20-F: Baiya International Group Reports 2025 Loss Amid Strategic Shift

Baiya International Group Inc. reported a significant net loss of $9.53 million in 2025, driven by increased operating expenses and a strategic pivot towards digital assets, while also addressing internal control weaknesses.

Summary

• Net revenues increased by 28.63% to $16.48 million in 2025 from $12.81 million in 2024.
• Gross profit increased by 35.07% to $1.90 million in 2025 from $1.41 million in 2024.
• Operating expenses surged by 754.62% to $11.48 million in 2025 from $1.34 million in 2024, primarily due to increased stock compensation and professional service fees.
• Net loss attributable to common shareholders was $9.53 million in 2025, a significant increase from $8,750 in 2024.
• Cash used in operating activities was $7.44 million in 2025, compared to cash provided of $1.58 million in 2024.
• The company provided $17.7 million in non-interest-bearing loans to Xinyi International Group Ltd. and Hesheng International Group Ltd. in December 2025, due December 2026.
• Identified material weaknesses in internal control over financial reporting, including insufficient accounting expertise, lack of timely related party transaction monitoring, and inadequate evaluation of contingencies.
• The company is undergoing a strategic shift towards digital assets and financial technology, including the acquisition of STARFISH TECHNOLOGY-FZE and its UpTop.Meme platform.
• Completed an IPO in March 2025, raising approximately $8.00 million net, and further equity financing in 2025 totaling $17.55 million gross.
• Regained compliance with Nasdaq's minimum bid price and stockholders' equity requirements in January 2026.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this as a concerning report due to the substantial increase in net loss and operating cash burn, coupled with identified material weaknesses in internal controls. While strategic shifts and capital raises are underway, the immediate financial performance and significant loan receivables to related parties introduce considerable risk.

Positives

• Net revenues increased by 28.63% to $16.48 million in 2025, driven by growth in entrusted recruitment and project outsourcing services.
• Gross profit increased by 35.07% to $1.90 million in 2025.
• Successful IPO in March 2025, raising approximately $8.00 million net.
• Additional equity financing in 2025 generated approximately $17.55 million gross.
• Regained compliance with Nasdaq's minimum bid price and stockholders' equity requirements in January 2026.
• Strategic acquisition of STARFISH TECHNOLOGY-FZE and its UpTop.Meme platform, signaling a pivot towards Web3 and digital assets.
• Expansion of cooperation plans with over 230 vocational and technical colleges in China.
• Commitment from principal shareholders (Mr. Weilai Zhang and Mr. Daoning Xia) to provide financial support if necessary.

Negatives

• Net loss attributable to common shareholders increased significantly to $9.53 million in 2025 from $8,750 in 2024.
• Operating expenses surged by 754.62% to $11.48 million in 2025, primarily due to increased stock compensation expenses ($4.29 million) and consulting/professional service fees ($4.70 million).
• Cash used in operating activities was $7.44 million in 2025, a significant reversal from cash provided in 2024.
• Identified material weaknesses in internal control over financial reporting, including insufficient accounting expertise, lack of timely related party transaction monitoring, and inadequate evaluation of contingencies.
• Extended non-interest-bearing loans totaling $17.7 million to two investment holding companies (Xinyi and Hesheng), which generate limited income and expose the company to credit risk.
• Previous experience with collection difficulties on third-party loans, including a written-off loan, raises concerns about the recoverability of the $17.7 million loans.
• Accrued a penalty of approximately $401,527 as of December 31, 2025, for a contractual violation with China Post Zhongshan branch.
• Remaining payment of RMB 409,451 from a civil mediation settlement is currently in the execution stage as of December 31, 2025.
• Reliance on a VIE structure in China, which carries unique legal and operational risks due to uncertainties in PRC laws and potential government intervention.
• Discontinuation of labor dispatching services in 2023 due to regulatory reforms and negative profit margins.
• Dependence on a limited number of major customers and service providers, creating concentration risk.
• Uncertainties regarding the interpretation and implementation of new PRC cybersecurity and data privacy laws, potentially increasing compliance costs.
• The company's principal executive office in Shenzhen has approximately RMB50,000 in unpaid rent as of the report date.

