Annual Report for Fiscal Year Ending May 31, 2025 (Form 20-F)

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this Annual Report. This discussion and analysis and other parts of this Annual Report contain forward-looking statements based upon current beliefs, plans and expectations that involve risks, uncertainties, and assumptions. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of several factors, including those set forth under "Risk Factors" and elsewhere in this Annual Report. You should carefully read the "Risk Factors" section of this Annual Report in Item 3D to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements.

OVERVIEW

JBDI Holdings Limited is a holding company incorporated as an exempted company under the laws of the Cayman Islands. As a holding company with no material direct operations of our own, we conduct our operations through our operating subsidiaries in Singapore.

For the financial years ended May 31, 2025 and 2024, our total revenue amounted to approximately $8.4 million and approximately $9.4 million, respectively, of which Singapore accounted for approximately $7.4 million for the financial years ended May 31, 2025 and approximately $7.9 million for the financial years ended May 31, 2024. Indonesia accounted for approximately $0.6 million for the financial years ended May 31, 2025 and approximately $0.9 million for the financial years ended May 31, 2024. Malaysia and other countries accounted for approximately $0.4 million for the financial years ended May 31, 2025 and approximately $0.6 million for the financial years ended May 31, 2024.

Our net loss amounted to approximately $2.4 million and approximately $1.0 million for the financial years ended May 31, 2025 and 2024, respectively.

For the financial years ended May 31, 2024 and 2023, our total revenue amounted to approximately $9.4 million and approximately $11.1 million, respectively, of which Singapore accounted for approximately $7.9 million for the financial years ended May 31, 2024 and approximately $9.3 million for the financial years ended May 31, 2023. Indonesia accounted for approximately $0.9 million for the financial years ended May 31, 2024 and approximately $1.4 million for the financial years ended May 31, 2023. Malaysia and other countries accounted for approximately $0.6 million for the financial years ended May 31, 2024 and approximately $0.4 million for the financial years ended May 31, 2023.

For our net loss amounted to approximately $1.0 million and our net income amounted to approximately $0.8 million for the financial years ended May 31, 2024 and 2023, respectively.

KEY FACTORS AFFECTING THE RESULTS OF OUR GROUP'S OPERATIONS

Our financial condition and results of operation have been and will continue to be affected by a number of factors, many of which may be beyond our control, including those factors set out in the section headed "Risk Factors" in this Annual Report and those set out below.

Description and Analysis of Principal Components of Our Results of Operations

The following discussion is based on our Group's historical results of operations and may not be indicative of our Group's future operating performance.

Comparison of operating results for the financial years ended May 31, 2025 and 2024

Revenue

As set forth in the following table, during the financial years ended May 31, 2025 and 2024, our revenue was derived from the sales of reconditioned Contains,the sales of new Containers, reconditioning services, waste water equipment services and sales of recycled materials and services serving the chemical and oil and gas industries:

Our total revenue decreased by approximately $1.0 million or 10.1% to approximately $8.4 million for the financial year ended May 31, 2025 from approximately $9.4 million for the financial year ended May 31, 2024. Such decrease was mainly attributable to the decrease in Singapore of the sales of reconditioned Containers and services of approximately $0.5 million as a result of the local demand.

Our net loss amounted to approximately $2.7 million and approximately $1.0 million for the financial years ended May 31, 2025 and 2024, respectively. The net loss for the financial year ended May 31, 2025 was mainly caused by the decrease in sales and the increase in expenses discussed below.

Approximately 87.9% and 84.2% of our total revenue for the financial years ended May 31, 2025 and 2024, respectively, was generated from customers located in Singapore. For the same financial years, our revenue generated from customers located in Indonesia accounted for approximately 7.9% and 9.3% of our total revenue, respectively. For the same financial years, our revenue generated from customers located in Malaysia and other countries accounted for approximately 4.2% and 6.5% of our total revenue, respectively.

Revenue by geographic location

During the financial years ended May 31, 2025 and 2024, customers for our sale of reconditioned Containers, sale of new Containers, reconditioning services, waste water equipment services and sales of recycled materials and services were mainly located in Singapore. The following tables set out a breakdown of our revenue by geographic location of our customers for the financial years ended May 31, 2025 and 2024:

Singapore

The revenue in Singapore decreased by approximately $0.5 million for the financial year ended May 31, 2025, as compared to the corresponding financial year ended May 31, 2024, and was primarily attributable to the decrease in the sales of reconditioned Containers and services.

Indonesia

The revenue in Indonesia decreased by approximately $0.2 million from approximately $0.9 million for the financial year ended May 31, 2024 to approximately $0.7 million for the financial year ended May 31, 2025.

Malaysia and other countries

Revenues from Malaysia and other countries decreased by approximately $0.2 million from approximately $0.6 million for the financial years ended May 31, 2024 to approximately $0.4 million for the financial years ended May 31, 2025.

