{"url_path":"/sec/mgn/10-k/2026/item-18","section_key":"item-18","section_title":"Item 18 Financial Statements**","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-05-15","source_url":"https://www.sec.gov/Archives/edgar/data/1995075/0001213900-26-057595-index.html","accession_number":"0001213900-26-057595","cik":"0001995075","ticker":"MGN","issuer_name":"Megan Holdings Ltd.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1995075/0001213900-26-057595-index.html","primary_entity_key":"0001995075","primary_entity_name":"Megan Holdings Ltd."},"word_count":16264,"has_tables":true,"body_markdown":"**Item\n18. Financial Statements**\n\n \n\nOur consolidated financial statements are included at the end of this\nannual report, beginning with page F-1.\n\n \n\n**MEGAN HOLDINGS LIMITED AND ITS SUBSIDIARIES**\n\n** **\n\n \n \n**PAGE**\n\n[Report of Independent Registered Public Accounting Firm (PCAOB ID\nNo. 7167)](#fin_001)\n \nF-2\n\n[Report\nof Independent Registered Public Accounting Firm (PCAOB ID No. 1171)](#fin_007)\n \nF-3\n\n[Consolidated Balance Sheets as of December 31, 2023, 2024 and 2025](#fin_002)\n \nF-4\n\n[Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2023, 2024 and 2025](#fin_003)\n \nF-5\n\n[Consolidated Statements of Changes in Shareholders’ Equity for the Years Ended December 31, 2023, 2024 and 2025](#fin_004)\n \nF-6\n\n[Consolidated Statements of Cash Flows for the Years Ended December 31, 2023, 2024 and 2025](#fin_005)\n \nF-7\n\n[Notes to Consolidated Financial Statements](#fin_006)\n \nF-8\n\n \n\nF-1\n\n \n\n \n\n**SFAI MALAYSIA PLT**202206000021 (LLP0031758-LCA) & AF 002216\n\nChartered Accountants\n\nBlock C2-G,\n\nGround Floor, Setiawalk,\n\nPersiaran Wawasan,\n\n47160 Puchong,\n\nSelangor, Malaysia.\n\nTel: 603- 7802 9000\n\n \n\n**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING\nFIRM**\n\n** **\n\nTo the Board of Directors and Stockholders \n\nMegan Holdings Limited\n\n \n\n**Opinion on the Consolidated Financial Statements**\n\n \n\nWe have audited the accompanying consolidated\nbalance sheet of Megan Holdings Limited and its subsidiaries (collectively, the “Company”) as of December 31, 2025, and the\nrelated consolidated statements of comprehensive income, shareholders’ equity and cash flows for the year ended December 31, 2025,\nand the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated\nfinancial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and the\nresults of its operations and its cash flows for the year ended December 31, 2025, in conformity with accounting principles generally\naccepted in the United States of America.\n\n \n\n**Basis for Opinion**\n\n \n\nThese consolidated financial statements are the\nresponsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial\nstatements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States)\n(“PCAOB”) and are required to be independent with respect to the Company in accordance with the United States federal\nsecurities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.\n\n \n\nWe conducted our audits in accordance with the\nstandards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether\nthe consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to\nhave, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required\nto obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness\nof the Company’s internal control over financial reporting. Accordingly, we express no such opinion.\n\n \n\nOur audits included performing procedures to\nassess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures\nthat respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the\nconsolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made\nby management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide\na reasonable basis for our opinion.\n\n** **\n\nWe have served as the Company’s auditor\nsince 2025.\n\n \n\n**/s/ SFAI MALAYSIA PLT**\n\n(PCAOB: 7167)\n\nMalaysia\n\nMay 15, 2026\n\n \n\nF-2\n\n \n\n \n\n \n\n**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING\nFIRM**\n\n \n\nTo:The Board of Directors and Shareholders of\n\nMegan Holdings Limited\n\n \n\n**Opinion on the Financial Statements**\n\n \n\nWe have audited the accompanying consolidated\nbalance sheets of Megan Holdings Limited and its subsidiaries (collectively the “Company”) as of December 31, 2023 and\n2024, and the related consolidated statements of comprehensive income, changes in shareholders’ equity, and cash flows in each of\nthe years for the two-year period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated\nfinancial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial\nposition of the Company as of December 31, 2023 and 2024, and the results of its operations and its cash flows in each of the two-year\nperiod ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.\n\n \n\n**Basis for Opinion**\n\n \n\nThese consolidated financial statements are the\nresponsibility of our management. Our responsibility is to express an opinion on the consolidated financial statements based on our audit.\nWe are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”)\nand are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable\nrules and regulations of the Securities and Exchange Commission and the PCAOB.\n\n \n\nWe conducted our audits in accordance with the\nstandards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the\nconsolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have,\nnor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain\nan understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of\nour internal control over financial reporting. Accordingly, we express no such opinion.\n\n \n\nOur audits included performing procedures to assess the risks of material\nmisstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those\nrisks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial\nstatements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as\nevaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for\nour opinion.\n\n \n\n*/s/ WWC, P.C.*\n\nWWC, P.C.\n\nCertified Public Accountants\n\nPCAOB ID No. 1171\n\n \n\nWe have served as the Company’s auditor\nfrom 2022 through December 15, 2025.\n\n \n\nSan Mateo, California\n\nJuly 17, 2025, except for Note 2, 16, and 19 which are dated August 1, 2025\n\n \n\n \n\nF-3\n\n \n\n**MEGAN HOLDINGS LIMITED AND ITS SUBSIDIARIES\nCONSOLIDATED BALANCE SHEETS**\n\n** **\n\n  \nDecember 31,\n2023  \nDecember 31,\n2024  \nDecember 31,\n2025  \nDecember 31,\n2025 \n\n  \nMYR  \nMYR  \nMYR  \nUSD \n\nASSETS \n   \n   \n   \n  \n\nCurrent assets \n   \n   \n   \n  \n\nCash and cash equivalents \n 4,116,347  \n 9,365  \n 172,025  \n 42,412 \n\nRestricted cash \n 12,090  \n 12,090  \n 12,090  \n 2,981 \n\nInvestments in marketable securities \n 4,434,792  \n 22,594,500  \n 29,183,340  \n 7,195,103 \n\nAccounts receivable, net \n 20,090,422  \n 34,040,469  \n 31,050,630  \n 7,655,481 \n\nContract assets, net \n \n—\n  \n 46,140  \n \n—\n  \n \n—\n \n\nDeposits and other receivables \n 22,810,363  \n 11,272,476  \n 33,428,420  \n 8,241,722 \n\nTotal current assets \n 51,464,014  \n 67,975,040  \n 93,846,505  \n 23,137,699 \n\n  \n    \n    \n    \n   \n\nNon-current assets \n    \n    \n    \n   \n\nProperty and equipment \n 557,758  \n 779,367  \n 719,357  \n 177,356 \n\nDeferred initial public offering costs \n 2,775,539  \n 2,859,702  \n \n—\n  \n \n—\n \n\n**Total\nnon-current assets**** **\n** ****3,333,297**** **** **\n** ****3,639,069**** **** **\n** ****719,357**** **** **\n** ****177,356**** **\n\n  \n    \n    \n    \n   \n\nTotal assets \n 54,797,311  \n 71,614,109  \n 94,565,862  \n 23,315,055 \n\n  \n    \n    \n    \n   \n\nLIABILITIES AND SHAREHOLDER’S EQUITY \n    \n    \n    \n   \n\nCurrent liabilities \n    \n    \n    \n   \n\nAccounts payable \n 1,752,435  \n 335,408  \n 567,477  \n 139,911 \n\nContract liabilities \n 2,584,731  \n 3,700,000  \n 9,848,141  \n 2,428,043 \n\nAmount due to a director \n 50,188  \n 61,995  \n 779  \n 192 \n\nAmount due to a related party \n 2,108,419  \n 3,320,276  \n 3,259,111  \n 803,528 \n\nAccrued liabilities and other payables \n 6,976,337  \n 15,124,668  \n 14,925,614  \n 3,679,885 \n\nBank loan \n 30,626  \n 32,369  \n 33,637  \n 8,293 \n\nLease liabilities \n \n—\n  \n 28,986  \n 31,001  \n 7,643 \n\nIncome taxes payables \n 11,165,069  \n 14,010,069  \n 17,202,927  \n 4,241,353 \n\nTotal current liabilities \n 24,667,805  \n 36,613,771  \n 45,868,687  \n 11,308,848 \n\n  \n    \n    \n    \n   \n\nNon-current liabilities \n    \n    \n    \n   \n\nLease liabilities \n \n—\n  \n 117,276  \n 86,328  \n 21,284 \n\nBank loan \n 357,487  \n 326,346  \n 292,345  \n 72,077 \n\nTotal non-current liabilities \n 357,487  \n 443,622  \n 378,673  \n 93,361 \n\n  \n    \n    \n    \n   \n\nTotal liabilities \n 25,025,292  \n 37,057,393  \n 46,247,360  \n 11,402,209 \n\n  \n    \n    \n    \n   \n\nShareholders’ equity \n    \n    \n    \n   \n\nOrdinary shares, USD0.0001 par value, 500,000,000 shares authorized, 15,000,000, 15,000,000 and 16,250,000 shares issued and outstanding as of December 31, 2023, 2024 and 2025, respectively* \n 6,263  \n 6,263  \n 7,213  \n 1,625 \n\nAdditional paid-in capital* \n 243,737  \n 243,737  \n 13,125,132  \n 3,236,132 \n\nRetained earnings \n 29,522,019  \n 34,306,705  \n 35,186,147  \n 8,675,086 \n\nEquity attributable to owners of the Company \n 29,772,019  \n 34,556,705  \n 48,318,492  \n 11,912,843 \n\nNon-controlling interest \n \n—\n  \n 11  \n 10  \n 3 \n\nTotal equity \n 29,772,019  \n 34,556,716  \n 48,318,502  \n 11,912,846 \n\n  \n    \n    \n    \n   \n\nTotal liabilities and\nshareholders’ equity \n 54,797,311  \n 71,614,109  \n 94,565,862  \n 23,315,055 \n\n \n\n*Giving retroactive effect to the issuance of ordinary shares effected which are detailed in Note 12.\n\n \n\nThe accompanying notes are an integral part of\nthese consolidated financial statements.\n\n \n\nF-4\n\n \n\n** **\n\n**MEGAN HOLDINGS LIMITED AND ITS SUBSIDIARIES\nCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME**\n\n** **\n\n  \nDecember 31,\n2023  \nDecember 31,\n2024  \nDecember 31,\n2025  \nDecember 31,\n2025 \n\n  \nMYR  \nMYR  \nMYR  \nUSD \n\nRevenue \n 85,237,802  \n 60,293,562  \n 83,885,403  \n 20,681,805 \n\nCost of revenue – external parties \n (55,626,226) \n (44,912,585) \n (82,429,636) \n (20,322,889)\n\nCost of revenue – related\nparty \n (15,329,495) \n (3,501,194) \n \n—\n  \n \n—\n \n\n  \n    \n    \n    \n   \n\nGross Profit \n 14,282,081  \n 11,879,783  \n 1,455,767  \n 358,916 \n\n  \n    \n    \n    \n   \n\nGeneral and administrative expenses \n (4,030,856) \n (3,572,145) \n (1,807,241) \n (445,572)\n\nInterest expenses \n (1,543) \n (23,788) \n (23,767) \n (5,860)\n\n(Allowance for)/Reversal of expected credit losses \n (281,479) \n (700,521) \n 982,000  \n 242,110 \n\n  \n    \n    \n    \n   \n\nIncome from operations \n 9,968,203  \n 7,583,329  \n 606,759  \n 149,594 \n\n  \n    \n    \n    \n   \n\nOther income/(expenses) \n    \n    \n    \n   \n\nDividend income \n \n—\n  \n 32,562  \n 11,223  \n 2,767 \n\nFair value gain/(loss) on marketable securities \n 1,552,582  \n (4,607) \n 3,665,944  \n 903,832 \n\nInterest income \n 1,633  \n 18,393  \n 46,784  \n 11,535 \n\nTotal other income, net \n 1,554,215  \n 46,348  \n 3,723,951  \n 918,134 \n\n  \n    \n    \n    \n   \n\nIncome before income tax \n 11,522,418  \n 7,629,677  \n 4,330,710  \n 1,067,728 \n\n  \n    \n    \n    \n   \n\nIncome tax expenses \n (3,235,342) \n (2,845,000) \n (3,451,269) \n (850,905)\n\nNet income \n 8,287,076  \n 4,784,677  \n 879,441  \n 216,823 \n\n  \n    \n    \n    \n   \n\nNet income: \n    \n    \n    \n   \n\nEquity holders of the Company \n 8,287,076  \n 4,784,686  \n 879,442  \n 216,823 \n\nNon-controlling interest \n \n—\n  \n (9) \n (1) \n # \n\nTotal \n 8,287,076  \n 4,784,677  \n 879,441  \n 216,823 \n\n  \n    \n    \n    \n   \n\nWeighted average number of ordinary shares \n    \n    \n    \n   \n\nbasic and diluted* \n 15,000,000  \n 15,000,000  \n 15,318,493  \n 15,318,493 \n\nEarnings per share attributable\nto ordinary shareholders \n    \n    \n    \n   \n\nbasic and diluted* \n 0.55  \n 0.32  \n 0.06  \n 0.01 \n\n \n\n* Giving retroactive effect to the issuance of ordinary shares effected which are detailed in Note 12.\n\n \n\n# Amount less than 1.\n\n \n\nThe accompanying notes are an integral part of\nthese consolidated financial statements.\n\n \n\nF-5\n\n \n\n** **\n\n**MEGAN HOLDINGS LIMITED AND ITS SUBSIDIARIES\nCONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY**\n\n \n\n  \nOrdinary Shares*  \nAdditional  \n   \n   \nNon-  \nTotal \n\n  \nNo. of\nshares*  \nAmount  \npaid-in\ncapital*  \nRetained\nearnings  \nTotal  \ncontrolling\ninterest  \nstockholders’\nequity \n\n  \n   \nMYR  \nMYR  \nMYR  \nMYR  \nMYR  \nMYR \n\nBalance, January 1, 2023 \n 15,000,000  \n 6,263  \n 243,737  \n 21,234,943  \n 21,484,943  \n \n—\n  \n 21,484,943 \n\nNet income \n —  \n \n—\n  \n \n—\n  \n 8,287,076  \n 8,287,076  \n \n—\n  \n 8,287,076 \n\nBalance, December 31, 2023 \n 15,000,000  \n 6,263  \n 243,737  \n 29,522,019  \n 29,772,019  \n \n—\n  \n 29,772,019 \n\nNon-controlling interest arising from acquisition of a subsidiaries \n —  \n \n—\n  \n \n—\n  \n \n—\n  \n \n—\n  \n 20  \n 20 \n\nNet income/ (loss) \n —  \n \n—\n  \n \n—\n  \n 4,784,686  \n 4,784,686  \n (9) \n 4,784,677 \n\nBalance, December 31, 2024 \n 15,000,000  \n 6,263  \n 243,737  \n 34,306,705  \n 34,556,705  \n 11  \n 34,556,716 \n\nShare issuance \n 1,250,000  \n 950  \n 12,881,395  \n \n—\n  \n 12,882,345  \n \n—\n  \n 12,882,345 \n\nNet income / (loss) \n —  \n \n—\n  \n \n—\n  \n 879,442  \n 879,442  \n (1) \n 879,441 \n\nBalance, December 31, 2025 (MYR) \n 16,250,000  \n 7,213  \n 13,125,132  \n 35,186,147  \n 48,318,492  \n 10  \n 48,318,502 \n\nBalance, December 31, 2025 (USD) \n 16,250,000  \n 1,625  \n 3,236,132  \n 8,675,086  \n 11,912,843  \n 3  \n 11,912,846 \n\n \n\n*Giving retroactive effect to the issuance of ordinary shares effected which are detailed in Note 12.\n\n \n\nThe accompanying notes are an integral part of\nthese consolidated financial statements.