Integrated Media Technology Ltd 20-F for FY2023
Integrated Media Technology Ltd (IMTE)
About this 20-F
Integrated Media Technology Ltd filed this 20-F on October 22, 2024, covering the fiscal year ended December 31, 2023 (FY2023).
Headline figures
Fiscal year ended December 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $373.68K
- up 2.5% from $364.41K a year earlier
- Net loss
- $16.73M
- compared with a net loss of $9.97M a year earlier
- Diluted EPS
- -$4.91
- compared with -$4.86 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
OR
For the fiscal year ended
OR
For the transition period from to
OR
Date of event requiring this shell company report
Commission file number
(Exact name of Registrant as specified in its charter
and translation of Registrant’s name into English)
(Jurisdiction of incorporation or organization)
Phone: +61 7324 6018 E: corporate@imtechltd.com
(Address of principal executive offices)
Phone:
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act.
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Securities registered or to be registered pursuant to Section 12(g) of the Act. None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act. None
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.
The number of ordinary shares, as of September 30,
2024 is
Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes
☒
If this report is an annual or transition report,
indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934. ☐ Yes ☒
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. ☒
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or an emerging growth company. See definition of “large accelerated filer”, “accelerated filer” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ | |||
| 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 13(a) of the Exchange
Act.
Indicate by check mark whether the registrant
has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report.
If securities are registered pursuant to Section
12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
| U.S. GAAP ☐ | by the International Accounting Standards Board | ☒ | Other ☐ |
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. ☐ Item 17 ☐ Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
☐
Yes
TABLE OF CONTENTS
i
INTRODUCTION
Integrated Media Technology Limited was incorporated under the laws of the Commonwealth of Australia on August 8, 2008. As used in this annual report, the terms “we,” “us,” “our”, “IMTE”, and the “Company” mean Integrated Media Technology Limited and its subsidiaries, unless otherwise indicated. In this annual report on Form 20-F references to:
| ● | “Australia” is to the Commonwealth of Australia; |
| ● | “Board” or “Board of Directors” means board of directors of the Company; |
| ● | “Canada” is to the country in North America of Canada; |
| ● | “China” or the “PRC” are to the People’s Republic of China, excluding Taiwan and the special administrative regions of Hong Kong and Macau for the purposes of this annual report only; |
| ● | “Hong Kong” is to the Hong Kong Special Administrative Region; |
| ● | “Korea” or “South Korea” are to Republic of Korea; |
| ● | “Malaysia” is to the country in Southeast Asia of Malaysia; |
| ● | “USA” is to the United States of America; |
| ● | “the Group” or “Group” refers to Integrated Media Technology Limited and its subsidiaries; |
| ● | “NASDAQ” are to the NASDAQ Stock Market; |
| ● | “SEC” means the United States Securities and Exchange Commission; |
| ● | “shares”, “Shares” or “Ordinary Shares” are to the ordinary shares of the Company, no par value; |
| ● | “Australian dollars” or “A$” or “AUD” are to the currency of Commonwealth of Australia; |
| ● | “EUR” are to the legal currency of Europe; |
| ● | “GBP” are to the legal currency of United Kingdom; |
| ● | “Hong Kong dollar” are to the official currency of Hong Kong; |
| ● | “MYR” are to the legal currency of Malaysia; |
| ● | “RMB” and “Renminbi” are to the legal currency of China; |
| ● | “U.S. dollars” or “US$” or “$” are to the currency of the United States of America; |
| ● | “Won” are to the legal currency of South Korea. |
Our consolidated financial statements appearing in this annual report on Form 20-F are prepared in United States dollars and in accordance with the International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB. Our consolidated financial statements appearing in this annual report on Form 20-F comply with both the IFRS and Australian equivalents to IFRS, or A-IFRS. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with IFRS.
Statements made in this annual report on Form 20-F concerning the contents of any contract, agreement or other documents are summaries of such contracts, agreements or documents and are not complete descriptions of all of their terms. If we filed any of these documents as an exhibit to this annual report or to any annual report that we previously filed, you may read the document itself for a complete description of its terms.
Except for the historical information contained in this annual report on Form 20-F, the statements contained in this annual report on Form 20-F are “forward-looking statements” which reflect our current view with respect to future events and financial results. We urge you to consider statements which use the terms “anticipate,” “believe,” “do not believe,” “expect,” “plan,” “intend,” “estimate,” and similar expressions are intended to identify forward-looking statements. We remind investors that forward-looking statements are merely predictions and therefore inherently subject to uncertainties and other factors and involve known and unknown risks that could cause the actual results, performance, levels of activity, or our achievements, or industry results, to be materially different from any future results, performance, levels of activity, or our achievements expressed or implied by such forward-looking statements. Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Except as required by applicable law, including the securities laws of the United States, we undertake no obligation to publicly release any update or revision to any forward-looking statements to reflect new information, future events or circumstances, or otherwise after the date hereof. Please see the Risk Factors section that appears in “Item 3. Key Information - D. Risk Factors.”
ii
PART I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not applicable.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
ITEM 3. KEY INFORMATION
A. [Reserved]
B. Capitalization and Indebtedness
Not applicable.
C. Reasons for the Offer and Use of Proceeds
Not applicable.
D. Risk Factors
The following risks relate specifically to our business and should be considered carefully. Our business, financial condition and results of operations could be harmed by any of the following risks. The risks and uncertainties described below are not the only ones that we face. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business. If any of the following risks and uncertainties develops into actual events, our business, financial condition, and results of operations could be materially and adversely affected, and the trading price of our Ordinary Shares could decline. As a result of the above factors, the trading price of our Ordinary Shares could decline, and the holders could lose part or all of their investment.
1
General Risks
The recurrence of the coronavirus disease (“COVID-19”), or similar adverse public health developments in the countries we operate in now and in the future, may materially and adversely affect our business and operating results.
From 2020 to 2022, COVID-19 adversely impacted countries, communities, supply chains and markets globally. In 2023, COVID-19 has generally subsided, and markets and industries have generally returned to pre-pandemic days. There is the risk of the recurrence of new variants of COVID-19 which may result in the return in travel restrictions, border control, and shutdown of businesses. We may experience impact from quarantines and market downturns related to pandemic fears and impact on our workforce if the virus spreads again. COVID-19 and other pandemic viruses affect our workforce and supplier’s workforce, and as a result we could experience interruption to our business and operations and may experience delays or the inability to deliver goods on a timely basis. In addition, one or more of our customers, partners, service providers or suppliers may experience financial distress, delayed or defaults on payment, file for bankruptcy protection, sharp diminishing of business, or suffer disruptions in their business due to the outbreak. The extent to which these viruses impacts our results are highly uncertain and will include emerging information concerning the severity of these viruses in the future and the actions taken by governments at various levels and private businesses to attempt to contain the virus. Wider-spread of these viruses in the countries we operate and globally could prolong the deterioration in economic conditions and could cause decreases in demand and reduce and/or negatively impact our ability to grow our revenues. Any decreased collectability of accounts receivable, bankruptcy of small and medium businesses, or early termination of agreements due to deterioration in economic conditions could negatively impact our results of operations. Although the Company is taking measures to mitigate the effect as much as possible, there is no assurance that the steps will be sufficient.
Geopolitical and other challenges and uncertainties due to the ongoing military conflict between Russia and Ukraine and the Middle East between Israel and its neighbors could have a material adverse effect on the global economy, certain material and commodity prices and our business.
Global markets are currently operating in a period of economic uncertainty, volatility and disruption following Russia’s full-scale invasion of Ukraine on February 24, 2022 and the conflict between Israel and its neighbors in October 2023. Although the length and impact of the ongoing military conflict is highly unpredictable, the conflicts in Ukraine and in the Middle East, and any other geopolitical tensions could have an adverse effect on the economy and business activity globally and lead to:
| ● | credit and capital market disruptions; |
| ● | significant volatility in commodity prices (such as grains, fertilizer inputs and oil and gas); |
| ● | increased expenses related to direct and indirect materials used in our production process (i.e., packaging, logistics and inputs, among others); |
| ● | increased costs of resources (such as energy, natural gas and coal) for our operations; |
| ● | slowdown or disruption of the global and local supply chain, which may lead to shortages and lack of critical materials, commodities and products in the market; |
| ● | potential fluctuation of the U.S. dollar; |
| ● | increase in interest rates and inflation in the markets in which we operate, which may contribute to further increases in the prices of energy, oil and other commodities; and |
| ● | lower or negative global growth. |
Any such event may increase our costs and adversely affect our business if we are not able to pass such increased costs onto our customers.
Additionally, Russia’s prior annexation of Crimea, recent recognition of two separatist republics in the Donetsk and Luhansk regions of Ukraine and subsequent military interventions in Ukraine have led to sanctions and other penalties being levied by the United States, European Union and other countries against Russia, Belarus, the Crimea Region of Ukraine, the so-called Donetsk People’s Republic, and the so-called Luhansk People’s Republic, including the agreement to remove certain Russian financial institutions from the Society for Worldwide Interbank Financial Telecommunication, or SWIFT, payment system. Additional potential sanctions and penalties have also been proposed and/or threatened. Russian military actions, the resulting sanctions and Russian counter measures or retaliatory actions (including cyberattacks and espionage) could adversely affect the global economy and financial markets and lead to further instability and lack of liquidity in capital markets.
The impact of these measures, as well as potential responses to them by Russia, is currently unknown and, while we currently have no exposure to Russia and Ukraine, and the Middle East, current and future measures could significantly and adversely affect our business, financial condition and results of operations, including, for example, increase in costs of exporting to Europe for our halal products, potential sanctions in the marketing of our products to Russia and threats to the safety of our employees in locations close to the conflict. Geopolitical and economic risks have also increased over the past few years as a result of trade tensions between the United States and China, Brexit, and the rise of populism. Growing tensions may lead, among others, to a deglobalization of the world economy, an increase in protectionism or barriers to immigration, a general reduction of international trade in goods and services and a reduction in the integration of financial markets, any of which could materially and adversely affect our business, financial condition, and results of operations.
We are continuing to monitor the situation in Russia, Ukraine, Middle East and globally and assess its potential impact on our business. Any of the abovementioned factors could adversely affect our business, prospects, financial condition, and operating results. The extent and duration of the military action, sanctions and resulting market disruptions are impossible to predict, but could be substantial. Any such disruptions may also magnify the impact of other risks described elsewhere in this annual report.
2
Risks Related to Our Business
We have a history of operating losses and may not achieve profitability in the future.
We have a long history of operating losses and, unless we are able to generate sufficient and consistent revenue, we will incur losses from operations and may not achieve or maintain profitability. As of December 31, 2023, we had an accumulated deficit of $53,821,478. For the year ended December 31, 2023 we recorded loss of $18,350,112 which was mainly resulted from the Company’s operating costs and the limited sales operation. In the next 12 months we plan to raise the funds necessary to roll out the Halal and the lamination manufacturing business, but there is no certainty that we can start these operations in a significant manner and derive profitability from these businesses.
If we fail to achieve profitability, or if we are unable to fund our continuing operations, our business will be harmed, and the holders of our Ordinary Shares could lose all or part of their investment. There is a substantial risk that we may not be able to fund the operation in nano-coated plate filters, the lamination operation for switchable glass, halal certification and sale of halal products, the distribution of new energy products and operating of a digital assets exchange. We will rely on deploying these businesses to generate revenue in the future. It is possible that none of them will be successfully commercialized, which would prevent us from achieving and maintaining profitability.
We have a limited operating history, and it may be difficult for potential investors to evaluate our business.
We are just starting or will be starting our businesses in nano-coated plate filters, the lamination operation for switchable glass, halal certification and sale of halal products, the distribution of new energy products and operating of a digital assets exchange (“New Businesses”). Our limited operating history in these New Businesses makes it difficult for potential investors to evaluate our New Businesses or prospective operations with long term view. We are subject to all the risks inherent in the initial organization, financing, expenditures, complications and delays inherent in these relatively new businesses. Our New Businesses may face delays in sales and financing from suppliers due to our new entry into the market of our products or services which may face challenges in consumer recognition and acceptance, where more established players and products have better resources to penetrate the markets. Moreover, as a new entrant in these competitive markets, we face many questions about our Company, organization, finances, and product information before distributors are willing to carry our products into their network. Thus, it takes additional time to establish a distributor network for our products, and for these distributors to accept our products into their network. Our products may never be accepted by distributors and thereby hinder our ability to sell our products in the target markets. Investors should evaluate an investment in us considering the uncertainties encountered by such companies in a competitive environment. Our New Businesses is dependent upon the implementation of our business plan for each business segment, as well as the ability to access continuous innovation in our products and improve our services. There can be no assurance that our efforts will be successful or that we will be able to attain profitability.
We will require additional financing in the future to sufficiently fund our operations.
We incurred significant losses for the past 3 years from 2021 to 2023, and we may incur losses in the future as we continue to develop our businesses in nano-coated plat filters, the lamination operation for switchable glass, halal certification and sale of halal products, the distribution of new energy products and operating of a digital assets exchange. Our actual cash requirements may vary from those now planned and will depend upon many factors, including: the timing, costs and results of commercialization of our products; the commercial potential of our products; our ability to outsource manufacturing capabilities; and the status and timing of competitive developments.
We anticipate that the development of our businesses including the capital-intensive lamination operation for our switchable glass operation, will require additional funds to achieve our long-term goals of commercialization. In addition, we will require funds to defend our intellectual property rights, outsource manufacturing capacity, develop marketing and sales capability and fund operating expenses for all our products. We intend to seek such additional funding through public or private financing and or other arrangements with corporate partners. However, such financing, licensing opportunities or other arrangements may not be available from any sources on acceptable terms, or at all. Any shortfall in funding could result in our having to curtail or sell or cease our operations, which would harm our business, financial conditions, and results of operations.
There is substantial doubt about our ability to continue as a going concern, which may affect our ability to obtain future financing and may require us to curtail or cease our operations.
Our consolidated financial statements as of December 31, 2023 were prepared under the assumption that we will continue as a going concern. At December 31, 2023, we had cash and cash equivalents of $675,781. We estimate that our existing cash resources will not be sufficient to fund all our operations into the second half of 2024. Our ability to continue as a going concern will depend on our ability to obtain additional equity or debt financing, attain further operating efficiencies, reduce or contain expenditures and increase revenues. Based on these factors, management determined that there is substantial doubt regarding our ability to continue as a going concern. Our independent registered public accounting firm expressed substantial doubt as to our ability to continue as a going concern in its report included elsewhere in this Form 20-F.
If we are unable to continue as a going concern, we may have to liquidate our assets and may receive less than the value at which those assets are carried on our audited financial statements, and it is likely that investors will lose all or part of their investment. When we seek additional financing to fund our business activities as a result of the substantial doubt about our ability to continue as a going concern, investors or other financing sources may be unwilling to provide additional funding to us on commercially reasonable terms or at all.
3
We have limited cash resources and if we cannot raise additional funds or generate more revenues, we will not be able to pay our vendors and will probably not be able to continue as a going concern.
We will need to raise additional funds to pay outstanding debts, purchase lamination equipment, vendor invoices and execute our business plan. Our future cash flows depend on our ability to enter, and be paid under, contracts with our distributors for the sale of halal products, switchable glass and nano-coated plate filters and air purifiers, and products from our other operations. There can be no assurance that additional funds will be available when needed from any source or, if available, will be available on terms that are acceptable to us.
We may be required to pursue sources of additional capital through various means, including joint venture projects and debt or equity financing. Future financing through equity investments will be dilutive to existing shareholders. Also, the terms of securities we may issue in future capital transactions may be more favorable for our new investors. Newly issued securities may include preferences, superior voting rights, and the issuance of warrants or other convertible securities, which will have additional dilutive effects. Further, we may incur substantial costs in pursuing future capital and/or financing, including investment banking fees, legal fees, accounting fees, printing and distribution expenses and other costs. We may also be required to recognize non-cash expenses in connection with certain securities we may issue, such as convertible notes and warrants, which will adversely impact our financial condition and results of operations.
Our ability to obtain needed financing may be impaired by such factors as the weakness of capital markets and the fact that we have incurred a substantial loss in the past few years which could impact the availability or cost of future financing. If the amount of capital we are able to raise from financing activities, together with our revenues from operations, is not sufficient to satisfy our capital needs, even to the extent that we reduce our operations, we may be required to sell or cease operations.
Our limited operating history and rapidly evolving business makes it difficult for us to accurately forecast revenues and expenses, and it may be difficult for potential investors to evaluate our business.
We have a limited operating history on which to base an evaluation of our business and prospects, especially since our businesses are recently established. Our operating results may fluctuate because of a number of factors, many of which are outside of our control. For these reasons, comparing our operating results on a period-to-period basis may not be meaningful, and you should not rely on our past results as an indication of our future performance. Our prospects must be considered in light of inherent risks, expenses, and difficulties encountered by companies in their early stages of development.
Some of the other risks and uncertainties of our business relate to our ability to:
| - | offer innovative products and services across our businesses to attract and retain customer base; |
| - | attract customers; |
| - | increase awareness of our brand and continue to develop consumer and customer loyalty; |
| - | respond to competitive market conditions; |
| - | respond to changes in our regulatory environment; |
| - | manage risks associated with intellectual property rights; |
| - | maintain effective control of our costs and expenses; |
| - | raise sufficient capital to sustain and expand our business; |
| - | attract, retain and motivate qualified personnel; and |
| - | upgrade our technology to support increased traffic and expanded services. |
If we are unsuccessful in addressing any of these risks and uncertainties, our business may be materially and adversely affected.
4
The development of our business is dependent upon the completion and integration of acquisitions and other transactions that have only recently closed or incurred in the future.
Our business may not be successful if we are unable to successfully operate and integrate businesses we acquire such as the nano-coated plate filter business or the new energy business. Accordingly, it is difficult to evaluate our business based upon our historical financial results. We expect to continually look for new businesses to acquire to develop and grow our operations. If we fail to identify such businesses or are unable to acquire such businesses on reasonable terms, or fail to successfully integrate such businesses, our operating results and prospects could be harmed.
We may be unsuccessful in integrating the operations of the business we have acquired or expect to acquire in the future.
From time to time, we may acquire businesses, assets, or securities of companies that we believe will provide a strategic fit with our business. We integrate acquired businesses with our existing operations; our overall internal control over financial reporting processes; and our financial, operations, and information systems. If the financial performance of our business, as supplemented by the assets and businesses acquired, does not meet our expectations, it may make it more difficult for us to deliver positive results from the combined operations and may fail to meet market expectations. We may not effectively assimilate the business or product offerings of acquired companies into our business or within the anticipated costs or timeframes, retain key customers and suppliers or key employees of acquired businesses, or successfully implement our business plan for the combined business. In addition, our final determinations and appraisals of the estimated fair value of assets acquired and liabilities assumed in our acquisitions may vary materially from earlier estimates and we may fail to realize fully anticipated cost savings, growth opportunities or other potential synergies. We cannot be assured that the fair value of acquired businesses or investments will remain constant.
We face significant competition and may suffer from a loss of customers as a result.
We expect to face significant competition in our nano-coated plate filter, switchable glass, halal products, new energy products, and digital assets marketplace businesses, particularly from other companies that seek to provide similar products and services. Many of these competitors have significantly greater financial resources and more personnel than we have. They may also have longer operated histories and more experience in attracting, retaining and managing customers. They may use their experience and resources to compete with us in a variety of ways, including by competing more for users, customers, distributors, media channels and by investing more heavily in research and development and making acquisitions. If we fail to compete effectively, our business, financial condition and results of operation will be adversely affected.
Exchange rate fluctuations will continue to affect our reported results of operations.
The functional currency of each of our Group’s entities is measured using the currency of the primary economic environment in which that entity operates. For our operations in Malaysia, the functional currency used is the United States dollars as substantially all our revenues are realized, and a significant portion of our operating costs are and will be incurred in U.S. dollars and Euros. Movement in currency exchange rates will also affect cash denominated in Ringgit, Euros and Australian dollars and therefore will affect our reported results of operations.
Changes in currency exchange rates that increase the relative value of the U.S. dollar may make it more difficult for us to compete with foreign manufacturers on price, may reduce our foreign currency denominated sales when expressed in dollars, or may otherwise have a material adverse effect on our sales and operating results. A significant increase in our foreign currency denominated sales would increase our risk associated with foreign currency fluctuations. A weakness in the U.S. dollar relative to the various Asian currencies, especially the Malaysia Ringgit, could increase our product costs. Fluctuations in the currency exchange rates have, and may continue to, adversely affect our operating results.
We have limited manufacturing experience with our production candidates. Delays in manufacturing sufficient quantities of products may negatively impact our business and operations.
We have limited manufacturing experience. We will manufacture nano-coated plate filters and we expect to commercially operate the lamination lines for the switchable glass in 2025, subject to raising the necessary funds to roll out the business and hire the necessary staff with proper experience and expertise. If we do not raise sufficient resources, we may not be able to recruit the expertise, staffing and technical capability to operate a successful and profitable manufacturing operation. We may need to develop additional manufacturing resources, enter collaborative arrangements with other parties or have third parties manufacture our products on a contract basis. We may not have access, on acceptable terms, to financing required to scale-up production and develop commercial manufacturing processes. We may not be able to enter collaborative or contractual arrangements on acceptable terms with third parties that will meet our requirements for quality, quantity, and timeliness. Such delays and hurdles could harm our business, financial condition, and results of operations.
5
To the extent we rely significantly on contractors, we will be exposed to risks related to the business conditions of our contractors.
We rely on a variety of contractors to manufacture our air filters and air purifier products. Adverse events that affect one or more of our contractors could adversely affect us. For example:
| ● | a contractor is unable to retain key staff that have been working on our manufacturing orders; |
| ● | a contractor produces substandard products that are unacceptable to us; |
| ● | a contractor is unable to sustain operations due to financial or other business issues; |
| ● | a contractor loses its business permits or licenses that may be required to manufacture our products; or |
| ● | errors, negligence or misconduct that occur within a contractor may adversely affect our business concerns although we may not be directly responsible. |
To the extent we are able to enter into collaborative arrangements or strategic alliances, we will be exposed to risks related to those collaborations and alliances.
An important element of our strategy for developing, manufacturing and commercializing our nano-coated plate filter and halal products is entering into partnerships and strategic alliances with other distribution companies or other industry participants to advance our distribution capabilities and enable us to maintain our financial and operational capacity. We may not be able to negotiate alliances on acceptable terms, if at all. Although we are not currently parties to any collaborative arrangements or strategic alliances that we believe are material to our business. In the future we may rely on collaborative arrangements or strategic alliances to complete the development and commercialization of some of our nano-coated plate filter and halal products. Although we have no specific reason to believe that we will be at a disadvantage when negotiating such collaborative arrangements or strategic alliances, our negotiating position will be influenced by our financial capacity at the relevant time to continue the development and commercialization of the relevant products, as well as the timing of any such negotiations and the stage of development of the relevant product candidate. These arrangements may result in us receiving less revenue than if we sold such products directly, may place the development, sales, and marketing of our products outside our control, may require us to relinquish important rights or may otherwise be on terms unfavorable to us. Collaborative arrangements or strategic alliances will subject us to several risks, including the risk that:
| ● | we may not be able to control the amount and timing of resources that our strategic partners/collaborators may devote to our products; |
| ● | our strategic partners/collaborators may experience financial difficulties; |
| ● | we may be required to relinquish important rights such as marketing and distribution rights; |
| ● | business combinations or significant changes in a collaborator’s business strategy may also adversely affect a collaborator’s willingness or ability to complete its obligations under any arrangement; |
| ● | a collaborator could independently move forward with a competing product developed either independently or in collaboration with others, including our competitors; and |
| ● | collaborative arrangements are often terminated or allowed to expire, which would delay the development and may increase the cost of developing our product candidates. |
6
We may face intellectual property infringement claims and other related claims that could be time-consuming and costly to defend and may result in our inability to continue providing certain of our existing services.
Technology and service companies are frequently involved in litigation based on allegations of infringement of intellectual property rights, unfair competition, and invasion of privacy, defamation, and other violations of third-party rights. The validity, enforceability, and scope of protection of intellectual property are uncertain and continually evolving. In addition, many parties are actively developing and seeking protection for electronics technologies, including seeking patent protections. There may be patents issued or pending that are held by others that cover significant aspects of our technologies, products, business methods or services. As we face increasing competition and as litigation becomes more common in Asia and elsewhere in Europe and the United States for resolving commercial disputes, we face a higher risk of being the subject of intellectual property infringement claims.
Intellectual property litigation is expensive and time-consuming and could divert resources and management attention from the operations of our businesses. If there is a successful claim of infringement, we may be required to pay substantial fines and damages or enter into royalty or license agreements that may not be available on commercially acceptable terms, if at all. Our failure to obtain a license of the rights on a timely basis could harm our business. Any intellectual property litigation could have a material adverse effect on our business, financial condition or results of operations.
If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud.
We are subject to reporting obligations under the U.S. securities laws. The SEC, as required by Section 404 of the Sarbanes-Oxley Act of 2002, adopted rules requiring every public company to include in its annual report a management report on such company’s internal controls over financial reporting which contains management’s assessment of the effectiveness of the company’s internal controls over financial reporting. In addition, if the Company qualifies under certain revenue or market capitalization test an independent registered public accounting firm must attest to and report on management’s assessment of the effectiveness of the company’s internal controls over financial reporting. In addition, an independent registered public accounting firm must attest to and report on management’s assessment of the effectiveness of the company’s internal controls over financial reporting. Our management may conclude that our internal controls over financial reporting are not effective. Moreover, even if our management concludes that our internal controls over financial reporting are effective, our independent registered public accounting firm may still decline to attest to our management’s assessment or may issue a report that is qualified if they are not satisfied with our controls or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us. Our reporting obligations as a public company will place a significant strain on our management, operational and financial resources and systems for the foreseeable future. We are a Company with a small team of accounting personnel and other resources with which to address our internal financial controls and procedures. If we fail to timely achieve and maintain the adequacy of our internal financial controls, we may not be able to conclude that we have effective internal controls over financial reporting at a reasonable assurance level. Moreover, effective internal controls over financial reporting are necessary for us to produce reliable financial reports and are important to help prevent fraud. As a result, our failure to achieve and maintain effective internal controls over financial reporting could result in the loss of investor confidence in the reliability of our financial statements, which in turn could harm our business and negatively impact the market price of our shares.
If we fail to attract customers for our nano-coat plated filter, switchable glass products, halal products and services, new energy products and digital asset marketplace, our growth prospects could be seriously harmed.
Our distributors will not work with us if our products and services offerings do not sell well or do not have adequate sales margin for their sales channels. In addition, our customers will not maintain their business relationships with us if we cannot secure attractive competitive products and service offerings. Failure to retain customers, distributors or channel partners could seriously harm our business and growth prospects.
Because we primarily rely on distributors in distributing our halal products, nano-coated plate filter products, new energy products and switchable glass products, our failure to retain key distributors or attract additional distributors could materially and adversely affect our business.
We mainly rely on distributors to sell our halal products, nano-coated plate filter products and switchable glass products. If our distributors do not provide quality services to its customers, they may lose customers and our results of operations may be materially and adversely affected indirectly. There is no assurance that we can maintain favorable relationships with our current distributors. Our distribution arrangements will be non-exclusive. Furthermore, some of our potential distributors may have contracts with our competitors or potential competitors and may not sign distribution agreements with us. If we fail to retain our key distributors or attract additional distributors on terms that are commercially reasonable, our business and results of operations could be materially and adversely affected.
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We operate in a capital-intensive industry and require a significant amount of cash to fund our lamination operations and to manufacture our electronic glass. If we fail to obtain sufficient capital to fund our lamination equipment and operations, our business, financial condition and future prospects may be materially and adversely affected.
The operation of manufacturing electronic glass requires significant and continuous investment in equipment. Manufacturing electronic glass is costly due to the need to build up inventory for large construction projects which typically requires the glass to be installed at the final stage of construction. The ability and possibly the need to fund this working capital requirement may determine the ability to win contracts. If we cannot obtain adequate capital to meet our capital needs, we may not be able to fully execute our strategic plans for growth and our business, financial condition and prospects may be materially and adversely affected.
We are subject to payment processing risk.
Our marketplace and e-commerce customers pay for their services using a variety of different online payment methods. We rely on third parties to process such payments. Acceptance and processing of these payment methods are subject to certain rules and regulations and require payment of interchange and other fees. To the extent there are increases in payment processing fees, material changes in the payment ecosystem, such as delays in receiving payments from payment processors and/or changes to rules or regulations concerning payment processing, our revenues, operating expenses and results of operations could be adversely impacted.
Security breaches and attacks against our internal systems and network, and any potential resulting breach or failure to otherwise protect confidential and proprietary information, could damage our reputation and negatively impact our business, as well as materially and adversely affect our financial condition and results of operations.
Although we have employed resources to develop security measures against unauthorized access to our systems and networks, our cybersecurity measures may not successfully detect or prevent all unauthorized attempts to access the data on our network or compromise and disable our systems. Unauthorized access to our network and systems may result in the misappropriation of information or data, deletion or modification of user information, or a denial-of-service or other interruption to our business operations. As techniques used to obtain unauthorized access to or sabotage systems change frequently and may not be known until launched against us or our third-party service providers, we may be unable to anticipate, or implement adequate measures to protect against these attacks. If we are unable to avert these attacks and security breaches, we could be subject to significant legal and financial liability, our reputation would be harmed, and we could sustain substantial revenue loss from user dissatisfaction. We may not have the resources or technical sophistication to anticipate or prevent rapidly evolving types of cyber-attacks. Actual or anticipated attacks and risks may cause us to incur significantly higher costs, including costs to deploy additional personnel and network protection technologies, train employees, and engage third-party experts and consultants. Cybersecurity breaches would not only harm our reputation and business, but also could materially decrease our revenue and net income.
Disruption or failure of our IT systems could impair our users’ online experience and adversely affect our reputation.
Our ability to provide users with a high-quality online experience on our marketplace and e-commerce platform depends on the continuous and reliable operation of our IT systems. We cannot assure you that we will be able to procure sufficient bandwidth in a timely manner or on acceptable terms or at all. Failure to do so may significantly impair user experience on our platform and decrease the overall effectiveness of our platform to our users.
If we experience frequent or persistent service disruptions, whether caused by failures of our own systems or those of third-party service providers, our users’ experience may be negatively affected, which in turn, may have a material and adverse effect on our reputation. We cannot assure you that we will be successful in minimizing the frequency or duration of service interruptions.
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We face risks related to natural disasters, health epidemics and other outbreaks, which could significantly disrupt our operations.
We are vulnerable to natural disasters and other calamities. Fire, floods, typhoons, earthquakes, power loss, telecommunications failures, break-ins, war, riots, terrorist attacks or similar events may give rise to server interruptions, breakdowns, system failures, technology platform failures or internet failures, which could cause the loss or corruption of data or malfunctions of software or hardware as well as adversely affect our ability to produce video content or provide products and services on our e-commerce platform.
Our business operations could be disrupted if any of our employees are suspected of having COVID-19, Ebola virus disease, H1N1 flu, H7N9 flu, avian flu, SARS or other epidemic, since we could require our employees to be quarantined and/or our offices to be disinfected. In addition, our business, financial condition or results of operations could be materially and adversely affected to the extent that any of these epidemics harms the global economy in general.
Our failure to protect our intellectual property rights could have a negative impact on our business.
We believe our brand, trade names, trademarks and other intellectual property are critical to our success. The success of our business depends substantially upon our continued ability to use our brand, trade names and trademarks to increase brand awareness and to further develop our brand. The unauthorized reproduction of our trade names or trademarks could diminish the value of our brand and our market acceptance, competitive advantages or goodwill. In addition, our proprietary information, which has not been patented or otherwise registered as our property, is a component of our competitive advantage and our growth strategy.
Monitoring and preventing the unauthorized use of our intellectual property is difficult. The measures we take to protect our brand, trade names, trademarks and other intellectual property rights may not be adequate to prevent their unauthorized use by third parties. In addition, the application of laws governing intellectual property rights in Malaysia and other countries are uncertain and evolving, and could involve substantial risks to us. If we are unable to adequately protect our brand, trade names, trademarks and other intellectual property rights, we may lose these rights and our business may suffer materially. Further, unauthorized use of our brands, trade names or trademarks could cause brand confusion among advertisers and harm our reputation as a provider of high quality and comprehensive advertising services. If our brand recognition decreases, we may lose advertisers and fail in our expansion strategies, and our business, results of operations, financial condition and prospects could be materially and adversely affected.
The creation of non-fungible token (“NFT”) marketplace is dependent on our ability to develop an acceptable blockchain.
Our ability to create NFTs that can be minted, accepted and transferred is dependent on our ability to develop an accepted and secured blockchain. Failure to develop a secured and reliable blockchain, will adversely affect our ability to create a marketplace where our users can trade, purchase and sell their NFTs.
We do not have any access or working relationship with metaverse universe platform and no assurance can be given that we will have a third party metaverse platform that will be accepted by our users or generate sufficient interest.
We do not have a metaverse platform to feature our NFT. It is our intent that we will cooperate with a metaverse platform featuring a virtual world containing immersive experiences in social networking, gaming and NFT, boasting a wide range of “online + offline” and “virtual + reality” scenarios to promote the development of new content by creators and owners of NFT.
There can be no assurance that the market for NFTs will be developed and/or sustained, which may materially adversely affect our business operations.
The market for digital assets, including, without limitation, NFTs, is still nascent. Accordingly, the market for NFTs may not develop, of if a market does develop, such value be maintained. If no market develops for NFTs in the future, it may be difficult or impossible for us to develop and maintain a marketplace where our users can trade, purchase and sell their NFTs.
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The technology underlying blockchain technology is subject to a number of industry-wide challenges and risks relating to consumer acceptance of blockchain technology. The slowing or stopping of the development or acceptance of blockchain networks and blockchain assets would have a material adverse effect on the successful development of our NFT marketplace platform.
The growth of the blockchain industry is subject to a high degree of uncertainty regarding consumer adoption and long-term development. The factors affecting the further development of the blockchain and NFT industry include, without limitation:
| ● | Worldwide growth in the adoption and use of NFTs and other blockchain technologies; |
| ● | government and quasi-government regulation of NFTs and their use, or restrictions on or regulation of access to and operation of blockchain networks or similar systems; |
| ● | the maintenance and development of the open-source software protocol of blockchain networks; |
| ● | changes in consumer demographics and public tastes and preferences; |
| ● | the availability and popularity of other forms or methods of buying and selling goods and services, or trading assets, including new means of using government-backed currencies or existing networks; |
| ● | the extent to which current interest in NFTs represents a speculative “bubble”; |
| ● | general economic conditions in the United States and the world; |
| ● | the regulatory environment relating to NFTs and blockchains; and |
| ● | a decline in the popularity or acceptance of NFTs or other digital assets. |
The NFT industry as a whole has been characterized by rapid changes and innovations and is constantly evolving. Although it has experienced significant growth in recent years, the slowing or stopping of the development, general acceptance and adoption and usage of blockchain networks and blockchain assets may deter or delay the acceptance and adoption of NFTs.
The slowing or stopping of the development, general acceptance and adoption and usage of blockchain networks or blockchain assets may adversely impact the value of NFTs. The value of specific NFTs relies on the development, general acceptance and adoption and usage of the applicable blockchain network which depends on ability to readily access the applicable network.
The prices of digital assets are extremely volatile.
Decreases in the price of even a single other digital asset may cause volatility in the entire digital asset industry and may affect the value of other digital assets. For example, a security breach or any other incident or set of circumstances that affects purchaser or user confidence in a well-known digital asset may affect the industry as a whole and may also cause the price of other digital assets, including NFTs, to fluctuate.
If we cannot continue to innovate technologically or develop, market and sell new products and services, or enhance existing technology and products and services to meet customer requirements, our ability to grow our revenue could be impaired.
Our growth largely depends on our ability to innovate and add value to our existing creative platform and to provide our customers and contributors with a scalable, high-performing technology infrastructure that can efficiently and reliably handle increased customer and contributor usage globally, as well as the deployment of new features. We will continually make investments to maintain and enhance the technology and infrastructure and to evolve our information processes and computer systems in order to run our business more efficiently and remain competitive. We may not achieve the anticipated benefits, significant growth or increased market share from these investments for several years, if at all. If we are unable to manage our investments successfully or in a cost-efficient manner, our business and results of operations may be adversely affected.
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The value of NFT is uncertain and may subject us to unforeseeable risks.
NFTs are unique, one-of-a-kind digital assets made possible by certain digital asset network protocols. Because of their non-fungible nature, NFTs introduce digital scarcity and have become popular as online “collectibles,” similar to physical rare collectible items, such as trading cards or art pieces. Like real world collectibles, the value of NFTs may be prone to “boom and bust” cycles as popularity increases and subsequently subsides. If any of these bust cycles were to occur, it could adversely affect the value of certain of our future strategies. In addition, because NFTs generally rely on the same types of underlying technologies as digital assets, most risks applicable to digital assets are also applicable to NFTs, which will subject us to general digital assets risks as described elsewhere in these risk factors.
A particular digital asset’s status as a “security” in any relevant jurisdiction is subject to a high degree of uncertainty and depending upon the activities undertaken by our customers utilizing our products and services, we and our customers may be subject to regulatory scrutiny, investigations, fines, and other penalties, which may adversely affect our business, operating results, and financial condition.
The SEC and its staff have taken the position that certain digital assets fall within the definition of a “security” under the U.S. federal securities laws. The legal test for determining whether any given digital asset is a security is a highly complex, fact-driven analysis that evolves over time, and the outcome is difficult to predict. The SEC generally does not provide advance guidance or confirmation on the status of any particular asset as a security. Furthermore, the SEC’s views in this area have evolved over time and it is difficult to predict the direction or timing of any continuing evolution. With respect to various digital assets, there is currently no certainty under the applicable legal test that such assets are not securities, notwithstanding the conclusions we may draw based on our risk-based assessment regarding the likelihood that a particular asset could be deemed a “security” under applicable laws.
The classification of a digital asset as a security under applicable law has wide-ranging implications for the regulatory obligations that flow from the offer, sale and trading of such assets. For example, a digital asset that is a security in the United States may generally only be offered or sold in the United States pursuant to a registration statement filed with the SEC or in an offering that qualifies for an exemption from registration. Persons that effect transactions in assets that are securities in the United States may be subject to registration with the SEC as a “broker” or “dealer.” Platforms that bring together purchasers and sellers to trade digital assets that are securities in the United States are generally subject to registration as national securities exchanges, or must qualify for an exemption, such as by being operated by a registered broker-dealer as an alternative trading system, or ATS, in compliance with rules for ATSs. Persons facilitating clearing and settlement of securities may be subject to registration with the SEC as a clearing agency. Foreign jurisdictions may have similar licensing, registration, and qualification requirements.
If the SEC, foreign regulatory authority, or a court were to determine that a supported digital asset offered, sold, or traded by one of our customers on a platform provided by us is a security, our customer would not be able to offer such asset for trading until it was able to do so in a compliant manner, which would require significant expenditures by the customer. In addition, we or our customer could be subject to judicial or administrative sanctions for failing to offer or sell the digital asset in compliance with the registration requirements, or for acting as a broker, dealer, or national securities exchange without appropriate registration. Such an action could result in injunctions, cease and desist orders, as well as civil monetary penalties, fines, disgorgement, criminal liability, and reputational harm which could negatively impact our business, operating results, and financial condition.
If we do not effectively manage our sales channel inventory and product mix, we may incur costs associated with excess inventory, or lose sales from having too few products.
We determine production levels based on our forecasts of demand for our products. Actual demand for our products depends on many factors, which makes it difficult to forecast. We have experienced differences between our actual demand and our forecasted demand in the past year and expect differences to arise in the future. If we improperly forecast demand for our products, we could end up with too many products and be unable to sell the excess inventory in a timely manner, if at all, or alternatively, we could end up with too few products and not able to satisfy demand. This problem is exacerbated because we attempt to closely match inventory levels with product demand leaving a limited margin for error. If these events occur, we could incur increased expenses associated with writing off excessive or obsolete inventory, lose sales, incur penalties for later delivery, or have to ship products by air freight, a higher cost transportation mode, to meet immediate demand, and suffering a corresponding decline in gross margins.
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We face significant competition, which could result in decreased demand for our products or services leading to reduced margins or loss of market share and revenue.
We compete in a highly competitive market that is rapidly evolving in the halal food industry. Many companies have developed, or are expected to develop, products that compete with or will compete with our products. Furthermore, many of our current and potential competitors have significantly greater resources than we do. Many of our existing and potential competitors have longer operating histories, greater name recognition and substantially greater financial, technical, sales, marketing and other resources. These competitors may, among other things, undertake more extensive marketing campaigns, adopt more aggressive pricing policies, obtain more favorable pricing from suppliers and manufacturers, and exert more influence on sales channels than we can. Certain of our significant competitors also serve as key sales and marketing channels for our products, potentially giving these competitors a marketplace advantage based on their knowledge of our business activities and/or their ability to negatively influence our sales opportunities. Intense competition, rapid technological change and evolving industry standards could result in less favorable selling terms to our customers, decrease demand for our products or make our products obsolete. Our operating results and our ability to compete could be adversely affected if we are unable to: successfully and accurately anticipate customer demand; manage our product transitions, inventory levels and manufacturing processes efficiently; distribute or introduce our products quickly in response to customer demand and technological advances; differentiate our products from those of our competitors; or otherwise compete successfully in the markets for our products. If any of our competitors are successful in competing against us, our sales could decline, our margins could be negatively impacted and we could lose market share, any of which could seriously harm our business and results of operations.
As a branded goods business, our success depends on the value and relevance of our brand and products to consumers and on our ability to innovate and remain competitive.
For halal products, consumer tastes, preferences and behaviors are constantly changing and our ability to anticipate and respond to these changes and to continue to maintain loyalty to the halal products we distribute is vital to our business. If we are unable to innovate effectively, our sales or margins could be materially adversely affected.
The successful introduction of innovative products and packaging on a periodic basis has become increasingly important to our ability to maintain and grow our sales of halal products. Accordingly, the continued acceptance of our products and the future degree of market acceptance of any of our products, which may be accompanied by significant promotional expenditures, is likely to have an important impact on our future financial results.
We may not be able to compete effectively in the highly competitive halal food markets.
The halal food markets are highly competitive. In addition, many of our principal competitors are large, diversified companies with resources significantly greater than ours. We expect strong competition to continue, including competition for adequate distribution and competition for the limited shelf space for the halal categories in supermarkets and other retail food outlets. Competition in our product categories is based on product innovation, product quality, price, brand recognition and loyalty, effectiveness of marketing, promotional activity, and the ability to identify and satisfy consumer preferences. Our ability to increase our revenue could also be adversely impacted if we are not successful in introducing innovative products in response to changing consumer demands or by new product introductions of our competitors. If we are unable to build and sustain brand equity by offering recognizably superior product quality, we may be unable to maintain pricing advantages over competitive products.
From time to time, our customers experience price pressure in some of our markets as a result of competitors’ promotional pricing practices as well as general market conditions. Our failure to match or exceed our competitors’ cost reductions through innovative products and other improvements could weaken our competitive position. Competition is based on product quality, reliability, food safety, distribution effectiveness, brand loyalty, price, effective promotional activities, the ability to identify and satisfy emerging consumer preferences and the ability to provide ancillary support services. We may not be able to compete effectively with these larger, more diversified companies.
A material change in consumer demand for our halal products could have a significant impact on our business.
For our halal business we rely on continued demands from consumers for our products. To achieve business goals, we must develop and sell halal products that appeal to consumers. If demand and growth rates fall substantially below expected levels, our results could be negatively impacted. This could occur due to unforeseen negative economic or political events or to changes in consumer trends and habits.
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Economic conditions adversely affecting consumer discretionary spending may negatively impact our business and operating results.
We believe that our halal products revenues and profitability are strongly correlated to consumer spending habits, which is influenced by general economic conditions, unemployment levels, and the availability of discretionary income. In an economic downturn or in the event of the continued spread of pandemic virus, our business and results of operations could be materially and adversely affected.
The recent global economic and financial market crisis due to COVID-19 has had and may continue to have a negative effect on our business and results of operations.
Global economic conditions as a result of COVID-19 have had a negative effect on our business and results of operations as the economic activity throughout much of the world has also undergone an economic downturn. As a result, the global credit and liquidity have tightened in much of the world, some of our potential customers in Korea, Europe, United Kingdom and Malaysia may face continuous and prolonged business downturn and credit issues, and could experience cash flow problems and other financial hardships, which could affect timeliness of doing business with us.
Changes in governmental banking, monetary and fiscal policies to restore liquidity and increase credit availability may not be effective in alleviating the global economic declines due to the COVID-19 pandemic. It is difficult to determine the breadth and duration of the economic and financial market problems and the many ways in which they may affect our customers and our business in general. Nonetheless, continuation or further worsening of these difficult financial and macroeconomic conditions could have a significant effect on our business and results of operations.
The success of our business depends on the continuing contributions of key personnel who may terminate their employment with us at any time, and we will need to hire additional qualified personnel.
We rely heavily on the services of technical and management personnel. Loss of the services of any such individuals would adversely impact our operations. In addition, we believe our technical personnel represent a significant asset and provide us with a competitive advantage over many of our competitors and that our future success will depend upon our ability to retain these key employees and our ability to attract and retain other skilled financial, engineering, technical and managerial personnel. We do not currently maintain any “key man” life insurance with respect to any of such individuals.
Our success depends on the continuing efforts of our senior management team and other key personnel and our business may be harmed if we lose their services.
Our future success depends heavily upon the continuing services of the members of our senior management. If one or more of our senior executives or other key personnel are unable or unwilling to continue in their present positions, we may not be able to replace them easily or at all, and our business may be disrupted and our financial condition and results of operations may be materially and adversely affected. Competition for senior management and key personnel is intense, the pool of qualified candidates is very limited, and we may not be able to retain the services of our senior executives or key personnel, or attract and retain high-quality senior executives or key personnel in the future.
