Company Overview - Sunrise New Energy Co., Ltd. is a leading innovator in graphite anode materials, headquartered in Zibo, Shandong Province, China [10] - The company has a joint venture that has completed a manufacturing facility with a production capacity of 50,000 tons in Guizhou Province, utilizing inexpensive renewable energy [11] Recent Developments - The company has officially commenced construction of a new 20,000-ton high-end graphite anode material production line, representing a total planned investment of approximately USD 64 million [1][2] - This new facility is designed to meet the surging demand from leading lithium-ion battery manufacturers and will incorporate key processes such as pre-carbonization and high-temperature carbonization [2] Financial Performance - Sunrise has shown explosive growth in revenue, reaching $38.13 million, $45.05 million, and $64.99 million in 2022, 2023, and 2024 respectively, with year-over-year growth rates of 414.57%, 18.16%, and 44.28% [3] - The company expects its graphite anode shipments to reach 40,000–50,000 tons in 2025, up from 28,200 tons in 2024, with the new production line expected to contribute approximately USD 110 million in annual revenue and USD 16 million in annual profit [4] Market Trends - The lithium battery and energy storage industries are experiencing robust recovery, driven by strong EV sales growth and faster-than-expected expansion in global energy storage [5] - CATL, a key customer of Sunrise, has raised its 2026 procurement guidance to 1,100 GWh, a substantial 46% increase from previous forecasts, indicating strong market demand [5] Strategic Positioning - The launch of the new production line is a strategic move to alleviate current capacity constraints and capitalize on favorable industry trends [6] - Sunrise's planned capacity expansion includes a total planned capacity of 100,000 tons in Guizhou and a 210,000-ton project in Fuyang, Anhui Province, laying a solid foundation for future growth [7] Recognition and Support - Sunrise's Guizhou base has received USD 0.6 million in funding from the Central-Guided Local Science and Technology Development Fund, highlighting the company's leadership in advanced synthetic graphite innovation [8]

Group 1 - Chinese assets have shown strong performance, leading to a significant rise in US-listed Chinese stocks, with EPOW.US (Huiyang New Energy) closing up over 11%, marking its largest increase in five months [1] - The A-share market set multiple records, with the Shanghai Composite Index reaching a 10-year high, and the Nasdaq Golden Dragon China Index has been on an upward trend since August [1] Group 2 - Huiyang New Energy announced a joint venture agreement with SDH (HK) New Energy Tech Co., Kekecely Ltd, and Simple Cloud Technology to establish Alchemistica Inc. in Delaware, USA [1] - The total registered capital of the joint venture is $1 million, aimed at supporting Huiyang New Energy's expansion into the US market, focusing on R&D, marketing, and localized production in the energy sector [1] - Huiyang New Energy and its subsidiaries will hold a 71% stake in the joint venture, which is expected to enhance its competitive position and operational capabilities in the US market [1]

Core Viewpoint - Chinese assets have shown strong performance, leading to a significant rise in US-listed Chinese stocks, with EPOW.US experiencing over an 11% increase, marking its largest gain in five months [1] Group 1: Market Performance - A-shares have set multiple records recently, with the Shanghai Composite Index reaching a 10-year high [1] - The Nasdaq Golden Dragon China Index has been on an upward trend since August [1] Group 2: Company Developments - EPOW.US has announced a joint venture with SDH (HK) New Energy Tech Co., Kekecely Ltd, and Simple Cloud Technology to establish Alchemistica Inc. in Delaware, USA [1] - The total registered capital for the joint venture is $1 million, aimed at supporting EPOW.US's expansion into the US market, focusing on R&D, marketing, and localized production in the energy sector [1] - EPOW.US and its subsidiaries will hold a 71% stake in the joint venture, which is expected to enhance its competitive position and operational capabilities in the US market [1]

