Interested Person Transaction::Proposed Disposal of Yinda Technology Singapore Pte. Ltd. and Yinda Technology (Thailand) Co., Ltd.

TOTM TECHNOLOGIES LIMITED

(Incorporated in the Republic of Singapore)

(Company Registration No. 201506891C)

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PROPOSED DISPOSAL OF SHAREHOLDING INTERESTS IN

YINDA TECHNOLOGY SINGAPORE PTE. LTD. AND

YINDA TECHNOLOGY (THAILAND) CO., LTD.

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1. INTRODUCTION

1.1. The board of directors (the "Board" or the "Directors") of TOTM Technologies Limited (the "Company", and together with its subsidiaries, the "Group") wishes to announce that the Company has entered into a sale and purchase agreement (the "SPA") with Yinda Pte. Ltd. ("YPL") for the sale of the following to YPL:

1. 500,000 ordinary shares in Yinda Technology Singapore Pte. Ltd. ("Yinda Technology Singapore") (the "YTS Shares"), constituting 100.0% of the issued and paid up share capital of Yinda Technology Singapore; and
2. 572,700 ordinary shares in Yinda Technology (Thailand) Co., Ltd. ("Yinda Technology Thailand", together with Yinda Technology Singapore, the "Target Companies") (the "YTT Shares", together with the YTS Shares, the "Sale Shares"), constituting 77.9% of the issued ordinary share capital of Yinda Technology Thailand (with the remaining 22.1% of the issued ordinary share capital in Yinda Technology Thailand being held by Yinda Technology Singapore and 100.0% of the preferred share capital in Yinda Technology Thailand being held by Nattaya Promsatawong),

the "Proposed Disposal".

1. Upon completion of the Proposed Disposal (the "Completion"), Yinda Technology Singapore and Yinda Technology Thailand shall cease to be subsidiaries of the Company and the Group will exit from the provision of integrated and innovative communications solutions and services (the "Telecommunications Business").
2. The Proposed Disposal constitutes:
3. 1. a "discloseable transaction" under Chapter 10 of Section B: Rules of Catalist of the Listing Manual (the "Catalist Rules") of the Singapore Exchange Securities Trading Limited ("SGX-ST"). Please refer to paragraph 7 (Catalist Rule 1006 figures for the Proposed Disposal) for further details on the relative figures in respect of the Proposed Disposal computed on the bases set out in Catalist Rule 1006; and
   2. an "interested person transaction" as defined under Chapter 9 of the Catalist Rules. Please refer to paragraph 8 (The Proposed Disposal as an interested person transaction) for further details on the Proposed Disposal as an interested person transaction.

The Proposed Disposal is subject to the approval of the shareholders of the Company (the "Shareholders") who are deemed independent under the Catalist Rules in respect of the Proposed Disposal (the "Independent Shareholders"). The Company intends to convene an extraordinary general meeting (an "EGM") to seek the approval of the Independent Shareholders for the Proposed Disposal and further information on, inter alia, the Proposed Disposal will be provided in a circular to be issued by the Company (the "Circular") in due course.

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2. INFORMATION ON THE TARGET COMPANIES AND YPL Yinda Technology Singapore

