{"url_path":"/sec/mgn/10-k/2026/item-5","section_key":"item-5","section_title":"Item 5 Operating and Financial Review and Prospects**","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-05-15","source_url":"https://www.sec.gov/Archives/edgar/data/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":13532,"has_tables":true,"body_markdown":"**Item\n5. Operating and Financial Review and Prospects**\n\n \n\n57\n\n \n\n** **\n\n**MANAGEMENT’S DISCUSSION AND\nANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS**\n\n* *\n\n*The following discussion and analysis of our\nfinancial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes\nincluded elsewhere in this annual report. This discussion and analysis and other parts of this annual report contain forward-looking\nstatements based upon current beliefs, plans and expectations that involve risks, uncertainties and assumptions. Our actual results and\nthe timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of several\nfactors, including those set forth under “Risk Factors” and elsewhere in this annual report. You should carefully read the\n“Risk Factors” section of this annual report to gain an understanding of the important factors that could cause actual results\nto differ materially from our forward-looking statements.*\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 and supply and installation of smart industrial technologies and\nsolutions. Our operations are based in Malaysia. Since our inception in 2020, we have strived to establish ourselves as a trusted and\nexperienced provider of shrimp farm related maintenance services in Malaysia. As of the date of this annual report, we have been carrying\nout a series of upgrading and maintenance works for aquaculture farms, all of which are located in Tawau, Sabah, Malaysia. This constitutes\n15.5%, 70.5%  and 47.7% of our revenue for the financial years ended December 31, 2023, 2024 and 2025, respectively. Besides that,\nwe also carried out upgrading works for a pineapple plantation farm located at Kota Tinggi, Johor, Malaysia in 2024 and 2025. This constituted\n22.6%, Nil% and Nil% of our revenue for the financial years ended December 31, 2023, 2024 and 2025, respectively.\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 are currently\ninvolved in the development and construction of a shrimp hatchery center in Semporna, Sabah, Malaysia, where we have been engaged to\nundertake the construction of hatchery buildings and related functional facilities. We are also assisting in the development of a 111-acre\nshrimp farm at Tawau, Sabah, Malaysia. The design and development of new farms comprised 61.7%, 70.5% and Nil% of our revenue for the\nfinancial years ended December 31, 2023, 2024 and 2025, respectively. From time to time, we also assist our customers in sourcing for\nbuilding materials and machineries available for rental for use on their farms. This comprised 0.2%, 0.2% and 51.9% of our revenue for\nthe financial years ended December 31, 2023, 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\nSince our inception, our business has\ngenerated significant growth in revenue and profits. Our revenue decreased from MYR 85,237,802 to MYR 60,293,562 for the year ended\nDecember 31, 2024, representing a decrease of 29.3% due to completion of projects. Our revenue increase from MYR 60,293,562 for the\nyear ended December 31, 2024 to MYR 83,885,403 for the year ended December 31, 2025, representing an increase of MYR 23,591,841 or\n39.1%, primarily attributable to the industrial-supplies revenue which contributed MYR 43,523,625 (December 31, 2024: MYR 105,030),\nand growth in upgrading works amount to MYR 39,986,359 (December 31, 2024: MYR 17,660,000), partially offset by the cessation of new\naquaculture and agriculture farm development projects; December 31, 2025: Nil (December 31, 2024: MYR 42,492,542).\n\n \n\n**Factors Affecting Our Financial Condition\nand Results of Operations**\n\n \n\nOur results of operations have been and will\ncontinue to be affected by several factors, including those set out below:\n\n** **\n\n**We are dependent on a small number of key\ncustomers for continued sale of our services.**\n\n \n\nOur revenue is concentrated among a small number\nof customers. In the financial year ended December 31, 2023, 2024 and 2025, our top four customers accounted for approximately 87.0%,\n100% and 87.2% of our revenue, respectively. If any of these customers were to reduce or cease their business with the Company, it could\nhave a material adverse impact on the Company’s financial condition and results of operations.\n\n \n\n58\n\n \n\n \n\nThe Company has taken steps to mitigate its customer\nconcentration risk by diversifying its customer base and developing long-term relationships with its key customers. However, the Company\nremains exposed to customer concentration risk, and any significant changes in the business of its key customers could have a material\nadverse impact on its business.\n\n \n\nIn addition, the Company’s business is\ndependent on the continued success of its customers. If any of the Company’s customers were to experience financial difficulties\nor cease operations, it could have a material adverse impact on the Company’s business.\n\n \n\nThe Company is aware of the risks associated\nwith customer concentration and is taking steps to mitigate these risks. However, investors should be aware of the potential for customer\nconcentration to have a material adverse impact on the Company’s business.\n\n \n\nWe expect to generate recurring revenue from\nexisting customers for the next two to three years due to the fact that our current customers are the main players in Malaysia shrimp\nindustry, and this trend of customer concentration is likely to be maintained in the next two to three years. We are currently trying\nto diversify our customers, but we believe that the contribution to our revenue from any such new customers will not initially be as\nsignificant as that from our current customers.\n\n** **\n\n**The primary substantial portion of our\nrevenues will be derived from Malaysia.**\n\n \n\nIn the financial years ended December 31, 2023,\n2024 and 2025, all our revenue derived from operations in Malaysia. We anticipate that sales of our services in Malaysia will represent\nthe majority of our revenues in the near future. Any significant decline in the condition of the economy of Malaysia could adversely\naffect consumer demand for our services, among other things, which in turn would have a material adverse effect on our business and financial\ncondition. Such a decline would occur from numerous factors outside of our control including geopolitical disputes, regional and global\neconomic trends and climatic and environmental disasters.\n\n** **\n\n**We depend on a small number of individuals\nwho constitute our current management.**\n\n \n\nWe highly depend on the services of our senior\nmanagement team including Mr. Darren Hoo and Mr. Ng Kai Tie. The death, disability or other loss of members of our senior management\nteam could result in us being unable to replace such member on reasonable economic terms or in a time period that meets our proposed\nplan of operations, if we are able to do so at all. We do not carry key-employee insurance to compensate us for the loss of any such\nindividuals.\n\n \n\nOur ability to recruit, retain, and motivate\nkey employees may be hampered by market conditions. Competition for such employees can be intense, and the inability to attract and retain\nthe additional qualified employees required to expand our activities, or the loss of current key employees could adversely affect our\noperating efficiency and financial condition. In addition, our growth strategy may place strains on our management who may become distracted\nfrom day-to-day duties.\n\n** **\n\n59\n\n \n\n \n\n**Critical Accounting Policies and Use of Estimates**\n\n \n\nBasis of presentation\n\n \n\nThe accompanying consolidated financial statements\nhave been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”)\nand applicable rules and regulations of the Securities and Exchange Commission (“SEC”).\n\n \n\nPrinciples of consolidation\n\n \n\nThe consolidated financial statements include\nthe financial statements of the Company and its subsidiaries. The subsidiaries are an entity (including a structured entity), directly\nor indirectly, controlled by the Company. The financial statements of the subsidiaries are prepared for the same reporting period as\nthe Company, using consistent accounting policies. All transactions and balances among the Company and its subsidiaries have been eliminated\nupon consolidation.\n\n \n\nUse of estimates and assumptions\n\n \n\nThe preparation of consolidated financial statements\nin conformity with U.S. GAAP requires management to make judgements, estimates and assumptions that affect the application of policies\nand reported amounts of assets and liabilities as at the date of the consolidated financial statements and reported amounts of income\nand expenses during the reporting periods. The estimates and associated assumptions are based on historical experience and various other\nfactors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about\ncarrying values of assets and liabilities that are not readily apparent from other sources. Significant accounting estimates reflected\nin the Company’s consolidated financial statements include, but not limited to, allowance for expected credit losses, revenue recognition\nand uncertain tax position. Changes in facts and circumstances may result in revised estimates. Actual results could differ from those\nestimates, and as such, differences may be material to the consolidated financial statements.\n\n \n\nRisks and uncertainties\n\n \n\nThe main operations of the Company are located\nin Malaysia. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by political,\neconomic, and legal environments in Malaysia, as well as by the general state of the economy in Malaysia. The Company’s results\nmay be adversely affected by changes in the political, regulatory and social conditions in Malaysia. Although the Company has not experienced\nlosses from these situations and believes that it is in compliance with existing laws and regulations including its organization and\nstructure, such experience may not be indicative of future results.\n\n \n\nForeign currency translation and transaction\n\n \n\nThe accompanying consolidated financial statements\nare presented in the Malaysia Ringgit (“MYR”), which is the reporting currency of the Company. The functional currency of\nthe Company in the Cayman Islands is United States Dollars (“USD”), its other subsidiaries which are incorporated in Malaysia\nare Malaysia Ringgit (“MYR”), which are their respective local currencies based on the criteria of ASC 830, “Foreign\nCurrency Matters”.\n\n \n\nIn the consolidated financial statements of the\nCompany, transactions in currencies other than the functional currency are measured and recorded in the functional currency using the\nexchange rate in effect at the date of the transaction. At the balance sheet date, monetary assets and liabilities that are denominated\nin currencies other than the functional currency are translated into the functional currency using the exchange rate at the balance sheet\ndate. All gains and losses arising from foreign currency transactions are recorded in the consolidated statements of comprehensive income\nduring the year in which they occur.