{"url_path":"/sec/ineo/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/1933951/0001493152-26-023663-index.html","accession_number":"0001493152-26-023663","cik":"0001933951","ticker":"INEO","issuer_name":"INNEOVA Holdings Ltd","edgar_url":"https://www.sec.gov/Archives/edgar/data/1933951/0001493152-26-023663-index.html","primary_entity_key":"0001933951","primary_entity_name":"INNEOVA Holdings Ltd"},"word_count":11579,"has_tables":true,"body_markdown":"**ITEM\n5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS**\n\n \n\nThe\nfollowing discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated\nfinancial statements and related notes included elsewhere in this Annual Report. This discussion and analysis and other parts of this\nAnnual Report contain forward-looking statements based upon current beliefs, plans and expectations that involve risks, uncertainties,\nand assumptions. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking\nstatements as a result of several factors, including those set forth under “Risk Factors” and elsewhere in this Annual Report.\nYou should carefully read the “Risk Factors” section of this Annual Report in Item 3D to gain an understanding of the important\nfactors that could cause actual results to differ materially from our forward-looking statements.\n\n \n\n**OVERVIEW**\n\n \n\nINNEOVA\nHoldings Limited is a holding company incorporated as an exempted company under the laws of the Cayman Islands. As a holding company\nwith no material direct operations of our own, we conduct our operations as On-Highway Business, Off-Highway Business and Engineering\nServices through our operating subsidiaries in Singapore and Malaysia. We have over 40 years of experience in supplying genuine and aftermarket\nparts in the automotive sector through our On-Highway Business. Over the years, we have extended our reach to supply our products to\nthe industrial sector through our Off-Highway Business for applications in the marine, energy, mining, construction, agricultural, and\noil and gas industries. Our On-Highway customers are mainly resellers such as distributors and dealers of automotive parts, retailers,\nworkshops, end-users, and fleet owners, and our Off-Highway customers are distributors and dealers of industrial parts that are resold\nto workshops, industrial manufacturing facilities, shipyards, and heavy-duty transport fleet owners. Our Engineering Services business is an engineering\nsolutions provider offering system lifecycle analysis and turnkey solutions across transport, healthcare, defence, utilities, and facility\nmanagement.\n\n \n\nFor\nthe financial years ended December 31, 2025 and 2024, our net revenue amounted to approximately $58.4 million and approximately $62.7\nmillion, respectively, of which On-Highway Business accounted for approximately $24.5 million for the financial year ended December 31,\n2025 and approximately $25.8 million for the financial year ended December 31, 2024, Off-Highway Business accounted for approximately\n$29.3 million for the financial year ended December 31, 2025 and approximately $31.3 million for the financial year ended December 31,\n2024, and Engineering Services accounted for approximately $4.6 million for the financial year ended December 31, 2025 and approximately\n$5.6 million for the financial year ended December 31, 2024.\n\n \n\nFor\nthe financial year ended December 31, 2025, our net loss was approximately $0.4 million and for the financial year ended December 31,\n2024 our net income was approximately $0.4 million, respectively.\n\n \n\nFor\nthe financial years ended December 31, 2024 and 2023, our net revenue amounted to approximately $62.7 million and approximately $62.7\nmillion, respectively, of which On-Highway Business accounted for approximately $25.8 million for the financial year ended December 31,\n2024 and approximately $26.9 million for the financial year ended December 31, 2023, Off-Highway Business accounted for approximately\n$31.3 million for the financial year ended December 31, 2024 and approximately $32.6 million for the financial year ended December 31,\n2023, and Engineering Services accounted for approximately $5.6 million for the financial year ended December 31,\n2024 and approximately $3.2 million for the financial year ended December 31, 2023.\n\n \n\nFor\nthe financial year ended December 31, 2024, our net income was approximately $0.4 million and for the financial year ended December 31,\n2023 our net income was approximately $1.8 million, respectively.\n\n \n\n31\n\n \n\n \n\n**KEY\nFACTORS AFFECTING THE RESULTS OF OUR GROUP’S OPERATIONS**\n\n \n\nOur\nfinancial condition and results of operations have been and will continue to be affected by a number of factors, many of which may be\nbeyond our control, including those factors set out in the section headed “Risk Factors” in this Annual Report and those\nset out below.\n\n \n\n \n●\n**Demand\nfrom our major customer groups** – Our aggregate sales generated from our five (5) largest customers were approximately\n21.3% and 22.4% of our revenue for the financial years ended December 31, 2025 and 2024, respectively.\n\n \n \n \n\n \n \nIn\nparticular, our sales to our top one (1) largest customer amounted to approximately $4.2 million and $3.4 million,\nrepresenting approximately 7.3% and 5.5% of our revenue for the financial years ended December 31, 2025 and 2024,\nrespectively.\n\n \n \n \n\n \n \nAccordingly,\nour sales are significantly affected by the demands of our largest customer due to vigorous price competition in the supply chain,\nsupply chain shortage and disruption, and inflationary cost pressure as our customers will seek to purchase products optimizing price\nand timing of delivery.\n\n \n \n \n\n \n●\n**Fluctuations\nin our cost of revenues** – Finished goods are the largest part of our cost of revenue, representing approximately 80.8%\nand 80.4% of our total cost of revenues for the financial years ended December 31, 2025 and 2024, respectively.\n\n \n \n \n\n \n \nPrices\nof finished goods are subject to the suppliers’ price adjustments, and thereby change from time to time due to the changes\nin the price of raw materials, labor and production costs that our suppliers reflect in our purchase price. Fluctuation in the price,\navailability and quality of the finished goods that our suppliers use to manufacture our key components, as well as the cost of labor\nand transportation impact the price of our finished goods, and ultimately, the price of the finished goods that we sell. We may be\nunable to pass all or any of these higher costs on to our customers, which could have a material adverse effect on our profitability.\nThe prices at which we purchase such finished goods are determined principally by market forces such as the relevant supply and demand\nof such finished goods, as well as our bargaining power with our suppliers. For the financial years ended December 31, 2025 and\n2024, the majority of our finished goods were commonly available from the market, but our cost of procurement increased significantly\ndue to the inflationary cost pressure, increased material cost, labor shortages and trade restriction. We are exploring how to diversify\nour procurement networks to lower purchasing prices, such as through the consolidation of customer orders to negotiate better pricing.\nWe expect continued fluctuations in the cost of finished goods to affect our margins. All of the finished goods we procure, including\nspare-parts and key components, are sourced directly from various regional suppliers spanning from Asia to the Middle East in an\neffort to ensure availability and adequate supply, as well as to optimize efficient delivery to our customers.\n\n \n\n**Description\nand Analysis of Principal Components of Our Results of Operations**\n\n \n\nThe\nfollowing discussion is based on our Group’s historical results of operations and may not be indicative of our Group’s future\noperating performance.\n\n \n\n32\n\n \n\n \n\n**Comparison\nof results for the financial years ended December 31, 2025 and 2024**\n\n \n\n**Revenue**\n\n \n\nAs\nset forth in the following table, for the financial years ended December 31, 2025 and 2024, our revenue was derived from the sale\nof products in our On-Highway Business serving the automotive sector, our Off-Highway Business serving the industrial sector, and Engineering\nServices:\n\n \n\n  \nFinancial Years Ended December 31, \n\n  \n2025  \n2024 \n\n  \n$’000  \n%  \n$’000  \n% \n\n  \n   \n   \n   \n  \n\nOn-Highway \n 24,511  \n 42.0  \n 25,837  \n 41.2 \n\nOff-Highway \n 29,330  \n 50.2  \n 31,315  \n 49.9 \n\nEngineering Services \n 4,584  \n 7.8  \n 5,589  \n 8.9 \n\n  \n    \n    \n    \n   \n\nTotal \n 58,425  \n 100.0  \n 62,741  \n 100.0 \n\n \n\nOur\ntotal revenue decreased by approximately $4.3 million to approximately $58.4 million for the financial year ended December 31, 2025 from\napproximately $62.7 million for the financial year ended December 31, 2024. Such decrease was mainly attributable to the decrease in\nMiddle East and Other Countries of approximately $5.7 million as a result of the decrease in demand from the customers offset by an increase\nin Singapore of approximately of $1.4 million.\n\n \n\nThe\ntotal revenue for our On-Highway Business decreased by approximately $1.3 million to approximately $24.5 million for the financial year\nended December 31, 2025 from approximately $25.8 million for the financial year ended December 31, 2024. Such decrease was mainly attributable\nto the decrease in Middle East and Other Countries of approximately $3.8 million as a result of the decrease in local demand offset by\nan increase in Singapore of approximately of $2.5 million.\n\n \n\nThe total revenue for our Off-Highway\nBusiness decreased by approximately $2.0 million to approximately $29.3 million for the financial year ended December 31, 2025 from approximately\n$31.3 million for the financial year ended December 31, 2024. Such decrease was mainly attributable to the decrease in Other Countries of approximately $2.3 million as a result of the decrease in demand from the customers.