寄售买断与收入确认

As of December 31, 2023, 2024, 2025 and June 30, 2026, we had five, 15, 13 and 16 distributors, which we define as distributors with whom we maintain valid distribution agreements as of the respective dates.

We have implemented a set of operational controls to mitigate channel stuffing risks and prevent cross-channel diversion: (i) payment discipline: we require full payment prior to delivery for most distributor orders; (ii) territorial and channel boundaries: we assign distributors to defined geographic regions and sales channels, and prohibit unauthorized cross-regional sales or sub-distribution; in cases of customer overlap, we coordinate resolution by allowing the distributor to continue engagement or, where direct contracting occurs, we settle service fees with the distributor to preserve their role in pre-sales and after-sales support; and (iii) pricing control and enforcement: we maintain minimum price thresholds for distributors and monitor compliance through our marketing team; in cases of non-compliance, we may impose penalties, suspend supply, or terminate distribution rights.

All significant risks, including inventory risks, are transferred to our distributors upon delivery and acceptance, and we retain no ownership control over the products sold to our distributors.

Most of our distribution sales are made under consignment arrangements, under which we retain primary responsibility for downstream-customer development and technical engagement.

The decrease in the number of our distributors in 2024 primarily reflected our proactive optimization of our distribution network, under which we concentrated our distribution volume among distributors with greater scale, financial strength and operational capabilities, so as to improve our operating efficiency and facilitate channel management.

Based on the foregoing measures, we believe that our risk of channel stuffing is low.

In 2024, 2025 and the six months ended June 30, 2026, the revenue attributable to our distributors was RMB3.6 million, RMB1.9 million and RMB0.7 million, accounting for 69.7%, 57.3% and 31.4% of the revenue generated from sales of daily-care products in China, respectively.

In 2024, 2025 and the six months ended June 30, 2026, we terminated the relationship with 53, 57 and four distributors.

We conduct random purchases of products suspected of channel diversion or price violations and trace the distributors by tracking the special codes.

In each year of the Track Record Period, our revenue from distribution channels accounted for more than 98.0% of our total revenue.

we adopt a buy-out distribution model under which revenue is recognized at the point when our distribution partner completes revenue recognition confirmation in the CRM system (CRM Confirmation), after which the distribution partner assumes all inventory risks.

Our management is of the view that channel stuffing is unlikely to occur in our distribution channels and generally does not pose significant managerial concern, mainly because (i) we account for products sold to our distribution partners as part of our inventory to carry out reasonable and effective dynamic inventory management to prevent channel stuffing

In 2025, we started to sell products under our overseas brand “Vortis” through a distributor in the United States, and such sale contributed less than 0.5% of our revenue in 2025.

Our distributor is an independent third party and we have a principal-agent relationship pursuant to a consignment arrangement.

There was no distributor movement recorded during the Track Record Period, as we have engaged only one distributor.

we purchased a small amount of healthcare products from suppliers starting in 2020 and sold to a total of 13 Chinese distributors, who then resold such healthcare products to several medical institutions that collaborated with us in building and operating cardiology consortiums.

As such, we were deemed to be acting as an agent in the arrangement, and only the surcharge was recognized as our revenue. In 2020, revenue generated from such arrangement was RMB0.8 million, accounting for approximately 0.6% of the revenue from our smart healthcare products and approximately 0.2% of our total revenue in 2020.

We expect to continue such arrangement in a small size going forward, and believe that its impact on our financial results remained insignificant due to its limited size.

Distributor A is our sole distributor for our magazines and travel guidebooks mainly to newsstands and specified convenience stores and supermarkets in Hong Kong and Macau, whereas Distributor B is our sole distributor of the Madame Figaro Magazine and travel guidebooks mainly to bookstores in Hong Kong and Macau and online bookstores.

The Distributors are required to pay our Group regardless of whether they receive settlement from the retail points.

Our Directors confirmed that it is industry norm in Hong Kong for publishers to engage distributors for sales of magazines and books and regard distributors as customers of the publisher and they believe that the aforesaid revenue recognition policy is in line with industry practice.