Customer Base and Revenue - The company had a total of 119, 143, and 158 customers for the years ended December 31, 2024, 2023, and 2022, respectively, with the five largest customers accounting for approximately 50.9%, 53.2%, and 55.3% of total turnover[33]. - For the years ended December 31, 2024 and 2023, 7.7% and 0.4% of total revenue were generated from customers located in North America, impacted by U.S. tariffs on wood product imports[43]. - The company reported total revenue of $21,539,000 for the year ended December 31, 2024, a decrease of 15.0% from $25,457,000 in 2023[163]. - Logs accounted for 62.8% of total revenue in 2024, up from 40.9% in 2023, while flooring sales dropped to 9.1% from 23.8%[163]. - Sales to China represented 49.6% of total revenue in 2024, down from 60.9% in 2023, indicating a shift in market dynamics[164]. Operational Challenges - The company faces increased operating costs due to rising labor costs and logging permit expenses, which may adversely affect profitability[34]. - The company is dependent on a large workforce for manual labor, with risks of labor shortages affecting production[30]. - The company’s ability to obtain sufficient logging permits is crucial for future revenues, with no assurance of continued approvals[36]. - Environmental regulations have become more stringent, potentially increasing compliance costs and impacting harvesting volumes[29]. - Global market fluctuations and economic downturns could materially affect the company’s financial condition and operational results[40]. Market Competition and Economic Conditions - Competition from local and overseas firms, as well as from solid wood substitutes, poses risks to market share and revenue[46][48]. - Economic conditions in Hong Kong and China are sensitive to global economic conditions, and a downturn could negatively impact business operations and financial condition[90]. - The company’s pricing policy is based on production costs, transportation costs, and market prices, which may fluctuate due to raw material costs[165]. - The company anticipates ongoing restrictions on the export trade of forest products due to trade obstacles such as formaldehyde regulations, tariffs, and anti-dumping measures[168]. Regulatory and Compliance Issues - The PRC government may impose significant oversight and discretion over the company's operations, potentially affecting the value of its American Depositary Shares (ADSs)[59]. - The company is subject to a withholding tax rate of up to 10% on dividends payable by Chinese companies to non-PRC-resident enterprises[65]. - Current PRC regulations require the company's PRC subsidiary to draw 10% of its after-tax profits each year to fund a common reserve, which may limit dividend distributions[64]. - The company is required to comply with new cybersecurity review measures if it possesses personal data of over one million users and intends to list in a foreign country[61]. - The lack of PCAOB inspections of audit work in mainland China may limit the company's access to U.S. capital markets[71]. Corporate Structure and Shareholder Information - Approximately 68.56% of the company's issued share capital is owned by Easy Bliss Limited, indicating a controlled company status[107]. - The corporate structure includes multiple subsidiaries, with significant ownership stakes held by Peru Forestry Investments Co. and Golden Vast Development Limited[146]. - The company is classified as an emerging growth company, allowing it to take advantage of reduced reporting requirements under the JOBS Act[135]. - The company may face limitations on dividend payments under BVI law, which requires assets to exceed liabilities[132]. Sustainability and Environmental Management - The company has achieved FSC certification for five subsidiaries, enhancing its reputation for sustainable forestry practices[154]. - The company obtained necessary certificates for sustainable forest management, demonstrating compliance with relevant laws and regulations during the years ended December 31, 2022, 2023, and 2024[175]. - The company has a commitment to environmental management, with responsibilities for managing emissions and waste from its operations[186]. - The company has complied with environmental regulations, ensuring no incidents of non-compliance during the reporting years[175]. Product Development and Market Expansion - The company introduced essential oils as a new product in November 2020, refined from timber in its forests, and commenced production and export[142]. - The company is pursuing light-asset FSC business operations to expand forest resources without significant capital expenditure[160]. - The company plans to enhance R&D efforts to develop innovative and value-added products to navigate export trade challenges[168]. - Market expansion efforts are underway in Europe, targeting a 20% increase in market share by the end of 2023[172]. Financial Performance and Projections - The company reported a revenue of $1.8 billion for Q2 2023, representing a 15% increase year-over-year[172]. - The company provided guidance for Q3 2023, expecting revenue to be between $1.9 billion and $2.1 billion, indicating a potential growth of 10% to 16%[172]. - New product launches are anticipated to contribute an additional $300 million in revenue by the end of Q3 2023[172]. - The company reported a net profit margin of 12% for Q2 2023, up from 10% in the previous year[172]. Legal and Compliance Costs - The company expects to incur significant legal, accounting, and compliance costs as a public entity, particularly after ceasing to qualify as an "emerging growth company"[97]. - If the company loses its foreign private issuer status, it would incur significant additional legal and compliance costs[133]. - The company may face challenges in enforcing judgments against its directors and management due to its incorporation in the BVI[115]. Intellectual Property and Branding - The company has registered the domain name www.nature-wood.com, indicating potential online presence and branding efforts[175]. - The registered trademarks cover various classes, including categories related to building products, showcasing the company's commitment to brand protection and market differentiation[171].

