As filed with the U.S. Securities and Exchange Commission on October 16, 2024

Registration No. 333-[●]

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

 

 

FORM F-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

 

 

 

PRIMECH HOLDINGS LTD.

(Exact Name of Registrant as Specified in its Charter)

 

Not Applicable
(Translation of Registrant’s Name into English)

 

 

 

Singapore  7349  Not Applicable
(State or other jurisdiction of
incorporation or organization)
  (Primary Standard Industrial
Classification Code Number)
  (I.R.S. Employer
Identification No.)

 

23 Ubi Crescent
Singapore 408579
+65 6286 1868

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

 

 

COGENCY GLOBAL INC.
122 East 42nd Street, 18th Floor
New York, NY 10168
+1-800-221-0102

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

 

 

Copies of all communications, including communications sent to agent for service, should be sent to:

 

Lawrence S. Venick, Esq.
Loeb & Loeb LLP

2206-19 Jardine House
1 Connaught Road Central

Hong Kong SAR
Telephone: +852-3923-1111
Facsimile: +852-3923-1100

 

Richard A. Friedman

Stephen A. Cohen

Sheppard, Mullin, Richter & Hampton LLP

30 Rockefeller Plaza

New York, New York 10112

Telephone: (212) 653-8700

Facsimile: (212) 653-8701

 

 

 

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.

 

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: ☐

 

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

 

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

 

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. ☐

 

Emerging growth company.

 

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. 

 

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the U.S. Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

 

 

 

 

EXPLANATORY NOTE

 

This Registration Statement contains two prospectuses, as set forth below.

 

Public Offering Prospectus. A prospectus to be used for the offering of (i) up to [     ] Ordinary Shares, (ii) Warrants to Purchase up to [_] Ordinary Shares and up to [_] Ordinary Shares issuable upon exercise of the Warrants, and (iii) Placement Agent Warrants to purchase up to [_] Ordinary Shares and up to [_] Ordinary Shares issuable upon the exercise of the Placement Agent Warrants of the Registrant (the “Public Offering Prospectus”) through the placement agent named on the cover page of the Public Offering Prospectus.

 

Resale Prospectus. A prospectus to be used for the resale by the Selling Shareholder set forth therein of 2,000,000 Ordinary Shares of the Registrant (the “Resale Prospectus”).

 

The Resale Prospectus is substantively identical to the Public Offering Prospectus, except for the following principal points:

 

they contain different outside and inside front covers and back covers;

 

they contain different offering sections in the Prospectus Summary section beginning on page Alt-1;

 

they contain different Use of Proceeds sections on page Alt-16;

 

a Selling Shareholder section is included in the Resale Prospectus;

 

a Selling Shareholder Plan of Distribution is inserted; and

 

the Legal Matters section in the Resale Prospectus on page Alt-18 deletes the reference to counsel for the underwriter.

 

The Registrant has included in this Registration Statement a set of alternate pages after the back cover page of the Public Offering Prospectus (the “Alternate Pages”) to reflect the foregoing differences in the Resale Prospectus as compared to the Public Offering Prospectus. The Public Offering Prospectus will exclude the Alternate Pages and will be used for the public offering by the Registrant. The Resale Prospectus will be substantively identical to the Public Offering Prospectus except for the addition or substitution of the Alternate Pages and will be used for the resale offering by the Selling Shareholder.

 

 

 

 

The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

 

PRELIMINARY PROSPECTUS (Subject to Completion)   Dated October 16, 2024

 

 

Up to [         ] Ordinary Shares

 

Warrants to Purchase up to [_] Ordinary Shares and up to [_] Ordinary Shares issuable upon exercise of the Warrants

 

Placement Agent Warrants to purchase up to [_] Ordinary Shares and up to [_] Ordinary Shares issuable upon the exercise of the Placement Agent Warrants

 

This is a public offering of [    ] Ordinary Shares (“Ordinary Shares”), together with warrants to purchase up to [_] Ordinary Shares (the ‘Warrants”), at an assumed offering price of $[_] per ordinary share, which is equal to the closing trading price of our ordinary shares as reported on the Nasdaq Capital Market on [_], 2024. Each Ordinary Share will be sold together with [_] warrants. Each warrant can purchase [_] Ordinary Share, and has an exercise price of $[_] Ordinary Share. The Warrant will expire on the [_] anniversary of the original issuance date. The Warrant is not tradable on the Nasdaq Capital Market, or Nasdaq. The Ordinary Shares and Warrants are immediately separable and will be issued separately in this offering, but must be purchased together in this offering. This offering also relates to the Placement Agent Warrants (as defined below). We are listed on the Nasdaq Capital Market under the symbol “PMEC.” We refer to the shares of Ordinary Shares, Placement Agent Warrants and Warrants to be issued in this offering collectively as the “Securities.”

 

The actual combined public offering price per Ordinary Share and accompanying Warrants will be negotiated between us and the investors, in consultation with the placement agent based on, among other things, the trading price of our Ordinary Shares prior to the offering, our history and our prospects, the industry in which we operate, our past and present operating results, the previous experience of our executive officers and the general condition of the securities markets at the time of this offering, and may be at a discount to the current market price. Therefore, the assumed combined public offering price used throughout this prospectus may not be indicative of the final offering price. In addition, there is no established public trading market for the Warrants, and we do not expect a market for the Warrants to develop. We do not intend to apply for a listing of the Warrants on any national securities exchange. Without an active trading market, the liquidity of the Warrants will be limited.

 

This offering will terminate on  [   ], 2024, unless we decide to terminate the offering (which we may do at any time in our discretion) prior to that date. We will have a single closing for all securities purchased in this offering and the combined public offering price per Ordinary Share and accompanying Warrants will be fixed for the duration of this offering.

 

Immediately after the completion of the Offering, assuming an offering size as set forth above, our Major Shareholder, Sapphire Universe Holdings Limited, will own approximately [*]% of our outstanding ordinary shares (the “Shares”). As a result, we expect to be a “controlled company” within the meaning of the corporate governance standards of Nasdaq. See section titled “Prospectus Summary — Implications of Being a Controlled Company”.

 

This registration statement also contains a resale prospectus, pursuant to which the selling shareholder is offering 2,000,000 Ordinary Shares, or the Resale Offering, to be sold in one or more transactions that may take place in ordinary brokers’ transactions, privately negotiated transactions or through sales to one or more dealers for resale of such securities as principals after the trading of our Ordinary Shares on the Nasdaq begins. We will not receive any proceeds from the sale of the Ordinary Shares to be sold by the Selling Shareholder.

 

 

 

 

Investing in the shares involves risks. See section titled “Risk Factors” of this prospectus.

 

We are both an “emerging growth company” and a “foreign private issuer” under applicable U.S. Securities and Exchange Commission rules and will be eligible for reduced public company disclosure requirements. See section titled “Prospectus Summary — Implications of Being an ‘Emerging Growth Company’ and a ‘Foreign Private Issuer’” for additional information.

 

Neither the Securities and Exchange Commission nor any other regulatory body 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.

 

We have engaged FT Global Capital, Inc. (“FT Global”) as our exclusive placement agent to use its best efforts to solicit offers to purchase our securities in this offering. The placement agent has no obligation to purchase and is not purchasing or selling the securities offered by us, and is not required to arrange for the purchase or sale of any specific number or dollar amount of our securities, but will use its best efforts to solicit offers to purchase the securities offered by this prospectus. Because there is no minimum offering amount required as a condition to closing in this offering the actual offering amount, the placement agent’s fee, and proceeds to us, if any, are not presently determinable and may be substantially less than the total maximum offering amounts set forth above and throughout this prospectus. We have agreed to pay the placement agent the placement agent’s fees set forth in the table above, issue warrants to purchase up to ______ Ordinary Shares and to provide reimbursement of certain expenses and certain other compensation to the placement agent. See “Plan of Distribution” of this prospectus for more information regarding these arrangements.

 

We will deliver ordinary shares being issued to the investors electronically and will mail such investors physical warrant certificates for the warrants sold in this offering, upon closing and receipt of investor funds for the purchase of the securities offered pursuant to this prospectus.

 

 

 

   PER SHARE AND
ACCOMPANYING
WARRANTS
   TOTAL 
Public offering price  $

[         

]  $

10,000,000

 
Placement Agent commissions(1)  $[          ]  $

750,000 

 
Proceeds, before expenses, to us  $[          ]  $

9,250,000

 

 

 
(1) We have agreed to pay the Placement Agent a commission equal to 7.5% of the gross proceeds sold in the Offering. In addition, we have agreed to issue to the placement agent warrants to purchase up to 5% of the Ordinary Shares sold in this Offering at an exercise price equal to 125% of the combined public offering price per share of Ordinary Shares and accompanying Common Warrants. We have also agreed to reimburse the Placement Agent for certain of its offering related expenses, including reimbursement for all travel, due diligence, or related expenses. For a description of the compensation to be received by the Placement Agent, see “Plan of Distribution” for more information.

 

We expect the delivery of such securities against payment in U.S. dollars will be made in New York, New York on or about [    ], 2024.

 

 

 

FT GLOBAL CAPITAL, INC.

 

Prospectus dated [     ], 2024

 

 

 

 

TABLE OF CONTENTS

 

    Page
PROSPECTUS SUMMARY   1
THE OFFERING   13
SUMMARY FINANCIAL INFORMATION   14
RISK FACTORS   15
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS   41
USE OF PROCEEDS   42
DIVIDEND POLICY   43
CAPITALIZATION   44
DILUTION   45
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA   46
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS   47
INDUSTRY OVERVIEW   55
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK   61
OUR GROUP STRUCTURE   62
GENERAL INFORMATION ON OUR GROUP   63
PRINCIPAL SHAREHOLDERS   103
RELATED PARTY TRANSACTIONS   104
POTENTIAL CONFLICTS OF INTEREST   107
DESCRIPTION OF SHARE CAPITAL AND CONSTITUTION   109
SHARES ELIGIBLE FOR FUTURE SALE   126
EXCHANGE CONTROLS AND LIMITATIONS AFFECTING SHAREHOLDERS   127
TAXATION   129
PLAN OF DISTRIBUTION   137
EXPENSES OF THE OFFERING   140
LEGAL MATTERS   140
EXPERTS   140
SERVICE OF PROCESS AND ENFORCEMENT OF CIVIL LIABILITIES   141
WHERE YOU CAN FIND MORE INFORMATION   142
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS   F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM   F-2

 

For investors outside the United States: neither we, the Selling Shareholder nor the underwriter have done anything that would permit the IPO and Resale 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 IPO and Resale Offering of the shares and the distribution of this prospectus outside the United States.

 

Neither we nor the Placement Agent have authorized anyone to provide you with any information or to make any representations other than those contained in this prospectus, any amendment or supplement to this prospectus, or in any free writing prospectus we have prepared, and neither we nor the Placement Agent take responsibility for, and can provide no assurance as to the reliability of, any other information others may give you. Neither we nor the Placement Agent are making an offer to sell, or seeking offers to buy, these securities in any jurisdiction where the offer or sale is not permitted. The information contained in this prospectus is accurate only as of the date on the cover page of this prospectus, regardless of the time of delivery of this prospectus or the sale of shares. Our business, financial condition, results of operations and prospects may have changed since the date on the cover page of this prospectus.

 

i

 

 

PROSPECTUS SUMMARY

 

This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all of the information that you should consider before investing in our Shares. For a more complete understanding of us and the Offering and Resale Offering, you should read and carefully consider the entire prospectus, including the more detailed information set forth under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes. Some of the statements in this prospectus are forward-looking statements. See section titled “Special Note Regarding Forward-Looking Statements.”

 

Our Business

 

We are an established technology-driven facilities services provider in the public and private sectors operating mainly in Singapore. Our mission is to support businesses by improving lives and strengthening communities through our business practices and ethics. We compete primarily in Singapore, with a small portion of our operations in Malaysia.

 

Our revenues for the fiscal year ended March 31, 2024 and 2023 were approximately $72,524,000 and $69,026,000, respectively. For the fiscal year ended March 31, 2024 and 2023, we incurred a net loss of approximately $(3,223,000) and $(2,547,000), respectively.

 

We provide the following services:

 

Facilities services. Our facilities services include general cleaning and maintenance of public and private facilities, such as airports, conservancy areas (i.e., the public areas, refuse disposal areas, parks and carparks of public housing units), common areas of hotels, educational institutions, public roads, residential spaces, commercial buildings, office facilities, industrial areas, retail stores and healthcare facilities; housekeeping services; specialized cleaning services, such as marble polishing services; building façade cleaning services and clean room sanitation services; and waste management and pest control services. We derive the majority of our revenue from the provision of facilities services, which accounted for approximately $56.0 million or 77.2% of our revenue in FY 2024 and approximately $55.8 million or 80.8% of our revenue in FY 2023.

 

Stewarding services. Our stewarding services include the cleaning of kitchen facilities of healthcare facilities, hotels and restaurants and the supply of ad hoc customer service officers and food and beverage (“F&B”) service crew to healthcare facilities, hotels and restaurants. Stewarding services accounted for approximately $10.2 million or 14.0% of our revenue in FY 2024 and approximately $7.6 million or 11.0% of our revenue in FY 2023.

 

Cleaning services to offices. In addition to our core facilities services, we provide cleaning services to offices. The provision of office cleaning services accounted for approximately $5.9 million or 8.1% of our revenue in FY 2024 and approximately $4.9 million or 7.1% of our revenue in FY 2023.

 

Cleaning services to homes. We provide cleaning services to homes of individual customers who engage our services through our “HomeHelpy” application. We did not generate significant revenue (i.e., less than 1.0%) from the provision of these services during FY 2024 and FY 2023.

 

Cleaning Supplies. We also manufacture certain cleaning supplies, both for our own use and for sale to third parties. We did not generate significant revenue (i.e., less than 1.0%) from the sale of cleaning supplies to third parties during FY 2024 and FY 2023.

 

1

 

 

Our Industry

 

General. Cleaning and landscaping service providers in Singapore offer a wide spectrum of services. Cleaning services include the provision of various cleaning services to public areas, offices, factories, and households, among others. Landscaping services include landscape planting, care and maintenance service activities in and for parks and gardens, public and private housing, buildings, roads and expressways, among others.

 

Growth Drivers and Trends. Demand derived from office buildings, retail facilities, and residential buildings in Singapore has grown moderately in the past five years. New automated technologies have enhanced and will continue to enhance productivity. These include environmentally friendly robotic solutions for public spaces, waste management, and pest and pollution control. Singapore’s demand for cleaning and landscaping services experienced strong growth from 2014 to 2022, driven by economic sophistication, urbanization, and population growth. The industry market size increased from $1,377.0 million (S$1,836.0 million) in 2014 to $2,569.9 million (S$3,426.5 million) in 2022, a CAGR of 8.1%. Moreover, we believe the productivity of the industry will be enhanced progressively given the technology-driven programs launched by the government. Technological advancements have contributed to the growth of cleaning and landscaping companies, and we believe the industry will continue to benefit from future advancements in automation and technology.

 

Our Competitive Strengths

 

We believe our main competitive strengths are as follows:

 

We have a long and established track record and have achieved a high level of accreditation in the facilities services sector. Primech A&P was amalgamated from A&P Maintenance and Primech Services & Engrg, which were operating for approximately 30 years or more, respectively. Maint-Kleen was founded in 2002. Primech A&P and Maint-Kleen thus have been able to secure long-term business relationships with their customers. Primech Services & Engrg and A&P Maintenance were both awarded the Clean Mark Gold Award in 2020. The Clean Mark Gold Award is the highest level of accreditation under the Enhanced Clean Mark Accreditation Scheme granted to cleaning businesses. The scheme recognizes businesses that deliver high cleaning standards through the training of workers, the use of equipment to improve work processes, and fair employment practices. Primech A&P and Maint-Kleen were also awarded the Clean Mark Gold Award in 2022 and 2023.

 

We are able to provide a bundle of services to a wide spectrum of customers. We provide a broad spectrum of cleaning services both in the public and private sectors to a variety of customers including Singapore Changi Airport, conservancy areas, hotels, common areas, educational institutions, integrated public areas, residential spaces, office facilities, industrial areas, retail stores and healthcare facilities. Our diversified customer mix ensures that we do not rely on any single customer for our revenue and enables us to better manage our business risks.

 

We believe that our emphasis on having a trained workforce makes us more competitive in our industry. We believe that the training and development of our employees enables us to maintain and enhance our quality of solutions and services for the growth of our businesses and operations. In particular, we have been hiring a variety of employees from different sectors apart from the environment services industry such as the technological, finance, human resources and business development sectors in order to build up our key management personnel team.

 

We have an experienced and stable management team. We have an experienced management team led by Mr. Kin Wai Ho, our Chairman. A majority of our senior management team have been employed by our subsidiaries for more than 19 years. We view their collective industry knowledge and extensive project management experience as valuable in establishing stable relationships with our customers as well as facilitating the submission of competitive tenders and believe that this has assisted us in securing numerous tenders over the years. We also believe that our management team’s experience has assisted us in our cost estimation for contracts during the tendering process, which enables us to reduce situations of cost overruns.

 

2

 

 

Our Business Strategies and Future Plans

 

Our business strategies and future plans are as follows:

 

Automation and Online Expansion. We will seek to improve efficiency, expand service capacity and reduce our environmental footprint through the use of technology. Our technology initiatives to date include the use of autonomous floor scrubbing robots equipped with real-time monitoring and self-docking capabilities to perform cleaning services. We are also in the exploratory stage of a collaboration for the development of cleaning robots to perform household cleaning. Such initiatives have allowed us to expand our service capacity by leveraging technology instead of increasing our reliance on manpower in a traditionally labor-intensive industry. In addition, in 2019 we introduced our “HomeHelpy” website and mobile application to allow individual customers to book our cleaning services, which has enabled us to expand into the B2C segment (from our primary B2B business).

 

Geographic Expansion. We intend to establish ourselves as a regional player in the environmental services industry. While our operations are currently almost exclusively based in Singapore, we are considering an expansion of our business to other countries in Southeast Asia.

 

Expansion through organic growth and acquisitions. We intend to grow our facilities services business organically by expanding our coverage to include new technology as well as segments of the market where we currently do not have a presence or only have a small presence, such as hospitals, industrial centers, data centers and cleanrooms.

 

We intend to continue to pursue suitable opportunities for acquisitions, joint ventures and strategic alliances to expand our range of facilities services. Such opportunities could include areas that complement our business, such as waste management, gardening and landscaping, and pest management. We believe that building up a comprehensive suite of facilities services will enable us to maintain our competitive edge.

 

IoT. We are also seeking to build our own IoT system, software, and robots to improve the efficiency and capacity of our services. We have developed a baseline IoT-enabled cleaning management platform to support data-driven and on-demand cleaning operations since August 2023. This platform is undergoing continuous enhancement and has been deployed to a few cleaning projects. This system integrated commercial off-the-shelf IoT devices such as cameras and sensors to be deployed in a facility and/or on robots, which will evaluate and respond to various events to perform data driven functions or actions to assist our facility services with lower cost and more efficiency. We also intend to develop an autonomous toilet cleaning robots to alleviate the tedious manual toilet cleaning tasks. We have entered into a memorandum of understanding with an independent third party, which we intended to incorporate a company in Singapore, primarily focused on research and development, manufacturing, and sales/lease of cleaning robots.

 

Electric Vehicles. In 2021, we joined a consortium to submit a tender bid to install electric vehicle (“EV”) charging infrastructure at various public cark parks in Singapore. We believe that eco-solutions will become increasingly important in the future in the face of climate change. Integrating eco-solutions into our portfolio will not only expand our service capabilities, but also transition our business towards a more innovative model, and will ultimately help our business to keep pace with future technological advances.

 

We plan to replace a portion of our existing fleet of vehicles with electric vehicles and develop “green” chemicals that are more eco-friendly for use in our cleaning services. We believe that by integrating environmental sustainability into our business practices, we will be able to attract more customers and employees, and ultimately reap the benefits of more sustainable growth.

 

Summary Risk Factors

 

Our prospectus should be considered in light of the risks, uncertainties, expenses, and difficulties frequently encountered by similar companies. Below please find a summary of the principal risks we face, organized under relevant headings. These risks are discussed more carefully in the section titled “Risk Factors.

 

3

 

 

Risks Relating to Our Business

 

  We incurred a net loss in FY 2023 and FY 2024 and we may incur losses in the future;

 

We are subject to risks associated with debt financing;

 

Any adverse material changes to the Singapore market (whether localized or resulting from global economic or other conditions) such as the occurrence of an economic recession, pandemic or widespread outbreak of an infectious disease (such as COVID-19), could have a material adverse effect on our business, results of operations and financial condition;

 

The Clean Mark Gold Award currently awarded to Primech A&P may be revoked and the class 1 licence currently awarded to Primech A&P may by revoked and/or may not be renewed in May 2026;

 

Our Group does not have a long operating history as an integrated group;

 

There is no assurance that our future expansion and other growth plans will be successful;

 

There is no assurance that our existing service contracts for facilities services will be renewed upon expiry or that we will be successful in securing new service contracts;

 

Our current strategy to expand into the installation of electric vehicle (EV) charging infrastructure is limited to participation in a pilot program and potential minority investment(s);

 

Our service contracts typically contain liquidated damages clauses, and our customers may request for liquidated damages if we fail to comply or observe certain contractual requirements;

 

The loss of or reduction of Singapore government grants and/or subsidies could reduce our profits;

 

We may suffer from cost overruns as our fees are typically agreed upon submission of tender or quotation;

 

We are exposed to the credit risks of our customers and we may experience delays or defaults in collecting our receivables, and thus we face liquidity risks;

 

Our business involves inherent industrial risks and occupational hazards and the materialization of such risks may affect our business operations and financial results;

 

We depend on certain equipment to perform our facilities services and are subject to associated risks of maintenance and obsolescence;

 

We are exposed to legal or other proceedings or to other disputes or claims;

 

Our insurance coverage may not cover all our damages and losses;

 

We are dependent on our ability to retain existing senior management personnel and to attract new qualified management personnel;

 

We are dependent on our ability to retain existing senior management personnel and to attract new qualified management personnel;

 

The appeal of our services is reliant, to some extent, on maintaining and protecting the brand names and trademarks in our business;

 

We are exposed to risks of infringement of our intellectual property rights and the unauthorized use of our trademarks by third parties and we may face litigation suits for intellectual property infringement;

 

We could incur substantial costs as a result of data protection concerns or IT systems disruption or failure;

 

4

 

 

Unauthorized disclosure, destruction or modification of data, through cybersecurity breaches, computer viruses or otherwise or disruption of our services could expose us to liability, protracted and costly litigation and damage our reputation;

 

The value of our intangible assets and costs of investment may become impaired;

 

Our historical financial and operating results are not a guarantee of our future performance;

 

We may be exposed to liabilities under applicable anti-corruption laws and any determination that we violated these laws could have a materially adverse effect on our business;

 

Any inability by us to consummate and effectively incorporate acquisitions into our business operations may adversely affect our results of operations;

 

We may be subject to claims against us relating to any acquisition or business combination;

 

We have since the IPO incurred, and we will continue to incur, significant expenses and devote other significant resources and management time as a result of being a public company, which may negatively impact our financial performance and could cause our results of operations and financial condition to suffer;

 

If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired;

 

We do not expect to be subject to certain Nasdaq corporate governance rules applicable to U.S. listed companies; and

 

Negative publicity relating to our Group or our Directors, Executive Officers or Major Shareholders may materially and adversely affect our reputation and Share price.

 

Risks Relating to The Industry In Which We Operate

 

We operate in a highly regulated industry;

 

We may face employee retention and labor shortage issues due to the labor-intensive nature of the facilities services industry and the limited local labor force in Singapore;

 

Our supply of foreign labor may be affected by the laws, regulations and policies in the countries from which the foreign labor originates;

 

A shortage of reliable sub-contractors may disrupt our business operations and increase our costs and we may be liable for the breaches of our sub-contractors;

 

The facilities services industry in Singapore is highly competitive;

 

Industry consolidation may give our competitors advantage over us, which could result in a loss of customers and/or a reduction of our revenue;

 

We are subject to risks in connection with the use and storage of cleaning chemicals. In addition, any perceived use of cleaning supplies and/or chemicals that are not environmentally friendly or safe may adversely affect our brand name and the contracts we can successfully bid for; and

 

New and stricter legislation and regulations may affect our business, financial condition and results of operations.

 

Risks Relating to Investments In Singapore Companies

 

We are incorporated in Singapore, and our shareholders may have more difficulty in protecting their interests than they would as shareholders of a corporation incorporated in the United States;

 

It may be difficult for you to enforce any judgment obtained in the United States against us, our Directors, Executive Officers or our affiliates;

 

Subject to the general authority to allot and issue new Shares provided by our Shareholders, the Companies Act and our Constitution, our directors may allot and issue new Shares on terms and conditions and for such purposes as may be determined by our Board of Directors in its sole discretion. Any issuance of new Shares would dilute the percentage ownership of existing Shareholders and could adversely impact the market price of our Shares;

 

5

 

 

We are subject to the laws of Singapore, which differ in certain material respects from the laws of the United States; and

 

Singapore take-over laws contain provisions that may vary from those in other jurisdictions.

 

Risks Relating to An Investment In Our Shares

 

  This is a “best-efforts” offering, no minimum amount of securities is required to be sold, and we may not raise the amount of capital we believe is required for our business plans, including our near-term business plans, nor will investors in this offering receive a refund in the event that we do not sell an amount of securities sufficient to pursue the business goals outlined in this prospectus;

 

An active trading market for our Ordinary Shares may not continue and the trading price for our Ordinary Shares may fluctuate significantly;

 

Our share price has been, and could continue to be, volatile. You may lose all or part of your investment, and litigation may be brought against us;

 

Investors in our Shares and accompanying Warrants will face immediate and substantial dilution in the net tangible book value per Share and may experience future dilution;

 

We are a “controlled company” within the meaning of the Nasdaq Listing Rules and, as a result, may rely on exemptions from certain corporate governance requirements that provide protection to shareholders of other companies;

 

Our Shares may trade below $5.00 per share, and thus would be known as “penny stock;” trading in penny stocks has certain restrictions and these restrictions could negatively affect the price and liquidity of our Shares.

 

The trading price of our Shares following the IPO may be subject to rapid and substantial price volatility that 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;

 

There may be circumstances in which the interests of our Major Shareholder(s) could be in conflict with your interests as a Shareholder;

 

We may require additional funding in the form of equity or debt for our future growth which will cause dilution in Shareholders’ equity interest;

 

Investors may not be able to participate in future issues or certain other equity issues of our Shares;

 

We may not be able to pay dividends in the future;

 

If we fail to meet applicable listing requirements, Nasdaq may delist our Shares from trading, in which case the liquidity and market price of our Shares could decline;

 

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

 

We qualify as a foreign private issuer and, as a result, we will not be subject to U.S. proxy rules and will be subject to Exchange Act reporting obligations that permit less detailed and less frequent reporting than that of a U.S. domestic public company;

 

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

 

There can be no assurance that we will not be a passive foreign investment company, or PFIC, for U.S. federal income tax purposes for any taxable year, which could result in adverse U.S. federal income tax consequences to U.S. holders of our Shares;

 

We will have broad discretion in the use of proceeds of this Offering; and

 

Securities analysts may not publish favorable research or reports about our business or may publish no information at all, which could cause our stock price or trading volume to decline.

 

  The resale by the Selling Shareholder may cause the market price of our Ordinary Shares to decline.

 

6

 

 

Our Corporate Structure

 

The structure of our Group as of the date of this prospectus is as follows:

 

 

Corporate Information

 

Primech Holdings Ltd. is a Singapore corporation. Our registered office and principal place of business is 23 Ubi Crescent Singapore 408579. The telephone and facsimile numbers of our registered office are +65 6286 1868 and +65 6288 5260, respectively. Our agent for service of process in the United States is Cogency Global Inc., located at 122 East 42nd Street, 18th Floor, New York, NY 10168. Our corporate website is https://primechholdings.com. Information contained on our website does not constitute part of this prospectus.

 

Implications of Being an “Emerging Growth Company” and a “Foreign Private Issuer”

 

Emerging Growth Company

 

We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). As such, we are eligible, for up to five years, to take advantage of certain exemptions from various reporting requirements that are applicable to other publicly traded entities that are not emerging growth companies. These exemptions include:

 

the ability to include only two years of audited financial statements and only two years of related Management’s Discussion and Analysis of Financial Condition and Results of Operations disclosure;

 

exemptions from the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”), in the assessment of our internal control over financial reporting;

 

to the extent that we no longer qualify as a foreign private issuer, (i) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and (ii) exemptions from the requirement to hold a non-binding advisory vote on executive compensation, including golden parachute compensation.

 

We may take advantage of these provisions until the last day of our fiscal year following the fifth anniversary of the consummation of the IPO or such earlier time that we are no longer an emerging growth company.

 

As a result, the information contained in this prospectus may be different from the information you receive from other public companies in which you hold shares. We do not know if some investors will find the Shares less attractive because we may rely on these exemptions. The result may be a less active trading market for the Shares, and the price of the Shares may become more volatile.

 

We will remain an emerging growth company until the earliest of: (1) the last day of the first fiscal year in which our annual gross revenue exceeds $1.235 billion; (2) the last day of the fiscal year following the fifth anniversary of the date of the IPO; (3) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of the Shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter; or (4) the date on which we have issued more than $1.00 billion in non-convertible debt securities during any three-year period.

 

7

 

 

Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 13(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), for complying with new or revised accounting standards. Given that we currently report and expect to continue to report under U.S. GAAP, we have irrevocably elected not to avail ourselves of this extended transition period and, as a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required by the IASB. Under federal securities laws, our decision to opt out of the extended transition period is irrevocable.

 

Foreign Private Issuer

 

Upon consummation of the IPO, 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 will be exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including:

 

the rules under the Exchange Act requiring domestic filers to issue financial statements prepared under U.S. GAAP;

 

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 (the “SEC”) of quarterly reports on Form 10-Q containing unaudited financial and other specific information, or current reports on Form 8-K, upon the occurrence of specified significant events.

 

Notwithstanding these exemptions, we will file with the SEC, within four months after the end of each fiscal year, or such applicable time as required by the SEC, an annual report on Form 20-F containing financial statements audited by an independent registered public accounting firm.

 

We may take advantage of these exemptions until such time as we are no longer a foreign private issuer. We would cease to be a foreign private issuer at such time as more than 50% of our outstanding voting securities are held by U.S. residents and any of the following three circumstances applies: (i) the majority of our Executive Officers or members of our Supervisory Board are U.S. citizens or residents, (ii) more than 50% of our assets are located in the United States, or (iii) our business is administered principally in the United States.

 

Both foreign private issuers and emerging growth companies are also exempt from certain more extensive 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 extensive compensation disclosures required of companies that are neither an emerging growth company nor a foreign private issuer and will continue to be permitted to follow our home country practice on such matters.

 

Implications of Being a Controlled Company

 

We became a “controlled company” as defined under the Nasdaq Listing Rules because at the time of the completion of the IPO, Sapphire Universe held 82.06% of our total issued and outstanding Shares and was able to exercise 82.06% of the total voting power of our issued and outstanding share capital. Upon the consummation of this Offering, we will continue to be a “controlled company” because at such time, Sapphire Universe will hold [*]% of our total issued and outstanding Shares and will be able to exercise [*]% of the total voting power of our issued and outstanding share capital. 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. See section titled “Risk Factors — Risks Relating to an Investment in our Shares.”

 

Even if we cease to be a controlled company, we may still rely on exemptions available to foreign private issuers.

 

8

 

 

Conventions Which Apply to this Prospectus

 

Throughout this prospectus, we use a number of key terms and provide a number of key performance indicators used by management. Unless the context otherwise requires, the following definitions apply throughout where the context so admits:

 

Other Companies, Organizations and Agencies

 

“BCA”   : Building & Construction Authority of Singapore
       
“HSA”   : Health Sciences Authority of Singapore
       
“Independent Registered Public Accounting Firm”   : Weinberg & Company P.A.
       
“ISO”   : International Organization for Standardization
       
“MOM”   : Ministry of Manpower of Singapore
       
“NEA”   : National Environment Agency of Singapore
       
“Sapphire Universe”   : Sapphire Universe Holdings Limited, which is a Major Shareholder

 

General

 

“Audit Committee”   : The audit committee of our Board of Directors
       
“Board” or “Board of Directors”   : The board of directors of our Company
       
“Companies Act”   : The Companies Act 1967 of Singapore, as amended, supplemented or modified from time to time
       
“Company”   : Primech Holdings Ltd.
       
“Compensation Committee”   : The compensation committee of our Board of Directors
       
“Constitution”   : The constitution of our Company, as amended, supplemented or modified from time to time
       
“COVID-19”   : Coronavirus disease 2019
       
“CRS”   : Contractors Registration System of the BCA
       
“CVPA”   : The Control of Vectors and Pesticides Act 1998 of Singapore, as amended, supplemented or modified from time to time
       
“Directors”   : The directors of our Company
       
“EFMA”   : The Employment of Foreign Manpower Act 1990 of Singapore, as amended, supplemented or modified from time to time
       
“Employment Act”   : The Employment Act 1968 of Singapore, as amended, supplemented or modified from time to time
       
“EPHA”   : The Environmental Public Health Act 1987 of Singapore, as amended, supplemented or modified from time to time
       
“EPH Regulations”   : The Environmental Public Health (General Cleaning Industry) Regulations of Singapore 2014, as amended, supplemented or modified from time to time
       
“Executive Officers”   : The executive officers of our Company. See section titled “General Information On Our Group — Our Business Overview — Management.”

 

9

 

 

“FASB”   : The Financial Accounting Standards Board
       
“Fiscal Year” or “FY”   : Financial year ended or, as the case may be, ending March 31
       
“GAAP”   : Accounting principles generally accepted in the United States of America
       
“Group”   : Our Company and our subsidiaries
       
“GST”   : Goods and Services Tax
       
“Independent Directors”   : The independent non-executive Directors of our Company
       
“IoT”   : Internet-of-Things
       
“IPO”   : The Company’s initial public offering of 3,050,000 Ordinary Shares which was completed on October 12, 2023
       
“Lender”   : A registered financial institution under the Monetary Authority of Singapore that acts as our Company’s primary bank lender
       
“Listing”   : The listing and quotation of our Shares on Nasdaq
       
“Major Shareholder”   : A person who has an interest or interests (whether by record or beneficial ownership) in one or more voting shares (excluding treasury shares) in our Company, and the total votes attached to that share, or those shares, is not less than 5.0% of the total votes attached to all the voting shares (excluding treasury shares) in our Company
       
“Nasdaq”   : The Nasdaq Stock Market LLC
       
“Nasdaq Listing Rules”   : The Nasdaq rules governing listed companies
       
“Nominating and Corporate Governance Committee   : The nominating and corporate governance committee of our Board of Directors
       
“Offering”   : The offering of Shares by the Underwriter on behalf of our Company for subscription at the Offer Price, subject to and on the terms and conditions set out in this prospectus
       
“Offer Price”   : US$[*] for each Share being offered in this Offering
       
“QEHS”   : Quality, Environmental, Health and Safety

 

10

 

 

“Placement Agent”   : FT Global Capital, Inc. which is acting as exclusive placement agent for this Offering
       
“Placement Agent Agreement”   : The Placement Agent Agreement dated ___________, 2024 entered into between our Company and FT Global Capital, Inc., pursuant to which the Placement Agent has agreed to arrange for the sale of Shares offered in this prospectus on a “best-efforts” basis, as described in the sections titled “Plan of Distribution” of this prospectus
       
“Restructuring Exercise”   : The corporate restructuring exercise undertaken in anticipation of the Listing in which our Company acquired our current subsidiaries from Sapphire Universe

 

“RM”   : Malaysian ringgit or Malaysian dollar
       
“Share(s)”   : Ordinary share(s) in the capital of our Company
       
“Shareholders”   : Registered holders of Shares
       
“Singapore Take-Over Code”   : The Singapore Take-Over Code on Take-Overs and Mergers, as amended, supplemented or modified from time to time
       
“WICA”   : Work Injury Compensation Act 2019 of Singapore
       
“WSHA”   : Workplace Safety and Health Act 2006 of Singapore
       
“WSHIR”   : Workplace Safety and Health (Incident Reporting) Regulations of Singapore
       
“YA”   : Year of assessment

 

Currencies, Units and Others

 

“S$”   : Singapore dollars, the lawful currency of the Republic of Singapore
       
“US$” or “$”   : U.S. dollars and cents respectively, the lawful currency of the U.S.
       
“%” or “per cent.”   : Per centum
       
“sq. m.”   : Square meters

 

The expressions “associated company”, “related corporation” and “subsidiary” shall have the respective meanings ascribed to them in the Companies Act, as the case may be.

 

Any discrepancies in tables included herein between the total sum of amounts listed and the totals thereof are due to rounding. Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.

 

11

 

 

In this prospectus, references to “our Company” or to “the Company” are to Primech Holdings Ltd. and, unless the context otherwise requires, a reference to “we”, “our”, “us” or “our Group” or their other grammatical variations is a reference to our Company and our subsidiaries taken as a whole.

 

Certain of our customers and suppliers are referred to in this prospectus by their trade names. Our contracts with these customers and suppliers are typically with an entity or entities in the relevant customer or supplier’s group of companies.

 

Internet site addresses in this prospectus are included for reference only and the information contained in any website, including our website, is not incorporated by reference into, and does not form part of, this prospectus.

 

Market and Industry Data

 

We obtained certain industry, market and competitive position data in this prospectus from our own internal estimates, surveys and research and from publicly available information, including industry and general publications and research, surveys and studies conducted by third parties, such as reports by governmental agencies, for example, the Singapore Department of Statistics, the Singapore Ministry of Trade and Industry and the Singapore Urban Redevelopment Authority, among others, and by private entities. None of these governmental agencies and private entities are affiliated with our Company, and the information contained in this report has not been reviewed or endorsed by any of them.

 

Industry publications, research, surveys, studies and forecasts generally state that the information they contain has been obtained from sources believed to be reliable but that the accuracy and completeness of such information is not guaranteed. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and uncertainties as the other forward-looking statements in this prospectus. These forecasts and forward-looking information are subject to uncertainty and risk due to a variety of factors, including those described under “Risk Factors”. These and other factors could cause results to differ materially from those expressed in the forecasts or estimates from independent third parties and us.

 

Trademarks, Service Marks and Tradenames

 

We have proprietary rights to trademarks used in this prospectus that are important to our business, many of which are registered under applicable intellectual property laws. Solely for convenience, the trademarks, service marks, logos and trade names referred to in this prospectus are without the ® and ™ symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks, service marks and trade names.

 

This prospectus contains additional trademarks, service marks and trade names of others, which are the property of their respective owners. All trademarks, service marks and trade names appearing in this prospectus are, to our knowledge, the property of their respective owners. We do not intend our use or display of other companies’ trademarks, service marks, copyrights or trade names to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

 

Presentation of Financial and Other Information

 

Unless otherwise indicated, all financial information contained in this prospectus is prepared and presented in accordance with U.S. GAAP.

 

All references in this prospectus to “U.S. dollars,” “US$,” “$” and “USD” refer to the currency of the United States of America and all references to “S$,” “Singapore dollar,” or “SGD” refer to the currency of Singapore. Unless otherwise indicated, all references to currency amounts in this prospectus are in USD.

 

We have made rounding adjustments to some of the figures contained in this prospectus. Accordingly, numerical figures shown as totals in some tables may not be exact arithmetic aggregations of the figures that preceded them.

 

12

 

 

THE OFFERING

 

Shares offered by us:   Up to [*] Ordinary Shares.
     
Offer Price:   $[*] per Share.
     
Number of Shares outstanding before this Offering:   38,125,951 Shares are outstanding as of the date of this prospectus.
     
Shares to be outstanding immediately after this Offering:   [*] Shares.
     
Warrants offered by us:  

Up to [*] warrants to purchase up to [*] Ordinary Shares of the Company. The Warrants will have an exercise price of $[    ] per share. The Warrants will expire on the  [  ]-year anniversary of the initial issuance date.

 

The Ordinary Shares and the accompanying Warrants can only be purchased together in this offering but will be issued separately

 

To better understand the terms of the Common Warrants, you should carefully read the “Description of Securities We Are Offering” section of this prospectus. You should also read the form of Warrants, which has been filed as an exhibit to the registration statement that includes this prospectus. This prospectus also relates to the offering of the Ordinary Shares issuable upon exercise of the Warrants.

     
Placement Agent Warrants:  

We have agreed issue to the Placement Agent warrants (the “Placement Agent Warrants”) to purchase that number of Ordinary Shares which equals 5% of the aggregate number of Ordinary Shares sold in this Offering at an exercise price of $[●] per share (or 125% of the Offering Price per Share).

 

To better understand the terms of the Placement Agent Warrants, you should carefully read the descriptions of the Placement Agent Warrants in the “Description of Securities We Are Offering” and “Plan of Distribution” sections of this prospectus. You should also read the form of Placement Agent Warrant, which will be filed as an exhibit to the registration statement that includes this prospectus. This prospectus also relates to the offering of the Ordinary Shares issuable upon exercise of the Placement Agent Warrants.

     
Use of proceeds:   We estimate that our net proceeds from this Offering will be approximately US$8.8 million, assuming an Offering price of US$[*] per Share, which was the closing price of our Ordinary Shares on Nasdaq on October 11, 2024, and after deducting the placement agent fees and estimated offering expenses payable by us, assuming no exercise of the Warrants and Placement Agent Warrants.
     
    We plan to use the net proceeds of this Offering as follows:
     
    Approximately $6.6 million for investment, establishment our team of software developers, programmers, and engineers on research and development, and manufacturing, of cleaning robots.
     
    Approximately $2.2 million for working capital and other general corporate purposes.
     
Lock-up:   We have agreed with the Placement Agent that for a period of ninety (90) days after the date of this prospectus, the Company will not (a) offer, sell or otherwise transfer or dispose of, directly or indirectly, any Shares, or any securities convertible into or exchangeable or exercisable for Shares; or (b) file or cause to be filed any registration statement with the SEC relating to the offering of any Shares or any securities convertible into or exchangeable or exercisable for Shares. In addition, our Directors, Executive Officers and Major Shareholders have agreed with the Placement Agent not to sell, transfer or dispose of, directly or indirectly, any of our Shares or securities convertible into or exercisable or exchangeable for our Shares for a period of sixty (60) days after the date of this prospectus. See sections titled “Shares Eligible for Future Sale” and “Plan of Distribution” for more information.
     
Controlled company   After this Offering, assuming an offering size as set forth in this section, Sapphire Universe will own approximately [  ]% of our Shares. As a result, we expect to continue to be a “controlled company” within the meaning of the corporate governance standards of the Nasdaq Capital Market, or Nasdaq. See section titled “Prospectus Summary — Implications of Being a Controlled Company”.
     
Listing   Our Ordinary Shares are listed on the Nasdaq Capital Market under the symbol “PMEC.”
     
Risk factors   See section titled “Risk Factors” and other information included in this prospectus for a discussion of factors you should carefully consider before deciding to invest in the Shares.

 

Unless otherwise stated, all information in this prospectus assumes no exercise of the outstanding options and warrants described above into ordinary shares, and no exercise of the Warrants and Placement Agent Warrants issued in this offering and no sale of pre-funded warrants in this offering.

 

13

 

 

SUMMARY FINANCIAL INFORMATION

 

The following summary presents consolidated balance sheet data as of March 31, 2024 and 2023 and summary consolidated statements of operations data for the years ended March 31, 2024 and 2023 which have been derived from our audited financial statements included elsewhere in this prospectus. Our consolidated financial statements are prepared and presented in accordance with U.S. GAAP. You should read this “Selected Consolidated Financial And Operating Data” section together with our consolidated financial statements and the related notes and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section included elsewhere in this prospectus.

 

(in thousand dollars)  As of
March 31,
2024
   As of
March 31,
2023
 
   (Audited)   (Audited) 
Balance Sheets Data        
Current Assets  $31,333   $27,436 
Non-Current Assets   14,176    15,387 
Total assets  $45,509   $42,823 
           
Current liabilities  $22,742   $24,522 
Non-Current liabilities   7,708    9,468 
Shareholders’ equity   15,059    8,833 
Total liabilities and shareholders’ equity  $45,509   $42,823 

 

   For the Years Ended
March 31,
 
(in thousand dollars)  2024   2023 
Statements of Operations Data        
Revenues  $72,524   $69,026 
           
Operating costs and expenses          
Cost of revenue   (59,915)   (58,410)
General and administrative expenses   (13,160)   (12,304)
Sales and marketing expenses   (2,231)   (279)
Goodwill impairment   -    (138)
Loss from operations   (2,782)   (2,105)
Other income and expense, net   211    271 
Interest expense   (1,145)   (723)
Loss before income taxes   (3,716)   (2,557)
Net loss  $(3,223)  $(2,547)

 

14

 

 

RISK FACTORS

 

Prospective investors should carefully consider and evaluate each of the following considerations and all other information set forth in this prospectus before deciding to invest in our Shares. The following section describes some of the significant risks known to us now that could directly or indirectly affect us and the value or trading price of our Shares and should not be construed as a comprehensive listing of all risk factors. The following section does not state risks unknown to us now but which could occur in the future and risks which we currently believe to be not material but may subsequently turn out to be so. Should these risks occur and/or turn out to be material, they could materially and adversely affect our business, financial condition, results of operations and prospects. To the best of our Directors’ knowledge and belief, the risk factors that are material to investors in making an informed judgment have been set out below. If any of the following considerations and uncertainties develops into actual events, our business, financial condition, results of operations and prospects could be materially and adversely affected. In such cases, the trading price of our Shares could decline and investors may lose all or part of their investment in our Shares. Prospective investors are advised to apprise themselves of all factors involving the risks of investing in our Shares from their professional advisers before making any decision to invest in our Shares.

 

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

 

RISKS RELATING TO OUR BUSINESS

 

We incurred a net loss in FY 2023 and FY 2024 and we may incur losses in the future.

 

For the years ended March 31, 2024 and 2023, the Company recorded net loss of approximately $3,223,000 and $2,547,000, respectively. We anticipate that our operating expenses, together with the increased general administrative expenses of a public company, will increase in the foreseeable future as we seek to maintain and continue to grow our business, attract potential customers and further enhance our service offering. These efforts may prove more expensive than we currently anticipate, and we may not succeed in increasing our revenue sufficiently to offset these higher expenses. As a result of the foregoing and other factors, we may incur net losses in the future and may be unable to achieve or maintain profitability on a quarterly or annual basis for the foreseeable future.

 

We are subject to risks associated with debt financing.

 

Due to our working capital requirements in support of our day-to-day operations and business expansion, we may finance all or a substantial portion of our costs through bank loans and credit facilities, in addition to Shareholders’ equity and internally generated funds. Details on our total indebtedness is set forth in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this prospectus.

 

While we believe that we have sufficient capital from our available cash resources, our cash generated from our business operations and our credit facilities to meet our current working capital and capital expenditure requirements, we may require additional debt financing to operate our business, implement our future business strategies and/or acquire complementary businesses or develop new technologies.

 

Our ability to obtain debt financing depends on a number of factors including our financial strength, creditworthiness and prospects, as well as other factors beyond our control, including general economic, liquidity and political conditions. There is no assurance that we will be able to secure adequate debt financing on terms acceptable to us, or at all. In the event that we are unable to secure adequate debt financing on terms acceptable to us, we may not be able to implement our business strategies and our business and prospects could be materially and adversely affected as a result.

 

Any disruptions, volatility or uncertainty of the credit markets could limit our ability to borrow funds or cause our borrowings to become more expensive. As such, we may be forced to pay unattractive interest rates, thereby increasing our interest expense, decreasing our profitability and reducing our financial flexibility if we take on additional debt financing. Any material increase in interest rates would also increase our cost of borrowing and debt financing costs, which may weaken our ability to obtain further future debt financing.

 

15

 

 

Further, debt financing may restrict our freedom to operate our business as it may require conditions and/or covenants that:

 

a.limit our ability to pay dividends or require us to seek consent for the payment of dividends;

 

b.require us to dedicate a portion of our cash flow from operations to repayments of our debt, thereby reducing the availability of our cash flow for capital expenditures, working capital and other general corporate purposes; and

 

c.limit our flexibility in planning for, or reacting to, changes in our business and our industry.

 

Any adverse material changes to the Singapore market (whether localized or resulting from global economic or other conditions) such as the occurrence of an economic recession, pandemic or widespread outbreak of an infectious disease (such as COVID-19), could have a material adverse effect on our business, results of operations and financial condition.

 

During FY 2024 and FY 2023, substantially all of our revenue was derived from our operations in Singapore. Any adverse circumstances affecting the Singapore market, such as an economic recession, epidemic outbreak or natural disaster or other adverse incidents may adversely affect our business, financial condition, results of operations and prospects. Any downturn in the industry which we operate in resulting in the postponement, delay or cancellation of contracts and delay in recovery of receivables is likely to have an adverse impact on our business and profitability.

 

Uncertain global economic conditions have had and may continue to have an adverse impact on our business in the form of lower net sales due to weakened demand, unfavorable changes in product price/mix, or lower profit margins. For example, global economic downturns have adversely impacted some of our customers, such as Singapore Changi Airport, hotels, restaurants, retail establishments, and other entities that are particularly sensitive to business and consumer spending.

 

During economic downturns or recessions, there can be a heightened competition for sales and increased pressure to reduce selling prices as our customers may reduce their demand for our services. If we lose significant sales volume or reduce selling prices significantly, then there could be a negative impact on our consolidated financial condition or results of operations, profitability and cash flows.

 

Reduced availability of credit may also adversely affect the ability of some of our customers and suppliers to obtain funds for operations and capital expenditures. This could negatively impact our ability to obtain necessary supplies as well as our sales of materials and equipment to affected customers. This could additionally result in reduced or delayed collections of outstanding accounts receivable.

 

An epidemic or outbreak of communicable diseases may also adversely affect our business, financial condition, results of operations and prospects. For example, outbreak of COVID-19, resulted in a global health crisis, causing disruptions to social and economic activities, business operations and supply chains worldwide, including in Singapore. Measures taken by the Singapore government to tackle the spread of COVID-19 have included, among others, border closures, quarantine measures and lockdown measures. The COVID-19 outbreak and related government measures have adversely affected our business in a number of ways, including:

 

temporary scale-back of certain cleaning services rendered at Singapore Changi Airport, Terminal 2;

 

termination on short notice of a number of service contracts, especially contracts pertaining to the hospitality industry, as well as our provision of customer services to hotels and other tourism venues; and

 

a shortage of labor given that a significant proportion of our employees are foreign workers who were subject to Singapore government imposed travel restrictions including stay-home notices or quarantine orders.

 

If a substantial number of our employees are infected with and/or are suspected of having COVID-19, and our employees are required to be hospitalized, this may disrupt our ability to render services which may have a material adverse effect on our business operations and reputation of our Group.

 

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Singapore removed most remaining COVID-19 travel restrictions as of April 26, 2022, and eased its entry requirements for travelers, in response to a decline in new daily infections. As of the date of this prospectus, Singapore Changi Airport has fully reopened. Our contract with Changi Airport Group was renewed with effective on November 1, 2023 through October 31, 2025. Our other contract with Changi Airport Group for the airside is effective on November 1, 2023 through October 31, 2026.

 

Our revenue and profitability may be materially impacted if COVID-19 (or any health epidemic or virus outbreak) affects or continues to affect the overall economic and market conditions in Singapore for a prolonged period of time. Such an economic slowdown and/or negative business sentiment could potentially have an adverse impact on our business and operations. We are uncertain as to when the outbreak of COVID-19 will be contained, and we also cannot predict if the impact of an outbreak will be short-lived or long-lasting or when the Singapore market will be able to fully recover to pre-COVID-19 levels. If these disruptions are for a prolonged period of time, or if there are further outbreaks of infectious diseases, these may have a material adverse effect on our Group’s business, financial condition, results of operations, and prospects.

 

The Clean Mark Gold Award currently awarded to Primech A&P may be revoked and the class 1 licence currently awarded to Primech A&P may be revoked and/or now be renewed in May 2026.

 

Primech A&P and Maint-Kleen are 2022 and 2023 recipients of the Clean Mark Gold Award,. The Clean Mark Gold Award is the highest level of accreditation under the Enhanced Clean Mark Accreditation Scheme granted to cleaning businesses. See “General Information on Our Group — Our Business Overview — Awards and Accreditation.” With implementation of the revised Cleaning Business Licensing framework from 1 January 2024, NEA will cease issuance and applications of Enhanced Clean Mark Accreditation Scheme, including the Clean Mark Gold Award. Primech A&P has applied for and obtained a class 1 licence under the revised Cleaning Business Licensing framework on March 28, 2024.

 

As further set forth in “Legal Proceedings,” a 2019 workplace accident may result in a court conviction by A&P Maintenance. In 2020, A&P Maintenance and Primech Services & Engrg Pte. Ltd. amalgamated to form Primech A&P. Thus, a conviction (for offences under legislation administered by MOM) would have to be disclosed to NEA in connection with Primech A&P’s Clean Mark Gold Award and subsequent application for a renewal of its class 1 licence under the revised Cleaning Business Licensing framework. We have been advised by the solicitors to A&P Maintenance in connection with the 2019 workplace accident that this technicality will not in and of itself result in Primech A&P’s Clean Mark Gold Award being revoked prior to expiry, but we cannot assure you that this unfortunate accident will not cause Primech A&P’s Clean Mark Gold Award and/or class 1 license to be revoked prior to its expiry, or will not cause Primech A&P to fail in renewing its class 1 license when it expires in May 2026. Revocation of the Clean Mark Gold Award and/or the non-renewal or revocation of the class 1 licence could result in a breach of existing cleaning contracts, and/or disqualify Primech A&P from entering into or tendering for certain future cleaning contracts, which in turn could have a material adverse effect on our business and results of operations in the future.

 

Our Group does not have a long operating history as an integrated group.

 

Our Company was incorporated as a holding company on December 29, 2020; and starting in 2018 our Major Shareholder, Sapphire Universe acquired Primech Services & Engrg, A&P Maintenance, Acteef Cleaning, Maint-Kleen, and we acquired CSG and Princeston International in 2021. While our subsidiaries have been in operation between approximately two and thirty years, we do not have a long history of running an integrated group with standardized policies and procedures and on which our past performance may be judged.

 

There is no assurance that our future expansion and other growth plans will be successful.

 

As part of our future plans, we intend to expand our current facilities services into specialized services, or provide additional services such as landscaping and security services. We may expand our range of services organically, or inorganically through franchising, joint ventures, acquisitions and/or strategic alliances.

 

As such, we may be subject to risks related to the expansion of our Group such as, among others:

 

the availability of sufficient funds;

 

difficulties arising from operating a significantly larger and more complex organization;

 

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difficulties in entering into new businesses for which we may not be as or at all familiar;

 

difficulties in integrating the assets and the business operations of the subsidiaries and strategic alliances cohesively;

 

failure to realize expected profitability or growth;

 

failure to realize expected synergies and cost savings; and

 

unforeseen legal, regulatory, contractual, labor or other issues whether in Singapore or elsewhere.

 

We may also enter into new geographic markets, depending on the demand for our services as well as opportunities for growth. See section titled “General Information on our Group — Our Business Overview — Our Business Strategies and Future Plans” for further details. Overseas expansion involves numerous risks, including but not limited to legal and regulatory risks and financial costs. We cannot assure you that our operations in new geographic markets will be profitable. In addition to the above, geographic expansion will require substantial management dedication and efforts which may require significant additional expenditures. The successful implementation of our growth strategies depends on a variety of factors including our ability to hire and retain key management personnel, negotiate attractive terms for such acquisitions or expansions that may command high valuations, and obtain sufficient financing for our capital expenditures. There is no assurance that we will be able to obtain the required financing or that we will continue to have sufficient cash flow to fund our Group’s expansion. The abovementioned challenges associated with our growth plans may place increased demands on our management and on our operational systems and other resources, and could also increase our exposure to unanticipated risks and liabilities.

 

As such, there is no assurance that our Group will be successful in implementing our future plans or that we will be able to realize the profits, growth, or synergies expected from our Group’s expansion. In the event that we are unable to effectively or successfully execute our expansion strategies, our business, financial condition, results of operations and prospects may be materially and adversely affected.

 

There is no assurance that our existing service contracts for facilities services will be renewed upon expiry or that we will be successful in securing new service contracts.

 

We derive the majority of our revenue from the provision of facilities services, which accounted for 77.2% of our revenue in FY 2024 and 80.8% of our revenue in FY 2023.

 

To the extent that the demand for our facilities services, particularly in Singapore, is adversely affected for any reasons, our business, financial condition and results of operations could be materially and adversely affected.

 

For facilities services, our service contracts with our customers are typically for a term of two to four years and may provide for an option to renew or extend for an additional term (typically two years). There is no assurance that our existing service contracts will be renewed or extended by our customers on the exact same terms, or at all. In order to secure facilities services contracts, we typically have to participate in a tender process, or provide quotes for our services. This is a competitive process for which our customers take into account, among other things, the prior performance, financial capability, reputation, accreditations and certifications of each potential contractor before deciding which contractor to appoint. Competition for such tenders is typically high. Accordingly, there is no assurance that we will be successful in securing new facilities services contracts. To the extent we are unable to secure new facilities contracts as our existing service contracts expire, our profitability and prospects could be materially and adversely affected.

 

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Depending on customers’ demand for our services, if less of our service is required, our customers may re-negotiate to lower the fees payable to us under their service contracts with us. Further, our facilities services contracts typically permit our customers to terminate our service without cause by providing an agreed upon prior notice. If a substantial number of our service contracts are terminated early for any reason, and we are unable to secure new service contracts in a timely manner, this could have a material adverse effect on our business, financial condition, results of operations and prospects. For example, due to the COVID-19 pandemic leading to a slowdown in the hospitality and aviation industries, most of our service contracts for stewarding services and with Singapore Changi Airport were modified to reduce the scope of our services, which led to a decrease in our revenue by $2.5 million and $3.5 million, respectively, from FY 2020 to FY 2021 and had a material adverse effect on our results of operations.

 

Our current strategy to expand into the installation of electric vehicle (EV) charging infrastructure is limited to participation in a pilot program and potential minority investment(s).

 

One of our business strategies is to expand our portfolio of services to include, among others, eco-solutions. To this end, we joined a consortium with third parties who have extensive experience in the EV charging and energy solutions sectors to submit a tender with the Singapore government to install EV charging infrastructure at various public cark parks in Singapore. The consortium was awarded the pilot tender by the government of Singapore to install EV charging infrastructure in approximately 150 public car parks in the North and North-East regions in Singapore. While we are familiar with submitting tenders to government authorities and executing government projects, we are reliant on our consortium collaborators such as Charge+ Pte. Ltd. (“Charge+”) (an EV charging solution provider in Singapore and Southeast Asia) for their experience in the EV industry. We and the other consortium members entered into agreements with the Singapore government relating to the EV project; these agreements provide that each consortium member, as a service provider, is jointly and severally responsible to the authorities for the due performance of the agreements. We subsequently entered into a Deed of Confirmation and Acknowledgement dated May 24, 2022 (the “Deed of Confirmation”) with our consortium collaborators which provides that (i) Charge+ shall at its own cost and expense, carry out and complete all works in connection with this project, (ii) Charge+ shall pay all concession and other fees payable and due to the Singapore authorities in connection with this project, (iii) we have no financial obligations to Charge+ or the other members of the consortium and (iv) Charge+ shall be entitled to all revenues received in connection with this project. Notwithstanding the Deed of Confirmation, each consortium member (including us) remains jointly and severally responsible to the authorities for the due performance of the agreements. The Singapore government is not a party to the Deed of Confirmation and the Deed of Confirmation does not extinguish the Company’s financial or operational obligations to the Singapore government. Therefore, if Charge+ was to default on its obligations under the agreements with the Singapore government relating to the EV project and Deed of Confirmation with respect to these costs, we estimate that the financial obligations to be borne by the other three consortium collaborators (including us) would not exceed US$3.3 million (SGD 4.4 million) over the next twelve years, comprised of no more than US$1.5 million (SGD 2 million) for the installation of the remaining charging stations and operating costs of no more than US$150,000 (SGD 200,000) per year for the next twelve years. See “Our Business Strategies and Future Plans” for more information.

 

We do not own or operate an EV charging function.

 

As we are not in the business of manufacturing or operating EV technology, our participation is limited to efforts of the types described above.

 

Our service contracts typically contain liquidated damages clauses, and our customers have in the past and may in the future request for liquidated damages if we fail to comply or observe certain contractual requirements.

 

Our service contracts with our customers typically contain liquidated damages clauses. If we fail to meet the requirements prescribed in the service contracts such as the inability to fulfil the required standard of cleanliness desired by our customers whether from shortage of personnel and/or other operational mishaps such as delays in cleaning schedules or deviations from customer instructions, our customers may require us to pay ascertained monetary damages, and/or they may deduct any such damages from our security deposit with them or any monies due or payable to us. In FY 2024 and FY 2023, we incurred an aggregate cost of approximately $0.6 million and $1.1 million, respectively, in liquidated damages. In the event that substantial liquidated damages are imposed on us, this may have material adverse effect on our business, financial condition, results of operations and prospects.

 

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The loss of or reduction of Singapore government grants and/or subsidies could reduce our profits.

 

We from time to time receive certain Singapore government grants and/or subsidies in connection with, among others, the wages of our employees (such as the Special Employment Credit and the Wage Credit Scheme) as well as the purchase of technological equipment. For FY 2024 and FY 2023, our Singapore government grants amounted to $2.8 million and $4.6 million, respectively.

 

The provision of such grants and/or subsidies is at the sole discretion of the government depending on, among other things, public interest and political factors, and is not guaranteed.

 

There is no assurance that the Singapore government will provide such grants and/or benefits in future periods of economic uncertainty.

 

We have tendered bids and quoted for service contracts based on factors such as the prevailing market conditions and the availability of Singapore government grants and/or subsidies. Any further reduction in the amount of government grants and/or subsidies received may render certain of our ongoing projects unprofitable and this would have a material adverse effect on our business, financial condition, results of operations and prospects. Our increased use of technological equipment such as cleaning robots is also supported by specific Singapore government grants. We cannot predict whether we or our subsidiaries will continue to benefit from such grants and/or subsidies, and there is no guarantee that we can continue to receive Singapore government grants in the future. In the event that these Singapore government grants and/or subsidies fall away and we are unable to find alternative funding on same or similar favorable terms, our plans to expand our service capacity through capital expenditure on cleaning robots may not be successful and our financial condition and operating results may suffer. Further, it is uncertain whether we will be able to benefit from Singapore government grants, or any other grants or subsidies, in respect of any expansion of our business or any jobs performed by us outside Singapore.

 

We may suffer from cost overruns as our fees are typically agreed upon submission of tender or quotation.

 

We typically enter into service contracts whereby the contract value is fixed upon submission of a tender or quotation. A tender is proffered by us in a competitive bidding process, and a quotation is given directly by us to a potential client. We would take into consideration, among other things, the needs and expectations of the customers, the need for procurement of additional resources (such as manpower, equipment or supplies) and other logistical arrangements, the need for engaging sub-contractors, as well as prevailing Singapore government grants and/or subsidies.

 

The accuracy of our contract proposals is subject to our Group’s experience and expertise in assessing the tender or quotation requirements. However, the tender or quotation process may be carried out approximately one (1) to three (3) months prior to entry into the final service contract and the rendering of our services. During this period, we may face unforeseen circumstances such as changes in the cost of labor, equipment or supplies, regulatory changes, and other unforeseen circumstances which may result in cost overruns. Any increase in costs of labor, equipment or supplies, or the incurrence of additional sub-contractor fees during the term of the service contract, would be borne by us. If we are unable to control costs or manage our costs within our estimates, this may materially and adversely affect our results of operations and financial condition.

 

We are exposed to the credit risks of our customers and we may experience delays or defaults in collecting our receivables, and thus we face liquidity risks.

 

We extend our credit terms of between 30 and 90 days depending on the creditworthiness of our customers. As at March 31, 2024 and 2023, accounts receivable were approximately $18.4 million and $15.4 million, respectively, and our average accounts receivable turnover days were 85 days and 72 days, respectively. Our total amount of reserve for uncollectible amounts of trade and other receivables were approximately $448,000 and $454,000 in FY 2024 and FY 2023, respectively.

 

We face uncertainties over the timeliness of our customers’ payments and their ability to pay. Our customers’ ability to pay may be affected by events or circumstances that are difficult to foresee or anticipate, such as a decline in their business or an economic downturn. Hence, there can be no assurance that we will be able to collect our trade debts fully or within a reasonable period of time.

 

As such, our financial condition and results of operations are dependent, to a certain extent, on the creditworthiness of our customers. If there are any unforeseen circumstances affecting our customers’ ability or willingness to pay us, we may experience payment delays or non-payment. In such events, our Group’s liquidity, cash flows and working capital may be adversely affected.

 

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Our business involves inherent industrial risks and occupational hazards, the materialization of which may adversely affect our business operations and financial results.

 

Our business involves inherent industrial risks and occupational hazards, which may not be wholly eliminated or preventable through the implementation of safety measures. Our industry is labor-intensive by nature and our workers are required to perform certain tasks that present risks and dangers, such as working at a considerable height above ground, cleaning slippery floors, working in environments which may be dusty or dirty and may contain viruses or bacteria, carrying heavy objects, coming into contact with cleaning chemicals such as bleach and detergents, and operating motor vehicles and cleaning machinery.

 

In addition, we are liable under the WICA and under Singapore common law to compensate employees (including sub-contractors’ employees) who suffer bodily injuries or death as a result of accidents or who contract occupational diseases arising out of and in the course of their employment with us. We may also face claims from third parties from time to time including those who suffer personal injuries at premises where we provide services. Thus, we may from time to time be involved in material disputes with various parties in the ordinary course of our business. Such complaints, allegations and legal actions, regardless of their merit, may result in public scrutiny and negative publicity, thereby harming the standing and market reputation of our Group. In the event that claims are brought against us, whether with or without merit, the resulting litigation, arbitration, administrative or other legal proceedings could be time consuming and costly.

 

While we have implemented QEHS procedures, there is no assurance of compliance therewith by our employees at all times or that they will not be exposed to risks or dangers related to their work activities, such as illnesses from diseases or viruses, or physical injuries arising from equipment failure or industrial accidents. In the event that such risks or dangers materialize, we may be subject to inquiries and investigations by the relevant authorities, thus disrupting our business and damaging our reputation, which may also affect the validity of our relevant licenses, permits and/or approvals, business, financial condition, results of operations and prospects. Please refer to the section titled “General Information on our Group — Our Business Overview — Legal Proceedings” of this prospectus for further details.

 

Our operations are also exposed to the risk of equipment failure, failure by our employees to follow procedures and protocols, as well as risks inherent in operating equipment and machinery, resulting in damage to or loss of any relevant machines, equipment or facilities or to personal injury. A major operational failure could result in substantial loss of life and/or serious injury, damage to or loss of machines, equipment or facilities, protracted legal disputes and damage to our reputation. Further, our contracts provide that our customers can suspend or refuse services in the event that their operations are affected by events of force majeure. In the event of operational or equipment failure, we may be forced to cease part of our operations and we may be subject to any penalty or incur extra costs or expenses in any dispute as a result of such operational or equipment failure. As a result, the business, financial condition and results of operations of our Group may be materially and adversely affected.

 

We depend on certain equipment to perform our facilities services and are subject to associated risks of maintenance and obsolescence.

 

We utilize cleaning robots in the provision of our facilities services. We purchase these robots from third parties, and they typically come with a manufacturer’s warranty of one year. In the event that any necessary repairs are not covered by the manufacturer’s warranty or such warranty has expired, we would be required to pay for the costs of repair, which could be a significant amount.

 

Further, our cleaning robots may face obsolescence due to rapid technological developments and the emergence of alternative innovations. To the extent that our equipment faces obsolescence before the end of their expected useful lives, we may be subject to impairment losses. Changes and advancements in technology may require us to replace and upgrade our equipment at an earlier stage than expected. As a result, we may incur significant additional capital expenditure.

 

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We are exposed to legal or other proceedings or to other disputes or claims.

 

In the event that our customers do not make payment in a timely manner, we may seek to enforce our contractual rights and seek recourse via litigation or arbitration. These legal procedures are time-consuming and the settlement of a contract dispute may require additional financial and other resources. Failure to secure adequate payments in time or to manage past due receivables effectively could have a material and adverse effect on our business, financial condition, results of operations and prospects.

 

Further, disputes and claims may arise, from time to time, between our Group and our customers, suppliers or sub-contractors for various reasons such as delays, unsatisfactory service delivery and alleged breaches of service contracts. Due to the nature of our services, we have, from time to time, been the subject of workplace safety and/or negligence claims from employees and/or members of the public. These disputes, if remain unresolved or worsen, may eventually result in legal or other proceedings and therefore cause disruptions and delays to our operations, in addition to the extra costs that may be incurred in their settlement or other resolution. Our resources may also be diverted to defend the claims, thereby adversely affecting our Group’s business, financial condition, results of operations and prospects.

 

In the event that we are unable to resolve the aforementioned disputes or claims satisfactorily in a timely manner or at all, our Group’s business, financial condition and results of operation may be materially and adversely affected. Please refer to the section titled “General Information on our Group — Our Business Overview — Legal Proceedings” of this prospectus for further details.

 

Our insurance coverage may not cover all our damages and losses.

 

We maintain insurance policies to provide insurance coverage of our business operations. We expect to renew our insurance policies, such as our insurance policy for work injury compensation on an annual basis and there is no assurance that we will be able to renew all of our policies or obtain new policies on similar terms.

 

The nature of our business operations entails inherent risks such as risk of fire, theft and property loss at the worksites during the course of our service contracts or during the delivery of our services. Also, we do not have key man insurance to cover the loss of key personnel. While our Directors believe that we have sufficient insurance coverage for our business operations in line with industry standards and business practices in Singapore and although we may be able to increase our insurance coverage when required, there is no assurance that our existing or future insurance coverage will be sufficient to indemnify us against all potential losses.

 

As a public company, we expect the laws, rules and regulations governing U.S. public companies will make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage.

 

In the event that our existing insurance coverage is insufficient to indemnify us against all or any losses, our business, financial condition, results of operations and prospects may be materially and adversely affected.

 

We are dependent on our ability to retain existing senior management personnel and to attract new qualified management personnel.

 

Our continued success is highly dependent on our ability to retain our senior management personnel, who are responsible for key aspects of our business, including but not limited to maintaining customer relationships, developing new business opportunities, finance and project management. Our Executive Officers have an average of 19 years’ experience in the facilities services industry, and their knowledge, skills and extensive experience in our industry, business relationships with our customers, and ability to manage existing and develop new customer relationships have been important to the growth of our Group. If any of our key management personnel cease to be involved with our Group in the future and we are unable to find suitable replacements in a timely manner, this may cause disruptions to our business operations and our business, financial condition, results of operations and prospects may be adversely affected.

 

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The success and growth of our Group also depends on our ability to identify, hire, train and retain suitable, skilled and qualified key management personnel. If we are unable to hire and retain employees from different sectors apart from the facilities services industry, such as hires with technology, finance, human resources and business development capabilities, our ability to build up our key management personnel team may be limited to a certain extent.

 

The appeal of our services is reliant, to some extent, on maintaining and protecting the brand names and trademarks in our business.

 

Our business is sensitive to customer perception of the quality and safety of our services and products. In the event of any misuse of our brand and/or trademarks (which may include misuse by our sub-contractors, our employees or unrelated third parties), or in the event we fail to detect, deter and prevent trademark, related misconduct, or otherwise fail to effectively protect our brand and/or trademarks, our reputation could be damaged, resulting in our business, financial condition, results of operations and prospects being materially and adversely affected.

 

We are exposed to risks of infringement of our intellectual property rights and the unauthorized use of our trademarks by third parties and we may face litigation suits for intellectual property infringement.

 

We believe our trademarks are well recognized by our customers and in the industries we are operating in, which reflects our reliable and quality services that have contributed to our success. It is possible that our competitors or other third parties may adopt trademarks similar to ours, which may lead to brand confusion. If we fail to effectively protect our trademarks and other intellectual property, generally or against specific third party infringement, our intellectual property rights could be negatively affected and our customers may have a negative impression of our service quality which in turn may have an adverse impact on our Group’s reputation, prospects, business and financial results.

 

There is also no assurance that we will not be sued for any potential infringement of any intellectual property rights of third parties in the future. In the event of any claims or litigation involving infringement of the intellectual property rights of third parties, whether with or without merit, we may be required to divert a significant amount of our time and resources to defend or attend to any possible litigation or legal proceedings. As a result, our reputation, business and financial results may be adversely affected.

 

We could incur substantial costs as a result of data protection concerns or IT systems disruption or failure.

 

While we have not been the subject of any cyber-attacks or IT system failures that have had a material impact on our Group, our business may be impacted by such attacks or system failures in the future. Cybersecurity attacks, in particular, are evolving and include, but are not limited to, malicious software, attempts to gain unauthorized access to data and other electronic security breaches that could lead to disruptions in systems, unauthorized release of confidential or otherwise protected information and corruption of data. A cyberattack or system failure may result in operational downtimes and/or delays, which may have a detrimental impact on our ability to provide services to our customers. In addition, we utilize cleaning robots in the provision of our facilities services and we have established online booking platforms (web based and mobile applications) for our HomeHelpy business, and any failure of these systems could disrupt our daily operations and lead to delays of our provision of services or loss in our revenues.

 

We handle the personal data of customers in the ordinary course of providing cleaning services to individual customers. The collection and use of such personal data is governed by personal data protection laws in Singapore, in particular the Personal Data Protection Act 2012 (No. 26 of 2012). While we have implemented measures to protect sensitive information and confidential and personal data and comply with applicable laws, rules and regulations, our facilities and systems may be vulnerable to security breaches and other data loss, including cyber-attacks. In addition, it is not possible to predict the impact on our business of any future loss, alteration or misappropriation of information in our possession related to us, our employees, former employees, customers, suppliers or others. This could lead to negative publicity, legal claims, theft, modification or destruction of proprietary or other key information, damage to or inaccessibility of critical systems, operational downtimes and/or delays and other significant costs, which could adversely affect our business, financial condition, results of operations and prospects.

 

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Unauthorized disclosure, destruction or modification of data, through cybersecurity breaches, computer viruses or otherwise or disruption of our services could expose us to liability, protracted and costly litigation and damage our reputation.

 

Our business involves the collection, storage, processing and transmission of customers’ business data. An increasing number of organizations, including large merchants and businesses, other large technology companies, financial institutions and government institutions, have disclosed breaches of their information technology, or IT, systems, some of which have involved sophisticated and highly targeted cybersecurity attacks, including on portions of their websites or infrastructure. We may also be subjected to breaches of cybersecurity by hackers. Threats may derive from human error, fraud or malice on the part of employees or third parties, or may result from accidental technological failure. Concerns about cybersecurity are increased when we transmit information. Electronic transmissions can also be subjected to cybersecurity attacks, interception or loss. Also, computer viruses and malware can be distributed and spread rapidly over the internet and could infiltrate our systems or those of our associated participants, which can impact the confidentiality, integrity and availability of information, and the integrity and availability of our products, services and systems, among other effects. Denial of service or other cybersecurity attacks could be targeted against us for a variety of purposes, including interfering with our products and services or creating a diversion for other malicious activities. These types of actions and attacks could disrupt our delivery of products and services or make them unavailable, which could damage our reputation, force us to incur significant expenses in remediating the resulting impacts, expose us to uninsured liabilities, subject us to lawsuits, fines or sanctions, distract our management or increase our costs of doing business.

 

Our encryption of data and other protective measures may not prevent unauthorized access or use of sensitive data. A breach of our system or that of one of our associated participants may subject us to material losses or liability. A misuse of such data or a cybersecurity breach could harm our reputation and deter customers from using our products and services, thus reducing our revenue. In addition, any such misuse or breach could cause us to incur costs to correct the breaches or failures, expose us to uninsured liabilities, increase our risk of regulatory scrutiny, subject us to lawsuits, result in the imposition of material penalties and fines under applying laws or regulations.

 

We cannot assure that there are written agreements in place with every associated participant or that such written agreements will prevent the unauthorized use, modification, destruction or disclosure of data or enable us or our customers to obtain reimbursement in the event we should suffer incidents resulting in unauthorized use, modification, destruction or disclosure of data. Any unauthorized use, modification, destruction or disclosure of data could result in protracted and costly litigation, which could have a material and adverse effect on our business, financial condition and results of operations.

 

Cybersecurity attack incidents are increasing in frequency and evolving in nature and include, but are not limited to, installation of malicious software, unauthorized access to data and other electronic security breaches that could lead to disruptions in systems, unauthorized release of confidential or otherwise protected information and the corruption of data. Given the unpredictability of the timing, nature and scope of information technology disruptions, there can be no assurance that the procedures and controls we employ will be sufficient to prevent security breaches from occurring and we could be subject to manipulation or improper use of our systems and networks or financial losses from remedial actions, any of which could have a material and adverse effect on our business, financial condition and results of operations.

 

The value of our intangible assets and costs of investment may become impaired.

 

As a result of our past acquisitions carried out pursuant to the Restructuring Exercise in 2021, goodwill and other intangible assets represented a significant portion of our assets. Goodwill and other intangible assets (comprising customer contracts and customer relationships) were approximately $0.7 million and $0.8 million as at March 31, 2024 and 2023, respectively, representing approximately 1.5% and 1.8% of our total assets. During FY 2023, we determined there was an impairment charge of approximately $138,000 related to the recorded goodwill relating to the acquisition of Maint-Kleen. For the year ended March 31, 2024, we determined there was no impairment of our remaining recorded goodwill. If we make additional acquisitions, it is likely that we will record additional intangible assets such as goodwill on our consolidated statement of financial position.

 

Other intangible assets are amortized over their estimated useful lives. In accordance with applicable accounting standards, we periodically evaluate our goodwill and other intangible assets to determine whether all or a portion of their carrying values may no longer be recoverable, in which case a charge to the profit or loss statement may be necessary. Such impairment testing is complex and requires us to make assumptions and judgments regarding the estimated recoverable amount of our cash-generating units to which the goodwill is allocated. If estimated recoverable amounts are less than the carrying values for goodwill in future annual impairment tests, we may be required to record impairment losses in future periods. Any future evaluations requiring an impairment of our goodwill could materially affect our results of operations and shareholders’ equity in the period in which the impairment occurs. A material decrease in shareholders’ equity could, in turn, potentially impact our ability to pay dividends.

 

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Our historical financial and operating results are not a guarantee of our future performance.

 

Our annual and periodic financial results vary from year-to-year and from period-to-period, in response to a number of factors that we cannot predict, such as general business outlook and sentiment, economic market conditions, employment rates, inflation and interest rates and consumer confidence. As such, we believe that our annual and periodic financial results are not a guarantee of our future economic performance and undue reliance should not be placed on such results for future speculative purposes.

 

We may be exposed to liabilities under applicable anti-corruption laws and any determination that we violated these laws could have a materially adverse effect on our business.

 

We are subject to various anti-corruption laws that prohibit companies and their agents from making improper payments or offers of payments for the purpose of obtaining or retaining business. We may conduct business in countries and regions that are generally recognized as potentially more corrupt business environments. Activities in these countries create the risk of unauthorized payments or offers of payments by one of our employees or agents that could be in violation of various anti-corruption laws, including the Prevention of Corruption Act 1960 of Singapore (the “PCA”) and the United States Foreign Corrupt Practices Act (the “FCPA”). We have implemented safeguards and policies to discourage these practices by our employees and agents but we cannot provide assurance that our internal controls and compliance systems will always protect us from acts committed by our employees or agents. If our employees or agents violate our policies or we fail to maintain adequate record keeping and internal accounting practices to accurately record our transactions, we may be subject to regulatory sanctions. Violations of the PCA or the FCPA or other anti-corruption laws, or allegations of any such acts, could damage our reputation and subject us to civil or criminal investigations in Singapore, the United States and in other jurisdictions. Those and any related shareholder lawsuits could lead to substantial civil and criminal, monetary and non-monetary penalties and cause us to incur significant legal and investigatory fees which could adversely affect our business, consolidated financial condition and results of operations.

 

Any inability by us to consummate and effectively integrate acquisitions into our business operations may adversely affect our results of operations.

 

We invest time and resources into carefully assessing opportunities for acquisitions, and we continue to evaluate potential acquisition opportunities to support, strengthen and grow our business, including potentially in the near term. For example, since 2020 we have acquired Maint-Kleen, CSG and Princeston International. Despite diligence and integration planning, acquisitions still present certain risks, including the time and economic costs of integrating an acquisition’s technology, control and financial systems, unforeseen liabilities, and difficulties in bringing together different work cultures and personnel. Although we have previously completed several acquisitions, there can be no assurance that we will be able to locate suitable acquisition candidates, acquire possible acquisition candidates, acquire such candidates on commercially reasonable terms, or integrate acquired businesses successfully in the future. Future acquisitions, including those we may consummate in the near term, may require us to incur additional debt and contingent liabilities, which may adversely affect our business, results of operations and consolidated financial condition. The process of integrating acquired businesses into our existing operations may result in operating, contractual and supply chain difficulties, such as the failure to retain customers or management personnel. Such difficulties may divert significant financial, operational and managerial resources from our existing operations, and make it more difficult to achieve our operating and strategic objectives.

 

We may be subject to claims against us relating to any acquisition or business combination.

 

There may be liabilities assumed in any acquisition or business combination that we did not discover or that we underestimated in the course of performing our due diligence. Although a seller generally will have indemnification obligations in favor of us under an acquisition or merger agreement, these obligations will usually be subject to financial limitations, such as general deductibles and maximum recovery amounts, as well as time limitations. We cannot ensure that our right to indemnification from any sellers will be enforceable, collectible or sufficient in amount, scope or duration to fully offset the amount of any undiscovered or underestimated liabilities that we may incur. Any such liabilities, individually or collectively, could have a material and adverse effect on our prospects, business and financial results.

 

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We have since the IPO incurred, and we will continue to incur. significant expenses and devote other significant resources and management time as a result of being a public company, which may negatively impact our financial performance and could cause our results of operations and financial condition to suffer.

 

We have since the IPO incurred, and we will continue to incur, significant legal, accounting, insurance and other expenses as a result of being a public company. Laws, regulations and standards relating to corporate governance and public disclosure for public companies, including the Dodd-Frank Act of 2010, the Sarbanes-Oxley Act, regulations related thereto and the rules and regulations of the SEC and Nasdaq, have, since the IPO, significantly increased our costs as well as the time that must be devoted to compliance matters. We expect that continued compliance with these laws, rules, regulations and standards will substantially increase our expenses as compared to our expenses prior to the IPO, including our legal and accounting costs, and make some of our operating activities more time-consuming and costly. These public company obligations also will require attention from our senior management and could divert their attention away from the day-to-day management of our business. We also expect these laws, rules, regulations and standards to make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified persons to serve on our Board of Directors or as officers. If we are unable to satisfy our obligations as a public company, we could be subject to delisting of our Shares, fines, sanctions and other regulatory actions and potential civil litigation.

 

If we fail to maintain an effective system of disclosure controls and internal controls over financial reporting, our ability to timely produce accurate financial statements or comply with applicable regulations could be impaired.

 

The Sarbanes-Oxley Act requires, among other things, that we maintain effective internal disclosure controls and procedures over our financial reporting. We are continuing to develop and refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in our reports that we will file with the SEC will be recorded, processed, summarized, and reported within the time periods and as otherwise specified in SEC rules, and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal Executive Officers and financial officers. We are also continuing to improve our internal controls over financial reporting.

 

Ensuring that we have effective disclosure controls and procedures and internal controls over financial reporting in place so that we can produce accurate financial statements on a timely basis is a costly and time-consuming effort that will need to be re-evaluated frequently. Our internal controls over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP. Beginning with our second annual report on Form 20-F after we become a company whose securities are publicly listed in the United States, we will be required, pursuant to Section 404 of the Sarbanes-Oxley Act, to make a formal assessment of the effectiveness of our internal controls over financial reporting, and once we cease to be an emerging growth company, we will be required to include an attestation report on internal controls over financial reporting issued by our Independent Registered Public Accounting Firm. During our evaluation of our internal controls, if we identify one or more material weaknesses in our internal controls over financial reporting, we will be unable to assert that our internal controls over financial reporting are effective. We cannot assure you that there will not be material weaknesses or significant deficiencies in our internal controls over financial reporting in the future. Any failure to maintain internal controls over financial reporting could severely inhibit our ability to accurately report our financial condition, or results of operations.

 

We do not expect to be subject to certain Nasdaq corporate governance rules applicable to U.S. listed companies.

 

As a foreign private issuer, we are entitled to rely on a provision in Nasdaq’s corporate governance rules that allows us to follow Singapore corporate law with regards 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.

 

In addition, our Audit Committee is not subject to additional Nasdaq requirements applicable to listed U.S. companies, including an affirmative determination that all members of the audit committee are “independent,” using more stringent criteria than those applicable to the Company under relevant SEC rules. Nasdaq’s corporate governance rules require listed U.S. companies to, among other things, seek shareholder approval for the implementation of certain equity compensation plans and issuances of shares, which the Company is not required to follow as a foreign private issuer. However, we voluntarily have a majority of independent directors and our audit committee will consist of three independent directors.

 

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Negative publicity relating to our Group or our Directors, Executive Officers or Major Shareholders may materially and adversely affect our reputation and Share price.

 

Negative publicity or announcements relating to our Group or any of our Directors, Executive Officers or Major Shareholders, whether with or without merit, may materially and adversely affect the reputation and goodwill of our Group in our industry, consequently affecting our relationships with our customers, suppliers and sub-contractors. In addition, such negative publicity may affect market perception of our Group and the performance of our Share price.

 

Negative publicity or announcements may include, among others, newspaper reports of accidents at our work sites, unsuccessful attempts in joint ventures, acquisitions or take-overs, any involvement we may have in litigation or insolvency proceedings, and unfavorable or negative articles on any of our Directors, Executive Officers or Major Shareholders. Any claims and legal actions brought forward by our customers may also have a negative impact on our brand image. If our customers, suppliers and sub-contractors subsequently lose confidence in us, this could result in the termination of business relationships or fewer referrals or invitations to tender or quote for facilities services or other contracts. To this end, our business, financial condition, results of operations and prospects may be adversely impacted.

 

RISKS RELATING TO THE INDUSTRY IN WHICH WE OPERATE

 

We operate in a highly regulated industry.

 

We are required to obtain licenses, permits, approvals and/or certifications for our business operations and there is no guarantee that such licenses, permits, approvals and or certifications can be obtained, renewed or will not be revoked in the future.

 

The facilities services industry in Singapore is highly regulated. In order to conduct our business operations, we are required to hold various valid licenses, permits, approvals and/or certifications. These licenses, permits, approvals and/or certifications are subject to various terms and conditions, and are renewable on a periodic basis. While we are not aware of any circumstances which might prevent us from renewing our licenses, permits, approvals and/or certifications, there is no guarantee that these will be renewed in a timely basis, or at all.

 

If we fail to adhere to the stipulated regulatory requirements and/or conditions of our licenses, we may be subject to fines and penalties or be required to take remedial measures; our licenses, permits, approvals and/or certificates may be revoked; and/or additional terms and conditions may be imposed on us. In particular, the Director-General of NEA has discretion to revoke, suspend or impose any other directions or restrictions on the licensee’s cleaning business license if the licensee has gone or is likely to go into compulsory or voluntary liquidation other than for the purpose of amalgamation or reconstruction, or the Director-General becomes aware of a circumstance that would have required or permitted the Director-General to refuse to grant or renew the licensee’s cleaning business license. See section titled “General Information on our Group — Government Regulations” for further details on material Singapore government regulations applicable to us. The loss of licenses, permits, approvals and/or certifications could disrupt our business operations thereby adversely affecting our business, financial condition, results of operations and prospects.

 

In Singapore, there are twelve major registration categories, and various “workheads,” administered by the Building & Construction Authority of Singapore, or BCA. The Facilities Management Workheads, also known as “FM,” are the relevant “workheads” applicable to our services. There are several FM sub-categories that affect our Company.

 

In order to bid for the provision of cleaning services in a public sector project of an unlimited contract size, we would have to continue to maintain a L6 grade registration in respect of the FM02 workhead for “Housekeeping, Cleansing, Desilting and Conservancy” currently held by Primech A&P and Maint-Kleen, and there is no assurance that we will be able to continue to do so. The Singapore government may also introduce new workheads from time to time. For instance, with effect from April 1, 2020, BCA introduced a new FM01 workhead for “Facilities Management” whereby a provider has to provide at least two distinct maintenance services. Such maintenance services include security services, cleaning services, landscaping services and pest control. BCA may also from time to time change the requirements for obtaining the requisite workhead. Any inability to renew or maintain our current workhead grading, or obtain any relevant new workhead grading, may reduce our business opportunities for our Group and have an adverse impact on our business, financial condition, results of operations and prospects.

 

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The cleaning business in Singapore was only subject to license beginning in 2014, when the EPHA was amended to require the licensing of cleaning businesses. Any changes to the existing rules and regulations which govern our business operations may require us to obtain additional licenses and registrations from the relevant Singapore government authorities. To this end, our financial performance may be adversely affected if additional expenses are incurred as part of complying with license and registration requirements. We also cannot guarantee that such additional licenses and registrations will be granted to us in a timely manner, or at all. In the event that there is a delay in obtaining the relevant licenses, we are unable to obtain or renew the necessary licenses or if the necessary licenses are revoked, our business, financial condition, results of operations and prospects may be adversely affected.

 

We may face employee retention and labor shortage issues due to the labor-intensive nature of the facilities services industry and limited local labor force in Singapore.

 

At present, the facilities services industry is highly labor-intensive. Labor costs contributed approximately 85.4% and 84.2% of our direct costs for FY 2024 and FY 2023, respectively. In particular, we are heavily reliant on foreign workers. As of March 31, 2024, approximately 66% of our employees were Singapore citizens and permanent residents, while the remaining 34% employees were foreign workers.

 

The MOM prescribes a dependency ratio ceiling which sets out the maximum permitted ratio of foreign workers to the total workforce that a company is allowed to hire. Since January 1, 2020, MOM reduced the dependency ratio ceiling for the services sector from 40% to 35%. In addition, we also have to pay levies and performance bonds in respect of our non-traditional source (“NTS”) employees, resulting in increased expenses for our Group.

 

While the employment of Singapore citizens and permanent residents is not subject to the same restrictions, the employment of such workers in the cleaning, security and landscape sectors must comply with the Progressive Wage Model (“PWM”). The PWM requirements for the cleaning sector took effect from September 1, 2014 and were revised with effect from July 1, 2018, and compliance with these PWM requirements is a licensing condition for cleaning companies. The PWM stipulates monthly minimum basic wages for cleaners performing different types of cleaning jobs (the minimum wage varies depending on the job scope of the cleaner) and provides for yearly wage increases from July 1, 2020 to June 30, 2029. In addition, there is a mandatory PWM bonus payable to cleaners who meet certain criteria. See section titled “General Information on our Group — Government Regulations — Progressive Wage Model” for further details. There is no assurance that we will be able to pass on any increase in labor costs onto our customers when determining our tender pricing, failing which, our business, financial condition, results and operations and profitability may be materially and adversely affected.

 

Further, we may also face retention issues as the facilities services industry in Singapore is fragmented with many industry players, who may be able to offer more competitive wages or benefits than us, and our employees are generally not subject to non-compete restrictions and are able to easily move between different employers in the industry. Various factors including labor laws, travel restrictions and competition from other employers may affect our ability to retain existing employees or hire new employees, or to procure additional manpower from sub-contractors when needed. In the event that we are not able to maintain or increase our workforce as needed, we may face a shortage of labor and our business, financial condition, results of operations and prospects may be materially and adversely affected.

 

Our supply of foreign labor may be affected by the laws, regulations and policies in the countries from which the foreign labor originates.

 

We are dependent on the supply of foreign labor for our business operations, which is predominantly subject to the supply conditions in foreign labor markets. Our foreign workers are mainly from Malaysia, Bangladesh, Myanmar and China. The supply of foreign labor is affected by the laws, regulations and policies of the countries from which the foreign labor originates. Such laws, regulations and policies or changes thereof or the introduction of additional requirements and/or restrictions by the authorities or governments of these countries may affect the supply of foreign labor and may cause disruptions or delays to our operations and/or increase our labor costs.

 

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For example, we source our foreign labor from foreign labor provision agencies and the laws, regulations and policies of the countries from which the foreign labor originates may require the foreign labor provision agencies to be licensed or meet other requirements before they may arrange for the foreign labor to work abroad. Hence, if these foreign labor provision agencies breach the relevant laws, regulations and policies and have their licenses revoked, we will not be able to source foreign labor from them, and we may not be able to find an alternative foreign labor provision agency. In the event that we are not able to find a suitable supply of foreign labor to meet the requirements of our customers as a result of any of the foregoing factors, our business, financial condition, results of operations and prospects may be adversely affected.

 

A shortage of reliable sub-contractors may disrupt our business operations and increase our costs and we may be liable for the breaches of our sub-contractors.

 

In order to manage our service capacity and to complement our service offerings, we may sub-contract portions of our facilities services contracts to external service providers from time to time. For example, we outsource external façade cleaning to specialist cleaners and may from time to time outsource residential space cleaning services to sub-contractors with expertise in condominium cleaning. We also outsource pest control services, landscaping and waste management to sub-contractors with the relevant expertise. While we have oversight of our sub-contractors, we are not be able to control the day-to-day management and operations of our sub-contractors. Pursuant to the terms of the service contracts entered into with our customers, we may be liable for the negligence, omission, or default arising from our sub-contractors as well.

 

Notably, our engagements with sub-contractors are not exclusive and our sub-contractors are free to take up work with other companies. Where our sub-contractors decide not to work with us or where we are unable to retain them at costs favorable to us, our business, financial condition, results of operations and prospects may be materially and adversely affected.

 

Although we are selective in engaging sub-contractors, there is a risk that our sub-contractors may fail to meet the standards required by our customers. In the event that we are required to replace a sub-contractor, we may incur higher costs and there may be disruptions or delays to the services rendered to our customers. Consequently, there may be an adverse impact on our reputation and on our business, financial condition, results of operations and prospects.

 

The facilities services industry in Singapore is highly competitive.

 

Our success in the facilities services industry will depend on our ability to compete effectively against our competitors on factors such as pricing, quality of services, reliability, reputation and size of operations. We may face more intensive competition in the future from existing competitors and new market entrants, which may be in a better position to expand their market share due to their longer operating histories, larger customer base, ready access to sub-contractors, wider range of services offered, greater financial resources or other factors. See section titled “General Information on our Group — Our Business Overview — Competition” for further details. There is no assurance that the facilities services industry in Singapore will not see an increase in the number of contractors who possess the requisite accreditation to tender for higher-value facilities services contract, or obtain a cleaning business license, or an increase in the number of contractors who have a similar expertise and track record to us.

 

The facilities services industry in Singapore may be affected by new initiatives introduced by the relevant regulatory agencies. For example, the NEA introduced the Clean Mark Accreditation Scheme in 2010 as an initiative to recognize businesses that deliver high cleaning standards through the training of workers, use of equipment to improve work processes and fair employment practices, and our subsidiaries, Primech A&P and Maint-Kleen subsequently obtained Clean Mark awards. See section titled “General Information on our Group — Government Regulations — Enhanced Clean Mark Accreditation Scheme” for further details. If we are unable to capitalize on Singapore government-backed initiatives and adapt or compete against our competitors in the face of such changes, our business, financial condition, results of operations and prospects may be materially and adversely affected.

 

In order to expand service capacity, certain of our competitors in the facilities services industry have been exploring the use of new cleaning technology that will improve their business, including novel cleaning technology and product developers with specialized technical skills. If we are unable to adapt to and acquire such advances in technology (such as the use of effective green chemicals), we cannot remain competitive, and this may result in lower profit margins and a loss of market share for our Group. There is no assurance that we will be able to compete against our competitors effectively in the future and this could have a material and adverse effect on the business, financial condition, results of operations and prospects of our Group.

 

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Industry consolidation may give our competitors advantage over us, which could result in a loss of customers and/or a reduction of our revenue.

 

Some of our competitors have made or may make acquisitions or enter into partnerships or other strategic relationships in order to offer more comprehensive services or achieve greater economies of scale. In addition, new entrants not currently considered competitors may enter our market through acquisitions, partnerships or strategic relationships. Many potential entrants may have competitive advantages over us, such as greater name recognition, longer operating histories, more varied services and larger marketing budgets, as well as greater financial, technical and other resources. Industry consolidation may result in practices that make it more difficult for us to compete effectively, including on the basis of price, sales and marketing programs, technology or services functionality. These pressures could result in a reduction in our revenue.

 

We are subject to risks in connection with the use and storage of cleaning chemicals. In addition, any perceived use of cleaning supplies and/or chemicals that are not environmentally friendly or safe may adversely affect our brand name and the contracts we can successfully bid for.

 

Certain of the cleaning solutions and chemicals we use in our cleaning and pest control operations are considered “hazardous substances” under the Environmental Protection and Management Act 1999 of Singapore (“EPMA”) and are subject to regulatory control. In particular, we are required under the EPMA and the regulations thereunder to hold a permit to store and use such hazardous substances and comply with certain conditions of storage and disposal. Non-compliance with the relevant laws and regulations may result in fines or imprisonment, and could also reduce our chances of successfully tendering for public contracts, in view of the Singapore government’s preference for environmentally friendly cleaning chemicals. Our inability to successfully tender for public contracts could adversely affect our business, financial position, and results of operations and future prospects.

 

In the event that the public deems our cleaning solutions and chemicals to be not environmentally friendly or safe, or to be harmful to humans or animals, the demand for our services may reduce. This might happen regardless of whether such claims are justified or not. This in turn can damage our branding and have an adverse impact upon our business, financial position, results of operations and prospects.

 

New and stricter legislation and regulations may affect our business, financial condition and results of operations.

 

Our business requires compliance with many laws and regulations. Increased legislative and regulatory activity and burden, particularly in the areas of licensing requirements and immigration and employment regulation, and a more stringent manner in which any of them are applied could significantly impact our business. Failure to comply with these laws and regulations could subject us to lawsuits and other proceedings, and could also lead to damage awards, fines and penalties. We may become involved in a number of legal proceedings and audits, including Singapore government and agency investigations, and consumer, employment, tort and other litigation. The outcome of some of these legal proceedings, audits, and other contingencies could require us to take, or refrain from taking, actions that could harm our operations or require us to pay substantial amounts of money, harming our financial condition. Additionally, defending against these lawsuits and proceedings may be necessary, which could result in substantial costs and diversion of our senior management’s attention and resources, harming our financial condition. There can be no assurance that any pending or future legal or regulatory proceedings and audits will not harm our business, financial condition and results of operations.

 

Furthermore, the regulatory environment in which we operate is still developing, and the potential exists for future legislation and regulations to be adopted. These developments may adversely affect the customers to whom, and the markets into which, we sell our products, increase our costs, require additional expenditures to ensure continued regulatory compliance and otherwise negatively affect our business, consolidated financial condition or results of operations, including in ways that cannot yet be foreseen.

 

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RISKS RELATING TO INVESTMENTS IN SINGAPORE COMPANIES

 

We are incorporated in Singapore, and our Shareholders may have more difficulty in protecting their interests than they would as shareholders of a corporation incorporated in the United States.

 

Our corporate affairs are governed by our Constitution and by the laws governing companies incorporated in Singapore. The rights of our Shareholders and the responsibilities of the members of our board of directors under Singapore law may be different from those applicable to a corporation incorporated in the United States. Therefore, our public Shareholders may have more difficulty in protecting their interests in connection with actions taken by us, our management, members of our board of directors or our Major Shareholders than they would as shareholders of a corporation incorporated in the United States. For example, controlling shareholders in corporations incorporated in Delaware are subject to fiduciary duties while controlling shareholders in Singapore companies are not subject to such duties.

 

In addition, only persons who are registered as Shareholders in our register of members are recognized under Singapore law as our Shareholders. Only registered Shareholders have legal standing to institute Shareholder actions against us or otherwise seek to enforce their rights as Shareholders. Investors in our Shares who are not specifically registered as Shareholders in our register of members (for example, where such Shareholders hold Shares indirectly through the Depository Trust Company “DTC”) are required to be registered as Shareholders in our register of members in order to institute or enforce any legal proceedings or claims against us, our directors or our executive officers relating to shareholder rights. The administrative process of becoming a registered Shareholder could result in delays prejudicial to any such legal proceeding or enforcement action. See section titled “Description of Share Capital and Constitution — Comparison of Shareholder Rights” for a discussion of certain differences between Singapore and Delaware corporation law.

 

It may be difficult for you to enforce any judgment obtained in the United States against us, our Directors, Executive Officers or our affiliates.

 

All of our Directors and Executive Officers reside outside the United States. In addition, all of our assets are located outside the United States. As a result, it may be difficult to enforce in the United States any judgment obtained in the United States against us or any of these persons, including judgments based upon the civil liability provisions of the U.S. securities laws. In addition, in original actions brought in courts in jurisdictions located outside the United States, it may be difficult for investors to enforce liabilities based upon U.S. securities laws.

 

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. It is not clear whether a Singapore court may impose civil liability on us or our directors and officers who reside in Singapore in an action brought in the Singapore courts against us or such persons with respect to a violation solely of the federal securities laws of the United States.

 

In addition, holders of book-entry interests in the Shares (for example, where such Shareholders hold Shares indirectly through the DTC) will be required to be registered Shareholders as reflected in our register of members in order to have standing to bring a Shareholder action and, if successful, to enforce a foreign judgment against us, our Directors or our Executive Officers in the Singapore courts. Any such enforcement action would be subject to applicable Singapore laws. The administrative process of becoming a registered Shareholder could result in delays that could be prejudicial to any legal proceeding or enforcement action. In making a determination as to enforceability of a judgment of a state court or a federal court of the United States, the Singapore courts would have regard to, among other factors, whether the judgment was final and conclusive, given by a court of law of competent jurisdiction, expressed to be for a fixed sum of money, whether it was procured by fraud, or in breach of principles of natural justice, or whether the enforcement thereof would be contrary to public policy.

