F-1/A: Softto, Inc. Files Amended IPO Prospectus Amidst Revenue Decline and Going Concern Warning

Sentiment:

Initial Public Offering Amendment 2 July 2025 12:26 PM

Softto, Inc., a Cayman Islands holding company operating personal care and beauty product businesses in China, filed an amended F-1 registration statement for its initial public offering on the OTCQX Market, reporting a significant revenue decrease and continued net losses for 2024, alongside a substantial doubt about its ability to continue as a going concern.

Delay expectedThe arbitration hearing for the RMB 50 million loan from Bank of China was originally scheduled for April 25, 2025, but was suspended due to an application for confirmation of arbitration validity. Although the application was rejected on May 19, 2025, the hearing was re-scheduled to June 25, 2025, indicating a delay in the resolution of this significant legal proceeding.

Capital raiseThe company is undertaking an initial public offering of Ordinary Shares on a firm commitment basis, with an expected price of $5 per Ordinary Share.The company has granted the underwriter a 45-day option to purchase up to an additional 15% of the total number of ordinary shares to cover any over-allotments.The company expects to receive net proceeds from this offering of between $[ ] and $[ ] (amounts to be filled in final prospectus) after deducting underwriting discounts and estimated offering expenses.Approximately 70% of the net proceeds will be remitted to China to fund the registered capital of the WFOE or as inter-company loans to PRC subsidiaries.The company plans to use approximately 30% of net proceeds for business operations and general corporate purposes, 30% for potential strategic investments and acquisitions, 20% for product development and R&D, and 20% for expansion of the online store network.The company's management explicitly states that equity financing is one of the measures to alleviate the going concern risk.

Worse than expectedRevenues decreased significantly by 31.5% year-over-year, indicating a substantial decline in sales performance.The company continues to incur net losses, with an accumulated deficit of over $7 million, raising concerns about long-term profitability.The auditor has expressed 'substantial doubt' about the company's ability to continue as a going concern, highlighting severe liquidity and financial health issues.Cash and cash equivalents decreased significantly from $1.8 million in 2023 to $0.68 million in 2024, further exacerbating liquidity concerns.A major loan of RMB 50 million (approximately $6.85 million) is overdue and subject to arbitration, with potential for significant interest and penalties, adding to financial strain.

Summary

Softto, Inc. is a Cayman Islands holding company that conducts its business primarily through operating subsidiaries in China, focusing on personal care and beauty products including cleansing, skincare, shampoo, and oral care.
The company's product brands include Softto, Softto Oriental Herbs, i-softto, Dakeshu, Qingyuan, and Welltop, sold in 238 cities across China through offline wholesale and online retail channels.
Revenues for the fiscal year ended December 31, 2024, were approximately $10.2 million, a 31.5% decrease from $15.0 million in 2023.
Net loss for 2024 was approximately $1.7 million, an improvement from a net loss of $2.3 million in 2023.
Gross profit decreased by 22.5% from $3.9 million in 2023 to $3.0 million in 2024, but gross profit margin increased from 25.8% to 29.1%.
The company relies on third-party OEM manufacturers for its products, with Guangzhou Tianwen Jiaoyan Cosmetics Co., Ltd. (a related party) accounting for 79.4% of total purchases in 2024 and 96.6% in 2023.
The company's auditor has expressed substantial doubt about its ability to continue as a going concern due to recurring losses and a net capital deficiency.
Softto plans to raise capital through this initial public offering, with an estimated price range of $4 to $6 per Ordinary Share.
The company intends to use the net proceeds for business operations (30%), potential strategic investments and acquisitions (30%), product development and R&D (20%), and expansion of online store network (20%).
As of December 31, 2024, the company had 42 employees, down from 55 in 2023.
The company is involved in several legal disputes, including a significant financial loan contract arbitration for RMB 50 million (approximately $6.85 million) where the bank is seeking immediate repayment and enforcement of guarantees.
The Alliance Agreement with large distributors, which accounted for approximately 34.4% of total sales in 2023, was not renewed at the end of 2024, with the company now signing separate agreements to increase margins.
The company's auditor, Simon & Edward, LLP, is headquartered in the U.S. and is subject to PCAOB inspections, which currently mitigates risks related to the HFCA Act.

Sentiment

Score: 3

Explanation: The sentiment is predominantly negative due to significant revenue decline, persistent net losses, and an explicit 'going concern' warning from the auditor. While there are positives like improved gross margin and reduced operating expenses, these are overshadowed by severe liquidity issues, a major overdue loan, and high concentration risks with suppliers and customers. The IPO itself is a positive step for capital, but the underlying financial health and operational challenges present a high degree of risk.

