or penalties being conducted or threatened by any government authorities. However, if we are fined or otherwise penalized by government authorities due to our failure to adequately pay social insurance or compulsorily enforced by a people’s court due to our failure to adequately pay housing provident fund contributions for our employees, our financial condition and results may be negatively impacted.

Enforcement of stricter labor laws and regulations in PRC may adversely affect our PRC operating subsidiaries’ business and results of operations.

Our PRC operating subsidiaries have been subject to stricter regulatory requirements in terms of entering into labor contracts with its employees and paying various statutory employee benefits, including pensions, housing fund, medical insurance, work-related injury insurance, unemployment insurance and maternity insurance to designated government agencies for the benefit of its employees. Pursuant to the PRC Labor Contract Law, or the Labor Contract Law, that became effective in January 2008 and was amended in December 2012 and became effective on July 1, 2013, and its implementing rules that became effective in September 2008, employers are subject to stricter requirements in terms of signing labor contracts, minimum wages, paying remuneration, determining the term of employees’ probation and unilaterally terminating labor contracts. In the event that our PRC operating subsidiaries decide to terminate some of its employees or otherwise change its employment or labor practices, the Labor Contract Law and its implementation rules may limit our ability to effect those changes in a desirable or cost-effective manner, which could adversely affect our business and results of operations. We believe our PRC operating subsidiaries’ current practice complies with the Labor Contract Law and its amendments. However, the relevant governmental authorities may take a different view and impose fines on us.

As the interpretation and implementation of labor-related laws and regulations are still evolving, our employment practices could violate labor related laws and regulations in the PRC, which may subject us to labor disputes or government investigations. If our PRC operating subsidiaries are deemed to have violated relevant labor laws and regulations, our PRC operating subsidiaries could be required to provide additional compensation to its employees and our business, financial condition and results of operations could be materially and adversely affected.

The recent joint statement by the SEC, proposed rule changes submitted by Nasdaq, and an act passed by the U.S. Senate and the U.S. House of Representatives, all call for additional and more stringent criteria to be applied to emerging market companies. These developments could add uncertainties to our offering, business operations, share price and reputation.

U.S. public companies that have substantially all of their operations in the PRC (including in Hong Kong) have been the subject of intense scrutiny, criticism and negative publicity by investors, financial commentators and regulatory agencies, such as the SEC. Much of the scrutiny, criticism and negative publicity has centred on financial and accounting irregularities and mistakes, a lack of effective internal controls over financial accounting, inadequate corporate governance policies or a lack of adherence thereto and, in many cases, allegations of fraud.

On December 7, 2018, the SEC and the PCAOB issued a joint statement highlighting continued challenges faced by the U.S. regulators in their oversight of financial statement audits of U.S.-listed companies with significant operations in the PRC. On April 21, 2020, SEC Chairman Jay Clayton and PCAOB Chairman William D. Duhnke III, along with other senior SEC staff, released a joint statement highlighting the risks associated with investing in companies based in or have substantial operations in emerging markets including the PRC, reiterating past SEC and PCAOB statements on matters including the difficulty associated with inspecting accounting firms and audit work papers in the PRC and higher risks of fraud in emerging markets and the difficulty of bringing and enforcing SEC, Department of Justice and other U.S. regulatory actions, including in instances of fraud, in emerging markets generally.

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

On May 21, 2021, Nasdaq filed three proposals with the SEC to (i) apply minimum offering size requirement for companies primarily operating in a “Restrictive Market”, (ii) prohibit Restrictive Market companies from directly listing on Nasdaq Capital Market, and only permit them to list on Nasdaq Global Select or Nasdaq Global Market in connection with a direct listing and (iii) apply additional and more stringent criteria to an applicant or listed company based on the qualifications of the company’s auditors.

As a result of these scrutiny, criticism and negative publicity, the publicly traded stock of many U.S. listed Chinese companies sharply decreased in value and, in some cases, has become virtually worthless. Many of these companies are now subject to shareholder lawsuits and SEC enforcement actions and are conducting internal and external investigations into the allegations. It is not clear what effect this sector-wide scrutiny, criticism and negative publicity will have on us, our offering, business and our share price. If we become the subject of any unfavorable allegations, whether such allegations are proven to be true or untrue, we will have to expend significant resources to investigate such allegations and/or defend our company. This situation will be costly and time consuming and distract our management from developing our growth. If such allegations are not proven to be groundless, we and our operating subsidiaries’ business operations will be severely affected and you could sustain a significant decline in the value of our share.

The enactment of Law of the PRC on Safeguarding National Security in the Hong Kong Special Administrative Region (the “Hong Kong National Security Law”) could impact our Hong Kong subsidiary.

On June 30, 2020, the Standing Committee of the PRC National People’s Congress adopted the Hong Kong National Security Law. This law defines the duties and government bodies of the Hong Kong National Security Law for safeguarding national security and four categories of offenses — secession, subversion, terrorist activities, and collusion with a foreign country or external elements to endanger national security — and their corresponding penalties. On July 14, 2020, the former U.S. President Donald Trump signed the Hong Kong Autonomy Act, or HKAA, into law, authorizing the U.S. administration to impose blocking sanctions against individuals and entities who are determined to have materially contributed to the erosion of Hong Kong’s autonomy. On August 7, 2020 the U.S. government imposed HKAA-authorized sanctions on eleven individuals, including the Hong Kong chief executive Carrie Lam. On October 14, 2020, the U.S. State Department submitted to relevant committees of Congress the report required under HKAA, identifying persons materially contributing to “the failure of the Government of China to meet its obligations under the Joint Declaration or the Basic Law.” The HKAA further authorizes secondary sanctions, including the imposition of blocking sanctions, against foreign financial institutions that knowingly conduct a significant transaction with foreign persons sanctioned under this authority. The imposition of sanctions may directly affect the foreign financial institutions as well as any third parties or customers dealing with any foreign financial institution that is targeted. It is difficult to predict the full impact of the Hong Kong National Security Law and HKAA on Hong Kong and companies located in Hong Kong. If our subsidiary is determined to be in violation of the Hong Kong National Security Law or the HKAA by competent authorities, its business operations, financial position and results of operations could be materially and adversely affected.

If we become subject to the recent scrutiny, criticism and negative publicity involving U.S.-listed China-based companies, we may have to expend significant resources to investigate and/or defend the matter which could harm our operating subsidiaries’ business operations, this offering and our reputation and could result in a loss of your investment in our Ordinary Shares, in particular if such matter cannot be addressed and resolved favorably.

During the last several years, U.S. listed public companies that have substantially all of their operations in the PRC have been the subject of intense scrutiny by investors, financial commentators and regulatory agencies. Much of the scrutiny has focused on financial and accounting irregularities and mistakes, lacks of effective internal controls over financial reporting and, in many cases, allegations of fraud. As a result of the scrutiny, the publicly traded stock of many U.S.-listed Chinese companies that have been the subject of such scrutiny has sharply decreased in value and, in some cases, has become virtually worthless. Many of these companies are now subject to shareholder lawsuits and/or SEC enforcement actions that are conducting internal and/or external investigations into the allegations. It is not clear what effect this sector-wide scrutiny, criticism and negative publicity will have on us, our operating subsidiaries’ business and this offering.

If we become the subject of any such scrutiny, whether any allegations are true or not, we may have to expend significant resources to investigate such allegations and/or defend the Company. Such investigations or allegations would be costly and time-consuming and likely would distract our management from our normal business and could result in our reputation being harmed. Our stock price could decline because of such allegations, even if the allegations are false.

A downturn in the Hong Kong, the PRC or global economy, or a change in economic and political policies of the PRC could materially and adversely affect our operating subsidiaries’ business and financial condition.

Our operating subsidiaries’ business, prospects, financial condition and results of operations may be influenced to a significant degree by political, economic and social conditions in Hong Kong and the PRC generally. The Chinese economy differs from the economies of most developed countries in many respects, including the amount of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. 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 our operating subsidiaries.

Economic conditions in Hong Kong and the PRC are sensitive to global economic conditions. Any prolonged slowdown in the global or Chinese economy may affect potential clients’ confidence in financial market as a whole and have a negative impact on our operating subsidiaries’ business, results of operations and financial condition. Additionally, continued turbulence in the international markets may adversely affect our ability to access the capital markets to meet liquidity needs.

Changes in the political and economic policies of the PRC government or in relations between the PRC and the U.S. may materially and adversely affect our business, financial condition and results of operations and may result in our inability to sustain our growth and expansion strategies.

Part all of our operations are conducted in the PRC. Accordingly, our financial condition and results of operations are affected to a significant extent by economic, political and legal developments in the PRC or changes in government relations between China and the U.S. or other governments. There is significant uncertainty about the future relationship between the U.S. and China with respect to trade policies, treaties, government regulations and tariffs.

The PRC economy differs from the economies of most developed countries in many respects, including the extent of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. Although the PRC government has implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets, and the establishment of improved corporate governance in business enterprises, a substantial portion of productive assets in China is still owned by the government. In addition, the PRC government continues to play a significant role in regulating industry development by imposing industrial policies. The PRC government also exercises significant control over China’s economic growth by allocating resources, controlling payment of foreign currency-denominated obligations, setting monetary policy, regulating financial services and institutions and providing preferential treatment to particular industries or companies.

While the PRC economy has experienced significant growth in the past four 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 PRC economy, but may also have a negative effect on us. Our financial condition and results of operation could be materially and adversely affected by government control over capital investments or changes in tax regulations that are applicable to us. In addition, the PRC government has implemented in the past certain measures, including interest rate increases, to control the pace of economic growth. These measures may cause decreased economic activity.

In July 2021, the PRC government provided new guidance on China-based companies raising capital outside of China, including through VIE arrangements. In light of such developments, the SEC has imposed enhanced disclosure requirements on China-based companies seeking to register securities with the SEC. As part of our operations are based in the PRC, any future Chinese, U.S. or other rules and regulations that place restrictions on capital raising or other activities by China based companies could adversely affect our business and results of operations. If the business

environment in the PRC deteriorates from the perspective of domestic or international investment, or if relations between the PRC and the U.S. or other governments deteriorate, the PRC government may intervene with our operations and our business in the PRC and the U.S., as well as the market price of our ordinary shares, may also be adversely affected.

There are political risks associated with conducting business in Hong Kong.

Any adverse economic, social and/or political conditions, material social unrest, strike, riot, civil disturbance or disobedience, as well as significant natural disasters, may affect the market may adversely affect Samfine HK’s business operations. Hong Kong is a Special Administrative Region of the PRC and the basic policies of the PRC regarding Hong Kong are reflected in the Basic Law, namely, Hong Kong’s constitutional document, which provides Hong Kong with a high degree of autonomy and executive, legislative and independent judicial powers, including that of final adjudication under the principle of “one country, two systems.” However, there is no assurance that there will not be any changes in the economic, political and legal environment in Hong Kong in the future. Since the operation of our HK subsidiary, Samfine HK, is based in Hong Kong, any change of such political arrangements may pose immediate threat to the stability of the economy in Hong Kong, thereby directly and adversely affecting Samfine HK’s results of operations and financial positions.

Under the Basic Law of the Hong Kong Special Administrative Region of the People’s Republic of China, Hong Kong is exclusively in charge of its internal affairs and external relations, while the government of the PRC is responsible for its foreign affairs and defense. As a separate customs territory, Hong Kong maintains and develops relations with foreign states and regions. Based on certain recent development including the Hong Kong National Security Law, the U.S. State Department has indicated that the United States no longer considers Hong Kong to have significant autonomy from the PRC and at the time President Trump signed an executive order and HKAA, to remove Hong Kong’s preferential trade status and to authorize the U.S. administration to impose blocking sanctions against individuals and entities who are determined to have materially contributed to the erosion of Hong Kong’s autonomy. The United States may impose the same tariffs and other trade restrictions on exports from Hong Kong that it places on goods from mainland China. These and other recent actions may represent an escalation in political and trade tensions involving the U.S., the PRC, and Hong Kong, which could potentially harm Samfine HK’s business.

Given the relatively small geographical size of Hong Kong, any of such incidents may have a widespread effect on Samfine HK’s business operations, which could in turn adversely and materially affect our business, results of operations and financial condition. It is difficult to predict the full impact of the HKAA on Hong Kong and companies with operations in Hong Kong like Samfine HK. Furthermore, legislative or administrative actions in respect of China-U.S. relations could cause investor uncertainty for affected issuers, including us, and the market price of our Ordinary Shares could be adversely affected.

Changes in international trade policies, trade disputes, barriers to trade, or the emergence of a trade war may dampen growth in Hong Kong, the PRC and other markets where the majority of our operating subsidiaries’ customers reside.

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, our operating subsidiaries and our operating subsidiaries’ customers, service providers, and other partners. International trade disputes could result in tariffs and other protectionist measures which may materially and adversely affect our operating subsidiaries’ business.

Tariffs could increase the cost of the goods and products which could affect customers’ investment decisions. In addition, political uncertainty surrounding international trade disputes and the potential of their escalation to trade war and global recession could have a negative effect on customer confidence, which could materially and adversely affect our operating subsidiaries’ business. Our operating subsidiaries may have also access to fewer business opportunities, and their 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 operating subsidiaries’ markets, business, or results of operations, as well as the financial condition of our operating subsidiaries’ customers. We cannot provide any assurances as to whether such actions will occur or the form that they may take.

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

Our reporting currency is HKD, and foreign currencies are converted into HKD for financial reporting purpose. Our operating subsidiaries’ sales are denominated mainly in HKD and RMB. The purchase of paper, being the major raw materials, was mainly denominated in HKD and RMB while the production costs like labor costs and overheads expenses for Samfine SZ were principally denominated in RMB. Our operating subsidiaries are therefore exposed to the exchange rate risk on HKD against RMB. To date, we and our operating subsidiaries have not adopted any hedging policy against foreign exchange fluctuations. We and our operating subsidiaries cannot predict the future exchange rate fluctuations and in the event of any significant change in the exchange rates among HKD and RMB, our operating subsidiaries’ financial condition and results of operations may be affected. Any appreciation of the RMB may lead to an increase in our operating subsidiaries’ manufacturing costs if they are unable to pass on such additional costs to their customers. This may, in turn, affect our operating subsidiaries’ competitiveness against competitors outside the PRC.

In addition, significant revaluation of the RMB may have a material and adverse effect on your investment. For example, to the extent that we need to convert U.S. dollars we receive from this offering into RMB for our operations, appreciation of the RMB against the U.S. dollar would have an adverse effect on the RMB amount we would receive from the conversion. Conversely, if we decide to convert our RMB into U.S. dollars for the purpose of making payments for dividends on our Ordinary Shares or for other business purposes, appreciation of the U.S. dollar against the RMB would have a negative effect on the U.S. dollar amount available to us. Also, appreciation or depreciation in the value of the RMB relative to U.S. dollars would affect our financial results reported in U.S. dollar terms regardless of any underlying change in our operating subsidiaries’ business or results of operations.