In addition, if any member of our senior management team or any of our other key personnel joins a competitor or forms a competing company, we may lose customers, distributors, know-how and key professionals and staff members. Each of our executive officers and key employees has entered into an employment agreement with us which contains confidentiality and non-competition provisions. Legal proceedings to enforce such provisions would be costly in both money and management time and such provisions may not be enforced or enforceable.
We rely on highly skilled personnel and if we are unable to retain or motivate key personnel or hire qualified personnel, we may not be able to grow effectively.
Our performance and future success depends on the talents and efforts of highly skilled individuals. We will need to continue to identify, hire, develop, motivate and retain highly skilled personnel for all areas of our organization. Competition in our industry for qualified employees is intense. Our continued ability to compete effectively depends on our ability to attract new employees and to retain and motivate our existing employees.
As competition in our industry intensifies, it may be more difficult for us to hire, motivate and retain highly skilled personnel. If we do not succeed in doing so, we may be unable to grow effectively.
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We have no business insurance coverage.
We do not have any business liability or disruption insurance coverage for our operations. Any business disruption, litigation or natural disaster may result in our incurring substantial costs and the diversion of our resources.
Our Company may experience, and continues to experience, rapid growth in operations, which may place, and may continue to place, significant demands on its management, operational and financial infrastructure.
If the Company does not effectively manage its growth, the quality of its products and services could suffer, which could negatively affect the Company’s brand and operating results. To effectively manage this growth, the Company will need to continue to improve its operational, financial and management controls and its reporting systems and procedures. Failure to implement these improvements could hurt the Company’s ability to manage its growth and financial position.
Our Company’s business faces inherent risk in the switchable glass and halal products and services.
Our Company’s business is subject to certain risks inherent in the switchable glass and halal products and services. Our Company’s revenue and operating results could be adversely affect by many factors which include, amongst others, changes in general economic, business and credit conditions, fluctuation in foreign exchange rates, changes in demand for and market acceptance of our products and services, our ability to introduce new products and services and enhancements in a timely manner, rapid technological changes, increase in operating expenses, lower profit margins due to pricing competition and delay in expansion plans.
Our Company seeks to limit these business risks through, inter-alia prudent management policies, keeping abreast with new developments and technologies in the relevant industries and maintaining good relationship with customers and suppliers. However, there can be no assurance that any changes in these factors will not have any material adverse effect on our Company’s business.
Our Company’s business faces competitions from local and foreign competitors.
Our Company faces competition from both local and foreign competitors which offer similar products that of our Company offerings. Increased competition could result in competitive pricing resulting in lower profit margins. However, our Company believes that we have several competitive edges over our competitors, including amongst others, better quality products, and technological expertise.
Our Company seeks to limit the competitive risks through, inter-alia constant review of our product development and marketing strategies to adapt to changes in economic conditions and market demands as well as focusing on certain markets and industries. However, there can be no assurance that our Company will be able to compete effectively against our competitors and that competitive pressure will not materially and adversely affect our Company’s business, operations and results and or financial condition.
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Our production of products from lamination machinery and nano-coat plating equipment involves a significant degree of risk and uncertainty in terms of operational performance and costs.
We rely on complex machinery for production of our products, and we may experience unexpected malfunctions from time to time requiring repairs and spare parts to fix the equipment. The availability of spare parts may not be available when needed. Unexpected malfunctions of our lamination and nano-coated plate filter equipment (“Manufacturing Equipment”) may significantly affect our operational efficiency and production. In addition, the operational performance and costs associated with the Manufacturing Equipment can be difficult to predict and may be influenced by factors outside of our control, such as, but not limited to, failures by suppliers to deliver necessary equipment components in a timely manner and at prices and volumes acceptable to us, which could have a material adverse effect on our operational performance, cash flows, financial condition, or prospects.
Disaster events may disrupt our business.
Unforeseen events, or the prospect of such events, including public health issues including health epidemics or pandemics, war and terrorism and other international conflicts, and natural disasters such as fire, hurricanes, earthquakes, tornados or other adverse weather and climate conditions, whether occurring in Asia or elsewhere, could disrupt our operations, disrupt the operations of suppliers or business customers or result in political or economic instability. These types of events outside of our control could adversely affect our operating results. We cannot assure that any backup systems will be adequate to protect it from the effects of fire, floods, typhoons, earthquakes, power loss, telecommunications failures, break-ins, war, riots, terrorist attacks or similar events. Any of the foregoing events may give rise to interruptions, breakdowns, system failures, technology platform failures or internet failures, which could cause the loss or corruption of data or malfunctions of software or hardware as well as adversely affect our ability to manufacture products and provide services. These events could reduce demand for our products and services, make it difficult or impossible to receive equipment from suppliers or impair our ability to deliver products and services to business customers on a timely basis. Any such disruption could damage our reputation and cause business customer attrition. We could be subject to claims or litigation with respect to losses caused by such disruptions. Our insurance may not cover a particular event at all or be sufficient to fully cover our losses.
Risk Factors Relating to Quality of Products
If our products fail to perform as expected, our ability to develop, market and sell our products and services could be harmed.
If our products of nano-coated plate filters or our lamination glass products to be manufactured contain defects in design and manufacture that cause them not to perform as expected or that require repair, or certain features of its products take longer than expected to become enabled or are legally restricted, our ability to develop, sell, and service its products could be harmed. Although we will attempt to remedy any issues it observes in its products as effectively and rapidly as possible, such efforts may not be timely, may hamper production or may not be to the satisfaction of our customers. While we will perform extensive internal testing on the products we manufacture, we currently have a limited frame of reference by which to evaluate detailed long-term quality, reliability, durability and performance characteristics of our products. There can be no assurance that we will be able to detect and fix any defects in our products prior to their sale to our customers.
Our inability to provide products or services in a timely manner, legal restrictions on product features, or defects in our products or services, including products and services of third parties that we incorporate into our product offerings, could adversely affect our reputation, result in delivery delays, product recalls, product liability claims, and significant warranty and other expenses, and subject the Company to claims or litigation. In addition, our inability to meet our customers’ expectations with respect to our products or services could affect our ability to generate new business customers and thereby have a material adverse effect on our business, financial condition, cash flow or results of operations.
We rely on certain third-party providers of licensed software and services integral to our operations.
Certain aspects of the operation of our business may depend on third-party software and service providers. With regard to licensed software technology, we may become dependent upon the ability of third parties to maintain, enhance or develop their software and services on a timely and cost-effective basis, to meet industry technological standards and innovations to deliver software and services that are free of defects or security vulnerabilities, and to ensure their software and services are free from disruptions or interruptions. Further, these third-party services and software licenses may not always be available to us on commercially reasonable terms or at all.
If the third-party software or services become obsolete, fail to function properly, are incompatible with future versions of our products or services, or are defective or otherwise fail to address our needs, there is no assurance that we would be able to replace the functionality provided by any future third-party software or services with software or services from alternative providers. Any of these factors could have a material adverse effect on our financial condition, cash flows or results of operations.
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We may need to defend ourselves against and may face liability in respect of claims for infringing, misappropriating or otherwise violating the intellectual property rights of others, which may be time-consuming and could cause us to incur substantial costs and/or materially impact our ability to operate.
From time to time, legal action by us may be necessary to enforce our contractual rights, to protect our manufacturing and distribution operation or to defend against claims of infringement, misappropriation or invalidity. Such litigation could result in substantial costs and diversion of resources and could negatively affect our business, operating results and financial condition. Others, including our competitors, may hold or obtain patents, copyrights, trademarks or other proprietary rights that could prevent, limit or interfere with our ability to make, use, develop, or sell its products and services, which could make it more difficult for us to operate our business. We may receive inquiries from holders of patents or trademarks inquiring whether we are infringing their proprietary rights and/or seek court declarations that they do not infringe upon our rights.
We may consider entering into licensing agreements with respect to such rights, although no assurance can be given that such licenses can be obtained on acceptable terms or that litigation will not occur, and such licenses could significantly increase our operating expenses. Companies holding patents or other intellectual property rights relating to switchable glass or nano-coated plating technologies may bring suits alleging infringement of such rights or otherwise asserting their rights and seeking licenses. In addition, if we are determined to have infringed upon a third party’s intellectual property rights, it may be required to cease making, selling or incorporating certain components or intellectual property into the goods and services it offers, to pay substantial damages and/or license royalties, obtain a license from the holder of the infringed intellectual property right, which license may not be available on reasonable terms or at all, to redesign its products and services, and/or to establish and maintain alternative branding for its products and services. In the event that we were required to take one or more such actions, our business, prospects, operating results and financial condition could be materially adversely affected. In addition, any litigation or claims, whether or not valid, could result in substantial costs, negative publicity and diversion of resources and management attention.
We cannot be certain that our products and services or those of third parties that we incorporate into our products do not and will not infringe the intellectual property rights of others. We do not own any patent technologies but rely on our equipment suppliers and technology partners. In future, we may be subject to claims based on allegations of infringement, misappropriation or other violations of the intellectual property rights of others, including litigation brought by competitors, potential competitors or special purpose or so-called “non-practicing” entities that focus solely on extracting royalties and settlements by enforcing intellectual property rights and against whom our patents may therefore provide little or no deterrence or protection.
Regardless of their merits, intellectual property claims divert the attention of our personnel and are often time-consuming and expensive. In addition, to the extent claims against us are successful, we may have to pay substantial monetary damages (including, for example, treble damages if we are found to have wilfully infringed patents and increased statutory damages if we are found to have wilfully infringed copyrights) or discontinue or modify certain products or services that are found to infringe another party’s rights or enter into licensing agreements with costly royalty payments. Defending against claims of infringement, misappropriation or other violations or being deemed to be infringing, misappropriating or otherwise violating the intellectual property rights of others could impair our ability to innovate, develop, distribute and sell our current and planned products and services. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of own confidential information could be compromised by the discovery process. Although claims of this kind have not materially affected our business to date, there can be no assurance material claims will not arise in the future.
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Our switchable glass products must comply with local building codes and ordinances, and failure of our products to comply with such codes and ordinances may have an adverse effect on our business.
Our switchable glass product must comply with local building codes and ordinances. Building codes may also affect the products our customers are allowed to use, and, consequently, changes in building codes may also affect the sale of our products. If our products fail to comply with such local building codes or ordinances, our ability to market and sell such products would be impaired. Also, should these codes and ordinances be amended or expanded, or should new laws and regulations be enacted, we could incur additional costs or become subject to requirements or restrictions that require us to modify our products or adversely affect its ability to market and sell our products. If our products do not adequately or quickly adapt to building standards, we may lose market share to competitors, which would adversely affect our business, results of operation, financial condition, and cash flows. Furthermore, failure of our products to comply with such codes or ordinances could subject us to negative publicity or damage our reputation.
Our insurance strategy may not be adequate to protect us from all business risks.
We may be subject, in the ordinary course of business, to losses resulting from products liability, accidents, acts of God and other claims against us, for which we may have no insurance coverage. A loss that is uninsured or which exceeds policy limits may require us to pay substantial amounts, which could adversely affect our financial condition and operating results.
We are subject to all of the ordinary course operating hazards and risks that may come with the provision of our products and services and business operations. In addition to contractual provisions limiting our liability to business customers and third parties, we maintain insurance policies in such amounts and with such coverage and deductibles as required by law and that we believe are reasonable and prudent. Nevertheless, such insurance may not be adequate to protect us from all the liabilities and expenses that may arise from claims for personal injury, death or property damage arising in the ordinary course of our business and current levels of insurance may not be able to be maintained or be available at economical prices. If a significant liability claim is brought against us that is not covered by insurance, then we may have to pay the claim with our own funds, which could have a material adverse effect on our business, financial condition, cash flows or results of operations. We may not be able to secure additional product liability insurance coverage on commercially acceptable terms or at reasonable costs when needed, particularly if we do face liability for its products and are forced to make a claim under our policy.
We may become subject to product liability claims, which could harm our financial condition and liquidity if we are not able to successfully defend or insure against such claims.
Although our switchable glass and nano-coated plate filter products are designed and produced to be safe, product liability claims, even those without merit, could harm our business, prospects, operating results and financial condition. We face inherent risk of exposure to claims in the event our products do not perform or are claimed to not have performed as expected. A successful product liability claim against us could require us to pay a substantial monetary award. Moreover, a product liability claim could generate substantial negative publicity about our products and business and could have a material adverse effect on our business, prospects and operating results.
If we are unable to achieve our targeted manufacturing costs for our products, our financial condition and operating results will suffer.
While we will continue reduce costs in our operations and from our suppliers, including through economies of scale in increased production, there is no guarantee that we will be able to achieve sufficient cost savings to reach our planned gross margin and profitability goals, or our other financial targets. If our efforts to continue to decrease manufacturing costs are not successful, we may incur substantial costs or cost overruns in utilizing and increasing the production capability of our manufacturing facility. Many of the factors that impact our manufacturing costs are beyond our control, such as potential increases in the costs of materials and components. If we are unable to continue to control and reduce our manufacturing costs, our operating results, business and prospects will be harmed.
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Risks Relating to Our Organization
If we infringe the intellectual property rights of third parties, it may increase our costs or prevent us from the commercialization our product candidates.
There is a risk that we are or may infringe the proprietary rights of third parties of which we are unaware. There has been substantial litigation and other proceedings regarding patent and other intellectual property rights in the electronic and new energy industries. To date, we have not been involved in any such third-party claims and we are not aware that our products (digital asset trading platform, ecommerce platform for halal products, nano-coated plate filters and air purifiers, new energy products and switchable glass) infringe the intellectual property rights of third parties. The consequent of any possible future intellectual property infringement claims, we might be:
| ● | prohibited from selling or licensing any products or digital asset trading or ecommerce platforms that we may develop unless the patent holder licenses the patent to us, which it is not required to do; |
| ● | required to expend considerable amounts of money in defending the claim; |
| ● | required to pay substantial royalties or grant a cross license to our patents to another patent holder; |
| ● | required to redesign the formulation of a product so that it does not infringe, which may not be possible or could require substantial funds and time; or |
| ● | required to pay substantial monetary damages. |
Future sales of our products may suffer if they are not accepted in the marketplace by consumers and customers.
There is a risk that our products (halal products, nano-coated plate filters and air purifier products, new energy products, and switchable glass) may not gain market acceptance by consumers and customers. The degree of market acceptance of any of our products will depend on a variety of factors, including:
| ● | timing of market introduction; and |
| ● | price and product feature compared to existing and new products. |
We may be exposed to product liability claims which could harm our business.
The marketing and sale of consumer and electronic products entails an inherent risk of product liability. We face product liability exposure related to our products. Regardless of merit or eventual outcome, liability claims may result in:
| ● | decreased demand for our products; |
| ● | injury to our reputation; |
| ● | costs of related litigation; |
| ● | substantial monetary awards to customers and others; |
| ● | loss of revenues; and |
| ● | the inability to commercialize our other products. |
If there is a claim made against us or some other problems that is attributable to our products, our share price may be negatively affected. Even if we were ultimately successful in product liability litigation, the litigation would consume substantial amounts of our financial and managerial resources and may create adverse publicity, all of which would impair our ability to generate sales of our product candidates. We may incur substantial liabilities or be required to limit development or commercialization of our product candidates if we cannot successfully defend ourselves against product liability claims. Such coverage may not be available in the future on acceptable terms, or at all. We have no insurance coverage and even if we have adequate insurance coverage, product liability claims or recalls could result in negative publicity and force us to devote significant managerial and financial resources to those matters, and the commercialization of our other products may be delayed or severely compromised.
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Changes in government legislation and policy may adversely affect us.
While we do not anticipate in the near future any specific material changes in government legislation that may adversely affect us, any material changes in interest rates, exchange rates, relevant taxation and other legal regimes and government policies may adversely affect our operations, the use of our financial resources and the market price of our Ordinary Shares.
Currency fluctuations may expose us to increased costs and revenue decreases.
Our business may in the future be affected by fluctuations in foreign exchange rates. Currency fluctuations could, therefore, cause our costs to increase and revenues to decline. The majority of our expenses will continue to be denominated in United States dollars and Malaysia Ringgit. In the past year, the United States dollars, our reporting currency, has, as a general trend, appreciated against the Malaysia Ringgit. We cannot anticipate whether this trend will continue in respect of the Ringgit. In circumstances where the United States dollar appreciates against Malaysia Ringgit, this may have a positive effect on our costs incurred in Malaysia Ringgit but may have a negative effect on any revenues which we source from Malaysia Ringgit. In 2023, we have been affected positively on foreign exchange gains as a result of currency fluctuations.
Australian takeovers laws may discourage takeover offers being made for us or may discourage the acquisition of large numbers of our shares.
We are incorporated in Australia and are subject to the takeover laws of Australia. Amongst other things, we are subject to the Corporations Act 2001 (Commonwealth of Australia). Subject to a range of exceptions, the Corporations Act prohibits the acquisition of a direct or indirect interest in our issued voting shares if the acquisition of that interest will lead to a person’s or someone else’s voting power in us increasing from 20% or below to more than 20%, or increasing from a starting point that is above 20% and below 90%. Exceptions to the general prohibition include circumstances where the person makes a formal takeover bid for us, if the person obtains shareholder approval for the acquisition or if the person acquires less than 3% of the voting power of us in any rolling six-month period. Australian takeovers laws may discourage takeover offers being made for us or may discourage the acquisition of large numbers of our shares.
Rights as a holder of ordinary shares are governed by Australian law and the Company’s Constitution (the “Constitution”) and differ from the rights of shareholders under U.S. law. Holders of our Ordinary Shares may have difficulty in effecting service of process in the United States or enforcing judgments obtained in the United States.
We are a public company incorporated under the laws of Australia. Therefore, the rights of holders of our Ordinary Shares are governed by Australian law and our Constitution. These rights differ from the typical rights of shareholders in U.S. corporations. Circumstances that under U.S. law may entitle a shareholder in a U.S. company to claim damages may also give rise to a cause of action under Australian law entitling a shareholder in an Australian company to claim damages. However, this will not always be the case. Holders of our Ordinary Shares may have difficulties enforcing, in actions brought in courts in jurisdictions located outside the U.S., liabilities under U.S. securities laws. In particular, if such a holder sought to bring proceedings in Australia based on U.S. securities laws, the Australian court might consider:
| ● | that it did not have jurisdiction; and/or |
| ● | that it was not an appropriate forum for such proceedings; and/or |
| ● | that, applying Australian conflict of laws rule, U.S. law (including U.S. securities laws) did not apply to the relationship between holders of our Ordinary Shares and us or our directors and officers; and/or |
| ● | that the U.S. securities laws were of a public or penal nature and should not be enforced by the Australian court. |
Holders of our Ordinary Shares may also have difficulties enforcing in courts outside the U.S. judgments obtained in the U.S. courts against any of our directors and executive officers or us, including actions under the civil liability provisions of the U.S. securities laws.
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Our operations may be materially and adversely affected by changes in the economic, political and social conditions of Malaysia, Indonesia, Europe, United Kingdom and Middle East.
Some of our non-cash assets are in, and some of our revenue is sourced from Malaysia, United Kingdom and Europe. The growth of our switchable glass businesses are expected to be derived from Malaysia or Indonesia and the Middle East. Accordingly, our business, financial condition, results of operations and prospects may be influenced to a significant degree by political, economic and social conditions in the countries we operate or do business in and by continued economic growth in these countries as a whole.
We may rely on dividends and other distributions on equity paid by our operating subsidiary to fund cash and financing requirements, and limitations on the ability of our operating subsidiaries to pay dividends to us could materially restrict our ability to conduct our business.
We, as a holding company, may rely on dividends and other distributions on equity paid by our operating Malaysia companies for our cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to the parent company, service any debt we may incur and pay our operating expenses. If these Malaysia subsidiaries incurs debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other distributions to us.
Risks Associated with Our Technology and Intellectual Property
Potential technological changes in our field of businesses create considerable uncertainty.
We are not conducting research and development on our products. However, our competitors and other experts in new energy products, nano-coated plate air filters and switchable glass products and any products now and in the future the Company manufactures or sells (“IMTE Products”) are continuously and extensively conducting research in the relevant technologies. New developments in research are expected to continue at a rapid pace in both industry and academia. Research and discoveries by others may render some or all our products uncompetitive or obsolete.
If we are unable to keep pace with technological change or with the advances of our competitors our products may become non-competitive.
The technologies used in IMTE Products including new energy products and nano-coating products are subject to rapid and significant technological change. Our competitors in the USA and Australia and elsewhere are numerous and include, among others, major technology companies, large electronics companies, universities and other research institutions. These competitors may develop technologies and products that are more effective, or which would render the technology in our IMTE Products obsolete or non-competitive. Many of these competitors have greater financial and technical resources and manufacturing and marketing capabilities than we do. In addition, many of our competitors have much more experience in marketing, sales and commercializing new technologies of new or improved IMTE Products.
Our nano-coated plate filter’s manufacturing technology is from a third party, and to the extent that the equipment manufacturer will be able to continuously develop and upgrade the nano-coated plate filter technology to keep our nano-coated plate products competitive will determine the success of our business. If our equipment manufacturer is not able to innovate their technology to match our competitors’ technology development, then there is a risk that our nano-coated products will become uncompetitive in the market place which may have an adverse effect in our nano-coated plate business, financial condition and results of operations.
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Our success depends upon our ability to protect our intellectual property and our proprietary technology.
Our success will depend in large part on whether we can:
| ● | Obtain and maintain patents to protect our own products; |
| ● | Obtain licenses to relevant patented technologies of third parties; |
| ● | Operate without infringing on the proprietary rights of third parties; and |
| ● | Protect our trade secrets and know-how. |
Patent matters in industrial and consumer electronics are highly uncertain and involve complex legal and factual questions. Accordingly, the availability and breadth of claims allowed in electronics patents cannot be predicted. The enforceability of a patent depends on several factors that may vary amongst jurisdictions. These factors may include the novelty of the invention, the requirement that the invention not be obvious in light of prior art (including prior use or publication of the invention), the utility of the invention, and the extent to which the patent clearly describes the best method of working the invention.
While we intend to seek patent protection, when applicable, for some of our filter products and technologies, we cannot be certain that any of the future patent applications filed by us or on our behalf will be approved. We also cannot be certain that others will not independently develop similar products or processes, duplicate any of the products or processes developed by us previously or licensed to us, or design around the patents owned or licensed by us, or that any patents owned or licensed by us will provide us with competitive advantages. Furthermore, we cannot be certain that patents held by third parties will not prevent the commercialization of products incorporating the technology developed by us or licensed to us, or that third parties will not challenge or seek to narrow, invalidate or circumvent any of the issued, pending or future patents owned or licensed by us.
We may have to resort to litigation to enforce any patents issued or licensed to us or to determine the scope and validity of third-party proprietary rights. We may have to defend the validity of our patents in order to protect or enforce our rights against a third party, or third parties may in the future assert against us infringement claims regarding proprietary rights belonging to them. Such proceedings could result in the expenditure of significant financial and managerial resources and could negatively affect our profitability. Adverse determinations in any such proceedings could prevent us from developing and commercializing our products and could harm our business, financial condition and results of operations.
Our commercial success will also depend, in part, on our ability to avoid infringement of patents issued to others. If a court determines that we were infringing any third-party patents, we could be required to pay damages, alter our products or processes, obtain licenses or cease certain activities. We cannot be certain that the licenses required under patents held by third parties would be made available on terms acceptable to us or at all. To the extent that we are unable to obtain such licenses, we could be foreclosed from the development, manufacture or commercialization of the product requiring such license or encounter delays in product introductions while we attempt to design around such patents, and any of these circumstances could have a material adverse effect on our business, financial condition and results of operations.
In addition to patent protection, we rely on unpatented trade secrets and know-how and proprietary technological innovation and expertise that are protected in part by confidentiality and invention assignment agreements with our employees, advisors and consultants. We cannot make any assurances that we will have adequate remedies for any breach. In addition, third parties could independently develop the same or similar technologies.
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If we are not able to protect and control unpatented trade secrets, know-how and other technological innovation, we may suffer competitive harm.
In addition to patented intellectual property, we also rely on unpatented technology, trade secrets, confidential information and know-how to protect our technology and maintain our competitive position. Trade secrets are difficult to protect. In order to protect proprietary technology and processes, we rely in part on confidentiality and intellectual property assignment agreements with our employees, consultants and others. These agreements may not effectively prevent disclosure of confidential information or result in the effective assignment to us of intellectual property, and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information or other breaches of the agreements. In addition, others may independently discover trade secrets and proprietary information that have been licensed to us or that we own, and in such case, we could not assert any trade secret rights against such party. Enforcing a claim that a party illegally obtained and is using trade secrets that have been licensed to us or that we own is difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, courts outside the United States and Australia may be less willing to protect trade secrets. Costly and time-consuming litigation could be necessary to seek to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain trade secret protection could have a material adverse effect on our business.
We do not have patent protection in certain countries and we may not be able to effectively enforce our intellectual property rights in certain countries, which could significantly erode the market for our product candidates.
We intend to seek regulatory approval to market our product candidates in a number of overseas countries. Our product candidates are not protected by patents in certain countries, which means that competitors may be free to sell products that incorporate the same technology that is used in our products in those countries. In addition, the laws and practices in some foreign countries may not protect intellectual property rights to the same extent as in the United States or Australia. We may not be able to effectively obtain, maintain or enforce rights with respect to the intellectual property relating to our product candidates in those countries. Our lack of patent protection in one or more countries, or the inability to obtain, maintain or enforce intellectual property rights in one or more countries, could adversely affect our ability to commercialize our products in those countries and could otherwise have a material adverse effect on our business.
Risks Relating to Our Securities
Our failure to meet the continued listing requirements of Nasdaq could result in a delisting of our securities.
On May 17, 2024, we received a notification letter (the “Notification Letter”) from the Listings Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) that the Company is no longer in compliance with the Nasdaq Listing Rule 5250(c)(1) for continued listing due to its failure to timely file its annual report on Form 20-F for the year ended December 31, 2023 (the “Annual Report”) with the SEC. Under the Nasdaq Listing Rule 5810(c)(2)(F)(i), the Company has until July 16, 2024 (that is, 60 calendar days from the date of the Deficiency Letter) to submit to Nasdaq a plan (the “Compliance Plan”) to regain compliance with the Nasdaq Listing Rules. The Company has submitted a plan of Compliance on July 16, 2024 and on July 31 2024 to file the Annual Report by August 2024 and then extended to October 2024.
Under the Nasdaq Listing Rule 5810(c)(2)(F)(ii), if Nasdaq accepts the Compliance Plan, Nasdaq can grant the Company an exception until November 11, 2024 (that is, up to 180 calendar days from the extended due date of the Annual Report) to regain compliance. However, if it appears to Nasdaq that we will be unable to cure the deficiency, or if we are not otherwise eligible for the additional cure period, Nasdaq will provide notice that our Ordinary Shares will be subject to delisting.
If we fail to satisfy the continued listing requirements of Nasdaq, such as failure to timely file the Annual Report with the SEC, Nasdaq may take steps to delist our Ordinary Shares. Such a delisting would have a negative effect on the price of our Ordinary Shares, impair the ability to sell or purchase our Ordinary Shares when persons wish to do so, and any delisting materially adversely affect our ability to raise capital or pursue strategic restructuring, refinancing or other transactions on acceptable terms, or at all. Delisting could also result in a determination that our Ordinary Shares are a “penny stock,” which would require brokers trading in our Ordinary Shares to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary market for our Ordinary Shares. In the event of a delisting, we would attempt to take actions to restore our compliance with Nasdaq’s listing requirements, but we can provide no assurance that any such action taken by us would allow our Ordinary Shares to become listed again, stabilize the market price or improve the liquidity of our Ordinary Shares, prevent our Ordinary Shares from dropping below the Nasdaq minimum bid price requirement or prevent future non-compliance with Nasdaq’s listing requirements.
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In the event that our Ordinary Shares are delisted from NASDAQ, U.S. broker-dealers may be discouraged from effecting transactions in shares of our Ordinary Shares because they may be considered penny stocks and thus be subject to the penny stock rules.
The SEC has adopted several rules to regulate “penny stock” that restrict transactions involving stock which is deemed to be penny stock. Such rules include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Exchange Act. These rules may have the effect of reducing the liquidity of penny stocks. “Penny stocks” generally are equity securities with a price of less than US$5.00 per share (other than securities registered on certain national securities exchanges or quoted on NASDAQ if current price and volume information with respect to transactions in such securities is provided by the exchange or system). Our Ordinary Shares have in the past constituted, and may again in the future constitute, “penny stock” within the meaning of the rules. The additional sales practice and disclosure requirements imposed upon U.S. broker-dealers may discourage such broker-dealers from effecting transactions in shares of our Ordinary Shares, which could severely limit the market liquidity of such Ordinary Shares and impede their sale in the secondary market.
A U.S. broker-dealer selling penny stock to anyone other than an established customer or “accredited investor” (generally, an individual with net worth in excess of US$1,000,000 or an annual income exceeding US$200,000, or US$300,000 together with his or her spouse) must make a special suitability determination for the purchaser and must receive the purchaser’s written consent to the transaction prior to sale, unless the broker-dealer or the transaction is otherwise exempt. In addition, the “penny stock” regulations require the U.S. broker-dealer to deliver, prior to any transaction involving a “penny stock”, a disclosure schedule prepared in accordance with SEC standards relating to the “penny stock” market, unless the broker-dealer or the transaction is otherwise exempt. A U.S. broker-dealer is also required to disclose commissions payable to the U.S. broker-dealer and the registered representative and current quotations for the securities. Finally, a U.S. broker-dealer is required to submit monthly statements disclosing recent price information with respect to the “penny stock” held in a customer’s account and information with respect to the limited market in “penny stocks”.
Shareholders should be aware that, according to the SEC, the market for “penny stocks” has suffered in recent years from patterns of fraud and abuse. Such patterns include (i) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (ii) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (iii) “boiler room” practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (iv) excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and (v) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, resulting in investor losses. Our management is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to our securities.
Our Ordinary Shares may be considered a “penny stock” under SEC regulations which could adversely affect the willingness of investors to hold our Shares.
The SEC has adopted regulations which generally define “penny stock” to be an equity security that has a market price of less than $5.00 per share, subject to specific exemptions. During the fiscal year ended December 31, 2023, our Ordinary Shares traded on the NASDAQ at below US$5.00 per share. The low trading price of our Ordinary Shares may adversely impact the willingness of investors to invest in our Ordinary Shares in the United States.
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Our stock price may be volatile.
The market price of our Ordinary Shares is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control, including the following:
| ● | changes in our industry; |
| ● | our ability to work through a health crisis or pandemic; |
| ● | competitive pricing pressures; |
| ● | our ability to obtain working capital financing; |
| ● | additions or departures of key personnel; |
| ● | limited “public float” in the hands of a small number of persons whose sales or lack of sales could result in positive or negative pricing pressure on the market price for our Ordinary Shares; |
| ● | sales of our Ordinary Shares; |
| ● | our ability to execute our business plan; |
| ● | operating results that fall below expectations; |
| ● | loss of any strategic relationship; |
| ● | regulatory developments; |
| ● | developments concerning research and development, manufacturing, and marketing alliances or collaborations by us and our competitors; |
| ● | announcements of technological innovations or new commercial products by us and our competitors; |
| ● | regulatory actions in respect of any of our products or the products of any of our competitors; |
| ● | determinations regarding our patent applications and those of others; |
| ● | market conditions, including market conditions in the technology and digital media sectors; |
| ● | increases in our costs or decreases in our revenues due to unfavorable movements in foreign currency exchange rates; |
| ● | development or litigation concerning patents, licenses and other intellectual property rights; |
| ● | litigation or public concern about the safety of our potential products; |
| ● | changes in recommendations or earnings estimates by securities analysts; |
| ● | deviations in our operating results from the estimates of securities analysts; |
| ● | rumors relating to us or our competitors; |
| ● | developments concerning current or future strategic alliances or acquisitions; |
| ● | political, economic and other external factors such as interest rate or currency fluctuations, war; and |
| ● | period-to-period fluctuations in our financial results. |
Our Ordinary Shares are traded on NASDAQ Capital Market. However, trading volumes for our Ordinary Shares have been historically low and volatile. The limited trading market for our Ordinary Shares may cause fluctuations in the market value of our Ordinary Shares to be exaggerated, leading to price volatility in excess of that which would occur in a more active trading market for our Ordinary Shares.
In addition, stock markets have recently experienced extreme price and volume fluctuations due to the effects of COVID-19. These fluctuations have especially affected the stock market price of many technology companies and, in many cases, are unrelated to the operating performance of the particular companies. We believe that these broad market fluctuations may continue to affect the market price of our Ordinary Shares.
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We may be deemed a passive foreign investment company (PFIC) which would subject our U.S. investors to adverse tax rules.
Holders of our Ordinary Shares who are U.S. residents face income tax risks. There is a substantial risk that if we are deemed a passive foreign investment company, or PFIC, which could result in a reduction in the after-tax return to a “U.S. Holder” of our Ordinary Shares. For U.S. federal income tax purposes, we will be classified as a PFIC for any taxable year in which (i) 75% or more of our gross income is passive income, or (ii) at least 50% of the average value of all of our assets for the taxable year produce or are held for the production of passive income. For this purpose, cash is considered to be an asset that produces passive income.
The determination of whether we are a PFIC is made on an annual basis and depends on the composition of our income and the value of our assets. Therefore, it is possible that we could be deemed a PFIC in the current year as well as in future years. If we are classified as a PFIC in any year that a U.S. Holder owns Ordinary Shares, the U.S. Holder will generally continue to be treated as holding Ordinary Shares of a PFIC in all subsequent years, notwithstanding that we are not classified as a PFIC in a subsequent year. Dividends received by the U.S. Holder and gains realized from the sale of our Ordinary Shares would be taxed as ordinary income and subject to an interest charge. We urge U.S. investors to consult their own tax advisors about the application of the PFIC rules and certain elections that may help to minimize adverse U.S. federal income tax consequences in their particular circumstances.
As a foreign private issuer whose shares are listed on the NASDAQ Capital Market, we follow certain home country corporate governance practices in lieu of instead of certain NASDAQ requirements.
As a foreign private issuer whose shares are listed on the NASDAQ Capital Market, we are permitted to follow certain home country corporate governance practices instead of certain requirements of The NASDAQ Marketplace Rules. As an Australian company listed on the NASDAQ Capital Market, we follow home country practice with regard to, among other things, the composition of the board of directors, director nomination process, compensation of officers and quorum at shareholders’ meetings. In addition, we follow Australian law instead of the NASDAQ Marketplace Rules that require that we obtain shareholder approval for certain dilutive events, such as for the establishment or amendment of certain equity-based compensation plans, an issuance that will result in a change of control of the company, certain transactions other than a public offering involving issuances of a 20% or more interest in the company and certain acquisitions of the stock or assets of another company. A foreign private issuer that elects to follow a home country practice instead of NASDAQ requirements, must submit to NASDAQ in advance a written statement from an independent counsel in such issuer’s home country certifying that the issuer’s practices are not prohibited by the home country’s laws. In addition, a foreign private issuer must disclose in its annual reports filed with the U.S. Securities and Exchange Commission each such requirement that it does not follow and describe the home country practice followed by the issuer instead of any such requirement. Accordingly, our shareholders may not be afforded the same protection as provided under NASDAQ’s corporate governance rules. Please see “Item 6. Directors, Senior Management and Employees - C. Board Practices” for further information.
U.S. shareholders may not be able to enforce civil liabilities against us.
All of our directors and executive officers, other than Mr. John Park our co-CEO are non-residents of the United States, and all or a substantial portion of the assets of such persons are located outside the United States. As a result, it may not be possible for investors to affect service of process within the United States upon such persons or to enforce against them judgments obtained in U.S. courts predicated upon the civil liability provisions of the federal securities laws of the United States. There is doubt as to the enforceability in Australia in original actions, or in actions for enforcement of judgments of U.S. courts, of civil liabilities to the extent predicated upon the federal securities laws of the United States.
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As a foreign private issuer, we do not have to provide the same information as an issuer of securities based in the U.S.
Given that we are a foreign private issuer within the meaning of the rules under the Exchange Act, we are exempt from certain provisions of that law that are applicable to U.S. public companies, including (i) the rules under the Exchange Act requiring the filing with the U.S. Securities and Exchange Commission (“SEC”) of quarterly reports on Form 10-Q or current reports on Form 8-K; (ii) the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a registered security; and (iii) 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. Thus, investors are not afforded the same information which would be ordinarily available were they investing in a domestic U.S. public corporation.
In accordance with the requirements of the Australian Corporations Act 2001, we disclose annual and semi-annual results. Our results are presented in accordance with International Financial Reporting Standards (IFRS). Our annual results are audited, and our semi-annual results undergo a limited review by our independent auditors. We file annual audited results presented in accordance with Australian Accounting Standards and IFRS as issued by International Accounting Standards Board with the SEC on Form 20-F. We are required to provide our semi-annual results and other material information that we disclose in Australia in the U.S. under the cover of Form 6-K. Nevertheless, this information is not the same information as would be made available to investors if we were a domestic U.S. public corporation.
We may issue additional securities in the future, which may result in dilution to our shareholders.
As of September 30, 2024 we have 3,431,434 Ordinary Shares issued and outstanding, which does not include the number of shares to be issued under (i) warrants issued in July 2024 (“2024 Warrants”) and (ii) convertible notes. The 2024 Warrants, if fully exercised, would raise a total of US$0.525 million and are for a term of 2 years expiring in 2026 and can be exercised at an exercise price of US$1.30 for each share. Under the 2024 Warrant agreement, the warrant holder cannot exercise the warrant to subscribe for shares in the Company if such exercise would take the warrant holder over 19.99% shareholding in the Company. As at the date of this report, all the 2024 Warrants are outstanding. There are 2 convertible notes. The 2023 convertible note is US$15.0 million and can convert into shares in the Company at a conversion price of US$1.42 per share. The 2024 convertible note is US$0.350 million and can convert into shares in the Company at a conversion price of US$1.25 per share. These convertible notes are exercisable for a period of 2 years to November 2025 and July 2026 respectfully. If the warrants are exercised or the convertible notes are converted, additional Ordinary Shares will be issued and would dilute our shareholders.
In addition, to the extent that we conduct additional equity offerings, additional Ordinary Shares will be issued, which may result in dilution to our current shareholders. Sales of substantial numbers of such shares in the public market would also result in further dilution to our shareholders and could adversely affect the market price of our Ordinary Shares.
We may seek to raise additional funds, finance acquisitions or develop strategic relationships by issuing securities that would dilute your ownership. Depending on the terms available to us, if these activities result in significant dilution, it may negatively impact the trading price of our Ordinary Shares.
We have financed our operations, and we expect to continue to finance our operations, acquisitions, if any, and the development of strategic relationships by issuing equity and/or convertible securities, which could significantly reduce the percentage ownership of our existing shareholders. Further, any additional financing that we secure, may require the granting of rights, preferences or privileges senior to, or pari passu with, those holders of our Ordinary Shares. Any issuances by us of equity securities may be at or below the prevailing market price of our Ordinary Shares and in any event may have a dilutive impact on your ownership interest, which could cause the market price of our Ordinary Shares to decline. We may also raise additional funds through the incurrence of debt or the issuance or sale of other securities or instruments senior to our Ordinary Shares. The holders of any securities or instruments we may issue may have rights superior to the rights of our shareholders. If we experience dilution from the issuance of additional securities and we grant superior rights to new securities over our shareholders, it may negatively impact the trading price of our Ordinary Shares and you may lose all or part of your investment.
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If we fail to comply with internal control evaluations and attestation requirements our stock price could be adversely affected.
We are subject to United States securities laws, including the Sarbanes-Oxley Act of 2002 and the rules and regulations adopted by the SEC pursuant to such Act. As a foreign private issuer, under Section 404 of the Sarbanes-Oxley Act and the related regulations, we will be required to perform an evaluation of our internal control over financial reporting, including (1) management’s annual report on its assessment of the effectiveness of internal control over financial reporting; and (2) our independent registered public accounting firm’s annual audit of the effectiveness of internal control over financial reporting. In 2010, the enactment of the Dodd Frank Bill resulted in an exemption from Section 404(b) of the Sarbanes-Oxley Act for fiscal 2010 onwards, meaning that we did not have to comply with point (2) above. For further information, see “Item 15 - Controls and Procedures - Management’s Annual Report on Internal Control over Financial Reporting.”
The requirements of Section 404(a) of the Sarbanes-Oxley Act are ongoing and also apply to future years. We expect that our internal control over financial reporting will continue to evolve as our business develops. Although we are committed to continue to improve our internal control processes and we will continue to diligently and vigorously review our internal control over financial reporting in order to ensure compliance with the Section 404 requirements, any control system, regardless of how well designed, operated and evaluated, can provide only reasonable, not absolute, assurance that its objectives will be met. Therefore, we cannot be certain that in the future additional material weaknesses or significant deficiencies will not exist or otherwise be discovered. If our efforts to remediate weaknesses identified are not successful or if other deficiencies occur, these weaknesses or deficiencies could result in misstatements of our results of operations, restatements of our financial statements, a decline in our stock price, or other material effects on our business, reputation, results of operations, financial conditions or liquidity.
Our management has concluded that our disclosure controls and procedures and internal control over financial reporting are ineffective due to the existence of a material weakness in our internal control over financial reporting. If we are unable to establish and maintain effective disclosure controls and internal control over financial reporting, our ability to produce accurate financial statements on a timely basis could be impaired, and the market price of our securities may be negatively affected.
A material weakness (as defined in Rule 12b-2 under the Exchange Act) is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis. We carried out an evaluation, under the supervision and with the participation of management, of the effectiveness of the design and operation of our disclosure controls and procedures and internal control over financial reporting as of December 31, 2023. Based upon this evaluation, management has identified a deficiency related to adequate number of personnel which makes reporting process susceptible to management override, lack of technical accounting expertise and lack of formal accounting process over key accounting areas. These internal control failures did not result in material adjustment to the accounts in the current year. If these deficiencies are not correct, then they could lead to adjustments in our accounts in the future which could negatively affect the market price of our securities.
Our Constitution and other Australian laws and regulations applicable to us may adversely affect our ability to take actions that could be deemed beneficial to our shareholders.
As an Australian company we are subject to different corporate requirements than a corporation organized under the laws of the United States. Our constituent document, or Constitution, as well as the Australian Corporations Act 2001 set forth various rights and obligations that are unique to us as an Australian company. These requirements may limit or otherwise adversely affect our ability to take actions that could be beneficial to our shareholders.
We have never paid a dividend and we do not intend to pay dividends in the foreseeable future which means that holders of shares may not receive any return on their investment from dividends.
To date, we have not declared or paid any cash dividends on our Ordinary Shares and currently intend to retain any future earnings for funding growth. We do not anticipate paying any dividends in the foreseeable future. Dividends may only be paid out of our profits. Payment of cash dividends, if any, in the future will be at the discretion of the board of directors of the Company. Our holders of shares may not receive any return on their investment from dividends. The success of your investment will likely depend entirely upon any future appreciation of the market price of our Ordinary Shares, which is uncertain and unpredictable. There is no guarantee that our Ordinary Shares will appreciate in value or even maintain the price at which you purchased your Ordinary Shares.
We may not be able to attract the attention of major brokerage firms.
Securities analysts of major brokerage firms may not provide coverage of us since there is no incentive to brokerage firms to recommend the purchase of our Ordinary Shares. No assurance can be given that brokerage firms will, in the future, want to conduct any secondary offerings on behalf of our Company.
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ITEM 4. INFORMATION ON THE COMPANY
A. History and Development of the Company
We were incorporated under the laws of the Commonwealth of Australia on August 8, 2008 under the name “China Integrated Media Corporation Limited.” On October 12, 2016, we changed the name to Integrated Media Technology Limited (“IMTE”). The registered office is located at Suite 1401 Level 14, 219-227 Elizabeth Street, Sydney NSW 2000, Australia and our telephone number is +61 7324 6018. Our principal office is located at Suite A, Unit 5, Level 3, Lot 4, Glen 9 Business Park, Jalan Pensyarah U1/28, Hicom Glenmarie Industrial Park, 40150 Shah Alam, Selangor, Malaysia and our telephone number is +61 7324 6018. Our address on the Internet is www.imtechltd.com. The information on, or accessible through, our website is not part of this annual report on Form 20-F. We have included our website address in this annual report on Form 20-F solely as an inactive textual reference.
In 2013, IMTE was engaged in (i) the development of the digital advertising platform in glasses-free 3D (autostereoscopic), (ii) distribution of digital displays and (iii) lottery gaming business in China. In 2015, the Company changed this focus of its businesses to concentrate on 3D autostereoscopic business and took the following corporate actions: (i) terminated the lottery gaming business in China and (ii) acquired 3D technology and audio companies (as discussed further below). However, due to the capital-intensive nature of research and development and the losses incurred in 2018 and 2019, management decided in early 2020 to stop the R&D activities and focus on the sales and marketing of 3D display products. In 2020, management also decided to broaden the Company’s revenue base and in subsequent period by investing in a lamination glass project, a new nano-coated plate filter project, IoT projects, financial research, certification of halal process and trading in halal products, and setting up a marketplace to trade in digital assets. In 2021, the Company stopped the marketing and sales of 3D display products due to the adverse effect of the pandemic on the retail and advertising sectors. In 2022, the Company decided to divest from its China and Hong Kong businesses and to shift its operating base to Malaysia. As a result, the Company sold off its investment in China lamination glass business and decreased its equity interest in its financial research business to 23.8%, a non-controlling equity position; accordingly for accounting purposes we are deemed to have sold and deconsolidate this business, and instead treat this investment as an equity investment in an associated company. In 2023, the Company acquired Itana Energy Pty Ltd. (formerly Teko Energy Pty Ltd) to enter the new energy products and energy sector under the Admiral Energy brand for the territory of Asia Pacific. The Company now engages in business activities relating to the laminated switchable glass in Southeast Asia and Middle East, nano-coated plate filter and air filter products, certification of halal process and trading in Halal products, setting up and managing a marketplace to trade in digital assets and trading in new energy products.
IMTE was listed on the Australian Securities Exchange, or ASX, in February 2013.
