Exhibit 99.1
TOYO Co., Ltd.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Currency expressed in United States Dollars (“US$”), except for number of shares)
June 30, 2024 | December 31, 2023 | |||||||
(unaudited) | ||||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash | $ | $ | ||||||
Restricted cash | ||||||||
Accounts receivable – a related party | ||||||||
Prepayments | ||||||||
Prepayments – a related party | ||||||||
Inventories, net | ||||||||
Other current assets | ||||||||
Total Current Assets | ||||||||
Non-current Assets | ||||||||
Restricted cash, non-current | ||||||||
Deferred offering costs | ||||||||
Long-term prepaid expenses | ||||||||
Deposits for property and equipment | ||||||||
Property and equipment, net | ||||||||
Right of use assets | ||||||||
Other non-current assets | ||||||||
Total Non-current Assets | ||||||||
Total Assets | $ | $ | ||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current Liabilities | ||||||||
Short-term bank borrowings | $ | $ | ||||||
Accounts payable | ||||||||
Contract liabilities | ||||||||
Contract liabilities – a related party | ||||||||
Due to related parties | ||||||||
Other payable and accrued expenses | ||||||||
Lease liabilities, current | ||||||||
Total Current Liabilities | ||||||||
Lease liabilities, non-current | ||||||||
Long-term bank borrowings | ||||||||
Total Non-current Liabilities | ||||||||
Total Liabilities | ||||||||
Commitments and Contingencies (Note 14) | ||||||||
Shareholders’ Equity | ||||||||
Ordinary shares (par value $ | ||||||||
Additional paid-in capital | ||||||||
Retained earnings | ||||||||
Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
Total Shareholders’ Equity | ||||||||
Total Liabilities and Shareholders’ Equity | $ | $ |
* |
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
1
TOYO Co., Ltd.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
(Currency expressed in United States Dollars (“US$”), except for number of shares)
For the Six Months Ended June 30, | ||||||||
2024 | 2023 | |||||||
Revenues from related parties | $ | $ | ||||||
Revenues from third parties | ||||||||
Revenues | ||||||||
Cost of revenues – related parties | ( | ) | ||||||
Cost of revenues – third parties | ( | ) | ||||||
Cost of revenues | ( | ) | ||||||
Gross profit | ||||||||
Operating expenses | ||||||||
Selling and marketing expenses | ( | ) | ||||||
General and administrative expenses | ( | ) | ( | ) | ||||
Total operating expenses | ( | ) | ( | ) | ||||
Income (loss) from operations | ( | ) | ||||||
Other expenses, net | ||||||||
Interest expenses, net | ( | ) | ( | ) | ||||
Other expenses, net | ( | ) | ( | ) | ||||
Total other expenses, net | ( | ) | ( | ) | ||||
Income (loss) before income taxes | ( | ) | ||||||
Income tax expenses | ||||||||
Net income (loss) | $ | $ | ( | ) | ||||
Other comprehensive loss | ||||||||
Foreign currency translation adjustment | ( | ) | ( | ) | ||||
Comprehensive income (loss) | $ | $ | ( | ) | ||||
$ | $ | ( | ) |
* | The shares and per share information are presented on a retroactive basis to reflect the reorganization effected on February 27, 2024 (Note 1). |
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
2
TOYO Co., Ltd.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Currency expressed in United States Dollars (“US$”), except for number of shares)
Ordinary shares | Additional | Retained Earnings | Accumulated other | Total | ||||||||||||||||||||
Number of shares* |
Amount | paid-in capital | (Accumulated deficit) | comprehensive income (loss) | shareholders’ equity | |||||||||||||||||||
Balance as of December 31, 2022 | $ | $ | $ | ( |
) | $ | $ | |||||||||||||||||
Capital injection from shareholders | — | |||||||||||||||||||||||
Net loss | — | ( |
) | ( |
) | |||||||||||||||||||
Foreign currency translation adjustments | — | ( |
) | ( |
) | |||||||||||||||||||
Balance as of June 30, 2023 | $ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||
Balance as of December 31, 2023 | $ | $ | $ | $ | ( |
) | $ | |||||||||||||||||
Capital injection from shareholders | — | |||||||||||||||||||||||
Net income | — | |||||||||||||||||||||||
