{"url_path":"/sec/mgn/10-k/2026/item-4","section_key":"item-4","section_title":"Item 4 Information on the Company**","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":14705,"has_tables":true,"body_markdown":"**Item\n4. Information on the Company**\n\n \n\n**4.A. History and Development of the Company**\n\n** **\n\n**Corporate History**\n\n \n\nOur history can be traced back to September 2020\nwhen Mr. Darren Hoo saw an opportunity to develop a company focused on the development, construction and maintenance of aquaculture\nfarms and related works. MMSB was therefore initially established to carry on the provision of these services. Since then, we have grown\ninto a company covering a comprehensive range of services and solutions, which comprises the upgrading and maintenance of aquaculture\nand agriculture farms, design and development of new aquaculture and agriculture farms, and the sourcing of industrial supplies and rental\nof machinery for agriculture and aquaculture purposes.\n\n** **\n\n**Corporate Structure**\n\n \n\nOur Company was incorporated in the Cayman Islands\non December 7, 2022 under the Companies Act as an exempted company with limited liability. Our authorized share capital was fifty\nthousand United States dollars (US$50,000.00) divided into five hundred million (500,000,000) shares of a nominal or par value of US$0.0001\neach upon incorporation.\n\n \n\nOn May 15, 2023, Mr. Darren Hoo completed\nthe transfer of the one share of a nominal or par value of US$0.0001 to SSL for the total consideration of US$0.0001.\n\n \n\nOn July 31, 2024, the Company entered into\na share swap agreement with the shareholders of MMSB, namely, SSL, USSB, YHCML, ECGL, KLSB, KBSB, Malama and SJCC for the purpose of\nacquiring the entire issued share capital of MMSB, as part of the re-organization undertaken by the Company. As part of the terms of\nthe Share Swap Agreement, SSL, USSB, YHCML, ECGL, KLSB, KBSB, Malama and SJCC as the shareholders of MMSB shall dispose their respective\nshares in MMSB, representing in aggregate 100% of the issued share capital of MMSB, to MHL and the Company shall acquire the entire issued\nshares in MMSB. The consideration for the share transfers was based on the net tangible assets value of MMSB as at December 31,\n2023 of approximately USD 6,500,000.00 and was to be satisfied by the allotment and issuance of 14,999,999 ordinary shares\nof a nominal or par value of US$0.0001 each in aggregate to SSL, USSB, YHCML, ECGL, KLSB, KBSB, Malama and SJCC, each credited as fully\npaid, in proportion to their respective shareholdings in MMSB. Following the completion of the Share Swap Agreement on July 31,\n2024, MHL became the holding company of MMSB. Following the completion of the Share Swap Agreement, the issued share capital of\nthe Company was 15,000,000 ordinary shares of a nominal or par value of US$0.0001 each and SSL, USSB, YHCML, ECGL, KLSB, KBSB, Malama\nand SJCC were collectively the shareholders of MHL.\n\n \n\nOn September 29, 2025, the Company completed\nits IPO. In the IPO, the Company issued 1,250,000 shares of a nominal or par value of US$0.0001 each at a price of US$4.00 per share.\nThe Company received gross proceeds in the amount of US$5,000,000 before deducting any underwriting discounts and expenses. The Class\nA Ordinary Shares began trading on September 26, 2025 on the Nasdaq Capital Market under the ticker symbol “MGN.”\n\n** **\n\n**Organization Chart**\n\n \n\nThe chart below sets out our corporate structure\nas of the date of this annual report.\n\n \n\n \n\n \n\n \n\n(1)Star Sprite Limited, a business company incorporated\nin the BVI on November 30, 2022 and wholly owned by Mr. Darren Hoo.\n\n** **\n\n32\n\n \n\n** **\n\n**Entities**\n\n \n\nA description of our subsidiaries, both direct\nand indirect, are set out below.\n\n* *\n\n*MMSB*\n\n \n\nOn February 13, 2020, MMSB was incorporated\nin Malaysia with limited liability. MMSB commenced business in September, 2020 and is principally engaged in development, construction\nand maintenance of agriculture and aquaculture farms in Malaysia. As part of a group reorganization completed on July 31, 2024.\nMMSB became a wholly-owned subsidiary of our Company.\n\n* *\n\n*MTSB*\n\n \n\nOn March 18, 2024, MTSB was incorporated\nin Malaysia with limited liability, and is an indirect subsidiary of MHL and an 80% direct subsidiary of MMSB (the remaining 20% shareholding\nin MTSB is held by Ms. Tan Chui Fang). Ms. Tan Chui Fang has been involving in the Semiconductor industry for more than 5 years,\nwhere she has developed significant connections. Her ability to connect with potential clients will be beneficial to the Company. In\nrecognition of her contributions to MTSB, she has been awarded a 20% equity stake. MTSB increased its paid-up capital by 199,900 shares\non July 22, 2024, bringing the total number of issued and paid up shares to 200,000 ordinary shares. MMSB subscribed -to- for the\nentire issuance, resulting in MMSB holding a 99.99% stake in MTSB as of July 22, 2024. As of the date of this annual report, the\nmain business activities of MTSB are consultancy and management of projects for process engineering and industrial systems (such as warehouse\nmanagement system, building management system, etc.), and supply of robotics and automation equipment. As at the date of this annual\nreport, Ms. Tan Chui Fang does not hold any other role in MHL and MMSB.\n\n** **\n\n**Corporate Headquarters**\n\n \n\nOur principal executive offices are located at\nB-01-07, Gateway Corporate Suites, Gateway Kiaramas, No.1, Jalan Desa Kiara, 50480 Mont Kiara, Kuala Lumpur, Malaysia. Our telephone\nnumber is +60 364201071. Our website address is *www.meganmezanin.com*. Information on our website does not constitute part of this\nannual report. Our registered and records office is located at Harneys Fiduciary (Cayman) Limited, 4th Floor, Harbour Place, 103 South\nChurch Street, P.O. Box 10240, Grand Cayman KY1-1002, George Town, Cayman Islands.\n\n \n\n**4.B. Business Overview**\n\n** **\n\n**Overview**\n\n \n\nWe are a company principally engaged in the development,\nconstruction and maintenance of aquaculture farms and related works. Our operations are based in Malaysia. Since our inception in 2020,\nwe have strived to establish ourselves as a trusted and experienced provider of shrimp farm related maintenance services in Malaysia.\nAs of the date of this annual report, we have been carrying out a series of upgrading and maintenance works for aquaculture farms, all\nof which are located in Tawau, Sabah, Malaysia. This constitutes 15.5%, 69.4% and 47.7% of our revenue for the financial years ended\nDecember 31, 2023, 2024 and 2025, respectively. Besides that, we also carried out upgrading works for a pineapple plantation farm\nlocated at Kota Tinggi, Johor, Malaysia in 2022 and 2023. This constituted 22.6%, Nil% and Nil% of our revenue for the financial years\nended December 31, 2023, 2024 and 2025, respectively.\n\n \n\n33\n\n \n\n \n\nComplementary to our upgrading and maintenance\nservices, we also assist customers with the design and development of new farms. As of the date of this annual report, we completed the\ndevelopment and construction of a shrimp hatchery center in Semporna, Sabah, Malaysia, where we have been engaged to undertake the construction\nof hatchery buildings and related functional facilities. We also assisted the development of a 111-acre shrimp farm at Tawau, Sabah,\nMalaysia. The design and development of new farms comprised 61.7%, 70.5% and Nil% of our revenue for the financial years ended December 31,\n2023, 2024 and 2025. From time to time, we also assist our customers in sourcing for building materials and machineries available for\nrental for use on their farms. This comprised 0.2%, 0.2% and 51.9% of our revenue for the financial years ended December 31,\n2023, 2024 and 2025, respectively.\n\n \n\nWith our wide suite of services and diverse revenue\nstreams, we are well-positioned to serve customers as a one-stop center for their aquaculture and agriculture needs.\n\n** **\n\n**Our Services**\n\n \n\nOnce we have received a project from a customer,\nwe collaborate with trusted subcontractors who provide the manpower and equipment to execute the necessary upgrading, maintenance, and\nconstruction tasks on an as needed basis, all while maintaining a hands-on approach to oversee every aspect of the process. Due to the\nlabor intensity and complexity of some of these projects, we may on occasion engage several subcontractors to work on the same project.\n\n* *\n\n*Upgrading and maintenance of aquaculture and\nagriculture farms*\n\n \n\nWe offer comprehensive upgrading and maintenance\nsolutions tailored to the needs of our valued farm customers. To date, we have provided these services for aquaculture farms focused\non shrimp production as well as for an agricultural farm for the production of pineapples.\n\n \n\nWe generate revenue from charging customers a\nproject-based fee through progress claims, usually on a monthly basis. Once we have submitted our progress claim to the customers, a\nsite visit will be arranged to verify that the on-site progress matches the progress claim. Once verified, customers will proceed with\nthe payment arrangement. We charge our customers based on an all-in rate that includes the cost from subcontractors, as well as the on-cost\nmark-up for our profit.\n\n \n\nThe graphics depicted throughout this section\nrepresents the actual images of our systems and products.\n\n** **\n\n**(a)    Aquaculture**\n\n \n\nWith regards to aquaculture, we particularly\nfocus on providing upgrading and maintenance works to shrimp farms. The following areas are our main priorities when it comes to maintenance:\n\n** **\n\n**(i) Pond Maintenance**.\n\n \n\n \n\n \n\nMaintaining the cleanliness of pond\nbottoms after harvests is critical to prevent the accumulation of organic residues that may contain bacteria or viruses that could negatively\nimpact shrimp cultivation in aquaculture operations. We and our subcontractors regularly inspect and maintain our customer’s shrimp\nponds to ensure the ponds are in optimum condition for farming. We scrape our clients’ pond bottoms thoroughly after cultivation\ncycles to remove accumulated sediments and organic matter, and stabilize pond banks to prevent erosion.\n\n** **\n\n34\n\n \n\n** **\n\n**(ii) Aeration and Circulation\nSystems**.\n\n \n\n \n\n \n\nProper aeration and circulation systems\nare essential for maintaining water quality and oxygen levels in shrimp ponds. Our customers use paddlewheels and other aeration equipment\nto ensure the ponds are well-aerated and that oxygen levels are optimum for shrimp survival. As part of our upgrading and maintenance\nwork, we regularly check and maintain the aeration equipment and replace it as necessary. The condition of electrical cables and control\npanels are also checked regularly for damages, and parts replacements are made as needed.\n\n** **\n\n**(iii) Seawater Intake,\nDistribution, and Discharge Systems**.\n\n \n\n \n\n \n\n**Seawater Intake system**\n\n \n\nOur customer’s shrimp farms\nuse various water treatment systems to maintain water quality, such as sedimentation ponds, mechanical filters, or biological treatments.\nFarm infrastructure (such as the Seawater Intake System shown above) requires regular maintenance to ensure that all the infrastructures\nare in optimum operating condition to prevent any negative impacts on the shrimp or the environment. We also regularly inspect and maintain\nthe water intake, distribution, and discharge systems to ensure proper flow and prevent any blockages or damage. Our company also conducts\nroutine water quality testing to monitor and maintain optimal water conditions for our customers’ farms.\n\n** **\n\n35\n\n \n\n** **\n\n**(b) Agriculture\nfarms**\n\n \n\nAs of the date of this annual report, our area\nof expertise and focus in agricultural farms resides with pineapple farms, which involves soil preparation and ploughing. Soil preparation\nis critical for pineapple farming, as it ensures that the soil is adequately prepared for the growth and development of the pineapple\nplants. Soil preparation involves ploughing process which helps control weeds by burying weed seeds and disrupting weed growth. This\ncan reduce competition for nutrients and water and improve yield. Moreover, ploughing helps to incorporate fertilizer into the soil,\nmaking nutrients more readily available to the pineapple plants. This can improve plant growth and yield. Finally, ploughing can also\nhelp prevent soil erosion by creating ridges and furrows that can hold water and prevent runoff. This can reduce soil erosion and loss\nof topsoil, which is important for maintaining soil fertility and crop productivity.