{"url_path":"/sec/cupr/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":"2026-04-27","source_url":"https://www.sec.gov/Archives/edgar/data/1995704/0001493152-26-019085-index.html","accession_number":"0001493152-26-019085","cik":"0001995704","ticker":"CUPR","issuer_name":"Cuprina Holdings (Cayman) LTD","edgar_url":"https://www.sec.gov/Archives/edgar/data/1995704/0001493152-26-019085-index.html","primary_entity_key":"0001995704","primary_entity_name":"Cuprina Holdings (Cayman) LTD"},"word_count":8552,"has_tables":true,"body_markdown":"**ITEM\n5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS**\n\n \n\n*The\nfollowing discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial\nstatements and the related notes included elsewhere in this Report. This discussion contains forward-looking statements reflecting our\ncurrent expectations that involve risks and uncertainties. See “Forward-Looking Statements” for a discussion of the uncertainties,\nrisks and assumptions associated with these statements. Actual results and the timing of events could differ materially from those discussed\nin our forward-looking statements as a result of many factors, including those set forth under “Risk Factors” and elsewhere\nin this Report.*\n\n \n\n**Overview**\n\n \n\nWe\nare a Singapore-based biomedical and biotechnology company that is dedicated to the development and commercialization of innovative products\nfor the management of chronic wounds and the health and beauty sector. Our expertise in biomedical research allows us to identify and\nutilize materials derived from natural sources to develop wound care products in the form of medical devices meeting international standards.\nWe believe we will be able to build upon and leverage such expertise to develop innovative cosmeceutical products in the future.\n\n \n\nAs\nof December 31, 2025, we manufactured and distributed our MEDIFLY products. The MEDIFLY products are used as a biological debridement\ntool for chronic wounds, in a procedure known as Maggot Debridement Therapy, or MDT, which is an effective alternative to surgical debridement.\nIn addition to our currently commercialized MEDIFLY products, we have two lines of chronic wound care products in our pipeline. Such\nlines of pipeline chronic wound care products include:\n\n \n\n \n●\nCollagen\ndressings, including sponges, particles and hydrogels utilizing bullfrog collagen derived from the valorization of abattoir waste\nstreams of American bullfrogs (*Lithobates catesbeianus*); and\n\n \n●\nProducts\nutilizing medical leeches for wound treatment.\n\n \n\nWe\ncurrently expect development of such products to take place over the course of 2026 and 2027 and to become commercially available subject\nto regulatory approval.\n\n \n\nWe\nhave been selling our MEDIFLY products primarily in Singapore since February 2020. In March 2023, our MEDIFLY products became commercially\navailable in Hong Kong. Looking ahead, we have strategic plans in place for 2026 and 2027 to expand our sales and establish physical\noperations in several key regions, including the Middle East (in particular, the member states of the Gulf Cooperation Council, or GCC),\nand mainland China. These expansion initiatives will further enable us to cater to the growing demand for our products in these promising\nmarkets, cementing our position as a trusted player in the field of chronic wound care and treatment.\n\n \n\nFor\nour cosmeceuticals business, we introduced three products in 2023, including a hydrating balm product, a muscle energy cream and a pain\nrelief muscle patch. For our currently commercialized cosmeceutical products, we have commissioned original equipment manufacturers of\nskincare products to develop the formulation and manufacture the substantially finished and finished products. In addition, we plan to\nexplore the possibility of developing a range of potential cosmeceutical product candidates incorporating bullfrog collagen using the\nnovel collagen production technology that we are currently developing with a view to making them commercially available between 2026\nand 2028, subject to the progress of the relevant R&D work.\n\n \n\nWe\noffer our chronic wound care products to both public and private hospitals and clinics, where patients can obtain them through prescription\nfrom a physician. Our customers primarily include major public and private hospitals and clinics in Singapore. Our commercialized cosmeceutical\nproducts can be purchased directly by individual customers through a variety of channels, including retailers and gyms in Singapore and\nother countries such as Malaysia and Australia, as well as online shopping platforms such as Shopee.\n\n \n\n81\n\n \n\n \n\nAs\nof December 31, 2025, we had 10 full-time employees. For the years ended December 31, 2023, 2024, and 2025, our revenue amounted to S$100,773,\nS$48,321, and S$49,894 (US$38,789), respectively, while we recorded net loss of S$1,119,555, S$1,560,535, and S$4,673,447 (US$3,633,248),\nrespectively, for the same periods.\n\n \n\n**A.\nOperating results**\n\n \n\n**Key\nFactors Affecting Our Results of Operations**\n\n \n\nOur\nresults of operations have been, and are expected to continue to be, affected by various factors, which primarily include the following:\n\n \n\n**Product\npipeline and commercialization**\n\n \n\nOur\nbusiness and results of operations depend on our ability to successfully develop and commercialize our pipeline products and product\ncandidates and the timing of obtaining regulatory approvals and commercializing such products. As of December 31, 2025, we had fully\ncommercialized one distinct line of chronic wound care products, our MEDIFLY products, which accounted for 78.4%, 71.2%, and 88.6% of\nour revenue for the year ended December 31, 2023, 2024 and 2025, respectively. We have a number of pipeline chronic wound care products\nand cosmeceutical products under development. Our ability to grow our revenue and timing of such growth is largely dependent on whether\nand when we are able to develop and commercialize these products.\n\n \n\nOur\nresults of operations also depend on our ability to successfully commercialize our pipeline products upon approval. The commercial success\nof our products depends upon the degree of market acceptance each of such products achieves, particularly among hospitals and physicians.\nPhysicians’ and hospitals’ receptiveness to our products in turn depends on, among others, our ability to convince them as\nto the distinctive characteristics, advantages, safety and cost effectiveness of our products as compared to our competitors’ products.\n\n \n\n**Growth\nof the chronic wound care market in our intended markets**\n\n \n\nThe\noverall growth of the medical device market, in particular the chronic wound care market, will significantly affect our financial performance\nand future growth. According to Fortune Business Insights, the market size for the global chronic wound care market was US$15.27 billion\nin 2025 and is expected to reach US$29.22 billion in 2034, representing a CAGR of 7.5%. In particular, with the escalating prevalence\nof lifestyle diseases such as diabetes, aging populations, enhanced patient health awareness, favorable government policies, increased\npatient affordability and improved clinical practice of physicians, in the countries/regions where we currently operate or intend to\noperate in the near future, namely, Southeast Asia, China, the United States and the Middle East, chronic wound care market is expected\nto grow steadily in the foreseeable future.