\n\n \n\n60\n\n \n\n \n\nThe following table outlines the currency exchange\nrates that were used in creating the consolidated financial statements in this report:\n\n \n\n \n \n \n**December\n31,\n2023**\n \n \n**December\n31,\n2024**\n \n \n \n**December\n31,\n2025**\n \n\nYear-end spot rate\n \n \nUSD 1 = MYR 4.5903\n \n \nUSD 1 = MYR 4.4680\n \n \n \nUSD 1 = MYR 4.0560\n \n\nAverage rate\n \n \nUSD 1 = MYR 4.5577\n \n \nUSD 1 = MYR 4.5741\n \n \n \nUSD 1 = MYR 4.0882\n \n\n \n\nConvenience translation\n\n \n\nTranslations of balances in the consolidated\nbalance sheets, consolidated statements of comprehensive income, consolidated statements of changes in shareholders’ equity\nand consolidated statements of cash flows from MYR into USD as of December 31, 2025 are solely for the convenience of the readers\nand are calculated at the rate of USD 1.00 = MYR 4.0560, representing the exchange rate set forth in the H.10 statistical release of\nthe Federal Reserve Board on December 31, 2025. No representation is made that the MYR amounts could have been, or could be,\nconverted, realized or settled into USD at such rate, or at any other rate.\n\n \n\nFair value measurements\n\n \n\nThe Company’s financial instruments, including\ncash and cash equivalents, investments in marketable securities, account receivables, contract assets, deposits and other receivables,\naccount payables, amount due to a director, accrued liabilities and other payables and operating lease liabilities, have carrying amounts\nthat approximate their fair values due to their short maturities. ASC Topic 820, “Fair Value Measurements and Disclosures,”\nrequires disclosing the fair value of financial instruments held by the Company. ASC Topic 825, “Financial Instruments,”\ndefines fair value and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure\nrequirements for fair value measures. The carrying amounts reported in the consolidated balance sheets are a reasonable estimate of their\nfair values because of the short period between the origination of such instruments and their expected realization and their current\nmarket rate of interest. The three levels of valuation hierarchy are defined as follows:\n\n \n\n●Level 1 inputs\nto the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities\nin active markets.\n\n   \n\n●Level 2 inputs\nto the valuation methodology include quoted prices for similar assets and liabilities in\nactive markets, and inputs that are observable for the assets or liability, either directly\nor indirectly, for substantially the full term of the financial instruments.\n\n \n\n●Level 3 inputs\nto the valuation methodology are unobservable and significant to the fair value.\n\n \n\nThe following table presents information about\nthe Company’s financial assets and liabilities that were measured at fair value on a recurring basis as of December 31, 2023, 2024\nand 2025 and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value.\n\n \n\n  \nDecember 31,\n2023  \nQuoted\nPrices in\nActive Market\n\n(Level 1)  \nSignificant\nOther\nObservable\n\nInput\n(Level 2)  \nSignificant\nOther\nUnobservable\n\nInput\n(Level 3) \n\n  \nMYR  \nMYR  \nMYR  \nMYR \n\nAssets: \n    \n    \n    \n   \n\nInvestments in marketable securities \n 4,434,792  \n 4,434,792  \n —  \n — \n\n \n\n  \nDecember 31,\n2024  \nQuoted\nPrices in\nActive Market\n\n(Level 1)  \nSignificant\nOther\nObservable\n\nInput\n(Level 2)  \nSignificant\nOther\nUnobservable\n\nInput\n(Level 3) \n\n  \nMYR  \nMYR  \nMYR  \nMYR \n\nAssets: \n   \n   \n   \n  \n\nInvestments in marketable securities \n 22,594,500  \n 22,594,500  \n —  \n — \n\n \n\n61\n\n \n\n \n\n  \nDecember 31,\n2025  \nQuoted\nPrices in\nActive Market\n\n(Level 1)  \nSignificant\nOther\nObservable\n\nInput\n(Level 2)  \nSignificant\nOther\nUnobservable\n\nInput\n(Level 3) \n\n  \nMYR  \nMYR  \nMYR  \nMYR \n\nAssets: \n   \n   \n   \n  \n\nInvestments in marketable securities \n 29,183,340  \n 29,183,340  \n —  \n — \n\n  \n\nFair value estimates are made at a specific point\nin time based on relevant market information about the financial instruments. These estimates are subjective in nature and involve uncertainties\nand matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect\nthe estimates.\n\n \n\nCash and cash equivalents\n\n \n\nCash and cash equivalents primarily consist of\nbank deposits with original maturities of three months or less, which are unrestricted as to withdrawal and use. Cash and cash equivalents\nalso consist of funds earned from the Company’s operating revenues which were held at third party platform fund accounts which\nare unrestricted as to immediate use or withdrawal. The Company maintains most of its bank accounts in Malaysia.\n\n \n\nRestricted cash\n\n \n\nRestricted cash represents the fixed deposits\nthat have been pledged to lenders as security for the Company’s outstanding bank loan.\n\n \n\nAccounts receivable, net\n\n \n\nAccounts receivable include trade accounts\ndue from customers. Accounts are considered overdue after 90 days from the date of invoice. In evaluating the collectability of\nreceivable balances, the Company considers specific evidence including aging of the receivable, the client’s payment history,\nits current creditworthiness, current economic trends, industry trend analysis, and the credit history and financial conditions of\nthe customers. The Company regularly reviews the adequacy and appropriateness of the allowance for expected credit losses. Account\nbalances are charged off against the allowance after all means of collection have been exhausted and the likelihood of collection is\nnot probable. As of December 31, 2023, the Company made allowance for expected credit losses amounted to MYR 281,479\n(USD 61,320) for accounts receivable based on the Company’s expected credit losses methodology for the measurement of credit\nlosses. As of December 31, 2024, the Company made allowance for expected credit losses amounted to MYR 700,521 (USD 156,786) for\naccounts receivable based on the Company’s expected credit losses methodology for the measurement of credit losses. As of\nDecember 31, 2025, the Company’s reversal of the allowance for\nexpected credit losses amounted to MYR 982,000 (USD 242,110) for accounts receivable based on the Company’s expected credit\nlosses methodology for the measurement of credit losses. Therefore, the management of the Company is of the view that the\nexpected credit loss recognised as of December 31, 2024 was sufficient. As of 31 December 2025, there is no balances overdue for\nmore than 30 days. Management is of the view that the expected credit loss balance as at 31 December 2025 remains adequate.\n\n \n\nIn assessing whether the contract meets the criteria\nin paragraph 606-10-25-1, the Company assesses whether it is probable that the Company will collect substantially all of the consideration\nto which it will be entitled in exchange for the services that will be transferred to the customer. This includes assessing the entity’s\nhistory with this class of customer in accordance with paragraph 606-10-55-3B and its business practice of stopping service in response\nto customer nonpayment in accordance with paragraph 606-10-55-3C. Consequently, as part of this analysis, the entity does not consider\nthe likelihood of payment for services that would not be provided in the event of the customer’s nonpayment because the entity\nis not exposed to credit risk for those services.\n\n \n\n62\n\n \n\n \n\nContract assets, net\n\n \n\nContract assets are recorded when the progress\nto completion revenue earned on contracts exceeds amounts actually billed under the contract.\n\n \n\nDeposits and other receivables\n\n \n\nDeposits are mainly for rent, utilities and\nmoney deposited with certain vendors. These amounts are refundable and bear no interest. The short-term deposits usually have a\none-year term and are refundable upon contract termination. Other receivables mainly represented advances to subcontractors of MYR\n22,809,654, MYR 11,249,508 and MYR 25,890,637 (USD 6,383,293) as of December 31, 2023, 2024 and 2025, respectively, for the\nsubcontracting construction services. As of December 31, 2025, the balance of advances to subcontractors of MYR 25,890,637\n(USD 6,383,293) primarily related to ongoing upgrading projects in Tawau, Sabah and Kota Tinggi, Johor that had not yet reached\npercentage-of-completion recognition milestones at the reporting date. Management assessed recoverability based on project progress\ncertifications and subcontractor delivery schedules and considered no impairment to be required.\n\n \n\nDeferred initial public offering costs\n\n \n\nThe Company follows the requirements of the FASB\nASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A — “Expenses of Offering”. Deferred\ninitial public offering (“IPO”) costs consist of underwriting, legal and other expenses incurred through the balance sheet\ndate that are directly related to the intended IPO. Deferred IPO costs will be charged to shareholders’ equity netted against the\nproceeds upon the completion of the IPO.\n\n \n\nInvestment in marketable securities\n\n \n\nInvestments in marketable securities, net, consist\nof investments in listed shares, which are listed on Bursa Malaysia. Marketable securities are accounted for under ASC 321 and reported\nat their readily determinable fair values as quoted by market exchanges with changes in fair value recorded in other income in the consolidated\nstatements of comprehensive income. All changes in a marketable security’s fair value are reported in earnings as they occur, as\nsuch, the sale of a marketable security does not necessarily give rise to a significant gain or loss. Unrealized gains/(losses) due to\nfluctuations in fair value are recorded in the consolidated statements of comprehensive income. Declines in fair value below cost deemed\nto be other-than-temporary are recognized as impairments in the consolidated statements of comprehensive income.\n\n \n\nProperty and equipment, net\n\n \n\nProperty and equipment are stated at cost less\naccumulated depreciation and any impairment losses. Depreciation is computed using the straight-line method over the estimated useful\nlives of the assets. The estimated useful lives are as follows:\n\n \n\n  \nExpected useful\n\nlives\n\nOffice furniture and fittings \n10 years\n\nOffice equipment \n10 years\n\nMotor vehicle \n5 years\n\nRenovations \n10 years\n\nFreehold property \n50 years\n\n \n\n63\n\n \n\n \n\nExpenditures for maintenance and repairs are\ncharged to earnings as incurred, while additions, renewals and betterments, which are expected to extend the useful life of assets, are\ncapitalized. The cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any\ngain or loss is included in the consolidated statements of comprehensive income. The Company also re-evaluates the periods of depreciation\nto determine whether subsequent events and circumstances warrant revised estimates of useful lives.\n\n \n\nImpairment for long-lived assets\n\n \n\nLong-lived assets, including property and equipment\nwith finite lives are reviewed for impairment whenever events or changes in circumstances (such as a significant adverse change to market\nconditions that will impact the future use of the assets) indicate that the carrying value of an asset may not be recoverable. The Company\nassess the recoverability of the assets based on the undiscounted future cash flows the assets are expected to generate and recognize\nan impairment loss when estimated undiscounted future cash flows expected to result from the use of the asset plus net proceeds expected\nfrom disposition of the asset, if any, are less than the carrying value of the asset. If an impairment is identified, the Company would\nreduce the carrying amount of the asset to its estimated fair value based on a discounted cash flows approach or, when available and\nappropriate, to comparable market values. For the years ended December 31, 2023, 2024 and 2025, no impairment of long-lived assets was\nrecognized.