Positives

Net loss decreased by approximately $0.6 million, or 26.2%, from $2.3 million in 2023 to $1.7 million in 2024.
Gross profit margin increased from 25.8% in 2023 to 29.1% in 2024, indicating improved profitability per unit sold despite lower overall sales.
Operating expenses decreased by 28.7% from $5.6 million in 2023 to $4.0 million in 2024, driven by reduced selling and marketing, general and administrative, and shipping and handling costs.
The company has a comprehensive omni-channel sales and marketing management system, covering online and offline channels across China.
Softto has a strong R&D capability with a team of 9 people averaging 10 years of experience, holding 7 design patents and 1 invention patent in China.
The company's products are economically priced and competitive, appealing to price-sensitive consumers.
Implementation of the Amoeba management system and an ERP system has enhanced operational efficiency, reduced communication and labor costs, and improved inventory monitoring.
The company has a professional and experienced management team with deep industry knowledge.
A strict quality control system is in place for contract manufacturers, and new products undergo third-party quality inspections.
The company's auditor is headquartered in the U.S. and subject to PCAOB inspections, currently mitigating risks under the Holding Foreign Companies Accountable Act.

Negatives

Revenues decreased significantly by approximately $4.8 million or 31.5% from $15.0 million in 2023 to $10.2 million in 2024.
The company incurred net losses of $1.7 million in 2024 and $2.3 million in 2023, and has an accumulated deficit of approximately $7.5 million as of December 31, 2024.
The auditor has expressed substantial doubt about the company's ability to continue as a going concern due to recurring losses and a net capital deficiency.
Online retail revenue decreased by approximately 58.5% due to an increasingly competitive online shopping environment and rising customer acquisition costs.
Offline wholesale business also experienced a slight decline of 12.3% due to the competitive environment.
The Alliance Agreement with large distributors, which accounted for 34.4% of total sales in 2023, was not renewed at the end of 2024, potentially impacting future sales volume.
The company relies heavily on a single major supplier (Guangzhou Tianwen Jiaoyan Cosmetics Co., Ltd.), which accounted for 79.4% of total purchases in 2024, posing a significant concentration risk.
The company decided to terminate its cooperation with its major supplier (Tianwen) and Qianlang starting January 2025, with the handling of a $9.4 million prepayment balance still under discussion.
A significant portion of accounts receivable (64.8% in 2024) is concentrated in one customer, posing a substantial risk if that customer is unable to pay.
The company does not carry business interruption insurance, product liability insurance, or any other business insurance policies, exposing it to uninsured losses.
The company is involved in a significant legal dispute over a RMB 50 million loan (approximately $6.85 million) with Bank of China, which is overdue and subject to arbitration, potentially leading to substantial interest and penalties.
The company's management team lacks public company experience, which could impair compliance with federal securities laws and reporting requirements.
The company's basic salary for certain employees may fail to meet local minimum salary standards, potentially leading to labor disputes or additional compensation costs.

Risks

The company is subject to risks related to public health crises such as the global pandemic associated with COVID-19, which can disrupt business operations and supply chains.
Uncertain economic or social conditions in China, including inflation, reduced market growth rates, and tighter credit markets, may adversely impact demand for products or cause financial hardship for customers and partners.
A significant change in customer relationships or demand for products, especially given customer concentration, could significantly impact the business.
Erosion of the company's or its brands' reputation due to product quality defects, recalls, litigation, negative social media, or other issues could materially impact financial results.
Reliance on third-party suppliers and contract manufacturers creates risks related to product quality, timely delivery, and effective management of these relationships.
Disruptions in the supply chain due to labor disputes, loss of key manufacturers, inability to procure raw materials, trade policy changes, natural disasters, or acts of war could adversely affect business.
Financial results and profitability are subject to prevailing prices and raw material costs, and inability to offset cost increases could decrease margins.
Increased scrutiny, criticism, and negative publicity involving U.S.-listed China-based companies could harm business operations, the offering, and reputation.
Growing competition in the beauty and personal care products market in China may adversely affect market share, sales, and earnings.
Sales of certain products are seasonal, causing fluctuations in operating results and working capital requirements.
The company may incur net losses in the future and may not be able to generate sufficient operating cash flows to continue as a going concern, requiring additional capital that may not be available.
Substantial debt may be incurred in the future, which could adversely affect financial condition and operations.
Interim results may fluctuate significantly and may not fully reflect underlying business performance.
Inability to effectively and cost-efficiently promote and maintain the brand could harm business and results of operations.
Strategic investments or acquisitions may require significant management attention, disrupt business, and adversely affect financial results.
Loss of senior management could severely disrupt business operations.
Competition for employees is intense, and inability to attract and retain qualified personnel could damage product quality and services.
Lack of business insurance coverage (except property and workers' compensation) exposes the company to uninsured losses.
Exposure to greater than anticipated tax liabilities due to complex tax structures and uncertain interpretations of tax laws in China.
Cybersecurity incidents could disrupt business operations, result in loss of critical information, and adversely impact reputation.
Product liability claims due to defective or inferior products, especially since products are manufactured by third parties, could damage reputation and financial condition.
Inability to prevent unauthorized use of intellectual property could harm business and competitive position.
Subject to intellectual property infringement claims, which may be expensive to defend and disrupt business.
Increased focus on environmental, social, and governance (ESG) matters may impose additional costs or expose the company to risks if compliance is not met.
Lack of requisite approvals, licenses, or permits applicable to the business may have a material adverse impact.
Changes in China's economic, political, or social conditions or government policies could have a material adverse effect on business and results of operations.
Reliance on dividends and other distributions from PRC subsidiaries to fund cash and financing requirements, which may be limited by PRC regulations.
PRC regulation of loans and direct investment by offshore holding companies may restrict or prevent the use of offering proceeds to fund PRC subsidiaries.
Changes in Chinese laws and regulations could result in a material negative impact on business operations, decrease share value, and limit legal protections.
The Chinese government exerts substantial influence over business conduct and may intervene at any time, potentially limiting ability to offer securities or causing value decline.
Difficulties in bringing actions against the company or its officers/directors in the U.S. or enforcing judgments due to incorporation in Cayman Islands and operations in PRC.
The Holding Foreign Companies Accountable Act (HFCA Act) and related regulations could lead to delisting of shares if the auditor is unable to meet PCAOB inspection requirements.
Regulatory bodies of the United States may be limited in their ability to conduct investigations or inspections of operations in China.
Uncertainty regarding PRC tax reporting obligations and consequences for certain indirect transfers of equity interests.
No public market for shares prior to this offering, and if an active trading market does not develop, resale may be difficult.
Broad discretion in the use of net proceeds from the offering, which may not be used effectively.
No cash dividends are expected in the foreseeable future.
Immediate and substantial dilution for new investors due to offering price being substantially higher than pro forma net tangible book value per share.
Volatility in share price may subject the company to securities litigation.
If a limited number of participants purchase a significant percentage of the offering, the effective public float may be smaller, leading to price volatility.
Classification as a passive foreign investment company (PFIC) could result in adverse U.S. federal income tax consequences for U.S. taxpayers.
The board of directors may refuse or delay the registration of share transfers in certain circumstances.
Increased costs as a public company, particularly after ceasing to qualify as an emerging growth company.
Obligation to develop and maintain proper and effective internal control over financial reporting, with potential for weaknesses or deficiencies.