Although the exchange rate between the HKD to the U.S. dollar has been pegged since 1983, we cannot assure you that the HKD will remain pegged to the U.S. dollar. Any significant fluctuations in the exchange rates between HKD to U.S. dollars may have a material adverse effect on our operating subsidiaries’ revenue and financial condition. For example, to the extent that we are required to convert U.S. dollars we receive from this offering into HKD for our operations, fluctuations in the exchange rates between HKD against the U.S. dollar would have an adverse effect on the amounts we receive from the conversion. We have not used any forward contracts, futures, swaps or currency borrowings to hedge our exposure to foreign currency risk.

Changes in the PRC’s economic, political or social conditions or government policies could have a material adverse effect on our operating subsidiaries business and operations.

Substantially all of our operations are conducted in the PRC and a majority of our revenues is sourced from the PRC. Our operating subsidiaries’ business, financial condition, results of operations and prospects may be influenced to a significant degree by political, economic and social conditions in the PRC generally and therefore by the significant discretion of PRC authorities. The Chinese economy differs from the economies of most developed countries in many respects, including the level of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. Although the PRC government has implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets, and the establishment of improved corporate governance in business enterprises, a substantial portion of productive assets in the PRC is still owned by the government. In addition, the PRC government continues to play a significant role in regulating industry development by imposing industrial policies. The PRC government also exercises significant control over the PRC’s economic growth through allocating resources, controlling payment of foreign currency-denominated obligations, setting monetary policy, and providing preferential treatment to particular industries or companies. The increased global focus on environmental and social issues and the PRC’s potential adoption of more stringent standards in these areas may adversely impact the operations of China-based issuers, including us.

While the Chinese economy has experienced significant growth over past decades, growth has been uneven, both geographically and among various sectors of the economy, and the rate of growth has been slowing since 2012. Any adverse changes in economic conditions in the PRC, in the policies of the PRC government or in the laws and regulations in the PRC could have a material adverse effect on the overall economic growth of the PRC. Such developments could materially and adversely affect our operating subsidiaries’ business and operating results, lead to a reduction in demand for our operating subsidiaries’ services and adversely affect their competitive position. 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 our operating subsidiaries. For example, our operating subsidiaries’ financial condition and results of operations may be adversely

affected by government control over capital investments or changes in tax regulations. In addition, in the past, the PRC government has implemented certain measures, including interest rate adjustment, to control the pace of economic growth. These measures may cause decreased economic activity in the PRC, which may materially and adversely affect our operating subsidiaries’ business and operating results.

We are required to obtain approval from PRC authorities to list on overseas stock exchanges and we should complete the filing procedure before our overseas issuance and listing.

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 will become 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.

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 our PRC subsidiaries by CSRC, in view of the fact that the Trial Measures have come into effect on 31 March 2023, we shall fulfill the filing procedure with the CSRC as per requirement of the Trial Measures. As of the date of this prospectus, we are in the process of preparing a report and other required materials in connection with the CSRC filing, which will be submitted to the CSRC in due course. We expect to submit any additional materials as subsequently requested by and/or respond to questions from the CSRC on a timely basis as they occur, and expect to obtain CSRC approval prior to our proposed initial public offering and listing on the Nasdaq Stock Market. However, if we do not comply with the filing procedures according to the Administration Measures or if our filing materials contain false records, misleading statements or material omissions, the CSRC may order us to rectify such non-compliance, issue a warning, and impose a fine of not less than RMB1 million and not more than RMB10 million. These risks could completely hinder our ability to offer or continue to offer securities to investors, or cause such securities to significantly decline in value or become worthless. Unless we obtain approval from the CSRC, we will not proceed with our initial public offering.

Failure to comply with the Individual Foreign Exchange Rules relating to the overseas direct investment or the engagement in the issuance or trading of securities overseas by our Chinese resident shareholders may subject such shareholders to fines or other liabilities.

Other than Circular 37, our ability to conduct foreign exchange activities in the PRC may be subject to the interpretation and enforcement of the Implementation Rules of the Administrative Measures for Individual Foreign Exchange promulgated by SAFE on January 5, 2007 (as amended and supplemented, the “Individual Foreign Exchange Rules”) and the Foreign Exchange Administration Regulations of the PRC, which was promulgated by the State Council on January 29, 1996, became effective on April 1, 1996 and last amended on August 1, 2008. Under the Individual Foreign Exchange Rules and the Foreign Exchange Administration Regulations, any Chinese individual seeking to make a direct investment overseas or engage in the issuance or trading of negotiable securities or derivatives overseas must make the appropriate registrations in accordance with SAFE provisions. Chinese individuals who fail to make such registrations may be subject to warnings, fines or other liabilities.

We may not be fully informed of the identities of all our beneficial owners who are Chinese residents. For example, because the investment in or trading of our Ordinary Shares will happen in an overseas public or secondary market where shares are often held with brokers in brokerage accounts, it is unlikely that we will know the identity

of all of our beneficial owners who are Chinese residents. Furthermore, we have no control over any of our future beneficial owners and we cannot assure you that such Chinese residents will be able to complete the necessary approval and registration procedures required by the Individual Foreign Exchange Rules.

It is uncertain how the Individual Foreign Exchange Rules will be interpreted or enforced and whether such interpretation or enforcement will affect our ability to conduct foreign exchange transactions. Because of this uncertainty, we cannot be sure whether the failure by any of our Chinese resident shareholders to make the required registration will subject our operating subsidiaries to fines or legal sanctions on their operations, delay or restriction on repatriation of proceeds of this offering into the PRC, restriction on remittance of dividends or other punitive actions that would have a material adverse effect on our operating subsidiaries’ business, results of operations and financial condition.

Uncertainties with respect to the PRC’s legal system could materially and adversely affect us and our operating subsidiaries.

Part of our operations are conducted in the PRC and are governed by PRC laws, rules and regulations. Our PRC subsidiaries are subject to laws, rules, and regulations applicable to foreign investment in China. The PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions under the civil law system may be cited for reference but have limited precedential value.

In 1979, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general. The overall effect of legislation over the past four decades has significantly enhanced the protections afforded to various forms of foreign investments in the PRC. However, PRC law still restricts certain foreign investments in the PRC, and such laws are continually evolving, as more fully described under “Regulation — Regulations Relating to Foreign Investment.” The PRC has not developed a fully integrated legal system, and recently enacted laws and regulations may not sufficiently cover all aspects of economic activities in the PRC. In particular, the interpretation and enforcement of these laws and regulations involve uncertainties and can be inconsistent and unpredictable.

Any administrative and court proceedings in China may be protracted, resulting in substantial costs and diversion of resources and management attention. Since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory provisions and contractual terms, it may be difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection we and our operating subsidiaries enjoy. These uncertainties may affect our and our operating subsidiaries’ judgment on the relevance of legal requirements and our operating subsidiaries’ ability to enforce their contractual arrangements and rights, or tort claims. In addition, the regulatory uncertainties may be exploited through unmerited or frivolous legal actions or threats in attempts to extract payments or benefits from our operating subsidiaries.

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 and our operating subsidiaries may not be aware of our operating subsidiaries’ violation of any of these policies and rules until sometime after the violation. In addition, any administrative and court proceedings in the PRC may be protracted, resulting in substantial costs and diversion of resources and management attention. Further, such evolving laws and regulations and the inconsistent enforcement thereof could also lead to failure to obtain or maintain licenses and permits to do business in the PRC, which would adversely affect our operating subsidiaries.

U.S. regulatory bodies may be limited in their ability to conduct investigations or inspections of our operations in the PRC.

Any disclosure of documents or information located in the PRC by foreign agencies may be subject to jurisdiction constraints and must comply with the PRC’s state secrecy laws, which broadly define the scope of “state secrets” to include matters involving economic interests and technologies. There is no guarantee that requests from U.S. federal or state regulators or agencies to investigate or inspect our operating subsidiaries’ operations will be honored by our operating subsidiaries, or by entities who provide services to our operating subsidiaries or with whom our operating subsidiaries associate, without violating PRC legal requirements, particularly those entities that are located within the PRC. Furthermore, under the current PRC laws, an on-site inspection of our operating subsidiaries’ facilities by any of these regulators may be limited or prohibited.

Our operations may be subject to transfer pricing adjustments by taxation authorities.

We may use transfer pricing arrangements to accounted for business activities between us and our Controlling Shareholder, the different entities within our consolidated group, or other related parties. We cannot assure you that the tax authorities in the jurisdictions where we operate would not subsequently challenge the appropriateness of our transfer pricing arrangements or that the relevant regulations or standards governing such arrangements will not be subject to future changes. If a competent tax authority later finds that the transfer prices and the terms that we have applied are not appropriate, such authority may require us or our subsidiaries to re-assess the transfer prices and re-allocate the income or adjust the taxable income. Any such reallocation or adjustment could result in a higher overall tax liability for us and may adversely affect our business, financial condition, and results of operations.

Risks Related to Our Corporate Structure

We rely on dividends and other distributions on equity paid by our subsidiaries to fund our cash and financing requirements, and any limitation on the ability of our subsidiaries to make payments to us could have a material adverse effect on our ability to conduct our business.

SFHG is a holding company, and we rely on dividends and other distributions on equity paid by our subsidiaries for our cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders and to service any debt we may incur. We do not expect to pay cash dividends in the foreseeable future. We anticipate that we will retain any earnings to support operations and to finance the growth and development of our business. If any of our subsidiaries incurs debt on its own behalf in the future, the instruments governing the debt may restrict its ability to pay dividends or make other distributions to us.

According to the BVI Business Companies Act 2004 (as amended), a BVI company may make dividends distribution to the extent that immediately after the distribution, the value of the company’s assets exceeds its liabilities and that such company is able to pay its debts as they fall due.

According to the Companies Ordinance of Hong Kong, dividends could only be paid out of distributable profits (that is, accumulated realized profits less accumulated realized losses) or other distributable reserves, as permitted under Hong Kong law. Dividends cannot be paid out of share capital. There are no restrictions or limitation under the laws of Hong Kong imposed on the conversion of HK dollar into foreign currencies and the remittance of currencies out of Hong Kong, nor there is any restriction on foreign exchange to transfer cash between SFHG and its subsidiaries, across borders and to U.S. investors, nor there is any restrictions and limitations to distribute earnings from Samfine HK to SFHG and U.S. investors and amounts owed. Under the current practice of the Inland Revenue Department of Hong Kong, no tax is payable in Hong Kong in respect of dividends paid by us.

Under the laws of the PRC, dividends could only be paid out of its accumulated profits which is determined in accordance with PRC accounting standards and regulations. Our PRC subsidiaries, Samfine SZ and Samfine SZ Technology are required to set aside at least 10% of their after-tax profits as the statutory common reserve fund, which are not available for distribution as cash dividends. Samfine SZ and Samfine SZ Technology may stop drawing the profits if the aggregate balance of the common reserve has already accounted for 50 percent or more of their registered capital. In addition, distribution of any profits is not permitted 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. The registered share capital and capital reserve accounts are also restricted from withdrawal in the PRC.

Moreover, pursuant to the PRC Foreign Exchange Regulations, RMB is, in general, freely convertible for payment under current account items such as foreign exchange transactions relating to trading, services and payment of dividend, but not for payment under capital account items including capital transfer, direct investment, securities investment, derivative products or loan, except with prior approval granted by the SAFE. The payment of current account items, such as profit distributions and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval from SAFE by complying with certain procedural requirements. However, approval from, registration or filing with appropriate government authorities is required 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. Foreign-Invested enterprises established in the PRC, through providing certain documents (such as the board resolution and tax registration permit), can purchase foreign exchange for dividend payments, trading or services without the approval from the SAFE. The PRC government may also from time to time impose 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 our profits. Furthermore, if our PRC subsidiaries, incurs debt on its own in the future, the instrument governing the debt may restrict its ability to pay dividends or make other payments.

Any limitation on the ability of our Hong Kong and PRC subsidiaries to pay dividends or make other distributions to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business.

Risks Related to Our Operating Subsidiaries’ Business and Industry

Our operating subsidiaries are dependent on the demand of their customers as they do not enter into any long-term contract, and their sales may fluctuate subject to customers’ demands.

In line with the industry norms, our operating subsidiaries do not enter into any long-term contract with their customers (i.e. book traders mainly located in Hong Kong whose clients are located around the world) but generate their sales on an order-by-order basis. As such, our operating subsidiaries’ sales may fluctuate subject to customers’ demand for their products and services. There is no assurance that our operating subsidiaries will continue to enjoy growth in their revenue and/or profit as they had experienced during the years ended December 31, 2022 and 2021 or at all during their future business operations. The future growth of our operating subsidiaries’ business depends on their ability to maintain and increase orders from their existing and new customers. We cannot guarantee that our operating subsidiaries’ growth will continue in the future. If there is any adverse change to market conditions such as an economic slowdown or an increase in competition, our operating subsidiaries’ business, financial condition and results of operations may be materially and adversely affected.

Our operating subsidiaries rely on Hong Kong-based book traders whose customers are located in the international markets particularly the U.S. and Europe and subject to any material adverse changes to these markets.

Our operating subsidiaries generated most of their revenue from Hong Kong-based book traders located in Hong Kong whose customers are located around the world, particularly in the U.S. and the Europe. Our operating subsidiaries anticipate that the provision of printing services and printed products to such book traders whose customers are located in international markets will continue to represent most of our operating subsidiaries’ revenue in the near future. In the event that there are any adverse changes in the political, economic or social conditions, foreign trade or monetary policies, legal or regulatory requirements, or taxation or tariff regime in any of these markets, our operating subsidiaries’ business, financial condition and results of operations may be materially and adversely affected.

We have a substantial customer concentration, with a limited number of customers accounting for a substantial portion of our revenues.

We derive a significant portion of our revenues from a few major customers. For the six months ended June 2023, three customers accounted for 31.5%, 24.9% and 24.1% of our total revenue. For the year ended December 31, 2021, four customers accounted for 22.7%, 20.5%, 18.3% and 13.7% of our total revenue and for the year ended December 31, 2022, three customers accounted for 27.2%, 24.5% and 22.7% of our total revenue, respectively. There are inherent risks whenever a large percentage of total revenues are concentrated with a limited number of customers. It is not possible for us to predict the future level of demand for our products that will be generated by these customers or the future demand for our products by these customers in the end-user marketplace. If any of these customers experience declining or delayed sales due to market, economic or competitive conditions, we could be pressured to reduce our prices or they could decrease the purchase quantity of our products, which could have an adverse effect on our margins and financial position, and could negatively affect our revenues and results of operations. If any one of our largest customers terminates the purchase of our products, such termination would materially negatively affect our revenues, results of operations and financial condition.

