Exhibit 99.1
SUNRISE NEW ENERGY CO., LTD.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
| As
of June 30, 2025 | As
of 2024 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Accounts receivable, net | ||||||||
| Notes receivable | ||||||||
| Inventories, net | ||||||||
| Due from related parties | ||||||||
| Prepaid expenses and other current assets | ||||||||
| TOTAL CURRENT ASSETS | ||||||||
| NON-CURRENT ASSETS | ||||||||
| Long-term prepayments and other non-current assets | ||||||||
| Plant, property and equipment, net | ||||||||
| Land use rights, net | ||||||||
| Intangible assets, net | ||||||||
| Long-term investments, net | ||||||||
| Finance lease right-of-use assets | ||||||||
| TOTAL NON-CURRENT ASSETS | ||||||||
| TOTAL ASSETS | ||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable | ||||||||
| Notes payable | ||||||||
| Short-term loan | ||||||||
| Deferred revenue | ||||||||
| Deferred government subsidy | ||||||||
| Due to related parties | ||||||||
| Income taxes payable | ||||||||
| Finance lease liabilities, current | ||||||||
| Long-term loan, current | ||||||||
| Long-term payables, current | ||||||||
| Consideration payable, current | ||||||||
| Accrued expenses and other current liabilities | ||||||||
| TOTAL CURRENT LIABILITIES | ||||||||
| NON-CURRENT LIABILITIES | ||||||||
| Long-term loan, non-current | ||||||||
| Finance lease liabilities, non-current | ||||||||
| Long term payable, non-current | ||||||||
| Consideration payable, non-current | ||||||||
| Deferred tax liabilities, net | ||||||||
| TOTAL NON-CURRENT LIABILITIES | ||||||||
| TOTAL LIABILITES | ||||||||
| COMMITMENTS AND CONTINGENCIES (Note 23) | ||||||||
| EQUITY | ||||||||
| Class A ordinary shares* ( | ||||||||
| Class B ordinary shares* ( | ||||||||
| Subscription receivable | ( | ) | ||||||
| Additional paid-in capital | ||||||||
| Statutory reserves | ||||||||
| Accumulated deficits | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| TOTAL SHAREHOLDERS’ DEFICIT ATTRIBUTABLE TO SUNRISE NEW ENERGY CO., LTD. ORDINARY SHAREHOLDERS | ( | ) | ( | ) | ||||
| Non-controlling interests | ||||||||
| TOTAL EQUITY | ||||||||
| TOTAL LIABILITIES AND TOTAL EQUITY | $ | $ | ||||||
| * |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-1
SUNRISE NEW ENERGY CO., LTD.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
| For the six months ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| REVENUES, NET | ||||||||
| Products | $ | $ | ||||||
| Services | ||||||||
| Total revenues | ||||||||
| COSTS OF REVENUES | ||||||||
| Products | ||||||||
| Services | ||||||||
| Total cost of revenues | ||||||||
| GROSS PROFIT | ||||||||
| OPERATING EXPENSES | ||||||||
| Selling expenses | ||||||||
| General and administrative expenses | ||||||||
| Research and development expenses | ||||||||
| Total operating expenses | ||||||||
| LOSS FROM OPERATIONS | ( | ) | ( | ) | ||||
| OTHER INCOME (EXPENSES) | ||||||||
| Investment income | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Other (expense) income, net | ( | ) | ||||||
| Total other expenses, net | ( | ) | ( | ) | ||||
| LOSS BEFORE INCOME TAXES | ( | ) | ( | ) | ||||
| Income taxes provision | ||||||||
| NET LOSS | ( | ) | ( | ) | ||||
| Less: net loss attributable to non-controlling interests | ( | ) | ( | ) | ||||
| NET LOSS ATTRIBUTABLE TO SUNRISE NEW ENERGY CO., LTD. ORDINARY SHAREHOLDERS | $ | ( | ) | $ | ( | ) | ||
| OTHER COMPREHENSIVE LOSS | ||||||||
| Foreign currency translation adjustment | ( | ) | ||||||
| TOTAL COMPREHENSIVE LOSS | ( | ) | ( | ) | ||||
| Less: comprehensive loss attributable to non-controlling interest | ( | ) | ( | ) | ||||
| COMPREHENSIVE LOSS ATTRIBUTABLE TO ORIDNARY SHAREHOLDERS OF SUNRISE NEW ENERGY CO., LTD. | $ | ( | ) | $ | ( | ) | ||
| LOSS PER SHARE | ||||||||
| Basic and diluted - Class A and Class B ordinary shares | $ | ( | ) | $ | ( | ) | ||
| WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING | ||||||||
| Basic and diluted - Class A and Class B ordinary shares | ||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-2
SUNRISE NEW ENERGY CO., LTD.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
| Ordinary shares* | Accumulated | Total equity (deficit) | ||||||||||||||||||||||||||||||||||||||||||||||
| Class A ordinary shares | Class B ordinary shares | Subscription | Additional paid-in | Statutory | Accumulated | other Comprehensive | attributable to ordinary | Non- Controlling | Total | |||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | receivable | capital | reserves | deficits | loss | shareholders | interests | equity | |||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2023 | $ | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Extinguishment on redeemable non-controlling interests | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
| Accretion on redeemable non-controlling interests | - | - | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||
| Share-based compensation | ||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2024 | $ | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | $ | ||||||||||||||||||||||||||||||||
| Balance as of December 31, 2024 | $ | $ | $ | ( |
) | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | $ | ||||||||||||||||||||||||||||||
| Collection of subscription receivable | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
| Statutory reserve | - | - | ( |
) | ||||||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||
| Share-based compensation | ||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2025 | $ | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | $ | ||||||||||||||||||||||||||||||||
| * |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-3
SUNRISE NEW ENERGY CO., LTD.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjusted to reconcile net loss to cash used in operating activities | ||||||||
| Share-based compensation | ||||||||
| Interest expense | ||||||||
| Depreciation and amortization | ||||||||
| Deferred tax benefits | ( | ) | ( | ) | ||||
| Investment income | ( | ) | ( | ) | ||||
| Allowance for credit loss | ( | ) | ||||||
| Impairment on inventory | ||||||||
| Amortization of right-of-use assets | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Notes receivable | ||||||||
| Due from related parties | ||||||||
| Due to related parties | ( | ) | ( | ) | ||||
| Inventories | ( | ) | ( | ) | ||||
| Prepaid expenses and other current assets | ( | ) | ( | ) | ||||
| Accounts payable | ( | ) | ||||||
| Notes payable | ( | ) | ( | ) | ||||
| Income taxes payable | ||||||||
| Deferred revenue | ||||||||
| Accrued expenses and other current liabilities | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities | ||||||||
| Purchase of plant, property and equipment | ( | ) | ( | ) | ||||
| Purchase of land use rights | ( | ) | ||||||
| Loans to related parties | ( | ) | ||||||
| Repayment of loans to third parties | ||||||||
| Redemption of short-term investment | ||||||||
| Prepaid for investment | ( | ) | ||||||
| Repayment of prepaid for investment | ||||||||
| Net cash (used in) provided by investing activities | ( | ) | ||||||
| Cash flows from financing activities | ||||||||
| Loan from related parties | ||||||||
| Repayment on loan from related parties | ( | ) | ( | ) | ||||
| Proceeds from short-term loan | ||||||||
| Repayment on short-term loan | ( | ) | ( | ) | ||||
| Proceeds from long-term loan | ||||||||
| Repayment on long-term loan | ( | ) | ( | ) | ||||
| Prepayment of acquisition cost of long-term loan | ( | ) | ||||||
| Repayment on long-term payables | ( | ) | ( | ) | ||||
| Repayment on finance lease liabilities | ( | ) | ( | ) | ||||
| Proceeds from subscription receivable | ||||||||
| Proceeds from advance capital contributions (Note 17) | ||||||||
| Net cash provided by financing activities | ||||||||
| Effect of foreign exchange rate on cash and cash equivalents | ( | ) | ||||||
| Net increase in cash and cash equivalents | ||||||||
| Cash, cash equivalents and restricted cash, beginning of period | ||||||||
| Cash, cash equivalents and restricted cash, end of period | $ | $ | ||||||
| Cash, cash equivalents and restricted cash, end of period | ||||||||
| Less: restricted cash | ||||||||
| Cash and cash equivalents, end of period | ||||||||
| Supplemental disclosure of cash flow information | ||||||||
| Interest paid | ||||||||
| Income tax paid | ||||||||
| Supplemental noncash transactions | ||||||||
| Plant, property and equipment obtained from finance lease right-of-use assets at the end of the lease term | ||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-4
SUNRISE NEW ENERGY CO., LTD.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – ORGANIZATION AND BUSINESS DESCRIPTION
Sunrise New Energy Co., Ltd. (“EPOW”), previously known as Global Internet of People, Inc., or GIOP, is an exempted company with limited liability incorporated under the laws of the Cayman Islands on February 22, 2019. It is a holding company with no business operation.
On March 22, 2019, EPOW incorporated Global Mentor Board Information Technology Limited (“GMB HK”), a limited liability company formed in accordance with laws and regulations of Hong Kong. GMB HK is currently not engaging in any active business and is merely acting as a holding company of Beijing Mentor Board Union Information Technology Co, Ltd. (“GIOP BJ”). GIOP BJ was incorporated by GMB HK as a Foreign Enterprise in China on June 3, 2019.
GIOP BJ incorporated Global Mentor Board (Zibo) Information Technology Co., Ltd. (“SDH”, formerly known as Global Mentor Board (Beijing) Information Technology Co., Ltd.) and Shidong Cloud (Beijing) Education Technology Co., Ltd. (“Shidong Cloud”) on December 5, 2014 and December 22, 2021, respectively.
SDH is a limited liability company incorporated on December 5, 2014 under the laws of China. Since 2017, SDH established several subsidiaries in China, including Global Mentor Board (Hangzhou) Technology Co., Ltd. (“GMB (Hangzhou”) and its subsidiary, Guizhou Yuanneng Zhihui Enterprise Management Partnership Enterprise (Limited Partnership) (“Guizhou Yuanneng”), Global Mentor Board (Shanghai) Enterprise Management Consulting Co., Ltd. (“GMB Consulting”), Shanghai Voice of Seedling Cultural Media Co., Ltd. (“GMB Culture”), which has a subsidiary, Mentor Board Voice of Seedling (Shanghai) Cultural Technology Co., Ltd. (“GMB Technology”), Shidong (Beijing) Information Technology Co., Ltd. (“GMB (Beijing)”), and, Beijing Mentor Board Health Technology Co., Ltd. (“GMB Health”) and its subsidiary Shidong Yike (Beijing) Technology Co., Ltd. (“Shidong Yike”), Zibo Shidong Digital Technology Co., Ltd. (“Zibo Shidong”) and its subsidiaries. SDH and its subsidiaries are primarily engaged in providing peer-to-peer knowledge sharing and enterprise services to clients in the People’s Republic of China (“PRC”).
