Revenue Performance - Total revenue for the year ended December 31, 2023, was $17,252,662, representing a 29.9% increase from $13,272,075 in 2022[283]. - Total revenue increased by $3,980,587, or 30.0%, from $13,272,075 in 2022 to $17,252,662 in 2023, driven primarily by revenue growth in PRC Stores[469]. - Revenue from China increased by $4,822,949, or 50.8%, from $9,491,208 in 2022 to $14,314,157 in 2023, primarily driven by bakery products[3]. - Revenue from bakery products in China rose by $3,826,909, or 44.0%, from $8,705,218 in 2022 to $12,532,127 in 2023, as business operations fully recovered from the COVID-19 pandemic[3]. - Revenue from other products in China increased by $996,040, or 126.7%, from $785,990 in 2022 to $1,782,030 in 2023, due to higher sales of seasonal and beverage products[3]. - Revenue from the United States decreased by $842,362, or 22.3%, from $3,780,867 in 2022 to $2,938,505 in 2023, mainly due to competition and store closures[6]. - Revenue from U.S. bakery products fell by $167,861, or 27.4%, from $612,819 in 2022 to $444,958 in 2023, impacted by increased competition[6]. - Revenue from U.S. beverage products decreased by $346,696, or 16.9%, from $2,047,670 in 2022 to $1,700,974 in 2023, affected by new product launches from competitors[6]. - Revenue from U.S. eat-in services declined by $327,805, or 29.3%, from $1,120,378 in 2022 to $792,573 in 2023, primarily due to the closure of Chanson Greenwich[6]. - The PRC Stores accounted for 82.9% of total revenue in 2023, while the U.S. Stores contributed 17.1%[283]. Product Offerings - The PRC Stores had over 707 types of bakery and seasonal products available, including 145 new products introduced in 2023[283]. - The U.S. Stores offered 108 types of eat-in menu items and bakery products, with 20 new products launched in 2023[283]. - Revenue from bakery products constituted 87.6% of the PRC Stores' revenue in 2023, while seasonal products and beverage products accounted for 9.1% and 3.3%, respectively[284]. - The U.S. Stores generated 27.0% of their revenue from eat-in services in 2023, with beverage products making up 57.9%[285]. - The PRC Stores currently offer over 707 types of bakery products and more than 40 types of beverage products, with bestselling items including little puffs, chocolate cakes, and Americano[303]. Market Expansion and Strategy - The company plans to expand into new markets by opening new stores and enhancing its presence in Xinjiang and New York City[298]. - The company aims to improve in-store customer experience through renovations and standardized employee training[299]. - The company intends to increase brand awareness through marketing efforts, social media presence, and e-commerce sales[301]. - The partnership with Aranka Media Enterprise since 2019 aims to improve brand growth and customer relationships through enhanced media strategy[344]. Customer Engagement and Membership - The PRC Stores had approximately 582,000 members as of December 31, 2023, with sales to members accounting for 51.47% of total sales[312]. - The PRC Stores offer a member day discount of 12% off original prices each week to stimulate sales[341]. - The PRC Stores and U.S. Stores conduct periodic customer satisfaction surveys to gather insights on product quality and customer needs[335]. Financial Performance - Gross profit for 2023 was $8,147,325, up from $6,102,671 in 2022, reflecting improved sales performance[468]. - Total operating expenses rose to $8,757,826 in 2023, compared to $7,540,696 in 2022, primarily due to increased selling and administrative expenses[468]. - The company reported a net income of $33,588 in 2023, a significant improvement from a net loss of $1,288,205 in 2022[468]. - Operating income for 2023 was a loss of $610,501, an improvement from a loss of $1,438,025 in 2022, indicating better expense management[468]. - SG&A expenses are expected to continue increasing as the company invests in new store openings, product launches, and market penetration efforts[465]. Supply Chain and Production - The PRC Stores contract third-party producers for seasonal products, with production based on previous sales records and capacity[305]. - Top suppliers of the PRC Stores in 2023 included Urumqi Yuxin Jiayuan Commerce and Trade Co., Ltd., which constituted 11.93% of total raw materials[329]. - Top suppliers for U.S. Stores in 2023 included Baldor Specialty Foods (28%), Southern Glazers of NY Metro (12%), and The Chefs' Warehouse (13%) of total raw materials[331]. - The central factory has an annual production capacity worth RMB150 million (approximately $21 million) on a raw cost basis[346]. - The investment budget for the central factory is approximately RMB17.8 million (approximately $2.5 million), with RMB14.7 million (approximately $2.1 million) already spent as of December 31, 2023[346]. Employee Management - The PRC Stores and U.S. Stores have a total of 410 employees as of December 31, 2023, with 356 in the PRC and 54 in the U.S.