Foreign currency translation adjustments | — | ( |
) | ( |
) | |||||||||||||||||||
Balance as of June 30, 2024 | $ | $ | $ | $ | ( |
) | $ |
* | The share information is presented on a retroactive basis to reflect the reorganization effected on February 27, 2024 (Note 1). |
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
3
TOYO Co., Ltd.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Currency expressed in United States Dollars (“US$”)
For the Six Months Ended June 30, | ||||||||
2024 | 2023 | |||||||
Net cash provided by (used in) operating activities | $ | $ | ( | ) | ||||
Cash flows from investing activities: | ||||||||
Purchase of property and equipment | ( | ) | ( | ) | ||||
Purchase of property and equipment from a related party | ( | ) | ||||||
Net cash used in investing activities | ( | ) | ( | ) | ||||
Cash flows from financing activities: | ||||||||
Capital injection from shareholders | ||||||||
Proceeds from short-term bank borrowings | ||||||||
Proceeds from long-term bank borrowings | ||||||||
Proceeds from borrowings from a related party | ||||||||
Repayment of borrowings to a related party | ( | ) | ||||||
Payments of offering costs | ( | ) | ( | ) | ||||
Net cash provided by financing activities | ||||||||
Effect of exchange rate changes on cash | ( | ) | ( | ) | ||||
Net increase (decrease) in cash | ( | ) | ||||||
Cash and restricted cash at beginning of period | ||||||||
Cash and restricted cash at end of period | $ | $ | ||||||
Supplemental cash flow information | ||||||||
Cash paid for interest expense to a bank | $ | $ | ||||||
Cash paid for interest expense to a related party | $ | $ | ||||||
Cash paid for income tax | $ | $ | ||||||
Supplemental cash flow information for non-cash operating, investing and financing activities: | ||||||||
Operating lease right-of-use assets obtained in exchange for operating lease liabilities | $ | $ | ||||||
Purchase of property, plant and equipment financed by accounts payable | $ | $ | ||||||
Payment of offering cost financed by other payable | $ | $ |
Reconciliation of cash and restricted cash to the consolidated balance sheets
June 30, 2024 | December 31, 2023 | |||||||
Cash | $ | $ | ||||||
Restricted cash | ||||||||
Restricted cash, non-current | ||||||||
$ | $ |
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
4
TOYO Co., Ltd.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”), except for number of shares)
1. ORGANIZATION AND BUSINESS DESCRIPTION
TOYO Co., Ltd. (“TOYO”) was incorporated on May 16, 2023, under the laws of the Cayman Islands as an exempted company with limited liability. The Company commenced operations on November 8, 2022, through its a wholly owned subsidiary Vietnam Sunergy Cell Company Limited (“TOYO Solar”), which is a limited liability company established under the laws of the Socialist Republic of Vietnam (“Vietnam”). TOYO and its subsidiaries (the “Company”) are primarily engaged in design, manufacture and sales of solar cells and solar modules and related businesses.
Name of Entity | Date of Incorporation | Place of Incorporation | % of Ownership | Principal Activities | ||||
Parent company: | ||||||||
TOYO | ||||||||
Wholly owned subsidiaries of TOYO | ||||||||
TOPTOYO Investment Pte. Ltd. (“TOYO SinCo”) | ||||||||
TOYO Solar | ||||||||
TOYO China Co., Ltd. (“TOYO China”) |
Reorganization
On February 27, 2024,
TOYO completed the reorganization of entities under common control of its then existing shareholders, who collectively owned
On February 23, 2024,
the Company issued
The Company believed that it was appropriate to reflect the reorganization on a retroactive basis as if such structure existed at that time and in accordance with ASC 805-50-45-5, the entities under common control are presented on a combined basis for all periods to which such entities were under common control. The Company has retroactively adjusted all share and per share data for all periods presented. The unaudited condensed consolidated financial statements are prepared on the basis as if the reorganization became effective as of the beginning of the first year presented in the unaudited condensed consolidated financial statements.