\n\n \n\nF-6\n\n \n\n** **\n\n**MEGAN HOLDINGS LIMITED AND ITS SUBSIDIARIES\nCONSOLIDATED STATEMENTS OF CASH FLOWS**\n\n** **\n\n  \nDecember 31,\n2023  \nDecember 31,\n2024  \nDecember 31,\n2025  \nDecember 31,\n2025 \n\n  \nMYR  \nMYR  \nMYR  \nUSD \n\nCASH FLOWS FROM OPERATING ACTIVITIES: \n   \n   \n   \n  \n\nNet income \n 8,287,076  \n 4,784,677  \n 879,441  \n 216,823 \n\nAdjustments to reconcile net income to net\ncash provided by operating activities: \n    \n    \n    \n   \n\nDepreciation of property and equipment \n 9,104  \n 40,408  \n 60,270  \n 14,859 \n\nAmortization of operating lease right-of-use assets \n \n—\n  \n \n—\n  \n \n—\n  \n \n—\n \n\nAllowance for expected credit losses \n 281,479  \n 700,521  \n (982,000) \n (242,110)\n\nInterest expenses \n \n—\n  \n 22,246  \n 23,767  \n 5,860 \n\nFair value (gain)/loss on marketable\nsecurities \n (1,552,582) \n 4,607  \n (3,665,944) \n (903,832)\n\n  \n 7,025,077  \n 5,552,459  \n (3,684,466) \n (908,400)\n\nChanges in operating assets and liabilities: \n    \n    \n    \n   \n\nAccounts receivable, net \n (3,046,438) \n (14,650,568) \n 3,971,839  \n 979,250 \n\nContract assets, net \n 2,126  \n (46,140) \n 46,140  \n 11,376 \n\nDeposits and other receivables \n (18,264,133) \n 11,537,887  \n (22,155,944) \n (5,462,511)\n\nDeferred initial public offering costs \n (1,845,532) \n (84,163) \n 2,859,702  \n 705,055 \n\nAccounts payable \n (1,891,628) \n (1,417,027) \n 232,069  \n 57,216 \n\nContract liabilities \n (1,714,269) \n 1,115,269  \n 6,148,141  \n 1,515,814 \n\nAccrued liabilities and other payables \n (5,154,530) \n 146,978  \n (199,054) \n (49,076)\n\nPayment of operating lease liabilities \n \n—\n  \n \n—\n  \n \n—\n  \n \n—\n \n\nIncome taxes payables \n 3,235,342  \n 2,845,000  \n 3,192,858  \n 787,194 \n\n  \n    \n    \n    \n   \n\nNET CASH (USED IN)/\nPROVIDED BY OPERATING ACTIVITIES \n (21,653,985) \n 4,999,695  \n (9,588,715) \n (2,364,082)\n\n  \n    \n    \n    \n   \n\nCASH FLOWS FROM INVESTING ACTIVITIES: \n    \n    \n    \n   \n\nPurchases of property and equipment \n (562,199) \n (102,017) \n (260) \n (64)\n\nDeposits (paid)/refunded for purchase of properties \n 4,500,000  \n \n—\n  \n \n—\n  \n \n—\n \n\nProceeds from disposal of marketable securities \n 72,110,556  \n 40,309,185  \n 43,174,117  \n 10,644,506 \n\nPurchases of marketable securities \n (60,017,385) \n (50,472,147) \n (46,097,013) \n (11,365,141)\n\nAcquisition of non-controlling interests \n \n—\n  \n 20  \n \n—\n  \n \n—\n \n\nNET CASH (USED IN)/PROVIDED\nBY INVESTING ACTIVITIES \n 16,030,972  \n (10,264,959) \n (2,923,156) \n (720,699)\n\n  \n    \n    \n    \n   \n\nCASH FLOWS FROM FINANCING ACTIVITY: \n    \n    \n    \n   \n\nChanges in amount due to a director \n 50,188  \n 11,807  \n (61,216) \n (15,093)\n\nAdvance from a related party \n 2,108,419  \n 1,211,857  \n (61,165) \n (15,080)\n\nProceeds from bank loan \n 390,600  \n \n—\n  \n \n—\n  \n \n—\n \n\nRepayments of bank loan \n (2,487) \n (46,818) \n (48,358) \n (11,923)\n\nProceeds from issuance of shares, net \n \n—\n  \n \n—\n  \n 12,882,345  \n 3,176,121 \n\nRepayment of lease liabilities \n \n—\n  \n (18,564) \n (37,075) \n (9,141)\n\nFixed deposit pledged \n (12,090) \n \n—\n  \n \n—\n  \n \n—\n \n\n**NET\nCASH PROVIDED BY FINANCING ACTIVITIES** \n 2,534,630  \n 1,158,282  \n 12,674,531  \n 3,124,884 \n\n  \n    \n    \n    \n   \n\n**NET CHANGE IN CASH\nAND CASH EQUIVALENTS** \n (3,088,383) \n (4,106,982) \n 162,660  \n 40,103 \n\n  \n    \n    \n    \n   \n\n**CASH,\nCASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF YEAR** \n 7,204,730  \n 4,116,347  \n 9,365  \n 2,309 \n\n  \n    \n    \n    \n   \n\nCASH, CASH EQUIVALENTS\nAND RESTRICTED CASH AT YEAR END \n 4,116,347  \n 9,365  \n **172,025**  \n **42,412** \n\n  \n    \n    \n    \n   \n\nSUPPLEMENTAL CASH FLOW INFORMATION: \n    \n    \n    \n   \n\nCash received/paid for: \n    \n    \n    \n   \n\nInterest income \n 1,633  \n 18,393  \n 46,784  \n 11,535 \n\nInterest paid \n 1,543  \n 22,246  \n 23,767  \n 5,860 \n\n \n\nThe accompanying notes are an integral part of\nthese consolidated financial statements.\n\n \n\nF-7\n\n \n\n** **\n\n**MEGAN HOLDINGS LIMITED AND ITS SUBSIDIARIES\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS**\n\n** **\n\n**Note 1 — Nature of business and\norganization**\n\n** **\n\n**Business**\n\n \n\nMegan Holdings Limited (the “Company”)\nis a holding company incorporated on December 7, 2022, under the laws of the Cayman Islands. The Company has no substantial operations\nother than as an investment holding of the entire share capital of Megan Mezanin Sdn Bhd (“MMSB”), a Malaysia company incorporated\non February 13, 2020 and an investment holding of 99.99% in Megan Technologies Sdn. Bhd. (“MTSB”), a Malaysia company\nincorporated on 18 March 2024.\n\n \n\nThe Company, through its wholly-owned subsidiaries,\nMMSB, provides development, construction and maintenance of aquaculture and agriculture farms and related works, and its partially-owned\nsubsidiaries, MTSB, to supply and installation of smart industrial technologies and solutions. Currently, the Company’s main revenue\nsegment is generated from upgrading works carried out for the Company’s customers’ existing aquaculture farms, known as Umas\nFarm and Wakuba Farm, both located in Tawau, Sabah, Malaysia. The Company also undertake maintenance works for the Company’s customers’\nfarms, on an ad-hoc basis. To supplement the services to the Company’s customers, the Company are also able to assist customers\nto source for industrial supplies and provide rental of machinery to them.\n\n** **\n\n**Organization and reorganization**\n\n \n\nThe Company was incorporated under the laws\nof the Cayman Islands as a limited company on December 7, 2022 and as a holding company. As at the date of its incorporation,\nthe authorized share capital of the Company was USD 50,000 divided into 500,000,000 ordinary shares with a par value of USD 0.0001\neach. The Company allotted and issued one ordinary share to Mr. Hoo Wei Sern (“Mr. Hoo”), the sole shareholder\nof MMSB. On the other hand, the authorized share capital of MMSB was 250,000 ordinary shares which were issued and outstanding,\nwholly-owned by Mr. Hoo, before the Group Reorganization (defined below).\n\n \n\nPursuant to a Group Reorganization, to\nrationalize the structure of the Company and its subsidiaries (collectively, the “Group”) in preparation for the listing\nof the Company’s ordinary shares, the Company became the holding company of the Group on 31 July, 2024, which involved\n(i) the incorporation of the Company on December 7, 2022 and allotment of one ordinary share to Mr. Hoo, the sole\nshareholder of MMSB at par value of USD 0.0001. On May 15, 2023, Mr. Hoo completed the transfer of the one ordinary share\nto Star Sprite Limited, a company which is wholly owned by Mr. Hoo, for the total consideration of US$0.0001; (ii) the\nsale of an aggregate 69,250 ordinary shares, representing a total 27.5% of equity interest of MMSB, in MMSB by Mr. Hoo to\nseveral third parties, with less than 5% shareholdings in MMSB each, through several share sale and purchase agreements\n(“Share Sale Transaction”) dated July 7, 2023, at an aggregate consideration of MYR 1,295,000 (equivalents to USD\n294,305) and the Share Sale Transaction was completed on August 1, 2023; (iii) the allotment and issuance of 14,999,999\nordinary shares of the Company to shareholders of MMSB by the Company for the transfer of the entire equity interest in MMSB, by\nshareholders of MMSB, to the Company on July 31, 2024. After the Group Reorganization as of July 31, 2024, Mr. Hoo is\ndeemed holding 72.3% of equity interest in the Company. The Company, together with its wholly-owned subsidiaries, are effectively\ncontrolled by the same Controlling Shareholder, Mr. Hoo, i.e., ultimately held as to 100% and 72.3% by the Controlling\nShareholder before and after the Group Reorganization, respectively, and therefore the Group Reorganization is considered as a\nrecapitalization of entities under common control. The consolidation of the Company and its subsidiaries has been accounted for at\nhistorical cost. No amount is recognized in respect of goodwill or excess of acquirer’s interest in the net fair value of\nacquiree’s identifiable assets, liabilities and contingent liabilities over cost at the time of common control combination.\nThe consolidated statements of comprehensive income, consolidated statements of changes in shareholders’ equity and\nconsolidated statements of cash flows are prepared as if the current Group structure had been in existence throughout the three-year\nperiod ended December 31, 2025, or since the respective dates of incorporation/establishment of the relevant entity, where this\nis a shorter period. The consolidated balance sheets as of December 31, 2023, 2024 and 2025 present the assets and liabilities of\nthe companies now comprising the Group which had been incorporated/established as at the relevant balance sheet date as if the\ncurrent group structure had been in existence at those dates.\n\n \n\nF-8\n\n \n\n** **\n\n**MEGAN HOLDINGS LIMITED AND ITS SUBSIDIARIES\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS**\n\n** **\n\n**Note 1 — Nature of business\nand organization** (cont.)\n\n** **\n\nThe accompanying consolidated financial statements\nreflect the activities of the Company and each of the following entities:\n\n \n\n** ** ** **** ** **Percentage of effective ownership December 31,**** **** ** ** **** ** **Principal  **\n\nName  Background  2023   2024   2025   Ownership  Activities\n\nMegan Holdings Limited (“MHL”)  –  A Cayman Islands company\n–  Incorporated on December 7, 2022\n–  Issued share capital of USD 0.0001   N/A    N/A    N/A   The listing entity  Investment holding\n\n                         \n\nMegan Mezanin Sdn Bhd (“MMSB”)  –  A Malaysian company\n–  Incorporated on February 13, 2020\n–  Issued share capital of MYR 250,000   100%    100%    100%   Wholly-owned by MHL  Development, construction and maintenance of aquaculture and agriculture farms and related works\n\n                         \n\nMegan Technologies Sdn Bhd (“MTSB’)  –  A Malaysian company\n–  Incorporated on March 18, 2024\n–  Issued share capital of MYR 200,000   Nil    99.99%    99.99%   Partial-owned by MMSB  Supply and installation of Smart Industrial Technologies and Solutions\n\n \n\n**Note 2 — Summary of significant\naccounting policies**\n\n \n\nBasis of preparation\n\n \n\nThe accompanying consolidated financial statements\nhave been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”)\nand applicable rules and regulations of the Securities and Exchange Commission (“SEC”).\n\n \n\nPrinciples of consolidation\n\n \n\nThe consolidated financial statements include\nthe financial statements of the Company and its subsidiaries. A subsidiaries are an entity (including a structured entity), directly\nor indirectly, controlled by the Company. The financial statements of the subsidiaries are prepared for the same reporting period as\nthe Company, using consistent accounting policies. All transactions and balances among the Company and its subsidiaries have been eliminated\nupon consolidation.\n\n \n\nUse of estimates and assumptions\n\n \n\nThe preparation of consolidated financial statements\nin conformity with U.S. GAAP requires management to make judgements, estimates and assumptions that affect the application of policies\nand reported amounts of assets and liabilities as at the date of the consolidated financial statements and reported amounts of income\nand expenses during the reporting periods. The estimates and associated assumptions are based on historical experience and various other\nfactors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about\ncarrying values of assets and liabilities that are not readily apparent from other sources. Significant accounting estimates reflected\nin the Company’s consolidated financial statements include, but not limited to, allowance for expected credit losses, revenue recognition\nand uncertain tax position. Changes in facts and circumstances may result in revised estimates. Actual results could differ from those\nestimates, and as such, differences may be material to the consolidated financial statements.\n\n \n\nF-9\n\n \n\n \n\n**MEGAN HOLDINGS LIMITED AND ITS SUBSIDIARIES\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS**\n\n** **\n\n**Note 2 — Summary of significant\naccounting policies** (cont.)\n\n \n\nRisks and uncertainties\n\n \n\nThe main operations of the Company are located\nin Malaysia. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by political,\neconomic, and legal environments in Malaysia, as well as by the general state of the economy in Malaysia. The Company’s results\nmay be adversely affected by changes in the political, regulatory and social conditions in Malaysia. Although the Company has not experienced\nlosses from these situations and believes   that it is in compliance with existing laws and regulations including its organization\nand structure disclosed in Note 1, such experience may not be indicative of future results.\n\n \n\nForeign currency translation and transaction\n\n \n\nThe accompanying consolidated financial statements\nare presented in the Malaysia Ringgit (“MYR”), which is the reporting currency of the Company. The functional currency of\nthe Company in the Cayman Islands is United States Dollars (“USD”), its other subsidiaries which are incorporated in\nMalaysia are Malaysia Ringgit (“MYR”), which are their respective local currencies based on the criteria of ASC 830,\n“Foreign Currency Matters”.\n\n \n\nIn the consolidated financial statements of the\nCompany, transactions in currencies other than the functional currency are measured and recorded in the functional currency using the\nexchange rate in effect at the date of the transaction. At the balance sheet date, monetary assets and liabilities that are denominated\nin currencies other than the functional currency are translated into the functional currency using the exchange rate at the balance sheet\ndate. All gains and losses arising from foreign currency transactions are recorded in the consolidated statements of operations and comprehensive\nincome during the year in which they occur.\n\n \n\nThe following table outlines the currency exchange\nrates that were used in creating the consolidated financial statements in this report:\n\n \n\n \n \n**December 31,\n\n2023**\n \n**December 31,\n\n2024**\n \n**December 31,\n\n2025**\n\nYear-end spot\nrate\n \nUSD 1 = MYR 4.5903\n \nUSD 1 = MYR 4.4680\n \nUSD 1 = MYR 4.5903\n\nAverage rate\n \nUSD 1 = MYR 4.5577\n \nUSD 1 = MYR 4.5741\n \nUSD 1 = MYR 4.5577\n\n \n\nConvenience translation\n\n \n\nTranslations of balances in the consolidated\nbalance sheets, consolidated statements of comprehensive income, consolidated statements of changes in shareholders’ equity\nand consolidated statements of cash flows from MYR into USD as of December 31, 2025 are solely for the convenience of the\nreaders and are calculated at the rate of USD 1.00 = MYR 4.0560, representing the exchange rate set forth in the H.10\nstatistical release of the Federal Reserve Board on December 31, 2025. No representation is made that the MYR amounts could\nhave been, or could be, converted, realized or settled into USD at such rate, or at any other rate. \n\n \n\nF-10\n\n \n\n** **\n\n**MEGAN HOLDINGS LIMITED AND ITS SUBSIDIARIES\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS**\n\n** **\n\n**Note 2 — Summary of significant\naccounting policies** (cont.)