TOYO Co., Ltd(TOYO) - 2024 Q4 - Annual Report

EXPLANATORY NOTE This section clarifies the business combination involving TOYO, BWAQ, and TOYO Solar, detailing the corporate restructuring and subsequent Nasdaq listing of TOYO's Ordinary Shares - TOYO Co., Ltd. completed a business combination on July 1, 2024, involving multiple entities including Blue World Acquisition Corporation (BWAQ) and Vietnam Sunergy Cell Company Limited (TOYO Solar)[7] - The business combination included a Pre-Merger Reorganization where TOYO acquired SinCo, and SinCo acquired TOYO Solar, making TOYO Solar a wholly-owned subsidiary of SinCo, which in turn became a wholly-owned subsidiary of TOYO[8] - BWAQ merged into Merger Sub, with Merger Sub surviving as a wholly-owned subsidiary of TOYO. Ordinary Shares of TOYO commenced trading on Nasdaq under the symbol 'TOYO' on July 2, 2024, and Warrants on the OTC Markets[10] - A PIPE Purchase Agreement was entered into with NOTAM Co., Ltd. for an aggregate purchase price of $6,000,000 for 600,000 BWAQ Class A Ordinary Shares, with provisions for additional share issuance based on future stock performance[8] CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This section advises readers on the inherent uncertainties and risks associated with forward-looking statements contained in the report, disclaiming any obligation to update them - This report contains forward-looking statements, identifiable by words such as 'may,' 'expect,' 'predict,' 'potential,' 'anticipate,' 'contemplate,' 'believe,' 'estimate,' 'intends,' 'will,' 'would,' and 'continue'[11] - Readers are cautioned not to place undue reliance on these statements, as actual results may differ materially due to known and unknown risks and uncertainties, many of which are beyond the company's control[12] - The company undertakes no obligation to publicly update or revise any forward-looking statements to reflect changes in expectations or circumstances[12] PART I This part provides foundational information about the company, including its identity, key financial data, business operations, and corporate governance ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS Identifies TOYO Co., Ltd.'s key personnel and external advisors post-business combination, including directors, senior management, legal counsel, and independent auditors A. Directors and Senior Management Provides the business address for all directors and executive officers, with further details referenced in the Form F-4 - The directors and executive officers of the Company post-Business Combination are detailed in the Form F-4, section 'Management of PubCo Following the Transactions'[13] - The business address for all directors and executive officers is 5F, Tennoz First Tower, 2-2-4, Higashi-Shinagawa, Shinagawa-ku, Tokyo, Japan 140-0002[13] B. Adviser Identifies Robinson & Cole LLP as the legal counsel for the Company post-Business Combination - Robinson & Cole LLP will serve as counsel to the Company after the Business Combination[14] C. Auditors Designates Marcum Asia CPAs LLP as the independent auditor for the Company, continuing its role post-Business Combination - Marcum Asia CPAs LLP (formerly Marcum Bernstein & Pinchuk LLP) served as the independent auditor for the Company as of December 31, 2023 and 2022, and will continue in this role post-Business Combination[15] ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE This item is not applicable, indicating no specific offer statistics or expected timetable are provided in this report - This item is not applicable to the current report[16] ITEM 3. KEY INFORMATION Presents key financial and risk information, including pro forma capitalization and indebtedness as of December 31, 2023, and references detailed risk factors A. [Reserved] This section is reserved and contains no specific content B. Capitalization and Indebtedness Details the company's pro forma capitalization and indebtedness as of December 31, 2023 Beneficial Ownership of Ordinary Shares (as of July 1, 2024) | As of December 31, 2023 (pro forma) | thousands | |:------------------------------------|:----------| | Cash and cash equivalents | 29,804 | | Total equity | 63,855 | | Debt: | | | Non-current debt | 12,192 | | Current debt | 142,648 | | Total indebtedness | 154,840 | | Total capitalization | 218,695 | C. Reasons for the Offer and Use of Proceeds This item is not applicable to the current report - This item is not applicable to the current report[17] D. Risk Factors Refers to the comprehensive description of the Company's risk factors detailed in the Form F-4 - The risk factors associated with the Company are described in the Form F-4 in the section titled 'Risk Factors,' which is incorporated by reference[18] ITEM 4. INFORMATION ON THE COMPANY Provides an overview of TOYO Co., Ltd.'s history, business operations, organizational structure, and property, plants, and equipment A. History and Development of the Company Outlines TOYO Co., Ltd.'s incorporation, its role as a consolidating entity, and its principal executive office location - TOYO Co., Ltd. was incorporated on May 