Core Insights - Smart Powerr Corp. (NASDAQ:CREG) operates in the renewable energy sector, focusing on energy efficiency and sustainability, competing with companies like China Jo-Jo Drugstores, Inc. (CJJD), Recon Technology, Ltd. (RCON), Euro Tech Holdings Company Limited (CLWT), and SemiLEDs Corporation (LEDS) [1] Financial Metrics - CREG's Return on Invested Capital (ROIC) is -2.22%, which is significantly lower than its Weighted Average Cost of Capital (WACC) of 9.34%, indicating inefficiencies in capital utilization [2] - China Jo-Jo Drugstores, Inc. (CJJD) has a negative ROIC of -6.65% and Recon Technology, Ltd. (RCON) has -9.23%, both failing to cover their WACC [3] - Euro Tech Holdings Company Limited (CLWT) shows a ROIC of 2.12% against a WACC of 8.18%, resulting in a ROIC to WACC ratio of 0.26, indicating insufficient returns [3] - SemiLEDs Corporation (LEDS) has a negative ROIC of -20.38% compared to a WACC of 7.09%, leading to a ROIC to WACC ratio of -2.88, highlighting the challenges faced by most companies in this group [4]

Core Viewpoint - Smart Powerr Corp. is struggling to generate sufficient returns to cover its cost of capital, indicating a challenging financial position in the renewable energy sector [1][2][5]. Financial Performance - Smart Powerr Corp. has a Return on Invested Capital (ROIC) of -2.22% and a Weighted Average Cost of Capital (WACC) of 9.31%, resulting in a ROIC to WACC ratio of -0.24, which shows that the company is spending more on its capital than it is earning from it [2][5]. - The negative ROIC to WACC ratio indicates that Smart Powerr Corp. is not in a sustainable financial position [2]. Peer Comparison - When compared to peers, China Jo-Jo Drugstores, Inc. (CJJD) has a ROIC to WACC ratio of -1.64, and Recon Technology, Ltd. (RCON) has a ratio of -0.93, both indicating they are also not covering their cost of capital [3]. - SemiLEDs Corporation (LEDS) has a significantly worse ROIC of -20.38% and a WACC of 6.87%, leading to a ROIC to WACC ratio of -2.96, highlighting the overall challenges faced by companies in the renewable energy sector [4]. Industry Challenges - Most companies in the renewable energy sector, including Smart Powerr Corp., are facing difficulties in generating returns above their cost of capital, indicating inefficiencies in capital utilization [4][5].

[Cautionary Note Regarding Forward-Looking Statements](index=4&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) The report contains forward-looking statements subject to risks, and the company disclaims any obligation to update them - The report contains forward-looking statements identified by specific terms like 'believes,' 'estimates,' 'anticipates,' 'expects,' 'intends,' 'plans,' 'may,' 'will,' 'potential,' 'projects,' 'predicts,' 'continue,' or 'should'[9](index=9&type=chunk) - Actual results may differ materially from expectations due to various factors, including those discussed under 'Risk Factors' in SEC filings[9](index=9&type=chunk) - The company undertakes no obligation to update or revise forward-looking statements, except as legally required[10](index=10&type=chunk) [PART I – FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This section provides the company's unaudited consolidated financial statements and management's discussion and analysis [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements for Smart Powerr Corp., including balance sheets, statements of operations and comprehensive loss, statements of stockholders' equity, and statements of cash flows, along with detailed notes explaining the company's organization, accounting policies, and specific financial line items [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheets show a significant increase in cash and total assets, with a slight decrease in total liabilities | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :-------------- | :------------------ | | Cash | $131,114,964 | $25,341 | | Total current assets | $131,340,250 | $121,115,843 | | Total non-current assets | $867,673 | $118,943 | | TOTAL ASSETS | $132,207,923 | $121,234,786 | | Total current liabilities | $12,740,036 | $13,096,541 | | Total noncurrent liabilities | $3,379,679 | $3,407,164 | | Total liabilities | $16,119,715 | $16,503,705 | | Total stockholders' equity | $116,088,208 | $104,731,081 | - Cash significantly increased from **$25,341** at December 31, 2024, to **$131.11 million** at June 30, 2025[15](index=15&type=chunk) - Total assets increased by approximately **$11 million**, while total liabilities slightly decreased[15](index=15&type=chunk) [Consolidated Statements of Operations and Comprehensive Loss](index=7&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) The company reported revenue for the first time in H1 2025, but net loss significantly increased compared to the prior year | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Revenue | $82,839 | $0 | | Cost of revenues | $(47,418) | $0 | | Gross Profit | $35,421 | $0 | | Total operating expenses | $2,223,109 | $559,237 | | Loss from operations | $(2,187,688) | $(559,237) | | Net loss | $(2,129,276) | $(689,554) | | Basic and diluted net loss per share | $(0.12) | $(0.08) | - The company reported revenue of **$82,839** for the six months ended June 30, 2025, compared to no revenue in the prior year period[16](index=16&type=chunk) - Net loss increased significantly from **$(689,554)** in 2024 to **$(2.13 million)** in 2025 for the six-month period[16](index=16&type=chunk) [Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' equity increased due to a significant rise in common stock shares and additional paid-in capital, despite a growing accumulated deficit | Metric | Dec 31, 2024 | Mar 31, 2025 | June 30, 2025 | | :-------------------------------- | :----------- | :----------- | :------------ | | Common Stock (Shares) | 9,161,218 | 24,491,069 | 25,305,012 | | Common Stock (Amount) | $9,161 | $24,491 | $25,305 | | Additional Paid in Capital | $165,959,857 | $175,809,927 | $177,209,736 | | Accumulated Deficit | $(62,056,383) | $(62,940,843) | $(64,185,659) | | Total Stockholders' Equity | $104,731,081 | $114,296,227 | $116,088,208 | - Common stock shares outstanding increased significantly from **9.16 million** at December 31, 2024, to **25.31 million** at June 30, 2025, primarily due to an offering of common stock and conversion of long-term notes[18](index=18&type=chunk) - Additional paid-in capital increased by over **$11 million**, while the accumulated deficit grew by approximately **$2.1 million** during the six months ended June 30, 2025[18](index=18&type=chunk) [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating activities generated significant cash inflow in H1 2025, contributing to a substantial net increase in cash for the period | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Net cash generated from (used in) operating activities | $64,496,018 | $(248,132) | | Net cash generated from investing activities | $55,202,004 | $68,542,364 | | Net cash provided by financing activity | $9,865,400 | $0 | | NET INCREASE IN CASH | $131,089,623 | $68,069,682 | | CASH, END OF PERIOD | $131,114,964 | $68,102,052 | - Operating activities generated significant cash inflow of **$64.5 million** in H1 2025, a substantial improvement from a cash outflow of **$0.25 million** in H1 2024[21](index=21&type=chunk) - Cash from financing activities was **$9.87 million** in H1 2025, primarily from common stock issuance[21](index=21&type=chunk) [Notes to Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations of the company's organization, accounting policies, and specific financial line items [1. Organization and Description of Business](index=11&type=section&id=1.