\n\n \n\nAccounts payable\n\n \n\nAccounts payable represents trade payables to\nvendors.\n\n \n\nContract liabilities\n\n \n\nContract liabilities are recorded when amounts\nbilled under a contract exceed the progress towards completion of revenue earned under the contract. These payments are non-refundable\nand are recognized as revenue when our performance obligation is satisfied.\n\n \n\nAccrued liabilities and other payables\n\n \n\nAccrued liabilities and other payables are primarily\ninclude salaries payable as well as other accrual and payable.\n\n \n\nLeases\n\n \n\nASC 842 supersedes the lease requirements in\nASC 840 “Leases”, and generally requires lessees to recognize operating and finance lease liabilities and corresponding operating\nlease right-of-use assets on the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty of\ncash flows arising from leasing arrangements. All leases in the Group are accounted for as operating leases.\n\n \n\nThe Company determine if an arrangement is a\nlease at inception. On the Company’s balance sheet, the corporate office lease is included in operating lease right-of-use (“ROU”)\nasset, current portion of operating lease liability and operating lease liability, net of current portion.\n\n \n\nOperating lease ROU assets represent the right\nto use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising\nfrom the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease\npayments over the lease term. For leases that do not provide an implicit rate, The Company used the incremental borrowing rate based\non the information available at commencement date in determining the present value of lease payments. The Company used the implicit rate\nwhen readily determinable. Lease expense for lease payments is recognized on a straight-line basis over the lease term.\n\n \n\nSignificant judgment may be required when determining\nwhether a contract contains a lease, the length of the lease term, the allocation of the consideration in a contract between lease and\nnon-lease components, and the determination of the discount rate included in the office lease. The Company reviewed the underlying objective\nof each contract, the terms of the contract, and consider the current and future business conditions when making these judgments.\n\n \n\n64\n\n \n\n \n\nAny lease with a term of 12 months or less is\nconsidered short-term. As permitted by ASC 842, short-term leases are excluded from the ROU assets and lease liabilities on the consolidated\nbalance sheets. Consistent with all other operating leases, short-term lease expense is recorded on a straight-line basis over the lease\nterm.\n\n \n\nThe Company evaluates the impairment of its right-of-use\nassets consistent with the approach applied for its other long-lived assets. The Company reviews the recoverability of its long-lived\nassets when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment\nof possible impairment is based on its ability to recover the carrying value of the asset from the expected undiscounted future pre-tax\ncash flows of the related operations. The Company has elected to include the carrying amount of finance and operating lease liabilities\nin any tested asset group and include the associated lease payments in the undiscounted future pre-tax cash flows. For the years ended\nDecember 31, 2023, 2024 and 2025, the Company did not have any impairment loss against its operating lease right-of-use assets.\n\n \n\nThe Company enters into lease agreement for its\nmotor vehicle. A lease is classified as a finance lease if it meets any of the following criteria at commencement:\n\n \n\n1.Ownership of the underlying\nasset transfers to the Company by the end of the lease term.\n\n \n\n2.The lease grants the\nCompany a purchase option that is reasonably certain to be exercised.\n\n \n\n3.The lease term covers\na major part of the remaining economic life of the asset (generally ≥75%).\n\n \n\n4.The present value of\nlease payments equals or exceeds substantially all of the asset’s fair value (generally\n≥90%).\n\n \n\n5.The underlying asset\nis specialized such that it has no alternative use to the lessor at the end of the lease\nterm.\n\n \n\nInitial Recognition\n\n \n\nFor finance leases, the Company recognizes a\nright-of-use (ROU) asset and a corresponding lease liability on the balance sheet at the lease commencement date. The lease liability\nis measured at the present value of future lease payments, discounted using the rate implicit in the lease (if readily determinable)\nor the Company’s incremental borrowing rate. The ROU asset is initially measured at the amount of the lease liability, adjusted\nfor:\n\n \n\n●Any prepaid lease\npayments,\n\n \n\n●Initial direct\ncosts incurred by the Company (e.g., commissions),\n\n \n\n●Less any lease\nincentives received.\n\n \n\nSubsequent Measurement\n\n \n\n●The ROU asset\nis amortized on a straight-line basis over the shorter of the lease term or the asset’s\nuseful life. Amortization expense is recognized in the income statement within operating\ncosts.\n\n \n\n●The lease liability\nis reduced as payments are made. Interest expense is recognized using the effective interest\nmethod and reported separately in the income statement.\n\n \n\n65\n\n \n\n \n\nBank loan\n\n \n\nBank loan comprises a long-term loan. Bank loan\nis recognized initially at fair value, net of transaction costs incurred. Bank loan is subsequently stated at amortized cost; any difference\nbetween the proceeds net of transaction costs and the redemption value is recognized in profit or loss over the period of the borrowings\nusing the effective interest method.\n\n \n\nThe bank loan as of December 31, 2023, 2024 and\n2025 are set out below:\n\n \n\nBank loan \n**Principal\namount**  \n**Maturity\ndate** \nPeriod \nInterest rate \n**Third party\nguarantee** \n**Directors’\npersonal guarantee** \n\n  \n **MYR**  \n  \n  \n  \n  \n **MYR** \n\n**December 31, 2023** \n    \n  \n  \n  \n  \n   \n\nMaybank(1) Commodity Murabahah Term Financing-i \n 388,113  \nNovember 30, 2033 \n10 years \nBase Financing Rate minus 2.00% \nNil \n 388,113 \n\nDecember 31, 2024 \n    \n  \n  \n  \n  \n   \n\nMaybank(1)\nCommodity Murabahah Term Financing-i \n 358,715  \nNovember 30, 2033 \n10 years \nBase Financing Rate minus 2.00% \nNil \n 358,715 \n\nDecember 31, 2025 \n    \n  \n  \n  \n  \n   \n\nMaybank(1) Commodity\nMurabahah Term Financing-i \n 325,982  \nNovember 30, 2033 \n10 years \nBase Financing Rate minus 2.00% \nNil \n 325,982 \n\n \n\n \n\n(1)MMSB entered into a loan agreement with Maybank Islamic\nBerhad on April 5, 2023.\n\n \n\nFor the years ended December 31, 2023, 2024 and\n2025, the effective interest rate of the Company’s bank loan was 4.65% for all three years.\n\n \n\nOther than directors’ personal guarantee,\nthe bank loan are secured by freehold property and bank loan assignment over an insurance policy for a director of the Company.\n\n \n\nRevenue recognition\n\n \n\nThe Company elected to adopt Accounting Standards\nCodification (ASC) Topic 606, Revenue from Contracts with Customers (ASC 606), effective as of April 1, 2020. Accordingly, the consolidated\nfinancial statements for the years ended December 31, 2023, 2024 and 2025 are presented under ASC 606. The Company recognizes revenue\nto depict the transfer of promised goods or services (that is, an asset) to customers in an amount that reflects the consideration to\nwhich the Company expects to receive in exchange for those goods or services. An asset is transferred when the customer obtains control\nof that asset. It also requires the Company to identify contractual performance obligations and determine whether revenue should be recognized\nat a point in time or over time, based on when control of goods and services transfers to a customer. The Company elected the modified\nretrospective method which required a cumulative adjustment to retained earnings instead of retrospectively adjusting prior periods.\nThe adoption of ASC 606 did not have a material impact on the Company’s consolidated financial statements.\n\n \n\nRevenue from contracts with customers is recognized\nwhen control of goods or services is transferred to the customers at an amount that reflects the consideration to which the Company expects\nto be entitled in exchange for those goods or services.\n\n \n\nIn assessing whether the contract meets the criteria\nin paragraph 606-10-25-1, the Company assesses whether it is probable that the Company will collect substantially all of the consideration\nto which it will be entitled in exchange for the services that will be transferred to the customer. This includes assessing the Company’s\nhistory with this class of customer in accordance with paragraph 606-10-55-3B and its business practice of stopping service in response\nto customer nonpayment in accordance with paragraph 606-10-55-3C. Consequently, as part of this analysis, the entity does not consider\nthe likelihood of payment for services that would not be provided in the event of the customer’s nonpayment because the entity\nis not exposed to credit risk for those services.\n\n \n\nWhen the consideration in a contract includes\na variable amount, the amount of consideration is estimated to which the Company will be entitled in exchange for transferring the goods\nor services to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable\nthat a significant revenue reversal in the amount of cumulative revenue recognized will not occur when the associated uncertainty with\nthe variable consideration is subsequently resolved. Currently, the Company’s contracts do not include such variable amount. During\nthe year, there is no provision for onerous contracts.\n\n \n\n66\n\n \n\n \n\nThe Company generates its revenues primarily\nfrom development of new aquaculture and agriculture farms, upgrading of aquaculture and agriculture farms, sales of industrial supplies\nand rental of machinery to its customers.\n\n \n\nGenerally, revenue is recognized when the Company\nhas negotiated the terms of the transaction, which includes determining either the overall fixed price, or the fixed price for each performance\nobligation in the form of a service or a product, the service or product has been delivered to the customer, no obligation is outstanding\nregarding that service or product, and the Company is reasonably assured that funds have been or will be collected from the customer.\n\n \n\nTo achieve that core principle, the Company applies\nthe five steps defined under Topic 606:\n\n \n\n1.identify the contract(s)\nwith a customer;\n\n \n\n2.identify the performance\nobligations in the contract;\n\n \n\n3.determine the transaction\nprice;\n\n \n\n4.allocate the transaction\nprice to the performance obligations in the contract; and\n\n \n\n5.recognize revenue when\n(or as) the entity satisfies a performance obligation.