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1、F-1 1 ea0215348-f1_agrozinc.htm REGISTRATION STATEMENTAs filed with the U.S.Securities and Exchange Commission on January 16,2025.Registration Statement No.333-UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549 Form F-1 REGISTRATION STATEMENTUNDERTHE SECURITIES ACT OF 1933 Agroz Inc
2、.(Exact name of registrant as specified in its charter)Cayman Islands 100 Not Applicable(State or other jurisdiction ofincorporation or organization)(Primary Standard IndustrialClassification Code Number)(IRS EmployerIdentification Number)No.2,Lorong Teknologi 3/4A,Taman Sains Selangor,Kota Damansar
3、a,47810 Petaling Jaya,Selangor,Malaysia+60 18-218 2300(Address,including zip code,and telephone number,including area code,of registrants principal executive offices)Sichenzia Ross Ference Carmel LLP1185 Avenue of the Americas31st Floor,New York,NY 10036Telephone:(212)930-9700(Name,address,including
4、 zip code,and telephone number,including area code,of agent for service)Copies to:Ross D.Carmel,Esq.Shane Wu,Esq.Sichenzia Ross Ference Carmel LLP1185 Avenue of the Americas,31st FloorNew York,NY 10036(212)930-9700 Jason T.Simon,Esq.Yangyang Jia,Esq.Greenberg Traurig,LLP1750 Tysons Boulevard,Suite 1
5、000McLean,VA 22102(703)749-1300 Approximate date of commencement of proposed sale to public:As soon as practicable after this registration statement becomes effective.If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under
6、the Securities Act,check thefollowing box.If this Form is filed to register additional securities for an offering pursuant to Rule 462(b)under the Securities Act,check the following box and list the SecuritiesAct registration statement number of the earlier effective registration statement for the s
7、ame offering.If this Form is a post-effective amendment filed pursuant to Rule 462(c)under the Securities Act,check the following box and list the Securities Act registrationstatement number of the earlier effective registration statement for the same offering.If this Form is a post-effective amendm
8、ent filed pursuant to Rule 462(d)under the Securities Act,check the following box and list the Securities Act registrationstatement number of the earlier effective registration statement for the same offering.Indicate by check mark whether the registrant is an emerging growth company as defined in R
9、ule 405 of the Securities Act:Emerging growth company If an emerging growth company that prepares its financial statements in accordance with accounting principles generally accepted in the United States(“U.S.GAAP”),indicate by check mark if the registrant has elected not to use the extended transit
10、ion period for complying with any new or revised financial accountingstandards provided pursuant to Section 7(a)(2)(B)of the Securities Act.The term“new or revised financial accounting standard”refers to any update issued by the Financial Accounting Standards Board to its Accounting StandardsCodific
11、ation after April 5,2012.The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall filea further amendment that specifically states that this registration statement shall thereafter become effective in ac
12、cordance with Section 8(a)of theSecurities Act or until the registration statement shall become effective on such date as the U.S.Securities and Exchange Commission,acting pursuant tosuch Section 8(a),may determine.The information in this prospectus is not complete and may be changed.We may not sell
13、 these securities until the registration statement filed with the U.S.Securities and Exchange Commission is effective.This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy thesesecurities in any jurisdiction where the offer or sale is not permitted.PRELIMI
14、NARY PROSPECTUS SUBJECT TO COMPLETION,DATED ,2025 Ordinary Shares Agroz Inc.This is the initial public offering of the ordinary shares(“Offering”),par value US$0.0001 per share(“Ordinary Shares”or“Shares”),of Agroz Inc.(“Agroz”),anexempted company with limited liability incorporated under the laws o
15、f the Cayman Islands,whose operating subsidiary is established in Malaysia.We are offering2,500,000 Ordinary Shares of Agroz.Prior to this Offering,there was no public market for the Ordinary Shares.The offering price of the Shares in this Offering is expected to be$4.00 per share.Wehave reserved th
16、e ticker symbol“AGRZ”for the Shares on The Nasdaq Stock Market(“Nasdaq”).Listing of the Shares on Nasdaq is a condition to this Offering.There is no assurance that our Nasdaq application will be approved,and if our application is not approved,this Offering will not be completed.Investing in the Shar
17、es is highly speculative and involves a high degree of risk.Before purchasing any Ordinary Shares,you should carefully read thediscussion of material risks of investing in the Shares in“Risk Factors”beginning on page 16 of this prospectus.We are an“emerging growth company”and a“foreign private issue
18、r”as defined under the federal securities laws and,as such,will be subject to reducedpublic company reporting requirements.See“Prospectus Summary Implications of Being an Emerging Growth Company and a Foreign PrivateIssuer”for additional information.Upon the completion of this Offering,the outstandi
19、ng shares of Agroz will consist of Ordinary Shares,assuming the Underwriters of this Offering(the“Underwriters”)do not exercise their Over-Allotment Option(as defined below),assuming the Over-Allotment Option is exercised in full.Per Share Total(2)IPO price$4.00$10,000,000 Underwriting discounts(1)a
20、nd commissions$0.28$700,000 Proceeds,before expenses,to us$3.72$9,300,000 (1)Represents underwriting discounts equal to seven percent(7.0%)per Ordinary Share.(2)Assumes that the Underwriters do not exercise any portion of their Over-Allotment Option.In addition,we have agreed to grant to the underwr
21、iters warrants topurchase Ordinary Shares equal to five percent(5%)of the total number of Ordinary Shares sold in the offering,exercisable upon the closing of the offering,ata price of 120%of the public offering price of the Ordinary Shares offered in this offering.The registration statement of whic
22、h this prospectus is a part coversthe Ordinary Shares issuable upon the exercise of the warrants.This table does not include a non-accountable expense allowance equal to one percent(1%)ofthe gross proceeds of this offering payable to the underwriters,or certain other expenses for which we have agree
23、d to reimburse the underwriters.See thesection titled“Underwriting”beginning on page 106 of this prospectus for additional disclosure regarding underwriter compensation and offering expenses.We expect our total cash expenses for this Offering(including cash expenses payable to our Underwriters for t
24、heir out-of-pocket expenses)to be approximatelyUS$1,449,560,exclusive of the above discounts and non-accountable expenses.In addition,we will pay additional items of value in connection with this Offeringthat are viewed by the Financial Industry Regulatory Authority(“FINRA”),as underwriting compensa
25、tion.These payments will further reduce proceeds available tous before expenses.See“Underwriting.Neither the United States Securities and Exchange Commission nor any state securities commission nor any other regulatory body has approved ordisapproved of these securities or determined if this prospec
26、tus is truthful or complete.Any representation to the contrary is a criminal offense.This Offering is being conducted on a firm commitment basis.The Underwriters are obligated to take and pay for all of the Ordinary Shares.We have granted theUnderwriters an option for a period of forty-five(45)days
27、after the closing date of this Offering(the“Closing Date”)to purchase up to 375,000 additional OrdinaryShares from us at the IPO price(or 15%of the Ordinary Shares sold in this Offering),less underwriting discounts to cover over-allotments,if any.If theUnderwriters exercise the Over-Allotment Option
28、(as defined below)in full,assuming the public offering price per Ordinary Share is US$4.00,the totalunderwriting discounts payable will be US$805,000,the non-accountable expenses payable will be$115,000 and the total proceeds to us,before expenses,will beUS$10,580,000.If we complete this Offering,ne
29、t proceeds will be delivered to us on the Closing Date.The Underwriters expect to deliver the Ordinary Shares against payment as set forth under“Underwriting”on or about ,2025.US Tiger Securities,Inc.The date of this prospectus is ,2025.TABLE OF CONTENTS PageProspectus Summary 1Risk Factors 16Specia
30、l Note Regarding Forward-Looking Statements 29Industry and Market Data 30Use of Proceeds 30Dividend Policy 31Capitalization 32Dilution 33Exchange Rate Information 34Corporate History and Structure 34Managements Discussion and Analysis of Financial Condition and Results of Operations 35Business 55Reg
31、ulations 70Management 72Related Party Transactions 81Principal Shareholders 85Description of Share Capital 86Shares Eligible for Future Sale 98Material Income Tax Considerations 101Underwriting 106Expenses Related to this Offering 112Legal Matters 112Experts 112Enforceability of Civil Liabilities 11
32、2Where You Can Find Additional Information 113Index to Consolidated Financial Statements F-1 We are responsible for the information contained in this prospectus and any free writing prospectus we prepare or authorize.We have not,and theUnderwriters have not,authorized anyone to provide you with diff
33、erent information,and we and the Underwriters take no responsibility for any otherinformation others may give you.We are not,and the Underwriters are not,making an offer to sell the Shares in any jurisdiction where the offer or sale isnot permitted.You should not assume that the information containe
34、d in this prospectus is accurate as of any date other than the date on the front cover ofthis prospectus,regardless of the time of delivery of this prospectus or the sale of any Ordinary Shares.For investors outside the United States:neither we nor the Underwriters have done anything that would perm
35、it this Offering or possession or distribution of thisprospectus in any jurisdiction,other than the United States,where action for that purpose is required.Persons outside the United States who come into possession ofthis prospectus must inform themselves about,and observe any restrictions relating
36、to,the offering of the Ordinary Shares and the distribution of this prospectusoutside the United States.Agroz is an exempted company with limited liability incorporated under the laws of the Cayman Islands and a majority of our outstanding Ordinary Shares areowned by non-U.S.residents.Under the rule
37、s of the SEC,we currently qualify for treatment as a“foreign private issuer.”As a foreign private issuer,we will not berequired to file periodic reports and financial statements with the SEC as frequently or as promptly as domestic registrants whose securities are registered under theExchange Act.Un
38、til and including ,2025(25 days after the date of this prospectus),all dealers that buy,sell or trade the Shares,whether or not participating in thisOffering,may be required to deliver a prospectus.This delivery requirement is in addition to the obligation of dealers to deliver a prospectus when act
39、ingas Underwriters and with respect to their unsold allotments or subscriptions.i DEFINED TERMS IN THIS PROSPECTUS Unless otherwise indicated or the context otherwise requires,all references in this prospectus to:“Agroz Group”refers to Agroz Group Sdn.Bhd.,a Malaysian private limited company,our ope
40、rating subsidiary;“AgTech”refers agricultural technology;“Board of Directors”refers to the Board of Directors of the Company;“CEA”refers to controlled environment agriculture;“Companies Act”refers to the Companies Act(as revised)of the Cayman Islands,as amended,supplemented or otherwise modified fro
41、m time to time;“Company,”“we,”“us,”and“Agroz”refers to Agroz Inc.,an exempted Company with limited liability incorporated under the laws of the Cayman Islandson August 8,2023,that will issue the Ordinary Shares being offered;“DGCL”refers to the Delaware General Corporation Law;“Exchange Act”refers t
42、o the U.S.Securities Exchange Act of 1934,as amended;“IFRS”refers to International Financial Reporting Standards;“IPO”refers to an initial public offering of securities;“Memorandum and Articles of Association”refers to the amended and restated memorandum and articles of association of our Company;ii
