F-1: JIADE LIMITED Launches $19M Public Offering

JIADE LIMITED is offering up to 20 million Class A Ordinary Shares at $0.95 each in a self-underwritten public offering to raise approximately $18.8 million for expansion, R&D, and acquisitions.

Summary

• JIADE LIMITED is conducting a best-efforts, self-underwritten public offering of up to 20,000,000 Class A Ordinary Shares at an assumed price of $0.95 per share.
• The offering aims to raise estimated net proceeds of approximately $18,791,458, which will be allocated to market promotion (30%), research and development (30%), acquisition of vocational training institutions (20%), and working capital (20%).
• The company operates through PRC subsidiaries, providing comprehensive education supporting services to adult education institutions via its KB Platform and auxiliary solutions.
• Key financial highlights for 2024 include revenue of RMB18,742,000 (US$2,568,000), net income of RMB5,607,000 (US$768,000), cash of RMB3,918,000 (US$537,000), and working capital of RMB21,262,000 (US$2,913,000).
• The company completed the acquisitions of Kunyuan and Jiazhi in January 2025, expanding its safety technology training services.
• Mr. Yuan Li, Chairman and Co-CEO, will retain significant voting control (approximately 70.74% after the offering), making the company a controlled company under Nasdaq rules.
• The offering is subject to various risks, including those related to PRC regulatory oversight, the Holding Foreign Companies Accountable Act, and the self-underwritten nature of the offering.

Sentiment

Score: 4

Explanation: The company shows growth in revenue and strategic acquisitions, but the significant drop in net income and cash, coupled with the highly dilutive and risky self-underwritten offering at a substantial discount to market price, indicates considerable financial and operational challenges. The concentrated voting power and PRC regulatory risks further add to the negative sentiment.

Positives

• Successful CSRC approval for overseas listing obtained on January 2, 2024, mitigating a significant regulatory risk for PRC-based companies.
• Kebiao Technology, a PRC subsidiary, was designated a High and New Technology Enterprise (HNTE) in November 2022, indicating strong R&D capabilities and intellectual property.
• The company has a growing business with total revenue increasing from RMB10,239,000 in 2022 to RMB18,742,000 (US$2,568,000) in 2024.
• Strategic acquisitions of Kunyuan and Jiazhi in January 2025 expand service offerings into production safety training and vocational skills development, which benefit from high repeat business due to mandatory refresher courses.
• The company possesses 36 software copyrights and 8 copyright registration certificates, demonstrating competitive technological advantages.
• New investors in this offering will experience an immediate accretion in net tangible book value of $0.23 per Class A Ordinary Share.

Negatives

• The offering is a "best efforts" and "self-underwritten" public offering, meaning there is no guarantee that any or all of the 20,000,000 Class A Ordinary Shares will be sold, potentially significantly reducing the intended proceeds.
• There is no minimum offering amount required as a condition to closing, which means the company may not raise sufficient funds to pursue its stated business goals, and investors will not receive a refund.
• The assumed public offering price of $0.95 per share is significantly lower than the closing trading price of $1.90 per Class A Ordinary Share on Nasdaq as of August 13, 2025, indicating potential market price volatility or a discount for new shares.
• Existing shareholders will experience immediate and substantial dilution in net tangible book value per share, with a decrease of approximately $1.03 per Ordinary Share.
• The dual-class share structure concentrates voting control with Mr. Yuan Li (70.74% after the offering), limiting the influence of other shareholders and potentially discouraging favorable change-of-control transactions.
• Net income decreased from RMB9,562,000 in 2023 to RMB5,607,000 (US$768,000) in 2024, despite revenue growth.
• Cash balance decreased from RMB7,082,000 in 2023 to RMB3,918,000 (US$537,000) in 2024.

