JE Cleantech Holdings Limited (XN60) Risk Analysis

We cannot assure you that an active public market for our Class A Ordinary Shares will continue. If an active public market for our Ordinary Shares does not continue, the market price and liquidity of our Class A Ordinary Shares may be materially and adversely affected. As a result, investors in our Class A Ordinary Shares may experience a significant decrease in the value of their Class A Ordinary Shares.

Since our Class A Ordinary Shares commenced trading on April 22, 2022, the trading price of our Class A Ordinary Shares has been volatile and has fluctuated widely due to factors beyond our control. This may continue in the future because of broad market and industry factors, such as the performance and fluctuation of the market prices of other companies with business operations located mainly in Singapore that have listed their securities in the United States. In addition to market and industry factors, the price and trading volume for our shares may be highly volatile due to factors specific to our own operations. Such volatility may result in the loss by our investors of part of all of their investment in our shares.

The trading market for our Class A Ordinary Shares will be influenced by research or reports that industry or securities analysts publish about our business. If one or more analysts downgrade our Class A Ordinary Shares, the market price for our shares would likely decline. If one or more of these analysts cease to cover us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause the market price or trading volume for our shares to decline.

Sales of substantial amounts of our Class A Ordinary Shares in the public market, or the perception that these sales could occur, could adversely affect the market price of our Class A Ordinary Shares and could materially impair our ability to raise capital through equity offerings in the future. We currently have 1,751,619 Class A Ordinary Shares outstanding (not including 55,047 shares held in treasury), all of which are freely tradable without restriction or further registration under the Securities Act. In addition, the 3,500,000 Class B Ordinary Shares could be made available for sale through registration under the Securities Act or pursuant to Rule 144. We cannot predict what effect, if any, the market sale of securities held by any shareholder or the availability of these securities for future sale will have on the market price of our Class A Ordinary Shares.

Short selling is the practice of selling shares that the seller does not own but rather has borrowed from a third party with the intention of buying identical shares back at a later date to return to the lender. The short seller hopes to profit from a decline in the value of the shares between the sale of the borrowed shares and the purchase of the replacement shares, as the short seller expects to pay less in that purchase than it received in the sale. As it is in the short seller's interest for the price of the shares to decline, many short sellers publish, or arrange for the publication of, negative opinions and allegations regarding the relevant issuer and its business prospects in order to create negative market momentum and generate profits for themselves after selling the shares short. These short attacks have, in the past, led to selling of shares in the market. If we were to become the subject of any unfavorable publicity, whether such allegations are proven to be true or untrue, we could have to expend a significant amount of resources to investigate such allegations and/or defend ourselves. While we would strongly defend against any such short seller attacks, we may be constrained in the manner in which we can proceed against the relevant short seller by principles of freedom of speech, applicable state law or issues of commercial confidentiality.

On December 14, 2023, we received a written notification from the Listing Qualifications Department of The Nasdaq Stock Market LLC (the "Nasdaq Notification") stating that our Ordinary Shares (now our Class A Ordinary Shares) failed to maintain a minimum bid price of $1.00 over the last 30 consecutive business days as required by the Minimum Bid Price Requirement under Nasdaq rule 5550(a)(2) (the "Listing Rule."). Receipt of the Nasdaq Notification did not result in the immediate delisting of our Ordinary Shares and had no immediate effect on the listing or the trading of our Ordinary Shares on the Nasdaq Capital Market under the symbol "JCSE." Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), we had a compliance period of 180 calendar days from the date of the Nasdaq Notification, or until June 11, 2024, to regain compliance with the Minimum Bid Requirement. If at any time before June 11, 2024, the closing bid of our Ordinary Shares was at least $1.00 for a minimum of 10 consecutive business days, we would have been deemed to have regained compliance with the Minimum Bid Requirement following which Nasdaq would have provided a written confirmation of compliance and the matter would be closed. The Company did not regain compliance with the Listing Rule by June 11, 2024 and was not eligible for a second 180-day remediation period. The staff, therefore, determined to delist the Company's Ordinary Shares, suspend trading of the Company's Ordinary Shares at the open of trading on June 26, 2024 and file a Form 25-NSE with the Securities and Exchange Commission (the "SEC"), which would remove the Company's securities from listing and registration on The Nasdaq Stock Market (the "Delisting Determination"). The Company requested a hearing based on written submissions for a fee of $20,000 and proposed a share consolidation at a ratio of 1-for 3 to remedy non-compliance with the Minimum Bid Price Requirement. Subsequently, as of August 1, 2024, we informed Nasdaq that the trading price of our Ordinary Shares had closed for ten consecutive days at or above the $1.00 minimum bid price and therefore satisfied the Minimum Bid Price Requirement. On August 27, 2024, we received a letter dated August 27, 2024 (the "Compliance Letter") from the Listing Qualifications Department of Nasdaq. The Compliance Letter informed us that we had regained compliance with Nasdaq's Minimum Bid Price Requirement in Listing Rule 5550(a)(2), as required by the Nasdaq Hearing Panel's decision dated July 15, 2024. Accordingly, our Ordinary Shares continued to be listed on The Nasdaq Capital Market and Nasdaq considered the matter closed. If in the future our Class A Ordinary Shares are delisted from Nasdaq, we could face significant material adverse consequences, including: - limited availability of market quotations for our Class A Ordinary Shares;         - reduced liquidity for our Class A Ordinary Shares;         - a determination that our Class A Ordinary Shares are "penny stock," which will require brokers trading in our shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our Class A Ordinary Shares;         - a limited amount of news and analyst coverage; and         - decreased ability to issue additional securities or obtain additional financing in the future. In addition, as long as our Class A Ordinary Shares are listed on Nasdaq, U.S. federal law prevents or preempts the states from regulating their sale, although the law does allow the states to investigate companies if there is a suspicion of fraud and, if there is a finding of fraudulent activity, then the states can regulate or bar their sale. If we were no longer listed on Nasdaq, we would be subject to regulations in each state in which we offer our shares.