Cost of revenue

During the financial years ended May 31, 2025 and 2024, our cost of revenue decreased by approximately $0.1 million or 2.0% to approximately $5.0 million for the financial year ended May 31, 2025 from approximately $5.1 million for the financial year ended May 31, 2024. Such decrease was mainly attributable to the decrease in the price of the raw materials.

Gross profit and gross profit margin

Our gross profit amounted to approximately $3.4 million and approximately $4.3 million for the financial years ended May 31, 2025 and 2024, respectively. Our gross profit margins were approximately 39.7% and 45.5% for the financial years ended May 31, 2025 and 2024, respectively. Our total gross profit decreased during the financial year ended May 31, 2025 primarily due to the lower profit margin through the sales of reconditioned Containers.

Selling and distribution expenses

Our selling and distribution expenses mainly included promotion and marketing expenses and transportation expenses for inbound and outbound shipments. The following table sets forth the breakdown of our selling and distribution expenses for the financial years ended May 31, 2025 and 2024:

Our selling and distribution expenses remained the same at approximately $0.1 million for the financial year ended May 31, 2025 and approximately $0.1 million for the financial year ended May 31, 2024, representing approximately 1.7% and 1.4% of our total revenue for the corresponding financial years.

Administrative expenses

The following table sets forth the breakdown of our administrative expenses for the financial years ended May 31, 2025 and 2024:

Administrative expenses were approximately $6.1 million and approximately $5.4 million for the financial years ended May 31, 2025 and 2024, respectively, representing approximately 72.6% and 57.3% of our total revenue for the corresponding financial years.

Staff costs mainly represented the salaries, employee benefits and retirement benefit costs for our employees' and Directors' remuneration. The staff costs of our Group were approximately $2.7 million and approximately $2.7 million for the financial years ended May 31, 2025 and 2024, respectively.

Depreciation expense is charged on our property, plant and equipment which includes (i) leasehold buildings; (ii) right-of-use assets; (iii) motor vehicles; and (iv) office equipment, and furniture and fittings.

"Others" is mainly comprised of insurance expenses, office supplies, legal and professional fees, vehicle upkeep and other miscellaneous expenses and aggregated approximately $2.1 million and approximately $0.4 million for the financial years ended May 31, 2025 and 2024, respectively. The increase in other expenses was primarily due to an approximately $1.6 million increase in legal and professional fees as a result of our IPO, which closed on August 26, 2025.

Other Income, Net

The following table sets forth the breakdown of our other income (expense) for the financial years ended May 31, 2025 and 2024:

*The figures are insignificant.

Interest expenses were approximately $0.03 million for the financial year ended May 31, 2025 and approximately $0.04 million for financial year ended May 31, 2024 from our bank loans and financing facilities. For more details of our bank borrowings, please see the paragraph headed "Bank Indebtedness" in this section.

Income Tax Expenses

During the financial years ended May 31, 2025 and 2024, our income tax refund/expense was comprised of our current tax expense for the relevant financial year.

For the financial year ended May 31, 2025, our income tax refund was approximately $0.001 million.

For the financial year ended May 31, 2024, our income tax refund was approximately $0.1 million.

Net Loss

As a result of the foregoing, our net loss amounted to approximately $2.7 million and approximately $1.0 million for the financial years ended May 31, 2025 and 2024, respectively.

Comparison of operating results for the financial years ended May 31, 2024 and 2023

Revenue

As set forth in the following table, during the financial years ended May 31, 2024 and 2023, our revenue was derived from sales of reconditioned Containers,sales of new Containers, reconditioning services, waste water equipment services and sales of recycled materials and services serving the chemical and oil and gas industries.

Our total revenue decreased by approximately $1.7 million, or 15.5%, to approximately $9.4 million for the financial year ended May 31, 2024 from approximately $11.1 million for the financial year ended May 31, 2023. The decrease was mainly attributable to the decrease in Singapore of sales of reconditioned Containers and services of approximately $2.0 million as a result of a decrease in local demand.

Our net loss amounted to approximately $1.0 million for the financial year ended May 31, 2024 and our net income amounted to approximately $0.8 million for the financial year ended May 31, 2023. The net loss for the financial year ended May 31, 2024 was mainly caused by a decrease in sales and an increase in expenses as discussed below.

Approximately 84.2% and 84.0% of our total revenue for the financial years ended May 31, 2024 and 2023, respectively, was generated from customers located in Singapore. For the same financial years, our revenue generated from customers located in Indonesia accounted for approximately 9.3% and 12.7% of our total revenue, respectively, and our revenue generated from customers located in Malaysia and other countries accounted for approximately 6.5% and 3.3% of our total revenue, respectively.