\n\n \n\nFor the financial years ended\nDecember 31, 2023, 2024 and 2025, the upgrading and maintenance services segment generated approximately MYR 32.5 million\n(approximately US$7.1 million), MYR 17.7 million (approximately US$4.0 million) and MYR 40.0 million (approximately\nUS$9.9 million), which constituted approximately 38.1%, 29.3% and 47.7% of our total revenue respectively. Upgrading and maintenance\nservices have been and will continue to be a growth area for us, as we believe that our customers will become increasingly reliant\non our expertise in maintenance and upgrading to manage their farming efficiently.\n\n* *\n\n*Design and development of new aquaculture\nand agriculture farms*\n\n \n\nWe offer a range of services to help our customers\ndesign and develop their new aquaculture and agriculture farms. We consider a range of factors to ensure optimal production efficiency,\nenvironmental sustainability, and profitability. We aim to work closely with our customers to develop customized designs that meet their\nspecific needs and goals and help them maximize the success and sustainability of their farms. As of the date of this annual report,\nwe have only been involved in the development of 1 aquaculture farm and 1 shrimp hatchery center.\n\n \n\nWe generate revenue from charging customers project-based\nfee through progress claims, usually on a monthly basis. Once we have submitted our progress claim to the customers, site visit will\nbe arranged to verify that the on-site progress matches the progress claim. Once verified, customers will proceed for payment arrangement.\nWe charge our customers based on an all-in rate that includes the cost from subcontractors, as well as the on-cost mark-up for our profit.\n\n \n\nWe begin by conducting a comprehensive assessment\nof our customers’ needs and goals. This involves gathering information on factors such as the type of crops or aquatic animals\nto be raised, the available resources, and the regulatory requirements. We use this information to develop a customized design that meets\nour customers’ specific needs and goals.\n\n** **\n\n**(a) Site\nSelection**.\n\n \n\n \n\n \n\nSite selection is critical, and we\nassist our customers in carefully evaluating factors such as climate, soil type, topography, water availability, and accessibility when\nselecting a site. We ensure that the site selected by our customers is located away from sources of pollution and potential hazards to\nminimize environmental impacts and to comply with regulatory requirements. Additionally, we take into account factors such as (i) water\nintake point, (ii) alignment of the discharge water to be released, and (iii) the land contour.\n\n** **\n\n36\n\n \n\n \n\n**(b) Infrastructure\nDesign**\n\n \n\n \n\n \n\nWe carefully select the seawater intake\npoint by assessing critical water parameters such as salinity, pH and turbidity as well as water depth and tidal movements.\n\n \n\n \n\nBy implementing a well-designed water\nfiltration and treatment system, we can optimize the quality of the water source to ensure that it meets the necessary standards for\nour aquaculture purposes.\n\n \n\nAs of the date of this annual report, we completed\nthe development and construction of an Integrated Shrimp Farm in Tawau, Sabah, Malaysia. This 111-acre project consists of a 99-pond\nshrimp farm and a processing factory.\n\n \n\nFor the financial years ended\nDecember 31, 2023, 2024 and 2025, the design and development business segment generated approximately MYR 52.6 million\n(approximately US$11.5 million), MYR 42.5 million (approximately US$9.5 million) and MYR Nil (approximately US$Nil),\nwhich constitutes approximately 61.7%, 70.5%   and Nil% of our total revenue respectively.\n\n* *\n\n37\n\n \n\n* *\n\n*Sourcing of industrial supplies and rental\nof machinery*\n\n \n\nFrom time to time, we will receive requests from\ncustomers to source for building materials and machinery (such as excavators, cranes, and backhoe) available for rental for use on their\nproject sites. We work closely with a network of trusted suppliers and vendors to source high-quality building materials and machinery\nthat meet the specific needs of our customers. Specifically, we will first review the customer’s requirement on the product specifications\nand then make requests to our qualified suppliers and vendors to provide a price quote as well as product samples for our further evaluation.\nIn the event if we are unable to source for the actual specifications required by the customer, we will propose products with equivalent\nspecifications to customers for their evaluation. We understand that each project is unique, and we take the time to understand the specific\nrequirements of each customer and project to ensure that we are sourcing the right equipment and materials. In sourcing the equipment\nand materials, we take into consideration factors such as cost, delivery time, and availability to provide our customers with an arrangement\nthat meets their budget and timeline requirements.\n\n \n\nWe generate revenue from issuance of invoices\nto customers, and once customers have signed the delivery order as a proof of goods well received in order, they will proceed for payment\narrangement in accordance with the payment terms agreed. We charge our customers based on an all-in rate that includes the material cost\nand delivery cost from suppliers, as well as the on-cost mark-up for our profit.\n\n \n\nFor the financial years ended\nDecember 31, 2023, 2024 and 2025, the sourcing of industrial supplies and rental of machinery segment generated approximately\nMYR 0.2 million, MYR 0.1 million and MYR 43.52 million (approximately US$10.73 million), which constituted\napproximately 0.2%, 0.2% and 51.9% of our total revenue, respectively.\n\n** **\n\n**Material agreements with customers**\n\n \n\nAs of the date of this annual report, we have\nentered into the following material contracts with the respective customers and their projects:\n\n* *\n\n*Wakuba New Prawn Farm Development with\nNorth Cube Sdn Bhd (Integrated Shrimp Farm)*\n\n* *\n\n*(i)**New Shrimp Farm Development Contract\ndated June 30, 2022*\n\n \n\nWe were engaged to undertake the\ndevelopment of a prawn farm located at Kampung Wakuba, Tawau, Sabah (“**Integrated Shrimp Farm**”). The construction\nworks include basic infrastructure works, main electrical works, building works, shrimp ponds, and processing factory as well as\ncompliance works with regulatory requirements. The engagement fee for our services was MYR 106,746,450.00 and the contract was\ncompleted on June 28, 2024.\n\n \n\nThe material terms of the contract\nare as follows:\n\n \n\ni.There is no deposit\nrequirement.\n\n \n\nii.The upgrading works\nare carried out in accordance with the following scope of works as set out in the contract\nwhich are also the project milestones to be achieved:\n\n \n\n●the construction\nand installation of basic infrastructure works;\n\n \n\n●the installation\nof main electrical works;\n\n \n\n●the construction\nof building works such as earthwork, road and drainage works, building structural works and\nelectrical works;\n\n \n\n38\n\n \n\n \n\n●the construction\nof shrimp ponds;\n\n \n\n●the construction\nof a processing factory; and\n\n \n\n●conduct of compliance\nworks with regulatory requirements such as obtaining development orders etc.\n\n \n\niii.Our fees are invoiced\nto the customer on a monthly basis based on work done.\n\n \n\niv.Our customer is given\na one-month credit term for the payment of our invoices.\n\n \n\nv.The upgrading works\nare to be completed within 18 months from the date of the contract, i.e. until December 29,\n2023. The contract was mutually extended by the parties until December 31, 2024.\n\n \n\nvi.As of the date of this annual report, the project has been completed and we have received MYR\n73,626,450.00 from our customer. While the engagement fee under the contract was initially stated at MYR 106,746,450.00, certain\ncomponents of the originally contemplated scope of works were subsequently omitted or not carried out. Accordingly, the final scope\nof works performed by the Company was reduced, and the aggregate consideration ultimately invoiced and received amounted to\nMYR 73,626,450.00, which represents the total contract value realized by the Company upon completion of the project.\n\n* *\n\n*Material Agreements with Suppliers*\n\n \n\nAs of the date of this annual report, MMSB has\nentered into the followings with the respective sub-contractors to undertake certain works in connection with the following projects\nMMSB were involved in:\n\n* *\n\n*(a)**Wakuba\nNew Prawn Farm Development with North Cube Sdn Bhd (Integrated Shrimp Farm)*\n\n* *\n\n*(i)**Letter\nof Award dated April 28, 2023 with Pelican Prospect Sdn Bhd*\n\n \n\nWe engaged Pelican Prospect Sdn\nBhd as a sub-contractor to undertake works such as shrimp pond earthwork, construction of a processing factory, basic infrastructure\nworks such as construction of water reservoir, installation of water inlet system and fencing works, and compliance with regulatory\nrequirements such as the Environmental Impact Assessment study and building approval at the Integrated Shrimp Farm for the contract\nsum of MYR 39,385,000.00. The contract was completed on June 28, 2024. This Letter of Award is connected to the New Shrimp Farm\nDevelopment Contract dated June 30, 2022 entered into with North Cube Sdn Bhd as detailed above.\n\n \n\nThe material terms of the contract\nare as follows:\n\n \n\ni.The contract is subject\nto the terms and conditions contained in the tender documents submitted by the subcontractor\nto us and shall form as part of the contract.\n\n \n\nii.The scope of works\nis as described in the submitted tender documents and shall include the provision for transportation,\npreparation works, and all other works deemed necessary for the full completion of the works.\n\n \n\niii.The works to be conducted\nby the sub-contractor are as follows:\n\n \n\n●shrimp pond earth\nwork;\n\n \n\n39\n\n \n\n \n\n●construction of\na processing factory;\n\n \n\n●basic infrastructure\nworks such as:\n\n \n\n●installation of a\nwater inlet system;\n\n \n\n●construction of a\nwater reservoir;\n\n \n\n●fencing work;\n\n \n\n●compliance with\nregulatory requirements such as:\n\n \n\n●Environmental Impact\nAssessment study;\n\n \n\n●building approval.\n\n \n\niv.The contract is a firm-priced\ncontract and the contract sum is not subject to any fluctuation and cost increase for whatsoever\nreason other than variation instructed by us.\n\n \n\nv.The fees of the sub-contractor\nare invoiced to us on a monthly basis based on work done.\n\n \n\nvi.We are given a one-month\ncredit term to pay the invoices received by us.\n\n \n\nvii.The total contract\nperiod is from May 1, 2023 until December 31, 2023 (which was extended to December 31,\n2024).\n\n \n\nviii.As of the date of\nthis annual report, we have paid MYR 39,385,000.00 to our supplier and the project has since\nbeen completed.\n\n* *\n\n*(ii)**Letter\nof Award dated April 28, 2023 with Kheng Builders Sdn Bhd*\n\n \n\nWe engaged Kheng Builders Sdn Bhd\nas a sub-contractor to undertake building works such as main feed store, sub feed store, workshop, guardhouse, farm office, canteen,\nand workers’ quarters at the Integrated Shrimp Farm for the contract sum of MYR 3,459,000.00. The contract was completed on\nJune 28, 2024. This Letter of Award is connected to the New Shrimp Farm Development Contract dated June 30, 2022 entered\ninto with North Cube Sdn Bhd as detailed above.\n\n \n\nThe material terms of the contract\nare as follows:\n\n \n\ni.The contract is subject\nto the terms and conditions contained in the tender documents submitted by the subcontractor\nto us and shall form as part of the contract.\n\n \n\nii.The scope of works\nis as described in the submitted tender documents and shall include the provision for transportation,\npreparation works, and all other works deemed necessary for the full completion of the works.\n\n \n\niii.The works to be conducted\nby the sub-contractor are as follows:\n\n \n\n●Building works;\n\n \n\n●Main feed store;\n\n \n\n●Sub feed store;\n\n \n\n●workshop;\n\n \n\n40\n\n \n\n \n\n●guardhouse;\n\n \n\n●farm office;\n\n \n\n●canteen;\n\n \n\n●workers’\nquarters.