On October 8, 2021, EPOW incorporated SDH (HK) New Energy Tech Co., Ltd. (“SDH New Energy”), a limited liability company formed in accordance with laws and regulations of Hong Kong. SDH New Energy is acting as a holding company of Zhuhai (Zibo) Investment Co., Ltd (“Zhuhai Zibo”) and Zhuhai (Guizhou) New Energy Investment Co., Ltd. (“Zhuhai Guizhou”). Zhuhai Zibo and Zhuhai Guizhou were incorporated by SDH New Energy as Foreign Enterprises in China on October 15, 2021 and November 23, 2021, respectively.
On August 26, 2022, GMB HK transferred its equity interest in GIOP BJ to Zhuhai Zibo. GIOP BJ eventually became the wholly owned subsidiary of Zhuhai Zibo.
On
November 8, 2021, Zhuhai Zibo incorporated Sunrise (Guizhou) New Energy Materials Co., Ltd. (“Sunrise Guizhou”). Sunrise
Guizhou incorporated Sunrise (Guxian) New Energy Materials Co., Ltd. (“Sunrise Guxian”) and Guizhou Sunrise Technology Innovation
Research Co., Ltd. (“Innovation Research”) on April 26, 2022 and December 13, 2022, respectively. On July 2, 2022, Sunrise
Guizhou entered into purchase agreements with original shareholders of Guizhou Sunrise Technology Co., Ltd. (“Sunrise Tech”,
formerly as Anlong Hengrui Graphite Material Co., Ltd.) to acquire
As described below, EPOW, through a restructuring which was accounted for as a reorganization of entities under common control (the “Reorganization”), became the ultimate parent entity of its subsidiaries, and the primary beneficiary of the variable interest entity (the “VIE”), SDH, and the VIE’s subsidiaries for accounting purposes under accounting principles generally accepted in the United States of America (“U.S. GAAP”) to the extent that SDH’s the financials results of is consolidated to the unaudited condensed consolidated statements under U.S. GAAP. EPOW, its subsidiaries, the VIE and the VIE’s subsidiaries, are collectively hereinafter referred as the “Company”.
On June 10, 2019, GIOP BJ entered into a series of contractual arrangements with SDH and shareholders of SDH. These agreements include an Exclusive Technical and Consulting Service Agreement, an Exclusive Service Agreement, an Exclusive Option Agreement and Powers of Attorney (collectively “VIE Agreements”). Pursuant to the above VIE Agreements, GIOP BJ has the exclusive right to provide SDH with comprehensive technical support, consulting services and other services in relation to the principal business during the term the VIE Agreement. All the above contractual arrangements obligate GIOP BJ to absorb a majority of the risk of loss from business activities of SDH and entitle GIOP BJ to receive a majority of their residual returns. In essence, GIOP BJ is the primary beneficiary of SDH for accounting purpose under U.S. GAAP. EPOW, together with its wholly owned subsidiaries, GIOP BJ, VIE and VIE’s subsidiaries were effectively controlled by the same shareholders before and after the reorganization. Therefore, SDH is considered as a VIE under the Statement of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810 “Consolidation”.
F-5
The unaudited condensed consolidated financial statements reflect the activities of the Company and each of the following entities:
| Name | Date of Incorporation | Place of incorporation | Percentage of effective ownership | Principal Activities | ||||
| Subsidiaries | ||||||||
| Global Mentor Board Information Technology Limited (“GMB HK”) | ||||||||
| Beijing Mentor Board Union Information Technology Co, Ltd. (“GIOP BJ”) | ||||||||
| Shidong Cloud (Beijing) Education Technology Co., Ltd (“Shidong Cloud”) | ||||||||
| SDH (HK) New Energy Tech Co., Ltd. (“SDH New Energy”) | ||||||||
| Zhuhai (Zibo) Investment Co., Ltd. (“Zhuhai Zibo”) | ||||||||
| Zhuhai (Guizhou) New Energy Investment Co., Ltd. (“Zhuhai Guizhou”) | ||||||||
| Sunrise (Guizhou) New Energy Materials Co., Ltd. (“Sunrise Guizhou”) | ||||||||
| Guizhou Sunrise Technology Co., Ltd. (“Sunrise Tech”) | ||||||||
| Sunrise (Guxian) New Energy Materials Co., Ltd. (“Sunrise Guxian”) | ||||||||
| Guizhou Sunrise Technology Innovation Research Co., Ltd. (“Innovation Research”) | ||||||||
| Shenzhen Sunrise Yitan New Energy Technology Co., Ltd. (“Sunrise Yitan”) | ||||||||
| Shenzhen Sunrise Suiyuan New Materials Technology Co., Ltd. (“Sunrise Suiyuan”) | ||||||||
| Guizhou Chenhui Trading Co., Ltd. (“Sunrise Chenhui”) | | |||||||
| Guizhou Yihui New Energy Co., Ltd. | ||||||||
| Sunrise Anhui New Energy Materials Co., Ltd. | ||||||||
| Variable Interest Entity (“VIE”) and subsidiaries of VIE | ||||||||
| Global Mentor Board (Zibo) Information Technology Co., Ltd. (“SDH” or “VIE”) | ||||||||
| Global Mentor Board (Hangzhou) Technology Co., Ltd. (“GMB (Hangzhou)”) | ||||||||
| Global Mentor Board (Shanghai) Enterprise Management Consulting Co., Ltd. (“GMB Consulting”) | ||||||||
| Shanghai Voice of Seedling Cultural Media Co., Ltd. (“GMB Culture”) | ||||||||
| Shidong (Beijing) Information Technology Co., LTD. (“GMB (Beijing)”) | ||||||||
| Mentor Board Voice of Seeding (Shanghai) Cultural Technology Co., Ltd. (“GMB Technology”) | ||||||||
| Shidong Zibo Digital Technology Co., Ltd. (“Zibo Shidong”) | ||||||||
| Beijing Mentor Board Health Technology Co., Ltd (“GMB Health”) | ||||||||
| Shidong Yike (Beijing) Technology Co., Ltd. (“Shidong Yike”) | ||||||||
| Guizhou Yuanneng Zhihui Enterprise Management Partnership Enterprise (Limited Partnership) (“Guizhou Yuanneng”) |
F-6
The VIE contractual arrangements
Neither the Company nor the Company’s subsidiaries own any equity interest in SDH. Instead, The Company directs the activities and receives the economic benefits of SDH’s business operation through a series of contractual arrangements. GIOP BJ, SDH and its shareholders entered into a series of contractual arrangements, also known as VIE Agreements, in June 2019.
Each of the VIE Agreements is described in detail below:
Exclusive Technical and Consulting Services Agreement
Pursuant to the Exclusive Technical and Consulting Services Agreement between SDH and GIOP BJ (the “Exclusive Service Agreement”), GIOP BJ provides SDH with technical support, consulting services, business support and other management services relating to its day-to-day business operations and management, on an exclusive basis, utilizing its advantages in technology, human resources, and information. For services rendered to SDH by GIOP BJ under the Exclusive Service Agreement, GIOP BJ is entitled to collect a service fee approximately equal to SDH’s earnings before corporate income tax, i.e., SDH’s revenue after deduction of operating costs, expenses and other taxes, subject to adjustment based on services rendered and SDH’s operation needs.
This agreement became effective on June 10, 2019 and will remain effective unless otherwise terminated as required by laws or regulations, or by relevant governmental or regulatory authorities otherwise terminated earlier in accordance with the provisions of this agreement or relevant agreements separately executed between the parties. Nevertheless, this agreement shall be terminated after all the equity interest in SDH held by its shareholders and/or all the assets of SDH have been legally transferred to GIOP BJ and/or its designee in accordance with the Exclusive Option Agreement (described below).
The Chief Executive Officer (“CEO”) of GIOP BJ, Mr. Haiping Hu, is currently managing SDH pursuant to the terms of the Exclusive Service Agreement. The Exclusive Service Agreement does not prohibit related party transactions. The Company’s audit committee will be required to review and approve in advance any related party transactions, including transactions involving GIOP BJ or SDH.
Equity Pledge Agreement
Under
the Equity Pledge Agreement between GIOP BJ, and shareholders of SDH, together holding
F-7
The Equity Pledge Agreement is effective until: (1) the secured debt in the scope of pledge is cleared off; and (2) Pledgers transfer all the pledged equity interests to Pledgees according to the Equity Pledge Agreement, or other entity or individual designated by it.
The purposes of the Equity Pledge Agreement are to (1) guarantee the performance of SDH’s obligations under the Exclusive Service Agreement; (2) make sure the SDH Shareholders do not transfer or assign the pledged equity interests, or create or allow any encumbrance that would prejudice GIOP BJ’s interests without GIOP BJ’s prior written consent. In the event SDH breaches its contractual obligations under the Exclusive Service Agreement, GIOP BJ will be entitled to dispose of the pledged equity interests.
Exclusive Option Agreement
Under
the Exclusive Option Agreement, the SDH Shareholders irrevocably granted GIOP BJ (or its designee) an exclusive option to purchase, to
the extent permitted under PRC law, once or at multiple times, at any time, part or all of their equity interests in SDH or the assets
of SDH. The option price to be paid by GIOP BJ to each shareholder of SDH is RMB
Under the Exclusive Option Agreement, GIOP BJ may at any time under any circumstances, purchase, or have its designee purchase, at its discretion, to the extent permitted under PRC law, all or part of the SDH Shareholders’ equity interests in SDH or the assets of SDH. The Equity Pledge Agreement, together with the Equity Pledge Agreement, the Exclusive Service Agreement, and Powers of Attorney, enable GIOP BJ to be the primary beneficiary of SDH.
The Exclusive Option Agreement remains effective until all the equity or assets of SDH is legally transferred under the name of GIOP BJ and/or other entity or individual designated by it, or unilaterally terminated by GIOP BJ within 30-day prior written notice.
Powers of Attorney
Under each of the Powers of Attorney, the SDH Shareholders authorized GIOP BJ to act on their behalf as their exclusive agent and attorney with respect to all rights as shareholders, including, but not limited to: (a) attending shareholders’ meetings; (b) exercising all the shareholder’s rights, including voting, that shareholders are entitled to under the laws of China and the Articles of Association, including, but not limited to, the sale or transfer or pledge or disposition of shares in part or in whole; and (c) designating and appointing on behalf of shareholders the legal representative, the executive director, supervisor, the chief executive officer, and other senior management members of SDH.
The Powers of Attorney are irrevocable and continuously valid from the date of execution of the Powers of Attorney, so long as the SDH Shareholders own the equity interests of SDH.
F-8
Spousal Consent
Pursuant to the Spousal Consent, each spouse of the individual shareholders of SDH irrevocably agreed that the equity interest in SDH held by their respective spouses would be disposed of pursuant to the Equity Interest Pledge Agreement, the Exclusive Option Agreement, and the Powers of Attorney. Each spouse of the shareholders agreed not to assert any rights over the equity interest in SDH held by their respective spouses. In addition, in the event that any spouse obtains any equity interest in SDH through the respective shareholder for any reason, he or she agrees to be bound by the contractual arrangements.
