F-1/A: TechCreate Group IPO: ASEAN RTP & Cybersecurity Focus

TechCreate Group Ltd., a Singapore-headquartered technology consultancy, is launching an initial public offering of 2,550,000 Class A Ordinary Shares on the NYSE American, aiming to expand its real-time payment and cybersecurity solutions in Southeast Asia and globally.

Summary

• TechCreate Group Ltd. is offering 2,550,000 Class A Ordinary Shares in its initial public offering, with an anticipated price range of US$4.00 to US$5.00 per share, and intends to list on the NYSE American under the symbol TCGL.
• The company is a technology consultancy and advanced software solutions provider, headquartered in Singapore, specializing in digital payment, cybersecurity, and IT infrastructure services, with its flagship product being the Artificial Intelligence Real-Time Engine (AI-RTE).
• Revenue increased by 8% from S$2,879,645 in 2023 to S$3,104,324 (US$2,298,818) in 2024.
• Net loss significantly increased by 420% from S$194,795 in 2023 to S$1,012,826 (US$750,019) in 2024.
• Gross profit decreased by 37% from S$1,418,867 in 2023 to S$893,816 (US$661,890) in 2024, with the gross profit margin declining from 49% to 29%.
• Operating expenses increased by 20% from S$1,465,930 in 2023 to S$1,762,839 (US$1,305,420) in 2024.
• Net cash used in operating activities was S$1,286,364 (US$952,580) in 2024, a significant shift from S$141,242 generated in 2023.
• The estimated net proceeds from the offering, approximately US$11.5 million (or US$13.2 million if the over-allotment option is fully exercised), will be allocated 25% to sales and marketing, 35% to research and development, and 30% to potential mergers and acquisitions.
• The company has identified a material weakness in internal control over financial reporting due to a lack of sufficient financial reporting and accounting personnel with appropriate U.S. GAAP and SEC reporting knowledge.
• Mr. Lim Heng Hai, the Chairman and CEO, will beneficially own approximately 86.1% of the total voting power post-offering due to a dual-class share structure.

Sentiment

Score: 4

Explanation: While the company operates in high-growth markets with innovative technology and clear strategic plans, the significant increase in net loss, decrease in gross profit margin, and negative operating cash flow in 2024, coupled with identified material weaknesses in internal controls and high dependence on key customers/suppliers, present substantial financial and operational challenges that temper the positive outlook. The IPO proceeds are crucial for future growth but do not negate the current financial performance issues.

Positives

• Possesses deep expertise and an established track record in Real-Time Payments (RTP) within Southeast Asia.
• Proprietary AI-RTE offers the potential for faster, more secure, and more efficient RTP integrations compared to competitors.
• Operates in a rapidly growing RTP market in Southeast Asia, projected to grow at a CAGR of 22.3% to USD 9.4 billion by 2028.
• Demonstrates agility and efficiency in adapting to industry changes due to its smaller size and focused specialization.
• Maintains strong partnerships and client relationships, positioning itself as a 'one-stop-shop' for digital solutions.
• Offers competitively priced solutions by leveraging low operating costs and pre-built solutions tailored to specific RTP systems.
• Holds a leadership position in ISO 20022 implementation, representing Singapore in key groups and drafting message definitions, which is crucial for global financial messaging standards.
• Successfully completed an internal reorganization for the purpose of listing on the NYSE American.
• Identified the United States as a target market for expansion, particularly due to the Federal Reserve's upcoming ISO 20022 transition on March 10, 2025, and has passed the Federal Reserve's MyStandards criteria.
• Identified South Korea as another target market for cybersecurity solutions, actively collaborating with leading US and European providers.
• Committed to investing in research and development to enhance the AI-RTE with features like real-time fraud detection, predictive analytics, and data privacy enhancements.
• Plans to capitalize on open banking by developing solutions that leverage APIs within existing financial institution ecosystems.
• Received awards and accreditations, including 'Excellent Bank Payment Gateway Provider' and 'Cyber Security Education Innovation of the Year' in 2023.
• Management believes the company has sufficient working capital for at least the next 12 months, considering cash on hand, operational cash flows, and estimated IPO proceeds.