\n\n \n\nThe determination of whether revenues should\nbe reported on a gross or net basis is based on the Company’s assessment of whether it is the principal or an agent in the transaction\nin accordance with ASC 606-10-55 and depends on whether the promise to the customer is to provide the products or to facilitate a sale\nby a third party. The nature of the promise depends on whether the Company control the products prior to transferring it. When the Company\ncontrols the products, the promise is to provide and deliver the products and revenue is presented gross. When the Company does not control\nthe products, the promise is to facilitate the sale and revenue is presented net. To distinguish a promise to provide products from a\npromise to facilitate the sale from a third party, the Company considers the guidance of control in ASC 606-10-55-37A and the indicators\nin 606-10-55-39. The Company considers this guidance in conjunction with the terms in its arrangements with both suppliers and customers.\n\n \n\nRevenue is presented in the consolidated statements\nof comprehensive income. The Company does not offer rights of refund of previously paid or delivered amounts, rebates, warranty, rights\nof return or price protection. In all instances, the Company limits the amount of revenue recognized to the amounts for which it has\nthe right to bill its’ customers.\n\n \n\nThe Company currently generates its revenue by\nthe below sources:\n\n* *\n\n*(a) Development of new aquaculture and agriculture\nfarms*\n\n \n\nThe Company currently generates revenue from\nthe development of new aquaculture and agriculture farms. The Company is typically contracted through invitation to tender from or corporate\nnegotiation with existing or potential customers in Malaysia. The Company designs and develops aquaculture and agriculture farms based\non customers’ specific needs. The contract does not provide any post-contract customer warranty, support, or upgrades and there\nis no retention withheld by customers. The duration of the development period primarily between 6 to 18 months.\n\n \n\nIn general, the design and builds of farming\nmainly consist of four components:\n\n \n\n●Irrigation System\n\n \n\n●Earthwork\n\n \n\n●Water Discharge\nSystem\n\n \n\n●Electrical Works\n\n \n\n67\n\n \n\n \n\nThe design of aquaculture and agriculture farms\ncan have a significant impact on the productivity, efficiency, and sustainability of the farm. Some important factors to consider when\ndesigning aquaculture and agriculture farms include site selection, infrastructure design and sustainable practices.\n\n \n\nThe Company recognizes revenue using the percentage-of-completion\nmethod, based primarily on contract costs incurred to date compared to total estimated contract costs. The percentage-of-completion method\n(an input method) is the most representative depiction of the Company’s performance because it directly measures the value of the\nservices or products transferred to the customer.\n\n \n\nPrincipal versus agent considerations. The Company\nevaluates each revenue stream under ASC 606-10-55-36 through 55-40 to determine whether it controls the specified goods or services before\nthey are transferred to the customer, and accordingly whether it acts as principal (recognizing revenue gross) or as agent (recognizing\nrevenue net of supplier costs). The Company applies the three control indicators in ASC 606-10-55-37A as follows.\n\n \n\nFor the Company’s development, upgrading\nand renovation of aquaculture and agriculture farms (collectively, the “project-based services”), management has concluded\nthat the Company acts as principal because: (i) the Company is primarily responsible for fulfilling the promise to the customer, including\noverall project design, construction supervision, integration of materials and subcontractor labor into a single completed deliverable,\nand acceptance and warranty of the finished works; (ii) the Company bears inventory risk on building materials and equipment from the\npoint of procurement until they are integrated into the customer’s site, and bears performance risk on subcontractor work until\ncustomer acceptance; and (iii) the Company has discretion in establishing the price charged to the customer, which is negotiated on a\nproject basis and is not a fixed pass-through of supplier or subcontractor cost. Accordingly, subcontractor charges, building materials,\nlabor and equipment used in the project-based services are recognized on a gross basis within revenue and cost of revenue.\n\n \n\nFor the Company’s sales of industrial supplies,\nthe Company likewise acts as principal. Although goods are, in certain cases, delivered directly from the supplier to the customer’s\nsite to reduce handling and transportation cost, the Company (i) is the contracting party with the customer and is primarily responsible\nfor the specification, acceptance and post-delivery support of the goods supplied; (ii) takes legal title to the goods on shipment from\nthe supplier and bears inventory and credit risk until the customer accepts the goods and pays the Company; and (iii) negotiates pricing\nwith the customer independently of supplier cost, with the customer having no direct contractual recourse against the supplier. The narrower\ngross margin observed on this revenue stream during the years presented reflects the commodity nature and competitive pricing of the\nunderlying products and start-up pricing of the MTSB business, and does not, in management’s judgment, alter the conclusion under\nASC 606-10-55-37A. Management reassesses these conclusions on an annual basis and whenever the underlying contractual or operational\narrangements change. The performance obligation to transfer the completed products are not separately identifiable, which is evidencing\nby the fact that the Company provides a significant service of integrating the goods and services into products for which the customer\nhas contracted. As such, the Company’s contracts typically contain one single performance obligation to complete a defined construction\nproject. The Company currently does not have any modification of contract and the contract currently does not have any variable consideration.\nThe transaction price is clearly identifiable within service contracts. Historically, any contract acquisition costs have been immaterial;\nin the event that such costs arose, the Company expenses such costs incurred as periodic cost.\n\n \n\nRecognition of revenue and cost of revenue for\nconstruction projects requires significant judgment by management, including, among other things, estimating total costs expected to\nbe incurred to complete a project and measuring progress toward completion. Management reviews contract estimates regularly to assess\nrevisions of estimated costs to complete a project and measurement of progress toward completion. Management believes it maintains reasonable\nestimates based on prior experience; however, many factors contribute to changes in estimates of contract costs. Accordingly, estimates\nmade with respect to uncompleted projects are subject to change as each project progresses and better estimates of contract costs become\navailable. All contract costs are recorded as incurred, and revisions to estimated total costs are reflected as soon as the obligation\nto perform is determined. In the event that an estimated losses on uncompleted contracts (there is none for the years ended December\n31, 2023, 2024 and 2025) may occur based on evidence that indicates that the estimated total cost of a contract exceeds its estimated\ntotal revenue, regardless of the stage of completion, a provision for the loss of the full amount will be recognized to the result of\noperations. Contract costs consist of costs on contracts, including labor, machine rental cost, materials, and amounts payable to subcontractors.\n\n \n\nThe Company’s contracts set forth payment\nterms that require the customer to make payment within 90 days of billing which is triggered by the Company reaching the milestone to\nbill the customer. Management does not believe that its contracts include a significant financing component because the period between\ndelivery or the contracting services to the customer and the time of payment does not typically exceed one year.\n\n \n\nThe Company has no obligations for returns, refunds,\nor similar obligations of its projects with customers.\n\n \n\nFor the years ended December 31, 2023, 2024 and\n2025, the Company is not aware of any material claims against the Company in relation to development of new aquaculture and agriculture\nfarms provided.\n\n \n\nThe Company has elected to apply the practical\nexpedient to recognize the incremental costs of obtaining a contract as an expense if the amortization period of the asset would have\nbeen one year or less. The Company considers the guidance of control in ASC 340-40, there were no incremental costs incurred for the\nyears ended December 31, 2023, 2024 and 2025.\n\n \n\n68\n\n \n\n \n\n*(b) Upgrading of aquaculture and agriculture\nfarms*\n\n \n\nRevenue from upgrading service contracts, which\nrequire the Company to provide technical support and labor services for upgrading of aquaculture and agriculture farms during the contracted\nperiods, is generally between 3 to 18 months. For aquaculture farms (particularly shrimp farms), the focus areas of our works include\nensuring proper water levels and quality, aeration and circulation systems and water intake, distribution, and discharge systems of shrimp\nponds. For the agriculture farms (particularly pineapple farms), the focus area of our works is soil preparation which involves the improvement\nof soil structure and aeration. The upgrading services considered to be one single performance obligation since the work procedures are\ninterrelated and affect the functions of each other like the seawater intake system, water distribution system, shrimp ponds, cables,\npaddle wheels, and water discharge system and work in conjunction are to ensure the farm operates effectively.\n\n \n\nThe Company recognizes revenue from upgrading\nof aquaculture and agriculture farms using the percentage-of-completion method, based primarily on contract costs incurred to date compared\nto total estimated contract costs. The percentage-of-completion method (an input method) is the most representative depiction of the\nCompany’s performance because it directly measures the value of the services or products transferred to the customer. Subcontractor,\nbuilding materials, labor and equipment are included in revenue and cost of revenue. The performance obligation to transfer the completed\nproducts are not separately identifiable, which is evidencing by the fact that the Company provides a significant service of integrating\nthe goods and services into products for which the customer has contracted. As such, the Company’s contracts typically contain\none single performance obligation to complete a defined upgrading services. The Company currently does not have any modification of contract\nand the contract currently does not have any variable consideration. The transaction price is clearly identifiable within service contracts.\nHistorically, any contract acquisition costs have been immaterial; in the event that such costs arose, the Company expenses such costs\nincurred as periodic cost.\n\n \n\nThe Company’s contracts set forth payment\nterms that require the customer to make payment within 90 days of billing which is triggered by the Company reaching the milestone to\nbill the customer. Management does not believe that its contracts include a significant financing component because the period between\ndelivery or the contracting services to the customer and the time of payment does not typically exceed one year.\n\n \n\nThe Company has no obligations for returns, refunds,\nor similar obligations of its projects with customers.