Revenue by geographic location

During the financial years ended May 31, 2024 and 2023, the customers for our sale of reconditioned Containers, sales of new Containers, reconditioning services, waste water equipment services and sales of recycled materials and services were mainly located in Singapore. The following tables set out a breakdown of our revenue by geographic location of our customers for the financial years ended May 31, 2024 and 2023.

Singapore

Our revenue in Singapore decreased by approximately $1.4 million for the financial year ended May 31, 2024, as compared to the financial year ended May 31, 2023, and was primarily attributable to a decrease in sales of reconditioned Containers and services.

Indonesia

Our revenue in Indonesia decreased by approximately $0.5 million from approximately $1.4 million for the financial year ended May 31, 2023 to approximately $0.9 million for the financial year ended May 31, 2024.

Malaysia and other countries

Revenues from Malaysia and other countries increased by approximately $0.2 million from approximately $0.4 million for the financial year ended May 31, 2023 to approximately $0.6 million for the financial year ended May 31, 2024.

Cost of revenue

During the financial years ended May 31, 2024 and 2023, our Group's cost of revenue increased by approximately $1.6 million, or 45.7%, to approximately $5.1 million for the financial year ended May 31, 2024 from approximately $3.5 million for the financial year ended May 31, 2023. The increase was mainly attributable to an addition of direct labor and overheads.

Gross profit and gross profit margin

Our total gross profit amounted to approximately $4.3 million and approximately $7.6 million for the financial years ended May 31, 2024 and 2023, respectively. Our overall gross profit margins were approximately 45.5% and 68.3% for the financial years ended May 31, 2024 and 2023, respectively. Our total gross profit decreased during the financial year ended May 31, 2024, primarily due to a lower profit margin from the sale of reconditioned Containers and increase in cost of revenues.

Selling and distribution expenses

Our selling and distribution expenses mainly included promotion and marketing expenses and transportation expenses for inbound and outbound shipments. The following table sets forth the breakdown of our selling and distribution expenses for the financial years ended May 31, 2024 and 2023:

Our selling and distribution expenses remained essentially the same at approximately $0.1 million for the financial year ended May 31, 2024 and approximately $0.1 million for the financial year ended May 31, 2023, representing approximately 1.4% and 1.1% of our total revenue for the corresponding financial years.

Administrative expenses

The following table sets forth the breakdown of our administrative expenses for the financial years ended May 31, 2024 and 2023.

Administrative expenses were at approximately $5.4 million and approximately $6.6 million for the financial years ended May 31, 2024 and 2023, respectively, representing approximately 57.3% and 59.4% of our total revenue for the corresponding financial years.

Staff costs mainly represented salaries, employee benefits and retirement benefit costs to our employees and Directors' remuneration. The staff costs of our Group were at approximately $2.7 million and approximately $3.8 million for the financial years ended May 31, 2024 and 2023, respectively.

Depreciation expense is charged on our property, plant and equipment, which includes (i) leasehold buildings; (ii) right-of-use assets; (iii) motor vehicles; and (iv) office equipment and furniture and fittings.

Miscellaneous expenses were mainly comprised of insurance expenses, office supplies, legal and professional fees, repair and maintenance, vehicles upkeep and other miscellaneous expenses.

Other Income, Net

The following table sets forth the breakdown of our other income (expense) for the financial years ended May 31, 2024 and 2023.

*The figures are insignificant.

Interest expenses were approximately $0.04 million for the financial year ended May 31, 2024 and approximately $0.05 million for the financial year ended May 31, 2023 from our bank loans and financing facilities. For more details of our bank borrowings, please see the paragraph headed "Bank Indebtedness" in this section.

Income Tax Expenses

During the financial years ended May 31, 2024 and 2023, our income tax refund/expense was comprised of our current tax expense for the relevant financial year.

For the financial year ended May 31, 2024, our income tax refund was approximately $0.1 million.

For the financial year ended May 31, 2023, our income tax was approximately $0.3 million and our effective tax rate was 25.9% due to the increase in non-deductible expenses.

Net Income (Loss)

As a result of the foregoing, our net loss amounted to approximately $1.0 million and our net income amounted to approximately $0.8 million for the financial years ended May 31, 2024 and 2023, respectively.

Liquidity and Capital Resources

Based on the above considerations, we are of the opinion that we have sufficient funds to meet our working capital requirements and current liabilities as they become due within twelve months from the date of our financial statements are issued. However, there is no assurance that we will be successful in implementing our plans. There are a number of factors that could potentially arise and could undermine our plans, such as changes in the demand for our products, general market conditions and the broader capital market climate, etc.