Negatives

• Net loss increased significantly by 420% from S$194,795 in 2023 to S$1,012,826 in 2024.
• Gross profit decreased by 37% from S$1,418,867 in 2023 to S$893,816 in 2024, and gross profit margin declined from 49% to 29%.
• Cost of revenue increased by 51% from S$1,460,778 in 2023 to S$2,210,508 in 2024, outpacing revenue growth.
• Net cash used in operating activities was S$1,286,364 in 2024, a substantial negative shift from S$141,242 generated in 2023.
• Dependence on a few major customers (Customer A, B, C, D accounted for 34%, 23%, 19%, and 11% of 2024 revenue respectively) poses a risk if these relationships are lost or reduced.
• Dependence on a few major suppliers (Supplier A and D accounted for 12% and 13% of 2024 cost of revenue respectively) creates supply chain risk.
• Overdue trade receivables amounted to approximately S$191,766, representing 7% of current assets as of December 31, 2024.
• Management team has limited experience managing a public company, which could lead to challenges in regulatory compliance and investor relations.
• A material weakness in internal control over financial reporting was identified, specifically a lack of sufficient financial reporting and accounting personnel with U.S. GAAP and SEC reporting knowledge.
• The dual-class voting structure concentrates voting control with Class B Ordinary Shares (Mr. Lim Heng Hai will exercise approximately 86.1% of total voting power post-IPO), limiting the influence of Class A shareholders.
• No present plan to pay cash dividends on Class A Ordinary Shares in the foreseeable future, as the company intends to retain earnings for business expansion.
• New investors in the IPO will experience significant dilution in net tangible book value, estimated at US$4.03 per Class A Ordinary Share.
• Reliance on artificial intelligence (AI) in products and services may result in operational challenges, legal liability, reputational concerns, and competitive risks due to its developing nature and evolving regulations.
• Reliance on third-party cloud service providers (e.g., Amazon Web Services) exposes the company to risks of service outages, security breaches, price increases, and regulatory scrutiny.
• The use of open-source software could lead to costly litigation or require re-engineering of platforms and services.
• Business is dependent on securing new project-based contracts, and there is no assurance of securing contracts of similar value or profit margins.
• Clients may delay settlement of bills, which could adversely impact business, financial condition, and results of operations.
• Projects may encounter cost overruns or delays, potentially leading to claims, liabilities, and disputes with customers.
• The ability to sell solutions is dependent on the quality of technical support services, and failure to offer high-quality support could harm customer satisfaction and sales.
• Current research and development efforts may not produce successful solutions that result in significant revenue or cost savings in the near future.
• Future international expansion could subject the company to additional costs and risks, including local regulatory, currency, political instability, and foreign ownership restrictions.
• Acquisitions or strategic investments may not be successful or yield the intended benefits and could disrupt business and harm financial condition.
• There is a perceived lack of sophistication in the regulatory landscape and customer awareness regarding cybersecurity service provider evaluation criteria in Brunei, Cambodia, and Malaysia.
• Insurance coverage may not adequately cover all claims, and the company may incur costs or losses from uninsured events.
• As a foreign private issuer, the company is exempt from certain provisions applicable to U.S. domestic public companies, which may provide less information and protection to investors.
• The market price and trading volume of Class A Ordinary Shares may be volatile and could decline significantly following the offering.
• Sales of substantial amounts of Class A Ordinary Shares in the public markets, or the perception of such sales, could reduce the share price and dilute voting power.
• Failure to meet the continued listing requirements of the NYSE American could result in a delisting of Class A Ordinary Shares.
• Management will have broad discretion in the application of net proceeds from the offering, which may not align with shareholder approval.
• Techniques employed by short sellers may drive down the market price of the listed securities.
• Shareholders may face difficulties in protecting their interests, as Cayman Islands law provides substantially less protection compared to U.S. laws.

