Core Viewpoint - HUHUTECH International Group Inc. reported a year of expansion in fiscal year 2024, achieving significant revenue growth and strategic milestones, particularly in the Japanese market, while also facing a net loss due to increased operating expenses and investments in growth initiatives [2][3]. Financial Performance - Total revenue for fiscal year 2024 was $18.1 million, an increase of 8.5% from $16.7 million in fiscal year 2023, driven by growth in product sales and system integration projects [5][7]. - Gross profit rose 21.1% to $6.6 million, with gross margin improving to 36.1% from 32.3% in the previous year [7][9]. - Net loss for fiscal year 2024 was $1.9 million, compared to net income of $2.3 million in fiscal year 2023, with basic and diluted loss per share at $0.1 [11][12]. Revenue Breakdown - Revenue from system integration projects was $16.6 million, a 2.0% increase from $16.3 million in fiscal year 2023, attributed to expansion in the Japanese market [8]. - Revenue from engineering consulting services increased by 76.3% to $0.4 million, while revenue from product sales surged 340.3% to $1.2 million [8]. Operating Expenses - Total operating expenses increased by 149.6% to $8.1 million, primarily due to the operations of HUHU Japan [10][18]. - Selling expenses rose 137.2% to $2.1 million, general and administrative expenses increased by 205.0% to $3.2 million, and research and development expenses grew by 114.7% to $2.9 million [18]. Cash Flow and Financial Condition - As of December 31, 2024, the company had cash of $3.1 million, up from $2.7 million in the previous year, with net cash used in operating activities at $3.0 million [13]. - Net cash provided by financing activities was $7.5 million, compared to net cash used in financing activities of $0.6 million in fiscal year 2023 [14]. Recent Developments - The company completed its initial public offering on October 23, 2024, raising gross proceeds of $4.69 million, enhancing its position for future growth and innovation [15].

Company Structure and Operations - HUHUTECH is a holding company with no operations of its own, conducting business through subsidiaries in China and Japan[22]. - As of the date of the report, HUHUTECH has 21,173,413 issued and outstanding Ordinary Shares, with an authorized share capital of US$50,000 divided into 20,000,000,000 Ordinary Shares[24]. - HUHUTECH intends to retain most, if not all, available funds and future earnings to support operations and finance business growth[32]. - HUHUTECH's ability to conduct operations may be materially affected if subsidiaries are unable to pay dividends when needed[31]. - The company relies on dividends from its PRC subsidiaries for cash needs, and any limitations on these dividends could affect its ability to cover expenses[114]. Regulatory Environment - The establishment and operation of companies in China are governed by the PRC Company Law and the PRC Foreign Investment Law, which provides a framework for foreign investments[39][40]. - The Foreign Investment Law prohibits expropriation of foreign investments without fair compensation and mandates that local governments adhere to commitments made to foreign investors[41]. - The 2020 Negative List allows foreign investments in industries not listed, with certain restrictions in place for specific sectors[43]. - The 2021 Negative List continues to open industries for foreign investments while maintaining restrictions in certain areas[44]. - The PRC Foreign Investment Law, effective January 1, 2020, replaced previous laws and aims to unify corporate legal requirements for foreign and domestic enterprises[131]. Financial Regulations and Taxation - Current PRC regulations permit the Company's PRC subsidiaries to pay dividends only out of their accumulated profits, which must be determined in accordance with Chinese accounting standards[35]. - Under the current regulatory regime, foreign investment enterprises in China may pay dividends only out of their retained earnings, with a requirement to set aside at least 10% of after-tax profits until reserves reach 50% of registered capital[75]. - The Enterprise Income Tax Law imposes a uniform corporate income tax rate of 25% on resident enterprises, while non-resident enterprises face a withholding income tax rate of 10% on income sourced from within China if they do not have permanent establishments[77]. - Dividends declared to non-PRC resident investors are subject to a withholding tax rate of 10%[79]. - The PRC government imposes a 10% withholding tax on dividends payable by Chinese companies to non-PRC-resident enterprises, which could limit the company's ability to pay dividends[145]. Intellectual Property and Compliance - The Patent Law protects three types of patents with varying protection periods: 20 years for invention patents, 10 years for utility model patents, and 15 years for design patents[51]. - The Copyright Law provides legal rights to copyright owners, including rights of publication and reproduction, and extends protection to internet activities[54]. - Infringers of copyright may face civil liabilities, including compensation for losses and potential criminal penalties in severe cases[54]. - The company may face challenges in protecting its intellectual property rights, which could impact its competitive advantage[118]. Labor and Employment Regulations - Employers in China are required to provide social insurance benefits covering various insurances, with penalties for non-compliance[85]. - Employers must register and deposit housing funds, contributing no less than 5% of the employee's monthly average salary from the previous year[86]. - Under the Japanese Labor Standards Law, employers must adhere to minimum wage standards and working conditions, with penalties for violations[101]. Currency and Cash Flow Management - The transfer of cash among subsidiaries is subject to PRC regulations, but there are currently no restrictions on transferring cash between subsidiaries[29]. - The PRC government may impose restrictions on foreign currency access for current account transactions, which could impact cash transfers[28]. - Funds or assets in the PRC or Hong Kong may not be available for operations outside these regions due to government restrictions on cash transfers[129]. - The company relies on dividend payments from PRC subsidiaries to fund cash requirements, but must obtain SAFE approval for converting Renminbi into foreign currency for capital expenses[194]. Risks and Uncertainties - The company faces substantial uncertainties regarding the interpretation and implementation of the PRC Foreign Investment Law, which may impact its corporate structure and operations[114]. - The company may encounter difficulties in expanding its business in Japan, which could adversely affect its operational results[118]. - The company has experienced significant disruptions due to the COVID-19 pandemic, which may continue to adversely affect its financial condition[118]. - The evolving regulatory landscape may require the company to enhance internal compliance measures and allocate additional resources to meet new requirements[159]. Compliance and Legal Risks - The company is subject to various laws and regulations in the construction industry in Japan, which may negatively impact its business[118]. - The company may face regulatory actions and legal proceedings that could harm its reputation and adversely affect its financial condition[119]. - The company may face stricter review and approval processes regarding foreign exchange activities, which could adversely affect its financial condition and operations[127]. - Non-compliance with cybersecurity regulations could result in significant financial penalties, operational disruptions, or revocation of business licenses[159]. International Trade and Market Conditions - The current international trade tensions, particularly between the U.S. and China, may adversely impact the company's business and financial condition[214]. - The U.S. government announced a 20% tariff on Chinese imports starting March 4, 2025, which may impact the company's supply chain and cost structure[215]. - Changes in international trade policies could affect demand for the company's services and its competitive position[214].