Future Outlook

The company expects its revenue to maintain slight growth in the coming years, driven by functional products with patented formulas. It plans to increase R&D investment, expand its sales network through collaborations with celebrities and KOLs, participate in industry exhibitions, and integrate online explosive products into offline stores. The company also intends to strengthen partnerships with platforms like Meituan and explore collaborations with other community platforms. Additionally, it aims to enhance talent attraction and retention and actively seek strategic partnerships and acquisitions, including exploring the U.S. market, though no specific projects are currently in the pipeline.

Management Comments

"Our product and its quality speak for itself." (Company's product development philosophy)
"We keep up with the development and change of trends in personal care products industry in China and pursue constant improvements of our products."
"We develop and sell every type and model of our products with high standards to meet market and consumer demands, and to provide quality body skin care brand products for Chinese people."
"We expect to take full advantages of the brand recognition, combine diversified sales channels, make the best of marketing and new media, to make Softto brand a leader in the personal care products industry of China."
"In 2024, we address the concerns of young customers by focusing on functional hair care products, including herbal shampoos and anti-hair-loss shampoos, with anti-hair-loss shampoo as our main promoted product."
"By utilizing data insights gained through the online store sales data and popular trends analysis, we are able to develop new popular products more efficiently."
"We will strive to balance and expand the demand of the consumer base, while increasing sales through our offline business channels."
"We will make full use of resources including live broadcast platforms, such as Tiktok, Kuaishou, and other e-commerce platforms to create sales of explosive products in combination with popular customized products."
"We will also develop customized products for hotel and bathing center special channels, and layout and build new retail channels."
"We have been trying new ways to generate revenues during the year of 2024, such as investing in short video advertisements and collaborate with internet celebrities to promote customized products."
"Starting from the second half of 2023, we have encouraged distributors to pick up goods by themselves and refund logistics fees through replenishment, resulting in 1% decrease in the proportion of our logistics costs."
"Management believes that we have adequate resources to continue in operational existence for the foreseeable future." (Despite going concern warning)
"We plan to alleviate the going concern risk through (1) equity financing, (2) other available sources of financing (including debt) from PRC banks and other financial institutions, (3) increasing cash generated from business operations, and (4) collecting receivables and loans from related parties to meet its anticipated working capital requirements for at least the next 12 months."

Industry Context

The personal care market in China is highly competitive, historically dominated by overseas magnates like P&G and Unilever. However, recent trends, as highlighted by the 2023 McKinsey China Consumer Report, show increasing consumer preference for local brands due to perceived quality and innovation, not just lower prices or national pride. This 'Made in China' trend presents an opportunity for domestic players like Softto. Softto's market share in the PRC personal care market was 0.02% in 2022, significantly smaller than major domestic competitors like Jahwa (0.8%), Lafang (0.1%), Mingchen (0.08%), and Bawang (0.04%). The industry is characterized by rapid technological developments and changing consumer preferences, requiring continuous product innovation and adaptive marketing strategies.