Our operating subsidiaries’ business is substantially dependent on our relationship with our major suppliers. Changes or difficulties in our relationships with our suppliers may harm our business and financial results.

Our business is substantially dependent on our relationship with our major suppliers. We consider major suppliers in each period to be those suppliers that accounted for more than 10% of overall purchases in such period. For the six months ended June 2023, two vendors accounted for 29.5% and 15.7% of our total purchases. For the year ended

December 31, 2021, one vendor accounted for 14.4% of our total purchases and for the year ended December 31, 2022, three vendors accounted for 17.6%, 17.5% and 16.3% of our total purchases, respectively. We generally do not enter into any long-term agreements with our suppliers. Accordingly, there is no assurance that our operating subsidiaries can maintain stable and long-term business relationships with any supplier. Failure to maintain existing relationships with the suppliers or to establish new relationships in the future could negatively affect our operating subsidiaries’ ability to obtain goods sold to customers in a price advantage and timely manner. If our operating subsidiaries are unable to obtain ample supply of goods from existing suppliers or alternative sources of supply, our operating subsidiaries may be unable to satisfy the orders from its customers, which could materially and adversely affect our business, results of operations and financial condition.

Our operating subsidiaries may not be able to meet the delivery schedule of their customers and may experience a loss of revenue.

Once our operating subsidiaries accept purchase orders from their customers, they are committed to finishing their production process and delivering the finished products to their customers within the agreed schedule. Our operating subsidiaries’ customers generally require their delivery to destinations specified by them, and our operating subsidiaries’ products are generally delivered to designated overseas destinations. Our operating subsidiaries’ delivery of certain products, in particular the textbooks, is time-sensitive. Significant unscheduled downtime at the Shenzhen Factory due to equipment breakdowns, power failures, severe weather conditions or epidemic disease could cause disruptions in our operating subsidiaries’ operations or cause delays in their production schedules.

Moreover, given that Shenzhen Factory is the only production base for our operating subsidiaries’ business, if its operation is adversely affected, the production of our operating subsidiaries may be adversely disrupted or halted as a whole. Our operating subsidiaries may also become unable to fulfil the agreed production and delivery schedule due to transport and shipping disruptions, delay in the cargo consolidation process, and/or other factors beyond their control. If possible delay in delivery schedule is anticipated, our operating subsidiaries would take proactive actions such as timely negotiation with their customers for adjusting schedule, making delivery by expedited methods, or arranging for order fulfilment by way of sub-contracting. Our operating subsidiaries may incur additional expenses or have to offer additional discounts to their customers as a result of such remedial measures. When such delays occur, our operating subsidiaries may also experience a loss of revenue, and, in the worst case scenario, their customers may claim against them for compensation for late delivery. If such disruptions and/or delays occur frequently, our operating subsidiaries’ reputation, business, financial condition and results of operations may be materially and adversely affected.

Our operating subsidiaries are subject to challenges from technological advancements in publishing and new forms of information dissemination.

Our operating subsidiaries face challenges from new forms of information dissemination along with the increased digitalization of information, technological advancements in publishing and the increased popularity of the use of electronic media. As the Internet becomes easily accessible, on the one hand, personal electronic devices such as desktop computers, laptop computers, mobile phones, electronic readers and tablets become more common, on the other hand, both the supply of and demand for electronic information may impact the demand for printed products. If consumers’ preferences and trends keep shifting towards electronic media and platforms, and the popularity and sales of electronic products such as e-book readers and tablet devices stay on the increasing trend, our operating subsidiaries’ customers, namely book traders whose client are whose publication covers various sectors, may decide to transfer or increase distribution of their contents on digital mediums and reduce the usage of print media. In such event, our operating subsidiaries’ business, financial condition and results of operations may be materially and adversely affected.

Failure to adapt to technological developments in the printing industry may reduce our operating subsidiaries’ competitiveness.

Constant refinements to offset printing presses and related machinery as well as the introduction of new technologies are continuously improving the quality, productivity, safety, speed, reliability and energy efficiency within the printing industry. The ability to print faster and more cost-effectively offers printing service providers a competitive edge. Technological improvements and increases in the level of automation, not only in the printing process but also in the pre-press and post-press production stages, not only offer printing service providers cost savings on raw materials,

time and labor, but also reduce human error while enhancing the quality of products. For the six months ended June 30, 2023 and the years ended December 31, 2022 and 2021, our operating subsidiaries have continuously upgraded their production facilities. However, in the event that our operating subsidiaries are not able to upgrade their technologies to meet customers’ demands, their business and results of operations may be adversely affected.

Our operating subsidiaries face fierce competition in the printing service industry in Hong Kong and the PRC.

Our operating subsidiaries operate in a highly fragmented and competitive industry, and we cannot assure you that our operating subsidiaries will be able to compete successfully in the future against many similar companies of varying sizes in the industry. Our operating subsidiaries’ success depends on their ability to compete effectively against these competitors in terms of product quality, customer service, price and timely delivery. Our operating subsidiaries’ larger competitors may have advantages over them such as having more advanced technologies or greater access to capital for marketing activities, better brand recognition and reputation in the market, a wider range of value-adding services, stronger human and financial resources, longer operating histories, and an operational presence in more geographic locations. Our operating subsidiaries also face competition from local medium and small-sized printing service providers which offer a similar range of services to them. New participants may enter into the market insofar as they have engaged appropriate qualified professionals. Given the keen competition, we cannot assure that our operating subsidiaries will be able to maintain their competitive edge, being their one-stop printing services together with valuable printing solution consultation coupled with their reputation as a reliable and quality printing service provider in response to the fast-changing business environment. In addition, competition creates an unfavorable pricing environment in the market in which our operating subsidiaries operate. Intensified competition may cause our operating subsidiaries to reduce their service fees in order to compete with other market players, which could place significant pressure on our operating subsidiaries’ ability to maintain gross margins and is particularly acute during market slowdowns, and will in turn materially and adversely affect our operating subsidiaries’ market share, financial condition and results of operations.

Our operating subsidiaries face risks associated with the seasonality of their industry.

Our operating subsidiaries’ business and results of operations and cash flows fluctuate significantly from period to period. We generally record a relatively lower revenue in the first quarter of each calendar year due to the Chinese New Year holiday. Production in the PRC tends to slow down for at least four weeks, or even completely shut down, during the holiday period. On the other hand, the demand for our printing products typically increase in the fourth quarter of each calendar year as our customers generally place orders to us to meet their sales demand before festive seasons such as Christmas and Chinese New Year. Therefore, we generally experience a decrease in our revenue in the first quarter of each calendar year and an increase in our revenue in the fourth quarter of each calendar year, which is caused by our customers increasing their product inventory ahead of the holiday season. As a result, our operating subsidiaries’ operating results for a given interim period are not necessarily indicative of their operating results for an entire financial year. In addition, if our operating subsidiaries fail to provide those services in a timely manner and on commercially reasonable terms during peak season, our operating subsidiaries may lose their existing clients which may adversely affect their business and results of operations.

The financial condition of our operating subsidiaries’ customers may deteriorate and their fee settlement to our operating subsidiaries may be delayed, which may adversely affect our operating subsidiaries’ cash flows, working capital, financial condition and results of operations.

A decline in the financial condition of our operating subsidiaries’ customers would hinder our operating subsidiaries’ ability to collect payments from their customers and would also result in a decrease in demand for their services in the future. A sustained period of unfavorable general economic conditions or conditions affecting the operations or industries of our operating subsidiaries’ customers may increase our operating subsidiaries’ exposure to credit risks and result in increases in their allowance for doubtful receivables. These factors may also materially and adversely affect our operating subsidiaries’ cash flows, working capital, financial condition and results of operations.

Our operating subsidiaries are subject to the risk of payment deferral by their customers as part of their normal business operations. We cannot assure you that our operating subsidiaries will be able to fully recover the outstanding amounts due from their customers, if at all, or that they will settle the amounts in a timely manner. If settlements by our operating subsidiaries’ customers are not made in full or in a timely manner, our operating subsidiaries’ financial condition and results of operations will be adversely affected.

Our operating subsidiaries are subject to data transfer risks in their production process which may result in discrepancies in their printing products.

Our operating subsidiaries have been utilizing computer-to-plate printing technology in their printing process. The transfer of data from their computer systems directly onto printing plates may result in data loss that our operating subsidiaries are unable to detect. In the event of such occurrences, the printing order produced will contain discrepancies that our operating subsidiaries’ customers may find unsatisfactory. If such discrepancies are identified during our operating subsidiaries’ quality inspection and before delivery to customers, our operating subsidiaries could correct the discrepancies by re-printing the relevant products; or if such discrepancies are not identified until after delivery, our operating subsidiaries may have to reprocess the entire order and/or offer additional discounts to their customers for the defective delivery. In either case, our operating subsidiaries may have to incur additional costs and/or may experience a loss of revenue. In the worst case scenario, our operating subsidiaries’ customers may reject their entire printing order and/or claim against us for compensation for defective delivery. This may adversely affect our operating subsidiaries’ reputation, business, financial condition and prospects.

Our operating subsidiaries may be denied permits to print publications in light of their wholly foreign-owned status.

According to the consultation conducted by our PRC counsel, Commerce & Finance Law Offices, with the Administration of Press and Publication of Shenzhen Municipality, as well as confirmed by our directors and senior managements to their best knowledge, it is a common practice to use wholly foreign-owned enterprises (“WFOEs”) to obtain a printing permit and engage in the printing of publications in Shenzhen (the “Practice”). If such Practice is determined by National Press and Publication Administration (the “NPPA”) or other competent authorities to contravene applicable regulation, and, meanwhile, National Press and Publication Administration officially order local departments in charge of the administration of press and publication to abolish the Practice, the Administration of Press and Publication of Shenzhen Municipality may have to follow the order of NPPA and cease issuing Printing Permit to WFOEs, our PRC operating subsidiary, Samfine SZ, may be unable to obtain printing permits as a WFOE, resulting in the suspension of accepting entrustment to print foreign publications or discontinue or restrict our operations. Our subsidiaries and we may be subject to any foreign investment restrictions or prohibitions.

According to the Regulations on the Administration of Printing Industry (2020 Revision), an enterprise shall accept entrustment to print foreign publications on the premise of obtaining printing permits. Accordingly, Samfine SZ has been operating the business of printing foreign publications with such permits, which suggests that competent authority in Shenzhen has approved such operations of Samfine SZ. Only if the Practice is abolished by NPPA or competent authorities in Shenzhen, meanwhile, Samfine SZ is unable to obtain printing permits but still operate the business of printing foreign publications, the PRC government may find that such operations of printing publications without newly issued printing permits, violate or contravene the regulations mentioned above, which may lead to the relevant government authorities, who would have broad discretion in dealing with such violation, to take actions, including, without limitation:-

•        revoking the printing operation license of Samfine SZ;

•        imposing fines on us;

•        discontinuing or placing restrictions or onerous conditions on our operations;

•        requiring us to restructure our operations in such a way to compel us to establish a new enterprise, re-apply for the necessary licences or relocate our businesses, staff and assets;

•        imposing additional conditions or requirements with which we may not be able to comply; or

•        taking other regulatory or enforcement actions against us that could be harmful to our business.

Any of these events could cause significant disruption to our business operations and severely damage our reputation, which would in turn have a material adverse effect on our business, financial condition and results of operations. Further actions required to be taken by us under such laws, regulations, and rules may materially and adversely affect our business, financial condition and results of operations.

Having considered (i) the Practice has not been abolished in Shenzhen; (ii) Samfine SZ has still been able to obtain printing permits as of the date of this prospectus; (iii) Samfine SZ has been granted printing permits as a WFOE, making it a normal and regular practice for Samfine SZ and the competent authority in Shenzhen; and (iv) as informed by the Administration of Press and Publication of Shenzhen Municipality, it has no plan or schedule to

abolish the Practice in the foreseeable future considering that NPPA has not yet given clear and affirmative direct to do so, the potential risk that Samfine SZ may be denied permits to print publications in light of its WFOE-status in the foreseeable future is relatively remote.

In the event that the Administration of Press and Publication of Shenzhen Municipality officially abolishes the Practice in light of the clear and affirmative order from NPPA, and Samfine SZ is denied permits to print publications in the future, Samfine SZ still has the option to establish a new subsidiary (the “New Subsidiary”) and then divest and merge its own publication printing business into the New Subsidiary. In other words, the New Subsidiary would operate the publication printing business. Meanwhile, Samfine SZ could introduce Chinese investors as shareholders of the New Subsidiary, making the New Subsidiary a sino-foreign joint venture and its shareholding structure meet the requirements for applying for a printing operation license with the scope of business including “publication printing.”

Additionally, given that (i) Samfine SZ has been engaging in printing foreign publications under the premise of obtaining printing permits for corresponding printing projects; (ii) the Administration of Press and Publication of Shenzhen Municipality has been issuing printing permits to Samfine SZ knowing Samfine SZ’s WFOE-status; (iii) Samfine SZ has not been investigated, ordered to rectify, fined or imposed any other penalties due to its operations of printing foreign publications during the past three years; (iv) as informed by the Administration of Press and Publication of Shenzhen Municipality, the Practice arose in a specific historical context and continues today and the competent authority in Shenzhen has no schedule to abolish the Practice in the foreseeable future, the risk of the past operations of Samfine SZ was deemed to significantly violate applicable regulations related to printing business due to printing foreign publications is relatively remote.

Our operating subsidiaries may fail to obtain or renew the licenses, permissions and approvals that required for conducting their operation, or otherwise fail to satisfy their requirements from time to time, which will affect our operating subsidiaries’ ability to obtain new business and its financial position and prospects.