Risks

• Economic conditions and ongoing geopolitical uncertainties and conflicts could materially and adversely affect business, financial condition, and results of operations.
• Dependence on major customers for a substantial portion of revenue; loss or significant reduction in services to one or more major customers could negatively impact revenue and operating results.
• Dependence on major suppliers to support the provision of services and products; inability to establish and maintain an uninterrupted supply chain could negatively impact revenue and operating results.
• Failures, defects, errors, or vulnerabilities in systems could adversely affect business, financial condition, and results of operations.
• Reliance on artificial intelligence (AI) in products and services may result in operational challenges, legal liability, reputational concerns, and competitive risks.
• Actual or perceived failure to protect information provided by users and commercial partners, or other confidential information, and to comply with relevant laws and regulations could adversely affect business.
• Reliance on third parties (e.g., Amazon Web Services) to deliver services to users on platforms; any disruption or interference could adversely affect business.
• Failure to accurately predict, prepare for, and respond promptly to rapidly evolving technological and market developments and successfully manage product introductions in the security market could harm competitive position.
• Business is dependent on the level of awareness of cybersecurity threats; a decline in perceived threats could adversely affect customer acquisition.
• Increasing focus on cloud-based services presents execution, competitive, and compliance risks; revenue growth may be adversely affected by the ability to develop and generate sufficient usage of such services.
• Competition in a highly competitive and rapidly evolving market with a number of other companies, and the possibility of new entrants disrupting the market.
• Business is dependent on project-based contracts for payment and cybersecurity solutions; inability to secure new contracts.
• Business is subject to legal and regulatory risks that could have a material and adverse impact on business, financial condition, and results of operations.
• Business depends on a strong reputation and brand; any failure to maintain, protect, and enhance the brand could have a material adverse effect.
• The obligation to disclose information publicly may put the company at a disadvantage to competitors that are private companies.
• As a foreign private issuer, the company is exempt from certain provisions applicable to U.S. domestic public companies, potentially making it more difficult for investors to evaluate performance and prospects.
• Operating results may vary significantly from period to period and be unpredictable, which could cause the market price of Class A Ordinary Shares to decline.
• Difficulties in protecting interests as a shareholder, as Cayman Islands law provides substantially less protection compared to U.S. laws, and it may be difficult to enforce judgments obtained in U.S. courts.
• International operations subject the company to increased risks, including local regulatory, licensing, reporting, and legal obligations, currency fluctuations, and political instability.
• Exposure to fluctuations in operations in foreign jurisdictions, including changes in currency exchange rates and potential restrictions on foreign ownership.
• Developments in the social, political, regulatory, and economic environment in Brunei, Cambodia, Malaysia, and Singapore may have a material adverse impact.
• Foreign exchange controls in Malaysia may affect the repatriation of dividends or distributions from overseas businesses.
• Lack of sophistication of the regulatory landscape and customer awareness on the evaluation criteria for selection of cybersecurity service providers in Brunei, Cambodia, and Malaysia.
• Incurrence of additional costs as a result of becoming a public company, which could negatively impact net income and liquidity.
• Dual-class voting structure concentrates voting control to holders of Class B Ordinary Shares, limiting or precluding the ability of Class A shareholders to influence corporate matters.
• As an emerging growth company, reduced reporting requirements may make Class A Ordinary Shares less attractive to investors.
• May be deemed a passive foreign investment company (PFIC) for U.S. federal income tax purposes, which could result in adverse U.S. federal income tax consequences to U.S. holders.
• The market price and trading volume of Class A Ordinary Shares may be volatile and could decline significantly following this offering.
• If securities or industry analysts do not publish research, publish inaccurate or unfavorable research, or cease publishing research, share price and trading volume could decline.
• Actual operating results may differ significantly from guidance provided.
• Sales of substantial amounts of Class A Ordinary Shares in the public markets, or the perception that they might occur, could reduce the price and dilute voting power.
• Failure to meet the continued listing requirements of the NYSE American could result in a delisting of Class A Ordinary Shares.
• Management may allocate the net proceeds from this offering in ways that shareholders may not approve.
• Techniques employed by short sellers may drive down the market price of listed securities.
• Failure to maintain proper and effective internal controls over financial reporting may adversely affect investor confidence.
• Reporting obligations as a public company may place a significant strain on management, resources, and systems.
• If Class A Ordinary Shares are not eligible for deposit and clearing within the facilities of the Depository Trust Company (DTC), transactions may be disrupted.
• Negative publicity relating to directors, senior management, or controlling shareholders may adversely affect the market price.
• Board may decline to register transfers of Class A Ordinary Shares in certain circumstances.
• Shareholders may be unable to present proposals before annual general meetings or extraordinary general meetings not called by shareholders.
• May not be able to, or may decide not to, pay dividends or repurchase shares at a level anticipated by shareholders.
• Undetermined specific use for a portion of the net proceeds from this offering.

Future Outlook

The company aspires to be the preeminent Real-Time Payment (RTP) solutions provider in Southeast Asia, leveraging its deep regional expertise, proprietary AI-RTE, and strategic partnerships. It plans geographic expansion into the United States, targeting the ISO 20022 transition, and South Korea, focusing on cybersecurity needs. Significant investment in research and development is planned to enhance the AI-RTE with features like real-time fraud detection, predictive analytics, and data privacy, and to develop new regulatory compliance and data analytics solutions. The company also intends to capitalize on open banking opportunities and pursue organic growth, strategic alliances, and acquisitions to expand its market share and product portfolio. The goal is to cultivate strong client relationships to build recurring revenue streams and contribute to industry transformation by redefining operational efficiency and innovation in the digital economy.