\n\n \n\niv.The contract is a firm-priced\ncontract and the contract sum is not subject to any fluctuation and cost increase for whatsoever\nreason other than variation instructed by us.\n\n \n\nv.The fees of the sub-contractor\nare invoiced to us on a monthly basis based on work done.\n\n \n\nvi.We are given a one-month\ncredit term to pay the invoices received by us.\n\n \n\nvii.The total contract\nperiod is from May 1, 2023 until December 31, 2023 (which was extended to December 31,\n2024).\n\n \n\nviii.As of the date of\nthis annual report, the project has been completed and we have paid MYR 3,459,000.00 to our\nsupplier.\n\n* *\n\n*(iii)**Letter\nof Award dated April 28, 2023 with Sea Sanctuary Sdn Bhd*\n\n \n\nWe engaged Sea Sanctuary Sdn Bhd\nas a sub-contractor to undertake electrical works such as construction of a sub station and gen set room and cabling works, as well\nas installation of electrical works for shrimp ponds at the Integrated Shrimp Farm for the contract sum of MYR 5,570,000.00. The\ncontract was completed on June 28, 2024. This Letter of Award is connected to the New Shrimp Farm Development Contract dated\nJune 30, 2022 entered into with North Cube Sdn Bhd as detailed above.\n\n \n\nThe material terms of the contract\nare as follows:\n\n \n\ni.The contract is subject\nto the terms and conditions contained in the tender documents submitted by the subcontractor\nto us and shall form as part of the contract.\n\n \n\nii.The scope of works\nis as described in the submitted tender documents and shall include the provision for transportation,\npreparation works, and all other works deemed necessary for the full completion of the works.\n\n \n\niii.The works to be conducted\nby the sub-contractor are as follows:\n\n \n\n●main electrical\nworks;\n\n \n\n●sub station and gen\nset room;\n\n \n\n●cabling works;\n\n \n\n●shrimp ponds;\n\n \n\n●electrical works.\n\n \n\n41\n\n \n\n \n\niv.The contract is a firm-priced\ncontract and the contract sum is not subject to any fluctuation and cost increase for whatsoever\nreason other than variation instructed by us.\n\n \n\nv.The fees of the sub-contractor\nare invoiced to us on a monthly basis based on work done.\n\n \n\nvi.We are given a one-month\ncredit term to pay the invoices received by us.\n\n \n\nvii.The total contract\nperiod is from May 1, 2023 until December 31, 2023 (which was extended to December 31,\n2024).\n\n \n\nviii.As of the date of\nthis annual report, the project has been completed and we have paid MYR 5,570,000.00 to our\nsupplier.\n\n** **\n\n**Subcontractor Process Flow**\n\n \n\nFor each project we are engaged for, we invite\nvarious sub-contractors to submit their tenders to participate in the relevant projects or part thereof. Once tenders are received, we\nwill evaluate on the suitability of the sub-contractor for the said project based on our criteria such as, amongst others, pricing, delivery\nperiod, payment terms, and the prospective subcontractor’s ability to provide the necessary materials required for the project.\nOnce the sub-contractor is identified, a letter of award will be issued by us to the sub-contractor specifying the scope of the works\nrequired to be undertaken, the milestones to be achieved and the contract sum.\n\n \n\nIn general, ground works are undertaken by the\nsub-contractors whereas we primarily focus on project management. We rely on sub-contractors in order to minimize our need to tackle\nissues relating to man-management of workers. Instead, matters relating to the man-management of workers are dealt with by the subcontractors,\nand this allows us to focus our attention to the execution of the projects and its progress. To ensure that the prices paid to the related\nparty subcontractors are market prices, all our subcontractors undergo a fair tender process for the projects involved before we engage\nthem.\n\n** **\n\n**Competition**\n\n \n\nThe market for aquaculture projects and services\nis highly competitive. Many of the producers and sellers are large entities that have significantly greater resources than we have. We\nalso compete with small suppliers but due to the size of our projects, we believe that we are able to offer better pricing to our customers.\n\n \n\nWe believe we are strategically placed to compete\nbased on the following factors: (i) proactive approach to cost-effective solutions for aquaculture farm development and maintenance,\n(ii) strong customer and supplier relationships, and (iii) an experienced management team. For further details, please refer\nto the section titled “*Business — Our Competitive Strengths*”.\n\n** **\n\n**Our Competitive Strengths**\n\n \n\nWe believe that the following competitive strengths\nhave contributed to our success and differentiated us from our competitors:\n\n** **\n\n**●****Cost\neffective solutions.    **We provide cost-effective solutions for aquaculture\nfarm development, construction, and maintenance by actively visiting customers to understand\nthe latest progress of their operations and the issues that they are facing. Leveraging our\nexpertise, we carefully scrutinize customers’ requests to optimize the efficiency of\ntheir farm infrastructure. We believe that this enables our customers to achieve greater\nsuccess in the aquaculture and agriculture sectors by improving their output.\n\n** **\n\n42\n\n \n\n \n\n**●****Strong\nCustomer Relationship Built Through Experience & Knowledge.    **Based\non our technical know-how and experience, we are able to discuss in depth with customers\non the technical issues that occurred, pinpoint root cause of issues, and propose to them\non the infrastructure modification or upgrades that will contribute to overall farm improvement\nthat will overcome the issues faced by the customers.\n\n \n\n●**Expertise of\nmanagement team.    **We take pride in the expertise of our management\nteam, guided by Mr. Darren Hoo, our Chairman and CEO. With extensive experience\nin the aquaculture and agriculture industries in Malaysia, Mr. Darren Hoo has played\nan important role in driving our growth. He leads our business strategies and fosters strong\ncustomer relationships. Thanks to his leadership, we have been able to leverage our knowledge\nto provide services that cater to our customers’ unique needs. We value our customers\nand maintain close partnerships, enabling us to gain a deep understanding of their farm operations.\nDrawing on our technical know-how and experience, we engage in meaningful discussions with\ncustomers, carefully diagnosing technical issues and identifying their root causes. Subsequently,\nwe propose infrastructure modifications or upgrades that aim to enhance overall farm performance,\naddressing the challenges faced by our customers.\n\n** **\n\n**Our Growth Strategy**\n\n \n\nWe intend to develop our business and strengthen\nour customer base, by implementing the following strategies:\n\n \n\n●**Market Development:    **We\nare actively researching potential clients to expand our customer beyond Malaysia, as well\nas tapping into international markets, starting from neighboring countries such as Indonesia.\nBy leveraging our reputation and established customer portfolio, we aim to build new relationships\nand penetrate new markets. This market development strategy will allow us to tap into new\nrevenue streams and increase our market share, driving our continued success in the industry.\n\n \n\n●**Strategic Growth\nInitiatives:    **As our customer base expands, we have the opportunity\nto identify potential partners for further business development. We propose equity participation\nin the entities of suitable clients, which would allow us to build a recurring revenue stream\nand potentially become one of our main sources of income. By forming strategic business partnerships,\nwe can create a mutually beneficial relationship that drives our continued growth and success\nin the industry.\n\n** **\n\n**●****Development\nof Smart Farming System:    **We established a pilot scale project\nutilizing our Smart Farming System in October 2025, and we have since been continuously\nimproving the quality, durability and efficiency of our Smart Farming System. We currently\nexpect the pilot scale project to conclude by the end of Q2 2026, after which we intend to\nproceed with commercialization, subject to the results of the pilot program and other relevant\nfactors. Our Smart Farming System offers several benefits including (a) water quality\nmonitoring, (b) feeding optimization, (c) disease prevention, (d) environmental\nmonitoring and (e) data analytics. Overall, the hardware development for our Smart Farming\nSystem will require a combination of sensors, actuators, cameras, control systems, connectivity,\nand power supply, all working together to optimize yields, improve resource efficiency, and\npromote sustainable farming practices. Our Chief Executive Officer, Mr. Darren Hoo has\na degree in Biotechnology and has obtained vast experience in aquaculture and Electrical\nand Instrumentation engineering (E&I). Leveraging on his vast skills and experience,\nMr. Darren Hoo is spearheading our venture into the development of our own proprietary\nSmart Farming System. With our Smart Farming System, we are poised to become a full-service\naquaculture consulting company in 2026, with the provision of expert consulting and project\nmanagement services being added to our business portfolio. We believe that, once developed,\nour Smart Farming System will be a key driver of our business growth, offering an effective\ntool for digital transformation in the aquaculture and agriculture industry. There are currently\nnot many providing smart farming systems in Malaysia and neighboring countries. Hence, our\nsolution addresses the market’s demand for modernization. By leveraging modern technology,\nwe hope to help our customers optimize their aquaculture and agriculture farms for maximum\nyield and profitability. Our system will closely monitor the operating parameters of each\npond and alert customers to any irregularities, enabling them to take corrective action and\nimprove yield. In addition, the system captures a wealth of data that customers can use to\nanalyze operational costs, estimate yields, and make informed decisions about their farms’\nfinancial performance. Ultimately, we\n\n \n\nhope that our Smart Farming System\nwill allow us to offer customers a more comprehensive and effective solution for their aquaculture and agriculture needs. Promoting the\nadoption of Smart Farming Systems will require a multi-faceted approach:\n\n \n\n(a)Demonstrating the benefits:    By\nshowcasing the benefits of increased productivity, reduced costs, improved resource efficiency,\nand enhanced sustainability, we can motivate customers to adopt our Smart Farming System.\nOur existing customers have expressed interest in becoming pioneers of our Smart Farming\nSystem, allowing us to demonstrate its value to other potential customers.\n\n  \n\n43\n\n \n\n  \n\n(b)Providing training\nand support:    Our Smart Farming System will require specialized knowledge\nand skills. We plan to offer workshops, training programs, and online resources to help customers\nunderstand how to effectively use the system and maximize its benefits.\n\n \n\n(c)Creating policies and\nincentives:    We plan to collaborate with the Ministry of Agriculture\nMalaysia to promote modernization in agriculture, including our Smart Farming System, through\ntax incentives, subsidies, and research grants.\n\n \n\n(d)Collaborating with\nindustry partners:    We plan to partner with technology providers and\nfinancial institutions to help develop and implement new technologies, provide financing\nfor customers, and share best practices and knowledge.\n\n \n\n(e)Developing networks\nand communities:    We plan to create networks and communities of industry\nstakeholders to provide opportunities for collaboration, support, and information sharing,\nbuilding a sense of community among farmers.\n\n \n\n(f)By adopting these strategies,\nwe believe we can accelerate our adoption of smart farming technologies and help create more\nsustainable and productive aquaculture and agricultural sectors in Malaysia.