F-1/A: Seahawk Recycling Files for NASDAQ IPO, Targets Growth

Seahawk Recycling Holdings, Inc., a Japanese recycling company, filed an amendment to its F-1 registration statement for an initial public offering of 3.75 million Class A Ordinary Shares on the NASDAQ Capital Market.

Summary

• Seahawk Recycling Holdings, Inc. is an international recycling company based in Tokyo, Japan, specializing in waste paper and scrap metal trading across East Asia and Southeast Asia.
• The company is offering 3,750,000 Class A Ordinary Shares in its initial public offering, with an expected price range of $4.00 to $6.00 per share.
• Application has been made to list the Class A Ordinary Shares on the NASDAQ Capital Market under the symbol SEAH, with listing conditioned upon NASDAQ's final approval.
• For the six months ended September 30, 2025, total revenues increased by 52.5% to $50.62 million from $33.18 million in the prior year period.
• Net income for the six months ended September 30, 2025, was $187,662, a decrease of 73.5% from $707,309 in the same period of 2024.
• For the fiscal year ended March 31, 2025, revenues increased by 28.2% to $65.40 million from $51.00 million in 2024.
• The company reported a net income of $1.22 million for the fiscal year ended March 31, 2025, a significant turnaround from a net loss of $302,889 in 2024.
• Proceeds from the offering are intended for global market expansion, AI-powered trading system optimization, new recyclable category development, facility investment, and general working capital.
• The company operates with a dual-class voting structure, where Class B Ordinary Shares carry 20 votes per share, concentrating voting control with the CEO and CFO.
• WISDOM FOCUS GROUP LTD., controlled by the CEO and CFO, will beneficially own approximately 89.14% of the aggregate voting power post-offering, making Seahawk a controlled company under NASDAQ rules.
• Material weaknesses in internal control over financial reporting were identified, and remediation measures are being implemented.

Sentiment

Score: 6

Explanation: The company demonstrates strong revenue growth and a positive shift to net income in the last fiscal year, operating in a growing and environmentally critical industry. However, the significant drop in net income for the most recent six-month period, coupled with high insider voting control, substantial dilution for new investors, and identified material weaknesses in internal controls, introduces considerable risk and uncertainty. The mixed financial performance and corporate governance concerns temper an otherwise positive growth narrative.

Positives

• Total revenues increased by 52.5% to $50.62 million for the six months ended September 30, 2025, driven by successful market expansion and favorable average selling prices.
• Waste paper recycling sales saw a substantial 182.2% increase to $28.45 million for the six months ended September 30, 2025, primarily due to a 202.1% increase in sales volume.
• The company achieved a significant turnaround from a net loss of $302,889 in fiscal year 2024 to a net income of $1.22 million in fiscal year 2025.
• Gross profit margin improved from 1.9% in fiscal year 2024 to 4.0% in fiscal year 2025, driven by revenue growth outpacing cost of revenue increases and contribution from technology licensing.
• Selling and marketing expenses decreased by 17.0% for the six months ended September 30, 2025, due to lower logistics quotations.
• The company's waste storage site and dismantling factory received environmental acceptance from the Japanese government on June 19, 2025, demonstrating compliance with strict new environmental requirements.
• Proprietary transaction matching system enhances trading efficiency, shortens decision cycles, and improves profitability.
• Established supplier and customer relationships provide reliable access to supply and demand, fostering stable business operations.
• Commitment to sustainability and the green circular economy aligns with global environmental priorities and attracts customers, regulators, and investors.
• Product diversification (waste paper and scrap metal) and strategic global layout (East Asia, Southeast Asia, North America) mitigate regional risks and leverage cross-industry demand cycles.
• Flexible logistics model, utilizing a network of third-party providers on a per-transaction basis, ensures operational agility, cost control, and scalability.

