Asfiled with the Securities and Exchange Commission on November 29, 2024

 

RegistrationNo. 333-

 

 

UNITEDSTATES

SECURITIESAND EXCHANGE COMMISSION

Washington,D.C. 20549

 

FORMF-1

REGISTRATIONSTATEMENT

UNDER

THESECURITIES ACT OF 1933

 

ESGLHOLDINGS LIMITED

(ExactName of Registrant as Specified in Its Charter)

 

Cayman Islands		4954		Not applicable
(State or Other jurisdiction of Incorporation or Organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

 

101Tuas South Avenue 2

Singapore637226

+656653 2299

(Address,Including Zip Code, And Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

 

Puglisi& Associates

850Library Avenue, Suite 204

Newark,DE 19711

(302)738-6680

(Name,Address, Including Zip Code, And Telephone Number, Including Area Code, of Agent For Service)

 

Copiesof all correspondence to:

 

MitchellS. Nussbaum, Esq.

DavidJ. Levine, Esq.

Loeb& Loeb, LLP

345Park Avenue

NewYork, NY 10154

(212)407-4000

Fax:(212) 407-4990

 

Approximatedate of commencement of proposed sale to the public: From time to time after this Registration Statement becomes effective.

 

Ifany of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under theSecurities Act of 1933 check the following box: ☒

 

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

 

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

 

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

 

Indicateby check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933. Emerging growthcompany. ☒

 

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

 

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

 

†The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting StandardsBoard to its Accounting Standards Codification after April 5, 2012.

 

 

 

Theinformation in this prospectus is not complete and may be changed. We may not sell these securities until the registration statementfiled with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not solicitingan offer to buy these securities in any state where the offer or sale is not permitted.

 

SUBJECTTO COMPLETION, DATED NOVEMBER 29, 2024

 

PRELIMINARYPROSPECTUS

 

ESGLHOLDINGS LIMITED

 

17,241,380Ordinary Shares

 

Weare registering for resale by the selling shareholders named herein (the “Selling Shareholders”) up to 17,241,380 of ourordinary shares, $0.0001 par value per share (the “Ordinary Shares”).

 

TheSelling Shareholders may offer, sell or distribute all or a portion of the securities hereby registered publicly or through private transactionsat prevailing market prices or at negotiated prices. We will not receive any of the proceeds from such sales of the Ordinary Shares.We will bear all costs, expenses and fees in connection with the registration of these securities, including with regard to compliancewith state securities or “blue sky” laws. The Selling Shareholders will bear all commissions and discounts, if any, attributableto their sale of Ordinary Shares. See “Plan of Distribution.”

 

OurOrdinary Shares are listed on Nasdaq Capital Market under the symbol “ESGL”. On November 27, 2024, the last reportedsales price of our Ordinary Shares was $1.35 per share. 

 

TheOrdinary Shares being registered for resale in this prospectus will constitute a considerable percentage of our “public float”(defined as the number of our outstanding Ordinary Shares held by non-affiliates). In addition, the Ordinary Shares being registeredfor resale hereunder were purchased by the Selling Shareholders at a price below the current market price of our Ordinary Shares. Giventhe substantial amount of redemptions in connection with the Business Combination and the relative lack of liquidity in our stock, salesof our Ordinary Shares under the registration statement of which this prospectus is a part could result in a significant decline in themarket price of our securities.

 

Investingin our securities involves a high degree of risk. You should review carefully the risks and uncertainties described under theheading “Risk Factors” beginning on page 6 of this prospectus, and under similar headings in any amendment orsupplements to this prospectus.

 

Neitherthe Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passedupon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

 

Thedate of this prospectus is           , 2024

 

 

TABLEOF CONTENTS

 

	Page
Selected Definitions	1
Cautionary Statement Regarding Forward-Looking Statements	2
Summary of the Prospectus	3
The Offering	5
Risk Factors	6
Use of Proceeds	22
Market Price of our Securities	23
Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Business	44
Management	53
Description of Ordinary Shares	59
Description of Warrants	69
Beneficial Ownership of Securities	70
Selling Shareholders	71
Certain Relationships and Related Party Transactions	72
U.S. Federal Income Tax Considerations	75
Plan of Distribution	79
Legal Matters	81
Experts	81
Where You Can Find More Information	81
Index to Financial Statements	F-1

 

Noone has been authorized to provide you with information that is different from that contained in this prospectus. This prospectus isdated as of the date set forth on the cover hereof. You should not assume that the information contained in this prospectus is accurateas of any date other than that date.

 

Forinvestors outside the United States: We have not done anything that would permit this offering or possession or distribution of thisprospectus in any jurisdiction where action for that purpose is required, other than in the United States. You are required to informyourselves about and to observe any restrictions relating to this offering and the distribution of this prospectus.

 

 

SELECTEDDEFINITIONS

 

	●	“$” or “US$” or “U.S. dollars” or “USD” refers to the legal currency of the United States.
	●	“Amended and Restated Memorandum of Association” means ESGL’s amended and restated memorandum of association adopted by special resolutions dated July 28, 2023 and effective on August 2, 2023.
	●	“Board” means the board of directors of the Company.
	●	“Business Combination” means the Merger contemplated by the Merger Agreement.
	●	“Code” means the Internal Revenue Code of 1986, as amended.
	●	“Company” means ESGL Holdings Limited.
	●	“Closing” means the closing of the Business Combination.
	●	“ESA” means Environmental Solutions (Asia) Pte. Ltd., which was incorporated under the laws of Singapore on May 8, 1999.
	●	“ESGH” means Environmental Solutions Group Holdings Limited, a holding company incorporated under the laws of the Cayman Islands as an exempted company with limited liability on November 18, 2022.
	●	“ESGL” means ESGL Holdings Limited, a Cayman Islands exempt company.
	●	“Exchange Act” means the Securities Exchange Act of 1934, as amended.
	●	“founder shares” means the 2,156,250 Ordinary Shares issued to the Initial Stockholders at Closing in exchange for the 2,156,250 shares of GUCC Class B common stock issued for an aggregate purchase price of $25,000 in March 2021.
	●	“GAAP” means accounting principles generally accepted in the United States of America.
	●	“Group” means ESGL and its subsidiaries, including ESGH, ES BVI and ESA.
	●	“GUCC” means Genesis Unicorn Capital Corp., a Delaware corporation.
	●	“GUCC Class A common stock” or “Class A common stock” means the Class A common stock, $0.0001 par value per share, of Genesis Unicorn Capital Corp.
	●	“GUCC Class B common stock” or “Class B common stock” means the Class B common stock, $0.0001 par value per share, of Genesis Unicorn Capital Corp.
	●	“GUCC common stock” or “common stock” means shares of GUCC Class A common stock and GUCC Class B common stock, collectively.
	●	“IASB” means International Accounting Standards Board.
	●	“IFRS” means International Financial Reporting Standards as issued by the IASB.
	●	“Initial Stockholders” means the Sponsor and other initial holders of founder shares.
	●	“IPO” refers to the initial public offering of 8,625,000 units (including 1,125,000 units as a result of the underwriters’ exercise of its over-allotment option) of GUCC consummated on February 17, 2022.
	●	“IRS” means the United States Internal Revenue Service.
	●	“Merger” means the transactions contemplated by the Merger Agreement.

 

	●	“Merger Agreement” means that certain Agreement and Plan of Merger, dated as of November 29, 2022, as may be amended from time to time, by and among ESGL, GUCC, ESGH, and the other parties named therein.
	●	“Ordinary Shares” means the ordinary shares, $0.0001 par value per share, of ESGL.
	●	“Private Units” means the units issued to the Sponsor in a private placement simultaneously with the closing of IPO, with each unit included one Ordinary Share and one Private Warrant.
	●	“Private Warrants” means the warrants included in the Private Units issued to the Sponsor in a private placement simultaneously with the closing of IPO, with each Private Warrant entitling the holder to purchase one Ordinary Share.
	●	“Public Warrants” means the public warrants issued in the IPO, with each Public Warrant entitling the holder to purchase one Ordinary Share.
	●	“SEC” means the U.S. Securities and Exchange Commission.
	●	“Securities Act” means the Securities Act of 1933, as amended.
	●	“Sponsor” means Genesis Unicorn Capital, LLC, a Delaware limited liability company.

 

 

CAUTIONARYSTATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 

Certainstatements in this prospectus may constitute “forward-looking statements” for purposes of the federal securities laws. ESGL’sforward-looking statements include, but are not limited to, statements regarding ESGL or its management team’s expectations, hopes,beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizationsof future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,”“appear,” “approximate,” “believe,” “continue,” “could,” “estimate,”“expect,” “foresee,” “intends,” “may,” “might,” “plan,” “possible,”“potential,” “predict,” “project,” “seek,” “should,” “would”and similar expressions (or the negative version of such words or expressions) may identify forward-looking statements, but the absenceof these words does not mean that a statement is not forward-looking. Forward-looking statements in this prospectus may include, forexample, statements about:

 

Theforward-looking statements are based on the current expectations of the management of ESGL, as applicable, and are inherently subjectto uncertainties and changes in circumstances and their potential effects and speak only as of the date of such statement. There canbe no assurance that future developments will be those that have been anticipated. These forward-looking statements involve a numberof risks, uncertainties or other assumptions that may cause actual results or performance to be materially different from those expressedor implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors describedin “Risk Factors,” those discussed and identified in public filings made with the SEC by ESGL and the following:

 

	●	fluctuations in the Group’s revenues, earnings and cash flows based on changes in commodity prices, as commodity prices for circular products are particularly susceptible to volatility based on regulations and tariffs that affect our ability to export products;
	●	changes in policies imposed by governments may impact on the availability and costs of employing non-Singapore workers;
	●	the Group’s ability to maintain its licenses, permits and accreditations that are required to operate its business;
	●	expectations regarding the Group’s strategies and future financial performance, including its future business plans or objectives, prospective performance and opportunities and competitors, revenues, backlog conversion, products and services, pricing, operating expenses, market trends, liquidity, cash flows and uses of cash, capital expenditures, and ability to invest in growth initiatives and pursue acquisition opportunities;
	●	risks related to the general economic and financial market conditions; political, legal and regulatory environment; and the industry in which the Group operates;
	●	the outcome of any legal proceedings that may be instituted against ESGL;
	●	limited liquidity and trading of ESGL’s securities;
	●	geopolitical risk and changes in applicable laws or regulations;
	●	the possibility that ESGL may be adversely affected by other economic, business, and/or competitive factors;
	●	operational risks; and
	●	litigation and regulatory enforcement risks, including the diversion of management time and attention and the additional costs and demands on the Group’s resources.

 

Shouldone or more of these risks or uncertainties materialize or should any of the assumptions made by the management of ESGL be incorrect,actual results may vary in material respects from those projected in these forward-looking statements.

 

Allsubsequent written and oral forward-looking statements concerning the Business Combination or other matters addressed in this registrationstatement and attributable to ESGL or any person acting on their behalf are expressly qualified in their entirety by the cautionary statementscontained or referred to in this registration statement. Except to the extent required by applicable law or regulation, ESGL undertakesno obligation to update these forward-looking statements to reflect events or circumstances after the date of this registration statementor to reflect the occurrence of unanticipated events.

 

 

SUMMARYOF THE PROSPECTUS

 

Thissummary highlights selected information from this prospectus and does not contain all of the information that is important to you inmaking an investment decision. This summary is qualified in its entirety by the more detailed information included in this prospectus.Before making your investment decision with respect to our securities, you should carefully read this entire prospectus, including theinformation under “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results ofOperations,” and the financial statements included elsewhere in this prospectus.

 

Unlessotherwise indicated or the context otherwise requires, references in this prospectus to “ESGL,” “Company”, “we,”“our,” “us” “Group” and other similar terms refer to ESGL Holdings Limited and our consolidated subsidiaries.

 

General

 

ESGLis a holding company incorporated as an exempted company under the laws of the Cayman Islands. As a holding company with no materialoperations of its own, ESGL conducts all its operations through its operating entity incorporated in Singapore, Environmental Solutions(Asia) Pte. Ltd. (“ESA”).

 

ESAis a waste management, treatment and recycling company involved in the collection and recycling of hazardous and non-hazardous industrialwaste from customers such as pharmaceutical, semiconductor, petrochemical and electroplating companies. ESA currently has two revenuestreams, from: (i) services income which is primarily comprised of the fees it charges its customers for waste collection and disposalservices, which fees are similar to those charged by ESA’s competitors, and (ii) the sales and trading of ESA’s circularproducts that are made and processed from the recycled waste collected from its customers with respect to its waste collection and disposalservices, which ESA believes makes ESA a unique and environmentally friendly offering in the marketplace.

