F-1: STAK Inc. Launches $3M Unit Offering with Warrants

STAK Inc. is offering 3 million units, each comprising one Class A Ordinary Share and two warrants, to raise approximately $2.9 million for R&D and working capital.

Summary

• STAK Inc., a Cayman Islands exempted company, is conducting a public offering of 3,000,000 Units.
• Each Unit consists of one Class A Ordinary Share and two Warrants, with an assumed public offering price of $1.0 per Unit.
• Each Warrant allows the holder to purchase one Class A Ordinary Share at an initial exercise price of $1.20 per share, with a three-year term and immediate exercisability.
• The offering aims to raise estimated net proceeds of approximately $2.9 million, after deducting estimated offering expenses.
• Proceeds will be allocated 40% to research and development and 60% to working capital and other general corporate purposes.
• STAK Inc. operates primarily through its wholly-owned subsidiaries in mainland China, YLAN Technology (Changzhou) Co., Ltd. and Changzhou Zhongshan Intelligent Equipment Co., Ltd., specializing in oilfield production and maintenance equipment.
• The company's Class A Ordinary Shares are listed on the Nasdaq Capital Market under the symbol STAK, having commenced trading on February 26, 2025.
• A dual-class share structure was implemented on June 5, 2025, with Class A Ordinary Shares carrying one vote and Class B Ordinary Shares carrying 30 votes.
• CEO and Chairman, Mr. Chuanbo Jiang, holds significant voting power (81.6% post-offering, assuming no warrant exercise) through Class B Ordinary Shares.

Sentiment

Score: 4

Explanation: The filing details a planned capital raise that will provide funds for R&D and working capital, which is positive for growth. However, it highlights substantial dilution for new investors, significant control by existing shareholders, and numerous risks associated with operating in China and the volatile oilfield industry. The lack of dividends and market for warrants also contribute to a cautious outlook.

Positives

• The offering is expected to raise approximately $2.9 million in net proceeds, providing capital for research and development and working capital.
• The company's Class A Ordinary Shares are already listed on the Nasdaq Capital Market, providing an established trading venue for the underlying shares.
• The company is recognized by the local government in Changzhou, China, as a key enterprise for future securities exchange listing, indicating local support.
• The company's auditor, HTL International, LLC, is based in the U.S. and registered with the PCAOB, mitigating some delisting risks associated with the HFCA Act.

Negatives

• New investors will experience immediate and substantial dilution of $0.21 per share in net tangible book value.
• There is no established public trading market for the Units or the Warrants, and the company does not intend to list them, limiting their liquidity.
• The Warrants are speculative in nature, and their market value is uncertain.
• The company does not expect to pay dividends in the foreseeable future, meaning investors must rely on share price appreciation for returns.
• Substantial future sales or perceived potential sales of Class A Ordinary Shares, including those underlying the Warrants, could cause the share price to decline.
• The dual-class share structure and concentration of ownership with executive officers and directors limit the ability of other shareholders to influence corporate matters and could discourage change of control transactions.
• The company is a Cayman Islands holding company with no material operations of its own, conducting business through PRC operating entities, which exposes investors to unique legal and operational risks associated with mainland China.
• Uncertainties in the interpretation and enforcement of new PRC laws and guidelines (e.g., cybersecurity reviews, Overseas Listing Regulations) could materially and adversely impact the business and its ability to offer or continue to offer securities.
• The company does not hold a special vehicle production permission and outsources final vehicle assembly, which could restrict growth if outsourcing is not allowed or capacity is exceeded.

