F-1/A: FBS Global Limited Files Amendment No. 9 to Form F-1 for Proposed IPO and Nasdaq Listing

FBS Global Limited has filed Amendment No. 9 to its Form F-1 registration statement with the SEC, outlining details for its initial public offering and subsequent listing on the Nasdaq Capital Market.

Summary

• FBS Global Limited, a Cayman Islands-based holding company, has filed Amendment No. 9 to its Form F-1 registration statement.
• The document outlines the details of the company's proposed initial public offering (IPO) and listing on the Nasdaq Capital Market under the ticker symbol FBGL.
• The offering includes 1,875,000 Ordinary Shares offered by the company and 1,884,337 Ordinary Shares offered for potential resale by Resale Prospectus Shareholders.
• The anticipated initial public offering price is between US$[4.00] and US$[5.00] per Ordinary Share.
• Kelvin Ang, the controlling shareholder, will own approximately 71.4% of the company's total issued and outstanding Ordinary Shares after the offering.
• The company intends to use the net proceeds from the offering for expansion, research and development, M&A projects, and working capital.
• The document also details various risk factors associated with investing in the company's Ordinary Shares, including dependence on the construction industry in Singapore, reliance on major customers, and project execution risks.

Sentiment

Score: 5

Explanation: The document presents a mixed sentiment. While it highlights the company's strengths and growth strategies, it also acknowledges significant risks and a recent decline in profitability. The IPO itself is a positive step, but the identified weaknesses and external factors temper the overall outlook.

Positives

• The company has an established track record of over 20 years in interior design and build projects.
• The company is committed to sustainable development and corporate social responsibility through the environmental focus of its building materials.
• The company has obtained various certifications and gradings, including ISO 9001:2015, ISO 14001:2015, and ISO 45001:2018, reflecting its quality and safety management standards.

Negatives

• The company is dependent on the construction industry in Singapore, which is subject to cyclical fluctuations.
• The company relies on a few major customers, and a decrease in projects from them could affect financial performance.
• The company is subject to risks of default or delays in the collection of trade receivables.
• The company is dependent on foreign workers and may face debarment from hiring or increased labor costs.
• The company operates in a highly competitive industry.
• The company has identified material weaknesses in its internal control over financial reporting.