Risks

• PRC Regulatory Risks: The corporate structure could be disallowed by Chinese regulatory authorities, leading to material changes in operations or a significant decline in share value. PRC laws and regulations are sometimes vague and uncertain, potentially resulting in material changes to operations, depreciation, or loss of share value, or hindering the ability to offer securities.
• Cybersecurity Review: While the company's PRC counsel advises it is not currently subject to cybersecurity review by the CAC, there is uncertainty regarding future interpretations or new laws that could impose such requirements.
• Holding Foreign Companies Accountable Act (HFCA Act): Class A Ordinary Shares may be prohibited from trading on a national exchange if the PCAOB is unable to inspect the company's auditors for two consecutive years. Although current auditors (Enrome LLP and ZH CPA, LLC) have been inspected, future obstructions by PRC authorities could lead to delisting.
• Dividend Restrictions: PRC government controls on currency conversion and statutory reserve requirements (10% of after-tax profits until 50% of registered capital) may restrict the ability of PRC subsidiaries to pay dividends to the parent company, impacting dividend distribution to investors.
• Fund Transfer Restrictions: PRC government interventions or restrictions could limit the ability of the company or its subsidiaries to transfer cash or assets out of the PRC/Hong Kong.
• Self-Underwritten Offering Risk: The absence of an underwriter and reliance on Mr. Yuan Li to sell shares to acquaintances means there is no guarantee of successful capital raising, potentially leaving the company unable to fund its business plan.
• Dilution: Investors will experience immediate and substantial dilution in net tangible book value per share.
• Concentrated Voting Power: The dual-class share structure gives Mr. Yuan Li substantial influence over corporate matters, potentially allowing him to take actions not aligned with other shareholders' interests.
• Uncertainty of Use of Proceeds: Management has broad discretion in applying the net proceeds, and there is no guarantee that the funds will be used effectively or for the stated purposes if business conditions change.
• Market Price Volatility: Sales of substantial amounts of Class A Ordinary Shares in the public market could adversely affect their market price.

Future Outlook

The company intends to expand its business into new markets, broaden its offerings to include production safety training and vocational skills development, continue investing in technology R&D, and pursue strategic acquisitions. It does not anticipate paying cash dividends in the foreseeable future, intending to retain earnings for business expansion.

Management Comments

• We intend to complete one closing of this offering but may undertake one or more additional closings for the sale of the additional Class A Ordinary Shares to the investors in the initial closing.
• We intend to keep any future earnings to finance the expansion of our business, and we do not anticipate that any cash dividends will be paid in the foreseeable future.
• Our management will have broad discretion in the application of such net proceeds, including working capital and other general corporate purposes, and we may spend or invest these proceeds in a way with which our shareholders disagree.

Industry Context

The company operates in the rapidly changing adult education industry in China, providing supporting services to adult education institutions. Its focus on production safety training and vocational skills development aligns with governmental policies that bolster this fast-growing sector, particularly given mandatory refresher and certification renewal programs. The company's tech-driven approach with its KB Platform positions it to capitalize on the increasing demand for efficient educational administration and online learning solutions.

Comparison to Industry Standards

• The company's designation as a High and New Technology Enterprise (HNTE) in November 2022 by Sichuan provincial authorities suggests a strong commitment to R&D and technological innovation, which is a competitive advantage in the education technology sector.
• The acquisition of Kunyuan and Jiazhi, which provide mandatory safety technology training, positions the company in a segment with recurring revenue streams, a desirable characteristic compared to more volatile education sectors. Kunyuan trains approximately 800 individuals per month, and Jiazhi trains approximately 400 individuals per month, indicating a significant operational scale in this niche.
• The company's revenue growth from RMB10.2 million in 2022 to RMB18.7 million in 2024 demonstrates expansion, though the decline in net income in 2024 warrants closer examination against industry profitability benchmarks.

Management Changes

Corporate Governance

Legal Proceedings

• The company and its subsidiaries have not been involved in any investigations on cybersecurity review initiated by any PRC regulatory authority, nor received any inquiry, notice, or sanction related to cybersecurity review under the Cybersecurity Review Measures as of the date of the prospectus.
• The company's PRC subsidiaries filed with the CSRC on August 8, 2023, and submitted supplemental documents on September 22, 2023, in connection with this offering and listing. The CSRC approved these filings on January 2, 2024.
• The company is required to file with the CSRC within three working days after the completion of the issuance for this offering.
• No action, suit, inquiry, notice of violation, proceeding, or investigation is pending or threatened against or affecting the company that could result in a Material Adverse Effect, except as disclosed in SEC Reports.