%20Organization%20and%20Description%20of%20Business) Smart Powerr Corp. is transitioning from energy-saving solutions in the PRC to an energy storage integrated solution provider - Smart Powerr Corp., formerly China Recycling Energy Corporation, provides energy-saving solutions and services, including sales, leasing, and project investment in the PRC[23](index=23&type=chunk) - Erdos TCH, a key joint venture, ceased operations in May 2019 due to renovations and government mandates, receiving **RMB1 million ($145,524)** monthly compensation, though no income has been recognized due to collection uncertainty[24](index=24&type=chunk) - The company is transforming into an energy storage integrated solution provider, targeting new industries with high growth potential[31](index=31&type=chunk) [2. Summary of Significant Accounting Policies](index=13&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) The financial statements adhere to U.S. GAAP, with functional currency in RMB, and detail revenue recognition and deferred tax policies - Consolidated financial statements are prepared in conformity with U.S. GAAP, with operating entities' functional currency in Chinese Renminbi (RMB) and presented in U.S. dollars[29](index=29&type=chunk) - Revenue recognition policies cover sales-type leasing, contingent rental income, and operation and maintenance income[33](index=33&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk) - The company applies a **100%** deferred tax asset valuation allowance due to significant uncertainty regarding future realization of tax benefits from recurring losses[115](index=115&type=chunk) [3. Short-Term Loan Receivable](index=21&type=section&id=3.%20Short-Term%20Loan%20Receivable) A significant short-term loan receivable of $55.95 million was fully repaid by January 2025, with no outstanding balance as of June 30, 2025 - As of December 31, 2024, the Company had a **$55.95 million (RMB405.8 million)** short-term loan to Xi'an Yingtai Energy Conservation Technology Co., Ltd[80](index=80&type=chunk) - The loan, with a capital utilization fee of **$10,960 (RMB80,000)** per day, was fully repaid by January 10, 2025, including **RMB200 million** and **RMB205.8 million** with **RMB1.2 million** interest income[80](index=80&type=chunk) - As of June 30, 2025, there are no outstanding short-term loan receivables[81](index=81&type=chunk) [4. Advance to Suppliers](index=21&type=section&id=4.%20Advance%20to%20Suppliers) Advances to suppliers saw a contract completion for a smart cloud platform and the termination of a large energy storage battery system purchase agreement - By 2025, Zhenran Limited completed its smart cloud platform contract, with **$750,000** paid and **$50,000** due, totaling **$800,000** transferred to fixed assets, and a **$200,000** bad debt provision reversed[82](index=82&type=chunk) - A purchase agreement for **$82.3 million (RMB595.0 million)** with Hubei Bangyu New Energy Technology Co., Ltd. for energy storage battery systems was terminated on March 11, 2025, and the advance payment of **RMB476.0 million** was reclaimed[83](index=83&type=chunk) [5. Accrued Liabilities and Other Payables](index=22&type=section&id=5.%20Accrued%20Liabilities%20and%20Other%20Payables) Total accrued liabilities and other payables slightly decreased, with accrued litigation remaining the largest component | Category | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :------------------ | | Education and union fund and social insurance payable | $231,440 | $227,137 | | Accrued payroll and welfare | $239,394 | $230,029 | | Accrued litigation | $2,437,702 | $2,392,383 | | Professional fee | $28,404 | $253,307 | | Other | $62,204 | $63,630 | | Total | $2,999,144 | $3,166,486 | - Accrued liabilities and other payables decreased from **$3.17 million** at December 31, 2024, to **$3.00 million** at June 30, 2025[85](index=85&type=chunk) - Accrued litigation constitutes the largest portion of these payables, mainly for court enforcement fees, lawyer fees, and penalties[85](index=85&type=chunk) [6. Taxes Payable](index=22&type=section&id=6.%20Taxes%20Payable) Income tax payable, primarily for a transition tax, remained stable, with the company expecting to seek an extension for payment due to recurring losses | Category | June 30, 2025 | December 31, 2024 | | :---------------- | :-------------- | :------------------ | | Income tax | $7,607,201 | $7,607,201 | | Other | $19,045 | $20,021 | | Total | $7,626,246 | $7,627,222 | | Current | $4,275,621 | $4,276,597 | | Noncurrent | $3,350,625 | $3,350,625 | - Income tax payable includes **$7.61 million** for the estimated one-time transition tax on post-1986 foreign unremitted earnings, with **$4.28 million** current and **$3.35 million** noncurrent[86](index=86&type=chunk) - The company elected to pay the transition tax liability in installments until April 2026 but has not yet paid and expects to apply for an extension due to consecutive losses[86](index=86&type=chunk) [7. Deferred Tax, Net](index=22&type=section&id=7.%20Deferred%20Tax%2C%20Net) The company maintains a 100% valuation allowance against its deferred tax assets, resulting in a net deferred tax asset of zero | Deferred Tax Assets | 2025 | 2024 | | :-------------------------------- | :--- | :--- | | Accrued expenses | $13,212 | $48,616 | | Impairment of advance to supplier | $42,000 | $42,000 | | US NOL | $238,931 | $233,651 | | PRC NOL | $238 | $444 | | Total deferred tax assets | $294,381 | $324,711 | | Less: valuation allowance | $(294,381) | $(324,711) | | Deferred tax assets, net | $0 | $0 | - The company has a **100%** valuation allowance against its deferred tax assets, resulting in a net deferred tax asset of zero, due to uncertainty of realizing benefits from recurring operating losses[88](index=88&type=chunk)[115](index=115&type=chunk) [8. Entrusted Loan Payable](index=23&type=section&id=8.%20Entrusted%20Loan%20Payable) A significant entrusted loan from HYREF Fund was partially repaid through asset transfers and a principal payment, with interest still outstanding - The HYREF Fund invested **RMB460 million ($77 million)** in Xi'an Zhonghong for three CDQ WHPG projects, with **RMB457 million** as a debt investment at **12.5%** interest, collateralized by various assets and guaranteed by Xi'an TCH and the CEO[89](index=89&type=chunk) - A significant portion of the HYREF loan was partially repaid through the transfer of the Chengli CDQ WHPG station (**RMB188.6 million or $27.54 million**) and Xuzhou Huayu Project and Shenqiu Phase I & II projects (**RMB247.066 million or $36.07 million**)[91](index=91&type=chunk)[97](index=97&type=chunk) - In November 2024, Xi'an TCH repaid a principal of **RMB77 million ($10.55 million)** for the entrusted loan, with interest still outstanding[103](index=103&type=chunk) [9. Note Payable, Net](index=26&type=section&id=9.