Core Viewpoint - Huiyang New Energy (EPOW) shows a significant increase in revenue and a notable rise in net profit loss, indicating growth potential despite current financial challenges [1] Financial Performance - As of December 31, 2024, Huiyang New Energy reported total revenue of $64.9977 million, representing a year-on-year growth of 44.28% [1] - The company recorded a net profit loss attributable to shareholders of $11.7764 million, which is an increase of 51.4% compared to the previous year [1] Company Overview - Huiyang New Energy is headquartered in Zibo, Shandong Province, China, and is engaged in the research, manufacturing, and sales of lithium-ion battery graphite anode materials through its joint ventures [1] - The company is constructing a manufacturing plant covering 138,000 square meters in Guizhou Province, China, utilizing inexpensive electricity from renewable sources to significantly reduce costs and minimize environmental impact [1] - The founder and CEO, Hu Haiping, has been a key pioneer in China's graphite anode industry since 1999, and the core team consists of industry veterans with decades of experience and multiple successful entrepreneurial ventures in lithium battery anode materials [1] Additional Business Activities - In addition to its core business, the company operates a traditional internet knowledge-sharing platform and is exploring strategic alternatives for this segment [1]

Core Viewpoint - Huayang New Energy (EPOW) shows significant growth in revenue and a strategic focus on sustainable manufacturing in the lithium battery sector [1] Financial Performance - As of December 31, 2024, Huayang New Energy reported total revenue of $64.9977 million, representing a year-on-year increase of 44.28% [1] - The company recorded a net profit attributable to shareholders of -$11.7764 million, which reflects a year-on-year increase of 51.4% [1] Company Overview - Huayang New Energy is headquartered in Zibo, Shandong Province, China, and is engaged in the research, manufacturing, and sales of lithium-ion battery graphite anode materials through joint ventures [1] - The company is constructing a manufacturing facility covering 138,000 square meters in Guizhou Province, China, which utilizes low-cost renewable energy for production, significantly reducing costs and environmental impact [1] - The founder and CEO, Hu Haiping, has been a key pioneer in China's graphite anode industry since 1999, and the core team consists of industry veterans with decades of experience [1] Strategic Initiatives - The company is exploring strategic alternatives for its traditional internet knowledge-sharing platform business while focusing on its core operations in the lithium battery sector [1]

Core Viewpoint - Huiyang New Energy (EPOW) shows significant growth in revenue and a strategic focus on sustainable manufacturing in the lithium battery sector [1] Financial Performance - As of December 31, 2024, Huiyang New Energy reported total revenue of $64.9977 million, representing a year-on-year increase of 44.28% [1] - The company recorded a net profit attributable to shareholders of -$11.7764 million, which is a 51.4% increase in losses compared to the previous year [1] Company Overview - Huiyang New Energy is headquartered in Zibo, Shandong Province, China, and is engaged in the research, manufacturing, and sales of lithium-ion battery graphite anode materials through joint ventures [1] - The company is constructing a manufacturing facility covering 138,000 square meters in Guizhou Province, China, which utilizes low-cost renewable energy to significantly reduce production costs and environmental impact [1] - The founder and CEO, Hu Haiping, has been a key pioneer in China's graphite anode industry since 1999, and the core team consists of industry veterans with decades of experience [1] Strategic Initiatives - The company is exploring strategic alternatives for its traditional internet knowledge-sharing platform business while focusing on its core operations in the lithium battery sector [1]

