Financial Performance - For the six months ended June 30, 2024, the company reported a net loss of $689,554, compared to a net loss of $337,346 for the same period in 2023, indicating a 104.5% increase in losses year-over-year[130]. - Net loss for the six months ended June 30, 2024, was $689,554, an increase of $352,208 compared to a net loss of $337,346 for the same period in 2023[153]. - Net loss for the three months ended June 30, 2024, was $409,757, an increase of $161,915 compared to a net loss of $247,842 for the same period in 2023[159]. - Net non-operating expenses for the six months ended June 30, 2024, were $116,141, compared to non-operating income of $184,381 for the same period in 2023[152]. - Total operating expenses for the six months ended June 30, 2024, were $559,237, an increase of $100,002 or 21.78% compared to $459,235 for the same period in 2023[151]. - Operating expenses for the three months ended June 30, 2024, totaled $350,803, a decrease of $23,604 or 6.30% compared to $374,407 for the same period in 2023[157]. - Income tax expense for the three months ended June 30, 2024, was nil, compared to $57,958 for the same period in 2023[158]. Financial Position - The accumulated deficit as of June 30, 2024, stands at $61.19 million, reflecting the ongoing financial challenges faced by the company[130]. - As of June 30, 2024, the company reported an unrestricted accumulated deficit of $(61,186,925) and total accumulated deficit of $(45,995,280) compared to $(60,497,371) and $(45,305,726) respectively as of December 31, 2023[176]. - The company maintains a statutory reserve of $15,191,645, which is restricted retained earnings and cannot be distributed as cash dividends[176]. - The company is required to allocate at least 10% of its annual after-tax profit to a surplus reserve until it reaches 50% of its registered capital, which restricts the ability to distribute cash dividends[173][174]. - The company's contractual obligations as of June 30, 2024, total $16,334,466, including notes payable of $5,129,312 and entrusted loans of $11,143,634[179]. - Cash and equivalents as of June 30, 2024, were $68.10 million, with a current ratio of 5.68:1 and a liability-to-equity ratio of 0.25:1[161]. Cash Flow and Investments - Net cash used in operating activities for the six months ended June 30, 2024, was $248,132, a significant decrease from $69,042,292 for the same period in 2023[162]. - Net cash provided by investing activities for the six months ended June 30, 2024, was $68,542,364, compared to net cash used in investing activities of $69,994,412 for the same period in 2023[164]. - The company made a prepayment of $66.8 million to Hubei Bangyu New Energy Technology Co., Ltd. for energy storage battery systems as part of its expansion into energy storage solutions[163]. Business Strategy and Operations - The company is transitioning to an energy storage integrated solution provider, targeting high-growth potential industries such as large-scale photovoltaic and wind power stations[128]. - The company plans to pursue disciplined and targeted expansion strategies in market areas currently not served, indicating a focus on growth and diversification[128]. - The company is actively exploring opportunities to apply energy storage technologies to new industries, indicating a strategic shift towards innovation and market expansion[128]. - The company currently holds five power generating systems that are not producing electricity, highlighting operational challenges[130]. - The company has not recognized any income from its joint venture with Erdos TCH due to uncertainties in collection, despite receiving monthly compensation of RMB 1 million ($145,460) until operations resume[135]. Funding and Financial Support - Management intends to raise additional funds through private or public offerings or bank loans to support its business plan and operations[131]. - The company believes it has sufficient cash and access to loans to meet its working capital needs, supported by the Chinese government's backing for energy-saving businesses[179]. Currency and Market Risks - The company's operations are primarily in the PRC, making its earnings susceptible to foreign currency exchange rate fluctuations, particularly between the U.S. dollar and RMB[181].
Smart Powerr (CREG) - 2024 Q2 - Quarterly Report