%20Note%20Payable%2C%20Net) The company has outstanding promissory notes, with principal balances increasing due to missed redemption payments and default events - A promissory note of **$3.15 million** issued in December 2020, bearing **8%** interest, was subject to a **125%** prepayment penalty and a **25%** increase in outstanding balance if redemption payments were missed[104](index=104&type=chunk) - Another promissory note of **$5.25 million** issued in April 2021, also at **8%** interest, saw its outstanding principal increase by **$1.37 million** in 2021 and **$0.23 million** in 2022 due to missed redemption payments and default events[106](index=106&type=chunk) | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :-------------- | :------------------ | | Notes payable, net of unamortized OID | $4,419,334 | $4,705,696 | | Accrued interest on notes | $37,776 | $69,103 | [10. Stockholders' Equity](index=27&type=section&id=10.%20Stockholders'%20Equity) The number of outstanding warrants increased during the period, maintaining an average exercise price of $10 | Warrants Activity | Number of Warrants | Average Exercise Price | | :------------------------ | :----------------- | :--------------------- | | Outstanding at January 1, 2025 | 16,515 | $10 | | Granted | 2,340 | $10 | | Outstanding at June 30, 2025 | 18,855 | $10 | - The number of outstanding warrants increased from **16,515** to **18,855** during the six months ended June 30, 2025, with an average exercise price of **$10**[107](index=107&type=chunk) [11. Stock-Based Compensation Plan](index=27&type=section&id=11.%20Stock-Based%20Compensation%20Plan) The company granted restricted stock in April 2025, resulting in a one-time share-based compensation expense for the quarter - The Company's Omnibus Equity Plan, approved in 2015, authorizes the issuance of **124,626** shares of Common Stock[108](index=108&type=chunk) - In April 2025, **124,126** shares of Restricted Stock were granted to two employees, vesting immediately, resulting in a one-time share-based compensation expense of **$831,520** for Q2 2025[110](index=110&type=chunk)[111](index=111&type=chunk) | Option Activity | Number of Shares | Average Exercise Price | | :---------------------- | :--------------- | :--------------------- | | Outstanding at January 1, 2025 | 500 | $16.1 | | Outstanding at June 30, 2025 | 500 | $16.1 | [12. Income Tax](index=28&type=section&id=12.%20Income%20Tax) Chinese subsidiaries are subject to a 25% income tax rate, and the company has significant NOLs with a 100% deferred tax asset valuation allowance - Chinese subsidiaries are generally subject to a **25%** income tax rate, but sales-type leases are treated as operating leases by the local tax bureau, leading to deferred income taxes[112](index=112&type=chunk) - The US parent company has **$9.05 million** in Net Operating Loss (NOL) carryforwards, and PRC subsidiaries have **$33.42 million** in NOLs, all with a **100%** deferred tax asset valuation allowance due to uncertain realization[114](index=114&type=chunk)[115](index=115&type=chunk) | Income Tax Expense (Benefit) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------- | :----------------------------- | :----------------------------- | | Income tax benefit – current | $34,747 | $14,176 | | Total income tax benefit | $34,747 | $14,176 | [13. Statutory Reserves](index=30&type=section&id=13.%20Statutory%20Reserves) PRC corporate law requires Chinese subsidiaries to allocate 10% of net income to a non-distributable statutory surplus reserve fund - PRC corporate law requires Chinese subsidiaries to transfer **10%** of their net income to a statutory surplus reserve fund until it reaches **50%** of registered capital, which is non-distributable except during liquidation[119](index=119&type=chunk)[120](index=120&type=chunk) | Subsidiary | Registered Capital | Maximum Statutory Reserve Amount | Statutory Reserve at June 30, 2025 | | :-------------------------- | :----------------- | :------------------------------- | :--------------------------------- | | Shanghai TCH | $29,800,000 | $14,900,000 | $1,003,859 | | Xi'an TCH | ¥202,000,000 | ¥101,000,000 | $11,272,917 | | Erdos TCH | ¥120,000,000 | ¥60,000,000 | $2,914,869 | | Xi'an Zhonghong | ¥30,000,000 | ¥15,000,000 | Did not accrue yet due to accumulated deficit | | Shaanxi Huahong | $2,500,300 | $1,250,150 | Did not accrue yet due to accumulated deficit | | Zhongxun | ¥35,000,000 | ¥17,500,000 | Did not accrue yet due to accumulated deficit | [14. Contingencies](index=31&type=section&id=14.%20Contingencies) The company faces significant risks from PRC political, economic, and legal environments, including ongoing lawsuits with substantial accrued litigation expenses - The company's PRC operations are subject to significant risks related to political, economic, and legal environments, including strict currency controls and capital transfer regulations[123](index=123&type=chunk)[124](index=124&type=chunk) - An ongoing lawsuit by Beijing Hongyuan Recycling Energy Investment Center (BIPC) against Xi'an TCH for stock repurchase resulted in a judgment in favor of Hongyuan, with Xi'an TCH filing for retrial and accruing **$2.10 million** in litigation expenses as of December 31, 2024[125](index=125&type=chunk)[126](index=126&type=chunk) - Another judgment requires Xi'an Zhonghong Technology Co., Ltd. to pay **RMB77 million ($11.06 million)** loan principal and **RMB2.42 million ($0.35 million)** interest to BIPC, plus an additional **RMB80.29 million ($11.53 million)** in enforcement fees; the principal was paid in November 2024, but interest remains outstanding[127](index=127&type=chunk)[128](index=128&type=chunk)[180](index=180&type=chunk) [15. Lease](index=32&type=section&id=15.%20Lease) Xi'an TCH has an office lease extending through 2026, with associated right-of-use assets and lease liabilities - Xi'an TCH entered an office lease from January 1, 2024, through December 31, 2026, with a monthly rent of **RMB36,536 ($5,600)**[129](index=129&type=chunk) | Lease Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :-------------- | :------------------ | | Right-of-use assets, net | $88,692 | $115,068 | | Current operating lease liabilities | $59,638 | $58,529 | | Non-current operating lease liabilities | $29,054 | $56,539 | | Total lease liabilities | $88,692 | $115,068 | | Weighted Average Remaining Lease Term - Operating leases | 2 years | 2 years | | Weighted Average Discount Rate - Operating leases | 3.48% | 3.48% | [16. Subsequent Events](index=32&type=section&id=16.