\n\n \n\nWe\nbelieve that we will benefit from the expected growth of the global and regional chronic wound care market. Through our robust product\npipeline, research and development expertise, in-house manufacturing capabilities and knowledge navigating the complex regulatory approval\nprocess, we believe we are well positioned to capture the significant potential growth in the chronic wound care medical device market.\n\n \n\n**Our\nability to attract customers and educate health practitioners to the benefit of our products**\n\n \n\nWe\ngenerate revenue primarily from the provision of our chronic wound care products. Our sustainable revenue growth depends significantly\non our ability to retain and attract customers, primarily including hospitals and clinics in Singapore, which, in turn, relies on our\nability to educate healthcare practitioners regarding the utilization of our products in wound care environments. Healthcare practitioners\nhold a crucial role in deciding the treatment path for patients and selecting the appropriate products, if needed, for their care. To\nensure the acceptance and adoption of our wound care products, it is essential to educate healthcare practitioners about the features,\nadvantages, safety, clinical effectiveness, and cost-effectiveness of our products. This includes providing insights on potential comparisons\nwith competitor products and offering training on the correct application of our products to healthcare practitioners. As such, we allocate\nsubstantial resources to training our sales professionals and to continuously augmenting their knowledge and capabilities on a continuous\nbasis.\n\n \n\n82\n\n \n\n \n\nFor\nthe years ended December 31, 2023, 2024, 2025 and up to the date of this annual report, our wound care products had been prescribed by\nhealth practitioners in a number of major general hospitals in Singapore and Hong Kong. In addition, we have either held and/or participated\nin over 10 educational conferences and talks during the same period. Our ability to continue to enhance our recognition among chronic\nwound care professionals and their potential patients is critical to our ability to continue to grow our revenue and achieve profitability.\n\n \n\n**Favorable\nGovernment Policies and Medical Insurance Coverage**\n\n \n\nGovernment\npolicies and medical insurance coverage significantly affect the overall medical device industry, and specifically they can directly\naffect the end-market prices, sales volume and market acceptance of our products.\n\n \n\nWe\nhave received government grants in the amount of S$36,086, S$41,531 and S$16,928 (US$13,160) for the years ended December 31, 2023, 2024\nand 2025, respectively, due to the Jobs Support Scheme and Jobs Growth Incentive from Inland Revenue Authority of Singapore,\nwhich is designed to support and encourage local hiring in Singapore. In addition, the Smart Nation initiative led by the government\nof Singapore is expected to support the increased demand for medical devices by the rapidly ageing population to drive the market in\nSingapore. Furthermore, the Research, Innovation and Enterprise Plan (RIE2030), launched by the government of Singapore, holds a budget\nof around S$37 billion with ‘Human Health and Potential’ as one of the major areas of focus. These broader government policies\nand initiatives will help accelerate the innovation and upgrading of medical device industry, and boost the development of the medical\ndevice market into the future. However, we cannot assure you that the government grants we are currently benefiting from and the\nfavorable government policies will continue in the future. See “Risk Factors – Risks Relating to Our Business and Industry\n– The reduction or discontinuation of government grants currently available to us may have a material adverse effect on our business\noperations and financial condition.”\n\n \n\nAdditionally,\nthe growth in population coverage and funding for public medical insurance programs have significantly improved patients’ abilities\nto pay for medical treatment, resulting in considerable growth in both patient enrollment and average spending. As a result, whether\nour products, including pipeline products expected to become commercially available, can be included in government insurance coverage\nin the jurisdictions where we currently operate or intend to enter, will have a material impact on the demand for our products, the sales\nvolume of our products and our financial performance. However, there are uncertainties as to whether the government will continue to\nincrease its healthcare spending, and whether our products can be included in the public insurance coverage, and different jurisdictions\nmay have different practices for the reimbursement of our products.\n\n \n\n**Key\nComponents of Results of Operations**\n\n \n\n**Revenue**\n\n \n\nFor\nthe years ended December 31, 2023, 2024, and 2025, we generated revenue of S$100,773, S$48,321, and S$49,894 (US$38,789), respectively.\nWe derive all of our revenue from sale of our products. For the year ended December 31, 2023, 2024 and 2025, 78.4%, 71.2% and 88.6%,\nrespectively, of our revenue was derived from the sales of our MEDIFLY products, with the remaining 21.6%, 28.8% and 11.4% coming from\nsales of our cosmeceutical products respectively, which we began selling in April 2023. For the year ended December 31, 2023, 2024 and\n2025, 87.9%, 89.9% and 75.7%, respectively, of our revenue was derived from customers located in Singapore, with the remainder of our\nrevenue derived from customers located in Hong Kong and Australia respectively.\n\n \n\n**Cost\nof revenues**\n\n \n\nOur\ncost of revenues primarily consists of production staff salaries and contributions, rental for production space and the costs of breeding\n*Lucilia cuprina*flies and consumables used. For the years ended December 31, 2023, 2024 and 2025, our cost of revenues was S$64,168,\nS$51,345, and S$50,539 (US$39,290), respectively. The following table sets forth components of our cost of revenues for the years indicated:\n\n \n\n  \nYear ended December 31, \n\n  \n2023  \n2024  \n2025  \n2025 \n\n  \nS$  \nS$  \nS$  \nUS$ \n\n  \n   \n   \n   \n  \n\nProduction staff salaries and contributions \n 10,632  \n 11,583  \n 13,426  \n 10,438 \n\nRental for production space \n 15,073  \n 15,073  \n 15,265  \n 11,867 \n\nUtilities used for production \n 3,606  \n 5,658  \n 4,195  \n 3,261 \n\nDepreciation for production equipment \n 8,064  \n 10,499  \n 10,038  \n 7,804 \n\nDirect cost for cosmeceutical product \n 15,624  \n 5,753  \n 1,696  \n 1,319 \n\nBreeding for *Lucilia cuprina* flies and consumables used \n 11,169  \n 2,779  \n 4,239  \n 3,295 \n\nOutsourcing nursing services \n -  \n -  \n 1,680  \n 1,306 \n\nTotal \n 64,168  \n 51,345  \n 50,539  \n 39,290 \n\n \n\n83\n\n \n\n \n\n**Gross\nprofit/ (loss) and gross profit/ (loss) margin**\n\n \n\nOur\ngross profit and gross profit margin are primarily affected by the pricing of the products as well as the fluctuation for some of the\nconsumables in cost of sales. For the years ended December 31, 2023, our gross profit was S$36,605, with a gross profit margin of 36.3%.\nFor the years ended December 31, 2024 and 2025, our gross loss was S$3,024 and S$645 (US$501), with a gross loss margin of 6.3% and 1.3%,\nrespectively.