Cash flows

The following table summarizes our cash flows for the financial years ended May 31, 2025, 2024 and 2023:

Cash flows from operating activities

For the financial year ended May 31, 2025, our net cash used by operating activities was approximately $3.3 million, which primarily consisted of our net loss of approximately $2.7 million, adding back (i) the non-cash depreciation of property, plant and equipment and right-of-use assets of approximately $0.3 million; (ii) the allowance for expected credit loss of approximately $0.2 million (iii) the increase in accounts payable and accrued liabilities of approximately $0.2 million; (iv) the increase in accounts receivable of approximately $0.03 million; (v) the decrease in inventories of approximately $0.04 million; and (vi) the increase of amount due to related parties of approximately $1.4 million, and was partially offset by (a) the repayment of operating lease liabilities of approximately $0.1 million.

For the financial year ended May 31, 2024, our net cash provided by operating activities was approximately $1.0 million, which primarily consisted of our net loss of approximately $1.0 million, adding back (i) the non-cash depreciation of property, plant and equipment and right-of-use assets of approximately $0.5 million; (ii) the impairment depreciation of property, plant and equipment of approximately $0.7 million; (iii) the increase in accounts payable and accrued liabilities of approximately $0.2 million; (iv) the decrease in accounts receivable of approximately $0.3 million; (v) the decrease in inventories of approximately $0.04 million; (vi) the decrease of amount due to related parties of approximately $0.4 million; and (vii) reversal of the allowance for expected credit loss of approximately $0.2 million, and was partially offset by (a) the decrease of taxes payable of approximately $0.3 million; and (b) the repayment of operating lease liabilities of approximately $0.06 million.

For the financial year ended May 31, 2023, our net cash provided by operating activities was approximately $1.6 million, which primarily consisted of our net income of approximately $0.8 million, adding back (i) the non-cash depreciation of property, plant and equipment and right-of-use assets of approximately $0.5 million; (ii) the impairment of property, plant and equipment of approximately $0.3 million; (iii) the increase in accounts payable of approximately $0.09 million; and (iv) the decrease in accounts receivable of approximately $0.3 million, and was partially offset by (a) the increase in inventories of approximately $0.04 million; (b) the decrease of taxes payable of approximately $0.2 million; and (c) the repayment of operating lease liabilities of approximately $0.02 million.

Cash flows used in investing activities

For the financial year ended May 31, 2025, our net cash used in investing activities was approximately $0.003 million, primarily consisting of the purchase of property, plant and equipment of approximately $0.032 million offset by the proceeds from the disposal of property, plant and equipment of approximately of $0.029 million.

For the financial year ended May 31, 2024, our net cash used in investing activities was approximately $0.04 million, primarily consisting of the purchase of property, plant and equipment of approximately $0.08 million offset by the proceeds from the disposal of property, plant and equipment of approximately of $0.04 million.

For the financial year ended May 31, 2023, our net cash used in investing activities was approximately $0.05 million, primarily consisting of the purchase of property, plant and equipment.

Cash flows used in financing activities

Our cash flows used in financing activities primarily consists of dividend paid, interest paid, repayment of bank borrowings, payment for interest portion of lease liabilities and payment for capital portion of lease liabilities.

For the financial year ended May 31, 2025, our net cash used in financing activities of approximately $6.0 million, which mainly consisted of issuance of new shares of approximately $7.0 million offset by repayment of borrowings of approximately $0.4 million and share buy-back of approximately $0.6 million.

For the financial year ended May 31, 2024, our net cash used in financing activities was approximately $1.1 million, which mainly consisted of bank borrowings and repayment of lease liabilities of approximately $0.4 million and dividend payment of approximately $0.7 million.

For the financial year ended May 31, 2023, our net cash used in financing activities was approximately $2.0 million, which mainly consisted of repayment of bank borrowings of approximately $0.4 million and dividend payment of approximately $1.6 million.

Accounts receivable, net

Our net accounts receivable decreased from approximately $1.7 million as of May 31, 2024 to approximately $1.6 million as of May 31, 2025. The decrease was primarily attributable to lower sales for the financial year ended May 31, 2025.

We did not charge any interest on or hold any collateral as security over these accounts receivable balances. We generally offer credit periods of 30 to 90 days to our customers. We have not had, and do not expect to have, issues collecting payment from these longer aging invoices.

The following table sets forth the ageing analysis of our accounts receivable, net, based on the invoiced date as of the dates mentioned below:

Movements in the allowance for expected credit loss are as follows:

We have a policy for determining the allowance for impairment based on the evaluation of collectability and aging analysis of accounts receivable and on management's judgement, including the change in credit quality, the past collection history of each customer and the current market condition.

The Company generally conducts its business with creditworthy third parties. The Company determines, on a continuing basis, the probable losses and the allowance for expected credit loss, based on several factors including internal risk ratings, customer credit quality, payment history, historical bad debt/write-off experience and forecasted economic and market conditions. Accounts receivable are written off after exhaustive collection efforts occur and the receivable is deemed uncollectible. In addition, receivable balances are monitored on an ongoing basis and its exposure to bad debts is not significant.

