{"url_path":"/sec/cchh/10-k/2026/item-5","section_key":"item-5","section_title":"Item 5 Operating and Financial Review and Prospects**","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-05-15","source_url":"https://www.sec.gov/Archives/edgar/data/2074123/0001213900-26-057844-index.html","accession_number":"0001213900-26-057844","cik":"0002074123","ticker":"CCHH","issuer_name":"CCH Holdings Ltd","edgar_url":"https://www.sec.gov/Archives/edgar/data/2074123/0001213900-26-057844-index.html","primary_entity_key":"0002074123","primary_entity_name":"CCH Holdings Ltd"},"word_count":9159,"has_tables":true,"body_markdown":"**Item\n5. Operating and Financial Review and Prospects**\n\n \n\n*The following management’s discussion and analysis provides information\nwhich we believe is relevant to an assessment and understanding of our consolidated results of operations and should be read in conjunction\nwith our consolidated financial statements and related notes included in this annual report on Form 20-F. The financial statements,\nincluding the comparative figures, were prepared in accordance with U.S. GAAP. This section contains forward looking information\nbased on our current expectations and projections. For information on the material factors and assumptions underlying such forward-looking\ninformation, refer to the “Risk Factors” sections on Form 20-F. Certain dollar amounts have been rounded to the nearest million\ndollars or thousand dollars, as noted, and tables may not add due to rounding. In this section, “we,” “our,” “us,”\nand other similar terms refer to CCH Holdings Ltd and all of its subsidiaries.*.\n\n \n\n**Recent\nDevelopments**\n\n \n\nIn March 27, 2026, the Company\nentered into certain Securities Purchase Agreement (the “SPA”) with certain purchasers (the “Purchasers”) as defined\nin Regulation S of the Securities Act, pursuant to which the Company agreed to sell up to an aggregate of 18,000,000 units (the “Units”),\neach unit consisting of one ordinary share, par value US$0.00001 per share, at price of $0.2 per Unit to the Purchasers (the “Offering”).\nThe net proceeds to the Company from such Offering shall be used by the Company for working capital and general corporate purposes. The\nissuance was exempt from registration under Section 4(a)(2) of the Securities Act and Regulation S thereunder. On March 31, 2026, the\ntransaction was closed and the Company issued 18,000,000 Class A Ordinary Shares pursuant to the Offering.\n\n \n\nOperating Results\n\n \n\n**Overview**\n\n \n\nWe are one of the leading specialty\nhotpot restaurant chains in Malaysia, specializing in chicken hotpot and fish head hotpot. With roots in George Town, Penang, Malaysia\nsince 2015, we have become a top player in the specialty hotpot market in Malaysia.\n\n \n\nWe are committed to providing\nthe most authentic Sichuan hotpot experience with Hong Kong style chicken hotpot traditions, to suit the discerning Malaysian palate.\nWith our established brands in specialty hotpot and exclusive signature dishes that are well received by customers, we are committed to\nfurther expanding our reach in Malaysia and beyond.\n\n \n\nWe offer catering services in\nMalaysia and outside Malaysia mainly under two brands, namely Chicken Claypot House (鸡煲之家)\nfor our chicken hotpot restaurants and Zi Wei Yuan (紫薇园)\nfor our fish head hotpot restaurants through a combination of company-owned restaurant outlets and franchised restaurant outlets.\nAs of the date of this annual report, we operate or license a total of 27 restaurant outlets, among which there are 17 Chicken Claypot\nHouse restaurant outlets, one Zi Wei Yuan restaurant outlets, two food courts under the brand 888 Family Food Court, one restaurant outlet\nunder the brand Bibixian (比比鲜) focusing on Teochew-style\nchicken hotpot, four restaurant outlets under the brand Banbudian Bistro (先启半步颠)\noffering Sichuan cuisine, and two restaurant outlet under the brand Chao Liu Xian Hotpot offering Chaoshan-style dishes. Among the 24\nrestaurant outlets operated or licensed by us in Malaysia, there are 13 company-owned restaurant outlets and 11 franchised restaurant\noutlets, as of the date of this annual report. Currently, we also have four franchised restaurant outlets located in two other countries\nincluding Thailand and China. \n\n \n\nFor the years ended December 31,\n2023, 2024 and 2025, we derived substantially all of our revenues from our restaurant operations business, which amounted to US$9.78 million,\nUS$8.92 million and US$9.59 million, respectively. Our restaurant operations business consists of three parts, namely company-owned restaurant\noperations, sales of food ingredients and condiments and franchise licensing. For the years ended December 31, 2023, 2024 and\n2025, our revenues breakdowns for restaurant operations were US$8.21 million, US$6.64 million and US$6.28 million from company-owned restaurant\noperations, US$1.01 million, US$1.24 million and US$2.18 million from sales of food ingredients and condiments, and US$0.31 million,\nUS$0.67 million and US$0.59 million from franchise licensing, respectively.\n\n \n\nThe cultural diversity in Southeast\nAsia has created a distinctive fusion cuisine landscape, and hotpot with traditions rooted in China has become a popular dining choice\namong customers. To seize the market opportunity, we have been actively but also prudently expanding the network of our restaurant outlets\nin Malaysia. We are also poised for strategic expansion into other locations in Southeast Asia, such as Vietnam, Cambodia and Indonesia,\nas well as other international locations with significant growth potentials such as Hong Kong, Taiwan and the U.S.\n\n** **\n\n**Key Factors that Affect Our Results of Operations**\n\n \n\nOur business and results of operations\nare affected by a number of factors. While these factors present significant opportunities for our business, they also pose important\nrisks and challenges we need to successfully address in order to growth our business.\n\n \n\n36\n\n \n\n**Macroeconomic\nConditions in Malaysia**\n\n \n\nMacroeconomic\nconditions in Malaysia can significantly affect the disposable income and spending power of our customers, as well as the ability of\nour suppliers to support our business. In stronger economic conditions, customers tend to allocate more spending to dining out. Conversely,\nduring weaker economies, customers become more cautious and rational about their dining expenses. Our revenue primarily comes from restaurant\noperations in Malaysia, making us closely tied to the country’s macroeconomic conditions. Any deterioration in the Malaysian economy\nmay lead to reduced consumer expenditure on food, increased fears of recession, and decreased consumer confidence. This can materially\nand adversely impact overall salary levels, spending power, and dining trends, significantly affecting our financial conditions and operational\nresults. During the COVID-19 pandemic, the Malaysian government-imposed disease control and social distancing measures that severely\nrestricted the operations of catering businesses. These measures resulted in a significant decline in customer visits, a reduction in\nstaffing levels, and disruptions to our operations.\n\n \n\nFurther,\nif inflation or other factors were to significantly increase our business costs, we would be affected by inflationary increases in wages,\nbenefits, and other costs and our profitability may decline. There is no assurance that future cost increases can be offset by higher\nmenu prices, nor that these price increases will be fully absorbed by customers without impacting their visit frequencies or spending\npatterns.\n\n \n\n**Consumer\nRecognition of our Brands**\n\n \n\nOur\nability to attract new consumers and retain existing consumers in a cost-effective manner is crucial to driving revenue growth and achieving\nhigher profitability. By establishing a strong brand identity and implementing effective marketing strategies, we are dedicated to staying\nconnected with our consumers. Over the past decade, we have effectively built brand awareness among consumers and maintained a strong\npresence in the specialty hotpot market in Malaysia, and we have received various awards and recognitions over the years. For details,\nsee “Business — Our Competitive Strengths — We are one of the leading hotpot restaurant chains in Malaysia with strong\nbrand identity.”