\n\n \n\nFor the years ended December 31, 2023, 2024 and 2025,\nthe Company is not aware of any material claims against the Company in relation to upgrading of new aquaculture and agriculture farms\nprovided.\n\n \n\nThe Company has elected to apply the practical\nexpedient to recognize the incremental costs of obtaining a contract as an expense if the amortization period of the asset would have\nbeen one year or less. The Company considers the guidance of control in ASC 340-40, there were no incremental costs incurred for the\nyears ended December 31, 2023, 2024 and 2025.\n\n* *\n\n*(c) Sales of industrial supplies*\n\n \n\nThe Company also generates revenue from sales\nof industrial supplies. The Company typically receives purchase orders from its customers which will set forth the terms and conditions\nincluding the transaction price, products to be delivered, terms of delivery, and terms of payment. The terms serve as the basis of the\nperformance obligations that the Company must fulfil in order to recognize revenue. The key performance obligation is the delivery of\nthe industrial supplies to the customer at their specified location at which point control to that asset passes to the customer. The\ncompletion of this earning process is evidenced by a written customer acceptance indicating receipt of the product. Typical payment terms\nset forth in the invoice is 30 days from the invoice date.\n\n \n\nThe industrial supplies were delivered directly\nto customers by the suppliers and relevant shipping and handling costs for the delivery will be charged to cost of revenue once incurred.\n\n \n\nThe transaction price does not include variable\nconsideration related to returns or refunds as the contracts do not include provisions that allow for sales refunds or returns of products.\nFor the years ended December 31, 2023, 2024 and 2025 and, the Company is not aware of any material claims against the Company in relation\nto the sale of industrial supplies.\n\n \n\nThe Company is a principal and records revenue\non a gross basis as the Company is primarily responsible for fulfilling the goods or services to the customers, is subject to inventory\nrisk, has discretion in establishing pricing and the ability to direct the control of the promised goods before transferring those goods\nto the customers.\n\n \n\n69\n\n \n\n \n\n*(d) Rental of machinery*\n\n \n\nRental of machinery income are mainly leasing\nof excavators and cranes from third party supplier, whose equipment are ready to use without, or willing to modification. The Company\nthen sublets these excavators and cranes to customers with the desired effect of generating a spread between its leasing cost and rental\nincome to generate profit margins. Under the terms and conditions of the agreements that company enters, the Company acts a principal\nin the transaction because the Company takes the risk of loss from lack of rental income if itself has leased the machinery as a lessee,\nbut has not procured a lessee to fill the to rent the machineries; accordingly, the Company recognizes rental income using the gross\nmethod.\n\n \n\nThe rental agreements vary with regard to length\nand payment terms, usually one to six months, subject to the mutual consent of the Company and the lessee. Billing will be raised on\nmonthly basis and payment terms set forth in the invoice is 60 days from the invoice date.\n\n* *\n\n*(e) Renovation*\n\n \n\nRevenue from renovation contracts is recognized\nover time as control of the renovated asset is transferred to the customer. The company uses the percentage-of-completion method (input\nmethod) based on costs incurred relative to total estimated costs to measure progress toward satisfying performance obligations. Revenue\nis recognized only when it is highly probable that a significant reversal will not occur.\n\n \n\nThe Company’s contracts set forth payment\nterms that require the customer to make payment within 90 days of billing which is triggered by the Company reaching the milestone to\nbill the customer. Management does not believe that its contracts include a significant financing component because the period between\ndelivery or the contracting services to the customer and the time of payment does not typically exceed one year.\n\n \n\nThe Company has no obligations for returns, refunds,\nor similar obligations of its projects with customers.\n\n \n\nFor the years ended December 31, 2023, 2024 and\n2025, the Company is not aware of any material claims against the Company in relation to renovation services provided.\n\n \n\nThe Company has elected to apply the practical\nexpedient to recognize the incremental costs of obtaining a contract as an expense if the amortization period of the asset would have\nbeen one year or less. The Company considers the guidance of control in ASC 340-40, there were no incremental costs incurred for the\nyears ended December 31, 2023, 2024 and 2025.\n\n \n\nAdditionally, the Company, acting as a lessor,\naccounts for its leases in accordance to ASC 842. Based on the terms and conditions of the leases set forth in rental agreements. The\nCompany has recognized the leases as operating leases. The lessees have no right to terminate the rental agreements.\n\n \n\nOther income\n\n \n\nInterest income is mainly generated from savings\nand time deposits and is recognized on an accrual basis using the effective interest method.\n\n \n\nCost of revenue\n\n \n\nCost of revenue consists primarily of buildings\nmaterial cost, labor cost, machine rental cost and sub-contracting cost. Sub-contracting fee includes both subcontracting costs and other\noutside costs associated with performance under contracts with customers. Labor costs represent the portion of salaries and wages incurred\nin connection with the production of deliverables under contracts with customers.\n\n \n\n70\n\n \n\n \n\nGeneral and administrative expenses\n\n \n\nGeneral and administrative expenses mainly consist\nof staff cost, depreciation, office supplies and upkeep expenses, travelling and entertainment, legal and professional fees and other\nmiscellaneous administrative expenses.\n\n \n\nEmployee compensation\n\n \n\nThe full-time employees of the Company’s\nsubsidiaries in Malaysia are entitled to the government mandated defined contribution plan, such as social security, employee provident\nfund, employment insurance, and human resource development fund, as required by labor laws in Malaysia. The Company is required to accrue\nand pay for these benefits based on certain percentages of the employees’ respective salaries, subject to certain ceilings, in\naccordance with the relevant government regulations, and make cash contributions to the government mandated defined contribution plan.\n\n \n\nSegment reporting\n\n \n\nASC Topic 280, Segment Reporting, establishes\nstandards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure\nas well as information about geographical areas, business segments and major customers in financial statements for details on the Company’s\nbusiness segments. The Company uses the “management approach” in determining reportable operating segments.\n\n \n\nThe management approach considers the internal\norganization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance\nas the source for determining the Company’s reportable segments. Management, including the chief operating decision maker, reviews\noperation results by the revenue of different products or services. Based on management’s assessment, the Company has determined\nthat it has only three operating segments:\n\n \n\na.)Aquaculture and agriculture;\n\n \n\nb.)Industrial solutions;\nand\n\n \n\nc.)Investment in marketable\nsecurities\n\n \n\nAll assets are based in Malaysia and all revenue\nare generated from Malaysia.\n\n \n\nIn November 2023, the FASB issued ASU 2023-07,\n“Segment Reporting (Topic 280)”, Improvements to Reportable Segment Disclosures to improve reportable segment disclosure\nrequirements through enhanced disclosures about significant segment expenses on an interim and annual basis. ASU 2023-07 became effective\nstarting January 1, 2024, and was applied on a retrospective basis to all periods presented. The Company has adopted this standard for\nthe fiscal year 2024 annual financial statements thereafter.\n\n \n\nIncome taxes\n\n \n\nThe Company accounts for income taxes in accordance\nwith U.S. GAAP for income taxes. The charge for taxation is based on the results for the fiscal year as adjusted for items, which are\nnon-assessable or disallowed. It is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.\n\n \n\nDeferred taxes are accounted for using the asset\nand liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities\nin the consolidated financial statements and the corresponding tax basis used in the computation of assessable tax profit. In principle,\ndeferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assets are recognized to the extent that\nit is probable that taxable profit will be available against which deductible temporary differences can be utilized. Deferred tax is\ncalculated using tax rates that are expected to apply to the period when the asset is realized or the liability is settled. Deferred\ntax is charged or credited in the income statement, except when it is related to items credited or charged directly to equity, in which\ncase the deferred tax is also dealt with in equity. Deferred tax assets are reduced by a valuation allowance when, in the opinion of\nmanagement, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Current income taxes\nare provided for in accordance with the laws of the relevant taxing authorities.\n\n \n\n71\n\n \n\n \n\nAn uncertain tax position is recognized as a\nbenefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination\nbeing presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized\non examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. Income tax penalties\nare accrued related to late in submission of income tax for the years ended December 31, 2023, 2024 and 2025. The Company had no uncertain\ntax positions for the years ended December 31, 2023, 2024 and 2025. The Company does not expect that its assessment regarding unrecognized\ntax positions will materially change over the next 12 months.\n\n \n\nEarnings per share\n\n \n\nThe Company computes earnings per share (“EPS”)\nin accordance with ASC 260, “Earnings per Share”. ASC 260 requires companies to present basic and diluted EPS. Basic EPS\nis measured as net income divided by the weighted average ordinary share outstanding for the period. Diluted EPS presents the dilutive\neffect on a per share basis of the potential ordinary shares (e.g., convertible securities, options and warrants) as if they had been\nconverted at the beginning of the periods presented, or issuance date, if later. Potential ordinary shares that have an anti-dilutive\neffect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. For\nthe years ended December 31, 2023, 2024 and 2025, there were no dilutive shares.\n\n \n\nRelated party\n\n \n\nThe Company adopted ASC 850, Related Party Disclosures,\nfor the identification of related parties and disclosure of related party transactions.\n\n \n\nCommitments and contingencies\n\n \n\nIn the normal course of business, the Company\nis subject to contingencies, including legal proceedings and claims arising out of the business that relate to a wide range of matters,\nsuch as government investigations and tax matters. The Company recognizes a liability for such contingency if it determines it is probable\nthat a loss has occurred and a reasonable estimate of the loss can be made. The Company may consider many factors in making these assessments\nincluding historical and the specific facts and circumstances of each matter.