During the financial years ended May 31, 2025 and 2024, other than the loss allowance provision indicated in the table above, no impairment loss was provided for amounts that were past due.

Accounts payable

The general credit terms from our major suppliers are payment within 30 days. Our accounts payable increased from approximately $0.5 million as of May 31, 2024 to approximately $0.6 million as of May 31, 2025 which was generally in line with the increased purchases from our suppliers. We generally pay our accounts payable within 30 days of receipt of invoice. Our average payables turnover days remained relatively stable and amounted to approximately 50 days and approximately 43 days as of May 31, 2025 and 2024, respectively.

We did not have any material default in payment of accounts payable during the financial years ended May 31, 2025 and 2024.

Material Cash Requirements

Our cash requirements consist primarily of day-to-day operating expenses, capital expenditures and contractual obligations with respect to facility leases and other operating leases. We lease all our office facilities. We expect to make future payments on existing leases from cash generated from operations. We have limited credit available from our major vendors and are required to prepay the majority of our inventory purchases, which further constrains our cash liquidity.

We had the following contractual obligations and lease commitments as of May 31, 2025:

We believe that we have sufficient working capital for our requirements for at least the next 12 months from the date of this Annual Report, absent unforeseen circumstances, taking into account the financial resources presently available to us, including cash and cash equivalents on hand and cash flows from our operations.

Bank Indebtedness

As of May 31, 2025 and 2024, all bank borrowings were obtained from a financial institution in Singapore, bear annual interest at a fixed rate of 2.0% and mature in December 2025. The bank borrowings are subject to certain financial covenant clauses with which we are not in compliance.

The Company's bank borrowings currently are guaranteed by a personal guarantee from Mr. Lim CP and a corporate guarantee from E U Holdings.

Capital commitments

For the financial years ended May 31, 2025, 2024 and 2023, we did not have any capital commitments.

Off-Balance Sheet Transactions

As of May 31, 2025, we have not entered into any material off-balance sheet transactions or arrangements.

We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. In addition, we have not entered into any derivative contracts that are indexed to our own shares and classified as shareholders' equity, or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. Moreover, we do not have any variable interest in an unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us.

Critical Accounting Policies and Estimates

Our financial statements and accompanying notes have been prepared in accordance with U.S. GAAP. The preparation of these financial statements and accompanying notes requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operation. Critical accounting policies are those that are most important to the portrayal of our financial conditions and results of operations and require management's difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management's current judgments. While our significant accounting policies are more fully described in Note 2 to the consolidated financial statements included elsewhere in this Annual Report, we believe the following critical accounting policies involve the most significant estimates and judgments used in the preparation of our financial statements.

We are an "emerging growth company" as defined under the federal securities laws and, as such, will be subject to reduced public company reporting requirements. Section 107 of the JOBS Act provides that an "emerging growth company" can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act, for complying with new or revised accounting standards. We have elected to take advantage of the extended transition period for complying with new or revised accounting standards and acknowledge such election is irrevocable pursuant to Section 107 of the JOBS Act. As a result of our election, our financial statements may not be comparable to those of companies that comply with public company effective dates.

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the periods presented. Significant accounting estimates in the period include the allowance for expected credit loss on accounts receivables, deposits, prepayments, impairment loss on inventories, assumptions used in assessing right of use assets, and impairment of long-lived assets, and deferred tax valuation allowance.

The consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant inter-company balances and transactions within the Company have been eliminated upon consolidation.

A subsidiary is an entity in which the Company, directly or indirectly, controls more than one half of the voting power; or has the power to govern the financial and operating policies, to appoint or remove the majority of the members of the board of directors, or to cast a majority of votes at the meeting of directors.

Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the date of the balance sheet dates. The resulting exchange differences are recorded in the statement of operations.

The reporting currency of the Company is the United States Dollar or "US$" and the accompanying consolidated financial statements have been expressed in US$. In addition, the Company and subsidiaries are operating in Singapore, maintain their books and records in their local currency, Singapore Dollars or "S$," which is a functional currency as being the primary currency of the economic environment in which their operations are conducted. In general, for consolidation purposes, assets and liabilities of the Company's subsidiaries for which the functional currency is not US$ are translated into US$, in accordance with ASC Topic 830-30, Translation of Financial Statement, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the year. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statements of changes in shareholders' equity.

Translation gains and losses that arise from exchange rate fluctuations from transactions denominated in a currency other than the functional currency are translated, as the case may be, at the rate on the date of the transaction and included in the results of operations as incurred.