\n\n \n\nWe\nhave continued to invest in branding, sales and marketing to acquire and retain consumers in a cost-effective manner and actively adjust\nour sales and marketing strategies to fully utilize the strategies with higher conversion rates. We also strive to provide an enjoyable\nconsumer dining experience by offering tasty signature dishes under each of our brands and continuously adding new items to our menus\nto cater to the changing preferences of consumers and encourage revisits.\n\n \n\n**Strategic\nExpansion of Our Network of Restaurant Outlets**\n\n \n\nThe expansion of our restaurant\nnetwork is a key driver of our revenue growth and operating efficiency. As of the date of this annual report, we operate or license a\ntotal of 27 restaurants outlets, including 13 company-owned outlets in Malaysia, 11 franchised outlets in Malaysia and three franchised\noutlets outside Malaysia.  We have developed a strategic restaurant expansion blueprint focused on increasing our presence in existing\nmarkets including Malaysia and Thailand as well as exploring new markets with strong potentials. Such plan is subject to market conditions,\nconsumer demands, performance of existing outlets, availability of suitable locations, our capital resources and the identification of\nqualified franchise partners. We have recently opened several restaurant outlets in Malaysia. On June 26, 2025, we opened a food court\nunder our brand 888 Family Food Court in Penang, Malaysia. As of the date of this annual report, we hold 80% of the equity interest in\nthe operating entity of this food court, GEF Family. On August 21, 2025, we also opened a new company-owned restaurant outlet under our\nbrand Chicken Claypot House in Ipoh, Malaysia. Additionally, we entered into a licensing agreement dated May 20, 2025 with a licensee\nin Malaysia, granting it a master license to open new franchised restaurant outlets under the brand Banbudian Bistro, and such licensee\nhas opened a new restaurant outlet in Penang, Malaysia on September 1, 2025. In the future, we intend to further expand in existing markets\nand also explore new markets with strong potentials in Southeast Asia, such as Vietnam, Cambodia and Indonesia, East Asia such as Hong\nKong and Taiwan, as well as the U.S. and the United Kingdom with a focus on locations with large Asian communities in the next three\nto five years.\n\n \n\nWe\nbelieve that our expanding network of restaurant outlets will enhance our brand image, attract more consumers and franchise partners,\nreduce consumer acquisition costs, promote brand loyalty, and in turn increase sales. A growing scale will also enable us to gain more\nbargaining power over suppliers, which we believe will further lower our costs and expenses as a percentage of our net revenues. On the\nother hand, as we continue to expand our network of restaurant outlets, we will continue to encounter challenges in implementing our\nmanagerial, operating and financial strategies to sustain business growth, or achieve any growth at all.\n\n \n\n37\n\n \n\n**Cost-effective\nSupply Chain Management**\n\n \n\nOur\nsuccess depends on reliable and consistent sources of food ingredients such as meat, seafood, vegetables, beverages and condiments delivered\nto us at stable competitive prices in a timely manner. High quality, cost-efficient and integrated supply chain management provides a\nsolid foundation for our operational efficiency and is an important factor in our financial performance. Historically, our costs have\nconsisted primarily of material costs, payroll costs, and other operation costs. Among these, material costs related to the purchase\nof food, beverages, condiments and consumables packaging are the most significant component of our cost structure, representing 32.7%,\n32.6% and 37.6% of our revenues for the years ended December 31, 2023, 2024 and 2025, respectively. We have established strong business\nrelationships with a broad network of suppliers and streamlined our supply chain management practice in relation to food preparation\nat our central kitchen and each restaurant outlets. We are dedicated to continuously improving our negotiating powers with suppliers\nand reducing procurement costs through bulk purchasing of ingredients and supplies, with the aim to lower overall food costs and enhanced\nprofitability through competitive pricing. With established stringent supplier selection procedures, inspection procedures, and a performance\nevaluation system, we are also able to assess the performance of each of our suppliers on a regular basis. In addition, we are continuing\nto strengthen our supply chain management to improve operational efficiency. For example, we have established a three-tier inventory\nsystem to achieve higher efficiency and lower costs in storage and logistics.\n\n \n\n**Operational\nEfficiency with Central Kitchen Management**\n\n \n\nHigh\nquality and integrated central kitchen management provides a solid foundation for us to maintain consistency and operational efficiency\nacross our hotpot restaurant chain and is an important factor in our financial performance. We have achieved standardization at various\nstages of our business operations to ensure that our food offerings and catering services are delivered consistently. By consolidating\npart of our food production in a central kitchen, we benefit from economies of scale. With a centralized production facility, we can\ncontinuously optimize processes, workflows, and equipment usage, which increases efficiency, reduces duplication of efforts, and boosts\nproductivity, which translates into cost savings and faster turnaround times. Additionally, our central kitchen facilitates effective\nsupply chain management, giving us better visibility and control over ingredient sourcing, inventory management, and distribution, which\nensures a reliable and uninterrupted supply of ingredients to our restaurant outlets, minimizing the risk of stockouts and improving\noverall operational efficiency. Moreover, our central kitchen provides greater control over food quality and consistency by processing\nand distributing semi-finished food products and soup bases subject to unified stringent quality standards.\n\n \n\n**Seasonality**\n\n \n\nThere\nare seasonal patterns for hot pot consumption. As such, our business and financial performance are subject to seasonal fluctuations,\nsuch as Chinese New Year and other holidays, school vacations, weather conditions and fluctuations in food prices, among others. As a\nresult, our results of operations may fluctuate from year-to-year/period-to-period and comparison of different periods may not be meaningful.\n\n** **\n\n**Results\nof Operations**\n\n \n\nThe following table sets forth a summary of our consolidated results of\noperations, in absolute amount and as a percentage of our revenues for the years ended December 31, 2023, 2024 and 2025. This\ninformation should be read together with our consolidated financial statements and related notes included elsewhere in this annual report.\nThe results of operations in any period are not necessarily indicative of the results that may be expected for any future periods.