{"url_path":"/sec/tmde/10-k/2026/item-5","section_key":"item-5","section_title":"Item 5 **","topic":"sec","document":{"doc_type":"20-F/A","doc_date":"2026-05-15","source_url":"https://www.sec.gov/Archives/edgar/data/2009714/0001493152-26-023294-index.html","accession_number":"0001493152-26-023294","cik":"0002009714","ticker":"TMDE","issuer_name":"TMD Energy Ltd","edgar_url":"https://www.sec.gov/Archives/edgar/data/2009714/0001493152-26-023294-index.html","primary_entity_key":"0002009714","primary_entity_name":"TMD Energy Ltd"},"word_count":12235,"has_tables":true,"body_markdown":"**ITEM\n5.**\n**OPERATING\nAND FINANCIAL REVIEW AND PROSPECTS**\n\n \n\nYou\nshould read the following discussion and analysis of the Group’s financial condition and results of operations in conjunction with\nthe Group’s unaudited consolidated financial statements and the related notes included elsewhere in this transition report on Form\n20-F. This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. The\nGroup’s actual results may differ materially from those anticipated in these forward-looking statements as a result of various\nfactors, including those set forth under “Item 3. Key Information — 3.D. Risk Factors” of our annual report on Form\n20-F for the year ended December 31, 2024. We caution you that our businesses and financial performance are subject to substantial risks\nand uncertainties.\n\n** **\n\n**5.A.\nOperating Results**\n\n \n\n**Holding\nCompany Structure**\n\n** **\n\nOur\nCompany is a holding company with no material operations of its own other than investment holding. We conduct our operations primarily\nthrough our indirect operating subsidiaries which are owned by Straits Marine Fuels & Energy Sdn. Bhd. (“**SMF**”),\nthe sole direct subsidiary of our Company. Similarly, SMF is a holding company with no material operations of its own other than holding\ninvestment in all the indirect subsidiaries of our Company. As a result, both our Company and SMF’s ability to pay dividends depends\nupon dividends paid by our subsidiaries. Some of our subsidiaries have debt on their own with instruments governing their debt that may\nrestrict their ability to pay dividend to us, unless those debts are repaid. The same restrictions may apply if they incur any new debt\non their own in the future.\n\n \n\nStraits\nEnergy Resources Berhad (“**Straits**”), the holding company of our Company through its wholly-owned subsidiary, Straits\nManagement Services Sdn. Bhd. will continue to provide overall group management and coordination services encompassing but not restricted\nto listing compliance and requirement, group consolidation and reporting, corporate governance, corporate secretarial, corporate finance,\ncorporate banking, accounting, market and public relations at a management fee that will be reviewed annually for our group of companies.\n\n \n\nOur\nCompany, through our various subsidiaries, are involved in oil trading and bunkering with its own vessel management team overseeing its\nfleet of bunkering vessels servicing and providing quality bunker to both domestic and international liners and vessels of all nature,\nthat ply through Malaysian waters. Being a Malaysian company operating in Malaysian waters, it is natural that this oil trading and bunkering\nunit maintain its financial records and statements in its domestic currency, RM. Our Company will be looking into possibilities of expanding\nits operation regionally out of Malaysian waters.\n\n \n\n**Recent\nDevelopments**\n\n \n\nWe\nconsummated our initial public offering on the NYSE American on April 22, 2025, issuing 3,100,000 ordinary shares at a price of $3.25\nper share. In addition, we entered into an underwriting agreement with the underwriter on April 21, 2025, which granted the underwriter\na 45-day option to purchase up to an additional 465,000 ordinary shares at the public offering price of $3.25 per share to cover any\nover-allotment. Subsequently, on April 22, 2025, the underwriter exercised the over-allotment option in full, purchasing an additional\n465,000 ordinary shares at the public offering price of $3.25 per share. The initial public offering closed on April 22, 2025 and the\nexercise of the over-allotment option closed on April 24, 2025, with gross proceeds totaling $11.59 million, before deducting underwriting\ndiscounts and offering expenses. The ordinary shares began trading on April 21, 2025 on NYSE American and commenced trading under the\nticker symbol “TMDE”.\n\n \n\nOn\nMay 16, 2025, we had changed our fiscal year end from December 31 to June 30, to align with the fiscal year end of our holding company,\nStraits.\n\n \n\n**Factors\nAffecting Our Results of Operations**\n\n \n\n**We\nrely on sales to key customers and purchases from a limited number of suppliers, where reduction or loss of key customers or supply chain\ndisruptions and price volatility from supplier could diminish our operating results.**\n\n** **\n\nWe\nhave not derived a significant amount of revenue from volume commitments or any other understandings with our key customers related to\nfuture purchases. Orders from our key customers could be reduced or ceased at any time without obligation. Our Group also does not enter\ninto long-term agreements with our customers. If any of our major customers terminate their business relationship with us, and we fail\nto secure new customers or new orders from other existing customers in a timely manner, a substantial reduction or termination of purchases\nby our key customer could significantly affect our operations.\n\n \n\nIn\naddition, we currently purchase refined marine fuel products from a limited number of suppliers. If our relationship with any of our\nkey suppliers is terminated or if our key suppliers experience production disruptions, we may not be able to obtain a sufficient quantity\nof refined marine fuel on acceptable terms and without interruptions to our business. We may encounter difficulties and delays in obtaining\nmarine fuel from alternative sources. Any interruption or delay in the supply of marine fuel, or the inability to obtain fuel from alternate\nsources at acceptable prices and within a reasonable timeframe, would impair our ability to meet scheduled deliveries to our customers\nand could lead to order cancellations or penalties.\n\n \n\n1\n\n \n\n \n\n**We\nrely on the expertise of our senior management, and our inability to retain key personnel could disrupt our business and limit our growth.**\n\n** **\n\nOur\nbusiness success and growth prospects depend significantly on the continued service of our senior management team and our ability to\nhire and retain key members of our management team. The unexpected loss of any of these key individuals could disrupt our operations,\ndamage important business relationships, and delay strategic initiatives, potentially harming our competitive position. We face inherent\nchallenges in attracting and retaining qualified personnel due to intense industry competition for executive talent. While we implement\nretention measures, there is no assurance that we will successfully maintain our current management team. Any disruption in leadership\ncould materially adversely affect our operations.\n\n \n\n**Material\ndisruptions in the availability or supply of oil may reduce the supply of our products and have a material impact on our operations.**\n\n \n\nOur\noperations face substantial risks from marine fuel supply disruptions that could impair our ability to fulfill customer demand. Global\noil markets remain exposed to geopolitical conflicts, trade restrictions, and natural disasters that may reduce refinery output or disrupt\nlogistics. Political instability in producing regions, terrorist activity, or military actions could abruptly constrain supply availability,\nwhile extreme weather or accidents might damage critical infrastructure. Such events typically trigger sudden price spikes and inventory\nshortages across the bunker fuel market.\n\n \n\nThese\nconstraints would directly limit our sales volumes and erode our competitive pricing position. Although we maintain alternative supply\narrangements, the integrated nature of oil markets means local disruptions often escalate into prolonged shortages. Our commodity-based\nbusiness model leaves us particularly vulnerable to these shocks, as securing substitute fuel during crises becomes costly and time-consuming.\nPersistent supply issues could damage customer relationships and significantly pressure margins, leading to lasting effects on financial\nperformance.\n\n \n\n**Adverse\nconditions in the shipping industry may reduce the demand for our products and services and negatively affect our results of operations\nand financial condition.**\n\n \n\nOur\nmarine fuel supply business remains highly dependent on the cyclical performance of the shipping industry. Fluctuations in vessel charter\nrates, fuel costs, and operational expenses directly impact our customers’ purchasing capacity. During market downturns, when freight\nrates decline or operating costs rise, shipping companies typically reduce bunkering consumption, creating immediate pressure on our\nsales volumes and margins. The industry’s vulnerability to risks, including geopolitical conflicts, piracy incidents, trade disputes,\nand port security threats, can disrupt shipping routes and vessel operations, leading to sudden drops in regional fuel demand. Prolonged\nmarket weakness often forces shipowners to idle vessels or slow steam, further depressing bunker demand.\n\n \n\nWhile\nwe actively monitor industry trends and adjust our commercial strategies accordingly, these macroeconomic and geopolitical factors remain\nbeyond our control. Our financial performance will continue to reflect shipping market volatility, with potential impacts on revenue\nstability, profitability, and cash flow generation. This inherent sector exposure represents a persistent challenge to our business model’s\nresilience.\n\n \n\n**Impact\nof Russia’s Invasion of Ukraine, Conflicts in Middle East and Related Supply Chain Issues**\n\n \n\nIn\nFebruary 2022, Russia launched a military attack on Ukraine, leading to further regional and international conflicts or armed action.\nAs Russia is one of the largest exporters of crude oil in the world, this crisis had disrupted the oil supply and caused a spike in oil\nprices for the year ended December 31, 2022 (“**FY2022**”), which subsequently declined for the year ended December 31,\n2023 (“**FY2023**”). Since late 2023, conflicts in the Middle East, including the Israel–Gaza war and related regional\nescalations, have contributed to heightened geopolitical instability. These developments, combined with increased security risks in major\nshipping lanes, disrupted global maritime trade by lengthening voyage times and raising operational costs across the industry.\n\n \n\nThe\nRussia-Ukraine conflict caused a spike in oil prices that was offset by a continuing growth in demand volume in our oil cargo bunkered\nin FY2023, resulting in our revenue dropping to $633.1 million in FY2023 from approximately $702.1 million in FY2022.