 

Accordingly, there can be no assurance that the Singapore courts would enforce against us, our Directors or our Executive Officers, judgments obtained in the United States which are predicated upon the civil liability provisions of the federal securities laws of the United States.

 

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Subject to the general authority to allot and issue new Shares provided by our Shareholders, the Companies Act and our Constitution, our directors may allot and issue new Shares on terms and conditions and for such purposes as may be determined by our Board of Directors in its sole discretion. Any issuance of new Shares would dilute the percentage ownership of existing Shareholders and could adversely impact the market price of our Shares.

 

Under Singapore law, we may only allot and issue new Shares with the prior approval of our Shareholders at a general meeting. Subject to the general authority to allot and issue new Shares provided by our Shareholders, the provisions of the Companies Act, and our Constitution, we may allot and issue new Shares, to the number of the existing Shares to which such Shareholders are entitled on such terms and conditions as our Directors may think fit to impose. Such terms and conditions may be adverse to the rights of holders of our Shares.

 

Because new issuances of Shares are subject to Shareholder approval, if a sufficient number of Shares have not been approved for issuance in any given year, we may be delayed in raising capital through equity offerings or delayed or prevented from consummating an acquisition using our Shares. Assuming Shareholders have approved the issuance of Shares, we may seek to raise capital in the future, including to fund acquisitions, future investments and other growth opportunities. We may, for these and other purposes, issue additional Shares or securities convertible into Shares. Any additional issuances of new Shares could dilute the percentage ownership of our existing Shareholders and may also adversely impact the market price of our Shares.

 

We are subject to the laws of Singapore, which differ in certain material respects from the laws of the United States.

 

As a Singapore-incorporated company, we are required to comply with the laws of Singapore, certain of which are capable of extra-territorial application, as well as our Constitution. In particular, we are required to comply with certain provisions of the Securities and Futures Act 2001 of Singapore (the “SFA”), which prohibit certain forms of market conduct and information disclosures, and impose criminal and civil penalties on corporations, directors and officers in respect of any breach of such provisions. In addition, the Singapore Code on Take-Overs and Mergers, or “Singapore Take-over Code”, which specifies, among other things, certain circumstances in which a general offer is to be made upon a change in control of a Singapore-incorporated public company, and further specifies the manner and price at which voluntary and mandatory general offers are to be made.

 

The laws of Singapore and of the United States differ in certain significant respects. The rights of our Shareholders and the obligations of our Directors and Executive Officers under Singapore law may be different from those applicable to U.S. corporations, including those incorporated in Delaware, in material respects, and our Shareholders may have more difficulty and less clarity in protecting their interests in connection with actions taken by our management, members of our Board of Directors or our Major Shareholders than would otherwise apply to U.S. corporations, including those incorporated in Delaware. See section titled “Description of Share Capital and Constitution” for a discussion of certain differences between Singapore and Delaware corporation law.

 

In addition, the application of Singapore law, in particular, the Companies Act may, in certain circumstances, impose more restrictions on us, our Shareholders, Directors and officers than would otherwise be applicable to U.S. corporations, including those incorporated in Delaware. For example, the Companies Act requires a director to act with reasonable degree of diligence in the discharge of the duties of his or her office and, in certain circumstances, imposes criminal liability for specified contraventions of particular statutory requirements or prohibitions. In addition, pursuant to the provisions of the Companies Act, shareholders holding 10% or more of the total number of paid-up shares as of the date of the deposit carrying the right of voting at general meetings (disregarding paid-up shares held as treasury shares) may by depositing a requisition, require our Directors to convene an extraordinary general meeting. If our directors do not within 21 days after the date of deposit of the requisition proceed to convene a meeting, the requisitioning shareholders, or any of them representing more than 50% of the total voting rights represented of all of them, may themselves, proceed to convene such meeting, and we will be liable for the reasonable expenses incurred by such requisitioning shareholders. We are also required by the Companies Act to deduct corresponding amounts from fees or other remuneration payable by us to such of the directors as are in default.

 

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Singapore take-over laws contain provisions that may vary from those in other jurisdictions.

 

The Singapore Take-over Code applies to, among others, corporations with a primary listing of their equity securities in Singapore. While the Singapore Take-over Code is drafted with, among others, listed public companies in mind, unlisted public companies with more than 50 (fifty) shareholders and net tangible assets of approximately $3.75 million (S$5.0 million) or more, must also observe the letter and spirit of the general principles and rules of the Singapore Take-Over Code, wherever this is possible and appropriate. Public companies with a primary listing overseas may apply to Securities Industry Council (“SIC”) to waive the application of the Singapore Take-over Code. As of the date of this prospectus, no application has been made to SIC to waive the application of the Singapore Take-over Code in relation to us.  

 

In this regard, the Singapore Take-Over Code contains certain provisions that may possibly delay, deter or prevent a future take-over or change in control of us. Under the Singapore Take-Over Code, except with the consent of SIC, any person acquiring an interest, whether by a series of transactions over a period of time or not, either on his own or together with parties acting in concert with him, in 30% or more of our voting shares is required to extend a take-over offer for all remaining voting shares in accordance with the procedural and other requirements under the Singapore Take-Over Code.

 

Except with the consent of SIC, such a take-over offer is also required to be made if a person holding between 30% and 50% (both inclusive) of our voting shares, either on his own or together with parties acting in concert with him, acquires additional voting shares representing more than 1% of our voting shares in any six-month period. While the Singapore Take-Over Code seeks to ensure an equality of treatment among shareholders in take-over or merger situations, its provisions could substantially impede the ability of the shareholders to benefit from a change of control and, as a result, may adversely affect the market price of the Shares and the ability to realize any benefit from a potential change of control.

 

RISKS RELATING TO AN INVESTMENT IN OUR SHARES

 

This is a “best-efforts” offering, no minimum amount of securities is required to be sold, and we may not raise the amount of capital we believe is required for our business plans, including our near-term business plans, nor will investors in this offering receive a refund in the event that we do not sell an amount of securities sufficient to pursue the business goals outlined in this prospectus.

 

The Placement Agent has agreed to use its best efforts to solicit offers to purchase the Ordinary Shares and accompanying Warrants in this Offering. The Placement Agent has no obligation to buy any of the Ordinary Shares and accompanying Warrants from us or to arrange for the purchase or sale of any specific number or dollar amount of the Ordinary Shares and accompanying Warrants. There is no required minimum number of Ordinary Shares and accompanying Warrants that must be sold as a condition to completion of this Offering. Because there is no minimum offering amount required as a condition to the closing of this offering, the actual offering amount, Placement Agent fees and proceeds to us are not presently determinable and may be substantially less than the maximum amounts set forth above. We may sell fewer than all of the Ordinary Shares and accompanying Warrants offered hereby, which may significantly reduce the amount of proceeds received by us, and investors in this Offering will not receive a refund in the event that we do not sell an amount of securities sufficient to support our business goals and continued operations, including our near-term continued operations. Thus, we may not raise the amount of capital we believe is required for our operations in the short-term and may need to raise additional funds to complete such short-term operations. Such additional capital may not be available or available on terms acceptable to us, or at all.

 

An active trading market for our Ordinary Shares 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 develop or continue. If an active public market for our Ordinary Shares does not continue following the completion of this Offering, the market price and liquidity of our Ordinary Shares may be materially and adversely affected. The public offering price for our Ordinary Shares in this Offering was determined by negotiation between us and the Placement Agent based upon several factors, and we can provide no assurance that the trading price of our Ordinary Shares after this Offering will not decline below the public offering price. As a result, investors in this Offering may experience a significant decrease in the value of their Ordinary Shares.

 

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Our share price has been, and could continue to be, volatile. You may lose all or part of your investment, and litigation may be brought against us.

 

There has been significant volatility in the market price and trading volume of equity securities, which may be unrelated to the financial performance of the companies issuing the securities. These broad market fluctuations could negatively affect the market price of our stock. The market price and volume of our ordinary shares could fluctuate, and in the past has fluctuated, more dramatically than the stock market in general. Since our IPO, the market price of our ordinary shares has ranged from a high of $4.18 per share to a low of $0.49 per share. There is no assurance that the market price for our Shares will not decline below the Offer Price. The Offer Price was determined after consultation between our Company and the Placement Agent, after taking into consideration, among others, market conditions and estimated market demand for our Shares. The Offer Price may not necessarily be indicative of the market price for our Shares after the completion of this Offering. Investors may not be able to sell their Shares at or above the Offer Price. The prices at which our Shares will trade after this Offering may fluctuate significantly and rapidly as a result of, among others, the following factors, some of which are beyond our control:

 

variation in our results of operations;

 

perceived prospects and future plans for our business and the general outlook of our industry;

 

changes in securities analysts’ estimates of our results of operations and recommendations;

 

announcements by us of significant contracts, acquisitions, strategic alliances or joint ventures or capital commitments;

 

the valuation of publicly-traded companies that are engaged in business activities similar to ours;

 

additions or departures of key personnel;

 

fluctuations in stock market prices and volume;

 

involvement in litigation;

 

general economic and stock market conditions; and

 

discrepancies between our actual operating results and those expected by investors and securities analysts.

 

There is no guarantee that our Shares will appreciate in value after this Offering or even maintain the price at which you purchased the Shares. You may not realize a return on your investment in our Shares and you may even lose your entire investment in our Shares.

 

In addition, the stock markets have from time to time experienced significant price and volume fluctuations that have affected the market prices of securities. These fluctuations often have been unrelated or disproportionate to the operating performance of publicly-traded companies. In the past, following periods of volatility in the market price of a particular company’s securities, an investor may lose all or part of his or her investment, and litigation has sometimes been brought against that company. If similar litigation is instituted against us, it could result in substantial costs and divert our senior management’s attention and resources from our core business.

 

Furthermore, since this Offering is being conducted on a “best-efforts” basis and the actual public offering price per Ordinary Share will be determined by and among the Placement Agent, the investors, and us at the time of pricing and, as is typical, may be at a discount to the then-current, per-share market price of our Ordinary Shares, these factors may also negatively affect the market price of our Ordinary Shares.

 

Our Ordinary Shares may be subject to extreme volatility that is seemingly unrelated to the underlying performance of our business. Recently, companies with comparable public floats have experienced instances of extreme stock price run-ups followed by rapid price declines, and such stock price volatility was seemingly unrelated to the respective company’s underlying performance. Although the specific cause of such volatility is unclear, our anticipated public float may amplify the impact the actions taken by a few shareholders have on the price of our Ordinary Shares, which may cause our share price to deviate, potentially significantly, from a price that better reflects the underlying performance of our business. Should our Ordinary Shares experience run-ups and declines that are seemingly unrelated to our actual or expected operating performance and financial condition or prospects, prospective investors may have difficulty assessing the rapidly changing value of our Ordinary Shares. In addition, investors of our Ordinary Shares may experience losses, which may be material, if the price of our Ordinary Shares declines after this offering or if such investors purchase shares of our Ordinary Shares prior to any price decline.

 

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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. Furthermore, the potential extreme volatility may confuse the public investors of the value of our stock, distort the market perception of our stock price and our Company’s financial performance and public image and negatively affect the long-term liquidity of our Ordinary Shares, regardless of our actual or expected operating performance. If we encounter such volatility, including any rapid stock price increases and declines seemingly unrelated to our actual or expected operating performance and financial condition or prospects, it will likely make it difficult and confusing for prospective investors to assess the rapidly changing value of our Ordinary Shares and understand the value thereof.

 

Investors in our Shares and accompanying Warrants will face immediate and substantial dilution in the net tangible book value per Share and may experience future dilution.

 

If you purchase Ordinary Shares and accompanying Warrants in this Offering, you will pay more for your shares than the net tangible book value of your shares. As a result, you will incur immediate dilution of $[      ] per share, representing the difference between the assumed public offering price of $[          ] per share and our estimated as adjusted net tangible book value as of March 31, 2024 of $[        ] per share. Accordingly, should we be liquidated at our book value, you would not receive the full amount of your investment. Please refer to the section titled “Dilution” of this prospectus for more information.

 

We are a “controlled company” within the meaning of the Nasdaq Listing Rules and, as a result, may rely on exemptions from certain corporate governance requirements that provide protection to shareholders of other companies.

 

Upon the completion of the IPO we were, and upon completion of this Offering we will continue to be, a “controlled company” as defined under the Nasdaq Listing Rules because Sapphire Universe will own more than 50% of our total voting power. For so long as we remain a controlled company under that definition, we are permitted to elect to rely, and may rely, on certain exemptions from corporate governance rules, including an exemption from the rule that a majority of our Board of Directors must be independent directors or that we have to establish a nominating committee and a compensation committee composed entirely of independent directors. As a result, you will not have the same protection afforded to shareholders of companies that are subject to these corporate governance requirements. However, we voluntarily have a majority of independent directors and our audit committee will consist of three independent directors.

 

Our Shares may trade under $5.00 per share and thus would be known as “penny stock”. Trading in penny stocks has certain restrictions and these restrictions could negatively affect the price and liquidity of our Shares.

 

Our Shares may trade below $5.00 per share. As a result, our Shares would be known as “penny stock”, which is subject to various regulations involving disclosures to be given to you prior to the purchase of any penny stock. The SEC has adopted regulations which generally define a “penny stock” to be any equity security that has a market price of less than $5.00 per share, subject to certain exceptions. Depending on market fluctuations, our Shares could be considered to be “penny stock”. A penny stock is subject to rules that impose additional sales practice requirements on broker/dealers who sell these securities to persons other than accredited investors. For transactions covered by these rules, the broker/dealer must make a special suitability determination for the purchase of these securities. In addition, a broker/dealer must receive the purchaser’s written consent to the transaction prior to the purchase and must also provide certain written disclosures to the purchaser. Consequently, the “penny stock” rules may restrict the ability of broker/dealers to sell our Shares, and may negatively affect the ability of holders of our Shares to resell them. These disclosures require you to acknowledge that you understand the risks associated with buying penny stocks and that you can absorb the loss of your entire investment. Penny stocks generally do not have a very high trading volume. Consequently, the price of the shares is often volatile and you may not be able to buy or sell your shares when you want to.

 

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The trading price of our Shares following this offering may be subject to rapid and substantial price volatility that 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.

 

The trading price of our Ordinary Shares following this offering may be subject to rapid and substantial price volatility that 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. Our Ordinary Shares may trade at prices higher or lower than the offering price. There have been recent instances of extreme share price run-ups followed by rapid price declines following initial public offerings, with share price volatility seemingly unrelated to company performance, particularly among companies with relatively smaller public floats, and we expect that such instances may continue and/or increase in the future. Contributing to this risk of volatility are a number of factors. We anticipate our Ordinary Shares will initially be held by a relatively limited number of shareholders and thus, are likely to be more sporadically and thinly traded than those of larger, more established companies. As a consequence of this lack of liquidity, the trading of relatively small quantities of Shares by our shareholders may disproportionately influence the price of those Shares in either direction. The price of our Ordinary Shares could, for example, decline precipitously in the event that a large number of our Shares are sold on the market without commensurate demand as compared to a seasoned issuer that could better absorb those sales without adverse impact on its share price. As a consequence of this enhanced risk, more risk-adverse investors may, under the fear of losing all or most of their investment in the event of negative news or lack of progress, be more inclined to sell their Shares on the market more quickly and at greater discounts than would be the case with the shares of a larger, more established company that has a relatively large public float.

 

Many of these factors are beyond our control and may decrease the market price of our Ordinary Shares. Such volatility, including any stock run-ups, may be unrelated or disproportionate 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. Accordingly, you could lose all or part of your investment.

 

There may be circumstances in which the interests of our Major Shareholder(s) could be in conflict with your interests as a Shareholder.

 

Sapphire Universe currently owns 82.06% of our Shares and, upon completion of this Offering, will beneficially own [    ]% of our Shares and voting power. Mr. Kin Wai Ho, our Chairman, currently beneficially owns 52.52% of our Shares through his equity ownership in Sapphire Universe. Messrs. Cyrus Jun Ming Wen currently beneficially own 29.54%, of our Shares through his equity ownership in Sapphire Universe. As a result of this ownership, Messrs. Ho and Wen will have significant control and influence over our affairs and their voting power will constitute a quorum of our Shareholders voting on any matter requiring the approval of our Shareholders. Messrs. Ho and Wen will continue to have significant influence over our affairs for the foreseeable future, including with respect to the nomination and election of Directors, the issuance of additional Shares or payment of dividends, the consummation of significant corporate transactions, such as the adoption of amendments to our Constitution and organizational regulations and approval of mergers or sales of substantially all of our assets.

 

In certain circumstances, the interests of Sapphire Universe as a Major Shareholder, and of each of Messrs. Ho and Wen as significant indirect Shareholders, may conflict with the interests of our other Shareholders. Accordingly, this concentration of ownership may harm the market price of our Shares by, among other things:

 

delaying, defending, or preventing a change of control, even at a per share price that is in excess of the then current price of our Shares;

 

impeding a merger, consolidation, takeover, or other business combination involving us, even at a per share price that is in excess of the then current price of our Shares; or

 

discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of us, even at a per share price that is in excess of the then current price of our Shares.

 

Any of Sapphire Universe, Mr. Ho and Mr. Wen may also cause corporate actions to be taken that conflict with the interests of our other Shareholders.

 

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Future issuance of Shares by us and sale of Shares by our existing Shareholders may adversely affect the price of our Shares.

 

Except as otherwise described in the section titled “Plan of Distribution” of this prospectus, there will be no restriction on the ability of our Shareholders to sell their Shares. In the event we issue, or our Shareholders sell, substantial amounts of our Shares in the public market following this Offering, the price of our Shares may be adversely affected. Any resulting downward pressure on the price of our Shares may also make it difficult for us to issue new Shares and raise the necessary funds in the future at a time and price we deem appropriate. In addition, the price of our Shares may be adversely affected if our Shareholders subject to moratorium sell their Shares upon the expiry of the relevant moratorium periods.

 

We may require additional funding in the form of equity or debt for our future growth which will cause dilution in Shareholders’ equity interest.

 

We may pursue opportunities to grow our business through joint ventures, strategic alliance, acquisitions or investment opportunities, following the Offering. However, there can be no assurance that we will be able to obtain additional funding on terms that are acceptable to us or at all. If we are unable to do so, our future plans and growth may be adversely affected.

 

An issue of Shares or other securities to raise funds will dilute Shareholders’ equity interests and may, in the case of a rights issue, require additional investments by Shareholders. Further, an issue of Shares below the then prevailing market price will also affect the value of Shares then held by investors.

 

Dilution in Shareholders’ equity interests may occur even if the issue of shares is at a premium to the market price. In addition, any additional debt funding may restrict our freedom to operate our business as it may have conditions that:

 

limit our ability to pay dividends or require us to seek consents for the payment of dividends;

 

increase our vulnerability to general adverse economic and industry conditions;

 

require us to dedicate a portion of our cash flow from operations to repayments of our debt, thereby reducing the availability of our cash flow for capital expenditures, working capital and other general corporate purposes; and

 

limit our flexibility in planning for, or reacting to, changes in our business and our industry.

 

The current disruptions, volatility or uncertainty of the credit markets could limit our ability to borrow funds or cause our borrowings to be more expensive in the future. As such, we may be forced to pay unattractive interest rates, thereby increasing our interest expense, decreasing our profitability and reducing our financial flexibility if we take on additional debt financing.

 

Investors may not be able to participate in future issues or certain other equity issues of our Shares.

 

In the event that we issue new Shares, we may be under an obligation to offer those Shares to our existing Shareholders at the time of issue unless the approval of our Shareholders is obtained at a general meeting. If we elect to conduct a rights issue or certain other equity issues, we will have the discretion and may also be subject to certain regulations as to the procedures to be followed in making such rights available to Shareholders or in disposing of such rights for the benefit of such Shareholders and making the net proceeds available to them. In addition, we may not offer such rights to our existing Shareholders having an address in jurisdictions outside of Singapore.

 

Accordingly, certain Shareholders may be unable to participate in future equity offerings by us and may experience dilution in their shareholdings as a result.

 

We may not be able to pay dividends in the future.

 

Subject to the Companies Act and our Constitution, our Board of Directors has complete discretion as to whether to declare and distribute dividends. Our ability to declare dividends to our Shareholders in the future will be contingent on multiple factors, including our future financial performance, distributable reserves of our Company, current and anticipated cash needs, capital requirements, our ability to implement our future plans, contractual, legal and tax restrictions, regulatory, competitive, technical and other factors such as general economic conditions, demand for and selling prices of our products and services, the ability of our subsidiaries to distribute funds to us, and other factors exclusive to the facilities services industry. Our existing and future loan arrangements with any financial institutions may also limit when and how much dividends we can declare and pay out. Any of these factors could have a material adverse effect on our business, financial position and results of operations, and hence there is no assurance that we will be able to pay dividends to our Shareholders after the completion of the Offering.

 

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If we fail to meet applicable listing requirements, Nasdaq may delist our Shares from trading, in which case the liquidity and market price of our Shares could decline.

 

We cannot assure you that we will continue to be able to meet the continued listing standards of Nasdaq in the future. If we fail to comply with the applicable listing standards and Nasdaq delists our Shares, we and our Shareholders could face significant material adverse consequences, including:

 

a limited availability of market quotations for our Shares;

 

reduced liquidity for our Shares;

 

a determination that our Shares are “penny stock”, which would require brokers trading in our Shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our Shares;

 

a limited amount of news about us and analyst coverage of us; and

 

a decreased ability for us to issue additional equity securities or obtain additional equity or debt financing in the future.

 

The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or pre-empts the states from regulating the sale of certain securities, which are referred to as “covered securities.” Because we expect that our Shares will be listed on Nasdaq, such securities will be covered securities. Although the states are pre-empted from regulating the sale of our securities, the federal statute 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 the sale of covered securities in a particular case. Further, if we were no longer listed on Nasdaq, our securities would not be covered securities and we would be subject to regulations in each state in which we offer our securities.

 

The Resale by the Selling Shareholder may cause the market price of our Ordinary Shares to decline.

 

The resale of Ordinary Shares by the Selling Shareholder, as well as the issuance of Ordinary Shares in the IPO, could result in resales of our Ordinary Shares by our current shareholders concerned about the potential dilution of their holdings. In addition, the resale by the Selling Shareholder could have the effect of depressing the market price for our Ordinary Shares.

 

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 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 remain 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. We do not plan to “opt out” of such exemptions afforded to an emerging growth company. As a result of this election, our financial statements may not be comparable to those of companies that comply with public company effective dates.

 

We qualify as a foreign private issuer and, as a result, we will not be subject to U.S. proxy rules and will be subject to Exchange Act reporting obligations that permit less detailed and less frequent reporting than that of a U.S. domestic public company.

 

Upon the closing of the IPO, we have been reporting under the Exchange Act as a non-U.S. company with foreign private issuer status. Because 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 (i) the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; (ii) 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 (iii) the rules under the Exchange Act requiring the filing with 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. In addition, our officers, Directors and principal Shareholders are exempt from the reporting and “short-swing” profit recovery provisions of Section 16 of the Exchange Act and the rules thereunder. Therefore, our Shareholders may not know on a timely basis when our officers, directors and principal Shareholders purchase or sell our Shares. In addition, foreign private issuers are not required to file their annual report on Form 20-F until one hundred twenty (120) days after the end of each fiscal year, while U.S. domestic issuers that are accelerated filers are required to file their annual report on Form 10-K within seventy-five (75) days after the end of each fiscal year. Foreign private issuers also are exempt from Regulation Fair Disclosure, aimed at preventing issuers from making selective disclosures of material information. As a result of the above, you may not have the same protections afforded to shareholders of companies that are not foreign private issuers.

 

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If we lose our status as a foreign private issuer, we would be required to comply with the Exchange Act reporting and other requirements applicable to U.S. domestic issuers, which are more detailed and extensive than the requirements for foreign private issuers. We may also be required to make changes in our corporate governance practices in accordance with various SEC and Nasdaq rules. The regulatory and compliance costs to us under U.S. securities laws if we are required to comply with the reporting requirements applicable to a U.S. domestic issuer may be significantly higher than the cost we would incur as a foreign private issuer. As a result, we expect that a loss of foreign private issuer status would increase our legal and financial compliance costs and would make some activities highly time consuming and costly. We also expect that if we were required to comply with the rules and regulations applicable to U.S. domestic issuers, it would make it more difficult and expensive for us to obtain and maintain directors and officers liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These rules and regulations could also make it more difficult for us to attract and retain qualified members of our Board of Directors.

 

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

 

As discussed above, we are a foreign private issuer, and therefore, we are not required to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act. The determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter. We would lose our foreign private issuer status if, for example, more than 50% of our Shares are directly or indirectly held by residents of the United States and we fail to meet additional requirements necessary to maintain our foreign private issuer status. If we lose our foreign private issuer status on this date, 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 mandatorily comply with U.S. federal proxy requirements, and our officers, Directors and Major 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 Nasdaq rules. 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, and accounting, reporting and other expenses in order to maintain a listing on a U.S. securities exchange.

 

There can be no assurance that we will not be a passive foreign investment company, or PFIC, for U.S. federal income tax purposes for any taxable year, which could result in adverse U.S. federal income tax consequences to U.S. holders of our Shares.

 

A non-U.S. corporation will be a PFIC for any taxable year if either (i) at least 75% of its gross income for such year consists of certain types of “passive” income; or (ii) at least 50% of the value of its assets (based on an average of the quarterly values of the assets, and looking through certain 25% or more-owned subsidiaries) during such year is attributable to assets that produce passive income or are held for the production of passive income, or the asset test. Based on our current and expected income and assets (taking into account the expected cash proceeds and our anticipated market capitalization following this Offering), we do not presently expect to be a PFIC for the current taxable year or the foreseeable future. However, no assurance can be given in this regard because the determination of whether we are or will become a PFIC is a fact-intensive inquiry made on an annual basis that depends, in part, upon the composition of our income and assets. In addition, there can be no assurance that the Internal Revenue Service, or IRS, will agree with our conclusion or that the IRS would not successfully challenge our position. Fluctuations in the market price of our Shares may cause us to become a PFIC for the current or subsequent taxable years because the value of our assets for the purpose of the asset test may be determined by reference to the market price of our Shares. The composition of our income and assets may also be affected by how, and how quickly, we use our liquid assets and the cash raised in this Offering. If we were to be or become a PFIC for any taxable year during which a U.S. Holder holds our Shares, certain adverse U.S. federal income tax consequences could apply to such U.S. Holder. See section titled “Taxation — Certain United States Federal Income Tax Considerations” of this prospectus.

 

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There is no required minimum number of securities that must be sold as a condition to completion of this offering, and we have not, nor will we, establish an escrow account in connection with this offering. Because there is no minimum offering amount required as a condition to the closing of this offering, the actual offering amount, the Placement Agent fees and proceeds to us are not presently determinable and may be substantially less than the maximum amounts set forth herein. Because there is no escrow account and no minimum offering amount, investors could be in a position where they have invested in us, but we are unable to fulfill our objectives due to a lack of interest in this offering. Further, because there is no escrow account in operation and no minimum investment amount, any proceeds from the sale of securities offered by us will be available for our immediate use, despite uncertainty about whether we would be able to use such funds to effectively implement our business plan. Investor funds will not be returned under any circumstances whether during or after the offering.

 

There is no public market for the Warrants sold in this offering.

 

There is no established public trading market for the Warrants being sold in this offering. We will not list the Warrants on any securities exchange or nationally recognized trading system, including Nasdaq. Therefore, we do not expect a market to ever develop for the Warrants. Without an active market, the liquidity of the Warrants will be limited.

 

The Warrants are speculative in nature. Holders of the Warrants offered hereby will have no rights as shareholders with respect to our Ordinary Shares underlying such warrants until such holders exercise their warrants and acquire our Ordinary Shares, except as otherwise provided in the Warrants.

 

The Warrants do not confer any rights of Ordinary Share ownership on their holders, such as voting rights or the right to receive dividends, but merely represent the right to acquire shares of Ordinary Shares at a fixed price. Commencing on the date of issuance, holders of the Warrants may exercise their right to acquire the underlying Ordinary Shares and pay the stated warrant exercise price per share. Following this offering, the market value of the Warrants is uncertain and there can be no assurance that the market value of the Warrants, if any, will equal or exceed their combined public offering prices. There can be no assurance that the market price of the Ordinary Shares will ever equal or exceed the exercise price of the Warrants, and consequently, whether it will ever be profitable for holders of Warrants to exercise the Warrants.

 

Until holders of the Pre Warrants acquire shares of our Ordinary Shares upon exercise thereof, holders of such Warrants will have no rights with respect to shares of our Ordinary Shares, except as provided in the Warrants, respectively. Upon exercise of the Warrants, such holders will be entitled to the rights of a shareholder only as to matters for which the record date occurs after the exercise date.

 

We will have broad discretion in the use of proceeds of this Offering.

 

We currently intend to use the net proceeds from this Offering for investing, establishment our team of software developers, programmers, and engineers on research and development, and manufacturing, of cleaning robots and for working capital and other general corporate purposes. Our management will have broad discretion over the use and investment of the net proceeds of this Offering within and also potentially among those categories. Accordingly, investors in this Offering have only limited information concerning management’s specific intentions and will need to rely upon the judgment of our management with respect to the use of proceeds.

 

We have not determined a specific use for a portion of the net proceeds of this Offering now earmarked for working capital and other general corporate purposes, and our management will have considerable discretion in deciding how to apply these proceeds, including for any of the purposes described in the section entitled “Use of Proceeds”. Because of the number and variability of factors that will determine our full use of our net proceeds from this Offering, their ultimate use may vary substantially from their currently intended use. This creates uncertainty for our Shareholders and could adversely affect our Company’s business, prospects, financial condition and results of operations. You will not have the opportunity to assess whether the proceeds are being used appropriately before you make your investment decision. You must rely on the judgment of our management regarding the application of the net proceeds of this Offering. We cannot assure you that the net proceeds will be used in a manner that would improve our results of operations or increase the share price, nor that these net proceeds will be placed only in investments that generate income or appreciate in value.

 

Securities analysts may not publish favorable research or reports about our business or may publish no information at all, which could cause our stock price or trading volume to decline.

 

If a trading market for our securities develops, the trading market will be influenced to some extent by the research and reports that industry or financial analysts publish about us and our business. We do not control these analysts. As a newly public company, we may be slow to attract research coverage and the analysts who publish information about our securities will have had relatively little experience with us or our industry, which could affect their ability to accurately forecast our results and could make it more likely that we fail to meet their estimates. In the event we obtain securities or industry analyst coverage, if any of the analysts who cover us provide inaccurate or unfavorable research or issue an adverse opinion regarding our stock price, our stock price could decline. If one or more of these analysts cease coverage of us or fail to publish reports covering us regularly, we could lose visibility in the market, which in turn could cause our stock price or trading volume to decline and result in the loss of all or a part of your investment in us.

 

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This prospectus contains forward-looking statements that involve risks and uncertainties. All statements other than statements of current or historical facts are forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors, including those listed under “Risk Factors,” that may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements.

 

In some cases, you can identify these forward-looking statements by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “likely to” or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements include statements about:

 

changes in political, social and economic conditions, the regulatory environment, laws and regulations and interpretation thereof in the jurisdictions where we conduct business or expect to conduct business;

 

the risk that we may be unable to realize our anticipated growth strategies and expected internal growth;

 

changes in the availability and cost of professional staff which we require to operate our business;

 

changes in customers’ preferences and needs;

 

changes in competitive conditions and our ability to compete under such conditions;

 

changes in our future capital needs and the availability of financing and capital to fund such needs;

 

changes in currency exchange rates or interest rates;

 

projections of revenue, earnings, capital structure and other financial items;

 

changes in our plan to enter into certain new business sectors; and

 

other factors beyond our control.

 

You should read this prospectus and the documents that we refer to in this prospectus with the understanding that our actual future results may be materially different from and worse than what we expect. Other sections of this prospectus include additional factors which could adversely impact our business and financial performance. Moreover, we operate in an evolving environment. New risk factors and uncertainties emerge from time to time and it is not possible for our management to predict all risk factors and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We qualify all of our forward-looking statements by these cautionary statements.

 

You should not rely upon forward-looking statements as predictions of future events. 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 any forward-looking statements, whether as a result of new information, future events or otherwise. You should read this prospectus and the documents that we refer to 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 may be materially different from what we expect.

 

This prospectus also contains statistical data and estimates that we obtained from industry publications and reports generated by government or third-party providers of market intelligence. Although we have not independently verified the data, we believe that the publications and reports are reliable.

 

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USE OF PROCEEDS

 

We estimate that we will receive net proceeds from this Offering of approximately $8.8 million, based upon an assumed combined public offering price of $[  ] per Ordinary Share and accompanying Warrants (which is the last reported sale price of our Common Stock on Nasdaq on October 11, 2024), after deducting placement agent fees and estimated offering expenses payable by us.

 

However, because this is a best efforts offering with no minimum number of securities or amount of proceeds as a condition to closing, the actual offering amount, Placement Agent fees, and net proceeds to us are not presently determinable and may be substantially less than the maximum amounts set forth on the cover page of this prospectus, and we may not sell all or any of the securities we are offering. As a result, we may receive significantly less in net proceeds. Based on the assumed offering price set forth above, we estimate that our net proceeds from the sale of 75%, 50%, and 25% of the securities offered in this offering would be approximately $6.5 million, $4.2 million, and $1.9 million, respectively, after deducting the Placement Agent fees and estimated offering expenses payable by us, and assuming no exercise of the Warrants and Placement Agent Warrants. We will only receive additional proceeds from the exercise of the Placement Agent Warrants and Warrants we are issuing in this offering if the Placement Agent Warrants and the Warrants are exercised for cash. We cannot predict when or if the Placement Agent Warrants or the Warrants will be exercised. It is possible that these warrants may expire and may never be exercised.

 

These estimates exclude the proceeds, if any, from the exercise of Warrants offered hereby. If all of the Warrants offered hereby were to be exercised in cash at the exercise price of $[  ] per share, we would receive additional proceeds of approximately $[  ] million. We cannot predict when or if these Warrants will be exercised. It is possible that these Warrants may expire and may never be exercised. Additionally, these Warrants contain a cashless exercise provision that permit exercise of such Warrants on a cashless basis at any time when there is no effective registration statement under the Securities Act covering the issuance of the underlying shares.

 

These estimates also exclude the proceeds, if any, from the exercise of Placement Agent Warrants to be issued to the Placement Agent or its designees as compensation in connection with this offering. If all of the Placement Agent Warrants were to be exercised in cash at the exercise price of $[  ] per share, we would receive additional proceeds of approximately $[  ] million. We cannot predict when or if these Placement Agent Warrants will be exercised. It is possible that these Placement Agent Warrants may expire and may never be exercised. Additionally, these Placement Agent Warrants contain a cashless exercise provision that permit exercise of such Placement Agent Warrants on a cashless basis at any time when there is no effective registration statement under the Securities Act covering the issuance of the underlying shares.

 

We plan to use the net proceeds of this Offering in the following order of priority:

 

Approximately $6.6 million for investment, establishment our team of software developers, programmers, and engineers on research and development, and manufacturing, of cleaning robots.

 

Approximately $2.2 million for working capital and other general corporate purposes.

 

To the extent that our actual net proceeds is not sufficient to fund all of the proposed purposes, we will decrease our allocation of the net proceeds for the purposes set out above on a pro rata basis. We would anticipate raising additional capital through equity or debt financing sufficient to fund our proposed uses above.

 

The amounts and timing of any expenditures will vary depending on the amount of cash generated by our operations, and the rate of growth, if any, of our business, and our plans and business conditions. The foregoing represents our current intentions based upon our present plans and business conditions to use and allocate the net proceeds of this Offering. Our management will have significant flexibility in applying and discretion to apply the net proceeds of this Offering. If an unforeseen event occurs or business conditions change, we may use the proceeds of this Offering differently than as described in this prospectus.

 

Pending deployment of the net proceeds for the uses described above, the funds may be placed in short-term deposits with financial institutions or used to invest in short-term money market instruments.

 

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DIVIDEND POLICY

 

We have no formal dividend policy. We currently intend to retain all available funds and any future earnings to fund the development and growth of our business and to repay indebtedness and, therefore, we do not anticipate paying any cash dividends in the foreseeable future. Additionally, our ability to pay dividends on our Shares is limited by various factors such as our future financial performance and bank covenants. Any future determination to pay dividends will be at the discretion of our Board of Directors, subject to compliance with covenants in current and future agreements governing our and our subsidiaries’ indebtedness, and will depend on our results of operations, financial condition, capital requirements and other factors that our Board of Directors may deem relevant.

 

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CAPITALIZATION

 

The following tables set forth our capitalization as of March 31, 2024:

 

on an actual basis; and

 

on a pro forma as adjusted basis to reflect the issuance and sale of [*] shares at an assumed combined public offering price of $[*] per share and accompanying warrants after deducting the placement agent fees and estimated offering expenses payable by us.

 

You should read the tables together with our consolidated financial statements and the related notes included elsewhere in this prospectus and the information under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

 

   As of March 31, 2024 
(in thousands except share data, U.S. dollars)  Actual   As Adjusted 
   (in US$’000) 
Cash:  $7,648    16,463 
Notes payable   16,982    16,982 
Equity:          
Ordinary shares, 35,550,000 ordinary shares outstanding on an actual basis; and [      ] ordinary shares outstanding on an as adjusted basis(1)   22,193    31,008 
Additional paid-in capital   924    924 
Accumulated comprehensive income   923    923 
Accumulated deficit   (9,049)   (9,049)
Total equity   14,991    23,806 
Non-controlling interest   68    68 
Total shareholders’ equity   15,059    23,874 
Total capitalization  $32,041    40,856 

 

 

(1)Pro forma additional paid in capital reflects the net proceeds we expect to receive, after deducting the placement agent fee, placement agent expense allowance and other expenses. We expect to receive net proceeds of approximately $8,815,000 (offering proceeds of $10,000,000, less placement agent commissions of $750,000 and offering expenses of $435,000). The ordinary shares reflects the net proceeds we expect to receive, after deducting the placement agent commissions, placement agent expense allowance and other expenses.

 

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DILUTION

 

If you invest in our Shares, your interest will be diluted to the extent of the difference between the Offer Price per share and our net tangible book value per share after this Offering. Dilution results from the fact that the Offering Price per ordinary share is substantially in excess of the book value per ordinary share attributable to the existing Shareholders for our presently outstanding shares.

 

Net tangible book value represents the amount of our total assets, excluding goodwill and other intangible assets, less our total liabilities. Our net tangible book value as of March 31, 2024 was approximately US$14,371,000, or US$0.40 per ordinary share.

 

After giving effect to the issuance and sale of [*] Shares in this Offering at an assumed public offering price of US$[*] per share, and after deducting placement agent commissions and estimated offering expenses payable by us, our pro forma as adjusted net tangible book value as of March 31, 2024 would have been US$[*] per outstanding ordinary share. This represents an immediate increase in net tangible book value of US$[*] per share to existing shareholders and an immediate dilution in net tangible book value of US$[*] per ordinary share to investors purchasing Shares in this Offering. The following table illustrates such dilution:

 

 Per Ordinary
Share
Offering priceUS$ [      ]
Net tangible book value as of March 31, 2024US$ 0.40
Pro forma net tangible book value after giving effect to this OfferingUS$ [      ]
Amount of dilution in net tangible book value to investors in this OfferingUS$ [      ]

 

A $1.00 change in the assumed public offering price of $[       ] per share, which is based on the estimated public offering price set forth on the cover page of this prospectus, would increase (decrease), in the case of an increase (decrease), our pro forma as adjusted net tangible book value after giving effect to this offering by approximately $[        ] million, the pro forma as adjusted net tangible book value per ordinary share after giving effect to this offering by $[        ] per ordinary share and the dilution in pro forma as adjusted net tangible book value per ordinary share to new investors in this offering by $[        ] per ordinary share, assuming no change to the number of ordinary shares offered by us as set forth on the cover page of this prospectus, and after deducting the Placement Agent’s discounts and commissions and other offering expenses.

 

The following table summarizes, on a pro forma as adjusted basis as of March 31, 2024, the total number of Shares purchased from us, the total cash consideration paid to us, and the average price per share paid by existing Shareholders and by investors in this Offering. The table below reflects the offering price of US$[*] per share, for Shares purchased in this Offering and excludes placement agent commission and commissions and estimated offering expenses payable by us.

 

   Shares
Purchased
   Total
Consideration
   Average Price
per Share
 
   Number   %   US$   %   US$ 
Existing Shareholders   35,550,000    [   ]    0    0.0    0.00 
Investors in this Offering   [   ]    [   ]    [   ]    100.0    [   ] 
Total   [   ]    100.0    [   ]    100.0    [   ] 

 

The dilution information in this section is presented for illustrative purposes only. Our as adjusted net tangible book value following the consummation of this Offering is subject to adjustment based on the actual public offering price of our Shares and other terms of this Offering determined at pricing.

 

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SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA

 

The following selected consolidated balance sheet data as of March 31, 2024 and 2023 and selected consolidated statements of operations data for the year ended March, 2024 and 2023 which have been derived from our financial statements included elsewhere in this prospectus. Our consolidated financial statements are prepared and presented in accordance with GAAP. You should read this “Selected Consolidated Financial and Operating Data” section together with our consolidated financial statements and the related notes and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section included elsewhere in this prospectus.

 

(in thousand dollars)  As of
March 31,
2024
   As of
March 31,
2023
 
   (Audited)   (Audited) 
Balance Sheets Data        
Current Assets  $31,333   $27,436 
Non-Current Assets   14,176    15,387 
Total assets  $45,509   $42,823 
           
Current liabilities  $22,742   $24,522 
Non-Current liabilities   7,708    9,468 
Shareholders’ equity   15,059    8,833 
Total liabilities and shareholders’ equity  $45,509   $42,823 

 

   For the Years Ended
March 31,
 
(in thousand dollars)  2024   2023 
Statements of Operations Data        
Revenues  $72,524   $69,026 
           
Operating costs and expenses          
Cost of revenue   (59,915)   (58,410)
General and administrative expenses   (13,160)   (12,304)
Sales and marketing expenses   (2,231)   (279)
Goodwill impairment   -    (138)
Loss from operations   (2,782)   (2,105)
Other income and expense, net   211    271 
Interest expense   (1,145)   (723)
Loss before income taxes   (3,716)   (2,557)
Net loss  $(3,223)  $(2,547)

 

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the section of this prospectus titled “Summary Financial Information” and the Company’s consolidated financial statements and related notes appearing elsewhere in this prospectus. In addition to historical information, this discussion and analysis here and throughout this prospectus contains forward-looking statements that involve risks, uncertainties and assumptions. The Company’s actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those set forth under “Risk Factors” and elsewhere in this prospectus.

 

History and Overview

 

Our Company was incorporated on December 29, 2020 as a private company limited by shares under the name “Primech Holdings Pte. Ltd.” On May 11, 2023, our Company changed its corporate name to “Primech Holdings Ltd.”, so as to remove the designation “Pte.” which is used only for privately held companies under Singapore law, and adopted a constitution for a public company under Singapore law.

 

Our Company is a holding company that owns 100% of Primech A&P, Pte. Ltd. (“Primech A&P”), Primech AI Holdings Limited (“Primech AI Holdings”), Primech Hong Kong Limited, Acteef Cleaning Specialist Pte. Ltd., Maint-Kleen Pte. Ltd., HomeHelpy Singapore Pte. Ltd. and Princeston International (S) Pte. Ltd.. Primech A&P owns 100% of our Malaysian subsidiary My All Services and Primech AI Holdings 51% of Primech AI Investmetns Limited and Primech AI Pte. Ltd. Our Company also owns 80% of CSG.

 

We are an established facilities and stewarding services provider in the public and private sectors. We operate primarily in Singapore which operations contributed approximately $72.0 million or 99.3% and approximately $68.3 million or 98.9% of our total revenue for FY 2024 and FY 2023, respectively, with the remainder from our operations in Malaysia and sales of products.

 

Summary of Service Offerings

 

Facilities Services

 

Our facilities services include general cleaning and maintenance of public and private facilities, such as airports, conservancy areas (i.e., the public areas, refuse disposal, parks and carparks of public housing units), common areas of hotels, educational institutions, public roads, residential spaces, commercial buildings, office facilities, industrial areas, retail stores and healthcare facilities; housekeeping services; specialized cleaning services, such as marble polishing services, building façade cleaning services and clean room sanitation services; and waste management services and pest control services.

 

Stewarding Services

 

Our stewarding services include the cleaning of kitchen facilities of healthcare facilities, hotels and restaurants and the supply of ad hoc customer service officers and F&B service crew to healthcare facilities, hotels and restaurants.

 

Cleaning Services to Offices and Homes and Manufacturing of Cleaning Supplies

 

In addition to our core facilities services, we provide cleaning services to offices. We also provide cleaning services to homes of individual customers which engage our services through our “HomeHelpy” application. In addition, through CSG and Princeston International, we manufacture certain cleaning supplies, both for our own use and for sale to third parties.

 

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Fiscal Years Ended 31 March, 2024 and 2023

 

Facilities Services

 

We derive the majority of our revenue from the provision of facilities services, which accounted for approximately $56.0 million or 77.2% of our revenue in FY 2024 and approximately $55.8 million or 80.8% of our revenue in FY 2023.

 

Stewarding Services

 

Stewarding services accounted for approximately $10.2 million or 14.0% of our revenue in FY 2024 and approximately $7.6 million or 11.0% of our revenue in FY 2023.

 

Cleaning Services to Offices

 

The provision of office cleaning services accounted for approximately $5.9 million or 8.1% of our revenue in FY 2024 and $4.9 million or 7.1% of our revenue in FY 2023.

 

Cleaning Services to Homes

 

We did not generate significant revenue from our HomeHelpy homes cleaning services to homes during FY 2024 and FY 2023.

 

Concentration of Risk

 

Substantially all of our revenue was derived from our operations in Singapore and a substantial portion of our revenue was derived from our facilities services operations (approximately $56.0 million or 77.2% during FY 2024 and approximately $55.8 million or 80.8% during FY 2023). Any adverse circumstances affecting the Singapore market, such as an economic recession, epidemic outbreak or natural disaster or other adverse incidents may adversely affect our business, financial condition, results of operations and prospects. Any downturn in our industry that results in any postponement, delay or cancellation of our contracts or in any delay in recovery of our receivables is likely to have an adverse effect on our business and profitability.

 

For the year ended March 31, 2024, one customer accounted for 10.0% of our total revenue and no customer accounted over 10% our accounts receivable.

 

For the year ended March 31, 2023, one customer accounted for 10.4% of our total revenue and one customer accounted for 12.1% of our accounts receivable.

 

Critical Accounting Policies

 

Management’s discussion and analysis of our results of operations, liquidity and capital resources is based upon our financial statements. We prepare our financial statements in conformity with GAAP. Certain of our accounting policies require that we apply significant judgment in determining estimates and assumptions for calculating estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. We use, in part, our historical experience, terms of existing contracts, observance of trends in the industry and information obtained from independent valuation experts or other outside sources to make our judgments. We cannot assure you that our actual results will conform to our estimates. We regularly evaluate these estimates and assumptions, particularly in areas we consider to be critical accounting estimates, where changes in estimates and assumptions could have a material impact on our results of operations, financial position and, generally to a lesser extent, cash flows.

 

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The following critical accounting policies affect the more significant judgments and estimates used in the preparation of the Company’s financial statements.

 

Use of estimates

 

The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates. On an ongoing basis, management reviews its estimates and, if deemed appropriate, those estimates are adjusted. Significant estimates include those related to assumptions used in valuing reserves of uncollectible accounts receivable, assumptions used in valuing assets acquired in business acquisitions, impairment testing of goodwill and other long-term assets, the valuation allowance for deferred tax assets, accruals for potential liabilities, and assumptions used in the determination of the Company’s liquidity.

 

Revenue Recognition

 

The Company recognizes revenue in accordance with FASB Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers (“ASC 606”). The underlying principle of ASC 606 is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contract(s), which include (1) identifying the contract or agreement with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied.

 

For any service contracts where the performance obligation is not completed, deferred revenue is recorded for any payments received in advance of the performance obligation.

 

Government subsidies

 

Government subsidies are not recognized until there is reasonable assurance that the Company will comply with the conditions of the subsidy and the Company will receive the subsidy. Generally, government subsidies fall into two categories: subsidies related to income and subsidies related to assets. Subsidies related to income are recognized in the period that the recognition criteria are met, and are presented as a reduction of the related expense that they are intended to subsidize within operating expenses in the consolidated statements of operations and comprehensive income. Subsidies related to assets are for the purchase, construction or other acquisition of long-lived assets and are recognized as reductions to the capitalized costs of the related assets.

 

Recent accounting pronouncements

 

See Note 1 to the financial statements for the discussion of recent accounting pronouncements.

 

The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the consolidated financial position, statements of operations and cash flows.

 

Plan of Operation

 

Currently our Company is primarily a facility services provider, with a focus on general cleaning services. Moving forward, we intend to provide a full suite of services in the facility services sector through constant innovation focusing on automation and digitization.

 

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Results of Operations

 

Fiscal Year Ended March 31, 2024 and 2023

 

The following discussion summarizes our operating results for FY 2024 compared to FY 2023.

 

   Year Ended March 31,   Change 
(thousand dollars)  2024   2023   Dollars   Percentage 
Revenue  $72,524   $69,026   $3,498    5.1%
                     
Direct Costs and Expenses                    
Depreciation and amortization   (925)   (945)   20    (2.1)%
Employee benefit expense – Salaries   (41,827)   (40,149)   (1,678)   4.2%
Employee benefit expenses – Other   (9,331)   (9,026)   (305)   3.4%
Subcontractor charges   (2,697)   (2,988)   291    (9.7)%
Other expense   (5,135)   (5,302)   167    (3.1)%
    (59,915)   (58,410)   (1,505)   2.6%
General and administrative Expenses                    
Depreciation and amortization   (2,945)   (2,703)   (242)   9.0%
Employee benefit expense – Salaries   (5,420)   (5,655)   235    (4.2)%
Consultancy and other professional fees   (1,923)   (1,167)   (756)   64.8%
Other expense   (2,872)   (2,779)   (93)   3.3%
    (13,160)   (12,304)   (856)   7.0%
Goodwill impairment   -    (138)   (138)   (100)%
Sales and marketing expenses   (2,231)   (279)   (1,952)   699.6%
Interest expense   (1,145)   (723)   (422)   58.4%
Income tax benefit   493    10    483    4830.0%
Other operating income, net   211    271    (60)   (22.1)%
Net loss  $(3,223)  $(2,547)  $(676)   26.5%

 

Discussion For the Fiscal Years Ended March 31, 2024 and 2023

 

Revenue

 

The Company’s revenues for FY 2024 and FY 2023 were approximately $72.5 million and $69.0 million, respectively, representing an increase of approximately 5.1%. The increase was mainly driven by new customers affiliated with the Singaporean government during the reporting period in our facilities services segment.

 

(thousand dollars)  For the Years Ended
March 31,
 
Revenue by category  2024   2023 
Facilities services  $56,016   $55,755 
Stewarding services   10,156    7,599 
Cleaning services to offices (tenancy)   5,870    4,899 
Total service revenues from Singapore   72,042    68,253 
Other service revenues from Malaysia   53    265 
Revenue by product – Other product   429    508 
   $72,524   $69,026 

 

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Revenue from facilities services increased from approximately $55.8 million for FY 2023 to approximately $56.0 million for FY 2024. The increase was mainly driven by increase in revenue from Singapore Changi Airport as we commenced our service for the airside of Singapore Changi Airport on November 1, 2023.

 

Revenue from stewarding services increased from approximately $7.6 million for FY 2023 to approximately $10.2 million for FY 2024 and revenue from cleaning services to offices increased from approximately $4.9 million for FY 2023 to approximately $5.9 million for FY 2024. The increase was mainly due to the removal of most of COVID-19 travel restrictions by the Singapore government since April 2022, leading to recovery in the hospitality sector as well as employees returning to offices, which resulted in an increase in demand of our stewarding services and cleaning services to offices.

 

Direct costs and expenses

 

Direct costs and expenses for FY 2024 and FY 2023 were approximately $59.9 million and $58.4 million, respectively, representing an approximate increase of 2.6%. Labor costs contributed approximately 85.4% and 84.2% of our direct costs for FY 2024 and FY 2023, respectively, amounting to approximately $51.2 million and $49.2 million, respectively, where employee benefit expense — salaries was the largest component of labor costs for both years. Approximately $2.6 million and $4.2 million in Singapore government grants were netted against our direct costs and expenses in FY 2024 and FY 2023, respectively. The increase of direct costs and expenses was driven by the following items.

 

Depreciation and amortization

 

Depreciation and amortization charges relating to direct costs remained stable for FY 2024 and FY 2023, were approximately $925,000 and $945,000, respectively, representing an approximate increase of 2.1% year over year.

 

Employee benefit expense — Salaries

 

Employee benefit expenses were approximately 85.4% and 84.2% of our direct costs for FY 2024 and FY 2023, respectively. Employee benefit expense mainly represents salaries, contributions to provident fund and allowances paid to employees, of which salaries accounted for the largest portion of employee benefit expenses. Salaries relating to direct costs and expenses for FY 2024 and FY 2023 were approximately $41.8 million and $40.1 million, respectively, representing an approximate increase of 4.2%. Such increase was driven by increase in labor costs as we provided services to more customers and increase in worker’s wages under the Progressive Wage Model (“PWM”). Government grants of approximately $2.6 million and 4.2 million, were netted against our Employee benefit expense — Salaries under direct costs and expenses in FY 2024 and FY 2023 respectively.

 

Subcontractor charges

 

Subcontractor charges for FY 2024 and FY 2023 were approximately $2.7 million and $3.0 million, respectively, representing an approximate decrease of 9.7%. Such decrease was caused by the increase in projects serviced by our staff, which lead to a decrease in need of service from third party service providers.

 

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General and Administrative expenses

 

General and administrative expenses for FY 2024 and FY 2023 were approximately $13.2 million and $12.3 million, respectively, representing an approximate increase of 7.0%. Approximately $0.1 million and $0.2 million of government grants were set-off against our general and administrative expenses in FY 2024 and FY 2023, respectively. The increase in our general and administrative expenses was explained by the following items.

 

Depreciation and amortization

 

Depreciation and amortization charges relating to general and administrative expenses for FY 2024 and FY 2023 were approximately $2.9 million and $2.7 million, respectively, representing an approximate increase of 9.0%. Such increase was driven by additional depreciation on right-of use assets.

 

Employee benefit expense — Salaries

 

Employee benefit expense mainly represents salaries, contribution to provident fund and allowances paid to employee, which salaries accounted for the majority portion of employee benefit expenses. Salaries relating to general and administrative expenses for FY 2024 and FY 2023 were approximately $5.4 million and $5.7 million, respectively, representing an approximate decrease of 4.2%. The management has been implementing policies to control the overall expense.

 

Consultancy and other professional fees

 

Other professional fees for FY 2024 and FY 2023 were approximately $1.9 million and $1.2 million, respectively, representing an approximate increase of 64.8%. The increase mainly resulted from engagement of consultants and professionals post IPO.

 

Sales and Marketing Expenses

 

Sales and marketing expenses mainly represent advertising expenses; such charges for FY 2024 and FY 2023 were approximately $2.2 million and $279,000, respectively, representing an approximate 7 times increase. Such increase was resulted from the marketing campaign in Asia after the IPO to increase the recognition of “Primech” brand.

 

Other operating income, net

 

Other operating income, net mainly represent rental income and interest income, they are partly off-set by other operating expenses such as trademark and license fees and fees to other information technology services providers. Other operating income, net for FY 2024 and FY 2023 were approximately $211,000 and $271,000, respectively, representing an approximate decrease of 22.1%. Such decrease was mainly resulted decrease in gain from disposal of property and equipment.

 

Interest expense

 

Interest expense mainly represent interest on bank borrowings and lease liabilities; such charges for FY 2024 and FY 2023 were approximately $1.1 million and $723,000, respectively, representing an approximate increase of 58.4%. Such increase was driven by increase in interest rate.

 

Income tax benefit

 

Income tax benefit were approximately $493,000 for FY 2024, mainly represent reversal of deferred tax in respect of amortization of intangible assets during the period. Income tax benefit were approximately $10,000 for FY 2023, mainly represents reversal of tax payable to the government of Singapore.

 

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Discussion For the Fiscal Years Ended 31 March, 2024 and 2023

 

Liquidity and Capital Resources

 

The Group and a registered financial institution under the Monetary Authority of Singapore (the “Lender”) are parties to a temporary bridge loan dated October 21, 2020 (supplemented May 5, 2021, August 3, 2021, July 26, 2022 and July 28, 2023). The aggregate amount of this loan outstanding at March 31, 2024 is approximately $1.9 million (S$2.5 million).

 

The Group and the Lender are parties to four overdraft facilities dated August 6, 2019; July 14, 2022, July 20, 2022 and July 26, 2022 (supplemented February 10, 2023 and July 28, 2023), respectively. The aggregate amount of the overdraft facilities is approximately $6.6 million (S$8.8 million), of which $5.8 million (S$7.8 million) was outstanding at March 31, 2024.

 

These loans bear interest at a rate that ranges from 2.0% to 6.7% per annum. These loans and are secured by debentures over assets and several guarantees from Sapphire Universe, certain Executive Officers and one or more Major Shareholders for an unlimited amount. See section titled “Related Party Transactions”.

 

We are a party to a “with recourse” receivable purchase facility dated July 20, 2018 (supplemented September 28, 2021 and August 15, 2022) and July 23, 2020 (supplemented August 18, 2022) with the Lender pursuant to which Primech A & P and Maint-Kleen agreed to sell to the Lender, and the Lender agreed to purchase from the subsidiary, certain receivables owing from customers. All amounts due under the terms of the Facility, totaling up to approximately $7.4 million (S$9.8 million), are guaranteed by security over receivables; debentures over assets and several personal guarantees for an unlimited amount. The outstanding balance under this loan at March 31, 2024 was approximately $4.0 million (S$5.4 million). See section titled “Related Party Transactions”. We pay a discount charge calculated based on 3% p.a. over three months bank’s Costs of Fund on the outstanding gross amount of accounts receivable factored.

 

The Group and the Lender are parties to a business property financing facility dated March 30, 2021 (supplemented February 10, 2023 and August 11, 2023) in relation to our acquisition of the properties located at 23 Ubi Crescent and 25 Ubi Crescent, Singapore. The purchase price is approximately $6.7 million consisted of cash consideration of approximately $1.7 million and a loan obtained from the Lender of approximately $5.0 million (S$6,775,000) and the outstanding balance of this loan at March 31, 2024 was approximately $4.5 million (S$6.1 million). This facility is secured by several personal guarantees. See section titled “Related Party Transactions”.

 

Primech A&P is required to maintain, during the term of the financing agreements relating to each of these facilities, a minimum adjusted tangible net worth of $7.0 million (SGD 10.0 million), and a gearing ratio, defined as to the ratio of total bank debt to tangible net worth of not more than 1.5. As of March 31, 2024, we are complying of the financial covenants.

 

The consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. For FY 2024, the Company recorded net loss of approximately $3.2 million and cash used in operating activities of approximately $9.1 million. We received approximately $2.8 million and $4.6 million in Singapore government grants which were netted against our direct costs and expenses and general and administrative expenses in FY 2024 and FY 2023, respectively. These government subsidies were received from government authorities in Singapore, and were primarily used to offset wage costs, and are recorded as a reduction to associated wage costs in cost of revenue and general and administrative expenses in the accompanying consolidated statements of operations and comprehensive income.

 

Notwithstanding the receipt of the government subsidies received during FY 2024, management believes that with its balances of cash of approximately $7.6 million, working capital of approximately $8.6 million and approximately $2.5 million of available loans or overdraft facilities at March 31, 2024, our liquidity is sufficient to fund operations for at least one year from the date the Group’s March 31, 2024 financial statements are issued.

 

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We intend to fund our future operations and meet our financial obligations through revenue growth. We cannot, however, provide assurance that revenue, income and cash flows generated from our businesses will be sufficient to sustain our operations in the twelve months following the date of this prospectus. As a result, we are actively evaluating strategic alternatives including debt and equity financings and potential sales of investment assets.

 

Conditions in the debt and equity markets, as well as the volatility of investor sentiment regarding macroeconomic and microeconomic conditions, will play primary roles in determining whether we can successfully obtain additional capital. We cannot be certain that we will be successful at raising additional capital.

 

Cash Flows — Operating Activities

 

We used approximately $5.9 million more cash in operating activities during the year ended March 31, 2024 than we did during the year ended March 31, 2023. The increase in cash used in continuing operating activities mainly resulted from the increase in prepaid expenses and other current assets as we prepaid to our vendor for services.

 

We generated approximately $8.2 million less cash from operating activities during the year ended March 31, 2023 than we did during the year ended March 31, 2022. The decrease in cash provided in continuing operating activities resulted from the increase in account receivables and prepaid expenses and other current assets. Such increase of account receivables was due to increase in unbilled revenue as we were in process of confirming with our customers on the service provided during the period, which resulted in delay in issue of our billing to such customers.

 

Cash Flows — Investing Activities

 

We used approximately $0.3 million less cash from investing activities during the year ended March 31, 2024 than we did during the year ended March 31, 2023. The decrease in cash used in investing activities resulting from less acquisition of property and equipment.

 

We used approximately $1.4 million less cash from investing activities during the year ended March 31, 2023 than we did during the year ended March 31, 2022. The decrease in cash used in investing activities resulting from less acquisition of property and equipment as compared to FY 2022.

 

Cash Flows — Financing Activities

 

We generated approximately $0.2 million more cash from financing activities during the year ended March 31, 2024 than we did during the year ended March 31, 2023. The increase in cash from financing activities resulted from net proceeds from issue of new shares for the IPO and partly offset by less new bank loans utilized and increase in repayment of bank loans in current period.

 

We generated approximately $8.0 million in financing activities during the year ended March 31, 2023 compared to $3.6 million used in financing activities during the year ended March 31, 2022. The increase in cash from financing activities resulted from an increase in utilization of bank loans.

 

Off-Balance Sheet Arrangements

 

We have not entered into any derivative contracts that are indexed to our shares and classified as Shareholders’ equity or that are not reflected in our consolidated financial statements. Moreover, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or product development services with us.

 

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INDUSTRY OVERVIEW  

 

Overview of the Cleaning and Landscaping Industry in Singapore

 

Cleaning and landscaping service providers in Singapore offer a wide spectrum of cleaning and landscaping services. The Singapore Standard Industrial Classification 2020 (“Industrial Classification”) published by the Singapore Department of Statistics, Ministry of Trade & Industry, categorizes cleaning activities into general cleaning services and other cleaning services. General cleaning services include the provision of various cleaning services to public areas, offices, factories, households, among others. Moreover, according to the Industrial Classification, landscaping services in Singapore include landscape planting, care and maintenance service activities in and for parks and gardens, public and private housing, buildings, roads and expressways, among others.

 

Cleaning and landscaping services in Singapore are generally categorized as follows:

 

    General cleaning services   Other cleaning services
Cleaning services   General cleaning services (including cleaning of public areas, offices and factories)   Pest control services in non-agriculture sectors
         
      interior and/or exterior general cleaning services for all types of building and premises such as offices, shops and factories     exterminating and controlling birds, mosquitoes, rodents, termites, and other insects and pests (except for agriculture)
         
      general cleaning services for public premises such as streets and parks     ●  providing fumigation and weed control services (except for agriculture)
         
    Domestic/household cleaning services   Cleaning of swimming pools, spas and fountains
         
      provision of general cleaning services for households    
         
Landscaping services  

●      Landscape planting, care and maintenance service activities in/for:

 

●   parks and gardens

 

●   public and private housing

 

●   buildings (e.g. roof gardens, façade greenery, vertical greenery, indoor gardens)

 

●   sports facilities and premises (e.g. football fields, golf courses, lawns)

 

●   roads and expressways

 

●   protection against noise, wind, erosion

 

●   industrial and commercial buildings

 

Sources: the Ministry of Trade & Industry; the Singapore Department of Statistics

 

Singapore’s demand for cleaning and landscaping services experienced strong growth from 2014 to 2022, driven by economic sophistication, urbanization, and population growth. The industry market size increased from $1,377.0 million (S$1,836.0 million) in 2014 to $2,569.9 million (S$3,426.5 million) in 2022, a CAGR of 8.1%. Moreover, we believe the productivity of the industry will be enhanced progressively given the technology-driven programs launched by the government. The increasing collaboration between technology programs and cleaning and landscaping companies is proven to be conducive to the growth of the industry, which we believe will benefit from automation and robotic technology in the future.

 

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Growth Drivers and Trends of the Cleaning and Landscaping Industry in Singapore

 

Growing demand derived from office buildings, retail facilities, and residential buildings

 

Despite the uncertainties exerted by the COVID-19 pandemic, the number of commercial and residential buildings in Singapore witnessed a moderately increasing trend in Singapore over the past five years. According to the Urban Redevelopment Authority of Singapore, the office space available climbed from 7,575 thousand square meters in the first quarter of 2015 to 8,047 thousand square meters in the fourth quarter of 2023, a CAGR of 0.8%. The retail space available increased from 5,948 thousand square meters in the first quarter of 2015 to 6,277 thousand square meters in the fourth quarter of 2023, a CAGR of 0.7%. On the residential housing front, the public residential housing units under the management of the Housing & Development Board (“HDB”) of Singapore experienced moderate growth from 984,908 units in 2015 to 1,130,144 units in 2023, a CAGR of 1.7%. The private residential property units increased moderately from 311,635 in the first quarter of 2015 to 410,588 in the fourth quarter of 2023, a CAGR of 3.5%. The growth in respect of office space, retail facilities and residential buildings has spurred demand for cleaning and landscaping services in Singapore.

 

Adoption of automated technologies to enhance productivity

 

The future of the cleaning and landscaping industry will be shaped by automated cleaning technology, which is likely to enhance the productivity of the industry. The National Environmental Agency (“NEA”) rolled out the INCUBATE (INnovating and CUrating Better Automation and Technologies for Environmental Services) Programme in December 2017 to identify and tackle challenges faced by the industry with technology. The program is a partnership between the NEA and progressive premises owners to support the transformation of the cleaning and landscaping industry. According to the NEA, the program currently has 21 partners and has carried out 46 trials in transport and community hubs, commercial properties and integrated attractions. In an example of robotic cleaning, a multi-purpose robot is developed by an INCUBATE partner, which cleans, scrubs, broadcasts safe-distancing messages, and reports unattended bags. Cleaners are freed up to focus on wiping down high-contact touchpoints such as door handles. Given the introduction of the INCUBATE Programme, it is expected that the cleaning and landscaping industry will witness the introduction of new automation technology in the future, contributing to improved productivity improved in the long run.

 

Government support in talent development

 

In an effort to enhance the productivity of various industries in Singapore, the Singapore government has committed various sector-specific initiatives. According to the National Parks Board of Singapore, the Landscape Sector Transformation Plan (the “LSTP”) is a tripartite effort led by the National Parks Board, together with companies and associations from the landscape industry, Institutes of Higher Learning (the “IHLs”) and government agencies. The LSTP, launched in 2019, is a transformation plan that aims to grow Singapore’s landscape industry up to 30% over the next 10 years by enhancing productivity and digital transformation. As an integral part of the LSTP, the LSTP emphasizes talent development by upskilling the existing landscape industry labor force to manage the green spaces of Singapore. The labor force will be trained to understand ecosystems, integrate ecological processes and incorporate the use of technology to enhance their professionalism and competence in the cleaning and landscaping industry.

 

The Environmental Robotics Program

 

As part of the National Environmental Agency’s strategy to leverage robotics technology to transform Singapore’s environmental service-related sectors, the Environmental Robotics Program was developed in 2017. The Environmental Robotics Program seeks to catalyze the local robotics industry by providing opportunities for small and medium enterprises, institutes of higher learning, and research institutes to co-create solutions with the public sector that not only build up local expertise and experience in delivering environmental robotic solutions, but also enhance the competitiveness and resilience of the cleaning service-related sectors. Specifically, the Program aims to develop robotic solutions for the National Environmental Agency’s work areas including, public spaces, waste management, and pest and pollution control. By working collaboratively with robotics technology, the cleaning service industry will witness the improvement of productivity and reduce reliance on manpower.

 

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Major Customer Segments of the Cleaning and Landscaping Industry in Singapore

 

Office Space

 

 

Source: Urban Redevelopment Authority of Singapore

 

Thanks to the economic development over the past few years, the office space available in Singapore increased from 7,575 thousand square meters in the first quarter of 2015 to 8,047 thousand square meters in the fourth quarter of 2023 a CAGR of 0.8%. The positive economic outlook of Singapore has drawn companies from the finance and technology sectors to set up offices in Singapore from 2015 to 2023, fueling the growth of office development. Although the office demand dropped moderately due to social distancing measures and flexible working arrangements during the pandemic of COVID-19, the long-term demand for office will remain resilient as the physical office is relevant for firms to curate a social identity associated with the workspaces, according to Coldwell Banker Richard Ellis Group (“CBRE”), which is one of the largest commercial real estate services companies in the world. The office demand will recover in line with the expected economic growth after the pandemic.

 

Furthermore, office development is also underpinned by the Central Business District (CBD) Incentive Scheme put forward by the Singapore government in 2019. The scheme is to encourage the conversion of existing, older, office developments into mixed-use developments that will help to rejuvenate the CBD. With this scheme, according to CBRE, the office market is anticipated to see redevelopment with agile space solutions and digitally-enabled specifications in the CBD in the future.

 

Retail Spaces

 

 

Source: Urban Redevelopment Authority of Singapore

 

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The retail space available increased from 5,948 thousand square meters in the first quarter of 2015 to 6,277 thousand square meters in the fourth quarter of 2023, at a CAGR of 0.7%. The growth was supported by the vibrant retail sector and tourism of Singapore before the pandemic. However, the retail property market took a hit during the pandemic, recording rising vacancies and falling rents, according to Jones Lang LaSalle Incorporated, which is a global commercial real estate services company. The retail space available experienced a dip in 2020 in the wake of the COVID-19. Nonetheless, as Singapore reopens its borders progressively along with the vaccination program, it is anticipated that the retail consumption of the city will pick up gradually, supporting the recovery of the retail property market, which in turn generates needs for cleaning and landscaping services.

 

Public Residential Housing Units

 

 

Source: The Housing & Development Board of Singapore

 

The public residential housing units under the management of the HDB of Singapore experienced moderate growth from 984,908 units in 2015 to 1,130,144 units in 2023, a CAGR of 1.7%. The development of public residential housing is a result of the increasing population of Singapore. According to the Singapore Department of Statistics, the total population of Singapore increased from 5,535,002 in 2015 to 5,917,648 in 2023, a CAGR of 0.8%. As part of the HDB’s mission and objectives, HDB is committed to providing quality public housing units to Singaporeans with affordable rent or price. Given the rising population of Singapore, it is envisaged that the number of public housing units will continue to grow in the future.

 

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Private Residential Housing Units

 

 

Source: The Singapore Department of Statistics

 

The private residential property market experienced moderate growth from 2015 to 2023. It increased from 311,635 units in the first quarter of 2015 to 410,588 units in the fourth quarter of 2023, at a CAGR of 3.5%. The development of the private residential property market was primarily driven by the economic growth of Singapore and the increasing population. According to the Singapore Department of Statistics, the Singapore GDP increased from $317,583.1 million (S$423,444.1 million) in 2015 to $399,194.6 million (S$532,259.5 million) (measured in the chained dollar) in 2023. Also, the total population of Singapore increased from 5,535,002 in 2015 to 5,917,648 in 2023, a CAGR of 0.8%. In light of the stable and growing private residential property market, the cleaning and landscaping industry sees potential increasing demand from this sector.

 

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Market Size of the Cleaning and Landscaping Industry in Singapore

 

 

Note: Operating revenue refers to income earned from business operations, i.e. income from services rendered, sale of goods, commission fees and rental of premises, machinery and equipment.

 

Source: The Singapore Department of Statistics

 

The growing economy of Singapore that propels the thriving real estate property market has spurred increasing demand for cleaning and landscaping services. The industry market size increased from $1,357.2 million (S$1,836.8 million) in 2014 to $2,569.9 million (S$3,426.5 million) in 2022, a CAGR of 8.1%. The real estate property market is a major contributor to our industry. For instance, according to the Urban Redevelopment Authority of Singapore, the office space available climbed from 7,575 thousand square meters in the first quarter of 2015 to 8,047 thousand square meters in the fourth quarter of 2023. The public residential housing units under the management of the HDB experienced moderate growth from 984,908 units in 2015 to 1,130,144 units in 2023, a CAGR of 1.7%. The private residential property units also increased moderately from 311,635 in the first quarter of 2015 to 410,588 in the fourth quarter of 2023. The growing number of retail facilities, office buildings, and residential units have generated rising demand for cleaning and landscaping services.

 

However, the industry witnessed a slight market drop in 2019 to $2,111.2 million (S$2,857.3 million) from $2,144.6 million (S$2,902.5 million) in 2018. The minor market pull back was due to the softening growth of the Singapore economy in 2019, which experienced the slowest growth in a decade. Additionally, the industry suffered a setback in 2020 due to the economic contraction caused by COVID-19 pandemic. According to Singapore Department of Statistics, the GDP of Singapore decreased from $360,706.4 million (S$480,942.3 million) in 2019 to $346,748.1 million (S$462,330.8 million) in 2020 (measured by chained dollar). The COVID-19 pandemic caused disruption of business among various sectors in Singapore, and hence the demand for cleaning and landscaping services was negatively affected. Nonetheless, it is expected that the cleaning and landscaping industry will progressively recover in line with the recovery of the economy in Singapore. Moreover, technology will play a vital role in shaping the future of the cleaning and landscaping industry. The Singapore government has rolled out several technology-driven programs in an effort to enhance the long-term productivity of the cleaning and landscaping industry, which are discussed in the section “Growth Drivers and Trends of the Cleaning and Landscaping Industry in Singapore”. In light of the introduction of robotic and automation technology, cleaning and landscaping companies likely will witness improving productivity and operational efficiency in the future.

 

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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Inflation Risk

 

Inflationary factors, such as increases in personnel and overhead costs, could impair our operating results. Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, a high rate of inflation in the future may have an adverse effect on our ability to maintain current levels of gross margin and operating expenses as a percentage of sales revenue if the revenues do not increase with such increased costs.

 

Interest Rate Risk

 

We are exposed to cash flow interest rate risk in relation to bank loans, bank overdrafts and a recourse receivables purchase facility with variable interest rates which is partially offset by bank balances held at variable rates. It is the Group’s policy to keep its borrowings at variable rates at a minimum so as to minimize the fair value interest rate risk.

 

The Group cash flow interest rate risk is mainly concentrated on the fluctuation of Singapore Overnight Rate Average (“SORA”) and the prime lending rate of our lenders arising from the Group’s Singapore dollar denominated borrowings. Interest rates are subject to change upon renewal.

 

Credit Risk

 

Credit risk is controlled by the application of credit approvals, limits and monitoring procedures. We manage credit risk through regularly evaluating the collectability of financial assets, based on a combination of factors such as credit worthiness, past transaction history, current economic industry trends and changes in payment patterns. We identify credit risk collectively based on industry and customer type. In measuring the credit risk of our sales to our customers, we mainly reflect the “probability of default” by the customer on its contractual obligations and consider the current financial position of the customer and the current and likely future exposures to the customer.

 

Liquidity Risk

 

We are also exposed to liquidity risk, which is risk that we will be unable to provide sufficient capital resources and liquidity to meet our commitments and business needs. Liquidity risk is controlled by the application of financial position analysis and monitoring procedures. To manage liquidity risk, the Group monitors and maintains a level of cash and cash equivalents deemed adequate by the management to finance the Group’s operations and mitigate the effects of fluctuations in cash flows.

 

The Group relies on bank borrowings as a significant source of liquidity. As at March 31, 2024, the Group has available unutilized facilities of approximately $2.6 million, including $0.8 million unutilized bank overdraft facilities. Management monitors the utilization of bank borrowings regularly.

 

Foreign Exchange Risk

 

While our reporting currency is the U.S. dollar, almost all of our consolidated revenues and consolidated costs and expenses are denominated in Singapore dollars. All of our assets are denominated in Singapore dollars. As a result, we are exposed to foreign exchange risk as our revenues and results of operations may be affected by fluctuations in the exchange rate between the U.S. dollar and the Singapore dollar. If the Singapore dollar depreciates against the U.S. dollar, the value of our Singapore dollar revenues, earnings and assets as expressed in our U.S. dollar financial statements will decline. We have not entered into any hedging transactions in an effort to reduce our exposure to foreign exchange risk.

 

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OUR GROUP STRUCTURE

 

The structure of our Group as of the date of this prospectus is as follows:

 

 

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GENERAL INFORMATION ON OUR GROUP

 

OUR HISTORY

 

Our Company was incorporated on December 29, 2020 as a private company limited by shares under the name “Primech Holdings Pte. Ltd.”. On May 11, 2023, we changed our corporate name from “Primech Holdings Pte. Ltd.” to “Primech Holdings Ltd.”

 

In 2018, Sapphire Universe, one of our Major Shareholders, acquired Primech Services & Engrg Pte Ltd, A&P Maintenance and Acteef Cleaning, in three separate transactions. Each of these companies had, prior to their acquisition, already been operating for approximately 30 years or more. Historically, Primech Services & Engrg was focused on providing cleaning services to Singapore Changi Airport and educational institutions, while A&P Maintenance and Acteef Cleaning were focused on providing cleaning services to offices. In 2020, Sapphire Universe also acquired Maint-Kleen which was focused on providing conservancy services. The acquisitions by Sapphire Universe of Primech Services & Engrg, A&P Maintenance, Acteef Cleaning and Maint-Kleen have enabled our Group to provide a wide spectrum of cleaning services.

 

In the last three years, we have expanded our range of cleaning services to include cleaning of healthcare facilities, and we have also expanded into the provision of stewarding services. Through our customer service business, we provide customer service officers and F&B service crew to venues such as healthcare facilities, hotels and restaurants. We also launched our “HomeHelpy” application, an online portal which allows individual customers to book our cleaning services in homes and offices.

 

In 2020, A&P Maintenance and Primech Services & Engrg amalgamated to form Primech A&P, thereby consolidating financial resources and service capacity, and enabling us to tender and quote for larger projects.

 

On December 29, 2020, Sapphire Universe incorporated our Company to serve as the holding company for our Group.

 

In April 2021, our Company acquired a 80% stake in CSG, which is in the business of manufacturing chemical supplies, and a 100% stake in Princeston International, which is in the business of wholesale trading of cleaning supplies, ad hoc cleaning services and disinfection products. This further expanded our business to include the manufacture of certain cleaning supplies, both for our own use and for sale to third parties.

 

On November 22, 2021, our Company completed the acquisitions of our subsidiaries from Sapphire Universe as part of the Restructuring Exercise, pursuant to a restructuring agreement entered by and among the Company, our subsidiaries, and Sapphire Universe on November 11, 2021.

 

On November 22, 2021, Sapphire Universe, which previously held 100% of our Company’s capital stock, entered into an agreement to sell 1,212,500 shares, or 3.73% equity stake in the Company, to two unrelated investors.

 

Some key milestones of our Group are set out below:

 

2018   Sapphire Universe acquired Primech Services & Engrg, A&P Maintenance as well as Acteef Cleaning.
2019   Primech Services & Engrg acquired My All Services in connection with our proposed expansion into Malaysia. We also launched our “HomeHelpy” application.
2020   Sapphire Universe acquired Maint-Kleen.
    Primech Services & Engrg and A&P Maintenance were awarded the Clean Mark Gold Award for the first time.
    Primech Services & Engrg amalgamated with A&P Maintenance to form our current subsidiary, Primech A&P.
    We revamped our QEHS Management System in compliance with ISO 9001, ISO 14001 and ISO 45001 as awarded by TÜV SÜD PSB Singapore.
2021   Our Company acquired CSG and Princeston International.
    We moved into our new Singapore headquarters at 23 Ubi Crescent, Singapore 408579.
    We completed the Restructuring Exercise to finalize our Group corporate structure.
2023   On October 12, 2023, our Company completed its IPO of 3,050,000 Ordinary Shares.
2024   We launched Primech AI Pte. Ltd. as an operating subsidiary that will focus on creating robotic-based solutions catering to the vast demands for efficient and autonomous cleaning technology.

 

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OUR BUSINESS OVERVIEW

 

We are an established technology-driven facilities services provider in the public and private sectors operating mainly in Singapore. Our mission is to support businesses by improving lives and strengthening communities through our business practices and ethics. We operate primarily in Singapore which operations contributed approximately $72.0 million or 99.3% of our total revenue in FY 2024 and approximately $68.3 million or 98.9% of our total revenue in FY 2023, with the remainder from our operations in Malaysia and sales of products.

 

We provide the following services:

 

Facilities services. These include: general cleaning and maintenance of public and private facilities, such as airports, conservancy areas, hotels’ common areas, educational institutions, integrated public areas, residential spaces, office facilities, industrial areas, retail stores and healthcare facilities; housekeeping services; specialized cleaning services, such as marble polishing services, building façade cleaning services and clean room sanitation services; and waste management services and pest control services. We also provide cleaning services to homes of individual customers which engage our services through our “HomeHelpy” application. We derive the majority of our revenue from the provision of facilities services, which accounted for approximately $56.0 million or 77.2% of our revenue in FY 2023 and approximately $55.8 million or 80.8% of our revenue in FY 2023.

 

Stewarding services. These include the cleaning of kitchen facilities of healthcare facilities, hotels and restaurants and the supply of ad hoc customer service officers and F&B service crew to healthcare facilities, hotels and restaurants. Stewarding services accounted for approximately $10.2 million or 14.0% of our total revenue in FY 2024 and approximately $7.6 million or 11.0% of our revenue in FY 2023.

 

Cleaning services to offices. In addition to our core facilities services, we provide cleaning services to offices. The provision of office cleaning services accounted for approximately $5.9 million or 8.1% of our total revenue in FY 2024 and approximately $4.9 million or 7.1% of our revenue in FY 2023.

 

Cleaning services to homes. We provide cleaning services to homes of individual customers who engage our services through our “HomeHelpy” application. We did not generate significant revenue from the provision of these services during FY 2024 and FY 2023.

 

Cleaning Supplies. In addition, through CSG and Princeston International, we manufacture certain cleaning supplies, both for our own use and for sale to third parties. We did not generate significant revenue from the provision of these services during FY 2024 and FY 2023.

 

As a testament to the quality of our service, in 2022 and 2023 our subsidiaries Primech A&P and Maint-Kleen were awarded the Clean Mark Gold Award by the National Environment Agency of Singapore under its Clean Mark Accreditation Scheme. This scheme recognizes businesses that deliver high cleaning standards through the training of workers, the use of equipment to improve work processes, and fair employment practices.

 

Further details of our awards and accreditations are set out in the section titled “General Information on Our Group — Our Business Overview — Awards and Accreditation” below. Our notable projects include the provision of services to Singapore Changi Airport Terminal 2, a Singapore multinational bank, Temasek Polytechnic, and Nanyang Technological University of Singapore.

 

As of September 30, 2024, our Group employed 2,870 employees. We believe it is crucial to maintain sufficient manpower to reduce the amount of services which are sub-contracted thus enabling us to standardize our service delivery and better manage operational risks. While we sub-contract certain services such as external façade cleaning, the majority of our services provided to customers are performed by our Group’s employees. Our sub-contractor costs amounted to approximately $2.7 million or 4.5% and approximately $3.0 million or 5.1% of our total direct costs and expenses for FY 2024 and FY 2023, respectively.

 

Our name, “Primech”, was formed through a contraction of “Prime” and “Mechanization”. We believe that we are at the forefront of using technology to supplement and bolster our services.

 

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OUR COMPETITIVE STRENGTHS

 

We believe our main competitive strengths are as follows:

 

We have a long and established track record and have achieved a high level of accreditation in the facilities services sector.

 

The environmental services industry in Singapore is highly fragmented. According to NEA’s List of Licensed Cleaning Businesses, there are over 1,500 cleaning companies licensed by the NEA as of April 1, 2024. We believe that we have been able to distinguish ourselves through, among other things, the long and established track record of our subsidiaries and the accreditations we have received.

 

Primech A&P was amalgamated from A&P Maintenance and Primech Services & Engrg, which have been operating for approximately 30 years or more. Primech A&P and Maint-Kleen thus have been able to secure long-term business relationships with their customers. See sections titled “General Information on Our Group — Our Business Overview — Our Contracts and Portfolio” and “General Information on Our Group — Our Business Overview — Awards and Accreditations” of this prospectus for further details.

 

In relation to the FM02 workhead in respect of “Housekeeping, Cleansing, Desilting and Conservancy Services”, Primech A&P and Maint-Kleen holds an L6 grade registration (which is the highest possible grade), which qualifies it to tender for public projects of an unlimited value, and which we believe has placed us in a good position to undertake sizable contracts in the public sector. Our private sector customers may also take our workhead grading into consideration when evaluating our quotations. As a testament to the quality of our services, Primech A&P and Maint-Kleen have been awarded the Clean Mark Gold Award, which is the highest level of accreditation under the Enhanced Clean Mark Accreditation Scheme granted to cleaning businesses. The scheme recognizes businesses that deliver high cleaning standards through the training of workers, use of equipment to improve work processes, and fair employment practices. As of April 1, 2024, only 53 of the 1,541 NEA-licensed cleaning businesses in Singapore, including Primech A&P and Maint-Kleen, have a Clean Mark Gold Award status. See the section titled “General Information on our Group — Government Regulations” of this prospectus for further details.

 

With our strong track record and high levels of accreditation, we believe that we are one of the top facilities services providers in Singapore. We believe that we are strongly positioned to maintain our market position through our adoption of technology and wide network of industry contacts, including sub-contractors.

 

We are able to provide a bundle of services to a wide spectrum of customers

 

We provide a broad spectrum of cleaning services both in the public and private sectors to a variety of customers including, Singapore Changi Airport, conservancy areas, hotels, common areas, educational institutions, integrated public areas, residential spaces, office facilities, industrial areas, retail stores and healthcare facilities. Our diversified customer mix ensures that we do not rely on any single customer for our revenue and enables us to better manage our business risks. For instance, when the spread of COVID-19 in 2020 led to a decrease in demand for our services at Singapore Changi Airport and in the hospitality industry, we pivoted to provide our services to healthcare facilities as well as increased disinfection services.

 

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In addition to the provision of cleaning services, we have diversified into waste management and pest control services as well as customer services. Providing a bundle of services provides an additional convenience to our customers as they would liaise with a centralized service provider rather than multiple contractors. Further, the new FM01 workhead for “Facilities Management” requires contractors to provide at least two distinct maintenance services (for which we are able to provide cleaning and pest control services in-house), thus ensuring that we are able to continue tendering for public projects. Selected CRS registrations held by Primech A&P include the following:

 

an L6 registration under the FM02 workhead for “Housekeeping, Cleansing, Desilting and Conservancy” services, which enables us to tender for Singapore government projects relating to this workhead of an unlimited contract size; and

 

an M4 registration under the FM01 workhead of “Facilities Management” which enables us to tender for Singapore government projects relating to this workhead up to approximately $750,000 (S$1,000,000) per project.

 

We believe that our emphasis on having a trained workforce makes us more competitive in our industry

 

We believe that the training and development of our employees enables us to maintain and enhance our quality of solutions and services for the growth of our businesses and operations. In particular, we have been hiring a variety of employees from different sectors apart from the environment services industry such as the hires from the technological, finance, human resources and business development sectors in order to build up our key management personnel team.

 

Further, through our emphasis on the self-delivery of service, we seek to minimize outsourcing our services to sub-contractors, thus better controlling the level of our service, and complying with laws and regulations. As of September 30, 2024, our Group employed 2,870 employees. We provide various training and development programs for our employees according to their job requirements and functions to equip them with the relevant skills and knowledge. For example, 75% of our cleaners, team leaders and supervisors are trained in any two modules under the Environmental Cleaning Workforce Skills Qualification training framework. We also provide certain cleaners with in-house training through the HomeHelpy Training Center. See the section titled “General Information on our Group — Our Business Overview — Staff Training” for further details.

 

We have an experienced and stable management team

 

We have an experienced management team, led by Mr. Kin Wai Ho, our Chairman. A majority of our senior management team have been employed our subsidiaries for more than 18 years. We view their collective industry knowledge and extensive project management experience as valuable in establishing stable relationships with our customers as well as facilitating the submission of competitive tenders and believe that this has assisted us in securing numerous tenders over the years. We also believe that the experience of our management team has assisted us in our cost estimation for contracts during the tendering process which enables us to reduce situations of cost overruns.

 

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OUR BUSINESS STRATEGIES AND FUTURE PLANS

 

Our business strategies and future plans are as follows:

 

Improve efficiency, expand service capacity, establish smart IoT service, and reduce environmental footprint through the use of technology

 

We actively explore opportunities to use technology to improve our day-to-day operating efficiency and expand our service capacity in the long run. This runs in line with the Singapore government’s vision for the environmental services industry as outlined in its Environmental Services Industry Transformation Map launched in December 2017, which has allowed us to benefit from various governmental grants and subsidies aimed at raising the operational efficiency and productivity of the environmental services industry in Singapore through technology adoption.

 

Our technology initiatives to date include the use of autonomous floor scrubbing robots equipped with real-time monitoring and self-docking capabilities to perform cleaning services. In addition, we introduced our “HomeHelpy” website and mobile application to allow individual customers to book our cleaning services, which has enabled us to expand into the B2C segment (from our primary B2B business), and we believe that there is opportunity to convert such ad hoc services into long-term service contracts in the future. Our “HomeHelpy” platform has more than 1,650 registered members as of September 2024, and has served more than 690 users since its inception.

 

In 2021, we collaborated with three companies to form a consortium to submit a tender bid to install EV charging infrastructure at various car parks in Singapore. The consortium was awarded the pilot tender by the government of Singapore to install EV charging stations in approximately 150 public car parks in the North and North-East regions in Singapore. In consideration, the consortium has to pay concession fees for the right to install and operate the EV charging points (at S$0.15/kwh) to the relevant government authorities. All EV charging stations have been installed as of September 30, 2024.

 

The consortium agreement documents provide that the Company and Charge+ are responsible for, among other things, the payment of all fees to the authorities, obtaining necessary government approvals, engaging local stakeholders, carrying out and completing the project, and providing the use of the charging infrastructure to the public. The Company shall also provide lead demand from our fleet of electric vehicles. Although we and our consortium collaborators are jointly and severally responsible to the relevant authorities for the due performance of the project, the consortium collaborators have executed the Deed of Confirmation pursuant to which Charge+ has agreed, at its own cost and expense, to carry out and complete all works in connection with this project, and pay all concession and other fees payable and due to the Singapore government in connection with this project. In exchange, Charge+ shall be entitled to all revenues received in connection with this project, and will have general day-to-day authority over the project’s operations. The Singapore government is not a party to the Deed of Confirmation and the Deed of Confirmation does not extinguish the Company’s obligations to the Singapore government. Therefore, if Charge+ was to default on its obligations with respect to these costs, we estimate that the financial obligations to be borne by the other three consortium collaborators (including us) would not exceed US$3.3 million (SGD 4.4 million) over the next twelve years, comprised of no more than US$1.5 million (SGD 2 million) for the installation of the remaining charging stations and operating costs of no more than US$150,000 (SGD 200,000) per year for the next twelve years.

 

In addition, we deployed 18 EV as of September 2024, and we hope to convert more or all of our fleet of cleaning machines to EV over time. We also have started to offer, on a limited basis, an EV charging function to our customers as a package in our services, which will be provided by a sub-contracted third party. We do not own or operate an EV charging function. We believe that eco-solutions will become increasingly important in the future in the face of climate change, and integrating eco-solutions into our portfolio will not only expand our service capabilities, but also will transition our business towards a more innovative model, and will ultimately help our business to keep pace with future technological advances.

 

Going forward, we intend to continue to seek out opportunities for collaboration with technology companies to develop innovations in the areas of cleaning services and facilities management. For example, we plan to explore the use of removable batteries in our cleaning robots to reduce downtime. We do not intend, however, to enter the EV conversion or EV charging businesses as a new service offering.

 

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Over the next three years, we plan to replace and convert a portion of our existing fleet of cleaning machines with and to EVs and develop “green” chemicals that are more eco-friendly for use in our cleaning services. We believe that by integrating environmental sustainability into our business practices, we will be able to attract more customers and employees, and ultimately reap the benefits of more sustainable growth.

 

We have developed a baseline IoT-enabled cleaning management platform to support data-driven and on-demand cleaning operations since August 2023. This platform is undergoing continuous enhancement and has been deployed to a few cleaning projects. This system integrated commercial off-the-shelf IoT devices such as cameras and sensors to be deployed in a facility and/or on robots, which will evaluate and respond to various events to perform data driven functions or actions to assist our facility services with lower cost and more efficiency. We also intend to develop an autonomous toilet cleaning robots to alleviate the tedious manual toilet cleaning tasks. However, as the IoT service is a new area for us, our plan to build our own IoT system may not be successful or, even successful, may not be able to generate revenues for a period of time.

 

Expand our range of facilities services both organically and through suitable acquisitions

 

Historically, we have been able to quickly gain a foothold in certain customer markets (for example, conservancy areas and offices) through the acquisition of companies with an established track record in those markets. We intend to continue to pursue suitable opportunities for acquisitions, joint ventures and strategic alliances to expand our range of facilities services. Such opportunities could include areas that complement our business, such as waste management, gardening and landscaping, and pest management. We believe that building up a comprehensive suite of facilities services will enable us to maintain our competitive edge.

 

We also intend to grow our facilities services business organically by expanding our coverage to include segments of the market where we currently do not have a presence or only have a small presence, such as hospitals, industrial centers, data centers and cleanrooms.

 

We are also looking to expand our facilities services into the landscaping sector in order to meet the Singapore government’s demand to supply more parks and other spaces in Singapore in the future. The landscaping services we intend to carry out will cover horticultural maintenance, which comprises services such as weeding, fertilizing, mowing and irrigation works. This would also enable us to provide an additional maintenance service under the FM01 workhead prescribed by BCA.

 

In connection with the expansion of customer services, we may also provide security services to condominiums.

 

Explore business opportunities in the Southeast Asian region

 

We intend to establish ourselves as a regional player in the environmental services industry. While our operations are currently almost exclusively based in Singapore, we may expand our business to other countries in Southeast Asia. We believe that our corporate image, which could be enhanced upon attainment of the Listing, would attract other service providers in the regional environmental services industry to consider a collaboration with us, through which we can leverage on our corporate image and their local knowledge to establish a greater foothold in Southeast Asia.

 

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OUR SERVICES

 

Facilities Services

 

Facilities services is our primary business segment, accounting for approximately $56.0 million or 77.2% and approximately $55.8 million or 80.8% of our total revenue in FY 2024 and FY 2023, respectively. Our main customers in this segment include conservancy areas, educational institutions and Singapore Changi Airport. The range of facilities services we offer includes the following:

 

Conservancy areas cleaning services: These include daily cleaning of certain common areas within town councils including void decks, corridors, staircases, lifts and lift landings, drains and carparks, by using manual and mechanical means. We also provide monthly block washing and quarterly fogging of bin chutes.

 

Educational institutions cleaning services: These include cleaning of schools under the Ministry of Education of Singapore as well certain premises of polytechnics. Our cleaning solutions take into account tiling, school amenities and enrolment figures, with the aim of reducing disturbance to the institution’s schedules.

 

Airport cleaning services: These include the routine cleaning of certain areas of Singapore Changi Airport Terminal 2 as well as periodic cleaning of, among others, glass panels, marble walls, artwork and floor tiles.

 

Other facilities cleaning services: These include cleaning of hotels, public spaces and roads, condominium common areas and facilities, offices, industrial areas, and retail stores.

 

Other cleaning services: These include marble polishing services, external façade cleaning for exteriors of buildings, stewarding and clean room cleaning. We may render these services in-house or outsource them to our panel of sub-contractors.

 

Waste management and pest control services: In order to provide integrated solutions for our customers, we have, over time, expanded our facilities services to also encompass waste management services, such as the collection, transportation and disposal of general waste, and sorting of waste for recycling, as well as pest control services such as the remediation and prevention of infestations of rodents, insects, birds and other pests, to our customers.

 

Landscaping services: These include general horticultural maintenance services such as weeding, fertilizing, mowing and irrigation. We offer landscaping services as part of our integrated facilities services but do not currently render these services in-house and instead outsource them to sub-contractors. We plan to expand our in-house facilities services to include landscaping services in the future.

 

Stewarding Services

 

Stewarding services accounted for approximately $10.2 million or 14.0% and approximately $7.6 million or 11.0% and of our total revenue in FY 2024 and FY 2023, respectively. Stewarding services comprise the provision of kitchen cleaning services and the supply of customer service officers and F&B service crew. Our main customers in this segment are healthcare facilities, hotels and other hospitality venues, and restaurants. The tasks we perform include:

 

cleaning of kitchen equipment and dishwashing;

 

for hospitals, assisting the visitors of the hospital with any enquiries and providing support in respect of registering patients, crowd control as well as carrying out authorized clearance;

 

for hotels and hospitality venues, providing room attendant services and public area cleaning services. In the future, we intend to introduce front-of-house customer services.

 

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Cleaning Services to Offices

 

In addition to our core facilities services, we provide cleaning services to offices. The provision of office cleaning services accounted for $5.9 million or 8.1%  and approximately $4.9 million or 7.1%of our revenue in FY 2024 and FY 2023, respectively.

 

Technology

 

“HomeHelpy” website and mobile application for home and office cleaning services

 

 

In order to facilitate outreach to more customers, we have created a mobile application for our customers through “HomeHelpy” as well as a website at https://www.homehelpy.com which is a home, office and specialized cleaning services portal that allows customers to create bookings for cleaning services on-demand. Our “HomeHelpy” mobile application and website accounted for less than 1.0% of our total revenue in each of FY 2024 and FY 2023. Our “HomeHelpy” platform has more than 1,650 registered members as of September 2024, and has served more than 690 users since its inception.

 

Upon downloading our “HomeHelpy” mobile application or visiting our HomeHelpy website, customers are able to select their preferred service from a variety of home cleaning, office cleaning and specialized cleaning services (such as marble polishing, upholstery cleaning, carpet cleaning, and disinfection). We also offer customizable add-on services such as clothes ironing, refrigerator cleaning, bedsheet changing, microwave cleaning, cooker hood cleaning, oven cleaning, and air purification.

 

Under our home cleaning services, we offer two types of packages: classic (where customers are to prepare the cleaning tools and consumable materials to be used during the cleaning session) and premium (a more expensive package, where customers only have to prepare the cleaning tools).

 

Advance payment is required to confirm a booking, and we charge a cancellation fee of 50% of the booking price if the customer cancels the booking 12 to 24 hours before the service commences. There is no refund for bookings cancelled less than 12 hours before the service. Customers are able to reschedule their booking through our mobile application or website provided that it is at least 24 hours before the service commences.

 

Our HomeHelpy services can be engaged on a one-time basis, or on a recurring basis, such as weekly or fortnightly. Upcoming and past appointments can be monitored both by our customer as well as us through the relevant online portal. This provides our customers with the flexibility to manage their appointments, and enables us to better understand the demands of our customers.

 

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Our employees, or HomeHelpers, undergo a training program, which they must pass before they may be deployed to provide cleaning services for our customers. Through our training program, we are able to ensure that our HomeHelpers possess the required hard and soft skills for the job and that cleaning procedures are standardized, thus enabling us to maintain high service and quality standards.

 

In the near future, we intend to upgrade our mobile application to include additional functions such as the option to purchase cleaning products from us through the application. In addition, we intend to expand our services offered through HomeHelpy to include services such as disinfection and air conditioner servicing.

 

Cleaning robots

 

In order to supplement and bolster our provision of facilities services, we utilize a fleet of cleaning robots, which we purchase from third parties. The following summarizes the types of our cleaning robots as of September 30, 2024:  

 

Description   Illustration
Robotic scrubber cleaners robots (large)  
     
Robotic scrubber cleaners (small)  

 

Robotic scrubber cleaners can be remotely controlled to schedule cleaning at specific times, and can also be programmed to self-dock at designated recharge locations. These robots are also equipped with real-time monitoring and also collect reporting data on the state of the cleaning sites, which allows us to monitor and make adjustments to cleaning schedules so as to optimize our resources.

 

Other Technology Initiatives

 

Our cleaners also input their daily cleaning records through mobile applications which alert them as to their required daily jobs, as well as urgent ad-hoc tasks. These mobile applications also provide management with daily updates as to our operations.

 

We also implement technological aids at certain of our key customers. For instance, at Temasek Polytechnic, we have installed in-toilets motion sensors which detect traffic flow. An alert is sent out to the relevant cleaner if more than 20 individuals have entered the premises in a given period of time. There are also ammonia sensors which trigger the air fresheners and hand soap, as well as toilet paper sensors which alert our cleaners as and when such supplies have to be refilled.

 

Through the use of such technology, we are able to more effectively utilize our cleaning staff and provide a higher and more consistent level of cleanliness to our customers.

 

Sale of Cleaning Supplies

 

We acquired CSG, a manufacturer of cleaning supplies, and Princeston International, a company engaged in the wholesale trading of cleaning supplies, in 2021. The sale of cleaning supplies accounted for less than 1.0% of our total revenue in FY 2024 and FY 2023.

 

Through CSG, we manufacture a variety of cleaning supplies such as hand soaps, hand soap dispensers, and cleaning fluids used for general, floor, carpet, restroom or kitchen purposes, as well as treatment products used in the marine industry. We sell our cleaning supplies, primarily marketed under the brand “D’Bond”, to business customers in Singapore, such as other facilities services providers.

 

Through Princeston International, we sell floor mats and cleaning supplies such as hand soap and garbage bags.

 

Our cleaning supplies production facility is located on leasehold land at 50 Tuas Avenue 11, Singapore 639170. The use of the property is industrial.

 

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OUR CONTRACTS AND PORTFOLIO

 

We typically enter into service contracts for a term of two to four years. Certain service contracts contain a provision giving the customer an option to renew for an additional term of typically two years. Our service contracts may be in respect of solely cleaning services or a mixture of cleaning, waste management and pest control services. Depending on the customer’s requirements, we may charge our customers based on input (i.e. an agreed number of employees to the delivery of the given service at a set cost price plus a margin) or based on output (i.e. achieving the level of performance required by the customer).