\n\n \n\n  \nFor the years ended December 31, \n\n  \n2023  \n2024  \n2025 \n\n  \nUS$  \n%  \nUS$  \n%  \nUS$  \n% \n\nRevenues \n 9,775,038  \n 100.0  \n 8,915,344  \n 100.0  \n 9,589,671  \n 100.0 \n\nCost of revenues \n (7,565,559) \n (77.4) \n (6,509,083) \n (73.0) \n (7,739,702) \n (80.7)\n\nGross profit \n 2,209,479  \n 22.6  \n 2,406,261  \n 27.0  \n 1,849,969  \n 19.3 \n\nOperating expenses \n    \n    \n    \n    \n    \n   \n\nSelling and marketing expenses \n (493,101) \n (5.0) \n (263,871) \n (3.0) \n (257,497) \n (2.7)\n\nGeneral and administrative expenses \n (979,973) \n (10.0) \n (816,122) \n (9.2) \n (3,826,066) \n (39.9)\n\nGain from equity method investments \n 28,747  \n 0.3  \n 8,873  \n 0.1  \n (125,546) \n (1.3)\n\nTotal operating expenses \n (1,444,327) \n (14.7) \n (1,071,120) \n (12.1) \n (4,209,109) \n (43.9)\n\nIncome from operations \n 765,152  \n 7.9  \n 1,335,141  \n 14.9  \n (2,359,140) \n (24.6)\n\nOther income/(expenses) \n    \n    \n    \n    \n    \n   \n\nOther income, net \n 37,572  \n 0.4  \n 77,735  \n 0.9  \n 89,360  \n 0.9 \n\nFinancial expenses, net \n (118,256) \n (1.2) \n (131,683) \n (1.5) \n (269,572) \n (2.8)\n\nTotal other expenses, net \n (80,684) \n (0.8) \n (53,948) \n (0.6) \n (180,212) \n (1.9)\n\nIncome/(loss) before income tax expense \n 684,468  \n 7.1  \n 1,281,193  \n 14.3  \n (2,539,352) \n (26.5)\n\nIncome tax expense \n (315,854) \n (3.2) \n (367,792) \n (4.1) \n (141,978) \n (1.5)\n\nNet income/(loss) \n 368,614  \n 3.9  \n 913,401  \n 10.2  \n (2,681,330) \n (28.0)\n\n \n\n38\n\n \n\n**Key\nComponents of Results of Operations**\n\n \n\n**Revenues**\n\n \n\nWe recorded total revenues of US$9.59 million for the year ended December 31,\n2025, representing an increase of 7.6% from US$8.92 million for the year ended December 31, 2024, primarily driven by the increase\nin revenues generated from sales of food ingredients and condiments and others, partially offset by the decrease in revenues generated\nfrom company-owned restaurant operations and franchise licensing. We recorded total revenues of US$8.92 million for the year ended December\n31, 2024, representing a decrease of 8.8% from US$9.78 million for the year ended December 31, 2023, primarily driven by the decrease\nin revenues generated from our company-owned restaurant operations, partially offset by the increase in revenues generated from sales\nof food ingredients and condiments, franchise licensing and others. The following table sets forth the breakdown of total revenues for\nthe periods indicated.\n\n \n\n  \nFor\nthe years ended December 31, \n\n  \n2023  \n2024  \n2025 \n\n  \nUS$  \n%  \nUS$  \n%  \nUS$  \n% \n\nRevenues \n   \n   \n   \n   \n   \n  \n\nRestaurant\noperations \n 9,521,142  \n 97.4  \n 8,548,395  \n 95.9  \n 9,091,689  \n 94.8 \n\nCompany-owned\nrestaurant operations \n 8,209,810  \n 84.0  \n 6,640,706  \n 74.5  \n 6,284,641  \n 65.5 \n\nSales\nof food ingredients and condiments \n 1,006,081  \n 10.3  \n 1,239,966  \n 13.9  \n 2,220,405  \n 23.2 \n\nFranchise\nlicensing \n 305,251  \n 3.1  \n 667,723  \n 7.5  \n 586,643  \n 6.1 \n\nOthers \n 253,896  \n 2.6  \n 366,949  \n 4.1  \n 497,982  \n 5.2 \n\nTotal\nrevenues \n 9,775,038  \n 100.0  \n 8,915,344  \n 100.0  \n 9,589,671  \n 100.0 \n\n** **\n\n**Restaurant\nOperations**\n\n** **\n\n*Company-owned\nrestaurant operations.* We primarily generate revenues by offering customers a variety of cuisine including chicken hotpot with\nvarious flavors, charcoal fish head hotpot, food ingredients (meats, seafood and vegetables) with featured soup bases, hot-pot seasoning\nand dipping sauces, as well as other side dishes, special dishes, beverage and desserts at our company-owned restaurants.\n\n \n\n*Sales\nof food ingredients and condiments.* We also generate revenues from sales of food ingredients and condiments to local distributors\nor our franchised restaurant outlets.\n\n \n\n*Franchise\nlicensing.* Pursuant to our standard licensing agreement, our licensees in Malaysia are required to a fixed amount of administrative\nfee and settle applicable costs and expenses, for pre-opening and ongoing support services and the authorization to operate a franchised\nrestaurant using the trademarks, trade names, logos, and other proprietary marks associated with the brand of Chicken Claypot House and/or\nZi Wei Yuan. Administrative fees are generally settled on a monthly basis. Applicable costs and expenses are charged as occurred.\n\n \n\nFor\nlicensees outside of Malaysia, they are required to pay a master license fee as in a fixed upfront payment for pre-opening and ongoing\nsupport services, the authorization of the access to the proprietary marks associated with the brand of Chicken Claypot House and/or\nZi Wei Yuan, and the right to operate a fixed number of restaurants under the authorized brands. Additionally, for each restaurant such\nmaster licensee opens above the fixed number agreed or sub-franchises to other third-parties, a fixed outlet license fee shall also be\npaid. Master license fee is higher than outlet license fee, since master license is granted with the overarching right to operate the\nbusiness within a specified territory, including the power to grant outlet license within the territory.\n\n \n\nDuring\nthe effective license term, all the licensees are also required to share a certain percentage (generally between 5% to 7.5%) of each\napplicable restaurant outlet’s gross revenues as royalties, which are settled on a monthly basis.\n\n \n\nTherefore,\nrevenues from franchise licensing are generated from service fees that we receive from our licensees, which primarily include (i) royalties,\n(ii) license fees, and (iii) other service fees for providing support services.\n\n \n\n39\n\n \n\n**Others**\n\n** **\n\nWe\nalso generate revenues from leasing out buildings.\n\n** **\n\n**Cost\nof Revenues**\n\n \n\nOur\ncost of revenues consists of costs directly related to revenue-generating activities, which are primarily consisted of material\ncosts, payroll costs including salaries and related social insurance, and other operating costs directly linked to the revenues including\nrental costs, utilities costs, depreciation of property and equipment, repair and maintenance costs, and other miscellaneous costs. The\nfollowing table sets forth a breakdown of our cost of revenues presented by cost categories, in absolute amounts and as percentages of\ntotal revenues, for the periods indicated.\n\n \n\n  \nFor\nthe years ended December 31, \n\n  \n2023  \n2024  \n2025 \n\n  \nUS$  \n%  \nUS$  \n%  \nUS$  \n% \n\nCost\nof revenues \n   \n   \n   \n   \n   \n  \n\nMaterial\ncosts \n 3,197,559  \n 32.7  \n 2,905,793  \n 32.6  \n 3,604,260  \n 37.6 \n\nPayroll\ncosts \n 2,410,704  \n 24.7  \n 1,979,175  \n 22.2  \n 2,342,591  \n 24.4 \n\nRental\ncosts \n 988,395  \n 10.1  \n 924,000  \n 10.4  \n 987,799  \n 10.3 \n\nUtilities\ncosts \n 354,023  \n 3.6  \n 349,228  \n 3.9  \n 343,203  \n 3.6 \n\nRepairs\nand maintenance costs \n 306,416  \n 3.1  \n 104,198  \n 1.2  \n 244,267  \n 2.5 \n\nDepreciation\nof property and equipment \n 290,492  \n 3.0  \n 227,412  \n 2.6  \n 184,837  \n 1.9 \n\nOthers \n 17,970  \n 0.2  \n 19,277  \n 0.1  \n 32,745  \n 0.4 \n\nTotal\ncost of revenues \n 7,565,559  \n 77.4  \n 6,509,083  \n 73.0  \n 7,739,702  \n 80.7 \n\n \n\nThe\nfollowing table sets forth a breakdown of our cost of revenues presented by revenue streams, in absolute amounts and as percentages of\ntotal revenues, for the periods indicated.\n\n \n\n  \nFor\nthe years ended December 31, \n\n  \n2023  \n2024  \n2025 \n\n  \nUS$  \n%  \nUS$  \n%  \nUS$  \n% \n\nCost\nof revenues \n   \n   \n   \n   \n   \n  \n\nRestaurant\noperations \n 7,477,062  \n 76.5  \n 6,389,726  \n 71.7  \n 7,594,627  \n 79.2 \n\nOthers \n 88,497  \n 0.9  \n 119,357  \n 1.3  \n 145,075  \n 1.5 \n\nTotal\ncost of revenues \n 7,565,559  \n 77.4  \n 6,509,083  \n 73.0  \n 7,739,702  \n 80.7 \n\n \n\n**Gross\nProfit and Gross Profit Margin**\n\n \n\nGross\nprofit represents revenues less cost of revenues. Gross profit margin represents gross profit as a percentage of our revenues. Our gross\nprofit is primarily affected by our ability to generate revenues and the fluctuation of our costs. The following table below sets forth\nour gross profit and gross profit margin in respect of revenue streams for the periods indicated.\n\n \n\n  \nFor\nthe years ended December 31, \n\n  \n2023  \n2024  \n2025 \n\n  \nUS$  \nMargin\n%  \nUS$  \nMargin\n%  \nUS$  \nMargin\n% \n\nGross profit and gross profit\nmargin \n   \n   \n   \n   \n   \n  \n\nRestaurant operations \n 2,044,080  \n 21.5  \n 2,158,669  \n 25.3  \n 1,497,062  \n 16.4 \n\nOthers \n 165,399  \n 65.1  \n 247,592  \n 67.5  \n 352,907  \n 70.9 \n\nTotal \n 2,209,479  \n 22.6  \n 2,406,261  \n 27.0  \n 1,849,969  \n 19.3 \n\n \n\n40\n\n \n\n**Operating\nExpenses**\n\n \n\n*Selling\nand Marketing Expenses*\n\n \n\nOur\nselling and marketing expenses primarily consist of (i) advertising and promotion expenses incurred to promote our brand image and awareness,\n(ii) payroll expenses including salaries and related social insurance expenses for marketing personnel, and (iii) others.