\n\n \n\nAs\nthe financial impact of this crisis had already been reflected in FY2022 and FY2023, there was no material impact on our revenue for\nthe year ended December 31, 2024 (“**FY2024**”). In fact, after considering the increase in the volume of oil cargo bunkered,\nour revenue rose from $633.1 million in FY2023 to $688.6 million in FY2024, driven by the expansion of our marketplace.\n\n \n\nSince\nthen, the direct effect of the Russia-Ukraine conflict on our operations has moderated, and subsequent movements in oil prices have been\ninfluenced more by global economic conditions and trade policy developments and regional conflicts in the Middle East.\n\n \n\nFor\nthe six months ended June 30, 2025, our performance was affected by a combination of factors. Middle East tensions contributed to additional\nvolatility in oil prices and operational costs, serving as another headwind that, together with trade and tariff issues, led to a decline\nin our revenue.\n\n \n\nIn\nresponse to these market challenges, we have been strengthening collaboration with our key service providers and exploring alternative\nsourcing and supply chain options to enhance resilience and operational continuity. While these measures aim to mitigate potential impacts,\nthere can be no assurance that they will fully shield us from ongoing geopolitical and trade policy volatility.\n\n \n\n2\n\n \n\n \n\n**Escalating\nTrade Tensions and Impacts of Tariff Policy Volatility**\n\n \n\nRecent\nglobal trade developments have introduced heightened uncertainty into international commerce. In early 2025, the implementation of broad\nnew tariffs on a wide range of imported goods significantly disrupted global trade dynamics, raising concerns across multiple sectors.\nFrequent changes in tariff rates and enforcement timelines further disrupted global shipping schedules, causing vessel delays, delivery\nrescheduling, and a slowdown in trade flows across major routes.\n\n \n\nThe\nprolonged tariff crisis reduced shipping activity and cargo movement, which in turn lowered demand for marine fuel. Coupled with softer\nglobal consumption, weaker economic growth, and a continuing shift toward alternative energy, these headwinds exerted downward pressure\non oil demand and contributed to a significant decline in international oil prices, with the global average oil price declined.\n\n \n\nFor\nthe six months ended June 30, 2025, revenue decreased to $276.3 million from $357.5 million for the six months ended June 30, 2024. This\ndecline was primarily attributable to lower sales volume, despite our enlarged customer base compared to the six months ended June 30,\n2024. In addition, weaker shipping activity and softer global consumption further depressed oil prices, which deteriorated our performance\nfor the six months ended June 30, 2025.\n\n \n\nIn\nresponse, we are strengthening collaboration with our key service providers and exploring alternative sourcing and supply chain options\nto enhance resilience and operational continuity. While these strategic measures aim to mitigate potential impacts, there can be no assurance\nthat they will fully shield us from the broader effects of ongoing trade policy shifts. We will continue to monitor developments closely\nand adapt our business strategy as needed to maintain operational stability and financial performance.\n\n \n\nNevertheless,\nany negative impact arising from an escalation of geopolitical tensions, including the Russia-Ukraine conflict, conflicts in the Middle\nEast, a slowdown in global economy, or continued trade tension and tariff crisis could adversely affect our business conditions. The\nvolatility of crude oil price and inflationary pressures can increase our operating cost and a prolonged crisis may adversely impact\nthe supply and demand of oil cargo, which may result in a lower volume of oil cargo bunkered. In addition, any significant increase in\nmarine fuel price might tighten the operating cash flows of our Group, which may, in turn, adversely affect our working capital requirements,\nfinancial conditions and prospects. These disruptions may also heighten many other risks disclosed in the “Risk Factors”\nsection in our annual report on Form 20-F for the year ended December 31, 2024, including our ability to market our securities, raise\nequity or debt financing.\n\n \n\nThe\nultimate impact of the conflict on our operations remains unknown and will depend on future developments. The Group will continuously\nmonitor the situation closely and initiate any necessary mitigating actions when required.\n\n \n\n**Six\nMonths Ended June 30, 2025 Compared to Six Months Ended June 30, 2024**\n\n \n\n**Results\nof Operations**\n\n \n\nThe\nfollowing table summarizes the results of our operations during the six months ended June 30, 2025 and 2024, respectively, and provides\ninformation regarding the dollar and percentage increase or (decrease) during such years.\n\n \n\n  \n\nFor the Six Months Ended\n\nJune 30,\n  \n  \n\n  \n2025  \n2024  \nVariance – \n\n  \n$’000  \n$’000  \nIncrease (Decrease) \n\n  \n(Unaudited)  \n(Unaudited)  \n$’000  \n% \n\nRevenues, net \n 276,185  \n 357,486  \n (81,301) \n (22.7)\n\nRevenues – related party, net \n 155  \n 39  \n 116  \n 297.4 \n\nTotal revenues \n 276,340  \n 357,525  \n (81,185) \n (22.7)\n\n  \n    \n    \n    \n   \n\nCost of revenues \n (272,275) \n (351,629) \n (79,354) \n (22.6)\n\nCost of revenues – related party \n (82) \n (350) \n (268) \n (76.6)\n\nTotal cost of revenues \n (272,357) \n (351,979) \n (79,622) \n (22.6)\n\n  \n    \n    \n    \n   \n\nGross profit \n 3,983  \n 5,546  \n (1,563) \n (28.2)\n\n  \n    \n    \n    \n   \n\nOperating expenses \n    \n    \n    \n   \n\nSelling and marketing expenses \n (38) \n (47) \n (9) \n (19.1)\n\nGeneral and administrative expenses \n (3,330) \n (3,061) \n 269  \n 8.8 \n\nDepreciation expenses \n (2,559) \n (2,305) \n 254  \n 11.0 \n\nTotal operating expenses \n (5,927) \n (5,413) \n 514  \n 9.5 \n\n  \n    \n    \n    \n   \n\n(Loss) Income from operations \n (1,944) \n 133  \n (2,077) \n (1,561.7)\n\n  \n    \n    \n    \n   \n\nOther (expenses) income, net \n    \n    \n    \n   \n\nInterest income \n 16  \n 29  \n (13) \n (44.8)\n\nSundry (expense) income \n (775) \n 3,229  \n (4,004) \n (124.0)\n\nInterest expenses \n (2,803) \n (1,987) \n 816  \n 41.1 \n\nShare of losses of associate \n (4) \n -  \n (4) \n (100.0)\n\nTotal other (expenses) income, net \n (3,566) \n 1,271  \n (4,837) \n (380.6)\n\n  \n    \n    \n    \n   \n\n(Loss) Income before income taxes \n (5,510) \n 1,404  \n (6,914) \n (492.5)\n\nIncome tax benefits (expenses) \n 988  \n (277) \n 1,265  \n 456.7 \n\nNet (loss) income \n (4,522) \n 1,127  \n (5,649) \n (501.2)\n\nLess: loss (income) attributable to non-controlling interest \n 212  \n (287) \n 499  \n 173.9 \n\nNet (loss) income attributable to controlling interest \n (4,310) \n 840  \n (5,150) \n (613.1)\n\n  \n    \n    \n    \n   \n\nOther comprehensive (loss) income: \n    \n    \n    \n   \n\nNet (loss) income \n (4,522) \n 1,127  \n (5,649) \n (501.2)\n\nForeign currency translation adjustments \n (96) \n (248) \n 152  \n 61.3 \n\nTotal comprehensive (loss) income \n (4,618) \n 879  \n (5,497) \n (625.4)\n\n \n\n3\n\n \n\n \n\n**Key\nComponents of Results of Operations**\n\n \n\n**Revenues**\n\n \n\nOur\nGroup’s revenue comprises of bunkering services, vessel chartering services and ship management services as tabulated below:\n\n \n\n  \nTotal Revenue  \nInter-Segment  \nRevenue from Customers  \n  \n\n  \n\n**For the Six Months**\n\n**Ended June 30,**\n  \n\n**For the Six Months**\n\n**Ended June 30,**\n  \n\n**For the Six Months**\n\n**Ended June 30,**\n  \nVariance – \n\n  \n2025  \n2024  \n2025  \n2024  \n2025  \n2024  \nIncrease \n\n  \n$’000  \n$’000  \n$’000  \n$’000  \n$’000  \n$’000  \n(Decrease) \n\n  \n(Unaudited)  \n(Unaudited)  \n(Unaudited)  \n(Unaudited)  \n(Unaudited)  \n(Unaudited)  \n$’000  \n% \n\nAnalysis By Segment: \n    \n    \n    \n    \n    \n    \n    \n   \n\nBunkering services \n 275,440  \n 357,350  \n -  \n -  \n 275,440  \n 357,350  \n (81,910) \n (22.9)\n\nVessel chartering services \n 3,548  \n 3,486  \n 3,548  \n 3,486  \n -  \n -  \n -  \n - \n\nShip management services \n 5,074  \n 965  \n 4,174  \n 790  \n 900  \n 175  \n 725  \n 414.3 \n\nTotal Revenue \n 284,062  \n 361,801  \n 7,722  \n 4,276  \n 276,340  \n 357,525  \n (81,185) \n (22.7)\n\n \n\n*Overall*\n\n \n\nOur\nGroup’s overall revenue for the six months ended June 30, 2025 had decreased by 22.7%, or equivalent to $81.2 million, to $276.3\nmillion from $357.5 million achieved for the six months ended June 30, 2024 due to decrease in contribution from the bunkering services\nsegment, as it contributed more than 99% of our Group’s revenue for the six months ended June 30, 2025, offset by a slight increase\nin ship management services. The decrease in revenue for the six months ended June 30, 2025 was primarily attributable to a decrease\nin the volume of oil cargo bunkered of approximately 11.2%, from 578,614 metric ton for the six months ended June 30, 2024 to 514,025\nmetric ton for the six months ended June 30, 2025.\n\n \n\n*Bunkering\nServices*\n\n \n\nThe\ndecrease in the bunkering services revenue by $81.9 million to $275.4 million for the six months ended June 30, 2025 from $357.3 million\nfor the six months ended June 30, 2024 was substantially attributable to the decrease of approximately 11.2% in volume of oil cargo bunkered,\nfrom 578,614 metric ton for the six months ended June 30, 2024 to 514,025 metric ton for the six months ended June 30, 2025. In addition,\nbecause the selling price of bunker fuel is generally benchmarked to the prevailing market oil price, the 17.9% decrease in the average\noil price for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 further reduced the revenue recognized\nfrom bunkering services.\n\n \n\nWe\nexpanded our customer base in bunkering services from 53 customers for the six months ended June 30, 2024 to 77 for the six months ended\nJune 30, 2025. Despite this expansion, bunkered volume declined due to a slowdown in global trade and shipping activity. The tariff crisis\nin early 2025, marked by broad new tariffs and frequent changes in implementation timelines, significantly disrupted shipping schedules\nand cargo flows. These disruptions, together with softer global consumption and weaker economic growth, reduced overall demand for marine\nfuel and directly contributed to the decline in oil cargo bunkered.\n\n \n\nThe\ncombined impact of reduced bunkered volume and declining global marine fuel prices offset the benefits of customer base expansion, thereby\nconstraining overall revenue growth in our bunkering services.\n\n \n\n*Vessel\nChartering Services*\n\n** **\n\nOur\nvessel chartering services segment previously generated revenue by chartering vessels to third parties. There was no revenue from third\nparties related to vessel chartering services for the six months ended June 30, 2025 and 2024, as our Group temporarily discontinued\nthe segment after the chartering contract expired in July 2023. The vessel was subsequently redeployed to our bunkering fleet to support\nthe growth of our oil bunkering operations.