424B4 1 ea0208187-424b4_rectitude.htm PROSPECTUS

 

PROSPECTUSFiled pursuant to Rule 424(b)(4)

Registration No. 333-276517

 

2,000,000 Ordinary Shares

  

 

Rectitude Holdings Ltd

 

This is an initial public offering of our ordinary shares, par value US$0.0001 per share (the “Ordinary Shares”). We are offering, on a firm commitment basis, 2,000,000 Ordinary Shares. The initial public offering price of the Ordinary Shares is US$4.00 per Ordinary Share.

 

Prior to this offering, there has been no public market for our Ordinary Shares. We have received the approval letter from the Nasdaq Stock Market to list the Ordinary Shares on the Nasdaq Capital Market (“Nasdaq”) under the symbol “RECT.”

 

Throughout this prospectus, unless the context indicates otherwise, any references to “Rectitude Cayman,” “the Company,” or “our Company” are to Rectitude Holdings Ltd, a Cayman Islands holding company.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

 

Investing in our Ordinary Shares involves a high degree of risk, including the risk of losing your entire investment. See “Risk Factors” beginning on page 8 to read about factors you should consider before buying our Ordinary Shares.

 

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 Our Being an Emerging Growth Company” and “Implications of Our Being a Foreign Private Issuer” beginning on page 6 of this prospectus 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 subsidiaries in Singapore. The Ordinary Shares offered in this offering are shares of the holding company that is incorporated in the Cayman Islands.

 

 

 

 

Upon completion of this offering, our issued and outstanding shares will consist of 14,500,000 Ordinary Shares, assuming the underwriters’ over-allotment option is not exercised. We are a “controlled company” as defined under the Nasdaq Stock Market Rules because, immediately after the completion of this offering, Mr. Zhang Jian and his spouse, Ms. Xu Yukai will collectively own approximately 72.7% of our total issued and outstanding Ordinary Shares, representing approximately 72.7% of the total voting power. 

 

After this offering, Mr. Zhang Jian and his spouse, Ms. Xu Yukai will control shares representing more than 50% of the total voting power of our shares. 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 organizational documents, 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 capital stock that you may feel are in your best interest as one of our shareholders.

 

    Per Share    Total 
Initial public offering price(1)  US$      4.00   US$      8,000,000 
Underwriting discounts and commissions(2)  US$      0.28   US$       560,000 
Proceeds to the Company before expenses(3)  US$      3.72   US$    7,440,000 

 

 

(1)

Initial public offering price per share is US$4.00.

(2)We have agreed to pay the underwriter a discount equal to 7% of the gross proceeds of the offering. This table does not include a non-accountable expense allowance equal to 1% of the gross proceeds of this offering payable to the underwriter. For a description of the other compensation to be received by the underwriter, see “Underwriting” beginning on page 101.
(3)Excludes fees and expenses payable to the underwriter. The total amount of underwriter expenses related to this offering is set forth in the section entitled “Expenses Relating to This Offering” on page 109.

 

If we complete this offering, net proceeds will be delivered to us on the closing date.

 

The underwriter expects to deliver the Ordinary Shares to the purchasers against payment on or about June 24, 2024.

 

You should not assume that the information contained in the registration statement to which this prospectus is a part is accurate as of any date other than the date hereof, regardless of the time of delivery of this prospectus or of any sale of the Ordinary Shares being registered in the registration statement of which this prospectus forms a part.

 

No dealer, salesperson or any other person is authorized to give any information or make any representations in connection with this offering other than those contained in this prospectus and, if given or made, the information or representations must not be relied upon as having been authorized by us. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any security other than the securities offered by this prospectus, or an offer to sell or a solicitation of an offer to buy any securities by anyone in any jurisdiction in which the offer or solicitation is not authorized or is unlawful.

 

Sole Book-Running Manager

 

A.G.P.

 

The date of this prospectus is June 21, 2024.

 

 

 

  

TABLE OF CONTENTS

 

    Page
ABOUT THIS PROSPECTUS   ii
PRESENTATION OF FINANCIAL INFORMATION   ii
MARKET AND INDUSTRY DATA   ii
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS   iii
DEFINITIONS   v
PROSPECTUS SUMMARY   1
RISK FACTORS   8
ENFORCEABILITY OF CIVIL LIABILITIES   22
USE OF PROCEEDS   23
CAPITALIZATION   24
DILUTION   25
DIVIDENDS AND DIVIDEND POLICY   26
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS   27
HISTORY AND CORPORATE STRUCTURE   45
INDUSTRY OVERVIEW   47
BUSINESS   55
REGULATORY ENVIRONMENT   73
MANAGEMENT   77
PRINCIPAL SHAREHOLDERS   84
RELATED PARTY TRANSACTIONS   85
DESCRIPTION OF SHARE CAPITAL   86
CERTAIN CAYMAN ISLANDS COMPANY CONSIDERATIONS   90
SHARES ELIGIBLE FOR FUTURE SALE   96
MATERIAL TAX CONSIDERATIONS   97
UNDERWRITING   101
EXPENSES RELATING TO THIS OFFERING   109
LEGAL MATTERS   110
EXPERTS   110
WHERE YOU CAN FIND ADDITIONAL INFORMATION   110
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS   F-1

 

Until July 16, 2024 (the 25th day after the date of this prospectus), all dealers that effect transactions in these Ordinary Shares, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as an underwriter and with respect to their unsold allotments or subscriptions.

 

i

 

 

ABOUT THIS PROSPECTUS

 

Neither we, nor any of the underwriters have authorized anyone to provide you with any information or to make any representations other than as contained in this prospectus or in any related free writing prospectus. Neither we, nor the underwriters take responsibility for, and provide no assurance about the reliability of, any information that others may give you. Please read this prospectus carefully. It describes our business, our financial condition and our results of operations. We have prepared this prospectus so that you will have the information necessary to make an informed investment decision. This prospectus is an offer to sell only the securities offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of the securities. Our business, financial condition, results of operations and prospects may have changed since that date.

 

For investors outside the United States: Neither we, nor the underwriter have 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.

 

PRESENTATION OF FINANCIAL INFORMATION

 

Basis of Presentation

 

Unless otherwise indicated, all financial information contained in this prospectus is prepared and presented in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP” or “GAAP”).

 

Certain amounts, percentages and other figures included in this prospectus have been subject to rounding adjustments. Accordingly, amounts, percentages and other figures shown as totals in certain tables or charts may not be the arithmetic aggregation of those that

precede them and amounts and figures expressed as percentages in the text may not total 100% or, when aggregated may not be the arithmetic aggregation of the percentages that precede them.

 

Our financial year ends on March 31 of each year. References in this prospectus to a financial year, such as “financial year 2023,” relate to our financial year ended March 31 of that calendar year.

 

Financial Information in U.S. 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 for the financial years ended March 31, 2023 and March 31, 2022 were made at S$1.3294 to US$1.00, the exchange rate set forth in the H10 statistical release of the Federal Reserve Board on March 31, 2023. All translations from Singapore dollars to U.S. dollars and from U.S. dollars to Singapore dollars for the six months ended September 30, 2023 were made at a S$1.3656 to US$1.00.

 

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.

 

MARKET AND INDUSTRY DATA

 

Certain market data and forecasts used throughout this prospectus were obtained from market research, reports of governmental and international agencies and industry publications, gathered by the Company. 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.

 

ii

 

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This prospectus contains forward-looking statements that relate to our current expectations and views of future events. These forward-looking statements are contained principally in the sections entitled “Prospectus Summary,” “Risk Factors,” “Use of Proceeds,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Industry Overview” and “Business.” These statements relate to events that involve known and unknown risks, uncertainties and other factors, including those listed under “Risk Factors,” which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

 

In some cases, these forward-looking statements can be identified by words or phrases such as “believe,” “plan,” “expect,” “intend,” “should,” “seek,” “estimate,” “will,” “aim” and “anticipate,” or other similar expressions, but these are not the exclusive means of identifying such statements. All statements other than statements of historical facts included in this document, including those regarding future financial position and results, business strategy, plans and objectives of management for future operations (including development plans and dividends) and statements on future industry growth are forward-looking statements. In addition, we and our representatives may from time to time make other oral or written statements which are forward-looking statements, including in our periodic reports that we will file with the SEC, other information sent to our shareholders and other written materials.

 

These forward-looking statements are subject to risks, uncertainties and assumptions, some of which are beyond our control. In addition, these forward-looking statements reflect our current views with respect to future events and are not a guarantee of future performance. Actual outcomes may differ materially from the information contained in the forward-looking statements as a result of a number of factors, including, without limitation, the risk factors set forth in “Risk Factors” and the following:

 

our business and operating strategies and our various measures to implement such strategies;

 

our operations and business prospects, including development and capital expenditure plans for our existing business;

 

changes in policies, legislation, regulations or practices in the industry and those countries or territories in which we operate that may affect our business operations;

 

our financial condition, results of operations and dividend policy;

 

changes in political and economic conditions and competition in the area in which we operate, including a downturn in the general economy;

 

the regulatory environment and industry outlook in general;

 

future developments in the supply of safety equipment market and actions of our competitors;

 

catastrophic losses from man-made or natural disasters, such as fires, floods, windstorms, earthquakes, diseases, epidemics, other adverse weather conditions or natural disasters, war, international or domestic terrorism, civil disturbances and other political or social occurrences;

 

iii

 

 

the loss of key personnel and the inability to replace such personnel on a timely basis or on terms acceptable to us;

 

the overall economic environment and general market and economic conditions in the jurisdictions in which we operate;

 

our ability to execute our strategies;

 

changes in the need for capital and the availability of financing and capital to fund those needs;

 

our ability to anticipate and respond to changes in the markets in which we operate, and in client demands, trends and preferences;

  

exchange rate fluctuations, including fluctuations in the exchange rates of currencies that are used in our business;

 

changes in interest rates or rates of inflation; and

 

legal, regulatory and other proceedings arising out of our operations.

 

The forward-looking statements made in this prospectus relate only to events or information as of the date on which the statements are made in this prospectus. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this prospectus and the documents that we reference in this prospectus and have filed as exhibits to the registration statement, of which this prospectus is a part, completely and with the understanding that our actual future results or performance may be materially different from what we expect.

 

This prospectus contains certain data and information that we obtained from various government and private publications. Statistical data in these publications also include projections based on a number of assumptions. The markets for the supply of safety equipment may not grow at the rate projected by such market data, or at all. Failure of this industry to grow at the projected rate may have a material and adverse effect on our business and the market price of our Ordinary Shares. Furthermore, if any one or more of the assumptions underlying the market data are later found to be incorrect, actual results may differ from the projections based on these assumptions. You should not place undue reliance on these forward-looking statements.

 

iv

 

 

DEFINITIONS

 

“ALS” means Alturan Supplies Pte. Ltd., a company incorporated in Singapore on September 15, 2009, and a wholly owned subsidiary of our Company.

 

“Amended and Restated Memorandum and Articles of Association” means collectively the Amended and Restated Memorandum of Association and Amended and Restated Articles of Association.

 

“Amended and Restated Articles of Association” means the amended and restated articles of association of our Company adopted on October 3, 2023, to take effect immediately prior to the completion of this offering, as amended from time to time.

 

“Amended and Restated Memorandum of Association” means the amended and restated memorandum of association of our Company adopted on October 3, 2023, as amended from time to time.

 

“Business Day” means a day (other than a Saturday, Sunday or public holiday in the U.S.) on which licensed banks in the U.S. are generally open for normal business to the public.

 

“CAGR” means compound annual growth rate.

 

“Chinese Yuan” means the lawful currency of the People’s Republic of China.

 

“Company,” “our Company,” or “Rectitude Cayman” means Rectitude Holdings Ltd, a exempted company incorporated in the Cayman Islands with limited liability on June 1, 2023.

 

“Companies Act” means the Companies Act (As Revised) of the Cayman Islands.

 

“COVID-19” means the Coronavirus Disease 2019.

 

“Directors” means the directors of our Company as at the date of this prospectus, unless otherwise stated.

 

“Exchange Act” means the United States Securities Exchange Act of 1934, as amended.

 

“Executive Directors” means the executive Directors of our Company as at the date of this prospectus, unless otherwise stated.

 

“Executive Officers” means the executive officers of our Company as at the date of this prospectus, unless otherwise stated.

 

“Group,” “our Group,” “we,” “us,” or “our” means 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.

 

v

 

 

“Independent Directors” means the independent non-executive director of our Company as of the date of this prospectus, unless otherwise stated.

 

“Independent Third Party” means a person or company who or which is independent of and is not a 5% owner of, does not control and is not controlled by or under common control with any 5% owner and is not the spouse or descendant (by birth or adoption) of any 5% owner of the Company.

 

“JTC” means JTC Corporation, the lead government agency responsible for the management and development of industrial infrastructure in Singapore, as established under the Jurong Town Corporation Act 1968 of Singapore.

 

“MOM” means the Ministry of Manpower of Singapore.

 

“PRC” means the People’s Republic of China.

 

“PTH” means P.T.H. Pte. Ltd., a company incorporated in Singapore on November 3, 2008, and a wholly owned subsidiary of our Company.

 

“RPL” means Rectitude Pte Ltd, a company incorporated in Singapore on December 26, 1997, and a wholly owned subsidiary of our Company.

   

“S$” or “SGD” or “Singapore Dollars” means Singapore dollar(s), the lawful currency of Singapore.

 

“SEC” or “Securities and Exchange Commission” means the United States Securities and Exchange Commission.

 

“Securities Act” means the U.S. Securities Act of 1933, as amended.

 

“Singapore Companies Act” means the Companies Act 1967 of Singapore, as amended, supplemented or modified from time to time.

 

“WSH” means the Workplace Safety and Health Council of Singapore, a statutory body under the MOM.

 

“US$,” or “USD” or “United States Dollars” means United States dollar(s), the lawful currency of the United States of America.

 

vi

 

 

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 business is principally involved in the provision of safety equipment, encompassing essential items such as (i) personal protective clothing, hand gloves, safety footwear, and personal fall arrest systems (a system used to arrest an employee in a fall from a walking-working surface, usually consisting of a body harness, anchorage, and connector), (ii) portable fire extinguishers and (iii) traffic products such as rubber speed humps, wheel stops and wheel chocks. Additionally, when needed by our customers, we also offer auxiliary products such as industrial hardware tools and electrical hardware required for construction sites. For the financial years ended March 31, 2022 and March 31, 2023, the provision of safety equipment contributed 57.4% and 65.0% of our revenue, respectively. In addition, for the six months ended September 30, 2022 and 2023, the provision of safety equipment contributed to 58% and 60% of our revenue, respectively.

 

Our products and solutions are marketed to a wide array of distributor networks and end markets, both in Singapore and increasingly throughout the Southeast Asian region including Brunei, Cambodia, Malaysia, Indonesia and Vietnam. The bulk of our customers belong to the infrastructure development, building construction, marine, oil and gas industries, and general industrial markets. This broad market coverage allows us to serve a diverse customer base and capitalize on growth opportunities in various sectors. Our business strategy involves enhancing our market presence in Singapore and increasingly, the Southeast Asian region as well as executing selected acquisitions that meet our specific investment criteria.

 

We believe we have a corporate culture that motivates newly acquired, entrepreneurial businesses to embrace our shareholder value creation principles. In the financial year ended March 31, 2023, business in Singapore contributed to 92% of our Group’s revenue. We also believe that our financial results reflect our strong market position. For the financial year ended March 31, 2022, our revenue was S$29.8 million, and our net profit was S$2.1 million. For the financial year ended March 31, 2023, our revenue was S$37.6 million, and our net profit was S$3.9 million. This is a growth of 26.3% in revenue and 89.1% in net profit respectively. The cost of revenue increased from S$21.1 million in the financial year ended March 31, 2022 to S$25.5 million in the financial year ended March 31, 2023.

 

For the six months ended September 30, 2023, business in Singapore contributed to 97% of our Group’s revenue. We also believe that our financial results reflect our strong market position. For the six months ended September 30, 2022, our revenue was S$18.5 million, and our net profit was S$2.5 million. For the six months ended September 30, 2023, our revenue was S$20.5 million, and our net profit was S$2.1 million. This is a growth of 11% in revenue. The cost of revenue increased from S$12.4 million in the six months ended September 30, 2022 to S$12.9 million in the six months ended September 30, 2023.

 

Competitive Strengths

 

We have strong and stable relationships with our suppliers and customers.

 

Since the inception of our business in 1997, we have developed stable relationships with our key suppliers and customers in each region we serve. We have strived to maintain stable business relationships with our major customers. For the financial years ended March 31, 2022 and 2023, our top five customers accounted for 33% of total revenue and three of our top five customers have done business with us for more than 10 years. For the six months ended September 30, 2022 and 2023, our top five customers accounted for 31% and 25% of total revenue, respectively and three of our top five customers have done business with us for more than 10 years.

 

1

 

 

We have an experienced management team.

 

We have an experienced management team, led by Mr. Zhang Jian, our Executive Director, Chairman and Chief Executive Officer, who has been instrumental in spearheading the growth of our Group. Mr. Zhang has over 20 years of experience in the safety 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 also supported by an experienced management team with substantial experience in the provision of safety equipment. For more information, please see the section titled “Management — Executive Directors and Officers.”

 

We have strategically located branches across Singapore.

 

We have a network of eight strategically located branches across Singapore that stock our safety equipment and other industrial grade hardware products. These branches are conveniently situated near our customers’ workplace, allowing us to fulfil their needs quickly and easily on short notice. We believe our prompt and efficient delivery capabilities sets us apart from competitors.

 

We are a one-stop provider of an extensive range of safety products and industrial graded hardware tools.

 

We offer a wide range of safety products, including helmets, safety shoes, travel restraint, and fall arrest systems, to help our customers meet their regulatory requirements. As a one-stop provider, we also supply industrial-grade hardware tools, simplifying our customers’ procurement process and offering a comprehensive solution for their safety and hardware needs.

 

Growth strategies

 

Expand business and operations through joint ventures, acquisitions and/or strategic alliances

 

We aim to focus on our core business of selling safety and industrial-grade hardware equipment, while also considering collaborations in Southeast Asia within industries like construction, electronics, hotels, manufacturing, oil and gas, and marine sectors to expand our business opportunities. Additionally, we may explore acquiring traditional industrial hardware stores in Singapore facing succession challenges if suitable opportunities arise.

 

Strengthening our local presence

 

We plan to strengthen our local presence. A key aspect of this strategy involves expanding our branch network across Singapore by establishing new branches in strategic locations. By increasing our local footprint, we aim to enhance our accessibility, better serve our customers, and solidify our position as a trusted provider of safety and industrial solutions in the region.

 

Widening our product range

 

We plan to expand our product range of safety products within our established brands. By broadening our offerings, we aim to provide our customers with an even greater selection of high-quality safety products under our trusted brands. This allows us to cater to diverse customer needs, strengthen our market presence, and further solidify our position as a reliable provider of comprehensive safety solutions.

 

Summary of Risk Factors

 

Investing in our Ordinary Shares involves risks. The risks summarized below are qualified by reference to “Risk Factors” beginning on page 8 of this prospectus, which you should carefully consider before making a decision to purchase Ordinary Shares. If any of these risks actually occurs, our business, financial condition or results of operations would likely be materially adversely affected. In such case, the trading price of our Ordinary Shares would likely decline, and you may lose all or part of your investment.

 

2

 

 

We face numerous risks that could materially affect our business, results of operations or financial condition. These risks include but are not limited to the following:

 

Risks related to Our Business and Industry:

 

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 are dependent on the need to continually maintain a wide range of safety equipment which are relevant to our customers’ needs.

 

We are susceptible to fluctuations in the prices and quantity of available safety equipment and industrial grade hardware.

 

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.

 

Our reputation and profitability may be adversely affected if there are major failures or malfunction in our safety equipment sold by or sold to our customers.

 

A significant failure or deterioration in our quality control systems could have a material adverse effect on our business and operating results.

 

We are exposed to disputes and claims arising from site accidents due to the usage of our safety equipment.

 

We may be affected if we are found to be in breach of any lease agreements entered into by us.

 

Increased competition in the safety equipment sales and rental business in Singapore and the region may affect our ability to maintain our market share and growth.

 

We are exposed to the credit risks of our customers.

 

Our business is subject to supply chain interruptions.

 

Our business and operations may be materially and adversely affected in the event of a re-occurrence or a prolonged global pandemic outbreak of COVID-19.

 

We may be affected by an outbreak of other infectious diseases.

 

We are exposed to risks arising from fluctuations of foreign currency exchange rates.

 

We and/or our customers may not be able to obtain the necessary approvals or certifications for the use of our safety equipment in various jurisdictions.

 

We are subject to environmental, health and safety regulations and penalties, and may be adversely affected by new and changing laws and regulations.

 

Our insurance policies may be inadequate to cover our assets, operations and any loss arising from business interruptions.

 

We may be harmed by negative publicity.

 

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.

 

We are exposed to risks in respect of acts of war, terrorist attacks, epidemics, political unrest, adverse weather conditions and other uncontrollable events.

 

We may not be able to successfully implement our business strategies and future plans.

 

We are subject to risks related to product recalls, and our operation results and financial condition would suffer if we fail to adequately manage such risks.

 

3

 

 

Risks related to our Securities and this offering:

 

An active trading market for our Ordinary Shares may not be established or, if established, may not continue and the trading price for our Ordinary Shares may fluctuate significantly.

 

We may not maintain the listing of our Ordinary Shares on Nasdaq which could limit investors’ ability to make transactions in our Ordinary Shares and subject us to additional trading restrictions.

 

The trading price of our Ordinary Shares may be volatile, which could result in substantial losses to investors.

 

Certain recent initial public offerings of companies with public floats comparable to the anticipated public float of our Company have experienced extreme volatility that was seemingly unrelated to the underlying performance of the respective company. We may experience similar volatility. 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.

 

If securities or industry analysts do not publish research or reports about our business causing us to lose visibility in the financial markets or if they adversely change their recommendations regarding our Ordinary Shares, the market price for our Ordinary Shares and trading volume could decline.

 

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.

 

Short selling may drive down the market price of our Ordinary Shares.

 

Because our public offering price per share is substantially higher than our net tangible book value per share, you will experience immediate and substantial dilution.

 

The initial public offering price for our Ordinary Shares may not be indicative of prices that will prevail in the trading market and such market prices may be volatile.

 

You must rely on the judgment of our management as to the uses of the net proceeds from this offering, and such uses may not produce income or increase our share price.

 

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.

 

Our Controlling Shareholders have substantial influence over the Company. Their interests may not be aligned with the interests of our other shareholders, and they could prevent or cause a change of control or other transactions.

 

As a “controlled company” under the rules of Nasdaq, we may choose to exempt our Company from certain corporate governance requirements that could have an adverse effect on our public shareholders.

 

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 Nasdaq corporate governance listing standards. These practices may afford less protection to shareholders than they would enjoy if we complied fully with Nasdaq corporate governance listing standards.

 

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.

 

Certain judgments obtained against us or our auditor by our shareholders may not be enforceable.

 

We are an emerging growth company within the meaning of the Securities Act and may take advantage of certain reduced reporting requirements applicable to other public companies that are not emerging growth companies.

 

4

 

 

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.

 

We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses to us.

 

Our compensation of directors and officers may not be publicly available.

 

We will incur significantly increased costs and devote substantial management time as a result of the listing of our Ordinary Shares on Nasdaq.

 

Corporate Information

 

Rectitude Cayman was incorporated in the Cayman Islands on June 1, 2023. Our registered office in the Cayman Islands is at Vistra (Cayman) Limited, P. O. Box 31119 Grand Pavilion, Hibiscus Way, 802 West Bay Road, Grand Cayman, KY1 — 1205 Cayman Islands. Our principal executive office is at 35 Tampines Industrial Avenue 5, T5@Tampines, Singapore 528627. Our telephone number at this location is +65 6749 6647. Our principal website address is www.rectitude.com.sg. 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.

 

Corporate Structure(1)

 

 

 

(1)This is our Corporate Structure post-reorganization.

 

Our Company was incorporated in the Cayman Islands on June 1, 2023 under the Companies Act as an exempted company with limited liability. Our authorized share capital is US$50,000 divided into 500,000,000 Ordinary Shares, par value US$0.0001 per share.

 

RPL, PTH and ALS are our direct wholly owned subsidiaries.

 

Implications of Our Being a “Controlled Company”

 

We are a “controlled company” as defined under the Nasdaq Stock Market Rules as Zhang Jian, our Chairman of the Board, Executive Director and Chief Executive Officer and his spouse, Ms. Xu Yukai, together hold 72.7% of our total issued and outstanding Ordinary Shares and is able to exercise 72.7% of the total voting power of our authorized and issued shares, assuming that the underwriters do not exercise their over-allotment option. For so long as we remain a “controlled company,” we are permitted to elect not to comply with certain corporate governance requirements. If we rely on these exemptions, you will not have the same protection afforded to shareholders of companies that are subject to these corporate governance requirements.

 

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Implications of Our Being an Emerging Growth Company

 

As a company with less than US$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 US$1.235 billion, (3) the date on which we are deemed to be a “large accelerated filer” under the Exchange Act, which means the market value of our Ordinary Shares that are held by non-affiliates exceeds US$700.0 million as of the prior March 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 Our Being a Foreign Private Issuer

 

Upon completion of this offering, we will 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 are 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 Nasdaq. These practices may afford less protection to shareholders than they would enjoy if we complied fully with corporate governance listing requirements of the Nasdaq. Following this offering, we will rely on home country practice to be exempted from certain of the corporate governance requirements of the Nasdaq, namely (i) a majority of the Directors on our Board are not required to be independent Directors; (ii) there is no necessity to have regularly scheduled executive sessions with independent Directors; and (iii) there is no requirement for the Company to obtain shareholder approval prior to an issuance of securities in connection with (a) the acquisition of stock or assets of another company; (b) equity-based compensation of officers, directors, employees or consultants; (c) a change of control; and (d) transactions other than public offerings. 