As of the date of this prospectus, our operating subsidiaries had obtained all requisite permissions, licenses, or approvals that are required for conducting their business operation and have not been denied such licenses, permissions, and approvals by any authorities, details of which are set out in the sub-section headed “Business — Licenses, Permissions, Approvals and Certifications” in this prospectus. Our ability to obtain, maintain, or renew such licenses, permissions or approvals on acceptable terms is subject to change, as, among other things, the regulations and policies of applicable governmental authorities may change. These major licenses have expiry dates and are renewable at the end of their terms by application to the relevant authorities. There is no assurance that our operating subsidiaries can renew these licenses in a timely manner. If our licenses, permissions or approvals are revoked or suspended or we are unable to renew them, we cannot ensure you that our business operation will not be stopped and, correspondingly, our financial performance would be adversely affected. Moreover, we cannot assure you that we will be successful and timely in obtaining such licenses, permissions and approvals. Failure to do so may subject our operating subsidiaries to fines and penalties imposed by the regulatory agencies, including possible suspension of our operating subsidiaries’ operations. In addition, these licenses are subject to continued compliance with various standards relating to, amongst others, financial capability, expertise, management and safety and there is no assurance that our operating subsidiaries will continue to meet such standards from time to time. There are circumstances which may affect the ability of our operating subsidiaries to maintain such licenses or otherwise lead to a suspension, downgrading or demotion of the qualifications. If our operating subsidiaries are unable to renew or otherwise maintain its licenses, they may not be able to obtain new orders from their customers, and thereby its financial position and prospects would be materially and adversely affected.

Our operating subsidiaries rely on their key management and professional staff, the loss of whom may affect our operating subsidiaries’ operations.

Our operating subsidiaries have a team of experienced and competent management who is responsible for directing and managing daily operations, overseeing financial condition and performance, allocating and budgeting human resources and formulating business strategies. For example, Mr. Wing Wah Cheng, Wayne, the founder of our operating subsidiaries and the chairman of the board of directors and the Controlling Shareholder, has over 25 years of experience in the printing industry. Leveraging on their experience and network in the industry, our operating subsidiaries have been successfully expanding their client base and operations. However, we cannot assure you that our operating subsidiaries can retain the services of their key management and find suitable replacements if any of them terminates his or her engagement with our operating subsidiaries, given the intense competition for experienced and competent personnel in the industry.

Our operating subsidiaries’ financial result for the year ending December 31, 2023 is expected to be adversely affected by non-recurring listing expenses.

The managements of our operating subsidiaries are of the view that the financial result of our operating subsidiaries for the year ending December 31, 2023 is expected to be adversely affected by the listing expenses in relation to the offering, the nature of which is non-recurring. See “Expenses related to this offering” for details. Part of the listing expenses is expected to be accounted for as a deduction from equity upon listing while part of the listing expenses has been and is expected to be recognized as expenses in the consolidated statements of income which is expected to be recognized for the year ending December 31, 2023. Accordingly, the results of operation and financial performance for the year ending December 31, 2023 may be adversely impacted, and may or may not be comparable to our operating subsidiaries’ financial performance in the past.

Our operating subsidiaries are dependent on the quality of raw materials supplied by their suppliers.

Our operating subsidiaries conduct quality inspections on the raw materials delivered to them and rely on their suppliers to provide relevant certificates proving that the materials are in compliance with all necessary standards and requirements of their customers or the countries or regions which our operating subsidiaries export their products to. In the event that the raw materials supplied to our operating subsidiaries fail to satisfy the specifications as requested by our operating subsidiaries and confirmed by their suppliers, our operating subsidiaries will endeavor to request for exchange of raw materials from their suppliers, make procurement from other suppliers, as well as timely negotiate with their customers for adjustment of their delivery schedule. During the six months ended June 30, 2023 and the years ended December 31, 2022 and 2021, our operating subsidiaries did not have any material claims against their suppliers due to defective quality of raw materials. If our operating subsidiaries are unable to resolve the issue in a timely manner when they receive defective raw materials, (i) our operating subsidiaries may experience delay in product delivery to their customers, (ii) our operating subsidiaries may not be able to deliver satisfactory products to their customers, or (iii) their customers may reject the relevant shipment, which may result in the loss of orders or claim of damages from customers. In such circumstances, our operating subsidiaries’ business, financial condition and results of operations may be adversely affected.

We and our operating subsidiaries may be subject to litigation, arbitration or other legal proceeding risk.

We and our operating subsidiaries may be subject to arbitration claims and lawsuits in the ordinary course of their business. As of the date of this prospectus, we and our operating subsidiaries are not a party to, and are not aware of any threat of, any legal proceeding that, in the opinion of our and our operating subsidiaries’ management, is likely to have a material adverse effect on our operating subsidiaries’ business, financial condition or operations. Actions brought against us or our operating subsidiaries may result in settlements, awards, injunctions, fines, penalties and other results adverse to us or our operating subsidiaries. A substantial judgment, settlement, fine or penalty could be material to our or our operating subsidiaries’ operating results or cash flows for a particular period, depending on our or our operating subsidiaries’ results for that period, or could cause our or our operating subsidiaries significant reputational harm, which could harm our business prospects.

Our operating subsidiaries may be exposed to claims by third parties for defamation or infringement of intellectual property rights.

Almost all the materials our operating subsidiaries print are subject to copyright protection. In the event of any intellectual property rights claims against our operating subsidiaries’ customers, our operating subsidiaries may become a party to such disputes. In addition, our operating subsidiaries may also be exposed to potential litigation claims that the contents of publications our operating subsidiaries are contracted to print may contain allegedly libel or defamatory materials. As a result, there is a risk that claims may be made against our operating subsidiaries for defamation, negligence, copyright or trademark infringement or other claims relating to the nature and contents of the materials they print. In any of the circumstances described above, any protracted litigation will require substantial costs and the diversion of resources and management’s attention. Furthermore, an adverse determination against our operating subsidiaries in any of such legal proceedings may result in our operating subsidiaries’ payment of significant damages, which they may not be able to seek full indemnification from their customers. As such, our operating subsidiaries’ business, financial condition and results of operations may be adversely affected.

We may be unable to adequately safeguard our intellectual property or we may face claims that may be costly to resolve or that limit our ability to use such intellectual property in the future.

Any unauthorized use or misuse of our intellectual property could harm our business and reputation. Our business is materially dependent on our intellectual property. Our technical know-how is the result of our research and development efforts, which we believe to be proprietary and unique. Nevertheless, third parties may obtain and use our intellectual property without authorization. We have obtained 18 patents in the PRC. The application of laws governing intellectual property rights in the PRC is uncertain and evolving and the practice of intellectual property rights enforcement action by the PRC regulatory authorities is in its early stage of development and is subject to significant uncertainty. Therefore, infringement of intellectual property rights continues to pose a serious risk to doing business in the PRC. Monitoring and preventing unauthorized use are difficult and the measures we take to protect our intellectual property rights may not be adequate. For example, copyright registration by itself may not be adequate protection from potential misuse, infringement or other challenges from third parties claiming rights on our intellectual property. We therefore cannot assure you that we will be able to prevent third parties from infringing our intellectual property rights and utilizing our patented technology.

Further, third parties may assert infringement claims against us with respect to our intellectual property or attempt to invalidate our patents; we cannot assure you that such claims will not be successful. Even if we succeed in establishing or protecting our intellectual property rights, we could incur substantial costs and divert significant management’s attention and resources in enforcing our rights or defending any claims. Our business could be substantially disrupted by such costs and attention from management. If any party succeeds in asserting a claim against us relating to a disputed intellectual property, we may need to obtain licenses to continue to use the relevant design or technology. We cannot assure you that we will be able to obtain these licenses on commercially reasonable terms, if at all. Failure to obtain the necessary licenses or other rights could cause our business results to suffer.

We rely upon a combination of trade secrets, non-disclosure, and other contractual agreements with our employees, as well as limitation of access to and distribution of our intellectual property, in our efforts to protect intellectual property. However, our efforts in this regard may be inadequate to deter misappropriation of our proprietary information or we may be unable to detect unauthorized use and take appropriate steps to enforce our rights. Policing unauthorized use of our intellectual property is difficult, and there can be no assurance that the steps taken by us will be successful. If litigation is necessary to safeguard our intellectual property rights or to determine the validity and scope of the proprietary rights of others, we could incur substantial costs and diversion of our resources, which may have a material adverse effect on our business, financial condition, operating results or future prospects.

Our operating subsidiaries’ services depend on the reliability of computer systems maintained by our operating subsidiaries and their outsourcing vendors and the ability to implement and maintain information technology and security measures.

Our operating subsidiaries’ services depend on the reliability of computer systems maintained by our operating subsidiaries and their outsourcing vendors to operate efficiently and reliably at all times. Certain emergencies or contingencies could occur, such as a natural disaster or a significant power outage, which could temporarily shut down our operating subsidiaries’ facilities and computer systems. Further, our operating subsidiaries’ servers may be subject to computer viruses, hacking, vandalism, physical or electronic break-ins and other disruptions, which could lead to a loss of data. In addition, if the technological and operational platforms and capabilities become outdated, our operating subsidiaries will be at a disadvantage when competing with their competitors in the industry in which they operate. Our operating subsidiaries’ failure to back up their data and information in a timely manner may cause material disruption of their business operation and may therefore adversely affect their business and results of operations.

Our operating subsidiaries reputation may be damaged due to negative events concerning their business.

Our operating subsidiaries’ reputation is susceptible to damage in case of any negative events in relation to their operations, including, without limitation, negative publicity or media coverage, development of scandals, litigation and disputes, and regulatory enquiries or enforcement actions taken against Our operating subsidiaries or their employees. We cannot assure that such negative events will not happen in the future. If they materialize, it may have a material adverse impact on our operating subsidiaries’ reputation and in turn our operating subsidiaries’ business activities and results of operations.

Our operating subsidiaries may be unable to successfully implement their future business plans.

Our operating subsidiaries’ success is dependent on, among other things, their proper and timely execution of their future business plans. Our operating subsidiaries’ future business plans may be hindered by factors beyond their control, such as competition within the industry they operate, their ability to cope with high exposure to financial risk, operational risk, market risk and credit risk as their business and client base expand and their ability to provide, maintain and improve the level of human and other resources in servicing their customers. As such, we cannot assure that our operating subsidiaries’ future business plans will materialize, or that our operating subsidiaries’ objectives will be accomplished fully or partially, or our operating subsidiaries’ business strategies will generate the intended benefits to our operating subsidiaries as initially contemplated. If our operating subsidiaries fail to implement their business development strategies successfully, their business performance, financial condition and future prospects and growth could be materially and adversely affected.

Our operating subsidiaries may in the future pursue acquisitions and joint ventures as part of our growth strategy. Any future acquisition or joint venture may result in exposure to potential liabilities of the acquired companies and significant transaction costs, and also may present new risks associated with entering additional markets or offering new products or services and integrating the acquired companies or newly established joint ventures. Moreover, our operating subsidiaries may not have sufficient management, financial and other resources to integrate companies they acquire or to successfully operate joint ventures, and they may be unable to profitably operate their expanded company structure. Additionally, any new business that our operating subsidiaries may acquire or joint ventures they may form, once integrated with their existing operations, may not produce expected or intended results.

Our operating subsidiaries’ internal control system may become ineffective or inadequate.

Our operating subsidiaries rely on their internal control system to ensure effective business operations. Our operating subsidiaries have established, maintained and relied on an internal control system comprising a series of policies and procedures. There is no assurance that the internal control system in place will prove at all times adequate and effective to deal with all the possible risks given the fast-changing environment in which our operating subsidiaries operate. We cannot assure that our operating subsidiaries’ internal control system has no deficiencies or inherent limitations, or that it can fully prevent our operating subsidiaries from their employee misconduct. Such deficiencies or inherent limitations may adversely affect our operating subsidiaries’ financial condition and results of operations.

A sustained outbreak of the COVID-19 pandemic could have a material adverse impact on our operating subsidiaries’ business, operating results and financial condition.

Since late December 2019, the outbreak of COVID-19 spread rapidly throughout China and later to the rest of the world. On January 30, 2020, the International Health Regulations Emergency Committee of the World Health Organization declared the outbreak a PHEIC, and later, on March 11, 2020, a global pandemic. Many businesses and social activities in the PRC, Hong Kong, the U.S. and other countries and regions have been severely disrupted, including those of our suppliers and customers. While the spread of COVID-19 was substantially controlled in China in 2021, restrictions were re-imposed from time to time in certain cities to combat sporadic outbreaks. Despite the rapid COVID-19 vaccine rollout, uncertainties remain due to the emerging new variants, and our operations may be adversely affected by the restrictive measures to be imposed in the future. For example, in early 2022, the Omicron variant of COVID-19 made its presence felt in China, especially in Jilin Province, Shenzhen and Shanghai where restrictions and strict lockdowns were imposed. Our suppliers and our customers have experienced significant business disruptions and suspension of operations due to quarantine measures to contain the spread of the pandemic, which have caused and may continue to have a negative impact on our business and operations, such as shortage in the supply of raw materials, suspend or reduce our production capacity, shortage of transportation or logistic services, delay of our products delivery, delay or cancellation of orders from our customers, and delay or default in payments from our customers. Our customers or end-users of our products that are negatively impacted by the COVID-19 pandemic may reduce their budgets to purchase our products, which may materially adversely impact our revenue and results of operations. Our business operations could also be disrupted if any of our employees are suspected of being or is infected by COVID-19, since it could require other employees to be quarantined or our offices and production site to be closed down and disinfected.

The COVID-19 pandemic continued to affect global logistics. During 2021, there have been minor outbreaks of COVID-19 in other ports in the PRC and caused temporary closure of ports in Shenzhen, which (i) caused delay of delivering and shipment of our products to customers and (ii) interrupted and decreased supply of raw materials for

our operating subsidiaries’ production and driving raw material prices up. Our customers have also been hampered by congested ports in the U.S., which in turn have caused delay of shipment, increase of inventory and disruption of our operating subsidiaries’ production schedule.

As part of global supply chain interruption due to COVID-19, coal and other supplies for power generation plants have been negatively impacted. As a result, the PRC government started to enforce the “dual control of energy consumption” policy to control the total power consumption and efficiency which had caused disruptions to our operating subsidiaries’ production schedule and increase of the cost of production. All of these would have a material adverse effect on our results of operations and financial condition. Additionally, if the outbreak persists or escalates, we may be subject to further negative impact on our business operations and financial condition.

Our operating subsidiaries face risks related to natural disasters, health epidemics and other outbreaks, which could significantly disrupt their operations.

Our operating subsidiaries are vulnerable to natural disasters and other calamities. Fire, floods, typhoons, earthquakes, power loss, telecommunications failures, break-ins, war, riots, terrorist attacks or similar events may give rise to server interruptions, breakdowns, system failures, technology platform failures or Internet failures, which could cause the loss or corruption of data or malfunctions of software or hardware as well as adversely affect our operating subsidiaries’ ability to operate, including communicating with clients and the relevant listing authorities. Moreover, besides COVID-19, our operating subsidiaries’ business and ability to operate could also be adversely affected by Ebola virus disease, Zika virus disease, H1N1 flu, H7N9 flu, avian flu, SARS or other epidemics.