\n\n \n\n*Ship\nManagement Services*\n\n \n\nOur\nship management services, supported by a competent team of qualified professional mariners, also managed third-party vessels, including\ntugboats used in the port and STS operations that are owned by other subsidiaries within the Straits Group, which are outside our Group.\n\n** **\n\nThe\nship management services generated approximately $0.9 million and $0.2 million for the six months ended June 30, 2025 and 2024, respectively,\ndue to the addition of new customers for the six months ended June 30, 2025.\n\n \n\n**Cost\nof revenues**\n\n \n\nOur\ncost of revenues represent direct expenses incurred to generate revenue. These costs are recorded and accrued as incurred. The cost of\nrevenues primarily comprise oil cargo cost, along with other bunkering operation costs such as bunker own used, port charges, crew wages\nand consumables, transport costs and agency fees. It also includes vessel operation-related costs, such as vessel consumables, insurance,\ngeneral upkeep and repair costs.\n\n \n\n4\n\n \n\n \n\nIts\nmajor cost components are as follow:\n\n \n\n  \n\nFor the Six Months Ended\n\nJune 30,\n  \n  \n\n  \n2025  \n2024  \nVariance – \n\n  \n(Unaudited)  \n(Unaudited)  \nIncrease (Decrease) \n\n  \n$’000  \n$’000  \n$’000  \n% \n\nOil cargo sold \n 264,009  \n 343,994  \n (79,985) \n (23.3)\n\nBunker own used \n 1,818  \n 2,136  \n (318) \n (14.9)\n\nCrew wages \n 1,815  \n 1,767  \n 48  \n 2.7 \n\nOther operating cost \n 4,715  \n 4,082  \n 633  \n 15.5 \n\nTotal cost of revenues \n 272,357  \n 351,979  \n (79,622) \n (22.6)\n\n \n\nOur\noverall cost of revenues decreased by 22.6%, or equivalent to $79.6 million, to $272.4 million for the six months ended June 30, 2025\nfrom $352.0 million for the six months ended June 30, 2024, representing 98.6% and 98.4% of our total revenue respectively. This decrease\nwas in line with the decline in the volume of cargo bunkered, with oil cargo costs dropped to $264.0 million for the six months ended\nJune 30, 2025 from $344.0 million for the six months ended June 30, 2024. In addition, other operating costs increased to $4.7 million\nfor the six months ended June 30, 2025 from $4.1 million for the six months ended June 30, 2024. The increase was primarily attributable\nto higher port-related operation costs, partially offset by a reduction in equipment upkeep expenses.\n\n \n\n**Gross\nProfit and Gross Profit Margin**\n\n** **\n\n*Overall*\n\n** **\n\n  \n\nFor the Six Months Ended\n\nJune 30,\n  \n  \n\n  \n2025  \n2024  \nVariance – \n\n  \n(Unaudited)  \n(Unaudited)  \nIncrease (Decrease) \n\n  \n$’000  \n$’000  \n$’000  \n% \n\nRevenue \n 276,340  \n 357,525  \n (81,185) \n (22.7)\n\nCost of revenues \n (272,357) \n (351,979) \n (79,622) \n (22.6)\n\nGross profit \n 3,983  \n 5,546  \n (1,563) \n (28.2)\n\n  \n    \n    \n    \n   \n\nGross profit margin \n 1.44% \n 1.55% \n (0.11)% \n (7.1)\n\n \n\nAs\na result of the foregoing, we recorded an overall decrease of 28.2% in gross profit, or equivalent to $1.6 million, to $4.0 million for\nthe six months ended June 30, 2025 from $5.6 million for the six months ended June 30, 2024.\n\n \n\nNevertheless,\nour gross profit margin decreased marginally by 0.11%, to 1.44% for the six months ended June 30, 2025 from 1.55% for the six months\nended June 30, 2024 primarily reflecting increased operational expenses from our oil bunkering services, resulting in a marginal compression\nof our gross profit margin.\n\n \n\n*Bunkering\nServices*\n\n** **\n\n  \n\nFor the Six Months Ended\n\nJune 30,\n  \n  \n\n  \n2025  \n2024  \nVariance – \n\n  \n(Unaudited)  \n(Unaudited)  \nIncrease (Decrease) \n\n  \n$’000  \n$’000  \n$’000  \n% \n\nRevenue \n 275,440  \n 357,350  \n (81,910) \n (22.9)\n\nCost of revenues \n (271,627) \n (351,979) \n (80,352) \n (22.8)\n\nGross profit \n 3,813  \n 5,371  \n (1,558) \n (29.0)\n\n  \n    \n    \n    \n   \n\nGross profit margin \n 1.38% \n 1.50% \n (0.12)% \n (7.9)\n\n  \n    \n    \n    \n   \n\nTotal metric ton sold (mt) \n 514,025  \n 578,614  \n (64,589) \n (11.2)\n\n  \n    \n    \n    \n   \n\nAverage gross profit per metric ton \n$7.42  \n$9.28  \n$(1.86) \n (20.0)\n\n \n\nWe\nrecorded a decrease of 29.0% in gross profit of bunkering services, or equivalent to $1.6 million, to $3.8 million for the six months\nended June 30, 2025 from $5.4 million for the six months ended June 30, 2024. Our gross profit margin decreased marginally by 0.12%,\nto 1.38% for the six months ended June 30, 2025 from 1.50% for the six months ended June 30, 2024.\n\n \n\nThe\naverage gross profit per mt of oil cargo sold had decreased by approximately 20.0%, or equivalent to $1.86 per mt, to $7.42 per mt for\nthe six months ended June 30, 2025 from $9.28 per mt for the six months ended June 30, 2024. This margin compression was largely due\nto elevated operating costs and sharp decline in demand for bunkering. Tariff-related delays and logistical disruptions increased transportation\nand handling expenses, while deferred tariff adjustments limited cost pass-through capabilities. Additionally, global oil demand softness\nand broader inflationary pressures narrowed the spread between selling prices and procurement costs, further eroding profitability.\n\n \n\n5\n\n \n\n****\n\n** **\n\n*Ship\nManagement Services*\n\n \n\nGross\nprofit of ship management services was relatively stable, representing $169,761 for the six months ended June 30, 2025, up from $175,465\nfor the six months ended June 30, 2024.\n\n \n\nThe\nslight decrease in gross profit margin primarily reflects the recognition of certain direct costs associated with technical management\nand agency services for the six months ended June 30, 2025.\n\n \n\n**Selling\nand Marketing Expenses**\n\n** **\n\nThe\nselling and marketing expenses comprise marketing, advertising and business development expenses incurred by the sales and marketing\nteam.\n\n \n\nOur\nselling and marketing expenses decreased by 19.1% or approximately $0.01 million, to $0.04 million for the six months ended June 30,\n2025, down from $0.05 million for the six months ended June 30, 2024. The decrease was primarily attributable to a reversal of approximately\n$0.03 million in previously over provisioned marketing expenses, partially offset by an increase in spending of $0.04 million for business\ndevelopment for the six months ended June 30, 2025.\n\n \n\n**General\nand Administrative Expenses**\n\n \n\nThe\ngeneral and administrative expenses which increased by 8.8% or $0.2 million, to $3.3 million for the six months ended June 30, 2025 from\n$3.1 million for the six months ended June 30, 2024 comprise the following:\n\n \n\n  \n\nFor the Six Months Ended\n\nJune 30,\n  \n  \n\n  \n2025  \n2024  \nVariance – \n\n  \n(Unaudited)  \n(Unaudited)  \nIncrease (Decrease) \n\n  \n$’000  \n$’000  \n$’000  \n% \n\nStaff cost \n 1,505  \n 1,174  \n 331  \n 28.2 \n\nManagement fees \n 373  \n 91  \n 282  \n 309.9 \n\nProfessional fees \n 410  \n 353  \n 57  \n 16.1 \n\nLeasing license \n 170  \n 160  \n 10  \n 6.3 \n\nOthers \n 872  \n 1,283  \n (411) \n (32.0)\n\nTotal general and administrative expenses \n 3,330  \n 3,061  \n 269  \n 8.8 \n\n \n\nStaff\ncost increased by $0.3 million, to $1.5 million for the six months ended June 30, 2025, up from $1.2 million for the six months ended\nJune 30, 2024. Without significant change in the number of overall headcounts, the increase was primarily due to annual salary adjustments\nand bonus payments during the six months ended June 30, 2025. In addition, approximately $0.07 million of directors’ remuneration\nwas incurred following our listing.\n\n \n\nManagement\nfees paid to Straits Management Services Sdn. Bhd., a related company within the Straits Group, increased to $0.4 million for the six months\nended June 30, 2025 from $0.1 million for the six months ended June 30, 2024. These fees cover overall group management and coordination\nservices, encompassing but not limited to listing compliance and requirement, group consolidation and reporting, corporate governance,\ncorporate secretarial, corporate finance, corporate banking, accounting, market and public relations to the subsidiaries of our Company.\nThe increase was mainly due to a higher fee being charged for the six months ended June 30, 2025.\n\n \n\nProfessional\nfees include statutory audit fees, tax fees, corporate secretarial fees, and legal fees. The professional fees remained relatively stable\nfor the six months ended June 30, 2025, which mainly represented fee incurred in connection with our expenses related to investor relationship\nand a provision of audit fee for the consolidated financial statement.\n\n \n\nCorporations\nincorporated under Labuan Companies Act 1990 are required to pay an annual leasing license fee of $20,000 to Labuan Financial Services\nAuthority (“**LFSA**”). As such, there was leasing license fee of $0.01 million each for the six months ended June 30,\n2025 and 2024. In addition, $0.02 million and $0.01 million represents other license fees charged for the six months ended June 30, 2025\nand 2024, respectively.\n\n \n\nThe\ndecrease in other general and administrative expenses for the six months ended June 30, 2025 primarily reflected the reduced in late\ncharge in payment to suppliers driven by greater access to funding and implementation of our cost savings initiatives aimed at optimizing\noperational efficiency and reducing discretionary spending.\n\n \n\n**Depreciation**\n\n \n\nDepreciation\nrepresents the annual depreciation on the cost of Group’s fleet of 15 vessels, dry-dock cost, tools, office equipment, computer\nhardware and software, motor vehicles, real property and furniture and fittings.\n\n \n\n6\n\n \n\n \n\nThe\nincrease in depreciation by $0.3 million to $2.6 million for the six months ended June 30, 2025, up from $2.3 million for the six months\nended June 30, 2024, was due to the addition of dry-dock cost which resulted in higher depreciation charges.\n\n \n\n**Other\n(Expense) Income, net**\n\n \n\n*Interest\nIncome*\n\n \n\nInterest\nincome decreased to $16,072 for the six months ended June 30, 2025 from $28,903 for the six months ended June 30, 2024. The decrease\nwas primarily attributable to an adjustment recorded in respect of interest income relating to earlier periods during the six months\nended June 30, 2024, with no corresponding adjustment in the six months ended June 30, 2025. Interest income was derived from principal\nsums approximating $0.1 million and $2.4 million placed with lender bank of Tumpuan Megah Development Sdn. Bhd. (“**Tumpuan Megah**”)\nas a term deposit and in a designated current account respectively.