43、“MYR”refers to the Malaysian Ringgit;“Offering”means this initial public offering of Shares;“Ordinary Shares”or“Shares”refers to the ordinary shares of the Company,par value USD 0.0001;“Over-Allotment Option”refers to the Underwriters option to purchase up to 375,000 additional Ordinary Shares from
44、us in the IPO;“PCAOB”refers to Public Company Accounting Oversight Board;“Representative”refers to US Tiger Securities,Inc.,the representative of the Underwriters in this Offering;“RCPS”means redeemable convertible preferred shares of the Company;“SEC”or“Securities and Exchange Commission”means the
45、United States Securities and Exchange Commission;“Securities Act”refers to the U.S.Securities Act of 1933,as amended;“Underwriters”refers to the underwriters of this Offering;and“U.S.dollars,”“$,”“US$,”“USD”or“dollars”refers to United States dollar(s),the lawful currency of the United States.We have
46、 made rounding adjustments to some of the figures included in this prospectus.Accordingly,numerical figures shown as totals in some tables may not be anarithmetic aggregation of the figures that preceded them.Unless the context indicates otherwise,all information in this prospectus assumes no exerci
47、se by the Underwriters of their Over-Allotment Option.Agroz is a holding company with operations conducted in Malaysia through its operating subsidiary in Malaysia,Agroz Group.The reporting currency of AgrozGroup is MYR.This prospectus contains translations of MYR into U.S.dollars solely for the con
48、venience of the reader.Unless otherwise noted,all translationsfrom MYR to U.S.dollars and from U.S.dollars to MYR in this prospectus for the six months ended on June 30,2024 were calculated at the rate of US$1=MYR4.7157,representing the noon buying rate in The City of New York for cable transfers of
49、 MYR as certified for customs purposes by the Federal Reserve Bankof New York on the last trading day of June 28,2024.Translations of amounts from MYR into US$for the fiscal year ended December 31,2023 were calculated atthe rate of US$1=MYR4.5903,representing the noon buying rate in The City of New
50、York for cable transfers of MYR as certified for customs purposes by theFederal Reserve Bank of New York on the last trading day of December 31,2023.No representation is made that the MYR amount represents or could have been,or could be converted,realized or settled into US$at that rate,or at any ot
51、her rate.iii PROSPECTUS SUMMARY The following summary highlights information contained elsewhere in this prospectus and does not contain all of the information you should consider beforeinvesting in the Shares.You should read the entire prospectus carefully,including“Risk Factors,”“Managements Discu
52、ssion and Analysis of FinancialCondition and Results of Operations,”and our consolidated financial statements and the related notes thereto,in each case included in this prospectus.Youshould carefully consider,among other things,the matters discussed in the section of this prospectus titled“Business
53、”before making an investment decision.Unless the context otherwise requires,all references to“Agroz,”“we,”“us,”“our,”the“Company,”and similar designations refer to Agroz Inc.,an exemptedcompany with limited liability incorporated under the laws of the Cayman Islands.Our Mission Our mission is to imp
54、rove food safety,food security,and sustainability for society by creating a reliable,accessible food supply through our agriculturaltechnology(hereinafter sometimes referred to as“AgTech”)and vertical farming(synonymous with controlled environment agriculture and hereinaftersometimes referred to as“
55、CEA”)methods.Our Company Agroz is a fully vertically integrated agricultural technology company applying technology solutions,innovative business models,processes,and systems todesign,build,manage,and operate indoor CEA vertical farms.We also operate CEA vertical farms in local communities to grow a
56、nd deliver clean,pesticidefree,fresh and nutritious rich vegetables directly to consumers and businesses,and to educate the public on how our vegetables are grown.Revenue Model We primarily derive our revenue from:(1)designing and/or constructing indoor CEA vertical farms;(2)operating and managing i
57、ndoor CEA vertical farms;(3)selling CEA vertical farms,and(4)selling fresh produce.We offer a comprehensive set of farm solutions to our clients.We work with clients to set up CEA vertical farms,starting with the design phase,and continuinginto the construction and implementation phrase.We build the
58、 structural framework for the CEA vertical farms,install their interior components,and integratethe Agroz OS(as defined below)which is essential to the operation of the CEA vertical farms we design and/or construct.After constructing the CEA verticalfarms,we assist clients with operation and managem
59、ent as needed.1.Designing and/or Constructing Indoor Vertical Farms Our goal is to create efficient,sustainable,and environmentally controlled vertical farms which maximize crop yield and crop quality and allow for precisemanagement of temperature,humidity,light and nutrients.We design and/or constr
60、uct indoor CEA vertical farms for our clients according to their specific needs.This involves planning each CEA vertical farms layout,designing its infrastructure,building the farms structural framework,setting up equipment,and implementing our Agroz Farm Operating System(“Agroz OS”)within the farm.
61、The Agroz OS,at its most current stage of development,integrates certain hardware and software solutions detailed below.Through Agroz OS,we aim to improve productivity,boost yield,and improve the quality of produce generated within CEA vertical farms.Agroz OS is currently comprised of digitally auto
62、mated hardware systems capable of:(i)managing various environmental conditions within the CEA verticalfarms and water quality and volume,(ii)providing irrigation and nutrient fertigation;(iii)providing light to crops;(iv)managing energy use;and(v)collectingdata to enable management of temperature an
63、d lighting within the farms,as well as nutrient provision,irrigation and fertigation;and software solutions whichenable email and communication systems for the organization of the farm,supported by Microsoft Azure Cloud and Microsoft Azure AI.We envision that at a more advanced developmental stage,A
64、groz OS will consist of:(i)an AI agent system,which when fully deployed can undertake complexmulti-step autonomous actions within vertical farms and result in vertical farms which can be independently and automatically operated;and software solutionswhich enable:(ii)tracking of every aspect of the v
65、ertical farms business activities through our proprietary Agroz ERP and(iii)financial accounting andbookkeeping,supported by Intuit Quickbooks software solutions.We expect that these software solutions will be fully integrated into Agroz OS in 2025.As of the date of this prospectus,we have only impl
66、emented in Agroz OS(i)the above digitally automated hardware systems for Agroz OS and(ii)software solutions enabling email and communication systems for farm organization.The software solutions mentioned in the preceding sentence aresupported by Microsoft Azure and Microsoft Azure AI,which solutions
67、 are possible pursuant to being Microsoft ISV and Microsoft AI Cloud Partner under theMicrosoft Publisher Agreement and Microsoft AI Cloud Partner Program Agreement filed herein as Exhibits 10.7 and 10.8,respectively.For a more complete description of the types of hardware and software solutions in
68、Agroz OS,see“Products and Services”below.2.Operating and Managing Indoor CEA Vertical Farms Following the successful design and/or construction of CEA vertical farms,our clients may also receive,at their option,farm operation and managementservices.The services we offer in this respect include the o
69、verseeing of day-to-day CEA vertical farm operations and performing regular maintenance of ourclients CEA vertical farm systems,using all of the intellectual property we have developed,including Agroz OS and the standard operating proceduresupporting CEA vertical farm operations.We began generating
70、revenue from the operation and management services for our clients CEA vertical farms in fiscalyear 2024.Currently,we operate and manage two(2)CEA vertical farms.The first CEA vertical farm we operate and manage is a 10,021 square foot indoor vertical farm in Kota Damansara.Agroz Group leases certai
71、n property locatedat Kota Damansara pursuant to the terms of the Tenancy Agreement between Agroz Group and Childs Partner(M)Sdn.Bhd(“Childs Partner”),the lessor ofsuch property.Agroz Group remits monthly rent as consideration for renting such property.The Tenancy Agreement between Agroz Group and Ch
72、ilds Partner isfiled herein as Exhibit 10.9.1 The second CEA vertical farm we operate and manage is a 5,239 square foot educational vertical farm(“EduFarm”)at the AEON Mall Alpha Angle(“AEONAlpha Angle”),a shopping center in Wangsa Maju,Kuala Lumpur,Malaysia.Agroz Group is the lessee of certain spac
73、e owned by AEON Co.(M)Berhad(“AEON”)in its mall at AEON Alpha Angle,Wangsa Maju,Malaysia pursuant to the terms of that certain Tenancy Agreement between Agroz Group andAEON.The Tenancy Agreement between Agroz Group and AEON is filed as Exhibit 10.4 herein.Pursuant to the terms of the Tenancy Agreeme
74、nt,AEONgranted Agroz Group a tenancy to occupy this space and operate it as a CEA vertical farm.As consideration for occupying and renting this space,Agroz Groupagreed to pay monthly rent as well 30%of the monthly revenue generated at the EduFarm.The lease term is for three(3)years,ending on April 3
75、0,2026,unlessAgroz Group requests for an extension of lease and AEON grants an extension thereof.The Malaysia Book of Records,a publication of record setting achievements,recognizes the vertical farm we operate and manage at AEON Alpha Angle as thelargest indoor vertical farm located inside a shoppi
76、ng mall in Malaysia.Additionally,in June of 2024,the Malaysian government,through the Ministry ofAgriculture and Food Security,recognized the EduFarm for meeting Malaysian Good Agricultural Practices(“myGAP.PF”)requirements in being pesticide free.MyGAP.PF is a certification scheme recognizing farms
77、 which adopt agricultural practices with an environmentally friendly concept,safeguarding the welfareand safety of workers and do not use synthetic pesticides to produce quality,safe and edible products.This certification covers 20 types of vegetables grown inthe CEA vertical farms we manage and ope
78、rate,including green butterhead,red butterhead,green coral,red coral,wild rocket,green kale,and arugula,to namea few.Through the EduFarm,we also supply fresh produce sold at AEON Alpha Angle and at certain supermarkets operated by AEON.3.Sale of CEA Vertical Farms We sell CEA vertical farms to poten
79、tial buyers once they are fully operational and optimized.Each CEA vertical farm includes Agroz OS.We aim to achievehigh-yield crop production and resource management through these CEA vertical farms.4.Sale of Fresh Produce We also generate revenue from sales of fresh produce,which produce consist o
80、f(i)produce grown in the leased CEA vertical farms we operate and(ii)produceoutsourced from our clients CEA vertical farms and other suppliers.To date,we have successfully grown 50 different crops and are currently offering 21varieties of crops for sale.For a complete list of varieties that we have
81、grown and those we are currently offering,see“Our Products and Services”below.Ourkey distribution avenue is the direct distribution of fresh produce to Malaysian-based wholesale distributors,and large supermarket brand retailers,such asAEON,and recently we have expanded our distribution to Village G
82、rocer.Our Competitive Strengths We believe the following strengths differentiate us from our competitors:Vertical integration We believe a core feature that sets us apart from our competitors is our status as a fully vertically integrated agricultural technology provider of(i)services forthe design
83、and/or construction of CEA vertical farms;(ii)services for the operation and management of CEA vertical farms;and(iii)fresh produce.To ourknowledge,no company in Malaysia or Southeast Asia currently holds this status.Innovative and Advanced Agriculture Technology(AgTech)solutions We have proprietary
84、 CEA software,which we believe gives us a competitive advantage over other market players.We own the underlying source code to all ofthe software components which we plan to launch within Agroz OS in the future,including,but not limited to,(i)the source code to the software platform itself,(ii)the A