Risks

• PRC operating entities operate in an emerging, dynamic, and competitive flexible employment industry, making future prospects difficult to evaluate.
• Limited operating history and subject to risks encountered by development-stage companies.
• Proper functioning of the Gongwuyuan platform and IT infrastructure is essential; errors or disruptions could materially affect performance.
• Reliance on cooperation with third-party companies for aspects of the business, leading to potential disruption, increased costs, and reputational risks.
• Customers may object to or claim compensation for outsourcing arrangements, which could materially affect business and financial conditions.
• Seasonal variations in demand for blue-collar workers and HR services cause material fluctuations in revenue streams and affect predictability of quarterly results.
• Dependence on Internet service providers and vulnerability to failures of the Internet, telecommunications networks in China, and the company's technology platform.
• Significant loan receivables, including non-interest-bearing loans to investment holding companies, expose the company to credit risk and may adversely affect liquidity and financial condition if not repaid.
• Failure to maintain an effective system of internal controls over financial reporting could lead to inaccurate financial reporting or fraud.
• Risk of being taxed or penalized under PRC Announcement 7 regarding indirect asset transfers by non-PRC resident enterprises.
• PRC government may find the Contractual Arrangements with the VIE and its shareholders non-compliant with PRC laws, leading to severe penalties or relinquishment of interests.
• Reliance on Contractual Arrangements with the VIE and its shareholders to consolidate financial results, which may not be as effective as direct ownership.
• Loss of ability to use and enjoy assets held by Gongwuyuan if it declares bankruptcy or becomes subject to liquidation.
• Uncertainties with respect to the interpretation and implementation of the newly enacted Foreign Investment Law, potentially impacting the viability of the corporate structure.
• Recent state government interference in business activities of U.S.-listed Chinese companies may negatively impact existing and future operations in China.
• Adverse changes in economic and political policies of the PRC government could materially affect overall economic growth in China and the company's business.
• PRC foreign exchange controls and foreign debt rules may restrict the ability to move capital, affecting liquidity and operations.
• Uncertainties with respect to the PRC legal system, including enforcement of laws and sudden changes in regulations.
• Potential liability for improper collection, use, or appropriation of personal information provided by customers and users.
• Reliance on dividends and other distributions from PRC subsidiary to fund cash and financing requirements, with limitations on the subsidiary's ability to make payments.
• Failure to obtain or renew relevant requisite licenses, permits, authorization, approvals, or certificates from relevant government authorities.
• Difficulty in effecting service of process upon directors or officers residing in mainland China or enforcing non-mainland China court judgments.
• Additional and more stringent criteria applied to emerging market companies by the SEC and PCAOB, adding uncertainties to Nasdaq listing.
• Ordinary Share price may change significantly regardless of operating performance, and shares may not be resold at or above IPO price.
• Future dilution if additional Class A Ordinary Shares are issued.
• As a Cayman Islands exempted company, shareholders may have different protection of rights than under U.S. law.
• Permitted to adopt certain home country practices in corporate governance that differ from Nasdaq requirements, affording less protection to shareholders.
• Risk of being classified as a passive foreign investment company (PFIC) for U.S. federal income tax purposes, leading to adverse tax consequences for U.S. investors.
• Increased costs and additional rules/regulations as a public company.
• Exposure to liabilities under the Foreign Corrupt Practices Act (FCPA).
• Uncertainties regarding the enactment timetable, interpretation, and implementation of laws and regulations with respect to online platform business operations (e.g., anti-monopoly, e-commerce).
• Approval of the China Securities Regulatory Commission (CSRC) or other PRC regulatory agencies may be required for offshore offerings under PRC law.
• PRC regulations relating to the establishment of offshore special purpose companies by PRC residents may subject beneficial owners or PRC subsidiary to liability or penalties.
• If classified as a PRC resident enterprise for PRC income tax purposes, unfavorable tax consequences could result for the company and non-PRC shareholders.
• Failure to comply with relevant regulation regarding VIEs leased premises may cause interruptions to VIEs business operations.

Future Outlook

The company plans to increase revenue by strengthening its sales force, partnering with more third-party labor service providers, increasing promotion of the Gongwuyuan Platform, and continuing to develop and integrate digital technologies like crowdsourcing, big data, and AI to enhance job-matching and one-stop services in the flexible employment market in China. Its long-term objective is to expand business coverage to include information technology services, online platforms linking schools and enterprises, and online training programs for workers, anticipating that strategic cooperation with vocational colleges will become a new growth point. The company expects labor costs in China to steadily increase in 2025 and likely continue to increase in following years, planning to mitigate these changes by improving employee loyalty, providing practical training, and relocating operational functions to lower-cost areas. The strategic expansion into digital assets and financial technology is expected to materially affect its revenue mix, operating expenses, regulatory profile, and liquidity in future periods.