Cash and cash equivalents consist primarily of cash in readily available checking and saving accounts. Cash and cash equivalents consist of highly liquid investments that are readily convertible to cash and that mature within three months or less from the date of purchase. The carrying amounts approximate fair value due to the short maturities of these instruments. The Company maintains most of its bank accounts in Singapore. There are no material accounts of the Company or any subsidiary in other jurisdictions.

Accounts receivable include trade accounts due from customers related to the sale of products.

Accounts receivable are recorded at the invoiced amount. The Company seeks to maintain strict control over its outstanding receivables to minimize credit risk. Overdue balances are reviewed regularly by senior management. Management reviews the Company's receivables on a regular basis to determine if the bad debt allowance is adequate, and provides allowance when necessary. The allowance is based on management's best estimates of specific losses on individual customer exposures, as well as the historical trends of collections. Account balances are charged off against the allowance after all reasonable means of collection have been exhausted and the likelihood of collection is not probable. The Company's management continues to evaluate the reasonableness of the valuation allowance policy and update it if necessary.

The Company does not hold any collateral or other credit enhancements over its accounts receivable balances.

Inventories consist of used metal drums, plastic containers, reconditioned drums and certain operating supplies, which are valued at the lower of cost or net realizable value. Cost is determined by the average cost method. The Company records adjustments to its inventory for estimated obsolescence or diminution in net realizable value equal to the difference between the cost of the inventory and the estimated net realizable value. At the point of loss recognition, a new cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis.

Property and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which the assets become fully operational and after taking into account their estimated residual values:

Expenditure for repairs and maintenance is expensed as incurred. When assets have been retired or sold, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the results of operations.

In accordance with the provisions of ASC Topic 360, Impairment or Disposal of Long-Lived Assets, all long-lived assets such as property, plant and equipment owned and held by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of an asset to the estimated future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets.

The Company receives some of its non-interest income from contracts with customers, which are accounted for in accordance with Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASC 606").

The majority of the Company's income is derived from contracts with customers in the sale of products, and as such, the revenue recognized depicts the transfer of promised goods or services to its customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company considers the terms of the contract and all relevant facts and circumstances when applying this guidance. The Company's revenue recognition policies are in compliance with ASC 606, as follows:

Product sales consist of a single performance obligation that the Company satisfies at a point in time. The Company recognizes product revenue when the following events have occurred: (a) the Company has transferred physical possession of the products, depending upon the method of distribution and shipping terms set forth in the customer contract, (b) the Company has a present right to payment, (c) the customer has legal title to the products, and (d) the customer bears significant risks and rewards of ownership of the products. Based on the Company's historical practices and shipping terms specified in the sales agreements and invoices, these criteria are generally met when the products are:

For these sales, the Company determines that the customer is able to direct the use of, and obtain substantially all of the benefits from, the products at the time the products are shipped.

The Company records its revenues on product sales, net of goods & services taxes ("GST"), when the services are rendered and the title and risk of loss of products are fully transferred to the customers. The Company is subject to GST which is levied on the majority of the products at the rate of 9% on the invoiced value of sales in Singapore.

Amounts received as prepayment on future products are recorded as customer deposits and recognized as income when the product is shipped.

Shipping and handling costs, which are associated with the distribution of our products to customers, were approximately $0.1 million, approximately $0.1 million and approximately $0.1 million during the financial years ended May 31, 2025, 2024 and 2023, and are borne by the Company's suppliers or distributors.

Sales and marketing expenses include payroll, employee benefits and other headcount-related expenses associated with sales and marketing personnel, and the costs of advertising, promotions, seminars and other programs.

A government grant or subsidy is not recognized until there is reasonable assurance that: (a) the enterprise will comply with the conditions attached to the grant or subsidy; and (b) the grant or subsidy will be received. When the Company receives a government grant or subsidy but the conditions attached to the grant or subsidy have not been fulfilled, such government grant or subsidy is deferred and recorded under other payables and accrued expenses, and other long-term liability. The classification of short-term or long-term liabilities is dependent on management's expectation of when the conditions attached to the grant or subsidy can be fulfilled.

ASC Topic 220, Comprehensive Income, establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive income, as presented in the accompanying statement of shareholder's equity, consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive income is not included in the computation of income tax expense or benefit.

Income taxes are determined in accordance with the provisions of ASC Topic 740, Income Taxes ("ASC 740"). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the financial years in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.

For the financial years ended May 31, 2025, 2024 and 2023, the Company did not have any interest and penalties associated with tax positions. As of May 31, 2025 and 2024, the Company did not have any significant unrecognized uncertain tax positions.

The Company is subject to tax in local and foreign jurisdictions. As a result of its business activities, the Company files tax returns that are subject to examination by the relevant tax authorities.