85、groz ERP and direct-to-consumer(“DTC”)online marketplace integrated within.We also own the underlying source code to the programmable logiccontroller(“PLC”),or industrial computer,which is an essential component enabling automation and environmental condition control and management withinthe CEA ver
86、tical farms we operate,integrated within the current version of Agroz OS.We are currently a Microsoft Independent Software Vendor(“ISV”)and a Microsoft AI Cloud partner.We are a Microsoft ISV pursuant to the terms of thatcertain Microsoft Publisher Agreement between us and Microsoft Corporation(“Mic
87、rosoft Publisher Agreement”)filed herein as Exhibit 10.7 herein.Pursuantto the Microsoft Publisher Agreement,Microsoft Corporation allows us to open and maintain a publisher account,which we can use to list and sell softwarecontent developed by us on the Azure Marketplace,Microsoft AppSource,and any
88、 Microsoft owned or operated endpoints(such endpoints,the“MicrosoftCommercial Marketplace”).ISVs like us can offer the software on the Microsoft Commercial Marketplace to reseller partners designated by us.We agreed toabide by certain customary terms and conditions for the use of such publisher acco
89、unt pursuant to the Microsoft Publisher Agreement,including,but not limitedto:our maintaining good standing of such account;Microsoft Corporations removal and disablement policies as to the software listing;a license grant toMicrosoft Corporation to host,install,reproduce,publicly perform and displa
90、y our software;agreement not to infringe on third party intellectual property rights;and our appointment of Microsoft Corporation as agent or commissionaire,as applicable,to facilitate purchases through the Microsoft Commercial Marketplace.We are currently a Microsoft AI Cloud partner pursuant to th
91、e terms of that certain Microsoft AI Cloud Partner Program Agreement between us and a Microsoftaffiliate designated by Microsoft(the“Microsoft Cloud Partner Program Agreement”).The Microsoft AI Cloud Partner Program Agreement is filed herein asExhibit 10.8.Pursuant to the terms of the Microsoft Clou
92、d Partner Program Agreement,we are allowed to use the Microsoft AI Cloud Partner Program(the“MCPP”)administered by Microsoft.Through such use,we access certain Microsoft content,information,sales tools,documentation,branding materials suchas logos,and resources in the development of our software sol
93、utions.We agree to abide by the terms and conditions of the MCPP set forth in the MicrosoftCloud Partner Program Agreement as a Microsoft Cloud Partner.Our relationship with Microsoft through the Microsoft AI Cloud Program has allowed us to build,publish and develop our cloud-based Agroz OS software
94、application on Microsoft Azure,Microsofts cloud computing platform,and gain access to various software and development tools owned by Microsoft toenhance and support Agroz OS and the CEA vertical farms we operate and manage.2 In May of 2024,we announced that we would be using the latest generative a
95、rtificial intelligence(GenAI)technologies made available through Microsoft AzureOpenAI Service to build and develop Agroz Copilot.Our CEA methods and technology solutions have enabled us to improve crop productivity and farm efficiency using less space than conventional agriculturalmethods of produc
96、tion do.These methods and solutions have also enabled us to precisely manage our water use and deploy tailored artificial lighting tomaximize the growth potential of our vegetables,eliminating the need to irrigate vast expanses of land like traditional farms do.Healthy,clean and fresh vegetables We
97、deliver healthy,clean,and fresh vegetables to our customers.We go beyond organic practices by growing clean and fresh vegetables in a safe and sustainablemanner.The CEA vertical farms we operate utilize non-genetically modified organism(“non-GMO”)seeds and organic nutrients that are free from harmfu
98、lchemicals,pesticides,fungicide,insecticide and herbicide.Strategic Partnership with AEON Co.(M)Berhad We have established a strategic business partnership with AEON,a leading Malaysian retailer which we believe can revolutionize the traditional groceryshopping experience and attract more high-consu
99、mption customers.We grow fresh vegetables within the EduFarm which are sold directly to visitors at theEduFarm and to shoppers at supermarkets operated by AEON.We,through Agroz Group,have a showcase display at the AEON MaxValu Prime at The Sphere,Bangsar South,Malaysia,a shopping center(“AEON MaxVal
100、u Prime”),where customers can choose the vegetables they wish to purchase at our sales counter,thereby applying a unique concept we introduced called“Farm-in-Supermarket.”This business partnership exists pursuant to the terms of that certainConcessionaire Agreement between Agroz Group and AEON dated
101、 May 31,2023(the“Concessionaire Agreement”),which specifies various material terms byreference to the Yearly Contract entered into between Agroz Group and AEON(the“Yearly Contract”).Under the Concessionaire Agreement,AEON agreed topermit Agroz Group to operate a sales counter at the AEON MaxValu Pri
102、me.Each month,AEON pays Agroz Group the account balance of the total grossreceipt of sales of fresh produce sold at the sales counter,after deducting all costs,Margins(as defined below),reimbursement,indemnities and other relatedexpenses for the months sales period.Agroz Group is required to pay AEO
103、N 30%of the total of the amount registered on AEONs cash register per month(suchpercentage,the“Margin”).The Concessionaire Agreement currently has no expiration date,as specified in the Yearly Contract.However,the ConcessionaireAgreement is terminable upon the occurrence of:(i)the Margin or any othe
104、r sums or any part thereof payable by Agroz Group being in arrears for seven(7)daysafter the same becomes due and payable;(ii)there is a breach by Agroz Group of any other terms contained in the Concessionaire Agreement and such breach isnot cured within three(3)days of Agroz Groups receipt of a wri
105、tten notice from AEON requiring such breach to be cured,including the breach of AgrozGroups obligation to meet or fulfill AEONs imposed sales or trading target on Agroz Group for three(3)consecutive months or such other time frame specifiedby AEON;(iii)Agroz Groups bankruptcy or a petition filed for
106、 bankruptcy,winding up,or Agroz Groups entry into an arrangement with its creditors orcancellation of its business registration certificate;(iv)Agroz Group being forbidden by law to perform its obligations under the Concessionaire Agreement orloss of Agroz Groups agency to sell or deal with its fres
107、h produce;vi)a breach of the representations or warranties in the Concessionaire Agreement;or vii)inthe opinion of AEON,Agroz Group becoming unable to pay Agroz Groups debts.The Concessionaire Agreement is filed herein as Exhibit 10.5 and the YearlyContract between Agroz Group and AEON is filed here
108、in as Exhibit 10.6.We believe this“Farm-in-Supermarket”concept revolutionizes the traditional grocery shopping experience,made possible in part through our partnership withAEON.View of the Agroz Indoor CEA Vertical Farm at AEONAlpha Angle in Wangsa Maju,Kuala LumpurAgroz AgTech combines digital auto
109、mation with agronomyto grow quality greens closest to consumers 3 Positive public image The United Nations Development Programme(UNDP),a United Nations(“UN”)agency,identifies us as an active CEA market player.On June 19,2023,the UNDP,together with the government of Malaysia through the Ministry of I
110、nvestment,Trade and Industry(“MITI”)and the MalaysianInvestment Development Authority(MIDA),launched the Malaysia SDG Investor Map(the“Map”).The Map is an online market intelligence tool designed tohelp private investors find investment opportunities that are aligned to,and compliant with,the UNs Su
111、stainable Development Goals(“SDGs”).CEA wasidentified as an investment opportunity area within the Map,and we were identified therein as a company active in the CEA space.We are strongly committed to supporting the UNs SDGs.Our community-based indoor CEA vertical farms are at the forefront of suppor
112、ting the UNs SDGs.Currently,we actively contribute to ten(10)out of the 17 SDGs.By aligning our operations with these SDGs,we strive to make a positive impact on society andthe environment,advancing sustainable development and creating a better future for all.We believe the UN Development Programmes
113、 recognition of us as an active CEA market player makes us unique and establishes our robust market positionagainst our competitors.Our Products and Services Products(i)Indoor CEA Vertical Farms We design and/or construct indoor CEA vertical farms for our clients according to their specific needs an
114、d in exchange for an agreed upon fee.Our design and/orconstruction services involve selecting and/or recommending the location for the vertical farm and overseeing and executing all aspects of the construction andbuilding of a CEA vertical farm.Once the physical infrastructure of the CEA vertical fa
115、rm has been constructed and completed,we incorporate and implementAgroz OS into our clients CEA vertical farms for operations.Agroz OS is a holistic system that enables operation of the vertical farms.This system incorporatesboth automated hardware and software solutions and is physically administer
116、ed through our Agroz OS cloud software application,available through MicrosoftAzure Cloud.For the fiscal year ending December 31,2023(the“2023 Fiscal Year”)and the six months ended June 30,2024(the“2024 Interim Period”),we provided designservices to two clients during the 2023 Fiscal Year,which serv
117、ices have been completed as of the date of this prospectus,and design and construction services totwo clients during the 2024 Interim Period.We sold two CEA vertical farms in the 2023 Fiscal Year and did not sell any farms in the 2024 Interim Period.Weoperated and managed two CEA vertical farms at A
118、EON Alpha Angle and the Kota Damansara farm during both the 2023 Fiscal Year and the 2024 InterimPeriod.We did not own any CEA vertical farms during 2023 Fiscal Year or the 2024 Interim Period.Agroz OS incorporates both automated hardware and software solutions and is physically administered through
119、 our Agroz OS cloud software application,available through Microsoft Azure Cloud.The automated hardware components of Agroz OS include:a)Environmental control devices capable of regulating air temperature,ventilation,humidity,air quality and air flow conditions;b)Water management devices which filte
120、r and clean water using ultraviolet light to deter bacteria and viruses and reduce algae growth;c)Irrigation and nutrient fertigation systems which control the precise mix of nutrients with water,specifically tailored to the type of cultivar being grownand their stage of growth;d)Horticulture light-
121、emitting diode(LED)lighting systems which are adjustable as to type of light spectrum,intensity and duration depending on the typeof crop being grown and the stage of growth they are at;e)Energy monitoring and management devices which monitor and optimize energy use within the CEA farm.These devices
122、 combine existing grids whichconnect electrical supplies to renewable green energy(“RE”)systems,which include solar photovoltaics.f)Monitoring systems which include Human Machine Interface devices(HMI),enabling continuous and real-time monitoring and setting configurationthrough touchscreen interfac
123、es;and g)Internet of Things(IoT)sensors connected to PLCs(or industrial computers),which collectively enable data collection and the control and automation of:(1)nutrient mixing,(2)irrigation,fertigation and nutrient provision to produce;(3)horticulture LED lighting;and(4)air conditioning and temper
124、ature settingswithin the CEA vertical farm.4 As of the date of this prospectus,we have only implemented in Agroz OS(i)the above digitally automated hardware systems for Agroz OS and(ii)software solutions enabling email and communication systems for farm organization,including Email,Microsoft 365,Mic
125、rosoft Teams,and file sharingthrough Microsoft OneDrive.The software solutions mentioned in the preceding sentence are supported by Microsoft Azure and Microsoft AI,which solutionsare possible pursuant to being Microsoft ISV and Microsoft AI Cloud Partner under the Microsoft Publisher Agreement and