\n\n \n\nRecent accounting pronouncements\n\n \n\nThe Company considers the applicability and impact\nof all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued. Under\nthe Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”), the Company meets the definition of an emerging\ngrowth company and has elected the extended transition period for complying with new or revised accounting standards, which delays the\nadoption of these accounting standards until they would apply to private companies.\n\n* *\n\n*Recently issued accounting pronouncements*\n\n \n\nIn November 2023, the FASB issued ASU No. 2023-07,\nSegment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). The amendments in ASU 2023-07\nimprove reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. ASU 2023-07\nis effective for annual periods beginning after December 15, 2023. Adoption of ASU 2023-07 should be applied retrospectively to all prior\nperiods presented in the financial statements. The Company is currently evaluating the potential impact of adopting this new guidance\non its consolidated financial statements and related disclosures.\n\n \n\n72\n\n \n\n \n\nIn December 2023, the FASB issued Accounting\nStandards Update No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”),\nwhich modifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation,\n(2) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (3)\nincome tax expense or benefit from continuing operations (separated by federal, state and foreign). ASU 2023-09 also requires entities\nto disclose their income tax payments to international, federal, state and local jurisdictions, among other changes. The guidance is\neffective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have\nnot yet been issued or made available for issuance. ASU 2023-09 should be applied on a prospective basis, but retrospective application\nis permitted. The Company is currently evaluating the potential impact of adopting this new guidance on its consolidated financial statements\nand related disclosures.\n\n \n\nExcept as mentioned above, the Company does not\nbelieve other recently issued but not yet effective accounting standards, if currently adopted, would have a potential material effect\non the Company’s consolidated balance sheets, statements of comprehensive loss and statements of cash flows, and related disclosures.\n\n \n\n**Results of Operations**\n\n** **\n\n**Years Ended December 31, 2023, 2024 and 2025**\n\n \n\nThe following table sets forth a summary of our\nconsolidated results of operations for the periods indicated, both in absolute amount and as a percentage of its total revenue.\n\n \n\n  \nFor the year ended December 31, \n\n  \n2023  \n2024  \n2025 \n\n  \nMYR   \n% of\nrevenue  \nMYR  \n% of\nrevenue  \nMYR  \nUSD  \n% of\nrevenue \n\nRevenue \n 85,237,802  \n 100.0% \n 60,293,562  \n 100.0% \n 83,885,403  \n 20,681,805  \n 100.0%\n\nCost of revenue \n (70,955,721) \n (83.2)% \n (48,413,779) \n (80.3)% \n (82,429,636) \n (20,322,889) \n (98.3)%\n\nGross profit \n 14,282,081  \n 16.8% \n 11,879,783  \n 19.7% \n 1,455,767  \n 358,916  \n **1.7****%**\n\n  \n    \n    \n    \n    \n    \n    \n   \n\nGeneral and administrative expenses \n (4,030,856) \n (4.7)% \n (3,572,145) \n (5.9)% \n (1,807,241) \n (445,572) \n (2.2)%\n\nInterest expenses \n (1,543) \n (0.0)% \n (23,788) \n (0.0)% \n (23,767) \n (5,860) \n (0.0)%\n\n(Allowance for)/Reversal of expected credit losses \n (281,479) \n (0.3)% \n (700,521) \n (1.2)% \n 982,000  \n 242,110  \n 1.2%\n\nIncome from operations \n 9,968,203  \n 11.7% \n 7,583,329  \n 12.6% \n 606,759  \n 149,594  \n 0.7%\n\n  \n    \n    \n    \n    \n    \n    \n   \n\nOther income/(expenses) \n    \n    \n    \n    \n    \n    \n   \n\nDividend income \n —  \n —  \n 32,562  \n 0.1% \n 11,223  \n 2,767  \n 0.0%\n\nFair value gain/(loss) on marketable securities \n 1,552,582  \n 1.8% \n (4,607) \n 0.0% \n 3,665,944  \n 903,832  \n 4.4%\n\nInterest income \n 1,633  \n 0.0% \n 18,393  \n 0.0% \n 46,784  \n 11,535  \n 0.1%\n\nTotal other income, net \n 1,554,215  \n 1.8% \n 46,348  \n 0.1% \n 3,723,951  \n 918,134  \n 4.4%\n\nIncome before income tax \n 11,522,418  \n 13.5% \n 7,629,677  \n 12.7% \n 4,330,710  \n 1,067,728  \n 5.2%\n\n  \n    \n    \n    \n    \n    \n    \n   \n\nIncome tax expense \n (3,235,342) \n (3.8)% \n (2,845,000) \n (4.7)% \n (3,451,269) \n (850,905) \n (4.1)%\n\nNet income \n 8,287,076  \n 9.7% \n 4,784,677  \n 8.0% \n 879,441  \n 216,823  \n 1.0%\n\n** **\n\n73\n\n \n\n \n\n**Comparison of Years Ended December 31,\n2023, 2024 and 2025**\n\n** **\n\n**Revenue**\n\n \n\nWe generate revenue primarily from (i)\ndevelopment of new aquaculture and agriculture farms; (ii) upgrading of aquaculture and agriculture farms; (iii) sales of industrial\nsupplies; and (iv) renovation. Project services include upgrading works as well as design and development works. Total revenue was\nMYR 85,237,802 for the year ended December 31, 2023, MYR 60,293,562 for the year ended December 31, 2024 and MYR 83,885,403 for the\nyear ended December 31, 2025.\n\n \n\nThe following table sets forth our revenue by\nsales categories for the periods indicated.\n\n \n\n  \nFor the year ended December 31, \n\n  \n2023  \n2024  \n2025 \n\n  \nMYR   \n% of\nrevenue  \nMYR  \n% of\nrevenue  \nMYR  \nUSD  \n% of\nrevenue \n\nDevelopment of new aquaculture and agriculture farms \n 52,582,024  \n 61.7% \n 42,492,542  \n 70.5% \n —  \n —  \n — \n\nUpgrading of aquaculture and agriculture farms \n 32,485,378  \n 38.1% \n 17,660,000  \n 29.3% \n 39,986,359  \n 9,858,570  \n 47.7%\n\nSales of industrial supplies \n 170,400  \n 0.2% \n 105,030  \n 0.2% \n 43,523,625  \n 10,730,676  \n 51.9%\n\nRenovation \n —  \n —  \n 35,990  \n 0.0% \n 375,419  \n 92,559  \n 0.4%\n\nTotal revenue \n 85,237,802  \n 100.0% \n 60,293,562  \n 100.0% \n 83,885,403  \n 20,681,805  \n 100.0%\n\n \n\nDuring the years ended December 31, 2023, 2024\nand 2025, revenue from development of new aquaculture and agriculture farms accounted for 61.7%, 70.5% and Nil% of total revenue, respectively.\nRevenue from upgrading of aquaculture and agriculture farms accounted for 38.1%, 29.3% and 47.7% of total revenue, respectively. Revenue\nfrom sales of industrial supplies accounted for 0.2%, 0.2% and 51.9% of total revenue. Revenue from renovation accounted for Nil%, Nil%\nand 0.4% of total revenue.\n\n \n\n74\n\n \n\n \n\nTotal revenue decreased by 29.3%, from MYR\n85,237,802 for the year ended December 31, 2023, to MYR 60,293,562 for the year ended December 31, 2024, primarily due to the\nfollowing reason:\n\n \n\ni)a decrease in revenue\nfrom development of new aquaculture and agriculture farms by MYR 10,089,482 or 19.2% from\nMYR 52,582,024 for the year ended December 31, 2023, to MYR 42,492,542 for the year ended December\n31, 2024, mainly contributed by the decrease in percentage of completion for the development\nof new shrimp hatchery center and shrimp farm in Sabah. The decrease is mainly because of\nlesser projects on hand for the year ended December 31, 2024.\n\n \n\nii)A decrease in revenue\nfrom upgrading of aquaculture and agriculture farms by MYR 14,825,378 or 45.6% from MYR 32,485,378\nto for the year ended December 31, 2023, to MYR 17,660,000 for the year ended December 31,\n2024 mainly due to lesser project during the year ended December 31, 2024.\n\n \n\nTotal revenue increased by MYR 23,591,841 or\n39.1% from MYR 60,293,562 for the year ended December 31, 2024 to MYR 83,885,403 for the year ended December 31, 2025. The increase\nwas primarily driven by\n\n \n\n(i)the commencement of industrial-supplies\nrevenue MYR 43,523,625 for the year ended December 31, 2025 (December 31, 2024: MYR 105,030);\nand\n\n \n\n(ii)higher upgrading-works revenue MYR 39,986,359 for the year ended December 31, 2025 (December 31,\n2024: MYR 17,660,000); and (iii) renovation revenue of MYR 375,419 for the year ended December 31, 2025 (December 31, 2024:\nMYR 35,990). The growth was partially offset by the cessation of new development projects for the year ended December 31, 2025\n(December 31, 2024: MYR 42,492,542) following the completion of prior-year hatchery and shrimp-farm engagements.\n\n \n\nNevertheless, we expect that there will be a\nslight change in the proportion of the revenue contribution in future financial periods. Through our discussions with customers on their\nfuture plans, they are more inclined towards maintaining the same land footprint and improving farm output efficiency, through a series\nof upgrading works.\n\n \n\nOn 18 March 2024, the Company incorporated MTSB\nwith 99.99% shareholdings of MTSB. The principal activities of MTSB is to supply and installation of smart industrial technologies and\nsolutions.\n\n** **\n\n**Cost of revenue**\n\n \n\nThe cost of revenue primarily consists of\nsubcontracting cost, and purchase of building material and rental of machinery. The total cost of revenue decreased by MYR\n22,541,942, or 31.8%, from MYR 70,955,721 for the year ended December 31, 2023, to MYR 48,413,779 for the year ended December 31,\n2024. The total cost of revenue was MYR 48,413,779 for the year ended December 31, 2024 and MYR 82,429,636 for the year ended\nDecember 31, 2025, representing an increase of MYR 34,015,857 or 70.3%, in line with the increase in revenue and the change in\nrevenue mix toward industrial-supplies (MTSB segment) and upgrading works which carry different cost-to-revenue profiles. Cost of\nrevenue as a percentage of revenue increased from 80.2% in December 31, 2024 to 98.3% in December 31, 2025, primarily reflecting the\nhigher cost ratio on industrial-supplies sales (gross-cost ratio of approximately 101.8%) and a thinner margin profile on upgrading\nworks.\n\n  \n\n75\n\n \n\n \n\nThe following table sets forth our cost of revenue\nby sales categories for the periods indicated.\n\n \n\n  \nFor the year ended December 31, \n\n  \n2023  \n2024  \n2025 \n\n  \nMYR   \n% of\nrevenue  \nMYR  \n% of\nrevenue  \nMYR  \nUSD  \n% of\nrevenue \n\nDevelopment of new aquaculture and agriculture farms \n 44,669,424  \n 52.4% \n 33,288,263  \n 55.2% \n —  \n —  \n —%\n\nUpgrading of aquaculture and agriculture farms \n 26,123,097  \n 30.6% \n 15,023,000  \n 24.9% \n 37,760,375  \n 9,309,757  \n 45.0%\n\nSales of industrial supplies \n 163,200  \n 0.2% \n 72,501  \n 0.1% \n 44,313,102  \n 10,925,322  \n 52.8%\n\nRenovation \n —  \n —  \n 30,015  \n 0.0% \n 356,159  \n 87,810  \n 0.4%\n\nRental of machinery \n —  \n —  \n —  \n —  \n —  \n —  \n — \n\nTotal cost of revenue \n 70,955,721  \n 83.2% \n 48,413,779  \n 80.2% \n 82,429,636  \n 20,322,889  \n 98.3%\n\n \n\nIn our cost of revenue, the cost of development\nof new aquaculture and agriculture farms as well as upgrading of aquaculture and agriculture farms is mainly comprised of subcontracting\ncosts. The cost of sales of industrial supplies and rental of machinery mainly includes sourcing of building materials and machineries\nrespectively. The overall 31.8% decrease and 70.3% increase in cost of revenue from the year ended December 31, 2024 to December 31,\n2025 are in line with the decrease or increase in our revenue over the same period.