 

Afundamental tenet of ESA is that waste is a resource to be reused, repurposed and recirculated. ESA believes that this mindset of creatingcommodities from waste sets itself apart from the linear traditional waste industry participants, which largely only generate incomefrom the collection, destruction and disposal of post-collection waste. This philosophy is ingrained and reflected in ESA’s businessoperations where it utilizes renewable energy and by-products produced from ESA’s waste treatment process to reduce its own operatingcosts. In line with this mindset, ESA’s primary business focus is the conversion and processing of industrial waste (that wouldotherwise be unused in the waste recycling process) into circular products such as pyrolysis oil, diesel, metals such as nickel, zinc,copper, silver, gold, minerals such as lime (calcium hydroxide) and fluorspar (calcium fluoride), and chemicals such as hydrochloricacid, sulfuric acid, and calcium chloride. ESA then sells these converted circular products to local and international end users, tradersor overseas refiners who require the circular products for their own commercial use or for further processing including manufacturingand galvanizing purposes.

 

Forthe six months ended June 30, 2024, the Group’s revenues generated from services income and sales of circular products were approximatelyUS$2.7 million and US$0.8 million respectively. For the two years ended December 31, 2023 and 2022, the Group’s revenue generatedfrom services income was approximately US$3.9 million and US$2.2 million respectively. For the two years ended December 31, 2023 and2022, the Group’s revenue generated from the sales and trading of its circular products was approximately US$2.3 million and US$2.7million   respectively.

 

OnFebruary 17, 2022, GUCC consummated its initial public offering of 8,625,000 of its units, each consisting of one share of Class A commonstock and one redeemable Public Warrant entitling the holder thereof to purchase one share of Class A common stock at price of $11.50,at a purchase price per unit of $10.00. On August 2, 2023, GUCC reincorporated to the Cayman Islands and reincorporated into ESGL, withESGL continuing as the surviving entity.

 

ESGL,a Cayman Islands exempted company with limited liability, was formed on November 18, 2022. ESGL’s principal executive office islocated at 101 Tuas South Avenue 2 Singapore 637226, telephone number is +65 6653 2299.

 

 

PrivatePlacement

 

OnAugust 21, 2024, we entered into a Share Purchase Agreement (the “Purchase Agreement”) with certain accredited investorsnamed therein (the “Purchasers”), pursuant to which we issued in an initial closing of a private placement an aggregate of13,800,000 ordinary shares to the Purchasers at a purchase price of US$0.29 per share. The initial closing of the private placement occurredon August 22, 2024 (the “Closing Date”) and we received gross proceeds of $4,002,000. For a period of three months followingthe Closing Date, Mr. Samuel Wu, one of the Purchasers, was granted the right to purchase up to an additional 3,441,380 Ordinary Sharesfor gross proceeds of $998,000 on the same and terms and conditions set forth in the Purchase Agreement (the “Second Closing Option”).The Second Closing Option was exercised in full by such Purchaser on September 30, 2024. Accordingly, we issued an aggregate of 17,241,380Ordinary Shares in the private placement for aggregate gross proceeds to the Company of $5,000,000.

 

TheOrdinary Shares were issued and sold by us in a private placement pursuant to the exemption provided in Section 4(a)(2) under the SecuritiesAct. As soon as practicable following the expiration of the Second Closing Option, we agreed to use commercially reasonable effortsto prepare and file a resale registration statement on Form F-1 with the Securities and Exchange Commission registering the OrdinaryShares issued pursuant to the Purchase Agreement for resale on behalf of the Purchasers. We also agreed to use commercially reasonableefforts to cause such registration statement to be declared effective under the Securities Act as promptly as possible after the filingthereof, and shall use our commercially reasonable efforts to keep such registration statement continuously effective under the SecuritiesAct until the date that all of the shares covered by such registration statement (i) have been sold thereunder or pursuant to Rule 144,or (ii) may be sold without volume or manner-of-sale restrictions pursuant to Rule 144.

 

RiskFactors Summary

 

Investingin our securities involves risks. You should carefully consider the risks described in “Risk Factors” before makinga decision to invest in our ordinary shares. If any of these risks actually occurs, our business, financial condition and results ofoperations would likely be materially adversely affected. In such case, the trading price of our securities would likely decline, andyou may lose all or part of your investment. Set forth below is a summary of some of the principal risks we face:

 

RisksRelating to the Group’s Business and Industry

 

	●	For the two years ended December 31, 2023 and 2022 and the 6-month period ended June 30, 2024, the Group has incurred operating losses and may incur significant losses for the foreseeable future. The Group may not generate sufficient revenue or become profitable or, if it achieves profitability, it may not be able to sustain it.
	●	The environmental services industry is highly competitive and includes competitors that may have greater financial and operational resources, flexibility to reduce prices or other competitive advantages that could make it difficult for the Group to compete effectively.
	●	The Group requires a significant amount of capital to fund its operations and growth. If the Group cannot obtain sufficient capital on acceptable terms, its business, financial condition, and prospects may be materially and adversely affected.
	●	Fluctuations in prices for recyclable waste materials the Group collects from its customers and the circular products that it sells to local and international end users, traders or overseas refiners may adversely affect the Group’s revenue, operating income, and cash flows.
	●	The Group may not be able to enhance its existing recycling, reuse, disposal and waste treatment solutions and develop new solutions in a timely manner.
	●	The Group may not be able to enhance its existing recycling, reuse, disposal and waste treatment solutions and develop new solutions in a timely manner.
	●	Acute and chronic weather events, including those brought about by climate change, may limit the Group’s operations and increase the costs of collection, transfer, disposal, and other environmental services it provides.
	●	The Group’s revenues, earnings and cash flows will fluctuate based on changes in commodity prices, and commodity prices for circular products are particularly susceptible to volatility based on regulations and tariffs that affect its ability to export products.
	●	The Group may have environmental liabilities that are not covered by its insurance. Changes in insurance markets also may impact its financial results.
	●	The Group could be required to make immediate repayment of certain of its outstanding debt with financial institutions.
	●	The Group’s strategy includes an increasing dependence on technology in its operations. If any of its key technology fails, its business could be adversely affected.
	●	The Group is exposed to environmental liability.

 

RisksRelating to our Securities

 

	●	Although as a foreign private issuer, ESGL is exempt from certain corporate governance standards applicable to US domestic issuers, if ESGL cannot continue to satisfy the continued listing requirements and other rules of Nasdaq, ESGL’s securities may not be listed or may be delisted, which could negatively affect the price of its securities and your ability to sell them.
	●	Currently, our Ordinary Shares and Warrants are listed on the Nasdaq Capital Market. However, there may not be enough liquidity in such market to enable shareholders to sell their securities.
	●	Certain judgments obtained against us by our shareholders may not be enforceable.
	●	The sale or availability for sale of substantial amounts of Ordinary Shares could adversely affect their market price.
	●	The market price of our equity securities may be volatile, and your investment could suffer or decline in value.

 

RisksRelating to Operating as a Public Company

 

	●	ESGL’s management team has limited experience managing a public company.
	●	If ESGL fails to implement and maintain an effective system of internal controls to remediate its material weaknesses over financial reporting, ESGL may be unable to accurately report its results of operations, meets its reporting obligations or prevent fraud, and investor confidence and the market price of Ordinary Shares may be materially and adversely affected.
	●	ESGL may be a “passive foreign investment company,” or “PFIC”, which could result in adverse U.S. federal income tax consequences to U.S. Holders.

 

Theother matters described in the section titled “Risk Factors”.

 

 

THEOFFERING

 

Issuer		ESGL Holdings Limited
Securities offered by the Selling Shareholders		We are registering for resale by the Selling Shareholders up to 17,241,380 Ordinary Shares.
Terms of the offering		The Selling Shareholders will determine when and how he will dispose of the Ordinary Shares registered under this prospectus for resale.
Shares outstanding prior to the offering		40,239,419
Shares outstanding after the offering		40,239,419
Use of proceeds		We will not receive any of the proceeds from the sale of the Ordinary Shares by the Selling Shareholders. See “Use of Proceeds.”
Nasdaq ticker symbols		Our Ordinary Shares and our Public Warrants are listed on the Nasdaq Capital Market under the symbols “ESGL” and “ESGLW,” respectively.

 

 

RISKFACTORS

 

Aninvestment in our securities involves a high degree of risk. You should carefully consider the risks described below before making aninvestment decision. Our business, prospects, financial condition, or operating results could be harmed by any of these risks, as wellas other risks not known to us or that we consider immaterial as of the date of this prospectus. The trading price of our securitiescould decline due to any of these risks, and, as a result, you may lose all or part of your investment. The following discussion shouldbe read in conjunction with ESGL’s financial statements and notes thereto included herein. You should carefully consider the followingrisk factors in addition to the other information included in this prospectus, including matters addressed in the section titled “CautionaryStatement Regarding Forward-Looking Statements.”

 

RisksRelating to the Group’s Business and Industry

 

Forthe two years ended December 31, 2023 and 2022 and the six months ended June 30, 2024, the Group has incurred operating losses and mayincur significant losses for the foreseeable future. The Group may not generate sufficient revenue or become profitable or, if it achievesprofitability, it may not be able to sustain it.

 

Forthe two years ended December 31, 2023 and 2022, the Group’s net losses were US$94,979,338 and US$2,391,812, respectively. As ofDecember 31, 2023, the Group had an accumulated losses of US$99,985,928. For the six months ended June 30, 2024, the Group’s netlosses were US$471,424 and the Group had an accumulated losses of US$100,457,352.

 

Substantiallyall of the Group’s losses have resulted from approximately US$93.1 million of listing expenses which are non-operational and non-recurring.In the financial year ended December 31, 2022, the Group incurred approximately US$981,000 of Listing Expenses. The Group’s ListingExpenses in the year ended December 31, 2023 mainly arose from the accounting treatment of its share based consideration for the BusinessCombination and the revaluation of the Forward Purchase Agreement “FPA”. In the previous financial year, the Listing Expenseswere mainly professional fees incurred for the Business Combination.

 

Theother major contributor to the net loss were expenses incurred in connection with the depreciation of property, plant and equipment,the purchase of raw materials, employee benefits expenses and its other operating expenses. The Group may continue to incur losses forthe foreseeable future as it continues its research and development activities, pursues potential mergers and acquisitions, seeks productcertification approvals in the territories it has identified, hires additional personnel, obtains and protects its intellectual propertyand incurs additional costs for commercialization or to expand its pipeline of waste materials it collects and the circular productsit generates from the recycled waste collected from its customers with respect to its waste collection and disposal services.

 

Tobecome and remain profitable, the Group must increase its operating capacity to treat higher volumes of wastes and succeed in developingand eventually commercializing circular products that can generate sufficient revenue. In that regard, the Group has commenced salesof Fluorspar and Kao Lin, materials generated from the wastes the Group collected.

 

Inaddition, the Group has not yet demonstrated an ability to successfully overcome many of the risks and uncertainties frequently encounteredby companies in new and rapidly evolving fields, particularly in the environmental services industry. Because of these numerous risksand uncertainties, the Group is unable to accurately predict the timing or amount of increased expenses or when, or if, it will be ableto achieve profitability. Even if the Group achieves profitability, it may not be able to sustain or increase profitability on a quarterlyor annual basis. Its failure to become and remain profitable would depress the value of the Company and could impair the ability of theCompany to raise capital, expand its business, maintain its research and development efforts, diversify its products, or even continueits operations. A decline in the value of the Company could also cause you to lose all or part of your investment.

 

Theenvironmental services industry is highly competitive and includes competitors that may have greater financial and operational resources,flexibility to reduce prices or other competitive advantages that could make it difficult for the Group to compete effectively.

 

TheGroup principally competes with waste management companies who collect and dispose the waste the Group needs for its waste managementand treatment processes. Competition for waste collection is typically based on factors such as geographic location, quality of services,ease of doing business and/or price. The  Group ‘s competitors may have greater financial and operational resources than wedo. They could also seek to gain market share by reducing the prices they charge customers, introducing products and solutions that aresimilar to the Group’s or introducing new technology tools. If the Group were to lose market share or if it were to lower pricesto address competitive issues, it could negatively impact the Group’s consolidated financial position  , results of operationsand cash flows.

 

 

TheGroup requires a significant amount of capital to fund its operations and growth. If the Group cannot obtain sufficient capital on acceptableterms, its business, financial condition, and prospects may be materially and adversely affected.

 

TheGroup requires a significant amount of capital and resources for its operations and continued growth. The Group expects to make significantinvestments to develop new operating capabilities and technology, which are fundamental to the Group’s business operations andfuture growth. However, the Group cannot assure you that these investments will generate the optimal returns, if at all. To date, theGroup has historically funded its cash requirements primarily through the issuance of ordinary shares, cash generated by operations andborrowings from banks. If these resources are insufficient to satisfy the Group’s cash requirements, the Group may seek to raisefunds through additional equity offering or debt financing or additional bank facilities. The Group’s ability to obtain additionalcapital in the future, however, is subject to a number of uncertainties, including those relating to its future business development,financial condition, and results of operations, general market conditions for financing activities by companies in its industry, andmacro-economic and other conditions. If the Group cannot obtain sufficient capital on acceptable terms to meet its capital needs, theGroup may not be able to execute its growth strategies, and the Group’s business, financial condition, and prospects may be materiallyand adversely affected.

 

TheGroup did not meet its original revenue projection for the fiscal year ended 2023.

