PART I Key Information This section outlines significant investment risks, covering business and industry factors, and securities-related issues like stock price volatility and foreign private issuer implications - On May 1, 2025, the company acquired a 100% stake in INNEOVA Engineering Pte. Ltd. from its controlling shareholder, followed by a name change to INNEOVA Holdings Limited and a new Nasdaq ticker INEO effective April 28, 20251920 - The company completed its initial public offering (IPO) on October 22, 2024, raising approximately $4.9 million in net proceeds by offering 875,000 Ordinary Shares at $8.00 per share20 Risk Factors This subsection details various risks materially affecting the company's business and securities, including supplier dependency, competition, and stock price volatility - The company's business is highly dependent on its ability to source quality merchandise at competitive prices, and is exposed to supply chain disruptions, tariffs, and raw material shortages2526 - The business relies heavily on key executives, including CEO Jimmy Neo, Deputy CEO Edward Neo, and COO CK Neo, whose loss could adversely affect operations29 - Sales from the top five customers constituted 24.1% of revenue in FY2024, up from 22.7% in FY2023, indicating significant customer concentration risk36 - As of December 31, 2024, the company had approximately $19.9 million in aggregate principal amount of indebtedness, which could constrain financial flexibility and use of cash flow47 - As a Cayman Islands company, it is permitted to follow home country corporate governance practices that may differ from Nasdaq standards, potentially offering less protection to shareholders75 - Controlling shareholders collectively own 80.1% of outstanding shares, giving them substantial influence over corporate transactions and outcomes, which may not always align with the interests of other shareholders7374 Information on the Company This section provides an overview of the company's structure, operations, and strategies, focusing on its On-Highway and Off-Highway segments FY2024 & FY2023 Revenue Breakdown by Business Segment (in $'000) | Business Segment | FY2024 Revenue ($'000) | FY2024 % of Total | FY2023 Revenue ($'000) | FY2023 % of Total | | :--- | :--- | :--- | :--- | :--- | | On-Highway | 25,750 | 44.1% | 26,830 | 45.1% | | Off-Highway | 32,500 | 55.7% | 32,620 | 54.8% | | Services | 90 | 0.2% | 70 | 0.1% | | Total | 58,330 | 100.0% | 59,520 | 100.0% | - The company operates through several subsidiaries, including INNEOVA Industrial for the Off-Highway business and INNEOVA Automotive for the On-Highway business, which includes the 'Autozone' retail outlets in Singapore9899101 - Business strategies focus on market penetration in Asia Pacific, expanding product lines (e.g., green solutions like air and water filtration), enhancing digital capabilities with an e-commerce platform, and developing a new warranty and after-sales service business135139140 FY2024 & FY2023 Revenue by Geography (in $'000) | Geography | FY2024 Revenue ($'000) | FY2024 % of Total | FY2023 Revenue ($'000) | FY2023 % of Total | | :--- | :--- | :--- | :--- | :--- | | Domestic (Singapore) | 21,800 | 37.4% | 25,900 | 43.5% | | Export | 36,500 | 62.6% | 33,600 | 56.5% | - As of December 31, 2024, the company employed 139 people, with 126 in Singapore and 13 in Malaysia, and employees are not covered by collective bargaining agreements159 Operating and Financial Review and Prospects This section analyzes the company's financial performance, highlighting a slight revenue decrease and significant net income decline in FY2024 due to increased expenses Financial Performance Summary (FY2022-2024) | Metric ($'000) | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Total Revenue | 58,333 | 59,521 | 51,445 | | Gross Profit | 10,925 | 10,910 | 9,280 | | Profit from Operations | 784 | 2,528 | 1,610 | | Net Income | 8 | 1,629 | 1,527 | - Total revenue decreased by $1.2 million (2.0%) in FY2024, mainly due to a $4.1 million decrease in Singapore demand, partially offset by growth in other export markets188 - Administrative expenses increased by $1.6 million (22.2%) in FY2024, primarily due