\n\n** **\n\n**Gross profit**\n\n \n\nFor the years ended December 31, 2023, 2024\nand 2025, our gross profit was MYR 14,282,081, MYR 11,879,783 and MYR 1,455,767, respectively, and our gross profit margins were\n16.8%, 19.7% and 1.7%, respectively. The margins remain constants for the years ended December 31, 2023 and 2024. The\ncompression in margin for the year ended December 31, 2025 was primarily attributable to (i) the higher contribution of lower-margin\nindustrial-supplies revenue (gross-cost ratio of approximately 101.8% in December 31, 2025) and (ii) a thinner margin profile on\nupgrading works in December 31, 2025 compared with the prior-year mix that was weighted toward higher-margin development\nprojects.\n\n** **\n\n**General and administrative expenses**\n\n \n\nGeneral\nand administrative expenses decreased by MYR 458,711 or 11.4%, from MYR 4,030,856 for the year ended December 31, 2023, to\nMYR 3,572,145 for the year ended December 31, 2024, mainly due to significant decrease in professional fees by MYR 944,245 and\npartially offset by other general and administrative expenses increase by MYR 470,933.\n\n \n\nGeneral and administrative expenses\ndecreased by MYR 1,764,904 or 49.4%, from MYR 3,572,145 for the year ended December 31, 2024, to MYR 1,807,241 for the year ended\nDecember 31, 2025. The decrease was driven primarily by lower professional and IPO-readiness fees for the year ended December 31,\n2025, partially offset by movements in staff costs and other overheads.\n\n \n\n76\n\n \n\n ** **\n\n**Interest\nexpenses**\n\n \n\nInterest expenses consisted primarily of\ninterest expenses from finance lease liabilities and bank loan. For the years ended December 31, 2023, 2024 and 2025, interest\nexpenses were MYR 1,543, MYR 23,788 and MYR 23,767, respectively.\n\n** **\n\n**Allowance for expected credit losses**\n\n \n\nAllowance for/(reversal of) expected credit\nlosses on accounts receivable was a charge of MYR 281,479 and MYR 700,521 for the year ended December 31, 2023 and 2024, respectively,\nand a reversal of MYR 982,000 for the year ended December 31, 2025. The December 31, 2025 reversal reflected improved collection\nexperience on prior-year provisions and the absence of specific credit deterioration on outstanding accounts receivable.\n\n** **\n\n**Fair value gain/(loss) on marketable securities**\n\n \n\nFor the years ended December 31, 2023, 2024\nand 2025, fair value gain/(loss) on marketable securities was a gain of MYR 1,552,582, a loss of MYR 4,607 and a gain of MYR\n3,665,944, respectively. The FY2023 gain was driven by lower unrealized fair value losses on investments in marketable securities of\nMYR 75,236, compared to unrealized fair value losses of MYR 1,784,544 in the prior year. The FY2024 movement was substantially flat,\nreflecting an immaterial mark-to-market adjustment on the Company’s holdings. The FY2025 gain reflects mark-to-market\nincreases in the Company’s portfolio of Bursa Malaysia-listed equity securities (classified as Level 1 under the fair value\nhierarchy). At December 31, 2025, the carrying value of the portfolio was MYR 29,183,340 (December 31, 2024: MYR 22,594,500).\n\n** **\n\n**Interest income**\n\n \n\nInterest income consisted primarily of\ninterest income from bank deposits. For the years ended December 31, 2023, 2024 and 2025, interest income was MYR 1,633, MYR 18,393\nand MYR 46,784, respectively.\n\n** **\n\n**Income tax expense**\n\n \n\nIncome tax expense was MYR 3,235,342, MYR\n2,845,000 and MYR 3,451,269 for the years ended December 31, 2023, 2024 and 2025, respectively, an increase of MYR 606,269 or 21.3%\nfrom FY2024 to FY2025. The effective tax rates were 37.3% for December 31, 2024 and 79.7% for December 31, 2025. The variance\nbetween our effective rate and the Malaysian statutory corporate income tax rate of 24% was attributable to (i) non-deductible\nexpenses; (ii) under/over-provision in respect of prior years; and (iii) differences between accounting and tax depreciation.\n\n** **\n\n**Net income**\n\n \n\nOur income tax expense decreased by MYR\n390,342 or 12.1% from MYR 3,235,342 for the year ended December 31, 2023, to MYR 2,845,000 for the year ended December 31, 2024. The\neffective tax rates are 28.1% and 37.3% for the year ended December 31, 2023 and 2024 respectively. The increase in effective tax\nrate for the year ended December 31, 2024 is mainly due to higher expenses incurred that are not deductible for calculation of\nincome tax purposes.\n\n \n\nOur income tax expense increased by MYR\n606,269 or 21.3% from MYR 2,845,000 for the year ended December 31, 2024 to MYR 3,451,269 for the year ended December 31, 2025. The\neffective tax rate increased from 37.3% for the year ended December 31, 2024 to 79.7% for the year ended December 31, 2025. The\nsignificantly higher effective tax rate for the year ended December 31, 2025 is primarily attributable to non-deductible expenses\nincurred during the year, including the fair value gain on marketable securities, and the relatively low level of pre-tax income\n(MYR 4,330,710), which amplifies the effective tax rate impact of permanent differences.\n\n** **\n\n77\n\n \n\n** **\n\n**Liquidity and Capital Resources**\n\n \n\nThe Company’s accounts have been prepared\nassuming that the company will continue as a going concern basis. The going concern basis assumes that assets are realized and liabilities\nare extinguished in the ordinary course of business at amounts disclosed in the financial statements. The Company’s ability to\ncontinue as a going concern depends upon aligning its sources of funding (debt and equity) with the expenditure requirements of the Company\nand repayment of the short-term debt facilities, if any, as and when they fall due.\n\n \n\nThe Company has considered whether there is substantial\ndoubt about its ability to continue as a going concern. Cash flow from operations and capital contributions and advances from a director\nhave been utilized to finance the working capital requirements of the Company.\n\n \n\nAs of December 31, 2025, the Company’s\ncash and cash equivalents amounted to MYR 172,025. This represents a lower cash position relative to historical operating levels and\nis insufficient, on a standalone basis, to fund the Company’s forecasted operating cash outflows for the next twelve months.\nThis condition required management to evaluate whether there is substantial doubt regarding the Company’s ability to continue\nas a going concern.\n\n \n\nIn evaluating this condition, management assessed\nthe Company’s broader structural liquidity and overall financial solvency. The lower cash position is a temporary operational variance\nrather than a structural deficit. As of December 31, 2025, the Company maintains a robust balance sheet characterized by the following\nmitigants:\n\n \n\n●**Net\nCurrent Asset Position:** Current assets exceed current liabilities by MYR 48.0 million,\nindicating strong capacity to settle short-term obligations.\n\n \n\n●**Net\nAsset Position:** Total assets exceed total liabilities by MYR 48.3 million (USD 11.9 million),\ndemonstrating overall corporate solvency and positive shareholder equity.\n\n \n\n●**High-Liquidity\nInvestment in marketable securities:** Included within the current asset position are MYR 29.2\nmillion of investment securities recorded at fair market value. These assets consist entirely\nof Level 1 publicly traded equities and short-term government bonds that are unencumbered\nand traded in active markets.\n\n \n\nManagement possesses both the explicit intent\nand the ability to liquidate these investment securities as necessary to fund daily operations and satisfy liabilities as they become\ndue. Because these assets are highly liquid and carry no regulatory or debt-covenant restrictions, they function as an immediate secondary\nsource of cash. Management’s internal stress-testing indicates that even under severe adverse market conditions—applying\na significant discount to the current market value of these securities—the net realizable cash proceeds will be more than sufficient\nto bridge any operating cash shortfalls.\n\n   \n\n78\n\n \n\n  \n\nFor the year ended December 31, 2025, the\nCompany had negative cash flow from operating activities of MYR 9,588,715 (USD 2,364,082), negative cash flow from investing\nactivities of MYR 2,923,156 (USD 720,699), positive cash flow from financing activities of MYR 12,674,531 (USD 3,124,884), and a\nclosing balance of MYR 172,025 (USD 42,412) in cash and cash equivalents. The negative operating cash flow was driven by\nworking-capital absorption (notably advances to subcontractors and the movement in deposits and other receivables), while the\nfinancing inflow reflected proceeds from share issuance, partially offset by repayments of bank loan and lease liabilities.\n\n \n\nIn addition, the Company ensures that it has\nsufficient cash on demand or highly liquid asset such as investment in marketable securities that are convertible to cash in a short\nperiod of time to meet expected operational expenses for a period of, at least, twelve months, including the servicing of financial obligations;\nthis excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters.\n\n \n\nBased on its strong net current asset and total\nnet asset positions, the immediate convertibility of its high-liquidity investment portfolio, and the funding requirements and expected\ncash flows from operations described above, management has concluded that the Company has adequate resources to fund its operations and\nmeet its obligations for a period of at least twelve months from the date these consolidated financial statements are authorized for\nissuance. Accordingly, the consolidated financial statements have been prepared on a going concern basis, which contemplates the realization\nof assets and the settlement of liabilities in the normal course of business.\n\n \n\nFurthermore, pertaining to the capital\ncommitment, the Company intends to use a portion of the net proceeds from its initial public offering and follow-on offering\ncompleted in 2025 and 2026 for the development of Smart Farming System, which includes establishment of research and development\nfacility, machineries and equipment for approximately MYR 7,000,000 (USD 1,500,000). Please refer to “Use of Proceeds”\nfor more information. As such, the development of Smart Farming System will not cause any impact on our liquidity in the near\nfuture.\n\n** **\n\n**Cash Flows Analysis**\n\n** **\n\n**Cash Flows for the Cash Flows for the Years\nEnded December 31, 2023, 2024 and 2025**\n\n \n\nThe following table sets forth a summary of our\ncash flows for the periods indicated.\n\n \n\n  \nFor the year ended December 31, \n\n  \n2023  \n2024  \n2025 \n\n  \nMYR   \nMYR  \nMYR  \nUSD \n\nNet cash (used in)/provided by operating activities \n (21,653,985) \n 4,999,695  \n (9,588,715) \n (2,364,082)\n\nNet cash provided by/(used in) investing activities \n 16,030,972  \n (10,264,959) \n (2,923,156) \n (720,699)\n\nNet cash provided by financing activities \n 2,534,630  \n 1,158,282  \n 12,674,531  \n 3,124,884 \n\n(Decrease)/Increase in cash and cash equivalents \n (3,088,383) \n (4,106,982) \n 162,660  \n 40,103 \n\nCash and cash equivalents at the beginning of the period \n 7,204,730  \n 4,116,347  \n 9,365  \n 2,309 \n\nCash and cash equivalents at the end of the period \n 4,116,347  \n 9,365  \n 172,025  \n 42,412 \n\n \n\n79\n\n \n\n** **\n\n**Operating Activities**\n\n \n\nFor the year ended December 31, 2025, net\ncash used in operating activities of MYR 9,588,715 primarily resulted from our net income of MYR 879,441, as adjusted for non-cash\nitems and changes in operating activities. Adjustments for non-cash items primarily consisted of a fair value gain on marketable\nsecurities of MYR 3,665,944, depreciation of property and equipment amounting to MYR 60,270, a reversal of allowance for expected\ncredit losses of MYR 982,000 and interest expenses amounting to MYR 23,767.