Our operating subsidiaries’ operations are located in Hong Kong and the PRC, where their management and a majority of their employees currently reside. Consequently, our operating subsidiaries are highly susceptible to factors adversely affecting Hong Kong and the PRC. If any of the abovementioned natural disasters, health epidemics or other outbreaks were to occur in Hong Kong and the PRC, our operating subsidiaries’ operation may experience material disruptions, such as temporary closure of their offices and suspension of services, which may materially and adversely affect our operating subsidiaries’ business, financial condition and results of operations.

A severe or prolonged downturn in the global economy could materially and adversely affect our operating subsidiaries’ business and results of operations.

The global market and economic crisis stemming from the COVID-19 pandemic resulted in recessions occurring in most major economies. Continued concerns about the systemic impact of potential long-term and wide-spread recession, energy costs, geopolitical issues, sovereign debt issues, COVID-19 and new variants thereof and the availability and cost of credit have contributed to increased market volatility and diminished expectations for economic growth around the world. The difficult economic outlook has negatively affected businesses and consumer confidence and contributed to significant volatility.

There is continuing uncertainty over the long-term effects of the expansionary monetary and fiscal policies that have been adopted by the central banks and financial authorities of some of the world’s leading economies, including Hong Kong and Mainland China. There have also been concerns over unrest in several geographic areas, which may result in significant market volatility. Any prolonged slowdown in the global and/or Hong Kong and/or Mainland China economy may have a negative impact on our business, results of operations and financial condition, and continued turbulence in the international markets may adversely affect our ability to access the capital markets to meet liquidity needs.

The recent outbreak of war in Ukraine has already affected global economic markets, 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 our client’s business and our business, even though we do not have any direct exposure to Russia or the adjoining geographic regions. 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 the operations, results of operations, financial condition, liquidity and business outlook of our business.

For the six months ended June 30, 2023 and the years ended December 31, 2022 and 2021, our operating subsidiaries revenue’ was mainly generated from the provision of printing products to book traders mainly located in Hong Kong whose customers are located around the world, particularly in the U.S. and Europe. We expect that these areas will continue to be our operating subsidiaries’ focused markets. Accordingly, if these areas experience any adverse economic, political or regulatory conditions due to events beyond our operating subsidiaries’ control, such as global economic downturn, natural disasters, contagious disease outbreaks, or terrorist attacks, our operating subsidiaries’ business, financial condition, results of operations and prospects may be materially and adversely affected.

Risks Related to our Ordinary Shares

If we fail to meet applicable listing requirements, Nasdaq may not approve our listing application, or may delist our Ordinary Shares from trading, in which case the liquidity and market price of our Ordinary Shares could decline.

We have applied to have our Ordinary Shares listed on Nasdaq Capital Market. We expect that our Ordinary Shares will be listed on Nasdaq Capital Market on or promptly after the date of this prospectus. However, we cannot assure you that we will be able to meet Nasdaq’s initial listing standards or 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 Ordinary Shares, we and our shareholders could face significant material adverse consequences, including:

•        a limited availability of market quotations for our Ordinary Shares;

•        reduced liquidity for our Ordinary Shares;

•        a determination that our Ordinary Shares are “penny stock,” which would require brokers trading in our Ordinary Shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our Ordinary 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 U.S. National Securities Markets Improvement Act of 1996 prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered securities.” Because we expect that our Ordinary Shares will be listed on Nasdaq, such securities will be covered securities. Although states are preempted from regulating the sale of our Ordinary Shares, this 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 Ordinary Shares would not be covered securities and we would be subject to regulations in each state in which we offer our Ordinary Shares.

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

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

In recent years, the 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 Ordinary Shares, regardless of our actual operating performance. These fluctuations may be even more pronounced in the trading market for our Ordinary Shares shortly following this offering. If the market price of our Ordinary 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.

In addition, in the past, class action litigation has often been instituted against companies whose securities have experienced periods of volatility in market price. Securities litigation brought against us following volatility in the price of our Ordinary Shares, regardless of the merit or ultimate results of such litigation, could result in substantial costs, which would hurt our financial condition and operating results and divert management’s attention and resources from our business.

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

Our Ordinary Shares are expected to initially trade below $5.00 per share. As a result, our Ordinary 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 Ordinary Shares could be considered to be “penny stock.” A penny stock is subject to rules that impose additional sales practice requirements on broker/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 Ordinary Shares, and may negatively affect the ability of holders of our Ordinary 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.

Volatility in the price of our Ordinary Shares may subject us to securities litigation.

The market for our Ordinary Shares may have, when compared to seasoned issuers, significant price volatility and we expect that our Ordinary 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. Securities litigation could result in substantial costs and liabilities and could divert management’s attention and resources.

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

Our pre-IPO shareholders may be able to sell their Ordinary Shares pursuant to Rule 144 under the Securities Act after completion of this offering. Because these shareholders have paid a lower price per Ordinary Share than participants in this offering, when they are able to sell their pre-IPO shares under Rule 144, they may be more willing to accept a lower sales price than the IPO price. This fact could impact the trading price of our Ordinary Shares following completion of the offering, to the detriment of participants in this offering. Under rule 144, before our pre-IPO shareholders can sell their shares, in addition to meeting other requirements, they must meet the required holding period. We do not expect any of the Ordinary Shares to be sold pursuant to Rule 144 during the pendency of this offering.

The market price of our Ordinary Shares may be subject to rapid and substantial volatility regardless of our operating performance, and such volatility may make it difficult for prospective investors to assess the rapidly changing value of our Ordinary Shares.

The public offering price for our Ordinary Shares will be determined through negotiations between the underwriters and us and may vary from the market price of our Ordinary Shares following our public offering. If you purchase our Ordinary Shares in our public offering, you may not be able to resell those shares at or above the public offering price. The market price of our Ordinary Shares may fluctuate significantly in response to numerous factors, many of which are beyond our control, including:

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

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

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

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

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

•        lawsuits threatened or filed against us; and

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

In addition, our Ordinary Shares may be subject to rapid and substantial price volatility. Such 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. Recently, companies with comparably small public floats and initial public offering sizes have experienced instances of extreme stock price run-ups followed by rapid price declines, and such stock price volatility was seemingly unrelated to the respective company’s actual or expected operating performance and financial condition or prospects. Although the specific cause of such volatility is unclear, our anticipated public float may amplify the impact the actions taken by a few shareholders have on the price of our Ordinary Shares, which may cause our share price to deviate, potentially significantly, from a price that better reflects the underlying performance of our business. As a relatively small-capitalization company with a small public float, our Ordinary Shares may experience greater stock price volatility, extreme price run-ups, and declines that 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. Further, investors in our Ordinary Shares may experience losses, which may be material, if the price of our Ordinary Shares declines after this offering or if such investors purchase our Ordinary Shares prior to any price decline. Moreover, in the past, shareholders have filed securities class action litigation following periods of market volatility. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business, and adversely affect our business.

Because our initial public offering price is substantially higher than our pro forma net tangible book value per share, you will incur immediate and substantial dilution in the book value of your Ordinary Shares.

If you purchase our shares in this offering, you will pay substantially more than our net tangible book value per share. As a result, you will experience immediate and substantial dilution. See “Dilution” for a more complete description of how the value of your investment in our shares will be diluted upon the completion of this offering.

Our directors, officers and principal 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 directors, officers and principal shareholders hold in aggregate 78.91% or more of our shares. After this offering, our directors, officers and principal shareholders will hold in aggregate 69.29% or more of our shares. We will be a “controlled company” as defined under the Nasdaq Stock Market Rules because, immediately after the completion of this offering, our Controlling Shareholder, will own 69.29% of our total issued and outstanding Shares, representing 69.29% of the total voting power, assuming that the underwriters do not exercise their over-allotment option, and may have the ability to determine matters requiring approval by shareholders.

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 Ordinary Shares as part of a sale of us or our assets, and might affect the prevailing market price of our Ordinary 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.

We are a “controlled company” within the meaning of the Nasdaq listing rules, and may follow certain exemptions from certain corporate governance requirements that could adversely affect our public shareholders.

Following this offering, our largest shareholder will continue to own more than a majority of the voting power of our outstanding Ordinary Shares. Under the Nasdaq listing rules, a company of which more than 50% of the voting power is held by an individual, group, or another company is a “controlled company” and is permitted to phase in its compliance with the independent committee requirements. Although we do not intend to rely on the “controlled

Commerce and Finance Law Office, our counsel as to PRC law, has advised us that the recognition and enforcement of foreign judgments are subject to compliance with the PRC Civil Procedures Law and relevant civil procedure requirements in the PRC. PRC courts may recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedures Law based either on treaties between China and the country where the judgment is made or on reciprocity between jurisdictions. China does not have any treaties or other form of reciprocity with the United States or the Cayman Islands that provide for the reciprocal recognition and enforcement of foreign judgments. In addition, according to the PRC Civil Procedures Law, courts in the PRC will not enforce a foreign judgment against us or our directors and officers if they decide that the judgment violates the basic principles of PRC law 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.

CFN Lawyers, our counsel as to the laws of Hong Kong, has advised us that there is uncertainty as to whether the courts of Hong Kong would (i) recognize or enforce judgments of United States courts obtained against us or our directors or officers predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States or (ii) entertain original actions brought in Hong Kong against us or our directors or officers predicated upon the securities laws of the United States or any state in the United States. A judgment of a court in the United States predicated upon U.S. federal or state securities laws may be enforced in Hong Kong at common law by bringing an action in a Hong Kong court on that judgment for the amount due thereunder, and then seeking summary judgment on the strength of the foreign judgment, provided that the foreign judgment, among other things, is (1) for a debt or a definite sum of money (not being taxes or similar charges to a foreign government taxing authority or a fine or other penalty) and (2) final and conclusive on the merits of the claim, but not otherwise. Such a judgment may not, in any event, be so enforced in Hong Kong if (a) it was obtained by fraud; (b) the proceedings in which the judgment was obtained were opposed to natural justice; (c) its enforcement or recognition would be contrary to the public policy of Hong Kong; (d) the court of the United States was not jurisdictionally competent; or (e) the judgment was in conflict with a prior Hong Kong judgment. Hong Kong has no arrangement for the reciprocal enforcement of judgments with the United States. As a result, there is uncertainty as to the enforceability in Hong Kong, in original actions or in actions for enforcement, of judgments of United States courts of civil liabilities predicated solely upon the federal securities laws of the United States or the securities laws of any State or territory within the United States.

You may have more difficulties protecting your interests than you would as a shareholder of a U.S. corporation.

We are an exempted company incorporated under the laws of the Cayman Islands. Our corporate affairs are governed by our Memorandum and Articles of Association, the Companies Act and the common law of the Cayman Islands. The rights of shareholders to take action against our directors, actions by our minority shareholders and the fiduciary duties of our directors owed to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from the common law of England, the decisions of whose courts are of persuasive authority, but are not binding, on a court in the Cayman Islands. The rights of our shareholders and the fiduciary duties of our directors owed to us under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a less developed body of securities laws than the United States. Some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands. In addition, Cayman Islands companies may not have the standing to initiate a shareholder derivative action in a federal court of the United States.

Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to obtain copies of the register of members or corporate records of the company. They will, however, have such rights as may be set out in the company’s articles of association. A Cayman Islands exempted company may maintain its principal register of members and any branch registers in any country or territory, whether within or outside the Cayman Islands, as the company may determine from time to time. There is no requirement for an exempted company to make any returns of members to the Registrar of Companies in the Cayman Islands. The names and addresses of the members are, accordingly, not a matter of public record and are not available for public inspection. However, an exempted company shall make available at its registered office, in electronic form or any other medium, such register of members, including any branch register of member, as may be required of it upon service of an order or notice by the Tax Information Authority pursuant to the Tax Information Authority Act (2013 Revision) of the Cayman Islands. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.

As a result of all of the above, our public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of our board of directors or Controlling Shareholder than they would as public shareholders of a company incorporated in the United States.

For a discussion of significant differences between the provisions of the Companies Act and the laws applicable to companies incorporated in the United States and their shareholders, see the section of this prospectus captioned “Description of Securities — Differences in Corporate Law.”

Cayman Islands economic substance requirements may have an effect on our business and operations.

Pursuant to the International Tax Cooperation (Economic Substance) Act, 2018 of the Cayman Islands (‘‘ES Act’’) that came into force on 1 January 2019, a ‘‘relevant entity’’ is required to satisfy the economic substance test set out in the ES Act. A ‘‘relevant entity’’ includes an exempted company incorporated in the Cayman Islands as is the Company; however, it does not include an entity that is tax resident outside the Cayman Islands. Accordingly, for so long as the Company is a tax resident outside the Cayman Islands, including in Hong Kong, it is not required to satisfy the economic substance test set out in the ES Act.

We qualify as a foreign private issuer and, as a result, we will not be subject to U.S. proxy rules and will be subject to Exchange Act reporting obligations that permit less detailed and less frequent reporting than that of a U.S. corporation.

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 one hundred twenty (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 seventy-five (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.

If we lose our status as a foreign private issuer, we would be required to comply with the Exchange Act reporting and other requirements applicable to U.S. domestic issuers, which are more detailed and extensive than the requirements for foreign private issuers. We may also be required to make changes in our corporate governance practices in accordance with various SEC and Nasdaq rules. The regulatory and compliance costs to us under U.S. securities laws if we are required to comply with the reporting requirements applicable to a U.S. domestic issuer may be significantly higher than the cost we would incur as a foreign private issuer. As a result, we expect that a loss of foreign private issuer status would increase our legal and financial compliance costs and would make some activities highly time consuming and costly. We also expect that if we were required to comply with the rules and regulations applicable to U.S. domestic issuers, obtaining and maintaining directors’ and officers’ liability insurance would become more difficult and expensive for us, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These rules and regulations could also make it more difficult for us to attract and retain qualified members of our board of directors.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements that involve substantial risks and uncertainties. In some cases, you can identify forward-looking statements by the words “may,” “might,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “goal,” “objective,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue” and “ongoing,” or the negative of these terms, or other comparable terminology intended to identify statements about the future. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. The forward-looking statements and opinions contained in this prospectus are based upon information available to us as of the date of this prospectus and, while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. Forward-looking statements include statements about:

•        the expected or potential impact of the novel coronavirus (COVID-19) pandemic, and the related responses of the government, consumers, the Company, and our operating subsidiaries on our business, financial condition and results of operations;

•        timing of the development of future business;

•        capabilities of our operating subsidiaries’ business operations;

•        expected future economic performance;

•        competition in our operating subsidiaries’ market;

•        continued market acceptance of our operating subsidiaries’ services and products;

•        protection of our operating subsidiaries’ intellectual property rights;

•        changes in the laws that affect our operating subsidiaries’ operations;

•        fluctuations in foreign currency exchange rates;

•        our operating subsidiaries’ ability to obtain and maintain all necessary government certifications, approvals, and/or licenses to conduct our business;

•        continued development of a public trading market for our securities;

•        the cost of complying with current and future governmental regulations and the impact of any changes in the regulations on our operating subsidiaries’ operations;

•        managing our growth effectively;

•        projections of revenue, earnings, capital structure and other financial items;

•        fluctuations in operating results;

•        dependence on our operating subsidiaries’ senior management and key employees; and

•        other factors set forth under “Risk Factors.”