Comparison to Industry Standards

Softto's market share of 0.02% in the PRC personal care market in 2022 is significantly lower than established domestic competitors such as Jahwa (0.8%), Lafang (0.1%), Mingchen (0.08%), and Bawang (0.04%). This indicates a much smaller scale of operations compared to leading local brands.
The company's reliance on third-party OEM manufacturers is a common practice in the industry, but its high concentration on a single related-party supplier (79.4% of purchases in 2024) is a notable deviation from best practices for supply chain diversification and risk management, especially given the decision to terminate this relationship.
The company's strategy of leveraging online platforms, celebrities, and KOLs aligns with broader industry trends in China's e-commerce and social commerce landscape, where digital marketing and influencer collaborations are crucial for brand visibility and sales.
The adoption of the Amoeba management system and ERP system for operational management indicates an effort to enhance efficiency and competitiveness, which is in line with modern corporate management practices to optimize supply chain and reduce costs.
The company's continued net losses and the auditor's 'going concern' warning suggest financial performance below industry profitability standards, particularly for a company seeking public listing.

Management Changes

Role	Previous Person	New Person	Effective Date	Reason
Chief Executive Officer and Chairman of the Board	NA	Yuhao Liang	January 14, 2025	Appointment as part of corporate restructuring and leadership formalization for IPO.
Chief Financial Officer	NA	Yue Chang	January 13, 2025	Appointment as part of corporate restructuring and leadership formalization for IPO.
Director	NA	Luhan Wang	January 13, 2025	Appointment as part of corporate restructuring and leadership formalization for IPO.
Independent Director Nominee	NA	Zhenyu Liu	Upon effectiveness of registration statement	Appointment to meet OTC Markets corporate governance rules for independent directors.
Independent Director Nominee	NA	Zixuan Xu	Upon effectiveness of registration statement	Appointment to meet OTC Markets corporate governance rules for independent directors.
Legal Representative of operating subsidiary	Mr. Min Wang	NA	April 2024	Resignation.
Legal Representative of operating subsidiary	Mrs. Si Hua Wang	NA	June 2024	Resignation.
General Manager of Softto Smart Brand Management Co., Ltd.	Deputy General Manager	Luhan Wang	September 2024	Promotion.

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Board Composition	The board of directors will consist of five directors, including two independent directors (Zhenyu Liu and Zixuan Xu) to satisfy OTC Markets corporate governance rules.	Upon effectiveness of registration statement	Enhances board independence and oversight, aligning with public company governance standards.
Committee Establishment	Establishment of an Audit Committee, a Compensation Committee, and a Corporate Governance and Nominating Committee.	Upon effectiveness of registration statement	Improves corporate oversight, financial reporting integrity, executive compensation practices, and director nomination processes.
Code of Ethics Adoption	Adoption of a code of ethics applicable to all executive officers, directors, and employees.	Prior to or upon effectiveness of registration statement	Establishes clear business and ethical principles, promoting integrity and compliance within the company.
Indemnification Agreements	Entering into indemnification agreements with each director and executive officer, providing additional indemnification beyond the memorandum and articles of association.	Prior to or upon effectiveness of registration statement	Provides greater protection to directors and officers against liabilities, potentially attracting and retaining qualified individuals, but SEC views such indemnification for Securities Act liabilities as unenforceable.
Memorandum and Articles of Association Amendment	Adoption of amended and restated memorandum and articles of association to become effective immediately prior to the completion of the offering.	Immediately prior to completion of offering	Governs corporate affairs under Cayman Islands law, outlining shareholder rights, dividend policies, voting rights, and other corporate actions for a public company.

Legal Proceedings

**Dispute over a financial loan contract with Bank of China Limited (Guangzhou Tianhe Sub-branch) (Case No. (2025) Sui Zhong Zi Zi No. 2003):** Bank of China is seeking immediate repayment of a RMB 50 million (approximately $6.85 million) loan from Softto Smart, plus interest, penalty interest, and compound interest, due to loan maturity and failure to repay. Mr. Yuhao Liang, Ms. Luhan Wang, and Guangzhou Tianwen Jiaoyan Cosmetics Co., Ltd. are jointly and severally liable as guarantors. The bank also seeks to exercise mortgage rights on property owned by Yuan Dong Development Co., Ltd. The estimated total interest and penalties for 2024 are approximately $262,131. The arbitration hearing was re-scheduled to June 25, 2025, after a temporary suspension.
**Labor Dispute between Plaintiff Xu Xiuhua and Defendant Guangzhou Yuebang Personal Care Products Co., LTD (2024) Yue 0111 Civil 1722:** Concluded on February 29, 2024, with Guangzhou Yuebang ordered to pay Xu Xiuhua RMB 39,433.29 for unpaid wages and RMB 6,951.72 for unused annual leave. Guangzhou Yuebang has fulfilled this obligation.
**Disputes on contract for carriage of goods between Guangzhou Douyue Technology Innovation Co., LTD, Guangzhou Softto Brand Management and Operation Co., Ltd., Tikas (Guangzhou) High-tech Co., LTD and Guangzhou Zhongmai Logistics Co. (2025) Guangdong 71 Civil Final No. 73):** Concluded on April 15, 2025, finding Guangzhou Douyue and Tikas Guangzhou owed Zhongmai RMB 482,225.57 and RMB 239,239.46 respectively for logistics services and liquidated damages. The company has not yet fulfilled this obligation.
**Disputes on contract for carriage of goods between Guangzhou Yuebang Personal Care Products Co., LTD, Guangzhou Softto Brand Management and Operation Co., Ltd., and Guangzhou Zhongmai Logistics Co. (2025) Guangdong 71 Civil Final No. 142):** Concluded on May 15, 2025, ordering Softto Smart and Guangzhou Yuebang to jointly and severally pay RMB 333,583.84 in transportation fees and return RMB 200,000 plus liquidated damages to Zhongmai. The company has fulfilled this obligation.
**Disputes on contract between Tikas (Guangzhou) High-tech Co., LTD and Zhejiang Jiacheng Media Co., Ltd (2025) Yue 0117 Civil 628):** Concluded on May 16, 2025, ordering Zhejiang Jiacheng Media Co., Ltd to return RMB 98,963.7 (including liquidated damages) and pay RMB 5,000 in lawyer's fees to Tikas (Guangzhou) High-tech Co., LTD. The defendant has not yet fulfilled this obligation.