1. Yinda Technology Singapore was incorporated in Singapore on 10 April 2003 and has an issued and paid up share capital of S$500,000 comprising 500,000 shares. The principal activities of Yinda Technology Singapore are for investment holding, installation and implementation of telecommunication related products and services. Its directors are Mr. Xie Huazhong, Ms. Wang Xiaolan and Ms. Shao Lifang.
2. Based on the latest audited financial statements of Yinda Technology Singapore for the financial year ended 31 May 2021 ("FY2021"), Yinda Technology Singapore recorded a loss of S$2,136,829 for FY2021 and has a net liability value of S$3,017,640 as at 31 May 2021.
   Yinda Technology Thailand
3. Yinda Technology Thailand was incorporated in Thailand on 14 December 2001 and has a issued and paid-up capital of THB8,190,000 (approximately S$304,428) comprising 765,000 preference shares and 735,000 ordinary shares. The principal activity of Yinda Technology Thailand is providing telecommunication network services. Its directors are Ms. Wang Xiaolan, Ms. Shao Lifang and Ms. Nattaya Promsatawong.
4. Based on the latest audited financial statements of Yinda Technology Thailand for FY2021, Yinda Technology Thailand recorded a loss of THB14,941,346 (approximately S$654,000) for FY2021 and has a net asset value of THB39,081,566 (approximately S$1,592,000) as at 31 May 2021.
   YPL
5. YPL is wholly owned by Shanghai Yinda Science and Technology Industrial Co Ltd ("Shanghai Yinda"). Shanghai Yinda is in turn 97.09% held by Shanghai Yinda Technology Group Co Ltd ("Shanghai Yinda Group"), and 2.91% held by Ms. Yang Xulan, an employee of Shanghai Yinda. Shanghai Yinda Group is in turn 51.48% held by Mdm. Song Xingyi ("Mdm. Song"), the Non-Independent,Non-Executive Chairman of the Company, 33.66% held by Mr. Wang Hua, 13.86% held by Mr. Wang Zhijun and 1.00% held by Ms. Shao Lifang. Mdm. Song is the spouse of Mr. Wang Zhijun and mother of Mr. Wang Hua. Ms. Shao Lifang is the Executive Director of the Company.
6. The Shanghai Yinda Group is engaged in the information technology, telecommunications and related business mainly in the People's Republic of China. YPL is an investment holding company in information technology and computer service activities.
7. As YPL is an associate of Mdm. Song, the Proposed Disposal constitutes an interested person transaction as defined under Chapter 9 of the Catalist Rules.
   Independent valuation of the Target Companies
8. For the purposes of the Proposed Disposal, the Company has commissioned Cushman & Wakefield VHS Pte. Ltd. as an independent valuer (the "Independent Valuer") to assess and determine the market value of 100.00% equity interests in the capital of the Target Companies as at 30 September 2021 for the Proposed Disposal.
9. Based on the preliminary valuation conducted by the Independent Valuer, having considered that the Target Companies is expected to be sold to a single buyer as a package deal, the indicative market value of 100% equity interest in the capital of the Target Companies as at 30 September 2021 is S$nil. The finalised valuation report for the valuation will be issued by the Independent Valuer and included in the Circular.

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3. CONSIDERATION

1. The aggregate consideration for the sale of the Sale Shares shall be the amount of S$1,001.00 (the "Total Consideration") with S$1.00 and S$1,000.00 attributable to Yinda Technology Singapore and Yinda Technology Thailand, respectively.
2. The Total Consideration was arrived at after arm's length negotiations, on a willing-buyer,willing-seller basis and taking into account: (a) the indicative market value provided by the Independent Valuer of S$nil as elaborated on in paragraph 2.9; (b) the continued loss-making positions of Yinda Technology Singapore and Yinda Technology Thailand since the financial year ended 31 May 2020 ("FY2020"); (c) the net liability value of Yinda Technology Singapore amounting to approximately S$3.0 million offset by the net asset value of Yinda Technology Thailand amounting to approximately S$1.6 million; (d) the indebtedness between the Target Companies, the Group and YPL which is further elaborated on in paragraph 5.1 (Conditions precedent); and (e) applicable market conditions.
3. The Total Consideration shall be satisfied by YPL setting off an outstanding amount which is equivalent to the Total Consideration due from the Company to YPL under the Existing YPL Loan1. Therefore, no cash proceeds will be received from the Proposed Disposal.
4. Please also see paragraph 5.1 (Conditions precedent) for details on the novation, set-off and waiver of the Existing Shareholder's Loans2 as conditions to the Proposed Disposal, contemplated under the terms and conditions of the SPA.