[366]. - The PRC Stores maintain an in-house R&D team of six employees, focusing on product quality and customer trends[354]. - The PRC Stores and U.S. Stores expect to invest resources to retain more qualified employees in their R&D team[354]. - The company has not fully deposited social insurance fees for all employees as required by relevant regulations[442]. - The company has not yet paid housing funds for all employees, which is mandated to be at least 5% of the monthly average salary[443]. Regulatory Compliance - The U.S. Stores are subject to extensive federal, state, and local government regulations, which could impact operations if licenses are not obtained or retained[444]. - The U.S. Stores must comply with zoning, land use, and environmental regulations, which could delay construction and increase development costs[446]. - The U.S. Stores are required to comply with the U.S. Fair Labor Standards Act, which could increase labor costs due to minimum wage changes[448]. - Environmental laws may impose significant fines and liabilities for non-compliance, potentially affecting the business and financial condition of the U.S. Stores[450]. Legal and Taxation - An income tax rate of 10% applies to dividends declared to non-PRC resident investors, which may be reduced to 5% under certain conditions[438]. - Xinjiang United Family and its branch offices currently pay VAT at a rate of 13% for manufacturing and selling bakery products, down from 16% prior to April 2019[433]. - Three of the UFG Entities are paying VAT at a reduced rate of 1%, while the rest are exempt from VAT[433]. - The urban maintenance and construction tax is levied at a rate of 7%, educational surcharges at 3%, and local education surcharges at 2% for Xinjiang United Family and its branch offices[437].

Financial Performance - Total revenue for the six months ended June 30, 2023, was $8,811,287, an increase of 3.1% compared to $8,543,803 in the same period of 2022[8] - Gross profit for the same period was $4,332,571, up from $4,147,088, reflecting a gross margin improvement[8] - Net income for the six months ended June 30, 2023, was $284,760, compared to $220,793 in 2022, representing a 29% increase[8] - For the six months ended June 30, 2023, net revenue was $4,562,762, an increase of 21.4% compared to $3,754,826 for the same period in 2022[34] - Net income for the six months ended June 30, 2023, was $1,213,299, up 26.5% from $959,198 in the prior year[34] - The company reported a total comprehensive loss of $21,107 for the six months ended June 30, 2023, compared to a loss of $38,445 in 2022, showing an improvement[8] - The company expects revenue and net income to increase significantly in the second half of fiscal year 2023 compared to the same period last year[82] Assets and Liabilities - Total assets increased to $36,553,766 as of June 30, 2023, from $27,329,186 as of December 31, 2022, marking a growth of 33.8%[4] - Total liabilities decreased to $24,426,976 as of June 30, 2023, from $26,152,137 as of December 31, 2022, a reduction of 6.6%[4] - Shareholders' equity increased significantly to $12,126,790 as of June 30, 2023, from $1,177,049 as of December 31, 2022, reflecting a growth of 935%[4] - Total assets as of June 30, 2023, were $11,523,084, compared to $11,202,614 as of December 31, 2022, reflecting a growth of 2.9%[33] - Current liabilities increased to $6,173,116 as of June 30, 2023, from $5,858,647 at the end of 2022, representing a rise of 5.3%[33] - Total liabilities as of June 30, 2023, were $7,562,033, an increase from $7,307,391 as of December 31, 2022, indicating a growth of 3.5%[33] Cash Flow and Investments - Cash flows from operating activities provided $610,154, compared to a cash outflow of $(359,946) in the prior year, indicating a significant improvement[19] - Cash and cash equivalents decreased to $1,471,984 as of June 30, 2023, from $2,915,470 as of December 31, 2022, a decline of 49.6%[4] - The company reported cash provided by operating activities of $0.6 million for the six months ended June 30, 2023, compared to cash used in operating activities of $0.4 million for the same period last year[81] - The company incurred a net cash used in investing activities of $(11,252,022), primarily due to payments for long-term debt investment of $(6,000,000) and advances of loans to third parties of $(3,900,000)[19] - The company recorded interest income of $21,452 for the six months ended June 30, 2023, from the loan to the third party[93] - The company incurred an investment income of $171,616 from a $6.0 million investment with Worthy Credit, yielding a 12% annual return[111] Shareholder Information - The Company closed its initial public offering on April 3, 2023, raising funds by selling 3,390,000 Class A ordinary shares at $4.00 each[35] - As of June 30, 2023, the company had 12,390,000 shares issued and outstanding, an increase from 9,000,000 shares as of December 31, 2022, following the IPO[133] - The company has a negative working capital of approximately $5.4 million as of June 30, 2023, including deferred revenue of approximately $7.1 million[81] Revenue Recognition and Accounting Policies - The Company follows ASC 606 for revenue recognition, ensuring that revenue reflects the transfer of goods or services to customers