\n\n** **\n\n**Marketing and Sales**\n\n \n\nWe do not have a separate marketing and sales\ndepartment. One of our key channels for marketing is through word of mouth as our new customers are usually referred by our existing\ncustomers or business contacts. Our Chairman and Chief Executive Officer, Mr. Darren Hoo, has long-standing relationships with some\nof our major customers, due to Mr. Darren Hoo’s business connections and rapport built with customers and draws on his personal\nknowledge and experience to generate sales for our Group.\n\n \n\nMr. Darren Hoo is also responsible for establishing\nand maintaining our customer relationships and securing orders from customers. He also communicates with our existing customers to understand\ntheir needs and market trends, so as to improve our product range. Through these regular contacts, our customers provide us with valuable\nfeedback on industry trends and developments as well as their requirements. Mr. Darren Hoo also updates customers on our services\nsuch as information on new equipment or technology available in the market and their capabilities. He places strong emphasis on understanding\nthe requirements of our customers and consistently providing them with tailored solutions to meet the particular needs of their farms.\nWe consider customer feedback a valuable tool for improving our products and services. Mr. Darren Hoo is also responsible for handling\ncustomers’ complaints and any complaints arising from service quality.\n\n** **\n\n**Seasonality**\n\n \n\nWe have not observed any significant seasonal\ntrends. Our management believes that there is no apparent seasonality factor affecting the industry in which we operate due to the geographical\nlocation of the farms and the tropical climate enjoyed in Malaysia which enables year round operations.\n\n** **\n\n**Intellectual Property**\n\n \n\nWe have not registered any intellectual property\nrights.** **We were not involved in any proceedings with regard to, and we have not received notice of any claims of infringement\nof, any intellectual property rights that may be threatened or pending, in which we may be involved either as a claimant or respondent.\n\n** **\n\n44\n\n \n\n**  **\n\n**Employees**\n\n \n\nAs of the date of this annual report, we have\nfour full-time employees, all of whom are based at our headquarters in Malaysia. The following table sets forth the number of our employees\ncategorized by function as of the date of this annual report. We have no part-time employees.\n\n \n\nFunction \nNumber of\nEmployees \n\nChief Executive Officer \n       1 \n\nChief Financial Officer \n 1 \n\nAccount Executive \n 1 \n\nAdmin Assistant \n 1 \n\nTotal \n 4 \n\n \n\nOur success depends on our ability to attract,\nmotivate, train and retain qualified personnel. We believe we offer our employees competitive compensation packages and an environment\nthat encourages in-house development. As a result, we have generally been able to attract and retain qualified personnel and maintain\na stable core management team.\n\n \n\nIn the course of most of our engagements, we\nalso rely extensively on the help from subcontractors to assist in our work, especially for services such as the maintenance of existing\nshrimp farms of our clients and the construction of new shrimp hatcheries.\n\n \n\nTo the best of our knowledge, we are compliant\nwith local prevailing wage and contractor licensing and have good relations with our employees. As we are expanding our business, we\nintend to hire additional staffs and engage consultants on an as-needed basis. We may also engage experts to advise us in various capacities.\n\n** **\n\n**Facilities**\n\n \n\nWe are headquartered in Malaysia and operate\nin a corporate office located at B-01-07, Gateway Corporate Suites, Gateway Kiaramas, No.1, Jalan Desa Kiara, 50480 Mont Kiara, Kuala\nLumpur, Malaysia. Our corporate office consists of approximately 1,195 square feet, which is our own asset. We believe that our existing\noffice is generally adequate to meet our current needs, but we expect to seek additional space as needed to accommodate future growth.\nShould we need additional space, we believe we will be able to obtain additional space on commercially reasonable terms.\n\n** **\n\n**Insurance**\n\n \n\nWe currently only maintain a life insurance policy\neffected in favor of Mr. Darren Hoo as well as a property insurance policy covering our corporate headquarters at B-01-07, Gateway\nCorporate Suites, Gateway Kiaramas, No.1, Jalan Desa Kiara, 50480 Mont Kiara, Kuala Lumpur, Malaysia. We will continue to review and\nassess our risk portfolio and make necessary and appropriate adjustments to our insurance practices to align with our needs and with\nindustry practice in Malaysia and in the market in which we operate.\n\n** **\n\n**Legal Proceedings**\n\n \n\nFrom time to time, we may become a party to various\nlegal, arbitral or administrative proceedings or claims arising in the ordinary course of our business. Any of the pending lawsuits against\nus, or any other legal or administrative proceeding, regardless of the outcome, is likely to result in substantial cost and diversion\nof our resources, including our management’s time and attention.\n\n \n\nSave and except as disclosed below, there are\ncurrently no material legal proceedings against us or that have been against us, and we are not aware of investigations being conducted\nby a governmental entity into our company:\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\n45\n\n \n\n**  **\n\n**INDUSTRY**\n\n* *\n\n*The information and data presented in this\nsection have been derived from Protégé Associates Sdn Bhd (“Protégé Associates”)’s industry\nreport commissioned by us entitled “Independent Market Research Report on the Agriculture Industry in Malaysia” (the “Protégé\nAssociates Report”). Protégé Associates has advised us that the statistical and graphical information contained herein\nis drawn from its database and other sources. Certain information and data for 2023 and 2024 have been derived from the management’s\nindependent research. The following discussion contains projections for future growth, which may not occur at the rates that are projected\nor at all.*\n\n** **\n\n**Overview of the Agriculture Industry in Malaysia**\n\n \n\nMalaysia is a country rich in natural\nresources such as oil and gas, timber and other forest products, palm oil, and rubber. The country’s tropical climate and vast\nland resources make it well-suited for agriculture development. Agriculture refers to the activities of growing crops and rearing\nanimals to provide food and other products. It can be divided into 4 different sub-sectors namely, crops, fisheries (including\nfishing and aquaculture), forestry and logging and livestock. The agriculture industry in Malaysia contributed approximately MYR\n103.46 billion or 6.3% of the nation’s GDP in 2024 and MYR 100.81 billion or 6.4% of the nation’s GDP in 2023. This was\na slight increase of 0.7% from MYR 100.08 billion in 2023 as a result of higher oil palm output and the livestock subsector. Of the\nMYR 100.81 billion contributed by the agricultural sector to Malaysia’s GDP in 2023, fruit crops contributed MYR 5.60 billion\nwhile aquaculture contributed MYR 4.30 billion.\n\n \n\nMalaysia produces and exports selected\nproducts such as palm oil and other palm oil-based products and rubber, however, the country remains an importer of commodities such\nas maize, wheat, and rice. Malaysia still faces challenges in terms of food security and has relied on imports to meet the local\ndemand. Malaysia’s imported MYR 93.8 billion worth of food compared to MYR 54.5 billion worth of food exports in 2024. Food\nproducts such as onions, dairy products, coffee, wheat flour, tea, shallots, potatoes, and cooking oil are among the imported\nitems.\n\n \n\nAccording to the Global Food Security Index (“GFSI”)\npublished by The Economist, Malaysia ranked 42nd globally among 113 countries, with a heavy reliance on imports for essential\nfood products. To tackle the food security issue, the Malaysian Government (“Government”) is focusing on the 4 pillars outlined\nby the Food and Agricultural Organisation, namely availability, accessibility, utilization, and stability in line with the National Food\nSecurity Policy Action 2021 – 2025 and the National Agro-Food Policy 2021 – 2030. The National Food Security\nPolicy Action 2021 – 2025 aims to strengthen the country’s food supply chain from agricultural inputs to food\nwaste, ensuring the country’s food system remains intact at all times. On the other hand, the National Agro-Food Policy 2021 – 2030\nemphasizes the importance of modernization and digitization of farming with the adoption of smart farming technologies. The Malaysian\nGovernment plans to increase the use of automation and technology in the agro-food industry, and to ramp up research and innovation activities\nto modernize agro-technology. These key measures will likely assist the Government’s effort in bolstering food production and is\nexpected to further strengthen the food value chain and reduce Malaysia’s reliance on imported food items.\n\n \n\nMHL is involved in the development, construction\nand maintenance of aquaculture and pineapple farms and related works, including implementation of smart farming technologies. In terms\nof pineapple farming, MHL has undertaken works on a pineapple farm. As such, for the purposes of this report, the overview of the agriculture\nsector will only focus on pineapples.\n\n \n\nPineapples, which is amongst the top 3 fruits\nproduced in Malaysia, are cultivated in the open as field and garden crops and are used typically for food. There are several types of\npineapple cultivated in Malaysia, including the Josaphine, MD2, Morris, and N36 cultivants. In 2024, there was approximately 18,600 hectares\nof planted area for pineapple compared to 18,300 hectares in the previous year. The production of pineapple had increased in 2024 to\napproximately 516,870 tonnes compared to 440,848 tonnes in 2023. The states of Johor, Pahang, and Sarawak are the top 3 producers of\npineapple in Malaysia.\n\n** **\n\n**Overview of Shrimp and Prawn Aquaculture**\n\n \n\nAquaculture involves the cultivation of selected\nliving organisms in freshwater and brackish water environments, as well as the cultivation of seaweed on a commercial scale under controlled\nconditions. Commonly, aquaculture can be conducted in completely artificial facilities built onshore, as in the case of fish tanks, ponds,\naquaponics, or raceways,\n\n \n\nwhereby the living conditions are subjected\nto human control such as the water quality, feed, and temperature. Alternatively, aquaculture can also be conducted on shallow\nwaters nearshore of a body of water, which therefore allows the cultivated species to be subjected to a more naturalistic\nenvironment. In Malaysia, the aquaculture industry has developed quickly since its beginning in the 1920’s and is regarded as\nan important way of increasing local production for food security. The Malaysian Government playing an active role to encourage\nfishermen to venture into this sector to fulfil the needs arising from the increasing demand for marine products. The aquaculture\nsector contributed approximately MYR 4.30 billion or 0.3% to the country’s GDP in 2024.\n\n  \n\n46\n\n \n\n \n\nMHL is involved in the development, construction\nand maintenance of aquaculture and agriculture farms and related works, including implementation of smart farming technologies. In terms\nof aquaculture, MHL has undertaken works on a shrimp aquaculture farm. As such, for the purposes of this report, the overview of the\nagriculture sector will focus on shrimp and prawns.\n\n \n\nShrimp and prawn aquaculture is undertaken in\nbrackish water, which is water that is saltier than normal freshwater, but less salty than seawater. Aquaculture production from brackish\nwater recorded an decrease of 0.4% from 393,800 tonnes in 2023 to 392,400 tonnes in 2023. Similarly, the value of aquaculture produced\nin brackish water increased by 3% from MYR 3.3 billion in 2023 to MYR 3.4 billion in 2024.\n\n \n\nFigure 9: Production Figures of Selected Brackish\nWater Species in Malaysia, 2023-2024\n\n \n\n  \nProduction (tons) \n\nType of Brackish Water Species \n2023  \n2024 \n\nWhite Shrimp \n 34,375  \n 38,668 \n\nTiger Prawn \n 18,703  \n 22,302 \n\n * *\n\n*Source: DOF*\n\n** **\n\n**The Role of IOT in the Agriculture Industry\nIn Malaysia**\n\n \n\nThe internet of things (“IOT”) refers\nto a network of physical objects that are linked together to a system that serves to collect and exchange data. It is a form of information\ntechnology (“IT”) that is expected to drive digital connectivity and industrial development related to the Fourth Industrial\nRevolution (“4IR”). Connected by the Internet, physical objects ranging from everyday household objects to complex industrial\ntools are able to collect and transmit data through multiple methods such as radiofrequency identification (“RFID”), infrared\nsensors, and quick response (“QR”) codes, thus enabling smarter identification, location sensing, tracking, and monitoring.