Our authorized and issued Ordinary Shares are divided into Class A Ordinary Shares and Class B Ordinary Shares. Holders of Class A Ordinary Shares are entitled to one vote per share, while holders of Class B Ordinary Shares are entitled to 20 votes per share. Each Class B Ordinary Shares is convertible into one Class A Ordinary Shares at any time by the holder thereof, while Class A Ordinary Shares are not convertible into Class B Ordinary Shares under any circumstances. The holders of Class B Ordinary Shares have the ability to control matters requiring shareholder approval, including any amendment to our memorandum and articles of association and approval over any change of control transactions. Any conversions of Class B Ordinary Shares into Class A Ordinary Shares may dilute the percentage ownership of the existing holders of Class A Ordinary Shares within their class of Ordinary Shares. Our founder, Chairman of the Board of Directors and Chief Executive Officer, Ms. Hong Bee Yin, and JE Cleantech Global Limited, which is 100% directly owned by Ms. Hong, beneficially own all of our issued and outstanding Class B Ordinary Shares. These Class B Ordinary Shares constitute approximately 66.6% of our total issued and outstanding share capital and approximately 97.6% of the aggregate voting power of our total issued and outstanding share capital as of the date of this Annual Report. As a result of the dual-class share structure and the concentration of ownership, holders of Class B Ordinary Shares have considerable influence over matters such as decisions regarding mergers and consolidations, election of directors and other significant corporate actions. Such holders may take actions that are not in the best interest of us or our other members. This concentration of ownership may discourage, delay or prevent a change in control of our Company, which could have the effect of depriving our other members of the opportunity to receive a premium for their shares as part of a sale of our Company and may reduce the price of our Class A Ordinary Shares. This concentrated control will limit your ability to influence corporate matters and could discourage others from pursuing any potential merger, takeover or other change of control transactions that holders of Class A Ordinary Shares may view as beneficial.

Holders of Class B Ordinary Shares may convert each Class B Ordinary Share into one fully paid Class A Ordinary Share at any time. The right to convert is exercisable by the holder of the Class B Ordinary Shares by delivering a written notice to the Company that such holder elects to convert a specified number of Class B Ordinary Shares into Class A Ordinary Shares. In no event shall Class A Ordinary Shares be convertible into Class B Ordinary Shares. Accordingly, the conversion by any holder of Class B Ordinary Shares held by it into Class A Ordinary Shares will result in a dilution of the percentage ownership of the existing holders of Class A Ordinary Shares within their class of Ordinary Shares.

We are currently a "controlled company," as defined under the Nasdaq Stock Market Rules, because one of our shareholders holds more than 50% of our voting power. As a result, for so long as we remain a controlled company as defined under that rule, we are exempt from, and our shareholders generally are not provided with the benefits of, some of the Nasdaq Stock Market corporate governance requirements, including that: (i) a majority of our Board of Directors must be independent directors; (ii) our compensation committee must be composed entirely of independent directors; and (iii) our nomination committee must be composed entirely of independent directors. Although we intend to have a majority of independent directors and for our compensation and our nomination committees to be composed entirely of independent directors, that may change in the future so long as we remain a controlled company.