Related Party Transactions

• Education Supporting Services: Provided to Chengdu Jinjiang District New Vision Training School (New Vision), an entity significantly influenced by Ms. Jie Tong, spouse of Mr. Yuan Li. Amounts were RMB5,158,349 in 2022 and RMB853,089 in 2023. All related trade receivables from New Vision have been fully collected as of the date of the prospectus.
• Working Capital Loans (Received): Received interest-free working capital loans from Sichuan Zhongtai Zhigao Information Technology Consulting Partnership (ZTZG) (a 10%+ Class A shareholder) in 2022 (RMB590,000) and from Mr. Yuan Li (Co-CEO, Chairman, controlling shareholder) in 2022 (RMB20,025). All these balances have been fully paid as of the date of the prospectus.
• Working Capital Loans (Provided): Provided interest-free loans to Mr. Yuan Li in 2023, which have been fully repaid as of the date of the prospectus.
• Payments on Behalf of Company: Mr. Yuan Li made payments to purchase a vehicle on behalf of the company in 2024 (RMB275,000 / US$37,675), as vehicle installment payments could only be processed in the name of its legal representative.
• Amounts Due From Related Parties (as of Dec 31, 2024): Mr. Yuan Li (RMB4,439,705 / US$608,237), Mr. Hangyu Dai (RMB8,000). All unsecured, interest-free, and repayable on demand.
• Amounts Due To Related Parties (as of Dec 31, 2024): Mr. Yuan Li (RMB275,000 / US$37,675), Ms. Li Tan (RMB100 / US$14).

Stakeholder Impact

• Shareholders (Existing): Will experience immediate and substantial dilution in net tangible book value per share (decrease of $1.03 per share) due to the offering price being significantly below the pro forma net tangible book value. Their voting power will also be further diluted, although Mr. Yuan Li will retain majority control.
• Shareholders (New Investors): Will acquire shares at a price ($0.95) significantly below the current market price ($1.90 as of Aug 13, 2025) and will experience an immediate accretion in net tangible book value ($0.23 per share). However, they face the risk of the offering not being fully subscribed due to its best-efforts, self-underwritten nature.
• Management/Employees: The adoption of the 2025 Equity Incentive Plan and issuance of Class A Ordinary Shares to key personnel (Xiwen Liang, Huiting Peng, Zhiqiu Xia, Jun Fu) aims to align their interests with the company's performance.
• Customers (Adult Education Institutions): The planned investment in market promotion and R&D, along with potential acquisitions, could lead to expanded and improved education supporting services.
• Creditors: The capital raise will increase the company's cash reserves and working capital, potentially improving its financial stability and ability to meet obligations.

Next Steps

• Complete the public offering of up to 20,000,000 Class A Ordinary Shares.
• File with the CSRC within three working days after the completion of the issuance for this offering.
• Apply for a tax resident certificate from the Hong Kong tax authority if Shenzhen Kebiao plans to declare and pay dividends to Jiadezhigao HK.
• Expand business into new markets with unmet demand.
• Expand offerings with a focus on production safety training and vocational skills development.
• Continue to invest in technology research and development.
• Pursue additional strategic and financially attractive acquisitions.

Key Dates

Recommendation

The offering presents significant red flags for investors. The "best efforts, self-underwritten" nature means there's no guarantee of capital raise success, yet investors won't get refunds if targets aren't met. The offering price of $0.95 is a deep discount to the current market price of $1.90, which is highly unusual and suggests potential issues or a desperate need for capital. While new investors see an immediate book value accretion, existing shareholders face substantial dilution. The company's net income and cash balances declined in 2024 despite revenue growth, indicating deteriorating profitability and liquidity. Furthermore, the dual-class share structure concentrates voting power with the CEO, limiting minority shareholder influence, and the inherent PRC regulatory risks remain significant. These factors collectively point to a high-risk investment with concerning financial trends and governance issues.

Keywords

Adult Education, China, SEC F-1, Public Offering, Nasdaq, Dual-Class Shares, PRC Regulation, Cybersecurity, HFCA Act, Vocational Training, EdTech, Share Dilution, Capital Raise