\n\n \n\nThe total revenue for our\nEngineering Services decreased by approximately $1.0 million to approximately $4.6 million for the financial year ended December 31,\n2025 from approximately $5.6 million for the financial year ended December 31, 2024. Such decrease was mainly attributable to the decrease in Singapore of approximately of $1.2 million.\n\n \n\nFor\nthe financial years ended December 31, 2025 and 2024, approximately 46.4% and 41.0% of our total revenue, respectively,\nwas generated from customers located in Singapore and approximately 5.1% and 5.9% of our total revenue, respectively, was\ngenerated from customers located in the Middle East. For the same financial years, our revenue generated from customers located in other\ncountries accounted for approximately 48.5% and 53.1% of our total revenue, respectively.\n\n \n\n**Revenue\nby geographical locations**\n\n \n\nFor\nthe financial years ended December 31, 2025 and 2024, the customers for our On-Highway Business products, Off-Highway Business products\nand Engineering Services were mainly located in Singapore, Middle East and Other Countries. The following table sets out a breakdown\nof our revenue by geographic location of our customers for the financial years ended December 31, 2025 and 2024:\n\n \n\n  \nFinancial Years Ended December 31, \n\n  \n2025  \n2024 \n\n  \n$’000  \n%  \n$’000  \n% \n\n  \n   \n  \n\nSingapore \n    \n    \n    \n   \n\nOn-Highway \n 8,365  \n 14.3  \n 5,850  \n 9.3 \n\nOff-Highway \n 14,356  \n 24.6  \n 14,288  \n 22.8 \n\nEngineering Services \n 4,373  \n 7.5  \n 5,589  \n 8.9 \n\n  \n    \n    \n    \n   \n\nTotal \n 27,094  \n 46.4  \n 25,726  \n 41.0 \n\n \n\n33\n\n \n\n \n\n  \nFinancial Years Ended December 31, \n\n  \n2025  \n2024 \n\n  \n$’000  \n%  \n$’000  \n% \n\n  \n   \n  \n\nMiddle East \n    \n    \n    \n   \n\nOn-Highway \n 2,599  \n 4.4  \n 3,646  \n 5.8 \n\nOff-Highway \n 338  \n 0.6  \n 49  \n 0.1 \n\nEngineering Services \n 14  \n 0.1  \n -  \n - \n\n  \n    \n    \n    \n   \n\nTotal \n 2,951  \n 5.1  \n 3,695  \n 5.9 \n\n \n\n  \nFinancial Years Ended December 31, \n\n  \n2025  \n2024 \n\n  \n$’000  \n%  \n$’000  \n% \n\n  \n   \n   \n   \n  \n\n**Other Countries(1), individually less than 10%** \n    \n    \n    \n   \n\nOn-Highway \n 13,547  \n 23.2  \n 16,342  \n 26.1 \n\nOff-Highway \n 14,636  \n 25.1  \n 16,978  \n 27.0 \n\nEngineering Services \n 197  \n 0.2  \n -  \n - \n\n  \n    \n    \n    \n   \n\nTotal \n 28,380  \n 48.5  \n 33,320  \n 53.1 \n\n \n\n \n(1)\n“Other\nCountries” means Malaysia, Indonesia, Thailand, Hong Kong, Taiwan, Vietnam, Philippines, South Korea, Japan, Australia, India,\nPakistan, Sri Lanka, African and Latin America.\n\n \n\n*Singapore*\n\n \n\nThe\nrevenue in Singapore increased by approximately $1.3 million for the financial year ended December 31, 2025, as compared to the\ncorresponding financial year ended December 31, 2024, which was primarily attributable to the increase in demand from the local\ncustomers.\n\n \n\nThe revenue for our On-Highway\nBusiness increased by approximately $2.5 million for the financial year ended December 31, 2025, as compared to the corresponding financial\nyear ended December 31, 2024, which was primarily attributable to the increase in demand from the customers.\n\n \n\nThe revenue for our Off-Highway\nBusiness decreased by approximately $0.07 million for the financial year ended December 31, 2025, as compared to the corresponding financial\nyear ended December 31, 2024, which was primarily attributable to the decrease in demand from the customers.\n\n \n\nThe revenue for our Engineering\nServices decreased by approximately $1.2 million for the financial year ended December 31, 2025, as compared to the corresponding financial\nyear ended December 31, 2024, which was primarily attributable to the decrease in demand from the customers.\n\n \n\n*Middle\nEast*\n\n \n\nThe\ndecrease in revenue in the Middle East by approximately $0.7 million to approximately $3.0 million for the financial year ended\nDecember 31, 2025, as compared to the corresponding financial year ended December 31, 2024, was primarily attributable to a decrease\nin demand from customers for On-Highway Business by approximately $0.7 million.\n\n \n\nThe\nrevenue for our On-Highway Business decreased by approximately $1.0 million for the financial year ended December 31, 2025, as\ncompared to the corresponding financial year ended December 31, 2024, which was primarily attributable to the decrease sale orders\nby our customers.\n\n \n\nThe\nrevenue for our Off-Highway Business increased by approximately $0.3 million for the financial year ended December 31, 2025, as\ncompared to the corresponding financial year ended December 31, 2024, which was primarily attributable to an increase in demand from\ncustomers.\n\n \n\nThe revenue for our Engineering\nServices increased by approximately $0.01 million for the financial year ended December 31, 2025, as compared to the corresponding financial\nyear ended December 31, 2024, which was primarily attributable to the increase in demand from the customers.\n\n \n\n34\n\n \n\n \n\n*Other\nCountries*\n\n \n\nRevenues\nfrom other countries decreased by approximately $4.9 million, primarily due to the decrease in demand from new and recurring customers among\nvarious countries.\n\n \n\nThe\nrevenue for our On-Highway Business decreased by approximately $2.8 million for the financial year ended December 31, 2025, as\ncompared to the corresponding financial year ended December 31, 2024, which was primarily attributable to a decrease in demand from\nour customers in Malaysia, Indonesia, Thailand, Vietnam, Philippines, Japan, Australia, Pakistan, Sri Lanka, African and Latin\nAmerica.\n\n \n\nThe\nrevenue for our Off-Highway Business decreased by approximately $2.1 million for the financial year ended December 31, 2025, as\ncompared to the corresponding financial year ended December 31, 2024, which was primarily attributable to the decrease in demand\nfrom our customers in Malaysia, Indonesia, Hong Kong, Taiwan, South Korea, Australia and India.\n\n \n\nThe revenue for our Engineering\nServices increased by approximately $0.2 million for the financial year ended December 31, 2025, as compared to the corresponding financial\nyear ended December 31, 2024, which was primarily attributable to the increase in demand from the customers.\n\n \n\n**Cost\nof revenue**\n\n \n\nThe table below sets forth our\nGroup’s cost of revenue by business sector for the financial years ended December 31, 2025 and 2024:\n\n \n\n  \nFinancial Years Ended December 31, \n\n  \n2025  \n2024 \n\n  \n$’000  \n%  \n$’000  \n% \n\n  \n   \n   \n   \n  \n\nOn-Highway \n 18,867  \n 40.0  \n 20,247  \n 40.1 \n\nOff-Highway \n 24,446  \n 51.8  \n 26,436  \n 52.4 \n\nEngineering Services \n 3,891  \n 8.2  \n 3,756  \n 7.4 \n\n  \n    \n    \n    \n   \n\nTotal \n 47,204  \n 100.0  \n 50,439  \n 100.0 \n\n \n\n \n\nFor\nthe financial years ended December 31, 2025 and 2024, our cost of revenue was mainly comprised of purchasing finished products for resale.\nFor the financial years ended December 31, 2025 and 2024, our cost of revenues decreased by approximately $3.2 million from approximately\n$50.4 million in 2024 to approximately $47.2 million in 2025. This decrease was primarily attributable to better margin for sales in\nour On-Highway Business and Off-Highway Business.\n\n \n\n**Gross\nprofit and gross profit margin**\n\n \n\nThe\ntable below sets forth our Group’s gross profit and gross profit margin by business sector for the financial years ended December\n31, 2025 and 2024:\n\n \n\n  \nFinancial Years Ended December 31, \n\n  \n2025  \n2024 \n\n  \n\n**Gross**\n\n**Profit**\n  \n\n**Gross**\n\n**Margin**\n  \n\n**Gross**\n\n**Profit**\n  \n\n**Gross**\n\n**Margin**\n \n\n  \n$’000  \n%  \n$’000  \n% \n\n  \n   \n  \n\nOn-Highway \n 5,644  \n 23.0  \n 5,589  \n 21.6 \n\nOff-Highway \n 4,884  \n 16.7  \n 4,879  \n 15.6 \n\nEngineering Services \n 693  \n 15.1  \n 1,834  \n 32.8 \n\n  \n    \n    \n    \n   \n\nTotal \n 11,221  \n 19.2  \n 12,302  \n 19.6 \n\n \n\nOur\ntotal gross profit remained at approximately $11.2 million and $12.3 million for the financial years ended December 31,\n2025 and 2024, respectively. Our overall gross profit margins were approximately 19.2% and 19.6% for the financial years\nended December 31, 2025 and 2024, respectively. Our total gross profit remained stable for the financial years ended December 31, 2025\nand 2024, respectively.\n\n \n\n35\n\n \n\n \n\n**Selling\nand distribution expenses**\n\n \n\nOur\nselling and distribution expenses mainly included promotion and marketing expenses and transportation expenses for inbound and outbound\nshipments. The following table sets forth the breakdown of our selling and distribution expenses for the financial years ended December\n31, 2025 and 2024:\n\n \n\n  \nFinancial Years Ended December 31, \n\n  \n2025  \n2024 \n\n  \n$’000  \n$’000 \n\n  \n   \n  \n\nPromotion and marketing expenses \n 401  \n 938 \n\nTransportation expenses \n 766  \n 749 \n\n  \n    \n   \n\nTotal \n 1,167  \n 1,687 \n\n \n\nOur\nselling and distribution expenses amounted to approximately $1.2 million and $1.7 million for the financial years ended\nDecember 31, 2025 and 2024, respectively.\n\n \n\nThe\ndecrease in selling and distribution expenses by approximately $0.5 million for the financial year ended December 31, 2025, as compared\nto the financial year ended December 31, 2024 due to the decrease in promotion and marketing expenses.