20-F: Nano Labs Ltd. Reports Financials Amidst Crypto Market Volatility

Nano Labs Ltd. filed its annual report for the fiscal year ended December 31, 2025, detailing a shift from net loss to net income, driven by significant gains in cryptocurrency valuations.

Summary

• Nano Labs Ltd. reported a net income of RMB125.9 million (US$17.9 million) for the fiscal year ended December 31, 2025, a significant turnaround from a net loss of RMB119.5 million in 2024 and RMB254.4 million in 2023.
• Total net revenues decreased to RMB27.0 million (US$3.8 million) in 2025 from RMB40.6 million in 2024, primarily due to lower product sales.
• Cost of revenues increased substantially in 2025 to RMB66.8 million (US$9.5 million), leading to a gross loss of RMB39.8 million (US$5.7 million) for the year.
• The company experienced a substantial gain of RMB178.6 million (US$25.4 million) from the change in fair value of cryptocurrencies in 2025, a key driver for the overall net income.
• Operating expenses decreased in 2025 compared to 2024, largely due to reduced research and development and selling and marketing expenses.
• The company's cash position decreased significantly, with cash and cash equivalents at RMB8.5 million (US$1.2 million) as of December 31, 2025.
• Significant related-party transactions involved interest-free loans from key shareholders, Jianping Kong and Qifeng Sun, which were subsequently converted into Class A ordinary shares.

Sentiment

Score: 5

Explanation: StockSavvy.ai views this filing as mixed; while the company returned to profitability, this was largely driven by cryptocurrency market gains rather than core business improvements, with declining revenues and a gross loss highlighting operational challenges.

Positives

• Achieved net income of RMB125.9 million (US$17.9 million) in 2025, reversing previous years' losses.
• Recorded a substantial gain of RMB178.6 million (US$25.4 million) from the change in fair value of cryptocurrencies, primarily due to increased BNB prices.
• Reduced operating expenses, particularly in research and development and selling and marketing, by streamlining activities.
• Secured increased credit lines, reaching RMB198 million, to support operations.
• Launched new products and strategic initiatives, including the iPollo ClawPC A1 Mini and the Next Big BNB Program for Real World Assets (RWA) infrastructure.

Negatives

• Total net revenues decreased to RMB27.0 million (US$3.8 million) in 2025, down from RMB40.6 million in 2024.
• Cost of revenues increased significantly to RMB66.8 million (US$9.5 million) in 2025, resulting in a gross loss of RMB39.8 million (US$5.7 million).
• Cash and cash equivalents decreased substantially to RMB8.5 million (US$1.2 million) as of December 31, 2025.
• The company reported a material weakness in internal control over financial reporting due to a lack of sufficient accounting personnel with U.S. GAAP knowledge.
• Significant inventory write-downs continued in 2025, amounting to RMB32.6 million (US$4.6 million), reflecting the impact of cryptocurrency price volatility on inventory valuation.

Risks

• The company's business is heavily reliant on the volatile cryptocurrency market, with significant revenue derived from cryptocurrency mining machines.
• Adverse changes in cryptocurrency prices, such as Bitcoin, ETC, and Grin, can significantly impact demand for the company's products and its financial performance.
• The company faces risks related to its substantial holdings of BNB and related derivative exposures, including market volatility and valuation uncertainty.
• Regulatory developments in China and overseas markets concerning cryptocurrencies and technology companies could adversely affect the company's operations and ability to raise capital.
• The company's reliance on third-party foundries for IC fabrication and packaging presents risks related to supply chain disruptions, capacity shortages, and quality control.
• The company is subject to risks associated with its corporate structure as a Cayman Islands holding company with primary operations in China, including potential PRC government intervention and uncertainties in legal and regulatory enforcement.
• The company's auditor is subject to PCAOB inspections, and any inability of the PCAOB to inspect auditors in China for two consecutive years could lead to delisting from the Nasdaq Stock Market.
• The company has a material weakness in internal control over financial reporting, which could impact investor confidence and the market price of its shares.