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The Offering

 

Offering Price   The initial public offering price is US$4.00 per Ordinary Share.
     
Ordinary Shares offered by us   2,000,000 Ordinary Shares
Ordinary Shares issued and outstanding prior to this offering   12,500,000 Ordinary Shares
     
Ordinary Shares issued and outstanding immediately after this offering  

14,500,000 Ordinary Shares assuming no exercise of the underwriters’ over-allotment option and excluding up to 100,000 Ordinary Shares underlying the Underwriter’s Warrants.

 

14,800,000 Ordinary Shares assuming full exercise of the underwriters’ over-allotment option and excluding up to 100,000 Ordinary Shares underlying the Underwriter’s Warrants.

     
Underwriter’s Warrants   We have agreed to issue to the Underwriter and to register herein warrants to purchase up to 100,000 Ordinary Shares (equal to five percent (5%) of the total amount of Ordinary Shares sold in this offering, not including any shares underlying the underwriters’ over-allotment option, the “Underwriter’s Warrants”). The Underwriter’s Warrants will be exercised at any time, and from time to time, in whole or in part, commencing from six (6) months after the commencement of sale of the offering and expiring four and a half years from the commencement of sales of the offering. The Underwriter’s Warrants are exercisable at a per share price of 130% of the offering price of the Ordinary Shares in this offering.
     
Use of proceeds   We currently intend to use the net proceeds from this offering to run marketing and promotion campaigns to boost our brand, invest in product development to create new and improved offerings, upgrade our systems and embrace digital transformation for efficiency, and cover general working capital needs and for corporate purposes. See “Use of Proceeds.”
     
Dividend policy   We do not intend to pay any dividends on our Ordinary Shares for the foreseeable future. Instead, we anticipate that all of our earnings, if any, will be used for the operation and growth of our business. See “Dividends and Dividend Policy” for more information.
     
Lock-up   We, each of our Directors and Executive Officers and 10% or greater shareholders, have agreed, subject to certain exceptions, for a period of 180 days after the date of this prospectus, not to, except in connection with this offering, 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 Ordinary Shares or any other securities convertible into or exercisable or exchangeable for Ordinary Shares, or enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of Ordinary Shares. See “Shares Eligible for Future Sale” and “Underwriting — Lock-Up Agreements.”
     
Risk factors   Investing in our Ordinary Shares involves risks. See “Risk Factors” beginning on page 8 of this prospectus for a discussion of factors you should carefully consider before deciding to invest in our Ordinary Shares.
     
Listing   We have received Nasdaq’s approval to list our Ordinary Shares on the Nasdaq Capital Market.
     
Trading symbol   RECT
     
Transfer agent  

VStock Transfer LLC

 

Address: 18 Lafayette Pl, Woodmere, NY 11598

 

Telephone: (212) 828-8436

 

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RISK FACTORS

 

Investing in our shares is highly speculative and involves a significant degree of risk. You should carefully consider the following risks, as well as other information contained in this prospectus, before making an investment in our Company. The risks discussed below could materially and adversely affect our business, prospects, financial condition, results of operations, cash flows, ability to pay dividends and the trading price of our shares. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially and adversely affect our business, prospects, financial condition, results of operations, cash flows and ability to pay dividends, and you may lose all or part of your investment.

 

This prospectus also contains forward-looking statements having direct and/or indirect implications on our future performance. Our actual results may differ materially from those anticipated by these forward-looking statements due to certain factors, including the risks and uncertainties faced by us, as described below and elsewhere in this prospectus.

 

Risks Related to Our Business and Industry

 

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.

 

Generally, we fund our purchases of safety equipment and industrial grade hardware products 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 safety 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 be able to obtain sufficient financing to purchase our safety 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.

 

We are dependent on the need to continually maintain a wide range of safety equipment which are relevant to our customers’ needs.

 

The needs and preferences of our customers in terms of types and specifications of safety equipment may change as a result of evolving laws, regulations, standards and requirements and new developments in technology. Our future success depends on our ability to obtain and provide safety equipment that meet the 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 respond to changes sufficiently and promptly 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 March 31, 2022, March 31, 2023 and September 30, 2023, we had inventories of S$5.6 million, S$5.8 million and S$5.9 million respectively. Our revenue relies on customer demand for our safety equipment. Depending on the progress of technological development of safety equipment, our existing safety 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 safety equipment and industrial grade hardware.

 

We are exposed to fluctuations in the prices of safety equipment and industrial grade hardware. In the event that we are not able to source any specific product at acceptable prices, or if we face any delays or shortages in obtaining sufficient quantity of products, this 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. Zhang Jian has been instrumental in expanding our business from dealing with industrial grade hardware in 1997 to providing our current wide range of products and services in respect of safety equipment and electrical products today. We rely on the wide network and contacts of Mr. Zhang, which was built over the past two decades, in particular, sourcing for new safety equipment from new and existing suppliers and sales of our safety equipment.

 

Our performance depends on the continued service and performance of Mr. Zhang because he plays an important role in guiding the implementation of our business strategies and future plans. The working and business relationships that Mr. Zhang has developed with our main suppliers and customers over the years is important for the future development of our business. If Mr. Zhang 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. Zhang and/or the inability to identify, hire, train and retain other qualified 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.

 

Our reputation and profitability may be adversely affected if there are major failures or malfunction in our safety equipment sold by or sold to our customers.

 

Our operations are exposed to the risk of equipment failure which may arise due to wear and tear, quality control, risk of failure by our customers to follow procedures and protocols, as well as inherent risks in our customer’s operating environments, resulting in personal injury of the user of our safety equipment. In the event of such equipment failure, we may be forced to cease all, or part of our operations and we may be subject to legal and regulatory liabilities and actions such as directives, penalties, sanctions, or significant costs and expenses in any dispute as a result of such equipment failure. This may have an adverse impact on our operations and financial performance.

 

Since our establishment, we believe that we have built goodwill in our brands and thus customer loyalty. Hence, if there are any major lapses in our equipment sales and 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. In such an event, our business and hence our profitability and financial performance may be adversely affected.

 

A significant failure or deterioration in our quality control systems could have a material adverse effect on our business and operating results.

 

The quality and safety of our products are critical to the success of our business and operations. As such, it is imperative that our (and our service providers’) quality control systems operate effectively and successfully. Quality control systems can be negatively impacted by the design of the quality control systems, the quality training programs and adherence by employees to quality control guidelines. Although we strive to ensure that all of our service providers have implemented and adhere to high-quality control systems, any significant failure or deterioration of such quality control systems could have a material adverse effect on our business and operating results.

 

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We are exposed to disputes and claims arising from site accidents due to the usage of our safety equipment.

 

The infrastructure, building construction, and marine, and oil and gas industries are high-risk industries in which risks of accidents and fatalities are more likely to occur. Claims may be made against us for such job site accidents and/or fatalities on grounds caused by, inter alia, defective or malfunctioning safety equipment. In the event that we are required to pay damages arising from disputes, our reputation and profitability will be adversely affected.

 

Although we have sought to minimize the risk of such liabilities by regular inspection of the safety equipment we import from our suppliers, we believe that it is not possible for us to guard against every equipment defect or malfunction. 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 insurance. 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 and are subject to certain terms and conditions in respect of these real properties, such as the requirement to obtain approval from 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 be in breach of any of the terms and conditions of our leases.

 

Increased competition in the safety equipment business in Singapore and the region may affect our ability to maintain our market share and growth.

 

We operate in the safety equipment sales 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 safety 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 safety 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 are exposed to the credit risks of our customers.

 

We extend credit terms to some of our customers. Our average accounts receivable turnover days were approximately 127 days, 116 days, and 94 days for the financial years ended March 31, 2022, 2023, and for the six months ended September 30, 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 financial year ended March 31, 2022, 2023 and the six months ended September 30, 2023, 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.

 

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Our business is subject to supply chain interruptions.

 

We work with third-party logistic providers for the import, export, and transportation of our safety equipment and industrial-grade hardware. We rely on such third-party service providers’ abilities to deliver our safety 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;

 

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; and

 

the COVID-19 and disruptions as a result of efforts to control or mitigate the pandemic (such as facility closures, governmental orders, outbreaks and/or transportation capacity).

 

Our results of operations and capital resources have not been materially impacted by supply chain interruptions during the six months ended September 30, 2023, and financial years ended March 31, 2022 and 2023, and there have not been any material impact for the six months ended September 30, 2023 and financial years ended March 31, 2022 and 2023 because we have locked in the prices of most of our sales orders during these time periods. 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, COVID-19, outbreaks, or other factors, could affect our revenue and profitability. Please refer to the risk factors “Our business and operations may be materially and adversely affected in the event of a re-occurrence or a prolonged global pandemic outbreak of COVID-19” 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 on our reputation, revenue, and profitability.

 

In the six months ended September 30, 2023, and financial years ended March 31, 2022, and March 31, 2023, our business segments, products, lines of service, projects, or operations were not materially impacted by supply chain disruptions, especially in light of Russia’s invasion of Ukraine and the effectiveness of the Uyghur Forced Labor Protection Act (“UFLPA”). Moving forward, we also do not expect to experience such supply chain disruptions in the future because we source our goods from a number of suppliers. To the best of our knowledge, we have not received any information from our suppliers pertaining to any present or potential supply chain disruptions as well. Pertaining to the UFLPA, we understand from our suppliers based in the People’s Republic of China (PRC) that the safety products we have procured are not derived from raw materials obtained from forced labor in China’s Xinjiang Uyghur Autonomous Region. We intend to inform our suppliers of this material preference when placing orders and are considering plans to impose this as a non-negotiable term of our orders in the coming months. Should the opportunity arise, we plan to source more of our products from manufacturers and suppliers outside of the PRC to further diversify our supply chains.

 

Our business model does not heavily rely on third-party software or services, particularly those that are directly integrated into our products or operations. This reduces our dependency on external technology and lessens the potential impact of cybersecurity breaches or disruptions originating from these third-party entities. Additionally, our emphasis on physical retail shops and warehouses provides an inherent buffer against cyberattacks. Currently, we only receive a small number of inquiries via our website at www.rectitude.com.sg. Sales to end users through e-commerce platforms such as Shopee and Lazada are also minimal, total amounting only to S$17,085 (US$12,852) and S$30,057 (US$22,609) for the financial years ended March 31, 2023, and 2022, and S$6,167 (US$4,516) and S$5,430 (US$3,976) for the six months ended September 30, 2023 and 2022 respectively, with sales via our physical stores and through third party vendors accounting for the rest of our sales. While data breaches and operational disruptions can still occur, the physical presence of our business allows for alternative methods of product distribution and customer service, reducing the overall impact of cybersecurity related incidents on our operations. Despite our perception of the lower risk of cybersecurity related incidents materially affecting our operations, we plan to prioritize the implementation of cybersecurity measures to maintain a secure and reliable business environment. For example, we plan to (i) conduct more rigorous assessments of potential suppliers’ cybersecurity practices, including penetration testing and vulnerability assessments; (ii) incorporate cybersecurity clauses into our business contracts; (iii) include specific security requirements and data protection protocols in our vendor contracts to ensure consistent cybersecurity standards across our supply chain; (iv) educate our employees on cybersecurity threats by providing training for employees to recognize and report phishing attempts, social engineering tactics, and other cyber threats; and (v) implement cybersecurity awareness tools and simulations to test employees’ knowledge and response to potential threats. By implementing these measures, we hope that our ability to respond to and recover from any eventual cybersecurity incidents will be enhanced.

 

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Our business and operations may be materially and adversely affected in the event of a re-occurrence or a prolonged global pandemic outbreak of COVID-19.

 

The global pandemic outbreak of COVID-19 announced by the World Health Organization in early 2020 has disrupted our operations, and the operations of our customers, suppliers, and/or sub-contractors. If the development of the COVID-19 outbreak becomes more severe and/or new variants of COVID-19 evolve to be more transmissible and virulent than the existing strains, this may result in a tightening of restrictions and regulations on businesses. If we or our customers, suppliers, and sub-contractors are forced to close their businesses with prolonged disruptions to their operations, we may experience a delay or shortage of supplies and/or services by our suppliers and sub-contractors, or termination of our orders and contracts by our customers. In addition, if any of our employees are suspected of having contracted COVID-19, some or all of our employees may be quarantined thus causing a shortage of labor and we will be required to disinfect our workplace and our production and processing facilities. In such event, our operations may be severely disrupted, which may have a material and adverse effect on our business, financial condition, and results of operations.

 

In addition, we have also faced difficulties in hiring suitable manpower from overseas jurisdictions due to travel restrictions imposed by the Singapore Government as a result of the COVID-19 pandemic during financial years 2022 and 2023. This has led to a stagnation in our workforce strength, thereby affecting our potential growth as we rely heavily on manual labor. We have also taken measures to mitigate the impact of potential shortages in the future by introducing robots to our operations. For example, at our hardware store and warehouse located at Defu Industrial City, #03-28, 8 Defu South Street 1, Singapore 533758, we have engaged the use of robots that are able to engage in simple tasks such as customer reception, displaying the availability and description of various products available in the store and direct customers to the shelf where a particular product is located. This reduces the number of workers we require at the store.

 

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 are 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 in foreign currency exchange rates.

 

Our reporting currency is Singapore dollars. Our overseas sales is denominated in Singapore Dollars and procurement from our overseas suppliers are denominated in Chinese Yuan. 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 safety equipment in various jurisdictions.

 

Various jurisdictions may require different licenses, approvals and certifications for the use and operation of certain safety equipment, such as in Singapore, Malaysia, Cambodia and Australia.

 

As we offer safety equipment and firefighting equipment to our customers within Singapore, we will need to maintain such approvals and certifications in order to carry out such services. In addition, we are guided by a set of safety regulations imposed on us as described in the “Regulatory Environment” section on page 73 below. We are subject to monetary fines and/or other penalties if there is an infringement of any of the applicable safety regulations. Our business operations are regulated by various governmental bodies and authorities in Singapore as disclosed in the “Regulatory Environment” section of this prospectus on page 73. Any such new regulations or any imposition of new licensing requirements that may be applicable to our business operations and/or the products that we supply may have an adverse impact on our operations and financial performance.

 

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In addition, compliance with changes in government legislation, regulations, or policies may increase our costs and any significant increase in 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.

 

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 safety 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 that 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 customers’ job sites 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 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 safety equipment products 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 rumours. 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 contractual arrangements 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.

 

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We are exposed to risks with 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 our safety 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 safety 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 are subject to risks related to product recalls, and our operation results and financial condition would suffer if we fail to adequately manage such risks.

 

We have implemented measures in our sourcing and certification processes, that are designed to prevent and detect defects and contaminants in our products. See “Business — Sales Process Flow” and “Business — Certifications” sections for more information. Such measures, however, may not prevent, reveal or detect defects in our products, and such defects may not become apparent until after our products have been sold into the market or in the event of an actual workplace accident. Consequently, there is a risk that product defects may occur and such defects will require a product recall. Any product recalls and related remedial actions can be costly to our operations and could have a material adverse effect on our business, results of operations and financial condition. Furthermore, product recalls could result in negative publicity and public concerns regarding the safety of our products, which could harm the reputation of our products and our business and could cause the market value of our shares to decline.

 

Risks Related to Our Securities and This Offering

 

An active trading market for our Ordinary Shares may not be established or, if established, may not continue and the trading price for our Ordinary Shares may fluctuate significantly.

 

We cannot assure you that a liquid public market for our Ordinary Shares will be established. If an active public market for our Ordinary Shares does not occur following the completion of this offering, the market price and liquidity of our Ordinary Shares may be materially and adversely affected. The initial public offering price for our Ordinary Shares in this offering was determined by negotiation between us and the underwriter based upon several factors, and we can provide no assurance that the trading price of our shares after this offering will not decline below the initial public offering price. As a result, investors in our shares may experience a significant decrease in the value of their shares.

 

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We may not maintain the listing of our Ordinary Shares on Nasdaq which could limit investors’ ability to make transactions in our Ordinary Shares and subject us to additional trading restrictions.

 

We have been granted approval to list our Ordinary Shares on Nasdaq concurrently with this offering. In order to continue listing our Ordinary Shares on Nasdaq, we must maintain certain financial and share price levels and we may be unable to meet these requirements in the future. We cannot assure you that our Ordinary Shares will continue to be listed on Nasdaq in the future.

 

If Nasdaq delists our Ordinary Shares and we are unable to list our Ordinary 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)a limited availability of market quotations for our Ordinary Shares;

 

(b)reduced liquidity for our Ordinary Shares;

 

(c)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;

 

(d)a limited amount of news and analyst coverage; and

 

(e)a decreased ability to issue additional securities or obtain additional financing in the future.

 

As long as our Ordinary Shares are listed on Nasdaq, U.S. federal law prevents or pre-empts individual 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 Nasdaq, we would be subject to regulations in each state in which we offer our Ordinary Shares.

 

The trading price of our Ordinary Shares may be volatile, 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 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;

 

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.

 

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.

 

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Certain recent initial public offerings of companies with public floats comparable to the anticipated public float of our Company have experienced extreme volatility that was seemingly unrelated to the underlying performance of the respective company. We may experience similar volatility. 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.

 

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.

 

In addition, if the trading volumes of our Ordinary Shares are low, persons 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.

 

If securities or industry analysts do not publish research or reports 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 shares will be influenced by research or reports that industry or securities analysts publish about our business. If one or more analysts downgrade our shares, the market price for our shares would likely decline. If one or more of these analysts cease to cover us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause the market price or trading volume for our shares to decline.

 

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 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 Cayman Islands and Singapore law. Even if our Board decides to declare and pay dividends (by way of a simple majority decision of our Directors), 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 subsidiaries, 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 shares. You may not realize a return on your investment in our shares and you may even lose your entire investment.

 

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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 number 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.

 

Because our initial public offering price per share is substantially higher than our net tangible book value per share, you will experience immediate and substantial dilution.

 

If you purchase Ordinary Shares in this offering, you will pay substantially more than our net tangible book value per share. As a result, you will experience immediate and substantial dilution of US$2.93 per Ordinary Share, representing the difference between our as adjusted net tangible book value per Ordinary Share of US$1.07 as of the 6 months ended September 30, 2023, after giving effect to the net proceeds to us from this offering, and the initial public offering price of US$4.00 per Ordinary Share and assuming a full exercise of the over-allotment option. See “Dilution” for a more complete description of how the value of your investment in our shares will be diluted upon the completion of this offering.  

 

The initial public offering price for our Ordinary Shares may not be indicative of prices that will prevail in the trading market and such market prices may be volatile.

 

The initial public offering price for our Ordinary Shares was determined by negotiations between us and the underwriters, and does not bear any relationship to our earnings, book value or any other indicia of value. We cannot assure you that the market price of our Ordinary Shares will not decline significantly below the initial public offering price. The financial markets in the United States and other countries have experienced significant price and volume fluctuations in the last few years. Volatility in the price of our Ordinary Shares may be caused by factors outside of our control and may be unrelated or disproportionate to changes in our results of operations.

 

You must rely on the judgment of our management as to the uses of the net proceeds from this offering, and such uses may not produce income or increase our share price.

 

We intend to use the net proceeds of this offering as set out in “Use of Proceeds.” However, our management will have considerable discretion in the application of the net proceeds received by us in this offering. You will not have the opportunity, as part of your investment decision, to assess whether proceeds are being used appropriately. The net proceeds may be used for corporate purposes that do not improve our efforts to achieve or maintain profitability or increase our share price. The net proceeds from this offering may be placed in investments that do not produce income or that lose value.

 

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 are 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% 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%.

 

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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 Tax Considerations — Passive Foreign Investment Company Considerations.”

 

Our Controlling Shareholders have substantial influence over the Company. Their interests may not be aligned with the interests of our other shareholders, and they could prevent or cause a change of control or other transactions.

 

Immediately prior to the completion of this offering, Mr. Zhang Jian and his spouse, Ms. Xu Yukai, together owns an aggregate of approximately 84.3% of our issued and outstanding Ordinary Shares. Upon completion of this offering, Mr. Zhang will and Ms. Xu Yukai (collectively “the Controlling Shareholders”) will together own 72.7% of our issued and outstanding Ordinary Shares, assuming the underwriters do not exercise their over-allotment option.

 

Accordingly, our Controlling Shareholders could have considerable influence or control over the outcome of any corporate transactions or other matters submitted to the shareholders for approval, including (i) mergers, consolidations, (ii) the election or removal of Directors, (iii) the sale of all or substantially all of our assets, (iv) making amendments to our Amended and Restated Memorandum and Articles of Association, (v) whether to issue additional shares, including to him, (vi) employment, including compensation arrangements, and (vii) 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 Shareholders, 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 shares. For more information regarding our principal shareholders and their affiliated entities, see “Principal Shareholders.”

 

As a “controlled company” under the rules of the Nasdaq Capital Market, we may choose to exempt our Company from certain corporate governance requirements that could have an adverse effect on our public shareholders.

 

Our directors and officers beneficially own a majority of the voting power of our issued and outstanding Ordinary Shares. Under the Rule 4350(c) of the Nasdaq Capital Market, a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements, including:

 

an exemption from the rule that a majority of our Board must be independent directors;

 

an exemption from the rule that the compensation of our chief executive officer must be determined or recommended solely by independent directors; and

 

An exemption from the rule that our director nominees must be selected or recommended solely by independent directors.

 

The exemption we intend to rely on is that a majority of our Board need not be independent directors. As a result, you may not have the same protection afforded to shareholders of companies that are subject to these corporate governance requirements.

 

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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 Nasdaq corporate governance listing rules. These practices may afford less protection to shareholders than they would enjoy if we complied fully with Nasdaq corporate governance listing standards.

 

As a foreign private issuer that has been granted approval list our Ordinary Shares on Nasdaq, we rely on a provision in Nasdaq corporate governance listing standards that allows us to follow Cayman Islands law with regard to certain aspects of corporate governance. This allows us to follow certain corporate governance practices that differ in significant respects from the corporate governance requirements applicable to U.S. companies listed on Nasdaq.

 

These practices may afford less protection to shareholders than they would enjoy if we complied fully with corporate governance listing requirements of Nasdaq. Following this offering, we will rely on home country practice to be exempted from certain of the corporate governance requirements of Nasdaq, namely (i) a majority of the Directors on our Board are not required to be independent Directors; (ii) there will not be a necessity to have regularly scheduled executive sessions with independent Directors; and (iii) there will be no requirement for the Company to obtain Shareholder approval prior to an issuance of securities in connection with (a) the acquisition of stock or assets of another company; (b) equity-based compensation of officers, directors, employees or consultants; (c) a change of control; and (d) transactions other than public offerings.

 

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 a Cayman Islands company limited by shares incorporated under the laws of the Cayman Islands. 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 action against the directors, actions by minority shareholders and the fiduciary duties of our directors to us under Cayman Islands law are governed by the Companies Act and 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 the common law of England, the decisions of whose courts are 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 states in the United States. In particular, the Cayman Islands has a less developed body of securities laws than the United States. Some U.S. states have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands. In addition, Cayman Islands companies may not have the standing to initiate a shareholder derivative action in a federal court of the United States.

 

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. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.

 

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 or Controlling Shareholders than they would as shareholders of a company incorporated in a U.S. state. For a discussion of significant differences between the provisions of the Companies Act and the laws applicable to companies incorporated in a U.S. state and their shareholders, see “Certain Cayman Islands Company Considerations — Differences in Corporate Law.”

 

Certain judgments obtained against us or our auditor by our shareholders may not be enforceable.

 

We are a Cayman Islands company. Our operating subsidiaries were incorporated and are located in Singapore. Substantially all of our assets are located outside of the United States. In addition, all of our current Directors and 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. 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 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 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 officers, Directors, or major shareholders, than would shareholders of a corporation incorporated in a jurisdiction in the United States.

 

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We are an emerging growth company within the meaning of the Securities Act and may take advantage of certain reduced reporting requirements.

 

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 the Sarbanes-Oxley Act for so long as we are an emerging growth company. 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. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the extended transition period, although we have adopted certain new and revised accounting standards based on transition guidance permitted under such standards earlier. As a result of this election, our future financial statements may not be comparable to other public companies that comply with the public company effective dates for these new or revised accounting standards.

 

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 are 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 Nasdaq Capital 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 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 under the Exchange Act, 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, 2024. In the future, we would lose our foreign private issuer status if (1) more than 50% 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 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 listing rules of Nasdaq. As 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.

 

Our compensation of directors and officers may not be publicly available.

 

Under Cayman Islands law, the Company is not required to disclose compensation paid to our senior management on an individual basis and the Company has not otherwise publicly disclosed this information elsewhere. The executive officers, directors and management of the Company receive fixed and variable compensation. They also receive benefits in line with market practice. The fixed component of their compensation is set on market terms and adjusted annually. The variable component consists of cash bonuses and awards of shares (or the cash equivalent). Cash bonuses are paid to executive officers and members of management based on previously agreed targets for the business. Shares (or the cash equivalent) are awarded under share options.

 

As a result of all of the above, our public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a company incorporated in the United States.

 

We will incur significantly increased costs and devote substantial management time as a result of the listing of our Ordinary Shares on Nasdaq.

 

We will incur additional legal, accounting, and other expenses as a public reporting company, particularly after we cease to qualify as an emerging growth company. For example, we are required to comply with the additional requirements of the rules and regulations of the SEC and Nasdaq rules, including applicable corporate governance practices. We expect that compliance with these requirements will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. In addition, we expect that our management and other personnel will need to divert attention from operational and other business matters to devote substantial time to these public company requirements. We cannot predict or estimate the amount of additional costs we may incur as a result of becoming a public company or the timing of such costs.