5
TOYO Co., Ltd.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”), except for number of shares)
1. ORGANIZATION AND BUSINESS DESCRIPTION (cont.)
Business Combination with a SPAC
On August 10, 2023, TOYO entered into the Agreement and Plan of Merger (as amended on December 6, 2023, February 6, 2024 and February 29, 2024, the “Business Combination Agreement”) with Blue World Acquisition Corporation, a Cayman Islands exempted company (“BWAQ”), TOYOone Limited, a Cayman Islands exempted company (“Merger Sub”), TOYO SinCo, and TOYO Solar (together with TOYO, Merger Sub and TOYO SinCo, the “Group Companies”, or each individually, a “Group Company”), VSun Joint Venture Stock Company (“VSun JV”), and Fuji Solar Co., Ltd, a Japanese company (“Fuji Solar”), WA Global Corporation, a Cayman Islands exempted company (“WAG”), Belta Technology Company Limited, a Cayman Islands exempted company (“Belta”), and BestToYo Technology Company Limited, a Cayman Islands exempted company (“BestToYo” and together with WAG and Belta, collectively, the “Sellers”).
Pursuant to the Business Combination
Agreement, (a) the Group Companies, VSun JV, Fuji Solar, WAG, Belta and BestToYo shall consummate a series of transactions involving
the Group Companies, including (A) TOYO (“PubCo”) acquiring one hundred percent (
Among the
a. | Following the closing of Transactions, if the net profit of PubCo for the fiscal year ending December 31, 2024 as shown on the audited financial statements of PubCo for the fiscal year ending December 31, 2024 (such net profit, the “2024 Audited Net Profit”) is no less than $ |
b. | If the 2024 Audited Net Profit is less than $ |
The Transactions was consummated on July 1, 2024. Following the consummation of the Transactions, the ordinary shares of TOYO commenced trading on the Nasdaq Stock Market on July 2, 2024, under the symbol “TOYO.”
6
TOYO Co., Ltd.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”), except for number of shares)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Consolidation
The unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Security and Exchange Commission and accounting principles generally accepted in the United States of America (’‘U.S. GAAP’’) for interim financial reporting. Certain information and footnote disclosures normally included in financial statements prepared in conformity with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2023.
In the opinion of the management, the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments, which are necessary for a fair presentation of financial results for the interim periods presented. The Company believes that the disclosures are adequate to make the information presented not misleading. The accompanying unaudited condensed consolidated financial statements have been prepared using the same accounting policies as used in the preparation of the Company’s consolidated financial statements for the year ended December 31, 2023. The results of income for the six months ended June 30, 2024 are not necessarily indicative of the results for the full year.
Foreign currency translation
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing on the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates on the date of the balance sheet.
The reporting currency of the Company is U.S. dollars (“$”) and the accompanying unaudited condensed consolidated financial statements have been expressed in $.
In general, assets and liabilities of the Company whose functional currency is not the $, are translated into $, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of the Company is recorded as a separate component of accumulated other comprehensive income within the statement of shareholders’ equity.
June 30, 2024 | December 31, 2023 | |||||||
VND exchange rate for balance sheet items, except for equity accounts |
For the Six Months Ended June 30, | ||||||||
2024 | 2023 | |||||||
VND exchange rate for items in the statement of operations and comprehensive income, and statement of cash flows |
No representation is made that the VND amounts could have been, or could be, converted into U.S. dollars at the rates used in translation.
