As filed with the U.S. Securities and Exchange Commission on March 28, 2025.
Registration No. 333-[ - ]
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
(Exact name of registrant as specified in its charter)
| 3990 | Not Applicable | |||
(State or other jurisdiction of incorporation or organization) |
(Primary Standard Industrial Classification Code Number) |
(IRS. Employer Identification Number) |
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Cogency Global Inc.
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
William S. Rosenstadt, Esq. Mengyi “Jason” Ye, Esq. Yuning “Grace” Bai, Esq. Ortoli Rosenstadt LLP 366 Madison Avenue, 3rd Floor New York, NY 10017 Telephone: (212) 588 0022 |
Benjamin Tan, Esq. Sichenzia Ross Ference LLP 1185 Avenue of the Americas, 31st Floor New York, NY 11036 Telephone: (212) 930 9700 |
Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☐
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.
Emerging
growth company
If
an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant
has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided
pursuant to Section 7(a)(2)(B) of the Securities Act.
| † | The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012. |
The Registrant hereby files this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
The information in this prospectus is not complete and may be changed. We may not sell the securities until the registration statement filed with the U.S. Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting any offer to buy these securities in any jurisdiction where such offer or sale is not permitted.
| PRELIMINARY PROSPECTUS | SUBJECT TO COMPLETION, DATED MARCH 28, 2025 |
Multi Ways Holdings Limited
Up to 9,000,000 Ordinary Shares
We are offering, on a reasonable best efforts basis, of up to 9,000,000 ordinary shares (“ Ordinary Shares” ), par value $0.00025 per share of Multi Ways Holdings Limited (“MWG”, the “Company”, “we”, “our”, “us”) directly to select investors pursuant to this prospectus supplement and the accompanying prospectus at an assumed offering price of $0.2180 per Ordinary Share, which represents a 30.0% discount from the last reported sale price of our Ordinary Share, as reported on the NYSE American Market on March 26, 2025.
Our Ordinary Shares are listed on the NYSE American Market under the trading symbol “MWG.” On March 26, 2025, the last reported share price of our Ordinary Shares on the NYSE American Market was $0.3115 per share. Our share price is volatile. During the 6 months prior to the date of this prospectus, our Ordinary Shares have traded at a low of $0.2800 and a high of $0.6200. From the beginning of 2025 through March 26, 2025, our Ordinary Shares have traded at a low of $0.2650 and a high of $0.3660. There has been no change recently in our financial condition or results of operations that is consistent with the recent change in our share price.
Because there is no minimum offering amount required as a condition to closing this offering, we may sell fewer than all of the Ordinary Shares offered hereby, which may significantly reduce the amount of proceeds received by us, and investors in this offering will not receive a refund in the event that we do not sell an amount of Ordinary Shares sufficient to pursue the business goals outlined in this prospectus. Because there is no minimum offering amount, investors could be in a position where they have invested in our company, but we are unable to fulfill our objectives due to a lack of interest in this offering. See “Use of Proceeds” and “Risk Factors” for more information. The proceeds from this offering will be deposited in a separate non-interest bearing bank account (limited to funds received on our behalf) established by our escrow agent. We intend to complete one closing of this offering, but may undertake one or more additional closings for the sale of the additional securities to the investors in the initial closing. Any such funds that the escrow agent receives shall be held in escrow until the applicable closing of the offering, and then used to complete securities purchases, or returned if this offering fails to close. The offering will be terminated after sixty (60) days of the effectiveness of this registration statement provided that the closing(s) of the offering have not occurred by such date.
We have 33,330,000 Ordinary Shares issued and outstanding as of the date of this prospectus. We are and a controlled company as defined under NYSE American Market Rules because, MWE Investments, our controlling shareholder, owns approximately 61.8% of our total issued and outstanding Ordinary Shares, representing approximately 61.8% of the total voting power of our capital stock and as of the date of this prospectus. MWE Investments will control 48.6% Ordinary Shares after the offering, assuming the sales of all the securities being offered in this offering. As a result, this concentrated control may limit or preclude your ability to influence corporate matters for the foreseeable future, including the election of directors, amendments of our memorandum and articles of association, and any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transaction requiring shareholder approval. In addition, this may have anti-takeover effects and may prevent or discourage unsolicited acquisition proposals or offers for our share capital that you may feel are in your best interest as one of our shareholders.
Investing in our Ordinary Shares involves a high degree of risk. Before buying any Ordinary Shares, you should carefully read the discussion of material risks of investing in our Ordinary Shares in “Risk Factors” beginning on page 13.
We are an “Emerging Growth Company” and a “Foreign Private Issuer” under applicable U.S. federal securities laws and, as such, are eligible for reduced public company reporting requirements. Please see Implications of Being an Emerging Growth Company and Implications of Being a Foreign Private Issuer beginning on page 11 for more information.
We are a holding company that is incorporated in the Cayman Islands. As a holding company with no operations, we conduct all of our operations through our wholly-owned subsidiary in Singapore. The Ordinary Shares offered in this offering are Ordinary Shares of the holding company that is incorporated in the Cayman Islands. Investors of our Ordinary Shares should be aware that they do not directly hold equity interests in the Singaporean operating entity, but rather are purchasing equity solely in Multi Ways Holding Limited, our Cayman Islands holding company, which indirectly owns 100% equity interests in the Singaporean subsidiary.
We have engaged Spartan Capital Securities, LLC (the “placement agent”) as our exclusive placement agent to use its reasonable best efforts to solicit offers to purchase our securities in this offering. The placement agent has no obligation to purchase and are not purchasing or selling the securities offered by us, and are not required to arrange for the purchase or sale of any specific number or dollar amount of our securities, but will use their reasonable best efforts to solicit offers to purchase the securities offered by this prospectus. Because there is no minimum offering amount required as a condition to closing in this offering the actual offering amount, the placement agent’s fee, and proceeds to us, if any, are not presently determinable and may be substantially less than the total maximum offering amounts set forth above and throughout this prospectus. We have agreed to pay the placement agent fees set forth in the table above, to issue the Placement Agent’s Warrants and to provide reimbursement of certain expenses and certain other compensation to the placement agent. See “Plan of Distribution” of this prospectus for more information regarding these arrangements.
| Per Share | Total (assuming maximum offering) | |||||||
| Offering price(1) | $ | 0.2180 | $ | 1,962,000 | ||||
| Placement agent’s fees(2) | $ | 0.0109 | $ | 98,100 | ||||
| Proceeds to the Company before expenses(3) | $ | 0.2071 | $ | 1,863,900 | ||||
(1) The offering price per share is assumed to be $0.2180, which represents a 30.0% discount from the last reported sale price of our Ordinary Share, as reported on the NYSE American Market on March 26, 2025.
(2) We have agreed to pay the placement agent a discount equal to five percent (5.0%) of the gross proceeds of the offering. This table does not include a non-accountable expense allowance equal to one percent (1.0%) of the gross proceeds of this offering payable to the placement agent or the placement agent’s out-of-pocket accountable expenses of up to US$50,000. For a detailed description of the compensation to be received by the placement agent, see “Plan of Distribution” beginning on page 111.
(3) We estimate the total expenses of this offering payable by us, excluding the placement agent’s fees and reimbursement of the placement agent’s accountable and non-accountable expenses, will be approximately US$115,012, as set forth in the section entitled “Expenses Relating to This Offering” on page 113.
We will deliver the Ordinary Shares being issued to the investors electronically, upon closing and receipt of investor funds for the purchase of the Ordinary Shares offered pursuant to this prospectus. We expect the delivery of such securities against payment in U.S. dollars will be made, with respect to Ordinary Shares sold at the closing, in New York, New York on or about [●], 2025.
Neither the U.S. Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.
Prospectus dated [●], 2025.
TABLE OF CONTENTS
You should rely only on the information contained in this prospectus and the documents we incorporate by reference in this prospectus. We and the placement agent have not authorized anyone to provide you with different information. We do not take any responsibility for and cannot provide any assurance as to the reliability of any other information that others may give you. We are not making an offer to sell the securities in any jurisdiction where the offer or sale thereof is not permitted. The information contained in this prospectus or incorporated by reference in this prospectus is accurate only as of the respective date of such information, regardless of the time of delivery of this prospectus or of any sale or offer to sell hereunder. You should not assume that the information appearing in this prospectus is accurate as of any date other than the date on the front cover of this prospectus. Our business, financial condition, results of operations, and prospects may have changed since that date.
To the extent this prospectus contains summaries of the documents referred to herein, you are directed to the actual documents for complete information. All of the summaries are qualified in their entirety by the actual documents. Copies of some of the documents referred to herein have been filed, will be filed, or will be incorporated by reference as exhibits to the registration statement of which this prospectus forms a part, and you may obtain copies of such documents as described below in the section titled “Where You Can Find Additional Information.”
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ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement we filed with the SEC. We and the placement agent have not authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectuses prepared by us or on our behalf or to which we have referred you. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the Ordinary Shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. We are not making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted or where the person making the offer or sale is not qualified to do so or to any person to whom it is not permitted to make such offer or sale. The information contained in this prospectus is current only as of the date on the front cover of the prospectus. You should not assume that the information contained in this prospectus, any prospectus supplement or the documents incorporated by reference are accurate as of any date other than their respective dates, regardless of the time of delivery of this prospectus or of any sale of the Ordinary Shares. Our business, financial condition, results of operations and prospects may have changed since that date.
For investors outside the United States: We have not done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction, other than the United States, where action for that purpose is required. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the Ordinary Shares and the distribution of this prospectus outside the United States.
We obtained statistical data, market data and other industry data and forecasts used in this prospectus from market research, publicly available information and industry publications. While we believe that the statistical data, industry data, forecasts and market research are reliable, we have not independently verified the data.
PRESENTATION OF FINANCIAL INFORMATION
Basis of Presentation
The reporting currency of the Company is United States Dollar or “US$” and the accompanying consolidated financial statements have been expressed in US$. In addition, the Company and subsidiaries are operating in Singapore, maintain their books and record in their local currency, Singapore Dollars or “S$”, which is a functional currency as being the primary currency of the economic environment in which their operations are conducted. In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not US$ are translated into US$, in accordance with ASC Topic 830-30, Translation of Financial Statement, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the year. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statements of changes in shareholders’ equity.
Translation gains and losses that arise from exchange rate fluctuations from transactions denominated in a currency other than the functional currency are translated, as the case may be, at the rate on the date of the transaction and included in the results of operations as incurred.
As at the date of this prospectus, the Company has an authorized share capital of US$2,500,000 divided into 10,000,000,000 Ordinary Shares, of a par value of $0.00025 each.
Multi Ways Holdings Limited is a holding company with operations conducted in Singapore through its operating subsidiary in Singapore, using Singapore dollars. Our reporting currency is the United States Dollar. This prospectus also contains translations of certain foreign currency amounts into U.S. dollars for the convenience of the reader. Unless otherwise stated, all translations of Singapore dollars into U.S. dollars were made at S$1.3509 to $1.00 for the six months ended June 30, 2024, amounts were made at S$1.3520 to $1.00 for the six months ended June 30, 2023, amounts were made at S$1.3314 to $1.00 for the financial year ended December 31, 2023 and amounts were made at S$1.3722 to $1.00 for the financial year ended December 31, 2022, in accordance with our internal exchange rate. We make no representation that the Singapore dollar or U.S. dollar amounts referred to in this prospectus could have been or could be converted into U.S. dollars or Singapore dollars, as the case may be, at any particular rate or at all. Our fiscal year end is December 31. References to a particular “fiscal year” are to our fiscal year ended December 31 of that calendar year. Our audited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”).
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We obtained the industry and market data used in this prospectus or any document incorporated by reference from industry publications, research, surveys and studies conducted by third parties and our own internal estimates based on our management’s knowledge and experience in the markets in which we operate. We did not, directly or indirectly, sponsor or participate in the publication of such materials, and these materials are not incorporated in this prospectus other than to the extent specifically cited in this prospectus. We have sought to provide current information in this prospectus and believe that the statistics provided in this prospectus remain up-to-date and reliable, and these materials are not incorporated in this prospectus other than to the extent specifically cited in this prospectus.
This prospectus contains additional trademarks, service marks and trade names of others. All trademarks, service marks and trade names appearing in this prospectus are, to our knowledge, the property of their respective owners. We do not intend our use or display of other companies’ trademarks, service marks or trade names to imply a relationship with, or endorsement or sponsorship of us by, any other person.
Except where the context otherwise requires and for purposes of this prospectus only the term:
● “Amended and Restated Memorandum and Articles of Association” refers to the second amended and restated memorandum and articles of association of our Company adopted on October 30, 2024, and as supplemented, amended or otherwise modified from time to time.
● “BVI” refers to the British Virgin Islands.
● “Company” or “our Company” refers to Multi Ways Holdings Limited, an exempted company incorporated in the Cayman Islands with limited liability under the Companies Act on June 2, 2022.
● “Companies Act” refers to the Companies Act (2025 Revision) of the Cayman Islands.
● “Controlling Shareholder” refers to Mr. Eng Hock Lim;
● “COVID-19” refers to the Coronavirus Disease 2019.
● “Directors” refers to the directors of our Company as at the date of this prospectus, unless otherwise stated.
● “Exchange Act” refers to the United States Securities Exchange Act of 1934, as amended.
● “Executive Directors” refers to the executive directors of our Company as at the date of this prospectus, unless otherwise stated.
● “Executive Officers” refers to the executive officers of our Company as at the date of this prospectus, unless otherwise stated.
● “Group,” “our Group,” “we,” “us,” or “our” refers to our Company and its subsidiaries or any of them, or where the context so requires, in respect of the period before our Company becoming the holding company of its present subsidiaries, such subsidiaries as if they were subsidiaries of our Company at the relevant time or the businesses which have since been acquired or carried on by them or as the case may be their predecessors.
● “GST” refers to the Goods and Services Tax chargeable pursuant to the Goods and Services Tax Act 1993 of Singapore.
● “HDB” refers to the Housing & Development Board of Singapore.
● “Independent Directors” refers to the independent non-executive Directors of our Company as at the date of this prospectus, unless otherwise stated.
● “LTA” refers to the Land Transport Authority of Singapore.
● “MOM” refers to the Ministry of Manpower of Singapore.
● “Multi Ways SG” refers to Multi Ways Equipment Pte. Ltd, a company incorporated in Singapore on August 22, 2002 and an indirect wholly-owned subsidiary of our Company.
● “MWE Holdings” refers to MWE Holdings Limited, a company incorporated in the BVI on June 15, 2022 and wholly-owned by our Company.
● “MWE Investments” refers to MWE Investments Limited, a company incorporated in the BVI on June 1, 2022 and owned as to 97.0% and 3.0% by Mr. Eng Hock Lim, being our Controlling Shareholder and Ms. Noi Geck Lee respectively.
● “Ordinary Shares” refers to the Company’s ordinary shares, par value US$0.00025 per share;
● “Operating Subsidiary” refers to Multi Ways SG;
● “S$” or “SGD” or “Singapore Dollars” refers to Singapore dollar(s), the lawful currency of Singapore.
● “SCAL” refers to Singapore Contractors’ Association Limited.
● “SEC” refers to the United States Securities and Exchange Commission;
● “Securities Act” refers to the U.S. Securities Act of 1933, as amended.
● “Singapore Companies Act” refers to the Companies Act 1967 of Singapore, as amended, supplemented or modified from time to time.
● “WSH” refers to the Workplace Safety and Health Council of Singapore, a statutory body under the MOM.
● “UAE” refers to the United Arab Emirates.
● “US$” or “U.S. dollars” refers to the lawful currency of the United States;
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MARKET AND INDUSTRY DATA
Certain market data and forecasts used throughout this prospectus were obtained from internal company surveys, market research, consultant surveys, reports of governmental and international agencies and industry publications and surveys. Industry publications and third-party research, surveys and reports generally indicate that their information has been obtained from sources believed to be reliable. This information involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. Our estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under the heading “Risk Factors” in this prospectus.
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus. This summary may not contain all of the information that may be important to you, and we urge you to read this entire prospectus carefully, including the “Risk Factors,” “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections and our consolidated financial statements and notes to those statements, included elsewhere in this prospectus, before deciding to invest in our Ordinary Shares. This prospectus includes forward-looking statements that involve risks and uncertainties. See “Special Note Regarding Forward-Looking Statements.”
Overview
Our Group’s history began in 1988 when Mr. Eng Hock Lim carried on the business of selling generators and air compressors under a sole proprietorship under the business name “Multi-Ways Equipment”. Multi Ways SG was incorporated in 2002 to take over the business carried on by Mr. Eng Hock Lim under the sole proprietorship. Over the last two decades, we have become a supplier of a wide range of heavy construction equipment in Singapore and the region. In 1996, we expanded our fleet of heavy construction equipment to include road-building equipment and mining equipment. In 2012, we expanded into the crane trading business.
Our mission is to be an industry leader in the sales and rental of a wide range of heavy construction equipment in Singapore and the region, and as a one-stop shop offering complementary equipment refurbishment and maintenance services to our customers.
Competitive Strengths
We have a long and proven track record in the supply of heavy construction equipment in Singapore.
We have been supplying heavy construction equipment and related materials to our customers for over two decades and have accumulated extensive industry experience. We believe our strong industry knowledge, reputation and consistent delivery of quality products and services have contributed to our success over the years.
We believe our strong track record in the supply of heavy construction and related equipment will facilitate the promotion and demand for our products with both existing and new customers, as well as the expansion of our business.
Skilled maintenance and servicing team who respond promptly to customers’ requests and are flexible in adapting to their needs and requirements
We pride ourselves in having a skilled team of technicians, mechanics, painters and panel-beaters who have relevant skills and expertise in the refurbishment of heavy construction equipment and troubleshooting and repair works, who have accumulated experience over the years. We have a team of 29 mechanics, 17 technicians and 10 painters and panel-beaters in our maintenance and servicing team, who are able to respond promptly to our customers’ requests, in terms of providing troubleshooting services, customization of equipment and refurbishment works. Our maintenance and servicing team have the required expertise and experience in conducting refurbishment works to the heavy construction equipment, and are able to customize specific parts or technical specifications to suit our customers’ needs and requirements, as various types of construction work have varying requirements. Our accumulated experience enables us to provide such value-added services to our customers.
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We have strong and stable relationships with our suppliers and customers.
Since the inception of our business in 1998, we have developed stable relationships with our key suppliers and customers in the region.
We have strived to maintain stable business relationships with our major customers. For the six months ended June 30, 2024 and the financial years ended December 31, 2023 and 2022, our top five customers accounted for 28.3%, 35.8%, and 39.4% of total sales, respectively.
We have an experienced management team.
We have an experienced management team, led by Mr. Eng Hock Lim, our Executive Director, Chairman and Chief Executive Officer, who has been instrumental in spearheading the growth of our Group. Mr. Eng Hock Lim has over 30 years of experience in the supply of heavy construction equipment industry in Singapore and is primarily responsible for the planning and execution of our Group’s business strategies and managing our Group’s customer relationships.
Our Group is supported by an experienced management team with substantial experience in the supply of heavy construction equipment.
Growth strategies
Our principal objective is to sustain continuous growth in our business and strengthen our market position in the sales of heavy construction equipment and related materials industry in Singapore with the following strategies:
Expand and renew our fleet of heavy construction equipment
We intend to continue to acquire both new and used heavy construction equipment to expand and renew our fleet available for sales and rental by our customers. With a wider range of equipment fleet available, we believe that we will be able to target a larger pool of customers and further expand our customer base and further strengthen our market position. With a newer fleet of heavy construction equipment, we believe that equipment downtime caused by wear and tear would be reduced, thereby resulting in an equipment fleet that is more reliable.
Increase our storage facilities and capabilities
We plan to increase our fleet size, we will need additional physical storage facilities to house our heavy construction equipment. We intend to look for opportunities to acquire or lease properties so that we will have sufficient space to house our equipment. In the event that our business continues to grow, we may need to expand our workshop to accommodate increasing refurbishment works and customization orders from our customers.
Expand business and operations through acquisitions, joint ventures and/or strategic alliances
We intend to focus on our principal business activities in the sales and rental of heavy construction equipment. We plan to explore opportunities to collaborate with suitable partners in related industries through strategic alliances, joint ventures, acquisitions and investments. For example, if a suitable opportunity arises, we may collaborate with potential partners in the infrastructure and building construction and mining industries if these collaborations are likely to provide us with more business opportunities.
Risks and Challenges
You should carefully consider all of the information in this prospectus before making an investment in our Ordinary Shares. Below please find a summary of the principal risks and uncertainties we face, organized under relevant headings. Our business is subject to a number of risks, including risks that may prevent us from achieving our business objectives or may adversely affect our business, financial condition, results of operations, cash flows, and prospects. These risks are discussed more fully below and include, but are not limited to, risks related to:
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Risks related to Our Business and Industry
| ● | Our business is inherently susceptible to the cyclical fluctuations of the infrastructure, building construction, mining, offshore and marine and oil and gas industry worldwide and regionally, which our customers are operating in (on page 13). | |
| ● | We are affected by regional and worldwide political, regulatory, social and economic conditions in the jurisdictions in which we and our customers and suppliers operate and in the jurisdictions which we intend to expand our business in (page 13). | |
| ● | Our rental business is dependent on the general economic conditions in Singapore, and our revenue and profitability may be adversely affected if the demand for construction of infrastructure and/or buildings fall (on page 14). | |
| ● | We are dependent on the need to continually maintain a wide range of heavy construction equipment which are relevant to our customers’ needs (on page 14). | |
| ● | We are susceptible to fluctuations in the prices and quantity of available heavy construction equipment and construction equipment parts (on page 15). | |
| ● | Our continued success is dependent on our key management personnel and our experienced and skilled personnel and our business may be severely disrupted if we are unable to retain them or to attract suitable replacements (on page 15). |
| ● | We are reliant on skilled labor (on page 15). | |
| ● | Our reputation and profitability may be adversely affected if there is prolonged equipment downtime (on page 16). | |
| ● | Our reputation and profitability may be adversely affected if there are major failures or malfunction in our heavy construction equipment sold or rented by our customers (on page 16). | |
| ● | We are exposed to disputes and claims arising from site accidents due to the usage of our heavy construction equipment (on page 17). | |
| ● | We may be affected if we are found to be in breach of any lease agreements entered into by us (on page 17). | |
| ● | Increased competition in the heavy construction equipment sales and rental business in Singapore and the region may affect our ability to maintain our market share and growth (on page 17). | |
| ● | We only have a limited number of customer groups and our business is significantly dependent on our major customer groups’ needs and our relationships with them. We may be unsuccessful in attracting new customers (on page 17). | |
| ● | We are exposed to the credit risks of our customers (on page 18). | |
| ● | We are dependent on our key suppliers for our supply of heavy construction equipment (on page 18). |
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| ● | Our business is subject to supply chain interruptions (on page 18). | |
| ● | We may be affected by an outbreak of other infectious diseases (on page 19). | |
| ● | We are exposed to risks arising from fluctuations of foreign currency exchange rates (on page 19). | |
| ● | We and/or our customers may not be able to obtain the necessary approvals or certifications for the use of our heavy construction equipment in various jurisdictions (on page 19). | |
| ● | We are subject to environmental, health and safety regulations and penalties, and may be adversely affected by new and changing laws and regulations (on page 20). | |
| ● | Our insurance policies may be inadequate to cover our assets, operations and any loss arising from business interruptions (on page 20). | |
| ● | We may require additional financing in the future to fund our purchase of heavy construction equipment and our future growth (on page 20). | |
| ● | We may be harmed by negative publicity (on page 21). | |
| ● | If we are unable to maintain and protect our intellectual property, or if third parties assert that we infringe on their intellectual property rights, our business could suffer (on page 21). | |
| ● | The war in Ukraine could materially and adversely affect our business and results of operations (on page 21). | |
| ● | We are exposed to risks in respect of acts of war, terrorist attacks, epidemics, political unrest, adverse weather conditions and other uncontrollable events (on page 22). | |
| ● | We may not be able to successfully implement our business strategies and future plans (on page 22). | |
| ● | We may be subject to litigation and regulatory investigations and proceedings and may not always be successful in defending ourselves against such claims or proceedings (on page 22). |
Risks related to our Ordinary Shares
| ● | We may not maintain the listing of our Ordinary Shares on the NYSE American Market which could limit investors’ ability to make transactions in our Ordinary Shares and subject us to additional trading restrictions (on page 22). | |
| ● | The trading price of our Ordinary Shares may be volatile and there may not be an active, liquid trading market for our Ordinary Shares, which could result in substantial losses to investors (on page 23). | |
| ● | Because we do not expect to pay dividends in the foreseeable future, you must rely on price appreciation of our Ordinary Shares for a return on your investment. You may not realize a return on your investment in our Ordinary Shares and you may even lose your entire investment (on page 24). | |
| ● | Short selling may drive down the market price of our Ordinary Shares (on page 24). |
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| ● | If securities or industry analysts do not publish or publish inaccurate or unfavorable research about our business, or if they adversely change their recommendations regarding our Ordinary Shares, the market price for our Ordinary Shares and trading volume could decline (on page 25). | |
| ● | If we are classified as a passive foreign investment company, United States taxpayers who own our securities may have adverse United States federal income tax consequences (on page 25). | |
| ● | Our Controlling Shareholder has substantial influence over the Company. Its interests may not be aligned with the interests of our other shareholders, and it could prevent or cause a change of control or other transactions (on page 25). | |
| ● | As a “controlled company” within the meaning of the NYSE American Company Guide, we may rely on exemptions from certain corporate governance requirements that provide protection to shareholders of other companies (on page 26). | |
| ● | As a company incorporated in the Cayman Islands, we are permitted to follow certain home country practices in relation to corporate governance matters in lieu of certain requirements under the NYSE American Company Guide. These practices may afford less protection to shareholders than they would enjoy if we complied fully with NYSE American Company Guide (on page 26). | |
| ● | You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated under Cayman Islands law (on page 26). | |
| ● | Certain judgments obtained against us or our auditor by our shareholders may not be enforceable (on page 27). | |
| ● | We are a foreign private issuer within the meaning of the Exchange Act, and as such we are exempt from certain provisions applicable to United States domestic public companies (on page 27). | |
| ● | We will incur increased costs after we cease to qualify as an emerging growth company (on page 28). | |
| ● | We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses to us (on page 28). | |
| ● | We are an “emerging growth company,” and the reduced disclosure requirements applicable to emerging growth companies may make our Ordinary Shares less attractive to investors (on page 28). |
Risks Related to the Offering
| ● | This is a best efforts offering, no minimum number or dollar amount of securities is required to be sold, and we may not raise the amount of capital we believe is required for our business plans (on page 29). | |
| ● | Because there is no minimum required for the offering to close, investors in this offering will not receive a refund in the event that we do not sell an amount of securities sufficient to pursue the business goals outlined in this prospectus (on page 29). | |
| ● | We have broad discretion in the use of the net proceeds from this offering and may not use them effectively (on page 29). | |
| ● | The price of the Ordinary Shares and other terms of this offering have been determined by us along with our placement agent (on page 29). | |
| ● | If you purchase our securities in this offering, you will incur immediate and substantial dilution in the book value of your shares (on page 29). |
Because we are incorporated under the laws of the Cayman Islands, you may encounter difficulty protecting your interests as a shareholder, and your ability to protect your rights through the U.S. federal court system may be limited. Please refer to the sections entitled “Risk Factors” and “Enforceability of Civil Liabilities” for more information.
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Corporate Structure
Our Company was incorporated in the Cayman Islands on June 2, 2022 under the Companies Act as an exempted company with limited liability. Our authorized share capital is currently US$2,500,000 divided into 10,000,000,000 Ordinary Shares, par value US$0.00025 each.
The following diagram illustrates the corporate structure of Multi Ways Holdings Limited and its subsidiaries as of the date of this prospectus:
Entities
A description of our principal operating subsidiary is set out below.
MWE Holdings
On June 15, 2022, MWE Holdings was incorporated in the BVI with limited liability. As part of a group reorganization completed on August 26, 2022, MWE Holdings became the direct holding company of 100% shares of Multi Ways SG and a wholly owned subsidiary of the Company.
Multi Ways SG
On August 22, 2002, Multi Ways SG was incorporated in Singapore with limited liability. Multi Ways SG commenced business in 2002 and is principally engaged in the sales and rental of heavy construction equipment in Singapore and the region. As part of a group reorganization completed on August 26, 2022, Multi Ways SG became a wholly owned subsidiary of MWE Holdings and an indirect wholly-owned subsidiary of our Company.
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Implications of Our Being a Controlled Company
MWE Investments, our controlling shareholder, owns approximately 61.8% of our total issued and outstanding Ordinary Shares, representing approximately 61.8% of the total voting power of our capital stock and as of the date of this prospectus. MWE Investments will control 48.6% shares after the offering, assuming the sales of all the securities being offered in this offering. MWE Investments is owned as to 97.0% and 3.0% by Mr. Eng Hock Lim and Ms. Noi Geck Lee respectively. We are a “controlled company” within the meaning of the NYSE American Rules and therefore we are eligible for, and, in the event, we no longer qualify as a foreign private issuer, we intend to rely on, certain exemptions from the corporate governance listing requirements of the NYSE American Market.
Implications of Being an Emerging Growth Company
As a company with less than $1.235 billion in revenue during our last fiscal year, we qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include:
| ● | being permitted to provide only two financial years of selected financial information (rather than five years) and only two years of audited financial statements (rather than three years), in addition to any required unaudited interim financial statements, with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure; and | |
| ● | an exemption from compliance with the auditor attestation requirement of the Sarbanes-Oxley Act, on the effectiveness of our internal control over financial reporting. |
We may take advantage of these reporting exemptions until we are no longer an emerging growth company. We will remain an emerging growth company until the earliest of (1) the last day of the fiscal year in which the fifth anniversary of the completion of this offering occurs, (2) the last day of the fiscal year in which we have total annual gross revenue of at least $1.235 billion, (3) the date on which we are deemed to be a “large accelerated filer” under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which means the market value of our Ordinary Shares that are held by non-affiliates exceeds $700.0 million as of the prior December 31, and (4) the date on which we have issued more than US$1.0 billion in non-convertible debt during the prior three-year period. We may choose to take advantage of some, but not all, of the available exemptions. We have included two years of selected financial data in this prospectus in reliance on the first exemption described above. Accordingly, the information contained herein may be different from the information you receive from other public companies in which you hold stock.
Implications of Being a Foreign Private Issuer
We report under the Exchange Act as a non-U.S. company with foreign private issuer status. Even after we no longer qualify as an emerging growth company, as long as we qualify as a foreign private issuer under the Exchange Act, we will continue to be exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including:
| ● | the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; | |
| ● | the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and | |
| ● | the rules under the Exchange Act requiring the filing with the Securities and Exchange Commission, or the SEC, of quarterly reports on Form 10-Q containing unaudited financial and other specified information, or current reports on Form 8-K, upon the occurrence of specified significant events. |
Both foreign private issuers and emerging growth companies are also exempt from certain more stringent executive compensation disclosure rules. Thus, even if we no longer qualify as an emerging growth company but remain a foreign private issuer, we will continue to be exempt from the more stringent compensation disclosures required of companies that are neither emerging growth companies nor foreign private issuers.
In addition, as a company incorporated in the Cayman Islands, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from the corporate governance listing requirements of the NYSE American Market. These practices may afford less protection to shareholders than they would enjoy if we complied fully with corporate governance listing requirements of the NYSE American Market. Following this offering, we will rely on home country practice to be exempted from certain of the corporate governance requirements of the NYSE American Market, such that a majority of the Directors on our Board of Directors are not required to be independent Directors.
Corporate Information
We were incorporated in the Cayman Islands on June 2, 2022. Our registered office in the Cayman Islands is at Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman, KY1-1111 Cayman Islands. Our principal executive office is at 3E Gul Circle, Singapore 629633. Our telephone number at this location is +65 6287 5252. Our principal website address is www.multiwaysholdings.com. The information contained on our website does not form part of this prospectus. Our agent for service of process in the United States is Cogency Global Inc., 122 E. 42nd Street, 18th Floor, New York, New York 10168.
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THE OFFERING
| Issuer | Multi Ways Holdings Limited | |
| Ordinary Shares Offered by us | Up to 9,000,000 Ordinary Shares at an assumed offering price of $0.2180 per Ordinary Shares, which represents a 30.0% discount from the last reported share price of our Ordinary Shares on NYSE American Market on March 26, 2025. | |
| Best Efforts | We have engaged Spartan Capital Securities, LLC as our exclusive placement agent to use their reasonable best efforts to solicit offers to purchase the securities in this offering. The placement agent has no obligation to buy any of the securities from us or to arrange for the purchase or sale of any specific number or dollar amount of the securities.
No minimum offering amount is required as a condition to closing this offering. We intend to complete one closing of this offering, but may undertake one or more additional closings for the sale of the additional securities to the investors in the initial closing. The offering will be terminated after sixty (60) days of the effectiveness of this registration statement provided that the closing(s) of the offering have not occurred by such date. | |
| Escrow Account and Deposit of Proceeds | The proceeds from the sale of the Ordinary Shares in this offering will be deposited in a separate non-interest bearing bank account (limited to funds received on our behalf). No interest will be available for payment to either us or the investors. The purpose of the escrow account is for (i) the holding of amounts of subscription monies which are collected through the banking system and (ii) the disbursement of collected funds.
We intend to complete one closing of this offering, but may undertake one or more closings on a rolling basis. Any such funds that the escrow agent receives shall be held in escrow until the applicable closing of the offering, and then used to complete securities purchases, or returned if this offering fails to close. In event that the offering is terminated, all subscription funds being held in the escrow account at the time of such termination will be returned to investors. | |
| Ordinary Shares issued and outstanding prior to completion of this offering | 33,330,000 Ordinary Shares | |
| Ordinary Shares issued and outstanding after completion of this offering | 42,330,000 Ordinary Shares | |
| Voting Rights | Each Share is entitled to one vote.
See the sections titled “Principal Shareholders” and “Description of Share Capital” for additional information. | |
| Listing | Our Ordinary Shares are listed on the NYSE American Market under the symbol “MWG.” | |
| Transfer Agent | VStock Transfer LLC
Address: 18 Lafayette Pl, Woodmere, NY 11598 Telephone: (212) 828-8436 |
| Securities Issuance Standstill | We have agreed that, without the prior written consent of the placement agent, we will not, for a period of 90 days after the date of the placement agency agreement: (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of capital stock of the Company or any securities convertible into or exercisable or exchangeable for shares of capital stock of the Company; (ii) file or cause to be filed any registration statement with the SEC relating to the offering of any shares of capital stock of the Company or any securities convertible into or exercisable or exchangeable for shares of capital stock of the Company; (iii) complete any offering of debt securities of the Company, other than entering into a line of credit with a traditional bank; or (iv) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of capital stock of the Company, subject to certain exemptions. | |
| Right of First Refusal | We have agreed to grant the placement agent the right of first refusal, for a period of six (6) months after the closing of this offering (but no longer than three (3) years from commencement of sales of this offering), to act as the sole investment banker, sole book-runner, or sole placement agent for any future public or private equity or debt offering, including any equity-linked financing (each, a “Subject Transaction”), conducted by the Company or any successor to the Company. | |
| Tail Period | For a period of six (6) months from the closing date of this offering, in the event that we receive any proceeds from any Subject Transaction to the extent that such financing or capital is provided to us by investors whom the placement agent had introduced to us, we have agreed to pay to the placement agent a cash fee equal to five percent (5%) of such gross proceed. | |
| Risk Factors | Investing in our Ordinary Shares involves risks. See “Risk Factors” beginning on page 13 of this prospectus for a discussion of factors you should carefully consider before deciding to invest in our Ordinary Shares. | |
| Payment and Settlement | We expect that the delivery of the Ordinary Shares for the initial closing against payment therefor will occur on or about [●], 2025. | |
| Use of Proceeds | We estimate that we will receive net proceeds of approximately US$1.7 million from this offering, assuming the sales of all of the securities we are offering, after deducting the placement agent’s fees, reimbursement of placement agent’s accountable and non-accountable expenses, and other estimated offering expenses payable by us. We intend to use the net proceeds to us for working capital and general corporate purposes. |
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RISK FACTORS
An investment in our securities carries a significant degree of risk. You should carefully consider the following risks before you decide to purchase the Ordinary Shares. Any one of these risks and uncertainties has the potential to cause material adverse effects on our business, prospects, financial condition and operating results which could cause actual results to differ materially from any forward-looking statements expressed by us and a significant decrease in the value of our Ordinary Shares. Refer to “Special Note Regarding Forward-Looking Statements”.
We may not be successful in preventing the material adverse effects that any of the following risks and uncertainties may cause. These potential risks and uncertainties may not be a complete list of the risks and uncertainties facing us. There may be additional risks and uncertainties that we are presently unaware of, or presently consider immaterial, that may become material in the future and have a material adverse effect on us. You could lose all or a significant portion of your investment due to any of these risks and uncertainties.
Risks related to our Business and Industry
Our business is inherently susceptible to the cyclical fluctuations of the infrastructure, building construction, mining, offshore and marine and oil and gas industry worldwide and regionally, which our customers are operating in.
Our customers mainly operate in the infrastructure, building construction, mining, offshore and marine, oil and gas industries, respectively. These industries are largely cyclical in nature and economic downturns and resulting pricing pressures experienced by them will result in them reducing their capital and operating expenditures. A slowdown in these industries or the occurrence of any event that may adversely affect these industries such as changes in regulatory environment and economic conditions will result in a decrease in demand for our services and products, and accordingly our business, profitability and financial performance may be adversely affected. These industries are also subject to the impact of the industry cycle, general market and economic conditions and government policies and expenditures, which are factors beyond our control. A decline in the number of new sales orders and rental contracts due to these factors may cause us to operate in a more competitive environment, and we may also be required to be more competitive in our pricing which, in turn, may adversely impact our business, financial condition, results of operations and prospects.
As our revenue is largely derived from our equipment sales business (compared with our rental business), our business performance and profitability may be adversely affected by our customers’ preferences such as whether to purchase or rent our heavy construction equipment required for their projects. These preferences may change according to market conditions, the general availability of financing and the type and duration of project which our customers require heavy construction equipment for. In the event that we have to lower our sales or rental prices for our heavy construction equipment to attract and retain our customers, our profitability, revenue and financial performance will be adversely affected.
We are affected by regional and worldwide political, regulatory, social and economic conditions in the jurisdictions in which we and our customers and suppliers operate and in the jurisdictions which we intend to expand our business in.
We and our customers and suppliers are governed by the laws, regulations and government policies in each of the various jurisdictions in which we and our customers and suppliers operate or into which we intend to expand our business and operations. Our business and future growth are dependent on the political, regulatory, social and economic conditions in these jurisdictions, which are beyond our control. Any economic downturn, changes in policies, currency and interest rate fluctuations, capital controls or capital restrictions, labor laws, changes in environmental protection laws and regulations, duties and taxation and limitations on imports and exports in these countries may materially and adversely affect our business, financial condition, results of operations and prospects.
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Generally, we fund our purchases of heavy construction equipment via our internal resources and short and long-term financing from banks and other financial institutions. Any disruption, uncertainty and volatility in the global credit markets may limit our ability to obtain the required working capital and financing for our business at reasonable terms and finance costs. If all or a substantial portion of our credit facilities are withdrawn and we are unable to secure alternative funding on acceptable commercial terms, our operations and financial position will be adversely affected. The interest rates for most of our credit facilities are subject to review from time to time by the relevant financial institutions. Given that we rely on these credit facilities to finance our purchase of heavy construction equipment and that interest expenses represent a significant percentage of our expenses, any increase in the interest rates of the credit facilities extended to us may have a material adverse impact on our profitability.
In addition, such fluctuations and volatility in the global credit markets could limit credit lines of our current and potential customers from banks or financial institutions. Accordingly, such customers may not commence or continue their construction projects, or may not be able to obtain sufficient financing to purchase or rent our heavy construction equipment, or we may be required to lower our rates in order to cater to our customers’ current situation. This may have an adverse impact on our revenue and financial performance.
Our rental business is dependent on the general economic conditions in Singapore, and our revenue and profitability may be adversely affected if the demand for construction of infrastructure and/or buildings fall.
Revenues from our rental business is derived largely from our customers in Singapore. As such, our business is subject to the uncertainties and cyclical nature of the infrastructure and building construction sector in Singapore as the demand for our heavy construction equipment rental business is dependent, to a large extent, on the level of business activities in the infrastructure and building construction sector in Singapore. In particular, our revenue and profitability may be adversely affected if the demand for construction of infrastructure and/or buildings fall. In addition, an economic downturn in Singapore may lead to a reduction in construction projects, thereby leading to a subsequent decline in demand for heavy construction equipment, and this would have an adverse impact on our revenue and financial performance.
As our business is dependent on our customers’ demand for heavy construction equipment in Singapore, which is undertaken on a project basis on a short-term to mid-term basis and such projects are non-recurring, it is critical that we continuously and consistently secure customers who have new and upcoming construction projects. We cannot assure you that we will be able to do so. Whether our existing customers are able to secure new construction projects is not within our control, and we may not be able to attract new customers who have secured new and upcoming construction projects. Accordingly, our historical performance may not be an indication of our future performance. In the event that we are not able to secure new projects of similar value, size and margins, there would be an adverse impact on our financial performance.
We are dependent on the need to continually maintain a wide range of heavy construction equipment which are relevant to our customers’ needs.
The needs and preferences of our customers in terms of types and specifications of heavy construction equipment may change as a result of evolving needs and new developments in technology. Our future success depends on our ability to obtain new and used heavy construction equipment that meet evolving market demands of our customers. The preferences and purchasing patterns of our customers can change rapidly due to technological developments in their respective industries. There is no assurance that we will be able to respond to changes in the specifications of our customers in a timely manner. Our success depends on our ability to adapt our products to the requirements and specifications of our customers. There is also no assurance that we will be able to sufficiently and promptly respond to changes in customer preferences to make corresponding adjustments to our products or services, and failing to do so may have a material and adverse effect on our business, financial condition, results of operations and prospects.
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As of June 30, 2024, and December 31, 2023 and 2022, we had inventories of $42.3 million, $36.7 million and $31.4 million, respectively. Our sales and rental business rely on customer demand for our heavy construction equipment. Depending on the progress of technological development of heavy construction equipment, our existing heavy construction equipment may become prematurely obsolete or phased out. Any change in customer demand for our products may have an adverse impact on our product sales, which may in turn lead to inventory obsolescence, decline in inventory value or inventory write-off. In that case, our business, financial condition, results of operations and prospects may be materially and adversely affected.
We are susceptible to fluctuations in the prices and quantity of available heavy construction equipment and construction equipment parts.
We are exposed to fluctuations in the prices of heavy construction equipment and construction equipment parts which we may require for our heavy construction equipment repair and maintenance services. In the event that we are not able to source any specific construction equipment part required to carry out our maintenance and refurbishment services at acceptable prices, or if we face any delays or shortages in obtaining sufficient quantity of construction equipment parts, we may not be able to conduct our services business in an efficient manner, which may negatively impact our sales and rental businesses as well, as we regularly refurbish and maintain heavy construction equipment prior to resale and/or rental. Such shortages and delays in construction equipment parts and price fluctuations of construction equipment parts may have a negative impact on our profitability.
Our continued success is dependent on our key management personnel and our experienced and skilled personnel and our business may be severely disrupted if we are unable to retain them or to attract suitable replacements.
Since the commencement of our business, our Executive Director, Chairman and Chief Executive Officer, Mr. Eng Hock Lim has been instrumental in expanding our business from dealing with generators and air compressors in 1988 to providing our current wide range of products and services in respect of heavy construction equipment today. We rely on the wide network and contacts of Mr. Eng Hock Lim which was built over the past two decades, in particular, sourcing for new and used heavy construction equipment from new and existing suppliers and sales of heavy construction equipment.
Our performance depends on the continued service and performance of Mr. Eng Hock Lim because he plays an important role in guiding the implementation of our business strategies and future plans. The working and business relationships that Mr. Eng Hock Lim has developed with our main suppliers and customers over the years is important for the future development of our business. If Mr. Eng Hock Lim were to terminate his employment, there is no assurance that we would be able to find suitable replacements with such a vast network of contacts in a timely manner. The loss of services of Mr. Eng Hock Lim and/or the inability to identify, hire, train and retain other qualified engineering technical and operations personnel in the future may materially and adversely affect our business, financial condition, results of operations and prospects.
In addition, although we are dependent on certain key personnel, we do not have any key man life insurance policies on any such individual. Therefore, if any of our key management personnel dies or become disabled, we will not receive any compensation to assist with such individual’s absence. The loss of such person could materially and adversely affect our business, financial condition, results of operations and growth prospects.
We are reliant on skilled labor.
Our operations are dependent on our ability to recruit and retain experienced and skilled crane operators and servicing and maintenance team comprising technicians, mechanics, painters and panel-beaters who are trained and specialized in certain types of heavy construction equipment or specific repair works to provide maintenance and repair support services. As there is a limited number of skilled personnel in the industry, competition for experienced and skilled personnel is intense. In case of a shortage of such skilled labor in respect of any particular technical skills for repair and maintenance services, we may have to increase their salaries in order to attract and retain their services which will result in an increase in our overall cost of sales and operating expenses. In the event we are not able to pass on the increase in costs to our customers, our financial performance will be adversely affected.
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We rely on experienced and skilled personnel for our operations and services and our ability to provide good customer care service depends to a large extent on whether we are able to secure adequately skilled personnel for our operations. In particular, we rely on our team of crane operators approved by the MOM for the operation of our cranes in Singapore. If we are unable to employ suitable personnel, or if our personnel do not fulfil their roles or if we experience a high turnover of experienced and skilled personnel without suitable, timely or sufficient replacements, the quality of our services may decline, which may adversely affect our business, financial condition, results of operations and prospects.
In addition, the availability of both skilled and unskilled foreign labor is subject to policies imposed by the MOM in Singapore. The availability, requirements and costs of housing for such workers are also subject to government policies. Any change in such policies may affect the supply of foreign manpower and cause disruptions to our operations which will result in an increase in our labor costs and may have a material adverse impact on our financial performance. Please refer to the “Business – Our Equipment Sales Business”.
Our reputation and profitability may be adversely affected if there is prolonged equipment downtime.
Equipment downtime occurs when our heavy construction equipment is sent for repair and maintenance instead of being deployed at our customers’ jobsites. Our Group has a wide range of heavy construction equipment in our inventories such as excavators, dump trucks, cranes and generators. Please refer to “Business – Our Customers” for further description of the full suite of heavy construction equipment in our inventories. In the event that any of our heavy construction equipment experience prolonged downtime due to repair and maintenance needs, the opportunity cost, in terms of foregone revenue could be substantial. Further, newer forms of heavy construction equipment may also be more sophisticated with the incorporation of newer technologies which makes repair and maintenance of such heavy construction equipment more time consuming or may render certain equipment obsolete. Although our repair and maintenance team are constantly upgrading their technical skills and know-how to keep up with the advancement of heavy construction equipment technologies, there is no assurance that we will be able to minimize the time required for repair and maintenance.
Our reputation and profitability may be adversely affected if there are major failures or malfunction in our heavy construction equipment sold or rented by our customers.
Our operations are exposed to the risk of equipment failure which may arise due to wear and tear, mechanical failure, equipment upgrades and delays in delivery of machinery and equipment, risk of failure by our employees to follow procedures and protocols, as well as inherent risks in operating equipment and machinery, resulting in damage to or loss of any relevant heavy construction equipment or facilities required in a project, or personal injury. Major operational failure could result in loss of life and/or serious injury, damage to or loss of the machines, equipment or facilities and protracted legal disputes and damage to our reputation. In the event of an operational or equipment failure, we may be forced to cease all or part of our operations and we may be subject to legal and regulatory liabilities such as penalties, sanctions or significant costs and expenses in any dispute as a result of such operational or equipment failure. In addition, the industry we operate in is highly regulated by the MOM and other regulatory authorities in Singapore. Where there is any non-compliance of any regulatory requirement of the MOM or other regulatory authorities in Singapore, we may be subject to penalties or sanctions as may be imposed by them. This may have an adverse impact on our operations and financial performance.
Since our establishment, we believe that we have built goodwill in our “Multi Ways” brand and thus customer loyalty. Hence, if there are any major lapses in our equipment sales and rental such as negligence by our operators, frequent breakdowns of our rental of heavy construction equipment, or due to circumstances beyond our control resulting in negative publicity, our reputation may be adversely affected and our customers may lose confidence in our equipment sales and rental. In such event, our business and hence our profitability and financial performance may be adversely affected.
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We are exposed to disputes and claims arising from site accidents due to the usage of our heavy construction equipment.
The infrastructure, building construction, mining offshore and marine, and oil and gas industries are a high-risk industry in which risks of accidents and fatalities are more likely to occur. Claims may be made against us for such jobsite accidents and/or fatalities on grounds such as defective or malfunctioning heavy construction equipment and failure to adhere to health and safety standards by our crane operators or crane erectors. In the event that we are required to pay damages arising from disputes, our reputation and profitability will be adversely affected.
Accidents which occur during lifting operations or other operations of our heavy construction equipment may result in damages to property and equipment, personal injury and/or deaths to our employees or third parties. Although we have sought protection against the risk of such liabilities by regular servicing and maintenance of our heavy construction equipment and obtaining the necessary insurance coverage for our equipment and employees, we believe that it is not possible for us to be fully insured against every conceivable risk that we may be exposed to.
If any accidents are not covered by our insurance policies and claims arising from such accidents are in excess of our insurance coverage or if any of our insurance claims are contested by any insurance company, we may be required to pay for such compensation, which may have a material and adverse impact on our financial performance. In addition, the payment by our insurers of such insurance claims may result in increases in the premiums payable by us for our insurances. This will also increase the costs of our operations and adversely affect our financial performance.
We may be affected if we are found to be in breach of any lease agreements entered into by us.
We have leased certain of our real properties from JTC Corporation (formerly the Jurong Town Corporation) (the “JTC”), and are subject to certain terms and conditions in respect of these real properties, such as requirement to obtain approval from the JTC for subletting. As such, we may be exposed to regulatory and enforcement risks, including but not limited to potentially costly fines, if we are found to in breach of any of the terms and conditions of our leases.
Increased competition in the heavy construction equipment sales and rental business in Singapore and the region may affect our ability to maintain our market share and growth.
We operate in the heavy construction equipment sales and rental business, which is highly competitive. Our competitors may possess greater financial resources and more up-to-date equipment with better specifications. They may also have a larger customer base and offer a wider range of heavy construction equipment coupled with greater marketing resources.
Entry of new competitors in the market or market consolidation could also increase the degree of competition within the industry. Our continued success depends on our ability to compete with our competitors as well as to be able to compete successfully in the future against existing or potential competitors or to adapt to changes in market conditions and demands. In the event we are unable to compete successfully against existing or potential competitors or to adapt to changes in market conditions and demands, our business and financial performance may be adversely affected.
We maintain good working relationships with our suppliers and customers and have a wide range of heavy construction equipment for our customers’ needs. However, there is no assurance that our existing suppliers and customers will renew their agreements or continue to work with us. In the event our suppliers and customers choose to work with our competitors and/or our experienced and skilled employees choose to join our competitors, we may not be able to maintain our competitive position and our business, financial condition, results of operations and prospects may be materially and adversely affected.
We only have a limited number of customer groups and our business is significantly dependent on our major customer groups’ needs and our relationships with them. We may be unsuccessful in attracting new customers.
Our aggregate sales generated from our top five customer groups amounted to approximately 28.3%, 35.8% and 39.4% of our revenue for the six months ended June 30, 2024 and for the financial years ended December 31, 2023 and 2022, respectively. In particular, sales to our largest customer amounted to approximately $1.5 million, representing approximately 8.1% of our total revenue, for the six months ended June 30, 2024 and approximately $4.4 million, representing approximately 12.1% of our total revenue, for the financial years ended December 31, 2023.