 

We believe our strong track record and high levels of accreditation have allowed us to secure notable projects. Our customers include but not limited to the following: Singapore Changi Airport, Nanyang Technological University and, Temasek Polytechnic.

 

Singapore Changi Airport has been a customer of our Group for over ten years. Primech Services & Engrg was awarded a contract by Changi Airport Group (Singapore) Pte. Ltd. in 2018 to provide routine and periodic cleaning of the basement, mezzanine level and first storey of Singapore Changi Airport Terminal 2, including two multi-storey carpark buildings, Changi Airport MRT Station, and all external aluminum cladding and the glass façade for, among others, Singapore Changi Airport Terminal 2 and the link bridge to the Jewel Changi Airport. Singapore Changi Airport closed Terminal 2 as of May 1, 2020, and airlines were relocated to other terminals because the COVID-19 related decrease in air passenger flow presented an opportunity to commence the previously planned Terminal 2 renovations ahead of schedule in May 2020. As a result, our service contracts with Singapore Changi Airport were modified to reduce the scope of our services. For the period from August 1, 2020 to October 31, 2021, pursuant to the upgrading works carried out at Singapore Changi Airport, our services were expanded to include the airside (which is the area beyond passport and customs control) of Terminals 1 and 3 but with reduced frequency of cleanup required. These services have been provided pursuant to contracts with Changi Airport Group.

 

Singapore removed most remaining COVID-19 travel restrictions as of April 26, 2022 and eased its entry requirements for travelers, in response to a decline in new daily infections. Singapore Changi Airport Terminal 2 has fully reopened  as of November 2023 and our service for Changi Airport Terminal 2 arrival hall has resumed to the same scope to the period prior COVID-19 and the upgrading works. This contract was subsequently extended for a period of two (2) years from November 1, 2023 to October 31, 2025.

 

We were subsequently awarded another term contract for cleaning services at the airside general compound in Singapore Changi Airport for November 1, 2023 through October 31, 2026, with an option to renew for a further two (two) years. We undertake a comprehensive array of tasks, encompassing routine cleaning of airside facilities such as bin centers, sanitary disposal centers, fire stations, and ancillary buildings. Outdoors, our team conducts mechanical sweeping, refuse collection, and bay scrubbing across 200 parking stands and remote bays. We are also able to promptly address any hydraulic oil spillages, ensuring thorough cleaning of affected areas.

 

Nanyang Technological University has been a customer of our Group since 2018. A&P Maintenance was awarded a contract by Nanyang Technological University in 2018 for a period of two years from April 1, 2018 to March 31, 2020, with an option by the University to extend for another two years up to March 31, 2022 (which option was exercised), to provide cleaning services for various buildings at Academic Complex South within the Nanyang Technological University and their surroundings (including link ways and canopies). Primech A&P was again awarded the cleaning contract for the same area from April 1, 2022 to March 31, 2024, with an option to extend for another two years until March 31, 2026, which the option was exercised. In addition to general cleaning services, the contract with Nanyang Technological University also covers the provision of decontamination and disinfection services and clean room cleaning services, when called for.

 

Temasek Polytechnic has been a customer of our Group since 2013. Our current contract with Temasek Polytechnic was awarded to us pursuant to a tender and is for a term of five (5) years from April 2020 to March 2025, with an option to renew for a further two (2) years. Under the contract, we provide, among other things, cleaning and pest control services for numerous areas within Temasek Polytechnic’s campus.

 

A Singapore multinational bank has been a customer of our Group for over eight (8) years. Our current contract with the bank is for a period of three years from September 1, 2020 to August 31, 2023 and this has been extended for an additional period of two years from September 1, 2023 to August 31, 2025 in connection with the cleaning, refuse disposal and pest control services for various buildings and offices operated by the bank. We may also provide ad hoc services such as external façade cleaning.

 

The Ministry of Education of Singapore has become our customer since April 2022. Our current contract with the Ministry of Education of Singapore commenced on April 1, 2022, with a four-year term and a twelve-month extension option.

 

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OUR BUSINESS OPERATIONS

 

The workflow of our business operations generally involves four stages, as summarized below:

 

Tender Submission and Quotation Invitation Process

 

In order to participate in public sector projects, we have to bid in open tenders through platforms such as GeBIZ (the Singapore government’s online procurement portal) and SESAMi (an electronic transaction hub in Asia). We may also receive requests for quotation in respect of private sector projects. These may be new projects, or calls for tenders and/or quotations upon the expiry of existing service contracts.

 

Upon receiving an invitation to tender or a request for quotation, we would first make a preliminary assessment of the requirements of the tender or quotation, taking into account (among other things) our available resources and whether there is a need to engage sub-contractors. We may conduct a site visit in order to gather more information on the details of the invitation to tender or request for quote. Based on this assessment, we would prepare a project dossier, and consider whether to submit a tender bid or provide a quotation.

 

Depending on the materiality of the tender and/or quote, a submission could be reviewed and endorsed by our Executive Officers before being submitted to the customer for consideration.

 

Execution of Plans

 

Once we have received the letter of award or an equivalent confirmation indicating that our tender or quotation has been accepted, a joint taskforce project start-up team will be formed comprising, among others, a project manager who has experience in managing projects of a similar risk profile as the tender/quotation in question, a representative from each of the administrative and human resources departments (who will arrange for contract insurance and performance bonds (if any) to be prepared prior to the commencement of the service contract, and for recruitment and/or training), a business development professional (who will check the service contract documentation and set up a new file with customer details), and an operations department professional (who will plan budgeting and procurement requirements and meet with the customer in order to clarify outstanding queries or issues relating to the site or venue).

 

Depending on the materiality of the tender and/or quote, the project manager may also submit a startup form to our executive officers for review.

 

Upon finalization of the foregoing, we will submit a master cleaning schedule to our customer for its reference.

 

We may allocate fixed cleaners at each project, depending on the size and complexity of the cleaning site. Typically 10 to 15 employees report to a supervisor, and 40 to 50 employees report to a manager based on our current master cleaning schedule.

 

Implementation, Controls and Monitoring

 

Throughout the project lifecycle, our operations department will provide high-level supervision of the ongoing performance of our employees, our customers, the cleaning services rendered, and the disposal of waste.

 

Within the first three months of an executed project, the project may be subjected to an internal assessment to ensure that the implementation of operations has conformed to the project plan.

 

Apart from the internal assessment, the project will also be subjected to routine QEHS inspections and audits. In order to ensure compliance and that the project budget is kept to, the project manager and accounts manager for the project will closely monitor the performance of the project. Invoices are also submitted to the customer on a regular basis.

 

Review of Performance

 

The performance of the project will be periodically reviewed by the project manager and the senior management team. Critical intervention in the project may take place as and when needed to ensure that the project is operating within the acceptable and previously set out parameters. As part of making continual improvements to the project, the audit findings will also be discussed by the project manager and other relevant stakeholders.

 

As the project approaches the end of its life-cycle, the project manager and the senior management team will also conduct a comprehensive project review. This project review will form the basis for any decisions to take up any offer to re-tender or requote for the same project, if our Company is provided the opportunity.

 

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MARKETING AND BUSINESS DEVELOPMENT

 

Our Group is primarily engaged in business-to-business (“B2B”) customer dealings. Our marketing and corporate development activities are led by Mr. Khazid bin Omar, our Senior Vice President, Corporate Services, and Mr. Yew Jin Sng, our Senior Vice President of Business Development. The business development team supports our Group’s sales and marketing efforts by approaching new customers, fostering long-term and strong relationships with existing customers, and generating and concluding new sales and service contracts.

 

We market our services actively through both traditional media (for example, print and radio advertisements) and new media (for example, search engine optimization and targeted advertising). We also participate in tradeshows and networking events, and we organize public relations activities with the media.

 

In terms of business development, we target large-scale projects (for example, involving conservancy areas or educational institutions) to boost our portfolio and our profile in the industry. We are registered on various tender platforms (in respect of public projects) such as GeBIZ and SESAMi. We monitor these portals for suitable tenders put up by the respective Singapore government agencies, and we also monitor newspaper advertisements for both public and private tenders.

 

Our “HomeHelpy” website and mobile application also enables us to market our cleaning services to individual customers. Through this business-to-customer (B2C) platform, we are able to expand our scope of coverage to include individual homes and offices.

 

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OUR MAJOR CUSTOMERS

 

Our major customers which accounted for 5.0% or more of our Group’s total revenue for FY 2024 and/or FY 2023 are as follows:

 

   Service  Percentage of
total revenue (%)
 
Customer  provided  FY 2024   FY 2023 
Changi Airport  Facilities services   10.0    4.6 
The Ministry of Education of Singapore  Facilities services   9.6    10.4 
National Environment Agency  Facilities services   8.0    2.6 
A Singapore multinational bank  Facilities services   5.8    5.9 

 

Except as disclosed above, our Directors are of the view that, as of March 31, 2024, our business and profitability are not materially dependent on any of our customers. To the best of our Directors’ knowledge, we are not aware of any information or arrangement which would lead to a cessation or termination of our current relationship with any of our major customers.

 

As of the date of this prospectus, none of the Directors or Major Shareholders of our Company or their respective associates has any interest, direct or indirect, in any of our customers.  

 

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OUR MAJOR SUPPLIERS

 

Direct cost of revenue for FY 2024 and FY 2023 amounted to approximately $59.9 million and $58.4 million, respectively. Approximately $5.5 million and $5.6 million of supplies purchases and sub-contractor costs were included in direct cost of revenue in FY 2024 and FY 2023, respectively. Our major suppliers (including sub-contractors) which accounted for 5.0% or more of our Group’s total supplies purchases and sub-contractor costs for FY 2024 and/or FY 2023 are as follows:

 

      Percentage of
total purchases (%)
 
Supplier  Product or service supplied  FY 2024   FY 2023 
Rental Hygiene Services Pte Ltd  Hygiene services and toiletries   18.5    17.2 
Waste Integrated Services & Environmental Pte Ltd  Sub-contractor of cleaning services   9.2    9.2 
Weishen Industrial Services Pte Ltd.  Sub-contractor of cleaning services   7.4    - 
Hoe Kian Huat Trading  Supplier of hardware   6.2    5.8 
Advanced Specialist Pte Ltd.  Sub-contractor of cleaning services   5.6    4.1 
Dexterity Services Pte Ltd  Sub-contractor of cleaning services   -    9.6 

 

Except as disclosed above, our Directors are of the view that, as of March 31, 2024, our business and profitability are not materially dependent on any of our suppliers. To the best of our Directors’ knowledge, we are not aware of any information or arrangement which would lead to a cessation or termination of our current relationship with any of our major suppliers.

 

As of the date of this prospectus, none of our Directors or Major Shareholders or their respective associates has any interest, direct or indirect, in any of our major suppliers.

 

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INSURANCE

 

As of the date of this prospectus, certain of our subsidiaries have taken out group hospital and surgical policies, foreign worker medical policies, and performance bond insurances, in respect of our employees, as well as insurance in accordance with WICA. We may be required to take up additional insurance policies in compliance with specific customer requirements as well. Such additional insurance include public liability insurance.

 

The above insurance policies are reviewed annually to ensure that our Group has sufficient insurance coverage. Our Directors believe that we have adequate insurance coverage for the purposes of our business operations and we will procure the necessary additional insurance coverage for our business operations, properties and assets as and when the need arises.

 

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INTELLECTUAL PROPERTY

 

Our Group’s intellectual property rights are important to our business and as of the date of this prospectus, the Group has registered the following trademarks:

 

Trademark   Jurisdiction   Class   Trade Mark Number   Expiry Date
  Singapore   03(1)   40202103768S   February 17, 2031
                 
  Hong Kong   03(2)   305537043   February 17, 2031
                 
  Japan   03(3)   6414416   July 8, 2031
                 
  Thailand   37(4)   200102313   January 19, 2030
                 
  Singapore   37(5)   40202000868W   January 13, 2030
                 

 

  European Union   37(6)   018179388   January 10, 2030

 

 

Notes:

 

(1)Chemical cleaning preparations for carpets; Chemical cleaning preparations for curtains; Chemical cleaning preparations for floors; Chemical cleaning preparations for glass; Chemical cleaning preparations for household purposes; Chemical cleaning preparations for upholstery; Cleaning agents for household purposes; Cleaning agents for glass; Cleaning agents for the hands; Cleaning preparations; Cleaning preparations for bathroom use; Cleansers for household purposes; Cleaning substances for household use; Cleaning preparations incorporating substances for the control of allergens; Cleaning preparations incorporating substances for the control of dust mites; Cleaning preparations impregnated into tissues; Cleaning preparations for sanitary purposes; Cleaning preparations for household use; Detergents for household use; Dry cleaning preparations.
(2)Cleaning agents; Cleaning agents and preparations; Cleaning agents for cleaning surfaces; cleaning compositions for floors and other interior surfaces; cleaning liquid; Cleaning preparations; cleaning preparations for industrial use; cleaning preparations for use on fabrics, upholstery and carpets, with and without deodorant properties; Cleaning preparations impregnated into tissues; cleaning sprays; Cleansers for household purposes; detergents for household purposes; dry-cleaning preparations
(3)Chemical cleaning preparations for household purposes, cleaning preparations; dry-cleaning preparations; detergents, other than for use in manufacturing operations and for medical purposes
(4)Cleaning of buildings exterior surface; Cleaning of buildings interior; Disinfecting; Window cleaning.
(5)Ceiling cleaning services; Cleaning of building exteriors; Cleaning of building interiors; Cleaning of building sites; Cleaning of buildings; Cleaning of commercial premises; Cleaning of domestic premises; Cleaning of factories; Cleaning of floor coverings; Cleaning of hospitals; Cleaning of hotels; Cleaning of office buildings and commercial premises; Cleaning of property; Cleaning of public areas; Cleaning of residential houses; Cleaning of schools; Cleaning of shops; Cleaning of venues before and after events; Cleaning services; Cloth laundry; Disinfecting; Disinfection services; Domestic cleaning services; Floor polishing; Handyman repair, maintenance and installation services; House cleaning services; Industrial cleaning services; Interior and exterior window cleaning services; Office cleaning services; Providing information relating to street cleaning services; Providing information relating to window cleaning services; Provision of cleaning services; Upholstery cleaning services.
(6)Cleaning of buildings exterior surface; cleaning of buildings interior; disinfecting; window cleaning.

 

Save as disclosed above, our Group does not own or use any trademark, patent or other license which is material to our business or profitability.

 

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LEGAL PROCEEDINGS

 

From time to time, we are a party to claims and legal proceedings arising in the ordinary course of business. Our management evaluates our exposure to these claims and proceedings individually and in the aggregate and provides for potential losses on such litigation if the amount of the loss is estimable and the loss is probable.

 

Except as disclosed below, to our knowledge, we believe that there are no material litigation matters at the current time (including any pending or known to be contemplated) which may have a material adverse effect on our business, financial condition or results of operations.

 

MOM Investigation in Relation to a Fatal Accident at Our Work Site

 

In 2019, A&P Maintenance was under contract to provide, among others, external façade cleaning services for an office tower. We appointed a sub-contractor, which in turn appointed its own sub-contractor, to carry out the façade cleaning works. The façade cleaning works were performed using a gondola. When not in use, the gondola was stored in a pit underneath floor slabs. When required for use, the floor slabs would be removed and the gondola would be elevated from the pit.

 

The façade cleaning works began in May 2019 and were expected to be completed by June 2019. In late May 2019, the works were halted due to an obstruction of the gondola tracks. During this time, the gondola was kept in the pit, however, part of the floor opening, around the gondola switch, was not covered.

 

The gondola pit was located in a rooftop area, where an independently owned bar was also located. In the early hours of June 9, 2019, a security officer working at the bar fell into the uncovered area of the gondola pit. The security officer died from the fall. The circumstances surrounding the fall were as follows: the security officer had been assigned to ensure that patrons of the bar did not enter a barricaded area (which included the area with the gondola pit). Two guests had pushed aside the barricades and entered the restricted area. Upon seeing the guests enter the restricted area, the security officer ran towards them. During this, the security officer accidentally fell into the uncovered area of the gondola pit.

 

Following the accident, the MOM commenced an investigation, which included interviews with certain of our management and employees. As a result of the said incident, two charges were brought against A&P Maintenance under Sections 20 read with Sections 14(3) and 14A(1)(b) of the WSHA, and one charge was brought against an employee of A&P Maintenance under Section 15(3A) of the WSHA. As of March 2, 2023, MOM has formally withdrawn its charge against the employee of A&P Maintenance. On 5 July 2023, A&P Maintenance pleaded guilty to the two charges. On August 18, 2023, a fine of $184,000 (S$245,000) was imposed on A&P Maintenance for the contraventions of the WSHA which has since been paid in full.

 

Other Legal Matters

 

In April 2024, the administrator and personal representative of a deceased person who had a fatal fall, brought a negligence claim against Jurong-Clementi Town Council, C&W Services Township Pte Ltd and Primech A&P. This claim which includes various heads of damage including but not limited to various expenses, loss of income and loss of dependency, is being handled by Primech A&P’s insurer, which has appointed an adjuster.

 

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LICENSES

 

We are required under the relevant laws and regulations of Singapore and Malaysia to hold certain licenses in order to conduct our business operations.

 

As of the date of this prospectus, our Group holds the following licenses:

 

Each of Primech A&P, Maint-Kleen, Princeston International and HomeHelpy holds a cleaning business license required pursuant to the Environmental Public Health Act of Singapore for carrying on a cleaning business in Singapore;

 

Each of Primech A&P and Maint-Kleen holds a general waste collector’s license (Class A — Inorganic waste and recyclables) required pursuant to the Environmental Public Health (General Waste Collection) Regulations for carrying on the business of, inter alia, collecting or transporting general waste for payment or other remuneration in Singapore;

 

CSG holds a permit to store and use hazardous substances pursuant to the Environmental Protection and Management (Hazardous Substances) Regulations;

 

Primech A&P is a registered vector control operator under the Control of Vectors and Pesticides Act of Singapore, which is required for a business to undertake or engage in vector control work in Singapore;

 

Primech A&P is a registered contractor with the BCA in respect of the FM01 Facilities Management workhead;

 

Each of Primech A&P and Maint-Kleen is a registered contractor with the BCA in respect of the FM02 Housekeeping, Cleansing, Desilting & Conservancy Service workhead; and

 

Primech A&P is a registered contractor with the BCA in respect of the FM04 Pest Control workhead.

 

Save as disclosed herein, we do not require any other material licenses, registrations, permits or approvals in respect of our operations apart from those pertaining to general business registration requirements. See section titled “Government Regulations” for further details on the licensing requirements applicable to us under relevant laws and regulations. We regularly apply on a timely basis for extensions on all our licenses listed below. See section titled “Government Regulations.”

 

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GOVERNMENT REGULATIONS

 

We are subject to all relevant laws and regulations of Singapore and Malaysia and may be affected by policies which may be introduced by their respective governments from time to time. We have identified the main laws and regulations (apart from those pertaining to general business requirements) that materially affect our operations, including the licenses, permits and approvals typically required for the conduct of our business, and the relevant regulatory bodies, below.

 

As of the date of this prospectus, our Directors believe that we are not in breach of any laws or regulations applicable to our business operations that would materially affect our business operations, and our Group is in compliance with all the applicable laws and regulations that are material to our business operations. The Group may be subject to certain fines/penalties arising from its ordinary course of business from time to time.

 

Singapore

 

Environmental Public Health Act 1987 of Singapore (the “EPHA”) and the Environmental Public Health (General Cleaning Industry) Regulations 2014 (the “EPH Regulations”)

 

In order to regulate and upgrade the cleaning standards and productivity in the cleaning industry in Singapore, the EPHA was amended to require the licensing of cleaning businesses, in particular, requiring the training of cleaners and the payment of progressive wages to cleaners to ensure a more engaged cleaning workforce and the retention of a core of resident cleaners.

 

Pursuant to Section 80D of the EPHA, no person shall carry on a cleaning business in Singapore, except under and in accordance with a cleaning business license that is in force. A “cleaning business” means a business, whether or not the business is carried on for profit, (a) in which a person carries out cleaning work for other persons through the services of cleaners engaged or employed by that person; or (b) of supplying cleaners to other persons. “Cleaning work” means work carried out in Singapore that has, as its main or only component, the bringing of premises or any public place into, or keeping of premises or any public place in, a clean condition, and includes supervising the carrying out of such work but excludes any work that the Minister declares, by notification in the Gazette, not to be cleaning work.

 

Any person who contravenes Section 80D(1) of the EPHA shall be guilty of an offence and shall be liable on conviction to a fine not exceeding S$10,000 or to imprisonment for a term not exceeding 12 months or to both and, in the case of a continuing offence, to a further fine not exceeding S$1,000 for every day or part thereof during which the offence continues after conviction.

 

Pursuant to Section 80G of the EPHA read with the EPH Regulations, the applicant shall be eligible for a cleaning business license if:

 

(a)the applicant is a company registered under the Companies Act, a limited liability partnership registered under the Limited Liability Partnerships Act 2005 of Singapore, a sole proprietorship or firm registered under the Business Names Registration Act 2014, or a society registered under the Societies Act 1966 of Singapore or an entity having a business or corporate structure that may be prescribed;

 

(b)the applicant has submitted a progressive wage plan that conforms with applicable requirements (as described below);

 

(c)in the case of an applicant who has one (1) or more cleaners in the applicant’s employ at the time of the application — the applicant satisfies the Director-General that such proportion of the cleaners that the applicant employs, have attended such training, and at such frequency, as the Director-General may specify for the class of the cleaning business licence that is being applied for;

 

(d)the paid-up capital or (where the applicant is not a corporation) net worth of the applicant for the period specified by the Director-General, is not less than the amount specified by the Director-General for the class of the cleaning business licence that is being applied for (if specified);

 

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(e)the applicant has obtained a valid certification relating to the safety, health and welfare of persons at work in the applicant’s workplace, of a type that is specified by the Director-General for the class of the cleaning business licence that is being applied for (if specified); and

 

(g)the applicant satisfies such other requirements as may be prescribed.

 

Where an applicant applies for a grant or renewal of a class 1 cleaning business license, the EPH Regulations has prescribed requirements which include, amongst other requirements, that the applicant holds a bizSAFE Certification of level 3 or a higher level.

 

Such other requirements that have been prescribed under the EPH Regulations include that as at the date of the application for a class 2 or class 3 cleaning business licence, the applicant must have at least one (1) officer or employee who:

 

(a)has at least 2 years of practical experience in supervising cleaning work; or

 

(b)has been certified by the SkillsFuture Singapore Agency for having attended —

 

(i)at least one training module under the Singapore Workforce Skills Qualifications (WSQ) System that is specified in Division 1 of Part 5of the Second Schedule of the EPH Regulations; and

 

(ii)at least one training module under the Singapore Workforce Skills Qualifications (WSQ) System that is specified in Division 2 of Part 5 of the Second Schedule of the EPH Regulations.

 

Every progressive wage model in respect of a cleaning business of a licensee or an applicant for a cleaning business license (“Progressive Wage Model”) must:

 

(a)relate to every citizen or permanent resident of Singapore the licensee or applicant employs or proposes to employ as a cleaner in its cleaning business;

 

(b)specify the basic wage payable to every cleaner in paragraph (a) that is on an increasing scale depending on seniority, responsibilities, cleaning work experience and training received;

 

(c)specify an amount as the basic wage for each class of cleaners in paragraph (a) that is not less than the amount specified under section 80H(2)(a) for that class; and

 

(d)specify that where the cleaner belongs to a class of cleaners specified as eligible for a progressive wage model bonus under section 80H(2)(b), the cleaner will be paid a progressive wage model bonus.

 

See section titled “General Information on our Group — Government Regulations — Progressive Wage Model” for further details.

 

From 1 January 2024 onwards, a cleaning business license is valid for two years and renewable every two years (with the exception of class 3 cleaning business licenses). As of September 30, 2024, the details of the cleaning business licenses held by our Group were as follows:

 

Licensee   License number   Expiry Date
Primech A&P   NEA240420/1704H/C1/R01   May 22, 2026
Maint-Kleen   NEA231371/0284W/R10   December 16, 2024
Princeston International   NEA240972/5717C/R01   June 12, 2026
HomeHelpy  

NEA241252/9400R/C2/R01

  September 7, 2026

 

Pursuant to Section 80H of the EPHA, read with the EPH Regulations, every cleaning business licence is subject to prescribed conditions which are, among others:

 

(a)conditions requiring the cleaning business licensee to enter into a contract of service in writing with each cleaner employed by the cleaning business licensee;

 

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(b)conditions requiring every contract of service entered into between the cleaning business licensee and every cleaner who is a citizen or permanent resident of Singapore (called in this section a resident cleaner) to provide for the payment of a basic wage or a progressive wage model bonus to the resident cleaner, that —

 

(i)is not less than the amount; and

 

(ii)in the case of a progressive wage model bonus, is to be paid at the frequency,

 

specified by order by the Commissioner for Labour under Section 80H(2) for the class of cleaners that the resident cleaner belongs to;

 

(c)conditions requiring the cleaning business licensee to ensure that every cleaner employed by the cleaning business licensee satisfies the training requirements as may be specified by the Director-General for the class of cleaners that the cleaner belongs to;

 

(d)conditions prohibiting the cleaning business licensee from deploying any individual who is not employed by the cleaning business licensee to carry out any cleaning work, unless the individual is a cleaner employed by another cleaning business licensee; and

 

(e)conditions requiring the cleaning business licensee to keep such records, accounts or documents relating to the business or activities that the cleaning business licensee is authorised to carry out under the cleaning business licence, as may be prescribed, and retain those records, accounts or documents for a prescribed period.

 

If the conditions of the cleaning business license are not met, the Director-General may revoke any such cleaning business license, suspend the cleaning business license for such period of time (not exceeding six months) as the Director-General thinks fit; or impose such other directions or restrictions as the Director-General considers appropriate on the licensee’s cleaning business in Singapore, including imposing different conditions for different classes of cleaning business licences or cleaning business licensees under different circumstances.

 

Environmental Protection and Management Act 1999 of Singapore and the Environmental Protection and Management (Hazardous Substances) Regulations

 

The Environmental Protection and Management Act, or the EPMA, and the regulations thereunder govern environmental pollution control and the protection and management of the environment and resource conservation in Singapore.

 

Certain of the cleaning solutions and chemicals we use in our cleaning and pest control operations are considered “hazardous substances” under the EPMA and are subject to regulatory control. In particular, pursuant to Regulation 17 of the Environmental Protection and Management (Hazardous Substances) Regulations, a person shall not use, keep or have in his possession or under his control any of the specified hazardous substances under the regulations, unless he is authorized to store and use such hazardous substances. In addition, the storage and use of the hazardous substance must be effected in accordance with the provisions of the permit and any condition specified therein.

 

Non-compliance with the relevant requirements under the Environmental Protection and Management (Hazardous Substances) Regulations constitutes an offence and may result in fines or imprisonment.

 

As of September 30, 2024, our Group holds a permit to store and use hazardous substances under Regulation 17 of the Environmental Protection and Management (Hazardous Substances) Regulations, as follows:

 

Licensee   License Number   Hazardous Substances   Expiry Date
CSG   C0764P190924   40% Hydrochloric Acid
55% Sodium Hydroxide
  August 2, 2025

 

Further, CSG also holds a Factory Notification Confirmation issued by MOM enabling it to carry out production, packaging and storage of detergents and cleaners, and a license for explosive precursors issued by the Singapore Police Force for the period between August 30, 2023 to August 29, 2025.

 

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CSG also has the right to use the Singapore Green label for the D’Bond brand in respect of multi-purpose cleaners for the period between February 28, 2020 to February 27, 2026. CSG also has the right to use the Singapore Green label for the D’Bond brand in respect of hand soap between April 29, 2022 to April 28, 2026.

 

Enhanced Clean Mark Accreditation Scheme

 

The cleaning business license sets the entry-level standards for cleaning businesses, while accreditation under the Enhanced Clean Mark Accreditation Scheme aims to differentiate the quality of services provided by cleaning businesses. With the implementation of a revised Cleaning Business Licensing framework from 1 January 2024, the National Environment Agency of Singapore has indicated that it will cease the issuance and applications of Enhanced Clean Mark Accreditation Scheme.

 

There are two levels of award under the scheme; namely the Clean Mark Silver Award and the Clean Mark Gold Award. As of September 30, 2024, the details of the Clean Mark awards held by our Group were as follows:

 

Licensee   License number   Award   Expiry Date
Primech A&P   NEA230348/1704H/G10   Gold   December 31, 2025
Maint-Kleen   NEA231371/0284W/G11   Gold   December 31, 2025

 

The accreditation criteria for the Clean Mark Gold Award includes, among others:

 

(a)professional and regulatory standards, having (i) attained and maintained at least NEA Clean Mark Silver accreditation status for a period of 12 months, (ii) sufficient financial resources (paid up capital or net worth of at least S$25,000), (iii) no conviction in the past 12 months preceding the certification and throughout the accreditation award, for offences under legislation administered by NEA, MOM or the Singapore Central Provident Fund Board; (iv) no default on Employment Claims Tribunal Orders issued in the past 12 months preceding the certification and throughout the accreditation award; (v) attained at least bizSAFE Level 3 certification; and (vi) attained ISO 9001 certification;

 

(b)environmental health and cleanliness standards, having in place an existing system (for a minimum of six (6) months) to let cleaners know how and where they could improve upon to ensure that performance standards agreed between the company and clients are met;

 

(c)operations planning, support and delivery, by (i) providing cleaners with a sufficient supply of clean and presentable uniforms and appropriate types of cleaning equipment, (ii) appointing at least one supervisor as a productivity manager to improve work processes, develop and implement productivity initiatives and (iii) having a good performance record of an average of 75 points and above from the clients’ assessment forms;

 

(d)training, quality of manpower and general working conditions, that:

 

(i)at the point of application and throughout the accreditation award, all cleaners are trained in two (2) modules, one (1) workplace safety and health module and one (1) core module as stated in the list of modules endorsed by the Tripartite Cluster for Cleaners;

 

(ii)cleaners’ wages (including all overtime payments, allowances, bonuses and any other forms of salary payments) are paid through GIRO unless otherwise requested by cleaners;

 

(iii)cleaners are given basic statutory benefits as stated under the employment laws; and

 

(iv)cleaners’ performances are recognized with incentives and bonuses.

 

Progressive Wage Model (“PWM”)

 

Cleaning companies must satisfy the PWM wages and training requirements for cleaners who are Singapore citizen and permanent resident cleaners. These were minimum basic wages imposed by Ministry of Manpower which will increase from July 1, 2020 to June 30, 2029. A mandatory PWM bonus is payable to certain cleaners as well. The cleaning business must pay the PWM bonus at least once but no more than twice in a calendar year.

 

The remuneration of our Singapore citizen and permanent resident cleaners are in compliance with the Progressive Wage Model.

 

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Environmental Public Health (General Waste Collection) Regulations

 

Pursuant to the Environmental Public Health (General Waste Collection) Regulations, any person who wishes to carry on the business of (a) collecting or transporting general waste for payment or other remuneration (whether monetary or otherwise) or (b) collecting or transporting from any food establishment used cooking oil, may apply for a general waste collector’s license.

 

There are various classes of licenses. In particular, Class A general waste collection licenses relate to the collection of inorganic waste (e.g. construction and renovation debris, tree trunks and branches, furniture disposal, electrical appliances, wooden crates, pallets and other bulky items for disposal) and recyclable waste (excluding food waste).

 

A general waste collection license is valid for one year and renewable on a yearly basis. As of September 30, 2024, the details of the general waste collection licenses held by our Group were as follows:

 

Licensee   Class of License   License number   Expiry Date
Primech A&P   A   A-08-011X-000   April 30, 2025
Maint-Kleen   A   A-19-025K-000   October 21, 2024

 

Pursuant to Regulation 7AA of the Environmental Public Health (General Waste Collection) Regulations read with Section 99(15) of the EPHA, where a licensee (a) is in breach of any restriction or condition subject to which the licence was granted or (b) has contravened any provision of the EPHA, the Director-General may suspend or cancel the licence; and in the case of (a), the Director-General may in lieu of or in addition to suspending or cancelling the licence, impose a financial penalty of any amount, not exceeding $5,000, unless the breach in (a) is an offence under the EPHA.

 

Any person who contravenes or fails to comply with any of the provisions of the Environmental Public Health (General Waste Collection) Regulations shall be guilty of an offence and shall be liable on conviction to a fine not exceeding S$10,000 and, in the case of a continuing offence, to a further fine not exceeding S$500 for every day during which the offence continues after conviction.

 

Control of Vectors and Pesticides Act 1998 of Singapore (the “CVPA”)

 

Under Section 2 of the CVPA, a vector control operator refers to a person who, in the course of any trade or business, undertakes or engages any work carried out for the purpose of the destruction, or prevention of the propagation or harboring, of any insect, including its egg, larva and pupa, and any rodent, including its young, carrying or causing, or capable of carrying or causing any disease to human beings. Under Section 24 of the CVPA, no person shall in the course of any trade or business, undertake or engage in vector control work or advertise or otherwise hold himself out as a vector control operator unless he is registered as a vector control operator under the CVPA.

 

Under Section 30(1) of the CVPA, the registration of a vector control operator, vector control technician’s license and vector control worker’s certificate are each valid for three years from its date of grant. As of September 30, 2024, the details of the cleaning business licenses held by our Group were as follows:

 

Licensee   License number   Expiry Date
Primech A&P   NEA198801704H   July 3, 2027

 

Any person who undertakes any trade or business, or engages in vector control work without registration shall be guilty of an offence and shall be liable on conviction to a fine not exceeding S$20,000 or to imprisonment for a term not exceeding three (3) months or to both and, in the case of a second or subsequent conviction, to a fine not exceeding S$50,000 or to imprisonment for a term not exceeding six (6) months or to both.

 

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Contractors Registration System

 

The BCA administers the “CRS” which serves the procurement needs of Singapore government departments, statutory bodies and other public sector organizations including first level sub-contractors involved in Singapore government projects. Registration of a contractor with the BCA and the grade assigned to it is dependent on the contractor fulfilling the requisite grade requirements relating to, among others, track record, financial capacity, management certifications, and personnel qualifications.

 

In particular, a contractor may be registered under the following facilities management workheads with BCA:

 

FM01 Facilities Management which entails integrated facilities management and/or managing agent services by facilities management companies. In particular, the provision of integrated facilities management refers to the provision of at least two distinct maintenance services by the same company. The areas of distinct maintenance services include building maintenance services, mechanical and electrical maintenance services, security services, cleaning services, landscaping services and pest control services. The contract may deliver the services or outsource and manage sub-contractors.

 

FM02 Housekeeping, Cleansing, Desilting & Conservancy Service which entails cleaning and housekeeping services for offices, buildings, compounds, industrial and commercial complexes, desilting and cleansing of drains.

 

FM03 Landscaping which entails landscaping services including tree planting, turfing and grass cutting.

 

FM04 Pest Control which entails extermination and control of pests in installations, buildings and complexes.

 

The following table sets out the current registrations of our subsidiaries in the CRS as of March 31, 2024.

 

Company name  Workhead code  Grade  Expiry date
Primech A&P  FM01  M4  December 1, 2026
Primech A&P  FM02  L6  December 1, 2026
Primech A&P  FM04  L1  December 1, 2026
Maint-Kleen  FM02  L6  June 1, 2025

 

The tendering limit for projects in the public sector is determined by one’s qualified grade under the CRS.

 

The tendering limits under the FM01 are as follows:

 

Tendering limit  M1  M2   M3   M4 
(S$ million)               
April 1, 2020  Unlimited   30    10    1 

 

The tendering limits under the FM02 to FM04 Workheads are as follows:

 

Tendering limit  Single grade  L6  L5   L4   L3   L2   L1 
   (S$ million)                       
July 1, 2022 to June 30, 2023  Unlimited  Unlimited   16    8    5    1.6    0.80 
July 1, 2023 to June 30, 2024  Unlimited  Unlimited   16    8    5    1.6    0.80 
July 1, 2024 to June 30, 2025  Unlimited  Unlimited   16    8    5    1.6    0.80 

 

In order to apply for, maintain and renew the registrations under the CRS, there are different requirements to be complied with for different grades, including but not limited to, requirements relating to minimum paid up capital and net worth, employment of certain personnel with prescribed qualifications, and track record of past and current projects.

 

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Workplace Safety and Health Act 2006 of Singapore (the “WSHA”)

 

The WSHA provides that every employer has the duty to take, so far as is reasonably practicable, such measures as are necessary to ensure the safety and health of (a) his employees at work and (b) persons (not being his employees) who may be affected by any undertaking carried on by him in the workplace. These measures include, but are not limited to: (i) providing and maintaining for such persons a work environment which is safe, without risk to health, and adequate as regards to facilities and arrangements for their welfare at work; (ii) ensuring that adequate safety measures are taken in respect of any machinery, equipment, plant, article or process used by such persons; (iii) ensuring that such 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; (iv) developing and implementing procedures for dealing with emergencies that may arise while such persons are at work; and (v) ensuring that such persons at work have adequate instruction, information, training and supervision as is necessary for them to perform their work.

 

Under the WSHA, the Commissioner for Workplace Safety and Health (“Commissioner”) may serve a remedial or a stop-work order in respect of a workplace, for contravention or omission of any WSHA-specified condition.

 

Workplace Safety and Health (Incident Reporting) Regulations (the “WSHIR”)

 

Under Regulation 4 of the WSHIR, where any accident at a workplace occurs which leads to the death of any employee, the employer shall, as soon as is reasonably practicable but no later than 10 days after the accident, submit a report to the Commissioner.

 

Under Regulation 6 of the WSHIR, where an employee meets with an accident at a workplace on or after September 1, 2020, and the employee is certified by a registered medical practitioner or registered dentist to be unfit for work, or to require hospitalization or to be placed on light duties, on account of the accident, the employer shall submit a report to the Commissioner of the accident within 10 days after the date the employer first has notice of the accident.

 

Work Injury Compensation Act 2019 of Singapore (“WICA”)

 

WICA provides that if any personal injury is caused to an employee by accident arising out of and in the course of the employee’s employment with an employer, the employer shall be liable to pay compensation in accordance with the provisions of WICA. Any employer who fails to insure himself in accordance with WICA shall be guilty of an offence and shall be liable to, on conviction, a fine not exceeding S$10,000 or to imprisonment for a term not exceeding 12 months or to both, or if the employer is a repeat offender, to a fine not exceeding S$20,000 or to imprisonment for a term not exceeding 12 months or to both.

 

In this regard, certain of our subsidiaries have obtained a contract for insurance in accordance with WICA, with the current term for most subsidiaries covering up until November 3, 2024.

 

Employment Act 1968 of Singapore (the “Employment Act”)

 

The rights of all employees employed under a contract of service with our subsidiaries are governed under the Employment Act in particular, their rights to annual leave, sick leave and maternity leave, amongst others. In respect of (a) workmen who receive salaries not exceeding S$4,500 a month and (b) employees (other than workmen or persons employed in a managerial or an executive position) who receive salaries not exceeding S$2,600 a month, the Employment Act governs additional aspects of their conditions of service such as hours of work, overtime and rest day, amongst others.

 

Employment of Foreign Manpower Act 1990 of Singapore (the “EFMA”)

 

The employment of foreign workers in Singapore is governed by the EFMA and regulated by MOM. In Singapore, under Section 5(1) of the EFMA, no person shall employ a foreign worker unless he has obtained in respect of the foreign worker a valid work pass. The foreign worker has to be employed and carry out duties in accordance with the conditions of his or her work pass. Any person who fails to comply with or contravenes Section 5(1) of the EFMA shall be guilty of an offence and shall:

 

(a)be liable on conviction to a fine of not less than 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:

 

(i)in the case of an individual, 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 (1) month and not more than 12 months; or

 

(ii)in any other case, be punished, with a fine not less than S$20,000 and not more than S$60,000.

 

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There are various employment passes available for foreign workers, namely, “Work Permits”, “S Passes” and “Employment Passes”. While there is no minimum qualifying salary for Work Permit holders, the minimum qualifying salary for S Pass holders (who are not in the financial services sector) is currently S$3,000 and for Employment Pass holders (who are not in the financial services sector) it is currently S$5,000.

 

The number of Work Permit and S Pass holders a company can hire in Singapore is limited by a quota (or dependency ratio ceiling) and subject to limitations, including conditions for source countries or regions, age when applying and maximum period of employment. The dependency ratio ceiling for foreign workers (whether Work Permit holders or S Pass holders) hired by a company within the services sector in Singapore is currently 35% of our total workforce.

 

The employment of foreign workers is also subject to the payment of levies. Companies which hire close to the maximum quota are required to pay higher levies. Currently the Group pays levies between S$300 to S$800 per month for each Work Permit holder, and S$330 per month for each S Pass holder.

 

Employment of Foreign Workers in the Services Sector

 

A company that wishes to employ foreign employees from NTS countries for conservancy cleaning services would have to first submit a completed prior approval form to the Work Pass Division of the MOM, and such prior approval form has to be endorsed by the supporting town council. Once the prior approval has been issued, the cleaning company may then proceed to submit a new work permit application for each NTS foreign employee. As of September 30, 2024, we employed 271 workers from Bangladesh across 13 projects under such approval.

 

An employer is also required to place a $5,000 security bond for each non-Malaysian work permit holder it wishes to employ. The bond is in the form of a banker’s or insurance guarantee to support the security bond. It is used to ensure that both the employer and the foreign employee comply with the conditions of the work permit. The employer is not permitted to ask the foreign employee to pay for the bond, and the bond must be purchased before the foreign employee arrives in Singapore.

 

Regulations on Anti-Money Laundering and Prevention of Terrorism Financing

 

The primary anti-money laundering legislation in Singapore is the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act 1992, or CDSA, provides for the confiscation of benefits derived from, and to combat, corruption, drug dealing and other serious crimes. Generally, the CDSA criminalizes the concealment or transfer of the benefits of criminal conduct as well as the knowing assistance of the concealment, transfer or retention of such benefits.

 

The Terrorism (Suppression of Financing) Act 2002, or TSOFA, is the primary legislation for the combating of terrorism financing. It was enacted to give effect to the International Convention for the Suppression of the Financing of Terrorism. Besides criminalizing the laundering of proceeds derived from drug dealing and other serious crimes and terrorism financing, the TSOFA also requires any person in Singapore and any citizen of Singapore outside of Singapore who has information about any transaction in respect of any property belonging to any terrorist to immediately inform the Commissioner of Police of that fact or information. If any person fails to lodge the requisite reports under the CDSA and the TSOFA, it may be subject to criminal liability.

 

Malaysia

 

Laws and Regulations in Malaysia In Relation to the Cleaning Business

 

MDTCL Approval for Unregulated Services

 

Under the Guidelines on Foreign Participation in the Distributive Trade Services (“Guidelines”), all foreign business operators engaged in the business of distribution and trade services in Malaysia are required to obtain approval from the Ministry of Domestic Trade and Cost of Living (“MDTCL”) in order to be able to apply for expatriate work permits and sometimes, to obtain or renew business premise licenses.

 

Under the Guidelines, “foreign participation” means any interests, associated group of interests or parties acting in concert which comprises of (i) individual who is not a Malaysia citizen; (ii) foreign company or institution; or (iii) local company whereby parties stated in (i) and (ii) herein hold more than 50 percent of the voting rights in the company.

 

As My All Services is currently wholly owned by Primech A & P Pte. Ltd. (a foreign company), which is ultimately owned by Mr. Kin Wai Ho, Mr. Jin Ngee Vernon Kwek and Mr. Cyrus Jun Ming Wen, who are foreigners under the Guidelines, My All Services is considered to be a company with foreign participation pursuant to the Guidelines.

 

Further, “distributive trade” is defined to comprise all linkage activities that channel goods and services from the supply chains to intermediaries for the purpose of resale or to the final buyers. Because My All Services supplies cleaning services as a business to the general public, it would be considered as engaging in distributive trade services under the Guidelines.

 

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The services provided by My All Services would fall within the category of “various other distribution formats” and which is defined in the Guidelines as other type of distributive formats and unregulated sector not otherwise expressed in the Guidelines. In this regard, the MDTCL has issued a list of certain services under “unregulated” sub sectors and the following services are set out to be unregulated services under the purview of MDTCL:

 

disinfecting and exterminating services,

 

window cleaning services,

 

janitorial services and

 

other building cleaning services not otherwise classified.

 

Services provided by My All Services would therefore fall within the category of unregulated services and would subject My All Services to the approval and requirements imposed under the Guidelines by MDTCL. Accordingly, while the guidelines refer to “unregulated” services, such services are in fact regulated.

 

In addition to an approval from the MDTCL, a foreign owned entity carrying on unregulated services is recommended to comply with the Guidelines. The Guidelines do not have force of law and are merely reflective of government policy. While there are no legal sanctions or penalties for non-compliance with the Guidelines, compliance with the Guidelines is enforced administratively. For example, the Malaysian Immigration Department generally refuses to process work permit applications if the applicant company does not have the distributive trade approval.

 

As of the date of this prospectus, My All Services does not have and has not applied for the MDTCL approval under the Guidelines to supply cleaning services in Malaysia. Without the MDTCL approval, My All Services may not be able to apply for or renew any work permits for any foreign employees, or apply for or renew its business premise and signage license.

 

As of the date of this prospectus, My All Services has not employed any foreign employees in Malaysia and does not currently require a business premise and signage license from any local authorities under the LGA as it does not operate its cleaning service business from any business premises.

 

Laws and Regulations in Malaysia in relation to Workplace Safety and Health

 

Occupational Safety and Health Act

 

The Occupational Safety and Health Act 1994 (“OSHA”) and its regulations apply throughout Malaysia to certain industries specified in the First Schedule to the OSHA, including the sanitary services industry. OSHA imposes general duties upon employers and employees to ensure workplace health and safety. Along with the regulations promulgated under OSHA, OSHA requires, among others, the establishment of workplace safety and health committees (where there are more than 40 persons employed at the place of work), the introduction of a policy statement regarding occupation safety and health and sets forth strict compliance requirements in relation to workplace accident notification. Contravention of the OSHA will render a person liable to a fine up to MYR50,000 and/or imprisonment for a term up to 2 years.

 

Laws and Regulations in Malaysia Relating to Employment

 

Employment Laws

 

In Malaysia, the legal rules governing the employment relationship include legislation that sets minimum employment standards; that governs trade unions; that establishes and regulates a national statutory pension fund; that provides social security protections; that sets minimum wages and minimum ages for retirement; and that establishes protections for laid off employees.

 

Employee’s Personal Data Protection

 

The Personal Data Protection Act 2010 (“PDPA”) regulates the processing of personal data in Malaysia. Briefly, the PDPA imposes legal obligations on employers (as data users) who process the personal data of its employees (as data subjects). Employers, as data users, are required to comply with the personal data protection principles prescribed under the PDPA which include the requirement to, among others, obtain an employee’s consent prior to processing his/her personal data, inform the employee that his/her personal data is being processed via written notice, specify reasons for the collection of the personal data, imposes responsibility for the protection of such personal data, ensure the accuracy of the personal data and requires permission to be given to employees to access the collected personal data. Contravention of such principles will render a person liable to a fine not exceeding MYR300,000 and/or imprisonment for a term not exceeding 2 years.

 

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PROPERTIES AND FIXED ASSETS

 

As of the date of this prospectus, (a) Primech A&P holds a sixty (60) year leasehold interest in 23 Ubi Crescent Singapore 408579 (expiring July 2057) with an area of 420.6 sq. m. and a sixty (60) year leasehold interest in 25 Ubi Crescent Singapore 408580 (expiring July 2057) with an area of 420.7 sq. m., and (b) CSG Industries holds a thirty (30) years interest (expiring in February 2038) in 50 Tuas Avenue 11 #01-22 Tuas Lot Singapore 639107. We have leased additional small offices in other Singapore and Malaysia cities.

 

On April 27, 2021, Primech A&P completed the acquisition of leasehold interest in 23 and 25 Ubi Crescent Singapore for approximately $6.7 million. The purchase price consisted of cash consideration of approximately $1.7 million and a loan obtained from the Lender of approximately $5.0 million.

 

To the best of our Directors’ knowledge and belief, there are no regulatory requirements or environmental issues that may materially affect our Group’s utilization of tangible fixed assets.

 

Pursuant to the terms of the leases entered into by our Company and/or relevant subsidiary, the lessor is entitled to unilaterally terminate the relevant lease in the event of, unpaid rent after a prescribed period, any breach of conditions, covenants or stipulations in such lease, or in the event of liquidation of the tenant. Our Directors are of the view that any unilateral termination by any lessor is unlikely to have a material impact on our Group’s business or operations as we believe that we will be able to secure leases for alternative premises in the event of such termination.

 

STAFF TRAINING

 

From time to time, we may send our employees who require specialized training to industry related courses and have sponsored our employees in their pursuit of higher education and development. We conduct specific training to equip our employees in our finance, administration and human resources departments with the relevant skills and knowledge to meet their job requirements. Such training includes in-house training conducted by our senior employees as well as training conducted by external speakers or consultants. Depending on the job requirements, we will also support our employees in these departments when they register for external courses.

 

The Singapore Workforce Skills Qualifications (“WSQ”) is a national credential system that trains, develops, assesses and certifies skills and competencies for the workforce. In particular, the Environmental Cleaning WSQ training framework caters to the training of cleaning crew, stewards and supervisors in the commercial and private residential cleaning, and public cleaning subsectors. In particular, as a requirement of our Clean Mark Awards, as of September 30, 2024:  

 

  75% of our cleaners are trained in any two modules under the WSQ Certificate in Environmental Cleaning or higher;

 

  75% of our team leaders are trained in any two modules under the WSQ Higher Certificate in Environmental Cleaning or higher; and

 

  75% of our supervisors are trained in any two modules under the WSQ Advanced Certificate in Environmental Cleaning.

 

In 2019, Primech A&P also signed a memorandum of undertaking with BATU (the Building Construction and Timber Industries Employee’s Union), e2i (the Employment and Employability Institute) and NTUC LearningHub (an affiliate of NTUC, the National Trades Union Congress in Singapore) to form a Company Training Committee which seeks to train our employees to have better job prospects by being ready for new technology and business models.

 

We also have a HomeHelpy Training Center for our employees working under “HomeHelpy”. The training center replicates an average home, with the necessary furnishings such as beds, stove, kitchenware etc. enabling our employees to hone their skills before they render services. In the future, we also intend to use this center to provide training in connection with specialized cleaning services such as cleaning of healthcare facilities, cleanrooms and data centers, as well as customer services. We also train employees to function as internal assessors and inspectors to ensure quality control of our cleaning services.

 

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AWARDS AND ACCREDITATIONS

 

The following is a description of the material accreditations we have received:

 

ISO 9001:2015 (Quality Management) which specifies requirements for a quality management system. Organizations use the standard to demonstrate the ability to consistently provide products and services that meet customer and regulatory requirements;

 

ISO 14001:2015 (Environmental Management) which specifies the requirements for an environmental management system that an organization can use to enhance its environmental performance;

 

ISO 45001:2018 (Occupational Health & Safety Management System) which specifies requirements for an occupational health and safety (“OH&S”) management system, and gives guidance for its use, to enable organizations to provide safe and healthy workplaces by preventing work-related injury and ill health, as well as by proactively improving its OH&S performance; and

 

bizSAFE Star status which is the highest possible accreditation which can be obtained under bizSAFE, a nationally recognized capability building program in Singapore designed to help companies build workplace safety and health capabilities. bizSAFE level 3 certificate is the minimum level required for any contracts and tenders with bizSAFE partners (selected organizations, typically larger organizations, that have influencing power in their business value chain), main construction firms, Singapore government sectors, etc.

 

Set out below is a list of the awards and accreditations our Group has received:

 

Expiry Date   Recipient   Name of Award or Accreditation   Awarding Organization
December 14, 2026   Primech Holdings   ISO 9001:2015 (Quality Management)  

Guardian Independent Certification Pte Ltd

December 14, 2026   Primech A&P   ISO 9001:2015 (Quality Management)   Guardian Independent Certification Pte Ltd
December 14, 2026   Maint-Kleen   ISO 9001:2015 (Quality Management)   Guardian Independent Certification Pte Ltd
January 4, 2026   CSG   ISO 9001:2015 (Quality Management)   Business Systems Certification Pty, Ltd.
December 14, 2026   Primech Holdings   ISO 14001:2015 (Environmental Management)   Guardian Independent Certification Pte Ltd
December 14, 2026   Primech A&P   ISO 14001:2015 (Environmental Management)   Guardian Independent Certification Pte Ltd
December 14, 2026   Maint-Kleen   ISO 14001:2015 (Environmental Management)   Guardian Independent Certification Pte Ltd
January 4, 2026   CSG   ISO 14001:2015 (Environmental Management)   Business Systems Certification Pty, Ltd.
December 14, 2026   Primech Holdings   ISO 45001:2018 (Occupational Health & Safety Management System)   Guardian Independent Certification Pte Ltd
December 14, 2026   Primech A&P   ISO 45001:2018 (Occupational Health & Safety Management System)   Guardian Independent Certification Pte Ltd
December 14, 2026   Maint-Kleen   ISO 45001:2018 (Occupational Health & Safety Management System)   Guardian Independent Certification Pte Ltd
December 14, 2026   Primech A&P   bizSAFE Star   Workplace Safety and Health Council
December 14, 2026   Maint-Kleen   bizSAFE Star   Workplace Safety and Health Council
December 31, 2025   Primech A&P   Clean Mark Gold Award   NEA
December 31, 2025   Maint-Kleen   Clean Mark Gold Award   NEA
April 2025   Primech A&P   Ordinary Membership   Environmental Management Association of Singapore

 

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QUALITY CONTROL AND ASSURANCE

 

Our subsidiaries have obtained various ISO accreditations in relation to our quality management and OH&S systems, as described under the section titled “General Information on our Group — Our Business Overview — Awards and Accreditations”.

 

On a day-to-day management basis, our site supervisors and foremen are responsible for checking that our employees have complied with our procedures and guidelines regarding workplace safety and quality control during the course of the work on site. In the event that there are complaints from our customers, our site supervisors and foremen will typically rectify any such issues on site immediately. Given that our services involve a large workforce and that a substantial part of our services are provided in connection with public areas, our Directors believe that complaints from customers or members of the public are not uncommon in our industry. In the event that a written complaint is received, we will record the complaint and detail any remedial/corrective steps taken and forward the same to the responsible operations manager. Depending on the nature of the complaint — whether it related to quality of services or other environmental, health or safety issues, the operations manager shall decide on the appropriate responses or follow-up measures to take, oversee their implementation and follow up with the customer accordingly.

 

ENVIRONMENTAL MATTERS

 

Our Group’s environmental impacts are managed by our Environmental, Occupational Health & Safety (EHS) team, under Human Resource department which administers our ISO 14001:2015 certified environmental management system and ensures that our Group is compliant with all applicable environmental laws and regulations. We employ the following measures to ensure compliance and mitigate the environmental impact across our business services:

 

Air quality and noise control: In general, our cleaning and disinfecting operations do not generate any air emissions, except from the use of company vehicles. Company vehicles are scheduled for routine inspection for emission compliance. In general, our cleaning and disinfecting operations do not generate high noise level. Regular maintenance is carried out on our selected machinery and equipment, such as company vehicles and floor-scrubbers, to ensure intended performance and ensure emissions are within acceptable level/ limits.

 

Waste and recyclables: Waste are segregated into general waste, toxic waste and recyclables. Waste and recyclables will be collected by the respective licensed collectors.

 

Energy: We generally consider energy-efficient products when procuring equipment and machinery. Such includes, but is not limited to, selecting of LED lights over conventional lightings and selecting air conditioning with good energy efficiency rating.

 

Wastewater management: At our contract sites, we minimize the use of water for cleaning and reuse water whenever possible. Domestic wastewater is disposed of as soon as practicable at designated disposal points after collection to avoid the collection of stagnant water for breeding of vectors.

 

Use of ecolabel products: We strive to use products endorsed under the Singapore Green Labelling Scheme, certified eco-friendly or equivalent, such as hand soap, floor cleaner and tissue paper, as these products have been certified or proven to have lesser undesirable effects on our environment.

 

Primech A&P is also currently a member of the Environmental Management Association of Singapore (“EMAS”). EMAS was established by service providers from contract cleaning, waste management and pest control industries, with an aim to provide a cohesive platform for companies in the environmental industry to raise the professionalism of the industry and to address the common concerns of environmental and hygienic services.

 

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RESEARCH AND DEVELOPMENT

 

Our research and development expenses were not significant in FY 2024 and FY 2023.

 

We are currently exploring the potential of applying EV charging technology, in particular the use of lithium-ion batteries, to our cleaning robots. Our cleaning robots are currently powered by lead acid batteries, which have long charge times and are less efficient than the lithium-ion batteries designed to be used in EVs. To this end, we are collaborating with Oyika Pte. Ltd., a company that builds battery swap and charging infrastructure for EVs, to develop swappable lithium-ion batteries for use in our cleaning robots, which will allow them to operate for a longer period of time (e.g., by way of replacing batteries) as compared to our current robots, which have to be charged during the day. At the same time, we intend to incorporate smart sensors to track performance and efficiency. We do not own or operate an EV charging function.

 

ESTIMATED REVENUES UNDER CONTRACT

 

As of September 30, 2024, our contracted revenues for future fulfilment by our Group were approximately $142.0 million (S$189.2 million). The following table sets forth a breakdown of the value of our contracted revenues which we estimate to fulfil in FY 2025, FY 2026 and FY 2027 onwards, subject to cancellations or other contractual changes which are not presently foreseeable:

 

     ($’000)     (%) 
Estimated amount of services contracted for at October 1, 2024 to be recorded in revenue for FY ending March 31, 2025   34,643    24.4 
Estimated amount of services contracted for at April 1, 2025, to be recorded in revenue for FY ending March 31, 2026   50,556    35.6 
Estimated amount of services contracted for at April 1, 2026 to be recorded in revenue for FY ending March 31, 2027 onwards   56,775    40.0 
    141,974    100.0 

 

Our order book as at any particular date is not indicative of our revenue for succeeding periods as secured contracts are subject to cancellations, deferral or early termination by our customers.

 

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CORPORATE SOCIAL RESPONSIBILITY

 

We seek to improve lives and strengthen communities by fostering civic engagements through service and volunteerism. To this end, we have undertaken several corporate social responsibility initiatives, such as:

 

participating in the Metropolitan YMCA (“MYMCA”) Flag Day to fundraise for the underprivileged and those in need;

 

joining MYMCA for their Big Sweep Program to help improve living conditions for destitute elderly and families in need by cleaning and refurbishing their homes;

 

participating in community service programs led by Touch Community Services such as “Meals-on-Wheels” (a meal delivery program to meet the daily needs of home-bound elderly) and Home Improvement Programs (cleaning and refurbishing the homes of the elderly in need).

 

As part of our sustainability policy, we also, among others, practice recycling, avoid using paper products where unnecessary, and we use products with a lower environmental impact (e.g. ecolabels) in providing our cleaning services.

 

Our Directors intend to establish a corporate social responsibility policy which will formally address our Group’s impact on the local community.

 

COMPETITION

 

We operate in a competitive environment and face competition from new and existing competitors based in Singapore and elsewhere. In particular, the cleaning industry we operate in is highly fragmented with low barriers to entry. As of April 1, 2024, there were over 1,500 cleaning companies licensed by the NEA in Singapore. We believe that our primary competitors are large environmental services companies with an established presence in Singapore, such as the ISS Group, 800 Super Holdings, Weishen Industrial Services, Chye Thiam Maintenance Pte Ltd, Hygieia Group Limited and Ramky Cleantech Services Pte Ltd.

 

We believe that our competitive edge comes from our positioning as an innovative company and the quality of our services, which have allowed us not only to secure contracts with large organizations such as Singapore Changi Airport, educational institutions and large commercial banks, but also to maintain long-term relationships with these customers.

 

RECENT DEVELOPMENTS

 

We incorporated new subsidiaries, Primech AI Holdings Limited (“PAHL”) and Primech AI Investments Limited on March 28, 2024. PAHL entered into a memorandum of understanding with an independent third party on April 16, 2024, which we will jointly introduce an eco-friendly and fully automatic artificial intelligent-powered toilet cleaning robot. On May 29, 2024, Primech AI Pte. Ltd. was set up, Primech Holdings Ltd. hold 51% interest in the Primech AI Pte. Ltd.

 

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MANAGEMENT

 

The following table sets forth information regarding our Directors and Executive Officers as of the date of this prospectus.

 

Name   Age   Position
Mr. Kin Wai Ho   49   Chief Executive Officer and Director
Mr. Yew Jin Sng   75   Senior Vice President, Business Development and Director
Mr. Hansel Loo   44   Senior Vice President, Operations
Mr. Khazid bin Omar   59   Senior Vice President, Corporate Services
Ms. Kit Yu Lee   38   Chief Financial Officer
Mr. William Mirecki   54   Independent Director
Mr. William Yuen   57   Independent Director
Dr. Kai Yue Jason Chan   50   Independent Director

 

The business and working experience and areas of responsibility of our Directors and Executive Officers are set out below:

 

Mr. Kin Wai Ho was appointed as the Chairman of our Company from November 2021 to January 2023 and redesignated as Chief Executive Officer in January 2023. He was appointed as a director of our Company in June 2021. Since February 2018, Mr. Ho co-founded and was subsequently an executive director of Sapphire Universe, an investment holding company. Since November 2021, Mr. Ho has been a non-executive director of Fit Boxx Holdings Limited, a retail company. From June 2017 to May 2023, Mr. Ho served as an independent director of Lapco Holdings Limited (HKEx: 8472), an environmental hygiene service company. Mr. Ho has also served as a director of Faith Elite Limited since May 2018, Ever Sound International Limited since December 2008, Oriental Unicorn Limited since October 2020, Ever App Limited since September 2013, Sapphire Universe Holdings Pte. Ltd since June 2020, Primech A & P since April 2018, and HomeHelpy since November 2019. From May 2018 to November 2021, Mr. Ho served as a vice chairman of Fit Boxx Holdings Limited, a company engaged in the sourcing, marketing, selling and distribution of a variety of beauty device products, fitness, health care products, and other related products. From September 2015 to September 2020, Mr. Ho served as the Chairman of the board of directors and chief executive officer of Jimu Group Limited (previously known as Ever Smart International Holdings Limited) (HKEx: 8187), a footwear design and development, production management, and logistics management service company. From 2009 to 2015, Mr. Ho served as an executive director of Ever Smart International Enterprise Limited, a footwear trading company. From 2003 to 2009, Mr. Ho served as a sales merchandiser of Betastar Trading Limited, a footwear trading private company. From 2000 to 2001, Mr. Ho served as a programmer at JP Morgan Chase & Co., a multinational investment bank and financial services holding company. Mr. Ho obtained a Bachelor of Science degree in Management from the Royal Holloway and Bedford New College, University of London in 1999 and a Master of Science in Interactive Multimedia from Middlesex University in 2001.

 

Mr. Yew Jin Sng was appointed as our Senior Vice President, Business Development in November 2021 and was appointed as a director of our Company in January 2023. Mr. Sng is responsible for the management of our Group’s key clients and supporting our President in formulating strategies in respect of client management. From April 2018 to December 2020, Mr. Sng served as the chief executive officer of Primech Services & Engrg Pte Ltd where he oversaw the management of the company’s business operations. Mr. Sng also has been serving as a director of Primech A & P and Primech Services & Engrg Pte Ltd since 2020 and 2013, respectively. Prior to joining us, Mr. Sng founded Megapact Agencies/Megapact Systems Services and partnered Transmarco Group to helm a joint venture software company, Datacom Services, as its general manager, in 1983, and left Datacom in 1985 to run Megapact Agencies as the managing director. From 1970 to 1980, Mr. Sng served as a systems manager of NCR Corporation in Singapore (NYSE: NCR), software, managed and professional services, consulting and technology company. From 1980 to 1983, Mr. Sng served as a divisional manager of Asian Computer Services Pte Ltd, a subsidiary of Haw Par Corporation. Mr. Sng obtained a Diploma in Management Studies from the Singapore Institute of Management in 1976.

 

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Mr. Hansel Loo was appointed as our Senior Vice President, Operations in November 2021. Mr. Loo is responsible for the management of onsite day-to-day operational matters. Mr. Loo joined Maint-Kleen in 2002 as a senior vice president. In May 2016, Mr. Loo was appointed as the executive director of Maint-Kleen, where he was responsible for overseeing the operations of the company. Mr. Loo obtained various industry-related certifications, including, a certificate on navigating through business uncertainties: business continuity plan from TÜV SÜD PSB Pte. Ltd. in 2020, completing the course on basic concept in construction productivity enhancement from the Building and Construction Authority in 2013, and completing the bizSAFE workshop for Company CEO/Top Management from the MOM in 2010. Mr. Loo received a certificate of office skills issued by Institution of Technical Education in 1998.

 

Mr. Khazid bin Omar was appointed as our Chief Executive Officer from November 2021 to January 2023 and was redesignated as Senior Vice President, Corporate Services in January 2023. He was appointed as director of our Company during December 2020 to January 2023. He joined Primech Services & Engrg Pte Ltd in April 2018 as the chief operating officer and was promoted to senior vice president in December 2020. Mr. Omar also previously served as a director of Acteef Cleaning and Primech A & P. From January 2002 to May 2017, Mr. Omar served as a director of housekeeping in the Fairmont Hotel Singapore, a company which operates a global chain of luxury hotels. Mr. Omar obtained a Bachelor’s degree in Business Administration from the Royal Melbourne Institute of Technology in 2005.

 

Ms. Kit Yu Lee was appointed as our Chief Financial Officer in November 2021. Ms. Lee joined us as the chief financial officer of Primech A & P Limited in March 2020. From August 2018 to November 2020, Ms. Lee served as the chief financial officer of Fit Boxx Holdings Limited, a retail company. From May 2015 to December 2019, Ms. Lee served as the deputy chief financial officer and subsequently the financial controller of Jimu Group Limited (previously known as Ever Smart International Holdings Limited) (HKEx: 8187), a footwear design and development, production management, and logistics management service company. From 2008 to 2015, Ms. Lee served as an audit associate, an audit senior, and with her last position as audit manager at Deloitte Touche Tohmatsu Limited in Hong Kong, a public accounting company. Ms. Lee obtained a Bachelor of Science in Accounting and Finance from the University of Warwick in 2008. She has been a member of the Hong Kong Institute of Certified Public Accountants since 2015.

 

Mr. William Mirecki has served as our independent director since September 2023. Mr. Mirecki has over 20 years of leadership experience in the distribution and sales and marketing business. Since 2000, Mr. Mirecki joined Wolverine World Wide, Inc. (NYSE: WWW) (“WWW”), a footwear manufacturing company. He has held different senior positions in WWW from May 2000 to March 2018, including director of global products of Hush Puppies from May 2000 to December 2003, regional vice president of lifestyle group from January 2004 to December 2011, regional vice president of Asia Pacific from January 2012 to March 2015, president of Hush Puppies from April 2015 to March 2018, and has been the managing director of Merrell Asia Pacific, WWW’s largest global brand, since April 2018. From 1999 to 2000, Mr. Mirecki served as a regional sales manager of Pfister & Vogel Leather Co., a company previously engaged in leather production. From 1993 to 1999, Mr. Mirecki served as a leather buyer, product development manager, and brand merchandise manager of Florsheim, Inc., a shoe brand company. Mr. Mirecki obtained a Bachelor’s degree in Liberal Arts, Minor in Criminal Justice and Business from Southern Illinois University in 1992.

 

Mr. William Yuen has served as our independent director since September 2023. Mr. Yuen has also served as an independent director and the chairman of the audit committee of Weidai Ltd., a company listed on the over-the-counter market in the United States (OTC symbol: WEIDY) (formerly listed on the New York Stock Exchange (NYSE symbol: WEI)), since November 2018. Previously, Mr. Yuen held various roles, including board member, chief financial officer, and company secretary, in several publicly listed companies in Hong Kong. Prior to that, he worked in the global capital markets group and the audit and assurance department of Big Four accounting firms in Los Angeles and Hong Kong. Mr. Yuen received a bachelor’s degree in accounting from the University of Southern California. Mr. Yuen is a member of the American Institute of Certified Public Accountants and a member of the Hong Kong Institute of Certified Public Accountants. Mr. Yuen is also a certified public accountant in the state of California and a Chartered Global Management Accountant.

 

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Dr. Kai Yue Jason Chan, MH, JP has served as our independent director since September 2023. Dr. Chan has been serving as an independent director of Bamboos Health Care Holdings Ltd (HKEx: 2293), a healthcare staffing service company since April 2019, as an independent director of Semk Holdings International Ltd (HKEx: 2250) since December 2021 and as an independent director of Sun Cheong Creative Development Ltd (HKEx: 1781) from December 2021 to May 2022. Dr. Chan has been Head of Information Technology, College of Professional and Continuing Education (CPCE) at The Hong Kong Polytechnic University (“PolyU”) since 2009. Dr. Chan has been further appointed as Assistant Dean (Innovation and Entrepreneurship) of CPCE since 2021 and Associate Dean (Development) since September 2022. Dr. Chan has also been serving as a visiting lecturer at School of Professional Education & Executive Development of PolyU since 2008. Dr. Chan has been appointed to several public services roles in Hong Kong. Dr. Chan has been served as a member of Property Management Services Authority since 2016, a member of Advisory Committee of the Innovation and Technology Venture Fund for Innovation and Technology Bureau since 2017, a member of the Steering Committee of Child Development Fund for Labour and Welfare Bureau since 2017, a co-opted member of Consumer Council since 2018, a member of the Dissemination and Promotion Sub-committee of the Quality Education Fund for Education Bureau since 2019, a member of the Entrepreneurship Committee Advisory Group for Hong Kong Cyberport since 2020, a member of Board of Governors of Prince Philip Dental Hospital since 2020. Dr. Chan was appointed as Justice of the Peace (JP) and awarded the Medal of Honour (MH) by the Government of the Hong Kong Special Administrative Region in June 2017 and July 2021 respectively. Dr. Chan graduated from The City University of Hong Kong with a Bachelor of Arts in Public and Social Administration with First Class Honours in 1998. He further obtained a Master of Science degree in Computing at the City University of Hong Kong in 2004 and a Master of Educational Technology degree at The University of British Columbia in 2005. Dr. Chan completed the Stanford Certified Project Manager certificate program at Stanford University in 2007 and his doctorate in Doctor of Education at The University of Bristol in 2010.

 

Employment of Foreign Manpower Act

 

The EFMA provides that no person shall employ a foreign employee within Singapore otherwise than in accordance with the conditions of the foreign employee’s work pass. A work pass for a foreign employee shall be valid only in respect of the employer and the foreign employee specified therein.

 

Mr. Kin Wai Ho is the Chairman and a member of the Board of Directors of Primech Holdings Ltd, and Ms. Kit Yu Lee is its Chief Financial Officer. Both Mr. Kin Wai Ho and Ms. Kit Yu Lee are citizens of Hong Kong.

 

Mr. Kin Wai Ho and Ms. Kit Yu Lee obtained valid work passes for Primech A&P effective in October 2020 which expired in October 2022 and were subsequently renewed to be effective up till October 2024. Mr. Kin Wai Ho has been based in Singapore since August 2021. During this period, Mr. Kin Wai Ho is also a director of Primech Holdings Ltd and HomeHelpy. Ms. Kit Yu Lee was based in Singapore between October 2020 to December 2020. During the abovementioned period, and Ms. Kit Yu Lee also held (and continues to hold) directorships in Maint-Kleen and Acteef Cleaning. Such statutory directorships in other entities, including affiliates, are considered to be alternate employment under the EFMA, and should have required Letters of Consent from MOM. As such, Mr. Kin Wai Ho and Ms. Kit Yu Lee were in technical breach of the EFMA in their individual capacity for being in employment of an employer without a valid work pass.

 

Mr. Kin Wai Ho, in respect of his role in Primech Holdings Ltd. and HomeHelpy, and Ms. Kit Yu Lee, in respect of her role in Primech Holdings Ltd., CSG, Maint-Kleen, Acteef Cleaning and Princeston International, filed the documents requesting letters of consent with MOM and these were obtained on November 29, 2021 and December 9, 2021, as the case may be. Subsequently Mr. Kin Wai Ho obtained letters of consent to take up directorship roles in HomeHelpy, Primech Holdings Ltd. on October 28, 2022 subject to the conditions stated therein. Ms. Kit Yu Lee obtained letters of consent to take up directorship roles in Acteef Cleaning, CSG, Maint-Kleen and Princeston International on November 17, 2022 subject to the conditions stated therein. Ms. Kit Yu Lee also obtained letters of consent to take up a directorship role in Primech Holdings Ltd. on October 28, 2022 subject to the conditions stated therein. For completeness, prior to these dates, our Company, HomeHelpy, Maint-Kleen, and Acteef Cleaning were technically in breach of the EFMA for employing foreign employees otherwise than in accordance with their work passes.

 

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The penalties for each of the above breaches include a fine, imprisonment or both. Nevertheless, we believe that significant fines or imprisonment are only a theoretical risk, and while there have been technical breaches of the EFMA in the past, we are not aware of MOM having taken such serious enforcement action where, as in this case, the individuals in question do hold employment passes for one or more related entities despite not having all the required letters of consent.

 

Employment Agreements and Director Agreements

 

We have entered into employment agreements with each of our executive officers, pursuant to which such individuals have agreed to serve as our executive officers for a period of three years from the effective date of the registration statement. We may terminate the employment for cause at any time for certain acts, such as conviction or plea of guilty to a felony or any crime involving moral turpitude, negligent or dishonest acts to our detriment, or misconduct or a failure to perform agreed duties. We may also terminate the employment without cause at any time upon 3 months’ advance written notice. Each executive officer may resign at any time upon 3 months’ advance written notice.

 

Each executive officer has agreed to hold, both during and after the termination or expiry of his employment agreement, in strict confidence and not to use, except as required in the performance of his duties in connection with the employment or pursuant to applicable law, any of our confidential or proprietary information or the confidential or proprietary information of any third party received by us and for which we have confidential obligations. Each executive officer has also agreed to disclose in confidence to us all inventions, designs and trade secrets which he conceives, develops or reduces to practice during his employment with us and to assign all right, title and interest in them to us, and assist us in obtaining and enforcing patents, copyrights and other legal rights for these inventions, designs and trade secrets.

 

In addition, each executive officer has agreed to be bound by non-competition and non-solicitation restrictions during the term of the employment and for one year following the last date of employment. Specifically, each executive officer has agreed not to: (i) engage or assist others in engaging in any business or enterprise that is competitive with our business, (ii) solicit, divert or take away the business of our clients, customers or business partners, or (iii) solicit, induce or attempt to induce any employee or independent contractor to terminate his or her employment or engagement with us. The employment agreements also contain other customary terms and provisions.

 

We have also entered into director agreements with each of our directors which agreements set forth the terms and provisions of their engagement.

 

Board of Directors

 

Composition of our Board of Directors

 

Our Board of Directors consists of five directors. A director is not required to hold any shares in our Company to qualify to serve as a director. The Corporate Governance Rules of the NASDAQ generally require that a majority of an issuer’s board of directors must consist of independent directors.

 

Our Board of Directors will consist of five directors upon the effectiveness of the registration statement. Our Board of Directors has determined that each of Mr. William Yuen, Mr. William Mirecki and Dr. Kai Yue Jason Chan is an “independent director” as defined under the Nasdaq rules. Our Board of Directors is composed of a majority of independent directors.

 

Committees of the Board of Directors

 

We established an audit committee, a compensation committee and a nominating and corporate governance committee under our Board of Directors. We adopted a charter for each of the three committees. Each committee’s members and functions are described below.

 

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Audit Committee.

 

Our audit committee consists of our three independent directors, and is chaired by Mr. William Yuen. We have determined that each member of our audit committee satisfy the requirements of Section 303A of the Corporate Governance Rules/Rule 5605(c)(2) of the Listing Rules of the NASDAQ and meet the independence standards under Rule 10A-3 under the Securities Exchange Act of 1934, as amended. We have determined that Mr. William Yuen qualifies as an “audit committee financial expert.” The audit committee oversees our accounting and financial reporting processes and the audits of the financial statements of our Company. The audit committee is responsible for, among other things:

 

reviewing and recommending to our board for approval, the appointment, re-appointment or removal of the independent auditor, after considering its annual performance evaluation of the independent auditor;

 

approving the remuneration and terms of engagement of the independent auditor and pre-approving all auditing and non-auditing services permitted to be performed by our independent auditors at least annually;

 

reviewing with the Independent Registered Public Accounting Firm any audit problems or difficulties and management’s response;

 

discussing with our independent auditor, among other things, the audits of the financial statements, including whether any material information should be disclosed, issues regarding accounting and auditing principles and practices;

 

reviewing and approving all proposed related party transactions, as defined in Item 404 of Regulation S-K under the Securities Act;

 

discussing the annual audited financial statements with management and the Independent Registered Public Accounting Firm;

 

reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any special steps taken to monitor and control major financial risk exposures;

 

approving annual audit plans, and undertaking an annual performance evaluation of the internal audit function (if applicable);

 

establishing and overseeing procedures for the handling of complaints and whistleblowing; and

 

meeting separately and periodically with management and the Independent Registered Public Accounting Firm.

 

Compensation Committee.

 

Our compensation committee consists of our three independent directors and is chaired by Mr. William Mirecki. We have determined that each member of our compensation committee satisfy the “independence” requirements of Rule 5605(c)(2) of the Listing Rules of the NASDAQ. The compensation committee assists the board in reviewing and approving the compensation structure, including all forms of compensation, relating to our Directors and Executive Officers. Our chief executive officer may not be present at any committee meeting during which their compensation is deliberated upon. The compensation committee is responsible for, among other things:

 

overseeing the development and implementation of compensation programs in consultation with our management;

 

at least annually, reviewing and approving, or recommending to the board for its approval, the compensation for our Executive Officers;

 

at least annually, reviewing and recommending to the board for determination with respect to the compensation of our non-executive directors;

 

at least annually, reviewing periodically and approving any incentive compensation or equity plans, programs or other similar arrangements;

 

reviewing Executive Officer and director indemnification and insurance matters; and

 

overseeing our regulatory compliance with respect to compensation matters, including our policies on restrictions on compensation plans and loans to Directors and Executive Officers.

 

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Nominating and Corporate Governance Committee.

 

Our nominating and corporate governance committee consists of our three independent directors, and is chaired by Dr. Kai Yue Jason Chan. We have determined that each member of our nominating and corporate governance committee satisfy the “independence” requirements of Rule 5605(c)(2) of the Listing Rules of the NASDAQ. The nominating and corporate governance committee assists the board in selecting individuals qualified to become our directors and in determining the composition of the Board and its committees. The nominating and corporate governance committee is responsible for, among other things:

 

recommending nominees to the Board for election or re-election to the Board, or for appointment to fill any vacancy on the Board;

 

reviewing annually with the Board the current composition of the Board with regards to characteristics such as independence, knowledge, skills, experience, expertise, diversity and availability of service to us;

 

developing and recommending to our Board such policies and procedures with respect to nomination or appointment of members of our Board and chairs and members of its committees or other corporate governance matters as may be required pursuant to any SEC or NASDAQ rules, or otherwise considered desirable and appropriate;

 

selecting and recommending to the Board the names of directors to serve as members of the audit committee and the compensation committee, as well as of the nominating and corporate governance committee itself; and

 

evaluating the performance and effectiveness of the Board as a whole.

 

Code of Business Conduct and Ethics

 

We adopted a code of business conduct and ethics, which is applicable to all of our directors, executive officers and employees and is publicly available.

 

Duties of Directors

 

Under Singapore law, all of our directors owe fiduciary duties to our Company, including a duty to act honestly and in good faith in the best interests of the Company, a duty not to exercise his / her powers for an improper purpose, and a duty not to place himself / herself in a position which will result in a conflict of interest between his / her duties to the Company and his / her personal interests. Our directors also have a duty to act with due care, skill and diligence. In fulfilling their duty of care to us, our directors must ensure compliance with our Constitution, as amended from time to time. Our Company has the right to seek damages if a duty owed by any of our directors is breached, subject to the applicable laws on quantification of damages. You should refer to the section titled “Description of Share Capital and Constitution — Comparison of Shareholder Rights” for additional information on the standard of corporate governance under Singapore law. 

 

Interested Transactions

 

A director may, subject to any separate requirement for audit and risk committee approval under applicable law or applicable NASDAQ rules, vote in respect of any contract or transaction in which he or she is interested, provided that the nature of the interest of any directors in such contract or transaction is disclosed by him or her at or prior to its consideration and any vote in that matter.

 

Foreign Private Issuer Exemption

 

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 (4) days of their occurrence, and from the disclosure requirements of Regulation FD.

 

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Exemption from Section 16 rules regarding sales of 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 the Nasdaq rules applicable to domestic issuers requiring disclosure within four (4) 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 the Nasdaq rules, as permitted by the foreign private issuer exemption.

 

Exemption from the requirement that our Board of Directors 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 of Directors, either by (i) independent directors constituting a majority of our Board of Directors’ independent directors in a vote in which only independent directors participate, or (ii) a committee comprised solely of independent directors, and that a formal written charter or Board resolution, as applicable, addressing the nominations process is adopted.

 

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 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 Singapore requirements in lieu of many of the Nasdaq corporate governance rules, we intend to comply with the Nasdaq corporate governance rules applicable to foreign private issuers, including the requirement to hold annual meetings of shareholders.

 

Other Corporate Governance Matters

 

The Sarbanes-Oxley Act of 2002, as well as related rules subsequently implemented by the SEC, requires foreign private issuers, including us, to comply with various corporate governance practices.

 

Because we are a foreign private issuer, our members of our Board of Directors, executive board members and senior management are not subject to short-swing profit and insider trading reporting obligations under section 16 of the Exchange Act. They will, however, be subject to the obligations to report changes in share ownership under section 13 of the Exchange Act and related SEC rules.

 

We may also be eligible to utilize the controlled company exemptions under the Nasdaq corporate governance rules if more than 50% of our voting power is held by an individual, a group or another company. Pursuant to the Nasdaq corporate governance rules, in order for a group to exist, such shareholders must have publicly filed a notice that they are acting as a group (i.e., a Schedule 13D). We do not currently expect that more than 50% of our voting power will be held by an individual, a group or another company immediately following the consummation of this Offering except as disclosed in this prospectus.

 

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COMPENSATION

 

For the years ended March 31, 2024 and 2023, we paid an aggregate of approximately $1,118,000 (S$1,502,000) and approximately $889,000 (S$1,220,000), respectively in cash and benefits in-kind granted to or accrued on behalf of all of our directors and members of senior management for their services, in all capacities, and we did not pay any additional compensation to our directors and members of senior management. We have not set aside or accrued any amount to provide pension, retirement or other similar benefits to our Executive Officers and Directors.

 

EMPLOYEES

 

As of September 30, 2024, our Group had a workforce of 2,870, comprising employees who are all located within our offices in Singapore and Malaysia.

 

There were no material changes to the number of employees hired by our Group in the last three financial years, save that the number of employees increased from 2,400 as of March 31, 2021 to 2,870 as of September 30, 2024, primarily due to increase in projects serviced by our Group which result in increase in number of personnel to perform these services. As of September 30, 2024, none of our employees are related to our Directors and Major Shareholders. Any new employment of related employees and the proposed terms of their employment will be subject to the review and approval of our Compensation Committee. In the event that a member of our Compensation Committee is related to the employee under review, he will abstain from the review.

 

We do not employ a significant number of temporary employees. A certain number of our employees are members of the Building Construction And Timber Industries Employees Union. The rest of our employees are not unionized. The relationship and co-operation between the management and staff have been good and are expected to continue and remain as such in the future. There has not been any incidence of work stoppages or labor disputes which affected our operations.

 

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PRINCIPAL SHAREHOLDERS

 

The table below sets out the names of each Major Shareholder and Director, and the number and percentage of Shares in which each of them has an interest (whether direct or deemed) as of the date of this prospectus and immediately after the completion of this Offering.

 

The following table sets forth information regarding the beneficial ownership of our Shares as of the date of this prospectus by our officers, directors, and 5% or greater beneficial owners of Shares. There is no other person or group of affiliated persons known by us to beneficially own more than 5% of our Shares. The following table assumes that none of our officers, directors or 5% or greater beneficial owners of our Shares will purchase shares in this Offering. In addition, the following table assumes that all the Shares being offered in the Offering will be issued and purchased. Holders of our Shares are entitled to one (1) vote per share and vote on all matters submitted to a vote of our Shareholders, except as may otherwise be required by law.

 

We have determined beneficial ownership in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Unless otherwise indicated, the person identified in this table has sole voting and investment power with respect to all shares shown as beneficially owned by him, subject to applicable community property laws.

 

    Shares
Beneficially Owned
Prior to this Offering(2)
  
    Shares
Beneficially Owned
After this Offering(3)
 
Name of Beneficial Owners(1)   Number     %     Number     %  
5% Shareholders                        
Sapphire Universe(2)(3)     31,287,500       82.06 %     29,287,750       [  ] %
Mr. Kin Wai Ho(2)     20,024,000       52.52 %     20,024,000       [  ] %
Mr. Jin Ngee Vernon Kwek(2)                        
Mr. Cyrus Jun Ming Wen(2)     11,264,500       29.54 %     11,264,500       [  ] %
                                 
Directors and Executive Officers(1):                                
Mr. Kin Wai Ho(2)     20,024,000       52.52 %     20,024,000       [  ] %
Mr. William Mirecki     25,317       0.07     25,317       [  ] %
Mr. William Yuen     25,317       0.07 %     25,317       [  ] %
Dr. Kai Yue Jason Chan     25,317       0.07 %     25,317       [  ] %
Mr. Khazid bin Omar                        
Mr. Hansel Loo                        
Mr. Yew Jin Sng                        
Ms. Kit Yu Lee                        
All directors and executive officers as a group (8 persons)     20,099,951       52.73 %     20,099,951       [  ] %

 

 

(1)Unless otherwise noted, the business address of each of the following entities or individuals is 23 Ubi Crescent, Singapore 408579.
(2)Sapphire Universe is owned by Bright Oracle Limited, Oriental Unicorn Limited and Shining Valkyrie Development Limited which hold 15.5%, 48.5% and 36%, respectively, of the outstanding shares of Sapphire Universe. Mr. Kin Wai Ho owns and controls Bright Oracle Limited. As such, Mr. Kin Wai Ho is deemed to beneficially own 4,849,563 Ordinary Shares held through Bright Oracle Limited. Mr. Kin Wai Ho and Mr. Jin Ngee Vernon Kwek beneficially owns and controls 83.5% and 16.5% of the issued and outstanding shares of Oriental Unicorn Limited, respectively. As such, Mr. Kin Wai Ho deemed to beneficially own 15,174,437 Ordinary Shares held through Oriental Unicorn Limited. Shining Valkyrie Development Limited is a wholly-owned subsidiary of Delight Treasure Holdings Limited. Mr. Cyrus Jun Ming Wen owns and controls Delight Treasure Holdings Limited. As such, Mr. Cyrus Jun Ming Wen is deemed to beneficially own 11,263,500 Shares held through Shining Valkyrie Development Limited.
(3)Assumes the sales of our Ordinary Shares by the Selling Shareholder pursuant to the Resale Prospectus filed contemporaneously herewith.

 

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RELATED PARTY TRANSACTIONS

 

The following is a summary of transactions since April 1, 2021 to which we have been a party and in which any members of our Board of Directors, any Executive Officers, or Major Shareholder had, has or will have a direct or indirect material interest, other than compensation arrangements which are described under the section of this prospectus captioned “General Information on our Group — Management”.

 

Restructuring Agreement

 

On November 11, 2021, the Company entered into a restructuring agreement with Primech A&P, Sapphire Universe Holdings Pte. Ltd. and Sapphire Universe in connection with the Restructuring Exercise, specifically the acquisitions of Acteef Cleaning, HomeHelpy, Primech A&P, and Maint-Kleen Pte. In connection with the Restructuring Exercise, the Company on November 22, 2021 issued 32,499,998 Shares to Sapphire Universe in exchange for all the issued and outstanding shares of Acteef Cleaning, HomeHelpy, Primech A&P, and Maint-Kleen. Upon the consummation of the Restructuring Exercise, the Company is the sole shareholder of Acteef Cleaning, HomeHelpy, Primech A&P, and Maint-Kleen. Sapphire Universe is, as of the date of this prospectus, a Major Shareholder.

 

Share Sale and Purchase Agreement

 

On April 1, 2021, the Company, as purchaser, entered into a share sale and purchase agreement with Vernon Kwek Jin Ngee, as seller, in connection with the purchase of shares of Princeston International. Pursuant to this agreement, the Company acquired all the issued and outstanding shares of Princeston International for a purchase price of approximately $0.8 million (S$1.1 million) paid in cash. Vernon Kwek Jin Ngee is a Major Shareholder. Through Bright Oracle Limited, Vernon Kwek Jin Ngee holds a 14.92% equity interest of the Company before this Offering.

 

Bank Facilities and Personal and Corporate Guarantees

 

Our Company and its subsidiaries have entered into bank facilities to finance their operations from time to time. Certain of these facilities have been guaranteed by Major Shareholders, Directors, and/or Executive Officers, as further provided below.

 

Primech A&P entered into a business property financing facility dated March 30, 2021, and supplemented on February 10, 2023 and August 11, 2023, with the Lender in an aggregate amount of approximately $5.0 million (S$6.7 million). This facility was drawn down on April 1, 2021 that matures in April 2041. Each of Ho Kin Wai, the Chairman of our Company, Kwek Jin Ngee Vernon, a Major Shareholder, and Yew Jin Sng, our Senior Vice President of Business Development, provided a personal guarantee to the Lender, and Sapphire Universe provided a corporate guarantee to the Lender in connection with this facility.

 

Primech Services & Engrg entered into a temporary bridging loan dated October 21, 2020, with the Lender in an aggregate amount of approximately $3.7 million (S$5.0 million), that matures in March 2026. After the amalgamation of A & P Maintenance and Primech Services & Engrg, Primech A&P entered into four supplemental letters with the Lender on May 5, 2021, August 3, 2021, July 26, 2022 and July 28, 2023, respectively. Each of Ho Kin Wai, Kwek Jin Ngee Vernon, and Yew Jin Sng provided a personal guarantee to the Lender in connection with this temporary bridging loan.

 

Primech Services & Engrg entered into a banking facility agreement dated July 20, 2018, with the Lender in an aggregate amount of approximately $3.3 million (S$4.5 million). In connection with the amalgamation of A & P Maintenance and Primech Services & Engrg, Primech A&P entered into two supplemental letters with the Lender on May 5, 2021 and August 2, 2018, respectively. Each of Ho Kin Wai, Kwek Jin Ngee Vernon, and Yew Jin Sng provided a personal guarantee to the Lender and Sapphire Universe provided a corporate guarantee to the Lender in connection with this facility. This facility has been replaced by the new overdraft, guarantee and corporate card facility agreement dated July 26, 2022 which Primech A&P entered into with the Lender, as detailed below.

 

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A&P Maintenance entered into an overdraft facility dated April 25, 2019, with the Lender in an aggregate amount of approximately $0.7 million (S$1.0 million). In connection with the amalgamation of A & P Maintenance and Primech Services & Engrg, Primech A&P entered into a supplemental letter with the Lender on May 5, 2021. Each of Ho Kin Wai, Kwek Jin Ngee Vernon, and Yew Jin Sng provided a personal guarantee to the Lender and Sapphire Universe provided a corporate guarantee to the Lender in connection with this facility. This facility has been replaced by the new overdraft, guarantee and corporate card facility agreement dated July 26, 2022 which Primech A&P entered into with the Lender, as detailed below.

 

Primech Services & Engrg entered into a recourse receivables purchase facility agreement dated July 20, 2018, with the Lender in an aggregate amount of approximately $3.0 million (S$4.0 million). After the amalgamation of A & P Maintenance and Primech Services & Engrg, Primech A&P entered into a supplemental letter with the Lender on September 28, 2021 pursuant to which this facility was increased to approximately $6.0 million (S$8.0 million), a second supplement letter dated August 15, 2022 and a third supplemental letter dated July 28, 2023. Each of Ho Kin Wai, Kwek Jin Ngee Vernon, and Yew Jin Sng, provided a personal guarantee to the Lender in connection with this recourse receivables purchase facility.

 

Maint-Kleen entered into a recourse receivables purchase facility agreement dated June 5, 2020 and supplemented on July 27, 2020 and August 18, 2022, with the Lender in an aggregate amount of approximately $1.3 million (S$1.8 million). Each of Ho Kin Wai and Kwek Jin Ngee Vernon provided a personal guarantee to the Lender and Sapphire Universe Holdings Limited provided a corporate guarantee to the Lender in connection with this recourse receivables purchase facility.

 

Maint-Kleen entered into an overdraft banking facility agreement dated July 30, 2020, with the Lender in an aggregate of $0.37 million (S$500,000). In connection with the amalgamation, Maint-Kleen entered into a supplemental letter with the Lender on May 5, 2021. Ho Kin Wai and Kwek Jin Ngee Vernon, provided a personal guarantee to the Lender, and Sapphire Universe Holdings Limited provided a corporate guarantee to the Lender in connection with this facility. Primech A&P provided a corporate guarantee to the Lender in connection with this overdraft banking facility. This facility has been replaced by the new overdraft facility agreement dated July 14, 2022 which Maint-Kleen entered into with the Lender, as detailed below.

 

Primech A&P entered into a term loan banking facility agreement dated June 28, 2022, with the Lender in an aggregate amount of approximately $1.0 million (S$1.4 million), and supplemented on July 28, 2023. Each of Ho Kin Wai, Kwek Jin Ngee Vernon and Yew Jin Sng provided a personal guarantee to the Lender and Sapphire Universe Holdings Limited provided a corporate guarantee to the Lender in connection with this term loan banking facility.

 

Primech A&P entered into an overdraft, guarantee and corporate credit card facility agreement dated July 26, 2022, and supplemented on February 10, 2023 and July 28, 2023, with the Lender in an aggregate amount of approximately $7.8 million (S$10.4 million). The aggregate amount under this facility agreement will be revised to an aggregate amount of approximately $6.0 million (S$8.0 million) after November 25, 2022. Each of Ho Kin Wai, Kwek Jin Ngee Vernon and Yew Jin Sng provided a personal guarantee to the Lender and Sapphire Universe Holdings Limited provided a corporate guarantee to the Lender in connection with this overdraft, guarantee and corporate credit card facility agreement.

 

Maint-Kleen entered into an overdraft facility agreement dated July 14, 2022, with the Lender in an aggregate amount of approximately $0.37 million (S$0.5 million). Each of Ho Kin Wai and Kwek Jin Ngee Vernon provided a personal guarantee to the Lender and each of Primech A&P and Sapphire Universe Holdings Limited provided a corporate guarantee to the Lender in connection with this overdraft facility.

 

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Princeston entered into an overdraft facility agreement dated July 20, 2022, with the Lender in an aggregate amount of approximately $0.15 million (S$0.2 million). No security has been provided in respect of this facility agreement.

 

Primech A&P entered into a term loan banking facility agreement dated December 28, 2022, with the Lender in an aggregate amount of approximately $0.3 million (S$0.4 million), and supplemented on July 28, 2023. Each of Ho Kin Wai, Kwek Jin Ngee Vernon and Yew Jin Sng provided a personal guarantee to the Lender and Sapphire Universe Holdings Limited provided a corporate guarantee to the Lender in connection with this term loan banking facility.

 

Sapphire Universe is the borrower under a loan agreement with the Lender dated December 16, 2019, in the amount of approximately $2.6 million (S$3.6 million), which was obtained in connection with Sapphire Universe’s acquisition of Maint-Kleen. The Lender has a security interest over the assets of Maint-Kleen, and Primech A&P has also guaranteed this loan. This loan has also been personally guaranteed by Ho Kin Wai and Kwek Jin Ngee Vernon.

 

Indemnities Issued to Insurance Providers

 

As at March 31, 2024, 2023 and 2022, Kwek Jin Ngee Vernon, an indirect Major Shareholder, Yew Jin Sng, our Senior Vice President of Business Development, and Hansel Loo, our Senior Vice President of Operations, each provided a personal guarantee in favor of the relevant providers for certain indemnities amounting to approximately $6.2 million (S$8.4 million), $4.5 million (S$6.0 million) and $3.1 million (S$4.2 million) the relevant insurance provider for performance bonds in respect of service contracts to customers undertaken by the Group.

 

Contingent Consideration

 

As of March 31, 2023 and March 31, 2022, contingent consideration of approximatly $791,000 (S$ 1,050,000) was outstanding and payable to Mr. Hansel Loo, in connection with the acquisition of Maint-Kleen. Mr. Loo is an officer of the Company and former 100% shareholder of Maint-Kleen. Contingent consideration is included in accounts payable in the Company’s consolidated balance sheets as of March 31, 2023 and fully settled during the year ended March 31, 2024.

 

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POTENTIAL CONFLICTS OF INTEREST

 

Save as disclosed below and in the section titled “Related Party Transactions” of this prospectus, none of our Directors, Major Shareholders or any of their associates has an interest, direct or indirect:

 

(a)in any transaction to which our Group was or is to be a party;

 

(b)in any entity carrying on the same business or dealing in similar services which competes materially and directly with the existing business of our Group; and

 

(c)in any enterprise or company that is our Group’s client or supplier of goods and services.

 

In June 2017, Mr. Kin Wai Ho was appointed as the independent non-executive director of Lapco Holdings Limited in connection with its listing on the Growth Enterprise Market of the Stock Exchange of Hong Kong Limited. Mr. Kin Wai Ho is also a member of the audit committee, remuneration committee and nomination committee of Lapco Holdings Limited. Lapco Holdings Limited is a one-stop environmental hygiene services provider based in Hong Kong covering cleaning services, pest management services, waste management and recycling services and landscaping services. Lapco Holdings Limited provides services to a wide range of venues in Hong Kong including streets, cultural, leisure and recreational premises, residential premises, commercial buildings, markets, restaurants and academic institutions. Its major customers include the Hong Kong Government, property management companies and other corporations in the private sector. Save for Mr. Kin Wai Ho’s independent directorship in Lapco Holdings Limited, Lapco Holdings Limited and our Group are unrelated with no business relationships with each other. Mr. Ho resigned as independent non-executive director of Lapco Holdings Limited in May 2023.

 

There is presently no conflict of interest between Lapco Holdings Limited and our Group as we operate in distinct geographical areas without overlap. To mitigate any risk that Lapco Holdings Limited may expand into South East Asia, Mr. Kin Wai Ho, has provided an irrevocable undertaking dated February 28, 2022, that for so long as he is the independent non-executive director of Lapco Holdings Limited, and Chairman of our Company:

 

(a)he shall abstain from voting at the relevant board meetings of Lapco Holdings Limited in relation to proposals to expand their business operations into South East Asia;

 

(b)he shall abstain from voting at the relevant board meetings of our Company in relation to proposals to expand our business operations into Hong Kong; and

 

(c)he shall not carry out or be involved in any business similar to or competing with the business carried out by our Group from time to time. In particular, should Lapco Holdings Limited expand any of their business operations into South East Asia or if our Group expands its business operations into Hong Kong, Mr. Kin Wai Ho shall step down from his role as an independent non-executive director of Lapco Holdings Limited, as soon as practicable.

 

The undertaking shall commence from the Listing and shall terminate with immediate effect upon the date of (i) him no longer being a director and a Major Shareholder of our Company or (ii) upon privatization of our Company, whichever is earlier.

 

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In addition, we believe that any potential conflicts of interest are further mitigated by the following:

 

(a)our Directors have a duty to disclose their interests in respect of any contract, proposal, transaction or any other matter whatsoever in which they have any personal material interest, directly or indirectly, or any actual or potential conflicts of interest (including conflicts of interest that arise from their directorship(s) or executive position(s) or personal investments in any other corporation(s)) that may involve them. Upon such disclosure, such Directors shall not participate in any proceedings of our Board of Directors, and shall in any event abstain from voting in respect of any such contract, arrangement, proposal, transaction or matter in which the conflict of interest arises, unless and until our Audit Committee has determined that no such conflict of interest exists;

 

(b)our Audit Committee is required to examine the internal procedures put in place by our Company to determine if such procedures put in place have become inappropriate or insufficient in the event of changes to the nature of, or manner in which, the business activities of our Group, our joint ventures or the interested persons are conducted, or if they are sufficient to ensure that Related Party Transactions are conducted on normal commercial terms and will not be prejudicial to our Company and its Shareholders;

 

(c)our Audit Committee will review any actual or potential conflicts of interest that may involve our Directors as disclosed by them to our Board. Upon disclosure of an actual or potential conflict of interests by a Director, our Audit Committee will consider whether a conflict of interests does in fact exist. A Director who is a member of our Audit Committee will not participate in any proceedings of our Audit Committee in relation to the review of a conflict of interests relating to him or her. The review will include an examination of the nature of the conflict and such relevant supporting data, as our Audit Committee may deem reasonably necessary;

 

(d)our Audit Committee will also monitor the investments in our customers, suppliers and competitors made by our Directors, Major Shareholders and their respective associates who are involved in the management of or have shareholding interests in similar or related business of our Company (to the extent as disclosed by them to our Audit Committee) and make assessments on whether there are any potential conflicts of interest;

 

(a)our Directors owe fiduciary duties to us, including the duty to act in good faith and in our best interests. Our Directors are also subject to a duty of confidentiality that precludes a Director from disclosing to any third party (including any of our Shareholders or their associates) information that is confidential.

 

 

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DESCRIPTION OF SHARE CAPITAL AND CONSTITUTION

 

The following description summarizes material terms of our Constitution as they will be in effect upon the consummation of this Offering. Such summary does not purport to be complete and is subject to, and is qualified in its entirety by reference to, all of the provisions of our Constitution, a copy of which has been filed as an exhibit to the registration statement of which this prospectus forms a part. Prospective investors are urged to read the exhibits for a complete understanding of our Constitution.

 

General

 

Upon the consummation of this Offering, our issued and outstanding share capital will consist only of ordinary shares. Following this Offering, we will have [    ] Shares issued and outstanding. We currently only have one class of issued ordinary shares, which have identical rights in all respects and rank equally with one another.

