F-1/A: Carbon Zero Technologies Files IPO for China Recycling Expansion

Carbon Zero Technologies International Inc., a leading Chinese renewable resources recycling company, files for an initial public offering on Nasdaq to fund expansion and technology development.

Summary

• Carbon Zero Technologies International Inc. (CZTI), established in 2016, is a technology-driven renewable resources recycling company operating primarily in China.
• The company is the largest waste household appliance recycling platform in China, holding approximately 1.04% market share in 2023, having recycled 21.8 million units by December 31, 2023, and 34.1 million units of household waste by December 31, 2024.
• CZTI operates an Online-to-Offline (O2O) model using proprietary apps (Boolv ShouShou, Boolv Collect, Boolv Sorting Center) to manage collection, sorting, and sales of recycled materials.
• Total revenues grew from RMB 4.0 billion in 2023 to RMB 4.5 billion in 2024 (11.8% year-over-year growth).
• For the six months ended June 30, 2025, total revenue was approximately RMB 3.5 billion, a 96.3% increase from RMB 1.8 billion in the same period of 2024.
• The company reported a net income of RMB 3.4 million for the six months ended June 30, 2025, a significant improvement from a net loss of RMB 8.5 million in the prior year's comparable period.
• Net cash provided by operating activities was RMB 17.6 million for the six months ended June 30, 2025, compared to RMB 5.7 million for the same period in 2024, and negative for full years 2023 and 2024.
• The IPO involves offering 3,335,000 American Depositary Shares (ADSs), each representing eight Class A ordinary shares, with an expected price range of $11.00 to $13.00 per ADS.
• Net proceeds to the company from the public offering are estimated at approximately $36.5 million, or $42.1 million if the underwriters' over-allotment option is fully exercised.
• A selling shareholder is also offering 750,000 ADSs for resale, from which the company will not receive any proceeds.
• The company plans to use IPO proceeds for expanding recycling operations, downstream operations (dismantling), mergers and acquisitions, enhancing R&D, increasing employee compensation, and general working capital.

Sentiment

Score: 7

Explanation: The company shows strong revenue growth and a recent return to net profitability and positive operating cash flow, indicating improving financial health and successful execution of its O2O recycling model. Its leading market position in China's growing renewable resources industry and strategic expansion plans are significant positives. However, substantial regulatory risks in China, identified material weaknesses in internal controls, and significant dilution for new investors temper the overall sentiment.

Positives

• Experienced significant revenue growth, with 11.8% year-over-year in 2024 and a substantial 96.3% increase for the first six months of 2025.
• Achieved a positive net income of RMB 3.4 million for the six months ended June 30, 2025, reversing previous net losses.
• Generated positive net cash flow from operating activities of RMB 17.6 million for the six months ended June 30, 2025.
• Holds a leading market position as the largest waste household appliance recycling platform in China with a 1.04% market share in 2023.
• Possesses an extensive nationwide recycling network covering over 500 cities with approximately 4,500 third-party recycling stations and over 37,000 registered recycling personnel.
• Leverages tech-driven innovations through its Boolv ShouShou, Boolv Collect, and Boolv Sorting Center apps, enhancing efficiency and traceability in the recycling process.
• Has an industry-leading traceability system for renewable resources, recognized by the Ministry of Commerce of the PRC for sharing and promotion to local governments.
• Strategic partnerships with over 15 downstream waste dismantling/disposal companies and more than 10 steel production companies ensure seamless integration of the recycling life cycle.
• Actively pursuing growth strategies including expanding into new recycling categories like lithium-ion batteries and integrating downstream dismantling businesses to increase gross profit margins.
• Committed to ESG principles and plans to participate in carbon trading, having obtained a Product Carbon Footprint Certification in 2023.

Negatives

• Experienced negative net income for the full year 2024 (RMB 24.8 million loss) and the first six months of 2024 (RMB 8.5 million loss).
• Had negative net cash flows from operating activities in both 2023 (RMB 47.9 million) and 2024 (RMB 68.4 million).
• Identified material weaknesses in internal control over financial reporting, including a lack of sufficient competent financial reporting and accounting personnel with U.S. GAAP and SEC reporting understanding, and a lack of formal internal control policies.
• The initial public offering price is substantially higher than the net tangible book value per share, resulting in immediate and substantial dilution of approximately $10.70 per ADS for new investors.
• The company is a 'controlled company' under Nasdaq rules, with CEO Baitong Tang holding approximately 82.24% of voting power, which may limit other shareholders' influence on corporate matters.
• The trading price of ADSs is likely to be volatile, especially for companies with smaller public floats, potentially leading to substantial losses for investors.
• Does not currently expect to pay dividends in the foreseeable future, requiring investors to rely on price appreciation for returns.
• Faces significant regulatory uncertainties and potential government intervention in China, which could materially affect operations and the value of ADSs.
• Relies heavily on third-party business partners, and deterioration of these relationships could adversely affect business prospects.
• Limited insurance coverage could expose the company to significant costs and business disruption in the event of uninsured losses.