Core Viewpoint - Huayang New Energy (EPOW) shows a significant increase in revenue and a notable investment in manufacturing capabilities, indicating growth potential in the electric vehicle and lithium-ion battery materials sector [1] Financial Performance - As of December 31, 2024, Huayang New Energy reported total revenue of $64.9977 million, representing a year-on-year growth of 44.28% [1] - The company recorded a net profit attributable to shareholders of -$11.7764 million, which reflects a year-on-year increase of 51.4% in losses [1] Company Overview - Huayang New Energy is headquartered in Zibo, Shandong Province, China, and is engaged in the research, manufacturing, and sales of graphite anode materials for electric vehicles and other lithium-ion batteries through joint ventures [1] - The company is constructing a manufacturing facility covering 138,000 square meters in Guizhou Province, China, which utilizes inexpensive electricity from renewable sources to significantly reduce costs and minimize environmental impact [1] - The founder and CEO, Hu Haiping, has been a key pioneer in China's graphite anode industry since 1999, and the core team consists of industry veterans with decades of experience and multiple successful entrepreneurial ventures in lithium battery anode materials [1] Strategic Initiatives - In addition to its core business, Huayang New Energy operates a traditional internet knowledge-sharing platform and is exploring strategic alternatives for this segment [1]

Core Viewpoint - Huayang New Energy (EPOW) shows significant growth in revenue and a strategic focus on sustainable manufacturing in the lithium battery sector [1] Financial Performance - As of December 31, 2024, Huayang New Energy reported total revenue of $64.9977 million, representing a year-on-year increase of 44.28% [1] - The company recorded a net profit attributable to shareholders of -$11.7764 million, which is a 51.4% increase in losses compared to the previous year [1] Company Overview - Huayang New Energy is headquartered in Zibo, Shandong Province, China, and is engaged in the research, manufacturing, and sales of lithium-ion battery graphite anode materials through joint ventures [1] - The company is constructing a manufacturing plant in Guizhou Province, covering an area of 138,000 square meters, which utilizes low-cost electricity from renewable energy sources to significantly reduce costs and minimize environmental impact [1] - The founder and CEO, Hu Haiping, has been a key pioneer in China's graphite anode industry since 1999, and the core team consists of industry veterans with decades of experience and multiple successful entrepreneurial ventures in lithium battery anode materials [1] Strategic Initiatives - In addition to its core business, Huayang New Energy operates a traditional internet knowledge-sharing platform and is exploring strategic alternatives for this segment [1]

Core Viewpoint - The negative electrode materials industry in China is experiencing significant challenges despite a 26% year-on-year increase in shipment volume to 2.08 million tons in 2024, leading to market polarization with a concentration ratio (CR6) of 76% among top companies, while smaller firms are exiting the market due to cost pressures and technical barriers [1] Group 1: Company Performance - Huiyang New Energy (EPOW.US) achieved over 500 million yuan in sales in 2024, marking a growth of over 40%, significantly outpacing many competitors [1] - The company has shown continuous high growth since 2022, with revenues increasing from 38.13 million USD in 2022 (up 414.57% year-on-year) to 45.05 million USD in 2023 (an 18.16% increase) [1] - By 2024, Huiyang New Energy ranked 11th among hundreds of negative electrode material suppliers in China, entering the first tier of the industry and ranking in the top 3 in the energy storage segment [1] Group 2: Leadership and Innovation - The founder and chairman, Hu Haiping, is a seasoned industry expert, previously leading Shanghai Shanshan Technology Co. and transforming it into a global leader in new energy [2] - Huiyang New Energy has a strong R&D team with 12 laboratories and over 100 intellectual property applications, establishing a patent matrix in multiple developed countries [3] - The company has received significant funding support for its silicon-carbon and hard carbon