On February 9, 2015, the Company acquired all the issued shares of Conco International Co., Ltd. (“CICL”), a company principally engaged in the design, sales and distribution of audio products. The consideration paid was $61,591 which was the amount of the net asset value of CICL. The consideration was settled by the Company issuing 307,954 shares at A$0.20 per share.
In May 2015, the Company entered into a cooperation agreement to set up Global Vantage Audio Limited, a 50% subsidiary company, to distribute and market branded “Syllable” headsets globally except for the markets in China, India and Pakistan.
On September 30, 2015, the Company acquired all of the issued shares of Marvel Digital Limited (“MDL”), a Hong Kong incorporated technology company principally engaged in the development of autostereoscopic 3D display technology and products, 2D to 3D conversion software and digital content management system. The consideration paid was A$5,216,213 which was the net asset value of MDL. The consideration was settled by the Company issuing 26,081,065 shares at A$0.20 per share.
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In March 2016, the Company disposed CICL to an independent third party for US$41,235, representing the net asset value of CICL.
On October 12, 2016, pursuant to an extraordinary general meeting the Shareholders unanimously voted to change the name of the Company to Integrated Media Technology Limited.
On May 2, 2017, we effected a 1-for-30 reverse split of our Ordinary Shares, which was approved at a special meeting of our shareholders on March 2, 2017. This reduced the number of outstanding shares of our common stock from 79,301,852 shares on May 5, 2017, to 2,643,611 shares on May 8, 2017, after adjusting for fractional shares.
In July 2017, we established a new wholly owned subsidiary - GOXD Technology Limited, incorporated in Hong Kong, for carrying out business activities on sales and distribution of 2D/3D glasses-free 4K digital photo frames to corporate customers and household consumers.
On August 3, 2017 our Ordinary Shares was admitted for listing on the NASDAQ Capital Markets under the symbol “IMTE”.
On January 12, 2018, the Group entered into the following agreements in connection with the issue of a HK$23 million (equivalent to approximately A$3.8 million) Convertible Bonds (the “Convertible Bonds”): (i) Subscription Agreement between Marvel Digital Limited, a wholly-owned subsidiary of the Company (“MDL”) and an independent third party entity (“Bondholder”) for the Convertible Bonds, (ii) Deed of Guarantee between the Company and the Bondholder to guarantee the payment obligations under the Convertible Bonds and (iii) Put Option Deed between the Company and the Bondholder to repurchase any converted MDL Shares as described below.
Pursuant to the terms of the Convertible Bonds, the Convertible Bonds were convertible into 75,000 Ordinary Shares of MDL (“MDL Shares”) at a conversion price of HK$306.67 per share, which is equivalent to 20% of the then enlarged issued share capital of MDL.
On August 6, 2018, the Company’s subsidiary company, MDL, completed the Share Subscription Agreement where the investor subscribed for 5% of the enlarged issued share capital of MDL for HKD15,000,000 (approximately A$2,573,000). Upon the issuance of shares in MDL, IMTE’s shareholding in MDL decreased from 100% to 95%.
On August 8, 2018, the Company’s subsidiary company, GOXD Technology Limited (“GOXD”) entered into an Equity Investment Agreement where the investor purchased 20% of the enlarged issued share capital of GOXD for US$4,000,000 (approximately A$5,378,000). GOXD is a subsidiary of MDL. Upon the issuance of shares in GOXD, MDL’s shareholding in GOXD decreased from 100% to 80%.
On December 12, 2018 the shareholders of the Company approved the settlement of A$8,000,000 debt owed to Marvel Finance Limited, the then ultimate holding company, by the issuance of 708,500 shares in the Company.
In April 2019, the Company and Teko International Limited (“Teko”) entered into a distribution rights agreement for the territory of Hong Kong and Guangzhou Province, China (“Territories”) for a proprietary conductive film and 3rd generation Polymer Dispersed Liquid Crystal (“PDLC”) film. Pursuant to the Agreement, the Company will pay 50,000 IMTE shares upon the commissioning of one lamination line, (ii) for each of the next 3 years after the commissioning of the manufacturing line, IMTE shall pay Teko 50,000 IMTE shares should the annual revenue reach US$10 million or 100,000 IMTE shares should the revenue reach US$20 million, and (iii) 50,000 IMTE shares for each additional lamination line installed. In addition, for managing the operations, the Company will pay to Teko 25% of the net profits from the sale of the PDLC film products and the lamination operations. The then CEO and CFO of the Company were also then the directors and shareholders of Teko.
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On January 3, 2020, the Convertible Bonds with MDL matured and then on January 21, 2020 the Company reached an agreement with Bondholder to repay HK$23 million (equivalent to approximately A$4.3 million) of the Convertible Bonds on the following schedule: i) HK$13 million (or about A$2.4 million) to be paid on January 17, 2020 and ii) the remaining HK$10 million (or about A$1.9 million) to be paid in equal instalments over four months. Furthermore, the interest rate is changed to 15% per annum. All of the instalment payments were made.
On January 20, 2020, the Company entered into a Convertible Note Purchase Agreement with CIMB Limited (“the CN Agreement”), an independent third party. Pursuant to CN Agreement, CIMB will purchase from the Company a 10% convertible promissory note (“the Note”) in the principal amount of HK$14 million (or about A$2.6 million or about US$1.8 million) maturing in two (2) years from the date of the agreement. The holder of the Note has the right to convert the principal amount to shares in the Company at a fixed conversion price of US$5.00 per share, subject to adjustment, over the term of the Note. On February 11, 2020, the Company and the holder of the Note entered into a supplement agreement to the CN Agreement to limit the total number of Ordinary Shares of the Company issuable upon conversion of the Note to no more than 19.99% of the total issued and outstanding Ordinary Shares of the Company. The supplement agreement further provides that the conversion price shall, in no event, be less than US$1.50 per share, subject to regulatory or shareholder approval. The Note was converted in January 2022 and a total of 664,871 shares were issued.
On February 20, 2020, the Company entered into a Securities Purchase Agreement for the sale of 158,730 ordinary shares of, no par value, of the Company and warrants (“Warrants”) to purchase up to 126,984 Ordinary Shares (“Warrant Shares”) to an accredited investor (“Investor”) at a price of US$6.30 per share to raise gross proceeds of US1 million. The Warrants were exercisable for the period of 12 months from the date of issuance, at an exercise price of US$10.50 per Share. The Cash Offering is for US$1 million and generated net cash proceeds of approximately US$920,000 after deducting estimated expenses in connection with the offering. The Company intended to use the net cash proceeds for partially paying off debts to a bondholder and general corporate purposes.
In May 2020, the Company disposed its research and development operations to independent third parties in order to rationalize its operations and focus on the marketing and sales of autostereoscopic 3D displays.
On August 6, 2020, the Company entered into two conditional SP Agreements to buy 25.5% equity interest in Sunup from each of Nextglass Technologies Corp (“Nextglass”) and Teko International Limited (“Teko”) for US$750,000 each for a total consideration of US$1,500,000. The consideration paid was US$750,000 for each of Nextglass and Teko, and each of them was issued 250,000 Ordinary Shares in IMTE (the “Consideration Shares”) at US$3.00 per share. Under the SP Agreements, IMTE could also pay a deferred consideration based on five times the annualized earnings for the two years following completion, less the initial consideration of US$750,000. For the duration of the agreements and until the deferred consideration is determined, Nextglass and Teko have the right to purchase their 25.5% Sunup equity interest back from IMTE through the restitution of the Consideration Shares if IMTE and Sunup terminate the directors and officers of Sunup without cause and without the consent of the Nextglass and Teko.
On December 21, 2020 the Company entered into a contract with RE&I International Limited and Zhenjiang Nextek Glass Film Limited to purchase one lamination line for our switchable glass operation for total proceeds of US$1,650,000.
On December 21, 2020, the Company entered into a subscription agreement to subscribe for up to 60% equity interest in Greifenberg Capital Limited (“Greifenberg”) for a total subscription amount of US$1,200,000. The Company subscribed an initial amount of US$500,000. The Company had the option to subscribe for an additional US$700,000 if Greifenberg achieves certain milestones after May 31, 2021, which the Company did not exercise. Greifenberg is engaged in the business of providing financial research and risk analysis on China’s financial markets.
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On December 21, 2020, Sunup, the Company’s then subsidiary entered into an assignment agreement to take up the rights to a Product Development Agreement for two new air purifiers. The contract provided for Sunup to own the trademark and the right to use the product design and the distribution right to sell the air purifier products worldwide. The total investment cost for the product development was approximately US$728,000.
On February 5, 2021, CIMC Marketing Pty Limited (“CIMC”), a wholly owned subsidiary of the Company entered into an underwriting agreement with Xped Limited (now known as Oakridge International Limited) (“Oakridge”), a company listed on the Australian Securities Exchange where it purchased 500 million shares at a subscription price of A$0.001 per share for a total amount of A$500,000 or equivalent to US$381,000. The 500 million shares represented approximately 15% of the then total outstanding shares in Oakridge. Oakridge was then engaged in the business of selling professional healthcare technology equipment and solutions to healthcare facilities. Oakridge also then intended to build on smart home and smart building solutions for a more efficient interactive environment for its occupants. In 2022 the Company sold this investment for $240,612 and realized a loss of $202,363.
On February 22, 2021, the Company entered into a Securities Purchase Agreement for the sale of 625,000 Ordinary Shares of the Company at a price of US$4.00 per share for US$2,500,000. The Company intended to use the net cash proceeds for working capital purposes and the development of existing and new businesses.
On March 4, 2021, the Company entered into subscription agreements in a private placement to subscribe a total of 573,350 shares in the Company at a price of US$4.00 per share for total proceeds of US$2,293,400. The use of the proceeds was to build out of manufacturing infrastructure and working capital.
On March 23, 2021, the Company entered into a Securities Purchase Agreement for the sale of 708,000 Ordinary Shares of the Company at a price of US$6.50 per share for gross proceeds of US$4,602,000. The Company intended to use the net cash proceeds for developing its current businesses, corporate expenditures, and general corporate purposes.
On July 6, 2021, the Company entered into three Securities Purchase Agreements (“SPA”) for the sale of a total of 888,888 Ordinary Shares of the Company at a price of US$3.15 per share for a net cash net cash proceeds of approximately US$2,765,000 after deducting estimated expenses in connection with the offering. The Company intended to use the net cash proceeds for the purchase of equipment for the Company’s electronic glass business and working capital.
On January 3, 2022, the Company entered into convertible note purchase agreements to raise a total of US$10 million by the issuance of US$10 million convertible notes (“Note”). The Note bears interest at 6% per annum maturing in 2 years from the date of issuance of the Note. The holder of the Note has the right to convert the principal amount to shares in the Company at a fixed conversion price of US$3.12 per share, subject to adjustment, over the term of the Note. The holder of the Note cannot convert the shares in the Company if such conversion would take the noteholder over 4.99% shareholding in the Company. As at the date of this report all the Notes were converted into a total of 3,205,128 shares in the Company. In addition, the noteholder also received a warrant representing 80% of the amount of the Note, raising an additional US$8 million if all the warrants are exercised. The warrants are for a term of 2 years from the date of the Note and can be exercised at US$3.74 for each share. Under the warrant agreement, the warrant holder cannot exercise the warrant to subscribe for shares in the Company if such exercise would take the warrant holder over 4.99% shareholding in the Company. All the warrants were not exercised and expired in January 2024. The use of the proceeds from this fund raise was to support the acquisition and building out of manufacturing infrastructure and working capital of the Company.
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On January 19, 2022, the noteholder, holding a 10% convertible promissory note (“CN Note”) in the principal amount of HK$14 million (or about A$2.6million or about US$1.8million) issued by the Company on January 20, 2020, converted the CN Note into 664,871 shares in the Company.
In March and April 2022, the Company entered into Securities Purchase Agreements selling a total of 1,431,788 Ordinary Shares of the Company at a price of US$4.50 per share for total gross proceeds of approximately US$6.4 million. The use of the proceeds was for the expansion of the lamination plant in USA, air filter operation, investment in new projects and working capital.
On April 13, 2022, the Company issued a total of 507,692 shares as a result of the conversion of convertible promissory note of US$1,650,000.
On June 29, 2022, the Company issued 646,173 shares at US$4.50 per share for a total subscription amount of US$2,907,786. The proceeds from this sale of shares were used for the Company’s operation and working capital.
On July 11, 2022, the Company entered into a Sales and Purchase Agreement (“SP Agreement”) with Capital Stone Holdings Limited (“Purchaser”), pursuant to which the Company has conditionally agreed to sell to the Purchaser 100% equity interest in eGlass Technologies Ltd (“eGlass”), a then wholly-owned subsidiary of the Company holding all the assets of our switchable glass business in China (the “Disposal”) for US$6.8 million (“Consideration”).The Purchaser paid the Consideration by issuance to the Company a debt instrument (“Loan Agreement”) which bears interests of 5% per annum, repayable in 2 years and secured against the shares of eGlass. The Purchaser intended to list the eGlass shares on the Australia Securities Exchange (“ASX”) within the next 2 years. Pursuant to the SP Agreement, the Purchaser has the right to pay the Loan by giving the Company the number of shares in eGlass calculated by dividing the amount of outstanding loan by 10% discount to the then 5 days volume weighted average closing price (“VWAP”) provided that such price shall not be greater than the 120% of the IPO Price. Alternatively, the Company has the right to have the Purchaser pay the Loan by transferring to the Company the number of shares in eGlass calculated by dividing the amount of outstanding loan by the IPO Price. Any outstanding loan which could not be fully repaid by the eGlass shares above will be settled by cash.
From July to December 2022, the Company entered into Subscription Agreements (“Subscription Agreements”) for a total of US$5.5 million where each Subscriber subscribed to a convertible note (“CPNote”). The CPNote is interest free, unsecured and convertible into shares of eGlass Technologies Ltd. (“eGlass”), a then subsidiary of the Company, on the date eGlass receives notice from the Australian Stock Exchange (“ASX”) that it will be admitted to the official list of ASX, at a conversion price equal to 25% discount to the IPO Price. In November and December 2023, all the CPNotes were converted into eGlass shares, except for US$600,000 of CPNotes which were converted into 240,000 shares in the Company at a conversion price of US$2.50 per share.
On August 23, 2022, the Company issued 2,200,000 ordinary shares at a share price of US$1.59 for a total of US$3,498,000 to consultants.
In August and September 2022, the Company issued a total of 2,539,682 shares at US$1.26 per share for a total subscription amount of US$3,200,000. In connection of the private placement of shares, the Company issued to the shareholders warrants to purchase a total of 2,539,682 shares raising an additional US$3.2 million, if all the warrants are exercised. The warrants are for a term of 2 years from the date of the Agreement and can be exercised at US$1.26 for each share. The Company intended to use the funds for the development of Halal projects, air filter operation and working capital. In September 2024, all the warrants have not been exercised and have all expired.
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In February 2023, the Company issued 163,053 ordinary shares at a share price of US$0.65 for a total of US$105,984 to consultants.
In May 2023, the Company issued 19,230 ordinary shares at a share price of US$0.65 per share and 402,084 ordinary shares at a share price of US$0.48 per share for a subscription amount of US$205,503. The proceeds from this sale of shares were used for the working capital. 77,083 shares at a share price of US$.480 for a total share issuance amount of US$37,000 to consultants.
In June and July 2023, the Company issued 99,999 shares at a share price of US$0.30 per share for a total subscription amount of US$30,000. The proceeds from this sale of shares were used for the working capital.
On July 21, 2023 the Company completed a conditional sale and purchase agreement (“Sale and Purchase Agreement”) to acquire 100% equity interests in Teko Energy Pty Ltd (now named as Itana Energy Pty Ltd “IEPL”) and its 50% subsidiary Admiral Energy Corporation Pty Ltd. (“AEC”) for US$750,000 which was paid by the issuance of a total of 3,000,000 ordinary shares, representing a share issuance of US$0.25 per share, in the Company. IEPL is an investment holding company and its 50% subsidiary AEC is in the business of marketing, promoting and distributing new energy products including new energy storage solutions, new energy charging stations and new energy vehicles under the brand “Admiral Energy” in the territories of Australia, New Zealand, China (including Hong Kong, Taiwan and Macau), South Korea, Japan, Vietnam, Cambodia, Thailand, Malaysia, Indonesia, Singapore, Laos, Myanmar, and the Philippines.
In August 2023, the Company issued 33,333 ordinary shares at a share price of US$0.30 for a total of US$10,000 to consultants.
In September 2023, the Company issued 166,666 shares at a share price of US$0.30 per share for a total subscription amount of US$50,000. The proceeds from this sale of shares were used for the working capital.
On October 16, 2023, we effected a 1-for-10 share consolidation of our Ordinary Shares, which was approved at a special meeting of our shareholders on September 29, 2023. This reduced the number of outstanding shares of our common stock from 21,486,202 shares to 2,148,501 shares, after adjusting for fractional shares.
From this section onwards, * means post share consolidation of 10 shares for 1 share effective from October 16, 2023.
On October 24, 2023, the Company entered into convertible note purchase agreements with Nextglass Solutions, Inc raising a total of US$15 million by the issuance of US$15 million convertible notes (“NSI Note”). The NSI Note is interest free maturing in 2 years from the date of issuance of the NSI Note. The holder of the NSI Note has the right to convert the principal amount to shares in the Company at a fixed conversion price of US$1.42* per share, subject to adjustment, over the term of the NSI Note. Under the NSI Note, the holder of the NSI Note cannot convert the shares in the Company if such conversion would take the noteholder over 19.99% shareholding in the Company.
In November 2023, the Company issued 114,116* ordinary shares at a share price of US$2.00* for a total of US$228,232 to consultants.
In November 2023, the Company issued 45,000* shares at a share price of US$2.00* per share for a total subscription amount of US$90,000. The proceeds from this sale of shares were used for the working capital.
In November 2023, a noteholder converted US$600,000 of the CPNotes at a conversion price of US$2.50* per share into 240,000* shares of the Company. The CPNotes were issued in July 2022 in relation to the subscription agreement where the noteholder could convert into the Company’s shares or eGlass Technology Limited’s shares as described above.
In December 2023, the Company issued 562,817* shares at a share price of US$2.50* per share for a total subscription amount of US$1,407,043. The proceeds from this sale of shares were used for the working capital.
In January 2024, the Company issued 21,000* ordinary shares at a share price of US$2.50* for a total subscription amount of US$52,500. The proceeds from this sale of shares were used for the Company’s operation and working capital.
On July 22, 2024, the Company issued a $350,000 convertible notes (“2407 Note”). The 2407 Note bears interest at 6% per annum maturing in 2 years from the date of issuance of the 2407 Note. The holder of the 2407 Note has the right to convert the principal amount to shares in the Company at a fixed conversion price of $1.25* per share, subject to adjustment, over the term of the 2407 Note. The holder of the 2407 Note cannot convert the shares in the Company if such conversion would take the noteholder over 19.99% shareholding in the Company. In addition, the noteholder also received a warrant representing 150% of the amount of the 2407 Note, raising an additional $525,000 if all the warrants are exercised. The warrants are for a term of 2 years from the date of the 2407 Note and can be exercised at $1.30* for each share. Under the warrant agreement, the warrant holder cannot exercise the warrant to subscribe for shares in the Company if such exercise would take the warrant holder over 19.99% shareholding in the Company. The use of the proceeds from this fund raise was for working capital. As at the date of this report none of the 2407 Note were converted and none of the warrants were exercised.
On July 26, 2024, the Group entered into an Exclusive Distribution Agreement for the distributing and sale of the smartglass products used in or installed in the Prefabrication Home Market. The distributor would maintain the exclusive distribution by achieving certain annual sales. The agreement if for 3 years with a renewal for 5 years under certain conditions.
| * | Adjusted for post-share consolidation of 10 shares for 1 share on October 16, 2023. |
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In summary, the Group’s business activities are manufacture and sale of nano coated plates for filters and air purifiers, the manufacture and sale of electronic glass in Southeast Asia and Middle East, provision of halal certification and distribution of Halal products, and the operating of an online exchange platform for trading in digital assets and trading in new energy products.
B. Business Overview
IMTE is an Australian company and in 2020 and 2021 was engaged in the business of glasses-free 3D (also known as autostereoscopic 3D) display, the manufacture and sale of nano-coated plates for filters and air purifiers, the sale of electronic glass, IoT products and financial research. At the end of 2021, the Company stopped the business of glasses-free 3D due to the adverse effect of pandemic on the sales of 3D products to consumer and advertising sectors. In 2023, IMTE was engaged in the business of the manufacture and sale of nano-coated plates for filters and air purifiers, the sale of electronic glass, operating the digital market exchange, digital asset products and the trading in new energy products.
Breakdown of total revenues by category for the years ended December 31, 2023, 2022 and 2021:
| Consolidated | ||||||||||||
| December 31, 2023 $ | December 31, 2022 $ | December 31, 2021 $ | ||||||||||
| Sales of Halal products | 373,676 | 364,405 | - | |||||||||
| Interest income | 4 | 392,622 | 14,096 | |||||||||
| Development, sales and distribution of 3D autostereoscopic products and conversion equipment | - | - | 2,974 | |||||||||
| Sales of air-filters products | - | - | 141,337 | |||||||||
| 373,680 | 757,027 | 158,407 | ||||||||||
Breakdown of total revenues by geographic market for the years ended December 31, 2023, 2022 and 2021:
| Consolidated | ||||||||||||
| December 31, 2023 $ | December 31, 2022 $ | December 31, $ | ||||||||||
| Malaysia | 373,676 | 364,405 | 58,380 | |||||||||
| Hong Kong | - | - | 2,974 | |||||||||
| China | - | - | 5,116 | |||||||||
| USA | - | - | 77,841 | |||||||||
| 373,676 | 364,405 | 144,311 | ||||||||||
In 2019, IMTE was engaged in the business of development, manufacture and distribution of glasses-free 3D display (also known as autostereoscopic 3D) (“ASD”). 2019 was a challenging year for our ASD business as our development of technologies was undercapitalized and much of our work plan was postponed or delayed until funding was secured. We also faced difficulties with our subcontractors to resolve the manufacturing process problems which further delayed sales. In early 2020, COVID-19 pandemic hit China and then spread to the rest of the world, putting our business on hold for most of 2020 and 2021. At the end of 2020, the economic outlook for retail business was uncertain as the extent of the people’s behavior changed to stay at home more and rely on pick-up and delivery services. This drastically affected our 3D advertising platform business.
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In May 2020, we divested our ASD research and development operation as a cost cutting measure. We decided to focus on the marketing and sales of ASD products and services, and outsource all development works with defined budgets.
In June 2020, the Company diversified its business by dedicating resources to the electronic glass and the nano-coated plate filters businesses. These two businesses were not affected by COVID-19 as much as the ASD business, which was operating in the retail advertising markets. In particular, the air filter products should not be affected as much as the ASD business because, in a pandemic environment, consumers will look to purchase devices that cleanse the air. The electronic switchable glass product is a commercial product that is less susceptible to short-term interruptions in a pandemic environment because it does not depend on retail and or travel sector.
In line with our renewed business strategy, in August 2020, we acquired 25.5% interests in Sunup Holdings Limited (“Sunup”) from each of Nextglass Technologies Corp. and Teko International Limited for US$750,000 each. In total, we acquired 51% of Sunup for a total consideration of US$1,500,000, which was paid by the issuance of a total of 500,000 shares in the Company at a price of US$3.00 per share. Sunup was then engaged in the manufacturing and sale of nano-coated plates used in air filters. Sunup had set up its equipment and began limited production in November 2020. In 2022, the Company focused on completing its new design air filter products under the brand name Ohho. In line with our strategy to divest from Hong Kong, the Company also reorganized its operation to move its holding company for this investment to be held by our newly Canadian incorporated company Ohho Technologies Ltd. In 2023, this business unit focused on the roll out and marketing strategies. The Company is in the process of identifying a manufacturing partner in Vietnam to manufacture our Ohho products for sale in 2024.
Consistent with our current strategy to diversify and expand our business operations, on December 21, 2020, the Company entered into an agreement to acquire the majority interest in Greifenberg Capital Limited (“Greifenberg”), a company that analyses credit risk using Big Data and Artificial Intelligence, for a total subscription of up to US$1,200,000. This investment provided the Company with an opportunity to integrate its business operation with use of new data and Artificial Intelligence in the new digital economy. We believe that strategically integrating our businesses with Artificial Intelligence and Big Data tools will enhance our business operations, especially in the advertising sector such as tracking or predicting trends in consumer behavior. In February 2022, the equity investment in Greifenberg decreased from 40.75% to 23.96% when the Company no longer exercised control in the management of Greifenberg. Accordingly, the Company de-consolidated this investment from its financial accounts once the Company’s equity interest fell below 30% and accounted for the investment in Greifenberg as an Investment in Associated for accounting purposes. For the year ended December 31, 2023 the Company recorded a loss of US$106,466 on the share of loss of associates. In February 2023, Greifenberg filed a Form F1 for listing its shares on Nasdaq Capital Markets. As at the date of this report, there has been no further update released on the Nasdaq website.
Consistent with our current strategy to diversify and expand our business operations, on January 28, 2021 the Company entered into an agreement to acquire a 70% equity interest in Shenzhen Koala Wisdom Fire Engineering Co., Ltd., a company in the business of Internet of Things. Pursuant to the agreement, the vendors would enter into contracts for deployment of an IoT Detection System of not less than RMB200,000 within 60 days from the date of the agreement. IMTE would purchase the 70% equity interest in Shenzhen Koala for US$40,000 (“Initial Consideration”) by the issuance of a total of 10,000 Ordinary Shares in the Company. In April 2021, the parties agreed to cancel this agreement and to negotiate another agreement involving other IoT projects in the future. Although the Company was not successful in this acquisition, the Company will continue to pursue businesses or synergistic investment in IoT sector in the future.
On February 5, 2021, a Group company acquired 500 million shares representing approximately 15% or A$500,000 (approximately US$381,000) in Xped Limited (now known as Oakridge International Limited) (“Oakridge”), a company listed on the Australia Securities Exchange at the subscription price of A$0.001 per share. Oakridge is engaged in the business of selling professional healthcare technology equipment and solutions to healthcare facilities. Oakridge was then focused on expanding into delivering assisted independent living technologies utilizing synergies with Oakridge’s Internet of Things (IoT) platform. Oakridge also then intended to build on smart home and smart building solutions for a more efficient interactive environment for the occupants. Our investment provides a strategic investment into the technology and healthcare markets in Australia. In August 2022, the Company sold this investment and realized a loss of A$225,000.
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At the end of 2021, the Company decided to stop selling ASD products to curtail ongoing overhead costs in the ASD operation as the demand for such products in the retail and advertising markets were drastically reduced due to the effects of the pandemic.
On December 29, 2021, the Company entered into an Assignment and Assumption Agreement to take over the rights and obligation on a Cooperation Agreement on developing a Blockchain business focusing on digital asset market platform mainly focusing on NFT (Non-Fungible Token) trading market. Under the Cooperation Agreement, the Company would invest up to US$1 million for 60% equity interests in Ace Corporation Limited to develop, establish, and operate a trading marketplace platform called “Ouction” at www.ouction.io. Ouction platform will be an interactive experiencing solution designed with dynamic image cryptographic verification technology which will serve as a bridge for O2O (Online to Offline) transaction. This will enable the Ouction platform to not only verify virtual asset transactions, but also provide encryption and Blockchain notarized digital certificates of physical assets for a fairer and more credible platform trading experience to e-commerce companies and their users. Ouction is expected to adopt decentralized technologies in the fields of games, fintech, film & TV, culture, and e-commerce. Ouction also plans to develop cross-industrial synergy and economic value from the new NFT marketplace it creates. Ouction’s marketplace plans to be a niche market in art, historical artifacts, photos and videos. In 2022, the Company established the Ouction marketplace platform and in line with its strategy, it began to sell high value premium products. This was met with mixed results due to travel restrictions of Covid 19 in Asia and the economic effect on consumers on the war in Ukraine. In line with our strategy to divest from Hong Kong, the Company reorganized its operation to move its holding company of this investment to be held by our newly Canadian incorporated company, Ouction Digital Ltd. In 2023, the Company focused on roll out and marketing strategies. In 2024, the Company will seek to promote and attract more users to the Ouction platform and securing more premium and digital products in art and pop culture to be promoted on our Ouction platform.
On January 4, 2022, the Company announced its intention to divest its China electronic glass business by either selling the business unit or undertaking a spin off the business unit into a stand-alone, publicly traded listed company. In September 2022, the Company disposed the electronic glass business in China by selling the holding company of this business, eGlass Technologies Inc. (“eGlass”) for US$6,800,000 or A$10,101,944 (“Consideration”), realizing a gain on disposal of subsidiary of A$51,143. Pursuant to the sale and purchase agreement (“SP Agreement”) with Capital Stone Holdings Limited (“Purchaser”) the Purchaser paid the Consideration by issuing to the Company a debt instrument (“Loan”) bearing interest of 5% per annum repayable in 2 years and is secured against the shares of eGlass. The Purchaser has indicated an intention to list eGlass on the Australia Securities Exchange (“ASX”). Pursuant to the SP Agreement, the Purchaser has the right to pay the Loan by giving IMTE the number of shares in eGlass calculated by dividing the amount of the outstanding Loan by 10% discount to the then 5 days volume weighted average closing price; provided such price may not be greater than the 120% of the IPO Prices. Alternatively, the Company has the right to have the Purchaser repay the loan by transferring to IMTE the number of shares in eGlass calculated by dividing the amount of outstanding loan by the IPO Price. Any outstanding loan amount that could not be fully repaid by the eGlass shares would be settled by cash.
After the disposal of eGlass, the Company did not have any operation and investment in China. The Company will continue with the electronic glass business and lamination operation in Southeast Asia and Middle East. Due to the capital-intensive requirements of the lamination business, the Company will seek to find strategic partners or undertake a spin off into a standalone public traded company.
On January 20, 2022, the Company entered into a subscription agreement for 60% equity interests in World Integrated Supply Ecosystem Sdn. Bhd. (“WISE”), a Malaysia company engaged in the business of the provision of halal certification to qualified businesses/operations, the establishment halal products supply chain, and sale of halal products. WISE will be providing halal certification working with the JAKIM, a department of the Malaysia government mandated to conduct and manage the halal certification process and other regional halal certification bodies. WISE is working towards being appointed by JAKIM Malaysia and other regional halal certification bodies as an accredited certification body to conduct the auditing process and certify product application. In 2022, WISE started its sourcing operation in Southeast Asia and Middles East for the markets in Europe and Great Britain. In 2023, WISE recorded a revenue of US$373,676 mainly from the sale of healthcare products to the Malaysia markets. In 2024, WISE is expected to start the halal certification of manufacturers and farm producers.
In summary, the Company is currently focusing on the marketing and distribution of halal products, the manufacture and sale of nano coated plates for air filters and air purifiers, operating the Ouction digital asset marketplace, manufacture and sale of switchable glass and the trading of new energy products.
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IMTE Products and Services
Switchable Glass Products
In September 2022, the Company completed its sale of its electronic glass business in China as part of the Company’s strategy to exit from China. After the disposal the Company continues with its plan to have 2 lamination lines with capabilities to produce annually about 160,000 m2 of laminated glass. The switchable glass is a new material that can be used for many applications including the real estate industry for both external and internal walls for new buildings and homes. The real estate and construction industry in the growing markets in Asia, Middle East and the USA are expected to use more energy saving materials like our energy saving switchable glass which are suitable for environmental buildings/homes of tomorrow.
Buildings today are built with windows for aesthetic purposes and to allow for natural light and outside views. However, normal glass has two significant drawbacks in letting the heat and the glare from sunlight to come directly into the building. To compensate for this, we use blinds and curtains to shield us from these uncomfortable occurrences. Heat entering the buildings requires more energy to cool the internal environment, normally the use of air conditioner which is detrimental to the environment and costly to the building owner.
Our laminated switchable and energy saving glass can provide more natural light and outdoor views while minimizing heat and glare. This is achieved by adjusting the tinting and transparency in the glass (from transparent to opaque states, and vice versa) automatically by the use of sensors in determining the amount of sunlight to allow into the interior of the building.
Our lamination process is to laminate our partner’s proprietary PLDC film between the glass to enable the glass to go from transparent and opaque, and vice versa. In the near future, we will also develop sensors to operate and manage each switchable glass to optimize energy savings and customer experience.
Our energy saving glass uses electrochromic film technology from our supplier, Nextglass Technologies Corp. Electrochromic film is the phenomenon by which light transmission through a transparent material, changes when an electrical voltage is applied to it. Our energy saving glass can modulate ultraviolet, visible and infrared light simultaneously and can block more than 99% of solar radiation and achieve reduced energy consumption. This ability to control the transmission of light enables us to automatically control the amount of heat and glare in a building.
Our Advantages
Our switchable glass and energy saving glass provides multiple benefits to users and building owners.
| ● | Sustainability and Energy Efficiency: Our switchable glass reduces energy usage in buildings by blocking heat from entering buildings and thus reducing the energy required to cool buildings. Our switchable glass also helps bring in natural light reducing the daytime lighting energy requirements. |
| ● | Improved User Experience: Our energy saving glass will allow users to work closely to the glass/windows without the feeling of discomfort from heat and glare coming through the glass. Our energy saving windows can control the sun light and the heat from coming into the building for the comfort of the occupants. |
| ● | Cost savings from switchable glass saves us from putting up blinds or curtains and reduce the ongoing maintenance costs for the property owner. |
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Market Opportunities
We believe that the market for switchable and energy saving glass will include internal and external walls and, other applications for privacy walls/windows such as in hospitals and offices. The demand for energy efficient buildings in Asia, Middle East, and the United States are growing with the support of government incentives in certain markets.
Our Customer
We are working with our partner Nextglass to subcontract the manufacturing and to sell laminated glass to customers in the growing markets in Asia, Middle East and the United States.
Our Competition
As we are working towards a subcontract arrangement at this moment, our competition is with other manufacturers of switchable glass. We are working with our partner to allow us to enter the market directly.
Growth Strategies
We are working on an arrangement to be able to enter select markets directly in Asia, Middle East and the United States. We will then introduce the energy saving glass to the real estate industry participants i.e. developers and architects of the advantages of our switchable and energy saving glass products. We will also seek to expand the usage of our switchable glass to provide internal privacy walls such as in offices and hotels. The growth in the use of switchable and energy saving glass is expected to be in applications where cost savings and privacy consideration in which glass is used as a barrier to the outside environment.
Nano-coated Plate Filter Products
In August 2020, the Company purchased equipment to manufacture nano-coated plate filters using a new technology for air and water filters. These filters provide better clean air and eliminate small particle pollutants in the air for large indoor meeting places and in closed environment where the air is circulated i.e. trains, taxi, subways, buses, cruise ships, etc.
The current technology of Plasma-Enhanced Chemical Vapor Deposition (PECVD) is too expensive and causes emission of toxic material. However, we are using a new PECVD technology, patent owned by our Korea partner, that manufactures the product at a much lower costs than the traditional PECVD technology and the process does not emit toxic material in the manufacturing process. The technology we use is superior in performance and less costly to produce.
What is Plasma-Enhanced Chemical Vapor Deposition
In PECVD, one or more gaseous reactants are used to form a solid insulating or conducting layer on the surface of a wafer. This layer is then enhanced by the use of a vapor containing electrically-charged particles or plasma, at lower temperatures.
PECVD processing enables deposition at lower temperatures. A plasma is formed from the gaseous chemicals in a reaction chamber. In contrast to traditional Chemical Vapor Deposition, where higher temperature is used to cause reactions, in PECVD the plasma provides the energy needed to cause the reaction, which means that it can be done at a lower temperature.
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The positive effect of photo catalytic air purification and sterilization are:
| ● | Eliminating all kinds of particles. |
| ● | Removing odors. |
| ● | Eliminating cigarette smoke and carcinogens. |
| ● | Removing VOCs contained in the dust. |
| ● | Increasing negative ions and oxygen in the close environment will increase. |
| ● | Eliminating contact with allergen inducing substances and have the effect of allergy treatment. |
We have started limited manufacturing and selling the air filter plates product in 2020. We have also completed our own proprietary design of a family of air purifier products in 2022. Due to the COVID-19 pandemic and the effect of restarting the operation, and the integrated chip shortage worldwide, the distribution and manufacturing of our products was delayed to 2024. We plan to market our generation 2 air filter/purifiers in Korea, United States, Europe and countries in Asia. The initial market response to our purifiers has been very positive based on feedback from potential brand distributors, and we expect to secure orders in 2024, once the manufacturer has been secured.
Our nano-coated plate products eliminate particles, eliminate germs and viruses, eliminate micro molecules that are harmful to human body and odors in the air. We have sent the product to testing labs in Korea to certify our air filters eliminate particles in the air. With such test results we believe that we will receive many more enquiries and sales orders. In 2023, we focused on our roll out and marketing strategies, and the search of a qualified manufacturer which is still in progress. After we enter into a manufacturing agreement then we will seek to sell our products in Korea, United States and countries in Asia.
Our sales strategy is to appoint distributors and or channel partners for certain territories and countries while for other markets we will sell direct to consumers online to build our own customer base and branding. We will also seek manufacturing and distribution partners as part of our growth strategy.
Our product strategy is to build a product line catering to all price points. We may invest in more designs for specific markets and applications such as air purifiers for baby care, aged care, and healthcare environments. As our air filters/purifiers are designed to be mobile for personal use, there are many applications where users are in confined space such as travelers on trains or buses.
Going forward, we will look at using this technology to manufacture water filters for the home, and for the food sanitary water treatment industries.
Internet of Things (“IoT”) Products
IMTE will be focusing on IoT products as one of the core businesses to be engaged in the future. In February 2021, the Company took a strategic 15% stake in an ASX company Oakridge International Limited, a company engaged in the business of IoT and healthcare technologies to assisted healthcare, age homes and self-care homes. In 2022, the Company disposed the investment in Oakridge to focus on working directly on IoT projects or operations.
The Company will continue to seek opportunities to invest in IoT technologies and bringing these technologies to Europe, North America and Australia markets.
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NFT Trading Marketplace
We have set up our NFT online trading presence named Ouction at www.ouction.io. This platform is an interactive experiencing solution designed with dynamic image cryptographic verification technology which will serve as a bridge for O2O (Online to Offline) transaction. This will enable the Ouction platform to not only verify virtual (digital) asset transactions, but also provide encryption and Blockchain notarized digital certificates of physical assets for a fairer and more credible platform trading experience to e-commerce companies and their users.
In 2022, the Ouction marketplace platform was set up and in line with its strategy, it began to sell high value premium products. This was met with mixed results due to travel restrictions of Covid 19 in Asia and the economic effect on consumers on the war in Ukraine. In 2023, we focused on our roll out and marketing strategies, and the restart of the operation after Covid 19. In 2024, the Company will seek to promote and attract more users to the Ouction platform and securing more premium and digital products in art and pop culture to be promoted on our Ouction platform.
Halal Certification and Products
We will be developing the business of halal products and services through our subsidiary World Integrated Supply Ecosystem Sdn. Bhd. (“WISE”) based in Malaysia. WISE’s long-term strategy is to build a global supply chain for halal products on a secure digital marketplace for growers, producers and traders. WISE will focus on its business of the provision of halal certification to qualified businesses/operations, the establishment halal products supply chain, and sale of Halal products. However due to the COVID-19 pandemic and the quarantine and restriction on travel in Malaysia, Hong Kong and China in 2022, we were not able to implement halal certification in the target markets of Southeast Asia and China. The demand for halal certification by food manufacturers and producers in Asia has been very strong. In early 2023 travel and quarantine restrictions were lifted in China and we expect to launch this segment of our business to pursue customers and suppliers in China.
In 2022, WISE signed a distribution agreement with a Paris, France based distributor to distribute our halal products. We started selling our products in France and United Kingdom in second half of 2022 but it was more difficult in 2023 to restart the operation after Covid 19. In 2024, WISE will need to raise additional funds to finalize a cooperation with a wholesaler in UK for its distribution and sales operation for the London metropolitan market. In Asia, to further expand our business operations, we are working with a network marketing company in Malaysia to sell our healthcare products.
In 2023, we focused on selling in Malaysia to secure a stable operation base.
In 2024, we will seek to cooperate with manufacturers / producers in Asia to strengthen our Halal product offerings for the European, UK, Asia and the Middle East markets. In addition, we will also seek expand to the North America markets, as opportunities arise, to further expand our halal network and expand our healthcare products.
New Energy Products
In 2023, we acquired Teko Energy Pty Ltd (now renamed as Itana Energy Pty Ltd “IEPL”), an investment holding company and its 50% subsidiary Admiral Energy Corporation Pty Ltd (“AEC”) which has a joint venture agreement with Admiral Global DMCC, a company incorporated in Dubai, United Arab Emirates. AEC is in the business of marketing, promoting and distributing new energy products including new energy storage solutions, new energy charging stations and new energy vehicles under the brand “Admiral Energy” in the territories of Australia, New Zealand, China (including Hong Kong, Taiwan and Macau), South Korea, Japan, Vietnam, Cambodia, Thailand, Malaysia, Indonesia, Singapore, Laos, Myanmar, and the Philippines.
In 2023 after we acquired IEPL we focused on selecting the markets and products for the markets in Asia Pacific. We plan to commence the sales operation of new energy products in 2024, subject to adequate available resources in the Company, to roll out the operation.
Future Developments
The focus of the Group is to continue to develop its businesses in switchable glass, nano-coated plate filters, IoT products, halal certification process and sale of halal products, operating a digital asset marketplace platform and the trading of new energy products. We have experienced significant losses in the past 3 years and the Group intends to build on its businesses and revenue base in 2024.
The implementation of the future business plans depends on adequate capital being available to the Group. The Company will be reviewing potential acquisitions and or strategic partnerships /co-operations that can add value to the Group. Management will also seek synergistic acquisitions to build revenue and bring in resources to complement and to supplement our internal capabilities to become a well-managed and fast-growing company.
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Market and Industry Analysis
Nano-coated plate filter
In the post pandemic period, people are still weary of the recurrence of new virus. A product like our nano-coated plate air filters is expected to be a popular product that can filter particles in the air for people and the healthcare industries.
Switchable glass
The market for switchable glass in Asia, Middle East and the USA is expected to grow as government push for more energy saving and environmentally friendly solutions. Switchable glass will reduce the amount of heat and glare in buildings, requiring less energy to cool its interiors and have less carbon footprint.
Halal products
The market for halal products is growing in Asia and Europe. In Asia the increase in securing food prepared in the Halal method is becoming more difficult. In Europe due to the influx of immigrants from Middle East, the demand for Halal products has grown and presents a real opportunity to sell our products into this market.
New energy products
The demand for new energy products has grown recently across Asia and globally due to the push to become carbon neutral and the switch from carbon-based energy i.e. gasoline to renewable energy i.e. solar energy. In Asia, there are still electricity shortages such that battery storage is essential to bridge electricity outage. Energy storage products are needed to store energy collected from solar panels and wind farms in countries such as Australia, Malaysia, and the Philippines.
Sourcing and Manufacturing
For certain products such as Halal, new energy products or IoT products, we will source manufacturers to supply us the products for sale. However, for nano-coated plates and lamination of switchable glass, we will manufacture these products for sale.
Marketing, Distribution and Sales
We plan to build our own brands for our air purifier, Halal and switchable glass products when we launch our products to market.
Sources and Availability of Raw Materials and Principal Suppliers
Other than our lamination line for switchable glass, our source and availability of raw materials is not dependent on a principal supplier. For the lamination operation we are reliant on our film manufacturer to supply film to be used in the lamination process. To mitigate the situation, we will place sufficient order of this raw material so that there will be no delay in our manufacturing process.
Inventory, Operating Capital and Seasonality
Our raw material inventory levels are expected to be modest relative to sales of our manufactured products. Our policy is to manufacture to order. Thus, we do not expect to keep much inventory other than key components, unless under extraneous circumstances such as material shortage i.e. chip shortages or expected prolonged manufacturing interruption i.e. labor strike.
We will monitor our operating capital to meet our obligations as they come due. We monitor our operating budgets in view of our operating cash flow requirements.
We do not expect any seasonality to our business other than normally expected in the consumer business where there is a general let down in the first quarter of each year after the Christmas season.
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Dependence on Major Customers
In 2023, we had limited sales. Our strategy going forward is to appoint distributors to sell our products and services, and we will maintain a small sales and marketing team in order to keep our operating costs low. The distributors will have their own major customers, but consider as a whole, we are not dependent on only a few specific customers in order to derive sales as we build up our distributor network and customer base.
Research and Developments
We will rely on our partners and or third parties on development of new technologies in nano-coated plates and lamination lines for switchable glass.
Intellectual Property
We rely on unpatented trade secrets, know-how and other non-confidential information as well as our proprietary technological innovation and expertise that are protected in part by confidentiality and invention assignment agreements with our employees, advisors, consultants and associates.
Patent matters in electronics industry are highly uncertain and involve complex legal and factual questions. The availability and breadth of claims allowed in electronics patents cannot be predicted. Statutory differences in patentable subject matter may limit the protection the Company can obtain on some or all of its licensed inventions or prevent us from obtaining patent protection either of which could harm our business, financial condition and results of operations. Since patent applications are not published until at least 18 months from their first filing date and the publication of discoveries in the scientific literature often lags behind actual discoveries, we cannot be certain that we, or any of our licensors, were the first creator of inventions covered by pending patent applications, or that we or our licensors, were the first to file patent applications for such inventions. Additionally, the grant and enforceability of a patent is dependent on a number of factors that may vary between jurisdictions. These factors may include the novelty of the invention, the requirement that the invention not be obvious in the light of prior art (including prior use or publication of the invention), the utility of the invention, and the extent to which the patent clearly describes the best method of working the invention. In short, this means that claims granted in various territories may vary and thereby influence commercial outcomes.
While we intend to seek patent protection for our products and technologies, we cannot be certain that any of the pending or future patent applications filed by the Company, or licensed to us, will be approved, or that IMTE will develop additional proprietary products or processes that are patentable or that we will be able to license any other patentable products or processes. IMTE cannot be certain that others will not independently develop similar products or processes, duplicate any of the products or processes developed or being developed by the Company or licensed to us, or design around the patents owned or licensed by us, or that any patents owned or licensed by us will provide us with competitive advantages.