4. RATIONALE FOR THE PROPOSED DISPOSAL

1. Viability of the remaining business
   The Proposed Disposal is in line with the Company's diversification into the business of development and provision of identity management biometric technology solutions earlier in April 2021 (the "Biometrics Business") and the intention to reduce the Group's reliance on the Telecommunications Business.
   The Proposed Disposal is an avenue for the Company to reduce its ongoing operational costs in relation to the Telecommunications Business and exit from its investment in the Target Companies, so that more resources can be deployed to focus on growing and developing its portfolio within the Biometrics Business which has proven to be more profitable. Based on the audited financial statements of the Group for FY2021, the Biometrics Business contributed net profit amounting to S$0.5 million to the Group despite only having recorded two (2) months of revenue contribution, compared to the Group's net loss of S$8.4 million which mainly stemmed from the Telecommunications Business.
2. Exit from loss-making business segment
   The Proposed Disposal allows the Group to exit from a loss-making business segment. Yinda Technology Singapore recorded net losses amounting to S$2.9 milllion in FY2020 and S$2.1 million in FY2021 while Yinda Technology Thailand recorded net losses amounting to THB4,723,657 (approximately S$176,000) in FY2020 and THB14,491,346 (approximately S$654,000) in FY2021.

• The Existing YPL Loan means the outstanding principal loan amounts provided by YPL to the Company of S$2,226,253 and US$511,180 (equivalent to S$692,138 based on a historical exchange rate of US$1.00 to S$1.354), and interest payable of 3.25% per annum on the principal loan amounts (such interest payable amounts being S$317,776 as at 30 November 2021). The aggregate of the principal and interest amounts to S$3,236,167 which is to be repayable on 31 May 2022 or such earlier date as mutually agreed by YPL and the Company, pursuant to a renewed loan agreement dated 4 June 2021.
  2 The Existing Shareholder's Loans means the the outstanding shareholder's loans of a total amount of S$4,246,501 provided by the Seller to Yinda Technology Singapore and Yinda Technology Thailand (being S$3,648,630 and S$597,871, respectively).

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Despite the Board and Management's efforts to control costs and restructure the Telecommunications Business of the Group, including the Group's exit from its telecommunications operations in Malaysia and Philippines in January 2021, the Group's telecommuncations projects in Singapore and Thailand continue to be affected and delayed due to measures implemented by the respective governments to curb COVID-19.

Due to the loss-making position of the Target Companies and their inability to make payment in the foreseeable future, the Company had fully written down its investment in Yinda Technology Singapore of S$8,784,890 during the financial year ended 31 May 2019 ("FY2019") and its investment in Yinda Technology Thailand by S$1.0 million during FY2021 to S$1.3 million as at 31 May 2021. The Company had also written down the Existing Shareholders' Loans from Yinda Technology Singapore to zero recoverable value.

1. Challenges to the Telecommunications Business
   The Company believes that the slowdown of its Telecommunications Business was evident before the COVID-19 pandemic, where revenue dropped from S$17.9 million in FY2019 to S$11.5 million in FY2020. This is due to the greater challenges faced by the Group in securing new and larger project contracts with better profit margins. Furthermore, the prospects of the Telecommunications Business deteriorated during the COVID-19 pandemic where challenges were faced in securing skilled labour and engineers, especially where the Group lost several foreign workers who chose to return to their home countries, resulting in project delays. In FY2021, both Singapore and Thailand recorded revenue with only S$2.0 million and S$3.0 million respectively. The Board and Management do not expect the Telecommunications Business to turn around in the near future due to depressed margins and a shortage of skilled workers.
2. Target Companies in need of working capital
   Based on the projects on hand and the project status, it was anticipated that the Target Companies required working capital amounting to at least S$2,791,000 to have achieved a break even result in FY2021. Upon the completion of an internal strategic review of the Group's business, the Board is of the view that instead of continuing to provide working capital to fund the Telecommuncations Business, the best course of action for the Group would be to undertake the Proposed Disposal of the Target Companies, to ease the strain caused by the financial requirements of the telecommunications projects which are capital intensive. The Proposed Disposal will also allow the Group to consolidate its financial and capital resources to further develop the biometrics business, which the Group diversified into in April 2021.
3. Packaged sale
   Taking into consideration the terms and conditions of the Proposed Disposal, even though the Total Consideration is of a nominal amount of S$1,001.00 with S$1.00 and S$1,000.00 attributable to Yinda Technology Singapore and Yinda Technology Thailand, respectively, the terms of the Proposed Disposal is unique and beneficial to the Company as:
4. 1. both Yinda Technlogy Singapore and Yinda Technology Thailand will be sold as a package deal. This will free up time and effort which is otherwise required should the Company have to market the Target Companies separately; and
   2. it allows the Company to novate to YPL an outstanding aggregate amount of S$3.2 million owed under the Existing Shareholder's Loans, to be set-off against the full remaining amount of the Existing YPL Loan.