\n\n \n\n**Operating\nexpenses**\n\n \n\n*Selling,\ngeneral and administrative expenses*\n\n \n\nOur\nselling, general and administrative expenses primarily consist of (i) selling and marketing expenses; (ii) payroll and employee benefits;\n(iii) depreciation and amortization expenses; and (iv) other operating expenses. For the years ended December 31, 2023, 2024 and 2025,\nour selling, general and administrative expenses were S$937,200 S$1,400,873 and S$4,602,300 (US$3,577,937), respectively. The following\ntable sets forth components of our selling, general and administrative expenses for the periods indicated:\n\n \n\n  \nYear ended December 31, \n\n  \n2023  \n2024  \n2025  \n2025 \n\n  \nS$  \nS$  \nS$  \nUS$ \n\n  \n   \n   \n   \n  \n\nSelling and marketing expenses \n 79  \n 3,641  \n 1,039  \n 808 \n\nPayroll and employee benefits \n 672,465  \n 831,866  \n 899,801  \n 699,527 \n\nDepreciation and amortization expenses \n 26,994  \n 31,687  \n 26,485  \n 20,590 \n\nOther operating expenses \n 237,662  \n 533,679  \n 3,674,975  \n 2,857,012 \n\nTotal \n 937,200  \n 1,400,873  \n 4,602,300  \n 3,577,937 \n\n \n\n(i)\nSelling and marketing expenses\n\n \n\nOur\nselling and marketing expenses primarily consist of expenses relating to our advertising and marketing of our products and external consulting\ncosts. For the years ended December 2023, 2024 and 2025, our selling and marketing expenses were S$79, S$3,641 and S$1,039 (US$808),\nrespectively.\n\n \n\n(ii)\nPayroll and employee benefits\n\n \n\nOur\npayroll and employee benefits primarily consist of personnel-related expenses associated with our employees, primarily including salaries,\nbenefits and allowances, and contributions to the government savings scheme in Singapore. The following table sets forth components of\nour payroll and employee benefits for the periods indicated:\n\n \n\n  \nYear ended December 31, \n\n  \n2023  \n2024  \n2025  \n2025 \n\n  \nS$  \nS$  \nS$  \nUS$ \n\n  \n   \n   \n   \n  \n\nStaff salaries \n 586,703  \n 726,170  \n 733,689  \n 570,387 \n\nStaff bonuses and allowances \n -  \n -  \n 59,938  \n 46,597 \n\nStaff CPF contributions (1) \n 81,040  \n 101,441  \n 102,628  \n 79,786 \n\nSkill Development Levy (2) \n 1,469  \n 1,611  \n 1,604  \n 1,247 \n\nStaff uniform \n 16  \n 104  \n -  \n - \n\nStaff welfare \n 3,237  \n 2,540  \n 1,612  \n 1,253 \n\nOthers \n -  \n -  \n 330  \n 257 \n\n**Total (3)** \n 672,465  \n 831,866  \n 899,801  \n 699,527 \n\n \n\nNotes:\n\n \n\n(1)\na mandatory social security savings scheme in Singapore funded by contributions from employers and employees\n\n(2)\na compulsory levy in Singapore which requires an employer to pay for all employees working in Singapore\n\n(3)\nthe payroll and employee benefits included here are those that are not directly associated with our revenue generation and research and\ndevelopment activities.\n\n \n\n84\n\n \n\n \n\n(iii)\nDepreciation and amortization expenses\n\n \n\nOur\ndepreciation and amortization expenses are primarily charged on our (i) furniture and fittings; (ii) computers; and (iii) renovation.\nThe depreciation and amortization expenses included here are those that are not directly associated with our revenue generation. For\nthe years ended December 2023, 2024 and 2025, our depreciation and amortization expenses were S$26,994, S$31,687 and S$26,485 (US$20,590),\nrespectively.\n\n \n\n*(iv)\nOther operating expenses*\n\n \n\nOur\nother operating expenses primarily consist of professional fees, consultant fees, director fees, insurance expenses, operating lease\nexpenses, travelling expenses, foreign exchange losses and utilities. For the years ended December 31, 2023, 2024 and 2025, our other\noperating expenses was S$237,662, S$533,679 and S$3,674,975 (US$2,857,012), respectively. The following table sets forth components of\nour other operating expenses for the periods indicated:\n\n \n\n  \nYear ended December 31, \n\n  \n2023  \n2024  \n2025  \n2025 \n\n  \nS$  \nS$  \nS$  \nUS$ \n\n  \n   \n   \n   \n  \n\nProfessional fees \n 65,695  \n 369,004  \n 3,236,962  \n 2,516,491 \n\nConsultant fees \n 48,218  \n 22,133  \n 80,249  \n 62,387 \n\nDirector fees \n -  \n -  \n 67,500  \n 52,476 \n\nOperating lease expenses for ROU assets \n 31,330  \n 29,112  \n 48,087  \n 37,384 \n\nCardup fee charges \n -  \n 12,855  \n 2,070  \n 1,609 \n\nShort-term lease rental \n 1,200  \n 6,448  \n 4,933  \n 3,835 \n\nTravelling expenses \n 9,182  \n 6,014  \n 9,888  \n 7,687 \n\nAllowance for ECL \n 28,409  \n -  \n -  \n - \n\nUtilities \n 4,694  \n 6,782  \n 5,362  \n 4,169 \n\nInsurance expenses \n 8,996  \n 10,642  \n 49,127  \n 38,192 \n\nTraining and seminar expenses \n 7,928  \n 18,468  \n 10,001  \n 7,775 \n\nSubscription expenses \n 6,592  \n 24,433  \n 6,906  \n 5,369 \n\nFreight and courier expenses \n 6,662  \n 2,860  \n 6,857  \n 5,331 \n\nForeign exchange losses \n 2,503  \n 1,969  \n 124,152  \n 96,519 \n\nOthers(1) \n 16,253  \n 22,959  \n 22,881  \n 17,788 \n\nTotal \n 237,662  \n 533,679  \n 3,674,975  \n 2,857,012 \n\n \n\nNotes:\n\n \n\n(1)\nOthers primarily include bank fees, fixed asset expensed off, IT & computer expenses, and printing & stationery expenses etc.\n\n \n\n85\n\n \n\n \n\n*Research\nand development costs*\n\n \n\nOur\nresearch and development costs primarily consist of the costs incurred by us on research and collaboration works conducted with NTU for\nthe extraction and formulation of bullfrog collagen and bullfrog collagen-based wound care products, and salaries and contributions related\nto our research and development staff. With respect to our product using hirudotherapy, or medical leech therapy, currently in the pipeline,\nin line with our R&D workflow, we have completed the ideation phase of the project and commenced the literature review stage in second\nhalf of 2025. Therefore, no R&D costs have been incurred thus far with respect to such products, and we anticipate costs to be incurred\nstarting from the preliminary investigation phase and onwards. For further information regarding our R&D workflow, please refer to\nthe “Business – Research and Development”.\n\n \n\nFor\nthe years ended December 31, 2023, 2024 and 2025, our research and development costs were S$167,734, S$241,362 and S$226,884 (US$176,385),\nrespectively. The following table sets forth components of our research and development costs for the periods indicated:\n\n \n\n  \nYear ended December 31, \n\n  \n2023  \n2024  \n2025  \n2025 \n\n  \nS$  \nS$  \nS$  \nUS$ \n\n  \n   \n   \n   \n  \n\nExternal costs \n -  \n 11,963  \n 4,000  \n 3,110 \n\nInternal costs \n    \n    \n    \n   \n\n- R&D staff salaries and contributions \n 150,177  \n 226,632  \n 217,112  \n 168,788 \n\n- Rental for R&D facilities (1) \n 13,200  \n -  \n -  \n - \n\n- Equipment \n 157  \n 483  \n 2,485  \n 1,932 \n\n- Consumables \n 4,200  \n 2,284  \n 3,287  \n 2,555 \n\nTotal \n 167,734  \n 241,362  \n 226,884  \n 176,385 \n\n \n\nNotes:\n\n \n\n(1)\nRental for R&D facilities refers to a short-term lease that we entered into in March 2022 for the purpose of conducting our research\nand development activities in Life Science Incubator in Singapore. Life Science Incubator is a biosafety level 2 co-working laboratory\nspace offering advanced equipment and facilities to researchers. This lease was terminated in June 2023.