 

For the purposes of this section, references to “Shareholders” mean those Shareholders whose names and number of shares are entered in our register of members. Only persons who are registered in our register of members are recognized under Singapore law as our Shareholders. As a result, only registered Shareholders have legal standing under Singapore law to institute shareholder actions against us or otherwise seek to enforce their rights as Shareholders.

 

Ordinary Shares

 

Our ordinary shares have no par value as there is no concept of authorized share capital under Singapore law. All shares presently issued are fully paid and existing Shareholders are not subject to any calls on shares. Although Singapore law does not recognize the concept of “non-assessability” with respect to newly-issued shares, we note that any subscriber of our Shares who has fully paid up all amounts due, with respect to such Shares, will not be subject to Singapore law concerning any personal liability to contribute to our assets or liabilities in such subscriber’s capacity solely as a holder of such Shares. We believe this interpretation is substantively consistent with the concept of “non-assessability” under most, if not all, U.S. state corporations laws. We cannot, except in the circumstances permitted by the Companies Act, grant any financial assistance for the acquisition or proposed acquisition of our own Shares. Except as described in this section “Description of Share Capital and Constitution — Singapore Code on Take-Overs and Mergers”, there are no limitations in our Constitution or Singapore law on the rights of Shareholders who are not resident in Singapore to hold or vote in respect of our Shares.

 

Voting Rights

 

Each ordinary share is entitled to one vote per share on all matters upon which the Shares are entitled to vote. Voting at any meeting of Shareholders is by poll. On a poll, each holder of Shares who is present in person or by proxy or by attorney or other duly authorized representative, has one vote for each ordinary share which he holds or represents. Proxies need not be Shareholders.

 

Subject to the Companies Act and our Constitution, only those Shareholders who are registered in our register of members will be entitled to vote at any meeting of Shareholders in person or by proxy or by attorney or other duly authorized representative. The Shares offered in this Offering are expected to be held through DTC or its nominee. Therefore, DTC or its nominee will grant an omnibus proxy to DTC participants holding our Shares in book-entry form. Persons holding through a broker, bank, nominee or other institution that is a direct or indirect participant of DTC will have the right to instruct their broker, bank, nominee or other institution holding our Shares on how to vote such Shares by completing the voting instruction form provided by the applicable broker, bank, nominee, or other institution. On all matters requiring a Shareholder vote, DTC or its nominee will vote the Shares held by it in accordance with the voting instructions of the DTC participant Shareholders.

 

Dividends

 

We may, by ordinary resolution, declare dividends at a general meeting of our Shareholders, but no dividend shall be payable except out of our profits, and the amount of any such dividend shall not exceed the amount recommended by our Board of Directors. Subject to our Constitution and in accordance with the Companies Act, our Board of Directors may, without the approval of our Shareholders, declare and pay interim dividends, but any final dividends the board declares must be approved by an ordinary resolution at a general meeting of our Shareholders. See section titled “Dividend Policy” for additional information about our dividend policy.

 

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Capitalization and Other Rights

 

Our Board of Directors may, with the approval of our Shareholders at a general meeting, capitalize any reserves or profits and distribute them as shares, credited as paid-up, to our Shareholders in proportion to their shareholdings in accordance with our Constitution.

 

Variation of Rights

 

Subject to the Companies Act and every other Singapore statute for the time being in force affecting us, under our Constitution, whenever our share capital is divided into different classes of shares, the special rights attached to any class may be varied or abrogated either with the consent in writing of the holders of three-quarters of the issued shares of the class or with the sanction of a special resolution passed at a separate general meeting of the holders of the shares of the class (but not otherwise) and may be so varied or abrogated either while the Company is a going concern or during or in contemplation of a winding-up. To every such separate general meeting, the necessary quorum shall be two persons (unless all the shares of the class are held by one person whereupon the necessary quorum shall be one person) at least holding or representing by proxy or by attorney or other duly authorized representative one-third of issued shares of the class and that any holder of shares of the class present in person or by proxy or by attorney or other duly authorized representative may demand a poll, and on a poll, shall have one vote for every share of the class held by him, provided always that where the necessary majority for such a special resolution is not obtained at such general meeting, consent in writing if obtained from the holders of three-quarters of the issued shares of the class concerned within two months of such general meeting shall be as valid and effectual as a special resolution carried at such general meeting.

 

Issuance of New Shares

 

Under the Companies Act, new shares may be issued only with the prior approval of our Shareholders in a general meeting. General approval may be sought from our Shareholders in a general meeting for the issuance of shares. Such approval, if granted, will lapse at the earlier of:

 

the conclusion of the next annual general meeting; or

 

the expiration of the period within which the next annual general meeting is required by law to be held (i.e., within six months after the end of each fiscal year);

 

however, any approval may be revoked or varied by the Company in a general meeting.

 

Subject to this and the provisions of the Companies Act and our Constitution, our Board of Directors may allot, issue or grant options over or otherwise dispose of new Shares to such persons on such terms and conditions and at such time as the Company in the general meeting may approve and for such consideration (if any) and subject or not to the payment of any part of the amount (if any) thereof in cash as our Board of Directors may think fit. Such rights are subject to any condition attached to such issue and the regulations of any stock exchange on which our Shares are listed, as well as U.S. federal and blue sky securities laws applicable to such issue.

 

Preference Shares

 

Our Constitution provides that, subject to the Companies Act and our Constitution, we may issue shares of a different class with preferential, deferred, qualified or special rights, privileges, conditions or such restrictions, whether with regard to dividend, voting, return of capital or otherwise, or which do not confer voting rights, as our Board of Directors may think fit. The Companies Act allows public companies to issue shares with different voting rights (including special, limited or conditional voting rights, or no voting rights), subject to, among others, our Shareholders having adopted a special resolution approving such issuance.

 

We may, subject to the Companies Act and the prior approval in a general meeting of our Shareholders, issue preference shares that are, or at our option are to be, subject to redemption provided that such preference shares may not be redeemed out of the capital of the Company unless:

 

all our Directors have made a solvency statement in relation to such redemption; and

 

we have lodged a copy of the statement with the Accounting and Corporate Regulatory Authority of Singapore.

 

Further, the preference shares must be fully paid-up before they are redeemed.

 

The issuance of preference shares could have the effect of decreasing the trading price of our Shares, restricting dividends on our Shares, diluting the voting power of our Shares, impairing the liquidation rights of our Shares, or delaying or preventing a change in control of the Company.

 

Warrants

 

As of the date of this prospectus, there are (i) outstanding Warrants to purchase up to [        ] Ordinary Shares of the Company at an exercise price of $[        ] per share (the “2024 Warrants”), and (ii) outstanding Warrants to purchase up to [         ] Ordinary Shares of the Company at an exercise price of $[         ] per Share (the “2024 Placement Agent Warrants,” collectively with the 2024 Warrants, “Warrants”). The 2024 Warrants and 2024 Placement Agent Warrants became exercisable on [         ], 2024 and will expire on [         ], [        ]. The exercise price and number of Ordinary Shares issuable upon exercise of the Warrants is subject to appropriate adjustment upon the occurrence of certain events, including, but not limited to, stock dividends or splits, business combination, sale of assets, similar recapitalization transactions or other similar transactions. In addition, the exercise price of the Warrants is subject to an adjustment in the event that we issue Ordinary Shares for less than the applicable exercise Ordinary Shares to the same extent as if they had exercised their Warrants prior to such distribution.

 

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Holders of the Warrants may exercise their Warrants to purchase Ordinary Shares on or before the expiration date of such Warrants by delivering an exercise notice, appropriately completed and duly signed. Following each exercise of the Warrants, the holder is required to pay the exercise price for the number of Ordinary Shares for which the Warrant is being exercised in cash. A holder of the Warrants also will have the right to exercise its Warrants on a cashless basis if a registration statement or prospectus contained therein is not available for the resale of the Ordinary Shares issuable upon exercise thereof. Warrants may be exercised, in whole or in part, and any portion of a Warrant not exercised prior to the termination date shall be and become void and of no value. The absence of an effective registration statement or applicable exemption from registration does not alleviate our obligation to deliver Ordinary Shares issuable upon exercise of a Warrant.

 

Upon the holder’s exercise of a Warrant, we will issue the Ordinary Shares issuable upon exercise of the Warrant within two trading days of our receipt of notice of exercise, subject to receipt of payment of the aggregate exercise price therefor.

 

The Ordinary Shares issuable on exercise of the Warrants are duly and validly authorized and will be, when issued, delivered and paid for in accordance with the Warrants, validly issued and fully paid and non-assessable.

 

If, at any time a Warrant is outstanding, we consummate any fundamental transaction, as described in the Warrants and generally including any consolidation or merger into another corporation, or the sale of all or substantially all of our assets, or other transaction in which our Ordinary Shares are converted into or exchanged for other securities or other consideration, the holder of any Warrants will thereafter receive, the securities or other consideration to which a holder of the number of Ordinary Shares then deliverable upon the exercise or exchange of such Warrants would have been entitled upon such consolidation or merger or other transaction. Additionally, in the event of a fundamental transaction, each Warrant holder will have the right to require us, or our successor, to repurchase the Warrants for an amount equal to the Black-Scholes value of the remaining unexercised portion of the Warrant on the terms set forth in the Warrant.

 

The exercisability of the Warrants may be limited in certain circumstances if, after giving effect to such exercise, the holder or any of its affiliates would beneficially own (as determined pursuant to Section 13(d) of the Exchange Act, and the rules and regulations promulgated thereunder) more than 4.99% or 9.99% of our Ordinary Shares, at the election of the holder.

 

Placement Agent Warrants

 

In connection with this Offering, the Company has agreed to issue to the Placement Agent warrants to purchase up to 5% of the Ordinary Shares sold in this Offering. See section entitled “Plan of Distribution” on page 137 for more information.

 

Register of Members

 

Only persons who are registered in our register of members are recognized under Singapore law as our Shareholders with legal standing under Singapore law to institute shareholder actions against us or otherwise seek to enforce their rights as Shareholders. We will not, except as required by applicable law, recognize any equitable, contingent, future or partial interest in any ordinary share, or any interest in any fractional part of an ordinary share, or other rights for any ordinary share other than the absolute right thereto of the registered holder of that ordinary share. We may close our register of members for any time or times, provided that our register of members may not be closed for more than 30 days in aggregate in any calendar year. We typically will close our register of members to determine Shareholders’ entitlement to receive dividends and other distributions.

 

Our Shares, which are expected to be listed and traded on NASDAQ, are expected to be held through DTC. Accordingly, DTC or its nominee, Cede & Co., will be the Shareholder on record registered in our register of members.

 

A holder of Shares held in book-entry interests through DTC or its nominee may become a registered Shareholder by exchanging its interest in such Shares for certificated Shares and being registered in our register of members in respect of such shares. The procedures by which a holder of book-entry interests held through the facilities of the DTC may exchange such interests for certificated Shares are determined by DTC and our transfer agent, in accordance with their internal policies and guidelines regulating the withdrawal and exchange of book-entry interests for certificated Shares. Our transfer agent is Vstock Transfer, LLC.

 

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Singapore Code on Take-Overs and Mergers

 

The Singapore Code on Take-Overs and Mergers (the “Singapore Take-over Code”) regulates, among other things, the acquisition of voting shares of Singapore-incorporated public companies. In this regard, the Singapore Take-over Code applies to, among others, corporations with a primary listing of their equity securities in Singapore. While the Singapore Take-over Code is drafted with, among others, listed public companies in mind, unlisted public companies with more than 50 shareholders and net tangible assets of assets of $3.75million (S$5.0 million) or more, must also observe the letter and spirit of the general principles and rules of the Singapore Take-over Code, wherever this is possible and appropriate. Public companies with a primary listing overseas may apply to Securities Industry Council (“SIC”) to waive the application of the Singapore Take-over Code. As of the date of this prospectus, no application has been made to SIC to waive the application of the Singapore Take-over Code in relation to us. We may submit an application to SIC for a waiver from the Singapore Take-over Code so that the Singapore Take-over Code will not apply to us for so long as we are not listed on a securities exchange in Singapore. We will make an appropriate announcement if we submit the application and when the result of the application is known.

 

Any person acquiring an interest, whether by a series of transactions over a period of time or not, shares which either on his or her own or together with parties acting in concert with such person, carry 30% or more of the voting rights in the Company or any person holding, either on his or her own or together with parties acting in concert with such person, holds not less than 30% but not more than 50% of the voting rights in the Company, and if such person (or parties acting in concert with such person) acquires additional voting shares representing more than 1% of the voting rights in the Company in any six-month period, must, except with the consent of SIC, extend a mandatory take-over offer for all the remaining voting shares in accordance with the provisions of the Singapore Take-over Code. Responsibility for ensuring compliance with the Singapore Take-over Code rests with parties (including Company directors) to a take-over or merger and their advisors.

 

Under the Singapore Take-over Code, “parties acting in concert” comprise individuals or companies who, pursuant to an agreement or understanding (whether formal or informal), cooperate, through the acquisition by any of them of shares in a company, to obtain or consolidate effective control of that company. Certain persons are presumed (unless the presumption is rebutted) to be acting in concert with each other. They are as follows:

 

a company, its parent company, its subsidiaries and fellow subsidiaries (together, the related companies), the associated companies of any of the company and its related companies, companies whose associated companies include any of these foregoing companies and any person who has provided financial assistance (other than a bank in the ordinary course of business) to any of the foregoing for the purchase of voting rights;

 

a company with any of its directors (together with their close relatives, related trusts and companies controlled by any of the directors, their close relatives and related trusts);

 

a company with any of its pension funds and employee share schemes;

 

a person with any investment company, unit trust or other fund whose investment such person manages on a discretionary basis but only in respect of the investment account which such person manages;

 

a financial or other professional adviser, including a stockbroker, with its client in respect of the shareholdings of the adviser and persons controlling, controlled by or under the same control as the adviser;

 

directors of a company (including their close relatives, related trusts and companies controlled by any of such directors, their close relatives and related trusts) which is subject to an offer or where the directors have reason to believe a bona fide offer for the company may be imminent;

 

partners; and

 

an individual and (i) such person’s close relatives, (ii) such person’s related trusts, (iii) any person who is accustomed to act in accordance with such person’s instructions, (iv) companies controlled by the individual, such person’s close relatives, such person’s related trusts or any person who is accustomed to act in accordance with such person’s instructions and (v) any person who has provided financial assistance (other than a bank in the ordinary course of business) to any of the foregoing for the purchase of voting rights.

 

Subject to certain exceptions, a mandatory offer must be in cash or be accompanied by a cash alternative at not less than the highest price paid by the offeror or parties acting in concert with the offeror during the offer period and within the six months prior to its commencement.

 

Under the Singapore Take-over Code, where effective control of a company is acquired or combined by a person, or persons acting in concert, a general offer to all other shareholders is normally required. An offeror must treat all shareholders of the same class in an offeree company equally. A fundamental requirement is that shareholders in the company subject to the take-over offer must be given sufficient information, advice and time to enable them to reach an informed decision on the offer. These legal requirements may impede or delay a takeover of our Company by a third-party.

 

Election and Re-election of Directors

 

Our Directors are appointed by our Shareholders at a general meeting, and an election of Directors takes place annually. One third (or the number nearest one third) of our Directors, are required to retire from office at each annual general meeting. Further, all our Directors are required to retire from office at least once in every three years. However, a retiring director is eligible for re-election at the meeting at which he retires.

 

We may, by ordinary resolution, remove any director before the expiration of his or her period of office, notwithstanding anything in our Constitution or in any agreement between us. We may also, by an ordinary resolution, appoint another person in place of a director removed from office pursuant to the foregoing.

 

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Our Constitution provides that our Board of Directors shall have the power, at any time, to appoint any person to be a director either to fill a casual vacancy or as an additional director but any person so appointed by the directors shall hold office only until the next annual general meeting and shall then be eligible for re-election.

 

General Meetings of Shareholders

 

Subject to the Companies Act, we are required to hold an annual general meeting of Shareholders within six months from the end of our fiscal year. The directors may convene an extraordinary general meeting whenever they think fit and they must do so upon the requisition of Shareholders holding not less than 10% of the total number of paid-up shares as of the date of deposit of the requisition carrying the right to vote at a general meeting (disregarding paid-up shares held as treasury shares). In addition, two or more Shareholders holding not less than 10% of our total number of issued shares (excluding treasury shares) may call a meeting of our Shareholders.

 

The Companies Act provides that a shareholder is entitled to attend any general meeting and speak on any resolution put before the general meeting. Unless otherwise required by law or by our Constitution, voting on resolutions put forth at general meetings is by ordinary resolution, requiring the affirmative vote of a simple majority of the voting rights of the Shareholders present in person or represented by proxy at the meeting and entitled to vote on the resolution. An ordinary resolution suffices, for example, for the appointment of directors. A special resolution, requiring the affirmative vote of not less than three-fourths of the voting rights of the Shareholders present in person or represented by proxy at the meeting and entitled to vote on the resolution, is necessary for certain matters under Singapore law, including voluntary winding-up, amendments to our Constitution, a change of our corporate name and a reduction in the share capital.

 

We must give at least 21 days’ notice in writing for every general meeting convened for the purpose of passing special resolutions. General meetings convened for the purpose of passing ordinary resolutions generally require at least 14 days’ notice in writing.

 

Minority Rights

 

The rights of minority shareholders of Singapore companies are protected under Section 216 of the Companies Act, which gives the Singapore courts a general power to make any order, upon application by any shareholder of a company, as they think fit to remedy any of the following situations:

 

the affairs of a company are being conducted or the powers of the board of directors are being exercised in a manner oppressive to, or in disregard of the interests of, one or more of its shareholders, including the applicant; or

 

a company takes an action, or threatens to take an action, or its shareholders pass a resolution, or propose to pass a resolution, which unfairly discriminates against, or is otherwise prejudicial to, one or more of the shareholders, including the applicant.

 

Singapore courts have a wide discretion as to the remedies they may grant and the remedies listed in the Companies Act itself are not exclusive. In general, the Singapore courts may:

 

direct or prohibit any act or cancel or modify any transaction or resolution;

 

regulate the conduct of the affairs of the company in the future;

 

authorize civil proceedings to be brought in the name of, or on behalf of, the company by a person or persons and on such terms as the court may direct;

 

provide for the purchase of shares or debentures of the Company by the other shareholders or holders of debentures or by the company and, in the case of a purchase of shares by the company, a corresponding reduction of its share capital; or

 

provide that the company be wound up.

 

In addition, Section 216A of the Companies Act allows a complainant (including a minority shareholder) to apply to the Singapore courts for leave to bring an action in a court proceeding or arbitration in the name and on behalf of the company or intervene in an action in a court proceeding or arbitration to which a company is a party for the purpose of prosecuting, defending or discontinuing the action or arbitration on behalf of a company.

 

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Liquidation or Other Return of Capital

 

On a winding-up or other return of capital, subject to any special rights attaching to any other class of shares, holders of Shares will be entitled to participate in any surplus assets in proportion to their shareholdings.

 

Limitation of Liability of Directors and Officers

 

Under Section 172 of the Companies Act, any provision exempting or indemnifying the officers of a company (including directors) against any liability that would otherwise attach to them in connection with any negligence, default, breach of duty or breach of trust in relation to the company is void. However, a company is not prohibited from: (a) as provided in Section 172A of the Companies Act, purchasing and maintaining for any such individual insurance against liability incurred by him or her in connection with any negligence, default, breach of duty or breach of trust in relation to the company; or (b) as provided in Section 172B of the Companies Act, indemnifying the individual against liability incurred by him or her to a person other than the company except when the indemnity is against any liability (i) of the individual to pay a fine in criminal proceedings, (ii) of the individual to pay a penalty to a regulatory authority in respect of non-compliance with any requirements of a regulatory nature (howsoever arising), (iii) incurred by the individual in defending criminal proceedings in which he or she is convicted, (iv) incurred by the individual in defending civil proceedings brought by the company or a related company in which judgment is given against him or her, or (v) incurred by the individual in connection with an application for relief under Section 76A(13) or Section 391 of the Companies Act in which the court refuses to grant him or her relief.

 

Our Constitution provides that, subject to the provisions of the Companies Act and every other Singapore statute for the time being in force and affecting our Company, every director, auditor, secretary or other officer of the Company shall be entitled to be indemnified by us against all costs, charges, losses, expenses and liabilities incurred or to be incurred by them in the execution and discharge of their duties or in relation thereto.

 

In addition, and without prejudice to the generality of the foregoing, no director, secretary or other officer of the Company shall be liable for the acts, receipts, neglects or defaults of any other director or officer, or for joining in any receipt or other act for conformity, or for any loss or expense happening to the Company through the insufficiency or deficiency of title to any property acquired by order of the directors for or on behalf of us or for the insufficiency or deficiency of any security in or upon which any of the moneys of the Company shall be invested or for any loss or damage arising from the bankruptcy, insolvency or tortious act of any person with whom any moneys, securities or effects shall be deposited or left or for any other loss, damage or misfortune whatsoever which shall happen in the execution of duties of his or her office or in relation thereto unless the same shall happen through his or her own negligence, default, breach of duty or breach of trust.

 

We intend to enter into indemnification agreements with each of our Directors and Executive Officers. These agreements will require us to indemnify these individuals to the fullest extent permitted under Singapore law against liabilities that may arise by reason of their service to us, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified (on terms that the full amount of such advances is to be repaid if the individual is convicted in the relevant proceeding (with such conviction being final), final judgment is given against the individual in the relevant proceeding or, as the case may be, the court refuses to grant the individual relief on the application (with such refusal of relief being final)), save that the Company shall not provide any indemnity (to any extent) to a director or an officer against any liability attaching to him in connection with any negligence, default, breach of duty or breach of trust in relation to the Company save for the circumstances as permitted pursuant to Section 172A and Section 172B of the Companies Act. These indemnification rights shall not be exclusive of any other right which an indemnified person may have or hereafter acquire under any statute, provision of our Constitution, agreement, vote of shareholders or disinterested directors or otherwise.

 

We expect to maintain standard policies of insurance that provide coverage (1) to our Directors and officers against loss rising from claims made by reason of breach of duty or other wrongful act and (2) to us with respect to indemnification payments that we may make to such Directors and officers.

 

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Transfer Agent and Registrar

 

The transfer agent and branch registrar for our Shares, which will maintain our branch register located in the United States, will be VStock Transfer, LLC. Its address is 18 Lafayette Place, Woodmere, New York 11598.

 

Comparison of Shareholder Rights

 

We are incorporated under the laws of Singapore. The following discussion summarizes material differences between the rights of holders of our Shares and the rights of holders of the common stock of a typical corporation incorporated under the laws of the state of Delaware which result from differences in governing documents and the laws of Singapore and Delaware.

 

This discussion does not purport to be a complete or comprehensive statement of the rights of holders of our Shares under applicable law in Singapore and our Constitution or the rights of holders of the common stock of a typical corporation under applicable Delaware law and a typical certificate of incorporation and bylaws.

 

Delaware   Singapore
Board of Directors
 
A typical certificate of incorporation and bylaws would provide that the number of directors on the board of directors will be fixed from time to time by a vote of the majority of the authorized directors. Under Delaware law, a board of directors can be divided into classes and cumulative voting in the election of directors is only permitted if expressly authorized in a corporation’s certificate of incorporation.   The constitution of companies will typically state the minimum number of directors as well as provide that directors may be appointed or removed by shareholders via ordinary resolution passed at a general meeting, provided that the number of directors following such appointment or removal is within the minimum (and maximum, if any) number of directors provided in the constitution. Our Constitution provides that subject to the Companies Act, there shall be at least one director who is ordinarily resident in Singapore.
     
Limitation on Personal Liability of Directors
 
A typical certificate of incorporation provides for the elimination of personal monetary liability of directors for breach of fiduciary duties as directors to the fullest extent permissible under the laws of Delaware, except for liability (i) for any breach of a director’s loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law (relating to the liability of directors for unlawful payment of a dividend or an unlawful stock purchase or redemption) or (iv) for any transaction from which the director derived an improper personal benefit. A typical certificate of incorporation would also provide that if the Delaware General Corporation Law is amended so as to allow further elimination of, or limitations on, director liability, then the liability of directors will be eliminated or limited to the fullest extent permitted by the Delaware General Corporation Law as so amended.   Under Section 172 of the Companies Act, any provision exempting or indemnifying the officers of a company (including directors) against any liability that would otherwise attach to them in connection with any negligence, default, breach of duty or breach of trust in relation to a company is void. However, a company is not prohibited from: (a) as provided in Section 172A of the Companies Act, purchasing and maintaining for any director insurance against any such liability incurred by him or her in connection with any negligence, default, breach of duty or breach of trust in relation to the company; or (b) as provided in Section 172B of the Companies Act, indemnifying a director against liability incurred by him or her to a person other than the company except when the indemnity is against any liability (i) of the director to pay a fine in criminal proceedings, (ii) of the director to pay a penalty to a regulatory authority in respect of non- compliance with any requirements of a regulatory nature (howsoever arising), (iii) incurred by the director in defending criminal proceedings in which he or she is convicted, (iv) incurred by the director in defending civil proceedings brought by the company or a related company in which judgment is given against him or her, or (v) incurred by the director in connection with an application for relief under Section 76A(13) or Section 391 of the Companies Act in which the court refuses to grant him or her relief.

 

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Delaware   Singapore
    Our Constitution provides that, subject to the provisions of the Companies Act and every other Singapore statute for the time being in force and affecting our Company, every director, auditor, secretary or other officer of the Company shall be entitled to be indemnified by us against all costs, charges, losses, expenses and liabilities incurred or to be incurred by them in the execution and discharge of their duties or in relation thereto. In particular, and without prejudice to the generality of the foregoing, no director, secretary or other officer of the Company shall be liable for the acts, receipts, neglects or defaults of any other director or officer, or for joining in any receipt or other act for conformity, or for any loss or expense happening to the Company through the insufficiency or deficiency of title to any property acquired by order of the directors for or on behalf of us or for the insufficiency or deficiency of any security in or upon which any of the moneys of the Company shall be invested or for any loss or damage arising from the bankruptcy, insolvency or tortious act of any person with whom any moneys, securities or effects shall be deposited or left or for any other loss, damage or misfortune whatsoever which shall happen in the execution of the duties of his or her office or in relation thereto unless the same shall happen through his or her own negligence, default, breach of duty or breach of trust.
     
Interested Shareholders
 

Section 203 of the Delaware General Corporation Law generally prohibits a Delaware corporation from engaging in specified corporate transactions (such as mergers, stock and asset sales, and loans) with an “interested stockholder” for three years following the time that the stockholder becomes an interested stockholder. Subject to specified exceptions, an “interested stockholder” is a person or group that owns 15% or more of the corporation’s outstanding voting stock (including any rights to acquire stock pursuant to an option, warrant, agreement, arrangement or understanding, or upon the exercise of conversion or exchange rights, and stock with respect to which the person has voting rights only), or is an affiliate or associate of the corporation and was the owner of 15% or more of the voting stock at any time within the previous three years.

 

A Delaware corporation may elect to “opt out” of, and not be governed by, Section 203 through a provision in either its original certificate of incorporation, or an amendment to its original certificate or bylaws that was approved by majority stockholder vote. With a limited exception, this amendment would not become effective until 12 months following its adoption.

  There are no comparable provisions in Singapore with respect to public companies which are not listed on the Singapore Exchange Securities Trading Limited.

 

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Delaware   Singapore
Removal of Directors
 
A typical certificate of incorporation and bylaws provide that, subject to the rights of holders of any preferred stock, directors may be removed at any time by the affirmative vote of the holders of at least a majority, or in some instances a supermajority, of the voting power of all of the then outstanding shares entitled to vote generally in the election of directors, voting together as a single class. A certificate of incorporation could also provide that such a right is only exercisable when a director is being removed for cause (removal of a director only for cause is the default rule in the case of a classified board).   According to the Companies Act, directors of a public company may be removed before expiration of their term of office with or without cause by ordinary resolution (i.e., a resolution requiring the affirmative vote of a simple majority of those shareholders present and voting in person or by proxy). Notice of the intention to move such a resolution has to be given to the company not less than 28 days before the meeting at which it is moved. The company shall then give notice of such resolution to its shareholders not less than 14 days before the meeting.
     
Filling Vacancies on the Board of Directors
 

A typical certificate of incorporation and bylaws provide that, subject to the rights of the holders of any preferred stock, any vacancy, whether arising through death, resignation, retirement, disqualification, removal, an increase in the number of directors or any other reason, may be filled by a majority vote of the remaining directors, even if such directors remaining in office constitute less than a quorum, or by the sole remaining director.

 

Any newly elected director usually holds office for the remainder of the full term expiring at the annual meeting of stockholders at which the term of the class of directors to which the newly elected director has been elected expires.

  Our Constitution provides that our Board of Directors shall have the power, at any time, to appoint any person to be a director either to fill a casual vacancy or as an additional director but any person so appointed by the directors shall hold office only until the next annual general meeting and shall then be eligible for re-election.
     
Amendment of Governing Documents
 
Amendment of Certification of Incorporation and Bylaws   Alteration to Constitution
     

Under the Delaware General Corporation Law, amendments to a corporation’s certificate of incorporation require the approval of stockholders holding a majority of the outstanding shares entitled to vote on the amendment.

 

If a class vote on the amendment is required by the Delaware General Corporation Law, a majority of the outstanding stock of the class is required, unless a greater proportion is specified in the certificate of incorporation or by other provisions of the Delaware General Corporation Law. Under the Delaware General Corporation Law, the board of directors may amend bylaws if so authorized in the certificate of incorporation. The stockholders of a Delaware corporation also have the power to amend bylaws.

  Our Constitution may be altered by special resolution (i.e., a resolution requiring the affirmative vote of not less than three-fourths majority of the shareholders present in person or represented by proxy at the meeting and entitled to vote on the resolution for which not less than 21 days written notice is given). Our board of directors has no power to amend our Constitution.
     
Meetings of Shareholders
 
Annual and Special Meetings   Annual General Meetings
     

Typical bylaws provide that annual meetings of stockholders are to be held on a date and at a time fixed by the board of directors.

 

Under the Delaware General Corporation Law, a special meeting of stockholders may be called by the board of directors or by any other person authorized to do so in the certificate of incorporation or the bylaws.

  Subject to the Companies Act, we are required to hold an annual general meeting of Shareholders within six months from the end of our fiscal year.

 

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Delaware   Singapore
    Extraordinary General Meetings
    Any general meeting other than the annual general meeting is called an “extraordinary general meeting.” Two or more Shareholders holding not less than 10% of the total number of issued shares (excluding treasury shares) may call an extraordinary general meeting. In addition, the constitution usually also provides that general meetings may be convened in accordance with the Companies Act by the directors.
     
    Notwithstanding anything in the constitution, the directors are required to convene a general meeting if required to do so by requisition (i.e., written notice to directors requiring that a meeting be called) by Shareholders holding not less than 10% of the total number of paid-up shares as at the date of the deposit of the requisition carrying the right of voting at general meetings of the company. In addition, our Constitution provides that the directors may, whenever they think fit, convene an extraordinary general meeting.
     
Quorum Requirements   Quorum Requirements
     
Under the Delaware General Corporation Law, a corporation’s certificate of incorporation or bylaws can specify the number of shares which constitute the quorum required to conduct business at a meeting, provided that in no event shall a quorum consist of less than one-third of the shares entitled to vote at a meeting.   Our Constitution provides that the quorum at any general meeting shall be two or more members present in person or by proxy or by attorney or other duly authorized representative save in certain circumstances.
     
Indemnification of Officers, Directors and Employees
 

Under the Delaware General Corporation Law, subject to specified limitations in the case of derivative suits brought by a corporation’s stockholders in its name, a corporation may indemnify any person who is made a party to any third-party action, suit or proceeding on account of being a director, officer, employee or agent of the corporation (or was serving at the request of the corporation in such capacity for another corporation, partnership, joint venture, trust or other enterprise) against expenses, including attorneys’ fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with the action, suit or proceeding through, among other things, a majority vote of a quorum consisting of directors who were not parties to the suit or proceeding, if the person:

 

●  acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation or, in some circumstances, at least not opposed to its best interests; and

 

   in a criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful.

  Under Section 172 of the Companies Act, any provision exempting or indemnifying officers of a company (including directors) against any liability that would otherwise attach to them in connection with any negligence, default, breach of duty or breach of trust in relation to a company is void. However, a company is not prohibited from: (a) as provided in Section 172A of the Companies Act, purchasing and maintaining for any such individual insurance against any such liability incurred by him or her in connection with any negligence, default, breach of duty or breach of trust in relation to the company; or (b) as provided in Section 172B of the Companies Act, indemnifying the individual against liability incurred by him or her to a person other than the company except when the indemnity is against any liability (i) of the director to pay a fine in criminal proceedings, (ii) of the director to pay a penalty to a regulatory authority in respect of non-compliance with any requirements of a regulatory nature (howsoever arising), (iii) incurred by the individual in defending criminal proceedings in which he or she is convicted, (iv) incurred by the individual in defending civil proceedings brought by the company or a related company in which judgment is given against him or her or (v) incurred by the individual in connection with an application for relief under Section 76A(13) or Section 391 of the Companies Act in which the court refuses to grant him or her relief.

 

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Delaware   Singapore
Delaware corporate laws permits indemnification by a corporation under similar circumstances for expenses (including attorneys’ fees) actually and reasonably incurred by such persons in connection with the defense or settlement of a derivative action or suit, except that no indemnification may be made in respect of any claim, issue or matter as to which the person is adjudged to be liable to the corporation unless the Delaware Court of Chancery or the court in which the action or suit was brought determines upon application that the person is fairly and reasonably entitled to indemnity for the expenses which the court deems to be proper.   In cases where a director is sued by the company, the Companies Act gives the court the power to relieve directors either wholly or partially from the consequences of their negligence, default, breach of duty or breach of trust. In order for relief to be obtained, it must be shown that (i) the director acted reasonably and honestly; and (ii) it is fair, having regard to all the circumstances of the case including those connected with such director’s appointment, to excuse the director.
     
To the extent a director, officer, employee or agent is successful in the defense of such an action, suit or proceeding, the corporation is required by Delaware corporate laws to indemnify such person for reasonable expenses incurred thereby. Expenses (including attorneys’ fees) incurred by such persons in defending any action, suit or proceeding may be paid in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of that person to repay the amount if it is ultimately determined that person is not entitled to be so indemnified.  

However, Singapore case law has indicated that such relief will not be granted to a director who has received the company’s property as a result of his or her breach of trust.

 

Our Constitution provides that, subject to the provisions of the Companies Act and every other Singapore statute for the time being in force and affecting the Company, every director, auditor, secretary or other officer of the Company shall be entitled to be indemnified by the Company against all costs, charges, losses, expenses and liabilities incurred or to be incurred by them in the execution and discharge of their duties or in relation thereto. In particular, and without prejudice to the generality of the foregoing, no director, secretary or other officer of the Company shall be liable for the acts, receipts, neglects or defaults of any other director or officer, or for joining in any receipt or other act for conformity, or for any loss or expense happening to the Company through the insufficiency or deficiency of title to any property acquired by order of the directors for or on behalf of the Company or for the insufficiency or deficiency of any security in or upon which any of the moneys of the Company shall be invested or for any loss or damage arising from the bankruptcy, insolvency or tortious act of any person with whom any moneys, securities or effects shall be deposited or left or for any other loss, damage or misfortune whatsoever which shall happen in the execution of the duties of his or her office or in relation thereto unless the same shall happen through his or her own negligence, default, breach of duty or breach of trust.

     
Shareholder Approval of Issuance of Shares
 
Under Delaware law, the board of directors has the authority to issue, from time to time, capital stock in its sole discretion, as long as the number of shares to be issued, together with those shares that are already issued and outstanding and those shares reserved to be issued, do not exceed the authorized capital for the corporation as previously approved by the stockholders and set forth in the corporation’s certificate of incorporation. Under the foregoing circumstances, no additional stockholder approval is required for the issuance of capital stock. Under Delaware law, stockholder approval is required for any amendment to the corporation’s certificate of incorporation to increase the authorized capital and the issuance of stock in a direct merger transaction where the number of shares exceeds 20% of the corporation’s shares outstanding prior to the transaction, regardless of whether there is sufficient authorized capital.   Section 161 of the Companies Act provides that notwithstanding anything in the company’s constitution, the directors shall not exercise any power to issue shares without prior approval of the Shareholders in a general meeting. Such authorization may be obtained by ordinary resolution (i.e., a resolution requiring the affirmative vote of a simple majority of the voting rights of those Shareholders present and voting in person or by proxy). Once this Shareholders’ approval is obtained, unless previously revoked or varied by the company in a general meeting, it continues in force until the conclusion of the next annual general meeting or the expiration of the period within which the next annual general meeting after that date is required by law to be held, whichever is earlier; but any approval may be revoked or varied by the company in a general meeting.

 

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Delaware   Singapore

In addition, a corporation may issue one or more classes of stock or one or more series of stock within any class as shall be stated and expressed in the certificate of incorporation or of any amendment thereto, or in the resolution or resolutions providing for the issue of such stock adopted by the board of directors pursuant to authority expressly vested in it by the provisions of its certificate of incorporation.

 
     
Any stock of any class or of any series thereof may be made convertible into, or exchangeable for, at the option of either the holder or the corporation or upon the happening of a specified event, shares of any other class or classes or any other series of the same or any other class or classes of stock of the corporation, at such price or prices or at such rate or rates of exchange and with such adjustments as shall be stated in the certificate of incorporation or in the resolution or resolutions providing for the issue of such stock adopted by the board of directors.    
     
Shareholder Approval of Business Combinations

 

Generally, under the Delaware General Corporation Law, completion of a merger, consolidation, or the sale, lease or exchange of substantially all of a corporation’s assets or dissolution requires approval by the board of directors and by a majority (unless the certificate of incorporation requires a higher percentage) of outstanding stock of the corporation entitled to vote.  

The Companies Act mandates that specified corporate actions require approval by the shareholders in a general meeting, notably:

 

●   notwithstanding anything in the company’s constitution, directors are not permitted to carry into effect any proposals for disposing of the whole or substantially the whole of the company’s undertaking or property unless those proposals have been approved by shareholders in a general meeting;

 

     
The Delaware General Corporation Law also requires a special vote of stockholders in connection with a business combination with an “interested stockholder” as defined in section 203 of the Delaware General Corporation Law. See “Description of share capital and constitution — Interested Shareholders” above in this section.   ●  subject to the constitution of each amalgamating company, an amalgamation proposal in accordance with the full amalgamation procedures under the Companies Act that do not require a court order must be approved by the shareholders of each amalgamating company via special resolution at a general meeting; and
     
    ●   notwithstanding anything in the company’s constitution, the directors may not, without the prior approval of shareholders, issue shares, including shares being issued in connection with corporate actions.

 

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Delaware   Singapore
Shareholder Action Without A Meeting
 
Under the Delaware General Corporation Law, unless otherwise provided in a corporation’s certificate of incorporation, any action that may be taken at a meeting of stockholders may be taken without a meeting, without prior notice and without a vote if the holders of outstanding stock, having not less than the minimum number of votes that would be necessary to authorize such action, consent in writing. It is not uncommon for a corporation’s certificate of incorporation to prohibit such action.   Shareholder action by written consent is not permitted for a public company which is listed (as defined under the Companies Act).
     
Shareholder Suits
 
    Derivative Actions
     
Under the Delaware General Corporation Law, a stockholder may bring a derivative action on behalf of the corporation to enforce the rights of the corporation. An individual also may commence a class action suit on behalf of himself or herself and other similarly situated stockholders where the requirements for maintaining a class action under the Delaware General Corporation Law have been met. A person may institute and maintain such a suit only if such person was a stockholder at the time of the transaction which is the subject of the suit or his or her shares thereafter devolved upon him or her by operation of law. Additionally, under Delaware case law, the plaintiff generally must be a stockholder not only at the time of the transaction which is the subject of the suit, but also through the duration of the derivative suit. The Delaware General Corporation Law also requires that the derivative plaintiff make a demand on the directors of the corporation to assert the corporate claim before the suit may be prosecuted by the derivative plaintiff, unless such demand would be futile.  

The Companies Act has a provision which provides a mechanism enabling shareholders to apply to the court for leave to bring a derivative action or arbitration in the name and on behalf of the company or intervene in an action or arbitration to which the company is a party for the purpose of prosecuting, defending or discontinuing the action or arbitration on behalf of the company.

 

Applications are generally made by shareholders of the company, but courts are given the discretion to allow such persons as they deem proper to apply (e.g., beneficial owner of shares).

 

It should be noted that this provision of the Companies Act is primarily used by minority shareholders to bring an action or arbitration in the name and on behalf of the company or intervene in an action or arbitration to which the company is a party for the purpose of prosecuting, defending or discontinuing the action on behalf of the company.

 

Class Actions

 

The concept of class action suits, which allows individual shareholders to bring an action seeking to represent a class or classes of shareholders, does not exist in Singapore. However, it is possible as a matter of procedure for a number of shareholders having the same interest to pursue a representative action and establish liability on behalf of themselves and other shareholders who join in or who are made parties to such an action, subject to the discretion of the Singapore courts.

     
Distributions and Dividends; Repurchases and Redemptions
 
The Delaware General Corporation Law permits a corporation to declare and pay dividends out of statutory surplus or, if there is no surplus, out of net profits for the fiscal year in which the dividend is declared and/or for the preceding fiscal year as long as the amount of capital of the corporation following the declaration and payment of the dividend is not less than the aggregate amount of the capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets.  

The Companies Act provides that no dividends can be paid to shareholders except out of profits.

 

The Companies Act does not provide a definition on when profits are deemed to be available for the purpose of paying dividends and this is accordingly governed by case law.

 

Our Constitution provides that no dividend can be paid otherwise than out of profits.

 

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Delaware   Singapore
Under the Delaware General Corporation Law, any corporation may purchase or redeem its own shares, except that generally it may not purchase or redeem these shares if the capital of the corporation is impaired at the time or would become impaired as a result of the redemption. A corporation may, however, purchase or redeem out of capital shares that are entitled upon any distribution of its assets to a preference over another class or series of its shares if the shares are to be retired and the capital reduced.  

Acquisition of a Company’s Own Shares

 

The Companies Act generally prohibits a company from acquiring its own shares subject to certain exceptions. Any contract or transaction made or entered into in contravention of the aforementioned prohibition by which a company acquires its own shares is void. However, provided that it is expressly permitted to do so by its constitution, as the case may be, and subject to the special conditions of each permitted acquisition contained in the Companies Act, a company may:

 

      redeem redeemable preference shares. Preference shares may be redeemed out of capital if all the directors make a solvency statement in relation to such redemption in accordance with the Companies Act, and the company lodges a copy of the statement with the Accounting and Corporate Regulatory Authority of Singapore;
         
      whether or not it is listed on an approved exchange in Singapore or any securities exchange outside Singapore, make an off-market purchase of its own shares otherwise than on an approved exchange in Singapore or any securities exchange outside Singapore in accordance with an equal access scheme authorized in advance at a general meeting;
         
      make a selective off-market purchase of its own shares otherwise than on a securities exchange and not in accordance with an equal access scheme if the purchase or acquisition is made in accordance with an agreement authorized in advance at a general meeting by a special resolution where persons whose shares are to be acquired and their associated persons have abstained from voting; and
         
      whether or not it is listed on an approved exchange in Singapore or any securities exchange outside Singapore, make an acquisition of its own shares under a contingent purchase contract which has been authorized in advance at a general meeting by a special resolution.

 

   

A company may also purchase its own shares by an order of a Singapore court.

 

The total number of ordinary shares that may be acquired by a company during a relevant period may not exceed 20% (or such other prescribed percentage) of the total number of ordinary shares as of the date of the resolution passed to authorize the acquisition of the shares. Where, however, a company has reduced its share capital by a special resolution or a Singapore court has made an order confirming the reduction of share capital of the company, the total number of ordinary shares shall be taken to be the total number of ordinary shares as altered by the special resolution or the order of the court. Payment, including any expenses (including brokerage or commission) incurred directly in the acquisition by the company of its own shares, may be made out of the company’s distributable profits or capital, provided that the company is solvent.

 

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Our Constitution provides that subject to the provisions of the Companies Act, we may purchase or otherwise acquire our issued shares on such terms and in such manner as we may think fit. These shares may be held as treasury shares or cancelled as provided in the Companies Act or dealt with in such manner as may be permitted by the Companies Act. On cancellation of the shares, the rights and privileges attached to those shares will expire.

     
   

Financial Assistance for the Acquisition of Shares

 

A public company or a company whose holding company or ultimate holding company is a public company shall not give financial assistance to any person whether directly or indirectly for the purpose of or in connection with: 

 

      the acquisition or proposed acquisition of shares in the company or units of such shares; or
         
      the acquisition or proposed acquisition of shares in its holding company or ultimate holding company, or units of such shares.

 

   

Financial assistance may take the form of a loan, the giving of a guarantee, the provision of security, the release of an obligation, the release of a debt or otherwise.

 

However, it should be noted that a company may provide financial assistance for the acquisition of its shares or shares in its holding company if it complies with the requirements (including approval by special resolution) set out in the Companies Act.

     
Transactions with Officers or Directors
 
Under the Delaware General Corporation Law, some contracts or transactions in which one or more of a corporation’s directors has an interest are not void or voidable because of such interest provided that some conditions, such as obtaining the required approval and fulfilling the requirements of good faith and full disclosure, are met. Under the Delaware General Corporation Law, either (a) the stockholders or the board of directors must approve in good faith any such contract or transaction after full disclosure of the material facts or (b) the contract or transaction must have been “fair” as to the corporation at the time it was approved. If board approval is sought, the contract or transaction must be approved in good faith by a majority of disinterested directors after full disclosure of material facts, even though less than a majority of a quorum.   Under the Companies Act, directors and chief executive officers are not prohibited from dealing with the company, but where they have an interest in a transaction with the company, that interest must be disclosed to the board of directors. In particular, every director or chief executive officer who is in any way, whether directly or indirectly, interested in a transaction or proposed transaction with the company must, as soon as is practicable after the relevant facts have come to such director’s or chief executive officer’s knowledge, declare the nature of such director’s or chief executive officer’s interest at a board of directors’ meeting or send a written notice to the company containing details on the nature, character and extent of his or her interest in the transaction or proposed transaction with the company.

 

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    There is, however, no requirement for disclosure where the interest of the director or chief executive officer (as the case may be) consists only of being a member or creditor of a corporation which is interested in the transaction or proposed transaction with the company if the interest may properly be regarded as immaterial. Where the transaction or the proposed transaction relates to any loan to the company, a director or chief executive officer shall not be deemed to be interested or to have been at any time interested in the transaction or proposed transaction where the director or chief executive officer has only guaranteed or joined in guaranteeing the repayment of such loan, unless the constitution provides otherwise.
     
   

Further, where the transaction or the proposed transaction has been or will be made with or for the benefit of a related corporation (i.e. the holding company, subsidiary or subsidiary of a common holding company), a director or chief executive officer shall not be deemed to be interested or to have been at any time interested in the transaction or proposed transaction where he is a director or chief executive officer (as the case may be) of that corporation, unless the constitution provides otherwise.

 

In addition, a director or chief executive officer who holds any office or possesses any property which directly or indirectly might create duties or interests in conflict with such director’s or chief executive officer’s duties or interests as director or chief executive officer (as the case may be) is required to declare the fact and the nature, character and extent of the conflict at a meeting of directors or send a written notice to the company setting out the fact and the nature, character and extent of the conflict.

     
   

The Companies Act extends the scope of this statutory duty of a director and chief executive officer to disclose any interests by pronouncing that an interest of a member of a director’s or chief executive officer’s (as the case may be) family (including spouse, son, adopted son, step-son, daughter, adopted daughter and step-daughter) will be treated as an interest of the director or chief executive officer (as the case may be).

 

Subject to specified exceptions, the Companies Act prohibits a company from making a loan or quasi-loan to its directors or to directors of a related corporation, or giving a guarantee or security in connection with such a loan or quasi-loan.

 

Companies are also prohibited from making loans or quasi-loans to its directors’ spouse or children (whether adopted or natural or step-children), or giving a guarantee or security in connection with such a loan or quasi-loan.

 

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Dissenters’ Rights
 
Under the Delaware General Corporation Law, a stockholder of a corporation participating in some types of major corporate transactions may, under varying circumstances, be entitled to appraisal rights pursuant to which the stockholder may receive cash in the amount of the fair market value of his or her shares in lieu of the consideration he or she would otherwise receive in the transaction.   There are no equivalent provisions in Singapore under the Companies Act.
     
Cumulative Voting
 
Under the Delaware General Corporation Law, a corporation may adopt in its bylaws that its directors shall be elected by cumulative voting. When directors are elected by cumulative voting, a stockholder has the number of votes equal to the number of shares held by such stockholder times the number of directors nominated for election. The stockholder may cast all of such votes for one director or among the directors in any proportion.   There is no equivalent provision under the Companies Act in respect of companies incorporated in Singapore.
     
Anti-Takeover Measures
 

Under the Delaware General Corporation Law, the certificate of incorporation of a corporation may give the board the right to issue new classes of preferred stock with voting, conversion, dividend distribution, and other rights to be determined by the board at the time of issuance, which could prevent a takeover attempt and thereby preclude shareholders from realizing a potential premium over the market value of their shares.

 

In addition, Delaware law does not prohibit a corporation from adopting a stockholder rights plan, or “poison pill,” which could prevent a takeover attempt and therefore could preclude shareholders from realizing a potential premium over the market value of their shares.

 

The constitution of a Singapore company typically provides that the company may allot and issue new shares of a different class with preferential, deferred, qualified or other special rights as its board of directors may determine with the prior approval of the company’s shareholders in a general meeting.

 

Under the Singapore Take-over Code, if the board of the offeree company has reason to believe that a bona fide offer is imminent, the board must not, take any action, without the approval of shareholders at a general meeting, on the affairs of the offeree company that could effectively result in any bona fide offer being frustrated or the shareholders being denied an opportunity to decide on its merits.

 

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SHARES ELIGIBLE FOR FUTURE SALE

 

Upon the completion of this Offering, we will have [    ] Shares outstanding. All of the Shares sold in this Offering will be freely transferable by persons other than our “affiliates” without restriction or further registration under the Securities Act.

 

Future sales of substantial amounts of Shares in the public market, or the perception that such sales may occur, could adversely affect the market price of our Shares. Further, since a large number of our Shares will not be available for sale shortly after this Offering because of the contractual and legal restrictions on resale described below, sales of substantial amounts of our Shares in the public market after these restrictions lapse, or the perception that such sales may occur, could adversely affect the prevailing market price and our ability to raise equity capital in the future.

 

Lock-Up Agreements

 

We have agreed that, without the prior written consent of the Placement Agent and subject to certain exceptions, we will not, during the period ending ninety (90) days after the date of this prospectus, (i) issue, offer, pledge, sell, contract to sell, offer or issue, contract to purchase or grant any option, right or warrant to purchase, or otherwise dispose of, any Ordinary Shares or any securities convertible into or exercisable or exchangeable for Ordinary Shares or enter into a transaction which would have the same effect; (ii) enter into any swap, hedge or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Ordinary Shares; or (iii) file any registration statement with the SEC relating to the offering of any Ordinary Shares or any securities convertible into or exercisable or exchangeable for Ordinary Shares, in each case regardless of whether any such transaction described above is to be settled by delivery of Ordinary Shares or such other securities, in cash or otherwise.

 

Our Executive Officers, Directors and Major Shareholders have agreed, subject to some exceptions, not to transfer or dispose of, directly or indirectly, any of our Shares, or any securities convertible into or exchangeable or exercisable for our Shares, for a period of sixty (60) days after the date of this prospectus. After the expiration of the sixty (60) day period, the Shares held by our Directors, Executive Officers and our existing Shareholders may be sold subject to the restrictions under Rule 144 under the Securities Act or by means of registered public offerings. Please refer to the section titled “Plan of Distribution — Lock-Up Agreements” of this prospectus for further details.

 

Rule 144

 

[   ] of our ordinary shares, assuming the sale of all the ordinary shares we are offering at the closing, that will be outstanding upon the completion of this offering are “restricted securities” as that term is defined in Rule 144 under the Securities Act and may be sold publicly in the United States only if they are subject to an effective registration statement under the Securities Act or pursuant to an exemption from the registration requirement such as those provided by Rule 144 and Rule 701 promulgated under the Securities Act. In general, beginning 90 days after we have been a reporting company under Section 13(a) of the Exchange Act, a person (or persons whose shares are aggregated) who at the time of a sale is not, and has not been during the three months preceding the sale, an affiliate of ours and has beneficially owned our restricted securities for at least six months will be entitled to sell the restricted securities without registration under the Securities Act, subject only to the availability of current public information about us, and will be entitled to sell restricted securities beneficially owned for at least one year without restriction. Persons who are our affiliates and have beneficially owned our restricted securities for at least six months may sell a number of restricted securities within any three-month period that does not exceed the greater of the following:

 

1% of the then outstanding ordinary shares which will equal [______] ordinary shares, assuming the sale of all the Units we are offering at the closing; or

 

the average weekly trading volume of our ordinary shares during the four calendar weeks preceding the date on which notice of the sale is filed with the SEC. Sales by our affiliates under Rule 144 are also subject to certain requirements relating to the manner of sale, notice and the availability of current public information about us.

 

Rule 701

 

In general, under Rule 701 of the Securities Act as currently in effect, each of our employees, consultants or advisors who purchases our Shares from us in connection with a compensatory stock or option plan or other written agreement relating to compensation is eligible to resell such Shares 90 days after we became a reporting company under the Exchange Act in reliance on Rule 144, but without compliance with some of the restrictions, including the holding period, contained in Rule 144.

 

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EXCHANGE CONTROLS AND LIMITATIONS AFFECTING SHAREHOLDERS

 

Singapore

 

There are no Singapore government laws, decrees, regulations or other legislation that may affect the import or export of capital, including the availability of cash and cash equivalents for use by our Group, and the remittance of dividends, interest or other payments to non-resident holders of our Company’s securities.

 

Malaysia

 

In Malaysia, foreign exchange control is governed by the Financial Services Act 2013 (“FSA”) and the Islamic Financial Services Act 2013 (“IFSA”). The Foreign Exchange Notices (“FE Notices”) set out, among others, the circumstances in which the specific approval of the controller or regulator of foreign exchange i.e. the central bank of Malaysia (“BNM”), must be obtained by residents and non-residents to remit funds to and from Malaysia. A party undertaking or engaging in any transactions that are not provided for or allowed under the FE Notices are required to obtain approval from BNM prior to undertaking the said transaction.

 

A “resident” is defined as (i) a citizen of Malaysia (excluding a citizen who has obtained a permanent resident status in a foreign country and is residing outside Malaysia), (ii) a non-citizen of Malaysia who has obtained permanent resident status in Malaysia and is ordinarily residing in Malaysia, or (iii) a person (whether body corporate or unincorporated) incorporated or registered with or approved by any authority in Malaysia.

 

A “non-resident” is defined as (i) any person other than a resident, (ii) an overseas branch, a subsidiary, a regional office, a sales office, a representative office of a resident company, (iii) embassies, consulates, high commissions, supranational or international organizations, or (iv) a Malaysian citizen who has obtained permanent resident status in a country or territory outside Malaysia and is residing outside Malaysia.

 

The following are some of the provisions and restrictions that are applicable to My All Services as a resident under the new FE Notices issued and made effective on April 15, 2021.

 

(i)Payment in Ringgit between residents and non-residents

 

A resident is allowed to make or receive payments in Ringgit in Malaysia to or from a non-resident for, among others, income earned or expenses incurred in Malaysia and for the settlement of a trade in goods or services.

 

(ii)Payment in foreign currency between residents and non-residents

 

A resident is allowed to make or receive payments in foreign currency to or from a non-resident for any purpose (subject to compliance with all FE Notices), other than for payment made or received for:

 

(a)a foreign currency-denominated derivative or Islamic derivative offered by a resident (unless otherwise approved by BNM);

 

(b)a derivative or Islamic derivative which is referenced to Ringgit (unless otherwise approved by BNM);

 

(c)a derivative or Islamic derivative, which market price, value, delivery or payment obligation is derived from, referenced to or based on exchange rate, offered by a non-resident (unless otherwise approved by BNM).

 

(iii)Repatriation of funds by non-resident

 

Non-residents are free to repatriate divestment proceeds, profits, dividends or any income arising from investments in Malaysia, provided that such repatriation is made in foreign currency (except in the currency of Israel) and the conversion of Ringgit to foreign currency is undertaken in compliance with the FE Notices.

 

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(iv)Borrowing in Ringgit by residents from non-residents

 

A resident is allowed to borrow in Ringgit in any amount from a non-resident through the issuance of (a) redeemable preference shares or Islamic redeemable preference shares in Ringgit for use in Malaysia, (b) Ringgit sovereign bond or sukuk (issued by the Federal Government); or (c) Ringgit corporate bond or Sukuk in accordance with relevant guidelines issued by the Securities Commission Malaysia excluding non-tradable Ringgit corporate bond or Sukuk issued to a non-resident entity outside the resident entity’s group or a non-resident financial institution (“NRFI”).

 

A resident entity is allowed to borrow in Ringgit up to RM1 million in aggregate (computed based on an aggregate borrowing in Ringgit by the resident entity and other resident entity with a parent-subsidiary relationship) for use in Malaysia from a non-resident excluding a NRFI.

 

(v)Borrowing in foreign currency by residents and non-residents

 

A resident is allowed to borrow in foreign currency in any amount from (a) a licensed onshore bank, (b) an entity within the resident entity’s group or from the resident entity’s direct shareholder except for a NRFI or a non-resident special purpose vehicle which is used to obtain borrowing from any person outside the resident entity’s group or (c) through issuance of foreign currency corporate bond or Sukuk to another resident.

 

A resident entity is allowed to borrow in foreign currency up to RM100 million equivalent in aggregate (computed based on an aggregate borrowing in foreign currency by the resident entity and other resident entity with parent-subsidiary relationship) from (a) non-resident outside the resident entity’s Group; (b) a NRFI; or (c) a non-resident special purpose vehicle which is used to obtain borrowing from any person outside the resident entity’s group.

 

(vi)Lending by a resident

 

A person is allowed to lend in Ringgit or foreign currency to a resident or non-resident for any corresponding borrowing threshold (as set out in item (iv) and (v) above) approved under the FE Notices or where the borrowing has otherwise been approved in writing by BNM.

 

(vii)Giving and Obtaining of Financial Guarantee

 

A resident guarantor is allowed to give a financial guarantee in any amount in Ringgit or foreign currency to secure any borrowing obtained by a resident in Ringgit or foreign currency as approved in the FE Notices or otherwise approved in writing by BNM.

 

A non-bank resident guarantor is allowed to give a financial guarantee in any amount in Ringgit or foreign currency to secure a borrowing obtained by a non-resident in Ringgit or foreign currency as approved in the FE Notices or otherwise approved in writing by BNM, excluding a financial guarantee given to secure a borrowing (a) obtained by a non-resident borrower which is a special purpose vehicle (i.e.: an entity set up solely for a specific purpose and is not an operating business unit) or (b) where the resident guarantor has entered into a formal or informal arrangement to make repayment of the borrowing in foreign currency other than for an event of default.

 

A resident lender is allowed to obtain a financial guarantee in any amount in foreign currency or Ringgit from a non-resident guarantor to secure a borrowing obtained by a resident or a non-resident borrower.

 

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TAXATION

 

The following are material Singapore tax and U.S. federal income tax considerations relevant to an investment in our Shares. This discussion does not address all of the tax consequences that may be relevant in light of the investor’s particular circumstances. Potential investors should consult their tax advisers regarding the Singapore, U.S. federal, state and local, and non-U.S. tax consequences of owning and disposing of our Shares in their particular circumstances.

 

Singaporean Tax Considerations

 

The statements made herein regarding taxation are general in nature and based on certain aspects of current tax laws of Singapore and administrative guidelines issued by the relevant authorities in force as of the date of this prospectus and are subject to any changes in such laws or administrative guidelines, or in the interpretation of these laws or guidelines, occurring after such date, which could be made on a retrospective basis. These laws and guidelines are also subject to various interpretations and the relevant tax authorities or the courts could later disagree with the explanations or conclusions set out below. The statements below are not to be regarded as advice on the tax position of any holder of our Shares or of any person acquiring, selling or otherwise dealing with our Shares or on any tax implications arising from the acquisition, sale or other dealings in respect of our Shares. The statements made herein do not purport to be a comprehensive or exhaustive description of all of the tax considerations that may be relevant to a decision to purchase, own or dispose of our Shares and do not purport to deal with the tax consequences applicable to all categories of investors, some of which (such as dealers in securities) may be subject to special rules. Prospective holders of our Shares are advised to consult their own tax advisers as to the Singapore or other tax consequences of the acquisition, ownership of or disposal of our Shares. The statements below regarding the Singapore tax treatment of dividends received in respect of our Shares are based on the assumption that the Company is tax resident in Singapore for Singapore income tax purposes. It is emphasized that neither the Company nor any other persons involved in this prospectus accepts responsibility for any tax consequences or liabilities resulting from the subscription for, purchase, holding or disposal of our Shares.

 

Individual Income Tax

 

An individual is a tax resident in Singapore in a year of assessment if, in the preceding year, he resides in Singapore except for such temporary absences as may be reasonable and not inconsistent with a claim by such person to be resident in Singapore. This includes a person who is physically present in Singapore or exercises an employment (other than as a director of a company) in Singapore for 183 days or more during the year preceding the year of assessment.

 

Generally, individual taxpayers are subject to Singapore income tax on income accruing in or derived from Singapore, unless certain exemptions apply. Foreign-sourced income received in Singapore by a non-resident individual is exempt from Singapore income tax. Foreign-sourced income received on or after January 1, 2004 by a Singapore tax resident individual (except for income received through a partnership in Singapore) is also exempt from Singapore income tax if the Comptroller of Income Tax in Singapore (“Comptroller”) is satisfied that the tax exemption would be beneficial to the individual.

 

Singapore tax residents are currently taxed at progressive rates ranging from 0% to 24%. Non-resident individuals, subject to certain exceptions and conditions, are currently subject to Singapore income tax on income accruing in or derived from Singapore at the rate of 24%.

 

Corporate Income Tax

 

A company is regarded as resident in Singapore for Singapore tax purposes if the control and management of its business are exercised in Singapore.

 

A company is subject to Singapore income tax on income accruing in or derived from Singapore and on foreign-sourced income received or deemed to be received in Singapore, unless certain exemptions apply.

 

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Foreign-sourced income in the form of dividends, branch profits and service income received or deemed to be received in Singapore by a Singapore tax resident company is exempt from Singapore income tax if the following conditions are met:

 

(i)such income is subject to tax of a similar character to income tax (by whatever name called) under the law of the territory from which such income is received;

 

(ii)at the time the income is received in Singapore, the highest rate of tax of a similar character to income tax (by whatever name called) levied under the law of the territory from which the income is received on any gains or profits from any trade or business carried on by any company in that territory at that time is not less than 15%; and

 

(iii)the Comptroller is satisfied that the tax exemption would be beneficial to the Singapore tax resident company.

 

The corporate tax rate in Singapore is currently 17%. From YA 2020 onwards, three-quarters of a company’s first S$10,000 of normal chargeable income, and half of its next S$190,000 of normal chargeable income are exempt from corporate tax.

 

Newly incorporated companies will also, subject to certain conditions and exceptions, be eligible for tax exemption on three-quarters of the company’s first S$100,000 of normal chargeable income, and half of its next $100,000 of normal chargeable income, for each of the company’s first three YAs falling in or after YA 2020.

 

Dividend Distributions

 

Under Singapore’s one-tier corporate tax system, dividends paid by a Singapore tax resident company are exempt from Singapore income tax in the hands of its shareholders, regardless of whether the shareholder is a company or an individual and whether or not the shareholder is a Singapore tax resident.

 

Gains on Disposal of our Shares

 

Singapore does not impose tax on capital gains. There are no specific laws or regulations which deal with the characterization of whether a gain is income or capital in nature. Gains arising from the disposal of our Shares may be construed to be of an income nature and subject to Singapore income tax, especially if they arise from activities which the Inland Revenue Authority of Singapore (“IRAS”) regards as the carrying on of a trade or business in Singapore.

 

Holders of our Shares who apply, or who are required to apply, the Singapore Financial Reporting Standard (“FRS”) 39, FRS 109 or Singapore Financial Reporting Standard (International) 9 (“SFRS(I) 9”) (as the case may be) may for the purposes of Singapore income tax be required to recognize gains or losses (not being gains or losses in the nature of capital) in accordance with the provisions of FRS 39, FRS 109 or SFRS(I) 9 (as modified by the applicable provisions of Singapore income tax law) even though no sale or disposal of our Shares is made.

 

Holders of our Shares should consult their accounting and tax advisers regarding the Singapore income tax consequences of their acquisition, holding and disposal of our Shares.

 

Stamp Duty

 

There is no stamp duty payable on the subscription for our Shares.

 

Stamp duty is payable on an instrument for the conveyance, assignment or transfer on sale of the shares in a company incorporated in Singapore, or a company which maintains a share or branch register in Singapore. Stamp duty is calculated at the rate of 0.2% of the consideration for, or market value of, such shares transferred, whichever is higher.

 

Stamp duty is borne by the purchaser unless there is an agreement to the contrary. Where an instrument of transfer is executed outside Singapore and not brought into Singapore, or no instrument of transfer is executed, no stamp duty is generally payable on the acquisition of shares. However, stamp duty is generally payable if the instrument of transfer is executed in Singapore, or is executed outside Singapore and received in Singapore.

 

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An electronic instrument may be treated as an instrument of transfer for stamp duty purposes. In this regard, an electronic instrument that effects a transaction includes, among others, an electronic record that effects, or an electronic record and a physical document that together effect, the same transaction, whether directly or indirectly. Examples of an “electronic record” include anything sent by e-mail, SMS or any Internet-based messaging service.

 

An electronic instrument that is executed outside Singapore is received in Singapore if (a) it is retrieved or accessed by a person in Singapore; (b) an electronic copy of it is stored on a device (including a computer) and brought into Singapore; or (c) an electronic copy of it is stored on a computer in Singapore.

 

Stamp duty may therefore apply on the sale and disposal of our Shares if an instrument of transfer (including an electronic instrument) is executed in Singapore, or if an instrument of transfer (including an electronic instrument) is executed outside Singapore and received in Singapore. Investors should seek their own tax advice on the applicability of stamp duty in connection with the purchase and sale of our Shares.

 

Estate Duty

 

Singapore estate duty was abolished with respect to all deaths occurring on or after February 15, 2008.

 

Goods and Services Tax (“GST”)

 

The sale of our Shares by a GST-registered investor belonging in Singapore for GST purposes to another person belonging in Singapore is an exempt supply not subject to GST. Any input GST incurred by the GST-registered investor in making an exempt supply is generally not recoverable as input tax.

 

Where our Shares are sold by a GST-registered investor in the course of or furtherance of a business carried on by such investor contractually to and for the direct benefit of a person belonging outside Singapore, the sale should generally, subject to the satisfaction of certain conditions, qualify for zero-rating (i.e., subject to GST at 0%). Any input GST incurred by the GST-registered investor in making such a supply in the course of or furtherance of a business may be fully recoverable as input tax where the relevant conditions are met. Investors should seek their own tax advice on the recoverability of GST incurred on expenses in connection with the purchase and sale of our Shares.

 

Services consisting of arranging, brokering, underwriting or advising on the issue, allotment or transfer of ownership of our ordinary shares rendered by a GST-registered person to an investor belonging in Singapore for GST purposes in connection with the investor’s purchase, sale or holding of our Shares will be subject to GST at the prevailing rate of 9%. Similar services rendered by a GST-registered person contractually to and for the direct benefit of an investor belonging outside Singapore should generally, subject to the satisfaction of certain conditions, qualify for zero-rating.

 

Laws and Regulations in Malaysia in Relation to Malaysian Taxation

 

Corporate Income Tax

 

Income tax is imposed on income accruing in or derived from Malaysia or received in Malaysia from outside Malaysia. The rate of income tax for resident and non-resident companies (except for SMEs; i.e. companies with a paid-up capital in respect of Shares of not more than MYR2.5 million and gross income not exceeding MYR50 million in a basis period of a year of assessment from all business sources) is 24%. SMEs are generally subject to income tax at a rate of 17% on the first MYR600,000 of chargeable income and 24% on the remaining chargeable income with effect from the YA 2020. The chargeable income that is subject to tax comprises gross income, less permitted deductions.

 

Sales and Service Tax

 

Effective from 1 September 2018, the goods and services tax regime was repealed and replaced with a new sales tax and service tax regime.

 

Sales tax is charged on taxable goods: (i) manufactured in Malaysia by a registered manufacturer and sold, used or disposed of by them, or (ii) imported into Malaysia by any person, at a rate of 5%, 10% or a specified rate depending on the category of taxable goods.

 

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Service tax is generally charged at 6% on taxable services, provided in Malaysia by a registered person in the course of business, and on imported taxable services. Taxable services include accommodation services, food and beverage services, and professional services.

 

Withholding Tax

 

Malaysia imposes a withholding tax on certain payments to non-residents, including, without limitation, royalties, technical fees, installation fees and rental of movable property. The rate of withholding tax is generally between 10% and 15% unless there is a double-taxation agreement between Malaysia and the country of the non-resident, in which case, the withholding tax rate may be reduced.

 

Taxes on Dividends

 

There is no further income tax on dividends received from a Malaysian company. Tax imposed on the company’s profits will be the final tax and dividends distributed to the Shareholders will not be subject to further tax.

 

Certain United States Federal Income Tax Considerations

 

The following discussion is a summary of U.S. federal income tax considerations generally applicable to U.S. Holders (as defined below) of the ownership and disposition of our Shares. This summary applies only to U.S. Holders that hold our Shares as capital assets (generally, property held for investment) and that have the U.S. dollar as their functional currency. This summary is based on U.S. tax laws in effect as of the date of this prospectus, on U.S. Treasury regulations in effect or, in some cases, proposed as of the date of this prospectus, and judicial and administrative interpretations thereof available on or before such date. All of the foregoing authorities are subject to change, which could apply retroactively and could affect the tax consequences described below. Moreover, this summary does not address the U.S. federal estate, gift, backup withholding, and alternative minimum tax considerations, or any state, local, and non-U.S. tax considerations, relating to the ownership and disposition of our Shares. The following summary does not address all aspects of U.S. federal income taxation that may be important to particular investors in light of their individual circumstances or to persons in special tax situations such as:

 

financial institutions or financial services entities;

 

insurance companies;

 

pension plans;

 

cooperatives;

 

regulated investment companies;

 

real estate investment trusts;

 

broker-dealers;

 

traders that elect to use a mark-to-market method of accounting;

 

governments or agencies or instrumentalities thereof;

 

certain former U.S. citizens or long-term residents;

 

tax-exempt entities (including private foundations);

 

persons liable for alternative minimum tax;

 

persons holding stock as part of a straddle, hedging, conversion or other integrated transaction;

 

persons whose functional currency is not the U.S. dollar;

 

passive foreign investment companies;

 

controlled foreign corporations;

 

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persons that actually or constructively own 5% or more of the total combined voting power of all classes of our voting stock; or

 

partnerships or other entities taxable as partnerships for U.S. federal income tax purposes, or persons holding Shares through such entities.

 

PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE APPLICATION OF U.S. FEDERAL TAXATION TO THEIR PARTICULAR CIRCUMSTANCES, AND THE STATE, LOCAL, NON-U.S., OR OTHER TAX CONSEQUENCES OF THE OWNERSHIP AND DISPOSITION OF OUR SHARES.

 

For purposes of this discussion, a “U.S. Holder” is a beneficial owner of our Shares that is, for U.S. federal income tax purposes:

 

an individual who is a citizen or resident of the United States;

 

a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in the United States or under the laws of the United States, any state thereof or the District of Columbia;

 

an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or

 

a trust that (1) is subject to the primary supervision of a court within the United States and the control of one or more U.S. persons for all substantial decisions, or (2) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.

 

If a partnership (or other entity treated as a partnership for U.S. federal income tax purposes) is a beneficial owner of our Shares, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. Partnerships holding our Shares and their partners are urged to consult their tax advisors regarding an investment in our Shares.

 

Taxation of Dividends and Other Distributions on Our Shares

 

Subject to the discussion below under “Passive Foreign Investment Company Rules,” any cash distributions paid on our Shares out of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles, will generally be includible in the gross income of a U.S. Holder as dividend income on the day actually or constructively received by the U.S. Holder. Because we do not intend to determine our earnings and profits on the basis of U.S. federal income tax principles, any distribution we pay will generally be treated as a “dividend” for U.S. federal income tax purposes. A non-corporate U.S. Holder will be subject to tax on dividend income from a “qualified foreign corporation” at a lower applicable capital gains rate rather than the marginal tax rates generally applicable to ordinary income provided that certain holding period requirements are met. A non-U.S. corporation (other than a corporation that is classified as a PFIC for the taxable year in which the dividend is paid or the preceding taxable year) will generally be considered to be a qualified foreign corporation (i) if it is eligible for the benefits of a comprehensive tax treaty with the United States that the U.S. Secretary of Treasury determines is satisfactory for purposes of this provision and includes an exchange of information program, or (ii) with respect to any dividend it pays on stock that is readily tradable on an established securities market in the United States, including Nasdaq. It is unclear whether dividends that we pay on our Shares will meet the conditions required for the reduced tax rate. If we are eligible for such benefits, dividends we pay on our Shares, would be eligible for the reduced rates of taxation described in this paragraph. You are urged to consult your tax advisor regarding the availability of the lower rate for dividends paid with respect to our Shares. Dividends received on our Shares will not be eligible for the dividends-received deduction allowed to corporations.

 

Dividends will generally be treated as income from foreign sources for U.S. foreign tax credit purposes and will generally constitute passive category income. Depending on the U.S. Holder’s individual facts and circumstances, a U.S. Holder may be eligible, subject to a number of complex limitations, to claim a foreign tax credit not in excess of any applicable treaty rate in respect of any foreign withholding taxes imposed on dividends received on our Shares. A U.S. Holder who does not elect to claim a foreign tax credit for foreign tax withheld may instead claim a deduction, for U.S. federal income tax purposes, in respect of such withholding, but only for a year in which such U.S. Holder elects to do so for all creditable foreign income taxes. The rules governing the foreign tax credit are complex and their outcome depends in large part on the U.S. Holder’s individual facts and circumstances. Accordingly, U.S. Holders are urged to consult their tax advisors regarding the availability of the foreign tax credit under their particular circumstances.

 

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Taxation of Sale or Other Disposition of Shares

 

Subject to the discussion below under “Passive Foreign Investment Company Rules,” a U.S. Holder will generally recognize capital gain or loss upon the sale or other disposition of Shares in an amount equal to the difference between the amount realized upon the disposition and the U.S. Holder’s adjusted tax basis in such Shares. Any capital gain or loss will be long term if the Shares have been held for more than one year and will generally be U.S.-source gain or loss for U.S. foreign tax credit purposes. Long-term capital gains of non-corporate taxpayers are currently eligible for reduced rates of taxation. The deductibility of a capital loss may be subject to limitations. U.S. Holders are urged to consult their tax advisors regarding the tax consequences if a foreign tax is imposed on a disposition of our Shares, including the availability of the foreign tax credit under their particular circumstances.

 

Passive Foreign Investment Company Rules

 

A non-U.S. corporation, such as our company, will be classified as a private foreign investment company (“PFIC”), for U.S. federal income tax purposes for any taxable year, if either (i) 75% or more of its gross income for such year consists of certain types of “passive” income or (ii) 50% or more of the value of its assets (determined on the basis of a quarterly average) during such year is attributable to assets that produce or are held for the production of passive income. For this purpose, cash and cash equivalents are categorized as passive assets and the company’s goodwill and other unbooked intangibles are taken into account as non-passive assets. Passive income generally includes, among other things, dividends, interest, rents, royalties, and gains from the disposition of passive assets. We will be treated as owning a proportionate share of the assets and earning a proportionate share of the income of any other corporation in which we own, directly or indirectly, more than 25% (by value) of the stock.

 

Based on our current composition of assets, subsidiaries and market capitalization (which will fluctuate from time to time), we do not expect to be or become a PFIC for U.S. federal income tax purposes. However, no assurance can be given in this regard because the determination of whether we will be or become a PFIC is a factual determination made annually that will depend, in part, upon the composition of our income and assets. Furthermore, the composition of our income and assets may also be affected by how, and how quickly, we use our liquid assets and the cash raised in this Offering. Under circumstances where our revenue from activities that produce passive income significantly increase relative to our revenue from activities that produce non-passive income, or where we determine not to deploy significant amounts of cash for active purposes, our risk of becoming classified as a PFIC may substantially increase. In addition, because there are uncertainties in the application of the relevant rules, it is possible that the Internal Revenue Service may challenge our classification of certain income and assets as non-passive or our valuation of our tangible and intangible assets, each of which may result in our becoming a PFIC for the current or subsequent taxable years. If we were classified as a PFIC for any year during which a U.S. Holder held our Shares, we generally would continue to be treated as a PFIC for all succeeding years during which such U.S. Holder held our Shares even if we cease to be a PFIC in subsequent years, unless certain elections are made. Our U.S. counsel expresses no opinion with respect to our PFIC status for any taxable year.

 

If we are classified as a PFIC for any taxable year during which a U.S. Holder holds our Shares, and unless the U.S. Holder makes a mark-to-market election (as described below), the U.S. Holder will generally be subject to special tax rules that have a penalizing effect, regardless of whether we remain a PFIC, on (i) any excess distribution that we make to the U.S. Holder (which generally means any distribution paid during a taxable year to a U.S. Holder that is greater than 125 percent of the average annual distributions paid in the three preceding taxable years or, if shorter, the U.S. Holder’s holding period for the Shares), and (ii) any gain realized on the sale or other disposition of Shares. Under these rules,

 

the U.S. Holder’s gain or excess distribution will be allocated ratably over the U.S. Holder’s holding period for the Shares;

 

the amount allocated to the current taxable year and any taxable years in the U.S. Holder’s holding period prior to the first taxable year in which we are classified as a PFIC (each, a “pre-PFIC year”), will be taxable as ordinary income;

 

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the amount allocated to each prior taxable year, other than a pre-PFIC year, will be subject to tax at the highest tax rate in effect for individuals or corporations, as appropriate, for that year; and

 

an additional tax equal to the interest charge generally applicable to underpayments of tax will be imposed in respect of the tax attributable to each prior taxable year, other than a pre-PFIC year, of the U.S. Holder.

 

If we are treated as a PFIC for any taxable year during which a U.S. Holder holds our Shares, or if any of our subsidiaries is also a PFIC, such U.S. Holder would be treated as owning a proportionate amount (by value) of the shares of any lower-tier PFICs for purposes of the application of these rules. U.S. Holders are urged to consult their tax advisors regarding the application of the PFIC rules to any of our subsidiaries.

 

As an alternative to the foregoing rules, a U.S. Holder of “marketable stock” in a PFIC may make a mark-to-market election with respect to such stock, provided that such stock is “regularly traded” within the meaning of applicable U.S. Treasury regulations. If our Shares qualify as being regularly traded, and an election is made, the U.S. Holder will generally (i) include as ordinary income for each taxable year that we are a PFIC the excess, if any, of the fair market value of Shares held at the end of the taxable year over the adjusted tax basis of such Shares and (ii) deduct as an ordinary loss the excess, if any, of the adjusted tax basis of the Shares over the fair market value of such Shares held at the end of the taxable year, but such deduction will only be allowed to the extent of the amount previously included in income as a result of the mark-to-market election. The U.S. Holder’s adjusted tax basis in the Shares would be adjusted to reflect any income or loss resulting from the mark-to-market election. If a U.S. Holder makes a mark-to-market election in respect of a corporation classified as a PFIC and such corporation ceases to be classified as a PFIC, the U.S. Holder will not be required to take into account the gain or loss described above during any period that such corporation is not classified as a PFIC. If a U.S. Holder makes a mark-to-market election, any gain such U.S. Holder recognizes upon the sale or other disposition of our Shares in a year when we are a PFIC will be treated as ordinary income and any loss will be treated as ordinary loss, but such loss will only be treated as ordinary loss to the extent of the net amount previously included in income as a result of the mark-to-market election.

 

Because a mark-to-market election cannot be made for any lower-tier PFICs that we may own, a U.S. Holder may continue to be subject to the PFIC rules with respect to such U.S. Holder’s indirect interest in any investments held by us that are treated as an equity interest in a PFIC for U.S. federal income tax purposes.

 

Furthermore, as an alternative to the foregoing rules, a U.S. Holder that owns stock of a PFIC generally may make a “qualified electing fund” election regarding such corporation to elect out of the PFIC rules described above regarding excess distributions and recognized gains. However, we do not intend to provide information necessary for U.S. Holders to make qualified electing fund elections which, if available, would result in tax treatment different from the general tax treatment for PFICs described above.

 

If a U.S. Holder owns our Shares during any taxable year that we are a PFIC, the U.S. Holder must generally file an annual Internal Revenue Service Form 8621 and provide such other information as may be required by the U.S. Treasury Department, whether or not a mark-to-market election is or has been made. If we are or become a PFIC, you should consult your tax advisor regarding any reporting requirements that may apply to you.

 

You should consult your tax advisors regarding how the PFIC rules apply to your investment in our Shares.

 

Non-U.S. Holders

 

Cash dividends paid or deemed paid to a Non-U.S. Holder with respect to the Shares generally will not be subject to U.S. federal income tax unless such dividends are effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, are attributable to a permanent establishment or fixed base that such holder maintains or maintained in the United States).

 

In addition, a Non-U.S. Holder generally will not be subject to U.S. federal income tax on any gain attributable to a sale or other taxable disposition of the Shares unless such gain is effectively connected with its conduct of a trade or business in the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment or fixed base that such holder maintains or maintained in the United States) or the Non-U.S. Holder is an individual who is present in the United States for 183 days or more in the taxable year of such sale or other disposition and certain other conditions are met (in which case, such gain from U.S. sources generally is subject to U.S. federal income tax at a 30% rate or a lower applicable tax treaty rate).

 

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Cash dividends and gains that are effectively connected with the Non-U.S. Holder’s conduct of a trade or business in the United States (and, if required by an applicable income tax treaty, are attributable to a permanent establishment or fixed base that such holder maintains or maintained in the United States) generally will be subject to regular U.S. federal income tax at the same regular U.S. federal income tax rates as applicable to a comparable U.S. Holder and, in the case of a Non-U.S. Holder that is a corporation for U.S. federal income tax purposes, may also be subject to an additional branch profits tax at a 30% rate or a lower applicable tax treaty rate.

 

Information Reporting and Backup Withholding

 

Certain U.S. Holders are required to report information to the Internal Revenue Service relating to an interest in “specified foreign financial assets,” including shares issued by a non-United States corporation, for any year in which the aggregate value of all specified foreign financial assets exceeds $50,000 (or a higher dollar amount prescribed by the Internal Revenue Service), subject to certain exceptions (including an exception for shares held in custodial accounts maintained with a U.S. financial institution). These rules also impose penalties if a U.S. Holder is required to submit such information to the Internal Revenue Service and fails to do so.

 

In addition, dividend payments with respect to our Shares and proceeds from the sale, exchange or redemption of our Shares may be subject to additional information reporting to the IRS and possible U.S. backup withholding. Backup withholding will not apply, however, to a U.S. Holder who furnishes a correct taxpayer identification number and makes any other required certification on IRS Form W-9 or who is otherwise exempt from backup withholding. U.S. Holders who are required to establish their exempt status generally must provide such certification on IRS Form W-9. U.S. Holders are urged to consult their tax advisors regarding the application of the U.S. information reporting and backup withholding rules.

 

Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited against your U.S. federal income tax liability, and you may obtain a refund of any excess amounts withheld under the backup withholding rules by filing the appropriate claim for refund with the IRS and furnishing any required information. We do not intend to withhold taxes for individual Shareholders. However, transactions effected through certain brokers or other intermediaries may be subject to withholding taxes (including backup withholding), and such brokers or intermediaries may be required by law to withhold such taxes.

 

THE PRECEDING DISCUSSION OF U.S. FEDERAL TAX CONSIDERATIONS IS FOR GENERAL INFORMATION PURPOSES ONLY. IT IS NOT TAX ADVICE. EACH PROSPECTIVE INVESTOR SHOULD CONSULT ITS OWN TAX ADVISOR REGARDING THE APPLICATION OF U.S. FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF PURCHASING, HOLDING AND DISPOSING OF OUR SHARES, INCLUDING THE CONSEQUENCES OF ANY PROPOSED CHANGE IN APPLICABLE LAWS TO THEIR PARTICULAR SITUATIONS.

 

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PLAN OF DISTRIBUTION

 

Placement Agent Agreement

 

We will enter into a Placement Agency Agreement with FT Global Capital, Inc. (“FT Global” or the “Placement Agent”), pursuant to which FT Global will agree to act as our exclusive placement agent in connection with this Offering (the “PAA”).

 

The Placement Agent is arranging for the sale of the securities offered in this prospectus on a “best-efforts” basis.

 

The Placement Agent is not purchasing any securities offered by this prospectus, nor is it required to arrange the purchase or sale of any specific number or dollar amount of securities, but the Placement Agent has agreed to use its best efforts to arrange for the direct sale of all of the securities in this Offering pursuant to this prospectus. There is no requirement that any minimum number of the securities be sold in this Offering and there can be no assurance that we will sell all or any of the securities being offered pursuant to this prospectus.

 

We will enter into a securities purchase agreement (the “Securities Purchase Agreement”) directly with each investor in connection with this Offering and we may not sell the entire amount, or any amount, of the securities offered pursuant to this prospectus. Furthermore, pursuant to the PAA, the Placement Agent’s obligations are subject to customary conditions, representations and warranties contained in the PAA, such as receipt by the Placement Agent of officers’ certificates, comfort letters and legal opinions.

 

We have also agreed to indemnify the investors against certain losses resulting from our breach of any of our representations, warranties, or covenants under agreements with the purchasers as well as under certain other circumstances described in the Securities Purchase Agreement.

 

The closing of this Offering will take place on or around [●], 2024.

 

Fees

 

In consideration for the Placement Agent services, we have agreed to pay the Placement Agent upon the closing of this Offering a cash fee equal to 7.5% of the aggregate purchase price of the securities sold under this prospectus. In addition, we agreed to pay additional compensation to the Placement Agent in the form of the Placement Agent Warrants to purchase that number of shares which equals 5% of the aggregate number of the Ordinary Shares sold in this Offering. In addition, we have agreed to reimburse the Placement Agent for all travel, due diligence, legal or related expenses, up to $130,000 in the aggregate.

 

The Placement Agent Warrants

 

The Placement Agent Warrant which we agreed to issue to the Placement Agent upon closing of this offering shall generally be on the same terms and conditions as the investor warrants, provided that the exercise price will be equal to 125% of the offering price per ordinary share in this offering, subject to limitations set forth in FINRA Rule 5110.

 

The Placement Agent Warrant and the underlying Ordinary Shares may be deemed to be compensation by FINRA, and therefore will be subject to FINRA Rule 5110(e)(1). In accordance with FINRA Rule 5110(e)(1), neither the Placement Agent Warrant nor any of our Ordinary Shares issued upon exercise of the Placement Agent Warrant may be sold, transferred, assigned, pledged or hypothecated, or be the subject of any hedging, short sale, derivative, put or call transaction that would result in the effective economic disposition of such securities by any person, for a period of 180 days immediately following the commencement date of sales in this Offering, subject to certain exceptions. The Placement Agent Warrant to be received by the Placement Agent and related persons in connection with this Offering: (i) fully comply with lock-up restrictions pursuant to FINRA Rule 5110(e)(1); and (ii) fully comply with transfer restrictions pursuant to FINRA Rule 5110(e)(2). In addition, pursuant to FINRA Rule 5110(g)(8)(A), the Placement Agent Warrants are not exercisable more than five years from the commencement of sales of the public offering and they will have anti-dilution terms that are consistent with FINRA Rule 5110(g)(8)(E) and (F).

 

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The following table shows the per ordinary share and total placement agent fees we will pay to the Placement Agent in connection with the sale of the securities offered pursuant to this prospectus assuming the purchase of all of the securities initially offered hereby:

 

   Total 
Aggregate Offering Price of Shares  $10,000,000 
Placement agent fees*  $

750,000

 

 

 

*Does not include any Placement Agent Warrants

 

Because there is no minimum offering amount in this Offering, the actual total placement agent fees are not presently determinable and may be substantially less than the maximum amount set forth above.

 

We estimate the total offering expenses of this Offering that will be payable by us, excluding the placement agent fees, will be approximately $435,000, which include legal and printing costs, various other fees and reimbursement of the Placement Agent’s expenses. At the closing, our transfer agent will credit the securities underlying the Shares to the respective accounts of the purchasers.

 

Lock-Up Agreements

 

We have agreed that, without the prior written consent of the Placement Agent and subject to certain exceptions, we will not, during the period ending ninety (90) days after the date of this prospectus, (i) issue, offer, pledge, sell, contract to sell, offer or issue, contract to purchase or grant any option, right or warrant to purchase, or otherwise dispose of, any Ordinary Shares or any securities convertible into or exercisable or exchangeable for Ordinary Shares or enter into a transaction which would have the same effect; (ii) enter into any swap, hedge or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Ordinary Shares; or (iii) file any registration statement with the SEC relating to the offering of any Ordinary Shares or any securities convertible into or exercisable or exchangeable for Ordinary Shares, in each case regardless of whether any such transaction described above is to be settled by delivery of Ordinary Shares or such other securities, in cash or otherwise.

 

Each of our directors and executive officers and principal shareholders (5% or more shareholders) has agreed that, without the prior written consent of the Placement Agent and subject to certain exceptions, it will not, during the period ending sixty (60) days after the date of the Placement Agent Agreement, (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of directly or indirectly, any Ordinary Shares or any securities convertible into or exercisable or exchangeable for Ordinary Shares, (ii) enter into a transaction which would have the same effect or enter into any swap, hedge or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Ordinary Shares or any of our securities that are substantially similar to the Ordinary Shares or any options or warrants to purchase any of the Ordinary Shares or any securities convertible into, exchangeable for or that represent the right to receive the Ordinary Shares, whether now owned or hereinafter acquired, owned directly by it or with respect to which it has beneficial ownership within the rules and regulations of the SEC, whether any of these transaction is to be settled by delivery of Ordinary Shares or such other securities, in cash or otherwise or (iii) publicly disclose the intention to make any such offer, sale, pledge or disposition, or enter into any such transaction, swap, hedge or other arrangement.

 

The restrictions described in the preceding paragraph are subject to certain exceptions, including the transfer of shares as a bona fide gift or through will of intestacy.

 

The Placement Agent has no present intention to waive or shorten the lock-up period; however, the terms of the lock-up agreements may be waived at its discretion. In determining whether to waive the terms of the lock-up agreements, the Placement Agent may base its decision on its assessment of the relative strengths of the securities markets and companies similar to ours in general, and the trading pattern of, and demand for, our Shares in general.

 

Tail Fee

 

We have agreed to grant the Placement Agent additional tail compensation for any financings consummated within the 12-month period following the termination of the PAA to the extent that such financing is provided to us by investors that the Placement Agent introduced or “wall-crossed” on our behalf in connection with this offering. Notwithstanding anything to the contrary contained herein, the Company has the right to terminate the relationship for cause in compliance with FINRA Rule 5110(g)(5)(B). The exercise of such right of termination for cause eliminates the Company’s obligations with respect to the tail fee 

 

Right of First Refusal

 

Subject to certain limited exceptions, for a period of twelve (12) months after the successful completion of this Offering, the Placement Agent has the right of first refusal to act as lead and book running manager or minimally co-lead manager and co-book runner and/or co-lead placement agent of 70% of the economics, for any and all future public or private equity, equity-linked or debt offerings (excluding commercial bank debt) of the Company, or any successor to or any subsidiary of the Company.

 

The foregoing does not purport to be a complete statement of the terms and conditions of the PAA and the Securities Purchase Agreement. Copies of the each have previously been included, or will be included, as exhibits to the Registration Statement to which this prospectus forms a part.

 

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Indemnification

 

We have agreed to indemnify the Placement Agent and purchasers against liabilities under the Securities Act and to contribute to payments that the Placement Agent may be required to make in respect of such liabilities.

 

Determination of Offering Price

 

The actual offering price of the securities we are offering has been negotiated between us and the investors in the offering based on the trading of our Shares prior to the offering, among other things. Other factors considered in determining the public offering price of the securities we are offering include our history and prospects, the stage of development of our business, our business plans for the future and the extent to which they have been implemented, an assessment of our management, the general conditions of the securities markets at the time of the offering and such other factors as were deemed relevant.

 

Listing

 

Our Ordinary Shares are listed on the Nasdaq Capital Market under the symbol “PMEC”. The Warrants offered hereby are not listed on any stock exchange or any trading system, and we do not expect a market for the Warrants to develop.

 

Regulation M

 

The Placement Agent may be deemed to be an underwriter within the meaning of Section 2(a)(11) of the Securities Act and any fees received by them and any profit realized on the sale of the securities by them while acting as principal might be deemed to be underwriting commissions under the Securities Act. The Placement Agent will be required to comply with the requirements of the Securities Act and the Exchange Act including, without limitation, Rule 10b-5 and Regulation M under the Exchange Act. These rules and regulations may limit the timing of purchases and sales of the securities by the Placement Agent. Under these rules and regulations, the Placement Agent may not (i) engage in any stabilization activity in connection with our securities; and (ii) bid for or purchase any of our securities or attempt to induce any person to purchase any of our securities, other than as permitted under the Exchange Act, until they have completed their participation in the distribution.

 

Electronic Offer, Sale and Distribution of Securities

 

A prospectus in electronic format may be made available on the websites maintained by the Placement Agent, if any, participating in this offering and the placement agent may distribute prospectuses electronically. Other than the prospectus in electronic format, the information on these websites is not part of this prospectus or the registration statement of which this prospectus forms a part, has not been approved or endorsed by us or the Placement Agent, and should not be relied upon by investors.

 

Other Relationships

 

From time to time, the Placement Agent may provide, various advisory, investment and commercial banking and other services to us in the ordinary course of business, for which it may receive customary fees and commissions. However, except as disclosed in this prospectus, we have no present arrangements with the Placement Agent for any services.

 

Selling Restrictions

 

No action may be taken in any jurisdiction other than the United States that would permit a public offering of the Shares or the possession, circulation or distribution of this prospectus or any other material relating to us or the Shares in any jurisdiction where action for that purpose is required. Accordingly, the Shares offered by this prospectus may not be offered or sold, directly or indirectly, nor may this prospectus or any other material or advertisements in connection with the Shares be distributed or published in or from any country or jurisdiction, except under circumstances that will result in compliance with the applicable rules and regulations of that country or jurisdiction. Persons into whose possession this prospectus comes are advised to inform themselves about and to observe any restrictions relating to the offering and the distribution of this prospectus. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities offered by this prospectus in any jurisdiction in which such an offer or a solicitation is unlawful.

 

In addition to the public offering of the Shares in the United States, the Placement Agent may, subject to applicable foreign laws, also offer the Shares in certain countries.

 

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EXPENSES OF THE OFFERING

 

We estimate that our expenses in connection with this Offering, other than placement agent commissions, will be as follows:

 

Expenses   Amount  
U.S. Securities and Exchange Commission registration fee   $               [*] *
FINRA filing fee     [*]
Printing and engraving expenses     [   ] *
Legal fees and expenses     [   ]
Accounting fees and expenses     [   ]
Placement Agent Expense     130,000  
Miscellaneous     [   ] *
Total   $ [   ]  

 

*To be filed by amendment

 

All amounts in the table are estimates except the SEC registration fee, Nasdaq listing fee and FINRA filing fee. We will pay all of the expenses of this Offering.

 

LEGAL MATTERS

 

The validity of the Shares offered in this Offering and certain other legal matters as to Singapore law will be passed upon for us by JurisAsia LLC, our Singapore counsel. Certain other legal matters as to United States Federal and New York State law in connection with this Offering will be passed upon for us by Loeb & Loeb LLP, New York, New York. Certain legal matters as to U.S. federal law in connection with this Offering will be passed upon for the Placement Agent by Sheppard, Mullin, Richter & Hampton LLP, New York, New York.

 

EXPERTS

 

The consolidated financial statements of Primech Holdings Ltd. as of March 31, 2024 and 2023, and for the years then ended, have been audited by Weinberg & Company P.A., Independent Registered Public Accounting Firm, as set forth in their report elsewhere herein. Such consolidated financial statements have been so included in reliance upon such report given upon the authority of such firm as experts in accounting and auditing.

 

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SERVICE OF PROCESS AND ENFORCEMENT OF CIVIL LIABILITIES

 

We are incorporated under the laws of the Republic of Singapore, and all of our Directors and Executive Officers are residents outside the United States. In addition, a significant portion of our operations and business is conducted, and a substantial portion of our assets are located, outside the United States.

 

Although we are incorporated outside the United States, we have agreed to accept service of process in the United States through Cogency Global Inc., our agent designated for that purpose, located at 122 East 42nd Street, 18th Floor, New York, NY 10168. Nevertheless, since a substantial portion of the assets owned by us are located outside the United States, any judgment obtained in the United States against us may not be collectible within the United States.

 

An investor may or may not be able to commence an original action against us or our directors or officers, or any person, before the courts outside the United States to enforce liabilities under United States federal securities laws, depending on the nature of the action.

 

It is possible that the Singapore courts may not (i) recognize and enforce judgments of courts in the United States, based upon the civil liability provisions of the securities laws of the United States or any state or territory of the United States (ii) enter judgments in original actions brought in the Singapore courts based solely on the civil liability provisions of these securities laws. An in personam final and conclusive judgment in the federal or state courts of the United States under which a fixed or ascertainable sum of money is payable may generally be enforced as a debt in the Singapore courts under the common law as long as it is established that the Singapore courts have jurisdiction over the judgment debtor. Additionally, the court where the judgment was obtained must have had international jurisdiction over the party sought to be bound in the local proceedings. However, the Singapore courts are unlikely to enforce a foreign judgment if (a) the foreign judgment is inconsistent with a prior local judgment that is binding on the same parties; (b) the enforcement of the foreign judgment would contravene the public policy of Singapore; (c) the proceedings in which the foreign judgment was obtained were contrary to principles of natural justice; (d) the foreign judgment was obtained by fraud; or (e) the enforcement of the foreign judgment amounts to the direct or indirect enforcement of a foreign penal, revenue or other public law.

 

In particular, the Singapore courts may potentially not allow the enforcement of any foreign judgment for a sum payable in respect of taxes, fines, penalties or other similar charges, including the judgments of courts in the United States based upon the civil liability provisions of the securities laws of the United States or any state or territory of the United States. In respect of civil liability provisions of the United States federal and state securities law which permit punitive damages against us and our Directors or Executive Officers, we are unaware of any reported decision by the Singapore courts which has considered the specific issue of whether a judgment of a United States court based on such civil liability provisions of the securities laws of the United States or any state or territory of the United States is enforceable in Singapore.

 

In addition, holders of book-entry interests in our Shares will be required to be registered as Shareholders in our register of members in order to have standing to bring a Shareholder suit and, if successful, to enforce a foreign judgment against us, our Directors or our Executive Officers in the Singapore courts, subject to applicable Singapore laws. A holder of book-entry interests in our Shares may become our registered Shareholder by exchanging its interest in our Shares for certificated Shares and being registered in our register of members. The administrative process of becoming a registered Shareholder could result in delays prejudicial to any legal proceeding or enforcement action.

 

141

 

 

WHERE YOU CAN FIND MORE INFORMATION

 

We have filed with the SEC a registration statement on Form F-1 under the Securities Act relating to this offering.

 

You may read and copy the registration statement, including the related exhibits and schedules, and any document we file with the SEC without charge at the SEC’s public reference room at 100 F Street, N.E., Room 1580, Washington, DC 20549. You may also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, N.E., Room 1580, Washington, DC 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. The SEC also maintains an Internet website that contains reports and other information regarding issuers that file electronically with the SEC. Our filings with the SEC are also available to the public through the SEC’s website at http://www.sec.gov.

 

We are subject to the information reporting requirements of the Exchange Act that are applicable to foreign private issuers, and under those requirements are filing reports with the SEC. Those other reports or other information may be inspected without charge at the locations described above. As a foreign private issuer, we are exempt from the rules under the Exchange Act related to the furnishing and content of proxy statements, and our officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we are not required under the Exchange Act to file annual, quarterly and current reports and financial statements with the SEC as frequently or as promptly as U.S. registrants whose securities are registered under the Exchange Act. However, we are required to file with the SEC, within 120 days after the end of each fiscal year, or such applicable time as required by the SEC, an annual report on Form 20-F containing financial statements audited by an independent registered public accounting firm, and will furnish to the SEC, on Form 6-K, unaudited interim financial information.

 

We maintain a corporate website at https://primechholdings.com. Information contained on, or that can be accessed through, our website does not constitute a part of this prospectus. We have included our website address in this prospectus solely as an inactive textual reference. We will post on our website any materials required to be so posted on such website under applicable corporate or securities laws and regulations, including, posting any XBRL interactive financial data required to be filed with the SEC and any notices of general meetings of our shareholders.

 

142

 

 

PRIMECH HOLDINGS LIMITED AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

 

TABLE OF CONTENTS

 

Consolidated Financial Statements for the Fiscal Years Ended March 31, 2024 and 2023

 

    Page
Consolidated Financial Statements    
Report of Independent Registered Public Accounting Firm   F-2
Consolidated Balance Sheets as of March 31, 2024 and 2023   F-3
Consolidated Statements of Operations and Comprehensive Loss for the Years Ended March 31, 2024 and 2023   F-4
Consolidated Statements of Changes in Shareholders’ Equity for the Years Ended March 31, 2024 and 2023   F-5
Consolidated Statements of Cash Flows for the Years Ended March 31, 2024 and 2023   F-6
Notes to the Consolidated Financial Statements for the Years Ended March 31, 2024 and 2023   F-7

 

F-1

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Shareholders and the Board of Directors of
Primech Holdings Limited and Subsidiaries

 

Opinion on the Consolidated Financial Statements

 

We have audited the accompanying consolidated balance sheets of Primech Holdings Limited and Subsidiaries (collectively, the “Company”) as of March 31, 2024 and 2023, and the related consolidated statements of operations and comprehensive loss, changes in shareholders’ equity, and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

 

Basis for Opinion

 

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

We have served as the Company’s auditor since 2021.