Furthermore, we cannot be certain that patents held by third parties will not prevent the commercialization of products incorporating the technology developed by us or licensed to us, or that third parties will not challenge or seek to narrow, invalidate or circumvent any of the issued, pending or future patents owned or licensed by us.
Our commercial success will also depend, in part, on our ability to avoid infringement of patents issued to others. If a court determines that we were infringing any third-party patents, we could be required to pay damages, alter our products or processes, obtain licenses or cease certain activities. We cannot be certain that the licenses required under patents held by third parties would be made available on terms acceptable to us or at all. To the extent that we are unable to obtain such licenses, we could be foreclosed from the development, export, manufacture or commercialization of the product requiring such license or encounter delays in product introductions while we attempt to design around such patents, and any of these circumstances could have a material adverse effect on our business, financial condition and results of operations. We may have to resort to litigation to enforce any patents issued or licensed to us or to determine the scope and validity of third-party proprietary rights. Such litigation could result in substantial costs and diversion of effort by us. We may have to participate in opposition proceedings before the relevant patent office, or in interference proceedings declared by the United States Patent and Trademark Office, to determine the priority of invention for patent applications filed by competitors. Any such litigation interference or opposition proceeding, regardless of outcome, could be expensive and time consuming, and adverse determinations in any such proceedings could prevent us from developing, manufacturing or commercializing our products and could have a material adverse effect on our business, financial condition and results of operations.
42
Material Contracts Related to Intellectual Property and Commercialization Rights
None.
Government Regulations
The market for our lamination glass, nano-coated plate filter product and halal products are affected by a wide range of U.S. and international regulations, including regulations related to taxation and import-export controls, which could negatively impact the market for these products we sell or decrease potential profits to the Company. Pursuant to the Tariff Act of 1930, as amended, the Trade Act of 1974 and regulations promulgated there under, the United States government charges tariff duties, excess charges, assessments and penalties on many imports. These regulations are subject to continuous change and revision by government agencies and by action of the United States Trade Representative and may have the effect of increasing the cost of goods purchased by the Company or limiting quantities of goods available to the Company from our overseas suppliers.
Costs and Effects of Compliance with Environmental Laws; Environmental Matters
We are not aware of any material costs or impacts on our business related to compliance with federal, state or local environmental laws regarding the products we intend to market and sell.
Insurance
We do not carry any kind of product liability or other business insurance.
Legal and Administrative Proceedings
We are not party to any material legal or administrative proceedings, and we are not aware of any threatened material legal or administrative proceedings against us other than we are not in compliance with the Nasdaq Listing Rule 5250(c)(1) for continued listing due to its failure to timely file its annual report on Form 20-F for the year ended December 31, 2023 with the SEC.
Under the Nasdaq Listing Rule 5810(c)(2)(F)(i), the Company has until July 16, 2024 (that is, 60 calendar days from the date of the Deficiency Letter received on May 17, 2023) to submit to Nasdaq a plan (the “Compliance Plan”) to regain compliance with the Nasdaq Listing Rules. The Company has submitted a plan of Compliance on July 16, 2024 and on July 31, 2024 to file the Annual Report by in August 2024. Under the Nasdaq Listing Rule 5810(c)(2)(F)(ii), if Nasdaq accepts the Compliance Plan, Nasdaq can grant the Company an exception until November 11, 2024 (that is, up to 180 calendar days from the extended due date of the Annual Report) to regain compliance. However, if it appears to Nasdaq that we will be unable to cure the deficiency, or if we are not otherwise eligible for the additional cure period, Nasdaq will provide notice that our Ordinary Shares will be subject to delisting.
On September 2, 2024 the Company received a notice from Australia Securities & Investment Commission (“ASIC”) that it has contravened section 319, 320 and 201A of the Corporations Act 2001 which relates to the lodging of the Annal Report, Half Yearly Report with ASIC and having 2 ordinarily Australia resident directors during the period April 1, 2021 to now. The Company has supplied the requested information under this notice.
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C. Organizational Structure
During the year and as at December 31, 2023, we have the following material subsidiaries and their corporate details and business activities are listed below:
| Subsidiary Name | Place of Incorporation | % held | Business scope | |||
| CIMC Marketing Pty Limited | Australia | 100% (Direct) | Management services & Investment holding | |||
| IMTE Asia Limited | Hong Kong | 100% (Direct) | Dormant | |||
| IMTE Malaysia Sdn. Bhd. | Malaysia | 100% (Direct) | Administrative services and sale of products | |||
| Itana Holdings Limited | Canada | 100% (Direct) | Investment holding | |||
| Merit Stone Limited | British Virgin Islands | 100% (Direct) | Investment holding | |||
| Ohho Technologies Limited | Canada | 51% (Direct) | Sale of filter plates and air filter products | |||
| Ouction Digital Limited | Canada | 60% (Direct) | Provision of digital platform and sale of digital asset | |||
| World Integrated Supply Ecosystem Sdn. Bhd. | Malaysia | 60% (Indirect) | Sale of Halal products | |||
| Itana Energy Pty Ltd (formerly Teko Energy Pty Ltd)* | Australia | 100% (direct) | Investment holding | |||
| Admiral Energy Pty Ltd * | Australia | 50% (Indirect) | Marketing and sale of new energy products and solutions |
| * | Acquired during the year. |
D. Property, Plant and Equipment
The Company has its registered office in Sydney, Australia, and its principal and main operating office is located in Kuala Lumpur, Malaysia. In Australia, the Company has its registered office as part of the services provided by its company secretary and such service costs A$1,000 per month.
The Company rented a 299 square meter office in Kuala Lumpur, Malaysia to serve as our corporate headquarter and a portion of the office of about 150 square meters is used for our Halal operation. The lease on this premise is for $1,088 per month and for a period of two years to October 2024.
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ITEM 4A. UNRESOLVED STAFF COMMENTS
None.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The following discussion and analysis of the financial condition and results of operations of IMTE should be read in conjunction with the audited consolidated financial statements as at and for the fiscal year ended December 31, 2023, as at and for the year ended December 31, 2022, and for the year ended December 31, 2021, together with the notes thereto included elsewhere in this Annual Report. The financial information contained in this Annual Report is derived from the financial statements, which were prepared in accordance with IFRS.
| A. | Operating Results |
IMTE is an Australian incorporated company and it is in the business of trading in Halal products, the manufacture and sale of nano coated plates for filters, the trading of luxury products on its digital assets trading platform, sale of new energy products and solutions, and the manufacturing and sale of electronic glass. In 2023, the Company focused in the Halal and smartglass business laying the foundation for operations in Malaysia.
For a description of the milestones that we have achieved since inception and through to the date of this report, see “Item 4. Information on the Company – A. History and Development of the Company.”
Overview
Prior to 2020, we were an early-stage company in the development of 3D autostereoscopic products and services. We recorded significant losses in the operation especially during the COVID-19 pandemic in early 2019. In May 2020 when there was no sign that the pandemic was ending soon, the Group restructured its operation by disposing its R&D and test manufacturing operation for 3D autostereoscopic products, and focused only on the marketing and sales of these 3D products to reduce our administrative and operating costs. In 2020 the Company started new businesses in nano-coated plate filter products, financial analytical research and switchable glass to provide a broader revenue base for the future.
45
In 2021, the pandemic continued to affect the development of our nano-coated plate filter, financial analytical research and switchable glass operation. The quarantine and restriction on travel and constant re-start / stop of the economy caused delays in these businesses. In late 2021 with no indication of the end of the pandemic, we disposed the marketing and sales of 3D autostereoscopic products and services operation to contain our costs.
In January 2022, in order to broaden our revenue base, the Company announced entering into two other businesses namely: (i) the provision of certification halal products and processes, and the sale of halal products and (ii) the setting up of a marketplace (Ouction) for trading in digital assets.
Due to Covid 19 restrictive environment, the Company developed its businesses cautiously in 2022. For our halal business, we appointed distributors in London, Paris, and Kuala Lumpur and recorded sales of A$526,807 from this business unit in 2022. Although the other business units did not bring in any revenue, we continue to make strides to develop the other businesses.
In early 2022, due to the geopolitical issues between the United States and China, the Board decided to divest its businesses operation and investments in Hong Kong and China, and to shift the focus our investments and operations to Malaysia and Europe, including relocating our corporate headquarters and main business operations and manpower to Kuala Lumpur. In early 2022, the equity interest of our investment in our financial analytical research investment decreased to 23.96%. Accordingly, for accounting purposes, we were deemed to have sold this investment and we could not consolidate this investment as we no longer controlled this investment. Instead, we equity account for this investment as an Investment in Associated Company in the financial accounts of the Company. By September 2022, we disposed substantially all our Hong Kong and China operation, which was mainly our switchable glass investment in China and Hong Kong. We also transferred our NFT operation to Kuala Lumpur in the short term with a view of setting up the digital assets operation in Singapore or Dubai. Today, we have no operation in Hong Kong and China.
In 2023, we continued to develop our halal and smartglass business. We streamlined our halal business and started to cooperate with a national direct sales company in Malaysia with over 10,000 sales agents. We have developed this working relationship in 2023 and we expect to be able to grow our halal business through this direct sales network. Also, we have cultivated new relationships in 2023 with suppliers of both halal and foodstuff products in Southeast Asia and China that can provide a selection of products at competitive prices. We look at developing this market in 2024.
For the smartglass business, we have identified a contract manufacturer in Malaysia to manufacture our smartglass products. We will use this contract manufacturer until we can set up our own manufacturing plant in Malaysia. Since our operating base is in Malaysia and our initial markets will in Southeast Asia and Middle East, we plan to set up our first lamination plant in Malaysia housing 2 lamination lines. We have also placed deposits for an additional 3 lines to be set up in Southeast Asia or Middle East, depending on the market demands.
Going forward in 2024, the Company seeks to continue to develop its businesses in Halal and smartglass businesses in Malaysia, subject to available resources. For Halal business, we will focus on developing a network of suppliers of foodstuff and healthcare products, both halal and non-halal products. We will also seek to work with our direct sales customer to push our products into their direct sales network. With the right product and price point, we can make significant sales through this channel. For the smartglass business, we plan to sign up with a contract manufacturer to manufacture our lamination glass until we can set up our own factory. As for the other businesses, we will develop them cautiously and when opportunities arise.
We will continue to seek investment opportunities in industries and businesses synergistic to our businesses and in growth industries such as in new energy and new materials, to increase Shareholders’ value.
For the past two years, we have funded our operations primarily through the sale of equity securities in the Company and issuances of convertible notes and from operation cashflows. For details of the business overview, see “Item 4. Information on the Company – B. Business Overview.”
Recent Acquisitions
See “Item 4. Information on the Company – A. History and Development of the Company.”
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Results of Operations
The following table sets forth our condensed consolidated statements of operations by amount and as a percentage of our total operating revenues for the periods indicated:
| For the years ended December 31, | ||||||||||||||||||||||||
| 2023 | 2022 | 2021 | ||||||||||||||||||||||
| Amount $ | % of Net Revenues | Amount $ | % of Net Revenues | Amount $ | % of Net Revenues | |||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||
| Products | 373,676 | 100.0 | 364,405 | 100.0 | 144,311 | 100.0 | ||||||||||||||||||
| Cost and expenses | ||||||||||||||||||||||||
| Cost of sales | 261,566 | 70.0 | 475,546 | 130.5 | 111,680 | 77.4 | ||||||||||||||||||
| Employee benefit expenses | 517,547 | 138.5 | 1,011,992 | 277.7 | 1,206,065 | 835.7 | ||||||||||||||||||
| Financial costs | 418,622 | 112.0 | 633,884 | 174.0 | 1,495,288 | 1,036.2 | ||||||||||||||||||
| Depreciation and amortization expenses | 919,465 | 246.1 | 1,373,141 | 376.8 | 991,512 | 687.1 | ||||||||||||||||||
| Professional and consulting expenses | 1,242,743 | 332.6 | 4,311,514 | 1,183.2 | 1,775,586 | 1,230.4 | ||||||||||||||||||
| Travel and accommodation expenses | 5,932 | 1.6 | 110,526 | 30.3 | 68,291 | 47.3 | ||||||||||||||||||
| Other expenses | 19,280,901 | 5,159.8 | 1,492,470 | 409.6 | 480,013 | 332.6 | ||||||||||||||||||
| Other gains | (14,885 | ) | (4.0 | ) | (98,144 | ) | (26.9 | ) | (1,256,730 | ) | (870.8 | ) | ||||||||||||
| (Gain)/ loss on fair value change in warrant | (2,396,291 | ) | (641.3 | ) | 2,408,271 | 660.9 | - | - | ||||||||||||||||
| Share of losses of associates | 175,507 | 47.0 | 223,354 | 61.3 | - | - | ||||||||||||||||||
| Total cost and expenses | 20,411,107 | 5,462.2 | 11,942,554 | 3,277.3 | 4,871,705 | 3,375.8 | ||||||||||||||||||
| Operating loss before income tax | (20,037,431 | ) | (5,362.2 | ) | (11,578,149 | ) | (3,177.3 | ) | (4,727,394 | ) | (3,275.8 | ) | ||||||||||||
| Non-operating income | ||||||||||||||||||||||||
| Interest income | 4 | 0.0 | 392,622 | 107.7 | 14,096 | 9.8 | ||||||||||||||||||
| Gain/(loss) on disposal of financial assets at fair value through profit or loss | 1,677,178 | 448.8 | 484,361 | 132.9 | (629,564 | ) | (436.3 | ) | ||||||||||||||||
| Loss on disposal of investment in equity instrument | - | - | (202,363 | ) | (55.5 | ) | - | - | ||||||||||||||||
| Other income | 10,137 | 2.7 | 1,990 | 0.5 | 250,944 | 173.9 | ||||||||||||||||||
| Net loss before income taxes | (18,350,112 | ) | (4,605.3 | ) | (10,901,539 | ) | (2,991.6 | ) | (5,091,918 | ) | (3,528.4 | ) | ||||||||||||
| Income tax expense | - | - | - | - | - | - | ||||||||||||||||||
| Net loss | (18,350,112 | ) | (4,605.3 | ) | (10,901,539 | ) | (2,991.6 | ) | (5,091,918 | ) | (3,528.4 | ) | ||||||||||||
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Comparison of Year Ended December 31, 2023 to Year Ended December 31, 2022
Revenue
The following table sets forth revenues by sources and the percentage of our total operating revenues for the period indicated:
| For the years ended December 31, | ||||||||||||||||
| 2023 | 2022 | |||||||||||||||
| Amount $ | % of Net Revenues | Amount $ | % of Net Revenues | |||||||||||||
| Products | ||||||||||||||||
| Halal products | 373,676 | 100.0 | 364,405 | 100.0 | ||||||||||||
Revenues. The revenue from operating activities for the year ended December 31, 2023 was $373,676 as compared to the prior year of $364,405, an increase of $9,271 or 2.54% from the prior year. The main source of revenue for the year was the sale of Halal products. The growth in sales compared to the prior year was primarily attributed to the stable nature of the business operations. In 2024, we will continue to put more emphasis on sales of Halal products; but we also expect to receive fees from the digital assets marketplace.
Cost of Sales. The following table sets forth cost of sales by sources of revenues by amount and as a percentage of net revenues for the years indicated:
| Years ended December 31, | ||||||||||||||||
| 2023 | 2022 | |||||||||||||||
| Amount $ | % of Net Revenues | Amount $ | % of Net Revenues | |||||||||||||
| Products | 261,566 | 70.0 | 475,546 | 130.5 | ||||||||||||
Cost of sales decreased by 45.0% to $261,566 in 2023 from $475,546 in 2022, which was primarily due to the sale of our products in Malaysia in 2023 rather than to Europe in 2022 where the costs of goods were higher due to the unexpected market dynamics derived from the conflict in Ukraine and our penetration strategy in Europe which resulted in higher cost of sales relative to sales in 2022.
Gross Profit and Gross Margin. Gross profit increased from gross loss of $111,141 in 2022 to a gross profit of $112,110 in 2023. This favorable shift was a result the halal products delivering about 30% gross margin in 2023 whereas in 2022, the gross loss was the result of several contributing factors, such as a high volume of 2022 purchases resulting in losses and unexpected market pricing dynamics derived from the conflict in Ukraine. Furthermore, the adoption of a penetration pricing strategy to establish and stimulate demand of our products in the European markets.
Interest income.
Interest income decrease from $392,622 in 2022 to $4 in 2023 mainly due to no interest income from loan, associate and former companies were written off during the year.
Gain on fair value change in derivate financial instruments.
For the year ended December 31, 2023, the fair value change of derivative financial instrument relating to convertible promissory notes was a net gain of $1,677,178 as compared to $484,361 in the prior year.
Loss on disposal of equity investment in equity investments.
In 2022, the loss on disposal of equity investment in Oakridge International Limited was $202,363.
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Other income
Other income increased from $1,990 in 2022 to $10,137 in 2023. In 2023, other income was mainly the waiver of debts.
Expenses
The operating expenses for the year ended December 31, 2023 was $20,411,107 as compared to the prior year of $11,942,554. The increase of $8,468,553 in total operating expenses was mainly attributable to the following:
| - | A decrease of $213,980 in cost of sales from $475,546 in 2022 to $261,566 in 2023 as discussed above; | |
| - | A decrease of $494,445 in employee benefit expenses from $1,011,992 in 2022 to $517,547 in 2023, which was primarily due to decreased in number of staff in 2023 as compared to 2022; |
| - | A decrease of $110,120 in finance costs from $633,884 in 2022 to $523,764 in 2023 which was mainly attributable to a decrease in interest expense charges on decreased lease assets; |
| - | A decrease of $453,676 in depreciation and amortization expenses from $1,373,141 in 2022 to $919,465 in 2023 as the result of the sale of certain fixed and leased assets in 2022. |
| - | A decrease of $3,068,771 in professional and consulting expenses from $4,311,514 in 2022 to $1,242,743 in 2023 resulting from the decrease in corporate activities thus lower legal and professional fees in 2023 and the decrease in consulting services; |
| - | An increase of $17,788,431 in other expenses of $1,492,470 in 2022 to $19,280,901 in 2023 was mainly attributable to the increase in the provision for equipment deposits, loan receivable, other receivable, and other current assets. |
| - | A decrease of $83,259 in other gains from $98,144 in 2022 to $14,885 in 2023 was mainly attributable to the net effect of a decrease in foreign exchange loss expenses and disposal and deemed disposal of subsidiaries in 2022. |
| - | A decrease of $4,804,562 in gain on fair value change in warrants from loss $2,408,271 in 2022 to gain $2,396,291 in 2023 resulting from revaluation of the warrants; |
| - | A decrease of $47,847 in share of loss of associate company in Greifenberg Digital Limited of $223,354 in 2022 to $175,507 in 2023. |
Income tax
No income tax expenses were recognized during the year ended December 31, 2023.
Net Profit (Loss)
We recorded a net loss of $18,350,112 for the year ended December 31, 2023 as compared to a net loss of $10,901,539 recorded for the year ended December 31, 2022.
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Comparison of Year Ended December 31, 2022 to Year Ended December 31, 2021
Revenue
The following table sets forth revenues by sources and the percentage of our total operating revenues for the period indicated:
| For the years ended December 31, | ||||||||||||||||
| 2022 | 2021 | |||||||||||||||
| Amount $ | % of Net Revenues | Amount $ | % of Net Revenues | |||||||||||||
| Products | ||||||||||||||||
| Halal products | 364,405 | 100 | - | - | ||||||||||||
| Displays | - | - | 2,974 | 2.1 | ||||||||||||
| Air-filter products | - | - | 141,337 | 97.9 | ||||||||||||
| Total operating revenues | 364,405 | 100 | 144,311 | 100.00 | ||||||||||||
Revenues. The revenue from operating activities for the year ended December 31, 2022 was $364,405 as compared to the prior year of $144,311, an increase of $220,094 or 152.5% from the prior year. The revenue for the year ended December 31, 2022 was mainly from the sale of Halal products. The sales increased as compared to the prior year was mainly due to the increase in the Halal products as compared to the sales of display products in 2021. As the restriction on COVID-19 was released during the year, the sales of Halal products increased in Europe and Malaysia. In 2023, we will continue to put more emphasis on sales of Halal products; but we also expect to receive revenue from nano-coated plate filter products and fees from the digital assets marketplace.
Cost of Sales. The following table sets forth cost of sales by sources of revenues by amount and as a percentage of net revenues for the years indicated:
| Years ended December 31, | ||||||||||||||||
| 2022 | 2021 | |||||||||||||||
| Amount $ | % of Net Revenues | Amount $ | % of Net Revenues | |||||||||||||
| Products | 475,546 | 130.5 | 111,680 | 77.4 | ||||||||||||
| Services | - | - | - | - | ||||||||||||
| Total cost of sales | 475,546 | 130.5 | 111,680 | 77.4 | ||||||||||||
Cost of sales increased by 325.8% to $475,546 in 2022 from $111,680 in 2021, which was primarily due to the corresponding increase in sales as compared with the year in 2021.
Gross Profit and Gross Margin. Gross profit decreased from gross profit of $32,631 in 2021 to a gross loss of $111,141 in 2022. The decrease in gross margin from the prior year was due to different product mixes. In 2022, the gross loss was mainly the result of the decline in the market price of Halal products due to the unforeseen market condition from the war in Ukraine and the use of penetration pricing policy to establish and to build demand for our products in the European markets. In addition, there were unexpected cost increases in transportation costs; and prices decreases due to i) delays in transportation and ii) fluctuation in foreign exchange, in particular the decrease in GBP eroding our sales price and margins.
Interest income.
Interest income increases from $14,096 in 2021 to $392,622 in 2022 mainly due to interest received from short term loans.
Loss on fair value change in derivate financial instruments.
For the year ended December 31, 2022, the fair value change of derivative financial instrument relating to convertible promissory notes was a gain of $629,564 as compared to a loss of $484,361 in the prior year.
Loss on disposal of equity investment in equity investments.
In 2022, the loss on disposal of equity investment in Oakridge International Limited was $202,363.
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Other income
Other income decreased from $250,944 in 2021 to $1,990 in 2022. In 2021, other income was mainly the underwriting fees received from our investment in Oakridge International Limited and waive of debts.
Expenses
The operating expenses for the year ended December 31, 2022 was $11,578,149 as compared to the prior year of $4,727,394 from the prior year. The increase of 6,850,755 in total operating expenses was mainly attributable to the following:
| - | An increase of $363,866 in cost of sales from $111,680 in 2021 to $475,546 in 2022 as discussed above; | |
| - | A decrease of $194,073 in employee benefit expenses from $1,206,065 in 2021 to $1,011,992 in 2022, which was primarily due to decreased in number of staffs in 2022 as a result of the group restructuring and the sale of the subsidiaries during the year; |
| - | An increase of $381,629 in depreciation and amortization expenses from $991,512 in 2021 to $1,373,141 in 2022 as the result of the depreciation expense for nano-filter equipment was depreciated for the full year, as compared to the depreciation expense in 2021 which was for a partial year; |
| - | An increase of $2,535,928 in professional and consulting expenses from $1,775,586 in 2021 to $4,311,514 in 2022 resulting from the increase in legal and professional fees relating to increase in corporate activities in 2022 and the increase in consulting services for halal business unit and consulting services for our executives; |
| - | A decrease of $861,404 in finance costs from $1,495,288 in 2021 to $633,884 in 2022 which was mainly attributable to a decrease in interest expense charges on convertible notes that were converted in 2022, as compared to interest charge in 2021 was for a full year; |
| - | An increase of $1,012,457 in other expenses of $480,013 in 2021 to $1,492,470 in 2022 was mainly attributable to the increase in the provision of inventory, allowance of bad debts and plant and equipment written off. |
| - | An increase of $1,158,586 in other gains from $1,256,730 in 2021 to $98,144 in 2022 was mainly attributable to the net effect of a decrease in foreign exchange loss expenses and the decrease in gain on disposal and deemed disposal of subsidiaries. |
| - | An increase of $2,408,271 in loss on fair value change in warrants in 2022; |
| - | An increase of $223,354 in share of loss of associate company in Greifenberg Digital Limited after it was accounted for on an equity basis rather than consolidated subsidiary in the prior year. |
Income tax
No income tax expenses were recognized during the year ended December 31, 2022.
Net Profit (Loss)
We recorded a net loss of $10,901,539 for the year ended December 31, 2022 as compared to a net loss of $5,091,918 recorded for the year ended December 31, 2021.
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New, Revised or Amending Accounting Standards and Interpretations
New standards and amendments to standards are effective for annual periods beginning after 1 January 2024 and earlier application is permitted; however, the Group has not early adopted them in preparing these Consolidated Financial Statements.
| New or Amended Standard Forthcoming requirements | Title of the Standard | Effective for Annual Periods Beginning on or After | ||
| Lease Liability in Sale and Leaseback | Amendments to IFRS 16 Leases | January 1,2024 | ||
| Classification of Liabilities as Current or Non-current | Amendments to IAS 1 Presentation of Financial Statements | January 1,2024 | ||
| Supplier Finance Arrangements | Amendments to IAS 7 and IFRS 7 | January 1,2025 | ||
| Lack of Exchangeability | Amendments to IAS 21 | January 1,2025 | ||
| Sale or Contribution of Assets between an Investor and its Associate or Joint Venture | Amendments to IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures | Available for optional adoption/effective date deferred indefinitely |
The amendments listed above did not have any impact on the amounts recognised in prior periods and are not expected to significantly affect the current or future periods.
B. Liquidity and Capital Resources
Since our inception, our operations have mainly been financed through the issuance of equity securities. Additional funding has come through shareholder advances and short-term borrowings. For the past 3 years, we have recorded losses of $18,350,112, $10,901,539 and $5,091,918 for the fiscal years ended December 31, 2023, 2022, and 2021 respectively.
Equity Issuances
The following table summarizes our issuance of Ordinary Shares for cash, from the conversion debts and share based payments. We did not issue shares for executive compensation in the last 3 fiscal years.
| Fiscal Year | Number of Shares | Net Proceeds | ||||||||
| (in $) | ||||||||||
| Share issuance in respect of payment to a consultant | 2021 | 2,051 | * | 74,100 | ||||||
| Share issuance for cash | 2021 | 279,523 | * | 12,160,400 | ||||||
| Share issuance in respect of payments to consultants | 2022 | 220,000 | * | 3,498,000 | ||||||
| Share issuance for cash | 2022 | 782,277 | * | 22,550,846 | ||||||
| Share issuance in respect of conversion of convertible notes | 2022 | 117,256 | * | 3,444,872 | ||||||
| Share issuance for cash | 2023 | 29,999 | * | 90,000 | ||||||
| Share issuance in respect of payment to a consultant | 2023 | 66,145 | * | 348,485 | ||||||
| Share issuance for cash | 2023 | 607,817 | 1,497,043 | |||||||
| Share issuance in respect of payments to consultants | 2023 | 114,116 | 228,232 | |||||||
| Share issuance in respect of acquisition of subsidiaries | 2023 | 300,000 | 750,000 | |||||||
| Share issuance in respect of conversion of convertible notes | 2023 | 240,000 | 600,000 | |||||||
| * | Adjusted for post share consolidation of 10 shares for 1 share on October 16, 2023. |
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Capital Requirements
As of December 31, 2023, we had total current assets of $3,690,314 which mainly consisted of $675,781 in cash and cash equivalents, $17,353 in other receivable, $2,996,964 in inventories, and $215 in other current assets. Our current liabilities on December 31, 2023 totaled $2,387,649 which mainly consisted of $926,669 in trade and other liabilities, $1,449,000 in derivatives in financial instruments and $11,980 in warrant liabilities. Our net current assets at December 31, 2023 was $1,302,665 as compared to of $13,786,224 at December 31, 2022. Our current cash and cash equivalents is insufficient to fund our capital expenditures in the next 12 months based on our budget, realization of our current assets, and forecasted revenue. We will be required to raise funds from the capital or debt markets in 2024 to roll out our business plans. If we are unable to raise additional capital when required or on acceptable terms or not realize our anticipated operating and sales plans, we may have to significantly delay, scale back or discontinue some, if not all, our operation operations.
Cash Flows
The following table summarizes our cash flows for the periods presented:
| Fiscal Year Ended December 31, | ||||||||||||
| 2023 | 2022 | 2021 | ||||||||||
| $ | $ | $ | ||||||||||
| Net cash provided by /(used in) operating activities | 2,840,058 | (17,183,849 | ) | (5,166,965 | ) | |||||||
| Net cash outflows in investing activities | (14,998,240 | ) | (15,083,437 | ) | (11,305,979 | ) | ||||||
| Net cash inflows by financing activities | 12,783,427 | 32,118,268 | 14,981,072 | |||||||||
| Net increase/(decrease) in cash and cash equivalents | 625,245 | (149,018 | ) | (1,491,872 | ) | |||||||
| Cash and cash equivalents at beginning of year | 50,536 | 199,554 | 1,691,426 | |||||||||
| Cash and cash equivalents at end of year | 675,781 | 50,536 | 199,554 | |||||||||
Net cash provided by /(used in) operating activities were $2,840,058, $(17,183,849), and $(5,166,965) during the years ended December 31, 2023, 2022 and 2021 respectively. Net cash inflows in operating activities during the year ended December 31, 2023, were mainly due the loss for the year and the net inflows from the changes in working capital from operations and the provision of receivables, deposits and other assets. For the year ended December 31, 2022, the net cash outflows in operating activities were mainly due to the loss for the year and the net outflows from the changes in working capital from operations. For the year ended December 31, 2021, the net cash outflows in operating activities were mainly due to the loss for the year and the net outflows from the changes in working capital from operations and the net gain from the sale of the 3D autostereoscopic business.
Net cash outflows in investing activities were $14,998,240, $15,083,437, and $11,305,979 for the years ended December 31, 2023, 2022 and 2021 respectively. In 2023, the net cash outflows in investing activities was mainly due to the deposits made for the lamination production lines. In 2022, the net cash outflows in investing activities were mainly due to the deposits made for the lamination production lines and the purchase of intangible assets. Finally, in 2021the net cash outflows in investment activities were mainly the deposit made in lamination production line, the purchase of intangible assets, the investment in financial assets and the rental of lamination factory.
Net cash inflows in financing activities were $12,783,427, $32,118,268, and $14,981,072 for the years ended December 31, 2023, 2022 and 2021 respectively. Net cash inflows in financing activities during the year ended December 31, 2023, were attributable to the issuance of shares, the net proceeds from issuance and repayment of convertible notes. Net cash inflows in financing activities during the year ended December 31, 2022, were attributable to the issuance of shares and convertible notes. Net cash inflows in financing activities during the year ended December 31, 2021 are attributable to the issuance of shares, the financing costs of the convertible note and the rental of the lamination factory.
We had net cash and bank balance of $675,781, $50,536, and $199,554 as at December 31, 2023, 2022 and 2021 respectively.
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C. Research and Development, Patents and Licenses
The Company did not conduct any research and development activities and incur no expenses for R&D in 2023 and 2022.
The Company has conducted research into formulation of credit models for our then financial research business in 2021. The financial research business was deemed disposed in 2022 and was accounted for as an investment in associated company.
D. Trend Information
We are still developing our business operations and it is not possible for us to predict with any degree of accuracy the outcome of our business in the future. Our operations are mainly dependent on further development and commercialization of our business and technologies.
E. [Reserved]
F. [Reserved]
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
| A. | Directors and Senior Management |
The following table sets forth our directors and senior management and the positions they held as of the date of this annual report on Form 20-F.
| Name | Position | |
| Mr. Hazran Mohamed (1) | Independent Non-Executive Director | |
| Mr. Muhammad Zubairy Bin Husain (2) | Independent Non-Executive Director | |
| Ms. Jannu Binti Babjan (3) | Independent Non-Executive Director | |
| Mr. John Ki Park (4) | Co- Chief Executive Officer | |
| Dato Mega Radzman Bin Megat Khairuddin (5) | Co- Chief Executive Officer | |
| Mohd Hazrol Bin Mohd Rosmey (6) | Interim Chief Financial Officer |
| (1) | Mr. Hazran Mohamed was appointed as the director on 4 July 2023. |
| (2) | Mr. Muhammad Zubairy Bin Husain was appointed as a director on 4 July 2023. |
| (3) | Ms. Jannu Binti Babjan was appointed as a director on 23 May 2024. |
| (4) | Mr. John Ki Park was appointed the co-chief executive officer on 23 November 2023. |
| (5) | Dato Megat Radzman Bin Megat Khairuddin was appointed as the chief executive officer on 5 May 2023. On 23 November 2023, his designation was changed to co-chief executive officer. |
| (6) | Mr. Mohd Hazrol Bin Mohd Rosmey was appointed the interim chief financial officer on 19 June 2023. |
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Mr. Hazran Mohamed, age 53, was appointed as an independent non-executive director of the Company on July 4, 2023. Mr. Mohamed has over 15 years of experience as journalist working as news editor for television. Currently he is an independent journalist in Malaysia. From 2020 to 2022, he was the Press Secretary to Minister of Ministry of Rural Development (“KPLB”), a government linked entity in the business of rural development in line with the Malaysian government’s initiative in addressing poverty, improving the quality of life and well-being of the rural community. Prior to joining the KPLB, Mr. Mohamed has worked in senior positions as a Special Officer to Chairman of Tenaga National Berhad (TNB), the national electricity company of Malaysia. From 2016 to 2018 he served as the Head of Corporate Communication for Ministry of Education.
Mr. Mohamed received a Bachelor of Social Science & Malay Literature from University Putra Malaya.
Muhammad Zubairy Bin Husain, age 52, was appointed as an independent and non-executive director of the Company on July 4, 2023. Mr. Husain was trained at the Chamber of Dato’ Doctor Ratnam Kamala Nathan. He was called to the Malaysian Bar as an Advocate & Solicitor in 1996. He practiced civil litigation between 1996 and 2000, specializing in medical negligence and accident cases. He then went on to establish his own law firm, Hasif Zubairy & Associates, in 1997 which focused on 5-star hotel line consultation jobs. He ventured into the IT business in 2002 with iTer Niaga Sdn Bhd, which focused on hardware supply and maintenance. He further ventured into the security business providing maritime security services to various business verticals, mainly the oil and gas sector. He was also involved in nation-building activities and received the Bintang Kebaktian Masyarakat (BKM) medal and the Panglima Mahkota Wilayah (PMW) title for his fundraising activities for orphans and single mothers. He is skilled in organization and management, strategic planning, communication, and negotiation.
Mr. Husain received a Bachelor of Laws (Hons.) from National University of Malaysia in 1995.
Ms. Jannu Binti Babjan, aged 57, is an Advocate & Solicitor practicing in Malaysia operating her own proprietary business for the past 8 years. She has over 29 years of experience in civil litigations in a wide range of areas including commercial disputes, employment and industrial matters, shareholder disputes, etc. Ms. Babjan has acted for clients in all tiers of the Malaysian legal system from the magistrate courts right up to the Federal Court of Malaysia. Ms. Babjan was an independent and non-executive director of the Company from April 2021 to August 2021.
Ms. Babjan graduated from the University of Malaya - LLB (Hons) Malaya.
John Ki Park, age 57, was appointed as the Co-Chief Executive Officer of the smartglass business on November 23, 2023. Mr. Park is currently Director and Chief Executive Officer of Nextglass Technologies Corp., a company in the electronic film business and a supplier of such film products to our smartglass manufacturing operation. Prior to joining Nextglass in 2016, Mr. Park also served as the CEO of BBV Vietnam S.E.A. Acquisition Corporation “BB”) a special purpose acquisition vehicle listed on Nasdaq. Prior to joining BBV, Mr. Park served in various executive management positions including CEO of Innovay Inc. an affiliate of Migami and vice president of Mira Life Group, a cosmetic company at which he raised capital for their market launch and distribution in Asia.
Mr. Park received both his B.S. degree and an M.B.A. degree from Brigham Young University.
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Dr. Megat Radzman Bin Megat Khairuddin, age 56 was appointed as Co-Chief Executive Officer of the Company on May 5, 2023. Dr. Megat’s role was managing the operations of the Company across all business segments. During the year Dr. Megat was also acted as the CEO of the Group and then in November 2023 he became the co- CEO for the non- Smartglass businesses. Dr. Megat has over 20 years of experience involving in several technology companies working in data communication, crypto/digital currency projects and in supply chain management for motorcycle spare parts and services value chain.
One of Dr. Megat’s significant achievements is designing the new methodology of laying fiber optic cable called ‘Fast Built Methodology’ which is faster by 60%, cost saving up to 25%, far better in quality and easy access compared to the conventional methodology. This method has been used widely in the Southeast Asia market. He also acted as and been responsible as Consultant & Business Partner for Siemens & Ericsson and have been awarded as “Worldwide Best man” of the year for 1996 & 1997 by Integral Inc. of USA. He also acted and was responsible as Business Consultant for Hungary Telecommunication Association.
Dr. Megat was the Designer & Technical Consultant for RISTI (R&D division of PT Telekom, Indonesia based in Bandung). He was instrumental in developing the business of CSL Group of Companies as the largest hand phones manufacturer & distributor in Malaysia with 75% market share. Dr. Megat also spearheaded SAMATA Industries Sdn Bhd as the largest motorcycle spare parts manufacturer, importer & distributor in Malaysia.
Dr. Megat received his Doctor of Philosophy in International Marketing from InterAmerican University, USA and his Bachelor of Science degree in Electronics Engineering (Data Communication) from University of British Columbia.
Mohd Hazrol Bin Mohd Rosmey, age 41, was appointed as interim Chief Financial Officer of the Company on June 19, 2023. Mr. Mohd Rosmey was the Financial Controller of the Company’s operation in Malaysia and was redesignated and assume the role as the interim Chief Financial Officer of the Company. Mr. Mohd Rosmey has over 15 years of experience as Branch Manager in a local bank in Malaysia. From 2012 to 2019, he was the Branch Manager to AmBank (M) Berhad, responsible to manage branch operation and sales, staff under supervision and ensure branch operation comply with the Standard operation Procedure (S.O.P) requirement. Prior to joining AmBank (M) Berhad, Mr. Mohd Rosmey has worked in Personal Financial Consultant and Personal Banker in Hong Leong Bank Bhd.
Mr. Mohd Rosmey received a Bachelor of Business Administration from University of Malaya.
Directors Resigned/Retired during the year and up to the date of this Report.
Dr. Zhi-Cheng Xiao, age 66, was appointed as an independent non-executive director on June 19, 2023 and resigned on July 22, 2024. Dr. Xiao has since 2011 to now a Professor in the Department of Anatomy and Developmental Biology at Monash University in Melbourne Australia. He has also worked with one the of the world’s top pharmaceutical companies as a director of research in neuroscience and neurodegenerative diseases. Dr. Xiao has published more than 130 papers in reputed journals and served as editorial board members of more than 10 journals. He has established IRP Health and uPcare Group in Melbourne.
Dr. Xiao focus of research is the molecular events that mediate communication among neural cells, in the nervous system during development, myelination, learning and memory, degeneration, and regeneration. These studies have yielded insights into the therapeutic potential of cell signalling molecules to ameliorate or even ablate the detrimental consequences of nervous system injury and neurodegenerative diseases, including stroke, traumatic brain injury, spinal cord injury, Alzheimer Disease (AD), and Multiple Sclerosis (MS).
Dr. Xiao received his Doctor of Natural Science Degree from the Swiss Federal Institute of Technology, Zurich. He received his undergraduate degree in Medicine from Harbin Medical University, China. Dr. Xiao is also a member of the American Society of Biological Chemistry, American Society of Neuroscience, International Society of Stem Cells, International Society of Alzheimer’s disease, and Australasian Neuroscience Society.
Ms. Hui Zhong, age 41, has served as a director of the Company since August 2021 and resigned on June 3, 2024. Ms. Hui has worked as a project costing engineer for construction projects in China from 2006 to 2013 before moving to Australia. In the past 5 years, Ms. Zhong operated her own gift shop business from 2017 to 2019. From 2017 to now, Ms. Zhong has worked for Max Biocare Pharmaceutical Company as a part time consultant for events and expos.
Ms. Zhong has a Bachelor Degree in Public Utility Management from Dalian University of Technology in Dalian city, Liaoning province, China.
Mr. Zhongqing Yang, aged 39, has served as director since April 2022 and resigned on June 6, 2023. He has more than 12 years of experience in the financial and insurance industry and has been in charge of the channel development section of Huaxia Insurance in Shanxi and the corporate department of CBI Life Insurance in Shanxi since 2009, and became the Vice President of Zhongming Investment Group in March 2020, responsible for strategic development planning, operation and market development. Mr. Yang holds a master’s degree in management and is proficient in corporate strategic management and operation. He is also experienced in wealth management and high net worth client development.
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Mr. Xiaodong ZHANG, aged 54, has served as director since July 2021 and resigned on June 6, 2023. He was the Executive Vice President and CFO of Boqi Xinhai Group Company Limited (“Boqi Xinhai”), a company in the business of investment and financing management, sales of automobile and agricultural technology development in China. Mr. Zhang has extensive experience in financial management in the capital market in China. Prior to joining the Boqi Xinhai, Mr. Zhang has worked in senior positions in capital operation and risk control management in China. Mr. Zhang has a Master of Science in Financial Management from Northwestern Polytechnical University in Xi’an city, Shaanxi province, China.
Ms. Jing ZHUO, aged 37, has served as director since July 2021 and resigned on June 19, 2023. She was the Executive Vice General Manager of Dalian Jiujiu Technology Company Ltd. (“Dalian Jiujiu”), a company in the business of IT technology development and consultancy. Ms. Zhuo manages all the financial matters for Dalian Jiujiu including capital market initiatives. She has worked in Dailan Jiujiu since 2019. Ms. Zhuo has extensive experience in financial management in the technology industry and in the capital market. Prior to joining the Dalian Jiujiu, Ms. Zhuo has worked in senior positions, including software development, for a number of companies. In 2009, Ms. Zhuo received a Master of Science in Financial Management from Dongbei University of Finance & Economics in Dalian City, Liaoning province, China.
Ms. Dan LI, aged 38, has served as director since August 2021 and resigned on July 4 2023. She was the vice president of enterprise operations for RD International Holdings Limited, an investment company providing investment and financial consulting services and selling of financial products to retail customers. Prior to this, from 2007 to 2012, Ms. Li was the corporate investment manager and senior investment analyst for a large financial group in Australia, focusing on investments in the securities market. Ms. Li holds degrees in International Business from Monash University and the Australia Institute of Business and Technology, both institutions are based in Australia.
There are no orders, judgments, or decrees of any governmental agency or administrator, or of any court of competent jurisdiction, revoking or suspending for cause any license, permit or other authority to engage in the securities business or in the sale of a particular security or temporarily or permanently restraining any of our officers or directors from engaging in or continuing any conduct, practice or employment in connection with the purchase or sale of securities, or convicting such person of any felony or misdemeanor involving a security, or any aspect of the securities business or of theft or of any felony. Nor are any of the officers or directors of any corporation or entity affiliated with us so enjoined.
There are no family relationships among any of our officers and directors, other than Ms. Jannu Binti Babjan and Mr. Megat Radzman Bin Megat Khairuddin are first cousins.
B. Compensation
Remuneration Principles
Remuneration of all directors and officers is determined by the Nomination and Remuneration Committee.
We are committed to remunerating senior executives and executive directors in a manner that is market-competitive and consistent with “Best Practice” including the interests of shareholders. Remuneration packages are based on fixed and variable components, determined by the executives’ position, experience and performance, and may be satisfied via cash or equity.
Non-executive directors are remunerated out of the aggregate amount approved by shareholders and at a level that is consistent with industry standards. Non-executive directors do not receive performance–- based bonuses and prior shareholder approval is required to participate in any issue of equity. No retirement benefits are payable other than statutory superannuation, if applicable.
Our remuneration policy is based on our financial performance and on success of our development and commercializing of our products, services or solutions.
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The purpose of a performance bonus is to reward individual performance in line with our objectives. Consequently, performance-based remuneration is paid to an individual where the individual’s performance clearly contributes to a successful outcome. This is regularly measured in respect of performance against key performance indicators.