Management Comments

• Our mission is to redefine the digital payments landscape by establishing TechCreate as the unparalleled leader in RTP solutions across ASEAN.
• We believe our proprietary AI-RTE has the potential to offer faster, more secure, and more efficient RTP integrations compared to competitors.
• We believe our growth is built on disciplined expansion and reinvestment into innovation, sustained by our profitability and commitment to excellence.
• We believe TechCreate is more than a technology company, rather it represents a vision for a better-connected, more secure, and innovative future.
• We believe this offering represents a pivotal milestone in TechCreate’s journey, providing the resources to scale our operations, expand our geographic footprint, and deepen our technological capabilities.
• We believe TechCreate is leading the charge [in the evolving payments industry].
• We believe our solutions empower financial institutions and businesses to navigate complexities with confidence, driving meaningful transformation across the global financial ecosystem.
• We aim to maintain our position in this industry for the long term, because we are committed to building a legacy of innovation, trust, and impact.
• We believe our Groups smaller size and focused specialization, relative to established industry players... give us the ability to quickly adapt to change in the industry space and make and implement important decisions at a faster pace.
• We believe that our low operating costs and specialization allow us to maintain competitive pricing as savings are passed on to clients through competitive pricing.
• We believe that our Group has sufficient working capital for our requirements for at least the next 12 months from December 31, 2024, in absence of unforeseen circumstances, taking into account the financial resources presently available to us, including cash and cash equivalents on hand, cash flows from our operations and the estimated net proceeds from this Offering.

Industry Context

The company operates within the rapidly evolving Southeast Asian transaction banking payment middleware market, which is projected to grow at a remarkable CAGR of 22.3% to USD 9.4 billion by 2028. This growth is driven by increasing complexity in transaction banking, digital transformation, demand for real-time payments, and a focus on customer experience. The global adoption of ISO 20022, with SWIFT's migration in March 2023 and the Federal Reserve's planned adoption for Fedwire Funds Service on March 10, 2025, presents a significant opportunity for companies with expertise in this standard. The rising complexity of financial systems also fuels demand for robust cybersecurity solutions. The global digital payments market, particularly via POS QR Code terminals, is expanding rapidly in Southeast Asia, expected to reach USD 13.3 trillion by 2028. The company faces competition from established global players like FIS, Finastra, Vocalink, and ACI Worldwide Inc., as well as regional players such as NETS and PayNet.

Comparison to Industry Standards

• The company's proprietary AI-RTE is positioned as a unified, AI-driven framework that consolidates speed, scalability, and security, differentiating it from competitors who often focus on modular solutions.
• Its agility and efficiency in adapting to market changes are highlighted as a competitive strength when compared to larger, more established industry players like Fidelity National Information Services, Inc. (FIS), Finastra Group Holdings Limited, Vocalink Holdings Limited, and ACI Worldwide Inc.
• The company's leadership in ISO 20022 implementation is demonstrated by its representation of Singapore in the Registration Management and Payment Standard Evaluation Groups and its role in drafting Singapore's ISO 20022 interbank clearing and settlement message definition, positioning it as a trusted partner for financial institutions navigating this global standard transformation.
• The company has successfully passed the Federal Reserve's MyStandards required criteria and has been appointed a Senior Relationship Manager from the Federal Reserve, indicating its readiness and compliance for the US market's ISO 20022 transition.
• Its solutions are designed to integrate seamlessly with a variety of core banking systems, including industry leaders like Finacle, Temenos, Flexcube, and Silverlake, which is a critical capability for serving diverse financial institutions.
• The company's cybersecurity solutions, strengthened by the acquisition of Diginius, aim to provide advanced capabilities such as real-time threat detection, multi-layered protection, and adaptive defenses, addressing the increasing threats faced by financial institutions.
• The E-Invoicing platform holds the European Union's PEPPOL certification and integrates with the Inland Revenue Authority of Singapore (IRAS) and the Inland Revenue Board of Malaysia (IRBM) guidelines, ensuring compliance with international and regional tax and invoicing standards.

Management Changes

Corporate Governance

Legal Proceedings

• No pending or threatened claims and litigation as of December 31, 2024, and through the date the consolidated financial statements were available to be issued.
• Not a party to any legal or governmental proceedings (including any pending or known to be contemplated) which may have a material adverse effect on business, financial condition, or results of operations in Singapore.
• Not aware of any legal proceedings of which the company is a party outside of Singapore.

