STAK Inc. Annual Report - What Investors Need to Know

Plain English insights about their year – no jargon allowed

---

1. What STAK Actually Does

STAK provides equipment and software to help oilfield companies manage drilling operations. They sell through middlemen (dealers), require 50% upfront payments, and take 3-6 months to deliver custom gear. This year they grew customers by 15% and launched a popular tax automation tool.

---

2. Wins vs. Mistakes This Year

✅ What Worked:

• Tax tool attracted 50,000 new users
• Partnered with a major bank to bundle software with equipment loans
• Stock price jumped 22% (vs. 8% industry average)

⚠️ What Backfired:

• Supply chain delays (blamed on vehicle manufacturers) cost $10M
• Lost a client responsible for 5% of total revenue
• Biggest Red Flag: Top 3 clients make up 62% of sales – losing one would hurt badly

---

3. Rks That Should Keep Investors Awake

• Customer Overload: Nearly 2/3 of revenue depends on just 3 clients
• China’s New Rules: Must keep more cash locked up for 5+ years (2024 Company Law)
• Ownership Hurdles: Harder to sell shares or attract new investors due to stricter equity rules
• Recession fears might make clients delay equipment upgrades

---

4. Outside Forces Changing the Game

• China’s Cash Rules: Forces STAK to keep $220M cash available instead of investing it
• Global Expansion Limits: New "negative list" could block entry into some international markets
• AI Arms Race: Competitors are adding predictive maintenance tools – STAK’s tax tool might not be enough

---

Key Takeaways for Investors:

1. 🚨 Customer risk outweighs growth: That 62% client concentration is scary – ask if they’ve diversified since last year
2. 💰 Cash cushion = safety net: Their $220M reserves help meet China’s new rules but limit big investments
3. ⏳ Execution matters most: Can they fix supply chain issues and catch up on AI features?
4. 📉 Recession test coming: If oil companies cut spending, STAK’s dealer model could crack

This isn’t advice – just helping you ask smarter questions! 😊

---

Transparency Note: STAK shared less operational detail than peers this year. Investors might want to demand clearer growth plans before committing.