\n\n** **\n\nFair value measurements\n\n \n\nThe Company’s financial instruments, including\ncash and cash equivalents, investments in marketable securities, account receivables, contract assets, deposits and other receivables,\naccount payables, amount due to a director, accrued liabilities and other payables and operating lease liabilities, have carrying amounts\nthat approximate their fair values due to their short maturities. ASC Topic 820, “Fair Value Measurements and Disclosures,”\nrequires disclosing the fair value of financial instruments held by the Company. ASC Topic 825, “Financial Instruments,”\ndefines fair value and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure\nrequirements for fair value measures. The carrying amounts reported in the consolidated balance sheets are a reasonable estimate of their\nfair values because of the short period between the origination of such instruments and their expected realization and their current\nmarket rate of interest. The three levels of valuation hierarchy are defined as follows:\n\n \n\n \n●\nLevel 1 inputs to the valuation\nmethodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.\n\n \n\n \n●\nLevel 2 inputs to the valuation\nmethodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets\nor liability, either directly or indirectly, for substantially the full term of the financial instruments.\n\n \n\n \n●\nLevel 3 inputs to the valuation\nmethodology are unobservable and significant to the fair value.\n\n \n\nThe following table presents information about\nthe Company’s financial assets and liabilities that were measured at fair value on a recurring basis as of December 31, 2023, 2024\nand 2025 and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value.\n\n \n\n  \nDecember 31,\n2023  \nQuoted\nPrices in Active\n\nMarket\n(Level 1)  \nSignificant\nOther\nObservable\n\nInput\n(Level 2)  \nSignificant\nOther\nUnobservable\n\nInput\n(Level 3) \n\n  \nMYR  \nMYR  \nMYR  \nMYR \n\nAssets: \n   \n   \n   \n  \n\nInvestments in marketable securities \n 4,434,792  \n 4,434,792  \n \n—\n  \n \n—\n \n\n \n\n  \nDecember 31,\n2024  \nQuoted\nPrices in Active\n\nMarket\n(Level 1)  \nSignificant\nOther\nObservable\n\nInput\n(Level 2)  \nSignificant\nOther\nUnobservable\n\nInput\n(Level 3) \n\n  \nMYR  \nMYR  \nMYR  \nMYR \n\nAssets: \n   \n   \n   \n  \n\nInvestments in marketable securities \n 22,594,500  \n 22,594,500  \n \n—\n  \n \n—\n \n\n \n\n  \nDecember 31,\n2025  \nQuoted\nPrices in Active\n\nMarket\n(Level 1)  \nSignificant\nOther\nObservable\n\nInput\n(Level 2)  \nSignificant\nOther\nUnobservable\n\nInput\n(Level 3) \n\n  \nMYR  \nMYR  \nMYR  \nMYR \n\nAssets: \n   \n   \n   \n  \n\nInvestments in marketable securities \n 29,183,340  \n 29,183,340  \n \n—\n  \n \n—\n \n\n \n\nFair value estimates are made at a specific point\nin time based on relevant market information about the financial instruments. These estimates are subjective in nature and involve uncertainties\nand matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect\nthe estimates.\n\n  \n\nF-11\n\n \n\n** **\n\n**MEGAN HOLDINGS LIMITED AND ITS SUBSIDIARIES\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS**\n\n** **\n\n**Note 2 — Summary of significant\naccounting policies** (cont.)\n\n** **\n\nCash and cash equivalents\n\n \n\nCash and cash equivalents primarily consist of\nbank deposits with original maturities of three months or less, which are unrestricted as to withdrawal and use. Cash and cash equivalents\nalso consist of funds earned from the Company’s operating revenues which were held at third party platform fund accounts which\nare unrestricted as to immediate use or withdrawal. The Company maintains most of its bank accounts in Malaysia.\n\n** **\n\nRestricted cash\n\n \n\nRestricted cash represents the fixed deposits\nthat have been pledged to lenders as security for the Company’s outstanding bank loan.\n\n \n\nAccounts receivable, net\n\n \n\nAccounts receivable include trade accounts\ndue from customers. Accounts are considered overdue after 90 days from the date of invoice. In evaluating the collectability of\nreceivable balances, the Company considers specific evidence including aging of the receivable, the client’s payment history,\nits current creditworthiness, current economic trends, industry trend analysis, and the credit history and financial conditions of\nthe customers. The Company regularly reviews the adequacy and appropriateness of the allowance for expected credit losses. Account\nbalances are charged off against the allowance after all means of collection have been exhausted and the likelihood of collection is\nnot probable. As of December 31, 2023, the Company made allowance for expected credit losses amounted to MYR 281,479 for\naccounts receivable based on the Company’s expected credit losses methodology for the measurement of credit losses. As of\nDecember 31, 2024, the Company made additional allowance for expected credit losses amounted to MYR 700,521 for\naccounts receivable based on the Company’s expected credit losses methodology for the measurement of credit losses. As of\nDecember 31, 2025, the Company’s reversal of the allowance for expected credit losses amounted to MYR 982,000 (USD 242,110)\nfor accounts receivable based on the Company’s expected credit losses methodology for the measurement of credit losses. All\naccounts receivable balances for all financial years were fully settled subsequent to year-end, and therefore no additional\nexpected credit losses were required to be provided in respective financial years.\n\n \n\nContract assets, net\n\n \n\nContract assets are recorded when the progress\nto completion revenue earned on contracts exceeds amounts actually billed under the contract.\n\n \n\nDeposits and other receivables\n\n \n\nDeposits are mainly for rent, utilities and\nmoney deposited with certain vendors. These amounts are refundable and bear no interest. The short-term deposits usually have a\none-year term and are refundable upon contract termination. Other receivables mainly represented advances to subcontractor of\nMYR 22,809,654, MYR 11,249,508 and MYR 25,890,637 (USD 6,383,293) as of December 31, 2023, 2024 and 2025, respectively, for the\nsubcontracting construction services.\n\n \n\nDeferred initial public offering costs\n\n \n\nThe Company follows the requirements of the FASB\nASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A — “Expenses of Offering”.\nDeferred initial public offering (“IPO”) costs consist of underwriting, legal and other expenses incurred through the balance\nsheet date that are directly related to the intended IPO. Deferred IPO costs will be charged to shareholders’ equity netted\nagainst the proceeds upon the completion of the IPO.\n\n \n\nF-12\n\n \n\n** **\n\n**MEGAN HOLDINGS LIMITED AND ITS SUBSIDIARIES\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS**\n\n** **\n\n**Note 2 — Summary of significant\naccounting policies** (cont.)\n\n \n\nInvestments in marketable securities\n\n \n\nInvestments in marketable securities, net, consist\nof investments in listed shares, which are listed on Bursa Malaysia. Marketable securities are accounted for under ASC 321 and reported\nat their readily determinable fair values as quoted by market exchanges with changes in fair value recorded in other income in the consolidated\nstatements of comprehensive income. All changes in a marketable security’s fair value are reported in earnings as they occur, as\nsuch, the sale of a marketable security does not necessarily give rise to a significant gain or loss. Unrealized gains/(losses) due to\nfluctuations in fair value are recorded in the consolidated statements of comprehensive income. Declines in fair value below cost deemed\nto be other-than-temporary are recognized as impairments in the consolidated statements of comprehensive income.\n\n \n\nProperty and equipment, net\n\n \n\nProperty and equipment are stated at cost less\naccumulated depreciation and any impairment losses. Depreciation is computed using the straight-line method over the estimated useful\nlives of the assets. The estimated useful lives are as follows:\n\n \n\n    **Expected useful lives**\n\nOffice furniture and fittings   10 years\n\nOffice equipment   10 years\n\nMotor vehicle   5 years\n\nRenovations   10 years\n\nFreehold property   50 years\n\n \n\nExpenditures for maintenance and repairs are\ncharged to earnings as incurred, while additions, renewals and betterments, which are expected to extend the useful life of assets, are\ncapitalized. The cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any\ngain or loss is included in the consolidated statements of comprehensive income. The Company also re-evaluates the periods of depreciation\nto determine whether subsequent events and circumstances warrant revised estimates of useful lives.\n\n \n\nImpairment for long-lived assets\n\n \n\nLong-lived assets, including property and equipment\nwith finite lives are reviewed for impairment whenever events or changes in circumstances (such as a significant adverse change to market\nconditions that will impact the future use of the assets) indicate that the carrying value of an asset may not be recoverable. The Company\nassess the recoverability of the assets based on the undiscounted future cash flows the assets are expected to generate and recognize\nan impairment loss when estimated undiscounted future cash flows expected to result from the use of the asset plus net proceeds expected\nfrom disposition of the asset, if any, are less than the carrying value of the asset. If an impairment is identified, the Company would\nreduce the carrying amount of the asset to its estimated fair value based on a discounted cash flows approach or, when available and\nappropriate, to comparable market values. As of December 31, 2025, no impairment of long-lived assets was recognized.\n\n \n\nAccounts payable\n\n \n\nAccounts payable represents trade payables to\nvendors.\n\n \n\nContract liabilities\n\n \n\nContract liabilities are recorded when amounts\nbilled under a contract exceed the progress towards completion of revenue earned under the contract. These payments are non-refundable\nand are recognized as revenue when the performance obligation is satisfied.\n\n \n\nAccrued liabilities and other payables\n\n \n\nAccrued liabilities and other payables are primarily\ninclude salaries payable, payables to purchase of marketable securities and other accrual and payable.\n\n \n\nF-13\n\n \n\n** **\n\n**MEGAN HOLDINGS LIMITED AND ITS SUBSIDIARIES\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS**\n\n** **\n\n**Note 2 — Summary of significant\naccounting policies** (cont.)\n\n** **\n\nLeases\n\n \n\nASC 842 supersedes the lease requirements\nin ASC 840 “Leases”, and generally requires lessees to recognize operating and finance lease liabilities and corresponding\noperating lease right-of-use assets on the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty\nof cash flows arising from leasing arrangements. All leases in the Group are accounted for as operating leases.\n\n \n\nThe Company determines if an arrangement is a\nlease at inception. The Company’s corporate office lease has a term of 12 months or less and qualifies for the short-term lease\npractical expedient under ASC 842; accordingly, no operating lease right-of-use (“ROU”) asset or operating lease liability\nhas been recognized on the consolidated balance sheets as of December 31, 2025, and lease expense is recognized on a straight-line basis\nover the lease term. The Company has no other arrangements that meet the definition of an operating lease.\n\n \n\nFor any lease that does not qualify for the short-term\nlease practical expedient, operating lease ROU assets represent the right to use an underlying asset for the lease term, and lease liabilities\nrepresent the Company’s obligation to make lease payments arising from the lease. Such ROU assets and lease liabilities would be\nrecognized at the commencement date based on the present value of lease payments over the lease term. For leases that do not provide\nan implicit rate, the Company would use the incremental borrowing rate based on the information available at commencement date in determining\nthe present value of lease payments. The Company would use the implicit rate when readily determinable. Lease expense for lease payments\nis recognized on a straight-line basis over the lease term.\n\n \n\nSignificant judgment may be required when determining\nwhether a contract contains a lease, the length of the lease term, the allocation of the consideration in a contract between lease and\nnon-lease components, and the determination of the discount rate. The Company reviews the underlying objective of each contract, the\nterms of the contract, and the current and future business conditions when making these judgments.\n\n \n\nAny lease with a term of 12 months or less\nis considered short-term. As permitted by ASC 842, short-term leases are excluded from the ROU assets and lease liabilities on the\nconsolidated balance sheets. Consistent with all other operating leases, short-term lease expense is recorded on a straight-line basis\nover the lease term.\n\n \n\nThe Company evaluates the impairment of its right-of-use\nassets consistent with the approach applied for its other long-lived assets. The Company reviews the recoverability of its long-lived\nassets when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment\nof possible impairment is based on its ability to recover the carrying value of the asset from the expected undiscounted future pre-tax\ncash flows of the related operations. The Company has elected to include the carrying amount of finance and operating lease liabilities\nin any tested asset group and include the associated lease payments in the undiscounted future pre-tax cash flows. For the years\nended December 31, 2023, 2024 and 2025, the Company did not have any impairment loss against its operating lease right-of-use assets.\n\n \n\nBank loan\n\n \n\nBank loan comprises a long-term loan. Bank loan\nis recognized initially at fair value, net of transaction costs incurred. Bank loan is subsequently stated at amortized cost; any difference\nbetween the proceeds net of transaction costs and the redemption value is recognized in profit or loss over the period of the borrowings\nusing the effective interest method. \n\n \n\nF-14\n\n \n\n ** **\n\n**MEGAN HOLDINGS LIMITED AND ITS SUBSIDIARIES\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS**\n\n** **\n\n**Note 2 — Summary of significant\naccounting policies** (cont.)