Related Party Transactions

**Amounts due from related parties:** As of December 31, 2024, the company had $9,633,684 due from related parties, a significant increase from $77,325 in 2023. This includes $109,599 from Mr. Min Wang (50% bad debt provision made), $112,399 from Mrs. Lu Han Wang, and $9,392,126 from Tianwen (reclassified from advance to suppliers due to termination of cooperation), and $19,560 from Qianlang (reclassified from advance to suppliers).
**Amounts due to related parties:** As of December 31, 2024, the company owed $115,327 to related parties, down from $831,909 in 2023. This includes $115,327 to Mr. Yuhao Liang (partially settled via offset agreement).
**Advances to supplier-related parties:** As of December 31, 2023, the company had $10,667,309 in advances to Tianwen, its major related party supplier. This balance was reclassified to 'Amounts due from related parties' as of December 31, 2024, due to the termination of cooperation.
**Loan to related parties:** As of December 31, 2024, the company had $80,079 in loans to related parties, down from $1,240,796 in 2023. This includes $943 to Tianwen, $17,745 to Xueji, $10,864 to Xueli, and $50,527 to Zhimei. A significant loan of $1,194,383 to Guangxi Group in 2023 was settled via offset agreement.
**Loans from related parties:** As of December 31, 2024, the company had $415,000 in loans from related parties, including $356,247 from Zhimei and $58,752 from others.
**Accounts receivables related parties:** As of December 31, 2024, the company had $17,918 in accounts receivable from related parties, down from $807,335 in 2023. A significant amount of $769,157 from Yunshang was settled via offset agreement.
**Accounts payable related parties:** As of December 31, 2024, the company had $644,507 in accounts payable to related parties, up from $283,450 in 2023. This includes $418,094 to Tianwen, $51,241 to Xueli, $108,786 to Zhimei, and $66,386 to Qianlang.
**Sales to related parties:** Total sales to related parties were $6,440 in 2024, down from $4,763 in 2023.
**Purchases from related parties:** Total purchases from related parties were $5,239,062 in 2024, down from $8,725,260 in 2023. Tianwen accounted for 79.4% of total purchases in 2024 and 96.6% in 2023.
**Offset Agreements:** Multiple offset agreements were executed in 2024 to settle significant intercompany and related party debts and claims, including those involving Softto Smart, Guangzhou Softto, Wang Sihua, Liang Yuhao, Guangzhou Douyue, Wuzhou, Huiming, Guangzhou Yuebang, Tianwen, and Guangxi Group. These agreements involved transferring claims and debts to extinguish balances.

Stakeholder Impact

**Shareholders:** Face significant dilution from the IPO, immediate and substantial dilution due to the offering price being higher than pro forma net tangible book value. Investment is highly speculative with a risk of complete loss. Future share price volatility is expected. The controlling shareholders (Yuhao Liang and Luhan Wang) will maintain significant influence over the company.
**Employees:** The company reduced its workforce from 55 to 42 employees in 2024. There is a risk of labor disputes if basic salaries do not meet local minimum standards. The company aims to attract, incentivize, and retain talented professionals, focusing on training and creating a positive work environment.
**Customers:** The company's ability to meet customer demands and maintain relationships is crucial, especially with a high concentration of accounts receivable in one customer. Product quality issues or supply chain disruptions could negatively impact customer satisfaction and brand reputation.
**Suppliers:** The company's decision to terminate cooperation with its major related-party supplier (Tianwen) and engage new third-party suppliers will impact its supply chain and procurement relationships. The resolution of the $9.4 million prepayment balance with Tianwen is pending.
**Creditors (Banks):** The company has significant short-term loans, including an overdue RMB 50 million loan from Bank of China, which is subject to arbitration. This poses a direct risk to the company's ability to meet its debt obligations and could impact future access to financing.
**Regulatory Authorities (SEC, PCAOB, PRC Government):** The company is subject to evolving U.S. and Chinese regulations, including the HFCA Act and new PRC overseas listing rules. Non-compliance or changes in interpretation could lead to delisting, fines, or restrictions on operations and capital transfers, impacting all stakeholders.