\n\n* *\n\n*General\nand Administrative Expenses*\n\n \n\nOur\ngeneral and administrative expenses primarily consist of (i) payroll expenses including salaries and related social insurance expenses\nfor management and administrative personnel, (ii) office and utilities expenses, (iii) rental expenses for office space, (iv) professional\nservices expenses, (v) travelling expenses, (vi) depreciation and amortization expenses for property and equipment and software used\nfor office purpose, (vii) insurance expenses, and (viii) other miscellaneous administrative expenses.\n\n** **\n\n**Financial\nExpenses, Net**\n\n \n\nOur\nfinancial expenses, net primarily consist of interest expenses for borrowings and miscellaneous bank charges, partially offset by interest\nincome from bank deposits.\n\n** **\n\n**Taxation**\n\n** **\n\n**Cayman\nIslands**\n\n** **\n\nThe\nCompany was incorporated in the Cayman Islands as an exempted company with limited liability under the Companies Act and accordingly,\nis exempted from Cayman Islands income and corporate tax. As such, the Company is not subject to tax on either income or capital gain.\nIn addition, no withholding tax is imposed upon any payments of dividends by subsidiaries to the Company.\n\n \n\n**Malaysia**\n\n** **\n\nOur\nMalaysian subsidiaries, including STCH Holding, STCH GH, ZWY Raja Uda, CHH KL, CCH Tropika and GTL F&B, are governed by the income\ntax laws of Malaysia. The income tax provision in respect of operations in Malaysia is calculated at the applicable tax rates on the\ntaxable income for the periods based on existing legislation, interpretations, and practices. Under the Income Tax Act of Malaysia,\nenterprises incorporated in Malaysia are usually subject to a unified 24% enterprise income tax rate while preferential tax rates, tax\nholidays, and tax exemptions may be granted on a case-by-case basis. The tax rate for small and medium sized companies (generally\ncompanies incorporated in Malaysia with paid-in capital of MYR2,500,000 or less, and gross income of not more than MYR50 million)\nis 15% for the first MYR150,000 (approximately US$37,500) taxable income, and 17% for taxable income between MYR150,001 (approximately\nUS$37,500) to MYR600,000 (approximately US$150,000), with the remaining balance of taxable income being taxed at the 24% rate.\n\n** **\n\n**Comparison\nof Years Ended December 31, 2023 and 2024**\n\n \n\n**Revenues**\n\n \n\nThe\nfollowing table sets forth the breakdown of total revenues for the periods indicated.\n\n \n\n  \nFor\nthe Years Ended December 31,  \nVariance \n\n  \n2023  \n2024  \nAmount  \nPercentage \n\n  \nUS$  \n%  \nUS$  \n%  \nUS$  \n% \n\nRevenues \n   \n   \n   \n   \n   \n  \n\nRestaurant\noperations \n 9,521,142  \n 97.4  \n 8,548,395  \n 95.9  \n (972,747) \n (10.2)\n\nCompany-owned\nrestaurant operations \n 8,209,810  \n 84.0  \n 6,640,706  \n 74.5  \n (1,569,104) \n (19.1)\n\nSales\nof food ingredients and condiments \n 1,006,081  \n 10.3  \n 1,239,966  \n 13.9  \n 233,885  \n 23.2 \n\nFranchise\nlicensing \n 305,251  \n 3.1  \n 667,723  \n 7.5  \n 362,472  \n 118.7 \n\nOthers \n 253,896  \n 2.6  \n 366,949  \n 4.1  \n 113,053  \n 44.5 \n\nTotal\nrevenues \n 9,775,038  \n 100.0  \n 8,915,344  \n 100.0  \n (859,694) \n (8.8)\n\n \n\nWe\nrecorded total revenues of US$8.92 million for the year ended December 31, 2024, representing a decrease of 8.8% from US$9.78 million\nfor the year ended December 31, 2023, primarily driven by the decrease in revenues generated from our company-owned restaurant\noperations, partially offset by the increase in revenues generated from sales of food ingredients and condiments, franchise licensing\nand others.\n\n \n\n41\n\n \n\n**Restaurant\nOperations**\n\n** **\n\n*Company-owned restaurant\noperations.* Revenues from company-owned restaurant operations decreased by 19.1% from US$8.21 million for the\nyear ended December 31, 2023 to US$6.64 million for the year ended December 31, 2024, primarily attributable to (i) \nthe significant sales decrease in five company-owned restaurant outlets that led to a decrease in sales of US$1.27 million,\namong which we decided to close down two during the second half of 2024 with the plan to search for new restaurant locations with better\ncustomer traffic, and (ii) domestic economy instability affecting the market sentiment which led to the consumers being more prudent\non daily spending.\n\n \n\n*Sales\nof food ingredients and condiments.* Revenues from sales of food ingredients and condiments increased by 23.2% from US$1.01 million\nfor the year ended December 31, 2023 to US$1.24 million for the year ended December 31, 2024, primarily attributable to\nthe increased sales of products to one local distributor of food supply chain.\n\n \n\n*Franchised\nlicensing.* Revenues from franchised licensing increased by 118.7% from US$0.31 million for the year ended December 31,\n2023 to US$0.67 million for the year ended December 31, 2024. The increase in revenues is primarily attributable to the increased\nmaster license fees and royalties contributed by the licensees outside Malaysia for the year ended December 31, 2024, as a result\nof our efforts to expand our brand footprints in Thailand and China during 2024, which we expect these master licensees outside Malaysia\nwill contribute more royalties and outlet license fees in the future.\n\n \n\n**Others**\n\n** **\n\nRevenues\nfrom leasing out buildings increased by 44.5% from US$0.25 million for the year ended December 31, 2023 to US$0.37 million\nfor the year ended December 31, 2024, primary attributable to the addition of three lease agreements as lessor in 2024.\n\n** **\n\n**Cost\nof Revenues**\n\n \n\nThe\nfollowing table sets forth a breakdown of our cost of revenues presented by cost categories, in absolute amounts and as percentages of\ntotal revenues, for the periods indicated.\n\n \n\n  \nFor\nthe Years Ended December 31,  \nVariance \n\n  \n2023  \n2024  \nAmount  \nPercentage \n\n  \nUS$  \n%  \nUS$  \n%  \nUS$  \n% \n\nCost of revenues \n   \n   \n   \n   \n   \n  \n\nMaterial\ncosts \n 3,197,559  \n 32.7  \n 2,905,793  \n 32.6  \n (291,766) \n (9.1)\n\nPayroll\ncosts \n 2,410,704  \n 24.7  \n 1,979,175  \n 22.2  \n (431,529) \n (17.9)\n\nRental\ncosts \n 988,395  \n 10.1  \n 924,000  \n 10.4  \n (64,395) \n (6.5)\n\nUtilities\ncosts \n 354,023  \n 3.6  \n 349,228  \n 3.9  \n (4,795) \n (1.4)\n\nDepreciation\nof property and equipment \n 290,492  \n 3.0  \n 227,412  \n 2.6  \n (63,080) \n (21.7)\n\nRepairs\nand maintenance costs \n 306,416  \n 3.1  \n 104,198  \n 1.2  \n (202,218) \n (66.0)\n\nOthers \n 17,970  \n 0.2  \n 19,277  \n 0.1  \n 1,307  \n 7.3 \n\nTotal\ncost of revenues \n 7,565,559  \n 77.4  \n 6,509,083  \n 73.0  \n (1,056,476) \n (14.0)\n\n \n\nWe\nrecorded a total cost of revenues of US$6.51 million for the year ended December 31, 2024, representing a decrease of 14.0% from US$7.57\nmillion for the year ended December 31, 2023, primarily driven by the decrease in cost of materials, salaries and related social insurance\ncosts, and repairs and maintenance costs, which was (i) generally in line with the decreased revenues from company-owned restaurant operations,\nand also (ii) a result of our further optimization in standardized operations which led to improvement in overall cost control.\n\n \n\n*Material\ncosts.* Our costs of materials including costs of food, beverage and consumables, decreased from US$3.20 million for the year\nended December 31, 2023 to US$2.91 million for the year ended December 31, 2024, which was in line with the decreased revenues from company-owned\nrestaurant operations.\n\n \n\n*Payroll\ncosts.* Our payroll costs including salaries and related social insurance costs for restaurant staff decreased from US$2.41 million\nfor the year ended December 31, 2023 to US$1.98 million for the year ended December 31, 2024, mainly due to the optimization in restaurant\nstaff headcount and reduction in bonus provision related sales incentives, which was in line with the decreased revenues from company-owned\nrestaurant operations.\n\n \n\n*Rental\ncosts.* Our rental costs incurred for restaurant premises were US$0.99 million and US$0.92 million for the years ended December\n31, 2023 and 2024, respectively, which remained relatively stable.\n\n \n\n*Utilities\ncosts.* Our utilities costs incurred for restaurants’ daily operations were US$0.35 million and US$0.35 million for the\nyears ended December 31, 2023 and 2024, respectively, which remained relatively stable.\n\n \n\n42\n\n \n\n*Depreciation\nof property and equipment.