 

Theprojected revenues of the Group for fiscal year 2023 and the 6-month period ended June 30, 2024 were US$11.0 million and US$3.8million respectively. The revenues of the Group for the fiscal year ended 2023 and half year ended June 30, 2024 were approximatelyUS$6.2 million and US$3.8 million respectively. The Group did not meet its original 2023 revenue projection mainly due to a combinationof several factors. Firstly, the merger with Genesis Unicorn Capital Corp, expected to strengthen the Group’s financial standing,resulted in lower-than-expected proceeds due to unprecedented high redemptions. This unexpected outcome had a notable impact on the Group’srevenue trajectory. Secondly, the Group faced challenges in meeting its funding requirement to enhance technologies and capacity, essentialfor effectively serving market needs. This limitation hindered the Group’s ability to capitalize on growth and innovation opportunities,consequently affecting revenue generation. Furthermore, geopolitical tensions and market volatility presented additional obstacles torevenue generation efforts. Lower manufacturing activity, potentially influenced by these external factors, led to reduced waste fromcustomers, impacting revenue streams. Lastly, unexpected waste management regulatory changes in Singapore posed operational challenges,particularly in the final quarter of the financial year. Adapting to these regulatory shifts proved to be a complex task, affecting operationalefficiency. Therefore, there can be no assurance that the Group’s actual financial results would meet the financial projectionsand there is a significant likelihood that the Group’s actual financial results over the time periods and under the scenarios coveredby the projections would be materially different. At this time, the Group’s management estimates that the impact of the lack offunds for capital investments may continue in the near future and therefore, the Group may not be able to meet its original revenue projectionsfor 2024, 2025 and/or 2026. The Group has not updated its projections due to uncertainties surrounding recent developments, their futureoutcomes, and their impact on the Group’s projections.

 

Fluctuationsin prices for recyclable waste materials the Group collects from its customers and the circular products that it sells to local and internationalend users, traders or overseas refiners may adversely affect the Group’s revenue, operating income, and cash flows.

 

TheGroup collects a variety of recyclable waste materials from its customers and processes and transforms them into circular products forsale to local and international end users, traders or overseas refiners, and the Group may directly or indirectly receive proceeds fromits waste collection services and the sale of circular products. The Group’s results of operations may be affected by changingprices or market requirements for the recyclable waste materials and the circular products. The resale and purchase prices of, and marketdemand for, the circular products can be volatile because of changes in economic conditions and numerous other factors beyond the Group’scontrol. These fluctuations may affect the cost of and demand for the Group’s services and the Group’s future revenue, operatingincome, and cash flows. For example, a decline in oil prices would have an adverse effect on the Company’s revenue.

 

TheGroup is also exposed to inflationary pressures and rising interest rates which may adversely affect the selling price of its circularproducts. If this causes purchasing demand from the Group’s customers for its circular products to reduce, the selling price ofcertain of the Group’s circular products such as copper and zinc could drop and reduce its revenue. Inflation has also resultedin higher costs for the maintenance of the Group’s equipment, higher electricity and fuel costs and freight and payroll costs,which had an adverse impact on the Group’s operating profit and operating profit margin. Moreover, certain suppliers who are affectedby supply chain inflationary pressures may decide to reduce their production and as a result the volume of industrial waste that is generatedand supplied to the Group may be reduced. Similarly, following the general decline in the spending power of consumers, the Group’swaste disposal customers which are mainly semi-conductor companies with products that are used in mobile devices to cars may also decideto reduce their production which in turn would lead to lower volumes of waste being disposed to the Group. Although increasing the sellingprice of the Group’s circular products could mitigate the impact of inflation, competitive pressures may constrain the Group’sability to fully recover any increased costs in this way. In addition, efforts to mitigate the effect of inflation through continuousinvestments in waste treatment processes and software developments to automate, streamline and improve the productivity of the Group’sbusiness operations may not be sufficient.

 

TheGroup may not be able to enhance its existing recycling, reuse, disposal and waste treatment solutions and develop new solutions in atimely manner.

 

TheGroup’s future operating results will depend, to a significant extent, on its ability to continue to provide efficient and innovativerecycling, reuse, disposal and waste treatment services that compare favorably with alternative services on the basis of cost, performance,and customer preferences. The Group’s success in maintaining and growing with its existing customers and attracting new customersdepends on various factors, including the following:

 

	●	innovative development of new services for customers;
	●	maintenance of quality standards;
	●	efficient and cost-effective services; and
	●	utilization of advances in technology.

 

 

TheGroup’s inability to enhance its existing services and develop new services on a timely basis could harm its operating resultsand impede its growth.

 

TheGroup’s revenues, earnings and cash flows will fluctuate based on changes in commodity prices, and commodity prices for circularproducts are particularly susceptible to volatility based on regulations and tariffs that affect its ability to export products.

 

Enforcementor implementation of foreign and domestic regulations can affect the Group’s ability to export its circular products. In 2017,the Chinese government announced bans on certain scrap materials and begun to enforce extremely restrictive quality and other requirements,which significantly reduced China’s import of recyclables. As of January 1, 2021, China ceased importing virtually all recyclables,including those exported by the Group. Many other markets, both domestic and foreign, have also tightened their quality expectationsand limited or restricted the import of certain circular products.

 

Suchtrade restrictions have disrupted the global trade of recyclables, creating excess supply and decreasing recyclable commodity prices.The Group has been actively working to identify alternative markets for recycling commodities, but there may not be demand for all ofthe circular products it produces. The heightened quality requirements have been difficult for the industry to achieve and have drivenup operating costs. As prices of circular products have fallen and operating costs have increased, the Group and other recyclers arepassing cost increases through to waste collection customers.

 

Fluctuationin energy prices also affects the Group’s business, including recycling of plastics manufactured from petroleum products. Significantvariations in the price of methane gas, electricity and other energy- related products can result in a corresponding significant impactto the Group’s revenue from yield from such operations. Any of the commodity prices to which the Group is subject may fluctuatesubstantially and without notice in the future.

 

Acuteand chronic weather events, including those brought about by climate change, may limit the Group’s operations and increase thecosts of collection, transfer, disposal, and other environmental services it provides.

 

TheGroup’s operations could be adversely impacted by extreme weather events, changing weather patterns, and rising mean temperatureand sea levels, some of which the Group is already experiencing. The Intergovernmental Panel on Climate Change,which includes more than 1,300 scientists from the United States and other countries, forecasts a temperature rise of 2.5° to 10°Fahrenheit over the next century. Changing weather patterns and rising temperatures are expected to result in more severe heat waves,fires, storms, and other extreme weather events. Any of these extreme weather events such as flash flooding in Singapore could significantlydecrease the volume of waste material the Group collects from its waste disposal customers and suppliers of industrial waste as theymay be required to temporarily cease or suspend their business activities, thereby reducing the volume of waste they generate. Otherthan the Group’s customers and suppliers, such adverse weather conditions may also result in the temporary suspension of the Group’sbusiness operations, ability to utilize the Group’s normal commercial channels and supply chain, and the incursion of significantcosts to repair its fixtures, equipment and property, all of which could significantly affect the Company’s operating results duringthose periods.

 

TheGroup’s businesses are subject to operational and safety risks.

 

Providingwaste management, treatment and recycling services to the Group’s customers involves risks such as equipment defects, malfunctionsand failures and natural disasters, which could potentially result in releases of hazardous materials, damage to or total loss of theGroup’s property or assets, injury or death of the Group’s employees or a need to shut down or reduce operations of the Group’sfacilities while remedial actions are undertaken. The Group’s employees and logistics providers, when necessary, often work underpotentially hazardous conditions. These risks expose the Group to potential liability for pollution and other environmental damages,personal injury, loss of life, business interruption and property damage or destruction. The Group must also maintain a solid safetyrecord in order to remain a preferred supplier to its major customers. While the Group seeks to minimize its exposure to such risks primarilythrough entering and maintaining various insurance policies in relation to the business, operations, employees and assets of ESA, suchactions and insurance may not be adequate to cover all of the Group’s potential liabilities which could negatively impact its resultsof operations and cash flows.

 

 

TheGroup’s insurance coverage and self-insurance reserves may be inadequate to cover all significant risk exposures, and increasingcosts to maintain adequate coverage may significantly impact the Group’s financial condition and results of operations.

 

TheGroup carries a range of insurance policies intended to protect its assets and operations, including general liability insurance, propertydamage, business interruption and environmental risk insurance. While the Group endeavors to purchase insurance coverage appropriateto its risk assessment, it is unable to predict with certainty the frequency, nature or magnitude of claims for direct or consequentialdamages, and as a result the Group’s insurance program may not fully cover itself for losses it may incur.

 

Asa result of a number of catastrophic weather and other events, insurance companies have incurred substantial losses and in many casesthey have substantially reduced the nature and amount of insurance coverage available to the market, have broadened exclusions and/orhave substantially increased the cost of such coverage. If this trend continues, the Group may not be able to maintain insurance of thetypes and coverage it desires at reasonable rates. A partially or completely uninsured claim against the Group (including liabilitiesassociated with cleanup or remediation), if successful and of sufficient magnitude, could have a material adverse effect on the Group’sbusiness, financial condition and results of operations. Any future difficulty in obtaining insurance could also impair the Group’sability to secure future contracts, which may be conditional upon the availability of adequate insurance coverage. In addition, claimsassociated with risks for which the Group is to some extent self-insured (property, workers’ compensation, employee medical, comprehensivegeneral liability and vehicle liability) may exceed the Group’s recorded reserves, which could negatively impact future earnings.

 

TheGroup may have environmental liabilities that are not covered by its insurance. Changes in insurance markets also may impact its financialresults.

 

TheGroup may incur environmental liabilities arising from its operations or properties. The Group maintains high deductibles for its environmentalliability insurance coverage. If the Group was to incur substantial liability for environmental damage, its insurance coverage may beinadequate to cover such liability. This could have a material adverse effect on the Group’s consolidated financial condition,results of operations and cash flows.

 

Also,due to the variable condition of the insurance market, the Group has experienced, and may experience in the future, increased insuranceretention levels and increased premiums or unavailability of insurance. As the Group assumes more risk for insurance through higher retentionlevels, the Group may experience more variability in its insurance reserves and expense.

 

TheGroup depends on key personnel who would be difficult to replace, and its business will likely be harmed if it loses their services orcannot hire additional qualified personnel.

 

TheGroup’s success depends, to a significant extent, upon the continued services of its current management team and key personnel.The loss of one or more of its key executives or employees could have a material adverse effect on its business. The Group does not maintain“key person” insurance policies on the lives of any of its executives or any of its other employees. The Group employs allof its executives and key employees on an at-will basis, and their employment can be terminated by the Group or them at any time, forany reason, and without notice, subject, in certain cases, to severance payment rights.

 

TheGroup’s success also depends on its ability to attract, retain, and motivate additional skilled management personnel. The Groupplans to continue to expand its work force to continue to enhance its business and operating results. The Group believes that there issignificant competition for qualified personnel with the skills and knowledge that it requires. Many of the other companies with whichthe Group competes for qualified personnel have substantially greater financial and other resources than the Group does. They also mayprovide more diverse opportunities and better chances for career advancement. Some of these characteristics may be more appealing tohigh-quality candidates than those which the Group has to offer. If the Group is not able to retain its current key personnel or attractthe necessary qualified key personnel to accomplish its business objectives, it may experience constraints that will significantly impedethe achievement of its business objectives and its ability to pursue its business strategy. New hires require significant training and,in most cases, take significant time before they achieve full productivity. New employees may not become as productive as the Group expects,and the Group may be unable to hire or retain sufficient numbers of qualified individuals. If the Group’s recruiting, training,and retention efforts are not successful or do not generate a corresponding increase in revenue, the Group’s business will be harmed.

 

 

Generaleconomic conditions can directly and adversely affect revenues for environmental services and the Group’s income from operationsmargins.

 

TheGroup’s business is directly affected by changes in national and general economic factors that are outside of the Group’scontrol, including consumer confidence, interest rates and access to global markets. A weak economy generally results in decreases involumes of waste generated, which negatively impacts the ability to grow through new business or service upgrades, and may result incustomer turnover and reduction in the waste service needs of the Group’s customers and the demand for circular products from endusers, traders or overseas refiners. Consumer uncertainty and the loss of consumer confidence may also reduce the number and varietyof services and/or circular products requested by customers. This decrease in demand can negatively impact commodity prices and the Group’soperating income and cash flows.

 

TheGroup could become involved in litigation matters that may be expensive and time consuming, and, if resolved adversely, could harm itsbusiness, financial condition, or results of operations.

 

Althoughthe Group is not currently involved in any litigation matters, any such litigation to which it is a party may result in an onerous orunfavorable judgment that may not be reversed upon appeal, or the Group may decide to settle lawsuits on similarly unfavorable terms.Any negative outcome could result in payments of substantial monetary damages or fines, or changes to the Group’s products or businesspractices, and accordingly the Group’s business, financial condition, or results of operations could be materially and adverselyaffected.

 

TheGroup could be required to make immediate repayment of certain of its outstanding debt with financial institutions.