Kumamoto, Japan, Feb. 14, 2025 (GLOBE NEWSWIRE) -- HUHUTECH International Group Inc. (Nasdaq: HUHU) (the “Company” or “HUHUTECH”), a professional provider of factory facility management and monitoring systems, today announced the official opening of its semiconductor industry-supporting warehousing and logistics center located in Kumamoto Prefecture, Japan (the “Kumamoto Center”), through its Japanese subsidiary, HUHU Technology Co., Ltd (“HUHU Japan”). The Kumamoto Center is designed to provide efficient a ...

Wuxi, China, Nov. 21, 2024 (GLOBE NEWSWIRE) -- HUHUTECH International Group Inc. (Nasdaq: HUHU) (the “Company” or “HUHUTECH”), a professional provider of factory facility management and monitoring systems, today announced that the underwriters of its initial public offering (the "Offering") have partially exercised their over-allotment option to purchase an additional 123,413 ordinary shares at the public offering price of US$4.00 per share, resulting in additional gross proceeds of $493,652. After giving e ...

Wuxi, China, Oct. 23, 2024 (GLOBE NEWSWIRE) -- HUHUTECH International Group Inc. (Nasdaq: HUHU) (the “Company” or “HUHUTECH”), a professional provider of factory facility management and monitoring systems, today announced the closing of its initial public offering (the “Offering”) of 1,050,000 ordinary shares (“Ordinary Shares”) at a public offering price of US$4.0 per Ordinary Share. The Ordinary Shares began trading on the Nasdaq Capital Market on October 22, 2024 under the ticker symbol “HUHU.” The Compa ...

Wuxi, China, Oct. 21, 2024 (GLOBE NEWSWIRE) -- HUHUTECH International Group Inc. (the “Company” or “HUHUTECH”), a professional provider of factory facility management and monitoring systems, today announced the pricing of its initial public offering (the “Offering”) of 1,050,000 ordinary shares (“Ordinary Shares”) at a public offering price of US$4.0 per Ordinary Share. The Ordinary Shares have been approved for listing on the Nasdaq Capital Market and are expected to commence trading on October 22, 2024 un ...