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The concentration of our customers has not changed materially. Accordingly, our sales would be significantly affected by changes in our relationship with or in the needs of our major customer groups, particularly our largest customer group, as well as other factors that may affect their purchases from us, many of which are beyond our control. Any adverse changes in the economic conditions in the markets in which our customer groups operate and in their business expansion plans may negatively affect their purchasing practices and result in a reduction in demand for our heavy construction equipment and services.
In addition, there is generally no long-term commitment from customers of sales and rental of heavy construction equipment business. If we fail to quote a competitive price to our customer, or if the quality of our services does not meet our customer’s specifications or if there is any disruption to our business relationship with our customer, we may be unable to secure further business from such customer. Any significant decrease in sales to any of our customers for any reason, including any disruption to our business relationship with them, may materially and adversely affect our business, financial condition, results of operations and prospects.
We are exposed to the credit risks of our customers.
We extend credit terms to our customers. Our average accounts receivable turnover days were approximately 98 days and approximately 63 days for the six months ended June 30, 2024 and for the financial year ended December 31, 2023, respectively. Our customers may be unable to meet their contractual payment obligations to us, either in a timely manner or at all. The reasons for payment delays, cancellations or default by our customers may include insolvency or bankruptcy, or insufficient financing or working capital due to late payments by their respective customers. While we did not experience any material order cancellations by our customers during the six months ended June 30, 2024 and the financial years ended December 31, 2023 and 2022, there is no assurance that our customers will not cancel their orders and/or refuse to make payment in the future in a timely manner or at all. We may not be able to enforce our contractual rights to receive payment through legal proceedings. In the event that we are unable to collect payments from our customers, we are still obliged to pay our suppliers in a timely manner and thus our business, financial condition and results of operations may be adversely affected.
We are dependent on our key suppliers for our supply of heavy construction equipment.
Since we commenced operations, we have maintained long-standing relationships with a reliable group of suppliers, from whom we source good quality and competitively priced construction equipment. Our equipment sales and rental business is dependent on our ability to obtain a supply of such good quality and reliable equipment from our suppliers at competitive prices. We consider suppliers that account for more than 10% of our total purchasing as major suppliers. We are dependent on one such major supplier who accounted in aggregate for approximately 27.0%, 17.0% and 15.2% of our Group’s equipment purchases for the six months ended June 30, 2024 and the financial years ended December 31, 2023 and 2022. As we generally do not have long-term supply contracts with our major suppliers, and the supply of heavy construction equipment is on an ad-hoc basis as and when such equipment is available for sale, there can be no assurance that we will have continued access to a sufficient supply of good quality new and used heavy construction equipment at competitive prices. In the event we are unable to obtain good quality equipment from our major suppliers at competitive prices, we may have to seek alternative sources from other suppliers and may be charged higher prices and will be subject to the quality of the equipment purchased from alternative suppliers whom we are not familiar with. In the event that we purchase inferior construction equipment from such alternative suppliers, our operations, reputation, profitability and financial performance may be materially and adversely affected.
Our business is subject to supply chain interruptions.
We work with third party logistic providers for the import, export and transportation of our heavy construction equipment. We rely on such third-party service providers’ abilities to timely deliver our heavy construction equipment as part of the supply chain logistics. The factors that can adversely affect our operations include, but are not limited to:
| ● | interruptions to our delivery capabilities; | |
| ● | failure of third-party service providers to meet our standards or their commitments to us; and | |
| ● | increasing transportation costs, shipping constraint or other factors that could impact cost, such as having to find more expensive service providers which may or may not be readily available. |
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Our results of operations and capital resources have not been materially impacted by supply chain interruptions during the six months ended June 30, 2024 and the financial years ended December 31, 2023, and 2022. respectively. However, any increased costs from delays, cancellations and insurance, or disruption to, or inefficiency in, the supply chain network of our third-party service providers, whether due to geopolitical conflicts, outbreaks, or other factors, could affect our revenue and profitability. Please refer to the risk factor “The war in Ukraine could materially and adversely affect our business and results of operations” set out below in this prospectus for details on how these recent events have caused interruptions to our supply chain and impacted our operations. If we fail to manage these risks effectively, we could experience a material adverse impact to our reputation, revenue and profitability.
We may be affected by an outbreak of other infectious diseases.
An outbreak of infectious diseases such as severe acute respiratory syndrome and avian influenza or new forms of infectious diseases in the future may potentially affect our operations as well as the operations of our customers and suppliers. In the event that any of the employees in any of our offices or worksites or those of our customers and suppliers is affected by any infectious disease, we or our customers and suppliers may be required to temporarily shut down our or their offices or worksites to prevent the spread of the diseases. This may have an adverse impact on our revenue and financial performance.
We are exposed to risks arising from fluctuations of foreign currency exchange rates.
Our reporting currency is United States dollars and a portion of our overseas sales and procurement is denominated in Japanese Yen. We may be exposed to foreign currency exchange gains or losses arising from transactions in currencies other than our reporting currency.
We and/or our customers may not be able to obtain the necessary approvals or certifications for the use of our heavy construction equipment in various jurisdictions.
Various jurisdictions require different licenses, approvals and certifications for the use and operation of certain heavy construction equipment, such as in Singapore, crane operators of certain types of cranes will need to be approved by the MOM in order to operate such cranes.
As we offer crane erection and operation services to our customers within Singapore, we will need to maintain such approvals and certifications in order to carry out such services. We have 14 employees approved by the MOM to operate cranes in Singapore, and 14 employees who have completed the requisite course work to be certified to erect a range of cranes at jobsites in Singapore. In addition, we are guided by a set of safety regulations imposed on us. See “Regulations” We are subject to monetary fines and/or demerit points if there is an infringement of any of the safety regulations. Our business operations are regulated by various governmental bodies and authorities in Singapore. See “Regulations”. Any such new regulations or any changes to the licensing requirements on the use and operation of heavy construction equipment may have an adverse impact on our operations and financial performance.
We have also notified the MOM of our factory and that we conduct our refurbishment, maintenance and servicing services of heavy construction equipment at our workshop at 3E Gul Circle, Singapore 629633. The licenses and permits are generally subject to conditions stipulated in such licenses and permits and/or relevant laws and regulations under which such licenses and permits are issued. Failure to comply with such conditions, laws or regulations could result in us being penalized or the revocation or non-renewal of the relevant license or permit. Accordingly, we have to constantly monitor and ensure our compliance with such conditions imposed, if any. A failure to comply with such conditions may result in the revocation or non-renewal of any of the licenses and permits and which may impact our ability to carry out our business and operations. In addition, compliance with changes in government legislation, regulations or policies may increase our costs and any significant increase in licensing and compliance costs arising from such changes may adversely affect our financial performance. In such event, our business and profitability would be materially and adversely affected.
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We are subject to environmental, health and safety regulations and penalties, and may be adversely affected by new and changing laws and regulations.
We are subject to laws, regulations and policies relating to the protection of the environment and to workplace health and safety. We are required to adopt measures to control the discharge of polluting matters, wastewater discharge and hazardous substances and noise at our servicing and maintenance workshop and storage facilities in accordance with such applicable laws and regulations and to implement such measures that ensure the safety and health of our employees. Changes to current laws, regulations or policies or the imposition of new laws, regulations and policies in the heavy construction equipment industry could impose new restrictions or prohibitions on our current practices. We may incur significant costs and expenses and need to budget additional resources to comply with any such requirements, which may have a material and adverse effect on our business, financial condition, results of operations and prospects.
Our insurance policies may be inadequate to cover our assets, operations and any loss arising from business interruptions,
We face the risk of loss or damage to our equipment due to fire, theft or other natural disasters in Singapore. Such events may also cause a disruption or cessation in our business operations, and thus may adversely affect our financial results. Our insurance coverage may not be sufficient to cover all of our potential losses. If there are losses which exceed the insurance coverage or are not covered by our insurance policies, we will remain liable for any liability, debt or other financial obligation related to such losses. We do not have any insurance coverage for business interruptions.
Due to the nature of our operations, there is also a risk of accidents occurring either to our employees or to third parties on our premises and/or on our customers’ jobsites during the course of operations. In the event that any claims arise in respect of such occurrences and liability for such claims are attributed to us or that our insurance coverage is insufficient, we may be exposed to losses which may adversely affect our profitability and financial position.
We may require additional financing in the future to fund our purchase of heavy construction equipment and our future growth.
We require financing to fund our purchase of heavy construction equipment such as excavators, bulldozers and cranes, as such equipment have a high upfront capital expenditure. If we are unable to secure financing to fund our purchases of heavy construction equipment, our ability to renew or expand our fleet to meet our equipment rental and sales requirements and maintain a wide inventory of equipment may be adversely affected. This would, in turn, affect our competitive advantage, which lies in our wide variety and range of heavy construction equipment available for sales and rental. In such event, our future financial performance may be materially and adversely affected.
In view of the fast-changing business requirements and market conditions, we may encounter certain business opportunities from time to time that may potentially increase our revenue, and accordingly we may be required to expand our capabilities and business through acquisitions, investments, joint-ventures and/or strategic partnerships with parties who are able to add value to our business. If such situation arises, we may require additional funds to take advantage of these opportunities.
If our funding requirements are met by way of additional debt financing, we may be subject to restrictions under such debt financing arrangements which may:
| ● | limit our ability to pay dividends or require us to seek consent for the payment of dividends; | |
| ● | increase our vulnerability to general adverse economic and industry conditions; | |
| ● | limit our ability to pursue our growth plans; | |
| ● | require us to dedicate a substantial portion of our cash flow from operations to payment for our debt, thereby reducing the availability of our cash flow to fund other capital expenditure, working capital requirements and other general corporate purposes; or | |
| ● | limit our flexibility in planning for, or reacting to, changes in our business and our industry. |
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We may be harmed by negative publicity.
We operate in highly competitive industries and there are other companies in the market that offer similar products for sales and rental and complementary services which we offer. We derive most of our customers through word of mouth and we rely on the positive feedback of our customers. Thus, customer satisfaction with our heavy construction equipment and heavy construction equipment related services, is critical to the success of our business as this will also result in potential referrals to new customers from our existing customers. If we fail to meet our customers’ expectations, there may be negative feedback regarding our products and/or services, which may have an adverse impact on our business and reputation. In the event we are unable to maintain a high level of customer satisfaction or any customer dissatisfaction is inadequately addressed, our business, financial condition, results of operations and prospects may also be adversely affected.
Our reputation may also be adversely affected by negative publicity in reports, publications such as major newspapers and forums, or any other negative publicity or rumors. There is no assurance that our Group will not experience negative publicity in the future or that such negative publicity will not have a material and adverse effect on our reputation or prospects. This may result in our inability to attract new customers or retain existing customers and may in turn adversely affect our business and results of operations.
If we are unable to maintain and protect our intellectual property, or if third parties assert that we infringe on their intellectual property rights, our business could suffer.
Our business depends, in part, on our ability to identify and protect proprietary information and other intellectual property such as our client lists and information and business methods. We rely on trade secrets, confidentiality policies, non-disclosure and other contractual arrangements and copyright and trademark laws to protect our intellectual property rights. However, we may not adequately protect these rights, and their disclosure to, or use by, third parties may harm our competitive position. Our inability to detect unauthorized use of, or to take appropriate or timely steps to enforce, our intellectual property rights may harm our business. Also, third parties may claim that our business operations infringe on their intellectual property rights. These claims may harm our reputation, be a financial burden to defend, distract the attention of our management and prevent us from offering some services. Intellectual property is increasingly stored or carried on mobile devices, such as laptop computers, which increases the risk of inadvertent disclosure if the mobile devices are lost or stolen and the information has not been adequately safeguarded or encrypted. This also makes it easier for someone with access to our systems, or someone who gains unauthorized access, to steal information and use it to our disadvantage.
The war in Ukraine could materially and adversely affect our business and results of operations.
The outbreak of war in Ukraine has already affected global economic markets, including a dramatic increase in the price of oil and gas, and the uncertain resolution of this conflict could result in protracted and/or severe damage to the global economy. Russia’s recent military interventions in Ukraine have led to, and may lead to, additional sanctions being levied by the United States, European Union, Singapore and other countries against Russia. Russia’s military incursion and the resulting sanctions could adversely affect global energy and financial markets and thus could affect our customers’ businesses and our business, even though we do not have any direct exposure to Russia or the adjoining geographic regions.
In addition, Russia and Ukraine are major exporters of oil and critical minerals needed by our customers, which could have a significant negative impact on many of our customers in the various industries. The extent and duration of the military action, sanctions and resulting market disruptions are impossible to predict, but could be substantial. Any such disruptions caused by Russian military action or resulting sanctions may magnify the impact of other risks described in this section. We do not have any suppliers or customers in Ukraine or Russia. Our business and our results of operations have not been materially impacted by Russia’s invasion of Ukraine. We cannot predict the progress or outcome of the situation in Ukraine, as the conflict and governmental reactions are rapidly developing and beyond their control. Prolonged unrest, intensified military activities or more extensive sanctions impacting the region could have a material adverse effect on the global economy, including the businesses of our customers, and such effect could in turn have a material adverse effect on our business, financial condition, results of operations and prospects.
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We are exposed to risks in respect of acts of war, terrorist attacks, epidemics, political unrest, adverse weather conditions and other uncontrollable events.
Unforeseeable circumstances and other factors such as power outages, labor disputes, adverse weather conditions or other catastrophes, epidemics or outbreaks may disrupt our operations and cause loss and damage to our storage facilities, workshop and office, and acts of war, terrorist attacks or other acts of violence may further materially and adversely affect the global financial markets and consumer confidence. Our business may also be affected by macroeconomic factors in the countries in which we operate, such as general economic conditions, market sentiment, social and political unrest and regulatory, fiscal and other governmental policies, all of which are beyond our control. Any such events may cause damage or disruption to our business, markets, customers and suppliers, any of which may materially and adversely affect our business, financial condition, results of operations and prospects.
We may not be able to successfully implement our business strategies and future plans
As part of our business strategies and future plans, we intend to expand and renew our fleet of heavy construction equipment portfolio and increase our storage facilities and capabilities as well as consider potential business opportunities through mergers and acquisitions and joint ventures. While we have planned such expansion based on our outlook regarding our business prospects, there is no assurance that such expansion plans will be commercially successful or that the actual outcome of those expansion plans will match our expectations. The success and viability of our expansion plans are dependent upon our ability to successfully predict the types of heavy construction equipment which are tradable amongst our customers, hire and retain skilled employees to carry out our business strategies and future plans and implement strategic business development and marketing plans effectively and upon an increase in demand for our products and services by existing and new customers in the future.
Further, the implementation of our business strategies and future plans may require substantial capital expenditure and additional financial resources and commitments. There is no assurance that these business strategies and future plans will achieve the expected results or outcome such as an increase in revenue that will be commensurate with our investment costs or the ability to generate any costs savings, increased operational efficiency and/or productivity improvements to our operations. There is also no assurance that we will be able to obtain financing on terms that are favorable, if at all. If the results or outcome of our future plans do not meet our expectations, if we fail to achieve a sufficient level of revenue or if we fail to manage our costs efficiently, we may not be able to recover our investment costs and our business, financial condition, results of operations and prospects may be adversely affected.
We may be subject to litigation and regulatory investigations and proceedings and may not always be successful in defending ourselves against such claims or proceedings.
From time to time, we may be subject to lawsuits and arbitration claims in the ordinary course of our business brought by external parties or disgruntled current or former employees, inquiries, investigations, and proceedings by regulatory and other governmental agencies. Any such claims brought against us, with or without merits, may result in administrative measures, settlements, injunctions, fines, penalties, negative publicities, or other results adverse to us that could have material adverse effect on our reputation, business, financial condition, results of operations, and prospects even if we are successful in defending ourselves against.
Our customers may also be involved in litigation, investigation, or other legal proceedings, some of which may relate to transactions that we have advised, whether or not there has been any fault on our part.
Risks related to our Ordinary Shares
We may not maintain the listing of our Ordinary Shares on the NYSE American Market which could limit investors’ ability to make transactions in our Ordinary Shares and subject us to additional trading restrictions.
Our Ordinary Shares are listed on the NYSE American Market under the symbol “MWG.” In order to continue listing our Ordinary Shares on the NYSE American Market, we must satisfy minimum financial and other continued listing requirements and standards, including those regarding director independence and independent committee requirements, minimum shareholders’ equity, minimum share price, and certain corporate governance requirements. There can be no assurance that we will continue to be able to comply with the applicable Company Guide, and we cannot assure you that our Ordinary Shares will continue to be listed on the NYSE American Market in the future.
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If the NYSE American Market delists our Ordinary Shares and we are unable to list our shares on another national securities exchange, we expect our Ordinary Shares could be quoted on an over-the-counter market in the United States. If this were to occur, we could face significant material adverse consequences, including:
| ● | a limited availability of market quotations for our Ordinary Shares; | |
| ● | reduced liquidity for our Ordinary Shares; | |
| ● | a determination that our Ordinary Shares are “penny stock,” which will require brokers trading in our Ordinary Shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our Ordinary Shares; | |
| ● | a limited amount of news and analyst coverage; and | |
| ● | a decreased ability to issue additional securities or obtain additional financing in the future. |
As long as our Ordinary Shares are listed on the NYSE American Market, U.S. federal law prevents or preempts the states from regulating their sale. However, the law does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar their sale. Further, if we were no longer listed on the NYSE American Market, we would be subject to regulations in each state in which we offer our shares.
The trading price of our Ordinary Shares may be volatile and there may not be an active, liquid trading market for our Ordinary Shares, which could result in substantial losses to investors.
The trading price of our Ordinary Shares may be volatile and could fluctuate widely due to factors beyond our control. This may happen because of the broad market and industry factors, like the performance and fluctuation of the market prices of other companies with business operations located mainly in Singapore that have listed their securities in the United States. In addition to market and industry factors, the price and trading volume for our Ordinary Shares may be highly volatile for factors specific to our own operations, including the following:
| ● | fluctuations in our revenues, earnings and cash flow; | |
| ● | changes in financial estimates by securities analysts; | |
| ● | additions or departures of key personnel; | |
| ● | a limited amount of news and analyst coverage; and | |
| ● | release of lock-up or other transfer restrictions on our outstanding equity securities or sales of additional equity securities; and | |
| ● | potential litigation or regulatory investigations. |
Any of these factors may result in significant and sudden changes in the volume and price at which our shares will trade.
Recently, there have been instances of extreme stock price run-ups followed by rapid price declines and strong stock price volatility with recent initial public offerings, especially among those with relatively smaller public floats. As a relatively small-capitalization company with relatively small public float, we may experience greater stock price volatility, extreme price run-ups, lower trading volume and less liquidity than large-capitalization companies. In particular, our Ordinary Shares may be subject to rapid and substantial price volatility, low volumes of trades and large spreads in bid and ask prices. Such volatility, including any stock-run up, may be unrelated to our actual or expected operating performance and financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our Ordinary Shares.
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In addition, if the trading volumes of our Ordinary Shares are low, investors buying or selling in relatively small quantities may easily influence prices of our Ordinary Shares. This low volume of trades could also cause the price of our Ordinary Shares to fluctuate greatly, with large percentage changes in price occurring in any trading day session. Holders of our Ordinary Shares may also not be able to readily liquidate their investment or may be forced to sell at depressed prices due to low volume trading. Broad market fluctuations and general economic and political conditions may also adversely affect the market price of our Ordinary Shares. As a result of this volatility, investors may experience losses on their investment in our Ordinary Shares. A decline in the market price of our Ordinary Shares also could adversely affect our ability to issue additional shares of Ordinary Shares or other of our securities and our ability to obtain additional financing in the future. No assurance can be given that an active market in our Ordinary Shares will develop or be sustained. If an active market does not develop, holders of our Ordinary Shares may be unable to readily sell the shares they hold or may not be able to sell their shares at all.
In the past, shareholders of public companies have often brought securities class action suits against those companies following periods of instability in the market price of their securities. If we were involved in a class action suit, it could divert a significant amount of our management’s attention and other resources from our business and operations and require us to incur significant expenses to defend the suit, which could harm our results of operations. Any such class action suit, whether or not successful, could harm our reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully made against us, we may be required to pay significant damages, which could have a material adverse effect on our financial condition and results of operations.
Because we do not expect to pay dividends in the foreseeable future, you must rely on price appreciation of our Ordinary Shares for a return on your investment.
We currently intend to retain all of our available funds and any future earnings after this offering to fund the development and growth of our business. As a result, we do not expect to pay any cash dividends in the foreseeable future. Therefore, you should not rely on an investment in our Ordinary Shares as a source for any future dividend income. Our Board has complete discretion as to whether to distribute dividends, subject to certain requirements of Singapore law. Even if our Board decides to declare and pay dividends, the timing, amount and form of future dividends, if any, will depend on, among other things, our future results of operations and cash flow, our capital requirements and surplus, the amount of distributions, if any, received by us from our subsidiary, our financial condition, contractual restrictions and other factors as determined by our Board. Accordingly, the return on your investment in our Ordinary Shares will likely depend entirely upon any future price appreciation of our Ordinary Shares. There is no guarantee that our Ordinary Shares will appreciate in value after this offering or even maintain the price at which you purchased our Ordinary Shares. You may not realize a return on your investment in our Ordinary Shares and you may even lose your entire investment.
Short selling may drive down the market price of our Ordinary Shares.
Short selling is the practice of selling shares that the seller does not own but rather has borrowed from a third party with the intention of buying identical shares back at a later date to return to the lender. The short seller hopes to profit from a decline in the value of the shares between the sale of the borrowed shares and the purchase of the replacement shares, as the short seller expects to pay less in that purchase than it received in the sale. As it is in the short seller’s interest for the price of the shares to decline, many short sellers publish, or arrange for the publication of, negative opinions and allegations regarding the relevant issuer and its business prospects in order to create negative market momentum and generate profits for themselves after selling the shares short. These short attacks have, in the past, led to selling of shares in the market. If we were to become the subject of any unfavorable publicity, whether such allegations are proven to be true or untrue, we could have to expend a significant amount of resources to investigate such allegations and/or defend ourselves. While we would strongly defend against any such short seller attacks, we may be constrained in the manner in which we can proceed against the relevant short seller by principles of freedom of speech, applicable state law or issues of commercial confidentiality.
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If securities or industry analysts do not publish or publish inaccurate or unfavorable research about our business, or if they adversely change their recommendations regarding our Ordinary Shares, the market price for our Ordinary Shares and trading volume could decline.
The trading market for our Ordinary Shares will depend in part on the research and reports that securities or industry analysts publish about us or our business. If research analysts do not establish and maintain adequate research coverage or if one or more of the analysts who covers us downgrades our Ordinary Shares or publishes inaccurate or unfavorable research about our business, the market price for our Ordinary Shares would likely decline. If one or more of these analysts cease coverage of the Company or fail to publish reports on us regularly, we could lose visibility in the financial markets, which, in turn, could cause the market price or trading volume for our Ordinary Shares to decline.
If we are classified as a passive foreign investment company, United States taxpayers who own our securities may have adverse United States federal income tax consequences.
We are a non-U.S. corporation and, as such, we will be classified as a passive foreign investment company, which is known as a PFIC, for any taxable year if, for such year, either
| ● | At least 75.0% of our gross income for the year is passive income; or | |
| ● | The average percentage of our assets (determined at the end of each quarter) during the taxable year that produce passive income or that are held for the production of passive income is at least 50.0%. |
Passive income generally includes dividends, interest, rents, royalties (other than rents or royalties derived from the active conduct of a trade or business) and gains from the disposition of passive assets.
If we are determined to be a PFIC for any taxable year (or portion thereof) that is included in the holding period of a U.S. taxpayer who holds our securities, the U.S. taxpayer may be subject to increased U.S. federal income tax liability and may be subject to additional reporting requirements.
While we do not expect to become a PFIC, because the value of our assets for purposes of the asset test may be determined by reference to the market price of our Ordinary Shares, fluctuations in the market price of our Ordinary Shares may cause us to become a PFIC for the current or subsequent taxable years. The determination of whether we will be or become a PFIC will also depend, in part, on the composition of our income and assets. If we determine not to deploy significant amounts of cash for active purposes, our risk of being a PFIC may substantially increase. Because there are uncertainties in the application of the relevant rules and PFIC status is a factual determination made annually after the close of each taxable year, there can be no assurance that we will not be a PFIC for the current taxable year or any future taxable year.
For a more detailed discussion of the application of the PFIC rules to us and the consequences to U.S. taxpayers if we were determined to be a PFIC, see “Material Income Tax Consideration - Passive Foreign Investment Company”
Our Controlling Shareholder has substantial influence over the Company. Its interests may not be aligned with the interests of our other shareholders, and it could prevent or cause a change of control or other transactions.
Our Executive Director, Chairman, Chief Executive Officer and Controlling Shareholder Mr. Eng Hock Lim, through MWE Investments, indirectly controls approximately 61.8% of our issued and outstanding Ordinary Shares.
Accordingly, our Controlling Shareholder could control the outcome of any corporate transaction or other matter submitted to the shareholders for approval, including mergers, consolidations, the election of Directors and other significant corporate actions, including the power to prevent or cause a change in control. The interests of our largest shareholder may differ from the interests of our other shareholders. Without the consent of our Controlling Shareholder, we may be prevented from entering into transactions that could be beneficial to us or our other shareholders. The concentration in the ownership of our shares may cause a material decline in the value of our Ordinary Shares. For more information regarding our principal shareholders and their affiliated entities, see “Risks and Challenges – Implications of Our Being a Controlled Company”
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As a “controlled company” within the meaning of the NYSE American Company Guide, we may rely on exemptions from certain corporate governance requirements that provide protection to shareholders of other companies.
We are a “controlled company” as defined under the NYSE American Company Guide, because one of our shareholders holds more than 50% of our voting power. As a result, we are eligible for certain exemptions from the corporate governance requirements of the NYSE American Market. We do not intend to rely on such exemptions, however, for so long as we remain a controlled company as defined under that rule, we are permitted to elect to rely, and may rely, on certain exemptions from corporate governance rules of the NYSE American Company Guide, including (1) the requirement that a majority of our Board of Directors must be independent Directors, (2) the requirement that our director nominees must be selected or recommended solely by either a Nomination Committee comprised solely of independent Directors or by a majority of the independent Directors and (3) the requirement that we have a formal written charter or board resolution, as applicable, addressing the nominations process and such related matters as may be required under the federal securities laws. As a result, you may not have the same protection afforded to shareholders of companies that are subject to these corporate governance requirements.
As a company incorporated in the Cayman Islands, we are permitted to follow certain home country practices in relation to corporate governance matters in lieu of certain requirements under the NYSE American Company Guide. These practices may afford less protection to shareholders than they would enjoy if we complied fully with NYSE American Company Guide.
As a foreign private issuer whose ordinary shares are listed on the NYSE American Market, we are permitted to follow certain home country practices in relation to corporate governance matters in lieu of certain requirements under the NYSE American Company Guide. A foreign private issuer must disclose in its annual reports filed with the SEC each requirement under the NYSE American Company Guide with which it does not comply, followed by a description of its applicable home country practice. Our home country practices in the Cayman Islands may afford less protection to holders of our Ordinary Shares. We currently follow our home country practices, in lieu of the NSYSE American requirements with regards to the requirement under Section 132 of the NYSE American Company Guide that companies listed on NYSE American Market shall release quarterly sales and earnings; and the Shareholder Approval Requirements under Section 711 to 713 of the NYSE American Company Guide, including but not limited to shareholder approval requirements with respect (a) the establishment (or material amendment to) a stock option or purchase plan or other equity compensation arrangement as specified in Section 711 of the NYSE American Company Guide; (b) the issuance of additional shares as sole or partial consideration for an acquisition of the stock or assets of another company in the circumstances specified in Section 712 of the NYSE American Company Guide; and (c) the issuance of additional shares in connection with a transaction specified in Section 713 of the NYSE American Company Guide, or that will result in a change of control of the Company.
You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated under Cayman Islands law.
We are an exempted company incorporated under the laws of the Cayman Islands with limited liability. Our corporate affairs are governed by our Amended and Restated Memorandum and Articles of Association, the Companies Act and the common law of the Cayman Islands. The rights of shareholders to take any action against our Directors and us, actions by minority shareholders and the fiduciary duties of our Directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common law, which are generally of persuasive authority, but are not binding, on a court in the Cayman Islands. The rights of our shareholders and the fiduciary duties of our Directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a different body of securities laws than the United States and provide significantly less protection to investors. In addition, Cayman Islands companies may not have the standing to initiate a shareholder derivative action in a federal court of the United States. There is no statutory recognition in the Cayman Islands of judgments obtained in the United States, although the courts of the Cayman Islands will generally recognize and enforce a non-penal judgment of a foreign court of competent jurisdiction without retrial on the merits.
Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records (other than the Amended and Restated Memorandum and Articles of Association) or to obtain copies of lists of shareholders of these companies. Our Directors are not required under our Amended and Restated Memorandum and Articles of Association to make our corporate records available for inspection by our shareholders. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder resolution or to solicit proxies from other shareholders in connection with a proxy contest.
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Certain corporate governance practices in the Cayman Islands, which is our home country, differ significantly from requirements for companies incorporated in other jurisdictions such as U.S. states. Currently, we plan to rely on home country practice with respect to any corporate governance matter. Accordingly, our shareholders may be afforded less protection than they otherwise would under rules and regulations applicable to U.S. domestic issuers.
As a result of all of the above, shareholders may have more difficulty in protecting their interests in the face of actions taken by our management, members of the Board of Directors or Controlling Shareholder than they would as shareholders of a company incorporated in a U.S. state.
Certain judgments obtained against us or our auditor by our shareholders may not be enforceable.
We are a Cayman Islands exempted company. Our operating subsidiary was incorporated and is located in Singapore. Substantially all of our assets are located outside of the United States. In addition, all of our current Directors and Executive Officers are nationals and residents of countries other than the United States and substantially all of the assets of these persons are located outside the United States. Furthermore, our auditor, OneStop Assurance PAC, is headquartered in Singapore and substantially all of their assets are located outside the United States. As a result, it may be difficult for a shareholder to effect service of process within the United States upon these persons or to enforce against us, our Directors and Executive Officers, or our auditor judgments obtained in United States courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and Singapore may render you unable to enforce a judgment against our assets or the assets of our Directors and Executive Officers. For more information regarding the relevant laws of the Cayman Islands and Singapore, see “Enforceability of Civil Liabilities.” As a result of all of the above, our shareholders may have more difficulties in protecting their interests through actions against us, our Directors, Executive Officers or major shareholders, or our auditor than would shareholders of a corporation incorporated in a jurisdiction in the United States.
We are a foreign private issuer within the meaning of the Exchange Act, and as such we are exempt from certain provisions applicable to United States domestic public companies.
Because we are a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including:
| ● | the rules under the Exchange Act requiring the filing of quarterly reports on Form 10-Q or current reports on Form 8-K with the SEC; | |
| ● | the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act; | |
| ● | the sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and | |
| ● | the selective disclosure rules by issuers of material non-public information under Regulation FD. |
We will be required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, we intend to publish our financial results on a semi-annual basis through press releases distributed pursuant to the rules and regulations of the NYSE American Market. Press releases relating to financial results and material events will also be furnished to the SEC on Form 6-K. However, the information we are required to file with or furnish to the SEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. As a result, you may not be afforded the same protections or information that would be made available to you if you were investing in a U.S. domestic issuer.
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We will incur increased costs after we cease to qualify as an emerging growth company.
We are a public company and expect to incur significant legal, accounting and other expenses that we did not incur as a private company. The Sarbanes-Oxley Act of 2002 and the rules subsequently implemented by the SEC and the New York Stock Exchange detailed requirements concerning corporate governance practices of public companies. As a company with less than $1.235 billion in net revenues for our last fiscal year, we qualify as an “emerging growth company” pursuant to the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2012 relating to internal controls over financial reporting.
We expect these rules and regulations to increase our legal and financial compliance costs and to make some corporate activities more time consuming and costly. After we are no longer an “emerging growth company,” we expect to incur significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 and the other time and attention to our public company reporting obligations and other compliance matters. For example, as a result of becoming a public company, we will need to increase the number of independent Directors and adopt policies regarding internal controls and disclosure controls and procedures. We also expect that operating as a public company will make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. In addition, we will incur additional costs associated with our public company reporting requirements. It may also be more difficult for us to find qualified persons to serve on our Board or Executive Officers. We are currently evaluating and monitoring developments with respect to these rules and regulations, and we cannot predict or estimate with any degree of certainty the amount of additional costs we may incur or the timing of such costs.
We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses to us.
As discussed above, we are a foreign private issuer, and therefore, we are not required to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act. The determination of foreign private issuer status is made annually on the last Business Day of an issuer’s most recently completed second fiscal quarter, and, accordingly, the next determination will be made with respect to us on June 30, 2025. In the future, we would lose our foreign private issuer status if (1) more than 50.0% of our outstanding voting securities are owned by U.S. residents and (2) a majority of our Directors or Executive Officers are U.S. citizens or residents, or we fail to meet additional requirements necessary to avoid the loss of foreign private issuer status. If we lose our foreign private issuer status, we will be required to file with the SEC periodic reports and registration statements on U.S. domestic issuer forms, which are more detailed and extensive than the forms available to a foreign private issuer. We will also have to comply with U.S. federal proxy requirements, and our Executive Officers, Directors and 10% shareholders will become subject to the short-swing profit disclosure and recovery provisions of Section 16 of the Exchange Act. In addition, we will lose our ability to rely upon exemptions from certain corporate governance requirements under the NYSE American Company Guide. If we become a U.S. listed public company that is not a foreign private issuer, we will incur significant additional legal, accounting and other expenses that we will not incur as a foreign private issuer.
We are an “emerging growth company,” and the reduced disclosure requirements applicable to emerging growth companies may make our Ordinary Shares less attractive to investors.
We are an “emerging growth company,” as defined in the JOBS Act, and we may take advantage of certain exemptions from various requirements applicable to other public companies that are not emerging growth companies including, most significantly, not being required to comply with the auditor attestation requirements of Section 404 of Sarbanes-Oxley Act of 2002 for so long as we are an emerging growth company until the fifth anniversary from the date of our initial listing. As a result, if we elect not to comply with such auditor attestation requirements, our investors may not have access to certain information they may deem important.
The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards. Pursuant to the JOBS Act, we have elected to take advantage of the benefits of this extended transition period for complying with new or revised accounting standards as required when they are adopted for public companies. As a result, our operating results and financial statements may not be comparable to the operating results and financial statements of other companies who have adopted the new or revised accounting standards.
After we are no longer an “emerging growth company,” we expect to incur significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 of the Sarbanes- Oxley Act of 2002 and the other rules and regulations of the SEC, which may adversely affect our financial condition and results of operations.
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Risks Related to the Offering
This is a best efforts offering, no minimum number or dollar amount of securities is required to be sold, and we may not raise the amount of capital we believe is required for our business plans.
The placement agent has agreed to use their reasonable best efforts to solicit offers to purchase the securities in this offering. The placement agent has no obligation to buy any of the securities or to arrange for the purchase or sale of any specific number or dollar amount of the securities. There is no required minimum number of securities that must be sold as a condition to completion of this offering. The placement agent may sell fewer than all of the securities offered hereby, which may significantly reduce the amount of proceeds received by us, and investors in this offering will not receive a refund in the event that we do not sell an amount of securities sufficient to fund our business plan. Thus, we may not raise the amount of capital we believe is required for our operations in the short-term and may need to raise additional funds, which may not be available or available on terms acceptable to us.
Because there is no minimum required for the offering to close, investors in this offering will not receive a refund in the event that we do not sell an amount of securities sufficient to pursue the business goals outlined in this prospectus.
The proceeds from the sale of the Ordinary Shares in this offering will be deposited in a separate non-interest bearing bank account (limited to funds received on our behalf). No interest will be available for payment to either us or the investors.
We intend to complete one closing of this offering, but may undertake one or more closings on a rolling basis. Any such funds that the escrow agent receives shall be held in escrow until the applicable closing of the offering, and then used to complete securities purchases, or returned if this offering fails to close. In event that the offering is terminated, all subscription funds being held in the escrow account at the time of such termination will be returned to investors.
We have not specified a minimum offering amount in connection with this offering. Because there is no minimum offering amount, investors could be in a position where they have invested in our company, but we are unable to fulfill our objectives due to a lack of interest in this offering. Investor funds will not be returned solely because we do not sell an amount of securities sufficient to pursue the business goals outlined in this prospectus.
We have broad discretion in the use of the net proceeds from this offering and may not use them effectively.
To the extent (i) we raise more money than required for the purposes explained in the section titled “Use of Proceeds” or (ii) we determine that the proposed uses set forth in that section are no longer in the best interests of our Company, we cannot specify with any certainty the particular uses of such net proceeds that we will receive from this offering. Our management will have broad discretion in the application of such net proceeds, including working capital, possible acquisitions, and other general corporate purposes, and we may spend or invest these proceeds in a way with which our shareholders disagree. The failure by our management to apply these funds effectively could harm our business and financial condition. Pending their use, we may invest the net proceeds from this offering in a manner that does not produce income or that loses value.
The price of the Ordinary Shares and other terms of this offering have been determined by us along with our placement agent.
If you purchase our Ordinary Shares in this offering, you will pay a price that was not established in a competitive market. Rather, you will pay a price that was determined by us along with our placement agent. The offering price for Ordinary Shares may bear no relationship to our assets, book value, historical results of operations or any other established criterion of value. The trading price, if any, of the Ordinary Shares that may prevail in any market that may develop in the future, for which there can be no assurance, may be higher or lower than the price you paid for our Ordinary Shares.
If you purchase our securities in this offering, you will incur immediate and substantial dilution in the book value of your shares.
Investors purchasing our securities in this offering will pay a price per share that substantially exceeds the pro forma as adjusted net tangible book value per Ordinary Share. As a result, investors purchasing Ordinary Shares in this offering will incur an immediate negative dilution of $0.3494 per Ordinary Share. For more information on the dilution, you may experience as a result of investing in this offering, see the section of this prospectus entitled “Dilution.”
Purchasers who purchase our securities in this offering pursuant to a subscription agreement may have rights not available to purchasers that purchase without the benefit of a subscription purchase agreement.
In addition to rights and remedies available to all purchasers in this offering under U.S. federal securities and U.S. state law, the purchasers that enter into a subscription agreement will also be able to bring claims of breach of contract against us. The ability to pursue a claim for breach of contract provides those investors with the means to enforce the covenants uniquely available to them under the subscription agreement including, but not limited to (i) timely delivery of securities, (ii) agreement to not issue any shares or securities convertible into shares for a period of days from closing of the offering, subject to certain exceptions and (iii) indemnification for breach of contract.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that reflect our current expectations and views of future events, all of which are subject to risks and uncertainties. Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. You can find many (but not all) of these statements by the use of words such as “approximates,” “believes,” “hopes,” “expects,” “anticipates,” “estimates,” “projects,” “intends,” “plans,” “will,” “would,” “should,” “could,” “may” or other similar expressions in this prospectus. These statements are likely to address our growth strategy, financial results and product and development programs. You must carefully consider any such statements and should understand that many factors could cause actual results to differ from our forward-looking statements. These factors may include inaccurate assumptions and a broad variety of other risks and uncertainties, including some that are known and some that are not. No forward-looking statement can be guaranteed and actual future results may vary materially.
Forward-looking statements are based on the reasonable assumptions, estimates, analysis and opinions made in light of our experience and our perception of trends, current conditions and expected developments, as well as other factors that we believe to be relevant and reasonable in the circumstances at the date that such statements are made, but which may prove to be incorrect. Management believes that the assumption and expectations reflected in such forward-looking statements are reasonable. Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which may have been used.
The forward-looking statements, including the statements contained in the sections entitled “Risk Factors,” “Description of Business and Management’s Discussion” and “Analysis of Financial Conditions and Results of Operations” and elsewhere in this prospectus, are subject to known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from those expressed or implied by such forward-looking statements. Such risks, uncertainties and other factors include but are not limited to:
| ● | assumptions about our future financial and operating results, including revenue, interest rates, income, expenditures, cash balances, and other financial items; | |
| ● | our ability to execute our growth and expansion plan, including our ability to meet our goals; | |
| ● | current and future economic and political conditions; | |
| ● | our ability to compete in a changing e-commerce industry; | |
| ● | our ability to raise sufficient funds to carry out our proposed business plan or failure to manage future growth effectively; | |
| ● | our capital requirements and our ability to raise any additional financing which we may require; | |
| ● | our ability to attract customers and further enhance our brand awareness; | |
| ● | our ability to hire and retain qualified management personnel and key employees in order to enable us to develop our business; | |
| ● | trends and competition in the e-commerce industry; | |
| ● | our ability to execute prospective business plans; | |
| ● | future decisions by management in response to changing conditions; | |
| ● | misjudgments in the course of preparing forward-looking statements; | |
| ● | consumers’ and businesses’ willingness to purchase products or services over the internet; | |
| ● | developments in alternative community e-commerce retailors or our inability to satisfy the demand of the existing and potential customers; | |
| ● | inability to design, develop, market and sell products or provide services that address additional market opportunities; | |
| ● | disruption of supply or shortage of raw materials; | |
| ● | our limited operating history by which performance can be gauged; | |
| ● | our ability to manage our research, development, expansion, growth and operating expenses; | |
| ● | our ability to protect our intellectual property and to develop, maintain and enhance a strong brand; and | |
| ● | other assumptions described in this prospectus underlying or relating to any forward-looking statements. |
Although management has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. Forward-looking statements might not prove to be accurate, as actual results and future events could differ materially from those anticipated in such forward-looking statements. Accordingly, readers should not place undue reliance on forward-looking statements. We wish to advise you that these cautionary remarks expressly qualify, in their entirety, all forward-looking statements attributable to our company or persons acting on our company’s behalf. We do not undertake to update any forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting such statements, except as, and to the extent required by, applicable securities laws. You should carefully review the cautionary statements and risk factors contained in this prospectus and other documents that we may file from time to time with the securities regulators.
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USE OF PROCEEDS
We expect to receive approximately $1.7 million of net proceeds from this offering, assuming the sales of all of the securities we are offering, assuming the sales of all of the securities we are offering, after deducting the placement agent’s fees, reimbursement of placement agent’s accountable and non-accountable expenses, and other estimated offering expenses payable by us. We currently intend to use the proceeds for working capital and general corporate purposes.
DIVIDEND POLICY
While we currently have no plans to distribute dividends, in the event we consider distributing a dividend in the future, our Board shall take into account, among other things, the following factors when deciding whether to propose a dividend and in determining the dividend amount: (a) operating and financial results; (b) cash flow situation; (c) business conditions and strategies; (d) future operations and earnings; (e) taxation considerations; (f) interim dividend paid, if any; (g) capital requirement and expenditure plans; (h) interests of shareholders; (i) statutory and regulatory restrictions; (j) any restrictions on payment of dividends; and (k) any other factors that our Board may consider relevant. The payment of dividends, in certain circumstances is also subject to the approval of our shareholders, the Cayman Islands Companies Act and our Amended and Restated Memorandum and Articles of Association as well as any other applicable laws. Currently, we do not have any predetermined dividend distribution ratio.
Even if our Board decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that our Board may deem relevant. In addition, we are a holding company and depend on the receipt of dividends and other distributions from our subsidiary to pay dividends on our Ordinary Shares.
There are no foreign exchange controls or foreign exchange regulations under current applicable laws of the various places of incorporation of our significant subsidiaries that would affect the payment or remittance of dividends.
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CAPITALIZATION
The following table sets forth our capitalization as of November 30, 2024:
| ● | on an actual basis; and | |
| ● | on a pro forma as adjusted basis to reflect (i) the above; and (ii) the issuance and sale of 9,000,000 ordinary Shares in this offering at an assumed offering price of $0.2180 per Ordinary Share, assuming the sales of all of the securities we are offering, after deducting the placement agent’s fees, reimbursement of placement agent’s accountable and non-accountable expenses, and other estimated offering expenses payable by us. |
The pro forma as adjusted information below is illustrative only, and our capitalization following the completion of this offering is subject to adjustment based on the actual net proceeds to us from the offering. You should read this table in conjunction with “Use of Proceeds,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes included elsewhere in this prospectus.
| Actual | As adjusted | |||||||
| $’000 | $’000 | |||||||
| Shareholders’ Equity | ||||||||
| Ordinary Shares, par value $0.00025 per share, 10,000,000,000 Ordinary Shares authorized, 33,330,000 Ordinary Shares outstanding on an actual basis and 42,330,000 Ordinary Shares outstanding on a pro forma as adjusted basis | 8 | 10 | ||||||
| Additional paid-in capital | 20,141 | 20,141 | ||||||
| New additional paid-up capital | - | 1,960 | ||||||
| Retained earnings | 2,235 | 1,958 | ||||||
| Accumulated other comprehensive loss | (49 | ) | (49 | ) | ||||
| Total Shareholders’ Equity | 22,335 | 24,020 | ||||||
| Indebtedness | ||||||||
| Bank borrowings | 11,205 | 11,205 | ||||||
| Directors loan account | 14,714 | 14,714 | ||||||
| Total Indebtedness | 25,919 | 25,919 | ||||||
| Total Capitalization | 48,254 | 49,939 | ||||||
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DILUTION
Investors purchasing our Ordinary Shares in this offering will experience immediate and substantial dilution in the pro forma as adjusted net tangible book value of their Ordinary Shares. Dilution in pro forma as adjusted net tangible book value represents the difference between the offering price of our Ordinary Shares and the pro forma as adjusted net tangible book value per share of our Ordinary Shares immediately after the offering.
Historical net tangible book value per Ordinary Share represents our total tangible assets (total assets excluding goodwill and other intangible assets, net) deduct total liabilities, divided by the number of outstanding Ordinary Shares. After giving effect to the sale of Ordinary Shares in this offering by the Company at an assumed offering price of $0.2180 per Ordinary Share, assuming the sales of all of the securities we are offering, after deducting the placement agent’s fees, reimbursement of placement agent’s accountable and non-accountable expenses, and other estimated offering expenses payable by us, the pro forma as adjusted net tangible book value as of November 30, 2024 would have been approximately $24.0 million, or $0.5674 per Ordinary Share. This represents in pro forma as a decrease in adjusted net tangible book value of $0.1027 per Ordinary Share to our existing stockholders and an immediate negative dilution of $0.3494 per Ordinary Share to new investors purchasing Ordinary Shares in this offering.
The following table illustrates this dilution on a per Ordinary Share basis to new investors.
| Assumed offering price per Ordinary Share | $ | 0.2180 | ||
| Historical net tangible book value per Ordinary Share as of November 30, 2024 | $ | 0.6701 | ||
| Pro forma as adjusted decrease in net tangible book value per Ordinary Share attributable to the investors in this offering | $ | (0.1027 | ) | |
| Pro forma as adjusted net tangible book value per Ordinary Share as of November 30, 2024 after giving effect to this offering | $ | 0.5674 | ||
| Negative dilution per Ordinary Share to new investors participating in this offering | $ | (0.3494 | ) |
The dilution information discussed above is illustrative only and may change based on the actual offering price and other terms of this offering.
SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA
The following summary consolidated financial data as of December 31, 2023 and 2022 and for the financial years ended December 31, 2023 and 2022 have been derived from our audited consolidated financial statements included elsewhere in this prospectus. The following summary consolidated financial data as of June 30, 2024 and 2023 and for the six months ended June 30, 2024 and 2023 have been derived from our unaudited consolidated financial statements included elsewhere in this prospectus. The summary financial data set forth below should be read in conjunction with, and are qualified by reference to, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and notes thereto included elsewhere in this prospectus. Our consolidated financial statements are prepared and presented in accordance with U.S. GAAP. Our historical results do not necessarily indicate results expected for any future period.
You should read the following summary financial data together with our financial statements and the related notes appearing at the end of this prospectus, “Capitalization” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. We have derived the financial data for the six months ended June 30, 2024 and 2023 from our unaudited interim condensed consolidated financial statements appearing elsewhere in this prospectus. We have also derived the financial data for the financial years ended December 31, 2023 and 2022 from our audited financial statements included in this prospectus.
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Results of Operations Data
| Six Months ended June 30, | Financial Years ended December 31, | |||||||||||||||||||||||||||||||
| 2024 | 2023 | 2023 | 2022 | |||||||||||||||||||||||||||||
| S$’000 | $’000 | S$’000 | $’000 | S$’000 | $’000 | S$’000 | $’000 | |||||||||||||||||||||||||
| Revenues | 18,917 | 14,091 | 19,182 | 14,371 | 48,074 | 36,016 | 52,927 | 38,359 | ||||||||||||||||||||||||
| Net income | 103 | 77 | (6,400 | ) | (4,795 | ) | 2,327 | 1,739 | 1,419 | 1,028 | ||||||||||||||||||||||
| Basic and diluted net income per Ordinary Share | 0.003 | 0.003 | (0.23 | ) | (0.17 | ) | 0.07 | 0.06 | 0.06 | 0.04 | ||||||||||||||||||||||
| Weighted average number of Ordinary Shares outstanding (’000) | 30,840 | 30,840 | 27,703 | 27,703 | 29,284 | 29,284 | 24,800 | 24,800 | ||||||||||||||||||||||||
| (1) | Calculated at the rate of $1 = S$1.3425 (2024/6/30), S$1.3348 (2023/6/30), S$1.3348 (2023/12/31) and S$1.3798 (2022/12/31), as set forth as the Company’s internal exchange rate. |
Balance Sheet Data
| As of June 30, | As of December 31, | |||||||||||||||||||||||
| 2024 | 2023 | 2022 | ||||||||||||||||||||||
| S$’000 | $’000 | S$’000 | $’000 | S$’000 | $’000 | |||||||||||||||||||
| Cash and cash equivalents | 4,900 | 3,656 | 9,417 | 7,073 | 1,376 | 1,003 | ||||||||||||||||||
| Working capital | 27,255 | 20,175 | 27,819 | 20,903 | 3,960 | 2,886 | ||||||||||||||||||
| Total assets | 88,536 | 65,538 | 77,212 | 58,001 | 72,431 | 52,786 | ||||||||||||||||||
| Total liabilities | 59,230 | 43,843 | 48,163 | 36,174 | 63,770 | 46,474 | ||||||||||||||||||
| Total shareholders’ equity | 29,306 | 21,695 | 29,049 | 21,827 | 8,591 | 6,262 | ||||||||||||||||||
| Non-controlling interest | - | - | - | - | 70 | 50 | ||||||||||||||||||
| (1) | Calculated at the rate of $1 = S$1.3509 (2024/6/30), S$1.3314 (2023/12/31) and S$1.3722 (2022/12/31), as set forth as the Company’s internal exchange rate. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this prospectus. This discussion and analysis and other parts of this prospectus contain forward-looking statements based upon current beliefs, plans and expectations that involve risks, uncertainties and assumptions. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of several factors, including those set forth under “Risk Factors” and elsewhere in this prospectus. You should carefully read the “Risk Factors” section of this prospectus to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements.
Overview
Multi Ways Holdings Limited is a holding company incorporated as an exempted company under the laws of the Cayman Islands. As a holding company with no material direct operations of our own, we conduct our operations as equipment sales, rental and services through our operating subsidiary in Singapore. We have over twenty (20) years of experience in supplying and rental of new and used heavy construction equipment in the infrastructure, building construction, mining, offshore and marine, oil and gas industries through our services.
For the six months ended June 30, 2024 and 2023, our net revenue amounted to approximately $14.1 million and approximately $14.4 million, respectively, of which equipment sales accounted for approximately $8.0 million for the six months ended June 30, 2024 and approximately $11.0 million for the six months ended June 30, 2023. Rental accounted for approximately $3.5 million for the six months ended June 30, 2024 and approximately $2.1 million for the six months ended June 30, 2023, respectively and services revenue accounted for approximately $2.6 million for the six months ended June 30, 2024 and approximately $1.3 million for the six months ended June 30, 2023 respectively.