We use a variety of key performance indicators to determine achievement, depending on the role of the executive being assessed. These include:
| ● | Successful in achieving sales targets, |
| ● | Successful contract negotiations, |
| ● | Achievement of reaching operational/project milestones within scheduled time and/or budget, and |
| ● | Our share price reaching a targeted level on the NASDAQ over a period of time. |
Executive Compensation
The following table sets forth all the compensation awarded to, earned by or paid to each individual who served as directors and officer in fiscal year of 2023.
| Short-term Benefits | Post-Employment | Share-based | ||||||||||||||||||||||||||
| Benefits | Benefits | Payments | Total | |||||||||||||||||||||||||
| Salary & | Super- | Retirement | ||||||||||||||||||||||||||
| Fees | Other | annulation | Benefits | Shares | Options | |||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||
| Mr. Hazran Mohamed(1) | 8,806 | N/A | N/A | N/A | N/A | N/A | 8,806 | |||||||||||||||||||||
| Mr. Muhammad Zubairy bin Husain(2) | 8,806 | N/A | N/A | N/A | N/A | N/A | 8,806 | |||||||||||||||||||||
| Dr. Zhi-Cheng Xiao(3) | 9,550 | N/A | N/A | N/A | N/A | N/A | 9,550 | |||||||||||||||||||||
| Ms. Jannu Binti Babjan (12) | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||||
| Dr. Megat Radzman bin Megat Khairuddin(4) | 142,935 | N/A | N/A | N/A | N/A | N/A | 142,935 | |||||||||||||||||||||
| Mr. John Ki Park(5) | - | N/A | N/A | N/A | N/A | N/A | - | |||||||||||||||||||||
| Mr. Mohd Hazrol bin Mohd Rosmey(6) | 51,852 | N/A | N/A | N/A | N/A | N/A | 51,852 | |||||||||||||||||||||
| Mr. Xiaodong Zhang(7) | 106,296 | N/A | N/A | N/A | N/A | N/A | 106,296 | |||||||||||||||||||||
| Ms. Jing Zhuo(8) | 57,477 | N/A | N/A | N/A | N/A | N/A | 57,477 | |||||||||||||||||||||
| Mr. Zhongqing Yang(9) | 7,086 | N/A | N/A | N/A | N/A | N/A | 7,086 | |||||||||||||||||||||
| Ms. Dan Li(10) | 6,114 | N/A | N/A | N/A | N/A | N/A | 6,114 | |||||||||||||||||||||
| Ms. Hui Zhong (11) | 24,265 | N/A | N/A | N/A | N/A | N/A | 24,265 | |||||||||||||||||||||
| Total | 423,187 | N/A | N/A | N/A | N/A | N/A | 423,187 | |||||||||||||||||||||
| (1) | Mr. Hazran Mohamed was appointed as a director on July 4, 2023. |
| (2) | Mr. Muhammad Zubairy bin Husain was appointed as a director on July 4, 2023. |
| (3) | Dr. Zhi-Cheng Xiao was appointed as a director on June 19, 2023 and resigned on July 22, 2024. |
| (4) | Dr. Megat Radzman bin Megat Khairuddin was appointed as a co-chief executive officer on May 5, 2023. |
| (5) | Mr. John Ki Park was appointed as a co-chief executive officer on November 27, 2023. |
| (6) | Mr. Mohd Hazrol bin Mohd Rosmey was appointed as an interim chief financial officer on June 19, 2023. |
| (7) | Mr. Xiaodong Zhang resigned as director on June 6, 2023. |
| (8) | Ms. Jing Zhuo resigned as director on June 19, 2023. |
| (9) | Mr. Zhongqing Yang resigned as director on June 6, 2023. |
| (10) | Ms. Dan Li resigned as director on July 4, 2023. |
| (11) | Ms. Hui Zhong resigned as a director on June 3, 2024. |
| (12) | Ms. Jannu Binti Babjan was appointed a director on May 23, 2024. |
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Service Agreements
All the directors have formal letters of appointment in place that have been executed which outline their roles and responsibilities. The agreements with the Company have no fixed term and the directors’ position can be terminated with cause without notice, and subject to the Company’s Constitution. The letters of appointment executed do not provide for any termination payment to directors in the event of being terminated or removed from their positions.
Employee Share Option Plan
In December 2021, an Employee Share Option Plan (“2021 ESOP”) was approved and established by the Board. The ESOP is available to employee, consultants and eligible persons (as the case may be) of the Company as the Board may in its discretion determine. See below under item 10.A for more information.
As at December 31, 2023 and 2022, the Company had no employee share option issued and outstanding in respect to the 2021 ESOP.
Pension and Retirement Benefits
There was no amount set aside or accrued by the Group to provide pension, retirement or similar benefits as at December 31, 2023 as these amounts were expensed and paid as of this date.
C. Board Practices
Introduction
Our Board of Directors is elected by and accountable to our shareholders. It currently consists of four independent non-executive directors. The Chairman of our Board of Directors is responsible for the management of the Board of Directors and its functions.
Election of Directors
Directors are elected at our annual general meeting of shareholders. Under our Constitution, a director, other than a managing director, must not hold office for more than three years or beyond the third annual general meeting following his appointment (whichever is the longer period) without submitting himself for re-election. Our Board of Directors has the power to appoint any person to be a director, either to fill a vacancy or as an additional director (provided that the total number of directors does not exceed the maximum allowed by law), and any director so appointed may hold office only until the next annual general meeting when he or she shall be eligible for election.
Corporate Governance
ASX Corporate Governance Principles
As a “foreign private issuer”, we are not required to comply with all of the corporate governance practices followed by U.S. companies under NASDAQ listing standards.
In Australia there are no defined corporate governance structures and practices that must be observed by a company listed on NASDAQ. The practices we follow in lieu of NASDAQ’s corporate governance requirements is the ASX Best Practice Guide published by the ASX Corporate Governance Council. The Guide contains what are called the Recommendations which articulate eight core principles which are intended to provide a reference point for companies about their corporate governance structure and practices. It is not mandatory to follow the Recommendations. We believe that our established practices in the area of corporate governance are in line with the spirit of the NASDAQ standards and provide adequate protection to our shareholders. We believe that we are in material compliance with the ASX Corporate Governance Principles. Set forth below are material provisions of the ASX corporate Governance Principles together with the reasons, where applicable, for variation therefrom.
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| 1. | Lay solid foundations for management and oversight. Companies should establish and disclose the respective roles and responsibilities of Board and management. |
| 2. | Structure the Board to add value. Companies should have a Board of an effective composition, size, and commitment to adequately discharge its responsibilities and duties. During the year ended December 31, 2023, we varied from the Recommendations in the following area: |
| a) | No formal performance evaluation of the Board was conducted for the year ended December 31, 2023 as the Board believes that we are not of a size, nor are our financial affairs of such complexity, to warrant such an exercise. The Board recognizes the importance of performance evaluations and will continually assess the necessity and timing of future performance evaluation. |
| 3. | Act ethically and responsibly. Companies should actively promote ethical and responsible decision-making. |
| 4. | Safeguard integrity in financial reporting. Companies should have a structure to independently verify and safeguard the integrity of their financial reporting. |
| 5. | Make timely and balanced disclosure. Companies should promote timely and balanced disclosure of all material matters concerning the compliance. |
| 6. | Respect the rights of security holders. Companies should respect the rights of shareholders and facilitate the effective exercise of those rights. |
| 7. | Recognize and manage risk. Companies should establish a sound system of risk oversight and management and internal control. |
| 8. | Remunerate fairly and responsibly. Companies should ensure that the level and composition of remuneration is sufficient and reasonable and that its relationship to performance is clear. |
Non-Executive and Independent Directors
Australian law does not require a company to appoint a certain number of independent directors to its board of directors or audit committee. However, under the ASX Corporate Governance Principles and Recommendations, that a listed company have a majority of independent directors on its board of directors and that the audit committee be comprised of independent directors. Our Board of Directors currently have four directors, all of which are non-executive directors within the meaning of the ASX Corporate Governance Principles and Recommendations, and our audit committee consists of such three independent non-executive directors. Accordingly, we currently comply with the Recommendations.
Under NASDAQ Marketplace Rules, in general a majority of our Board of Directors must qualify as independent directors within the meaning of the NASDAQ Marketplace Rules and our audit committee must have at least three members and be comprised only of independent directors, each of whom satisfies the respective “independence” requirements of NASDAQ and the U.S. Securities and Exchange Commission.
The Board of Directors does not have regularly scheduled meetings at which only independent directors are present. The Board of Directors does meet regularly, and independent directors are expected to attend all such meetings. Our practices are consistent with the Recommendations, in that the Recommendations do not provide that independent directors should meet separately from the Board of Directors.
Our Board of Directors has determined that each of Ms. Jannu Binit Babjan, Mr. Mohammad Zubairy bin Husain and Mr. Hazran Mohamed qualifies as an independent director under the requirements of the NASDAQ Marketplace Rules and U.S. Securities and Exchange Commission.
Committees of the Board of Directors
Audit Committee. NASDAQ Marketplace Rules require us to establish an audit committee comprised of at least three members, each of whom is financially literate and satisfies the respective “independence” requirements of the U.S. Securities and Exchange Commission and NASDAQ and one of whom has accounting or related financial management expertise at senior levels within a company.
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Our Audit Committee assists our Board of Directors in overseeing the accounting and financial reporting processes of our Company and audits of our consolidated financial statements, including the integrity of our consolidated financial statements, compliance with legal and regulatory requirements, our independent registered public accounting firm’s qualifications and independence, and independent registered public accounting firm, and such other duties as may be directed by our Board of Directors. The Audit Committee is also required to assess risk management.
Our Audit Committee currently consists of three board members, each of whom satisfies the “independence” requirements of the U.S. Securities and Exchange Commission, and NASDAQ Marketplace Rules. Our Audit Committee is currently composed Ms. Jannu Binti Babjan, Mr. Hazran Mohamed and Mr. Mohammad Zubairy Bin Husain. Mr. Mohammad Zubairy Bin Husain is the chairman of the audit committee. The audit committee meets at least two times per year.
Nomination and Remuneration Committee. Our Board of Directors has established a Nomination and Remuneration Committee, which is comprised by majority of independent directors, within the meaning of NASDAQ Marketplace Rules. The Nomination and Remuneration Committee is responsible for reviewing the salary, incentives and other benefits of our directors, senior executive officers and employees, and to make recommendations on such matters for approval by our Board of Directors. The Nomination and Remuneration Committee is also responsible for overseeing and advising our Board of Directors about the adoption of policies that govern our compensation programs. Ms. Jannu Binti Babjan, Mr. Hazran Mohamed and Mr. Mohammad Zubairy bin Husain are the current members of the Nomination and Remuneration Committee. Ms. Jannu Binti Babjan is the chairman of this committee.
Corporate Governance Requirements Arising from Our U.S. Listing - the Sarbanes-Oxley Act of 2002, SEC Rules and the NASDAQ Capital Market Marketplace Rules
NASDAQ permits “foreign private issuers” such as the Company follow “home country” corporate governance practices in lieu of the otherwise applicable NASDAQ corporate governance standards, as long as we disclose each requirement of Rule 5600 that we do not follow and describe the home country practice we follow in lieu of the relevant NASDAQ corporate governance standards. We follow Australian corporate governance practices in lieu of the corporate governance requirements of the NASDAQ Marketplace Rules in respect of:
| ● | NASDAQ requirement under Rule 5620(c) that a quorum consist of holders of 33 1/3% of the outstanding Ordinary Shares - In Australia, we do not have an express requirement that each listed company have a quorum of any particular number of the outstanding Ordinary Shares, but instead allow a listed issuer to establish its own quorum requirements. Our quorum is currently two person who are entitled to vote. We believe this quorum requirement is consistent with the requirements in Australia and is appropriate and typical of generally accepted business practices in Australia. |
| ● | The NASDAQ requirements under Rules 5605(b)(1) and (2) relating to director independence, including the requirements that a majority of the board of directors must be comprised of independent directors and that independent directors must have regularly scheduled meetings at which only independent directors are present - The NASDAQ and ASX definitions of what constitute an independent director are not identical and the requirements relating to the roles and obligations of independent directors are not identical. In Australia, unlike NASDAQ, permits an issuer to establish its own materiality threshold for determining whether a transaction between a director and an issuer affects the director’s status as independent and it does not require that a majority of the issuer’s board of directors be independent, as long as the issuer publicly discloses this fact. In addition, in Australia, it is not required that the independent directors have regularly scheduled meeting at which only independent directors are present. We believe that our Board composition is consistent with the requirements in Australia and that it is appropriate and typical of generally accepted business practices in Australia. |
| ● | We have relied on and expect to continue to rely on an exemption from the requirement that our independent directors meet regularly in executive sessions under NASDAQ Listing Rules. The Corporations Act does not require the independent directors of an Australian company to have such executive sessions and, accordingly, we claim this exemption. |
| ● | The NASDAQ requirements under Rules 5605(d) that compensation of an issuer’s officers must be determined, or recommended to the Board for determination, either by a majority of the independent directors, or a compensation committee comprised solely of independent directors, and that director nominees must either be selected, or recommended for the Board’s selection, either by a majority of the independent directors, or a nomination committee comprised solely of independent directors. The NASDAQ compensation committee requirements are not identical to the Australia’s remuneration and nomination committee requirements. We have established a remuneration committee consisting of a majority of independent directors and an independent chairperson, or publicly disclose that it has not done so. We have a Nomination and Remuneration Committee that is consistent with the requirements in Australia and which we believe is appropriate and typical of generally accepted business practices in Australia. |
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Directors’ Service Contracts
For details of directors’ service contracts providing for benefits upon termination of employment, see “Item 6. Directors, Senior Management and Employees - B. Compensation - Service Agreements.”
Indemnification of Directors and Officers
Our Constitution provides that, we may indemnify a person who is, or has been, an officer of our Company, to the full extent permissible by law, out of our property against any liability incurred by such person as an officer in defending proceedings, whether civil or criminal, and whatever their outcome.
In addition, our Constitution provides that to the extent permitted by law, we may pay, or agree to pay, a premium in respect of a contract insuring a person who is or has been an officer of our company or one of our subsidiaries against any liability:
| ● | incurred by the person in his or her capacity as an officer of our company or a subsidiary of our company, and |
| ● | for costs and expenses incurred by that person in defending proceedings relating to that person acting as an officer of IMTE, whether civil or criminal, and whatever their outcome. |
We currently do not maintain a directors’ and officers’ liability insurance policy. However, we intend to arrange an insurance policy for our directors and officers in the near future. We have established a policy for the indemnification of our directors and officers against certain liabilities incurred as a director or officer, including costs and expenses associated in successfully defending legal proceedings.
D. Employees
As of December 31, 2023, we had 11 employees and of these employees 1 employee was employed in administration in Australia, 1 employee was employed in corporate in South Korea, 1 employee was employed in sales and marketing in Malaysia, and the rest were employed in finance, administration and management in Malaysia.
As of December 31, 2022, we had 15 employees and of these employees were employed in finance, administration and management located in Malaysia.
Each of our full-time employees enters into an employment agreement. We also engage part-time employees from time to time. We may only terminate the employment of any of our employees in accordance with the relevant employee’s contract of employment.
Our standard contract of employment for full time and part-time employees provides that we can terminate the employment of an employee without notice for serious misconduct or with between one to three months’ notice without cause (as set out in the relevant employee’s contract of employment). We can terminate the employment of a casual employee without notice. For a summary of the key terms of employment of each of our senior management, see “Item 6. Directors, Senior Management and Employees - B. Compensation - Service Agreements.”
E. Share Ownership
Beneficial Ownership of Senior Management and Directors
The beneficial ownership of senior management and directors are set out in Item 7.A.
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ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A. Major Shareholders
The following table sets forth information regarding shares of our Ordinary Shares beneficially owned as of September 30, 2024 by: (i) each of our directors; (ii) all the directors as a group; and (iii) each person known by us to beneficially own five percent or more of the outstanding shares of our common stock.
Except as otherwise indicated, based on information furnished by the owners, we believe that the beneficial owners listed below have sole voting and investment power with respect to all Ordinary Shares shown as beneficially owned by them, subject to the information contained in the footnotes to this table. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Unless otherwise indicated, the address of the beneficial owner is c/o Integrated Media Malaysia Sdn Bhd at Suite A, Unit 5, Level 3, Lot 4, Glen 9 Business Park, Jalan Pensyarah U1/28, Hicom Glenmarie Industrial Park, 40150 Shah Alam, Selangor, Malaysia.
For purposes of computing the percentage of outstanding Ordinary Shares held by each person or group of persons named above, any shares that such person or group has the right to acquire within 60 days are deemed outstanding but are not deemed to be outstanding for purposes of computing the percentage ownership of any other person or group. As of September 30, 2024, there were 3,431,434 outstanding shares.
| Options | Note | Total Stock | ||||||||||||||||||
| Exercisable | Convertible | and | ||||||||||||||||||
| Ordinary | Within 60 | Within 60 | Stock Based | % | ||||||||||||||||
| Name | Shares | Days | Days | Holdings | Ownership | |||||||||||||||
| Mr. Hazran Mohamed (1) | - | - | - | - | - | |||||||||||||||
| Mr. Mohammad Zubairy bin Husain (1) | - | - | - | - | - | |||||||||||||||
| Ms. Jannu Binti Babjan, (2) | - | - | - | - | - | |||||||||||||||
| Dr. Megat Radzman Bin Megat Khairuddin(3) | 4,152 | - | - | 4,152 | * | |||||||||||||||
| John Ki Park(4) | - | - | - | - | - | |||||||||||||||
| Mr. Mohd Hazrol Bin Mohd Rosmey(5) | - | - | - | - | - | |||||||||||||||
| All directors and officers as a group (6 persons) | 4,152 | - | - | 4,152 | * | |||||||||||||||
| Nextglass Technologies Corp(6) | 50,769 | - | 789,147 | 839,916 | 19.99 | % | ||||||||||||||
| Nextglass Solutions Inc(6) | - | - | 789,147 | 789,147 | 18.79 | % | ||||||||||||||
| Ohho Korea Co., Ltd(7) | 240,000 | - | - | 240,000 | 7.0 | % | ||||||||||||||
| Teko Limited(8) | 210,000 | - | - | 210,000 | 6.2 | % | ||||||||||||||
| Con Unerkov(8) | 210,033 | - | 595,000 | 805,033 | 19.99 | % | ||||||||||||||
| Montague Capital Pty Ltd(8) | - | - | 595,000 | 595,000 | 14.78 | % | ||||||||||||||
| * | less than 1% |
Notes:
| (1) | Appointed as a director of the Company on July 4, 2023. |
| (2) | Appointed as a director of the Company on May 23, 2024. |
| (3) | Appointed as a co-chief executive officer of the Company on May 5, 2023. |
| (4) | Appointed as a co-chief executive officer of the Company on November 27, 2023. |
| (5) | Appointed as an interim chief financial officer on June 19, 2023. |
| (6) | Nextglass Technologies Corp. (“NGT”) holds 50,769 shares directly and its wholly owned subsidiary Nextglass Solutions Inc. (“NSI”) holds a US$15 million convertible note (“Note”). Pursuant to the Note, the noteholder can convert the Note at $1.42 per share at any time from the date of the note to November 21, 2025 provided that the noteholder and its affiliates shall not exceed 20% shareholding in the Company after such conversion. The percentage of ownership shown in the above table for NGT and NSI are based on the shares outstanding post conversion. Both NGT and NSI are incorporated in Delaware, USA. NGT is controlled by Mr. Jeonggeun Kim. |
| (7) | Ohho Korea Co., Ltd, a company incorporated in South Korea, is a company wholly owned and controlled by Mr. Hong Seok Kim. |
| (8) | Montague Capital Pty Ltd. (“Montague”) holds a US$350,000 convertible note (“Note”). Pursuant to the Note, the noteholder can convert the Note at $1.25 per share at any time from the date of the Note to July 22, 2026 provided that the noteholder and its affiliates shall not exceed 20% shareholding in the Company after such conversion. Montague is controlled by Mr. Con Unerkov. Mr. Unerkov holds 210,000 shares indirectly through his shareholding in Teko Limited (“Teko”) a Hong Kong corporation, and holds 33 shares indirectly through Intek Solutions Pty Ltd. (“Intek”) an Australian corporation. The percentage of ownership shown in the above table for Montague, Teko and Mr. Unerkov are based on the shares outstanding post conversion. Intek, Teko and Montague are controlled by Mr. Unerkov. |
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B. Related Party Transactions
The following related party transactions, other than employment matters and indemnification agreements between our directors and executive officers on the one hand and IMTE on the other, occurred during the years ended December 31, 2023, 2022 and 2021.
For the year ended December 31, 2023
During the year, the Group had the following related party transactions:
| a) | Interest expenses charges of $33,850 to Greifenberg Analytics Limited, an associated company formerly controlled by the Company. | |
| b) | The remuneration of directors of the Company were paid $228,400. |
For the year ended December 31, 2022
During the year, the Group had the following related party transactions:
| a) | Interest expenses charges of US$7,448 to Greifenberg Analytics Limited, an associated company formerly controlled by the Company. |
For the year ended December 31, 2021
During the year, the Group had the following related party transactions:
| a) | Company secretarial and consulting service fees for the services of our executives totaling $407,988 to entities controlled by former CFO and Company Secretary, Mr. Cecil Ho. |
| b) | On February 5, 2021, CIMC Marketing Pty Limited, a subsidiary of the Company, acquired 500 million shares for $381,000 (approximately A$500,000) representing approximately 15% of the then equity interest in Oakridge International Limited (formerly Xped Limited) (“Oakridge”). Mr. Con Unerkov, the then Chairman and Chief Executive Officer of the Company, was also the Chairman and Chief Executive Officer of Oakridge. Mr. Cecil Ho, the Chief Financial Officer of the Company, was also the then Chief Financial Officer of Oakridge until March 10, 2021. |
C. Interests of Experts and Counsel
Not applicable.
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ITEM 8. FINANCIAL INFORMATION
A. Consolidated Statements and Other Financial Information
Our audited consolidated financial statements for the fiscal year ending December 31, 2023 are included in Item 18 of this Annual Report on Form 20-F.
Legal Proceedings
We are not involved in any significant legal, arbitration or governmental proceedings. We are not aware of any pending significant legal, arbitration or governmental proceedings with respect to IMTE.
Dividend Distribution Policy
We have never paid cash dividends to our shareholders. We intend to retain future earnings for use in our business and do not anticipate paying cash dividends on our Ordinary Shares in the foreseeable future. Any future dividend policy will be determined by the Board of Directors and will be based upon various factors, including our results of operations, financial condition, current and anticipated cash needs, future prospects, contractual restrictions and other factors as the Board of Directors may deem relevant.
B. Significant Changes
No significant changes occurred since the date of the annual financial statements.
ITEM 9. THE OFFER AND LISTING
A. Offer and Listing Details
NASDAQ Capital Markets
Our Ordinary Shares have traded on the NASDAQ Capital Markets since August 4, 2017.
ITEM 10. ADDITIONAL INFORMATION
B. Plan of Distribution
Not applicable.
C. Markets
Our Ordinary Shares are listed and traded on the NASDAQ Capital Market.
D. Selling Shareholders
Not applicable.
E. Dilution
Not applicable.
F. Expenses of the Issue
Not applicable.
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A. Share Capital
As at the date of this Annual Report, there is no concept of authorized share capital and par value for companies incorporated in Australia. The Company can issue unlimited number of Common Stock without par value. The Company only has one class of Ordinary Shares.
Below is a summary of the movement in the capital structure of the Company for the past 3 years.
Ordinary Shares
On February 2021, the Company issued a total of 20,518 Ordinary Shares at a share price of $3.6125 per share for a total subscription amount of $74,100 for the performance remuneration.
On February 22, 2021, the Company issued 625,000 Ordinary Shares at a share price of $4.00 per share to raise $2,500,000 for working capital.
On March 4, 2021, the Company entered into subscription agreements in a private placement with investors to subscribe a total of 573,350 shares in the Company at a price of $4.00 per share for total proceeds of $2,293,400. The use of the proceeds is to build out manufacturing infrastructure and working capital.
On March 23, 2021, the Company issued 708,000 Ordinary Shares at a price of $6.50 per share to raise $4,602,000 for developing its current businesses, corporate expenditures and general corporate purposes.
On July 6, 2021, the Company entered into three Securities Purchase Agreements (“SPA”) with investors (“Investors”) for the total sale of 888,887 Ordinary Shares of, no par value, of the Company (“Ordinary Shares”) at a price of $3.15 per share (the “Cash Offerings”). The Cash Offerings generated net cash proceeds of approximately $2,765,000 after deducting estimated expenses in connection with the offering. The Company intends to use the net cash proceeds for the purchase of equipment for the Company’s electronic glass business and working capital.
On January 3, 2022, the Company entered into convertible note purchase agreements with investors raising a total of US$10 million by the issuance of $10 million convertible notes (“Note”). The Note bears interest at 6% per annum maturing in 2 years from the date of issuance of the Note. The holder of the Note has the right to convert the principal amount to shares in the Company at a fixed conversion price of $3.12 per share, subject to adjustment, over the term of the Note. Under the Note, the holder of the Note cannot convert the shares in the Company if such conversion would take the noteholder over 4.99% shareholding in the Company. On the same date, the notes were converted and a total of 3,205,128 shares were issued.
On January 19, 2022, the Company issued a total of 664,871 Ordinary Shares as a result of the conversion of convertible promissory note of about $1,8 million (approximately HK$14,000,000) issued on January 20, 2020.
In March 2022, the Company approved the issuance of 698,888 shares at a price of $4.50 per share for a total raise of about $3.145,000. The Company intends to use the net cash proceeds for the purchase of equipment for the expansion of the lamination plant in USA, air filter operation, investment in new projects and working capital.
In April 2022, the Company issued a total of 507,692 Ordinary Shares as a result of the conversion of convertible promissory note of $1,650,000 which was issued in December 2020.
In April 2022, the Company issued 732,900 shares at a share price of $4.50 per share for a total subscription amount of $3,298,060. The proceeds from this sale of shares were used for the expansion of the lamination plant in USA, air filter operation, investment in new projects and working capital.
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On June 29, 2022, the Company issued 646,173 shares at a share price of $4.50 per share for a total subscription amount of $2,907,786. The proceeds from this sale of shares were used for the Company’s operation and working capital.
On August 23, 2022, the Company issued 2,200,000 Ordinary Shares at a share price of $1.59 for a total of $3,498,000 to consultants.
In August and September 2022, the Company issued a total of 2,539,682 shares at a share price of $1.26 per share for a total subscription amount of $3,200,000. The proceeds were used for the Company’s operation and working capital.
On February 16, 2023, the Company issued 163,053 Ordinary Shares at a share price of $0.65 for a total of $105,984 to consultants.
On May 8, 2023, the Company issued 19,230 Ordinary Shares at a share price of $0.65 for a total of $12,500 to consultants.
On May 15, 2023, the Company issued 479,167 Ordinary Shares at a share price of $0.48 for a total of $230,000 to consultants.
From June to September 2023, the Company issue a total of 299,998 Ordinary Shares at a share price of $0.30 per share to raise a total of $90,000 for working capital.
On October 16, 2023, we effected a 1-for-10 share consolidation of our Ordinary Shares, which was approved at a special meeting of our shareholders on September 29, 2023. This reduced the number of outstanding shares of our common stock from 21,486,202 shares to 2,148,501 shares, after adjusting for fractional shares.
From this section onwards, * means post share consolidation of 10 shares for 1 share effective from October 16, 2023.
On October 17, 2023, the Company issued 300,000* shares at a price of $2.50* per share for a total of $750,000 for the acquisition of a subsidiary- Itana Energy Pty Ltd (formerly known as Teko Energy Pty Ltd).
On November 8, 2023, the Company issued 114,116* Ordinary Shares at a share price of $2.00* for a total of $228,232 to consultants.
On November 8, 2023, the Company issued 45,000* Ordinary Shares at a share price of $2.00* per share to raise $90,000 for working capital.
On November 25, 2023, the Company issued a total of 240,000* Ordinary Shares as a result of the conversion of convertible promissory note of $600,000 issued in July 2022.
In December 2023, the Company issue a total of 562,817* Ordinary Shares at a share price of $2.50* per share to raise a total of $1,407,043 for working capital.
In January 2024, the Company issued a total of 21,000* Ordinary Shares at a share price of $2.50* per share to raise a total of $52,500 for working capital.
* Post share consolidation of 10 shares for 1 share effective from October 16, 2023.
Convertible Notes
From July to December 2022, the Company entered into a number of Subscription Agreements (“Subscription Agreements”) where each Subscriber subscribed to a convertible note (“CPNote”). The CPNote is interest free, unsecured and convertible into shares of eGlass Technologies Ltd. (“eGlass”), a then subsidiary of the Company, on the date eGlass receives notice from the Australian Stock Exchange (“ASX”) that it will be admitted to the official list of ASX, at a conversion price equal to 25% discount to the IPO Price.
However, if by the first anniversary of the date of the Agreement, eGlass has not received notice from ASX that it will be admitted to the official list of ASX, all Notes will convert to shares of the Company based on the then 30-day VWAP multiplied by 90%.
In November and December 2023, all of the CPNote were converted into eGlass shares, except for $600,000 of CPNotes which were converted into 240,000 shares in the Company at a conversion price of $2.50 per share.
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In November 2023, the Company issued a US$15 million Convertible Note (the “NSI-Note”) to Nextglass Solutions Inc. (“NSI”), a Delaware corporation. The NSI-Note is non-interest bearing and maturing in two years from the date of the NSI-Note. The holder of the NSI-Note has the right to convert the principal into ordinary shares of the Company at a conversion price of US$1.42 per share over the term of the NSI-Note. The conversion price is subject to downward adjustment and has a floor price of US$1.00 if the Company sells ordinary shares below the conversion price within 12 months from the date of the NSI-Note. Furthermore, there is a conversion limitation such that no conversion can be effected if after such conversion NSI would own more than 19.99% equity interest in the Company. The Company will use the proceeds of the US$15,000,000 raise to invest in the smartglass lamination operation.
On July 22, 2024, the Company issued a US$350,000 Convertible Note (the “MCPL-Note”) to Montague Capital Pty Ltd. (“Montague”), an Australia corporation. The MCPL-Note is interest bearing at 6% per annum and maturing in two years from the date of the NSI-Note. The holder of the MCPL-Note has the right to convert the principal into ordinary shares of the Company at a conversion price of US$1.25 per share over the term of the MCPL-Note. There is a conversion limitation such that no conversion can be effected if after such conversion Montague and its associates would own more than 19.99% equity interest in the Company. The Company will use the proceeds for working capital. At the date of this report none of the MCPL-Note has been redeemed or converted.
Warrants
On February 20, 2020 the Company entered into a SPA for the sale of 158,730 Ordinary Shares of the Company and warrants (“Warrants”) to purchase up to 126,984 Ordinary Shares. The Warrants were exercisable for the period of 12 months from the date of issuance, at an exercise price of $10.50 per Share. If the VWAP of the Company’s Ordinary Shares on the trading day immediately prior to the exercise date is less than $10.50, then the Warrants may be exercised at such time by means of a cashless exercise where each Warrant exercised would receive one Share without any cash payment to the Company. On May 12, 2020, all the Warrants were exercised by means of a cashless exercise.
On January 3, 2022 in connection with the sale of the convertible note, the Company issued to the noteholders warrants to purchase up to 2,139,032 shares raising an additional $8 million if all the warrants are exercised. The warrants are for a term of 2 years from the date of the convertible notes and can be exercised at $37.40 for each share (post-share consolidation). Under the warrant agreement, the warrant holder cannot exercise the warrant to subscribe for shares in the Company if such exercise would take the warrant holder over 4.99% shareholding in the Company. In January 2024, none of these warrants were exercised and all these warrants expired.
In connection with the private placement in August and September 2022, the Company issued to the shareholders warrants to purchase a total of 2,539,682 shares raising an additional $3.2 million, if all the warrants are exercised. The warrants are for a term of 2 years from the date of the Agreement and can be exercised at $12.60 for each share (post-share consolidation). Under the warrant agreement, the warrant holder cannot exercise the warrant to subscribe for shares in the Company if such exercise would take the warrant holder over 4.99% shareholding in the Company. In September 2024, none of the warrants were exercised and all these warrants expired.
In connection with the Convertible Notes issued to Montague in July 2024, the Company to the noteholder warrants to purchase a total of 403,846 shares raising an additional $525,000, if all the warrants are exercised. The warrants are for a term of 2 years from the date of the Agreement and can be exercised at $1.30 for each share. Under the warrant agreement, the warrant holder cannot exercise the warrant to subscribe for shares in the Company if such exercise would take the warrant holder over 19.99% shareholding in the Company. At the date of this report none of the warrants have been exercised.
Options
The Company had no employee share options issued and outstanding as of December 31, 2023.
2021 Employee Share Option Plan
In December 2021, the Company approved a new Employee Share Option Plan (“2021 ESOP”). The 2021 ESOP is available to employee, consultants, and eligible persons (as the case may be) of the Company and at the absolute discretion of the Board. The 2021 ESOP is valid for 10 years term. The shares are to be issued at a price determined by the Board. The options are to be issued for no consideration. The exercise price and other relevant terms of an option is to determine by the Board at its sole discretion. The total number of the shares which may be offered by the Company under the ESOP shall not at any time exceed 20% of the Company’s total issued shares when aggregated with the number of shares issued or that may be issued as a result of offers made at any time during the previous 3-year period, the limit imposed under the Australian Securities and Investments Commission Class Order 14/1001.
As at December 31, 2023 the Company had no employee share options issued and outstanding in respect to the 2021 ESOP.
B. Memorandum and Articles of Association
A summary of our Constitution is incorporated by reference to our registration statement on Form 20-F filed on July 21, 2017.
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C. Material Contracts
Except for contracts entered into in the ordinary course of business, the only contracts entered into by IMTE within two years immediately preceding this annual report that are still in effect, which may be regarded as material are as follows:
Subscription Agreement for 60% Equity interests in World Integrated Supply Ecosystem Sdn Bhd. (“WISE”)
On January 20, 2022, the Company entered into a subscription agreement for 60% equity interests in World Integrated Supply Ecosystem Sdn Bhd. (“WISE”), a Malaysia company engaged in the business of the provision of halal certification to qualified businesses/operations, the establishment halal products supply chain, and sale of halal products. WISE will be providing halal certification working with the JAKIM, a department of the Malaysia government mandated to conduct and manage the halal certification process. WISE is working towards being appointed by JAKIM Malaysia as an accredited certification body to conduct the auditing process and certify product application. WISE will also work with other certification bodies worldwide that have been accredited by JAKIM, thereby extending our reach to the global markets.
Assumption and Assignment Agreement between IMTE and Joint Investment Limited dated December 29, 2021 for IMTE to subscribe up to 60% in Ace Corporation Limited
On December 29, 2021, the Company entered into an Assignment and Assumption Agreement to take over the rights and obligation on a Cooperation Agreement on developing a Blockchain business focusing on digital asset market platform mainly focusing on NFT (Non-Fungible Token) trading market. Under the Cooperation Agreement, the Company shall invest up to US$1 million for 60% equity interests in Ace Corporation Limited to develop, establish, and operate a trading marketplace platform called “Ouction” at www.ouction.io. Ouction platform will be an interactive experiencing solution designed with dynamic image cryptographic verification technology which will serve as a bridge for O2O (Online to Offline) transaction. This will enable the Ouction platform to not only verify virtual asset transactions, but also provide encryption and Blockchain notarized digital certificates of physical assets for a fairer and more credible platform trading experience to e-commerce companies and their users. Ouction is expected to adopt decentralized technologies in the fields of games, fintech, film & TV, culture, and e-commerce. Ouction also plans to develop cross-industrial synergy and economic value from the new NFT marketplace it creates. Ouction’s marketplace plans to be a niche market in art, historical artifacts, photos and videos.
D. Exchange Controls
Australia has largely abolished exchange controls on investment transactions. The Australian dollar is freely convertible into U.S. dollars. In addition, there are currently no specific rules or limitations regarding the export from Australia of profits, dividends, capital or similar funds belonging to foreign investors, except that certain payments to non-residents must be reported to the Australian Transaction Reports and Analysis Centre, which monitors such transaction, and amounts on account of potential Australian tax liabilities which may be required to be withheld unless a relevant taxation treaty can be shown to apply. Article 11.8 of the free trade agreement between Australia and the US provides that all transfers relating to a covered investment is to be made freely and without delay into and out of each territory. Such transfers include inter alia contributions to capital, including the initial contribution; profits, dividends, capital gains and proceeds from the sale of all or any part of the covered investment or from the partial or complete liquidation of the covered investment.
The Foreign Acquisitions and Takeovers Act 1975
Under Australian law, in certain circumstances foreign persons are prohibited from acquiring more than a limited percentage of the shares in an Australian company without approval from the Australian Treasurer. These limitations are set forth in the Australian Foreign Acquisitions and Takeovers Act, or the Takeovers Act.
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Under the Takeovers Act, as currently in effect, any foreign person, together with associates, or parties acting in concert, is prohibited (without approval) from acquiring 20% or more of the shares in any company having total assets of A$252 million or more (or A$1,094 million or more in case of private (non-government) U.S. investors). “Associates” is a broadly defined term under the Takeovers Act and includes:
| ● | spouses, lineal ancestors and descendants, and siblings; |
| ● | any person with whom the person is acting, or proposes to act, in concert; |
| ● | partners, officers of companies, the company, employers and employees, and corporations; |
| ● | their shareholders related through substantial shareholdings or voting power; |
| ● | corporations whose directors are controlled by the person, or who control a person; and |
| ● | associations between trustees and substantial beneficiaries of trust estates. |
In addition, a foreign person may not acquire shares in a company having total assets of A$252 million or more (or A$1,094 million or more in case of private (non-government) U.S. investors) if, as a result of that acquisition, the total holdings of all foreign persons and their associates will exceed 40% in aggregate without the approval of the Australian Treasurer. If the necessary approvals are not obtained, the Treasurer may make an order requiring the acquirer to dispose of the shares it has acquired within a specified period of time. At present, we do not have total assets of A$252 million or more. At this time, our total assets do not exceed any of the above thresholds and therefore no approval would be required from the Australian Treasurer. Nonetheless, should our total assets exceed the threshold in the future, we will be mindful to monitor the holdings for foreign persons (together with the associates) to ensure that the thresholds will not be exceeded without the Australian Treasurer’s approval.
Each foreign person seeking to acquire holdings in excess of the above caps (including their associates, as the case may be) would need to complete an application form setting out the proposal and relevant particulars of the acquisition/shareholding. The Australian Treasurer then has 30 days to consider the application and make a decision. However, the Australian Treasurer may extend the period by up to a further 90 days by publishing an interim order. The Australian Treasurer has issued a guideline titled Australia’s Foreign Investment Policy which provides an outline of the policy. As for the risk associated with seeking approval, the policy provides that the Treasurer will reject an application if it is contrary to the national interest.
If the level of foreign ownership exceeds 40% at any time (or if one individual not ordinarily resident in Australia, a foreign corporation or a foreign government holds at least 20%), we would be considered a foreign person under the Takeovers Act. In such event, we would be required to obtain the approval of the Australian Treasurer for our company, together with our associates, to acquire (i) more than 20% of an Australian company or business with assets totaling over A$252 million (or A$1,094 million if we were considered a private US investor); or (ii) any direct or indirect ownership in certain real estate interests.
The percentage of foreign ownership in our company would also be included in determining the foreign ownership of any Australian company or business in which we may choose to invest. Since we have no current plans for any such investments or acquisitions and do not currently own any relevant real estate interests, any such approvals required to be obtained by us as a foreign person under the Takeovers Act will not affect our current or future ownership or lease of real estate interests in Australia.
Our Constitution does not contain any additional limitations on a non-resident’s right to hold or vote our securities. Australian law requires the transfer of shares in our company to be made in writing. No stamp duty will be payable in Australia on the transfer of Ordinary Shares quoted on the NASDAQ.
The Financial Transactions Reports Act 1988
The Financial Transactions Reports Act 1988 (Cth) is an act of the Parliament of the Commonwealth of Australia, designed to facilitate the administration and enforcement of Australia’s taxation laws. It provides for the reporting of certain financial transactions and transfers, including the export or import of currency exceeding AUD10,000 to Australian Transaction Reports and Analysis Centre.
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The Income Tax Assessment Act of 1936 and the Income Tax Assessment Act of 1997 (collectively, the “Tax Act”)
The Income Tax Assessment Act 1936 (Cth) and the Income Tax Assessment Act 1997 (Cth) (collectively, the “Tax Act”) is the principal law governing the imposition of Federal taxes in Australia (except goods and services tax and a number of specific taxes such as fringe benefits tax).
Under the Tax Act, in some circumstances overseas residents are obliged to pay income tax in Australia on income derived from Australian sources or property.
E. Taxation
The following is a summary of the current tax laws of the U.S. (including the Internal Revenue Code of 1986, as amended, its legislative history, existing and proposed regulations thereunder, published rulings and court decisions) and Australia as they relate to us and our shareholders, including United States and other non-Australian shareholders. The summary is based upon laws and relevant interpretations thereof in effect as of the date of this annual report, all of which are subject to change, possibly on a retroactive basis. The discussion does not address any aspects of U.S. taxation other than federal income taxation or any aspects of Australian taxation other than federal income taxation, inheritance taxation, stamp duty and goods and services tax.
Existing and prospective holders of ordinary shares are advised to consult their own tax advisors with respect to the specific tax consequences to them of the purchase, ownership and disposition of ordinary shares, including, in particular, the effect of any foreign, state or local taxes.
Australian Tax Consequences
Non-Australian residents may be liable to pay Australian tax on income derived from Australian sources. One mechanism by which that tax is paid (for non-residents who have no permanent establishment or fixed base in Australia or where the income is not connected with a permanent establishment or fixed base) is known as withholding tax. Dividends paid by a resident Australian company to a resident of the United States of America who is entitled to the benefits of the Australia/US double tax treaty and is beneficially entitled to the dividends are subject to withholding tax at the rate of 15% to the extent the dividends are unfranked. The rate of withholding tax on dividends is normally 30%, but since the United States has concluded a double tax treaty agreement with Australia, the rate is reduced to 15% where the benefits of the treaty apply. It should be noted, however, that under Section 128B(3) of the Income Tax Assessment Act 1936 (Cth), to the extent that dividends paid to non-residents have been franked (generally where a company pays tax itself), such dividends are exempt from withholding tax. “Franked dividends” is the expression given to dividends when the profits out of which those dividends are paid have been taxed at company level and such tax is allocated to the dividend. Accordingly, an Australian company paying fully franked dividends to a non-resident is not required to deduct any withholding tax. Dividends on which withholding tax has been paid are generally not subject to any further Australian tax. In other words, the withholding tax should represent the final Australian tax liability in relation to those dividends.
The pertinent provisions of the double tax treaty between Australia and the United States provide that dividends are primarily liable for tax in the country of residence of the beneficial owner of the dividends. However, the source country, in this case Australia, may also tax them, but in such case the tax will be limited to 15% if the benefits of the treaty apply. Where the beneficial owner is a United States resident corporation that directly holds at least 10% of the voting power in us, the tax will be limited to 5%. The 15% limit does not apply to dividends derived by a resident of the United States of America who has a permanent establishment or fixed base in Australia, if the holding giving rise to the dividends is effectively connected with that establishment or base. Such dividends are taxed on a net assessment basis as business income or independent personal services income as the case may be.
We have not paid any cash dividends since our inception and we do not anticipate the payment of cash dividends in the foreseeable future. See “Item 8.A. Financial Statements and Other Financial Information-Dividend Policy.”
Capital gains tax in Australia is payable on net assessable real gains over the period in which the shares have been held, that is, the difference between the selling price and the total cost price calculated under Australian tax law. In some cases the cost price may be indexed for inflation, or, if the shares have been held for more than one year, certain taxpayers can, with respect to shares held for more than one year, be eligible for a discount of up to 50% of the gross gain. Capital losses may be available to offset capital gains.
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Stamp Duty
Any transfer of shares through trading on the NASDAQ, whether by Australian residents or foreign residents, should not be subject to stamp duty.
Australian Death Duty
Australia does not have estate or death duties. Generally, no capital gains tax liability is realized upon the inheritance of a deceased person’s shares. The disposal of inherited shares by beneficiaries, may, however, give rise to a capital gains tax liability.
Goods and Services Tax
The issue or transfer of shares will not incur Australian goods and services tax and does not require a stockholder to register for Australian goods and services tax purposes.
U.S. Federal Income Tax Considerations
The following discussion summarizes the principal U.S. federal income tax considerations relating to the purchase, ownership and disposition of our Ordinary Shares by a U.S. holder (as defined below) holding such shares as capital assets (generally, property held for investment). This summary is based on the Internal Revenue Code of 1986, as amended (the “Code”), Treasury regulations, administrative pronouncements of the U.S. Internal Revenue Service (the “IRS”) and judicial decisions, all as in effect on the date hereof, and all of which are subject to change (possibly with retroactive effect) and to differing interpretations. This summary does not describe any state, local or non-U.S. tax law considerations, or any aspect of U.S. federal tax law other than income taxation; U.S. holders are urged to consult their own tax advisors regarding such matters.
This summary does not purport to address all material federal income tax consequences that may be relevant to a holder of ordinary shares or warrants. This summary does not take into account the specific circumstances of any particular investors, some of which (such as tax-exempt entities, banks or other financial institutions, insurance companies, broker-dealers, traders in securities that elect to use a mark-to-market method of accounting for their securities holdings, regulated investment companies, real estate investment trusts, U.S. expatriates, investors liable for the alternative minimum tax, partnerships and other pass-through entities, investors that own or are treated as owning 10% or more of our voting stock, investors that hold the ordinary shares as part of a straddle, hedge, conversion or constructive sale transaction or other integrated transaction, and U.S. holders whose functional currency is not the U.S. dollar) may be subject to special tax rules. This discussion does not address U.S. federal tax laws other than those pertaining to U.S. federal income taxation (such as estate or gift tax laws or the Medicare tax on investment income), nor does it address any aspects of U.S. state or local or non-U.S. taxation.
As used below, a “U.S. Holder” is a beneficial owner of an ordinary share that is, for U.S. federal income tax purposes, (i) a citizen or resident alien individual of the United States, (ii) a corporation (or an entity taxable as a corporation) created or organized under the law of the United States, any State thereof or the District of Columbia, (iii) an estate, the income of which is subject to U.S. federal income tax without regard to its source, or (iv) a trust if (1) a court within the United States is able to exercise primary supervision over the administration of the trust, and one or more U.S. persons have the authority to control all substantial decisions of the trust, or (2) the trust has a valid election in effect under applicable U.S. Treasury Regulations to be treated as a U.S. person. For purposes of this discussion, a “Non-U.S. Holder” is a beneficial owner of an ordinary share or warrant that is (i) a non-resident alien individual, (ii) a corporation (or an entity taxable as a corporation) created or organized in or under the law of a country other than the United States or a political subdivision thereof or (iii) an estate or trust that is not a U.S. holder. This discussion does not address any aspect of U.S. federal gift or estate tax, or state, local or non-U.S. tax laws. Additionally, the discussion does not consider the tax treatment of partnerships or other pass-through entities or persons who hold ordinary shares through such entities. If a partnership (including for this purpose any entity treated as a partnership for U.S. federal tax purposes) is a beneficial owner of ordinary shares or warrants, the U.S. federal tax treatment of a partner in the partnership generally will depend on the status of the partner and the activities of the partnership. A holder of ordinary shares or warrants that is a partnership and partners in that partnership are urged to consult their own tax advisers regarding the U.S. federal income tax consequences of purchasing, holding and disposing of ordinary shares or warrants.
We have not sought a ruling from the IRS or an opinion of counsel as to any U.S. federal income tax consequence described herein. The IRS may disagree with the description herein, and its determination may be upheld by a court.