If the Company is to sell the Target Companies on a standalone basis, Yinda Technology Singapore is likely to be sold at S$nil value due to its substantial net liability position. Although there is a possibility that Yinda Technology Thailand (sold on a standalone basis) may be able to fetch a consideration close to its net asset value of S$1.7 million, this consideration amount

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is not sufficient for the Company to repay the Existing YPL Loan and it is also unlikely that the majority of the Existing Shareholder's Loans will be recoverable.

Given the considerations above and in view that a sale to other third parties are unlikely to offer such similar terms (whether on a combined or standalone basis) which would allow the Group to repay the Existing YPL Loan, the Board and Management of the Company are of the view that the Proposed Disposal of both Target Companies as a package deal to YPL is in the best interest of the Company and its shareholders.

5. MATERIAL TERMS OF THE SPA Conditions precedent

5.1. Completion is conditional on the following conditions being satisfied (or waived in accordance with the SPA) (the "Conditions"):

1. the approval of the Shareholders having been obtained at the EGM in respect of, amongst others: (a) the entry into the SPA; (b) all transactions contemplated in the SPA (and in connection therewith) on the terms set out in this Agreement; and (c) Chapter 9 and Chapter 10 (if applicable) of the Catalist Rules in connection with the transactions contemplated in the SPA;
2. the approval of the Board having been obtained for the entry into the SPA and all transactions contemplated in the SPA (and in connection therewith);
3. the approval of the board of directors of YPL having been obtained for the entry into the SPA and all transactions contemplated in the SPA (and in connection therewith);
4. where necessary, the approval of the shareholders of YPL having been obtained for the entry into the SPA and all transactions contemplated in the SPA (and in connection therewith);
5. the receipt of the opinion from Xandar Capital Pte. Ltd, the independent financial adviser appointed by the Company (the "IFA") that the proposed sale of the Sale Shares on the terms and conditions of the SPA is on normal commercial terms and is not prejudicial to the interests of the Company and its minority Shareholders;
6. the receipt of the valuation report from the Independent Valuer;
7. the novation by the Company to YPL of an outstanding aggregate amount of S$3,235,166 owed under the Existing Shareholder's Loans, which shall be set-off against the full remaining amount of the Existing YPL Loan (after the set-off from the Consideration as described above), as contemplated by a novation and set-off deed to be entered into on or around the date of the SPA amongst the Seller, the Buyer, Yinda Technology Singapore and Yinda Technology Thailand (the "Novation and Set-OffDeed");
8. the waiver by the Company of the remaining aggregate amount of S$1,011,335 owed under the Existing Shareholder's Loans, as contemplated under the terms and conditions of the Novation and Set-Off Deed;
9. the release and cancellation of the corporate guarantees extended by the Company under the relevant loans of Yinda Technology Singapore and Yinda Technology Thailand, as the case may be;
10. the completion of an audit on the Target Companies for the period commencing 1 June 2021 to the date of the SPA, as required by the Company; and
11. the parties to the SPA not having received notice of any injunction or other order, directive or notice restraining or prohibiting the consummation of the transactions

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