* Our depreciation of property and equipment primarily including depreciation of leasehold improvements\nand equipment used for restaurant operations, and depreciation of buildings for leasing out, decreased from US$0.29 million for the year\nended December 31, 2023 to US$0.23 million for the year ended December 31, 2024, which due to the disposal of property and equipment\nin one restaurant outlet.\n\n \n\n*Repairs\nand maintenance costs.* Our repairs and maintenance costs decreased from US$0.31 million for the year ended December 31, 2023\nto US$0.10 million for the year ended December 31, 2024 mainly due to the decrease of consumable tool expenses for repairs and maintenance.\n\n \n\n*Others.* Our\nother miscellaneous costs were approximately US$0.02 million and US$0.02 million for the years ended December 31, 2023\nand 2024, respectively.\n\n** **\n\n**Gross\nProfit and Gross Profit Margin**\n\n \n\nThe\nfollowing table below sets forth our gross profit and gross profit margin in respect of revenue streams for the periods indicated.\n\n \n\n  \nFor\nthe Years Ended December 31,  \nVariance \n\n  \n2023  \n2024  \nAmount  \nPercentage \n\n  \nUS$  \nMargin %  \nUS$  \nMargin %  \nUS$  \n% \n\nGross profit and gross profit\nmargin \n   \n   \n   \n   \n   \n  \n\nRestaurant\noperations \n 2,044,080  \n 21.5  \n 2,158,669  \n 25.3  \n 114,589  \n 5.6 \n\nOthers \n 165,399  \n 65.1  \n 247,592  \n 67.5  \n 82,193  \n 49.7 \n\nTotal \n 2,209,479  \n 22.6  \n 2,406,261  \n 27.0  \n 196,782  \n 8.9 \n\n \n\nOur\ngross profits were US$2.21 million and US$2.41 million for the years ended December 31, 2023 and 2024, respectively, representing\na gross profit margin of 22.6% and 27.0%, respectively, primarily attributable to our efforts in further optimization in standardized\noperations to avoid waste of food ingredients and redundant staff, which led to improvement in overall cost control, especially in the\nmaterial costs, payroll costs, and repairs and maintenance costs.\n\n** **\n\n**Operating\nExpenses**\n\n \n\n*Selling\nand Marketing Expenses*\n\n \n\nOur\nselling and marketing expenses decreased by 46.5%, from US$0.49 million for the year ended December 31, 2023 to US$0.26 million\nfor the year ended December 31, 2024, which was mainly attributable to the decrease in expenses we incurred to advertise and promote\nour brand and restaurants by actively reducing ineffective marketing activities.\n\n* *\n\n*General\nand Administrative Expenses*\n\n \n\nOur\ngeneral and administrative expenses decreased by 16.7% from US$0.98 million for the year ended December 31, 2023 to US$0.82 million\nfor the year ended December 31, 2024, respectively, primarily due to a decrease in insurance expenses of US$0.07 million and\na decrease in rental expenses of US$0.05 million, which was mainly due to the disposal of one company-owned restaurant outlet\nduring 2024.\n\n** **\n\n**Financial\nExpenses, Net**\n\n \n\nOur\nfinancial expenses, net slightly increased from US$0.12 million for the year ended December 31, 2023 to US$0.13 million\nfor the year ended December 31, 2024, primarily attributable to the slight increase of interest expenses incurred for bank overdrafts\nand bank borrowings.\n\n** **\n\n**Net\nincome**\n\n \n\nAs\na result of the aforementioned, we recorded a net income of US$0.37 million and US$0.91 million for the years ended December 31,\n2023 and 2024, respectively. The increase in net income was primarily attributable to (i) our efforts in further optimization in\nstandardized operations which led to improvement in overall cost control and (ii) the decrease in marketing expenses we incurred\nto advertise our brand and restaurants in 2024.\n\n \n\n43\n\n** **\n\n**Comparison\nof Years Ended December 31, 2024 and 2025**\n\n \n\n**Revenues**\n\n \n\nThe\nfollowing table sets forth the breakdown of total revenues for the periods indicated.\n\n \n\n  \nFor\nthe years ended December 31,  \nVariance \n\n  \n2024  \n2025  \nAmount  \nPercentage \n\n  \nUS$  \n%  \nUS$  \n%  \nUS$  \n% \n\nRevenues \n   \n   \n   \n   \n   \n  \n\nRestaurant\noperations \n 8,548,395  \n 95.9  \n 9,091,689  \n 94.8  \n 543,294  \n 6.4 \n\nCompany-owned\nrestaurant operations \n 6,640,706  \n 74.5  \n 6,284,641  \n 65.5  \n (356,065) \n (5.4)\n\nSales\nof food ingredients and condiments \n 1,239,966  \n 13.9  \n 2,220,405  \n 23.2  \n 980,439  \n 79.1 \n\nFranchise\nlicensing \n 667,723  \n 7.5  \n 586,643  \n 6.1  \n (81,080) \n (12.1)\n\nOthers \n 366,949  \n 4.1  \n 497,982  \n 5.2  \n 131,033  \n 35.7 \n\nTotal\nrevenues \n 8,915,344  \n 100.0  \n 9,589,671  \n 100.0  \n 674,327  \n 7.6 \n\n \n\nWe\nrecorded total revenues of US$9.59 million for the year ended December 31, 2025, representing an increase of 7.6% from US$8.92 million\nfor the year ended December 31, 2024, primarily driven by the increase in revenues generated from sales of food ingredients and\ncondiments and others, partially offset by the decrease in revenues generated from company-owned restaurant operations and franchise\nlicensing.\n\n \n\n**Restaurant\nOperations**\n\n** **\n\n*Company-owned restaurant\noperations.* Revenues from company-owned restaurant operations decreased by 5.4% from US$6.64 million for the year\nended December 31, 2024 to US$6.28 million for the year ended December 31, 2025, primarily attributable to (i) domestic\neconomy instability affecting the market sentiment which led to the consumers being more prudent on daily spending and (ii) more intense\ncompetition in the catering industry as more Chinese hot-pot brands entering Southeast Asia.\n\n \n\n*Sales\nof food ingredients and condiments.* Revenues from sales of food ingredients and condiments increased by 79.1% from US$1.24 million\nfor the year ended December 31, 2024 to US$2.22 million for the year ended December 31, 2025, primarily attributable to\nthe increased sales of products to local distributors of food supply chain and franchised restaurant outlets.\n\n \n\n*Franchised\nlicensing.* Revenues from franchised licensing decreased by 12.1% from US$0.67 million for the year ended December 31,\n2024 to US$0.59 million for the year ended December 31, 2025. The decrease in revenues is primarily attributable to the downward\nadjustment of annual license fees for certain licensees renewing their license term, partially offset by the slight increase in royalties.\n\n \n\n**Others**\n\n** **\n\nRevenues\nfrom leasing out buildings increased by 35.7% from US$0.37 million for the year ended December 31, 2024 to US$0.50 million\nfor the year ended December 31, 2025, primary attributable to the longer average leasing duration as lessor in the 2025, as there\nwere two existing lease agreements commenced during the second half of 2024.\n\n** **\n\n**Cost\nof Revenues**\n\n \n\nThe\nfollowing table sets forth a breakdown of our cost of revenues presented by cost categories, in absolute amounts and as percentages of\ntotal revenues, for the periods indicated.\n\n \n\n  \nFor\nthe years ended December 31,  \nVariance \n\n  \n2024  \n2025  \nAmount  \nPercentage \n\n  \nUS$  \n%  \nUS$  \n%  \nUS$  \n% \n\nCost of revenues \n   \n   \n   \n   \n   \n  \n\nMaterial costs \n 2,905,793  \n 32.6  \n 3,604,260  \n 37.6  \n 698,467  \n 24.0 \n\nPayroll costs \n 1,979,175  \n 22.2  \n 2,342,591  \n 24.4  \n 363,416  \n 18.4 \n\nRental costs \n 924,000  \n 10.4  \n 987,799  \n 10.3  \n 63,799  \n 6.9 \n\nUtilities costs \n 349,228  \n 3.9  \n 343,203  \n 3.6  \n (6,025) \n (1.7)\n\nRepairs and maintenance costs \n 104,198  \n 2.6  \n 244,267  \n 1.9  \n 140,069  \n 134.4 \n\nDepreciation of property and equipment \n 227,412  \n 1.2  \n 184,837  \n 2.5  \n (42,575) \n (18.7)\n\nOthers \n 19,277  \n 0.1  \n 32,745  \n 0.4  \n 13,468  \n 69.9 \n\nTotal\ncost of revenues \n 6,509,083  \n 73.0  \n 7,739,702  \n 80.7  \n 1,230,619  \n 18.9 \n\n \n\n44\n\n \n\nWe\nrecorded a total cost of revenues of US$7.74 million for the year ended December 31, 2025, representing an increase of 18.9% from\nUS$6.51 million for the year ended December 31, 2024, primarily driven by the increase in cost of materials and payroll costs, which\nwas attributable to (i) the increased sales of food ingredients and condiments during 2025, and also (ii) a result of the appreciation\nof Malaysian Ringgit (MYR) against the U.S. Dollar (USD) during 2025 compared to 2024.\n\n \n\n*Material\ncosts.