projects, being the only negative electrode material enterprise selected for a high-value core patent cultivation project in Guizhou Province [3] Group 3: Market Strategy and Future Outlook - Huiyang New Energy has developed a comprehensive ecosystem focused on innovation, product performance, and customer expansion, allowing it to select high-margin orders effectively [4] - The global demand for negative electrode materials is expected to grow, with projections of 2.625 million tons by 2025 and 4.023 million tons by 2028, indicating a compound annual growth rate of 16.71% from 2024 to 2028 [4] - The company plans to increase its total output to approximately 30,000 tons in 2024 and 40,000 to 50,000 tons in 2025, with expectations of reaching breakeven by 2025 due to scale effects and high-margin order selection [4][5] - Huiyang New Energy aims for an annual production capacity of 140,000 tons, which could exceed 5% of the global total once fully operational by early 2029 [5]

PART I [Item 3. Key Information](index=7&type=section&id=Item%203.%20KEY%20INFORMATION) The company outlines its holding structure, reliance on a Chinese VIE, key financial data, and significant regulatory and operational risks - The company operates as a Cayman Islands holding company with substantial business conducted in the PRC through a joint venture (Sunrise Guizhou) and a Variable Interest Entity (VIE), SDH [25](index=25&type=chunk)[26](index=26&type=chunk) - The VIE structure is used to operate the knowledge sharing platform, and while consolidated under U.S. GAAP, the agreements pose significant risks regarding control and enforcement[26](index=26&type=chunk)[27](index=27&type=chunk) - The company is subject to PRC regulatory risks, including potential cybersecurity reviews by the CAC and filing requirements with the CSRC for overseas listings[29](index=29&type=chunk)[30](index=30&type=chunk) - The Holding Foreign Companies Accountable Act (HFCA Act) risk is currently mitigated as the PCAOB was able to inspect the company's auditor in 2022[32](index=32&type=chunk) VIE Contribution to Consolidated Financials | Metric | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | **% of Total Assets** | 4.05% | 5.48% | 8.79% | | **% of Total Liabilities** | 7.14% | 6.54% | 13.04% | | **% of Total Net Revenues** | 1.05% | 1.46% | 1.61% | [Selected Condensed Consolidating Financial Schedule](index=11&type=section&id=Selected%20Condensed%20Consolidating%20Financial%20Schedule) Financial schedules detail the performance of the Parent, Subsidiaries, and VIE, with Subsidiaries driving revenue and losses Condensed Consolidating Statement of Operations Data (Year ended Dec 31, 2024) | (US$) | Parent | Subsidiaries | VIE and VIE's subsidiaries | Group consolidated | | :--- | :--- | :--- | :--- | :--- | | **Revenues, net** | - | 71,276,389 | 2,899,946 | 64,997,741 | | **(Loss) Profit from operations** | (1,776,146) | (15,469,759) | 649,577 | (16,596,328) | | **Net (loss) income** | (1,778,111) | (17,057,370) | 854,317 | (17,981,164) | Condensed Consolidating Balance Sheet Data (As of Dec 31, 2024) | (US$) | Parent | Subsidiaries | VIE and VIE's subsidiaries | Group consolidated | | :--- | :--- | :--- | :--- | :--- | | **Total assets** | 16,982,761 | 141,690,551 | 19,360,549 | 143,023,032 | | **Total liabilities** | 252,338 | 122,482,787 | 13,398,312 | 115,728,359 | Condensed Consolidating Statement of Cash Flows Data (Year ended Dec 31, 2024) | (US$) | Parent | Subsidiaries | VIE and VIE's subsidiaries | Group consolidated | | :--- | :--- | :--- | :--- | :--- | | **Net cash used in operating activities** | (1,269,634) | (2,574,103) | (1,508,420) | (5,352,157) | | **Net cash provided by (used in) investing activities** | 1,071,942 | (2,293,647) | 423,298 | 632,461 | | **Net cash (used in) provided by financing activities** | (150,000) | 11,251,341 | 961,196 | 10,631,669 | [Risk Factors](index=15&type=section&id=D.