 

Asof December 31, 2023 and June 30, 2024, the Group has certain borrowings with outstanding balances of approximately US$5.7 millionand US$4.7 million respectively classified as current liabilities, as the relevant loan agreements the Group entered into withthe lenders provide them discretion to demand immediate repayment of the outstanding balances from us. In addition, as of the date ofthis prospectus, the Group had obtained waivers   from the relevant lenders in relation to certain terms and conditions underthe relevant loan agreements in connection with the closing of the Business Combination, except for Term Loan IV with an outstandingbalance of approximately S$499,000 (US$378,000) as of December 31, 2023 from the relevant bank (the “Relevant Bank”). OnJuly 20, 2022, the Group had obtained a written consent from the Relevant Bank for, among other things, the undertaking of a proposedrestructuring of the Group. Subsequently on January 17, 2023, the Group had requested a waiver from the Relevant Bank for the closingof the Business Combination. As of the date of this prospectus, the Group had not obtained the waiver or any notice from the RelevantBank objecting, disagreeing to the matter or demanding any immediate repayment of Term Loan IV in connection with the closing of theBusiness Combination.

 

Notwithstandingthe above, the lenders could demand immediate repayment of the outstanding balances from the Group for the borrowings classified as currentliabilities and it may be unable to repay, negotiate, extend or refinance the bank borrowings on favorable terms or at all, which mayhave a material adverse effect on its business, results of operations and financial position. If the Group fails to repay certain ofthe bank borrowings, some lenders could enforce their security interests under the relevant loan agreements and take possession of theGroup’s leasehold land and buildings where it operates its business, thereby resulting in a material adverse effect on the Group’sbusiness, results of operations and financial condition. See Note 17 to the Group’s financial statements for further informationon the Group’s outstanding debt with financial institutions.

 

 

TheGroup’s strategy includes an increasing dependence on technology in its operations. If any of its key technology fails, its businesscould be adversely affected.

 

TheGroup’s operations are increasingly dependent on technology. The Group’s information technology systems are critical to itsability to drive profitable growth, implement standardized processes and deliver a consistent customer experience. Problems with theoperation of the information or communication technology systems it uses could adversely affect, or temporarily disable, all or a portionof the Group’s operations. Inabilities and delays in implementing new systems can also affect its ability to realize projectedor expected revenue or cost savings. Further, any systems failures could impede its ability to timely collect and report financial resultsin accordance with applicable laws.

 

Emergingtechnologies represent risks, as well as opportunities, to the Group’s current business model. The costs associated with developingor investing in emerging technologies could require substantial capital and adversely affect the Group’s results of operationsand cash flows. Delays in the development or implementation of such emerging technologies and difficulties in marketing new productsor services based on emerging technologies could have similar negative impacts. The Group’s financial results may suffer if itis not able to develop or license emerging technologies, or if a competitor obtains exclusive rights to an emerging technology that disruptsthe current methods used in the environmental services industry.

 

Acyber security incident could negatively impact the Group’s business and its relationships with customers.

 

TheGroup uses information technology, including computer and information networks, in substantially all aspects of its business operations.The Group also use mobile devices, social networking and other online activities to connect with its employees and its customers. Suchuses give rise to cyber security risks, including security breach, espionage, system disruption, theft and inadvertent release of information.The Group’s business involves the storage and transmission of numerous classes of sensitive and/or confidential information andintellectual property, including customers’ personal information, private information about employees, and financial and strategicinformation about the Group and its business partners. In connection with its strategy to grow through acquisitions and to pursue newinitiatives that improve its operations and cost structure, the Group is also expanding and improving its information technologies, resultingin a larger technological presence and corresponding exposure to cyber security risk. If the Group fails to assess and identify cybersecurity risks associated with acquisitions and new initiatives, it may become increasingly vulnerable to such risks. Additionally, whilethe Group has implemented measures to prevent security breaches and cyber incidents, its preventive measures and incident response effortsmay not be entirely effective. Also, the regulatory environment surrounding information security and privacy is increasingly demanding,with the frequent imposition of new and constantly changing requirements. This changing regulatory landscape may cause increasingly complexcompliance challenges, which may increase the Group’s compliance costs. Any failure to comply with these changing security andprivacy laws and regulations could result in significant penalties, fines, legal challenges and reputational harm. The theft, destruction,loss, misappropriation, or release of sensitive and/or confidential information or intellectual property, or interference with the Group’sinformation technology systems or the technology systems of third parties on which it relies, could result in business disruption, negativepublicity, brand damage, violation of privacy laws, loss of customers, potential liability and competitive disadvantage.

 

TheGroup may be subject to intellectual property claims that create uncertainty about ownership of technology essential to its businessand divert its managerial and other resources.

 

TheGroup can provide no assurance that third parties will not claim infringement by it with respect to its current or future services, trademarks,or other proprietary rights. The Group’s success depends, in part, on its ability to protect its intellectual property and to operatewithout infringing the intellectual property rights of others in the process. There can be no assurance that any of its intellectualproperty will be adequately safeguarded or that it will not be challenged by third parties. The Group may be subject to intellectualproperty infringement claims that would be costly to defend, could limit its ability to use certain critical technologies, and may divertits technical and management personnel from their normal responsibilities. The Group may not prevail in any of these suits. An adversedetermination of any litigation or defense proceedings could cause the Group to pay substantial damages, including treble damages, ifit willfully infringes and also could increase the risk of its patent applications not being issued.

 

 

Furthermore,because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that someof the Group’s confidential information could be compromised by disclosure during this type of litigation. In addition, duringthe course of this kind of litigation, there could be public announcements of the results of hearings, motions, or other interim proceedingsor developments in the litigation. If these results are perceived to be negative, it could have an adverse effect on the Group’sbusiness.

 

Changesin policies imposed by governments may impact on the availability and costs of employing non-Singapore workers.

 

TheGroup is dependent on non-Singapore workers for its business operations. The Group’s ability to meet its labor requirements foroperational needs is subject to various factors, including changes in the labor policies of such foreign workers’ countries oforigin or the policies imposed by Ministry of Manpower (“MOM”) in Singapore. The Group is therefore vulnerable to any shortagein the supply of foreign workers and any increase in the cost of foreign labor, the occurrence of which would adversely affect its businessand financial performance.

 

Governmentpolicies affecting labor costs include, inter alia, the new progressive wage model (“PWM”) and foreign worker levies.Changes in these policies may lead to an increase in the Group’s labor costs which may result in its business, financial conditionand results of operations being materially and adversely affected. The Group is subject to foreign worker levies for the foreign workersit hires. The Group paid foreign worker levies in the amount of US$168,137 and US$97,703 for the two fiscal years ended December 31,2023 and 2022, respectively.

 

Theforeign worker levies applicable to the Group will differ according to the percentage of the Group’s total workforce comprisingof foreign workers. As of April 16, 2024, approximately 64.7% of the Group’s total workforce is comprised of foreign workers forwhom it might have to pay such foreign worker levies. Further, the criteria for applying for certain foreign work permits will be tightenedmoving forward and there will be increase in foreign worker levies. There is no assurance that the Singapore Government will not furtherincrease the levy rates in future, and if they do so, the Group may face a significant increase in labor costs.

 

InJanuary 2022, the National Environment Agency (“NEA”) and MOM announced a new waste management PWM with a six (6) year scheduleof sustained PWM wage increases from 2023 to 2028 and a mandatory annual PWM bonus for eligible workers from January 2024. Under thenew PWM wage schedule, the monthly baseline wage of an entry-level waste collection crew worker is expected to increase from S$2,210in 2023 to S$3,260 in 2028 or possibly sooner. The implementation of and revisions to the PWM has increased the Group’s labor costsand there is no assurance that the Singapore government will not revise the PWM to further increase the base salaries beyond 2028.

 

TheGroup is exposed to environmental liability.

 

TheGroup’s business operations are subject to environmental laws and regulations in Singapore, in particular on the disposal and treatmentof industrial and toxic waste and obligations to protect public health and the environment. While the Group has not had any materialnon-compliance with applicable environmental laws and regulations to date, there is no assurance that it will continue to be in compliancewith all the applicable laws and regulations, and the Group may incur additional costs in complying with such laws and regulations. Anyviolation of the relevant environmental laws and regulations may lead to substantial fines, costs for implementation of preventive orcorrective measures, clean-up costs or even suspension of operations that could materially and adversely affect the Group’s business,operations, financial performance, financial condition, results of operations and/or prospects.

 

TheGroup is exposed to the risk of non-renewal, non-granting or suspension of its licenses, permits and accreditations that are requiredto operate its business.

 

Thewaste management industry in Singapore in which the Group operates in is highly regulated. The Group’s licenses and registrationsare subject to periodic renewal by the relevant government authorities and are generally subject to a variety of conditions which arestipulated either within the licenses and registrations themselves, or under the particular laws and/or regulations issued by the competentauthorities. Failure to comply with such conditions, laws or regulations could result in the revocation, non-renewal or downgrade ofthe relevant licenses, permits or accreditations and/or imposition of penalties. In such an event, the Group’s business and financialperformance will be adversely affected.

 

 

Developmentsin the social, political, regulatory and economic environment in the country where the Group operates, may have a material and adverseimpact on the Group.

 

TheGroup’s business, prospects, financial condition and results of operations may be adversely affected by social, political, regulatoryand economic developments in the country in which the Group operates. Such political and economic uncertainties include, but are notlimited to, the risks of war, terrorism, nationalism, nullification of contract, changes in interest rates, imposition of capital controlsand methods of taxation. For example, all of the Group’s current operations are located in Singapore, and negative developmentsin Singapore’s socio-political environment may adversely affect the Group’s business, financial condition, results of operationsand prospects.

 

Disruptionsin the international trading environment may seriously decrease the Group’s international sales outside Singapore.

 

Thesuccess and profitability of the Group’s international activities depends on factors such as general economic conditions, laborconditions, political stability, macro-economic regulating measures, tax laws, import and export duties, transportation difficulties,fluctuation of local currency and foreign exchange controls of the countries in which the Group sells its services, as well as the politicaland economic relationships in Singapore where the Group sources waste materials and jurisdictions where the Group’s end users,traders or overseas refiners are located. As a result, the Group’s sales are vulnerable to disruptions in the international tradingenvironment, including adverse changes in foreign government regulations, political unrest and international economic downturns. Anydisruptions in the international trading environment may affect the demand for the Group’s products, which could impact its business,financial condition and results of operations.

 

Manyof the economies in Asia are experiencing substantial inflationary pressures which may prompt the governments to take action to controlthe growth of the economy and inflation that could lead to a significant decrease in the Group’s profitability.

 

Whilemany of the economies in Asia have experienced rapid growth over the last two decades, they currently are experiencing inflationary pressures,and the rate of growth is slowing down. The economy in Singapore and globally has experienced general increases in certain operatingcosts and expenses, such as employee compensation and office operating expenses, as a result of higher inflation. Average wages in Singaporeare expected to continue to increase and the Group expects that its employee costs, including wages and employee benefits, will continueto increase. Unless the Group is able to control its employee costs or pass them on to its clients, the Group’s financial condition,and results of operations may be adversely affected.

 

Asgovernments in Asia (and worldwide) take steps to address current inflationary pressures, there may be significant changes in the availabilityof bank credit, commercial reasonability of interest rates, limitations on loans, restrictions on currency conversions and foreign investmentrules, thereby restricting the availability of credit and reducing economic growth. Inflation, actions that may be implemented to combatinflation and public speculation about any possible additional actions also may contribute materially to economic uncertainty in Asia(and worldwide) and accordingly weaken investor confidence, thus adversely impacting economic growth and causing decreased economic activity,which in turn could lead to a reduction in demand for the Group’s products and services, and consequently have a material adverseeffect on the Group’s businesses, financial condition and results of operations. Conversely, more lenient government policies andinterest rate decreases may trigger increases in inflation and, consequently, growth volatility and the need for sudden and significantinterest rate increases, which could negatively affect the Group’s business. There also may be imposition of price controls. Ifprices for the Group’s waste disposal services and/or circular products rise at a rate that is insufficient to compensate for therise in the costs of supplies and operations, it may have an adverse effect on the Group’s profitability. If these or other similarrestrictions are imposed by a government to influence the economy, it may lead to a slowing of economic growth.

 

 

CaymanIslands economic substance requirements may have an effect on the Group’s business and operations.

 

Pursuantto the International Tax Cooperation (Economic Substance) Act (As Revised) of the Cayman Islands (“ES Act”) that came intoforce on 1 January 2019, a “relevant entity” is required to satisfy the economic substance test set out in the ES Act. A“relevant entity” includes an exempted company incorporated in the Cayman Islands as is the Company; however, it does notinclude an entity that is tax resident outside the Cayman Islands. Accordingly, for so long as the Company is a tax resident outsidethe Cayman Islands, it is not required to satisfy the economic substance test set out in the ES Act.

 

RisksRelating to our Securities

 

Althoughas a foreign private issuer, ESGL is exempt from certain corporate governance standards applicable to US domestic issuers, if ESGL cannotcontinue to satisfy the continued listing requirements and other rules of Nasdaq, ESGL’s securities may not be listed or may bedelisted, which could negatively affect the price of its securities and your ability to sell them.