\nWhile physical infrastructure has traditionally been separated from IT infrastructure, IOT has enabled connectivity between the two and\nallowed both physical and IT infrastructure to function as a single unit. The emergence and growth of IOT has led to the development\nof wearable technology, smart homes and smart cities, as well as smart farming. IOT can help businesses improve their productivity and\nefficiency by automating tasks, collecting data in real time, and analyzing said data to provide insights for better decision-making.\nIOT can also help to reduce costs as a result of improved productivity and automation of tasks.\n\n \n\nWith developments in technology, farming has\ndeveloped from manual farming to farming with machinery to further use of technologies leading to smart farming. Smart farming is an\nemerging concept of farming management that utilizes modern technologies such as IOT to improve the quantity and quality of agricultural\nproducts whilst minimizing environmental impact and reducing the use of resources. Sensors can be placed in the ground or in water to\ncollect data such as soil moisture, air temperature, or water pH levels. Software can be used to analyze the collected data and provide\nfarmers with recommendations on improving processes. Due to the connectivity to IOT, farmers are then able to access the data and software\nat their own convenience. Automation also allows farmers to automatically water plants or dispense feed in ponds, thus optimizing management\nof plants and animals and leading to greater efficiency.\n\n \n\nThe adoption of smart farming in the agriculture\nand aquaculture industries in Malaysia has been relatively slow due to the perception that technologies such as IoT and artificial intelligence\n(“AI”) are expensive and not viable for the industries. Nevertheless, inroads have been made to increase the adoption of\nsmart farming in the agriculture and aquaculture industries in Malaysia. Singularity Aerotech Asia Sdn Bhd had developed the SM4RT TANITM\nplatform which utilizes IOT and cloud-based solutions to provide Malaysian farmers with digital tools to monitor soil, weather, and water\nconditions in real-time. FGV Integrated Farming Holdings Sdn Bhd, a subsidiaries of FGV Holdings Berhad which is a company listed on\nthe Main Market of Bursa Malaysia, has utilized technology such as automated transplanting machines to plant rice paddy as well as drones\nto map farming areas and monitor crop health. Similarly, Wavetree Technologies Sdn Bhd, a subsidiaries of Techna-X Berhad which is a\ncompany listed on the Main Market of Bursa Malaysia, is involved in the provision of IOT solutions such as environmental monitoring,\nwater quality sensing, and health monitoring in aquaculture.\n\n \n\n47\n\n \n\n \n\nVarious stakeholders, including the Malaysian\nGovernment, private sector companies involved in the agricultural sector and farmers have acknowledge the key benefits that comes with\nthe adoption of smart farming technologies. Like many countries, Malaysia relies on imports for food products. Some of the challenges\nfaced by the agriculture industry include labor shortages, lack of automation and technology adoption, as well as a dependence on foreign\nlabor. The Government hopes that the use of smart farming technologies will become more widespread and help to solve food security issues.\n\n \n\nThe Malaysia Digital Economy Corporation (“MDEC”),\nMalaysia’s lead agency in digital transformation has rolled out “eLadang”, a digital agriculture technology (“AgTech”)\ninitiative whereby the MDEC collaborates with players in the agriculture industry to infuse 4IR technologies to increase productivity,\nquality, and revenue while reducing operational and manpower costs. The “eLadang” initiative also aims to transform the agriculture\nindustry to a high-skilled, digitally empowered, and data driven industry to further boost Malaysia’s digital economy. In the same\nvein, the Ministry of Agriculture and Food Security (“MAFS”) has proposed for training institutes to develop skilled agricultural\nworkers. The youth have been identified as a main group that is open to accepting modern and smart farming technologies in line with\nthe 4IR.\n\n \n\nBy adopting smart farming technologies, Malaysia\ncan improve the efficiency, sustainability, and productivity of its agriculture sector, helping to achieve food security for the country.\n\n** **\n\n**Historical Market Performance and Growth Forecast**\n\n \n\nProtégé Associates has provided\nthe historical performance and growth forecast of pineapple farming in Malaysia based on a combination of resources including data from\nthe DOSM and the DOA.\n\n \n\nFigure 13: Historical Size and Growth Forecast\nfor Pineapple Farming in Malaysia, 2020-2027\n\n \n\nYear \nProduction\n(tonnes)  \nAnnual Growth\n(%) \n\n2020 \n 323,420  \n   \n\n2021 \n 375,423  \n 16.1 \n\n2023 \n 537,231  \n 43.1 \n\n2023*e* \n 553,348  \n 3.0 \n\n2024*f* \n 597,616  \n 8.0 \n\n2025*f* \n 648,413  \n 8.5 \n\n2026*f* \n 704,177  \n 8.6 \n\n2027*f* \n 764,736  \n 8.6 \n\n* *\n\n \n\n*Notes:*\n\n \n\n*1)**e denotes estimate,\nf denotes forecast*\n\n \n\n*2)**Compound annual\ngrowth rate (“CAGR”) (2023-2027) = 8.4%*\n\n* *\n\n*Source: Protégé Associates*\n\n \n\n48\n\n \n\n \n\nProtégé Associates has provided\nthe historical performance and growth forecast of shrimp and prawn aquaculture in Malaysia based on a combination of resources including\ndata from the DOSM and the DOF.\n\n \n\nFigure 14: Historical Size and Growth Forecast\nfor Shrimp and Prawn Aquaculture in Malaysia, 2020-2027\n\n \n\nYear \nProduction\n(tonnes)  \nAnnual Growth\n(%) \n\n2020 \n 48,674  \n — \n\n2021 \n 56,497  \n 16.1 \n\n2023 \n 54,888  \n 2.8 \n\n2023*e* \n 58,181  \n 6.0 \n\n2024*f* \n 61,789  \n 6.2 \n\n2025*f* \n 65,805  \n 6.5 \n\n2026*f* \n 70,214  \n 6.7 \n\n2027*f* \n 75,058  \n 6.9 \n\n* *\n\n \n\n*Notes:*\n\n* *\n\n*1)**e denotes estimate,\nf denotes forecast*\n\n \n\n*2)**CAGR (2023-2027)\n= 6.6%*\n\n* *\n\n*Source: Protégé Associates*\n\n \n\nIn 2024, the size of pineapple farming in Malaysia\nin terms of production was 516,870 tonnes, which was an increase of 17.0% from 440,848 tonnes in 2023. During the same year, the size\nof the shrimp and prawn aquaculture in Malaysia in terms of production was 60,970 tonnes, an increase of 14.9% from 53,078 tonnes in\n2023.\n\n \n\nIn the short-term (2023-2024), growth in pineapple\nfarming and shrimp and prawn aquaculture sectors is likely to be underpinned by the continued demand for agro-food products from the\nMalaysian population as well as Government initiatives in improving the nation’s food security. However, downside risks include\nthe high cost of implementing smart farming technologies and the skill gap in using and maintaining such technologies. In the medium\nto long-term (2025-2027), continued efforts by the Malaysian Government to improve the level of self-sufficiency for various food products\nincluding rice, beef, and fruits and vegetables to reduce the nation’s reliance on food imports as well as to increase the share\nof contribution of aquaculture to the production of seafood products to reduce the strain on natural resources. The Government also intends\nto digitise the economy and have introduced the National IoT Strategic Roadmap and the National 4IR Policy as well as tax incentives\nand grants to encourage the adoption of IoT, AI, and other technologies. Additionally, the use of technology in the agriculture and aquaculture\nsectors can assist farmers and producers in monitoring crops and animals more effectively, which may improve the quality of the end product.\nOn the other hand, the agriculture and aquaculture sectors may continue to be affected by lack of adoption of smart farming techniques.\nThe lack of broadband coverage and connectivity may further affect the ability to implement smart farming technology.\n\n** **\n\n**Competitive Analysis**\n\n \n\nMHL is involved in the development,\nconstruction and maintenance of aquaculture and agriculture farms and related works, including the implementation of smart farming\ntechnologies. MHL has undertaken works on shrimp aquaculture farms as well as a pineapple agriculture farm. For the\nfinancial years ended December 31, 2023 and 2024, MHL recorded revenue of MYR 70.9 million and MYR 48.4 million\nrespectively. Competitors of MHL include companies that develop and construct agriculture and aquaculture farms, players who develop\nsmart farming technologies in-house, or players that are smart farming service providers.\n\n \n\nFor the purposes of comparison, Protégé\nAssociates has selected companies registered in Malaysia involved in the provision of smart farming solutions.\n\n** **\n\n**Alliance Agrotech Sdn Bhd (“Alliance\nAgrotech”):    **Alliance Agrotech is principally involved in the provision of smart farming technologies\nsuch as drones, unmanned ground vehicles, aerial mapping, as well as agriculture consulting services to aid farmers and producers. For\nthe financial period ended September 30, 2023, Alliance Agrotech recorded revenue of MYR 0.2 million.\n\n** **\n\n**Braintree Technologies Sdn Bhd (“Braintree\nTechnologies”):    **Braintree Technologies is principally involved in the development of smart farming technologies\nutilising robotics and AI. Braintree Technologies utilises drones to inspect farms as well as map out farms, count trees, and disperse\npesticides. For the financial year ended June 30, 2023, Braintree Technologies recorded revenue of MYR 3.3 million.\n\n** **\n\n49\n\n \n\n** **\n\n**FGV Prodata Systems Sdn Bhd (“FGV Prodata\nSystems”):    **FGV Prodata Systems is a subsidiaries of FGV Holdings Berhad, which is publicly listed on\nthe Main Board of Bursa Securities Malaysia Berhad. It is primarily involved in the provision of information and communication technology\nservices for customers in various sectors such as agriculture, transportation, financial, and education. For the agriculture sector,\nFGV Prodata Systems provides solutions such as estate management and automation. For the financial year ended December 31, 2021,\nFGV Prodata Systems recorded revenue of MYR 185.7 million.\n\n** **\n\n**Hexa IoT Sdn Bhd (“Hexa IoT”):    **Hexa\nIoT is principally a provider of IoT solutions to customers in various sectors including agriculture and manufacturing. For the agriculture\nsector, Hexa IoT provides solutions such as soil, climate, and water monitoring as well as visual quality inspection. For the financial\nyear ended May 31, 2023, Hexa IoT recorded revenue of MYR 0.6 million.\n\n** **\n\n**MH Delima Sdn Bhd (“MH Delima”):    **MH\nDelima is primarily involved in the provision of teaching equipment for various sectors including agriculture and automotive. In cooperation\nwith Universiti Teknologi Mara, MH Delima has developed smart farming solutions such as water monitoring system, feeding system, recirculatory\naquaculture system, as well as fertigation and irrigation systems. For the financial year ended December 31, 2021, MH Delima recorded\nrevenue of MYR 4.9 million.\n\n** **\n\n**Redtone Digital Berhad:    **Redtone\nDigital Berhad, a company listed on the ACE Market of Bursa Malaysia Securities Bhd, is a provider of telecommunications services, managed\ntelecommunications network services, and industry digital services. Under industry digital services, Redtone Digital Berhad provides\ncloud services and application, virtual reality, and IoT for smart farming. For the financial year ended June 30, 2023, Redtone\nDigital Berhad recorded revenue of MYR 158.0 million, of which MYR 4.3 million from industry digital services.\n\n** **\n\n**Singularity Aerotech Asia Sdn Bhd (“Singularity\nAerotech Asia”):    **Singularity Aerotech Asia is primarily an engineering services and technology provider\nfor various sectors including aerospace, manufacturing, oil and gas, and agriculture. Singularity Aerotech Asia has developed SM4RT TANITM,\na platform which utilizes IOT and cloud-based solutions to monitor soil, weather, and water conditions in real-time. For the financial\nyear ended December 31, 2021, Singularity Aerotech Asia recorded revenue of MYR 7.7 million.