Risks in relation to the VIE structure
EPOW believes that the contractual arrangements among GIOP BJ, the VIE and their respective shareholders are in compliance with PRC laws and regulations and are legally enforceable. However, uncertainties in the PRC legal system could limit the EPOW’s ability to enforce the contractual arrangements. If the legal structure and contractual arrangements were found to be in violation of PRC laws and regulations, the PRC government could:
| ● | revoke the business and operating licenses of the Company’s PRC subsidiary and the VIE; |
| ● | discontinue or restrict the operations of any related-party transactions between the Company’s PRC subsidiary and the VIE; |
| ● | limit the Company’s business expansion in China by way of entering into contractual arrangements; |
| ● | impose fines or other requirements with which the Company’s PRC subsidiary and the VIE may not be able to comply; |
| ● | require the Company or the Company’s PRC subsidiary and the VIE to restructure the relevant ownership structure or operations; or |
| ● | restrict or prohibit the Company’s use of the proceeds of the additional public offering to finance. |
The Company’s ability to conduct its wisdom sharing and enterprise consulting business may be negatively affected if the PRC government were to carry out any of the aforementioned actions. As a result, the Company may not be able to consolidate its VIE in its unaudited condensed consolidated financial statements as it may lose the ability to receive economic benefits from the VIE. The Company, however, does not believe such actions would result in the liquidation or dissolution of the Company, its PRC subsidiary and VIE.
For the six months ended June 30, 2025, cash transfers among EPOW,
its subsidiaries, the VIE, and the VIE’s subsidiaries included: (i) an interest-free loan of $
F-9
The
Company provided interest free loans of $
The following financial statements of the VIE and the VIE’s subsidiaries were included in the Company’s unaudited condensed consolidated financial statements as of June 30, 2025 and December 31, 2024 and for the six months ended June 30, 2025 and 2024:
| As
of June 30, 2025 | As
of December 31, 2024 | |||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Notes receivable | ||||||||
| Inventories | ||||||||
| Due from related parties | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Long term prepayments and other non-current assets | ||||||||
| Plant, property and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Total non-current assets | ||||||||
| Total assets | $ | $ | ||||||
| Accounts payable | $ | $ | ||||||
| Deferred revenue | ||||||||
| Deferred government subsidy | ||||||||
| Income taxes payable | ||||||||
| Due to related parties | ||||||||
| Accrued expenses and other current liabilities | ||||||||
| Total current liabilities | ||||||||
| Total liabilities | $ | $ | ||||||
| For
the six months ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Revenues, net | $ | $ | ||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| For
the six months ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Net cash provided by (used in) operating activities | $ | $ | ( | ) | ||||
| Net cash (used in) provided by investing activities | $ | ( | ) | $ | ||||
| Net cash provided by (used in) financing activities | $ | $ | ( | ) | ||||
F-10
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and have been consistently applied. Certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with U.S. GAAP have been unaudited condensed or omitted consistent with Article 10 of Regulation S-X. In the opinion of management, the unaudited condensed consolidated financial statements and accompanying notes include all adjustments (consisting of normal recurring adjustments) considered necessary for the fair statement of the Company’s financial position, and results of operations and cash flows. Interim results of operations are not necessarily indicative of the results for the full year or for any future period.
Principles of consolidation
The unaudited condensed consolidated financial statements include the financial statements of the Company, its subsidiaries, the VIE and VIE’s subsidiaries for which the Company is the ultimate primary beneficiary for accounting purpose only under U.S. GAAP.
A
subsidiary is an entity in which the Company, directly or indirectly, controls more than one half of the voting power, has the power
to appoint or remove the majority of the members of the board of directors, to cast a majority of votes at the meeting of the board of
directors or to govern the financial and operating policies of the investee under a statute or agreement among the shareholders or equity
holders. The Company owns
All transactions and balances between the Company, its subsidiaries, the VIE and VIE’s subsidiaries have been eliminated upon consolidation.
Non-controlling interests
Non-controlling interests are recognized to reflect the portion of their equity that is not attributable, directly
or indirectly, to the Company as the controlling shareholder. As of June 30, 2025, for the Company’s consolidated subsidiaries,
the VIE, and the VIE’ s subsidiaries, non-controlling interests represent: a) a non-controllingshareholder’s
As
of December 31, 2024, for the Company’s consolidated subsidiaries, the VIE and VIE’ s subsidiaries, non-controlling interests
represent: a) a non-controlling shareholder’s
Non-controlling interests are presented as a separate line item in the equity section of the Company’s unaudited condensed consolidated balance sheets and have been separately disclosed in the Company’s unaudited condensed consolidated statements of operations and comprehensive loss to distinguish the interests from that of the Company.
Use of estimates
The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates and judgments are based on historical information, information that is currently available to the Company and on various other assumptions that the Company believes to be reasonable under the circumstances. Significant estimates required to be made by management, include, but are not limited to, the assessment of the allowance for credit loss, inventory valuation, depreciable lives of property and equipment, impairment of long-lived assets, impairment of long-term investments that do not have readily determinable fair values, realization of deferred tax assets, accretion to redemption value of redeemable non-controlling interests, and extinguishment of the redeemable non-controlling interests. Actual results could differ from those estimates.
F-11
Foreign currency translation
The Company’s principal country of operations is the PRC. The financial position and results of its operations are determined using RMB, the local currency, as the functional currency. The Company’s unaudited condensed consolidated financial statements are reported using the U.S. Dollars (“US$” or “$”). The results of operations and the unaudited condensed consolidated statements of cash flows denominated in foreign currency are translated at the average rate of exchange during the reporting period. Assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the applicable rates of exchange in effect at that date. The equity denominated in the functional currency is translated at the historical rate of exchange at the time of capital contribution. Because cash flows are translated based on the average translation rate, amounts related to assets and liabilities reported on the unaudited condensed consolidated statements of cash flows will not necessarily agree with changes in the corresponding balances on the unaudited condensed consolidated balance sheets. Translation adjustments arising from the use of different exchange rates from period to period are included as a separate component of accumulated other comprehensive loss included in unaudited condensed consolidated statements of changes in shareholders’ equity. Gains and losses from foreign currency transactions are included in the Company’s unaudited condensed consolidated statements of operations and comprehensive loss.
The
value of RMB against US$ and other currencies may fluctuate and is affected by, among other things, changes in the PRC’s political
and economic conditions. Any significant revaluation of RMB may materially affect the Company’s financial condition in terms of
US$ reporting.
| June
30, 2025 | December
31, 2024 | June 30, 2024 | ||||
| Period-end spot rate | US$ | US$ | US$ | |||
| Average rate | US$ | US$ | US$ |
Fair value measurements
The Company follows the provisions of ASC 820, Fair Value Measurements and Disclosures. ASC 820 clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:
Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.
Level 2 - Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.
Level 3 - Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.
The carrying amounts reported in the balance sheets for cash and cash equivalents, restricted cash, accounts receivable, notes receivable, due from related parties, prepaid expenses and other current assets, short-term loan, deferred revenue, income taxes payable, accounts payable, notes payable, due to related parties, accrued expenses and other current liabilities approximate their fair value based on the short-term maturity of these instruments. The carrying amount of long-term loans, financial lease liabilities, long-term payables and consideration payable approximates fair value as its interest rates are at the same level as the current market yield for comparable loans.
The Company’s non-financial assets, such as plant, property and equipment, land use rights and financial lease right-of-use assets would be measured at fair value only if they were determined to be impaired.
F-12
Cash and cash equivalents
Cash and cash equivalents include cash on hand and demand deposits in accounts maintained with commercial banks, as well as highly liquid investments which are unrestricted as to withdrawal or use and are readily convertible to known amounts of cash within three months. The interest incomes of highly liquid investments are reported in the Company’s unaudited condensed consolidated statements of operations and comprehensive loss. The Company maintains the bank accounts in Mainland China and Hong Kong. Cash balances in bank accounts in Mainland China and Hong Kong are not insured by the U.S. Federal Deposit Insurance Corporation or other programs.
Restricted cash
Restricted cash represents bank deposits with designated use, which cannot be withdrawn without certain approval or notice. Such restricted cash mainly relates to the deposit for commercial note issuance.
On December 14, 2023, Sunrise Guizhou entered into a banker’s
acceptance note contract with Shanghai Pudong Development Bank Co., Ltd. (“SPD Bank”) for issuing banker’s acceptance
notes to the suppliers of Sunrise Guizhou. Pursuant to the contract, Sunrise Guizhou was obliged to deposit
On July 31, 2024, Sunrise Guizhou entered into a banker’s acceptance
note contract with China Everbright Bank Company Limited (the “Everbright Bank”) for issuing banker’s acceptance notes
to the suppliers of Sunrise Guizhou. Pursuant to the contract, Sunrise Guizhou was obliged to deposit
Short-term investments
The Company evaluates whether an investment is other-than-temporarily impaired based on the specific facts and circumstances. Factors that are considered in determining whether an other-than-temporary decline in value has occurred include the market value of the security in relation to its cost basis, the financial condition of the investee, and the intent and ability to retain the investment for a sufficient period of time to allow for recovery in the market value of the investment.
Accounts receivable, net
Accounts receivables mainly represent amounts due from clients in the ordinary course of business and are recorded net of allowance for credit loss.
F-13
The
Company used an expected credit loss model for the impairment of financial instruments mentioned above as of period ends pursuant to
ASC 326 Financial Instruments – Credit Losses (“ASC 326”). For the allowance of the accounts receivable, the Company
believes the aging of accounts receivables is a reasonable parameter to estimate expected credit loss, and determines expected credit
losses for accounts receivables using an aging schedule as of period ends. The expected credit loss rates under each aging schedule were
developed on the basis of the average historical loss rates from previous years, and adjusted to reflect the effects of those differences
in current conditions and forecasted changes. The Company measured the expected credit losses of accounts receivables on a collective
basis. When an accounts receivable does not share risk characteristics with other accounts receivables, management will evaluate such
accounts receivable for expected credit loss on an individual basis. Doubtful accounts balances are written off and deducted from allowance
for credit loss, when receivables are deemed uncollectible, after all collection efforts have been exhausted and the potential for recovery
is considered remote. The allowance for credit loss was $
Inventories
The inventories as of June 30, 2025 consisted of raw materials, materials in transit, work in process and finished goods. Finished goods were mainly graphite anode materials, health service gift cards, learning course gift cards, Chinese tea, latex pillows, and health care products.
The costs of inventories include the cost of raw materials, freight, direct labor and related production overhead. The cost of inventories is calculated using the weighted average method. Inventory shall be measured at the lower of cost and net realizable value. Net realizable value is estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. When evidence exists that the net realizable value of inventory is lower than its cost, the difference shall be recognized as a loss in earnings in the period in which it occurs.
The impairment of inventories provided for lower of cost and net realizable
value was and $
Lease
At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is or contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for a consideration.
To assess whether a contract is or contains a lease, the Company assesses whether the contract involves the use of an identified asset, whether it has the right to obtain substantially all the economic benefits from the use of the asset and whether it has the right to control the use of the asset.
A lease arrangement is being evaluated for classification as operating or financing upon lease commencement. The right-of-use assets and related lease liabilities are recognized at the lease commencement date.
Lease liabilities, which represent the Company’s obligation to make lease payments arising from the lease, and corresponding right of-use assets, which represent the Company’s right to use an underlying asset for the lease term, are recognized at the commencement date of the lease based on the present value of fixed future payments, calculated using the discount rate implicit in the lease, if available, or the Company’s incremental borrowing rate.