\n\n \n\n**Other\nincome**\n\n \n\nOur\nother income primarily consists of grants that we received under the Jobs Support Scheme and Jobs Growth Incentive from the government\nof Singapore, as well as Enterprise Development Grant (“EDG”) for Sustainability Open Innovation Challenge (“SOIC”)\nfrom Enterprise Singapore, fees received from providing the usage for ISO13485 certified facilities and interest income derived from\nfixed deposit and overnight deposit. For the years ended December 31, 2023, 2024 and 2025, our other income was S$39,149, S$173,865 and\nS$234,455 (US$182,271), respectively. The following table sets forth components of our other income for the periods indicated:\n\n \n\n  \nYear ended December 31, \n\n  \n2023  \n2024  \n2025  \n2025 \n\n  \nS$  \nS$  \nS$  \nUS$ \n\n  \n   \n   \n   \n  \n\nGovernment grants \n 36,086  \n 163,846  \n 138,073  \n 107,341 \n\nUsage of ISO13485 certified facilities \n -  \n 10,000  \n 67,614  \n 52,565 \n\nInterest income \n -  \n -  \n 26,562  \n 20,650 \n\nCash /fund transfer rebates \n 3,063  \n 19  \n 2,206  \n 1,715 \n\nTotal \n 39,149  \n 173,865  \n 234,455  \n 182,271 \n\n \n\n86\n\n \n\n \n\n**Interest\nexpense**\n\n \n\nInterest\nexpense mainly represents interest on interest-bearing bank loan, loan from one of our ultimate beneficial owners and loan from employees.\nFor the years ended December 31, 2023, 2024 and 2025, our interest expense was S$56,587, S$37,210 and S$14,724 (US$11,447), respectively.\nThe following table sets forth components of our interest expense for the years indicated:\n\n \n\n  \nYear ended December 31, \n\n  \n2023  \n2024  \n2025  \n2025 \n\n  \nS$  \nS$  \nS$  \nUS$ \n\n  \n   \n   \n   \n  \n\nInterest expense on an advance from one of the ultimate beneficial owners \n 55,860  \n -  \n -  \n - \n\nInterest expense on loan from employees \n -  \n 35,427  \n -  \n - \n\nInterest expense on term loan \n 727  \n 1,783  \n 14,724  \n 11,447 \n\nTotal \n 56,587  \n 37,210  \n 14,724  \n 11,447 \n\n \n\n**Income\ntax expense**\n\n \n\nOur\nincome tax expense comprises our current tax expense and deferred tax. As we did not generate taxable income for the years ended December\n31, 2023, 2024 and 2025, our income tax expense was nil, nil and nil, respectively.\n\n \n\n**Taxation**\n\n \n\n*Cayman\nIslands and BVI*\n\n \n\nOur\nCompany and Cuprina Holdings (BVI) Limited are domiciled in the Cayman Islands and British Virgin Islands, respectively. The locality\ncurrently enjoys permanent income tax holidays; accordingly, our Company does not accrue for income taxes.\n\n \n\n*Singapore*\n\n \n\nCuprina\nPte. Ltd. is incorporated in Singapore and is subject to Singapore corporate tax on the taxable income as reported in its statutory financial\nstatements adjusted in accordance with relevant Singapore tax laws. The applicable tax rate is 17% in Singapore, with 75% of the first\nS$10,000 taxable income and 50% of the next S$190,000 taxable income exempted from income tax.\n\n \n\n*Malaysia*\n\n \n\nCuprina Malaysia Sdn. Bhd., the subsidiary, is subject to Malaysian corporate income tax on its taxable income as reported in its statutory\nfinancial statements, in accordance with applicable Malaysian tax laws. The standard corporate income tax rate in Malaysia is 24%. However,\nas Cuprina Malaysia Sdn. Bhd. is directly owned by a foreign company incorporated outside Malaysia, and such foreign ownership exceeds\n20% of its paid-up ordinary share capital, the subsidiary does not qualify for the SME preferential tax rates and remains subject to the\n24% corporate income tax rate. The subsidiary had no operating profit or tax liabilities for the years ended December 31, 2023, 2024 and\n2025.\n\n \n\n*Hong\nKong*\n\n \n\nCuprina\nHong Kong Limited is considered a Hong Kong tax resident enterprise under Hong Kong tax laws; accordingly, it is subject to enterprise\nincome tax on its taxable income as determined under Hong Kong tax laws and accounting standards at a statutory tax rate of 16.5%.\n\n \n\n*Mainland\nChina*\n\n \n\nCuprina\n(Beijing) Biotechnology Co., Ltd., is considered a mainland China tax resident enterprise under mainland China tax laws; accordingly,\nit is subject to enterprise income tax on its taxable income as determined under mainland China tax laws and accounting standards at\na statutory tax rate of 25%. The subsidiary had no operating profit or tax liabilities for the years ended December 31, 2023, 2024 and\n2025.\n\n \n\n87\n\n \n\n \n\n*United\nStates*\n\n \n\nCuprina\nUnited States Inc., is domiciled in the United States. As a result, it is subject to corporate income tax on its taxable income as determined\nunder United States tax laws at a federal tax rate of 21% and state tax rate ranging from 1% to 12%. The subsidiary had no operating\nprofit or tax liabilities for the years ended December 31, 2023, 2024 and 2025.\n\n \n\n**Equity\nin net earnings of affiliates**\n\n \n\nEquity\nin net earnings of affiliates mainly related to the sharing of results for the following two joint arrangements (i) the arrangement between\nCuprina Malaysia Sdn. Bhd., one of our subsidiaries, and a local Malaysian company for the proposed business of selling our maggot-based\nchronic wound care products in Malaysia, which was terminated in July 2023; and (ii) the arrangement between Cuprina Pte. Ltd., one of\nour subsidiaries, and a local Saudi Arabian company for the supply of medical devices and the operation of medical laboratories and supporting\nmedical services.\n\n \n\n**Year\non Year Comparisons of Our Results of Operations**\n\n \n\n**Year\nended December 31, 2025 Compared to Year ended December 31, 2024.**\n\n \n\n**Revenue**\n\n \n\nOur\nrevenue increased by 3.3% from S$48,321 for the year ended December 31, 2024 to S$49,894 (US$38,789) for the year ended December 31,\n2025. The increase was primarily due to increase in sales of our MEDIFLY products in both Singapore and Hong Kong. The number of patients\nusing our MEDIFLY products increased from 78 for year ended December 31, 2024 to 96 for the year ended December 31, 2025.\n\n \n\n**Cost\nof revenues**\n\n \n\nOur\ncost of revenues decreased by 1.6% from S$51,345 for the year ended December 31, 2024 to S$50,539 (US$39,290) for the year ended December\n31, 2025, representing approximately 106.3%, and 101.3% of our revenue, respectively, for the corresponding years. The decrease was primarily\ndue to the reduce in the direct cost of our cosmeceutical products, in line with our reduce in revenues generated by cosmeceutical products\nduring the period.\n\n \n\nThe\nreduce in cost of revenues does not in line with the increase in our revenues, as majority of the cost of revenues are fixed in nature,\nprimarily the cost of revenues from MEDIFLY products, which arise from production staff salaries and contributions, rental for production\nspace, and depreciation for production equipment. These costs have been fairly consistent for the years ended December 31, 2023, 2024\nand 2025 despite of the fluctuation in the revenues generated for the corresponding years.\n\n \n\n**Gross\nloss and gross loss margin**\n\n \n\nOur\ngross loss decreased from S$3,024 for the year ended December 31, 2024 to S$645 (US$501) for the year ended December 31, 2025, which\nwas due to the increased revenue for the year ended December 31, 2025. Our gross loss margin decreased from approximately 6.3% for the\nyear ended December 31, 2024, to gross loss margin of approximately 1.3% for the year ended December 31, 2025. The decrease was primarily\nattributed to increase in sales of our MEDIFLY products in both Singapore and Hong Kong, as majority of the cost of revenues are fixed\nin nature, which primarily arise from production staff salaries and contributions, rental for production space, and depreciation for\nproduction equipment\n\n \n\n88\n\n \n\n \n\n**Operating\nexpenses**\n\n \n\nOur\noperating expenses increased by 194.1% from S$1,642,235 for the year ended December 31, 2024 to S$4,829,184 (US$3,754,322)\nfor the year ended December 31, 2025. The increase was due to the increase in our selling, general and administrative expenses.