For the financial years ended December 31, 2023 and 2022, our net revenue amounted to approximately $36.0 million and approximately $38.4 million, respectively, of which equipment sales accounted for approximately $24.7 million in 2023 and approximately $32.2 million in 2022, respectively. Rental accounted for approximately $5.0 million in 2023 and approximately $3.8 million in 2022, respectively and services revenue accounted for approximately $6.4 million in 2023 and approximately $2.4 million in 2022, respectively.
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KEY FACTORS AFFECTING THE RESULTS OF OUR GROUP’S OPERATIONS
Our financial condition and results of operations have been and will continue to be affected by a number of factors, many of which may be beyond our control, including those factors set out in the section headed “Risk Factors” in this prospectus and those set out below.
| ● | Demand from our major customer groups – Our aggregate sales generated from our top five customers were approximately 28.3% and approximately 35.9% of our revenue for the six months ended June 30, 2024 and 2023, respectively. In particular, sales to our largest customer amounted to approximately $1.5 million and approximately $1.7 million, representing approximately 8.1% and approximately 8.9% of our revenue for the six months ended June 30, 2024 and 2023, respectively.
Also, our aggregate sales generated from our top five customers were approximately 35.8% and approximately 39.4% of our revenue for the financial years ended December 31, 2023 and 2022, respectively. In particular, sales to our largest customer amounted to approximately $4.4 million, representing approximately 12.1% of our revenue for the financial year ended December 31, 2023. Our sales are significantly affected by the demands of our largest customer due to vigorous price competition in the supply chain, supply chain shortage and disruption, and inflationary cost pressure as our customers will seek to purchase products of more competitive prices and faster delivery. See “Risk Factors – Risks Related to Our Business and Industry - We only have a limited number of customer groups and our business is significantly dependent on our major customer groups’ needs and our relationships with them. We may be unsuccessful in attracting new customers”. | |
| ● | Fluctuations in the cost of our revenues – Finished goods are the largest part of our cost of revenue, representing approximately 66.9% and approximately 70.2% of our total cost of revenues for the six months ended June 30, 2024 and 2023, respectively.
Also, finished goods are the largest part of our cost of revenue, representing approximately 76.0% and approximately 74.6% of our total cost of revenues for the financial years ended December 31, 2023 and 2022, respectively. Fluctuations in the price, availability, quality, cost of labor and transportation may impact the price of our finished goods, and ultimately the selling price. We may be unable to pass all or any of these higher costs on to our customers, which could have a material adverse effect on our profitability.
The prices at which we purchase such finished goods are determined by the demand and supply forces in this industry, as well as our bargaining power with our suppliers. As of June 30, 2024 and December 31, 2023 and 2022, the majority of our finished goods were commonly available from the market, but our cost of procurement increased significantly due to the inflationary cost pressure, labor shortages, supply chain delay and disruption. We are exploring how to diversify our procurement networks to lower purchasing prices, such as through the consolidation of customer orders to negotiate better pricing. We expect continued fluctuations in the cost of finished goods to affect our margins.
All of the finished goods we procure, including spare parts and key components, are sourced directly from various regional suppliers spanning from Asia to the Middle East in an effort to ensure availability and adequate supply, as well as efficient delivery to our customers.
Our results of operations and capital resources have not been materially impacted by fluctuations in the cost of revenues or supply chain disruptions during the six months ended June 30, 2024 and the financial years ended December 31, 2023 and 2022, and we do not foresee any material impact for the financial year ended December 31, 2024, because we have locked in the prices of most of our purchase and sales orders. However, any increased costs from delays, cancellations and insurance, or disruption to, or inefficiency in, the supply chain network of our third-party service providers, whether due to geopolitical conflicts, outbreaks, or other factors, could affect our revenue and profitability. See “Risk Factors – Risks Related to Our Business and Industry - Our business is subject to supply chain interruptions”. |
| 35 |
Description and Analysis of Principal Components of Our Results of Operations
The following discussion is based on our Group’s historical results of operations and may not be indicative of our Group’s future operating performance.
Comparison of operating results for the six months ended June 30, 2024 and 2023
Revenue
As set forth in the following table, for the six months ended June 30, 2024 and 2023, our revenue was derived from the sale of heavy construction equipment, rental and services in our equipment sales, rental and services serving the infrastructure, building construction, mining, offshore and marine, and oil and gas industries:
| Six Months ended June 30, | ||||||||||||||||
| 2024 | 2023 | |||||||||||||||
| $’000 | % | $’000 | % | |||||||||||||
| Sales of heavy construction equipment, rental and services | ||||||||||||||||
| Equipment Sales | 9,600 | 68.1 | 10,957 | 76.2 | ||||||||||||
| Rental | 3,518 | 25.0 | 2,108 | 14.7 | ||||||||||||
| Services(1) | 973 | 6.9 | 1,306 | 9.1 | ||||||||||||
| Total | 14,091 | 100.0 | 14,371 | 100.0 | ||||||||||||
(1) Services mean refurbishment and servicing, troubleshooting and repair, transportation and erection, crane operation and machinery cleaning.
Our total revenue decreased by approximately $0.3 million or 1.9% to approximately $14.1 million for the six months ended June 30, 2024 from approximately $14.4 million for the six months ended June 30, 2023. Such decrease was mainly attributable to the decrease demand in our equipment sales of approximately $2.9 million offset by an increase in rental of approximately $1.4 million and services of approximately $1.3 million, respectively.
For the six months ended June 30, 2024, our net income amounted to approximately $0.1million and net loss amounted to approximately $4.8 million for the six months ended June 30, 2023, respectively. The net income for the six months ended June 30, 2024 was mainly the absent of one-time IPO professional fees of approximately $5.0 million.
For the six months ended June 30, 2024 and 2023, approximately 69.4% and approximately 33.9% of our total revenue, respectively, was generated from customers located in Singapore and approximately 10.7% and approximately 18.1% of our total revenue, respectively, was generated from customers located in United Arab Emirates. For the same financial years, our revenue generated from customers located in other countries accounted for approximately 19.9% and approximately 48.0% of our total revenue, respectively.
| 36 |
Revenue by geographical locations
For the six months ended June 30, 2024 and 2023, the customers for our equipment sales, rental and services were mainly located in Singapore and United Arab Emirates. The following table sets out a breakdown of our revenue by geographic location of our customers for the six months ended June 30, 2024 and 2023:
| Six Months ended June 30, | ||||||||||||||||
| 2024 | 2023 | |||||||||||||||
| $’000 | % | $’000 | % | |||||||||||||
| Singapore | ||||||||||||||||
| Equipment Sales | 3,816 | 39.0 | 1,645 | 33.8 | ||||||||||||
| Rental | 3,518 | 36.0 | 2,108 | 43.3 | ||||||||||||
| Services | 2,442 | 25.0 | 1,117 | 22.9 | ||||||||||||
| Total | 9,776 | 100.0 | 4,870 | 100.0 | ||||||||||||
| Six Months ended June 30, | ||||||||||||||||
| 2024 | 2023 | |||||||||||||||
| $’000 | % | $’000 | % | |||||||||||||
| United Arab Emirates | ||||||||||||||||
| Equipment Sales | 1,486 | 98.9 | 2,551 | 98.3 | ||||||||||||
| Services | 17 | 1.1 | 43 | 1.7 | ||||||||||||
| Total | 1,503 | 100.0 | 2,594 | 100.0 | ||||||||||||
| Six Months ended June 30, | ||||||||||||||||
| 2024 | 2023 | |||||||||||||||
| $’000 | % | $’000 | % | |||||||||||||
| Other Countries(1), individually less than 10% | ||||||||||||||||
| Equipment Sales | 2,711 | 96.5 | 6,761 | 97.9 | ||||||||||||
| Services | 101 | 3.5 | 146 | 2.1 | ||||||||||||
| Total | 2,812 | 100.0 | 6,907 | 100.0 | ||||||||||||
(1) “Other Countries” means Maldives, Indonesia, Thailand, Vietnam, Philippines, and Australia.
Singapore
Revenue in Singapore increased by approximately $4.9 million for the six months ended June 30, 2024, as compared to the corresponding six months ended June 30, 2023, which was primarily attributable to the increase in demand from local customers.
United Arab Emirates
Revenue in United Arab Emirates decreased by approximately $1.1 million for the six months ended June 30, 2024, as compared to the corresponding six months ended June 30, 2023, which was primarily attributable to the decrease in sale orders.
Other Countries
Revenue from other countries decreased by approximately $4.1 million, which was primarily due to lower demand from recurring customers from these countries.
| 37 |
Cost of revenue
For the six months ended June 30, 2024 and 2023, our Group’s cost of revenue decreased by approximately $0.7 million or 6.5% to approximately $9.4 million for the six months ended June 30, 2024 from approximately $10.1 million for the six months ended June 30, 2023. Such decrease was mainly attributable to the decrease in equipment sales of approximately $1.3 million offset by the increase in rental of approximately $0.3 million and services of approximately $0.3 million.
| Six Months ended June 30, | ||||||||||||||||
| 2024 | 2023 | |||||||||||||||
| $’000 | % | $’000 | % | |||||||||||||
| Equipment Sales | 7,539 | 80.0 | 8,801 | 87.3 | ||||||||||||
| Rental | 458 | 4.8 | 135 | 1.3 | ||||||||||||
| Services | 1,431 | 15.2 | 1,147 | 11.4 | ||||||||||||
| Total | 9,428 | 100.0 | 10,083 | 100.0 | ||||||||||||
Gross profit and gross profit margin
The table below sets forth our Group’s gross profit and gross profit margin by business sector for the six months ended June 30, 2024 and 2023:
| Six Months ended June 30, | ||||||||||||||||
| 2024 | 2023 | |||||||||||||||
| Gross Profit | Gross Margin | Gross Profit | Gross Margin | |||||||||||||
| $’000 | % | $’000 | % | |||||||||||||
| Equipment Sales | 474 | 5.9 | 2,156 | 19.7 | ||||||||||||
| Rental | 3,060 | 87.0 | 1,973 | 93.6 | ||||||||||||
| Services | 1,129 | 44.1 | 159 | 12.2 | ||||||||||||
| Total | 4,663 | 33.1 | 4,288 | 29.8 | ||||||||||||
Our overall gross profit margins were approximately 33.1% and approximately 29.8% for the six months ended June 30 2024 and 2023, respectively. Our total gross profit amounted to approximately $4.7 million and approximately $4.3 million for the six months ended June 30, 2024 and 2023, respectively. Our total gross profit improved by approximately 3.3% during the six months ended June 30, 2024 as compared to the six months ended June 30, 2023, which was generally due to diversified purchasing networks from across various countries.
Selling and distribution expenses
Our selling and distribution expenses mainly included promotion and marketing expenses and transportation expenses for inbound and outbound shipments. The following table sets forth the breakdown of our selling and distribution expenses for the six months ended June 30, 2024 and 2023:
| Six Months ended June 30, | ||||||||||||||||
| 2024 | 2023 | |||||||||||||||
| $’000 | % | $’000 | % | |||||||||||||
| Advertisement and promotion | 66 | 9.1 | 47 | 9.5 | ||||||||||||
| Freight costs | 561 | 77.0 | 285 | 57.6 | ||||||||||||
| Transportation and travelling | 101 | 13.9 | 163 | 32.9 | ||||||||||||
| Total | 728 | 100.0 | 495 | 100.0 | ||||||||||||
| 38 |
Our selling and distribution expenses increased by approximately $0.2 million or 47.1% to approximately $0.7 million for the six months ended June 30, 2024 from approximately $0.5 million for the six months ended June 30, 2023. Such increase was mainly attributable to the freight costs of approximately $0.3 million.
Administrative expenses
The following table sets forth the breakdown of our administrative expenses for the six months ended June 30, 2024 and 2023:
| Six Months ended June 30, | ||||||||||||||||
| 2024 | 2023 | |||||||||||||||
| $’000 | % | $’000 | % | |||||||||||||
| Depreciation of plant and equipment | 166 | 4.9 | 458 | 5.4 | ||||||||||||
| Depreciation of right-of-use assets | 404 | 11.9 | 428 | 5.1 | ||||||||||||
| Salaries and related costs | 2,310 | 68.0 | 2,157 | 25.5 | ||||||||||||
| Repair and maintenance | 18 | 0.5 | 38 | 0.5 | ||||||||||||
| Upkeep of motor vehicles | 102 | 3.0 | 95 | 1.1 | ||||||||||||
| Professional fees | 195 | 5.8 | 5,018 | 59.5 | ||||||||||||
| Others | 200 | 5.9 | 246 | 2.9 | ||||||||||||
| Total | 3,395 | 100.0 | 8,440 | 100.0 | ||||||||||||
Our administrative expenses decreased by approximately $5.0 million to approximately $3.4 million for the six months ended June 30, 2024 from approximately $8.4 million for the six months ended June 30, 2023, representing 24.1% and 58.7% of our total revenue for the corresponding six months ended June 30, 2024 and 2023, respectively. Our administrative expenses for the six months ended June 30, 2023 included the one-time initial public offering (IPO) expenses professional fees of approximately $5.0 million.
Staff costs mainly represented the salaries, employee benefits and retirement benefit costs to our employees and directors’ remuneration. The staff costs of our Group were approximately $2.3 million and approximately $2.2 million for the six months ended June 30, 2024 and 2023, respectively.
Depreciation expense is charged on our property, plant and equipment which includes (i) leasehold buildings; (ii) right-of-use assets; (iii) motor vehicles; and (iv) office equipment, and furniture and fittings.
Miscellaneous expenses were mainly comprised of insurance expenses, office supplies, legal and professional fees, repair and maintenance, vehicles upkeep and other miscellaneous expenses.
Other Expense, Net
The following table sets forth the breakdown of our other expense, net for the six months ended June 30, 2024 and 2023:
| Six Months ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| $’000 | $’000 | |||||||
| Gain on disposal of plant and equipment | 50 | 125 | ||||||
| Interest income | 121 | 3 | ||||||
| Interest expenses | (694 | ) | (522 | ) | ||||
| Dividend income | 12 | 14 | ||||||
| Government grants | 15 | 17 | ||||||
| Foreign exchange loss | (4 | ) | (73 | ) | ||||
| Others | 38 | 350 | ||||||
| Total | (462 | ) | (86 | ) | ||||
| 39 |
Interest expenses were approximately $0.7 million and approximately $0.5 million for the six months ended June 30, 2024 and 2023, respectively, from our bank loans and financing facilities. For more details of our bank borrowings, please see the paragraph headed “Bank Indebtedness” in this section.
We reported approximately $0.004 million and approximately $0.07 million of net foreign exchange loss for the six months ended June 30, 2024 and 2023, respectively.
Income tax expenses
For the six months ended June 30, 2024 and 2023, our income tax expense was comprised of our current tax expense and deferred tax for the six months period.
For the six months ended June 30, 2024, our income tax was approximately $0.001 million and our effective tax rate was approximately 2.6%. Such income tax decrease was generally in line with the increase in our profit for the current six months period.
For the six months ended June 30, 2023, our income tax refund was approximately $0.06 million due to over-payment of income tax in previous financial year.
Net income (loss)
As a result of the foregoing, our net income amounted to approximately $0.1 million and net loss amounted to approximately $4.8 million for the six months ended June 30, 2024 and 2023, respectively.
Liquidity and Capital Resources
Our liquidity and working capital requirements primarily related to our operating expenses. Historically, we have met our working capital and other liquidity requirements primarily through a combination of cash generated from our operations and loans from banking facilities. Going forward, we expect to fund our working capital and other liquidity requirements from various sources, including but not limited to cash generated from our operations, loans from banking facilities, the net proceeds from this offering and other equity and debt financings as and when appropriate.
Cash flows
The following table summarizes our cash flows for the six months ended June 30, 2024 and 2023:
| Six Months ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| $’000 | $’000 | |||||||
| Cash and cash equivalents as at beginning of the period | 7,073 | 1,003 | ||||||
| Net cash used in operating activities | (8,034 | ) | (7,029 | ) | ||||
| Net cash used in investing activities | (177 | ) | (3,903 | ) | ||||
| Net cash generated from financing activities | 5,215 | 14,809 | ||||||
| Effect on exchange rate change on cash and cash equivalents | (421 | ) | 310 | |||||
| Net change in cash and cash equivalents | (3,417 | ) | 4,187 | |||||
| Cash and cash equivalents as at end of the period | 3,656 | 5,190 | ||||||
| 40 |
Cash flows from operating activities
For the financial period ended June 30, 2024, our net cash used in operating activities was approximately $8.0 million, which primarily consisted of our net income before tax expenses of approximately $0.1 million, adding back (i) the non-cash depreciation of property, plant and equipment and right-of-use assets of approximately $0.6 million, (ii) the increase in accounts payables and accrued liabilities of approximately $2.0 million but partially offset by (a) the gain on disposal of property, plant and equipment of approximately $0.1 million, (b) the written back of inventories of approximately $0.1 million, (c) the gain on disposal of investment available for sales of approximately $7,000, (d) the gain on fair value adjustment on financial assets available for sales of approximately $4,000, (e) income tax expenses of approximately $1,000, (f) the increase of account receivables of approximately $2.5 million, (g) the increase on inventory of approximately $5.5 million and (h) the increase of deposits, prepayments and other receivables of approximately $3.3 million.
For the financial period ended June 30, 2023, our net cash used in operating activities was approximately $7.0 million, which primarily consisted of our net loss before tax expenses of approximately $4.7 million, adding back (i) the non-cash depreciation of property, plant and equipment and right-of-use assets of approximately $0.9 million, (ii) the decrease in accounts receivables of approximately $0.3 million, and (iii) the increase in accounts payables and accrued liabilities of approximately $0.6 million; but partially offset by (a) the gain on disposal of property, plant and equipment of approximately of approximately $0.1 million, (b) the gain on disposal of investment available for sales of approximately $8,000, (c) the gain of fair value adjustment on financial assets available for sales of approximately $9,000, (d) the increase in inventory of approximately $2.5 million and (e) the increase in deposits, prepayments and other receivables of approximately $1.4 million.
Cash flows from investing activities
For the financial period ended June 30, 2024, our net cash used in investing activities was approximately $0.2 million, primarily consisting of (i) the purchases of property, plant and equipment of approximately $0.5 million and (ii) the investment in financial assets, available for sale of approximately $0.02 million but mitigated by (a) the proceeds from property, plant and equipment of approximately $0.4 million and (b) the proceeds from disposal of financial assets, available for sale of approximately $0.01 million.
For the financial period ended June 30, 2023, our net cash used in investing activities was approximately $3.9 million, primarily consisting of (i) the purchases of property, plant and equipment of approximately $1.1 million, (ii) the additional of right-of-use assets of approximately $0.9 million, (iii) the investment in equity securities of approximately $2.2 million and (iv) the investment in financial assets, available for sale of approximately $0.03 million but mitigated by (a) the proceeds from disposal of investment in financial assets available for sales of approximately $0.2 million and (b) the proceed from disposal of property, plant and machinery of approximately $0.1 million.
Cash flows from financing activities
Our cash flows used in financing activities primarily consists of interest paid, proceeds from loans, repayment of loans, payment for interest portion of lease liabilities and payment for capital portion of lease liabilities.
For the financial period ended June 30, 2024, our net cash generated from financing activities of approximately $5.2 million, which mainly consisted of (i) the proceeds from bank borrowings of approximately $19.1 million, (ii) the proceeds from lease liabilities of approximately $2.8 million but offset by (a) the repayment of bank borrowings of approximately $13.6 million, (b) the repayment of lease liabilities of approximately $2.5 million and (c) the interest payments of approximately $0.6 million.
For the financial period ended June 30, 2023, our net cash generated from financing activities of approximately $14.8 million, which mainly consisted of (i) the proceeds from bank borrowings of approximately $19.3 million, (ii) the proceeds from lease liabilities of approximately $3.9 million, (iii) the proceeds from right-of-use of approximately $0.8 million and (iv) the proceeds from issuance of Ordinary Shares of approximately $15.1 million but offset by (a) the loan repayment of approximately $17.9 million, (b) the repayment of lease liabilities of approximately $5.7 million and (c) the repayment of right-of-use liabilities of approximately $0.4 million.
| 41 |
Comparison of operating results for the financial years ended December 31, 2023 and 2022
Our total revenue decreased by approximately $2.3 million or approximately 6.1% to approximately $36.0 million for the year ended December 31, 2023 from approximately $38.4 million for the financial year ended December 31, 2022. Such decrease was mainly attributable to the decrease demand in our equipment sales of approximately $7.5 million because of decrease in overseas demand.
For the financial years ended December 31, 2023 and 2022, approximately 48.4% and approximately 41.2% of our total revenue, respectively, was generated from customers located in Singapore and approximately 18.7% and approximately 23.6% of our total revenue, respectively, was generated from customers located in Australia. For the same financial years, our revenue generated from customers located in other countries accounted for approximately 32.9% and approximately 35.2% of our total revenue, respectively.
For the financial years ended December 31, 2023 and 2022, our net income amounted to approximately $1.7 million and approximately $1.0 million, respectively. Such increase was largely derived from the gain on disposal of property and equipment and the gain on early termination on lease liability of approximately $5.0 million and approximately $0.1 million respectively, the reduce in selling & distribution expenses and income tax expenses of approximately $0.6 million and $0.6 million respectively, and was offset by the decrease in gross profits approximately $1.1 million, the increase of administrative expenses and interest expense of approximately $4.0 million and approximately $0.4 million respectively.
Revenue by geographical locations
During the financial years ended December 31, 2023, and 2022, the customers for our equipment sales, rental and services were mainly located in Singapore and Australia. The following table sets out a breakdown of our revenue by geographic location of our customers for the financial years ended December 31, 2023, and 2022:
| Financial Years ended December 31, | ||||||||||||||||
| 2023 | 2022 | |||||||||||||||
| $’000 | % | $’000 | % | |||||||||||||
| Singapore | ||||||||||||||||
| Equipment Sales | 10,467 | 60.1 | 10,053 | 63.6 | ||||||||||||
| Rental | 4,953 | 28.4 | 3,803 | 24.1 | ||||||||||||
| Services | 2,010 | 11.5 | 1,955 | 12.3 | ||||||||||||
| Total | 17,430 | 100.0 | 15,811 | 100.0 | ||||||||||||
| Financial Years ended December 31, | ||||||||||||||||
| 2023 | 2022 | |||||||||||||||
| $’000 | % | $’000 | % | |||||||||||||
| Australia | ||||||||||||||||
| Equipment Sales | 6,728 | 99.9 | 9,035 | 99.8 | ||||||||||||
| Services | 9 | 0.1 | 21 | 0.2 | ||||||||||||
| Total | 6,737 | 100.0 | 9,056 | 100.0 | ||||||||||||
| Financial Years ended December 31, | ||||||||||||||||
| 2023 | 2022 | |||||||||||||||
| $’000 | % | $’000 | % | |||||||||||||
| Other Countries(1), individually less than 10% | ||||||||||||||||
| Equipment Sales | 7,500 | 63.3 | 13,114 | 97.2 | ||||||||||||
| Rental | * | * | * | * | ||||||||||||
| Services | 4,349 | 36.7 | 378 | 2.8 | ||||||||||||
| Total | 11,849 | 100.0 | 13,492 | 100.0 | ||||||||||||
(1) “Other Countries” means Maldives, Indonesia, Thailand, Vietnam, Philippines, and Middle East.
* Denotes amount less than $1,000.
| 42 |
Singapore
The revenue in Singapore increased by approximately $1.6 million for the financial year ended December 31, 2023, as compared to the corresponding financial year ended December 31, 2022, which was primarily attributable to the increase in demand from local customers.
Australia
The decrease in revenue in Australia by approximately $2.3 million for the financial year ended December 31, 2023, as compared to the corresponding financial year ended December 31, 2022.
Other Countries
Revenues from other countries decreased by approximately $1.6 million, which was primarily due to lower demand from new and recurring customers among various countries.
Cost of revenue
During the financial years ended December 31, 2023 and 2022, our cost of revenue decreased by approximately $1.3 million or approximately 4.4% to approximately $27.4 million for the financial year ended December 31, 2023 from approximately $28.6 million for the financial year ended December 31, 2022. Such decrease was mainly attributable to the decrease for the demand in our equipment sales of approximately $1.5 million and offset the increase in Services of approximately $0.3 million in 2023.
| Financial Years ended December 31, | ||||||||||||||||
| 2023 | 2022 | |||||||||||||||
| $’000 | % | $’000 | % | |||||||||||||
| Equipment Sales | 24,203 | 88.4 | 25,744 | 90.0 | ||||||||||||
| Rental | 558 | 2.0 | 597 | 2.0 | ||||||||||||
| Services | 2,605 | 9.6 | 2,276 | 8.0 | ||||||||||||
| Total | 27,366 | 100.00 | 28,617 | 100.0 | ||||||||||||
Gross profit and gross profit margin
The table below sets forth our Group’s gross profit and gross profit margin by business sector during the financial years ended December 31, 2023, and 2022:
| Financial Years ended December 31, | ||||||||||||||||
| 2023 | 2022 | |||||||||||||||
| Gross Profit | Gross Margin | Gross Profit | Gross Margin | |||||||||||||
| $’000 | % | $’000 | % | |||||||||||||
| Equipment Sales | 491 | 2.0 | 6,458 | 20.1 | ||||||||||||
| Rental | 4,394 | 88.7 | 3,206 | 84.3 | ||||||||||||
| Services | 3,765 | 59.1 | 78 | 3.3 | ||||||||||||
| Total | 8,650 | 24.0 | 9,742 | 25.4 | ||||||||||||
| 43 |
Our total gross profit amounted to approximately $8.7 million and approximately $9.7 million for the financial years ended December 31, 2023 and 2022, respectively. Our overall gross profit margins were approximately 24.0% and approximately 25.4% for the financial years ended December 31, 2023 and 2022, respectively. Our total gross profit decreased during the financial years ended December 31, 2023 and 2022, which was generally due to the lower profit margin through diversified purchasing networks from across various countries.
Selling and distribution expenses
Our selling and distribution expenses mainly included promotion and marketing expenses and transportation expenses for inbound and outbound shipments. The following table sets forth the breakdown of our selling and distribution expenses for the financial years ended December 31, 2023, and 2022:
| Financial Years ended December 31, | ||||||||||||||||
| 2023 | 2022 | |||||||||||||||
| $’000 | % | $’000 | % | |||||||||||||
| Advertisement and promotion | 15 | 1.6 | 26 | 1.7 | ||||||||||||
| Freight costs | 645 | 67.8 | 1,343 | 89.4 | ||||||||||||
| Transportation and travelling | 292 | 30.6 | 133 | 8.9 | ||||||||||||
| Total | 952 | 100.0 | 1,502 | 100.0 | ||||||||||||
The selling and distribution expenses were approximately $1.0 million and approximately $1.5 million for the financial years ended December 31, 2023 and 2022, respectively, representing approximately 2.6% and approximately 3.9% of our total revenue for the corresponding financial years.
Administrative expenses
The following table sets forth the breakdown of our administrative expenses for the financial years ended December 31, 2023, and 2022:
| Financial Years ended December 31, | ||||||||||||||||
| 2023 | 2022 | |||||||||||||||
| $’000 | % | $’000 | % | |||||||||||||
| Depreciation of plant and equipment | 907 | 8.4 | 800 | 11.9 | ||||||||||||
| Depreciation of right-of-use assets | 866 | 8.0 | 828 | 12.3 | ||||||||||||
| Salaries and related costs | 4,793 | 44.5 | 3,916 | 58.0 | ||||||||||||
| Repair and maintenance | 71 | 0.7 | 42 | 0.6 | ||||||||||||
| Upkeep of motor vehicles | 199 | 1.8 | 214 | 3.2 | ||||||||||||
| Professional fees | 3,047 | 28.3 | 115 | 1.7 | ||||||||||||
| Others | 893 | 8.3 | 830 | 12.3 | ||||||||||||
| Total | 10,776 | 100.0 | 6,745 | 100.0 | ||||||||||||
| 44 |
Administrative expenses were approximately $10.8 million and approximately $6.7 million for the financial years ended December 31, 2023 and 2022, respectively, representing approximately 29.9% and approximately 17.6% of our total revenue for the corresponding financial years.
Staff costs mainly represented the salaries, employee benefits and retirement benefit costs to our employees, directors’ remuneration and directors’ fees. The staff costs of our Group were at approximately $4.8 million and approximately $3.9 million for the financial years ended December 31, 2023 and 2022, respectively.
Depreciation expense is charged on our property, plant and equipment which includes (i) leasehold buildings; (ii) right-of-use assets; (iii) motor vehicles; and (iv) office equipment, and furniture and fittings.
Professional fees were mainly comprised of one-time initial public offering (IPO) expenses, consultancy advisory, legal fees and audit fees.
Miscellaneous expenses were mainly comprised of insurance expenses, office supplies, bad debts provision, insurance, entertainment, property tax, vehicles upkeep and other miscellaneous expenses.
Other income, net
The following table sets forth the breakdown of our other income, net for the financial years ended December 31, 2023, and 2022:
| Financial Years ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| $’000 | $’000 | |||||||
| Gain on disposal of plant and equipment | 5,161 | 2 | ||||||
| Interest income | 57 | * | ||||||
| Interest expenses | (1,105 | ) | (748 | ) | ||||
| Government grants | 22 | 81 | ||||||
| Dividend income | 16 | 7 | ||||||
| Foreign exchange loss | (43 | ) | (93 | ) | ||||
| Others | 656 | 813 | ||||||
| Total | 4,764 | 62 | ||||||
* Denotes amount less than $1,000.
Interest expenses were approximately $1.1 million and $0.7 million for the financial years ended December 31, 2023 and 2022 from our bank loans and financing facilities.
We reported the net foreign exchange loss of approximately $0.04 million in 2023 and approximately $0.09 million in 2022.
Jobs Support Scheme is an initiative introduced by the Singapore Government as a business support package to provide help for workers and businesses hit by Covid-19 restriction, such incentive scheme has been extended for another 6 months until September 2023. Our Jobs Scheme income amounted to approximately $0.01 million for both the financial year ended December 31, 2023 and 2022 respectively.
Income tax expenses (benefit)
During the financial years ended December 31, 2023 and 2022, our income tax expense was comprised of our current tax expense and deferred tax for the financial year.
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For the financial year ended December 31, 2023, our income tax decreased to approximately $0.05 million and our effective tax rate was approximately 10.2% largely due to the gain from the sales of property (capital gain) which are not taxable.
For the financial year ended December 31, 2022, our income tax increased to approximately $0.5 million and our effective tax rate was approximately 34.0% due to tax refund from previous years.
Net Income
As a result of the foregoing, our net income amounted to approximately $1.8 million and approximately $1.0 million for the financial years ended December 31, 2023 and 2022, respectively.
Liquidity and Capital Resources
Our liquidity and working capital requirements primarily related to our operating expenses. Historically, we have met our working capital and other liquidity requirements primarily through a combination of cash generated from our operations and loans from banking facilities. Going forward, we expect to fund our working capital and other liquidity requirements from various sources, including but not limited to cash generated from our operations, loans from banking facilities, the net proceeds from this offering and other equity and debt financings as and when appropriate.
Cash flows
The following table summarizes our cash flows for the financial years ended December 31, 2023 and 2022:
| Financial Years ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| $’000 | $’000 | |||||||
| Cash and cash equivalents as at beginning of the year | 1,003 | 1,533 | ||||||
| Net cash provided by operating activities | 55 | 910 | ||||||
| Net cash generated from (used in) investing activities | 6,810 | (1,140 | ) | |||||
| Net cash used in financing activities | (875 | ) | (296 | ) | ||||
| Effect on exchange rate change on cash and cash equivalents | 80 | (4 | ) | |||||
| Net increase in cash and cash equivalents | 6,070 | (530 | ) | |||||
| Cash and cash equivalents as at end of the year | 7,073 | 1,003 | ||||||
Cash flows from operating activities
For the financial year ended December 31, 2023, our net cash provided by operating activities was approximately $0.06 million, which primarily consisted of our net income of approximately $1.7 million, adding back (i) the non-cash depreciation of property, plant and equipment and right-of-use assets of approximately $1.8 million, (ii) the reverse of impairment for trade receivables approximately $0.1 million, (iii) the written down in inventories of approximately $0.5 million, (iv) the increase in accounts receivable of approximately $1.8 million (v) the increase of inventories of approximately $3.6 million, (vi) the written off of advance to suppliers of approximately $1.0 million; (vii) the increase of loss on revaluation of quoted share of approximately $0.02 million; and (viii) the decrease of other current assets of approximately $0.4 million and partially offset by (a) the gain on disposal of property and equipment and early termination of approximately $5.2 million, (b) the decrease in customer deposit of approximately $2.8 million, (c) the decrease of account payables of approximately $2.1 million and (d) the decrease of income tax payable of approximately $0.7 million.
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For the financial year ended December 31, 2022, our net cash provided by operating activities was approximately $0.9 million, which primarily consisted of our net income of approximately $1.6 million, adding back (i) the non-cash depreciation of property, plant and equipment and right-of-use assets of approximately $1.6 million, (ii) the provision of impairment for trade receivables approximately $0.2 million, (iii) the decrease in inventories of approximately $0.9 million and (iv) the increase in accounts and other payables of approximately $2.0 million and partially offset by (a) the decrease in accounts receivable of approximately $0.9 million and (b) the decrease in contract liabilities of approximately $4.4 million.
Cash flows from investing activities
For the financial year ended December 31, 2023, our net cash generated from investing activities was approximately $6.8 million, primarily consisting of the purchases of property, plant and equipment of approximately $2.0 million, the investment in equity securities of approximately $2.2 million and offset by the proceeds from disposal of property and equipment of approximately $10.9 million and the investment in financial assets, available for sale of approximately $0.1 million.
For the financial year ended December 31, 2022, our net cash used in investing activities was approximately $1.1 million, primarily consisting of the purchases of property, plant and equipment of approximately $0.8 million and the purchases of financial assets, available for sale of approximately $0.3 million.
Cash flows from financing activities
Our cash flows used in financing activities primarily consists of interest paid, proceeds from loans, repayment of loans, payment for interest portion of lease liabilities and payment for capital portion of lease liabilities.
For the financial year ended December 31, 2023, our net cash used in financing activities of approximately $0.9 million, which mainly consisted of bank loan repayment of approximately $7.4 million, the repayment of lease liabilities of approximately $6.4 million, the payment of dividend of approximately $10.5 million, the loan from director of approximately $9.9 million and the proceeds from share issuance net of deferred offering costs of approximately $13.5 million.
For the financial year ended December 31, 2022, our net cash used in financing activities of approximately $0.2 million, which mainly consisted of the bank loan repayment of approximately $0.1 million, the repayment of lease liabilities of approximately $0.1 million and the payment of dividend of approximately $0.1 million.
Accounts receivable, net
Our net accounts receivable increased from approximately $5.3 million as of December 31, 2023 to approximately $7.6 million as of June 30, 2024. The increase was primarily attributable to an overall increase in sales during the six months ended June 30, 2024.
We did not charge any interest on or hold any collateral as security over these accounts receivable balances. We generally offer credit periods of 30 to 90 days to our customers. We have not had, and do not expect to have, issues collecting payment from these longer aging invoices.
The following table sets forth the ageing analysis of our accounts receivable, net, based on the invoiced date as of the dates mentioned below:
| As of June 30, 2024 | As of December 31, 2023 | |||||||
| $’000 | $’000 | |||||||
| Within 30 days | 278 | 1,521 | ||||||
| Between 31 and 60 days | 1,449 | 779 | ||||||
| Between 61 and 90 days | 928 | 581 | ||||||
| Between 91 and 120 days | 355 | 661 | ||||||
| Over 120 days | 4,628 | 1,799 | ||||||
| Total accounts receivable, net | 7,638 | 5,341 | ||||||
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Movements in the provision for impairment of accounts receivable are as follows:
| As of June 30, 2024 | As of December 31, 2023 | |||||||
| $’000 | $’000 | |||||||
| Opening balance | 394 | 284 | ||||||
| Provision for impairment of receivables | - | 110 | ||||||
| Closing balance | 394 | 394 | ||||||
We have a policy for determining the allowance for impairment based on the evaluation of collectability and aging analysis of accounts receivable and on management’s judgement, including the change in credit quality, the past collection history of each customer and the current market condition.
The loss allowance for accounts receivable related to a general provision for accounts receivable applying the simplified approach to providing for expected credit loss(es) (the “ECL(s)”). Credit risk grades are defined using qualitative and quantitative factors that are indicative of the risk of default. An ECL rate is calculated based on historical loss rates of the industry in which our customers operate and ageing of the accounts receivable.
During the six months ended June 30, 2024 and the financial year ended December 31, 2023, other than the loss allowance provision discussed above, no impairment loss was provided for amounts that were past due.
Accounts payable
The general credit terms from our major suppliers are payment within 30 days. Our accounts payable decreased from approximately $4.8 million as of December 31, 2023 to approximately $3.8 million as of June 30, 2024. We generally pay our accounts payable within 30 days of receipt of invoice. Our average payables turnover days remained relatively stable and amounted to approximately 81 days for the six months ended June 30, 2024 and approximately 64 days for the financial year ended December 31, 2023.
We did not have any material default in payment of accounts payable during the six months ended June 30, 2024 and the financial year ended December 31, 2023.
Material Cash Requirements
Our cash requirements consist primarily of day-to-day operating expenses, capital expenditures and contractual obligations with respect to facility leases and other operating leases. We lease all our office facilities. We expect to make future payments on existing leases from cash generated from operations. We have limited credit available from our major vendors and are required to prepay the majority of our inventory purchases, which further constrains our cash liquidity.
We had the following contractual obligations and lease commitments as of June 30, 2024:
| Contractual Obligations | Total | Less than 1 year | 1-3 Years | |||||||||
| $’000 | $’000 | $’000 | ||||||||||
| Operating lease commitment | 7,972 | 4,272 | 3,700 | |||||||||
| Bank loan repayment | 10,440 | 10,440 | - | |||||||||
| Total obligations | 18,412 | 14,712 | 3,700 | |||||||||
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We believe that we have sufficient working capital for our requirements for at least the next 12 months from the date of this prospectus, absent unforeseen circumstances, taking into account the financial resources presently available to us, including cash and cash equivalents on hand, cash flows from our operations and the estimated net proceeds from this offering.
Bank Indebtedness
| Bank Borrowings | Terms of repayments | Annual interest rate | As of June 30, 2024 | As of December 31, 2023 | ||||||||||
| $’000 | $’000 | |||||||||||||
| Term loans | 2 to 5 years | 2.5% - 3.5% | 965 | 1,521 | ||||||||||
| Trust receipts | Within 12 months | 2.85% - 6.34% | 9,475 | 3,498 | ||||||||||
| Total | 10,440 | 5,019 | ||||||||||||
As of June 30, 2024, bank borrowings were obtained from several financial institutions in Singapore, which bear annual interest at a fixed rate from 2.5% to 6.34% and are repayable in 2 to 5 years.
Capital commitments
As of June 30, 2024 and December 31, 2023, we did not have any capital commitments.
Off-Balance Sheet Transactions
As of June 30, 2024, we have not entered into any material off-balance sheet transactions or arrangements.
We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. In addition, we have not entered into any derivative contracts that are indexed to our Ordinary Shares and classified as shareholders’ equity, or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. Moreover, we do not have any variable interest in an unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us.
Critical Accounting Policies and Estimates
Our financial statements and accompanying notes have been prepared in accordance with U.S. GAAP. The preparation of these financial statements and accompanying notes requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operations. Critical accounting policies are those that are most important to the portrayal of our financial condition and results of operations and require management’s difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments. While our significant accounting policies are more fully described in Note 2 to the consolidated financial statements included elsewhere in this prospectus, we believe the following critical accounting policies involve the most significant estimates and judgments used in the preparation of our financial statements.
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We are an “emerging growth company” as defined under the federal securities laws and, as such, will be subject to reduced public company reporting requirements. Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act, for complying with new or revised accounting standards. We have elected to take advantage of the extended transition period for complying with new or revised accounting standards and acknowledge such election is irrevocable pursuant to Section 107 of the JOBS Act. As a result of our election, our financial statements may not be comparable to those of companies that comply with public company effective dates.
| ● | Use of Estimates and Assumptions |
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the periods presented. Significant accounting estimates in the period include the allowance for expected credit loss on accounts and other receivables, impairment loss on inventories, assumptions used in assessing right-of-use assets, and impairment of long-lived assets, and deferred tax valuation allowance.
The inputs into the management’s judgments and estimates consider the economic implications of COVID-19 on the Company’s critical and significant accounting estimates. Actual results could differ from these estimates.
| ● | Basis of Consolidation |
The consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant inter-company balances and transactions within the Company have been eliminated upon consolidation.
| ● | Non-Controlling Interest |
The Company reports non-controlling interest in its majority owned subsidiaries in the consolidated balance sheets within the shareholders’ equity section, separately from the Company’s shareholders’ equity. Non-controlling interest represents non-controlling interest holders’ proportionate share of the equity of the Company’s majority-owned subsidiaries. Non-controlling interest is adjusted for non-controlling interest holders’ proportionate share of the earnings or losses and other comprehensive income.
| ● | Foreign Currency Translation and Transaction |
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the date of the balance sheet dates. The resulting exchange differences are recorded in the statement of operations.
The reporting currency of the Company is United States Dollar or “US$” and the accompanying consolidated financial statements have been expressed in US$. In addition, the Company and subsidiaries are operating in Singapore, maintain their books and record in their local currency, Singapore Dollars or “S$”, which is a functional currency as being the primary currency of the economic environment in which their operations are conducted. In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not US$ are translated into US$, in accordance with ASC Topic 830-30, Translation of Financial Statement, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the year. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statements of changes in shareholders’ equity.
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Translation gains and losses that arise from exchange rate fluctuations from transactions denominated in a currency other than the functional currency are translated, as the case may be, at the rate on the date of the transaction and included in the results of operations as incurred.
| ● | Cash and Cash Equivalents |
Cash and cash equivalents consist primarily of cash in readily available checking and saving accounts. Cash and cash equivalents consist of highly liquid investments that are readily convertible to cash and that mature within three months or less from the date of purchase. The carrying amounts approximate fair value due to the short maturities of these instruments. The Company maintains most of its bank accounts in Singapore. There are no material accounts of the Company or any subsidiary in other jurisdictions.
| ● | Restricted Cash |
Restricted cash held by foreign subsidiaries relate to fixed deposits within or more than twelve months that also serve as security deposits and guarantees under the banking facilities.
| ● | Accounts Receivable, net |
Accounts receivable include trade accounts due from customers in the sale of products.
Accounts receivable are recorded at the invoiced amount. The Company seeks to maintain strict control over its outstanding receivables to minimize credit risk. Overdue balances are reviewed regularly by senior management. Management reviews its receivables on a regular basis to determine if the bad debt allowance is adequate, and provides allowance when necessary. The allowance is based on management’s best estimates of specific losses on individual customer exposures, as well as the historical trends of collections. Account balances are charged off against the allowance after all reasonable means of collection have been exhausted and the likelihood of collection is not probable. The Company’s management continues to evaluate the reasonableness of the valuation allowance policy and update it if necessary.
The Company does not hold any collateral or other credit enhancements over its accounts receivable balances.
| ● | Inventories |
Inventories are valued at the lower of cost or net realizable value. Cost is determined by the average cost method. The Company records adjustments to its inventory for estimated obsolescence or diminution in net realizable value equal to the difference between the cost of the inventory and the estimated net realizable value. At the point of loss recognition, a new cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis.
| ● | Property and Equipment, net |
Property and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational and after taking into account their estimated residual values:
| Expected useful life | ||
| Leasehold building | Over the remaining lease term | |
| Leasehold improvement | Over the remaining lease term | |
| Plant and machineries | 10 years | |
| Motor vehicles | 5 years | |
| Office equipment, and furniture and fittings | 3 to 10 years |
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Expenditure for repairs and maintenance is expensed as incurred. When assets have retired or sold, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the results of operations.
| ● | Impairment of Long-Lived Assets |
In accordance with the provisions of ASC Topic 360, Impairment or Disposal of Long-Lived Assets, all long-lived assets such as property, plant and equipment owned and held by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of an asset to its estimated future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets.
| ● | Revenue Recognition |
| (a) | Revenues from goods and services provided |
The Company receives certain portion of its non-interest income from contracts with customers, which are accounted for in accordance with Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASC 606”).
ASC 606-10 provided the following overview of how revenue is recognized from the Company’s contracts with customers: The Company recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.
| Step 1: | Identify the contract(s) with a customer. | |
| Step 2: | Identify the performance obligations in the contract. | |
| Step 3: | Determine the transaction price – The transaction price is the amount of consideration in a contract to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. | |
| Step 4: | Allocate the transaction price to the performance obligations in the contract – Any entity typically allocates the transaction price to each performance obligation on the basis of the relative standalone selling prices of each distinct good or service promised in the contract. | |
| Step 5: | Recognize revenue when (or as) the entity satisfies a performance obligation – An entity recognizes revenue when (or as) it satisfies a performance obligation by transferring a promised good or service to a customer (which is when the customer obtains control of that good or service). The amount of revenue recognized is the amount allocated to the satisfied performance obligation. A performance obligation may be satisfied at a point in time (typically for promises to transfer goods to a customer) or over time (typically for promises to transfer service to a customer). |
Majority of the Company’s income is derived from contracts with customers in the sale of products, and as such, the revenue recognized depicts the transfer of promised goods or services to its customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company considers the terms of the contract and all relevant facts and circumstances when applying this guidance. The Company’s revenue recognition policies are in compliance with ASC 606, as follows:
Product sales consist of a single performance obligation that the Company satisfies at a point in time. The Company recognizes product revenue when the following events have occurred: (a) the Company has transferred physical possession of the products, depending upon the method of distribution and shipping terms set forth in the customer contract, (b) the Company has a present right to payment, (c) the customer has legal title to the products, and (d) the customer bears significant risks and rewards of ownership of the products. Based on the Company’s historical practices and shipping terms specified in the sales agreements and invoices, these criteria are generally met when the products are:
| ● | Invoiced; and | |
| ● | Shipped from the Company’s facilities or warehouse (“Ex-works”, which is the Company’s standard shipping term). |
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For these sales, the Company determines that the customer is able to direct the use of, and obtain substantially all of the benefits from, the products at the time the products are shipped.
| (b) | Revenues from equipment rental |
The accounting for the types of revenue that are accounted for under Topic 842 is discussed below.
Equipment rental business are governed by our standard rental contract. The Company accounts for the rental of heavy construction equipment as operating leases where, lease income from the prospective of lessor is recognized to the Company’s statement of income straight-line basis over the term of the lease once management has determined that the lease payments are reasonably expected to be collected. The performance obligation under these leasing arrangements is to deliver the unit to the customer at their location and ensure that our heavy construction equipment is ready for use, and to ensure that our heavy construction equipment is available for use over the life of the lease contract. Our rental contract periods are on monthly.
Our equipment rental business are generally short-term to mid-term in nature and our heavy construction equipment is typically rented for the majority of the time that we own it.
The Company records its revenues on product sales, net of GST upon the services are rendered and the title and risk of loss of products are fully transferred to the customers. The Company is subject to GST which is levied on the majority of the products at the rate of 9% on the invoiced value of sales in Singapore.
Amounts received as prepayment on future products are recorded as customer deposit and recognized as income when the product is shipped.
| ● | Shipping and Handling Costs |
No shipping and handling costs are associated with the distribution of the products to the customers which are borne by the Company’s suppliers or distributors during the six months ended June 30, 2024 and 2023.
| ● | Sales and Marketing |
Sales and marketing expenses include payroll, employee benefits and other headcount-related expenses associated with sales and marketing personnel, and the costs of advertising, promotions, seminars, and other programs.
| ● | Government Grant |
A government grant or subsidy is not recognized until there is reasonable assurance that: (a) the enterprise will comply with the conditions attached to the grant; and (b) the grant will be received. When the Company receives government grant or subsidies but the conditions attached to the grants have not been fulfilled, such government subsidies are deferred and recorded under other payables and accrued expenses, and other long-term liability. The classification of short-term or long-term liabilities is depended on the management’s expectation of when the conditions attached to the grant can be fulfilled.
| ● | Comprehensive Income (Loss) |
ASC Topic 220, Comprehensive Income, establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive income, as presented in the accompanying statement of shareholder’s equity, consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive income is not included in the computation of income tax expense or benefit.
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| ● | Income Taxes |
Income taxes are determined in accordance with the provisions of ASC Topic 740, Income Taxes (“ASC 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.
For the six months ended June 30, 2024 and 2023, the Company did not have any interest and penalties associated with tax positions. As of June 30, 2024 and December 31, 2023, the Company did not have any significant unrecognized uncertain tax positions.
The Company is subject to tax in local and foreign jurisdiction. As a result of its business activities, the Company files tax returns that are subject to examination by the relevant tax authorities.
| ● | Leases |
Effective from January 1, 2020, the Company adopted the guidance of ASC 842, Leases, which requires an entity to recognize a right-of-use asset and a lease liability for virtually all leases. On February 25, 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update No. 2016-02, Leases (Topic 842), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing transactions. ASC 842 requires that lessees recognize right-of-use assets and lease liabilities calculated based on the present value of lease payments for all lease agreements with terms that are greater than twelve months. It requires for leases longer than one year, a lessee to recognize in the statement of financial condition a right-of-use asset, representing the right to use the underlying asset for the lease term, and a lease liability, representing the liability to make lease payments. ASC 842 distinguishes leases as either a finance lease or an operating lease that affects how the leases are measured and presented in the statement of operations and statement of cash flows. ASC 842 supersedes nearly all existing lease accounting guidance under GAAP issued by the FASB including ASC Topic 840, Leases.
The accounting update also requires that for finance leases, a lessee recognize interest expense on the lease liability, separately from the amortization of the right-of-use asset in the statements of earnings, while for operating leases, such amounts should be recognized as a combined expense. In addition, this accounting update requires expanded disclosures about the nature and terms of lease agreements.
| ● | Retirement Plan Costs |
Contributions to retirement plans (which are defined contribution plans) are charged to general and administrative expenses in the accompanying statements of operation as the related employee service are provided. The Company is required to make contribution to their employees under a government-mandated multi-employer defined contribution pension scheme for its eligible full-times employees in Singapore. The Company is required to contribute a specified percentage of the participants’ relevant income based on their ages and wages level.
| ● | Segment Reporting |
FASB ASC 280, “Segment Reporting”, establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for details on the Company’s business segments. For the six months ended June 30, 2024 and 2023, the Company has one reporting business segment.
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| ● | Related Parties |
The Company follows the ASC 850-10, Related Party for the identification of related parties and disclosure of related party transactions.
Pursuant to section 850-10-20 the related parties include: (a) affiliates of the Company; (b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of section 825-10-15, to be accounted for by the equity method by the investing entity; (c) trusts for the benefit of employees, such as pension and Income-sharing trusts that are managed by or under the trusteeship of management; (d) principal owners of the Company; (e) management of the Company; (f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and (g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
The financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: (a) the nature of the relationship(s) involved; (b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; (c) the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and (d) amount due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.
| ● | Commitments and Contingencies |
The Company follows the ASC 450-20, Commitments to report accounting for contingencies. Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time that these matters will have a material adverse effect on the Company’s financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows.
| ● | Concentration of Credit Risk |
Financial instruments that potentially subject the Company to credit risk consist of cash and cash equivalents, restricted cash, and accounts receivable. Cash and cash equivalents are maintained with high credit quality institutions, the composition and maturities of which are regularly monitored by management. As of April 1, 2024, the Singapore Deposit Protection Board pays compensation up to a limit of S$100,000 (approximately US$74,360) if the bank with which an individual/a company hold its eligible deposit fails. As of June 30, 2024, bank and cash balances of approximately $3.7 million were maintained at financial institutions in Singapore, of which approximately $3.6 million was subject to credit risk.