Negatives

• Net income for the six months ended September 30, 2025, decreased significantly by 73.5% to $187,662 from $707,309 in the prior year period.
• Gross profit margin decreased from 4.0% to 3.0% for the six months ended September 30, 2025, primarily due to cost of revenue growth slightly outpacing revenue increase.
• Scrap metal recycling sales decreased by 5.0% to $21.86 million for the six months ended September 30, 2025, driven by a 27.0% decrease in sales volume.
• General and administrative expenses increased by 110.9% to $0.75 million for the six months ended September 30, 2025, largely due to IPO-related professional service expenses and increased headcount.
• Investment income, net, decreased by 77.5% to $80,731 for the six months ended September 30, 2025, due to lower unrealized and realized gains on short-term investments.
• Net cash used in operating activities was approximately $0.36 million for the six months ended September 30, 2025, compared to cash provided of $0.70 million in the prior year period.
• The company is exposed to risks related to concentration of suppliers, relying on one major supplier for a significant portion of purchases (57.36% for six months ended Sep 30, 2025).
• A significant portion of total revenue was derived from major customers (60.69% from two customers for six months ended Sep 30, 2025), posing a risk if business from them is lost.
• New investors in the IPO will experience immediate and substantial dilution of approximately $4.32 per share, assuming a $5.00 IPO price.
• The company does not intend to pay dividends after listing on NASDAQ.
• The dual-class voting structure concentrates voting control with the chief executive officer and chief financial officer, potentially misaligning interests with other shareholders.
• Material weaknesses in internal control over financial reporting were identified, including lack of sufficient accounting personnel, ineffective review processes, and lack of risk assessment.

Risks

• Historical financial and operating results are not a guarantee of future performance.
• Ability to remain competitive is contingent upon continuously enhancing the proprietary transaction matching system, failure of which may have adverse effects.
• Dependence on suppliers, with operations vulnerable to disruptions if relationships are compromised or if favorable terms cannot be negotiated.
• Exposure to risks related to concentration of suppliers, with one major supplier constituting over 57% of aggregate purchases for the six months ended September 30, 2025.
• High concentration of revenue from major customers means loss of business from them may have a significant negative impact.
• Inability to manage growth or execute strategies effectively could materially and adversely affect business and prospects.
• Reliance on third-party logistics service providers exposes operations to disruption if relationships deteriorate or services are inadequate.
• Exposure to various risks relating to long-distance transportation for international supply chains, including increased costs, loss/damage, and delays.
• Fluctuations or declines in the differences between merchandise costs and sales prices would harm business, financial condition, and results of operations.
• Changes in international trade policies, trade disputes, barriers to trade, or trade wars may dampen growth in China, where a portion of products are sold.
• Failure to maintain and enhance brand recognition may hinder increasing the network of suppliers, customers, and business partners.
• Potential for litigation and regulatory investigations and proceedings, with no guarantee of successful defense.
• Adverse effects from a failure to protect intellectual property or from intellectual property claims by third parties.
• Current insurance policies may not provide adequate coverage against all claims, leading to uninsured losses.
• Operations are subject to natural disasters, adverse weather conditions, operating hazards, and labor disputes.
• Burdensome compliance with new environmental regulations or import and export policies could harm results.
• Geopolitical instability (Russia-Ukraine, Middle East conflicts) could materially and adversely affect global economy, capital markets, and business operations, including potential sanctions on China impacting sales.
• Cybersecurity incidents may materially and adversely affect business by compromising systems and data.
• As an emerging growth company, reduced disclosure requirements may make Class A Ordinary Shares less attractive to investors and comparisons difficult.
• Increased costs will be incurred as a public company, particularly after ceasing to qualify as an emerging growth company.
• WISDOM FOCUS GROUP LTD., as the controlling shareholder, will have the ability to control the outcome of matters submitted to shareholders for approval.
• No public market for Class A Ordinary Shares prior to the offering, and an active trading market may not develop, leading to potential inability to resell shares at or above the IPO price.
• NASDAQ may apply additional and more stringent criteria for initial and continued listing due to the small public offering and large insider holdings.
• The initial public offering price may not be indicative of future trading market prices, and market prices may be volatile.
• Immediate and substantial dilution in net tangible book value for Class A Ordinary Shares purchased by new investors.
• Sale or availability for sale of substantial amounts of Class A Ordinary Shares by existing shareholders could adversely affect market price.
• No intention to pay dividends after listing Class A Ordinary Shares on NASDAQ.
• Lack of research or negative reports from securities or industry analysts could cause Class A Ordinary Shares price and trading volume to decline.
• The dual-class structure of Ordinary Shares concentrates voting control with the chief executive officer, whose interests may not align with other shareholders.
• Difficulties in protecting interests and limited ability to protect rights through U.S. courts due to BVI incorporation.
• As a foreign private issuer, reliance on exemptions from certain NASDAQ corporate governance standards may afford less protection to shareholders.
• If the company ceases to qualify as a foreign private issuer, it would incur significant additional legal, accounting, and other expenses.
• Failure to satisfy NASDAQ Capital Market listing requirements could negatively impact the price and ability to sell Class A Ordinary Shares.
• Changes in currency conversion rates between Japanese Yen and U.S. dollars may affect the value of investments.
• Volatility in Class A Ordinary Shares price may subject the company to securities litigation.
• Management has broad discretion in the use of net proceeds from the offering and may not use them effectively.
• Existing shareholders may sell Class A Ordinary Shares under Rule 144 after the offering, potentially impacting market price.
• Risk of being deemed a passive foreign investment company (PFIC) for U.S. federal income tax purposes, resulting in adverse tax consequences for U.S. holders.
• Lack of effective internal controls over financial reporting may affect the ability to accurately report financial results or prevent fraud.
• The price of Class A Ordinary Shares could be subject to rapid and substantial volatility due to small capitalization and public float.