%20Risk%20Factors) The company faces substantial business, corporate structure, Chinese regulatory, and market risks - **Business Risks:** The company has a limited operating history in the graphite anode business, has incurred substantial losses (**$18.0M in 2024**, **$32.9M in 2023**), and faces substantial doubt about its ability to continue as a going concern[47](index=47&type=chunk)[54](index=54&type=chunk) - **Corporate Structure Risks:** The company relies on contractual VIE arrangements that may be deemed non-compliant by PRC authorities, and the dual-class share structure concentrates **87.9% of voting power** with the CEO[48](index=48&type=chunk)[90](index=90&type=chunk)[106](index=106&type=chunk) - **China-Specific Risks:** The PRC government exerts substantial influence, and recent regulations on data security (CAC) and overseas listings (CSRC) add uncertainty, while the **HFCA Act poses a potential delisting risk**[49](index=49&type=chunk)[50](index=50&type=chunk)[113](index=113&type=chunk) - **Market Risks:** The company has identified **several material weaknesses in its internal controls** over financial reporting, its stock price may be volatile, and it does not intend to pay dividends[56](index=56&type=chunk)[173](index=173&type=chunk)[176](index=176&type=chunk) [Item 4. Information on the Company](index=43&type=section&id=Item%204.%20INFORMATION%20ON%20THE%20COMPANY) The company details its strategic shift to graphite anode manufacturing, which now dominates revenue, and its VIE-based legacy business - The company was incorporated in the Cayman Islands in 2019, completed its IPO in 2021, and changed its name to Sunrise New Energy Co., Ltd in 2022[192](index=192&type=chunk)[193](index=193&type=chunk)[200](index=200&type=chunk) - The company's core business shifted in 2022 to manufacturing graphite anode materials, which now represents **99.03% of total revenue** for fiscal year 2024[210](index=210&type=chunk)[214](index=214&type=chunk) - The legacy knowledge sharing business is operated through a VIE structure (SDH), which is controlled via contractual arrangements rather than equity ownership[208](index=208&type=chunk)[337](index=337&type=chunk) [History and Development of the Company](index=43&type=section&id=A.%20History%20and%20Development%20of%20the%20Company) The company shifted its focus from corporate consulting to graphite anode manufacturing in 2022 via a joint venture - The holding company, Sunrise New Energy Co., Ltd., was incorporated in the Cayman Islands on February 22, 2019, and completed its IPO on Nasdaq on February 11, 2021[192](index=192&type=chunk)[193](index=193&type=chunk) - In April 2022, the company entered the graphite anode materials business by forming the Sunrise Guizhou joint venture, in which its subsidiary now holds a **39.35% equity interest**[197](index=197&type=chunk)[198](index=198&type=chunk) - The company changed its name from Global Internet of People, Inc. to Sunrise New Energy Co., Ltd. in August 2022 and adopted a dual-class share structure in February 2024[200](index=200&type=chunk)[201](index=201&type=chunk) [Business Overview](index=44&type=section&id=B.%20Business%20Overview) The company's operations are dominated by its graphite anode business, with the legacy knowledge sharing platform now contributing less than 1% of revenue - The graphite anode business (Sunrise Guizhou) has a **30,000-ton annual capacity** and is constructing a third phase for an additional 20,000 tons[210](index=210&type=chunk)[217](index=217&type=chunk) - In FY2024, the graphite anode business had significant customer concentration, with **one customer accounting for 67% of its total sales**[82](index=82&type=chunk)[220](index=220&type=chunk)[221](index=221&type=chunk) - The legacy knowledge sharing business has declined significantly, with its revenue contribution falling to **approximately 0.97% of the total in FY2024**[214](index=214&type=chunk)[216](index=216&type=chunk)[229](index=229&type=chunk) Revenue Breakdown by Business Segment (USD) | Business Segment | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | **Graphite anode business** | 64,365,362 | 44,384,004 | 37,580,677 | | **Knowledge sharing and enterprise business** | 632,379 | 666,401 | 544,991 | | **Total revenues, net** | **64,997,741** | **45,050,405** | **38,125,668** | [Organizational Structure](index=69&type=section&id=C.