You should refer to the section titled “Risk Factors” for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this prospectus will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light

of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

You should read this prospectus and the documents that we reference in this prospectus and have filed as exhibits to the registration statement, of which this prospectus forms a part, completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

INDUSTRY AND MARKET DATA

This prospectus includes statistical and other industry and market data that we obtained from industry publications and research, surveys and studies conducted by third parties, as well estimates by our management based on such data. None of these third parties are affiliated with us, and the information contained in this prospectus has not been reviewed or endorsed by any of them. The market data and estimates used in this prospectus involve a number of assumptions and limitations, and you are cautioned not to give undue weight to such data and estimates. Industry publications, research, surveys, studies and forecasts generally state that the information they contain has been obtained from sources believed to be reliable but that the accuracy and completeness of such information is not guaranteed. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and uncertainties as the other forward-looking statements in this prospectus.

While we believe that the information from these industry publications, surveys and studies is reliable, the industry in which our operating subsidiaries operate is subject to a high degree of uncertainty and risk due to a variety of important factors, including those described in the section titled “Risk Factors.” These and other factors could cause results to differ materially from those expressed in the estimates made by the independent parties and by us.

Overview of printing industry

Introduction

Printing is a process for reproducing the information which includes text and images, etc. on the manuscripts to printing substrates. Printing is a supporting industry to publishing, advertising and various light consumer goods industries, including toys, food, cosmetics, etc. Modern large-scale printing is typically done using a printing press, while the small-scale printing is done free-form with a digital printer. Although paper is the most common material, it is also frequently processed on metals, plastics, cloth and composite materials.

Depending upon the process, the printed image is transferred to the substrate either directly or indirectly. In direct printing, the image is transferred directly from the image carrier to the substrate. In indirect, or offset, printing, the image is firstly transferred from the image carrier to the blanket cylinder and then to the substrate.

Each printing process can be divided into three major steps: (i) Pre-press operations encompass a series of steps during which the idea for a printed image is converted into an image carrier such as a plate, cylinder, or screen; (ii) Press refers to actual printing operations; and (iii) Post-press primarily involves the assembly of printed materials and consists of binding and finishing operations.

Printing of Books and Other Printed Materials

A book is a set of sheets of paper, parchment, or similar materials that are fastened together to hinge at one side. In terms of contents and target readers, children’s books, educational textbooks and learning materials, leisure and lifestyle books are key types of books in the global book printing market.

Novelty products, which refer to the specially designed and featured products with creative uniqueness, such as handcrafts, pop-up books, characteristic stationery products, etc. are classified as other printed materials. Production cost of novelty products are usually higher if they are handmade products due to additional labor and production requirement (e.g. pop-up and lift-the-flap books).

Value Chain

The typical industry value chain of book printing consists of various stakeholders, including book authors or agents, publishers, printing companies, distributors and booksellers, which are responsible for the drafting, production, supply and sales of the printed books in market.

The chart below demonstrates the typical value chain for the book printing:

•        Book authors serve as content providers of books. In general, authors provide their drafted content directly to the publishers or through the agents. Alternatively, authors may also liaise directly with printing companies for self-publishing.

•        Publishers are responsible for design, pricing, production and marketing of the printed books. In general, publishers may outsource the production to printing companies.

•        Printing companies will undertake printing of books and process of quality management based on requirements of authors and/or publishers, including: (i) pre-press (e.g. color proofing, imposition and plate-making) (ii) printing and (iii) post-press (e.g. folding, collating, sewing, trimming) and binding and finishing operations.

•        Distributors and wholesalers will provide temporary storage or shipment services to booksellers upon receiving the instructions from publishers.

•        Booksellers and retailers are responsible for sales and marketing activities (e.g. categorization and displaying the books in common area) of the printed books.

Analysis of Hong Kong Export Market of Books and Other Printed Matters

The printing service providers in Hong Kong produce a wide range of printing materials, including books, booklets, brochures and leaflets, and paper and paperboard labels, advertising materials, commercial catalogues, calendars, postcards and greeting cards. Most printing service providers have relocated their production to Mainland China with purpose-built plants to reduce operation costs. Such development has changed the workflow and logistics and greatly improved efficiency and output quality. However, they most will maintain their offices in Hong Kong to receive overseas orders.

Hong Kong’s Export Value of Books and Other Printed Matters (including Re-Export)

According to the Hong Kong Census and Statics Department, the total export value of printed reading books, brochures, leaflets and other printed materials and children’s picture, drawing or coloring books from Hong Kong has remained at a stable level for the years 2017, 2018 and 2021. The total export value recorded a decline in 2019 and 2020 respectively, mainly attributable to the global economic downturn and the social unrest in Hong Kong in 2019 and the outbreak of COVID-19 since early 2020. In 2021, the total export value rose back sharply to the levels of 2017 and 2018, from approximately HK$7,987 million in 2020 to HK$8,975 million in 2021, representing an increase of approximately12.4%, due to the global economic recovery and improvement of the cargo flows.

The chart below sets forth the export value of printed reading books, brochures, leaflets and other printed materials and children’s picture, drawing or coloring books from Hong Kong in the period from 2017 to 2021:

Source: Hong Kong Census and Statics Department

Hong Kong’s Export Value of Books and Other Printed Matters by Geographic Region

A large share of the export business is attributable to orders received directly from overseas countries. This also includes orders from major international publishers in Hong Kong. Export orders are mainly handled by printing service providers or book traders, who have established business relationships with overseas customers. During 2020, 2021 and the ten months ended 2022, more than 58% of Hong Kong’s total export of printed matters were exported to the US, Mainland China, Europe and the UK.

The chart below sets forth Hong Kong’s export of printed matters by market over the period from 2020 to October 2022:

Note: ASEAN includes Vietnam, Cambodia and Indonesia

Source: Hong Kong Trade Development Council

Analysis of PRC Export Market of Books and Other Printed Materials

According to the Hong Kong Trade Development Council, the majority of Hong Kong’s total export of printed matters are attributable to re-exports of the PRC, with the total Hong Kong’s exports of printed matters during 2020, 2021 and the ten months of 2022 amounted to approximately HK$13,858 million, HK$15,769 million and HK$8,579 million respectively, of which 80.4%, 81.6% and 79% were re-exports originated from the PRC.

According to the National Bureau of Statistics of China, the total export value of printed reading books, brochures, leaflets and other printed materials and children’s picture, drawing or coloring books from the PRC increased from approximately US$3,613.0 million to approximately US$4,358 million from 2016 to 2021, representing a compounded annual growth rate of 3.17%, indicating a steady growth in demand for printed books and printed material products from the PRC to overseas. The total export value for the year 2021 increased by 24.89% compared to the previous year, 2020. This significant rise was likely attributable to the global recovery from the COVID-19 outbreak that began in January 2020. Set out below is the export value of printed reading books, brochures, leaflets and other printed materials and children’s picture, drawing or coloring books in PRC from 2016 to 2021.

Source: National Bureau of Statistics

Major market drivers of the market for printed books and other printed materials in Hong Kong and the PRC

Steady growth of demand for printed books

Despite the introduction of electronic books and electronic online learning platforms in the past years, the demand for printed books and printed materials maintained steady growth indicating that printed books are expected to remain as an important channel for knowledge transference, especially for educational books, reference books and children’s books, which is anticipated to be one of the key drivers to book printing market in future. Based on the historical growth rate of the total export value of the PRC and the recent rebound in total re-export value in Hong Kong for printed books and printed materials, as the global economic sentiment and the COVID-19 outbreak situation continues to improve, the demand for exports of printed books and printed materials is expected to recover to previous level of growth in the future.

Evolving Technology in Book Printing and Design

Advancement of technology is anticipated to take place in book printing due to higher requirement on fancy design, special printing effect and shorter production lead time, etc. from the customers. Therefore, book printing service providers are seeking higher degree of automation in production process (e.g. including binding and collating as well as other post press finishing steps). Moreover, book printing service providers are dedicated to enhancing production efficiency, saving costs and minimizing the scrap. As a result, the research and development of printing technologies will be facilitated given the demand for high quality printing services from customers.

USE OF PROCEEDS

Based upon an assumed initial public offering price of $[4.50] per Ordinary Share, we estimate that we will receive net proceeds from this offering, after deducting the estimated underwriting discounts and the estimated offering expenses payable by us, of approximately US$           if the underwriters do not exercise their over-allotment option, and US$           if the underwriters exercise their over-allotment option in full, after deducting the underwriting discounts, non-accountable expense allowance and estimated offering expenses payable by us.

Each $1.00 increase (decrease) in the assumed initial public offering price of US$[4.50] per Ordinary Share (the midpoint of the price range set forth on the cover page of this prospectus) would increase (decrease) the net proceeds to us from this offering by US$          , assuming that the number of Ordinary Shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting the underwriting discounts and estimated offering expenses payable by us. An increase (decrease) of 1.0 million in the number of Ordinary Shares we are offering would increase (decrease) the net proceeds to us from this offering by US$          , assuming the assumed initial public offering price remains the same, and after deducting the underwriting discounts and estimated offering expenses payable by us.

The primary purposes of this offering are to create a public market for our Ordinary Shares for the benefit of all shareholders. We plan to use the net proceeds of this offering as follows:

•        Approximately 35% for strengthening of our printing business in Hong Kong and expanding market presence in other international markets in particular the U.S.:

we intend to strengthen our operating subsidiaries’ printing business in Hong Kong by recruiting suitable talents and/or improving the remuneration package of our existing talents; and

we also intend to set up regional representative offices or center in key strategic locations in particular the East Coast of the U.S. where potential customers are located to support our future business development and to enable us to respond quickly to the needs of our customers.

•        Approximately 35% for purchasing machinery and improving and upgrading our operating subsidiaries’ production equipment to enhance level of automation; and

•        Approximately 30% for additional working capital and other general corporate purposes.

The foregoing represents our current intentions based upon our present plans and business conditions to use and allocate the net proceeds of this offering. Our management, however, will have significant flexibility and discretion to apply the net proceeds of this offering. If an unforeseen event occurs or business conditions change, we may use the proceeds of this offering differently than as described in this registration statement. We reserve the right to change the use of proceeds that we presently anticipate and describe in this prospectus.

To the extent that the net proceeds we receive from this offering are not immediately used for the above purposes, we intend to invest our net proceeds in short-term, interest-bearing bank deposits or debt instruments.

DIVIDEND POLICY

We do not have any present plan to declare or pay any dividends on our Ordinary Shares in the foreseeable future. We currently intend to retain all available funds and future earnings, if any, for the operation and expansion of our operating subsidiaries’ business, and we 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 of the date of this prospectus, SFHG did not declare or pay any dividends and there was no transfer of assets among SFHG and its subsidiaries. During the six months ended June 30, 2023 and the years ended December 31, 2022 and 2021, Samfine HK declared and paid cash dividends in the amounts of nil, nil and HK$7,200,000, respectively, to our then sole shareholder, Mr. Wing Wah Cheng, Wayne. If we determine to pay dividends on any of our Ordinary Shares in the future, as a holding company, we will be dependent on receipt of funds from our subsidiaries.

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 our subsidiaries to us, and such other factors as our board of directors may deem relevant.

Subject to the Companies Act and our Articles of Association, our Company in general meeting may declare dividends in any currency to be paid to the members but no dividend shall be declared in excess of the amount recommended by our board of directors. Subject to a solvency test, as prescribed in the Companies Act, and the provisions, if any, of our Memorandum and Articles of Association, a company may pay dividends and distributions out of its share premium account. In addition, based upon English case law which is likely to be persuasive in the Cayman Islands, dividends may be paid out of profits.

We are a holding company incorporated in the Cayman Islands. In order for us to distribute any dividends to our shareholders, 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 operating subsidiaries.

Under the BVI Business Companies Act 2004 (as amended), a British Virgin Islands company may make a dividend distribution to the extent that immediately after the distribution, the value of the company’s assets exceeds its liabilities and that such company is able to pay its debts as they fall due. Under the current practice of the Inland Revenue Department of Hong Kong, no tax is payable in Hong Kong in respect of dividends paid by us. However, PRC regulations may restrict the ability of our PRC subsidiaries to pay dividends to us. For example, certain payments from our PRC subsidiaries to us may be subject to PRC withholding income tax. In addition, regulations in the PRC currently permit payment of dividends of a PRC company only out of accumulated distributable after-tax profits as determined in accordance with its articles of association and the accounting standards and regulations in the PRC. Each of our PRC subsidiaries is required to set aside at least 10% of its after-tax profit based on PRC accounting standards every year to a statutory common reserve fund until the aggregate amount of such reserve fund reaches 50% of the registered capital of such subsidiary. Such statutory reserves are not distributable as loans, advances or cash dividends. See “Risk Factors — Risks Related to Our Corporate Structure — We rely on dividends and other distributions on equity paid by our subsidiaries to fund our cash and financing requirements, and any limitation on the ability of our subsidiaries to make payments to us could have a material adverse effect on our ability to conduct our business.”

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

CAPITALIZATION

The following table sets forth our capitalization as of June 30, 2023 on:

•        an actual basis, giving effect to the share split at a ratio of 1-for-1.6 and the increase of the authorized shares to 800,000,000 Ordinary Shares, which was approved and effected on September 5, 2023; and

•        a pro forma as adjusted basis to give effect to the sale of 2,500,000 Ordinary Shares in this offering at the assumed initial public offering price of $4.50 per Ordinary Share (the midpoint of the price range set forth on the cover page of this prospectus) after deducting the underwriting discounts, non-accountable expense allowance and estimated offering expenses payable by us, assuming 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 “Exchange Rate Information,” “Use of Proceeds” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

____________

(1)      Reflects the sale of Ordinary Shares in this offering at an assumed initial public offering price of $4.50 per Ordinary Share (the midpoint of the price range set forth on the cover page of this prospectus), and after deducting the underwriting discounts, non-accountable expense allowance and estimated offering expenses payable by us. The pro forma as adjusted information is illustrative only, and we will adjust this information based on the actual initial public offering price and other terms of this offering determined at pricing. Additional paid-in capital reflects the net proceeds we expect to receive, after deducting the underwriting discounts (underwriting discount equal to 7% per Ordinary Share, and estimated offering expenses payable by us (US$          ). We estimate that such net proceeds will be approximately US$          . For an itemization of an estimation of the total offering expenses payable by us, see “Expenses Related to this Offering.”