Effective from January 1, 2020, the Company adopted the guidance of ASC 842, Leases, which requires an entity to recognize a right-of-use asset and a lease liability for virtually all leases. On February 25, 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing transactions. ASC 842 requires that lessees recognize right of use assets and lease liabilities calculated based on the present value of lease payments for all lease agreements with terms that are greater than twelve months. It requires for leases longer than one year, a lessee to recognize in the statement of financial condition a right-of-use asset, representing the right to use the underlying asset for the lease term, and a lease liability, representing the liability to make lease payments. ASC 842 distinguishes leases as either a finance lease or an operating lease that affects how the leases are measured and presented in the statement of operations and statement of cash flows. ASC 842 supersedes nearly all existing lease accounting guidance under GAAP issued by the Financial Accounting Standards Board ("FASB") including ASC Topic 840, Leases.

The accounting update also requires that for finance leases, a lessee recognize interest expense on the lease liability, separately from the amortization of the right-of-use asset in the statements of earnings, while for operating leases, such amounts should be recognized as a combined expense. In addition, this accounting update requires expanded disclosures about the nature and terms of lease agreements.

Contributions to retirement plans (which are defined contribution plans) are charged to general and administrative expenses in the accompanying statements of operation as the related employee services are provided. The Company is required to make contributions under a government-mandated multi-employer defined contribution pension scheme for its eligible full-times employees in Singapore. The Company is required to contribute a specified percentage of the participants' relevant income based on their ages and wage levels.

FASB ASC 280, Segment Reporting, establishes standards for reporting information about operating segments on a basis consistent with the Company's internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for details on the Company's business segments. For the financial years ended May 31, 2025, 2024 and 2023, the Company has one reporting business segment.

The Company follows ASC 850-10, Related Party for the identification of related parties and disclosure of related party transactions.

Pursuant to section 850-10-20, related parties include: (a) affiliates of the Company; (b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of section 825-10-15, to be accounted for by the equity method by the investing entity; (c) trusts for the benefit of employees, such as pension and income-sharing trusts that are managed by or under the trusteeship of management; (d) principal owners of the Company; (e) management of the Company; (f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and (g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.

The financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: (a) the nature of the relationship(s) involved; (b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; (c) the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and (d) amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.

The Company follows ASC 450-20, Commitments to report accounting for contingencies. Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company's financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time that these matters will have a material adverse effect on the Company's financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company's business, financial position and results of operations or cash flows.

Financial instruments that potentially subject the Company to credit risk consist of cash and cash equivalents, and accounts receivable. Cash and cash equivalents are maintained with high credit quality institutions, the composition and maturities of which are regularly monitored by management. The Singapore Deposit Protection Board pays compensation up to a limit of S$100,000 (approximately $74,360) if the bank with which an individual/a company hold its eligible deposit fails. As of May 31, 2025, bank and cash balances of approximately $2.7 million were maintained at financial institutions in Singapore, of which approximately $2.6 million was subject to credit risk. While management believes that these financial institutions are of high credit quality, it also continually monitors their credit worthiness.

For accounts receivable, the Company determines, on a continuing basis, the allowance for expected credit loss based on the estimated realizable value. The Company identifies credit risk on a customer-by-customer basis. The information is monitored regularly by management. Concentration of credit risk arises when a group of customers has similar characteristics such that their ability to meet their obligations is expected to be affected similarly by changes in economic conditions.

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company's policy is to ensure that it has sufficient cash to meet its liabilities when they become due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation. A key risk in managing liquidity is the degree of uncertainty in the cash flow projections. If future cash flows are fairly uncertain, the liquidity risk increases.

The Company follows the guidance of the ASC Topic 820-10, Fair Value Measurement and Disclosure ("ASC 820-10"), with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:

The carrying value of the Company's financial instruments: cash and cash equivalents, accounts receivable, amount due to a related party, accounts payable, income tax payable, other payables and accrued liabilities approximate at their fair values because of the short-term nature of these financial instruments.

Management believes, based on the current market prices or interest rates for similar debt instruments, the fair value of notes payable approximates the carrying amount.

The Company's non-marketable equity securities are investments in privately held companies, which are without readily determinable market values and are classified as Level 3, due to the absence of quoted market prices, the inherent lack of liquidity and the fact that inputs used to measure fair value are unobservable and require management's judgment.