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GIVEN THE COMPLEXITY OF THE TAX LAWS AND BECAUSE THE TAX CONSEQUENCES TO ANY PARTICULAR INVESTOR MAY BE AFFECTED BY MATTERS NOT DISCUSSED HEREIN, PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF ORDINARY SHARES, INCLUDING THE APPLICABILITY AND EFFECT OF STATE, LOCAL AND NON-U.S. TAX LAWS, AS WELL AS U.S. FEDERAL TAX LAWS.
TO ENSURE COMPLIANCE WITH REQUIREMENTS IMPOSED BY THE IRS UNDER TREASURY CIRCULAR 230, WE INFORM YOU THAT (1) ANY DISCUSSION OF U.S. FEDERAL INCOME TAX ISSUES CONTAINED HEREIN (INCLUDING ANY ATTACHMENTS), UNLESS OTHERWISE SPECIFICALLY STATED, WAS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, FOR THE PURPOSE OF AVOIDING PENALTIES UNDER THE UNITED STATES INTERNAL REVENUE CODE, AND (2) EACH U.S. HOLDER SHOULD SEEK ADVICE BASED UPON THEIR PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.
Taxation of Distributions
U.S. Holders. In general, subject to the passive foreign investment company (“PFIC”) rules discussed below, a distribution on an ordinary share will constitute a dividend for U.S. federal income tax purposes to the extent that it is made from our current or accumulated earnings and profits as determined under U.S. federal income tax principles. If a distribution exceeds the amount of our current and accumulated earnings and profits, it will be treated as a non-taxable reduction of basis to the extent of the U.S. Holder’s tax basis in the ordinary share on which it is paid, and to the extent it exceeds that basis it will be treated as a capital gain. For purposes of this discussion, the term “dividend” means a distribution that constitutes a dividend for U.S. federal income tax purposes.
The gross amount of any dividend on an ordinary share (which will include the amount of any Australian taxes withheld) generally will be subject to U.S. federal income tax as foreign source dividend income and will not be eligible for the corporate dividends received deduction. The amount of a dividend paid in Australian currency will be its value in U.S. dollars based on the prevailing spot market exchange rate in effect on the day that the U.S. Holder receives the dividend, whether or not the dividend is converted into U.S. dollars. A U.S. holder will have a tax basis in any distributed Australian currency equal to its U.S. dollar amount on the date of receipt, and any gain or loss realized on a subsequent conversion or other disposition of the Australian currency generally will be treated as U.S. source ordinary income or loss. If dividends paid in Australian currency are converted into U.S. dollars on the date they are received by a U.S. Holder, the U.S. Holder generally should not be required to recognize foreign currency gain or loss in respect of the dividend income. U.S. Holders are urged to consult their own tax advisers regarding the treatment of any foreign currency gain or loss if any Australian currency received by the U.S. Holder is not converted into U.S. dollars on the date of receipt.
Subject to certain exceptions for short-term and hedged positions, any dividend that a non-corporate holder receives on an ordinary share will be subject to tax rate of 20% if the dividend is a “qualified dividend”. A dividend on an ordinary share will be a qualified dividend if (i) either (a) the ordinary shares are readily tradable on an established securities market in the U.S. or (b) we are eligible for the benefits of a comprehensive income tax treaty with the U.S. that the U.S. Secretary of the Treasury determines is satisfactory for purposes of these rules and that includes an exchange of information program, and (ii) we were not, in the year prior to the year the dividend was paid, and are not, in the year the dividend is paid, a PFIC. The ordinary shares are listed on the NASDAQ Capital Market, which should then qualify them as readily tradable on an established securities market in the United States. In any event, the double tax treaty between Australia and the U.S. (the “Treaty”) satisfies the requirements of clause (i)(b), and, although the matter is not free from doubt, we believe that we should be a resident of Australia entitled to the benefits of the Treaty. However, because the facts relating to our entitlement to the benefits of the Treaty can change over time, there can be no assurance that we will be entitled to the benefits of the Treaty for any taxable year. As discussed above, qualified dividends do not include dividends paid by a company which was a PFIC in the year prior to the year the dividend was paid, or in the year the dividend is paid. Based on our audited financial statements and relevant market and shareholder data, we believe we were not a PFIC for U.S. federal income tax purposes for our December 31, 2022 taxable year. Based on our audited consolidated financial statements and our current expectations regarding the value and nature of our assets, the sources and nature of our income, and relevant market and shareholder data, we do not expect that we could be classified as a PFIC for our December 31, 2022 taxable year. Given that the determination of PFIC status involves the application of complex tax rules, and that it is based on the nature of our income and assets from time to time, no assurances can be provided that we will not be considered a PFIC for any past or future taxable year. Moreover, as described in the section below entitled “Passive Foreign Investment Company Rules,” if we were a PFIC in a year while a U.S. Holder held an ordinary share, and if the U.S. Holder has not made a qualified electing fund election effective for the first year the U.S. Holder held the ordinary share, the ordinary share remains an interest in a PFIC for all future years or until such an election is made. The IRS takes the position that that rule will apply for purposes of determining whether an ordinary share is an interest in a PFIC in the year a dividend is paid or in the prior year, even if the Company does not satisfy the tests to be a PFIC in either of those years.
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Even if dividends on the ordinary shares would otherwise be eligible for qualified dividend treatment, in order to qualify for the reduced qualified dividend tax rates, a non-corporate holder must hold the ordinary share on which a dividend is paid for more than 60 days during the 120-day period beginning 60 days before the ex-dividend date, disregarding for this purpose any period during which the non-corporate holder has an option to sell, is under a contractual obligation to sell or has made (and not closed) a short sale of substantially identical stock or securities, is the grantor of an option to buy substantially identical stock or securities or, pursuant to Treasury regulations, has diminished their risk of loss by holding one or more other positions with respect to substantially similar or related property. In addition, to qualify for the reduced qualified dividend tax rates, the non-corporate holder must not be obligated to make related payments with respect to positions in substantially similar or related property. Payments in lieu of dividends from short sales or other similar transactions will not qualify for the reduced qualified dividend tax rates. A non-corporate holder that receives an extraordinary dividend eligible for the reduced qualified dividend rates must treat any loss on the sale of the stock as a long-term capital loss to the extent of the dividend. For purposes of determining the amount of a non-corporate holder’s deductible investment interest expense, a dividend is treated as investment income only if the non-corporate holder elects to treat the dividend as not eligible for the reduced qualified dividend tax rates. Special limitations on foreign tax credits with respect to dividends subject to the reduced qualified dividend tax rates apply to reflect the reduced rates of tax.
The U.S. Treasury has announced its intention to promulgate rules pursuant to which non-corporate holders of stock of non-U.S. corporations, and intermediaries though whom the stock is held, will be permitted to rely on certifications from issuers to establish that dividends are treated as qualified dividends. Because those procedures have not yet been issued, it is not clear whether we will be able to comply with them.
Non-corporate holders of ordinary shares are urged to consult their own tax advisers regarding the availability of the reduced qualified dividend tax rates in the light of their own particular circumstances.
Any Australian withholding tax will be treated as a foreign income tax eligible for credit against a U.S. Holder’s U.S. federal income tax liability, subject to generally applicable limitations under U.S. federal income tax law. For purposes of computing those limitations separately under current law for specific categories of income, a dividend generally will constitute foreign source “passive category income” or, in the case of certain holders, “general category income”. A U.S. Holder will be denied a foreign tax credit with respect to Australian income tax withheld from dividends received with respect to the ordinary shares to the extent the U.S. Holder has not held the ordinary shares for at least 16 days of the 30-day period beginning on the date which is 15 days before the ex-dividend date or to the extent the U.S. Holder is under an obligation to make related payments with respect to substantially similar or related property. Any days during which a U.S. Holder has substantially diminished its risk of loss on the ordinary shares are not counted toward meeting the 16-day holding period required by the statute. The rules relating to the determination of the foreign tax credit are complex, and U.S. Holders are urged to consult with their own tax advisers to determine whether and to what extent they will be entitled to foreign tax credits as well as with respect to the determination of the foreign tax credit limitation. Alternatively, any Australian withholding tax may be taken as a deduction against taxable income, provided the U.S. Holder takes a deduction and not a credit for all foreign income taxes paid or accrued in the same taxable year. In general, special rules will apply to the calculation of foreign tax credits in respect of dividend income that is subject to preferential rates of U.S. federal income tax.
Non-U.S. Holders. A dividend paid to a Non-U.S. Holder on an ordinary share will not be subject to U.S. federal income tax unless the dividend is effectively connected with the conduct of trade or business by the non-U.S. Holder within the United States (and is attributable to a permanent establishment or fixed base the Non-U.S. Holder maintains in the United States if an applicable income tax treaty so requires as a condition for the Non-U.S. Holder to be subject to U.S. taxation on a net income basis on income from the ordinary share). A Non-U.S. Holder generally will be subject to tax on an effectively connected dividend in the same manner as a U.S. Holder. A corporate Non-U.S. Holder may also be subject under certain circumstances to an additional “branch profits tax,” the rate of which may be reduced pursuant to an applicable income tax treaty.
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Taxation of Capital Gains
U.S. Holders. Subject to the passive foreign investment company rules discussed below, on a sale or other taxable disposition of an ordinary share, a U.S. Holder will recognize capital gain or loss in an amount equal to the difference between the U.S. Holder’s adjusted basis in the ordinary share and the amount realized on the sale or other disposition, each determined in U.S. dollars.
Such capital gain or loss will be long-term capital gain or loss if at the time of the sale or other taxable disposition the ordinary share has been held for more than one year. In general, any adjusted net capital gain of an individual is subject to a federal income tax rate of 20%. Capital gains recognized by corporate U.S. Holders generally are subject to U.S. federal income tax at the same rate as ordinary income. The deductibility of capital losses is subject to various limitations.
Any gain a U.S. Holder recognizes generally will be U.S. source income for U.S. foreign tax credit purposes, and, subject to certain exceptions, any loss will generally be a U.S. source loss. If an Australian tax is withheld on a sale or other disposition of an ordinary share, the amount realized will include the gross amount of the proceeds of that sale or disposition before deduction of the Australian tax. The generally applicable limitations under U.S. federal income tax law on crediting foreign income taxes may preclude a U.S. Holder from obtaining a foreign tax credit for any Australian tax withheld on a sale of an ordinary share. The rules relating to the determination of the foreign tax credit are complex, and U.S. Holders are urged to consult with their own tax advisers regarding the application of such rules. Alternatively, any Australian withholding tax may be taken as a deduction against taxable income, provided the U.S. Holder takes a deduction and not a credit for all foreign income taxes paid or accrued in the same taxable year.
Non-U.S. Holders. A Non-U.S. Holder will not be subject to U.S. federal income tax on a gain recognized on a sale or other disposition of an ordinary share unless (i) the gain is effectively connected with the conduct of a trade or business by the Non-U.S. Holder within the United States (and is attributable to a permanent establishment or fixed base that the Non-U.S. Holder maintains in the United States if an applicable income tax treaty so requires as a condition for the Non-U.S. Holder to be subject to U.S. taxation on a net income basis on income from the ordinary share), or (ii) in the case of a Non-U.S. Holder who is an individual, the Non-U.S. Holder is present in the United States for 183 or more days in the taxable year of the sale or other disposition and certain other conditions apply. Any effectively connected gain of a corporate Non-U.S. Holder may also be subject under certain circumstances to an additional “branch profits tax”, the rate of which may be reduced pursuant to an applicable income tax treaty.
Passive Foreign Investment Company Rules
A special set of U.S. federal income tax rules applies to a foreign corporation that is a PFIC for U.S. federal income tax purposes. As noted above, based on our audited consolidated financial statements and relevant market and shareholder data, we believe we were not a PFIC for U.S. federal income tax purposes for our December 31, 2022 taxable year. Moreover, given that the determination of PFIC status involves the application of complex tax rules, and that it is based on the nature of our income and assets from time to time, no assurances can be provided that we will be considered a PFIC for any future taxable year.
In general, a foreign corporation is a PFIC if at least 75% of its gross income for the taxable year is passive income or if at least 50% of its assets for the taxable year produce passive income or are held for the production of passive income. In general, passive income for this purpose means, with certain designated exceptions, dividends, interest, rents, royalties (other than certain rents and royalties derived in the active conduct of trade or business), annuities, net gains from dispositions of certain assets, net foreign currency gains, income equivalent to interest, income from notional principal contracts and payments in lieu of dividends. The determination of whether a foreign corporation is a PFIC is a factual determination made annually and is therefore subject to change. Subject to exceptions pursuant to certain elections that generally require the payment of tax, once stock in a foreign corporation is classified as stock in a PFIC in the hands of a particular shareholder that is a U.S. person, it remains stock in a PFIC in the hands of that shareholder.
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Unfavorable tax consequences for a U.S. Holder can occur if we are treated as a PFIC for any year while a U.S. Holder owns ordinary shares. Certain of these tax consequences can be mitigated with respect to a U.S. Holder’s ordinary shares (but not a U.S. Holder’s warrants) if the U.S. Holder makes, or has made, a timely qualified electing fund election or election to mark to market the holder’s ordinary shares, and such election is in effect for the first taxable year during which the U.S. Holder owns ordinary shares that we are a PFIC. If we are treated as a PFIC, and neither election is made, then contrary to the tax consequences described in “U.S. Federal Income Tax Considerations-Taxation of Distributions” and “U.S. Federal Income Tax Considerations-Taxation of Capital Gains” above, in any year in which the U.S. Holder either disposes of an ordinary share at a gain or receives one or more “excess distributions” in respect of our Ordinary Shares, special rules apply to the taxation of the gain or the excess distributions. For purposes of these rules, a U.S. Holder will be treated as receiving an “excess distribution” to the extent that actual or constructive distributions received in the current taxable year exceed 125% of the average distributions (whether actual or constructive and whether or not out of earnings and profits) received by such U.S. Holder in respect of our Ordinary Shares during the three preceding years or, if shorter, the U.S. Holder’s holding period. A disposition of an ordinary share, for purposes of these rules, includes many transactions on which gain or loss is not realized under general U.S. federal income tax rules (but generally should not include the exercise of a warrant, as discussed below). The gain or the excess distributions must be allocated ratably to each day the U.S. Holder has held the ordinary share, as the case may be. Amounts allocated to each year are taxable as ordinary income in their entirety (and are not eligible for the reduced qualified dividend rates) and not as capital gain, and amounts allocable to prior years may not be offset by any deductions or losses. Amounts allocated to each such prior year are taxable at the highest rate in effect for that year and are subject to an interest charge at the rates applicable to deficiencies for income tax for those periods. In addition, a U.S. Holder’s tax basis in an ordinary share that is acquired from a decedent would not receive a step-up to fair market value as of the date of the decedent’s death but instead would be equal to the decedent’s basis, if lower.
The special PFIC rules described above will not apply to a U.S. Holder’s ordinary shares if the U.S. Holder makes a timely election, which remains in effect, to treat us as a qualified electing fund, or QEF, for the first taxable year in which the U.S. Holder owns an ordinary share and in which we are classified as a PFIC, provided that we comply with certain reporting requirements. Instead, a U.S. Holder that has made a QEF election is required for each taxable year to include in income a pro rata share of our ordinary earnings as ordinary income and a pro rata share of its net capital gain as long-term capital gain, subject to a separate election to defer payment of taxes, which deferral is subject to an interest charge. In order for such a QEF election to be valid, we must provide U.S. Holders either (1) a statement showing such U.S. Holder’s pro rata share of our ordinary earnings and net capital gain (calculated for U.S. tax purposes) for the Company’s taxable year, (2) sufficient information to enable the U.S. Holder to calculate its pro rata share for such year, or (3) a statement that the Company has permitted the U.S. Holder to inspect and copy its permanent books of account, records, and such other documents as may be maintained by us that are necessary to establish that PFIC ordinary earnings and net capital gain are computed in accordance with U.S. income tax principles. We have not yet determined whether, in years in which we are classified as a PFIC, we will make the computations necessary to supply U.S. Holders with the information needed to report income and gain pursuant to a QEF election. It is, therefore, possible that U.S. Holders would not be able to make or retain that election in any year we are a PFIC. The QEF election is made on a shareholder-by-shareholder basis and once made, can only be revoked with the consent of the IRS. A U.S. Holder generally makes a QEF election by attaching a completed IRS Form 8621 (Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund), including the information provided in a PFIC annual information statement, to a timely filed U.S. federal income tax return for the tax year to which the election relates. Retroactive QEF elections may only be made by filing a protective statement with such return or with the consent of the IRS. A U.S. Holder may make a separate election to defer the payment of taxes on undistributed income inclusions under the QEF rules, but if deferred, any such taxes will be subject to an interest charge.
If a U.S. Holder has elected the application of the QEF rules to the U.S. Holder’s ordinary shares, and the special tax and interest charge rules described in the second preceding paragraph do not apply to such shares (because of a timely QEF election for the first tax year of the U.S. Holder’s holding period for such shares, or, as described below, a purge of the PFIC taint pursuant to a special purging election), any gain realized on the disposition of an ordinary share generally will be taxable as capital gain and no interest charge will be imposed. As discussed above, U.S. Holders of a QEF are currently taxed on their pro rata shares of the QEF’s earnings and profits, whether or not distributed. In such case, a subsequent distribution of such earnings and profits that were previously included in income generally will not be taxable as a dividend. The tax basis of a U.S. Holder’s shares in a QEF will be increased by amounts that are included in income, and decreased by amounts distributed but not taxed as dividends, under the above rules. Similar basis adjustments apply to property if by reason of holding such property the U.S. Holder is treated under applicable attribution rules as owning shares in a QEF.
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If a QEF election is not made for the first taxable year in which the U.S. Holder owns an ordinary share and in which we are a PFIC, certain elections can be made while we continue to satisfy the definition of a PFIC that, combined with a QEF election, can cause the QEF election to be treated as having been made for that first taxable year. Those elections may require the electing shareholder to recognize gain on a constructive sale or to be taxable on the shareholder’s share of certain undistributed profits of the foreign corporation. If gain or income is recognized pursuant to one of those elections, the special PFIC rules set forth in the fourth preceding paragraph would apply to that gain or income. Even if a QEF election ceases to apply because in a later taxable year we cease to satisfy the tests to be a PFIC, the QEF election will apply again in any subsequent year in which the Company again satisfies the tests to be a PFIC. Moreover, if a U.S. Holder sells all of the ordinary Shares they own and later reacquires other ordinary shares, any QEF election the U.S. Holder has made that remains in effect will apply to the ordinary shares acquired later. The applicable Treasury regulations provide that the Commissioner of the IRS has the discretion to invalidate or terminate a QEF election if the U.S. Holder or we, or an intermediary, fails to satisfy the requirements for the QEF election.
The special PFIC rules described in the fourth preceding paragraph will not apply to a U.S. Holder’s ordinary shares if the U.S. Holder elects to mark the U.S. Holder’s ordinary shares to market each year, provided that the ordinary shares are considered “marketable stock” within the meaning of the applicable Treasury regulations. A U.S. Holder that makes this election will recognize as ordinary income or loss each year an amount equal to the difference, if any, as of the close of the taxable year between the fair market value of the U.S. Holder’s ordinary shares and the U.S. Holder’s adjusted tax basis in the ordinary shares. Losses would be allowed only to the extent of net mark-to-market gain previously included in income by the U.S. Holder under the election for prior taxable years, reduced by losses allowed in prior taxable years. If the mark-to-market election were made, then the special PFIC rules set forth in the fourth preceding paragraph would not apply for periods covered by the election. In general, the ordinary shares will be marketable stock within the meaning of the applicable Treasury regulations if they are traded, other than in de minimis quantities, on at least 15 days during each calendar quarter on a “qualified exchange or other market” within the meaning of the applicable Treasury regulations and certain other requirements are met. The Australian Securities Exchange is a qualified exchange within the meaning of the applicable Treasury regulations. Thus, the ordinary shares should be “marketable stock” within the meaning of the applicable Treasury regulations. If a U.S. Holder makes a mark-to-market election, but does not make that election for the first taxable year in which the U.S. Holder owns an ordinary share and in which the Company is classified as a PFIC, and if the U.S. Holder had not made a QEF election for that first such taxable year, the rules set forth in the fourth preceding paragraph will apply to any distributions on an ordinary share in the year of the mark-to-market election, to any gain recognized on an actual sale of an ordinary share in that year, and to any gain recognized in that year pursuant to the mark-to-market election. The mark-to-market rules generally continue to apply to a U.S. Holder who makes the mark-to-market election, even in years we do not satisfy the tests to be a PFIC.
A U.S. Holder who owns ordinary shares during a year in which we are classified as a PFIC generally will remain subject to the rules set forth in the fifth preceding paragraph for all taxable years if the U.S. Holder has not made a QEF election or a mark-to-market election for the first taxable year in which the U.S. Holder owns an ordinary share and in which we are classified as a PFIC. In that event, those rules will apply to any gains on dispositions of ordinary shares and to any “excess distributions.” It is, however, possible for a U.S. Holder to avoid this “once a PFIC, always a PFIC” result by electing to treat all of the U.S. Holder’s ordinary shares as sold for their fair market value as of the last day of the last taxable year we satisfy the tests to be a PFIC, provided the statute of limitations has not run for that year. If a gain is recognized on that constructive sale, the rules set forth in the fifth preceding paragraph would apply to that gain.
If we are classified as a PFIC for a taxable year, and, at any time during such taxable year, have a non-U.S. subsidiary that is classified as a PFIC, U.S. Holders generally would be deemed to own a portion of the shares of such lower-tier PFIC, and generally could incur liability for the deferred tax and interest charge described in the sixth preceding paragraph, if we receive a distribution from, or dispose of all or part of its interest in, the lower-tier PFIC. We have not yet determined whether, if we are classified as a PFIC, we would make the computations necessary to supply U.S. Holders with the information needed to make or maintain a QEF election with respect to the lower-tier PFIC. It is, therefore, possible that U.S. Holders would not be able to make or retain that election in any taxable year that we are classified as a PFIC and has a non-U.S. subsidiary that is also classified as a PFIC. U.S. Holders are urged to consult their own tax advisors regarding the tax issues raised by lower-tier PFICs.
A dividend from a foreign corporation that otherwise would qualify for reduced qualified dividend rates does not qualify for that rate if the foreign corporation is a PFIC in either the taxable year of the dividend or the preceding taxable year.
A U.S. Holder who owns (or is deemed to own) shares in a PFIC during any taxable year, such U.S. Holder may have to file an IRS Form 8621 (whether or not a QEF or mark-to-market election is made).
77
GIVEN THE COMPLEXITIES OF THE PFIC RULES AND THEIR POTENTIALLY ADVERSE TAX CONSEQUENCES, U.S. HOLDERS OF ORDINARY SHARES ARE URGED TO CONSULT THEIR TAX ADVISERS ABOUT THE PFIC RULES, INCLUDING THE CONSEQUENCES TO THEM OF MAKING A QEF ELECTION OR A MARK-TO-MARKET ELECTION WITH RESPECT TO THE ORDINARY SHARES IN THE EVENT THAT THE COMPANY QUALIFIES AS A PFIC FOR ANY TAXABLE YEAR.
Information Reporting and Backup Withholding
U.S. Holders. Dividends paid on, and proceeds from the sale or other disposition of, an ordinary share generally may be subject to information reporting requirements and may be subject to backup withholding at the rate of 28% unless a U.S. Holder provides an accurate taxpayer identification number or otherwise demonstrates that they are exempt. The amount of any backup withholding collected from a payment to a U.S. Holder will be allowed as a credit against the U.S. Holder’s U.S. federal income tax liability and may entitle the U.S. Holder to a refund, provided that certain required information is submitted to the Internal Revenue Service. Under U.S. federal income tax law and U.S. Treasury Regulations, certain categories of U.S. holders must file information returns with respect to their investment in, or involvement in, a foreign corporation. U.S. holders are urged to consult with their own tax advisors concerning such reporting requirements.
Non-U.S. Holders. Non-U.S. Holders generally will be exempt from these information reporting requirements and backup withholding tax but may be required to comply with certain certification and identification procedures in order to establish their eligibility for exemption.
THE DISCUSSION ABOVE IS NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF ALL TAX CONSIDERATIONS APPLICABLE TO AN INVESTMENT IN ORDINARY SHARES. HOLDERS AND POTENTIAL HOLDERS ARE URGED TO CONSULT THEIR TAX ADVISER(S) CONCERNING THE TAX CONSEQUENCES RELEVANT TO THEM IN THEIR PARTICULAR SITUATION.
F. Dividends and Paying Agents
Not applicable.
G. Statement by Experts
Not applicable.
H. Documents on Display
We are subject to the reporting requirements of the United States Securities and Exchange Act of 1934, as amended, or the Exchange Act, as applicable to “foreign private issuers” as defined in Rule 3b-4 under the Exchange Act. As a foreign private issuer, we are exempt from certain provisions of the Exchange Act. Accordingly, our proxy solicitations are not subject to the disclosure and procedural requirements of regulation 14A under the Exchange Act, and transactions in our equity securities by our officers and directors are exempt from reporting and the “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 periodic reports and financial statements as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act. However, we will file with the U.S. Securities and Exchange Commission an annual report on Form 20-F containing financial statements that have been examined and reported on, with and opinion expressed by an independent registered public accounting firm, and we will submit reports to the U.S. Securities and Exchange Commission on Form 6-K containing (among other things) press releases and unaudited financial information for the first six months of each fiscal year. We post our annual report on Form 20-F on our website promptly following the filing of our annual report with the U.S. Securities and Exchange Commission. The information on our website is not incorporated by reference into this annual report.
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This document and the exhibits thereto and any other document we file pursuant to the Exchange Act may be inspected without charge and copied at prescribed rates at the U.S. Securities and Exchange Commission public reference room at 100 F Street, N.E., Room 1580, Washington D.C. 20549. You may obtain information on the operation of the Securities and Exchange Commission’s public reference room in Washington, D.C. by calling the U.S. Securities and Exchange Commission at 1-800-SEC-0330.
The U.S. Securities and Exchange Commission maintains a website at www.sec.gov that contains reports, proxy and information statements and other information regarding registrants that make electronic filings with the U.S. Securities and Exchange Commission using its EDGAR (Electronic Data Gathering, Analysis, and Retrieval) system.
The documents concerning our Company which are referred to in this document may also be inspected at the offices of our registered office located at Suite 1401 Level 14, 219-227 Elizabeth Street, Sydney NSW 2000, Australia.
I. Subsidiary Information
See “Item 4.C. Information on the Company - Organizational Structure.”
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our cash and cash equivalents consist primarily of cash and money market funds in United States dollars, European Euros, Malaysia Ringgit and Hong Kong dollars. We invest our excess cash and cash equivalents mainly in interest-bearing accounts and term deposits with banks in Malaysia. Our primary exposure to market risk is interest income sensitivity, which is affected by changes in the general level of United States, Europe and Malaysia interest rates. However, because of the short-term nature of the instruments in our portfolio, a sudden change in market interest rates would not be expected to have a material impact on our financial condition and/or results of operation.
We are exposed to foreign currency risk via our operation in Malaysia and Europe and trade and other payables we hold. We are required to make certain payments in U.S. dollars, Euro and Malaysian ringgit and other currencies. An adverse movement in end-of-period exchange rates would have a material impact on our operating results.
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
A. Debt Securities
Not applicable.
B. Warrants and Rights
Not applicable.
C. Other Securities
Not applicable.
79
PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
Not applicable.
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
Not applicable.
ITEM 15. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Management of the Company maintain disclosure controls and procedures as such term is defined in Rules 13 a-15 (e) and 15d-15(e) under the Securities Exchange Act of 1934 as amended (the “Exchange Act”), as amended, that are designed to ensure that information required to be disclosed in the reports that are filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Disclosure controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving the desired control objectives.
Management has carried out an evaluation, under the supervision and with the participation of the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the disclosure controls and procedures as of December 31, 2023. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were not effective as of December 31, 2023.
Management’s Annual Report on Internal Control over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting for the Company, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the consolidated financial statements for external purposes in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. A Company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit the preparation of the consolidated financial statements in accordance with IFRS as issued by the International Accounting Standards Board and that receipts and expenditures of the Company are being made only in accordance with authorizations of our Board of Directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the consolidated financial statements.
A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. In particular, the design of a control system must be considered relative to their costs. Additionally, the design of a control system is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated objectives under all potential future conditions. Due to its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements to the consolidated financial statements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2023 based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) (the “2013 Framework”) Internal Control-Integrated Framework. Based on this assessment, management concluded that the Company’s internal control over financial reporting is not effective as of December 31, 2023 under the COSO 2013 Framework.
80
A material weakness is a deficiency, or combination of deficiencies, that results in more than a remote likelihood that a material misstatement of annual or interim financial statements will not be prevented or detected. In connection with the assessment described above, management identified the following control deficiencies that represent material weaknesses at December 31, 2023:
| i. | inadequate segregation of duties due to limited number of personnel, which makes the reporting process susceptible to management override; and |
| ii. | Lack of technical accounting expertise to evaluate complex accounting transactions, such as convertible promissory notes; and |
| iii. | Lack of formal accounting processes over key accounting areas. |
Management believes that the material weaknesses set forth in items (i) through (iii) above did not have an effect on the Company’s financial reporting during the year ended December 31, 2023.
Remediation of Material Weaknesses
A material weakness is a control deficiency (within the meaning of the Public Company Accounting Oversight Board (“PCAOB”) Auditing Standard No. 5), or combination of control deficiencies, that result in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. While management believes that the Company’s consolidated financial statements previously filed in the Company’s SEC reports have been properly recorded and disclosed in accordance with IFRS, we have designed and plan to implement, or in some cases have already implemented, the specific remediation initiatives described below:
| ● | We plan to retain additional accounting personnel and continue to enhance our internal finance and accounting organizational structure. |
| ● | We are in the process of further enhancing the supervisory procedures to include additional levels of analysis and quality control reviews within the accounting and financial reporting functions. |
While we now believe that these material weaknesses are continuing being addressed, we will continue our remediation efforts during fiscal year 2024.
Changes in Internal Control over Financial Reporting
There have been no significant changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect internal control over financial reporting during the period covered by this Annual Report.
ITEM 15T. CONTROLS AND PROCEDURES
Not applicable.
ITEM 16. RESERVED
Not applicable.
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
Not applicable.
81
ITEM 16B. CODE OF ETHICS
We have adopted a code of ethics that applies to our executive directors and chief financial officer. A copy of this Code of Ethics is available on the Company’s website at www.imtechltd.com.
No waivers to this Code of Ethics were granted to our executive directors or chief financial officer during the fiscal year ended December 31, 2023.
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
During the year 2023 and 2022, the following fees were paid or payable for services provided by Audit Alliance LLP, auditor of the Group.
| Fee Category | 2023 | 2022 | ||||||
| Audit Fees | $ | 130,800 | $ | 150,500 | ||||
| Audit-Related Fees | $ | - | $ | - | ||||
| All Other Fees | $ | - | $ | 5,500 | ||||
Audit Fees
This category consists of fees for professional services rendered by our principal independent registered public accountant for the audit of our annual financial statements, review of financial statements included in our interim reports and services that are normally provided by the independent registered public accounting firms in connection with statutory and regulatory filings or engagements for those fiscal years.
Audit-Related Fees
This category consists of fees for assurance and related services by our principal independent registered public accountant that are reasonably related to the performance of the audit or review of our financial statements and are not reported above under “Audit Fees”. The services for the fees disclosed under this category include consultations concerning financial accounting and reporting standards.
Tax Fees
This category consists of fees for professional services rendered by our principal independent registered public accountant for tax compliance, tax advice, and tax planning.
All Other Fees
This category consists of fees for services provided by our principal independent registered public accountant other than the services described above.
Policy on Pre-Approval of Audit Services
The Audit Committee pre-approves all services, including both audit and non-audit services, provided by our independent registered public accounting firm. All audit services (including statutory audit engagements as required under local country laws) must be accepted by the Audit Committee before the audit commences.
Each year, management and the independent registered public accounting firm will jointly submit a pre-approval request, which will list each known and/or anticipated audit and non-audit service for the upcoming calendar year and which will include associated budgeted fees. The Audit Committee will review the requests and approve a list of annual pre-approved non-audit services.
82
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Not applicable.
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
Not applicable.
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
Not applicable.
ITEM 16G. CORPORATE GOVERNANCE
Not applicable.
ITEM 16H. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
83
PART III
ITEM 17. FINANCIAL STATEMENTS
We have elected to furnish financial statements and related information specified in Item 18.
ITEM 18. FINANCIAL STATEMENTS
Integrated Media Technology Limited
Index to Consolidated Financial Statements
84
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Integrated Media Technology Limited
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of financial position of Integrated Media Technology Limited (the “Company”) and its subsidiaries (the “Group”) as of December 31, 2023 and 2022, and the related consolidated statements of profit or loss and other comprehensive income, changes in shareholders’ equity and cash flows for the years ended December 31, 2023, 2022 and 2021, 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 Group as of December 31, 2023 and 2022, and the results of its operations, and its cash flows for the years ended December 31, 2023, 2022 and 2021, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.
Basis for Opinion
These consolidated financial statements are the responsibility of the Group’s management. Our responsibility is to express an opinion on the Group’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 Group in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Group 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 Group’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 consolidated 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 provides a reasonable basis for our opinion.
Material Uncertainty Related to Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Group will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Group incurred a net loss in the amount of approximately $18.35 million during the year ended December 31, 2023 and had accumulated losses of approximately $53.82 million as of December 31, 2023, which raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
F-1
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the Audit Committee of the Board of Directors and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements, and (2) involved challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which they relate.
Convertible Promissory Notes
Critical Audit Matter Description
As discussed in Notes 3, 22 and 23 to the consolidated financial statements, during the year ended December 31, 2023, the Group issued one convertible promissory note. The Group analyzed the convertible promissory note for embedded derivatives and determined they contained conversion options and embedded derivatives, which were recorded at fair value as a liability upon inception of the notes, and were revalued at the reporting date at fair value.
How the Critical Audit Matter was Addressed in our Audit
We identified convertible promissory notes as a critical audit matter as subjective auditor judgment was required to evaluate whether these notes contain derivative financial instruments and assess the proper valuation of such instruments.
The following are the primary procedures we performed to address this critical audit matter:
| ● | Evaluated and discussed with management, their analysis over the valuation and accounting treatment over the convertible promissory notes, as well as, the embedded conversion options and derivatives that require recognition as derivative liabilities; |
| ● | Read and analyzed the convertible promissory note agreements; |
| ● | Reviewed management’s specialist’s valuations for the convertible promissory notes, including the embedded derivative components; |
| ● | Obtained an understanding of the work of the specialist, including assessing the knowledge, skill and ability of the specialist; |
| ● | Evaluated the work of the specialist, including engaged with internal specialists to assess the reasonableness of assumptions used in the valuation and the accounting treatment of the convertible promissory notes and related derivatives; |
| ● | Tested and reviewed the overall calculations; and | |
| ● | Tested the design and implementation of management’s controls surrounding management’s valuation of the convertible promissory note process. |
| /s/ Audit Alliance LLP | |
October 22, 2024
We have served as the Group’s auditor since 2021.
F-2
INTEGRATED MEDIA TECHNOLOGY LIMITED
CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
(in United States dollars, except number of shares)
| Years ended December 31, | ||||||||||||||
| Note | 2023 US$ | 2022 US$ | 2021 US$ | |||||||||||
| Revenue, net | 4 | |||||||||||||
| Cost of sales | ( | ) | ( | ) | ( | ) | ||||||||
| ( | ) | |||||||||||||
| Interest income | ||||||||||||||
| Other income | 5 | |||||||||||||
| Gain/(loss) on fair value change in derivative financial instruments | 21 | ( | ) | |||||||||||
| Loss on disposal of financial assets at fair value through other comprehensive income | ( | ) | ||||||||||||
| ( | ) | |||||||||||||
| Expenses | ||||||||||||||
| Finance costs | 6 | ( | ) | ( | ) | ( | ) | |||||||
| Employee benefit expenses | 7 | ( | ) | ( | ) | ( | ) | |||||||
| Depreciation and amortization expenses | 7 | ( | ) | ( | ) | ( | ) | |||||||
| Professional and consulting expenses | ( | ) | ( | ) | ( | ) | ||||||||
| Travel and accommodation expenses | ( | ) | ( | ) | ( | ) | ||||||||
| Other expenses | 7 | ( | ) | ( | ) | ( | ) | |||||||
| Other gains | 7 | |||||||||||||
| Share of losses of associates | ( | ) | ( | ) | ||||||||||
| Gain/(loss) on fair value change in warrant | ( | ) | ||||||||||||
| Total expenses | ( | ) | ( | ) | ( | ) | ||||||||
| Loss before income tax | 7 | ( | ) | ( | ) | ( | ) | |||||||
| Income tax expense | 8 | |||||||||||||
| Loss for the year | ( | ) | ( | ) | ( | ) | ||||||||
| Loss and total comprehensive loss for the year attributable to: | ||||||||||||||
| Equity shareholders of Integrated Media Technology Limited | ( | ) | ( | ) | ( | ) | ||||||||
| Non-controlling interest | ( | ) | ( | ) | ( | ) | ||||||||
| ( | ) | ( | ) | ( | ) | |||||||||
| Loss per share | US$ | US$ | US$ | |||||||||||
| - Basic and Diluted | 10 | ( | ) | ( | ) | ( | ) | |||||||
The above consolidated statements of profit or loss and comprehensive loss should be read in conjunction with the accompanying notes.
F-3
INTEGRATED MEDIA TECHNOLOGY LIMITED
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(in United States dollars)
| December 31, | ||||||||||||
| 2023 | 2022 | |||||||||||
| Note | US$ | US$ | ||||||||||
| ASSETS | ||||||||||||
| Current Assets | ||||||||||||
| Cash and cash equivalents | ||||||||||||
| Trade receivables | 11 | - | ||||||||||
| Other receivables | 11 | |||||||||||
| Inventories | 12 | |||||||||||
| Loan receivable | 13 | |||||||||||
| Other current assets | 11 | |||||||||||
| Amount due from an associate | 14 | |||||||||||
| Amounts due from the former group companies | 15 | |||||||||||
| Total Current Assets | ||||||||||||
| Non-Current Assets | ||||||||||||
| Plant and equipment, net | 16 | |||||||||||
| Other assets – equipment deposits | 17 | |||||||||||
| Intangible assets | 18 | |||||||||||
| Investment in an associate | 14 | |||||||||||
| Total Non-Current Assets | ||||||||||||
| TOTAL ASSETS | ||||||||||||
| LIABILITIES | ||||||||||||
| Current Liabilities | ||||||||||||
| Trade and other payables | 19 | |||||||||||
| Convertible promissory notes | 20 | |||||||||||
| Derivative financial instruments | 22 | |||||||||||
| Warrant liabilities | 23 | |||||||||||
| Total Current Liabilities | ||||||||||||
| NON-CURRENT LIABILITIES | ||||||||||||
| Convertible promissory notes | 20 | |||||||||||
| Warrant liabilities | 23 | |||||||||||
| Total Non-Current Liabilities | ||||||||||||
| TOTAL LIABILITIES | ||||||||||||
| NET CURRENT ASSETS | ||||||||||||
| NET ASSETS | ||||||||||||
| CAPITAL AND RESERVES | ||||||||||||
| Issued capital ( par value | 25 | |||||||||||
| Other reserves | ( | ) | ||||||||||
| Accumulated losses | ( | ) | ( | ) | ||||||||
| Equity attributable to equity shareholders of Integrated Media Technology Limited | ||||||||||||
| Non-controlling interests | ( | ) | ||||||||||
| TOTAL EQUITY | ||||||||||||
| * |
The above consolidated statements of financial position should be read in conjunction with the accompanying notes.
F-4
INTEGRATED MEDIA TECHNOLOGY LIMITED
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in United States dollars)
| Attributable to owners of the Group | ||||||||||||||||||||
| Issued Capital | Accumulated Losses | Other Reserves | Non-controlling Interest | Total | ||||||||||||||||
| US$ | US$ | US$ | US$ | US$ | ||||||||||||||||
| Balance as of December 31, 2020 and as of January 1, 2021 | ( | ) | ||||||||||||||||||
| Changes in equity for 2021: | ||||||||||||||||||||
| Loss for the year | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Fair value through other comprehensive income | ||||||||||||||||||||
| Total comprehensive loss for the year | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Transfer other reserve to accumulated losses | ( | ) | ||||||||||||||||||
| Acquisition of subsidiary | ||||||||||||||||||||
| Disposal of subsidiary | ( | ) | ( | ) | ||||||||||||||||
| Issuance of shares for services (Note 25(b)) | ||||||||||||||||||||
| Issuance of new ordinary shares for cash (Note 25(b)) | ||||||||||||||||||||
| Balance at December 31, 2021 and as of January 1, 2022 | ( | ) | ||||||||||||||||||
| Changes in equity for 2022: | ||||||||||||||||||||
| Loss for the year | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Fair value through other comprehensive income | ||||||||||||||||||||
| Total comprehensive loss for the year | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Release of other reserve upon sale of financial asset | ( | ) | ( | ) | ||||||||||||||||
| Acquisition of subsidiary | ( | ) | ||||||||||||||||||
| Deemed disposal of subsidiary | ( | ) | ( | ) | ||||||||||||||||
| Issuance of ordinary shares on conversion of convertible notes (Note 25(b)) | ||||||||||||||||||||
| Issuance of shares for services (Note 25(b)) | ||||||||||||||||||||
| Issuance of new ordinary shares for cash (Note 25(b)) | ||||||||||||||||||||
| Balance at December 31, 2022 and as of January 1, 2023 | ( | ) | ( | ) | ||||||||||||||||
| Changes in equity for 2023: | ||||||||||||||||||||
| Loss for the year | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Fair value through other comprehensive income | ||||||||||||||||||||
| Total comprehensive loss for the year | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Acquisition of subsidiaries | ( | ) | ||||||||||||||||||
| Issuance of convertible note | ||||||||||||||||||||
| Issuance of shares for services (Note 25(b)) | ||||||||||||||||||||
| Issuance of new ordinary shares for cash (Note 25(b)) | ||||||||||||||||||||
| Issuance of shares on conversion of debts (Note 25(b)) | ||||||||||||||||||||
| Balance at December 31, 2023 | ( | ) | ( | ) | ||||||||||||||||
The above consolidated statements of changes in equity should be read in conjunction with the accompanying notes.
F-5
INTEGRATED MEDIA TECHNOLOGY LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in United States dollars)
| Years Ended December 31, | ||||||||||||||
| 2023 | 2022 | 2021 | ||||||||||||
| Note | US$ | US$ | US$ | |||||||||||
| Cash flows from operating activities | ||||||||||||||
| Loss before income tax | ( | ) | ( | ) | ( | ) | ||||||||
| Adjustments to reconcile loss before income tax to net cash used in operating activities: | ||||||||||||||
| Depreciation and amortization | ||||||||||||||
| Fair value change in derivative financial instruments | 22 | ( | ) | ( | ) | |||||||||
| Changes in fair value of warrants | ( | ) | ||||||||||||
| Share of losses of an associate | ||||||||||||||
| Net cash inflow/(outflows) from changes in working capital | 30(b) | ( | ) | ( | ) | |||||||||
| Provision for inventories | ||||||||||||||
| Provision for trade receivables | ( | ) | ||||||||||||
| Provision for equipment deposit | ||||||||||||||
| Provision for other receivable | ||||||||||||||
| Provision for loan receivable | ||||||||||||||
| Provision for other current assets | ||||||||||||||
| Provision for due from associate | ||||||||||||||
| Provision for due from former companies | ||||||||||||||
| Provision for intangibles assets | ||||||||||||||
| Loss/(gain) on disposal of subsidiaries | 24(a) | ( | ) | |||||||||||
| Loss on deemed disposal of subsidiary | ||||||||||||||
| Loss on disposal of investment in equity instrument | ||||||||||||||
| Write off of intangible assets | ||||||||||||||
| Plant and equipment written off | ||||||||||||||
| Net cash provided by/(used in) operating activities | ( | ) | ( | ) | ||||||||||
| Cash flows from investing activities | ||||||||||||||
| Purchase of plant and equipment | ( | ) | ( | ) | ( | ) | ||||||||
| Purchase of other assets – equipment deposits | ( | ) | ( | ) | ( | ) | ||||||||
| Cash acquired on acquisition/(disposal) of subsidiaries | 24 | ( | ) | ( | ) | |||||||||
| Purchase of intangible assets | ( | ) | ( | ) | ||||||||||
| Purchase of investment in financial assets | ( | ) | ||||||||||||
| Purchase of right of use assets | ( | ) | ||||||||||||
| Proceeds from sale of investment in equity instrument | ||||||||||||||
| Capital injection from minority shareholders | ||||||||||||||
| Net cash used in investing activities | ( | ) | ( | ) | ( | ) | ||||||||
| Cash flows from financing activities | ||||||||||||||
| Net proceeds from issuance of ordinary shares | ||||||||||||||
| Issuance of shares for services | ||||||||||||||
| Proceeds from issuance of convertible promissory notes | ||||||||||||||
| Finance costs for convertible notes | ||||||||||||||
| Redemption for convertible notes | ( | ) | ||||||||||||
| Inception of lease liabilities | ||||||||||||||
| Net cash provided by financing activities | 30(a) | |||||||||||||
| Net increase/(decrease) in cash and cash equivalents | ( | ) | ( | ) | ||||||||||
| Cash and cash equivalents at the beginning of financial year | ||||||||||||||
| Cash and cash equivalents at the end of financial year | ||||||||||||||
| Analysis of cash and cash equivalents: | ||||||||||||||
| Cash and bank balances | ||||||||||||||
The above consolidated statements of cash flows should be read in conjunction with the accompanying notes.
F-6
INTEGRATED MEDIA TECHNOLOGY LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in United States dollars, unless otherwise noted)
NOTE 1. REPORTING ENTITY
The consolidated financial report covers the entity of Integrated Media Technology Limited (“IMTE”) and its controlled entities for the years ended December 31, 2023, 2022 and 2021 which were authorized for issue by the Board of Directors on October 22, 2024. IMTE is a for-profit public company limited by shares, incorporated and domiciled in Australia whose shares are publicly traded on the NASDAQ Capital Markets. IMTE is an investment holding company and its subsidiaries carry out the business of the Group in Australia, Korea, and Malaysia.
