Company Overview - Top Wealth Group Holding Limited was incorporated on February 1, 2023, and has authorized 500,000,000 Ordinary Shares, with 27,000,000 shares issued and outstanding [259]. - The corporate structure includes Top Wealth Group Holding Limited as the holding company, with operations primarily conducted through its subsidiary in Hong Kong [267]. - The company is classified as a "foreign private issuer," which allows it to follow less stringent reporting requirements compared to U.S. domestic issuers [280]. - The company underwent a reorganization in March 2023, acquiring 100% interest in its subsidiaries at nominal values of US$10 each [262]. Share Issuance and IPO - On October 12, 2023, the company issued 26,999,250 Ordinary Shares to shareholders at par value, treated as a share split, resulting in a total of 27,000,000 shares outstanding [263]. - The company completed its initial public offering on April 18, 2024, issuing 2,000,000 Ordinary Shares at a price of US$4.00 per share, totaling gross proceeds of US$8 million [276]. Financial Performance - For the fiscal year ended December 31, 2023, the company's revenue was US$16.9 million, a significant increase from US$8.5 million in 2022, and a turnaround from a loss of approximately US$16,888 in 2021 [300]. - Revenue for the year ended December 31, 2023, increased by USD 8,430,358, or 99%, reaching USD 16,943,287 compared to USD 8,512,929 in 2022 [414]. - Revenue from caviar was USD 12,483,195, an increase of USD 3,970,266, or 46.64%, while revenue from wine was USD 4,460,092, contributing 100% growth as it was not present in 2022 [415]. - Cost of sales rose to USD 11,556,006, an increase of USD 7,246,259, or 168%, from USD 4,309,747 in 2022, aligning with the significant revenue growth [416]. - Gross profit for the year was USD 5,387,281, up by USD 1,184,099, or 28.2%, from USD 4,203,182 in 2022 [417]. - Gross profit margin decreased to 31.8% from 49.4% in 2022, primarily due to increased volume purchases leading to more favorable discounts for certain customers [417]. - Administrative expenses increased to USD 1,846,759 from USD 466,477, representing approximately 10.90% of total revenue in 2023 compared to 5.48% in 2022 [418]. Revenue Sources and Customer Concentration - The top five customers accounted for 92.0% of total revenues in 2023, indicating a high concentration of revenue sources [301]. - For the year ended December 31, 2022, four customers generated over 10% of total revenue, accounting for approximately 82.6% of total revenue, while for 2023, three customers accounted for approximately 75.5% of sales volume [329]. Procurement and Supply Chain - Procurement from Fujian Aoxuanlaisi amounted to approximately US$6.2 million in 2023, representing 64.3% of total purchases, highlighting reliance on a single supplier [303]. - For the year ended December 31, 2023, procurement from Silver Fame International (HK) Limited amounted to approximately US$3.4 million, representing 35.6% of total purchases [343]. - The exclusive supply agreement with a PRC sturgeon farm allows the company to procure caviar directly for a term of 10 years, ensuring a stable supply chain [298]. - The Caviar Sales Agreement with Fujian Aoxuanlaisi is for a term of 10 years, from April 30, 2022, to April 30, 2032 [345]. Market Expansion and Strategy - The company plans to expand its global market presence in regions such as Europe, the United States, and Southeast Asia by establishing representative offices and recruiting local staff [312]. - The company aims to enhance brand awareness and market exposure by participating in food expos and hosting tasting events in collaboration with luxury restaurants and hotels [314]. - Future growth is expected from the increasing demand for caviar in nutraceutical, cosmeceutical, and pharmaceutical applications [410]. - The company plans to expand sales channels to directly sell products to overseas customers within three years after the Offering, overcoming challenges such as intense competition and logistics adaptation [313]. Caviar Business and Brand Development - The company has established its own caviar brand, "Imperial Cristal Caviar," which has achieved continuous sales growth since its launch in November 2021 [296]. - The company actively participates in food expos and collaborates with food bloggers to enhance brand awareness and product publicity [299]. - The company is committed to sourcing top-quality caviar from sturgeon farms globally, with plans to expand procurement sources in Europe and the United States [315]. - The company intends to carry out vertical expansion by acquiring non-controlling stakes in suitable sturgeon farms in Europe and/or the United States to ensure a stable supply of high-quality caviar [316]. Compliance and Regulatory Matters - The company is subject to the implications of the Holding Foreign Companies Accountable Act (HFCAA), which may affect its trading status if audit reports are not compliant [284]. - The company is subject to the Food Safety Ordinance, requiring registration as a food importer or distributor [379]. - The Protection of Endangered Species of Animals and Plants Ordinance regulates the importation of caviar, requiring CITES permits [384]. - The company has not encountered any material food safety incidents since the establishment of its caviar business [310]. - The company has not incurred any costs for compliance with environmental protection rules and does not expect significant future costs [370]. Financial Management and Cash Flow - The company has not adopted any cash management policies and procedures as of the date of the annual report [271]. - The company’s net cash used in operating activities for the year ended December 31, 2023, was USD 863,616, mainly due to an increase in accounts receivable [433]. - Cash and cash equivalents at the end of the year for 2023 were USD 134,350, down from USD 217,384 in 2022 [431]. - The company expects to fund its working capital requirements from cash generated from operations and proceeds from the IPO [430]. Executive Leadership - The executive team includes Kim Kwan Kings Wong as CEO and Chairman, who is focused on business expansion and market promotion for caviar products [458]. - The Company has committed to expanding its international market presence for caviar products under the leadership of its founder, Kim Kwan Kings Wong [458].
Top Wealth Group Holding Limited(TWG) - 2023 Q4 - Annual Report