As a foreign private issuer whose Class A Ordinary Shares are traded on Nasdaq, we rely on a provision in the Nasdaq corporate governance listing standards that allows us to follow Cayman Islands law with regard to certain aspects of corporate governance. This allows us to follow certain corporate governance practices that differ in significant respects from the corporate governance requirements applicable to U.S. companies listed on Nasdaq. For example, we are exempt from Nasdaq regulations that require a listed U.S. company to: - have a majority of the board of directors consist of independent directors;         - require non-management directors to meet on a regular basis without management present;         - have an independent compensation committee;         - have an independent nominating committee; and         - seek shareholder approval for the implementation of certain equity compensation plans and dilutive issuances of Class A Ordinary Shares, such as transactions, other than a public offering, involving the sale of 20% or more of our Class A Ordinary Shares for less than the greater of book or market value of the shares. As a foreign private issuer, we are permitted to follow home country practice in lieu of the above requirements. Although we intend to have a majority of independent directors and for our compensation and our nomination committees to be composed entirely of independent directors, that may change in the future. However, our audit committee is required to comply with the provisions of Rule 10A-3 of the Exchange Act, which is applicable to U.S. companies listed on Nasdaq. Therefore, we intend to maintain a fully independent audit committee in accordance with Rule 10A-3 of the Exchange Act. However, because we are a foreign private issuer, our audit committee is not subject to additional Nasdaq corporate governance requirements applicable to listed U.S. companies, including the requirements to have a minimum of three members and to affirmatively determine that all members are "independent," using more stringent criteria than those applicable to us as a foreign private issuer.

We are an exempted company incorporated under the laws of the Cayman Islands with limited liability. Our corporate affairs are governed by our Amended and Restated Memorandum of Association (our "Amended and Restated Memorandum") and our Amended and Restated Articles of Association (our "Amended and Restated Articles"), the Companies Act and the common law of the Cayman Islands. The rights of shareholders to take action against our directors and us, actions by minority shareholders and the fiduciary duties of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common law, which are generally of persuasive authority, but are not binding, on a court in the Cayman Islands. The rights of our shareholders and the fiduciary duties of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a different body of securities laws than the United States, and provide significantly less protection to investors. In addition, Cayman Islands companies may not have the standing to initiate a shareholder derivative action in a federal court of the United States. There is no statutory recognition in the Cayman Islands of judgments obtained in the United States, although the courts of the Cayman Islands will generally recognize and enforce a non-penal judgment of a foreign court of competent jurisdiction without retrial on the merits. Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records (other than the Amended and Restated Memorandum and Amended and Restated Articles) or to obtain copies of lists of shareholders of these companies. Our directors are not required under our Amended and Restated Memorandum or our Amended and Restated Articles to make our corporate records available for inspection by our shareholders. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder resolution or to solicit proxies from other shareholders in connection with a proxy contest. Certain corporate governance practices in the Cayman Islands, which is our home country, differ significantly from requirements for companies incorporated in other jurisdictions such as U.S. states. Currently, we do not plan to follow home country practice with respect to most corporate governance matters. However, if we so choose, we may do so in the future. Accordingly, our shareholders may be afforded less protection than they otherwise would under rules and regulations applicable to U.S. domestic issuers. As a result of all of the above, shareholders may have more difficulty in protecting their interests in the face of actions taken by our management, members of the Board of Directors or controlling shareholder than they would as shareholders of a company incorporated in a U.S. state.

We are a Cayman Islands exempted company and substantially all of our assets are located outside of the United States. In addition, all of our current directors and officers are nationals and residents of countries other than the United States and substantially all of the assets of these persons are located outside the United States. As a result, it may be difficult for a shareholder to effect service of process within the United States upon these persons or to enforce against us or them judgments obtained in United States courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and Singapore may render you unable to enforce a judgment against our assets or the assets of our directors and officers. As a result of all of the above, our shareholders may have more difficulties in protecting their interests through actions against us or our officers, directors or major shareholders than would shareholders of a corporation incorporated in a jurisdiction in the United States.

We are an "emerging growth company," as defined in the JOBS Act, and we may take advantage of certain exemptions from various requirements applicable to other public companies that are not emerging growth companies including, most significantly, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act for so long as we are an emerging growth company. As a result, if we elect not to comply with such auditor attestation requirements, our investors may not have access to certain information they may deem important. The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards. In other words, an "emerging growth company" can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the extended transition period, although we have early adopted certain new and revised accounting standards based on transition guidance permitted under such standards. As a result of this election, our future financial statements may not be comparable to other public companies that comply with the public company effective dates for these new or revised accounting standards.

Because we are a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including: - the rules under the Exchange Act requiring the filing of quarterly reports on Form 10-Q or current reports on Form 8-K with the SEC;         - the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act;         - the sections of the Exchange Act requiring insiders to file public reports of their trading activities under Section 16(a) of the Exchange Act and liability for insiders who profit from trades made in a short period of time; and         - the selective disclosure rules by issuers of material non-public information under Regulation FD. We are required to file an annual report on Form 20-F within four months after the end of each fiscal year. In addition, we intend to publish our financial results on a semi-annual basis through press releases distributed pursuant to the rules and regulations of Nasdaq. Press releases relating to financial results and material events will also be furnished to the SEC on Form 6-K. However, the information we are required to file with or furnish to the SEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. As a result, you may not be afforded the same protections or information that would be made available to you if you were investing in a U.S. domestic issuer.