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For accounts receivable, the Company determines, on a continuing basis, the allowance for expected credit loss is based on the estimated realizable value. The Company identifies credit risk on a customer-by-customer basis. The information is monitored regularly by management. Concentration of credit risk arises when a group of customers having similar characteristics such that their ability to meet their obligations is expected to be affected similarly by changes in economic conditions.
| ● | Liquidity Risk |
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company’s policy is to ensure that it has sufficient cash to meet its liabilities when they become due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation. A key risk in managing liquidity is the degree of uncertainty in the cash flow projections. If future cash flows are fairly uncertain, the liquidity risk increases.
| ● | Fair Value Measurement |
The Company follows the guidance of the ASC Topic 820-10, Fair Value Measurement and Disclosure (“ASC 820-10”), with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:
Level 1: Inputs are based upon unadjusted quoted prices for identical instruments traded in active markets; | |
Level 2: Inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques (e.g. Black-Scholes Option-Pricing model) for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs; and | |
| Level 3: Inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models. |
The carrying value of the Company’s financial instruments: cash and cash equivalents, restricted cash, accounts receivable, loans receivable, amount due to a related party, accounts payable, escrow liabilities, income tax payable, amount due to a related party, other payables and accrued liabilities approximate at their fair values because of the short-term nature of these financial instruments.
Management believes, based on the current market prices or interest rates for similar debt instruments, the fair value of note payable approximate the carrying amount. The Company accounts for loans receivable at cost, subject to impairment testing. The Company obtains a third-party valuation based upon loan level data including note rate, type and term of the underlying loans.
The Company’s non-marketable equity securities are investments in privately held companies, which are without readily determinable market values and are classified as Level 3, due to the absence of quoted market prices, the inherent lack of liquidity and the fact that inputs used to measure fair value are unobservable and require management’s judgment.
Fair value estimates are made at a specific point in time based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
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| ● | Recent Accounting Pronouncements |
In July 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires public entities to disclose information about their reportable segments’ significant expenses and certain other segment items on an interim and annual basis if they are regularly provided to the chief operating decision maker (“CODM”). This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied retrospectively to all prior periods presented. Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption.
In September 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires public entities on an annual basis to disclose (1) specific categories in the tax rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. This ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments should be applied on a prospective basis, though retrospective application is permitted.
In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative, which incorporates certain SEC disclosure requirements into the FASB Accounting Standards Codification. This update will improve disclosure and presentation requirements of a variety of topics and align the requirements in the FASB codification with the SEC’s regulations. The Company is currently evaluating the potential effect of this ASU on its combined financial statements, but does not expect the impact to be material.
Except as mentioned above, the Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company’s consolidated balance sheets, statements of income and comprehensive income and statements of cash flows.
Impact of Inflation
According to the Monetary Authority of Singapore (“MTA”), the year-over-year percentage changes in the consumer price index for 2024 and 2023 were 2.4% and 4.8%, respectively as reported by the MTA at https://www.mas.gov.sg/news/monetary-policy-statements/2025/mas-monetary-policy-statement-24jan25. MAS Core Inflation is now forecast to average 1.0 - 2.0% in 2025 and barring unforeseen circumstances, we expected to not continue to increase. Inflation in Singapore has not materially affected our profitability and operating results. However, we can provide no assurance that we will be unaffected by higher inflation rates in Singapore or globally in the future.
Seasonality
We have not observed any significant seasonal trends. Our Directors believe that there is no apparent seasonality factor affecting the industry that our Group is operating in.
Quantitative and Qualitative Disclosures about Market Risk
Interest Rate Risk
We are exposed to interest rate risk while we have short-term bank loans outstanding. Although interest rates for our short-term loans are typically fixed for the terms of the loans, the terms are typically twelve months and interest rates are subject to change upon renewal.
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Credit Risk
Credit risk is controlled by the application of credit approvals, limits and monitoring procedures. We manage credit risk through in-house research and analysis of the relevant economy and the underlying obligors and transaction structures. We identify credit risk collectively based on industry, geography and customer type. In measuring the credit risk of our sales to our customers, we mainly reflect the “probability of default” by the customer on its contractual obligations and consider the current financial position of the customer and the current and likely future exposures to the customer.
Liquidity Risk
We are also exposed to liquidity risk, which is risk that we will be unable to provide sufficient capital resources and liquidity to meet our commitments and business needs. Liquidity risk is controlled by the application of financial position analysis and monitoring procedures. When necessary, we will turn to financial institutions and related parties to obtain short-term funding to cover any liquidity shortage.
Foreign Exchange Risk
Our reporting currency is the U.S. dollar, and almost all of our consolidated revenues and consolidated costs and expenses.
CORPORATE HISTORY AND STRUCTURE
Our Group’s history can be traced back to September 1988 when Mr. Eng Hock Lim, our Executive Director, Chairman, Chief Executive Officer and Controlling Shareholder, registered a sole proprietorship under the business name “Multi-Ways Equipment” to carry on the business of sales in generators and air compressors.
Multi Ways SG was incorporated as a company in Singapore on August 22, 2002 under the Singapore Companies Act as an exempt private company limited by Ordinary Shares, under the name of “Multi Ways Equipment Pte. Ltd.”, to take over the business of the sole proprietorship.
Our first workshop was located in Defu Lane, Singapore and we moved to 32 Joo Koon Road, Singapore 628985 in 1993 to accommodate increasing sales and rental orders and store our expanding range of heavy construction equipment. In 1996, our Group expanded our fleet of heavy construction equipment to include road-building equipment such as motor graders and tire rollers and mining equipment such as bulldozers and dump trucks.
In 2011, we moved to our flagship showroom and headquarters situated at 3E Gul Circle, Singapore 629633, where we display our wide selection of heavy construction equipment for our customers for viewing. Part of our premises at 3E Gul Circle, Singapore 629633 is also concurrently used as a storage facility and workshop where we conduct our refurbishment, maintenance and servicing services.
We expanded our fleet of heavy construction equipment to include cranes for sale in 2012, and expanded into the crane rental business in 2015. Due to the continued expansion in the fleet variety and quantity of our heavy construction equipment available to our customers of our sales and rental business, we acquired an additional storage facility at 22 Gul Avenue, Singapore 629662 where we commenced the construction of a storage facility building which was completed in 2017. Subsequently, we rented another storage facility at 16 Pioneer Sector 2, Singapore 628377 in 2020, to store some of our heavy construction equipment in Singapore.
Since then, our Group has expanded our range of products available for sales and rental to include various types of heavy construction equipment such as earth-moving equipment (which include excavators, bulldozers, wheel loaders and dump trucks), material-handling equipment (which include crawler cranes, rough terrain cranes and forklifts) and road-building equipment (which include motor graders, asphalt finishers and vibratory rollers), as well as offer complementary services such as refurbishment, servicing and maintenance of heavy construction equipment.
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In 2015, we obtained BizSafe Level 4 accreditation from WSH, which is a nationally-recognized program designed to build workplace safety and health capabilities. We have approximately 56 employees in our maintenance and servicing team.
Over the last two decades, we have become a supplier of a wide range of heavy construction equipment in Singapore.
As at the date of this prospectus, our Group is comprised of the Company and its subsidiaries, MWE Holdings and Multi Ways SG.
Corporate Structure
Our Company was incorporated in the Cayman Islands on June 2, 2022 under the Companies Act as an exempted company with limited liability. Our authorized share capital is US$2,500,000 divided into 10,000,000,000 Ordinary Shares, par value $0.00025 each. Prior to a group reorganization, our Group comprised only Multi Ways SG. With the completion of our reorganization, MWE Holdings and Multi Ways SG has become our direct and indirect wholly-owned subsidiaries, respectively.
Organization Chart
The following diagram illustrates the corporate structure of Multi Ways Holdings Limited and its subsidiaries as of the date of this prospectus:
Entities
A description of our principal operating subsidiary is set out below.
MWE Holdings
On June 15, 2022, MWE Holdings was incorporated in the BVI with limited liability. As part of a group reorganization on August 26, 2022, MWE Holdings became the direct holding company of 100% Ordinary Shares of Multi Ways SG and a wholly-owned subsidiary of the Company.
Multi Ways SG
On August 22, 2002, Multi Ways SG was incorporated in Singapore with limited liability. Multi Ways SG commenced business in 2002 and is principally engaged in the sales and rental of heavy construction equipment in Singapore and the region. As part of a group reorganization on August 26, 2022, Multi Ways SG became a wholly-owned subsidiary of MWE Holdings and an indirect wholly-owned subsidiary of our Company.
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BUSINESS
Overview
We are a supplier of a wide range of heavy construction equipment for sales and rental in Singapore and the surrounding region. With more than two decades of experience in the sales and rental of heavy construction equipment business, we have established ourselves to be a reliable supplier of a wide variety of new and used heavy construction equipment to our customers from Singapore, Australia, United Arab Emirates (the “UAE”), Maldives, Indonesia and the Philippines. Our operation is based in Singapore.
Most of the heavy construction equipment in our fleet available for sales and rental by our customers comprise of used construction equipment which we have purchased from reliable suppliers whom we have established relationships with over the years in this business, and are located in various geographical locations in the region.
Our wide variety of new and used heavy construction equipment for sale and rental by our customers range from: (i) earth-moving equipment such as bulldozers, off-terrain dump trucks, excavators and wheel loaders; (ii) material-handling equipment such as crawler cranes, rough terrain cranes, scissor lifts, forklifts, boom-lifts and telescopic handlers; (iii) road-building equipment such as motor graders, vibrating compactors, asphalt finishers, skid loaders, backhoe loaders, hand rollers and mini excavators; and (iv) generators and compressors, such as air compressors, generators, lighting towers and welding machines.
Complementary to the heavy construction equipment products offered for sale and rental by us, we also offer services to our customers, such as servicing and maintenance services for heavy construction equipment, customization of heavy construction equipment to meet specific needs of certain customers, machinery cleaning which meet the standards required for quarantine-free import to Australia and New Zealand for customers based in those regions, provision of qualified crane operators to our customers to operate the cranes and transportation of heavy construction equipment, both within Singapore and cross-border transportation to desired ports.
With our wide variety of heavy construction equipment in our inventory and complementary equipment refurbishment and cleaning services, we are well-positioned to serve customers as a one-stop shop.
Our Customers
Our customers operate in various industries which range from the infrastructure and building construction industry, including piling and land reclamation, to the mining industry, marine industry and oil and gas industry. For example, our crawler cranes may be deployed at construction sites for lifting general construction materials and erection and dismantling of tower cranes for customers in the infrastructure and building construction industry. Another example is that our dump trucks may be deployed at jobsites to transport earth and soil between various areas within the jobsite for customers in the construction and mining industry. Such customers are generally contractors involved in construction or suppliers of equipment or services in the building construction sector. Customers in the oil and gas industry are generally suppliers of equipment and process modules for use in offshore oil and gas exploration, which may use our crawler cranes and rough terrain cranes to undertake installation and assembly of oil and gas structures and equipment. Customers in the mining industry are typically contractors involved in surface or underground mining, which may use our excavators and dump trucks.
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Our key customer base operates in the following key industries:
| Industry | Key Geographic Location | |
Infrastructure and Building Construction |
Singapore, Malaysia, Indonesia, Vietnam, Bangladesh and Maldives | |
| Mining | Australia and Indonesia | |
| Oil and Gas | UAE | |
| Marine | Indonesia |
Our Products
Most of our heavy construction equipment available for sales and rental by our customers are used equipment. Some of our used heavy construction equipment available for sales and rental to our customers are as follows:
(i) Earth-moving Equipment
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Excavator
Excavators are essential for digging, material handling, demolition and are used in most construction projects. We have a range of excavators with varying operating capacities to cater to different needs of our customers. |
Mini Excavator
We also offer mini excavators, with operating weight capacity of under 10 tonnage, which are able to work in small spaces. |
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Wheel Loader
Wheel loaders are used for scooping and transporting earth and sand and run on wheels. Our selection of wheel loaders have varying operating capacities to cater to differing needs of customers. |
Bulldozer
Bulldozers are used to flatten the ground by pushing materials such earth, sand, rubble or rock with a heavy and broad blade or plate during construction work and travels on tracks.
We offer a range of bulldozers with varying operating capacities. |
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| Dump Truck | ||
| Dump trucks are used for transporting loose material for construction and are typically filled with earth, sand, dirt, waste and other materials by another machine, where it then transports and dumps its load at a specified location. We offer a range of dump trucks with varying operating capacities. | ||
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(ii) Material-handling Equipment
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Crawler Crane
Cranes are machines generally equipped with chains and sheaves that can be used to lift and lower loads and to move them horizontally. Crawler cranes are used to lift and lower loads around construction sites safely and economically.
The crawler crane comprises of a lattice boom mounted on an undercarriage with tracks. The heavy tracks provide the crane stability and mobility over undulating terrains. As such, it can move within jobsites easily and perform lifting with very minimal set-up. In addition, a crawler crane is capable of travelling while lifting a load at the same time.
We have a wide range of crawler cranes with maximum load capacities ranging from 50 tonnage to 300 tonnage. |
Rough Terrain Crane
Rough terrain crane comprises a telescopic boom mounted on an undercarriage with rubber tyres. The dual-cabin crane is capable of travelling on roads, thus eliminating the need for special equipment to transport the crane. When working on jobsites, outriggers are extended from the chassis of the crane to increase stability during lifting. The crane also has moving counterweights for additional stabilisation
Rough terrain cranes are fitted with versatile steering capabilities to allow manoeuvring of their extended chassis with ease. |
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Forklift
Forklifts are powered industrial trucks used to lift loads and transport materials over short distances. Forklifts are used to carry goods and loads across distances of varying terrain. Although forklifts have lower load capacities than cranes, it is more compact and more easily manoeuvred. |
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Boom Lift
Boom lifts are aerial work platform providing temporary access for personnel or equipment to inaccessible areas, usually at height. It comprises a lift (or bucket) at the end of a hydraulic lifting system mounted on a self-moving platform. The boom lift is fitted with either a straight or an articulated boom, consisting jointed sections, which can be controlled to extend the lift in a number of different directions. The boom lift is usually designed to be fully operated (including set-up) by a single person. |
Scissor Lift
Scissor lifts are another type of aerial work platform. It comprises a lift at the end of a set of linked, folding supports in a criss-cross ‘X’ pattern mounted on a self-moving platform. The lift is capable of vertical movements and can be extended horizontally to allow closer access to work areas. The scissor lift is also design to be fully operated by a single person. |
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(iii) Road-building Equipment
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Motor Grader
Motor graders are used to flatten a surface during construction for fine grading, with higher degree of precision than bulldozers. |
Asphalt Finisher
Asphalt finishers are used to lay asphalt on roads by laying the asphalt flat and provides minor compaction. |
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Tire Roller
Tire rollers are used to compact soils, hotmix and other materials and are typically used for pavements. |
Vibratory Roller – Single Drum
Vibratory rollers are used vibration of drums for compacting asphalt, soil and concrete to increase density and load-bearing capacity. |
Vibratory Roller – Tandem Drum
Tandem vibratory rollers are equipped with two steel drums on the front and back, and are used mainly to pave smooth surfaces like asphalt and rolled concrete. |
(iv) Generators and Compressors
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Air Compressor
Air compressors are used to power tools on construction sites, such as power hammers, drills, saws, wrenches and other pneumatic tools by using compressed air as a form of energy. |
Generator
Generators are used to provide power to temporary buildings and construction machinery which require electricity to operate. |
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Our Equipment Sales Business
Our equipment sales business involves the sale of both new and used heavy construction equipment from our inventory, predominantly to our local or overseas customers in Singapore, Australia, UAE, Maldives, Indonesia and the Philippines.
Mr. Eng Hock Lim, our Executive Director, Chairman and Chief Executive Officer, is primarily responsible for our equipment sales business. He and his team are in charge of sourcing for new and used construction equipment from various countries and regions such as Japan and the Middle East. Some of the construction equipment that we purchase are reserved for our rental business, and the rest are sold to our customers in Singapore and around the region.
We have a wide customer base in respect of our sales business, comprising more than 100 customers spanning Singapore, Australia, UAE, Maldives, Indonesia and Philippines.
We procure used construction equipment from our wide network of contacts. We have a reliable group of suppliers, whom we have long-standing relationships with. From these suppliers, we source good quality and competitively priced used heavy construction equipment. Depending on the intended usage and regulatory requirements that our customers have to comply with, we recondition and refurbish our fleet of used heavy construction equipment prior to reselling them to our customers. The reconditioning and refurbishment of these used equipment are carried out at our servicing workshop situated at 3E Gul Circle, Singapore and it is well-equipped to inspect, service, refurbish and repair used heavy construction equipment purchased from our suppliers. We also offer specific customization of any type of heavy construction equipment in our inventories, depending on the unique needs and requirements of our customers. Our reputation and experience in providing high quality reconditioning and refurbishment engineering services provide our customers with the confidence that used heavy construction equipment that they procure from us would be in good working condition. We believe that we have an established reputation amongst our customers for our reconditioned and refurbished heavy construction equipment and this has allowed us to expand our equipment sales business over the years. As of the date of this prospectus, we have 56 employees in our maintenance and service team who are based in Singapore, comprising highly-skilled mechanics, technicians, painters and panel-beaters who are well-qualified to refurbish the wide range of heavy construction equipment in our inventories.
Besides used heavy construction equipment, we also source new heavy construction equipment from reputable dealers all over the world to satisfy our customers’ needs. This ensures our competitiveness of supplying established brands of heavy construction equipment to them.
It is in our business practice not to take speculative positions in our equipment sales business. We typically purchase equipment if there is an existing purchase commitment or serious indication of purchase interest from our customers, or if, based on our decades of experience, is likely to be popular for rental. However, to maintain our position as one of the leading suppliers of a wide range of new and used construction equipment, we do maintain an inventory of such equipment which are more popular with our customers and which, in our view, are easier to resell.
Equipment sales business constitutes approximately 68.1%, 68.6%, and 83.9% of our Group’s total revenue for the six months ended June 30, 2024 and for the financial years ended December 31, 2023 and 2022 respectively. In the six months ended June 30, 2024, our Group’s total revenue generated from equipment sales business is $9.6 million, of which approximately 47.6% and 52.4% are sales from the Singapore and overseas markets respectively. In the financial year ended December 31, 2023, our Group’s total revenue generated from equipment sales business was $24.7 million, of which approximately 42.4% and 57.6% were sales from Singapore and overseas markets respectively. In the financial year ended December 31, 2022, our Group’s total revenue generated from equipment sales business was $32.2 million, of which approximately 31.2% and 68.8% were sales from Singapore and overseas markets respectively.
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Sales Process Flow
The process flow pertaining to our sales business activities can be generally illustrated diagrammatically as follows:
Purchase of Equipment from Suppliers
Our Executive Director, Chairman and Chief Executive Officer, Mr. Eng Hock Lim’s wide network of contacts has allowed us to build a reputation and rapport with a network of trusted suppliers from around the region. Our suppliers constantly update us with information on equipment availability in the market. Our suppliers will typically provide us with digital photographs of the available used equipment for sale, and will inform us of the state and condition of such equipment. Subject to expected demand for the equipment and refurbishment works needed, our sales team further negotiates sales terms with our suppliers before committing to purchases.
Customer Inquiries for Equipment Purchases
Through our commitment to deliver quality equipment which are customizable based on our customer’s needs, we have firmly established ourselves as a preferred equipment supplier to our customers. Our existing customers, together with potential new customers through referrals and through online inquiries via our website at www.multiwaysholdings.com, approach us with inquiries whenever they need to purchase heavy construction equipment for their projects. Subject to equipment availability and acceptable sales terms, our customers enter into sales agreement confirming their equipment purchases with us.
Functionality Testing, Inspection and Refurbishment of Equipment
Upon arrival of the equipment at our workshop in Singapore, our experienced maintenance service team conducts thorough inspections on every aspect of equipment functionality and usability. We have designated diagnostic testing and inspection checklists for different types of heavy construction equipment, as each type of equipment have different functionality testing and maintenance needs such as bulldozers, cranes, excavators, generators and compressors, wheel loaders and motor graders. For example, functionality testing and inspection of our bulldozers will involve visual checks on general appearance of equipment, inspection of operator’s cockpit, testing of braking system and various engine parts such as the radiator, engine filter and exhaust system. Thereafter, our maintenance service team will note the various refurbishment or maintenance works required for specific equipment and schedule approximate completion time for each of the works required. For used equipment, our maintenance service teams will proceed to conduct the necessary refurbishment and maintenance works such as replacing worn parts, which is typically followed by a fresh coat of paint or paint touch-ups such that our equipment is visually pleasing.
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Our team of technicians conducts a final round of testing and inspection of the refurbished equipment for functionality and usability after refurbishment and maintenance works are completed, prior to delivery to our customers, so as to maintain quality standards of our equipment to our customers.
Delivery to Customers
Our equipment sales team arranges shipment in accordance to the delivery schedule as required by our customers. As a one-stop shop for services offered to our overseas customers, we provide container packing services and arrangement of transportation to our customer’s desired port.
Warranty for new equipment is covered by the original equipment manufacturers. For used equipment whilst we do not provide any warranty, we are dedicated to deliver equipment to the satisfaction of our customers.
Our Rental Business
Our rental business comprises the rental of our full suite of heavy construction equipment, mainly to customers within Singapore.
We have a comprehensive fleet of heavy construction equipment to support our customers who need to comply with regulations relating to the use and operation of heavy construction equipment, such as those stipulated by the MOM, the BCA, the HDB and the LTA in Singapore. For example, our cranes deployed on the LTA and the HDB worksites must not exceed 15 years from the date of manufacture. Another example is that for the HDB worksites, only the HDB-approved crane erectors are allowed to operate cranes, and such cranes are required to be registered with the HDB. We have more than 30 cranes which are currently registered with the HDB and 4 of our employees are approved as crane erectors by the MOM.
Our customers who deploy our construction equipment for rent are predominantly in the infrastructure and building construction industry in Singapore. For example, in the infrastructure industry, our cranes are used for piling and foundation works for constructing highways and train tunnels. As another example, in the construction industry, our customers typically rent our cranes which are utilized in the construction of buildings and upgrading works to hoist and lift heavy equipment at construction sites, excavators to lift smaller loads and for digging as well as dump trucks to transport loose materials during the construction process.
The crane rental contracts which we enter into with our customers are of varied durations which are typically monthly leases or such other periods as required by our customers depending on their construction work schedule, for flexibility and convenience. Rental contracts for other types of equipment are typically for a shorter duration, ranging from a few days to several months, depending on project requirements.
Our Group also provides crane operation services to our customers, to complement the provision of crane rental service. We have 4 operators who are qualified to operate crane machinery in Singapore. Larger cranes also require dismantling for transportation to job site, followed by erection of crane machinery at desired location within job site. We offer transportation service of cranes to our customers’ desired location, and crane erection services, where the crane is transported and installed at the job site and the erection and dismantling of cranes.
Our rental business constitutes approximately 25.0%, 13.8%, and 9.9%, of the Company’s total revenue for the six months ended June 30, 2024 and the financial years ended December 31, 2023 and 2022 respectively.
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Rental Process Flow
The process flow pertaining to our equipment rental business activities can be illustrated diagrammatically as follows:
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Customer Inquiries on Rental
Customers approach us for our comprehensive equipment fleet and responsive service. As a result, our existing customers, as well as prospective customers, approach us with inquiries when they need to rent equipment for their jobsites. In addition, our equipment rental team actively communicates with our customers and offers our equipment and services to them according to their requirements. This also enables us to obtain first-hand feedback on the equipment rental demand situation in the market.
Submission of Quotation and Confirmation of Rental Order
Based on our customers’ requirements, our rental team will prepare and provide a quotation and present our product offerings and service solutions to our customers for their consideration. Thereafter, our customers sign and return the quotations or issue purchase orders to confirm their equipment rental orders.
Functionality Testing, Inspection and Maintenance of Equipment
To ensure minimal disruptions due to mechanical faults or breakdown, our experienced maintenance service team inspects and services the equipment thoroughly at our workshop prior to each mobilization and delivery to our customers’ jobsites based on specific checklists as part of our quality control processes.
Services Rendered to Rental Customers
Our rental team plans and coordinates the mobilization and delivery of our equipment to our customers’ jobsites.
If required, our crane operators are able to offer crane operation services per customers’ specifications. Our crane operators adhere strictly to stipulated work safety requirements and ensure that the equipment is used safely and properly, with no excessive wear and tear to the machinery and equipment.
In the event of any equipment breakdown or malfunction, our customers reach us at our hotline in which our maintenance service response team will be dispatched as soon as possible to assist during working hours from Mondays to Saturdays. Our servicing technician will assess and troubleshoot the equipment breakdown at our customers’ jobsites and rectify the issues on-site, where practicable, for time and cost efficiency. If such equipment cannot be repaired on-site, it will be transported to our workshop for repairs.
Return of Equipment and Inspection
At the end of the rental period, our liaison person will make arrangement with the customer for return of the equipment. Most of our customers engage our transportation service in which we assist to transport the rental equipment from the jobsites for return to our storage facilities. Once towed into our storage facilities, our trained team of mechanics and technicians will inspect and test each rental equipment for functionality and usability as per our designated checklists, and recommend and coordinate appropriate servicing and maintenance works (including any refurbishment or painting works) to be done at our workshop.
If there is any defect arising from the rental usage of our equipment (other than fair wear and tear), our liaison person will contact the customer directly to make arrangement on repair costs and expenses to be borne by the affected customer for such defect.
Fleet Renewal Strategy
Our Group also makes conscientious efforts to upgrade and expand our fleet of heavy construction equipment regularly to ensure that our service continues to meet our customers’ evolving needs and requirements across various industries. Our constant communication with our customers across different geographical locations and industries offers us a real-time feedback mechanism which we believe puts us in good stead to enable us to proactively and pre-emptively consider new and upgraded forms and types of heavy construction equipment which will be sought after by our customers.
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Before acquiring any heavy construction equipment, we will assess the development and outlook of the market for the particular type of equipment and analyze, amongst other things, the value and earnings potential of the equipment and investment time frame for recouping the investments. We regularly review the composition and fleet of heavy construction equipment to ensure that we continue to meet customers’ requirements and to monitor our operational needs against repair and maintenance costs. In order to maintain the reliability and safety track record of our heavy construction equipment and to minimize or reduce expenditure on major repair and maintenance works, we may dispose older equipment and replace them with newer ones.
With this fleet renewal strategy, we believe that we are able to ensure our heavy construction equipment remain relevant and efficient and able to consistently deliver reliable service to our customers.
Our Services
To complement our sales and rental of new and used heavy construction equipment, we offer the following services:
| ● | Refurbishment and Servicing | |
| ● | Troubleshooting and Repair | |
| ● | Transportation and Erection | |
| ● | Crane Operation | |
| ● | Machinery Cleaning |
Services constitute approximately 6.9%, 17.6%, and 6.2% of the Company’s total revenue for the six months ended June 30, 2024 and the financial years ended December 31, 2023, and 2022 respectively.
Refurbishment and Servicing
We offer service and maintenance packages to regularly maintain so as to keep the heavy construction equipment used by our customers in good working order and condition. Our servicing and maintenance services include following our designated checklists and manufacturer guidelines for periodic maintenance, preparing documentation detailing maintenance issues, visual inspection of general appearance of the equipment, testing and maintenance of braking system, engine and hydraulic system, as well as repainting works. As part of our after-sales service and maintenance package, we also provide inspection services, which include checking on the standard safety requirements, physical inspection, physical load-lifting test for certain heavy construction equipment such as cranes. Our technicians will then sign off on the relevant checklist after functionality testing and examination for the particular heavy construction equipment.
We also offer customization refurbishment services, in which we remodel and customize certain heavy construction equipment to fit the specific needs and requirements of our customers. For example, our customers may approach us to spray-paint their heavy construction equipment in their corporate colors and include logo embellishment. We also offer customization of specific technical specifications of our equipment, such as changing the length of the boom or arm of an excavator and installing additional piping and attachments to equipment to suit our customers’ requirements.
We seek to provide timely and effective after-sales services, and are available to assist our customers to ensure prompt response to our customers’ needs.
Troubleshooting and repair
In the event that our customers face any technical issues or machinery breakdown, we are able to provide troubleshooting and repair services with our team of skilled technicians and mechanics from our workshop located at 3E Gul Circle, Singapore. Typically, upon receiving our customers’ request for troubleshooting works, we will dispatch one of our technicians or mechanics as soon as practicable to the jobsite where the equipment is situated, who will assist to troubleshoot on-site. In the event that the equipment cannot be repaired on-site, we will arrange for it to be transported to our workshop for further testing and repair works.
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Transportation
We offer domestic transportation services within Singapore, as well as overseas transportation of heavy construction equipment to our overseas customers. We offer a one-stop service for our overseas customers, in which we provide container packing services and arrange shipment of heavy construction equipment to our customers’ desired port.
Crane Erection and Operation
We have 14 crane operators who are qualified and certified by the MOM to erect and operate cranes in Singapore. Some of our customers in our equipment rental business require our assistance to erect the cranes on the jobsite, and operate the cranes based on their needs and requirements.
Machinery Cleaning
We provide thorough cleaning services for heavy construction equipment. Our machinery cleaning services meet the stringent import cleaning conditions of Australia and New Zealand for quarantine-free import.
COMPETITIVE STRENGTHS
We have a long and proven track record in the supply of heavy construction equipment in Singapore.
We have been supplying heavy construction equipment and related materials to our customers for over two decades and have accumulated extensive industry experience. We believe our strong industry knowledge, reputation and consistent delivery of quality products and services have contributed to our success over the years.
We believe our strong track record in the supply of heavy construction and related equipment will facilitate the promotion and demand for our products with both existing and new customers, as well as the expansion of our business.
Skilled maintenance and servicing team who respond promptly to customers’ requests and are flexible in adapting to their needs and requirements
We pride ourselves in having a skilled team of technicians, mechanics, painters and panel-beaters who have relevant skills and expertise in refurbishment of heavy construction equipment and troubleshooting and repair works, who have accumulated experience over the years. We have a team of 29 mechanics, 17 technicians and 10 painters and panel-beaters in our maintenance and servicing team, who are able to respond promptly to our customers’ requests, in terms of providing troubleshooting services, customization of equipment and refurbishment works. Our maintenance and servicing team have the required expertise and experience in conducting refurbishment works to the heavy construction equipment, and are able to customize specific parts or technical specifications to suit our customers’ needs and requirements, as various types of construction work have varying requirements. Our accumulated experience enables us to provide such value-added services to our customers.
We have the ability to source for and offer a wide and diversified range of heavy construction equipment for sales and rental to our customers
We have a wide range of various types of heavy construction equipment which are typically required for construction projects across various industries such as infrastructure, building construction, mining, offshore and marine, and oil and gas. This enables us to reach out to a wider group of customers in varying industries in different geographical locations in the region. We constantly maintain and renew our wide fleet of heavy construction equipment, so as to remain relevant and adaptable to our customers’ requirements.
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We have strong and stable relationships with our suppliers and customers
Since the commencement of our Group’s business over the last two decades, we have developed strong and stable relationships with our key suppliers and customers in the region. We have identified and maintained good relationships with reliable suppliers, who will typically notify us of used heavy construction equipment for sale. This enables us to source for and purchase used heavy construction equipment which are in good condition, and which are serviceable in which we refurbish prior to selling or renting such equipment to our customers. Our equipment rental and sales customers regularly return to us for repeat business and from time to time, they also refer other prospective customers to us. We have a wide customer base comprising more than 100 customers from Singapore, Australia, UAE, Maldives, Indonesia and the Philippines.
We have strived to maintain stable business relationships with our key customers. For the six months ended June 30, 2024 and the financial years ended December 31, 2023 and 2022, our top five customers accounted for 28.3%, 35.8%, and 39.4% of total sales, respectively.
We have an experienced management team.
We have an experienced management team, led by Mr. Eng Hock Lim, our Executive Director, Chairman and Chief Executive Officer who has been instrumental in spearheading the growth of our Group. Mr. Eng Hock Lim has over 30 years of experience in the supply of heavy construction equipment industry in Singapore and is primarily responsible for planning and execution of our Group’s business strategies and managing our Group’s customer relationships.
Our Group is supported by an experienced management team with substantial experience in the supply of heavy construction equipment. Our experienced management team includes members such as Mr. Eng Hock Lim, Ms. Noi Geck Lee, Ms. Mei Jun Lim, Mr. Lu Chong Tan and Ms. Cheon Kem Tan.
BUSINESS STRATEGIES
We intend to strengthen our market position in the sales and rental business of heavy construction equipment within Singapore and the region, by implementing the following business strategies and plans.
Expand and renew our fleet of heavy construction equipment
We intend to continue to acquire both new and used heavy construction equipment to expand and renew our fleet available for sales and rental by our customers. With a wider range of equipment fleet available, we believe that we will be able to target a larger pool of customers and further expand our customer base and strengthen our market position. With a newer fleet of construction equipment, we believe that equipment downtime caused by wear and tear would be reduced, thereby resulting in an equipment fleet that is more reliable.
Increase our storage facilities and capabilities
As we plan to increase our fleet size, we will need additional physical storage facilities to house our heavy construction equipment. We intend to look for opportunities to acquire or lease properties so that we will have sufficient space to house our equipment. In the event that our business continues to grow, we may need to expand our workshop to accommodate increasing refurbishment works and customization orders from our customers.
Increase efficiency by adoption of technology
As our current business operations are highly labor-intensive by nature, and we rely largely on the experience and expertise of our employees in assessing the types of heavy construction equipment which are likely to be m easier to resell and rent amongst our customers, as well as to conduct the refurbishment and maintenance works to maintain reliable and good performance of our equipment. We believe that there are opportunities for us to use technology to streamline our processes, in order to increase operational efficiency so that our employees can focus on higher value-added services and modernize our business operations.
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Expand business and operations through acquisitions, joint ventures and/or strategic alliances
Whilst we intend to focus on our principal business activities in the sales and rental of heavy construction equipment, we plan to explore opportunities to collaborate with suitable partners in related industries through strategic alliances, joint ventures, acquisitions and investments. For example, if a suitable opportunity arises, we may collaborate with potential partners in the infrastructure and building construction and mining industries if these collaborations are likely to provide us with more business opportunities.
REAL PROPERTY
Facilities
Our principal executive office is located at 3E Gul Circle in Singapore 629633, where Multi Ways SG, our subsidiary, leased approximately 2,390 square meters of office space.
A description of Multi Ways SG’s leased real properties is below:
| Location | Usage | Lease Period | Rent | Approximate area | ||||
16 Pioneer Sector 2 Singapore 628377 |
Manufacture, fabricate, repair and service crane hoist forklifts, machines, heavy equipment, engineering and services and storage | 3 years from August 2, 2023 | S$43,700 per month (excluding GST) | 1,643.2 square meters | ||||
3E Gul Circle Singapore 629633 |
Business of Multi Ways SG | 24 months from June 1, 2023 | S$50,000 per month (excluding GST) | 2,390 square meters |
LICENSES AND PERMITS AND REGISTRATIONS
Licenses and Certifications
The following licenses and registrations are material for our Group’s operations:
| Description | Issuing Authority | Expiry Date | Issued to | |||
| Letter from the MOM dated October 15, 2016 confirming Multi Ways SG’s Factory Notification status | MOM | - | Multi Ways SG | |||
| Became a member of the SCAL and was admitted to the Registry of the Singapore List of Trade Subcontractors (SLOTS) | SCAL | January 29, 2026 | Multi Ways SG | |||
| BizSafe Level 4 Accreditation | WSH | January 29, 2026 | Multi Ways SG |
Additionally, 14 of our employees are crane operators qualified and certified by the MOM in Singapore to erect and operate cranes in Singapore. We intend to apply for the renewal of the above relevant certifications for our respective employees prior to their respective expiry dates and based on past experience, our Directors do not foresee any material difficulties in renewing the relevant certifications.
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AWARDS AND ACCREDITATIONS
Throughout our operating history, our Group has received a number of awards and accreditations in recognition of our performance and quality products and services.
| Year | Award | Organized / granted by | Recipient | |||
| 2012 and 2008 | Meritorious Defence Partner Award |
Ministry of Defence, Singapore | Multi Ways SG |
WORKPLACE HEALTH AND SAFETY
Our Group’s business in Singapore is subject to various safety standards and regulations such as the Workplace Safety and Health Act (Chapter 354A), Workplace Safety and Health (General Provisions) Regulations, Workplace Safety and Health (Operation of Cranes) Regulations 2011 and the Work Injury Compensation Act (Chapter 354). Please refer to the “Regulatory Environment” section of this prospectus for more information.
We endeavor to implement and maintain a robust workplace safety and health management safety system, and have obtained on January 24, 2025 a certificate from WSH certifying that Multi Ways SG has fulfilled the requirements to obtain the Level 4 accreditation under BizSafe, which is a nationally recognized capability building program designed to help companies build workplace safety and health capabilities.
In particular, all our crane operators are required to obtain the requisite driving license and attend a crane operator course conducted by an accredited training provider recognized by the MOM before they can apply for a Crane Operator Certificate issued by the MOM. The Crane Operator Certificate is only issued after the operator attends and completes a crane operator course which covers safety procedures and basic knowledge on the key parts of a mobile crane. Other than the mandatory courses, we also encourage our crane operators to attend various courses on safety and technical skills to ensure that they are updated on new developments and requirements in the industry.
We consistently review our workplace safety and health system and implement additional measures and safe work procedures for our operations, including:
| ● | conducting risk assessments for non-routine activities; | |
| ● | implementing an in-house orientation program and assessment program for relevant newly hired employees; | |
| ● | implementing pre-lift meetings for the crane operator and lifting team to ensure that the crane operator has a better understanding of the intended load to be lifted, the effective radius of the mobile crane and the distance of the load; | |
| ● | establishing an emergency response procedure and communicating such procedure to all crane operators; and | |
| ● | establishing a checklist for the monthly workplace safety and health inspection conducted by our management. |
We emphasize strongly on employee training and we conduct on-the-job training for our employees to equip them with the requisite knowledge and technical skills for the responsibilities and requirements of their jobs. Some of our employees undergo relevant certifications organized by government-appointed training centers where they become certified to operate and erect cranes in Singapore. Some of our employees also undergo workplace safety courses regularly, depending on their job requirements.
COMPETITION
We operate in the heavy construction equipment sales business, which is highly competitive. The heavy construction equipment rental market in Singapore has relatively high barriers to entry in the form of high set-up and operating costs, strong technological knowledge, well-established and long-term business relationships with suppliers, distributors and construction contractors and track record.
To the best of our knowledge, we have identified the following as our main competitors to our heavy construction equipment business in Singapore:
| ● | Tat Hong Holdings Ltd | |
| ● | Sin Heng Heavy Machinery Ltd | |
| ● | Antar Cranes Services Pte. Ltd | |
| ● | INA Heavy Machinery & Equipment Pte Ltd |
SALES AND MARKETING
Our sales and marketing team consisted of 5 full-time employees based in Singapore. Our Executive Director, Chairman and Chief Executive Officer, Mr. Eng Hock Lim, oversees our sales and marketing department.
One of our key channels for marketing is through word of mouth as our new customers are usually referred by our existing customers or business contacts. Our Executive Director, Chairman and Chief Executive Officer, Mr. Eng Hock Lim, has long-standing relationships with some of our major customers.
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Our sales and marketing team is responsible for establishing and maintaining our customer relationships and securing orders from customers. Our team also communicates with our existing customers to understand their needs and market trends, so as to improve our product range. Through these regular contacts, our customers provide us with valuable feedback on industry trends and developments as well as their requirements. We also update customers on our fleet such as information on newly acquired cranes and their capabilities. We place strong emphasis on understanding the requirements of our customers and consistently providing them with reliable heavy construction equipment that meet their requirements. We consider customer feedback a valuable tool for improving our products and services. Our sales and marketing team is also responsible for handling customers’ complaints and any complaints arising from product defects or service quality and will relay such feedback internally to the relevant teams for follow-up.
Our management meets with our sales and marketing team regularly to review our sales performance and marketing strategies and targets. These regular meetings also allow our sales and marketing team to highlight issues or problems that they encounter and discuss strategies to resolve these issues or problems in a timely manner.
INVENTORY
For our equipment sales and rental business, we maintain an inventory of earth-moving equipment, material-handling equipment and road-building equipment as described in the “Business” section, which are in demand with our customers and hence easier to resell and rent.
We maintain minimal inventory of spare equipment parts for our refurbishment, maintenance and services business, as these spare equipment parts are easily available in the market.
As of June 30, 2024 and December 31, 2023 and 2022, we had inventories of $42.3 million, $36.7 million and $31.4 million, respectively.
INTELLECTUAL PROPERTY
Our Group has not registered any intellectual property rights.
We were not involved in any proceedings with regard to, and we have not received notice of any claims of infringement of, any intellectual property rights that may be threatened or pending, in which we may be involved either as a claimant or respondent.
EMPLOYEES
We employed 89 persons as of February 28, 2025, who were also all located in Singapore. Our employees are not covered by collective bargaining agreements. We consider our labor practices and employee relations to be good.
INSURANCE
We maintain commercial all risks property insurance policies covering our heavy construction equipment and workshop in accordance with customary industry practice. We carry occupational injury and medical insurance for our employees, in compliance with applicable regulations. We do not carry general business interruption or “key person” insurance. We will continue to review and assess our risk portfolio and make necessary and appropriate adjustments to our insurance practices to align with our needs and with industry practice in Singapore and in the markets in which we operate.
LITIGATION AND OTHER LEGAL PROCEEDINGS
As of the date of this prospectus, save for an ongoing proceeding described below, we are not party to any significant proceedings in Singapore. We are not aware of any legal proceedings of which we are a party outside of Singapore.
On November 20, 2024, Multi Ways SG filed a case against China Railway Tunnel Group Co., Ltd (Singapore Branch) for the claim amount of S$51,108.73. Multi Ways SG received a partial payment of $15,000 on December 9, 2024.
REGULATIONS
This section sets forth a summary of the material laws and regulations that affect our Group’s business and operations in Singapore. Information contained in this section should not be construed as a comprehensive summary nor detailed analysis of laws and regulations applicable to the business and operations of our Group. This overview is provided as general information only and not intended to be a substitute for professional advice. You should consult your own advisers regarding the implication of the laws and regulations of Singapore on our business and operations.
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Laws and Regulations Relating to Our Business in Singapore
As Multi Ways SG is a company incorporated in Singapore, we are subject to all relevant laws and regulations of Singapore and may be affected by new laws, regulations and policies which are introduced by the Singapore government from time to time. We have identified the main laws and regulations (apart from those pertaining to general business requirements) that we anticipate may materially affect our operations, the relevant regulatory bodies and the licenses, permits and approvals typically required for the conduct of our business in Singapore.
The following description is a summary of material laws and regulations applicable to our operations in Singapore. The laws and regulations set out below are not exhaustive and are only intended to provide general information to investors and are neither designed nor intended to be a substitute for professional advice. Prospective investors should consult their own advisers regarding the implication of the relevant laws and regulations on us.
Environmental Public Health Act
The Environmental Public Health Act 1987 of Singapore (the “EPHA”) is administered by the National Environment Agency (“NEA”) and regulates, among other things, the disposal and treatment of industrial waste and public nuisances. Under the EPHA, the Director- General of Public Health of Singapore (the “DGPH”) may, upon receipt of any information with respect to the existence of a nuisance liable to be dealt with summarily under the EPHA and if satisfied of the existence of a nuisance, serve a nuisance order on the person by whose act, default or sufferance the nuisance arises or continues, or if the person cannot be found, on the owner or occupier of the premises on which the nuisance arises. Some of the nuisances which are liable to be dealt with summarily under the EPHA include any factory or workplace which is not kept in a clean state, any place where there exists or is likely to exist any condition giving rise, or capable of giving rise to the breeding of flies or mosquitoes, any place where there occurs, or from which there emanates noise or vibration as to amount to a nuisance and any machinery, plant or any method or process used in any premises which causes a nuisance or is dangerous to public health and safety. If the DGPH receives any information in respect of the existence of a nuisance liable to be dealt with under the EPHA, a nuisance order may be served on the person responsible for the nuisance prescribing the measures to be taken to remedy the nuisance. Any failure to comply with the nuisance order served is an offense and such person is liable upon conviction for a fine not exceeding S$10,000 for the first offense and to a further fine not exceeding S$1,000 for every day during which the offense continues after conviction.
Environmental Protection and Management Act
The Environmental Protection and Management Act 1999 of Singapore and its subsidiary legislation are administered by the NEA, which provide for, among other things, laws relating to pollution control in Singapore through the regulation of various industries. Pursuant to the Environmental Protection and Management (Boundary Noise Limits for Factory Premises) Regulations (the “EPM Regulations”), the owner or occupier of any factory premises shall ensure that the level of noise emitted from his premises does not exceed the maximum permissible noise levels as set out in the First Schedule to the EPM Regulations. The permissible noise levels may vary depending on the type of affected premises, which include, among others, noise sensitive premises that require peace and quiet, residential premises and commercial premises not including factory premises. Any person who fails to comply with the requirements under the EPM Regulations is guilty of an offense and liable upon conviction for (a) a fine not exceeding S$5,000 on the first conviction, and in the case of a continuing offense, to a further fine not exceeding S$200 for every day or part thereof the offense continues after the conviction; and (b) a fine not exceeding S$10,000 on a subsequent conviction, and in the case of a continuing offense, to a further fine not exceeding S$300 for every day or part thereof during which the offense continues after conviction.
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Workplace Safety and Health Act
The Workplace Safety and Health Act 2006 of Singapore (the “WSHA”) provides that every employer has the duty to take, so far as is reasonably practicable, such measures as are necessary to ensure the safety and health of its employees at work. These measures include providing and maintaining for the employees a work environment that is safe, without risk to health, and adequate with regards to facilities and arrangements for employees’ welfare at work, ensuring that adequate safety measures are taken in respect of any machinery, equipment, plant, article or process used by the employees, ensuring that the employees are not exposed to hazards arising out of the arrangement, disposal, manipulation, organization, processing, storage, transport, working or use of things in or near their workplace and under the control of the employer, developing and implementing procedures for dealing with emergencies that may arise while those persons are at work and ensuring that the employees at work have adequate instruction, information, training and supervision as is necessary for them to perform their work. The relevant regulatory body is the MOM.
Any person who breaches his duty under the WSHA is guilty of an offense and will be liable on conviction, in the case of a body corporate, to a fine not exceeding S$500,000 and if the contravention continues after the conviction, the body corporate shall be guilty of a further offense and will be liable to a fine not exceeding S$5,000 for every day or part thereof during which the offense continues after conviction. For repeat offenders, where a person has on at least one previous occasion been convicted of an offense under the WSHA that causes the death of any person and that person is subsequently convicted of the same offense that causes the death of another person, the court may, in addition to any imprisonment, if prescribed, punish the person, in the case of a body corporate, with a fine not exceeding S$1 million and, in the case of a continuing offense, with a further fine not exceeding S$5,000 for every day or part thereof during which the offense continues after conviction.
Under the WSHA, it is the duty of any person who manufactures any machinery, equipment or hazardous substance (the “MEHS”), which includes, among other things, welding equipment, for use at work to ensure, so far as is reasonably practicable, that (a) information regarding the safe use of the MEHS is supplied for use at work (which should include precautions to be taken for the proper use and maintenance of such the MEHS, the health hazards associated with the MEHS and the information relating to and the results of any examinations or tests of the MEHS that are relevant to its safe use); (b) the MEHS are safe, and without risk to health, when properly used; and (c) the MEHS are examined and tested in compliance with the obligation imposed by paragraph (b). The duties imposed on any person in respect of the aforementioned shall (i) apply only if the MEHS are manufactured or supplied in the course of a trade or business carried on by the person (whether for profit or not); (ii) apply whether the MEHS are exclusively manufactured or supplied for use by persons at work; (iii) extend to the supply of the MEHS by way of sale, transfer, lease or hire and whether as principal or agent, and to the supply of the MEHS to a person for the purpose of supply to others; and (iv) not apply to a person by reason only that the person supplies the machinery or equipment under a lease-purchase agreement, conditional sale agreement or credit-sale agreement to another (“customer”) in the course of a business of financing the acquisition of the machinery or equipment by the customer from others. In the event any person contravenes the relevant provision in the WSHA that imposes the aforementioned duty on such person, that person is guilty of an offense, and liable on conviction (in the case of a natural person) for a fine not exceeding S$200,000 or imprisonment for a term not exceeding two years or both, or (in the case of a body corporate) for a fine not exceeding S$500,000.
Further, the Commissioner for Workplace Safety and Health (the “CWSH”) may serve a remedial order or a stop-work order in respect of a workplace if he is satisfied that (a) the workplace is in such condition, or is so located, or any part of the machinery, equipment, plant or article in the workplace is so used, that any work or process carried on in the workplace cannot be carried on with due regard to the safety, health and welfare of persons at work; (b) any person has contravened any duty imposed by the WSHA; or (c) any person has done any act, or has refrained from doing any act which, in the opinion of the CWSH, poses or is likely to pose a risk to the safety, health and welfare of persons at work.
The remedial order shall direct the person served with the order to take such measures, to the satisfaction of the CWSH, to, among other things, remedy any danger so as to enable the work or process in the workplace to be carried on with due regard to the safety, health and welfare of the persons at work, whereas a stop-work order will direct the person served with the order to immediately cease to carry on any work or process indefinitely or until such measures as are required by the CWSH have been taken, to the satisfaction of the CWSH, to remedy any danger so as to enable the work or process in the workplace to be carried on with due regard to the safety, health and welfare of the persons at work, and shall specify the date on which such order is to take effect.
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Pursuant to the Workplace Safety and Health (Noise) Regulations 2011 of Singapore (the “WSHNR”), the occupier of a workplace must take reasonably practicable measures to reduce or control the noise from any machinery or equipment used or from any process, operation or work carried out by him in the workplace, so that no person at work in the workplace is exposed or likely to be exposed to excessive noise. This may include replacing noisy machinery, equipment, processes, operations or work with less noisy machinery, equipment, processes, operations or work, and such other measures as prescribed under the WSHNR. Where it is not practicable to reduce the noise, the occupier of a workplace shall limit the duration of time persons at work are exposed to the noise in accordance with the time limits prescribed in the Schedule under the WSHNR. Any person who contravenes the aforementioned is guilty of an offense and is liable on conviction for a fine not exceeding S$10,000, and in the case of a second or subsequent conviction, for a fine not exceeding S$20,000 or imprisonment for a term not exceeding six months or both.
Pursuant to the Workplace Safety and Health (Risk Management) Regulations, the employer in a workplace is supposed to, among other things, conduct a risk assessment in relation to the safety and health risks posed to any person who may be affected by his undertaking in the workplace, take all reasonably practicable steps to eliminate or minimize foreseeable risks, implement measures or safety procedures to address the risks, and to inform workers of the same, maintain records of such risk assessments and measures/safety procedures for a period of not less than three years and submit such records to the CWSH when required by the CWSH from time to time. Any employer who fails to comply with the aforementioned requirements is guilty of an offense and is liable on conviction for a fine not exceeding S$10,000 for the first offense, and for a fine not exceeding S$20,000 for a subsequent offense or imprisonment for a term not exceeding six months or both.
Workplace Safety and Health (Construction) Regulations 2007 (the “WSHC”)
Part XV of the WSHC provide, among others, for the duty of the owner of a crane, an employee’s lift or a material handling machinery being used in a worksite to ensure that the crane, employee’s lift or material handling machine is of good construction, sound material and adequate strength, free from patent defects and properly maintained. It is the duty of the operator of a crane or material handling machinery being used in a worksite to ensure that the crane or machinery, as the case may be, is positioned or operated to be stable. Where the capacity of the crane used in a worksite is variable, a capacity chart which sets out the safe loads for various lengths of the job at various angles and radial distances shall be provided.
The occupier of a worksite has a duty to ensure that before any crane, employee’s lift or material handling machinery is put into service for the first time in the worksite, it has been thoroughly examined and inspected by a competent person, and in the case of a crane or an employee’s lift, such examination and test is conducted by an authorized examiner.