* Our costs of materials including costs of food, beverage and consumables, increased from US$2.91 million for the year\nended December 31, 2024 to US$3.60 million for the year ended December 31, 2025, which was driven by the increased cost in sales\nof food ingredients and condiments during 2025 partially offset by the slight decreased cost in company-owned restaurant operations.\n\n \n\n*Payroll\ncosts.* Our payroll costs including salaries and related social insurance costs for restaurant staff increased from US$1.98 million\nfor the year ended December 31, 2024 to US$2.34 million for the year ended December 31, 2025, mainly due to (i) the increased staff\nplacement in several outlets located in center to provide better services and (ii) the increased average staff allowance for longer working\nhours.\n\n \n\n*Rental\ncosts.* Our rental costs incurred for restaurant premises were US$0.92 million and US$0.99 million for the years ended December\n31, 2024 and 2025, respectively, which remained relatively stable.\n\n \n\n*Utilities\ncosts.* Our utilities costs incurred for restaurants’ daily operations were US$0.35 million and US$0.34 million for the\nyears ended December 31, 2024 and 2025, respectively, which remained relatively stable.\n\n \n\n*Repairs\nand maintenance costs.* Our repairs and maintenance costs increased from US$0.10 million for the year ended December 31, 2024\nto US$0.24 million for the year ended December 31, 2025 mainly due to the decrease of consumable tool expenses for repairs and maintenance.\n\n \n\n*Depreciation\nof property and equipment.* Our depreciation of property and equipment primarily including depreciation of leasehold improvements\nand equipment used for restaurant operations, and depreciation of buildings for leasing out, decreased from US$0.23 million for the year\nended December 31, 2024 to US$0.18 million for the year ended December 31, 2025, which was due to the increase of fully depreciated assets.\n\n \n\n*Others.* Our\nother miscellaneous costs were approximately US$0.02 million and US$0.03 million for the years ended December 31, 2024 and\n2025, respectively.\n\n** **\n\n**Gross\nProfit and Gross Profit Margin**\n\n \n\nThe\nfollowing table below sets forth our gross profit and gross profit margin in respect of revenue streams for the periods indicated.\n\n \n\n  \nFor\nthe years ended December 31,  \nVariance \n\n  \n2024  \n2025  \nAmount  \nPercentage \n\n  \nUS$  \nMargin\n%  \nUS$  \nMargin\n%  \nUS$  \n% \n\nGross profit and gross profit\nmargin \n   \n   \n   \n   \n   \n  \n\nRestaurant operations \n 2,158,669  \n 25.3  \n 1,497,062  \n 16.4  \n (661,607) \n (30.6)\n\nOthers \n 247,592  \n 67.5  \n 352,907  \n 70.9  \n 105,315  \n 42.5 \n\nTotal \n 2,406,261  \n 27.0  \n 1,849,969  \n 19.3  \n (556,292) \n (23.1)\n\n \n\nOur\ngross profits were US$2.41 million and US$1.85 million for the years ended December 31, 2024 and 2025, respectively, representing\na gross profit margin of 27.0% and 19.3%, respectively. The decrease in gross profit margin was primarily attributable to the significant\nincrease in percentage of sales of food ingredients and condiments with lower gross profit margin, which adversely drove down the overall\ngross profit margin.\n\n** **\n\n**Operating\nExpenses**\n\n \n\n*Selling\nand Marketing Expenses*\n\n \n\nOur\nselling and marketing expenses remained relatively stable, were US$0.26 million and US$0.26 million for the years ended December 31,\n2024 and 2025, respectively. The decrease in advertising and promotion expenses were offset by the increase in payroll expenses.\n\n* *\n\n*General\nand Administrative Expenses*\n\n \n\nOur general and administrative\nexpenses increased by 368.8% from US$0.82 million for the year ended December 31, 2024 to US$3.83 million for the year ended\nDecember 31, 2025, respectively, primarily due to (i) an increase in non-employee share-based compensation expenses of US$2.32 million\nfor business development and advisory services mainly including regional market research and expansion, localized marketing strategy development,\nsupplier relationship establishment, staff recruitment and training, and business coordination services, (ii) professional service expenses\nin connection with our initial public offering of US$0.42, (iii) an increase in other expenses of US$0.15 million and (iv) an increase\nin expected credit loss of US$0.06 million.\n\n** **\n\n45\n\n** **\n\n**Financial\nExpenses, Net**\n\n \n\nOur\nfinancial expenses, net slightly increased from US$0.13 million for the year ended December 31, 2024 to US$0.27 million for\nthe year ended December 31, 2025, primarily attributable to the increase in weighted average interest rate in total borrowings.\n\n** **\n\n**Net\nincome/(loss)**\n\n \n\nAs a result of the aforementioned,\nwe recorded a net income of US$0.91 million and net loss of US$2.68 million for the years ended December 31, 2024 and 2025,\nrespectively. The change from net income to net loss was primarily attributable to (i) the increase in non-employee share-based compensation\nof US$2.32 million and (ii) the decrease in gross profit in absolute amount of US$0.56 million.\n\n \n\n**A.****Liquidity\nand Capital Resources**\n\n \n\nOur primary sources of liquidity have been cash flows from our operating\nactivities, capital contributions from shareholders and loans from banks. As of December 31, 2024 and 2025, we had cash and cash equivalents\nof US$0.55 million and US$0.42 million, and total positive working capital of US$2.62 million and US$5.09 million, respectively. The Group\nbegan to incur losses since the fiscal year of 2025. The Group incurred net losses of US$2.68 million for the year ended December 31,\n2025, primarily due to (i) the increase in non-employee share-based compensation of US$2.32 million and (ii) the decrease in gross profit\nin absolute amount of US$0.56 million. Net cash used in operating activities were US$0.30 million and US$0.53 million for the years ended\nDecember 31, 2024 and 2025, respectively. These conditions raised substantial doubts about the Group’s ability to continue as a\ngoing concern.\n\n \n\nOur\nliquidity is based on our ability to generate cash from operating activities, obtain capital financing from equity interest investors\nand borrow funds from financial institutions. Our future capital requirements depend on many factors including our growth rate, the continuing\nmarket acceptance of our offerings, the timing and extent of spending to support our efforts to develop our platform, the expansion of\nsales and marketing activities, and the expansion and penetration of our business into different geographies and markets. We plan to\nimprove its liquidity through mitigation plans including: 1) enlarging its production to increase the cash inflow from operating activities;\n2) pursuing to obtain financial support from credit facilities and equity financing, and 3) improving operating efficiency and cost reduction.\n\n \n\nTo\nenhance our liquidity position or increase our cash reserve for future investments or operations through additional financing activities,\nwe may in the future seek equity financing or obtain credit facilities. The issue of additional equity securities would result in further\ndilution to our shareholders. The incurrence of indebtedness would result in increased fixed obligations and could result in operating\ncovenants that would restrict our operations. There can be no assurance, however, that the current operating plan will be effectively\nimplemented or that additional funding will be available on terms acceptable to us, or at all. If we are unable to obtain sufficient\nfunding, we could be required to delay our development efforts and limit activities, which could adversely affect our business and consolidated\nfinancial statements. Thus, there can be no assurances to alleviate the conditions that give rise to substantial doubt on going concern\nfor the next twelve months since the issuance of financial statements.\n\n** **\n\n**Cash\nFlows**\n\n \n\nThe\nfollowing table sets forth a summary of our cash flows for the periods indicated.