\n\n \n\n**Administrative\nexpenses**\n\n \n\nThe\nfollowing table sets forth the breakdown of our administrative expenses for the financial years ended December 31, 2025 and 2024:\n\n \n\n  \nFinancial Years Ended December 31, \n\n  \n2025  \n2024 \n\n  \n$’000  \n%  \n$’000  \n% \n\n  \n   \n  \n\nStaff costs \n 5,761  \n 57.0  \n 5,464  \n 58.3 \n\nDepreciation \n 817  \n 8.1  \n 662  \n 7.1 \n\nProperty and related expenses \n 604  \n 6.0  \n 603  \n 6.4 \n\nMiscellaneous expenses \n 1,749  \n 17.3  \n 2,033  \n 21.7 \n\nLegal and professional fees \n 1,154  \n 11.4  \n 590  \n 6.3 \n\nOffice supplies and upkeep expenses \n 20  \n 0.2  \n 14  \n 0.2 \n\n  \n    \n    \n    \n   \n\nTotal \n 10,105  \n 100.0  \n 9,366  \n 100.0 \n\n \n\nOur\nadministrative expenses increased by approximately $0.7 million to approximately $10.1 million for the financial year ended December\n31, 2025 from approximately $9.4 million for the financial year ended December 31, 2024, respectively.\n\n \n\nStaff\ncosts mainly represented the salaries, employee benefits and retirement benefit costs to our employees and directors’ remuneration.\nStaff costs increased by approximately $0.3 million to approximately $5.8 million for the financial year ended December 31, 2025 from\napproximately $5.5 million for the financial year ended December 31, 2024, respectively.\n\n \n\nDepreciation\nexpense is charged on our property and equipment which included (i) leasehold factory premise, (ii) leasehold improvement, (iii)\ntools and equipment, (iv) furniture, fixtures and fittings, (v) office equipment, (vi) computer equipment, (vii) motor vehicles, (viii)\nmachinery and equipment and (ix) right-of-use assets.\n\n \n\nProperty\nand related expenses mainly represented property tax and related expenses in Singapore.\n\n \n\n36\n\n \n\n \n\nMiscellaneous\nexpenses were mainly comprised of insurance expenses, office supplies, legal and professional fees, charitable donations, and other miscellaneous\nexpenses. The miscellaneous expenses of our Group decreased by approximately $0.3 million to approximately $1.7 million for the financial\nyear ended December 31, 2025 from approximately $2.0 million for the financial year ended December 31, 2024, respectively.\n\n \n\nLegal\nand professional fees were mainly comprised of professional fees related to compliance costs. The legal and professional fees of our\nGroup increased by approximately $0.6 million to approximately $1.2 million for the financial year ended December 31, 2025 from approximately\n$0.6 million for the financial year ended December 31, 2024, respectively.\n\n \n\n**Other\nexpenses, net**\n\n \n\nThe\nfollowing table sets forth the breakdown of our other expenses for the financial years ended December 31, 2025 and 2024:\n\n \n\n  \nFinancial Years Ended December 31, \n\n  \n2025  \n2024 \n\n  \n$’000  \n$’000 \n\n  \n   \n  \n\nInterest income \n 56  \n 81 \n\nInterest expense \n (1,345) \n (1,449)\n\nGovernment grant \n 45  \n 94 \n\nGain (loss) on disposal of property and equipment \n 12  \n (2)\n\nForeign exchange gain, net \n 66  \n 294 \n\nOther income \n 164  \n 234 \n\n  \n    \n   \n\nTotal other expenses \n (1,002) \n (748)\n\n \n\nInterest\nexpenses were approximately $1.3 million in 2025 and approximately $1.4 million in 2024, respectively, from our bank loans and financing\nfacilities. For more details of our bank borrowings, please see the paragraph headed “Bank Indebtedness” in this section.\n\n \n\nWe\nreported net foreign exchange gain approximately $0.07 million in 2025 and approximately $0.3 million in 2024, respectively.\n\n \n\n**Income\ntax expenses**\n\n \n\nFor\nthe financial years ended December 31, 2025 and 2024, our income tax expense was comprised of our current tax (benefit) expense for the\nfinancial year.\n\n \n\nFor\nthe financial year ended December 31, 2025, our income tax benefit was approximately $0.7 million due to deferred tax provision.\n\n \n\nFor\nthe financial year ended December 31, 2024, our income tax expense was approximately $0.13 million and our effective tax rate was\napproximately 25.0% due to the increase was generally in line with the increase in non-deductible expenses for the financial\nyear.\n\n \n\n**Net\nincome**\n\n \n\nOur net loss approximately $0.4 million and our net income approximately\n$0.4 million for the financial years ended December 31, 2025 and 2024, respectively.\n\n \n\n37\n\n \n\n \n\n**Comparison\nof results for the financial years ended December 31, 2024 and 2023**\n\n \n\n**Revenue**\n\n \n\nAs\nset forth in the following table, for the financial years ended December 31, 2024 and 2023, our revenue was derived from the sale\nof products in our On-Highway Business serving the automotive sector, our Off-Highway Business serving the industrial sector, and Engineering\nServices:\n\n \n\n  \nFinancial Years Ended December 31, \n\n  \n2024  \n2023 \n\n  \n$’000  \n%  \n$’000  \n% \n\n  \n   \n   \n   \n  \n\nOn-Highway \n 25,837  \n 41.2  \n 26,900  \n 42.9 \n\nOff-Highway \n 31,315  \n 49.9  \n 32,621  \n 52.0 \n\nEngineering Services \n 5,589  \n 8.9  \n 3,172  \n 5.1 \n\n  \n    \n    \n    \n   \n\nTotal \n 62,741  \n 100.0  \n 62,693  \n 100.0 \n\n \n\nOur total revenue\nincreased by approximately $0.05 million to approximately $62.7 million for the financial year ended December 31, 2024 from approximately\n$62.7 million for the financial year ended December 31, 2023.\n\n \n\nThe\ntotal revenue for our On-Highway Business decreased by approximately $1.0 million to approximately $25.8 million for the financial year\nended December 31, 2024 from approximately $26.9 million for the financial year ended December 31, 2023. Such decrease was mainly attributable\nto the decrease in Singapore and Middle East of approximately $5.3 million as a result of the decrease in local demand offset by an increase\nin Other Countries of approximately of $4.3 million.\n\n \n\nThe total revenue for our\nOff-Highway Business decreased by approximately $1.3 million to approximately $31.3 million for the financial year ended December\n31, 2024 from approximately $32.6 million for the financial year ended December 31, 2023. Such decrease was mainly attributable to\nthe decrease in Singapore and Middle East of approximately $2.3 million due to the decrease in demand from the customers offset by\nan increase in Other Countries of approximately of $1.0 million.\n\n \n\nThe total revenue for our Engineering Services increased by approximately\n$2.4 million to approximately $5.6 million for the financial year ended December 31, 2024 from approximately $3.2 million for the financial\nyear ended December 31, 2023. Such increase was mainly attributable to the increase in Singapore of approximately $2.4 million.\n\n \n\nFor\nthe financial years ended December 31, 2024 and 2023, approximately 41.0% and 46.0% of our total revenue, respectively,\nwas generated from customers located in Singapore and approximately 5.9% and 9.3% of our total revenue, respectively, was\ngenerated from customers located in the Middle East. For the same financial years, our revenue generated from customers located in other\ncountries accounted for approximately 53.1% and 44.7% of our total revenue, respectively.\n\n \n\n**Revenue\nby geographical locations**\n\n \n\nFor\nthe financial years ended December 31, 2024 and 2023, the customers for our On-Highway Business products, Off-Highway Business products\nand Engineering Services were mainly located in Singapore, Middle East and Other Countries. The following table sets out a breakdown\nof our revenue by geographic location of our customers for the financial years ended December 31, 2024 and 2023:\n\n \n\n  \nFinancial Years Ended December 31, \n\n  \n2024  \n2023 \n\n  \n$’000  \n%  \n$’000  \n% \n\n  \n   \n  \n\nSingapore \n    \n    \n    \n   \n\nOn-Highway \n 5,849  \n 9.3  \n 10,377  \n 16.5 \n\nOff-Highway \n 14,288  \n 22.8  \n 15,315  \n 24.4 \n\nEngineering Services \n 5,589  \n 8.9  \n 3,172  \n 5.1 \n\n  \n    \n    \n    \n   \n\nTotal \n 25,726  \n 41.0  \n 28,864  \n 46.0 \n\n \n\n38\n\n \n\n \n\n  \nFinancial Years Ended December 31, \n\n  \n2024  \n2023 \n\n  \n$’000  \n%  \n$’000  \n% \n\n  \n   \n  \n\nMiddle East \n    \n    \n    \n   \n\nOn-Highway \n 3,646  \n 5.8  \n 4,442  \n 7.1 \n\nOff-Highway \n 49  \n 0.1  \n 1,385  \n 2.2 \n\nEngineering Services \n -  \n -  \n -  \n - \n\n  \n    \n    \n    \n   \n\nTotal \n 3,695  \n 5.9  \n 5,827  \n 9.3 \n\n \n\n  \nFinancial Years Ended December 31, \n\n  \n2024  \n2023 \n\n  \n$’000  \n%  \n$’000  \n% \n\n  \n   \n   \n   \n  \n\n**Other Countries(1), individually less than 10%** \n    \n    \n    \n   \n\nOn-Highway \n 16,342  \n 26.0  \n 12,081  \n 19.3 \n\nOff-Highway \n 16,978  \n 27.1  \n 15,921  \n 25.4 \n\nEngineering Services \n -  \n -  \n -  \n - \n\n  \n    \n    \n    \n   \n\nTotal \n 33,320  \n 53.1  \n 28,002  \n 44.7 \n\n \n\n \n(1)\n“Other\nCountries” means Malaysia, Indonesia, Thailand, Hong Kong, Taiwan, Vietnam, Philippines, South Korea, Japan, Australia, India,\nPakistan, Sri Lanka, African and Latin America.\n\n \n\n*Singapore*\n\n \n\nThe\nrevenue in Singapore decreased by approximately $3.1 million for the financial year ended December 31, 2024, as compared to the\ncorresponding financial year ended December 31, 2023, which was primarily attributable to the decrease in demand from the local\ncustomers.\n\n \n\nThe\nrevenue for our On-Highway Business decreased by approximately $4.5 million for the financial year ended December 31, 2024, as\ncompared to the corresponding financial year ended December 31, 2023, which was primarily attributable to the decrease in demand\nfrom the local customers.\n\n \n\nThe\nrevenue for our Off-Highway Business decreased by approximately $1.0 million for the financial year ended December 31, 2024, as\ncompared to the corresponding financial year ended December 31, 2023, which was primarily attributable to the decrease in demand\nfrom the local customers.\n\n \n\nThe\nrevenue for our Engineering Services increased by approximately $2.4 million for the financial year ended December 31, 2024, as\ncompared to the corresponding financial year ended December 31, 2023, which was primarily attributable to the increase in demand\nfrom the local customers.\n\n \n\n*Middle\nEast*\n\n \n\nThe\ndecrease in revenue in the Middle East by approximately $2.1 million to approximately $3.7 million for the financial year ended\nDecember 31, 2024, as compared to the corresponding financial year ended December 31, 2023, was primarily attributable to a decrease\nin demand from customers for On-Highway Business and Off-Highway Business by approximately $0.8 million and approximately $1.3\nmillion, respectively.