EXCHANGE RATE INFORMATION

SFHG is a holding company with operations conducted in Hong Kong and the PRC through its operating subsidiaries in Hong Kong and the PRC, Samfine HK and Samfine SZ, respectively. SFHG’s reporting currency is HKD. This prospectus contains translations of HKD into U.S. dollars solely for the convenience of the reader. Unless otherwise noted, all translations from HKD to U.S. dollars and from U.S. dollars to HKD in this prospectus were calculated at the noon buying rate of US$1 = HK$7.8015 and US$1 = HK$7.8363 on December 30, 2022 and June 30, 2023, respectively, as published in H.10 statistical release of the United States Federal Reserve Board. We make no representation that the HKD or U.S. dollar amounts referred to in this prospectus could have been or could be converted into U.S. dollars or HKD, as the case may be, at any particular rate or at all.

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

Through our operating subsidiaries, we are an established one-stop printing service provider which principally provides printing services in Hong Kong and the PRC. With over 20 years of experience in the printing industry, our operating subsidiaries offer a wide range of printed products such as (i) book products, which mainly include children’s books, educational books, art books, notebooks, diaries and journals; and (ii) novelty and packaging products, which mainly include handcraft products, book sets, pop-up books, stationery products, products with assembly parts and other specialized products, shopping bags and package boxes.

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 the PRC and Hong Kong, as well as its government policies, laws and regulations

Our key operations are in the PRC and Hong Kong. The PRC government may exercise significant oversight and discretion over the conduct of our business and may intervene in or influence our operations at any time, which could result in a material change in our operations and/or the value of our Ordinary Shares. 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 the PRC as a whole. Accordingly, our results of operations and prospects may be, to a significant degree, subject to economic, political and legal developments in the PRC.

Hong Kong is a Special Administrative Region of the PRC and the basic policies of the PRC regarding Hong Kong are reflected in the Basic Law, namely, Hong Kong’s constitutional document, which provides Hong Kong with a high degree of autonomy and executive, legislative and independent judicial powers, including that of final adjudication under the principle of “one country, two systems.” However, there is no assurance that there will not be any changes in the economic, political and legal environment in Hong Kong in the future. Since our operation is based in Hong Kong, any change of such political arrangements may pose immediate threat to the stability of the economy in Hong Kong, thereby directly and adversely directly and adversely affecting our results of operations and financial positions.

We face fierce competition in the printing service industry in Hong Kong.

We operate in a highly competitive printing industry. Our success depends on our ability to compete effectively against our competitors in terms of product quality, customer services, price and timely delivery. Our competitors may have access to more advanced technologies or greater access to capital for marketing activities, better brand recognition and reputation in the market than we do. They may also operate under more competitive cost structures due to their geographical location or nature of services provided. As a result, our competitors may be able to compete more successfully over a longer period of time than we do. In addition, we may face competition from new entrants who may deliberately price their products lower than ours in order to gain access to this industry. There is no assurance that we will continue to compete successfully in the future, and if we fail to do so, our business, financial condition and results of operations may be materially and adversely affected.

Customer relationships and factors affecting our customers

Our sales are generated on an order-by-order basis and we generally do not enter into long-term contracts with our customers. The volume of product purchased form our customers may vary from year to year due to a number of factors, including the financial and operational success of our customers and factors affecting consumer demand

of our customers’ products such as general economic conditions and the perception of such conditions by customers, employment rates, the level of consumer’s disposable personal income, interest rate, consumer debt levels, availability of credit and levels of taxation in the regions in which our products are sold.

Fluctuations of raw material prices

Cost of sales of printing products, which are directly related to revenue generating transactions, primarily consists of direct material cost such as paper cost, labor cost, subcontracting fee and allocated overhead. We do not have any framework supply agreement or other long-term supply contracts with any of our suppliers nor adopted any hedging policy for forward purchase of raw materials. The price of these raw materials is subject to a number of factors beyond our control, such as global demand of wood pulp, oil price, general economic condition, and environmental and conservation related regulations. As such, in case of any significant increase in the price of our principal raw materials, and if we are unable to pass on such increase to our customers, our business and profitability may be adversely affected.

A sustained outbreak of the COVID-19 pandemic could have a material adverse impact on our business, operating results and financial condition.

Since late December 2019, the outbreak of a novel strain of coronavirus, later named COVID-19, first emerged in the PRC and has spread globally. On January 30, 2020, the International Health Regulations Emergency Committee of the World Health Organization declared the outbreak a “Public Health Emergency of International Concern (PHEIC),” and later on March 11, 2020 a global pandemic. The COVID-19 outbreak has led governments across the globe to impose a series of measures intended to contain its spread, including border closures, travel bans, quarantine measures, social distancing, and restrictions on business operations and large gatherings. From 2020 to the middle of 2021, COVID-19 vaccination program had been greatly promoted around the globe. While the spread of COVID-19 was substantially controlled in 2021, several types of COVID-19 variants emerged in different parts of the world and restrictions were re-imposed from time to time in certain cities to combat sporadic outbreaks. For example, in early 2022, the Omicron variant of COVID-19 made its presence felt in China, especially in Jilin Province, Shenzhen and Shanghai where strict lockdowns were imposed.

Given the rapidly expanding nature of COVID-19 pandemic, and substantially all of our business operations and our workforces are concentrated in the PRC, we believe that it has impacted and will likely continue to impact our business, results of operations, and financial condition. Potential impact on our results of operations will also depend on future developments and information that may emerge regarding the duration and severity of COVID-19 and the actions taken by governmental authorities and other entities to contain COVID-19 or to mitigate its impacts, almost all of which are beyond our control.

The impacts of the COVID-19 pandemic on our business, financial condition, and results of operations include, but are not limited to, the following:

•        Samfine SZ’s production facilities, Shenzhen Factory, located at Shenzhen, Guangdong Province had not been fully operational until March 20, 2020. We temporarily closed our offices and production facilities in early February 2020, as required by relevant PRC local authorities and in observation of the Chinese New Year national holiday. Due to the nature of our business, the closure of the Shenzhen Factory had delayed production and product delivery. Our offices and the Shenzhen Factory reopened on February 20, 2020 and production capacity had been picking up slowly until fully operational on March 20, 2020. However, in early 2022, restrictions and lockdowns were re-imposed in Shenzhen due to Omicron variant of the Covid-19. As a result, our Shenzhen Factory was temporarily closed for two weeks. Such closures and operation interruptions adversely affected our sales volume and our production during the lockdown period.

•        Some of our book trader customers have been negatively impacted and the demand for product delivery has been delayed. Our customers have also been hampered by congested ports in the U.S. due to the COVID-19 pandemic, which in turn have caused delay in shipment, increase of inventory and disruption of our operating subsidiaries production schedule. We believe the negative impact on our business by the COVID-19 pandemic has been gradually easing with occasional small outbreaks which usually are under control quickly.

•        We experienced some disruption to our supply chain during the PRC government lockdown, with suppliers increasing lead times and purchase price for raw materials during the first half of 2020. While all of our major suppliers are currently fully operational, any future disruption in their operations would impact our ability to manufacture and deliver our products to customers. In addition, reductions in commercial airline and cargo flights, disruptions to ports and other shipping infrastructure resulting from the pandemic are resulting in increased transport times to deliver raw materials to our facilities, and may also affect our ability to timely ship our products to customers. As a result of these supply chain disruptions, we had increased customer order lead times. This may limit our ability to fulfill orders with short lead times and means that we may be unable to satisfy all of the demand for our products in a timely manner, which may adversely affect our relationships with our customers.

•        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 since the Chinese New Year holiday in early 2020. However, the impact of such shortage is not significant to our operating subsidiaries because customer order deliveries have been delayed due to the COVID-19 pandemic and our existing employees have been working overtime to mitigate this temporary labor shortage. Since the second quarter 2020, as the COVID-19 pandemic in the PRC has been mostly under control, we have seen supply of labor slightly recovering.

The extent to which the COVID-19 pandemic 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 the COVID-19 pandemic or treat its impact, among others. If the disruptions posed by the COVID-19 pandemic 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 the COVID-19 pandemic 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 pandemic on the printing 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 2023 and beyond.

Basis of Presentation

Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) and financial reporting requirements under the SEC rules. They include the financial statements of the Company and its subsidiaries. All transactions and balances among these entities have been eliminated upon consolidation.

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 printed book products and novelty products 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

In establishing the required allowance for doubtful accounts, management considers historical collection experience, aging of the receivables, the economic environment, industry trend analysis, and the credit history and financial conditions of the customers. Management reviews its receivables on a regular basis to determine if the bad debt allowance is adequate, and adjusts the allowance when necessary. In this connection, 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 June 30, 2023

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 June 30, 2023:

The table below sets forth the accounts receivable balance net of subsequent settlements as at August 31, 2023:

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:

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:

Year ended December 31, 2021 compared to year ended December 31, 2022

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

The table below sets forth the subsequent settlements related to our accounts receivable as of December 31, 2022:

The table below sets forth the accounts receivable balance net of subsequent settlements as at February 14, 2023:

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:

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:

Taxes

Cayman Islands

We are incorporated in the Cayman Islands. The Cayman Islands currently levy no taxes on individuals or corporations based upon profits, income, gains or appreciations and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to our Company levied by the Government of the Cayman Islands save for certain stamp duties which may be applicable, from time to time, on certain instruments.

BVI

We own New Achiever Ventures Limited, 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

We own Samfine HK, our Hong Kong subsidiary, through New Achiever. Samfine HK was incorporated in Hong Kong and is subject to Hong Kong profit tax at a rate of 16.5%. From year of assessment of 2019/2020 onwards, Hong Kong profits tax rates are 8.25% on assessable profits up to HK$2,000,000, and 16.5% on any part of assessable profits over HK$2,000,000. Under Hong Kong tax law, Samfine HK is exempted from income tax on its foreign-derived income and there is no withholding tax in Hong Kong on remittance of dividends.

People’s Republic of China

Samfine SZ and Samfine SZ Technology are subject to enterprise income tax on their worldwide taxable income as determined under PRC tax laws and accounting standards at a rate of 25%. Samfine SZ and Samfine SZ Technology are governed by the income tax laws of the PRC and the income tax provision in respect to operations in the PRC is calculated at the applicable tax rates on the taxable income for the periods based on existing legislation, interpretations and practices in respect thereof. Under the Enterprise Income Tax Laws of the PRC (the “EIT Laws”), domestic enterprises and Foreign Investment Enterprises (the “FIE”) are usually subject to a unified 25% enterprise income tax rate while preferential tax rates, tax holidays and even tax exemption may be granted on case-by-case basis. During the year ended December 31, 2021, Samfine SZ officially obtained a preferential tax concession for being a high and new enterprise which entitled Samfine SZ to subject to 15% PRC EIT for the coming three years.

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.”

Selling and marketing expenses

For the years ended December 31, 2022 and 2021, our selling and marketing expenses consisted of staff costs, transportation costs, customs expense and other miscellaneous expenses. The following table sets forth a breakdown of our selling and marketing expenses for the years ended December 31, 2022 and 2021:

Our selling and marketing expenses decreased by 13.0% to HK$9,506,947 (US$1,218,605) for the year ended December 31, 2022 from HK$10,922,868 for the year ended December 31, 2021, primarily due to a decrease in transportation costs and customs expense, offset by the increase in staff costs.

Staff costs

Our staff costs increased by 50.7% to HK$5,575,007 (US$714,607) for the year ended December 31, 2022 from HK$3,698,915 for the year ended December 31, 2021 mainly due to a one-off sales commission of approximately HK$1.5 million for the order placed from a new customer for the sales of novelty products during the year.

Transportation costs

Our transportation costs decreased by 50.4% to HK$2,638,816 (US$338,245) for the year ended December 31, 2022 from HK$5,315,090 for the year ended December 31, 2021 as ocean freight rates decreased during the year ended December 31, 2022 after the surge in COVID-19 period in 2021.

Customs expense

Our customs expense decreased by 45.8% to HK$826,887 (US$105,991) for the year ended December 31, 2022 from HK$1,524,951 for the year ended December 31, 2021 which was in line with the decrease in revenue.

Others

Our other selling and marketing expenses mainly consisted of rental expenses, advertising expenses and other miscellaneous expenses, and remained relatively stable at HK$383,912 and HK$466,237 (US$59,762) for the year ended 31 December, 2021 and 2022, respectively.

General and administrative expenses

For the years ended December 31, 2022 and 2021, our general and administrative expenses consisted of staff costs, rental and office expense, allowance for doubtful debts, write-down of inventories, depreciation, legal and professional fee and other miscellaneous expenses. The following table sets forth a breakdown of our general and administrative expenses for the years ended December 31, 2022 and 2021:

Our general and administrative expenses increased by 53.1% to HK$17,134,492 (US$2,196,307) for the year ended December 31, 2022 from HK$11,194,531 for the year ended December 31, 2021, principally due to the increase in legal and professional fee and rental, office expense and research and development costs.

Staff costs

Our staff costs remained relatively stable at HK$5,218,935 and HK$5,392,654 (US$691,233) for the year ended December 31, 2021 and 2022, respectively.

Rental and office expenses

Our rental and office expenses mainly represented rental expenses for Hong Kong office, warehouses in Shenzhen and Shenzhen Factory and other office expenses. Our rental and office expenses increased by 33.2% to HK$4,171,198 (US$534,666) for the year ended December 31, 2022 from HK$3,131,226 for the year ended December 31, 2021, principally due to the rental discount received for our warehouses in Shenzhen during the year ended December 31, 2021.

Allowance for doubtful debts

In establishing the required allowance for doubtful accounts, management considers historical collection experience, aging of the receivables, the economic environment, industry trend analysis, and the credit history and financial conditions of the customers. Management reviews its receivables on a regular basis to determine if the bad debt allowance is adequate and adjusts the allowance when necessary. In this connection, we established a provision for doubtful accounts when there is objective evidence that we may not be able to collect amounts due.

For details of the allowance for doubtful debts, please refer to the section headed ‘‘Provision for doubtful accounts’’ in this prospectus.

Legal and professional fee

Our legal and professional fee increased by 674.1% to HK$3,337,372 (US$427,786) for the year ended December 31, 2022 from HK$431,131 for the year ended December 31, 2021 mainly due to the audit fee and other professional fees in relation to our proposed listing.