 

In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs, and making some activities more time-consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidelines are provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may also initiate legal proceedings against us, and our business may be adversely affected.

 

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ENFORCEABILITY OF CIVIL LIABILITIES

 

Our Company is a company incorporated with limited liability under the laws of the Cayman Islands. We are incorporated in 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. However, the Cayman Islands has a less developed body of securities laws as compared to the United States and provides less protection for investors. In addition, Cayman Islands companies may not have standing to sue before the U.S. federal courts.

 

All of our current operations are conducted outside of the United States and all of our current assets are located outside of the United States, with the majority of our operations and current assets being located in Singapore. All of the Directors and Executive Officers of our Company reside outside the United States and substantially all of their assets are located outside the United States.

 

As a result, it may not be possible for you to:

 

effect service of process within the United States upon our non-U.S. resident directors or on us;

 

enforce in U.S. courts judgments obtained against our non-U.S. resident directors or us in the U.S. courts in any action, including actions under the civil liability provisions of U.S. securities laws; and

 

enforce in U.S. courts judgments obtained against our non-U.S. resident directors or us in courts of jurisdictions outside the United States in any action, including actions under the civil liability provisions of U.S. securities laws.

 

We have appointed Cogency Global Inc., 122 E. 42nd Street, 18th Floor, New York, New York 10168 as our agent upon whom process may be served in any action brought against us under the securities laws of the United States.

 

Cayman Islands

 

Conyers Dill & Pearman, our counsel as to Cayman Islands law, has advised us that there is uncertainty as to whether the courts of the Cayman Islands would (i) recognize or enforce judgments of the U.S. courts obtained against us or our Directors or Executive Officers that are predicated upon the civil liability provisions of the U.S. securities laws or any U.S. state; or (ii) entertain original actions brought in the Cayman Islands against us or our Directors or Executive Officers that are predicated upon the U.S. securities laws or the securities laws of any U.S. state.

 

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, the courts of the Cayman Islands would 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 would 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 no treaty between the United States and Singapore providing for the reciprocal recognition and enforcement of judgments in civil and commercial matters and a final judgment for the payment of money rendered by any federal or state court in the United States based on civil liability, whether or not predicated solely upon the federal securities laws, would, therefore, not be automatically enforceable in Singapore.

  

In making a determination as to enforceability of a foreign judgment, the Singapore courts need to be satisfied that the foreign judgment was final and conclusive and on the merits of the case, given by a court of law of competent jurisdiction, and was expressed to be for a fixed sum of money. However, the Singapore courts are unlikely to enforce a foreign judgment if (i) the foreign judgment was obtained by fraud; (ii) the proceedings in which the foreign judgment was obtained was not conducted in accordance with principles of natural justice; (iii) the enforcement of the foreign judgment would be contrary to the public policy of Singapore; (iv) the foreign judgment would conflict with earlier judgments from Singapore or earlier foreign judgments recognized in Singapore; or (v) the foreign judgment would amount to the direct or indirect enforcement of foreign penal, revenue or other public laws. Civil liability provisions of the federal and state securities law of the United States permit the award of punitive damages against us, our Directors and officers. The Singapore courts do not allow the enforcement of foreign judgments which amount to the direct or indirect enforcement of foreign penal, revenue or other public laws. It is uncertain as to whether a judgment of the courts of the United States awarding such punitive damages would be regarded by the Singapore courts as being pursuant to foreign, penal, revenue or other public laws. Such determination has yet to be conclusively made by a Singapore court in a reported decision.

 

22

 

 

USE OF PROCEEDS

 

We expect to receive approximately US$5.8 million of net proceeds from this offering after deducting underwriting discounts and commissions and estimated offering expenses of approximately US$2.2 million payable by us, assuming the underwriters do not exercise their over-allotment option.  

 

We currently intend to use proceeds from this offering in the following ways:

 

Marketing and promotion campaigns — We intend to use 20% of the proceeds from the offering for marketing and promotion campaigns. This allocation reflects our commitment to expanding brand awareness, reaching new customers, and driving revenue growth through targeted marketing initiatives.

 

Product development — We intend to use 30% of the proceeds from the offering for product and marketing development. This strategic investment will focus on expanding our product portfolio by increasing the inventory of fast-moving products.

 

Digital Transformation and System Upgrading — We intend to use 10% of the proceeds from the offering for digitalizing our systems, upgrading equipment, and investing in software solutions like online platforms, enterprise resource planning (ERP) systems, and human resource (HR) systems. This investment aims to streamline our business and administrative processes, encompassing quoting, invoicing, tracking, procurement with inventory management, accounting, financial reporting, employee management, and overall efficiency improvement.

 

Working Capital — The balance amount will be used for general working capital and corporate purposes.

 

23

 

 

CAPITALIZATION

 

The following table sets forth our capitalization as of September 30, 2023:

 

on an actual basis; and

 

on a pro forma as adjusted basis to reflect (i) the above; and (ii) the issuance and sale of 2,000,000 Ordinary Shares in this offering at an initial public offering price of US$4.00 per Ordinary Share after deducting underwriting discounts and 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.

 

Shareholders’ Equity  Actual   As
adjusted(1)(2)
 
Ordinary Shares, par value US$0.0001 per share, 500,000,000 Ordinary Shares authorized, 12,500,000 Ordinary Shares outstanding on an actual basis, 14,500,000 Ordinary Shares outstanding on an as adjusted basis  $1,250   $1,450 
Additional paid-in capital  $2,473,122   $2,473,122 
New additional paid-in capital      $5,761,811 
– Retained earnings  $7,284,908   $7,284,908 
   $9,759,280   $15,521,291 
Total Shareholders’ Equity  $9,759,280   $15,521,291 
           
Indebtedness          
Bank borrowings  $2,639,742   $2,639,742 
Total Indebtedness  $2,639,742   $2,639,742 
Total Capitalization   12,399,022    18,161,033 

 

(1)

Reflects the sale of Ordinary Shares in this offering (excluding any Ordinary Shares that may be sold as a result of the underwriters exercising their over-allotment option) at the initial public offering price of $4.00 per share, and after deducting the estimated underwriting discounts and estimated offering expenses payable by us. Additional paid-in capital reflects the net proceeds we expect to receive, after deducting the underwriting discounts, estimated offering expenses payable by us and advisory fees. We estimate that such net proceeds will be approximately US$5,800,000.

 

(2)Assuming the underwriters do not exercise their over-allotment option.

 

24

 

 

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 initial public 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 share represents our total tangible assets (total assets excluding goodwill and other intangible assets) less 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 the initial public offering price of US$4.00 per share, after deducting US$640,000 in underwriting discounts and non-accountable expenses and estimated offering expenses payable by the Company of approximately US$1,597,989 the pro forma as adjusted net tangible book value as of September 30, 2023 would have been approximately US$1.07 per share. This represents an immediate increase in pro forma as adjusted net tangible book value of US$0.29 per share to our existing stockholders and an immediate dilution of US$2.93 per share to new investors purchasing Ordinary Shares in this offering.

 

The following table illustrates this dilution on a per share basis to new investors.

 

   No Exercise of
Over-
Allotment
Option
   Full Exercise of
Over-
Allotment
Option
 
Initial public offering price per share  $4.00   $4.00 
Historical net tangible book value per share as of September 30, 2023  $0.78   $0.78 
Increase in as adjusted net tangible book value per share attributable to the investors in this offering  $0.29   $0.34 
Pro forma net tangible book value per share after giving effect to this offering  $1.07   $1.12 
Dilution per share to new investors participating in this offering  $2.93   $2.88 

 

If the underwriters exercise in full their option to purchase additional Ordinary Shares in this offering, the as adjusted net tangible book value after the offering would be US$1.12 per share, the increase in net tangible book value to existing shareholders would be US$0.34 per share, and the dilution to new investors would be US$2.88 per share.

 

The following table summarizes, on a pro forma as adjusted basis as of September 30, 2023, the differences between existing shareholders and the new investors with respect to the number of Ordinary Shares purchased from us, the total consideration paid and the average price per ordinary share before deducting the estimated commissions to the underwriter and the estimated offering expenses payable by us.

 

   Ordinary Shares
purchased
   Total
consideration
   Average
price per
Ordinary
Share
 
   Number   Percent   Amount   Percent     
Existing shareholders   12,500,000    86.2%  $1,250    86.2%  $0.0001 
New investors (1)   2,000,000    13.8%  $8,000,000    13.8%  $4.00 
Total   14,500,000    100%  $8,001,250    100%  $0.55 

 

(1) Not including over-allotment shares of up to 300,000 shares.

  

25

 

  

DIVIDENDS AND 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 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 the Board may deem relevant. In addition, we are a holding company and depend on the receipt of dividends and other distributions from our subsidiaries 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.

 

26

 

 

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

 

Our business is principally involved in the provision of safety equipment, encompassing essential items such as (i) personal protective clothing, hand gloves, safety footwear, and personal fall arrest systems (a system used to arrest an employee in a fall from a walking-working surface, usually consisting of a body harness, anchorage, and connector), (ii) portable fire extinguishers and (iii) traffic products such as rubber speed humps, wheel stops and wheel chocks. Additionally, when needed by our customers, we also offer auxiliary products such as industrial hardware tools and electrical hardware required for construction sites. For the financial years ended March 31, 2022 and 2023, the provision of safety equipment contributed 57.4% and 65.0% of our revenue, respectively. While for the six months ended September 30, 2022 and 2023, the provision of safety equipment contributed 58% and 60% of our revenue, respectively.

 

Our products and solutions are marketed to a wide array of distributor networks and end markets, both in Singapore and increasingly throughout the Southeast Asian region including Brunei, Cambodia, Malaysia, Indonesia and Vietnam. The bulk of our customers belong to the infrastructure development, building construction, marine, oil and gas industries, and general industrial markets. This broad market coverage allows us to serve a diverse customer base and capitalize on growth opportunities in various sectors. Our business strategy involves enhancing our market presence in Singapore and increasingly, the Southeast Asian region as well as executing selected acquisitions that meet our specific investment criteria.

 

We believe we have a corporate culture that motivates newly acquired, entrepreneurial businesses to embrace our shareholder value creation principles. In the financial year ended March 31, 2023, business in Singapore contributed to 92.0% of our Group’s revenue. We also believe that our financial results reflect our strong market position. For the financial year ended March 31, 2022, our revenue was S$29.8 million, and our net profit was S$2.1 million. For the financial year ended March 31, 2023, our revenue was S$37.6 million, and our net profit was S$3.9 million. This is a growth of 26.3% in revenue and 89.1% in net profit respectively. The cost of revenue increased from S$21.1 million in the financial year ended March 31, 2022 to S$25.5 million in the financial year ended March 31, 2023.

 

For the six months ended September 30, 2023, business in Singapore contributed to 97% of our Group’s revenue. We also believe that our financial results reflect our strong market position. For the six months ended September 30, 2022, our revenue was S$18.5 million, and our net profit was S$2.5 million. For the six months ended September 30, 2023, our revenue was S$20.5 million, and our net profit was S$2.1 million. This is a growth of 11% in revenue. The cost of revenue increased from S$12.4 million in the six months ended September 30, 2022 to S$12.9 million in the six months ended September 30, 2023.

 

27

 

 

Factors Affecting Our Financial Condition and Results of Operations

 

Our results of operations have been and will continue to be affected by several factors, including those set out below:

 

We operate in a highly competitive industry

 

We face substantial competition within the safety equipment sales industry, and we compete on various factors including pricing, quality and range of our products, and branding. Certain of our competitors may have substantially greater financial resources, marketing resources, and ability to distribute wider range of safety equipment than the Company. We believe that with the strong brand recognition for our products in the markets we operate in, having established presence in strategic locations conveniently situated near our customers’ work sites and stable relationships developed and maintained with our existing customers over many years, we will be able to maintain our competitiveness and meet our customers’ needs, secure repeat orders with existing customers and acquire new customers. However, if we are unable to ensure our range of safety products are up-to-date or manage our pricing strategy effectively to meet the customers’ requirements and expectations, we might not compete successfully with our competitors, which may materially and adversely affect our business and results of operations.

 

We are dependent on a stable production and supply of products from our manufacturing partners and suppliers

 

We distribute a wide range of safety equipment and hardware products, which include our own branded products which are manufactured by selected third-party contract manufacturers and other products sourced from a variety of suppliers in the region and in the PRC. As such, our business is reliant on a stable production and sufficient supply of products from our manufacturing partners and suppliers. While we have developed strong relationships with reliable suppliers and third-party contract manufacturers that supply our products today, there can be no assurance that our third-party manufacturing partners and suppliers will not face operational or financial issues and in turn, negatively affect our ability to meet our customers’ demand and lead to loss of sales or even business relationship with existing customers. Additionally, our ability to procure products from our suppliers may be affected by increase in prices or shortages in the raw materials, which may materially and negatively impact our business and financial performance.

 

We are exposed to disputes and product liability claims arising from accidents due to the usage of our safety equipment

 

In the event that the safety equipment that we distribute are found to be defective and/or determined to cause injury or death, we are subject to disputes and/or product liability claims from our customers. Furthermore, as a safety equipment company, we face an inherent risk of damage to our reputation if one or more of our products are, or are alleged to be defective, whether deliberate or accidental, and such defects and allegations may adversely affect the purchasing decision of our customers and negatively impact our business operations. In addition, our products are typically used in potentially hazardous environments prone to accidents such as construction sites. While we have sought to minimize and mitigate the risk of such liabilities by performing regular inspection of the safety equipment we procure from our suppliers, there can be no assurance that any claims arising from such defects would be under our insurance coverage, or that the insurance will be sufficient to cover the impact on our company or that the insurance claims would not be contested by our insurers.

 

Our ability to successfully implement our business strategies and/or future plans

 

We intend to strengthen our market position within Singapore, invest in new marketing initiatives, expand our safety equipment portfolio and engage in strategic acquisitions. The success and viability of our business strategies and future plans are dependent on favourable market conditions, our ability to obtain sufficient financing, hire and retain skilled employees and professionals to execute our business strategies and implement our business development and marketing plans effectively and successfully manage our product portfolio to meet the customers’ changing demand. While we have planned such strategies based on our outlook regarding our business prospects and consideration for the aforementioned factors, there is no assurance that our planned strategies will be successful. Further, there is no assurance that our planned merger and acquisitions will result in the realisation of our expected synergy and financial returns from such activities. If we do not achieve the desired outcome from our implementation of our business strategies and investments, our business, financial conditions and results of operations may be materially and adversely affected.

 

28

 

 

Results of Operations

 

The following table sets forth a summary of our consolidated results of operations for the periods indicated, both in absolute amount and as a percentage of its total revenue.

 

Years Ended March 31, 2022 and 2023

 

   For the Years ended
March 31,
 
   2022   2023 
   S$   S$ 
Revenue   29,813,611    37,643,696 
Cost of revenue   (21,069,733)   (25,503,026)
Gross profit   8,743,878    12,140,670 
           
Selling and marketing expenses   (1,650,101)   (2,104,824)
Research and development expenses   (89,067)   (83,684)
General and administrative expenses   (4,500,000)   (5,169,398)
Total operating expenses   (6,239,168)   (7,357,906)
           
Income from operations   2,504,710    4,782,764 
           
Other income (expense)          
Other income, net   130,493    156,878 
Interest expense   (119,180)   (142,496)
Total other income, net   11,313    14,382 
Income before income tax expense   2,516,023    4,797,146 
Income tax expense   (439,015)   (870,325)
Net income and comprehensive income   2,077,008    3,926,821 

 

Comparison of Years Ended March 31, 2022 and 2023

 

Revenue

 

We generate revenue primarily from the sale of safety equipment and other auxiliary products. Our safety equipment includes essential items such as (i) personal protective clothing, hand gloves, safety footwear, and personal fall arrest system; (ii) portable fire extinguishers and (iii) traffic products. Additionally, we also sell auxiliary products to supplement our safety products and solutions based on customers’ needs, such as industrial-grade hardware tools and electrical products. Total revenues increased by S$7,830,085, or 26.3%, from S$29,813,611 for the year ended March 31, 2022, to S$37,643,696 for the year ended March 31, 2023.

 

The following table sets forth our revenue by sales categories for the periods indicated.

 

   For the Years ended
March 31,
         
   2022   2023   Variance 
   S$   S$   S$   % 
Revenue                
Safety equipment   17,126,386    24,468,513    7,342,127    42.9%
Auxiliary products   12,687,225    13,175,183    487,958    3.8%
Total revenue   29,813,611    37,643,696    7,830,085    26.3%

 

During the years ended March 31, 2022, and 2023, sale of safety equipment accounted for approximately 57.4% and 65.0% of the total revenue, respectively, while sale of auxiliary products accounted for approximately 42.6% and 35.0% of the total revenue, respectively. Total revenue increased by 26.3%, from S$29,813,611 for the year ended March 31, 2022 to S$37,643,696 for the year ended March 31, 2023, primarily due to an approximately 42.9% increase in the sale of safety equipment from S$17,126,386 for the year ended March 31, 2022 to S$24,468,513 for the year ended March 31, 2023. Our revenue from the sale of safety equipment increased due to significant increases in sales of fall arrest systems and traffic products, as well as growth in sales of personal protective equipment. We further grew our revenue from the sale of auxiliary products, which increased by 3.8% from S$12,687,225 for the year ended March 31, 2022 to S$13,175,183 for the year ended March 31, 2023. Overall, our revenue increase was driven by higher demand by our customers, such as those in the construction sectors driven by new construction projects and resumption of previously delayed activities, which were partially driven by the economic activities recovering from re-opening and easing of restrictive measures targeted at managing the Covid-19 pandemic.

 

29

 

 

Cost of revenue

 

The cost of revenue primarily consisted of purchasing costs of our safety equipment and auxiliary products. The total cost of sales increased by S$4,433,293, or 21.0%, from S$21,069,733 for the year ended March 31, 2022, to S$25,503,026 for the year ended March 31, 2023.

 

The approximately 21.0% overall increase in cost of revenue was consistent with the increase of revenue during the year, though the increase is lower to a certain extent due to better procurement costs secured from larger volume of orders and more favourable product mix, as our safety equipment mainly consist of our own branded products that have higher margins.

 

Gross profit

 

For the years ended March 31, 2022 and 2023, our gross profits were S$8,743,878 and S$12,140,670, respectively, and our gross profit margins were approximately 29.3% and 32.2%, respectively. Our gross profit increased by S$3,396,792, or approximately 38.8% primarily due to the increase in the sale of safety equipment. Our gross profit margin improved by approximately 2.9% primarily due to lower procurement costs and a better product mix.

 

Selling and marketing expenses

 

The following table sets forth a breakdown of our selling and marketing expenses for the periods indicated.

 

   For the Years ended
March 31,
         
   2022   2023   Variance 
   S$   S$   S$   % 
Selling and marketing expenses                
Advertising and promotion   199,753    368,730    168,977    84.6%
Staff expenses   827,564    971,287    143,723    17.4%
Branches related expenses   622,784    764,807    142,023    22.8%
Total selling and marketing expenses   1,650,101    2,104,824    454,723    27.6%

 

Selling and marketing expenses primarily included expenses related to advertising and marketing activities and associated costs of our retail branches, which included labor costs, sales commissions and operating lease expenses. Selling and marketing expenses increased by S$454,723, or approximately 27.6%, from S$1,650,101 for the year ended March 31, 2022, to S$2,104,824 for the year ended March 31, 2023. The increase was primarily due to an increase in the allocation of resources to running and expanding our retail branches, which is expected to continue in the next year.

 

Research and development expenses

 

The following table sets forth a breakdown of our research and development expenses for the periods indicated.

 

   For the Years ended
March 31,
         
   2022   2023   Variance 
   S$   S$   S$   % 
Research and development expenses                
Staff expenses   60,222    61,121    899    1.5%
Software, license and subscription fees   28,845    22,563    (6,282)   (21.8)%
Total research and development expenses   89,067    83,684    (5,383)   (6.0)%

 

30

 

 

Research and development expenses primarily consisted of compensation cost to engineering, design and product development employees and software expenses. Research and development expenses decreased slightly by approximately 6.0%, from S$89,067 for the year ended March 31, 2022 to S$83,684 for the year ended March 31, 2023 due to a reduction in software expenses.

 

General and administrative expenses

 

The following table sets forth a breakdown of our general and administrative expenses for the periods indicated.

 

   For the Years ended March 31,         
   2022   2023   Variance 
   S$   S$   S$   % 
General and administrative expenses                
Staff expenses   2,839,498    3,500,158    660,660    23.3%
Professional fees   92,040    111,190    19,150    20.8%
Depreciation   530,927    540,105    9,178    1.7%
General insurance   64,408    78,727    14,319    22.2%
Property maintenance & property tax   62,557    64,376    1,819    2.9%
Testing fees   122,390    54,456    (67,934)   (55.5)%
Transportation   38,928    68,828    29,900    76.8%
Upkeep of motor vehicles   240,111    293,426    53,315    22.2%
Allowance for expected credit losses   319,912    214,169    (105,743)   (33.1)%
Others   189,229    243,963    54,734    28.9%
Total general and administrative expenses   4,500,000    5,169,398    669,398    14.9%

 

General and administrative expenses consisted primarily of motor vehicle running expenses, transportation, property maintenance and property tax, allowance for expected credit losses and general administrative expenses such as staff costs, depreciation, legal and professional fees and other miscellaneous administrative expenses. General and administrative expenses increased by S$669,398 or approximately 14.9%, from S$4,500,000 for the year ended March 31, 2022, to S$5,169,398 for the year ended March 31, 2023, mainly due to an increase in staff expenses resulted from increased number of employees from 52 to 68 and annual salary increment adjustments. Other increased administrative expenses are mainly to support expanded business.

 

Other income, net

 

Other income primarily consisted of gain/(loss) from foreign currency exchange, gain on disposal of property, plant and equipment, operating lease modifications income, rental income and government grants. Other income increased by S$26,385, or approximately 20.2% from S$130,493 for the year ended March 31, 2022, to S$156,878 for the year ended March 31, 2023. The increase was mainly driven by operating lease modifications income of S$53,991 for the year ended March 31, 2023 which arose due to our renegotiation and modification of three existing operating lease contracts for branches by extending the lease term by another 2 to 3 years at revised lease payments during the year ended March 31, 2023. Total government grants received were S$116,665 and S$100,556 for the years ended March 31, 2022 and 2023, respectively. For the year ended March 31, 2023, the grants mainly included financial support from the Progressive Wage Credit Scheme provided by the Singapore Government to support employers in raising the wages of lower wage employees.

 

Interest expense

 

Interest expense primarily consisted of accrued interest from guaranteed bank loans and finance lease liabilities. Interest expenses increased by S$23,316, or approximately 19.6% from S$119,180 for the year ended March 31, 2022, to S$142,496 for the year ended March 31, 2023. The increase was mainly due to an increase in interest expense from bank loan from S$84,261 for the year ended March 31, 2022 to S$101,271 for the year ended March 31, 2023 and increase in interest expenses from finance lease from S$34,919 for the year ended March 31, 2022 to S$41,225 for the year ended March 31, 2023.

 

31

 

 

Income tax expense

 

Our provisions for income taxes were S$439,015 and S$870,325 for the years ended March 31, 2022 and March 31, 2023, respectively. We incurred higher income tax expenses for the year 2023 which is in line with our higher income before income taxes provision.

 

Net income for the year

 

As a result of the foregoing, our net income for the year increased by S$1,849,813, or approximately 89.1%, from S$2,077,008 for the year ended March 31, 2022, to S$3,926,821 for the year ended March 31, 2023.

 

Periods Ended September 30, 2022 and 2023

 

   For the Periods ended September 30, 
   2022   2023   2023 
   S$   S$   US$ 
Revenue   18,494,837    20,483,795    14,999,850 
Cost of revenue   (12,390,578)   (12,912,013)   (9,455,194)
Gross profit   6,104,259    7,571,782    5,544,656 
                
Selling and marketing expenses   (1,314,591)   (1,913,781)   (1,401,422)
Research and development expenses   (38,692)   (48,291)   (35,362)
General and administrative expenses   (1,641,050)   (2,916,668)   (2,135,814)
Total operating expenses   (2,994,333)   (4,878,740)   (3,572,598)
                
Income from operations   3,109,926    2,693,042    1,972,058 
                
Other income (expense)               
Other income, net   106,942    37,187    27,231 
Interest expense   (68,534)   (79,173)   (57,977)
Total other income, net   38,408    (41,986)   (30,746)
Income before income tax expense   3,148,334    2,651,056    1,941,312 
Income tax expense   (604,966)   (553,689)   (405,455)
Net income and comprehensive income   2,543,368    2,097,367    1,535,857 

 

Comparison of Periods Ended September 30, 2022 and 2023

 

Revenue

 

We generate revenue primarily from the sale of safety equipment and other auxiliary products. Our safety equipment includes essential items such as (i) personal protective clothing, hand gloves, safety footwear, and personal fall arrest system; (ii) portable fire extinguishers and (iii) traffic products. Additionally, we also sell auxiliary products to supplement our safety products and solutions based on customers’ needs, such as industrial-grade hardware tools and electrical products. Total revenues increased by S$1,988,958, or 11%, from S$18,494,837 for the period ended September 30, 2022, to S$20,483,795 (US$14,999,850) for the period ended September 30, 2023.

 

The following table sets forth our revenue by sales categories for the periods indicated.