Risks

• Challenges and potential setbacks due to the rapidly evolving renewable resources recycling industry in China, including limited systems, absence of standards, and regulatory uncertainties.
• Risk of impeding development and growth if talent recruitment needs for technological development, expanding recycling categories, and business expansion are not met.
• Misalignment between technological development and business plans, potentially hindering current growth and strategies if enhanced compatibility and functionality in digital systems, IT capabilities, traceability management, and financial inventory systems are not achieved.
• Market risks in implementing business strategy, including renewable resources recycling category expansion and downstream operations expansion, potentially affecting business, financial condition, and results of operations if investments, market risks, and operational management are not carefully evaluated.
• Potential deterioration of relationships with business partners in the renewable resources recycling value chain poses a risk of adverse effects on business prospects and operations.
• Negative net cash flows from operating activities, which may continue in the future, raising concerns about financial performance.
• Fluctuations or declines in the differences between merchandise costs and sales of renewable resources and the fees charged for online system services could harm business, financial condition, and results of operations.
• Risk of mishandling personal information, lack of confidence in privacy and security, and potential data breaches could deter users, harm reputation, and result in legal and regulatory risks.
• Inability to continuously enhance technologies and systems to keep up with evolving market demands, technological advancements, and industry standards may have adverse effects on business.
• Limited financing channels as a non-public company may hinder the ability to secure necessary funds for operations and expansion.
• Failure to manage growth or execute strategies effectively could materially and adversely affect business and prospects.
• The growth and profitability of the business depend on consumer demand and discretionary spending, which could be adversely affected by a severe or prolonged economic downturn in China or globally.
• Limited insurance coverage could expose the company to costs and business disruption.
• Failure to manage inventory effectively could materially and adversely affect results of operations, financial condition, and liquidity.
• Business operations depend on the performance and reliability of China's internet infrastructure, and any disruptions or limitations could have adverse effects.
• Inability to prevent others from unauthorized use of intellectual property, or intellectual property infringement claims, could harm business and competitive position.
• Failure to establish and maintain proper internal financial reporting controls, including identified material weaknesses, could impair the ability to produce accurate financial statements or prevent fraud.
• Exposure to legal proceedings or administrative penalties during business operations.
• Changes in U.S. and international trade policies, particularly with regard to China, may adversely impact business and operating results, including potential investment prohibitions under the U.S. Department of the Treasury's final rule on outbound investment.
• Operations have been and may continue to be affected by the COVID-19 pandemic.
• Financial distress experienced by business partners and other contract counterparties could have an adverse impact.
• Increased labor costs, inability to retain suitable employees, or unfavorable labor relations may adversely affect the business.
• Interruptions or failures that impair access to information technology systems could adversely affect business.
• Uncertainties regarding the interpretation and enforcement of PRC laws, rules, and regulations, and changes in policies, could adversely affect the company and the value of ADSs.
• Significant oversight and discretion by the Chinese government over subsidiaries' business, with potential for intervention or influence at any time, leading to material adverse changes.
• Recent greater oversight by the CAC over data security, particularly for companies seeking to list on a foreign exchange, and other data protection obligations, could adversely impact business and offering.
• PRC regulations relating to the establishment of offshore special purpose companies by PRC residents (SAFE Circular 37) may subject the company to liability or penalties.
• Reliance on dividends and other distributions from Operating Entities in the PRC, which may be restricted by PRC government interventions or limitations on fund transfers.
• Difficulties in effecting service of legal process, enforcing foreign judgments, or bringing actions in China against the company or management based on foreign laws.
• Uncertainties in the Hong Kong legal system could limit the availability of legal protections.
• Hong Kong subsidiaries are subject to Hong Kong data security laws and regulations.
• Failure to comply with PRC regulations regarding the registration requirements for employee stock incentive plans may subject participants or the company to fines and sanctions.
• Inflation in the PRC could negatively affect profitability and growth.
• Classification as a PRC resident enterprise for PRC income tax purposes could result in unfavorable tax consequences to the company and non-PRC shareholders.
• Direct scrutiny, criticism, and negative publicity involving U.S.-listed Chinese companies could harm operations and reputation.
• As a foreign private issuer, the company is exempt from certain U.S. public company reporting requirements, potentially affording less protection to shareholders.
• As a Cayman Islands company, the company is permitted to adopt certain home country corporate governance practices that differ from Nasdaq standards, potentially affording less protection to shareholders.
• Increased costs as a public company, particularly after ceasing to qualify as an emerging growth company.
• Potential loss of foreign private issuer status in the future, resulting in significant additional costs and expenses.
• The obligation to disclose information publicly may put the company at a disadvantage to private competitors.
• The dual-class voting structure limits the ability of Class A ordinary shareholders to influence corporate matters and could discourage change of control transactions.
• Trading of ADSs will be prohibited in the United States under the HFCAA if the PCAOB is unable to inspect the auditor for two consecutive years.
• No public market for ADSs prior to this offering, and no assurance of an active trading market or that the price will not decline below the IPO price.
• The trading price of ADSs is likely to be volatile, which could result in substantial losses to investors, especially given the relatively smaller public float.
• If securities or industry analysts cease to publish research or reports, or adversely change recommendations, the market price and trading volume could decline.
• The interests of CEO Baitong Tang, as a controlling shareholder, may conflict with those of other shareholders.
• Substantial future sales or perceived potential sales of ADSs in the public market could cause the price to decline.
• ADS holders may not be entitled to a jury trial with respect to claims arising under the deposit agreement or related to the ADSs.
• Claims relating to ordinary shares or ADSs may be submitted to arbitration.
• The voting rights of holders of ADSs are limited by the terms of the deposit agreement.
• ADS holders may experience dilution due to the inability to participate in rights offerings.
• Limitations on the transfer of ADSs.
• The deposit agreement may be amended without consent from holders of ADSs, limiting choices to selling ADSs or withdrawing shares.