%20Subsequent%20Events) Post-period events include a 1-for-10 reverse stock split and the exchange of promissory notes for common stock - On July 16, 2025, the Company resolved to effect a **1-for-10** reverse stock split of its common stock, effective July 17, 2025, reducing outstanding shares from approximately **25.3 million** to **2.53 million**[132](index=132&type=chunk)[133](index=133&type=chunk)[135](index=135&type=chunk) - Subsequent to June 30, 2025, the company agreed to exchange **$700,000** of promissory notes for **389,835** shares of common stock in three separate agreements in July and August 2025[136](index=136&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance, liquidity, and capital resources for the six months ended June 30, 2025, including the impact of PRC regulations [Overview](index=34&type=section&id=Overview) The company generated sales in H1 2025 but experienced a significant increase in net loss compared to the prior year | Metric | 2025 | % of Sales | 2024 | % of Sales | | :------------------------------------ | :----------- | :--------- | :----------- | :--------- | | Sales | $82,839 | 100% | $0 | -% | | Gross profit | $35,421 | 43% | $0 | -% | | Loss from operations | $(2,187,688) | (2,641)% | $(559,237) | -% | | Net loss | $(2,129,276) | (2,570)% | $(689,554) | -% | - The company generated sales of **$82,839** in H1 2025, a significant increase from no sales in H1 2024[141](index=141&type=chunk) - Despite sales, the net loss for H1 2025 increased to **$(2.13 million)** from **$(689,554)** in H1 2024[141](index=141&type=chunk) [Results of Operations](index=34&type=section&id=Results%20of%20Operations) This section details the drivers behind the company's sales, cost of sales, gross profit, operating expenses, non-operating income, income tax, and net loss [Sales](index=34&type=section&id=Sales) Total sales for H1 2025 were $82,839, derived from an Operation and Maintenance Contract for a power station - Total sales for the six months ended June 30, 2025, amounted to **$82,839**, derived from an Operation and Maintenance Contract for a power station[142](index=142&type=chunk) - The contract, totaling **RMB1.8 million (US$0.2 million)**, spans **10 years** from March 1, 2025, to February 28, 2035, with revenue recognized based on the time period[142](index=142&type=chunk) [Cost of Sales](index=34&type=section&id=Cost%20of%20Sales) Cost of sales for the six months ended June 30, 2025, was $47,418 - Cost of sales for the six months ended June 30, 2025, was **$47,418**[143](index=143&type=chunk) [Gross Profit](index=34&type=section&id=Gross%20Profit) The gross margin for the six months ended June 30, 2025, was 43% - The gross margin for the six months ended June 30, 2025, was **43%**[144](index=144&type=chunk) [Operating Expenses](index=35&type=section&id=Operating%20Expenses) Operating expenses significantly increased year-over-year, primarily due to higher financing costs and share-based compensation - Operating expenses, primarily general and administrative (G&A), increased by **$1.66 million** or **298%** year-over-year, reaching **$2.22 million** for the six months ended June 30, 2025[146](index=146&type=chunk) - The increase was mainly driven by a **$948,648** rise in financing costs and **$831,520** in share-based compensation[146](index=146&type=chunk) [Net Non-Operating Income (Expenses)](index=36&type=section&id=Net%20Non-Operating%20Income%20(Expenses)) Net non-operating income shifted from an expense in the prior year, driven by interest income and a reversal of impairment provision - Net non-operating income for the six months ended June 30, 2025, was **$93,159**, a shift from non-operating expenses of **$116,141** in the prior year[147](index=147&type=chunk) - This change was primarily due to **$98,999** in interest income from financial support to other companies and a **$200,000** reversal of provision for impaired prepayments, partially offset by **$251,414** in interest expenses[147](index=147&type=chunk) [Income Tax Expense](index=36&type=section&id=Income%20Tax%20Expense) Income tax expense increased, with a 0% effective tax rate due to a 100% valuation allowance against deferred tax assets - Income tax expense for the six months ended June 30, 2025, was **$34,747**, up from **$14,176** in the prior year[148](index=148&type=chunk) - The consolidated effective income tax rate for the three months ended June 30, 2025, and 2024, was **0%** and **1.6%**, respectively, with a **100%** valuation allowance against deferred tax assets due to continuing operating losses[148](index=148&type=chunk) [Net Loss](index=36&type=section&id=Net%20Loss) Net loss significantly increased for H1 2025, primarily driven by rising operating expenses and the reversal of impairment provision - Net loss for the six months ended June 30, 2025, increased by **$1.44 million** to **$2.13 million**, compared to a loss of **$689,554** in the prior year[149](index=149&type=chunk) - This increase in net loss was primarily driven by rising operating expenses and the reversal of impairment provision[149](index=149&type=chunk) [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity improved significantly in H1 2025 due to strong operating cash flow, despite ongoing net losses | Metric | June 30, 2025 | | :------------------------------------ | :-------------- | | Cash and equivalents | $131.11 million | | Other current assets (excluding cash) | $0.23 million | | Current liabilities | $12.74 million | | Working capital | $118.6 million | | Current ratio | 10.31:1 | | Debt-to-equity ratio | 0.12:1 | | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Operating Activities | $64,496,018 | $(248,132) | | Investing activities | $55,202,004 | $68,542,364 | | Financing activity | $9,865,400 | $0 | - Net cash generated from operating activities significantly increased to **$64.5 million** in H1 2025, primarily due to the recovery of **$65.6 million** in advance payments to suppliers[151](index=151&type=chunk) - The company's ability to continue as a going concern is dependent on achieving profitable operations, despite incurring an operating loss of **$2.19 million** and a net loss of **$2.13 million** in H1 2025[156](index=156&type=chunk)[158](index=158&type=chunk) [Transfers of Cash to and from Our Subsidiaries](index=38&type=section&id=Transfers%20of%20Cash%20to%20and%20from%20Our%20Subsidiaries) PRC regulations impose strict currency controls and statutory reserve requirements, limiting the ability of subsidiaries to transfer cash or distribute dividends - The PRC maintains strict currency controls and capital transfer regulations, requiring compliance for moving money in or out of the country[159](index=159&type=chunk) - The company relies on dividend distributions from its PRC subsidiaries to meet working capital and cash needs, but these subsidiaries have not transferred any earnings or cash to the company to date[159](index=159&type=chunk) - PRC laws and regulations require subsidiaries to allocate **10%** of annual after-tax income to a general reserve fund before paying dividends, which limits their ability to distribute net assets[159](index=159&type=chunk) [PRC Regulations](index=38&type=section&id=PRC%20Regulations) PRC regulations mandate statutory surplus reserve allocations for foreign-invested and domestic enterprises, restricting dividend distributions - Foreign-invested enterprises (FIEs) and domestic enterprises in the PRC are required to allocate at least **10%** of their annual after-tax profit to a statutory surplus reserve until it reaches **50%** of their registered capital[162](index=162&type=chunk)[163](index=163&type=chunk) - These statutory reserves are restricted and cannot be distributed as cash dividends, and FIEs cannot repatriate profits until capital contribution requirements are met[162](index=162&type=chunk)[165](index=165&type=chunk) [Chart of the Company's Statutory Reserve](index=40&type=section&id=Chart%20of%20the%20Company's%20Statutory%20Reserve) The company's unrestricted accumulated deficit increased, while restricted retained earnings from the surplus reserve fund remained constant | Category | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :------------------ | | Unrestricted accumulated deficit | $(64,185,659) | $(62,056,383) | | Restricted retained earnings (surplus reserve fund) | $15,191,645 | $15,191,645 | | Total accumulated deficit | $(48,994,014) | $(46,864,738) | - The company's unrestricted accumulated deficit increased from **$(62.06 million)** to **$(64.19 million)** during the six months ended June 30, 2025[167](index=167&type=chunk) - Restricted retained earnings from the surplus reserve fund remained constant at **$15.19 million**[167](index=167&type=chunk) [Off-Balance Sheet Arrangements](index=40&type=section&id=Off-Balance%20Sheet%20Arrangements) The company has no off-balance sheet arrangements, including financial guarantees, derivative contracts, or variable interests in unconsolidated entities - The company has not entered into any financial guarantees, other commitments to guarantee third-party payment obligations, or derivative contracts indexed to its shares[168](index=168&type=chunk) - There are no retained or contingent interests in assets transferred to unconsolidated entities, nor any variable interests in unconsolidated entities providing financing or support[168](index=168&type=chunk) [Contractual Obligations](index=40&type=section&id=Contractual%20Obligations) The company's primary contractual obligation is interest payable on entrusted loans, which it expects to meet with existing cash and access to loans | Contractual Obligation | 1 year or less | | :----------------------- | :------------- | | Interest payable of Entrusted loan | $347,591 | | Total | $347,591 | - As of June 30, 2025, the company's primary contractual obligation is **$347,591** in interest payable on entrusted loans, due within one year[169](index=169&type=chunk) - The company believes it has sufficient cash and access to loans to meet its working capital needs, historically supported by the Chinese government for energy-saving businesses[169](index=169&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, the company is primarily exposed to foreign currency exchange rate risk due to its PRC operations - The company is a smaller reporting company and is not required to provide the full information typically required under this item[170](index=170&type=chunk) - Operations are mainly conducted in the PRC, making earnings subject to movements in foreign currency exchange rates, particularly between the U.S. dollar and RMB[171](index=171&type=chunk) [Item 4. Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting - As of June 30, 2025, the company's CEO and CFO concluded that its disclosure controls and procedures were effective[173](index=173&type=chunk) - No material changes in internal control over financial reporting occurred during the fiscal quarter ended June 30, 2025[174](index=174&type=chunk) - Management acknowledges that control systems provide only reasonable, not absolute, assurance and may not prevent or detect all errors or fraud due to inherent limitations and resource constraints[175](index=175&type=chunk) [PART II – OTHER INFORMATION](index=42&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and exhibits [Item 1. Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings) The company is not a party to any new material legal proceedings but provides updates on ongoing litigation involving stock repurchase and loan repayment judgments - The company is not currently a party to any material legal proceedings, and none are threatened[177](index=177&type=chunk) - A lawsuit by Beijing Hongyuan Recycling Energy Investment Center (BIPC) against Xi'an TCH for stock repurchase resulted in a judgment in favor of Hongyuan, with Xi'an TCH filing for retrial and accruing **$2.10 million** in litigation expense as of December 31, 2024[178](index=178&type=chunk)[179](index=179&type=chunk) - Xi'an Zhonghong Technology Co., Ltd. was ordered to pay **RMB77 million ($11.06 million)** loan principal and **RMB2.42 million ($0.35 million)** interest to BIPC, plus **RMB80.29 million ($11.53 million)** in enforcement fees; the principal was paid in November 2024, but interest remains outstanding[180](index=180&type=chunk) [Item 1A. Risk Factors](index=42&type=section&id=Item%201A.%20Risk%20Factors) As a smaller reporting company, no new risk factor disclosures are required, referring to the prior annual report for comprehensive risks - The company is a smaller reporting company and is not required to provide information for this item[182](index=182&type=chunk) - There have been no material changes in risk factors from those disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024[182](index=182&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=42&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reports no unregistered sales of equity securities or use of proceeds during the period - There were no unregistered sales of equity securities or use of proceeds to report[183](index=183&type=chunk) [Item 3. Defaults Upon Senior Securities](index=42&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon senior securities during the period - There were no defaults upon senior securities to report[184](index=184&type=chunk) [Item 4. Mine Safety Disclosures](index=42&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - This item is not applicable to the company[186](index=186&type=chunk) [Item 5. Other Information](index=43&type=section&id=Item%205.%20Other%20Information) The company reports no other information to disclose under this item - There is no other information to report under this item[187](index=187&type=chunk) [Item 6. Exhibits](index=44&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q - The report includes various exhibits such as Articles of Incorporation, Bylaws, Common Stock Specimen, and numerous agreements related to operations, equity, and debt[188](index=188&type=chunk)[189](index=189&type=chunk)[190](index=190&type=chunk)[191](index=191&type=chunk)[192](index=192&type=chunk)[193](index=193&type=chunk) - Recent exhibits include Exchange Agreements dated July 22, 2025, July 31, 2025, and August 8, 2025, between the Company and Bucktown Capital, LLC[193](index=193&type=chunk) - Certifications from the Principal Executive Officer and Principal Financial Officer pursuant to the Sarbanes-Oxley Act of 2002 are also filed[194](index=194&type=chunk) [SIGNATURES](index=50&type=section&id=SIGNATURES) The report was duly signed on August 13, 2025, by the Chairman of the Board, CEO, and CFO - The report was duly signed on August 13, 2025, by Guohua Ku, Chairman of the Board and Chief Executive Officer, and Yongjiang Shi, Chief Financial Officer[198](index=198&type=chunk)[199](index=199&type=chunk)

Core Viewpoint - Smart Powerr Corp. has regained compliance with Nasdaq's minimum bid price requirement, closing at or above $1.00 for 10 consecutive business days from July 18 to July 31, 2025 [1][2]. Company Overview - Smart Powerr Corp. is based in Xi'an, China, specializing in waste energy recycling and energy efficiency solutions for energy-intensive industries [3]. - The company employs a Build-Operate-Transfer (BOT) model to provide energy-saving and recovery facilities, focusing on nonferrous metal plants [3]. - Smart Powerr Corp. aims to expand into market areas where it currently does not operate, pursuing disciplined and targeted growth strategies [3].