The right-of-use of asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and less any lease incentive received.
Finance lease
Finance leases are generally those leases that transfer ownership to the Company or allow the Company to purchase assets at a nominal amount by the end of the lease term. Assets acquired under finance leases are recorded as finance lease right-of-use, or ROU, assets.
F-14
The
Company’s leases have initial terms ranging from
For finance lease, lease expense is generally front-loaded as the finance lease ROU asset is depreciated on a straight-line basis over the amortization period, but interest expense on the lease liability is recognized in interest expense using the effective interest method which results in more expense during the early years of the lease.
Operating lease
For operating leases, lease expense relating to fixed payments is recognized on a straight-line basis over the lease term. Additionally, the Company elected not to recognize leases with lease terms of 12 months or less at the commencement date. Lease payments on short-term leases are recognized as an expense on a straight-line basis over the lease term, not included in lease liabilities.
Sales and leaseback contracts
The Company enters into sale and leaseback transactions. The Company acts as the seller-lessee, transfers its assets to a third-party entity (the buyer-lessor) and then leases the transferred assets back from the buyer-lessor at a contract designated rental price. The Company evaluates if sales of the underlying assets in the sale and leaseback contract have occurred in accordance with ASC 606. When a sale and leaseback transaction does not qualify for sale accounting, the transaction is accounted for as a financing transaction by the seller-lessee and a lending transaction by the buyer-lessor. The seller-lessee shall not derecognize the transferred asset and shall account for any amounts received as a financial liability.
Plant, property and equipment, net
Plant,
property and equipment are stated at cost less accumulated depreciation.
| Building | ||
| Machines | ||
| Electronic equipment | ||
| Furniture, fixtures and equipment | ||
| Vehicle | ||
| Leasehold improvements |
Expenditures for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized. The cost and related accumulated depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the unaudited condensed consolidated statements of operation and comprehensive loss in other income or expenses.
Land use right, net
Land
use rights are recorded at cost less accumulated amortization. Land use rights are amortized on a straight-line basis over the remaining
term of the land certificates, from
Intangible assets, net
The
Company’s intangible assets represent intellectual property rights on manufacturing graphite anode materials from capital injection
by a non-controlling shareholder of Sunrise Guizhou and the copyright of course videos purchased from a third party including but not
limited to course videos which cover subjects such as entrepreneurship development, financial service, corporate governance, team management,
marketing strategy and etc. Intangible assets are stated at cost less accumulated amortization and impairment. Intangible assets are
amortized on a straight-line basis over their estimated useful lives. The estimated useful lives of intangible assets are determined
to be
F-15
Long-term investments
Equity method investments in investees represent the Company’s investments in privately held companies, over which it has significant influence but does not own a majority equity interest or otherwise control. The Company applies the equity method to account for an equity investment, in common stock or in-substance common stock, according to ASC 323 “Investment — Equity Method and Joint Ventures”.
An investment in in-substance common stock is an investment in an entity that has risk and reward characteristics that are substantially similar to that entity’s common stock. The Company considers subordination, risks and rewards of ownership and obligation to transfer value when determining whether an investment in an entity is substantially similar to an investment in that entity’s common stock.
Under
the equity method, the Company’s share of the post-acquisition profits or losses of the equity investee is recognized in the consolidated
income statements and its share of post-acquisition movements in accumulated other comprehensive income is recognized in shareholders’
equity. When the Company’s share of losses in the equity investee equals or exceeds its interest in the equity investee, the Company
does not recognize further losses, unless the Company has incurred obligations or made payments or guarantees on behalf of the equity
investee. Investment income (loss) for long-term investments of $
For other equity investments that do not have readily determinable fair values and over which the Company has neither significant influence nor control through investments in common stock or in-substance common stock, the Company accounts for these investments at cost minus any impairment, if necessary.
The Company continually reviews its investments in equity investees to determine whether a decline in fair value below the carrying value is other than temporary. The primary factors the Company considers in its determination are the length of time that the fair value of the investment is below the Company’s carrying value, and the financial condition, operating performance and the prospects of the equity investee. If the decline in fair value is deemed to be other than temporary, the carrying value of the equity investee is written down to fair value. No impairment charges were recorded in investment losses in the Company’s unaudited condensed consolidated statements of operation and comprehensive loss for the six months ended June 30, 2025 and 2024.
Impairment of long-lived assets
Long-lived assets, including plant, property and equipment, intangible asset, land use rights and finance lease right-of-use assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset or asset group may not be recoverable. When these events occur, the Company measures impairment by comparing the carrying value of the long-lived assets or assets group to the estimated undiscounted future cash flows expected to result from the use of the assets or asset group and their eventual disposition. If the sum of the expected undiscounted cash flow is less than the carrying amount of the assets or assets group, the Company would recognize an impairment loss based on the fair value of the assets or assets group, which is the excess of carrying amount over the fair value of the assets, using the expected future discounted cash flows.
F-16
Asset acquisition
When the Company acquires other entities, if the assets acquired and liabilities assumed do not constitute a business, the transaction is accounted for as an asset acquisition. Assets are recognized based on the cost, which generally includes the transaction costs of the asset acquisition, and no gain or loss is recognized unless the fair value of noncash assets given as consideration differs from the assets’ carrying amounts on the Company’s unaudited condensed consolidated financial statements. The cost of a group of assets acquired in an asset acquisition is allocated to the individual assets acquired or liabilities assumed based on their relative fair value and does not give rise to goodwill.
Redeemable non-controlling interests
Redeemable non-controlling interests represent redeemable preferred shares financing in Sunrise Guizhou from a non-controlling shareholder. As the preferred shares could be redeemed by the shareholder upon the occurrence of certain events that are not solely within the control of the Company, these shares are accounted for as redeemable non-controlling interests. The Company assesses the probability of redemption by the holder of the redeemable non-controlling interests. Due to the probability of being redeemed, the Company adjusts the carrying amount of the mezzanine equity to the redemption value at the end of each reporting period as if it was the redemption date for the redeemable non-controlling interest. The Company accounts for the changes in accretion to the redemption value in accordance with ASC 480, Distinguishing Liabilities from Equity. The redeemable non-controlling interests are recorded at redemption value. The Company adopts equity classification method to classify the ASC 480 offsetting entry as an adjustment to retained earnings (or additional paid-in capital in the absence of retained earnings).
The Company assesses whether an amendment to the terms of its redeemable non-controlling interests is an extinguishment or a modification based on a qualitative evaluation of the amendment. If the amendment adds, removes, significantly changes to a substantive contractual term or to the nature of the overall instrument, the amendment results in an extinguishment of the redeemable non-controlling interests. The Company also assesses if the change in terms results in value transfer between redeemable non-controlling interests and ordinary shareholders. When redeemable non-controlling interests are extinguished, the difference between the carrying amount and the fair value of the redeemable non-controlling interests is recorded against equity.
Share-based compensation
Share-based compensation is measured based on the grant date fair value of the equity instrument. Share-based compensation expenses are recognized over the requisite service period based on the graded vesting attribution method with corresponding impact reflected in additional paid-in capital. When no future services are required to be performed by grantees in exchange for an award of equity instruments, the cost of the award is expensed on the grant date. The Company elects to recognize forfeitures when they occur.
F-17
Government subsidies
The Company’s PRC based subsidiary received government subsidies
from local government. Government subsidies are recognized when there is reasonable assurance that the attached conditions will be complied
with. When the government subsidy relates to an expense item, it is net against the expense and recognized in the unaudited condensed
consolidated statements of operations and comprehensive loss over the period necessary to match the subsidy on a systematic basis to the
related expenses. Where the subsidy relates to an asset acquisition, it is recognized as income in the unaudited condensed consolidated
statements of operations and comprehensive loss in proportion to the useful life of the related assets. Government grants received for
the six months ended June 30, 2025 and 2024 were and $
Revenue recognition
The Company recognizes revenue under ASC 606, Revenue from Contracts with Customers. The core principle of the new revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle:
Step 1: Identify the contract with the customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when the company satisfies a performance obligation
The Company mainly offers and generates revenue from three kinds of services to its clients in China, sales of graphite anode materials, consulting services, and other services.
Revenue recognition policies for each type of the Company’s services are discussed as follows:
Sales of graphite anode materials
The Company’s major business is to sell graphite anode materials to its customers. The Company’s major customers are manufacturers of industrial and consumer energy storage lithium-ion batteries, such as batteries for electric vehicles and electric ships, and smart consumer electronics. The Company examines the availability of the inventory, takes control of products in its own and third-party warehouses, and then organizes the shipping and delivery of products to customers after the purchase orders are received from customers.
F-18
Consulting services
The Company provides consulting services to small and medium-sized enterprises by helping them develop strategies and solutions including corporate reorganization, product promotion and marketing, industry supply chain integration, corporate governance, financing and capital structure, etc. The consulting services are tailored to meet each client’s specific needs and requirements.
Consulting fees are based on the specifics of the services provided, for instance, time and efforts required, etc. The Company considers comprehensive factors and determines prices with reference to quoted market prices. If no quoted market price is available, the price will be estimated by using an expected cost plus a margin approach.
Consulting fees are recognized as revenue when services have been provided and receipt of consulting services is confirmed by clients as the duration of services is short, typically one month or less. Consulting fees collected before providing any service are presented as deferred revenue on the unaudited condensed consolidated balance sheets.
Contract assets and liabilities
The Company’s contract liabilities consist of deferred revenues, primarily relating to the advance consideration received from customers, which include the advance member service fees and enterprise service fees received from customers. The amount from customers before provision of service is recognized as deferred revenue. The deferred revenue is recognized as revenue once the criteria for revenue recognition are met.
The
Company recognized $
There was no contract asset recorded as of June 30, 2025 and December 31, 2024.
Cost of goods sold
The
cost of goods sold for the six months ended June 30, 2025 and 2024 was primarily the cost of finished goods of graphite anode materials,
including labor, overhead, depreciation and amortization of long-lived assets, single granular coke, secondary granular coke, and mixed
batches of single particle and secondary coke, depreciation and amortization, labor cost, outsourcing fee and freight. Cost of goods
sold was $
F-19
Service costs
Service
costs primarily include (1) the cost of holding events and activities, such as venue rental fees, conference equipment fees, (2) professional
and consulting fees paid to third parties for the Company’s activity; (3) the fees paid to Mentors and Experts; and (4) labor costs.
Service costs were $
Income taxes
The Company accounts for income taxes under ASC 740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the unaudited condensed consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
The provisions of ASC 740-10-25, “Accounting for Uncertainty in Income Taxes,” prescribe a more-likely-than-not threshold for unaudited condensed consolidated financial statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return. This interpretation also provides guidance on the recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and related disclosures.
The Company believes there were no uncertain tax positions as of June 30, 2025 and December 31, 2024. The Company does not expect that its assessment regarding unrecognized tax positions will materially change over the next 12 months. The Company is not currently under examination by an income tax authority, nor has been notified that an examination is contemplated. The Company will recognize interest and penalties, if any, related to unrecognized tax benefits on the income tax expense line in the accompanying unaudited condensed consolidated statement of operations and comprehensive loss. Accrued interest and penalties will be included on the related tax liability line in the unaudited condensed consolidated balance sheet. Interest and penalties incurred related to underpayment of income tax are classified as income tax expense in the period incurred.