\n\n \n\n*Sundry\n(Expense) Income*\n\n \n\n  \n\nFor the Six Months Ended\n\nJune 30,\n  \n  \n\n  \n2025  \n2024  \nVariance – \n\n  \n(Unaudited)  \n(Unaudited)  \nIncrease (Decrease) \n\n  \n$’000  \n$’000  \n$’000  \n% \n\n(Loss) Gain on foreign exchange \n (1,496) \n 3,210  \n (4,706) \n (146.6)\n\nMiscellaneous income \n 721  \n 19  \n 702  \n 3,694.7 \n\nTotal sundry (expense) income \n (775) \n 3,229  \n (4,004) \n (124.0)\n\n \n\nAlthough\nthe majority of our business activities are denominated in USD, the functional currencies of our five subsidiaries remain RM and\nSGD. As a result, foreign currency gains and losses arise when USD-denominated balances of these subsidiaries are remeasured into\ntheir respective functional currencies. We currently do not have a foreign currency hedging policy, as the USD generated from our\nrevenue is sufficient to cover our USD purchases. However, we continue to monitor our foreign exchange exposure and will consider\nhedging significant foreign currency exposure should the need arise. In the current state of RM and SGD strengthening against the\nUSD, the weakening of the USD reduced the RM-equivalent and SGD-equivalent values of our USD-denominated cash balances, receivables\nand payables, resulting in a net foreign currency loss. We recorded a net foreign currency loss of $1.5 million for the six months\nended June 30, 2025 as compared to net foreign currency gain of $3.2 million for the six months ended June 30, 2024.\n\n \n\nMiscellaneous\nincome primarily comprises late payment interest income of $0.6 million from a related party, Straits, arising from late payment at an\ninterest rate of 8.25%.\n\n \n\n**Interest\nExpense**\n\n \n\nInterest\nexpense included interest on trade financing facilities granted to Tumpuan Megah, term loan interest and vessel vendor financing interest.\n\n \n\nThe\nincrease in interest expense by $0.8 million, to $2.8 million for the six months ended June 30, 2025, up from $2.0 million for the six\nmonths ended June 30, 2024, was due to a higher volume of trade financing facilities granted to Tumpuan Megah, which bear interest rates\nranging from 5.75% to 7.75%.\n\n \n\n**Provision\nFor Income Taxes**\n\n \n\nCayman\nIslands\n\n \n\nOur\nCompany was incorporated in Cayman Islands. Under the current tax laws of Cayman Islands, we are not subject to income, corporation or\ncapital gains tax, and no withholding tax is imposed upon the payment of dividends.\n\n \n\nMalaysia\n\n \n\nProfits\nof Malaysian corporations incorporated under the Companies Act 2016 are subject to the prevailing corporate income tax rate at 24%, and\nthis is applicable to SMF, TMD Marine Fuels Sdn. Bhd. and Tumpuan Megah.\n\n \n\nFor\ncorporations incorporated under the Labuan Companies Act 1990, that individually own each of our 15 vessels, their audited net profits\nare subject to the prevailing corporate income tax rate at 3%.\n\n \n\nSingapore\n\n \n\nFor\nSingapore incorporated corporations, their prevailing corporate income tax rate is at 17% with the following partial tax exemption on\nits chargeable income:\n\n \n\n1.75%\nof its first chargeable income of SGD10,000; and\n\n2.50%\nof its next chargeable income of SGD190,000.\n\n \n\n7\n\n \n\n \n\nWith\nthe aforementioned, our Group’s effective tax rate was 19.7% for the six months ended June 30, 2024. For the six months ended June\n30, 2025, the Group recorded an income tax benefit of $1.0 million, representing (i) current tax expenses of $0.08 million for the ended\nJune 30, 2025; (ii) deferred tax income arising from temporary differences amounted to $0.07 million; and (iii) over-provision of income\ntax expenses of $1.0 million in FY2024 due to the change in our fiscal year end.\n\n \n\n  \nFor the Six Months Ended\nJune 30,  \n  \n\n  \n2025  \n2024  \nVariance – \n\n  \n(Unaudited)  \n(Unaudited)  \nIncrease (Decrease) \n\n  \n$’000  \n$’000  \n$’000  \n% \n\nCurrent Income Tax \n    \n    \n    \n   \n\nBased on result for the period \n 78  \n 277  \n (199) \n (71.8)\n\nOver provision in prior periods \n (1,001) \n -  \n (1,001) \n (100.0)\n\n  \n (923) \n 277  \n (1,200) \n (433.2)\n\nDeferred Tax \n    \n    \n    \n   \n\nReversal of temporary differences \n (65) \n -  \n (65) \n 100.0 \n\nUnder provision in prior periods \n -  \n -  \n -  \n - \n\n  \n (65) \n -  \n (65) \n 100.0 \n\n  \n    \n    \n    \n   \n\nTotal income tax (benefit) expense \n (988) \n 277  \n (1,265) \n (456.7)\n\n \n\nWith\nthe change of fiscal year end from December 31 to June 30, the tax reporting period of Tumpuan Megah covered 18 months from January 1,\n2024 to June 30, 2025. Given Tumpuan Megah recorded a net loss for the six months ended June 30, 2025, the tax loss position reduced\nthe overall assessable profits for the full 18-month reporting period. As a result, the provision for income tax previously recognized\nfor the year ended December 31, 2024 was overstated by $1.0 million.\n\n \n\n**Year\nEnded December 31, 2024 Compared to Year Ended December 31, 2023**\n\n \n\n**Results\nof Operations**\n\n \n\nThe\nfollowing table summarizes the results of our operations during the fiscal years ended December 31, 2024 and 2023, respectively, and\nprovides information regarding the dollar and percentage increase or (decrease) during such years.\n\n \n\n  \n\nFor the Years Ended\n\nDecember 31,\n  \n\n**Variance –**\n\n \n\n  \n2024  \n2023  \n**Increase\n(Decrease)** \n\n  \n$’000  \n$’000  \n$’000  \n% \n\nRevenues, net \n 688,430  \n 632,790  \n 55,640  \n 8.8 \n\nRevenues – related party, net \n 178  \n 290  \n (112) \n (38.6)\n\nTotal revenues \n 688,608  \n 633,080  \n 55,528  \n 8.8 \n\n  \n    \n    \n    \n   \n\nCost of revenues \n (671,616) \n (619,867) \n 51,749  \n 8.3 \n\nCost of revenues – related party \n (947) \n (1,123) \n (176) \n (15.7)\n\nTotal cost of revenues \n (672,563) \n (620,990) \n 51,573  \n 8.3 \n\n  \n    \n    \n    \n   \n\nGross profit \n 16,045  \n 12,090  \n 3,955  \n 32.7 \n\n  \n    \n    \n    \n   \n\nOperating expenses \n    \n    \n    \n   \n\nSelling and marketing expenses \n (40) \n (101) \n (61) \n (60.4)\n\nGeneral and administrative expenses \n (5,249) \n (5,127) \n 122  \n 2.4 \n\nDepreciation expenses \n (4,758) \n (4,257) \n 501  \n 11.8 \n\nTotal operating expenses \n (10,047) \n (9,485) \n 562  \n 5.9 \n\n  \n    \n    \n    \n   \n\nIncome from operations \n 5,998  \n 2,605  \n 3,393  \n 130.2 \n\n  \n    \n    \n    \n   \n\nOther (expenses) income \n    \n    \n    \n   \n\nInterest income \n 52  \n 10  \n 42  \n 420.0 \n\nSundry income, net \n 2,022  \n 3,321  \n (1,299) \n (39.1)\n\nInterest expenses \n (4,598) \n (2,203) \n (2,395) \n (108.7)\n\nShare of losses of associate \n (1) \n -  \n (1) \n (100.0)\n\nTotal other (expenses) income, net \n (2,525) \n 1,128  \n (3,653) \n 323.8 \n\n  \n    \n    \n    \n   \n\nIncome before income taxes \n 3,473  \n 3,733  \n (260) \n (7.0)\n\nIncome tax expenses \n (1,428) \n (774) \n 654  \n 84.5 \n\nNet income \n 2,045  \n 2,959  \n (914) \n (30.9)\n\nLess: income attributable to non-controlling interest \n (168) \n (963) \n (795) \n (82.6)\n\nNet income attributable to controlling interest \n 1,877  \n 1,996  \n (119) \n (6.0)\n\n  \n    \n    \n    \n   \n\nOther comprehensive income: \n    \n    \n    \n   \n\nNet income \n 2,045  \n 2,959  \n (914) \n (30.9)\n\nForeign currency translation adjustments \n 276  \n 1,888  \n (1,612) \n (85.4)\n\nTotal comprehensive income \n 2,321  \n 4,847  \n (2,526) \n (52.1)\n\n \n\n8\n\n \n\n \n\n**Key\nComponents of Results of Operations**\n\n \n\n**Revenues**\n\n \n\nOur\nGroup’s revenue comprises of bunkering services, vessel chartering services and ship management services as tabulated below:\n\n \n\n  \nTotal Revenue  \n      Inter-Segment  \nRevenue from Customers  \n  \n\n  \nFor the Years Ended December 31,  \n\nFor the Years Ended\n\nDecember 31,\n  \nFor the Years Ended December 31,  \n\n**Variance – Increase**\n\n \n\n  \n2024  \n2023  \n2024  \n2023  \n2024  \n2023  \n**(Decrease)** \n\n  \n$’000  \n$’000  \n$’000  \n$’000  \n$’000  \n$’000  \n$’000  \n% \n\nAnalysis By Segment: \n    \n    \n    \n    \n    \n    \n    \n   \n\nBunkering services \n 688,210  \n 631,608  \n -  \n -  \n 688,210  \n 631,608  \n 56,602  \n 9.0 \n\nVessel chartering services \n 7,097  \n 8,041  \n 7,097  \n 6,847  \n -  \n 1,194  \n (1,194) \n (100.0)\n\nShip management services \n 1,917  \n 1,911  \n 1,519  \n 1,633  \n 398  \n 278  \n 120  \n 43.2 \n\nTotal Revenue \n 697,224  \n 641,560  \n 8,616  \n 8,480  \n 688,608  \n 633,080  \n 55,528  \n 8.8 \n\n \n\n*Overall*\n\n \n\nOur\nGroup’s overall revenue for FY2024 had increased by 8.8%, or equivalent to $55.5 million, to $688.6 million from $633.1 million\nachieved in FY2023 due to rise in contribution from the bunkering services segment, as it contributed more than 99% of our Group’s\nrevenue. The increase in revenue in FY2024 was primarily attributable to an increase in the volume of oil cargo bunkered of approximately\n6.0%, from 933,418 metric ton in FY2023 to 989,512 metric ton in FY2024.\n\n \n\n*Bunkering\nServices*\n\n \n\nThe\nincrease in the bunkering services revenue by $56.6 million to $688.2 million in FY2024 from $631.6 million in FY2023 was substantially\nattributable to the increase of approximately 6.0% in volume of oil cargo bunkered, from 933,418 metric ton in FY2023 to 989,512 metric\nton in FY2024.\n\n \n\nThe\nincrease in bunkered volume was driven by both our Group’s ongoing efforts to meet customer demand through enhanced operational\nefficiency. In addition, we expanded our customer base in bunkering services from 90 customers in FY2023 to 101 in FY2024, which further\ncontributed to the increase in bunkered volume and revenue.\n\n \n\nWe\nalso benefited from higher vessel capacity, as one of our vessels, previously chartered to a third party in FY2023, was redeployed to\nour bunkering fleet in July 2023 following the expiration of the charter contract to support the expansion of our oil bunkering operations.\n\n \n\n*Vessel\nChartering Services*\n\n** **\n\nOur\nvessel chartering services segment previously generated revenue by chartering vessels to third parties. There was no revenue from third\nparties related to vessel chartering services in FY2024, compared to $1.2 million in FY2023, as our Group temporarily discontinued the\nsegment after the chartering contract expired in July 2023. The vessel was subsequently redeployed to our bunkering fleet to support\nthe growth of our oil bunkering operations.\n\n \n\n*Ship\nManagement Services*\n\n \n\nOur\nship management services, supported by a competent team of qualified professional mariners, also managed third-party vessels, including\ntugboats used in the port and STS operations that are owned by other subsidiaries within the Straits Group, which are outside our Group.\n\n** **\n\nThe\nship management services remained steady, generating approximately $0.4 million and $0.3 million in FY2024 and FY2023, respectively.\n\n \n\n**Cost\nof revenues**\n\n \n\nOur\ncost of revenues represent direct expenses incurred to generate revenue. These costs are recorded and accrued as incurred. The cost of\nrevenues primarily comprise oil cargo cost, along with other bunkering operation costs such as bunker own used, port charges, crew wages\nand consumables, transport costs and agency fees. It also includes vessel operation-related costs, such as vessel consumables, insurance,\ngeneral upkeep and repair costs.