Management Comments

• Management plans to increase its revenue by strengthening its sales force to develop more employing companies clients, partnering with more third-party labor service providers to seek and attract more labors, and increase the promoting and marketing activities of Gongwuyuan Platform, as well as continuing to develop and integrate digital technologies including crowdsourcing, big data and artificial intelligence to enhance the Gongwuyuan Platform to provide better job-matching and one-stop services to employing companies and workers in the flexible employment market throughout China.
• Management also intends to raise additional funds by way of a private or public offering, or by obtaining loans from banks or others.
• Our principal shareholders, Mr. Weilai Zhang and Mr. Daoning Xia, have made a commitment to provide financial support whenever necessary.
• Our core business is outsourcing and based on our analysis of the current domestic market, we have identified the logistics and express delivery industry as one of the fastest-growing sectors in China. This industry is still rapidly expanding, and as a result, there is a significant demand for human resources, often offering higher salary levels, attracting a large workforce. Despite limited funds, our company has continued to focus on the logistics and express delivery industry, actively expanding our outsourcing services to postal companies. We are seeking opportunities, establishing a business foundation, and preparing for future business expansion.
• We have been examining postal business tender documents from various regions and understanding market rates.
• In May 2023, we successfully launched operations with the Zhaoqing Branch of China Postal Group Limited, generating revenue of $4.4 million for the year ended December 31, 2024.
• Furthermore, the postal and express delivery business allows us to expand into e-commerce logistics, such as sorting and delivery services for companies like JD, Vipshop, and Cainiaos delivery stations.
• The overall labor cost in China has increased in 2025 compared with 2024, we expect this increased labor cost will keep at current level or even slightly increase further for the near future due to unstable job market in China.
• To address labor costs challenges, we plan to take several actions to mitigate these changes, such as: improving employee loyalty to reduce recruiting cost, getting more practical training for our employees to improve productivity, and relocating some of the operational functions to lower cost area.

Industry Context

StockSavvy.ai notes that Baiya International Group's strategic pivot towards digital assets and financial technology, particularly with the acquisition of UpTop.Meme, positions it in the rapidly evolving Web3 and decentralized finance (DeFi) space. This move diversifies its business beyond the traditional human resources sector in China, which is experiencing increased labor costs and regulatory scrutiny. The focus on logistics and express delivery within its HR services aligns with China's fast-growing e-commerce logistics sector, indicating an attempt to capitalize on strong market demand for blue-collar workers in this area. The challenges in the flexible employment industry, such as rising labor costs and regulatory reforms, are consistent with broader trends in China's labor market.

Comparison to Industry Standards

• StockSavvy.ai notes that the significant increase in operating expenses, particularly stock compensation and professional fees, is atypical for a company experiencing a substantial net loss, suggesting a high investment phase or potential inefficiencies compared to more mature, profitable industry peers.
• The $17.7 million in non-interest-bearing loans to investment holding companies, Xinyi and Hesheng, is a notable capital allocation decision that deviates from standard practices for companies seeking to improve liquidity and profitability, especially given the company's accumulated deficit and operating cash outflows.
• The identified material weaknesses in internal controls are a red flag, indicating a need for significant improvement to meet the robust governance standards expected of publicly traded companies, particularly when compared to well-established U.S. or international benchmarks.

Management Changes

Corporate Governance

Legal Proceedings

• Arbitration proceeding with Guangzhou Arbitration Commission Dongguan Branch: Gongwuyuan obtained a default judgment on April 15, 2022, ordering Guangdong Jingcheng Education Technology Co., Ltd and Wu Dengtao to repay RMB 300,000 principal, legal interests, and RMB 16,991 arbitration fee. Enforcement is ongoing, payment not yet collected.
• Civil mediation settlement agreement (Dongguan Gongwuyuan Yifang Talent Service Co., Ltd. and Gongwuyuan): Judicial confirmation issued September 27, 2023, for RMB 750,000 owed to Dongguan Huidian Xinxi Jishu Co., Ltd. Initial RMB 50,000 paid. Remaining RMB 700,000 assigned to Deng Yongjin. RMB 400,000 paid to Deng Yongjin, remaining RMB 409,451 performed by execution on November 6, 2024. No outstanding debt obligation as of December 31, 2025.
• Civil mediation settlement agreement (Zhongshan Jushangyue): Judicial confirmation issued September 28, 2023, for RMB 350,000 owed to Dongguan Huidian Xinxi Jishu Co., Ltd. Initial RMB 50,000 paid. Remaining RMB 300,000 assigned to Deng Yongjin. RMB 252,187 paid to Deng Yongjin, remaining payment is in the execution stage as of December 31, 2025.
• Accrued a penalty of approximately $401,527 as of December 31, 2025, in connection with a violation of contract terms with China Post Zhongshan branch. All three agreements expired and were terminated as of February 28, 2025. No further material exposure expected.