7
TOYO Co., Ltd.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”), except for number of shares)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Inventories, net
Inventories are stated at the
lower of cost or net realizable value. Cost of inventories is determined using the moving weighted average cost method. Adjustments are
recorded to write down the cost of inventories to the estimated net realizable value due to damaged and slow-moving goods, which is dependent
upon factors such as historical and forecasted consumer demand, and specific customer requirements. The Company takes ownership, risks
and rewards of the products. Write downs are recorded in cost of revenues in the unaudited condensed consolidated statements of operations
and comprehensive income. For the six months ended June 30, 2024 and 2023, the Company provided inventory provision of $
Revenue recognition
The Company adopted ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”) since its setup. In accordance with ASC 606, revenue is recognized when the control of the promised goods or services is transferred to the customers, and the performance obligations under the contract have been satisfied, in an amount that reflects the consideration expected to be entitled to in exchange for those goods or services (excluding sales taxes collected on behalf of government authorities). The Company’s revenue contracts generally do not include a right of return in relation to the delivered products or services.
The Company determines revenue recognition through the following steps: (1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the entity satisfies a performance obligation.
The Company primarily generated revenues from sales of solar cells.
The Company officially commenced sales of solar cells to customers in the second half of 2023. The Company recognizes revenue generated from sales of solar cells at a point in time following the transfer of control of the solar cells to the customers, which typically occurs upon shipment or delivery depending on the terms of the underlying contracts. The contracts with customers may contain provisions that require the Company to make liquidated damage payments to the customer if the Company fails to ship or deliver solar cells before scheduled dates. The Company recognizes these liquidated damages as a reduction of revenue. For the six months ended June 30, 2024 and 2023, the Company did not incur such liquidation damages.
Sales agreements typically
contain the assurance-type customary product warranties if defects in solar cells exceeds
Contract liabilities
Contract
liabilities are recognized if the Company receives consideration prior to satisfying the performance obligations, which include customer
advances and deferred revenue under service arrangements. As of June 30, 2024, the Company had contract liabilities of $
8
TOYO Co., Ltd.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”), except for number of shares)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Income taxes
The Company accounts for income taxes in accordance with the U.S. GAAP for income taxes. Under the asset and liability method as required by this accounting standard, the recognition of deferred income tax liabilities and assets for the expected future tax consequences of temporary differences between the income tax basis and financial reporting basis of assets and liabilities. Provision for income taxes consists of taxes currently due plus deferred taxes.
The charge for taxation is based on the results for the year as adjusted for items which are non-assessable or disallowed. It is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax basis. Deferred tax assets are recognized to the extent that it is more likely than not these items will be utilized against taxable income in the future. Deferred tax is calculated using tax rates that are expected to apply to the period when the asset is realized or the liability is settled. Deferred tax is charged or credited in the income statement, except when it is related to items credited or charged directly to equity. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities.
An uncertain tax position is
recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination,
with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than
9
TOYO Co., Ltd.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”), except for number of shares)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Recently issued accounting standards
The Jumpstart Our Business Startups Act (“JOBS Act”) provides that an emerging growth company (“EGC”) as defined therein can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an EGC to delay adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company qualifies as an EGC as of June 30, 2024 and has elected to apply the extended transition period.
In December 2023, the FASB issued ASU 2023-09, which is an update to Topic 740, Income Taxes. The amendments in this update related to the rate reconciliation and income taxes paid disclosures improve the transparency of income tax disclosures by requiring (1) adding disclosures of pretax income (or loss) and income tax expense (or benefit) to be consistent with U.S. Securities and Exchange Commission (SEC) Regulation S-X 210.4-08(h), Rules of General Application — General Notes to Financial Statements: Income Tax Expense, and (2) removing disclosures that no longer are considered cost beneficial or relevant. For public business entities, the amendments in this Update are effective for annual periods beginning after December 15, 2024. For entities other than public business entities, the amendments are effective for annual periods beginning after December 15, 2025. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The amendments in this Update should be applied on a prospective basis. Retrospective application is permitted. The Company does not expect the adoption of ASU 2023-09 would have a significant impact on the Company’s consolidated balance sheets, consolidated statements of operations and comprehensive income (loss) and consolidated statements of cash flows.