 

   For the Periods ended September 30,         
   2022   2023   Variance 
   S$   S$   US$   S$   % 
Revenue                    
Safety equipment   10,717,849    12,290,277    8,999,910    1,572,428    15%
Auxiliary products   7,776,988    8,193,518    5,999,940    416,530    5%
Total revenue   18,494,837    20,483,795    14,999,850    1,988,958    11%

 

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During the periods ended September 30, 2022, and 2023, sale of safety equipment accounted for approximately 58% and 60% of the total revenue, respectively, while sale of auxiliary products accounted for approximately 42% and 40% of the total revenue, respectively. Total revenue increased by 11%, from S$18,494,837 for the period ended September 30, 2022 to S$20,483,795 (US$14,999,850) for the period ended September 30, 2023, primarily due to an approximately 15% increase in the sale of safety equipment from S$10,717,849 for the period ended September 30, 2022 to S$12,290,277 (US$8,999,910) for the period ended September 30, 2023. Our revenue from the sale of safety equipment increased due to significant increases in sales of fall arrest systems and traffic products, as well as growth in sales of personal protective equipment. We further grew our revenue from the sale of auxiliary products, which increased by 5% from S$7,776,988 for the period ended September 30, 2022 to S$8,193,518 (US$5,999,940) for the period ended September 30, 2023. Overall, our revenue increase was driven by higher demand by our customers, such as those in the construction sectors driven by new construction projects and resumption of previously delayed activities, which were partially driven by the economic activities recovering from re-opening and easing of restrictive measures targeted at managing the Covid-19 pandemic.

 

Cost of revenue

 

The cost of revenue primarily consisted of purchasing costs of our safety equipment and auxiliary products. The total cost of sales increased by S$521,435 or 4%, from S$12,390,578 for the period ended September 30, 2022, to S$12,912,013 (US$9,455,194) for the period ended September 30, 2023.

 

The approximately 4 % overall increase in cost of revenue was consistent with the increase of revenue during the period, though the increase is lower to a certain extent due to better procurement costs secured from larger volume of orders and more favourable product mix, as our safety equipment mainly consist of our own branded products that have higher margins.

 

Gross profit

 

For the periods ended September 30, 2022 and 2023, our gross profits were S$6,104,259 and S$7,571,782 (US$5,544,656), respectively, and our gross profit margins were approximately 33% and 37%, respectively. Our gross profit increased by S$1,467,523, or approximately 24% primarily due to the increase in the sale of safety equipment. Our gross profit margin improved by approximately 4% primarily due to lower procurement costs and a better product mix.

 

Selling and marketing expenses

 

The following table sets forth a breakdown of our selling and marketing expenses for the periods indicated.

 

   For the Periods ended September 30,         
   2022   2023   Variance 
    S$    S$    US$    S$    % 
Selling and marketing expenses                         
Advertising and promotion   25,265    21,874    16,018    (3,391)   (13)%
Staff expenses   790,553    983,950    720,526    193,397    24%
Branches related expenses   498,773    907,957    664,878    409,184    82%
Total selling and marketing expenses   1,314,591    1,913,781    1,401,422    599,190    46%

 

Selling and marketing expenses primarily included expenses related to advertising and marketing activities and associated costs of our retail branches, which included labor costs, sales commissions and operating lease expenses. Selling and marketing expenses increased by S$599,190, or approximately 46%, from S$1,314,591 for the period ended September 30, 2022, to S$1,913,781(US$1,401,422) for the period ended September 30, 2023. The increase was primarily due to an increase in the headcount of operational staff from 47 to 55, an increase in advertising expenses to advert the Company’s brands and in the allocation of resources into the running, expanding and preparing of our new branches located in, 8 Defu South Street 1, #03-28, Defu Industrial City, Singapore 533758 and 2 Defu South Street 1 #02-02 Singapore 533755 to operate, which is expected to continue in the next year.

  

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Research and development expenses

 

The following table sets forth a breakdown of our research and development expenses for the periods indicated.

 

   For the Periods ended September 30,         
   2022   2023   Variance 
   S$   S$   US$   S$   % 
Research and development expenses                    
Staff expenses   28,671    41,122    30,112    12,451    43%
Software, license and subscription fees   10,021    7,169    5,250    (2,852)   (28)%
Total research and development expenses   38,692    48,291    35,362    9,599    25%

 

Research and development expenses primarily consisted of compensation cost to engineering, design and product development employees and software expenses. Research and development expenses increased slightly by approximately 25%, from S$38,692 for the period ended September 30, 2022 to S$48,291 (US$35,362) for the period ended September 30, 2023 due to an increase in an additional of 1 head count with higher monthly salary.

 

General and administrative expenses

 

The following table sets forth a breakdown of our general and administrative expenses for the periods indicated.

 

   For the Periods ended September 30,         
   2022   2023   Variance 
   S$   S$   US$   S$   % 
General and administrative expenses                    
Staff expenses   895,508    1,511,056    1,106,514    615,548    69%
Professional fees   60,434    555,996    407,144    495,562    820%
Depreciation   273,532    269,095    197,053    (4,437)   (2)%
General insurance   71,224    33,628    24,625    (37,596)   (53)%
Property maintenance & property tax   32,788    33,247    24,346    459    1%
Testing fees   15,376    67,540    49,458    52,164    339%
Transportation   30,256    86,292    63,190    56,036    185%
Upkeep of motor vehicles   103,506    182,680    133,773    79,174    76%
Allowance for expected credit losses   59,932    3,304    2,419    (56,628)   (94)%
Bad debts write-off       28,542    20,901    28,542    100%
Others   98,494    145,288    106,391    46,794    48%
Total general and administrative expenses   1,641,050    2,916,668    2,135,814    1,275,618    78%

 

General and administrative expenses consisted primarily of motor vehicle running expenses, transportation, property maintenance and property tax, allowance for expected credit losses and general administrative expenses such as staff costs, depreciation, legal and professional fees and other miscellaneous administrative expenses. General and administrative expenses increased by S$1,275,618 or approximately 78%, from S$1,641,050 for the period ended September 30, 2022, to S$2,916,668 (US$2,135,814) for the period ended September 30, 2023, mainly due to an increase in staff expenses resulted from increased number of employees from 82 to 98, arising from the opening of new branches and annual salary increment adjustments. Other administrative expenses such as professional fees increased by S$495,562 from S$60,434 for the period ended September 30, 2022 to S$555,996 (US$407,144) for the period ended September 30, 2023, are mainly due to the engagement of professional service providers to support expanded business in the IPO.

 

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Other income, net

 

Other income primarily consisted of gain/(loss) from foreign currency exchange, gain on disposal of property, plant and equipment, operating lease modifications income, rental income and government grants. Other income decreased by S$69,755, or approximately 65% from S$106,942 for the period ended September 30, 2022, to S$37,187 (US$27,231) for the period ended September 30, 2023. The decrease was mainly driven by operating lease modifications income of S$7,025 (US$5,144) for the period ended September 30, 2023 which arose due to our renegotiation and modification of one existing operating lease contracts for new branch by extending the lease term by another 2 to 3 years at revised lease payments during the period ended September 30, 2023. Total government grants received were S$792 and S$10,607 (US$7,767) for the periods ended September 30, 2022 and 2023, respectively. For the period ended September 30, 2023, the grants mainly included financial support from the Progressive Wage Credit Scheme provided by the Singapore Government to support employers in raising the wages of lower wage employees.

 

Interest expense

 

Interest expense primarily consisted of accrued interest from guaranteed bank loans and finance lease liabilities. Interest expenses increased by S$10,639, or approximately 16% from S$68,534 for the period ended September 30, 2022, to S$79,173 (US$57,977) for the period ended September 30, 2023. The increase was mainly due to an increase in interest expense from bank loan from S$44,822 for the period ended September 30, 2022 to S$62,362 (US$45,666) for the period ended September 30, 2023.

 

Income tax expense

 

Our provisions for income taxes were S$604,966 and S$553,689 (US$405,455) for the periods ended September 30, 2022 and 2023, respectively. We incurred lower income tax expenses for the period ended September 30, 2023, which is in line with our lower income before income taxes provision.

 

Net income for the year

 

As a result of the foregoing, our net income for the period decreased by S$446,001, or approximately 18%, from S$2,543,368 for the period ended September 30, 2022, to S$2,097,367 (US$1,535,857) for the period ended September 30, 2023.

 

Liquidity and Capital Resources

 

As of March 31, 2023, our cash balances amounted to approximately S$2,432,557, and our current assets were S$19,782,248, and our current liabilities were S$11,603,841. For the year ended March 31, 2023, we generated profit for the year of S$3,926,821 with net operating cash inflows of S$3,607,236.

 

As of September 30, 2023, our cash balances amounted to approximately S$3,360,787 (US$2,461,034), and our current assets were S$19,935,316 (US$14,598,211), and our current liabilities were S$10,150,098 (US$7,432,701). For the period ended September 30, 2023, we generated profit for the period of S$2,097,367 (US$1,535,857) with net operating cash inflows of S$3,740,897 (US$2,739,381).

 

In assessing our liquidity, we believe that our current cash and cash flows provided by operating activities and guaranteed loans from banks, will be sufficient to meet our working capital requirements and debt obligations in the next 12 months from the date the audited financial statements are issued. However, if we experience an adverse operating environment or incur unanticipated capital expenditures, or if we decided to accelerate our growth, then additional financing may be required. No assurance can be provided, however, that additional financing, if required, would be available at all or on favourable terms. Such financing may include the use of additional debt or the sale of additional equity securities. Any financing which involves the sale of equity securities or instruments that are convertible into equity securities could result in immediate and possibly significant dilution to our existing shareholders.

 

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Cash Flows Analysis

 

Cash Flows for the Years ended March 31, 2022 and 2023

 

The following table sets forth a summary of our cash flows for the periods indicated.

 

   For the Years ended
March 31,
 
   2022   2023 
   S$   S$ 
Net cash provided by operating activities   1,323,677    3,607,236 
Net cash used in investing activities   (188,661)   (13,165)
Net cash used in financing activities   (1,003,542)   (2,303,223)
Increase in cash and cash equivalents   131,474    1,290,848 
Cash and cash equivalents at the beginning of the year   1,010,235    1,141,709 
Cash and cash equivalents at the end of the year   1,141,709    2,432,557 

 

Operating activities

 

For the year ended March 31, 2022, net cash provided by operating activities was S$1,323,677, primarily resulted from our profit for the year of S$2,077,008, as adjusted for non-cash items and non-operating items, changes in operating activities and cash used in operations. Adjustments for non-cash items consisted of depreciation of property, plant and equipment of S$530,927, amortization of ROU asset of S$553,724, allowance for inventory write-down of S$157,322, allowance for expected credit losses of S$319,912 and fair value gain in financial assets of S$5,758. Adjustments for non-operating items consisted of interest expenses from operating lease liabilities of S$69,060 and interest expenses from finance lease liabilities of S$34,919. Changes in operating assets and liabilities mainly included: (i) a decrease in other receivables of S$118,433; and (ii) an increase in accounts payable of S$915,247; and offset by (i) an increase in accounts receivables of S$1,845,394; (ii) an increase in advances to related parties of S$196,585; (iii) an increase in inventories of S$658,436; (iv) a decrease in other payables of S$55,905; (v) a decrease in operating lease liabilities of S$538,980; and (vi) a decrease in income tax payable of S$16,642.

 

For the year ended March 31, 2023, net cash provided by operating activities was S$3,607,236, primarily resulted from our profit for the year of S$3,926,821, as adjusted for non-cash items and non-operating items, changes in operating activities and cash used in operations. Adjustments for non-cash items consisted of depreciation of property, plant and equipment of S$540,105, amortization of ROU asset of S$667,660, reduced lease payments from lease modification of S$53,991, PPE write-off of S$3,534, allowance for inventory write-down of S$256,919, allowance for expected credit losses of S$214,169 and fair value gain in financial assets of S$1,542. Changes in operating assets and liabilities mainly included: (i) a decrease in advances to related parties of S$32,290; (ii) an increase in accounts payable of S$594,653; and (iii) an increase in income tax payable of S$553,929 and offset by (i) an increase in accounts receivable, net of S$1,745,800; (ii) an increase in other receivables of S$53,357; (iii) an increase in inventories of S$418,177; (iv) a decrease in other payables of S$234,690; (v) interest expenses from finance lease liabilities of S$41,225 and (vi) a decrease in operating lease liabilities of S$636,239.

 

Investing activities

 

For the year ended March 31, 2022, net cash used in investing activities was S$188,661, which was primarily consisted of purchase of property, plant and equipment, mainly in motor vehicles.

 

For the year ended March 31, 2023, net cash used in investing activities was S$13,165, which was primarily consisted of purchase of property, plant and equipment, mainly in computers and office furniture and fittings.

 

Financing activities

 

For the year ended March 31, 2022, net cash used in financing activities was S$1,003,542 which was primarily consisted of repayment of guaranteed bank loans of S$390,086, payment of finance lease obligations of S$167,400, and payment of dividends of S$950,000 and offset by advances from shareholders of S$503,944.

 

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For the year ended March 31, 2023, net cash used in financing activities was S$2,303,223 which was primarily consisted of repayment of guaranteed bank loans of S$1,140,400, payment of finance lease obligations of S$173,950, and payment of dividends of S$1,150,000 and offset by advances from shareholders of S$161,127.

 

Cash Flows for the Periods ended September 30, 2022 and 2023

 

The following table sets forth a summary of our cash flows for the periods indicated.

 

   For the Periods ended September 30, 
   2022   2023 
   S$   S$   US$ 
Net cash provided by operating activities   2,433,185    3,740,897    2,739,381 
Net cash used in investing activities   (9,692)   (173,424)   (126,995)
Net cash used in financing activities   (1,374,081)   (2,639,243)   (1,932,662)
Increase in cash and cash equivalents   1,049,412    928,230    679,724 
Cash and cash equivalents at the beginning of the year   1,141,709    2,432,557    1,781,310 
Cash and cash equivalents at the end of the year   2,191,121    3,360,787    2,461,034 

 

Operating activities

 

For the period ended September 30, 2022, net cash provided by operating activities was S$2,433,185, primarily resulted from our profit for the period of S$2,543,368, as adjusted for non-cash items and non-operating items, changes in operating activities and cash used in operations. Adjustments for non-cash items consisted of reduced lease payments from lease modification of S$38,682, depreciation of property, plant and equipment of S$273,532, amortization of ROU asset of S$317,326, allowance for inventory write-down of S$75,265, allowance for expected credit losses of S$59,932, fair value gain in financial assets of S$16,446 and gain on disposal of property, plant and equipment of S$386. Changes in operating assets and liabilities mainly included: (i) a decrease in advances to related parties of S$358,435; (ii) a decrease in other receivables of S$70,693; (iii) an increase in trade payables of S$1,531,918 (iv) an increase in income tax payable of S$410,111 and offset by (i) an increase in accounts receivable, net of S$1,699,897; (ii) an increase in inventories of S$803,050; (iii) a decrease in other payables of S$317,528; (iv) a decrease in operating lease liabilities of S$307,694; and (v) interest expenses from finance lease liabilities of S$23,712.

 

For the period ended September 30, 2023, net cash provided by operating activities was S$3,740,897 (US$2,739,381), primarily resulted from our profit for the year of S$2,097,367 (US$1,535,857), as adjusted for non-cash items and non-operating items, changes in operating activities and cash used in operations. Adjustments for non-cash items consisted of depreciation of property, plant and equipment of S$269,095 (US$197,053), amortization of ROU asset of S$415,364 (US$304,162), reduced lease payments from lease modification of S$7,025 (US$5,144), bad debt written off of S$28,542 (US$20,901), allowance for inventory write-down of S$110,392 (US$80,838), allowance for expected credit losses of S$3,304 (US$2,419), fair value gain in financial assets of S$9,162 (US$6,709) and gain on disposal of property, plant and equipment of S$5,000 (US$3,661). Changes in operating assets and liabilities mainly included: (i) a decrease in accounts receivable, net of S$1,314,885 (US$962,862); (ii) an increase in other payables of S$309,327 (US$226,514); (iii) an increase in income tax payable of S$65,913 (US$48,267) and offset by (i) an increase in other receivables of S$109,147 (US$79,926); (ii) an increase in advances to related parties of S$56,959 (US$41,710); (iii) an increase in inventories of S$274,165 (US$200,765); (iv) a decrease in trade payables of S$73,743 (US$54,000); (v) an decrease in operating lease liabilities of S$321,309 (US$235,288); (vi) interest expenses from finance lease liabilities of S$16,782 (US$12,289).

 

Investing activities

 

For the period ended September 30, 2022, net cash used in investing activities was S$9,692, which was primarily consisted of purchase of property, plant and equipment, mainly in computers.

 

For the period ended September 30, 2023, net cash used in investing activities was S$173,424 (US$126,995), which was primarily consisted of purchase of property, plant and equipment, mainly in machinery.

 

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Financing activities

 

For the period ended September 30, 2022, net cash used in financing activities was S$1,374,081 which was primarily consisted of repayment of guaranteed bank loans of S$701,153, payment of finance lease obligations of S$82,840, and payment of dividends of S$1,000,000 and offset by advances from shareholders of S$409,912.

 

For the period ended September 30, 2023, net cash used in financing activities was S$2,639,243 (US$1,932,662) which was primarily consisted of repayment of guaranteed bank loans of S$191,611 (US$140,313), payment of finance lease obligations of S$83,175 (US$60,907), and payment of dividends of S$2,000,000 (US$1,464,558), payment of amount due to shareholders of S$122,767 (US$89,900) and payment of deferred IPO expenses of S$241,690 (US$176,984).

 

Contingencies

 

In the normal course of business, the Company is subject to contingencies, including legal proceedings and claims arising out of the business that relate to a wide range of matters, such as government investigations and tax matters. The Company recognizes its liability for such contingency if it determines it is probable that a loss has occurred, and a reasonable estimate of the loss can be made. The Company may consider many factors in making these assessments including historical and the specific facts and circumstances of each matter. As of March 31, 2023 and September 30, 2023, we do not believe that any such matters, individually or in the aggregate, will have a material adverse effect on our business, financial condition, results of operations, or cash flows.

 

Capital Expenditures

 

We incurred capital expenditures of S$13,551 and S$178,424 (US$130,656) for the periods ended March 31, 2023, and September 30, 2023, respectively, primarily driven by purchases of equipment.

 

Critical Accounting Policies and Use of Estimates

 

Our consolidated financial statements and unaudited interim condensed consolidated financial statements included elsewhere in this prospectus have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of consolidated financial statements and unaudited interim condensed 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 unaudited interim condensed consolidated financial statements and the reported amounts of revenues and expenses during the periods presented. On an ongoing basis, Management evaluates estimates, including but not limited to, those related to allowance for accounts receivable, impairment assessment of inventories, impairment assessment of long-lived assets, fair value of financial instrument and incremental borrowing rate of operating leases. Management bases its estimates on historical experience and on various other assumptions believed to be reasonable. As a result, management makes judgments regarding the carrying values of the Company’s assets and liabilities that are not readily apparent from other sources. Authoritative pronouncements, historical experience and assumptions are used as the basis for making estimates. Actual results may differ from these estimates.

 

Cash and cash equivalents

 

The Company considers cash equivalents to be short-term, that are readily convertible to cash and have a maturity of three months or less at the time of purchase. Cash and cash equivalents consist of cash on hand, demand deposit placed with financial institutions, which is unrestricted as to withdrawal and use. Management believes that the banks and other financial institutions are of high credit quality and continually monitors the credit worthiness of these banks and financial institutions.

 

Accounts receivable, net

 

Accounts receivable include trade accounts due from customers. Management reviews the adequacy of the allowance for expected credit loss on an ongoing basis, using historical collection trends and aging of receivables. Management also periodically evaluates individual customer’s financial condition, credit history, and the current economic conditions to make adjustments in the allowance for expected credit loss when it is considered necessary. Allowance for expected credit loss is write-off after all means of collection have been exhausted and the potential for recovery is considered remote. Management continues to evaluate the reasonableness of the allowance for expected credit loss policy and update, if necessary.

 

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Inventories, net

 

Inventories, net which comprise mainly of safety products available for sale, and are primarily stated at the lower of cost (on first-in, first-out basis) or net realizable value. Inventories valuation allowance is based on management’s estimate of future consumption for safety products and historical sales volumes.

 

Other receivables

 

Other receivables primarily consist of prepaid expenses for insurance and refundable deposits for leases. These amounts bear no interest. Management reviews its prepayments and refundable deposits placed with counterparties on a regular basis to determine if the allowance is adequate and adjusts the allowance when necessary. Management believes that these counterparties are of high credit quality and continually monitors the credit worthiness of these counterparties.

 

Deferred offering costs

 

Pursuant to ASC 340-10-S99-1, IPO costs directly attributable to an offering of equity securities are deferred and would be charged against the gross proceeds of the offering as a reduction of additional paid-in capital. These costs include legal fees related to the registration drafting and counsel, consulting fees related to the registration preparation, the SEC filing and print related costs.

 

Financial instrument

 

The Company has purchased a life insurance policy for one of the shareholders of the Company. The policy is recorded at its cash surrender value in accordance with FASB ASC 325-30, Investments in Insurance Contracts. ASC 325-30 permits a reporting entity to account for its investment in life insurance policy using either the investment method or the fair value method. The Company elected to use the fair value method to account for its life insurance policy. The Company initially record the purchase of life insurance policy at the purchase price, which is the amount paid for the policy, inclusive of all direct external fees and costs associated with the purchase. At each subsequent reporting period, the Company re-measure the investment at fair value in its entirety and recognize the change in fair value as gain or loss in the current period in our consolidated statements of operations and comprehensive income.

 

Property, plant and equipment, net

 

Property, plant and equipment are stated at cost, less accumulated depreciation, and impairment loss, if applicable. Depreciation is computed using the straight-line method after consideration of the estimated useful lives. The estimated useful lives are as follows:

 

    Useful life
Office equipment   5 years
Motor vehicles   5 years
Computer   1 years
Machinery   5 years
Furniture, fixtures and fittings   5 years
Leasehold building and leasehold improvement   lesser of lease term or expected useful life

 

The cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the statements of operations and comprehensive income. Expenditures for maintenance and repairs are charged to earnings as incurred, while additions, renewals and betterment, which are expected to extend the useful life of assets, are capitalized. The Company also re-evaluates the periods of depreciation to determine whether subsequent events and circumstances warrant revised estimates of useful lives.

 

Impairment for long-lived assets

 

The Company’s long-lived assets with finite lives, including property, plant and equipment, net are reviewed for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying value of an asset may not be recoverable. The Company assesses the recoverability of the assets based on the undiscounted future cash flows the assets are expected to generate and recognizes an impairment loss when estimated undiscounted future cash flows expected to result from the use of the asset plus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. If an impairment is identified, the Company will reduce the carrying amount of the asset to its estimated fair value based on a discounted cash flows approach or, when available and appropriate, to comparable market values.

 

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Fair value measurement

 

Accounting guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact, and it considers assumptions that market participants would use when pricing the asset or liability.

 

Accounting guidance establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Accounting guidance establishes three levels of inputs that may be used to measure fair value:

 

Level 1 applies to assets or liabilities for which there are quoted prices, in active markets for identical assets or liabilities.

 

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical asset or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

 

Level 3 applies to asset or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

 

Cash and cash equivalents, accounts receivable, net, other receivables, financial instrument, bank loans — current portion, operating lease liabilities — current portion, finance lease liabilities — current portion, accounts payable, other payables, amount due to shareholders and amount due to director are financial assets and liabilities and are subject to fair value measurement. The Company’s financial assets and liabilities are short-term in nature, therefore, management believes their carrying value approximate their fair value.

 

Leases

 

The Company determines if an arrangement is a lease at inception. A lease is classified at the inception date as either a finance lease or an operating lease. As the lessee, a lease is a finance lease if any of the following conditions exists: a) The lease transfers ownership of the underlying asset to the lessee by the end of the lease term, b) The lease grants the lessee an option to purchase the underlying asset that the Company is reasonably certain to exercise, c) the lease term is for 75% or more of the remaining economic life of the underlying asset, unless the commencement date falls within the last 25% of the economic life of the underlying asset, d) the present value of the sum of the lease payments equals or exceeds 90% of the fair value of the underlying asset; and e) the underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term.

 

Finance lease assets are included in property, plant and equipment, net, and finance lease liabilities are included in current and non-current finance lease liabilities.

 

Operating leases are included in operating lease right-of-use (“ROU”) assets, current operating lease liabilities and non-current operating lease liabilities, in the Company’s consolidated balance sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. When determining the lease term, the Company includes options to extend or terminate the lease when it is reasonably certain that it will exercise that option, if any. As the Company’s leases do not provide an implicit rate, the Company used an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

 

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The Company has elected to adopt the following lease policies in conjunction with the adoption of ASU 2016-02: (i) for leases that have lease terms of 12 months or less and does not include a purchase option that is reasonably certain to exercise, the Company elected not to apply ASC 842 recognition requirements; and (ii) the Company elected to apply the package of practical expedients for existing arrangements entered into prior to April 1, 2020 to not reassess (a) whether an arrangement is or contains a lease, (b) the lease classification applied to existing leases, and (c) initial direct costs.

 

Lease modification arose from the Company’s renegotiation and modification of certain existing operating lease contracts for certain outlets by extending the lease term for another 2 to 3 years at revised lease payments during the periods ended March 31, 2023 and September 30, 2023, respectively. As these extensions are not part of the terms and conditions of the original operating lease contracts, it is accounted for as operating lease modifications with an addition to ROU and corresponding remeasurement to operating lease liabilities.

 

Revenue recognition

 

The Company adopted Accounting Standards Codification 606, Revenue from Contracts with Customers (“ASC 606”), on April 1, 2021 using the modified retrospective approach. The Company’s accounting for revenue recognition remains substantially unchanged prior to adoption of ASC 606. There were no cumulative effect adjustments for prior to April 1, 2020. The effect from the adoption of ASC 606 was not material to the Company’s financial statements.

 

The Company recognizes revenues when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price, including variable consideration, if any; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration to which it is entitled in exchange for the goods or services it transfers to the client.