 

/s/ Weinberg & Company, P.A.

Los Angeles, California

July 23, 2024

 

F-2

 

Primech Holdings Limited and Subsidiaries
Consolidated Balance Sheets
(in thousands except share data, U.S. dollars)

 

   As of March 31, 
   2024   2023 
Assets        
Current assets        
Cash and cash equivalents  $7,648   $9,072 
Accounts receivable, net   18,452    15,364 
Government subsidies receivable   1,368    1,684 
Prepaid expenses and other current assets   3,810    1,175 
Inventories   55    141 
Total current assets   31,333    27,436 
           
Non-current assets          
Property and equipment, net   10,082    10,920 
Right of use assets   3,406    3,128 
Goodwill   667    693 
Intangible assets, net   21    93 
Deferred offering costs       553 
Total assets  $45,509   $42,823 
           
Liabilities and shareholders’ equity          
Current liabilities          
Accounts payable and accrued expenses  $9,406   $10,899 
Notes payable-current portion   11,277    11,905 
Lease liabilities-current portion   2,059    1,718 
Total current liabilities   22,742    24,522 
           
Non-current liabilities          
Notes payable-long term   5,705    7,114 
Lease liabilities-long term   1,752    1,628 
Deferred tax liability   251    726 
Total liabilities   30,450    33,990 
           
Commitments and contingencies   
 
    
 
 
           
Shareholders’ Equity          
Common Stock, 35,550,000 and 32,500,000 shares issued and outstanding as of March 31, 2024 and 2023, respectively,   22,193    12,720 
Additional paid-in capital   924    924 
Accumulated other comprehensive income   923    947 
Accumulated deficit   (9,049)   (5,810)
Total Primech Holdings Limited shareholders’ equity   14,991    8,781 
           
Non-controlling interests   68    52 
Total shareholders’ equity   15,059    8,833 
Total liabilities and shareholders’ equity  $45,509   $42,823 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

F-3

 

Primech Holdings Limited and Subsidiaries
Consolidated Statements of Operations and other Comprehensive Loss
(in thousands except share and per share data, U.S. dollars)

 

   For the Years Ended
March 31,
 
   2024   2023 
Revenues        
Revenues, net  $72,524   $69,026 
           
Operating costs and expenses          
Cost of revenue (net of $2,550 and $4,220 of government subsidies)   59,915    58,410 
General and administrative expenses (net of $68 and $170 of government subsidies)   13,160    12,304 
Sales and marketing expenses   2,231    279 
Goodwill impairment   
    138 
Total operating costs and expenses   75,306    71,131 
Loss from operations   (2,782)   (2,105)
Other operating income, net (includes $202 and $202 of government subsidies)   211    271 
Interest expense   (1,145)   (723)
Loss before income taxes   (3,716)   (2,557)
Income tax benefit   493    10 
Net loss   (3,223)   (2,547)
(Profit)/loss attributable to non-controlling interests   (16)   15 
Net loss attributable to PHL   (3,239)   (2,532)
Total foreign currency translation adjustment   (24)   138 
Comprehensive loss  $(3,263)   (2,394)
           
Earnings loss per share:          
Basic and diluted  $(0.10)  $(0.08)
           
Weighted average number of ordinary shares outstanding:          
Basic and Diluted   33,929,000    32,500,000 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

F-4

 

Primech Holdings Limited and Subsidiaries
Consolidated Statements of Changes in Shareholders’ Equity
(in thousands except share data, U.S. dollars)

 

   Common stock   Additional
paid in
   Accumulated
comprehensive
   Accumulated   Non-
controlling
     
   Shares   Amount   capital   income   deficit   Interests   Total 
Balance as of Apr 1, 2022   32,500,000    12,720    924             809    (3,278)   67    11,242 
Net loss       
    
    
    (2,532)   (15)   (2,547)
Foreign currency Translation adjustment       
    
    138    
    
    138 
Balance as of March 31, 2023   32,500,000   $12,720   $924   $947   $(5,810)  $52   $8,833 
Issuance of common shares upon closing of initial public offering, net of offering costs   3,050,000    9,473    
    
    
    
    9,473 
Net loss       
    
    
    (3,239)   16    (3,223)
Foreign currency Translation adjustment       
    
    (24)   
    
    (24)
Balance as of March 31, 2024   35,550,000   $22,193   $924   $923   $(9,049)  $68   $15,059 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

F-5

 

Primech Holdings Limited and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands except share data, U.S. dollars)

 

   For the Years Ended
March 31,
 
   2024   2023 
Cash flows from operating activities:        
Net loss  $(3,223)  $(2,547)
Adjustments to reconcile net loss  to net cash used in operating activities:          
Depreciation of property and equipment   1,640    1,637 
Amortization of right of use assets   2,203    1,716 
Gain on disposal of property and equipment   (13)   (186)
Amortization of intangible assets   29    303 
Impairment of Goodwill   
    138 
           
Change in operating assets and liabilities:          
Deferred tax liability   (454)   
 
Accounts receivable   (3,330)   (3,152)
Government subsidies receivables   290    (1,310)
Prepaid expenses & other current assets   (2,657)   152 
Inventories   84    6 
Accounts payable and accrued expenses   (1,329)   1,970 
Operating lease liability   (2,322)   (1,683)
Tax payable   
    (228)
Net cash used in operating activities   (9,082)   (3,184)
           
Cash flows from investing activities:          
Acquisition of property and equipment   (909)   (2,004)
Proceeds from sale of property and equipment   102    871 
Net cash used in investing activities   (807)   (1,133)
           
Cash flows from financing activities:          
Net Proceeds from issue of new shares   9,473    
 
Deferred offering costs   545    236 
Payment of finance lease liabilities   (86)   (524)
Repayment of bank loans   (3,163)   (1,293)
Proceeds from bank loans   1,412    9,908 
Dividend paid   
    (317)
Net cash provided by financing activities   8,181    8,010 
           
Net (decrease) increase in cash and cash equivalents   (1,708)   3,693 
Effect of exchange rate changes on cash and cash equivalents   284    235 
Cash and cash equivalents, beginning of year   9,072    5,144 
Cash and cash equivalents, end of year  $7,648   $9,072 
           
Supplemental disclosure of non-cash investing and financing transactions          
Acquisition of equipment under finance leases   173    102 
Recognition of Right of use assets and liabilities   2,553    3,380 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

F-6

 

Primech Holdings Limited and Subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended March 31, 2024 and 2023
(in thousands except share data, U.S. dollars)

 

1. Organization and Summary of Significant Accounting Policies

 

Primech Holdings Limited (“PHL”) is a company incorporated in Singapore on December 29, 2020. PHL’s controlling shareholder is Sapphire Universe Holdings Limited (the “Parent”), which was formed in February 2018.

 

In 2018 through 2020, the Parent acquired Primech Services & Engrg (“Primech”), A&P Maintenance (“A&P”), Acteef Cleaning Specialists Pte Ltd (“Acteef Cleaning”), and Maint-Kleen Pte. Ltd (“Maint-Kleen”) (collectively, the “Subsidiaries”, and with PHL, the “Company”). Each of these companies had, prior to their acquisitions, operated in Singapore between 20 and 38 years, and the acquisitions by the Parent established a group of companies that provides a wide spectrum of cleaning services. Subsequent to their acquisition by the Parent, Primech and A&P merged into one company known as Primech A&P Pte Ltd (“Primech A&P”). On April 1, 2021, the Company acquired 100% of interest of Princeston International (S) Pte. Ltd (“Princeston”) and 80% of interest of CSG Industries Pte Ltd (“CSG”). On March 28, 2024, the company incorporated Primech AI Holdings Limited (“Primech AI”) and Primech AI Investments Limited (“Primech AI Investments”). In May 2024, the Company transferred 49% of interest of Primech AI Investments to an independent third party.

 

Effective November 22, 2022, the Parent restructured its holdings and transferred its ownership of the Subsidiaries to PHL. For the purposes of the presentation of these consolidated financial statements, the merger and consolidation of these entities with PHL has been reflected as if effective since the beginning of the entire period presented.

 

On May 11, 2023, the Company changed its corporate name to Primech Holdings Ltd., so as to remove the designation “Pte.” which is used only for privately held companies under Singapore law, and adopted a constitution for a public company under Singapore law.

 

COVID-19

 

Our consolidated financial statements for the years ended March 31, 2024 and 2023 was materially impacted by the effects of the global outbreak of novel strains of coronavirus, or COVID-19, as national and local authorities in Singapore, where we operate, placed significant restrictions on travel and other activities. In addition, governmental authorities in Singapore, like many governments and central banks worldwide, have reacted with significant monetary and fiscal interventions designed to stabilize economic conditions (see liquidity discussion below).

 

The long term effect of this pandemic on our business and financial performance will heavily depend on future developments, including outbreaks of COVID-19 variants, duration and severity of the outbreak, government policies such as travel restrictions and business closures, the financial and operational impact on our customer base, all of which are highly uncertain and unpredictable. We are closely monitoring developments in Singapore and will continually assess its effect on our business.

 

Liquidity

 

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. For the fiscal year ended March 31, 2024, the Company recorded net loss of approximately $3,223 and cash used in operating activities of approximately $9,082. Included in these amounts are government subsidies of approximately $2,820 received. These government subsidies were received from government authorities in Singapore, and were primarily used to offset wage costs, and are recorded as a reduction to associated wage costs in cost of revenue and general and administrative expenses in the accompanying consolidated statements of operations and comprehensive income.

 

Notwithstanding the receipt of the government subsidies, management believes that its March 31, 2024, balances of cash of approximately $7,648, working capital of approximately $8,591 and approximately $2,542 of available loans or overdraft facilities are sufficient to fund operations for at least one year from the date the Company’s March 31, 2024, financial statements are issued. The amount and timing of future cash requirements will depend, in part, on the Company’s operating profitability. The Company may seek to raise additional debt and/or equity capital to fund future operations and strategic initiatives, but there can be no assurances that the Company will be able to secure such additional financing in the amounts necessary to fully fund its operating requirements on acceptable terms, or at all. The Ordinary Shares were previously approved for listing on The Nasdaq Capital Market and commenced trading under the ticker symbol “PMEC” on October 10, 2023. The amount and timing of future cash requirements will depend, in part, on the Company’s operating profitability. The Company may seek to raise additional debt and/or equity capital to fund future operations and strategic initiatives, but there can be no assurances that the Company will be able to secure such additional financing in the amounts necessary to fully fund its operating requirements on acceptable terms, or at all.

 

F-7

 

Primech Holdings Limited and Subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended March 31, 2024 and 2023
(in thousands except share data, U.S. dollars)

 

1. Organization and Summary of Significant Accounting Policies (cont.)

 

Basis of presentation and principles of consolidation

 

These consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). The Company’s consolidated financial statements includes the consolidated accounts of all of our subsidiaries. All intercompany accounts and transactions included in the consolidated financial statements have been eliminated.

 

As of March 31, 2024, PHL has eight wholly-owned subsidiaries, Primech A&P, Acteef Cleaning, HomeHelpy Singapore Pte. Ltd, Maint-Kleen, My All Services Sdn Bhd, Princeston and Primech AI, Primech AI Investments and one 80% owned subsidiary, CSG. All intercompany amounts and transactions have been eliminated in consolidation. All subsidiaries are entities incorporated under the laws of Singapore, except for My All Services which was incorporated in Malaysia and Primech AI and Primech AI Investments which were incorporated in British Virgin Islands.

 

Use of estimates

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates. On an ongoing basis, management reviews its estimates and if deemed appropriate, those estimates are adjusted. Significant estimates include those related to assumptions used in valuing reserves of uncollectible accounts receivable, assumptions used in valuing assets acquired in business acquisitions, impairment testing of goodwill and other long-term assets, the valuation allowance for deferred tax assets, and accruals for potential liabilities.

 

Revenue recognition

 

The Company recognizes revenue in accordance with Financial Accounting Standard Board (FASB) Accounting Standards Codification (ASC) 606, Revenue from Contract with Customers (ACS 606). The underlying principle of ASC 606 is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contract(s), which include (1) identifying the contract or agreement with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied.

 

For service contracts where the performance obligation is not completed, deferred revenue, if any, is recorded for any payments received in advance of the performance obligation.

 

Cost of revenue

 

Recurring direct operating costs for services are recognized as incurred. Cost of services revenue consists primarily of personnel costs.

 

Government subsidies

 

Government subsidies are not recognized until there is reasonable assurance that the Company will comply with the conditions of the subsidy and the Company will receive the subsidy.

 

Generally, government subsidies fall into two categories: subsidies related to income and subsidies related to assets. Subsidies related to income are recognized in the period that the recognition criteria are met, and are presented as a reduction of the related expense that they are intended to compensate within operating expenses in the consolidated statements of operations and comprehensive income. Subsidies related to assets are for the purchase, construction or other acquisition of long-lived assets and are recognized as reductions to the capitalized costs of the related assets.

 

F-8

 

Primech Holdings Limited and Subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended March 31, 2024 and 2023
(in thousands except share data, U.S. dollars)

 

1. Organization and Summary of Significant Accounting Policies (cont.)

 

For the years ended March 31, 2024 and 2023, a total of approximately $2,820 and approximately $4,592 respectively of subsidies related to income were received that primarily offset various payroll and related costs. In addition, for the years ended March 31, 2024 and 2023 the Company received approximately $171 and approximately $129, respectively, of subsidies related to assets that offset purchases of certain equipment. At March 31, 2024 and 2023, government subsidies receivable totalled approximately $1,368 and approximately $1,684, respectively. There are no unfulfilled conditions or other contingencies related to these subsidies.

 

Cash and cash equivalents

 

Our cash and cash equivalents consist of funds held in bank accounts. Cash equivalents are highly-liquid investments with original maturities of three months or less, including money market funds.

 

We maintain cash balances in Singapore dollars (“SGD”), U.S. Dollars (“USD”) and Malaysian Ringgit (“MYR”). The following table, reported in USD, disaggregates our cash balances by currency denomination:

 

   For the Years Ended
March 31,
 
   2024   2023 
Cash denominated in:        
SGD  $7,443   $8,966 
USD   135    
 
MYR   70    106 
Total  $7,648   $9,072 

 

Accounts receivable

 

Accounts receivable are recorded at the invoiced amount less an allowance for any uncollectible accounts. Accounts receivable also includes unbilled amounts for which we have performed services for the customer but have not yet invoiced. Accounts receivable at March 31, 2024 and 2023 included unbilled receivables of approximately $4,068 and approximately $3,578, respectively. We regularly evaluate the collectability of trade receivable balances based on a combination of factors such as customer credit-worthiness, past transaction history with the customer, current economic industry trends and changes in customer payment patterns. If we determine that a customer will be unable to fully meet its financial obligation, such as in the case of a bankruptcy filing or other material events impacting its business, a specific reserve for bad debt will be recorded to reduce the related receivable to the amount expected to be recovered. Reserve for uncollectible accounts were approximately $448 and approximately $454 as of March 31, 2024 and 2023, respectively.

 

Property and equipment

 

We state property and equipment at cost and depreciate such assets using the straight-line method over the estimated useful lives of each asset category. For leasehold improvements, we determine amortization using the straight-line method over the shorter of the lease term or estimated useful life of the asset. Expenditures for repairs and maintenance, which do not materially extend the useful lives of the assets, are expensed as incurred. Expenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized and depreciated over the remaining useful life of the related asset. The estimated useful lives of property and equipment are as follows:

 

Machinery   2 to 5 years
Motor vehicles   5 years
Furniture and fixtures   2 to 5 years
Office equipment   2 to 5 years
Leasehold improvements   Shorter of useful life or lease term
Office improvements   2 to 5 years
Capitalized software   2 to 3 years
Leasehold property   27 to 32 years

 

F-9

 

Primech Holdings Limited and Subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended March 31, 2024 and 2023
(in thousands except share data, U.S. dollars)

 

1. Organization and Summary of Significant Accounting Policies (cont.)

 

Deferred offering costs

 

Deferred offering costs consisted principally of legal, accounting, and underwriter’s fees incurred related to equity financings. These offering costs were deferred at March 31, 2023 and were charged against the gross proceeds received from our Initial Public Offering that occurred on October 12, 2023.

 

Intangible assets

 

Amortizable identifiable intangible assets are stated at cost less accumulated amortization, and represent customer relationships and customer backlog acquired in business combinations. Customer backlog represents the value of existing firm purchase orders in place at the time of acquisition and are amortized over 3 years. Customer relationships are amortized over 5 years. The Company follows ASC 360 in accounting for intangible assets, which requires impairment losses to be recorded when indicators of impairment are present and the undiscounted cash flows estimated to be generated by the assets are less than the assets’ carrying amounts. For the years ended March 31, 2024 and 2023, the Company determined there were no indicators of impairment of its amortizable identifiable intangible assets.

 

Goodwill

 

Goodwill is the excess of cost of an acquired entity over the fair value of amounts assigned to assets acquired and liabilities assumed in a business combination. Under the guidance of ASC 350, goodwill is not amortized, rather it is tested for impairment annually, and will be tested for impairment between annual tests if an event occurs or circumstances change that would indicate the carrying amount may be impaired. An impairment loss generally would be recognized when the carrying amount of the reporting unit’s net assets exceeds the estimated fair value of the reporting unit and would be measured as the excess carrying value of goodwill over the derived fair value of goodwill. The Company’s policy is to perform an annual impairment testing for its reporting units on March 31, of each fiscal year. For the year ended March 31, 2023, the Company determined there was an impairment charge of approximately $138 related to the recorded Goodwill relating to its acquisition of Maint-Kleen. For the year ended March 31, 2024, the Company determined there was no impairment of its remaining recorded Goodwill.

 

Impairment of long-lived assets

 

Long-lived assets primarily include property and equipment and intangible assets. In accordance with the provision of ASC 360, the Company generally conducts its annual impairment evaluation to its long-lived assets, usually in the fourth quarter of each year, or more frequently if indicators of impairment exist, such as a significant sustained change in the business climate. The recoverability of long-lived assets is measured at the reporting unit level. If the total of the expected undiscounted future net cash flows is less than the carrying amount of the asset, a loss is recognized for the difference between the fair value and carrying amount of the asset. As of March 31, 2024 and 2023, the Company determined there were no indicators of impairment of its long-lived assets.

 

F-10

 

Primech Holdings Limited and Subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended March 31, 2024 and 2023
(in thousands except share data, U.S. dollars)

 

1. Organization and Summary of Significant Accounting Policies (cont.)

 

Fair value of financial instruments

 

Under ASC 820, Fair Value Measurements and Disclosures, fair value is defined as the price at which an asset could be exchanged or a liability transferred in a transaction between knowledgeable, willing parties in the principal or most advantageous market for the asset or liability. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or parameters are not available, valuation models are applied. A fair value hierarchy prioritizes the inputs used in measuring fair value into three broad levels as follows:

 

Level 1 — Quoted prices in active markets for identical assets or liabilities.

 

Level 2 — Inputs, other than the quoted prices in active markets, are observable either directly or indirectly.

 

Level 3 — Unobservable inputs based on the Company’s assumptions.

 

The Company is required to use observable market data if such data is available without undue cost and effort. The Company has no fair value items required to be disclosed as of March 31, 2024 or 2023 under these requirements.

 

The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, accounts receivable, short-term bank loans and accounts payable, approximate their fair values because of the short maturity of these instruments. The carrying values of capital lease obligations and notes payable approximate their fair values because interest rates on these obligations are based on prevailing market interest rates.

 

Advertising

 

Costs related to advertising and product promotion expenditures are charged to “Sales and marketing expenses” as incurred. Certain advertising costs are paid in advance and are expensed at the time the advertising occurs. Advertising costs aggregated $2,231 and $ 262 for the year ended March 31, 2024 and 2023, respectively.

 

Income taxes

 

The Company accounts for income taxes using an asset and liability approach which allows for the recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain.

 

The Company conducts its businesses in Singapore and Malaysia and is subject to tax in these jurisdictions. As a result of its business activities, the Company will file separate tax returns that are subject to examination by the foreign tax authorities.

 

F-11

 

Primech Holdings Limited and Subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended March 31, 2024 and 2023
(in thousands except share data, U.S. dollars)

 

1. Organization and Summary of Significant Accounting Policies (cont.)

 

Leases

 

The Company accounts for leases under ASC 842, Leases. The Company determines whether a contract is, or contains, a lease at inception. Right-of-use assets represent the Company’s right to use an underlying asset during the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease.

 

Right-of-use assets and lease liabilities are recognized at lease commencement based upon the estimated present value of unpaid lease payments over the lease term. The Company uses its incremental borrowing rate based on the information available at lease commencement in determining the present value of unpaid lease payments.

 

Earnings per share

 

Basic earnings per ordinary share is computed by dividing net earnings attributable to ordinary shareholders by the weighted-average number of ordinary shares outstanding during the period. Diluted earnings per share is computed by dividing net income attributable to ordinary shareholders by the sum of the weighted average number of ordinary shares outstanding and of potential ordinary shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential ordinary shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted earnings per share. For the years ended March 31, 2024 and 2023, the Company had no dilutive equity instruments.

 

Translation of foreign currencies

 

We report all currency amounts in USD. Our subsidiaries, however, maintain their books and records in their SGD functional currency, while My All Services maintains its books and records in their MYR functional currency.

 

In general, when consolidating our subsidiaries with non-USD functional currencies, we translate the amounts of assets and liabilities into USD using the exchange rate on the balance sheet date, and the amounts of revenue and expense are translated at the average exchange rate prevailing during the period. The gains and losses resulting from translation of financial statement amounts into USD are recorded as a separate component of accumulated other comprehensive loss within stockholders’ equity.

 

We used the exchange rates in the following table to translate amounts denominated in non-USD currencies as of and for the periods noted:

 

   As of
March 31,
 
   2024   2023 
Exchange rates at March 31:        
SGD:USD   0.74    0.75 
RM:USD   0.21    0.23 

 

   For the Years Ended
March 31,
 
   2024   2023 
Average exchange rate during the year ended March 31:        
SGD:USD   0.74    0.73 
RM:USD   0.21    0.22 

 

F-12

 

Primech Holdings Limited and Subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended March 31, 2024 and 2023
(in thousands except share data, U.S. dollars)

 

1. Organization and Summary of Significant Accounting Policies (cont.)

 

Concentration

 

For the year ended March 31, 2024, one customer accounted for 10.0% of our total revenue and no customer accounted for more than 10% of our accounts receivable. For the year ended March 31, 2023, one customer accounted for 10.4% of our total revenue and one customer accounted for 12.1% of our accounts receivable.

 

For the year ended March 31, 2024 and 2023, there were no vendors that accounted for more than 10% of our total operating costs and expenses. At March 31, 2024 and 2023, no vendors accounted for more than 10% of accounts payable.

 

Comprehensive Income

 

Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. The Company’s accumulated other comprehensive income consists of cumulative foreign currency translation adjustments.

 

Segment reporting

 

The Company operates in a single segment, commercial cleaning services, based on how the chief operating decision maker (“CODM”) views and evaluates the Company’s operations in making operational and strategic decisions and assessments of financial performance. The Company’s President has been identified as the CODM.

 

Economic and political risks

 

Our operations in Singapore are subject to significant risks not typically associated with companies in the United States of America, including risks associated with, among others, the political, economic and legal environment and foreign currency exchange. Our results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation.

 

Recent Accounting Pronouncements

 

In June 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-13, Credit Losses — Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires entities to use a forward-looking approach based on current expected credit losses (“CECL”) to estimate credit losses on certain types of financial instruments, including trade receivables. This may result in the earlier recognition of allowances for losses. The Company adopted ASU 2016-13 beginning April 1, 2023. The Company does not believe the impact of the new guidance and related codification improvements had a material impact to its financial position, results of operations and cash flows.

 

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosure, which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expense categories that are regularly provided to the chief operating decision maker and included in each reported measure of a segment’s profit or loss. The update also requires all annual disclosures about a reportable segment’s profit or loss and assets to be provided in interim periods and for entities with a single reportable segment to provide all the disclosures required by ASC 280, Segment Reporting, including the significant segment expense disclosures. This standard will be effective for the Company on April 1, 2024 and interim periods beginning in fiscal year 2025, with early adoption permitted. The updates required by this standard should be applied retrospectively to all periods presented in the financial statements. The Company does not expect this standard to have a material impact on its results of operations, financial position or cash flows.

 

The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the consolidated financial position, statements of operations and cash flows.

 

2. Revenues

 

The Company’s revenue is primarily from providing a wide variety of cleaning services, including facilities services, stewarding services, cleaning services to individual customers and other service revenues. Revenue from services is recognized as the services are provided. Service revenue is recognized based on the time incurred by our staff in performing cleaning services and is billed on a monthly basis. The Company offers no discounts, rebates, rights of return, or other allowances to clients which would result in the establishment of reserves against service revenue. Additionally, to date, the Company has not incurred incremental costs in obtaining a client contracts.

 

F-13

 

Primech Holdings Limited and Subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended March 31, 2024 and 2023
(in thousands except share data, U.S. dollars)

 

2. Revenues (cont.)

 

Disaggregation of Revenue

 

The following table presents a disaggregation of our revenue by major category

 

   For the Years Ended
March 31,
 
Revenue by service line  2024   2023 
Facilities cleaning services  $56,016   $55,755 
Stewarding services   10,156    7,599 
Cleaning services for commercial office tenants   5,870    4,899 
Total service revenues from Singapore   72,042    68,253 
Other cleaning service revenues from Malaysia   53    265 
Sales of products   429    508 
   $72,524   $69,026 

 

   For the Years Ended
March 31,
 
Revenue by customer category  2024   2023 
Facilities cleaning services        
Conservancy common areas   11,325    9,720 
Commercial   10,305    11,369 
Institutional   17,202    17,324 
Multi-family residential   4,201    6,873 
Hotel   4,649    5,182 
Singapore Changi Airport   7,247    3,176 
Industrial   516    1,046 
Others   571    1,065 
    56,016    55,755 
Stewarding services   10,156    7,599 
Cleaning services for commercial office tenants   5,870    4,899 
Total service revenues from Singapore   72,042    68,252 
Other cleaning service revenues from Malaysia   53    265 
Sales of products   429    508 
   $72,524   $69,026 

F-14

 

Primech Holdings Limited and Subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended March 31, 2024 and 2023
(in thousands except share data, U.S. dollars)

 

3. Accounts receivable

 

The Company records revenues and costs on a net basis and the related Trade and other receivables and payables amounts on a gross basis. Trade and other receivables, net of provision for doubtful accounts consist of the following:

 

   As of
March 31,
 
   2024   2023 
Accounts receivable  $14,832   $12,240 
Unbilled receivables   4,068    3,578 
Less: provision for doubtful accounts   (448)   (454)
Accounts receivable, net  $18,452   $15,364 

 

At March 31, 2024 and 2023, provisions for doubtful accounts receivables were approximately $448 and approximately $454, respectively.

 

4. Property and Equipment

 

At March 31, 2024 and 2023, property and equipment consisted of the following:

 

   As of
March 31,
 
   2024   2023 
Machinery  $6,837   $7,516 
Motor vehicles   1,086    718 
Office equipment   1,328    1,222 
Furniture and fixtures   797    811 
Leasehold improvements   805    787 
Leasehold property   7,193    7,235 
    18,046    18,289 
Less: accumulated depreciation   (7,964)   (7,369)
Total  $10,082   $10,920 

 

Depreciation expense was approximately $1,640 and approximately $1,637 for the years ended March 31, 2024 and 2023, respectively.

 

Primech A&P holds a sixty (60) year leasehold interest in 23 Ubi Crescent Singapore (expiring July 2057) and a sixty (60) year leasehold interest in 25 Ubi Crescent Singapore (expiring July 2057). CSG Industries holds a thirty (30) years interest (expiring in February 2038) in 50 Tuas Avenue 11 #01-22 Tuas Lot Singapore 639107.

 

5. Prepaid expenses and other current assets

 

Prepaid expenses and other current assets, net consisted of the following:

 

   As of
March 31,
 
   2024   2023 
Prepaid advertising  $1,019   $
-
 
Deposits   1,816    542 
Other prepaid amounts   975    633 
Total  $3,810   $1,175 

 

F-15

 

Primech Holdings Limited and Subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended March 31, 2024 and 2023
(in thousands except share data, U.S. dollars)

 

6. Leases

 

Operating lease right-of-use (“ROU”) assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Generally, the implicit rate of interest (“discount rate”) in arrangements is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease payments. The Company’s incremental borrowing rate is a hypothetical rate based on its understanding of what its credit rating would be. The operating lease ROU asset includes any lease payments made and excludes lease incentives.

 

As of March 31, 2024, the Company has operating lease agreements for certain of its office facilities, office equipment and workers’ accommodations with remaining lease terms of 1 to 44 months. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company accounts for the lease and non-lease components of its leases as a single lease component. Lease expense is recognized on a straight-line basis over the lease term.

 

The following table sets forth the components of the Company’s lease cost for the year ended March 31, 2024 and 2023.

 

   March 31, 
   2024   2023 
Finance lease cost:        
Depreciation of asset under finance lease  $68   $106 
Interest on lease liabilities (included in interest expense in the statements of operations)   34    54 
Total finance lease cost  $102   $160 
Operating lease cost:          
Amortization of right of use asset (included in general and administrative expenses in the statements of operations)  $2,203   $1,716 
Rental expense (included in cost of revenue, and general and administrative expenses in the statement of operations)   504    7 
Operating lease cost  $2,707   $1,723 
           
Cash paid for amounts included in the measurement of lease liabilities          
Operating cash flows from operating leases  $2,322   $1,683 
Financing cash flows from finance leases   86    523 
Total cash paid for amounts included in measurement of lease liabilities  $2,408   $2,206 

 

The following table sets forth the Company’s right of use assets and lease liabilities as of March 31, 2024 and 2023:

 

   March 31, 
   2024   2023 
Finance lease assets (included in Property and equipment-see Note 4)  $519   $402 
Operating lease right of use assets  $3,406   $3,128 
           
Finance lease liabilities          
Non-current liabilities  $251   $235 
Current liabilities   70    78 
Total Finance lease liabilities  $321   $313 
Operating lease liabilities          
Non-current liabilities  $1,501   $1,393 
Current liabilities   1,989    1,639 
Total operating lease liabilities  $3,490   $3,032 

 

F-16

 

Primech Holdings Limited and Subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended March 31, 2024 and 2023
(in thousands except share data, U.S. dollars)

 

6. Leases (cont.)

 

   March 31,
2024
   March 31,
2023
 
Weighted average lease term (Years)        
Finance leases   2.8    2.8 
Operating leases   1.6    1.8 
Weighted average discount rate          
Finance leases   4.4%   3.9%
Operating leases   5.6%   3.0%

 

Present value of the net minimum lease payments as of March 31, 2024:

 

Future minimum lease payments  Finance Leases   Operating Leases 
2025  $81   $2,104 
2026   83    1,060 
2027   75    336 
2028   62    141 
2029   12    18 
Thereafter    58    
 
Total minimum lease payments    371    3,659 
Less: amount representing interest    (50)   (169)
Present value of net minimum lease payments   $321   $3,490 

 

7. Notes Payable

 

   As of
March 31,
 
   2024   2023 
(A) HSBC – Bridge loan  $1,855   $2,826 
(B) HSBC – Overdraft facility   5,825    7,651 
(C) HSBC – Factoring agreement with recourse   3,983    2,862 
(D) HSBC – Term loans   837    973 
(E) HSBC – Mortgage loan   4,482    4,707 
    16,982    19,019 
Less: current portion   (11,277)   (11,905)
Notes payable, net of current portion  $5,705   $7,114 

 

(A)In October 2020, the Company’s subsidiary Primech A&P obtained a loan in the principal amount of approximately $3,711 (SGD 5,000) from the Lender. The loan bears interest at the rate 2% per annum, is payable in monthly instalments of approximately $77 (SGD 104) each, and will mature in March, 2026. The loan is secured by all the assets of the Primech A&P and is guaranteed by the shareholders of the Parent. The balance of the loan was approximately $2,826 (SGD 3,750) at March 31, 2023. During the year ended March 31, 2024, the Company paid down approximately $929 (SGD 1,250). The balance of the loan was approximately $1,855 (SGD 2,500) at March 31, 2024.

 

(B)In prior periods and through March 31, 2024, certain of the Company’s subsidiaries obtained overdraft facilities from HSBC with an aggregate credit limit of $5,819 (SGD 7,842). The credit facilities are subject to annual review and are due on demand. The bank granted a temporary increase in the credit limit of an additional $2,198 (SGD 3,000) from September 2023 through October 2023 and $742 (SGD1,000) from November 2023 through July 2024. The overdraft facilities permit the subsidiaries to borrow funds on a revolving line of credit up to the credit limit and bear interest at the rate 0.5% per annum below HSBC prevailing Prime Lending rate (total rate was 5.5% at March 31, 2024). The loans are secured by all term deposit accounts of the subsidiaries, an all monies debenture (mortgage) over all present and future assets of Primech A&P, and are guaranteed by certain directors and the Parent. At March 31, 2024, the balance of the overdraft facilities was approximately $5,825 (SGD 7,849) and approximately $737 (SGD 993) was unutilized under the overdraft facility.

 

F-17

 

Primech Holdings Limited and Subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended March 31, 2024 and 2023
(in thousands except share data, U.S. dollars)

 

7. Notes Payable (cont.)

 

(C)In July 2018, Primech A&P, entered into with recourse receivables purchase (accounts receivable purchase agreement) with HSBC. Under the terms of the facility, Primech A&P agreed to sell to HSBC (“Factor”) certain customer accounts receivables due A&P. All amounts due under the terms of agreement is limited to approximately $2,968 (SGD 4,000), and is guaranteed by (a) security over receivables; (b) debentures (mortgages) over all present and future assets; and (c) an unlimited guarantee provided by certain directors. Primech A&P pays a discount charge calculated based on the SIBOR plus 3%, which charge is based on the outstanding gross amount of accounts receivable factored. The facility was renewed in September, 2021, and increased to approximately $5,900 (SGD 8,000). Th facility was further renewed in August 2022 and subject to annual review, revising the discount chart rate to the Bank’s Cost of Funds plus 3%, which charge is based on the outstanding gross amount of accounts receivable factored. The facility is subject to annual review and is due on demand. The applicable Bank’s Cost of Funds as of March 31, 2024 was 3.65%, and the total rate was 6.65%. The maturity of the each of the factored invoice is 60 days after the draw down. The bank has temporary reduced the facility limit of approximately $4,452 (SGD 6,000) in September 2023 through July 2024.

 

In July 2020, Maint-Kleen entered into with recourse receivables purchase facility (accounts receivable purchase agreement) with HSBC. Under the terms of the facility, Maint-Kleen agreed to sell to HSBC (“Factor”) certain customer accounts receivables due A&P. All amounts due under the terms of agreement is limited to approximately $1,336 (SGD 1,800), and is guaranteed by (a) security over receivables; (b) debentures (mortgages) over all present and future assets; and (c) an unlimited guarantee provided by certain directors. Primech A&P and Maint-Kleen pays a discount charge calculated based on the SIBOR plus 3%, which charge is based on the outstanding gross amount of accounts receivable factored. The facility was renewed in August 2022 and subject to annual review, revising the discount chart rate to the Bank’s Cost of Funds plus 3%, which charge is based on the outstanding gross amount of accounts receivable factored. The facility is subject to annual review and is due on demand. The applicable Bank’s Cost of Funds as of March 31, 2024 was 3.65%, and the total rate was 6.65%. The maturity of the each of the factored invoice is 60 days after the draw down.

 

Under the terms of the these facilities, all factored receivables are sold with recourse, which requires Primech A&P and Maint-Kleen to repurchase any receivables, if demanded, not paid on time. Accordingly, such receivables are accounted for as a secured financing arrangement and not as a sale of financial assets. At March 31, 2024 and 2023, the Company had sold to HSBC with recourse accounts receivable of approximately $8,893 (SGD 11,985) and approximately $5,527 (SGD 7,334), which are included in accounts receivable on the accompanying consolidated balance sheets. At March 31, 2024, approximately $1,805 (SGD 2,433) was available under the recourse receivables purchase facility.

 

(D)On April 1, 2021, the Company acquired 80% of interest of CSG Industries Pte Ltd and a term loan is among the liabilities assumed. The term loan facility was drawn down in December, 2011 amounting to approximately $346 (SGD 468). The loans bear interest at the rate 0.75% plus Commercial Financing Rate (“CFR”) (CFR was 6.11% and 6.30% at March 31, 2024 and 2023, total loan rate was 6.86% and 7.05%), payable in monthly instalments of approximately $3 (SGD 4) each, and mature in October 2026. The loan is secured by a mortgage over a property owned by CSG located in Singapore and a personal guarantee for a maximum amount of approximately $384 (SGD 530) by the minority shareholder of CSG. During the years ended March 31, 2024 and 2023, repayments of approximately $32 (SGD 43) and approximately $38 (SGD 52) was made on the term loan facility. At March 31, 2024 and 2023, approximately $61 (SGD 82) and $94 (SGD 125) was outstanding under the loan.

 

F-18

 

Primech Holdings Limited and Subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended March 31, 2024 and 2023
(in thousands except share data, U.S. dollars)

 

7. Notes Payable (cont.)

 

In June 28, 2022 Primech A&P obtained one term loan facility for approximately $976 (SGD 1,400) from HSBC to finance the purchase of machinery and equipment and/or vehicles in relation to a project. The loan bears interest at the rate 3% plus Singapore Overnight Rate Average (“SORA”) per annum (SORA was 3.69% at March 31, 2024, total loan rate was 6.69%), are payable in monthly installments of approximately $20 (SGD 29) each, and mature in July 2026. The loan is secured by all present and future assets owned by Primech A&P and a joint and several guarantee for an unlimited amount by certain directors and the Parent. During the year ended March 31, 2023, approximately $976 (SGD 1,400) was drawn down, and repayments of approximately $170 (SGD 233) were made on the term loan facility. Net amount due at March 31, 2023 amounted to approximately $879 (SGD 1,167). During the year ended March 31, 2024, the Company paid down approximately $260 (SGD 350). Net amount due at March 31, 2024 amounted to approximately $606 (SGD 817).

 

On December 28, 2022 Primech A&P obtained one term loan facility for approximately $293 (SGD 400) from HSBC to finance the purchase of machinery and equipment and/or vehicles in relation to a project. Approximately $242 (SGD 330) was drawdown on April 28, 2023. The loan bears interest at the rate 3% plus Singapore Overnight Rate Average (“SORA”) per annum (SORA was 3.69% at March 31, 2024, total loan rate was 6.69%), are payable in monthly installments of approximately $7 (SGD 9) each, and mature in April 2026. The loan is secured by all present and future assets owned by Primech A&P and a joint and several guarantee for an unlimited amount by certain directors and the Parent. Approximately $242 (SGD 330) was drawn down during the year ended March 31, 2024, and repayments of approximately $75 (SGD 101) were made on the term loan facility during the year ended March 31, 2024. Net amount due at March 31, 2024 amounted to approximately $170 (SGD 229).

 

(E)On April 27, 2021, Primech A&P completed the acquisition of two office units (“properties”) located in Singapore for approximately $6,705 (SGD 9,035). The purchase price was made up of cash consideration of approximately $1,692 (SGD 2,280) and a loan obtained from HSBC of approximately $5,013 (SGD 6,755). The full amount of the loan was drawn down on April 1, 2021. The loans bear interest at the rate 1.30% plus 3 months SORA per annum (3 months SORA was 3.68% at March 31, 2024, total loan rate was 4.98%), and will mature in March, 2041. The loan is secured by the properties and is guaranteed by the shareholders of the Parent. The balance of the loan was approximately $4,707 (SGD 6,247) at March 31, 2023. During the year ended March 31, 2024, the Company paid down approximately $157 (SGD 211). The balance of the loan was approximately $4,482 (SGD 6,039) at March 31, 2024.

 

Primech A&P has certain financial covenants prescribed in the financing agreements of bridge loan (A), overdraft facility (B), factoring agreement with recourse (C), and term loans (D). Primech A&P is required to maintain, during the term of the financing agreements relating to each of these facilities, a minimum adjusted tangible net worth of $7.0 million (SGD 10.0 million), and a gearing ratio, defined as to the ratio of total bank debt to tangible net worth (or adjusted tangible net worth, as the case may be), of not more than 1.5. As of March 31, 2024, we are in compliance of the financial covenants.

 

At March 31, 2024 and 2023, the group’s executive officer, Mr. Yew Jin Sng, and beneficial owners Mr. Kin Wai Ho and Mr. Jin Ngee Vernon Kwek had executed guarantees in favor of HSBC to secure the Bridge loan, the Factoring agreement with recourse, the term loans, and the Overdraft facility. In addition, the Parent had executed a guarantee in favor of HSBC to secure the Factoring agreement with recourse, the term loans, the Overdraft facility and the mortgage loan.

 

F-19

 

Primech Holdings Limited and Subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended March 31, 2024 and 2023
(in thousands except share data, U.S. dollars)

 

7. Notes Payable (cont.)

 

Future minimum principal payment obligations under the notes payable are as follows:

 

For the Years Ended March 31, 2024    
2025  $11,277 
2026   1,470 
2027   276 
2028   193 
2029 onward   3,766 
Total minimum debt payments   16,982 
Less: Current portion of long-term debt   (11,277)
Long-term debt  $5,705 

 

8. Income Taxes

 

The Company’s subsidiaries (excluding its Malaysian and BVI subsidiaries) are incorporated in Singapore and are subject to Singapore Profits Tax on the taxable income as reported in its statutory financial statements adjusted in accordance with relevant Singapore tax laws.

 

The current and deferred portions of the income tax expense (benefit) included in the statements of operations and comprehensive income as determined in accordance with ASC 740 are as follows:

 

   For the Years Ended
March 31,
 
   2024   2023 
Current  $(39)  $(8)
Deferred   (454)   (2)
Income tax benefit  $(493)  $(10)

 

The following table presents a reconciliation between the theoretical income tax provision computed by applying the federal statutory rate and our actual income tax expense:

 

   Year Ended
March 31,
 
   2024   2023 
Income tax provision at statutory rates  $(780)  $(537)
Tax effects of          
Deferred tax assets not recognized   197    565 
Reversal of temporary differences   (452)   
-
 
Income exempt from income taxes   
-
    (63)
Expenses not deductible for income tax purposes   802    69 
Foreign tax rates different than statutory rates   
-
    (47)
Tax exemption and rebates   (260)   (21)
Other   
-
    24 
Income tax provision (benefit) as reported  $(493)  $(10)

 

Our 2024 and 2023 effective tax rates were significantly impacted by receipt of Government subsidies exempt from income taxes, book-tax adjustments in foreign jurisdictions, and taxation of our earnings generated in jurisdictions with rates that differ from the US federal statutory rate.

 

F-20

 

Primech Holdings Limited and Subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended March 31, 2024 and 2023
(in thousands except share data, U.S. dollars)

 

8. Income Taxes (cont.)

 

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial statement purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities at March 31, 2024 and 2023 are as follows:

 

   March 31, 
   2024   2023 
Deferred Tax Liabilities        
Accrued expenses  $37   $38 
Temporary difference on property and equipment   166    169 
Basis difference of customer backlog from acquisitions   (5)   251 
Basis differences of customer relationships from acquisitions   
-
    208 
Basis difference of real estate held for investment   
-
    37 
Basis difference of property and equipment   74    34 
Other   (9)   
-
 
    263    738 
Deferred Tax Assets          
Net operating loss carryover   (2,360)   (1,274)
Accrued expenses   (10)   (10)
Other   (2)   (2)
Valuation allowance   2,360    1,274 
    (12)   (12)
Net deferred tax liability  $251   $726 

 

We recognize deferred tax assets (“DTAs”) and deferred tax liabilities (“DTLs”) to account for the effects of temporary differences between the tax basis of an asset or liability and its amount as reported in our consolidated balance sheets, using enacted tax rates expected to apply to taxable income in the years in which we expect those temporary differences to be recovered or settled. Any effect on DTAs or DTLs resulting from a change in enacted tax rates is included in income during the period that includes the enactment date.

 

We reduce the carrying amounts of DTAs by a valuation allowance if, based upon all available evidence (both positive and negative), we determine that it is more likely than not that such DTAs will not be realizable. The Company follows FASB guidelines that address the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. At March 31, 2024 and 2023, the Company did not have a liability for unrecognized tax benefits.

 

9. Common Stock

 

Our ordinary common shares have no par value as there is no concept of authorized share capital under Singapore law. All shares presently issued are fully paid and existing shareholders are not subject to any calls on shares. Although Singapore law does not recognize the concept of “non-assessability” with respect to newly-issued shares, we note that any subscriber of our ordinary shares who has fully paid up all amounts due, with respect to such ordinary shares, will not be subject to Singapore law concerning any personal liability to contribute to our assets or liabilities in such subscriber’s capacity solely as a holder of such ordinary shares. We believe this interpretation is substantively consistent with the concept of “non-assessability” under most, if not all, U.S. state corporations laws. We cannot, except in the circumstances permitted by the Companies Act, grant any financial assistance for the acquisition or proposed acquisition of our own ordinary shares. Except as described in the Singapore Code on Take-Overs and Mergers (the “Singapore Take-over Code”), there are no limitations in our constitution or Singapore law on the rights of shareholders who are not resident in Singapore to hold or vote in respect of our ordinary shares.

 

On October 9, 2023, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Spartan Capital Securities, LLC, the underwriter to the Underwriting Agreement (the “Underwriters”), relating to the Company’s initial public offering (the “IPO”) of 3,050,000 ordinary shares, no par value per share (the “Ordinary Shares”).

 

On October 12, 2023, the Company closed the IPO. The Ordinary Shares were priced at $4.00 per share, resulting in net proceeds to the Company of approximately $9,473. The Ordinary Shares were previously approved for listing on The Nasdaq Capital Market and commenced trading under the ticker symbol “PMEC” on October 10, 2023.

 

F-21

 

Primech Holdings Limited and Subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended March 31, 2024 and 2023
(in thousands except share data, U.S. dollars)

 

10. Related Party Transactions and Balances

 

Remuneration to Directors and executive officers for the years ended March 31, 2024 and 2023 were:

 

   For the year ended
March 31,
 
Directors & Officers  2024   2023 
Yew Jin Sng  $116   $92 
Ho Kin Wai   485    446 
William Yuen   33    
-
 
William Mirecki   23    
-
 
Kai Yue Jason Chan   23    
-
 
Khazid Bin Omar   161    146 
Loo Hansel   94    85 
Kit Yu Lee   183    120 
    1,118   $889 

 

In addition, remuneration to Directors of the Group’s subsidiaries for the ended March 31, 2024 and 2023 were:

 

   For the year ended
March 31,
 
Directors  2024   2023 
Chiu Hsieh Hui   42    38 
Wong Chee Kwok   9    112 
Ong Thiam Teck   
-
    55 
   $51   $205 

 

In addition, for the years ended March 31, 2024 and 2023, the Company paid approximately $531 and approximately $684, respectively, to Mr. Jin Ngee Vernon Kwek, a beneficial owner of the Company, for his services to a subsidiary of the Company.

 

As discussed in Note 7, loans in the aggregate principal amount of approximately $18,891 (SGD 22,884) are guaranteed by certain directors and shareholders of the Parent.

 

As discussed in Note 11, the group’s executive officers, Mr. Yew Jin Sng and Mr. Hansel Loo; and Mr. Jin Ngee Vernon Kwek had executed guarantees in favor of the sureties for indemnities amounting to approximately $6,203 (SGD 8,359) and approximately $4,545 (SGD 6,031), at March 31, 2024 and 2023, respectively.

 

F-22

 

Primech Holdings Limited and Subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended March 31, 2024 and 2023
(in thousands except share data, U.S. dollars)

 

11. Commitments and Contingencies

 

Legal matters

 

a) MOM Investigation in Relation to a Fatal Accident at Our Work Site

 

In 2019, A&P Maintenance was under contract to provide, among others, external façade cleaning services for an office tower. We appointed a sub-contractor, which in turn appointed its own sub-contractor, to carry out the façade cleaning works. The façade cleaning works were performed using a gondola. When not in use, the gondola was stored in a pit underneath floor slabs. When required for use, the floor slabs would be removed and the gondola would be elevated from the pit.

 

The façade cleaning works began in May 2019 and were expected to be completed by June 2019. In late May 2019, the works were halted due to an obstruction of the gondola tracks. During this time, the gondola was kept in the pit, however, part of the floor opening, around the gondola switch, was not covered.

 

The gondola pit was located in a rooftop area, where an independently owned bar was also located. In the early hours of June 9, 2019, a security officer working at the bar fell into the uncovered area of the gondola pit. The security officer died from the fall. The circumstances surrounding the fall were as follows: the security officer had been assigned to ensure that patrons of the bar did not enter a barricaded area (which included the area with the gondola pit). Two guests had pushed aside the barricades and entered the restricted area. Upon seeing the guests enter the restricted area, the security officer ran towards them. During this, the security officer accidentally fell into the uncovered area of the gondola pit.

 

Following the accident, the MOM commenced an investigation, which included interviews with certain of our management and employees. As a result of the said incident, two charges were brought against A&P Maintenance under Sections 20 read with Sections 14(3) and 14A(1)(b) of the WSHA, and one charge was brought against an employee of A&P Maintenance under Section 15(3A) of the WSHA. As of March 2, 2023, MOM has formally withdrawn its charge against the employee of A&P Maintenance. On 5 July 2023, A&P Maintenance pleaded guilty to the two charges. On August 18, 2023, a fine of $184 (S$245) was imposed on A&P Maintenance for the contraventions of the WSHA which has since been paid in full.

 

b) Other Legal Matters

 

In April 2024, the administrator and personal representative of a deceased person who had a fatal fall, brought a negligence claim against Jurong-Clementi Town Council, C&W Services Township Pte Ltd and Primech A&P. This claim which includes various heads of damage including but not limited to various expenses, loss of income and loss of dependency, is being handled by Primech A&P’s insurer, which has appointed an adjuster.

 

In addition to the foregoing, from time to time, the Company has become or may become involved in various legal proceedings and receives claims, arising from the normal course of business activities.

 

Performance bonds

 

Certain contracts require us to provide a surety bond as a guarantee of performance. As of March 31, 2024 and 2023, we had performance bond commitments totalling to approximately $8,141 (SGD 10,971) and approximately $6,655 (SGD 8,831) under which the surety (insurance company or bank) guarantees that the Company will perform in accordance with contractual obligations. These bonds are typically renewed annually and remain in place until the contractual obligations are satisfied. In general, we would only be liable for the amount of these guarantees in the event of default in our performance of our obligations under each contract, the probability of which we believe is remote. At March 31, 2024 and 2023, the group’s executive officer, Mr. Yew Jin Sng and Mr. Hansel Loo; and Mr. Jin Ngee Vernon Kwek had executed guarantees in favor of the sureties for indemnities amounting to approximately $6,203 (SGD 8,359) and approximately $4,545 (SGD 6,031).

 

12. Subsequent Events

 

In June 2024, the Company entered into two consultancy contracts with two vendors, with compensation to the Vendors settled in total of 2,500,000 new shares of the Company, valued at $1,500.

 

F-23

 

 

Primech Holdings Ltd.

 

Up to [         ] Ordinary Shares

 

Warrants to Purchase up to [_] Ordinary Shares and up to [_] Ordinary Shares issuable upon exercise of the Warrants

 

Placement Agent Warrants to purchase up to [_] Ordinary Shares and up to [_] Ordinary Shares issuable upon the exercise of the Placement Agent Warrants

 

 

 

PROSPECTUS

 

 

 

FT GLOBAL CAPITAL, INC.

 

   [     ], 2024

 

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.

 

 

 

 

The information in this prospectus is not complete and may be changed or supplemented. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where such offer or sale is not permitted..

 

PRELIMINARY PROSPECTUS (Subject to Completion)   Dated October 16, 2024

 

PRIMECH HOLDINGS LTD.

 

2,000,000 Ordinary Shares

 

This Resale Prospectus relates to the resale of 2,000,000 Ordinary Shares by the selling shareholder named in this prospectus. We will not receive any of the proceeds from the sale of Ordinary Shares by the selling shareholder named in this prospectus.

 

Our registration of the Ordinary Shares covered by this prospectus does not mean that the Selling Shareholders will offer or sell any of such Ordinary Shares. The Selling Shareholder named in this prospectus, or its donees, pledgees, transferees or other successors-in-interest, may resell the Ordinary Shares covered by this prospectus through public or private transactions at prevailing market prices, at prices related to prevailing market prices or at privately negotiated prices. For additional information on the possible methods of sale that may be used by the Selling Shareholders, you should refer to the section of this prospectus entitled “Selling Shareholder Plan of Distribution.”

 

Ordinary Shares subject to resale hereunder will have been issued by us and acquired by the Selling Shareholder prior to any resale of such shares pursuant to this prospectus.

 

No underwriter or other person has been engaged to facilitate the sale of the Ordinary Shares in this Offering. The Selling Shareholder has agreed to reimburse the Company, for all costs, expenses and fees in connection with the registration of the Ordinary Shares, as well as to bear all commissions and discounts, if any, attributable to their respective sales of our Ordinary Shares.

 

Our Ordinary Shares is traded on The Nasdaq Capital Market, Nasdaq, under the symbol “PMEC.” On October 4, 2024, the reported sales price of our Ordinary Shares on The Nasdaq Capital Market was $0.65 per share.

 

Immediately after the completion of the Public Offering and Resale, assuming an offering size as set forth in the Public Offering Prospectus, our Major Shareholder, Sapphire Universe Holdings Limited, will own approximately [*]% of our outstanding ordinary shares (the “Shares”). As a result, we expect to be a “controlled company” within the meaning of the corporate governance standards of Nasdaq. See section titled “Prospectus Summary — Implications of Being a Controlled Company”.

 

Investing in our Ordinary Shares involves risks. See “Risk Factors” beginning on page 15. 

 

We are both an “emerging growth company” and a “foreign private issuer” as defined under the U.S. federal securities laws and, as such, may elect to comply with certain reduced public company reporting requirements for this and future filings. See “Prospectus Summary — Implications of Being an Emerging Growth Company and a Foreign Private Issuer” for additional information. Investors are cautioned that you are buying shares of a shell company issuer incorporated in the Cayman Islands with an operating subsidiary in Singapore.

 

Investing in our Ordinary Shares is highly speculative and involves a high degree of risk. Before buying any shares, you should carefully read the discussion of material risks of investing in our Ordinary Shares in “Risk Factors” beginning on page 15 of this prospectus.

 

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

 

The date of this Resale Prospectus is  [      ], 2024

 

 

 

 

RESALE PROSPECTUS SUMMARY

 

PROSPECTUS SUMMARY

 

This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all of the information that you should consider before investing in our Shares. For a more complete understanding of us and this Resale Offering, you should read and carefully consider the entire prospectus, including the more detailed information set forth under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes. Some of the statements in this prospectus are forward-looking statements. See section titled “Special Note Regarding Forward-Looking Statements.”

 

Our Business

 

We are an established technology-driven facilities services provider in the public and private sectors operating mainly in Singapore. Our mission is to support businesses by improving lives and strengthening communities through our business practices and ethics. We compete primarily in Singapore, with a small portion of our operations in Malaysia.

 

Our revenues for the fiscal year ended March 31, 2024 and 2023 were approximately $72,524,000 and $69,026,000, respectively. For the fiscal year ended March 31, 2024 and 2023, we incurred a net loss of approximately $(3,223,000) and $(2,547,000), respectively.

 

We provide the following services:

 

  Facilities services. Our facilities services include general cleaning and maintenance of public and private facilities, such as airports, conservancy areas (i.e., the public areas, refuse disposal areas, parks and carparks of public housing units), common areas of hotels, educational institutions, public roads, residential spaces, commercial buildings, office facilities, industrial areas, retail stores and healthcare facilities; housekeeping services; specialized cleaning services, such as marble polishing services; building façade cleaning services and clean room sanitation services; and waste management and pest control services. We derive the majority of our revenue from the provision of facilities services, which accounted for approximately $56.0 million or 77.2% of our revenue in FY 2024 and approximately $55.8 million or 80.8% of our revenue in FY 2023.

 

  Stewarding services. Our stewarding services include the cleaning of kitchen facilities of healthcare facilities, hotels and restaurants and the supply of ad hoc customer service officers and food and beverage (“F&B”) service crew to healthcare facilities, hotels and restaurants. Stewarding services accounted for approximately $10.2 million or 14.0% of our revenue in FY 2024 and approximately $7.6 million or 11.0% of our revenue in FY 2023.

 

  Cleaning services to offices. In addition to our core facilities services, we provide cleaning services to offices. The provision of office cleaning services accounted for approximately $5.9 million or 8.1% of our revenue in FY 2024 and approximately $4.9 million or 7.1% of our revenue in FY 2023.

 

  Cleaning services to homes. We provide cleaning services to homes of individual customers who engage our services through our “HomeHelpy” application. We did not generate significant revenue (i.e., less than 1.0%) from the provision of these services during FY 2024 and FY 2023.

 

  Cleaning Supplies. We also manufacture certain cleaning supplies, both for our own use and for sale to third parties. We did not generate significant revenue (i.e., less than 1.0%) from the sale of cleaning supplies to third parties during FY 2024 and FY 2023.

 

Alt-1

 

 

Our Industry

 

  General. Cleaning and landscaping service providers in Singapore offer a wide spectrum of services. Cleaning services include the provision of various cleaning services to public areas, offices, factories, and households, among others. Landscaping services include landscape planting, care and maintenance service activities in and for parks and gardens, public and private housing, buildings, roads and expressways, among others.

 

  Growth Drivers and Trends. Demand derived from office buildings, retail facilities, and residential buildings in Singapore has grown moderately in the past five years. New automated technologies have enhanced and will continue to enhance productivity. These include environmentally friendly robotic solutions for public spaces, waste management, and pest and pollution control. Singapore’s demand for cleaning and landscaping services experienced strong growth from 2014 to 2022, driven by economic sophistication, urbanization, and population growth. The industry market size increased from $1,377.0 million (S$1,836.0 million) in 2014 to $2,569.9 million (S$3,426.5 million) in 2022, a CAGR of 8.1%. Moreover, we believe the productivity of the industry will be enhanced progressively given the technology-driven programs launched by the government. Technological advancements have contributed to the growth of cleaning and landscaping companies, and we believe the industry will continue to benefit from future advancements in automation and technology.

 

Our Competitive Strengths

 

We believe our main competitive strengths are as follows:

 

  We have a long and established track record and have achieved a high level of accreditation in the facilities services sector. Primech A&P was amalgamated from A&P Maintenance and Primech Services & Engrg, which were operating for approximately 30 years or more, respectively. Maint-Kleen was founded in 2002. Primech A&P and Maint-Kleen thus have been able to secure long-term business relationships with their customers. Primech Services & Engrg and A&P Maintenance were both awarded the Clean Mark Gold Award in 2020. The Clean Mark Gold Award is the highest level of accreditation under the Enhanced Clean Mark Accreditation Scheme granted to cleaning businesses. The scheme recognizes businesses that deliver high cleaning standards through the training of workers, the use of equipment to improve work processes, and fair employment practices. Primech A&P and Maint-Kleen were also awarded the Clean Mark Gold Award in 2022 and 2023.  

 

  We are able to provide a bundle of services to a wide spectrum of customers. We provide a broad spectrum of cleaning services both in the public and private sectors to a variety of customers including Singapore Changi Airport, conservancy areas, hotels, common areas, educational institutions, integrated public areas, residential spaces, office facilities, industrial areas, retail stores and healthcare facilities. Our diversified customer mix ensures that we do not rely on any single customer for our revenue and enables us to better manage our business risks.

 

  We believe that our emphasis on having a trained workforce makes us more competitive in our industry. We believe that the training and development of our employees enables us to maintain and enhance our quality of solutions and services for the growth of our businesses and operations. In particular, we have been hiring a variety of employees from different sectors apart from the environment services industry such as the technological, finance, human resources and business development sectors in order to build up our key management personnel team.

 

  We have an experienced and stable management team. We have an experienced management team led by Mr. Kin Wai Ho, our Chairman. A majority of our senior management team have been employed by our subsidiaries for more than 19 years. We view their collective industry knowledge and extensive project management experience as valuable in establishing stable relationships with our customers as well as facilitating the submission of competitive tenders and believe that this has assisted us in securing numerous tenders over the years. We also believe that our management team’s experience has assisted us in our cost estimation for contracts during the tendering process, which enables us to reduce situations of cost overruns.

 

Alt-2

 

 

Our Business Strategies and Future Plans

 

Our business strategies and future plans are as follows:

 

Automation and Online Expansion. We will seek to improve efficiency, expand service capacity and reduce our environmental footprint through the use of technology. Our technology initiatives to date include the use of autonomous floor scrubbing robots equipped with real-time monitoring and self-docking capabilities to perform cleaning services. We are also in the exploratory stage of a collaboration for the development of cleaning robots to perform household cleaning. Such initiatives have allowed us to expand our service capacity by leveraging technology instead of increasing our reliance on manpower in a traditionally labor-intensive industry. In addition, in 2019 we introduced our “HomeHelpy” website and mobile application to allow individual customers to book our cleaning services, which has enabled us to expand into the B2C segment (from our primary B2B business).

 

Geographic Expansion. We intend to establish ourselves as a regional player in the environmental services industry. While our operations are currently almost exclusively based in Singapore, we are considering an expansion of our business to other countries in Southeast Asia.

 

Expansion through organic growth and acquisitions. We intend to grow our facilities services business organically by expanding our coverage to include new technology as well as segments of the market where we currently do not have a presence or only have a small presence, such as hospitals, industrial centers, data centers and cleanrooms.

 

We intend to continue to pursue suitable opportunities for acquisitions, joint ventures and strategic alliances to expand our range of facilities services. Such opportunities could include areas that complement our business, such as waste management, gardening and landscaping, and pest management. We believe that building up a comprehensive suite of facilities services will enable us to maintain our competitive edge.

 

IoT. We are also seeking to build our own IoT system, software, and robots to improve the efficiency and capacity of our services. We have developed a baseline IoT-enabled cleaning management platform to support data-driven and on-demand cleaning operations since August 2023. This platform is undergoing continuous enhancement and has been deployed to a few cleaning projects. This system integrated commercial off-the-shelf IoT devices such as cameras and sensors to be deployed in a facility and/or on robots, which will evaluate and respond to various events to perform data driven functions or actions to assist our facility services with lower cost and more efficiency. We also intend to develop an autonomous toilet cleaning robots to alleviate the tedious manual toilet cleaning tasks. We have entered into a memorandum of understanding with an independent third party, which we intended to incorporate a company in Singapore, primarily focused on research and development, manufacturing, and sales/lease of cleaning robots.

 

Electric Vehicles. In 2021, we joined a consortium to submit a tender bid to install electric vehicle (“EV”) charging infrastructure at various public cark parks in Singapore. We believe that eco-solutions will become increasingly important in the future in the face of climate change. Integrating eco-solutions into our portfolio will not only expand our service capabilities, but also transition our business towards a more innovative model, and will ultimately help our business to keep pace with future technological advances.

 

We plan to replace a portion of our existing fleet of vehicles with electric vehicles and develop “green” chemicals that are more eco-friendly for use in our cleaning services. We believe that by integrating environmental sustainability into our business practices, we will be able to attract more customers and employees, and ultimately reap the benefits of more sustainable growth.

 

Alt-3

 

 

Summary Risk Factors

 

Our prospectus should be considered in light of the risks, uncertainties, expenses, and difficulties frequently encountered by similar companies. Below please find a summary of the principal risks we face, organized under relevant headings. These risks are discussed more carefully in the section titled “Risk Factors.

 

Risks Relating to Our Business

 

  We incurred a net loss in FY 2023 and FY 2024 and we may incur losses in the future;

 

  We are subject to risks associated with debt financing;

 

  Any adverse material changes to the Singapore market (whether localized or resulting from global economic or other conditions) such as the occurrence of an economic recession, pandemic or widespread outbreak of an infectious disease (such as COVID-19), could have a material adverse effect on our business, results of operations and financial condition;

 

  The Clean Mark Gold Award currently awarded to Primech A&P may be revoked and the class 1 licence currently awarded to Primech A&P may by revoked and/or may not be renewed in May 2026;

 

  Our Group does not have a long operating history as an integrated group;

 

  There is no assurance that our future expansion and other growth plans will be successful;

 

  There is no assurance that our existing service contracts for facilities services will be renewed upon expiry or that we will be successful in securing new service contracts;

 

  Our current strategy to expand into the installation of electric vehicle (EV) charging infrastructure is limited to participation in a pilot program and potential minority investment(s);

 

  Our service contracts typically contain liquidated damages clauses, and our customers may request for liquidated damages if we fail to comply or observe certain contractual requirements;

 

  The loss of or reduction of Singapore government grants and/or subsidies could reduce our profits;

 

  We may suffer from cost overruns as our fees are typically agreed upon submission of tender or quotation;

 

  We are exposed to the credit risks of our customers and we may experience delays or defaults in collecting our receivables, and thus we face liquidity risks;

 

  Our business involves inherent industrial risks and occupational hazards and the materialization of such risks may affect our business operations and financial results;

 

  We depend on certain equipment to perform our facilities services and are subject to associated risks of maintenance and obsolescence;

 

  We are exposed to legal or other proceedings or to other disputes or claims;

 

  Our insurance coverage may not cover all our damages and losses;

 

  We are dependent on our ability to retain existing senior management personnel and to attract new qualified management personnel;

 

Alt-4

 

 

  We are dependent on our ability to retain existing senior management personnel and to attract new qualified management personnel;

 

  The appeal of our services is reliant, to some extent, on maintaining and protecting the brand names and trademarks in our business;

 

  We are exposed to risks of infringement of our intellectual property rights and the unauthorized use of our trademarks by third parties and we may face litigation suits for intellectual property infringement;

 

  We could incur substantial costs as a result of data protection concerns or IT systems disruption or failure;

  

  Unauthorized disclosure, destruction or modification of data, through cybersecurity breaches, computer viruses or otherwise or disruption of our services could expose us to liability, protracted and costly litigation and damage our reputation;

 

  The value of our intangible assets and costs of investment may become impaired;

 

  Our historical financial and operating results are not a guarantee of our future performance;

 

  We may be exposed to liabilities under applicable anti-corruption laws and any determination that we violated these laws could have a materially adverse effect on our business;

 

  Any inability by us to consummate and effectively incorporate acquisitions into our business operations may adversely affect our results of operations;

 

  We may be subject to claims against us relating to any acquisition or business combination;

 

  We have since the IPO incurred, and we will continue to incur, significant expenses and devote other significant resources and management time as a result of being a public company, which may negatively impact our financial performance and could cause our results of operations and financial condition to suffer;

 

  If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired;

 

  We do not expect to be subject to certain Nasdaq corporate governance rules applicable to U.S. listed companies; and

 

  Negative publicity relating to our Group or our Directors, Executive Officers or Major Shareholders may materially and adversely affect our reputation and Share price.

 

Risks Relating to The Industry In Which We Operate

 

  We operate in a highly regulated industry;

 

  We may face employee retention and labor shortage issues due to the labor-intensive nature of the facilities services industry and the limited local labor force in Singapore;

 

  Our supply of foreign labor may be affected by the laws, regulations and policies in the countries from which the foreign labor originates;

 

  A shortage of reliable sub-contractors may disrupt our business operations and increase our costs and we may be liable for the breaches of our sub-contractors;

 

  The facilities services industry in Singapore is highly competitive;

 

Alt-5

 

 

  Industry consolidation may give our competitors advantage over us, which could result in a loss of customers and/or a reduction of our revenue;

 

  We are subject to risks in connection with the use and storage of cleaning chemicals. In addition, any perceived use of cleaning supplies and/or chemicals that are not environmentally friendly or safe may adversely affect our brand name and the contracts we can successfully bid for; and

 

  New and stricter legislation and regulations may affect our business, financial condition and results of operations.

 

Risks Relating to Investments In Singapore Companies

 

  We are incorporated in Singapore, and our shareholders may have more difficulty in protecting their interests than they would as shareholders of a corporation incorporated in the United States;

 

  It may be difficult for you to enforce any judgment obtained in the United States against us, our Directors, Executive Officers or our affiliates;

 

  Subject to the general authority to allot and issue new Shares provided by our Shareholders, the Companies Act and our Constitution, our directors may allot and issue new Shares on terms and conditions and for such purposes as may be determined by our Board of Directors in its sole discretion. Any issuance of new Shares would dilute the percentage ownership of existing Shareholders and could adversely impact the market price of our Shares;

  

  We are subject to the laws of Singapore, which differ in certain material respects from the laws of the United States; and

 

  Singapore take-over laws contain provisions that may vary from those in other jurisdictions.

 

Risks Relating to An Investment In Our Shares

 

  This is a “best-efforts” offering, no minimum amount of securities is required to be sold, and we may not raise the amount of capital we believe is required for our business plans;

 

  An active trading market for our Ordinary Shares may not continue and the trading price for our Ordinary Shares may fluctuate significantly;

 

  Our share price has been, and could continue to be, volatile. You may lose all or part of your investment, and litigation may be brought against us;

 

  Investors in our Shares will face immediate and substantial dilution in the net tangible book value per Share and may experience future dilution;

 

  We are a “controlled company” within the meaning of the Nasdaq Listing Rules and, as a result, may rely on exemptions from certain corporate governance requirements that provide protection to shareholders of other companies;

 

  Our Shares may trade below $5.00 per share, and thus would be known as “penny stock;” trading in penny stocks has certain restrictions and these restrictions could negatively affect the price and liquidity of our Shares.

 

  The trading price of our Shares following the IPO may be subject to rapid and substantial price volatility that may be unrelated to our actual or expected operating performance and financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our ordinary shares;

 

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  There may be circumstances in which the interests of our Major Shareholder(s) could be in conflict with your interests as a Shareholder;

 

  We may require additional funding in the form of equity or debt for our future growth which will cause dilution in Shareholders’ equity interest;

 

  Investors may not be able to participate in future issues or certain other equity issues of our Shares;

 

  We may not be able to pay dividends in the future;

 

  If we fail to meet applicable listing requirements, Nasdaq may delist our Shares from trading, in which case the liquidity and market price of our Shares could decline;

 

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

 

  We qualify as a foreign private issuer and, as a result, we will not be subject to U.S. proxy rules and will be subject to Exchange Act reporting obligations that permit less detailed and less frequent reporting than that of a U.S. domestic public company;

 

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

 

  There can be no assurance that we will not be a passive foreign investment company, or PFIC, for U.S. federal income tax purposes for any taxable year, which could result in adverse U.S. federal income tax consequences to U.S. holders of our Shares;

 

  We will have broad discretion in the use of proceeds of this Offering; and

 

  Securities analysts may not publish favorable research or reports about our business or may publish no information at all, which could cause our stock price or trading volume to decline.
     
  The resale by the Selling Shareholder may cause the market price of our Ordinary Shares to decline.

 

Our Corporate Structure

 

The structure of our Group as of the date of this prospectus is as follows:

 

 

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Corporate Information

 

Primech Holdings Ltd. is a Singapore corporation. Our registered office and principal place of business is 23 Ubi Crescent Singapore 408579. The telephone and facsimile numbers of our registered office are +65 6286 1868 and +65 6288 5260, respectively. Our agent for service of process in the United States is Cogency Global Inc., located at 122 East 42nd Street, 18th Floor, New York, NY 10168. Our corporate website is https://primechholdings.com. Information contained on our website does not constitute part of this prospectus.

 

Implications of Being an “Emerging Growth Company” and a “Foreign Private Issuer”

 

Emerging Growth Company

 

We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). As such, we are eligible, for up to five years, to take advantage of certain exemptions from various reporting requirements that are applicable to other publicly traded entities that are not emerging growth companies. These exemptions include:

 

  the ability to include only two years of audited financial statements and only two years of related Management’s Discussion and Analysis of Financial Condition and Results of Operations disclosure;

 

  exemptions from the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”), in the assessment of our internal control over financial reporting;

 

  to the extent that we no longer qualify as a foreign private issuer, (i) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and (ii) exemptions from the requirement to hold a non-binding advisory vote on executive compensation, including golden parachute compensation.

 

We may take advantage of these provisions until the last day of our fiscal year following the fifth anniversary of the consummation of the IPO or such earlier time that we are no longer an emerging growth company.

 

As a result, the information contained in this prospectus may be different from the information you receive from other public companies in which you hold shares. We do not know if some investors will find the Shares less attractive because we may rely on these exemptions. The result may be a less active trading market for the Shares, and the price of the Shares may become more volatile.

 

We will remain an emerging growth company until the earliest of: (1) the last day of the first fiscal year in which our annual gross revenue exceeds $1.235 billion; (2) the last day of the fiscal year following the fifth anniversary of the date of the IPO; (3) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of the Shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter; or (4) the date on which we have issued more than $1.00 billion in non-convertible debt securities during any three-year period. 

 

Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 13(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), for complying with new or revised accounting standards. Given that we currently report and expect to continue to report under U.S. GAAP, we have irrevocably elected not to avail ourselves of this extended transition period and, as a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required by the IASB. Under federal securities laws, our decision to opt out of the extended transition period is irrevocable.

 

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Foreign Private Issuer

 

Upon consummation of the IPO, 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 will be exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including:

 

  the rules under the Exchange Act requiring domestic filers to issue financial statements prepared under U.S. GAAP;

 

  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 (the “SEC”) of quarterly reports on Form 10-Q containing unaudited financial and other specific information, or current reports on Form 8-K, upon the occurrence of specified significant events.

 

Notwithstanding these exemptions, we will file with the SEC, within four months after the end of each fiscal year, or such applicable time as required by the SEC, an annual report on Form 20-F containing financial statements audited by an independent registered public accounting firm.

 

We may take advantage of these exemptions until such time as we are no longer a foreign private issuer. We would cease to be a foreign private issuer at such time as more than 50% of our outstanding voting securities are held by U.S. residents and any of the following three circumstances applies: (i) the majority of our Executive Officers or members of our Supervisory Board are U.S. citizens or residents, (ii) more than 50% of our assets are located in the United States, or (iii) our business is administered principally in the United States.

 

Both foreign private issuers and emerging growth companies are also exempt from certain more extensive 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 extensive compensation disclosures required of companies that are neither an emerging growth company nor a foreign private issuer and will continue to be permitted to follow our home country practice on such matters.

 

Implications of Being a Controlled Company

 

We became a “controlled company” as defined under the Nasdaq Listing Rules because at the time of the completion of the IPO, Sapphire Universe held 82. 06% of our total issued and outstanding Shares and was able to exercise 82.06% of the total voting power of our issued and outstanding share capital. Upon the consummation of this Offering, we will continue to be a “controlled company” because at such time, Sapphire Universe will hold [*]% of our total issued and outstanding Shares and will be able to exercise [*]% of the total voting power of our issued and outstanding share capital. 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. See section titled “Risk Factors — Risks Relating to an Investment in our Shares.”

 

Even if we cease to be a controlled company, we may still rely on exemptions available to foreign private issuers.

 

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Conventions Which Apply to this Prospectus

 

Throughout this prospectus, we use a number of key terms and provide a number of key performance indicators used by management. Unless the context otherwise requires, the following definitions apply throughout where the context so admits:

 

Other Companies, Organizations and Agencies

 

“BCA”   : Building & Construction Authority of Singapore
       
“HSA”   : Health Sciences Authority of Singapore
       
“Independent Registered Public Accounting Firm”   : Weinberg & Company P.A.
       
“ISO”   : International Organization for Standardization
       
“MOM”   : Ministry of Manpower of Singapore
       
“NEA”   : National Environment Agency of Singapore
       
“Sapphire Universe”   : Sapphire Universe Holdings Limited, which is a Major Shareholder
       
General      
       
“Audit Committee”   : The audit committee of our Board of Directors
       
“Board” or “Board of Directors”   : The board of directors of our Company
       
“Companies Act”   : The Companies Act 1967 of Singapore, as amended, supplemented or modified from time to time
       
“Company”   : Primech Holdings Ltd.
       
“Compensation Committee”   : The compensation committee of our Board of Directors
       
“Constitution”   : The constitution of our Company, as amended, supplemented or modified from time to time
       
“COVID-19”   : Coronavirus disease 2019
       
“CRS”   : Contractors Registration System of the BCA
       
“CVPA”   : The Control of Vectors and Pesticides Act 1998 of Singapore, as amended, supplemented or modified from time to time
       
“Directors”   : The directors of our Company
       
“EFMA”   : The Employment of Foreign Manpower Act 1990 of Singapore, as amended, supplemented or modified from time to time
       
“Employment Act”   : The Employment Act 1968 of Singapore, as amended, supplemented or modified from time to time
       
“EPHA”   : The Environmental Public Health Act 1987 of Singapore, as amended, supplemented or modified from time to time
       
“EPH Regulations”   : The Environmental Public Health (General Cleaning Industry) Regulations of Singapore 2014, as amended, supplemented or modified from time to time
       
“Executive Officers”   : The executive officers of our Company. See section titled “General Information On Our Group — Our Business Overview — Management.”

 

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“FASB”   : The Financial Accounting Standards Board
       
“Fiscal Year” or “FY”   : Financial year ended or, as the case may be, ending March 31
       
“GAAP”   : Accounting principles generally accepted in the United States of America
       
“Group”   : Our Company and our subsidiaries
       
“GST”   : Goods and Services Tax
       
“Independent Directors”   : The independent non-executive Directors of our Company
       
“IoT”   : Internet-of-Things
       
“IPO”   : The Company’s initial public offering of 3,050,000 Ordinary Shares which was completed on October 12, 2023
       
“Lender”   : A registered financial institution under the Monetary Authority of Singapore that acts as our Company’s primary bank lender
       
“Listing”   : The listing and quotation of our Shares on Nasdaq
       
“Major Shareholder”   : A person who has an interest or interests (whether by record or beneficial ownership) in one or more voting shares (excluding treasury shares) in our Company, and the total votes attached to that share, or those shares, is not less than 5.0% of the total votes attached to all the voting shares (excluding treasury shares) in our Company
       
“Nasdaq”   : The Nasdaq Stock Market LLC
       
“Nasdaq Listing Rules”   : The Nasdaq rules governing listed companies
       
“Nominating and Corporate Governance Committee   : The nominating and corporate governance committee of our Board of Directors
       
“Offering”   : The offering of Shares by the Underwriter on behalf of our Company for subscription at the Offer Price, subject to and on the terms and conditions set out in this prospectus
       
“Offer Price”   : US$[*] for each Share being offered in this Offering
       
“QEHS”   : Quality, Environmental, Health and Safety

 

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“Placement Agent”   : FT Global Capital, Inc. which is acting as exclusive placement agent for this Offering
       
“Placement Agent Agreement”   : The Placement Agent Agreement dated ___________, 2024 entered into between our Company and FT Global Capital, Inc., pursuant to which the Placement Agent has agreed to arrange for the sale of Shares offered in this prospectus on a “best-efforts” basis, as described in the sections titled “Plan of Distribution” of this prospectus
       
“Restructuring Exercise”   : The corporate restructuring exercise undertaken in anticipation of the Listing in which our Company acquired our current subsidiaries from Sapphire Universe
“RM”   : Malaysian ringgit or Malaysian dollar
       
“Resale Offering”   : The resale of 2,000,000 Ordinary Shares by the selling shareholder named in this prospectus
       
“Selling Shareholder”   : The selling shareholder who is listed in the Resale Prospectus
       
“Share(s)”   : Ordinary share(s) in the capital of our Company
       
“Shareholders”   : Registered holders of Shares
       
“Singapore Take-Over Code”   : The Singapore Take-Over Code on Take-Overs and Mergers, as amended, supplemented or modified from time to time
       
“WICA”   : Work Injury Compensation Act 2019 of Singapore
       
“WSHA”   : Workplace Safety and Health Act 2006 of Singapore
       
“WSHIR”   : Workplace Safety and Health (Incident Reporting) Regulations of Singapore
       
“YA”   : Year of assessment
       
Currencies, Units and Others      
       
“S$”   : Singapore dollars, the lawful currency of the Republic of Singapore
       
“US$” or “$”   : U.S. dollars and cents respectively, the lawful currency of the U.S.
       
“%” or “per cent.”   : Per centum
       
“sq. m.”   : Square meters

 

The expressions “associated company”, “related corporation” and “subsidiary” shall have the respective meanings ascribed to them in the Companies Act, as the case may be.

 

Any discrepancies in tables included herein between the total sum of amounts listed and the totals thereof are due to rounding. Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.

 

In this prospectus, references to “our Company” or to “the Company” are to Primech Holdings Ltd. and, unless the context otherwise requires, a reference to “we”, “our”, “us” or “our Group” or their other grammatical variations is a reference to our Company and our subsidiaries taken as a whole.

 

Certain of our customers and suppliers are referred to in this prospectus by their trade names. Our contracts with these customers and suppliers are typically with an entity or entities in the relevant customer or supplier’s group of companies.

 

Internet site addresses in this prospectus are included for reference only and the information contained in any website, including our website, is not incorporated by reference into, and does not form part of, this prospectus.

 

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Market and Industry Data

 

We obtained certain industry, market and competitive position data in this prospectus from our own internal estimates, surveys and research and from publicly available information, including industry and general publications and research, surveys and studies conducted by third parties, such as reports by governmental agencies, for example, the Singapore Department of Statistics, the Singapore Ministry of Trade and Industry and the Singapore Urban Redevelopment Authority, among others, and by private entities. None of these governmental agencies and private entities are affiliated with our Company, and the information contained in this report has not been reviewed or endorsed by any of them.

 

Industry publications, research, surveys, studies and forecasts generally state that the information they contain has been obtained from sources believed to be reliable but that the accuracy and completeness of such information is not guaranteed. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and uncertainties as the other forward-looking statements in this prospectus. These forecasts and forward-looking information are subject to uncertainty and risk due to a variety of factors, including those described under “Risk Factors”. These and other factors could cause results to differ materially from those expressed in the forecasts or estimates from independent third parties and us.

 

Trademarks, Service Marks and Tradenames

 

We have proprietary rights to trademarks used in this prospectus that are important to our business, many of which are registered under applicable intellectual property laws. Solely for convenience, the trademarks, service marks, logos and trade names referred to in this prospectus are without the ® and ™ symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks, service marks and trade names.

 

This prospectus contains additional trademarks, service marks and trade names of others, which are the property of their respective owners. All trademarks, service marks and trade names appearing in this prospectus are, to our knowledge, the property of their respective owners. We do not intend our use or display of other companies’ trademarks, service marks, copyrights or trade names to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

 

Presentation of Financial and Other Information

 

Unless otherwise indicated, all financial information contained in this prospectus is prepared and presented in accordance with U.S. GAAP.

 

All references in this prospectus to “U.S. dollars,” “US$,” “$” and “USD” refer to the currency of the United States of America and all references to “S$,” “Singapore dollar,” or “SGD” refer to the currency of Singapore. Unless otherwise indicated, all references to currency amounts in this prospectus are in USD.

 

We have made rounding adjustments to some of the figures contained in this prospectus. Accordingly, numerical figures shown as totals in some tables may not be exact arithmetic aggregations of the figures that preceded them.

 

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THE RESALE OFFERING

 

Securities being offered:   Ordinary Shares.
Number of Ordinary Shares offered by us:   0 ordinary shares.
Number of Ordinary Shares offered by the Selling Shareholder:  
2,000,000 Ordinary Shares.
Number of Ordinary Shares outstanding before the Resale Offering:  
38,125,951 Ordinary Shares.
Ordinary Shares to be outstanding after the Resale Offering:  
38,125,951 Ordinary Shares.
Use of proceeds:   We will not receive any of the proceeds from the sale of the Ordinary Shares by the Selling Shareholder named in this Resale Prospectus.

 

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SUMMARY FINANCIAL INFORMATION

 

The following summary presents consolidated balance sheet data as of March 31, 2024 and 2023 and summary consolidated statements of operations data for the years ended March 31, 2024 and 2023 which have been derived from our audited financial statements included elsewhere in this prospectus. Our consolidated financial statements are prepared and presented in accordance with U.S. GAAP. You should read this “Selected Consolidated Financial And Operating Data” section together with our consolidated financial statements and the related notes and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section included elsewhere in this prospectus.

 

(in thousand dollars)  As of
March 31,
2024
   As of
March 31,
2023
 
   (Audited)   (Audited) 
Balance Sheets Data        
Current Assets  $31,333   $27,436 
Non-Current Assets   14,176    15,387 
Total assets  $45,509   $42,823 
           
Current liabilities  $22,742   $24,522 
Non-Current liabilities   7,708    9,468 
Shareholders’ equity   15,059    8,833 
Total liabilities and shareholders’ equity  $45,509   $42,823 

 

   For the Years Ended
March 31,
 
(in thousand dollars)  2024   2023 
Statements of Operations Data        
Revenues  $72,524   $69,026 
           
Operating costs and expenses          
Cost of revenue   (59,915)   (58,410)
General and administrative expenses   (13,160)   (12,304)
Sales and marketing expenses   (2,231)   (279)
Goodwill impairment   -    (138)
Loss from operations   (2,782)   (2,105)
Other income and expense, net   211    271 
Interest expense   (1,145)   (723)
Loss before income taxes   (3,716)   (2,557)
Net loss  $(3,223)  $(2,547)

 

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USE OF PROCEEDS

 

We will not receive any of the proceeds from the sale of the Ordinary Shares by the Selling Shareholder.

 

SELLING SHAREHOLDER

 

The following table sets forth the names of the Selling Shareholder, the number of Ordinary Shares owned by such Selling Shareholder immediately prior to the date of this Resale Prospectus and the number of Shares to be offered by the Selling Shareholder pursuant to this Resale Prospectus. The table also provides information regarding the beneficial ownership of our Ordinary Shares by the Selling Shareholder as adjusted to reflect the assumed sale of all of the Shares offered under this Resale Prospectus.

 

Percentages of beneficial ownership before the Resale Offering are based on 38,125,951 Ordinary Shares outstanding as at the date of this Resale Prospectus. Beneficial ownership is based on information furnished by the Selling Shareholder. Unless otherwise indicated and subject to community property laws where applicable, the Selling Shareholder named in the following table has, to our knowledge, sole voting and investment power with respect to the Shares beneficially owned by him, her or it.

 

The Selling Shareholder is not a broker dealer or an affiliate of a broker dealer. The Selling Shareholder has no agreement or understanding to distribute any of the Ordinary Shares being registered. The Selling Shareholder may offer for sale from time to time any or all of the Shares, subject to the agreements described in the “Selling Shareholder Plan of Distribution.” The table below assumes that the Selling Shareholder will sell all of the Shares offered for sale hereby:

 

Name of Selling Shareholder  Ordinary
Shares
Beneficially
Owned Prior
to the Resale
Offering(1)
   Maximum
Number of
Ordinary
Shares to be
Sold
   Number of
Ordinary
Shares
Owned
after the
Resale
Offering
   Percentage
Ordinary
Shares
Ownership
After the
Resale
Offering (%)
 
Sapphire Universe Holdings Limited(2)   2,000,000    2,000,000    29,287,500    76.82%

 

 

(1)Beneficial ownership is determined in accordance with the rules and regulations of the SEC. In computing the number of Ordinary Shares beneficially owned by a person and the percentage ownership of that person, securities that are currently convertible or exercisable into Ordinary Shares, or convertible or exercisable into our Ordinary Shares within 60 days of the date hereof are deemed outstanding. Such Shares, however, are not deemed outstanding for the purposes of computing the percentage ownership of any other person. Except as indicated in the footnotes to the above table, the Selling Shareholder named in the table has sole voting and investment power with respect to the Shares set forth opposite such shareholder’s name.

 

(2)Sapphire Universe is owned by Bright Oracle Limited, Oriental Unicorn Limited and Shining Valkyrie Development Limited which hold 15.5%, 48.5% and 36%, respectively, of the outstanding shares of Sapphire Universe. Mr. Kin Wai Ho owns and controls Bright Oracle Limited. As such, Mr. Kin Wai Ho is deemed to beneficially own 4,849,563 Ordinary Shares held through Bright Oracle Limited. Mr. Kin Wai Ho and Mr. Jin Ngee Vernon Kwek beneficially owns and controls 83.5% and 16.5% of the issued and outstanding shares of Oriental Unicorn Limited, respectively. As such, Mr. Kin Wai Ho deemed to beneficially own 15,174,437 Ordinary Shares held through Oriental Unicorn Limited. Shining Valkyrie Development Limited is a wholly-owned subsidiary of Delight Treasure Holdings Limited. Mr. Cyrus Jun Ming Wen owns and controls Delight Treasure Holdings Limited. As such, Mr. Cyrus Jun Ming Wen is deemed to beneficially own 11,263,500 Shares held through Shining Valkyrie Development Limited..

 

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SELLING SHAREHOLDER PLAN OF DISTRIBUTION

 

The Selling Shareholder and any of its pledgees, donees, assignees and successors-in-interest may, from time to time, sell any or all of his Ordinary Shares being offered under this Resale Prospectus on any stock exchange, market or trading facility on which shares of our Ordinary Shares are traded or in private transactions. These sales may be at fixed or negotiated prices. The Selling Shareholder may use any one or more of the following methods when disposing of shares:

 

  ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
     
  block trades in which the broker-dealer will attempt to sell the shares as agent but may position; and resell a portion of the block as principal to facilitate the transaction;
     
  purchases by a broker-dealer as principal and resales by the broker-dealer for its account;
     
  an exchange distribution in accordance with the rules of the applicable exchange;
     
  privately negotiated transactions;
     
  to cover short sales made after the date that the registration statement of which this Resale Prospectus is a part is declared effective by the SEC;
     
  broker-dealers may agree with the Selling Shareholder to sell a specified number of such shares at a stipulated price per share;
     
  a combination of any of these methods of sale; and
     
  any other method permitted pursuant to applicable law.

 

The shares may also be sold under Rule 144 under the Securities Act of 1933, as amended, if available for the Selling Shareholder, rather than under this Resale Prospectus. The Selling Shareholder has the sole and absolute discretion not to accept any purchase offer or make any sale of shares if they deem the purchase price to be unsatisfactory at any particular time.

 

The Selling Shareholder may pledge its shares to their brokers under the margin provisions of customer agreements. If the Selling Shareholder defaults on a margin loan, the broker may, from time to time, offer and sell the pledged shares.

 

Broker-dealers engaged by the Selling Shareholder may arrange for other broker-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Shareholder (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated, which commissions as to a particular broker or dealer may be in excess of customary commissions to the extent permitted by applicable law.

 

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If sales of shares offered under this Resale Prospectus are made to broker-dealers as principals, we would be required to file a post-effective amendment to the registration statement of which this Resale Prospectus is a part. In the post-effective amendment, we would be required to disclose the names of any participating broker-dealers and the compensation arrangements relating to such sales.

 

The Selling Shareholder and any broker-dealers or agents that are involved in selling the shares offered under this Resale Prospectus may be deemed to be “underwriters” within the meaning of the Securities Act in connection with these sales. Commissions received by these broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting discount under the Securities Act. Any broker-dealers or agents that are deemed to be underwriters may not sell shares offered under this Resale Prospectus unless and until we set forth the names of the underwriters and the material details of their underwriting arrangements in a supplement to this Resale Prospectus or, if required, in a replacement resale prospectus included in a post-effective amendment to the registration statement of which this Resale Prospectus is a part.

 

The Selling Shareholder and any other persons participating in the sale or distribution of the shares offered under this Resale Prospectus will be subject to applicable provisions of the Exchange Act, and the rules and regulations under that act, including Regulation M. These provisions may restrict activities of, and limit the timing of purchases and sales of any of the shares by, the Selling Shareholder or any other person. Furthermore, under Regulation M, persons engaged in a distribution of securities are prohibited from simultaneously engaging in market making and other activities with respect to those securities for a specified period of time prior to the commencement of such distributions, subject to specified exceptions or exemptions. All of these limitations may affect the marketability of the shares.

 

Rule 2710 requires members firms to satisfy the filing requirements of Rule 2710 in connection with the resale, on behalf of Selling Shareholder, of the securities on a principal or agency basis. NASD Notice to Members 88-101 states that in the event the Selling Shareholder intends to sell any of its shares registered for resale in this Resale Prospectus through a member of FINRA participating in a distribution of our securities, such member is responsible for insuring that a timely filing, if required, is first made with the Corporate Finance Department of FINRA and disclosing to FINRA the following:

 

  it intends to take possession of the registered securities or to facilitate the transfer of such certificates;
     
  the complete details of how the Selling Shareholder’s shares are and will be held, including location of the particular accounts;
     
  whether the member firm or any direct or indirect affiliates thereof have entered into, will facilitate or otherwise participate in any type of payment transaction with the Selling Shareholder, including details regarding any such transactions; and
     
  in the event any of the securities offered by the Selling Shareholder are sold, transferred, assigned or hypothecated by any Selling Shareholder in a transaction that directly or indirectly involves a member firm of FINRA or any affiliates thereof, that prior to or at the time of said transaction the member firm will timely file all relevant documents with respect to such transaction(s) with the Corporate Finance Department of FINRA for review.

 

No FINRA member firm may receive compensation in excess of that allowable under FINRA rules, including Rule 2710, in connection with the resale of the securities by the Selling Shareholder. If any of the Ordinary Shares offered for sale pursuant to this Resale Prospectus are transferred other than pursuant to a sale under this Resale Prospectus, then subsequent holders could not use this Resale Prospectus until a post-effective amendment or prospectus supplement is filed, naming such holders. We offer no assurance as to whether any of the Selling Shareholder will sell all or any portion of the shares offered under this Resale Prospectus.

 

We have agreed to pay all fees and expenses we incur incident to the registration of the shares being offered under this Resale Prospectus. However, each Selling Shareholder and purchaser is responsible for paying any discount, and similar selling expenses they incur.

 

We and the Selling Shareholder have agreed to indemnify one another against certain losses, damages and liabilities arising in connection with this Resale Prospectus, including liabilities under the Securities Act.

 

LEGAL MATTERS

 

We are being represented by Loeb & Loeb LLP with respect to certain legal matters as to United States federal securities and New York State law. The validity of the Ordinary Shares offered in this offering and other certain legal matters as to Singapore law will be passed upon for us by JurisAsia LLC.

 

Alt-18

 

 

 

 

 

Primech Holdings Ltd.

 

 

2,000,000 Ordinary Shares

 

 

 

RESALE PROSPECTUS

 

 

 

You should rely only on the information contained in this Resale Prospectus. No dealer, salesperson or other person is authorized to give information that is not contained in this Resale Prospectus. This Resale Prospectus is not an offer to sell nor is it seeking an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. The information contained in this Resale Prospectus is correct only as of the date of this prospectus, regardless of the time of the delivery of this prospectus or the sale of these securities.

 

The date of this Resale Prospectus is [     ], 2024

 

 

 

 

Part II — Information Not Required in the Prospectus

 

Item 6.  Indemnification of Directors and Officers.

 

Our Constitution provides that, subject to applicable laws, every Director, secretary or other officer of the Company shall be entitled to be indemnified by the Company against all costs, charges, losses, expenses and liabilities incurred or to be incurred by him/her in the execution and discharge of his/her duties or in relation thereto. In particular, and without prejudice to the generality of the foregoing, no Director, secretary or other officer of the Company shall be liable for the acts, receipts, neglects or defaults of any other Director or officer or for joining in any receipt or other act for conformity or for any loss or expense happening to the Company through the insufficiency or deficiency of title to any property acquired by order of the Directors for or on behalf of the Company or for the insufficiency or deficiency of any security in or upon which any of the moneys of the Company shall be invested or for any loss or damage arising from the bankruptcy, insolvency or tortious act of any person with whom any moneys, securities or effects shall be deposited or left or for any other loss, damage or misfortune whatsoever which shall happen in the execution of the duties of his/her office or in relation thereto unless the same shall happen through his/her own negligence, default, breach of duty or breach of trust.

 

Section 172 of the Companies Act provides that any provision (i) that purports to exempt an officer (including a Director) of a company (to any extent) from, or (ii) by which a company directly or indirectly provides an indemnity (to any extent) for an officer of a company against, any liability that would otherwise attach to him/her in connection with any negligence, default, breach of duty or breach of trust in relation to the company is void. Notwithstanding the foregoing, a company may:

 

purchase and maintain for an officer of the company insurance against any liability attaching to him/her in connection with any negligence, default, breach of duty or breach of trust in relation to the company; and

 

directly or indirectly provide an indemnity (to any extent) for an officer of the company against liability incurred by the officer to a person other than the company, except when the indemnity is against any liability of the officer (i) to pay a fine in criminal proceedings or a sum payable to a regulatory authority by way of a penalty in respect of non-compliance with any requirement of a regulatory nature; or any liability incurred by the officer (ii) in defending criminal proceedings in which he/she is convicted, in defending civil proceedings brought by the company or a related company in which judgment is given against him/her, or in connection with an application for relief under section 76A(13) or 391 of the Companies Act in which the court refuses to grant him/her relief.

 

Item 7.  Recent Sales of Unregistered Securities.

 

During the past three years, the Company sold the following ordinary shares without registration under the Securities Act. We believe that each of the following issuances was exempt from registration under the Securities Act pursuant to Section 4(a)(2) of the Securities Act regarding transactions not involving a public offering. No underwriters were involved in these issuances of ordinary shares.

 

On December 29, 2020, the Company incorporated in Singapore and issued two ordinary shares to Sapphire Universe Holdings Limited resulting in two ordinary shares outstanding for an aggregate purchase price of S$2, or approximately S$1 per share.

 

On November 11, 2021, the Company entered into a restructuring agreement with Primech A&P, Sapphire Universe Holdings Pte. Ltd. and Sapphire Universe Holdings Limited in connection with the acquisitions of Acteef Cleaning Specialists Pte Ltd (“Acteef Cleaning”), HomeHelpy Singapore Pte Ltd (“HomeHelpy”), Primech A & P Pte Ltd (“Primech A&P”), and Maint-Kleen Pte. Ltd (“Maint-Kleen”). In connection with the restructuring, the Company on November 22, 2021 issued 32,499,998 ordinary shares to Sapphire Universe Holdings Limited in exchange of all the issued and outstanding shares of Acteef Cleaning, HomeHelpy, Primech A&P, and Maint-Kleen. Upon the consummation of the restructuring, the Company is the sole shareholder of Acteef Cleaning, HomeHelpy, Primech A&P, and Maint-Kleen.

 

II-1

 

 

Item 8.  Exhibits.

 

(a)The following documents are filed as part of this registration statement:

 

1.1   Form of Placement Agent Agreement*
2.1   Share Purchase Agreement by and among the Registrant, CSG Industries Pte. Ltd., and shareholders of CSG Industries Pte. Ltd. dated April 1, 2021(1)
2.2   Share Purchase Agreement by and among the Registrant, Princeston International (S) Pte. Ltd., and shareholders of Princeston International (S) Pte. Ltd. dated April 1, 2021(1)
2.3   Novation Agreement by and among the Registrant, Sapphire Universe Holdings Limited and Loo Hansel dated November 11, 2021(1)
2.4   Restructuring Agreement by and among Primech Holdings Pte. Ltd., Primech AP, Sapphire Universe Holdings Pte. Ltd, and Sapphire Universe Holdings Limited dated November 11, 2021(1)
3.1   Current Effective Constitution of the Registrant(1)
4.1   Specimen Share Certificate(1)
4.2   Form of Placement Agent Warrant*
4.3   Form of Investors Warrant*
5.1   Opinion of JurisAsia LLC as to the validity of the ordinary shares**
10.1   Business Property Financing Facility dated March 30, 2021, by and between Primech A&P Pte. Ltd. and the Lender(1)
10.2   Term Loan (temporary bridging loan) Agreement dated October 21, 2020 by and between Primech A&P Pte. Ltd. and the Lender (supplemented by supplemental letters dated May 5, 2021, August 3, 2021)(1)
10.3   Banking Facility dated July 20, 2018, by and between Primech A & P Pte. Ltd. and the Lender (supplemented by supplemental letter dated September 28, 2021)(1)
10.4   Banking Facility dated June 5, 2020, by and between Maint-Kleen Pte. Ltd. and the Lender (supplemented by a supplemental letter dated July 27, 2020 and August 18, 2022)(1)
10.5   Banking Facility dated August 6, 2019 by and between MY ALL SERVICES SDN. BHD. and the Lender(1)
10.6   EV Charging Infrastructure Tender Documents(1)
10.7   Deployment of Electric Vehicle Charging Infrastructure Tender executed by Primech A&P Pte. Ltd., Charge+ Pte. Ltd., Sunseap Group Pte. Ltd., and Oyika Pte. Ltd. dated May 10, 2021(1)
10.8   Consortium Agreement among Primech A&P Pte. Ltd., Charge+ Pte. Ltd., Sunseap Group Pte. Ltd., and Oyika Pte. Ltd. dated May 13, 2021(1)
10.9   Deployment of Electric Vehicle Charging Infrastructure letter of acceptance notification from the Government of Singapore dated September 1, 2021(1)
10.10   Deployment of Electric Vehicle Charging Infrastructure letter of acceptance from the Housing & Development Board (“HDB”) dated September 1, 2021 in respect of contract entered into with HDB in respect of the North region(1)
10.11   Deployment of Electric Vehicle Charging Infrastructure letter of acceptance from HDB dated September 1, 2021 in respect of contract entered into with HDB in respect of the North-East region(1)
10.12   Deployment of Electric Vehicle Charging Infrastructure letter of acceptance from JTC Corporation (“JTC”) dated September 1, 2021 in respect of contract entered into with JTC in respect of the North region(1)
10.13   Deployment of Electric Vehicle Charging Infrastructure letter of acceptance from JTC dated September 1, 2021 in respect of contract entered into with JTC in respect of the North-East region(1)
10.14   Deployment of Electric Vehicle Charging Infrastructure letter of acceptance from the National Parks Board (“NParks”) dated September 1, 2021 in respect of contract entered into with NParks in respect of the North region(1)
10.15   Deployment of Electric Vehicle Charging Infrastructure letter of acceptance from the People’s Association (“PA”) dated September 1, 2021 in respect of contract entered into with PA in respect of the North-East region(1)
10.16   Deployment of Electric Vehicle Charging Infrastructure letter of acceptance from the Urban Redevelopment Authority (“URA”) dated September 1, 2021 in respect of contract entered into with URA in respect of the North-East region(1)
10.17   Deployment of Electric Vehicle Charging Infrastructure Contract entered into among HDB, Primech A&P Pte. Ltd., Charge+ Pte. Ltd., Sunseap Group Pte. Ltd., and Oyika Pte. Ltd. dated October 18, 2021 in respect of the North-East region(1)

 

II-2

 

 

10.18   Deployment of Electric Vehicle Charging Infrastructure Contract entered into among HDB, Primech A&P Pte. Ltd., Charge+ Pte. Ltd., Sunseap Group Pte. Ltd., and Oyika Pte. Ltd. dated October 18, 2021 in respect of the North region(1)
10.19   Deployment of Electric Vehicle Charging Infrastructure Contract entered into among URA, Primech A&P Pte. Ltd., Charge+ Pte. Ltd., Sunseap Group Pte. Ltd., and Oyika Pte. Ltd. dated November 10, 2021 in respect of the North-East region(1)
10.20   Deed of Confirmation and Acknowledgement by and among Primech A&P Pte. Ltd., Charge+ Pte. Ltd., Sunseap Group Pte. Ltd., and Oyika Pte. Ltd dated May 24, 2022(1)
10.21   Banking Facility dated July 20, 2022 by and between Princeston International (S) Pte. Ltd. and the Lender(1)
10.22   Banking Facility dated July 14, 2022 by and between Maint-Kleen Pte. Ltd. and the Lender(1)
10.23   Banking Facility dated July 26, 2022 by and between Primech A & P Pte. Ltd. and the Lender(1)
10.24   Term Loan Banking Facility dated June 28, 2022 by and between Primech A & P Pte. Ltd. and the Lender(1)
10.25   Term loan banking facility agreement dated December 28, 2022, by and between Primech A & P Pte. Ltd. and the Lender(1)
10.26   Supplemental letters dated February 10, 2023 and August 11, 2023 for Business Property Financing Facility dated March 30, 2021, by and between Primech A&P Pte. Ltd. and the Lender(1)
10.27   Supplemental letters dated July 26, 2022 and July 28, 2023 for Term Loan (temporary bridging loan) Agreement dated October 21, 2020 by and between Primech A&P Pte. Ltd. and the Lender(1)
10.28   Supplemental letter dated August 15, 2022 for Banking Facility dated July 20, 2018, by and between Primech A & P Pte. Ltd. and the Lender(1)
10.29   Supplemental letter dated August 18, 2022 for Banking Facility dated June 5, 2020, by and between Maint-Kleen Pte. Ltd. and the Lender(1)
10.30   Supplemental letters dated February 10, 2023 and July 28, 2023 for Banking Facility dated July 26, 2022 by and between Primech A & P Pte. Ltd. and the Lender(1)
10.31   Supplemental letter dated July 28, 2023 for Term Loan Banking Facility dated June 28, 2022 by and between Primech A & P Pte. Ltd. and the Lender(1)
10.32   Supplemental letter dated July 28, 2023 for Term loan banking facility agreement dated December 28, 2022, by and between Primech A & P Pte. Ltd. and the Lender(1)
10.33   Form of Securities Purchase Agreement*
21.1   List of Subsidiaries(2)
23.1   Consent of Weinberg & Company P.A.*
23.2   Consent of JurisAsia LLC (included in Exhibit 5.1)**
24.1   Power of Attorney (included on signature pages)
107   Filing Fee Table*

 

 

*Filed herein.
**To be filed by amendment.

