WF Holding Ltd(WFF) - 2024 Q4 - Annual Report

PART I Key Information This section outlines significant investment risks, categorized by business, Malaysian operations, and share ownership, including capital needs, competition, and foreign exchange Risks Related to Business and Industry The company faces significant business risks including substantial capital expenditure needs, production planning inaccuracies, intense competition, and high customer and supplier concentration - Maintaining engineering, development, and manufacturing operations requires significant capital expenditures, which were $51,519 in 2024, $73,087 in 2023, and $125,813 in 2022[25] - The company faces intense competition from other fiberglass reinforced plastic (FRP) manufacturers in Malaysia, many of whom may have greater financial and technical resources[28] - Customer concentration risk is notable. For the year ended December 31, 2024, three customers accounted for approximately 12%, 12%, and 13% of revenue, respectively. For 2023, one customer accounted for 14%. This concentration is considered temporary and tied to specific projects[37] - The company is dependent on key suppliers for raw materials. For the year ended December 31, 2024, three suppliers accounted for 27%, 23%, and 12% of total purchases[42] - International operations expose the company to various risks. For the years ended December 31, 2024, 2023, and 2022, approximately 69%, 57%, and 30% of revenues were generated from customers outside Malaysia[59] - As a holding company, WF Holding Limited is dependent on distributions from its subsidiary, Win-Fung, to pay dividends, taxes, and other expenses[66] Risks Related to Operations in Malaysia Operations in Malaysia face risks from local laws, economic and political instability, and foreign exchange rate fluctuations, impacting financial results and fund repatriation - The business is subject to a wide variety of Malaysian laws and regulations, and failure to comply could result in liabilities, fines, or license revocations[74] - The business is exposed to risks from Malaysia's social, political, and economic environment, including changes in government policies, interest rates, and taxation[76][79] - Fluctuations in the exchange rate between the Malaysian Ringgit (RM) and the U.S. dollar could adversely affect the company's financial results and the value of its securities[80] - The ability to repatriate dividends and other payments from the Malaysian subsidiary is subject to Malaysia's foreign exchange control policies, which could impact the holding company's liquidity[81] Risks Related to Ownership of Ordinary Shares Risks of share ownership include price volatility, delisting, substantial influence by a single shareholder, no anticipated dividends, and exemptions from certain U.S. governance rules - A single shareholder, Lew Capital Private Limited, controlled by CEO Chee Hoong Lew and his brother, exercises approximately 63.54% of the total voting power, giving it substantial influence over the company[87] - The company does not anticipate paying dividends in the foreseeable future, meaning returns for shareholders will depend on share price appreciation[88] - As a foreign private issuer incorporated in the Cayman Islands, the company is exempt from certain SEC reporting and governance rules applicable to U.S. domestic companies, which may limit investor protection and information[93][98] - The company qualifies as an "emerging growth company" under the JOBS Act, allowing it to rely on exemptions from certain disclosure requirements, such as auditor attestation on internal controls[99] - The company is a "controlled company" under Nasdaq rules due to Lew Capital's majority ownership, which allows it to be exempt from certain corporate governance requirements, such as having a majority of independent directors[105] Information on the Company WF Holding Limited, a Cayman Islands holding company, operates through its Malaysian subsidiary Win-Fung, manufacturing FRP products for diverse industries and planning capacity expansion History and Development of the Company WF Holding Limited was incorporated in the Cayman Islands in March 2023, with its Malaysian subsidiary Win-Fung becoming wholly-owned in June 2023 - WF Holding Limited was incorporated in the Cayman Islands on March 7, 2023[111] - On June 21, 2023, a corporate reorganization made Win-Fung Fibreglass Sdn. Bhd. a wholly-owned subsidiary