126、Microsoft AI Cloud Partner ProgramAgreement filed herein as Exhibits 10.7 and 10.8,respectively.We are currently in the process of integrating an AI agent system into Agroz OS,which system is supported by Microsoft AI and capable of presenting complexagricultural decisions to farm managers and farm
127、owners and autonomously executing such decisions after human approval is received.When fully deployed,weenvision that the AI systems agents can undertake complex multi-step autonomous actions within vertical farms and result in vertical farms which can beindependently and automatically operated.We a
128、nticipate full deployment of this AI agent system by Q2 of 2025.Investors should be aware that such AI agentsystem is distinct from the Agroz Copilot;by contrast,Agroz Copilot is a GenAI application separate from Agroz OS,which enables human farmers to inputqueries and instructions into an applicati
129、on to receive recommendations for assistance with daily tasks,not a system for autonomous functioning of verticalfarms.Although we have launched a pilot rollout for Agroz Copilot,this application is still under development and we do not currently have a date certain forthe official launch of Agroz C
130、opilot to the public.We envision that at a more advanced developmental stage,Agroz OS will include software solutions for:a)the aforementioned AI agent system,and the following software solutions:b)Agroz ERP,a software system that tracks every aspect of the vertical farms business activities,includi
131、ng:(1)farm input materials(i.e.,seeds,nutrients,growth media,packaging,consumables,carbon dioxide);(2)growth of produce at different stages;(3)farm personnel activity;(4)harvest inventory;(5)sales orders,invoices,and deliveries,and(6)accounting records.Agroz ERP is also accessible as a mobile applic
132、ation;and c)Intuit QuickBooks to aid in financial reporting and bookkeeping,with such accounting software stored on cloud servers and financial informationprotected by encryption technology and firewall.We expect that these software solutions will be fully integrated into Agroz OS in 2025.5 (ii)Fres
133、h produce We deliver healthy,clean,flavorful and fresh vegetables to our customers.We go beyond organic practices by growing clean and fresh vegetables in asafe and sustainable manner.The CEA vertical farms we operate utilize non-genetically modified organism(“non-GMO”)seeds and organic nutrients th
134、at arefree from harmful chemicals,pesticides,fungicide,insecticide and herbicide.To date,we have successfully grown 50 different crops and are currently offering21 varieties on the market.Services We assist clients with their design and/or construction of indoor CEA vertical farms,tailored to their
135、specific needs and,upon their election,manage and operatetheir CEA vertical farms.The design and/or construction of CEA vertical farms involves selecting and/or recommending the location for the CEA vertical farmand overseeing and executing all aspects of the building of the CEA vertical farm from r
136、aw material.The operation and management services we offer involve overseeing day-to-day CEA vertical farm operations using all of the intellectual property we havedeveloped,including Agroz OS and the standard operating procedure supporting CEA vertical farm operation.We also perform regular mainten
137、ance of ourclients CEA vertical farm systems.Investing in our business is highly speculative and involves a high degree of risk.We face certain challenges in implementing the business strategies we havedescribed above.Below are some particularly prominent challenges:Limitations to CEA vertical farmi
138、ng.CEA vertical farming has certain limitations which may impede our ability to achieve successful financialperformance or the financial performance necessary to continue as a going concern.For instance,CEA vertical farming currently permits production ofa restricted range of crops.Certain staple cr
139、ops like wheat and rice have very specific growth requirements and producing these staple crops ischallenging using current CEA vertical farming methods and are more favorably grown using traditional farming methods.Some plant species are alsomore difficult to grow indoors than outdoors.CEA vertical
140、 farming also has higher costs and requires a high level of human skill for operation thantraditional farming techniques due to the technology employed in CEA vertical farming.Certain natural conditions in which plants grow,includingwind and insects,are also difficult to mimic in indoor settings,whi
141、ch may affect the quality of produce grown in indoor CEA vertical farms.Doubt about our ability to continue as a going concern.The audit report filed with this registration statement of which this prospectus forms a partincludes a disclosure from our auditors that there is substantial doubt about ou
142、r ability to continue as a going concern.Our auditors made this statementbased on our insufficient cash flows generated from operations and provided for development,and our incurrence of significant losses historically,along with our need to raise additional funds to meet obligations and sustain ope
143、rations.Material weaknesses in internal controls.Management has identified certain material weaknesses in our internal controls.Investors should be awarethat these material weaknesses may increase the possibility of us being unable to detect or prevent potential misstatements in our financial statem
144、entson a timely basis.Related party transactions.Agroz Inc.and Agroz Group,on a consolidated basis,have had and continue to have significant related party transactions,set forth in more detail in the“Related Party Transactions”section.Our material related party transactions notably involve transacti
145、ons for which thevalue involved is sizeable in comparison to the amount of assets we own.For instance,Agroz Group has two software development service contractswith Braiven Co.,Ltd.,an entity significantly influenced by our Chief Technology Officer,in amounts of approximately$500,000 and$4,000,000.F
146、ora more detailed discussion on these two software development service contracts,see“Related Party Transactions Present and Ongoing Related PartyTransactions (h)Software development services provided to Agroz Group”on page 83.Agroz Group has also in the past sold CEA vertical farmsolutions to Agroz
147、Ventures,an entity significantly influenced by the Company,which totaled approximately$900,000 in the fiscal year endedDecember 31,2023.To the best of the Companys knowledge,related party transactions incurred to date were not entered into on more favorable terms than terms in non-related party tran
148、sactions.Pricing and supply in such transactions were determined on a willing buyer,willing seller basis.Despite these pricingpractices,investors should be aware that the Company cannot assure that there is an absence of conflicts of interests or influence of related parties oversuch related party t
149、ransactions.See“Risk Factors”for our risk disclosure regarding our related party transactions.Investors should also be advised that the Company does not currently anticipate using any of the proceeds from this Offering to settle its liabilities andoperating expenses for related parties.The Company p
150、lans to settle such liabilities and operating expenses using operating income instead.6 Potential for diminished returns on investors investment in the Company due to the Companys issued and outstanding RCPS,and certain rights ofShare holders junior to the rights of RCPS holders.Other than the Share
151、s,we have another outstanding class of shares,RCPS,which may result in a diminished return on investment for investors.RCPSholders may,subject to the approval of the Board of Directors,convert each RCPS into one(1)Ordinary Share.If such conversion occurs,investorsownership stake in the Ordinary Shar
152、es will be diluted.Additionally,if we determine to issue more RCPS in the future,investors ownership stake inthe Ordinary Shares may be diluted.At our option,each RCPS is redeemable in whole or in part at the RCPS subscription price of US$2.50(the“RCPS Subscription Price”)(or theprorated amount in t
153、he case of redemption of a fraction of an RCPS),at any time after the RCPS share issuance date,by way of written notice or asotherwise specified by the Board of Directors from time to time,following which we shall pay the redemption proceeds to the RCPS shareholder within14 business days from the da
154、te of our issuance of the written notice Further,all RCPS which remain outstanding on the second anniversary of their dateof issuance(the“Maturity Date”)and have not been converted into Ordinary Shares will be fully redeemed by us at the RCPS Subscription Price.Thefunds which we use towards redempti
155、on payments will be diverted from funds we could have used for other corporate purposes.Therefore,investorsmay experience a diminished return on their investment in the Company through their ownership of the Ordinary Shares.Holders of RCPS are entitled to receive dividends out of any assets legally
156、available prior to any dividends payable to the Ordinary Shares,at a rate of10%per annum of the RCPS holders subscription amount for the RCPS.The funds allocated towards these interest payments will also divert fromfunds we could have used for other corporate purposes and dividend payments to holder
157、s of Ordinary Shares.Investors should be aware of the risk ofdiminished returns on their investment and certain junior rights to those of RCPS holders before purchasing Shares.For a more complete discussion of the rights of the RCPS holders,see“Description of Share Capital Redeemable Convertible Pre
158、ference Shares”below.Please also see“Risk Factors for a more complete description of the risks to Share holders due to the issued and outstanding RCPS.Please carefully consider the information set forth in the“Risk Factors”section before making an investment decision.Corporate Structure The chart be
159、low illustrates our corporate structure as of the date of this prospectus and upon completion of this Offering:Corporate Information Our principal executive offices are located at No.2,Lorong Teknologi 3/4A,Taman Sains Selangor,Kota Damansara,47810 Petaling Jaya,Selangor,Malaysia.Our corporate websi
160、te address is https:/.Market Opportunity We believe there is vast market potential for the AgriTech and CEA vertical farming markets globally and in the Southeast Asia region,starting with Malaysia,and aim to match the top-grade*products we have available to where they are most highly demanded in th
161、ese markets.*“Top-grade,”as used herein,is a term we use here to describe what we believe are premium agricultural products which meet industry-leading standards inboth quality and safety.The Malaysian government,through the Ministry of Agriculture and Food Security,recognized our EduFarm for meetin
162、g itsstandards for Malaysian Good Agricultural Practices(“myGAP.PF”)in being pesticide free.We also use non-GMO seeds to grow produce,which webelieve sets us apart from competitors which may rely on genetically modified crops.We believe that our use of non-GMO seeds is an increasinglyimportant facto
163、r for customers prioritizing organic and sustainable food sources.7 The Global AgriTech Market According to Spherical Insights,a reputed market research firm,the global agricultural technology market was valued at$22.1 billion in 2022,and is projectedto grow to over$75.87 billion by 2032,a compound
164、annual growth rate(“CAGR”)of 13.1%.Future Market Insights,another market researcher,reports that theglobal indoor farming market is expected to reach a value of USD 10.69 billion in 2033,with a CAGR of 9.8%from 2023.This market growth is reportedly driven by factors such as the increasing adoption o
165、f CEA vertical farming,the expansion of indoor farming technology,and thegrowing demand for higher crop yields to meet the rising global food demand.1 As an alternative to conventional produce gathering methods,CEA verticalfarming can cater to the needs of this rising global demand.Statista,an onlin
166、e platform,reported that the global market size of vertical farming was valued atUSD$5.6 billion in 20222 and according to J&A Capital Markets Report by Jahani&Associates,the market is projected to experience a compounded annualgrowth rate(CAGR)of 20.8%,reaching$21 billion by the year 2029.3 The mar
167、ket size of CEA vertical farming in the Asia-Pacific region reached US$2.43billion in 2023 and is projected to experience growth at a CAGR of 29.2%from 2024 to 2030.4 The Malaysian AgriTech market Within Malaysia,agricultural production is projected to grow at a CAGR of 0.6%from 2021 to 2026,reachin