\n\n** **\n\nRevenue recognition\n\n \n\nThe Company elected to adopt Accounting Standards\nCodification (ASC) Topic 606, Revenue from Contracts with Customers (ASC 606), effective as of April 1, 2020. Accordingly,\nthe consolidated financial statements for the years ended December 31, 2023, 2024 and 2025 are presented under ASC 606. The\nCompany recognizes revenue to depict the transfer of promised goods or services (that is, an asset) to customers in an amount that reflects\nthe consideration to which the Company expects to receive in exchange for those goods or services. An asset is transferred when the customer\nobtains control of that asset. It also requires the Company to identify contractual performance obligations and determine whether revenue\nshould be recognized at a point in time or over time, based on when control of goods and services transfers to a customer. The Company\nelected the modified retrospective method which required a cumulative adjustment to retained earnings instead of retrospectively adjusting\nprior periods. The adoption of ASC 606 did not have a material impact on the Company’s consolidated financial statements.\n\n \n\nRevenue from contracts with customers is recognized\nwhen control of goods or services is transferred to the customers at an amount that reflects the consideration to which the Company expects\nto be entitled in exchange for those goods or services.\n\n \n\nWhen the consideration in a contract includes\na variable amount, the amount of consideration is estimated to which the Company will be entitled in exchange for transferring the goods\nor services to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable\nthat a significant revenue reversal in the amount of cumulative revenue recognized will not occur when the associated uncertainty with\nthe variable consideration is subsequently resolved. Currently, the Company’s contracts do not include such variable amount. During\nthe year, there is no provision for onerous contracts.\n\n \n\nThe Company generates its revenues primarily\nfrom development of new aquaculture and agriculture farms, upgrading of aquaculture and agriculture farms, sales of industrial supplies\nand rental of machinery to its customers.\n\n \n\nGenerally, revenue is recognized when the Company\nhas negotiated the terms of the transaction, which includes determining either the overall price, or the price for each performance obligation\nin the form of a service or a product, the service or product has been delivered to the customer, no obligation is outstanding regarding\nthat service or product, and the Company is reasonably assured that funds have been or will be collected from the customer.\n\n \n\nTo achieve that core principle, the Company applies\nthe five steps defined under Topic 606:\n\n \n\n \n1.\nidentify the contract(s) with\na customer;\n\n \n\n \n2.\nidentify the performance\nobligations in the contract;\n\n \n\n \n3.\ndetermine the transaction\nprice;\n\n \n\n \n4.\nallocate the transaction\nprice to the performance obligations in the contract; and\n\n \n\n \n5.\nrecognize revenue when\n(or as) the entity satisfies a performance obligation.\n\n \n\nThe determination of whether revenues should\nbe reported on a gross or net basis is based on the Company’s assessment of whether it is the principal or an agent in the transaction\nin accordance with ASC 606-10-55 and depends on whether the promise to the customer is to provide the products or to facilitate\na sale by a third party. The nature of the promise depends on whether the Company control the products prior to transferring it. When\nthe Company controls the products, the promise is to provide and deliver the products and revenue is presented gross. When the Company\ndoes not control the products, the promise is to facilitate the sale and revenue is presented net. To distinguish a promise to provide\nproducts from a promise to facilitate the sale from a third party, the Company considers the guidance of control in ASC 606-10-55-37A\nand the indicators in 606-10-55-39. The Company considers this guidance in conjunction with the terms in its arrangements with both\nsuppliers and customers.\n\n \n\nRevenue is presented in the consolidated statements\nof comprehensive income. The Company does not offer rights of refund of previously paid or delivered amounts, rebates, warranty, rights\nof return or price protection. In all instances, the Company limits the amount of revenue recognized to the amounts for which it has\nthe right to bill its’ customers.\n\n \n\nF-15\n\n \n\n** **\n\n**MEGAN HOLDINGS LIMITED AND ITS SUBSIDIARIES\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS**\n\n** **\n\n**Note 2 — Summary of significant\naccounting policies** (cont.)\n\n** **\n\nThe Company currently generates its revenue by\nthe below sources:\n\n* *\n\n*(a) Development of new aquaculture and\nagriculture farms*\n\n \n\nThe Company currently generates revenue from\nthe development of new aquaculture and agriculture farms. The Company is typically contracted through invitation to tender from or corporate\nnegotiation with existing or potential customers in Malaysia. The Company primarily responsible for the fulfilling the promise to provide\nthe designs and develops aquaculture and agriculture farms based on customers’ specific needs and adding value to the inputs by\ncombining them in accordance with an architectural and engineering plan so that they are worth more as a scalable solution versus as\nindividual components. The contract does not provide any post-contract customer warranty, support, or upgrades and there is no retention\nwithheld by customers. The duration of the development period primarily between 6 to 18 months. The Company has discretion in establishing\nthe price for the specified services.\n\n \n\nIn general, the design and builds of farming\nare mainly consist of four components:\n\n \n\n \n●\nIrrigation System\n\n \n\n \n●\nEarthwork\n\n \n\n \n●\nWater Discharge System\n\n \n\n \n●\nElectrical Works\n\n \n\nThe design of aquaculture and agriculture farms\ncan have a significant impact on the productivity, efficiency, and sustainability of the farm. Some important factors to consider when\ndesigning aquaculture and agriculture farms include site selection, infrastructure design and sustainable practices.\n\n \n\nThe Company recognizes revenue using the percentage-of-completion\nmethod applying the cost-to-cost input method under ASC 606-10-25-31 and ASC 606-10-55-20, measured by the ratio of contract costs incurred\nto date compared to total estimated contract costs. The percentage-of-completion method (an input method) is the most representative\ndepiction of the Company’s performance because it directly measures the value of the services or products transferred to the customer.\nSubcontractor charges, building materials, labor and equipment are included in revenue and cost of revenue when management believes that\nthe Company is acting as a principal rather than as an agent under ASC 606-10-55-37A, on the basis that the Company controls the integrated\nproject deliverable before it is transferred to the customer — specifically, the Company is primarily responsible to the customer\nfor the design, execution and acceptance of the completed project, integrates the materials, labor and subcontractor work into a single\ncompleted deliverable (the developed, upgraded or renovated farm) for which the customer has contracted, bears performance risk on that\nintegrated deliverable until customer acceptance, and has discretion in establishing the contract price, which is negotiated on a project\nbasis and is not a pass-through of supplier or subcontractor cost. The performance obligation to transfer the completed products are\nnot separately identifiable, which is evidencing by the fact that the Company provides a significant service of integrating the goods\nand services into products for which the customer has contracted. As such, the Company’s contracts typically contain one single\nperformance obligation to complete a defined construction project. The Company currently does not have any modification of contract and\nthe contract currently does not have any variable consideration. The transaction price is clearly identifiable within service contracts.\nHistorically, any contract acquisition costs have been immaterial; in the event that such costs arose, the Company expenses such costs\nincurred as periodic cost.\n\n \n\nRecognition of revenue and cost of revenue for\nconstruction projects requires significant judgment by management, including, among other things, estimating total costs expected to\nbe incurred to complete a project and measuring progress toward completion. Management reviews contract estimates regularly to assess\nrevisions of estimated costs to complete a project and measurement of progress toward completion. Management believes it maintains reasonable\nestimates based on prior experience; however, many factors contribute to changes in estimates of contract costs. Accordingly, estimates\nmade with respect to uncompleted projects are subject to change as each project progresses and better estimates of contract costs become\navailable. All contract costs are recorded as incurred, and revisions to estimated total costs are reflected as soon as the obligation\nto perform is determined. In the event that an estimated losses on uncompleted contracts (there is none for years ended December\n31, 2023, 2024 and 2025) may occur based on evidence that indicates that the estimated total cost of a contract exceeds its estimated\ntotal revenue, regardless of the stage of completion, a provision for the loss of the full amount will be recognized to the result of\noperations. Contract costs consist of costs on contracts, including labor, machine rental cost, materials, and amounts payable to subcontractors.\n\n \n\nThe Company’s contracts set forth payment\nterms that require the customer to make payment within 90 days of billing which is triggered by the Company reaching the milestone\nto bill the customer. Management does not believe that its contracts include a significant financing component because the period between\ndelivery or the contracting services to the customer and the time of payment does not typically exceed one year.\n\n \n\nF-16\n\n \n\n \n\n**MEGAN HOLDINGS LIMITED AND ITS SUBSIDIARIES\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS**\n\n** **\n\n**Note 2 — Summary of significant\naccounting policies** (cont.)\n\n** **\n\nThe Company has no obligations for returns, refunds,\nor similar obligations of its projects with customers.\n\n \n\nFor the years ended December 31, 2023, 2024\nand 2025, the Company is not aware of any material claims against the Company in relation to development of new aquaculture and agriculture\nfarms provided.\n\n \n\nThe Company has elected to apply the practical\nexpedient to recognize the incremental costs of obtaining a contract as an expense if the amortization period of the asset would have\nbeen one year or less. The Company considers the guidance of control in ASC 340-40, there were no incremental costs incurred for\nthe years ended December 31, 2023, 2024 and 2025.\n\n* *\n\n*(b) Upgrading of aquaculture and agriculture\nfarms*\n\n \n\nRevenue from upgrading service contracts is generally\nbetween 3 to 18 months, which the Company primarily responsible for the fulfilling the promise to provide technical support and\nlabor services for upgrading of aquaculture and agriculture farms during the contracted periods and adding value to the inputs by combining\nthem in accordance to an architectural and engineering plan so that they are worth more as a scalable solution versus as individual components.\nThe Company has discretion in establishing the price for the specified services.\n\n \n\nFor aquaculture farms (particularly shrimp farms),\nthe focus areas of the works include ensuring proper water levels and quality, aeration and circulation systems and water intake, distribution,\nand discharge systems of shrimp ponds. For the agriculture farms (particularly pineapple farms), the focus area of the works is soil\npreparation which involves the improvement of soil structure and aeration. The upgrading services considered to be one single performance\nobligation since the work procedures are interrelated and affect the functions of each other like the seawater intake system, water distribution\nsystem, shrimp ponds, cables, paddle wheels, and water discharge system and work in conjunction are to ensure the farm operates effectively.\n\n \n\nThe Company recognizes revenue from upgrading\nof aquaculture and agriculture farms over time using the percentage-of-completion method, applying the cost-to-cost input method under\nASC 606-10-25-31 and ASC 606-10-55-20, measured by the ratio of contract costs incurred to date to total estimated contract costs. The\npercentage-of-completion method (an input method) is the most representative depiction of the Company’s performance because it\ndirectly measures the value of the services or products transferred to the customer. Subcontractor, building materials, labor and equipment\nare included in revenue and cost of revenue. The performance obligation to transfer the completed products are not separately identifiable,\nwhich is evidencing by the fact that the Company provides a significant service of integrating the goods and services into products for\nwhich the customer has contracted. As such, the Company’s contracts typically contain one single performance obligation to complete\na defined upgrading services. The Company currently does not have any modification of contract and the contract currently does not have\nany variable consideration. The transaction price is clearly identifiable within service contracts. Historically, any contract acquisition\ncosts have been immaterial; in the event that such costs arose, the Company expenses such costs incurred as periodic cost.\n\n \n\nThe Company’s contracts set forth payment\nterms that require the customer to make payment within 90 days of billing which is triggered by the Company reaching the milestone\nto bill the customer. Management does not believe that its contracts include a significant financing component because the period between\ndelivery or the contracting services to the customer and the time of payment does not typically exceed one year.\n\n \n\nThe Company has no obligations for returns, refunds,\nor similar obligations of its projects with customers.\n\n \n\nFor the years ended December 31, 2023, 2024\nand 2025, the Company is not aware of any material claims against the Company in relation to upgrading of new aquaculture and agriculture\nfarms provided.\n\n \n\nThe Company has elected to apply the practical\nexpedient to recognize the incremental costs of obtaining a contract as an expense if the amortization period of the asset would have\nbeen one year or less. The Company considers the guidance of control in ASC 340-40, there were no incremental costs incurred for\nthe years ended December 31, 2023, 2024 and 2025.\n\n \n\nF-17\n\n \n\n ** **\n\n**MEGAN HOLDINGS LIMITED AND ITS SUBSIDIARIES\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS**\n\n** **\n\n**Note 2 — Summary of significant\naccounting policies** (cont.)