\n\n \n\n*Selling,\ngeneral and administrative expenses*\n\n \n\nOur\nselling, general and administrative expenses increased by 228.5% from S$1,400,873 for the year ended December 31, 2024 to\nS$4,602,300 (US$3,577,937) for the year ended December 31, 2025, which was primarily due to an increase in our other operating expenses\nand payroll and employee benefits.\n\n \n\n(i)\nOur selling and marketing expenses decreased from S$3,641 for the year ended December 31, 2024 to S$1,039 (US$808) for the year ended\nDecember 31, 2025. This was primarily due to our rebranding activities carried out for our cosmeceutical products, which were launched\nand carried out in the prior year, including photography and building the social media library.\n\n \n\n(ii)\nOur payroll and employee benefits increased by 8.2% from S$831,866 for the year ended December 31, 2024 to S$899,801 (US$699,527) for\nthe year ended December 31, 2025. The increase was primarily due to the bonus payout amounting to S$59,938 (US$46,597) during the period.\nMoreover, the increase was also due to the revision by Central Provident Fund Board for increasing the CPF ordinary wage ceiling from\nS$6,800 to S$7,400 effective January 1, 2025.\n\n \n\n(iii)\nOur depreciation and amortization expenses decreased by 16.4% from S$31,687 for the year ended December 31, 2024 to S$26,485 (US$20,590)\nfor the year ended December 31, 2025. The decrease was primarily due to some of the plant and equipment, including renovation works have\nbeen fully depreciated during the period, despite that they are still in use by the Company.\n\n \n\n(iv)\nOur other operating expenses increased by 588.6% from S$533,679 for the year ended December 31, 2024 to S$3,674,975 (US$2,857,012) for\nthe year ended December 31, 2025. The increase was primarily attributed to an increase in professional fees incurred, particularly for\n(i) engagement of professional for advisory services on businesses, assets, and, operation acquisition matters; (ii) engagement of professional\nfor corporate development and business consultancy services; and (iii) engagement of professional for compliance services on SEC and\nFINRA matters. In addition, the increase in consultant fees incurred, primarily relating to the appointment of our Medical and Scientific\nDirector, as well as the licensing fee incurred in respect of the FDA Clearance for Medical Maggots and associated dressings identified\nin 510(k) K033391 has also resulted in the increase. Furthermore, the increase also due to the director fees for those independent directors\nand non-executive directors, as well as the related Director and Officer Liability Insurance acquired, following the completion of IPO.\nMoreover, the increase also derived from the depreciated exchange rate of USD against SGD, of which resulted in our foreign exchange\nlosses incurred, particularly for our financial assets denominated in USD.\n\n \n\n*Research\nand development costs*\n\n \n\nOur\nresearch and development costs decreased by 6.0% from S$241,362 for the year ended December 31, 2024 to S$226,884 (US$176,385) for the\nyear ended December 31, 2025. The decrease in research and development costs was primarily due to the decrease in the salaries and contributions\nrelated to our internal research and development staff from S$226,632 for the year ended December 31, 2024 to S$217,112 (US$168,788)\nfor the year ended December 31, 2025. The decrease was due to the departure of one of our research and development employees during the\nlast quarter of the period.\n\n \n\n**Other\nincome**\n\n \n\nOur\nother income increased by 34.8% from S$173,865 for the year ended December 31, 2024 to S$234,455 (US$182,271) for the year ended December\n31, 2025. The increase was in relation to the fees received from the rendering the usage for our ISO13485 certified facilities.\n\n \n\n89\n\n \n\n \n\n**Interest\nexpense**\n\n \n\nOur\ninterest expense decreased by 60.4% from S$37,210 for the year ended December 31, 2024 to S$14,724 (US$11,447) for the year ended December\n31, 2025. This decrease was primarily attributable to the loan given to us in 2024, from several of our employees, which carries a one-off\ninterest rate of 25.0%. The principal and interest have been fully settled as of June 30, 2024.\n\n \n\n**Equity\nin net earnings of affiliates**\n\n \n\nThe\nequity in net earnings of the affiliates primarily relates to the sharing of results from the joint arrangement between Cuprina Pte.\nLtd., one of our subsidiaries, and a local Saudi Arabian company. This joint arrangement is accounted for using the equity method, starting\nfrom May 2023. For the year ended December 31, 2025, we recorded a loss of S$63,349 (US$49,249) from this affiliate, attributed to the\nsharing of operational losses. This is in comparison to a loss of S$51,931 recorded for the year ended December 31, 2025.\n\n \n\n**Net\nloss**\n\n \n\nAs\na result of the foregoing, in particular the increase in professional fees under other operating expenses, our net loss increased from\nS$1,560,535 for the year ended December 31, 2024 to S$4,673,447 (US$3,633,248) for the year ended December 31, 2025.\n\n \n\n**Year\nended December 31, 2024 Compared to Year ended December 31, 2023.**\n\n \n\n**Revenue**\n\n \n\nOur\nrevenue decreased by 52.0% from S$100,773 for the year ended December 31, 2023 to S$48,321 for the year ended December 31, 2024. The\ndecrease was primarily due to reduce in sales of our MEDIFLY products in both Singapore and Hong Kong. The number of patients using our\nMEDIFLY products decreased from 135 for year ended December 31, 2023 to 78 for the year ended December 31, 2024.\n\n \n\n**Cost\nof revenues**\n\n \n\nOur\ncost of revenues decreased by 20.0% from S$64,168 for the year ended December 31, 2023 to S$51,345 for the year ended December 31, 2024,\nrepresenting approximately 63.7%, and 106.3% of our revenue, respectively, for the corresponding years. The decrease was primarily due\nto the reduce in the direct cost of our cosmeceutical products as well as the consumables of our MEDIFLY products, in line with our reduce\nin revenues generated during the period.\n\n \n\nThe\nreduce in cost of revenues does not directly in line with the reduce in revenues, as majority of the cost of revenues are fixed in nature,\nwhich primarily arise from production staff salaries and contributions, rental for production space, and depreciation for production\nequipment. These costs have been fairly consistent for the years ended December 31, 2023 and 2024 despite of the reduce in the revenues\ngenerated for the corresponding years.\n\n \n\n**Gross\nprofit/ (loss) and gross profit/ (loss) margin**  \n\n \n\nOur\ngross profit decreased by 108.3% from S$36,605 for the year ended December 31, 2023 to gross loss of S$3,024 for the year ended December\n31, 2024, which was due to the decreased revenue for the year ended December 31, 2024. Our gross profit margin decreased from approximately\n36.3% for the year ended December 31, 2023, to gross loss margin of approximately 6.3% for the year ended December 31, 2024. The decrease\nwas primarily attributed to reduce in sales of our MEDIFLY products in both Singapore and Hong Kong, as majority of the cost of revenues\nare fixed in nature, which primarily arise from production staff salaries and contributions, rental for production space, and depreciation\nfor production equipment.