 

(1)Incorporated herein by reference to Amendment No. 11 to our Registration Statement on Form F-1 (File No. 333-264036), as amended, initially filed with the SEC on September 18, 2023.

 

(2) Incorporated herein by reference to Form 20-F (File No. 001-41829), filed with the SEC on July 23, 2024

 

(b)Financial Statement Schedules

 

None.

 

Item 9.  Undertakings

 

The undersigned registrant hereby undertakes:

 

(a)(1)To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

 

i.To include any prospectus required by Section 10(a)(3) of the Securities Act;

 

ii.To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;

 

iii.To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

 

II-3

 

 

(2)That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof;

 

(3)To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

 

(4)To file a post-effective amendment to the registration statement to include any financial statements required by “Item 8.A. of Form 20-F” at the start of any delayed offering or throughout a continuous offering. Financial statements and information otherwise required by Section 10(a)(3) of the Securities Act need not be furnished, provided that the registrant includes in the prospectus, by means of a post-effective amendment, financial statements required pursuant to this paragraph (4) and other information necessary to ensure that all other information in the prospectus is at least as current as the date of those financial statements.

 

(5)That, for purposes of determining any liability under the Securities Act to any purchaser:

 

ii.Each prospectus filed by the Registrant pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

 

(6)For the purpose of determining any liability under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

 

i.Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;

 

ii.Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

 

iii.The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

 

iv.Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

 

(h)Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

 

(i)(1)That, for purposes of determining liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b) (1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

 

(2)That, for the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

 

II-4

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-1 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the Republic of Singapore, on October 16, 2024.

 

  Primech Holdings Ltd.
   
  By:

/s/ Kin Wai Ho

    Name:  Kin Wai Ho
    Title: Chief Executive Officer and Director

 

Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

 

Signature   Title   Date
         
/s/ Kin Wai Ho   Chief Executive Officer and Director   October 16, 2024
Kin Wai Ho        
         
/s/ Yew Jin Sng   Senior Vice President, Business Development and   October 16, 2024
Yew Jin Sng   Director    
         
/s/ Kit Yu Lee   Chief Financial Officer   October 16, 2024
Kit Yu Lee        
         
/s/ William Mirecki   Director   October 16, 2024
William Mirecki        
         
/s/ William Yuen   Director   October 16, 2024
William Yuen        
         
/s/ Kai Yue Jason Chan   Director   October 16, 2024
Kai Yue Jason Chan        

  

II-5

 

 

Authorized U.S. Representative

 

Pursuant to the Securities Act of 1933, as amended, the undersigned, the duly authorized representative in the United States of Primech Holdings Ltd., has signed this registration statement in New York, on October 16, 2024.

 

  Authorized U.S. Representative
Cogency Global Inc.
   
  By:

/s/ Colleen A. De Vries

    Name: Colleen A. De Vries
    Title: Senior Vice-President on behalf of
Cogency Global Inc.

 

II-6

 

+1-800 221-0102 In July 2018, Primech A&P, entered into with recourse receivables purchase (accounts receivable purchase agreement) with HSBC. Under the terms of the facility, Primech A&P agreed to sell to HSBC (“Factor”) certain customer accounts receivables due A&P. All amounts due under the terms of agreement is limited to approximately $2,968 (SGD 4,000), and is guaranteed by (a) security over receivables; (b) debentures (mortgages) over all present and future assets; and (c) an unlimited guarantee provided by certain directors. Primech A&P pays a discount charge calculated based on the SIBOR plus 3%, which charge is based on the outstanding gross amount of accounts receivable factored. The facility was renewed in September, 2021, and increased to approximately $5,900 (SGD 8,000). Th facility was further renewed in August 2022 and subject to annual review, revising the discount chart rate to the Bank’s Cost of Funds plus 3%, which charge is based on the outstanding gross amount of accounts receivable factored. The facility is subject to annual review and is due on demand. The applicable Bank’s Cost of Funds as of March 31, 2024 was 3.65%, and the total rate was 6.65%. The maturity of the each of the factored invoice is 60 days after the draw down. The bank has temporary reduced the facility limit of approximately $4,452 (SGD 6,000) in September 2023 through July 2024. In July 2020, Maint-Kleen entered into with recourse receivables purchase facility (accounts receivable purchase agreement) with HSBC. Under the terms of the facility, Maint-Kleen agreed to sell to HSBC (“Factor”) certain customer accounts receivables due A&P. All amounts due under the terms of agreement is limited to approximately $1,336 (SGD 1,800), and is guaranteed by (a) security over receivables; (b) debentures (mortgages) over all present and future assets; and (c) an unlimited guarantee provided by certain directors. Primech A&P and Maint-Kleen pays a discount charge calculated based on the SIBOR plus 3%, which charge is based on the outstanding gross amount of accounts receivable factored. The facility was renewed in August 2022 and subject to annual review, revising the discount chart rate to the Bank’s Cost of Funds plus 3%, which charge is based on the outstanding gross amount of accounts receivable factored. The facility is subject to annual review and is due on demand. The applicable Bank’s Cost of Funds as of March 31, 2024 was 3.65%, and the total rate was 6.65%. The maturity of the each of the factored invoice is 60 days after the draw down. Under the terms of the these facilities, all factored receivables are sold with recourse, which requires Primech A&P and Maint-Kleen to repurchase any receivables, if demanded, not paid on time. Accordingly, such receivables are accounted for as a secured financing arrangement and not as a sale of financial assets. At March 31, 2024 and 2023, the Company had sold to HSBC with recourse accounts receivable of approximately $8,893 (SGD 11,985) and approximately $5,527 (SGD 7,334), which are included in accounts receivable on the accompanying consolidated balance sheets. At March 31, 2024, approximately $1,805 (SGD 2,433) was available under the recourse receivables purchase facility. On April 1, 2021, the Company acquired 80% of interest of CSG Industries Pte Ltd and a term loan is among the liabilities assumed. The term loan facility was drawn down in December, 2011 amounting to approximately $346 (SGD 468). The loans bear interest at the rate 0.75% plus Commercial Financing Rate (“CFR”) (CFR was 6.11% and 6.30% at March 31, 2024 and 2023, total loan rate was 6.86% and 7.05%), payable in monthly instalments of approximately $3 (SGD 4) each, and mature in October 2026. The loan is secured by a mortgage over a property owned by CSG located in Singapore and a personal guarantee for a maximum amount of approximately $384 (SGD 530) by the minority shareholder of CSG. During the years ended March 31, 2024 and 2023, repayments of approximately $32 (SGD 43) and approximately $38 (SGD 52) was made on the term loan facility. At March 31, 2024 and 2023, approximately $61 (SGD 82) and $94 (SGD 125) was outstanding under the loan. In June 28, 2022 Primech A&P obtained one term loan facility for approximately $976 (SGD 1,400) from HSBC to finance the purchase of machinery and equipment and/or vehicles in relation to a project. The loan bears interest at the rate 3% plus Singapore Overnight Rate Average (“SORA”) per annum (SORA was 3.69% at March 31, 2024, total loan rate was 6.69%), are payable in monthly installments of approximately $20 (SGD 29) each, and mature in July 2026. The loan is secured by all present and future assets owned by Primech A&P and a joint and several guarantee for an unlimited amount by certain directors and the Parent. During the year ended March 31, 2023, approximately $976 (SGD 1,400) was drawn down, and repayments of approximately $170 (SGD 233) were made on the term loan facility. Net amount due at March 31, 2023 amounted to approximately $879 (SGD 1,167). During the year ended March 31, 2024, the Company paid down approximately $260 (SGD 350). Net amount due at March 31, 2024 amounted to approximately $606 (SGD 817). On December 28, 2022 Primech A&P obtained one term loan facility for approximately $293 (SGD 400) from HSBC to finance the purchase of machinery and equipment and/or vehicles in relation to a project. Approximately $242 (SGD 330) was drawdown on April 28, 2023. The loan bears interest at the rate 3% plus Singapore Overnight Rate Average (“SORA”) per annum (SORA was 3.69% at March 31, 2024, total loan rate was 6.69%), are payable in monthly installments of approximately $7 (SGD 9) each, and mature in April 2026. The loan is secured by all present and future assets owned by Primech A&P and a joint and several guarantee for an unlimited amount by certain directors and the Parent. Approximately $242 (SGD 330) was drawn down during the year ended March 31, 2024, and repayments of approximately $75 (SGD 101) were made on the term loan facility during the year ended March 31, 2024. 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Exhibit 1.1

 

PLACEMENT AGENCY AGREEMENT

 

FT Global Capital, Inc.

1688 Meridian Avenue, Suite 700

Miami Beach, FL 33139

[*], 2024

 

Ladies and Gentlemen:

 

This letter (this “Agreement”) constitutes the agreement between Primech Holdings Ltd. (NASDAQ: PMEC) (the “Company”) and FT Global Capital, Inc. (“FT Global” or the “Placement Agent”) pursuant to which FT Global shall serve as the placement agent for the Company, on a “best efforts” basis, in connection with the proposed offer and sale (the “Offering”) by the Company of its Securities (as defined Section 3 of this Agreement) (the “Services”). The Company expressly acknowledges and agrees that FT Global’s obligations hereunder are on a “best efforts” basis only and that the execution of this Agreement does not constitute a commitment by FT Global to purchase the Securities and does not ensure the successful placement of the Securities or any portion thereof or the success of FT Global with respect to securing any other financing on behalf of the Company.

 

1.Appointment of FT Global as Exclusive Placement Agent.

 

On the basis of the representations, warranties, covenants and agreements of the Company herein contained, and subject to all the terms and conditions of this Agreement, the Company hereby appoints the Placement Agent as its exclusive placement agent in connection with a distribution of its Shares (as defined below) and Warrants (as defined below) to be offered and sold by the Company pursuant to a registration statement filed under the Securities Act of 1933, as amended (the “Securities Act”) on Form F-1 (File No. 333-[*]) (the “Registration Statement”), and the Placement Agent agrees to act as the Company’s exclusive placement agent. Pursuant to this appointment, the Placement Agent will solicit offers for the purchase of or attempt to place all or part of the Securities of the Company in the proposed Offering. Until the final closing or upon termination of this Agreement pursuant to Section 5 hereof, the Company shall not, without the prior written consent of the Placement Agent, solicit or accept offers to purchase the Securities other than through the Placement Agent. The Placement Agent will use its “best efforts” to solicit offers to purchase the Securities from the Company on the terms, and subject to the conditions, set forth in the Prospectus (as defined below). The Placement Agent shall use commercially efforts to assist the Company in obtaining performance by each Purchaser (as defined below) whose offer to purchase Securities has been solicited by the Placement Agent, but the Placement Agent shall not, except as otherwise provided in this Agreement, be obligated to disclose the identity of any potential purchaser or have any liability to the Company in the event any such purchase is not consummated for any reason. The Company acknowledges that under no circumstances will the Placement Agent be obligated to underwrite or purchase any Securities for its own account and, in soliciting purchases of the Securities, the Placement Agent shall act solely as an agent of the Company. The Services provided pursuant to this Agreement shall be on an “agency” basis and not on a “principal” basis. Following the prior written consent of the Company, the Placement Agent may retain other brokers or dealers to act as sub-agents or selected-dealers on its behalf in connection with the Offering.

 

The Placement Agent will solicit offers for the purchase of the Securities in the Offering at such times and in such amounts as the Placement Agent deems advisable. The Company shall have the sole right to accept offers to purchase Securities and may reject any such offer, in whole or in part. The Company and Placement Agent shall negotiate the timing and terms of the Offering and acknowledge that the Offering and the provision of the Services related to the Offering are subject to market conditions and the receipt of all required related clearances and approvals.

 

 

 

 

2.Fees; Expenses; Other Arrangements.

 

A. Placement Agent’s Fee. As compensation for services rendered, the Company shall pay to the Placement Agent in cash by wire transfer in immediately available funds to an account or accounts designated by the Placement Agent an amount (the “Placement Fee”) equal to a percentage of the aggregate gross proceeds received by the Company from the sale of the Securities, at the closing of the Offering (the “Closing” and the date on which the Closing occurs, the “Closing Date”), which percentage shall be seven and one-half percent (7.5%) of the aggregate gross proceeds; and the Company shall issue to the Placement Agent or its designee(s) at the Closing a warrant to purchase such number of Shares (as defined in Section 3) equal to five percent (5%) of the Securities (as defined in Section 3) sold in this Offering at an exercise price of $[*] per Ordinary Share (as defined below), which warrant shall be exercisable in full or in part at any time beginning from the date of the commencement of sales in the Offering (the “Placement Agent Warrant” and together with the Common Shares (each as defined in Section 3) underlying the Placement Agent Warrant, the “Placement Agent Securities”). The Placement Agent may deduct from the gross proceeds of the Offering payable to the Company on the Closing Date the Placement Fee set forth herein to be paid by the Company to the Placement Agent. For the avoidance of doubt, the term of the Placement Agent Warrant shall not exceed three and one-half (3.5) years from the commencement of sales in the Offering. The Placement Agent hereby agrees that the holder of the Placement Agent Warrant will not sell, transfer, assign, pledge or hypothecate the Placement Agent Securities, nor shall any Placement Agent Securities be the subject of any hedging, short sale, derivative, put, or call transaction that would result in the effective economic disposition of the Placement Agent Securities for a period of one hundred eighty (180) days beginning on the date of the commencement of sales in the Offering in accordance with Financial Industry Regulatory Authority, Inc. (“FINRA”) Rule 5110(e)(1), except as provided for in FINRA Rule 5110(e)(2). In addition, pursuant to FINRA Rule 5110(g)(8)(A), the Placement Agent Warrants are not exercisable more than five years from the commencement of sales of the public offering and they will have anti-dilution terms that are consistent with FINRA Rule 5110(g)(8)(E) and (F).

 

B. Offering Expenses. The Company will be responsible for and will pay all expenses relating to the Offering, including, without limitation, (a) all filing fees and expenses relating to the registration of the Securities with the Commission; (b) all FINRA filing fees; (c) all fees and expenses relating to the listing of the Shares on the Nasdaq Capital Market (the “Exchange”); (d) the costs of all mailing and printing of the documents related to the Offering; (e) transfer and/or stamp taxes, if any, payable upon the transfer of Securities from the Company to Investors; (f) the fees and expenses of the Company’s accountants; (g) FT Global’s travel, due diligence and related expenses not to exceed $60,000; and (h) legal fees of FT Global’s counsel not to exceed $70,000. The Placement Agent may deduct from the gross proceeds of the Offering payable to the Company on the Closing Date the expenses set forth herein to be paid by the Company to the Placement Agent, provided, however, that in the event that the Offering is terminated, the Company agrees to reimburse the Placement Agent to the extent required by Section 5 hereof promptly after such termination.

 

C. Tail Financing. The Placement Agent shall be entitled to fees per Section 2.A. of this Agreement with respect to any public or private offering or other financing or capital-raising transaction of any kind (“Tail Financing”) to the extent that such Tail Financing is provided, directly or indirectly, to the Company or its affiliates by any persons or entities (or any entity under common management or having a common investment advisor) that the Placement Agent has introduced to the Company through an in-person, an electronic, a telephone or other form of communication or persons or entities that the Placement Agent had “wall-crossed” in connection with this Offering, if such Tail Financing is consummated at any time within the 12-month period following the termination of this Agreement. Any right to the fees provided by this paragraph shall be terminated upon termination of this Agreement by the Company for “Cause,” which shall mean a material breach by the Placement Agent of this Agreement or a material failure by the Placement Agent to provide the Services as contemplated by this Agreement. Prior to ten (10) days after termination or expiration of this Agreement, the Placement Agent will provide by electronic mail a written list of such persons or entities that the Placement Agent had introduced to the Company or “wall-crossed” in connection with this Offering during the term of this Agreement, which list shall be deemed to include entities under common management or having a common investment advisor with the entities included on such list. Notwithstanding the foregoing, no fees per Section 2.A. of this Agreement shall be payable for persons or entities that were sourced by the Company and not by the Placement Agent. Notwithstanding anything to the contrary contained in this subsection (C), the Company has the right to terminate this Agreement for cause in compliance with FINRA Rule 5110(g)(5)(B). The exercise of such right of termination for cause eliminates the Company’s obligations with respect to the provisions of this subsection.

 

2

 

 

D. Right of First Refusal. If the Offering is completed as contemplated in and during the Term of this Agreement, the Company agrees that the Placement Agent shall have an irrevocable right of first refusal for a period of twelve (12) months from the expiration of the Term of this Agreement to act as lead and book running manager or minimally co-lead manager and co-book runner and/or co-lead placement agent with no less than 70% of the economics, for any and all future public or private equity or equity-linked offerings (excluding commercial bank debt), whether with or without or through an underwriter, placement agent or broker-dealer and whether pursuant to registration under the Securities Act or otherwise, during such twelve (12) month period of the Company, or any successor to or any subsidiary of the Company. The Company and any such Subsidiary or successor will consult the Placement Agent with regard to any such proposed financing. If the Placement Agent fails to accept such offer within three (3) business days after the provision of a notice containing the material terms of the proposed financing proposal, then the Placement Agent shall have no further claim or right with respect to the financing proposal contained in such notice. If, however, the terms of such financing proposal are subsequently modified in any material respect, the irrevocable right referred to herein shall apply to such modified proposal as if the original proposal had not been made. If the Placement Agent decides to accept any such engagement, the agreement governing such engagement will contain, among other things, provisions for reasonable and customary fees for transactions of similar size and nature; provided, however, that in no event shall the Placement Agent’s fee be no less than the fee set forth Section 1(A) above. The Placement Agent’s failure to exercise its preferential right with respect to any particular proposal shall not affect its preferential rights relative to future proposals.

 

D. The term of the Placement Agent’s exclusive engagement will be as provided in that certain Engagement Agreement dated March 20, 2024 between the Company and the Placement Agent (the “Engagement Agreement”). Notwithstanding anything to the contrary contained herein, the provisions concerning confidentiality, indemnification and contribution contained herein and the Company’s obligations contained in the indemnification provisions will survive any expiration or termination of this Agreement, and the Company’s obligation to pay fees actually earned and payable and to reimburse expenses actually incurred and reimbursable pursuant to Section 1 hereof and which are permitted to be reimbursed under FINRA Rule 5110(g)(4), will survive any expiration or termination of this Agreement. Nothing in this Agreement shall be construed to limit the ability of the Placement Agent or its Affiliates to pursue, investigate, analyze, invest in, or engage in investment banking, financial advisory or any other business relationship with Persons (as defined below) other than the Company. As used herein (i) “Persons” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind and (ii) “Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person as such terms are used in and construed under Rule 405 under the Securities Act of 1933, as amended (the “Securities Act”).

 

E. The Services provided by the Placement Agent hereunder are solely for the benefit of the Company and are not intended to confer any rights upon any persons or entities not a party hereto (including, without limitation, securityholders, employees or creditors of the Company) as against the Placement Agent or its directors, officers, agents and employees.

 

3.Description of the Offering.

 

The Securities to be offered directly to various investors (each, an “Investor” or “Purchaser” and, collectively, the “Investors” or the “Purchasers”) pursuant to the Securities Purchase Agreement dated on or about the date hereof between the Company and the Investors (the “Securities Purchase Agreement”) shall consist of shares (the “Shares”) of the Company’s ordinary shares, no par value, (the “Ordinary Shares”), and certain warrants to purchase Shares (the “Warrants,” and collectively with the Shares and the Shares underlying the Warrants (the “Warrant Shares”), the “Securities”). The purchase price for one Share and accompanying Warrant to purchase [*] Shares shall be $[*] per unit of Securities (the “Purchase Price”). The Warrants shall have a term of [__] years from the date of issuance and an exercise price equal to $[__]. If the Company shall default in its obligations to deliver Securities to a Purchaser whose offer it has accepted and who has tendered payment, the Company shall indemnify and hold the Placement Agent harmless against any loss, claim, damage or expense arising from or as a result of such default by the Company under this Agreement.

 

4.Delivery and Payment; Closing.

 

Settlement of the Securities purchased by an Investor shall be made as set forth in the Securities Purchase Agreement. On the Closing Date, the Securities to which the Closing relates shall be delivered through such means as the parties to the Securities Purchase Agreement may hereafter agree. The Securities shall be registered in such name or names and in such authorized denominations as set forth in the Securities Purchase Agreement. The term “Business Day” means any day other than a Saturday, a Sunday, a legal holiday or a day on which banking institutions are authorized or obligated by law to close in New York, New York.

 

 

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5.Term and Termination of Agreement.

 

The term of this Agreement will commence upon the execution of this Agreement and will terminate on the tenth Business Day after the execution of this Agreement. Notwithstanding anything to the contrary contained herein, any provision in this Agreement concerning or relating to confidentiality, indemnification, contribution, advancement, the Company’s representations and warranties and the Company’s obligations to pay fees, including without limitation as set forth in Sections 2(C) and (D) above, and reimburse expenses will survive any expiration or termination of this Agreement. If any condition specified in Section 8 is not satisfied when and as required to be satisfied, this Agreement may be terminated by the Placement Agent by notice to the Company at any time on or prior to a Closing Date, which termination shall be without liability on the part of any party to any other party, except that those portions of this Agreement specified in Section 19 shall at all times be effective and shall survive such termination. Furthermore, the parties agree that the Engagement Agreement between the Company and the Placement Agent, shall continue to be effective and the terms therein shall continue to survive and be enforceable by the Placement Agent in accordance with its terms, including, without limitation, Sections 2 and 7 therein, notwithstanding the termination of this Agreement in accordance of this Section.

 

6.Permitted Acts.

 

Nothing in this Agreement shall be construed to limit the ability of the Placement Agent, its officers, directors, employees, agents, associated persons and any individual or entity “controlling,” “controlled by,” or “under common control” with the Placement Agent (as those terms are defined in Rule 405 under the Securities Act) to conduct its business including without limitation the ability to pursue, investigate, analyze, invest in, or engage in investment banking, financial advisory or any other business relationship with any individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

 

7.Representations, Warranties and Covenants of the Company.

 

As of the date and time of the execution of this Agreement, the Closing Date and the Applicable Time (as defined herein), the Company (i) makes such representations and warranties to the Placement Agent as the Company makes to the Investors pursuant to the Securities Purchase Agreement, and (ii) further represents, warrants and covenants to the Placement Agent, other than as disclosed in Prospectus (as defined below) or in any of its filings with the Securities and Exchange Commission (the “Commission”) that are incorporated by reference into the Registration Statement (as defined below), that:

 

A. Registration Matters. The Company has filed with the Securities and Exchange Commission (the “Commission”) the Registration Statement under the Securities Act, which was filed on [*], 2024 and declared effective on [*], 2024 for the registration of the Securities under the Securities Act. Following the determination of pricing among the Company and the prospective Investors introduced to the Company by the Placement Agent, the Company will file with the Commission pursuant to Rule 424(b) under the Securities Act, and the rules and regulations (the “Rules and Regulations”) of the Commission promulgated thereunder, a prospectus relating to the placement of the Securities, their respective pricing and the plan of distribution thereof and will advise the Placement Agent of all further information (financial and other) with respect to the Company required to be set forth therein. Such registration statement, at any given time, including the exhibits thereto filed at such time, as amended at such time, is hereinafter called the “Registration Statement”; such prospectus in the form in which it appears in the Registration Statement at the time of effectiveness, together with any preliminary prospectus relating to the Offering, if any (the “Preliminary Prospectus”); and the final prospectus, in the form in which it will be filed with the Commission pursuant to Rule 424(b) is hereinafter called the “Final Prospectus.” The Registration Statement at the time it originally became effective is hereinafter called the “Registration Statement.” Any reference in this Agreement to the Registration Statement, the Preliminary Prospectus, if any or the Final Prospectus shall be deemed to refer to and include the documents incorporated by reference therein (the “Incorporated Documents”), if any, which were or are filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), at any given time, as the case may be; and any reference in this Agreement to the terms “amend,” “amendment” or “supplement” with respect to the Registration Statement, the Preliminary Prospectus or the Final Prospectus shall be deemed to refer to and include the filing of any document under the Exchange Act after the date of this Agreement, or the issue date of the Preliminary Prospectus or the Final Prospectus, as the case may be, deemed to be incorporated therein by reference. All references in this Agreement to financial statements and schedules and other information which is “contained,” “included,” “described,” “referenced,” “set forth” or “stated” in the Registration Statement, the Preliminary Prospectus or the Final Prospectus (and all other references of like import) shall be deemed to mean and include all such financial statements and schedules and other information which is or is deemed to be incorporated by reference in the Registration Statement, the Preliminary Prospectus or the Final Prospectus, as the case may be. As used in this paragraph and elsewhere in this Agreement, “Applicable Time” means [●]:00 p.m., Eastern time, on the date of this Agreement. “Time of Sale Disclosure Package” means as of the Applicable Time, the Registration Statement, the Preliminary Prospectus, the Final Prospectus any securities purchase agreement between the Company and the Investors, and any issuer free writing prospectus as defined in Rule 433 of the Act (each, an “Issuer Free Writing Prospectus”), if any, that the parties hereto shall hereafter expressly agree in writing to treat as part of the Time of Sale Disclosure Package. The term “any Prospectus” shall mean, as the context requires, the Final Prospectus, and any supplement to either thereof. The Company has not received any notice that the Commission has issued or intends to issue a stop order suspending the effectiveness of the Registration Statement or the use of the Final Prospectus or intends to commence a proceeding for any such purpose.

 

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B. Stock Exchange Listing. The Common Shares are approved for listing on the Exchange and the Company has taken no action designed to, or likely to have the effect of, delisting the Shares from the Exchange, nor has the Company received any notification that the Exchange is contemplating terminating such listing.

 

C. No Stop Orders, etc. Neither the Commission nor, to the Company’s knowledge, any state regulatory authority has issued any order preventing or suspending the use of the Registration Statement, any Preliminary Prospectus or the Prospectus or has instituted or, to the Company’s knowledge, threatened to institute, any proceedings with respect to such an order. The Company has complied with each request (if any) from the Commission for additional information.

 

D. Disclosures in Registration Statement.

 

i. Compliance with Securities Act and 10b-5 Representation. The Registration Statement, as amended, (and any further documents to be filed with the Commission) contains all exhibits and schedules as required by the Securities Act. Each of the Registration Statement and any post-effective amendment thereto, at the time it became effective, complied in all material respects with the Securities Act and the applicable Rules and Regulations and did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. The Registration Statement, the Preliminary Prospectus, and the Final Prospectus, each as of its respective date, comply or will comply in all material respects with the Securities Act and the applicable Rules and Regulations. Each of the Registration Statement, the Preliminary Prospectus, and the Final Prospectus, as amended or supplemented, did not and will not contain as of the date thereof any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The Incorporated Documents, if any, when they were filed with the Commission, conformed in all material respects to the requirements of the Exchange Act and the applicable Rules and Regulations promulgated thereunder, and none of such documents, when they were filed with the Commission, contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein (with respect to Incorporated Documents incorporated by reference in the Registration Statement, the Preliminary Prospectus, and the Final Prospectus), in light of the circumstances under which they were made not misleading. No post-effective amendment to the Registration Statement reflecting any facts or events arising after the date thereof which represent, individually or in the aggregate, a fundamental change in the information set forth therein is required to be filed with the Commission. There are no documents required to be filed with the Commission in connection with the transaction contemplated hereby that (x) have not been filed as required pursuant to the Securities Act or (y) will not be filed within the requisite time period. There are no contracts or other documents required to be described in the Registration Statement, the Preliminary Prospectus, and the Final Prospectus, or to be filed as exhibits or schedules to the Registration Statement, which have not been described or filed as required. Neither the Company nor any of its directors and officers has distributed and none of them will distribute, prior to each Closing Date, any offering material in connection with the offering and sale of the Securities other than the Registration Statement, the Preliminary Prospectus, and the Final Prospectus, copies of the documents incorporated by reference therein and any other materials permitted by the Securities Act

 

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ii. Neither the Prospectus nor any amendment or supplement thereto, as of its issue date, at the time of any filing with the Commission pursuant to Rule 424(b), or at the Closing Date, included, includes or will include an untrue statement of a material fact or omitted, omits or will omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to the Placement Agent’s Information.

 

iii. Disclosure of Agreements. The Incorporated Documents, when they were filed with the Commission, conformed in all material respects to the requirements of the Exchange Act and the applicable Rules and Regulations, and none of such documents, when they were filed with the Commission, contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein (with respect to Incorporated Documents incorporated by reference in the Preliminary Prospectus or Final Prospectus), in the light of the circumstances under which they were made not misleading; and any further documents so filed and incorporated by reference in the Registration Statement, the Preliminary Prospectus, or the Final Prospectus, when such documents are filed with the Commission, will conform in all material respects to the requirements of the Exchange Act and the applicable Rules and Regulations, as applicable, and will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. Each agreement or other instrument (however characterized or described) to which the Company is a party or by which it is or may be bound or affected and (i) that is referred to in the Registration Statement, the Preliminary Prospectus and the Final Prospectus, and (ii) is material to the Company’s business, has been duly authorized and validly executed by the Company, is in full force and effect in all material respects and is enforceable against the Company and, to the Company’s knowledge, the other parties thereto, in accordance with its terms, except (x) as such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally, (y) as enforceability of any indemnification or contribution provision may be limited under the federal and state securities laws, and (z) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to the equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. None of such agreements or instruments has been assigned by the Company, and neither the Company nor, to the Company’s knowledge, any other party is in default thereunder and, to the Company’s knowledge, no event has occurred that, with the lapse of time or the giving of notice, or both, would constitute a default thereunder, except as disclosed in the Registration Statement, the Preliminary Prospectus, and the Final Prospectus. To the Company’s knowledge, performance by the Company of the material provisions of such agreements or instruments will not result in a violation of any existing applicable law, rule, regulation, judgment, order or decree of any governmental agency or court, domestic or foreign, having jurisdiction over the Company or any of its assets or businesses, including, without limitation, those relating to environmental laws and regulations.

 

iv. Changes After Dates in Registration Statement.

 

(a) No Material Adverse Change. Since the respective dates as of which information is given in the Registration Statement and the Prospectus, except as otherwise specifically stated therein: (i) there has been no material adverse change in the financial position or results of operations of the Company, nor any change or development that, singularly or in the aggregate, would involve a material adverse change, in or affecting the condition (financial or otherwise), results of operations, business, assets or prospects of the Company (a “Material Adverse Change”); (ii) there have been no material transactions entered into by the Company, other than as contemplated pursuant to this Agreement; and (iii) no officer or director of the Company has resigned from any position with the Company.

 

(b) Recent Securities Transactions, etc. Subsequent to the respective dates as of which information is given in the Registration Statement, the Preliminary Prospectus, and the Final Prospectus, and except as may otherwise be indicated or contemplated herein or disclosed in the Registration Statement, the Preliminary Prospectus, and the Final Prospectus, the Company has not: (i) issued any securities (other than (i) grants under any share compensation plan and (ii) Ordinary Shares issued upon the exercise or conversion of option, warrants or convertible securities described in the Registration Statement, the Time of Sale Disclosure Package and the Final Prospectus) or incurred any liability or obligation, direct or contingent, for borrowed money; or (ii) declared or paid any dividend or made any other distribution on or in respect to its capital stock.

 

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E. Transactions Affecting Disclosure to FINRA.

 

i. Finder’s Fees. There are no claims, payments, arrangements, agreements or understandings relating to the payment of a finder’s, consulting or origination fee by the Company or any executive officer or director of the Company with respect to the sale of the Securities hereunder or any other arrangements, agreements or understandings of the Company or, to the Company’s knowledge, any of its stockholders.

 

ii. Payments Within Twelve (12) Months. The Company has not made any direct or indirect payments (in cash, securities or otherwise) to: (i) any person, as a finder’s fee, consulting fee or otherwise, in consideration of such person raising capital for the Company or introducing to the Company persons who raised or provided capital to the Company; (ii) any FINRA member; or (iii) any person or entity that has any direct or indirect affiliation or association with any FINRA member, within the twelve (12) months prior to the date hereof, other than the payment to the Placement Agent as provided hereunder in connection with the Offering.

 

iii. Use of Proceeds. None of the net proceeds of the Offering will be paid by the Company to any participating FINRA member or its affiliates, except as specifically authorized herein.

 

iv. FINRA Affiliation. There is no (i) officer or director of the Company, (ii) to the Company’s knowledge, beneficial owner of 10% or more of any class of the Company’s securities or (iii) to the Company’s knowledge, beneficial owner of the Company’s unregistered equity securities which were acquired during the 180-day period immediately preceding the filing of the Registration Statement that is an affiliate or associated person of a FINRA member participating in the Offering (as determined in accordance with the rules and regulations of FINRA).

 

F. Integration. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause the Offering to be integrated with prior offerings by the Company for purposes of the Securities Act that would require the registration of any such securities under the Securities Act.

 

G. Restriction on Sales of Capital Stock. The Company, on behalf of itself and any successor entity, agrees that it will not, for a period of ninety (90) days after the date of the final prospectus (the “Lock-Up Period”), without the prior written consent of the Placement Agent (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of capital stock of the Company or any securities convertible into or exercisable or exchangeable for shares of capital stock of the Company; (ii) file or cause to be filed any registration statement with the Commission relating to the offering of any shares of capital stock of the Company or any securities convertible into or exercisable or exchangeable for shares of capital stock of the Company, other than (i) those already contractually agreed to with other parties prior to the date of the Engagement Agreement pursuant to a registration statement on Form S-8 for employee benefit plans; or (iii) publicly announce an intention to effect any transaction specified in clause (i) or (ii). The restrictions contained in this section shall not apply to (i) the issuance by the Company of Ordinary Shares upon the exercise of stock options, warrants or the conversion of a security, in each case, that is outstanding on the date hereof or issued in the Offering, provided that such securities have not been amended since the date hereof to increase the number of such securities or to decrease the exercise price, exchange price or conversion price of such securities (other than in connection with share splits or combinations) or to extend the term of such securities; (ii) the grant by the Company of stock options or other stock-based awards, or the issuance of shares of capital stock of the Company under any stock compensation plan of the Company in effect on the date hereof; and (iii) securities issued pursuant to acquisitions or strategic transactions approved by a majority of the disinterested directors of the Company, provided that such securities are issued as “restricted securities” (as defined in Rule 144 under the Securities Act) and carry no registration rights that require or permit the filing of any registration statement in connection therewith during the Lock-Up Period, and provided that any such issuance shall only be to a person (or to the equityholders of a person) which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with the current business of the Company at such time and shall provide to the Company additional benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities.

 

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H. Lock-Up Agreements. The Company has caused each of its officers, directors and beneficial owners of 5% or more of any class of the Company’s securities to deliver to the Placement Agent an executed Lock-Up Agreement, in the form attached as Exhibit A hereto (the “Lock-Up Agreement”).

 

8.Conditions of the Obligations of the Placement Agent.

 

The obligations of the Placement Agent hereunder shall be subject to the accuracy of the representations and warranties on the part of the Company set forth in Section 7 hereof, in each case as of the date hereof and as of the Closing Date as though then made, to the timely performance by each of the Company of its covenants and other obligations hereunder on and as of such dates, and to each of the following additional conditions: 

 

A. Regulatory Matters.

 

i. Effectiveness of Registration Statement; Rule 424 Information. The Registration Statement is effective on the date of this Agreement, and, on the Closing Date no stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto has been issued under the Securities Act, no order preventing or suspending the use of any Preliminary Prospectus or the Prospectus has been issued and no proceedings for any of those purposes have been instituted or are pending or, to the Company’s knowledge, contemplated by the Commission. The Company has complied with each request (if any) from the Commission for additional information. All filings with the Commission required by Rule 424 under the Securities Act to have been filed by the Closing Date shall have been made within the applicable time period prescribed for such filing by Rule 424.

 

ii. FINRA Clearance. On or before the Closing Date, the Placement Agent shall have received clearance from FINRA as to the amount of compensation allowable or payable to the Placement Agent as described in the Registration Statement.

 

iii. Listing of Additional Shares. On or before the Closing Date, the Company shall have filed a notice with the Exchange with respect to the Company’s additional listing of the securities sold in the Offering.

 

B. Company Counsel Matters. On the Closing Date, the Placement Agent shall have received the favorable opinion and negative assurance letter of Loeb and Loeb, LLP, and favorable opinions of JurisAsia LLC , outside counsel for the Company, or of other counsels reasonably satisfactory to the Placement Agent, in each case dated the Closing Date and addressed to the Placement Agent, and in each case substantially in form and substance reasonably satisfactory to the Placement Agent.

 

C. Comfort Letter. The Placement Agent shall have received letters dated the date of this Agreement and the Closing Date, each in form and substance satisfactory to the Placement Agent, from the Company’s independent public accountants, containing statements and information of the type ordinarily included in accountants’ “comfort letters” with respect to the financial statements and certain financial information contained in the Registration Statement and Prospectus.

 

D. Officers’ Certificate. On the Closing Date, the Placement Agent shall have received a certificate of the chief executive officer and chief financial officer of the Company, dated the Closing Date, to the effect that, (i) such officers have carefully examined the Registration Statement, the Disclosure Package, any Issuer Free Writing Prospectus and the Prospectus and, in their opinion, the Registration Statement and each amendment thereto, as of the Applicable Time and through the Closing Date did not include any untrue statement of a material fact and did not omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and the Disclosure Package, as of the Applicable Time through the Closing Date, any Issuer Free Writing Prospectus as of its date and as of the Closing Date, the Prospectus and each amendment or supplement thereto, as of the respective date thereof and as of the Closing Date, did not include any untrue statement of a material fact and did not omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances in which they were made, not misleading; and (ii) as of the Closing Date the representations and warranties of the Company contained herein and in the Securities Purchase Agreement were and are accurate in all material respects, and that the obligations to be performed by the Company hereunder have been fully performed in all material respects.

 

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E. Secretary’s Certificate. On the Closing Date, the Placement Agent shall have received from the Company a certificate of the corporate secretary of the Company, dated the Closing Date, certifying to the organizational documents of the Company, good standing in the jurisdiction of formation of the Company and board resolutions authorizing the Offering of the Securities.

 

F. Intentionally deleted.

 

G. No Material Changes. Prior to and on the Closing Date: (i) there shall have been no Material Adverse Change or development involving a prospective Material Adverse Change in the condition or prospects or the business activities, financial or otherwise, of the Company from the latest dates as of which such condition is set forth in the Registration Statement, the Disclosure Package and the Prospectus; (ii) no action, suit or proceeding, at law or in equity, shall have been pending or threatened against the Company or any affiliates of the Company before or by any court or federal or state commission, board or other administrative agency wherein an unfavorable decision, ruling or finding may materially adversely affect the business, operations, prospects or financial condition or income of the Company, except as set forth in the Registration Statement, the Disclosure Package and the Prospectus; (iii) no stop order shall have been issued under the Securities Act and no proceedings therefor shall have been initiated or threatened by the Commission; and (iv) the Registration Statement, the Disclosure Package and the Prospectus and any amendments or supplements thereto shall contain all material statements which are required to be stated therein in accordance with the Securities Act and the Securities Act Regulations and shall conform in all material respects to the requirements of the Securities Act and the Securities Act Regulations, and neither the Registration Statement, the Disclosure Package nor the Prospectus nor any amendment or supplement thereto shall contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

 

H. Delivery of Agreements.

 

(i) Lock-Up Agreements. On or before the Closing Date, the Company shall have delivered to the Placement Agent executed copies of the Lock-Up Agreement from each of the Company’s officers, directors and beneficial owners of 5% or more of any class of the Company’s securities.

 

(ii) Placement Agent Warrant. On the Closing Date, the Company shall have delivered to the Placement Agent an executed copy or copies of the Placement Agent Warrant(s) in such designations as requested by the Placement Agent.

 

I. Additional Documents. At the Closing Date, Placement Agent’s counsel shall have been furnished with such documents and opinions as they may require in order to evidence the accuracy of any of the representations or warranties, or the fulfillment of any of the conditions, herein contained; and all proceedings taken by the Company in connection with the issuance and sale of the Securities as herein contemplated shall be satisfactory in form and substance to the Placement Agent and Placement Agent’s counsel.

 

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9.Indemnification and Contribution; Procedures. 

 

A. Indemnification of the Placement Agent. The Company agrees to indemnify and hold harmless the Placement Agent, its affiliates and each person controlling such Placement Agent (within the meaning of Section 15 of the Securities Act), and the directors, officers, agents and employees of the Placement Agent, its affiliates and each such controlling person (the Placement Agent, and each such entity or person hereafter is referred to as an “Indemnified Person”) from and against any losses, claims, damages, judgments, assessments, costs and other liabilities (collectively, the “Liabilities”), and shall reimburse each Indemnified Person for all fees and expenses (including the reasonable fees and expenses of counsel for the Indemnified Persons, except as otherwise expressly provided in this Agreement) (collectively, the “Expenses”) incurred by an Indemnified Person in investigating, preparing, pursuing or defending any actions, whether or not any Indemnified Person is a party thereto, arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in (i) the Registration Statement, the Disclosure Package, the Preliminary Prospectus, the Prospectus or in any Issuer Free Writing Prospectus (as from time to time each may be amended and supplemented); (ii) any materials or information provided to investors by, or with the approval of, the Company in connection with the marketing of the Offering, including any “road show” or investor presentations made to investors by the Company (whether in person or electronically); or (iii) any application or other document or written communication (in this Section 9, collectively called “application”) executed by the Company or based upon written information furnished by the Company in any jurisdiction in order to qualify the Securities under the securities laws thereof or filed with the Commission, any state securities commission or agency, any national securities exchange; or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, unless such statement or omission was made in reliance upon, and in conformity with, the Placement Agent’s information. The Company also agrees to reimburse each Indemnified Person for all Expenses as they are incurred in connection with such Indemnified Person’s enforcement of his or its rights under this Agreement. Each Indemnified Person is an intended third party beneficiary with the same rights to enforce the indemnification that each Indemnified Person would have if he was a party to this Agreement. The Company agrees to reimburse such expenses incurred by an Indemnified Person pursuant to which indemnity may be sought hereunder within thirty (30) days after receipt by the Company of a statement requesting such reimbursement from time to time, whether prior to or after final disposition of any proceeding.

 

B. Procedure. Upon receipt by an Indemnified Person of actual notice of an action against such Indemnified Person with respect to which indemnity may reasonably be expected to be sought under this Agreement, such Indemnified Person shall promptly notify the Company in writing; provided that failure by any Indemnified Person so to notify the Company shall not relieve the Company from any obligation or liability which the Company may have on account of this Section 9 or otherwise to such Indemnified Person, except to the extent (and only to the extent) that its ability to assume the defense of any such action (as contemplated in the next sentence) is actually impaired by such failure or delay. The Company shall, if requested by the Placement Agent, assume the defense of any such action (including the employment of counsel reasonably satisfactory to the Placement Agent). Any Indemnified Person shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person unless: (i) the Company has failed promptly to assume the defense and employ counsel for the benefit of the Placement Agent and the other Indemnified Persons or (ii) such Indemnified Person shall have been advised that in the opinion of counsel that there is an actual or potential conflict of interest that prevents (or makes it imprudent for) the counsel engaged by the Company for the purpose of representing the Indemnified Person, to represent both such Indemnified Person and any other person represented or proposed to be represented by such counsel, it being understood, however, that the Company shall not be liable for the expenses of more than one separate counsel (together with local counsel), representing the Placement Agent and all Indemnified Persons who are parties to such action. The Company shall not be liable for any settlement of any action effected without its written consent (which shall not be unreasonably withheld). In addition, the Company shall not, without the prior written consent of the Placement Agent, settle, compromise or consent to the entry of any judgment in or otherwise seek to terminate any pending or threatened action in respect of which advancement, reimbursement, indemnification or contribution may be sought hereunder (whether or not such Indemnified Person is a party thereto) unless such settlement, compromise, consent or termination (i) includes an unconditional release of each Indemnified Person, acceptable to such Indemnified Party, from all Liabilities arising out of such action for which indemnification or contribution may be sought hereunder and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of any Indemnified Person. The advancement, reimbursement, indemnification and contribution obligations of the Company required hereby shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as every Liability and Expense is incurred and is due and payable, and in such amounts as fully satisfy each and every Liability and Expense as it is incurred (and in no event later than 30 days following the date of any invoice therefor).

 

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C. Indemnification of the Company. The Placement Agent agrees to indemnify and hold harmless the Company, its directors, its officers who signed the Registration Statement and persons who control the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act against any and all Liabilities, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions made in the Registration Statement, any Preliminary Prospectus, the Disclosure Package or Prospectus or any amendment or supplement thereto, in reliance upon, and in strict conformity with, the Placement Agent’s Information. In case any action shall be brought against the Company or any other person so indemnified based on any Preliminary Prospectus, the Registration Statement, the Disclosure Package or Prospectus or any amendment or supplement thereto, and in respect of which indemnity may be sought against the Placement Agent, the Placement Agent shall have the rights and duties given to the Company, and the Company and each other person so indemnified shall have the rights and duties given to the Placement Agent by the provisions of Section 9.B. The Company agrees promptly to notify the Placement Agent of the commencement of any litigation or proceedings against the Company or any of its officers, directors or any person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, in connection with the issuance and sale of the Securities or in connection with the Registration Statement, the Disclosure Package, the Prospectus or any Issuer Free Writing Prospectus, provided, that failure by the Company so to notify the Placement Agent shall not relieve the Placement Agent from any obligation or liability which the Placement Agent may have on account of this Section 9.C. or otherwise to the Company, except to the extent the Placement Agent is materially prejudiced as a proximate result of such failure.

 

D. Contribution. In the event that a court of competent jurisdiction makes a finding that indemnity is unavailable to any indemnified person, then each indemnifying party shall contribute to the Liabilities and Expenses paid or payable by such indemnified person in such proportion as is appropriate to reflect (i) the relative benefits to the Company, on the one hand, and to the Placement Agent and any other Indemnified Person, on the other hand, of the matters contemplated by this Agreement or (ii) if the allocation provided by the immediately preceding clause is not permitted by applicable law, not only such relative benefits but also the relative fault of the Company, on the one hand, and the Placement Agent and any other Indemnified Person, on the other hand, in connection with the matters as to which such Liabilities or Expenses relate, as well as any other relevant equitable considerations; provided that in no event shall the Company contribute less than the amount necessary to ensure that all Indemnified Persons, in the aggregate, are not liable for any Liabilities and Expenses in excess of the amount of commissions actually received by the Placement Agent pursuant to this Agreement. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand or the Placement Agent on the other and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Placement Agent agree that it would not be just and equitable if contributions pursuant to this subsection (D) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to above in this subsection (D). For purposes of this paragraph, the relative benefits to the Company, on the one hand, and to the Placement Agent on the other hand, of the matters contemplated by this Agreement shall be deemed to be in the same proportion as: (a) the total value received by the Company in the Offering, whether or not such Offering is consummated, bears to (b) the commissions paid to the Placement Agent under this Agreement. Notwithstanding the above, no person guilty of fraudulent misrepresentation within the meaning of Section 11(f) of the Securities Act shall be entitled to contribution from a party who was not guilty of fraudulent misrepresentation.

 

E. Limitation. The Company also agrees that no Indemnified Person shall have any liability (whether direct or indirect, in contract or tort or otherwise) to the Company for or in connection with advice or services rendered or to be rendered by any Indemnified Person pursuant to this Agreement, the transactions contemplated thereby or any Indemnified Person’s actions or inactions in connection with any such advice, services or transactions, except to the extent that a court of competent jurisdiction has made a finding that Liabilities (and related Expenses) of the Company have resulted primarily from such Indemnified Person’s gross negligence or willful misconduct in connection with any such advice, actions, inactions or services.

 

F. Survival. The advancement, reimbursement, indemnity and contribution obligations set forth in this Section 9 shall remain in full force and effect regardless of any termination of, or the completion of any Indemnified Person’s services under or in connection with, this Agreement. Each Indemnified Person is an intended third-party beneficiary of this Section 9, and has the right to enforce the provisions of Section 9 as if he/she/it was a party to this Agreement.

 

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10.Limitation of FT Global’s Liability to the Company.

 

FT Global and the Company further agree that neither FT Global nor any of its affiliates or any of their respective officers, directors, controlling persons (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act), employees or agents shall have any liability to the Company, its security holders or creditors, or any person asserting claims on behalf of or in the right of the Company (whether direct or indirect, in contract or tort, for an act of negligence or otherwise) for any losses, fees, damages, liabilities, costs, expenses or equitable relief arising out of or relating to this Agreement or the Services rendered hereunder, except for losses, fees, damages, liabilities, costs or expenses that arise out of or are based on any action of or failure to act by FT Global and that are finally judicially determined to have resulted solely from the gross negligence or willful misconduct of FT Global.

 

11.Limitation of Engagement to the Company.

 

The Company acknowledges that FT Global has been retained only by the Company, that FT Global is providing services hereunder as an independent contractor (and not in any fiduciary or agency capacity) and that the Company’s engagement of FT Global is not deemed to be on behalf of, and is not intended to confer rights upon, any shareholder, owner or partner of the Company or any other person not a party hereto as against FT Global or any of its affiliates, or any of its or their respective officers, directors, controlling persons (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act), employees or agents. Unless otherwise expressly agreed in writing by FT Global, no one other than the Company is authorized to rely upon any statement or conduct of FT Global in connection with this Agreement. The Company acknowledges that any recommendation or advice, written or oral, given by FT Global to the Company in connection with FT Global’s engagement is intended solely for the benefit and use of the Company’s management and directors in considering a possible Offering, and any such recommendation or advice is not on behalf of, and shall not confer any rights or remedies upon, any other person or be used or relied upon for any other purpose. FT Global shall not have the authority to make any commitment binding on the Company. The Company, in its sole discretion, shall have the right to reject any investor introduced to it by FT Global. If any purchase agreement and/or related transaction documents are entered into between the Company and the investors in the Offering, FT Global will be entitled to rely on the representations, warranties, agreements and covenants of the Company contained in any such purchase agreement and related transaction documents as if such representations, warranties, agreements and covenants were made directly to FT Global by the Company.

 

12.Amendments and Waivers.

 

No supplement, modification or waiver of this Agreement shall be binding unless executed in writing by the party to be bound thereby. The failure of a party to exercise any right or remedy shall not be deemed or constitute a waiver of such right or remedy in the future. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision hereof (regardless of whether similar), nor shall any such waiver be deemed or constitute a continuing waiver unless otherwise expressly provided.

 

13.Confidentiality.

 

In the event of the consummation or public announcement of any Offering, FT Global shall have the right to disclose its participation in such Offering, including, without limitation, the placement at its cost of “tombstone” advertisements in financial and other newspapers and journals. FT Global agrees not to use any confidential information concerning the Company provided to FT Global by the Company for any purposes other than those contemplated under this Agreement.

 

14.Headings.

 

The headings of the various sections of this Agreement have been inserted for convenience of reference only and will not be deemed to be part of this Agreement.

 

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15.Counterparts.

 

This Agreement may be executed in one or more counterparts and, if executed in more than one counterpart, the executed counterparts shall each be deemed to be an original and all such counterparts shall together constitute one and the same instrument. The words “execution,” “signed” and “signature” and words of like import in this Agreement and all documents relating thereto, shall (to the extent permissible under governing documents) include images of manually executed signatures transmitted by facsimile or other electronic format (including, without limitation, “pdf,” “tif” or “jpg”) and other electronic signatures (including, without limitation, DocuSign and AdobeSign). The use of electronic signatures and electronic records (including, without limitation, any contract or other record created, generated, sent, communicated, received or stored by electronic means) shall be of the same legal effect, validity and enforceability as a manually executed signature or use of a paper-based record-keeping system to the fullest extent permitted by applicable law, including, without limitation, the Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act and any other applicable law.

 

16.Severability.

 

The invalidity, illegality or unenforceability of any section, paragraph or provision of this Agreement shall not affect the validity, legality or enforceability of any other section, paragraph or provision hereof. If any Section, paragraph or provision of this Agreement is for any reason determined to be invalid, illegal or unenforceable, there shall be deemed to be made such minor changes (and only such minor changes) as are necessary to make it valid and enforceable.

 

17.Use of Information.

 

The Company will furnish FT Global such written information as FT Global reasonably requests in connection with the performance of its services hereunder. The Company understands, acknowledges and agrees that, in performing its services hereunder, FT Global will use and rely entirely upon such information as well as publicly available information regarding the Company and other potential parties to an Offering and that FT Global does not assume responsibility for independent verification of the accuracy or completeness of any information, whether publicly available or otherwise furnished to it, concerning the Company or otherwise relevant to an Offering, including, without limitation, any financial information, forecasts or projections considered by FT Global in connection with the provision of its services.

 

18.Absence of Fiduciary Relationship.

 

The Company acknowledges and agrees that: (a) the Placement Agent has been retained solely to act as Placement Agent in connection with the sale of the Securities and that no fiduciary, advisory or agency relationship between the Company and the Placement Agent has been created in respect of any of the transactions contemplated by this Agreement, irrespective of whether the Placement Agent has advised or is advising the Company on other matters; (b) the Purchase Price and other terms of the Securities set forth in this Agreement were established by the Company following discussions and arms-length negotiations with the Investors and the Company is capable of evaluating and understanding and understands and accepts the terms, risks and conditions of the transactions contemplated by this Agreement; (c) it has been advised that the Placement Agent and its affiliates are engaged in a broad range of transactions that may involve interests that differ from those of the Company and that the Placement Agent has no obligation to disclose such interest and transactions to the Company by virtue of any fiduciary, advisory or agency relationship; and (d) it has been advised that the Placement Agent is acting, in respect of the transactions contemplated by this Agreement, solely for the benefit of the Placement Agent, and not on behalf of the Company and that the Placement Agent may have interests that differ from those of the Company. The Company waives to the full extent permitted by applicable law any claims it may have against the Placement Agent arising from an alleged breach of fiduciary duty in connection with the Offering.

 

19.Survival of Indemnities, Representations, Warranties, Etc.

 

The respective indemnities, covenants, agreements, representations, warranties and other statements of the Company and Placement Agent, as set forth in this Agreement or made by them respectively, pursuant to this Agreement, shall remain in full force and effect, regardless of any investigation made by or on behalf of the Placement Agent, the Company, the Purchasers or any person controlling any of them and shall survive delivery of and payment for the Securities. Notwithstanding any termination of this Agreement, including without limitation any termination pursuant to Section 5, the payment, reimbursement, indemnity, contribution, advancement and limitation of liability agreements contained in Sections 2, 3, 9, 10, and 11, and the Company’s covenants, representations, and warranties set forth in this Agreement, shall not terminate and shall remain in full force and effect at all times. The indemnity and contribution provisions contained in Section 9 and the covenants, warranties and representations of the Company contained in this Agreement shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of any of the Placement Agent, any person who controls the Placement Agent within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act or any affiliate of the Placement Agent, or by or on behalf of the Company, its directors or officers or any person who controls the Company within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, and (iii) the issuance and delivery of the Securities.

 

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20.Governing Law.

 

This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to agreements made and to be fully performed therein, without regard to its choice of law provisions. Any disputes that arise under this Agreement, even after the termination of this Agreement, will be heard only in the state or federal courts located in the City and County of New York, Borough of Manhattan. The parties hereto expressly agree to submit themselves to the jurisdiction of the foregoing courts in the City and County of New York, Borough of Manhattan. The parties hereto expressly waive any rights they may have to contest the jurisdiction, venue or authority of any court sitting in the City and County of New York, Borough of Manhattan. The Company hereby appoints Cogency Global Inc., as its authorized agent (the “Authorized Agent”) upon whom process may be served in any suit, action or proceeding arising out of or based upon this Agreement or the transactions contemplated herein. The Company hereby represents and warrants that the Authorized Agent has accepted such appointment and has agreed to act as said agent for service of process, and the Company agrees to take any and all action, including the filing of any and all documents that may be necessary to continue such appointment in full force and effect as aforesaid. Service of process upon the Authorized Agent shall be deemed, in every respect, effective service of process upon the Company. The choice of the laws of the State of New York as the governing law of this Warrant is a valid choice of law and would be recognized and given effect to in any action brought before a court of competent jurisdiction in Singapore, except for those laws (i) which such court considers to be procedural in nature, (ii) which are revenue or penal laws or (iii) the application of which would be inconsistent with public policy, as such term is interpreted under the laws of Singapore. The choice of laws of the State of New York as the governing law of this Warrant will be honored by competent courts in Singapore. The Company or any of their respective properties, assets or revenues does not have any right of immunity under Singapore or New York law, from any legal action, suit or proceeding, from the giving of any relief in any such legal action, suit or proceeding, from set-off or counterclaim, from the jurisdiction of any Singapore, New York or United States federal court, from service of process, attachment upon or prior to judgment, or attachment in aid of execution of judgment, or from execution of a judgment, or other legal process or proceeding for the giving of any relief or for the enforcement of a judgment, in any such court, with respect to its obligations, liabilities or any other matter under or arising out of or in connection with this Warrant; and, to the extent that the Company, or any of its properties, assets or revenues may have or may hereafter become entitled to any such right of immunity in any such court in which proceedings may at any time be commenced, the Company hereby waives such right to the extent permitted by law and hereby consents to such relief and enforcement as provided in this Warrant and the other Transaction Documents

 

21.Notices.

 

All communications hereunder shall be in writing and shall be mailed or hand delivered and confirmed to the parties hereto as follows: 

 

If to the Company:

 

Primech Holdings Ltd.

23 Ubi Crescent

Singapore 408579

Attn: Chairman and CEO

 

If to the Placement Agent:

 

FT Global Capital, Inc.

1688 Meridian Avenue, Suite 700,

Miami Beach, FL 33139

786-220-6129 (Office); 786-655-8201 (Fax)

Attention: President, CEO

 

Any party hereto may change the address for receipt of communications by giving written notice to the others. 

 

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22.Miscellaneous.

 

This Agreement constitutes the entire agreement of FT Global and the Company, and supersedes any prior agreements, with respect to the subject matter hereof. If any provision of this Agreement is determined to be invalid or unenforceable in any respect, such determination will not affect such provision in any other respect, and the remainder of this Agreement shall remain in full force and effect. Notwithstanding anything herein to the contrary, the Engagement Agreement between the Company and the Placement Agent, shall continue to be effective and the terms therein shall continue to survive and be enforceable by the Placement Agent in accordance with its terms, including, without limitation, Sections 1 and 7 therein.

 

23.Successors.

 

This Agreement will inure to the benefit of and be binding upon the parties hereto, and to the benefit of the employees, officers and directors and controlling persons referred to in Section 9 hereof, and to their respective successors, and personal representatives, and, except as set forth in Section 9 of this Agreement, no other person will have any right or obligation hereunder. 

 

[SIGNATURE PAGE TO FOLLOW]

 

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In acknowledgment that the foregoing correctly sets forth the understanding reached by FT Global and the Company, and intending to be legally bound, please sign in the space provided below, whereupon this letter shall constitute a binding agreement as of the date executed.

 

Very truly yours,  
     
PRIMECH HOLDINGS LTD.  
     
By:    
  Name: Kin Wai Ho  
  Title: CEO  
     
Confirmed as of the date first written above:  
     
FT GLOBAL CAPITAL, INC.  
     
By:    
  Name: Patrick Ko  
  Title: President and CEO  

 

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SCHEDULE I

 

Issuer General Use Free Writing Prospectuses

 

None.

 

17

 

 

Exhibit A

 

Lock-Up Agreement

 

18

 

Exhibit 4.2

 

THE WARRANT AND WARRANT SHARES SHALL NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, OR HYPOTHECATED, OR BE THE SUBJECT OF ANY HEDGING, SHORT SALE, DERIVATIVE, PUT, OR CALL TRANSACTION THAT WOULD RESULT IN THE EFFECTIVE ECONOMIC DISPOSITION OF THE SECURITIES BY ANY PERSON FOR A PERIOD OF 180 DAYS IMMEDIATELY FOLLOWING THE COMMENCEMENT OF SALES OF THE OFFERING PURSUANT TO WHICH THE WARRANTS WERE ISSUED, EXCEPT AS PROVIDED IN FINRA RULE 5110(E)(2).

 

ORDINARY SHARE PURCHASE WARRANT

 

PRIMECH HOLDINGS LTD.

 

Warrant Shares: ______________ Initial Exercise Date: _____________, 2024

 

 

THIS ORDINARY SHARE PURCHASE WARRANT (the “Warrant”) certifies that, for value received, _____________________ or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after ___________, 2024 (the “Initial Exercise Date”) and on or prior to 5:00 p.m. (New York City time) on _____________ (the “Termination Date”) but not thereafter, to subscribe for and purchase from PRIMECH HOLDINGS LTD., a company incorporated under the laws of Singapore (the “Company”), up to ______ ordinary shares, no par value, of the Company (the “Common Shares”) (the Common Shares issuable hereunder, as subject to adjustment hereunder, the “Warrant Shares”). The purchase price of one Warrant Share under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).

 

Section 1. Definitions. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement (the “Purchase Agreement”), dated [__], 2024, among the Company and the purchasers signatory thereto. This Warrant is being issued pursuant to the Placement Agent Agreement between the Company and FT Global Capital, Inc. dated [__], 2024 (the “PA Agreement”). In addition, the following terms have the meanings indicated in this Section 1:

 

Adjustment Right” means any right granted with respect to any securities issued in connection with, or with respect to, any issuance or sale (or deemed issuance or sale in accordance with Section 3(b)) of Common Shares (other than rights of the type described in Section 3(d) hereof) that could result in a decrease in the net consideration received by the Company in connection with, or with respect to, such securities (including, without limitation, any cash settlement rights, cash adjustment or other similar rights).

 

Bid Price” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Shares are then listed or quoted on a Trading Market, the bid price of the Common Shares for the time in question (or the nearest preceding date) on the Trading Market on which the Common Shares are then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b)  if the Common Shares are then listed on OTCQB or OTCQX, the volume weighted average price of the Common Shares for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Shares are not then listed or quoted for trading on a Trading Market, OTCQB or OTCQX and if prices for the Common Shares are then reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Shares so reported, or (d) in all other cases, the fair market value of a Common Share as determined by an independent appraiser selected in good faith by the Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

 

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Closing Sale Price” means, for any security as of any date, the last closing trade price for such security on the Trading Market, as reported by Bloomberg L.P., or, if the Trading Market begins to operate on an extended hours basis and does not designate the closing trade price, then the last trade price of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg L.P., or, if the Trading Market is not the principal securities exchange or trading market for such security, the last trade price of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg L.P., or if the foregoing does not apply, the last trade price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg L.P., or, if no last trade price is reported for such security by Bloomberg L.P., the average of the ask prices of any market makers for such security as reported in The Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices). If the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Sale Price of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. All such determinations shall be appropriately adjusted for any share dividend, share split, share combination or other similar transaction during such period.

 

Convertible Securities” means any shares or other security (other than Options) that is at any time and under any circumstances, directly or indirectly, convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any Common Shares.

 

Exempt Issuance” means the issuance of (a) Common Shares or Options to employees, officers or directors of the Company pursuant to any share or Option plan duly adopted for such purpose, by a majority of the non-employee members of the Board of Directors or a majority of the members of a committee of non-employee directors established for such purpose for services rendered to the Company; (b) securities upon the exercise or exchange of or conversion of any Securities issued hereunder and/or other securities exercisable or exchangeable for or convertible into Common Shares issued and outstanding on the date of the Purchase Agreement, provided that such securities have not been amended since the date of the Purchase Agreement to increase the number of such securities or to decrease the exercise price, exchange price or conversion price of such securities (other than in connection with share splits or combinations) or to extend the term of such securities, and (c) securities issued pursuant to acquisitions or strategic transactions approved by a majority of the disinterested directors of the Company, provided that any such issuance shall only be to a Person (or to the equityholders of a Person) which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with the current business of the Company at such time and shall provide to the Company additional benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities.

 

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Options” means any rights, warrants or options to subscribe for or purchase Common Shares or Convertible Securities.

 

VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Shares are then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Shares for such date (or the nearest preceding date) on the Trading Market on which the Common Shares are then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b)  the Common Shares are then listed or quoted on OTCQB or OTCQX, the volume weighted average price of the Common Shares for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Shares are not then listed or quoted for trading on a Trading Market, OTCQB or OTCQX and if prices for the Common Shares are then reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the daily volume weighted average price of the Common Shares for such date (or the nearest preceding date), or (d) in all other cases, the fair market value of a Common Share as determined by an independent appraiser selected in good faith by the Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

 

Section 2. Exercise.

 

a) Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed facsimile copy or PDF copy submitted by e-mail (or e-mail attachment) of the Notice of Exercise in the form annexed hereto (the “Notice of Exercise”, and each such date, an “Exercise Date”). Within the earlier of (i) one (1) Trading Day and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined in Section 2(d)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the Warrant Shares specified in the applicable Notice of Exercise by wire transfer. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date on which the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Business Day of receipt of such notice. Notwithstanding the foregoing, with respect to any Notice(s) of Exercise delivered on or prior to 4:00 p.m. (New York City time) on the Trading Date prior to the Initial Exercise Date, which may be delivered at any time after the time of execution of the Purchase Agreement, the Company agrees to deliver the Warrant Shares subject to such notice(s) by 4:00 p.m. (New York City time) on the Initial Exercise Date and the Initial Exercise Date shall be the Warrant Share Delivery Date for purposes hereunder, provided that payment of the aggregate Exercise Price is received by such Warrant Share Delivery Date. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

 

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b) Exercise Price. The exercise price per Warrant Share under this Warrant shall be $[__]1, subject to adjustment hereunder (the “Exercise Price”).

 

c) [Intentionally Omitted].

 

d) Mechanics of Exercise.

 

i. Delivery of Warrant Shares Upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder or (B) the Warrant Shares are eligible for resale by the Holder without volume or manner-of-sale limitations pursuant to Rule 144, and otherwise by physical delivery of a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is the earliest of (i) one (1) Trading Day after the delivery to the Company of the Notice of Exercise, (ii) one (1) Trading Day after delivery of the aggregate Exercise Price to the Company and (iii) the number of Trading Days comprising the Standard Settlement Period after the delivery to the Company of the Notice of Exercise (such date, the “Warrant Share Delivery Date”). Upon delivery of the Notice of Exercise, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment of the aggregate Exercise Price is received within the earlier of (i) one (1) Trading Day and (ii) the number of Trading Days comprising the Standard Settlement Period following delivery of the Notice of Exercise. If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Shares on the date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the fifth Trading Day after such liquidated damages begin to accrue) for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise. The Company agrees to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Common Shares as in effect on the date of delivery of the Notice of Exercise.

 

 

1Insert 125% of the Offering Price

 

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ii. Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

 

iii. Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.

 

iv. Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions of Section 2(d)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, Common Shares to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the Common Shares so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of Common Shares that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Shares having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of Common Shares with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver Common Shares upon exercise of the Warrant as required pursuant to the terms hereof.

 

v. No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.

 

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vi. Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.

 

vii. Closing of Books. The Company will not close its shareholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

 

e) Holder’s Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below).  For purposes of the foregoing sentence, the number of Common Shares beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number of Common Shares issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of Common Shares which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common Share Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties.  Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(e), in determining the number of outstanding Common Shares, a Holder may rely on the number of outstanding Common Shares as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of Common Shares outstanding.  Upon the written or oral request of a Holder, the Company shall within one Trading Day confirm orally and in writing to the Holder the number of Common Shares then outstanding.  In any case, the number of outstanding Common Shares shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding Common Shares was reported. The “Beneficial Ownership Limitation” shall be [4.99] [9.99]2% of the number of shares of the Common Shares outstanding immediately after giving effect to the issuance of Common Shares issuable upon exercise of this Warrant. The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(e), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Shares outstanding immediately after giving effect to the issuance of Common Shares upon exercise of this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply. Any increase in the Beneficial Ownership Limitation will not be effective until the 61st day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.

 

 

2[As elected by such Holder by e-mail notice to the Company on or prior to the Initial Exercise Date.]

 

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Section 3. Certain Adjustments.

 

a) Share Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a share dividend or otherwise makes a distribution or distributions on shares of its Common Shares or any other equity or equity equivalent securities payable in Common Shares (which, for avoidance of doubt, shall not include any Common Shares issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding Common Shares into a larger number of shares, (iii) combines (including by way of reverse share split) outstanding Common Shares into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Shares any share capital of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of Common Shares (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of Common Shares outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of shareholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

b) Adjustment Upon Issuance of Common Shares. If and whenever on or after the Initial Exercise Date, the Company grants, issues or sells, (or enters into any agreement to grant, issue or sell), or in accordance with this Section 3(b) is deemed to have issued or sold, any Common Shares (including the issuance or sale of Common Shares owned or held by or for the account of the Company, but excluding any Exempt Issuances issued or sold or deemed to have been issued or sold) for a consideration per share (the “New Issuance Price”) less than a price equal to the Exercise Price in effect immediately prior to such issuance or sale or deemed issuance or sale (such Exercise Price then in effect is referred to herein as the “Applicable Price”) (the foregoing a “Dilutive Issuance”), then immediately after such Dilutive Issuance, the Exercise Price then in effect shall be reduced to an amount equal to the New Issuance Price. For all purposes of the foregoing (including, without limitation, determining the adjusted Exercise Price and the New Issuance Price under this Section 3(b)), the following shall be applicable:

 

i. Issuance of Options. If the Company in any manner grants, issues or sells any Options and the lowest price per share for which one Common Share is issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof is less than the Applicable Price, then such Common Share shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting, issuance or sale of such Option for such price per share. For purposes of this Section 3(b)(i), the “lowest price per share for which one Common Share is issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof” shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one Common Share upon the granting, issuance or sale of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option or otherwise pursuant to the terms thereof and (y) the lowest exercise price set forth in such Option for which one Common Share is issuable upon the exercise of any such Options or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option minus (2) the sum of all amounts paid or payable to the holder of such Option (or any other Person) upon the granting, issuance or sale such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option plus the value of any other consideration received or receivable by, or benefit conferred on, the holder of such Option (or any other Person). Except as contemplated below, no further adjustment of the Exercise Price shall be made upon the actual issuance of such Common Shares or of such Convertible Securities upon the exercise of such Options or upon the actual issuance of such Common Shares upon conversion, exercise or exchange of such Convertible Securities.

 

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ii. Issuance of Convertible Securities. If the Company in any manner issues or sells any Convertible Securities and the lowest price per share for which one Common Share is issuable upon the conversion, exercise or exchange thereof is less than the Applicable Price, then such Common Share shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale of such Convertible Securities for such price per share. For the purposes of this Section 3(b)(ii), the “lowest price per share for which one Common Share issuable upon the conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof” shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to one Common Share upon the issuance or sale of the Convertible Security and upon conversion, exercise or exchange of such Convertible Security and (y) the lowest conversion price set forth in such Convertible Security for which one Common Share is issuable upon conversion, exercise or exchange thereof minus (2) the sum of all amounts paid or payable to the holder of such Convertible Security (or any other Person) upon the issuance or sale of such Convertible Security plus the value of any other consideration received or receivable by, or benefit conferred on, the holder of such Convertible Security (or any other Person). Except as contemplated below, no further adjustment of the Exercise Price shall be made upon the actual issuance of such Common Shares upon conversion, exercise or exchange of such Convertible Securities, and if any such issuance or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of this Warrant has been or is to be made pursuant to other provisions of this Section 3(b), except as contemplated below, no further adjustment of the Exercise Price shall be made by reason of such issuance or sale.

 

iii. Change in Option Price or Rate of Conversion. If the purchase or exercise price provided for in any Options, the additional consideration, if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the rate at which any Convertible Securities are convertible into or exercisable or exchangeable for Common Shares increases or decreases at any time (other than proportional changes in conversion or exercise prices, as applicable, in connection with an event referred to in Section 3(a)), the Exercise Price in effect at the time of such increase or decrease shall be adjusted to the Exercise Price which would have been in effect at such time had such Options or Convertible Securities provided for such increased or decreased purchase price, additional consideration or increased or decreased conversion rate, as the case may be, at the time initially granted, issued or sold. For purposes of this Section 3(b)(iii), if the terms of any Option or Convertible Security that was outstanding as of the Initial Exercise Date are increased or decreased in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the Common Shares deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such increase or decrease. No adjustment pursuant to this Section 3(b) shall be made if such adjustment would result in an increase of the Exercise Price then in effect.

 

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iv. Calculation of Consideration Received. If any Option and/or Convertible Security and/or Adjustment Right is issued in connection with the issuance or sale or deemed issuance or sale of any other securities of the Company (as determined by the Holder, the “Primary Security”, and such Option and/or Convertible Security and/or Adjustment Right, the “Secondary Securities” and together with the Primary Security, each a “Unit”), together comprising one integrated transaction, the aggregate consideration per Common Share with respect to such Primary Security shall be deemed to be the lowest of (x) the purchase price of such Unit, (y) if such Primary Security is an Option and/or Convertible Security, the lowest price per share for which one Common Share is at any time issuable upon the exercise or conversion of the Primary Security in accordance with Section 3(b)(i) or 3(b)(ii) above and (z) the lowest VWAP of the Common Shares on any Trading Day during the five (5) Trading Day period (the “Adjustment Period”) immediately following the public announcement of such Dilutive Issuance (for the avoidance of doubt, if such public announcement is released prior to the opening of the applicable Trading Market on a Trading Day, such Trading Day shall be the first Trading Day in such five Trading Day period and if this Warrant is exercised, on any given Exercise Date during any such Adjustment Period, solely with respect to such portion of this Warrant converted on such applicable Exercise Date, such applicable Adjustment Period shall be deemed to have ended on, and included, the Trading Day immediately prior to such Exercise Date). If any Common Shares, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the net amount of consideration received by the Company therefor. If any Common Shares, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of such consideration received by the Company will be the fair value of such consideration, except where such consideration consists of publicly traded securities, in which case the amount of consideration received by the Company for such securities will be the arithmetic average of the VWAPs of such security for each of the five (5) Trading Days immediately preceding the date of receipt. If any Common Shares, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such Common Shares, Options or Convertible Securities (as the case may be). The fair value of any consideration other than cash or publicly traded securities will be determined jointly by the Company and the Holder. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the “Valuation Event”), the fair value of such consideration will be determined within five (5) Trading Days after the tenth (10th) day following such Valuation Event by an independent, reputable appraiser jointly selected by the Company and the Holder. The determination of such appraiser shall be final and binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.

 

v. Record Date. If the Company takes a record of the holders of Common Shares for the purpose of entitling them (A) to receive a dividend or other distribution payable in Common Shares, Options or in Convertible Securities or (B) to subscribe for or purchase Common Shares, Options or Convertible Securities, then such record date will be deemed to be the date of the issuance or sale of the Common Shares deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase (as the case may be).

 

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vi. Voluntary Adjustment by Company. The Company may at any time during the term of this Warrant, with the prior written consent of the Holder, but subject to the approval of the principal Trading Market, reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the board of directors of the Company.

 

c) Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells any Common Share Equivalents or rights to purchase shares, warrants, securities or other property pro rata to the record holders of any class of Common Shares (“Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of Common Shares acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of Common Shares are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such Common Shares as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

 

d) Pro Rata Distributions. Except as prohibited by FINRA Rule 5110(g)(8)(F), during such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of Common Shares, by way of return of capital or otherwise (including, without limitation, any distribution of cash, shares or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of Common Shares acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of Common Shares are to be determined for the participation in such Distribution (provided, however, to the extent that the Holder's right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any Common Shares as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation). To the extent that this Warrant has not been partially or completely exercised at the time of such Distribution, such portion of the Distribution shall be held in abeyance for the benefit of the Holder until the Holder has exercised this Warrant.

 

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e) Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company (or any Subsidiary), directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company (or any Subsidiary), directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Shares are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Shares or 50% or more of the voting power of the common equity of the Company, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Shares or any compulsory share exchange pursuant to which the Common Shares are effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off, merger or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires 50% or more of the outstanding Common Shares or 50% or more of the voting power of the common equity of the Company (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(e) on the exercise of this Warrant), the number of Common Shares of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of Common Shares for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise of this Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one Common Share in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Shares are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. Notwithstanding anything to the contrary, in the event of a Fundamental Transaction, the Company or any Successor Entity (as defined below) shall, at the Holder’s option, exercisable at any time concurrently with, or within 30 days after, the consummation of the Fundamental Transaction (or, if later, the date of the public announcement of the applicable Fundamental Transaction), purchase this Warrant from the Holder by paying to the Holder an amount of cash equal to the Black Scholes Value (as defined below) of the remaining unexercised portion of this Warrant on the date of the consummation of such Fundamental Transaction; provided, however, if the Fundamental Transaction is not within the Company's control, including not approved by the Company's Board of Directors, Holder shall only be entitled to receive from the Company or any Successor Entity, the same type or form of consideration (and in the same proportion), at the Black Scholes Value (as defined below) of the unexercised portion of this Warrant, that is being offered and paid to the holders of Common Shares of the Company in connection with the Fundamental Transaction, whether that consideration be in the form of cash, shares or any combination thereof, or whether the holders of Common Shares are given the choice to receive from among alternative forms of consideration in connection with the Fundamental Transaction; provided, further, that if holders of Common Stock of the Company are not offered or paid any consideration in such Fundamental Transaction, such holders of Common Stock will be deemed to have received common stock of the Successor Entity (which Entity may be the Company following such Fundamental Transaction) in such Fundamental Transaction. “Black Scholes Value” means the value of this Warrant based on the Black Scholes Option Pricing Model obtained from the “OV” function on Bloomberg, L.P. determined as of the day of consummation of the applicable Fundamental Transaction for pricing purposes and reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date, (B) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg L.P. as of the Trading Day immediately following the public announcement of the applicable Fundamental Transaction, (C) the underlying price per share used in such calculation shall be the greater of (i) the sum of the price per share being offered in cash, if any, plus the value of any non-cash consideration, if any, being offered in such Fundamental Transaction and (ii) the greater of (x) the last VWAP immediately prior to the public announcement of such Fundamental Transaction and (y) the last VWAP immediately prior to the consummation of such Fundamental Transaction, (D) a remaining option time equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date, (E) a 365 day annualization factor, and (F) a zero cost of borrow. The payment of the Black Scholes Value will be made by wire transfer of immediately available funds within five Business Days of the Holder’s election (or, if later, on the effective date of the Fundamental Transaction). The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant and the other Transaction Documents in accordance with the provisions of this Section 3(e) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of share capital of such Successor Entity (or its parent entity) equivalent to the Common Shares acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such share capital (but taking into account the relative value of the Common Shares pursuant to such Fundamental Transaction and the value of such share capital, such number of shares in such share capital and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein.

 

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f) Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of Common Shares deemed to be issued and outstanding as of a given date shall be the sum of the number of Common Shares (excluding treasury shares, if any) issued and outstanding.

 

g) Notice to Holder.

 

i. Adjustment to Exercise Price. Whenever the Exercise Price or the number Warrant Shares subject to the Warrant is adjusted pursuant to any provision of this Section 3, the Company shall promptly deliver to the Holder by facsimile or email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.

 

ii. Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Shares, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Shares, (C) the Company shall authorize the granting to all holders of the Common Shares rights or warrants to subscribe for or purchase any share capital of any class or of any rights, (D) the approval of any shareholders of the Company shall be required in connection with any reclassification of the Common Shares, any consolidation or merger to which the Company (or any of its Subsidiaries) is a party, any sale or transfer of all or substantially all of its assets, or any compulsory share exchange whereby the Common Shares are converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by facsimile or email to the Holder at its last facsimile number or email address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Shares of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Shares of record shall be entitled to exchange their shares of the Common Shares for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided pursuant to this Warrant constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to Form 6-K report. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

 

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h) Voluntary Adjustment By Company. Subject to the rules and regulations of the Trading Market, the Company may at any time during the term of this Warrant, subject to the prior written consent of the Holder, reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the board of directors of the Company.

 

Section 4. Transfer of Warrant.

 

a) Transferability. Subject to compliance with any applicable securities laws and the conditions set forth in Section 4(d) hereof and to the provisions of Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date on which the Holder delivers an assignment form to the Company assigning this Warrant in full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

 

b) New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the initial issuance date of this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

 

c) Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

 

Section 5. [Intentionally Omitted]

 

Section 6. Miscellaneous.

 

a) Currency. Unless otherwise indicated, all dollar amounts referred to in this Warrant are in United States Dollars (“U.S. Dollars”). All amounts owing under this Warrant shall be paid in U.S. Dollars. All amounts denominated in other currencies shall be converted in the U.S. Dollar equivalent amount in accordance with the Exchange Rate on the date of calculation. “Exchange Rate” means, in relation to any amount of currency to be converted into U.S. Dollars pursuant to this Warrant, the U.S. Dollar exchange rate as published in the Wall Street Journal (New York edition) on the relevant date of calculation.

 

b) No Rights as Shareholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a shareholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3.

 

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c) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or share certificate, if mutilated, the Company will make and deliver a new Warrant or certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or certificate.

 

d) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.

 

e) Authorized Shares.

 

The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Shares a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant (the “Required Reserve Amount”). The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Shares may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

 

If, notwithstanding the foregoing, and not in limitation thereof, at any time while any of the Warrants remain outstanding the Company does not have a sufficient number of authorized and unreserved Common Shares to satisfy its obligation to reserve the Required Reserve Amount (an “Authorized Share Failure”), then the Company shall immediately take all action necessary to increase the Company’s authorized Common Shares to an amount sufficient to allow the Company to reserve the Required Reserve Amount for all the Warrants then outstanding. Without limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure, but in no event later than ninety (90) days after the occurrence of such Authorized Share Failure, the Company shall hold a meeting of its shareholders for the approval of an increase in the number of authorized Common Shares. In connection with such meeting, the Company shall provide each shareholder with a proxy statement and shall use its best efforts to solicit its shareholders’ approval of such increase in authorized Common Shares and to cause its board of directors to recommend to the shareholders that they approve such proposal. In the event that the Company is prohibited from issuing Common Shares upon an exercise of this Warrant due to the failure by the Company to have sufficient Common Shares available out of the authorized but unissued Common Shares (such unavailable number of Common Shares, the “Authorization Failure Shares”), in lieu of delivering such Authorization Failure Shares to the Holder, the Company shall pay cash in exchange for the cancellation of such portion of this Warrant exercisable into such Authorization Failure Shares at a price equal to the sum of (i) the product of (x) such number of Authorization Failure Shares and (y) the greatest Closing Sale Price of the Common Shares on any Trading Day during the period commencing on the date the Holder delivers the applicable Notice of Exercise with respect to such Authorization Failure Shares to the Company and ending on the date of such issuance and payment under this Section 6(e) and (ii) to the extent the Holder purchases (in an open market transaction or otherwise) Common Shares to deliver in satisfaction of a sale by the Holder of Authorization Failure Shares, any brokerage commissions and other out-of-pocket expenses, if any, of the Holder incurred in connection therewith.

 

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Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

 

Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

 

f) Governing Law. This Warrant shall be governed by and construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Warrant shall be governed by, the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. The Company hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to the Company at the address set forth in the PA Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. The Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Nothing contained herein shall be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Company in any other jurisdiction to collect on the Company’s obligations to the Holder, to realize on any collateral or any other security for such obligations, or to enforce a judgment or other court ruling in favor of the Holder. The Company hereby appoints ______________ as its agent for service of process in New York. If service of process is effected pursuant to the above sentence, such service will be deemed sufficient under New York law and the Company shall not assert otherwise. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Nothing contained herein shall be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Company in any other jurisdiction to collect on the Company’s obligations to such Buyer or to enforce a judgment or other court ruling in favor of the Holder. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS WARRANT OR ANY TRANSACTION CONTEMPLATED HEREBY. The choice of the laws of the State of New York as the governing law of this Warrant is a valid choice of law and would be recognized and given effect to in any action brought before a court of competent jurisdiction in Singapore, except for those laws (i) which such court considers to be procedural in nature, (ii) which are revenue or penal laws or (iii) the application of which would be inconsistent with public policy, as such term is interpreted under the laws of the Singapore. The choice of laws of the State of New York as the governing law of this Warrant will be honored by competent courts in Singapore. The Company or any of their respective properties, assets or revenues does not have any right of immunity under Singapore or New York law, from any legal action, suit or proceeding, from the giving of any relief in any such legal action, suit or proceeding, from set-off or counterclaim, from the jurisdiction of any Singapore, New York or United States federal court, from service of process, attachment upon or prior to judgment, or attachment in aid of execution of judgment, or from execution of a judgment, or other legal process or proceeding for the giving of any relief or for the enforcement of a judgment, in any such court, with respect to its obligations, liabilities or any other matter under or arising out of or in connection with this Warrant; and, to the extent that the Company, or any of its properties, assets or revenues may have or may hereafter become entitled to any such right of immunity in any such court in which proceedings may at any time be commenced, the Company hereby waives such right to the extent permitted by law and hereby consents to such relief and enforcement as provided in this Warrant and the other Transaction Documents.

 

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g) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, may have restrictions upon resale imposed by state and federal or foreign securities laws.

 

h) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision of this Warrant or the PA Agreement, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

 

i) Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the PA Agreement.

 

j) Disclosure. Upon delivery by the Company to the Holder (or receipt by the Company from the Holder) of any notice in accordance with the terms of this Warrant, unless the Company has in good faith determined that the matters relating to such notice do not constitute material, non-public information relating to the Company or any of its Subsidiaries, the Company shall on or prior to 9:00 am, New York city time on the Business Day immediately following such notice delivery date, publicly disclose such material, non-public information on a Report of Foreign Private Issuer on Form 6-K or otherwise. In the event that the Company believes that a notice contains material, non-public information relating to the Company or any of its Subsidiaries, the Company so shall indicate to the Holder explicitly in writing in such notice (or immediately upon receipt of notice from the Holder, as applicable), and in the absence of any such written indication in such notice (or notification from the Company immediately upon receipt of notice from the Holder), the Holder shall be entitled to presume that information contained in the notice does not constitute material, non-public information relating to the Company or any of its Subsidiaries.

 

k) Absence of Trading and Disclosure Restrictions. The Company acknowledges and agrees that the Holder is not a fiduciary or agent of the Company and that the Holder shall have no obligation to (a) maintain the confidentiality of any information provided by the Company or (b) refrain from trading any securities while in possession of such information in the absence of a written non-disclosure agreement signed by an officer of the Holder that explicitly provides for such confidentiality and trading restrictions. In the absence of such an executed, written non-disclosure agreement, the Company acknowledges that the Holder may freely trade in any securities issued by the Company, may possess and use any information provided by the Company in connection with such trading activity, and may disclose any such information to any third party.

 

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l) Payment of Collection, Enforcement and Other Costs. If (a) this Warrant is placed in the hands of an attorney for collection or enforcement or is collected or enforced through any legal proceeding or the holder otherwise takes action to collect amounts due under this Warrant or to enforce the provisions of this Warrant or (b) there occurs any bankruptcy, reorganization, receivership of the company or other proceedings affecting company creditors’ rights and involving a claim under this Warrant, then the Company shall pay the costs incurred by the Holder for such collection, enforcement or action or in connection with such bankruptcy, reorganization, receivership or other proceeding, including, without limitation, attorneys’ fees and disbursements.

 

m) Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Shares or as a shareholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

 

n) Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

 

o) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.

 

p) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

 

q) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

 

r) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

 

********************

 

(Signature Page Follows)

 

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

 

  PRIMECH HOLDINGS LTD.
   
  By:     
    Name:           
    Title:    

 

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NOTICE OF EXERCISE

 

To: PRIMECH HOLDINGS LTD.

 

(1) The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any. Payment shall take the form of lawful money of the United States.

 

(2) Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:

 

_______________________________

 

 

The Warrant Shares shall be delivered to the following DWAC Account Number:

 

_______________________________

 

_______________________________

 

_______________________________

 

[SIGNATURE OF HOLDER]

 

Name of Investing Entity: ________________________________________________________________________

Signature of Authorized Signatory of Investing Entity: _________________________________________________

Name of Authorized Signatory: ___________________________________________________________________

Title of Authorized Signatory: ____________________________________________________________________

Date: ________________________________________________________________________________________

 

 

 

 

EXHIBIT B

 

ASSIGNMENT FORM

 

(To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)

 

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

 

Name:    
    (Please Print)
     
Address:    
    (Please Print)
     
Phone Number:  
     
Email Address:    
     
     
Dated: _______________ __, _________    
     
Holder’s Signature:_______________________    
     
Holder’s Address:________________________    

 

 

 

 

 

Exhibit 4.3

 

ORDINARY SHARE PURCHASE WARRANT

 

PRIMECH HOLDINGS LTD.

 

Warrant Shares: Initial Exercise Date: ____________, 2024

 

THIS ORDINARY SHARE PURCHASE WARRANT (the “Warrant”) certifies that, for value received, ___________________ or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after ____________, 2024 (the “Initial Exercise Date”) and on or prior to 5:00 p.m. (New York City time) on ______________ (the “Termination Date”) but not thereafter, to subscribe for and purchase from PRIMECH HOLDINGS LTD., a company incorporated under the laws of Singapore (the “Company”), up to ________ ordinary shares, without par value, of the Company (the “Common Shares”) (the Common Shares issuable hereunder, as subject to adjustment hereunder, the “Warrant Shares”). The purchase price of one Warrant Share under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).

 

Section 1. Definitions. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement (the “Purchase Agreement”), dated ___________, 2024, among the Company and the purchasers signatory thereto. In addition, the following terms have the meanings indicated in this Section 1:

 

Adjustment Right” means any right granted with respect to any securities issued in connection with, or with respect to, any issuance or sale (or deemed issuance or sale in accordance with Section 3(b)) of Common Shares (other than rights of the type described in Section 3(d) hereof) that could result in a decrease in the net consideration received by the Company in connection with, or with respect to, such securities (including, without limitation, any cash settlement rights, cash adjustment or other similar rights).

 

Bid Price” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Shares are then listed or quoted on a Trading Market, the bid price of the Common Shares for the time in question (or the nearest preceding date) on the Trading Market on which the Common Shares are then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b)  if the Common Shares are then listed on OTCQB or OTCQX, the volume weighted average price of the Common Shares for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Shares are not then listed or quoted for trading on a Trading Market, OTCQB or OTCQX and if prices for the Common Shares are then reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Shares so reported, or (d) in all other cases, the fair market value of a Common Share as determined by an independent appraiser selected in good faith by the Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

 

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Closing Sale Price” means, for any security as of any date, the last closing trade price for such security on the Trading Market, as reported by Bloomberg L.P., or, if the Trading Market begins to operate on an extended hours basis and does not designate the closing trade price, then the last trade price of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg L.P., or, if the Trading Market is not the principal securities exchange or trading market for such security, the last trade price of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg L.P., or if the foregoing does not apply, the last trade price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg L.P., or, if no last trade price is reported for such security by Bloomberg L.P., the average of the ask prices of any market makers for such security as reported in The Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices). If the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Sale Price of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. All such determinations shall be appropriately adjusted for any share dividend, share split, share combination or other similar transaction during such period.

 

Convertible Securities” means any shares or other security (other than Options) that is at any time and under any circumstances, directly or indirectly, convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any Common Shares.

 

Exempt Issuance” means the issuance of (a) Common Shares or Options to employees, officers or directors of the Company pursuant to any share or Option plan duly adopted for such purpose, by a majority of the non-employee members of the Board of Directors or a majority of the members of a committee of non-employee directors established for such purpose for services rendered to the Company; (b) securities upon the exercise or exchange of or conversion of any Securities issued hereunder and/or other securities exercisable or exchangeable for or convertible into Common Shares are issued and outstanding on the date of the Purchase Agreement, provided that such securities have not been amended since the date of the Purchase Agreement to increase the number of such securities or to decrease the exercise price, exchange price or conversion price of such securities (other than in connection with share splits or combinations) or to extend the term of such securities, and (c) securities issued pursuant to acquisitions or strategic transactions approved by a majority of the disinterested directors of the Company, provided that any such issuance shall only be to a Person (or to the equityholders of a Person) which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with the current business of the Company at such time and shall provide to the Company additional benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities.

 

Options” means any rights, warrants or options to subscribe for or purchase Common Shares or Convertible Securities.

 

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VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Shares are then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Shares for such date (or the nearest preceding date) on the Trading Market on which the Common Shares are then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b)  the Common Shares are then listed or quoted on OTCQB or OTCQX, the volume weighted average price of the Common Shares for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Shares are not then listed or quoted for trading on a Trading Market, OTCQB or OTCQX and if prices for the Common Shares are then reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the daily volume weighted average price of the Common Shares for such date (or the nearest preceding date), or (d) in all other cases, the fair market value of a Common Share as determined by an independent appraiser selected in good faith by the Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

 

Section 2. Exercise.

 

a) Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed facsimile copy or PDF copy submitted by e-mail (or e-mail attachment) of the Notice of Exercise in the form annexed hereto (the “Notice of Exercise”, and each such date, an “Exercise Date”). Within the earlier of (i) one (1) Trading Day and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined in Section 2(d)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the Warrant Shares specified in the applicable Notice of Exercise by wire transfer. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date on which the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Business Day of receipt of such notice. Notwithstanding the foregoing, with respect to any Notice(s) of Exercise delivered on or prior to 4:00 p.m. (New York City time) on the Trading Date prior to the Initial Exercise Date, which may be delivered at any time after the time of execution of the Purchase Agreement, the Company agrees to deliver the Warrant Shares subject to such notice(s) by 4:00 p.m. (New York City time) on the Initial Exercise Date and the Initial Exercise Date shall be the Warrant Share Delivery Date for purposes hereunder, provided that payment of the aggregate Exercise Price is received by such Warrant Share Delivery Date. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

 

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b) Exercise Price. The exercise price per Warrant Share under this Warrant shall be $_____, subject to adjustment hereunder (the “Exercise Price”).

 

c) Intentionally Omitted.

 

d) Mechanics of Exercise.

 

i. Delivery of Warrant Shares Upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder or (B) the Warrant Shares are eligible for resale by the Holder without volume or manner-of-sale limitations pursuant to Rule 144, and otherwise by physical delivery of a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is the earliest of (i) one (1) Trading Day after the delivery to the Company of the Notice of Exercise, (ii) one (1) Trading Day after delivery of the aggregate Exercise Price to the Company and (iii) the number of Trading Days comprising the Standard Settlement Period after the delivery to the Company of the Notice of Exercise (such date, the “Warrant Share Delivery Date”). Upon delivery of the Notice of Exercise, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment of the aggregate Exercise Price is received within the earlier of (i) one (1) Trading Day and (ii) the number of Trading Days comprising the Standard Settlement Period following delivery of the Notice of Exercise. If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Shares on the date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the fifth Trading Day after such liquidated damages begin to accrue) for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise. The Company agrees to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Common Shares as in effect on the date of delivery of the Notice of Exercise.

 

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ii. Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

 

iii. Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.

 

iv. Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions of Section 2(d)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, Common Shares to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the Common Shares so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of Common Shares that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Shares having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of Common Shares with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver Common Shares upon exercise of the Warrant as required pursuant to the terms hereof.

 

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v. No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.

 

vi. Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.

 

vii. Closing of Books. The Company will not close its shareholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

 

e) Holder’s Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below).  For purposes of the foregoing sentence, the number of Common Shares beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number of Common Shares issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of Common Shares which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common Share Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties.  Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(e), in determining the number of outstanding Common Shares, a Holder may rely on the number of outstanding Common Shares as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of Common Shares outstanding.  Upon the written or oral request of a Holder, the Company shall within one Trading Day confirm orally and in writing to the Holder the number of Common Shares then outstanding.  In any case, the number of outstanding Common Shares shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding Common Shares was reported. The “Beneficial Ownership Limitation” shall be [4.99] [9.99]1% of the number of shares of the Common Shares outstanding immediately after giving effect to the issuance of Common Shares issuable upon exercise of this Warrant. The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(e), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Shares outstanding immediately after giving effect to the issuance of Common Shares upon exercise of this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply. Any increase in the Beneficial Ownership Limitation will not be effective until the 61st day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.

 

 

1[As elected by such Holder by e-mail notice to the Company on or prior to the Initial Exercise Date.]

 

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Section 3. Certain Adjustments.

 

a) Share Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a share dividend or otherwise makes a distribution or distributions on shares of its Common Shares or any other equity or equity equivalent securities payable in Common Shares (which, for avoidance of doubt, shall not include any Common Shares issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding Common Shares into a larger number of shares, (iii) combines (including by way of reverse share split) outstanding Common Shares into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Shares any share capital of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of Common Shares (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of Common Shares outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of shareholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

b) Adjustment Upon Issuance of Common Shares. If and whenever on or after the Initial Exercise Date, the Company grants, issues or sells, (or enters into any agreement to grant, issue or sell), or in accordance with this Section 3(b) is deemed to have issued or sold, any Common Shares (including the issuance or sale of Common Shares owned or held by or for the account of the Company, but excluding any Exempt Issuances issued or sold or deemed to have been issued or sold) for a consideration per share (the “New Issuance Price”) less than a price equal to the Exercise Price in effect immediately prior to such issuance or sale or deemed issuance or sale (such Exercise Price then in effect is referred to herein as the “Applicable Price”) (the foregoing a “Dilutive Issuance”), then immediately after such Dilutive Issuance, the Exercise Price then in effect shall be reduced to an amount equal to the New Issuance Price. For all purposes of the foregoing (including, without limitation, determining the adjusted Exercise Price and the New Issuance Price under this Section 3(b)), the following shall be applicable:

 

i. Issuance of Options. If the Company in any manner grants, issues or sells any Options and the lowest price per share for which one Common Share is issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof is less than the Applicable Price, then such Common Share shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting, issuance or sale of such Option for such price per share. For purposes of this Section 3(b)(i), the “lowest price per share for which one Common Share is issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof” shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one Common Share upon the granting, issuance or sale of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option or otherwise pursuant to the terms thereof and (y) the lowest exercise price set forth in such Option for which one Common Share is issuable upon the exercise of any such Options or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option minus (2) the sum of all amounts paid or payable to the holder of such Option (or any other Person) upon the granting, issuance or sale such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option plus the value of any other consideration received or receivable by, or benefit conferred on, the holder of such Option (or any other Person). Except as contemplated below, no further adjustment of the Exercise Price shall be made upon the actual issuance of such Common Shares or of such Convertible Securities upon the exercise of such Options or upon the actual issuance of such Common Shares upon conversion, exercise or exchange of such Convertible Securities.

 

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ii. Issuance of Convertible Securities. If the Company in any manner issues or sells any Convertible Securities and the lowest price per share for which one Common Share is issuable upon the conversion, exercise or exchange thereof is less than the Applicable Price, then such Common Share shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale of such Convertible Securities for such price per share. For the purposes of this Section 3(b)(ii), the “lowest price per share for which one Common Share issuable upon the conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof” shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to one Common Share upon the issuance or sale of the Convertible Security and upon conversion, exercise or exchange of such Convertible Security and (y) the lowest conversion price set forth in such Convertible Security for which one Common Share is issuable upon conversion, exercise or exchange thereof minus (2) the sum of all amounts paid or payable to the holder of such Convertible Security (or any other Person) upon the issuance or sale of such Convertible Security plus the value of any other consideration received or receivable by, or benefit conferred on, the holder of such Convertible Security (or any other Person). Except as contemplated below, no further adjustment of the Exercise Price shall be made upon the actual issuance of such Common Shares upon conversion, exercise or exchange of such Convertible Securities, and if any such issuance or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of this Warrant has been or is to be made pursuant to other provisions of this Section 3(b), except as contemplated below, no further adjustment of the Exercise Price shall be made by reason of such issuance or sale.