Next Steps

Complete the initial public offering and list Ordinary Shares on the OTCQX Market.
Remit approximately 70% of the net proceeds from the offering to China for capital contributions or loans to PRC subsidiaries.
Utilize offering proceeds for business operations, strategic investments/acquisitions, product development, and online store network expansion.
Continue negotiations with Bank of China regarding the overdue RMB 50 million loan and attend the re-scheduled arbitration hearing on June 25, 2025.
Resolve the handling approach for the remaining $9.4 million prepayment balance with former major supplier Tianwen, through partial refund and partial supply.
Engage other third-party suppliers to replace purchases previously made from Tianwen.
Implement plans to alleviate going concern risk, including seeking additional equity financing, other debt sources, increasing cash from operations, and collecting receivables from related parties.
Continue to develop and launch new functional products with patented formulas, focusing on young customers.
Expand sales network through collaborations with celebrities, KOLs, and participation in industry exhibitions.
Strengthen partnerships with platforms like Meituan and explore collaborations with other community platforms.
Actively seek strategic partnerships and acquisitions, including exploring the U.S. market, though no specific projects are in pipeline yet.
Enhance ability to attract, incentivize, and retain talented professionals, focusing on internal training and building a diverse workforce.
Monitor and adapt to changing regulatory requirements in China, particularly regarding product safety, quality, and online advertising compliance.
Adjust business and marketing strategies to respond to rapid changes in consumer preferences.
Manage the risk of rising raw material prices and their impact on gross profit and margins.