Core Points - Smart Powerr Corp. has announced a reverse stock split at a ratio of 1-for-10 to comply with Nasdaq's minimum bid price requirement [2] - The reverse stock split will reduce the total number of outstanding shares from approximately 25.3 million to about 2.53 million [3] - The reverse stock split will not change the par value per share and will affect all issued and outstanding shares uniformly [4] Company Overview - Smart Powerr Corp. is based in Xi'an, China, and specializes in waste energy recycling and energy efficiency solutions for energy-intensive industries [5] - The company employs a Build-Operate-Transfer (BOT) model to provide energy-saving and recovery facilities, focusing on nonferrous metal plants [5] - Smart Powerr Corp. aims for disciplined and targeted expansion into market areas it currently does not serve [5]

PART I [Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) The company's Q1 2025 financial statements show a substantial cash increase and new revenue, despite a widened net loss, reflecting its ongoing business transformation [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) As of March 31, 2025, the company's total assets and cash significantly increased due to loan collections and supplier advances, while stockholders' equity also grew from a common stock offering Consolidated Balance Sheet Highlights (in U.S. Dollars) | Account | March 31, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | **Current Assets** | | | | | Cash | $129,596,314 | $25,341 | +$129,570,973 | | Advance to supplier | - | $65,214,994 | -$65,214,994 | | Short term loan receivables | - | $55,660,132 | -$55,660,132 | | **Total Assets** | **$130,747,730** | **$121,234,786** | **+$9,512,944** | | **Total Liabilities** | **$16,451,503** | **$16,503,705** | **-$52,202** | | **Total Stockholders' Equity** | **$114,296,227** | **$104,731,081** | **+$9,565,146** | [Consolidated Statements of Operations and Comprehensive Loss](index=7&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) For Q1 2025, the company generated new revenue but experienced a widened net loss, primarily due to a significant rise in operating expenses, leading to a worsened net loss per share Q1 2025 vs. Q1 2024 Performance (in U.S. Dollars) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Revenue | $20,625 | $0 | | Gross Profit | $8,819 | $0 | | Loss from Operations | ($1,162,390) | ($208,430) | | Net Loss | ($884,460) | ($279,797) | | Basic and Diluted Net Loss per Share | ($0.09) | ($0.03) | [Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Consolidated%20Statements%20of%20Stockholders%27%20Equity) Total stockholders' equity increased significantly as of March 31, 2025, primarily driven by the issuance of common stock, partially offset by the net loss for the period - The company issued **15,329,851 shares** of common stock, raising **$9,865,400** during the first quarter of 2025[18](index=18&type=chunk) [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) The company's cash position dramatically improved during Q1 2025, fueled by significant net cash inflows from operating, investing, and financing activities Summary of Cash Flows (in U.S. Dollars) | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $64,627,345 | ($183,519) | | Net Cash from Investing Activities | $55,202,004 | $68,564,217 | | Net Cash from Financing Activities | $9,865,400 | - | | **Net Increase in Cash** | **$129,570,973** | **$68,544,897** | | **Cash, End of Period** | **$129,596,314** | **$68,577,267** | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail the company's business transformation, resolution of significant receivables, and ongoing legal matters, alongside subsequent equity plan and share resale filings - The company is transforming from an energy-saving solutions provider to an energy storage integrated solution provider, targeting industries like industrial complexes, large-scale PV and wind power stations[30](index=30&type=chunk)[79](index=79&type=chunk) - A short-term loan of **$55.9 million** to Xi'an Yingtai was fully collected by January 10, 2025[76](index=76&type=chunk) - A purchase agreement with Bangyu for **$82.3 million** was terminated, and the company reclaimed an advance payment of **RMB 476.0 million** (approx. **$67.2 million**) in March 2025[79](index=79&type=chunk) - In November 2024, the company's subsidiary Xi'an TCH repaid the principal of an entrusted loan amounting to **RMB 77 million** (approx. **$10.55 million**), with interest still outstanding[99](index=99&type=chunk)[121](index=121&type=chunk) - Subsequent to the quarter end, on April 18, 2025, the company filed a Form S-8 for its Omnibus Equity Plan and on April 30, 2025, filed a Form S-1 for the resale of **8,029,851 shares** of common stock[125](index=125&type=chunk)[126](index=126&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the Q1 2025 net loss to a surge in operating expenses, while highlighting improved liquidity and new revenue, alongside PRC regulations affecting cash transfers from subsidiaries [Results of Operations](index=30&type=section&id=Results%20of%20Operations) For Q1 2025, the company recorded new sales from an operation and maintenance contract, but a significant increase in operating expenses, primarily financing costs, led to a widened net loss - Total sales for Q1 2025 were **$20,625**, derived from a new 10-year Operation and Maintenance contract[132](index=132&type=chunk) - Operating expenses increased by **$962,779** (**462%**) year-over-year, mainly due to a **$948,648** rise in financing costs[135](index=135&type=chunk)[136](index=136&type=chunk) - Net loss increased by **$604,663** to **$884,460** in Q1 2025, driven by the surge in operating expenses[139](index=139&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity significantly strengthened as of March 31, 2025, driven by positive cash flows from all activities, with management asserting sufficient funds for future operations despite PRC dividend restrictions Liquidity Position as of March 31, 2025 | Metric | Amount (in millions) | | :--- | :--- | | Cash and equivalents | $129.60 | | Working capital | $116.81 | | Current Ratio | 9.96:1 | - The increase in net cash from operating activities was mainly driven by the recovery of **$65.6 million** in advance payments to suppliers[141](index=141&type=chunk) - The company's PRC subsidiaries are required to allocate **10%** of annual after-tax income to a statutory reserve fund until it reaches **50%** of registered capital, which restricts dividend distributions to the parent company[148](index=148&type=chunk)[151](index=151&type=chunk)[153](index=153&type=chunk) [Contractual Obligations](index=36&type=section&id=Contractual%20Obligations) As of March 31, 2025, the company's primary contractual obligations due within one year total approximately **$5.1 million**, mainly consisting of notes payable principal and interest, which the company believes it can meet Contractual Obligations due within 1 year (as of March 31, 2025) | Obligation | Amount | | :--- | :--- | | Notes payable – Principal | $4,705,696 | | Interest payable of