as performance obligations are satisfied[52] - The Company recognized deferred revenue of $7,114,127 as of June 30, 2023, compared to $6,958,160 as of December 31, 2022, primarily from customer payments for membership cards and cash vouchers[57] - Revenue recognized from the opening deferred revenue for the six months ended June 30, 2023, was $3,945,400, compared to $3,899,040 for the same period in 2022[57] - Membership card breakage was immaterial for the six months ended June 30, 2023, and 2022, indicating low likelihood of redemption for inactive cards[55] Operational Developments - The company has established a bakery chain in Xinjiang, consisting of five directly-owned stores and 34 individually-owned businesses[23] - Xinjiang United Family has entered into contractual arrangements with 22 UFG entities, gaining exclusive rights to provide consulting services and absorb business risks[26] - The company has undertaken a reorganization in connection with its initial public offering, establishing a new legal structure to enhance operational efficiency[25] - The company opened three stores in PRC and two stores in the U.S. in 2023, with plans to open another ten stores in PRC later in fiscal year 2023[82] Tax and Regulatory Matters - The Company has not incurred any penalties or interest related to income taxes during the six months ended June 30, 2023, and 2022[66] - The company has a 100% valuation allowance for its deferred tax assets due to uncertainty regarding future earnings in U.S. operations[123] - The company expects tax rates for its UFG entities to potentially increase in future assessments based on past performance[118] Miscellaneous - The company incurred total operating lease expenses of $1,734,513 for the six months ended June 30, 2023, compared to $1,524,429 for the same period in 2022[100] - The company recorded an interest expense of $8,364 for a short-term bank loan of RMB3.0 million ($413,474) for the six months ended June 30, 2023[113] - The cumulative net operating loss (NOL) for U.S. operations increased to $13,088,033 as of June 30, 2023, with an additional NOL of $1,180,111 incurred during the six months[122] - The company incurred lease concessions due to COVID-19 amounting to $1,078,753, with $9,783 received during the six months ended June 30, 2023[46] - The company did not provide any financial support to the UFG entities for the six months ended June 30, 2023 and 2022[32] - The company did not experience any impairments of long-lived assets as of June 30, 2023, and December 31, 2022[51] - The company’s operations are influenced by political, economic, and legal environments in both the PRC and the United States, which may affect financial results[73]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 20-F ☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of ...

Revenue Performance - Total revenue decreased by 9.7% to $13.3 million in fiscal year 2022, down from $14.7 million in fiscal year 2021[3] - Revenue from China stores decreased by 25.8% to $9.5 million in fiscal year 2022, compared to $12.8 million in fiscal year 2021[4] - Revenue from United States stores increased by 99.6% to $3.8 million in fiscal year 2022, up from $1.9 million in fiscal year 2021[6] - Revenue for 2022 was $13,272,075, a decrease of 9.1% from $14,690,295 in 2021[20] Profitability - Net loss for fiscal year 2022 was $1.3 million, compared to net income of $0.5 million in fiscal year 2021[11] - Gross profit decreased by 11.9% to $6.1 million in fiscal year 2022, with a gross margin of 46.0%[8] - Gross profit for 2022 was $6,102,671, down from $6,930,423 in 2021, reflecting a gross margin of 45.9%[20] - Total comprehensive loss for 2022 was $(1,657,910), compared to a comprehensive income of $595,721 in 2021[20] Expenses - Operating expenses were $7.5 million in fiscal year 2022, slightly up from $7.4 million in fiscal year 2021[9] - Total operating expenses increased to $7,540,696 in 2022, up from $7,375,307 in 2021, primarily due to higher selling and administrative expenses[20] Cash Flow - Cash as of December 31, 2022, was $2.9 million, down from $3.9 million as of December 31, 2021[11] - Cash provided by operating activities was $551,348 in 2022, a significant decrease from $1,778,246 in 2021[23] - Cash used in investing activities was $(860,034) in 2022, compared to $(2,030,921) in 2021, indicating reduced capital expenditures[23] - Cash provided by financing activities was $9,929 in 2022, a recovery from $(178,240) in 2021[23] - Cash and cash equivalents at the end of 2022 were $2,915,470, down from $3,896,812 at the end of 2021[23] Shareholder Information - Basic and diluted loss per share in fiscal year 2022 was $0.14, compared to earnings per share of $0.06 in fiscal year 2021[11] - Earnings per share for 2022 was $(0.14), down from $0.06 in 2021[20] - The company completed its initial public offering of 3,390,000 Class A ordinary shares at a price of $4.00 per share on April 3, 2023[12] Future Plans - The company plans to expand its product selection and open more stores across the United States to enhance brand awareness and shareholder value[2]