16, 2023, in the Cayman Islands, specifically for the Business Combination[19] - The Company has been the consolidating entity for TOYO Solar's financial statements since the Pre-Merger Reorganization[19] - The Company's principal executive office is located in Tokyo, Japan, and its website is https://www.toyo-solar.com/"[20](index=20&type=chunk) B. Business Overview Describes that all business operations are conducted through TOYO Solar and its subsidiaries, with further details in the Form F-4 - Following the Business Combination, all business operations of the Company are conducted through TOYO Solar and its subsidiaries[21] - A detailed description of the business is included in the Form F-4 in sections 'Information Related to PubCo' and 'Management's Discussion and Analysis of Financial Condition and Results of Operations of PubCo'[21] C. Organizational Structure Details the organizational structure post-Business Combination, with TOYO Solar and Merger Sub becoming wholly-owned subsidiaries of TOYO - Upon consummation of the Business Combination, TOYO Solar became a wholly-owned subsidiary of TOYO, and Merger Sub (surviving entity of BWAQ merger) became a wholly-owned subsidiary of TOYO[22] - A diagram depicting the organizational structure is provided, and principal subsidiaries are listed in Exhibit 8.1[22] D. Property, Plants and Equipment States that TOYO's property, plants, and equipment are held through TOYO Solar, with detailed information in the Form F-4 - TOYO's property, plants, and equipment are held through TOYO Solar[23] - Information regarding TOYO Solar's property, plants, and equipment is described in the Form F-4 in the section 'Information related to PubCo — Property and equipment, net'[23] ITEM 4A. UNRESOLVED STAFF COMMENTS Confirms that there are no unresolved staff comments from the SEC regarding the company's filings - There are no unresolved staff comments[25] ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS Directs readers to the Form F-4 for a comprehensive discussion and analysis of the Company's financial condition and results of operations - The discussion and analysis of the Company's financial condition and results of operation are included in the Form F-4, section 'Management's Discussion and Analysis of Financial Condition and Results of Operations of PubCo'[26] ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES Outlines information regarding the Company's directors, senior management, compensation, board practices, and employee details, primarily referencing the Form F-4 A. Directors and Senior Management References the Form F-4 for details on directors and executive officers post-Business Combination - Directors and executive officers post-Business Combination are detailed in the Form F-4, section 'Management of PubCo Following the Transactions'[27] B. Compensation Provides compensation information for directors and executive officers, as detailed in the Form F-4 - Compensation information for directors and executive officers is set forth in the Form F-4, including sections on 'Compensation of Directors and Executive Officers,' 'Employment Agreements and Indemnification Agreements,' and 'Share Incentive Plan'[28] C. Board Practices Details the Company's board practices, as described in the Form F-4 - Information on the Company's board practices is detailed in the Form F-4, section 'Management of PubCo Following the Transactions'[28] D. Employees Presents information regarding the Company's employees, as set forth in the Form F-4 - Information regarding the Company's employees is set forth in the Form F-4, section 'Information Related to PubCo—Employees'[28] E. Share Ownership Refers to Item 7.A of this Report for details on Ordinary Share ownership by directors and executive officers - Ownership of Ordinary Shares by directors and executive officers upon the Business Combination is detailed in Item 7.A of this Report[28] ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS Provides detailed information on beneficial ownership of Ordinary Shares by major shareholders, directors, and executive officers, and references related party transactions A. Major Shareholders Details the beneficial ownership of Ordinary Shares by principal shareholders, directors, and executive officers as of July 1, 2024 - Beneficial ownership is calculated based on 46,095,743 Ordinary Shares issued and outstanding as of July 1, 2024[29] Beneficial Ownership of Ordinary Shares (as of July 1, 2024) | Name of Beneficial Owner | Ordinary Shares | % of Total Ordinary Shares / Voting Power | |:----------------------------------------------|:----------------|:------------------------------------------| | Principal Shareholders | | | | WWB Corporation and Affiliated Entities | 31,485,066 | 68.3% | | Belta | 10,045,000 | 21.8% | | Directors and Executive Officers | | | | Junsei Ryu | 31,485,066 | 68.3% | | Taewoo Chung | — | — | | Aihua Wang | — | — | | Alfred "Trey" Hickey | 30,000 | * | | Anders Karlsson | — | — | | Hiroyuki Tahara | — | — | | June Han | — | — | | All directors and executive officers as a group (7 individuals) | 