Loss per share
The Company computes loss per share (“EPS”) in accordance with ASC 260, “Earnings per Share”. ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS are computed by dividing the loss available to ordinary shareholders of the Company by the weighted average ordinary shares outstanding during the period. Diluted EPS takes into account the potential dilution that could occur if securities or other contracts to issue ordinary shares were exercised and converted into ordinary shares.
The Company has determined that the redeemable non-controlling interests are participating securities because the preferred shares participate in the retained earnings of Sunrise Guizhou. Accordingly, the Company treats the entire measurement adjustment to the redemption value of the redeemable non-controlling interests under ASC 480-10-S99-3A as being akin to a dividend, which affected the calculation of loss available to ordinary shareholders in the loss per share calculation.
For
the six months ended June 30, 2025 and 2024, the potentially dilutive securities that were not included in the calculation of dilutive
EPS in those periods where their inclusion would be anti-dilutive include restricted share units of
Comprehensive loss
Comprehensive loss consists of two components, net loss and other comprehensive loss. Other comprehensive loss refers to revenue, expenses, gains and losses that under U.S. GAAP are recorded as an element of shareholders’ equity but are excluded from net loss. Other comprehensive loss consists of foreign currency translation adjustment resulting from the Company translating its financial statements from functional currency into reporting currency.
Risks and uncertainties
Currency risk
A majority of the Company’s expense transactions are denominated in RMB and a significant portion of the Company and its subsidiaries’ assets and liabilities are denominated in RMB. RMB is not freely convertible into foreign currencies. In Mainland China, certain foreign exchange transactions are required by law to be transacted only by authorized financial institutions at exchange rates set by the People’s Bank of China (“PBOC”). Remittances in currencies other than RMB by the Company in Mainland China must be processed through the PBOC or other Company foreign exchange regulatory bodies which require certain supporting documentation in order to affect the remittance.
F-20
The
Company maintains certain bank accounts in Mainland China. On May 1, 2015, China’s new Deposit Insurance Regulation came into effect,
pursuant to which banking financial institutions, such as commercial banks, established in Mainland China are required to purchase deposit
insurance for deposits in RMB and in foreign currency placed with them. Such Deposit Insurance Regulation would not be effective in providing
complete protection for the Company’s accounts, as its aggregate deposits are much higher than the compensation limit, which is
RMB
The
Company also maintains certain bank accounts in Hong Kong. The Hong Kong Deposit Protection Scheme insures eligible deposits up to HK$
Other than the deposit insurance mechanism in the Mainland China and Hong Kong mentioned above, the Company’s bank accounts are not insured by the U.S. Federal Deposit Insurance Corporation insurance or other insurance.
Concentration and credit risk
Financial instruments that potentially subject the Company to the concentration of credit risks consist of cash, cash equivalents and restricted cash. The maximum exposures of such assets to credit risk are their carrying amounts as of the balance sheet dates. The Company deposits its cash, cash equivalents and restricted cash with financial institutions located in jurisdictions where the subsidiaries are located. The Company believes that no significant credit risk exists as these financial institutions have high credit quality.
The
Company’s also exposure to credit risk associated with its trading and other activities is measured on an individual counterparty
basis, as well as by group of counterparties that share similar attributes. There was $
There
were $
Concentrations of credit risk can be affected by changes in political, industry, or economic factors. To reduce the potential for risk concentration, The Company generally requires advanced payment before delivery of the services but may extend unsecured credit to its clients in the ordinary course of business. Credit limits are established and exposure is monitored in light of changing counterparty and market conditions. The Company did not have any material concentrations of credit risk outside the ordinary course of business as of June 30, 2025 and December 31, 2024.
Interest rate risk
Fluctuations in market interest rates may negatively affect the financial condition and results of operations. The Company is exposed to floating interest rate risk on cash deposit and floating rate borrowings, and the risks due to changes in interest rates are not material. The Company has not used any derivative financial instruments to manage its interest risk exposure.
Other uncertainty risk
The Company’s major operations are conducted in the PRC. Accordingly, the political, economic, and legal environments in the PRC, as well as the general state of the PRC’s economy may influence the Company’s business, financial condition, and results of operations.
The Company’s major operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic, and legal environment. The Company’s results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, and rates and methods of taxation, among other things. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations including its organization and structure disclosed in Note 1, this may not be indicative of future results.
F-21
Recently issued accounting pronouncements
The Company considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued. The Company is an “emerging growth company” (“EGC”) as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, EGC can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies.
In December 2023, the FASB issued Accounting Standards Update (ASU) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which enhances the transparency and decision usefulness of income tax disclosures. The amendments address more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. The ASU also includes certain other amendments to improve the effectiveness of income tax disclosures. The amendments in this ASU are effective for public business entities for annual periods beginning after December 15, 2024 on a prospective basis. Early adoption is permitted. The Company is in the process of evaluating the potential impact of the new guidance on its unaudited consolidated financial statements and related disclosures.
In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), and in January 2025, the FASB issued ASU No. 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date (“ASU 2025-01”). ASU 2024-03 requires additional disclosure of the nature of expenses included in the income statement as well as disclosures about specific types of expenses included in the expense captions presented in the income statement. ASU 2024-03, as clarified by ASU 2025-01, will be effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The ASU 2024-03 may be applied either prospectively to financial statements issued for reporting periods after its effective date or retrospectively to all prior periods presented in the financial statements. The Company is in the process of evaluating the potential impact of the new guidance on its unaudited consolidated financial statements and related disclosures.
In March 2025, the FASB issued ASU 2025-02—Liabilities (405): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 122. The amendments were effective immediately and on a fully retrospective basis to annual periods beginning after December 15, 2024. The Company is currently evaluating the effect of the adoption of this standard to its unaudited consolidated financial statements and disclosures.
NOTE 3 – GOING CONCERN
As reflected in the unaudited condensed consolidated financial statements,
the Company incurred a $
As of June 30, 2025, GIOP BJ didn’t comply with the financial
covenants as required by a short-term loan agreement in the principal amount of $
In addition, as of June 30, 2025, Sunrise Guizhou didn’t comply
with the financial covenants as required by three long-term loan agreements in an aggregate amount of $
These adverse conditions and events raised substantial doubt about the Company’s ability to continue as a going concern. For the next 12 months from the issuance date of this report, the Company plans to continue implementing various measures to boost revenue and controlling costs and expenses. In assessing its liquidity, management monitors and analyzes the Company’s cash on-hand, its ability to generate sufficient revenue sources and ability to obtain additional financial support in the future, and its operating and capital expenditure commitments. The Company intends to finance its future working capital needs and capital expenditures through financing activities to cover the cash shortfalls and negative operating cash flows. The Company expects to continue raising capital through debt or equity issuances to support its working capital needs.
As of June 30, 2025, the Company had cash and cash equivalents and
restricted cash of $
Currently, the Company is working to improve its liquidity and capital sources primarily through cash flows from operations, debt financing, and financial support from its principal shareholder. In order to fully implement its business plans, the Company may also seek equity financing from outside investors when necessary.
The Company makes no assurances that required financings will be available for the amounts needed, or on terms commercially acceptable to the Company, if at all. If one or all of these events does not occur or subsequent capital raises are insufficient to bridge financial and liquidity shortfall, there would likely be a material adverse effect on the Company and its unaudited condensed consolidated financial statements.
The unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern and, accordingly, do not include any adjustments that might result from the outcome of this uncertainty.
F-22
NOTE 4 – ACCOUNTS RECEIVABLE, NET
Accounts receivable consisted of the following:
| As
of June 30, 2025 | As
of December 31, 2024 | |||||||
| Accounts receivable | $ | $ | ||||||
| Allowance for credit losses | ( | ) | ( | ) | ||||
| Accounts receivable, net | $ | $ | ||||||
The movement of allowance for credit loss is as follows:
| For the six months ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Balance at beginning of the period | $ | $ | ||||||
| Current period addition | ( | ) | ||||||
| Foreign currency translation adjustments | ( | ) | ||||||
| Balance at end of the period | $ | $ | ||||||
Allowance for credit loss provision was $(
NOTE 5 – INVENTORIES
Inventories consist of the following:
| As
of June 30, 2025 | As
of December 31, 2024 | |||||||
| Raw materials | $ | $ | ||||||
| Finished goods | ||||||||
| Work in progress | ||||||||
| Others | ||||||||
| Total | $ | $ | ||||||
The impairment of inventories was and $
F-23
NOTE 6 – PREPAID EXPENSES AND OTHER CURRENT ASSETS
| As
of June 30, 2025 | As
of December 31, 2024 | ||||||||||
| Prepaid expenses | $ | $ | |||||||||
| Advance to supplier | (1) | ||||||||||
| Prepayment for investment | |||||||||||
| Other receivables | |||||||||||
| Prepaid value added tax (“VAT”) | (2) | ||||||||||
| Subtotal | |||||||||||
| Less: allowance for prepaid expenses and other current assets | ( | ) | ( | ) | |||||||
| Total | $ | $ | |||||||||
| (1) | |
| (2) |
NOTE 7 – LONG TERM PREPAYMENTS AND OTHER NON-CURRENT ASSETS
As of June 30, 2025 | As of December 31, 2024 | ||||||||||
| Prepayment for equipment | (1) | $ | $ | ||||||||
| Finance lease deposit | |||||||||||
| Prepayment for long-term loan acquisition costs | (2) | ||||||||||
| Total | $ | $ | |||||||||
| (1) | |
| (2) |
F-24
Note 8 – PLANT, PROPERTY AND EQUIPMENT, NET
Plant, property and equipment, stated at cost less accumulated depreciation, consisted of the following:
| As
of June 30, 2025 | As
of December 31, 2024 | |||||||
| Building | $ | $ | ||||||
| Machines | ||||||||