\n\n \n\n**Operating\nexpenses**\n\n \n\nOur\noperating expenses increased by 48.6% from S$1,104,934 for the year ended December 31, 2023 to S$1,642,235 for the year ended December\n31, 2024. The increase was due to the increase in our selling, general and administrative expenses as well as the research and development\ncosts.\n\n \n\n90\n\n \n\n \n\n*Selling,\ngeneral and administrative expenses*\n\n \n\nOur\nselling, general and administrative expenses increased by 49.5% from S$937,200 for the year ended December 31, 2023 to S$1,400,873 for\nthe year ended December 31, 2024, which was primarily due to an increase in our other operating expenses, payroll and employee benefits,\nselling and marketing expenses, and depreciation and amortization expenses.\n\n \n\n(i)\nOur selling and marketing expenses increased from S$79 for the year ended December 31, 2023 to S$3,641 for the year ended December 31,\n2024. This was primarily due to our rebranding activities carried out for our cosmeceutical products, which were launched during the\nperiod, including photography and building the social media library.\n\n \n\n(ii)\nOur payroll and employee benefits increased by 23.7% from S$672,465 for the year ended December 31, 2023 to S$831,866 for the year ended\nDecember 31, 2024. The increase was primarily due to an increase in headcount in the last quarter of 2023, as well as first quarter of\n2024. Moreover, the increase was also due to the revision by Central Provident Fund Board for increasing the CPF ordinary wage ceiling\nfrom S$6,000 to S$6,800 effective January 1, 2024.\n\n \n\n(iii)\nOur depreciation and amortization expenses increased by 17.4% from S$26,994 for the year ended December 31, 2023 to S$31,687 for the\nyear ended December 31, 2024. The increase was primarily due to investment in furniture and fittings in second half of 2023 and the renovation\nof our office which was only completed in the middle of first quarter of 2023.\n\n \n\n(iv)\nOur other operating expenses increased by 124.6% from S$237,662 for the year ended December 31, 2023 to S$533,679 for the year ended\nDecember 31, 2024. The increase was primarily attributed to an increase in professional fees incurred, particularly for (i) annual financial\naudit fee amounting to S$143,263; (ii) six months’ financial review fee amounting to S$55,045; (iii) engagement of the public relation\nservice company for their services at USD10,000 per month commencing from February 2024 onward; and (iv) delay in our IPO.\n\n \n\n*Research\nand development costs*\n\n \n\nOur\nresearch and development costs increased by 43.9% from S$167,734 for the year ended December 31, 2023 to S$241,362 for the year ended\nDecember 31, 2024. The increase in research and development costs was primarily due to the increase in the salaries and contributions\nrelated to our internal research and development staff from S$150,177 for the year ended December 31, 2023 to S$226,632 for the year\nended December 31, 2024. The increase was primarily attributable to the hiring of research and development staff in October 2023.\n\n \n\n**Other\nincome**\n\n \n\nOur\nother income increased by 344.1% from S$39,149 for the year ended December 31, 2023 to S$173,865 for the year ended December 31, 2024.\nThe increase was in relation to the interim EDG for SOIC from Enterprise Singapore amounted to $122,315.\n\n \n\n**Interest\nexpense**\n\n \n\nOur\ninterest expense decreased by 34.2% from S$56,587 for the year ended December 31, 2023 to S$37,210 for the year ended December 31, 2024.\nThis decrease was primarily attributable to the advances given to us in 2023 by one of our ultimate beneficial owners, which carries\na one-off interest rate of 6.0% and amounted to S$55,860. This decrease was partially offset by the loan given to us in 2024 from several\nof our employees, which carries a one-off interest rate of 25.0%. The principal and interest have been fully settled as of June 30, 2024.\n\n \n\n**Equity\nin net earnings of affiliates**\n\n \n\nThe\nequity in net earnings of the affiliates primarily relates to the sharing of results from two joint arrangements. The first arrangement\nis held by our subsidiary, Cuprina Malaysia Sdn. Bhd., and the second arrangement is held by our subsidiary, Cuprina Pte. Ltd. Both of\nthese arrangements are accounted for using the equity method, starting from July 2022 and May 2023, respectively. The joint arrangement\nheld by Cuprina Malaysia Sdn. Bhd. was terminated in July 2023.\n\n \n\n91\n\n \n\n \n\nFor\nthe year ended December 31, 2024, we recorded a loss of S$51,931 from existing affiliate, attributed to the sharing of operational losses.\nThis is in comparison to a loss of S$33,788 recorded for the year ended December 31, 2023, from both affiliates, attributed to the sharing\nof operational losses.\n\n \n\n**Net\nloss**\n\n \n\nAs\na result of the foregoing, in particular the increase in payroll and employee benefits and professional fees under other operating expenses,\nour net loss increased from S$1,119,555 for the year ended December 31, 2023 to S$1,560,535 for the year ended December 31, 2024.\n\n \n\n**A.**\n**Liquidity\nand Capital Resources**\n\n \n\nOur\nprimary source of liquidity historically has been cash generated from our bank loan and equity and loan contributions from our shareholders,\nwhich have historically been sufficient to meet our working capital and capital expenditure requirements.\n\n \n\nIn\n2021, we entered into a bridging loan agreement with DBS Bank with an aggregated principal amount of S$100,000 (US$77,742) with interest\nrate of 2.5% per annum. The bank loan has been fully repaid in January 2026.\n\n \n\nIn\nNovember 2024, we entered into a working capital loan agreement with DBS Bank with an aggregated principal amount of S$200,000 (US$155,485)\nwith interest rate of 8.0% per annum.\n\n \n\nAs\nof December 31, 2025, our cash and cash equivalents were S$3,117,682 (US$2,423,760). Our cash and cash equivalents primarily consist\nof cash in bank balances.\n\n \n\nWe\nbelieve that our existing cash and cash equivalents, anticipated cash raised from financings, together with anticipated cash flow from\noperations, will be sufficient to meet our anticipated cash needs for the next 12 months from the date of this annual report. We may,\nhowever, decide to enhance our liquidity position or increase our cash reserve for future investments through additional capital and\nfinance funding. We may need additional cash resources in the future if we experience changes in business conditions or other developments,\nor if we find and wish to pursue opportunities for investments, acquisitions, capital expenditures or similar actions. If we determine\nthat our cash requirements exceed the amount of cash and cash equivalents we have on hand at the time, we may seek to issue additional\nequity or debt securities or obtain credit facilities. The issuance and sale of additional equity would result in further dilution to\nour shareholders. The incurrence of indebtedness would result in increased fixed obligations and could result in operating covenants\nthat would restrict our operations. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if\nat all.