%20Organizational%20Structure) The company uses a holding structure with PRC operations controlled via a joint venture and a VIE for its legacy business - The company does not own any equity in its VIE, SDH, but controls it through a series of contractual arrangements entered into by its wholly-owned subsidiary, GIOP BJ[337](index=337&type=chunk) - Key VIE agreements include an Exclusive Technical and Consulting Services Agreement, Equity Pledge Agreement, Exclusive Option Agreement, and Powers of Attorney to ensure control[338](index=338&type=chunk)[341](index=341&type=chunk)[344](index=344&type=chunk)[347](index=347&type=chunk) [Property, Plants and Equipment](index=70&type=section&id=D.%20Property,%20Plants%20and%20Equipment) The company's primary physical assets are its manufacturing facilities in Guizhou Province, China, owned by its joint venture - Sunrise Guizhou owns its primary manufacturing site in Guizhou Province, China, which covers approximately **294,453 square meters**[351](index=351&type=chunk)[352](index=352&type=chunk) - The VIE leases 567 square meters of office space, with operating lease expenses of **$21,495 in FY2024**, a significant decrease from prior years[350](index=350&type=chunk) [Operating and Financial Review and Prospects](index=71&type=section&id=Item%205.%20OPERATING%20AND%20FINANCIAL%20REVIEW%20AND%20PROSPECTS) The company analyzes its revenue growth, persistent net losses, negative gross margin, and significant going concern risks - The company has incurred significant recurring losses and has a **working capital deficit of $23.7 million** as of Dec 31, 2024, raising substantial doubt about its ability to continue as a going concern[416](index=416&type=chunk)[419](index=419&type=chunk) Key Financial Results (Years ended Dec 31) | (USD) | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | **Total Revenues** | 64,997,741 | 45,050,405 | 38,125,668 | | **Gross Loss** | (5,797,580) | (12,403,251) | (1,350,378) | | **Loss from Operations** | (16,596,328) | (30,530,005) | (18,809,133) | | **Net Loss** | (17,981,164) | (32,920,724) | (23,124,402) | | **Net Loss Attributable to Shareholders** | (11,776,436) | (24,232,580) | (22,636,622) | | **Loss Per Share (Basic & Diluted)** | (0.48) | (1.08) | (0.98) | Summary of Cash Flows (Years ended Dec 31) | (USD) | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | **Net cash used in operating activities** | (5,352,157) | (7,282,995) | (9,573,401) | | **Net cash provided by (used in) investing activities** | 632,461 | (7,003,035) | (45,609,072) | | **Net cash provided by financing activities** | 10,631,669 | 13,679,267 | 45,760,061 | [Results of Operations](index=72&type=section&id=Results%20of%20Operations) Revenue grew due to higher graphite anode sales volume, but intense price competition led to a gross loss, though the net loss improved - FY2024 revenue increased **44.28% YoY to $65.0M**, driven by a significant increase in graphite anode sales volume from 12,513 tons to 28,221 tons[362](index=362&type=chunk)[364](index=364&type=chunk) - The average selling price of graphite anode materials **decreased by 34.35%** in 2024 due to industry overcapacity, contributing to a gross loss for the segment[364](index=364&type=chunk)[371](index=371&type=chunk) - Total operating expenses **decreased by 40.43%** in FY2024, mainly due to lower G&A costs and the non-recurrence of a prior-year intangible asset impairment[372](index=372&type=chunk)[375](index=375&type=chunk)[377](index=377&type=chunk) - **Net loss improved to $18.0M** in FY2024 from $32.9M in FY2023, reflecting higher revenue and lower operating expenses[386](index=386&type=chunk) [Liquidity and Capital Resources](index=81&type=section&id=Liquidity%20and%20Capital%20Resources) The company faces significant liquidity challenges and going concern doubts due to recurring losses and a working capital deficit - The company incurred a **net loss of $18.0M** and had a **working capital deficit of $23.7M** as of Dec 31, 2024, raising substantial doubt about its ability to continue as a going concern[416](index=416&type=chunk) - As of Dec 31, 2024, the company was in **default on covenants for loans totaling over $27.7M**, but has since obtained waivers or has not faced demands for accelerated repayment[417](index=417&type=chunk)[418](index=418&type=chunk) - Subsequent to year-end, the company secured new financing, including a bank loan of **~$41.1M** and a capital increase agreement for **~$27.4M**[422](index=422&type=chunk)[424](index=424&type=chunk) - As of Dec 31, 2024, **94.93% of the company's cash** and equivalents were held in the PRC and denominated in RMB[428](index=428&type=chunk)[429](index=429&type=chunk) [Directors, Senior Management and Employees](index=87&type=section&id=Item%206.