\n\n \n\nThe\nrevenue for our On-Highway Business decreased by approximately $0.8 million for the financial year ended December 31, 2024, as\ncompared to the corresponding financial year ended December 31, 2023, which was primarily attributable to the decrease sale orders\nby our customers.\n\n \n\nThe\nrevenue for our Off-Highway Business decreased by approximately $1.3 million for the financial year ended December 31, 2024, as\ncompared to the corresponding financial year ended December 31, 2023, which was primarily attributable to a decrease in demand from\ncustomers.\n\n \n\n39\n\n \n\n \n\n*Other\nCountries*\n\n \n\nRevenues\nfrom other countries increased by approximately $5.3 million, primarily due to a rise in demand from new and recurring customers among\nvarious countries.\n\n \n\nThe\nrevenue for our On-Highway Business increased by approximately $4.3 million for the financial year ended December 31, 2024, as\ncompared to the corresponding financial year ended December 31, 2023, which was primarily attributable to an increase in demand from\nour customers in Malaysia, Indonesia, Thailand, Vietnam, Philippines, Japan, Australia, Pakistan, Sri Lanka, African and Latin\nAmerica.\n\n \n\nThe\nrevenue for our Off-Highway Business increased by approximately $1.0 million for the financial year ended December 31, 2024, as\ncompared to the corresponding financial year ended December 31, 2023, which was primarily attributable to the increase in demand\nfrom our customers in Malaysia, Indonesia, Hong Kong, Taiwan, South Korea, Australia and India.\n\n \n\n**Cost\nof revenue**\n\n \n\nThe table below sets forth our\nGroup’s cost of revenue by business sector for the financial years ended December 31, 2024 and 2023:\n\n \n\n  \nFinancial Years Ended December 31, \n\n  \n2024  \n2023 \n\n  \n$’000  \n%  \n$’000  \n% \n\n  \n   \n   \n   \n  \n\nOn-Highway \n 20,247  \n 40.1  \n 21,349  \n 42.1 \n\nOff-Highway \n 26,436  \n 52.4  \n 26,731  \n 52.7 \n\nEngineering Services \n 3,756  \n 7.4  \n 2,617  \n 5.2 \n\n  \n    \n    \n    \n   \n\nTotal \n 50,439  \n 100.0  \n 50,697  \n 100.0 \n\n \n\nFor\nthe financial years ended December 31, 2024 and 2023, our cost of revenue was mainly comprised of purchasing finished products for resale.\nFor the financial years ended December 31, 2024 and 2023, our cost of revenues decreased by approximately $0.3 million from approximately\n$50.7 million in 2023 to approximately $50.4 million in 2024.\n\n \n\n**Gross\nprofit and gross profit margin**\n\n \n\nThe\ntable below sets forth our Group’s gross profit and gross profit margin by business sector for the financial years ended December\n31, 2024 and 2023:\n\n \n\n  \nFinancial Years Ended December 31, \n\n  \n2024  \n2023 \n\n  \n\n**Gross**\n\n**Profit**\n  \n\n**Gross**\n\n**Margin**\n  \n\n**Gross**\n\n**Profit**\n  \n\n**Gross**\n\n**Margin**\n \n\n  \n$’000  \n%  \n$’000  \n% \n\n  \n   \n  \n\nOn-Highway \n 5,589  \n 21.6  \n 5,551  \n 20.6 \n\nOff-Highway \n 4,879  \n 15.6  \n 5,890  \n 18.1 \n\nEngineering Services \n 1,834  \n 32.8  \n 555  \n 17.5 \n\n  \n    \n    \n    \n   \n\nTotal \n 12,302  \n 19.6  \n 11,996  \n 19.1 \n\n \n\nOur\ntotal gross profit remained at approximately $12.3 million and $12.0 million for the financial years ended December 31,\n2024 and 2023, respectively. Our overall gross profit margins were approximately 19.6% and 19.1% for the financial years\nended December 31, 2024 and 2023, respectively. Our total gross profit remained stable for the financial years ended December 31, 2024\nand 2023, respectively.\n\n \n\n40\n\n \n\n \n\n**Selling\nand distribution expenses**\n\n \n\nOur\nselling and distribution expenses mainly included promotion and marketing expenses and transportation expenses for inbound and outbound\nshipments. The following table sets forth the breakdown of our selling and distribution expenses for the financial years ended December\n31, 2024 and 2023:\n\n \n\n  \nFinancial Years Ended December 31, \n\n  \n2024  \n2023 \n\n  \n$’000  \n$’000 \n\n  \n   \n  \n\nPromotion and marketing expenses \n 938  \n 701 \n\nTransportation expenses \n 749  \n 747 \n\n  \n    \n   \n\nTotal \n 1,687  \n 1,448 \n\n \n\nOur\nselling and distribution expenses amounted to approximately $1.6 million and $1.4 million for the financial years ended\nDecember 31, 2024 and 2023, respectively.\n\n \n\nThe\nincrease in selling and distribution expenses by approximately $0.2 million for the financial year ended December 31, 2024, as compared\nto the financial year ended December 31, 2023, was primarily attributable an increase in sales rebates/incentives as a result of approximately\n$0.2 million.\n\n \n\n**Administrative\nexpenses**\n\n \n\nThe\nfollowing table sets forth the breakdown of our administrative expenses for the financial years ended December 31, 2024 and 2023:\n\n \n\n  \nFinancial Years Ended December 31, \n\n  \n2024  \n2023 \n\n  \n$’000  \n%  \n$’000  \n% \n\n  \n   \n  \n\nStaff costs \n 5,464  \n 58.3  \n 5,081  \n 66.0 \n\nDepreciation \n 662  \n 7.1  \n 596  \n 7.7 \n\nProperty and related expenses \n 603  \n 6.4  \n 587  \n 7.6 \n\nMiscellaneous expenses \n 2,033  \n 21.7  \n 1,164  \n 15.1 \n\nLegal and professional fees \n 590  \n 6.3  \n 251  \n 3.3 \n\nOffice supplies and upkeep expenses \n 14  \n 0.2  \n 14  \n 0.3 \n\n  \n    \n    \n    \n   \n\nTotal \n 9,366  \n 100.0  \n 7,693  \n 100.0 \n\n \n\nOur\nadministrative expenses increased by approximately $1.7 million to approximately $9.4 million for the financial year ended December 31,\n2024 from approximately $7.7 million for the financial year ended December 31, 2023, respectively.\n\n \n\nStaff\ncosts mainly represented the salaries, employee benefits and retirement benefit costs to our employees and directors’ remuneration.\nStaff costs increased by approximately $0.4 million to approximately $5.5 million for the financial year ended December 31, 2024 from\napproximately $5.1 million for the financial year ended December 31, 2023, respectively.\n\n \n\nDepreciation\nexpense is charged on our property and equipment which included (i) leasehold factory premise, (ii) leasehold improvement, (iii)\ntools and equipment, (iv) furniture, fixtures and fittings, (v) office equipment, (vi) computer equipment, (vii) motor vehicles, (viii)\nmachinery and equipment and (ix) right-of-use assets.\n\n \n\nProperty\nand related expenses mainly represented property tax and related expenses in Singapore.\n\n \n\n41\n\n \n\n \n\nMiscellaneous\nexpenses were mainly comprised of insurance expenses, office supplies, legal and professional fees, charitable donations, and other miscellaneous\nexpenses. The miscellaneous expenses of our Group increased by approximately $0.9 million to approximately $2.1 million for the financial\nyear ended December 31, 2024 from approximately $1.0 million for the financial year ended December 31, 2023, respectively.\n\n \n\n**Other\nexpenses, net**\n\n \n\nThe\nfollowing table sets forth the breakdown of our other expenses, net for the financial years ended December 31, 2024 and 2023:\n\n \n\n  \nFinancial Years Ended December 31, \n\n  \n2024  \n2023 \n\n  \n$’000  \n$’000 \n\n  \n   \n  \n\nInterest income \n 81  \n 2 \n\nInterest expense \n (1,449) \n (1,118)\n\nGovernment grant \n 94  \n 79 \n\nLoss on disposal of property and equipment \n (2) \n - \n\nForeign exchange gain, net \n 294  \n 153 \n\nOther income \n 234  \n 174 \n\n  \n    \n   \n\nTotal expenses \n (748) \n (710)\n\n \n\nInterest\nexpenses were approximately $1.4 million in 2024 and approximately $1.1 million in 2023, respectively, from our bank loans and financing\nfacilities. For more details of our bank borrowings, please see the paragraph headed “Bank Indebtedness” in this section.\n\n \n\nWe\nreported net foreign exchange gain approximately $0.3 million in 2024 and approximately $0.2 million in 2023, respectively.\n\n \n\n**Income\ntax expenses**\n\n \n\nFor\nthe financial years ended December 31, 2024 and 2023, our income tax expense was comprised of our current tax expense for the\nfinancial year.\n\n \n\nFor\nthe financial year ended December 31, 2024, our income tax was approximately $0.13 million and our effective tax rate was approximately\n25.0% due to the increase was generally in line with the increase in non-deductible expenses for the financial year.\n\n \n\nFor\nthe financial year ended December 31, 2023, our income tax was approximately $0.3 million and our effective tax rate was approximately\n13.3% due to the increase was generally in line with the increase in our profit for the financial year.\n\n \n\n**Net\nincome**\n\n \n\nOur net income approximately $0.4 million and approximately $1.8 million\nfor the financial years ended December 31, 2024 and 2023, respectively.\n\n \n\n**Liquidity\nand Capital Resources**\n\n \n\nOur\nliquidity and working capital requirements primarily related to our operating expenses. Historically, we have met our working capital\nand other liquidity requirements primarily through a combination of cash generated from our operations and loans from banking facilities.\nGoing forward, we expect to fund our working capital and other liquidity requirements from various sources, including cash generated\nfrom our operations, loans from banking facilities, the net proceeds from the Public Offering and other equity and debt financings as\nand when appropriate.\n\n \n\n42\n\n \n\n \n\nOur\ncash requirements consist primarily of day-to-day operating expenses, capital expenditures\nand contractual obligations with respect to facility leases and other operating leases. We\nlease all our office facilities. We expect to make future payments on existing leases from\ncash generated from operations. We have limited credit available from our major vendors and\nare required to prepay for the majority of our inventory purchases, which further constrains\nour cash liquidity.