168、g USD 24.9 billion by 2026,compared to USD23.9 billion in 2021,according to ReportLinker.5 The same source cites a forecasted revenue for the Malaysian agricultural sector in 2027 as MYR 161 billion.In 2022,agriculture was the third-highest GDP contributor to the Malaysian economy,constituting appro
169、ximately 8.93%of its GDP.We believe we can cater tothe needs of this growing demand with our high-quality products.The Malaysian government has also been supportive of improved technology and innovation in the agricultural sector,which we believe will contribute furtherto the growth of the Malaysian
170、 CEA vertical farming market.6 We believe this growth will allow us to establish a favorable position in the market,especiallygiven our advantages over competitors.The revenue potential of CEA vertical farming is also expected to lead to growth in this industry in the years to come.1https:/ 2https:/
171、 4https:/ 5https:/ 6http:/ have not commissioned any of the industry and market data included in this prospectus.Recent Developments On September 30,2024,the Branding Association of Malaysia presented Agroz Group with its Emerging Brand Legend Award.The Branding Association ofMalaysia is a Malaysian
172、 association catering to small and medium sized enterprises,offering leadership,resources,and networking opportunities to its membersand the broader business community.The Emerging Brand Legend Award is given to businesses that are less than 20 years old,and recognizes their rapid ascentand promisin
173、g potential in Malaysias competitive market landscape.8 On September 13,2024,the Ministry of Agriculture and Food Security,a ministry of the government of Malaysia,awarded us with the Best AgrotechnologyAward of 2024.This award is given to certain individuals,groups,organizations,and entities who ha
174、ve contributed to the field of agriculture and demonstratedoutstanding achievements.In January of 2024,we joined the Microsoft AI Cloud Partner Program pursuant to the terms of the Microsoft Cloud Partner Program Agreement.As a program participant in the MCPP,we currently use the latest GenAI techno
175、logies made available through Microsoft Azure OpenAI Service to developAgroz Copilot for Farmers(“Agroz Copilot”).Agroz Copilot is a GenAI application which enables human farmers to input queries and instructions into theapplication and receive recommendations from the application to assist with dai
176、ly tasks.Early feedback from the pilot rollout of Agroz Copilot has beenencouraging.We launched this pilot rollout at the EduFarm and the vertical farms we operate in Kota Damansara.We received positive feedback from the farmmanagers at such vertical farm locations.All of the farm managers at these
177、vertical farms indicated to us that the Agroz Copilot enhanced their productivity inmanaging their teams and educating produce growers on the Companys cultivation processes.We were also one of four(4)companies selected by Microsoft toshowcase the Agroz Copilot to Satya Nadella,Microsofts current Cha
178、irman and Chief Executive Officer,during the Microsoft artificial intelligence event inMalaysia on May 2,2024.We hope that when launched in the future,Agroz Copilot will support human farmers in their cultivation of diverse crops within CEAvertical farms,improve farm efficiency,increase crop product
179、ivity,and boost existing farm revenues.We believe Agroz Copilot will be transformative forfarmers and fundamentally agriculture.In July of 2023,we installed a 10,021 square foot indoor CEA vertical farm in Kota Damansara,Malaysia.In August of 2023,we installed a“Farm In Supermarket”in the shopping c
180、enter at AEON MaxValu Prime.Unlike the vertical farms we operate in KotaDamansara and AEON Alpha Angle,this installation is a showcase display used only for sales and promotional purposes,and is not a fully operational verticalfarm.Visitors to AEON MaxValu Prime may choose the produce they would lik
181、e to purchase,which come pre-harvested and packaged within the“Farm inSupermarket.”The above photos were taken from the Agroz Farm-in-Supermarket at AEON MaxValu Prime at The Sphere,Bangar South.9 Intellectual Property Trademarks As of the date of this prospectus,we have the following registered tra
182、demarks:No.Trademark Country of registration Trademarknumber Owner Class ApplicationStatus1 Malaysia TM2023037737 Agroz Group 44*Registered2 Malaysia TM2023037736 Agroz Group 31*Registered As of the date of this prospectus,we have the following trademarks pending application approval with the Intell
183、ectual Property Corporation of Malaysia:No.Trademark Country of registration Trademarknumber Owner Class ApplicationStatus3 Freshness You Can See,Hear and Taste Malaysia TM2023037738 Agroz Group 31*Pending approval 4 Freshness You Can See,Hear and Taste Malaysia TM2023037739 Agroz Group 44*Pending a
184、pproval *Raw and unprocessed agricultural,aquacultural,horticultural and forestry products;raw and unprocessed grains and seeds;fresh fruits and vegetables,freshherbs;natural plants and flowers;bulbs,seedlings and seeds for planting;live animals;foodstuffs and beverages for animals;malt.*Medical ser
185、vices;veterinary services;hygienic and beauty care for human beings or animals;agriculture,horticulture and forestry services.Copyrights As of the date of this prospectus,we have the following copyrights.We hold all of these copyrights in Malaysia.None of the following copyrights are currentlyregist
186、ered.*i)The source code to the PLC integrated into Agroz OS,which enables automation of various tasks within the indoor vertical farms we design,construct,operate,and manage;ii)The source code to Agroz OS and Agroz ERP;iii)The source code to Agroz Copilot for Farmers;iv)The source code to our Agroz
187、DTC online marketplace;and v)The codified standard operating procedure for the various vertical farms we operate and manage.*Copyrights are protected under the Malaysia Copyright Act 1987.Under the Malaysia Copyright Act 1987,subject to the relevant criteria under theMalaysia Copyright Act 1987 bein
188、g achieved,upon creation,original work becomes owned by the creator as copyrighted material and such original workbecomes automatically protected.Registration of copyrights in Malaysia are optional but not necessary to achieve protection.Copyright owners canvoluntarily register their copyrights to p
189、rovide additional legal certainty if disputes arise concerning their copyrights.The Malaysia Copyright Act 1987confers 50 years of protection for copyrights in literary works,including computer programs and manuals owned by corporate entities(which is applicableto our case),with the period beginning
190、 from the start of the calendar year following the literary works first publication or first made available to the public(whichever is the latest).10 Summary of Risk Factors Our business is subject to a number of risks,including risks that may prevent us from achieving our business objectives or may
191、 materially and adversely affectour business,financial condition,results of operations,cash flows,and prospects that you should consider before making a decision to invest in the Shares.These risks are discussed more fully in“Risk Factors.”Risks Related to our Business and Industry We have a limited
192、 operating history.We operate in an industry that is still relatively new and subject to many uncertainties.We may incur significant operating costs in the near future and cannot assure that we can recoup these losses to continue operating profitably or as agoing concern.We cannot assure that we can
193、 maintain a steady labor supply of personnel with sophisticated knowledge necessary for CEA vertical farm operation andmanagement.If we fail to do so,our financial performance may be negatively impacted.Failure to adequately manage our planned growth strategy may harm our business or increase our ri
194、sk of failure.We may become subject to additional regulation of agricultural products.We could be adversely affected by a change in consumer preferences,perception and spending habits in the food industry,and failure to develop andexpand our product offerings or gain market acceptance of our product
195、s may negatively impact our business.We build,manage,and develop vertical farms,which may be subject to unexpected costs and delays due to reliance on third parties for construction,material delivery,supply-chains and fluctuating material prices.We face strong competition in the agricultural technol
196、ogy and vertical farming industries and cannot assure that we can maintain a competitive positionagainst other market participants.We may experience unexpected network interruptions,security breaches or malware attacks,and failures in our and our subsidiarys informationtechnology systems,which may n
197、egatively impact our financial performance.We may not successfully develop our products and services or improve existing ones.Disruptions to transportation channels that we use to distribute our products may adversely affect our margins and profitability.We may not be able to adequately protect our
198、intellectual property and other proprietary rights that are material to our business.Our failure to maintain effective internal controls could cause our investors to lose confidence in us and adversely affect the market price of ourOrdinary Shares.If our internal controls are not effective,we may no
199、t be able to accurately report our financial results or prevent fraud.We may be unable to successfully implement our future business plans and objectives.We depend on key management personnel and our operation may suffer if we are unable to retain or replace them.We may be subject to the threat or p
200、ossibility of litigation,arbitration,or other legal proceedings.11 Risks Related to the Shares There has been no public market for our Ordinary Shares prior to this Offering;if an active trading market does not develop,you may not be able toresell the Shares at any reasonable price.The trading price
201、 of the Shares may be volatile,which could result in substantial losses to you.We rely on dividends and other distributions on equity paid by our operating subsidiary to fund our cash and financing requirements,and any limitationon the ability of our subsidiaries to make payments to us could have a
202、material adverse effect on our ability to conduct our business.If we fail to meet applicable listing requirements,Nasdaq may delist the Shares from trading,in which case the liquidity and market price of the Sharescould decline.If you purchase Shares in this Offering,you will incur immediate and sub
203、stantial dilution in the book value of your Ordinary Shares.If a limited number of participants in this Offering purchase a significant percentage of this Offering,the effective public float may be smaller thananticipated and the price of the Shares may be more volatile than it otherwise would be.Be
204、cause the amount,timing,and whether or not we distribute dividends at all is entirely at the discretion of the Board of Directors,you must rely onprice appreciation of the Shares for return on your investment.Our management has broad discretion to determine how to use the funds raised in this Offeri
205、ng and may use them in ways that may not enhance ourresults of operations or the price of the Shares.Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud.Securities analysts may not publish favorable research or reports about our business or may publish no inf
206、ormation at all,which could cause ourOrdinary Share price or trading volume to decline.Certain judgments obtained against us by our shareholders may not be enforceable.You may have more difficulties protecting your interests than you would as a shareholder of a U.S.corporation.Cayman Islands economi
207、c substance requirements may have an effect on our business and operations.As a foreign private issuer,we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantlyfrom Nasdaq corporate governance listing standards.These practices may
208、afford less protection to shareholders than they would enjoy if we compliedfully with Nasdaq corporate governance listing standards.We may lose our foreign private issuer status in the future,which could result in significant additional costs and expenses.We are an emerging growth company within the