The Company and its subsidiaries are referred to as the “Group”.
Going Concern
The Group’s consolidated financial statements
are prepared using International Financial Reporting Standards as issued by the International Accounting Standards Board applicable to
a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Group
has not yet established an ongoing source of revenue sufficient to cover its operating costs and allow it to continue as a going concern.
For the year ended December 31, 2023, the Group had generated a net loss US$
In order to continue as a going concern, the Group will need, among other things, additional capital resources. For the year ended December 31, 2023, the funds raised were used for the purchase of equipment and working capital. The Group will need to continue to raise funds through the sale of its equity securities and issuance of debt instruments to obtain additional operating capital. The Group will continue to be dependent upon its ability, and will continue to attempt, to secure additional equity and/or debt financing until the Group can earn revenue and realize positive cash flow from its operations.
There are no assurances that the Group will be successful in earning revenue and realizing positive cash flow from its operations. Without sufficient financing it would be unlikely that the Group will continue as a going concern.
Based on the Group’s current rate of cash outflows, cash on hand and proceeds from the recent sales of equity securities and convertible notes after the year ended, management believes that its current cash may not be sufficient to meet the anticipated cash needs for working capital for the next 12 months for the investments in the switchable glass and Halal operations.
The Group’s plans with respect to its liquidity issues include, but are not limited to, the following:
| 1) | Continue to raise financing through the sale of its equity and/or debt securities; |
| 2) | Continue developing its business, products and services and seek strategic partnerships and cooperative arrangement to grow our revenue and profitability. |
The ability of the Group to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraphs and eventually secure other sources of financing and achieve profitable operations. These consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from this uncertainty.
The consolidated financial statements of the Group are presented in United States dollars (“US$” or “$”), unless otherwise stated.
F-7
NOTE 2. BASIS OF ACCOUNTING
The consolidated financial statements present general purpose financial report that have been prepared in accordance with Australian Accounting Standards (“AASBs”), including Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001 as appropriate for for-profit entities. The consolidated financial statements also comply with International Financial Reporting Standards (“IFRSs”) as adopted by the International Accounting Standards Board.
NOTE 3. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies adopted by the Group in the preparation of the consolidated financial statements. The accounting policies have been consistently applied, unless otherwise stated.
(a) Basis of Preparation
The consolidated financial statements have been prepared on the accrual basis and are based on historical costs modified by the revaluation of selected non-current assets, financial assets and financial liabilities for which the fair value basis of accounting has been applied.
Change of reporting functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). Effective January 1, 2023, the Company adopted the US dollar (“US$” or “$”) as its functional currency. Prior to January 1, 2023, the functional currency of the Company was the Australian dollar and the Company’s financial results had been reported in Australian dollars as explained below. See below for additional disclosure regarding the change in functional currency.
The Company’s self-sustaining Malaysia operation is translated into US dollars using the current rate method, whereby assets and liabilities are translated at period-end exchange rates, while revenues and expenses are converted using average rates for the period. Gains and losses on translation to US dollars relating to self-sustaining operations are deferred and included in a separate component of shareholders’ equity described as cumulative foreign currency translation.
The remaining foreign operations are not considered self-sustaining and are translated using the temporal method. Under this method, monetary assets and liabilities denominated in foreign currencies are translated at exchange rates in effect at the balance sheet date. Non-monetary assets and liabilities denominated in foreign currencies are translated at rates in effect on the dates the assets were acquired or liabilities were assumed. Revenues and expenses are translated at rates of exchange prevailing on the transaction dates. Gains and losses on translation are reflected in income when incurred.
(b) Principles of Consolidation And Equity Accounting
(i) Subsidiaries
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity where the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the date that control ceases.
The acquisition method of accounting is used to account for business combinations by the group (see note 3(c)).
Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of profit or loss, statement of comprehensive income, statement of changes in equity and balance sheet respectively
(ii) Associates
Associates are all entities over which the Group
has significant influence but not control or joint control. This is generally the case where the group holds between
F-8
NOTE 3. SIGNIFICANT ACCOUNTING POLICIES (Continued)
(b) Principles of Consolidation and Equity Accounting (continued)
(iii) Equity method
Under the equity method of accounting, the investments are initially recognised at cost and adjusted thereafter to recognise the Group’s share of the post-acquisition profits or losses of the investee in profit or loss, and the Group’s share of movements in other comprehensive income of the investee in other comprehensive income. Dividends received or receivable from associates and joint ventures are recognised as a reduction in the carrying amount of the investment.
Where the Group’s share of losses in an equity-accounted investment equals or exceeds its interest in the entity, including any other unsecured long-term receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the other entity.
Unrealised gains on transactions between the Group and its associates and joint ventures are eliminated to the extent of the Group’s interest in these entities. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of equity-accounted investees have been changed where necessary to ensure consistency with the policies adopted by the Group.
The carrying amount of equity-accounted investments is tested for impairment in accordance with the policy described in note 3(h).
(iv) Changes in ownership interests
The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of the Group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognised in a separate reserve within equity attributable to owners of IMTE.
When the Group ceases to consolidate or equity account for an investment because of a loss of control, joint control or significant influence, any retained interest in the entity is remeasured to its fair value, with the change in carrying amount recognised in profit or loss. This fair value becomes the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.
If the ownership interest in a joint venture or an associate is reduced but joint control or significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income are reclassified to profit or loss where appropriate.
(c) Business Combinations
The Group accounts for business combinations using the acquisition method when control is transferred to the Group. The consideration transferred by the Company to obtain control of a subsidiary is calculated as the sum of the acquisition-date fair values of assets transferred, liabilities incurred and the equity interests issued by the Company, which includes the fair value of any asset or liability arising from a contingent consideration arrangement. Acquisition costs are expensed as incurred, except if related to the issue of debt or equity securities.
The Company recognizes identifiable assets acquired and liabilities assumed in a business combination regardless of whether they have been previously recognized in the acquiree’s financial statements prior to the acquisition. Assets acquired and liabilities assumed are generally measured at their acquisition-date fair values.
F-9
NOTE 3. SIGNIFICANT ACCOUNTING POLICIES (Continued)
(c) Business Combinations (continued)
Goodwill is stated after separate recognition of identifiable intangible assets. It is calculated as the excess of the sum of: (a) fair value of consideration transferred, (b) the recognized amount of any non-controlling interest in the acquiree, and (c) acquisition-date fair value of any existing equity interest in the acquiree, over the acquisition-date fair values of identifiable net assets.
Any contingent consideration to be transferred by the acquirer is recognized at acquisition-date fair value. Subsequent adjustments to consideration are recognized against goodwill only to the extent that they arise from new information obtained within the measurement period (a maximum of 12 months from the acquisition date) about the fair value at the acquisition date. All other subsequent adjustments to contingent consideration classified as an asset or a liability are recognized in the consolidated statement of profit or loss.
(d) Current And Deferred Income Tax
Income tax for the year comprises current tax and movements in deferred tax assets and liabilities. Current tax and movements in deferred tax assets and liabilities are recognised in profit or loss except to the extent that they relate to items recognised in other comprehensive income/loss or directly in equity, in which case the relevant amounts of tax are recognised in other comprehensive income or directly in equity, respectively.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the end of the reporting period, and any adjustment to tax payable in respect of previous years.
Deferred tax assets and liabilities arise from deductible and taxable temporary differences respectively, being the differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases. Deferred tax assets also arise from unused tax losses and unused tax credits.
Apart from certain limited exceptions, all deferred tax liabilities, and all deferred tax assets to the extent that it is probable that future taxable profits will be available against which the asset can be utilised, are recognised. Future taxable profits that may support the recognition of deferred tax assets arising from deductible temporary differences include those that will arise from the reversal of existing taxable temporary differences, provided those differences relate to the same taxation authority and the same taxable entity, and are expected to reverse either in the same period as the expected reversal of the deductible temporary difference or in periods into which a tax loss arising from the deferred tax asset can be carried back or forward. The same criteria are adopted when determining whether existing taxable temporary differences support the recognition of deferred tax assets arising from unused tax losses and credits, that is, those differences are taken into account if they relate to the same taxation authority and the same taxable entity, and are expected to reverse in a period, or periods, in which the tax loss or credit can be utilised.
The limited exceptions to recognition of deferred tax assets and liabilities are those temporary differences arising from goodwill not deductible for tax purposes, the initial recognition of assets or liabilities that affect neither accounting nor taxable profit (provided they are not part of a business combination), and temporary differences relating to investments in subsidiaries to the extent that, in the case of taxable differences, the Group controls the timing of the reversal and it is probable that the differences will not reverse in the foreseeable future, or in the case of deductible differences, unless it is probable that they will reverse in the future.
The carrying amount of a deferred tax asset is reviewed at the end of each reporting period and is reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow the related tax benefit to be utilised. Any such reduction is reversed to the extent that it becomes probable that sufficient taxable profits will be available.
F-10
NOTE 3. SIGNIFICANT ACCOUNTING POLICIES (Continued)
(d) Current And Deferred Income Tax (continued)
Current tax balances and deferred tax balances, and movements therein, are presented separately from each other and are not offset. Current tax assets are offset against current tax liabilities, and deferred tax assets against deferred tax liabilities, if the Company or the Group has the legally enforceable right to set off current tax assets against current tax liabilities and the following additional conditions are met:
| (i) | in the case of current tax assets and liabilities, the Group intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously; or |
| (ii) | in the case of deferred tax assets and liabilities, if they relate to income taxes levied by the same taxation authority on either: |
| - | the same taxable entity; or |
| - | different taxable entities, which, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered, intend to realize the current tax assets and settle the current tax liabilities on a net basis or realized and settle simultaneously. |
(e) Intangible Assets
(i) Acquired both separately and from a business combination
Purchased intangible assets are initially measured at cost. The cost of an intangible asset acquired in a business combination is its fair value as at the date of acquisition. Following initial recognition, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses. Intangible assets with finite lives are amortised over the useful life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at each financial year end. Intangible assets, excluding development costs, created within the business are not capitalised and expenditure is charged against profits in the period in which the expenditure is incurred.
(ii) Intellectual property
Expenditure incurred on patents, trademarks
or licenses are capitalized from the date of application. They have a definite useful life and are carried at cost less accumulated amortization.
They are amortized using the straight-line method over their estimated useful lives for a period of
(iii) Research and development costs
Development projects in the consolidated statements of financial position represent the development costs directly attributable to and incurred for internal technology projects of the Group. An intangible asset arising from development expenditure on an internal technology project is recognised and included in development projects only when the Group can demonstrate the technical feasibility of completing the intangible asset or technology so that it will be available for application in existing or new products or for sale, its intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete the development, the ability to measure reliably the expenditure attributable to the intangible asset during its development and the ability to use the tangible asset generated. For labour costs, all research and development member salaries that are directly attributable to the technology project are capitalised. Administrative staff and costs are recognised in the profit or loss instead of capitalising this portion of costs. Following the initial recognition of the development expenditure, the cost model is applied requiring the asset to be carried at cost less any accumulated impairment losses. The amortisation rate of these intangible assets was determined on the basis of the estimated useful life from the time that the relevant asset is taken into use.
F-11
NOTE 3. SIGNIFICANT ACCOUNTING POLICIES (Continued)
(e) Intangible Assets (continued)
(iv) Computer software
Acquired computer software licenses
are capitalized on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortized over their
estimated useful lives ranging
(f) Inventories
Finished goods are stated at the lower of cost and net realizable value on a “weighted average cost” basis. Cost comprises direct materials and delivery costs, import duties and other taxes. Costs of purchased inventories are determined after deducting rebates and discounts received or receivable. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale.
(g) Leases
As a lessee
At commencement or on modification of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of its relative and-alone prices. However, for the leases of property the Group has elected not to separate lease components and account for the lease and non-lease components as a single lease component.
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term, unless the lease transfers ownership of the underlying asset to the Group by the end of the lease term or the cost of the right-of-use asset reflects that the Group will exercise a purchase option. In that case the right-of-use asset will be depreciated over the useful life of the underlying asset, which is determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.
F-12
NOTE 3. SIGNIFICANT ACCOUNTING POLICIES (Continued)
(g) Leases (continued)
The Group determines Its incremental borrowing rate by obtaining interest rates from various external financing sources and makes certain adjustments to reflect the terms of the lease and type of the asset leased.
Lease payments included in the measurement of the lease liability comprise the following:
| - | fixed payments, including in-substance fixed payments; |
| - | variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date; |
| - | amounts expected to be payable under a residual value guarantee; and |
| - | the exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the Group is reasonably certain not to terminate early. |
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Group’s estimate of the amount expected to be payable under a residual value guarantee, if the Group changes its assessment of whether it will exercise a purchase, extension or termination option or if there is a revised in-substance fixed lease payment.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
The Group presents right-of-use assets that do not meet the definition of investment property in property, plant and equipment and lease liabilities in loans and borrowings in the statement of financial position.
Short-term leases and leases of low-value assets
The Group has elected not to recognize right-of-use assets and lease liabilities for leases of low value assets and short-term leases, including IT equipment. The Group recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.
(h) Impairment of Assets
Internal and external sources of information are reviewed at the end of each reporting period to identify indications that the following assets may be impaired or an impairment loss previously recognised no longer exists or may have decreased:
| - | plant and equipment (other than properties carried at revalued amounts); |
| - | intangible assets. |
F-13
NOTE 3. SIGNIFICANT ACCOUNTING POLICIES (Continued)
If any such indication exists, the asset’s recoverable amount is estimated. In addition for intangible assets that are not yet available for use and intangible assets that have indefinite useful lives, the recoverable amount is estimated annually whether or not there is any indication of impairment.
(h) Impairment of Assets (Continued)
(i) Calculation of recoverable amount
The recoverable amount of an asset is the greater of its fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where an asset does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the smallest group of assets that generates cash inflows independently (i.e. a cash-generating unit).
(ii) Recognition of impairment losses
An impairment loss is recognized in profit or loss if the carrying amount of an asset, or the cash-generating unit to which it belongs, exceeds its recoverable amount. Impairment losses recognized in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit (or group of units) and then, to reduce the carrying amount of the other assets in the unit (or group of units) on a pro rata basis, except that the carrying value of an asset will not be reduced below its individual fair value less costs of disposal (if measurable) or value in use (if determinable).
(iii) Reversals of impairment losses
In respect of assets other than goodwill, an impairment loss is reversed if there has been a favorable change in the estimates used to determine the recoverable amount. An impairment loss in respect of goodwill is not reversed.
A reversal of an impairment loss is limited to the asset’s carrying amount that would have been determined had no impairment loss been recognized in prior years. Reversals of impairment losses are credited to profit or loss in the year in which the reversals are recognized.
(i) Trade Deposits
Trade deposits are payments in advance to suppliers of equipment, products and services, which are initially recognized at fair value and thereafter stated at amortized cost using the effective interest method less impairment losses, except where the effect of discounting would be immaterial.
(j) Plant and Equipment
Items of plant and equipment are measured at cost less accumulated depreciation and impairment losses.
The carrying amount of plant and equipment is reviewed annually by the directors to ensure it is not in excess of the recoverable amount from those assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the asset’s employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts.
The depreciable amount of all fixed assets are depreciated over their estimated useful lives to the Group commencing from the time the assets is held ready for use.
F-14
NOTE 3. SIGNIFICANT ACCOUNTING POLICIES (Continued)
(j) Plant and Equipment (Continued)
Depreciation is calculated on a straight-line
basis to write the net cost of each item of plant and equipment over their expected useful lives.
| Class of fixed assets | Depreciation rate | |
| Leasehold Improvements | lesser of | |
| Office Furniture and Equipment | ||
| Machinery |
Gains and losses on disposal are determined by deducting the net book value of the assets from the proceeds of sale and are booked to the profit or loss in the year of disposal.
(k) Foreign Currency Translation
(i) Functional and presentation currency
As disclosed above, effective January 1, 2023, the Company adopted the US dollar as its functional currency. Prior to January 1, 2023, the functional currency of the Company was the Australian dollar. The reason for the change of functional currency is for the change of the currency used in the business operations, including in Australia where the Company did not have business operations regarding to the revenue and purchase operations or used the Australian dollar in its or the Groups operations. The Malaysia operation is considered self-sustaining with the Malaysia Ringette as their functional currency. The remaining operations are considered integrated and have the US dollar as their functional currency.
The change in functional currency of the Company is due to the increased exposure to the US dollar as a result of the growth in international operations outside Australia. The adoption of the Malaysia Ringette as the functional currency of the Malaysia operation is the result of the increased financial self-sustainability of this operation and its overall exposure to Ringette transactions.
The change in functional currency did not have any material effect to net income for the period as most of the assets and liabilities were US dollar denominated.
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The consolidated financial statements are presented in United States dollars (“US$” or “$”), which is the Group’s presentation currency.
(ii) Transactions and balances
Foreign currency transactions during the year are translated at the foreign exchange rates ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the foreign exchange rates ruling at the end of the reporting period. Exchange gains and losses are recognized in profit or loss, except those arising from foreign currency borrowings used to hedge a net investment in a foreign operation which are recognized in other comprehensive income.
Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the foreign exchange rates ruling at the transaction dates. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated using the foreign exchange rates ruling at the dates the fair value was measured.
(iii) Group companies
The results of foreign operations are translated into United States Dollars at the exchange rates approximating the foreign exchange rates ruling at the dates of the transactions. Statement of financial position items, are translated into United States Dollars at the closing foreign exchange rates at the end of the reporting period. The resulting exchange differences are recognized in other comprehensive income and accumulated separately in equity in the exchange reserve.
On disposal of a foreign operation, the cumulative amount of the exchange differences relating to that foreign operation is reclassified from equity to profit or loss when the profit or loss on disposal is recognized.
For the years ended December 31, 2023 and 2022, there was no comprehensive income. The significant monetary items denominated in currencies other than United States dollars include trade and other receivables and inventories.
F-15
NOTE 3. SIGNIFICANT ACCOUNTING POLICIES (Continued)
(l) Trade and Other Receivables
Trade receivables are recognized at original invoice amounts less an allowance for uncollectible amounts and have repayment terms between 30 and 90 days. Collectability of trade receivables is assessed on an ongoing basis. Debts which are known to be uncollectible are written off. An allowance is made for doubtful debts where there is objective evidence that the Group will not be able to collect all amounts due according to the original terms. Objective evidence of impairment includes financial difficulties of the debtor, default payments or debts more than 30 days overdue. On confirmation that the trade receivable will not be collectible, the gross carrying value of the asset is written off against the associated provision.
Other receivables generally arise from transactions outside the usual operating activities of the Group.
(m) Trade and Other Payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year which are unpaid. The amounts are unsecured and are paid on normal commercial terms.
(n) Warrant Liabilities
The warrant liabilities which are viewed as debts instruments, are measured at fair value through profit or loss. Each of the Company’s warrants contains a written put option and as a result of the existence of these put options, the warrants are required to be classified as a financial liability under IAS32.
The liability has been designated as at fair value through profit or loss on initial recognition and subsequent changes in fair value are recognised in the profit or loss. This liability is considered a derivative financial liability.
The warrant liability is classified as non-current, unless the underlying warrants will expire or be settled within 12 months from the end of a given reporting period.
(o) Provisions and Contingent Liabilities
Provisions are recognized for other liabilities of uncertain timing or amount when the Group has a legal or constructive obligation arising as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made. Where the time value of money is material, provisions are stated at the present value of the expenditure expected to settle the obligation.
Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.
(p) Borrowings
Borrowings are initially recognized at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortized cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognized in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities, which are not an incremental cost relating to the actual draw-down of the facility, are recognized as an offset against the liability balance and amortized on a straight-line basis over the term of the facility.
Borrowings are removed from the statement of financial position when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of the financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in other income or other expenses.
F-16
NOTE 3. SIGNIFICANT ACCOUNTING POLICIES (Continued)
(p) Borrowings (continued)
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting period.
(q) Borrowing Costs
Borrowing costs that are directly attributable to the acquisition, construction or production of an asset which necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of that asset. Other borrowing costs are expensed in the period in which they are incurred.
The capitalization of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or complete.
(r) Convertible Promissory Note
Convertible promissory note that can be converted into ordinary shares at the option of the holder, where the number of shares to be issued is fixed, are accounted for as compound financial instruments, i.e. they contain both a liability component and an equity component.
At initial recognition the liability component of the convertible promissory note is measured at fair value based on the future interest and principal payments, discounted at the prevailing market rate of interest for similar non-convertible instruments. The equity component is the difference between the initial fair value of the convertible promissory note as a whole and the initial fair value of the liability component. Transaction costs that relate to the issue of a compound financial instrument are allocated to the liability and equity components in proportion to the allocation of proceeds.
The liability component is subsequently carried at amortised cost. Interest expense recognised in profit or loss on the liability component is calculated using the effective interest method. The equity component is recognised in other reserve until either the bonds are converted or redeemed. If the note is converted, the other reserve, together with the carrying amount of the liability component at the time of conversion, is transferred to share capital as consideration for the shares issued. If the note is redeemed, the other reserve is transferred to the retained earning reserve account.
(s) Derivative Financial Instruments
Derivative financial instruments are recognised at fair value. At the end of each reporting period the fair value is remeasured. The gain or loss on remeasurement to fair value is recognised immediately in profit or loss.
(t) Employee Benefits
(i) Employee leave entitlements
Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated liability for annual leave as a result of services rendered by employees up to the date of the statement of financial position.
Employee entitlements to sick leave and maternity leave are not recognised until the time of leave.
F-17
NOTE 3. SIGNIFICANT ACCOUNTING POLICIES (Continued)
(t) Employee Benefits (continued)
(ii) Pension obligations
Salaries, annual bonuses, paid annual leave, contributions to defined contribution retirement plans and the cost of non-monetary benefits are accrued in the year in which the associated services are rendered by employees. Where payment or settlement is deferred and the effect would be material, these amounts are stated at their present values.
(u) Cash and Cash Equivalents
Cash and cash equivalents include cash on hand and call deposits with banks or financial institutions and net of bank overdrafts.
(v) Revenue
Revenue is recognized in accordance with IFRS 15 Revenue from Contracts with Customers. The underlying principle is to recognize revenue when a customer obtains control of the promised goods at an amount that reflects the consideration that is expected to be received in exchange for those goods. It also requires increased disclosures including the nature, amount, timing, and uncertainty of revenues and cash flows related to contracts with customers.
We recognize revenue upon transfer of control of the promised goods in a contract with a customer in an amount that reflects the consideration we expect to receive in exchange for those products. Transfer of control occurs once the customer has the contractual right to use the product, generally upon shipment or once delivery and risk of loss has transferred to the customer. We account for a contract with customer when we have approval and commitment from both parties, the rights of the parties and payment terms are identified, the contract has commercial substance and collectability of consideration is probable. We identify separated contractual performance obligations and evaluate each distinct performance obligation within a contract, whether it is satisfied at a point in time or over time. All of our performance obligations for the reported periods were satisfied at a point in time.
Revenue is allocated among performance obligations in a manner that reflects the consideration that we expect to be entitled to for the promised goods based on standalone selling prices (SSP). SSP are estimated for each distinct performance obligation and judgment may be required in their determination. The best evidence of SSP is the observable price of the product when we sell the goods separately in similar circumstances and to similar customers.
Interest Income
Revenue is recognized as interest accrues using the effective interest method.
(w) Sales Taxes
Revenues, expenses and assets are recognized net of the amount of goods and services tax (“GST”) or valued-added tax (“VAT”), except where the amount of GST or VAT incurred is not recoverable from the Australian Taxation Office or taxation authorities in other jurisdictions. In these circumstances, the GST or VAT is recognized as part of the cost of acquisition of the assets or as part of an item of expense. Receivables and payables in the consolidated statement of financial position are shown inclusive of GST or VAT.
Cash flows are included in the consolidated statement of cash flows on a gross basis and the GST or VAT component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows.
F-18
NOTE 3. SIGNIFICANT ACCOUNTING POLICIES (Continued)
(x) Earnings Per Share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Group, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
(y) Issued Capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Incremental costs directly attributable to the issue of new shares or options for the acquisition of a business are not included in the cost of the acquisition as part of the purchase consideration.
(z) Related Party Transactions
For the purpose of these consolidated financial statements, related party includes a person and entity as defined below:
| (i) | A person, or a close member of that person’s family, is related to the Group if that person: |
| (i) | has control or joint control over the Group; |
| (ii) | has significant influence over the Group; or |
| (iii) | is a member of the key management personnel of the Group or the Group’s parent. |
| (ii) | An entity is related to the Group if any of the following conditions applies: |
| (i) | the entity and the Group are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others). |
| (ii) | one entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member). |
| (iii) | both entities are joint ventures of the same third party. |
| (iv) | one entity is a joint venture of a third entity and the other entity is an associate of the third entity. |
| (v) | the entity is a post-employment benefit plan for the benefit of employees of either the Group or an entity related to the Group. |
| (vi) | the entity is controlled or jointly controlled by a person identified in (i). | |
| (vii) | A person identified in (i)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity). | |
| (viii) | The entity, or any member of a group of which it is a part, provides key management personnel services to the reporting entity or to the parent of the reporting entity. |
F-19
NOTE 3. SIGNIFICANT ACCOUNTING POLICIES (Continued)
(aa) Fair Value
Fair values may be used for financial asset and liability measurement and for sundry disclosures.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It is based on the presumption that the transaction takes place either in the principal market for the asset or liability or, in the absence of a principal market, in the most advantageous market. The principal of most advantageous market must be accessible to, or by, the Group.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their best economic interest.
The fair value measurement of a non-financial asset takes into account the market participant’s ability to generate economic benefits by using the asset at its highest and best use or by selling it to another market participant that would use the asset at its highest and best use.
In measuring fair value, the Group uses valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.
(ab) Investments And Other Financial Assets
(i) Classification
The Group classifies its financial assets in the following measurement categories:
| ● | those to be measured subsequently at fair value (either through OCI or through profit or loss), and | |
| ● | those to be measured at amortised cost. |
The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the cash flows. For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For investments in equity instruments that are not held for trading, this will depend on whether the group has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income (FVOCI). The Group reclassifies debt investments when and only when its business model for managing those assets changes.
(ii) Recognition and derecognition
Regular way purchases and sales of financial assets are recognised on trade date, being the date on which the Group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.
(iii) Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss. Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.
F-20
NOTE 3. SIGNIFICANT ACCOUNTING POLICIES (Continued)
(ab) Investments And Other Financial Assets (continued)
Debt instruments
Subsequent measurement of debt instruments depends on the Group’s business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the Group classifies its debt instruments:
| ● | Amortised cost: Assets that are held for collection of contractual cash flows, where those cash flows represent solely payments of principal and interest, are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other gains/(losses) together with foreign exchange gains and losses. Impairment losses are presented as separate line item in the statement of profit or loss. |
| ● | FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’ cash flows represent solely payments of principal and interest, are measured at FVOCI. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest income and foreign exchange gains and losses, which are recognised in profit or loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognized in other gains/(losses). Interest income from these financial assets is included in finance income using the effective interest rate method. Foreign exchange gains and losses are presented in other gains/(losses), and impairment expenses are presented as separate line item in the statement of profit or loss. |
| ● | FVPL: Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVPL. A gain or loss on a debt investment that is subsequently measured at FVPL is recognised in profit or loss and presented net within other gains/(losses) in the period in which it arises. |
Equity instruments
The Group subsequently measures all equity investments at fair value. Where the Group’s management has elected to present fair value gains and losses on equity investments in OCI, there is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. Dividends from such investments continue to be recognised in profit or loss as other income when the Group’s right to receive payments is established.
Changes in the fair value of financial assets at FVPL are recognised in other gains/(losses) in the statement of profit or loss as applicable. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.
(iv) Impairment
The Group assesses on a forward-looking basis the expected credit losses associated with its debt instruments carried at amortised cost and FVOCI. The impairment methodology applied depends on whether there has been a significant increase in credit risk. For trade receivables, the Group applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables, see note 11(c) for further details. The classification of financial assets depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. Regular way purchases or sales of financial assets are recognized and derecognized on a trade date or settlement date basis for which financial assets were classified in the same way, respectively. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.
F-21
NOTE 3. SIGNIFICANT ACCOUNTING POLICIES (Continued)
(ac) New, Revised or Amending Accounting Standards and Interpretations
| New or Amended Standard Forthcoming requirements | Title of the Standard | Effective for Annual Periods Beginning on or After | ||
| Lease Liability in Sale and Leaseback | ||||
| Classification of Liabilities as Current or Non-current | ||||
| Supplier Finance Arrangements | ||||
| Lack of Exchangeability | ||||
| Sale or Contribution of Assets between an Investor and its Associate or Joint Venture |
The amendments listed above did not have any impact on the amounts recognised in prior periods and are not expected to significantly affect the current or future periods.
F-22
NOTE 3. SIGNIFICANT ACCOUNTING POLICIES (Continued)
(ad) Critical Accounting Judgments, Estimates and Assumptions
The preparation of the consolidated financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts in the consolidated financial statements. Management continually evaluates its judgments and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgments, estimates and assumptions on historical experience and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting accounting judgments and estimates will seldom equal the related actual results. The judgments, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
(i) Provision for impairment of receivables
The provision for impairment of receivables assessment requires a degree of estimation and judgment. The level of provision is assessed by taking into account the recent sales experience, the ageing of receivables, historical collection rates and specific knowledge of the individual debtor’s financial position. Refer to Note 11 for further details.
(ii) Estimation of useful lives of assets
The Group determines the estimated useful lives and related depreciation and amortization charges for its plant and equipment and finite life intangible assets. The useful lives could change significantly as a result of technical innovations or some other events. The depreciation and amortization charge will increase where the useful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down. Please refer to Note 3(e) and 3(j) for further detail.
(iii) Income tax
The Group is subject to income taxes in the jurisdictions in which it operates. Significant judgment is required in determining the provision for income tax and in assessing whether deferred tax assets and certain deferred tax liabilities are recognized in the consolidated statement of financial position. Deferred tax assets, including those arising from unrecouped tax losses, capital losses and temporary differences, are recognized only where it is considered more likely than not that they will be recovered, which is dependent on the generation of sufficient future taxable profits. Assumptions about the generation of future taxable profits depend on management’s estimates of future cash flows. In addition, there are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The Group recognizes liabilities for anticipated tax audit issues based on the Group’s current understanding of the tax law. Where the final tax outcome of these matters is different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period in which such determination is made.
Judgements are also required about the application of income tax legislation. These judgements and assumptions are subject to risk and uncertainty, hence there is a possibility that changes in circumstances will alter expectations, which may impact the amount of deferred tax assets and deferred tax liabilities recognized in the statement of financial position and the amount of other tax losses and temporary differences not yet recognized. In such circumstances, some or all of the carrying amounts of recognized deferred tax assets and liabilities may require adjustments, resulting in a corresponding credit or charge to the consolidated statement of profit or loss and comprehensive income.
(iii) Investment in an associate
The results and assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting, except when the investment is classified as held for sale, in which case it is accounted for in accordance with IFRS 5.
(iv) Fair value estimate of warrant liability
Fair value estimation of warrant liability is included in note 3(n) and note 23 of the financial statements.
F-23
NOTE 3. SIGNIFICANT ACCOUNTING POLICIES (Continued)
(ad) Critical Accounting Judgments, Estimates and Assumptions (continued)
(v) Valuation of Inventory
Inventories are stated at the lower of cost or net realizable value, and the Group uses estimate to determine the net realizable value of inventory at the end of each reporting period.
The Group estimates the net realizable value of inventory for normal waste, obsolescence and unmarketable items at the end of reporting period and then writes down the cost of inventories to net realizable value. The net realizable value of the inventory is determined mainly based on assumptions of future demand within a specific time horizon.
(vi) Impairment of non-financial assets
The Group assesses impairment of all assets (including intangible assets) at each reporting date by evaluating conditions specific to the Group and to the particular asset that may lead to impairment. These include product, technology, economic and political environments and future product expectations. If an impairment trigger exists the recoverable amount of the asset is determined. Given the current uncertain economic environment management considered that the indicators of impairment were significant enough and as such these assets have been tested for impairment in this financial period. Refer to Note 3(h) for details regarding the method and assumptions used.
(vii) Fair value of convertible promissory notes
The fair value of convertible promissory notes are determined using valuation techniques including reference to other instruments that are substantially the same, discounted cash flow analysis and option pricing model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values.
(viii) Fair value of derivative financial instruments
The fair values of derivative financial instruments that are not quoted in active markets are determined by using valuation techniques. Valuation techniques used include discounted cash flows analysis and models with built-in functions available in externally acquired financial analysis or risk management systems widely used by the industry such as option pricing models. To the extent practical, the models use observable data. In addition, valuation adjustments may be adopted if factors such as credit risk are not considered in the valuation models. Management judgement and estimates are required for the selection of appropriate valuation parameters, assumptions and modelling techniques.
F-24
NOTE 4. REVENUE AND SEGMENT INFORMATION
| Consolidated | ||||||||||||
| December 31, 2023 US$ | December 31, 2022 US$ | December 31, 2021 US$ | ||||||||||
| Sales of Halal products | ||||||||||||
| Development, sales and distribution of 3D autostereoscopic products and conversion equipment | ||||||||||||
| Sales of air-filter products | ||||||||||||
| Total Revenue | ||||||||||||
Operating segments have been determined on the
basis of reports reviewed by the executive director. The executive director is considered to be the chief operating decision maker of
the Group. The executive director considers that the Group has assessed and allocated resources on this basis. The executive director
considers that the Group has
Disaggregation of Revenue
| 2023 | At a point in time US$ | Total US$ | ||||||
| Sales of Halal products | ||||||||
| 2022 | At a point in time US$ | Total US$ | ||||||
| Sales of Halal products | ||||||||
| 2021 | At a point in time US$ | Total US$ | ||||||
| Development, sales and distribution of 3D autostereoscopic products and conversion equipment | ||||||||
| Sales of air- filter products | ||||||||
| Total Revenue | ||||||||
F-25
NOTE 4. REVENUE AND SEGMENT INFORMATION (Continued)
Revenue by geographic location
The Group’s operations are located in Malaysia.
| Consolidated | ||||||||||||
| December 31, 2023 US$ | December 31, 2022 US$ | December 31, 2021 US$ | ||||||||||
| Malaysia | ||||||||||||
| Hong Kong | ||||||||||||
| China | ||||||||||||
| USA | ||||||||||||
Non-current assets by geographic location
| Consolidated | ||||||||||||
| December 31, 2023 US$ | December 31, 2022 US$ | December 31, 2021 US$ | ||||||||||
| USA | ||||||||||||
| Korea | ||||||||||||
| Malaysia | ||||||||||||
| Canada | ||||||||||||
| Australia | ||||||||||||
| Hong Kong | ||||||||||||
| China | ||||||||||||
Major customers
| December 31, 2023 | December 31, 2022 | December 31, 2021 | ||||||||||||||||||||||
| Percentage of Revenue | Balance due US$ | Percentage of Revenue | Balance due US$ | Percentage of Revenue | Balance due US$ | |||||||||||||||||||
| Customer A | % | |||||||||||||||||||||||
| Customer B | % | |||||||||||||||||||||||
| Customer C | % | % | ||||||||||||||||||||||
| Customer D | % | % | ||||||||||||||||||||||
| Customer E | % | |||||||||||||||||||||||
F-26
NOTE 4. REVENUE AND SEGMENT INFORMATION (Continued)
| Consolidated | ||||||||||||||||||||||||||||||||
| For the year ended 31 December 2023 | Sales of electronic glass US$ | Sales of air- filter products US$ | Sales of Halal products US$ | Provision of consultancy US$ | NFT US$ | Energy products and solutions US$ | Corporate US$ | Total US$ | ||||||||||||||||||||||||
| Revenue | ||||||||||||||||||||||||||||||||
| Revenue from operating activities | ||||||||||||||||||||||||||||||||
| Interest income | - | |||||||||||||||||||||||||||||||
| Loss on fair value changes in investment | ||||||||||||||||||||||||||||||||
| Other income | ||||||||||||||||||||||||||||||||
| Segment revenue | ||||||||||||||||||||||||||||||||
| Cost of sales | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Employee benefit expenses | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Depreciation and amortization expenses | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
| Professional and consulting expenses | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Travel and accommodation expenses | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Other operating expenses | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Finance costs | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Share on losses of associates | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Provision for inventory | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Provision for bad debt | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||
| Provision for other receivables | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Provision for other current assets | - | ( | ) | ( | ) | - | - | - | - | ( | ) | |||||||||||||||||||||
| Provision for loan receivable | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Provision for equipment deposits | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Provision for associate | - | - | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Provision for former companies | - | - | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Provision for intangible assets | - | - | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Loss on fair value change in warrant | ||||||||||||||||||||||||||||||||
| Exchange (loss)/gain | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Segment expenses | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Segment operating (loss)/profit | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Segment assets 2023 | ||||||||||||||||||||||||||||||||
| Segment liabilities 2023 | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
F-27
NOTE 4. REVENUE AND SEGMENT INFORMATION (Continued)
| Consolidated | ||||||||||||||||||||||||||||||||
| For the year ended 31 December 2022 |
Sale of electronic glass US$ |
Sale of air-filter products US$ |
Sale of Halal products US$ |
Provision of credit risk analysis US$ |
Provision of consultancy US$ |
NFT US$ |
Corporate US$ |
Total US$ |
||||||||||||||||||||||||
| Revenue | ||||||||||||||||||||||||||||||||
| Revenue from operating activities | ||||||||||||||||||||||||||||||||
| Interest income | ||||||||||||||||||||||||||||||||
| Gain on disposal of investment in equity instrument | ||||||||||||||||||||||||||||||||
| Loss on fair value changes in investment | ( |
) | ( |
) | ||||||||||||||||||||||||||||
| Other income | ||||||||||||||||||||||||||||||||
| Segment revenue | ||||||||||||||||||||||||||||||||
| Cost of sales | ( |
) | ( |
) | ||||||||||||||||||||||||||||
| Employee benefit expenses | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||
| Depreciation and amortization expenses | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||
| Professional and consulting expenses | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||
| Travel and accommodation expenses | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
| Other operating expenses | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||
| Finance costs | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||
| Share on losses of associates | ( |
) | ( |
) | ||||||||||||||||||||||||||||
| Gain on disposal of subsidiaries | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||
| Loss on deemed disposal of subsidiary | ( |
) | ( |
) | ||||||||||||||||||||||||||||
| Provision for inventory | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||
| Provision for bad debt | ( |
) | ( |
) | ||||||||||||||||||||||||||||
| Written off of property, plant and equipment | ( |
) | ( |
) | ||||||||||||||||||||||||||||
| Loss on fair value change in warrant | ( |
) | ( |
) | ||||||||||||||||||||||||||||
| Exchange gain/(loss) | ( |
) | ( |
) | ||||||||||||||||||||||||||||
| Segment expenses | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||
| Segment operating (loss)/profit | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||
| Segment assets 2022 | ||||||||||||||||||||||||||||||||
| Segment liabilities 2022 | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||
F-28
NOTE 4. REVENUE AND SEGMENT INFORMATION (Continued)
| Consolidated | ||||||||||||||||||||||||||||
| For the year ended 31 December 2021 | Development, sale and distribution of 3D displays, conversion equipment, software and others US$ | Sales of US$ | Sales of US$ | Provision of US$ | NFT US$ | Corporate US$ | Total US$ | |||||||||||||||||||||
| Revenue | ||||||||||||||||||||||||||||
| Revenue from operating activities | ||||||||||||||||||||||||||||
| Interest income | ||||||||||||||||||||||||||||
| Fair value change in derivative financial instruments | ( | ) | ( | ) | ||||||||||||||||||||||||
| Other income | ||||||||||||||||||||||||||||
| Segment revenue | ( | ) | ( | ) | ||||||||||||||||||||||||
| Cost of sales | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
| Employee benefit expenses | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Depreciation and amortization expenses | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Professional and consulting expenses | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Travel and accommodation expenses | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Other operating expenses | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Reversal of allowance for inventory obsolescence | ||||||||||||||||||||||||||||
| Provision for bad debt | ( | ) | ( | ) | ||||||||||||||||||||||||
| Gain/ (loss) on disposal of subsidiaries | ( | ) | ||||||||||||||||||||||||||
| Finance costs | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Segment expenses | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Segment operating profit/(loss) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Segment assets 2021 | ||||||||||||||||||||||||||||
| Segment liabilities 2021 | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
F-29
NOTE 5. OTHER INCOME
| Consolidated | ||||||||||||
| December 31, 2023 US$ | December 31, 2022 US$ | December 31, 2021 US$ | ||||||||||
| Waive of debts | ||||||||||||
| Underwriting fee from investment | ||||||||||||
| Sundry income | ||||||||||||
NOTE 6. FINANCE COSTS
| Consolidated | ||||||||||||
| December 31, 2023 US$ | December 31, 2022 US$ | December 31, 2021 US$ | ||||||||||
| Bank overdraft and borrowing interest | ||||||||||||
| Interest on revolving loan | ||||||||||||
| Interest on operating lease liability | ||||||||||||
| Interest on convertible promissory notes (Note 20) | ||||||||||||
F-30
NOTE 7. LOSS BEFORE INCOME TAX
| Consolidated | ||||||||||||
| December 31, 2023 US$ | December 31, 2022 US$ | December 31, 2021 US$ | ||||||||||
| Employee benefit expenses: | ||||||||||||
| - Wages and salaries | ||||||||||||
| - Staff welfare | ||||||||||||
| - Defined contribution superannuation plan expenses | ||||||||||||
| - Executive directors’ remuneration | ||||||||||||
| - Non-executive directors’ remuneration | ||||||||||||
| Total employee benefit expenses | ||||||||||||
| Depreciation and amortization of non-current assets: | ||||||||||||
| - Machinery | ||||||||||||
| - Office furniture and equipment | ||||||||||||
| - Leasehold improvements | ||||||||||||
| - Intangible assets | ||||||||||||
| - Right of use assets | ||||||||||||
| Total depreciation and amortization | ||||||||||||
| Other Expenses: | ||||||||||||
| Allowances/(recovery) for bad debts | ( | ) | ||||||||||
| Rental expense on operating lease | ||||||||||||
| Provision for inventory | ||||||||||||
| Provision for equipment deposits | ||||||||||||
| Provision for other receivable | ||||||||||||
| Provision for loan receivable | ||||||||||||
| Provision for other current assets | ||||||||||||
| Provision for due from associate | ||||||||||||
| Provision for due from former companies | ||||||||||||
| Provision for intangible assets | ||||||||||||
| Selling costs | ||||||||||||
| Other operating expenses | ||||||||||||
| Reversal of allowance for inventory obsolescence | ( | ) | ||||||||||
| Plant and equipment written off | ||||||||||||
| Other expenses | ||||||||||||
| Other gains: | ||||||||||||
| Gain on deemed disposal of subsidiaries | ||||||||||||
| Loss/(gain) on disposal of subsidiaries | ( | ) | ||||||||||
| Exchange loss, net | ( | ) | ( | ) | ( | ) | ||||||
| Total other gains | ( | ) | ( | ) | ( | ) | ||||||
| Audit and review of financial statements: | ||||||||||||
| - audit of the Group in USA | ||||||||||||
| - statutory audit of the Group in Australia | ||||||||||||
| - statutory audit of the subsidiaries | ||||||||||||
| - review for other reporting purposes | ||||||||||||
| Total audit and review fees | ||||||||||||
F-31
NOTE 8. INCOME TAX EXPENSE
| Consolidated | ||||||||||||
| December 31, 2023 US$ | December 31, 2022 US$ | December 31, 2021 US$ | ||||||||||
| Income tax expenses | ||||||||||||
| Deferred tax expenses | ||||||||||||
| Income tax expenses | ||||||||||||
(a)
| Consolidated | ||||||||||||
| December 31, 2023 US$ | December 31, 2022 US$ | December 31, 2021 US$ | ||||||||||
| Numerical reconciliation of income tax expense to prima facie tax payable | ||||||||||||
| Loss before income tax | ( | ) | ( | ) | ( | ) | ||||||
| Income tax expenses on loss before income tax at | ( | ) | ( | ) | ( | ) | ||||||
| Difference in overseas tax rates and adjustment for non-taxable items | ( | ) | ( | ) | ||||||||
| Less the tax effect of: | ||||||||||||
| Tax losses and temporary differences for the year for which no deferred tax is recognized | ||||||||||||
| Income tax expenses | ||||||||||||
The tax losses carried forward for the Group at
the December 31, 2023 was $
(b)
| Consolidated | ||||||||
| December 31, 2023 US$ |
December 31, 2022 US$ |
|||||||
| Balance brought forward | ||||||||
| Exchange difference | ||||||||
| Total | ||||||||
(c)
| Consolidated | ||||||||
| 2023 | 2022 | |||||||
| US$ | US$ | |||||||
| Deferred tax assets have not been recognised in respect of the following items: | ||||||||
| i) Temporary differences at | ||||||||
| ii) Tax losses at | ||||||||
Tax losses do not expire under current tax legislation. Deferred tax assets have not been recognised in respect of these losses because it is not probable that future taxable profit will be available against which the Group can utilise the benefits from the deferred tax assets.
(d) There was no income tax payable in the consolidated statements of financial position in years 2023 and 2022.
F-32
NOTE 9. DIVIDENDS
dividends were declared and paid during the financial year ended December 31, 2023 (2022: ).