\n\n \n\n  \nFor the years ended December 31, \n\n  \n2023  \n2024  \n2025 \n\n  \nUS$  \nUS$  \nUS$ \n\nNet cash provided by/(used in) operating activities \n 27,428  \n (297,730) \n (527,838)\n\nNet cash used in investing activities \n (989,700) \n (1,081,507) \n (3,058,232)\n\nNet cash provided by financing activities \n 789,247  \n 767,919  \n 3,514,682 \n\nEffect of exchange rate changes \n 63,498  \n 62,085  \n (57,992)\n\nNet change in cash \n (109,527) \n (549,233) \n (129,380)\n\nCash, at beginning of the year \n 1,204,232  \n 1,094,705  \n 545,472 \n\nCash, at end of the year \n 1,094,705  \n 545,472  \n 416,092 \n\n** **\n\n**Operating\nactivities**\n\n \n\nOur net cash used in operating activities was US$0.53 million for the\nyear ended December 31, 2025, which was primarily attributable to a net loss of US$2.68 million, as adjusted for (i) certain non-cash\nitems, primarily including non-employee share-based compensation of US$2.32 million, amortization of right-of-use assets of US$0.84 million,\ndepreciation of property and equipment and amortization of software of US$0.26 million, provision for expected credit losses of US$0.15\nmillion, and loss in equity method investment of US$0.13 million; and (ii) changes in working capital that negatively affected the cash\nflow from operating activities, primarily including an increase of US$0.66 million in amounts due from related parties due to the increased\nreceivables for products and services provided to related parties, a decrease of US$0.93 million in operating lease liabilities, an increase\nof US$0.44 million in accounts receivable mainly due to the increased receivables for products sold to local distributors, and a decrease\nof US$0.35 million in accounts payable due to timely payment; partially offset by (iii) changes in working capital that positively affected\nthe cash flow from operating activities, primarily including an increase of US$0.66 million in notes payable mainly due to the increased\npayables to suppliers benefiting from extension of credit term, and an increase of US$0.18 million in amount due to related parties.\n\n \n\n46\n\n \n\nOur\nnet cash used in operating activities was US$0.30 million for the year ended December 31, 2024, which was primarily attributable to a\nnet income of US$0.91 million, as adjusted for (i) certain non-cash items, primarily including amortization of right-of-use assets of\nUS$0.88 million, depreciation of property and equipment and amortization of software of US$0.27 million, provision for expected credit\nlosses of US$0.08 million, and gain from disposal of property and other equipment of US$0.07 million; and (ii) changes in working capital\nthat negatively affected the cash flow from operating activities, primarily including a decrease of US$0.94 million in operating lease\nliabilities, an increase of US$0.61 million in accounts receivable mainly due to the increased receivables for products sold to a local\ndistributor, an increase of US$0.52 million in amount due from related parties mainly due to the increased receivables for products and\nservices provided to related parties, a decrease of US$0.36 million in accrued liabilities and other current liabilities mainly due to\nthe decreased accrued payroll and welfare, and a decrease of US$0.18 million in amount due to related parties; partially offset by (iii)\nchanges in working capital that positively affected the cash flow from operating activities, primarily including an increase of US$0.25\nmillion in accounts payable mainly due to the increased payables to suppliers benefiting from extension of credit term, and a decrease\nof US$0.12 million in other non-current assets.\n\n \n\nOur\nnet cash provided by operating activities was US$0.03 million for the year ended December 31, 2023, which was primarily attributable\nto a net income of US$0.37 million, as adjusted for (i) certain non-cash items, primarily including amortization of right-of-use assets\nof US$0.91 million, depreciation of property and equipment and amortization of software of US$0.33 million, provision for expected credit\nlosses of US$0.06 million, and deferred taxes of US$0.04 million; and (ii) changes in working capital that positively affected the cash\nflow from operating activities, primarily including an increase of US$0.06 million in advances from customers, and an increase of US$0.06\nmillion in amounts due to related parties; partially offset by (iii) changes in working capital that negatively affected the cash flow\nfrom operating activities, primarily including a decrease of US$0.95 million in operating lease liabilities, a decrease of US$0.28 million\nin accrued liabilities and other current liabilities mainly due to the decreased accrued payroll and welfare, an increase of US$0.24\nmillion in amounts due from relate parties due to the increased receivables for products and services provided to related parties, an\nincrease of US$0.19 million in prepaid expenses and other current assets.\n\n** **\n\n**Investing\nActivities**\n\n \n\nOur\nnet cash used in investing activities for the year ended December 31, 2025 was US$3.06 million primarily attributable to (i) interest-free loans\nto related parties of US$3.63 million, (ii) interest-free loans to third parties of US$1.31 million, and (iii) purchase\nof property, equipment and software of US$0.23 million; partially offset by collection of interest-free loans to related parties\nof US$2.12 million.\n\n \n\nOur\nnet cash used in investing activities for the year ended December 31, 2024 was US$1.08 million primarily attributable to (i) interest-free loans\nto related parties of US$1.38 million, (ii) interest-free loans to third parties of US$0.25 million, and (iii) purchase\nof property, equipment and software of US$0.08 million; partially offset by collection of interest-free loans to related parties\nof US$0.62 million.\n\n \n\nOur\nnet cash used in investing activities for the year ended December 31, 2023 was US$0.99 million primarily attributable to (i)\npurchase of property, equipment and software of US$0.76 million, (ii) interest-free loans to related parties of US$0.39 million,\nand (iii) interest-free loans to third parties of US$0.23 million; partially offset by collection of interest-free loans\nto related parties of US$0.47 million.\n\n** **\n\n**Financing\nActivities**\n\n \n\nOur net cash provided by financing activities for the year ended December 31,\n2025 was US$3.51 million, primarily attributable to (i) proceeds from bank overdrafts of US$6.52 million, (ii) proceeds\nfrom IPO offering and full exercise of over-allotment option of US$5.75 million, (iii) proceeds from liability related to sale of future\nreceivables of US$1.87 million, and (iv) proceeds from long-term bank loans of US$0.05 million; partially offset by (i) repayments\nof bank overdrafts of US$6.60 million, (ii) deemed distribution of US$1.83 million, (iii) payment for offering cost related\nto IPO of US$1.27 million, (iv) repayment of liability related to sale of future receivables of US$0.82 million, (v) repayments of long-term bank\nloans of US$0.07 million, (vi) install payments of finance leases of US$0.04 million, and (vii) repayments of loan from third parties\nof US$0.04 million.\n\n \n\nOur\nnet cash provided by financing activities for the year ended December 31, 2024 was US$0.77 million, primarily attributable\nto (i) capital injection from shareholders of US$0.95 million and (ii) proceeds from bank overdrafts of US$0.92 million;\npartially offset by (i) repayments of bank overdrafts of US$1.00 million, (ii) repayments of long-term bank loans\nof US$0.06 million and (iii) install payments of finance leases of US$0.04 million.\n\n \n\nOur\nnet cash provided by financing activities for the year ended December 31, 2023 was US$0.79 million, primarily attributable\nto (i) proceeds from bank overdrafts of US$1.09 million, (ii)  proceeds from long-term bank loans of US$0.37 million,\n(iii)  capital injection from shareholders of US$0.12 million and (iv) loans from third parties of US$0.06 million;\npartially offset by (i) repayments of bank overdrafts of US$0.75 million, (ii) repayments of long-term bank loans\nof US$0.07 million and (iii) install payments of finance leases of US$0.04 million.\n\n** **\n\n47\n\n** **\n\n**Contingencies**\n\n \n\nFrom\ntime to time, we may become involved in litigation relating to claims arising in the ordinary course of the business. As of the date\nof this proxy statement/prospectus, there are no claims or actions pending or threatened against us that, if adversely determined, would\nin our judgment have a material adverse effect on us.