 

Revenue for sales of products which are primarily safety equipment and auxiliary products are recognized at a point in time when the Company has satisfied its performance obligation. The key performance obligation of the Company is delivery of goods or collection by customer has occurred, evidenced by the acceptance of products by customers, whereby physical and legal control of the products is passed from the Company to its customer, and there’s no fulfilled obligation from the Company.

 

Upon local customers’ acceptance/acknowledgement on the acceptance of goods, control of the goods is passed from the Company to the customer, at which the Company believes it has satisfied its performance obligation to recognize revenue. For overseas customers, control of the goods is passed to the customer in accordance with terms and conditions ie. Free on Board (“FOB”), as stipulated in the respective contracts with customers. No element of financing is deemed present as typical payment terms range from 30 to 120 days from the date of issuance of invoice.

 

The Company is a principal and records revenue on a gross basis as the Company is primarily responsible for fulfilling the goods or services to the customers, is subject to inventory risk, has discretion in establishing pricing and the ability to direct the control of the promised goods before transferring those goods to the customers.

 

A large portion of the revenue comes from the sale of safety products. Customer returns have historically represented a small percentage of customer sales on an annual basis. The right of return recognized in the statement of operations and comprehensive income, net of revenue were S$46,594 and S$106,263 during the fiscal years ended March 31, 2022 and 2023, respectively, and S$13,591 and S$27,287 (US$19,982) during the periods ended September 30, 2022 and 2023, respectively. The Company does not provide warranty but gives customers one week of validation period for right of return.

 

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Cost of revenue

 

Cost of revenue of safety products and other emerging products, which are directly related to revenue-generating transactions, primarily consist of cost of purchasing of products, net of discount received, and freight and handling charges.

 

Selling and marketing expenses

 

Selling and marketing expenses mainly consist of promotion and marketing expenses, amortization of ROU — operating leases, rental expenses, media expenses for online and traditional advertising, as well as labor costs.

 

Research and development expenses

 

Research and development expenses primarily consist of compensation cost to engineering, design and product development employees.

 

General and administrative expenses

 

General and administrative expenses consist primarily of motor vehicle running expenses, travelling and entertainment and general administrative expenses such as of staff costs, depreciation, legal and professional fees and other miscellaneous administrative expenses.

 

Employee benefit

 

Defined contribution plan

 

The Company participates in the national pension schemes as defined by the laws of Singapore’s jurisdictions in which it has operations. Contributions to defined contribution pension schemes are recognized as an expense in the period in which the related service is performed.

 

Government grants

 

Government grants are compensation for expenses already incurred or for the purpose of giving immediate financial support to the Company. The government evaluates the Company’s eligibility for the grants on a consistent basis, and then makes the payment. Therefore, there are no restrictions on the grants.

 

Government grants, which are covid related and non-covid related grants, are recognized when received and all the conditions for their receipt have been met and are recorded as part of “other income.”

 

Related parties’ transactions

 

Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Companies are also considered to be related if they are subject to common control or common significant influence, such as a family member or relative, shareholder, or a related corporation.

 

Commitments and contingencies

 

In the normal course of business, the Company is subject to contingencies, including legal proceedings and claims arising out of the business that relate to a wide range of matters, such as government investigations and tax matters. The Company recognizes its liability for such contingency if it determines it is probable that a loss has occurred, and a reasonable estimate of the loss can be made. The Company may consider many factors in making these assessments including historical and the specific facts and circumstances of each matter.

 

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Concentration of Customers

 

The following table sets forth a summary of single customers who represent 10% or more of the Company’s total revenue:

 

   For the Years ended March 31,   For the Periods ended September 30, 
   2022   2023   2022   2023   2023 
   S$   S$   S$   S$   US$ 
Amount of the Company’s revenue                    
Customer A(1)   3,772,166    5,635,667    3,242,780    4,382,169    3,208,970 
Customer B(2)   3,758,101    2,811,928    1,985,937         

 

The following table sets forth a summary of single customers who represent 10% or more of the Company’s total accounts receivable, net:

 

   As of 
   March 31,
2023
   September 30,
2023
   September 30,
2023
 
   S$   S$   US$ 
Amount of the Company’s accounts receivable, net            
Customer A(1)   2,307,236    2,901,193    2,124,482 
Customer B(2)   2,796,573    1,157,183    847,381 

  

 

(1)Customer A is a multinational construction corporation based in Singapore.
(2)Customer B is a multinational oil & gas corporation based in Singapore.

 

Concentration of Suppliers

 

The following table sets forth a summary of suppliers who represent 10% or more of the Company’s total purchases:

 

   For the Years ended March 31,   For the Periods ended September 30, 
   2022   2023   2022   2023   2023 
   S$   S$   S$   S$   US$ 
Amount of the Company’s purchases                    
Supplier X(3)   2,286,299    3,131,654        1,761,351    1,289,800 
Supplier Y(4)   3,458,437    3,940,606    2,583,455    1,851,025    1,355,466 

 

The following table sets forth a summary of suppliers who represent 10% or more of the Company’s total accounts payable:

 

   As of 
   March 31,
2023
   September 30,
2023
   September 30,
2023
 
   S$   S$   US$ 
Amount of the Company’s accounts payable            
Supplier X(3)   818,925    887,452    649,862 
Supplier Y(4)   705,095    1,002,671    734,235 

 

 

(3)Supplier X is a safety equipment manufactory corporation based in People’s Republic of China.
(4)Supplier Y is an industrial hardware trading and manufactory corporation based in People’s Republic of China

 

Credit risk

 

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents, accounts receivable, investments, amount due from related parties and other current assets. As of March 31, 2023 and September 30, 2023, all of the Company’s cash and cash equivalents were held in financial institutions with high credit ratings and quality in Singapore. Management believes that these financial institutions are of high credit quality and continually monitors the credit worthiness of these financial institutions.

 

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Accounts receivable, net primarily comprise of amounts receivable from the product customers. To reduce credit risk, the Company performs ongoing credit evaluations of the financial condition of these customers and generally does not require collateral or other security from the customers. The Company has established a provision matrix applied on the portfolio segmented by factors such as geographic region and products that are considered to have similar credit characteristics and risk of loss. Historically, such losses have been within management’s expectations.

 

Liquidity risk

 

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

 

The Company ensures that it has sufficient cash and bank balances, and liquid assets to meet its expected operational expenses, including servicing for financial obligations and bank loans.

 

Recently issued accounting pronouncements

 

The Company considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued. Under the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”), the Company meets the definition of an emerging growth company and has elected the extended transition period for complying with new or revised accounting standards, which delays the adoption of these accounting standards until they would apply to private companies.

 

In May 2019, the FASB issued ASU 2019-05, which is an update to ASU Update No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which introduced the expected credit losses methodology for the measurement of credit losses on financial assets measured at amortized cost basis, replacing the previous incurred loss methodology. The amendments in Update 2016-13 added Topic 326, Financial Instruments — Credit Losses, and made several consequential amendments to the Codification. Update 2016-13 also modified the accounting for available-for-sale debt securities, which must be individually assessed for credit losses when fair value is less than the amortized cost basis, in accordance with Subtopic 326-30, Financial Instruments — Credit Losses — Available-for-Sale Debt Securities. The amendments in this Update address those stakeholders’ concerns by providing an option to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost basis. For those entities, the targeted transition relief will increase comparability of financial statement information by providing an option to align measurement methodologies for similar financial assets. Furthermore, the targeted transition relief also may reduce the costs for some entities to comply with the amendments in Update 2016-13 while still providing financial statement users with decision-useful information. In November 2019, the FASB issued ASU No. 2019-10, to update the effective date of ASU No. 2016-13 for private companies, not-for-profit organizations and certain smaller reporting companies applying for credit losses, leases, and hedging standard. The new effective date for these preparers is for fiscal years beginning after December 15, 2022. ASU 2019-05 is effective for the Company for annual and interim reporting periods beginning April 1, 2023 as the Company is qualified as an emerging growth company. The Company has adopted this standard on April 1, 2023, the adoption did not have a material impact on its consolidated financial statements and unaudited interim condensed consolidated financial statements.

 

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this Update simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. For public business entities, the amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early adoption of the amendments is permitted, including adoption in any interim period for (1) public business entities for periods for which financial statements have not yet been issued and (2) all other entities for periods for which financial statements have not yet been made available for issuance. An entity that elects to early adopt the amendments in an interim period should reflect any

 

adjustments as of the beginning of the annual period that includes that interim period. Additionally, an entity that elects early adoption must adopt all the amendments in the same period. The Company adopted this standard on April 1, 2022, the adoption did not have a material impact on its consolidated financial statements and unaudited interim condensed consolidated financial statements.

 

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires entities to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASU 2014-09, Revenue from Contracts with Customers (Topic 606). The update will generally result in an entity recognizing contract assets and contract liabilities at amounts consistent with those recorded by the acquiree immediately before the acquisition date rather than at fair value. The new standard is effective on a prospective basis for fiscal years beginning after December 15, 2022, with early adoption permitted. This standard is effective for the Company on April 1, 2023 and the Company does not expect a significant impact to the consolidated financial statements upon adoption. However, the ultimate impact is dependent upon the size and frequency of future acquisitions.

 

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 operations and comprehensive income and statements of cash flows.

 

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HISTORY AND CORPORATE STRUCTURE

 

As of the date of this prospectus, our Group is comprised of the Company and its subsidiaries, RPL, PTH, and ALS.

 

Corporate History

 

Our Company was incorporated in the Cayman Islands on June 1, 2023, under the Companies Act as an exempted company with limited liability.

 

On the date of the Company’s incorporation, one (1) Ordinary Share was issued to Vistra (Cayman) Limited. On the same day, Vistra (Cayman) Limited transferred one (1) Ordinary Share to Zhang Jian for a consideration of US$0.001, and ninety-nine (99) Ordinary Shares were issued to Zhang Jian for a consideration of US$0.099.

 

On October 3, 2023, the Company’s shareholders and board of directors approved to amend the authorized share capital from US$50,000, divided into 50,000,000 ordinary shares of a par value of US$0.001 per share, to US$50,000, divided into 500,000,000 ordinary shares of a par value of US$0.0001 per share.

 

Prior to the Reorganization, as described below, the Group historically conducted our business through RPL, PTH, and ALS.

 

RPL

 

On December 26, 1997, RPL was incorporated in Singapore as a private company limited by shares. It commenced business on December 26, 1997 and is engaged in the provision of industry safety solutions to customers in the infrastructure, building construction, marine, and oil and gas industries. The products RPL provides include (i) personal protective equipment, (ii) personal fall arrest systems, (iii) firefighting equipment and (iv) industrial graded hardware.

 

As part of the Reorganization undertaken pursuant to the Share Swap Agreement as described below, 3,000,000 ordinary shares, representing 100% of the equity in RPL, were transferred to the Company, and RPL became a wholly owned subsidiary of our Company on January 3, 2024.

 

PTH

 

On November 3, 2008, PTH was incorporated in Singapore as a private company limited by shares. It commenced business on November 3, 2008 and is engaged in the wholesale of general hardware, including safety equipment, locks, hinges, and furniture. PTH is also engaged in providing electrical works for its customers.

 

As part of the Reorganization undertaken pursuant to the Share Swap Agreement, 200,000 ordinary shares, representing 100% of the equity in PTH, were transferred to the Company, and PTH became a wholly owned subsidiary of our Company on January 3, 2024.

 

ALS

 

On September 15, 2009, ALS was incorporated in Singapore as a private company limited by shares. It commenced business on September 15, 2009 and is engaged in retail and wholesale of general hardware.

 

As part of the Reorganization undertaken pursuant to the Share Swap Agreement, 100,000 ordinary shares, representing 100% of the equity in ALS, were transferred to the Company, and ALS became a wholly owned subsidiary of our Company on January 3, 2024.

 

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The Reorganization

 

This prospectus refers to the following events as the “Reorganization.”

 

Pursuant to a share swap agreement entered into amongst the Company, Zhang Jian, Xu Yukai, Chin Fook Onn, Huang Dong, SOCC Technologies Pte. Ltd., RPL, PTH, and ALS dated October 10, 2023 (the “Share Swap Agreement”), the following transfers of shares were undertaken as part of the Reorganization:

 

(i)Zhang Jian transferred 1,600,000 ordinary shares in the capital of RPL and 100,000 ordinary shares in the capital of ALS to the Company, in consideration for the allotment and issuance of 6,549,000 Ordinary Shares in the capital of the Company;

 

(ii)Xu Yukai transferred 883,333 ordinary shares in the capital of RPL and 200,000 ordinary shares in the capital of PTH to the Company, in consideration for the allotment and issuance of 3,987,500 Ordinary Shares in the capital of the Company;

 

(iii)Chin Fook Onn transferred 276,667 ordinary shares in the capital of RPL to the Company, in consideration for the allotment and issuance of 1,062,500 Ordinary Shares in the capital of the Company;

 

(iv)Huang Dong transferred 133,333 ordinary shares in the capital of RPL to the Company, in consideration for the allotment and issuance of 500,000 Ordinary Shares in the capital of the Company; and

 

(v)SOCC Technologies Pte. Ltd. transferred 106,667 ordinary shares in the capital of RPL to the Company, in consideration for the allotment and issuance of 400,000 Ordinary Shares in the capital of the Company.

 

The Reorganization was completed on January 3, 2024. As a result of the Reorganization, the Company became the holding company of the Group.

 

Organization Structure

 

The following diagram illustrates our corporate legal structure and identifies our subsidiaries as of the date of this prospectus and upon completion of this Offering (assuming no exercise of the over-allotment option).

 

 

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INDUSTRY OVERVIEW

 

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. The following discussion contains projections for future growth, which may not occur at the rates that are projected or at all.

 

Personal Protection Equipment (“PPE”) Industry Overview

 

Personal Protection Equipment (“PPE”) Market Overview

 

PPE encompasses an array of equipment designed to curtail exposure to safety and health risks in the workplace that have the potential to cause injuries or illnesses. These risks could manifest in various forms, including contact with chemicals, corrosive materials, biohazards, electrical perils, contaminated air, extreme temperature conditions, and more. Consequently, PPE plays a pivotal role in diverse industries spanning from construction, oil & gas, and manufacturing to food & beverage and healthcare, among others.

 

Below provides a list of the distinct types of PPE, each accompanied by illustrative examples.

 

Head-to-Neck Protection:    These include head protection items created to safeguard individuals from risks associated with impacts and penetrations, eye and face protection items for safeguarding the eyes and face from chemical or metal splashes, dust, projectiles, gases, vapours, and potential harm from optical radiation, and hearing protection equipment is engineered to shield the wearer’s ears from prolonged or brief exposure to high-volume noises.

 

Respiratory Protection:    Respiratory protection encompasses various respirator types designed to shield workers from inhaling harmful substances or airborne contaminants. This category includes filtration products that screen out airborne particles, chemicals, and gases, as well as breathing apparatuses that supply clean air from an independent source.

 

Hand Protection:    Hand protection stands out as one of the most prevalent forms of PPE across industries. Hand and arm protection aim to safeguard the wearer from a spectrum of risks like abrasions, bruises, cuts, exposure to chemicals, biohazard splashes, thermal burns, and electrical shocks. It encompasses protective gloves, which can be either disposable or reusable and find applications in both industrial and medical sectors.

 

Protective Attire:    Different workplace hazards necessitate distinct types of protective clothing. These can range from high-visibility apparel and chemical-resistant gear to heat-resistant attire, antistatic clothing, and specialized protection against weather elements or chainsaw hazards. Multi-functional protective clothing is also becoming increasingly prominent.

 

Workwear:    Workwear serves the primary purpose of aiding in the easy identification of a company’s employees and bolstering the corporate image. The global market for work clothing and uniforms is expanding, driven by advancements in fabric technologies.

 

Foot Protection:    Foot protection encompasses a variety of shoes and boots designed to shield workers from impact and puncture risks. The range encompasses general safety shoes, toe-capped safety shoes, water and chemical-resistant footwear, and footwear equipped with electrical insulation.

 

Fall Prevention:    This category encompasses equipment used by individuals working at heights. Its purpose is to either prevent falls or mitigate their impact in case of an accident.

 

Gas Detection:    Safety gas detectors are employed across diverse workplaces, ranging from oil platforms to pharmaceutical laboratories. The market is evolving towards a service-oriented business model, with manufacturers increasingly offering value-added services like wireless communication and remote monitoring to gain a competitive edge.

 

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Global Market

 

The anticipated global market size for PPE is projected to reach USD125 billion by 2030 from USD83 billion in 2023, marking a Compound Annual Growth Rate (“CAGR”) of 6.5%.

 

 

Source: Market Research Community

 

Asia Pacific is expected to grow at the fastest growth rate in the market at a CAGR of c.7% over the forecast period owing to significant economic development and industrialization across the region. The COVID-19 pandemic had a profound impact on the PPE market, leading to an unprecedented surge in demand for items like face masks, gloves, face shields, and gowns. This surge strained global supply chains, prompting diversification in PPE production with companies and industries pivoting to manufacture essential protective gear. Regulatory adjustments and price increases characterized the PPE landscape, and the crisis led to innovations such as antiviral coatings and reusable PPE materials.

 

The increasing awareness of workplace safety has significantly influenced the PPE market. Companies and industries are placing greater emphasis on worker safety and security due to stringent regulations and the high costs associated with workplace accidents and injuries. This growing awareness has driven the demand for PPE across various sectors. Particularly, the Asia Pacific region has witnessed a notable uptick in awareness and the implementation of new safety rules and regulations, which are expected to fuel market growth in the foreseeable future.

 

With an alarming rate of workplace fatalities, employees have heightened awareness on PPE to ensure their safety. The rising number of blue-collar workers in research and development establishments and production factories further drives the demand for PPE, as employers prioritize safeguarding their workforce.

 

Stringent safety regulations imposed by governments have compelled workers in various industries such as oil and gas, mining, and construction to use protective equipment for their safety. Work safety policies and mandates set by government agencies play a pivotal role in driving the demand for PPE. Companies are required to adhere to these regulations to maintain worker safety in hazardous work environments. As governments worldwide continue to prioritize workplace safety, these stringent regulations are expected to sustain and even bolster the growth of the PPE market in the coming years.

 

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Innovations in materials, design, and manufacturing processes have led to the development of more efficient and comfortable protective gear. For instance, advanced fabrics with properties like fire resistance, breathability, and moisture-wicking have improved the comfort and functionality of PPE. Additionally, technologies such as augmented reality (“AR”) and the internet of things (“IoT”) are being integrated into safety helmets and eyewear, enhancing real-time monitoring and communication capabilities for workers. These technological enhancements not only enhance safety but also drive adoption, making PPE more appealing to a wider range of industries and workers. As a result, the PPE market is poised for continued growth as it leverages technological innovations to meet evolving safety needs.

 

Our company is principally involved in the provision of safety equipment including a wide range of PPE and is well positioned to capitalize on the growing market for PPE. We are also seeking to drive increased adoption of PPE and enhance the value we provide to our customers via innovation, where we are trying to optimize safety training with the integration of virtual reality (“VR”) technology that offers immersive experience of workplace danger for workers and underscore the importance of PPE for workplace safety.

 

ASEAN Market

 

The PPE market in Southeast Asia (“SEA”), with an estimated size of USD3.4 billion in 2022, is poised for substantial growth with a projected CAGR of c.8% from 2022 to reach USD5.0 billion in 2027.

 

 

Source: Global news wire

 

SEA region is experiencing significant growth in the PPE market, driven by several key factors in the region. Governments in SEA countries have been enforcing stringent safety regulations, obliging employers to provide appropriate PPE to their workers. For example, Singapore’s Ministry of Manpower has been actively enforcing safety standards, leading to increased demand for safety helmets, gloves, and protective eyewear.

 

Moreover, the region’s industrial expansion, particularly in countries like Vietnam and Indonesia, is boosting the demand for PPE. Rapid growth in manufacturing and construction industries necessitates extensive use of PPE such as hard hats, reflective vests, and respiratory protection. The construction of infrastructure projects, including highways and power plants, further drives the need for these safety measures.

 

Economic growth and urbanization in SEA are contributing to increased construction activities, furthering the need for PPE. Thailand, for example, is undertaking major infrastructure projects that require extensive usage of PPE, including protective clothing, safety boots, and respiratory equipment. Awareness of the long-term health effects of occupational hazards is also rising, driving the adoption of protective gear among workers and employers.

 

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The emergence of e-commerce platforms has made PPE more accessible, enabling consumers and small businesses to conveniently purchase safety gear online. This accessibility is contributing to increased PPE sales across the SEA region. Altogether, these factors collectively contribute to the thriving PPE industry in Southeast Asia.

 

For the year ended March 31, 2023 and for the 6 months ended September 30, 2023, the Company generated revenue of S$37,643,696 (US$28,316,305), of which S$24,468,513 (US$18,405,682) and S$20,483,795 (US$14,999,850), of which S$12,290,277 (US$8,999,910) was from the sale of safety equipment, respectively, which represented approximately 0.5% and 0.25% market share of the PPE market in SEA in 2022, respectively. Additionally, the Company generated a revenue growth of 42.9% for our sale of safety equipment, which is significantly higher than the projected CAGR of c.8% for the PPE market in SEA. With the strong foundation built and continuously being developed in Singapore, and coupled with existing business across SEA region including Brunei, Cambodia, Malaysia, Indonesia and Vietnam, the Company is poised to continue its strong growth in the region.

 

Singapore Market

 

Singapore demonstrates the highest degree of adherence to the safety regulations outlined in the Workplace Safety and Health Act 2006, a legislation relating to the safety, health and welfare of persons at work in a workplace issued by the Singapore Government in 2006. The PPE market in Singapore, which was valued at USD137 million in 2015, has surged to USD260 million in 2023. It is projected to maintain this growth trajectory with an estimated CAGR of 8.3%, ultimately reaching a market size of USD454 million by 2025.

 

 

Source: Reogma

 

Singapore’s Workplace Safety and Health Act 2006 is a comprehensive framework that prioritizes the safety and well-being of workers in the country. It places a strong emphasis on risk assessment, clear safety procedures, the use of PPE, accident reporting and investigation, safety committees, training, emergency preparedness, and health surveillance. By adhering to these regulations, employers contribute to the overall safety culture in Singapore, prioritizing the protection and welfare of their employees.

 

One of its fundamental requirements is the mandate for employers to conduct risk assessments. These assessments are crucial in identifying potential hazards within the workplace, encompassing everything from machinery-related risks to chemical exposure and operational processes. By systematically evaluating these risks, employers can implement effective safety measures.

 

The use of PPE is rigorously enforced under the Act. Wherever there is a risk to employee safety, employers are required to provide suitable PPE, which may include helmets, safety glasses, gloves, or protective clothing. This ensures that employees have the necessary gear to safeguard themselves against workplace hazards.

 

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Distribution Landscape in Singapore

 

Singapore’s PPE sector comprises items both produced domestically and imported. Homegrown products also find their way into global markets and being exported. Within Singapore’s local market, PPE reaches end-users through diverse distribution channels, including business-to-business (B2B) and business-to-consumer (B2C) avenues.

 

Target Markets:

 

PPE for the local market can either be locally manufactured or imported. Moreover, domestically produced PPE items often find their way to foreign markets as well.

 

Distribution Channels:

 

B2B distribution channel involves transactions directly between businesses. This can take the form of a PPE manufacturer or importer selling directly to companies that require PPE in bulk or to wholesalers. It may also encompass wholesalers selling to retail outlets, which then provide the products to the end-users.

 

B2C distribution channel encompasses businesses selling directly to end-consumers, who are the ultimate users of the products or services. This approach can be executed through a variety of retail avenues, such as physical brick-and-mortar stores, the company’s official website, or digital e-commerce platforms.

 

End User Industries:

 

PPE finds application across a multitude of industries, including manufacturing, construction, oil & gas, healthcare, food and beverage, and mining & quarrying, among others. Workers in these diverse sectors rely on a spectrum of PPE types to ensure their safety from workplace risks, encompassing concerns like cuts and abrasions, chemical or biohazard exposures, impact threats, and electrical hazards. Each industry customizes PPE selection to address the unique hazards pertinent to their operations.

 

Competitive Landscape in Singapore

 

PPE industry in Singapore is characterized by intense competition and a fragmented landscape, largely dominated by small, traditional hardware stores and small to medium-size wholesalers. We possess a well-established track record in this sector. We have not identified industry peer for direct comparison within the Singaporean PPE market.

 

Notably, we enjoy a unique position poised for growth and market expansion due to several key factors: Firstly, we believe that a significant number of first-generation owners of traditional hardware stores are retiring without succession plans, rendering them less competitive in the evolving market landscape. Secondly, we can capitalize on the absence of proprietary brands and limited retail presence among our competitors, as they primarily adopt a wholesaler model with a focus on price competition. Lastly, we have cultivated a robust brand presence over the years and is strategically expanding into major industrial hubs and zones, ensuring proximity to end customers for their procurement needs.

 

1.Industry Outlook

 

The PPE market encompasses various safety gear types designed to protect workers from workplace hazards. These hazards range from chemical exposure to electrical risks and extreme temperatures, making PPE a crucial component across industries like construction, manufacturing, healthcare, and oil & gas. The global PPE market is on a growth trajectory, projected to reach USD125 billion by 2030 from USD83 billion in 2023, with Asia Pacific leading this expansion at a robust CAGR of c.7%. The COVID-19 pandemic caused an unprecedented surge in PPE demand, straining supply chains and fostering innovations like antiviral coatings and reusable materials.

 

Heightened awareness of workplace safety due to stringent regulations and the substantial costs associated with accidents and injuries has propelled PPE demand. Asia Pacific, in particular, has witnessed a surge in awareness, further bolstering the market.