\n\n \n\nFigure 15: Comparison between MHL and Selected\nMarket Players\n\n \n\nCompany Name\n \nLatest Available\nFinancial Year\n \nRevenue\n(MYR million)\n \n \nProfit/(Loss)\nBefore Tax\n\n(MYR million)\n \n \nProfit/(Loss)\nAfter Tax\n\n(MYR million)\n \n \nProfit/(Loss)\nBefore Tax\n\nMargin\n(%)\n \n \nProfit/(Loss)\nAfter Tax\n\nMargin\n(%)\n \n\nMegan Holdings\nLimited\n \nDecember 31, 2023\n \n \n85.2\n \n \n \n11.5\n \n \n \n8.3\n \n \n \n13.5\n \n \n \n9.7\n \n\nAlliance Agrotech\n \n30 September 2023(1)\n \n \n0.2\n \n \n \n*\n \n \n \n*\n \n \n \n0.4\n \n \n \n(0.1\n)\n\nBraintree Technologies\n \n30 June 2023\n \n \n3.3\n \n \n \n*\n \n \n \n*\n \n \n \n1.4\n \n \n \n(4.9\n)\n\nFGV Prodata Systems\n \n31 December 2021\n \n \n185.7\n(2) \n \n \n(6.1\n)\n \n \n(4.4\n)\n \n \n(3.3\n)\n \n \n(2.4\n)\n\nHexa IoT\n \n31 May 2023\n \n \n0.6\n \n \n \n*\n \n \n \n*\n \n \n \n1.2\n \n \n \n0.2\n \n\nMH Delima\n \n31 December 2021\n \n \n4.9\n \n \n \n*\n \n \n \n*\n \n \n \n0.8\n \n \n \n0.3\n \n\nRedtone Digital Berhad\n \n30 June 2023\n \n \n158.0\n(3) \n \n \n56.5\n \n \n \n40.5\n \n \n \n35.8\n \n \n \n25.6\n \n\nSingularity Aerotech Asia\n \n31 December 2021\n \n \n7.7\n \n \n \n0.2\n \n \n \n0.1\n \n \n \n2.6\n \n \n \n1.3\n \n\n * *\n\n \n\n*Notes:*\n\n* *\n\n●*The list of market\nplayers is alphabetically arranged and does not constitute as a ranking;*\n\n \n\n50\n\n \n\n \n\n●*The above companies\nare considered directly comparable as they provide smart farming products and solutions similar\nto Megan Holdings Limited. However, these comparable companies may not be identical to Megan\nHoldings Limited due to the following reasons:*\n\n \n\n*a.**Not all companies\nhave the same financial year end; and*\n\n \n\n*b.**Not all companies\ncarry out the same type of smart farming business activities, products and services as each\nother. They may provide products and solutions such as drones, unmanned ground vehicles,\nwater monitoring systems, feeding systems, irrigation systems, AI solutions, or cloud-based\nsolutions. They may also derive revenue from other non-smart farming activities such as provision\nof computer upgrading services, sales and rental of computer hardware and software, telecommunications\nservices, managed telecommunications network services.*\n\n* *\n\n*●*** denotes a figure less than MYR 100,000*\n\n \n\n*(1)**The financial period for Alliance Agrotech\nSdn Bhd was April 16, 2021 to September 30, 2022*\n\n \n\n*(2)**The revenue\nof FGV Prodata Systems includes the income generated from provision of computer upgrading\nservices (MYR 66.3 million), provision of IT services (MYR 64.8 million), sales\nof computer hardware and software (MYR 21.8 million), training services (MYR 0.2 million),\nand rental of computer hardware and software (MYR 32.6 million).*\n\n \n\n*(3)**The revenue\nof Redtone Digital Berhad includes the income generated from telecommunications services\n(MYR 40.8 million), managed telecommunications network services (MYR 80.1 million),\nnon-operating spectrum related income (MYR 32.8 million), and industry digital services\n(for smart farming) (MYR 4.3 million).*\n\n* *\n\n*Source: Megan Holdings Limited,\nAnnual Report of Redtone Digital Berhad and Companies Commission of Malaysia*\n\n** **\n\n**Market Share**\n\n \n\nIn 2024, there is a total area of approximately\n18,600 hectares of planted area of pineapples in Malaysia. MHL currently services 1 agriculture farm, namely a pineapple farm, with a\ntotal area of approximately 121 hectares, thus giving them a market share of approximately 0.65% in terms of total planted area of pineapples.\n\n \n\nIn 2024, there were 113,109 units of brackish\nwater aquaculture culture systems in Malaysia is a total area of 8,231 approximately 8,555 hectares of brackish water aquaculture culture\nsystems in Malaysia. MHL currently services 2 aquaculture farms with a total area of 292 hectares, thus giving them a market share of\n3.41% in terms of total area.\n\n** **\n\n**Key Industry Drivers**\n\n* *\n\n*Growing Population in Malaysia*\n\n \n\nIn 2023, the population in Malaysia was estimated\nat 32.7 million compared to 32.6 million in 2021. The population is expected to reach 41.5 million in 2040. The demand\nfor agriculture and aquaculture produce is positively correlated to the growth in population as a higher population will lead to demand\nfor food as a basic need. This is likely to drive the agriculture and aquaculture sectors as more products such as vegetables, fruits,\nfish, and shrimp need to be produced to meet the demands of the population. This will in turn spur the growth of smart farming technology\nin the agriculture and aquaculture sectors to reduce operational costs and labour demands while ensuring sufficient food for the population.\n\n* *\n\n*The Malaysian Government’s Prioritisation\nof Food Security*\n\n \n\nTo meet the needs of the country’s\npopulation, Malaysia has been importing food products from other countries. Food products imported by Malaysia include meat and meat\nproducts, dairy and dairy products, fish, rice, vegetables, fruits, and sugar. In 2023, Malaysia’s imported MYR\n75.71 billion worth of food compared to MYR 44.61 billion worth of food exports, resulting in a trade deficit of MYR\n31.10 billion. In the preceding year, Malaysia imported MYR 63.65 billion worth of food compared with an export of food\nworth MYR 38.70 billion, resulting in a trade deficit of MYR 24.95 billion. Furthermore, Malaysia ranked 41st\non the GSFI with a heavy reliance on imports for essential food products, which signifies that the country does not produce enough\nof food to feed its people. More recently, the impact of the COVID-19 pandemic, geopolitical conflict, climate, and currency has led\nto an increase in food input prices. The poultry industry in particular was affected as the price of animal feed (which Malaysia\nsignificantly imports) led to a shortage in poultry and eggs, affecting the accessibility and ability for consumers to purchase said\nproducts.\n\n \n\n51\n\n \n\n \n\nThe Malaysian Government is committed to tackle\nthe issue by outlining its strategies and plans in line with the National Food Security Policy Action Plan 2021 – 2025\nand the National Agro-Food Policy 2021 – 2030. Under the National Agro-Food Policy 2021 – 2030, Malaysia\naims to improve the level of self-sufficiency of food products such as rice from 63.0% in 2019 to 80.0% in 2030, fruits from 78.2% to\n83.0%, beef from 22.3% to 50.0%, and vegetables from 44.6% to 79.0% over the same period. The Government also aims to increase yield\nfrom aquaculture activities to reduce pressure on demand for natural water resources. The abovementioned policies are being implemented\nto bolster the food production with the adoption of modern technologies, thus reducing the import dependency. This will likely drive\nthe agriculture and aquaculture sectors moving forward, which in turn bodes well for the use of IOT in the aforementioned sectors.\n\n* *\n\n*Government’s Digitization Effort*\n\n \n\nBesides making food security a national priority,\nthe Malaysian Government is also prioritizing the digitization of the economy and have launched the National 4th Industrial\nRevolution Policy (“National 4IR Policy”) to address digitization. The National 4IR Policy focuses on 10 key sectors, such\nas agriculture, manufacturing, healthcare, education, and construction. In terms of the agriculture industry, key initiatives include\nthe establishment of 4IR agricultural technology application centre as well as establishing a 4IR agriculture facilitation fund to further\nencourage the adoption of emerging technologies such as drone technology and IoT to enhance efficiency and productivity in farming. An\nadditional initiative in the National 4IR Policy is investment in basic infrastructure in rural areas to enable the adoption of 4IR technologies.\nIn addition, the Malaysian Government had previously introduced the National IoT Strategic Roadmap. The roadmap, launched in 2014, aims\nto modernize farming and hence improve the overall efficiency and productivity of the agriculture industry.\n\n \n\nIn support of digitization, the Malaysian\nGovernment is also providing tax incentives to further encourage the adoption of 4IR technology amongst market players. Under the\nRevised Budget 2023, the Government reviewed the Accelerated Capital Allowance (“ACA”) to include the agriculture\nindustry in addition to the manufacturing and services industries. There are also tax incentives for food production projects\nincluding modern environmentally controlled agriculture up to the year 2025. Aside from tax incentives, the Government is also\nproviding grants to spur the modernization of the agricultural sector by providing a matching grant of MYR 50.0 million to\nencourage the automation in the agriculture sector through the use of robotics and AI.\n\n \n\nThe Government had also announced that MYR\n1.00 billion worth of funding under the Agro-Food Financing Scheme will be made available via Bank Negara Malaysia\n(“BNM”) to help agro-food entrepreneurs in increasing their production capacity. In addition to that, the Malaysian\nGovernment has announced an allocation of MYR 10.0 million to expand the e-Ladang program via MDEC. The program aims to\nonboard train more small-scale farmers and producers to adapt to technology, thus increasing their awareness of the latest farming\ntechnologies.\n\n* *\n\n*Smart Farming Technology Improves the Quality\nof Agriculture and Aquaculture Products*\n\n \n\nMost of the agriculture and aquaculture products\nin Malaysia vary in terms of quality. However, with most consumers being more health conscious, there is a rising demand for quality\nagriculture and aquaculture products. As a result, industry players in the agriculture and aquaculture sectors are looking to solutions\nto further improve the quality and standards of their produce.\n\n \n\nWith the advancement in technology, smart farming\npractices that incorporate the usage of IoT and big data analytics will aid farmers and aquaculture practitioners to better understand\nthe quality of their products via real-time monitoring and analytics of the collected data. For example, the usage of drone technology\nin the agriculture sector has allowed farmers to be more efficient in their crop management. The mapping capabilities of drones has enabled\nthe farmers to measure and obtain data such as the water stress level and the physiological features of the crop in a more accurate fashion.\nThis move has allowed them to make more informed decisions and maintain the quality of their produce. Smart farming has also enabled\nmarket players in the aquaculture industry to utilize technology such as IoT, big data analytics and AI to monitor the water quality\nand to increase the efficiency in the prevention of diseases in fishes and other aquaculture produce. As a result, they will be able\nto deliver products that are of better quality to consumers. The ability to produce higher quality products is likely to spur the adoption\nof smart farming technology to meet consumer needs.\n\n** **\n\n52\n\n \n\n** **\n\n**Potential Industry Challenges**\n\n* *\n\n*Lack of Adoption of Smart Farming*\n\n \n\nDespite the Malaysian Government’s effort\nin promoting adoption of smart farming, most industry players in the country still rely on conventional methods of farming due to the\nhigh cost of implementation and the limited knowledge towards smart farming.\n\n \n\nThere are costs that needs to be incurred for\na full implementation of smart farming technology. The tools and equipment involved in the deployment of the technology such as drones,\nIoT tools, and big data analytics software require upfront capital expenditure. On top of that, there are maintenance and servicing costs\ninvolved in ensuring the entire system functions optimally. Farmers and producers may be unable to or unwilling to invest to set up and\nutilize smart farming technologies as they may not be able to visualize the improvements in efficiency and productivity that such technologies\nwill offer them.\n\n \n\nDespite the Malaysian Government’s efforts\nin promoting adoption of smart farming technologies, the desire for changes in the farming practices is still low. Farmers and producers\nstill rely on conventional technologies and methods due to limited infrastructure and knowledge compared to more developed countries.