209、 meaning of the Securities Act and may take advantage of certain reduced reporting requirements.12 Implications of Being an Emerging Growth Company and a Foreign Private Issuer As a company with less than$1.235 billion in revenue during our last fiscal year,we qualify as an“emerging growth company”a
210、s defined in the Jumpstart OurBusiness Startups Act(the“JOBS Act”),enacted in April 2012,and may take advantage of reduced reporting requirements that are otherwise applicable topublic companies.These provisions include,but are not limited to:being permitted to present only two years of audited fina
211、ncial statements and only two years of related Managements Discussion and Analysis ofFinancial Condition and Results of Operations in our filings with the SEC;not being required to comply with the auditor attestation requirements in the assessment of our internal control over financial reporting;red
212、uced disclosure obligations regarding executive compensation in periodic reports,proxy statements,and registration statements;and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachutepayments not previously a
213、pproved.We may take advantage of these provisions until the last day of our fiscal year following the fifth anniversary of the date of the first sale of the Shares pursuantto this Offering.However,if certain events occur before the end of such five-year period,including if we become a“large accelera
214、ted filer,”our annual grossrevenues exceed US$1.235 billion,or we issue more than US$1 billion of non-convertible debt in any three-year period,we will cease to be an emerging growthcompany before the end of such five-year period.We are a foreign private issuer as defined by the SEC.As a result,in a
215、ccordance with the rules and regulations of The Nasdaq Stock Market LLC,we maycomply with home country governance requirements and certain exemptions thereunder rather than complying with Nasdaq corporate governance standards.Wemay choose to take advantage of the following exemptions afforded to for
216、eign private issuers:Exemption from filing quarterly reports on Form 10-Q or provide current reports on Form 8-K disclosing significant events within four days of theiroccurrence.Exemption from Section 16 rules regarding sales of Ordinary Shares by insiders,which will provide less data in this regar
217、d than shareholders of U.S.companies that are subject to the Exchange Act.Exemption from the Nasdaq rules applicable to domestic issuers requiring disclosure within four business days of any determination to grant a waiverof the code of business conduct and ethics to directors and officers.Although
218、we will require board approval of any such waiver,we may choose not todisclose the waiver in the manner set forth in the Nasdaq rules,as permitted by the foreign private issuer exemption.Furthermore,Nasdaq Rule 5615(a)(3)provides that a foreign private issuer,such as us,may rely on our home country
219、corporate governance practices in lieu ofcertain of the rules in the Nasdaq Rule 5600 Series and Rule 5250(d),provided that we nevertheless comply with Nasdaqs Notification of Noncompliancerequirement(Rule 5625),the Voting Rights requirement(Rule 5640)and that we have an audit committee that satisfi
220、es Rule 5605(c)(3),consisting of committeemembers that meet the independence requirements of Rule 5605(c)(2)(A)(ii).If we rely on our home country corporate governance practices in lieu of certain ofthe rules of Nasdaq,our shareholders may not have the same protections afforded to shareholders of co
221、mpanies that are subject to all of the corporategovernance requirements of Nasdaq.If we choose to do so,we may utilize these exemptions for as long as we continue to qualify as a foreign private issuer.Corporate Information Our principal executive office is located at No.2,Lorong Teknologi 3/4A,Tama
222、n Sains Selangor,Kota Damansara,47810 Petaling Jaya,Selangor,Malaysia.Our telephone number is+6018 218-2300.Our registered office in the Cayman Islands is located at the office of Vistra(Cayman)Limited,P.O.Box 31119Grand Pavilion,Hibiscus Way,802 West Bay Road,Grand Cayman,KY1 1205 Cayman Islands.Ou
223、r agent for service of process in the United States is Sichenzia Ross Ference Carmel LLP,located at 1185 Avenue of the Americas,31st Floor,New York,NY10036.Information contained on,or that can be accessed through,our website is not a part of,and shall not be incorporated by reference into,this prosp
224、ectus.13 The Offering Securities being offered:2,500,000 Ordinary Shares(or 2,875,000 Ordinary Shares assuming the Underwriters exercisetheir over-allotment option in full).IPO price:We estimate the IPO price will be US$4.00 per Ordinary Share.Number of Ordinary Shares outstanding before this Offeri
225、ng:21,323,405 Ordinary Shares.Number of Ordinary Shares outstanding after this Offering:23,823,405 Ordinary Shares(or 24,198,405 Ordinary Shares assuming the Underwritersexercise the over-allotment option in full).Over-Allotment Option:We have granted the Underwriters an option to purchase up to 15%
226、of the total number ofOrdinary Shares sold in this Offering within 45 days after the Closing Date to cover over-allotments(such option,“Over-Allotment Option”).Use of proceeds:Based upon an IPO price of US$4.00 per Share,we estimate that we will receive net proceedsfrom this Offering,after deducting
227、 the estimated underwriting discounts,non-accountableexpenses and the estimated offering expenses payable by us,of approximately US$7,750,440if the Underwriters do not exercise their Over-Allotment Option,and US$9,130,440 if theUnderwriters exercise their Over-Allotment Option in full,after deductin
228、g the underwritingdiscounts and commissions,non-accountable expense allowance and estimated offeringexpenses payable by us.We plan to use the net proceeds of this Offering as follows:Approximately 15%on capital expenditures;Approximately 25%on operating expenses;Approximately 20%on research and deve
229、lopment;Approximately 15%for marketing;and Approximately 25%for our acquisitions of certain companies(i.e.no specificacquisition target companies have been identified at this time).The Company does not currently anticipate using any of the proceeds from this Offering tosettle its liabilities and ope
230、rating expenses for related parties.The Company plans to settlesuch liabilities and operating expenses using operating income instead.For more information on the use of proceeds,see“Use of Proceeds”on page 30.Representatives Warrants We will issue to the Representative or its designee(s),on the Clos
231、ing Date,warrants topurchase a number of Ordinary Shares equal to 5%of the aggregate number of OrdinaryShares sold in this Offering,at an exercise price per share equal to 120%of the initial publicoffering price per Share.The Representatives warrants will be exercisable for a period of threeyears af
232、ter the Closing Date.See“Underwriting”for more details.Lock-up:We,any successor entities,and all of our directors,officers,and principal shareholders(defined as owners of 5%or more of the Shares)have agreed with the Underwriters,subject tocertain exceptions,not to offer,issue,sell,transfer,contract
233、to sell,encumber,grant any optionfor the sale of,or otherwise dispose of,directly or indirectly,any of the Shares or securitiesconvertible into or exercisable or exchangeable for the Shares for a period of six months afterthe effective date of the registration statement,which forms a part of this pr
234、ospectus.See“Shares Eligible for Future Sale”and“Underwriting”for more information.Proposed Nasdaq symbol:We have reserved the ticker symbol“AGRZ”for the Shares with Nasdaq.Transfer agent and registrar:VStock Transfer,LLC.Risk factors:Investing in the Shares is highly speculative and involves a high
235、 degree of risk.As an investoryou should be able to bear a complete loss of your investment.You should carefully considerthe information set forth in the“Risk Factors”section beginning on page 16.14 Unless otherwise indicated,all information contained in this prospectus assumes:to be based on 21,030
236、,494 Ordinary Shares outstanding as of June 30,2024;the issuance of 371,500 RCPS and the conversion of these RCPS into Ordinary Shares,as if such conversion had occurred on June 30,2024,on a one-for-one basis,see“Capitalization”;the surrender of 1,030,494 Ordinary Shares,as if such surrender had occ
237、urred on June 30,2024,see“Capitalization”;the conversion of 419,929 RCPS into Ordinary Shares,as if such conversion had occurred on June 30,2024,on a one-for-one basis,see“Capitalization”;the issuance of 3,556 Ordinary Shares,as if such issuance had occurred on June 30,2024,see“Capitalization”;the c
238、onversion of all of our outstanding 528,420 RCPS into Ordinary Shares,as if such conversion had occurred on June 30,2024,on a one-for-onebasis,see“Capitalization”;no exercise of the Underwriters Over-allotment Option by the underwriters to purchase up to an additional 375,000 Ordinary Shares from us
239、;and no exercise of the Warrants to be issued to the underwriters in this Offering.15 RISK FACTORS An investment in the Shares involves a high degree of risk.You should carefully consider the following information about these risks,together with the otherinformation appearing elsewhere in this prosp
240、ectus,before deciding to invest in the Shares.The occurrence of any of the following risks could have a materialadverse effect on our business,financial condition,results of operations,and future growth prospects.In these circumstances,the market price of the Shares coulddecline,and you may lose all
241、 or part of your investment.Risks Related to our Business and Industry We have a limited operating history.We have a limited operating history from which to evaluate our business and it will continue to be difficult to make accurate predictions and forecasts on our growthand future prospects.There i
242、s no guarantee that our products or services will remain attractive to potential and current clients as our business continues to develop.We operate in an industry that is still relatively new and subject to many uncertainties.The vertical farming industry is still very new and subject to much uncer
243、tainty.New market participants may also emerge in this sector which we cannot anticipate.There is no guarantee that this sector will grow,or grow at a level that will benefit our business,or even if it grows,we cannot assure that our business will operateprofitably in spite of favorable market condi
244、tions in this industry.We may incur significant operating costs in the near future and cannot assure that we can recoup these potential costs to continue operating profitably or as agoing concern.High startup costs are one of the most significant concerns for market entrants in the CEA vertical farm
245、ing industry.CEA vertical farming requires a significantinitial investment of funds,including to pay for infrastructure like building facilities and climate control systems.Additionally,there are high electricity costsrequired to maintain the LED lighting system within vertical farms as well as labo
246、r costs.We cannot guarantee a return on our investment into the vertical farms wehave developed thus far or that we will build and develop in the future.If we fail to do so,our financial performance may be adversely affected and there is a riskwe cannot continue as a going concern.We cannot assure t
247、hat we can maintain a steady labor supply of personnel with sophisticated knowledge necessary to operate CEA vertical farms.If we fail todo so,our financial performance may be negatively impacted.CEA vertical farms require a high level of technical expertise to establish,monitor,and sustain effectiv
248、ely.Our CEA technology minimizes the need for manuallabor for crop production but requires sophisticated levels of knowledge to configure,supervise,and maintain them successfully.Furthermore,operating a profitablevertical farming operation necessitates not only advanced expertise in horticulture and
249、 engineering but also the presence of leadership abilities,prior managementexperience,financial literacy,effective communication skills,and keen powers of observation.We cannot assure that we can retain personnel with such technicalexpertise.If we fail to do so,our financial performance may be negat
250、ively impacted.Failure to adequately manage our planned growth strategy may harm our business or increase our risk of failure.For the foreseeable future,we intend to pursue a growth strategy for the expansion of our operations by further developing and improving our products and services.Our ability
