F-1/A: One and one Green Technologies. INC Files for Nasdaq IPO to Fuel Global Recycling Expansion

One and one Green Technologies. INC, a Philippine-based waste and scrap metal recycling company, is pursuing an initial public offering on the Nasdaq Global Market to raise up to $10 million for production expansion, real estate acquisition, new facility construction, and working capital.

Summary

• One and one Green Technologies. INC (One and one Cayman), a Cayman Islands holding company, is conducting an Initial Public Offering (IPO) of 2,500,000 Class A Ordinary Shares, representing approximately 5.64% of the Class A Ordinary Shares post-offering.
• The estimated initial public offering price per share is between $4 and $6, aiming to raise approximately $10,000,000 in gross proceeds, or $11,500,000 if the underwriters' over-allotment option is fully exercised.
• The company operates through Variable Interest Entities (VIEs), Yoda Metal and DL Metal, in the Philippines, primarily engaged in recycling, production, and trading of recycled scrap metals.
• For the fiscal year ended December 31, 2024, the company reported revenues of $53,463,785, a 29.54% increase from $41,270,484 in 2023.
• Net income for FY2024 was $6,476,772, up from $5,567,174 in FY2023.
• Gross profit for FY2024 was $10,570,827, with a gross margin of 19.77%, a slight decrease from 21.52% in FY2023 due to higher raw material purchase prices.
• The company's annual processing capacity is estimated at 300,000 tons, focusing on copper alloy ingot, aluminum scraps, and plastic beads.
• Ms. Caifen Yan, Chairman of the Board and Director, will control approximately 91.75% of the aggregate voting power post-offering, making the company a 'controlled company' under Nasdaq rules.
• The net proceeds from the offering are allocated as follows: approximately 15% ($1.21 million) for machinery and equipment, 5% ($0.40 million) for land acquisition, 15% ($1.21 million) for a new manufacturing facility, and 65% ($5.25 million) for working capital and general corporate purposes.

Sentiment

Score: 7

Explanation: The document presents a generally positive outlook with strong revenue and net income growth, clear expansion strategies, and a focus on environmental sustainability. However, significant risks related to customer/supplier concentration, lack of insurance, and the VIE structure temper the overall sentiment. The IPO itself is a positive step for growth and capital access.

Positives

• Significant revenue growth: Net revenue increased by 29.54% from $41,270,484 in FY2023 to $53,463,785 in FY2024.
• Increased net income: Net income grew from $5,567,174 in FY2023 to $6,476,772 in FY2024.
• Environmentally friendly technology: The company utilizes an in-house exhaust gas recirculation system that enhances process efficiency, minimizes contamination, and ensures compliance with environmental standards, setting it apart from competitors.
• Strong regulatory compliance: Fully authorized by the Philippine government to process hazardous wastes under The Basel Convention, holding all necessary permits and licenses (ECC, Permit to Operate, Discharge Permit, Import and Export Permit).
• Experienced management team: The management team, including Chairwoman Caifen Yan (20+ years experience) and COO Huajun Yan (in-depth regulatory understanding), possesses extensive industry expertise.
• Stable customer and supplier bases: Established long-term relationships with over 60 suppliers and nine principal importers, ensuring a stable supply chain and demand for products.
• Market advantage: The resource recycling industry exhibits counter-cyclical characteristics, providing resilience to economic downturns and stable demand for copper and aluminum recycling.
• Strategic growth plans: Plans to extend production capabilities (e.g., precious metal separation), strengthen customer partnerships, develop overseas markets (Southeast Asia, Korea, Japan, Europe, USA), and reduce transportation costs by acquiring a bulk carrier terminal and building a new facility.

Negatives

• Limited operating history as an integrated group: One and one Cayman was incorporated in April 2024, and the company has limited experience operating as a standalone public entity.
• Substantial supplier concentration: In FY2024, four suppliers accounted for 45.7%, 12.6%, 10.7%, and 10.5% of total purchases, creating dependency.
• High customer concentration: In FY2024, three customers accounted for 56.4%, 22.2%, and 17.43% of total revenue, making the company vulnerable to loss of or reduced purchases from these key clients.
• Reliance on China and Hong Kong customers: Exposure to geopolitical, regulatory, and economic risks in these regions could adversely affect business operations and financial performance.
• Lack of commercial insurance coverage: The company does not maintain commercial insurance, exposing it to significant operational and financial risks from accidents, property damage, and legal claims.
• Decreased cash from operating activities: Net cash provided by operating activities decreased from $4,060,835 in FY2023 to $2,009,738 in FY2024, mainly due to an increase in accounts receivable.
• Dual-class share structure: Concentrates voting control with Ms. Caifen Yan (91.75% voting power post-offering), potentially limiting influence of other shareholders.
• Potential dilution for new investors: The initial public offering price is substantially higher than the company's current net tangible book value per share, leading to immediate and substantial dilution for new investors.