Key Dates

Date	Description
1988	Softto brand was established.
1994	Softto developed China's first high-end seaweed weight-loss soap, exported to Japan, U.S., and South Korea.
1998	Softto Papaya Whitening series launched.
2000	Softto launched 'Softto Top Ten Beautiful Women Facial Cleanser' with endorsements from World Elite Model Contest winners.
2003	Actress Ziyi Zhang invited to endorse Softto Aqua Crystal series.
June 2004	Softto trademark (registration number: 1158039) recognized as a well-known Chinese trademark.
2006	Softto's shampoo series granted National Exemption of Inspection product for three years.
2007	Softto's facial cleanser products recognized as Well-known brand products by Bureau of Quality Supervision and Inspection of Guangxi Zhuang Autonomous Region.
2007	Softto brand shower gel recognized as Chinese Well-known brand products for three years.
October 2010	PRC Social Insurance Law promulgated, effective July 1, 2011.
November 2011	Ministry of Finance and State Administration of Taxation promulgated Pilot Plan for Imposition of Value-Added Tax to Replace Business Tax.
February 2012	SAFE promulgated Stock Option Rules, replacing earlier rules.
December 2012	Labor Contract Law of PRC amended.
May 2013	SAFE circular issued specifying registration for direct investment by foreign investors.
August 2013	Trademark Law of the PRC promulgated, effective May 2014.
July 2014	SAFE promulgated Circular on Relevant Issues Relating to Domestic Residents Investment and Financing and Roundtrip Investment through Special Purpose Vehicles (SAFE Circular 37).
July 2014	SAFE issued Circular of the State Administration of Foreign Exchange on the Pilot Reform of the Administrative Approach Regarding the Settlement of the Foreign Exchange Capitals of Foreign-Invested Enterprises in Certain Areas (Circular 36).
2015	Softto awarded National Excellent Enterprise for Quality and Service Integrity.
February 2015	SAT issued Circular 7 to replace rules relating to indirect transfers in Circular 698, effective February 2015.
February 13, 2015	SAFE promulgated Notice on Further Simplifying and Improving the Administration of the Foreign Exchange Concerning Direct Investment (SAFE Notice 13), effective June 1, 2015.
March 30, 2015	SAFE promulgated SAFE Circular 19, effective June 1, 2015, replacing Circular 142 and Circular 36.
December 1, 2016	Safety and Technical Standards for Cosmetics (Version 2015) became effective.
March 2016	Ministry of Finance and State Administration of Taxation promulgated Notice on Fully Promoting the Pilot Plan for Replacing Business Tax by Value-Added Tax, effective May 1, 2016.
June 9, 2016	SAFE issued SAFE Circular 16, effective same day.
January 2017	SAFE promulgated Circular on Further Improving Reform of Foreign Exchange Administration and Optimizing Genuineness and Compliance Verification (Circular 3).
March 2017	EIT Law amended.
August 24, 2017	Administrative Measures for Internet Domain Names promulgated by MIIT, effective November 1, 2017.
October 17, 2017	SAT promulgated Bulletin of SAT on Issues Concerning the Withholding of Non-resident Enterprise Income Tax at Source (Bulletin 37), effective December 1, 2017, replacing Circular 698.
December 1, 2017	Bulletin 37 became effective.
December 28, 2017	Softto Smart Brand Management Co., Ltd. incorporated in China.
February 7, 2018	Received certificate for domain name www.muaskin.com (expires February 7, 2028).
April 4, 2018	Ministry of Finance and State Administration of Taxation issued Notice on Adjustment of VAT Rates, effective May 1, 2018.
August 31, 2018	Individual Income Tax Law amended, effective January 1, 2019.
December 29, 2018	PRC Social Insurance Law amended.
March 15, 2019	National People's Congress approved the Foreign Investment Law, effective January 1, 2020.
March 24, 2019	Regulations on the Administration of Housing Funds amended.
April 1, 2019	Announcement on Relevant Policies for Deepening Value-added Tax Reform became effective, lowering VAT rates.
May 2019	Mr. Yuhao Liang began serving as CEO of Softto Smart Brand Management Co., Ltd.
2019	Softto's 377VC Essence Lotion won Product Innovation Award at Huangpu International Cosmetics Technology Innovation Conference.
November 2019	Mr. Zhenyu Liu received his MBA degree from Tong Ji University.
December 26, 2019	State Council issued Implementation Regulations for the Foreign Investment Law, effective January 1, 2020.
March 2020	Article 177 of the PRC Securities Law became effective.
December 18, 2020	The Holding Foreign Companies Accountable Act (HFCA Act) enacted.
January 1, 2021	Regulation on the Supervision and Administration of Cosmetics (Order No. 727) became effective.
May 1, 2021	Measures for the Administration of the Registration and Recordation of Cosmetics (Order No. 35) became effective.
July 6, 2021	General Office of the Communist Party of China Central Committee and the General Office of the State Council jointly issued Opinions on Severely Cracking Down on Illegal Securities Activities According to Law.
August 2, 2021	Measures for the Supervision and Administration of Production and Operation of Cosmetics issued, effective January 1, 2022.
December 28, 2021	Cybersecurity Review Measures published by CAC and other authorities, effective February 15, 2022.
January 6, 2022	Guangzhou Yuebang Personal Care Products Co., LTD incorporated in China.
March 1, 2022	Guangzhou Douyue Technology Innovation Co., LTD incorporated in China.
March 24, 2022	Guangzhou Haoyuan Daily Chemical Trading Co., LTD incorporated in China.
July 7, 2022	CAC promulgated Measures for the Security Assessment of Data Cross-border Transfer, effective September 1, 2022.
September 26, 2022	Tikas (Guangzhou) High-tech Co., LTD incorporated in China.
December 2022	Chinese government eased strict COVID-19 control measures, leading to a surge in infections and business disruption in December 2022 and January 2023.
December 29, 2022	Consolidated Appropriations Act, 2023 signed into law, shortening HFCA Act timeline from three to two years.
February 2023	Business in China returned to normal after COVID-19 disruptions.
February 17, 2023	CSRC released Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Enterprises (New Overseas Listing Rules) with five interpretive guidelines, effective March 31, 2023.
February 24, 2023	CSRC, Ministry of Finance, National Administration of State Secretes Protection, and National Archives Administration released Provisions on Strengthening the Confidentiality and Archives Administration Related to the Overseas Securities Offering and Listing by Domestic Companies, effective March 31, 2023.
March 31, 2023	New Overseas Listing Rules and Confidentiality and Archives Administration Provisions took effect.
April 2023	Last PCAOB inspection of the company's auditor, Simon & Edward, LLP.