Research and development

Our research and development fee principally represented the expenses on research and development on the new technologies. The research and development fee increased by 829.7% to HK$709,448 (US$90,937) as we increased the research and development initiatives with a view to increase our productivity as well as to save costs. During the year ended December 31, 2021, Samfine SZ obtained a preferential tax concession for being a high and new enterprise and Samfine SZ was entitled to enjoy a preferential tax rate of 15% for the coming three years since 2021 as a result of its research and development.

Others

Our other general and administrative expenses mainly consisted of entertainment expense, low value consumables, motor vehicle expense, bank charges and other miscellaneous expenses which remained relatively stable at HK$2,073,919 and HK$2,388,178 (US$306,118) for the year ended December 31, 2021 and 2022, respectively.

Interest expense

Our interest expense represented interest expenses for our bank and other borrowings and finance lease liabilities, which remained relatively stable at HK$1,671,181 and HK$1,693,012 (US$217,011) for the year ended December 31, 2021 and 2022, respectively.

Hong Kong current profit tax arose from the operation of Samfine HK in Hong Kong and its applicable tax rate is 16.5%. From year of assessment of 2019/2020 onwards, Hong Kong profits tax rates are 8.25% on assessable profits up to HK$2,000,000, and 16.5% on any part of assessable profits over HK$2,000,000.

PRC current profit tax arose from the operation of Samfine SZ in Shenzhen, PRC and it is calculated at the applicable tax rates on the taxable income for the periods based on existing legislation, interpretations and practices in respect thereof. Under the Enterprise Income Tax Laws of the PRC (the “EIT Laws”), domestic enterprises and Foreign Investment Enterprises (the “FIE”) are usually subject to a unified 25% enterprise income tax rate while preferential tax rates, tax holidays and even tax exemption may be granted on case- by-case basis. During the year ended December 31, 2021, Samfine SZ applied and officially obtained a preferential tax concession for being a high and new enterprise whereby Samfine SZ was entitled to enjoy a preferential tax rate of 15% for the coming three years since 2021. During the year ended December 31, 2022, according to a notice jointly released by the Ministry of Finance and two other government departments, high and new enterprise entitled to the pre-tax deduction of 75% for research and development expenses.

Our overall effective tax rate decreased by 11.9 percentage points to 0% for the year ended December 31, 2022 from 11.9% for the year ended December 31, 2021. The decrease in effective tax rate for the year ended December 31, 2022 was mainly because the research and development costs incurred by Samfine SZ in 2022 were tax deductible under the high and new enterprise tax scheme and there was tax loss brought forward to offset the assessable profit generated by Samfine HK.

Net income

Our net income increased by 30.0% to HK$3,651,536 (US$468,057) for the year ended December 31, 2022 as compared to HK$2,808,811 for the year ended December 31, 2021. The increase in net income was predominantly due to a combined effect of increase in gross profit and increase in other income received during the year ended December 31, 2022.

Six months ended June 30, 2022 compared to six months ended June 30, 2023

The following table sets forth a summary of the consolidated results of operations of us for the periods indicated, both in absolute amount and as a percentage of its total revenues.

Revenue

For the six months ended June 30, 2023 and 2022, we generated our revenue through two revenue streams: sales of printed book products and sales of novelty products.

The following table presented our revenue disaggregated by service lines for the six months ended June 30, 2023 and 2022:

Our revenue decreased by 24.4% to HK$50,800,321 (US$6,482,692) for the six months ended June 30, 2023 from HK$67,153,982 for the six months ended June 30, 2022. The overall decrease in revenue was mainly driven by the decrease in sales of printed book products, which was partially offset by the increase in sales of novelty products. The decrease in sales of printed book products was mainly due to the decrease in demand of printed book products.

Gross profit and gross profit margin

Our overall gross profit decreased by 19.0% to HK$10,344,571 (US$1,320,083) for the six months ended June 30, 2023 from HK$12,776,396 for the six months ended June 30, 2022. The decrease was in correspondence to the decrease in our sales.

Our overall gross profit margin remained relatively stable at 19.0% and 20.4% for the six months ended June 30, 2022 and 2023, respectively.

Selling and marketing expenses

For the six months ended June 30, 2023 and 2022, our selling and marketing expenses consisted of staff costs, transportation costs, customs expense and other miscellaneous expenses. The following table sets forth a breakdown of our selling and marketing expenses for the six months ended June 30, 2023 and 2022:

Our selling and marketing expenses remained relatively stable at HK$4,139,035 and HK$3,982,211 (US$508,175) for the six months ended June 30, 2022 and 2023, respectively.

Prepayments and other current assets, net

The following table sets forth a breakdown of our prepayments and other current assets as of the dates indicated:

Our prepayments and other current assets, net increased by 43.7% to HK$7,534,453 (US$965,770) as of December 31, 2022 from HK$5,243,870 as of December 31, 2021. The increase was principally due to increase in deferred IPO costs of HK$5,704,624 (US$731,221) in relation to our proposed listing which was offset by the decrease in payments to suppliers by 88.9% to HK$315,472 (US$40,437) as of December 31, 2022 from HK$2,839,734 as we reduced prepayments to suppliers with a view to strengthen our liquidity.

Our prepayments and other current assets, net remained relatively stable at HK$7,534,453 and HK$7,453,262 (US$951,120) as of December 31, 2022 and June 30, 2023, respectively.

Investment in life insurance policy, net

Our investment in life insurance policy, net amounted to HK$1,569,303 (US$200,261) as of June 30, 2023. Mr. Cheng is the key management person insured under the contracted life insurance policies to insure against the death of the key member of management of the Company. For details of the investment in life insurance policy, net, please refer to Note 7 of the section headed “Index to consolidated financial statements — Notes to the Unaudited Interim Condensed Consolidated Financial Statements” in this prospectus.

Inventories, net

The following table sets forth a breakdown of our inventories, net as of the dates indicated:

Our inventories consisted of raw materials, work-in-progress and finished goods. Our inventories decreased by 66.5% to HK$5,705,688 (US$731,359) as of December 31, 2022 from HK$17,023,804 as of December 31, 2021. The decrease was primarily due to the sales order we received close to the year end of 2022 fall as a result of the Chinese New Year was in January 2023.

Our inventories increased by 22.0% to HK$6,958,871 (US$888,030) as of June 30, 2023 from HK$5,705,688 as of December 31, 2022 which was because our products were not yet delivered to customers as of June 30, 2023.

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 June 30, 2023 and the year ended December 31, 2022 and 2021, our obsolete and slow-moving inventories amounted to nil, nil and HK$87,612, respectively.

Accounts and bills payable

Our accounts and bills payable mainly related to the purchase of raw materials from our suppliers. Our suppliers usually grant us a credit period between 60 and 90 days.

Our accounts and bills payable decreased by 41.3% to HK$41,167,181 (US$5,276,829) as of December 31, 2022 from HK$70,094,209 as of December 31, 2021, mainly due to decrease in purchase of raw materials close to the end of 2022.

Our accounts and bills payable decreased by 25.9% to HKD30,500,580 (US$3,892,217) as of June 30, 2023 from HK$41,167,181 as of December 31, 2022, which was mainly due to the decrease in purchase of materials.

Accruals and other payables

The following table sets forth a breakdown of our accruals and other payables as of the dates indicated:

Our accruals and other payables decreased by 35.6% to HK$3,796,331 (US$486,615) as of December 31, 2022 from HK$5,893,635 as of December 31, 2021 principally due to decrease in payroll payable in relation to the decrease in year end sales commission payable to our sales staff as the decrease in overall sales during the year. The effect of decrease in payroll payable was offset by the increase in contract liabilities as we requested our customers to advance deposits to safeguard the production of their orders.

Our accruals and other payables remained relatively stable at HK$3,796,331 and HK$3,923,521 (US$500,686) as of December 31, 2022 and June 30, 2023, respectively.

Due from/to related parties

The following table set forth the breakdown of our balances due from related parties as of the dates indicated:

The following table set forth the breakdown of our balance due to related party as of the dates indicated:

The amounts due from/to the related parties are unsecured, interest free with no specific repayment terms. The balance is of non-trade nature. During the year ended December 31, 2022, we further made advances for approximately HK$1.35 million (approximately US$173,000) to Jiamei Cultural and Creative (Shenzhen) Co., Ltd. We also received repayments of approximately HK$3.8 million (approximately US$490,000) from Mr. Cheng and approximately HK$2.6 million (approximately US$330,000) from Mrs. Cheng, respectively, during the year ended December 31, 2022.

During the six months ended June 30, 2023, we received repayment of approximately HK$5,561,393 (approximately US$709,696) and approximately HK$453,070 (approximately US$57,817) from Mrs. Cheng and Jiamei Cultural and Creative (Shenzhen) Co., Ltd, respectively.

Operating lease liabilities

Our operating lease liabilities mainly related to our rented premises for our plants and office. The current portion of our operating lease liabilities remained relatively stable at HK$4,152,917, HK$4,083,953 and HK$3,996,847 (US$510,043) as at December 31, 2021 and 2022 and June 30, 2023, respectively.

Finance lease obligations

Our finance lease obligations relate to two of our motor vehicles in Hong Kong and certain machineries in our Shenzhen factory. The current portion of our finance lease obligations decreased by 42.7% to HK$655,176 (US$83,981) as of December 31, 2022 from HK$1,143,146 as of December 31, 2021, due to lapse of a finance lease contract for one motor vehicle in Hong Kong during the year and no renewal afterwards.

The current portion of our finance lease obligations decreased by 41.2% to HK$385,113 (US$49,145) as of June 30, 2023 from HK$655,176 as of December 31, 2022, due to instalment payments made during the six months ended June 30, 2023.

Tax payable

Our tax payable related to our HK profit tax and PRC EIT payable, which decreased to nil as of December 31, 2022 from HK$2,275,426 as of December 31, 2021 since payment was made in the current year and no provision for tax expenses was made during the year ended December 31, 2022. Therefore, no tax payable as of December 31, 2022.

Our tax payable as of June 30, 2023 was nil as no assessable profit was recorded.

Cash Flows

The following table sets forth a summary of our cash flows information for the years 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 settlements of manufacturing activities, staff costs and other operating expenses.

For the year ended December 31, 2021, we had net cash generated from operating activities of HK$6,131,071 (US$786,076) mainly arising from net income from our operation of HK$2,808,811 (US$360,123), as adjusted for non-cash items and changes in operating assets and liabilities. Adjustments for non-cash items consisted of (i) depreciation of plant and equipment of HK$3,891,705 (US$498,962); (ii) amortization of intangible assets of HK$396,033 (US$50,776); (iii) allowance for doubtful debts of HK$120,543 (US$15,455); (iv) write-down of inventories of HK$87,612 (US$11,233); and (v) loss on disposal of plant and equipment of HK$155,832 (US$19,979). Changes in operating assets and liabilities mainly include (i) increase in accounts receivable of HK$20,308,648 (US$2,603,806) due to increase in our revenue during the year; (ii) increase in inventories of HK$2,788,082 (US$357,465) as our production volume increased as a result of economy restoration and in the last quarter of 2021 we received certain orders from one of our customers to cope with the spring break needs; (iii) increase in prepayments and other current assets of HK$558,226 (US$71,571) mainly due to our increased prepayments to our suppliers as part of our strategies to secure raw material sources at competitive price; and (iv) decrease in tax payable of HK$292,784 (US$37,538); partially offset by (i) increase in accounts payable of HK$21,967,619 (US$2,816,506) mainly due to a larger demand for material purchase for production purpose upon recovery of economy and maintaining a relative stable material costs for production; and (ii) increase in accruals and other payables of HK$670,546 (US$85,972) due to our increased payroll payable as a result of the increase of headcount to cope with our business recovery and expected expansion.

For the year ended December 31, 2022, we had net cash generated from operating activities of HK$19,919,384 (US$2,553,277) mainly arising from net income from our operation of HK$3,651,536 (US$468,057), as adjusted for non-cash items and changes in operating assets and liabilities. Adjustments for non-cash items consisted of (i) depreciation of plant and equipment of HK$4,055,344 (US$519,816); (ii) amortization of intangible assets of HK$350,309 (US$44,903); (iii) allowance for doubtful debts of HK$878,966 (US$112,666); and (iv) loss on disposal of plant and equipment of HK$486,029 (US$62,299). Changes in operating assets and liabilities mainly include (i) decrease in accounts receivable of HK$34,698,771 (US$4,447,705) due to increase in settlement received from our customers; and (ii) decrease in inventories of HK$11,318,116 (US$ 1,450,762) primarily due to the sales order we received close to the year end of 2022 fall as a result of the Chinese New Year was in January 2023; partially offset by (i) decrease in accounts payable of HK$28,856,374 (US$3,698,824) mainly due to decrease in purchase of raw materials close to the end of 2022; (ii) increase in prepayments and other current assets of HK$2,290,583 (US$293,608) mainly due to increase of deferred IPO costs in relation to our proposed listing; (iii) decrease in accruals and other payables of HK$2,097,304 (US$268,833) mainly due to decrease in payroll payable; and (iv) decrease in tax payable of HK$2,275,426 (US$291,665).

For the six months ended June 30, 2023, we had net cash used in operating activities of HK$20,756,206 (US$2,648,724) mainly arising from net loss from our operation of HK$3,797,489 (US$484,602), as adjusted for non-cash items and changes in operating assets and liabilities. Adjustments for non-cash items consisted of (i) depreciation of plant and equipment of HK$1,582,421 (US$201,935); (ii) amortization of intangible assets of HK$35,010 (US$4,468); (iii) gain on disposal of plant and equipment of HK$16,731 (US$2,135) and (iv) allowance for expected credit loss of HK$618,106 (US$78,877). Changes in operating assets and liabilities mainly include (i) increase in accounts receivable of HK$7,692,006 (US$981,586) due to delay in settlement from our customers; (ii) increase in inventories of HK$1,253,183 (US$159,920) which was because our products were not yet delivered to customers as of June 30, 2023; and (iii) decrease in accounts payable of HKD10,440,715 (US$1,332,353) mainly due to the decrease in purchase of materials.

Net cash used in investing activities

For the year ended December 31, 2021, net cash used in investing activities was HK$1,612,106 (US$183,308) which related to the purchase of plant and equipment and computer software of HK$3,944,891 (US$505,781); partially offset by the proceed from disposal of plant and equipment of HK$2,332,785 (US$299,090).

For the year ended December 31, 2022, net cash used in investing activities was HK$3,052,437 (US$391,263) which related to the purchase of plant and equipment and computer software of HK$3,407,072 (US$436,720); partially offset by the proceed from disposal of plant and equipment of HK$354,635 (US$45,457).