Related Party Transactions

• Due from related parties: $424,121 as of December 31, 2025 (primarily from Mr. Weilai Zhang and his affiliated entities). $40,549 as of December 31, 2024 (primarily from Mr. Daoning Xia, Ms. Guoping Xia, and their affiliated entities). These balances are interest-free and due upon demand.
• Due to related parties: $212,100 as of December 31, 2025, and $170,855 as of December 31, 2024 (funds from companies controlled by Mr. Zhang, Mr. Xia, and Mr. Xiaojun Wang for working capital and expense reimbursement). These are non-interest bearing and payable on demand.
• Entrusted recruitment services provided to a related party company controlled by Mr. Xia: $0 in 2025 and 2024, $181,408 in 2023.
• Entrusted recruitment services provided to Jian Huixin Human Resources Co., Ltd. (same legal entity as Jian GWY): $36,913 in 2025.
• Operating lease agreements with companies controlled by Mr. Xia: rental expenses of $35,732 in 2025, $0 in 2024, and $143,832 in 2023.
• Rent-free use of office space provided by Dongguan Massachusetts Industrial Park Investment Co., Ltd. (ultimate controlling party Ms. Xia) from July 1, 2024, to June 30, 2026. Estimated fair value of rent is $69,106 per year.
• Related parties have provided guarantees for the company's bank borrowing (no bank loans outstanding as of December 31, 2025).

Stakeholder Impact

• Shareholders: Significant net loss and increased operating expenses could negatively impact shareholder value. Dilution risk from future equity issuances. Potential adverse tax consequences if classified as a PRC resident enterprise. Less protection of shareholder rights as a Cayman Islands exempted company following home country practices.
• Employees: Changes in management roles. Potential impact from labor cost increases and efforts to improve loyalty/productivity.
• Customers: Continued development of the Gongwuyuan Platform aims to improve user experience and efficiency. Potential for claims due to outsourcing arrangements.
• Suppliers/Service Providers: Reliance on third-party companies for business aspects creates interdependence. Concentration risk with a limited number of service providers.
• Creditors: Exposure to credit risk from significant loan receivables to third parties. Potential difficulties in enforcing contractual arrangements in China.
• Regulatory Authorities: Increased scrutiny from PRC government on data privacy, cybersecurity, and overseas listings. Identified material weaknesses in internal controls require remediation.

Next Steps

• Remediate identified material weaknesses in internal control over financial reporting, including hiring accounting professionals, establishing a related party register, implementing procedures for contingencies, and improving segregation of duties.
• Complete the acquisition of STARFISH TECHNOLOGY-FZE and its UpTop.Meme platform.
• Close the Securities Purchase Agreement for 13,500,000 Class A Ordinary Shares with an institutional investor in Q2 2026.
• Continue strategic expansion into digital assets and financial technology.
• Strengthen sales force, partner with more third-party labor service providers, and increase promotion of the Gongwuyuan Platform.
• Develop and integrate digital technologies (crowdsourcing, big data, AI) to enhance the Gongwuyuan Platform.
• Expand business coverage to include information technology services, online platforms linking schools and enterprises, and online training programs for workers.
• Continue cooperative developments with vocational and technical colleges.
• Monitor evolving PRC cybersecurity and data privacy laws and ensure compliance.
• Address labor cost challenges by improving employee loyalty, providing training, and relocating operational functions.
• Enforce the remaining payment of RMB 409,451 from the civil mediation settlement.
• Apply for Hong Kong tax resident certificate when Pengze WFOE plans to declare and pay dividends to Juxing HK.

Key Dates

Recommendation

The substantial increase in net loss, significant cash burn from operations, and identified material weaknesses in internal controls present serious concerns about the company's financial health and operational integrity. The large, non-interest-bearing loans to investment holding companies, coupled with past collection difficulties, add considerable credit risk. While the strategic pivot to digital assets is ambitious, it introduces new regulatory uncertainties and execution risks without clear immediate financial benefits. These factors collectively suggest a high-risk investment profile with significant downside potential.

Keywords

Human Resources Technology, Flexible Employment, Crowdsourcing Recruitment, SaaS, Digital Assets, Financial Technology, China, VIE Structure, SEC Filing, Nasdaq, Corporate Governance, Cybersecurity, Data Privacy, IPO, Loan Receivables, Internal Controls