Forest Management and Operations - The company owns concession rights for approximately 615,333 hectares of forests in Peru as of December 31, 2023[75]. - Approximately 14.21% and 3.48% of the company's forests are covered by Cumaru and Estoraque timber species, respectively, as of December 31, 2023[76]. - The company has established a vertically-integrated business model that enhances operational efficiency and quality control throughout the timber supply chain[79]. - As of December 31, 2023, the company managed approximately 112,600 hectares of forests for local forest owners in Peru under FSC management agreements[80]. - The company has a total of five subsidiaries that have obtained FSC CoC certifications, enhancing its credibility in sustainable forestry practices[77]. - The company has built a professional forest management team with an average of over 8 years of experience in FSC forest management[131]. - The company engages in timber auctions in France for log supply and collaborates with local forest owners in Peru[131]. Revenue and Financial Performance - Total revenue for the year ended December 31, 2023, was $25,457,000, a decrease of 53.9% from $55,339,000 in 2022[81]. - Revenue from logs was $10,415,000, accounting for 40.9% of total revenue, down from 50.2% in 2022[81]. - Revenue from flooring products was $6,049,000, representing 23.8% of total revenue, compared to 21.7% in 2022[81]. - Revenue from decking was $7,658,000, making up 30.1% of total revenue, an increase from 24.9% in 2022[81]. - The company reported a total comprehensive loss of approximately $11.5 million for 2023, compared to a total comprehensive income of approximately $4.5 million in 2022[144]. - Gross profit for 2023 was $2.4 million, representing a significant decrease of approximately 88.0% from $19.9 million in 2022, attributed to unfavorable market conditions in the construction sector[140]. - The company generated approximately $10.4 million in revenue from logs, accounting for 40.9% of total revenues in 2023, down from 50.2% in 2022[141]. - Flooring revenue was $6.0 million in 2023, representing 23.8% of total revenues, while decking revenue was $7.7 million, accounting for 30.1% of total revenues[141]. Market and Sales - Sales to China accounted for 60.9% of total revenue at $15,492,000, down from 68.4% in 2022[82]. - Sales to Europe were $8,095,000, representing 31.8% of total revenue, an increase from 27.6% in 2022[82]. - The company is facing increased competition in the international timber market due to environmental protection policies and export restrictions[83]. - Seasonal fluctuations affect sales, with typically lower sales in the first and fourth quarters due to adverse weather conditions[84]. - The company has a diverse product line including logs, decking, flooring, and sawn timber, with a focus on maintaining strong customer relationships[83]. Compliance and Regulations - The company has maintained compliance with all relevant laws and regulations, with no incidents of non-compliance reported during the years ended December 31, 2021, 2022, and 2023[90]. - The company is subject to Peruvian forestry regulations, which include the Organic Act for the sustainable use of natural resources and the Forest and Wildlife Act[92]. - The company is required to pay economic compensation to the Peruvian government for the right of use granted over public forests, calculated based on area and exploitation value[93]. - The company must obtain environmental certifications before commencing projects, classified by their potential impact[94]. Corporate Governance and Management - The company has established three committees under the board of directors: audit committee, compensation committee, and nominating and corporate governance committee[160]. - The audit committee consists of three independent directors, all of whom qualify as "audit committee financial experts" under Nasdaq Listing Rules[158]. - The company is a "foreign private issuer," allowing it to comply with home country governance requirements instead of Nasdaq standards[161]. - The total compensation for executive officers and directors for the fiscal year ended December 31, 2023, amounted to $564,000[156]. - The company aims to