\n\n \n\nOur\nability to manage our working capital, including receivables and other assets and liabilities and accrued liabilities, may materially\naffect our financial condition and results of operations.\n\n \n\nThe\nfollowing table sets forth our selected consolidated cash flow data for the periods indicated:\n\n \n\n \n\n  \nYears ended December 31, \n\n  \n2023  \n2024  \n2025  \n2025 \n\n  \nS$  \nS$  \nS$  \nUS$ \n\n  \n   \n   \n   \n  \n\nNet cash used in operating activities \n (894,981) \n (1,235,981) \n (9,133,948) \n (7,100,947)\n\nNet cash used in investing activities \n (67,977) \n (21,884) \n (58,229) \n (45,268)\n\nNet cash provided by financing activities \n 433,075  \n 1,340,977  \n 12,231,742  \n 9,509,245 \n\nNet increase/ (decrease) in cash and cash equivalents \n (529,883) \n 83,112  \n 3,039,565  \n 2,363,030 \n\nCash and cash equivalents, at the beginning of year \n 564,576  \n 35,263  \n 116,472  \n 90,548 \n\nForeign currency effect on cash and cash equivalents \n 570  \n (1,903) \n (38,355) \n (29,818)\n\nCash and cash equivalents, at the end of year \n 35,263  \n 116,472  \n 3,117,682  \n 2,423,760 \n\n \n\n92\n\n \n\n \n\n**Net\ncash used in operating activities**\n\n \n\nWe\nhad net cash flows used in operating activities of S$894,981 for the year ended December 31, 2023, primarily reflecting a net loss of\nS$1,119,555, as adjusted by (a) positive changes of approximately S$99,846 in non-cash items primarily including depreciation and amortization,\nexpected credit loss on accounts receivable and equity in net earnings of affiliates; and (b) positive changes of approximately S$124,728\nin working capital primarily reflecting (i) a decrease of approximately S$238,900 in net advance to related parties, partially offset\nby (ii) an increase of approximately S$37,511 in accounts receivable, (iii) an increase of approximately S$32,122 in other current assets,\nand (iv) a decrease of approximately S$45,863 in accruals and other payables.\n\n \n\nWe\nhad net cash flows used in operating activities of S$1,235,981 for the year ended December 31, 2024, primarily reflecting a net loss\nof S$1,560,535 as adjusted by (a) positive changes of approximately S$96,198 in non-cash items primarily including depreciation and amortization\nand equity in net earnings of affiliate; and (b) positive changes of approximately S$228,356 in working capital primarily reflecting\n(i) an decrease of approximately S$10,639 in other current assets, and (ii) an increase of approximately S$123,562 in accruals and other\npayables,(iii) a decrease of approximately S$24,430 in accounts receivable, and (iv) a decrease of approximately S$69,725 in net advance\nto related parties.\n\n \n\nWe\nhad net cash flows used in operating activities of S$9,133,948 (US$7,100,947) for the year ended December 31, 2025, primarily reflecting\na net loss of S$4,673,447 (US$3,633,248), as adjusted by (a) positive changes of approximately S$241,254 (US$187,556) in non-cash items\nprimarily including depreciation and amortization, foreign exchange losses and equity in net earnings of affiliate; and (b) negative\nchanges of approximately S$4,701,755 (US$3,655,255) in working capital primarily reflecting (i) an increase of approximately S$4,457,200\n(US$3,465,133) in other current assets, and (ii) an decrease of approximately S$292,171 (US$227,140) in accruals and other payables.\n\n \n\n**Net\ncash used in investing activities**\n\n \n\nNet\ncash used in investing activities was S$67,977 for the year ended December 31, 2023, which was attributable to the acquisition of new\nproperty and equipment.\n\n \n\nNet\ncash used in investing activities was S$21,884 for the year ended December 31, 2024, which was attributable to the acquisition of new\nproperty and equipment.\n\n \n\nNet\ncash used in investing activities was S$58,229 (US$45,268) for the year ended December 31, 2025, which was primarily attributable to\nthe acquisition of new property and equipment.\n\n \n\n**Net\ncash generated from financing activities**\n\n \n\nNet\ncash generated from financing activities was S$433,075 for the year ended December 31, 2023, primarily consisting of financial assistance\nfrom our shareholder, Cuprina Holding Pte. Ltd., and certain ultimate beneficial owners, partially offset by repayment of bank borrowing\nof S$20,574 and payments of deferred offering costs of S$647,796.\n\n \n\n93\n\n \n\n \n\nNet\ncash generated from financing activities was S$1,340,977 for the year ended December 31, 2024, primarily consisting of financial assistance\nfrom certain individual shareholders and ultimate beneficial owners, as well as drawdown of a bank loan amounted to S$200,000, partially\noffset by repayment of bank borrowings of S$23,572 and payments of deferred offering costs of S$423,787.\n\n \n\nNet\ncash generated from financing activities was S$12,231,742 (US$9,509,245) for the year ended December 31, 2025, primarily consisting of\n(i) gross proceeds from issuance of ordinary shares of S$17,606,040 (US$13,687,351) following the completion of the IPO, partially offset\nby (ii) payments for deferred stock issuance cost of S$2,628,743 (US$2,043,647), (iii) repayment of bank borrowing of S$54,049 (US$42,019),\nand (iv) repayments of advances from related parties of S$2,691,506 (US$2,092,440).\n\n \n\n**Accounts\nreceivable, net**\n\n \n\nOur\nnet accounts receivables are non-interest bearing and are generally on 30 days credit terms. Net accounts receivable mainly represent\namounts due from customers that meet the revenue recognition criteria. These accounts receivables are recorded net of any allowance for\ncredit losses and specific customer credit allowances. We maintain an allowance for estimated credit losses inherent in our accounts\nreceivable portfolio. In establishing the required allowance, our management considers historical losses adjusted to take into account\ncurrent market conditions and our customers’ financial condition, the receivable amount in dispute, and the current receivables\naging and current payment patterns, over the contractual life of the receivable. We write off the receivable when it is determined to\nbe uncollectible.\n\n \n\nOur\nnet accounts receivable decreased from S$26,389 as of December 31, 2024 to S$18,218 (US$14,163) as of December 31, 2025. The decrease\nwas primarily attributable to the completion of change in the billing procedure of public hospitals in Singapore, requiring invoices\nto be sent to both the relevant hospital department for billing and the relevant hospital department for authentication. This procedural\nchange resulted in delayed settlement of certain accounts receivable arising from the sale of our MEDIFLY products in the previous periods.\n\n \n\nAs\nof March 31, 2026, S$8,027 (US$6,240) or 44.1% of our net accounts receivable as of December 31, 2025 had been subsequently received.\n\n \n\nAs\nof December 31, 2024 and 2025, we made S$49,147 and S$49,147 (US$38,208) of allowance for current expected credit loss for\nour gross accounts receivable, respectively.\n\n** **\n\n**Deferred\nCosts**\n\n \n\nOur\ndeferred costs primarily consist of deferred contractual costs in relation to the industry research collaboration agreement with NTU\nand the listing expenses in relation to our IPO prior to the completion as of December 31, 2024.\n\n \n\nOur\ndeferred costs decreased from S$1,272,202 as of December 31, 2024 to S$nil (US$nil) as of December 31, 2025. The decrease was primarily\nattributable to the (i) completion of the IPO, of which the accumulated deferred stock issuance cost has been charged against the gross\nproceeds of the offering as a reduction of additional paid-in capital, and (ii) the payment made for the deferred contractual cost in\nrelation to the industry research collaboration agreement with NTU as of December 31, 2025.