of WF Holding Limited[112] Business Overview The company manufactures a wide range of FRP products from its ISO 9001 certified Malaysian facility, serving diverse industries and planning capacity expansion and new market entry - The company manufactures a wide range of fiberglass reinforced plastic (FRP) products, including filament wound tanks, thermoplastic tanks, lining, ducting, and custom-made products[113][115] - Manufacturing operations are ISO 9001:2015 certified and conducted at a facility in Malaysia[114][135] - The company plans to increase production capacity by procuring a new two-acre factory, which would increase production floor capacity by 150%[136] Revenue by Geography (2022-2024) | Geography | 2024 Revenue % | 2023 Revenue % | 2022 Revenue % | | :--- | :--- | :--- | :--- | | Malaysia | 31% | 43% | 70% | | Singapore | 39% | 32% | 13% | | Australia | 29% | 16% | 15% | | United States | 0% | 5% | 0% | | South Asia region | <1% | 4% | 2% | - Key growth strategies include increasing production capacity and workforce, expanding product offerings (e.g., FRP filter housing), and expanding into new markets like the oil and gas industry and further into Australia[153] Property, Plants and Equipment The company owns a 7,967 square meter leasehold property in Malaysia, housing its factory and office, deemed adequately maintained for operations - The company owns a leasehold land plot of approximately 7,967 square meters in Malaysia, which houses its factory and office[201] Operating and Financial Review and Prospectus This section analyzes financial performance, noting a 2024 revenue decrease to $4.57 million and net income decline, while outlining liquidity, market trends, and critical accounting policies Operating Results FY2024 saw revenue decrease by 20.26% to $4.57 million and net income drop by 77.29%, while gross margin improved to 40.36% Comparison of Operating Results (FY2024 vs. FY2023) | Metric | 2024 | 2023 | Change % | | :--- | :--- | :--- | :--- | | Revenue | $4,572,290 | $5,733,976 | (20.26)% | | Gross Profit | $1,845,316 | $1,980,357 | (6.82)% | | Gross Margin | 40.36% | 34.54% | +5.82pp | | Net Income | $111,603 | $491,401 | (77.29)% | Comparison of Operating Results (FY2023 vs. FY2022) | Metric | 2023 | 2022 | Change % | | :--- | :--- | :--- | :--- | | Revenue | $5,733,976 | $4,967,955 | +15.42% | | Gross Profit | $1,980,357 | $2,141,002 | (7.50)% | | Gross Margin | 34.54% | 43.10% | -8.56pp | | Net Income | $491,401 | $978,815 | (49.80)% | Liquidity and Capital Resources As of December 31, 2024, the company had $1.06 million in cash, with liquidity supported by operations and $7 million net IPO proceeds, deemed sufficient for the next year - As of December 31, 2024, the company had cash and cash equivalents of $1,056,732 and restricted cash of $133,897[228] - In March 2025, the company closed its initial public offering, raising approximately $7 million in net proceeds, intended for production expansion, hiring, and working capital[230] Summary of Cash Flow (in USD) | Cash Flow Activity | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Net cash from operating activities | 753,458 | 655,796 | (166,631) | | Net cash used in investing activities | (51,519) | (73,087) | (116,923) | | Cash used in financing activities | (465,643) | (442,794) | (106,199) | Contractual Obligations and Commitments as of Dec 31, 2024 (in USD) | Obligation | Total | Less than 1 year | 1-2 years | 3-5 years | More than 5 years | | :--- | :--- | :--- | :--- | :--- | :--- | | Bank loans | 279,920 | 69,213 | 52,221 | 58,541 | 99,945 | | Finance lease obligations | 165,378 | 60,295 | 96,461 | 8,622 | - | | Operating lease obligations | 42,821 | 36,558 | 5,939 | 324 | - | | Total | 488,119 | 166,066 | 154,621 | 67,487 | 99,945 | Trend Information Key business trends include growing demand for FRP products in construction and aerospace, technological advancements, stricter environmental regulations, and preference for lightweight composites - The global FRP market is growing due to rising demand in construction, automotive, and aerospace sectors[242] - Stricter environmental regulations are increasing demand for FRP products, especially in water and wastewater treatment[242] - There is a growing demand for lightweight composites to reduce carbon footprints, benefiting fiberglass applications in construction, automotive, and wind energy[242] Critical Accounting Estimates Critical accounting