 

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Government-enforced safety regulations have made PPE mandatory in high-risk industries such as oil & gas, mining, and construction. These regulations are poised to sustain and potentially enhance market growth.

 

Technological advancements have improved PPE comfort and functionality. Integration of augmented reality and IoT into safety gear enhances real-time monitoring and communication capabilities, making PPE more appealing to a wider range of industries and workers.

 

The Southeast Asia PPE market, valued at USD3.4 billion in 2022, is forecasted to grow at an impressive CAGR of c.8% until 2027. Stringent regulations in countries like Singapore have significantly increased demand for safety gear.

 

Singapore, renowned for its strict adherence to the Workplace Safety and Health Act 2006, has seen its PPE market surge from USD137 million in 2015 to USD260 million in 2023, with a projected CAGR of 8.3%. The Act mandates risk assessment and the provision of suitable PPE, ensuring comprehensive employee safety.

 

The rising workplace fatality rate has underscored the pivotal role of PPE in safeguarding workers. Initiatives such as the Heightened Safety Period (HSP) have demonstrated progress in reducing fatalities, but sustained vigilance is essential. Government-led initiatives, including Workplace Safety and Health 2028, aim to reduce workplace fatalities and major injuries. Employers are increasingly investing in PPE to align with these objectives, making it a pivotal component in fostering safer work environments.

 

Singapore’s PPE market is highly competitive and fragmented with many traditional, mom-and-pop hardware stores. We are uniquely positioned to benefit from evolving market dynamics, stands to capitalize on retiring first-generation store owners, limited retail presence among competitors, and a strong brand presence.

 

In conclusion, the PPE market is poised for substantial growth, driven by increased safety awareness, stringent regulations, and technological advancements. Singapore and Southeast Asia are significant players in this expansion, with PPE serving as a linchpin in fostering safer workplaces and achieving government-mandated safety goals.

 

Industry Growth Drivers

 

Growth in Construction Industry

 

The construction sector stands out as a prominent driving force behind the demand for PPE. Ensuring the well-being of laborers is paramount in construction, and PPE plays a pivotal role in safeguarding workers from accidents and injuries, making it an indispensable component within the industry’s safety protocols. The consistent growth and expansion of construction activities contribute significantly to the sustained demand for PPE products.

 

According to Singapore’s Building and Construction Authority (BCA), the preliminary actual construction demand for 2022 stood at S$29.8 billion, aligning with BCA’s earlier projections and reflecting the industry’s resilience. The public sector contributed S$17.9 billion, bolstered by projects such as the Cross Island MRT Line and healthcare facilities. Meanwhile, the private sector saw a slight moderation but remained robust, with a demand of S$11.9 billion, supported by private residential and industrial developments.

 

BCA has provided an outlook for Singapore’s construction sector, anticipating the total construction demand in 2023, which represents the value of construction contracts to be awarded, to be in the range of S$27 billion to S$32 billion.

 

The public sector is expected to contribute significantly, accounting for about 60% of the total construction demand, with an estimated value between S$16 billion and S$19 billion. This can be attributed to the ongoing public housing projects, particularly the Build-To-Order (BTO) flats. Additionally, projects in industrial and institutional building construction, such as water treatment plants and educational facilities, will contribute substantially. The civil engineering construction sector is expected to remain robust due to continued mass rapid transit (MRT) line construction and infrastructure projects. MRT is a rapid transit system in Singapore and the country’s principal mode of railway transportation for public commuters.

 

On the other hand, the private sector’s construction demand in 2023 is forecasted to be between S$11 billion and S$13 billion, mirroring the figures from the previous year. Residential and industrial building construction are expected to drive this demand, while commercial building demand is likely to increase due to project rescheduling and redevelopment efforts to enhance asset values.

 

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Looking ahead to the medium term, BCA foresees construction demand ranging from S$25 billion to S$32 billion per year from 2024 to 2027. This projection reflects the confidence in Singapore’s strong economic fundamentals and healthy investment commitments.

 

Year   Construction demand* (S$ billion)   Construction
Output^ (Nominal)
(S$ billion)
Public   Private   Total   Total
2022 p   17.9   11.9   29.8   30.2
2023 f   16 – 19   11 – 13   27 – 32   30 – 33
2024 – 2027 f1   14 – 18 p.a.   11 – 14 p.a.   25 – 32 p.a.    

  

 

p:Preliminary; f: forecast
*Construction demand: Value of contracts awarded
^Construction output: Value of certified progress payments

 

Building construction is one of the core industries that our company focuses on for the provision of safety equipment. Additionally, we also offer auxiliary products such as industrial hardware tools and electrical hardware required for construction sites. As our business strategy involves retail branches located near to our customer work sites, our company is strongly positioned to drive significant growth within the construction sector in Singapore.

 

Focus on Workplace Fatality

 

The increased workplace fatality rate in recent years, exemplified by a notable rise in 2022, has become a significant driver for the demand and emphasis on PPE. This push to lower fatality rates has led to heightened awareness of the importance of PPE across various industries, as it serves as a critical line of defence in safeguarding the well-being of workers.

 

In 2022, there was a notable increase in workplace fatalities compared to the preceding year, with a workplace fatality rate of 1.3 per 100,000 workers, up from 1.1 in 2021.

 

 

 

1Construction demand forecast in 2023-2027 excludes any potential awards of construction contracts for expansion of the two Integrated Resorts as well as the development of Changi Airport Terminal 5 and its associated infrastructure projects as the confirmed details such as award timelines and construction phasing for both mega developments are still unavailable at this point in time.

 

Source: Ministry of Manpower, Singapore

 

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Responding to this, the MOM introduced the HSP in September 2022 to mitigate the surge in workplace fatalities. Encouragingly, during the HSP, the monthly average of fatalities dropped from 4.5 to 2.5 per month, resulting in an annualized fatality rate of less than 1.0 per 100,000 workers. Nevertheless, certain concerns persist as the impact of the HSP varied across industries. In response, MOM extended the HSP until May 31, 2023, and established the Multi-Agency Workplace Safety Taskforce (MAST) to identify and implement sector-specific strategies to bolster workplace safety. While there has been some progress in enhancing workplace safety through the HSP, sustained vigilance remains imperative.

 

Under Workplace Safety And Health 2028, the objective is to achieve a sustained reduction of 30% in Singapore’s workplace fatal injury rate, transitioning from a 3-year average of 1.4 per 100,000 workers in 2018 to less than 1.0 per 100,000 workers over the next decade. This target aligns with the achievements of only four countries within the Organization for Economic Co-operation and Development (OECD). Furthermore, WSH 2028 recognize the significance of decreasing major injuries in workplaces as they mirror broader safety attitudes. Correspondingly, WSH 2028 aim for a comparable 30% decrease, shifting from a three-year average of 17.2 per 100,000 workers to under 12.0 per 100,000 workers.

 

 

Source: Ministry of Manpower, Singapore

 

In response to these government-led efforts, businesses and employers are increasingly investing in PPE to ensure the safety and protection of their workforce, making it a pivotal component in mitigating workplace hazards and striving for safer work environments. This trend provides a positive outlook for our business as we are one of the leading and trusted safety equipment providers in Singapore.

 

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BUSINESS

 

Overview

 

Our business is principally involved in the provision of safety equipment, encompassing essential items such as (i) personal protective clothing, hand gloves, safety footwear, and personal fall arrest systems (a system used to arrest an employee in a fall from a walking-working surface, usually consisting of a body harness, anchorage, and connector), (ii) portable fire extinguishers and (iii) traffic products such as rubber speed humps, wheel stops and wheel chocks. Additionally, when needed by our customers, we also offer auxiliary products such as industrial hardware tools and electrical hardware required for construction sites. For the financial years ended March 31, 2023 and March 31, 2022, the provision of safety equipment contributed to 65.0% and 57.4% of our revenue, respectively.

 

For the six months ended September 30, 2022 and six months ended September 30, 2023, the provision of safety equipment contributed to 58% and 60% of our revenue, respectively.

 

Our products and solutions are marketed to a wide array of distributor networks and end markets, both in Singapore and increasingly throughout the Southeast Asian region including Brunei, Cambodia, Malaysia, Indonesia and Vietnam. The bulk of our customers belong to the infrastructure development, building construction, marine, oil and gas industries, and general industrial markets. This broad market coverage allows us to serve a diverse customer base and capitalize on growth opportunities in various sectors. Our business strategy involves enhancing our market presence in Singapore and increasingly, the Southeast Asian region as well as executing selected acquisitions that meet our specific investment criteria.

 

We believe we have a corporate culture that motivates newly acquired, entrepreneurial businesses to embrace our shareholder value creation principles. In the financial year ended March 31, 2023, business in Singapore contributed to 92.0% of our Group’s revenue. For the six months ended September 30, 2023, business in Singapore contributed to 97% of our Group’s revenue. We also believe that our financial results reflect our strong market position.

 

For the financial year ended March 31, 2022, our revenue was S$29.8 million, and our net profit was S$2.1 million. For the financial year ended March 31, 2023, our revenue was S$37.6 million, and our net profit was S$3.9 million. This is a growth of 26.3% in revenue and 89.1% in net profit respectively. The cost of revenue increased from S$21.1 million in the financial year ended March 31, 2022 to S$25.5 million in the financial year ended March 31, 2023.

 

For the six months ended September 30, 2022, our revenue was S$18.5 million, and our net profit was S$2.5 million. For the six months ended September 30, 2023, our revenue was S$20.5 million, and our net profit was S$2.1 million. This is a growth of 11% in revenue. The cost of revenue increased from S$12.4 million in the six months ended September 30, 2022 to S$12.9 million in the six months ended September 30, 2023.

 

Our Brands

 

 

The D&D brand represents our core brand featuring a variety of safety footwear designed with sturdy toecaps, offering reliable protection against impact at an energy level of 200 joules or higher and compression resistance of at least 15 kilo newtons.

 

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The SkyHawk brand is our brand committed to providing reliable travel restraint and fall arrest equipment, specifically designed to ensure the safety of workers operating at heights.

 

 

 

The Super Sun brand covers our range of industrial graded hardware and traffic products.

 

 

The STRIKERS brand covers our range of firefighting equipment.

 

 

 

The Osprey brand covers our range of fall arrest equipment, safety gloves and step platform ladders.

 

 

 

The HORNET brand covers our range of fall arrest equipment for workers working at heights.

 

 

 

The DADE brand covers our range of industrial hardware tools, electrical products and accessories.

 

Our Products

 

For the financial year ended March 31, 2023, our top 3 products categories were (i) personal protective clothing, hand gloves, safety footwear, and personal fall arrest system, (ii) portable fire extinguishers and (iii) traffic products account, which accounted for S$10.7 million, S$1.1 million and S$1.0 million respectively.

 

In addition, for the six months ended September 30, 2023, our top 3 products categories were (i) personal protective clothing, hand gloves, safety footwear, and personal fall arrest system, (ii) portable fire extinguishers and (iii) traffic products account, which accounted for S$4.7 million (approximately US$3.5 million), S$0.6 million (approximately US$0.4 million) and S$0.5 million (approximately US$0.4 million) respectively.

 

To complement our sales of safety equipment and industrial hardware, we also offer products and accessories to our customers should they need them under our own range of “DADE” brand of industrial hardware tools, electrical products and accessories.

 

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The diagrams below illustrates the suite of personal protective clothing, hand gloves, safety footwear, and personal fall arrest systems we currently offer.

 

 

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The diagram below illustrates the types of fire extinguishers and fire related safety products we currently offer.

 

 

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The diagram below illustrates the suite of traffic products we currently offer.

 

 

Functionality Testing, Inspection of Equipment and Quality Control

 

Our company has established a quality control and assurance system for our safety products.

 

(a)Incoming goods

 

Upon receipt of the safety equipment, we tally the quantity delivered against the delivery order. Subsequently, we conduct random sampling of the goods to verify our specifications are met. In the event of any discrepancy in the quality or quantity, the non-conformity is highlighted and the replacement of goods or credit note is obtained from the supplier.

 

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(b)Our brand products

 

We evaluate and select our third-party contract manufacturers to manufacture our brand of products in accordance with our product specifications. Besides pricing, the other criteria, delivery time, and good track records are also evaluated. We would also visit the factories of our manufacturers for surveillance checks.

 

(c)Product certification and quality control

 

Under the Workplace Safety and Health Act 2006 of Singapore, the Workplace Safety and Health Council has endorsed Codes of Practices that specify the quality and standards for different safety equipment provided by our Group. As per these Codes of Practices, they define precise standards that our customers must follow when equipping their workers with safety products. To enhance the marketability of our products, we ensure that the safety items we supply conform to regulatory requirements and specific buyer mandates. RPL follows a two-step quality control process to achieve this goal. These verification tests are carried out by independent product testing organizations like Singapore Test Lab Pte Ltd and Bureau Veritas Australia Pty Ltd. These reputable organizations are responsible for testing and certifying products according to both national and international standards.

 

As part of this process, RPL completes and submits the required forms, production quality plans, and manuals. The independent testing organization reviews the documentation, conducts initial product inspections, and then issues certificates of conformity. For more information about relevant product certifications, please see the section titled “Business — Certifications.” Upon successful testing and certification, our products and RPL are included in the testing organization’s directory. This recognition allows us to display the testing organization’s quality control label on our products, indicating their adherence to established standards. The quality control process continues with regular surveillance checks conducted by the independent testing organization to ensure sustained product quality.

 

Our Customers

 

Our customers can be categorized into two groups, (i) wholesalers and distributers of our products and (ii) end users of our products. Our end user customers operate in various industries which range from infrastructure, building construction, marine, oil and gas industries, as well as general industrial markets. For example, our safety shoes are worn by workers operating in construction sites, as well as in the marine, oil and gas refineries. Our customers who are engaged in the wholesaling and distribution of our products, buy our products at a lower cost, and profit from the difference.

 

Sales and Marketing

 

Our sales and marketing team consists of 14 full-time employees based in Singapore. Our Executive Director, Huang Dong, oversees our sales and marketing department. We believe that we have a dedicated sales and marketing team providing top notch services to customers in Singapore and Southeast Asia. The sales team consist of staff who specialize in handling wholesaling and for the end user markets. We have also stationed staff at our various distribution branches who can advise the customer on their tailored needs.

 

We promote our platform and enhance brand awareness through both online and offline branding and business development initiatives. We take part in major exhibitions in Singapore and overseas to showcase our range of safety products such as Occupational Safety + Health Asia Singapore, MetalTech and AutoMex 2023 Kuala Lumpur, Exyte Singapore Safety week among others. We also market our products on online e-commerce platform(s) or website(s) such as Shopee, Lazada, and Dade.sg. One of our other key channels for marketing is through word-of-mouth referrals from our existing customers and business contacts. We believe that our high-quality sales staff services result in strong word-of-mouth referrals and positive customer reviews, which increase customer awareness of our brand. As we gain trust from our customers, they often refer us to their social network, or return to us for their other safety equipment or other related needs. We intend to continue to invest resources in our marketing efforts.

 

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Sales Process Flow

 

The process flow pertaining to our sales business activities can be described as follows:

 

Purchase of safety equipment and general hardware from suppliers

 

Mr. Zhang Jian, our Executive Director, Chairman and Chief Executive Officer’s wide network of contacts has allowed us to build a reputation and rapport with a network of trusted suppliers from around the region and in the PRC. 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 equipment for sale. Subject to expected demand for the equipment, our sales team further negotiates sales terms with our suppliers before committing to purchases.

 

Customer Inquiries for safety 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 new customers are generally derived from referrals from our existing customers and through online inquiries via our website at www.rectitude.com.sg. We also sell to end users through e-commerce platforms such as Shopee and Lazada. Customers might also approach us with inquiries whenever they need to purchase safety equipment for their projects. Subject to equipment availability and acceptable sales terms, our customers enter into sales agreement confirming their equipment purchases with us.

 

Competition

 

The safety equipment industry is growing and increasingly competitive. We compete with both online and offline merchants for the same pool of potential customers. We also believe that some of our competitors may be better funded or better connected than us. Nonetheless, we believe that we are well positioned to compete in the industry because of (i) our strong and stable relationships with our suppliers and customers, (ii) our experienced management team, (iii) our strategically located branches across Singapore and because (iv) we have an extensive range of safety products and industrial graded hardware tools.

 

Competitive Strengths

 

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 regions we serve. We have identified and maintained good relationships with reliable suppliers, who will typically notify us of new safety equipment for sale. They also refer prospective customers to us if the customer is procuring safety equipment from Singapore. Our customers regularly return to us for repeat business and from time to time. We have a wide customer base from Singapore, Brunei, Cambodia, Indonesia, Malaysia and Vietnam.

 

We have strived to maintain stable business relationships with our key customers. For the financial years ended March 31, 2023 and 2022, our top five customers accounted for 33% of total sales, and three of our top five customers have more than 10 years of business relationships with us. For the six months ended September 30, 2022 and 2023, our top five customers accounted for 31% and 25% of total revenue, respectively and three of our top five customers have done business with us for more than 10 years.

 

We have an experienced management team.

 

We have an experienced management team, led by Mr. Zhang Jian, our Executive Director, Chairman and Chief Executive Officer who has been instrumental in spearheading the growth of our Group. Mr. Zhang has over 20 years of experience in the safety 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 which includes Executive Directors such as Mr. Huang Dong, and Mr. Victor Aw, who themselves have substantial experience in the safety equipment industry.

 

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We have strategically located branches across Singapore.

 

We have a network of eight strategically located branches across Singapore that stock our safety products. These branches are conveniently situated near our customers’ workplace, allowing us to fulfil their product needs quickly and easily on short notice, and our prompt and efficient delivery capabilities sets us apart from competitors.

 

We provide a one-stop provider of an extensive range of safety products and industrial graded hardware tools.

 

Our customers often need a comprehensive range of safety products, such as helmets, safety shoes, and harnesses, to ensure their regulatory compliance. Being a one-stop provider for all their safety needs, we offer convenience and streamline their procurement process. Additionally, we also supply industrial-grade hardware tools that our customers may require. These tools are essential for construction, maintenance, and repair activities, and by offering them alongside our safety products, we further enhance our value proposition. By catering to both their safety and hardware needs, we provide a comprehensive solution, saving our customers time and effort in sourcing multiple suppliers.

 

Business Strategies

 

We intend to strengthen our market position in the safety equipment and industrial grade hardware industries, by implementing the following business strategies and plans.

 

Expand business and operations through acquisitions, joint ventures and/or strategic alliances

 

While we intend to focus on our principal business activities in the sales of safety and industrial-grade hardware equipment, we also plan to explore opportunities to collaborate with suitable partners in related industries in the Southeast Asian region through strategic alliances, joint ventures, acquisitions, and investments. For example, if a suitable opportunity arises, we may collaborate with potential partners in the construction, electronic hardware, hotel, electronic manufacturing, oil and gas and marine industries if these collaborations are likely to provide us with more business opportunities.

 

Strengthening our local presence

 

We also plan to strengthen our local presence. A key aspect of this strategy involves expanding our branch network across Singapore by establishing new branches in strategic locations. By increasing our local footprint, we aim to enhance our accessibility, better serve our customers, and solidify our position as a trusted provider of safety and industrial solutions in the region.

 

Widening our product range

 

We also plan to expand our product range of safety products within our established brands. By broadening our offerings, we aim to provide our customers with an even greater selection of high-quality safety products under our trusted brands. This allows us to cater to diverse customer needs, strengthen our market presence, and further solidify our position as a reliable provider of comprehensive safety solutions.

 

Real Property

 

A description of the Company’s leased properties is below:

 

Location  Usage  Lease Period  Rent
(per month)
   Approximate
area
9 Pioneer Road #01-54 Pioneer Road North Terrace Workshops Singapore 628461  Storage of general industrial hardware and chemical goods   December 16, 2022 to
December 15, 2025
  S$ 7,000   386 sqm/4,155 sq ft
35 Kallang Pudding Road, Tong Lee Building Tower A, #01-08 Singapore 349314  Warehouse   June 13, 2022 to
July 14, 2025
  S$ 8,300   354 sqm/3,810 sq ft

 

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Location  Usage  Lease Period  Rent
(per month)
   Approximate area
51 Tampines Industrial Avenue 5, T5 @ Tampines, Singapore 528635  Use of said premises for purpose approved by the Building Control Division and the Competent Authorities   August 1, 2022 to
July 31, 2024
  S$ 23,000   1,230 sqm/13,240 sq ft
56 Loyang Way, Loyang Enterprise Building, Singapore 508775  Factory   August 25, 2022 to
August 24, 2024
  S$ 12,890   479 sqm/5,156 sq ft
71 Kaki Bukit Ave 1 Shun Li Industrial Park, Singapore 417948  Office, operation, production, repair workshop, storage   October 1, 2023 to
September 30, 2026
  S$ 7,000   826 sqm/8,891 sq ft
Block 828, #01-264 (2nd level) Tampines Street 81, Singapore 520828  Residential   April 1, 2023 to
April 30, 2025
  S$ 3,200   275 sqm/2,963 sq ft
1000 Tai Seng Avenue #01-2508, Singapore 534421  Storage of goods i.e., shoes, body harness, restrain products, hardware and small machinery and as an office   April 24, 2021, to
April 23, 2027
  S$ 4,588   190 sqm/2,045 sq ft
Defu Industrial City, #03-28, 8 Defu South Street 1, Singapore 533758  Warehouse storage for general safety PPE, general hardware and as an office   October 21, 2023 to
October 20, 2026
  S$ 35,204   1,563 sqm/16,819 sq ft
2 Defu South Street 1 #02-02 Singapore 533755  Warehouse storage for general safety PPE, general hardware and as an office   15 November 2023 to
14 November 2026
  S$ 2,684   69 sqm/743 sq ft

 

On November 25, 2014, we purchased a 2,107 sqm/22,679 sq ft property located at 35 Tampines Industrial Avenue 5, Singapore 528627, which is the current principal executive office of our Group for purchase consideration of S$4,088,000 (US$3,075,071) with a monthly loan repayment of S$20,356 (US$15,312). On October 23, 2017, we purchased a 195 sqm/2,099 sq ft property located at 18 Kaki Bukit Road 3, #01-14, Entrepreneur Business Centre, Singapore 415978 for purchase consideration of S$1,200,000 (US$902,663) with a monthly loan repayment of S$5,749 (US$4,325). On March 1, 2021, we purchased a 294 sqm/3,165 sq ft property located at 71 Woodlands Industrial Park E9, #01-09, Wave 9, Singapore 757048 for purchase consideration of S$1,108,888 (US$834,127) with a monthly loan repayment of S$7,965 (US$5,991). On September 25, 2017, we purchased a 245 sqm/2,637 sq ft property located at 9 Tuas South Avenue 10 #02-20 T99, Singapore 637014 for purchase consideration of S$1,250,000 (US$897,731) with a monthly loan repayment of S$5,516 (US$4,149).

 

Impact of COVID-19 on our business and operations

 

Singapore Control Order Regulations

 

Since the outbreak of the first COVID-19 case in Singapore on January 23, 2020, the Singapore government raised the DORSCON (the Disease Outbreak Response System Condition, a color-coded framework that shows the current disease situation in Singapore) level from yellow to orange and introduced several restrictions which tightened alongside increasing cases of COVID-19 infections. On April 3, 2020, the Multi-Ministry Taskforce of the Singapore Government implemented the Circuit Breaker Measures, which were an elevated set of safe distancing measures and a nationwide partial lockdown, known as the ‘‘circuit breaker’’ on and with effect from April 7, 2020, to pre-empt the increasing local transmission of COVID-19 from April 7, 2020 (“Circuit Breaker Measures”). On April 7, 2020, the Singapore Parliament passed the COVID-19 (Temporary Measures) Act 2020 (“COVID-19 Act”) which provides the Singapore Government the legal basis to enforce the Circuit Breaker Measures, and the COVID-19 (Temporary Measures) (Control Order) Regulations 2020 (“COVID-19 Regulations”) were issued under the COVID-19 Act to implement the Circuit Breaker Measures. The COVID-19 Regulations impose restrictions on premises and businesses in relation to the closure of premises and respective controls on essential and non-essential service providers, and the movement of people, both in public places and in places of residence. The COVID-19 Regulations require the closing of most physical workplace premises and suspending all business, social and other activities that cannot be conducted through telecommuting from home, save for those providing essential services and in selected economic sectors which are critical for local and global supply chains (“Essential Services”). Entities providing Essential Services were required to operate with the minimum number of staff on their premises to ensure the continued running of those services, and implement strict safe distancing measures. The COVID-19 Regulations could be varied or extended, depending on the assessment of the then situation by the Singapore government. The Circuit Breaker Measures were imposed under the COVID-19 Regulations during the period between April 7, 2020 and June 1, 2020 (inclusive).

 

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On May 19, 2020, the Multi-Ministry Taskforce announced that the Circuit Breaker Measures would end on June 1, 2020 and the Multi-Ministry Taskforce would embark on a controlled approach to resume economic and community activities and progressively lift the relevant control measures in place after June 1, 2020 over three phases, with the first phase to be implemented with effect from June 2, 2020. The three phases were (a) a “Safe Re-opening” phase, implemented from June 2, 2020 to June 18, 2020 (inclusive), where economic activities that do not pose high risk of transmission (“Permitted Services”) were resumed while social, economic and entertainment activities that carry higher risk remained closed, and everyone was advised to continue to leave home only for essential activities and to wear a mask when doing so (“Phase 1”); (b) a “Safe Transition” phase with the gradual resumption of more activities including the re-opening of more firms and business (“Permitted Enterprises”), subject to safe management measures being implemented and practiced by employers and employees in these workplaces and their ability to also maintain a safe environment for their customers and social activities in small groups of not more than five persons, which were implemented with effect from June 19, 2020 (“Phase 2”); and (c) a “Safe Nation” phase, implemented with effect from December 28, 2020, whereby social, cultural, religious and business gatherings or events were resumed, although gathering sizes still had to be limited in order to prevent large clusters from arising, and services and activities that involve significant prolonged close contact or significant crowd management risk in an enclosed space also were allowed to be re-opened, subject to their ability to implement strict safe management measures effectively (“Phase 3”).