 

ESGL’ssecurities currently list on Nasdaq. ESGL cannot assure you that its securities will continue to be listed on Nasdaq. In order to maintainits listing on Nasdaq, ESGL is required to comply with certain rules of Nasdaq, including those regarding minimum shareholders’equity, minimum share price, minimum market value of publicly held shares, and various additional requirements.

 

IfNasdaq subsequently delists its securities from trading, ESGL could face significant consequences, including:

 

	●	a limited availability for market quotations for its securities;
	●	reduced liquidity with respect to its securities;
	●	a determination that the Ordinary Shares are a “penny stock,” which will require brokers trading in the Ordinary Shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for the Ordinary Shares;
	●	limited amount of news and analyst coverage; and
	●	a decreased ability to issue additional securities or obtain additional financing in the future.

 

Currently,our Ordinary Shares and Warrants are listed on the Nasdaq Capital Market. However, there may not be enough liquidity in such market toenable shareholders to sell their securities.

 

Currently,our Ordinary Shares and Warrants are listed on the Nasdaq Capital Market. If a public market for our securities does not develop, investorsmay not be able to re-sell their Ordinary Shares or Warrants, rendering their shares illiquid and possibly resulting in a complete lossof their investment. We cannot predict the extent to which investor interest in us will lead to the development of an active, liquidtrading market. The trading price of and demand for the Ordinary Shares and the development and continued existence of a market and favorableprice for the Ordinary Shares will depend on a number of conditions, including the development of a market following, including by analystsand other investment professionals, the businesses, operations, results, and prospects of the Group, general market and economic conditions,governmental actions, regulatory considerations, legal proceedings, and developments or other factors. These and other factors may impairthe development of a liquid market and the ability of investors to sell shares at an attractive price. These factors also could causethe market price and demand for the Ordinary Shares of the Group to fluctuate substantially, which may limit or prevent investors fromreadily selling their shares and may otherwise affect negatively the price and liquidity of the Ordinary Shares. Many of these factorsand conditions are beyond the control of the Group or the shareholders.

 

Wedo not anticipate that we will pay dividends on our Ordinary Shares and, consequently, your ability to achieve a return on your investmentwill depend on appreciation in the price of Ordinary Shares.

 

Weintend to retain any earnings to finance the operation and expansion of its business, and we do not anticipate paying any cash dividendsin the foreseeable future. In addition, in the future we may enter into agreements that prohibit or restrict its ability to declare orpay dividends on our Ordinary Shares. As a result, you may only receive a return on your investment in our Ordinary Shares if the marketprice of such shares increases.

 

 

Certainjudgments obtained against us by our shareholders may not be enforceable.

 

Weare an exempted company incorporated under the laws of the Cayman Islands. The Group conducts most of its operations in Singapore andsubstantially all of its operations outside of the United States. Substantially all of the Group’s assets are located outside ofthe United States. In addition, all of our senior executive officers reside outside the United States. Substantially all of the assetsof these persons are located outside the United States. As of the date of this prospectus, there are no officers, directors, or directornominees residing in China or Hong Kong, except for Lim Boon Yew Gary, who is one of our independent directors and resides in Hong Kong.A judgment of a court in the United States predicated upon U.S. federal or state securities laws may be enforced in Hong Kong at commonlaw by bringing an action in a Hong Kong court on that judgment for the amount due thereunder, and then seeking summary judgment on thestrength of the foreign judgment, provided that the foreign judgment, among other things, is (1) for a debt or a definite sum of money;(2) made by a court of competent jurisdiction over the parties and the subject matter; (3) between the same parties on an identical issue;(4) final and conclusive on the merits; and (5) not impeachable according to the rules on conflicts of laws of Hong Kong. Such a judgmentmay not, in any event, be so enforced in Hong Kong if (a) it was obtained by fraud; (b) the proceedings in which the judgment was obtainedwere opposed to natural justice; or (c) its enforcement or recognition would be contrary to the public policy of Hong Kong. It will becostlier and more time-consuming for the investors to effect service of process outside the United States, or to enforce judgments obtainedfrom the U.S. courts in the courts of the jurisdictions where our directors and officers reside. For example, to enforce a foreign judgmentin Hong Kong, the applicant will be required to apply to the Hong Kong High Court to enforce a foreign judgment (the “Application”)for which the applicant will be required to (i) engage a local counsel to facilitate or prepare the Application; and (ii) go throughthe standard litigation process to sue on the judgment as a debt. In addition, a judgment of a United States court for civil liabilitiespredicated upon the federal securities laws of the United States may also not be enforceable in or recognized by the courts of the jurisdictionswhere our directors and officers reside.

 

Furthermore,as of the date of this prospectus, most of officers, directors, or director nominees reside in Singapore. It is possible that the Singaporecourts may not (i) recognize and enforce judgments of courts in the United States, based upon the civil liability provisions of the securitieslaws of the United States or any state or territory of the United States (ii) enter judgments in original actions brought in the Singaporecourts based solely on the civil liability provisions of these securities laws. An in personam final and conclusive judgment inthe federal or state courts of the United States under which a fixed or ascertainable sum of money is payable may be enforced as a debtin the Singapore courts under the common law as long as it is (i) from a court of competent jurisdiction in the United States and (ii)final and conclusive on the merits under the laws of the United States. Additionally, the court where the judgment was obtained musthave had international jurisdiction over the party sought to be bound in the local proceedings. However, the Singapore courts are unlikelyto enforce a foreign judgment if (a) the foreign judgment is inconsistent with a prior local judgment that is binding on the same parties;(b) the enforcement of the foreign judgment would contravene the public policy of Singapore; (c) the proceedings in which the foreignjudgment was obtained were contrary to principles of natural justice; (d) the foreign judgment was obtained by fraud; or (e) the enforcementof the foreign judgment amounts to the direct or indirect enforcement of a foreign penal, revenue or other public law. As a result, itmay be difficult or impossible for you to bring an action against us or against these individuals in the United States in the event thatyou believe that your rights have been infringed under the U.S. federal securities laws or otherwise. Even if you are successful in bringingan action of this kind, the laws of the Cayman Islands, Singapore, and Hong Kong may render you unable to enforce a judgment againstour assets or the assets of our directors and officers. For more information regarding the relevant laws of the Cayman Islands and Singapore,see “Comparison of Stockholders’ Rights — Enforceability of Civil Liabilities under the U.S. Securities Laws.”

 

Ourshare price may be volatile and could decline substantially.

 

Themarket price of our Ordinary Shares may be volatile, both because of actual and perceived changes in our financial results and prospects,and because of general volatility in the stock market. The factors that could cause fluctuations in our share price may include, amongother factors discussed in this section, the following:

 

	●	actual or anticipated variations in the financial results and prospects of the company or other companies in the same industry;
	●	changes in financial estimates by research analysts;
	●	changes in the market valuations of other waste management companies;
	●	announcements by us or our competitors of new products and services, expansions, investments, acquisitions, strategic partnerships, or joint ventures;
	●	mergers or other business combinations;
	●	additions and departures of key personnel and senior management;

 

 

	●	changes in accounting principles;
	●	the passage of legislation or other developments affecting us or our industry;
	●	the trading volume of our Ordinary Shares in the public market;
	●	the release of lockup or other transfer restrictions on our outstanding equity securities or sales of additional equity securities;
	●	potential litigation or regulatory investigations;
	●	changes in economic conditions, including fluctuations in global and Singaporean economies;
	●	financial market conditions;
	●	natural disasters, terrorist acts, acts of war, or periods of civil unrest; and
	●	the realization of some or all of the risks described in this section.

 

Inaddition, the stock markets have experienced significant price and trading volume fluctuations from time to time, and the market pricesof the equity securities have been volatile and are sometimes subject to sharp price and trading volume changes. These broad market fluctuationsmay materially and adversely affect the market price of our Ordinary Shares.

 

Thesale or availability for sale of substantial amounts of Ordinary Shares could adversely affect their market price.

 

Salesof substantial amounts of the Ordinary Shares in the public market, or the perception that these sales could occur, could adversely affectthe market price of the Ordinary Shares and could materially impair ESGL’s ability to raise capital through equity offerings inthe future. The Ordinary Shares being registered pursuant to this registration statement will be freely tradable without restrictionor further registration under the Securities Act after this registration statement becomes effective.

 

Inaddition, ESGL is not restricted from issuing additional Ordinary Shares in the future, including securities convertible into, or exchangeableor exercisable for, its ordinary shares. ESGL’s issuance of such additional Ordinary Shares in the future will dilute the ownershipinterests of its then existing shareholders. ESGL may also raise capital through equity financings in the future. As part of ESGL’sbusiness strategy, ESGL may acquire or make investments in complementary companies, products or technologies and issue equity securitiesto pay for any such acquisition or investment. Any such issuances of additional shares may cause shareholders to experience significantdilution of their ownership interests and the per share value of the Ordinary Shares.

 

Ifsecurities or industry analysts do not publish research or publish inaccurate or unfavorable research about us or our business, our OrdinaryShares price and trading volume could decline.

 

Thetrading market for our Ordinary Shares will depend in part on the research and reports that securities or industry analysts publish aboutus or our business. Securities and industry analysts do not currently, and may never, publish research on us. If no securities or industryanalysts commence coverage of us, the trading price for our Ordinary Shares would likely be negatively affected. In the event securitiesor industry analysts initiate coverage, if one or more of the analysts who cover us downgrade our securities or publish inaccurate orunfavorable research about our business, our share price would likely decline. If one or more of these analysts cease coverage of usor fail to publish reports on us, demand for our Ordinary Shares could decrease, which might cause the share price and trading volumeto decline.

 

 

OurAmended and Restated Memorandum and Articles of Association contains anti-takeover provisions that could have a material adverse effecton the rights of holders of the Ordinary Shares.

 

TheAmended and Restated Memorandum and Articles of Association contains provisions to limit the ability of others to acquire control ofus or cause us to engage in change of control transactions. These provisions could have the effect of depriving our shareholders of anopportunity to sell their shares at a premium over prevailing market prices by discouraging third-parties from seeking to obtain controlof us in a tender offer or similar transaction. For example, our board of directors has the authority, subject to any resolution of theshareholders to the contrary, to issue preferred shares in one or more series and to fix their designations, powers, preferences, privileges,and relative participating, optional or special rights and the qualifications, limitations or restrictions, including dividend rights,conversion rights, voting rights, terms of redemption, and liquidation preferences, any or all of which may be greater than the rightsassociated with our Ordinary Shares. Preferred shares could be issued quickly with terms calculated to delay or prevent a change in controlof us or make removal of management more difficult. If our board of directors decides to issue preferred shares, the price of the OrdinaryShares may fall and the voting and other rights of the holders of the Ordinary Shares may be materially and adversely affected.

 

Ifthe benefits of the Business Combination do not meet the expectations of financial or industry analysts, the market price of our securitiesmay decline.

 

Themarket price of our securities may decline as a result of the Business Combination if:

 

	●	we do not achieve the perceived benefits of the Business Combination as rapidly as, or to the extent anticipated by, financial or industry analysts; or
	●	the effect of the Business Combination on the financial statements is not consistent with the expectations of financial or industry analysts.

 

Accordingly,investors may experience a loss as a result of declining share prices.

 

Themarket price of our equity securities may be volatile, and your investment could suffer or decline in value.

 

Thestock markets, including the Nasdaq, on which certain of our securities are listed, have from time to time experienced significant priceand volume fluctuations. Even if an active, liquid and orderly trading market develops and is sustained for the Ordinary Shares and ourWarrants, the market price of the Ordinary Shares and our Warrants may be volatile and could decline significantly. The Ordinary Sharesbeing registered for resale in this prospectus will constitute a considerable percentage of our “public float” (defined asthe number of our outstanding Ordinary Shares held by non-affiliates). In addition, the Ordinary Shares being registered for resale hereunderwere purchased by the Selling Shareholders at a price below the current market price of our Ordinary Shares. Given the substantial amountof redemptions in connection with the Business Combination and the relative lack of liquidity in our stock, sales of our Ordinary Sharesunder the registration statement of which this prospectus is a part could result in a significant decline in the market price of oursecurities.