In November 2023, the FASB issued ASU 2023-07. The amendments improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment, and contain other disclosure requirements. The purpose of the amendments is to enable investors to better understand an entity’s overall performance and assess potential future cash flows. The ASU applies to all public entities that are required to report segment information in accordance with ASC 280. The Company does not expect the adoption of ASU 2023-07 would have a significant impact on the Company’s consolidated balance sheets, consolidated statements of operations and comprehensive income (loss) and consolidated statements of cash flows.
The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material impact on its the financial position, statements of operations and cash flows.
10
TOYO Co., Ltd.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”), except for number of shares)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Significant risks and uncertainties
1) Credit risk
Assets that potentially subject
the Company to significant concentration of credit risk primarily consist of cash. The maximum exposure of such assets to credit risk
is their carrying amount as at the balance sheet dates. As of June 30, 2024 and December 31, 2023, the Company held cash and restricted
cash of $
2) Foreign currency risk
As of June 30, 2024 and December 31, 2023, substantially all of the Company’s purchase and operating expenses activities and the Company’s assets and liabilities are denominated in VND, which is not freely convertible into foreign currencies. All foreign exchange transactions take place either through the State Bank of Vietnam (“SBV”) or other authorized financial institutions at exchange rates quoted by SBV. Approval of foreign currency payments by the SBV or other regulatory institutions requires submitting a payment application form together with suppliers’ invoices and signed contracts. The value of VND is subject to changes in central government policies and to international economic and political developments affecting supply and demand in the Vietnam Foreign Exchange Trading System market.
3) Concentration risk
The Company commenced sales to customers since the second half of 2023. The Company has a concentration of its revenues with specific customers and accounts payable with specific vendors.
For the six months ended June
30, 2024, one related party customer accounted for
As of June 30, 2024, three
suppliers from third parties accounted for
For the six months ended June
30, 2024, one related party supplier accounted for
For the six months ended June
30, 2024, two third party suppliers accounted for
3. LIQUIDITY CONDITION AND GOING CONCERN
As of June 30, 2024 and December
31, 2023, the Company had working capital deficits of approximately $
The Company’s liquidity is based on its ability to generate cash from operating activities and obtain financing from investors to fund its general operations and capital expansion needs. The Company’s ability to continue as a going concern is dependent on management’s ability to successfully execute its business plan, which includes increasing revenue while controlling operating cost and expenses to generate positive operating cash flows and obtain financing from outside sources.
As of August 19, 2024, the
Company launched six production lines and had cash of approximately $
11
TOYO Co., Ltd.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”), except for number of shares)
3. LIQUIDITY CONDITION AND GOING CONCERN (cont.)
The Company believes that the current cash and anticipated cash flows from operating and financing activities will be sufficient to meet its anticipated working capital requirements and commitments for at least the next 12 months after the issuance of the Company’s accompanying unaudited condensed consolidated financial statements. Management believes that it is probable that the above plans can be effectively implemented, and it is probable that such plans will mitigate the conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern. The Company has prepared the unaudited condensed consolidated financial statements on a going concern basis. If the Company encounters unforeseen circumstances that place constraints on its capital resources, management will be required to take various measures to conserve liquidity. Management cannot provide any assurance that the Company will raise additional capital if needed.