\n\n** **\n\n*(c) Sales of industrial supplies*\n\n \n\nThe Company also generates revenue from sales\nof industrial supplies. The Company typically receives purchase orders from its customers which will set forth the terms and conditions\nincluding the transaction price, products to be delivered, terms of delivery, and terms of payment. The terms serve as the basis of the\nperformance obligations that the Company must fulfil in order to recognize revenue. The key performance obligation is the delivery of\nthe industrial supplies to the customer at their specified location at which point control to that asset passes to the customer. The\ncompletion of this earning process is evidenced by a written customer acceptance indicating receipt of the product. Typical payment terms\nset forth in the invoice is 30 days from the invoice date.\n\n \n\nThe industrial supplies were delivered directly\nto customers by the suppliers and relevant shipping and handling costs for the delivery will be charged to cost of revenue once incurred.\n\n \n\nThe transaction price does not include variable\nconsideration related to returns or refunds as the contracts do not include provisions that allow for sales refunds or returns of products.\nFor the years ended December 31, 2023, 2024 and 2025, the Company is not aware of any material claims against the Company in relation\nto the sale of industrial supplies.\n\n \n\nThe Company is a principal and records revenue\non a gross basis as the Company is primarily responsible for fulfilling the goods or services to the customers, is subject to inventory\nrisk, has discretion in establishing pricing and the ability to direct the control of the promised goods before transferring those goods\nto the customers.\n\n* *\n\n*(d) Rental of machinery*\n\n \n\nRental of machinery income are mainly leasing\nof excavators and cranes from third party supplier, whose equipment are ready to use without, or willing to modification. The Company\nthen sublets these excavators and cranes to customers with the desired effect of generating a spread between its leasing cost and rental\nincome to generate profit margins. Under the terms and conditions of the agreements that company enters, the Company acts a principal\nin the transaction because the Company takes the risk of loss from lack of rental income if itself has leased the machinery as a lessee,\nbut has not procured a lessee to fill the to rent the machineries; accordingly, the Company recognizes rental income using the gross\nmethod.\n\n \n\nThe rental agreements vary with regard to length\nand payment terms, usually one to six months, subject to the mutual consent of the Company and the lessee. Billing will be raised\non monthly basis and payment terms set forth in the invoice is 60 days from the invoice date. Rental income from rental of machinery\nis recognized, on a straight-line basis over the terms of the respective leases. The performance obligation under the lease rental agreements\nis to deliver these equipment to the customer at their location and ensure that the equipment is available for use over the life of the\nlease rental contract.\n\n \n\nAdditionally, the Company, acting as a lessor,\naccounts for its leases in accordance to ASC 842. Based on the terms and conditions of the leases set forth in rental agreements.\nThe Company has recognized the leases as operating leases. The lessees have no right to terminate the rental agreements.\n\n* *\n\n*(e) Renovation services*\n\n \n\nThe Company provides renovation services to industrial\nclients. Revenue from renovation services is recognized when control of the promised services is transferred to the customer, in an amount\nthat reflects the consideration the Company expects to be entitled to in exchange for those services, the contract period of such services\nis generally between 3 to 12 months. \n\n \n\nF-18\n\n \n\n** **\n\n**MEGAN HOLDINGS LIMITED AND ITS SUBSIDIARIES\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS**\n\n** **\n\n**Note 2 — Summary of significant\naccounting policies** (cont.)\n\n \n\nThe Company recognizes revenue from renovation\nservices over time using the percentage-of-completion method, applying the cost-to-cost input method under ASC 606-10-25-31 and ASC 606-10-55-20,\nmeasured by the ratio of contract costs incurred to date to total estimated contract costs. The percentage-of-completion method (an input\nmethod) is the most representative depiction of the Company’s performance because it directly measures the value of the services\nor products transferred to the customer. Subcontractor, materials, labor and equipment are included in revenue and cost of revenue. The\nperformance obligation to transfer the completed products are not separately identifiable, which is evidencing by the fact that the Company\nprovides a significant service of integrating the goods and services into products for which the customer has contracted. As such, the\nCompany’s contracts typically contain one single performance obligation to complete a defined renovation services. The Company\ncurrently does not have any modification of contract and the contract currently does not have any variable consideration. The transaction\nprice is clearly identifiable within service contracts. Historically, any contract acquisition costs have been immaterial; in the event\nthat such costs arose, the Company expenses such costs incurred as periodic cost.\n\n \n\nThe Company’s contracts set forth payment\nterms that require the customer to make payment within 90 days of billing which is triggered by the Company reaching the milestone\nto bill the customer. Management does not believe that its contracts include a significant financing component because the period between\ndelivery or the contracting services to the customer and the time of payment does not typically exceed one year.\n\n \n\nThe Company has no obligations for returns, refunds,\nor similar obligations of its projects with customers.\n\n \n\nThe Company began this services in the year 2024.\nFor the year ended December 31, 2025, the Company is not aware of any material claims against the Company in relation to upgrading\nof new aquaculture and agriculture farms provided.\n\n \n\nThe Company has elected to apply the practical\nexpedient to recognize the incremental costs of obtaining a contract as an expense if the amortization period of the asset would have\nbeen one year or less. The Company considers the guidance of control in ASC 340-40, there were no incremental costs incurred for\nthe years ended December 31, 2023, 2024 and 2025.\n\n \n\nOther income\n\n \n\nInterest income is mainly generated from time\ndeposits and is recognized on an accrual basis using the effective interest method.\n\n \n\nCost of revenue\n\n \n\nCost of revenue consists primarily of buildings\nmaterial cost, labor cost, machine rental cost and sub-contracting cost. Sub-contracting fee includes both subcontracting costs and other\noutside costs associated with performance under contracts with customers. Labor costs represent the portion of salaries and wages incurred\nin connection with the production of deliverables under contracts with customers.\n\n \n\nGeneral and administrative expenses\n\n \n\nGeneral and administrative expenses mainly consist\nof staff cost, depreciation, office supplies and upkeep expenses, travelling and entertainment, legal and professional fees and other\nmiscellaneous administrative expenses.\n\n \n\nEmployee compensation\n\n \n\nThe full-time employees of the Company’s\nsubsidiaries in Malaysia are entitled to the government mandated defined contribution plan, such as social security, employee provident\nfund, employment insurance, and human resource development fund, as required by labor laws in Malaysia. The Company is required to accrue\nand pay for these benefits based on certain percentages of the employees’ respective salaries, subject to certain ceilings, in\naccordance with the relevant government regulations, and make cash contributions to the government mandated defined contribution plan.\n\n \n\nSegment reporting\n\n \n\nASC Topic 280, Segment Reporting, establishes\nstandards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure\nas well as information about geographical areas, business segments and major customers in financial statements for details on the Company’s\nbusiness segments. The Company uses the “management approach” in determining reportable operating segments.\n\n \n\nF-19\n\n \n\n** **\n\n**MEGAN HOLDINGS LIMITED AND ITS SUBSIDIARIES\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS**\n\n** **\n\n**Note 2 — Summary of significant\naccounting policies** (cont.)\n\n** **\n\nThe management approach considers the internal\norganization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance\nas the source for determining the Company’s reportable segments. Management, including the chief operating decision maker, reviews\noperation results by the revenue of different products or services. Based on management’s assessment, the Company has determined\nthat it has only three operating segments:\n\n \n\n \na.)\nAquaculture and agriculture;\n\n \n\n \nb.)\nIndustrial solutions; and\n\n \n\n \nc.)\nInvestment in marketable\nsecurities\n\n \n\nAll assets are based in Malaysia and all revenue\nare generated from Malaysia.\n\n \n\nIn November 2023, the FASB issued ASU 2023-07,\n“Segment Reporting (Topic 280)”, Improvements to Reportable Segment Disclosures to improve reportable segment disclosure\nrequirements through enhanced disclosures about significant segment expenses on an interim and annual basis. ASU 2023-07 became\neffective starting January 1, 2024, and was applied on a retrospective basis to all periods presented. The Company has adopted this\nstandard for the fiscal year 2024 annual financial statements thereafter. See Note 16 for details.\n\n \n\nIncome taxes\n\n \n\nThe Company accounts for income taxes in accordance\nwith U.S. GAAP for income taxes. The charge for taxation is based on the results for the fiscal year as adjusted for items, which\nare non-assessable or disallowed. It is calculated using tax rates that have been enacted or substantively enacted by the balance sheet\ndate.\n\n \n\nDeferred taxes are accounted for using the asset\nand liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities\nin the consolidated financial statements and the corresponding tax basis used in the computation of assessable tax profit. In principle,\ndeferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assets are recognized to the extent that\nit is probable that taxable profit will be available against which deductible temporary differences can be utilized. Deferred tax is\ncalculated using tax rates that are expected to apply to the period when the asset is realized or the liability is settled. Deferred\ntax is charged or credited in the income statement, except when it is related to items credited or charged directly to equity, in which\ncase the deferred tax is also dealt with in equity. Deferred tax assets are reduced by a valuation allowance when, in the opinion of\nmanagement, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Current income taxes\nare provided for in accordance with the laws of the relevant taxing authorities.\n\n \n\nAn uncertain tax position is recognized as a\nbenefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination\nbeing presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized\non examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. Income tax penalties\nare accrued related to late in submission of income tax for the years ended December 31, 2023, 2024 and 2025. The Company had no\nuncertain tax positions for the years ended December 31, 2023, 2024 and 2025. The Company does not expect that its assessment regarding\nunrecognized tax positions will materially change over the next 12 months.\n\n \n\nEarnings per share\n\n \n\nThe Company computes earnings per share (“EPS”)\nin accordance with ASC 260, “Earnings per Share”. ASC 260 requires companies to present basic and diluted EPS. Basic\nEPS is measured as net income divided by the weighted average ordinary share outstanding for the period. Diluted EPS presents the dilutive\neffect on a per share basis of the potential ordinary shares (e.g., convertible securities, options and warrants) as if they had been\nconverted at the beginning of the periods presented, or issuance date, if later. Potential ordinary shares that have an anti-dilutive\neffect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. For\nthe years ended December 31, 2023, 2024 and 2025, there were no dilutive shares.\n\n \n\nF-20\n\n \n\n \n\n**MEGAN HOLDINGS LIMITED AND ITS SUBSIDIARIES\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS**\n\n** **\n\n**Note 2 — Summary of significant\naccounting policies** (cont.)\n\n** **\n\nRelated party\n\n \n\nThe Company adopted ASC 850, Related Party\nDisclosures, for the identification of related parties and disclosure of related party transactions.\n\n \n\nThe details of related party transactions during the years ended\nDecember 31, 2023, 2024 and 2025 and balances as of December 31 2023, 2024 and 2025 are set out in the Note 13.\n\n \n\nCommitments and contingencies\n\n \n\nIn the normal course of business, the Company\nis subject to contingencies, including legal proceedings and claims arising out of the business that relate to a wide range of matters,\nsuch as government investigations and tax matters. The Company recognizes a liability for such contingency if it determines it is probable\nthat a loss has occurred, and a reasonable estimate of the loss can be made. The Company may consider many factors in making these assessments\nincluding historical and the specific facts and circumstances of each matter.\n\n \n\nRecent accounting pronouncements\n\n \n\nThe Company considers the applicability and impact\nof all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued. Under\nthe Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”), the Company meets the definition\nof an emerging growth company and has elected the extended transition period for complying with new or revised accounting standards,\nwhich delays the adoption of these accounting standards until they would apply to private companies.\n\n* *\n\n*Recently adopted accounting pronouncements*\n\n \n\nIn May 2019, the FASB issued ASU 2019-05,\nwhich is an update to ASU Update No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement\nof Credit Losses on Financial Instruments, which introduced the expected credit losses methodology for the measurement of credit losses\non financial assets measured at amortized cost basis, replacing the previous incurred loss methodology. The amendments in Update 2016-13\nadded Topic 326, Financial Instruments — Credit Losses, and made several consequential amendments to the Codification.