| Vehicles | ||||||||
| Electronic equipment | ||||||||
| Furniture, fixtures and equipment | ||||||||
| Leasehold improvements | ||||||||
| Subtotal | $ | |||||||
| Construction in progress | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Plants, property and equipment, net | $ | $ | ||||||
Depreciation expense was $
NOTE 9 – LAND USE RIGHTS, NET
Land use rights, stated at cost less accumulated amortization, consisted of the following:
| As
of June 30, 2025 | As
of December 31, 2024 | |||||||
| Land use rights - cost | $ | $ | ||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||
| Land use rights, net | $ | $ | ||||||
For
the six months ended June 30, 2025 and 2024, amortization expense amounted to $
| Year ending December 31, | Amount | |||
| 2025 | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 and thereafter | ||||
| Total | $ | |||
F-25
NOTE 10 – INTANGIBLE ASSETS, NET
Intangible assets, stated at cost less accumulated amortization and impairment, consisted of the following:
| As of June 30, 2025 | As of December 31, 2024 | |||||||
| Copyrights of course videos | $ | $ | ||||||
| Intellectual property rights | ||||||||
| Intangible assets, cost | ||||||||
| Less: | ||||||||
| Accumulated amortization | ( | ) | ( | ) | ||||
| Impairment | ( | ) | ( | ) | ||||
| Intangible assets, net | $ | $ | ||||||
For
the six months ended June 30, 2025 and 2024, amortization expense amounted to $
| Year ending December 31, | Amount | |||
| 2025 | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 and thereafter | ||||
| Total | $ | |||
NOTE 11 – LONG-TERM INVESTMENTS
The Company’s long-term investments consist of the following:
| As
of June 30, 2025 | As
of December 31, 2024 | |||||||
| Equity method investments: | ||||||||
| Shidong (Suzhou) Investment Co., Ltd. (“Suzhou Investment”) | $ | $ | ||||||
| Shenzhen Jiazhong Creative Capital LLP (“Jiazhong”) | ||||||||
| Equity investments without readily determinable fair value: | ||||||||
| Beijing Jinshuibanlv Technology Co., Ltd. (“Jinshuibanlv”) | ||||||||
| Hangzhou Zhongfei Aerospace Health Management Co., Ltd. (“Zhongfei”) | ||||||||
| Shanghai Zhongren Yinzhirun Investment Management Partnership (“Yinzhirun”) | ||||||||
| Jiangxi Cheyi Tongcheng Car Networking Tech Co., Ltd.(“Cheyi”) | ||||||||
| Chengdu Wanchang Enterprise Management Consulting Partnership (Limited Partnership) (“Wanchang”) | ||||||||
| Shanghai Outu Home Furnishings Co., Ltd. (“Outu”) | ||||||||
| Zhejiang Qianshier Household Co., Ltd.(“Qianshier”) | ||||||||
| Taizhou Jiamenkou Auto Greengrocer’s Delivery Technology Co., Ltd. (“Jiamenkou”) | ||||||||
| Zhejiang Yueteng Information Technology Co., Ltd. (“Yueteng”) | ||||||||
| Shidong Funeng(Ruzhou) Industry Development Co., Ltd.( “Funeng”) | ||||||||
| Dongguan Zhiduocheng Car Service Co., Ltd. (“Car Service”) | ||||||||
| Subtotal | ||||||||
| Less: impairment | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
F-26
Equity method investments
Investment in Suzhou Investment
In
December 2017, the Company acquired
Investment in Jiazhong
In December 2020, the Company acquired
Equity investments without readily determinable fair value
Investment in Jinshuibanlv
In
April 2021, the Company signed an investment agreement with Beijing Zhitong Zhenye Technology Co., Ltd. and Li Jiyou to invest RMB
Investment in Zhongfei
In
November 2020, the Company acquired
Investment in Yinzhirun
In
December 2016, the Company acquired
Investment in Cheyi
In
November 2020, the Company acquired
F-27
The
Company noticed that Industry and Commerce Administration of Nanchang Xihu Branch was not able to perform on-site inspection on Cheyi’s
subsidiary Nanchang Qingchong Technology Co., Ltd. (“Qingchong”) in August 2022; Another Cheyi’s subsidiary, Jiangxi
Cheyi Tongcheng Vehicle Networking Technology Co., Ltd. (“Cheyi Tongcheng”) had a legal dispute with CCB Nanchang Branch
on March 9, 2023. The Company noticed the above factors that raise significant concerns about the investee’s ability to continue
as a going concern. Full impairment of $
Investment in Wanchang
In
September 2019, the Company initially acquired
Investment in Outu
In
December 2019, the Company acquired
Investment in Qianshier
In
December 2020, the Company acquired
In
2022, the Company noticed Qianshier had been subject to enforcement proceedings associated with a rental dispute, which raised significant
concerns about the investee’s ability to continue as a going concern. Full impairment of $
Investment in Jiamenkou
In
June 2020, the Company acquired
F-28
Investment in Yueteng
In
June 2020, the Company acquired
Investment in Funeng
In
August 2019, the Company subscribed capital with cash consideration of RMB
Investment in Car Service
In
November 2017, the Company acquired
NOTE 12 – ASSET ACQUISITION
In July 2022, Sunrise Guizhou entered into purchase
agreements with original shareholders of Sunrise Tech (formerly known as Anlong Hengrui Graphite Material Co., Ltd.) to acquire
The Company evaluated the acquisition of the purchased assets under ASC 805-Business Combination, and concluded that as substantially all of the fair value of the gross assets acquired is concentrated in an identifiable group of similar assets, the transaction did not meet the requirements to be accounted for as a business combination and therefore was accounted for as an asset acquisition.
The purchase prices of the assets as of the acquisition date are as follows:
| Land use rights | $ | |||
| Plant, property and equipment – buildings | ||||
| Total assets acquired | ||||
| Deferred tax liabilities | ( | ) | ||
| Net assets acquired | $ |
Sunrise Tech held three land use rights and two buildings. The Company recognized any excess consideration transferred over the fair value of the net assets acquired on a relative fair value basis to the identifiable net assets. The Company determined the estimated fair values using Level 3 inputs after review and consideration of relevant quoted market prices of comparable companies and relevant information.
For the six months ended June 30, 2025, the Company
had paid to the original shareholders of Sunrise Tech. The unpaid consideration RMB
F-29
NOTE 13 – FINANCE LEASES
The Company’s leases are mainly related to graphite anode material manufacturing equipment leases from financial lease companies. Finance lease contracts offer the Company an option to purchase assets at a nominal amount by the end of the lease term and it is reasonably certain the Company will exercise that option. The Company amortizes the finance lease right-of-use asset to the end of the useful life of the underlying asset.
As
of June 30, 2025, the Company’s finance leases had a weighted average remaining lease term of
The components of lease expense for the six months ended June 30, 2025 and 2024 were as follows:
| Statement of Income | For the six months ended June 30, | |||||||||
| Location | 2025 | 2024 | ||||||||
| Lease costs | ||||||||||
| Finance lease expense | $ | $ | ||||||||
Maturity of lease liabilities under the finance leases as of June 30, 2024 were as follows:
| Years ending December 31, | ||||
| 2025 | $ | |||
| 2026 | ||||
| Total lease payments | ||||
| Less: interest | ( | ) | ||
| Present value of finance lease liabilities | $ | |||
| Finance lease liabilities, current | $ | |||
| Finance lease liabilities, non-current | $ | |||
NOTE 14 – DEFERRED GOVERNMENT SUBSIDY
GMB
BJ planned to relocate the Company address from Beijing to Zibo city, and it applied for subsidy of RMB
F-30
NOTE 15 – LONG-TERM PAYABLE
Long-term payable represented the financial liabilities due to financial lease companies maturing within one or over one year. The long-term payable consisted of the following:
| As
of June 30, 2025 | As
of December 31, 2024 | |||||||
| Long term payables: | ||||||||
| China Power Investment Ronghe Financial Leasing Co., Ltd. (“Ronghe”) | $ | $ | ||||||
| Zhongguancun Science and Technology Leasing Co., Ltd. (“Zhongguancun”) | ||||||||
| Xiamen Guomao Chuangcheng Financial Leasing Co., Ltd. (“Guomao”) | ||||||||
| Risheng International Finance Leasing Co., Ltd. (“Risheng”) | ||||||||
| Total | $ | $ | ||||||
| Current portion | $ | $ | ||||||
| Non-current portion | $ | $ | ||||||
On November 4, 2022, Sunrise Guizhou entered into a sales and leaseback
financing contract into a three-year financing with Ronghe to obtain an amount of RMB
On February 7, 2023, Sunrise Guizhou entered into a sales and leaseback
financing contract into a two-year financing with Zhongguancun to obtain an amount of RMB
On
October 27, 2023, Sunrise Guizhou entered into a sales and leaseback financing contract for a two-year financing with Guomao for RMB
On
October 14, 2024, Sunrise Guizhou entered into a sales and leaseback financing contract for a thirty two-month financing with
Risheng for RMB
F-31
NOTE 16 – LOANS
| As
of June 30, 2025 | As
of December 31, 2024 | |||||||
| Short-term loan: | ||||||||
| Everbright Bank | $ | $ | ||||||
| Post Savings Bank of China | ||||||||
| Industrial Bank | ||||||||
| Total | ||||||||
| Long-term loan: | ||||||||
| China Construction Bank | $ | $ | ||||||
| WeBank Co., Ltd. | ||||||||
| Current portion | $ | $ | ||||||
| Non-current portion | $ | $ | ||||||
Short-term loan
Everbright Bank
On
March 27, 2025, Sunrise Guizhou entered into a loan agreement for RMB
Post Bank
On
June 19, 2024, Sunrise Guizhou entered into a line of credit facility agreement with Post Savings Bank of China (“Post Bank”)
to obtain a revolving loan of up to RMB
Industrial Bank
On June 19, 2024, GIOP BJ entered into a line of credit facility agreement
with Industrial Bank to obtain a revolving loan of up to RMB
Although GIOP BJ has been timely making interest payments to Industrial
Bank in accordance with the agreement, GIOP BJ didn’t comply with the financial covenants as required by the agreement as of June
30, 2025 and December 31, 2024. Specifically, the financial covenants of the agreement required GIOP BJ to maintain: (1) current assets
of not less than RMB
Long-term loan
China Construction Bank
On March 8, 2024, Sunrise Guizhou obtained a bank loan of RMB
On January 9, 2025, Sunrise Guizhou obtained a bank loan of RMB
Although Sunrise Guizhou has been timely repaying the CCB in accordance
with the respective terms of the loan agreements, Sunrise Guizhou didn’t comply with the financial covenants under the loan agreements
as of June 30, 2025 and December 31, 2024. Specifically, the financial covenants of the loan agreements required Sunrise Guizhou to maintain:
(1) an asset liability ratio of not more than
F-32
WeBank
On April 26, 2024, Sunrise Guizhou obtained a
loan for RMB
NOTE 17 – ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
| As
of June 30, 2025 | As
of December 31, 2024 | ||||||||||
| Payroll and social security payable | $ | $ | |||||||||
| Other tax payable | |||||||||||
| Advanced capital contributions | (1) | ||||||||||
| Other payable | |||||||||||
| Staff payable | |||||||||||
| Others | |||||||||||
| Total | $ | $ | |||||||||
| (1) |
NOTE 18 – TAXES
a. VAT
The
Company is subject to VAT and related surcharges in Mainland China for sales of graphite anode material and providing member services
and other in-depth services.
All of the tax returns of the Company have been and remain subject to examination by the Mainland China tax authorities for five years from the date of filing.
b. Income tax
Cayman Islands
The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains, or appreciation and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to us levied by the Government of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or, after execution, brought within the jurisdiction of the Cayman Islands. No stamp duty is payable in the Cayman Islands on the issue of shares by, or any transfers of shares of, Cayman Islands companies (except those which hold interests in land in the Cayman Islands). There are no exchange control regulations or currency restrictions in the Cayman Islands.
Payments of dividends and capital in respect of our ordinary shares will not be subject to taxation in the Cayman Islands and no withholding will be required on the payment of a dividend or capital to any holder of our ordinary shares, as the case may be, nor will gains derived from the disposal of our ordinary shares be subject to Cayman Islands income or corporation tax.