Related Party Transactions

• Rental income of S$14,400 in 2023 and S$14,440 in 2024 from Orange Pay Pte. Ltd., a company wholly owned by Mr. Lim Heng Hai (Chairman and CEO).
• Sale of products to Gridhut Automation Pte Ltd (65% owned by Mr. Lim Heng Hai and 7.5% by Mr. Ronald Vong Chin Hua) amounted to S$11,031 in 2023, with no sales in 2024.
• Sub-contractor charges from TechCreate Solutions Sdn Bhd (Mr. Ronald Vong Chin Hua is shareholder/director, Mr. Lim Heng Hai is director) increased from S$223,755 in 2023 to S$515,007 in 2024.
• Sub-contractor charges from Orange Pay Pte. Ltd. amounted to S$154,000 in 2024 (none in 2023).
• Payments on behalf by Mr. Lim Heng Hai and Mr. Ronald Vong Chin Hua for company operating activities were S$36,770 in 2023 and S$21,285 in 2024.
• Payments on behalf of Orange Pay Pte. Ltd. (for AWS service charges) were S$48,579 in 2023 and S$45,718 in 2024.
• Working capital loans of S$500,000 and S$350,000 obtained in 2024 were jointly secured by Mr. Lim Heng Hai and Mr. Ronald Vong Chin Hua (directors and shareholders).

Stakeholder Impact

• Shareholders: New investors face significant dilution (US$4.03 per share). The dual-class voting structure concentrates control with existing Class B shareholders, potentially limiting the influence of Class A shareholders. No immediate plans for dividends. The stock price may be volatile post-IPO.
• Employees: The 2025 Share Incentive Plan aims to attract, retain, and motivate qualified employees by aligning their interests with company performance. Strategic recruitment of AI engineers and data scientists is a focus.
• Customers: Benefit from enhanced RTP solutions, cybersecurity, and digital transformation services, aiming for improved efficiency, security, and compliance. Risks include potential service disruptions from third-party providers and delays in project completion.
• Suppliers: The company's dependence on major suppliers for critical components (cloud services, software licenses) means any disruption could impact its ability to deliver services to customers.
• Creditors: The company has taken on working capital loans in 2024, jointly secured by directors, which increases its financial obligations.
• Regulatory Bodies: The company is subject to various laws and regulations across its operating jurisdictions (data protection, financial services, cybersecurity, anti-money laundering, labor, tax). Non-compliance could result in fines, penalties, or operational restrictions.

Next Steps

• Complete the initial public offering and list Class A Ordinary Shares on NYSE American under the symbol TCGL.
• Allocate 25% of net IPO proceeds to sales and marketing activities for business development and expansion.
• Allocate 35% of net IPO proceeds to research and development to enhance the proprietary AI-RTE and develop a comprehensive suite of RTP solutions.
• Allocate 30% of net IPO proceeds for potential mergers and acquisitions.
• Expand geographic footprint into the United States and Republic of Korea, leveraging ISO 20022 expertise and cybersecurity needs.
• Recruit experienced AI engineers, data scientists, and machine learning specialists to drive AI-RTE innovation.
• Invest in high-performance computing infrastructure and acquire high-quality data sets for training AI algorithms.
• Conduct regular security audits and pursue industry-recognized security certifications to ensure high-level security within the AI-RTE.
• Forge strategic alliances with disruptive FinTech players to expand the product portfolio and offer a comprehensive RTP ecosystem.
• Cultivate strong client relationships with a focus on recurring revenue streams through value-added services and ongoing support.
• Remediate the identified material weakness in internal control over financial reporting by hiring qualified personnel and implementing training programs.
• Monitor and manage relationships with major customers and suppliers to mitigate concentration risks.
• Evaluate and adapt to evolving regulatory landscapes in all operating jurisdictions.

Key Dates

Recommendation

The company operates in high-growth sectors (RTP, cybersecurity, digital transformation in Southeast Asia) and possesses proprietary AI-RTE technology, which are strong long-term drivers. Its strategic expansion plans into the US and South Korea, coupled with leadership in ISO 20022, indicate significant market opportunities. However, the substantial increase in net loss and decline in gross profit margin in 2024, along with negative operating cash flow, raise immediate financial concerns. The identified material weakness in internal controls and the concentrated voting power of the dual-class structure also present governance and operational risks. While the IPO proceeds will fund critical R&D and expansion, the current financial performance suggests a 'hold' recommendation until there is clear evidence of improved profitability and remediation of internal control issues. The high dilution for new investors and the inherent risks of an emerging growth company further support a cautious stance.

Keywords

Real-Time Payments, RTP, Cybersecurity, Digital Transformation, FinTech, AI-RTE, ASEAN, Singapore, IPO, NYSE American, ISO 20022, Cloud Services, IT Infrastructure, Financial Institutions, Technology Consultancy, Payment Solutions, Corporate Governance, SEC Filing, Emerging Growth Company, Foreign Private Issuer, Transaction Banking Middleware