31,515,066 | 68.4% | - WWB Corporation, a wholly-owned subsidiary of Abalance Corporation, holds 31,485,066 Ordinary Shares, representing 68.3% of total shares. Junsei Ryu, a director, holds the same amount, indicating indirect ownership through affiliated entities[30] - Belta holds 10,045,000 Ordinary Shares, representing 21.8%, and is controlled by Mr. Jianfeng Cai[31] B. Related Party Transactions References the Form F-4 for detailed information on the Company's related party transactions - Information on the Company's related party transactions is detailed in the Form F-4, section 'Certain Relationships and Related Person Transactions — PubCo Relationships and Related Party Transactions'[33] C. Interests of Experts and Counsel States that there are no specific interests of experts and counsel to disclose - This section states 'None / Not applicable,' indicating no specific interests of experts and counsel to disclose[33] ITEM 8. FINANCIAL INFORMATION Outlines the availability of consolidated financial statements, information on legal proceedings, and dividend policy, primarily by reference to the Form F-4 A. Consolidated Statements and Other Financial Information Confirms that consolidated financial statements are filed as part of this Report and detailed in Item 18 - Consolidated financial statements have been filed as part of this Report and are detailed in Item 18 'Financial Statements'[34] Legal Proceedings Refers to the Form F-4 for descriptions of legal or arbitration proceedings - Legal or arbitration proceedings are described in the Form F-4, section 'Information Related to PubCo — Legal Proceedings'[34] Dividend Policy Describes the Company's dividend distribution policy, as detailed in the Form F-4 - The Company's policy on dividend distributions is described in the Form F-4, section 'Description of PubCo Securities—Ordinary Shares—Dividends'[35] ITEM 9. THE OFFER AND LISTING Details the listing of TOYO's Ordinary Shares on Nasdaq and Warrants on the OTC Markets, with other sub-sections marked as not applicable A. Offer and Listing Details Specifies that Ordinary Shares are listed on Nasdaq and Warrants are traded on the OTC Markets - Ordinary Shares are listed on Nasdaq under the symbol 'TOYO'[36] - Warrants are traded on the OTC Markets[36] B. Plan of Distribution This item is not applicable to the current report - This item is not applicable to the current report[36] C. Markets Confirms the listing of Ordinary Shares on Nasdaq and Warrants on the OTC Markets - Ordinary Shares are listed on Nasdaq under the symbol 'TOYO', and Warrants are traded on the OTC Markets[36] D. Selling Shareholders This item is not applicable to the current report - This item is not applicable to the current report[36] E. Dilution This item is not applicable to the current report - This item is not applicable to the current report[37] F. Expenses of the Issue This item is not applicable to the current report - This item is not applicable to the current report[37] ITEM 10. ADDITIONAL INFORMATION Provides additional corporate information, including share capital, governing documents, material contracts, exchange controls, taxation, and the role of experts A. Share Capital Details the Company's authorized and outstanding Ordinary Shares and warrants, including their par value and exercise price - The Company's authorized share capital is 500,000,000 ordinary shares with a par value of US$0.0001 per share[38] - As of July 1, 2024, 46,095,743 Ordinary Shares were outstanding and issued[38] - There are 4,970,012 Warrants outstanding, each exercisable at US$11.50 per Ordinary Share, with 4,252,988 being publicly tradable and registered[39] B. Memorandum and Articles of Association Confirms the effectiveness of the Company's amended and restated articles of association and references their description in the Form F-4 - The amended and restated articles of association of the Company ('Company Charter') became effective on July 1, 2024, and are filed as part of this Report[40] - A description of the Company Charter is contained in the Form F-4, section 'Description of PubCo Securities'[40] C. Material Contracts Outlines material contracts related to operations and the business combination, including the PIPE Purchase Agreement and Earnout Equities Vesting Agreement - Material contracts relating to TOYO's operations, such as related party borrowing and land lease agreements, are referenced in the Form F-4[41] - The PIPE Purchase Agreement, amended on June 26, 2024, includes provisions for NOTAM Co., Ltd. to purchase additional Ordinary Shares if the average closing price falls below $10.00 per share over specified periods (July, July-August, July-September 2024), up to a maximum of 500,000 additional shares[43][44][49] - An Earnout Equities Vesting Agreement, dated June 29, 2024, released 1,380,000 Founder Shares held by the Sponsor from potential surrender or cancellation, allowing their conversion into Ordinary Shares at the Merger Closing[52][53] D. Exchange Controls States that Cayman Islands laws impose no governmental restrictions on capital import/export