Future Outlook

The company plans to pursue rapid business growth by enhancing integrated system capabilities, expanding recycling categories (including lithium-ion batteries), and integrating business chain verticals (such as dismantling). It aims to add approximately 3,000 traditional offline recycling stations in the next three years, reaching over 6,000 total, and increase the proportion of downstream disposal and dismantling segments in total revenue and profit. The company also intends to strengthen business collaborations and capitalize on carbon trading opportunities.

Management Comments

• We intend to transform the entire renewable resources recycling business in China as we develop and deploy our Online to Offline system (O2O system) through online applications and offline sites in the traditional recycling business.
• Our goal is to establish comprehensive, digitized, and standardized waste recycling services, covering all categories of recyclable materials.
• We believe that building an open system driven by supply chain capabilities and technology and by creating a new infrastructure defined by end-to-end coverage of the value chain are the keys to success in the recycling business in China.
• For the next three to five years, we plan to adhere to two strategic priorities: first, to pursue rapid business growth by enhancing our integrated system capabilities, and second, to expand recycling categories and integrate business chain verticals.
• We believe that our company's ability to create significant value for each player in our system means that every partner has an incentive to cooperate.
• A robust and sustainable business is a good business, but a business that does good for society beyond generating shareholder return is a great business. We believe that the value of a business lies in solving social problems and creating social value.

Industry Context

China's renewable resources recycling industry is experiencing steady growth, with recycled resources increasing from 283 million tons in 2017 to 418 million tons in 2022 (CAGR of 8.1%), projected to reach 590.3 million tons by 2027 (CAGR of 7.1%). This growth is driven by the emergence of online platforms, expanding volumes of renewable resources (e.g., waste household appliances CAGR of 20.9% from 2017-2022), and favorable government policies aimed at carbon peak by 2030 and carbon neutrality by 2060. The industry is highly fragmented with over 90,000 companies in 2022. Carbon Zero Technologies positions itself as an innovator leading the digitization of recycling ecosystems, aiming to redefine this overlooked industry by addressing information asymmetry and inefficiency in traditional recycling models.

Comparison to Industry Standards

• Identified as the largest waste household appliance recycling platform in China with a market share of approximately 1.04% in 2023.
• Recycled approximately 21.8 million units of waste household appliances from inception to December 31, 2023.
• Recycled approximately 34.1 million units of household waste (including waste household appliances, plastic, paper, and scrap vehicles) from inception to December 31, 2024.
• Claims to be the only company in China to have fully connected the entire industry chain by establishing a nationwide recycling system and comprehensive regional disassembly capabilities.
• Offers efficient recycling with complete on-site collection within 24 hours after orders, establishing a leading competitive edge in nationwide recycling services in China.

Corporate Governance

Legal Proceedings

• Neither the company nor any of its subsidiaries is a party to any pending legal proceedings, nor are they aware of any such proceedings threatened against them.