Future Outlook

The company's future outlook is heavily influenced by the performance of the cryptocurrency market and its ability to manage operational costs and R&D investments. The company plans to continue expanding its product offerings and international sales, while navigating regulatory landscapes and potential market volatility.

Management Comments

• The company's success will depend, in part, on its ability to respond to changes in technology, customer demands, and industry standards in a cost-effective and timely manner.
• We intend to broaden our product offerings to design and develop solutions covering more application scenarios, including vision computing and privacy computing.
• We are committed to investing in new product development in order to stay competitive in our markets.

Industry Context

StockSavvy.ai notes that Nano Labs Ltd. operates in the highly dynamic and volatile sectors of Web 3.0 infrastructure, cryptocurrency treasury management, and integrated circuit design. The company's performance is intrinsically linked to the fluctuations in the cryptocurrency market, particularly Bitcoin and BNB, and the broader semiconductor industry trends. The ongoing global interest in AI agent systems, as evidenced by the launch of the iPollo ClawPC A1 Mini, suggests a strategic pivot or diversification into emerging technology markets.

Comparison to Industry Standards

• The company's R&D expenses as a percentage of revenue have decreased significantly in 2025 (approximately 30% of revenue) compared to 2023 (approximately 113% of revenue), indicating a shift in investment strategy or cost-cutting measures.
• The significant inventory write-downs (RMB32.6 million in 2025) highlight the industry-wide challenge of managing inventory in a market susceptible to rapid price fluctuations, a common issue for companies involved in cryptocurrency mining hardware.
• The company's gross loss in 2025 (-147.3% of revenue) is a critical concern, suggesting that current product pricing and cost structures are not sustainable without significant improvements in sales volume or cost reduction, a situation not uncommon for hardware manufacturers in nascent or volatile markets.

Corporate Governance

Legal Proceedings

• A customer filed a civil action in July 2025 against a subsidiary for a sales contract dispute, claiming RMB4,965,147 plus related interests for breach of contract. The amount liable in an unfavorable outcome cannot be reasonably estimated.
• Bank accounts of the Company were judicially frozen as a result of the legal proceedings, with RMB1,347,795 frozen as of December 31, 2025.

Related Party Transactions

• In 2023, Jianping Kong and Qifeng Sun provided US$10 million in interest-free loans, which were converted into 957,854 Class A ordinary shares.
• In 2024, Jianping Kong and Qifeng Sun provided US$8.5 million in interest-free loans, which were converted into 2,791,462 Class A ordinary shares.
• Jianping Kong and Qifeng Sun provided guarantees for the company's debts during 2023, 2024, and 2025.

Stakeholder Impact

• Shareholders may experience limited voting power due to the dual-class share structure and the company's controlled company status.
• Investors in Class A ordinary shares are exposed to the risks associated with operating in China and the potential impact of PRC government policies.
• The company's reliance on third-party foundries could impact product availability and delivery, affecting customers.
• The material weakness in internal controls could affect investor confidence and the market price of Class A ordinary shares.

Next Steps

• Continue to develop and launch new products, including iPollo Claw OS and additional OpenClaw-compatible hardware.
• Expand sales and operations internationally beyond China.
• Implement measures to address the material weakness in internal control over financial reporting, including hiring qualified personnel and enhancing internal audit functions.
• Monitor and adapt to evolving regulatory environments in China and overseas markets.
• Continue to manage cryptocurrency holdings and related treasury activities.

Key Dates

Recommendation

While the company has returned to profitability, this is largely due to cryptocurrency market gains rather than operational improvements. The declining revenues, gross loss, and material weakness in internal controls present significant risks. The company's reliance on volatile crypto markets and potential regulatory challenges in China also warrant caution. A 'hold' recommendation reflects the uncertainty and the need for operational improvements to demonstrate sustainable profitability independent of market fluctuations.

Keywords

Nano Labs Ltd, Form 20-F, Annual Report, Cryptocurrency, BNB, Bitcoin, IC Design, High Throughput Computing, High Performance Computing, Web 3.0, Cayman Islands, China, Financial Results, SEC Filing