F-33
Hong Kong
Mainland China
The Company’s subsidiaries, the VIE, and the VIE’s subsidiaries
are incorporated in the Mainland China, and are subject to the Mainland China Enterprise Income Tax Laws (“EIT Laws”) with
the statutory income tax rate of
In accordance with the implementation rules of EIT Laws, a qualified
“High and New Technology Enterprise” (“HNTE”) is eligible for a preferential tax rate of
The components of the income tax provision are as follows:
| For the six months ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Current | ||||||||
| Mainland China | $ | $ | ||||||
| Deferred | ||||||||
| Mainland China | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
Loss before income taxes was attributable to the following geographic locations for the six months ended June 30, 2025 and 2024:
| For the six months ended June 30, |
||||||||
| 2025 | 2024 | |||||||
| Mainland China | $ | ( |
) | $ | ( |
) | ||
| Others | ( |
) | ( |
) | ||||
| Total | $ | ( |
) | $ | ( |
) | ||
Reconciliation
between the provision for income taxes computed by applying the Mainland China EIT rate of
| For the six months ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Loss before income taxes | $ | ( | ) | $ | ( | ) | ||
| Mainland China EIT rate | % | % | ||||||
| Income taxes computed at statutory EIT rate | $ | ( | ) | $ | ( | ) | ||
| Reconciling items: | ||||||||
| Effect of tax holiday and preferential tax rate | ||||||||
| Effect of tax rates in foreign jurisdictions | ||||||||
| Effect of changes in tax rate | ||||||||
| Effect of true up on net operating loss in the tax returns | ||||||||
| Effect of expiration on net operating loss | ||||||||
| Change in valuation allowance | ( | ) | ( | ) | ||||
| Effect of non-deductible expense | ||||||||
| Effect of share-based compensation | ||||||||
| Super deduction of qualified R&D expenditures | ( | ) | ( | ) | ||||
| Income tax expense | $ | $ | ||||||
| Effective tax rate | ( | )% | ( | )% | ||||
F-34
Deferred tax assets and liabilities
According
to PRC tax regulations, net operating losses can be carried forward to offset future operating income for five years.
| As of June 30, 2025 | As of December 31, 2024 | |||||||
| Deferred tax assets | ||||||||
| Net operating loss carry forwards | $ | $ | ||||||
| Provision for doubtful debts | ||||||||
| Finance lease liabilities | ||||||||
| Impairment on inventory | ||||||||
| Impairment of intangible assets | ||||||||
| Impairment of long-term investment | ||||||||
| Deferred tax assets, gross | $ | |||||||
| Less: valuation allowance | ( | ) | ( | ) | ||||
| Total deferred tax assets, net | $ | $ | ||||||
| Deferred tax liabilities | ||||||||
| Finance lease right-of-use assets | $ | $ | ||||||
| Assets acquired in the asset acquisition | ||||||||
| Total deferred tax liabilities | $ | $ | ||||||
| Deferred tax assets, net | $ | $ | ||||||
| Deferred tax liabilities, net | $ | $ | ||||||
For entities incorporated in Mainland China, net operating loss can
be carried forward for
As of June 30, 2025, the Company had net operating
loss carrying forwards of $
The following is a schedule of expiration of carry forward operating losses as of June 30, 2025:
| For the years ending December 31, | ||||
| 2025 | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| 2031 | ||||
| 2032 | ||||
| 2033 | ||||
| 2034 | ||||
| 2035 | ||||
| Carried forward indefinitely | ||||
| Total | $ | |||
The Company evaluates each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measures the unrecognized benefits associated with the tax positions. As of June 30, 2025 and December 31, 2024, the Company did not have any unrecognized uncertain tax positions and the Company does not believe that its unrecognized tax benefits will change over the next twelve months. For the six months ended June 30, 2025 and 2024, the Company did not incur any interest and penalties related to any potential underpaid income tax expenses.
For the Company’s operating subsidiaries, as of June 30, 2025, the tax years ended December 31, 2019, through December 31, 2024 remain open for statutory examination by Mainland China tax authorities.
F-35
NOTE 19 – RELATED PARTY BALANCE AND TRANSACTIONS
The following is a list of related parties which the Company has transactions with:
| (a) | Ningbo Zhuhai Investment Co., Ltd. (“Zhuhai Investment”), a company controlled by Mr. Haiping Hu. | |
| (b) | Bally Corp. (“Bally”), a company controlled by Mr. Haiping Hu. | |
| (c) | Zhongna Times (Shenzhen) New Energy Technology Co., Ltd. (“Zhongna Times”), a company controlled by Mr. Haiping Hu. | |
| (d) | Shanghai Huiyang Investment Co., | |
| (e) | Shidong (Suzhou) Investment Co., Ltd., a company of which Mr. Haiping Hu is the CEO. | |
| (f) | Mr. Shousheng Guo, Director, | |
| (g) | Mr. Wenwu Zhang, Director of Sunrise Guizhou. | |
| (h) | Mr. Chenming Qi, General Manager, Director and | |
| (i) | Ms. Jing Ji, CEO of and | |
| (j) | Haicheng Shenhe, | |
| (k) | Ms. Chao Liu, Chief Financial Officer of the Company. | |
| (l) | GMB Internet Technology Co., Ltd., one of the shareholders of the Company. | |
| (m) | GMB Business Communication Co., Ltd. one of the shareholders of the Company. | |
| (n) | GMB Enterprise Cooperation Development Co., Ltd., one of the shareholders of the Company. | |
| (o) | GMB Information Technology Co., Ltd., one of the shareholders of the Company. | |
| (p) | GMB Wisdom Sharing Platform Co., Ltd., one of the shareholders of the Company. | |
| (q) | GMB Technology Co., Ltd., one of the shareholders of the Company. | |
| (r) | GMB Project Incubation Services Co., Ltd., one of the shareholders of the Company. | |
| (s) | Guizhou Yilong New Area Industrial Development and Investment Co., Ltd., | |
| (t) | Ms. Fangfei Liu, spouse of Mr. Haiping Hu. | |
| (u) | Mr. Huiyu Du, the former legal representative of Sunrise Guizhou. | |
| (v) | Beijing Huatai Zhonghe Venture Capital Center (Limited Partnership) (“Huatai Zhonghe”), controlled by Mr. Shousheng Guo. | |
| (w) | Ningbo Meishan Bonded Port Zone Zhihai Yuncheng Investment Management Partnership Enterprise (Limited Partnership) (“Zhihai Yuncheng”), a limited partnership controlled by Mr. Haiping Hu. | |
| (x) | Shenzhen Zhuhai New Energy Co., Ltd. (“Shenzhen Zhuhai”), a company ultimately controlled by Mr. Haiping Hu. |
F-36
| a. | Due from related parties |
As of June 30, 2025 and December 31, 2024, the balances of amounts due from related parties were as follows:
| As
of June 30, 2025 | As
of December 31, 2024 | ||||||||||
| Due from related parties | |||||||||||
| Bally | $ | $ | |||||||||
| Zhongna Times | (1) | ||||||||||
| Mr. Wenwu Zhang | (2) | ||||||||||
| Shenzhen Zhuhai | |||||||||||
| Zhihai Yuncheng | |||||||||||
| Others | |||||||||||
| Total | $ | $ | |||||||||
| (1) | |
| (2) |
| b. | Due to related parties |
As of June 30, 2025 and December 31, 2024, the balances of amounts due to related parties were as follows:
| As
of June 30, 2025 | As
of December 31, 2024 | ||||||||||
| Due to related parties | |||||||||||
| Ms. Jing Ji | $ | $ | |||||||||
| Shanghai Huiyang | (1) | ||||||||||
| Haicheng Shenhe | |||||||||||
| Huatai Zhonghe | |||||||||||
| Zhuhai Investment | (2) | ||||||||||
| Zhongna Times | |||||||||||
| Others | |||||||||||
| Total | $ | $ | |||||||||
| (1) | |
| (2) |
F-37
| d. | Related party transactions |
Related party purchase
The Company purchased maintenance services for the Company’s APP on knowledge sharing and enterprise business from Zhihai Yuncheng. For the six months ended June 30, 2025 and 2024, maintenance fee to Zhihai Yuncheng were and , respectively.
The
Company purchased consulting services for peer-to-peer knowledge sharing and enterprise business from Zhuhai Investment. For the six
months ended June 30, 2024, total purchase was $
| e. | Related party guarantee |
In July 2022, Sunrise Guizhou entered into purchase
agreements with original shareholders of Sunrise Tech to acquire
On September 22, 2022, Sunrise Guizhou entered
into a financing contract into an eighteen-month loan with Far East to obtain a loan of RMB
On May 16, 2023, Sunrise Guizhou entered into
a credit facility agreement with Everbright Bank to obtain a revolving loan of up to RMB
F-38
On
January 18, 2023, Sunrise Guizhou entered into a credit facility agreement with Post Bank to obtain a revolving loan of up to
RMB
On June 13, 2023, Sunrise Guizhou entered into
a finance lease agreement with Chongqing Xingyu Finance Lease Co., Ltd. to lease graphite anode materials production facilities. The principal
of the contract was RMB
On October 26, 2023, Sunrise Guizhou entered into
a three-year debt arrangement with SPD Bank to obtain a line of credit of up to RMB
On March 8, 2024, Sunrise Guizhou obtained a bank loan of RMB
On April 26, 2024, Sunrise Guizhou obtained a
loan of RMB
On June 19, 2024, GIOP BJ entered into a line of credit facility agreement
with Industrial Bank to obtain a revolving loan of up to RMB
On July 31, 2024, Sunrise Guizhou entered into
a banker’s acceptance note contract with Everbright Bank for issuing banker’s acceptance notes to the suppliers of Sunrise
Guizhou. Pursuant to the contract, Sunrise Guizhou was obliged to deposit 50% of the note payable amounts issued as restricted cash in
the designated bank account in Everbright Bank. As of June 30, 2025 and December 31, 2024, the deposit for note issuances was $
On January 9, 2025, Sunrise Guizhou obtained a bank loan of RMB
NOTE 20 – REDEEMABLE NON-CONTROLLING INTERESTS
On June 13, 2022, Guizhou Province New Kinetic Industry Development
Fund Partnership (“New Kinetic Partnership”) subscribed
In
addition to the preferential rights in dividend and liquidation, the New Kinetic Partnership has a right to require Sunrise Guizhou and
its shareholders to redeem New Kinetic Partnership’s shares, at any time and from time to time on or after the date of the earliest
to occurrence of certain events, including but not limited to: (i) Sunrise Guizhou fails to complete a qualified initial public offering
(“IPO”) thirty-six months post-closing; (ii) Sunrise Guizhou fails to complete the profit commitment for consecutive two
years; (iii) Sunrise Guizhou’s conviction of breaches or violation of criminal laws and/or applicable regulations which may have
a material adverse effect on the Company’s business; (iv) the occurrence of the change of business of Sunrise Guizhou; (v) the
net assets of Sunrise Guizhou is less than the net assets as of the date of the investment; (vi) the account receivable of Sunrise Guizhou
exceeds RMB
F-39
The
redemption value on the investment by the New Kinetic Partnership is
On June 18, 2024, the New Kinetic Partnership amended the terms of the investment agreement to waive their preferential rights in dividend and liquidation, and remove the redemption events related to completion of an IPO and meeting performance commitment. In addition, the Group, including Zhuhai Zibo, the controlling shareholder of Sunrise Guizhou, is excluded from the redemption obligor and certain shareholders of Sunrise Guizhou become the sole obligor of the redemption. As a result of the amendments, the Group reclassified the equity interest held by New Kinect Partnership from mezzanine equity to permanent equity.