\nUpdate 2016-13 also modified the accounting for available-for-sale debt securities, which must be individually assessed for credit\nlosses when fair value is less than the amortized cost basis, in accordance with Subtopic 326-30, Financial Instruments — Credit\nLosses — Available-for-Sale Debt Securities. The amendments in this Update address those stakeholders’ concerns\nby providing an option to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost\nbasis. For those entities, the targeted transition relief will increase comparability of financial statement information by providing\nan option to align measurement methodologies for similar financial assets. Furthermore, the targeted transition relief also may reduce\nthe costs for some entities to comply with the amendments in Update 2016-13 while still providing financial statement users with\ndecision-useful information. In November 2019, the FASB issued ASU No. 2019-10, which to update the effective date of ASU No. 2016-13\nfor private companies, not-for-profit organizations and certain smaller reporting companies applying for credit losses, leases, and hedging\nstandard. The new effective date for these preparers is for fiscal years beginning after December 15, 2022. ASU 2019-05\nis effective for the Company for annual and interim reporting periods beginning April 1, 2023 as the Company is qualified as an\nemerging growth company. The Company has adopted this standard on April 1, 2023, the adoption did not have a material impact on\nits consolidated financial statements. \n\n \n\nF-21\n\n \n\n** **\n\n**MEGAN HOLDINGS LIMITED AND ITS SUBSIDIARIES\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS**\n\n** **\n\n**Note 2 — Summary of significant\naccounting policies**(cont.)\n\n** **\n\nIn December 2019, the FASB issued ASU 2019-12,\nIncome Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this Update simplify the accounting for\nincome taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application\nof and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. For public business entities, the\namendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15,\n2020. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2021, and interim\nperiods within fiscal years beginning after December 15, 2022. Early adoption of the amendments is permitted, including adoption\nin any interim period for (1) public business entities for periods for which financial statements have not yet been issued and (2) all\nother entities for periods for which financial statements have not yet been made available for issuance. An entity that elects to early\nadopt the amendments in an interim period should reflect any adjustments as of the beginning of the annual period that includes that\ninterim period. Additionally, an entity that elects early adoption must adopt all the amendments in the same period. The Company has\nadopted of this standard on April 1, 2022, the adoption did not have a material impact on its consolidated financial statements.\n\n \n\nIn October 2021, the FASB issued ASU 2021-08,\nBusiness Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which\nrequires entities to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance\nwith ASU 2014-09, Revenue from Contracts with Customers (Topic 606). The update will generally result in an entity recognizing\ncontract assets and contract liabilities at amounts consistent with those recorded by the acquiree immediately before the acquisition\ndate rather than at fair value. The new standard is effective on a prospective basis for fiscal years beginning after December 15,\n2022, with early adoption permitted. This standard is effective for the Company on April 1, 2023 and the Company does not expect\na significant impact to the consolidated financial statements upon adoption. However, the ultimate impact is dependent upon the size\nand frequency of future acquisitions.\n\n* *\n\n*Recently issued accounting pronouncements*\n\n \n\nIn November 2023, the FASB issued ASU No. 2023-07,\nSegment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). The amendments in\nASU 2023-07 improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment\nexpenses. ASU 2023-07 is effective for annual periods beginning after December 15, 2023. Adoption of ASU 2023-07 should\nbe applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the potential\nimpact of adopting this new guidance on its consolidated financial statements and related disclosures.\n\n \n\nIn December 2023, the FASB issued Accounting\nStandards Update No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”),\nwhich modifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation,\n(2) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign)\nand (3) income tax expense or benefit from continuing operations (separated by federal, state and foreign). ASU 2023-09 also\nrequires entities to disclose their income tax payments to international, federal, state and local jurisdictions, among other changes.\nThe guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial\nstatements that have not yet been issued or made available for issuance. ASU 2023-09 should be applied on a prospective basis, but\nretrospective application is permitted. The Company is currently evaluating the potential impact of adopting this new guidance on its\nconsolidated financial statements and related disclosures.\n\n \n\nExcept as mentioned above, the Company does not\nbelieve other recently issued but not yet effective accounting standards, if currently adopted, would have a potential material effect\non the Company’s consolidated balance sheets, statements of comprehensive income and statements of cash flows, and related disclosures.\n\n** **\n\n**Note 3 — Accounts receivable,\nnet**\n\n \n\nAccounts receivable, net consist of the following:\n\n \n\n  \nDecember 31,\n2023  \nDecember 31,\n2024  \nDecember 31,\n2025  \nDecember 31,\n2025 \n\n  \nMYR  \nMYR  \nMYR  \nUSD \n\nAccounts receivable \n 20,371,901  \n 35,022,469  \n 31,050,630  \n 7,655,481 \n\nLess: allowance for expected credit losses \n (281,479) \n (982,000) \n \n—\n  \n \n—\n \n\nTotal accounts receivable,\nnet \n 20,090,422  \n 34,040,469  \n 31,050,630  \n 7,655,481 \n\n \n\nF-22\n\n \n\n** **\n\n**MEGAN HOLDINGS LIMITED AND ITS SUBSIDIARIES\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS**\n\n** **\n\n**Note 3 — Accounts receivable,\nnet**(cont.)\n\n** **\n\nThe movements in the allowance for expected credit\nlosses for the years ended December 31, 2023, 2024 and 2025 were as follows:\n\n \n\n  \nDecember 31,\n2023  \nDecember 31,\n2024  \nDecember 31,\n2025  \nDecember 31,\n2025 \n\n  \nMYR  \nMYR  \nMYR  \nUSD \n\nBeginning of the financial year \n \n—\n  \n 281,479  \n 982,000  \n 242,110 \n\nAdditional/(Reversal) \n 281,479  \n 700,521  \n (982,000) \n (242,110)\n\nEnd of the financial\nyear \n 281,479  \n 982,000  \n \n—\n  \n \n—\n \n\n \n\nAs of the end of each of the financial year,\nthe aging analysis of accounts receivable, net of allowance for expected credit losses, based on the invoice date is as follows:\n\n \n\n  \nDecember 31,\n2023  \nDecember 31,\n2024  \nDecember 31,\n2025  \nDecember 31,\n2025 \n\n  \nMYR  \nMYR  \nMYR  \nUSD \n\nWithin 30 days \n 4,094,700  \n 4,577,123  \n 31,050,630  \n 7,655,481 \n\nBetween 31 and 60 days \n 6,750,000  \n 12,291,475  \n \n—\n  \n \n—\n \n\nBetween 61 and 90 days \n 6,750,000  \n 8,330,550  \n \n—\n  \n \n—\n \n\nBetween 91 and 120 days \n 1,603,950  \n 1,500,000  \n \n—\n  \n \n—\n \n\nBetween 121 and 150 days \n 1,157,351  \n 1,590,000  \n \n—\n  \n \n—\n \n\nBetween 151 and 300 days \n 15,900  \n 6,733,321  \n \n—\n  \n \n—\n \n\nMore than 300 days \n \n—\n  \n \n—\n  \n \n—\n  \n \n—\n \n\nTotal accounts receivable \n 20,371,901  \n 35,022,469  \n **31,050,630**  \n **7,655,481** \n\nLess: allowance for expected credit losses \n (281,479) \n (982,000) \n \n—\n  \n \n—\n \n\nTotal accounts receivable,\nnet \n 20,090,422  \n 34,040,469  \n **31,050,630**  \n **7,655,481** \n\n \n\nAll accounts receivable balances for all financial years\nwere fully settled subsequent to year-end, and therefore no additional expected credit losses were required to be provided in respective\nfinancial years.\n\n** **\n\n**Note 4 — Contract assets/contract\nliabilities**\n\n \n\nThe following table reflects the movements of\nthe net balance of contract assets and contract liabilities.\n\n \n\nMovement in contract assets, consists of the\nfollowing:\n\n \n\n  \nDecember 31,\n2023  \nDecember 31,\n2024  \nDecember 31,\n2025  \nDecember 31,\n2025 \n\n  \nMYR  \nMYR  \nMYR  \nUSD \n\nBeginning of the financial year \n 2,126  \n \n—\n  \n 46,140  \n 11,376 \n\nIncrease resulting from satisfaction of performance obligation \n 85,237,802  \n 60,188,532  \n \n—\n  \n \n—\n \n\nDecrease resulting from advances from\ncustomers \n (3,849,000) \n \n—\n  \n \n—\n  \n \n—\n \n\nEstimated contract earnings to date \n 81,390,928  \n 60,188,532  \n 46,140  \n 11,376 \n\nLess: progress billings \n (81,390,928) \n (60,142,392) \n (46,140) \n (11,376)\n\nEnd of the financial\nyear \n \n—\n  \n 46,140  \n \n—\n  \n \n—\n \n\n \n\nF-23\n\n \n\n** **\n\n**MEGAN HOLDINGS LIMITED AND ITS SUBSIDIARIES\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS**\n\n** **\n\n**Note 4 — Contract assets/contract\nliabilities**(cont.)\n\n** **\n\nMovement in contract liabilities, consists of\nthe following:\n\n \n\n  \nDecember 31,\n2023  \nDecember 31,\n2024  \nDecember 31,\n2025  \nDecember 31,\n2025 \n\n  \nMYR  \nMYR  \nMYR  \nUSD \n\nBeginning of the financial year \n 4,299,000  \n 2,584,731  \n 3,700,000  \n 912,229 \n\nReceipt from clients \n 2,584,731  \n 3,700,000  \n 9,848,141  \n 2,428,043 \n\nRevenue recognized during the year \n (4,299,000) \n (2,584,731) \n (3,700,000) \n (912,229)\n\nEnd of the financial\nyear \n 2,584,731  \n 3,700,000  \n 9,848,141  \n 2,428,043 \n\n \n\nIncrease or decrease in contract assets and contract\nliabilities mainly due to changes in measurement of contracts’ progress.\n\n** **\n\n**Note 5 — Deposits and other\nreceivables**\n\n \n\nDeposits and other receivables consist of the\nfollowing:\n\n \n\n  \nDecember 31,\n2023  \nDecember 31,\n2024  \nDecember 31,\n2025  \nDecember 31,\n2025 \n\n  \nMYR  \nMYR  \nMYR  \nUSD \n\nAdvances to subcontractors \n 22,809,654  \n 11,249,508  \n 820  \n 202 \n\nOther deposits \n 709  \n 22,968  \n 33,427,600  \n 8,241,520 \n\nTotal \n 22,810,363  \n 11,272,476  \n 33,428,420  \n 8,241,722 \n\n** **\n\n*****Deposits for purchase of properties represented the deposits paid to third parties for acquisition of properties in Malaysia as of December 31, 2022. On 31 July 2023, the deposit of purchase of a property amounting to MYR 4,500,000 was fully refunded to the Company due to cessation of acquisition.\n\n** **\n\n**Note 6 — Investments in marketable\nsecurities**\n\n \n\nInvestments in marketable securities consisted\nof the investment in less than 5% of equity interest of listed entities in Malaysia. The movement of investments in marketable securities\nwas shown below:\n\n \n\n  \nDecember 31,\n2023  \nDecember 31,\n2024  \nDecember 31,\n2025  \nDecember 31,\n2025 \n\n  \nMYR  \nMYR  \nMYR  \nUSD \n\nAt fair value: \n   \n   \n   \n  \n\nBeginning of the financial year \n 14,272,365  \n 4,434,792  \n 22,594,500  \n 5,570,636 \n\nAdditions \n 60,720,401  \n 58,473,500  \n 46,097,013  \n 11,365,141 \n\nDisposals \n (72,110,556) \n (40,309,185) \n (43,174,117) \n (10,644,506)\n\nFair value gain/(loss) recognized for\nthe year \n 1,552,582  \n (4,607) \n 3,665,944  \n 903,832 \n\nEnd of the financial\nyear \n 4,434,792  \n 22,594,500  \n 29,183,340  \n 7,195,103 \n\n \n\nInvestments in equity securities, such as marketable\nsecurities, are accounted for at fair value with changes in fair value recognized in net income.\n\n \n\nF-24\n\n \n\n \n\n**MEGAN HOLDINGS LIMITED AND ITS SUBSIDIARIES\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS**\n\n** **\n\n**Note 7 — Property and equipment**\n\n \n\nProperty and equipment consist of the following:\n\n \n\n  \nDecember 31,\n2023  \nDecember 31,\n2024  \nDecember 31,\n2025  \nDecember 31,\n2025 \n\n  \nMYR  \nMYR  \nMYR  \nUSD \n\nAt cost: \n   \n   \n   \n  \n\nFreehold property \n 558,000  \n 558,000  \n 558,000  \n 137,574 \n\nOffice equipment \n 8,399  \n 25,362  \n 25,622  \n 6,317 \n\nMotor vehicle \n \n—\n  \n 220,000  \n 220,000  \n 54,241 \n\nRenovation \n \n—\n  \n 25,054  \n 25,054  \n 6,177 \n\nOffice furniture and fittings \n 537  \n 537  \n 537  \n 132 \n\nTotal \n 566,936  \n 828,953  \n 829,213  \n 204,441 \n\nAccumulated depreciation \n (9,178) \n (49,586) \n (109,856) \n (27,085)\n\nProperty and equipment \n 557,758  \n 779,367  \n 719,357  \n 177,356 \n\n \n\nDepreciation expenses for the years ended December 31, 2023, 2024\nand 2025 were MYR 9,104, MYR 40,408 and MYR 60,270 (USD 14,859), respectively.\n\n \n\nFreehold property is pledged with a bank to secure\nbank loan (Note 11) and motor vehicle is pledged with a bank to secure lease liabilities (Note 8).\n\n \n\nAs of December 31, 2023, 2024 and 2025, a motor vehicle with a carrying\namount of MYR Nil, MYR 194,333, MYR 150,333 (USD 37,064) was held in trust by a director of the Company.\n\n** **\n\n**Note 8 — Lease**\n\n \n\nThe Company leases property for the purpose of\nback-office operations for management personnel and business operation and leases equipment for the back-office operations for a lease\nterm of 2 years.\n\n \n\nThe Company enters into finance lease for its\nmotor vehicle. Finance leases are leases that meet one or more of the criteria under ASC 842 (e.g., transfer of ownership, purchase\noption reasonably certain to be exercised, lease term covering a major part of the asset’s economic life).\n\n \n\nThe extension options for lease of office premise\nhas not been included in lease liabilities because the Company has not renew the lease rental.\n\n \n\n  \nDecember 31,\n2023  \nDecember 31,\n2024  \nDecember 31,\n2025  \nDecember 31,\n2025 \n\n  \nMYR  \nMYR  \nMYR  \nUSD \n\nFinance lease liabilities \n \n—\n  \n 160,000  \n 146,262  \n 36,061 \n\nInterest expenses \n \n—\n  \n 4,826  \n 8,142  \n 2,007 \n\nPayment of operating lease liabilities \n \n—\n  \n (18,564) \n (37,075) \n (9,141)\n\nFinance lease liabilities,\nnet \n \n—\n  \n 146,262  \n 117,329  \n 28,927 \n\n \n\nF-25\n\n \n\n** **\n\n**MEGAN HOLDINGS LIMITED AND ITS SUBSIDIARIES\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS**\n\n** **\n\n**Note 8 — Lease**(cont.)\n\n \n\n  \nDecember 31,\n2023  \nDecember 31,\n2024  \nDecember 31,\n2025  \nDecember 31,\n2025 \n\n  \nMYR  \nMYR  \nMYR  \nUSD \n\nShort-term lease expenses \n 17,958  \n 7,813  \n 8,683  \n 2,141 \n\nTotal \n 17,958  \n 7,813  \n 8,683  \n 2,141 \n\n \n\nThe Company has elected not to recognize operating\nlease right-of-use assets and operating lease liabilities for short-term leases that have lease terms of 12 months or less and leases\nof low value leases. Lease payments relating to these leases are expensed to statements of comprehensive income on a straight-line basis\nover the lease term.