\n\n** **\n\n**Capital\nExpenditures**\n\n \n\nWe incurred capital expenditures of US$0.76 million, US$0.08 million and\nUS$0.23 million for the years ended December 31, 2023, 2024 and 2025, respectively, mainly for leasehold improvement and replacement of\nequipment. We expect that our capital expenditures will increase in the foreseeable future as we expand our business, and that our level\nof capital expenditures will be significantly affected by customer demand for our products and services. Our future capital requirements\nmay be uncertain and actual capital requirements may be different from those we currently anticipate. To the extent cash flows from our\nbusiness activities are insufficient to fund future capital requirements, we may need to seek equity or debt financing. We will continue\nto incur capital expenditures to support the expected growth of our business.\n\n** **\n\n**Contractual\nObligations**\n\n \n\nThe\nfollowing table sets forth our contractual obligations as of December 31, 2025:\n\n \n\n**Payments\ndue by schedule** \n\n  \nLess\nthan\n\n1 year  \n1 – 3 years  \nMore\nthan\n\n3 years  \nTotal \n\nOperating leases \n$753,071  \n$940,165  \n$-  \n$1,693,236 \n\nFinance leases \n$42,589  \n$62,860  \n$-  \n$105,449 \n\nBank overdrafts \n$420,792  \n$-  \n$-  \n$420,792 \n\nLiability related to sale of future receivable \n$1,109,467  \n$-  \n$-  \n$1,109,467 \n\nLong-term bank loans plus accrued interests \n$165,844  \n$279,927  \n$2,368,090  \n$2,813,861 \n\n \n\nOperating\nlease agreements represented non-cancellable operating leases for our use of office, food factory and restaurant store premises in Malaysia.\nFinance lease agreements represented the purchase of motor vehicles in financial installments. Other than those shown above, we did not\nhave any other significant capital commitments, purchase commitments, long-term obligations or guarantees as of December 31, 2025.\n\n \n\n**B.****Research\nand Development, Patents and Licenses, etc.**\n\n \n\n*See\n“Item 4. Information on the Company—B. Business Overview” and “Item 5. Operating and Financial Review and Prospects—A.\nOperating Results.”*\n\n* *\n\n**C.****Trend\nInformation**\n\n \n\nOther\nthan as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for\nthe period beginning on January 1, 2025 and ending on the date of this annual report that are reasonably likely to have a material effect\non our net revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to\nbe not necessarily indicative of future operating results or financial conditions.\n\n \n\n**D.****Critical\nAccounting Estimates**\n\n \n\nWe\nprepare our consolidated financial statements in accordance with U.S. GAAP. The preparation of financial statements in conformity with\nU.S. GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities\nat the date of the financial statements and reported amounts of revenues and expenses during the reporting periods. We continually evaluate\nthese judgments and estimates based on our own experience, knowledge and assessment of current business and other conditions, and our\nexpectations regarding the future based on available information and assumptions that we believe to be reasonable. Since the use of estimates\nis an integral component of the financial reporting process, our actual results could differ from those estimates. Some of our accounting\nestimates require a higher degree of judgment than others in their application.\n\n \n\nWhen\nreading our consolidated financial statements, you should consider our selection of critical accounting estimates, the judgment and other\nuncertainties affecting the application of such management estimates and the sensitivity of reported results to changes in conditions\nand assumptions. We believe the following accounting estimates involve the most significant judgments used in the preparation of our\nfinancial statements: (1) provision of allowance for expected credit losses, (2) estimates for inventory write-downs, and (3) valuation\nallowance for deferred tax assets.\n\n** **\n\n48\n\n** **\n\n**Provision\nof Allowance for Expected Credit Losses**\n\n \n\nOur\naccounts receivable, amounts due from related parties, other receivables and deposits in prepaid expenses and other current assets are\nwithin the scope of ASC 326. We estimated provision of allowance for expected credit losses to reserve for potentially uncollectible\nreceivable amounts periodically. We consider factors in assessing the collectability of the accounts receivable and related receivables\nand deposits in prepaid expenses and other current assets, such as historical distribution of the aging of the amounts due, historical\ncollections data of the customers, creditworthiness, forward-looking adjustments to assess the credit risk characteristics. Additionally,\nexternal data and macroeconomic factors are also considered. We estimated the allowance by segmenting in-scope financial assets into\ngroups based on their shared credit risk characteristics and the aging of the underlying receivables and assessed the expected credit\nloss rate for each group periodically. If there is strong evidence indicating that the accounts receivable is likely to be unrecoverable,\nwe also make specific allowance in the period in which there is strong evidence that a loss is determined to be probable. We would consider\nfactors such as the customer’s financial condition and liquidity, the customer’s willingness and ability to settle payment\nand historical and subsequent collections data in making specific allowance. Our estimate of the key assumptions did not change significantly\nthroughout the periods presented. For the years ended December 31, 2023, 2024 and 2025, we recognized expected credit loss of US$58,188,\nUS$83,669 and US$148,004, respectively.\n\n** **\n\n**Estimates\nfor Inventory Write-downs**\n\n \n\nOur\ninventories, consisting of foods, consumables and beverage, are stated at the lower of cost or net realizable value, with net realized\nvalue represented by estimated selling prices in the ordinary course of business, less reasonably predictable costs of disposal and transportation.\nInventories are written down to estimated net realizable value, which could be impacted by certain factors including historical usage,\nexpected demand, anticipated sales price, product shelf life, product obsolescence, and other factors. We periodically review our inventories\nfor excess or slow-moving items and makes provisions as necessary to properly reflect inventory value. No inventory write-downs were\nrecorded for years ended December 31, 2023, 2024 and 2025, respectively.\n\n** **\n\n**Valuation\nAllowance for Deferred Tax Assets**\n\n \n\nDeferred\nincome taxes are provided using assets and liabilities method, which requires the recognition of deferred tax assets and liabilities\nfor the expected future tax consequences of events that have been included in the financial statements. Deferred tax assets are recognized\nto the extent that these assets are more likely than not to be realized. In making such a determination, we consider all positive and\nnegative evidence, including future reversals of projected future taxable income and results of recent operation. We establish a valuation\nallowance against deferred tax assets to the extent we believe that recovery is not likely.\n\n \n\nIn general, deferred tax assets represent future tax benefits to be\nreceived when certain expenses previously recognized in the consolidated statements of operations become deductible expenses under applicable\nincome tax laws, or loss or credit carryforwards are utilized. As we estimate the allowance for deferred tax assets by considering if\nsufficient future taxable income will be generated to utilize the existing deferred tax assets, it can be altered if we change our forecasts\nof future profitability. We recorded US$28,967, US$2,560 and US$625,178 valuation allowance for deferred tax assets for the years ended\nDecember 31, 2023, 2024 and 2025, respectively.\n\n \n\n**E.****Recently\nAdopted or Issued Accounting Pronouncements**\n\n \n\nA\nlist of recently issued accounting pronouncements that are relevant to us is stated in Note 2 (ab) to our consolidated financial statements\nas of and for the fiscal years ended December 31, 2023, 2024 and 2025."}