The operator of any crane or material handling machinery used in a worksite must take, so far as is reasonably practicable, such measures as are necessary to ensure that a suspended load is not moved over any person in the worksite, and to ensure that no load is left suspended on the crane or material handling machinery when it is not in use.
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Workplace Safety and Health (General Provisions) Regulations (the “WSHR”)
More specific duties imposed by MOM on employers are laid out in the WSHR. Some of these duties include taking effective measures to protect persons at work from the harmful effects of any exposure to any biohazardous material which may constitute a risk to their health and ensuring that the employee has the necessary expertise for the work that he is engaged for and implemented adequate safety and health measures.
Pursuant to the WSHR, the following equipment, among others, are required to be tested and examined by an examiner (the “Authorised Examiner”), who is authorized by the Commissioner of Workplace Safety and Health (the “CWSH”), before they can be used in a factory and thereafter, at specified intervals:
| ● | hoist or lift; | |
| ● | lifting gears; and/or | |
| ● | lifting appliances and lifting machines. |
Upon examination, the Authorised Examiner will issue and sign a certificate of test and examination, specifying the safe working load of the equipment. Such certificate of test and examination shall be kept available for inspection. Under the WSHR, it is the duty of the owner of the equipment/occupier of a workplace to keep a register containing the requisite particulars with respect to the lifting gears, lifting appliances and lifting machines. In addition to the above, under the WSHA, inspectors appointed by the CWSH may, among others, enter, a workplace, to make such examination and inquiry as may be necessary to ascertain whether the provisions of the WSHA are complied with, to take samples of any material or substance found in a workplace or being discharged from any workplace for the purpose of analysis or test, to assess the levels of noise, illumination, heat or harmful or hazardous substances in any workplace and the exposure levels of persons at work therein and to take into custody any article in a workplace which is required for the purpose of an investigation or inquiry under the WSHA.
Workplace Safety and Health (Operation of Cranes) Regulations 2011 (the “WSHR Crane Regulations”)
Pursuant to the WSHR Crane Regulations, only registered crane operators are allowed to operate a mobile or tower crane (“Cranes”) in a workplace. A person who intends to operate Cranes will be required to apply to the Commissioner for Workplace Safety and Health (the “Commissioner”) for approval to register as a crane operator, which requirements include:
| ● | the successful completion of a training course acceptable to the Commissioner on the operation of a mobile crane or tower crane; | |
| ● | in the opinion of the Commissioner, having sufficient experience in operating a mobile crane or tower crane and having passed a proficiency test acceptable to the Commissioner; or | |
| ● | the possession of any other equivalent qualification acceptable to the Commissioner. |
In addition to the above, the Commissioner may require the applicant to produce a current medical certificate from a registered medical practitioner which certifies that the applicant is medically fit to operate a mobile crane or tower crane. Once the Commissioner has approved the application to register as a crane operator, the certificate of registration will be valid for a period of two years from the date of registration or for a shorter period as the Commissioner may specify.
Under the WSHR Crane Regulations, any registered crane operator may be required to produce his certificate of registration for inspection by inspectors appointed by the Commissioner. The Commissioner may suspend or cancel the registration of any registered crane operator if the Commissioner is satisfied that the registered crane operator has (i) obtained his registration under the WSHR Crane Regulations by means of fraud, false representation or the concealment of any material fraud; (ii) has been certified by a registered medical practitioner to be unfit to operate a mobile crane or a tower crane; or (iii) has failed to comply with any of the duties set out in the WSHR Crane Regulations.
Similarly, crane contractors must be approved by the Commissioner to carry out installation, repair, alteration and dismantling of Cranes (“Operations”). Upon successful application, the applicant receives a certificate of approval which is valid for two years from the date of approval. Crane contractors must ensure that the Operations are carried out in accordance with a manufacturer’s manual which contains instructions on safe procedures for such operations, or where such manual is unavailable, ensure that the Operations are carried out under the immediate supervision of an authorized examiner. The said cranes cannot be used unless they have been tested and certified safe by an authorized examiner for the operations for which they are intended.
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Workplace Safety and Health (Risk Management) Regulations (the “Risk Management Regulations”)
Pursuant to the Risk Management Regulations, employers and principal must in every workplace conduct a risk assessment in relation to the safety and health risks posed to any person who may be affected by his undertaking in the workplace, and take all reasonably practicable steps to eliminate any foreseeable risk to any person who may be affected by his undertaking in the workplace. Where it is not reasonably practicable to eliminate such risk, the employer or principal is required to implement reasonably practicable measures to minimize the risk, such as substitution, engineering control, administrative control and provision and use of suitable personal protective equipment, and safe work procedures to control the risk. The employer and principal shall also take all reasonably practicable steps to ensure that any person in the workplace who may be exposed to a risk to his safety and health is informed of the nature of the risk involved, and any measure of safe work procedures implemented.
Workplace Safety and Health (Work at Heights) Regulations 2013 (the “Work at Heights Regulations”)
Pursuant to the Work at Heights Regulations, the responsible person of any person who carries out or is to carry out any work at height must do the following:
| ● | ensure that no work at height it carried out where it is reasonably practicable to carry out the work safely otherwise than at height; | |
| ● | ensure that such person must have first received adequate safety and health training to familiarize himself with the hazards associated with work at height and the precautions to be observed; and | |
| ● | ensure that such person shall work at a height in a workplace under the immediate supervision of a competent person for that work. |
The occupiers of every workplace specified in the Work at Heights Regulations must also establish and implement a fall prevention plan in accordance with the requirements of the approved code of practice relating to safe and sound practices for fall prevention.
Factories (Operation of Cranes) Regulations (“Factories Regulations”)
Pursuant to the Factories Regulations, only crane contractors approved by the Chief Inspector are allowed to carry out installation, repair, alteration and dismantling of mobile cranes or tower cranes (the “Operations”). Crane contractors must first obtain approval from the Chief Inspector before they can undertake the jobs mentioned above. In addition, the owner of any mobile cranes or tower cranes must ensure that all of its cranes are tested and certified safe by an approved person for the operations for which they are intended. The said cranes cannot be used unless they have been tested and certified accordingly.
Further, operators of mobile and tower cranes must be registered with the Chief Inspector. Once registered, these operators are issued with certificates, which are typically valid for 2 years, indicating the types of cranes they are allowed to operate. Only operators who possess the appropriate certificates of registration can operate these cranes. Before they may be registered, these operators must first possess the necessary qualifications required under the Regulations. These qualifications include successful completion by the applicant of the course in crane operation conducted by an institute or organization acceptable to the Chief Inspector.
We have 14 crane operators who are qualified and certified by the MOM to erect and operate cranes in Singapore.
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Work Injury Compensation Act
The Work Injury Compensation Act 2019 of Singapore (the “WICA”), which is regulated by the MOM, applies to all employees who are engaged under a contract of service or apprenticeship with an employer regardless of their level of earnings. The WICA does not cover self-employed persons or independent contractors. However, as the WICA provides that, where any person (referred to as the principal) in the course of or for the purpose of his trade or business contracts with any other person (referred to as the subcontractor employer), the principal shall be liable to compensate those employees of the subcontractor employer who were injured while employed in the execution of work for the principal. The WICA provides that if an employee dies or sustains injuries in a work-related accident or contracts occupational diseases in the course of the employment, the employer shall be liable to pay compensation in accordance with the provisions of the WICA. An injured employee is entitled to claim medical leave wages, medical expenses and lump sum compensation for permanent incapacity or death, subject to certain limits stipulated in the WICA.
An employee who has suffered an injury arising out of and in the course of his employment can choose to either:
| ● | report the accident to his employer in order to submit a claim for compensation through the MOM without needing to prove fault or negligence on anyone’s part. There is a fixed formula in the WICA for the amount of compensation to be awarded; or | |
| ● | commence legal proceedings to claim damages under common law against the employer for breach of duty or negligence. |
Damages under a common law claim are usually more than an award under the WICA and may include compensation for pain and suffering, loss of wages, medical expenses and any future loss of earnings. However, the employee must show that the employer has failed to provide a safe system of work, or breached a duty required by law or that the employer’s negligence caused the injury.
Under the WICA, every employer is required to insure and maintain insurance under approved policies with an insurer against all liabilities which he may incur under the provisions of the WICA in respect of all employees employed by him, unless specifically exempted. Further, every employer is required to maintain work injury compensation insurance for all employees engaged in manual work labor regardless of their salary level, as well as all employees doing non-manual work who earn S$2,100 or less a month. Failure to provide adequate insurance is an offense carrying a fine of up to S$10,000 or imprisonment for a term of up to 12 months, or both. For further information on our Group’s insurance policies, please refer to the section headed “Insurance”.
Employment Act
The Employment Act 1968 of Singapore (the “Employment Act”) is the main legislation governing employment in Singapore and is administered by the MOM. The Employment Act covers every employee who is under a contract of service with an employer and includes a workman (as defined under the Employment Act) but does not include, among others, any person employed in a managerial or executive position (subject to the exceptions set out below). The definition of “employee” under the Employment Act does not extend to freelance contractors who have entered into a contract for service. Accordingly, freelance contractors are not considered to be employees of our Group.
A workman is defined under the Employment Act as including, among others, (a) any person, skilled or unskilled, who has entered into a contract of service with an employer in pursuance of which he is engaged in manual labor, including any apprentice; and (b) any person employed partly for manual labor and partly for the purpose of supervising in person any workman in and throughout the performance of his work.
Core employment provisions of the Employment Act, such as public holiday and sick leave entitlements, minimum days of annual leave, payment of salary and allowable deductions and release for wrongful dismissal, cover all employees, including persons employed in a managerial or executive position, except public servants, domestic workers, seafarers and those who are covered separately.
In addition to the core employment provisions of the Employment Act, Part IV of the Employment Act contains provisions relating to, among other things, working hours, overtime, rest days, holidays, annual leave, payment of retrenchment benefit, priority of retirement benefit, annual wage supplements and other conditions of work or service (“Part IV”). However, such Part IV provisions only apply to: (a) workmen earning basic monthly salaries of not more than S$4,500; and (b) employees (excluding workmen) earning basic monthly salaries of not more than S$2,600. An employer who breaches any provision of Part IV of the Employment Act is guilty of an offense and is liable on conviction for a fine not exceeding S$5,000, and for a second or subsequent offense a fine not exceeding S$10,000 or imprisonment for a term not exceeding 12 months or both.
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From April 1, 2016, employers are required to issue to their employees who are covered by the Employment Act and who are employed for 14 days or more a written record of the key employment terms of the employee. The key employment terms required to be provided (unless inapplicable to such employee) include, among other things, working arrangements (such as daily working hours, number of working days per week and rest day(s)), salary period, basic salary, fixed allowances and deductions, overtime rate of pay, types of leave and other medical benefits.
Employment of Foreign Manpower Act
The employment of foreign employees in Singapore is governed by the Employment of Foreign Manpower Act 1990 of Singapore (the “EFMA”) and is regulated by the MOM. The EFMA prescribes the responsibilities and obligations of employers of foreign employees in Singapore.
The EFMA provides that no person shall employ a foreign employee unless the foreign employee has obtained a valid work pass from the MOM in accordance with the Employment of Foreign Manpower (Work Passes) Regulations 2012, which allows the foreign employee to work for him. Any person who fails to comply with or contravenes this provision of the EFMA is guilty of an offense and will: (a) be liable on conviction for a fine not less than S$5,000 and not more than S$30,000 or imprisonment for a term not exceeding 12 months or both; and (b) on a second or subsequent conviction: (i) in the case of an individual, be liable for a fine of not less than S$10,000 and not more than S$30,000 and imprisonment for a term of not less than one month and not more than 12 months; or (ii) in any other case, be punished with a fine of not less than S$20,000 and not more than S$60,000.
In Singapore, the work pass to be issued to a foreigner is contingent on, among other things, the type of work and salary being received by the foreigner in question. Foreign professionals, managers and executives earning a fixed monthly salary of at leastS$5,000 (in all sectors except the financial services sector) and at least $5,500 (in the financial sector), with acceptable qualifications (such as a good university degree, professional qualifications or specialist skills) are eligible for an employment pass. The qualifying salaries increases for older and more experienced candidates. From September 1, 2023, in addition to meeting qualifying salary, employment pass candidates must also pass a points-based Complementarity Assessment Framework (“COMPASS”). Mid-level skilled staff earning a fixed monthly salary of at least S$3,000 (in all sectors except the financial services) and $3,500 (in the financial services sector) who possess a degree, diploma or technical certificate and have the relevant work experience may apply for an S-pass; and semi-skilled foreign workers from approved source countries working in, among others, the manufacturing sector may apply for a work permit.
Further, under the Employment of Foreign Manpower (Work Passes) Regulations 2012, an employer is required to purchase and maintain medical insurance with coverage of at least S$15,000 per 12-month period of a foreign workers’ employment (or for such shorter period where the foreign workers’ period of employment is less than 12 months) for the foreign workers’ in-patient care and day surgery except as the Controller of Work Passes may otherwise provide by notification in writing.
Since July 1, 2023, enhanced medical insurance coverage to better protect employers from bearing large unexpected medical bills applies to all new Work Permit and S Pass applications and renewals. The enhanced coverage include (a) introduction of a co-payment element for employers and insurers for amounts above $15,000, up to an annual claim limit of $60,000, (b) standardization of allowable exclusion clauses (c) introduction of age-differentiated premiums and (d) requirement for insurers to reimburse hospitals directly upon the admissibility of the claim.
In addition, the employment of foreign workers is also subject to sector-specific rules regulated by the MOM through the following policy instruments: (a) business activity; (b) approved source countries; (c) the imposition of security bonds and levies; and (d) quota (or dependency ratio ceilings) based on the ratio of local to foreign workers.
Required safety courses
For the manufacturing sector, foreign workers who handle metals and machinery in the metalworking industry, such as our foreign workers employed under JCS, must take a Metalworking Safety Orientation Course or an Apply Workplace Safety and Health in Metal Work course before their work permits can be issued, and such courses may be conducted by either the Occupational Safety and Health Training and Promotion Centre or other training institutions approved by the Chief Inspector appointed by the Minister of Manpower.
A work permit cannot be issued to the foreign worker until he has taken the safety course. Employers are responsible for their workers passing the test. If the foreign workers fail the course, they should retake it as soon as possible and are required to pass the course within three months of their arrival or their work permit could be revoked. Foreign workers in the metalworking industry that have worked in the metalworking industry for (a) less than six years must pass the safety course once every two years; and (b) more than six years must pass the safety course once every four years.
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Employers renewing a work permit must ensure that the foreign worker’s safety course certificate has a validity period of more than one month on the day of renewal, otherwise the work permit will not be renewed.
Central Provident Fund Act
The Central Provident Fund (“CPF”) system is a mandatory social security savings scheme funded by contributions from employers and employees. Pursuant to the Central Provident Fund Act 1953 of Singapore (the “CPFA”), an employer is obliged to make CPF contributions for all employees who are Singapore citizens or permanent residents who are employed in Singapore by an employer (save for employees who are employed as a master, a seaman or an apprentice in any vessel, subject to an exception for non-exempted owners). CPF contributions are not applicable for foreigners who hold employment passes, S passes or work permits. CPF contributions are required for both ordinary wages and additional wages (subject to an ordinary wage ceiling and a yearly additional wage ceiling) of employees at the applicable prescribed rates which is dependent on, among other things, the amount of monthly wages and the age of the employee. An employer must pay both the employer’s and employee’s share of the monthly CPF contribution. However, an employer can recover the employee’s share of CPF contributions by deducting it from their wages when the contributions are paid for that month.
Where the amount of the contributions which an employer is liable to pay under the CPFA in respect of any month is not paid within such period as may be prescribed, the employer shall be liable for the payment of interest on the amount for every day the amount remains unpaid commencing from the first day of the month succeeding the month in respect of which the amount is payable and the interest shall be calculated at the rate of 1.5% per month or the sum of S$5, whichever is greater. Where any employer who has recovered any amount from the monthly wages of an employee in accordance with the CPFA fails to pay the contributions to the CPF within such time as may be prescribed, he will be guilty of an offense and will be liable on conviction for a fine not exceeding S$10,000 or imprisonment for a term not exceeding seven years or both. Where an offense has been committed under the CPFA but there are no penalties provided, the offender may be liable for a fine not exceeding S$5,000 or imprisonment for a term not exceeding six months or both, and where the offense is repeated by the same offender, the offender may be liable for a fine not exceeding S$10,000 or imprisonment for a term not exceeding 12 months or both.
Customs regulations
Goods exported from Singapore are regulated under the Customs Act 1960 of Singapore (the “Customs Act”). To export goods from Singapore, the exporter is required to declare the goods to Singapore Customs, a department under the Ministry of Finance, which is the lead agency for trade facilitation and revenue enforcement. The Singapore Goods and Services Tax (the “GST”) is not levied on goods exported from Singapore. A Customs export permit is required for, among other things, the export of locally manufactured goods or local GST paid goods, the export of goods from free trade zones, dutiable goods from licensed warehouses and non-dutiable goods from a zero-rated warehouse. The exporter will be the party that issues the commercial invoice to his overseas customer. Exporters who intend to engage in import and/or export activities in Singapore or appoint a declaring agent to apply for Customs import, export and transshipment permits or certificates will need to activate their Customs Account with Singapore Customs, further to which a declaring agent may be appointed to apply for Customs permits on their behalf. Declaring agents have to be registered with the Singapore Customs.
Exporters may be penalized if they do not comply with the requirements and conditions imposed under the Customs Act. Making an incorrect declaration or failing to make a declaration of goods imported into, exported from or transshipped in Singapore will result in being liable on conviction for a fine not exceeding S$10,000, or the equivalent of the amount of the customs duty, excise duty or GST payable, whichever is the greater amount, or imprisonment for a term not exceeding 12 months, or both.
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Administration of Carriage of Goods by Motor Vehicles
The regulation of road traffic and movement of vehicles in Singapore, including the administration of the carriage of goods by motor vehicles, is governed by the Road Traffic Act and relevant subsidiary legislation, including, among others, the Road Traffic (Motor Vehicles, Registration & Licensing) Rules.
Pursuant to Rule 46 of the Road Traffic (Motor Vehicles, Registration & Licensing) Rules, no person shall cause or permit a motor vehicle or trailer constructed or adapted for use for the carriage of goods to carry a load in excess of the maximum laden weight as determined by the Registrar of Vehicles (the “Registrar”). Pursuant to Rules 43 and 44, the owner of a motor vehicle which is constructed or adapted for use for the carriage of goods or a trailer shall inform the Registrar of the maximum laden weight of the vehicle or trailer in accordance with the manufacturer’s specification, or shall otherwise provide the Registrar with such information as the Registrar may require in order to enable him to ascertain the maximum laden weight, and the Registrar shall upon receiving such information, determine the maximum laden weight of the motor vehicle or trailer. Owners of the motor vehicles and trailers are required to paint or otherwise clearly mark upon a conspicuous place on the vehicle or trailer, among others, the maximum laden weight of the vehicle or trailer and the weight of the vehicle or trailer unladen.
Contravention of Rule 46 of the Road Traffic (Motor Vehicles, Registration & Licensing) Rules constitutes an offence under Section 131(1) of the Road Traffic Act, punishable under Section 131(2) of the Road Traffic Act. Under Section 131(2), the offender may be liable, in the case of a first offence, to a fine not exceeding S$1,000 or imprisonment for a term not exceeding three months, and in the case of a second or subsequent offence, to a fine not exceeding S$2,000 or imprisonment for a term not exceeding six months. Section 131B(1) of the Road Traffic Act prescribes that where an offence committed by a body corporate is proved to have been committed with the consent or connivance of an officer or to be attributable to any act or default on his part, the officer, meaning any director, member of the committee of management, chief executive officer, manager, secretary or other similar officer, including any person purporting to act in any such capacity, shall be guilty of an offence and shall be liable to be proceeded against and punished accordingly.
MANAGEMENT
The following table provides information regarding our Directors and Executive Officers as of the date hereof:
| Name | Age | Position(s) | ||
| Mr. Eng Hock Lim | 66 | Executive Director, Chairman and Chief Executive Officer | ||
| Ms. Noi Geck Lee | 66 | Executive Director and Chief Administration Officer | ||
| Ms. Mei Jun Lim | 40 | Deputy Chief Executive Officer | ||
| Mr. Lu Chong Tan | 43 | Chief Operating Officer | ||
| Mr. Cheon Kem Tan | 51 | Financial Controller | ||
| Mr. Chin Hoong Chan | 37 | Independent Director | ||
| Mr. Gang Wong | 54 | Independent Director | ||
| Mr. Kok Chuah Tan | 52 | Independent Director |
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Executive Directors and Executive Officers:
Mr. Eng Hock Lim (“Mr. Lim”) is our Executive Director, Chairman and Chief Executive Officer. He was appointed as a Director on June 2, 2022. Mr. Lim is responsible for the overall business management of our Group. Mr. Lim has always been managing his own companies in the industrial machinery and heavy construction equipment sector for over 20 years. In August 2002, Mr. Lim set up Multi Ways SG for the sales in heavy construction equipment. He has been the managing director of Multi Ways SG since 2002. In June 2014, Mr. Lim set up MWE Investment Pte Ltd as an investment holding company and a company providing general warehousing and logistic services, where he is a director of the company.
Mr. Lim holds the General Certificate of Education Ordinary Level qualifications.
Ms. Noi Geck Lee (“Ms. Lee”) is our Executive Director and Chief Administration Officer. She was appointed as a Director on June 2, 2022. Ms. Lee is responsible for the overall administration of our Group. Ms. Noi Geck Lee has over 20 years of experience in providing general administrative services in the industrial machinery and heavy construction equipment sector. In August 2002, Ms. Lee joined Multi Ways SG as a director. In June 2014, Ms. Lee joined MWE Investment Pte Ltd, an investment holding company and a company providing general warehousing and logistic services, as a director.
Ms. Lee holds the Primary School Leaving Examination qualification in Singapore.
Ms. Mei Jun Lim (“Ms. Lim”) is our Deputy Chief Executive Officer. She is responsible for our Group’s sales of machinery, as well as our Group’s human resources and administration affairs. Ms. Lim joined our Group since 2007 as an executive director of Multi Ways SG. She has been a director of MWE Investment Pte Ltd since June 2014 and a director of MNH Global Pte Ltd, a business consultancy company, since September 2018.
Ms. Lim obtained a Diploma in Business Administration in Temasek Polytechnic, Singapore and a Bachelor of Business Administration in RMIT University, Australia in 2006.
Mr. Lu Chong Tan (“Mr. Tan”) is our Chief Operating Officer. He is responsible for the overall operations of our Group. Prior to joining our Group, Mr. Tan worked in Jordon International Food Processing Pte Ltd as a sales executive from 2003 to 2007. In 2008 to 2009, Mr. Tan was a wealth manager at the sales of unit trusts and insurance department of the Hongkong Shanghai Banking Corporation Limited. He joined Multi Ways SG in 2014. Since September 2018, Mr. Tan has been a director at MNH Global Pte Ltd, a business consultancy company.
Mr. Tan obtained an Honours in Economics and Management in SIM University, Singapore – University of London.
Mr. Cheon Kem Tan (“Mr. Tan”) is our Financial Controller. He was appointed on June 3, 2024. He is responsible for the following matters relating to our Group:
| ● | financial reporting of the Company, including managing accounting operations, statutory financial audit reporting and coordinating corporate tax and indirect tax submissions; | |
| ● | preparation of budget and financial forecasts; | |
| ● | development and implementation of financial policies and procedures in business processes; and | |
| ● | strengthening internal control. |
Mr. Tan is an experienced finance professional who previously served as the Group Finance Manager and Head of Department at Seiko Wall Pte Ltd. With over 20 years of extensive experience in finance, accounting, auditing, and taxation, Mr. Tan oversees the financial, accounting, auditing, and taxation functions for the Group and its subsidiaries. Before joining Seiko Wall, Mr. Tan worked as an auditor with Grant Thornton, where he honed his auditing skills. He then progressed through various finance positions at Union Gas Holdings Ltd, NSL Fuel Management Services Pte Ltd (a subsidiary of NSL Ltd), Raffles Marina Ltd (another subsidiary of NSL Ltd), Top Global Ltd, Sunmoon Food Company Ltd, and ACMA Ltd. His diverse experience across these organizations has equipped him with a broad skill set and a deep understanding of financial management in different business environments. Mr. Tan’s expertise and leadership have been pivotal in driving the financial strategy and operations at Seiko Wall Pte Ltd, ensuring compliance, accuracy, and strategic financial planning across the Group. His proven track record, coupled with his professional qualifications, makes him a significant asset to the company.
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Mr. Tan is a graduate of the Association of Chartered Certified Accountants (ACCA, UK) and a chartered accountant with the Institute of Singapore Chartered Accountants (ISCA). He is also an associate member of the Chartered Valuer and Appraiser (CVA) Singapore, specializing in business valuation.
Independent Directors:
Mr. Chin Hoong Chan (“Mr. Chan”) serves as chairman of the audit committee and as a member of the compensation and nomination committees. Mr. Chan has been in the audit and accounting field for over 10 years. From 2011 to 2012, Mr. Chan worked as an audit associate at Cheng & Co. in Malaysia. From 2012 to 2013, Mr. Chan worked as a senior audit associate at KPMG in Malaysia. From 2013 to 2018, Mr. Chan worked as audit assistant manager at BDO LLP in Singapore. Since 2018, Mr. Chan has been the Finance & HR Manager of Signmechanic Pte Ltd in Singapore. Since August 2024, he has served on the board of directors of JBDI Holdings Limited, a Singapore-based public company listed on the Nasdaq, where he serves as chair of nomination committee, and as a member of the audit committee and compensation committee.
Mr. Chan has completed the examination from Association of Chartered Certified Accountants and obtained the certificate in 2011. Mr. Chan is a member of the Association of Chartered Certified Accountants (ACCA) since 2014. He is also a member of the Institute of Singapore Chartered Accountants (ISCA) since 2016 and the Fellow Member of Association of Chartered Certified Accountants (FCCA) since 2019.
Mr. Gang Wong (“Mr. Wong”) serves as chairman of the compensation committee and as a member of the audit and nomination committees. Mr. Wong has over 25 years of experience in legal professional services, advising clients on transactions relating to corporate merger and acquisitions, capital markets and initial public offerings. He worked as a legal associate in Shook Lin & Bok LLP from May 1996 to April 1998 and Ang & Partners from July 1998 to January 2000. He re-joined Shook Lin & Bok LLP in February 2000 as a legal associate and has been a partner since January 2002. Mr. Wong is currently a partner and the Head of China Desk in Shook Lin & Bok LLP.
Mr. Wong also held the position as a director in several listed companies in Singapore. From August 2010 to February 2020, he was an independent non-executive director in Renewable Energy Asia Group Limited, a company engaged in the investment and development of renewable energy and whose Ordinary Shares were previously listed on the Catalist of the Singapore Exchange Securities Trading Limited. From June 2012 to October 2018, he was an independent non-executive director in First REIT Management Limited (formerly known as Bowsprit Capital Corporation Limited), the manager of First Real Estate Investment Trust, a real estate investment trust of hospitals and nursing homes and whose shares are listed on the Mainboard of the Singapore Exchange Securities Trading Limited (stock code: AW9U). Since November 2006, Mr. Wong has been an independent non-executive director in JEP Holdings Ltd (formerly known as Alantac Technology Ltd), a company specializing in aerospace engineering and machining and whose shares are listed on the Catalist of the Singapore Exchange Securities Trading Limited (stock code: 1J4). Since May 2019, Mr. Wong has been an independent non-executive director of Tianjin Pharmaceutical Da Ren Tang Group Corporation Limited (formerly known as Tianjin Zhong Xin Pharmaceutical Group Corporation Limited), a company engaged in the manufacturing and distribution of traditional Chinese medicine and pharmaceutical products and whose shares are listed on the Mainboard of the Singapore Exchange Securities Trading Limited (stock code: T14) and the Shanghai Stock Exchange (stock code: 600329). Since October 2024, he has served on the board of directors of SAG Holdings Limited, a Singapore-based public company listed on the Nasdaq, where he serves as chair of compensation committee, and as a member of the audit committee and nomination committee.
Mr. Wong obtained a Bachelor of Laws Honors degree in the National University of Singapore in July 1995. He has been admitted as an advocate and solicitor at the Supreme Court of Singapore since May 1996.
Mr. Kok Chuah Tan (“Mr. Tan”) serves as chairman of the nomination committee and as a member of the audit and compensation committees. Mr. Tan is an experienced business owner and involved in the real estate as well as business solutions industry. He is currently the key executive officer of Raffles Developments Pte Ltd, a director of Key Global Projects Pte Ltd, and a director of Key Global Pte Ltd. As Raffles Developments Pte Ltd’s key executive officer, Mr. Tan manages a team of real estate agent to negotiate contracts and handle complex real estate transactions in which he strives to provide excellent customer service and business property-related solutions to clients. He founded Key Global Pte Ltd in 2020 in response to the escalating demand and growing intricacies within the realm of business merger & acquisitions. Mr. Tan also worked for Greencast Pte Ltd for four years as their managing director, in which he led a team from NUS, and spearheaded the production of commercialized NUS construction products in Singapore, specifically ECOWALL products that utilize recycled building material aggregates. Mr. Tan’s extensive experience within the industry and his unique portfolio expanding throughout the business industry will make him a significant asset to the company.
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Mr. Tan has a diploma in electronics, communications and computer engineering from Singapore Polytechnic.
Family Relationships
Mr. Eng Hock Lim, our Executive Director, Chairman and Chief Executive Officer, and Ms. Noi Geck Lee, our Executive Director and Chief Administration Officer, are husband and wife.
Ms. Mei Jun Lim, our Deputy Chief Executive Officer, is the daughter of Mr. Eng Hock Lim and Ms. Noi Geck Lee.
Mr. Lu Chong Tan, our Chief Operating Officer, is the spouse of Ms. Mei Jun Lim.
EXECUTIVE COMPENSATION
Compensation of Executive Directors and Executive Officers
For the financial year ended December 31, 2024, we paid an aggregate of approximately S$1.1 million ($0.8 million) in cash to our Executive Directors and Executive Officers. For the financial year ended December 31, 2023, we paid an aggregate of approximately S$1.0 million ($0.8 million) in cash to our Executive Directors and Executive Officers.
Equity Incentive Plans
On October 30, 2024, the Company adopted the 2024 Equity Incentive Plan (the “2024 Incentive Plan”), for the purpose of granting share-based compensation awards to employees, Directors and consultants to incentivize their performance and align their interests with ours. Under the 2024 Incentive Plan, we are authorized to issue an aggregate of 3,000,000 Ordinary Shares.
Types of Awards. The 2024 Incentive Plan will permit the awards of options, stock appreciation rights, restricted stock, restricted stock units, stock bonus awards and/or performance compensation awards.
Plan Administration. The 2024 Incentive Plan will be administered by the Compensation Committee of the Board or any other committee appointed by the Board to administer this Plan (or if no Committee is appointed, the Board). The plan administrator is entitled to determine the participants who are to receive awards, the number of awards to be granted, and the terms and conditions of each award grant.
Eligibility. Employees, Directors, Executive Officers and the consultants of our company will be eligible to participate pursuant to the terms of the 2024 Incentive Plan.
Conditions of Award. The plan administrator shall determine the participants, types of awards, numbers of Ordinary Shares to be covered by awards, terms and conditions of each award, and provisions with respect to the vesting schedule, settlement, exercise, repurchase, cancellation, forfeiture, restrictions, limitations or suspension of awards.
Term of Award. The term of each award shall be fixed by the administrator and is stated in the award agreement between recipient of an award and us. No award shall be granted under the 2024 Incentive Plan after ten years from the date this Proposal is approved.
Vesting Schedule. In general, the plan administrator determines the vesting schedule, which will be set forth in the award agreement.
Transfer Restrictions. Unless otherwise determined by the administrator of the 2024 Incentive Plan, no award and no right under any such award shall be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent and distribution or pursuant to a qualified domestic relations order, and shall not be subject to execution, attachment, or similar process.
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As the date of this prospectus, the Company has yet to issue any Ordinary Shares through the 2024 Incentive Plan.
On October 19, 2023, the Company adopted the 2023 Equity Incentive Plan (the “2023 Incentive Plan”), for the purpose of granting share-based compensation awards to employees, Directors and consultants to incentivize their performance and align their interests with ours. Under the 2023 Incentive Plan, we are authorized to issue an aggregate of 3,000,000 Ordinary Shares. As of the date of this prospectus, no Ordinary Shares have been granted and outstanding.
Types of Awards. The 2023 Incentive Plan permits the awards of options, stock appreciation rights, restricted stock, restricted stock units, stock bonus awards and/or performance compensation awards.
Plan Administration. The 2023 Incentive Plan is administered by the Compensation Committee of the Board or any other committee appointed by the Board to administer this Plan (or if no Committee is appointed, the Board). The plan administrator is entitled to determine the participants who are to receive awards, the number of awards to be granted, and the terms and conditions of each award grant.
Eligibility. Employees, Directors and Executive Officers and the consultants of our company are eligible to participate pursuant to the terms of the 2023 Incentive Plan.
Conditions of Award. The plan administrator shall determine the participants, types of awards, numbers of Ordinary Shares to be covered by awards, terms and conditions of each award, and provisions with respect to the vesting schedule, settlement, exercise, repurchase, cancellation, forfeiture, restrictions, limitations or suspension of awards.
Term of Award. The term of each award shall be fixed by the administrator and is stated in the award agreement between recipient of an award and us. No award shall be granted under the 2023 Incentive Plan after ten years from the date the 2023 Incentive Plan was approved by the Board.
Vesting Schedule. In general, the plan administrator determines the vesting schedule, which is set forth in the award agreement.
Transfer Restrictions. Unless otherwise determined by the administrator of the 2023 Incentive Plan, no award and no right under any such award shall be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent and distribution or pursuant to a qualified domestic relations order, and shall not be subject to execution, attachment, or similar process.
As the date of this prospectus, the Company has issued 2,490,000 Ordinary Shares under the 2023 Incentive Plan.
Employment Agreements
Employment Agreement between Mr. Eng Hock Lim and Multi Ways SG
Effective as of August 1, 2022, Multi Ways SG entered into an Employment Agreement with Mr. Eng Hock Lim. The agreement provides for an annual base salary, together with such additional discretionary bonus. Mr. Eng Hock Lim’s employment will continue indefinitely, subject to termination by either party to the agreement upon 6 months’ prior written notice or the equivalent salary in lieu of such notice. The agreement also provides that Mr. Eng Hock Lim shall not, during the term of the agreement and for 12 months after cessation of employment, carry on business in competition with the Group.
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Employment Agreement between Ms. Noi Geck Lee and Multi Ways SG
Multi Ways SG entered into an Employment Agreement dated effective as of August 1, 2022 with Ms. Noi Geck Lee. The agreement provides for a monthly base salary. Under the terms of the agreement, Ms. Noi Geck Lee’s employment will continue indefinitely, subject to termination by either party to the agreement upon 6 months’ written notice or the equivalent salary in lieu of such notice. The agreement also provides that Ms. Noi Geck Lee shall not, during the term of the agreement and for 12 months after cessation of employment, carry on business in competition with the Group.
Employment Agreement between Ms. Mei Jun Lim and Multi Ways SG
Multi Ways SG entered into an Employment Agreement dated effective as of August 1, 2022 with Ms. Mei Jun Lim. The agreement provides for a monthly base salary. Under the terms of the agreement, Ms. Mei Jun Lim’s employment will continue indefinitely, subject to termination by either party to the agreement upon 6 months’ written notice or the equivalent salary in lieu of such notice. The agreement also provides that Ms. Mei Jun Lim shall not, during the term of the agreement and for 12 months after cessation of employment, carry on business in competition with the Group.
Employment Agreement between Mr. Lu Chong Tan and Multi Ways SG
Multi Ways SG entered into an Employment Agreement dated effective as of August 1, 2022 with Mr. Lu Chong Tan. The agreement provides for a monthly base salary. Under the terms of the agreement, Mr. Lu Chong Tan’s employment will continue indefinitely, subject to termination by either party to the agreement upon 6 months’ written notice or the equivalent salary in lieu of such notice. The agreement also provides that Mr. Lu Chong Tan shall not, during the term of the agreement and for 12 months after cessation of employment, carry on business in competition with the Group.
Employment Agreement between Mr. Cheon Kem Tan and Multi Ways SG
Effective June 3, 2024, the Company and Mr. Cheon Kem Tan entered into an employment agreement, pursuant to which, Mr. Cheon Kem Tan is entitled to an annual salary of S$108,000 (approximately $80,400) for his services as the Financial Controller of the Company. His employment has an initial term until his earlier death, resignation or removal.
Directors’ Agreements
Each of our Directors has entered into a Director’s Agreement with the Company. The terms and conditions of such Directors’ Agreements are similar in all material aspects. Each Director’s Agreement is for an initial term of one year and will continue until the Director’s successor is duly elected and qualified. Each Director will be up for re-election each year at the annual shareholders’ meeting and, upon re-election, the terms and provisions of his or her Director’s Agreement will remain in full force and effect. Any Director’s Agreement may be terminated for any or no reason by the Director or at a meeting called expressly for that purpose by a vote of the shareholders holding more than 50% of the Company’s issued and outstanding Ordinary Shares entitled to vote. Under the Directors’ Agreements, the Company agrees, to the maximum extent provided under applicable law, to indemnify the Directors against liabilities and expenses incurred in connection with any proceeding arising out of, or related to, the Directors’ performance of their duties, other than any such losses incurred as a result of the Directors’ gross negligence or willful misconduct.
Under the Directors’ Agreements, the aggregate annual salary that is payable to our Independent Directors is S$25,000 to Mr. Chin Hoong Chan, S$22,000 to Mr. Kok Chuah Tan and S$22,000 to Mr. Gang Wong in cash respectively.
In addition, our Directors will be entitled to participate in such share option scheme as may be adopted by the Company, as amended from time to time. The number of options granted, and the terms of those options will be determined from time to time by a vote of the Board of Directors, provided that each Director shall abstain from voting on any such resolution or resolutions relating to the grant of options to that Director.
Other than as disclosed above, none of our Directors have entered into a service agreement with our Company or any of our subsidiaries that provides for benefits upon termination of employment.
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Clawback Policy adopted by the Board
On December 1, 2023, the Board adopted an Executive Compensation Recovery Policy (the “Clawback Policy”) providing for the recovery of certain incentive-based compensation from current and former Executive Officers of the Company in the event the Company is required to restate any of its financial statements filed with the SEC under the Exchange Act in order to correct an error that is material to the previously-issued financial statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period. Adoption of the Clawback Policy was mandated by new NYSE listing standards introduced pursuant to Exchange Act Rule 10D-1. The Clawback Policy is in addition to Section 304 of the Sarbanes-Oxley Act of 2002 which permits the SEC to order the disgorgement of bonuses and incentive-based compensation earned by a registrant issuer’s chief executive officer and chief financial officer in the year following the filing of any financial statement that the issuer is required to restate because of misconduct, and the reimbursement of those funds to the issuer.
PRINCIPAL SHAREHOLDERS
The following table sets forth information regarding the beneficial ownership of our share capital by:
| ● | each person, or group of affiliated persons, known by us to beneficially own more than 5% of our Ordinary Shares; | |
| ● | each of our named Executive Officers; | |
| ● | each of our Directors; and | |
| ● | all of our current Directors and Executive Officers as a group. |
The calculations in the table below are based on 33,330,000 Ordinary Shares of our Company issued and outstanding as of the date of this prospectus.
The information presented below regarding beneficial ownership of our voting securities has been presented in accordance with the rules of the SEC and is not necessarily indicative of ownership for any other purpose. Under these rules, a person is deemed to be a “beneficial owner” of a security if that person has or shares the power to vote or direct the voting of the security or the power to dispose or direct the disposition of the security. A person is deemed to own beneficially any security as to which such person has the right to acquire sole or shared voting or investment power within sixty (60) days through the conversion or exercise of any convertible security, warrant, option or other right. More than one (1) person may be deemed to be a beneficial owner of the same securities. The percentage of beneficial ownership by any person as of a particular date is calculated by dividing the number of Ordinary Shares beneficially owned by such person, which includes the number of Ordinary Shares as to which such person has the right to acquire voting or investment power within sixty (60) days, by the sum of the number of Ordinary Shares outstanding as of such date, plus the number of Ordinary Shares as to which such person has the right to acquire voting or investment power within sixty (60) days. Consequently, the denominator used for calculating such percentage may be different for each beneficial owner. Except as otherwise indicated below and under applicable community property laws, we believe that the beneficial owners of our Ordinary Shares listed below have sole voting and investment power with respect to the Ordinary Shares shown.
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Unless otherwise noted below, the address of each person listed on the table is 3E Gul Circle, Singapore 629633 as the date of this prospectus
| Ordinary Shares Beneficially Owned | ||||||||||
| Name of Beneficial Owner | Positions | Number | Percentage % | |||||||
| Executive Directors and Executive Officers: | ||||||||||
| Mr. Eng Hock Lim(1) | Executive Director, Chairman and Chief Executive Officer | 20,967,256 | 62.9 | |||||||
| Ms. Noi Geck Lee(1) | Executive Director and Chief Administration Officer | 1,317,544 | 3.9 | |||||||
| Ms. Mei Jun Lim | Deputy Chief Executive Officer | 500,000 | 1.5 | |||||||
| Mr. Lu Chong Tan | Chief Operating Officer | 100,000 | 0.3 | |||||||
| Mr. Cheon Kem Tan | Financial Controller | - | - | |||||||
| Independent Directors: | ||||||||||
| Mr. Chin Hoong Chan | Independent Director | - | - | |||||||
| Mr. Gang Wong | Independent Director | - | - | |||||||
| Mr. Kok Chuah Tan | Independent Director | - | - | |||||||
| 5% Shareholders: | ||||||||||
| MWE Investments Limited(1) | 20,584,800 | 61.8 | ||||||||
(1) Represents Ordinary Shares held by MWE Investments Limited, a company directly owned as to 97.0% and 3.0% by Mr. Eng Hock Lim and Ms. Noi Geck Lee, respectively.
RELATED PARTY TRANSACTIONS
We have adopted an audit committee charter, which requires the committee to review all related-party transactions on an ongoing basis and all such transactions be approved by the committee.
Set forth below are related-party transactions of our Company for the financial years ended December 31, 2024, 2023 and 2022, which are identified in accordance with the rules prescribed under Form F-1 and Form 20-F and may not be considered as related-party transactions under Singapore law.
In the ordinary course of business, during the financial years ended December 31, 2024, 2023 and 2022, the Company involved with certain transactions, either at cost or current market prices, and on the normal commercial terms among related parties. The following table provides the transactions with these parties for the years as presented (for the portion of such period that they were considered related):
| Financial Years ended December 31, | ||||||||||||
| Nature of transactions | 2024 | 2023 | 2022 | |||||||||
| $’000 | $’000 | $’000 | ||||||||||
| P4 Engineering Industrial Pte Ltd(1) | ||||||||||||
| - Sale of goods | 51 | 150 | - | |||||||||
| - Purchases of goods | 443 | 736 | 945 | |||||||||
| - Land rental | 450 | 452 | 404 | |||||||||
| - Loan interest income | 91 | 21 | - | |||||||||
| MWE Investment Pte Ltd(2) | ||||||||||||
| - Sale of goods | - | - | 11 | |||||||||
| Yin Zhan Holding Pte Ltd(3) | ||||||||||||
| - Purchases of goods | - | - | 413 | |||||||||
| - Other services income | - | 7 | - | |||||||||
| Mr. Eng Hock Lim(4) | ||||||||||||
| - Director loan account | 14,592 | 14,517 | - | |||||||||
| - Loan interest income | 702 | - | - | |||||||||
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These related parties are controlled by the common Executive Directors and Executive Officers of the Company.
| (1) | Mr. Eng Hock Lim, Ms. Noi Geck Lee and Ms. Mei Jun Lim are the directors of P4 Engineering Industrial Pte Ltd. Mr. Eng Hock Lim and Ms. Noi Geck Lee are shareholders and they hold 100% in P4 Engineering Industrial Pte Ltd. |
| (2) | Mr. Eng Hock Lim, Ms. Noi Geck Lee and Ms. Mei Jun Lim are the directors, and they are also the shareholders and hold 88% stake in MWE Investment Pte Ltd. |
| (3) | Mr. Eng Hock Lim is the director and shareholder, and he holds 51% stake in Yin Zhan Holding Pte Ltd. |
| (4) | The amount due to Mr. Eng Hock Lim had been converted to loan account and Mr. Eng Hock Lim is the controlling shareholder through MWE Investments Limited which he holds 97.0% stake. |
Set forth below are related-party transactions of our Company for the six months ended June 30, 2024 and 2023, which are identified in accordance with the rules prescribed under Form F-1 and Form 20-F and may not be considered as related-party transactions under Singapore law.
In the ordinary course of business, during the six months ended June 30, 2024 and 2023, the Company involved with certain transactions, either at cost or current market prices, and on the normal commercial terms among related parties. The following table provides the transactions with these parties for the years as presented (for the portion of such period that they were considered related):
| Six Months ended June 30, | ||||||||||||
| Nature of transactions | 2024 | 2023 | 2022 | |||||||||
| $’000 | $’000 | $’000 | ||||||||||
| P4 Engineering Industrial Pte Ltd(1) | ||||||||||||
| - Sale of goods | 51 | - | - | |||||||||
| - Purchases of goods | 244 | 116 | 880 | |||||||||
| - Land rental | 223 | 229 | 181 | |||||||||
| - Loan interest income | ||||||||||||
| Multi Ways Equipment Sdn Bhd(2) | ||||||||||||
| - Sale of goods | 8 | - | - | |||||||||
| Yin Zhan Holding Pte Ltd(3) | ||||||||||||
| - Purchases of goods | - | - | 408 | |||||||||
| Mr. Eng Hock Lim(4) | ||||||||||||
| - Director loan account | 14,502 | 15,767 | - | |||||||||
| - Loan interest income | 349 | - | - | |||||||||
These related parties are controlled by the common Executive Directors and Executive Officers of the Company.
| (1) | Mr. Eng Hock Lim, Ms. Noi Geck Lee and Ms. Mei Jun Lim are the directors of P4 Engineering Industrial Pte Ltd. Mr. Eng Hock Lim and Ms. Noi Geck Lee are shareholders and they hold 100% in P4 Engineering Industrial Pte Ltd. |
| (2) | Ms. Maggie Lim and Mr. Nick Tan are the directors and shareholders, and they hold 100% in Multi Ways Equipment Sdn Bhd. |
| (3) | Mr. Eng Hock Lim is the director and shareholder, and he holds 51% stake in Yin Zhan Holding Pte Ltd. |
| (4) | The amount due to Mr. Eng Hock Lim had been converted to loan account and Mr. Eng Hock Lim is the controlling shareholder through MWE Investments Limited which he holds 97.0% stake. |
As of December 31, 2024, the outstanding balance of the directors loan from Mr. Eng Hock Lim and Ms. Noi Geck Lee is $14.6 million.
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DESCRIPTION OF SHARE CAPITAL
We are a Cayman Islands exempted company and our affairs are governed by our memorandum and articles of association, as amended from time to time, and the Companies Act (2025 Revision) of the Cayman Islands, which we refer to as the Companies Act below, and the common law of Cayman Islands.
As of the date of this prospectus, our authorized share capital is US$2,500,000 divided into 10,000,000,000 Ordinary Shares, par value of US$0.00025 each. As of the date of this prospectus, 33,330,000 Ordinary Shares are issued and outstanding.
Immediately prior to the completion of this offering, we will have 33,330,000 Ordinary Shares issued and outstanding. All of our Ordinary Shares issued and outstanding prior to the completion of the offering are and will be fully paid, and all of our Ordinary Shares to be issued in the offering will be issued as fully paid.
The following are summaries of material provisions of our Amended and Restated Memorandum and Articles of Association and of the Companies Act, insofar as they relate to the material terms of our Ordinary Shares.
Objects of Our Company. Under our post-offering memorandum and articles of association, the objects of our company are unrestricted, and we are capable of exercising all the functions of a natural person of full capacity irrespective of any question of corporate benefit, as provided by section 27(2) of the Companies Act.
Ordinary Shares. Our Ordinary Shares are issued in registered form and are issued when registered in our register of members. We may not issue Ordinary Shares to bearer. Our shareholders who are non-residents of the Cayman Islands may freely hold and vote their shares.
Dividends. The holders of our Ordinary Shares are entitled to such dividends as may be declared by our Board of Directors. Our post-offering memorandum and articles of association provide that dividends may be declared and paid out of the funds of our company lawfully available therefor. Under the laws of the Cayman Islands, our company may pay a dividend out of either profit or share premium account; provided that in no circumstances may a dividend be paid out of our share premium if this would result in our company being unable to pay its debts as they fall due in the ordinary course of business.
Voting Rights. Voting at any meeting of shareholders is by way of a poll save that in the case of a physical meeting, the chairman of the meeting may decide that a vote be on a show of hands unless a poll is demanded by:
| ● | at least three shareholders present in person or by proxy or (in the case of a shareholder being a corporation) by its duly authorised representative for the time being entitled to vote at the meeting; | |
| ● | shareholder(s) present in person or by proxy or (in the case of a shareholder being a corporation) by its duly authorised representative representing not less than one-tenth of the total voting rights of all shareholders having the right to vote at the meeting; and | |
| ● | shareholder(s) present in person or by proxy or (in the case of a shareholder being a corporation) by its duly authorised representative and holding Ordinary Shares in us conferring a right to vote at the meeting being Ordinary Shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all Ordinary Shares conferring that right. |
An ordinary resolution to be passed at a meeting by the shareholders requires the affirmative vote of a simple majority of the votes attaching to the Ordinary Shares cast at a meeting, while a special resolution requires the affirmative vote of no less than two-thirds of the votes cast attaching to the issued and outstanding Ordinary Shares at a meeting. A special resolution will be required for important matters such as a change of name, making changes to our post-offering memorandum and articles of association, a reduction of our share capital and the winding up of our company. Our shareholders may, among other things, divide or combine their Ordinary Shares by ordinary resolution.
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General Meetings of Shareholders. As a Cayman Islands exempted company, we are not obliged by the Companies Act to call shareholders’ annual general meetings. Our post-offering memorandum and articles of association provide that we shall, if required by the Companies Act, in each year hold a general meeting as its annual general meeting, and shall specify the meeting as such in the notices calling it, and the annual general meeting shall be held at such time and place as may be determined by our directors. All general meetings (including an annual general meeting, any adjourned general meeting or postponed meeting) may be held as a physical meeting at such times and in any part of the world and at one or more locations, as a hybrid meeting or as an electronic meeting, as may be determined by our Board of Directors in its absolute discretion.
Shareholders’ general meetings may be convened by the chairperson of our Board of Directors or by a majority of our Board of Directors. Advance notice of not less than ten clear days is required for the convening of our annual general shareholders’ meeting (if any) and any other general meeting of our shareholders. A quorum required for any general meeting of shareholders consists of, at the time when the meeting proceeds to business, two shareholders holding Ordinary Shares which carry in aggregate (or representing by proxy) not less than one-third of all votes attaching to issued and outstanding Ordinary Shares in our company entitled to vote at such general meeting.
The Companies Act does not provide shareholders with any right to requisition a general meeting or to put any proposal before a general meeting. However, these rights may be provided in a company’s articles of association. Our post-offering memorandum and articles of association provide that upon the requisition of any one or more of our shareholders holding Ordinary Shares which carry in aggregate not less than one-third of all votes attaching to the issued and outstanding Ordinary Shares of our company entitled to vote at general meetings, our Board will convene an extraordinary general meeting and put the resolutions so requisitioned to a vote at such meeting. However, our post-offering memorandum and articles of association do not provide our shareholders with any right to put any proposals before annual general meetings or extraordinary general meetings not called by such shareholders.