\n\n \n\n9\n\n \n\n \n\nIts\nmajor cost components are as follow:\n\n \n\n  \n\nFor the Years Ended\n\nDecember 31,\n  \n\n**Variance –**\n\n \n\n  \n2024  \n2023  \n**Increase\n(Decrease)** \n\n  \n$’000  \n$’000  \n$’000  \n% \n\nOil cargo sold \n 656,864  \n 606,451  \n 50,413  \n 8.3 \n\nBunker own used \n 4,011  \n 4,439  \n (428) \n (9.6)\n\nCrew wages \n 3,550  \n 3,481  \n 69  \n 2.0 \n\nOther operating cost \n 8,138  \n 6,619  \n 1,519  \n 22.9 \n\nTotal cost of revenues \n 672,563  \n 620,990  \n 51,573  \n 8.3 \n\n \n\nOur\noverall cost of revenues increased by 8.3%, or equivalent to $51.6 million, to $672.6 million for FY2024 from $621.0 million for FY2023,\nrepresenting 97.7% and 98.1% of our total revenue respectively. This increase was in line with the growth in the volume of cargo bunkered,\nwith oil cargo costs rising to $656.9 million in FY2024 from $606.4 million in FY2023. In addition, other operating costs increased to\n$8.1 million in FY2024 from $6.6 million in FY2023, primarily due to higher vessel maintenance and bunkering loading costs.\n\n \n\n**Gross\nProfit and Gross Profit Margin**\n\n** **\n\n*Overall*\n\n** **\n\n  \n\nFor the Years Ended\n\nDecember 31,\n  \n\n**Variance –**\n\n \n\n  \n2024  \n2023  \n**Increase\n(Decrease)** \n\n  \n$’000  \n$’000  \n$’000  \n% \n\nRevenue \n 688,608  \n 633,080  \n 55,528  \n 8.8 \n\nCost of revenues \n (672,563) \n (620,990) \n (51,573) \n (8.3)\n\nGross profit \n 16,045  \n 12,090  \n 3,955  \n 32.7 \n\n  \n    \n    \n    \n   \n\nGross profit margin \n 2.33% \n 1.91% \n 0.42% \n 22.0 \n\n \n\nAs\na result of the foregoing, we recorded an overall increase of 32.7% in gross profit, or equivalent to $3.9 million, to $16.0 million\nfor FY2024 from $12.1 million in FY2023.\n\n \n\nNevertheless,\nour gross profit margin increased marginally by 0.42% to 2.33% in FY2024 from 1.91% in FY2023 due to improved margins in our oil bunkering\nservices.\n\n \n\n*Bunkering\nServices*\n\n** **\n\n  \n\nFor the Years Ended\n\nDecember 31,\n  \n\n**Variance –**\n\n \n\n  \n2024  \n2023  \n**Increase\n(Decrease)** \n\n  \n$’000  \n$’000  \n$’000  \n% \n\nRevenue \n 688,210  \n 631,608  \n 56,602  \n 9.0 \n\nCost of revenues \n (672,563) \n (620,610) \n 51,953  \n 8.4 \n\nGross profit \n 15,647  \n 10,998  \n 4,649  \n 42.3 \n\n  \n    \n    \n    \n   \n\nGross profit margin \n 2.27% \n 1.74% \n 0.53% \n 30.5 \n\n  \n    \n    \n    \n   \n\nTotal metric ton sold (mt) \n 989,512  \n 933,418  \n 56,094  \n 6.0 \n\n  \n    \n    \n    \n   \n\nAverage gross profit per metric ton \n$15.81  \n$11.78  \n$4.03  \n 34.2 \n\n \n\nWe\nrecorded an increase of 42.3% in gross profit of bunkering services, or equivalent to $4.6 million, to $15.6 million in FY2024 from $11.0\nmillion in FY2023. Our gross profit margin increased marginally by 0.53% to 2.27% in FY2024 from 1.74% in FY2023.\n\n \n\nThe\naverage gross profit per metric ton of oil cargo sold had increased by approximately 34.2%, or equivalent to $4.03 per mt, to $15.81\nin FY2024 from $11.78 in FY2023. This improvement was attributable to our strategic focus on penetrating new markets and expanding our\ncustomer base contributed to higher sales volumes. We successfully attracted new customers while maintaining strong relationships with\nexisting buyers. Through maintaining a steady demand, we optimized resource usage and lowered the overall cost of providing services\nfor FY2024. In addition, the increase in bunkering activities, which led to higher operational efficiencies, enabling us to leverage\neconomies of scale and optimize our cost structure.\n\n** **\n\n*Vessel\nChartering Services*\n\n \n\n  \n\nFor the Years Ended\n\nDecember 31,\n  \n\n**Variance –**\n\n \n\n  \n2024  \n2023  \n**Increase\n(Decrease)** \n\n  \n$’000  \n$’000  \n$’000  \n% \n\nRevenue \n -  \n 1,194  \n (1,194) \n (100.0)\n\nCost of revenues \n -  \n (380) \n 380  \n 100.0 \n\nGross profit \n -  \n 814  \n 814  \n 100.0 \n\n  \n    \n    \n    \n   \n\nGross profit margin \n -  \n 68.2% \n (68.2)% \n (100.0)\n\n \n\n10\n\n \n\n \n\nWe\nrecorded a decrease in gross profit of vessel chartering services to nil in FY2024, down from $0.8 million in FY2023. Our gross profit\nmargin decreased to nil in FY2024 from 68.2% in FY2023.\n\n \n\nThe\ndrop in gross profit of vessel chartering services was due to our Group redeployed the chartered vessel to our bunkering fleet of vessels\nto meet the growing demand for our bunkering services following the expiration of the charter contract in July 2023.\n\n** **\n\n*Ship\nManagement Services*\n\n \n\nGross\nprofit of ship management services increased to $ 0.4 million in FY2024, from $0.3 million in FY2023, remaining relatively stable.\n\n \n\n**Selling\nand Marketing Expenses**\n\n** **\n\nThe\nselling and marketing expenses comprise marketing travelling and advertising expenses incurred by the sales and marketing team.\n\n \n\nOur\nselling and marketing expenses decreased by 60.4% or approximately $0.06 million, to $0.04 million in FY2024, down from $0.1 million\nin FY2023, due to cost-saving plan on marketing expenses in FY2024.\n\n \n\n**General\nand Administrative Expenses**\n\n \n\nThe\ngeneral and administrative expenses which increased by 2.4% or $0.1 million, to $5.2 million in FY2024 from $5.1 million in FY2023 comprise\nthe following:\n\n \n\n  \n\nFor the Years Ended\n\nDecember 31,\n  \n\n**Variance –**\n\n \n\n  \n2024  \n2023  \n**Increase\n(Decrease)** \n\n  \n$’000  \n$’000  \n$’000  \n% \n\nStaff cost \n 2,300  \n 2,266  \n 34  \n 1.5 \n\nManagement fees \n 499  \n 487  \n 12  \n 2.5 \n\nProfessional fees \n 424  \n 415  \n 9  \n 2.2 \n\nLeasing license \n 300  \n 300  \n -  \n - \n\nVessel deposit written off \n -  \n 273  \n (273) \n (100.0)\n\nImpairment/ assets written off \n 71  \n (5) \n 76  \n 1,520.0 \n\nOthers \n 1,655  \n 1,391  \n 264  \n 19.0 \n\nTotal general and administrative expenses \n 5,249  \n 5,127  \n 122  \n 2.4 \n\n \n\nStaff\ncost increased by $0.03 million to $2.30 million in FY2024, up from $2.27 million in FY2023. This was mainly due to higher staff-related\ncosts and the recruitment of a senior management member for a subsidiary, Straits Marine Services Pte. Ltd. in FY2024. This increase was\npartially offset by the adjustment for the over-provision of staff and director bonuses for FY2023 in Tumpuan Megah.\n\n \n\nManagement\nfees are paid to Straits Management Services Sdn. Bhd., a related company within the Straits Group, remained stable at $0.5 million in\nboth FY2024 and FY2023. These fees cover overall group management and coordination services, encompassing but not limited to listing\ncompliance and requirement, group consolidation and reporting, corporate governance, corporate secretarial, corporate finance, corporate\nbanking, accounting, market and public relations to the subsidiaries of our Company.\n\n \n\nProfessional\nfees include statutory audit fees, tax fees, corporate secretarial fees, and legal fees. The increase in professional fees for FY2024\nwas due to legal expenses incurred in connection with securing additional trade facilities from local financial institutions.\n\n \n\nCorporations\nincorporated under Labuan Companies Act 1990 are required to pay an annual leasing license fee of $20,000 to Labuan Financial Services\nAuthority (“**LFSA**”). As such, there was leasing license fee of $0.3 million each in FY2024 and FY2023.\n\n \n\nWe\npaid a deposit of approximately $0.3 million in FY2020 for the purchase of a vessel. However, the deposit was written off during FY2023\nas the vendor became uncontactable after the COVID-19 Pandemic, and the vessel was not maintained and was in a deplorable condition.\nWe have taken the necessary action in our attempts to recover the deposit paid.\n\n \n\nThe\nsignificant change under impairment was mainly due to an allowance for expected credit loss of our accounts receivable amounted to $0.07\nmillion in FY2024.\n\n \n\nThe\nincrease in other general and administrative expenses mainly represented (i) an increase in environmental, social, and governance activities\npayable to a related party, Benua Hijau Sdn. Bhd., an entity owned by a controlling shareholder, amounting to $0.1 million; (ii) an increase\nof $0.1 million in bank charges for issuing $6.5 million in bank guarantees to suppliers; and (iii) an increase in operating costs, such\nas insurance and travelling expenses, amounting to $0.05 million due to the expansion of business.\n\n \n\n**Depreciation**\n\n \n\nDepreciation\nrepresents the annual depreciation on the cost of Group’s fleet of 15 vessels, dry-dock cost, tools, office equipment, computer\nhardware and software, motor vehicles, real property and furniture and fittings.\n\n \n\nThe\nincrease in depreciation by $0.5 million to $4.8 million in FY2024, up from $4.3 million in FY2023, was due to the addition of dry-dock\ncost incurred during the year.\n\n \n\n11\n\n \n\n \n\n**Other\nIncome, net**\n\n \n\n*Interest\nIncome*\n\n \n\nInterest\nincome increased to $0.05 million in FY 2024 from $0.01 million in FY2023. The increase arises from approximately $0.04 million which\nconsists of principal sums approximating $0.1 million and $2.0 million placed with lender bank of Tumpuan Megah as a term deposit and\nin a designated current account respectively.\n\n \n\n*Sundry\nIncome*\n\n \n\n  \n\nFor the Years Ended\n\nDecember 31,\n  \n\n**Variance –**\n\n \n\n  \n2024  \n2023  \n**Increase\n(Decrease)** \n\n  \n$’000  \n$’000  \n$’000  \n% \n\nGain on foreign exchange \n 1,415  \n 2,982  \n (1,567) \n (52.5)\n\nCancellation fees \n -  \n 230  \n (230) \n (100.0)\n\nFair value adjustments \n -  \n 46  \n (46) \n (100.0)\n\nMiscellaneous income \n 607  \n 63  \n 544  \n 863.5 \n\nTotal sundry income \n 2,022  \n 3,321  \n (1,299) \n (39.1)\n\n \n\nOur\nbusiness activities are substantially denominated in USD, while our assets and liabilities are denominated in our functional currency.\nWe currently do not have a foreign currency hedging policy, as the USD generated from our revenue is sufficient to cover our USD purchases.\nHowever, we continue to monitor our foreign exchange exposure and will consider hedging significant foreign currency exposure should\nthe need arise. In the current state of RM strengthening against the USD, we recorded a lower net foreign currency gain of $1.4 million\nfor FY2024 as compared to $3.0 million for FY2023.\n\n \n\nCancellation\nfees are received from customers who cancelled their purchase of oil cargo. There was no cancellation fee recorded in FY2024.\n\n \n\nA\nfair value adjustment of approximately $0.1 million was made in FY2022 on a debt due from the vendor of Tumpuan Megah. Approximately\n$0.05 million of this impairment was written back in FY2023 following subsequent payment from the vendor. The debt was related to legal\nfees for a legal case involving Tumpuan Megah prior to the acquisition of Tumpuan Megah by Straits in 2018. The debt currently stood\nat approximately $1.8 million of which $0.8 million was being repaid through a repayment plan spanning a period beyond 12 months commencing\nfrom April 2023 till March 2027. No adjustment was made in FY2024.