\nMalaysian farmers may feel uncertain and insecure about adopting smart farming practices due to their unfamiliarity with them. Malaysian\nfarmers, especially those in rural or remote areas, may still be unaware of smart farming practices. Limited access to technology and\nknowledge, especially in remote locations, further hinders their ability to adopt necessary farming technologies.\n\n* *\n\n*Skill Gap in Using and Maintaining Smart Farming\nTechnologies*\n\n \n\nEffective implementation of smart farming technologies\nrequires knowledge and technical competency. However, there is a skill gap amongst stakeholders including the farmers and producers.\nAs a relatively new technology in Malaysia that is not yet widely adopted, the number of professionals with the necessary knowledge is\nlimited.\n\n \n\nTo fully leverage the benefits of smart farming\ntechnology, farmers and producers must be able to grasp and apply the technology seamlessly to monitor their crops optimize the yield.\nWithout proper understanding, they may not experience improvement, while incurring expenses related to investment and maintenance in\nthe smart farming equipment.\n\n* *\n\n*Insufficient Coverage and Connectivity in\nCertain Areas in Malaysia*\n\n \n\nThe implementation of smart farming technologies\nrequires network connectivity to connect various parts such as sensors, computers, and automated machinery and equipment. Insufficient\ncoverage and low connectivity in certain areas in Malaysia is likely to negatively affect adoption of smart farming technologies. According\nto Malaysia Communication and Multimedia Commission, the nationwide fixed-broadband penetration rate stood at 48.6% as of 1Q 2023. On\na related note, the fixed broadband penetration rate is relatively low in several states in Malaysia, particularly in states such as\nKelantan, Pahang and Terengganu in the East Coast, and Sabah and Sarawak in Malaysia. As of 1Q 2023, the fixed broadband penetration\nrate for Kelantan, Pahang and Terengganu is merely 24.8%, 30.9% and 35.3% respectively. Meanwhile, the fixed broadband penetration rate\nfor the Malaysian states of Sarawak and Sabah is only 38.9% and 29.7% respectively. Nationwide adoption of the smart farming technology\nmay be hindered by the lack of connectivity as network and broadband infrastructure are crucial for the effective implementation of said\ntechnology. Additionally, the current network and broadband infrastructure may not be adequate for the full implementation of smart farming\ntechnologies, particularly in transmitting large volumes of data collected.\n\n \n\nTo address this, the Malaysian Government\nhas pledged to improve the digital infrastructure as outlined in the 12th Malaysian Plan. The Government is\nallocating MYR 28.00 billion to improve the existing 4G network with investment by both the public and private sectors. On top\nof that, an additional MYR 15.00 billion is allocated to expedite the implementation of 5G network, with investment primarily\nfrom the private sector. Besides that, the Government through Jalinan Digital Negara (“JENDELA”) is targeting an 80.0%\ndeployment of 5G network services in populated areas nationwide by the end of 2023 through the implementation of JENDELA\nPhase 2 (2023 – 2025).\n\n \n\nNevertheless, though efforts are being made to\nimprove network connectivity across the nation, the current infrastructure in Malaysia is not optimal for a full implementation of smart\nfarming and is likely to affect the growth of the agriculture and aquaculture sectors.\n\n* *\n\n*Network Security Threats Due to the Sophistication\nin Technology*\n\n \n\nThe proliferation of data via multiple devices,\nplatforms and networks has heightened the risk of cyber-attacks beyond computers. As Internet usage expands via the application of IoT\ndevices and networks, there is a heightened risk of data breaches jeopardizing people’s identity, privacy and other vital information.\nThe risk also deters farmers and producers from adopting of smart farming technologies, fearing data theft and unexpected network security\nbreaches that could compromise confidential information such as crop yields and production capacity. Network security breaches may also\nexpose farmers and producers to sabotage if the smart farming technologies are maliciously misused. Established smart farming firms need\nto invest in safer and more secure agricultural technology software to address such threats.\n\n** **\n\n53\n\n \n\n** **\n\n**Barriers to Entry**\n\n* *\n\n*Capital Expenditure Requirements*\n\n \n\nThe implementation and maintenance of IoT devices\nand software systems in smart farming requires investment. To fully implement smart farming in agriculture or aquaculture ventures, funds\nmust be allocated for initial capital expenditure. Prospective entities venturing into the smart farming technology field, either as\nend-users of the technology or agricultural solutions provider, must be prepared to incur costs relating to the procurement of the relevant\ntools and equipment. Such costs include purchasing sensors, setting up infrastructure for network connectivity, data analytics to analyze\nthe data collected from sensors, and the software required to manage and monitor operations.\n\n \n\nIn addition to the initial capital expenditure\nrequirements, maintenance costs associated with smart farming technologies can be expensive. Machinery and equipment used in smart farming\nrequire regular maintenance to perform optimally. Further to routine maintenance, hardware and software updates may be required to keep\nabreast with technological advancements. Moreover, the machinery and equipment are used outdoors and may be exposed to wear and tear,\nresulting in repair and replacement costs for farmers and producers.\n\n* *\n\n*Training Cost to Equip Stakeholders with Necessary\nCompetency*\n\n \n\nAs smart farming is a relatively new technology,\nequipping stakeholders with the necessary competency in smart farming techniques, including IoT and automation technology, is likely\nto come with high training costs. As a result, the firms that intend to implement smart farming is expected to incur costs in training\ntheir employees to be well-versed in the application of the different technologies. This additional cost poses a significant barrier\nto entry for prospective market players.\n\n** **\n\n**Outlook of the Agriculture (Pineapple) and\nAquaculture Sectors in Malaysia**\n\n \n\nThe size of pineapple farming in Malaysia in\nterms of production was estimated to be 516,870 tonnes in 2024 while shrimp and prawn aquaculture in Malaysia in terms of production\nwas estimated to be 60,970 tonnes in the same year. Shrimp and prawn aquaculture recorded a positive growth of 14.9% while pineapple\nfarming recorded a growth of 17.0% in 2024. Both sectors are expected to grow steadily in the future. The growth is likely to be underpinned\nby demand for agriculture and aquaculture products in line with a growing population. Malaysia’s population in 2023 was estimated\nto be 32.7 million and is expected to reach 41.5 million in 2040, thus leading to higher demand for agri-food products. The\nMalaysian Government’s prioritization of food security will also drive growth in the sectors over the forecast period. In order\nto reduce reliance on imports for food products, the Government has implemented various strategies and plans such as the National Food\nSecurity Policy Action Plan 2021 – 2025 and the National Agro-Food Policy 2021 – 2030. Support from the\nGovernment in terms of increasing digitization in the country is also expected to boost the sectors moving forward. The Government aims\nto encourage the adoption of 4IR technologies, including in the agriculture and aquaculture sectors. Usage of smart farming technologies\nis expected to reduce labor, improve productivity, improve product quality while leading to increased revenue for farmers and producers.\nThis will also aid the country in achieving food security moving forward.\n\n \n\nOn the flip side, the agriculture and aquaculture\nsectors may face headwinds such as lack of adoption of smart farming, skills gap in implementing smart farming technologies, insufficient\ncoverage and connectivity across Malaysia, and network security threats. Lack of adoption of smart farming may arise from reasons such\nas lack of knowledge and high cost of implementation. Lack of knowledge means that farmers and producers may not be aware that there\nare indeed smart farming technologies to help them improve productivity and efficiency. On the other hand, farmers and producers aware\nof such technologies may not be able to implement them due to the high costs involved. Nevertheless, lack of adoption of smart farming\ntechnologies may affect the ability of the agriculture and aquaculture sectors to grow in the forecast period. There is still a skills\ngap in implementing and utilizing smart farming technologies as they are considered to be relatively new and not yet widely adopted in\nMalaysia. Network and broadband infrastructure are crucial for the effective implementation of said technology due to the connected nature\nof sensors, monitoring systems, and automated machines used in smart farming. As such, insufficient network coverage and connectively\nwill likely affect the adoption of smart farming technologies and therefore limit the growth of the sectors.\n\n \n\nThe connected nature of smart farming technologies\nmay be at risk of network security breaches. Lack of network security is likely to dampen the adoption of smart farming technologies\nand as such limit the growth of the sectors in future. Growth of the industry may also be dampened by the barriers to entry such as capital\nexpenditure requirements and high training costs.\n\n \n\nNevertheless, the agriculture and aquaculture\nsectors in Malaysia are expected to remain resilient throughout the forecast period. Protégé Associates has forecast pineapple\nfarming to grow at a CAGR of 8.4% from 553,348 tonnes in 2023 to 764,736 tonnes in 2027. The shrimp and prawn aquaculture is forecast\nto grow at a CAGR of 6.6% from 58,181 tonnes in 2023 to 75,058 tonnes in 2027.\n\n \n\n54\n\n \n\n** **\n\n**REGULATIONS**\n\n \n\nDue to the geographic diversity of our operations\nand services, our operations are subject to a variety of rules and regulations. We are subject to all of the local regulations generally\napplicable to businesses in the jurisdictions in which we operate, including with respect to employment, health and safety, competition,\ntax and other regulations. We set out below brief descriptions of certain regulations particularly significant for our operations.\n\n** **\n\n**Malaysia**\n\n \n\nOur operations are subject to a variety of rules\nand regulations. We primarily operate in Malaysia and are therefore subject to all of the local regulations generally applicable to businesses\nin Malaysia, including with respect to licensing, taxation, employment, data protection, anti-money laundering and other regulations.\nWe set out below brief descriptions of certain regulations particularly significant for our operations.\n\n* *\n\n*Licensing*\n\n \n\nIn general, there is a requirement to obtain\nbusiness premise licenses from the relevant local councils and authorities in accordance with the Local Government Act 1976 and\nthe relevant by-laws and regulations for operating business premises in Malaysia. Most local or district councils have\nLicensing of Trades, Businesses and Industries By-Laws which stipulate, among others, that no person shall carry on any\ntrade, business or industry in any place or premise within the respective district council unless he is licensed. Each set\nof by-laws applies within the boundaries of each local or district council. It is an offence for any person to use any\npremise for operating any business premise without a business premise license, which on conviction, is punishable with a fine not\nexceeding MYR 2,000 or to imprisonment for a term not exceeding one year or both and in the case of a continuing offence, to a fine\nnot exceeding MYR 200 for each day during which the offence is continued after conviction. The business premise license issued\nis renewable on an annual basis and we plan to renew it.\n\n \n\nWe primarily operate from our office located\nat B-01-07, Gateway Corporate Suites, Gateway Kiaramas, No.1, Jalan Desa Kiara, 50480 Mont Kiara, Kuala Lumpur, Malaysia and we hold\na valid business license issued by Dewan Bandaraya Kuala Lumpur for our office premise.