\n\n \n\nChanges in operating assets and liabilities mainly\nincluded:\n\n \n\n \n(i)a decrease in accounts receivable of MYR 3,971,839, mainly due to collections from customers;\n\n \n\n(ii)a decrease in contract\nassets of MYR 46,140;\n\n \n\n(iii)an increase in deposits\nand other receivables of MYR 22,155,944, mainly due to higher advances to subcontractors\nfor ongoing development and upgrading projects;\n\n \n\n(iv)an increase in accounts\npayable of MYR 232,069;\n\n \n\n(v)an increase in contract\nliabilities of MYR 6,148,141, mainly due to advance receipts from customers on new project\nengagements;\n\n \n\n(vi)a decrease in accrued liabilities and other payables of MYR 199,054; and\n\n \n\n(vii)an increase in income taxes payables of MYR 3,192,858.\n\n \n\n(viii)a decrease in deferred\nIPO costs of MYR 2,859,702, reflecting the offset against equity on completion of the IPO.\n\n \n\nFor the year ended December 31, 2024, net\ncash generated from operating activities of MYR 4,999,695 primarily resulted from our net income of MYR 4,784,677, as adjusted for\nnon-cash items and changes in operating activities. Adjustments for non-cash items primarily consisted fair value loss on marketable\nsecurities amounting to MYR 4,607, depreciation of property and equipment amounting to MYR 40,408, allowance for expected credit\nlosses amounting to MYR 700,521 and interest expenses amounting to MYR 22,246.\n\n \n\nChanges in operating assets and liabilities mainly\nincluded:\n\n \n\n(i)an increase in accounts\nreceivable of MYR 14,650,568, mainly due to slower collection from receivables;\n\n \n\n(ii)a decrease in deposits\nand other receivables of MYR 11,537,887, mainly due to the decrease of advances to subcontractors;\n\n \n\n(iii)an increase in deferred\ninitial public offering costs of MYR 84,163 mainly due to payment made during the year; and\n\n \n\n(iv)a decrease in accounts\npayable of MYR 1,417,027, mainly due to payment made during the year;\n\n \n\n(v)an increase in contract\nliabilities of MYR 1,115,269, mainly due to advance receipts from customers;\n\n \n\n(vi)an increase in accrued\nliabilities and other payables of MYR 146,978, mainly due to accrued expenses; and\n\n \n\n(vii)an increase in income\ntaxes payables of MYR 2,845,000, mainly due to an increase in tax provisions.\n\n \n\n80\n\n \n\n  \n\nFor the year ended December 31, 2023,\nnet cash used in operating activities of MYR 21,653,985 primarily resulted from changes in operating activities and as adjusted for\nnon-cash items despite generated net income of MYR 8,287,076. Adjustments for non-cash items primarily consisted fair value gain on\nmarketable securities amounting to MYR 1,552,582.\n\n \n\nChanges in operating assets and liabilities mainly\nincluded:\n\n \n\n(i)an increase in accounts\nreceivable of MYR 3,046,438, mainly due to an increase in billings in line with the increase\nin revenue;\n\n \n\n(ii)a decrease in contract\nassets of MYR 2,126, mainly resulting from the decrease of the unbilled revenue;\n\n \n\n(iii)an increase in deposits\nand other receivables of MYR 18,264,133, mainly due to increase in advances to subcontractors;\n\n \n\n(iv)an increase in deferred\ninitial public offering costs of MYR 1,845,532 mainly due to payment made during the year;\nand\n\n \n\n(v)a decrease in accounts\npayable of MYR 1,891,628, mainly due to prompt payments to suppliers and subcontractors;\n\n \n\n(vi)a decrease in contract\nliabilities of MYR 1,714,269, mainly due to revenue recognized during the year exceeding advances\nreceipts from customers;\n\n \n\n(vii)a decrease in accrued\nliabilities and other payables of MYR 5,154,530, mainly due to accruals in tax penalties;\nand\n\n \n\n(viii)an increase in income\ntaxes payables of MYR 3,235,342, mainly due to an increase in tax provisions.\n\n \n\n**Investing Activities**\n\n \n\nFor the year ended December 31, 2025, net\ncash used in investing activities was MYR 2,923,156, comprising net purchases of marketable securities of MYR 2,922,896 (proceeds\nfrom disposals of MYR 43,174,117 less purchases of MYR 46,097,013) and purchases of property and equipment of MYR 260.\n\n \n\nFor the year ended December 31, 2024, net\ncash used in investing activities was MYR 10,264,959, which was primarily driven by net payment for marketable securities of\nMYR 10,162,962 and purchases of property and equipment amounting to MYR 102,017.\n\n \n\nFor the year ended December 31, 2023,\nnet cash generated from investing activities was MYR 16,030,972, which was primarily driven by net proceeds from marketable\nsecurities of MYR 12,093,171, offset by deposits refunded for purchase of property of MYR 4,500,000 and purchase of property and\nequipment of MYR 562,199.\n\n \n\n**Financing Activities**\n\n \n\nFor the year ended December 31, 2025, net\ncash generated from financing activities was MYR 12,674,531, which was primarily driven by proceeds from share issuance of\nMYR 12,882,345, partially offset by:\n\n \n\n(1)Decrease in amount due\nto a director, Mr. Darren Hoo Wei Sern, of MYR 61,216;\n\n \n\n(2)Decrease in amount due\nto a related party, Star Sprite Limited, of MYR 61,165;\n\n \n\n(3)Repayment of bank loan amounting to MYR 48,358; and\n\n \n\n(4)Repayment of lease liabilities amounting to MYR 37,075.\n\n \n\n81\n\n \n\n \n\nFor the year ended December 31, 2024, net\ncash generated from financing activities was MYR 1,158,282, which was primarily driven by an increase in the amount due to a related\nparty (Star Sprite Limited) of MYR 1,211,857 and partially offset by the items below:\n\n \n\n(1)Advance from a director,\nDarren Hoo Wei Sern amounted to MYR 11,807\n\n \n\n(2)Repayment of bank loan\namounting to MYR 46,818; and\n\n \n\n(3)Repayment of lease liabilities\namounting to MYR 18,564.\n\n \n\nFor the year ended December 31, 2023, net\ncash generated from financing activities was MYR 2,534,630, which was primarily driven by as below:\n\n \n\n(1)Advance from a director,\nDarren Hoo Wei Sern amounted to MYR 50,188;\n\n \n\n(2)Amount due to a related\nparty, Star Sprite Limited amounted to MYR 2,108,419; and\n\n \n\n(3)Proceeds from bank loan,\nMaybank Islamic Berhad amounted to MYR 390,600.\n\n \n\nHowever, net cash generated from financial activities was migrated by repayments of bank loan and fixed deposit placement amounted to\nMYR2,487 and MYR12,090 respectively.\n\n \n\n**Off Balance Sheet Arrangements**\n\n \n\nAs of December 31, 2025, we had no off-balance\nsheet financing arrangements.\n\n** **\n\n**Contractual Commitments**\n\n \n\nWe lease property for the purpose of back-office\noperations for management personnel and business operation and leases equipment for the back-office operations. The future minimum lease\npayments under these non-cancellable operating leases are recognized as right-of-use assets and lease liabilities in the consolidated\nstatement of financial position.\n\n \n\nAs of December 31, 2025, we did not have any\ncapital commitments.\n\n** **\n\n**Concentration of Credit Risk**\n\n \n\nCredit risk is the potential financial loss to\nthe Company resulting from the failure of a client or a counterparty to settle its financial and contractual obligations to the Company,\nas and when they fall due. As the Company does not hold any collateral, the maximum exposure to credit risk is the carrying amounts of\naccount receivables, deposits, contracts receivable, contract assets, and other receivables (exclude prepayments) and cash and bank deposits\npresented on the consolidated balance sheets. Other than above, the Company has no other financial assets which carry significant exposure\nto credit risk.\n\n \n\nFinancial instruments that potentially expose\nthe Company to concentrations of credit risk consist primarily of contracts receivable. The Company conducts credit evaluations of its\nclients, and generally does not require collateral or other security from them. The Company evaluates its collection experience and long\noutstanding balances to determine the need for an allowance for expected credit losses. The Company conducts periodic reviews of the\nfinancial condition and payment practices of its clients to minimize collection risk on accounts receivable.\n\n \n\n82\n\n \n\n \n\nThe following table sets forth a summary of single\ncustomers whom represent 10% or more of the Company’s total revenue:\n\n \n\n  \nFor the year ended December 31, \n\n  \n2023  \n2024  \n2025 \n\n  \nMYR  \n% of\nrevenue  \nMYR  \n% of\nrevenue  \nMYR  \nUSD  \n% of\nrevenue \n\nAmount of the Company’s revenue \n   \n   \n   \n   \n   \n   \n  \n\nCustomer A \n 13,261,271  \n 15.6% \n 11,046,599  \n 18.3% \n 3,250,000  \n 801,282  \n 3.9%\n\nCustomer B \n 47,090,553  \n 55.2% \n 48,932,179  \n 81.2% \n 39,922,500  \n 9,842,825  \n 47.6%\n\nCustomer C \n 19,212,200  \n 22.5% \n —  \n —  \n 18,538,000  \n 4,570,513  \n 22.1%\n\n \n\n \n\n*Represents percentages less than 10%\n\n \n\nThe following table sets forth a summary of single\ncustomers whom represent 10% or more of the Company’s total gross accounts receivable:\n\n \n\n  \nFor the year ended December 31, \n\n  \n2023  \n2024  \n2025 \n\n  \nMYR  \n% of\naccount\nreceivable  \nMYR  \n% of\naccount\nreceivable  \nMYR  \nUSD  \n% of\naccount\nreceivable \n\nAmount of the Company’s accounts receivable \n   \n   \n   \n   \n   \n   \n  \n\nCustomer A \n *  \n *  \n —  \n —  \n —  \n —  \n — \n\nCustomer B \n 18,791,450  \n 92.2% \n 34,601,600  \n 98.7% \n —  \n —  \n — \n\nCustomer C \n —  \n —  \n —  \n —  \n 18,538,000  \n 4,570,513  \n 59.7%\n\nCustomer\nD \n —  \n —  \n —  \n —  \n 11,445,625  \n 2,821,900  \n 36.9%\n\n \n\n \n\n*Represents percentages less than 10%\n\n \n\nThe following table sets forth a summary of suppliers\nthat represent 10% or more of the Company’s total purchases:\n\n \n\n  \nFor the year ended December 31, \n\n  \n2023  \n2024  \n2025 \n\n  \nMYR  \n% of\ncost of\nrevenue  \nMYR  \n% of\ncost of\nrevenue  \nMYR  \nUSD  \n% of\ncost of\nrevenue \n\nAmount of the Company’s purchases: \n   \n   \n   \n   \n   \n   \n  \n\nSupplier A \n —  \n —  \n 4,750,000  \n 10.0% \n —  \n —  \n — \n\nSupplier B** \n 15,329,495  \n 21.6% \n *  \n *  \n —  \n —  \n — \n\nSupplier C \n 48,937,982  \n 69.0% \n 27,434,744  \n 56.7% \n 34,063,500  \n 8,398,299  \n 41.3%\n\nSupplier D \n *  \n *  \n 12,530,200  \n 25.9% \n 39,418,000  \n 9,718,442  \n 47.8%\n\nSupplier E \n —  \n —  \n —  \n —  \n 8,500,000  \n 2,095,661  \n 10.3%\n\n \n\n \n\n*Represents percentages less than 10%\n\n  \n\n**Related party — VC Marine Sdn. Bhd.\n\n \n\nThe following table sets forth a summary of single\nsuppliers whom represent 10% or more of the Company’s total payable:\n\n \n\n  \nFor the year ended December 31, \n\n  \n2023  \n2024  \n2025 \n\n  \nMYR  \n% of\naccounts\npayable  \nMYR  \n% of\naccounts\npayable  \nMYR  \nUSD  \n% of\naccounts\npayable \n\nAmount of the Company’s accounts payable: \n   \n   \n   \n   \n   \n   \n  \n\nSupplier A \n 720,000  \n 41.1% \n 190,400  \n 56.8% \n —  \n —  \n — \n\nSupplier B** \n 739,879  \n 42.2% \n —  \n —  \n —  \n —  \n — \n\nSupplier C \n —  \n —  \n —  \n —  \n —  \n —  \n — \n\nSupplier E \n 215,000  \n 12.3% \n —  \n —  \n —  \n —  \n — \n\nSupplier F \n —  \n —  \n 130,000  \n 38.8% \n —  \n —  \n — \n\nSupplier G \n —  \n —  \n —  \n —  \n 450,000  \n 110,947  \n 79.3%\n\n \n\n \n\n**Related party — VC Marine Sdn Bhd\n\n \n\n83"}