 

Between May 16, 2021 and August 6, 2021, the Singapore Government introduced two phases, namely the Phase 2 (Heightened Alert) and Phase 3 (Heightened Alert), along with the easing of certain measures within each of such phases. In summary, the Phase 2 (Heightened Alert) measures which were in effect from May 16, 2021 to June 13, 2021, included reductions in prevailing social gathering group size, sizes of larger scale events or activities and reinstatement of “work-from-home” as the default at workplaces to minimize workplace interactions, and the Phase 3 (Heightened Alert) measures, which were in effect from June 14, 2021 to July 19, 2021, was contemplated as a calibrated reopening and included increases in social gathering group sizes, event size and capacity limits, and subsequently the resumption of dining in at food and beverage establishments. On July 20, 2021, the Singapore Government announced the reversion back to Phase 2 (Heightened Alert) measures from July 22, 2021 to August 18, 2021 which superseded the measures introduced on July 19, 2021, during which “work from home” remained the default, employers who needed staff to return to workplaces were required to ensure that there was no cross-deployment at various worksites, enforce staggered start times and flexible working hours and social gatherings at workplaces were not allowed.

 

On August 6, 2021, the Singapore Government announced the easing of some safe management measures, with the first phase to take effect on August 10, 2021 and the second phase to take effect on August 19, 2021, which superseded those introduced on July 22, 2021 as part of Singapore’s transition towards COVID-19 resilience. The eased measures allowed for an increase in social gathering group size, event size and capacity limits for fully vaccinated individuals and easing of “work-from-home” requirements. A further easing of community measures was announced on August 19, 2021. Subsequently, given the exponential rise in COVID-19 cases from the end of August 2021, on September 24, 2021, the Singapore Government announced a tightening of safe management measures during the stabilization period between September 27, 2021 and October 24, 2021, which was later extended to November 21, 2021, with a mid-point review. On November 8, 2021, the Singapore Government announced calibrated adjustment of safe management measures including the easing of dine-in restrictions and updates to border measures. On December 22, 2021, in response to the global emergence of the Omicron variant, the Singapore Government introduced travel restrictions for affected countries or regions and enhanced the testing requirements for travelers. Effective March 29, 2022, the Singapore Government significantly eased Covid-19 restrictions by, among other things, lifting the requirement to wear masks outdoors, doubling the group size limit to 10 people and lifting the ban on alcohol sales in pubs and eateries after 10:30 p.m. It also eased testing and quarantine requirements for travelers and declared that up to 75% of employees who can work from home are allowed to return to their workplaces.

 

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From 26 April 2022, there was a further easing of community and border measures due to the fall and stabilization of daily infection numbers, including, without limitation, the removal of group size limits for mask-off activities, all workers may now return to the workplace (an increase from the limit of 75% of those who can work from home), mask-wearing will remain optional in outdoor settings, safe distancing will no longer be required between individuals and groups, and there is a removal of the capacity limit for larger settings/events with more than 1,000 persons.

 

On 13 February 2023, the Singapore Government lowered the DORSCON level to green.

 

Impact on our Group

 

During the pandemic, the introduction of COVID-19 Act imposed restrictions at each stage of pandemic posed significant challenges to our company as our business operations involved people interaction, movement of goods in physical workplace premises. If any of our staff is suspected or confirmed to have contacted COVID-19, we may have to temporarily suspend our operation and quarantine the affected staff, disinfecting the affected premises. We would adopt control measures to protect our employee, workers and customers inline with the advisories issued by the government and work closely with all parties to adhere to our business contingency plans.

 

The Circuit Breaker Measures were imposed during the period between April 7, 2020 and June 1, 2020. With our company categorized as the essential service provider in our economic sector during the “Circuit Breaker Measures,” we were allowed to operate but with the minimum number of staff to run our operation and strict implementation of safe distancing measures at our premises.

 

Throughout the pandemic period, there were also travel and visiting restrictions which hinder our client/suppliers engagements. From time to time, challenges evolve and we adapt to tackle them. With the work-from-home as the default, we started to conduct our business meetings online and implementing electronic filing.

 

We have also diversified our business to provide sanitizing cleaning service to industries and offices with NEA approved cleaning agent. Through our long-standing relationship with our suppliers, we were able to secure large quantities of face mask, personal protective clothing and hand gloves to meet the strong demand during the COVID-19 pandemic. Our sales team had innovate the idea to bring the face mask, personal protective clothing and hand gloves nearer to the potential customers by selling them through vending machine in strategic locations in Singapore.

 

The Group has also adopted control measures to protect our staff and customers from outbreaks of infectious diseases, such as requiring our staff to wear personal protective equipment (such as face masks and gloves) during interaction with customers.

 

We will continue to work closely with our customers to ensure that the impact of the COVID-19 is minimized to its fullest extent.

 

Control Measures

 

Our Group has also adopted control measures to protect our employees, workers and customers from outbreaks of infectious diseases, which are in line with the advisories issued by the MOM on best practices to be adopted by workplaces in Singapore, such as requiring our staff who interact with our customers to wear personal protective equipment (such as face masks and gloves), and monitoring the stock of personal protection equipment for our staff and workers.

 

If any of our staff is suspected or confirmed to have contracted COVID-19, we may have to temporarily suspend our operations and quarantine the affected staff, disinfect the affected facilities and reallocate manpower as appropriate. We will continue to work closely with our customers to ensure that the impact of any such incidents which may occur due to unforeseen circumstances is minimized to its fullest extent, and implement our business contingency plans as outlined above in mutual agreement with our customers.

 

Licenses And Permits And Registrations

 

The following licenses and registrations are material for our Group’s operations in Singapore:

 

Description   Issuing Authority   Expiry Date   Issued to
Registration with Singapore Customs under the Regulation of Imports and Exports Regulations and Customs Regulations   Singapore
Customs
  No expiry   Rectitude Pte Ltd

 

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Certifications

 

The fire extinguishers which we sell in Singapore are subject to various fire safety standards and regulations, such as the Fire Safety Act 1993. Please refer to the “Regulatory Environment” section of this prospectus for more information. Under the Workplace Safety and Health Act 2006 of Singapore, the Workplace Safety and Health Council has approved Codes of Practices which prescribe the quality and standards of different safety equipment supplied by our Group. Pursuant to these Code of Practices, our products have received a declaration of conformity which shows that we have complied with the requirements of the relevant standards. For our occupational protective footwear, RPL has obtained a “S” Mark license that signifies our compliance with the AS 2210.3:2019 requirements from Bureau Veritas Australia Pty Ltd, an independent assessor of the quality of our safety equipment. For our personal fall arrest systems (models HT 08 and HT 02K) under our brand HORNET, RPL has obtained a declaration of conformity dated May 21, 2021, and expires July 20, 2024, from the Singapore Test Lab Pte Ltd, an independent assessor of the quality of our safety equipment. For our personal fall arrest systems under our brand OSPREY (models OS 08 and OS 02K), RPL has obtained a declaration of conformity dated July 21, 2021, and expires July 20, 2024, from the Singapore Test Lab Pte Ltd, an independent assessor of the quality of our safety equipment. For our restraint belts (models SK 07 restraint belt with 20mm gate opening snap hook and SK 17 restraint belt with 55mm gate opening snap hook) under our brand SKYHAWK, RPL has obtained a declaration of conformity dated July 21, 2021, and expires July 20, 2024, from the Singapore Test Lab Pte Ltd, an independent assessor of the quality of our safety equipment. For our safety footwear (model 08868, 08858, 07878, 08878, 09818, 09838, 09858, 09868, 07818, 08818, 01818, 01828, 03818, 03838 and 05828) under our brand D&D, RPL has obtained declarations of conformity dated December 8, 2021, and expires December 7, 2024, from the Singapore Test Lab Pte Ltd, an independent assessor of the quality of our safety equipment. For our fire extinguishers (models S1, S2, S4, S6 and S9) under our brand STRIKERS, RPL has obtained a certificate of conformity dated March 27, 2020, and expires December 31, 2024, from the TÜV SÜD, an independent assessor of the quality of our safety equipment. RPL has obtained the bizSAFE Level 3 certification from the Workplace Safety and Health Council, which recognizes that we have conducted risk assessments for every work activity and process in our workplace.

 

Inventory

 

For our safety equipment sales, we maintain an inventory of safety shoes, travel restraint and fall arrest system and industrial grade hardware which are in demand with our customers and hence easier to sell.

 

As of March 31, 2023, and March 31, 2022, we had inventories of S$5.8 million (approximately US$4.3 million) and S$5.6 million (approximately US$4.2 million), respectively. As of September 30, 2023, we had inventories of S$5.9 million (approximately US$4.4 million).

 

Intellectual Property

 

Our Group’s intellectual property rights are important to its business. As of the date of this prospectus, the Group has registered the following trademarks:

 

Design  Place of Registration   Registered Owner  Registration Number   Class   Registration Date  Expiry Date
   Singapore   RPL   T0913908A    Class 25   November 30, 2009  November 30, 2029
   Brunei   RPL   45967    Class 9, 25   October 08, 2014  October 08, 2024

 

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Design  Place of Registration   Registered Owner  Registration Number   Class   Registration Date  Expiry Date
   Thailand   RPL   171112300    Class 9   August 28, 2015  August 27, 2025
   Thailand   RPL   171112228    Class 25   August 28, 2015  August 27, 2025
   Cambodia   RPL   KH/60739/16    Class 9   August 22, 2016  January 08, 2026
   Cambodia   RPL   KH/60740/16    Class 25   August 22, 2016  January 08, 2026
   Vietnam   RPL   288567    Class 9, 25   August 27, 2017  January 07, 2026
   Malaysia   RPL   2014064489    Class 9   September 25, 2014  September 25, 2024

 

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Design  Place of Registration   Registered Owner  Registration Number   Class   Registration Date  Expiry Date
   Malaysia   RPL   2014064490    Class 25   September 25, 2014  September 25, 2024
   Australia   RPL   1765250    Class 9, 25   April 15, 2016  April 15, 2026
   PRC   RPL   18955594    Class 9   May 21, 2017  May 20, 2027
   Singapore   RPL   T0913906E    Class 8   November 30, 2009  November 30, 2029
   Singapore   RPL   T0913907C    Class 9   November 30, 2009  November 30, 2029
   Singapore   RPL   40202206325V   Class 9   March 21, 2022  March 21, 2032
   Singapore   RPL   T1003512Z    Class 9   March 23, 2010  March 23, 2030

 

   Singapore   RPL   40202254207Q   Class 8, 35   August 30, 2022  August 30, 2032
   Singapore   PTH   40202304598W   Class 9, Class 25   March 9, 2023  March 9, 2033

 

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Design  Place of Registration   Registered Owner  Registration Number   Class   Registration Date  Expiry Date
   Singapore   PTH   40202206294V   Class 9   March 21, 2022  March 21, 2032
   Singapore   PTH   40202115187Y   Class 6, 9, 20   June 25, 2021  June 25, 2031
   Singapore   PTH   T1108778F    Class 9   July 11, 2011  July 11, 2031
   Singapore   RPL   T1216734A    Class 32   October 31, 2012  October 31, 2032

  

 

Notes:

 

(1)Class 6: Common metals and their alloys, ores; metal materials for building and construction; transportable buildings of metal; non-electric cables and wires of common metal; small items of metal hardware; metal containers for storage or transport; safes
(2)Class 8: Hand tools and implements, hand-operated; cutlery; side arms, except firearms; razors
(3)Class 9: Scientific, research, navigation, surveying, photographic, cinematographic, audiovisual, optical, weighing, measuring, signaling, detecting, testing, inspecting, life-saving and teaching apparatus and instruments; apparatus and instruments for conducting, switching, transforming, accumulating, regulating or controlling the distribution or use of electricity; apparatus and instruments for recording, transmitting, reproducing or processing sound, images or data; recorded and downloadable media, computer software, blank digital or analogue recording and storage media; mechanisms for coin-operated apparatus; cash registers, calculating devices; computers and computer peripheral devices; diving suits, divers’ masks, ear plugs for divers, nose clips for divers and swimmers, gloves for divers, breathing apparatus for underwater swimming; fire-extinguishing apparatus.
(4)Class 20: Furniture, mirrors, picture frames; containers, not of metal, for storage or transport; unworked or semi-worked bone, horn, whalebone or mother-of-pearl; shells; meerschaum; yellow amber
(5)Class 25: Clothing, footwear, headwear
(6)Class 32: Fruit juices, mineral water (beverages)
(7)Class 35: Convenience store retailing: Department store retailing; Online retail services; Online wholesale services; Providing consumer product information; Retail services; Provision of an online marketplace doe buyers and sellers of goods and services; Supermarket retailing; The bringing together, for the benefit of others, of a variety of goods (excluding the transport thereof), enabling customers to conveniently view and purchase those goods from a general merchandise catalogues by mail order; Wholesale services; Pharmacy retail services; Provision of commercial information.

 

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.

 

Research and Development

 

To continuously enhance the value our customers can receive from the purchase of safety products, we are trying to optimize safety training with the integration of virtual reality (“VR”) technology which we can then provide to them. Traditional safety training methods relying on verbal emphasis and slides have proven inadequate in our technologically advanced world. RPL has been developing VR technology that offers a transformative solution by immersing workers in realistic construction site scenarios, providing a firsthand experience of potential dangers and accidents. This approach instills fear and vigilance, encouraging proactive safety measures and accident prevention. This VR training is tailored to Singapore’s construction sites, incorporating local placards, company names, dialects, and communication styles for enhanced realism. Each accident scenario is meticulously analyzed to cover a diverse range of potential dangers, allowing workers to select simulations relevant to their specific working environments. We are aiming to provide our customers with the first iteration of our VR equipment in the fourth quarter of 2024.

 

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The diagram below depicts the headset our customer’s workers would use to undergo their VR training.

 

 

The diagrams below depict a typical construction scene.

 

 

The diagrams above depict commonly seen placards of Singapore with different Company’s names and icons to increase their sense of realism of the construction site.

 

 

The diagram above depicts the inside of the construction site, which would be presented along with guidance for workers to follow along to progress within the VR world.

 

 

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The diagram above depicts the occurrence of the accident itself. If the worker has failed to fasten his safety harness and abide by the required protocol, the plank he has been standing on would fall, resulting in him falling out of the window and onto the ground below.

 

 

The diagram above depicts the aftermath of the fall, where the worker will land on rows of protruding iron bars. This serves as a reminder for them to wear the proper safety equipment and to abide by the proper protocols.

 

Employees

 

We employed 98 people as of the date of this prospectus, 98 people as of September 30, 2023, 92 people as of March 31, 2023, and 77 people as of March 31, 2022, and 77 people as of March 31, 2021 who were all located in Singapore.

 

The following table sets forth the breakdown of our full-time employees and 1 part-time employee in Operations of RPL:

 

   As of the date of this prospectus 
Function  Number of
employees
 
Management   5 
Finance   5 
Human Resource   1 
IT   2 
Sales & Marketing   14 
Operations   71 
Total   98 

 

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 business premises in accordance with customary industry practice; as well as insurance policies covering heads of liability such as workmen’s compensation, public liability and contractors’ all risk as required from time-to-time by our clients. We carry occupational injury and medical insurance for our employees, in compliance with applicable regulations. 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

 

We and our subsidiaries have been and may from time to time be involved in various legal proceedings and claims in the ordinary course of business, including contractual disputes and other commercial disputes. As of the date of this prospectus, we are not a party to any significant proceedings in Singapore. We are not aware of any legal proceedings of which we are a party outside of Singapore.

 

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REGULATORY ENVIRONMENT

 

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.

 

Laws and Regulations Relating to Our Business in Singapore

 

Building and Construction Industry Security of Payments

 

The Building and Construction Industry Security of Payment Act 2004 of Singapore (“BCISPA”) is administered by the Building and Construction Authority (“BCA”), and facilitates payments for construction work done or for related goods or services supplied in the building and construction industry.

 

Under the BCISPA, any person who has carried out construction work or supplied any goods or services under a contract relating to, amongst others, (i) the construction, alteration, repair, restoration, maintenance, extension, demolition or dismantling of buildings or structures that form or are to form part of the land, (ii) the installation in any building, structure or works of fittings that form or are to form part of the land, including systems of heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection and security or communications systems, (iii) excavation and (iv) the erection, maintenance or dismantling of scaffolding, is entitled to progress payment.

 

The BCISPA contains provisions relating to, amongst others, the amount of the progress payment to which a person is entitled under a contract, the valuation of the construction work carried out under a contract and the date on which a progress payment becomes due and payable. In addition, the BCISPA, amongst others, endorses the following rights:

 

(i)the right of a claimant (being the person who is or claims to be entitled to a progress payment under section 5 of the BCISPA) who, in relation to a construction contract, fails to receive payment by the due date of an amount that is proposed to be paid by the respondent (being the person who is or may be liable to make a progress payment under a contract to a claimant) and accepted by the claimant, to make an adjudication application in relation to the payment claim. The BCISPA has established an adjudication process by which a person may claim payments due under a contract and enforce payment of the adjudicated amount;

 

(ii)the right of the claimant to suspend the carrying out of construction work or supply of goods and services, and to exercise a lien over goods supplied by the claimant to the respondent that are unfixed and which have not been paid for, or to enforce the adjudication determination in the same manner as a judgment or an order of the court with the permission of the court, if amongst others, such claimant is not paid after the adjudicator has determined that the respondent shall pay an adjudicated amount to the claimant; and

 

(iii)where the respondent fails to pay the whole or any part of the adjudicated amount to a claimant, the right of a principal of the respondent (being the person who is liable to make payment to the respondent for or in relation to the whole or part of the construction work that is the subject of the contract between the respondent and the claimant) to make direct payment of the outstanding amount of the adjudicated amount to the claimant, together with the right for such principal to recover such payment from the respondent.

 

Employees

 

Employment Act

 

The Employment Act 1968 of Singapore, or the Singapore EA, sets out the basic terms and conditions of employment and the rights and responsibilities of employers as well as employees. With effect from 1 April 2019, the EA extends to all employees, including persons employed in managerial or executive positions, with certain exceptions.

 

The Singapore EA prescribes certain minimum conditions of service that employers are required to provide to their employees, including (i) minimum days of statutory annual and sick leave; (ii) paid public holidays; (iii) statutory protection against wrongful dismissal; (iv) provision of key employment terms in writing; and (v) statutory maternity leave and childcare leave benefits. In addition, certain statutory protections relating to overtime and hours of work are prescribed under the Singapore EA, but only apply to limited categories of employees, such as an employee (other than a workman or a person employed in a managerial or an executive position) who receives a salary of up to S$2,600 a month (“relevant employee”). Section 38(8) of the Singapore EA provides, amongst others, that a relevant employee is not allowed to work for more than 12 hours in any one day except in specified circumstances, such as where the work is essential to the life of the community, defense or security. In addition, section 38(5) of the Singapore EA limits the extent of overtime work that a relevant employee can perform, to 72 hours a month.

 

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Other employment-related benefits which are prescribed by law include (i) contributions to be made by an employer to the Central Provident Fund, under the Central Provident Fund Act 1953 of Singapore in respect of each employee who is a citizen or permanent resident of Singapore; (ii) the provision of statutory maternity, paternity, childcare, adoption, unpaid infant care and shared parental leave benefits (in each case subject to the fulfilment of certain eligibility criteria) under the Child Development Co-savings Act 2001 of Singapore; (iii) statutory protections against dismissal on the grounds of age, and statutory requirements to offer re-employment to an employee who attains the prescribed minimum retirement age, under the Retirement and Re-employment Act 1993 of Singapore; and (iv) statutory requirements relating to work injury compensation, and workplace safety and health, under the Work Injury Compensation Act 2019 of Singapore and the Workplace Safety and Health Act 2006 of Singapore, respectively.

 

Employment of Foreign Workers in Singapore

 

The employment of foreign workers in Singapore is governed by the Employment of Foreign Manpower Act 1990 of Singapore (“EFMA”) and regulated by the Ministry of Manpower (“MOM”).

 

In Singapore, under Section 5(1) of the EFMA, no person shall employ a foreign employee unless the foreign employee has a valid work pass from the Controller of Work Passes appointed by the MOM to issue such work passes, which allows the foreign employee to work for him in Singapore. Section 5(6) of the EFMA provides that any person who contravenes Section 5(1) of the EFMA shall be guilty of an offence and shall: (a) be liable on conviction to a fine of at least S$5,000 and not more than S$30,000 or to imprisonment for a term not exceeding 12 months or to both; and (b) on a second or subsequent conviction be punished with a fine of at least S$10,000 and not more than S$30,000 and with imprisonment for a term of not less than one month and not more than 12 months in the case of an individual; or be punished with a fine of at least S$20,000 and not more than S$60,000, in any other case.

 

The availability of the foreign workers to various sectors is also regulated by the MOM through, amongst others, the following policy instruments:

 

(i)approved source countries;

 

(ii)the imposition of security bonds and levies;

 

(iii)dependency ceilings based on the ratio of local to foreign workers; and

 

(iv)quotas based on the man year entitlements (“MYE”) in respect of workers from Non-Traditional Sources (“NTS”) and the PRC.

 

Various categories of work passes may be issued by the Controller of Work Passes under the Employment of Foreign Manpower (Work Passes) Regulations 2012 (“EFMR”), including the work permit, the S Pass and the employment pass. The work permit is issued to, amongst others, semi-skilled migrant workers in the construction, manufacturing, marine shipyard, process or services sector. The S Pass is issued to skilled foreign workers who, amongst others, must earn a salary of at least S$3,150 a month in all sectors except the financial services sector, while skilled foreign workers in the financial services sector must earn a salary of at least S$3,650 a month to qualify. The employment pass is issued to foreign professionals, managers and executives who meet the eligibility criteria, and applicants must earn a salary of at least S$5,000 a month in order to qualify, with applicants in the financial services sector needing to earn a salary of at least S$5,500 a month to qualify. The minimum qualifying salary requirements applicable to an applicant may increase with age.

 

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The EFMR requires employers of work permit holders, inter alia, to:

 

(a)bear the costs for the medical treatment of the foreign employee, including any service, investigation, medicine and medical consumable, among others, which are necessary for the medical treatment;

 

(b)provide safe working conditions and take such measures as are necessary to ensure the safety and health of the foreign employee at work;

 

(c)provide acceptable accommodation for the foreign employee, which must be consistent with the written laws, directives, guidelines and circulars of the authorities;

 

(d)purchase and maintain medical insurance of at least S$60,000, with at least the first S$15,000 in aggregate of claims to be paid in full by the insurer.

 

The EFMR requires employers of S Pass holders, inter alia, to:

 

(a)bear the costs for the medical treatment of the foreign employee, including any service, investigation, medicine and medical consumable, among others, which are necessary for the medical treatment;

 

(b)purchase and maintain medical insurance of at least S$60,000, with at least the first S$15,000 in aggregate of claims to be paid in full by the insurer.

 

The employment of work permit and S Pass holders are subject to foreign worker levies and quotas. The foreign worker levy generally depends on two factors: (a) the worker’s qualification and (2) the number of work permit or S Pass holders hired. The foreign worker quota imposes a maximum ratio of foreign employees to the total workforce that a company in a given sector can employ.

 

Before applying for work permits for its foreign workers, a company must first declare its business activity to the MOM using the MOM’s online service. After the company declares its business activity, the MOM will assign the company to the most relevant sector. Each sector has sector-specific rules in relation to the employment of foreign workers and the company’s sector will determine the number of work permit holders that it can employ. To declare its business activity, the company must have a Central Provident Fund (“CPF”) account, contribute CPF Funds for its local workers for at least 1 month before declaring its business activity, and submit copies of the relevant licences to the MOM. After a company submits the online application to declare its business activity, the MOM may request for additional information and documents.

 

Workplace Safety and Health Act

 

The Workplace Safety and Health Act 2006 of Singapore (the “WSHA”) is administered by the MOM. Under the WSHA, 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 his employees at work. These measures include providing and maintaining for the persons at work a work environment which is safe, without risk to health, and adequate as regards facilities and arrangements for their welfare at work, ensuring that adequate safety measures are taken in respect of any machinery, equipment, plant, article or process used by those persons, ensuring that those persons are not exposed to hazards arising out of the arrangement, disposal, manipulation, organization, processing, storage, transport, working or use of things in their workplace 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 those persons at work have adequate instruction, information, training and supervision as is necessary for them to perform their work.

 

More specific duties imposed on employers are laid out in the Workplace Safety and Health (General Provisions) Regulations (“WSHR”). Some of these duties include taking effective measures to protect persons at work from the harmful effects of any exposure to any infectious agents or bio-hazardous material which may constitute a risk to their health.

 

Under the WSHA, inspectors appointed by the Commissioner for Workplace Safety and Health (“CWSH”) may, among others, enter, inspect and examine any workplace, to inspect and examine any machinery, equipment, plant, installation or article at any 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 the workplace which is relevant to an investigation or inquiry under the WSHA.

 

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Workmen’s Compensation

 

The Work Injury Compensation Act 2019 of Singapore (“WICA”), which is regulated by the MOM, applies to all employees in all industries who are engaged under a contract of service, with the exception of domestic workers, and members of the Singapore Armed Forces, Singapore Police Force, Singapore Civil Defence Force, Central Narcotics Bureau and Singapore Prisons Service. The WICA is in regard to injury suffered by them in the course of their employment and sets out, amongst others, the amount of compensation they are entitled to and the method(s) of calculating such compensation.