Risks

• Dependence on the construction industry in Singapore and other countries which the company operates in.
• Reliance on major customers and potential impact from decreased projects secured from them.
• Risks of default or delays in the collection of trade receivables.
• Reliance on renewal of existing registrations and licenses.
• Dependence on foreign workers and potential labor shortages or increased labor costs.
• Project execution risks, many of which are beyond the company's control.
• Dependence on suppliers and subcontractors to fulfill their contractual obligations.
• Risks associated with the quality of the company's works.
• Short-term revenue and profitability may not be indicative of long-term results.
• Operation in a highly competitive industry.
• Lack of effective internal controls over financial reporting.
• Chief Executive Officer will continue to own a substantial number of the company's ordinary shares and, as a result, may be able to exercise control over the company, including the outcome of shareholder votes.
• Compliance with and changes in regulatory requirements and codes.
• Cash flows may fluctuate due to the payment practice applied to projects or foreign currency exchange rates.
• Customers require the company to arrange performance bonds or bankers guarantee to secure due performance of contracts.
• The company may be subject to litigation, claims or other disputes.
• The company may not be able to implement future plans and strategies successfully.
• Insurance coverage may not be sufficient to cover all losses or potential claims and insurance premiums may increase.
• The company is affected by the macroeconomic, political, social and other factors beyond the company's control in Singapore and other countries which the company operates in.
• The company is exposed to risks of infringement of intellectual property rights and the unauthorized use of trademarks by third parties.
• Geopolitical conditions, including direct or indirect acts of war or terrorism, could have an adverse effect on operations and financial results.
• Financial condition and results of operations may be adversely affected by the recurrence of a global pandemic.
• Certain market opportunity data, forecasts, third-party website data and imagery contained in this prospectus were obtained from third-party sources and were not independently verified by the company.
• An active trading market for the company's Ordinary Shares may not be established or, if established, may not continue and the trading price for the company's Ordinary Shares may fluctuate significantly.
• The company may not maintain the listing of Ordinary Shares on the Nasdaq which could limit investors ability to make transactions in Ordinary Shares and subject the company to additional trading restrictions.
• The initial public offering price for Ordinary Shares may not be indicative of prices that will prevail in the trading market and such market prices may be volatile.
• The trading price of Ordinary Shares may be subject to rapid and substantial volatility, which could make it difficult for prospective investors to assess the rapidly changing value of Ordinary Shares and result in substantial losses to investors.
• If securities or industry analysts do not publish research or reports about the company's business, or if they adversely change their recommendations regarding Ordinary Shares, the market price for Ordinary Shares and trading volume could decline.
• The sale or availability for sale of substantial amounts of Ordinary Shares, including the Ordinary Shares that are being registered concurrently for resale in the Resale Prospectus, could adversely affect their market price.
• Short selling may drive down the market price of Ordinary Shares.
• Because the company does not expect to declare dividends in the foreseeable future, you must rely on price appreciation of Ordinary Shares for a return on your investment.
• Because the public offering price per share is substantially higher than the company's net tangible book value per share, you will experience immediate and substantial dilution.
• The company's Amended Articles of Association contains anti-takeover provisions that could discourage a third party from acquiring the company and adversely affect the rights of holders of Ordinary Shares.
• You must rely on the judgment of the company's management as to the uses of the net proceeds from this offering, and such uses may not produce income or increase the share price.
• If the company is classified as a passive foreign investment company, United States taxpayers who own the company's securities may have adverse United States federal income tax consequences.
• The company's controlling shareholder has substantial influence over the Company. His interests may not be aligned with the interests of other shareholders, and it could prevent or cause a change of control or other transactions.
• As a company incorporated in the Cayman Islands, the company is permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from Nasdaq corporate governance listing standards. In the event the company rely on these exemptions, these practices may afford less protection to shareholders than they would enjoy if the company complied fully with Nasdaq corporate governance listing standards.
• You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because the company is incorporated under Cayman Islands law.
• Certain judgments obtained against the company by shareholders may not be enforceable.
• The company is an emerging growth company within the meaning of the Securities Act and may take advantage of certain reduced reporting requirements.
• The company is a foreign private issuer within the meaning of the Exchange Act, and as such the company is exempt from certain provisions applicable to United States domestic public companies.
• The company is a controlled company within the meaning of the Nasdaq Stock Market Rules and, as a result, may rely on exemptions from certain corporate governance requirements that provide protection to shareholders of other companies.
• The company may lose foreign private issuer status in the future, which could result in significant additional costs and expenses to the company.
• Economic substance legislation of the Cayman Islands may adversely impact the company or operations.
• The company will incur significantly increased costs and devote substantial management time as a result of the listing of Ordinary Shares on the Nasdaq.
• Recent joint statement by the SEC and the PCAOB, rule changes by Nasdaq, and the Holding Foreign Company Accounting Act (HFCAA) all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties to the company's continued listing or future offerings of securities in the U.S.

Future Outlook

The company's business growth strategy is to provide green and sustainable building solutions through offering a full spectrum of environmentally-focused services, products and project management for its customers building projects in Singapore. The company believes it is well positioned to capitalize on the prevailing trend towards sustainability and innovations in the buildings industry, including decarbonization, healthy buildings/indoor environmental quality and smart buildings.

Management Comments

• The company is committed to sustainable development and corporate social responsibility through the environmental focus of its building materials.
• The company strives to use new technological equipment including a pole gun for ceiling installations, allowing it to minimize the use of scaffolding in congested areas with mechanical and engineering (or M&E) services.
• The company also works with manufacturers and suppliers to develop new materials such as an impact wall for toilets and a shaft wall for core areas of an elevator shaft.

Industry Context

The document notes that green buildings are becoming increasingly popular globally, including in Singapore, where both consumer demand and government regulations are pushing for more sustainable building projects by 2030. The company believes that sustainability in both business and environment is the only way to move forward, and it intends to lead the way in developing and implementing more sustainable building materials and practices.