The movement of redeemable non-controlling interests is as follows:
| For
the six months ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Balance at beginning of the period | $ | $ | ||||||
| Accretion to redemption value of redeemable non-controlling interests prior to amendment | ||||||||
| Reclassification of the redeemable non-controlling interests to permanent equity | ( | ) | ||||||
| Foreign exchange effect | ( | ) | ||||||
| Balance at end of the period | $ | $ | ||||||
NOTE 21 – SHAREHOLDERS’ EQUITY
Ordinary shares
EPOW
was established under the laws of the Cayman Islands on February 22, 2019. The authorized number of ordinary shares was
On February 11, 2021, the Company closed its
IPO. The Company offered
F-40
Share capital increase and re-designation
On February 8, 2024, the 2023 annual general meeting of shareholders (the “Meeting”) of the Company was held. At the Meeting, the shareholders of the Company approved the increase and re-designation of the Company share capital.
The
Company increased its authorized share capital from US$
Immediately
following the Share Capital Increase, the Company re-designated and re-classified its authorized share capital so that the afore-mentioned
authorized share capital of $
The Company believes that the re-designation should
be accounted for on a retroactive basis pursuant to ASC 260. The Company has retroactively restated all shares data for all periods presented.
As a result, there were
Share consolidation
On September 16, 2024, the extraordinary general
meeting of shareholders of the Company was held. At the extraordinary general meeting, the shareholders adopted an ordinary resolution
on consolidation of every ten (10) Class A ordinary shares and Class B ordinary shares with a par value of US$
2024 subscription agreement
On
October 18, 2024, the Company entered into a subscription agreement with Chong Ee Chang, a Malaysian citizen. Pursuant to the subscription
agreement, Chong Ee Chang agreed to subscribe for and purchase from the Company, and the Company agreed to issue and sell to Chong Ee
Chang an aggregate of
Share-based compensation
The
Company adopted the 2022 Stock Incentive Plan for the grant of restricted share units to employees, directors and non-employees to provide
incentive for their services. The maximum number of ordinary shares that may be delivered pursuant to compensatory awards granted to
the employees, directors and non-employees under the 2022 Stock Incentive Plan should not exceed
On February 8, 2024, the 2023 annual general meeting
of shareholders of the Company was held. At the Meeting, the shareholders of the Company approved the 2024 Employee Share Incentive Plan.
The Company adopted the 2024 Employee Share Incentive Plan for the grant of restricted share units to employees, directors and non-employees
to provide incentive for their services. The maximum number of ordinary shares that may be delivered pursuant to compensatory awards granted
to the eligible persons under the 2024 Stock Incentive Plan may not exceed
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The
Company recorded share-based compensation expenses of $
| For
the six months ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Cost of revenues | $ | $ | ||||||
| Selling expenses | ||||||||
| General and administrative expenses | ||||||||
| Research and development expenses | ( | ) | ||||||
| Total | $ | $ | ||||||
Restricted share units
On August 26, 2022, the Company granted
A summary of the restricted shares units activities is as follows:
| Number
of restricted share units outstanding | Weighted average grant date fair value | Aggregate intrinsic value | ||||||||||
| Restricted share units outstanding at January 1, 2024 | ||||||||||||
| Forfeited | ( | ) | ||||||||||
| Restricted share units outstanding at June 30, 2024 | ||||||||||||
| Restricted share units outstanding at January 1, 2025 | ||||||||||||
| Forfeited | ||||||||||||
| Restricted share units outstanding at June 30, 2025 | ||||||||||||
The Company recognized compensation expense over
the requisite service period for each separately vesting portion of the award as if the award is in substance, multiple awards. The Company
recorded share-based compensation expenses relating to restricted share units of $
Non-controlling interest
Non-controlling interest consists of the following:
| As
of June 30, 2025 | As
of December 31, 2024 | |||||||
| GMB (Beijing) | $ | $ | ||||||
| GMB Culture | ( | ) | ( | ) | ||||
| Sunrise Tech | ( | ) | ( | ) | ||||
| GMB Consulting | ||||||||
| Shidong Cloud | ||||||||
| Sunrise Guxian | ( | ) | ( | ) | ||||
| Sunrise Chenhui | ( | ) | ( | ) | ||||
| GMB Technology | ( | ) | ( | ) | ||||
| Sunrise Guizhou | ||||||||
| Total | $ | $ | ||||||
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Sunrise
Guizhou was established by Zhuhai (Zibo) Investment and five other companies in November, 2021. Shidong Cloud was established by GIOP
BJ and Beijing Yunqianyi Information Technology Co., Ltd. (“Yunqianyi”) in December 2022.
Sunrise Guxian was established by Guizhou New Energy and seven other companies in April, 2022. Sunrise Chenhui was established by Sunrise Tech on March 25, 2024.
On
June 18, 2024, the Company reclassified the redeemable non-controlling interest of $
On
September 25, 2024, GMB (Hangzhou) acquired
The actual capital contributions made by the Company and the non-controlling shareholders for the six months ended June 30, 2025 and 2024 had no effect on the Company’s equity percentage in its subsidiaries.
Statutory reserves
In accordance with the Regulations on Enterprises
of PRC, the Company’s subsidiaries, GIOP BJ, the VIE and the VIE’s subsidiaries in the PRC are required to provide for statutory
reserves, which are appropriated from net profit as reported in the Company’s PRC statutory accounts. They are required to allocate
As of June 30, 2025 and December 31, 2024, the
statutory reserves of the Company’s subsidiaries, GIOP BJ, the VIE and the VIE’s subsidiaries in the PRC have not reached
NOTE 22 – LOSS PER SHARE
Basic
and diluted loss per ordinary share is computed using the weighted average number of ordinary shares outstanding during the year. The
Company has determined that the redeemable non-controlling interests are participating securities as the preferred shares participate
in retained earnings of Sunrise Guizhou.
| For
the six months ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Numerator: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Less: accretion to redemption value of redeemable non-controlling interests | ||||||||
| foreign currency effect on redemption value of redeemable non-controlling interests | ( | ) | ||||||
| net loss attributable to non-controlling interests | ( | ) | ( | ) | ||||
| Net loss attributable to ordinary shareholders | $ | ( | ) | $ | ( | ) | ||
| Denominator: | ||||||||
| Weighted average number of shares outstanding – basic and diluted | ||||||||
| Loss per share – basic and diluted | $ | ( | ) | $ | ( | ) | ||
NOTE 23 – COMMITMENTS AND CONTINGENCIES
Contingencies
The Company may be involved in various legal proceedings, claims and other disputes arising from the commercial operations, projects, employees and other matters which, in general, are subject to uncertainties and in which the outcomes are not predictable. The Company determines whether an estimated loss from a contingency should be accrued by assessing whether a loss is deemed probable and can be reasonably estimated.
On March 17, 2025, Beijing Xindaxing Technology Co., Ltd. brought a
claim against Sunrise Guizhou in the Daxing’s People’s Court of Beijing City, alleging breach of contract arising from Sunrise
Guizhou’s alleged failure to pay financial advisory service fees of RMB
Other than the aforementioned lawsuit, the Company is also a party to several legal proceedings or claims that the Company believes are immaterial. Although the outcomes of these legal proceedings cannot be predicted, the Company does not believe these actions, in the aggregate, will have a material adverse impact on its financial position, results of operations or liquidity.
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NOTE 24 – SEGMENT REPORTING
ASC 280, “Segment Reporting”, establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for details on the Company’s business segments.
In November 2023, the FASB issued ASU No. 2023-07,
Improvements to Reportable Segment Disclosures (Topic 280), which updates reportable segment disclosure requirements by requiring disclosures
of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and
included within each reported measure of a segment’s profit or loss.
The Company uses the management approach to determine reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s CODM for making decisions, allocating resources and assessing performance. The Company’s CODM has been identified as the CEO, who reviews consolidated results when making decisions about allocating resources and assessing performance of the Company.
Based on the management’s assessment, the
Company determined that it has
The Company’s CODM evaluates performance based on each reporting segment’s revenue and costs of revenues. Revenues, cost of revenues and gross (loss) profits by segment are presented below.
| For
the six months ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| REVENUES, NET | ||||||||
| Graphite anode business | $ | $ | ||||||
| Knowledge sharing and enterprise business | ||||||||
| Total revenues | ||||||||
| COSTS OF REVENUES | ||||||||
| Graphite anode business | ||||||||
| Knowledge sharing and enterprise business | ||||||||
| Total cost of revenues | ||||||||
| GROSS PROFIT (LOSS) | ||||||||
| Graphite anode business | ( | ) | ||||||
| Knowledge sharing and enterprise business | ||||||||
| Total gross loss | ||||||||
| RECONCILIATION OF LOSS (SEGMENT OF GROSS LOSS) | ||||||||
| UNALLOCATED AMOUNTS | ||||||||
| OPERATING EXPENSES | ||||||||
| Selling expenses | ||||||||
| General and administrative expenses | ||||||||
| Research and development expenses | ||||||||
| Total operating expenses | ||||||||
| LOSS FROM OPERATIONS | ( | ) | ( | ) | ||||
| OTHER (EXPENSES) INCOME | ||||||||
| Investment income | ||||||||
| Interest expense, net | ( | ) | ( | ) | ||||
| Other (expense) income, net | ( | ) | ||||||
| Total other expenses, net | ( | ) | ( | ) | ||||
| LOSS BEFORE INCOME TAXES | $ | ( | ) | $ | ( | ) | ||
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NOTE 25 – SUBSEQUENT EVENTS
On July 31, 2025, the Company entered into a securities
purchase agreement with an investor, pursuant to which the Company agreed to issue and sell
On August 8, 2025, the Company entered into a
securities purchase agreement with an investor, pursuant to which the Company agreed to issue and sell
On August 22, 2025, the supplier of Sunrise Guizhou,
Hubei Jinhua New Material Technology Co., Ltd. (“Hubei Jinhua”) brought a claim for a violation of contract against Sunrise
Guizhou in the Xianfeng’s People’s Court of Hubei Province (the “Court”), alleging that Sunrise Guizhou failed
to pay the goods purchased with an aggregated price of RMB
On September 29, 2025, Sunrise Guizhou brought a claim against Ms.
Huiyu Du, the former legal representative of Sunrise Guizhou, for a loss of RMB
On November 3, 2025, the Company entered into
subscription agreements with three purchasers. Pursuant to the subscription agreements, the Company agreed to issue and sell an aggregate
of
The Company evaluated subsequent events and transactions that occurred after the balance sheet date through the date that the unaudited condensed consolidated financial statements were available to be issued and determined that no other subsequent events have occurred that would require recognition or disclosure, except elsewhere in the notes to the unaudited condensed consolidated financial statements.
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