Risks

• Operating history may not be indicative of future growth or financial results, and the company may not sustain historical growth rates.
• Uncertainty regarding maintaining profitability.
• Operating in a volatile industry where demand for oil equipment fluctuates significantly with oil and natural gas prices, making future prospects difficult to evaluate.
• Limited operating history and experience in specialized oilfield equipment and integrated solutions, making business evaluation difficult.
• Failure to maintain and enlarge the customer base or strengthen customer engagement may adversely affect business and results of operations.
• Failure to maintain product and service quality could materially and adversely affect reputation, financial condition, and results of operations.
• Dependence on business partners; business may be negatively affected if partners do not continue relationships or if their operations fail.
• Potential for significant liability claims or complaints from customers, litigation, and regulatory investigations.
• Dependence on top customers; failure to acquire new customers or retain existing ones cost-effectively may materially and adversely affect business.
• Intense industry competition from new entrants and established companies with greater resources.
• Dependence on key executives and highly qualified managers; retention is not assured.
• Pandemics, epidemics, natural disasters, terrorist activities, political unrest, and other outbreaks could disrupt operations.
• Uncertainties and quick changes in the PRC legal system could negatively impact business, decrease share value, and limit legal protections.
• Increased Chinese government oversight and control over overseas offerings and foreign investment in mainland China-based issuers may limit the ability to offer securities.
• Subject to CSRC filing procedures for subsequent securities offerings; approval or clearance by CAC and other compliance procedures may be required.
• Requirement to remit subsequent offering proceeds to mainland China before use, with no assurance of timely governmental registration.
• Difficulties in effecting service of legal process, enforcing foreign judgments, or bringing actions in China against the company or management.
• Reliance on dividends and distributions from PRC subsidiaries, with limitations on their ability to make payments potentially affecting the company's ability to conduct business.
• Potential for Chinese government intervention or influence in operations.
• PRC regulation of loans and direct investment by offshore holding companies and governmental control of currency conversion may delay use of proceeds.
• Risk of delisting under the HFCA Act if the PCAOB is unable to inspect auditors for two consecutive years.
• Uncertainties with respect to indirect transfers of equity interests in PRC resident enterprises by non-PRC holding companies.
• Failure to make adequate contributions to employee benefit plans and withhold individual income tax as required by PRC regulations may subject the company to penalties.
• Lack of special vehicle production permission, relying on outsourcing, which could restrict growth if outsourcing is not allowed or capacity is exceeded.
• No public market for the Units or the Warrants, limiting liquidity.
• Warrants are speculative in nature.
• Holders of Warrants do not have rights of Class A Ordinary Shareholders until exercised.
• Issuance of Class A Ordinary Shares in the public market from this offering is likely to cause the market price to fall.
• Market price and trading volume for Class A Ordinary Shares have been and may continue to be volatile.
• If securities or industry analysts do not publish research or adversely change recommendations, market price and trading volume could decline.
• Immediate and substantial dilution in net tangible book value for new investors, and substantial dilution for existing shareholders upon warrant exercise.
• Reliance on price appreciation for return on investment due to no expected dividends.
• Substantial future sales or perceived potential sales of Class A Ordinary Shares could cause price to decline.
• Management discretion in using net proceeds may not produce income or increase share price.
• Need for additional capital may result in further dilution or increased debt.
• Certain existing shareholders have substantial influence, and their interests may not align with other shareholders.
• As an emerging growth company, the company may take advantage of reduced reporting requirements, potentially limiting information available to investors.
• As a foreign private issuer, the company is exempt from certain US domestic public company provisions, potentially affording less protection to investors.
• Loss of foreign private issuer status in the future could result in significant additional costs and expenses.
• Increased costs as a result of being a public company.
• Risk of being classified as a Passive Foreign Investment Company (PFIC) for US federal income tax purposes.
• Dual-class share structure may adversely affect the value and liquidity of Class A Ordinary Shares and limit influence over corporate matters.
• Future issuances of Class B Ordinary Shares may be dilutive to holders of Class A Ordinary Shares and further concentrate voting power.

Future Outlook

The company intends to use the net proceeds from this offering primarily for research and development (40%) and working capital and general corporate purposes (60%). It does not anticipate paying cash dividends in the foreseeable future, planning to retain all available funds and future earnings to fund business development and repay indebtedness. The company is an emerging growth company and a foreign private issuer, which allows it to take advantage of reduced reporting requirements.

Management Comments

• We are an emerging growth company as defined under the federal securities laws and will be subject to reduced public company reporting requirements.
• We will continue to be a controlled company as defined under the Nasdaq Stock Market Rules because our controlling shareholder, Mr. Chuanbo Jiang, our CEO and Chairman of the board, currently owns 83.7% of our total issued and outstanding Class B Ordinary Shares, representing 82.5% of the total voting power of as the date of this prospectus, and will own 83.7% of our total issued and outstanding Class B Ordinary Shares, representing 81.6% of the total voting power following the completion of this offering, assuming that all Units are sold and none of the Warrants included in the Units is exercised. Although we do not intend to rely on the controlled company exemption under the Nasdaq listing rules, we could elect to rely on this exemption in the future.
• We are not a Chinese operating company but a Cayman Islands holding company without material operations and this structure involves unique risks to investors. Investors in our securities should be aware that they are not holding equity interests in our Chinese operating companies directly. Investors are purchasing equity solely in STAK Inc., our Cayman Islands holding company.
• We currently intend to retain most, if not all, of our available funds and any future earnings after this offering to fund the development and growth of our business. As a result, we do not expect to pay any cash dividends in the foreseeable future.