notes payable | $69,103 | | Interest payable of Entrusted loan | $343,131 | | **Total** | **$5,117,930** | [Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, detailed market risk disclosure is not required, but the primary risk identified is foreign currency exchange rate fluctuations between the U.S. dollar and Chinese RMB - The company is a smaller reporting company and is not required to provide detailed information on market risk[159](index=159&type=chunk) - The company's main market risk is foreign currency exchange rate risk between the U.S. dollar and the Chinese RMB, as its operations are in the PRC[160](index=160&type=chunk) [Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of September 30, 2024, with no material changes to internal control over financial reporting during Q1 2025 - Based on an evaluation as of September 30, 2024, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[162](index=162&type=chunk) - There were no material changes to the company's internal control over financial reporting during the fiscal quarter ended March 31, 2025[163](index=163&type=chunk) PART II [Legal Proceedings](index=38&type=section&id=Item%201.%20Legal%20Proceedings) The company details ongoing litigation, including a stock repurchase case awaiting retrial, the repayment of a **RMB 77 million** loan principal, and a U.S. default judgment resulting in share issuance - The company is awaiting a court decision on a retrial petition regarding a stock repurchase lawsuit with BIPC (Hongyuan) and has accrued **$2.1 million** for potential litigation expenses as of December 31, 2024[167](index=167&type=chunk)[168](index=168&type=chunk) - On November 29, 2024, the company paid **RMB 77 million** (approx. **$10.81 million**) to Beijing Hongyuan Recycling Energy Investment Center, settling the principal of a loan from a 2021 judgment[169](index=169&type=chunk) - A U.S. court entered a default judgment against the company, leading to the issuance of **128,765 shares** to settle a claim of **$139,066**[170](index=170&type=chunk) [Risk Factors](index=38&type=section&id=Item%201A.%20Risk%20Factors) As a smaller reporting company, this section is not required, and no material changes to risk factors from the prior annual report were reported - The company is a smaller reporting company and is not required to provide this information[171](index=171&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=38&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - None[172](index=172&type=chunk) [Defaults Upon Senior Securities](index=38&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - None[173](index=173&type=chunk) [Mine Safety Disclosures](index=39&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[175](index=175&type=chunk) [Other Information](index=39&type=section&id=Item%205.%20Other%20Information) The company reported no other information for this item - None[176](index=176&type=chunk) [Exhibits](index=40&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q report, including corporate governance documents, material contracts, and officer certifications - The report includes a comprehensive list of exhibits, such as corporate governance documents, securities purchase agreements, employment agreements, and certifications required by the Sarbanes-Oxley Act[177](index=177&type=chunk)[183](index=183&type=chunk)

Core Viewpoint - Smart Powerr Corp. has entered a strategic cooperation agreement with Shidai Huazhi (Jiangsu) Energy Technology Co., Ltd. to enhance urban energy infrastructure and support the "dual carbon" goal through integrated solutions in photovoltaic, energy storage, charging, and inspection [1][7] Group 1: Strategic Cooperation Details - The cooperation will focus on constructing integrated infrastructure for photovoltaic, energy storage, charging, and inspection, including ultra-fast charging stations that can save over one million yuan in electricity bills annually and reduce carbon emissions by more than one thousand tons per year [3] - Shidai Huazhi's actual controller, Mr. Huang Shilin, brings significant industry experience from his previous role at Contemporary Amperex Technology Co., Limited (CATL), enhancing the collaboration's operational advantages in energy storage [2] Group 2: Technological Innovations - The partnership aims to develop intelligent microgrid systems utilizing AC-DC hybrid technologies, with expectations that by 2026, adjustable resource response electricity in the microgrid will exceed 30%, contributing to a trillion-level "energy internet +" industrial cluster [4] - The energy closed-loop mode of "self-generation for self-use + surplus power feeding into the grid" will be explored, potentially creating a market scale of hundreds of trillions of yuan before 2030 [5] Group 3: Operational Management - Shidai Huazhi will establish a software management platform for intelligent inspection and ultra-fast charging stations, ensuring stable operation throughout the project lifecycle [6] - The chairman of CREG emphasized that this cooperation is a significant step in constructing a new power system and aims to provide replicable solutions for global energy transition [6] Group 4: Future Outlook - The two parties plan to explore further cooperation at the capital level, including the establishment of a joint venture subsidiary, anticipating explosive growth in the integrated industry of photovoltaic, energy storage, charging, and inspection [7]

Core Viewpoint - Smart Powerr Corp. has signed a strategic cooperation agreement with Shidai Huazhi (Jiangsu) Energy Technology Co., Ltd. to enhance urban energy infrastructure and support the "dual carbon" goal through integrated solutions in photovoltaic, energy storage, charging, and inspection [1][8]. Group 1: Strategic Cooperation Details - The cooperation will focus on constructing integrated infrastructure for photovoltaic, energy storage, charging, and inspection, including ultra-fast charging stations that can save over 1 million yuan in electricity bills annually and reduce carbon emissions by over 1,000 tons per year [3]. - Shidai Huazhi's expertise in energy storage will be leveraged to create a demonstration urban energy infrastructure solution [2]. Group 2: Technological Innovations - The collaboration aims to build intelligent microgrid systems with self-regulating capabilities, expecting that by 2026, adjustable resource response electricity in the microgrid will exceed 30% [4]. - The two parties will explore an energy closed-loop model to improve urban energy management efficiency, potentially leading to a market scale of hundreds of trillions of yuan before 2030 [5]. Group 3: Operational Management - Shidai Huazhi will develop a software management platform for intelligent inspection and ultra-fast charging stations, ensuring stable operation throughout the project lifecycle [6]. Group 4: Future Outlook - The partnership may extend to capital-level cooperation, including the establishment of a joint venture subsidiary, as the integrated industry of photovoltaic, energy storage, charging, and inspection is expected to experience explosive growth [8].