251、 to rapidly expand our operations will depend upon many factors,including our ability to work in a regulated environment,establish and maintainstrategic relationships with suppliers,and obtain adequate and necessary capital resources on acceptable terms.Any restrictions on our ability to expand may
252、have amaterially adverse effect on our business,results of operations,and financial condition.Accordingly,we may be unable to achieve our targets for sales growth,andour operations may not be successful or achieve anticipated operating results.16 We may become subject to additional regulation of agr
253、icultural products.Our business is subject to certain Malaysian laws and regulations,including the Food Act 1983 and the Federal Agricultural Marketing Authority Act 1965,whichgovern the safety,hygiene,grading,packaging and labeling of agricultural products.Save and except for these laws and their c
254、orresponding regulations,inparticular the Food Regulations 1985 and the Federal Agricultural Marketing Authority(Grading,Packaging and Labelling of Agricultural Produce)Regulations2008,we do not believe that our products are subject to any further regulation in Malaysia or any state agency.However,c
255、hanges in the industry,including growth,make it possible that additional regulations may be put into place and that such regulations could impact sales or otherwise negatively impact our revenues andbusiness opportunities.We could be adversely affected by a change in consumer preferences,perception
256、and spending habits in the food industry,and failure to develop and expandour product offerings or gain market acceptance of our products may negatively impact our business.The market in which we operate is subject to changes in consumer preference,perception and spending habits.Our performance will
257、 depend significantly on factorsthat may affect the level and pattern of consumer spending in Malaysia.Such factors include consumer preference,consumer income,consumer confidence in andperception of the safety and quality of our products and shifts in the perceived value for our products relative t
258、o alternatives.Consumer Preferences.There is no guarantee that the variety of produce we offer will continue to sustain popularity,that consumers will prefer the varieties ofproduce we offer,or that we will be successful in capturing a sufficient market share.If we are able to expand our product off
259、erings,our financial performance willsimilarly be impacted by changes in consumer preferences.Safety and Quality Concerns.Media coverage regarding the safety or quality of,or diet or health issues relating to,our products or the processes involved in thegrowth of our produce,may damage consumer conf
260、idence in our products.Any widespread safety or quality issues involving fresh fruits or vegetableseven ifnot involving uscould adversely affect consumer confidence in and demand for such vegetables or other fresh produce.Consumer Income.A general decline in the consumption of our products could occ
261、ur at any time as a result of change in consumer spending habits,including anunwillingness to pay a premium or an inability to purchase our products due to financial hardship,expectations of inflation,or increased price sensitivity.The success of our products will depend on a number of factors,inclu
262、ding our ability to accurately anticipate changes in market demand and consumer preferences,our ability to differentiate the quality of our products from those of our competitors,and the effectiveness of marketing and advertising campaigns for our products.We may not be successful in identifying tre
263、nds in consumer preferences and growing or developing products that respond to such trends in a timely manner.We orour partners also may not be able to effectively promote our products by marketing and advertising campaigns and gain market acceptance.If our products fail togain market acceptance,are
264、 restricted by regulatory requirements,have quality problems,or are affected by consumer perceptions of safety and quality even arisingfrom our competitors products,we may not be able to fully recover costs and expenses incurred in our operations,and our business,financial condition or results ofope
265、rations could be materially and adversely affected.We build,manage and develop CEA vertical farms,which may be subject to unexpected costs and delays due to reliance on third parties for construction,material delivery,supply-chains and fluctuating material prices.We build,manage,and develop CEA vert
266、ical farms that are dependent on a number of key inputs and their related costs,including materials such as steel and glassand other supplies,as well as electricity and other local utilities.Any significant interruption or negative change in the availability or economics of the supply chainfor key i
267、nputs could materially impact our business,financial condition and operating results.If our suppliers encounter unexpected costs,delays or other problemsin providing us with supplies,materials,or utilities,our financial position and ability to execute on our growth strategy could be negatively affec
268、ted.Any inabilityto secure required supplies and services or to do so on appropriate terms could have a materially adverse impact on our business,financial condition and operatingresults.17 The price of production,sale and distribution of these supplies may fluctuate widely based on the impact of nu
269、merous factors beyond our control,includinginternational,economic and political trends,transportation disruptions,expectations of inflation,global or regional consumptive patterns,speculative activities andincreased production due to new production and distribution developments and improved producti
270、on and distribution methods.Additionally,we import some of theequipment and materials used to build CEA vertical farms facilities.Any prolonged disruption of third-party delivery and shipping services for materials maynegatively affect development schedules for the CEA vertical farms we operate and
271、manage,and delay the rates at which we ship produce to consumers and therates in which our distributors ship produce to consumers.Rising costs associated with these delivery services may also adversely impact our building schedule andcrop season planning,and more generally our business,financial con
272、dition,results of operations and prospects.We face strong competition in the agricultural technology and vertical farming industries and cannot assure that we can maintain a competitive positionagainst other market participants.There are many competitors in the agricultural technology and vertical f
273、arming industry.There can be no guarantees that in the future other market participants willnot enter these sectors by developing products and services that are in direct competition with us.One particularly strong limitation of CEA vertical farmingcompared to traditional crop production methods is
274、that CEA vertical farming currently permits production of a restricted range of crops.The production of staplecrops such as wheat and rice is a roadblock for large scale vertical farming due to these crops specific growth requirements and current vertical farming technologylimitations.As a result,co
275、mpetitors with mega-farms,efficient transport connections,established distribution networks,and advanced food preservationtechnologies have competed more effectively than vertical farms in this respect.We anticipate the presence as well as entry of other companies in our market space.There is a risk
276、 that we may not be able to establish,or if established,to maintaina competitive advantage in our market space.Some competing companies may have longer operating histories,greater name recognition,larger customer bases andsignificantly greater financial,technical,sales and marketing resources.This m
277、ay allow them to respond more quickly than us to market opportunities.It may alsoallow them to devote greater resources to the marketing,promotion and sale of their products and/or services.These competitors may also adopt more aggressivepricing policies and make more attractive offers to existing a
278、nd potential customers,employees,strategic partners,distribution channels and advertisers.Increasedcompetition is likely to result in price reductions,reduced gross margins and a potential loss of market share.We may experience unexpected network interruptions,security breaches or malware attacks(co
279、mputer virus attacks)and failures in our and our subsidiarysinformation technology systems,which may negatively impact our financial performance.Information technology systems substantially support our and our operating subsidiarys operations.If these systems fail to perform,we could experiencedisru
280、ptions in operations,slower response time and diminished operating results.System interruptions,errors,or downtime can result from a variety of causes,including unexpected interruptions to the internet infrastructure,technological failures,changes to the systems,erroneous or corrupted data,changes i
281、n client usagepatterns,linkages with third-party systems,and power,employee misconduct,unauthorized trading,malware attacks(including but not limited to computer viruses,worms,ransomware,and spyware),cyberattacks,terrorist attacks,natural disaster,power outage,capacity constraints,software flaws,and
282、 other similar events.Any failure to maintain the performance,reliability,security,or availability of the network infrastructure may cause significant damage to our and our operatingsubsidiarys ability to continue operating profitably.We may not successfully develop our products and services or impr
283、ove existing ones.Our future success depends on successfully competing in markets for our products and services and our ability to improve our existing product lines and servicesand to develop and offer them to meet consumer needs.We cannot provide any assurance that we will be successful in doing s
284、o.We also cannot assure that we canprovide product and service innovations that satisfy consumer needs or achieve market acceptance,or that we will do so in a timely manner to meet marketdemands.If we fail to do so,our ability to maintain or grow our market share may be adversely affected,which coul
285、d materially adversely affect our business,financial condition and results of operations.In addition,the development and introduction of new products and services lines may require substantial research anddevelopment expenditures,which we may be unable to recoup if our products and services do not g
286、enerate adequate revenue.18 Investors should be aware of our related party transactions.Agroz Inc.and Agroz Group,on a consolidated basis,have had and continue to have significant related party transactions,set forth in more detail in the“RelatedParty Transactions”section.Our material related party
287、transactions notably involve transactions for which the value involved is sizeable in comparison to theamount of assets we own.For instance,Agroz Group has two software development service contracts with Braiven Co.,Ltd.,an entity significantly influenced byour Chief Technology Officer,in amounts of
288、 approximately$500,000 and$4,000,000.Agroz Group has also in the past sold CEA vertical farm solutions to AgrozVentures,an entity significantly influenced by the Company,which totaled approximately$900,000 in the fiscal year ended December 31,2023.Additionally,Agroz Group provided CEA vertical farm
289、design and construction services to Agroz Vertical Farms,an entity significantly influenced by the Company,whichtotaled$222,678 during the six months ended June 30,2024.Investors should carefully review and consider the existence of these related party transactions beforemaking an investment into th
290、e Company.To the best of its knowledge,the Company does not believe its past related party transactions were entered into on morefavorable terms than terms in non-related party transactions.However,investors should be aware that the Company cannot assure the absence of conflicts ofinterests or influ
291、ence of related parties over such related party transactions,despite its pricing practices.Disruptions to transportation channels that we use to distribute our products may adversely affect our margins and profitability.We may experience disruptions to the transportation channels used to distribute
292、our products,including increased congestion,a lack of transportation capacity,increased fuel expenses,import or export controls or delays,and labor disputes or shortages.Disruptions in our trucking capacity may result in reduced sales orincreased costs,including the additional use of more expensive
