20-F/A: Tungray Technologies Reports Net Loss, Revenue Decline in Amended 20-F

Tungray Technologies Inc. filed an amended annual report revealing a shift to a net loss of $0.6 million in 2024 from a net income in 2023, alongside a 10.8% revenue decrease.

Summary

• Tungray Technologies Inc. filed an amendment to its Annual Report on Form 20-F for the year ended December 31, 2024, to replace the audit report and include consolidated financial statements for 2023 and 2024 audited by Guangdong Prouden CPAs GP.
• Total revenues decreased by $1.6 million, or 10.8%, from $14.4 million in 2023 to $12.8 million in 2024.
• The company reported a net loss of $0.6 million in 2024, a significant decline from a net income of $0.8 million in 2023.
• Gross profit decreased by $1.1 million, or 16.6%, to $5.6 million in 2024, with the overall gross margin falling from 46.7% to 43.7%.
• Operating expenses increased by $0.6 million, or 11.4%, to $6.3 million in 2024, driven by higher selling, general and administrative, and research and development expenses.
• Net cash used in operating activities was $0.8 million in 2024, a reversal from $0.5 million provided by operating activities in 2023.
• The company completed an Initial Public Offering (IPO) in April 2024, raising approximately $5.41 million in gross proceeds, including an over-allotment exercise.

Sentiment

Score: 3

Explanation: The sentiment is negative due to a significant decline in financial performance, including a shift from net income to net loss, decreased revenue, and negative operating cash flow. While there was a successful IPO and increased R&D investment, these are overshadowed by the poor operational results and the new class action lawsuit, indicating increased risk and uncertainty.

Positives

• Research and development expenses increased by 34.3% to $1.1 million in 2024, indicating continued investment in product innovation and competitiveness.
• The number of customers increased from 163 in 2023 to 182 in 2024, suggesting broader customer reach despite revenue decline.
• Standardized products revenue saw a slight increase of 1.6% in 2024, indicating some growth in this segment.
• Successfully completed an IPO and over-allotment in April 2024, raising approximately $5.41 million in gross proceeds, enhancing capital resources.
• Management believes current working capital of approximately $9.2 million is sufficient to support operations for the next twelve months.

Negatives

• Total revenues decreased by 10.8% to $12.8 million in 2024, primarily due to a 13.6% decrease in customized products revenue.
• The company shifted from a net income of $0.8 million in 2023 to a net loss of $0.6 million in 2024.
• Gross profit declined by 16.6% to $5.6 million in 2024, and the overall gross margin decreased by 3.0 percentage points to 43.7%.
• Average revenue per customer decreased from approximately $88,000 in 2023 to $70,000 in 2024.
• Net cash used in operating activities was $0.8 million in 2024, a significant deterioration from cash provided by operations in the prior year.
• The decrease in revenue for customized products was attributed to the gradual end of the COVID-19 pandemic reducing demand for home printers and the China-United States trade war.
• Gross profit for both customized and standardized products was negatively impacted by a decrease in unit selling prices and an increase in labor costs.

Risks

• Ability to increase and retain customers, especially major customers, as average revenue per customer decreased in 2024.
• Highly competitive domestic markets in Singapore and the PRC, with competitors potentially having greater brand recognition, larger customer bases, longer operating histories, and more marketing resources.
• Impact of material fluctuations in raw material prices (steel, aluminum, oil, metal-based components) and energy costs, which could adversely affect financial performance if not offset by price increases.
• Exposure to foreign exchange risk due to operations in RMB and SGD, where depreciation against the USD could reduce the value of revenues, earnings, and assets.
• A putative class action lawsuit was filed on August 7, 2025, alleging materially false financial statements in the IPO registration, which could result in significant legal costs and damages.
• Restrictions on the ability of PRC subsidiaries to transfer assets to the parent company due to statutory laws and regulations, limiting dividend payments and fund transfers.

Future Outlook

The company expects the number of customers and average revenue per customer to remain stable in the long term. It plans to continue innovating to keep pace with industry growth and bring forward new cutting-edge technologies. Tungray also intends to pursue strategic acquisitions and investments in intelligent manufacturing to accelerate growth and strengthen its competitive position. The company anticipates identifying more applications for its metal thermal equipment and solutions in industries such as home appliances, equipment, machinery, and other automation manufacturing.

Management Comments

• Wanjun Yao, Chief Executive Officer, and Qi (Henry) Guo, Chief Financial Officer, certified that the report does not contain any untrue statement of a material fact or omit to state a material fact, and that the financial statements fairly present the financial condition, results of operations, and cash flows.
• Management believes its current working capital is sufficient to support its operations for the next twelve months.
• Management monitors the number of customers and new customers as indicators of the growth of Tungray's overall business.
• The company denies any and all wrongdoing alleged in the putative class action and intends to vigorously defend itself.

Industry Context

Tungray Technologies operates in the highly competitive industrial automation sector, serving OEMs in semiconductors, printers, electronics, and home appliances. The company acknowledges the rapid growth of high-tech enterprises and intelligent manufacturing as key to enterprise development, necessitating continuous technological advancement. The post-COVID-19 shift from work-from-home to office work has reduced demand for office equipment like printers, impacting the company's business. The China-United States trade war is also cited as a factor affecting revenue, highlighting geopolitical and economic pressures on the industry.