Financial Performance - The Company reported a net loss of $1,559,012 for the year ended December 31, 2024, compared to a net loss of $746,786 for 2023, indicating an increase in losses of approximately 108.5%[299] - Total operating expenses for 2024 were $1,093,468, up from $798,473 in 2023, reflecting a year-over-year increase of approximately 37%[324] - The net loss for the year ended December 31, 2024, was $1,559,012, an increase of $812,226 from a net loss of $746,786 in 2023, driven by increased operating expenses and impairment provisions[330] - Net non-operating expenses for 2024 were $451,547, a significant decline from non-operating income of $148,387 in 2023, largely due to a $200,000 bad debt provision[328] - The company reported a total accumulated deficit of $46,864,738 as of December 31, 2024, compared to $45,305,726 in 2023[348] Operational Status - The Company currently holds five power generating systems that are not producing electricity, indicating a need for operational improvements[299] - The company incurred an operating loss of $1.1 million and generated negative operating cash flows of $10.8 million for the year ended December 31, 2024[338] Cash Flow and Liquidity - The cash flow forecast suggests the Company will have sufficient cash to fund operations for the next 12 months[299] - As of December 31, 2024, the company had cash and equivalents of $25,341, with current liabilities of $13.10 million and a current ratio of 9.25:1[331] - Net cash used in operating activities decreased to $10,764,096 in 2024 from $68,099,899 in 2023, mainly due to reduced cash outflow related to an entrusted loan[332] - The company believes it has sufficient cash and access to commercial institutions to meet its working capital needs as of December 31, 2024[350] Strategic Direction - The Company is transitioning to an energy storage integrated solution provider and is exploring opportunities in high-growth potential industries such as large-scale photovoltaic and wind power stations[298] - The Company plans to pursue disciplined and targeted expansion strategies in market areas currently not served[298] Revenue Generation - Total sales for the years ended December 31, 2024 and 2023 were reported as $0, indicating no revenue generation during these periods[324] - The Company has not recognized any income from Erdos TCH due to uncertainties regarding collection, despite expecting compensation of RMB 1 million ($145,460) per month until operations resume[307] Financial Instruments and Guarantees - The company has not entered into any financial guarantees or derivative contracts that are indexed to its shares[349] Accounting Standards - The Company’s financial statements are prepared in accordance with US GAAP and in US Dollars[296]

Financial Performance - For the nine months ended September 30, 2024, the Company reported a net loss of $952,285, compared to a net loss of $518,069 for the same period in 2023, indicating an increase in losses of approximately 83.6% year-over-year [132]. - The net loss for the three months ended September 30, 2024, was $262,731, up from $180,723 in the same period of 2023, reflecting a year-over-year increase of about 45.3% [132]. - The Company had an accumulated deficit of $61.45 million as of September 30, 2024 [132]. - Net non-operating expenses for the nine months ended September 30, 2024, were $190,577, compared to non-operating income of $185,176 for the same period in 2023 [157]. - Income tax expense for the nine months ended September 30, 2024, was $14,168, compared to $97,140 for the same period in 2023, with effective tax rates of 1.5% and 23.1%, respectively [158]. - Net loss for the nine months ended September 30, 2024, was $952,285, an increase of $434,216 compared to a net loss of $518,069 for the same period in 2023 [159]. - Net cash used in operating activities for the nine months ended September 30, 2024, was $330,673, a significant decrease from $68,264,743 for the same period in 2023 [169]. - Operating expenses for the three months ended September 30, 2024, were $188,295, an increase of $41,425 or 28.21% compared to $146,870 for the same period in 2023 [164]. - Total operating expenses for the nine months ended September 30, 2024, were $747,540, an increase of $141,435 or 23.34% compared to $606,105 for the same period in 2023 [156]. - Net loss for the three months ended September 30, 2024, was $262,731, an increase of $82,008 compared to a net loss of $180,723 for the same period in 2023 [167]. Business Strategy and Operations - The Company is transitioning to become an energy storage integrated solution provider and is actively seeking opportunities in high-growth potential industries, including large-scale photovoltaic and wind power stations [130]. - The Company plans to raise additional funds through private or public offerings or bank loans to support its business strategy [133]. - The Company has not recognized any income from Erdos TCH due to uncertainties regarding collection, despite receiving monthly compensation of RMB 1 million ($145,460) until operations resume [138]. - The Company entered a purchase agreement with Hubei Bangyu New Energy Technology Co., Ltd. for $82.3 million to purchase energy storage battery systems, with a prepayment of $66.8 million made in 2023 [172]. - Erdos TCH, a joint venture, has two power generation systems with a total capacity of 18 MW in Phase I and three systems with a total capacity of 27 MW in Phase II [138]. Financial Position and Liquidity - Cash and equivalents as of September 30, 2024, were $69.12 million, with a current ratio of 5.73:1 and a liability-to-equity ratio of 0.25:1 [168]. - The Company has sufficient cash and access to commercial loans to meet its working capital needs, supported by the Chinese government's backing for energy-saving businesses [186]. - Total contractual obligations as of September 30, 2024, amount to $16,373,727, including notes payable of $4,978,821 and entrusted loans of $11,333,512 [186]. - As of September 30, 2024, the Company reported an unrestricted accumulated deficit of $61,449,656 and restricted retained earnings of $15,191,645 [184]. Regulatory and Environmental Factors - The Company’s subsidiaries primarily conduct operations in the PRC, which may influence its business and financial condition due to the local political and economic environment [147]. - The Company's operations are primarily in the PRC, making its earnings susceptible to fluctuations in foreign currency exchange rates, particularly between RMB and the U.S. dollar [187]. - The Company is required to maintain a statutory reserve by appropriating 10% of its annual after-tax profit until it reaches 50% of its registered capital, impacting dividend distribution [182]. Accounting and Reporting - The Company's financial statements are prepared in accordance with US GAAP, and significant inter-company accounts and transactions have been eliminated in consolidation [143].