4. INVENTORIES, NET
June 30, 2024 | December 31, 2023 | |||||||
(unaudited) | ||||||||
Raw materials | $ | $ | ||||||
Finished goods | ||||||||
Goods in transit | ||||||||
Less: inventory write-down | ( | ) | ||||||
Total inventories, net | $ | $ |
For the six months ended June
30, 2024, the Company provided inventory write-down of $
5. PROPERTY AND EQUIPMENT, NET
June 30, 2024 | December 31, 2023 | |||||||
(unaudited) | ||||||||
Construction in progress | $ | $ | ||||||
Machinery | ||||||||
Building | ||||||||
Office equipment | ||||||||
Vehicle | ||||||||
Less: accumulated depreciation | ( | ) | ( | ) | ||||
$ | $ |
Depreciation expense was $
The Company commenced its operations since November 2022. For the six months ended June 30, 2024 and 2023, the Company incurred costs in designing plants, construction of plants, installation of machinery in the plants, which were incremental costs to construct a plant. As of June 30, 2024 and December 31, 2023, all of the property and equipment were collateralized for the long-term borrowings from BIDV.
As of June 30, 2024, the Company
has drawn down loans of approximately $
12
TOYO Co., Ltd.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”), except for number of shares)
6. LONG-TERM PREPAID EXPENSES
In November 2022, the
Company entered into an agreement with a third party. The agreement conveys the Company the right to use a piece of designated land (“land
use rights”) and the right to use certain public infrastructures within the industrial zones, for a period of 45 years maturing
in October 2067. Pursuant to the agreement, the third party charged a total fee of $
Because these public infrastructures
were shared among all lessees in the industrial zone, the Company has no rights to obtain substantially all of the economic benefits from
these public infrastructure. The Company recorded the total public infrastructure service fee as long-term prepaid expenses, and amortized
the long-term prepaid expenses over
June 30, 2024 | December 31, 2023 | |||||||
(unaudited) | ||||||||
Prepaid expenses for public infrastructure | $ | $ | ||||||
Less: accumulated amortization | ( | ) | ( | ) | ||||
$ | $ |
For the six months ended
June 30, 2024 and 2023, the amortization expenses for long-term prepaid expenses is $
7. OPERATING LEASE
In November 2022, the
Company leased land use rights in Vietnam under non-cancelable operating leases, with lease term of
The table below presents the operating lease related assets and liabilities recorded on the consolidated balance sheets.
June 30, 2024 | December 31, 2023 | |||||||
(unaudited) | ||||||||
Right of use assets | $ | $ | ||||||
Operating lease liabilities, current | ||||||||
Operating lease liabilities, noncurrent | ||||||||
Total operating lease liabilities | $ | $ |
13
TOYO Co., Ltd.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”), except for number of shares)
7. OPERATING LEASE (cont.)
For the Six Months Ended June 30, | ||||||||
2024 | 2023 | |||||||
Weighted average remaining lease term (years) | ||||||||
Weighted average discount rate | % | % |
For the six months ended
June 30, 2024, operating lease expenses were $
June 30, 2024 | ||||
For the year ending December 31, 2024 | ||||
For the year ending December 31, 2025 | ||||
For the year ending December 31, 2026 | ||||
For the year ending December 31, 2027 | ||||
For the year ending December 31, 2028 | ||||
Thereafter | ||||
Total lease payments | ||||
Less: Imputed interest | ( | ) | ||
Present value of operating lease liabilities | $ |
8. LINE OF CREDIT
On April 26, 2023, the
Company entered into a three-year bank credit facility with BIDV, under which the Company can draw-down up to $
As of June 30, 2024, the
Company has drawn down loans of approximately $
For the six months ended June
30, 2024, the Company recognized interest expenses of $
On January 31, 2024, the
Company entered into a one-year revolving bank credit facility with BIDV, under which the Company can draw-down up to $
14
TOYO Co., Ltd.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”), except for number of shares)
9. SHORT-TERM BORROWINGS
In connection with the revolving
bank credit facility the Company entered into with BIDV in January 2024 (Note 8), the
Company has drawn down loans of approximately $
For the six months ended June
30, 2024, the Company recognized and fully paid interest expenses of $
10. INCOME TAXES
Cayman Islands
Under the current laws of the Cayman Islands, the Company is not subject to tax on income or capital gain.