\n\n \n\nWe\nhad the following contractual obligations and lease commitments as of December 31, 2025:\n\n \n\nContractual\nObligations \nTotal  \nLess\nthan 1 year  \n1-3\nYears  \n3-5\nYears \n\n  \n$’000  \n$’000  \n$’000  \n$’000 \n\n  \n   \n   \n   \n  \n\nOperating\nleases commitment \n 893  \n 246  \n 647  \n - \n\nBank\nloans repayment \n 18,927  \n 17,686  \n 1,241  \n - \n\n  \n    \n    \n    \n   \n\nTotal\nobligations \n 19,820  \n 17,939  \n 1,888  \n - \n\n \n\nWe\nbelieve that we have sufficient working capital for our requirements for at least the next 12 months from the date of this Annual Report,\nabsent unforeseen circumstances, taking into account the financial resources presently available to us, including cash and cash equivalents\non hand, cash flows from our operations and the estimated net proceeds from the Public Offering.\n\n \n\n**Bank\nIndebtedness**\n\n \n\nBank\nindebtedness \nTerms\nof repayments \n\n**Annual**\n\n**interest**\n\n**rate**\n  \n\n**As\nof**\n\n**December\n31,**\n \n\n  \n  \n   \n2025  \n2024 \n\n  \n  \n   \n$’000  \n$’000 \n\n  \n  \n   \n   \n  \n\nTerm\nloans \n2\nto 10 years \n 2.00-3.75% \n 3,173  \n 4,465 \n\nOverdraft \nWithin\n12 months \n 4.0739% \n 114  \n 12 \n\nTrust\nreceipts \nWithin\n12 months \n 1.65-7.25% \n 14,938  \n 17,137 \n\nRevolving\nloan \nWithin\n12 months \n 2.50% \n 702  \n 664 \n\n  \n  \n    \n    \n   \n\nTotal \n  \n    \n 18,927  \n 22,278 \n\n \n\nAs\nof December 31, 2025 and 2024, bank borrowings were obtained from several financial institutions in Singapore, which bear annual interest\nat a fixed rate from 1.65% to 7.25% and are repayable in 1 month to 10 years.\n\n \n\nThe\nCompany’s bank borrowings currently are guaranteed by personal guarantees from CE Neo, Jimmy Neo, Edward Neo, CK Neo a corporate\nguaranty from Soon Aik Global Pte Ltd. We will seek a waiver for future guarantees following the completion of the Public Offering.\n\n \n\n43\n\n \n\n \n\n**Cash\nflows**\n\n \n\nThe\nfollowing table summarizes our cash flows for the financial years ended December 31, 2025 and 2024:\n\n \n\n  \n\n**Financial Years Ended**\n\n**December 31,**\n \n\n  \n2025  \n2024 \n\n  \n$’000  \n$’000 \n\n  \n   \n  \n\nCash and cash equivalents, **and restricted cash** as at beginning of the\nfinancial year \n 2,088  \n 1,117 \n\n  \n    \n   \n\nNet cash provided by operating activities \n 4,441  \n 2,534 \n\nNet cash used in investing activities \n (10) \n (739)\n\nNet cash used in financing activities \n (5,461) \n (628)\n\nEffect on exchange rate change on cash and cash equivalents, and restricted cash \n 316  \n (196)\n\n  \n    \n   \n\nNet change in cash and cash equivalents, and restricted cash \n (714) \n 971 \n\n  \n    \n   \n\nCash and cash equivalents, **and restricted cash** as at end of the financial\nyear \n 1,374  \n 2,088 \n\n \n\n**Cash\nflows from operating activities**\n\n \n\nFor\nthe financial year ended December 31, 2025, our net cash provided by operating activities was approximately $4.5 million, which\nprimarily consisted of our net loss of approximately $0.4 million, adding back (i) the non-cash depreciation of property and\nequipment and right-of-use assets of approximately $0.8 million, (ii) the provision for the impairment of current expected credit\nlosses of approximately $0.8 million, (iii) the loss on disposal of property and equipment of approximately $0.013 million, (iv) the\ndecrease in accounts receivables of approximately $3.2 million, (v) the decrease in inventories of approximately $0.8 million, (vi)\nthe increase in customer deposits of approximately $0.2 million, (vii) the increase in accounts payables, accrued liabilities and\nprovision of approximately $0.4 million and was partially offset by (a) the decrease in tax payables of approximately $0.8 million, (b) the increase in deposits, prepayments and other receivables of approximately $0.1 million and (c) the repayment of operating lease liabilities of approximately $0.4million.\n\n \n\nFor\nthe financial year ended December 31, 2024, our net cash provided by operating activities was approximately $2.5 million, which primarily\nconsisted of our net income of approximately $0.3 million, adding back (i) the non-cash depreciation of property and equipment\nand right-of-use assets of approximately $0.7 million, (ii) the provision for the impairment of current expected credit losses of approximately\n$0.9 million, (iii) the provision for the impairment of inventories of approximately $0.01 million, (iv) the decrease in inventories\nof approximately $0.7 million, and (v) the increase in customer deposits of approximately $1.5 million, (vi) the increase in accounts payables and accrued liabilities and provision\nof approximately $0.002 million and was partially offset by (a)\nthe gain on disposal of property and equipment of approximately $0.002 million, (b) the increase in accounts receivables of approximately\n$0.4 million, (c) the increase in deposits, prepayments other receivables and of approximately $0.6 million, (d) the decrease in tax payables of approximately\n$0.2 million and (e) the repayment of operating lease liabilities of approximately $0.4million.\n\n \n\n44\n\n \n\n \n\n**Cash\nflows from investing activities**\n\n \n\nFor\nthe financial year ended December 31, 2025, our net cash used in investing activities was approximately $0.01 million, primarily consisting\nof the purchase of property and equipment of approximately $0.01 million.\n\n \n\nFor\nthe financial year ended December 31, 2024, our net cash used in investing activities was approximately $0.7 million, primarily consisting\nof the purchase of property and equipment of approximately $0.7 million.\n\n \n\n**Cash\nflows from financing activities**\n\n \n\nOur\ncash flows used in financing activities primarily consists of interest paid, proceeds from loans, repayment of loans, payment for interest\nportion of lease liabilities and payment for capital portion of lease liabilities.\n\n \n\nFor\nthe financial year ended December 31, 2025, our net cash used in financing activities was approximately $5.5 million, which mainly consisted\nof the repayment of bank borrowings of approximately $48.7 million, partially offset by proceeds from bank borrowings of approximately\n$45.4 million, the repayment of finance lease liabilities of approximately $0.1 million and the repayment to related parties of approximately\n$2.0 million.\n\n \n\nFor the financial year ended\nDecember 31, 2024, our net cash used in financing activities was approximately $0.6 million, which mainly consisted of the repayment of bank borrowings of approximately $43.3 million, partially offset by proceeds from bank\nborrowings of approximately $46.5 million.\n\n \n\n**Capital\ncommitments**\n\n \n\nAs\nof December 31, 2025 and 2024, we did not have any capital commitments.\n\n \n\n**Off-Balance\nSheet Transactions**\n\n \n\nAs\nof December 31, 2025, we have not entered into any material off-balance sheet transactions or arrangements.\n\n \n\nWe\nhave not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. In addition,\nwe have not entered into any derivative contracts that are indexed to our own shares and classified as shareholders’ equity, or\nthat are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets\ntransferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. Moreover, we do not have\nany variable interest in an unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages\nin leasing, hedging or research and development services with us.\n\n \n\n45\n\n \n\n \n\n●\nUse\nof Estimates and Assumptions\n\n \n\nThe\npreparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that\naffect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated\nfinancial statements and the reported amounts of revenues and expenses during the financial years presented. Significant accounting estimates\nin the period include the allowance for current expected credit losses on accounts and other receivables, impairment loss on inventories,\nassumptions used in assessing right-of-use assets, impairment of long-lived assets, useful lives of property and equipment, and realization of\ndeferred tax assets.\n\n \n\n●\nBasis\nof Consolidation\n\n \n\nThe\nconsolidated financial statements include the financial statements of the Company and its subsidiaries. All significant inter-company\nbalances and transactions within the Company have been eliminated upon consolidation.\n\n \n\n●\nForeign\nCurrency Translation and Transaction\n\n \n\nThe\nreporting currency of the Company is United States Dollar (“US$”) and the accompanying consolidated financial statements\nhave been expressed in US$. In addition, the Company and subsidiaries are operating in Singapore and Malaysia, maintain their books\nand record in their local currency, Singapore Dollars (“SGD”) and Malaysian Ringgit (“MYR”), respectively,\nwhich is a functional currency as being the primary currency of the economic environment in which their operations are conducted. In\ngeneral, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not US$ are translated\ninto US$, in accordance with ASC Topic 830-30, *Translation of Financial Statement*, using the exchange rate on the balance\nsheet date. Revenues and expenses are translated at average rates during the financial year. The gains and losses\nresulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other\ncomprehensive income within the statements of changes in shareholders’ equity.\n\n \n\nTranslation\ngains and losses that arise from exchange rate fluctuations from transactions denominated in a currency other than the functional currency\nare translated, as the case may be, at the rate on the date of the transaction and included in the results of operations as incurred.\n\n \n\n●\nCash\nand Cash Equivalents\n\n \n\nCash\nand cash equivalents consist primarily of cash on hand and cash in readily available checking and saving accounts. Cash equivalents\nconsist of highly liquid investments that are readily convertible to cash and that mature within three (3) months or less from the\ndate of purchase. The carrying amounts approximate fair value due to the short maturities of these instruments. The Company\nmaintains most of its bank accounts in Singapore and Malaysia.