\n\n \n\n**Other\ncurrent assets**\n\n \n\nOur\nother current assets primarily consist of prepayments, deposits and other current assets.\n\n \n\nOur\nother current assets increased from S$146,152 as of December 31, 2024 to S$4,736,715 (US$3,682,434) as of December 31, 2025. The increase\nwas primarily attributable to the prepayments made in relation to the professional services engaged for the (i) businesses, assets, and,\noperation acquisition matters, and (ii) corporate development and business consultancy, as well as the prepayments made for the D&O\ninsurance following the completion of IPO on April 11, 2025.\n\n \n\n94\n\n \n\n \n\n**Accruals\nand other payables**\n\n \n\nOur\naccruals and other payables decreased from S$323,971 as of December 31, 2024 to S$30,626 (US$23,809) as of December 31, 2025. The decrease\nwas attributable to the settlement of payables, primarily relating to the (i) payable to a professional party amounted to S$65,930 (US$51,256),\nfor professional services in relation to our initial public offering, (ii) payable to NTU amounted to S$178,396 (US$139,689), for the\ncontractual cost in relation to the industry research collaboration agreement, and (iii) payable to advances from an employee amounted\nto S$69,681 (US$54,172), during the period.\n\n \n\n**Impact\nof Inflation**\n\n \n\nAccording\nto the Monetary Authority of Singapore, the core inflation rate in Singapore averaged 4.2% in 2023, 2.7% in 2024 and 0.7% in 2025. Based\non the recent publication from the Monetary Authority of Singapore on February, 2026, the core inflation rate in Singapore is projected\nto average 1.0% - 2.0% in 2026. As of the date of this annual report, inflation in Singapore has not materially affected our profitability\nand operating results. However, we can provide no assurance that we will not be affected by such inflationary pressures in Singapore\nor globally in the future. In the event that the inflationary pressures continue to increase to any material extent, we may pass along\nincreased costs to our customers, which could result in loss of sales and loss of customers, and adversely impact our margins and results\nof operations.\n\n \n\n**Material\nCash Requirements**\n\n \n\nOur\ncash requirements consist primarily of day-to-day operating expenses, capital expenditures and contractual obligations with respect to\nfacility leases and other operating leases. We lease all our office facilities. We expect to make future payments on existing leases\nfrom cash generated from operations. We have limited credit available from our major vendors and are required to prepay the majority\nof our inventory purchases, which further constraints our cash liquidity.\n\n \n\nWe\nhad the following contractual obligations and lease commitments as of December 31, 2025:\n\n \n\nContractual Obligations \nTotal  \nLess than 1 year  \n2-5 years \n\nAccounts payable \n 1,177  \n 1,177  \n - \n\nAccruals and other payables \n 30,626  \n 30,626  \n - \n\nOperating lease commitment \n 317,790  \n 110,233  \n 207,557 \n\nBank loan repayment \n 164,929  \n 38,728  \n 126,201 \n\nAmount due to related parties \n 2,934,650  \n 2,934,650  \n - \n\nTotal obligations \n 3,449,172  \n 3,115,414  \n 333,758 \n\n \n\nWe\nbelieve that we have sufficient working capital for our requirements for at least the next 12 months from the date of this annual report,\nabsent unforeseen circumstances, taking into account the financial resources presently available to us, including cash and cash equivalents\non hand, and cash flows from our operations.\n\n \n\n95\n\n \n\n \n\nBank\nIndebtedness\n\n \n\n  \n   \n   \nAs of December 31, \n\nBank Borrowings \nTerms of repayment  \nAnnual interest rate  \n2024  \n2025 \n\n  \n   \n   \nS$  \nS$ \n\n  \n   \n   \n   \n  \n\nDBS Bank \n 60 months  \n 2.5% \n 22,900  \n 1,775 \n\nDBS Bank \n 60 months  \n 8.0% \n 196,078  \n 163,154 \n\n \n\nAs\nof December 31, 2024 and 2025, bank borrowings were obtained from a financial institution in Singapore, both repayable in 60 instalments,\nwhich bear annual interest at a fixed rate at 2.5% and 8.0%, and expire in January 2026 and November 2029, respectively.\n\n \n\n**Commitments\nand Contingencies**\n\n \n\nIn\nthe normal course of business, we are subject to contingencies, including legal proceedings and claims arising out of the business that\nrelate to a wide range of matters, such as government investigations and tax matters. We recognize a liability for such contingency if\nit determines it is probable that a loss will occur and a reasonable estimate of the loss can be made. We may consider many factors in\nmaking these assessments including historical and the specific facts and circumstances of each matter.\n\n \n\n**Capital\nExpenditures**\n\n \n\nWe\nmade capital expenditures of S$67,997, S$21,884 and S$58,229 (US$45,268) for the years ended December 31, 2023, 2024 and 2025, respectively.\nIn these periods, our capital expenditures were mainly used for the purchase of plant and equipment.\n\n \n\nWe\nplan to fund our future capital expenditures with our existing cash balance and proceeds from the offering. We will continue to make\ncapital expenditures to meet the expected growth of our business.\n\n \n\n**Capital\nCommitments**\n\n \n\nAs\nof December 31, 2024 and 2025, we did not have any capital commitments, except for the S$125,250 (US$97,372) capital commitment in relation\nto the joint venture agreement entered on November 18, 2025.\n\n \n\n**C.\nResearch and development, patents and licenses**\n\n \n\nSee\n“—B. Business Overview—Research and Development”, “—B. Business Overview— Intellectual Property”,\n“—B. Business Overview—Internet Domain Names”, and “—B. Business Overview— Licenses, Permits,\nRegistrations and Approvals.”\n\n \n\n**D.\nTrend information**\n\n \n\nOther\nthan as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events that\nare reasonably likely to have a material effect on our net revenues, profitability, liquidity or capital resources, or that would cause\nreported financial information not necessarily to be indicative of future operating results or financial condition or results of operations.\n\n \n\n**E.\nCritical Accounting Estimates**\n\n \n\nOur\nconsolidated financial statements are prepared in accordance with US GAAP. The preparation of these consolidated financial statements\nrequires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and related\ndisclosures. See Note 2 to our consolidated financial statements included elsewhere in this report for additional information on our\nsignificant accounting estimates and policies.\n\n \n\nWe\nbase our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances.\nActual results could differ significantly from the estimates and judgements made by our management. As at December 31, 2025, the Company\ndid not make any critical judgement in the process of applying the Company’s accounting policies that have a critical effect on\nthe amount recognized in the financial statements. The Company also did not make any key assumptions concerning the future, and other\nkey sources of estimation uncertainty at the reporting date, that have a critical risk of causing a material adjustment to the carrying\namounts of assets and liabilities within the next financial year.\n\n \n\n96"}