April 27, 2023	Guangzhou Yuebang and Guangzhou Douyue entered into banking facility agreements with Baiyun Mintai Rural Bank of Guangzhou for RMB 4 million each.
May 2023	Ms. Yue Chang began serving as financial controller of Softto Smart Brand Management Co., Ltd.
October 13, 2023	Guangzhou Softto Brand Management and Operation Co., Ltd. incorporated in China.
October 20, 2023	Guangzhou Yuebang and Guangzhou Douyue repaid $28,169 (RMB200,000) of their loans.
October 26, 2023	Softto Smart entered into a banking facility agreement with Industrial Bank for up to $4,225,411 (RMB30,000,000).
November 23, 2023	Bank of China Limited (Guangzhou Tianhe Sub-branch) entered into a Loan Contract with Softto Smart for RMB 50 million.
November 27, 2023	Softto Inc. incorporated in the Cayman Islands.
December 4, 2023	Softto Holding Limited (Softto BVI) established.
December 5, 2023	Softto Smart entered into a banking facility agreement with Bank of China for up to $6,849,972 (RMB50,000,000).
December 11, 2023	Softto Co., Limited (Softto HK) established.
December 15, 2023	OEM Agreement between Guangzhou Yuebang Personal Care Products Co. Ltd. and Guangzhou Tianwen Jiaoyan Cosmetics Co., Ltd. signed (term to December 14, 2024).
December 16, 2023	Softto Smart fully drew down the RMB 50 million loan from Bank of China.
January 8, 2024	Guangzhou Softto Investment Holdings Co., Ltd. (Softto Investment or WFOE) established.
January 20, 2024	Guangzhou Yuebang and Guangzhou Douyue repaid $28,169 (RMB200,000) of their loans.
January 23, 2024	Reorganization completed, with Softto Inc. acquiring Softto Smart and its subsidiaries.
February 2, 2024	Guangzhou Softto Brand Management and Operation Co., Ltd. became a wholly owned subsidiary of Guangzhou Softto Investment Holdings Co., Ltd.
February 29, 2024	Labor dispute case between Xu Xiuhua and Guangzhou Yuebang Personal Care Products Co., LTD concluded.
April 2024	Mr. Min Wang resigned as legal representative of operating subsidiary.
April 2, 2025	Offset Agreement signed among Softto Smart Brand Management Co., Ltd., Guangzhou Softto Brand Management and Operation Co., Ltd., Guangxi Huiming Trade Development Co., Ltd., Guangzhou Tianwen Jiaoyan Cosmetics Co., Ltd., Guangxi Softto Group Co., Ltd., Guangzhou Yuebang Personal Care Products Co., LTD, and Mrs. LuHan Wang to settle various intercompany and related party debts.
April 15, 2025	Dispute on contract for carriage of goods between Guangzhou Douyue Technology Innovation Co., LTD, Guangzhou Softto Brand Management and Operation Co., Ltd., Tikas (Guangzhou) High-tech Co., LTD and Guangzhou Zhongmai Logistics Co. concluded.
April 22, 2025	Liang Yuhao and Wang Luhan filed an application for confirmation of arbitration validity with Guangzhou Intermediate Court, suspending the Bank of China loan arbitration.
May 15, 2025	Disputes on contract for carriage of goods between Guangzhou Yuebang Personal Care Products Co., LTD, Guangzhou Softto Brand Management and Operation Co., Ltd., and Guangzhou Zhongmai Logistics Co. concluded.
May 16, 2025	Disputes on contract between Tikas (Guangzhou) High-tech Co., LTD and Zhejiang Jiacheng Media Co., Ltd concluded.
May 19, 2025	Guangzhou Intermediate Court ruled to reject the application for confirmation of arbitration validity.
June 3, 2025	Arbitral tribunal re-scheduled the Bank of China loan hearing to June 25, 2025.
June 5, 2024	OEM Agreement between Guangzhou Tianwen Jiaoyan Cosmetics Co., Ltd. and Guangzhou Douyue Technology Innovation Co., Ltd. signed.
June 11, 2024	Softto Inc. (Softto US) established in the United States.
June 12, 2024	Offset Agreement signed among Softto Smart Brand Management Co., Ltd. and other subsidiaries with Guangzhou Tianwen Jiaoyan Cosmetics Co., Ltd. and Guangxi Softto Group Co., Ltd. to settle various intercompany debts.
June 30, 2024	Three Parties Agreement signed among Guangzhou Yuebang Personal Care Products Co. Ltd., Wuzhou Fusion Trading Co., Ltd. and Guangxi Huiming Trade Development Co. Ltd to settle debts.
July 2, 2025	F-1/A filing date.
July 11, 2023	Tikas (Guangzhou) High Tech Co., Ltd Changsha Branch incorporated in Hunan, PRC.
July 31, 2024	Three Parties Agreement signed among Softto Smart Brand Management Co., Ltd., Sihua Wang and Yuhao Liang to settle debts.
August 19, 2024	Changsha Branch dissolved due to business adjustment.
August 23, 2024	Softto HK signed a distributor contract with a Malaysian client, exploring Southeast Asian market.
September 14, 2024	Softto Smart entered into a new lease agreement for its executive office.
September 2024	Ms. Luhan Wang promoted to general manager of Softto Smart.
October 29, 2024	Softto E-Commerce (Guangzhou) Co., Ltd. established.
October 30, 2024	Mrs. Wang Luhan repaid the Industrial Bank loan on behalf of Softto Smart.
November 2024	The Group relocated to its new executive office.
November 15, 2024	Softto Smart repaid $1,367 (RMB10,000) of the Bank of China loan.
November 18, 2024	Softto Retail Trading (Guangzhou) Co., Ltd. and Softto Trading (Guangzhou) Co. Ltd established.
November 21, 2025	Expiration date of OEM agreement between Softto Retail Trading (Guangzhou) Co., Ltd. and Guangzhou Kouyan Cosmetics Co., Ltd.
November 27, 2025	Expiration date of OEM agreement between Softto Retail Trading (Guangzhou) Co., Ltd. and Guangzhou Jiugong Yanhua Biotechnology Co., Ltd.
December 31, 2024	End of fiscal year for financial reporting.
January 2025	Company decided to terminate cooperation with Tianwen and Qianlang.
January 13, 2025	Ms. Yue Chang appointed as Chief Financial Officer and Ms. Luhan Wang appointed as Director.
January 14, 2025	Mr. Yuhao Liang appointed as Chief Executive Officer and Chairman of the Board.
June 25, 2025	Re-scheduled hearing date for the Bank of China loan arbitration.
September 15, 2030	Expiration date of the principal executive office lease.
March 11, 2033	Expiration date of the 'Womens herbal anti-hair loss and hair growth formula and preparation method and its products and product preparation method' invention patent.
July 14, 2037	Expiration date of 'Shower gel packaging bottle (Softto flower essential oil)' and 'Shower gel packaging bottle (Softto flower essence petal)' design patents.
March 20, 2038	Expiration date of 'Shampoo bottle', 'Dolls (IP images)', 'Body lotion bottle', 'Packaging bottle (childrens cream)', and 'Hand soap bottle' design patents.

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Keywords

Personal Care Products, Beauty Products, Hair Care, Skincare, Oral Care, OEM Manufacturing, China Market, IPO, OTCQX, SEC Filing, F-1/A, Going Concern, Cross-border Regulation, PRC Law, Holding Foreign Companies Accountable Act, E-commerce, Offline Wholesale, Supply Chain, Intellectual Property, Related Party Transactions, Guangzhou

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