AUDIT COMMITTEE OBSERVATIONS PENDING INVESTIGATIONS	9 Months Ended
Sep. 30, 2024
AUDIT COMMITTEE OBSERVATIONS PENDING INVESTIGATIONS
AUDIT COMMITTEE OBSERVATIONS & PENDING INVESTIGATIONS	NOTE 14 – AUDIT COMMITTEE OBSERVATIONS & PENDING INVESTIGATIONS In connection with the Company’s preparation and review of its financial statements for the period ending September 30, 2024, the Audit Committee reviewed a number of transactions occurring at our wholly owned subsidiary, Chemrex Corporation Sdn. Bhd. ("Chemrex"), which were concerning to the Audit Committee and as a result, it has initiated investigations into the following matters; A. Property Sale No. 4 Jalan CJ1/6 to CCRE Composite Sdn. Bhd. On September 30, 2024, Chemrex entered into an Offer to Purchase Agreement with CCRE Composite Sdn. Bhd. to sell certain property located at No. 4, Jalan CJ 1/6B, Taman Cheras Jaya, Batu 11, 43300 Seri Kembangan, Selangor. The property is the main operating premises of Chemrex. The purchase price agreed upon in this transaction was MYR 4,400,000 (approximately USD $1,067,433), with specific terms outlined for deposits and completion requirements. An initial payment of MYR 44,000 (approximately USD $10,674) was made to Chremrex by the buyer subsequent to the end of the reporting period. As mentioned, the Audit Committee has initiated an internal review of this transaction due to potential concerns that it may have been entered into without the appropriate authorization as mandated by corporate policies and Malaysian law. In addition, the terms of the transaction appear to be inconsistent with arm’s length transactions. The review is currently underway to assess compliance with internal controls over financial reporting and whether appropriate authority was granted to those involved in the transaction as well as whether the transaction was in compliance with Malaysian law. For the financial statements as of September 30, 2024, there is no immediate impact since the Offer to Purchase Agreement was signed on the last day of the current period, and the initial payment was received after the period-end. However, future impacts will depend on the completion status or potential rescission of the transaction. B. Transactions with Honkuk Material Sdn. Bhd. Chemrex engaged in transactions with Honkuk Material Sdn. Bhd., a related party by virtue of being owned by a number of Directors of Chemrex. The transactions relate to the purchase of materials totalling MYR789,696 (approximately USD $170,460) in conjunction with a manufacturing business recently engaged in by Chemrex. These transactions appear to lack independent review and board authorization and are currently undergoing further review. C. Unauthorized Directors Remuneration Increases Director remuneration for Chemrex directors was substantially increased by approximately MYR4,248,000 (approximately USD $916,954) during the third fiscal quarter of 2024. The payment increase appears to; lack documented board approval, have been inappropriately authorized and excessively exceed normal director compensation in violation of fiduciary responsibilities. The Audit Committee is reviewing the process undertaken and the transactions are undergoing investigation. D. Transactions with Mr. Wong Kim Hai Mr. Wong Kim Hai, a director of Chemrex, received payments during the current quarter from Chemrex totaling MYR200,000 (approximately USD $43,171). These payments appeared to lack documented board approval and be inappropriately authorised. E. Transactions with Quote Me Sdn. Bhd. Chemrex engaged in a transaction involving the purchase of technical know-how and machinery from a Malaysian company named Quote Me Sdn. Bhd. The purchase agreement made on August 1, 2024 was for MYR 855,000 (approximately USD $190,341) in exchange for the transfer of machinery and know-how which appear to be related to Chemrex’s operations. These assets are currently reflected on our balance sheet as of the end of the current quarter. However, the Audit Committee subsequently determined that Quote Me Sdn. Bhd. was a dissolved entity which raises concerns over the legitimacy of the transaction. If the transaction is rescinded, it would impact the Company’s balance sheet as of the December 31, 2024 fiscal year end, potentially requiring adjustments to reduce both asset and liability accounts related to this transaction. Additionally, any previously recognized expenses, capitalized assets, or amortization related to the acquired know-how and machinery would need to be reconsidered, which could affect the profit or loss statements for the affected periods. All of the above transactions are currently under review and investigation by the Audit Committee. In some instances, the Audit Committee has retained special counsel to assist in the investigation. The Company will provide updates of material irregularities regarding the above transactions.