 

OnNovember 27, 2024, the last reported sales price of our Ordinary Shares was $1.35 and the exercise price per share of theWarrants is $11.50. The exercise price of the Warrants is significantly higher than the current market price of our Ordinary Shares andaccordingly, it is highly unlikely that Warrant holders will exercise their Warrants in the foreseeable future. Cash proceeds associatedwith the exercises of the Warrants are dependent on our stock price and given the recent price volatility of our Ordinary Shares andrelative lack of liquidity in our stock, we may not receive any cash proceeds in relation to our outstanding Warrants. In addition, thetrading volume in our Ordinary Shares and our Warrants may fluctuate and cause significant price variations to occur. ESGL cannot assureyou that the market price of the Ordinary Shares and our Warrants will not fluctuate widely or decline significantly in the future inresponse to a number of factors, including, among others, the following:

 

●

the Selling Shareholders purchased the Ordinary Shares being registered for resale hereunder at a price of $0.29 per share, which price is lower than the current market price for our Ordinary Shares and, accordingly, may be or is incentivized to sell them under the registration statement of which this prospectus is a part;

 

 

	●	the Ordinary Shares being offered under this prospectus represent approximately 42.8% of Ordinary Shares outstanding as of the date of this prospectus, and sales of a significant number of such shares could materially adversely affect the trading prices of our securities;
	●	the realization of any of the risk factors presented in this prospectus;
	●	actual or anticipated differences in our estimates, or in the estimates of analysts, for our revenues, earnings, results of operations, level of indebtedness, liquidity or financial condition;
	●	failure to comply with the requirements of Nasdaq;
	●	failure to comply with the Sarbanes-Oxley Act or other laws or regulations;
	●	variance in our financial performance from the expectations of market analysts;
	●	announcements by us or our competitors of significant business developments, changes in service provider relationships, acquisitions or expansion plans;
	●	changes in the prices of our products and services;
	●	commencement of, or involvement in, litigation involving us;
	●	future issuances, sales, repurchases or anticipated issuances, sales, resales or repurchases, of our securities including due to the expiration of contractual lock-up agreements;
	●	publication of research reports about us;
	●	failure of securities analysts to initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow us or our failure to meet these estimates or the expectations of investors;
	●	new laws, regulations, subsidies, or credits or new interpretations of existing laws applicable to us;
	●	market conditions in our industry;
	●	changes in key personnel;
	●	speculation in the press or investment community;
	●	changes in the estimation of the future size and growth rate of our markets;

 

	●	broad disruptions in the financial markets, including sudden disruptions in the credit markets;
	●	actual, potential or perceived control, accounting or reporting problems;
	●	changes in accounting principles, policies and guidelines; and
	●	other events or factors, including those resulting from infectious diseases, health epidemics and pandemics, natural disasters, war, acts of terrorism or responses to these events.

 

 

Inthe past, following periods of volatility in the trading price of a company’s securities, securities class action litigation hasoften been instituted against that company. If we were to be involved in any similar litigation, we could incur substantial costs andour management’s attention and resources could be diverted, which would have a material adverse effect on us.

 

RisksRelating to Operating as a Public Company

 

ESGL’smanagement team has limited experience managing a public company.

 

Themembers of ESGL’s management team have limited or no experience managing a publicly-traded company, interacting with public companyinvestors, and complying with the increasingly complex laws, rules and regulations that govern public companies. There are significantobligations it is subject to relating to reporting, procedures and internal controls after ESGL becomes a publicly-traded company. Thesenew obligations and scrutiny will require significant attention from management and could divert their attention away from the day-to-daymanagement of the Group’s business, which could adversely affect its business, financial condition and operating results.

 

IfESGL fails to implement and maintain an effective system of internal controls to remediate its material weaknesses over financial reporting,ESGL may be unable to accurately report its results of operations, meets its reporting obligations or prevent fraud, and investor confidenceand the market price of Ordinary Shares may be materially and adversely affected.

 

ESGLis subject to the Sarbanes-Oxley Act of 2002. Section 404 of the Sarbanes-Oxley Act, or Section 404, requires that ESGL include a reportfrom management on the effectiveness of ESGL’s internal controls over financial reporting in ESGL’s annual report on Form20-F beginning with ESGL’s annual report in ESGL’s second annual report on Form 20-F after becoming a public company. Inaddition, once ESGL ceases to be an “emerging growth company” as such term is defined in the JOBS Act, ESGL’s independentregistered public accounting firm must attest to and report on the effectiveness of ESGL’s internal controls over financial reporting.Moreover, even if ESGL’s management concludes that ESGL’s internal controls over financial reporting is effective, ESGL’sindependent registered public accounting firm, after conducting its own independent testing, may issue an adverse opinion on the effectivenessof internal control over financial reporting if it is not satisfied with ESGL’s internal controls or the level at which ESGL’scontrols are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from ESGL. In addition,ESGL’s reporting obligations may place a significant strain on ESGL’s management, operational and financial resources andsystems for the foreseeable future. ESGL may be unable to timely complete its evaluation testing and any required remediation.

 

Duringthe course of documenting and testing ESGL’s internal control procedures, in order to satisfy the requirements of Section 404,ESGL may identify weaknesses and deficiencies in ESGL’s internal control over financial reporting. If ESGL fails to maintain theadequacy of its internal control over financial reporting, as these standards are modified, supplemented, or amended from time to time,ESGL may not be able to conclude on an ongoing basis that it has effective internal control over financial reporting in accordance withSection 404. Generally speaking, if ESGL fails to achieve and maintain an effective internal control environment, it could result inmaterial misstatements in ESGL’s financial statements and could also impair ESGL’s ability to comply with applicable financialreporting requirements and related regulatory filings on a timely basis. As a result, ESGL’s businesses, financial condition, resultsof operations and prospects, as well as the trading price of the ordinary shares, may be materially and adversely affected. Additionally,ineffective internal control over financial reporting could expose ESGL to increased risk of fraud or misuse of corporate assets andsubject ESGL to potential delisting from the stock exchange on which ESGL lists, regulatory investigations and civil or criminal sanctions.ESGL’ may also be required to restate its financial statements from prior periods. ESGL will incur increased costs as a resultof being a public company.

 

 

ESGLis a public company and expects to incur significant legal, accounting, and other expenses. For example, as a result of becoming a publiccompany, ESGL needs to increase the number of independent directors and adopt policies regarding internal controls and disclosure controlsand procedures. Operating as a public company will make it more difficult and more expensive for it to obtain director and officer liabilityinsurance, and ESGL may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the sameor similar coverage. In addition, ESGL will incur additional costs associated with its public company reporting requirements. It mayalso be more difficult for ESGL to find qualified persons to serve on its Board of Directors or as executive officers.

 

AfterESGL is no longer an “emerging growth company,” ESGL may incur significant expenses and devote substantial management efforttoward ensuring compliance with the requirements of Section 404 and the other rules and regulations of the SEC.

 

IfESGL ceases to qualify as a foreign private issuer, it would be required to comply fully with the reporting requirements of the ExchangeAct applicable to U.S. domestic issuers, and it would incur significant additional legal, accounting, and other expenses that it wouldnot incur as a foreign private issuer.

 

Asa foreign private issuer, ESGL will be exempt from the rules under the Exchange Act prescribing the furnishing and content of registrationstatements, and its officers, directors, and principal shareholders will be exempt from the reporting and short-swing profit recoveryprovisions contained in Section 16 of the Exchange Act. In addition, it will not be required under the Exchange Act to file periodicreports and financial statements with the SEC as frequently or as promptly as United States domestic issuers, and it will not be requiredto disclose in its periodic reports all of the information that United States domestic issuers are required to disclose. ESGL currentlyprepares its financial statements in accordance with IFRS. ESGL will not be required to file financial statements prepared in accordancewith or reconciled to U.S. GAAP so long as the Company’s financial statements are prepared in accordance with IFRS as issued bythe IASB. If it ceases to qualify as a foreign private issuer in the future, it would incur significant additional expenses that couldhave a material adverse effect on its results of operations.

 

BecauseESGL is a foreign private issuer and is exempt from certain Nasdaq corporate governance standards applicable to U.S. issuers, you willhave less protection than you would have if it were a domestic issuer.

 

ESGL’sstatus as a foreign private issuer exempts it from compliance with certain Nasdaq corporate governance requirements if it instead complieswith the statutory requirements applicable to a Cayman Islands exempted company. The statutory requirements of ESGL’s home countryof Cayman Islands, do not strictly require a majority of its board to consist of independent directors. Thus, although a director mustact in the best interests of ESGL, it is possible that fewer board members will be exercising independent judgment and the level of boardoversight of the management the company may decrease as a result. In addition, the Nasdaq Listing Rules also require U.S. domestic issuersto have an independent compensation committee with a minimum of two members, a nominating committee, and an independent audit committeewith a minimum of three members. ESGL, as a foreign private issuer, with the exception of needing an independent audit committee composedof at least three members, is not subject to these requirements. The Nasdaq Listing Rules may also require shareholder approval for certaincorporate matters that ESGL’s home country’s rules do not. Following Cayman Islands governance practices, as opposed to complyingwith the requirements applicable to a U.S. company listed on Nasdaq, may provide less protection to you than would otherwise be the case.

 

 

Youmay face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, becausewe are incorporated under Cayman Islands law.

 

Weare an exempted company incorporated under the laws of the Cayman Islands. Our corporate affairs are governed by our Amended and RestatedMemorandum and Articles of Association, the Companies Act (As Revised) of the Cayman Islands and the common law of the Cayman Islands.The rights of shareholders to take action against ESGL’s directors, actions by ESGL’s minority shareholders and the fiduciaryduties of ESGL’s directors to ESGL under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands.The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well asfrom the common law of England, the decisions of whose courts are of persuasive authority, but are not binding, on a court in the CaymanIslands. The rights of ESGL’s shareholders and the fiduciary duties of ESGL’s directors under Cayman Islands law are notas clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular,the Cayman Islands have a less developed body of securities laws than the United States and provides significantly less protection toinvestors. In addition, some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporatelaw than the Cayman Islands.

 

Thereis uncertainty as to whether the courts of the Cayman Islands would (i) recognize or enforce judgments of U.S. courts obtained againstESGL or ESGL’s directors or officers predicated upon the civil liability provisions of the securities laws of the United Statesor any state in the United States, or (ii) entertain original actions brought in the Cayman Islands against ESGL or ESGL’s directorsor officers predicated upon the securities laws of the United States or any state in the United States. It may be difficult or impossiblefor you to bring an action against ESGL or against these individuals in the Cayman Islands in the event that you believe that your rightshave been infringed under the applicable securities laws or otherwise. Even if you are successful in bringing an action of this kind,the laws of the Cayman Islands may render you unable to enforce a judgment against ESGL’s assets or the assets of ESGL’sdirectors and officers.

 

Shareholdersof Cayman Islands exempted companies like ESGL have no general rights under Cayman Islands law to inspect corporate records or to obtaincopies of lists of shareholders of these companies. ESGL’s directors have discretion under our Amended and Restated Memorandumand Articles of Association to determine whether or not, and under what conditions, its corporate records may be inspected by its shareholders,but are not obliged to make them available to its shareholders. This may make it more difficult for you to obtain the information neededto establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.

 

Asa result of all of the above, ESGL’s public shareholders may have more difficulty in protecting their interests in the face ofactions taken by ESGL’s management, members of the board of directors or controlling shareholders than they would as public shareholdersof a company incorporated in the United States.

 

CaymanIslands companies may not have standing to initiate a derivative action in a federal court of the United States. As a result, your abilityto protect your interests if you are harmed in a manner that would otherwise enable you to sue in a United States federal court may belimited to direct shareholder lawsuits.

 

ESGLmay be a “passive foreign investment company,” or “PFIC”, which could result in adverse U.S. federal income taxconsequences to U.S. Holders.

 

Ingeneral, we will be treated as a PFIC for any taxable year in which either (1) at least 75% of our gross income (looking through certain25% or more-owned subsidiaries) is passive income or (2) at least 50% of the average value of our assets (looking through certain 25%or more-owned subsidiaries) is attributable to assets that produce, or are held for the production of, passive income. Passive incomegenerally includes, without limitation, dividends, interest, rents, royalties, and gains from the disposition of passive assets. If weare determined to be a PFIC for any taxable year (or portion thereof) that is included in the holding period of a U.S. Holder (as definedin the Section of this prospectus captioned “Material U.S. Federal Income Tax Considerations for U.S. Holders”) of our securities,the U.S. Holder may be subject to increased U.S. federal income tax liability and may be subject to additional reporting requirements.The determination of whether we are a PFIC is a fact-intensive determination made on an annual basis applying principles and methodologiesthat in some circumstances are unclear and subject to varying interpretation. Our actual PFIC status for any taxable year will not bedeterminable until after the end of such taxable year. Accordingly, there can be no assurance with respect to our status as a PFIC forour current taxable year or any subsequent taxable year. We urge U.S. Holders to consult their own tax advisors regarding the possibleapplication of the PFIC rules in light of their individual circumstances.

 

 

USEOF PROCEEDS

 

Allof the Ordinary Shares offered by the Selling Shareholders pursuant to this prospectus will be sold by the Selling Shareholders for theirrespective accounts. We will not receive any of the proceeds from these sales.

 

 

MARKETPRICE OF OUR SECURITIES

 

OurOrdinary Shares and Public Warrants (which will include the Private Warrants upon their resale pursuant to an effective registrationstatement or Rule 144 under the Securities Act) began trading on the Nasdaq under the symbols “ESGL” and “ESGLW,”respectively, on August 4, 2023. On November 27, 2024, the closing sale price of our Ordinary Shares was $1.35. On November25, 2024, the closing sales price of our Public Warrants was $0.169. As of November 27, 2024, there were approximately35 holders of record of our Ordinary Shares and two holders of record of our Warrants. Such numbers do not include beneficialowners holding our securities through nominee names.