Industry Context

The company operates in the oilfield equipment and services industry, which is characterized by volatility tied to oil and natural gas prices. Its focus on specialized production and maintenance equipment, including automation solutions, aligns with broader industry trends towards efficiency, energy-saving, and environmental friendliness in oilfield operations. The company's strategy of outsourcing final vehicle assembly to specialized manufacturers is a common practice in industries requiring specific certifications or large-scale production capabilities. The regulatory environment in China, particularly regarding cybersecurity and overseas listings, presents a unique context for companies like STAK Inc. with significant operations in mainland China.

Comparison to Industry Standards

• The filing does not provide specific comparable companies, projects, or results to global benchmarks.
• It notes that the oil equipment industry is volatile and demand fluctuates with oil and natural gas prices, which is a general industry characteristic rather than a specific comparison.
• The company's dual-class share structure is highlighted as potentially affecting market price and liquidity, and certain index providers restrict companies with such structures, implying a deviation from some investor preferences or 'standards'.

Corporate Governance

Legal Proceedings

• No legal, arbitral, or governmental proceedings, regulatory investigations, or other governmental decisions, rulings, orders, or actions are in progress, pending, or threatened in the PRC that would reasonably be expected to materially adversely affect the offering or have a Material Adverse Effect on the company or its PRC subsidiaries.

Related Party Transactions

• The filing references employment agreements and director agreements, a share incentive plan, and other related party transactions as detailed in the company's most recent Annual Report on Form 20-F.
• Following the EGM in June 2025, the company repurchased 7,700,000 Class A Ordinary Shares from Lanying Capital Limited (100% owned by CEO Chuanbo Jiang) and 1,500,000 Class A Ordinary Shares from MT. Yang Holding Ltd (100% owned by COO Huyun Gao), issuing corresponding Class B Ordinary Shares to these entities.

Stakeholder Impact

• Shareholders (new investors): Will experience immediate and substantial dilution of $0.21 per share. Their voting power will be significantly limited due to the dual-class structure and concentrated ownership. Liquidity for the Units and Warrants will be limited as they are not listed.
• Shareholders (existing): Will experience substantial dilution if the Warrants issued in this offering are exercised. Their influence on corporate matters is already limited by the dual-class structure.
• Management: Will have significant flexibility and discretion in applying the net proceeds. The CEO and Chairman, Mr. Chuanbo Jiang, retains substantial voting control.
• Employees: The capital raise for R&D and working capital could support job creation or stability within the company's operations.
• Customers: Potential for improved products and services due to increased R&D investment.
• Creditors: The capital raise could improve the company's financial position, potentially enhancing its ability to repay existing short-term and long-term borrowings.

Next Steps

• The company needs to complete the CSRC filing procedures within three working days after the completion of this offering.
• The company will continue to use commercially reasonable efforts to cause all shares issuable upon exercise of the Warrants to be listed on national securities exchanges where its Class A Ordinary Shares are listed.
• The company intends to publish its results on a semi-annual basis as press releases, furnished to the SEC on Form 6-K.

Key Dates

Recommendation

While the capital raise provides funds for growth initiatives (R&D and working capital), the offering introduces significant dilution for new investors and the Warrants themselves are speculative with no public market. The company's dual-class structure heavily concentrates voting power, limiting minority shareholder influence. Furthermore, substantial risks related to operating in China, including regulatory uncertainties and market volatility in the oilfield industry, warrant a cautious approach. Given these factors, a "hold" recommendation is appropriate, suggesting investors monitor the company's execution of its growth strategy and the evolving regulatory landscape in China before making further investment decisions.

Keywords

STAK Inc., oilfield equipment, oilfield vehicles, Class A Ordinary Shares, Warrants, public offering, SEC filing, F-1 registration, China operations, PRC subsidiaries, Nasdaq Capital Market, dual-class shares, corporate governance, capital raise, dilution, emerging growth company, foreign private issuer, oil and gas industry, automation solutions