Singapore
TOYO SinCo is subject to corporate
income tax for its business operation in Singapore. Tax on corporate income is imposed at a flat rate of
China
TOYO China is subject to PRC
Corporate Income Tax (“CIT”) on the taxable income in accordance with the relevant PRC income tax laws. Effective from January 1,
2008, the PRC’s statutory, Enterprise Income Tax (“EIT”) rate is
Vietnam
TOYO Solar is subject to Vietnam
Enterprise Income Tax (“EIT”) on the taxable income in accordance with the relevant Vietnam income tax laws. The Vietnam’s
statutory, Enterprise Income Tax (“EIT”) rate is
Qualified as a High and New
Technology Enterprise, the Company received the preferential tax treatments since its inception, and is exempt from income taxes for the
first two years since the year ended December 31, 2023 when Company generated taxable income through year 2024. The Company is entitled
to a preferential income tax rate of
For the six month ended June 30, 2024 and 2023, the Company did
incur any current or deferred income tax expenses.
Uncertain tax positions
The Company evaluates the level of authority for each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measures the unrecognized benefits associated with the tax positions. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. For the six months ended June 30, 2024 and 2023, the Company had
unrecognized tax benefits. The Company does not believe that its uncertain tax position will materially change over the next twelve months.
11. RELATED PARTY TRANSACTIONS AND BALANCES
1) Nature of relationships with related parties
Name | Relationship with the Company | |
Fuji Solar Co., Ltd. (“Fuji Solar”) | ||
VSun JV | ||
Vietnam Sunergy (Bac Ninh) Company Limited (“VSun Bac Ninh”) | ||
VSun Solar USA Inc. (“VSun USA”) | ||
VSun China Co., Ltd. (“VSun China”) |
15
TOYO Co., Ltd.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”), except for number of shares)
11. RELATED PARTY TRANSACTIONS AND BALANCES (cont.)
For the Six Months Ended June 30, | ||||||||
2024 | 2023 | |||||||
Sales to a related party | ||||||||
VSun JV | $ | $ | ||||||
VSun China | ||||||||
VSun Bac Ninh | ||||||||
VSun USA | ||||||||
$ | $ | |||||||
Purchase of raw materials from a related party | ||||||||
VSun China | $ | $ | ||||||
$ | $ | |||||||
Payment of operating expenses by related parties on behalf of the Company | ||||||||
VSun JV | $ | $ | ||||||
VSun China | ||||||||
$ | $ | |||||||
Repayment of operating expenses to related parties paid on behalf of the Company | ||||||||
VSun JV(a) | $ | $ | ||||||
Prepayments of raw materials to a related party | ||||||||
VSun China(b) | $ | $ | ||||||
Prepayments of equipment to a related party | ||||||||
VSun China | $ | $ | ||||||
Repayments of equipment to a related party | ||||||||
VSun JV | $ | $ | ||||||
Borrowings from a related party(c) | ||||||||
VSun JV | $ | $ | ||||||
Repayment of borrowings to a related party(c) | ||||||||
VSun JV | $ | $ | ||||||
Accrual of interest expenses on borrowings from a related party(c) | ||||||||
VSun JV | $ | $ | ||||||
Repayment of interest expenses on borrowings from a related party(c) | ||||||||
VSun JV | $ |
(a) |
(b) | For the six months ended June 30, 2024, the Company also made prepayments of $ |
For the six months ended June 30, 2023,
the Company also made prepayments of $
(c) | For the six months ended June 30, 2023, the Company borrowed loans of approximately $ |
For the six months ended June 30, 2024,
the Company repaid to VSun JV loan principal of approximately $
For the six months ended June 30, 2024
and 2023, the Company accrued interest expenses of $
16
TOYO Co., Ltd.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”), except for number of shares)