or dividend remittances to non-resident shareholders - There are no governmental laws or regulations in the Cayman Islands that affect the import/export of capital or the remittance of dividends/payments to non-resident holders of Ordinary Shares[54] - No limitation is imposed by Cayman Islands laws or the Company Charter on the right of non-residents to hold or vote shares[54] E. Taxation Refers to the Form F-4 for information pertaining to material tax considerations - Information pertaining to tax considerations is set forth in the Form F-4, section 'Material Tax Considerations'[55] F. Dividends and Paying Agents Describes the Company's dividend policy as detailed in the Form F-4 and notes the absence of an identified paying agent - The Company's dividend policy is described in the Form F-4, section 'Description of PubCo Securities — Ordinary Shares — Dividends'[56] - The Company has not identified a paying agent[56] G. Statement by Experts Acknowledges reliance on Marcum Asia CPAs LLP for the audited consolidated financial statements incorporated by reference - The consolidated financial statements of TOYO and its subsidiaries, and BWAQ, incorporated by reference, rely on the reports of Marcum Asia CPAs LLP as an independent registered public accounting firm[57][58] H. Documents on Display Explains TOYO's status as a foreign private issuer and its SEC filing requirements, including the Annual Report on Form 20-F - As a 'foreign private issuer,' TOYO is exempt from certain SEC rules (e.g., proxy statements, Section 16 reporting) but is required to file an Annual Report on Form 20-F[59] - The SEC website (http://www.sec.gov) contains reports and other information filed by the Company[59] I. Subsidiary Information This item is not applicable to the current report - This item is not applicable to the current report[60] ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Refers to the Form F-4 for comprehensive disclosures regarding the Company's exposure to quantitative and qualitative market risks - Information on quantitative and qualitative disclosures about market risk is set forth in the Form F-4, section 'Management's Discussion and Analysis of Financial Condition and Results of Operation of PubCo — Quantitative and Qualitative Disclosures about Market Risk'[61] ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES Provides details on the Company's outstanding warrants, including their exercisability and registration status Warrants Details the number of outstanding warrants, their exercise price, and their registration and tradability status - Upon closing of the Business Combination, there were 4,970,012 Warrants outstanding[62] - Each whole Warrant is exercisable at US$11.50 per one Ordinary Share[62] - Of the total warrants, 4,252,988 are publicly tradable and registered, while the remainder are registered with contractual lock-ups or not registered, held by Fuji Solar, the Sponsor, and its members[62] PART II This part of the report is not applicable - This part of the report is not applicable[63] PART III This part details the Company's financial statements and a comprehensive list of exhibits filed as part of this report ITEM 17. FINANCIAL STATEMENTS Indicates that Item 17, pertaining to financial statements, is not applicable to this filing - This item is not applicable to the current report[63] ITEM 18. FINANCIAL STATEMENTS Incorporates by reference the audited consolidated financial statements of TOYO and BWAQ from the Form F-4 - Audited consolidated financial statements of TOYO and its subsidiaries as of December 31, 2023 and 2022, and for the year ended December 31, 2023, are incorporated by reference from the Form F-4 (pages F-2 to F-24)[64] - Unaudited condensed financial statements of BWAQ as of December 31, 2023, and audited financial statements as of June 30, 2023 and 2022, are incorporated by reference from the Form F-4 (pages F-25 to F-72)[65] - Unaudited pro forma condensed combined financial information of TOYO and BWAQ is attached as Exhibit 15.1 to this Report[66] ITEM 19. EXHIBITS Provides a comprehensive list of exhibits filed, including corporate governance documents, warrant agreements, and various business combination contracts - The report includes exhibits such as the Amended and Restated Memorandum and Articles of Association of TOYO (1.1), Specimen Ordinary Share Certificate (2.1), and Warrant Certificate (2.2)[68] - Key agreements related to the Business Combination are listed, including the Agreement and Plan of Merger and its amendments (4.1-4.4), Shareholder Lock-Up and Support Agreements (3.1-3.4), and the Sponsor Support Agreement (3.5)[68] - Other significant exhibits include the 2024 Share Incentive Plan (4.5), PIPE Purchase Agreement and its amendment (4.7, 4.11), Earnout Equities Vesting Agreement (4.12), and a list of principal subsidiaries (8.1)[69] SIGNATURE Certifies the report by TOYO Co., Ltd. and is signed by Junsei Ryu, Director and Chief Executive Officer - The report is certified by TOYO Co., Ltd. and signed by Junsei Ryu, Director and Chief Executive Officer, on July 8, 2024[71]