Management Changes

Corporate Governance

Legal Proceedings

• A putative class action lawsuit was filed on August 7, 2025, by Mohammed Alshubrumi against the Company, Wanjun Yao (Chairman, CEO, and Director), Alex Gong (former CFO), and IPO underwriters. The lawsuit alleges that financial statements in the IPO registration statement and prospectus were materially false, violating Sections 11 and 15 of the Securities Act. The company denies wrongdoing and intends to vigorously defend itself.

Related Party Transactions

• Account receivables from related parties totaled $327,556 in 2024, including FDT (Qingdao) Intellectual Technology Co., Ltd., Tungray (Kunshan) Industrial Automation Co., Ltd., Tungray (Kunshan) Robot Intelligent Technology Co., Ltd., and Kunshan Tungray Intelligent Technology Co., Ltd.
• Account payables to related parties were $79,988 in 2024, significantly down from $498,923 in 2023, including FDT (Qingdao) Intellectual Technology Co., Ltd., Qingdao Tungray Technology Development Co., Ltd., Shanghai Tongrui Industrial Automation Equipment Co., Ltd., Kunshan Tungray Intelligent Technology Co., Ltd., and Hefei CAS Dihuge Automation Co., Ltd.
• Other receivables from related parties increased to $320,447 in 2024, primarily from FDT (Qingdao) Intellectual Technology Co., Ltd. and Du Liling.
• Other payables to related parties were $338,453 in 2024, including Jingan Tang, FDT (Qingdao) Intellectual Technology Co., Ltd., and Qingdao Tungray Technology Development Co., Ltd.
• Prepayments to related parties increased substantially to $3,815,321 in 2024, mainly to Tungray (Kunshan) Industrial Automation Co., Ltd. and FDT (Qingdao) Intellectual Technology Co., Ltd.
• Revenue from related parties decreased significantly to $39,342 in 2024 from $319,546 in 2023, primarily from sales to Tungray (Kunshan) Industrial Automation Co., Ltd. and FDT (Qingdao) Intellectual Technology Co., Ltd.
• Purchases from related parties decreased from $961,525 in 2023 to $25,291 in 2024, mainly from FDT (Qingdao) Intellectual Technology Co., Ltd.
• Operating lease liabilities to related parties totaled $359,303 in 2024, including Tungray (Qingdao) Technology Development Co., Ltd. and Jingan Tang.
• Advances to related parties amounted to $301,949 in 2024, including Qingdao Tungray Biology Technology Co., Ltd., FDT (Qingdao) Intellectual Technology Co., Ltd., and Liling Du.
• Borrowings from related parties decreased to $178,860 in 2024 from $1,587,015 in 2023, including FDT (Qingdao) Intellectual Technology Co., Ltd. and Jingan Tang.

Stakeholder Impact

• Shareholders: Face potential negative share price impact due to the net loss, revenue decline, and the class action lawsuit. The dual-class share structure (Class A and Class B) grants disproportionate voting power to Class B holders, potentially limiting influence for Class A shareholders.
• Employees: The company implemented workforce elimination to cut costs, indicating potential job insecurity or reduced employee morale.
• Customers: Decreased demand for home printers post-COVID-19 and the impact of the China-United States trade war suggest challenges in customer acquisition and retention, particularly for customized products.
• Suppliers: Fluctuations in raw material and energy costs could affect supplier relationships and procurement costs, potentially leading to supply chain disruptions or increased expenses.
• Creditors: The company's shift to a net loss and negative operating cash flow could raise concerns for lenders, although current working capital is deemed sufficient for the next 12 months. Banking facilities and finance lease liabilities represent ongoing obligations.

Next Steps

• Continue to expend capital and efforts in research and development to maintain competitiveness and enhance product offerings.
• Pursue strategic acquisitions and investments in selective technologies and businesses within the intelligent manufacturing industries.
• Expand application fields and diversify the customer base to mitigate competitive pressures and market concentration risks.
• Vigorously defend against the putative class action lawsuit filed on August 7, 2025, regarding alleged materially false financial statements.

Key Dates

Recommendation

The company's financial performance has significantly deteriorated, marked by a shift from net income to a substantial net loss, a notable decline in total revenues and gross profit, and negative operating cash flow. This indicates fundamental operational challenges and a weakening financial position. Furthermore, the filing discloses a putative class action lawsuit alleging materially false financial statements in connection with its IPO, introducing significant legal and reputational risks. While the company completed an IPO, the subsequent financial results and legal challenges suggest a high level of uncertainty and potential for further downside. A seasoned investor would view these factors as strong indicators to divest or avoid investment.

Keywords

Industrial Automation, OEM Solutions, SEC Filing, Financial Results, Net Loss, Revenue Decline, Gross Margin, Operating Expenses, Cash Flow, IPO, Risk Factors, Legal Proceedings, Corporate Governance, Semiconductors, Printers, Electronics, Home Appliances, Welding Equipment, DC Motors