\n\n \n\nFinance lease\n\n \n\nThe Company enters into finance lease for its\nmotor vehicle. Finance leases are leases that meet one or more of the criteria under ASC 842 (e.g., transfer of ownership, purchase\noption reasonably certain to be exercised, lease term covering a major part of the asset’s economic life).\n\n** **\n\n**Lease liabilities, net**\n\n \n\nFuture lease payments, excluding short-term leases,\nas of December 31, 2025, are as follows:\n\n \n\nOperating lease \nDecember 31,\n2023  \nDecember 31,\n2024  \nDecember 31,\n2025  \nDecember 31,\n2025 \n\n  \nMYR  \nMYR  \nMYR  \nUSD \n\nWithin 1 year \n \n—\n  \n 37,128  \n 37,128  \n 9,154 \n\nBetween 1 and 2 years \n \n—\n  \n 37,128  \n 37,128  \n 9,154 \n\nBetween 2 and 3 years \n \n—\n  \n 37,128  \n 37,128  \n 9,154 \n\nBetween 3 and 4 years \n \n—\n  \n 37,128  \n 18,577  \n 4,580 \n\nBetween 4 and 5 years \n \n—\n  \n 18,524  \n \n—\n  \n \n—\n \n\nTotal future lease payment \n \n—\n  \n 167,036  \n 129,961  \n 32,042 \n\nLess: Imputed interest \n \n—\n  \n (20,774) \n (12,632) \n (3,114)\n\nPresent value of operating lease liabilities \n \n—\n  \n 146,262  \n 117,329  \n 28,927 \n\nLess: Current portion \n \n—\n  \n (28,986) \n (28,986) \n (7,643)\n\nNon-current portion of lease liabilities \n \n—\n  \n 117,276  \n 117,276  \n 21,284 \n\n \n\n**Note 9 — Deferred initial\npublic offering costs**\n\n \n\nAs of December 31, 2023, 2024 and 2025, the\nCompany capitalized MYR 2,775,539, MYR 2,859,702 and MYR Nil (USD Nil) of deferred initial public offering (“IPO”)\ncosts, respectively. Such costs will be deferred until the closing of the IPO, at which time the deferred IPO costs will be offset\nagainst the offering proceeds if successful listing, the IPO completed during the financial year ended December 31, 2025.\n\n \n\nF-26\n\n \n\n \n\n**MEGAN HOLDINGS LIMITED AND ITS SUBSIDIARIES\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS**\n\n** **\n\n**Note 10 — Accrued liabilities\nand other payables**\n\n \n\nThe components of accrued expenses and other\npayables are as follows:\n\n \n\n  \nDecember 31,\n2023  \nDecember 31,\n2024  \nDecember 31,\n2025  \nDecember 31,\n2025 \n\n  \nMYR  \nMYR  \nMYR  \nUSD \n\nAccrued payroll and welfare \n 30,635  \n 42,485  \n 35,367  \n 8,720 \n\nAccrued expenses* \n 870,270  \n 852,646  \n 46,933  \n 11,571 \n\nOther payables** \n 5,372,416  \n 5,525,168  \n 5,026,901  \n 1,239,374 \n\nPayables to purchase of marketable securities*** \n 703,016  \n 8,704,369  \n 9,816,413  \n 2,420,220 \n\nTotal \n 6,976,337  \n 15,124,668  \n 14,925,614  \n 3,679,885 \n\n \n\n* Accrued expenses mainly consist of accrual of professional service fees and cost incurred yet to bill.\n\n \n\n** Other payables mainly consist of payable for consultant service fees in relation to investment advisory and provision for income tax penalty.\n\n \n\n*** Payables to purchase of marketable securities represents the payments were made at year end but the consideration was successfully transferred on subsequent financial period in relation to the purchase of listed shares in Malaysia Exchange market at a price per share at closing date of the day that order was made, hence, as of December 31, 2023, 2024 and 2025, investments in marketable securities were recognized in consolidated balance sheets as debit and credited accrued liabilities and other payables.\n\n** **\n\n**Note 11 — Bank loan**\n\n \n\nThe carrying amount of bank loan is as follows:\n\n \n\n  \nDecember 31,\n2023  \nDecember 31,\n2024  \nDecember 31,\n2025  \nDecember 31,\n2025 \n\n  \nMYR  \nMYR  \nMYR  \nUSD \n\nBank loan \n   \n   \n   \n  \n\nCurrent portion \n 30,626  \n 32,369  \n 33,637  \n 8,293 \n\nNon-current portion \n 357,487  \n 326,346  \n 292,345  \n 72,077 \n\nTotal bank loan \n 388,113  \n 358,715  \n 325,982  \n 80,370 \n\n \n\nThe bank loan as of December 31, 2023, 2024 and\n2025 are set out below:\n\n \n\nBank loan  Principal\namount  Maturity date  Period  Interest rate  Third\nparty\nguarantee  Directors’\npersonal\nguarantee   Carrying\namount \n\n                  MYR   MYR \n\nTerm loan I  MYR 390,600  November 30, 2033  10 years  Base Financing Rate minus 2.00%  Nil   390,600    358,715 \n\nBalance as of December 31, 2025                       358,715 \n\nBalance as of December 31, 2025 (USD)                       80,286 \n\nTerm loan I  MYR 390,600  November 30, 2033  10 years  Base Financing Rate minus 2.00%  Nil   390,600    358,715 \n\nBalance as of December 31, 2024                       358,715 \n\nTerm loan I  MYR 390,600  November 30, 2033  10 years  Base Financing Rate minus 2.00%  Nil   390,600    388,113 \n\nBalance as of December 31, 2023                       388,113 \n\n \n\nF-27\n\n \n\n** **\n\n**MEGAN HOLDINGS LIMITED AND ITS SUBSIDIARIES\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS**\n\n** **\n\n**Note 11 — Bank loan**(cont.)\n\n** **\n\nFor the year ended December 31, 2025,\nthe effective interest rate of the Company’s bank loan is 4.65% per annum (2023: 4.65%; 2024: 4.65%).\n\n \n\nOther than directors’ personal guarantee,\nthe bank loan are secured by freehold property (Note 7) and bank loan assignment over an insurance policy for a director of the\nCompany.\n\n \n\nThe maturity dates for the Company’s outstanding\nbank loan as of December 31, 2023, 2024 and 2025 are as follows:\n\n \n\nTerm loan I \nDecember 31,\n2023  \nDecember 31,\n2024  \nDecember 31,\n2025  \nDecember 31,\n2025 \n\n  \nMYR  \nMYR  \nMYR  \nUSD \n\nWithin 1 year \n 48,360  \n 48,360  \n 48,360  \n 11,923 \n\nBetween 1 and 2 years \n 48,360  \n 48,360  \n 48,360  \n 11,923 \n\nBetween 2 and 3 years \n 48,360  \n 48,360  \n 48,360  \n 11,923 \n\nBetween 3 and 4 years \n 48,360  \n 48,360  \n 48,360  \n 11,923 \n\nBetween 4 and 5 years \n 48,360  \n 48,360  \n 48,360  \n 11,923 \n\nThereafter \n 247,464  \n 184,835  \n 151,564  \n 37,368 \n\nTotal bank loan \n 489,264  \n 426,635  \n 393,364  \n 96,983 \n\nLess: Imputed interest \n (101,151) \n (67,920) \n (67,382) \n (16,613)\n\nPresent value of bank loan \n 388,113  \n 358,715  \n 325,982  \n 80,370 \n\n** **\n\n**Note 12 — Shareholders’\nequity**\n\n* *\n\n*Ordinary shares*\n\n \n\nThe Company was incorporated under the laws of\nthe Cayman Islands as a limited company on December 7, 2022 and as a holding company. As at the date of its incorporation, the Company\nallotted and issued one ordinary share to Mr. Hoo Wei Sern (“Mr. Hoo”), the sole shareholder of MMSB. On May 15,\n2023, Mr. Hoo completed the transfer of the one ordinary share to Star Sprite Limited, a company which is wholly owned by Mr. Hoo,\nfor the total consideration of US$0.0001.\n\n \n\nOn July 31, 2024, the Company allotted and\nissued a total of 14,999,999 ordinary shares to the existing shareholders of the Company to perfect the Company’s capital structure\nin anticipation of an expected initial public offering of its ordinary shares, and the concurrent listing of its ordinary shares on the\nNASDAQ stock market.\n\n \n\nFor the sake of undertaking a public offering\nof the Company’s ordinary shares, the Company has performed a series of re-organizing transactions resulting in 15,000,000 shares\nof ordinary shares issued and outstanding that have been retroactively restated to the beginning of the first period presented. The Company\nonly has one single class of ordinary shares that are accounted for as permanent equity. The Company has accounted for these issuances\nof ordinary shares as a stock dividend; accordingly, the Company has retroactively restated the presentation of its historical capital\nstructure to the first period presented.\n\n** **\n\n**Note 13 — Related party balances\nand transactions**\n\n \n\nNature of relationships with related parties:\n\n \n\nRelated parties  Relationship  December 31,\n2023   December 31,\n2024   December 31,\n2025   December 31,\n2025 \n\n      MYR   MYR   MYR   USD \n\nAdvances to subcontractor:                   \n\nVC Marine Sdn Bhd  Common director   \n—\n    1,228,437    \n—\n    \n—\n \n\nAccounts payable:                       \n\nVC Marine Sdn Bhd  Common director   739,879    \n—\n    \n—\n    \n—\n \n\nAmount due to:                       \n\nStar Sprite Limited  Common director   2,108,419    3,320,276    3,259,111    803,528 \n\nAmount due to:                       \n\nDarren Hoo Wei Sern  Director   50,188    61,995    779    192 \n\n \n\nF-28\n\n \n\n** **\n\n**MEGAN HOLDINGS LIMITED AND ITS SUBSIDIARIES\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS**\n\n** **\n\n**Note 13 — Related party balances\nand transactions**(cont.)\n\n** **\n\nThe Company had an unsecured, interest-free,\nnon-trade advance from a related party namely Star Sprite Limited amounting to MYR 2,108,419, MYR 3,320,276 and MYR 3,259,111 (USD\n803,528), respectively, as of December 31, 2023, 2024 and 2025.\n\n \n\nThe Company had an unsecured, interest-free,\nnon-trade advance from director amounting to MYR 50,188, MYR 61,995 and MYR 779 (USD 192), respectively, as of December 31, 2023,\n2024 and 2025.\n\n \n\nRelated party transactions:\n\n \n\nTransaction nature  Name  December 31,\n2024   December 31,\n2025   December 31,\n2025 \n\n      MYR   MYR   USD \n\nSub-contractor charges  VC Marine Sdn Bhd   3,501,194    \n—\n    \n—\n \n\nNet repayment of sub-contractor charges to  VC Marine Sdn Bhd   (4,729,631)   \n—\n    \n—\n \n\nExpenses paid on behalf of Company  Star Sprite Limited   1,211,857    \n—\n    \n—\n \n\nExpenses paid on behalf by director  Hoo Wei Sern   71,818    \n—\n    \n—\n \n\nNet advance from/ (repayment) to director  Hoo Wei Sern   (60,011)   \n—\n    \n—\n \n\n** **\n\n**Note 14 — Disaggregated revenues**\n\n \n\nThe following table presents the Company’s\nrevenues disaggregated by service lines for the years ended December 31, 2023, 2024 and 2025:\n\n \n\n  \nDecember 31,\n2023  \nDecember 31,\n2024  \nDecember 31,\n2025  \nDecember 31,\n2025 \n\n  \nMYR  \nMYR  \nMYR  \nUSD \n\nOver time: \n   \n   \n   \n  \n\n– Development of new aquaculture and\nagriculture farms \n 52,582,024  \n 42,492,542  \n \n—\n  \n \n—\n \n\n– Upgrading of aquaculture and agriculture farms \n 32,485,378  \n 17,660,000  \n 39,986,359  \n 9,858,570 \n\n– Rental of machinery \n \n—\n  \n \n—\n  \n \n—\n  \n \n—\n \n\n– Renovation services \n \n—\n  \n 35,990  \n 375,419  \n 92,559 \n\n  \n    \n    \n    \n   \n\nAt point in time: \n    \n    \n    \n   \n\n– Sales of industrial supplies \n 170,400  \n 105,030  \n 43,523,625  \n 10,730,676 \n\nTotal revenue \n 85,237,802  \n 60,293,562  \n 83,885,403  \n 20,681,805 \n\n \n\n*Unsatisfied or partially unsatisfied performance\nobligations*  \n\n \n\nManagement expects that the approximate transaction\nprice allocated to unsatisfied or partially unsatisfied performance obligations as at the end of the reporting periods may be recognized\nas revenue in the next reporting periods as follow:\n\n \n\n  \n2024  \n2025  \n2026 \n\n  \nMYR  \nMYR  \nMYR \n\nPartial and fully unsatisfied performance obligation as at: \n   \n   \n  \n\nDecember 31, 2023 \n 62,537,000  \n \n—\n  \n \n—\n \n\nDecember 31, 2024 \n \n—\n  \n 3,250,000  \n \n—\n \n\nDecember 31, 2025 \n \n—\n  \n \n—\n  \n 15,802,916 \n\nDecember 31, 2025 (USD) \n \n—\n  \n \n—\n  \n 3,896,182 \n\n \n\n**Note 15 — Income taxes**\n\n** **\n\n**Caymans Islands**\n\n \n\nThe Company is incorporated in the Cayman Islands\nand is not subject to tax on income or capital gains under current Cayman Islands law. In addition, no Cayman Islands withholding tax\nwill be imposed upon payments of dividends by this entity to its shareholders.\n\n \n\nF-29\n\n \n\n** **\n\n**MEGAN HOLDINGS LIMITED AND ITS SUBSIDIARIES\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS**\n\n** **\n\n**Note 15 — Income taxes**(cont.)\n\n** **\n\n**Malaysia**\n\n \n\nMMSB and MTSB is subject to Malaysia\nCorporate Tax on the taxable income as reported in its statutory financial statements adjusted in accordance with relevant Malaysia\ntax laws. The standard corporate income tax rate in Malaysia is 24%. However, if the company has a paid-up capital of MYR\n2.5 million or less, and gross income from business of not more than MYR 50 million, the tax rate will be 17% on the first\nMYR 600,000 and 24% on amount exceeding MYR 600,000.\n\n \n\nThe operations in Malaysia incurred cumulative\nnet operating losses which can be carried forward for a maximum period of seven consecutive years to offset future taxable income.\n\n \n\nThe following tables provide the reconciliation\nof the differences between the statutory and effective tax expenses following as of December 31, 2025.\n\n \n\n  \nDecember 31,\n2023  \nDecember 31,\n2024  \nDecember 31,\n2025  \nDecember 31,\n2025 \n\n  \nMYR  \nMYR  \nMYR  \nUSD \n\nIncome before income tax \n 11,522,418  \n 7,629,677  \n 4,330,710  \n 1,067,728 \n\n  \n    \n    \n    \n   \n\nTax calculated at tax rate of 24% \n 2,765,380  \n 1,831,122  \n 1,039,370  \n 256,255 \n\nTax effect on non-taxable income \n (407,101) \n (5,616) \n (482,780) \n (119,029)\n\nTax effect of contract liabilities taxed upon receipt \n \n—\n  \n \n—\n  \n 2,255,554  \n 556,103 \n\nTax effect on non-deductible expenses \n 877,063  \n 1,019,494  \n 639,125  \n 157,576 \n\nIncome tax expenses \n 3,235,342  \n 2,845,000  \n 3,451,269  \n 850,905 \n\n \n\nThe income tax provision consists of the following\ncomponents:\n\n \n\n  \nDecember 31,\n2023  \nDecember 31,\n2024  \nDecember 31,\n2025  \nDecember 31,\n2025 \n\n  \nMYR  \nMYR  \nMYR  \nUSD \n\nCurrent income tax expenses \n 3,235,342  \n 2,845,000  \n 1,553,592  \n 383,036 \n\n \n\nUncertain tax positions\n\n \n\nThe Company evaluates each uncertain tax position\n(including the potential application of interest and penalties) based on the technical merits, and measures the unrecognized benefits\nassociated with the tax positions. As of December 31, 2025, the Company did not have any significant unrecognized uncertain tax positions.\nThe Company did not incur any interest and penalties related to potential underpaid income tax expenses for the years ended December\n31, 2023, 2024 and 2025, except for the provisions for income tax penalty have been accrued based on the management’s best estimate.\nThe Company also does not anticipate any significant increases or decreases in unrecognized tax benefits in the next 12 months from\nDecember 31, 2025.\n\n \n\n**Note 16 — Segment reporting**\n\n \n\nThe Company operates mainly in two reportable\nsegments. The Company evaluates segment performance based on operating income, excluding unallocated corporate expenses and certain\nnon-recurring items.\n\n \n\nThe Company’s chief operating decision\nmaker (CODM) has been identified as the Chief Executive Officer, Darren Hoo. Our CODM uses segment operating income (loss) to allocate\nresources to our segments in our quarterly planning process and to assess the performance of our segments, primarily by monitoring actual\nresults versus the quarterly plan.