THE latest termination of a placement agreement is not expected to affect watch-listed ’s ability to continue as a going concern, its board told shareholders in a bourse filing last Friday (May 13), a day after the deal was mutually called off.

The mainboard-listed product distributor last year planned to raise roughly S$3.1 million through the placement of 30 million shares, as part of efforts to meet short-term obligations.

But KTL and the placees have now mutually agreed to terminate the placement, the board said, citing factors such as unfulfilled conditions precedent and an ongoing trading suspension. Trading in KTL shares has been suspended since August 2021, after the deal was announced.

The board said that, to the best of its knowledge, the termination of the placement agreement is not expected to have any material adverse impact on the consolidated net tangible assets or earnings per share of the group for the financial year ending Jun 30, 2022.

The termination is also not expected to affect KTL’s ability to continue as a going concern “as the placement is only one of the several actions taken by the company to ensure the foregoing”, said the board, which pointed to “a re-assessment” of KTL’s financial position.

This comes even as KTL on the same day posted a loss of S$288,000 for the 3 months to Mar 31, 2022, down from S$333,000 in the year prior. Revenue was S$209,000, against none before.

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As KTL changed its year-end from Dec 31 to Jun 30, its current financial year will span an 18-month period. Net loss was S$2.3 million for the 15 months, on revenue of S$915,000. Loss per share was 0.09 cent for the 3 months, against 0.11 before, and 0.72 cent for the 15 months.

As such, the board acknowledged that “these conditions indicate an existence of a material uncertainty that may cast significant doubt on the company’s and the group’s ability to continue as a going concern”. But it added that the management believes KTL can still do so, and the latest financial statements have been prepared on a going-concern basis.

“The board has assessed that there is an urgent need to raise funds and look for opportunities to inject new revenue-generating businesses,” it said, while citing actions such as a shareholder loan for up to S$10 million inked with non-executive chairman Wu Yongqiang in March. KTL last year also entered into a loan deal for up to S$1.5 million with chief executive Chin Teck Oon.

The net asset value was 0.3 cent a share as at Mar 31, 2022, against 0.42 cent as at end-2020.

No dividend was recommended for the latest reporting period, unchanged from the year before, as the board noted that “the group currently still has retained losses”.