293、or less efficient alternatives to meet demand.Congestion can affect previously negotiated contractswith shipping companies,resulting in unexpected increases in shipping costs,reduction in our profitability or reduced sales.We may not be able to adequately protect our intellectual property and other
294、proprietary rights that are material to our business.Our ability to compete effectively depends in part on our rights to copyright,service marks,trademarks,trade names and other intellectual property rights we ownor license.If we are unable to protect our intellectual property,proprietary informatio
295、n and/or brand names,we could suffer a material adverse effect on ourbusiness,financial condition and results of operations.In particular,we own copyrights to(i)the software components of the future developmental version of AgrozOS;(ii)the PLC,an essential component enabling automation and environme
296、ntal condition control and management,which PLC is integrated within the currentversion of Agroz OS;(iii)the source code to Agroz Copilot for Farmers;(iv)the source code to the Agroz DTC online marketplace;and(v)the codified standardoperating procedure for various vertical farms we operate and manag
297、e.Malaysia copyright law grants protection automatically for such copyrights upon theircreation,subject to the relevant criteria under the Malaysia Copyright Act 1987 being achieved.However,we cannot predict whether disputes concerning thesecopyrights may not arise.Further,while we are not required
298、to register our copyrights,registering them provides additional legal certainty if disputes arise.Litigation may be necessary to enforce our intellectual property rights and protect our proprietary information,or to defend against claims by third parties that ourproducts or services infringe their i
299、ntellectual property rights.Any litigation or claims brought by or against us could result in substantial costs and diversion of ourresources.A successful claim of trademark,patent or other intellectual property infringement against us,or any other successful challenge to the use of ourintellectual
300、property,could subject us to damages or prevent us from providing certain products or services,or using certain of our recognized brand names,whichcould have a material adverse effect on our business,financial condition and results of operations.Our failure to maintain effective internal controls co
301、uld cause our investors to lose confidence in us and adversely affect the market price of our OrdinaryShares.If our internal controls are not effective,we may not be able to accurately report our financial results or prevent fraud.Section 404 of the Sarbanes-Oxley Act of 2002,(“Section 404”),require
302、s that after this Offering,we maintain internal control over financial reporting that meetsapplicable standards.We may err in the design or operation of our controls,and all internal control systems,no matter how well designed and operated,can provideonly reasonable assurance that the objectives of
303、the control system are met.Because there are inherent limitations in all control systems,there can be no assurancethat all control issues have been or will be detected.If we are unable,or are perceived as unable,to produce reliable financial reports due to internal controldeficiencies,investors coul
304、d lose confidence in our reported financial information and operating results,which could result in a negative market reaction and adecrease in our stock price.Following this Offering,we will be required,pursuant to Section 404,to furnish a report by management on,among other things,the effectivenes
305、s of our internalcontrol over financial reporting.Such report will not be required until our second annual report filed on Form 20-F.We will need to disclose any materialweaknesses identified by our management in our internal control over financial reporting.As an“emerging growth company,”we will av
306、ail ourselves of theexemption from the requirement that our independent registered public accounting firm attest to the effectiveness of our internal control over financial reportingunder Section 404.However,we may no longer avail ourselves of this exemption if and when we cease to be an“emerging gr
307、owth company.”When ourindependent registered public accounting firm is required to undertake an assessment of our internal control over financial reporting,the cost of our compliancewith Section 404 will correspondingly increase.Our compliance with applicable provisions of Section 404 will require t
308、hat we incur substantial accounting expenseand expend significant management time on compliance-related issues as we implement additional corporate governance practices and comply with reportingrequirements.Moreover,if we are not able to comply with the requirements of Section 404 applicable to us i
309、n a timely manner,or if we or our independentregistered public accounting firm identifies deficiencies in our internal control over financial reporting that are deemed to be material weaknesses,the market priceof our stock could decline and we could be subject to sanctions or investigations by the U
310、.S.Securities and Exchange Commission,or SEC,or other regulatoryauthorities,which would require additional financial and management resources.19 As of the date of this prospectus,management has identified certain material weaknesses in our internal controls pertaining to(i)our current lack of indepe
311、ndentdirectors and audit committee;(ii)our lack of effective information technology(“IT”)general controls(ITGC)(which are the basic set of controls for our ITsystems,including applications,operating systems,databases,and IT infrastructure),(iii)our lack of sufficient financial reporting and accounti
312、ng personnel withknowledge of IFRS and SEC reporting requirements,and(iv)our inadequate segregation of duties on sale and customers data management.Following the identification of the material weaknesses and control deficiencies,we plan to take remedial measures,including:1)hiring experienced IT sta
313、ff toformalize and strengthen our ITGC;2)hiring additional finance and accounting staff with qualifications and work experiences in IFRS and SEC reportingrequirements to formalize and strengthen key internal controls over financial reporting;and 3)allocating sufficient resources to prepare and revie
314、w financialstatements and related disclosures in accordance with IFRS and SEC reporting requirements.If we identify new material weaknesses in our internal control over financial reporting,if we are unable to comply with the requirements of Section 404 in a timelymanner,if we are unable to assert th
315、at our internal control over financial reporting is effective,or if our independent registered public accounting firm is unable toexpress an opinion as to the effectiveness of our internal control over financial reporting in the future,we may be late with the filing of our periodic reports,investors
316、 may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could be negatively affected.Asa result of such failures,we could also become subject to investigations by the stock exchange on which our securities are listed,the SEC,or other re
317、gulatoryauthorities,and become subject to litigation from investors and stockholders,which could harm our reputation,financial condition or divert financial andmanagement resources from our core business,and would have a material adverse effect on our business,financial condition and results of oper
318、ations.We may be unable to successfully implement our future business plans and objectives.Our future business plans may be hindered by factors beyond our control,such as competition within the industry we operate;our ability to cope with high exposureto financial risk,operational risk,and market ri
319、sk as our business expands;and our ability to provide,maintain,and improve the level of human and other resourcesin generating products and providing services.As such,we cannot assure you that our future business plans will materialize,that our objectives will beaccomplished fully or partially,or th
320、at our business strategies will generate the intended benefits to us as initially contemplated.If we fail to implement our businessdevelopment strategies successfully,our business performance could be materially and adversely affected.We are exposed to potential disruptions and risks from unforeseen
321、 disasters or crises.Our operations and business continuity depend on our ability to operate CEA vertical farms and systems without significant interruption.Unforeseen events such asnatural disasters,pandemics,power outages,or other catastrophic events could potentially disrupt our operations,leadin
322、g to business interruption,financial loss,and damage to our reputation.While we have in place business continuity plans,these plans might not be sufficient to mitigate all potential disruptions.Furthermore,in the context of a global pandemic,our operations may be severely impacted due to government-
323、imposed restrictions,widespread illness among ouremployees,or disruptions in our supply chain.There is no guarantee that our contingency plans could fully prevent or remediate the effects of such unforeseendisasters or crises.Thus,our financial condition,results of operations,and business prospects
324、may be adversely affected.20 We depend on key management personnel and our operation may suffer if we are unable to retain or replace them.We have a team of experienced and competent management which is responsible for directing and managing daily operations,monitoring and supervisingcompliance and
325、risk management,overseeing financial condition and performance,allocating and budgeting human resources,and formulating business strategies.However,we cannot assure you that we can retain the services of our key management and find suitable replacement if any of them terminate their engagement withu
326、s,are unable or unwilling to continue their services,or in the event of death.Other than our senior management,we also rely on our professional staff in different business operations to implement our business strategies,provide qualityservices to clients,manage our compliance and risks,identify and
327、capture business opportunities,maintain relationship with clients,and procure new clients.Lossof our professional staff and failure to recruit replacements for such staff will materially and adversely affect our business operations.We may be subject to the threat or possibility of litigation,arbitra
328、tion,or other legal proceedings.We and our directors and officers may from time to time become subject to or involved in various claims,controversies,lawsuits,and regulatory or legalproceedings.Claims,lawsuits,and litigations are subject to inherent uncertainties,and we are uncertain whether the for
329、egoing claims would develop into a lawsuit.Lawsuits and litigations may cause us to incur defense costs,utilize a significant portion of our resources and divert managements attention from our day-to-dayoperations,any of which could harm our business.Any settlements or judgments against us could hav
330、e a material adverse impact on our financial condition,resultsof operations and cash flows.In addition,negative publicity regarding claims or judgment made against us may damage our reputation and may result in a materialadverse impact on us.As of the date of this prospectus,we are not a party to,an
331、d are not aware of any threat of,any legal proceeding that,in the opinion of our management,is likely tohave a material adverse effect on our business,financial condition,or operations.Actions brought against us may result in settlements,awards,injunctions,fines,penalties,and other results adverse t
332、o us.A substantial judgment,settlement,fine,or penalty could be material to our operating results or cash flows for a particularperiod,depending on our results for that period,or could cause us significant reputational harm,which could harm our business prospects.Risks Related to The Shares There wa
333、s no public market for our Ordinary Shares prior to this Offering;if an active trading market does not develop,you may not be able to resell theShares at any reasonable price.This Offering is an IPO of the Shares.Prior to this Offering,there was no public market for the Shares.While we plan to list the Shares on the Nasdaq CapitalMarket,our listing application may not be approved.If our applicatio