 

 

MANAGEMENT’SDISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS  

 

Youshould read the following discussion and analysis of the Group’s financial condition and results of operations in conjunction withthe section entitled “Selected Historical Financial Information of the Group”, the Group’s combined and consolidatedfinancial statements, and the related notes included elsewhere in this registration statement, which were prepared in accordance withIFRS, as issued by the IASB, and presented in U.S. dollars (US$), which is the Group’s functional currency. This discussion containsforward-looking statements that involve risks and uncertainties. The Group’s actual results and the timing of events could differmaterially from those anticipated in these forward- looking statements as a result of various factors, including those set forth under“Risk Factors” and elsewhere in this prospectus.

 

Overview

 

ESGLis a holding company incorporated as an exempted company under the laws of the Cayman Islands. As a holding company with no materialoperations of its own, the Group conducts all its operations through its operating entity incorporated in Singapore, ESA.

 

TheGroup is a waste management, treatment and recycling company involved in the collection and recycling of hazardous and non-hazardousindustrial waste from customers such as pharmaceutical, semiconductor, petrochemical and electroplating companies. The Group currentlyhas two revenue streams, from: (i) services income which is primarily comprised of the fees charged to customers for the provision ofwaste collection and disposal services, which fees are similar to those charged by the Group’s competitors, and (ii) the salesand trading of its circular products made from recycled waste, which is believed to make the Group a unique and environmentally-friendlyoffering in the marketplace.

 

TheOrdinary Shares being registered for resale in connection with this offering will constitute a considerable percentage of our “publicfloat” (defined as the number of our outstanding Ordinary Shares held by non-affiliates). The Selling Shareholders named hereinbeneficially own in the aggregate 17,241,380 Ordinary Shares registered for resale hereunder, which is equal to approximately 42.8% ofour outstanding Ordinary Shares. The Selling Shareholders will be able to sell all of their Ordinary Shares for so long as the registrationstatement of which this prospectus forms a part is available for use. In addition, the Ordinary Shares being registered for resale hereunderwere purchased by the Selling Shareholders at a price below the current market price of our Ordinary Shares. Given the substantial amountof redemptions in connection with the Business Combination and the relative lack of liquidity in our stock, sales of our Ordinary Sharesunder the registration statement of which this prospectus is a part could result in a significant decline in the market price of oursecurities.

 

FactorsAffecting the Group’s Performance and Related Trends

 

TheGroup believes that the key factors affecting its performance and financial performance include:

 

	(i)	Continuous Engagement with the Group’s Customers: The Group benefits from its unique approach to waste handling — captive consumption, which has allowed it to capture customers from the target market segment of multinational corporations that aim to meet their environmental, social and governance goals. The Group’s revenue growth largely depends on its ability to retain current customers and attract new customers, including its ability to form relationships with and manage an increasing number of customers. In addition to the traditional means of attracting potential customers via emails, business brochures and LinkedIn, ESA is also a member of the Waste Management Recycling Association of Singapore and the United Nations Global Compact where it actively participates in industry forums to promote the Group’s brand and awareness of sustainable solutions, which has resulted in a substantial increase in customer engagement.
	(ii)	Manufacturing Activities: The Group derives part of its revenue by charging a disposal fee for the use of its collection and disposal service. Since the Group’s core business is tied to the volume of waste generated by its customers, its revenue growth could be influenced by manufacturing activities which are affected by the global supply and demand, as well as macroeconomic conditions.
	(iii)	Commodities Price: The Group derives part of its revenue from the sales and trading of its circular products, which typically include zinc, precious metals and base metals. As such, the prevailing market prices and the demand of these commodities will also determine the Group’s profitability and the sale of each commodity, respectively.

 

 

(iv)

Inflation: While many of the economies in Asia have experienced rapid growth over the last two decades, they currently are experiencing inflationary pressures, and the rate of growth is slowing down. The economy in Singapore and globally has experienced general increases in certain operating costs and expenses, such as employee compensation and office operating expenses as a result of higher inflation. Average wages in Singapore are expected to continue to increase and the Group expects that its employee costs, including wages and employee benefits, will continue to increase. Unless the Group is able to control its employee costs or pass them on to its clients, its financial condition, and results of operations may be adversely affected.

 

As governments in Asia (and worldwide) take steps to address current inflationary pressures, there may be significant changes in the availability of bank credit, commercial reasonability of interest rates, limitations on loans, restrictions on currency conversions and foreign investment rules, thereby restricting the availability of credit and reducing economic growth. Inflation, actions that may be implemented to combat inflation and public speculation about any possible additional actions also may contribute materially to economic uncertainty in Asia (and worldwide) and accordingly weaken investor confidence, thus adversely impacting economic growth and causing decreased economic activity, which in turn could lead to a reduction in demand for the Group’s products and services, and consequently have a material adverse effect on its businesses, financial condition and results of operations. Conversely, more lenient government policies and interest rate decreases may trigger increases in inflation and, consequently, growth volatility and the need for sudden and significant interest rate increases, which could negatively affect the Group’s business. There also may be imposition of price controls. If prices for the Group’s waste disposal services and/or its circular products rise at a rate that is insufficient to compensate for the rise in the costs of supplies and operations, it may have an adverse effect on the Group’s profitability. If these or other similar restrictions are imposed by a government to influence the economy, it may lead to a slowing of economic growth.

 

(v)

Government Regulations in Singapore: The Group’s operating subsidiary, ESA, is incorporated, and its operations and assets are all located, in Singapore. Accordingly, the Group’s business could be influenced by economic policies and initiatives undertaken by the Singapore government, changes in the Singapore business or regulatory environment affecting its customers and changes in the Singapore government policy on waste management. Unfavorable changes could affect demand for services that the Group provides and could materially and adversely affect its results of operations. Although the Group has generally benefited from Singapore’s economic growth and the policies to encourage the improvement of waste management, it is also affected by the complexity, uncertainties and changes in the Singapore economic conditions and regulations governing the waste industry.

 

Resultsof Operations

 

Comparisonof the Six Month Period Ending June 30, 2024 Compared with Six Month Period ending June 30, 2023

 

		Unaudited
		For the Period Ended June 30,												Percentage
		2024				2023				Change				Change
		(US$)				(US$)				(US$)				%
Revenue			3,487,879				3,394,313				93,566				2.76	%
Other income			282,213				189,335				92,878				49.05	%
Cost of inventory			(78,366	)			(407,291	)			(328,925	)			-80.76	%
Logistics costs			(264,638	)			(792,079	)			(527,441	)			-66.59	%
Operating expenses			(2,262,170	)			(1,630,586	)			631,584				38.73	%
Finance expense			(147,128	)			(158,912	)			(11,784	)			-7.42	%
Depreciation and amortization			(1,340,734	)			(1,185,034	)			155,700				13.14	%
Loss before income tax			(322,944	)			(590,254	)			(267,310	)			-45.29	%
Income tax expense			(148,480	)			(39,000	)			109,480				280.72	%
Net loss and comprehensive loss			(471,424	)			(629,254	)			(157,830	)			-25.08	%
Loss per share			(0.03	)			(0.10	)			(0.06	)			-65.87	%
Weighted average number of shares			14,000,514				6,378,267

 

Revenue

 

TheGroup derives its revenue from (i) the sales and trading of its circular products and (ii) waste disposal services which generally comprisesthe disposal fees it charges its customers for waste collection and disposal services. For the period ended June 30, 2024 (1H 2024”),total revenue for the Group increased marginally by 2.76% from approximately US$3.4 million to approximately US$3.5 million. The increasewas mainly due to higher waste disposal services which increased by approximately US$0.6 million (29.2%) compared to the period endedJune 30, 2023 (“1H 2023”). This offsets the decrease in sales of circular products which declined approximately US$0.5 million(39.1%) in 1H 2024 compared to 1H 2023. Lower circular products sales were mainly due to decrease in sales of base metal, copper andnickel.

 

 

OtherIncome

 

Otherincome increased by approximately US$93,000 (49.1%) in 1H 2024 due mainly to favorable exchange rates movements which compensated fordecrease in other income from warehousing and logistic service, government grants and interest.

 

		Unaudited
		For the Period Ended June 30,
														Percentage
		2024				2023				Change				change %
		US$				US$				US$				%
Foreign exchange gain			264,158				65,015				199,143				>100	%
Interest income			3				12,002				(11,999	)			-100.0	%
Gain from disposal of motor vehicle			-				2,130				(2,130	)			-100.0	%
Government grants			18,052				33,511				(15,459	)			-46.1	%
Grant from AEPW1			-				40,320				(40,320	)			-100.0	%
Warehousing and logistic services			-				36,357				(36,357	)			-100.0	%
			282,213				189,335				92,878				49.1	%

 

Costof Inventory

 

TheGroup’s cost of inventory represents costs and expenses attributable to the provision of its circular products. The Group’scost of inventory decreased by approximately US$329,000 or 80.8% from approximately US$407,000 for the period ended June 30, 2023 toapproximately US$78,000 for the period ended June 30, 2024, which is in line with the decrease in product sales mentioned above.

 

LogisticsCosts

 

TheGroup’s logistics costs represent costs attributable to the collection of waste and the delivery of its circular products. TheGroup’s logistics costs decreased by approximately US$527,000 or 66.6% from approximately US$792,000 for the period ended June30, 2023 to approximately US$264,000 for the period ended June 30, 2024. The lower logistics costs were mainly due to a decrease in transportationcosts and packaging costs such as containers for liquid hazardous waste   and drums. The latter contributed to a decrease inlogistics costs of approximately US$321,000. In 1H 2024, notwithstanding the increase in total waste disposal revenue of approximatelyUS$607,000 (29.2%), the Group’s disposal of hazardous liquid waste decreased by approximately US$387,000 (45.8%) compared to thesame period last year. This resulted in lower costs incurred for containers used to transport such hazardous liquid waste. This decreasein volumes of liquid hazardous waste was a temporary measure to allow the Group to invest in safety equipment to comply with new regulatoryrequirements.

 

OperatingExpenses

 

Operatingexpenses for the period ended June 30, 2024 mainly comprise of employee benefits expense, foreign worker levy, insurance expense, professionalfees, rental and disposal expenses.

 

Employeebenefits expense in 1H 2024 increased by approximately US$411,000 (64.3%) from approximately US$639,000 for the period ended June 30,2023 to approximately US$1.0 million due mainly to higher directors’ fees and remuneration which increased by approximately US$326,000and staff salaries and bonus which increased by approximately US$52,000.

 

 

Otheroperating expenses are mainly as follows:

 

		Unaudited
		For the Period Ended June 30,
														Percentage
		2024				2023				Change				change %
		US$				US$				US$				%
Foreign worker levy			82,944				78,335				4,609				5.9	%
Insurance			189,192				38,647				150,545				>100	%
Professional fees			285,343				291,303				(5,960	)			-2.0	%
Property tax			54,293				54,630				(337	)			-0.6	%
Rental and storage			211,561				214,175				(2,614	)			-1.2	%
Utilities			36,889				92,045				(55,156	)			-59.9	%
Upkeep, repair and maintenance			58,165				53,392				4,773				8.9	%
Chemical and incineration fees			189,545				70,378				119,167				>100	%
Bank service charges			3,528				45,878				(42,350	)			-92.3	%
Others			25,172				52,743				(27,571	)			-52.3	%
			1,212,273				991,526				220,747				22.3	%

 

Insuranceexpense in 1H 2024 increased by approximately US$150,000 due mainly to D&O insurance premium incurred after the business combination.Disposal and incineration fees increased by approximately US$119,000 in 1H 2024 due to collection of mesh clay, a new waste materialfrom a customer.

 

Financeexpense

 

Totalinterest expense in 1H 2024 was approximately US$9,400 (-7.2%) lower than the same period last year due mainly to interest being paidon reducing bank loan balances.

 

Depreciationand Amortization

 

TheGroup’s depreciation and amortization expenses increased by approximately US$156,000 (13.1%)   due to increase in intangibleassets such as self-developed software tailored to our operational requirements.

 

NetLoss

 

Asa result of the foregoing, the Group recorded a net loss of approximately US$471,000 for the period ended June 30, 2024. This is approximatelyUS$158,000 (25.1%) lower than the loss incurred in 1H 2023.