Risks

• The company does not have a long operating history as an integrated group, potentially leading to operational, financial, and other difficulties as it expands.
• Limited experience operating as a standalone public company, which may cause slower reactions to industry changes and divert management's attention.
• Potential for future losses due to anticipated increases in operating expenses, including public company administrative costs and retail store expansion.
• Reliance on a limited number of suppliers (4 major suppliers in FY2024) and customers (3 major customers in FY2024) creates concentration risk; loss of or reduced purchases from these could materially affect financial results.
• Exposure to significant geopolitical, regulatory, and economic risks due to reliance on customers in China and Hong Kong, including potential changes in import regulations, customs policies, and trade restrictions.
• Operational, regulatory, and reputational risks related to environmental compliance, workplace safety, and handling of waste materials, with potential for fines, operational delays, or reputational damage.
• Absence of commercial insurance coverage exposes the company to substantial financial liabilities from accidents, workplace injuries, property damage, equipment failures, and legal claims.
• Potential for litigation and regulatory investigations and proceedings, which could result in claims for damages, asset freezing, diversion of management attention, and reputational damage.
• Risks associated with future strategic acquisitions, investments, and partnerships, including increased leverage, dilution of existing shareholders, integration challenges, and assumption of unexpected liabilities.
• Any failure by the Variable Interest Entities (VIEs) or their shareholders to perform obligations under Contractual Arrangements could materially and adversely affect the business, as direct ownership is not held.
• Uncertainties in the Philippine legal system could limit the ability to enforce Contractual Arrangements with VIEs, potentially leading to loss of effective control over operations.
• Executive officers have limited prior experience conducting an IPO and managing a public company, which could impact fundraising and successful public company operation.
• Lack of requisite approvals, licenses, or permits, or non-compliance with relevant laws and regulations in the Philippines, could lead to liabilities, fines, penalties, and operational disruptions.
• Adverse material changes to the Philippines market (economic recession, pandemic, natural disaster, political/social instability) could negatively affect business, results of operations, and financial condition.
• Disruptions to production due to adverse weather conditions (rainfall, flood, typhoons) could cause damage to infrastructure and suspend operations.
• Potential conflicts of interest in ordinary business operations, which if not identified and addressed, could damage reputation and lead to client dissatisfaction, litigation, or regulatory actions.
• An active trading market for Class A Ordinary Shares may not develop, affecting liquidity and fair market value.
• Share price may fluctuate significantly, and investors may lose all or part of their investment, with potential for litigation against the company.
• Immediate and substantial dilution in net tangible book value per share for new investors.
• The dual-class share structure concentrates voting control with the Chairman and CEO, whose interests may not align with other shareholders.
• Class A Ordinary Shares may trade under $5.00 per share, classifying them as 'penny stock' and subjecting them to trading restrictions that could negatively affect price and liquidity.
• Uncertainty regarding future dividend payments, as the board has complete discretion and depends on VIE distributions.
• Risk of delisting from Nasdaq if applicable listing requirements are not met, leading to reduced liquidity and market price.
• Significant expenses and management time will be incurred as a public company, potentially negatively impacting financial performance.
• Risk of failing to maintain an effective system of disclosure controls and internal controls over financial reporting, impairing timely and accurate financial statements.
• As an emerging growth company, the company may take advantage of reduced reporting requirements, potentially providing less information to investors.
• Broad discretion in the use of net proceeds from the offering, which may not be used effectively.
• Uncertainty whether the courts of the Cayman Islands or the Philippines will recognize or enforce judgments of U.S. courts against the company or its directors/officers.
• Foreign ownership restrictions in the Philippines could lead to legal and financial repercussions if not complied with.