\n\n \n\n●\nRestricted\nCash\n\n \n\nRestricted cash represents fixed deposits held by foreign subsidiaries of the Group with DBS Bank, with maturities\nwithin 12 months. These fixed deposits have been pledged to the Bank as collateral security and guarantees under the Group’s trust receipt\nfacilities. Under the terms of the relevant facility agreements, the Bank is entitled to apply these fixed deposits against any outstanding\nobligations owed by the relevant subsidiaries in the event of a failure to repay amounts due. Accordingly, these deposits are not available\nfor the Group’s general use.\n\n \n\n46\n\n \n\n \n\n●\nAccounts\nReceivable, net\n\n \n\nAccounts\nreceivable include trade accounts due from customers in the sale of products.\n\n \n\nAccounts\nreceivable are recorded at the invoiced amount. The Company seeks to maintain strict control over its outstanding receivables to minimize\ncredit risk. Overdue balances are reviewed regularly by senior management. Management reviews its receivables on a regular basis to determine\nif the bad debt allowance is adequate, and provides allowance when necessary. The allowance is based on management’s best estimates as well as the historical trends of collections. Account balances are charged off\nagainst the allowance after all reasonable means of collection have been exhausted and the likelihood of collection is not probable.\nThe Company’s management continues to evaluate the reasonableness of the valuation allowance policy and update it if necessary.\n\n \n\nThe\nCompany adopted ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments\n(“ASC 326”). ASC 326 requires the application of a credit loss model based prospectively on current expected credit losses\n(CECL), and replaces the previous model based retrospectively on past incurred losses. The Company adopted ASC 326 using the modified\nretrospective method for all financial assets measured at amortized cost. The Company carries accounts receivable at the face amounts\nless a reserve for estimated credit losses.\n\n \n\nThe\nCompany does not hold any collateral or other credit enhancements overs its accounts receivable balances.\n\n \n\n●\nInventories\n\n \n\nInventories\nare valued at the lower of cost or net realizable value. Cost is determined by the average cost method. The Company records adjustments\nto its inventory for estimated obsolescence or diminution in net realizable value equal to the difference between the cost of the inventory\nand the estimated net realizable value. At the point of loss recognition, a new cost basis for that inventory is established, and subsequent\nchanges in facts and circumstances do not result in the restoration or increase in that newly established cost basis.\n\n \n\n●\nProperty\nand Equipment, net\n\n \n\nProperty\nand equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated\non the straight-line basis over the following expected useful lives from the date beginning when the assets are placed in service and\nafter taking into account their estimated residual values:\n\n \n\n \n** **\n**Expected\nuseful life**\n\nLeasehold\nfactory premise\n \n42 years\n\nLeasehold\nimprovement\n \n3-5\nyears\n\nTools\nand equipment\n \n3-8\nyears\n\nFurniture,\nfixtures and fittings\n \n5-8\nyears\n\nOffice\nequipment\n \n5-7\nyears\n\nComputer\nequipment\n \n3\nyears\n\nMotor\nvehicles\n \n5-10\nyears\n\nMachinery\nand equipment\n \n7\nyears\n\n \n\nLeasehold\nimprovements are depreciated over the shorter of their estimated useful life or the remaining lease term.\n\n \n\nExpenditures\nfor maintenance and repairs are expensed as incurred, while costs that extend the useful life of an asset are capitalized. Property and\nequipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.\nWhen property and equipment are retired or disposed of, the cost and related accumulated depreciation are removed from the accounts and\nany resulting gain or loss is recognized in the consolidated statements of operations.\n\n \n\n●\nImpairment\nof Long-Lived Assets\n\n \n\nIn\naccordance with the provisions of ASC Topic 360, *Impairment or Disposal of Long-Lived Assets*, all long-lived assets such as property\nand equipment owned and held by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the\ncarrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the\ncarrying amount of an asset to its estimated future undiscounted cash flows expected to be generated by the asset. If such assets are\nconsidered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed\nthe fair value of the assets.\n\n \n\n47\n\n \n\n \n\n●\nRevenue\nRecognition\n\n \n\nThe\nCompany recognizes its sales of goods and services from contracts with customers, which are accounted for in accordance with\nAccounting Standards Update (“ASU”) No. 2014-09, *Revenue from Contracts with Customers (Topic 606)* (“ASC\n606”).\n\n \n\nASC\n606 establishes a five-step model for recognizing revenue from contracts with customers. The Company recognizes revenue to depict the\ntransfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled\nin exchange for those goods or services.\n\n \n\nStep\n1: Identify the contract(s) with a customer.\n\nStep\n2: Identify the performance obligations in the contract.\n\nStep\n3: Determine the transaction price – The transaction price is the amount of consideration in a contract to which an entity expects\nto be entitled in exchange for transferring promised goods or services to a customer.\n\nStep\n4: Allocate the transaction price to the performance obligations in the contract – Any entity allocates the transaction price to\neach performance obligation on the basis of the relative standalone selling prices of each distinct good or service promised in the contract.\n\nStep\n5: Recognize revenue when (or as) the entity satisfies a performance obligation – An entity recognizes revenue when (or as) it\nsatisfies a performance obligation by transferring a promised good or service to a customer (which is when the customer obtains control\nof that good or service). The amount of revenue recognized is the amount allocated to the satisfied performance obligation. A performance\nobligation may be satisfied at a point in time (typically for promises to transfer goods to a customer) or over time (typically for promises\nto transfer service to a customer).\n\n \n\nThe\nmajority of the Company’s income is derived from contracts with customers in the sale of products and services, and as such, the revenue\nrecognized depicts the transfer of promised goods or services to its customers in an amount that reflects the consideration to which\nthe entity expects to be entitled in exchange for those goods or services. The Company considers the terms of the contract and all\nrelevant facts and circumstances when applying this guidance. The Company’s revenue recognition policies are in compliance\nwith ASC 606, as follows:\n\n \n\nProduct\nsales consist of a single performance obligation that the Company satisfies at a point in time. The Company recognizes product revenue\nwhen the following events have occurred: (a) the Company has transferred physical possession of the products, depending upon the method\nof distribution and shipping terms set forth in the customer contract, (b) the Company has a present right to payment, (c) the customer\nhas legal title to the products, and (d) the customer bears the risks and rewards of ownership of the products. Based on the Company’s\nhistorical practices and shipping terms specified in the sales agreements and invoices, these criteria are generally met when the control\nof the product transfers to the customer, at which point the customer obtains legal title and assumes the risks and rewards of ownership,\nand the customer is able to direct the use of, and obtain substantially all of the benefits from the products.\n\n \n\nThe\nCompany records its revenues on product sales, net of good & service taxes (“GST”) upon the services are rendered and\nthe title and risk of loss of products are fully transferred to the customers. The Company is subject to GST which is levied on the majority\nof the products at the rate of 9% on the invoiced value of sales in Singapore.\n\n \n\nThe Company records estimated sales returns, rebates,\nand other allowances as reductions to revenue at the time revenue is recognized. Estimates are based on historical experience, contractual\nterms, and current expectations. Actual results may differ from these estimates.\n\n \n\n●\nSales\nand Marketing\n\n \n\nSales\nand marketing expenses include payroll, employee benefits and other headcount-related expenses associated with sales and marketing personnel,\nand the costs of advertising, promotions, seminars, and other programs.\n\n \n\n●\nGovernment\nGrant\n\n \n\nA\ngovernment grant or subsidy is not recognized until there is reasonable assurance that: (a) the enterprise will comply with the conditions\nattached to the grant; and (b) the grant will be received. When the Company receives government grant or subsidies but the conditions\nattached to the grants have not been fulfilled, such government subsidies are deferred and recorded under other payables and accrued\nexpenses, and other long-term liability. The classification of short-term or long-term liabilities is depended on the management’s\nexpectation of when the conditions attached to the grant can be fulfilled.\n\n \n\n●\nComprehensive\nIncome (Loss)\n\n \n\nASC\nTopic 220, *Comprehensive Income*, establishes standards for reporting and display of comprehensive income, its components and accumulated\nbalances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive\nincome, as presented in the accompanying statement of shareholder’s equity, consists of changes in unrealized gains and losses\non foreign currency translation. This comprehensive income is not included in the computation of income tax expense or benefit.