11. RELATED PARTY TRANSACTIONS AND BALANCES (cont.)
3) Balances with related parties
Related party | Nature of balance | June 30, 2024 | December 31, 2023 | |||||||
VSun China | Sales to the related party | $ | $ |
Related party | Nature of balance | June 30, 2024 | December 31, 2023 | |||||||
VSun China | Prepayments for raw materials | $ | $ |
Related party | Nature of balance | June 30, 2024 | December 31, 2023 | |||||||
VSun JV | Advance for solar cells | $ | $ |
Related party | Nature of balance | June 30, 2024 | December 31, 2023 | |||||||
VSun JV | Borrowings | $ | $ | |||||||
VSun JV | Interest payable | |||||||||
VSun JV(a) | Payment of public infrastructure services on behalf of the Company | |||||||||
VSun JV | Payment of other operating expenses on behalf of the Company | |||||||||
VSun China | Payment of other operating expenses on behalf of the Company | |||||||||
Fuji Solar | Payment of offering costs on behalf of the Company | |||||||||
$ | $ |
(a) |
17
TOYO Co., Ltd.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”), except for number of shares)
12. EQUITY
Ordinary shares
TOYO’s authorized share
capital is
On February 23, 2024,
the Company issued
The issuance was considered as being part of the reorganization of the Company and was retroactively applied as if the transaction
occurred at the beginning of the period presented. No cash or other consideration was paid for the issuance of
As of June 30, 2024 and December 31,
2023, the Company had
Capital injection from shareholders
For the six months ended June
30, 2024 and 2023, VSUN JV made capital injection of $
13. EARNINGS (LOSS) PER SHARE
For the Six Months Ended June 30, | ||||||||
2024 | 2023 | |||||||
Net income (loss) | $ | $ | ( | ) | ||||
$ | $ | ( | ) |
14. COMMITMENTS AND CONTINGENCIES
Capital commitments
Minimum capital payments | ||||
For the six months ending December 31, 2024 | $ | |||
For the twelve months ending December 31, 2025 | ||||
$ |
18
TOYO Co., Ltd.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”), except for number of shares)
15. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that these unaudited condensed financial statements were issued. Except as discussed below, the Company did not identify any other subsequent events that would have required adjustment or disclosure in the unaudited condensed financial statements.
Closing of Business Combination
On July 1, 2024, TOYO completed the Transactions between TOYO, TOYO Solar, and BWAQ. The listed company following the Transactions is TOYO. The ordinary shares of TOYO commenced trading on the Nasdaq on July 2, 2024, under the ticker symbol “TOYO.”
Earnout Equities Vesting Agreement
On June 29, 2024, in consideration
of the development and efforts by the relevant parties in completing the Business Combination, TOYO, the Sellers, BWAQ, the sponsor of
BWAQ (the “Sponsor”), TOYO Solar and other relevant parties entered into a certain Earnout Equities Vesting Agreement (the
“Earnout Equities Vesting Agreement”) to, among the others, release all the founder shares of BWAQ (“Founder Shares”)
held by the Sponsor from being subject to potential surrender or cancellation as provided under the Sponsor Support Agreement, which was
entered into among the Sponsor, BWAQ and TOYO on August 10, 2023. Pursuant to the Earnout Equities Vesting Agreement, the parties agree
that
PIPE Purchase Agreement
On March 6, 2024, TOYO entered into the PIPE Purchase Agreement (as
amended on June 26, 2024, the “PIPE Purchase Agreement”), with BWAQ and NOTAM Co., Ltd., a Japanese corporation (the “PIPE
Investor” or “NOTAM”). Pursuant to the PIPE Purchase Agreement, NOTAM purchased a total of
Borrowings and repayment of borrowings
For the period from July 1, 2024 through the
date of this report, the Company drew down approximately $
19