 

iii. Change in Option Price or Rate of Conversion. If the purchase or exercise price provided for in any Options, the additional consideration, if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the rate at which any Convertible Securities are convertible into or exercisable or exchangeable for Common Shares increases or decreases at any time (other than proportional changes in conversion or exercise prices, as applicable, in connection with an event referred to in Section 3(a)), the Exercise Price in effect at the time of such increase or decrease shall be adjusted to the Exercise Price which would have been in effect at such time had such Options or Convertible Securities provided for such increased or decreased purchase price, additional consideration or increased or decreased conversion rate, as the case may be, at the time initially granted, issued or sold. For purposes of this Section 3(b)(iii), if the terms of any Option or Convertible Security that was outstanding as of the Initial Exercise Date are increased or decreased in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the Common Shares deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such increase or decrease. No adjustment pursuant to this Section 3(b) shall be made if such adjustment would result in an increase of the Exercise Price then in effect.

 

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iv. Calculation of Consideration Received. If any Option and/or Convertible Security and/or Adjustment Right is issued in connection with the issuance or sale or deemed issuance or sale of any other securities of the Company (as determined by the Holder, the “Primary Security”, and such Option and/or Convertible Security and/or Adjustment Right, the “Secondary Securities” and together with the Primary Security, each a “Unit”), together comprising one integrated transaction, the aggregate consideration per Common Share with respect to such Primary Security shall be deemed to be the lowest of (x) the purchase price of such Unit, (y) if such Primary Security is an Option and/or Convertible Security, the lowest price per share for which one Common Share is at any time issuable upon the exercise or conversion of the Primary Security in accordance with Section 3(b)(i) or 3(b)(ii) above and (z) the lowest VWAP of the Common Shares on any Trading Day during the five (5) Trading Day period (the “Adjustment Period”) immediately following the public announcement of such Dilutive Issuance (for the avoidance of doubt, if such public announcement is released prior to the opening of the applicable Trading Market on a Trading Day, such Trading Day shall be the first Trading Day in such five Trading Day period and if this Warrant is exercised, on any given Exercise Date during any such Adjustment Period, solely with respect to such portion of this Warrant converted on such applicable Exercise Date, such applicable Adjustment Period shall be deemed to have ended on, and included, the Trading Day immediately prior to such Exercise Date). If any Common Shares, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the net amount of consideration received by the Company therefor. If any Common Shares, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of such consideration received by the Company will be the fair value of such consideration, except where such consideration consists of publicly traded securities, in which case the amount of consideration received by the Company for such securities will be the arithmetic average of the VWAPs of such security for each of the five (5) Trading Days immediately preceding the date of receipt. If any Common Shares, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such Common Shares, Options or Convertible Securities (as the case may be). The fair value of any consideration other than cash or publicly traded securities will be determined jointly by the Company and the Holder. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the “Valuation Event”), the fair value of such consideration will be determined within five (5) Trading Days after the tenth (10th) day following such Valuation Event by an independent, reputable appraiser jointly selected by the Company and the Holder. The determination of such appraiser shall be final and binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.

 

v. Record Date. If the Company takes a record of the holders of Common Shares for the purpose of entitling them (A) to receive a dividend or other distribution payable in Common Shares, Options or in Convertible Securities or (B) to subscribe for or purchase Common Shares, Options or Convertible Securities, then such record date will be deemed to be the date of the issuance or sale of the Common Shares deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase (as the case may be).

 

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vi. Voluntary Adjustment by Company. The Company may at any time during the term of this Warrant, with the prior written consent of the Holder, but subject to the approval of the principal Trading Market, reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the board of directors of the Company.

 

c) Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells any Common Share Equivalents or rights to purchase shares, warrants, securities or other property pro rata to the record holders of any class of Common Shares (“Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of Common Shares acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of Common Shares are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such Common Shares as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

 

d) Pro Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of Common Shares, by way of return of capital or otherwise (including, without limitation, any distribution of cash, shares or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of Common Shares acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of Common Shares are to be determined for the participation in such Distribution (provided, however, to the extent that the Holder’s right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any Common Shares as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation). To the extent that this Warrant has not been partially or completely exercised at the time of such Distribution, such portion of the Distribution shall be held in abeyance for the benefit of the Holder until the Holder has exercised this Warrant.

 

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e) Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company (or any Subsidiary), directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company (or any Subsidiary), directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Shares are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Shares or 50% or more of the voting power of the common equity of the Company, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Shares or any compulsory share exchange pursuant to which the Common Shares are effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off, merger or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires 50% or more of the outstanding Common Shares or 50% or more of the voting power of the common equity of the Company (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(e) on the exercise of this Warrant), the number of Common Shares of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of Common Shares for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise of this Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one Common Share in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Shares are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. Notwithstanding anything to the contrary, in the event of a Fundamental Transaction, the Company or any Successor Entity (as defined below) shall, at the Holder’s option, exercisable at any time concurrently with, or within 30 days after, the consummation of the Fundamental Transaction (or, if later, the date of the public announcement of the applicable Fundamental Transaction), purchase this Warrant from the Holder by paying to the Holder an amount of cash equal to the Black Scholes Value (as defined below) of the remaining unexercised portion of this Warrant on the date of the consummation of such Fundamental Transaction; provided, however, if the Fundamental Transaction is not within the Company’s control, including not approved by the Company’s Board of Directors, Holder shall only be entitled to receive from the Company or any Successor Entity, the same type or form of consideration (and in the same proportion), at the Black Scholes Value (as defined below) of the unexercised portion of this Warrant, that is being offered and paid to the holders of Common Shares of the Company in connection with the Fundamental Transaction, whether that consideration be in the form of cash, shares or any combination thereof, or whether the holders of Common Shares are given the choice to receive from among alternative forms of consideration in connection with the Fundamental Transaction; provided, further, that if holders of Common Stock of the Company are not offered or paid any consideration in such Fundamental Transaction, such holders of Common Stock will be deemed to have received common stock of the Successor Entity (which Entity may be the Company following such Fundamental Transaction) in such Fundamental Transaction. “Black Scholes Value” means the value of this Warrant based on the Black Scholes Option Pricing Model obtained from the “OV” function on Bloomberg, L.P. determined as of the day of consummation of the applicable Fundamental Transaction for pricing purposes and reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date, (B) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg L.P. as of the Trading Day immediately following the public announcement of the applicable Fundamental Transaction, (C) the underlying price per share used in such calculation shall be the greater of (i) the sum of the price per share being offered in cash, if any, plus the value of any non-cash consideration, if any, being offered in such Fundamental Transaction and (ii) the greater of (x) the last VWAP immediately prior to the public announcement of such Fundamental Transaction and (y) the last VWAP immediately prior to the consummation of such Fundamental Transaction, (D) a remaining option time equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date, (E) a 365 day annualization factor, and (F) a zero cost of borrow. The payment of the Black Scholes Value will be made by wire transfer of immediately available funds within five Business Days of the Holder’s election (or, if later, on the effective date of the Fundamental Transaction). The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant and the other Transaction Documents in accordance with the provisions of this Section 3(e) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of share capital of such Successor Entity (or its parent entity) equivalent to the Common Shares acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such share capital (but taking into account the relative value of the Common Shares pursuant to such Fundamental Transaction and the value of such share capital, such number of shares in such share capital and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein.

 

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f) Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of Common Shares deemed to be issued and outstanding as of a given date shall be the sum of the number of Common Shares (excluding treasury shares, if any) issued and outstanding.

 

g) Notice to Holder.

 

i. Adjustment to Exercise Price. Whenever the Exercise Price or the number Warrant Shares subject to the Warrant is adjusted pursuant to any provision of this Section 3, the Company shall promptly deliver to the Holder by facsimile or email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.

 

ii. Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Shares, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Shares, (C) the Company shall authorize the granting to all holders of the Common Shares rights or warrants to subscribe for or purchase any share capital of any class or of any rights, (D) the approval of any shareholders of the Company shall be required in connection with any reclassification of the Common Shares, any consolidation or merger to which the Company (or any of its Subsidiaries) is a party, any sale or transfer of all or substantially all of its assets, or any compulsory share exchange whereby the Common Shares are converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by facsimile or email to the Holder at its last facsimile number or email address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Shares of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Shares of record shall be entitled to exchange their shares of the Common Shares for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided pursuant to this Warrant constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to Form 6-K report. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

 

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h) Voluntary Adjustment By Company. Subject to the rules and regulations of the Trading Market, the Company may at any time during the term of this Warrant, subject to the prior written consent of the Holder, reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the board of directors of the Company.

 

Section 4. Transfer of Warrant.

 

a) Transferability. Subject to compliance with any applicable securities laws and the conditions set forth in Section 4(d) hereof and to the provisions of Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date on which the Holder delivers an assignment form to the Company assigning this Warrant in full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

 

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b) New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the initial issuance date of this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

 

c) Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

 

Section 5. [Intentionally Omitted]

 

Section 6. Miscellaneous.

 

a) Currency. Unless otherwise indicated, all dollar amounts referred to in this Warrant are in United States Dollars (“U.S. Dollars”). All amounts owing under this Warrant shall be paid in U.S. Dollars. All amounts denominated in other currencies shall be converted in the U.S. Dollar equivalent amount in accordance with the Exchange Rate on the date of calculation. “Exchange Rate” means, in relation to any amount of currency to be converted into U.S. Dollars pursuant to this Warrant, the U.S. Dollar exchange rate as published in the Wall Street Journal (New York edition) on the relevant date of calculation.

 

b) No Rights as Shareholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a shareholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3.

 

c) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or share certificate, if mutilated, the Company will make and deliver a new Warrant or certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or certificate.

 

d) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.

 

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e) Authorized Shares.

 

The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Shares a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant (the “Required Reserve Amount”). The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Shares may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

 

If, notwithstanding the foregoing, and not in limitation thereof, at any time while any of the Warrants remain outstanding the Company does not have a sufficient number of authorized and unreserved Common Shares to satisfy its obligation to reserve the Required Reserve Amount (an “Authorized Share Failure”), then the Company shall immediately take all action necessary to increase the Company’s authorized Common Shares to an amount sufficient to allow the Company to reserve the Required Reserve Amount for all the Warrants then outstanding. Without limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure, but in no event later than ninety (90) days after the occurrence of such Authorized Share Failure, the Company shall hold a meeting of its shareholders for the approval of an increase in the number of authorized Common Shares. In connection with such meeting, the Company shall provide each shareholder with a proxy statement and shall use its best efforts to solicit its shareholders’ approval of such increase in authorized Common Shares and to cause its board of directors to recommend to the shareholders that they approve such proposal. In the event that the Company is prohibited from issuing Common Shares upon an exercise of this Warrant due to the failure by the Company to have sufficient Common Shares available out of the authorized but unissued Common Shares (such unavailable number of Common Shares, the “Authorization Failure Shares”), in lieu of delivering such Authorization Failure Shares to the Holder, the Company shall pay cash in exchange for the cancellation of such portion of this Warrant exercisable into such Authorization Failure Shares at a price equal to the sum of (i) the product of (x) such number of Authorization Failure Shares and (y) the greatest Closing Sale Price of the Common Shares on any Trading Day during the period commencing on the date the Holder delivers the applicable Notice of Exercise with respect to such Authorization Failure Shares to the Company and ending on the date of such issuance and payment under this Section 6(e) and (ii) to the extent the Holder purchases (in an open market transaction or otherwise) Common Shares to deliver in satisfaction of a sale by the Holder of Authorization Failure Shares, any brokerage commissions and other out-of-pocket expenses, if any, of the Holder incurred in connection therewith.

 

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Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

 

Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

 

f) Governing Law. This Warrant shall be governed by and construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Warrant shall be governed by, the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. The Company hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to the Company at the address set forth in Section 9(f) of the Securities Purchase Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. The Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Nothing contained herein shall be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Company in any other jurisdiction to collect on the Company’s obligations to the Holder, to realize on any collateral or any other security for such obligations, or to enforce a judgment or other court ruling in favor of the Holder. The Company hereby appoints [ ] as its agent for service of process in New York. If service of process is effected pursuant to the above sentence, such service will be deemed sufficient under New York law and the Company shall not assert otherwise. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Nothing contained herein shall be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Company in any other jurisdiction to collect on the Company’s obligations to such Buyer or to enforce a judgment or other court ruling in favor of the Holder. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS WARRANT OR ANY TRANSACTION CONTEMPLATED HEREBY. The choice of the laws of the State of New York as the governing law of this Warrant is a valid choice of law and would be recognized and given effect to in any action brought before a court of competent jurisdiction in Singapore, except for those laws (i) which such court considers to be procedural in nature, (ii) which are revenue or penal laws or (iii) the application of which would be inconsistent with public policy, as such term is interpreted under the laws of Singapore. The choice of laws of the State of New York as the governing law of this Warrant will be honored by competent courts in Singapore. The Company or any of their respective properties, assets or revenues does not have any right of immunity under Singapore or New York law, from any legal action, suit or proceeding, from the giving of any relief in any such legal action, suit or proceeding, from set-off or counterclaim, from the jurisdiction of any Singapore, New York or United States federal court, from service of process, attachment upon or prior to judgment, or attachment in aid of execution of judgment, or from execution of a judgment, or other legal process or proceeding for the giving of any relief or for the enforcement of a judgment, in any such court, with respect to its obligations, liabilities or any other matter under or arising out of or in connection with this Warrant; and, to the extent that the Company, or any of its properties, assets or revenues may have or may hereafter become entitled to any such right of immunity in any such court in which proceedings may at any time be commenced, the Company hereby waives such right to the extent permitted by law and hereby consents to such relief and enforcement as provided in this Warrant and the other Transaction Documents.

 

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g) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, may have restrictions upon resale imposed by state and federal or foreign securities laws.

 

h) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision of this Warrant or the Purchase Agreement, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

 

i) Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement.

 

j) Disclosure. Upon delivery by the Company to the Holder (or receipt by the Company from the Holder) of any notice in accordance with the terms of this Warrant, unless the Company has in good faith determined that the matters relating to such notice do not constitute material, non-public information relating to the Company or any of its Subsidiaries, the Company shall on or prior to 9:00 am, New York city time on the Business Day immediately following such notice delivery date, publicly disclose such material, non-public information on a Report of Foreign Private Issuer on Form 6-K or otherwise. In the event that the Company believes that a notice contains material, non-public information relating to the Company or any of its Subsidiaries, the Company so shall indicate to the Holder explicitly in writing in such notice (or immediately upon receipt of notice from the Holder, as applicable), and in the absence of any such written indication in such notice (or notification from the Company immediately upon receipt of notice from the Holder), the Holder shall be entitled to presume that information contained in the notice does not constitute material, non-public information relating to the Company or any of its Subsidiaries. Nothing contained in this Section 6 shall limit any obligations of the Company, or any rights of the Holder, under Section 4(i) of the Securities Purchase Agreement.

 

k) Absence of Trading and Disclosure Restrictions. The Company acknowledges and agrees that the Holder is not a fiduciary or agent of the Company and that the Holder shall have no obligation to (a) maintain the confidentiality of any information provided by the Company or (b) refrain from trading any securities while in possession of such information in the absence of a written non-disclosure agreement signed by an officer of the Holder that explicitly provides for such confidentiality and trading restrictions. In the absence of such an executed, written non-disclosure agreement, the Company acknowledges that the Holder may freely trade in any securities issued by the Company, may possess and use any information provided by the Company in connection with such trading activity, and may disclose any such information to any third party.

 

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l) Payment of Collection, Enforcement and Other Costs. If (a) this Warrant is placed in the hands of an attorney for collection or enforcement or is collected or enforced through any legal proceeding or the holder otherwise takes action to collect amounts due under this Warrant or to enforce the provisions of this Warrant or (b) there occurs any bankruptcy, reorganization, receivership of the company or other proceedings affecting company creditors’ rights and involving a claim under this Warrant, then the Company shall pay the costs incurred by the Holder for such collection, enforcement or action or in connection with such bankruptcy, reorganization, receivership or other proceeding, including, without limitation, attorneys’ fees and disbursements.

 

m) Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Shares or as a shareholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

 

n) Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

 

o) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.

 

p) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

 

q) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

 

r) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

 

********************

(Signature Page Follows)

 

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

 

  PRIMECH HOLDINGS LTD. 
     
  By:  
    Name:
    Title:

 

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NOTICE OF EXERCISE

 

To: PRIMECH HOLDINGS LTD.

 

(1) The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any. Payment shall take the form of in lawful money of the United States.

 

(2) Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:

 

_______________________________

 

 

The Warrant Shares shall be delivered to the following DWAC Account Number:

 

_______________________________

 

_______________________________

 

_______________________________

 

[SIGNATURE OF HOLDER]

 

Name of Investing Entity: ________________________________________________________________________

Signature of Authorized Signatory of Investing Entity: _________________________________________________

Name of Authorized Signatory: ___________________________________________________________________

Title of Authorized Signatory: ____________________________________________________________________

Date: ________________________________________________________________________________________

 

 

 

 

EXHIBIT B

 

ASSIGNMENT FORM

 

(To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)

 

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

 

Name:

  (Please Print)
   
Address:

 

(Please Print)

   
Phone Number:  
   
Email Address:  
   
Dated: _______________ __, ______  
   

 

Holder’s Signature:    
     
Holder’s Address:    

 

 

 

Exhibit 10.33

 

SECURITIES PURCHASE AGREEMENT

 

This Securities Purchase Agreement (this “Agreement”) is dated as of __________, 2024, between Primech Holdings Ltd., a company incorporated under the laws of Singapore (the “Company”), and each purchaser identified on the signature pages hereto (each, including its successors and assigns, a “Purchaser” and collectively the “Purchasers”).

 

WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to an effective registration statement under the Securities Act of 1933, as amended (the “Securities Act”) as to the Shares and Warrants, the Company desires to issue and sell to each Purchaser, and each Purchaser, severally and not jointly, desires to purchase from the Company, securities of the Company as more fully described in this Agreement.

 

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows:

 

ARTICLE I.
DEFINITIONS

 

1.1  Definitions. In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms have the meanings set forth in this Section 1.1:

 

Acquiring Person” shall have the meaning ascribed to such term in Section 4.5.

 

Action” shall have the meaning ascribed to such term in Section 3.1(j).

 

Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person as such terms are used in and construed under Rule 405 under the Securities Act.

 

Board of Directors” means the board of directors of the Company.

 

Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New York are generally are open for use by customers on such day.

 

 

 

 

Closing” means the closing of the purchase and sale of the Securities pursuant to Section 2.1.

 

Closing Date” means the Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable parties thereto, and all conditions precedent to (i) the Purchasers’ obligations to pay the Subscription Amount and (ii) the Company’s obligations to deliver the Securities, in each case, have been satisfied or waived, but in no event later than the first (1st) Trading Day following the date hereof.

 

Commission” means the United States Securities and Exchange Commission.

 

Company Counsel” means Loeb & Loeb LLP, with regards to matters of US federal securities law, and JurisAsia LLC with regards to matters of Singapore law.

 

Disclosure Schedules” means the Disclosure Schedules of the Company delivered concurrently herewith.

 

Disclosure Time” means, (i) if this Agreement is signed on a day that is not a Trading Day or after 9:00 a.m. (New York City time) and before midnight (New York City time) on any Trading Day, 9:01 a.m. (New York City time) on the Trading Day immediately following the date hereof, unless otherwise instructed as to an earlier time by the Placement Agent, and (ii) if this Agreement is signed between midnight (New York City time) and 9:00 a.m. (New York City time) on any Trading Day, no later than 9:01 a.m. (New York City time) on the date hereof, unless otherwise instructed as to an earlier time by the Placement Agent.

 

Escrow Agent” means Continental Stock Transfer & Trust Corporation.

 

Evaluation Date” shall have the meaning ascribed to such term in Section 3.1(s).

 

Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

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Exempt Issuance” means the issuance of (a) Ordinary Shares or options to employees, officers, directors consultants or other vendors of the Company pursuant to any share or option plan duly adopted for such purpose, by a majority of the non-employee members of the Board of Directors or a majority of the members of a committee of non-employee directors established for such purpose for services rendered to the Company, provided, however, in order for any issuances to consultants to be considered an Exempt Issuance, such issuances must be issued as “restricted securities” (as defined in Rule 144) and carry no registration rights that require or permit the filing of any registration statement in connection therewith during the prohibition period in Section 4.11 herein; (b) securities upon the exercise or exchange of or conversion of any Securities issued hereunder and/or other securities exercisable or exchangeable for or convertible into Ordinary Shares issued and outstanding on the date of this Agreement, provided that such securities have not been amended since the date of this Agreement to increase the number of such securities or to decrease the exercise price, exchange price or conversion price of such securities (other than in connection with share splits or combinations) or to extend the term of such securities; and (c) securities issued pursuant to acquisitions or strategic transactions approved by a majority of the disinterested directors of the Company, provided that such securities are issued as “restricted securities” (as defined in Rule 144) and carry no registration rights that require or permit the filing of any registration statement in connection therewith during the prohibition period in Section 4.12(a) herein, and provided that any such issuance shall only be to a Person (or to the equityholders of a Person) which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with the current business of the Company at such time and shall provide to the Company additional benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities.

 

FCPA” means the Foreign Corrupt Practices Act of 1977, as amended.

 

GAAP” shall have the meaning ascribed to such term in Section 3.1(h).

 

Indebtedness” shall have the meaning ascribed to such term in Section 3.1(aa).

 

Intellectual Property Rights” shall have the meaning ascribed to such term in Section 3.1(p).

 

Legend Removal Date” shall have the meaning ascribed to such term in Section 4.1(c).

 

Liens” means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

 

Material Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b).

 

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Material Permits” shall have the meaning ascribed to such term in Section 3.1(n).

 

Ordinary Shares” means the ordinary shares of the Company, without par value, and any other class of securities into which such securities may hereafter be reclassified or changed.

 

Ordinary Share Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Ordinary Shares, including, without limitation, any debt, preferred share, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Ordinary Shares.

 

Per Share Purchase Price” equals $______, subject to adjustment for reverse and forward share splits, share dividends, share combinations and other similar transactions of the Ordinary Shares that occur after the date of this Agreement but prior to the Closing Date.

 

Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

 

Placement Agent” means FT Global Capital, Inc.

 

Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial proceeding, such as a deposition), whether commenced or threatened.

 

Prospectus” means the final prospectus filed for the Registration Statement.

 

Prospectus Supplement” means the supplement to the Prospectus complying with Rule 424(b) of the Securities Act that is filed with the Commission and has been delivered by the Company along with the Prospectus to each Purchaser at the Closing.

 

Purchaser Party” shall have the meaning ascribed to such term in Section 4.8.

 

Registration Statement” means the effective registration statement with Commission file No. 333-________, which became effective on ___________, 2024, which registers the sale of the Shares to the Purchasers.

 

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Required Approvals” shall have the meaning ascribed to such term in Section 3.1(e).

 

Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.

 

Rule 424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.

 

SEC Reports” shall have the meaning ascribed to such term in Section 3.1(h).

 

Securities” means the Shares, the Warrants and the Warrant Shares.

 

Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

Shares” means the Ordinary Shares issued or issuable to each Purchaser pursuant to this Agreement.

 

Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be deemed to include locating and/or borrowing Ordinary Shares).

 

Subscription Amount” means, as to each Purchaser, the aggregate amount to be paid for Shares and Warrants purchased hereunder as specified below such Purchaser’s name on the signature page of this Agreement and next to the heading “Subscription Amount,” in United States dollars and in immediately available funds.

 

Subsequent Placement” shall have the meaning ascribed to such term in Section 4.11.

 

Subsidiary” means any subsidiary of the Company as set forth on Schedule 3.1(a), and shall, where applicable, also include any direct or indirect subsidiary of the Company formed or acquired after the date hereof.

 

Trading Day” means a day on which the principal Trading Market is open for trading.

 

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Trading Market” means any of the following markets or exchanges on which the Ordinary Shares are listed or quoted for trading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, or the New York Stock Exchange (or any successors to any of the foregoing).

 

Transaction Documents” means this Agreement, the Warrants, all exhibits and schedules thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated hereunder.

 

Transfer Agent” means VStock Transfer, LLC, the current transfer agent of the Company, with a mailing address of 18 Lafayette Place, Woodmere, New York 11598 and an email address of action@vstocktransfer.com, and any successor transfer agent of the Company.

 

Variable Rate Transaction” shall have the meaning ascribed to such term in Section 4.11(b).

 

Warrants” means, collectively, the Common Share purchase warrants delivered to the Purchasers at the Closing in accordance with Section 2.2 hereof, in the form of Exhibit A attached hereto.

 

Warrant Shares” means the Ordinary Shares issuable upon exercise of the Warrants.

 

ARTICLE II.
PURCHASE AND SALE

 

2.1 Closing. On the Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution and delivery of this Agreement by the parties hereto, the Company agrees to sell, and the Purchasers, severally and not jointly, agree to purchase, up to an aggregate of $__________ of Shares and Warrants. On the Closing Date, (i) each Purchaser shall pay its respective Subscription Amount as set forth on the signature page hereto executed by such Purchaser for the Shares and the Warrants to be issued and sold to such Purchaser at Closing, by wire transfer of immediately available funds to the Escrow Agent for distribution in accordance with the written wire instructions provided by the Company as set forth in Section 2.2(iii), and (ii) the Company shall (A) cause the Transfer Agent via The Depository Trust Company Deposit or Withdrawal at Custodian system (“DWAC”) to deliver Shares equal to such Purchaser’s Subscription Amount divided by the Per Share Purchase Price, (B) deliver to each Purchaser the Warrant such Purchaser is purchasing at such Closing, in each case, duly executed on behalf of the Company and registered in the name of such Purchaser or its designee and (C) deliver to each such Purchaser the other items set forth in Section 2.2 deliverable at the Closing. Upon satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at the offices of Placement Agent’s counsel, such other location, or remotely, as the parties shall mutually agree. Notwithstanding anything herein to the contrary, if at any time on or after the time of execution of this Agreement by the Company and an applicable Purchaser, through, and including the time immediately prior to the Closing (the “Pre-Settlement Period”), if such Purchaser sells to any Person all, or any portion, of any Ordinary Shares to be issued hereunder to such Purchaser at the Closing (collectively, the “Pre-Settlement Shares”), such Purchaser shall, automatically hereunder (without any additional required actions by such Purchaser or the Company), be deemed to be unconditionally bound to purchase, and the Company shall be deemed unconditionally bound to sell, such Pre-Settlement Shares to such Purchaser at the Closing; provided, that the Company shall not be required to deliver any Pre-Settlement Shares to such Purchaser prior to the Company’s receipt of the Subscription Amount for such Pre-Settlement Shares hereunder; provided, further, that the Company hereby acknowledges and agrees that the forgoing shall not constitute a representation or covenant by such Purchaser as to whether or not such Purchaser will elect to sell any Pre-Settlement Shares during the Pre-Settlement Period.  The decision to sell any Ordinary Shares will be made in the sole discretion of such Purchaser from time to time, including during the Pre-Settlement Period.

 

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2.2 Deliveries.

 

(a) On or prior to the Closing Date, the Company shall deliver or cause to be delivered to each Purchaser the following:

 

(i) this Agreement duly executed by the Company;

 

(ii) a legal opinion of Company Counsel, in form and substance reasonably satisfactory to the Placement Agent and the Purchasers addressed to the Placement Agent and the Purchasers;

 

(iii) the Company shall have provided each Purchaser with the Company’s wire instructions, on Company letterhead and executed by the Chief Executive Officer or Chief Financial Officer;

 

(iv) a copy of the irrevocable instructions to the Transfer Agent instructing the Transfer Agent to deliver on an expedited basis via The Depository Trust Company Deposit or Withdrawal at Custodian system (“DWAC”) Shares equal to such Purchaser’s Subscription Amount divided by the Per Share Purchase Price, registered in the name of such Purchaser;

 

(v) a Warrant registered in the name of such Purchaser to purchase up to a number of Ordinary Shares equal to ___% of such Purchaser’s Shares, with an exercise price equal to $___, subject to adjustment therein;

 

(vi) the Prospectus and Prospectus Supplement (which may be delivered in accordance with Rule 172 under the Securities Act);

 

(vii) the wire instructions for the escrow account maintained by the Escrow Agent on behalf of the Company relating to the transactions contemplated by this Agreement; and

 

(viii) lock-up agreements, in a form acceptable to the Purchasers (the “Lock-Up Agreement”), by and between the Company and each of the directors, officers, and 5% shareholders of the Company (collectively, the “Shareholders”), each duly executed and delivered by the Company and each of the Shareholders.

 

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(b) On or prior to the Closing Date, each Purchaser shall deliver or cause to be delivered to the Company the following:

 

(i) this Agreement duly executed by such Purchaser; and

 

(ii) such Purchaser’s Subscription Amount.

 

2.3 Closing Conditions.

 

(a) The obligations of the Company hereunder in connection with the Closing are subject to the following conditions being met:

 

(i) the accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality or Material Adverse Effect, in all respects) on the Closing Date of the representations and warranties of the Purchasers contained herein (unless as of a specific date therein in which case they shall be accurate as of such date);

 

(ii) all obligations, covenants and agreements of each Purchaser required to be performed at or prior to the Closing Date shall have been performed; and

 

(iii) the delivery by each Purchaser of the items set forth in Section 2.2(b) of this Agreement.

 

(b) The respective obligations of each Purchaser hereunder in connection with the Closing are subject to the following conditions being met:

 

(i) the accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality or Material Adverse Effect, in all respects) when made and on the Closing Date of the representations and warranties of the Company contained herein (unless as of a specific date therein in which case they shall be accurate in all material respects as of such date);

 

(ii) all obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been performed;

 

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(iii) the delivery by the Company of the items set forth in Section 2.2(a) of this Agreement;

 

(iv) the Registration Statement shall be effective and available for the issuance and sale of the Shares hereunder and the Company shall have delivered to such Purchaser the Prospectus and the Prospectus Supplement as required thereunder;

 

(v) there shall have been no Material Adverse Effect with respect to the Company since the date hereof; and

 

(vi) from the date hereof to the Closing Date, trading in the Ordinary Shares shall not have been suspended by the Commission or the Company’s principal Trading Market, and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by such service, or on any Trading Market, nor shall a banking moratorium have been declared either by the United States or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or other national or international calamity not currently existing as of the date hereof of such magnitude in its effect on, or any material adverse change in, Trading Market which, in each case, in the reasonable judgment of such Purchaser, makes it impracticable or inadvisable to purchase the Securities at the Closing.

 

ARTICLE III.
REPRESENTATIONS AND WARRANTIES

 

3.1 Representations and Warranties of the Company. Except as set forth in the Disclosure Schedules, which Disclosure Schedules shall be deemed a part hereof and shall qualify any representation made herein to the extent of the disclosure contained in the corresponding section of the Disclosure Schedules, the Company hereby makes the following representations and warranties to each Purchaser:

 

(a) Subsidiaries. All of the direct and indirect subsidiaries of the Company are set forth on Schedule 3.1(a). Except as set forth on Schedule 3.1(a), the Company owns, directly or indirectly, all of the share capital or other equity interests of each Subsidiary free and clear of any Liens, and all of the issued and outstanding share capital of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities, other than as indicated on Schedule 3.1(a). If the Company has no subsidiaries, all other references to the Subsidiaries or any of them in the Transaction Documents shall be disregarded.

 

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(b) Organization and Qualification. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary is in violation nor default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.

 

(c) Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and each of the other Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of this Agreement and each of the other Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, the Board of Directors or the Company’s shareholders in connection herewith or therewith other than in connection with the Required Approvals. This Agreement and each other Transaction Document to which it is a party has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

 

(d) No Conflicts. The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents to which it is a party, the issuance and sale of the Securities and the consummation by it of the transactions contemplated hereby and thereby do not and will not (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, anti-dilution or similar adjustments, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.

 

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(e) Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i) the filings required pursuant to Section 4.4 of this Agreement, (ii) the filing with the Commission of the Prospectus Supplement, (iii) application(s) to each applicable Trading Market for the listing of the Shares and Warrant Shares for trading thereon in the time and manner required thereby, (iv) the Board of Directors of the terms and conditions of this Agreement and the transactions contemplated herein; and (v) such filings as are required to be made under applicable state securities laws, if any (collectively, the “Required Approvals”).

 

(f) Issuance of the Securities; Registration. The Securities are duly authorized and, when issued and paid for in accordance with the applicable Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company. The Warrant Shares, when issued in accordance with the terms of the Warrants, will be validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company. The Company has reserved from its duly authorized share capital the maximum number of Ordinary Shares currently issuable pursuant to this Agreement and the Warrants. The Company has prepared and filed the Registration Statement in conformity with the requirements of the Securities Act, including the Prospectus, and such amendments and supplements thereto as may have been required to the date of this Agreement. The Registration Statement is effective under the Securities Act and no stop order preventing or suspending the effectiveness of the Registration Statement or suspending or preventing the use of the Prospectus has been issued by the Commission and no proceedings for that purpose have been instituted or, to the knowledge of the Company, are threatened by the Commission. The Company, if required by the rules and regulations of the Commission, shall file the Prospectus Supplement with the Commission pursuant to Rule 424(b). At the time the Registration Statement and any amendments thereto became effective, at the date of this Agreement and at the Closing Date, the Registration Statement and any amendments thereto conformed and will conform in all material respects to the requirements of the Securities Act and did not and will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; and the Prospectus, Prospectus Supplement and any amendments or supplements thereto, at the time the Prospectus, Prospectus Supplement or any amendment or supplement thereto was issued and at the Closing Date, conformed and will conform in all material respects to the requirements of the Securities Act and did not and will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The Company was at the time of the filing of the Registration Statement eligible to use Form F-1.

 

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(g) Capitalization. The capitalization of the Company as of the date hereof is as set forth on Schedule 3.1(g), which Schedule 3.1(g) shall also include the number of Ordinary Shares owned beneficially, and of record, by Affiliates of the Company as of the date hereof. The Company has not issued any of its share capital since its most recently filed Form 20-F, other than (i) pursuant to the exercise of employee share options under the Company’s share option plans disclosed in the SEC Reports, (ii) pursuant to the issuance of Ordinary Shares to employees pursuant to the Company’s employee share purchase plans disclosed in the SEC Reports, and (iii) pursuant to the conversion and/or exercise of Common Share Equivalents outstanding as of the date of the most recently filed Form 20-F, other than as set forth on Schedule 3.1(g). No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents. Except as set forth on Schedule 3.1(g) and except as a result of the purchase and sale of the Securities, there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire, any Ordinary Shares or the share capital of any Subsidiary, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional Ordinary Shares or Common Share Equivalents or share capital of any Subsidiary. The issuance and sale of the Securities will not obligate the Company or any Subsidiary to issue Ordinary Shares or other securities to any Person (other than the Purchasers). There are no outstanding securities or instruments of the Company or any Subsidiary with any provision that adjusts the exercise, conversion, exchange or reset price of such security or instrument upon an issuance of securities by the Company or any Subsidiary. There are no outstanding securities or instruments of the Company or any Subsidiary that contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to redeem a security of the Company or such Subsidiary. The Company does not have any share appreciation rights or “phantom share” plans or agreements or any similar plan or agreement. All of the outstanding share capital of the Company are duly authorized, validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. No further approval or authorization of any shareholder, the Board of Directors, or others is required for the issuance and sale of the Securities. There are no shareholders agreements, voting agreements or other similar agreements with respect to the Company’s share capital to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s shareholders.

 

(h) SEC Reports; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, together with the Prospectus and the Prospectus Supplement, being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) applied on a consistent basis during the periods involved, except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.

 

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(i) Material Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements included within the SEC Reports, except as set forth on Schedule 3.1(i), (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or disclosed in filings made with the Commission, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its shareholders or purchased, redeemed or made any agreements to purchase or redeem any of its share capital and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company share option plans. The Company does not have pending before the Commission any request for confidential treatment of information. Except for the issuance of the Securities contemplated by this Agreement or as set forth on Schedule 3.1(i), no event, liability, fact, circumstance, occurrence or development has occurred or exists or is reasonably expected to occur or exist with respect to the Company or its Subsidiaries or their respective businesses, prospects, properties, operations, assets or financial condition that would be required to be disclosed by the Company under applicable securities laws at the time this representation is made or deemed made that has not been publicly disclosed at least one Trading Day prior to the date that this representation is made.

 

(j) Litigation. Except as set forth on Schedule 3.1(j), there is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”). None of the Actions set forth on Schedule 3.1(j) (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and to the knowledge of the Company, there is not pending or contemplated or threatened, any investigation by the Commission involving the Company or any current or former director or officer of the Company. The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act.

 

(k) Labor Relations. No labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company, which could reasonably be expected to result in a Material Adverse Effect. None of the Company’s or its Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with the Company or such Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement other than as stated on Schedule 3.1(k), and the Company and its Subsidiaries believe that their relationships with their employees are good. To the knowledge of the Company, no executive officer of the Company or any Subsidiary, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of any third party, and the continued employment of each such executive officer does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

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(l) Compliance. Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any judgment, decree or order of any court, arbitrator or other governmental authority or (iii) is or has been in violation of any statute, rule, ordinance or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety, product quality and safety and employment and labor matters, except in each case as could not have or reasonably be expected to result in a Material Adverse Effect.

 

(m) Environmental Laws. The Company and its Subsidiaries (i) are in compliance with all applicable federal, state, local and foreign laws relating to pollution or protection of human health or the environment (including ambient air, surface water, groundwater, land surface or subsurface strata), including laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”) into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands, or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations, issued, entered, promulgated or approved thereunder (“Environmental Laws”); (ii) have received all permits licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses; and (iii) are in compliance with all terms and conditions of any such permit, license or approval where in each clause (i), (ii) and (iii), the failure to so comply could be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.

 

(n) Regulatory Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports, except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any Material Permit.

 

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(o) Title to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them (and with respect to any real property in Singapore, as permitted under the laws thereof) and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries, in each case free and clear of all Liens, except for (i) Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and (ii) Liens for the payment of federal, state or other taxes, for which appropriate reserves have been made therefor in accordance with GAAP and, the payment of which is neither delinquent nor subject to penalties. Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in compliance.

 

(p) Intellectual Property. The Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar rights necessary or required for use in connection with their respective businesses as described in the SEC Reports and which the failure to so have could have a Material Adverse Effect (collectively, the “Intellectual Property Rights”). None of, and neither the Company nor any Subsidiary has received a notice (written or otherwise) that any of, the Intellectual Property Rights has expired, terminated or been abandoned, or is expected to expire or terminate or be abandoned, within two (2) years from the date of this Agreement. Neither the Company nor any Subsidiary has received, since the date of the latest audited financial statements included within the SEC Reports, a written notice of a claim or otherwise has any knowledge that the Intellectual Property Rights violate or infringe upon the rights of any Person, except as could not have or reasonably be expected to not have a Material Adverse Effect. To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights. The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual properties, except where failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(q) Insurance. The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged. Neither the Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without a significant increase in cost.

 

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(r) Transactions With Affiliates and Employees. None of the officers or directors of the Company or any Subsidiary and, to the knowledge of the Company, none of the employees of the Company or any Subsidiary is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, providing for the borrowing of money from or lending of money to or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee, shareholder, member or partner, in each case in excess of $120,000 other than for (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and (iii) other employee benefits, including share option agreements under any share option plan of the Company, or otherwise as set forth on Schedule 3.1(r).

 

(s) Sarbanes-Oxley; Internal Accounting Controls. The Company and the Subsidiaries are in compliance with any and all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable rules and regulations promulgated by the Commission thereunder that are effective as of the date hereof and as of the Closing Date. The Company and the Subsidiaries maintain a system of internal control over financial reporting sufficient to provide reasonable assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company and the Subsidiaries have established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and the Subsidiaries and designed such disclosure controls and procedures to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. The Company’s certifying officers have evaluated the effectiveness of the disclosure controls and procedures of the Company and the Subsidiaries as of the end of the period covered by the most recently filed annual report under the Exchange Act (such date, the “Evaluation Date”). The Company presented in its most recently filed annual report under the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since the Evaluation Date, there have been no changes in the internal control over financial reporting (as such term is defined in the Exchange Act) of the Company and its Subsidiaries that have materially affected, or is reasonably likely to materially affect, the internal control over financial reporting of the Company and its Subsidiaries.

 

(t) Certain Fees. Except as set forth in the Prospectus Supplement, no brokerage or finder’s fees or commissions are or will be payable by the Company or any Subsidiary to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents. The Purchasers shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this section that may be due in connection with the transactions contemplated by the Transaction Documents.

 

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(u) Investment Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities, will not be or be an Affiliate of, an “investment company,” within the meaning of the Investment Company Act of 1940, as amended (the “Investment Company Act”), other than a transient investment company as contemplated by Rule 3a-2 of the Investment Company Act, or or otherwise as set forth on Schedule 3.1(u). The Company shall conduct its business in a manner so that it will not become subject to registration under the Investment Company Act of 1940, as amended.

 

(v) Registration Rights. No Person has any right to cause the Company or any Subsidiary to effect the registration under the Securities Act of any securities of the Company or any Subsidiary.

 

(w) Listing and Maintenance Requirements. The Ordinary Shares are registered pursuant to Section 12(b) of the Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Ordinary Shares under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating such registration. Except as set forth on Schedule 3.1(w), the Company has not, in the 12 months preceding the date hereof, received notice from any Trading Market on which the Ordinary Shares are or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements of such Trading Market which has not been cured as of the date hereof. The Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements. The Ordinary Shares are currently eligible for electronic transfer through the Depository Trust Company or another established clearing corporation and the Company is current in payment of the fees to the Depository Trust Company (or such other established clearing corporation) in connection with such electronic transfer.

 

(x) Application of Takeover Protections. The Company and the Board of Directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company’s certificate of incorporation (or similar charter documents) or the laws of its state of incorporation that is or could become applicable to the Purchasers as a result of the Purchasers and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including without limitation as a result of the Company’s issuance of the Securities and the Purchasers’ ownership of the Securities.

 

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(y) Disclosure. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company confirms that neither it nor any other Person acting on its behalf has provided any of the Purchasers or their agents or counsel with any information that it believes constitutes or might constitute material, non-public information which is not otherwise disclosed in the Prospectus Supplement or disclosed pursuant to Section 4.4. The Company understands and confirms that the Purchasers will rely on the foregoing representation in effecting transactions in securities of the Company. All of the disclosure furnished by or on behalf of the Company to the Purchasers regarding the Company and its Subsidiaries, their respective businesses and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. The press releases disseminated by the Company during the twelve months preceding the date of this Agreement taken as a whole do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made and when made, not misleading. The Company acknowledges and agrees that no Purchaser makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3.2 hereof.

 

(z) No Integrated Offering. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Securities to be integrated with prior offerings by the Company for purposes of (i) the Securities Act which would require the registration of the Warrants or Warrant Shares under the Securities Act, or (ii) any applicable shareholder approval provisions of any Trading Market on which any of the securities of the Company are listed or designated.

 

(aa) Solvency. Based on the consolidated financial condition of the Company as of the Closing Date, after giving effect to the receipt by the Company of the proceeds from the sale of the Securities hereunder, (i) the fair saleable value of the Company’s assets exceeds the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including known contingent liabilities) as they mature, (ii) the Company’s assets do not constitute unreasonably small capital to carry on its business as now conducted and as proposed to be conducted including its capital needs taking into account the particular capital requirements of the business conducted by the Company, consolidated and projected capital requirements and capital availability thereof, and (iii) the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its liabilities when such amounts are required to be paid. The Company does not intend to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt). The Company has no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction within one year from the Closing Date. The Prospectus Supplement sets forth as of the date hereof all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any Subsidiary has commitments. For the purposes of this Agreement, “Indebtedness” means (x) any liabilities for borrowed money or amounts owed in excess of $50,000 (other than trade accounts payable incurred in the ordinary course of business), (y) all guaranties, endorsements and other contingent obligations in respect of indebtedness of others, whether or not the same are or should be reflected in the Company’s consolidated balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (z) the present value of any lease payments in excess of $50,000 due under leases required to be capitalized in accordance with GAAP. Neither the Company nor any Subsidiary is in default with respect to any Indebtedness.

 

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(bb) Tax Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, the Company and its Subsidiaries each (i) has made or filed all United States federal, state and local income and all foreign income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations and (iii) has set aside on its books provision reasonably adequate for the payment of all material taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company or of any Subsidiary know of no basis for any such claim.

 

(cc) Foreign Corrupt Practices. Neither the Company nor any Subsidiary, nor to the knowledge of the Company or any Subsidiary, any agent or other person acting on behalf of the Company or any Subsidiary, has (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company or any Subsidiary (or made by any person acting on its behalf of which the Company is aware) which is in violation of law, or (iv) violated in any material respect any provision of FCPA.

 

(dd) Accountants. The Company’s accounting firm is set forth on Schedule 3.1(dd) of the Disclosure Schedules. To the knowledge and belief of the Company, such accounting firm (i) is a registered public accounting firm as required by the Exchange Act, and (ii) shall express its opinion with respect to the financial statements to be included in the Company’s Annual Report for the fiscal year ending March 31, 2024.

 

(ee) Acknowledgment Regarding Purchasers’ Purchase of Securities. The Company acknowledges and agrees that each of the Purchasers is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated thereby. The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given by any Purchaser or any of their respective representatives or agents in connection with the Transaction Documents and the transactions contemplated thereby is merely incidental to the Purchasers’ purchase of the Securities. The Company further represents to each Purchaser that the Company’s decision to enter into this Agreement and the other Transaction Documents has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.

 

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(ff) Acknowledgment Regarding Purchaser’s Trading Activity. Anything in this Agreement or elsewhere herein to the contrary notwithstanding (except for Sections 3.2(f) and 4.14 hereof), it is understood and acknowledged by the Company that: (i) none of the Purchasers has been asked by the Company to agree, nor has any Purchaser agreed, to desist from purchasing or selling, long and/or short, securities of the Company, or “derivative” securities based on securities issued by the Company or to hold the Securities for any specified term; (ii) past or future open market or other transactions by any Purchaser, specifically including, without limitation, Short Sales or “derivative” transactions, before or after the closing of this or future private placement transactions, may negatively impact the market price of the Company’s publicly-traded securities; (iii) any Purchaser, and counter-parties in “derivative” transactions to which any such Purchaser is a party, directly or indirectly, presently may have a “short” position in the Ordinary Shares, and (iv) each Purchaser shall not be deemed to have any affiliation with or control over any arm’s length counter-party in any “derivative” transaction. The Company further understands and acknowledges that (y) one or more Purchasers may engage in hedging activities at various times during the period that the Securities are outstanding, including, without limitation, during the periods that the value of the Warrant Shares deliverable with respect to Securities are being determined, and (z) such hedging activities (if any) could reduce the value of the existing shareholders’ equity interests in the Company at and after the time that the hedging activities are being conducted. The Company acknowledges that such aforementioned hedging activities do not constitute a breach of any of the Transaction Documents.

 

(gg) Regulation M Compliance. The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or, paid any compensation for soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company, other than, in the case of clauses (ii) and (iii), compensation paid to the Placement Agent in connection with the placement of the Securities.

 

(hh) Share Equity Plans. Each share option or equity award granted by the Company under the Company’s equity award plans was granted (i) in accordance with the terms of the Company’s shareholder approved equity award plan(s) and (ii) with an exercise price at least equal to the fair market value of the Ordinary Shares on the date such option or equity award would be considered granted under GAAP and applicable law. No share option or equity award granted under the Company’s or equity award plan(s) has been backdated. The Company has not knowingly granted, and there is no and has been no Company policy or practice to knowingly grant, options prior to, or otherwise knowingly coordinate the grant of share options with, the release or other public announcement of material information regarding the Company or its Subsidiaries or their financial results or prospects.

 

(ii) Office of Foreign Assets Control. Neither the Company nor any Subsidiary nor, to the Company’s knowledge, any director, officer, agent, employee or affiliate of the Company or any Subsidiary is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”).

 

(jj) U.S. Real Property Holding Corporation. The Company is not and has never been a U.S. real property holding corporation within the meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company shall so certify upon any Purchaser’s request.

 

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(kk) Bank Holding Company Act. Neither the Company nor any of its Subsidiaries or Affiliates is subject to the Bank Holding Company Act of 1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). Neither the Company nor any of its Subsidiaries or Affiliates owns or controls, directly or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent or more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither the Company nor any of its Subsidiaries or Affiliates exercises a controlling influence over the management or policies of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve.

 

(ll) Money Laundering. The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the “Money Laundering Laws”), and no Action or Proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any Subsidiary with respect to the Money Laundering Laws is pending or, to the knowledge of the Company or any Subsidiary, threatened.

 

(mm) Cybersecurity. (i)(x) There has been no security breach or other compromise of or relating to any of the Company’s or any Subsidiary’s information technology and computer systems, networks, hardware, software, data (including the data of its respective customers, employees, suppliers, vendors and any third party data maintained by or on behalf of it), equipment or technology (collectively, “IT Systems and Data”) and (y) the Company and the Subsidiaries have not been notified of, and has no knowledge of any event or condition that would reasonably be expected to result in, any security breach or other compromise to its IT Systems and Data; (ii) the Company and the Subsidiaries are presently in compliance with all applicable laws or statutes and all judgments, orders, rules and regulations of any court or arbitrator or governmental or regulatory authority, internal policies and contractual obligations relating to the privacy and security of IT Systems and Data and to the protection of such IT Systems and Data from unauthorized use, access, misappropriation or modification, except as would not, individually or in the aggregate, have a Material Adverse Effect; (iii) the Company and the Subsidiaries have implemented and maintained commercially reasonable safeguards to maintain and protect its material confidential information and the integrity, continuous operation, redundancy and security of all IT Systems and Data; and (iv) the Company and the Subsidiaries have implemented backup and disaster recovery technology consistent with industry standards and practices.

 

(nn)

 

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3.2 Representations and Warranties of the Purchasers. Each Purchaser, for itself and for no other Purchaser, hereby represents and warrants as of the date hereof and as of the Closing Date to the Company as follows (unless as of a specific date therein, in which case they shall be accurate as of such date):

 

(a) Organization; Authority. Such Purchaser is either an individual or an entity duly incorporated or formed, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited liability company or similar power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of the Transaction Documents and performance by such Purchaser of the transactions contemplated by the Transaction Documents have been duly authorized by all necessary corporate, partnership, limited liability company or similar action, as applicable, on the part of such Purchaser. Each Transaction Document to which it is a party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

 

(b) Understandings or Arrangements. Such Purchaser is acquiring the Securities as principal for its own account and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Securities (this representation and warranty not limiting such Purchaser’s right to sell the Securities pursuant to the Registration Statement or otherwise in compliance with applicable federal and state securities laws). Such Purchaser is acquiring the Securities hereunder in the ordinary course of its business.

 

(c) Purchaser Status. At the time such Purchaser was offered the Securities, it was, and as of the date hereof it is, and on each date on which it exercises any Warrants, it will be, an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act.

 

(d) Experience of Such Purchaser. Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.

 

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(e) Access to Information. Such Purchaser acknowledges that it has had the opportunity to review the Prospectus, Prospectus Supplement, Transaction Documents (including all exhibits and schedules thereto) and the SEC Reports and has been afforded, (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Securities and the merits and risks of investing in the Securities; (ii) access to information about the Company and its financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. Such Purchaser acknowledges and agrees that neither the Placement Agent nor any Affiliate of the Placement Agent has provided such Purchaser with any information or advice with respect to the Securities nor is such information or advice necessary or desired. Neither the Placement Agent nor any Affiliate has made or makes any representation as to the Company or the quality of the Securities and the Placement Agent and any Affiliate may have acquired non-public information with respect to the Company which such Purchaser agrees need not be provided to it. In connection with the issuance of the Securities to such Purchaser, neither the Placement Agent nor any of its Affiliates has acted as a financial advisor or fiduciary to such Purchaser.

 

(f) Certain Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, such Purchaser has not, nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, directly or indirectly executed any purchases or sales, including Short Sales, of the securities of the Company during the period commencing as of the time that such Purchaser first received a term sheet (written or oral) from the Company or any other Person representing the Company setting forth the material terms of the transactions contemplated hereunder and ending immediately prior to the execution hereof. Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the representation set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement. Other than to other Persons party to this Agreement or to such Purchaser’s representatives, including, without limitation, its officers, directors, partners, legal and other advisors, employees, agents and Affiliates, such Purchaser has maintained the confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this transaction). Notwithstanding the foregoing, for the avoidance of doubt, nothing contained herein shall constitute a representation or warranty, or preclude any actions, with respect to locating or borrowing shares in order to effect Short Sales or similar transactions in the future.

 

The Company acknowledges and agrees that the representations contained in this Section 3.2 shall not modify, amend or affect such Purchaser’s right to rely on the Company’s representations and warranties contained in this Agreement or any representations and warranties contained in any other Transaction Document or any other document or instrument executed and/or delivered in connection with this Agreement or the consummation of the transactions contemplated hereby. Notwithstanding the foregoing, for the avoidance of doubt, nothing contained herein shall constitute a representation or warranty, or preclude any actions, with respect to locating or borrowing shares in order to effect Short Sales or similar transactions in the future.

 

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ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES

 

4.1 Warrant Shares. If all or any portion of a Warrant is exercised at a time when there is an effective registration statement to cover the issuance or resale of the Warrant Shares or if the Warrant is exercised via cashless exercise, the Warrant Shares issued pursuant to any such exercise shall be issued free of all legends. If at any time following the date hereof the Registration Statement (or any subsequent registration statement registering the sale or resale of the Warrant Shares) is not effective or is not otherwise available for the sale or resale of the Warrant Shares, the Company shall immediately notify the holders of the Warrants in writing that such registration statement is not then effective and thereafter shall promptly notify such holders when the registration statement is effective again and available for the sale or resale of the Warrant Shares (it being understood and agreed that the foregoing shall not limit the ability of the Company to issue, or any Purchaser to sell, any of the Warrant Shares in compliance with applicable federal and state securities laws). The Company shall use best efforts to keep a registration statement (including the Registration Statement) registering the issuance or resale of the Warrant Shares effective during the term of the Warrants

 

4.2 Furnishing of Information. Subject to compliance with any applicable securities laws and the conditions set forth in Section 4(d) hereof and to the provisions of Section 4.1 of the Purchase Agreement, until the earliest of the time that no Purchaser owns Securities, the Company covenants to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act even if the Company is not then subject to the reporting requirements of the Exchange Act.

 

4.3 Integration. The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would require the registration under the Securities Act of the sale of the Warrants or Warrant Shares or that would be integrated with the offer or sale of the Securities for purposes of the rules and regulations of any Trading Market such that it would require shareholder approval prior to the closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction.

 

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4.4 Securities Laws Disclosure; Publicity. The Company shall (a) by the Disclosure Time, issue a press release disclosing the material terms of the transactions contemplated hereby, and (b) file a Current Report on Form 6-K, including the Transaction Documents as exhibits thereto, with the Commission within the time required by the Exchange Act. From and after the issuance of such press release, the Company represents to the Purchasers that it shall have publicly disclosed all material, non-public information delivered to any of the Purchasers by the Company or any of its Subsidiaries, or any of their respective officers, directors, employees or agents in connection with the transactions contemplated by the Transaction Documents. In addition, effective upon the issuance of such press release, the Company acknowledges and agrees that any and all confidentiality or similar obligations under any agreement, whether written or oral, between the Company, any of its Subsidiaries or any of their respective officers, directors, agents, employees or Affiliates on the one hand, and any of the Purchasers or any of their Affiliates on the other hand, with respect to the transaction contemplated hereby shall terminate. The Company and each Purchaser shall consult with each other in issuing any other press releases with respect to the transactions contemplated hereby, and neither the Company nor any Purchaser shall issue any such press release nor otherwise make any such public statement without the prior consent of the Company, with respect to any press release of any Purchaser, or without the prior consent of each Purchaser, with respect to any press release of the Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement or communication. Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Purchaser, or include the name of any Purchaser in any filing with the Commission or any regulatory agency or Trading Market, without the prior written consent of such Purchaser, except (a) as required by federal securities law in connection with the filing of final Transaction Documents with the Commission and (b) to the extent such disclosure is required by law or Trading Market regulations, in which case the Company shall provide the Purchasers with prior notice of such disclosure permitted under this clause (b).

 

4.5 Shareholder Rights Plan. No claim will be made or enforced by the Company or, with the consent of the Company, any other Person, that any Purchaser is an “Acquiring Person” under any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter adopted by the Company, or that any Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving Securities under the Transaction Documents or under any other agreement between the Company and the Purchasers.

 

4.6 Non-Public Information. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, which shall be disclosed pursuant to Section 4.4, the Company covenants and agrees that neither it, nor any other Person acting on its behalf will provide any Purchaser or its agents or counsel with any information that constitutes, or the Company reasonably believes constitutes, material non-public information, unless prior thereto such Purchaser shall have consented in writing to the receipt of such information and agreed with the Company to keep such information confidential. The Company understands and confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company. To the extent that the Company, any of its Subsidiaries, or any of their respective officers, directors, agents, employees or Affiliates delivers any material, non-public information to a Purchaser without such Purchaser’s consent, the Company hereby covenants and agrees that such Purchaser shall not have any duty of confidentiality to the Company, any of its Subsidiaries, or any of their respective officers, directors, agents, employees or Affiliates, or a duty to the Company, any of its Subsidiaries or any of their respective officers, directors, agents, employees or Affiliates not to trade on the basis of, such material, non-public information, provided that the Purchaser shall remain subject to applicable law. To the extent that any notice provided pursuant to any Transaction Document constitutes, or contains, material, non-public information regarding the Company or any Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 6-K. The Company understands and confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company.

 

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4.7 Use of Proceeds. Except as set forth on Schedule 4.7 attached hereto, the Company shall use the net proceeds from the sale of the Securities hereunder for the purposes set forth in the Pricing Prospectus and Prospectus and shall not use such proceeds: (a) for the satisfaction of any portion of the Company’s debt (other than payment of trade payables in the ordinary course of the Company’s business and prior practices), (b) for the redemption of any Ordinary Shares or Ordinary Share Equivalents, (c) for the settlement of any outstanding litigation or (d) in violation of FCPA or OFAC regulations.

 

4.8 Indemnification of Purchasers. Subject to the provisions of this Section 4.8, the Company will indemnify and hold each Purchaser and its directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against the Purchaser Parties in any capacity, or any of them or their respective Affiliates, by any shareholder of the Company who is not an Affiliate of such Purchaser Party, with respect to any of the transactions contemplated by the Transaction Documents (unless such action is solely based upon a material breach of such Purchaser Party’s representations, warranties or covenants under the Transaction Documents or any agreements or understandings such Purchaser Party may have with any such shareholder or any violations by such Purchaser Party of state or federal securities laws or any conduct by such Purchaser Party which is finally judicially determined to constitute fraud, gross negligence or willful misconduct) or (c) in connection with any registration statement of the Company providing for the resale by the Purchasers of the Warrant Shares issued and issuable upon exercise of the Warrants, the Company will indemnify each Purchaser Party, to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, reasonable attorneys’ fees) and expenses, as incurred, arising out of or relating to (i) any untrue or alleged untrue statement of a material fact contained in such registration statement, any prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any prospectus or supplement thereto, in the light of the circumstances under which they were made) not misleading, except to the extent, but only to the extent, that such untrue statements or omissions are based solely upon information regarding such Purchaser Party furnished in writing to the Company by such Purchaser Party expressly for use therein, or (ii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act or any state securities law, or any rule or regulation thereunder in connection therewith. If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party. Any Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of such Purchaser Party’s counsel, a material conflict on any material issue between the position of the Company and the position of such Purchaser Party, in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel. The Company will not be liable to any Purchaser Party under this Agreement (y) for any settlement by a Purchaser Party effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed; or (z) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants or agreements made by such Purchaser Party in this Agreement or in the other Transaction Documents. The indemnification required by this Section 4.8 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or are incurred. The indemnity agreements contained herein shall be in addition to any cause of action or similar right of any Purchaser Party against the Company or others and any liabilities the Company may be subject to pursuant to law; provided, however, that no Purchaser shall be entitled to any double recovery of damages as a result of the exercise of any other such right.

 

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4.9 Reservation of Shares. So long as any of the Warrants remain outstanding, the Company shall take all action necessary to at all times have authorized, and reserved from its duly authorized share capital, no less than the maximum number of Warrant Shares then issuable upon exercise of the Warrants (without taking into account any limitations on the exercise of the Warrants set forth in the Warrants) not yet issued.

 

4.10 Listing of Ordinary Shares. The Company hereby agrees to use best efforts to maintain the listing or quotation of the Ordinary Shares on the Trading Market on which it is currently listed, and prior to the Closing, the Company shall apply to list or quote all of the Shares and Warrant Shares on such Trading Market and promptly secure the listing of all of the Shares and Warrant Shares on such Trading Market. The Company further agrees, if the Company applies to have the Ordinary Shares traded on any other Trading Market, it will then include in such application all of the Shares and Warrant Shares, and will take such other action as is necessary to cause all of the Shares and Warrant Shares to be listed or quoted on such other Trading Market as promptly as possible. The Company will then take all action reasonably necessary to continue the listing and trading of its Ordinary Shares on a Trading Market and will comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Trading Market. The Company agrees to maintain the eligibility of the Ordinary Shares for electronic transfer through the Depository Trust Company or another established clearing corporation, including, without limitation, by timely payment of fees to the Depository Trust Company or such other established clearing corporation in connection with such electronic transfer.

 

4.11 Subsequent Equity Sales.

 

(a) From the date hereof until the ninetieth calendar day after the Closing Date, neither the Company nor any Subsidiary shall issue, enter into any agreement to issue or announce the issuance or proposed issuance of any Ordinary Shares or Common Share Equivalents (each, a “Subsequent Placement”).

 

(b) From the date hereof until the first anniversary of the Closing Date, the Company shall be prohibited from effecting or entering into an agreement to effect any issuance by the Company or any of its Subsidiaries of Ordinary Shares or Common Share Equivalents (or a combination of units thereof) involving a Variable Rate Transaction. “Variable Rate Transaction” means a transaction in which the Company (i) issues or sells any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive additional Ordinary Shares either (A) at a conversion price, exercise price or exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for the Ordinary Shares at any time after the initial issuance of such debt or equity securities, or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the Ordinary Shares or (ii) enters into, or effects a transaction under, any agreement, including, but not limited to, an equity line of credit, whereby the Company may issue securities at a future determined price. Any Purchaser shall be entitled to obtain injunctive relief against the Company to preclude any such issuance, which remedy shall be in addition to any right to collect damages. For the avoidance of doubt, the issuance of a warrant or other convertible security with anti-dilution provisions similar to the anti-dilution provisions in the Warrants shall not be deemed to be a Variable Rate Transaction solely due to such provisions.

 

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(c) Notwithstanding the foregoing, this Section 4.11 shall not apply in respect of an Exempt Issuance, except that no Variable Rate Transaction shall be an Exempt Issuance.

 

4.12 [Participation Right.

 

(a) From the date hereof until the date that is the first anniversary of the Closing Date, upon any issuance by the Company or any of its Subsidiaries of Ordinary Shares or Ordinary Shares Equivalents for cash consideration, Indebtedness or a combination of units thereof (a “Subsequent Financing”), each Purchaser shall have the right to participate in up to an amount of the Subsequent Financing equal to __% of the Subsequent Financing (the “Participation Maximum”) on the same terms, conditions and price provided for in the Subsequent Financing.

 

(b) Between the time period of 4:00 pm (New York City time) and 6:00 pm (New York City time) on the Trading Day immediately prior to the Trading Day of the expected announcement of the Subsequent Financing (or, if the Trading Day of the expected announcement of the Subsequent Financing is the first Trading Day following a holiday or a weekend (including a holiday weekend), between the time period of 4:00 pm (New York City time) on the Trading Day immediately prior to such holiday or weekend and 2:00 pm (New York City time) on the day immediately prior to the Trading Day of the expected announcement of the Subsequent Financing), the Company shall deliver to each Purchaser a written notice of the Company’s intention to effect a Subsequent Financing (a “Subsequent Financing Notice”), which notice shall describe in reasonable detail the proposed terms of such Subsequent Financing, the amount of proceeds intended to be raised thereunder and the Person or Persons through or with whom such Subsequent Financing is proposed to be effected and shall include a term sheet and transaction documents relating thereto as an attachment.

 

(c) Any Purchaser desiring to participate in such Subsequent Financing must provide written notice to the Company by 6:30 am (New York City time) on the Trading Day following the date on which the Subsequent Financing Notice is delivered to such Purchaser (the “Notice Termination Time”) that such Purchaser is willing to participate in the Subsequent Financing, the amount of such Purchaser’s participation, and representing and warranting that such Purchaser has such funds ready, willing, and available for investment on the terms set forth in the Subsequent Financing Notice. If the Company receives no such notice from a Purchaser as of such Notice Termination Time, such Purchaser shall be deemed to have notified the Company that it does not elect to participate in such Subsequent Financing.

 

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(d) If, by the Notice Termination Time, notifications by the Purchasers of their willingness to participate in the Subsequent Financing (or to cause their designees to participate) is, in the aggregate, less than the total amount of the Subsequent Financing, then the Company may effect the remaining portion of such Subsequent Financing on the terms and with the Persons set forth in the Subsequent Financing Notice.

 

(e) If, by the Notice Termination Time, the Company receives responses to a Subsequent Financing Notice from Purchasers seeking to purchase more than the aggregate amount of the Participation Maximum, each such Purchaser shall have the right to purchase its Pro Rata Portion (as defined below) of the Participation Maximum. “Pro Rata Portion” means the ratio of (x) the Subscription Amount of Securities purchased on the Closing Date by a Purchaser participating under this Section 4.11 and (y) the sum of the aggregate Subscription Amounts of Securities purchased on the Closing Date by all Purchasers participating under this Section 4.12.

 

(f) The Company must provide the Purchasers with a second Subsequent Financing Notice, and the Purchasers will again have the right of participation set forth above in this Section 4.12, if the definitive agreement related to the initial Subsequent Financing Notice is not entered into for any reason on the terms set forth in such Subsequent Financing Notice within two (2) Trading Days after the date of delivery of the initial Subsequent Financing Notice.

 

(g) The Company and each Purchaser agree that, if any Purchaser elects to participate in the Subsequent Financing, the transaction documents related to the Subsequent Financing shall not include any term or provision that, directly or indirectly, will, or is intended to, exclude one or more of the Purchasers from participating in a Subsequent Financing, including, but not limited to, provisions whereby such Purchaser shall be required to agree to any restrictions on trading as to any of the Securities purchased hereunder or be required to consent to any amendment to or termination of, or grant any waiver, release or the like under or in connection with, this Agreement, without the prior written consent of such Purchaser. In addition, the Company and each Purchaser agree that, in connection with a Subsequent Financing, the transaction documents related to the Subsequent Financing shall include a requirement for the Company to issue a widely disseminated press release by 9:30 am (New York City time) on the Trading Day of execution of the transaction documents in such Subsequent Financing (or, if the date of execution is not a Trading Day, on the immediately following Trading Day) that discloses the material terms of the transactions contemplated by the transaction documents in such Subsequent Financing.

 

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(h) Notwithstanding anything to the contrary in this Section 4.12 and unless otherwise agreed to by such Purchaser, the Company shall either confirm in writing to such Purchaser that the transaction with respect to the Subsequent Financing has been abandoned or shall publicly disclose its intention to issue the securities in the Subsequent Financing, in either case in such a manner such that such Purchaser will not be in possession of any material, non-public information, by 9:30 am (New York City time) on the second (2nd) Trading Day following date of delivery of the Subsequent Financing Notice. If by 9:30 am (New York City time) on such second (2nd) Trading Day, no public disclosure regarding a transaction with respect to the Subsequent Financing has been made, and no notice regarding the abandonment of such transaction has been received by such Purchaser, such transaction shall be deemed to have been abandoned and such Purchaser shall not be deemed to be in possession of any material, non-public information with respect to the Company or any of its Subsidiaries. Should the Company decide to pursue such transaction with respect to the offered securities, the Company shall provide such Purchaser with another Subsequent Financing Notice and such Purchaser will again have the right of participation set forth in this Section 4.12. The Company shall not be permitted to deliver more than one such Subsequent Financing Notice to such Purchaser in any sixty (60) day period, except with respect to an amendment or modification of terms and conditions of a Subsequent Financing, which shall be delivered to each Purchaser as a new Subsequent Financing Notice with new time periods commencing in accordance herewith as of the time of delivery of such new Subsequent Financing Notice in accordance herewith.

 

(i) The restrictions contained in this Section 4.12 shall not apply in connection with an Exempt Issuance.]

 

4.13 Equal Treatment of Purchasers. No consideration (including any modification of any Transaction Document) shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of the Transaction Documents unless the same consideration is also offered to all of the parties to the Transaction Documents. For clarification purposes, this provision constitutes a separate right granted to each Purchaser by the Company and negotiated separately by each Purchaser, and is intended for the Company to treat the Purchasers as a class and shall not in any way be construed as the Purchasers acting in concert or as a group with respect to the purchase, disposition or voting of Securities or otherwise.

 

4.14 Certain Transactions and Confidentiality. Each Purchaser, severally and not jointly with the other Purchasers, covenants that neither it nor any Affiliate acting on its behalf or pursuant to any understanding with it will execute any purchases or sales, including Short Sales of any of the Company’s securities during the period commencing with the execution of this Agreement and ending at such time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.4. Each Purchaser, severally and not jointly with the other Purchasers, covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed by the Company pursuant to the initial press release as described in Section 4.4, such Purchaser will maintain the confidentiality of the existence and terms of this transaction and the information included in the Disclosure Schedules and herein. Notwithstanding the foregoing and notwithstanding anything contained in this Agreement to the contrary, the Company expressly acknowledges and agrees that (i) no Purchaser makes any representation, warranty or covenant hereby that it will not engage in effecting transactions in any securities of the Company after the time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.4, (ii) no Purchaser shall be restricted or prohibited from effecting any transactions in any securities of the Company in accordance with applicable securities laws from and after the time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.4 and (iii) no Purchaser shall have any duty of confidentiality or duty not to trade in the securities of the Company to the Company or its Subsidiaries after the issuance of the initial press release as described in Section 4.4. Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the covenant set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement.

 

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4.15 Capital Changes. Until the one year anniversary of the Closing Date, the Company shall not undertake a reverse or forward share split or reclassification of the Ordinary Shares without the prior written consent of the Purchasers holding a majority in interest of the Shares.

 

4.16 Exercise Procedures. The form of Notice of Exercise included in the Warrants set forth the totality of the procedures required of the Purchasers in order to exercise the Warrants. No additional legal opinion, other information or instructions shall be required of the Purchasers to exercise their Warrants. Without limiting the preceding sentences, no ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise form be required in order to exercise the Warrants. The Company shall honor exercises of the Warrants and shall deliver Warrant Shares in accordance with the terms, conditions and time periods set forth in the Transaction Documents.

 

4.17 [Intentionally Omitted].

 

4.18 No Waiver of Lock-Up Agreements. The Company shall not amend, waive or modify any provision of any of the Lock-Up Agreements. The Company shall take all reasonably necessary actions to enforce the terms and conditions of the Lock-Up Agreements.

 

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ARTICLE V.
MISCELLANEOUS

 

5.1 Termination. This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only and without any effect whatsoever on the obligations between the Company and the other Purchasers, by written notice to the other parties, if the Closing has not been consummated on or before the fifth (5th) Trading Day following the date hereof; provided, however, that no such termination will affect the right of any party to sue for any breach by any other party (or parties).

 

5.2 Fees and Expenses. Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all Transfer Agent fees (including, without limitation, any fees required for same-day processing of any instruction letter delivered by the Company and any exercise notice delivered by a Purchaser), stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to the Purchasers.

 

5.3 Entire Agreement. The Transaction Documents, together with the exhibits and schedules thereto, the Prospectus and the Prospectus Supplement, contain the entire understanding of the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.

 

5.4 Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (a) the time of transmission, if such notice or communication is delivered via facsimile at the facsimile number or email attachment at the email address as set forth on the signature pages attached hereto at or prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number or via email attachment at the email address as set forth on the signature pages attached hereto, on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second (2nd) Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto. To the extent that any notice provided pursuant to any Transaction Document constitutes, or contains, material, non-public information regarding the Company or any Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 6-K.

 

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5.5 Amendments; Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Company and Purchasers which purchased at least 50.1% in interest of the Shares based on the initial Subscription Amounts hereunder (or, prior to the Closing, the Company and each Purchaser) or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought, provided that if any amendment, modification or waiver disproportionately and adversely impacts a Purchaser (or group of Purchasers), the consent of such disproportionately impacted Purchaser (or group of Purchasers) shall also be required. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right. Any proposed amendment or waiver that disproportionately, materially and adversely affects the rights and obligations of any Purchaser relative to the comparable rights and obligations of the other Purchasers shall require the prior written consent of such adversely affected Purchaser. Any amendment effected in accordance with this Section 5.5 shall be binding upon each Purchaser and holder of Securities and the Company.

 

5.6 Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.

 

5.7 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of each Purchaser (other than by merger). Any Purchaser may assign any or all of its rights under this Agreement to any Person to whom such Purchaser assigns or transfers any Securities, provided that such transferee agrees in writing to be bound, with respect to the transferred Securities, by the provisions of the Transaction Documents that apply to the “Purchasers.”

 

5.8 No Third-Party Beneficiaries. The Placement Agent shall be the third party beneficiary of the representations and warranties of the Company in Section 3.1 and the representations and warranties of the Purchasers in Section 3.2. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise set forth in Section 4.8 and this Section 5.8.

 

33

 

 

5.9 Governing Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal Proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any Action or Proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such Action or Proceeding is improper or is an inconvenient venue for such Proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such Action or Proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If any party shall commence an Action or Proceeding to enforce any provisions of the Transaction Documents, then, in addition to the obligations of the Company under Section 4.8, the prevailing party in such Action or Proceeding shall be reimbursed by the non-prevailing party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such Action or Proceeding. The Company hereby appoints Cogency Global Inc. as its agent for service of process in New York. The choice of the laws of the State of New York as the governing law of this Agreement is a valid choice of law and would be recognized and given effect to in any action brought before a court of competent jurisdiction in the Singapore, except for those laws (i) which such court considers to be procedural in nature, (ii) which are revenue or penal laws or (iii) the application of which would be inconsistent with public policy, as such term is interpreted under the laws of the Singapore. The choice of laws of the State of New York as the governing law of this Agreement will be honored by competent courts in Singapore. The Company or any of their respective properties, assets or revenues does not have any right of immunity under Singapore or New York law, from any legal action, suit or proceeding, from the giving of any relief in any such legal action, suit or proceeding, from set-off or counterclaim, from the jurisdiction of any Singapore, New York or United States federal court, from service of process, attachment upon or prior to judgment, or attachment in aid of execution of judgment, or from execution of a judgment, or other legal process or proceeding for the giving of any relief or for the enforcement of a judgment, in any such court, with respect to its obligations, liabilities or any other matter under or arising out of or in connection with this Agreement; and, to the extent that the Company, or any of its properties, assets or revenues may have or may hereafter become entitled to any such right of immunity in any such court in which proceedings may at any time be commenced, the Company hereby waives such right to the extent permitted by law and hereby consents to such relief and enforcement as provided in this Agreement and the other Transaction Documents.

 

34

 

 

5.10 Survival. The representations and warranties contained herein shall survive the Closing and the delivery of the Securities.

 

5.11 Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to each other party, it being understood that the parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by email delivery of a “.pdf” format data file or other electronic medium recognized as an electronic signature under applicable law, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile, “.pdf” signature page or other electronic signature were an original thereof.

 

5.12 Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

 

5.13 Rescission and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) any of the other Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction Document and the Company does not timely perform its related obligations within the periods therein provided, then such Purchaser may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights; provided, however, that, in the case of a rescission of an exercise of a Warrant, the applicable Purchaser shall be required to return any Ordinary Shares subject to any such rescinded exercise notice concurrently with the return to such Purchaser of the aggregate exercise price paid to the Company for such shares and the restoration of such Purchaser’s right to acquire such shares pursuant to such Purchaser’s Warrant (including, issuance of a replacement warrant certificate evidencing such restored right).

 

35

 

 

5.14 Replacement of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities.

 

5.15 Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Purchasers and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Transaction Documents and hereby agree to waive and not to assert in any Action for specific performance of any such obligation the defense that a remedy at law would be adequate.

 

5.16 Payment Set Aside. To the extent that the Company makes a payment or payments to any Purchaser pursuant to any Transaction Document or a Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other Person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.

 

5.17 Independent Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser under any Transaction Document are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance or non-performance of the obligations of any other Purchaser under any Transaction Document. Nothing contained herein or in any other Transaction Document, and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. Each Purchaser shall be entitled to independently protect and enforce its rights including, without limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser to be joined as an additional party in any Proceeding for such purpose. Each Purchaser has been represented by its own separate legal counsel in its review and negotiation of the Transaction Documents. The Company has elected to provide all Purchasers with the same terms and Transaction Documents for the convenience of the Company and not because it was required or requested to do so by any of the Purchasers. It is expressly understood and agreed that each provision contained in this Agreement and in each other Transaction Document is between the Company and a Purchaser, solely, and not between the Company and the Purchasers collectively and not between and among the Purchasers.

 

36

 

 

5.18 Liquidated Damages. The Company’s obligations to pay any partial liquidated damages or other amounts owing under the Transaction Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damages and other amounts have been paid notwithstanding the fact that the instrument or security pursuant to which such partial liquidated damages or other amounts are due and payable shall have been canceled.

 

5.19 Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.

 

5.20 Construction. The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments thereto. In addition, each and every reference to share prices and Ordinary Shares in any Transaction Document shall be subject to adjustment for reverse and forward share splits, share dividends, share combinations and other similar transactions of the Ordinary Shares that occur after the date of this Agreement.

 

5.21 WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.

 

(Signature Pages Follow)

 

37

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

 

PRIMECH HOLDINGS LTD.   Address for Notice:
         
         
By:         
  Name:     Email:
  Title:     Facsimile:
     
With a copy to (which shall not constitute notice):    

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

 

38

 

 

[PURCHASER SIGNATURE PAGES TO PMEC SECURITIES PURCHASE AGREEMENT]

 

IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

 

Name of Purchaser: __________________________________________________________________________

 

Signature of Authorized Signatory of Purchaser: ___________________________________________________

 

Name of Authorized Signatory: _________________________________________________________________

 

Title of Authorized Signatory: __________________________________________________________________

 

Email Address of Authorized Signatory:___________________________________________________________

 

Facsimile Number of Authorized Signatory: ________________________________________________________

 

Address for Notice to Purchaser:

 

Address for Delivery of Securities to Purchaser (if not same as address for notice):

 

Subscription Amount: $_________________

 

Shares: _________________

 

Warrant Shares: __________________

 

EIN Number: _______________________

 

[SIGNATURE PAGES CONTINUE]

 

 

39

 

 

Exhibit 23.1

 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors

Primech Holdings Ltd.

 

We consent to the inclusion in the foregoing Registration Statement on Form F-1 of our report dated July 23, 2024, relating to the consolidated financial statements of Primech Holdings Ltd. as of March 31, 2024 and 2023 and for the years then ended. We also consent to the reference to our firm under the caption “Experts”.

 

/s/ Weinberg & Company, P.A

Los Angeles, California

October 16, 2024

 

Exhibit 107

 

Calculation of Filing Fee Tables

 

Form F-1

(Form Type)

 

PRIMECH HOLDINGS LTD.

(Exact Name of Registrant as Specified in its Charter)

 

Table 1: Newly Registered Securities

 

Security Type  Security
Class
Title
  Fee
Calculation
Rule
  Proposed Maxim Aggregate Offering Price(1)(2)   Fee
Rate
   Amount of
Registration
Fee
 
                   
Equity  Ordinary Shares, no par value per share(1)(2)  Rule 457(o)  $10,000,000    0.0001531   $1,531.00 
                      
   Warrant to purchase Ordinary Shares(3)  Rule 457(g)   -    -    - 
                      
   Ordinary Shares issuable upon exercise of the warrants(1)(2)  Rule 457(o)  $10,000,000    0.0001531   $1,531.00 
                      
   Placement agent warrants(3)  Rule 457(g)   -    -    - 
                      
   Ordinary Shares issuable upon exercise of the placement agent warrants(1)(2)(4)  Rule 457(o)  $1,250,000    0.0001531   $191.38 
                      
Total Offering Amounts  $21,250,000    0.0001531   $3,253.38 
                
Total Fee Offsets              
                
Net Fee Due            $3,253.38 

 

(1) Represents the maximum number of ordinary shares offered in this Registration Statement.
   
(2) This Registration Statement includes an indeterminate number of additional ordinary shares issuable for no additional consideration pursuant to any stock dividend, stock split, recapitalization or other similar transaction effected without the receipt of consideration, which results in an increase in the number of outstanding ordinary shares. In the event of a stock split, stock dividend or similar transaction involving our common stock, in order to prevent dilution, the number of shares registered shall be automatically increased to cover the additional shares in accordance with Rule 416(a) under the Securities Act of 1933, as amended (the “Securities Act”).
   
(3) No separate registration fee required pursuant to Rule 457(g) under the Securities Act.
   
(4) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(g) under the Securities Act. The placement agent warrants are exercisable for up to the number of ordinary shares equal to 5.0% of the aggregate number of securities sold in this offering at a per share exercise price equal to 125% of the public offering price of the ordinary shares and accompanying warrants. As estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(g) under the Securities Act, the proposed maximum aggregate offering price of the representative’s warrants is $1,250,000, which is equal to 125% of $1,000,000 (5.0% of the proposed maximum aggregate offering price of $10,000,000).

 

 

v3.24.3
Document And Entity Information
12 Months Ended
Mar. 31, 2024
Document Information Line Items  
Entity Registrant Name PRIMECH HOLDINGS LTD.
Document Type F-1
Amendment Flag false
Entity Central Index Key 0001891944
Entity Emerging Growth Company true
Entity Ex Transition Period false
Entity Incorporation, State or Country Code U0
Entity Address, Address Line One 23
Entity Address, City or Town Ubi Crescent
Entity Address, Country SG
Entity Address, Postal Zip Code 408579
City Area Code +65
Local Phone Number 6286 1868
Business Contact  
Document Information Line Items  
Entity Address, Address Line One 122 East 42nd Street, 18th Floor
Entity Address, City or Town New York
Entity Address, Postal Zip Code 10168
City Area Code +1-800
Local Phone Number 221-0102
Contact Personnel Name COGENCY GLOBAL INC.
Entity Address, State or Province NY
v3.24.3
Consolidated Balance Sheets - USD ($)
$ in Thousands
Mar. 31, 2024
Mar. 31, 2023
Current assets    
Cash and cash equivalents $ 7,648 $ 9,072
Accounts receivable, net 18,452 15,364
Government subsidies receivable 1,368 1,684
Prepaid expenses and other current assets 3,810 1,175
Inventories 55 141
Total current assets 31,333 27,436
Non-current assets    
Property and equipment, net 10,082 10,920
Right of use assets 3,406 3,128
Goodwill 667 693
Intangible assets, net 21 93
Deferred offering costs   553
Total assets 45,509 42,823
Current liabilities    
Accounts payable and accrued expenses 9,406 10,899
Notes payable-current portion 11,277 11,905
Lease liabilities-current portion 2,059 1,718
Total current liabilities 22,742 24,522
Non-current liabilities    
Notes payable-long term 5,705 7,114
Lease liabilities-long term 1,752 1,628
Deferred tax liability 251 726
Total liabilities 30,450 33,990
Commitments and contingencies
Shareholders’ Equity    
Common Stock, 35,550,000 and 32,500,000 shares issued and outstanding as of March 31, 2024 and 2023, respectively, 22,193 12,720
Additional paid-in capital 924 924
Accumulated other comprehensive income 923 947
Accumulated deficit (9,049) (5,810)
Total Primech Holdings Limited shareholders’ equity 14,991 8,781
Non-controlling interests 68 52
Total shareholders’ equity 15,059 8,833
Total liabilities and shareholders’ equity $ 45,509 $ 42,823
v3.24.3
Consolidated Balance Sheets (Parentheticals) - shares
Mar. 31, 2024
Mar. 31, 2023
Statement of Financial Position [Abstract]    
Common stock, shares issued 35,550,000 32,500,000
Common stock, shares outstanding 35,550,000 32,500,000
v3.24.3
Consolidated Statements of Operations and other Comprehensive Loss - USD ($)
$ in Thousands
12 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Revenues    
Revenues, net $ 72,524 $ 69,026
Operating costs and expenses    
Cost of revenue (net of $2,550 and $4,220 of government subsidies) 59,915 58,410
General and administrative expenses (net of $68 and $170 of government subsidies) 13,160 12,304
Sales and marketing expenses 2,231 279
Goodwill impairment 138
Total operating costs and expenses 75,306 71,131
Loss from operations (2,782) (2,105)
Other operating income, net (includes $202 and $202 of government subsidies) 211 271
Interest expense (1,145) (723)
Loss before income taxes (3,716) (2,557)
Income tax benefit 493 10
Net loss (3,223) (2,547)
(Profit)/ loss attributable to non-controlling interests (16) 15
Net loss attributable to PHL (3,239) (2,532)
Total foreign currency translation adjustment (24) 138
Comprehensive loss $ (3,263) $ (2,394)
Earnings loss per share:    
Basic (in Dollars per share) $ (0.1) $ (0.08)
Diluted (in Dollars per share) $ (0.1) $ (0.08)
Weighted average number of ordinary shares outstanding:    
Basic (in Shares) 33,929,000 32,500,000
Diluted (in Shares) 33,929,000 32,500,000
v3.24.3
Consolidated Statements of Operations and other Comprehensive Loss (Parentheticals) - USD ($)
$ in Thousands
12 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Income Statement [Abstract]    
Cost of revenue net of government subsidies $ 2,550 $ 4,220
General and administrative expenses net of government subsidies 68 170
Other operating income, net of government subsidies $ 202 $ 202
v3.24.3
Consolidated Statements of Changes in Shareholders’ Equity - USD ($)
$ in Thousands
Common stock
Additional paid in capital
Accumulated comprehensive income
Accumulated deficit
Non-controlling Interests
Total
Balance at Mar. 31, 2022 $ 12,720 $ 924 $ 809 $ (3,278) $ 67 $ 11,242
Balance (in Shares) at Mar. 31, 2022 32,500,000          
Net loss (2,532) (15) (2,547)
Foreign currency Translation adjustment 138 138
Balance at Mar. 31, 2023 $ 12,720 924 947 (5,810) 52 $ 8,833
Balance (in Shares) at Mar. 31, 2023 32,500,000         32,500,000
Issuance of common shares upon closing of initial public offering, net of offering costs $ 9,473 $ 9,473
Issuance of common shares upon closing of initial public offering, net of offering costs (in Shares) 3,050,000          
Net loss (3,239) 16 (3,223)
Foreign currency Translation adjustment (24) (24)
Balance at Mar. 31, 2024 $ 22,193 $ 924 $ 923 $ (9,049) $ 68 $ 15,059
Balance (in Shares) at Mar. 31, 2024 35,550,000         35,550,000
v3.24.3
Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
12 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Cash flows from operating activities:    
Net loss $ (3,223) $ (2,547)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation of property and equipment 1,640 1,637
Amortization of right of use assets 2,203 1,716
Gain on disposal of property and equipment (13) (186)
Amortization of intangible assets 29 303
Impairment of Goodwill 138
Change in operating assets and liabilities:    
Deferred tax liability (454)
Accounts receivable (3,330) (3,152)
Government subsidies receivables 290 (1,310)
Prepaid expenses & other current assets (2,657) 152
Inventories 84 6
Accounts payable and accrued expenses (1,329) 1,970
Operating lease liability (2,322) (1,683)
Tax payable (228)
Net cash used in operating activities (9,082) (3,184)
Cash flows from investing activities:    
Acquisition of property and equipment (909) (2,004)
Proceeds from sale of property and equipment 102 871
Net cash used in investing activities (807) (1,133)
Cash flows from financing activities:    
Net Proceeds from issue of new shares 9,473
Deferred offering costs 545 236
Payment of finance lease liabilities (86) (524)
Repayment of bank loans (3,163) (1,293)
Proceeds from bank loans 1,412 9,908
Dividend paid (317)
Net cash provided by financing activities 8,181 8,010
Net (decrease) increase in cash and cash equivalents (1,708) 3,693
Effect of exchange rate changes on cash and cash equivalents 284 235
Cash and cash equivalents, beginning of year 9,072 5,144
Cash and cash equivalents, end of year 7,648 9,072
Supplemental disclosure of non-cash investing and financing transactions    
Acquisition of equipment under finance leases 173 102
Recognition of Right of use assets and liabilities $ 2,553 $ 3,380
v3.24.3
Organization and Summary of Significant Accounting Policies
12 Months Ended
Mar. 31, 2024
Organization and Summary of Significant Accounting Policies [Abstract]  
Organization and Summary of Significant Accounting Policies

1. Organization and Summary of Significant Accounting Policies

 

Primech Holdings Limited (“PHL”) is a company incorporated in Singapore on December 29, 2020. PHL’s controlling shareholder is Sapphire Universe Holdings Limited (the “Parent”), which was formed in February 2018.

 

In 2018 through 2020, the Parent acquired Primech Services & Engrg (“Primech”), A&P Maintenance (“A&P”), Acteef Cleaning Specialists Pte Ltd (“Acteef Cleaning”), and Maint-Kleen Pte. Ltd (“Maint-Kleen”) (collectively, the “Subsidiaries”, and with PHL, the “Company”). Each of these companies had, prior to their acquisitions, operated in Singapore between 20 and 38 years, and the acquisitions by the Parent established a group of companies that provides a wide spectrum of cleaning services. Subsequent to their acquisition by the Parent, Primech and A&P merged into one company known as Primech A&P Pte Ltd (“Primech A&P”). On April 1, 2021, the Company acquired 100% of interest of Princeston International (S) Pte. Ltd (“Princeston”) and 80% of interest of CSG Industries Pte Ltd (“CSG”). On March 28, 2024, the company incorporated Primech AI Holdings Limited (“Primech AI”) and Primech AI Investments Limited (“Primech AI Investments”). In May 2024, the Company transferred 49% of interest of Primech AI Investments to an independent third party.

 

Effective November 22, 2022, the Parent restructured its holdings and transferred its ownership of the Subsidiaries to PHL. For the purposes of the presentation of these consolidated financial statements, the merger and consolidation of these entities with PHL has been reflected as if effective since the beginning of the entire period presented.

 

On May 11, 2023, the Company changed its corporate name to Primech Holdings Ltd., so as to remove the designation “Pte.” which is used only for privately held companies under Singapore law, and adopted a constitution for a public company under Singapore law.

 

COVID-19

 

Our consolidated financial statements for the years ended March 31, 2024 and 2023 was materially impacted by the effects of the global outbreak of novel strains of coronavirus, or COVID-19, as national and local authorities in Singapore, where we operate, placed significant restrictions on travel and other activities. In addition, governmental authorities in Singapore, like many governments and central banks worldwide, have reacted with significant monetary and fiscal interventions designed to stabilize economic conditions (see liquidity discussion below).

 

The long term effect of this pandemic on our business and financial performance will heavily depend on future developments, including outbreaks of COVID-19 variants, duration and severity of the outbreak, government policies such as travel restrictions and business closures, the financial and operational impact on our customer base, all of which are highly uncertain and unpredictable. We are closely monitoring developments in Singapore and will continually assess its effect on our business.

 

Liquidity

 

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. For the fiscal year ended March 31, 2024, the Company recorded net loss of approximately $3,223 and cash used in operating activities of approximately $9,082. Included in these amounts are government subsidies of approximately $2,820 received. These government subsidies were received from government authorities in Singapore, and were primarily used to offset wage costs, and are recorded as a reduction to associated wage costs in cost of revenue and general and administrative expenses in the accompanying consolidated statements of operations and comprehensive income.

 

Notwithstanding the receipt of the government subsidies, management believes that its March 31, 2024, balances of cash of approximately $7,648, working capital of approximately $8,591 and approximately $2,542 of available loans or overdraft facilities are sufficient to fund operations for at least one year from the date the Company’s March 31, 2024, financial statements are issued. The amount and timing of future cash requirements will depend, in part, on the Company’s operating profitability. The Company may seek to raise additional debt and/or equity capital to fund future operations and strategic initiatives, but there can be no assurances that the Company will be able to secure such additional financing in the amounts necessary to fully fund its operating requirements on acceptable terms, or at all. The Ordinary Shares were previously approved for listing on The Nasdaq Capital Market and commenced trading under the ticker symbol “PMEC” on October 10, 2023. The amount and timing of future cash requirements will depend, in part, on the Company’s operating profitability. The Company may seek to raise additional debt and/or equity capital to fund future operations and strategic initiatives, but there can be no assurances that the Company will be able to secure such additional financing in the amounts necessary to fully fund its operating requirements on acceptable terms, or at all.

 

Basis of presentation and principles of consolidation

 

These consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). The Company’s consolidated financial statements includes the consolidated accounts of all of our subsidiaries. All intercompany accounts and transactions included in the consolidated financial statements have been eliminated.

 

As of March 31, 2024, PHL has eight wholly-owned subsidiaries, Primech A&P, Acteef Cleaning, HomeHelpy Singapore Pte. Ltd, Maint-Kleen, My All Services Sdn Bhd, Princeston and Primech AI, Primech AI Investments and one 80% owned subsidiary, CSG. All intercompany amounts and transactions have been eliminated in consolidation. All subsidiaries are entities incorporated under the laws of Singapore, except for My All Services which was incorporated in Malaysia and Primech AI and Primech AI Investments which were incorporated in British Virgin Islands.

 

Use of estimates

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates. On an ongoing basis, management reviews its estimates and if deemed appropriate, those estimates are adjusted. Significant estimates include those related to assumptions used in valuing reserves of uncollectible accounts receivable, assumptions used in valuing assets acquired in business acquisitions, impairment testing of goodwill and other long-term assets, the valuation allowance for deferred tax assets, and accruals for potential liabilities.

 

Revenue recognition

 

The Company recognizes revenue in accordance with Financial Accounting Standard Board (FASB) Accounting Standards Codification (ASC) 606, Revenue from Contract with Customers (ACS 606). The underlying principle of ASC 606 is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contract(s), which include (1) identifying the contract or agreement with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied.

 

For service contracts where the performance obligation is not completed, deferred revenue, if any, is recorded for any payments received in advance of the performance obligation.

 

Cost of revenue

 

Recurring direct operating costs for services are recognized as incurred. Cost of services revenue consists primarily of personnel costs.

 

Government subsidies

 

Government subsidies are not recognized until there is reasonable assurance that the Company will comply with the conditions of the subsidy and the Company will receive the subsidy.

 

Generally, government subsidies fall into two categories: subsidies related to income and subsidies related to assets. Subsidies related to income are recognized in the period that the recognition criteria are met, and are presented as a reduction of the related expense that they are intended to compensate within operating expenses in the consolidated statements of operations and comprehensive income. Subsidies related to assets are for the purchase, construction or other acquisition of long-lived assets and are recognized as reductions to the capitalized costs of the related assets.

 

For the years ended March 31, 2024 and 2023, a total of approximately $2,820 and approximately $4,592 respectively of subsidies related to income were received that primarily offset various payroll and related costs. In addition, for the years ended March 31, 2024 and 2023 the Company received approximately $171 and approximately $129, respectively, of subsidies related to assets that offset purchases of certain equipment. At March 31, 2024 and 2023, government subsidies receivable totalled approximately $1,368 and approximately $1,684, respectively. There are no unfulfilled conditions or other contingencies related to these subsidies.

 

Cash and cash equivalents

 

Our cash and cash equivalents consist of funds held in bank accounts. Cash equivalents are highly-liquid investments with original maturities of three months or less, including money market funds.

 

We maintain cash balances in Singapore dollars (“SGD”), U.S. Dollars (“USD”) and Malaysian Ringgit (“MYR”). The following table, reported in USD, disaggregates our cash balances by currency denomination:

 

   For the Years Ended
March 31,
 
   2024   2023 
Cash denominated in:        
SGD  $7,443   $8,966 
USD   135    
 
MYR   70    106 
Total  $7,648   $9,072 

 

Accounts receivable

 

Accounts receivable are recorded at the invoiced amount less an allowance for any uncollectible accounts. Accounts receivable also includes unbilled amounts for which we have performed services for the customer but have not yet invoiced. Accounts receivable at March 31, 2024 and 2023 included unbilled receivables of approximately $4,068 and approximately $3,578, respectively. We regularly evaluate the collectability of trade receivable balances based on a combination of factors such as customer credit-worthiness, past transaction history with the customer, current economic industry trends and changes in customer payment patterns. If we determine that a customer will be unable to fully meet its financial obligation, such as in the case of a bankruptcy filing or other material events impacting its business, a specific reserve for bad debt will be recorded to reduce the related receivable to the amount expected to be recovered. Reserve for uncollectible accounts were approximately $448 and approximately $454 as of March 31, 2024 and 2023, respectively.

 

Property and equipment

 

We state property and equipment at cost and depreciate such assets using the straight-line method over the estimated useful lives of each asset category. For leasehold improvements, we determine amortization using the straight-line method over the shorter of the lease term or estimated useful life of the asset. Expenditures for repairs and maintenance, which do not materially extend the useful lives of the assets, are expensed as incurred. Expenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized and depreciated over the remaining useful life of the related asset. The estimated useful lives of property and equipment are as follows:

 

Machinery   2 to 5 years
Motor vehicles   5 years
Furniture and fixtures   2 to 5 years
Office equipment   2 to 5 years
Leasehold improvements   Shorter of useful life or lease term
Office improvements   2 to 5 years
Capitalized software   2 to 3 years
Leasehold property   27 to 32 years

 

Deferred offering costs

 

Deferred offering costs consisted principally of legal, accounting, and underwriter’s fees incurred related to equity financings. These offering costs were deferred at March 31, 2023 and were charged against the gross proceeds received from our Initial Public Offering that occurred on October 12, 2023.

 

Intangible assets

 

Amortizable identifiable intangible assets are stated at cost less accumulated amortization, and represent customer relationships and customer backlog acquired in business combinations. Customer backlog represents the value of existing firm purchase orders in place at the time of acquisition and are amortized over 3 years. Customer relationships are amortized over 5 years. The Company follows ASC 360 in accounting for intangible assets, which requires impairment losses to be recorded when indicators of impairment are present and the undiscounted cash flows estimated to be generated by the assets are less than the assets’ carrying amounts. For the years ended March 31, 2024 and 2023, the Company determined there were no indicators of impairment of its amortizable identifiable intangible assets.

 

Goodwill

 

Goodwill is the excess of cost of an acquired entity over the fair value of amounts assigned to assets acquired and liabilities assumed in a business combination. Under the guidance of ASC 350, goodwill is not amortized, rather it is tested for impairment annually, and will be tested for impairment between annual tests if an event occurs or circumstances change that would indicate the carrying amount may be impaired. An impairment loss generally would be recognized when the carrying amount of the reporting unit’s net assets exceeds the estimated fair value of the reporting unit and would be measured as the excess carrying value of goodwill over the derived fair value of goodwill. The Company’s policy is to perform an annual impairment testing for its reporting units on March 31, of each fiscal year. For the year ended March 31, 2023, the Company determined there was an impairment charge of approximately $138 related to the recorded Goodwill relating to its acquisition of Maint-Kleen. For the year ended March 31, 2024, the Company determined there was no impairment of its remaining recorded Goodwill.

 

Impairment of long-lived assets

 

Long-lived assets primarily include property and equipment and intangible assets. In accordance with the provision of ASC 360, the Company generally conducts its annual impairment evaluation to its long-lived assets, usually in the fourth quarter of each year, or more frequently if indicators of impairment exist, such as a significant sustained change in the business climate. The recoverability of long-lived assets is measured at the reporting unit level. If the total of the expected undiscounted future net cash flows is less than the carrying amount of the asset, a loss is recognized for the difference between the fair value and carrying amount of the asset. As of March 31, 2024 and 2023, the Company determined there were no indicators of impairment of its long-lived assets.

 

Fair value of financial instruments

 

Under ASC 820, Fair Value Measurements and Disclosures, fair value is defined as the price at which an asset could be exchanged or a liability transferred in a transaction between knowledgeable, willing parties in the principal or most advantageous market for the asset or liability. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or parameters are not available, valuation models are applied. A fair value hierarchy prioritizes the inputs used in measuring fair value into three broad levels as follows:

 

Level 1 — Quoted prices in active markets for identical assets or liabilities.

 

Level 2 — Inputs, other than the quoted prices in active markets, are observable either directly or indirectly.

 

Level 3 — Unobservable inputs based on the Company’s assumptions.

 

The Company is required to use observable market data if such data is available without undue cost and effort. The Company has no fair value items required to be disclosed as of March 31, 2024 or 2023 under these requirements.

 

The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, accounts receivable, short-term bank loans and accounts payable, approximate their fair values because of the short maturity of these instruments. The carrying values of capital lease obligations and notes payable approximate their fair values because interest rates on these obligations are based on prevailing market interest rates.

 

Advertising

 

Costs related to advertising and product promotion expenditures are charged to “Sales and marketing expenses” as incurred. Certain advertising costs are paid in advance and are expensed at the time the advertising occurs. Advertising costs aggregated $2,231 and $ 262 for the year ended March 31, 2024 and 2023, respectively.

 

Income taxes

 

The Company accounts for income taxes using an asset and liability approach which allows for the recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain.

 

The Company conducts its businesses in Singapore and Malaysia and is subject to tax in these jurisdictions. As a result of its business activities, the Company will file separate tax returns that are subject to examination by the foreign tax authorities.

 

Leases

 

The Company accounts for leases under ASC 842, Leases. The Company determines whether a contract is, or contains, a lease at inception. Right-of-use assets represent the Company’s right to use an underlying asset during the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease.