\n\n \n\n48\n\n \n\n \n\n●\nIncome\nTaxes\n\n \n\nThe Company accounts for income\ntaxes in accordance with ASC Topic 740, *Income Taxes* (“ASC 740”). ASC 740 prescribes a comprehensive model for the\nrecognition, measurement, presentation, and disclosure of income taxes and uncertain tax positions in the financial statements.\n\n \n\nDeferred tax assets and liabilities\nare recognized for the expected future tax consequences attributable to temporary differences between the financial statement carrying\namounts of existing assets and liabilities and their respective tax bases, as well as for operating loss and tax credit carryforwards.\nDeferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which those temporary differences\nare expected to reverse.\n\n \n\nThe Company recognizes the financial statement effect\nof a tax position when it is more likely than not that the position will be sustained upon examination by the relevant tax authorities\nbased on the technical merits of the position. Tax positions recognized in the financial statements are measured as the largest amount\nof tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the taxing authority. The Company\nrecords interest and penalties related to uncertain tax positions, if any, as a component of income tax expense.\n\n \n\nThe\nCompany is subject to tax in local and foreign jurisdiction. As a result of its business activities, the Company files tax returns that\nare subject to examination by the relevant tax authorities.\n\n \n\n●\nLeases\n\n \n\nEffective\nfrom January 1, 2020, the Company adopted the guidance of ASC 842, *Leases*, which requires an entity to recognize a\nright-of-use asset and a lease liability for virtually all leases. On February 25, 2016, the Financial Accounting Standards Board\n(the “FASB”) issued Accounting Standards Update No. 2016-02, Leases (Topic 842), to increase transparency and\ncomparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key\ninformation about leasing transactions. ASC 842 requires that lessees recognize right-of-use assets and lease liabilities calculated\nbased on the present value of lease payments for all lease agreements with terms that are greater than 12 months. It requires for\nleases longer than one (1) year, a lessee to recognize in the statement of financial condition a right-of-use asset, representing\nthe right to use the underlying asset for the lease term, and a lease liability, representing the liability to make lease payments.\nASC 842 distinguishes leases as either a finance lease or an operating lease that affects how the leases are measured and presented\nin the statement of operations and statement of cash flows. ASC 842 supersedes nearly all existing lease accounting guidance under\nGAAP issued by the FASB including ASC Topic 840, Leases.\n\n \n\nThe\naccounting update also requires that for finance leases, a lessee recognize interest expense on the lease liability, separately from\nthe amortization of the right-of-use asset in the statements of earnings, while for operating leases, such amounts should be recognized\nas a combined expense. In addition, this accounting update requires expanded disclosures about the nature and terms of lease agreements.\n\n \n\n●\nRetirement\nPlan Costs\n\n \n\nContributions\nto retirement plans (which are defined contribution plans) are charged to general and administrative expenses in the accompanying statements\nof operation as the related employee service are provided. The Company is required to make contribution to their employees under a government-mandated\nmulti-employer defined contribution pension scheme for its eligible full-times employees in Singapore and Malaysia. The Company is required\nto contribute a specified percentage of the participants’ relevant income based on their ages and wages level.\n\n \n\n●\nSegment\nReporting\n\n \n\nFASB\nASC 280, “*Segment Reporting”*, establishes standards for reporting information about operating segments on a basis\nconsistent with the Company’s internal organizational structure as well as information about geographical areas, business segments\nand major customers in financial statements for details on the Company’s business segments. For the financial years ended December\n31, 2025, 2024 and 2023, the Company has three (3) reporting business segments.\n\n \n\n49\n\n \n\n \n\n●\nRelated\nParties\n\n \n\nThe\nCompany follows the ASC 850-10, *Related Party* for the identification of related parties and disclosure of related party transactions.\n\n \n\nPursuant\nto section 850-10-20 the related parties include: (a) affiliates of the Company; (b) entities for which investments in their equity securities\nwould be required, absent the election of the fair value option under the Fair Value Option Subsection of section 825-10-15, to be accounted\nfor by the equity method by the investing entity; (c) trusts for the benefit of employees, such as pension and Income-sharing trusts\nthat are managed by or under the trusteeship of management; (d) principal owners of the Company; (e) management of the Company; (f) other\nparties with which the Company may deal if one party controls or can significantly influence the management or operating policies of\nthe other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and (g)\nother parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership\ninterest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting\nparties might be prevented from fully pursuing its own separate interests.\n\n \n\nThe\nfinancial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense\nallowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the\npreparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: (a)\nthe nature of the relationship(s) involved; (b) a description of the transactions, including transactions to which no amounts or nominal\namounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary\nto an understanding of the effects of the transactions on the financial statements; (c) the dollar amounts of transactions for each of\nthe periods for which income statements are presented and the effects of any change in the method of establishing the terms from that\nused in the preceding period; and (d) amount due from or to related parties as of the date of each balance sheet presented and, if not\notherwise apparent, the terms and manner of settlement.\n\n \n\n●\nCommitments\nand Contingencies\n\n \n\nThe\nCompany follows the ASC 450-20, *Commitments to report accounting for contingencies*. Certain conditions may exist as of the date\nthe financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future\nevents occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise\nof judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims\nthat may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-asserted claims as well\nas the perceived merits of the amount of relief sought or expected to be sought therein.\n\n \n\nIf\nthe assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability\ncan be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates\nthat a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then\nthe nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.\n\n \n\nLoss\ncontingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.\nManagement does not believe, based upon information available at this time that these matters will have a material adverse effect on\nthe Company’s financial position, results of operations or cash flows. However, there is no assurance that such matters will not\nmaterially and adversely affect the Company’s business, financial position, and results of operations or cash flows.\n\n \n\n50\n\n \n\n \n\n●\nCredit Risk\n\n \n\nFinancial\ninstruments that potentially subject the Company to credit risk consist of cash and cash equivalents, restricted cash, accounts\nreceivable. Cash and cash equivalents are maintained with high credit quality institutions, the composition and maturities of which\nare regularly monitored by management. From April 1, 2024 onwards, the Singapore Deposit Protection Board pays compensation up to a\nlimit of S$100,000 (approximately $77,869) if the bank with which an individual or a company hold its eligible deposit fails. For\ndeposits held in Malaysia, the Perbadanan Insurans Deposit Malaysia (“PIDM”) provides deposit insurance protection up to\nMYR 250,000 (approximately $61,692) per depositor per member institution. As of December 31, 2025, cash balance of approximately\n$1.0 million and restricted cash of approximately $0.3 million were maintained at financial institutions in Singapore and Malaysia,\nof which approximately $0.7 million was subject to credit risk. While management believes that these financial institutions are of\nhigh credit quality, it also continually monitors their credit worthiness.\n\n \n\nFor\naccounts receivable, the Company determines, on a continuing basis, the allowance for current expected credit losses are based on the\nestimated realizable value. The Company identifies credit risk on a customer-by-customer basis. The information is monitored regularly\nby management. Concentration of credit risk arises when a group of customers having similar characteristics such that their ability to\nmeet their obligations is expected to be affected similarly by changes in economic conditions.\n\n \n\n●\nLiquidity\nRisk\n\n \n\nLiquidity\nrisk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company’s policy is\nto ensure that it has sufficient cash to meet its liabilities when they become due, under both normal and stressed conditions, without\nincurring unacceptable losses or risking damage to the Company’s reputation. A key risk in managing liquidity is the degree of\nuncertainty in the cash flow projections. If future cash flows are fairly uncertain, the liquidity risk increases.