\n\n \n\nPursuant to Section 25 (1) of the Malaysian\nConstruction Industry Development Board Act 1994, no person shall carry out or complete, undertake to carry out or complete any\nconstruction work or hold himself out as a contractor, unless he is registered with the Malaysian Construction Industry Development Board\n(“CIDB Malaysia”). As a company whose principal business is in the development, construction and maintenance of aquaculture\nfarms and related works, to the best of our knowledge, we are registered with CIDB Malaysia under the Company (Non-Contractor) category\napplicable to consultants, project owners and/or developers. We intend to register with CIDB Malaysia as a contractor under the Company\n(Contractor) category in the near future once we meet certain requirements.\n\n* *\n\n*Contracts*\n\n \n\nThe Contracts Act 1950 (the “CA 1950”)\nis the principal legislation governing contracts in Malaysia. The contracts as appearing herein and/or entered into by our subsidiaries\nare legally binding and enforceable under the CA 1950 until the completion or termination thereof.\n\n* *\n\n*Employment*\n\n \n\nThe Employment Act 1955 (“EA 1955”)\nis the principal law that regulates labor relations and employees in Malaysia, and governs the terms and conditions of employment such\nas working hours, holidays and rest periods, wages, overtime and other employment conditions.\n\n \n\nIn addition, an employer is under legal obligations\nto make statutory contributions as per the requirements under the Employees Provident Fund Act 1991 (“EPF Act”) towards\nan employee pension fund, the Employees Social Security Act 1969 (“ESSA 1969”) towards social security for employees,\nand the Employment Insurance System Act 2017 (“EIS”) for protection against occupational injuries including occupational\ndiseases and commuting accidents.\n\n \n\nIn Malaysia, the Employment (Restriction) Act 1968\nprovides that a non-citizen shall not be employed in any business in Malaysia without a valid employment permit. A foreign employee is\nrequired to obtain a work permit such as employment pass or professional visit pass issued by the Department of Immigration, Malaysia\nin order to carry out employment in Malaysia.\n\n \n\n55\n\n \n\n \n\nWe are in compliance and intend to continue to\nbe compliant with all of the aforesaid legislation regarding employment.\n\n \n\nSection 19 of the EA 1955 provides that\nevery employer shall pay to each of his employees no later than the seventh day after the last day of any wage period.\nSubject to the contract of service, the wage period will normally be one month. If there is no wage period mentioned in the contract\nof service, the wage period shall be deemed to be one month. Under section 12 of the EA 1955, on termination, either the employer or\nthe employee may give notice or payment in lieu of notice to terminate the contract of service. The length of such notice shall\ndepend on the tenure of the employment of the employee.\n\n \n\nRegardless of whether the employee falls under\nthe purview of the EA 1955, the employer is under legal obligations to make statutory contributions as per the requirements\nunder the Employees Provident Fund Act 1991 (the “EPF Act”), the Employees Social Security Act 1969 (the “ESSA\n1969”), and the Employment Insurance System Act 2017 (the “EIS”). The EPF Act imposes statutory obligation on\nemployers and employees to make contribution to the employees’ provident fund, or the EPF, which is a pension fund that is mandatory\n(with a few exceptions) for all Malaysian employees. The EPF is a saving scheme for retirement purposes of an employee.\n\n \n\nThe ESSA 1969 provides for social security for\nemployment injury contingencies in favor of employees and is administered by the Social Security Organization. The Social Security Organization\n(the “SOCSO”) was established as one of the government departments under the Ministry of Human Resources to administer, implement\nand enforce the ESSA 1969 and the Employees’ Social Security (General) Regulations 1971. The Employment Injury Scheme under the\nSOCSO provides protection to employees against occupational injuries including occupational diseases and commuting accidents. Employers\nare responsible for reporting all work-related accidents that befall their workers within forty-eight hours of notification. The\nESS Act provides the right to claim benefits such as invalidity pension, disablement benefit, dependent’s benefit, funeral benefit\nand survivors’ pension. With effect from June 1, 2016, employers are required to make monthly deductions and contributions\nfor all employees depending on their ages but regardless of their monthly wages, and generally calculated based on their monthly wages.\n\n \n\nIf the employer, (a) fails to pay any contribution\nor any part thereof which is payable by him under the ESSA 1969 or fails to pay within the time prescribed by regulations any interest\npayable under section 14A of the ESSA 1969; (b) deducts or attempts to deduct from the wages of an employee the whole or any part\nof the employer’s contribution; (c) in contravention of section 52 of the ESSA 1969 reduces the wages or any privileges or\nbenefits admissible to an employee; (d) in contravention of section 53 of the ESSA 1969 or any regulation dismisses, discharges,\nreduces or otherwise punishes an employee; (e) fails or refuses to submit any return or accident report required by the regulations,\nor makes a false return or report; (f) obstructs any Inspector appointed under section 12 of the ESSA 1969 and includes the Director\nGeneral and every Deputy Director General or any other official of the Social Security Organization in the discharge of his duties; or\n(g) is guilty of any contravention of or non-compliance with any of the requirements of the ESSA 1969 or the rules or the regulations\nin respect of which no special penalty is provided, he shall be punishable with imprisonment for a term which may extend to two years,\nor with fine not exceeding MYR 10,000 or with both.\n\n \n\nThe EIS is an act administered by the Social\nSecurity Organization to provide certain benefits and a re-employment program for insured persons in the event of loss of employment.\nThe EIS will provide temporary financial aid for up to six months for retrenched employees until they find new employment. Under\nthe EIS, every employee and employer is required to pay mandatory monthly contributions to the Social Security Organization in accordance\nwith the prescribed rates.\n\n \n\nIn Malaysia, the Employment (Restriction) Act 1968\nprovides that a non-citizen shall not be employed in any business in Malaysia without a valid employment permit. A foreign employee is\nrequired to obtain a work permit such as employment pass or professional visit pass issued by the Department of Immigration, Malaysia\nin order to carry out employment in Malaysia.\n\n* *\n\n*Environment*\n\n \n\nThe Environmental Quality Act 1974 (“EQA\n1974”) is the principal law that governs the prevention, abatement, control of pollution and enhancement of the environment in\nMalaysia. The EQA 1974 prescribes the prohibition and control of various forms of pollutions as well as the applicable penalties for\nany violations thereof, and the licensing requirement for activities which requires the movement, storage or deposit of waste.\n\n \n\nOur current operations do not require any license\nto be issued under the EQA 1974. Additionally, any potential actions by the relevant governmental entities for any alleged violations\nof the EQA 1974 are primarily made against our customer as the owner/occupier of the premise where the project is undertaken. Nevertheless,\nprecautionary measures are taken by us and our subcontractors to ensure compliance with the EQA 1974 when undertaking the projects to\navoid incurring any liability either by us, our customer, or our subcontractor. The precautionary measures taken are such as, but not\nlimited to, avoid conducting any open burning, identifying any risk of waste discharge in or the surrounding area of the project premise,\nsubmission of an environmental impact assessment report to the relevant authorities prior to the commencement of the works, and ensuring\nthat the works are conducted in accordance with industry norms and practices.\n\n* *\n\n56\n\n \n\n \n\n*Personal Data Protection*\n\n \n\nUnder the Personal Data Protection Act 2010\nof Malaysia (“Malaysian PDPA”), organizations are required to (i) obtain consent from individuals prior to collecting,\nusing or disclosing their personal data, unless the limited exceptions under the Malaysian PDPA arises; (ii) inform individuals\nin writing in two languages (i.e. English and the national language) of, amongst other things, the purposes for which their personal\ndata will be processed and the third parties to whom their personal data will be disclosed; and (iii) ensure that the personal data\ncollected will be processed in a safe and secure manner in accordance with the security standards prescribed under the Personal Data\nProtection Standard 2015.\n\n \n\nAn organization that fails to comply with\nthe provisions under the Malaysian PDPA may, if found guilty, be liable to a financial penalty up to a maximum of MYR 500,000 and\nany person who, at the time of the commission of the offence, was a director, chief executive officer, chief operating officer,\nmanager, secretary or any person in a managerial capacity may also be jointly or severally liable with the organization and be\nsubject to imprisonment of up to a maximum of five years.\n\n* *\n\n*Anti-Money Laundering and Counter-Terrorism\nFinancing*\n\n \n\nThe Anti-Money Laundering, Anti-Terrorism Financing\nand Proceeds of Unlawful Activities Act 2001 (“AMLA 2001”) prohibits money laundering and terrorism financing activities.\nAny person who (a) engages in a transaction that involves proceeds of unlawful activity; (b) uses proceeds of unlawful activity;\n(c) removes from or brings into Malaysia proceeds of unlawful activity; or (d) conceals, disguises, or impedes the establishment\nof the true nature, origin, location, movement, disposition, title of, rights with respect to, or ownership of, proceeds of unlawful\nactivity, commits a money laundering offence under the AMLA 2001.\n\n \n\nIn addition, a reporting institution under the\nFirst Schedule of the AMLA 2001 is obliged to observe the anti-money laundering and counter financing terrorism requirements and\nstandards, which include reporting and record-keeping duties, such as submitting suspicious transaction reports, implementing risk-based\napplication, and conducting customer due diligence.\n\n \n\nNeither we nor our subsidiaries are deemed to\nbe a reporting institution. Nevertheless, we are required to comply with the provisions under the AMLA 2001.\n\n \n\n**4.D. Property, Plant and Equipment**\n\n** **\n\n**Intellectual Property**\n\n \n\nWe have not registered any intellectual property\nrights. We were not involved in any proceedings with regard to, and we have not received notice of any claims of infringement of, any\nintellectual property rights that may be threatened or pending, in which we may be involved either as a claimant or respondent.\n\n \n\n**Facilities**\n\n \n\nWe are headquartered in Malaysia and operate\nin a corporate office located at B-01-07, Gateway Corporate Suites, Gateway Kiaramas, No.1, Jalan Desa Kiara, 50480 Mont Kiara, Kuala\nLumpur, Malaysia. Our corporate office consists of approximately 1,195 square feet, which is our own asset. We believe that our existing\noffice is generally adequate to meet our current needs, but we expect to seek additional space as needed to accommodate future growth.\nShould we need additional space, we believe we will be able to obtain additional space on commercially reasonable terms.\n\n** **\n\n**Insurance**\n\n \n\nWe currently only maintain a life insurance policy\neffected in favor of Mr. Darren Hoo as well as a property insurance policy covering our corporate headquarters at B-01-07, Gateway\nCorporate Suites, Gateway Kiaramas, No.1, Jalan Desa Kiara, 50480 Mont Kiara, Kuala Lumpur, Malaysia. We will continue to review and\nassess our risk portfolio and make necessary and appropriate adjustments to our insurance practices to align with our needs and with\nindustry practice in Malaysia and in the market in which we operate."}