estimates under U.S. GAAP include revenue recognition (ASC 606), service-type warranties, allowances for credit losses, and impairment of long-lived assets - Revenue is recognized under ASC 606 when control of goods or services is transferred to the customer. Product sales revenue is recognized upon delivery[243][244] - Service-type warranties are treated as separate performance obligations, with revenue deferred and recognized over the warranty period, which ranges from 6 to 84 months[247][248] - The allowance for credit losses on accounts receivable is estimated based on historical experience, economic conditions, and customer-specific factors. As of Dec 31, 2024, the allowance was $540,626[253] - Long-lived assets are evaluated for impairment whenever events indicate the carrying amount may not be recoverable. No impairment losses were recorded for the years ended Dec 31, 2024, 2023, and 2022[255] Directors, Senior Management and Employees This section details the company's leadership, compensation, board structure, and workforce, including CEO Chee Hoong Lew and 138 full-time employees as of December 2024 Directors and Senior Management The company's leadership includes CEO Chee Hoong Lew and CFO (Charis) Phei Yen Ho, supported by a five-member board with diverse industry experience - Chee Hoong Lew serves as the Chief Executive Officer and Director, with over 24 years of experience in the FRP industry[263] - (Charis) Phei Yen Ho was appointed Chief Financial Officer in September 2024, bringing 14 years of experience in accounting and finance[264] - The board includes members with diverse backgrounds, including engineering (Wah Chee Lim), politics and public administration (Chee Leong Lee), and accounting and audit (Chee Hoong Lim)[265][266][267] Compensation Aggregate compensation for directors and executive officers in FY2024 was approximately $145,238, with an additional $24,058 contributed to the Employees Provident Fund - Aggregate compensation for directors and executive officers for FY2024 was approximately $145,238[271] - The company contributed approximately $24,058 to the Employees Provident Fund for its officers and directors in FY2024[271] Employees As of December 31, 2024, the company had 138 full-time employees, primarily in production, with no union representation and good employee relations Employee Headcount by Function (as of Dec 31, 2024) | Function | Number of Employees | | :--- | :--- | | Senior Management | 9 | | Director | 3 | | Administrative, Finance and Human Resources | 4 | | Sales and Marketing | 6 | | Engineering/R&D | 10 | | Purchasing | 1 | | Quality Control | 7 | | Store | 1 | | Production | 97 | | TOTAL | 138 | - Total full-time employees increased to 138 in 2024, up from 118 in 2023 and 97 in 2022[292] Major Shareholders and Related Party Transactions This section details the company's ownership structure, with CEO Chee Hoong Lew beneficially owning 68.95% of shares, and outlines various related party transactions Major Shareholders As of April 29, 2025, CEO Chee Hoong Lew is the largest beneficial owner with 68.95% of ordinary shares, indicating highly concentrated ownership Beneficial Ownership of Ordinary Shares (as of April 29, 2025) | Name of Beneficial Owner | Percent of Class | | :--- | :--- | | Chee Hoong Lew (CEO, Director) | 68.95% | | All executive officers and directors (6 persons) | 68.95% | | Chee Seong Lew | 63.54% | | LYC Capital Private Limited | 5.41% | Related Party Transactions In FY2024, the company engaged in various related party transactions, including sales, purchases, and property leases with entities controlled by CEO Chee Hoong Lew - In FY2024, the company had sales of $30,024 to and purchases of $2,320 from Flakeshield Sdn Bhd, a company 50% owned by CEO Chee Hoong Lew[302] - In FY2024, the company had sales of $2,689 to and purchases of $8,571 from Acmos (M) Sdn Bhd, a company 90% owned by Mr. Lew[307] - The company rented a property from Mr. Lew for a monthly rent of RM12,000 (approx. $2,545), resulting in a rent expense of $31,477 in FY2024[307] - As of Dec 31, 2024, amounts owed to former significant shareholders One Fatboyz Limited and Snow Bear Capital Limited were $231,190 and $395,071, respectively[307] Financial Information This section presents U.S. GAAP consolidated financial statements, noting no material legal proceedings, no current dividend plans, and no significant changes since the statement date - The company has no plan to declare or pay any dividends in the near future, intending to retain earnings to operate and expand the business[309] - The company is not aware of any legal proceedings that would have a material adverse effect on its business, financial condition, or operating results[308] Quantitative and Qualitative Disclosures About Market Risk The company faces market risks primarily from foreign exchange fluctuations (RM to USD), with minor interest rate risk and potential future inflation impact - The company's primary market risk is foreign exchange risk due to transactions in currencies other than its functional currency, the Malaysian Ringgit (RM)[329] - The company does not currently use derivative financial instruments to hedge its foreign exchange exposure[329] - Inflation is not currently considered to have a material effect, but future inflationary pressures could harm the business if costs cannot be offset by price increases[332] PART II Material Modifications to the Rights of Security Holders and Use of Proceeds No material modifications to security holder rights; the company completed its IPO on March 28, 2025, raising approximately $7 million net proceeds - The company completed its IPO on March 28, 2025, raising approximately $7 million in net proceeds[338] Controls and Procedures Management concluded disclosure controls were effective as of December 31, 2024; no internal control assessment or attestation is included as a newly public company - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2024[340] - As a newly public company, this annual report does not include a report on internal control over financial reporting, per SEC transition rules[341] Other Disclosures This section covers governance, including the Audit Committee Financial Expert, adopted code of ethics, cybersecurity risk management, and $206,500 in principal accountant fees for FY2024 - The Board of Directors has determined that Chee Hoong Lim is the "Audit Committee Financial Expert"[345] Principal Accountant Fees (in USD) | Fee Type | 2024 | 2023 | | :--- | :--- | :--- | | Audit Fees | 181,500 | 135,000 | | Audit-Related Fees | - | - | | Tax Fees | - | - | | All Other Fees | 25,000 | - | | Total | 206,500 | 135,000 | - The company has adopted a code of ethics, an insider trading policy, and has integrated cybersecurity risk management into its overall risk management processes, with board-level oversight[346][362][364] PART III Financial Statements This section presents the company's audited consolidated financial statements for the three years ended December 31, 2024, prepared under U.S. GAAP Consolidated Balance Sheets As of December 31, 2024, total assets were $6.22 million, liabilities $3.47 million, and shareholders' equity $2.74 million, all increasing from 2023 Consolidated Balance Sheet Highlights (in USD) | Metric | As of Dec 31, 2024 | As of Dec 31, 2023 | | :--- | :--- | :--- | | Total Assets | $6,215,437 | $5,377,160 | | Total Current Assets | $4,815,042 | $3,933,357 | | Cash and cash equivalents | $1,056,732 | $777,125 | | Total Liabilities | $3,470,947 | $2,819,539 | | Total Current Liabilities | $3,176,368 | $2,393,354 | | Total Shareholders' Equity | $2,744,490 | $2,557,621 | Consolidated Statements of Operation and Comprehensive Income For FY2024, revenue was $4.57 million and net income $111,603, a significant decrease from $5.73 million revenue and $491,401 net income in 2023 Consolidated Income Statement Highlights (in USD) | Metric | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Revenue | $4,572,290 | $5,733,976 | $4,967,955 | | Gross Profit | $1,845,316 | $1,980,357 | $2,141,002 | | Income from Operations | $115,847 | $655,465 | $1,253,153 | | Net Income | $111,603 | $491,401 | $978,815 | | Earnings Per Share (Basic & Diluted) | $0.005 | $0.02 | $0.04 | Consolidated Statements of Cash Flows For FY2024, net cash from operations was $753,458, with $51,519 used in investing and $465,643 in financing, ending the year with $1.19 million cash Consolidated Cash Flow Highlights (in USD) | Cash Flow Activity | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | 753,458 | 655,796 | (166,631) | | Net cash used in investing activities | (51,519) | (73,087) | (116,923) | | Cash used in financing activities | (465,643) | (442,794) | (106,199) | | Net increase (decrease) in cash | 287,329 | 82,517 | (454,861) | | Cash at end of year | $1,190,629 | $903,300 | $820,783 |