\n\n \n\n●\nFair\nValue Measurement\n\n \n\nThe\nCompany follows the guidance of the ASC Topic 820-10, *Fair Value Measurements and Disclosure* (“ASC 820-10”), with\nrespect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier fair value hierarchy\nthat prioritizes the inputs used in measuring fair value as follows:\n\n \n\n \n●\n*Level\n1*: Inputs are based upon unadjusted quoted prices for identical instruments traded in active markets;\n\n \n●\n*Level\n2:* Inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments\nin markets that are not active, and model-based valuation techniques (e.g. Black-Scholes Option-Pricing model) for which all significant\ninputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets\nor liabilities. Where applicable, these models project future cash flows and discount the future amounts to a present value using\nmarket-based observable inputs; and\n\n \n●\n*Level\n3*: Inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants\nwould use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including option\npricing models and discounted cash flow models.\n\n \n\nThe\ncarrying value of the Company’s financial instruments: cash and cash equivalents, restricted cash, accounts receivable, loans receivable,\namount due to a related party, accounts payable, escrow liabilities, income tax payable, amount due to a related party, other payables\nand accrued liabilities approximate at their fair values because of the short-term nature of these financial instruments.\n\n \n\nManagement\nbelieves, based on the current market prices or interest rates for similar debt instruments, the fair value of note payable approximate\nthe carrying amount. The Company accounts for loans receivable at cost, subject to impairment testing.\nThe Company obtains a third-party valuation based upon loan level data including note rate, type and term of the underlying loans.\n\n \n\nThe\nCompany’s non-marketable equity securities are investments in privately held companies, which are without readily determinable\nmarket values and are classified as Level 3, due to the absence of quoted market prices, the inherent lack of liquidity and the fact\nthat inputs used to measure fair value are unobservable and require management’s judgment.\n\n \n\nFair\nvalue estimates are made at a specific point in time based on relevant market information about the financial instrument. These estimates\nare subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision.\nChanges in assumptions could significantly affect the estimates.\n\n \n\n51\n\n \n\n \n\n**Recently\nIssued Accounting Pronouncements**\n\n \n\nThe\nCompany is an “emerging growth company” (the “EGC”) as defined in the Jumpstart Our Business Startups Act of\n2012 (the “JOBS Act”). Under the JOBS Act, the EGC can delay adopting new or revised accounting standards issued subsequent\nto the enactment of the JOBS Act until such time as those standards apply to private companies.\n\n \n\nRecently\nAdopted Accounting Standards\n\n \n\nIn\nNovember 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU\n2023-07”). The amendments in the ASU are intended to improve reportable segment disclosure requirements, primarily through enhanced\ndisclosures about significant segment expenses that are regularly provided to the chief operating decision maker and included within\neach reported measure of segment profit or loss. In addition, the amendments enhance interim disclosure requirements, clarify circumstances\nin which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities\nwith a single reportable segment, and contain other disclosure requirements. The purpose of the amendments is to enable “investors\nto better understand an entity’s overall performance” and assess “potential future cash flows.” The amendments\nin ASU 2023-07 are effective for all public entities for fiscal years beginning after December 15, 2023, and interim periods within fiscal\nyears beginning after December 15, 2024. The adoption did not have material impact on the Company’s consolidated financial statement\npresentations and disclosures.\n\n \n\nIn\nDecember 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740). The ASU requires specific disaggregated\ninformation about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid.\nThe ASU is effective on a prospective basis for annual periods beginning after December 15, 2024. Early adoption is also permitted for\nannual financial statements that have not yet been issued or made available for issuance. This ASU will result in the required additional\ndisclosures being included in the consolidated financial statements, once adopted. The adoption did not have material impact on the Company’s\nconsolidated financial statement presentations and disclosures.\n\n \n\nRecent\nAccounting Pronouncements Not Yet Adopted\n\n \n\nIn\nNovember 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures\n(Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), and in January 2025, the FASB issued ASU\nNo. 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying\nthe Effective Date (“ASU 2025-01”). ASU 2024-03 requires additional disclosure of the nature of expenses included in the\nincome statement as well as disclosures about specific types of expenses included in the expense captions presented in the income statement.\nASU 2024-03, as clarified by ASU 2025-01, is effective for annual periods beginning after December 15, 2026, and interim reporting periods\nbeginning after December 15, 2027, with early adoption permitted. This guidance will be applied either prospectively or retrospectively.\nThe Company is currently evaluating the impact that the adoption of these standards will have on the Company’s consolidated financial\nstatements and disclosures.\n\n \n\nIn\nJuly 2025, the FASB issued ASU 2025-05, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for\nAccounts Receivable and Contract Assets”. ASU 2025-05 provides a practical expedient related to the estimation of expected credit\nlosses for current accounts receivable and current contract assets. ASU 2025-05 is effective for annual reporting periods beginning after\nDecember 15, 2025 and interim reporting periods within those annual reporting periods and should be applied prospectively. Early adoption\nis permitted, and the Company is currently assessing the impact of adoption.\n\n \n\nIn\nSeptember 2025, the FASB issued ASU 2025-06, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):\nTargeted Improvements to the Accounting for Internal-Use Software”, which provides guidance to clarify and modernize the accounting\nfor costs related to internal-use software. ASU2025-06 is effective for annual reporting periods beginning after December 15, 2027, including\ninterim reporting periods within those annual reporting periods. Early adoption is permitted, and the Company is currently assessing\nthe impact of adoption.\n\n \n\nOther\naccounting standards that have been issued by the FASB that do not require adoption until a future date are not expected to have a material\nimpact on the consolidated financial statements upon adoption. The Company does not discuss recent standards that are not anticipated\nto have an impact on or are unrelated to its consolidated financial condition, results of operations, cash flows or disclosures.\n\n \n\n**Impact\nof Inflation**\n\n \n\nAccording\nto the Monetary Authority of Singapore (the “MAS”), the year-over-year percentage changes in the consumer price index for\n2025 and 2024 were 0.7% and 2.4%, respectively as reported by the MAS at https://www.mas.gov.sg/news/monetary-policy-statements/2026/mas-onetary-policy-statement-29jan26.\nInflation in Singapore has not materially affected our profitability and operating results. However, we can provide no assurance that\nwe will be unaffected by higher inflation rates in Singapore or globally in the future.\n\n \n\n**Seasonality**\n\n \n\nWe\nhave not observed any significant seasonal trends. Our Directors believe that there is no apparent seasonality factor affecting the industry\nthat our Group is operating in.\n\n \n\n**Quantitative\nand Qualitative Disclosures about Market Risk**\n\n \n\n**Interest\nRate Risk**\n\n \n\nWe\nare exposed to interest rate risk while we have short-term bank loans outstanding. Although interest rates for our short-term loans are\ntypically fixed for the terms of the loans, the terms are typically 12 months and interest rates are subject to change upon renewal.\n\n \n\n52\n\n \n\n \n\n**Credit\nRisk**\n\n \n\nCredit\nrisk is controlled by the application of credit approvals, limits and monitoring procedures. We manage credit risk through in-house research\nand analysis of the relevant economy and the underlying obligors and transaction structures. We identify credit risk collectively based\non industry, geography and customer type. In measuring the credit risk of our sales to our customers, we mainly reflect the “probability\nof default” by the customer on its contractual obligations and consider the current financial position of the customer and the\ncurrent and likely future exposures to the customer.\n\n \n\n**Liquidity\nRisk**\n\n \n\nWe\nare also exposed to liquidity risk, which is risk that we will be unable to provide sufficient capital resources and liquidity to meet\nour commitments and business needs. Liquidity risk is controlled by the application of financial position analysis and monitoring procedures.\nWhen necessary, we will turn to financial institutions and related parties to obtain short-term funding to cover any liquidity shortage.\n\n \n\n**Foreign\nExchange Risk**\n\n \n\nOur\nreporting currency is the U.S. dollar, and almost all of our consolidated revenues and consolidated costs and expenses are denominated\nin Singapore Dollars (“S$”) and Japanese Yen (“JPY”). Our assets are denominated primarily in Singapore Dollars\nAs a result, we are exposed to foreign exchange risk as our revenues and results of operations may be affected by fluctuations in the\nexchange rate between the US$ and S$ and JPY. If the S$ and JPY depreciates against the US$, the value of our S$ revenues and JPY revenues,\nearnings and assets as expressed in our US$ financial statements will decline. We have not entered into any hedging transactions in an\neffort to reduce our exposure to foreign exchange risk."}