Future Outlook

The company intends to expand its global cross-border trade operations, particularly in high-growth regions like Southeast Asia, and plans to establish operating subsidiaries in Hong Kong by 2026 and China by 2027, aiming for profitability in these markets by 2028. Significant resources will be invested to optimize its proprietary transaction matching system with artificial intelligence for automatic market data gathering, smart matching, and optimized pricing. Additionally, the company plans new product development and diversification into recyclable materials such as waste glass, plastic, and organic waste, aligning with environmental trends and regulatory support.

Management Comments

• We are an international recycling company dedicated to advancing sustainable material solutions across East Asia and Southeast Asia, promoting a low-carbon and zero-waste global green circular economy.
• Our sales operations are powered by our proprietary transaction matching system that integrates real-time market data to match optimal supply and demand combinations efficiently.
• We intend to take advantage of all reduced reporting requirements and exemptions available to emerging growth companies under the JOBS Act.
• Although we do not intend to rely on the controlled company exemptions under the NASDAQ listing rules even if we are deemed to be a controlled company, we could elect to rely on these exemptions in the future.
• We currently intend to retain most, if not all, of our available funds and any future earnings to support operations and to finance the growth and development of the Operating Entity's business, and do not anticipate declaring or paying any dividends in the foreseeable future after the Offering.

Industry Context

The recycling market in Japan is highly competitive and fragmented, driven by strong government policies like the Act Concerning Sophistication of Recycling Business and the Green Transformation (GX) initiative, targeting an 80 trillion yen circular economy by 2030. Decarbonization policies and aging infrastructure replacement cycles are catalyzing demand for metal scrap, while high recovery and utilization rates, coupled with robust demand for packaging, support the paper recycling market. Asia, excluding Japan, shows significant growth in metal and paper recycling, fueled by industrial expansion, urbanization, and environmental awareness, especially with China's import ban on solid waste redirecting recycling efforts to Southeast Asia. Southeast Asia's recycled plastics and battery markets are projected for substantial growth, offering new diversification opportunities for Seahawk.

Comparison to Industry Standards

• Japan's overall manufacturing value-added is projected to rise at a moderate CAGR of 1.2% to $1,165.8 billion by 2029, indicating a stable but not rapid growth environment for the company's core market.
• Japan's circular economy market size is targeted to expand to 80 trillion yen by 2030, reflecting a CAGR of approximately 6% from 2022, suggesting a favorable long-term growth trend for recycling companies.
• Japan's waste paper recycling rate in domestic pulp and paper production climbed from 79.5% in 2019 to 81.7% in 2024 and is forecast to reach about 82.5% by 2029, indicating a mature and efficient market with high utilization.
• The domestic metal scrap purchase volume in Asia (excluding Japan) grew at a CAGR of 2.2% from 2019 to 2024, with projections to reach around 437,770.1 thousand metric tons by 2029, highlighting strong regional demand for recycled metals.
• The recycled plastics market in Southeast Asia is projected to grow at an 11.2% CAGR from 2025 to 2029, and the recycled battery market at a 35.7% CAGR, indicating high-growth adjacent markets compared to Japan's more mature recycling rates (86% for plastic, 42% for battery in Japan).
• The company's waste storage site and dismantling factory received environmental acceptance from the Japanese government on June 19, 2025, making it the fourth locally to fulfill newly applied strict environmental requirements, demonstrating strong compliance capabilities compared to over 400 sites that were shut down.