Fair value estimates are made at a specific point in time based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Recent Accounting Pronouncements

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements - codification amendments in response to SEC's disclosure update and simplification initiative which amend the disclosure or presentation requirements of codification subtopic 230-10 Statement of Cash Flows - Overall, 250-10 Accounting Changes and Error Corrections - Overall, 260-10 Earnings Per Share - Overall, 270-10 Interim Reporting - Overall, 440-10 Commitments - Overall, 470-10 Debt - Overall, 505-10 Equity - Overall, 815-10 Derivatives and Hedging - Overall, 860-30 Transfers and Servicing - Secured Borrowing and Collateral, 932-235 Extractive Activities - Oil and Gas - Notes to Financial Statements, 946-20 Financial Services - Investment Companies - Investment Company Activities, and 974-10 Real Estate - Real Estate Investment Trusts - Overall. Many of the amendments allow users to more easily compare entities subject to the SEC's existing disclosures with those entities that were not previously subject to the SEC's requirements. Also, the amendments align the requirements in the Codification with the SEC's regulations. For entities subject to existing SEC disclosure requirements or those that must provide financial statements to the SEC for securities purposes without contractual transfer restrictions, the effective date aligns with the date when the SEC removes the related disclosure from Regulation S-X or Regulation S-K. Early adoption is not allowed. For all other entities, the amendments will be effective two years later from the date of the SEC's removal. Entities shall apply the amendments in this update beginning after effective date on a prospective basis. The Group is in the process of evaluating the effect of the adoption of this ASU.

In December 2023, the FASB issued ASU 2023-09, Improvement to Income Tax Disclosure. This standard requires more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. This standard also includes certain other amendments to improve the effectiveness of income tax disclosures. ASU 2023-09 is effective for public business entities, for annual periods beginning after December 15, 2024. For entities other than public business entities, the amendments are effective for annual periods beginning after December 15, 2025. Early adoption is also permitted, and entities may apply the amendments in this update prospectively or retrospectively to all prior periods presented in the financial statements. The Group adopted ASU 2023-09 for the year ended May 31, 2025. Refer to Note 11 for Income Tax information.

In November 4, 2024, the FASB has released ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures. The purpose of this update is to improve the disclosures about a public business entity's expenses and address requests from investors for more detailed information about the types of expenses (including purchases of inventory, employee compensation, depreciation, amortization, and depletion) in commonly presented expense captions (such as cost of sales, selling expenses, general and administrative expenses, and research and development expenses). ASU 2024-04 is effective for all public business entities, for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. Any entity qualified as public business ("PBEs") entity shall apply ASU 2024-04 prospectively to financial statements issued for current period and all comparative periods. PBEs shall apply the amendments in this update either (1) prospectively to financial statements issued for reporting periods after the effective date or (2) retrospectively to any or all prior periods presented in the financial statements. Early adoption is permitted. The Group is in the process of evaluating the impact of adopting this new guidance on its consolidated financial statements.

Recently issued ASUs by the FASB, except for the ones mentioned above, are not expected to have a significant impact on the Group's consolidated results of operations or financial position. Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Group does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its consolidated financial condition, results of operations, cash flows, or disclosures.

Impact of Inflation

The year-over-year percentage changes in the consumer price index for 2024 and 2023 were 2.4% and 4.2%, respectively, as reported by the Monetary Authority of Singapore ("MAS") at https://www.mas.gov.sg/news/consumer-price-developments/2025/consumer-price-developments-in-august-2025. The MAS core inflation as of July 2025 was 0.3% as compared to January 2025 of 0.8% and, barring unforeseen circumstances, we expect it to remain relatively low for the foreseeable future. Inflation in Singapore has not materially affected our profitability and operating results. However, we can provide no assurance that we will be unaffected by higher inflation rates in Singapore or globally in the future.

Seasonality

We have not observed any significant seasonal trends. Our Directors believe that there is no apparent seasonality factor affecting the industry in which our Group operates.

Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Risk

We are exposed to interest rate risk if we have short-term bank loans outstanding. Although interest rates for our short-term loans, if any, would typically be fixed for the terms of the loans, the terms are typically twelve months and interest rates are subject to change upon renewal.

Credit Risk

Credit risk is controlled by the application of credit approvals, limits and monitoring procedures. We manage credit risk through in-house research and analysis of the relevant economy and the underlying obligors and transaction structures. We identify credit risk collectively based on industry, geography and customer type. In measuring the credit risk of our sales to our customers, we mainly reflect the "probability of default" by the customer on its contractual obligations and consider the current financial position of the customer and the current and likely future exposures to the customer.

Liquidity Risk

We are also exposed to liquidity risk, which is risk that we will be unable to provide sufficient capital resources and liquidity to meet our commitments and business needs. Liquidity risk is controlled by the application of financial position analysis and monitoring procedures. When necessary, we will turn to financial institutions and related parties to obtain short-term funding to cover any liquidity shortage.

Foreign Exchange Risk

Our reporting currency is the United States Dollar; however, the majority of our revenues and costs and a significant portion of our assets and liabilities are denominated in Singapore Dollars. As a result, we are exposed to foreign exchange risk as our revenues and results of operations may be affected by fluctuations in the exchange rate between the United States Dollar and the Singapore Dollar. If the Singapore Dollar depreciates against the United States Dollar, the value of our Singapore Dollar revenues and assets as expressed in our United States Dollar financial statements will decline.