NOTE 10. LOSS PER SHARE
| Consolidated | ||||||||||||
| December 31, 2023 |
December 31, 2022 |
December 31, 2021 |
||||||||||
| Loss after income tax attributable to shareholders | US$ | ( |
) | US$ | ( |
) | US$ | ( |
) | |||
| Number of ordinary shares* | ||||||||||||
| Weighted average number of ordinary shares on issue* | ||||||||||||
| Basic and diluted loss per share* | US$ | ( |
) | US$ | ( |
) | US$ | ( |
) | |||
*
NOTE 11. TRADE RECEIVABLES, OTHER RECEIVABLES AND OTHER CURRENT ASSETS
(a) Trade receivables
| Consolidated | ||||||||
| December 31, 2023 US$ | December 31, 2022 US$ | |||||||
| Trade receivables | ||||||||
| Less: Allowances for doubtful debts | ( | ) | ( | ) | ||||
| Consolidated | ||||||||
| December 31, 2023 US$ | December 31, 2022 US$ | |||||||
| Movement of allowance for doubtful debts | ||||||||
| As of January 1 | ||||||||
| Movement during the year | ||||||||
| As at December 31 | ||||||||
(i) Ageing Analysis
| Consolidated | ||||||||
| December 31, 2023 US$ | December 31, 2022 US$ | |||||||
| Current (not past due) | ||||||||
| Overdue: less than 1 month | ||||||||
| Overdue: 1 month - 3 months | ||||||||
| Overdue: 3 months- 12 months | ||||||||
| Overdue: over 12 months | ||||||||
(ii) Trade receivables which are past due but not impaired
Included in the Group’s trade receivable
balances are debtors with an aggregate carrying amount of US$
The carrying value of trade receivables is considered reasonable approximation of fair value to the short-term nature of the balance.
The maximum exposure to credit risk at the reporting date is the fair value of each class of receivables in the consolidated financial statements. Refer to Note 28(e) for further details of credit risk management.
F-33
NOTE 11. TRADE RECEIVABLES, OTHER RECEIVABLES AND OTHER CURRENT ASSETS (continued)
(b) Other receivables
| Consolidated | ||||||||
| December 31, 2023 US$ | December 31, 2022 US$ | |||||||
| Other receivables | ||||||||
| Provision | ( | ) | ||||||
The other receivables mainly relate to advances for purchase of halal products and inner layer film.
(c) Other current assets
| Consolidated | ||||||||
| December 31, 2023 US$ | December 31, 2022 US$ | |||||||
| Trade deposits | ||||||||
| Other deposits | ||||||||
| Prepayments | ||||||||
| VAT receivable | ||||||||
| Provision for other current assets | ( | ) | ||||||
The other deposits mainly relate to the purchase of air filter designs and products.
NOTE 12. INVENTORIES
| Consolidated | ||||||||
| December 31, 2023 US$ | December 31, 2022 US$ | |||||||
| Finished goods – Halal products | ||||||||
| Finished goods – displays and other products | ||||||||
| Provision for inventories | ( | ) | ( | ) | ||||
NOTE 13. LOAN RECEIVABLE
| Consolidated | ||||||||
| December 31, 2023 US$ | December 31, 2022 US$ | |||||||
| Loan receivable | ||||||||
| Loan interest receivable | ||||||||
| Provision for loan receivable | ( | ) | ||||||
On September 15, 2022 the Company completed the
sale of
F-34
NOTE 14. INVESTMENT IN AN ASSOCIATE
| Consolidated | ||||||||
| December 31, 2023 US$ | December 31, 2022 US$ | |||||||
| Interest in associate | ||||||||
| Due from an associate company, net | ||||||||
| Provision for associate | ( | ) | ||||||
| Name of Associates | Country of Incorporation | Principal Activities | Paid Up Capital | Percentage Owned | |||||||
| 2023 | 2022 | ||||||||||
| Greifenberg Digital Limited | US$ | | | ||||||||
| As at 31 December | 2023 | 2022 | ||||||
| US$ | US$ | |||||||
| Current assets | ||||||||
| Non-current assets | ||||||||
| Current liabilities | ( | ) | ( | ) | ||||
| Net assets | ||||||||
| Group share of net assets | % | % | ||||||
| Year ended 31 December | ||||||||
| Revenues, net | ||||||||
| Loss after tax | ( | ) | ( | ) | ||||
Other than as disclosed in Note 29(b), the non-trade
amounts due from associate is unsecured,
NOTE 15. AMOUNTS DUE FROM THE FORMER GROUP COMPANIES
| Consolidated | ||||||||
| December 31, 2023 US$ | December 31, 2022 US$ | |||||||
| Amounts due from former group companies - net | ||||||||
| Provision for due from former group companies | ( | ) | ||||||
As at December 31, 2022, the non-trade amounts due from former group
companies include an amount of about US$
The other amount due to former group companies
are unsecured, interest at
F-35
NOTE 16. PLANT AND EQUIPMENT
| Consolidated | ||||||||||||||||
Leasehold US$ | Fixtures and US$ | Machinery US$ | Total US$ | |||||||||||||
| As of December 31, 2021 | ||||||||||||||||
| Cost | ||||||||||||||||
| Accumulated depreciation | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Carrying amount as of December 31, 2021 | ||||||||||||||||
| Year ended December 31, 2022 | ||||||||||||||||
| Opening carrying amount | ||||||||||||||||
| Additions | ||||||||||||||||
| Disposals | ( | ) | ( | ) | ( | ) | ||||||||||
| Write-off | ( | ) | ( | ) | ( | ) | ||||||||||
| Depreciation expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Closing carrying amount as of December 31, 2022 | ||||||||||||||||
| As of December 31, 2022 | ||||||||||||||||
| Cost | ||||||||||||||||
| Accumulated depreciation | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Close carrying amount as of December 31, 2022 | ||||||||||||||||
| Year ended December 31, 2023 | ||||||||||||||||
| Opening carrying amount | - | |||||||||||||||
| Additions | ||||||||||||||||
| Depreciation expenses | - | ( | ) | ( | ) | ( | ) | |||||||||
| Closing carrying amount as of December 31, 2023 | - | |||||||||||||||
| As of December 31, 2023 | ||||||||||||||||
| Cost | ||||||||||||||||
| Accumulated depreciation | ( | ) | ( | ) | ( | ) | ||||||||||
| Carrying amount as of December 31, 2023 | ||||||||||||||||
NOTE 17. EQUIPMENT DEPOSIT
| Consolidated | ||||||||
| December 31, 2023 US$ | December 31, 2022 US$ | |||||||
| Carrying value as at January 1 | ||||||||
| Addition during the year | ||||||||
| Disposal to former group companies | ( | ) | ||||||
| Provision during the year | ( | ) | ||||||
| Carrying value as at end of year | ||||||||
The equipment deposit is for the lamination equipment
for the manufacturing of smartglass. During the year, the Company paid a further deposit of $
F-36
NOTE 18. INTANGIBLE ASSETS
| Consolidated | ||||||||||||||||||||
| Technologies and Knowhow US$ | Patents and Trademark US$ | Software and License US$ | Goodwill US$ | Total US$ | ||||||||||||||||
| Cost | ||||||||||||||||||||
| As of January 1, 2022 | ||||||||||||||||||||
| Additions | ||||||||||||||||||||
| Disposal | ( | ) | ( | ) | ||||||||||||||||
| Write-off | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| As of December 31, 2022 | ||||||||||||||||||||
| As of January 1, 2023 | ||||||||||||||||||||
| Additions | ||||||||||||||||||||
| Provision | ( | ) | ( | ) | ||||||||||||||||
| As of December 31, 2023 | ||||||||||||||||||||
| Accumulated Amortization and Impairment Losses | ||||||||||||||||||||
| As of January 1, 2022 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Amortisation | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Disposal | ||||||||||||||||||||
| Write-off | ||||||||||||||||||||
| December 31, 2022 | ( | ) | ( | ) | ( | ) | ||||||||||||||
| As of January 1, 2023 | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Amortisation | ( | ) | ( | ) | ( | ) | ||||||||||||||
| As of December 31, 2023 | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Carrying Amount | ||||||||||||||||||||
| As of December 31, 2023 | ||||||||||||||||||||
| As of December 31, 2022 | ||||||||||||||||||||
F-37
NOTE 19. TRADE AND OTHER PAYABLES
| Consolidated | ||||||||
| December 31, 2023 US$ | December 31, 2022 US$ | |||||||
| Trade payables | ||||||||
| Other payables | ||||||||
| Amount due to directors (i) | ||||||||
| Accruals | ||||||||
| (i) |
NOTE 20. CONVERTIBLE PROMISSORY NOTES
| Consolidated | ||||||||
| December 31, 2023 US$ | December 31, 2022 US$ | |||||||
| Face value of convertible promissory notes issued from July to December 2022 (note i) | ||||||||
| Face value of convertible promissory note issued in November 2023 (note ii) | ||||||||
| Debt discount to other reserves | ( | ) | ||||||
Derivatives embedded in the convertible promissory note issued (Note 22) | ( | ) | ( | ) | ||||
| Liability component on initial recognition | ||||||||
| Converted to shares in the Company | ( | ) | ||||||
| Redeemed through the conversion to eGlass shares | ( | ) | ||||||
| Interest accrued | ||||||||
| Carrying value as at end of year | ||||||||
Note (i)
From July to December 2022, the Company issued
a total of approximately US$
However, if by the first anniversary of the date
of the issuance of the CPNote, eGlass has not received notice from ASX that it will be admitted to the official list of ASX, all CPNotes,
according to the time of the one year anniversary, will then as appropriate, convert to shares of the Company based on then 30-day VWAP
multiplied by
In addition, each noteholder shall receive warrants (“Warrant”) equal to the amount of the CPNote to subscribe for one share in eGlass at the IPO Price for a period of one year after the IPO, provided that eGlass is listed on the ASX. The Warrants are assignable and transferable prior to the IPO. If eGlass is not listed on the ASX, the Warrants will automatically expire.
In November and December 2023, all of the CPNotes
were converted into eGlass shares, except for US$
Note (ii)
In November 2023, the Company issued a US$
F-38
NOTE 20. CONVERTIBLE PROMISSORY NOTES (Continued)
| Consolidated | ||||||||
| December 31, 2023 US$ | December 31, 2022 US$ | |||||||
| Carrying value as at January 1 | ||||||||
| Interest accrued at effective interest rate | ||||||||
| Shares issued for interest payment | ( | ) | ||||||
| Shares issued on conversion of convertible promissory note | ( | ) | ( | ) | ||||
| Redemption of convertible promissory note | ( | ) | ||||||
| Carrying value as at December 31 | - | |||||||
In, 2022, the Convertible Promissory Notes converted into shares of the Company are as follows:
(a) On
January 20, 2020, the Company entered into a Convertible Promissory Note Purchase Agreement the (“CN Agreement”), with an
independent third party (“Noteholder”). Pursuant to CN Agreement, the Noteholder purchased from the Company a
In October 2020, the Group settled the interest
accrued of $
On January 19, 2022, the Noteholder converted
the Promissory Note and accrued interest to a total of
(b) On
August 6, 2020, the Company entered into a second Convertible Promissory Note Agreement (“the Second CN Agreement”) with a
third party (“Second Noteholder”). Pursuant to the Second CN Agreement, the holder invested US$
The conversion feature in convertible promissory notes were derivative liabilities based on the fact the conversion into shares could result in a variable number of shares to be issued.
On April 13, 2022 the Second Noteholder converted
the Second CN Agreement to a total of
In 2023, the convertible promissory notes converted into shares of the Company are as follows:
As detailed in this Note (i) above, all the convertible
notes issued from July to December 2022 totaling about US$
F-39
NOTE 21. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME
| Consolidated | ||||||||
December 31, US$ | December 31, US$ | |||||||
| Investment in equity instrument designated at FVOCI | ||||||||
| As at January 1 | ||||||||
| Change in fair value through other comprehensive income | ( | ) | ||||||
| Disposal of investment in listed shares | ( | ) | ||||||
| As at December 31 | ||||||||
On February 25, 2021, the Group completed the
underwriting in Oakridge International Limited (“Oakridge”), a company listed on the Australian Securities Exchange, for
This investment in equity instrument was not held for trading. Instead, they were held for medium to long-term strategic purposes. Accordingly, the directors of the Company elected to designate this investment in equity instrument as at Fair Value Through Other Comprehensive Income (FVOCI) as they believe that recognising short-term fluctuations in this investment’s fair value in profit or loss would not be consistent with the Group’s strategy of holding this investment for long-term purposes and realising their performance potential in the long run.
In 2022, the Company disposed of the investment
in Oakridge for A$
NOTE 22. DERIVATIVE FINANCIAL INSTRUMENTS
| Consolidated | ||||||||
| December 31, 2023 US$ | December 31, 2022 US$ | |||||||
| Derivative financial liabilities: | ||||||||
| Carrying value as at beginning of year | ||||||||
| Derivative redeemed on conversion of promissory notes | ( | ) | ( | ) | ||||
Derivatives embedded in the convertible promissory note issued (Note 20(a)) | ||||||||
| Fair value change in derivative financial instruments during the year | ||||||||
| Carrying value as at end of year | ||||||||
In the prior year from July to December 2022,
the Company entered into a number of Subscription Agreements (“Subscription Agreements”) for US$
As at December 31, 2021, the derivatives related to two convertible
promissory notes (“CN Notes”) entered into during 2020 (details are set out in Note 20) were revalued using the weighted average
assumptions: volatility
F-40
NOTE 23. WARRANT LIABILITIES
| Consolidated | ||||||||
| December 31, 2023 US$ | December 31, 2022 US$ | |||||||
| Warrant liabilities | ||||||||
On January 3, 2022, the Company entered into convertible
note purchase agreements raising a total of US$
On August 2, 2022, the Company entered into private
placing agreements raising a total US$
F-41
NOTE 24. BUSINESS COMBINATIONS
(a) Disposal of subsidiaries
In 2022, the Group disposed eGlass Technologies
Ltd, Smartglass Limited and Smart (Zhenjiang) Intelligent Technologies Limited which realized a loss on disposal of US$
| Consolidated | ||||||||||||
| 2023 | 2022 | 2021 | ||||||||||
| US$ | US$ | US$ | ||||||||||
| Total disposal consideration | ||||||||||||
| Carrying amount of net asset sold (note(i) below) | ( | ) | ( | ) | ||||||||
| Loss on sales before income tax and reclassification of foreign currency translation reserve | ( | ) | ( | ) | ||||||||
| Reclassification of foreign currency transaction reserve | ||||||||||||
| Non-controlling interest | ||||||||||||
| (Loss)/gain on disposal after income tax | ( | ) | ||||||||||
(i)
| Consolidated | ||||||||||||
| 2023 | 2022 | 2021 | ||||||||||
| US$ | US$ | US$ | ||||||||||
| Cash and bank balances | ||||||||||||
| Plant and equipment | ||||||||||||
| Right of use assets | ||||||||||||
| Inventories | ||||||||||||
| Trade and others receivable | ||||||||||||
| Other deposit and prepayment | ||||||||||||
| Amount due from former fellow subsidiaries | ||||||||||||
| Trade and other liabilities | ( | ) | ( | ) | ||||||||
| Amount due to a related company | ( | ) | ||||||||||
| Amount due to holding company | ( | ) | ||||||||||
| Lease liabilities | ( | ) | ||||||||||
| Lease liabilities - long term | ( | ) | ||||||||||
| Deferred tax liabilities | ( | ) | ||||||||||
F-42
NOTE 24. BUSINESS COMBINATIONS (Continued)
(a) Disposal of subsidiaries (continued)
(ii)
| Consolidated | ||||||||||||
| 2023 | 2022 | 2021 | ||||||||||
| US$ | US$ | US$ | ||||||||||
| Consideration received, satisfied in cash | ||||||||||||
| Cash and cash equivalents of subsidiaries disposed of (included cash at bank and bank overdraft) | ( | ) | ( | ) | ||||||||
| ( | ) | |||||||||||
(b) Deemed disposal of subsidiaries
In 2022, the Group’s equity investment in
Greifenberg Digital Limited and its subsidiaries (“Greifenberg Group”) decreased from
| Consolidated | ||||||||||||
| 2023 | 2022 | 2021 | ||||||||||
| US$ | US$ | US$ | ||||||||||
| Total deemed disposal consideration | ||||||||||||
| Carrying amount of net asset sold (note(i) below) | ( | ) | ||||||||||
| Loss on sales before income tax and reclassification of foreign currency translation reserve | ( | ) | ||||||||||
| Non-controlling interest | ||||||||||||
| Loss on disposal after income tax | ( | ) | ||||||||||
(i) Net assets disposed of:
| Consolidated | ||||||||||||
| 2023 | 2022 | 2021 | ||||||||||
| US$ | US$ | US$ | ||||||||||
| Intangible assets | ||||||||||||
| Cash and bank balance | ||||||||||||
| Other deposit and prepayment | ||||||||||||
| Amount due to a related company | ||||||||||||
| Trade and other liabilities | ( | ) | ||||||||||
F-43
NOTE 24. BUSINESS COMBINATIONS (Continued)
(b) Deemed disposal of subsidiaries (continued)
(ii) Net cash flows from disposal of subsidiaries
| Consolidated | ||||||||||||
| 2023 | 2022 | 2021 | ||||||||||
| US$ | US$ | US$ | ||||||||||
| Deemed consideration received, satisfied in investment in associate | ||||||||||||
| Cash and cash equivalents of subsidiaries disposed of (included cash at bank and bank overdraft) | ( | ) | ||||||||||
(c) Acquisition of subsidiaries
On January 31, 2022, the Company acquired
On June 28, 2023, the Company acquired
| Consolidated | ||||||||||||
| 2023 | 2022 | 2021 | ||||||||||
| US$ | US$ | US$ | ||||||||||
| Purchase consideration (refer to (b) below): | ||||||||||||
| Cash paid | ||||||||||||
| Ordinary shares issued | ||||||||||||
| Total purchase considerations | ||||||||||||
| The assets and liabilities recognized as a result of the acquisitions are as follows: | ||||||||||||
| Cash | ||||||||||||
| Other assets | ||||||||||||
| Intangible assets | ||||||||||||
| Equipment | ||||||||||||
| Accounts payables | ( | ) | ||||||||||
| Other payables | ( | ) | ||||||||||
| Net identifiable liabilities acquired | ( | ) | ||||||||||
| Increase/(decrease) non-controlling interests | ( | ) | ||||||||||
| Increase in goodwill | ||||||||||||
| Increase in other reserve | ||||||||||||
F-44
NOTE 25. ISSUED CAPITAL
| December 31, 2023 | December 31, 2022 | December 31, 2021 | ||||||||||||||||||||||
| Number of shares* | US$ | Number of shares* | US$ | Number of shares* | US$ | |||||||||||||||||||
| Ordinary Shares fully paid | ||||||||||||||||||||||||
| * |
| Company | ||||||||
| Number of Shares | US$ | |||||||
| January 1, 2021 | ||||||||
| Issue of shares for services | ||||||||
| Issue of shares for cash | ||||||||
| Legal expenses in respect of issuance of debts | ( | ) | ||||||
| December 31, 2021 | ||||||||
| Issuance of shares for execution of share options | ||||||||
| Issuance of shares for cash | ||||||||
| Issuance of shares on conversion of debts | ||||||||
| December 31 2022 | ||||||||
| Issuance of shares for cash | ||||||||
| Issuance of shares for services | ||||||||
| Total issue of shares prior to share consolidation | ||||||||
| 1 for 10 share consolidation of our fully paid ordinary shares | ( | ) | - | |||||
| Total issue of shares post share consolidation | ||||||||
| Issuance of shares for cash | ||||||||
| Issuance of shares for services | ||||||||
| Issuance of shares on acquisition of subsidiaries | ||||||||
| Issuance of shares on conversion of debts | ||||||||
| December 31, 2023 | ||||||||
There is only one class of share on issue being ordinary fully paid shares. Holders of ordinary shares are treated equally in all respects regarding voting rights and with respect to the participation in dividends and in the distribution of surplus assets upon a winding up. The fully paid ordinary shares have no par value.
On October 16, 2023, the Company effectuated a
1-for-10 share consolidation of the ordinary shares, which was approved at a special meeting of the shareholders on September 29, 2023.
The purpose of the share consolidation was to enable the Company to meet the Nasdaq’s minimum share price requirement. The share consolidation
became effective on October 16, 2023 and every then issued and outstanding ordinary shares were automatically combined into one issued
and outstanding ordinary share. This reduced the number of outstanding shares from
F-45
NOTE 25. ISSUED CAPITAL (Continued)
(c) Convertible Notes
During the year 2021, the details of convertible notes movements are as below:-
There was no movement in convertible notes in 2021.
During the year 2022, the details of convertible notes movements are as below:-
On January 3, 2022, the Company entered into convertible
note purchase agreements raising a total of US$
On January 19, 2022 a noteholder converted all
the Jan 2020 Convertible Note into a total of
In April 2022, a noteholder converted all the
NGT Note into a total of
From July to December 2022, the Company entered
into a number of Subscription Agreements (“Subscription Agreements”) for US$
During the year 2023, the details of convertible notes movements are as below:-
On October 24, 2023, the Company entered into convertible note purchase
agreements with Nextglass Solutions, Inc raising a total of US$
As detailed above, all the CPNotes issued from
July to December 2022 totaling about US$
Subsequent to the year end to the date of this report, the details of convertible notes movement are as below:
On July 17, 2024, the Company entered into a
Convertible Note and Warrants Purchase Agreement for Montague Capital Pty Ltd to raise US$
In addition, the noteholder shall receive a warrant
representing
F-46
NOTE 25. ISSUED CAPITAL (Continued)
(d) Warrants
During the year 2021, the details of warrants movements are as below:-
There were no warrants issued in 2021.
During the year 2022, the details of warrants movements are as below:-
On January 3, 2022 in connection with the sale
of the convertible note, the Company issued to the noteholders warrants to purchase up to
In connection with the private placements in August
and September 2022, the Company issued to the shareholders warrants to purchase a total of
Subsequent to the year end to the date of this report, the details of warrants movement are as below:
On July 17, 2024 in connection with the Convertible
Note and Warrants Purchase Agreement, the Company issued to the noteholder warrants to purchases a total of
(e) Options
On August 17, 2022, the Company filed in accordance
with the requirements under the Securities Act of 1933, as amended, in order to register
2021 Employee Share Option Plan
In December 2021, the Company approved a new Employee
Share Option Plan (“2021 ESOP”). The 2021 ESOP is available to employee, consultants, and eligible persons (as the case may
be) of the Company upon determined by the Remuneration Committee and at the absolute discretion of the Board. The 2021 ESOP is valid for
As at December 31, 2023, the Company had no employee share option issued and outstanding in respect to the 2021 ESOP.
F-47
NOTE 26. RESERVES
| (i) | In 2021, the significant movement in other reserves represents the release of the reserve to accumulated losses as a result of the disposal of the subsidiary GOXD International Limited and its subsidiaries. |
| (ii) | In 2022, the movement in other reserves represents the release of the reserve to accumulated losses as a result of the disposal of the investment in Financial Assets at Fair Value Through other Comprehensive Income and the acquisition of a subsidies company. (Note 24(c)). |
| (iii) | In 2023, the movement in other reserves represents the difference between the initial fair value of the convertible promissory note as a whole and the initial fair value of the liability component arising from the issue of the US$ |
NOTE 27. COMMITMENTS
(a) Non-cancellable operating leases
| Consolidated | ||||||||
| 2023 | 2022 | |||||||
| US$ | US$ | |||||||
| Within one year | ||||||||
| In the second to fifth years, inclusive | ||||||||
(b) Capital commitments
As of December 31, 2023 the Group had no capital commitment.
F-48
NOTE 28. FINANCIAL RISK MANAGEMENT
(a) Financial risk management objectives
The Group is exposed to financial risk through the normal course of their business operations. The key risks impacting the Group’s financial instruments are considered to be interest rate risk, foreign currency risk, liquidity risk, credit risk and capital risk. The Group’s financial instruments exposed to these risks are cash and short term deposits, receivables, trade payables and borrowings.
The Group’s chief executive officer for operations monitors the Group’s risks on an ongoing basis and report to the Board.
(b) Interest rate risk management
The Group is exposed to interest rate risk (primarily on its cash and bank balances, loan receivables, amount due to ultimate holding company, and borrowings), which is the risk that a financial instrument’s value will fluctuate as a result of changes in the market interest rates on interest-bearing financial instruments.
The Group has adopted a policy of ensuring it maintains adequate cash and cash equivalents balances available at call. These accounts currently earn low interests.
The sensitivity analyses below have been determined based on the exposure to interest rates at the reporting date and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period. A 50 basis point increase or decrease represents management’s assessment of the possible change in interest rates.
At reporting date, if interest rates had increased/decreased
by 50 basis points from the weighted average effective rate for the year, with other variables constant, the loss for the year would have
been increased by US$
| Consolidated | ||||||||||||||||||||
| Weighted average effective interest rate | Floating interest rate US$ | Fixed interest rate | Non-interest bearing US$ | Total US$ | ||||||||||||||||
| 2023 | ||||||||||||||||||||
| Financial Assets | ||||||||||||||||||||
| Cash and bank balances | % | |||||||||||||||||||
| Trade receivables | - | - | ||||||||||||||||||
| Other receivables | ||||||||||||||||||||
| Other assets | ||||||||||||||||||||
| Due from an associated company | % | |||||||||||||||||||
| Due from the former group companies | % | |||||||||||||||||||
| Total Financial Assets | ||||||||||||||||||||
| Financial Liabilities | ||||||||||||||||||||
| Trade and other liabilities | ||||||||||||||||||||
| Derivative financial instruments | - | - | ||||||||||||||||||
| Warrant liabilities | - | - | ||||||||||||||||||
| Convertible promissory notes | % | |||||||||||||||||||
| Total Financial Liabilities | ||||||||||||||||||||
F-49
NOTE 28. FINANCIAL RISK MANAGEMENT (Continued)
(b) Interest rate risk management (continued)
| Consolidated | ||||||||||||||||||||
| Weighted average effective interest rate | Floating interest rate US$ | Fixed interest rate | Non- interest bearing US$ | Total US$ | ||||||||||||||||
| 2022 | ||||||||||||||||||||
| Financial Assets | ||||||||||||||||||||
| Cash and bank balances | % | |||||||||||||||||||
| Trade receivables | ||||||||||||||||||||
| Other receivables | ||||||||||||||||||||
| Loan receivables | % | |||||||||||||||||||
| Other assets | ||||||||||||||||||||
| Due from an associated company | % | |||||||||||||||||||
| Due from the former group companies | % | |||||||||||||||||||
| Total Financial Assets | ||||||||||||||||||||
| Financial Liabilities | ||||||||||||||||||||
| Trade and other liabilities | % | |||||||||||||||||||
| Convertible promissory notes | ||||||||||||||||||||
| Total Financial Liabilities | ||||||||||||||||||||
(c) Foreign currency risk
| Consolidated | ||||||||||||||||||||||||||||||||
| Short term exposure | Long term exposure | |||||||||||||||||||||||||||||||
| MYR | AUD | KRW | SGD | MYR | AUD | KRW | SGD | |||||||||||||||||||||||||
| 31 December 2023 | ||||||||||||||||||||||||||||||||
| Financial assets | ||||||||||||||||||||||||||||||||
| - Cash and cash equivalents | ||||||||||||||||||||||||||||||||
| - Trade and other receivables | - | |||||||||||||||||||||||||||||||
| - Loan receivable | ||||||||||||||||||||||||||||||||
| - Other assets | ||||||||||||||||||||||||||||||||
| - Due from an associate company | ||||||||||||||||||||||||||||||||
| - Due from the former companies | ||||||||||||||||||||||||||||||||
| Financial liabilities | ||||||||||||||||||||||||||||||||
| - Trade and other liabilities | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| - Convertible promissory notes | ||||||||||||||||||||||||||||||||
| Total exposure | ( | ) | ( | ) | ||||||||||||||||||||||||||||
F-50
NOTE 28. FINANCIAL RISK MANAGEMENT (Continued)
(c) Foreign currency risk (continued)
| Consolidated | ||||||||||||||||||||||||||||||||||||||||||||||||
| Short term exposure | Long term exposure | |||||||||||||||||||||||||||||||||||||||||||||||
| HKD | GBP | EUR | MYR | AUD | KRW | HKD | GBP | EUR | MYR | AUD | KRW | |||||||||||||||||||||||||||||||||||||
| 31 December 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Financial assets | ||||||||||||||||||||||||||||||||||||||||||||||||
| - Cash and cash equivalents | ||||||||||||||||||||||||||||||||||||||||||||||||
| - Trade and other receivables | ||||||||||||||||||||||||||||||||||||||||||||||||
| - Loan receivable | ||||||||||||||||||||||||||||||||||||||||||||||||
| - Other assets | ||||||||||||||||||||||||||||||||||||||||||||||||
| Financial liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||
| - Trade and other liabilities | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| - Convertible promissory notes | ||||||||||||||||||||||||||||||||||||||||||||||||
| Total exposure | ( | ) | ) | |||||||||||||||||||||||||||||||||||||||||||||
F-51
NOTE 28. FINANCIAL RISK MANAGEMENT (Continued)
(c) Foreign currency risk (continued)
The following table illustrates the sensitivity
of loss and equity in regard to the Group’s financial assets and financial liabilities and the HKD/USD exchange rate, AUD/USD exchange
rate, GBP/USD exchange rate, EUR/USD exchange rate, MYR/USD exchange rate, KRW/USD exchange rate and SGD/USD exchange rate and assure
“all other things being equal’.
| Consolidated | ||||||||||||||||||||||||||||||||
| Loss for the year | ||||||||||||||||||||||||||||||||
| HKD | AUD | GBP | EUR | MYR | KRW | SGD | Total | |||||||||||||||||||||||||
| 31 December 2023 | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
| 31 December 2022 | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ) | ( | ) | |||||||||||||||||||
| Consolidated | ||||||||||||||||||||||||||||||||
| Equity | ||||||||||||||||||||||||||||||||
| HKD | AUD | GBP | EUR | MYR | KRW | SGD | Total | |||||||||||||||||||||||||
| 31 December 2023 | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
| 31 December 2022 | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
If the USD had weakened against the HKD by
| Consolidated | ||||||||||||||||||||||||||||||||
| Loss for the year | ||||||||||||||||||||||||||||||||
| HKD | AUD | GBP | EUR | MYR | KRW | SGD | Total | |||||||||||||||||||||||||
| 31 December 2023 | ||||||||||||||||||||||||||||||||
| 31 December 2022 | ||||||||||||||||||||||||||||||||
| Consolidated | ||||||||||||||||||||||||||||||||
| Equity | ||||||||||||||||||||||||||||||||
| HKD | AUD | GBP | EUR | MYR | KRW | SGD | Total | |||||||||||||||||||||||||
| 31 December 2023 | ||||||||||||||||||||||||||||||||
| 31 December 2022 | ||||||||||||||||||||||||||||||||
Exposures to foreign exchange rates vary during the year depending on the volume of overseas transactions. Nonetheless, the analysis above is considered to be representative of the Group’s exposure to currency risk.
F-52
NOTE 28. FINANCIAL RISK MANAGEMENT (Continued)
(d) Liquidity risk management
Prudent liquidity risk management implies maintaining sufficient cash and term deposits, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. The Group manages liquidity risk by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.
| Consolidated | ||||||||||||||||||||||||
| 2023 | Total | |||||||||||||||||||||||
| contractual | 0 - 30 days | |||||||||||||||||||||||
| Carrying | undiscounted | or on | 31 - 90 | 91 - 365 | Over | |||||||||||||||||||
| amount | cash flow | demand | days | Days | 1 year | |||||||||||||||||||
| US$ | US$ | US$ | US$ | US$ | US$ | |||||||||||||||||||
| Trade and other liabilities | ||||||||||||||||||||||||
| Convertible promissory note | ||||||||||||||||||||||||
| Consolidated | ||||||||||||||||||||||||
| 2022 | Total | |||||||||||||||||||||||
| contractual | 0 - 30 days | |||||||||||||||||||||||
| Carrying | undiscounted | or on | 31 - 90 | 91 -365 | Over | |||||||||||||||||||
| amount | cash flow | demand | days | Days | 1 year | |||||||||||||||||||
| US$ | US$ | US$ | US$ | US$ | US$ | |||||||||||||||||||
| Trade and other liabilities | ||||||||||||||||||||||||
| Derivative financial instruments | ||||||||||||||||||||||||
| Convertible promissory notes | ||||||||||||||||||||||||
(e) Credit risk
Credit risk refers to the risk that a counter-party will default on its contractual obligations resulting in a financial loss to the Group. The Group’s potential concentration of credit risk consists mainly of cash deposits with banks, other receivables, loan receivable and trade receivables with its customers. The Group’s short term cash surpluses are placed with banks that have investment grade ratings. The Group considers the credit standing of counterparties and customers when making deposits and sales, respectively, to manage the credit risk. The Group does not have any material credit risk exposure to any single debtor or group of debtors under financial instruments entered into by the Group other than to debtors from purchase of products and loan receivable from Capital Stone Holdings Limited. Considering the nature of the business at current, the Group uses a range of approaches to mitigate credit risk.
The maximum exposure to credit risk, excluding the value of any collateral or other security, at the end of the reporting period, to financial assets, is represented by the carrying amount of cash and bank balances, trade and other receivables, and loan receivables net of any provisions for doubtful debts, as disclosed in the consolidated statement of financial positions and notes to the consolidated financial statements.
F-53
NOTE 28. FINANCIAL RISK MANAGEMENT (Continued)
(f) Fair value of financial instruments
The following liability is recognized and measured at fair value on a recurring basis:
- Derivative financial instruments
Fair value hierarchy
All assets and liabilities for which fair value is measured or disclosed are categorized according to the fair value hierarchy as follows:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Recognized fair value measurements
| Level 2 | ||||
| US$ | ||||
| Derivative financial instruments | ||||
| December 31, 2023 | ||||
| December 31, 2022 | ||||
The Group does not have any assets and liabilities that qualify for the level 1 category. There were no transfers between level 1, 2 and 3 during the year.
An instrument is included in level 2 if the financial instrument is not traded in an active market and if the fair value is determined by using valuation techniques based on the maximum use of observable market data for all significant inputs. For the derivatives, the Group uses the estimated fair value of financial instruments determined by using available market information and appropriate valuation methods, including relevant credit risks. The estimated fair value approximates to the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Specific valuation techniques used to value financial instruments include:
| ● | quoted market prices or dealer quotes for similar instruments; and | |
| ● | binomial options pricing models. |
F-54
NOTE 28. FINANCIAL RISK MANAGEMENT (Continued)
(f) Fair value of financial instruments (continued)
| Consolidated | ||||
| Put Option US$ | ||||
| At January 1, 2023 | ||||
| Issuance of put option at fair value | ||||
| Gain included in profit or loss on change in fair value | ( | ) | ||
| At December 31, 2023 | ||||
Disclosed fair values
The Group also has assets and liabilities which are not measured at fair values, but for which fair values are disclosed in the notes to the consolidated financial statements.
Due to their short term nature, the carrying amounts of trade receivables (refer to Note 11) and payables (refer to Note 19) are assumed to approximate their fair values because the impact of discounting is not significant.
(g) Capital management risk
The Group’s objective when managing capital is to safeguard the Group’s ability to continue as a going concern and to maintain a strong capital base sufficient to maintain future development of its business. In order to maintain or adjust the capital structure, the Group may return capital to shareholders, issue new shares or sell assets to reduce debts. The Group’s focus has been to raise sufficient funds through equity to fund its business activities.
There were no changes to the Group’s approach to capital management during the year. Risk management policies and procedures are established with regular monitoring and reporting.
Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements.
The capital structure of the Group consists of equity attributable to equity holders of the parent, comprising issued capital, paid-in capital, reserves and accumulated loss or retained earnings as disclosed in Notes 25 and 26 respectively.
F-55
NOTE 29. RELATED PARTIES
(a) Transactions with directors
| Consolidated | ||||||||||||
| December 31, 2023 US$ | December 31, 2022 US$ | December 31, 2021 US$ | ||||||||||
| Short term benefits (1) | ||||||||||||
| (1) |
(b) Other related party transactions
| Consolidated | ||||||||||||
| December 31, 2023 US$ | December 31, 2022 US$ | December 31, US$ | ||||||||||
| Interest charged to an associate company | ||||||||||||
| Company secretarial, taxation service and CFO fee paid to a related company (1) | ||||||||||||
| Consultancy fee paid to a related party (2) | ||||||||||||
| (1) |
| (2) |
F-56
NOTE 30. CASH FLOW INFORMATION
(a)
| Consolidated | ||||||||||||||||||||
| Convertible promissory notes | Derivative embedded in convertible bonds issued | Issue of shares | Other reserves | Total | ||||||||||||||||
| US$ | US$ | US$ | US$ | US$ | ||||||||||||||||
| Beginning balance as of January 1, 2023 | ( | ) | ||||||||||||||||||
| Cash flows from financing activities | ||||||||||||||||||||
| Issue of shares on conversion of debt | ( | ) | ||||||||||||||||||
| Issue of shares on acquisition of subsidiaries | ||||||||||||||||||||
| Change in working capital | ( | ) | ( | ) | ||||||||||||||||
| Acquisition of subsidiaries | ( | ) | ( | ) | ||||||||||||||||
| Fair value change in derivative financial instruments | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Debt discount | ( | ) | ||||||||||||||||||
| Ending balance as of December 31, 2023 | ||||||||||||||||||||
| Consolidated | ||||||||||||||||||||||||||||
| Amounts due to related companies | Convertible promissory notes | Lease liabilities | Derivative embedded in convertible bonds issued | Issue of shares | Other reserves | Total | ||||||||||||||||||||||
| US$ | US$ | US$ | US$ | US$ | US$ | US$ | ||||||||||||||||||||||
| Beginning balance as of January 1, 2022 | ||||||||||||||||||||||||||||
| Cash flows from financing activities | ||||||||||||||||||||||||||||
| Change in working capital | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Issue of shares on conversion of debt | ( | ) | ||||||||||||||||||||||||||
| Debt discount | ( | ) | ||||||||||||||||||||||||||
| Fair value change in derivative financial instruments | ||||||||||||||||||||||||||||
| Release of other reserve upon sale of financial assets | ( | ) | ( | ) | ||||||||||||||||||||||||
| Redemption of convertible promissory note | ( | ) | ( | ) | ||||||||||||||||||||||||
| Acquisition of subsidiary | ( | ) | ( | ) | ||||||||||||||||||||||||
| Disposal of subsidiaries | ||||||||||||||||||||||||||||
| Deemed disposal of subsidiaries | ( | ) | ( | ) | ||||||||||||||||||||||||
| Ending balance as of December 31, 2022 | ( | ) | ||||||||||||||||||||||||||
F-57
NOTE 30. CASH FLOW INFORMATION (continued)
(a) Reconciliation of liabilities arising from financing activities (continued)
| Consolidated | ||||||||||||||||||||||||||||||||
| Amounts due to related companies | Amount due to holding company | Convertible promissory notes | Lease liabilities | Derivative embedded in convertible bonds issued | Issue of shares | Other reserves | Total | |||||||||||||||||||||||||
| US$ | US$ | US$ | US$ | US$ | US$ | US$ | US$ | |||||||||||||||||||||||||
| Beginning balance as of January 1, 2021 | ||||||||||||||||||||||||||||||||
| Cash flows from financing activities | ||||||||||||||||||||||||||||||||
| Change in working capital | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Transfer other reserve to accumulated losses | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Acquisition of subsidiary | ||||||||||||||||||||||||||||||||
| Fair value change | ||||||||||||||||||||||||||||||||
| Disposal of plant and equipment | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Ending balance as of December 31, 2021 | ||||||||||||||||||||||||||||||||
F-58
NOTE 30. CASH FLOW INFORMATION (Continued)
(b)
| Consolidated | ||||||||||||
| December 31, 2023 US$ | December 31, 2022 US$ | December 31, 2021 US$ | ||||||||||
| Cash flows from changes in working capital | ||||||||||||
| (Increase)/decrease in assets: | ||||||||||||
| Trade receivables | ( | ) | ( | ) | ||||||||
| Other receivables | ( | ) | ( | ) | ( | ) | ||||||
| Inventories | ( | ) | ( | ) | ||||||||
| Loan receivables | ( | ) | ||||||||||
| Other current assets | ( | ) | ( | ) | ||||||||
| Amount due from associate company | - | ( | ) | |||||||||
| Amount due from former group companies | ( | ) | ||||||||||
| Increase/(decrease) in liabilities: | ||||||||||||
| Amount due to related companies | ( | ) | ||||||||||
| Deferred tax | ||||||||||||
| Trade and other payables | ( | ) | ||||||||||
| Amount due to holding company | ( | ) | ||||||||||
| Lease liabilities | ( | ) | ( | ) | ||||||||
| Net cash inflows/(outflows) from changes in working capital | ( | ) | ( | ) | ||||||||
NOTE 31. KEY MANAGEMENT PERSONNEL DISCLOSURES
(a) Remuneration
| Consolidated | ||||||||||||
| December 31, 2023 US$ | December 31, 2022 US$ | December 31, 2021 US$ | ||||||||||
| Short-term employee benefits | ||||||||||||
| Post-employment benefits | ||||||||||||
| Total | ||||||||||||
During the year 2021, included in short term benefits
for directors and officers included payments of US$
(b) Loans to Key Management Personnel and their related parties
There were
Other transactions with Key Management Personnel
Several key management persons, or their related parties, held positions in other entities that resulted in them having control or significant influences over the financials or operating policies of these entities. Transactions between related parties are in normal commercial terms and conditions unless otherwise stated in Notes 29.
(c) Share Options - number of share options held by management
There were no share options held outstanding held by the management.
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NOTE 32. CONTROLLED ENTITIES
| Name of Subsidiary | Country of Incorporation | Principal Activities | Paid Up Capital | Percentage Owned | ||||||||||
| 2023 | 2022 | |||||||||||||
| CIMC Marketing Pty Limited | A$ | |||||||||||||
| IMTE Asia Limited | HK$ | |||||||||||||
| IMTE Malaysia Sdn. Bhd. | MYR | |||||||||||||
| Itana Holdings Limited | US$ | |||||||||||||
| Merit Stone Limited | US$ | |||||||||||||
| Ohho International Limited | US$ | |||||||||||||
| Ouction Digital Limited | US$ | |||||||||||||
| World Integrated Supply Ecosystem Sdn. Bhd. | MYR | |||||||||||||
| Itana Energy Pty Ltd* | A$ | |||||||||||||
| Admiral Energy (Australia) Pty Ltd* | A$ | |||||||||||||
| * |
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NOTE 33. PARENT ENTITY INFORMATION (UNAUDITED)
Set out below is the supplementary information about the parent entity.
| Company | ||||||||||||
| December 31, 2023 US$ | December 31, 2022 US$ | December 31, 2021 US$ | ||||||||||
Loss after income tax | ( | ) | ( | ) | ( | ) | ||||||
| Other comprehensive income | ||||||||||||
| Total comprehensive loss | ( | ) | ( | ) | ( | ) | ||||||
| Company | ||||||||
| December 31, 2023 | December 31, 2022 | |||||||
| US$ | US$ | |||||||
| Total non-current assets | ||||||||
| Total current assets | ||||||||
| Total assets | ||||||||
| Total current liabilities | ( | ) | ( | ) | ||||
| Total non-current liabilities | ( | ) | ( | ) | ||||
| Total liabilities | ( | ) | ( | ) | ||||
| Total assets less liabilities | ||||||||
| Equity | ||||||||
| Issued capital | ||||||||
| Other reserves | ||||||||
| Accumulated losses | ( | ) | ( | ) | ||||
| Total equity | ||||||||
Guarantees entered into by the parent entity in relation to the debts of its subsidiary
Other than as disclosed in this Annual Report, the parent entity had not guarantee debts of its subsidiary companies.
Contingent liabilities
Other than as disclosed in this Annual Report, the parent entity had no contingent liabilities as at December 31, 2023 and December 31, 2022.
Capital commitments – plant and equipment
The parent entity has no capital commitments for plant and equipment as at December 31, 2023 and December 31, 2022.
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NOTE 33. PARENT ENTITY INFORMATION (UNAUDITED) (Continued)
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Group, as disclosed in Note 3, except for:
| - | Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity, |
| - | Dividends received from subsidiaries are recognized as other income by the parent entity and its receipt may be an indicator of impairment. |
NOTE 34. EVENTS OCCURRING AFTER THE REPORTING DATE
Subject to the subsequent events below, there is no other matter or circumstance arisen since December 31, 2023, which has significantly affected, or may significantly affect the operations of the Group, the result of those operations, or the state of affairs of the Group in subsequent financial years.
In January 2024, the Company issued
On July 22, 2024, the Company issued a $
On July 26, 2024, the Group entered into an Exclusive
Distribution Agreement for the distributing and sale of the smartglass products used in or installed in the Prefabrication Home Market.
The distributor would maintain the exclusive distribution by achieving certain annual sales. The agreement if for
NOTE 35. GROUP DETAILS
The registered office and principal place of business is:
Suite 1401 Level 14, 219-227 Elizabeth Street
Sydney NSW 2000
F-62
ITEM 19. EXHIBITS
The following exhibits are filed as part of this registration statement:
| (1) | Incorporated by reference on Form 20-F/A3 submitted on May 8, 2017. |
| (2) | Incorporated by reference on Form 6-K filed on January 20, 2020 and Form 6-K/A filed on February 12, 2020. |
| (3) | Incorporated by reference on Form 6-K filed on August 12, 2020. |
| (4) | Incorporated by reference on Form F-1 filed on December 23, 2020. |
| (5) | Incorporated by reference on Form F-1 filed on October 14, 2021. |
| (6) | Incorporated by reference on Form 6-K filed on December 30, 2021. |
| (7) | Incorporated by reference on Form 6-K filed on January 3, 2022. |
| (8) | Incorporated by reference on Form 6-K filed on January 20, 2022. |
| (9) | Incorporated by reference on Form 20-F filed on April 28, 2022. |
| (10) | Incorporated by reference on Form 6-K filed on July 12, 2022. |
| (11) | Incorporated by reference on Form 6-K filed on August 2, 2022. |
| (12) | Incorporated by reference on Form S-8 filed on August 17, 2022. |
| (13) | Incorporated by reference on Form 6-K filed on October 24, 2023. |
| (14) | Incorporated by reference on Form 6-K filed on July 24, 2024. |
| * | Filed with this annual report on Form 20-F. |
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SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this Annual Report on its behalf.
| Integrated Media Technology Limited | ||
| /s/ Jannu Binti Babjan | ||
| By: | Jannu Binti Babjan | |
| Title: | Chairman | |
Date: October 22, 2024
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