%20DIRECTORS,%20SENIOR%20MANAGEMENT%20AND%20EMPLOYEES) This section details the company's leadership, compensation, board structure, and employee base, highlighting the CEO's controlling voting power - The board of directors consists of five members: Haiping Hu (CEO & Chairman), Chao Liu (CFO & Director), and three independent directors[459](index=459&type=chunk)[460](index=460&type=chunk) - The company has a 2022 Share Incentive Plan and a 2024 Share Incentive Plan authorizing a combined **6,292,200 Class A Ordinary Shares**[470](index=470&type=chunk)[479](index=479&type=chunk) - As of April 30, 2025, the company had **317 full-time employees**, with 300 at the Sunrise Guizhou graphite anode business[499](index=499&type=chunk)[500](index=500&type=chunk) - CEO and Chairman Haiping Hu beneficially owns 31.96% of total ordinary shares, representing approximately **87.90% of the aggregate voting power**[505](index=505&type=chunk) FY2024 Executive and Director Compensation | Name | Position | Total Compensation (US$) | | :--- | :--- | :--- | | Haiping Hu | CEO, Chairman | 675,060 | | Chao Liu | CFO, Director | 94,744 | | Jian Pei | Independent Director | 16,522 | | Xiang Luo | Independent Director | 16,522 | | Xin Zhang | Independent Director | - | [Major Shareholders and Related Party Transactions](index=94&type=section&id=Item%207.%20MAJOR%20SHAREHOLDERS%20AND%20RELATED%20PARTY%20TRANSACTIONS) The company engages in extensive related party transactions, primarily with entities controlled by its CEO, who is the controlling shareholder - The company has numerous transactions with related parties controlled by CEO Haiping Hu, including Zhuhai Investment, Bally Corp., and Shanghai Huiyang[510](index=510&type=chunk) - CEO Haiping Hu and his spouse have provided personal guarantees for numerous financing arrangements, including lines of credit and bank loans totaling tens of millions of dollars[520](index=520&type=chunk)[522](index=522&type=chunk)[527](index=527&type=chunk) Due to Related Parties (As of Dec 31) | (USD) | 2024 | 2023 | | :--- | :--- | :--- | | Zhuhai Investment (controlled by CEO) | 3,442,663 | 2,183,911 | | Shanghai Huiyang (controlled by CEO's family) | 235,001 | 800,785 | | **Total Due to Related Parties** | **4,196,805** | **4,464,165** | [Financial Information](index=97&type=section&id=Item%208.%20FINANCIAL%20INFORMATION) The company reports no material legal proceedings and does not intend to pay dividends, retaining earnings for business expansion - The company is not currently involved in any material legal or administrative proceedings[533](index=533&type=chunk) - The company has no present plan to pay cash dividends and intends to retain future earnings to finance business expansion[534](index=534&type=chunk) [Additional Information](index=98&type=section&id=Item%2010.%20ADDITIONAL%20INFORMATION) This section covers the company's corporate structure, share capital, and tax considerations in the Cayman Islands, PRC, and U.S - The company's authorized share capital is divided into **3.5 billion Class A Ordinary Shares** (1 vote) and **1.5 billion Class B Ordinary Shares** (20 votes)[547](index=547&type=chunk) - The Cayman Islands levies no corporate income tax, and the company has received a 20-year tax exemption certificate[550](index=550&type=chunk)[552](index=552&type=chunk) - In the PRC, the company is subject to a standard **25% Enterprise Income Tax**, and dividends from PRC subsidiaries are subject to a 10% withholding tax[553](index=553&type=chunk)[847](index=847&type=chunk) - The company does not expect to be classified as a Passive Foreign Investment Company (PFIC) for U.S. federal income tax purposes for the current taxable year[571](index=571&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=105&type=section&id=Item%2011.