Future Outlook

The company's future outlook focuses on significant expansion and diversification. In 2025, it plans to geographically expand into Southeast Asia and other international markets, establishing stable raw material sources from Japan and South Korea. This includes recruiting an international business development team with diverse language and cultural expertise to strengthen capabilities across Europe, America, and Asia. The company intends to commence operations in Japan and Korea through joint ventures next year, exclusively for waste metal restoration and detoxification, aiming for profitability in these markets within two years. Production capabilities will be enhanced by advancing processing techniques to isolate precious metals from copper products, expected to increase profit margins by 8% to 10%. The company also plans to acquire a bulk carrier terminal and construct a new manufacturing facility nearby to reduce transportation costs by approximately $5 million per 100,000 tons annually, and to set up an additional facility within three years specifically for lithium battery recycling, anticipating significant growth opportunities from the increasing volume of end-of-life EV batteries.

Management Comments

• "Our exhaust gas recirculation system enhances process efficiency while minimizing and, in some cases, eliminating contamination. Through this system, we capture the ash and slag contained in the emissions for further metal recovery ad smelting, ensuring the exhaust we ultimately release meets all applicable standards."
• "Due to our sustainable, environmentally friendly processes, we believe we are well-positioned to comply with heightened regulations across the globe."
• "We benefit from being fully authorized by the government to process hazardous wastes under the framework of The Basel Convention: A Global Solution for Controlling Hazardous Wastes."
• "Our management team has extensive experience in the resource recycling industry."
• "Our Chairwoman, Caifen Yan, brings over two decades of experience to our company, fostering a vast network of suppliers and customers."
• "Our Chief Operating Officer, Huajun Yan, has an in-depth understanding of both local and international regulations governing this sector."
• "Our managers have keen business judgment, execution power and a forward-looking perspective on the industry's evolving trends."
• "Our analysis of customer needs and product demand trends reveals a strong and stable demand for copper and aluminum recycling."
• "Unlike other industries, the resource recycling industry exhibits counter-cyclical characteristics, showing resilience to economic recessions and fluctuations in demand."
• "Our reputation and the intrinsic demand for our services naturally attract customers to us, obviating the need for significant marketing investments."
• "We are confident that our advanced technology, products and license advantages will position us as formidable competitors in various overseas markets."
• "Asia market has great potential evidenced by fast industry growth and evolving regulation landscapes."
• "We anticipate that our experience in building our business operation in the Philippines will serve as a solid foundation for our business expansion across Asia."
• "The management expects to acquire new customers through these events to mitigate the risk of customer concentration."
• "Our vision is to be the world's leading sustainable and globally pre-eminent resource recovery company. Our goal is to provide sustainable and safe solutions and technologies to address the global hazardous waste challenge."
• "We are committed to contributing to the global green energy transition and the movement toward a zero-carbon economy."
• "We hold the strong belief that environmental, social, and governance (ESG) leadership is essential to the success of our business model."

Industry Context

The company operates in the global metal waste recycling industry, specifically focusing on non-ferrous metals like aluminum and copper, and also ferrous metals. This industry is driven by rapid urbanization, increasing demand for metals in consumer goods (electronics, automobiles), and growing awareness about sustainability. Governments are implementing stringent regulations to lower carbon footprints, encouraging the use of recycled metals. The global market is fragmented and competitive, with many small players and larger, more established companies, particularly in Europe and North America. The Philippines market, where the company primarily operates, is projected to grow at a CAGR of 3.9% (2020-2026), driven by automobile manufacturing and government waste management initiatives. The company differentiates itself with its environmentally friendly technology and government authorization to process hazardous waste, positioning itself to comply with heightened global regulations. It aims to expand into the growing lithium battery recycling market, driven by the surge in electric vehicle sales.

Comparison to Industry Standards

• The company's in-house exhaust gas recirculation system is highlighted as a competitive advantage over 'competing technologies, such as table concentrators,' which 'cannot prevent pollution during the final stages of processing.'
• The company benefits from being 'fully authorized by the government to process hazardous wastes under the framework of The Basel Convention: A Global Solution for Controlling Hazardous Wastes,' indicating a higher level of compliance and capability compared to many small, unregistered scrap metal recycling enterprises in the Philippines.
• The document notes that 'most of mega players in the global market, they are metal industry complex, and the use and processing of scrap metals contains a small portion of total capability. They are regional large companies concentrated in Europe and North America.' This implies One and one Green Technologies. INC, as a specialized recycling company, operates differently from these larger, diversified conglomerates.
• The company's annual processing capacity of 300,000 tons positions it as a significant player within the Philippines market, especially given that 'most small scrap metal recycle enterprises have weak technical, financial, and research capabilities.'
• The company's ability to secure materials at competitive prices through a network of over 60 suppliers, including waste exporters and commercial agents from Korea, Japan, Southeast Asia, Europe, and USA, suggests a robust sourcing strategy compared to less organized market participants.
• The company's plan to acquire a bulk carrier terminal and build a new manufacturing facility to reduce transportation costs by approximately $5 million for every 100,000 tons of volume annually indicates a strategic move towards greater efficiency and cost competitiveness, potentially surpassing the logistical capabilities of smaller, less integrated competitors.