Comparison to Industry Standards

• The company has obtained various certifications and gradings which it believes place it in an advantageous position when customers review its tender proposal or quotation.
• The company has obtained the following International Organization for Standardization qualifications: ISO 9001:2015, which reflects its quality management standards, and ISO 14001:2015 and ISO 45001: 2018, which reflect its environmental, occupational and workplace safety management systems.
• The company has also obtained the highest level bizSAFE Level Star certification, reflecting its workplace safety practices.
• The company is also typically subject to the national standards under the Construction Quality Assessment System (CONQUAS) set forth by the Building and Construction Authority in Singapore (BCA) for its projects that fall under architectural works, with the quality standards being assessed based on the finishing, alignment and evenness, jointing and no visible defect and delamination.
• The company completed the ceiling works for a private residential development, Jewel @ Buangkok in 2014, and this project was awarded the CONQUAS Star rating in recognition of the excellence of the workmanship.

Legal Proceedings

• In August 2021, Newspaper Seng Pte Ltd filed a claim against the company for an amount of approximately $2.2 million.
• The case was dismissed on February 16, 2023 and judgment was entered in favor of the company's Counterclaim.
• On March 10, 2023, Newspaper Seng Pte Ltd filed an application to set aside the dismissal order.
• Newspaper Seng Pte Ltd decided to withdraw the suit claims on November 30, 2023.
• The Court directed The company's lawyer to update the Plaintiffs solicitors to attend to the next Pre-Trial Conference (PTC), which took place on January 04, 2024.
• Mr. Laus solicitors discharged themselves of their representation and Mr. Lau indicated his intent to represent Newspaper Seng in the proceeding; however, the Court said this was impermissible.
• If Mr. Lau does not retain counsel, the company's striking out application to close the matter is expected to be granted.
• If Newspaper Seng retains counsel and intends to contest the striking out application, their reply affidavit is due by 15 February 2024 with a hearing to take place on February 28, 2024, regardless of whether or not counsel has been retained by Newspaper Seng at this time.
• In the meantime, legal counsel for the Company is in discussion with Mr. Lau to withdraw the suit against the Company.
• We expect the matter to be resolved favorably to the Company either through agreement or determination by the court in the first quarter of 2024.

Related Party Transactions

• The company has accounts receivable from Fine Build-Ninefold Group Construction Company (Private) Limited, a joint venture.
• The company has other receivables from 54 Pandan Road Pte Ltd, a related company with Mr. Kelvin Ang as a director.
• The company has an outstanding loan from Kelvin Ang.
• The company has supply construction material to Fine Build-Ninefold Group Construction Company (Private) Limited.
• The company has consultation fee from Fastfixs Systems Pte Ltd.
• The company guarantee a 5 year commercial loan SGD 200,000 from UOB Bank to Fastfixs Systems Pte Ltd, a related party.
• The company also guaranteed a SGD 7,400,000 10 year commercial loan on October 31, 2022, in the form of letter of credit from UOB Bank to 54 Pandan Road Pte Ltd, a related party.

Stakeholder Impact

• Shareholders face risks related to market volatility, potential dilution, and the controlling shareholder's influence.
• Employees face risks related to workplace safety, potential labor shortages, and compliance with employment laws.
• Customers may be affected by the company's ability to secure new projects and maintain quality of work.
• Suppliers and subcontractors may be affected by the company's ability to fulfill its contractual obligations and manage costs.

Next Steps

• The company aims to complete its initial public offering and list its Ordinary Shares on the Nasdaq Capital Market.
• The company intends to use the net proceeds from the offering for expansion, research and development, M&A projects, and working capital.
• The company will continue to monitor and manage its risk factors, including dependence on the construction industry and reliance on major customers.

Key Dates

Keywords

IPO, Nasdaq, Ordinary Shares, FBS Global, Initial Public Offering, FBGL, Resale Prospectus Shareholders, Construction, Singapore, Listing, SEC, Amendment, Form F-1