 

Comparisonof the Years Ended December 31, 2023 and 2022

 

		For the Year Ended December 31,
														Percentage
		2023				2022				Change				Change
		(US$)				(US$)				(US$)				(%)
Revenue			6,164,173				4,992,034				1,172,139				23.5	%
Other income			169,819				396,373				(226,554	)			-57.2	%
Cost of inventory			977,619				1,093,194				(115,575	)			-10.6	%
Logistics costs			925,225				689,762				235,463				34.1	%
Operating expenses			3,466,606				2,460,951				1,005,655				40.9	%
Finance expense			388,717				246,359				142,358				57.8	%
Depreciation and amortization			2,354,839				2,300,252				54,587				2.4	%
Listing expenses			93,067,324				981,701				92,085,623				>100	%
Loss before income tax			(94,846,338	)			(2,383,812	)			(92,462,526	)			>100	%
Income tax expense			133,000				8,000				125,000				>100	%
Net loss			(94,979,338	)			(2,391,812	)			(92,587,526	)			>100	%

 

 

Revenue

 

TheGroup derives its revenue from (i) the sales and trading of its circular products and (ii) waste disposal services which generally comprisesthe disposal fees it charges its customers for waste collection and disposal services. The Group’s revenue increased by approximatelyUS$1.2 million or 23.5% from approximately US$5.0 million for the year ended December 31, 2022 (“FY2022”) to approximatelyUS$6.2 million for the year ended December 31, 2023 (“FY2023”), primarily attributable to the increase in waste disposalservices which rose by approximately US$1.6 million or 71.8%. The increase from waste disposal services was offset by a decrease in salesof circular products by approximately US$0.4 million (16%) compared to the last financial year.

 

Thedecrease in sales of circular products was primarily attributable to (i) the lack of zinc sales in 2023. Sales of zinc fell from approximatelyUS$1.2 million in FY2022 to zero in FY2023. The Group pivoted away from sales of zinc due primarily to higher costs related to such transactions;(ii) the decrease in sales of precious metals of approximately US$0.75 million or 78.2% from approximately US$0.96 million for the yearended December 31, 2022 to approximately US$0.21 million for the year ended December 31, 2023, (iii) offset by increase in sales of basemetals which increased approximately by US$1.5 million (>100%) to approximately US$2.1 million for the year ended December 31, 2023from approximately US$0.59 million in the previous financial year primarily due to the availability of materials, feasible freight chargesand scheduling.

 

TheGroup’s revenue generated from waste disposal services increased by approximately US$1.6 million or 71.8% from approximately US$2.2million for the year ended December 31, 2022 to approximately US$3.9 million for the year ended December 31, 2023, primarily due to theincrease in higher demand for ESGL’s disposal services of solid industrial wastes, waste plastics, waste wood and chemical wastes.In FY2023, ESGL was awarded larger quantum contracts for such services from its major semi-conductor customers.

 

OtherIncome

 

TheGroup’s other income is mainly comprised of (i) grants, (ii) warehousing and logistics services, and (iii) interest income. Thefollowing table sets out the breakdown of other income for the periods indicated:

 

		For the Year Ended December 31,
														Percentage
		2023				2022				Change				change %
		US$				US$				US$				%
Interest income			18,308				4				18,304				>100	%
Gain from disposal of motor vehicle			-				26,586				(26,586	)			-100.0	%
Government grants			42,819				76,588				(33,769	)			-44.1	%
Grant from AEPW1			72,000				116,000				(44,000	)			-37.9	%
Warehousing and logistic services			36,357				175,650				(139,293	)			-79.3	%
Others			335				1,545				(1,210	)			-78.3	%
			169,819				396,373				(226,554	)			-57.2	%

 

¹TheAlliance to End Plastic Waste (“AEPW”) is an industry-founded and funded non-governmental and non-profit organization basedin Singapore. Founding members include BASF, Chevron Phillips Chemical, ExxonMobil, Dow Chemical, Mitsubishi Chemical Holdings, Proctor& Gamble and Shell.

 

 

TheGroup’s other income decreased by approximately US$226,000 or -57.2% from approximately US$396,000 for the year ended December31, 2022 to approximately US$170,000 for the year ended December 31, 2023. Such decrease was primarily attributable to (i) the decreasein warehousing and logistic services which decreased by approximately US$139,000 (-79.3%) in FY2023 compared to the prior financial yearas the warehousing arrangements were terminated and the Group utilized the space for its own operations, and (ii) the decrease in grantfrom AEPW of approximately US$44,000 or -37.9% from approximately US$116,000 for the year ended December 31, 2022 to approximately US$72,000for the year ended December 31, 2023 as the grant from AEPW draws to a close in 2023. and (iii) the decrease in government grants ofapproximately US$34,000 or -44.1% as the Group had received less employment related subsidies under the Job Growth Incentive Scheme.

 

Costof Inventory

 

TheGroup’s cost of inventory represents costs and expenses attributable to the provision of its circular products. The Group’scost of inventory decreased by approximately US$115,000 or -10.6% from approximately US$1.1 million for the year ended December 31, 2022to approximately US$978,000 for the year ended December 31, 2023, which is in line with the decrease in product sales such as zinc asmentioned above.

 

LogisticsCosts

 

TheGroup’s logistics costs represent costs attributable to the collection of waste and the delivery of its circular products. TheGroup’s logistics costs increased by approximately US$235,000 or 34.1% from approximately US$690,000 for the year ended December31, 2022 to approximately US$925,000 for the year ended December 31, 2023, which is in line with the increased demand for disposal servicesof wastes and the overall increase of Group’s business operations.

 

OperatingExpenses

 

TheGroup’s operating expenses mainly comprise employee benefits expense and other operating expenses. The Group’s operatingexpenses increased by approximately US$1.0 million or 40.9%, from approximately US$2.4 million for the year ended December 31, 2022 toapproximately US$3.4 million for the year ended December 31, 2023, primarily attributable to the overall increase in employee benefitsexpense which increased by approximately US$431,000 (46.2%) from approximately US$933,000 to US$1.4 million, and other operating expensesas detailed below.

 

EmployeeBenefits Expense

 

Employeebenefits expense is mainly comprised of (i) salaries, wages and bonuses, (ii) directors’ remuneration, (iii) employer’s contributionto defined contribution plans including Central Provident Fund, and (iv) other short-term benefits, including compulsory skills developmentlevy imposed in Singapore, administrative expenses relating to the application and/or renewal of work permits for foreign staff, medicalexpenses, staff insurance, staff welfare and training expenses, less (v) the amount capitalized as internal development of intangibleassets. The following table sets out the breakdown of employee benefits expense for the periods indicated:

 

		For the Year Ended December 31,
														Percentage
		2023				2022				Change				change %
		US$				US$				US$				%
Salaries, wages and bonuses			2,258,195				1,571,124				687,071				43.7	%
Directors’ remuneration			272,659				211,853				60,806				28.7	%
Directors’ fees			52,252				-				52,252				nm
Employer’s contribution to defined contribution plans including Central Provident Fund			142,749				107,263				35,486				33.1	%
Other short term benefit			26,943				54,077				(27,134	)			-50.2	%
			2,752,798				1,944,317				808,481				41.6	%
Less: Amount capitalized as internal development of intangible assets			(1,388,584	)			(1,011,193	)			(377,391	)			37.3	%
			1,364,214				933,124				431,090				46.2	%

 

 

TheGroup’s employee benefits expense increased by approximately US$431,000 or 46.2% from approximately US$933,000 for the year endedDecember 31, 2022 to approximately US$1.4 million for the year ended December 31, 2023. Such increase in employee benefits expense wasprimarily attributable to (i) the increase of salaries, wages and bonuses of approximately US$687,000 or 43.7% from approximately US$1.6million for the year ended December 31, 2022 to approximately US$2.3 million for the year ended December 31, 2023 mainly due to higherheadcount as the Group geared up for higher production to meet increased customer’s demands, and (ii) higher Directors’ remunerationof approximately US$61,000 or 28.7% from approximately US$212,000 for the year ended December 31, 2022 to approximately US$273,000 forthe year ended December 31, 2023, (iii) Directors’ fees for non-executive independent directors of approximately US$52,000 forwhich no Directors’ fees were incurred in the last financial year offset by the increase of salary expense being capitalized asinternal development of intangible assets of approximately US$377,000 or 37.3% from approximately US$1.0 million for the year ended December31, 2022 to approximately US$1.4 million for the year ended December 31, 2023 and was primarily attributable to the increase in timeand manpower allocated to the software development and innovation projects to develop engineering technologies in relation to the Group’swaste processing, treatment and recycling plans.

 

OtherOperating Expenses

 

Otheroperating expenses are mainly comprised of (i) foreign exchange loss, (ii) foreign worker levy, (iii) impairment loss on receivables,(iv) insurance, (v) professional fees, (vi) property tax, (vii) rental and storage, (viii) utilities, (ix) upkeep, repair and maintenance,(x) chemical and incineration fees, and (xi) others relating to bank charges, marketing and advertising expenses, entertainment expenses,business travel expense, computer and internet expenses, telephone and internet expenses and filing and lodgment fees. The followingtable sets out the breakdown of other operating expenses for the periods indicated:

 

		For the Year Ended December 31,
														Percentage
		2023				2022				Change				change %
		US$				US$				US$				%
Foreign exchange loss			189,426				22,287				167,139				>100	%
Foreign worker levy			168,137				97,703				70,434				72.1	%
Impairment loss on receivables			-				44,271				(44,271	)			-100.0	%
Insurance			55,694				43,589				12,105				27.8	%
Professional fees			109,703				93,978				15,725				16.7	%
Property tax			108,412				105,771				2,641				2.5	%
Rental and storage			594,748				290,481				304,267				>100	%
Utilities			189,982				157,974				32,008				20.3	%
Upkeep, repair and maintenance			230,037				317,267				(87,230	)			-27.5	%
Chemical and incineration fees			396,428				229,204				167,224				73.0	%
Bank service charges			50,427				8,203				42,224				>100	%
Others			9,398				117,099				(107,701	)			-92.0	%
			2,102,392				1,527,827				574,565				37.6	%

 

 

TheGroup’s other operating expenses increased by approximately US$575,000 or 37.6% from approximately US$1.5 million for the yearended December 31, 2022 to approximately US$2.1 million for the year ended December 31, 2023. The increase was mainly due to (i) higherrental and storage expenses which increased by approximately U$304,000 from approximately US$290,000 in the year ended December 31, 2022to approximately US$595,000 (>100%) in the year December 31, 2023 to cater for higher volumes of wastes collected in FY2023; (ii)increase in chemical and incineration fees from approximately US$229,000 in FY2022 to approximately US$396,000 in FY2023 as a resultof higher wastes collected and treated in FY2023; (iii) higher foreign exchange loss of approximately US$189,000 in the year ended December31, 2023 as compared to foreign exchange loss of approximately US$22,000 in the prior financial year; (iv) increase in foreign workerlevy which increased by approximately US$70,000 from approximately US$98,000 in the prior financial year to approximately US$168,000(72.1%) in the year ended December 31, 2023 on the increase in hiring to cater for higher volumes; (v) offset by a write-back of oldaccount payables which were more than 2 years old.

 

FinanceExpense

 

		For the Year Ended December 31,
														Percentage
		2023				2022				Change				change %
		US$				US$				US$				%
Interest expenses:
- Lease liabilities			55,934				28,559				27,375				95.9	%
- Borrowings			284,112				217,800				66,312				30.4	%
- Loans from Directors			48,671				-				48,671				nm
			388,717				246,359				142,358				57.8	%

 

TheGroup’s finance expense increased by approximately US$142,000 from approximately US$246,000 in the year ended December 31, 2022to approximately US$389,000 (57.8%) in FY2023. This was mainly due to higher interest on borrowings which increased by approximatelyUS$66,000 in FY2023 compared to FY2022 on new bank loans drawn down in FY2023. The interest on loans from Directors also resulted inhigher interest costs of approximately US$49,000 in FY2023. There was no such interest in the last financial year.

 

Depreciationand Amortization

 

TheGroup’s depreciation and amortization expense remain relatively unchanged for the financial years ended December 31, 2023 and 2022.

 

Listingexpense

 

Listingexpenses are non-recurring expenses incurred in connection with the Business Combination and are as follows:

 

		For the Year Ended December 31,
														Percentage
		2023				2022				Change				change %
		US$				US$				US$				%
Share issued as consideration			67,641,500				-				67,641,500				nm
Net assets of SPAC			(590,526	)			-				(590,526	)			nm
Revaluation of FPA			24,241,261				-				24,241,261				nm
Professional fees			1,680,198				981,701				698,497				71.2	%
Printing, courier, and others			94,891				-				94,891				nm
			93,067,324				981,701				92,085,623				>100	%

 

Total

Quantity

Price

Amount

Issuance of shares

6,764,150

10.00

67,641,500

 

NetLoss

 

Asa result of the foregoing, the Group recorded a net loss of approximately US$95.0 million for the year ended December 31, 2023, whichincreased by approximately US$92.6 million or >100% as compared with a net loss of approximately US$2.4 million for the year endedDecember 31, 2022.

 

 

Non-GAAPMeasures

 

EBITDA

 

TheGroup defines EBITDA as net income (loss) before interest, taxes and depreciation and amortization.

 

Forthe years ended December 31, 2023 and 2022, EBITDA consisted of the following:

 

		For the Year Ended December 31,
														Percentage
		2023				2022				Change				change %
		US$				US$				US$				%
Loss before income tax			(94,846,338	)			(2,383,812	)			(92,462,526	)			>100	%
Finance expense			388,717				246,359				142,358				57.8	%
Depreciation and amortization			2,354,839				2,300,252				54,587				2.4	%
EBITDA			(92,102,782	)			162,799				(92,265,581	)			>100	%
add : non-recurring expenses			93,067,324				981,701				92,085,623				>100	%