Management Changes

Corporate Governance

Legal Proceedings

• As of the date of the prospectus, neither the Company, its subsidiary, nor the VIEs have been involved in any legal or administrative litigation that may have a material adverse effect on the business, balance sheet, operating performance, and cash flow.
• The two VIEs registered under Philippine laws have complied with all applicable laws and regulations currently in force in all major aspects and have obtained all necessary licenses and approvals required for business operations in the Philippines from the relevant government departments.
• The company is not, nor has it ever been, party to any legal proceedings.

Related Party Transactions

• As of December 31, 2024, the company owed Mr. Huajun Yan (Chief Operating Officer and Director) $980,833 for working capital advances, which are non-interest bearing and without maturity. This amount was $897,638 as of December 31, 2023.

Stakeholder Impact

• Shareholders: New investors will face immediate and substantial dilution. Ms. Caifen Yan's significant voting control (91.75%) means minority shareholders will have little control over corporate affairs, potentially affecting their ability to influence decisions or receive a premium for their shares in a change of control. The lack of commercial insurance could expose shareholders to significant financial losses.
• Employees: The company's large workforce is exposed to occupational safety risks due to the nature of scrap material sorting. However, employees are provided with fully paid social insurance (medical care, accident insurance), and the company prioritizes a zero-harm workplace with safety protocols and training. The company is committed to attracting, retaining, and developing skilled staff.
• Customers: The company's dependence on a small group of customers (3 major customers accounted for 96% of revenue in FY2024) creates a risk of substantial revenue decline if these relationships deteriorate or orders reduce. The company aims to strengthen customer partnerships and diversify its client base.
• Suppliers: Reliance on a limited number of suppliers (4 major suppliers accounted for 79.5% of purchases in FY2024) poses a risk if these suppliers fail to meet obligations or relationships are not maintained. The company has over a hundred suppliers in total and uses lock-up agreements to mitigate price inflation risk.
• Creditors: The assets of the VIEs are solely for their own use and to settle their own obligations; creditors of the VIEs cannot claim against the holding company's assets. The company has no financial leverage, reducing interest burden.
• Regulatory Authorities: The company's commitment to environmental compliance and holding necessary permits (ECC, Permit to Operate, Discharge Permit, Import and Export Permit) indicates a positive relationship with regulatory bodies, reducing the risk of fines or operational disruptions due to non-compliance.

Next Steps

• Apply to list Class A Ordinary Shares on the Nasdaq Global Market under the symbol YDDL.
• Complete the IPO, contingent upon Nasdaq listing approval.
• Expand existing business by acquiring additional machinery and equipment (approx. 15% of net proceeds).
• Expand real estate portfolio through acquisition of additional land properties (approx. 5% of net proceeds).
• Construct a new manufacturing facility (approx. 15% of net proceeds).
• Utilize remaining proceeds (approx. 65%) for working capital and general corporate purposes.
• Extend production capabilities by advancing processing techniques to isolate precious metals from copper products.
• Strengthen existing customer and sales agent partnerships and expand into untapped regions in China.
• Develop overseas markets in Southeast Asia, Korea, Japan, Europe, and USA, including forming joint ventures in Japan and Korea next year.
• Acquire a bulk carrier terminal and set up a new manufacturing facility near it to reduce transportation costs.
• Set up an additional facility within three years specifically for lithium battery recycling.
• Recruit an international business development team with diverse language skills and cultural expertise.
• Monitor inflation trends and implement strategies such as pricing adjustments, cost-saving measures, and evaluating foreign currency hedging.
• Continue to comply with all governmental documentary requirements and environmental laws/regulations.
• Maintain and improve internal controls over financial reporting as a public company.

Key Dates

Recommendation

Keywords

Waste Recycling, Scrap Metal, Philippines, IPO, Nasdaq, Environmental Technology, Hazardous Waste, Copper Alloy Ingot, Aluminum Scraps, Electronic Waste, VIE Structure, Foreign Private Issuer, Emerging Growth Company, Sustainable Recycling, Industrial Recycling, Resource Recovery