Transfer of Ordinary Shares. Subject to the restrictions set out below, any of our shareholders may transfer all or any of his or her Ordinary Shares by an instrument of transfer in the usual or common form or in a form designated by the relevant stock exchange or any other form approved by our Board of Directors. Notwithstanding the foregoing, Ordinary Shares may also be transferred in accordance with the applicable rules and regulations of the relevant stock exchange.
Our Board may, in its absolute discretion, decline to register any transfer of any ordinary share which is not fully paid up or on which we have a lien. Our Board of Directors may also decline to register any transfer of any ordinary share unless:
| ● | the instrument of transfer is lodged with us, accompanied by the certificate for the Ordinary Shares to which it relates and such other evidence as our Board of Directors may reasonably require to show the right of the transferor to make the transfer; | |
| ● | the instrument of transfer is in respect of only one class of Ordinary Shares; | |
| ● | the instrument of transfer is properly stamped, if required; | |
| ● | in the case of a transfer to joint holders, the number of joint holders to whom the Ordinary Share is to be transferred does not exceed four; and | |
| ● | a fee of such maximum sum as the relevant stock exchange may determine to be payable or such lesser sum as our directors may from time to time require is paid to us in respect thereof. |
If our directors refuse to register a transfer they shall, within two months after the date on which the instrument of transfer was lodged, send to each of the transferor and the transferee notice of such refusal.
The registration of transfers may, after compliance with any notice required in accordance with the rules of the relevant stock exchange, be suspended and the register closed at such times and for such periods as our Board of Directors may from time to time determine; provided, however, that the registration of transfers shall not be suspended nor the register closed for more than 30 days in any year as our Board may determine.
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Liquidation. On the winding up of our company, if the assets available for distribution amongst our shareholders shall be more than sufficient to repay the whole of the share capital at the commencement of the winding up, the surplus shall be distributed amongst our shareholders in proportion to the par value of the Ordinary Shares held by them at the commencement of the winding up, subject to a deduction from those Ordinary Shares in respect of which there are monies due, of all monies payable to our company for unpaid calls or otherwise. If our assets available for distribution are insufficient to repay all of the paid-up capital, such the assets will be distributed so that, as nearly as may be, the losses are borne by our shareholders in proportion to the par value of the Ordinary Shares held by them.
Calls on Ordinary Shares and Forfeiture of Ordinary Shares. Our Board of Directors may from time to time make calls upon shareholders for any amounts unpaid on their Ordinary Shares in a notice served to such shareholders at least 14 days prior to the specified time and place of payment. The Ordinary Shares that have been called upon and remain unpaid are subject to forfeiture.
Redemption, Repurchase and Surrender of Ordinary Shares. We may issue Ordinary Shares on terms that such Ordinary Shares are subject to redemption, at our option or at the option of the holders of these Ordinary Shares, on such terms and in such manner as may be determined by our Board of Directors. Our company may also repurchase any of our Ordinary Shares on such terms and in such manner as have been approved by our Board of Directors. Under the Companies Act, the redemption or repurchase of any share may be paid out of our company’s profits, share premium account or out of the proceeds of a new issue of Ordinary Shares made for the purpose of such redemption or repurchase, or out of capital if our company can, immediately following such payment, pay its debts as they fall due in the ordinary course of business. In addition, under the Companies Act no such share may be redeemed or repurchased (a) unless it is fully paid up, (b) if such redemption or repurchase would result in there being no Ordinary Shares outstanding or (c) if the company has commenced liquidation. In addition, our company may accept the surrender of any fully paid share for no consideration.
Variations of Rights of Ordinary Shares. Whenever the capital of our company is divided into different classes the rights attached to any such class may, subject to any rights or restrictions for the time being attached to any class, only be varied with the sanction of a resolution passed by a majority of two-thirds of the votes cast at a separate meeting of the holders of the Ordinary Shares of that class. The rights conferred upon the holders of the Ordinary Shares of any class issued with preferred or other rights shall not, unless otherwise expressly provided by the terms of issue of the Ordinary Shares of that class, be deemed to be varied by the creation, allotment or issue of further Ordinary Shares ranking pari passu with such existing class of Ordinary Shares.
Issuance of Additional Ordinary Shares. Our post-offering memorandum and articles of association authorizes our Board of Directors to issue additional Ordinary Shares from time to time as our Board shall determine, to the extent of available authorized but unissued Ordinary Shares.
Our post-offering memorandum and articles of association also authorizes our Board to establish from time to time one or more series of Ordinary Shares and to determine, with respect to any series of Ordinary Shares , the terms and rights of that series, including, among other things:
| ● | the designation of the series; | |
| ● | the number of Ordinary Shares of the series; | |
| ● | the dividend rights, dividend rates, conversion rights and voting rights; and | |
| ● | the rights and terms of redemption and liquidation preferences. |
Our Board may issue Ordinary Shares without action by our shareholders to the extent of available authorized but unissued Ordinary Shares. Issuance of these Ordinary Shares may dilute the voting power of holders of Ordinary Shares.
Inspection of Books and Records. Holders of our Ordinary Shares will have no general right under Cayman Islands law to inspect or obtain copies of our list of shareholders or our corporate records. However, our post-offering memorandum and articles of association have provisions that provide our shareholders the right to inspect our register of shareholders without charge, and to receive our annual audited financial statements. See “Where You Can Find Additional Information.”
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Anti-Takeover Provisions. Some provisions of our post-offering memorandum and articles of association may discourage, delay or prevent a change of control of our company or management that shareholders may consider favorable, including provisions that:
| ● | authorize our Board of Directors to issue Ordinary Shares in one or more series and to designate the price, rights, preferences, privileges and restrictions of such Ordinary Shares without any further vote or action by our shareholders; and | |
| ● | limit the ability of shareholders to requisition and convene general meetings of shareholders. |
However, under Cayman Islands law, our directors may only exercise the rights and powers granted to them under our post-offering memorandum and articles of association for a proper purpose and for what they believe in good faith to be in the best interests of our company.
Exempted Company. We are an exempted company with limited liability under the Companies Act. The Companies Act distinguishes between ordinary resident companies and exempted companies. Any company that is registered in the Cayman Islands but conducts business mainly outside of the Cayman Islands may apply to be registered as an exempted company. The requirements for an exempted company are essentially the same as for an ordinary company except that an exempted company:
| ● | does not have to file an annual return of its shareholders with the Registrar of Companies; | |
| ● | is not required to open its register of members for inspection; | |
| ● | does not have to hold an annual general meeting; | |
| ● | may issue negotiable or bearer shares or Ordinary Shares with no par value; | |
| ● | may obtain an undertaking against the imposition of any future taxation (such undertakings are usually given for 20 years in the first instance); | |
| ● | may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands; | |
| ● | may register as an exempted limited duration company; and | |
| ● | may register as a segregated portfolio company. |
“Limited liability” means that the liability of each shareholder is limited to the amount unpaid by the shareholder on that shareholder’s Ordinary Shares of the company (except in exceptional circumstances, such as involving fraud, the establishment of an agency relationship or an illegal or improper purpose or other circumstances in which a court may be prepared to pierce or lift the corporate veil).
Differences in Corporate Law
The Companies Act is derived, to a large extent, from the older Companies Acts of England but does not follow recent English statutory enactments and accordingly there are significant differences between the Companies Act and the current Companies Act of England. In addition, the Companies Act differs from laws applicable to U.S. corporations and their shareholders. Set forth below is a summary of the significant differences between the provisions of the Companies Act applicable to us and the laws applicable to companies incorporated in the United States and their shareholders.
Mergers and Similar Arrangements. The Companies Act permits mergers and consolidations between Cayman Islands companies and between Cayman Islands companies and non-Cayman Islands companies. For these purposes, (a) “merger” means the merging of two or more constituent companies and the vesting of their undertaking, property and liabilities in one of such companies as the surviving company, and (b) a “consolidation” means the combination of two or more constituent companies into a consolidated company and the vesting of the undertaking, property and liabilities of such companies to the consolidated company. In order to effect such a merger or consolidation, the directors of each constituent company must approve a written plan of merger or consolidation, which must then be authorized by (a) a special resolution of the shareholders of each constituent company, and (b) such other authorization, if any, as may be specified in such constituent company’s articles of association. The plan must be filed with the Registrar of Companies of the Cayman Islands together with a declaration as to the solvency of the consolidated or surviving company, a list of the assets and liabilities of each constituent company and an undertaking that a copy of the certificate of merger or consolidation will be given to the members and creditors of each constituent company and that notification of the merger or consolidation will be published in the Cayman Islands Gazette. Court approval is not required for a merger or consolidation which is effected in compliance with these statutory procedures.
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A merger between a Cayman parent company and its Cayman subsidiary or subsidiaries does not require authorization by a resolution of shareholders of that Cayman subsidiary if a copy of the plan of merger is given to every member of that Cayman subsidiary to be merged unless that member agrees otherwise. For this purpose, a company is a “parent” of a subsidiary if it holds issued Ordinary Shares that together represent at least ninety percent (90%) of the votes at a general meeting of the subsidiary.
The consent of each holder of a fixed or floating security interest over a constituent company is required unless this requirement is waived by a court in the Cayman Islands.
Save in certain limited circumstances, a shareholder of a Cayman constituent company who dissents from the merger or consolidation is entitled to payment of the fair value of his Ordinary Shares (which, if not agreed between the parties, will be determined by the Cayman Islands court) upon dissenting to the merger or consolidation, provided the dissenting shareholder complies strictly with the procedures set out in the Companies Act. The exercise of dissenter rights will preclude the exercise by the dissenting shareholder of any other rights to which he or she might otherwise be entitled by virtue of holding Ordinary Shares, save for the right to seek relief on the grounds that the merger or consolidation is void or unlawful.
Separate from the statutory provisions relating to mergers and consolidations, the Companies Act also contains statutory provisions that facilitate the reconstruction and amalgamation of companies by way of schemes of arrangement, provided that the arrangement is approved by a majority in number of each class of shareholders and creditors with whom the arrangement is to be made, and who must in addition represent three-fourths in value of each such class of shareholders or creditors, as the case may be, that are present and voting either in person or by proxy at a meeting, or meetings, convened for that purpose. The convening of the meetings and subsequently the arrangement must be sanctioned by the Grand Court of the Cayman Islands. While a dissenting shareholder has the right to express to the court the view that the transaction ought not to be approved, the court can be expected to approve the arrangement if it determines that:
| ● | the statutory provisions as to the required majority vote have been met; | |
| ● | the shareholders have been fairly represented at the meeting in question and the statutory majority are acting bona fide without coercion of the minority to promote interests adverse to those of the class; | |
| ● | the arrangement is such that may be reasonably approved by an intelligent and honest man of that class acting in respect of his interest; and | |
| ● | the arrangement is not one that would more properly be sanctioned under some other provision of the Companies Act. |
The Companies Act also contains a statutory power of compulsory acquisition which may facilitate the “squeeze out” of a dissentient minority shareholder upon a tender offer. When a tender offer is made and accepted by holders of 90% of the Ordinary Shares affected within four months, the offeror may, within a two-month period commencing on the expiration of such four-month period, require the holders of the remaining Ordinary Shares to transfer such Ordinary Shares to the offeror on the terms of the offer. An objection can be made to the Grand Court of the Cayman Islands but this is unlikely to succeed in the case of an offer which has been so approved unless there is evidence of fraud, bad faith or collusion.
If an arrangement and reconstruction by way of scheme of arrangement is thus approved and sanctioned, or if a tender offer is made and accepted, in accordance with the foregoing statutory procedures, a dissenting shareholder would have no rights comparable to appraisal rights, save that objectors to a takeover offer may apply to the Grand Court of the Cayman Islands for various orders that the Grand Court of the Cayman Islands has a broad discretion to make, which would otherwise ordinarily be available to dissenting shareholders of Delaware corporations, providing rights to receive payment in cash for the judicially determined value of the Ordinary Shares.
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Shareholders’ Suits. In principle, we will normally be the proper plaintiff and as a general rule a derivative action may not be brought by a minority shareholder. However, based on English authorities, which would in all likelihood be of persuasive authority in the Cayman Islands, the Cayman Islands courts can be expected to follow and apply the common law principles (namely the rule in Foss v. Harbottle and the exceptions thereto) so that a non-controlling shareholder may be permitted to commence a class action against or derivative actions in the name of the company to challenge actions where:
| ● | a company acts or proposes to act illegally or ultra vires; | |
| ● | the act complained of, although not ultra vires, could only be effected duly if authorized by more than the number of votes which have actually been obtained; and | |
| ● | those who control the company are perpetrating a “fraud on the minority.” |
A shareholder may have a direct right of action against us where the individual rights of that shareholder have been infringed or are about to be infringed.
Indemnification of Directors and Executive Officers and Limitation of Liability. Cayman Islands law does not limit the extent to which a company’s memorandum and articles of association may provide for indemnification of Directors and Executive Officers, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime. Our post-offering memorandum and articles of association provide that that we shall indemnify our Directors and Executive Officers , and their personal representatives, against all actions, proceedings, costs, charges, expenses, losses, damages or liabilities incurred or sustained by such persons, other than by reason of such person’s dishonesty, wilful default or fraud, in or about the conduct of our company’s business or affairs (including as a result of any mistake of judgment) or in the execution or discharge of his duties, powers, authorities or discretions, including without prejudice to the generality of the foregoing, any costs, expenses, losses or liabilities incurred by such director or officer in defending (whether successfully or otherwise) any civil proceedings concerning our company or its affairs in any court whether in the Cayman Islands or elsewhere. This standard of conduct is generally the same as permitted under the Delaware General Corporation Law for a Delaware corporation.
In addition, we have entered into indemnification agreements with our Directors and Executive Officers that provide such persons with additional indemnification beyond that provided in our post-offering memorandum and articles of association.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our Directors, Executive Officers or persons controlling us under the foregoing provisions, we have been informed that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
Directors’ Fiduciary Duties. Under Delaware corporate law, a director of a Delaware corporation has a fiduciary duty to the corporation and its shareholders. This duty has two components: the duty of care and the duty of loyalty. The duty of care requires that a director act in good faith, with the care that an ordinarily prudent person would exercise under similar circumstances. Under this duty, a director must inform himself of, and disclose to shareholders, all material information reasonably available regarding a significant transaction. The duty of loyalty requires that a director acts in a manner he reasonably believes to be in the best interests of the corporation. He must not use his corporate position for personal gain or advantage. This duty prohibits self-dealing by a director and mandates that the best interest of the corporation and its shareholders take precedence over any interest possessed by a director, officer or controlling shareholder and not shared by the shareholders generally. In general, actions of a director are presumed to have been made on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the corporation. However, this presumption may be rebutted by evidence of a breach of one of the fiduciary duties. Should such evidence be presented concerning a transaction by a director, the director must prove the procedural fairness of the transaction, and that the transaction was of fair value to the corporation.
As a matter of Cayman Islands law, a director of a Cayman Islands company is in the position of a fiduciary with respect to the company and therefore it is considered that he owes the following duties to the company — a duty to act in good faith in the best interests of the company, a duty not to make a personal profit based on his position as director (unless the company permits him to do so), a duty not to put himself in a position where the interests of the company conflict with his personal interest or his duty to a third party and a duty to exercise powers for the purpose for which such powers were intended. A director of a Cayman Islands company owes to the company a duty to act with skill and care. It was previously considered that a director need not exhibit in the performance of his duties a greater degree of skill than may reasonably be expected from a person of his knowledge and experience. However, English and Commonwealth courts have moved towards an objective standard with regard to the required skill and care and these authorities are likely to be followed in the Cayman Islands.
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Shareholder Action by Written Consent. Under the Delaware General Corporation Law, a corporation may eliminate the right of shareholders to act by written consent by amendment to its certificate of incorporation. Cayman Islands law permits us to eliminate the right of shareholders to act by written consent and our post-offering amended and restated articles of association provide that any action required or permitted to be taken at any general meetings may be taken upon the vote of shareholders at a general meeting duly noticed and convened in accordance with our post-offering amended and restated articles of association and may not be taken by written consent of the shareholders without a meeting.
Shareholder Proposals. Under the Delaware General Corporation Law, a shareholder has the right to put any proposal before the annual meeting of shareholders, provided it complies with the notice provisions in the governing documents. A special meeting may be called by the Board of Directors or any other person authorized to do so in the governing documents, but shareholders may be precluded from calling special meetings.
The Companies Act does not provide shareholders with any right to requisition a general meeting or to put any proposal before a general meeting. However, these rights may be provided in a company’s articles of association. Our post-offering amended and restated articles of association allow our shareholders holding Ordinary Shares which carry in aggregate not less than one-third of all votes attaching to the issued and outstanding Ordinary Shares of our company entitled to vote at general meetings to requisition an extraordinary general meeting of our shareholders, in which case our Board is obliged to convene an extraordinary general meeting and to put the resolutions so requisitioned to a vote at such meeting. Other than this right to requisition a shareholders’ meeting, our post-offering amended and restated articles of association do not provide our shareholders with any other right to put proposals before annual general meetings or extraordinary general meetings. As an exempted Cayman Islands company, we are not obliged by law to call shareholders’ annual general meetings.
Cumulative Voting. Under the Delaware General Corporation Law, cumulative voting for elections of directors is not permitted unless the corporation’s certificate of incorporation specifically provides for it. Cumulative voting potentially facilitates the representation of minority shareholders on a Board of Directors since it permits the minority shareholder to cast all the votes to which the shareholder is entitled on a single director, which increases the shareholder’s voting power with respect to electing such director. There are no prohibitions in relation to cumulative voting under the laws of the Cayman Islands but our post-offering amended and restated articles of association do not provide for cumulative voting. As a result, our shareholders are not afforded any less protections or rights on this issue than shareholders of a Delaware corporation.
Removal of Directors. Under the Delaware General Corporation Law, a director of a corporation with a classified board may be removed only for cause with the approval of a majority of the outstanding Ordinary Shares entitled to vote, unless the certificate of incorporation provides otherwise. Under our post-offering amended and restated articles of association, subject to certain restrictions as contained therein, directors may be removed with or without cause, by an ordinary resolution of our shareholders. An appointment of a director may be on terms that the director shall automatically retire from office (unless he has sooner vacated office) at the next or a subsequent annual general meeting or upon any specified event or after any specified period in a written agreement between the company and the director, if any; but no such term shall be implied in the absence of express provision. Under our post-offering amended and restated articles of association, a director’s office shall be vacated if the director (i) becomes bankrupt or has a receiving order made against him or suspends payment or compounds with his creditors; (ii) is found to be or becomes of unsound mind or dies; (iii) resigns his office by notice in writing to the company; (iv) without special leave of absence from our Board of Directors, is absent from three consecutive meetings of the Board and the Board resolves that his office be vacated; (v) is prohibited by law from being a director or; (vi) is removed from office pursuant to the laws of the Cayman Islands or any other provisions of our post-offering memorandum and articles of association.
Transactions with Interested Shareholders. The Delaware General Corporation Law contains a business combination statute applicable to Delaware corporations whereby, unless the corporation has specifically elected not to be governed by such statute by amendment to its certificate of incorporation, it is prohibited from engaging in certain business combinations with an “interested shareholder” for three years following the date that such person becomes an interested shareholder. An interested shareholder generally is a person or a group who or which owns or owned 15% or more of the target’s outstanding voting share within the past three years. This has the effect of limiting the ability of a potential acquirer to make a two-tiered bid for the target in which all shareholders would not be treated equally. The statute does not apply if, among other things, prior to the date on which such shareholder becomes an interested shareholder, the Board of Directors approves either the business combination or the transaction which resulted in the person becoming an interested shareholder. This encourages any potential acquirer of a Delaware corporation to negotiate the terms of any acquisition transaction with the target’s board of directors.
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Cayman Islands law has no comparable statute. As a result, we cannot avail ourselves of the types of protections afforded by the Delaware business combination statute. However, although Cayman Islands law does not regulate transactions between a company and its significant shareholders, it does provide that such transactions must be entered into bona fide in the best interests of the company and not with the effect of constituting a fraud on the minority shareholders.
Dissolution; Winding up. Under the Delaware General Corporation Law, unless the Board of Directors approves the proposal to dissolve, dissolution must be approved by shareholders holding 100% of the total voting power of the corporation. Only if the dissolution is initiated by the Board of Directors may it be approved by a simple majority of the corporation’s outstanding Ordinary Shares. Delaware law allows a Delaware corporation to include in its certificate of incorporation a supermajority voting requirement in connection with dissolutions initiated by the Board.
Under Cayman Islands law, a company may be wound up by either an order of the courts of the Cayman Islands or by a special resolution of its members or, if the company is unable to pay its debts as they fall due, by an ordinary resolution of its members. The court has authority to order winding up in a number of specified circumstances including where it is, in the opinion of the court, just and equitable to do so.
Variation of Rights of Ordinary Shares. Under the Delaware General Corporation Law, a corporation may vary the rights of a class of Ordinary Shares with the approval of a majority of the outstanding Ordinary Shares of such class, unless the certificate of incorporation provides otherwise. Under our post-offering amended and restated articles of association, if our share capital is divided into more than one class of Ordinary Shares, the rights attached to any such class may only be varied with the sanction of a resolution passed by a majority of two-thirds of the votes cast at a separate meeting of the holders of the Ordinary Shares of that class.
Amendment of Governing Documents. Under the Delaware General Corporation Law, a corporation’s governing documents may be amended with the approval of a majority of the outstanding Ordinary Shares entitled to vote, unless the certificate of incorporation provides otherwise. Under Cayman Islands law, our post-offering memorandum and articles of association may only be amended with a special resolution of our shareholders.
Rights of Non-resident or Foreign Shareholders. There are no limitations imposed by our post-offering memorandum and articles of association on the rights of non-resident or foreign shareholders to hold or exercise voting rights on our Ordinary Shares. In addition, there are no provisions in our post-offering memorandum and articles of association governing the ownership threshold above which shareholder ownership must be disclosed.
History of Securities Issuances
Reorganization
Pursuant to a group reorganization completed on August 26, 2022, we issued an aggregate of 9,374,000 Ordinary Shares, par value US$0.00025, in exchange for 100% equity interest of Multi Ways SG:
| Securities/Purchaser | Date of Sale or Issuance | Number of Securities | ||
| MWE Investments, a company incorporated in the BVI with limited liability on June 1, 2022 and owned as to 97.0% and 3.0% by Mr. Eng Hock Lim and Ms. Noi Geck Lee respectively | August 26, 2022 | 8,914,674 Ordinary Shares | ||
| Precious Choice Global, a company incorporated in the BVI with limited liability on September 13, 2018 and owned as to 100% by Mr. Ho Tong Ho. | August 26, 2022 | 459,326 Ordinary Shares |
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On January 27, 2023, for purposes of recapitalization in anticipation of the initial public offering, the Company amended its memorandum of association to effect a 1:4 forward stock split and to change the authorized share capital to $100,000 divided into 400,000,000 Ordinary Shares, of a par value of $0.00025 each. Concurrently, MWE Investments surrendered 12,077,700 Ordinary Shares to the Company. Precious Choice Global surrendered 622,300 Ordinary Shares to the Company. The issuances were exempt from registration under the Securities Act pursuant to Section 4(a)(2) of the Securities Act regarding transactions not involving a public offering or in reliance on Regulation S under the Securities Act regarding sales by an issuer in offshore transactions. No placement agent were involved in these issuances of securities.
Initial Public Offering
On April 5, 2023, the Company completed its initial public offering. In this offering, the Company issued 6,040,000 Ordinary Shares at a price of US$2.50 per share. The Company received gross proceeds in the amount of US$15.1 million before deducting any underwriting discounts or expenses. The Ordinary Shares began trading on April 3, 2023 on the NYSE American Market under the ticker symbol “MWG.” The issuance was registered on the registration statement on Form F-1 (file no. 333-269641) initially filed with the SEC on February 8, 2023 and declared effective on March 30, 2023.
Grants under the 2023 Equity Incentive Plan
On October 19, 2023, the Board of the Company approved and adopted the 2023 Equity Incentive Plan, which became effective on November 1, 2023.
On August 1, 2024, the Company issued 1,000,000 and 700,000 Ordinary Shares under the 2023 Equity Incentive Plan to Mr. Eng Hock Lim, the Chief Executive Officer, Executive Director, and Chairman of the Board of the Company, and Ms. Noi Geck Lee, the Chief Administration Officer and Executive Director of the Company, respectively, as compensation for their continued service in the Company.
On September 25, 2024, the Company issued 500,000 and 100,000 Ordinary Shares under the 2023 Equity Incentive Plan to Ms. Mei Jun Lim, the Deputy Chief Executive Officer of the Company, and Mr. Lu Chong Tan, the Chief Operating Officer of the Company, respectively, as compensation for their continued service in the Company.
On September 25, 2024, the Company issued an additional 190,000 Ordinary Shares under the 2023 Equity Incentive Plan to certain other employees of the Company as compensation for their continued service in the Company. The issuance was registered on the registration statement on Form S-8 (file no. 333-275277) initially filed with the SEC on November 2, 2023 and amended on January 23, 2025.
SECURITIES ELIGIBLE FOR FUTURE SALE
Rule 144
In general, under Rule 144 as currently in effect, once we have been subject to public company reporting requirements for at least 90 days, a person who is not deemed to have been one of our affiliates for purposes of the Securities Act at any time during the 90 days preceding a sale and who has beneficially owned the Ordinary Shares proposed to be sold for at least six months, including the holding period of any prior owner other than our affiliates, is entitled to sell those Ordinary Shares without complying with the manner of sale, volume limitation or notice provisions of Rule 144, subject to compliance with the public information requirements of Rule 144. If such a person has beneficially owned the Ordinary Shares proposed to be sold for at least one year, including the holding period of any prior owner other than our affiliates, then that person is entitled to sell those Ordinary Shares without complying with any of the requirements of Rule 144.
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In general, under Rule 144, as currently in effect, our affiliates or persons selling Ordinary Shares on behalf of our affiliates are entitled to sell within any three-month period beginning 90 days after the date of this prospectus, a number of Ordinary Shares that does not exceed the greater of:
| ● | 1% of the number of Ordinary Shares; or | |
| ● | the average weekly trading volume of the Ordinary Shares during the four calendar weeks preceding the filing of a notice on Form 144 with respect to such sale. |
Sales under Rule 144 by our affiliates or persons selling Ordinary Shares on behalf of our affiliates are also subject to certain manner of sale provisions and notice requirements and to the availability of current public information about us.
Rule 701
In general, under Rule 701 of the Securities Act as currently in effect, each of our employees, consultants, or advisors who purchases our Ordinary Shares from us in connection with a compensatory stock plan or other written agreement executed prior to the completion of this offering is eligible to resell those Ordinary Shares in reliance on Rule 144, but without compliance with some of the restrictions, including the holding period, contained in Rule 144. However, the Rule 701 Ordinary Shares would remain subject to lock-up arrangements and would only become eligible for sale when the lock-up period expires.
Regulation S
Regulation S provides generally that sales made in offshore transactions are not subject to the registration or prospectus-delivery requirements of the Securities Act.
MATERIAL INCOME TAX CONSIDERATION
Cayman Islands Taxation
The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to us levied by the government of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or, after execution, brought within the jurisdiction of the Cayman Islands. The Cayman Islands is not party to any double tax treaties that are applicable to any payments made to or by our Company. There are no exchange control regulations or currency restrictions in the Cayman Islands.
We have received an undertaking from the Governor in Cabinet of the Cayman Islands to the effect that, for a period of 20 years from the date of the undertaking, no law that thereafter is enacted in the Cayman Islands imposing any tax or duty to be levied on profits, income or on gains or appreciation shall apply to our Company or its operations; and that no tax to be levied on profits, income, gains or appreciations or which is in the nature of estate duty or inheritance tax shall be payable (a) on or in respect of the Ordinary Shares, debentures or other obligations of our Company; or (b) by way of the withholding in whole or in part of any relevant payment as defined in the Tax Concessions Act of the Cayman Islands.
Payments of dividends and capital in respect of our Ordinary Shares will not be subject to taxation in the Cayman Islands and no withholding will be required on the payment of a dividend or capital to any holder of our Ordinary Shares, nor will gains derived from the disposal of our Ordinary Shares be subject to Cayman Islands income or corporation tax.
No stamp duty is payable in respect of the issue of our Ordinary Shares or on an instrument of transfer in respect of our Ordinary Shares.
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Singapore Taxation
Dividend Distributions
All Singapore-tax resident companies are currently under the one-tier corporate tax system, or one-tier system.
Under the one-tier system, the income tax paid by a tax resident company is a final tax and its distributable profits can be distributed to shareholders as tax exempt (one-tier) dividends. Such dividends are tax exempt in the hands of a shareholder, regardless of the tax residence status, shareholding level or legal form of the shareholder.
Accordingly, dividends received in respect of the Ordinary Shares by either a resident or non-resident of Singapore are not subject to Singapore income tax (whether by withholding or otherwise), on the basis that we are a tax resident of Singapore and under the one-tier system.
Foreign shareholders are advised to consult their own tax advisers to take into account the tax laws of their respective countries of residence and the existence of any agreement for the avoidance of double taxation which their country of residence may have with Singapore.
Material United States Federal Income Tax Considerations
The following discussion is a summary of U.S. federal income tax considerations generally applicable to the ownership and disposition of our Ordinary Shares by U.S. Holders (as defined below) that acquire our Ordinary Shares and hold our Ordinary Shares as “capital assets” (generally, property held for investment) under the United States Internal Revenue Code of 1986, as amended (the “Code”). This discussion is based upon existing United States federal income tax law which is subject to differing interpretations or change, possibly with retroactive effect. There can be no assurance that the Internal Revenue Service, or the IRS, or a court will not take a contrary position. This discussion does not address all aspects of United States federal income taxation that may be relevant to particular investors in light of their specific circumstances, including investors subject to special tax rules (for example, certain financial institutions (including banks), cooperatives, pension plans, insurance companies, broker-dealers, traders in securities that have elected the mark-to-market method of accounting for their securities, partnerships and their partners, regulated investment companies, real estate investment trusts, and tax-exempt organizations (including private foundations)), investors who are not U.S. Holders, investors who own (directly, indirectly, or constructively) 10% or more of our stock (by vote or value), investors that will hold their Ordinary Shares as part of a straddle, hedge, conversion, constructive sale, or other integrated transaction for United States federal income tax purposes, or U.S. Holders that have a functional currency other than the U.S. dollar, all of whom may be subject to tax rules that differ significantly from those summarized below. In addition, this discussion does not discuss any non-United States tax, state or local tax, or non-income tax (such as the U.S. federal gift or estate tax) considerations, or any consequences under the alternative minimum tax or Medicare tax on net investment income. Each U.S. Holder is urged to consult its tax advisor regarding the United States federal, state, local, and non-United States income and other tax considerations of an investment in our Ordinary Shares.
General
For purposes of this discussion, a “U.S. Holder” is a beneficial owner of our Ordinary Shares that is, for United States federal income tax purposes, (i) an individual who is a citizen or resident of the United States, (ii) a corporation (or other entity treated as a corporation for United States federal income tax purposes) created in, or organized under the laws of, the United States or any state thereof or the District of Columbia, (iii) an estate the income of which is includible in gross income for United States federal income tax purposes regardless of its source, or (iv) a trust (A) the administration of which is subject to the primary supervision of a United States court and which has one or more United States persons who have the authority to control all substantial decisions of the trust or (B) that has otherwise validly elected to be treated as a United States person under the Code .
If a partnership (or other entity or arrangement treated as a partnership for United States federal income tax purposes) is a beneficial owner of our Ordinary Shares, the tax treatment of a partner in the partnership will generally depend upon the status of the partner as a U.S. Holder, as described above, and the activities of the partnership. Partnerships holding our Ordinary Shares and partners in such partnerships are urged to consult their tax advisors as to the particular United States federal income tax consequences of an investment in our Ordinary Shares.
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Dividends
The entire amount of any cash distribution paid with respect to our Ordinary Shares (including the amount of any non-U.S. taxes withheld therefrom, if any) generally will constitute dividends to the extent such distributions are paid out of our current or accumulated earnings and profits, as determined under United States federal income tax principles, and generally will be taxed as ordinary income in the year received by such U.S. Holder. To the extent amounts paid as distributions on the Ordinary Shares exceed our current or accumulated earnings and profits, such distributions will not be dividends, but instead will be treated first as a tax-free return of capital to the extent of the U.S. Holder’s adjusted tax basis, determined for federal income tax purposes, in the Ordinary Shares with respect to which the distribution is made, and thereafter as capital gain. However, we do not intend to compute (or to provide U.S. Holders with the information necessary to compute) our earnings and profits under United States federal income tax principles. Accordingly, a U.S. Holder will be unable to establish that a distribution is not out of earnings and profits and should expect to treat the full amount of each distribution as a “dividend” for United States federal income tax purposes.
Any dividends that we pay will generally be treated as income from foreign sources for United States foreign tax credit purposes and will generally constitute passive category income. Depending on the U.S. Holder’s particular facts and circumstances, a U.S. Holder may be eligible, subject to a number of complex limitations, to claim a foreign tax credit in respect of any foreign withholding taxes imposed (at a rate not exceeding any applicable treaty rate) on dividends received on our Ordinary Shares. A U.S. Holder who does not elect to claim a foreign tax credit for foreign tax withheld may instead claim a deduction, for United States federal income tax purposes, in respect of such withholdings, but only for a year in which such U.S. Holder elects to do so for all creditable foreign income taxes. The rules governing the foreign tax credit are complex. U.S. Holders are advised to consult their tax advisors regarding the availability of the foreign tax credit under their particular circumstances.
Dividends paid in non-U.S. currency will be included in the gross income of a U.S. Holder in a U.S. dollar amount calculated by reference to a spot market exchange rate in effect on the date that the dividends are received by the U.S. Holder, regardless of whether such foreign currency is in fact converted into U.S. dollars on such date. Such U.S. Holder will have a tax basis for United States federal income tax purposes in the foreign currency received equal to that U.S. dollar value. If such dividends are converted into U.S. dollars on the date of receipt, a U.S. Holder generally should not be required to recognize foreign currency gain or loss in respect thereof. If the foreign currency so received is not converted into U.S. dollars on the date of receipt, such U.S. Holder will have a basis in the foreign currency equal to its U.S. dollar value on the date of receipt. Any gain or loss on a subsequent conversion or other disposition of the foreign currency generally will be treated as ordinary income or loss to such U.S. Holder and generally will be income or loss from sources within the United States for foreign tax credit limitation purposes. U.S. Holders should consult their own tax advisors regarding the treatment of foreign currency gain or loss, if any, on any foreign currency received by a U.S. Holder that are converted into U.S. dollars on a date subsequent to receipt.
Sale or Other Disposition of Ordinary Shares
A U.S. Holder will generally recognize capital gain or loss upon a sale or other disposition of Ordinary Shares, in an amount equal to the difference between the amount realized and the U.S. Holder’s adjusted tax basis, determined for federal income tax purposes, in such Ordinary Shares, each amount determined in U.S. dollars. Any capital gain or loss will be long-term capital gain or loss if the Ordinary Shares have been held for more than one year and will generally be United States source gain or loss for United States foreign tax credit purposes. The deductibility of a capital loss may be subject to limitations, particularly with regard to shareholders who are individuals. Each U.S. Holder is advised to consult its tax advisor regarding the tax consequences if a foreign tax is imposed on a disposition of our Ordinary Shares, including the availability of the foreign tax credit under its particular circumstances.
A U.S. Holder that receives Singapore dollars or another currency other than U.S. dollars on the disposition of our Ordinary Shares will realize an amount equal to the U.S. dollar value of the non-U.S. currency received at the spot rate on the date of sale (or, if the Ordinary Shares are traded on a recognized exchange and in the case of cash basis and electing accrual basis U.S. Holders, the settlement date). An accrual basis U.S. Holder that does not elect to determine the amount realized using the spot rate on the settlement date will recognize foreign currency gain or loss equal to the difference between the U.S. dollar value of the amount received based on the spot market exchange rates in effect on the date of sale or other disposition and the settlement date. A U.S. Holder will have a tax basis in the currency received equal to the U.S. dollar value of the currency received on the settlement date. Any gain or loss on a subsequent disposition or conversion of the currency will be United States source ordinary income or loss.
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Passive Foreign Investment Company Considerations
For United States federal income tax purposes, a non-United States corporation, such as our Company, will be treated as a “passive foreign investment company,” or “PFIC” if, in the case of any particular taxable year, either (a) 75% or more of our gross income for such year consists of certain types of “passive” income or (b) 50% or more of the value of our assets (generally determined on the basis of a quarterly average) during such year produce or are held for the production of passive income. Based upon our current and expected income and assets (including goodwill and taking into account the expected proceeds from this offering) and the expected market price of our Ordinary Shares following this offering, we do not expect to be a PFIC for the current taxable year or the foreseeable future.
However, while we do not expect to be or become a PFIC, no assurance can be given in this regard because the determination of whether we are or will become a PFIC for any taxable year is a fact-intensive inquiry made annually that depends, in part, upon the composition and classification of our income and assets. Fluctuations in the market price of our Ordinary Shares may cause us to be or become a PFIC for the current or subsequent taxable years because the value of our assets for the purpose of the asset test, including the value of our goodwill and other unbooked intangibles, may be determined by reference to the market price of our Ordinary Shares (which may be volatile). The composition of our income and assets may also be affected by how, and how quickly, we use our liquid assets and the cash raised in this offering. It is also possible that the Internal Revenue Service may challenge our classification of certain income or assets for purposes of the analysis set forth in subparagraphs (a) and (b), above or the valuation of our goodwill and other unbooked intangibles, which may result in our company being or becoming a PFIC for the current or future taxable years.
If we are classified as a PFIC for any taxable year during which a U.S. Holder holds our Ordinary Shares, and unless the U.S. Holder makes a mark-to-market election (as described below), the U.S. Holder will generally be subject to special tax rules on (i) any excess distribution that we make to the U.S. Holder (which generally means any distribution paid during a taxable year to a U.S. Holder that is greater than 125% of the average annual distributions paid in the three preceding taxable years or, if shorter, the U.S. Holder’s holding period for the Ordinary Shares), and (ii) any gain realized on the sale or other disposition, including, under certain circumstances, a pledge, of Ordinary Shares. Under the PFIC rules:
| ● | such excess distribution and/or gain will be allocated ratably over the U.S. Holder’s holding period for the Ordinary Shares; | |
| ● | such amount allocated to the current taxable year and any taxable years in the U.S. Holder’s holding period prior to the first taxable year in which we are a PFIC, each a pre-PFIC year, will be taxable as ordinary income; | |
| ● | such amount allocated to each prior taxable year, other than a pre-PFIC year, will be subject to tax at the highest tax rate in effect applicable to the U.S. Holder for that year; and | |
| ● | an interest charge generally applicable to underpayments of tax will be imposed on the tax attributable to each prior taxable year, other than a pre-PFIC year. |
If we are a PFIC for any taxable year during which a U.S. Holder holds our Ordinary Shares and we own any equity in a non-United States entity that is also a PFIC, or a lower-tier PFIC, such U.S. Holder would be treated as owning a proportionate amount (by value) of the shares of the lower-tier PFIC for purposes of the application of these rules. U.S. Holders are advised to consult their tax advisors regarding the application of the PFIC rules to any of the entities in which we may own equity.
As an alternative to the foregoing rules, a U.S. Holder of “marketable stock” in a PFIC may make a mark-to-market election with respect to such stock, provided that certain requirements are met. The mark-to-market election is available only for stock that is regularly traded on a national securities exchange that is registered with the SEC, or on a foreign exchange or market that the IRS determines is a qualified exchange that has rules sufficient to ensure that the market price represents a legitimate and sound fair market value. Although we have applied to list our Ordinary Shares on the NYSE American, we cannot guarantee that our listing will be approved. Furthermore, we cannot guarantee that, once listed, our Ordinary Shares will continue to be listed and regularly traded on such exchange. U.S. Holders are advised to consult their tax advisors as to whether the Ordinary Shares are considered marketable for these purposes.
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If an effective mark-to-market election is made with respect to our Ordinary Shares, the U.S. Holder will generally (i) include as ordinary income for each taxable year that we are a PFIC the excess, if any, of the fair market value of Ordinary Shares held at the end of the taxable year over its adjusted tax basis of such Ordinary Shares and (ii) deduct as an ordinary loss the excess, if any, of its adjusted tax basis of the Ordinary Shares held at the end of the taxable year over the fair market value of such Ordinary Shares held at the end of the taxable year, but only to the extent of the net amount previously included in income as a result of the mark-to-market election. The U.S. Holder’s adjusted tax basis in the Ordinary Shares would be adjusted to reflect any income or loss resulting from the mark-to-market election. If a U.S. Holder makes an effective mark-to-market election, in each year that we are a PFIC any gain recognized upon the sale or other disposition of the Ordinary Shares will be treated as ordinary income and loss will be treated as ordinary loss, but only to the extent of the net amount previously included in income as a result of the mark-to-market election.
If a U.S. Holder makes a mark-to-market election in respect of a PFIC and such corporation ceases to be a PFIC, the U.S. Holder will not be required to take into account the mark-to-market gain or loss described above during any period that such corporation is not a PFIC.
Because a mark-to-market election generally cannot be made for any lower-tier PFICs that a PFIC may own, a U.S. Holder who makes a mark-to-market election with respect to our Ordinary Shares may continue to be subject to the general PFIC rules with respect to such U.S. Holder’s indirect interest in any of our non-United States subsidiaries if any of them is a PFIC.
If a U.S. Holder owns our Ordinary Shares during any taxable year that we are a PFIC, such holder would generally be required to file an annual IRS Form 8621. Each U.S. Holder is advised to consult its tax advisor regarding the potential tax consequences to such holder if we are or become a PFIC, including the possibility of making a mark-to-market election.
THE DISCUSSION ABOVE IS A GENERAL SUMMARY. IT DOES NOT COVER ALL TAX MATTERS THAT MAY BE OF IMPORTANCE TO A PARTICULAR INVESTOR. EACH PROSPECTIVE INVESTOR IN THE OUR ORDINARY SHARES IS URGED TO CONSULT ITS OWN TAX ADVISER ABOUT THE TAX CONSEQUENCES TO IT OF OWNING AND DISPOSING OF OUR ORDINARY SHARES IN LIGHT OF SUCH PROSPECTIVE INVESTOR’S OWN CIRCUMSTANCES.
ENFORCEABILITY OF CIVIL LIABILITIES
We are incorporated under the laws of the Cayman Islands as an exempted company with limited liability. We were incorporated under the laws of the Cayman Islands because of certain benefits associated with being a Cayman Islands company, such as political and economic stability, an effective judicial system, a favorable tax system, the absence of foreign exchange control or currency restrictions, and the availability of professional and support services. The Cayman Islands, however, has a less developed body of securities laws as compared to the U.S. and provides significantly less protection for investors than the U.S. Additionally, Cayman Islands companies may not have standing to sue in the federal courts of the U.S.
Most of our operations are conducted in Singapore and a majority of our consolidated assets are located outside of the United States. In addition, all of our Directors and Executive Officers are nationals or residents of countries other than the United States, and all or a substantial portion of their assets are located outside the U.S. As a result, it may be difficult for investors to effect service of process within the U.S. upon us or these persons, or to enforce against us or them judgments obtained in U.S. courts, including judgments predicated upon the civil liability provisions of the U.S. federal securities laws or securities laws of any U.S. state.
Although we are incorporated outside the United States, we have appointed Cogency Global Inc. as our agent to receive service of process with respect to any action brought against us in the United States District Court for the Southern District of New York under the U.S. federal securities laws or securities laws of any U.S. state or any action brought against us in the Supreme Court of the State of New York in the County of New York under the securities laws of the State of New York.
Cayman Islands
Conyers Dill & Pearman, our counsel with respect to the laws of the Cayman Islands, has advised us that there is uncertainty as to whether the courts of the Cayman Islands would (i) recognize or enforce judgments of U.S. courts obtained against us or our Directors or Executive Officers predicated upon the civil liability provisions of the U.S. federal securities laws or securities laws of any U.S. state or (ii) entertain original actions brought in the Cayman Islands against us or our Directors or Executive Officers predicated upon the U.S. federal securities laws or securities laws of any U.S. state.
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We have been advised by Conyers Dill & Pearman that, although there is no statutory enforcement in the Cayman Islands of judgments obtained in the federal or state courts of the United States (and the Cayman Islands are not a party to any treaties for the reciprocal enforcement or recognition of such judgments with the United States), the courts of the Cayman Islands may recognize as a valid judgment, a final and conclusive judgment in personam obtained in the federal or state courts of the United States against the Company under which a sum of money is payable (other than a sum of money payable in respect of multiple damages, taxes or other charges of a like nature or in respect of a fine or other penalty) or, in certain circumstances, an in personam judgment for non-monetary relief, and may give a judgment based thereon, provided that (a) such courts had proper jurisdiction over the parties subject to such judgment; (b) such courts did not contravene the rules of natural justice of the Cayman Islands; (c) such judgment was not obtained by fraud; (d) the enforcement of the judgment would not be contrary to the public policy of the Cayman Islands; (e)no new admissible evidence relevant to the action is submitted prior to the rendering of the judgment by the courts of the Cayman Islands; and (f) there is due compliance with the correct procedures under the laws of the Cayman Islands. However, the Cayman Islands courts are unlikely to enforce a judgment obtained from United States courts under civil liability provisions of the U.S. federal securities law if such judgment is determined by the courts of the Cayman Islands to give rise to obligations to make payments that are penal or punitive in nature. Because such a determination has not yet been made by a court of the Cayman Islands, it is uncertain whether such civil liability judgments from U.S. courts would be enforceable in the Cayman Islands. A Cayman Islands court may stay enforcement proceedings if concurrent proceedings are being brought elsewhere.
Singapore
There is uncertainty as to whether judgments of courts in the United States based upon the civil liability provisions of the securities laws of the United States or any state or territory of the United States will be recognized and/or enforced by the Singapore courts, and there is doubt as to whether the Singapore courts will enter judgments in original actions brought in the Singapore courts based solely on the civil liability provisions of these securities laws. An in personam final and conclusive judgment in the federal or state courts of the United States under which a fixed or ascertainable sum of money is payable may generally be enforced as a debt in the Singapore courts under the common law as long as it is established that the Singapore courts have jurisdiction over the judgment debtor. However, the Singapore courts are unlikely to enforce a foreign judgment if (a) the foreign judgment is inconsistent with a prior local judgment that is binding on the same parties; (b) the recognition or enforcement of the foreign judgment would contravene the public policy of Singapore; (c) the proceedings in which the foreign judgment was obtained were contrary to principles of natural justice; (d) the foreign judgment was obtained by fraud; or (e) the enforcement of the foreign judgment amounts to the direct or indirect enforcement of a foreign penal, revenue or other public law.
In particular, the Singapore Courts may potentially not allow the enforcement of any foreign judgment for a sum payable in respect of taxes, fines, penalties or other similar charges, including the judgments of courts in the United States based upon the civil liability provisions of the securities laws of the United States or any state or territory of the United States. In respect of civil liability provisions of the United States federal and state securities laws that permit punitive damages against us and our Directors or Executive Officers, we are unaware of any decision by the Singapore courts that has considered the specific issue of whether a judgment of a United States court based on such civil liability provisions of the securities laws of the United States or any state or territory of the United States is enforceable in Singapore.
Further, all of our Directors and Executive Officers reside outside the United States. In addition, a majority of our assets and the assets of such persons are located outside the United States. As a result, it may be difficult to enforce in the United States any judgment obtained in the United States against us or any of such persons, including judgments based on the civil liability provisions of the U.S. securities laws. In addition, in original actions brought in courts in jurisdictions located outside the United States, it may be difficult for investors to enforce liabilities based upon U.S. securities laws.
Accordingly, there can be no assurance that the Singapore courts would enforce against us, our Directors and/or our officers, judgments obtained in the United States which based on the civil liability provisions of the federal securities laws of the United States.
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PLAN OF DISTRIBUTION
Pursuant to a placement agency agreement, we have engaged Spartan Capital Securities, LLC (the “placement agent”) to act as our placement agent on a reasonable best efforts basis in connection with this offering. The placement agent is not purchasing or selling any such securities, nor are they required to arrange for the purchase and sale of any specific number or dollar amount of such securities, other than to use their “reasonable best efforts,” to arrange for the sale of such securities by us. The terms of this offering are subject to market conditions and negotiations between us, the placement agent, and prospective investors. The placement agency agreement does not give rise to any commitment by the placement agent to purchase any of our securities, and the placement agent will have no authority to bind us by virtue of the placement agency agreement. Further, the placement agent does not guarantee that they will be able to raise new capital in any prospective offering. The placement agent may engage sub-agents or selected dealers to assist with this offering.
We may enter into a subscription agreement (the “Subscription Agreement”) directly with each investor in connection with this offering. Investors purchasing securities offered hereby will have the option to execute a Subscription Agreement with us. In addition to the rights and remedies available to all investors in this offering under U.S. federal and U.S. state securities laws, the investors which enter into a securities purchase agreement will also be able to bring claims of breach of contract against us. Investors who do not enter into a subscription agreement shall rely solely on this prospectus in connection with the purchase of our securities in this offering. The form of the Subscription Agreement is included as an exhibit to the Registration Statement of which this prospectus forms a part. We have agreed to indemnify the investors against certain losses resulting from our breach of any of our representations, warranties, or covenants under agreements with the purchasers as well as under certain other circumstances described in the Subscription Agreement. We may not sell the entire amount, or any amount, of securities offered pursuant to this prospectus.
We will deliver to the investors the ordinary shares electronically upon closing and receipt of investor funds for the purchase of the securities offered pursuant to this prospectus. We intend to complete one closing of this offering, but may undertake one or more additional closings for the sale of the additional securities to the investors in the initial closing.
Placement Agent Fees, Commissions and Expenses
We have agreed to pay to the placement agent a cash fee equal to five percent (5.0%) of the aggregate gross proceeds raised in this offering.
We have also agreed to pay a non-accountable expense allowance equal to one percent (1.0%) of the gross proceeds of this offering and to reimburse the placement agent up to $50,000 for its actual and accountable out-of-pocket expenses related to the offering, including any fees and disbursements of the placement agent’s legal counsel and, if applicable, any electronic road show service used in connection with the offering.
The following table shows the public offering price, placement agent’s fees and proceeds, before expenses, to us.
| Per Share | Total (assuming maximum offering) | |||||||
| Offering price(1) | $ | 0.224700 | $ | 2,022,300 | ||||
| Placement agent’s fees(2) | $ | 0.011235 | $ | 101,115 | ||||
| Proceeds to the Company before expenses(3) | $ | 0.213465 | $ | 1,921,185 | ||||
We estimate the total expenses payable by us for this offering to be approximately $286,350, which amount includes (i) a placement agent’s fee of $101,115, assuming the sale of all of the securities we are offering; (ii) placement agent’s non-accountable expense allowance of $20,223, (iii) the reimbursement of placement agent’s expenses in the amount of up to $50,000 in connection with this offering; and (iv) other estimated expenses of approximately $115,012, which include legal, accounting, printing costs and various fees associated with the registration of the securities.
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Escrow Account and Deposit of Proceeds
The proceeds from the sale of the Ordinary Shares in this offering will be deposited in a separate non-interest bearing bank account (limited to funds received on our behalf). No interest will be available for payment to either us or the investors. The purpose of the escrow account is for (i) the holding of amounts of subscription monies which are collected through the banking system and (ii) the disbursement of collected funds.
We intend to complete one closing of this offering, but may undertake one or more closings on a rolling basis. Any such funds that the escrow agent receives shall be held in escrow until the applicable closing of the offering, and then used to complete securities purchases, or returned if this offering fails to close. In event that the offering is terminated, all subscription funds being held in the escrow account at the time of such termination will be returned to investors.