 

Right-of-use assets and lease liabilities are recognized at lease commencement based upon the estimated present value of unpaid lease payments over the lease term. The Company uses its incremental borrowing rate based on the information available at lease commencement in determining the present value of unpaid lease payments.

 

Earnings per share

 

Basic earnings per ordinary share is computed by dividing net earnings attributable to ordinary shareholders by the weighted-average number of ordinary shares outstanding during the period. Diluted earnings per share is computed by dividing net income attributable to ordinary shareholders by the sum of the weighted average number of ordinary shares outstanding and of potential ordinary shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential ordinary shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted earnings per share. For the years ended March 31, 2024 and 2023, the Company had no dilutive equity instruments.

 

Translation of foreign currencies

 

We report all currency amounts in USD. Our subsidiaries, however, maintain their books and records in their SGD functional currency, while My All Services maintains its books and records in their MYR functional currency.

 

In general, when consolidating our subsidiaries with non-USD functional currencies, we translate the amounts of assets and liabilities into USD using the exchange rate on the balance sheet date, and the amounts of revenue and expense are translated at the average exchange rate prevailing during the period. The gains and losses resulting from translation of financial statement amounts into USD are recorded as a separate component of accumulated other comprehensive loss within stockholders’ equity.

 

We used the exchange rates in the following table to translate amounts denominated in non-USD currencies as of and for the periods noted:

 

   As of
March 31,
 
   2024   2023 
Exchange rates at March 31:        
SGD:USD   0.74    0.75 
RM:USD   0.21    0.23 

 

   For the Years Ended
March 31,
 
   2024   2023 
Average exchange rate during the year ended March 31:        
SGD:USD   0.74    0.73 
RM:USD   0.21    0.22 

 

Concentration

 

For the year ended March 31, 2024, one customer accounted for 10.0% of our total revenue and no customer accounted for more than 10% of our accounts receivable. For the year ended March 31, 2023, one customer accounted for 10.4% of our total revenue and one customer accounted for 12.1% of our accounts receivable.

 

For the year ended March 31, 2024 and 2023, there were no vendors that accounted for more than 10% of our total operating costs and expenses. At March 31, 2024 and 2023, no vendors accounted for more than 10% of accounts payable.

 

Comprehensive Income

 

Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. The Company’s accumulated other comprehensive income consists of cumulative foreign currency translation adjustments.

 

Segment reporting

 

The Company operates in a single segment, commercial cleaning services, based on how the chief operating decision maker (“CODM”) views and evaluates the Company’s operations in making operational and strategic decisions and assessments of financial performance. The Company’s President has been identified as the CODM.

 

Economic and political risks

 

Our operations in Singapore are subject to significant risks not typically associated with companies in the United States of America, including risks associated with, among others, the political, economic and legal environment and foreign currency exchange. Our results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation.

 

Recent Accounting Pronouncements

 

In June 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-13, Credit Losses — Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires entities to use a forward-looking approach based on current expected credit losses (“CECL”) to estimate credit losses on certain types of financial instruments, including trade receivables. This may result in the earlier recognition of allowances for losses. The Company adopted ASU 2016-13 beginning April 1, 2023. The Company does not believe the impact of the new guidance and related codification improvements had a material impact to its financial position, results of operations and cash flows.

 

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosure, which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expense categories that are regularly provided to the chief operating decision maker and included in each reported measure of a segment’s profit or loss. The update also requires all annual disclosures about a reportable segment’s profit or loss and assets to be provided in interim periods and for entities with a single reportable segment to provide all the disclosures required by ASC 280, Segment Reporting, including the significant segment expense disclosures. This standard will be effective for the Company on April 1, 2024 and interim periods beginning in fiscal year 2025, with early adoption permitted. The updates required by this standard should be applied retrospectively to all periods presented in the financial statements. The Company does not expect this standard to have a material impact on its results of operations, financial position or cash flows.

 

The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the consolidated financial position, statements of operations and cash flows.

v3.24.3
Revenues
12 Months Ended
Mar. 31, 2024
Revenues [Abstract]  
Revenues

2. Revenues

 

The Company’s revenue is primarily from providing a wide variety of cleaning services, including facilities services, stewarding services, cleaning services to individual customers and other service revenues. Revenue from services is recognized as the services are provided. Service revenue is recognized based on the time incurred by our staff in performing cleaning services and is billed on a monthly basis. The Company offers no discounts, rebates, rights of return, or other allowances to clients which would result in the establishment of reserves against service revenue. Additionally, to date, the Company has not incurred incremental costs in obtaining a client contracts.

 

Disaggregation of Revenue

 

The following table presents a disaggregation of our revenue by major category

 

   For the Years Ended
March 31,
 
Revenue by service line  2024   2023 
Facilities cleaning services  $56,016   $55,755 
Stewarding services   10,156    7,599 
Cleaning services for commercial office tenants   5,870    4,899 
Total service revenues from Singapore   72,042    68,253 
Other cleaning service revenues from Malaysia   53    265 
Sales of products   429    508 
   $72,524   $69,026 

 

   For the Years Ended
March 31,
 
Revenue by customer category  2024   2023 
Facilities cleaning services        
Conservancy common areas   11,325    9,720 
Commercial   10,305    11,369 
Institutional   17,202    17,324 
Multi-family residential   4,201    6,873 
Hotel   4,649    5,182 
Singapore Changi Airport   7,247    3,176 
Industrial   516    1,046 
Others   571    1,065 
    56,016    55,755 
Stewarding services   10,156    7,599 
Cleaning services for commercial office tenants   5,870    4,899 
Total service revenues from Singapore   72,042    68,252 
Other cleaning service revenues from Malaysia   53    265 
Sales of products   429    508 
   $72,524   $69,026 
v3.24.3
Accounts Receivable
12 Months Ended
Mar. 31, 2024
Accounts Receivable [Abstract]  
Accounts receivable

3. Accounts receivable

 

The Company records revenues and costs on a net basis and the related Trade and other receivables and payables amounts on a gross basis. Trade and other receivables, net of provision for doubtful accounts consist of the following:

 

   As of
March 31,
 
   2024   2023 
Accounts receivable  $14,832   $12,240 
Unbilled receivables   4,068    3,578 
Less: provision for doubtful accounts   (448)   (454)
Accounts receivable, net  $18,452   $15,364 

 

At March 31, 2024 and 2023, provisions for doubtful accounts receivables were approximately $448 and approximately $454, respectively.

v3.24.3
Property and Equipment
12 Months Ended
Mar. 31, 2024
Property and Equipment [Abstract]  
Property and Equipment

4. Property and Equipment

 

At March 31, 2024 and 2023, property and equipment consisted of the following:

 

   As of
March 31,
 
   2024   2023 
Machinery  $6,837   $7,516 
Motor vehicles   1,086    718 
Office equipment   1,328    1,222 
Furniture and fixtures   797    811 
Leasehold improvements   805    787 
Leasehold property   7,193    7,235 
    18,046    18,289 
Less: accumulated depreciation   (7,964)   (7,369)
Total  $10,082   $10,920 

 

Depreciation expense was approximately $1,640 and approximately $1,637 for the years ended March 31, 2024 and 2023, respectively.

 

Primech A&P holds a sixty (60) year leasehold interest in 23 Ubi Crescent Singapore (expiring July 2057) and a sixty (60) year leasehold interest in 25 Ubi Crescent Singapore (expiring July 2057). CSG Industries holds a thirty (30) years interest (expiring in February 2038) in 50 Tuas Avenue 11 #01-22 Tuas Lot Singapore 639107.

v3.24.3
Prepaid Expenses and Other Current Assets
12 Months Ended
Mar. 31, 2024
Prepaid Expenses and Other Current Assets [Abstract]  
Prepaid expenses and other current assets

5. Prepaid expenses and other current assets

 

Prepaid expenses and other current assets, net consisted of the following:

 

   As of
March 31,
 
   2024   2023 
Prepaid advertising  $1,019   $
-
 
Deposits   1,816    542 
Other prepaid amounts   975    633 
Total  $3,810   $1,175 
v3.24.3
Leases
12 Months Ended
Mar. 31, 2024
Leases [Abstract]  
Leases

6. Leases

 

Operating lease right-of-use (“ROU”) assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Generally, the implicit rate of interest (“discount rate”) in arrangements is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease payments. The Company’s incremental borrowing rate is a hypothetical rate based on its understanding of what its credit rating would be. The operating lease ROU asset includes any lease payments made and excludes lease incentives.

 

As of March 31, 2024, the Company has operating lease agreements for certain of its office facilities, office equipment and workers’ accommodations with remaining lease terms of 1 to 44 months. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company accounts for the lease and non-lease components of its leases as a single lease component. Lease expense is recognized on a straight-line basis over the lease term.

 

The following table sets forth the components of the Company’s lease cost for the year ended March 31, 2024 and 2023.

 

   March 31, 
   2024   2023 
Finance lease cost:        
Depreciation of asset under finance lease  $68   $106 
Interest on lease liabilities (included in interest expense in the statements of operations)   34    54 
Total finance lease cost  $102   $160 
Operating lease cost:          
Amortization of right of use asset (included in general and administrative expenses in the statements of operations)  $2,203   $1,716 
Rental expense (included in cost of revenue, and general and administrative expenses in the statement of operations)   504    7 
Operating lease cost  $2,707   $1,723 
           
Cash paid for amounts included in the measurement of lease liabilities          
Operating cash flows from operating leases  $2,322   $1,683 
Financing cash flows from finance leases   86    523 
Total cash paid for amounts included in measurement of lease liabilities  $2,408   $2,206 

 

The following table sets forth the Company’s right of use assets and lease liabilities as of March 31, 2024 and 2023:

 

   March 31, 
   2024   2023 
Finance lease assets (included in Property and equipment-see Note 4)  $519   $402 
Operating lease right of use assets  $3,406   $3,128 
           
Finance lease liabilities          
Non-current liabilities  $251   $235 
Current liabilities   70    78 
Total Finance lease liabilities  $321   $313 
Operating lease liabilities          
Non-current liabilities  $1,501   $1,393 
Current liabilities   1,989    1,639 
Total operating lease liabilities  $3,490   $3,032 

 

   March 31,
2024
   March 31,
2023
 
Weighted average lease term (Years)        
Finance leases   2.8    2.8 
Operating leases   1.6    1.8 
Weighted average discount rate          
Finance leases   4.4%   3.9%
Operating leases   5.6%   3.0%

 

Present value of the net minimum lease payments as of March 31, 2024:

 

Future minimum lease payments  Finance Leases   Operating Leases 
2025  $81   $2,104 
2026   83    1,060 
2027   75    336 
2028   62    141 
2029   12    18 
Thereafter    58    
 
Total minimum lease payments    371    3,659 
Less: amount representing interest    (50)   (169)
Present value of net minimum lease payments   $321   $3,490 
v3.24.3
Notes Payable
12 Months Ended
Mar. 31, 2024
Notes Payable [Abstract]  
Notes Payable

7. Notes Payable

 

   As of
March 31,
 
   2024   2023 
(A) HSBC – Bridge loan  $1,855   $2,826 
(B) HSBC – Overdraft facility   5,825    7,651 
(C) HSBC – Factoring agreement with recourse   3,983    2,862 
(D) HSBC – Term loans   837    973 
(E) HSBC – Mortgage loan   4,482    4,707 
    16,982    19,019 
Less: current portion   (11,277)   (11,905)
Notes payable, net of current portion  $5,705   $7,114 

 

(A)In October 2020, the Company’s subsidiary Primech A&P obtained a loan in the principal amount of approximately $3,711 (SGD 5,000) from the Lender. The loan bears interest at the rate 2% per annum, is payable in monthly instalments of approximately $77 (SGD 104) each, and will mature in March, 2026. The loan is secured by all the assets of the Primech A&P and is guaranteed by the shareholders of the Parent. The balance of the loan was approximately $2,826 (SGD 3,750) at March 31, 2023. During the year ended March 31, 2024, the Company paid down approximately $929 (SGD 1,250). The balance of the loan was approximately $1,855 (SGD 2,500) at March 31, 2024.

 

(B)In prior periods and through March 31, 2024, certain of the Company’s subsidiaries obtained overdraft facilities from HSBC with an aggregate credit limit of $5,819 (SGD 7,842). The credit facilities are subject to annual review and are due on demand. The bank granted a temporary increase in the credit limit of an additional $2,198 (SGD 3,000) from September 2023 through October 2023 and $742 (SGD1,000) from November 2023 through July 2024. The overdraft facilities permit the subsidiaries to borrow funds on a revolving line of credit up to the credit limit and bear interest at the rate 0.5% per annum below HSBC prevailing Prime Lending rate (total rate was 5.5% at March 31, 2024). The loans are secured by all term deposit accounts of the subsidiaries, an all monies debenture (mortgage) over all present and future assets of Primech A&P, and are guaranteed by certain directors and the Parent. At March 31, 2024, the balance of the overdraft facilities was approximately $5,825 (SGD 7,849) and approximately $737 (SGD 993) was unutilized under the overdraft facility.

 

(C)In July 2018, Primech A&P, entered into with recourse receivables purchase (accounts receivable purchase agreement) with HSBC. Under the terms of the facility, Primech A&P agreed to sell to HSBC (“Factor”) certain customer accounts receivables due A&P. All amounts due under the terms of agreement is limited to approximately $2,968 (SGD 4,000), and is guaranteed by (a) security over receivables; (b) debentures (mortgages) over all present and future assets; and (c) an unlimited guarantee provided by certain directors. Primech A&P pays a discount charge calculated based on the SIBOR plus 3%, which charge is based on the outstanding gross amount of accounts receivable factored. The facility was renewed in September, 2021, and increased to approximately $5,900 (SGD 8,000). Th facility was further renewed in August 2022 and subject to annual review, revising the discount chart rate to the Bank’s Cost of Funds plus 3%, which charge is based on the outstanding gross amount of accounts receivable factored. The facility is subject to annual review and is due on demand. The applicable Bank’s Cost of Funds as of March 31, 2024 was 3.65%, and the total rate was 6.65%. The maturity of the each of the factored invoice is 60 days after the draw down. The bank has temporary reduced the facility limit of approximately $4,452 (SGD 6,000) in September 2023 through July 2024.

 

In July 2020, Maint-Kleen entered into with recourse receivables purchase facility (accounts receivable purchase agreement) with HSBC. Under the terms of the facility, Maint-Kleen agreed to sell to HSBC (“Factor”) certain customer accounts receivables due A&P. All amounts due under the terms of agreement is limited to approximately $1,336 (SGD 1,800), and is guaranteed by (a) security over receivables; (b) debentures (mortgages) over all present and future assets; and (c) an unlimited guarantee provided by certain directors. Primech A&P and Maint-Kleen pays a discount charge calculated based on the SIBOR plus 3%, which charge is based on the outstanding gross amount of accounts receivable factored. The facility was renewed in August 2022 and subject to annual review, revising the discount chart rate to the Bank’s Cost of Funds plus 3%, which charge is based on the outstanding gross amount of accounts receivable factored. The facility is subject to annual review and is due on demand. The applicable Bank’s Cost of Funds as of March 31, 2024 was 3.65%, and the total rate was 6.65%. The maturity of the each of the factored invoice is 60 days after the draw down.

 

Under the terms of the these facilities, all factored receivables are sold with recourse, which requires Primech A&P and Maint-Kleen to repurchase any receivables, if demanded, not paid on time. Accordingly, such receivables are accounted for as a secured financing arrangement and not as a sale of financial assets. At March 31, 2024 and 2023, the Company had sold to HSBC with recourse accounts receivable of approximately $8,893 (SGD 11,985) and approximately $5,527 (SGD 7,334), which are included in accounts receivable on the accompanying consolidated balance sheets. At March 31, 2024, approximately $1,805 (SGD 2,433) was available under the recourse receivables purchase facility.

 

(D)On April 1, 2021, the Company acquired 80% of interest of CSG Industries Pte Ltd and a term loan is among the liabilities assumed. The term loan facility was drawn down in December, 2011 amounting to approximately $346 (SGD 468). The loans bear interest at the rate 0.75% plus Commercial Financing Rate (“CFR”) (CFR was 6.11% and 6.30% at March 31, 2024 and 2023, total loan rate was 6.86% and 7.05%), payable in monthly instalments of approximately $3 (SGD 4) each, and mature in October 2026. The loan is secured by a mortgage over a property owned by CSG located in Singapore and a personal guarantee for a maximum amount of approximately $384 (SGD 530) by the minority shareholder of CSG. During the years ended March 31, 2024 and 2023, repayments of approximately $32 (SGD 43) and approximately $38 (SGD 52) was made on the term loan facility. At March 31, 2024 and 2023, approximately $61 (SGD 82) and $94 (SGD 125) was outstanding under the loan.

 

In June 28, 2022 Primech A&P obtained one term loan facility for approximately $976 (SGD 1,400) from HSBC to finance the purchase of machinery and equipment and/or vehicles in relation to a project. The loan bears interest at the rate 3% plus Singapore Overnight Rate Average (“SORA”) per annum (SORA was 3.69% at March 31, 2024, total loan rate was 6.69%), are payable in monthly installments of approximately $20 (SGD 29) each, and mature in July 2026. The loan is secured by all present and future assets owned by Primech A&P and a joint and several guarantee for an unlimited amount by certain directors and the Parent. During the year ended March 31, 2023, approximately $976 (SGD 1,400) was drawn down, and repayments of approximately $170 (SGD 233) were made on the term loan facility. Net amount due at March 31, 2023 amounted to approximately $879 (SGD 1,167). During the year ended March 31, 2024, the Company paid down approximately $260 (SGD 350). Net amount due at March 31, 2024 amounted to approximately $606 (SGD 817).

 

On December 28, 2022 Primech A&P obtained one term loan facility for approximately $293 (SGD 400) from HSBC to finance the purchase of machinery and equipment and/or vehicles in relation to a project. Approximately $242 (SGD 330) was drawdown on April 28, 2023. The loan bears interest at the rate 3% plus Singapore Overnight Rate Average (“SORA”) per annum (SORA was 3.69% at March 31, 2024, total loan rate was 6.69%), are payable in monthly installments of approximately $7 (SGD 9) each, and mature in April 2026. The loan is secured by all present and future assets owned by Primech A&P and a joint and several guarantee for an unlimited amount by certain directors and the Parent. Approximately $242 (SGD 330) was drawn down during the year ended March 31, 2024, and repayments of approximately $75 (SGD 101) were made on the term loan facility during the year ended March 31, 2024. Net amount due at March 31, 2024 amounted to approximately $170 (SGD 229).

 

(E)On April 27, 2021, Primech A&P completed the acquisition of two office units (“properties”) located in Singapore for approximately $6,705 (SGD 9,035). The purchase price was made up of cash consideration of approximately $1,692 (SGD 2,280) and a loan obtained from HSBC of approximately $5,013 (SGD 6,755). The full amount of the loan was drawn down on April 1, 2021. The loans bear interest at the rate 1.30% plus 3 months SORA per annum (3 months SORA was 3.68% at March 31, 2024, total loan rate was 4.98%), and will mature in March, 2041. The loan is secured by the properties and is guaranteed by the shareholders of the Parent. The balance of the loan was approximately $4,707 (SGD 6,247) at March 31, 2023. During the year ended March 31, 2024, the Company paid down approximately $157 (SGD 211). The balance of the loan was approximately $4,482 (SGD 6,039) at March 31, 2024.

 

Primech A&P has certain financial covenants prescribed in the financing agreements of bridge loan (A), overdraft facility (B), factoring agreement with recourse (C), and term loans (D). Primech A&P is required to maintain, during the term of the financing agreements relating to each of these facilities, a minimum adjusted tangible net worth of $7.0 million (SGD 10.0 million), and a gearing ratio, defined as to the ratio of total bank debt to tangible net worth (or adjusted tangible net worth, as the case may be), of not more than 1.5. As of March 31, 2024, we are in compliance of the financial covenants.

 

At March 31, 2024 and 2023, the group’s executive officer, Mr. Yew Jin Sng, and beneficial owners Mr. Kin Wai Ho and Mr. Jin Ngee Vernon Kwek had executed guarantees in favor of HSBC to secure the Bridge loan, the Factoring agreement with recourse, the term loans, and the Overdraft facility. In addition, the Parent had executed a guarantee in favor of HSBC to secure the Factoring agreement with recourse, the term loans, the Overdraft facility and the mortgage loan.

 

Future minimum principal payment obligations under the notes payable are as follows:

 

For the Years Ended March 31, 2024    
2025  $11,277 
2026   1,470 
2027   276 
2028   193 
2029 onward   3,766 
Total minimum debt payments   16,982 
Less: Current portion of long-term debt   (11,277)
Long-term debt  $5,705 
v3.24.3
Income Taxes
12 Months Ended
Mar. 31, 2024
Income Taxes [Abstract]  
Income Taxes

8. Income Taxes

 

The Company’s subsidiaries (excluding its Malaysian and BVI subsidiaries) are incorporated in Singapore and are subject to Singapore Profits Tax on the taxable income as reported in its statutory financial statements adjusted in accordance with relevant Singapore tax laws.

 

The current and deferred portions of the income tax expense (benefit) included in the statements of operations and comprehensive income as determined in accordance with ASC 740 are as follows:

 

   For the Years Ended
March 31,
 
   2024   2023 
Current  $(39)  $(8)
Deferred   (454)   (2)
Income tax benefit  $(493)  $(10)

 

The following table presents a reconciliation between the theoretical income tax provision computed by applying the federal statutory rate and our actual income tax expense:

 

   Year Ended
March 31,
 
   2024   2023 
Income tax provision at statutory rates  $(780)  $(537)
Tax effects of          
Deferred tax assets not recognized   197    565 
Reversal of temporary differences   (452)   
-
 
Income exempt from income taxes   
-
    (63)
Expenses not deductible for income tax purposes   802    69 
Foreign tax rates different than statutory rates   
-
    (47)
Tax exemption and rebates   (260)   (21)
Other   
-
    24 
Income tax provision (benefit) as reported  $(493)  $(10)

 

Our 2024 and 2023 effective tax rates were significantly impacted by receipt of Government subsidies exempt from income taxes, book-tax adjustments in foreign jurisdictions, and taxation of our earnings generated in jurisdictions with rates that differ from the US federal statutory rate.

 

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial statement purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities at March 31, 2024 and 2023 are as follows:

 

   March 31, 
   2024   2023 
Deferred Tax Liabilities        
Accrued expenses  $37   $38 
Temporary difference on property and equipment   166    169 
Basis difference of customer backlog from acquisitions   (5)   251 
Basis differences of customer relationships from acquisitions   
-
    208 
Basis difference of real estate held for investment   
-
    37 
Basis difference of property and equipment   74    34 
Other   (9)   
-
 
    263    738 
Deferred Tax Assets          
Net operating loss carryover   (2,360)   (1,274)
Accrued expenses   (10)   (10)
Other   (2)   (2)
Valuation allowance   2,360    1,274 
    (12)   (12)
Net deferred tax liability  $251   $726 

 

We recognize deferred tax assets (“DTAs”) and deferred tax liabilities (“DTLs”) to account for the effects of temporary differences between the tax basis of an asset or liability and its amount as reported in our consolidated balance sheets, using enacted tax rates expected to apply to taxable income in the years in which we expect those temporary differences to be recovered or settled. Any effect on DTAs or DTLs resulting from a change in enacted tax rates is included in income during the period that includes the enactment date.

 

We reduce the carrying amounts of DTAs by a valuation allowance if, based upon all available evidence (both positive and negative), we determine that it is more likely than not that such DTAs will not be realizable. The Company follows FASB guidelines that address the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. At March 31, 2024 and 2023, the Company did not have a liability for unrecognized tax benefits.

v3.24.3
Common Stock
12 Months Ended
Mar. 31, 2024
Common Stock [Abstract]  
Common Stock

9. Common Stock

 

Our ordinary common shares have no par value as there is no concept of authorized share capital under Singapore law. All shares presently issued are fully paid and existing shareholders are not subject to any calls on shares. Although Singapore law does not recognize the concept of “non-assessability” with respect to newly-issued shares, we note that any subscriber of our ordinary shares who has fully paid up all amounts due, with respect to such ordinary shares, will not be subject to Singapore law concerning any personal liability to contribute to our assets or liabilities in such subscriber’s capacity solely as a holder of such ordinary shares. We believe this interpretation is substantively consistent with the concept of “non-assessability” under most, if not all, U.S. state corporations laws. We cannot, except in the circumstances permitted by the Companies Act, grant any financial assistance for the acquisition or proposed acquisition of our own ordinary shares. Except as described in the Singapore Code on Take-Overs and Mergers (the “Singapore Take-over Code”), there are no limitations in our constitution or Singapore law on the rights of shareholders who are not resident in Singapore to hold or vote in respect of our ordinary shares.

 

On October 9, 2023, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Spartan Capital Securities, LLC, the underwriter to the Underwriting Agreement (the “Underwriters”), relating to the Company’s initial public offering (the “IPO”) of 3,050,000 ordinary shares, no par value per share (the “Ordinary Shares”).

 

On October 12, 2023, the Company closed the IPO. The Ordinary Shares were priced at $4.00 per share, resulting in net proceeds to the Company of approximately $9,473. The Ordinary Shares were previously approved for listing on The Nasdaq Capital Market and commenced trading under the ticker symbol “PMEC” on October 10, 2023.

v3.24.3
Related Party Transactions and Balances
12 Months Ended
Mar. 31, 2024
Related Party Transactions and Balances [Abstract]  
Related Party Transactions and Balances

10. Related Party Transactions and Balances

 

Remuneration to Directors and executive officers for the years ended March 31, 2024 and 2023 were:

 

   For the year ended
March 31,
 
Directors & Officers  2024   2023 
Yew Jin Sng  $116   $92 
Ho Kin Wai   485    446 
William Yuen   33    
-
 
William Mirecki   23    
-
 
Kai Yue Jason Chan   23    
-
 
Khazid Bin Omar   161    146 
Loo Hansel   94    85 
Kit Yu Lee   183    120 
    1,118   $889 

 

In addition, remuneration to Directors of the Group’s subsidiaries for the ended March 31, 2024 and 2023 were:

 

   For the year ended
March 31,
 
Directors  2024   2023 
Chiu Hsieh Hui   42    38 
Wong Chee Kwok   9    112 
Ong Thiam Teck   
-
    55 
   $51   $205 

 

In addition, for the years ended March 31, 2024 and 2023, the Company paid approximately $531 and approximately $684, respectively, to Mr. Jin Ngee Vernon Kwek, a beneficial owner of the Company, for his services to a subsidiary of the Company.

 

As discussed in Note 7, loans in the aggregate principal amount of approximately $18,891 (SGD 22,884) are guaranteed by certain directors and shareholders of the Parent.

 

As discussed in Note 11, the group’s executive officers, Mr. Yew Jin Sng and Mr. Hansel Loo; and Mr. Jin Ngee Vernon Kwek had executed guarantees in favor of the sureties for indemnities amounting to approximately $6,203 (SGD 8,359) and approximately $4,545 (SGD 6,031), at March 31, 2024 and 2023, respectively.

v3.24.3
Commitments and Contingencies
12 Months Ended
Mar. 31, 2024
Commitments and Contingencies [Abstract]  
Commitments and Contingencies

11. Commitments and Contingencies

 

Legal matters

 

a) MOM Investigation in Relation to a Fatal Accident at Our Work Site

 

In 2019, A&P Maintenance was under contract to provide, among others, external façade cleaning services for an office tower. We appointed a sub-contractor, which in turn appointed its own sub-contractor, to carry out the façade cleaning works. The façade cleaning works were performed using a gondola. When not in use, the gondola was stored in a pit underneath floor slabs. When required for use, the floor slabs would be removed and the gondola would be elevated from the pit.

 

The façade cleaning works began in May 2019 and were expected to be completed by June 2019. In late May 2019, the works were halted due to an obstruction of the gondola tracks. During this time, the gondola was kept in the pit, however, part of the floor opening, around the gondola switch, was not covered.

 

The gondola pit was located in a rooftop area, where an independently owned bar was also located. In the early hours of June 9, 2019, a security officer working at the bar fell into the uncovered area of the gondola pit. The security officer died from the fall. The circumstances surrounding the fall were as follows: the security officer had been assigned to ensure that patrons of the bar did not enter a barricaded area (which included the area with the gondola pit). Two guests had pushed aside the barricades and entered the restricted area. Upon seeing the guests enter the restricted area, the security officer ran towards them. During this, the security officer accidentally fell into the uncovered area of the gondola pit.

 

Following the accident, the MOM commenced an investigation, which included interviews with certain of our management and employees. As a result of the said incident, two charges were brought against A&P Maintenance under Sections 20 read with Sections 14(3) and 14A(1)(b) of the WSHA, and one charge was brought against an employee of A&P Maintenance under Section 15(3A) of the WSHA. As of March 2, 2023, MOM has formally withdrawn its charge against the employee of A&P Maintenance. On 5 July 2023, A&P Maintenance pleaded guilty to the two charges. On August 18, 2023, a fine of $184 (S$245) was imposed on A&P Maintenance for the contraventions of the WSHA which has since been paid in full.

 

b) Other Legal Matters

 

In April 2024, the administrator and personal representative of a deceased person who had a fatal fall, brought a negligence claim against Jurong-Clementi Town Council, C&W Services Township Pte Ltd and Primech A&P. This claim which includes various heads of damage including but not limited to various expenses, loss of income and loss of dependency, is being handled by Primech A&P’s insurer, which has appointed an adjuster.

 

In addition to the foregoing, from time to time, the Company has become or may become involved in various legal proceedings and receives claims, arising from the normal course of business activities.

 

Performance bonds

 

Certain contracts require us to provide a surety bond as a guarantee of performance. As of March 31, 2024 and 2023, we had performance bond commitments totalling to approximately $8,141 (SGD 10,971) and approximately $6,655 (SGD 8,831) under which the surety (insurance company or bank) guarantees that the Company will perform in accordance with contractual obligations. These bonds are typically renewed annually and remain in place until the contractual obligations are satisfied. In general, we would only be liable for the amount of these guarantees in the event of default in our performance of our obligations under each contract, the probability of which we believe is remote. At March 31, 2024 and 2023, the group’s executive officer, Mr. Yew Jin Sng and Mr. Hansel Loo; and Mr. Jin Ngee Vernon Kwek had executed guarantees in favor of the sureties for indemnities amounting to approximately $6,203 (SGD 8,359) and approximately $4,545 (SGD 6,031).

v3.24.3
Subsequent Events
12 Months Ended
Mar. 31, 2024
Subsequent Events [Abstarct]  
Subsequent Events

12. Subsequent Events

 

In June 2024, the Company entered into two consultancy contracts with two vendors, with compensation to the Vendors settled in total of 2,500,000 new shares of the Company, valued at $1,500.

v3.24.3
Accounting Policies, by Policy (Policies)
12 Months Ended
Mar. 31, 2024
Organization and Summary of Significant Accounting Policies [Abstract]  
COVID-19

COVID-19

Our consolidated financial statements for the years ended March 31, 2024 and 2023 was materially impacted by the effects of the global outbreak of novel strains of coronavirus, or COVID-19, as national and local authorities in Singapore, where we operate, placed significant restrictions on travel and other activities. In addition, governmental authorities in Singapore, like many governments and central banks worldwide, have reacted with significant monetary and fiscal interventions designed to stabilize economic conditions (see liquidity discussion below).

The long term effect of this pandemic on our business and financial performance will heavily depend on future developments, including outbreaks of COVID-19 variants, duration and severity of the outbreak, government policies such as travel restrictions and business closures, the financial and operational impact on our customer base, all of which are highly uncertain and unpredictable. We are closely monitoring developments in Singapore and will continually assess its effect on our business.

Liquidity

Liquidity

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. For the fiscal year ended March 31, 2024, the Company recorded net loss of approximately $3,223 and cash used in operating activities of approximately $9,082. Included in these amounts are government subsidies of approximately $2,820 received. These government subsidies were received from government authorities in Singapore, and were primarily used to offset wage costs, and are recorded as a reduction to associated wage costs in cost of revenue and general and administrative expenses in the accompanying consolidated statements of operations and comprehensive income.

Notwithstanding the receipt of the government subsidies, management believes that its March 31, 2024, balances of cash of approximately $7,648, working capital of approximately $8,591 and approximately $2,542 of available loans or overdraft facilities are sufficient to fund operations for at least one year from the date the Company’s March 31, 2024, financial statements are issued. The amount and timing of future cash requirements will depend, in part, on the Company’s operating profitability. The Company may seek to raise additional debt and/or equity capital to fund future operations and strategic initiatives, but there can be no assurances that the Company will be able to secure such additional financing in the amounts necessary to fully fund its operating requirements on acceptable terms, or at all. The Ordinary Shares were previously approved for listing on The Nasdaq Capital Market and commenced trading under the ticker symbol “PMEC” on October 10, 2023. The amount and timing of future cash requirements will depend, in part, on the Company’s operating profitability. The Company may seek to raise additional debt and/or equity capital to fund future operations and strategic initiatives, but there can be no assurances that the Company will be able to secure such additional financing in the amounts necessary to fully fund its operating requirements on acceptable terms, or at all.

 

Basis of presentation and principles of consolidation

Basis of presentation and principles of consolidation

These consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). The Company’s consolidated financial statements includes the consolidated accounts of all of our subsidiaries. All intercompany accounts and transactions included in the consolidated financial statements have been eliminated.

As of March 31, 2024, PHL has eight wholly-owned subsidiaries, Primech A&P, Acteef Cleaning, HomeHelpy Singapore Pte. Ltd, Maint-Kleen, My All Services Sdn Bhd, Princeston and Primech AI, Primech AI Investments and one 80% owned subsidiary, CSG. All intercompany amounts and transactions have been eliminated in consolidation. All subsidiaries are entities incorporated under the laws of Singapore, except for My All Services which was incorporated in Malaysia and Primech AI and Primech AI Investments which were incorporated in British Virgin Islands.

Use of estimates

Use of estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates. On an ongoing basis, management reviews its estimates and if deemed appropriate, those estimates are adjusted. Significant estimates include those related to assumptions used in valuing reserves of uncollectible accounts receivable, assumptions used in valuing assets acquired in business acquisitions, impairment testing of goodwill and other long-term assets, the valuation allowance for deferred tax assets, and accruals for potential liabilities.

Revenue recognition

Revenue recognition

The Company recognizes revenue in accordance with Financial Accounting Standard Board (FASB) Accounting Standards Codification (ASC) 606, Revenue from Contract with Customers (ACS 606). The underlying principle of ASC 606 is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contract(s), which include (1) identifying the contract or agreement with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied.

For service contracts where the performance obligation is not completed, deferred revenue, if any, is recorded for any payments received in advance of the performance obligation.

Cost of revenue

Cost of revenue

Recurring direct operating costs for services are recognized as incurred. Cost of services revenue consists primarily of personnel costs.

Government subsidies

Government subsidies

Government subsidies are not recognized until there is reasonable assurance that the Company will comply with the conditions of the subsidy and the Company will receive the subsidy.

Generally, government subsidies fall into two categories: subsidies related to income and subsidies related to assets. Subsidies related to income are recognized in the period that the recognition criteria are met, and are presented as a reduction of the related expense that they are intended to compensate within operating expenses in the consolidated statements of operations and comprehensive income. Subsidies related to assets are for the purchase, construction or other acquisition of long-lived assets and are recognized as reductions to the capitalized costs of the related assets.

 

For the years ended March 31, 2024 and 2023, a total of approximately $2,820 and approximately $4,592 respectively of subsidies related to income were received that primarily offset various payroll and related costs. In addition, for the years ended March 31, 2024 and 2023 the Company received approximately $171 and approximately $129, respectively, of subsidies related to assets that offset purchases of certain equipment. At March 31, 2024 and 2023, government subsidies receivable totalled approximately $1,368 and approximately $1,684, respectively. There are no unfulfilled conditions or other contingencies related to these subsidies.

Cash and cash equivalents

Cash and cash equivalents

Our cash and cash equivalents consist of funds held in bank accounts. Cash equivalents are highly-liquid investments with original maturities of three months or less, including money market funds.

We maintain cash balances in Singapore dollars (“SGD”), U.S. Dollars (“USD”) and Malaysian Ringgit (“MYR”). The following table, reported in USD, disaggregates our cash balances by currency denomination:

   For the Years Ended
March 31,
 
   2024   2023 
Cash denominated in:        
SGD  $7,443   $8,966 
USD   135    
 
MYR   70    106 
Total  $7,648   $9,072 
Accounts receivable

Accounts receivable

Accounts receivable are recorded at the invoiced amount less an allowance for any uncollectible accounts. Accounts receivable also includes unbilled amounts for which we have performed services for the customer but have not yet invoiced. Accounts receivable at March 31, 2024 and 2023 included unbilled receivables of approximately $4,068 and approximately $3,578, respectively. We regularly evaluate the collectability of trade receivable balances based on a combination of factors such as customer credit-worthiness, past transaction history with the customer, current economic industry trends and changes in customer payment patterns. If we determine that a customer will be unable to fully meet its financial obligation, such as in the case of a bankruptcy filing or other material events impacting its business, a specific reserve for bad debt will be recorded to reduce the related receivable to the amount expected to be recovered. Reserve for uncollectible accounts were approximately $448 and approximately $454 as of March 31, 2024 and 2023, respectively.

Property and equipment

Property and equipment

We state property and equipment at cost and depreciate such assets using the straight-line method over the estimated useful lives of each asset category. For leasehold improvements, we determine amortization using the straight-line method over the shorter of the lease term or estimated useful life of the asset. Expenditures for repairs and maintenance, which do not materially extend the useful lives of the assets, are expensed as incurred. Expenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized and depreciated over the remaining useful life of the related asset. The estimated useful lives of property and equipment are as follows:

Machinery   2 to 5 years
Motor vehicles   5 years
Furniture and fixtures   2 to 5 years
Office equipment   2 to 5 years
Leasehold improvements   Shorter of useful life or lease term
Office improvements   2 to 5 years
Capitalized software   2 to 3 years
Leasehold property   27 to 32 years

 

Deferred offering costs

Deferred offering costs

Deferred offering costs consisted principally of legal, accounting, and underwriter’s fees incurred related to equity financings. These offering costs were deferred at March 31, 2023 and were charged against the gross proceeds received from our Initial Public Offering that occurred on October 12, 2023.

Intangible assets

Intangible assets

Amortizable identifiable intangible assets are stated at cost less accumulated amortization, and represent customer relationships and customer backlog acquired in business combinations. Customer backlog represents the value of existing firm purchase orders in place at the time of acquisition and are amortized over 3 years. Customer relationships are amortized over 5 years. The Company follows ASC 360 in accounting for intangible assets, which requires impairment losses to be recorded when indicators of impairment are present and the undiscounted cash flows estimated to be generated by the assets are less than the assets’ carrying amounts. For the years ended March 31, 2024 and 2023, the Company determined there were no indicators of impairment of its amortizable identifiable intangible assets.

Goodwill

Goodwill

Goodwill is the excess of cost of an acquired entity over the fair value of amounts assigned to assets acquired and liabilities assumed in a business combination. Under the guidance of ASC 350, goodwill is not amortized, rather it is tested for impairment annually, and will be tested for impairment between annual tests if an event occurs or circumstances change that would indicate the carrying amount may be impaired. An impairment loss generally would be recognized when the carrying amount of the reporting unit’s net assets exceeds the estimated fair value of the reporting unit and would be measured as the excess carrying value of goodwill over the derived fair value of goodwill. The Company’s policy is to perform an annual impairment testing for its reporting units on March 31, of each fiscal year. For the year ended March 31, 2023, the Company determined there was an impairment charge of approximately $138 related to the recorded Goodwill relating to its acquisition of Maint-Kleen. For the year ended March 31, 2024, the Company determined there was no impairment of its remaining recorded Goodwill.

Impairment of long-lived assets

Impairment of long-lived assets

Long-lived assets primarily include property and equipment and intangible assets. In accordance with the provision of ASC 360, the Company generally conducts its annual impairment evaluation to its long-lived assets, usually in the fourth quarter of each year, or more frequently if indicators of impairment exist, such as a significant sustained change in the business climate. The recoverability of long-lived assets is measured at the reporting unit level. If the total of the expected undiscounted future net cash flows is less than the carrying amount of the asset, a loss is recognized for the difference between the fair value and carrying amount of the asset. As of March 31, 2024 and 2023, the Company determined there were no indicators of impairment of its long-lived assets.

 

Fair value of financial instruments

Fair value of financial instruments

Under ASC 820, Fair Value Measurements and Disclosures, fair value is defined as the price at which an asset could be exchanged or a liability transferred in a transaction between knowledgeable, willing parties in the principal or most advantageous market for the asset or liability. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or parameters are not available, valuation models are applied. A fair value hierarchy prioritizes the inputs used in measuring fair value into three broad levels as follows:

Level 1 — Quoted prices in active markets for identical assets or liabilities.

Level 2 — Inputs, other than the quoted prices in active markets, are observable either directly or indirectly.

Level 3 — Unobservable inputs based on the Company’s assumptions.

The Company is required to use observable market data if such data is available without undue cost and effort. The Company has no fair value items required to be disclosed as of March 31, 2024 or 2023 under these requirements.

The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, accounts receivable, short-term bank loans and accounts payable, approximate their fair values because of the short maturity of these instruments. The carrying values of capital lease obligations and notes payable approximate their fair values because interest rates on these obligations are based on prevailing market interest rates.

Advertising

Advertising

Costs related to advertising and product promotion expenditures are charged to “Sales and marketing expenses” as incurred. Certain advertising costs are paid in advance and are expensed at the time the advertising occurs. Advertising costs aggregated $2,231 and $ 262 for the year ended March 31, 2024 and 2023, respectively.

Income taxes

Income taxes

The Company accounts for income taxes using an asset and liability approach which allows for the recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain.

The Company conducts its businesses in Singapore and Malaysia and is subject to tax in these jurisdictions. As a result of its business activities, the Company will file separate tax returns that are subject to examination by the foreign tax authorities.

 

Leases

Leases

The Company accounts for leases under ASC 842, Leases. The Company determines whether a contract is, or contains, a lease at inception. Right-of-use assets represent the Company’s right to use an underlying asset during the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease.

Right-of-use assets and lease liabilities are recognized at lease commencement based upon the estimated present value of unpaid lease payments over the lease term. The Company uses its incremental borrowing rate based on the information available at lease commencement in determining the present value of unpaid lease payments.

Earnings per share

Earnings per share

Basic earnings per ordinary share is computed by dividing net earnings attributable to ordinary shareholders by the weighted-average number of ordinary shares outstanding during the period. Diluted earnings per share is computed by dividing net income attributable to ordinary shareholders by the sum of the weighted average number of ordinary shares outstanding and of potential ordinary shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential ordinary shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted earnings per share. For the years ended March 31, 2024 and 2023, the Company had no dilutive equity instruments.

Translation of foreign currencies

Translation of foreign currencies

We report all currency amounts in USD. Our subsidiaries, however, maintain their books and records in their SGD functional currency, while My All Services maintains its books and records in their MYR functional currency.

In general, when consolidating our subsidiaries with non-USD functional currencies, we translate the amounts of assets and liabilities into USD using the exchange rate on the balance sheet date, and the amounts of revenue and expense are translated at the average exchange rate prevailing during the period. The gains and losses resulting from translation of financial statement amounts into USD are recorded as a separate component of accumulated other comprehensive loss within stockholders’ equity.

We used the exchange rates in the following table to translate amounts denominated in non-USD currencies as of and for the periods noted:

   As of
March 31,
 
   2024   2023 
Exchange rates at March 31:        
SGD:USD   0.74    0.75 
RM:USD   0.21    0.23 
   For the Years Ended
March 31,
 
   2024   2023 
Average exchange rate during the year ended March 31:        
SGD:USD   0.74    0.73 
RM:USD   0.21    0.22 

 

Concentration

Concentration

For the year ended March 31, 2024, one customer accounted for 10.0% of our total revenue and no customer accounted for more than 10% of our accounts receivable. For the year ended March 31, 2023, one customer accounted for 10.4% of our total revenue and one customer accounted for 12.1% of our accounts receivable.

For the year ended March 31, 2024 and 2023, there were no vendors that accounted for more than 10% of our total operating costs and expenses. At March 31, 2024 and 2023, no vendors accounted for more than 10% of accounts payable.

Comprehensive Income

Comprehensive Income

Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. The Company’s accumulated other comprehensive income consists of cumulative foreign currency translation adjustments.

Segment reporting

Segment reporting

The Company operates in a single segment, commercial cleaning services, based on how the chief operating decision maker (“CODM”) views and evaluates the Company’s operations in making operational and strategic decisions and assessments of financial performance. The Company’s President has been identified as the CODM.

Economic and political risks

Economic and political risks

Our operations in Singapore are subject to significant risks not typically associated with companies in the United States of America, including risks associated with, among others, the political, economic and legal environment and foreign currency exchange. Our results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In June 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-13, Credit Losses — Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires entities to use a forward-looking approach based on current expected credit losses (“CECL”) to estimate credit losses on certain types of financial instruments, including trade receivables. This may result in the earlier recognition of allowances for losses. The Company adopted ASU 2016-13 beginning April 1, 2023. The Company does not believe the impact of the new guidance and related codification improvements had a material impact to its financial position, results of operations and cash flows.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosure, which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expense categories that are regularly provided to the chief operating decision maker and included in each reported measure of a segment’s profit or loss. The update also requires all annual disclosures about a reportable segment’s profit or loss and assets to be provided in interim periods and for entities with a single reportable segment to provide all the disclosures required by ASC 280, Segment Reporting, including the significant segment expense disclosures. This standard will be effective for the Company on April 1, 2024 and interim periods beginning in fiscal year 2025, with early adoption permitted. The updates required by this standard should be applied retrospectively to all periods presented in the financial statements. The Company does not expect this standard to have a material impact on its results of operations, financial position or cash flows.

The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the consolidated financial position, statements of operations and cash flows.

v3.24.3
Organization and Summary of Significant Accounting Policies (Tables)
12 Months Ended
Mar. 31, 2024
Organization and Summary of Significant Accounting Policies (Tables) [Line Items]  
Schedule of Disaggregates Our Cash Balances by Currency Denomination We maintain cash balances in Singapore dollars (“SGD”), U.S. Dollars (“USD”) and Malaysian Ringgit (“MYR”). The following table, reported in USD, disaggregates our cash balances by currency denomination:
   For the Years Ended
March 31,
 
   2024   2023 
Cash denominated in:        
SGD  $7,443   $8,966 
USD   135    
 
MYR   70    106 
Total  $7,648   $9,072 
Schedule of Property and Equipment At March 31, 2024 and 2023, property and equipment consisted of the following:
   As of
March 31,
 
   2024   2023 
Machinery  $6,837   $7,516 
Motor vehicles   1,086    718 
Office equipment   1,328    1,222 
Furniture and fixtures   797    811 
Leasehold improvements   805    787 
Leasehold property   7,193    7,235 
    18,046    18,289 
Less: accumulated depreciation   (7,964)   (7,369)
Total  $10,082   $10,920 
Schedule of Translate Amounts Denominated in Non-USD Currencies We used the exchange rates in the following table to translate amounts denominated in non-USD currencies as of and for the periods noted:
   As of
March 31,
 
   2024   2023 
Exchange rates at March 31:        
SGD:USD   0.74    0.75 
RM:USD   0.21    0.23 
   For the Years Ended
March 31,
 
   2024   2023 
Average exchange rate during the year ended March 31:        
SGD:USD   0.74    0.73 
RM:USD   0.21    0.22 

 

Property, Plant and Equipment [Member]  
Organization and Summary of Significant Accounting Policies (Tables) [Line Items]  
Schedule of Property and Equipment The estimated useful lives of property and equipment are as follows:
Machinery   2 to 5 years
Motor vehicles   5 years
Furniture and fixtures   2 to 5 years
Office equipment   2 to 5 years
Leasehold improvements   Shorter of useful life or lease term
Office improvements   2 to 5 years
Capitalized software   2 to 3 years
Leasehold property   27 to 32 years

 

v3.24.3
Revenues (Tables)
12 Months Ended
Mar. 31, 2024
Revenues [Abstract]  
Schedule of Disaggregation of Our Revenue The following table presents a disaggregation of our revenue by major category
   For the Years Ended
March 31,
 
Revenue by service line  2024   2023 
Facilities cleaning services  $56,016   $55,755 
Stewarding services   10,156    7,599 
Cleaning services for commercial office tenants   5,870    4,899 
Total service revenues from Singapore   72,042    68,253 
Other cleaning service revenues from Malaysia   53    265 
Sales of products   429    508 
   $72,524   $69,026 
   For the Years Ended
March 31,
 
Revenue by customer category  2024   2023 
Facilities cleaning services        
Conservancy common areas   11,325    9,720 
Commercial   10,305    11,369 
Institutional   17,202    17,324 
Multi-family residential   4,201    6,873 
Hotel   4,649    5,182 
Singapore Changi Airport   7,247    3,176 
Industrial   516    1,046 
Others   571    1,065 
    56,016    55,755 
Stewarding services   10,156    7,599 
Cleaning services for commercial office tenants   5,870    4,899 
Total service revenues from Singapore   72,042    68,252 
Other cleaning service revenues from Malaysia   53    265 
Sales of products   429    508 
   $72,524   $69,026 
v3.24.3
Accounts Receivable (Tables)
12 Months Ended
Mar. 31, 2024
Accounts Receivable [Abstract]  
Schedule of Trade and Other Receivables Trade and other receivables, net of provision for doubtful accounts consist of the following:
   As of
March 31,
 
   2024   2023 
Accounts receivable  $14,832   $12,240 
Unbilled receivables   4,068    3,578 
Less: provision for doubtful accounts   (448)   (454)
Accounts receivable, net  $18,452   $15,364 
v3.24.3
Property and Equipment (Tables)
12 Months Ended
Mar. 31, 2024
Property and Equipment [Abstract]  
Schedule of Property and Equipment At March 31, 2024 and 2023, property and equipment consisted of the following:
   As of
March 31,
 
   2024   2023 
Machinery  $6,837   $7,516 
Motor vehicles   1,086    718 
Office equipment   1,328    1,222 
Furniture and fixtures   797    811 
Leasehold improvements   805    787 
Leasehold property   7,193    7,235 
    18,046    18,289 
Less: accumulated depreciation   (7,964)   (7,369)
Total  $10,082   $10,920 
v3.24.3
Prepaid Expenses and Other Current Assets (Tables)
12 Months Ended
Mar. 31, 2024
Prepaid Expenses and Other Current Assets [Abstract]  
Schedule of Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets, net consisted of the following:
   As of
March 31,
 
   2024   2023 
Prepaid advertising  $1,019   $
-
 
Deposits   1,816    542 
Other prepaid amounts   975    633 
Total  $3,810   $1,175 
v3.24.3
Leases (Tables)
12 Months Ended
Mar. 31, 2024
Leases [Abstract]  
Schedule of Components of Lease Cost The following table sets forth the components of the Company’s lease cost for the year ended March 31, 2024 and 2023.
   March 31, 
   2024   2023 
Finance lease cost:        
Depreciation of asset under finance lease  $68   $106 
Interest on lease liabilities (included in interest expense in the statements of operations)   34    54 
Total finance lease cost  $102   $160 
Operating lease cost:          
Amortization of right of use asset (included in general and administrative expenses in the statements of operations)  $2,203   $1,716 
Rental expense (included in cost of revenue, and general and administrative expenses in the statement of operations)   504    7 
Operating lease cost  $2,707   $1,723 
           
Cash paid for amounts included in the measurement of lease liabilities          
Operating cash flows from operating leases  $2,322   $1,683 
Financing cash flows from finance leases   86    523 
Total cash paid for amounts included in measurement of lease liabilities  $2,408   $2,206 
Schedule of Right of Use Assets and Lease Liabilities The following table sets forth the Company’s right of use assets and lease liabilities as of March 31, 2024 and 2023:
   March 31, 
   2024   2023 
Finance lease assets (included in Property and equipment-see Note 4)  $519   $402 
Operating lease right of use assets  $3,406   $3,128 
           
Finance lease liabilities          
Non-current liabilities  $251   $235 
Current liabilities   70    78 
Total Finance lease liabilities  $321   $313 
Operating lease liabilities          
Non-current liabilities  $1,501   $1,393 
Current liabilities   1,989    1,639 
Total operating lease liabilities  $3,490   $3,032 

 

Schedule of Leases
   March 31,
2024
   March 31,
2023
 
Weighted average lease term (Years)        
Finance leases   2.8    2.8 
Operating leases   1.6    1.8 
Weighted average discount rate          
Finance leases   4.4%   3.9%
Operating leases   5.6%   3.0%
Schedule of Net Minimum Lease Payments Present value of the net minimum lease payments as of March 31, 2024:
Future minimum lease payments  Finance Leases   Operating Leases 
2025  $81   $2,104 
2026   83    1,060 
2027   75    336 
2028   62    141 
2029   12    18 
Thereafter    58    
 
Total minimum lease payments    371    3,659 
Less: amount representing interest    (50)   (169)
Present value of net minimum lease payments   $321   $3,490 
v3.24.3
Notes Payable (Tables)
12 Months Ended
Mar. 31, 2024
Notes Payable [Abstract]  
Schedule of Notes Payable
   As of
March 31,
 
   2024   2023 
(A) HSBC – Bridge loan  $1,855   $2,826 
(B) HSBC – Overdraft facility   5,825    7,651 
(C) HSBC – Factoring agreement with recourse   3,983    2,862 
(D) HSBC – Term loans   837    973 
(E) HSBC – Mortgage loan   4,482    4,707 
    16,982    19,019 
Less: current portion   (11,277)   (11,905)
Notes payable, net of current portion  $5,705   $7,114 
(A)In October 2020, the Company’s subsidiary Primech A&P obtained a loan in the principal amount of approximately $3,711 (SGD 5,000) from the Lender. The loan bears interest at the rate 2% per annum, is payable in monthly instalments of approximately $77 (SGD 104) each, and will mature in March, 2026. The loan is secured by all the assets of the Primech A&P and is guaranteed by the shareholders of the Parent. The balance of the loan was approximately $2,826 (SGD 3,750) at March 31, 2023. During the year ended March 31, 2024, the Company paid down approximately $929 (SGD 1,250). The balance of the loan was approximately $1,855 (SGD 2,500) at March 31, 2024.
(B)In prior periods and through March 31, 2024, certain of the Company’s subsidiaries obtained overdraft facilities from HSBC with an aggregate credit limit of $5,819 (SGD 7,842). The credit facilities are subject to annual review and are due on demand. The bank granted a temporary increase in the credit limit of an additional $2,198 (SGD 3,000) from September 2023 through October 2023 and $742 (SGD1,000) from November 2023 through July 2024. The overdraft facilities permit the subsidiaries to borrow funds on a revolving line of credit up to the credit limit and bear interest at the rate 0.5% per annum below HSBC prevailing Prime Lending rate (total rate was 5.5% at March 31, 2024). The loans are secured by all term deposit accounts of the subsidiaries, an all monies debenture (mortgage) over all present and future assets of Primech A&P, and are guaranteed by certain directors and the Parent. At March 31, 2024, the balance of the overdraft facilities was approximately $5,825 (SGD 7,849) and approximately $737 (SGD 993) was unutilized under the overdraft facility.

 

(C)In July 2018, Primech A&P, entered into with recourse receivables purchase (accounts receivable purchase agreement) with HSBC. Under the terms of the facility, Primech A&P agreed to sell to HSBC (“Factor”) certain customer accounts receivables due A&P. All amounts due under the terms of agreement is limited to approximately $2,968 (SGD 4,000), and is guaranteed by (a) security over receivables; (b) debentures (mortgages) over all present and future assets; and (c) an unlimited guarantee provided by certain directors. Primech A&P pays a discount charge calculated based on the SIBOR plus 3%, which charge is based on the outstanding gross amount of accounts receivable factored. The facility was renewed in September, 2021, and increased to approximately $5,900 (SGD 8,000). Th facility was further renewed in August 2022 and subject to annual review, revising the discount chart rate to the Bank’s Cost of Funds plus 3%, which charge is based on the outstanding gross amount of accounts receivable factored. The facility is subject to annual review and is due on demand. The applicable Bank’s Cost of Funds as of March 31, 2024 was 3.65%, and the total rate was 6.65%. The maturity of the each of the factored invoice is 60 days after the draw down. The bank has temporary reduced the facility limit of approximately $4,452 (SGD 6,000) in September 2023 through July 2024.

In July 2020, Maint-Kleen entered into with recourse receivables purchase facility (accounts receivable purchase agreement) with HSBC. Under the terms of the facility, Maint-Kleen agreed to sell to HSBC (“Factor”) certain customer accounts receivables due A&P. All amounts due under the terms of agreement is limited to approximately $1,336 (SGD 1,800), and is guaranteed by (a) security over receivables; (b) debentures (mortgages) over all present and future assets; and (c) an unlimited guarantee provided by certain directors. Primech A&P and Maint-Kleen pays a discount charge calculated based on the SIBOR plus 3%, which charge is based on the outstanding gross amount of accounts receivable factored. The facility was renewed in August 2022 and subject to annual review, revising the discount chart rate to the Bank’s Cost of Funds plus 3%, which charge is based on the outstanding gross amount of accounts receivable factored. The facility is subject to annual review and is due on demand. The applicable Bank’s Cost of Funds as of March 31, 2024 was 3.65%, and the total rate was 6.65%. The maturity of the each of the factored invoice is 60 days after the draw down.

Under the terms of the these facilities, all factored receivables are sold with recourse, which requires Primech A&P and Maint-Kleen to repurchase any receivables, if demanded, not paid on time. Accordingly, such receivables are accounted for as a secured financing arrangement and not as a sale of financial assets. At March 31, 2024 and 2023, the Company had sold to HSBC with recourse accounts receivable of approximately $8,893 (SGD 11,985) and approximately $5,527 (SGD 7,334), which are included in accounts receivable on the accompanying consolidated balance sheets. At March 31, 2024, approximately $1,805 (SGD 2,433) was available under the recourse receivables purchase facility.

(D)On April 1, 2021, the Company acquired 80% of interest of CSG Industries Pte Ltd and a term loan is among the liabilities assumed. The term loan facility was drawn down in December, 2011 amounting to approximately $346 (SGD 468). The loans bear interest at the rate 0.75% plus Commercial Financing Rate (“CFR”) (CFR was 6.11% and 6.30% at March 31, 2024 and 2023, total loan rate was 6.86% and 7.05%), payable in monthly instalments of approximately $3 (SGD 4) each, and mature in October 2026. The loan is secured by a mortgage over a property owned by CSG located in Singapore and a personal guarantee for a maximum amount of approximately $384 (SGD 530) by the minority shareholder of CSG. During the years ended March 31, 2024 and 2023, repayments of approximately $32 (SGD 43) and approximately $38 (SGD 52) was made on the term loan facility. At March 31, 2024 and 2023, approximately $61 (SGD 82) and $94 (SGD 125) was outstanding under the loan.

 

In June 28, 2022 Primech A&P obtained one term loan facility for approximately $976 (SGD 1,400) from HSBC to finance the purchase of machinery and equipment and/or vehicles in relation to a project. The loan bears interest at the rate 3% plus Singapore Overnight Rate Average (“SORA”) per annum (SORA was 3.69% at March 31, 2024, total loan rate was 6.69%), are payable in monthly installments of approximately $20 (SGD 29) each, and mature in July 2026. The loan is secured by all present and future assets owned by Primech A&P and a joint and several guarantee for an unlimited amount by certain directors and the Parent. During the year ended March 31, 2023, approximately $976 (SGD 1,400) was drawn down, and repayments of approximately $170 (SGD 233) were made on the term loan facility. Net amount due at March 31, 2023 amounted to approximately $879 (SGD 1,167). During the year ended March 31, 2024, the Company paid down approximately $260 (SGD 350). Net amount due at March 31, 2024 amounted to approximately $606 (SGD 817).

On December 28, 2022 Primech A&P obtained one term loan facility for approximately $293 (SGD 400) from HSBC to finance the purchase of machinery and equipment and/or vehicles in relation to a project. Approximately $242 (SGD 330) was drawdown on April 28, 2023. The loan bears interest at the rate 3% plus Singapore Overnight Rate Average (“SORA”) per annum (SORA was 3.69% at March 31, 2024, total loan rate was 6.69%), are payable in monthly installments of approximately $7 (SGD 9) each, and mature in April 2026. The loan is secured by all present and future assets owned by Primech A&P and a joint and several guarantee for an unlimited amount by certain directors and the Parent. Approximately $242 (SGD 330) was drawn down during the year ended March 31, 2024, and repayments of approximately $75 (SGD 101) were made on the term loan facility during the year ended March 31, 2024. Net amount due at March 31, 2024 amounted to approximately $170 (SGD 229).

(E)On April 27, 2021, Primech A&P completed the acquisition of two office units (“properties”) located in Singapore for approximately $6,705 (SGD 9,035). The purchase price was made up of cash consideration of approximately $1,692 (SGD 2,280) and a loan obtained from HSBC of approximately $5,013 (SGD 6,755). The full amount of the loan was drawn down on April 1, 2021. The loans bear interest at the rate 1.30% plus 3 months SORA per annum (3 months SORA was 3.68% at March 31, 2024, total loan rate was 4.98%), and will mature in March, 2041. The loan is secured by the properties and is guaranteed by the shareholders of the Parent. The balance of the loan was approximately $4,707 (SGD 6,247) at March 31, 2023. During the year ended March 31, 2024, the Company paid down approximately $157 (SGD 211). The balance of the loan was approximately $4,482 (SGD 6,039) at March 31, 2024.
Schedule of Future Minimum Principal Payment Obligations Under the Notes Payable Future minimum principal payment obligations under the notes payable are as follows:
For the Years Ended March 31, 2024    
2025  $11,277 
2026   1,470 
2027   276 
2028   193 
2029 onward   3,766 
Total minimum debt payments   16,982 
Less: Current portion of long-term debt   (11,277)
Long-term debt  $5,705 
v3.24.3
Income Taxes (Tables)
12 Months Ended
Mar. 31, 2024
Income Taxes [Abstract]  
Schedule of Income Tax Expense (Benefit) The current and deferred portions of the income tax expense (benefit) included in the statements of operations and comprehensive income as determined in accordance with ASC 740 are as follows:
   For the Years Ended
March 31,
 
   2024   2023 
Current  $(39)  $(8)
Deferred   (454)   (2)
Income tax benefit  $(493)  $(10)
Schedule of Income Tax Reconciliation The following table presents a reconciliation between the theoretical income tax provision computed by applying the federal statutory rate and our actual income tax expense:
   Year Ended
March 31,
 
   2024   2023 
Income tax provision at statutory rates  $(780)  $(537)
Tax effects of          
Deferred tax assets not recognized   197    565 
Reversal of temporary differences   (452)   
-
 
Income exempt from income taxes   
-
    (63)
Expenses not deductible for income tax purposes   802    69 
Foreign tax rates different than statutory rates   
-
    (47)
Tax exemption and rebates   (260)   (21)
Other   
-
    24 
Income tax provision (benefit) as reported  $(493)  $(10)
Schedule of Deferred Income taxes Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial statement purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities at March 31, 2024 and 2023 are as follows:
   March 31, 
   2024   2023 
Deferred Tax Liabilities        
Accrued expenses  $37   $38 
Temporary difference on property and equipment   166    169 
Basis difference of customer backlog from acquisitions   (5)   251 
Basis differences of customer relationships from acquisitions   
-
    208 
Basis difference of real estate held for investment   
-
    37 
Basis difference of property and equipment   74    34 
Other   (9)   
-
 
    263    738 
Deferred Tax Assets          
Net operating loss carryover   (2,360)   (1,274)
Accrued expenses   (10)   (10)
Other   (2)   (2)
Valuation allowance   2,360    1,274 
    (12)   (12)
Net deferred tax liability  $251   $726 
v3.24.3
Related Party Transactions and Balances (Tables)
12 Months Ended
Mar. 31, 2024
Related Party Transactions and Balances [Abstract]  
Schedule of Remuneration to Directors Remuneration to Directors and executive officers for the years ended March 31, 2024 and 2023 were:
   For the year ended
March 31,
 
Directors & Officers  2024   2023 
Yew Jin Sng  $116   $92 
Ho Kin Wai   485    446 
William Yuen   33    
-
 
William Mirecki   23    
-
 
Kai Yue Jason Chan   23    
-
 
Khazid Bin Omar   161    146 
Loo Hansel   94    85 
Kit Yu Lee   183    120 
    1,118   $889 
In addition, remuneration to Directors of the Group’s subsidiaries for the ended March 31, 2024 and 2023 were:
   For the year ended
March 31,
 
Directors  2024   2023 
Chiu Hsieh Hui   42    38 
Wong Chee Kwok   9    112 
Ong Thiam Teck   
-
    55 
   $51   $205 
v3.24.3
Organization and Summary of Significant Accounting Policies (Details) - USD ($)
$ in Thousands
12 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Apr. 01, 2021
Organization and Summary of Significant Accounting Policies [Line Items]      
Date of incorporation Dec. 29, 2020    
Net loss $ (3,223) $ (2,547)  
Cash used in operating activities (9,082) (3,184)  
Government subsidies 2,820    
Cash 7,648 9,072  
Working capital $ 8,591    
Percentage of owned subsidiary 80.00%    
Government subsidies related to income $ 2,820 4,592  
Subsidies related to assets 171 129  
Government subsidies receivable 1,368 1,684  
Accounts receivable 4,068 3,578  
Reserve for uncollectible amount $ 448 454  
Amortization years 5 years    
Goodwill impairment charges 138  
Advertising cost 2,231 $ 262  
Liquidity [Member]      
Organization and Summary of Significant Accounting Policies [Line Items]      
Working capital 2,542    
Series of Individually Immaterial Business Acquisitions [Member] | Princeston International (S) Pte. Ltd [Member]      
Organization and Summary of Significant Accounting Policies [Line Items]      
Acquired interest     100.00%
Series of Individually Immaterial Business Acquisitions [Member] | CSG Industries Pte Ltd [Member]      
Organization and Summary of Significant Accounting Policies [Line Items]      
Acquired interest     80.00%
Series of Individually Immaterial Business Acquisitions [Member] | Third Party [Member]      
Organization and Summary of Significant Accounting Policies [Line Items]      
Percentage of interest transfer     49.00%
Cash [Member]      
Organization and Summary of Significant Accounting Policies [Line Items]      
Cash used in operating activities $ 9,082    
One Customer [Member] | Customer Concentration Risk [Member] | Revenue Benchmark [Member]      
Organization and Summary of Significant Accounting Policies [Line Items]      
Concentration percentage   10.40%  
One Customer [Member] | Customer Concentration Risk [Member] | Accounts Receivable [Member]      
Organization and Summary of Significant Accounting Policies [Line Items]      
Concentration percentage   12.10%  
Other Intangible Assets [Member]      
Organization and Summary of Significant Accounting Policies [Line Items]      
Amortization years 3 years    
v3.24.3
Organization and Summary of Significant Accounting Policies (Details) - Schedule of Disaggregates Our Cash Balances by Currency Denomination - USD ($)
$ in Thousands
Mar. 31, 2024
Mar. 31, 2023
Cash and Cash Equivalents [Line Items]    
Currency denominated $ 7,648 $ 9,072
SGD [Member]    
Cash and Cash Equivalents [Line Items]    
Currency denominated 7,443 8,966
USD [Member]    
Cash and Cash Equivalents [Line Items]    
Currency denominated 135
MYR [Member]    
Cash and Cash Equivalents [Line Items]    
Currency denominated $ 70 $ 106
v3.24.3
Organization and Summary of Significant Accounting Policies (Details) - Schedule of Property and Equipment
3 Months Ended
Mar. 31, 2023
Mar. 31, 2024
Motor vehicles [Member]    
Property, Plant and Equipment [Line Items]    
Estimated useful lives of property and equipment 5 years  
Leasehold improvements [Member]    
Property, Plant and Equipment [Line Items]    
Estimated useful lives of property and equipment Shorter of useful life or lease term  
Minimum [Member] | Machinery [Member]    
Property, Plant and Equipment [Line Items]    
Estimated useful lives of property and equipment   2 years
Minimum [Member] | Furniture and fixtures [Member]    
Property, Plant and Equipment [Line Items]    
Estimated useful lives of property and equipment   2 years
Minimum [Member] | Office equipment [Member]    
Property, Plant and Equipment [Line Items]    
Estimated useful lives of property and equipment   2 years
Minimum [Member] | Office improvements [Member]    
Property, Plant and Equipment [Line Items]    
Estimated useful lives of property and equipment   2 years
Minimum [Member] | Capitalized software [Member]    
Property, Plant and Equipment [Line Items]    
Estimated useful lives of property and equipment   2 years
Minimum [Member] | Leasehold property [Member]    
Property, Plant and Equipment [Line Items]    
Estimated useful lives of property and equipment   27 years
Maximum [Member] | Machinery [Member]    
Property, Plant and Equipment [Line Items]    
Estimated useful lives of property and equipment   5 years
Maximum [Member] | Furniture and fixtures [Member]    
Property, Plant and Equipment [Line Items]    
Estimated useful lives of property and equipment   5 years
Maximum [Member] | Office equipment [Member]    
Property, Plant and Equipment [Line Items]    
Estimated useful lives of property and equipment   5 years
Maximum [Member] | Office improvements [Member]    
Property, Plant and Equipment [Line Items]    
Estimated useful lives of property and equipment   5 years
Maximum [Member] | Capitalized software [Member]    
Property, Plant and Equipment [Line Items]    
Estimated useful lives of property and equipment   3 years
Maximum [Member] | Leasehold property [Member]    
Property, Plant and Equipment [Line Items]    
Estimated useful lives of property and equipment   32 years
v3.24.3
Organization and Summary of Significant Accounting Policies (Details) - Schedule of Translate Amounts Denominated in Non-USD Currencies
Mar. 31, 2024
Mar. 31, 2023
SGD:USD [Member]    
Organization and Summary of Significant Accounting Policies (Details) - Schedule of Translate Amounts Denominated in Non-USD Currencies [Line Items]    
Exchange rates 0.74 0.75
Average exchange rate 0.74 0.73
RM:USD [Member]    
Organization and Summary of Significant Accounting Policies (Details) - Schedule of Translate Amounts Denominated in Non-USD Currencies [Line Items]    
Exchange rates 0.21 0.23
Average exchange rate 0.21 0.22
v3.24.3
Revenues (Details) - Schedule of Disaggregation of Our Revenue - USD ($)
$ in Thousands
12 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Schedule of Disaggregation of Our Revenue [Line Items]    
Revenue $ 72,524 $ 69,026
Stewarding Services [Member]    
Schedule of Disaggregation of Our Revenue [Line Items]    
Revenue by customer and service 10,156 7,599
Cleaning Services for Commercial Office Tenants [Member]    
Schedule of Disaggregation of Our Revenue [Line Items]    
Revenue by customer and service 5,870 4,899
Service Revenues from Singapore [Member]    
Schedule of Disaggregation of Our Revenue [Line Items]    
Revenue by customer and service 72,042 68,253
Other cleaning service revenues from Malaysia [Member]    
Schedule of Disaggregation of Our Revenue [Line Items]    
Revenue by customer and service 53 265
Sales of products [Member]    
Schedule of Disaggregation of Our Revenue [Line Items]    
Revenue by customer and service 429 508
Revenue by service line [Member] | Facilities cleaning services [Member]    
Schedule of Disaggregation of Our Revenue [Line Items]    
Revenue by customer and service 56,016 55,755
Revenue by customer category [Member] | Facilities cleaning services [Member]    
Schedule of Disaggregation of Our Revenue [Line Items]    
Revenue by customer and service 56,016 55,755
Revenue by customer category [Member] | Cleaning Services for Commercial Office Tenants [Member]    
Schedule of Disaggregation of Our Revenue [Line Items]    
Revenue by customer and service 5,870 4,899
Revenue by customer category [Member] | Service Revenues from Singapore [Member]    
Schedule of Disaggregation of Our Revenue [Line Items]    
Revenue by customer and service 72,042 68,252
Revenue by customer category [Member] | Other cleaning service revenues from Malaysia [Member]    
Schedule of Disaggregation of Our Revenue [Line Items]    
Revenue by customer and service 53 265
Revenue by customer category [Member] | Sales of products [Member]    
Schedule of Disaggregation of Our Revenue [Line Items]    
Revenue by customer and service 429 508
Revenue by customer category [Member] | Conservancy common areas [Member]    
Schedule of Disaggregation of Our Revenue [Line Items]    
Revenue by customer and service 11,325 9,720
Revenue by customer category [Member] | Commercial [Member]    
Schedule of Disaggregation of Our Revenue [Line Items]    
Revenue by customer and service 10,305 11,369
Revenue by customer category [Member] | Institutional [Member]    
Schedule of Disaggregation of Our Revenue [Line Items]    
Revenue by customer and service 17,202 17,324
Revenue by customer category [Member] | Multi-family residential [Member]    
Schedule of Disaggregation of Our Revenue [Line Items]    
Revenue by customer and service 4,201 6,873
Revenue by customer category [Member] | Hotel [Member]    
Schedule of Disaggregation of Our Revenue [Line Items]    
Revenue by customer and service 4,649 5,182
Revenue by customer category [Member] | Singapore Changi Airport [Member]    
Schedule of Disaggregation of Our Revenue [Line Items]    
Revenue by customer and service 7,247 3,176
Revenue by customer category [Member] | Industrial [Member]    
Schedule of Disaggregation of Our Revenue [Line Items]    
Revenue by customer and service 516 1,046
Revenue by customer category [Member] | Others [Member]    
Schedule of Disaggregation of Our Revenue [Line Items]    
Revenue by customer and service 571 1,065
Revenue by customer category [Member] | Stewarding Services [Member]    
Schedule of Disaggregation of Our Revenue [Line Items]    
Revenue by customer and service $ 10,156 $ 7,599
v3.24.3
Accounts Receivable (Details) - USD ($)
$ in Thousands
Mar. 31, 2024
Mar. 31, 2023
Accounts Receivable [Abstract]    
Provisions for doubtful accounts receivables $ 448 $ 454
v3.24.3
Accounts Receivable (Details) - Schedule of Trade and Other Receivables - USD ($)
$ in Thousands
Mar. 31, 2024
Mar. 31, 2023
Schedule of Trade and Other Receivables [Abstract]    
Accounts receivable $ 14,832 $ 12,240
Unbilled receivables 4,068 3,578
Less: provision for doubtful accounts (448) (454)
Accounts receivable, net $ 18,452 $ 15,364
v3.24.3
Property and Equipment (Details) - USD ($)
$ in Thousands
12 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Property and Equipment [Abstract]    
Depreciation expense $ 1,640 $ 1,637
v3.24.3
Property and Equipment (Details) - Schedule of Property and Equipment - USD ($)
$ in Thousands
Mar. 31, 2024
Mar. 31, 2023
Schedule of Property and Equipment [Line Items]    
Property and equipment, gross $ 18,046 $ 18,289
Less: accumulated depreciation (7,964) (7,369)
Total 10,082 10,920
Machinery [Member]    
Schedule of Property and Equipment [Line Items]    
Property and equipment, gross 6,837 7,516
Motor vehicles [Member]    
Schedule of Property and Equipment [Line Items]    
Property and equipment, gross 1,086 718
Office equipment [Member]    
Schedule of Property and Equipment [Line Items]    
Property and equipment, gross 1,328 1,222
Furniture and fixtures [Member]    
Schedule of Property and Equipment [Line Items]    
Property and equipment, gross 797 811
Leasehold improvements [Member]    
Schedule of Property and Equipment [Line Items]    
Property and equipment, gross 805 787
Leasehold property [Member]    
Schedule of Property and Equipment [Line Items]    
Property and equipment, gross $ 7,193 $ 7,235
v3.24.3
Prepaid Expenses and Other Current Assets (Details) - Schedule of Prepaid Expenses and Other Current Assets - USD ($)
$ in Thousands
Mar. 31, 2024
Mar. 31, 2023
Schedule of Prepaid Expenses and Other Current Assets [Abstract]    
Prepaid advertising $ 1,019
Deposits 1,816 542
Other prepaid amounts 975 633
Total $ 3,810 $ 1,175
v3.24.3
Leases (Details) - Schedule of Components of Lease Cost - USD ($)
$ in Thousands
12 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Finance lease cost:    
Depreciation of asset under finance lease $ 68 $ 106
Interest on lease liabilities (included in interest expense in the statements of operations) 34 54
Total finance lease cost 102 160
Operating lease cost:    
Amortization of right of use asset (included in general and administrative expenses in the statements of operations) 2,203 1,716
Rental expense (included in cost of revenue, and general and administrative expenses in the statement of operations) 504 7
Operating lease cost 2,707 1,723
Cash paid for amounts included in the measurement of lease liabilities    
Operating cash flows from operating leases 2,322 1,683
Financing cash flows from finance leases 86 523
Total cash paid for amounts included in measurement of lease liabilities $ 2,408 $ 2,206
v3.24.3
Leases (Details) - Schedule of Right of Use Assets and Lease Liabilities - USD ($)
$ in Thousands
Mar. 31, 2024
Mar. 31, 2023
Schedule of Right of Use Assets and Lease Liabilities [Abstract]    
Finance lease assets (included in Property and equipment-see Note 4) $ 519 $ 402
Operating lease right of use assets 3,406 3,128
Finance lease liabilities    
Non-current liabilities 251 235
Current liabilities 70 78
Total Finance lease liabilities 321 313
Operating lease liabilities    
Non-current liabilities 1,501 1,393
Current liabilities 1,989 1,639
Total operating lease liabilities $ 3,490 $ 3,032
v3.24.3
Leases (Details) - Schedule of Leases
Mar. 31, 2024
Mar. 31, 2023
Weighted average lease term (Years)    
Finance leases 2 years 9 months 18 days 2 years 9 months 18 days
Operating leases 1 year 7 months 6 days 1 year 9 months 18 days
Weighted average discount rate    
Finance leases 4.40% 3.90%
Operating leases 5.60% 3.00%
v3.24.3
Leases (Details) - Schedule of Net Minimum Lease Payments - USD ($)
$ in Thousands
Mar. 31, 2024
Mar. 31, 2023
Schedule of Net Minimum Lease Payments [Abstract]    
Operating Leases, 2025 $ 2,104  
Finance Leases, 2025 81  
Operating Leases, 2026 1,060  
Finance Leases, 2026 83  
Operating Leases, 2027 336  
Finance Leases, 2027 75  
Operating Leases, 2028 141  
Finance Leases, 2028 62  
Operating Leases, 2029 18  
Finance Leases, 2029 12  
Operating Leases, Thereafter  
Finance Leases, Thereafter 58  
Operating Leases, Total minimum lease payments 3,659  
Finance Leases, Total minimum lease payments 371  
Operating Leases, Less: amount representing interest (169)  
Finance Leases, Less: amount representing interest (50)  
Operating Leases, Present value of net minimum lease payments 3,490 $ 3,032
Finance Leases, Present value of net minimum lease payments $ 321 $ 313
v3.24.3
Notes Payable (Details)
1 Months Ended 2 Months Ended 9 Months Ended 11 Months Ended 12 Months Ended
Mar. 31, 2024
USD ($)
Mar. 31, 2024
SGD ($)
Dec. 28, 2022
USD ($)
Dec. 28, 2022
SGD ($)
Jun. 28, 2022
USD ($)
Jun. 28, 2022
SGD ($)
Apr. 27, 2021
USD ($)
Apr. 27, 2021
SGD ($)
Apr. 01, 2021
USD ($)
Apr. 01, 2021
SGD ($)
Oct. 31, 2020
SGD ($)
Jul. 31, 2018
USD ($)
Jul. 31, 2018
SGD ($)
Dec. 31, 2011
USD ($)
Dec. 31, 2011
SGD ($)
Oct. 31, 2020
USD ($)
Oct. 31, 2023
USD ($)
Oct. 31, 2023
SGD ($)
Jul. 31, 2024
USD ($)
Jul. 31, 2024
SGD ($)
Jul. 31, 2024
USD ($)
Jul. 31, 2024
SGD ($)
Mar. 31, 2024
USD ($)
Mar. 31, 2024
SGD ($)
Mar. 31, 2023
USD ($)
Mar. 31, 2023
SGD ($)
Mar. 31, 2024
SGD ($)
Mar. 31, 2023
SGD ($)
Aug. 31, 2022
Oct. 31, 2020
SGD ($)
Jul. 31, 2020
USD ($)
Jul. 31, 2020
SGD ($)
Jul. 31, 2018
SGD ($)
Notes Payable (Details) [Line Items]                                                                  
Bears interest rate per annum                               $ 2                                  
Recourse accounts receivable $ 8,893,000 $ 11,985                                             $ 5,527,000 $ 7,334              
Recourse receivables purchase 1,805,000 $ 2,433                                                              
Loan                                             $ 1,412,000   9,908,000                
Lender [Member]                                                                  
Notes Payable (Details) [Line Items]                                                                  
Principal amount                               3,711,000                           $ 5,000      
Lender [Member]                                                                  
Notes Payable (Details) [Line Items]                                                                  
Monthly instalments of loan payable                     $ 104         $ 77,000             929,000 $ 1,250                  
Outstanding loan amount                                             1,855,000 2,500 2,826,000 3,750              
HSBC [Member]                                                                  
Notes Payable (Details) [Line Items]                                                                  
Aggregate credit limit $ 5,819,000                                           $ 5,819,000       $ 7,842            
Net amount due                                 $ 2,198,000 $ 3,000 $ 742,000 $ 1,000                          
Bears interest rate per annum 0.50% 0.50%                                                              
Total interest rate 5.50%                                           5.50%       5.50%            
Balance of overdraft facilities $ 5,825,000                                           $ 5,825,000       $ 7,849            
Unutilized under the overdraft facility $ 737,000                                           $ 737,000       $ 993            
Primech A&P [Member]                                                                  
Notes Payable (Details) [Line Items]                                                                  
Net amount due                       $ 5,900,000 $ 8,000                                        
Terms of agreement                       $ 2,968,000                                         $ 4,000
Discount charge based on SIBOR                       3.00%                                         3.00%
Revising discount charge based on Singapore Interbank Offered Rate                                                         3.00%        
Reduced facility limit                                         $ 4,452,000 $ 6,000                      
Primech A&P [Member] | Minimum [Member]                                                                  
Notes Payable (Details) [Line Items]                                                                  
Bank’s cost funds rate 3.65% 3.65%                                                              
Primech A&P [Member] | Maximum [Member]                                                                  
Notes Payable (Details) [Line Items]                                                                  
Bank’s cost funds total rate 6.65%                                           6.65%       6.65%            
Maint Kleen [Member]                                                                  
Notes Payable (Details) [Line Items]                                                                  
Terms of agreement                                                             $ 1,336,000 $ 1,800  
Discount charge based on SIBOR                                                             3.00% 3.00%  
Revising discount charge based on Singapore Interbank Offered Rate                                                         3.00%        
Bank’s cost funds rate 3.65% 3.65%                                                              
Bank’s cost funds total rate 6.65%                                           6.65%       6.65%            
CSG Industries Pte Ltd [Member]                                                                  
Notes Payable (Details) [Line Items]                                                                  
Interest acquired                 80.00% 80.00%                                              
Loan paid                           $ 346,000 $ 468                                    
Bear interest rate 0.75%                                           0.75%       0.75%            
Instalments                 $ 3,000 $ 4                                              
Aggregate credit limit                 $ 384,000 $ 530                                              
Loan outstanding $ 61,000                                           $ 61,000   $ 94,000   $ 82 $ 125          
CSG Industries Pte Ltd [Member] | Minimum [Member]                                                                  
Notes Payable (Details) [Line Items]                                                                  
Total interest rate                 6.86% 6.86%                                              
Repayments                 $ 32,000 $ 43                                              
CSG Industries Pte Ltd [Member] | Minimum [Member] | Commercial Financing Rate [Member]                                                                  
Notes Payable (Details) [Line Items]                                                                  
Bear interest rate 6.11%                                           6.11%       6.11%            
CSG Industries Pte Ltd [Member] | Maximum [Member]                                                                  
Notes Payable (Details) [Line Items]                                                                  
Total interest rate                 7.05% 7.05%                                              
Repayments                 $ 38,000 $ 52                                              
CSG Industries Pte Ltd [Member] | Maximum [Member] | Commercial Financing Rate [Member]                                                                  
Notes Payable (Details) [Line Items]                                                                  
Bear interest rate                                                 6.30%     6.30%          
Bridge Loan [Member]                                                                  
Notes Payable (Details) [Line Items]                                                                  
Tangible net $ 7,000,000                                           $ 7,000,000       $ 10,000,000            
One Term Loan Facility [Member] | HSBC [Member]                                                                  
Notes Payable (Details) [Line Items]                                                                  
Net amount due 606,000 $ 817                                             $ 879,000 1,167              
Bears interest rate per annum         6.69% 6.69%                                                      
Loan paid   350                                         260,000                    
Instalments         $ 20,000 $ 29                                                      
Repayments                                                 976,000 1,400              
Term loan facility         $ 976,000 $ 1,400                                                      
Bears interest at the rate         3.00% 3.00%                                                      
Repayments of Lines of Credit                                                 170,000 $ 233              
Two Term Loan Facility [Member] | HSBC [Member]                                                                  
Notes Payable (Details) [Line Items]                                                                  
Net amount due $ 170,000 $ 229                                                              
Bears interest rate per annum 6.69% 6.69%                                                              
Loan paid $ 242,000 $ 330 $ 242,000 $ 330                                                          
Instalments 7,000 9                                                              
Repayments $ 75,000 $ 101                                                              
Term loan facility     $ 293,000 $ 400                                                          
Bears interest at the rate     3.00% 3.00%                                                          
Two Office Units [Member]                                                                  
Notes Payable (Details) [Line Items]                                                                  
Bears interest rate per annum 4.98% 4.98%                                                              
Loan paid                                             157,000 $ 211                  
Loan outstanding $ 4,482,000                                           $ 4,482,000   $ 4,707,000   $ 6,039 $ 6,247          
Acquisition amount             $ 6,705,000 $ 9,035                                                  
Cash consideration             1,692,000 2,280                                                  
Loan               $ 6,755                                                  
Two Office Units [Member] | HSBC [Member]                                                                  
Notes Payable (Details) [Line Items]                                                                  
Loan             $ 5,013,000                                                    
Two Office Units [Member] | Primech A&P [Member]                                                                  
Notes Payable (Details) [Line Items]                                                                  
Interest rate, percentage             1.30% 1.30%                                                  
SORA [Member] | One Term Loan Facility [Member] | HSBC [Member]                                                                  
Notes Payable (Details) [Line Items]                                                                  
Average rate percentage         3.69% 3.69%                                                      
SORA [Member] | Two Term Loan Facility [Member] | HSBC [Member]                                                                  
Notes Payable (Details) [Line Items]                                                                  
Average rate percentage     3.69% 3.69%                                                          
SORA [Member] | Two Office Units [Member]                                                                  
Notes Payable (Details) [Line Items]                                                                  
Average rate percentage 3.68%                                           3.68%       3.68%            
v3.24.3
Notes Payable (Details) - Schedule of Notes Payable - USD ($)
$ in Thousands
Mar. 31, 2024
Mar. 31, 2023
Schedule of Notes Payable [Line Items]    
Notes payable, Gross $ 16,982 $ 19,019
Less: current portion (11,277) (11,905)
Notes payable, net of current portion 5,705 7,114
Bridge loan [Member]    
Schedule of Notes Payable [Line Items]    
Notes payable, Gross [1] 1,855 2,826
Overdraft facility [Member]    
Schedule of Notes Payable [Line Items]    
Notes payable, Gross [2] 5,825 7,651
Factoring agreement with recourse [Member]    
Schedule of Notes Payable [Line Items]    
Notes payable, Gross [3] 3,983 2,862
Term loans [Member]    
Schedule of Notes Payable [Line Items]    
Notes payable, Gross [4] 837 973
Mortgage loan [Member]    
Schedule of Notes Payable [Line Items]    
Notes payable, Gross [5] $ 4,482 $ 4,707
[1] In October 2020, the Company’s subsidiary Primech A&P obtained a loan in the principal amount of approximately $3,711 (SGD 5,000) from the Lender. The loan bears interest at the rate 2% per annum, is payable in monthly instalments of approximately $77 (SGD 104) each, and will mature in March, 2026. The loan is secured by all the assets of the Primech A&P and is guaranteed by the shareholders of the Parent. The balance of the loan was approximately $2,826 (SGD 3,750) at March 31, 2023. During the year ended March 31, 2024, the Company paid down approximately $929 (SGD 1,250). The balance of the loan was approximately $1,855 (SGD 2,500) at March 31, 2024.
[2] In prior periods and through March 31, 2024, certain of the Company’s subsidiaries obtained overdraft facilities from HSBC with an aggregate credit limit of $5,819 (SGD 7,842). The credit facilities are subject to annual review and are due on demand. The bank granted a temporary increase in the credit limit of an additional $2,198 (SGD 3,000) from September 2023 through October 2023 and $742 (SGD1,000) from November 2023 through July 2024. The overdraft facilities permit the subsidiaries to borrow funds on a revolving line of credit up to the credit limit and bear interest at the rate 0.5% per annum below HSBC prevailing Prime Lending rate (total rate was 5.5% at March 31, 2024). The loans are secured by all term deposit accounts of the subsidiaries, an all monies debenture (mortgage) over all present and future assets of Primech A&P, and are guaranteed by certain directors and the Parent. At March 31, 2024, the balance of the overdraft facilities was approximately $5,825 (SGD 7,849) and approximately $737 (SGD 993) was unutilized under the overdraft facility.
[3] In July 2018, Primech A&P, entered into with recourse receivables purchase (accounts receivable purchase agreement) with HSBC. Under the terms of the facility, Primech A&P agreed to sell to HSBC (“Factor”) certain customer accounts receivables due A&P. All amounts due under the terms of agreement is limited to approximately $2,968 (SGD 4,000), and is guaranteed by (a) security over receivables; (b) debentures (mortgages) over all present and future assets; and (c) an unlimited guarantee provided by certain directors. Primech A&P pays a discount charge calculated based on the SIBOR plus 3%, which charge is based on the outstanding gross amount of accounts receivable factored. The facility was renewed in September, 2021, and increased to approximately $5,900 (SGD 8,000). Th facility was further renewed in August 2022 and subject to annual review, revising the discount chart rate to the Bank’s Cost of Funds plus 3%, which charge is based on the outstanding gross amount of accounts receivable factored. The facility is subject to annual review and is due on demand. The applicable Bank’s Cost of Funds as of March 31, 2024 was 3.65%, and the total rate was 6.65%. The maturity of the each of the factored invoice is 60 days after the draw down. The bank has temporary reduced the facility limit of approximately $4,452 (SGD 6,000) in September 2023 through July 2024. In July 2020, Maint-Kleen entered into with recourse receivables purchase facility (accounts receivable purchase agreement) with HSBC. Under the terms of the facility, Maint-Kleen agreed to sell to HSBC (“Factor”) certain customer accounts receivables due A&P. All amounts due under the terms of agreement is limited to approximately $1,336 (SGD 1,800), and is guaranteed by (a) security over receivables; (b) debentures (mortgages) over all present and future assets; and (c) an unlimited guarantee provided by certain directors. Primech A&P and Maint-Kleen pays a discount charge calculated based on the SIBOR plus 3%, which charge is based on the outstanding gross amount of accounts receivable factored. The facility was renewed in August 2022 and subject to annual review, revising the discount chart rate to the Bank’s Cost of Funds plus 3%, which charge is based on the outstanding gross amount of accounts receivable factored. The facility is subject to annual review and is due on demand. The applicable Bank’s Cost of Funds as of March 31, 2024 was 3.65%, and the total rate was 6.65%. The maturity of the each of the factored invoice is 60 days after the draw down. Under the terms of the these facilities, all factored receivables are sold with recourse, which requires Primech A&P and Maint-Kleen to repurchase any receivables, if demanded, not paid on time. Accordingly, such receivables are accounted for as a secured financing arrangement and not as a sale of financial assets. At March 31, 2024 and 2023, the Company had sold to HSBC with recourse accounts receivable of approximately $8,893 (SGD 11,985) and approximately $5,527 (SGD 7,334), which are included in accounts receivable on the accompanying consolidated balance sheets. At March 31, 2024, approximately $1,805 (SGD 2,433) was available under the recourse receivables purchase facility.
[4] On April 1, 2021, the Company acquired 80% of interest of CSG Industries Pte Ltd and a term loan is among the liabilities assumed. The term loan facility was drawn down in December, 2011 amounting to approximately $346 (SGD 468). The loans bear interest at the rate 0.75% plus Commercial Financing Rate (“CFR”) (CFR was 6.11% and 6.30% at March 31, 2024 and 2023, total loan rate was 6.86% and 7.05%), payable in monthly instalments of approximately $3 (SGD 4) each, and mature in October 2026. The loan is secured by a mortgage over a property owned by CSG located in Singapore and a personal guarantee for a maximum amount of approximately $384 (SGD 530) by the minority shareholder of CSG. During the years ended March 31, 2024 and 2023, repayments of approximately $32 (SGD 43) and approximately $38 (SGD 52) was made on the term loan facility. At March 31, 2024 and 2023, approximately $61 (SGD 82) and $94 (SGD 125) was outstanding under the loan. In June 28, 2022 Primech A&P obtained one term loan facility for approximately $976 (SGD 1,400) from HSBC to finance the purchase of machinery and equipment and/or vehicles in relation to a project. The loan bears interest at the rate 3% plus Singapore Overnight Rate Average (“SORA”) per annum (SORA was 3.69% at March 31, 2024, total loan rate was 6.69%), are payable in monthly installments of approximately $20 (SGD 29) each, and mature in July 2026. The loan is secured by all present and future assets owned by Primech A&P and a joint and several guarantee for an unlimited amount by certain directors and the Parent. During the year ended March 31, 2023, approximately $976 (SGD 1,400) was drawn down, and repayments of approximately $170 (SGD 233) were made on the term loan facility. Net amount due at March 31, 2023 amounted to approximately $879 (SGD 1,167). During the year ended March 31, 2024, the Company paid down approximately $260 (SGD 350). Net amount due at March 31, 2024 amounted to approximately $606 (SGD 817). On December 28, 2022 Primech A&P obtained one term loan facility for approximately $293 (SGD 400) from HSBC to finance the purchase of machinery and equipment and/or vehicles in relation to a project. Approximately $242 (SGD 330) was drawdown on April 28, 2023. The loan bears interest at the rate 3% plus Singapore Overnight Rate Average (“SORA”) per annum (SORA was 3.69% at March 31, 2024, total loan rate was 6.69%), are payable in monthly installments of approximately $7 (SGD 9) each, and mature in April 2026. The loan is secured by all present and future assets owned by Primech A&P and a joint and several guarantee for an unlimited amount by certain directors and the Parent. Approximately $242 (SGD 330) was drawn down during the year ended March 31, 2024, and repayments of approximately $75 (SGD 101) were made on the term loan facility during the year ended March 31, 2024. Net amount due at March 31, 2024 amounted to approximately $170 (SGD 229).
[5] On April 27, 2021, Primech A&P completed the acquisition of two office units (“properties”) located in Singapore for approximately $6,705 (SGD 9,035). The purchase price was made up of cash consideration of approximately $1,692 (SGD 2,280) and a loan obtained from HSBC of approximately $5,013 (SGD 6,755). The full amount of the loan was drawn down on April 1, 2021. The loans bear interest at the rate 1.30% plus 3 months SORA per annum (3 months SORA was 3.68% at March 31, 2024, total loan rate was 4.98%), and will mature in March, 2041. The loan is secured by the properties and is guaranteed by the shareholders of the Parent. The balance of the loan was approximately $4,707 (SGD 6,247) at March 31, 2023. During the year ended March 31, 2024, the Company paid down approximately $157 (SGD 211). The balance of the loan was approximately $4,482 (SGD 6,039) at March 31, 2024.
v3.24.3
Notes Payable (Details) - Schedule of Future Minimum Principal Payment Obligations Under the Notes Payable
$ in Thousands
Mar. 31, 2024
USD ($)
Schedule of Future Minimum Principal Payment Obligations Under the Notes Payable [Abstract]  
2025 $ 11,277
2026 1,470
2027 276
2028 193
2029 onward 3,766
Total minimum debt payments 16,982
Less: Current portion of long-term debt (11,277)
Long-term debt $ 5,705
v3.24.3
Income Taxes (Details) - Schedule of Income Tax Expense (Benefit) - USD ($)
$ in Thousands
12 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Schedule of Income Tax Expense (Benefit) [Abstract]    
Current $ (39) $ (8)
Deferred (454) (2)
Income tax benefit $ (493) $ (10)
v3.24.3
Income Taxes (Details) - Schedule of Income Tax Reconciliation - USD ($)
$ in Thousands
12 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Schedule of Income Tax Reconciliation [Abstract]    
Income tax provision at statutory rates $ (780) $ (537)
Tax effects of    
Deferred tax assets not recognized 197 565
Reversal of temporary differences (452)
Income exempt from income taxes (63)
Expenses not deductible for income tax purposes 802 69
Foreign tax rates different than statutory rates (47)
Tax exemption and rebates (260) (21)
Other 24
Income tax benefit $ (493) $ (10)
v3.24.3
Income Taxes (Details) - Schedule of Deferred Income Taxes - USD ($)
$ in Thousands
Mar. 31, 2024
Mar. 31, 2023
Deferred Tax Liabilities    
Accrued expenses $ 37 $ 38
Temporary difference on property and equipment 166 169
Basis difference of customer backlog from acquisitions (5) 251
Basis differences of customer relationships from acquisitions 208
Basis difference of real estate held for investment 37
Basis difference of property and equipment 74 34
Other (9)
Deferred tax liabilities, Total 263 738
Deferred Tax Assets    
Net operating loss carryover (2,360) (1,274)
Accrued expenses (10) (10)
Other (2) (2)
Valuation allowance 2,360 1,274
Deferred tax assets, Total (12) (12)
Net deferred tax liability $ 251 $ 726
v3.24.3
Common Stock (Details) - USD ($)
$ / shares in Units, $ in Thousands
12 Months Ended
Oct. 12, 2023
Oct. 09, 2023
Mar. 31, 2024
Common Stock [Abstract]      
Ordinary shares   3,050,000  
Shares priced $ 4    
Net proceeds $ 9,473   $ 9,473
v3.24.3
Related Party Transactions and Balances (Details)
$ in Thousands
12 Months Ended
Mar. 31, 2024
USD ($)
Mar. 31, 2024
SGD ($)
Mar. 31, 2023
SGD ($)
Mar. 31, 2023
USD ($)
Related Party Transactions and Balances [Line Items]        
Cash paid $ 531     $ 684
Loans aggregate principal amount 18,891 $ 22,884    
Mr. Yew Jin Sng and Mr. Hansel Loo [Member]        
Related Party Transactions and Balances [Line Items]        
Sureties for indemnities amount 6,203   $ 8,359  
Mr. Jin Ngee Vernon Kwek [Member]        
Related Party Transactions and Balances [Line Items]        
Sureties for indemnities amount $ 4,545   $ 6,031  
v3.24.3
Related Party Transactions and Balances (Details) - Schedule of Remuneration to Directors - USD ($)
$ in Thousands
12 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Directors and Executive Officers [Member]    
Related Party Transaction [Line Items]    
Remuneration to Directors and executive officers $ 1,118 $ 889
Directors and Executive Officers [Member] | Yew Jin Sng [Member]    
Related Party Transaction [Line Items]    
Remuneration to Directors and executive officers 116 92
Directors and Executive Officers [Member] | Ho Kin Wai [Member]    
Related Party Transaction [Line Items]    
Remuneration to Directors and executive officers 485 446
Directors and Executive Officers [Member] | William Yuen [Member]    
Related Party Transaction [Line Items]    
Remuneration to Directors and executive officers 33
Directors and Executive Officers [Member] | William Mirecki [Member]    
Related Party Transaction [Line Items]    
Remuneration to Directors and executive officers 23
Directors and Executive Officers [Member] | Kai Yue Jason Chan [Member]    
Related Party Transaction [Line Items]    
Remuneration to Directors and executive officers 23
Directors and Executive Officers [Member] | Khazid Bin Omar [Member]    
Related Party Transaction [Line Items]    
Remuneration to Directors and executive officers 161 146
Directors and Executive Officers [Member] | Loo Hansel [Member]    
Related Party Transaction [Line Items]    
Remuneration to Directors and executive officers 94 85
Directors and Executive Officers [Member] | Kit Yu Lee [Member]    
Related Party Transaction [Line Items]    
Remuneration to Directors and executive officers 183 120
Director [Member]    
Related Party Transaction [Line Items]    
Remuneration to Directors and executive officers 51 205
Director [Member] | Chiu Hsieh Hui [Member]    
Related Party Transaction [Line Items]    
Remuneration to Directors and executive officers 42 38
Director [Member] | Wong Chee Kwok [Member]    
Related Party Transaction [Line Items]    
Remuneration to Directors and executive officers 9 112
Director [Member] | Ong Thiam Teck [Member]    
Related Party Transaction [Line Items]    
Remuneration to Directors and executive officers $ 55
v3.24.3
Commitments and Contingencies (Details)
$ in Thousands
Aug. 18, 2023
USD ($)
Aug. 18, 2023
SGD ($)
Mar. 31, 2024
USD ($)
Mar. 31, 2024
SGD ($)
Mar. 31, 2023
USD ($)
Mar. 31, 2023
SGD ($)
Commitments and Contingencies [Line Items]            
Maintenance amount $ 184 $ 245        
Commitments totaling     $ 8,141 $ 10,971 $ 6,655 $ 8,831
Mr. Jin Ngee Vernon Kwek [Member]            
Commitments and Contingencies [Line Items]            
Indemnities amounting     $ 6,203 $ 8,359 $ 4,545 $ 6,031
v3.24.3
Subsequent Events (Details) - Subsequent Event [Member]
$ in Thousands
Jun. 30, 2024
USD ($)
shares
Subsequent Event [Line Items]  
Consultancy contracts 2
Number of vendors 2
Compensation Vendors settled total new shares (in Shares) | shares 2,500,000
Compensation Vendors settled total new shares value (in Dollars) | $ $ 1,500

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