\n\n \n\nMiscellaneous\nincome includes interest income of $0.4 million from related party, Straits on late payment with interest rate at 8.25%. In addition,\nthere was a $0.2 million adjustment related to the previously recognized value of the acquisition of SMF.\n\n \n\n**Interest\nExpense**\n\n \n\nInterest\nexpense included interest on trade financing facilities granted to Tumpuan Megah, term loan interest and vessel vendor financing interest.\n\n \n\nThe\nincrease in interest expense by $2.4 million to $4.6 million in FY2024, up from $2.2 million in FY2023, was due to a higher volume of\ntrade financing facilities granted to Tumpuan Megah, which bear interest rates ranging from 5.82% to 8.25%.\n\n \n\n**Provision\nFor Income Taxes**\n\n \n\nCayman\nIslands\n\n \n\nOur\nCompany was incorporated in Cayman Islands. Under the current tax laws of Cayman Islands, we are not subject to income, corporation or\ncapital gains tax, and no withholding tax is imposed upon the payment of dividends.\n\n \n\nMalaysia\n\n \n\nProfits\nof Malaysian corporations incorporated under the Companies Act 2016 are subject to the prevailing corporate income tax rate of 24%, and\nthis is applicable to SMF, TMD Marine Fuels Sdn. Bhd. and Tumpuan Megah.\n\n \n\nFor\ncorporations incorporated under the Labuan Companies Act 1990, that individually own each of our 15 vessels, their audited net profits\nare subject to the prevailing corporate income tax rate of 3%.\n\n \n\nSingapore\n\n \n\nFor\nSingapore incorporated corporations, their prevailing corporate income tax rate is at 17% with the following partial tax exemption on\nits chargeable income:\n\n \n\n3.75%\nof its first chargeable income of SGD10,000; and\n\n4.50%\nof its next chargeable income of SGD190,000.\n\n \n\n12\n\n \n\n \n\nWith\nthe aforementioned, our Group’s effective tax rate was 41.1% for FY2024 and 20.7% for FY2023. The increase in income tax expenses\nin FY2024 was primarily due to higher gross profit from our bunkering services, which led to increased operating income. In addition,\ncertain bank charges and professional fees incurred in relation to bank facilities were non-deductible for tax purposes. Furthermore,\na non-taxable exchange gain of approximately $2.5 million reduced chargeable income in FY2023, whereas a non-deductible exchange loss\nof approximately $0.5 million increased chargeable income in FY2024. The reduction in non-taxable income further contributed to the increase\nin chargeable income for FY2024. Consequently, higher tax expenses and an increased effective tax rate were observed in FY2024. No deferred\ntax was recognized in FY2024 after the crystallization of deferred tax liabilities arising from assets controlled transfer to Labuan\ncompanies.\n\n \n\n  \n\nFor the Years Ended\n\nDecember 31,\n  \n\n**Variance –**\n\n \n\n  \n2024  \n2023  \nIncrease (Decrease) \n\n  \n$’000  \n$’000  \n$’000  \n% \n\nCurrent Income Tax \n    \n    \n    \n   \n\nBased on result for the year \n 1,458  \n 698  \n 760  \n 108.9 \n\n(Over) Under provision in prior years \n (30) \n 168  \n (198) \n (117.9)\n\n  \n 1,428  \n 866  \n 562  \n 64.9 \n\nDeferred Tax \n    \n    \n    \n   \n\nReversal of temporary differences \n -  \n (88) \n 88  \n 100.0 \n\nOver provision in prior years \n -  \n (4) \n 4  \n 100.0 \n\n  \n -  \n (92) \n 92  \n 100.0 \n\n  \n    \n    \n    \n   \n\nTotal income tax expense \n 1,428  \n 774  \n 654  \n 84.5 \n\n \n\n**5.B.\nLiquidity and Capital Resources**\n\n \n\nWe\nare exposed to liquidity risk, which is the risk that we may encounter difficulties in meeting our financial obligations as they become\ndue. We manage this risk by maintaining adequate levels of cash and cash equivalents, monitoring cash flows, and maintaining access to\nfinancing sources.\n\n \n\nAs\nof June 30, 2025, we had net working capital deficit of $8.7 million and a net loss of $4.5 million. Despite this, we believe that we\ncan meet all our financial obligations as they become due in the foreseeable future. This conclusion is based on a detailed assessment\nof our financial position, forecast, and plans up to the date of approval of these financial statements.\n\n \n\nKey\nconsiderations in this assessment include:\n\n \n\n●We\nmaintained cash and cash equivalents of $7.1 million as of June 30, 2025.\n\n●Our\nstrong payment track record and long-standing relationships suggest that trade facilities\namounting to approximately $91.8 million and supplier purchasing limits of $11.2 million\nwill be available for the next 12 months.\n\n●As\nof June 30, 2025, we had balances of available trade facilities amounting to $7.6 million\nto support our operational needs.\n\n●We\nentered into a repayment plan with major debtors covering approximately $15.0 million, with\nscheduled monthly repayments from June 2025 to May 2026, which are expected to provide additional\nliquidity.\n\n \n\nPrior\nto the consummation of our initial public offering on April 22, 2025, our principal sources of liquidity to finance our operating activities\nwere from the working capital, trade financing from financial institutions, suppliers credit financing and cash generated from business\noperation.\n\n \n\nOn\nApril 22, 2025, we consummated our initial public offering on the NYSE American. In this offering, 3,100,000 ordinary shares were issued\nat a price of $3.25 per share. In addition, we entered into an underwriting agreement with the underwriter on April 21, 2025, which granted\nthe underwriter a 45-day option to purchase up to an additional 465,000 ordinary shares at the public offering price of $3.25 per share\nto cover any over-allotment. Subsequently, on April 22, 2025, the underwriter exercised the over-allotment option in full, purchasing\nan additional 465,000 ordinary shares at the public offering price of $3.25 per share. The initial public offering closed on April 22,\n2025 and the exercise of the over-allotment option closed on April 24, 2025, with gross proceeds totaling $11.59 million, before deducting\nunderwriting discounts and offering expenses.\n\n \n\nWe\nbelieve that our existing cash resources, anticipated cashflow from operations, anticipated cash raised from financing together with\nnet proceeds from our public offering will be sufficient to meet and fund our anticipated operation working capital and capital expansion\nrequirements for the next 12 months from the date of this transition report.\n\n \n\nIf\nwe experience an adverse operating environment or incur unanticipated capital expenditure requirements, or if we determine to accelerate\nour growth, then additional financing may be required. No assurance can be given, however, that such financing would be available at\nall or on favorable terms. Additional financing may include the use of debt, credit facilities from financial institutions, or the sale\nof equity or instruments convertible into equity securities, whether by our Group or its holding company. Any issuance of additional\nequity could result in immediate and possibly significant dilution to our existing shareholders, while incurrence of debt would increase\nfixed obligations and bring along operating covenants that could restrict our operations.\n\n \n\nAs\nat June 30, 2025, our cash and cash equivalents were approximately $7.1 million, comprising primarily in cash and cash equivalent.\n\n \n\n13\n\n \n\n \n\n**Cash\nFlows and Working Capital**\n\n** **\n\nThe following table sets forth a summary of our cash flows for the six months ended June 30, 2025 and 2024 and the\nyears ended December 31, 2024 and 2023. The amounts presented below for the six months ended June 30, 2025 and the year ended December\n31, 2024 have been revised to correct certain immaterial classification errors within the consolidated statements of cash flows. See Note\n2, “Summary of Significant Accounting Policies,” to the consolidated financial statements for further details.\n\n \n\n  \n\n**For the Six Months Ended**\n\n**June 30,**\n  \n\nFor the Years Ended\n\nDecember 31,\n \n\n  \n2025  \n2024  \n2024  \n2023 \n\n  \n(Unaudited)  \n(Unaudited)  \n(Audited)  \n(Audited) \n\n  \n$’000  \n$’000  \n$’000  \n$’000 \n\n  \n\n(Revised)\n  \n   \n(Revised)  \n  \n\nNet cash (used in) provided by operating activities \n (20,251) \n (42,896) \n (24,290) \n 654 \n\nNet cash used in investing activities \n (8,341) \n (1,942) \n (16,006) \n (3,148)\n\nNet cash provided by (used in) financing activities \n 19,023  \n 45,136  \n 50,900  \n (2,489)\n\nNet (decrease) increase in cash and restricted cash \n (9,569) \n 298  \n 10,604  \n (4,983)\n\nEffect of exchange rates on cash and restricted cash \n 559  \n 860  \n 636  \n (1,456)\n\nCash and restricted cash, beginning of period / year \n 16,070  \n 4,830  \n 4,830  \n 11,269 \n\nCash and restricted cash, end of period / year \n 7,060  \n 5,988  \n 16,070  \n 4,830 \n\n \n\n**Operating\nActivities**\n\n \n\nOur\ncash inflow from operating activities was principally from collections of revenue. Our cash outflows used in operating activities was\nprincipally for payment of oil cargo purchased, operating expenses, staff cost and general administrative expenses.\n\n \n\nThe\nnet cash used in operating activities for the six months ended June 30, 2025 was $20.3 million, after adjusting for non-cash item which\nincludes:\n\n \n\ni.$2.6\nmillion in depreciation charges for the six months ended June 30, 2025. The increase in depreciation\ncharges was due to additional capital expenditure incurred on docking expenditure for the\nsix months ended June 30, 2025.\n\n \n\nMeanwhile,\nthe changes for the six months ended June 30, 2025 working capital were mainly attributable by the following operating assets and liabilities:\n\n \n\ni.Increase\nin accounts receivable by $6.6 million due to the implementation of our accounts receivable\nrepayment plan, in which installment agreements were established with customers for repayment\nof outstanding balances. In addition, slower collections from customers were observed for\nthe six months ended June 30, 2025, primarily due to delays in cargo movement and the ongoing\ntariff situation. These disruptions affected delivery schedules and invoicing cycles, which\nin turn strained customer cash flows and extended payment timelines;\n\nii.Lower\ninventory levels were maintained amid market instability for the six months ended June 30,\n2025, resulting in a decrease of $2.5 million;\n\niii.Increase\nin other receivables and current assets by $11.9 million, mainly due to advance payments\nrelated to marketing and business development activities of and a vessel deposit paid for\nsourcing target vessel amounting to total of $6.1 million. In addition, advance payments were made to suppliers\nfor purchase of cargo oil increased by $3.7 million; and\n\niv.Decrease\nin income tax payable of $1.8 million as the operating entity, Tumpuan Megah, incurred a\nnet loss for the six months ended June 30, 2025 which reduced the current tax expense and\nrelated tax payable.