Related Party Transactions

• Accounts receivable from related parties increased from RMB 44.6 million as of December 31, 2024, to RMB 78.4 million as of June 30, 2025, primarily due to sales of household waste to Hubei Jinke and Jingchuang Scrapped Vehicle.
• Advances to suppliers related parties increased from RMB 0.5 million as of December 31, 2024, to RMB 66.6 million as of June 30, 2025, for household waste purchases.
• Accounts payable related parties decreased from RMB 157.3 million as of December 31, 2024, to RMB 113.0 million as of June 30, 2025, for household waste purchases.
• Sales to related parties increased from RMB 60.1 million for 6M 2024 to RMB 121.1 million for 6M 2025, representing approximately 3% of total revenue in both periods.
• Purchases of products and services from related parties increased significantly from RMB 0.9 million for 6M 2024 to RMB 911.2 million for 6M 2025, representing approximately 25% of total purchases in 6M 2025.
• Due from related parties decreased from RMB 20.5 million as of December 31, 2024, to RMB 16.4 million as of June 30, 2025, including security deposits for acquisitions and unsecured, interest-free loans.
• Due to related parties increased from RMB 40.0 million as of December 31, 2024, to RMB 52.0 million as of June 30, 2025, including short-term working capital loans and acquisition consideration payable.
• Long-term loan payable to related parties decreased from RMB 101.1 million as of December 31, 2024, to RMB 88.6 million as of June 30, 2025, with an annual interest rate of 5% and a repayment deadline of January 1, 2026, for a portion of the loan.

Stakeholder Impact

• Shareholders: New investors will experience immediate and substantial dilution. Existing shareholders, particularly the CEO, will retain significant voting control. Future dividend payments are not expected in the foreseeable future.
• Employees: Plans to increase compensation and benefit packages, recruit high-level talent, and invest in vocational training, which could improve employee satisfaction and retention.
• Customers/Suppliers: Expansion of recycling categories and downstream operations aims to offer more comprehensive services and improve efficiency, potentially benefiting both upstream suppliers and downstream customers.
• Regulatory Bodies: The company is subject to extensive and evolving PRC regulations, including those related to data security, anti-monopoly, and overseas listings, requiring continuous compliance efforts and posing risks of penalties or operational restrictions.
• Environment/Society: The company's mission to develop zero waste product solutions and participate in carbon trading aligns with environmental sustainability goals and contributes to social value in China's recycling industry.

Next Steps

• Complete the Initial Public Offering and list ADSs on the Nasdaq Global Market under the symbol CZTI.
• Expand recycling operations into new categories beyond household waste, ferrous metals, lithium batteries, and electronic devices.
• Expand downstream operations to vertically extend the business, including dismantling of household appliances, plastic granulation, lithium batteries, and automobiles.
• Pursue mergers and acquisitions involving downstream companies in dismantling and recycling.
• Enhance research and development systems, increasing investments in digital technology, data analysis, traceability management, IoT, LBS, and unique product identifiers.
• Increase employee compensation and benefit packages, recruit high-level talent, and invest in vocational training.
• Expand the online and offline customer base by adding approximately 3,000 traditional offline recycling stations in the next three years, aiming for over 6,000 total.
• Strengthen business collaborations with major manufacturing enterprises and third-party systems (property management, appliance repair, home cleaning, charitable foundations).
• Participate in international/domestic carbon markets to capitalize on collected data for carbon quotas and future profit growth.
• Address identified material weaknesses in internal control over financial reporting by hiring qualified accounting personnel, providing training, and formulating U.S. GAAP accounting policies.

Key Dates

Recommendation

Carbon Zero Technologies International Inc. presents a compelling growth story in China's expanding renewable resources recycling market, supported by strong recent revenue growth and a return to profitability and positive operating cash flow in the first half of 2025. Its O2O model and extensive network provide a competitive advantage. However, the investment carries significant risks, including substantial regulatory uncertainties in China, the potential for government intervention, identified material weaknesses in internal controls, and immediate dilution for IPO investors. The 'controlled company' status also limits minority shareholder influence. While the long-term potential is notable, these risks warrant a cautious 'hold' recommendation for seasoned investors, suggesting monitoring performance and regulatory developments before making further investment decisions.

Keywords

Renewable Resources Recycling, Waste Management, Circular Economy, O2O Platform, China, Household Waste Recycling, Metallic Resources Recycling, ESG, Carbon Trading, IPO, Nasdaq, Technology-driven Recycling, Environmental Technology, Waste Dismantling, Data Analysis, IoT, LBS