to higher staff costs and a $0.8 million rise in miscellaneous expenses209213 - Net income plummeted to $8,000 in FY2024 from $1.6 million in FY2023, a result of stable gross profit being offset by higher operating expenses and interest expenses218466 Cash Flow Summary (FY2023-2024, in $'000) | Cash Flow Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | 2,667 | 3,965 | | Net cash used in investing activities | (774) | (455) | | Net cash used in financing activities | (568) | (3,898) | | Net change in cash | 1,057 | (300) | Bank Indebtedness as of Dec 31, 2024 | Type | Amount ($'000) | | :--- | :--- | | Term loans | 3,019 | | Trust receipts | 16,172 | | Revolving loan | 664 | | Total | 19,855 | Directors, Officers and Senior Management This section introduces the company's leadership team, detailing their backgrounds, roles, Board committee structures, and compensation - The executive leadership team includes Jimmy Neo (CEO), Edward Neo (Deputy CEO), CK Neo (COO), and Li Hoon Lee (CFO), who possess extensive experience in the automotive and industrial parts industry313315317329330 - The Board has three independent directors: Yee Yen Han, Chin Chye Koh, and Gang Wong, who chair the Audit, Nomination, and Compensation committees, respectively320322325 Executive Compensation Summary for FY2024 (in S$) | Name and Principal Position | Salary/Fees | Bonus | Other Compensation | | :--- | :--- | :--- | :--- | | Jimmy Neo, CEO | 180,000 | 15,000 | 21,167 | | Edward Neo, Deputy CEO | 165,000 | 13,750 | 22,466 | | CK Neo, COO | 144,000 | 12,000 | 25,900 | | Ivy Lee, CFO | 132,000 | 24,200 | 25,340 | - As a foreign private issuer, the company follows Cayman Islands corporate governance practices, which exempt it from certain Nasdaq requirements, such as having a majority-independent board and certain committee composition rules338342 Major Shareholders and Related Party Transactions This section details the company's ownership structure, highlighting controlling shareholders' 80.1% stake, and outlines significant related party transactions - The company's controlling shareholders (CE Neo, Jimmy Neo, Edward Neo, and CK Neo) beneficially own 80.1% of the issued and outstanding Ordinary Shares through their 25% respective interests in Soon Aik Global Pte Ltd353 - The company has significant related party transactions, including sales to and purchases from entities controlled by the Neo family, such as INNEOVA Engineering, Spare-Parts Zone (Australia), and PT Heavy Machindo Diesel358360 Key Related Party Transactions for FY2024 ($'000) | Nature of Transaction | Related Party | Amount | | :--- | :--- | :--- | | Sale of products | INNEOVA Engineering Pte Ltd | 1,181 | | Sale of products | PT Heavy Machindo Diesel | 644 | | Purchases | PT Heavy Machindo Diesel | 1,334 | | Purchases | INNEOVA Engineering Pte Ltd | 724 | | Expenses (Logistics) | EU Group Pte Ltd | 549 | The Offer and Listing This section details the company's initial public offering (IPO) and its Nasdaq listing, including the ticker symbol change to INEO - The company completed its IPO of 875,000 Ordinary Shares at $8.00 per share on October 22, 2024, with net proceeds of approximately $4.9 million364 - The company's shares began trading on the Nasdaq Capital Market on October 23, 2024, with the ticker symbol changing from "SAG" to "INEO" on April 28, 2025364 Additional Information This section outlines the company's corporate structure and governance as a Cayman Islands exempted company, detailing shareholder rights and tax considerations - The company is a Cayman Islands exempted company, which provides certain benefits such as no corporate, income, or capital gains taxes and a 20-year undertaking against future taxation398408409 - Shareholder voting requires a simple majority for ordinary resolutions and a two-thirds majority for special resolutions (e.g., changing the company name or articles)378 - The company does not expect to be a Passive Foreign Investment Company (PFIC) for the current taxable year, but the determination is fact-intensive and made annually, so no assurance can be given419420 - The company has not declared or paid dividends for the fiscal year ended December 31, 