\n\n \n\nThe\nnet cash used in operating activities for the six months ended June 30, 2024 was $42.9 million, after adjusting for non-cash item which\nincludes:\n\n \n\ni.$2.3\nmillion in depreciation charges for the six months ended June 30, 2024. The increase in depreciation\ncharges was due to additional capital expenditure incurred for the six months ended June\n30, 2024.\n\n \n\nMeanwhile,\nthe changes in working capital for the six months ended June 30, 2024 were mainly attributable by the following operating assets and\nliabilities:\n\n \n\ni.Decrease\nin accounts receivable by $2.3 million as we had established a repayment installment agreement\nwith a customer for his repayment of the outstanding balance and hence leading to reduction\nin account receivables;\n\nii.The\ndecrease in inventory was mainly due to the increase in the volume cargo bunkered, resulting\na lower inventory level at period end;\n\niii.Increase\nin other receivables and current assets by $5.7 million was substantially due to advance\npayment amounting to $3.3 million in anticipation of higher demand by customers in coming\nmonths. There was a further $1.2 million pledged to a supplier for an additional $7.0 million\nin credit limit and $0.6 million in deferred IPO expenses;\n\n \n\n14\n\n \n\n \n\niv.Decrease\nin accounts payable by $29.7 million as payment to suppliers were made through trade financing\nfacilities which had increased by $46.5 million; and\n\nv.Increase\nin due from related parties by $4.5 million was attributable to working capital advances\nto related parties.\n\n \n\nThe\nnet cash used in operating activities for FY2024 was $24.3 million, after adjusting for non-cash item which includes:\n\n \n\ni.$4.8\nmillion in depreciation charges for FY2024. The increase in depreciation charges was due\nto additional capital expenditure incurred on docking expenditure in FY2024.\n\n \n\nMeanwhile,\nthe changes in FY2024 working capital were mainly attributable by the following operating assets and liabilities:\n\n \n\ni.Decrease\nin accounts receivable by $2.8 million as the collection of accounts receivable had improved\ndue to our successful repayment plan implementation, in which we established a repayment\ninstallment agreement with a customer for the repayment of the outstanding balance and hence\nleading to a reduction in account receivables;\n\nii.The\nincrease in the bunkered cargo volume and the implementation of improved inventory control,\nresulting in a lower inventory level maintained in FY2024 by $6.5 million;\n\niii.Decrease\nin other receivables and current assets by $5.1 million, mainly due to advance payments being\nutilized to settle previous secured orders with the increase in bunkering services. In addition,\n$1.3 million was paid for deferred IPO expenses; and\n\niv.Decrease\nin accounts payable and accrued expenses by $45.3 million following the acquisition of new\nbank facilities to support our operations. This enabled the settlement of accounts payable\nand advance payments for cargo expenses, thus reduced accrued expenses.\n\n \n\nThe\nnet cash provided by operating activities for FY2023 was $0.7 million, after adjusting for non-cash items which includes:\n\n \n\ni.$4.3\nmillion in depreciation charges for FY2023. The increase in depreciation charges was due\nto additional capital expenditure incurred during the year and the full effect of previous\nyear’s capital expenditure incurred, as disclosed under the investing activities’\ncash flow below; and\n\nii.Reversal\nof deferred tax of $0.1 million as the vessels were transferred from Tumpuan Megah to the\nrespective Labuan companies as part of our risk management strategy and practices, representing\nthe transfer of one vessel in FY2023.\n\n \n\nMeanwhile,\nthe changes in FY2023 working capital were mainly attributable to the following operating assets and liabilities:\n\n \n\ni.Increase\nin accounts receivable by $15.6 million as we extended our credit terms to garner higher\ncargo volumes despite the drop in overall revenue which was due to lower global cargo prices;\n\nii.The\nconversion of a water barge into a bunker vessel and cessation of the chartering out of a\nvessel in FY2023 to meet increasing fuel cargo demand enabled us to increase our inventory\nholding by $6.0 million;\n\niii.Increase\nin other receivables and current assets by $9.5 million was substantially due to advance\npayment amounting to $6.2 million in anticipation of higher demand by customers subsequent\nto year end. There was also a further $2.2 million pledged to a supplier for an additional\n$7.0 million in credit limit and $0.6 million in deferred IPO expenses; and\n\niv.Increase\nin accounts payable by $19.3 million, aligned with an increase of 54.0% of sales to approximately\n$24.0 million in the month of December 2023 as compared to the month of December 2022 and\nan increase in accrued expenses by $6.4 million due to deferring supplier payment for cargo\noil procurement in response to the higher sales in December 2023.\n\n** **\n\n**Investing\nActivities**\n\n \n\nOur\ncash flow used in investing activities mainly comprised advances of $6.2 million made to our related parties for\nthe six months ended June 30, 2025. In addition, we incurred dry-dock expenditures amounted to\n$1.7 million and $1.8 million for the six months ended June 30, 2025 and 2024, respectively. The dry-dock activities are necessary\nto maintain our fleet of vessels in good performing conditions to ensure smooth bunkering operation apart from complying with the\nstrict and stringent operation procedures and requirements of our suppliers and loading terminals. These spendings are financed by\nour internally generated funds.\n\n \n\nOur\ncash flow used in investing activities mainly comprised advances of $12.2 million to\nour related parties in FY2024. In addition, we incurred dry-dock expenditures amounted to $3.8 million and $3.1\nmillion in FY2024 and FY2023, respectively. The dry-dock activities are necessary to maintain our fleet of vessels in good performing\nconditions to ensure smooth bunkering operation apart from complying with the strict and stringent operation procedures and requirements\nof our suppliers and loading terminals. These spendings are financed by our internally generated funds.\n\n \n\n**Financing\nActivities**\n\n \n\nOur\ncash flow provided by financing activities amounted to $19.0 million for the six months ended June 30, 2025. It mainly represented proceeds\nfrom issuance of common shares pursuant to IPO amounted to $11.6 million, as well as net borrowings of $7.4 million, representing trade\nfacilities obtained from local financial institutions and repayment of our vessel vendors who provided vendor-financed borrowing for\nvessel acquisitions.\n\n \n\n15\n\n \n\n \n\nOur\ncash flow provided by financing activities amounting to $45.1 million for the six months ended June 30, 2024 was mainly from the drawdown\nof trade financing facilities from the local financial institutions to repay our payables and our vessel financing vendors who had provided\nus vendor financing borrowing in our acquisition of their vessels. The net drawdown and repayment to the borrowings was approximately\nof $45.3 million for the six months ended June 30, 2024.\n\n \n\nOur\ncash flow provided by financing activities amounted to $50.9 million for FY2024. It represented proceeds from borrowings obtained\nthrough additional trade facilities from banks, offset by repaying our vessel vendors who provided vendor-financed borrowing for vessel\nacquisitions.\n\n \n\nOur\ncash flow used in financing activities amounted to $2.5 million for FY2023, representing a net amount of $2.8 million in repayment to\nour vessel vendors who provided vendor-financed borrowing for vessel acquisitions. In addition, we received proceeds totaling $0.3 million\nfrom our related parties.\n\n \n\n**Contractual\nobligations and Contingencies**\n\n \n\nIn the normal course of our business, we are subject to contingencies, such as legal proceedings and claims arising out of our business,\nwhich cover a wide range of matters. Liabilities for contingencies are recorded when it is probable that a liability has been incurred\nand the amount of the assessment can be reasonably estimated.\n\n \n\nAs of the date of this transition report, we did not have any loss\ncontingencies which require to be recognized or disclosed in our consolidated financial statements.\n\n \n\nAs\nof June 30, 2025, our contractual obligations were as follows:\n\n \n\n  \nLess than 1 year  \n\n**Between**\n\n**1-2 years**\n  \nOver 3 years  \nTotal \n\nContractual obligations \n$  \n$  \n$  \n$ \n\nFinance lease commitment \n 14,758  \n 29,516  \n 29,104  \n 73,378 \n\nOperating lease commitment \n 26,833  \n 14,695  \n -  \n 41,528 \n\nRepayment of loan borrowings \n 409,025  \n 62,655  \n 462,493  \n 934,173 \n\n  \n 450,616  \n 106,866  \n 491,597  \n 1,049,079 \n\n \n\n16\n\n \n\n \n\n**Analysis\nof items with major changes on the unaudited consolidated balance sheets as at June 30, 2025 and December 31, 2024**\n\n** **\n\n  \nAs of \n\n  \n\n**June\n30, ****2025**\n  \nDecember 31, 2024 \n\n  \n(Unaudited)  \n(Audited) \n\n  \n$’000  \n$’000 \n\nASSETS \n    \n   \n\nCurrent Assets \n    \n   \n\nCash and cash equivalents \n 7,060  \n 16,070 \n\nAccounts receivable, net \n 28,372  \n 20,322 \n\nInventories, net \n 7,627  \n 9,667 \n\nDue from related parties \n 17,993  \n 11,593 \n\nOther receivables and current assets \n 30,959  \n 20,207 \n\nIncome tax recoverable \n 1,003  \n - \n\nTotal current assets \n 93,014  \n 77,859 \n\n  \n    \n   \n\nNon-Current Assets \n    \n   \n\nProperty, plant and equipment, net \n 31,733  \n 32,133 \n\nInvestments, net \n 90  \n 89 \n\nOperating lease right of use asset (“**ROU asset**”), net \n 38  \n 17 \n\nDeferred tax assets, net \n 67  \n - \n\nTotal Non-Current Assets \n 31,928  \n 32,239 \n\n  \n    \n   \n\nTotal Assets \n 124,942  \n 110,098 \n\n  \n    \n   \n\nLIABILITIES AND SHAREHOLDERS’ EQUITY \n    \n   \n\nCurrent liabilities \n    \n   \n\nAccounts payable and accrued expenses \n 7,057  \n 7,426 \n\nOther payables \n 1,403  \n 1,503 \n\nShort-term loans \n 91,807  \n 79,269 \n\nDue to related parties \n 1,024  \n 627 \n\nTaxes payable \n -  \n 774 \n\nOperating lease liabilities - current portion \n 24  \n 9 \n\nLong-term debt payable - current portion \n 409  \n 777 \n\nFinance lease payable - current portion \n 12  \n 11 \n\nTotal current liabilities \n 101,736  \n 90,396 \n\n  \n    \n   \n\nNon-Current Liabilities \n    \n   \n\nOperating lease liabilities - non-current \n 14  \n 8 \n\nLong term debt payable \n 525  \n 504 \n\nFinance lease payable \n 54  \n 57 \n\nTotal Non-Current Liabilities \n 593  \n 569 \n\n  \n    \n   \n\nTotal Liabilities \n 102,329  \n 90,965 \n\n  \n    \n   \n\nShareholders’ Equity \n    \n   \n\nOrdinary share, par value $0.0001 per share; 500,000,000 shares authorized; 23,565,000 and 20,000,000 shares issued and outstanding at June 30, 2025 and December 31, 2024, respectively \n 2  \n 2 \n\nAdditional paid-in capital \n 12,732  \n 4,635 \n\nRetained earnings \n 8,274  \n 12,582 \n\nAccumulated other comprehensive income \n 578  \n 664 \n\nTotal equity attributable to equity holders’ of TMD Energy Limited \n 21,586  \n 17,883 \n\nNon-controlling interests \n 1,027  \n 1,250 \n\nTotal Equity \n 22,613  \n 19,133 \n\n  \n    \n   \n\nTotal Liabilities and Shareholders’ Equity \n 124,942  \n 110,098 \n\n \n\n**Cash\nand Cash Equivalents**\n\n \n\nCash\nand cash equivalents represent cash on hand and balances in bank accounts, including fixed deposits pledged for banking facilities. The\ndecrease in cash and cash equivalents was primarily driven by an increase in accounts receivable, advances to suppliers and related parties,\nand deposits paid for sourcing a target vessel, partially offset by proceeds from our initial public offering.