Right of First Refusal
We have agreed to grant the placement agent the right of first refusal, for a period of six (6) months after the closing of this offering (but no longer than three (3) years from commencement of sales of this offering), to act as the sole investment banker, sole book-runner, or sole placement agent for any future public or private equity or debt offering, including any equity-linked financing (each, a “Subject Transaction”), conducted by the Company or any successor to the Company.
Tail Period
For a period of six (6) months from the closing date of this offering, in the event that we receive any proceeds from any Subject Transaction to the extent that such financing or capital is provided to us by investors whom the placement agent had introduced to us, we have agreed to pay to the placement agent a cash fee equal to five percent (5%) of such gross proceeds.
Securities Issuance Standstill
We have also agreed, subject to certain exceptions set forth in the placement agency agreements, without the prior written consent of the placement agent, we will not, for a period of 90 days after the date of the placement agency agreement: (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of capital stock of the Company or any securities convertible into or exercisable or exchangeable for shares of capital stock of the Company; (ii) file or cause to be filed any registration statement with the SEC relating to the offering of any shares of capital stock of the Company or any securities convertible into or exercisable or exchangeable for shares of capital stock of the Company; (iii) complete any offering of debt securities of the Company, other than entering into a line of credit with a traditional bank; or (iv) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of capital stock of the Company.
Regulation M
The placement agent may be deemed to be underwriters within the meaning of Section 2(a)(11) of the Securities Act and any fees received by them and any profit realized on the sale of the securities by them while acting as principal might be deemed to be underwriting commissions under the Securities Act. The placement agent will be required to comply with the requirements of the Securities Act and the Exchange Act including, without limitation, Rule 10b-5 and Regulation M under the Exchange Act. These rules and regulations may limit the timing of purchases and sales of the securities by the placement agent. Under these rules and regulations, the placement agent may not (i) engage in any stabilization activity in connection with our securities; and (ii) bid for or purchase any of our securities or attempt to induce any person to purchase any of our securities, other than as permitted under the Exchange Act, until they have completed their participation in the distribution.
Other Relationships
The placement agent acted as the representative of the underwriters of the Company’s initial public offering and received compensation in the form of (i) a discount of eight present (8.0%), (ii) a non-accountable expense allowance equal to one percent (1.0%) of the gross proceeds of the initial public offering, and (iii) the reimbursement of out-of-pocket accountable expenses of $170,000.
From time to time, the placement agent may provide various advisory, investment and commercial banking and other services to us in the ordinary course of business, for which it may receive customary fees and commissions. However, except as disclosed in this prospectus, we have no present arrangements with the placement agent for any services.
We have agreed to indemnify the placement agent against certain liabilities, including liabilities under the Securities Act and liabilities arising from breaches of representations and warranties contained in the placement agency agreement. If we are unable to provide this indemnification, we will contribute to payments that the placement agent may be required to make for these liabilities.
Affiliations
The placement agent and its respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities. The placement agent and its affiliates may from time to time in the future engage with us and perform services for us or in the ordinary course of their business for which they will receive customary fees and expenses. In the ordinary course of their various business activities, the placement agent and its respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers, and such investment and securities activities may involve securities and/or instruments of us. The placement agent and its respective affiliates may also make investment recommendations and/or publish or express independent research views in respect of these securities or instruments and may at any time hold, or recommend to clients that they acquire, long and/or short positions in these securities and instruments.
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Electronic Distribution
A prospectus in electronic format may be made available on websites or through other online services maintained by the placement agent of this offering, or by its affiliates. Other than the prospectus in electronic format, the information on the placement agent’s website and any information contained in any other website maintained by the placement agent is not part of this prospectus or the registration statement of which this prospectus forms a part, has not been approved and/or endorsed by us or the placement agent in its capacity as the placement agent, and should not be relied upon by investors.
In connection with this offering, the placement agent or certain securities dealers may distribute prospectuses by electronic means, such as e-mail.
Selling Restrictions
No action has been taken in any jurisdiction (except in the United States) that would permit a public offering of the Ordinary Shares, or the possession, circulation or distribution of this prospectus or any other material relating to us or the Ordinary Shares, where action for that purpose is required. Accordingly, the Ordinary Shares may not be offered or sold, directly or indirectly, and neither this prospectus nor any other offering material or advertisements in connection with the Ordinary Shares may be distributed or published, in or from any country or jurisdiction except in compliance with any applicable rules and regulations of any such country or jurisdiction.
Transfer Agent and Registrar
The transfer agent and registrar for the Ordinary Shares is VStock Transfer LLC, 18 Lafayette Pl, Woodmere, NY 11598.
Listing
Our Ordinary Shares are listed on the NYSE American Market under the trading symbol “MWG.”
EXPENSES RELATING TO THIS OFFERING
Set forth below is an itemization of the total expenses that we expect to incur in connection with this offering, excluding the placement agent’s fees and accountable and non-accountable expenses reimbursements. With the exception of the SEC registration fee and the FINRA filing fee, all amounts are estimates.
| Securities and Exchange Commission Registration Fee | $ | 432 | ||
| FINRA Filing Fee | $ | 923 | ||
| Legal Fees and Expenses | $ | 76,690 | ||
| Accounting Fees and Expenses | $ | 25,000 | ||
| Miscellaneous Expenses | $ | 11,967 | ||
| Total Expenses | $ | 115,012 |
We will bear these expenses and the placement agent’s fees and accountable and non-accountable expenses incurred in connection with the offer and sale of the securities by us.
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LEGAL MATTERS
The validity of the Ordinary Shares offered hereby and certain legal matters as to Cayman Islands law will be passed upon for us by Conyers Dill & Pearman. Ortoli Rosenstadt LLP is acting as counsel to our company regarding U.S. securities law matters. The current address of Conyers Dill & Pearman is 29th Floor, One Exchange Square, 8 Connaught Place, Central, Hong Kong. The current address of Ortoli Rosenstadt LLP is 366 Madison Avenue, 3rd Floor, New York, NY 10017. Sichenzia Ross Ference LLP is acting as counsel to the placement agent.
EXPERTS
The financial statements of Multi Ways Holdings Limited as of December 31, 2023 and 2022 and for the years respectively then ended included in this prospectus have been so included in reliance on the report of OneStop Assurance PAC, an independent registered public accounting firm, given on the authority of said firm as experts in accounting and auditing. OneStop Assurance PAC has offices at 10 Anson Road, #06-15 International Plaza, Singapore 079903. Their telephone number is (65) 9644 9531.
INTERESTS OF EXPERTS AND COUNSEL
None of the named experts or legal counsel was employed on a contingent basis, owns an amount of Ordinary Shares in our company which is material to that person, or has a material, direct or indirect economic interest in our company or that depends on the success of the offering.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We are subject to periodic reporting and other informational requirements of the Exchange Act, as applicable to foreign private issuers. Accordingly, we will be required to file reports, including annual reports on Form 20-F, and other information with the SEC. As a foreign private issuer, we are exempt from the rules of the Exchange Act prescribing the furnishing and content of proxy statements to shareholders under the federal proxy rules contained in Sections 14(a), (b) and (c) of the Exchange Act, and our Directors, Executive Officers and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act.
You can request copies of these documents upon payment of a duplicating fee, by writing to the SEC. The SEC also maintains a website that contains reports, proxy statements and other information about issuers, such as us, who file electronically with the SEC. The address of that website is http://www.sec.gov. The information on that website is not a part of this prospectus.
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INDEX TO AND SUBSIDIARIES UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
INDEX TO MULTI WAYS HOLDINGS LIMITED AND SUBSIDIARIES AUDITED CONSOLIDATED FINANCIAL STATEMENTS
| F-1 |
MULTI WAYS HOLDINGS LIMITED AND SUBSIDIARIES
UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
(Currency expressed in United States Dollars (“$”))
As of June 30, 2024 | As of December 31, 2023 | |||||||
| $’000 | $’000 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | ||||||||
| Accounts receivable, net | ||||||||
| Inventories | ||||||||
| Amounts due from related parties | ||||||||
| Financial assets available for sales | ||||||||
| Deposits, prepayments and other receivables | ||||||||
| Total current assets | ||||||||
| Non-current assets | ||||||||
| Property and equipment, net | ||||||||
| Right-of-use assets | ||||||||
| Investment in equity securities | ||||||||
| Deferred tax assets | ||||||||
| Total non-current assets | ||||||||
| TOTAL ASSETS | ||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | ||||||||
| Customer deposits | ||||||||
| Amounts due to related parties | ||||||||
| Bank borrowings | ||||||||
| Lease liabilities | ||||||||
| Income tax payable | ||||||||
| Total current liabilities | ||||||||
| Long-term liabilities | ||||||||
| Bank borrowings | ||||||||
| Lease liabilities | ||||||||
| Total long-term liabilities | ||||||||
| TOTAL LIABILITIES | ||||||||
| Shareholders’ equity | ||||||||
| Ordinary share, par value $, Ordinary Shares authorized, Ordinary Shares issued and outstanding | ||||||||
| Additional paid-in capital | ||||||||
| Retained earnings | ||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Total shareholders’ equity | ||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
See accompanying notes to consolidated financial statements.
| F-2 |
MULTI WAYS HOLDINGS LIMITED AND SUBSIDIARIES
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Currency expressed in United States Dollars (“$”))
| Six Months ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| $’000 | $’000 | |||||||
| Revenue, net | ||||||||
| Cost of revenue | ( | ) | ( | ) | ||||
| Gross profit | ||||||||
| Operating cost and expenses: | ||||||||
| Selling and distribution | ( | ) | ( | ) | ||||
| General and administrative | ( | ) | ( | ) | ||||
| Total operating cost and expenses | ( | ) | ( | ) | ||||
| Profit (Loss) from operations | ( | ) | ||||||
| Other income (expense): | ||||||||
| Gain from disposal of plant and equipment | ||||||||
| Interest income | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Dividend income | ||||||||
| Government grant | ||||||||
| Foreign exchange loss, net | ( | ) | ( | ) | ||||
| Other income | ||||||||
| Total other expense, net | ( | ) | ( | ) | ||||
| Income (Loss) before income taxes | ( | ) | ||||||
| Income tax expense | ( | ) | ( | ) | ||||
| NET INCOME (LOSS) | ( | ) | ||||||
| Less: Net income attributable to non-controlling interest | ||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO EQUITY HOLDER OF THE COMPANY | ( | ) | ||||||
| Other comprehensive (loss) income: | ||||||||
| Foreign currency translation adjustment | ( | ) | ||||||
| COMPREHENSIVE LOSS | ( | ) | ( | ) | ||||
| Net income (loss) per Ordinary Share | ||||||||
| Basic and Diluted | ) | |||||||
| Weighted average number of Ordinary Shares outstanding | ||||||||
| Basic and Diluted | ||||||||
See accompanying notes to consolidated financial statements.
| F-3 |
MULTI WAYS HOLDINGS LIMITED AND SUBSIDIARIES
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Currency expressed in United States Dollars (“$”), except for number of shares)
| Ordinary Shares | Additional | Accumulated other | Total shareholders’ equity attributable to the | Non- | Total | |||||||||||||||||||||||||||
No. of shares | Amount | paid-in capital | comprehensive income (loss) | Retained earnings | controlling shareholder | controlling interest | shareholders’ equity | |||||||||||||||||||||||||
| ’000 | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | |||||||||||||||||||||||||
| Balance as of January 1, 2023 | ( | ) | ||||||||||||||||||||||||||||||
| Issue of new shares, net of deferred offering costs | ||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | |||||||||||||||||||||||||||||||
| Net income for the period | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance as of 30 June 2023 | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Ordinary Shares | Additional | Accumulated other | Total | |||||||||||||||||||||
| No. of | paid-in | comprehensive | Retained | shareholders | ||||||||||||||||||||
| shares | Amount | capital | loss | earnings | equity | |||||||||||||||||||
| ’000 | $’000 | $’000 | $’000 | $’000 | $’000 | |||||||||||||||||||
| Balance as of January 1, 2024 | ( | ) | ||||||||||||||||||||||
| Foreign currency translation adjustment | - | ( | ) | ( | ) | |||||||||||||||||||
| Net income for the period | - | |||||||||||||||||||||||
| Balance as of June 30, 2024 | ( | ) | ||||||||||||||||||||||
See accompanying notes to consolidated financial statements.
| F-4 |
MULTI WAYS HOLDINGS LIMITED AND SUBSIDIARIES
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Currency expressed in United States Dollars (“$”))
| Six Months ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| $’000 | $’000 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income (loss) | ( | ) | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities | ||||||||
| Depreciation of property and equipment | ||||||||
| Depreciation of right-of-use assets | ||||||||
| Gain on disposal of property and equipment | ( | ) | ( | ) | ||||
| Gain on disposal on financial assets, available for sale | ( | ) | ( | ) | ||||
| Gain on fair value adjustment on financial assets, available for sales | ( | ) | ( | ) | ||||
| Interest expenses | ||||||||
| Income tax paid | ( | ) | ( | ) | ||||
| Change in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Inventories | ( | ) | ( | ) | ||||
| Accounts payable and accrued liabilities | ||||||||
| Customer deposits | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Proceeds from disposal of property and equipment | ||||||||
| Additional of right-of-use assets | ( | ) | ||||||
| Purchase of financial assets, available for sale | ( | ) | ( | ) | ||||
| Proceeds from disposal on financial assets, available for sale | ||||||||
| Investment in equity securities | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from issuance of new shares | ||||||||
| Proceeds from bank borrowings | ||||||||
| Additional of right-of-use assets | ||||||||
| Repayment of bank borrowings | ( | ) | ( | ) | ||||
| Proceeds from lease liabilities | ||||||||
| Repayment of lease liabilities | ( | ) | ( | ) | ||||
| Interest paid | ( | ) | ( | ) | ||||
| Net cash used in financing activities | ||||||||
Net change in cash and cash equivalent | ( | ) | ||||||
| Effect on exchange rate change on cash and cash equivalents | ( | ) | ||||||
| BEGINNING OF PERIOD | ||||||||
| END OF PERIOD | ||||||||
| SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||||
| Cash refund for income taxes | ||||||||
| Cash paid for interest | ||||||||
See accompanying notes to consolidated financial statements.
| F-5 |
MULTI WAYS HOLDINGS LIMITED AND SUBSIDIARIES
NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2024 AND 2023
(Currency expressed in United States Dollars (“$”))
NOTE－1 BUSINESS OVERVIEW AND BASIS OF PRESENTATION
Multi
Ways Holdings Limited (“MWH”) is incorporated in the Cayman Islands on June 2, 2022 under the Companies Act as an exempted
company with limited liability. The authorized share capital is $
MWH, through its subsidiaries (collectively referred to as the “Company”) are mainly engaged in the sale and rental of the heavy construction equipment in Singapore, and global sales primarily generated from the Asia Pacific. The Company has over twenty (20) years of experience in supplying heavy construction equipment and rental businesses in the construction industry.
Description of subsidiaries incorporated and controlled by the Company
| Name | Background | Effective ownership | ||
| MWE Holdings Limited (“MWE Holdings”) | British Virgin Islands company Incorporated on June 15, 2022 Issued
and outstanding ordinary shares for $ Investment holding Provision of investment holding |
|||
| Multi Ways Equipment Pte Ltd (“Multi Ways SG”) | Singaporean company Incorporated on August 22, 2002 Issued
and outstanding ordinary shares for S$ Wholesale and retail trading and renting of industrial machinery and equipment |
Reorganization
Since 2022, the Company completed several transactions for the purposes of a group reorganization, as below:-
On
August 26, 2022, Mr. James Lim and Precious Choice Global entered into the Acquisition Agreement, pursuant to which Precious Choice Global
acquired Shares in Multi Ways SG (representing approximately
On
August 26, 2022, Mr. Eng Hock Lim and Ms. Noi Geck Lee, Precious Choice Global and MWH entered into a reorganization agreement, pursuant
to which Mr. Eng Hock Lim and Ms. Noi Geck Lee and Precious Choice Global transferred their respective and and
Shares in Multi Ways SG to MWH’s nominee, MWE Holdings. The consideration is settled by MWH allotting and issuing
Prior
to a group reorganization, MWE Holdings, the holding company of a direct wholly-owned company comprised of Multi Ways SG. MWE Holdings
was held as to
| F-6 |
During the years presented in these consolidated financial statements, the control of the entities has never changed (always under the control of MWH). Accordingly, the combination has been treated as a corporate restructuring (“Reorganization”) of entities under common control and thus the current capital structure has been retroactively presented in prior periods as if such structure existed at that time and in accordance with ASC 805-50-45-5, the entities under common control are presented on a combined basis for all periods to which such entities were under common control. The consolidation of MWH and its subsidiaries has been accounted for at historical cost and prepared on the basis as if the aforementioned transactions had become effective as of the beginning of the first period presented in the accompanying consolidated financial statements.
On
April 5, 2023, the Company completed its initial public offering. In this offering, the Company issued Ordinary Shares at a
price of $ per share. The Company received gross proceeds in the amount of approximately $
The total number of ordinary shares issued and outstanding as of June 30, 2024 was shares. The Company’s ordinary shares began trading on the NYSE American Market on April 5, 2023 under the ticker symbol “MWG.”
Upon
completion of issuance of the shares under the Offering, Multi Ways is effectively owned
Deferred Offering Costs
Deferred offering costs consists of capitalized underwriting, legal, accounting and other expenses incurred through the balance sheet date that are directly related the proposed Public Offering and will be charged against the proceeds received upon completion of the offering, should the offering be unsuccessful, these deferred costs will be charged to operations.
The
Company incurred approximately $
NOTE－2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These accompanying consolidated financial statements reflect the application of certain significant accounting policies as described in this note and elsewhere in the accompanying consolidated financial statements and notes.
● Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
● Use of Estimates and Assumptions
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the periods presented. Significant accounting estimates in the period include the allowance for doubtful accounts on accounts and other receivables, impairment loss on inventories, assumptions used in assessing right-of-use assets and impairment of long-lived assets, and deferred tax valuation allowance.
The inputs into the management’s judgments and estimates consider the economic implications of COVID-19 on the Company’s critical and significant accounting estimates. Actual results could differ from these estimates.
● Basis of Consolidation
The consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant inter-company balances and transactions within the Company have been eliminated upon consolidation.
| F-7 |
● Foreign Currency Translation and Transaction
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statement of operations.
The reporting currency of the Company is United States Dollar (“US$”) and the accompanying consolidated financial statements have been expressed in US$. In addition, the Company and subsidiaries are operating in Singapore, maintain their books and record in their local currency, Singapore Dollars (“S$”), which is a functional currency as being the primary currency of the economic environment in which their operations are conducted. In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not US$ are translated into US$, in accordance with ASC Topic 830-30, Translation of Financial Statement, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statements of changes in shareholders’ equity.
Translation of amounts from S$ into $ has been made at the following exchange rates for the six months ended June 30, 2024 and 2023:
| June 30, 2024 | June 30, 2023 | |||||||
| Year-end $:S$ exchange rate | ||||||||
Translation gains and losses that arise from exchange rate fluctuations from transactions denominated in a currency other than the functional currency are translated, as the case may be, at the rate on the date of the transaction and included in the results of operations as incurred.
● Cash and Cash Equivalents
Cash and cash equivalents consist primarily of cash in readily available checking and saving accounts. Cash equivalents consist of highly liquid investments that are readily convertible to cash and that mature within three months or less from the date of purchase. The carrying amounts approximate fair value due to the short maturities of these instruments. The Company maintains most of its bank accounts in Singapore.
● Restricted Cash
Restricted cash held by foreign subsidiaries related to fixed deposits within or more than twelve months that also serve as security deposits and guarantees under the banking facilities.
● Accounts Receivable, net
Accounts receivable include trade accounts due from customers in the sale of products.
Accounts receivable are recorded at the invoiced amount and do not bear interest, which are due within contractual payment terms. The normal settlement terms of accounts receivable from insurance companies in the provision of brokerage agency services are within 30 days upon the execution of the insurance policies. The Company seeks to maintain strict control over its outstanding receivables to minimize credit risk. Overdue balances are reviewed regularly by senior management. Management reviews its receivables on a regular basis to determine if the bad debt allowance is adequate and provides allowance when necessary. The allowance is based on management’s best estimates of specific losses on individual customer exposures, as well as the historical trends of collections. Account balances are charged off against the allowance after all means of collection have been exhausted and the likelihood of collection is not probable. The Company’s management continues to evaluate the reasonableness of the valuation allowance policy and update it if necessary.
| F-8 |
The Company does not hold any collateral or other credit enhancements overs its accounts receivable balances.
● Inventories
Inventories are valued at the lower of cost or net realizable value. Cost is determined by the average cost method. The Company records adjustments to its inventory for estimated obsolescence or diminution in net realizable value equal to the difference between the cost of the inventory and the estimated net realizable value. At the point of loss recognition, a new cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis.
● Property and Equipment, net
Property and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational and after taking into account their estimated residual values:
| Expected useful life | ||
| Leasehold building | ||
| Leasehold improvement | ||
| Plant and machineries | ||
| Motor vehicles | ||
| Office equipment, and furniture and fittings |
Expenditure for repairs and maintenance is expensed as incurred. When assets have retired or sold, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the Results of operations.
● Impairment of Long-Lived Assets
In accordance with the provisions of ASC Topic 360, Impairment or Disposal of Long-Lived Assets, all long-lived assets such as property and equipment owned and held by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of an asset to its estimated future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets.
● Revenue Recognition
| (a) | Revenues from goods and services provided |
The Company receives certain portion of its non-interest income from contracts with customers, which are accounted for in accordance with Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASC 606”).
ASC 606-10 provided the following overview of how revenue is recognized from the Company’s contracts with customers: The Company recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.
| Step 1: | Identify the contract(s) with a customer. | |
| Step 2: | Identify the performance obligations in the contract. | |
| Step 3: | Determine the transaction price – The transaction price is the amount of consideration in a contract to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. |
| F-9 |
| Step 4: | Allocate the transaction price to the performance obligations in the contract – Any entity typically allocates the transaction price to each performance obligation on the basis of the relative standalone selling prices of each distinct good or service promised in the contract. | |
| Step 5: | Recognize revenue when (or as) the entity satisfies a performance obligation – An entity recognizes revenue when (or as) it satisfies a performance obligation by transferring a promised good or service to a customer (which is when the customer obtains control of that good or service). The amount of revenue recognized is the amount allocated to the satisfied performance obligation. A performance obligation may be satisfied at a point in time (typically for promises to transfer goods to a customer) or over time (typically for promises to transfer service to a customer). |
Majority of the Company’s income is derived from contracts with customers in the sale of products, and as such, the revenue recognized depicts the transfer of promised goods or services to its customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company considers the terms of the contract and all relevant facts and circumstances when applying this guidance. The Company’s revenue recognition policies are in compliance with ASC 606, as follows:
Product sales consist of a single performance obligation that the Company satisfies at a point in time. The Company recognizes product revenue when the following events have occurred: (a) the Company has transferred physical possession of the products, depending upon the method of distribution and shipping terms set forth in the customer contract, (b) the Company has a present right to payment, (c) the customer has legal title to the products, and (d) the customer bears significant risks and rewards of ownership of the products. Based on the Company’s historical practices and shipping terms specified in the sales agreements and invoices, these criteria are generally met when the products are:
| ● | Invoiced; and | |
| ● | Shipped from the Company’s facilities or warehouse (“Ex-works”, which is the Company’s standard shipping term). |
For these sales, the Company determines that the customer is able to direct the use of, and obtain substantially all of the benefits from, the products at the time the products are shipped.
| (b) | Revenues from equipment rental |
The accounting for the types of revenue that are accounted for under Topic 842 is discussed below.
Equipment rental business are governed by our standard rental contract. The Company accounts for the rental of heavy construction equipment as operating leases where, lease income from the prospective of lessor is recognized to the Company’s statement of income straight-line basis over the term of the lease once management has determined that the lease payments are reasonably expected to be collected. The performance obligation under these leasing arrangements is to deliver the unit to the customer at their location and ensure that our heavy construction equipment is ready for use, and to ensure that our heavy construction equipment is available for use over the life of the lease contract. Our rental contract periods are on monthly.
Our equipment rental business is generally short-term to mid-term in nature and our heavy construction equipment is typically rented for the majority of the time that we own it.
The Company records its revenues on product sales, net of GST upon the services are rendered and the title and risk of loss of products are fully transferred to the customers. The Company is subject to GST which is levied on the majority of the products at the rate of 9% on the invoiced value of sales in Singapore.
Amounts received as prepayment on future products are recorded as customer deposit and recognized as income when the product is shipped.
The
Company generally allows a 7 days’ right of return to its customers. As of both June 30, 2024 and December 31, 2023, the sales
returns allowance was approximately $
| F-10 |
Certain
larger customers pay in advance for future shipments. These advance payments totaled approximately $
● Shipping and Handling Costs
No shipping and handling costs are associated with the distribution of the products to the customers which are borne by the Company’s suppliers or distributors during the six months ended June 30, 2024 and 2023.
● Sales and Marketing
Sales
and marketing expenses include payroll, employee benefits and other headcount-related expenses associated with sales and marketing personnel,
and the costs of advertising, promotions, seminars, and other programs. Advertising costs are expensed as incurred. Advertising expense
was approximately $
● Government Grant
A
government grant or subsidy is not recognized until there is reasonable assurance that: (a) the enterprise will comply with the conditions
attached to the grant; and (b) the grant will be received. When the Company receives government grant or subsidies but the conditions
attached to the grants have not been fulfilled, such government subsidies are deferred and recorded under other payables and accrued
expenses, and other long-term liability. The classification of short-term or long-term liabilities is dependent on the management’s
expectation of when the conditions attached to the grant can be fulfilled. For the six months ended June 30, 2024 and 2023, the Company
received government subsidies of approximately $
● Comprehensive Income (Loss)
ASC Topic 220, Comprehensive Income, establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive income, as presented in the accompanying statement of shareholder’s equity, consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive income is not included in the computation of income tax expense or benefit.
● Income Taxes
Income taxes are determined in accordance with the provisions of ASC Topic 740, Income Taxes (“ASC 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
ASC
740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements
uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the
financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax
positions must initially and subsequently be measured as the largest amount of tax benefit that has a
For the six months ended June 30, 2024 and 2023, the Company did not have any interest and penalties associated with tax positions. As of June 30, 2024 and December 31, 2023, the Company did not have any significant unrecognized uncertain tax positions.
| F-11 |
The Company is subject to tax in local and foreign jurisdiction. As a result of its business activities, the Company files tax returns that are subject to examination by the relevant tax authorities.
● Leases
Effective from January 1, 2020, the Company adopted the guidance of ASC 842, Leases, which requires an entity to recognize a right-of-use asset and a lease liability for virtually all leases. On February 25, 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing transactions. ASC 842 requires that lessees recognize right-of-use assets and lease liabilities calculated based on the present value of lease payments for all lease agreements with terms that are greater than twelve months. It requires for leases longer than one year, a lessee to recognize in the statement of financial condition a right-of-use asset, representing the right to use the underlying asset for the lease term, and a lease liability, representing the liability to make lease payments. ASC 842 distinguishes leases as either a finance lease or an operating lease that affects how the leases are measured and presented in the statement of operations and statement of cash flows. ASC 842 supersedes nearly all existing lease accounting guidance under GAAP issued by the Financial Accounting Standards Board (“FASB”) including ASC Topic 840, Leases.
The accounting update also requires that for finance leases, a lessee recognize interest expense on the lease liability, separately from the amortization of the right-of-use asset in the statements of earnings, while for operating leases, such amounts should be recognized as a combined expense. In addition, this accounting update requires expanded disclosures about the nature and terms of lease agreements.
● Retirement Plan Costs
Contributions
to retirement plans (which are defined contribution plans) are charged to general and administrative expenses in the accompanying statements
of operation as the related employee service are provided. The Company is required to make contribution to their employees under a government-mandated
multi-employer defined contribution pension scheme for its eligible full-times employees in Singapore. The Company is required to contribute
a specified percentage of the participants’ relevant income based on their ages and wages level. For the six months ended June
30, 2024 and 2023, approximately $
● Segment Reporting
FASB ASC 280, “Segment Reporting”, establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for details on the Company’s business segments. For the six months ended June 30, 2024 and 2023, the Company has one reporting business segment.
● Related Parties
The Company follows the ASC 850-10, Related Party for the identification of related parties and disclosure of related party transactions.
Pursuant to section 850-10-20 the related parties include: a) affiliates of the Company; b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of section 825-10-15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and Income-sharing trusts that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
| F-12 |
The financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a) the nature of the relationship(s) involved; b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c) the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d) amount due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.
● Commitments and Contingencies
The Company follows the ASC 450-20, Commitments to report accounting for contingencies. Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time that these matters will have a material adverse effect on the Company’s financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows.
● Concentration of Credit Risk
Financial
instruments that potentially subject the Company to credit risk consist of cash equivalents, restricted cash, accounts receivable. Cash
equivalents are maintained with high credit quality institutions, the composition and maturities of which are regularly monitored by
management. As of April 1, 2024,
For accounts receivable, the Company determines, on a continuing basis, the allowance for doubtful accounts are based on the estimated realizable value. The Company identifies credit risk on a customer-by-customer basis. The information is monitored regularly by management. Concentration of credit risk arises when a group of customers having similar characteristics such that their ability to meet their obligations is expected to be affected similarly by changes In economic conditions.
● Exchange Rate Risk
The reporting currency of the Company is US$, to date the majority of the revenues and costs are denominated in S$ and a significant portion of the assets and liabilities are denominated in S$. As a result, the Company is exposed to foreign exchange risk as its revenues and results of operations may be affected by fluctuations in the exchange rate between US$ and S$. If S$ depreciates against US$, the value of S$ revenues and assets as expressed in US$ financial statements will decline. The Company does not hold any derivative or other financial instruments that expose to substantial market risk.
| F-13 |
● Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company’s policy is to ensure that it has sufficient cash to meet its liabilities when they become due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation. A key risk in managing liquidity is the degree of uncertainty in the cash flow projections. If future cash flows are fairly uncertain, the liquidity risk increases.
● Fair Value Measurement
The Company follows the guidance of the ASC Topic 820-10, Fair Value Measurement and Disclosure (“ASC 820-10”), with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:
| ● | Level 1 : Inputs are based upon unadjusted quoted prices for identical instruments traded in active markets; | |
| ● | Level 2 : Inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques (e.g. Black-Scholes Option-Pricing model) for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs; and | |
| ● | Level 3 : Inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models. |
The carrying value of the Company’s financial instruments: cash and cash equivalents, restricted cash, accounts receivable, loans receivable, amount due to a related party, accounts payable, escrow liabilities, income tax payable, amount due to a related party, other payables and accrued liabilities approximate at their fair values because of the short-term nature of these financial instruments.
Management believes, based on the current market prices or interest rates for similar debt instruments, the fair value of note payable approximate the carrying amount. The Company accounts for loans receivable at cost, subject to impairment testing. The Company obtains a third-party valuation based upon loan level data including note rate, type and term of the underlying loans.
The Company’s non-marketable equity securities are investments in privately held companies, which are without readily determinable market values and are classified as Level 3, due to the absence of quoted market prices, the inherent lack of liquidity and the fact that inputs used to measure fair value are unobservable and require management’s judgment.
Fair value estimates are made at a specific point in time based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
● Recently Issued Accounting Pronouncements
In July 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires public entities to disclose information about their reportable segments’ significant expenses and certain other segment items on an interim and annual basis if they are regularly provided to the chief operating decision maker (“CODM”). This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied retrospectively to all prior periods presented. Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption.
| F-14 |
In September 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires public entities on an annual basis to disclose (1) specific categories in the tax rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. This ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments should be applied on a prospective basis, though retrospective application is permitted.
In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative, which incorporates certain SEC disclosure requirements into the FASB Accounting Standards Codification. This update will improve disclosure and presentation requirements of a variety of topics and align the requirements in the FASB codification with the SEC’s regulations. The Company is currently evaluating the potential effect of this ASU on its combined financial statements, but does not expect the impact to be material.
Except as mentioned above, the Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company’s consolidated balance sheets, statements of income and comprehensive income and statements of cash flows.
NOTE － 3 DISAGGREGATION OF REVENUE
The following tables present the Company’s revenue disaggregated by business segment and geography, based on management’s assessment of available data:
| Six Months ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| $’000 | $’000 | |||||||
| Sales at a single point in time | ||||||||
| Equipment Sales | ||||||||
| Services | ||||||||
| Sales over time | ||||||||
| Rental | ||||||||
In accordance with ASC 280, Segment Reporting (“ASC 280”), we have one reportable geographic segment. Sales are based on the countries in which the customer is located. Summarized financial information concerning our geographic segments is shown in the following tables:
| Six Months ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| $’000 | $’000 | |||||||
| Singapore | ||||||||
| United Arab Emirates | ||||||||
| Other countries(1) | ||||||||
| (1) |
| F-15 |
NOTE－4 ACCOUNTS RECEIVABLE, NET
Accounts receivable, net consisted of the following:
As of June 30, 2024 | As of December 31, 2023 | |||||||
| $’000 | $’000 | |||||||
| Accounts receivable – third parties | ||||||||
| Accounts receivable – related parties | ||||||||
| Less: allowance for doubtful accounts | ( | ) | ( | ) | ||||
| Accounts receivable, net | ||||||||
The following table presents the activities in the allowance for doubtful accounts for the six months ended June 30, 2024 and the financial year ended December 31, 2023.
As of June 30, 2024 | As of December 31, 2023 | |||||||
| $’000 | $’000 | |||||||
| Balance at January 1, | ||||||||
| Provision for impairment of receivables | ||||||||
| Foreign exchange adjustment | ( | ) | ||||||
| Balance at June 30 / December 31 | ||||||||
For the six months ended June 30, 2024 and 2023, the Company made no allowance for doubtful accounts. The Company has not experienced any significant bad debt write-offs of accounts receivable in the past.
The Company generally conducts its business with creditworthy third parties. The Company determines, on a continuing basis, the probable losses and an allowance for doubtful accounts, based on several factors including internal risk ratings, customer credit quality, payment history, historical bad debt/write-off experience and forecasted economic and market conditions. Accounts receivables are written off after exhaustive collection efforts occur and the receivable is deemed uncollectible. In addition, accounts receivable balances are monitored on an ongoing basis and its exposure to bad debts is not significant.
NOTE－5 INVENTORIES
The Company’s inventories were as follows:-
As of June 30, 2024 | As of December 31, 2023 | |||||||
| $’000 | $’000 | |||||||
| Finished goods | ||||||||
| Written down | ( | ) | ( | ) | ||||
| F-16 |
| Six Months ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| $’000 | $’000 | |||||||
| Statement of comprehensive income | ||||||||
| Inventories recognised as an expense in cost of revenue | ||||||||
For
the six months ended June 30, 2024 and 2023,
NOTE－6 AMOUNTS DUE FROM RELATED PARTIES
Amounts due from related parties consisted of the following:
As of June 30, 2024 | As of December 31, 2023 | |||||||
| $’000 | $’000 | |||||||
| Due from related parties | ||||||||
| - MWE Investment Pte Ltd(1) | ||||||||
| - Yin Zhan Holding Pte Ltd(2) | ||||||||
| - P4 Engineering Industrial Pte Ltd(3) | ||||||||
The related parties of the Company are as follows:
| (1) | |
| (2) | |
| (3) |
The amounts are unsecured, interest-free and repayable on demand.
NOTE－7 PROPERTY AND EQUIPMENT, NET
Property and equipment consisted of the following:
As of June 30, 2024 | As of December 31, 2023 | |||||||
| $’000 | $’000 | |||||||
| At cost | ||||||||
| Motor vehicles | ||||||||
| Office equipment, and furniture and fittings | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | ||||||||
Depreciation
expense for the six months ended June 30, 2024 and 2023 were approximately $
Property
and equipment under finance leasing arrangement classified under motor vehicle as of June 30, 2024 and December 31, 2023 amounted to
approximately $
| F-17 |
NOTE－8 AMOUNTS DUE TO RELATED PARTIES
Amounts due to related parties consisted of the following:
As of June 30, 2024 | As of December 31, 2023 | |||||||
| $’000 | $’000 | |||||||
| Due to related parties | ||||||||
| - Yin Zhan Holdings Pte Ltd(1) | ||||||||
| Due to directors | ||||||||
The entities are related parties of the Company as follows:
| (1) |
The amounts are unsecured, interest-free and non-repayable on demand.
The
amount due to directors bear an interest rate of
NOTE－9 BANK BORROWINGS
Bank borrowings consisted of the following:
| Term of repayments | Annual interest rate | As of June 30, 2024 | As of December 31, 2023 | |||||||||||
| $’000 | $’000 | |||||||||||||
| Term loans | % | |||||||||||||
| Trust receipts | % | |||||||||||||
| Representing | ||||||||||||||
| Within 12 months | ||||||||||||||
| Over 1 year | ||||||||||||||
As
of June 30, 2024 and December 31, 2023, bank borrowings were obtained from several financial institutions in Singapore, which bear annual
interest at a fixed rate from
The Company’s bank borrowings are guaranteed under the personal from Mr. James Lim and Ms. Lee NG and mortgage of leasehold property at 22 Gul Avenue, Singapore 629662. However, the leasehold property at 22 Gul Avenue, Singapore 629662 has been sold on November 30, 2023.
| F-18 |
NOTE－10 RIGHT-OF-USE ASSETS
The Company adopted ASU No. 2016-02, Leases, on January 1, 2019, the beginning of the fiscal 2019, using the modified retrospective approach. The Company determines whether an arrangement is a lease at inception. This determination generally depends on whether the arrangement conveys the right to control the use of an identified fixed asset explicitly or implicitly for a period of time in exchange for consideration. Control of an underlying asset is conveyed if we obtain the rights to direct the use of and to obtain substantially all of the economic benefit from the use of the underlying asset. Some of our leases include both lease and non-lease components which are accounted for as a single lease component as the Company has elected the practical expedient. Some of the operating lease agreements include variable lease costs, primarily taxes, insurance, common area maintenance or increases in rental costs related to inflation. Substantially all of our equipment leases and some of our real estate leases have terms of less than one year and, as such, are accounted for as short-term leases as we have elected the practical expedient.
Operating leases are included in the right-of-use lease assets, other current liabilities and long-term lease liabilities on the Consolidated Balance Sheet. Right-of-use assets and lease liabilities are recognized at each lease’s commencement date based on the present values of its lease payments over its respective lease term. When a borrowing rate is not explicitly available for a lease, the incremental borrowing rate is used based on information available at the lease’s commencement date to determine the present value of its lease payments. Operating lease payments are recognized on a straight-line basis over the lease term.
The
Company adopts
The table below presents the lease-related assets and liabilities recorded on the balance sheet.
As of June 30, 2024 | As of December 31, 2023 | |||||||
| $’000 | $’000 | |||||||
| Assets | ||||||||
| Finance lease, right-of-use asset, net (classified under property and equipment, net) | ||||||||
| Operating lease, right-of-use asset, net | ||||||||
| Total right-of-use asset | ||||||||
| Liabilities | ||||||||
| Current: | ||||||||
| Non-current: | ||||||||
| Total lease liabilities | ||||||||
As
of June 30, 2024, right-of-use assets were approximately $
As
of December 31, 2023, right-of-use assets were approximately $
The Company excludes short-term leases (those with lease terms of less than one year at inception) from the measurement of lease liabilities or right-of-use assets. The following tables summarize the lease expense for the years.
| F-19 |
| Six Months ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| $’000 | $’000 | |||||||
| Finance lease cost: | ||||||||
| Interest on lease liabilities (per ASC 842) | ||||||||
| Operating lease cost: | ||||||||
| Operating lease expense (per ASC 842) | ||||||||
| Short-term lease expense (other than ASC 842) | ||||||||
| Total lease expense | ||||||||
Components of Lease Expense
We recognize lease expense on a straight-line basis over the term of the operating leases, as reported within “general and administrative” expense on the accompanying consolidated statement of operations.
Future Contractual Lease Payments as of June 30, 2024
The below table summarizes our (i) minimum lease payments over the next five years, (ii) lease arrangement implied interest, and (iii) present value of future lease payments for the next three periods ending June 30:
| Periods ending June 30, | Operating and finance lease amount | |||
| $’000 | ||||
| 2025 | ||||
| 2026 | ||||
| Less: interest | ( | ) | ||
| Present value of lease liabilities | ||||
| Representing: | ||||
| Current liabilities | ||||
| Non-current liabilities | ||||
NOTE－11 SHAREHOLDERS’ EQUITY
Ordinary Shares
The
Company was incorporated under the laws of Cayman Islands on June 2, 2022 with authorized share of Ordinary Shares of par
value $ each. On January 27, 2023, the Company amended its memorandum of association to effect a
The Company is authorized to issue one class of ordinary share.
| F-20 |
The holders of the Company’s ordinary share are entitled to the following rights:
Voting Rights: Each share of the Company’s ordinary share entitles its holder to one vote per share on all matters to be voted or consented upon by the stockholders. Holders of the Company’s ordinary shares are not entitled to cumulative voting rights with respect to the election of directors.
Dividend Right: Subject to limitations under Cayman law and preferences that may apply to any shares of preferred stock that the Company may decide to issue in the future, holders of the Company’s ordinary share are entitled to receive ratably such dividends or other distributions, if any, as may be declared by the Board of the Company out of funds legally available therefor.
Liquidation Right: In the event of the liquidation, dissolution or winding up of our business, the holders of the Company’s ordinary share are entitled to share ratably in the assets available for distribution after the payment of all of the debts and other liabilities of the Company, subject to the prior rights of the holders of the Company’s preferred stock.
Other Matters: The holders of the Company’s ordinary share have no subscription, redemption or conversion privileges. The Company’s ordinary share does not entitle its holders to preemptive rights. All of the outstanding shares of the Company’s ordinary share are fully paid and non-assessable. The rights, preferences and privileges of the holders of the Company’s ordinary share are subject to the rights of the holders of shares of any series of preferred stock which the Company may issue in the future.
NOTE－12 INCOME TAXES
The provision for income taxes consisted of the following:
| Six Months ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| $’000 | $’000 | |||||||
| Under provision for previous year | ||||||||
| Income tax expense | ||||||||
The effective tax rate in the periods presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rate. The Company’s subsidiaries mainly operate in Singapore that are subject to taxes in the jurisdictions in which they operate, as follows:
BVI
MWE is considered to be an exempted British Virgin Islands Company and are presently not subject to income taxes or income tax filing requirements in the British Virgin Islands or the United States.
Singapore
Multi Ways SG is operating in Singapore and are subject to the Singapore tax law at the corporate tax rate at 17% on the assessable income arising in Singapore during its tax period.
| F-21 |
The reconciliation of income tax rate to the effective income tax rate based on income before income taxes for the six months ended June 30, 2024 and 2023 are as follows:
| Six Months ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| $’000 | $’000 | |||||||
| Income (loss) before income taxes | ( | ) | ||||||
| Statutory income tax rate | % | % | ||||||
| Income tax expense at statutory rate | ( | ) | ||||||
| Tax effect of non-taxable income | ( | ) | ( | ) | ||||
| Under provision for previous year | ||||||||
| Income tax expense | ||||||||
The following table sets forth the significant components of the deferred tax assets and liabilities of the Company as of June 30, 2024 and December 31, 2023:
As of June 30, 2024 | As of December 31, 2023 | |||||||
| $’000 | $’000 | |||||||
| Deferred tax asset: | ||||||||
| Accelerated tax depreciation | ||||||||
Uncertain tax positions
The Company evaluates the uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measure the unrecognized benefits associated with the tax positions. As of June 30, 2024 and 2023, the Company did not have any significant unrecognized uncertain tax positions. The Company did not incur any interest and penalties related to potential underpaid income tax expenses for the six months ended June 30, 2024 and 2023 and also did not anticipate any significant increases or decreases in unrecognized tax benefits in the next 12 months from June 30, 2024.
NOTE－13 RELATED PARTY TRANSACTIONS
In the ordinary course of business, during the six months ended June 30, 2024 and 2023, the Company was involved in certain transactions, either at cost or current market prices, and on the normal commercial terms with related parties. The following table provides the transactions with these parties for the periods as presented (for the portion of such period that they were considered related):
| Six Months ended June 30, | ||||||||
| Nature of transactions | 2024 | 2023 | ||||||
| $’000 | $’000 | |||||||
| P4 Engineering Industrial Pte Ltd(1) | ||||||||
| - Sale of goods(1) | ||||||||
| - Purchases of goods(1) | ||||||||
| - Land rental(1) | ||||||||
| - Loan interest income(1) | ||||||||
| Multi Ways Equipment Sdn Bhd (2) | ||||||||
| - Sale of goods(2) | ||||||||
| Mr. Eng Hock Lim(3) | ||||||||
| - Loan account(3) | ||||||||
| - Loan interest income(3) | ||||||||
These related parties are controlled by the common Directors and Executive Officers of the Company.
| (1) | |
| (2) | |
| (3) |
Apart from the transactions and balances detailed elsewhere in these accompanying consolidated financial statements, the Company has no other significant or material related party transactions during the periods presented.
| F-22 |
NOTE－14 CONCENTRATIONS OF RISK
The Company is exposed to the following concentrations of risk:
| (a) | Major customers |
For
the six months ended June 30, 2024, there was a single customer who accounted for approximately
For
the six months ended June 30, 2023, there was a single customer who accounted for approximately
| (a) | Major vendors |
For
the six months ended June 30, 2024 and 2023, the vendor who accounted for approximately
| 2024 | 2023 | |||||||||||||||
| Percentage of purchases | Accounts payable | Percentage of purchases | Accounts payable | |||||||||||||
| % | $’000 | % | $’000 | |||||||||||||
| Vendor A | ||||||||||||||||
| (b) | Credit risk |
Financial
instruments that potentially subject the Company to credit risk consist of cash equivalents, restricted cash, accounts and loans receivable.
Cash equivalents are maintained with high credit quality institutions, the composition and maturities of which are regularly monitored
by management. As of April 1, 2024, the Singapore Deposit Protection Board pays compensation up to a limit of S$ (approximately
$) if the bank with which an individual/a company hold its eligible deposit fails. As of June 30, 2024, bank and cash balances
of approximately $
For accounts receivable, the Company determines, on a continuing basis, the probable losses and sets up an allowance for doubtful accounts based on the estimated realizable value.
The Company has adopted a policy of only dealing with creditworthy counterparties. The Company performs ongoing credit evaluation of its counterparties’ financial condition and generally do not require a collateral. The Company also considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period.
| F-23 |
The Company has determined the default event on a financial asset to be when internal and/or external information indicates that the financial asset is unlikely to be received, which could include default of contractual payments due for more than 90 days, default of interest due for more than 365 days or there is significant difficulty of the counterparty.
To minimize credit risk, the Company has developed and maintained its credit risk grading to categorize exposures according to their degree of risk of default. The credit rating information is supplied by publicly available financial information and the Company’s own trading records to rate its major customers and other debtors. The Company considers available reasonable and supportive forward-looking information which includes the following indicators:
| ● | Actual or expected significant adverse changes in business, financial or economic conditions that are expected to cause a significant change to the debtor’s ability to meet its obligations; | |
| ● | Internal credit rating; and | |
| ● | External credit rating and when necessary. |
Regardless of the analysis above, a significant increase in credit risk is presumed if a debtor is more than 30 days past due in making contractual payment.
As of June 30, 2024, there was no outstanding from a single customer whose account receivable balances of total consolidated amounts.
As of June 30, 2023, there was no outstanding from a single customer whose account receivable balances of total consolidated amounts.
| (c) | Interest rate risk |
As the Company has no significant interest-bearing assets, the Company’s income and operating cash flows are substantially independent of changes in market interest rates.
The Company’s interest-rate risk arises from bank borrowings. The Company manages interest rate risk by varying the issuance and maturity dates of variable rate debt, limiting the amount of variable rate debt, and continually monitoring the effects of market changes in interest rates. As of June 30, 2024 and 2023, the borrowings were at fixed interest rates.
| (d) | Economic and political risk |
The Company’s major operations are conducted in Singapore. Accordingly, the political, economic, and legal environments in Singapore, as well as the general state of Singapore’s economy may influence the Company’s business, financial condition, and results of operations.
| (e) | Exchange rate risk |
The Company cannot guarantee that the current exchange rate will remain steady, therefore there is a possibility that the Company could post the same amount of profit for two comparable periods and because of the fluctuating exchange rate actually post higher or lower profit depending on exchange rate of S$ converted to $ on that date. The exchange rate could fluctuate depending on changes in political and economic environments without notice.
| (f) | Liquidity risk |
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company’s policy is to ensure that it has sufficient cash to meet its liabilities when they become due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation. A key risk in managing liquidity is the degree of uncertainty in the cash flow projections. If future cash flows are fairly uncertain, the liquidity risk increases.
NOTE－15 COMMITMENTS AND CONTINGENCIES
Litigation — From time to time, the Company may be involved in various legal proceedings and claims in the ordinary course of business. Save for an ongoing proceeding described below, the Company currently is not aware of any legal proceedings or claims that it believes will have, individually or in the aggregate, a material adverse effect on its business, financial condition, operating results, or cash flows.
On November 20, 2024, Multi Ways SG
filed a case against China Railway Tunnel Group Co., Ltd (Singapore Branch) for the claim amount of S$
As of June 30, 2024 and December 31, 2023, the Company has no material commitments or contingencies.