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company is exposed to interest rate, credit, liquidity, and foreign exchange risks - The company faces interest rate risk from its bank loans, credit risk from customer concentration, and **significant liquidity risk** due to its financial condition[581](index=581&type=chunk)[582](index=582&type=chunk)[583](index=583&type=chunk) - Significant foreign exchange risk exists as almost all revenues and assets are in RMB, while financial statements are reported in USD[584](index=584&type=chunk) PART II [Material Modifications to the Rights of Security Holders and Use of Proceeds](index=106&type=section&id=Item%2014.%20MATERIAL%20MODIFICATIONS%20TO%20THE%20RIGHTS%20OF%20SECURITY%20HOLDERS%20AND%20USE%20OF%20PROCEEDS) Shareholder rights were modified via a share re-designation, and proceeds from the 2021 IPO have been partially invested - In February 2024, shareholders approved the re-designation of Ordinary Shares into **Class A (1 vote) and Class B (20 votes) Ordinary Shares**[591](index=591&type=chunk) - From its 2021 IPO, the company received net proceeds of **$24.61 million**, of which **$10.76 million** has been invested as capital into the Sunrise Guizhou joint venture[593](index=593&type=chunk) [Controls and Procedures](index=106&type=section&id=Item%2015.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls were not effective due to several material weaknesses in internal control over financial reporting - Management concluded that **disclosure controls and procedures were not effective** as of December 31, 2024[595](index=595&type=chunk) - **Material weaknesses** in internal control were identified, including a lack of formal policies, insufficient staff with U.S. GAAP knowledge, and inadequate access restrictions[597](index=597&type=chunk) - Remediation efforts include hiring more qualified accounting personnel, implementing U.S. GAAP training, and preparing a comprehensive accounting policies manual[598](index=598&type=chunk) [Corporate Governance and Other Matters](index=107&type=section&id=Item%2016.%20Corporate%20Governance%20and%20Other%20Matters) This section covers governance topics, including a change in accountant and reliance on home country practices in lieu of certain Nasdaq rules - The company changed its independent registered public accounting firm on March 3, 2025, appointing **Wei, Wei & Co., LLP**[610](index=610&type=chunk) - As a foreign private issuer, the company follows Cayman Islands home country practice in lieu of certain Nasdaq listing rules, including those for shareholder approval[613](index=613&type=chunk)[615](index=615&type=chunk)[616](index=616&type=chunk) - The company has established a cybersecurity risk management process and reports that no incidents have materially affected the business to date[621](index=621&type=chunk) Principal Accountant Fees (USD) | Service | 2024 | 2023 | | :--- | :--- | :--- | | Audit fees | 322,700 | 381,100 | | **Total** | **322,700** | **381,100** | PART III [Financial Statements](index=110&type=section&id=Item%2018.%20FINANCIAL%20STATEMENTS) The audited financial statements include a 'Going Concern' uncertainty from the auditor due to the company's significant financial challenges - The independent auditor's report includes a **'Going Concern' paragraph**, citing significant working capital deficiency, recurring operating losses, and negative cash flows[637](index=637&type=chunk)[645](index=645&type=chunk) - The company adopted ASC 326 for credit losses on January 1, 2023, with an allowance for credit losses on accounts receivable of **$7.9 million** as of December 31, 2024[716](index=716&type=chunk)[717](index=717&type=chunk) - The company recorded significant impairment charges on inventories, totaling **$3.96 million in 2024** and **$7.24 million in 2023**[721](index=721&type=chunk) Consolidated Balance Sheet Highlights (As of Dec 31) | (USD) | 2024 | 2023 | | :--- | :--- | :--- | | **Total Current Assets** | 63,010,873 | 35,815,895 | | **Total Assets** | 143,023,032 | 120,504,530 | | **Total Current Liabilities** | 86,756,609 | 63,488,418 | | **Total Liabilities** | 115,728,359 | 75,172,766 | | **Total Equity** | 27,294,673 | 10,788,578 |