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Deferred Tax, Net

6 Months Ended

Jun. 30, 2025

7. DEFERRED TAX, NET

Deferred tax assets resulted from asset impairment loss which was temporarily non-tax deductible for tax purposes but expensed in accordance with US GAAP; interest income in sales-type leases which was recognized as income for tax purposes but not for book purpose as it did not meet revenue recognition in accordance with US GAAP; accrued employee social insurance that can be deducted for tax purposes in the future, and the difference between tax and accounting basis of cost of fixed assets which was capitalized for tax purposes and expensed as part of cost of systems in accordance with US GAAP. Deferred tax liability arose from the difference between tax and accounting basis of net investment in sales-type leases.

As of June 30, 2025 and December 31, 2024, deferred tax assets consisted of the following:

	2025			2024
Accrued expenses	$	13,212		$	48,616
Impairment of advance to supplier		42,000			42,000
US NOL		238,931			233,651
PRC NOL		238			444
Total deferred tax assets		294,381			324,711
Less: valuation allowance for deferred tax assets		(294,381	)		(324,711	)
Deferred tax assets, net	$	-		$	-

*	This represents the tax basis of Erdos TCH investment in sales type leases, which was written off under US GAAP upon modification of lease terms, which made the lease payments contingent upon generation of electricity.