NOTE－16 SUBSEQUENT EVENTS
In accordance with ASC Topic 855, “Subsequent Events”, which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before condensed consolidated financial statements are issued, the Company has evaluated all events or transactions that occurred after June 30, 2024, up through the date the Company issued the audited consolidated financial statements. During the period, the Company did not have any material subsequent events other than disclosed above.
| F-24 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To The Shareholders and Board of Directors of
MULTI WAYS HOLDINGS LIMITED AND SUBSIDIARIES
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Multi Ways Holdings Limited and Subsidiaries (collectively referred to as the “Company”) as of December 31, 2023 and 2022 the related consolidated statements of operations and comprehensive income, changes in shareholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2023 and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial positions of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
| /s/ Onestop Assurance PAC | |
| Singapore | |
| We have served as the Company’s auditor since 2022. | |
| May 15, 2024 | |
PCAOB ID# 6732
| F-25 |
MULTI WAYS HOLDINGS LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Currency expressed in United States Dollars (“US$”))
| As of December 31, | ||||||||
| 2023 | 2022 | |||||||
| $’000 | $’000 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | ||||||||
| Accounts receivable, net | ||||||||
| Inventories | ||||||||
| Amounts due from related parties | ||||||||
| Financial assets available for sales | ||||||||
| Deposits, prepayments and other receivables | ||||||||
| Total current assets | ||||||||
| Non-current assets: | ||||||||
| Property and equipment, net | ||||||||
| Right-of-use assets | ||||||||
| Investment in equity securities | ||||||||
| Deferred tax assets | ||||||||
| Total non-current assets | ||||||||
| TOTAL ASSETS | ||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | ||||||||
| Customer deposits | ||||||||
| Amounts due to related parties | ||||||||
| Bank borrowings | ||||||||
| Lease liabilities | ||||||||
| Income tax payable | ||||||||
| Total current liabilities | ||||||||
| Long-term liabilities: | ||||||||
| Bank borrowings | ||||||||
| Lease liabilities | ||||||||
| Total long-term liabilities | ||||||||
| TOTAL LIABILITIES | ||||||||
| Commitments and contingencies | ||||||||
| Shareholders’ equity | ||||||||
| Ordinary share, par value US$, shares authorized, and ordinary shares issued and outstanding as of December 31, 2023 and 2022, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Retained earnings | ||||||||
| Non-controlling interest | ||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Total shareholders’ equity | ||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
See accompanying notes to consolidated financial statements.
| F-26 |
MULTI WAYS HOLDINGS LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Currency expressed in United States Dollars (“US$”))
| Financial Years ended December 31, | ||||||||||||
| 2023 | 2022 | 2021 | ||||||||||
| $’000 | $’000 | $’000 | ||||||||||
| Revenues, net | ||||||||||||
| Cost of revenue | ( | ) | ( | ) | ( | ) | ||||||
| Gross profit | ||||||||||||
| Operating cost and expenses: | ||||||||||||
| Selling and distribution | ( | ) | ( | ) | ( | ) | ||||||
| General and administrative | ( | ) | ( | ) | ( | ) | ||||||
| Total operating cost and expenses | ( | ) | ( | ) | ( | ) | ||||||
| (Loss) Profit from operations | ( | ) | ||||||||||
| Other income (expense): | ||||||||||||
| Gain on early termination on lease liability | ||||||||||||
| Gain from disposal of plant and equipment | ||||||||||||
| Interest income | * | |||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ||||||
| Dividend income | ||||||||||||
| Government grant | ||||||||||||
| Foreign exchange loss, net | ( | ) | ( | ) | ( | ) | ||||||
| Other income | ||||||||||||
| Total other income, net | ||||||||||||
| Income before income taxes | ||||||||||||
| Income tax benefit (expense) | ( | ) | ( | ) | ||||||||
| NET INCOME | ||||||||||||
| Less: Net income attributable to non-controlling interest | ( | ) | ||||||||||
| NET INCOME ATTRIBUTABLE TO EQUITY HOLDER OF THE COMPANY | ||||||||||||
| Net income per share | ||||||||||||
| Basic and Diluted | ||||||||||||
| Weighted average number of ordinary shares outstanding | ||||||||||||
| Basic and Diluted (’000) | ||||||||||||
| NET INCOME ATTRIBUTABLE TO EQUITY HOLDER OF THE COMPANY | ||||||||||||
| Other comprehensive income (loss): | ||||||||||||
| Foreign currency translation adjustment | ( | ) | ( | ) | ||||||||
| COMPREHENSIVE INCOME | ||||||||||||
| * |
See accompanying notes to consolidated financial statements.
| F-27 |
MULTI WAYS HOLDINGS LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Currency expressed in United States Dollars (“US$”), except for number of shares)
| Ordinary Shares | Additional | Accumulated Other | Non | Total | ||||||||||||||||||||||||
No. of shares | Amount | paid-in capital |
comprehensive loss | Retained earnings | Controlling Interest |
shareholders’ equity | ||||||||||||||||||||||
| ’000 | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | ||||||||||||||||||||||
| Balance as of January 1, 2021 | ||||||||||||||||||||||||||||
| Dividend declared to former shareholders | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Foreign currency translation adjustment | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Net income for the year | - | |||||||||||||||||||||||||||
| Balance as of December 31, 2021 | ( | ) | ||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Net income for the year | - | |||||||||||||||||||||||||||
| Balance as of December 31, 2022 | ( | ) | ||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | |||||||||||||||||||||||||||
| Net income for the year | - | ( | ) | |||||||||||||||||||||||||
| Issue of new shares net of deferred offering costs | ||||||||||||||||||||||||||||
| Balance as of December 31, 2023 | ( | ) | ||||||||||||||||||||||||||
See accompanying notes to consolidated financial statements.
| F-28 |
MULTI WAYS HOLDINGS LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Currency expressed in United States Dollars (“US$”))
| Financial Years ended December 31, | ||||||||||||
| 2023 | 2022 | 2021 | ||||||||||
| $’000 | $’000 | $’000 | ||||||||||
| Cash flows from operating activities: | ||||||||||||
| Net income before tax | ||||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities | ||||||||||||
| Depreciation of property and equipment | ||||||||||||
| Depreciation of right-of-use assets | ||||||||||||
| Inventories written down | ||||||||||||
| Written off of advance to suppliers | ||||||||||||
| Gain on disposal of property and equipment | ( | ) | ( | ) | ( | ) | ||||||
| Gain on early termination on lease liability | ( | ) | ||||||||||
| Provision (reversal) of impairment of trade receivables | ( | ) | ||||||||||
| Loss on revaluation of quoted share | ||||||||||||
| Change in operating assets and liabilities: | ||||||||||||
| Accounts receivable | ( | ) | ||||||||||
| Inventories | ( | ) | ||||||||||
| Deposits, prepayments and other receivables | ( | ) | ||||||||||
| Accounts payable and accrued liabilities | ( | ) | ( | ) | ||||||||
| Customer deposits | ( | ) | ( | ) | ||||||||
| Income tax payable | ( | ) | ( | ) | ||||||||
| Net cash provided by operating activities | ||||||||||||
| Cash flows from investing activities: | ||||||||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||||||
| Proceeds from disposal of property and equipment | ||||||||||||
| Investment in equity securities | ( | ) | ||||||||||
| Proceeds from (investment in) financial assets available for sales | ( | ) | ||||||||||
| Net cash generated from (used in) investing activities | ( | ) | ||||||||||
| Cash flows from financing activities: | ||||||||||||
| Repayment of bank borrowings | ( | ) | ( | ) | ( | ) | ||||||
| Repayment of lease liabilities | ( | ) | ( | ) | ( | ) | ||||||
| Proceeds from shares issuance net of deferred offering costs | ||||||||||||
| Payment of dividends | ( | ) | ( | ) | ||||||||
| Loan from director | ||||||||||||
| Net cash used in financing activities | ( | ) | ( | ) | ( | ) | ||||||
| Effect on exchange rate change on cash and cash equivalents | ( | ) | ( | ) | ||||||||
| Net change in cash and cash equivalent | ( | ) | ||||||||||
| BEGINNING OF YEAR | ||||||||||||
| END OF YEAR | ||||||||||||
| SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||||||||
| Cash (paid) refund for income taxes | ( | ) | ( | ) | ||||||||
| Cash paid for interest | ||||||||||||
See accompanying notes to consolidated financial statements.
| F-29 |
MULTI WAYS HOLDINGS LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021
(Currency expressed in United States Dollars (“US$”))
NOTE－1 BUSINESS OVERVIEW AND BASIS OF PRESENTATION
Multi
Ways Holdings Limited (“MWH”) is incorporated in the Cayman Islands on June 2, 2022 under the Companies
Act as an exempted company with limited liability. The authorized share capital is US$
MWH, through its subsidiaries (collectively referred to as the “Company”) are mainly engaged in the sale and rental of the heavy construction equipment in Singapore, and global sales primarily generated from the Asia Pacific. The Company has over twenty (20) years of experience in supplying heavy construction equipment and rental businesses in the construction industry.
Description of subsidiaries incorporated and controlled by the Company
| Name | Background | Effective ownership | ||
| MWE Holdings Limited (“MWE Holdings”) | ||||
| Multi Ways Equipment Pte Ltd (“Multi Ways SG”) |
Reorganization
Since 2022, the Company completed several transactions for the purposes of a group reorganization, as below:-
On
August 26, 2022, Mr. James Lim and Precious Choice Global entered into the Acquisition Agreement, pursuant to which Precious Choice Global
acquired shares in Multi Ways SG (representing approximately
On
August 26, 2022, Mr. James Lim and Ms. Lee NG, Precious Choice Global and MWH entered into a reorganization agreement, pursuant to which
Mr. James Lim and Ms. Lee NG and Precious Choice Global transferred their respective and and shares in Multi
Ways SG to MWH’s nominee, MWE Holdings. The consideration is settled by MWH allotting and issuing
Prior
to a group reorganization, MWE Holdings, the holding company of a direct wholly-owned company comprised of Multi Ways SG. MWE Holdings
was held as to
During the years presented in these consolidated financial statements, the control of the entities has never changed (always under the control of MWH). Accordingly, the combination has been treated as a corporate restructuring (“Reorganization”) of entities under common control and thus the current capital structure has been retroactively presented in prior periods as if such structure existed at that time and in accordance with ASC 805-50-45-5, the entities under common control are presented on a combined basis for all periods to which such entities were under common control. The consolidation of MWH and its subsidiaries has been accounted for at historical cost and prepared on the basis as if the aforementioned transactions had become effective as of the beginning of the first period presented in the accompanying consolidated financial statements.
On
April 5, 2023, the Company completed its initial public offering. In this offering, the Company issued Ordinary Shares at a
price of US$ per share. The Company received gross proceeds in the amount of US$
The total number of ordinary shares issued and outstanding as of December 31, 2023 was shares. The Company’s ordinary shares began trading on the NYSE American on April 05, 2023 under the ticker symbol “MWG”.
Upon
completion of issuance of the shares under the Offering, Multi Ways is effectively owned
Deferred Offering Costs
Deferred offering costs consists of capitalized underwriting, legal, accounting and other expenses incurred through the balance sheet date that are directly related the proposed Public Offering and will be charged against the proceeds received upon completion of the offering, should the offering be unsuccessful, these deferred costs will be charged to operations.
The Company incurred US$
| F-30 |
NOTE－2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These accompanying consolidated financial statements reflect the application of certain significant accounting policies as described in this note and elsewhere in the accompanying consolidated financial statements and notes.
● Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
● Use of Estimates and Assumptions
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the years presented. Significant accounting estimates in the period include the allowance for expected credit loss on accounts and other receivables, impairment loss on inventories, assumptions used in assessing right-of-use assets and impairment of long-lived assets, and deferred tax valuation allowance.
The inputs into the management’s judgments and estimates consider the economic implications of COVID-19 on the Company’s critical and significant accounting estimates. Actual results could differ from these estimates.
● Basis of Consolidation
The consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant inter-company balances and transactions within the Company have been eliminated upon consolidation.
● Non-Controlling Interest
The Company reports non-controlling interest in its majority owned subsidiaries in the consolidated balance sheets within the shareholders’ equity section, separately from the Company’s shareholders’ equity. Non-controlling interest represents non-controlling interest holders’ proportionate share of the equity of the Company’s majority-owned subsidiaries. Non-controlling interest is adjusted for non-controlling interest holders’ proportionate share of the earnings or losses and other comprehensive income.
● Foreign Currency Translation and Transaction
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statement of operations.
The reporting currency of the Company is United States Dollar (“US$”) and the accompanying consolidated financial statements have been expressed in US$. In addition, the Company and subsidiaries are operating in Singapore, maintain their books and record in their local currency, Singapore Dollars (“S$”), which is a functional currency as being the primary currency of the economic environment in which their operations are conducted. In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not US$ are translated into US$, in accordance with ASC Topic 830-30, Translation of Financial Statement, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the year. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statements of changes in shareholders’ equity.
| F-31 |
Translation of amounts from S$ into US$ has been made at the following exchange rates for the financial years ended December 31, 2023, 2022 and 2021:
| December 31, 2023 | December 31, 2022 | December 31, 2021 | ||||||||||
| Year-end S$:US$ exchange rate | ||||||||||||
Translation gains and losses that arise from exchange rate fluctuations from transactions denominated in a currency other than the functional currency are translated, as the case may be, at the rate on the date of the transaction and included in the results of operations as incurred.
● Cash and Cash Equivalents
Cash and cash equivalents consist primarily of cash in readily available checking and saving accounts. Cash equivalents consist of highly liquid investments that are readily convertible to cash and that mature within three months or less from the date of purchase. The carrying amounts approximate fair value due to the short maturities of these instruments. The Company maintains most of its bank accounts in Singapore.
● Restricted Cash
Restricted cash held by foreign subsidiaries related to fixed deposits within or more than twelve months that also serve as security deposits and guarantees under the banking facilities.
● Accounts Receivable, net
Accounts receivable include trade accounts due from customers in the sale of products.
Accounts receivable are recorded at the invoiced amount and do not bear interest, which are due within contractual payment terms. The normal settlement terms of accounts receivable from insurance companies in the provision of brokerage agency services are within 30 days upon the execution of the insurance policies. The Company seeks to maintain strict control over its outstanding receivables to minimize credit risk. Overdue balances are reviewed regularly by senior management. Management reviews its receivables on a regular basis to determine if the bad debt allowance is adequate and provides allowance when necessary. The Company makes estimates of expected credit losses for the allowance for expected credit loss based upon its assessment of various factors, including (i) historical experience, (ii) the age of the accounts receivable balances, (iii) credit quality of its customers, (iv) current economic conditions, (v) reasonable and supportable forecasts of future economic conditions, and other factors that may affect its ability to collect from customers. Expected credit losses are estimated on a pool basis when similar risk characteristics exist using an age-based reserve model. Receivables that do not share risk characteristics are evaluated on an individual basis. Estimates of expected credit losses on trade receivables are recorded at inception and adjusted over the contractual life.
The Company does not hold any collateral or other credit enhancements overs its accounts receivable balances.
● Inventories
Inventories are valued at the lower of cost or net realizable value. Cost is determined by the average cost method. The Company records adjustments to its inventory for estimated obsolescence or diminution in net realizable value equal to the difference between the cost of the inventory and the estimated net realizable value. At the point of loss recognition, a new cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis.
| F-32 |
● Property and Equipment, net
Property and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational and after taking into account their estimated residual values:
| Expected useful life | ||
| Leasehold building | ||
| Leasehold improvement | ||
| Plant and machineries | ||
| Motor vehicles | ||
| Office equipment, and furniture and fittings |
Expenditure for repairs and maintenance is expensed as incurred. When assets have retired or sold, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the Results of operations.
● Impairment of Long-Lived Assets
In accordance with the provisions of ASC Topic 360, Impairment or Disposal of Long-Lived Assets, all long-lived assets such as property and equipment owned and held by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of an asset to its estimated future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets.
● Revenue Recognition
| (a) | Revenues from goods and services provided |
The Company receives certain portion of its non-interest income from contracts with customers, which are accounted for in accordance with Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASC 606”).
ASC 606-10 provided the following overview of how revenue is recognized from the Company’s contracts with customers: The Company recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.
| Step 1: | Identify the contract(s) with a customer.
| |
| Step 2: | Identify the performance obligations in the contract.
| |
| Step 3: | Determine the transaction price – The transaction price is the amount of consideration in a contract to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer.
| |
| Step 4: | Allocate the transaction price to the performance obligations in the contract – Any entity typically allocates the transaction price to each performance obligation on the basis of the relative standalone selling prices of each distinct good or service promised in the contract.
| |
| Step 5: | Recognize revenue when (or as) the entity satisfies a performance obligation – An entity recognizes revenue when (or as) it satisfies a performance obligation by transferring a promised good or service to a customer (which is when the customer obtains control of that good or service). The amount of revenue recognized is the amount allocated to the satisfied performance obligation. A performance obligation may be satisfied at a point in time (typically for promises to transfer goods to a customer) or over time (typically for promises to transfer service to a customer). |
| F-33 |
Majority of the Company’s income is derived from contracts with customers in the sale of products, and as such, the revenue recognized depicts the transfer of promised goods or services to its customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company considers the terms of the contract and all relevant facts and circumstances when applying this guidance. The Company’s revenue recognition policies are in compliance with ASC 606, as follows:
Product sales consist of a single performance obligation that the Company satisfies at a point in time. The Company recognizes product revenue when the following events have occurred: (a) the Company has transferred physical possession of the products, depending upon the method of distribution and shipping terms set forth in the customer contract, (b) the Company has a present right to payment, (c) the customer has legal title to the products, and (d) the customer bears significant risks and rewards of ownership of the products. Based on the Company’s historical practices and shipping terms specified in the sales agreements and invoices, these criteria are generally met when the products are:
| ● | Invoiced; and | |
| ● | Shipped from the Company’s facilities or warehouse (“Ex-works”, which is the Company’s standard shipping term). |
For these sales, the Company determines that the customer is able to direct the use of, and obtain substantially all of the benefits from, the products at the time the products are shipped.
| (b) | Revenues from equipment rental |
The accounting for the types of revenue that are accounted for under Topic 842 is discussed below.
Equipment rental business is governed by our standard rental contract. The Company accounts for the rental of heavy construction equipment as operating leases where, lease income from the prospective of lessor is recognized to the Company’s statement of income straight-line basis over the term of the lease once management has determined that the lease payments are reasonably expected to be collected. The performance obligation under these leasing arrangements is to deliver the unit to the customer at their location, ensure that our heavy construction equipment is ready for use, and ensure that our heavy construction equipment is available for use over the life of the lease contract. Our rental contract periods are on monthly.
Our equipment rental business is generally short-term to mid-term in nature and our heavy construction equipment is typically rented for the majority of the time that we own it.
The Company records its revenues on product sales, net of GST upon the services are rendered and the title and risk of loss of products are fully transferred to the customers. The Company is subject to GST which is levied on the majority of the products at the rate of 8% on the invoiced value of sales in Singapore.
Amounts received as prepayment on future products are recorded as customer deposit and recognized as income when the product is shipped.
| F-34 |
The
Company generally allows a 7 days’ right of return to its customers. For the financial years ended December 31, 2023, 2022 and
2021, the sales returns allowance was approximately $
Certain
larger customers pay in advance for future shipments. These advance payments totaled approximately $
● Shipping and Handling Costs
No shipping and handling costs are associated with the distribution of the products to the customers, as these costs are borne by the company’s suppliers or distributors during the financial years ended December 31, 2023, 2022, and 2021.
● Sales and Marketing
Sales
and marketing expenses include payroll, employee benefits and other headcount-related expenses associated with sales and marketing personnel,
and the costs of advertising, promotions, seminars, and other programs. Advertising expense was approximately $
● Government Grant
A
government grant or subsidy is not recognized until there is reasonable assurance that: (a) the enterprise will comply with the conditions
attached to the grant; and (b) the grant will be received. When the Company receives government grant or subsidies but the conditions
attached to the grants have not been fulfilled, such government subsidies are deferred and recorded under other payables and accrued
expenses, and other long-term liability. The classification of short-term or long-term liabilities is depended on the management’s
expectation of when the conditions attached to the grant can be fulfilled. For the financial years ended December 31, 2023, 2022, and
2021, the Company received government subsidies of approximately $
● Comprehensive Income (Loss)
ASC Topic 220, Comprehensive Income, establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive income, as presented in the accompanying statement of shareholder’s equity, consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive income is not included in the computation of income tax expense or benefit.
● Income Taxes
Income taxes are determined in accordance with the provisions of ASC Topic 740, Income Taxes (“ASC 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
| F-35 |
ASC
740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements
uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the
financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax
positions must initially and subsequently be measured as the largest amount of tax benefit that has a
For the financial years ended December 31, 2023, 2022 and 2021, the Company did not have any interest and penalties associated with tax positions. As of December 31, 2023 and 2022, the Company did not have any significant unrecognized uncertain tax positions.
The Company is subject to tax in local and foreign jurisdiction. As a result of its business activities, the Company files tax returns that are subject to examination by the relevant tax authorities.
● Leases
Effective from January 1, 2020, the Company adopted the guidance of ASC 842, Leases, which requires an entity to recognize a right-of-use asset and a lease liability for virtually all leases. On February 25, 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing transactions. ASC 842 requires that lessees recognize right-of-use assets and lease liabilities calculated based on the present value of lease payments for all lease agreements with terms that are greater than twelve months. It requires for leases longer than one year, a lessee to recognize in the statement of financial condition a right-of-use asset, representing the right to use the underlying asset for the lease term, and a lease liability, representing the liability to make lease payments. ASC 842 distinguishes leases as either a finance lease or an operating lease that affects how the leases are measured and presented in the statement of operations and statement of cash flows. ASC 842 supersedes nearly all existing lease accounting guidance under GAAP issued by the Financial Accounting Standards Board (“FASB”) including ASC Topic 840, Leases.
The accounting update also requires that for finance leases, a lessee recognize interest expense on the lease liability, separately from the amortization of the right-of-use asset in the statements of earnings, while for operating leases, such amounts should be recognized as a combined expense. In addition, this accounting update requires expanded disclosures about the nature and terms of lease agreements.
● Retirement Plan Costs
Contributions
to retirement plans (which are defined contribution plans) are charged to general and administrative expenses in the accompanying statements
of operation as the related employee service are provided. The Company is required to make contribution to their employees under a government-mandated
multi-employer defined contribution pension scheme for its eligible full-times employees in Singapore. The Company is required to contribute
a specified percentage of the participants’ relevant income based on their ages and wages level. During the financial years ended
December 31, 2023, 2022 and 2021, approximately $
● Segment Reporting
FASB ASC 280, “Segment Reporting”, establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for details on the Company’s business segments. For the financial years ended December 31, 2023, 2022 and 2021, the Company has one reporting business segment.
| F-36 |
● Related Parties
The Company follows the ASC 850-10, Related Party for the identification of related parties and disclosure of related party transactions.
Pursuant to section 850-10-20 the related parties include: a) affiliates of the Company; b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of section 825-10-15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and Income-sharing trusts that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
The financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a) the nature of the relationship(s) involved; b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c) the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d) amount due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.
● Commitments and Contingencies
The Company follows the ASC 450-20, Commitments to report accounting for contingencies. Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time that these matters will have a material adverse effect on the Company’s financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows.
● Concentration of Credit Risk
Financial
instruments that potentially subject the Company to credit risk consist of cash and cash equivalents, restricted cash, and accounts receivable.
Cash and cash equivalents are maintained with high credit quality institutions, the composition and maturities of which are regularly
monitored by management.
| F-37 |
For accounts receivable, the Company determines, on a continuing basis, the allowance for expected credit loss are based on the estimated realizable value. The Company identifies credit risk on a customer-by-customer basis. The information is monitored regularly by management. Concentration of credit risk arises when a group of customers having similar characteristics such that their ability to meet their obligations is expected to be affected similarly by changes in economic conditions.
● Exchange Rate Risk
The reporting currency of the Company is US$, to date the majority of the revenues and costs are denominated in S$ and a significant portion of the assets and liabilities are denominated in S$. As a result, the Company is exposed to foreign exchange risk as its revenues and results of operations may be affected by fluctuations in the exchange rate between US$ and S$. If S$ depreciates against US$, the value of S$ revenues and assets as expressed in US$ financial statements will decline. The Company does not hold any derivative or other financial instruments that expose to substantial market risk.
● Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company’s policy is to ensure that it has sufficient cash to meet its liabilities when they become due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation. A key risk in managing liquidity is the degree of uncertainty in the cash flow projections. If future cash flows are fairly uncertain, the liquidity risk increases.
● Fair Value Measurement
The Company follows the guidance of the ASC Topic 820-10, Fair Value Measurement and Disclosure (“ASC 820-10”), with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:
| ● | Level 1 : Inputs are based upon unadjusted quoted prices for identical instruments traded in active markets; | |
| ● | Level 2 : Inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques (e.g. Black-Scholes Option-Pricing model) for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs; and | |
| ● | Level 3 : Inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models. |
The carrying value of the Company’s financial instruments: cash and cash equivalents, restricted cash, accounts receivable, loans receivable, amount due to a related party, accounts payable, escrow liabilities, income tax payable, amount due to a related party, other payables and accrued liabilities approximate at their fair values because of the short-term nature of these financial instruments.
| F-38 |
Management believes, based on the current market prices or interest rates for similar debt instruments, the fair value of note payable approximate the carrying amount. The Company accounts for loans receivable at cost, subject to impairment testing. The Company obtains a third-party valuation based upon loan level data including note rate, type and term of the underlying loans.
The Company’s non-marketable equity securities are investments in privately held companies, which are without readily determinable market values and are classified as Level 3, due to the absence of quoted market prices, the inherent lack of liquidity and the fact that inputs used to measure fair value are unobservable and require management’s judgment.
Fair value estimates are made at a specific point in time based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
● Recently Issued Accounting Pronouncements
In June 2016, the Financial Accounting Standard Board (“FASB”) issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 was issued to improve financial reporting by requiring earlier recognition of credit losses on financing receivables and other financial assets in scope. The new standard represents significant changes to accounting for credit losses. Full lifetime expected credit losses will be recognized upon initial recognition of an asset in scope. The current incurred loss impairment model that recognizes losses when a probable threshold is met will be replaced with the expected credit loss impairment method without recognition threshold. The expected credit losses estimate will be based upon historical information, current conditions, and reasonable and supportable forecasts. This ASU as amended by ASU 2019-10, is effective for fiscal years beginning after December 15, 2023. The Company is currently evaluating the effect of this ASU on the Company’s consolidated financial statements and related disclosures.
In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes which amends ASC 740 Income Taxes (ASC 740). This update is intended to simplify accounting for income taxes by removing certain exceptions to the general principles in ASC 740 and amending existing guidance to improve consistent application of ASC 740. This update is effective for fiscal years beginning after December 15, 2021. The guidance in this update has various elements, some of which are applied on a prospective basis and others on a retrospective basis with earlier application permitted. The Company is currently evaluating the effect of this ASU on the Company’s consolidated financial statements and related disclosures.
In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. This update provides guidance for a modification or an exchange of a freestanding equity-classified written call option that is not within the scope of another Topic. This update is effective for fiscal years beginning after December 15, 2021. The Company is currently evaluating the effect of this ASU on the Company’s consolidated financial statements and related disclosures.
Except as mentioned above, the Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company’s consolidated balance sheets, statements of income and comprehensive income and statements of cash flows. The adoption of these effective standards is not expected to result in any material impact.
| F-39 |
NOTE－ 3 DISAGGREGATION OF REVENUE
The following tables present the Company’s revenue disaggregated by business segment and geography, based on management’s assessment of available data:
| Financial Years ended December 31, | ||||||||||||
| 2023 | 2022 | 2021 | ||||||||||
| $’000 | $’000 | $’000 | ||||||||||
| Sales at a single point in time | ||||||||||||
| Equipment Sales | ||||||||||||
| Services | ||||||||||||
| Sales over time | ||||||||||||
| Rental | ||||||||||||
| Total sales | ||||||||||||
In accordance with ASC 280, Segment Reporting (“ASC 280”), we have one reportable geographic segment. Sales are based on the countries in which the customer is located. Summarized financial information concerning our geographic segments is shown in the following tables:
| Financial Years ended December 31, | ||||||||||||
| 2023 | 2022 | 2021 | ||||||||||
| $’000 | $’000 | $’000 | ||||||||||
| Singapore | 17,430 | 15,811 | 13,884 | |||||||||
| Australia | 6,737 | 9,056 | 10,064 | |||||||||
| Other countries | 11,849 | 13,492 | 9,458 | |||||||||
| 36,016 | 38,359 | 33,406 | ||||||||||
| F-40 |
NOTE－4 ACCOUNTS RECEIVABLE, NET
Accounts receivable, net consisted of the following:
| As of December 31, | ||||||||
| 2023 | 2022 | |||||||
| $’000 | $’000 | |||||||
| Accounts receivable – third parties | ||||||||
| Accounts receivable – related parties | ||||||||
| Less: allowance for expected credit loss | ( | ) | ( | ) | ||||
| Accounts receivable, net | ||||||||
The Company generally conducts its business with creditworthy third parties. The Company determines, on a continuing basis, the probable losses and an allowance for expected credit loss, based on several factors including internal risk ratings, customer credit quality, payment history, historical bad debt/write-off experience and forecasted economic and market conditions. Accounts receivable are written off after exhaustive collection efforts occur and the receivable is deemed uncollectible. In addition, receivable balances are monitored on an ongoing basis and its exposure to bad debts is not significant.
NOTE－5 INVENTORIES
The Company’s inventories were as follows:-
| As of December 31, | ||||||||
| 2023 | 2022 | |||||||
| $’000 | $’000 | |||||||
| Statement of financial position | ||||||||
| Finished goods | ||||||||
| Written down | ( | ) | ( | ) | ||||
| Financial Years ended December 31, | ||||||||||||
| 2023 | 2022 | 2021 | ||||||||||
| $’000 | $’000 | $’000 | ||||||||||
| Statement of comprehensive income | ||||||||||||
| Inventories recognised as an expense in cost of sales | ||||||||||||
| F-41 |
NOTE－6 AMOUNTS DUE FROM RELATED PARTIES
Amounts due from related parties consisted of the following:
| As of December 31, | ||||||||
| 2023 | 2022 | |||||||
| $’000 | $’000 | |||||||
| Due from related parties: | ||||||||
| - MWE Investment Pte Ltd(1) | ||||||||
| - Multi Ways Holdings Limited | ||||||||
| - P4 Engineering Industrial Pte Ltd(2) | ||||||||
The related party of the Company are as follows:
| (1) | |
| (2) |
The amounts are unsecured, interest-free and repayable on demand.
NOTE－7 PROPERTY AND EQUIPMENT, NET
Property and equipment consisted of the following:
| As of December 31, | ||||||||||||
| 2023 | 2022 | 2021 | ||||||||||
| $’000 | $’000 | $’000 | ||||||||||
| At cost: | ||||||||||||
| Leasehold buildings | ||||||||||||
| Motor vehicles | ||||||||||||
| Office equipment, and furniture and fittings | ||||||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ( |
) | ||||||
| Property and equipment, net | ||||||||||||
| F-42 |
Depreciation
expense for the financial years ended December 31, 2023, 2022 and 2021were remained at approximately $
Property
and equipment under finance leasing arrangement classified under motor vehicle as of December 31, 2023 and 2022 amounted to approximately
$
Right-of-use
assets under operating leasing arrangements classified under leasehold building as of December 31, 2023 and 2022 amounted to approximately
$
NOTE－8 INVESTMENT IN EQUITY SECURITIES
The Company holds a 4.4% equity interest in Blissful Link Investments Limited. These investments are accounted for using the measurement alternative as outlined in ASC 321-10-35-2 due to the absence of readily determinable fair values. Under this method, the equity interest is initially recorded at cost less impairment.
The director has provided a guarantee to repurchase the investment within three years at the higher of cost or market value. Therefore, there has been no impairment necessary to be recorded due to this guarantee.
As
of December 31, 2023, the carrying value of investments in equity securities amounted to US$
NOTE－9 AMOUNTS DUE TO RELATED PARTIES
Amounts due to related parties consisted of the following:
| As of December 31, | ||||||||
| 2023 | 2022 | |||||||
| $’000 | $’000 | |||||||
| Due to related parties | ||||||||
| - P4 Engineering Industrial Pte Ltd(1) | ||||||||
| - Yin Zhan Holdings Pte Ltd(2) | ||||||||
| Due to directors | ||||||||
The entities are related parties of the Company as follows:
| (1) | |
| (2) |
The amounts due to related parties are unsecured, interest-free and non-repayable on demand.
The amount due to Directors bear an interest rate of
| F-43 |
NOTE－10 BANK BORROWINGS
Bank borrowings consisted of the following:
| Terms of | Annual | As of December 31, | ||||||||||||
| repayments | interest rate | 2023 | 2022 | |||||||||||
| $’000 | $’000 | |||||||||||||
| Term loans | % | |||||||||||||
| Trust receipts | % | |||||||||||||
| Bank overdraft | % | |||||||||||||
| Mortgage loan | % | |||||||||||||
| Total | ||||||||||||||
| Representing | ||||||||||||||
| Within 12 months | ||||||||||||||
| Over 1 year | ||||||||||||||
As
of December 31, 2023 and 2022, bank borrowings were obtained from several financial institutions in Singapore, which bear annual interest
at a fixed rate from
The Company’s bank borrowings are guaranteed under the personal from Mr. James Lim and Ms. Lee NG and mortgage of leasehold property at 22 Gul Avenue, Singapore 629662. However, the leasehold property at 22 Gul Avenue, Singapore 629662 has been sold on November 30, 2023.
| F-44 |
NOTE－11 RIGHT-OF-USE ASSETS
The Company adopted ASU No. 2016-02, Leases, on January 1, 2019, the beginning of the fiscal 2019, using the modified retrospective approach. The Company determines whether an arrangement is a lease at inception. This determination generally depends on whether the arrangement conveys the right to control the use of an identified fixed asset explicitly or implicitly for a period of time in exchange for consideration. Control of an underlying asset is conveyed if we obtain the rights to direct the use of and to obtain substantially all of the economic benefit from the use of the underlying asset. Some of our leases include both lease and non-lease components which are accounted for as a single lease component as the Company has elected the practical expedient. Some of the operating lease agreements include variable lease costs, primarily taxes, insurance, common area maintenance or increases in rental costs related to inflation. Substantially all of our equipment leases and some of our real estate leases have terms of less than one year and, as such, are accounted for as short-term leases as we have elected the practical expedient.
Operating leases are included in the right-of-use lease assets, other current liabilities and long-term lease liabilities on the Consolidated Balance Sheet. Right-of-use assets and lease liabilities are recognized at each lease’s commencement date based on the present values of its lease payments over its respective lease term. When a borrowing rate is not explicitly available for a lease, the incremental borrowing rate is used based on information available at the lease’s commencement date to determine the present value of its lease payments. Operating lease payments are recognized on a straight-line basis over the lease term.
The
Company adopts
The table below presents the lease-related assets and liabilities recorded on the balance sheet.
| As of December 31, | ||||||||
| 2023 | 2022 | |||||||
| $’000 | $’000 | |||||||
| Assets | ||||||||
| Finance lease, right-of-use asset, net (classified under property and equipment, net) | ||||||||
| Operating lease, right-of-use asset, net | ||||||||
| Total right-of-use asset | ||||||||
| Liabilities | ||||||||
| Current: | ||||||||
| Non-current: | ||||||||
| Total lease liabilities | ||||||||
| F-45 |
The Company excludes short-term leases (those with lease terms of less than one year at inception) from the measurement of lease liabilities or right-of-use assets. The following tables summarize the lease expense for the financial years.
| Financial Years ended December 31, | ||||||||||||
| 2023 | 2022 | 2021 | ||||||||||
| $’000 | $’000 | $’000 | ||||||||||
| Finance lease cost: | ||||||||||||
| Interest on lease liabilities (per ASC 842) | ||||||||||||
| Operating lease cost: | ||||||||||||
| Operating lease expense (per ASC 842) | ||||||||||||
| Short-term lease expense (other than ASC 842) | ||||||||||||
| Total lease expense | ||||||||||||
Components of Lease Expense
We recognize lease expense on a straight-line basis over the term of the operating leases, as reported within “general and administrative” expense on the accompanying consolidated statement of operations.
| F-46 |
Future Contractual Lease Payments as of December 31, 2023
The below table summarizes our (i) minimum lease payments over the next five years, (ii) lease arrangement implied interest, and (iii) present value of future lease payments for the next three years ending December 31:
| Financial Years ending December 31, | Operating and finance lease amount | |||
| $’000 | ||||
| 2024 | ||||
| 2025 | ||||
| Less: interest | ( | ) | ||
| Present value of lease liabilities | ||||
| Representing: | ||||
| Current liabilities | ||||
| Non-current liabilities | ||||
NOTE－12 SHAREHOLDERS’ EQUITY
Ordinary Shares
The
Company was established under the laws of Cayman Islands on June 2, 2022 with authorized share of ordinary shares of par
value US$ each. On January 27, 2023, the Company amended its memorandum of association to effect a
The Company is authorized to issue one class of ordinary share.
Dividends
On 31 December 2021, the company declared a dividend of S$ per ordinary share. The dividend is payable to its shareholders of record as of December 31, 2021. The dividend amount of US$ million was distributed and paid in December 2022.
On 31 December 2021, the company declared a dividend of S$ per ordinary share. The dividend is payable to its shareholders of record as of December 31, 2021. The dividend amount of US$ million was partially distributed and paid in December 2023 amounting to US$ million.
The holders of the Company’s ordinary share are entitled to the following rights:
Voting Rights: Each share of the Company’s ordinary share entitles its holder to one vote per share on all matters to be voted or consented upon by the stockholders. Holders of the Company’s ordinary shares are not entitled to cumulative voting rights with respect to the election of directors.
Dividend Right: Subject to limitations under Cayman law and preferences that may apply to any shares of preferred stock that the Company may decide to issue in the future, holders of the Company’s ordinary share are entitled to receive ratably such dividends or other distributions, if any, as may be declared by the Board of the Company out of funds legally available therefor.
| F-47 |
Liquidation Right: In the event of the liquidation, dissolution or winding up of our business, the holders of the Company’s ordinary share are entitled to share ratably in the assets available for distribution after the payment of all of the debts and other liabilities of the Company, subject to the prior rights of the holders of the Company’s preferred stock.
Other Matters: The holders of the Company’s ordinary share have no subscription, redemption or conversion privileges. The Company’s ordinary share does not entitle its holders to preemptive rights. All of the outstanding shares of the Company’s ordinary share are fully paid and non-assessable. The rights, preferences and privileges of the holders of the Company’s ordinary share are subject to the rights of the holders of shares of any series of preferred stock which the Company may issue in the future.
NOTE－13 INCOME TAXES
The provision for income taxes consisted of the following:
| Financial Years ended December 31, | ||||||||||||
| 2023 | 2022 | 2021 | ||||||||||
| $’000 | $’000 | $’000 | ||||||||||
| Income tax current year | ||||||||||||
| Over provision for previous years | ( | ) | ( | ) | ||||||||
| Deferred tax | ( | ) | ||||||||||
| Income tax (benefit) expense | ( | ) | ||||||||||
The effective tax rate in the years presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rate. The Company’s subsidiaries mainly operate in Singapore that are subject to taxes in the jurisdictions in which they operate, as follows:
BVI
MWE is considered to be an exempted British Virgin Islands Company and are presently not subject to income taxes or income tax filing requirements in the British Virgin Islands or the United States.
Singapore
Multi Ways SG is operating in Singapore and are subject to the Singapore tax law at the corporate tax rate at 17% on the assessable income arising in Singapore during its tax year.
| F-48 |
The reconciliation of income tax rate to the effective income tax rate based on income before income taxes for the financial years ended December 31, 2023, 2022 and 2021 are as follows:
| Financial Years ended December 31, | ||||||||||||
| 2023 | 2022 | 2021 | ||||||||||
| $’000 | $’000 | $’000 | ||||||||||
| Income before income taxes | ||||||||||||
| Statutory income tax rate | % | % | % | |||||||||
| Income tax expense at statutory rate | ||||||||||||
| Tax effect of non-taxable income | ( | ) | ( | ) | ||||||||
| Tax effect of non-deductible items | ||||||||||||
| Tax refund | ( | ) | ( | ) | ||||||||
| Tax holiday | ( | ) | ( | ) | ||||||||
| Other | ( | ) | ||||||||||
| Income tax (benefit) expense | ( | ) | ||||||||||
The following table sets forth the significant components of the deferred tax assets and liabilities of the Company as of December 31, 2023 and 2022:
| Financial Years ended December 31, | ||||||||||||
| 2023 | 2022 | 2021 | ||||||||||
| $’000 | $’000 | $’000 | ||||||||||
| Deferred tax asset: | ||||||||||||
| Accelerated tax depreciation | ||||||||||||
Uncertain tax positions
The Company evaluates the uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measure the unrecognized benefits associated with the tax positions. As of December 31, 2023 and 2022, the Company did not have any significant unrecognized uncertain tax positions. The Company did not incur any interest and penalties related to potential underpaid income tax expenses for the financial years ended December 31, 2023, 2022 and 2021 and also did not anticipate any significant increases or decreases in unrecognized tax benefits in the next 12 months from December 31, 2023.
| F-49 |
NOTE－14 RELATED PARTY TRANSACTIONS
In the ordinary course of business, during the financial years ended December 31, 2023, 2022 and 2021, the Company was involved in certain transactions, either at cost or current market prices, and on the normal commercial terms with related parties. The following table provides the transactions with these parties for the financial years as presented (for the portion of such period that they were considered related):
| Financial Years ended December 31, | ||||||||||||
| 2023 | 2022 | 2021 | ||||||||||
| Nature of transactions | $’000 | $’000 | $’000 | |||||||||
| P4 Engineering Industrial Pte Ltd(1) | ||||||||||||
| - Sale of goods(1) | ||||||||||||
| - Purchases of goods(1) | ||||||||||||
| - Land rental(1) | ||||||||||||
| - Loan interest income | ||||||||||||
| Multi Ways Equipment Sdn Bhd(2) | ||||||||||||
| - Sale of goods(2) | ||||||||||||
| MWE Investment Pte Ltd(3) | ||||||||||||
| - Sale of goods(3) | ||||||||||||
| Yin Zhan Holding Pte Ltd(4) | ||||||||||||
| - Sale of goods(4) | ||||||||||||
| - Purchases of goods(4) | ||||||||||||
| - Other services income(4) | ||||||||||||
| Loan from director | ||||||||||||
| - James Lim Eng Hock | ||||||||||||
These related parties are controlled by the common directors and officers of the Company.
| (1) | |
| (2) | |
| (3) | |
| (4) |
| F-50 |
Apart from the transactions and balances detailed elsewhere in these accompanying consolidated financial statements, the Company has no other significant or material related party transactions during the financial years presented.
NOTE－15 CONCENTRATIONS OF RISK
The Company is exposed to the following concentrations of risk:
| (a) | Major customers |
For
the financial year ended December 31, 2023, there was a single customer who accounted approximately for
For
the financial year ended December 31, 2022, there was a single customer who accounted approximately for
For
the financial year ended December 31, 2021, there was one single customer who accounted approximately for
| (a) | Major vendors |
For
the financial year ended December 31, 2023, 2022 and 2021, the vendor who accounted for
| 2023 | 2022 | 2021 | ||||||||||||||||||||||
| Percentage of purchases | Accounts payable | Percentage of purchases | Accounts payable | Percentage of purchases | Accounts payable | |||||||||||||||||||
| % | $’000 | % | $’000 | % | $’000 | |||||||||||||||||||
| Vendor A | ||||||||||||||||||||||||
| (b) | Credit risk |
Financial
instruments that potentially subject the Company to credit risk consist of cash equivalents, restricted cash, accounts and loans receivable.
Cash equivalents are maintained with high credit quality institutions, the composition and maturities of which are regularly monitored
by management. The Singapore Deposit Protection Board pays compensation up to a limit of S$ (approximately US$) if the bank
with which an individual/a company hold its eligible deposit fails. As of December 31, 2023, bank and cash balances of approximately
$
For accounts receivable, the Company determines, on a continuing basis, the probable losses and sets up an allowance for expected credit loss based on the estimated realizable value.
| F-51 |
The Company has adopted a policy of only dealing with creditworthy counterparties. The Company performs ongoing credit evaluation of its counterparties’ financial condition and generally do not require a collateral. The Company also considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period.
The Company has determined the default event on a financial asset to be when internal and/or external information indicates that the financial asset is unlikely to be received, which could include default of contractual payments due for more than 90 days, default of interest due for more than 365 days or there is significant difficulty of the counterparty.
To minimize credit risk, the Company has developed and maintained its credit risk grading to categorize exposures according to their degree of risk of default. The credit rating information is supplied by publicly available financial information and the Company’s own trading records to rate its major customers and other debtors. The Company considers available reasonable and supportive forward-looking information which includes the following indicators:
| ● | Actual or expected significant adverse changes in business, financial or economic conditions that are expected to cause a significant change to the debtor’s ability to meet its obligations; | |
| ● | Internal credit rating; and | |
| ● | External credit rating and when necessary. |
Regardless of the analysis above, a significant increase in credit risk is presumed if a debtor is more than 30 days past due in making contractual payment.
As of December 31, 2023 and 2022, there were no individual customers with outstanding balances that significantly contributed to the total consolidated accounts receivable.
| (c) | Interest rate risk |
As the Company has no significant interest-bearing assets, the Company’s income and operating cash flows are substantially independent of changes in market interest rates.
The Company’s interest-rate risk arises from bank borrowings. The Company manages interest rate risk by varying the issuance and maturity dates of variable rate debt, limiting the amount of variable rate debt, and continually monitoring the effects of market changes in interest rates. As of December 31, 2023 and 2022, the borrowings were at fixed interest rates.
| (d) | Economic and political risk |
The Company’s major operations are conducted in Singapore. Accordingly, the political, economic, and legal environments in Singapore, as well as the general state of Singapore’s economy may influence the Company’s business, financial condition, and results of operations.
| F-52 |
| (e) | Exchange rate risk |
The Company cannot guarantee that the current exchange rate will remain steady, therefore there is a possibility that the Company could post the same amount of profit for two comparable periods and because of the fluctuating exchange rate actually post higher or lower profit depending on exchange rate of S$ converted to US$ on that date. The exchange rate could fluctuate depending on changes in political and economic environments without notice.
| (f) | Liquidity risk |
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company’s policy is to ensure that it has sufficient cash to meet its liabilities when they become due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation. A key risk in managing liquidity is the degree of uncertainty in the cash flow projections. If future cash flows are fairly uncertain, the liquidity risk increases.
NOTE－16 COMMITMENTS AND CONTINGENCIES
Litigation — From time to time, the Company may be involved in various legal proceedings and claims in the ordinary course of business. The Company currently is not aware of any legal proceedings or claims that it believes will have, individually or in the aggregate, a material adverse effect on its business, financial condition, operating results, or cash flows.
As of December 31, 2023 and 2022, the Company has no material commitments or contingencies.
NOTE－17 SUBSEQUENT EVENTS
In accordance with ASC Topic 855, “Subsequent Events”, which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before consolidated financial statements are issued, the Company has evaluated all events or transactions that occurred after December 31, 2023, up through the date the Company issued the audited consolidated financial statements. During the period, the Company did not have any material subsequent events other than disclosed above.
| F-53 |
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 6. INDEMNIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS
Cayman Islands’ laws do not prohibit or restrict a company from indemnifying its Directors and Executive Officers against personal liability for any loss they may incur arising out of the Company’s business, except to the extent such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime. The indemnity extends only to liability for their own negligence and breach of duty other than breaches of fiduciary duty and not where there is evidence of dishonesty, willful default or fraud.
Our Amended and Restated Memorandum and Articles of Association permit, to the fullest extent permissible under Cayman Islands law, indemnification of our Directors and Executive Officers against all actions, proceedings, costs, charges, expenses, losses, damages or liabilities incurred or sustained by them, other than by reason of their own dishonesty, willful default or fraud, in connection with the execution or discharge of their duties, powers, authorities or discretion as Directors or Executive Officers of our Company, including without prejudice to the generality of the foregoing, any costs, expenses, losses or liabilities incurred by them in defending (whether successfully or otherwise) any civil proceedings concerning our Company or its affairs in any court whether in the Cayman Islands or elsewhere.
The service agreements of our Directors and Executive Officers with Multi Ways SG provide such persons additional indemnification beyond that provided in our Amended and Restated Articles of Association. These provisions will require us to indemnify these individuals to the fullest extent permitted under Cayman Islands law against liabilities that may arise by reason of their service to us, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified, subject to our Company reserving its rights to recover the full amount of such advances in the event that he or she is subsequently found to have been negligent or otherwise have breached his or her trust or fiduciary duties to our Company or to be in default thereof, or where the Cayman Islands courts have declined to grant relief.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to Directors, Executive Officers or persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
ITEM 7. RECENT SALES OF UNREGISTERED SECURITIES
During the past three years, we have issued and sold the following securities without registering such securities under the Securities Act. We believe that each of the following issuances was exempt from registration under the Securities Act pursuant to Section 4(a)(2) of the Securities Act regarding transactions not involving a public offering or in reliance on Regulation S under the Securities Act regarding sales by an issuer in offshore transactions. No placement agent was involved in these issuances of securities.
| II-1 |
Pursuant to a group reorganization completed on August 26, 2022, the Registrant issued an aggregate of 9,374,000 Ordinary Shares, par value US$0.00025, in exchange for 100% equity interest of Multi Ways SG:
| Securities/Purchaser | Date of Sale or Issuance | Number of Securities | ||
| MWE Investments, a company incorporated in the BVI with limited liability on June 1, 2022 and owned as to 97.0% and 3.0% by Mr. Eng Hock Lim and Ms. Noi Geck Lee respectively | August 26, 2022 | 8,914,674 Ordinary Shares | ||
| Precious Choice Global, a company incorporated in the BVI with limited liability on September 13, 2018 and owned as to 100% by Mr. Ho Tong Ho. | August 26, 2022 | 459,326 Ordinary Shares |
On January 27, 2023, for purposes of recapitalization in anticipation of the initial public offering, the Company amended its memorandum of association to effect a 1:4 forward stock split and to change the authorized share capital to $100,000 divided into 400,000,000 Ordinary Shares, of a par value of $0.00025 each. Concurrently, MWE Investments surrendered 12,077,700 Ordinary Shares to the Company. Precious Choice Global surrendered 622,300 Ordinary Shares to the Company.
ITEM 8. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
| (a) | Exhibits |
See “Exhibit Index” beginning on page 2-4 of this registration statement.
| (b) | Financial Statement Schedules |
All supplement schedules are omitted because of the absence of conditions under which they are required or because the data is shown in the financial statements or notes thereto.
ITEM 9. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the effective date of this registration statement (or the most recent post-effective amendment hereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated firm commitment offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and
(iii) To include any material information with respect to the plan of distribution not previously disclosed in this registration statement or any material change to such information in this registration statement;
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
| II-2 |
(4) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:
(i) If the registrant is relying on Rule 430B (§230.430B of this chapter):
(A) Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and
(B) Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an placement agent, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date; or
(ii) If the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
(5) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
(6) To file a post-effective amendment to the registration statement to include any financial statements required by item 8.A. of Form 20-F at the start of any delayed offering or throughout a continuous offering. Financial statements and information otherwise required by Section 10(a)(3) of the Act need not be furnished, provided, that the registrant includes in the prospectus, by means of a post-effective amendment, financial statements required pursuant to this paragraph (a)(4) and other information necessary to ensure that all other information in the prospectus is at least as current as the date of those financial statements.
(7) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant under Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
(8) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to Directors, Executive Officers and controlling persons of the registrant pursuant to the foregoing provisions, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in such Act and will be governed by the final adjudication of such issue.
| II-3 |
EXHIBIT INDEX
| + | Filed herewith. |
| II-4 |
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-1 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Singapore, on March 28, 2025.
| MULTI WAYS HOLDINGS LIMITED | ||
| By: | /s/ Eng Hock Lim | |
| Name: | Eng Hock Lim | |
| Title: | Executive Director, Chairman and Chief Executive Officer (Principal Executive Officer) | |
| By: | /s/ Cheon Kem Tan | |
| Name: | Cheon Kem Tan | |
| Title: | Financial Controller (Principal Accounting and Financial Officer) | |
KNOW ALL BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Bo Zhu, his or her true and lawful agent, proxy and attorney-in-fact, with full power of substitution and resubstitution, for and in his or her name, place and stead, in any and all capacities, to (1) act on, sign and file with the Securities and Exchange Commission any and all amendments (including post-effective amendments) to this Registration Statement together with all schedules and exhibits thereto and any subsequent registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, together with all schedules and exhibits thereto, (2) act on, sign and file such certificates, instruments, agreements and other documents as may be necessary or appropriate in connection therewith, (3) act on and file any supplement to any prospectus included in this Registration Statement or any such amendment or any subsequent registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and (4) take any and all actions which may be necessary or appropriate to be done, as fully for all intents and purposes as he or she might or could do in person, hereby approving, ratifying and confirming all that such agent, proxy and attorney-in-fact or any of his or her substitutes may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
| Date: | March 28, 2025 |
/s/ Eng Hock Lim | |
| Eng Hock Lim, Executive Director, Chairman and Chief Executive Officer (principal executive officer) | |||
| Date: | March 28, 2025 |
/s/ Cheon Kem Tan | |
Cheon Kem Tan, Financial Controller (principal financial officer, its controller or principal accounting officer) | |||
| Date: | March 28, 2025 |
/s/ Noi Geck Lee | |
| Noi Geck Lee, Executive Director and Chief Administration Officer | |||
| Date: | March 28, 2025 |
/s/ Chin Hoong Chan | |
| Chin Hoong Chan, Independent Director | |||
| Date: | March 28, 2025 |
/s/ Gang Wong | |
| Gang Wong, Independent Director | |||
| Date: | March 28, 2025 |
/s/ Kok Chuah Tan | |
| Kok Chuah Tan, Independent Director |
SIGNATURE OF AUTHORIZED REPRESENTATIVE OF THE REGISTRANT
Pursuant to the Securities Act, the undersigned, the duly authorized representative in the United States of America, has signed this registration statement or amendment thereto in New York, New York, United States of America on March 28, 2025.
| COGENCY GLOBAL INC. | ||
| By: | /s/ Colleen A. De Vries | |
| Name: | Colleen A. De Vries | |
| Title: | Senior Vice-President on behalf of Cogency Global Inc. | |
| II-5 |