AUDIT COMMITTEE OBSERVATIONS PENDING INVESTIGATIONS

9 Months Ended

Sep. 30, 2024

AUDIT COMMITTEE OBSERVATIONS PENDING INVESTIGATIONS

AUDIT COMMITTEE OBSERVATIONS & PENDING INVESTIGATIONS

NOTE 14 – AUDIT COMMITTEE OBSERVATIONS & PENDING INVESTIGATIONS

In connection with the Company’s preparation and review of its financial statements for the period ending September 30, 2024, the Audit Committee reviewed a number of transactions occurring at our wholly owned subsidiary, Chemrex Corporation Sdn. Bhd. ("Chemrex"), which were concerning to the Audit Committee and as a result, it has initiated investigations into the following matters;

A. Property Sale No. 4 Jalan CJ1/6 to CCRE Composite Sdn. Bhd.

On September 30, 2024, Chemrex entered into an Offer to Purchase Agreement with CCRE Composite Sdn. Bhd. to sell certain property located at No. 4, Jalan CJ 1/6B, Taman Cheras Jaya, Batu 11, 43300 Seri Kembangan, Selangor. The property is the main operating premises of Chemrex. The purchase price agreed upon in this transaction was MYR 4,400,000 (approximately USD $1,067,433), with specific terms outlined for deposits and completion requirements. An initial payment of MYR 44,000 (approximately USD $10,674) was made to Chremrex by the buyer subsequent to the end of the reporting period.

As mentioned, the Audit Committee has initiated an internal review of this transaction due to potential concerns that it may have been entered into without the appropriate authorization as mandated by corporate policies and Malaysian law. In addition, the terms of the transaction appear to be inconsistent with arm’s length transactions. The review is currently underway to assess compliance with internal controls over financial reporting and whether appropriate authority was granted to those involved in the transaction as well as whether the transaction was in compliance with Malaysian law. For the financial statements as of September 30, 2024, there is no immediate impact since the Offer to Purchase Agreement was signed on the last day of the current period, and the initial payment was received after the period-end. However, future impacts will depend on the completion status or potential rescission of the transaction.

B. Transactions with Honkuk Material Sdn. Bhd.

Chemrex engaged in transactions with Honkuk Material Sdn. Bhd., a related party by virtue of being owned by a number of Directors of Chemrex. The transactions relate to the purchase of materials totalling MYR789,696 (approximately USD $170,460) in conjunction with a manufacturing business recently engaged in by Chemrex. These transactions appear to lack independent review and board authorization and are currently undergoing further review.

C. Unauthorized Directors Remuneration Increases

Director remuneration for Chemrex directors was substantially increased by approximately MYR4,248,000 (approximately USD $916,954) during the third fiscal quarter of 2024. The payment increase appears to; lack documented board approval, have been inappropriately authorized and excessively exceed normal director compensation in violation of fiduciary responsibilities. The Audit Committee is reviewing the process undertaken and the transactions are undergoing investigation.

D. Transactions with Mr. Wong Kim Hai

Mr. Wong Kim Hai, a director of Chemrex, received payments during the current quarter from Chemrex totaling MYR200,000 (approximately USD $43,171). These payments appeared to lack documented board approval and be inappropriately authorised.

E. Transactions with Quote Me Sdn. Bhd.

Chemrex engaged in a transaction involving the purchase of technical know-how and machinery from a Malaysian company named Quote Me Sdn. Bhd.

The purchase agreement made on August 1, 2024 was for MYR 855,000 (approximately USD $190,341) in exchange for the transfer of machinery and know-how which appear to be related to Chemrex’s operations. These assets are currently reflected on our balance sheet as of the end of the current quarter.

However, the Audit Committee subsequently determined that Quote Me Sdn. Bhd. was a dissolved entity which raises concerns over the legitimacy of the transaction.

If the transaction is rescinded, it would impact the Company’s balance sheet as of the December 31, 2024 fiscal year end, potentially requiring adjustments to reduce both asset and liability accounts related to this transaction. Additionally, any previously recognized expenses, capitalized assets, or amortization related to the acquired know-how and machinery would need to be reconsidered, which could affect the profit or loss statements for the affected periods.

All of the above transactions are currently under review and investigation by the Audit Committee. In some instances, the Audit Committee has retained special counsel to assist in the investigation. The Company will provide updates of material irregularities regarding the above transactions.