\n\n** **\n\n**Basis of Segmentation**\n\n \n\n \n●\n**Aquaculture and agriculture:**    Develop,\nconstruction, and maintenance of aquaculture and agriculture farms and related works.\n\n \n\n \n●\n**Industrial solutions:**    Supply\nand installation of smart industrial technologies and solutions.\n\n \n\n \n●\n**Investment in marketable\nsecurities:    **Pertained to the Group’s investment activities involving the holding, and trading of\nmarketable financial instruments\n\n**  **\n\nF-30\n\n \n\n** **\n\n**MEGAN HOLDINGS LIMITED AND ITS SUBSIDIARIES\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\n**Note 16 — Segment reporting**(cont.)\n\n** **\n\n**Corporate level activities:    **Corporate-level\nactivities and expenses that are not directly attributable to any reportable operating segment. These primarily include legal and professional\nfees related to regulatory compliance and IPO activities, as well as certain fines, penalties, and other general corporate costs\n\n \n\nSegment Financial Information\n\n \n\nThe following table summarizes financial results\nfor reportable segments:\n\n \n\n  \nAquaculture\nand agriculture  \nInvestment in\nmarketable\n\nsecurities  \nTotal  \nTotal \n\n  \nMYR  \nMYR  \nMYR  \nUSD \n\nDecember 31, 2023 \n   \n   \n   \n  \n\nRevenue \n 85,237,802  \n \n—\n  \n 85,237,802  \n 18,569,114 \n\nCost of revenue \n (70,955,721) \n \n—\n  \n (70,955,721) \n (15,457,752)\n\nAllowance for expected credit losses \n (281,479) \n \n—\n  \n (281,479) \n (61,320)\n\n  \n    \n    \n    \n   \n\nBank charges on marketable securities \n \n—\n  \n (608,922) \n (608,922) \n (132,654)\n\nDirectors’ remunerations \n (173,000) \n \n—\n  \n (173,000) \n (37,688)\n\nEmployee benefits \n (146,656) \n \n—\n  \n (146,656) \n (31,949)\n\nFair value gain on marketable securities \n \n—\n  \n 1,552,582  \n 1,552,582  \n 338,231 \n\nOther operating expenses \n (217,308) \n \n—\n  \n (217,308) \n (47,341)\n\nOperating income \n 13,463,638  \n 943,660  \n 14,407,298  \n 3,138,641 \n\nCorporate level activities \n    \n    \n    \n   \n\nLegal, license and professional fees \n    \n    \n (2,132,845) \n (464,642)\n\nOther operating expenses \n    \n    \n (752,035) \n (163,831)\n\nIncome before income tax \n    \n    \n 11,522,418  \n 2,510,168 \n\nTotal assets for the segments \n 47,586,980  \n 4,434,792  \n 52,021,772  \n 11,332,979 \n\nCorporate level activities \n    \n    \n    \n   \n\nAdd: Deferred initial public offering\ncosts \n    \n    \n 2,775,539  \n 604,653 \n\nTotal assets \n    \n    \n 54,797,311  \n 11,937,632 \n\n \n\n  \n**Aquaculture\nand agriculture**  \n**Industrial\nSolutions**  \nInvestment in\nmarketable\n\nsecurities  \nTotal  \nTotal \n\n  \nMYR  \nMYR  \nMYR  \nMYR  \nUSD \n\nDecember 31, 2024 \n   \n   \n   \n   \n  \n\nRevenue \n 60,252,542  \n 41,020  \n \n—\n  \n 60,293,562  \n 13,494,530 \n\nCost of revenue \n (48,379,550) \n (34,229) \n \n—\n  \n (48,413,779) \n (10,835,671)\n\nAllowance for expected credit losses \n (700,521) \n \n—\n  \n \n—\n  \n (700,521) \n (156,786)\n\nBank charges on marketable securities \n \n—\n  \n \n—\n  \n (1,038,410) \n (1,038,410) \n (232,410)\n\nDirectors’ remunerations \n (220,500) \n (73,500) \n \n—\n  \n (294,000) \n (65,779)\n\nEmployee benefits \n (214,003) \n \n—\n  \n \n—\n  \n (214,003) \n (47,897)\n\nOther operating expenses \n (169,977) \n (17,310) \n (4,608) \n (191,895) \n (42,971)\n\nOperating income/(loss) \n 10,567,991  \n (84,019) \n (1,043,018) \n 9,440,954  \n 2,113,016 \n\nCorporate level activities \n    \n    \n    \n    \n   \n\nLegal, license and professional fees \n    \n    \n    \n (1,192,102) \n (266,808)\n\nOther operating expenses \n    \n    \n    \n (619,175) \n (138,580)\n\nIncome before income tax \n    \n    \n    \n 7,629,677  \n 1,707,628 \n\nTotal assets for the segments \n 45,981,629  \n 178,278  \n 22,594,500  \n 68,754,407  \n 15,388,183 \n\nCorporate level activities \n    \n    \n    \n    \n   \n\nAdd: Deferred initial public offering\ncosts \n    \n    \n    \n 2,859,702  \n 640,042 \n\nTotal assets \n    \n    \n    \n 71,614,109  \n 16,028,225 \n\n  \n\nF-31\n\n \n\n \n\n**MEGAN HOLDINGS LIMITED AND ITS SUBSIDIARIES\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\n**Note 16 — Segment reporting**(cont.)\n\n \n\n  \nAquaculture\n\nand\n\nagriculture  \nIndustrial\n\nSolutions  \nInvestment in\n\nmarketable securities  \nTotal  \nTotal \n\n  \nMYR  \nMYR  \nMYR  \nMYR  \nUSD \n\nDecember 31, 2025 \n   \n   \n   \n   \n  \n\nRevenue \n 83,509,984  \n 375,419  \n \n—\n  \n 83,885,403  \n 20,681,805 \n\nCost of revenue \n (82,073,477) \n (356,159) \n \n—\n  \n (82,429,636) \n (20,322,889)\n\nAllowance for expected credit losses \n 982,000  \n \n—\n  \n \n—\n  \n 982,000  \n 242,110 \n\nFair value gain/(loss) on marketable securities \n \n—\n  \n \n—\n  \n (1,237,616) \n (1,237,616) \n (305,132)\n\nDirectors’ remunerations \n (294,000) \n \n—\n  \n \n—\n  \n (294,000) \n (72,485)\n\nEmployee benefits \n (113,817) \n \n—\n  \n \n—\n  \n (113,817) \n 28,061)\n\nOther operating expenses \n (34,572) \n (26,326) \n \n—\n  \n (60,898) \n (15,014)\n\nOperating income/(loss) \n 1,976,118  \n (7,066) \n (1,237,616) \n 731,436  \n 180,334 \n\nCorporate level activities \n    \n    \n    \n    \n   \n\nLegal, license and professional fees \n    \n    \n    \n (124,677) \n (30,740)\n\nOther operating expenses \n    \n    \n    \n 3,723,951  \n 918,134 \n\nIncome before income tax \n    \n    \n    \n 4,330,710  \n 1,067,728 \n\nTotal assets for the segments \n 65,358,445  \n 24,077  \n 29,183,340  \n 94,565,862  \n 23,315,055 \n\nCorporate level activities \n    \n    \n    \n    \n   \n\nAdd: Deferred initial public offering costs \n    \n    \n    \n \n—\n  \n \n—\n \n\nTotal assets \n    \n    \n    \n 94,565,862  \n 23,315,055 \n\n \n\n**Note 17 — Concentrations and\nrisks**\n\n* *\n\n*Concentrations*\n\n \n\nFinancial instruments that potentially expose\nthe Company to concentrations of credit risk consist primarily of contracts receivable. The Company conducts credit evaluations of its\nclients, and generally does not require collateral or other security from them. The Company evaluates its collection experience and long\noutstanding balances to determine the need for an allowance for expected credit losses. The Company conducts periodic reviews of the\nfinancial condition and payment practices of its clients to minimize collection risk on accounts receivable.\n\n \n\nThe following table sets forth a summary of single\ncustomers whom represent 10% or more of the Company’s total revenue:\n\n \n\n  \nDecember 31,\n2023  \nDecember 31,\n2024  \nDecember 31,\n2025  \nDecember 31,\n2025 \n\n  \nMYR  \nMYR  \nMYR  \nUSD \n\nAmount of the Company’s revenue \n   \n   \n   \n  \n\nCustomer A \n 13,261,271  \n 11,046,599  \n \n—\n  \n \n—\n \n\nCustomer B \n 47,090,553  \n 48,932,179  \n 39,922,500  \n 9,842,825 \n\nCustomer C \n 19,212,200  \n \n—\n  \n 18,538,000  \n 4,570,513 \n\nCustomer D \n \n—\n  \n \n—\n  \n 11,445,625  \n 2,821,900 \n\n \n\n*Represents percentages less than 10%\n\n \n\nF-32\n\n \n\n \n\n**MEGAN HOLDINGS LIMITED AND ITS SUBSIDIARIES\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS**\n\n** **\n\n**Note 17 — Concentrations and\nrisks**(cont.)\n\n \n\nThe following table sets forth a summary of single\ncustomers whom represent 10% or more of the Company’s total gross accounts receivable:\n\n \n\n  \nDecember 31,\n2023  \nDecember 31,\n2024  \nDecember 31,\n2025  \nDecember 31,\n2025 \n\n  \nMYR  \nMYR  \nMYR  \nUSD \n\nAmount of the Company’s accounts receivable \n   \n   \n   \n  \n\nCustomer A \n *  \n *  \n *  \n * \n\nCustomer B \n 18,791,450  \n 34,601,600  \n \n—\n  \n \n—\n \n\nCustomer C \n \n—\n  \n \n—\n  \n 18,538,000  \n 4,570,513 \n\nCustomer D \n \n—\n  \n \n—\n  \n 11,445,625  \n 2,821,900 \n\n \n\n*Represents percentages less than 10%\n\n \n\nThe following table sets forth a summary of suppliers\nwhom represent 10% or more of the Company’s total purchases:\n\n \n\n  \nDecember 31,\n2023  \nDecember 31,\n2024  \nDecember 31,\n2025  \nDecember 31,\n2025 \n\n  \nMYR  \nMYR  \nMYR  \nUSD \n\nAmount of the Company’s purchases: \n   \n   \n   \n  \n\nSupplier A \n \n—\n  \n 4,750,000  \n \n—\n  \n \n—\n \n\nSupplier B** \n 15,329,495  \n *  \n \n—\n  \n \n—\n \n\nSupplier C \n 48,937,982  \n 27,434,744  \n 34,063,500  \n 8,398,299 \n\nSupplier D \n \n—\n  \n 12,530,200  \n 39,418,000  \n 9,718,442 \n\n \n\n* Represents percentages less than 10%\n\n \n\n** Related party — VC Marine Sdn Bhd (Note 13)\n\n ** **\n\nThe following table sets forth a summary of single\nsuppliers whom represent 10% or more of the Company’s total payable:\n\n \n\n  \nDecember 31,\n2023  \nDecember 31,\n2024  \nDecember 31,\n2025  \nDecember 31,\n2025 \n\n  \nMYR  \nMYR  \nMYR  \nUSD \n\nAmount of the Company’s accounts payable: \n   \n   \n   \n  \n\nSupplier A \n 720,000  \n 190,400  \n \n—\n  \n \n—\n \n\nSupplier B** \n 739,879  \n \n—\n  \n \n—\n  \n \n—\n \n\nSupplier C \n \n—\n  \n \n—\n  \n \n—\n  \n \n—\n \n\nSupplier D \n \n—\n  \n \n—\n  \n 450,000  \n 110,947 \n\nSupplier E \n 215,000  \n \n—\n  \n \n—\n  \n \n—\n \n\nSupplier F \n \n—\n  \n 130,000  \n \n—\n  \n \n—\n \n\n \n\n**\nRelated party — VC\nMarine Sdn Bhd (Note 13)\n\n* *\n\nF-33\n\n \n\n* *\n\n**MEGAN HOLDINGS LIMITED AND ITS SUBSIDIARIES\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS**\n\n* *\n\n**Note 17 — Concentrations and\nrisks**(cont.)\n\n* *\n\n*Credit Risk*\n\n \n\nCredit risk is the potential financial loss to\nthe Company resulting from the failure of a client or a counterparty to settle its financial and contractual obligations to the Company,\nas and when they fall due. As the Company does not hold any collateral, the maximum exposure to credit risk is the carrying amounts of\naccount receivables, deposits, contracts receivable, contract assets, and other receivables (exclude prepayments) and cash and bank deposits\npresented on the consolidated balance sheets. Other than above, the Company has no other financial assets which carry significant exposure\nto credit risk.\n\n* *\n\n*Liquidity Risk*\n\n \n\nLiquidity risk is the risk that the Company will\nencounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another\nfinancial asset. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient\nliquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking\ndamage to the Company’s reputation.\n\n \n\nThe Company maintains a significant portion\nof its financial assets in marketable equity securities, which are subject to market volatility and may not be readily convertible\nto cash without potential loss of value. As of December 31, 2025, the Company held approximately MYR 29 million (2024: MYR\n23 million; 2023: MYR 4 million) in equity investments, representing 31% (2024: 33%; 2023: 9%) of total current assets,\nwhile cash and cash equivalents totaled MYR 0.2 million (2024: MYR 0.01 million; 2023: MYR 4 million).\n\n \n\nThe Company’s liquidity management strategy\nfocuses on maintaining adequate financial flexibility to meet short-term obligations and operating needs. Although the Company’s\ncash position is limited, it considers its portfolio of publicly traded equity securities to be a secondary source of liquidity. These\ninvestments are classified as available-for-sale and can be liquidated, subject to market conditions, to meet cash flow requirements.\n\n \n\nThe Company currently maintain a reasonable lines\nof credit or other external financing arrangements. Management actively monitors the liquidity profile of its investment portfolio and\nevaluates market conditions to ensure sufficient access to funds when needed.\n\n \n\nIn addition, the Company ensures that it has\nsufficient cash on demand or highly liquid asset such as investment in marketable securities that are convertible to cash in a short\nperiod of time to meet expected operational expenses for a period of, at least, twelve months, including the servicing of financial\nobligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters.\n\n \n\nF-34\n\n \n\n** **\n\n**MEGAN HOLDINGS LIMITED AND ITS SUBSIDIARIES\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS**\n\n** **\n\n**Note 18 — Commitments and\ncontingencies**\n\n* *\n\n*Operating lease commitments*\n\n \n\nFor the details on future minimum lease payments\nunder the non-cancelable operating leases as of December 31, 2025, please refer to a section headed “operating lease right-of-use\nassets and operating lease liabilities” set forth in the Note 8 to the Consolidated Financial Statements.\n\n* *\n\n*Capital commitments*\n\n \n\nAs of December 31, 2025, the Company did not\nhave any capital commitments.\n\n* *\n\n*Legal proceedings*\n\n \n\nFrom time to time, the Company is party to certain\nlegal proceedings, as well as certain asserted and un-asserted claims. In the ordinary course of business, the Company may be subject\nto legal proceedings regarding contractual and employment relationships and a variety of other matters. The Company records contingent\nliabilities resulting from such claims, when a loss is assessed to be probable, and the amount of the loss is reasonably estimable. In\nthe opinion of management, there were no pending or threatened claims and litigation as of December 31, 2025, and through the issuance\ndate of these consolidated financial statements.\n\n** **\n\nOn December 9, 2025, the Government of\nMalaysia, for and on behalf of the Inland Revenue Board of Malaysia, commenced a civil suit against MMSB at the Kuala Lumpur High\nCourt for the claim of MYR 1,233,585 for MMSB’s default in furnishing its tax return for the Year of Assessment 2023. A\nJudgement in Default was awarded against MMSB whereby MMSB is liable to pay to the Inland Revenue Board of Malaysia the sum of RM\n1,233,585, together with interest calculated at the rate of 5% from the date of the judgement until the date of full payment, and\ncost. We intend to negotiate with the Inland Revenue Board of Malaysia on the settlement of the judgment sum.\n\n \n\n**Note 19 — Subsequent events**\n\n \n\nThe Company evaluated all events and transactions that occurred after\nDecember 31, 2025, up through May 15, 2026, the date that these consolidated financial statements are available to be issued.\nOther than as disclosed below, there are no material subsequent events that require disclosure in these consolidated financial statements.\n\n \n\nOn February 27, 2026, the Company closed a follow-on public offering\n(the “Follow-on Offering”) of 20,750,000 Class A Ordinary Shares, par value US$0.0001 per share, at a public offering price\nof US$0.40 per share. Gross proceeds to the Company, before deducting placement agent fees and other offering expenses, were approximately\nUS$8,300,000, and net proceeds were approximately US$7,563,875. The Company intends to use the net proceeds from the Follow-on Offering\nfor the development of its Smart Farming System, working capital and general corporate purposes.\n\n \n\nF-35"}