have at least two diverse directors by December 31, 2026, as part of its board diversity initiative[155]. Financial Position and Cash Flow - Cash at the end of the year decreased to $3.979 million as of December 31, 2023, from $5.083 million in 2022[148]. - Net cash used in operating activities was approximately $0.2 million for the year ended December 31, 2023, a significant decrease from $5.9 million generated in 2022, primarily due to a decrease in revenue[148]. - The company raised net proceeds of $5.1 million from its IPO, providing a new source of capital for business expansion[149]. - The company believes its cash and cash equivalents, along with available funds from its credit facility, are sufficient to fund working capital and capital expenditure requirements for at least the next twelve months[149]. Taxation and Financial Regulations - Dividend distributions are subject to a 5% tax in Peru, and companies can only pay dividends if approved by the General Shareholders Meeting[95]. - Companies engaged in forestry activities in Peru may benefit from a preferential income tax regime with rates of 15% for revenues up to 1,700 tax units, increasing to 29.5% by 2028 for higher revenues[98]. - The standard corporate income tax (CIT) rate in France is 25%, with a reduced rate of 15% for small and medium corporations on net taxable profits below €38,120[178]. - The withholding tax rate for dividends paid to corporations is generally 25%, but can increase to 75% for payments made to non-cooperative states[180]. Risk Management and Internal Controls - The company has not identified any material weaknesses in its internal control over financial reporting as of December 31, 2023[214]. - The company has implemented information security processes to manage material risks from cybersecurity threats, including annual employee training and systems monitoring[220]. - The independent Directors oversee the company's cybersecurity risk management processes, ensuring integration into overall risk management strategy[220]. - The company’s disclosure controls and procedures were deemed effective as of December 31, 2023[213]. Shareholder Information - Major shareholders include Mr. Hok Pan Se, who beneficially owns 70.18% of the ordinary shares[169]. - The total number of shares issued and outstanding as of the date of this report is 132,425,321 ordinary shares[172]. - The maximum authorized shares of the Company is 200,000,000 shares[172]. - The Company’s ADSs began trading on the Nasdaq Capital Market under the symbol "NWGL" on September 12, 2023[171].

Financial Overview - Nature Wood Group Limited reported total sales of $25.4 million for 2023, down from $55.3 million in 2022, indicating a significant decline in revenue [2] - The company anticipates a loss of $5.2 million for the year, contrasting with an income of $5.2 million in the previous year, primarily due to the global economic downturn and geopolitical tensions, particularly the ongoing Russian-Ukrainian war [2] Performance Insights - The decline in revenue and shift to a loss position reflect persistent global challenges, but the company has implemented aggressive cost-cutting measures to streamline operations [3] Strategic Initiatives and Future Outlook - Nature Wood is focused on identifying new opportunities, especially in the carbon credit market, which is seen as a promising avenue for high-profit margins [4] - The company is optimistic about the potential of the carbon credit market to contribute significantly to future growth [4] CEO's Statement - The CEO expressed confidence that the most challenging times are behind the company, highlighting the aggressive cost-cutting measures and strategic focus on high-margin opportunities as key to anticipated growth and profitability in 2024 [5] Company Background - Nature Wood Group Limited is a leading vertically-integrated forestry company involved in FSC business operations, covering both upstream forest management and downstream wood processing and distribution [6] - The company is one of the largest exporters of wood products in Peru, with approximately 615,333 hectares of forest concessions as of June 30, 2023, and holds significant positions in various wood product export categories [6]