2024, with future dividends at the discretion of the board and dependent on various factors401402 Quantitative and Qualitative Disclosures about Market Risk This section discusses the company's exposure to various market risks, including interest rate, credit, liquidity, and foreign exchange risks - The company is exposed to interest rate risk on its short-term bank loans, as rates are subject to change upon renewal309 - Credit risk is managed through credit approvals and monitoring, with a concentration of credit risk noted as one customer accounted for 21.7% of total accounts receivable as of December 31, 2024310583 - Significant foreign exchange risk exists as most revenues and costs are in Singapore Dollars (S$) and Japanese Yen (JPY), while the reporting currency is the U.S. Dollar (US$), and the company does not currently use hedging instruments312 PART II Controls and Procedures This section addresses the company's disclosure controls and internal control over financial reporting, which management concluded were effective as of December 31, 2024 - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2024439 - In its assessment of internal control over financial reporting, management determined there were no control deficiencies that constituted material weaknesses as of December 31, 2024442 - The company is an "emerging growth company" and is exempt from the auditor attestation requirement on internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act440 Corporate Governance and Other Disclosures This section covers corporate governance and compliance, including audit committee expertise, code of ethics, accountant fees, and insider trading and cybersecurity policies - The Board has designated Mr. Han Yee Yan as the "audit committee financial expert"444 Principal Accountant Fees ('000) | Fee Type | 2024 | 2023 | | :--- | :--- | :--- | | Audit Fees | 103 | 98 | | Audit Related Fees | - | - | | Tax Fees | - | - | | All Other Fees | - | - | | Total | 103 | 98 | - The company has adopted a Cybersecurity Policy, with the Audit Committee responsible for oversight, and No material cybersecurity breaches occurred during the year ended December 31, 2024452453454 - The company has adopted an Insider Trading Policy to ensure compliance with applicable laws and regulations451 PART III Financial Statements This section contains the company's audited consolidated financial statements for FY2022-2024, prepared under U.S. GAAP, including balance sheets, income statements, and cash flows Consolidated Balance Sheet Highlights (As of Dec 31, in $'000) | Account | 2024 | 2023 | | :--- | :--- | :--- | | Total Assets | 39,592 | 39,056 | | Total Current Assets | 36,781 | 37,598 | | Inventories | 18,103 | 18,959 | | Accounts receivable, net | 14,277 | 14,550 | | Total Liabilities | 30,717 | 36,005 | | Bank borrowings | 19,855 | 16,777 | | Total Shareholders' Equity | 8,875 | 3,051 | Consolidated Statements of Operations Highlights (Year Ended Dec 31, in $'000) | Account | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Revenues, net | 58,333 | 59,521 | 51,445 | | Gross profit | 10,925 | 10,910 | 9,280 | | General and administrative | (8,509) | (6,959) | (5,978) | | Net Income | 8 | 1,629 | 1,527 | Notes to Consolidated Financial Statements The notes provide detailed information supplementing the financial statements, covering accounting policies, revenue disaggregation, and subsequent events - The company's two reportable business segments are On-Highway business and Off-Highway business530 - The allowance for current expected credit losses on accounts receivable increased from $0.8 million in 2023 to $1.67 million in 2024531532 - Total bank borrowings increased to $19.86 million as of Dec 31, 2024, from $16.78 million in 2023, and these borrowings are guaranteed by controlling shareholders and related entities543544 - Subsequent to the fiscal year end, on May 1, 2025, the company acquired 100% of INNEOVA Engineering Pte. Ltd. from its controlling shareholder for consideration of 6,295,624 ordinary shares594 - For FY2024, one vendor (Vendor A) accounted for 25.4% of the company's total purchases577
Sag Holdings Limited(SAG) - 2024 Q4 - Annual Report