\n\n \n\n17\n\n \n\n \n\n**Accounts\nReceivable, Net**\n\n \n\nAccounts\nreceivable mainly arise from our bunkering services. The increase in receivables was due to the repayment installment agreement established\nwith customers and slower payments from our customers as they were affected by the delays in cargo shipments and tariff crisis.\n\n \n\n**Inventory,\nNet**\n\n \n\nInventory\nconsists of marine gas oil (“**MGO**”) and low sulfur fuel oil (“**LSFO**”) held for sale, as well as bunker\nfuel for vessel operations. The vessels primarily use MGO as bunker fuel. The decrease in inventory was mainly due to lower sales resulting\nin reduced stock on hand and fewer purchases to maintain appropriate inventory levels.\n\n \n\n**Due\nFrom (To) Related Parties**\n\n** **\n\nThis\nrepresents transactions occurring in the ordinary course of business, as well as advances provided to or received from related parties\nto support the Group’s operational activities. The increase was primarily attributable to an advance to Straits, part of which\nwere unsecured, interest bearing at 8.25% and had no fixed repayment terms.\n\n \n\n**Other\nReceivables and Current Assets**\n\n** **\n\nThese\ninclude advance payments, supplier deposits for trade purposes, and deferred offering costs. Supplier deposits were pledged to secure\npurchase credit limits and refundable only upon termination of the credit limit or offsetting against outstanding supplier balances.\nThe increase was due to advance payments made to suppliers for marketing and business development activities, as well as deposit paid\nfor sourcing target vessels. For the six months ended June 30, 2025, deferred offering costs were charged to shareholder’s equity\nafter the completion of initial public offerings.\n\n** **\n\n**Property,\nPlant and Equipment, Net**\n\n** **\n\nProperty,\nplant, and equipment, net, comprise vessels, docking fees, tools, equipment, and other assets. The decrease in property, plant and equipment,\nnet was primarily attributable to the increase in accumulated depreciation, which outpaced additions in docking expenditures associated\nwith our bunkering operations.\n\n** **\n\n**Accounts\nPayable and Accrued Expenses**\n\n \n\nWith\nthe availability of greater access to funding, we were enabled to place advance payments with suppliers, ensuring a smoother procurement\nprocess and securing orders ahead of schedule, resulting in a decrease in our accounts payable and accrued expenses.\n\n \n\n**Short-term\nLoans**\n\n \n\nShort-term\nloans represent trade facilities granted by various banking institutions to finance the purchase and importation of goods essential for\nour business operations. We successfully obtained additional trade facilities to meet our operational needs, ensuring adequate funding\nfor timely supplier payments.\n\n \n\n**Long\nTerm Liabilities**\n\n \n\nThese\nconsist of long-term debt used to finance leasehold properties, vessels, and motor vehicles. The decrease in long-term liabilities was\nmainly due to the repayment of a vessel installment loan, with no additional long-term debt incurred for the six months ended June 30,\n2025.\n\n \n\n**Capital\nExpenditures**\n\n \n\nWe\nhad a capital expenditure of $2.1 million, $3.8 million and $3.1 million for the six months ended June 30, 2025, FY2024 and FY2023 respectively.\nThese were financed through funds generated from operations.\n\n \n\n**Capital\nCommitments**\n\n \n\nAs\nat June 30, 2025, there was no material capital expenditures or purchase commitment to acquire vessels. Should there arise a need to\nexpand the existing fleet of vessels, we will seek financing from financial institutions or vendors of vessels with an extended long\nterm payment schedule.\n\n \n\n**5.C.\nResearch and Development, Patent and Licenses, etc.**\n\n** **\n\nNot\napplicable. The Company has not undertaken any Research and Development activities in the past three years.\n\n \n\n**5.D.\nTrend Information**\n\n \n\nOther\nthan as disclosed elsewhere in this transition report, we are not aware of any trends, uncertainties, demands, commitments, or events\nfor the six months ended June 30, 2025 that are reasonably likely to have a material and adverse effect on revenues, income, profitability,\nliquidity, or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future operating\nresults or financial condition.\n\n \n\n**5.E.\nCritical Accounting Estimates**\n\n \n\nWe\nprepare our unaudited consolidated financial statement in accordance with U.S. GAAP, which requires us to make judgement, estimation\nand assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenue and expenses during each\nreporting period. We continually evaluate these judgements, estimates and assumptions based on our own historical experience, knowledge\nand assessment of current business and other conditions and our expectations regarding the future based on available information, which\ntogether form our basis for making judgements about matters that are not readily apparent from other sources. Since the use of estimates\nis an integral component of the financial reporting process, our actual results could differ from these estimates. Some of our accounting\npolicies require a higher degree of judgment than others in their application.\n\n \n\n18\n\n \n\n \n\nThe\nselection of critical accounting policies, the judgments and other uncertainties affecting application of those policies and the sensitivity\nof reported results to changes in conditions and assumptions are factors that should be considered when reviewing our financial statements.\nOur critical accounting policies and practices include the following: (i) revenue recognition; (ii) allowance for doubtful accounts;\n(iii) impairment of long-lived assets; (iv) leases; and (v) income taxes. See Note 2 - Significant Accounting Policies to our unaudited\nconsolidated financial statements for the disclosure of these accounting policies. We believe the following accounting estimates involve\nthe most significant judgments used in the preparation of our financial statements.\n\n \n\n*Revenue\nRecognition*\n\n \n\nWe\nadopted ASC Topic 606, Revenue from Contracts with Customers (“**ASC 606**”) for all years presented. The core principle\nof this new revenue standard is that a company should recognize revenue when control of the promised goods or services is transferred\nto the customers, in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods\nor services. The following five steps are applied to achieve that core principle by us in our determination of revenue recognition: (1)\nidentification of the contract, or contracts, with a customer; (2) identification of the performance obligations in the contract; (3)\ndetermination of the transaction price; (4) allocation of the transaction price to the performance obligations in the contract; and (5)\nrecognition of revenue when, or as, the company satisfy a performance obligation.\n\n \n\nWe\nderived our revenues from a diverse range of maritime services provided to clients within the industry.\n\n \n\n1.Sales\nof cargo oil and fresh water, and bunkering facilitation\n\n \n\nRevenue\ngenerated from sales of cargo oil and fresh water, and bunkering facilitation involves the procurement and delivery of marine gas oil,\nlow sulfur fuel oil, and fresh water for delivery to customers’ ships. We recognize revenues at a point in time when cargo oil\nand fresh water have been delivered and accepted by the customer, indicating fulfillment of the performance obligation.\n\n \n\nSales\nof cargo oil and fresh water, and bunkering facilitation are not capable of being a distinct and separately identifiable. The performance\nobligation is only considered satisfied when sales of cargo oil and fresh water and bunkering facilitation are completed simultaneously.\n\n \n\n2.Vessel\nchartering services\n\n \n\nRevenue\ngenerated from vessel chartering services involves arranging charters for marine transportation for various purposes such as cargo transportation\nor offshore operations. We recognize revenues over time based on the time elapsed between the delivery of a vessel to a charterer and\nthe return of a vessel from the charterer and invoicing is done on a monthly basis.\n\n \n\n3.Ship\nmanagement services\n\n \n\nRevenue\nfrom ship management services involves providing technical management, crew management, marine consultancy, and shipping services. We\nrecognize revenues at a point in time when services are rendered and accepted by customer indicating fulfillment of the performance obligation.\n\n \n\nWe\nconsidered as a principal for all the revenues we generate above as we are directly involved in the procurement, delivery, and provision\nof the goods and services to customers. As the principal, we assume the risks and rewards associated with the transactions, including\nresponsibility for fulfilling the performance obligations and bearing any associated costs and risks, bears the risk of loss or damage\nto inventory, bears the credit risk associated with customers’ ability to pay for the goods or services. Therefore, we recognize\nrevenue at the gross amount.\n\n \n\n*Credit\nLosses on Financial Instruments*\n\n* *\n\nThe\nCompany recognizes credit losses on financial instruments in accordance with ASC Topic 326, Financial Instruments – Credit Losses.\nThe Company uses the Current Expected Credit Losses (“**CECL**”) model to estimate credit losses on financial assets measured\nat amortized cost, as well as certain off-balance sheet credit exposures.\n\n \n\nUnder\nthe CECL model, the estimation of credit losses involves significant judgment and estimation uncertainty. Management exercises its judgment\nbased on historical loss experience, current economic conditions, and reasonable and supportable forecasts. Changes in these factors\ncould have a material impact on the estimated credit losses.\n\n \n\nThe\nCompany has evaluated its account receivables and recognized a credit loss of $807, $69,474 and $nil for the six months ended June 30,\n2025 and the years ended December 31, 2024 and 2023 respectively.\n\n \n\n**Recent\naccounting pronouncements**\n\n \n\nSee\nthe discussion of the recent accounting pronouncements contained in Note 2 to the unaudited consolidated financial statements, “Summary\nof Significant Accounting Policies”.\n\n \n\n19"}