Management Changes

Corporate Governance

Legal Proceedings

• Currently not a party to, and not aware of any threat of, any legal or administrative proceedings that are likely to have any material and adverse effect on the business, financial condition, cash flow, or results of operations.

Related Party Transactions

• Mr. Shihai Bi, Director and CFO, provided unsecured, non-interest bearing, and demandable loans to the Group, totaling $65,612 for the six months ended September 30, 2024, and $131,231 for the year ended March 31, 2025.
• Mr. Guanglang Jiang, Director, Chairman, and CEO, provided unsecured, non-interest bearing, and demandable loans to the Group totaling $272,610 for the six months ended September 30, 2025.
• Mr. Shihai Bi provided personal guarantees for bank borrowings of US$3,088,092 as of September 30, 2025, and US$3,440,354 as of March 31, 2025.
• Mr. Guanglang Jiang paid certain expenses on behalf of the Group, primarily related to the company's establishment and general operating activities, totaling $60,000 for the six months ended September 30, 2025, and $72,326 for the year ended March 31, 2025.

Stakeholder Impact

• **Shareholders (New Investors)**: Will experience immediate and substantial dilution of $4.32 per share at the midpoint IPO price. Voting power will be significantly concentrated with existing controlling shareholders due to the dual-class structure.
• **Shareholders (Existing)**: Will retain significant voting control and may benefit from the capital raise for business expansion, potentially increasing the value of their holdings over time.
• **Employees**: Increased headcount in general and administrative personnel is expected, and the company plans to invest in team training for new product development and global expansion, potentially creating new opportunities.
• **Customers**: Expansion into new geographic regions (Southeast Asia, Hong Kong, China) and new recyclable categories (waste glass, plastic, organic waste) aims to broaden customer service capabilities and meet rising demand for sustainable materials.
• **Suppliers**: Global expansion and diversification of supply sources are planned, which could create new opportunities for suppliers, but the current concentration risk with major suppliers remains a factor.
• **Creditors**: The capital raise will improve financial stability and liquidity, potentially reducing credit risk, but existing long-term borrowings and related party guarantees remain relevant.

Next Steps

• Obtain final approval from NASDAQ for listing Class A Ordinary Shares under the symbol SEAH.
• Complete the initial public offering and deliver Class A Ordinary Shares to investors.
• Establish operating subsidiaries in Hong Kong by 2026 and China by 2027, with a goal of reaching profitability in these markets by 2028.
• Invest resources to optimize the proprietary transaction matching system with artificial intelligence for automatic market data gathering and analysis.
• Expand into new recyclable categories and product lines, such as waste glass, plastic, and organic waste.
• Continue to implement measures to improve internal control over financial reporting, including hiring qualified accounting personnel, implementing training programs, and establishing an internal audit team.

Key Dates

Recommendation

While Seahawk Recycling operates in a growing and environmentally critical industry with strong revenue growth and a recent turnaround to net profitability, several factors warrant a 'hold' recommendation for a seasoned investor. The significant dilution for new investors (over 86% of total consideration for 14% of shares), the dual-class share structure concentrating voting power with insiders (89.14%), and the identified material weaknesses in internal controls present considerable governance and operational risks. Although the company has clear growth strategies and is addressing internal control issues, the immediate dilution and the controlled company structure may limit upside for public shareholders and increase volatility. Investors should monitor the successful implementation of remediation efforts for internal controls and the execution of global expansion plans before considering a stronger position.

Keywords

Recycling, Waste Paper, Scrap Metal, Circular Economy, Japan, East Asia, Southeast Asia, IPO, NASDAQ, Environmental Solutions, Supply Chain, AI Trading System, Sustainable Materials, Foreign Private Issuer, Controlled Company