 

The WICA provides, amongst others, that the employer shall be liable to pay compensation under the WICA if personal injury is caused to an employee by accident arising out of and in the course of the employee’s employment with the employer. The WICA, read together with the Work Injury Compensation (Insurance) Regulations 2020, provides, amongst others, that employers are required to maintain work injury compensation insurance for all employees doing manual work regardless of salary level and non-manual employees earning S$2,600 or less a month (excluding any overtime payment, bonus payment, annual wage supplement, productivity incentive payment and any allowance however described), who are engaged under contracts of service (unless exempted).

 

The WICA does not cover self-employed persons or independent contractors. However, 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 may be directed by the Commissioner for Labour to fulfil the subcontractor employer’s obligations under the WICA in relation to any employee of the subcontractor employer employed in the execution of the work, such as to compensate those employees of the subcontractor employer who were injured while employed in the execution of work for the principal.

 

Under the WICA, if an employee dies or sustains injuries in a work-related accident or contracted occupational diseases in the course of the employment, the employer is generally liable to pay compensation in accordance with the provisions of the WICA. An injured employee is generally 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.

  

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.

 

Fire Safety

 

Fire Safety Act

 

The Fire Safety Act 1993 (the “FSA”) sets out the regulations governing the fire safety of buildings in Singapore. The FSA empowers the Singapore Civil Defence Force (“SCDF”) to set out fire safety requirements, set out in the Code of Practice for Fire Precautions in Buildings, published by the Commissioner on the website maintained by SCDF, as amended or remade from time to time (the “Fire Code”).

 

Under the FSA and Fire Code, portable fire extinguishers, as sold by Company, constitute regulated fire safety products that need to be certified and have valid Certificates of Conformity (a certificate issued by an accredited certification body as to the compliance of the regulated fire safety product with the applicable standard, as prescribed by the Fire Code, for the regulated safety product). The Certificates of Conformity issued for regulated fire safety products used in fire safety works and intended for use in Singapore shall bear an accreditation mark from the Singapore Accreditation Council (“SAC”) and shall be accompanied by test reports from testing laboratories accredited by SAC or recognized by SAC via the International Laboratory Accreditation Cooperation (ILAC) Mutual Recognition Arrangement. The Fire Code sets out the requirements for certification.

 

With respect to the supply of regulated fire safety products, such as portable fire extinguishers, section 70(1) of the FSA provides that any person (whether in Singapore or not) who (i) supplies or offers to supply to a person in Singapore any non-compliant fire safety product as a compliant fire safety product or for use as a regulated fire safety products; or (ii) in the course of such supply or offer, represents that the non-compliant fire safety product is a compliant fire safety product or is fit for use as a regulated fire safety product, knowing that the non-compliant fire safety product is a non-compliant fire safety product, shall be guilty of an offence and shall be liable on conviction to a fine not exceeding S$100,000 or to imprisonment for a term not exceeding 2 years or to both; and in the case of a continuing contravention, to an additional fine not exceeding S$1,000 for each day or part of a day the contravention continues. If the contravention continues after the conviction, the person shall be guilty of a further offence and shall be liable on conviction of this further offence to a fine not exceeding S$2,000 for every day or part of a day during which the contravention continues after conviction.

 

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MANAGEMENT

 

The following table sets forth the names, ages and titles of our Directors and Executive Officers:

 

Name   Age   Title
Zhang Jian   53   Chairman, Chief Executive Officer and Executive Director
Huang Dong   40   Executive Director
Victor Aw   51   Executive Director
Ang Siew Sang   70   Executive Director
Chan Yong Xian   42   Chief Financial Officer
Chan Kah Chun   31   Finance Manager

 

Independent Directors:

 

Name   Age   Title
Fok Chee Khuen   45   Independent Director
Shirley Tan   48   Independent Director
Clive Ho Yip Seng   61   Independent Director

 

No arrangement or understanding exists between any such Director or officer and any other persons pursuant to which any Director or executive officer was elected as a Director or executive officer. Our Directors are elected annually at the board meeting and serve until their successors take office or until their death, resignation or removal. The Executive Officers serve at the pleasure of the Board.

 

Board Diversity

 

Board Diversity Matrix (As of the date of this prospectus)
Country of Principal Executive Offices:  Singapore 
Foreign Private Issuer  Yes 
Disclosure Prohibited Under Home Country Law  No 
Total Number of Directors  7 

 

   Female   Male   Non-Binary   Did Not
Disclose Gender
 
Part I: Gender Identity                
Directors   2    5    0    0 
Part II: Demographic Background                    
Underrepresented Individual in Home Country Jurisdiction                
LGBTQ+                

 

Executive Directors and Officers:

 

Mr. Zhang Jian has been our Executive Director, Chairman and Chief Executive Officer since our Company’s inception. Mr. Zhang Jian is responsible for the overall business management of our Group. With extensive experience spanning over two decades in the safety equipment industry in Singapore, Mr. Zhang embarked on his entrepreneurial journey in 1997, establishing a general hardware business before venturing into the supply of laboratory equipment. In 2006, he foresaw the growing demand for Personal Protective Equipment (PPE) following the implementation of the Workplace Safety and Health (WSH) Act. Seizing this opportunity, he expanded our product range and established several successful brands like D&D, SkyHawk, Strikers, Osprey, Super Sun, among others. Under Mr. Zhang’s guidance, our company successfully secured long-term PPE supply tenders with prominent entities such as ST Logistics, Singapore Civil Defence Force, PSA Singapore, Certis CISCO, and more, between 2010 and 2013. Recognizing the importance of staying connected with our customers, he strategically opened eight branches across Singapore from 2014 to 2022, fostering stronger ties within the community. Mr. Zhang completed a postgraduate diploma in Business Administration administered by The Society of Business Practitioners in 1997.

 

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Mr. Huang Dong is an Executive Director of our Company. Mr. Huang Dong has over 15 years of experience in marketing and wholesaling safety equipment products for RPL. Since joining RPL in November 2008, up till October 2013, Mr. Huang demonstrated exceptional sales skills as he took charge of selling hardware to construction companies. His dedicated efforts resulted in the exploration of numerous new customers in Singapore, achieving outstanding performance and earning recognition as the top salesperson in the company for consecutive years. During his tenure as the overseas sales manager from November 2013 to December 2018, Mr. Huang’s focus shifted towards exploring opportunities abroad. He successfully established a strong presence in countries like Malaysia, Cambodia, Brunei, and China, cultivating excellent relationships with customers and fostering prosperous business cooperation. His efforts played a pivotal role in the rapid expansion of the company’s business in these regions, contributing significantly to the company’s profitability. Since November 2020, Mr. Huang has served as a company director, leveraging his extensive experience and insights to contribute to the overall growth and development of the organization. Mr. Huang obtained a bachelor’s degree in Science (Management) from the National University of Ireland in April 2014.

 

Mr. Victor Aw is an Executive Director of our Company. Mr. Aw joined RPL in June 2013. He is an experienced professional with 20 years of expertise in marketing and wholesaling safety equipment products. During his tenure as Sales Executive and later Sales Manager at Tengah Engineering & Hardware Pte Ltd from 2006 to 2009, he excelled in general sales, logistics management, and supplier relations. In subsequent roles at BS Industry & Construction Supply Pte Ltd from 2009 to 2013, and Rectitude Pte Ltd thereafter, he continued to drive sales growth, expanded client bases, and maintained excellent customer relationships. Since November 2020, Mr. Aw has served as a company director, he is involved in obtaining important certifications and implementing quality management systems. His proactive nature, coupled with expertise in safety products and equipment, further solidified his reputation as a successful sales professional and a driving force behind the Company’s growth in the safety equipment industry. Mr. Victor Aw graduated from Upper Aljunied Technical Secondary School with a GCE “O” Level certificate (technical stream) in 1992.

 

Ms. Ang Siew Sang is an Executive Director of our Company. Ms. Ang joined the Company as a director of RPL on March 2004, and also a director of ALS since September 2009. She is a partner of Greenly Trading Company which has been established since January 2, 1981, handling all of the income tax and goods and services tax related matters for private limited companies, limited liability partnerships, partnerships and sole proprietorships in Singapore. She is an accredited tax advisor member with the Singapore Chartered Tax Professional Ltd (SCTP) since June 27, 2012. She holds a Diploma in Business Studies from the Singapore Institute of Management awarded on November 19, 1984.

 

Mr. Chan Yong Xian is the Chief Financial Officer of our Company. Mr. Chan joined RPL in May 2023. He is an experienced professional with a long work history in the field of accounting and auditing. Throughout his career, he has demonstrated strong expertise in implementing business controls, streamlining processes, and providing valuable advisory guidance to management. Mr. Chan is currently the chairman of the audit committee of YY Group Holding Ltd. (symbol: YYGH), a company listed on Nasdaq. Mr. Chan’s extensive audit experience includes positions as Senior Audit Manager at BDO LLP from January 2018 to December 2020 and at Ang & Co PAC from August 2021 to March 2023, and a Senior promoted to Manager at Pricewaterhouse Coopers LLP from December 2013 to January 2018, where he audited listed companies in compliance with various accounting standards and was involved in IPO projects. His leadership skills were evident in managing audit engagements, contributing to revenue growth, and coaching audit teams. Mr. Chan holds a Master’s degree in Accounting from the Australian National University (2008) and a Bachelor’s degree in Electrical and Electronic Engineering (2006). He is a Certified Public Accountant (CPA) from CPA Australia. Additionally, he gained valuable experience in SOX testing and implementation throughout his 13 years of audit experience, working with prominent clients.

 

Mr. Chan Kah Chun is the Finance Manager of our Company. Mr. Chan joined RPL in April, 2015. In his work experience, Mr. Chan served as an Accounts Executive at Kings Materials Pte Ltd, Singapore from September 2014 to March 2015, where he handled various financial tasks, including recording purchases transactions, managing AP & AR transactions, handling petty cash, and monitoring company cash flow and bank accounts. He was also responsible for preparing sales reports for company sales meetings and inventory valuation. Additionally, he worked as an Accounts Executive at CSJ & Associates Marketing Pte Ltd, Singapore, where he managed data entry of sales and purchases, handled AP & AR transactions, monitored monthly expenses and income, and conducted bank reconciliations. Mr. Chan Kah Chun has a strong background in accounting and business. He completed the ACCA Diploma in Accounting and Business from Kompas International College, Malaysia, which included passing ACCA Foundation Level papers F1, F2, and F3. Additionally, he obtained several diplomas from Shen Jai School of Commerce, Malaysia, including LCCI Level 3 Higher Diploma in Accounting, LCCI Level 3 Higher Diploma in Cost Accounting, and LCCI Level 2 Diploma in Book-keeping and Accounting.

 

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Independent Director:

 

Mr. Fok Chee Khuen is an Independent Director. Mr. Fok has accumulated 22 years of experience in audit, accounting, and inspection. He is the co-founder and Managing Director of Quality Accountants Pte Ltd and FE Advisory Pte Ltd since August 2017 and manages the businesses on a daily basis. From April 2015 to August 2017, Mr. Fok served as the Head of the Practice Monitoring Department at the Accounting & Corporate Regulatory Authority (ACRA). Prior to that, from June 2013 to April 2015, he held the position of associate director in quality control and audit at Foo Kon Tan LLP. From December 2008 to June 2013, Mr. Fok worked at ACRA in the Practice Monitoring Department, where he left his role as a senior lead audit inspector. Earlier in his career, he served as an audit manager in Mazars Moores Rowland LLP, specializing in audits of listed corporations in Singapore and the United States from June 2007 to December 2008. Mr. Fok briefly joined UBS AG as a business analyst from September 2006 to June 2007. He began his professional journey with KPMG Singapore in the assurance unit in August 2002 and departed in September 2006, having reached the position of audit assistant manager. In June 2002, Mr. Fok obtained his Bachelor of Accountancy Degree (1st Class Honours) from Nanyang Technological University in Singapore. He is a Chartered Accountant of Singapore and a member of the Institute of Singapore Chartered Accountants.

 

Ms. Shirley Tan is an Independent Director.. She is a qualified Chartered Secretary, she has over 18 years of experience in corporate secretarial work and compliance advisory for private and publicly listed companies, SMEs, foreign companies, and academic institutions in Singapore. In the last five years she handled Econ Healthcare (Asia) Limited, 5E Resources Limited, authorised representative for Nio Inc. in Singapore for their secondary listing in Singapore, Ohmyhome Ltd (Listed in Nasdaq), compliance officer for Comba Telecom Systems Holdings Limited’s secondary listing in Singapore, YKGI Limited and Ever Glory United Holdings Ltd. Her areas of expertise include corporate secretarial due diligence exercises for initial public offering (IPO), dual listing in Singapore and Hong Kong, Real estate investment trust (REIT), reverse take-over (RTO), M&A, company restructuring, liquidation and striking off, and immigration application for Permanent Residence, Employment Pass, Dependent Pass, and Entrepass for expatriates for foreign directors and key management personnel. She also provides advice on support and advisory work concerning compliance matters with the Singapore Exchange Securities Trading Limited, Singapore Companies Act, Code of Corporate Governance, and relevant rules and regulations. Shirley is fluent in English, Mandarin, Hokkien, Cantonese, and Bahasa. She has experience in leading a team of corporate secretaries for established law firms and service providers for several private, publicly listed, REIT, offshore companies in Singapore, China Practice and SOP for “Excellence Must Be Our Minimum Standard.” She holds a Master’s of Science in management with distinction from the National University of Ireland, Dublin. She is a fellow at the Chartered Secretaries Institute of Singapore. She holds a practising certificate from the CSIS. She is a member of the CSIS secretarial practice sub-committee. She is a member of the Singapore Institute of Directors.

 

Mr. Clive Ho Yip Seng is an Independent Director.. Mr. Clive Ho Yip Seng was a Regional Sales Engineer at KES Systems & Service Pte Ltd from 1999 to 2020, where he subsequently rose to Group Sales Manager within a year. He then oversaw all Sales and Marketing Operations and attracted the attention of General Signal, an American multinational company, where he excelled as a Regional Director managing Process Control equipment across the Asia Pacific. Returning to KES System & Services, Clive oversaw all aspects of the business and expanding its global presence. He successfully increased sales from S$20 million to an impressive S$50 million while establishing ventures in the semiconductor back end. The company’s excellence was underlined by winning the Intel Corporation’s Preferred Quality Award for five consecutive years. After close to two decades, Clive embraced a new challenge as the Head of Strategic Business, driving diversification in the Aerospace and medical industries through a three-year plan. Today, Clive is a Business Advisor at SMECentre@SICCI, aiding local businesses in growth, internationalization, and leveraging government resources. Clive’s journey underscores his commitment to community and professional development. He holds a Bachelor of Business Administration degree from the University of South Australia in 2001.

 

Committees of the Board

 

Our Board has established an audit committee, a compensation committee and a nomination committee, each of which operates pursuant to a charter adopted by our Board. The Board may also establish other committees from time to time to assist our company and the Board. The composition and functioning of all of our committees complies with all applicable requirements of the Sarbanes-Oxley Act of 2002, Nasdaq and SEC rules and regulations, if applicable. Each committee’s charter is available on our website at www.rectitude.com.sg. The reference to our website address does not constitute incorporation by reference of the information contained at or available through our website, and you should not consider it to be part of this prospectus.

 

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Audit committee

 

Mr. Fok Chee Khuen, Ms. Shirley Tan and Mr. Clive Ho Yip Seng serve on the audit committee, which is chaired by Mr. Fok Chee Khuen. Our Board has determined that each are “independent” for audit committee purposes as that term is defined by the rules of the SEC and Nasdaq, and that each has sufficient knowledge in financial and auditing matters to serve on the audit committee. Our Board has designated Mr. Fok Chee Khuenas an “audit committee financial expert,” as defined under the applicable rules of the SEC. The audit committee’s responsibilities include:

 

appointing, approving the compensation of, and assessing the independence of our independent registered public accounting firm;

 

pre-approving auditing and permissible non-audit services, and the terms of such services, to be provided by our independent registered public accounting firm;

 

reviewing the overall audit plan with our independent registered public accounting firm and members of management responsible for preparing our financial statements;

 

reviewing and discussing with management and our independent registered public accounting firm our annual and quarterly financial statements and related disclosures as well as critical accounting policies and practices used by us;

 

coordinating the oversight and reviewing the adequacy of our internal control over financial reporting;

 

establishing policies and procedures for the receipt and retention of accounting-related complaints and concerns; recommending, based upon the audit committee’s review and discussions with management and our independent registered public accounting firm, whether our audited financial statements shall be included in our Annual Report on Form 20-F;

 

monitoring the integrity of our financial statements and our compliance with legal and regulatory requirements as they relate to our financial statements and accounting matters;

 

preparing the audit committee report required by SEC rules to be included in our annual proxy statement;

 

reviewing all related person transactions for potential conflict of interest situations and approving all such transactions; and

 

reviewing earnings releases.

 

Compensation committee

 

Mr. Fok Chee Khuen, Ms. Shirley Tan and Mr. Clive Ho Yip Seng serve on the compensation committee, which is chaired by Ms. Shirley Tan. Our Board has determined that each such member satisfies the “independence” requirements of Rule 5605(a)(2) of the Listing Rules of the Nasdaq Stock Market. The compensation committee’s responsibilities include:

 

evaluating the performance of our chief executive officer in light of our company’s corporate goals and objectives and, based on such evaluation: (i) recommending to the Board the cash compensation of our chief executive officer, and (ii) reviewing and approving grants and awards to our chief executive officer under equity-based plans;

 

reviewing and recommending to the Board the cash compensation of our other executive officers;

 

reviewing and establishing our overall management compensation, philosophy and policy;

 

overseeing and administering our compensation and similar plans;

 

reviewing and approving the retention or termination of any consulting firm or outside advisor to assist in the evaluation of compensation matters and evaluating and assessing potential and current compensation advisors in accordance with the independence standards identified in the applicable Nasdaq rules;

 

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retaining and approving the compensation of any compensation advisors;

 

reviewing and approving our policies and procedures for the grant of equity-based awards;

 

reviewing and recommending to the Board the compensation of our Directors; and

 

preparing the compensation committee report required by SEC rules, if and when required.

 

Nomination committee

 

Mr. Fok Chee Khuen, Ms. Shirley Tan and Mr. Clive Ho Yip Seng serve on the nomination committee, which is chaired by Mr. Clive Ho Yip Seng. Our Board has determined that each member of the nomination committee is “independent” as defined in the applicable Nasdaq rules. The nomination committee’s responsibilities include:

 

developing and recommending to the Board criteria for board and committee membership;

 

establishing procedures for identifying and evaluating Director candidates, including nominees recommended by stockholders; and

 

reviewing the composition of the Board to ensure that it is composed of members containing the appropriate skills and expertise to advise us.

 

While we do not have a formal policy regarding board diversity, our nomination committee and Board will consider a broad range of factors relating to the qualifications and background of nominees, which may include diversity (not limited to race, gender or national origin). Our nomination committee’s and Board’ priority in selecting board members is identification of persons who will further the interests of our shareholders through their established record of professional accomplishment, the ability to contribute positively to the collaborative culture among board members, knowledge of our business, understanding of the competitive landscape and professional and personal experience and expertise relevant to our growth strategy.

 

Foreign Private Issuer Status

 

We are a “foreign private issuer,” as defined by the SEC. As a result, in accordance with the rules and regulations of Nasdaq, we may choose to comply with home country governance requirements and certain exemptions thereunder rather than complying with Nasdaq corporate governance standards. We may choose to take advantage of the following exemptions afforded to foreign private issuers:

 

Exemption from filing quarterly reports on Form 10-Q, from filing proxy solicitation materials on Schedule 14A or 14C in connection with annual or special meetings of shareholders, from providing current reports on Form 8-K disclosing significant events within four days of their occurrence, and from the disclosure requirements of Regulation FD.

 

Exemption from Section 16 rules regarding sales of ordinary shares by insiders, which will provide less data in this regard than shareholders of U.S. companies that are subject to the Exchange Act.

 

Exemption from Nasdaq rules applicable to domestic issuers requiring disclosure within four business days of any determination to grant a waiver of the code of business conduct and ethics to directors and officers. Although we will require board approval of any such waiver, we may choose not to disclose the waiver in the manner set forth in Nasdaq rules, as permitted by the foreign private issuer exemption.

 

Exemption from the requirement that our Board have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities.

 

Exemption from the requirements that director nominees are selected, or recommended for selection by our Board, either by (1) independent directors constituting a majority of our Board’ independent directors in a vote in which only independent directors participate, or (2) a committee comprised solely of independent directors, and that a formal written charter or board resolution, as applicable, addressing the nominations process is adopted.

 

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Furthermore, Nasdaq Rule 5615(a)(3) provides that a foreign private issuer, such as us, may rely on our home country corporate governance practices in lieu of certain of the rules in the Nasdaq Rule 5600 Series and Rule 5250(d), provided that we nevertheless comply with Nasdaq’s Notification of Noncompliance requirement (Rule 5625), the Voting Rights requirement (Rule 5640) and that we intend to have an audit committee that satisfies Rule 5605(c)(3), consisting of committee members that meet the independence requirements of Rule 5605(c)(2)(A)(ii). If we rely on our home country corporate governance practices in lieu of certain of the rules of Nasdaq, our shareholders may not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of Nasdaq. If we choose to do so, we may utilize these exemptions for as long as we continue to qualify as a foreign private issuer.

 

Although we are permitted to follow certain corporate governance rules that conform to Cayman Islands requirements in lieu of many of Nasdaq corporate governance rules, we comply with Nasdaq corporate governance rules applicable to foreign private issuers.

 

Controlled Company

 

We will continue to be a “controlled company” within the meaning of the Nasdaq Stock Market Rules, and as a result, we are qualify for and rely on exemptions from certain corporate governance requirements.

 

Public Companies that qualify as a “Controlled Company” with securities listed on the Nasdaq Stock Market (Nasdaq), must comply with the exchange’s continued listing standards to maintain their listings. Nasdaq has adopted qualitative listing standards. Companies that do not comply with these corporate governance requirements may lose their listing status. Under Nasdaq rules, a “controlled company” is a company with more than 50% of its voting power held by a single person, entity or group. Under Nasdaq rules, a controlled company is exempt from certain corporate governance requirements, including:

 

an exemption from the rule that a majority of our Board must be independent directors;

 

an exemption from the rule that the compensation of our chief executive officer must be determined or recommended solely by independent directors; and

 

An exemption from the rule that our director nominees must be selected or recommended solely by independent directors.

 

Controlled companies must still comply with the exchange’s other corporate governance standards. These include having an audit committee and the special meetings of independent or non-management directors.

 

Upon the completion of this offering, our Controlling Shareholders beneficially own 72.7%   of our total issued and outstanding ordinary shares, assuming the underwriters do not exercise their over-allotment option, representing 72.7%   of the total voting power. As a result, we are a “controlled company” as defined under Nasdaq Listing Rule 5615(c), because our Controlling Shareholders will hold more than 50% of the voting power for the election of directors. As a “controlled company,” we are permitted to elect not to comply with certain corporate governance requirements. The exemption we intend to rely on is that a majority of our Board need not be independent directors. As a result, you may not have the same protection afforded to shareholders of companies that are subject to these corporate governance requirements.

 

Code of Conduct, Code of Ethics, Insider Trading Policy and Executive Compensation Recovery Policy

 

We have adopted (i) a written code of business conduct and ethics and (ii) Insider Trading Policy that applies to our Directors, officers, and employees, including our chief executive officer, chief financial officer, principal accounting officer or controller or persons performing similar functions, and we also intend to adopt an (iii) Executive Compensation Recovery Policy that applies to our officers, and employees, including our chief executive officer, chief financial officer, principal accounting officer or controller or persons performing similar functions, (collectively the “Policies”). A current copy of the Policies is posted on the Corporate Governance section of our website, which is located at www.rectitude.com.sg. The information on our website is deemed not to be incorporated in this prospectus or to be a part of this prospectus. We intend to disclose any amendments to the Policies, and any waivers of the Policies for our Directors, executive officers and senior finance executives, on our website to the extent required by applicable U.S. federal securities laws and the corporate governance rules of Nasdaq.

 

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Compensation of Executive Directors and Executive Officers

 

For the financial year ended March 31, 2023, we paid an aggregate of approximately S$1,281,415 (approximately US$963,905) in cash to our Executive Directors and Executive Officers — as mentioned below. For the financial year ended March 31, 2022, we paid an aggregate of approximately S$1,052,975 (approximately US$792,068) in cash to our Executive Directors and Executive Officers.

 

Employment Agreements

 

Employment Agreement between Zhang Jian and Rectitude Cayman

 

Effective as of June 1, 2023, Rectitude Cayman entered into an Employment Agreement with Zhang Jian. The agreement provides for an annual base salary, together with such additional discretionary bonus. Zhang Jian’s employment will continue indefinitely, subject to, amongst others, termination by either party to the agreement upon 60 days prior written notice or the equivalent salary in lieu of such notice. The agreement also provides that Zhang Jian 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 Chan Yong Xian and Rectitude Cayman

 

Effective as of June 1, 2023, Rectitude Cayman entered into an Employment Agreement with Chan Yong Xian. The agreement provides for an annual base salary, together with such additional discretionary bonus. Chan Yong Xian’s employment will continue indefinitely, subject to, amongst others, termination by either party to the agreement upon 60 days prior written notice or the equivalent salary in lieu of such notice. The agreement also provides that Chan Yong Xian 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 Chan Kah Chun and Rectitude Cayman

 

Effective as of June 1, 2023, Rectitude Cayman entered into an Employment Agreement with Chan Kah Chun. The agreement provides for an annual base salary, together with such additional discretionary bonus. Chan Kah Chun’s employment will continue indefinitely, subject to termination by either party to the agreement upon 60 days prior written notice or the equivalent salary in lieu of such notice. The agreement also provides that Chan Kah Chun 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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