Financial Performance - For the six months ended June 30, 2023, the Company reported a net loss of $337,346, compared to a net loss of $666,269 for the same period in 2022, indicating a 49.3% improvement in losses year-over-year[137]. - For the three months ended June 30, 2023, the Company had a net loss of $247,842, slightly higher than the net loss of $224,810 for the same period in 2022, reflecting a 10.2% increase in quarterly losses[137]. - The Company has an accumulated deficit of $60.08 million as of June 30, 2023, highlighting ongoing financial challenges[137]. - Total sales for the six months ended June 30, 2023 and 2022 were $0[162]. - Operating expenses for the six months ended June 30, 2023 were $459,235, an increase of $75,729 or 19.7% compared to $383,506 in 2022[163]. - Net cash used in operating activities was $69,042,292 for the six months ended June 30, 2023, compared to $167,599 in 2022[174]. - Income tax expense for the six months ended June 30, 2023 was $62,492, compared to $23,557 in 2022[166]. - The consolidated effective income tax rate for the six months ended June 30, 2023 was 22.7%, compared to 3.7% in 2022[166]. - The Company has an unrestricted accumulated deficit of $(60,082,175) as of June 30, 2023, compared to $(59,726,943) as of December 31, 2022[186]. - The total accumulated deficit stands at $(44,896,286) as of June 30, 2023, compared to $(44,558,940) as of December 31, 2022[186]. Liquidity and Financial Position - As of June 30, 2023, the Company had cash on hand of $456,155 and a loan receivable of $67,120,596 (RMB 485.0 million), which was fully repaid on July 3, 2023, ensuring liquidity for the next 12 months[138]. - As of June 30, 2023, the Company had cash and equivalents of $456,155 and a current ratio of 5.75:1[173]. - The Company believes it has sufficient cash and access to loans to meet its working capital needs as of June 30, 2023[189]. Business Strategy and Operations - The Company is transitioning to become an energy storage integrated solution provider, targeting high-growth potential industries such as industrial complexes and renewable energy sectors[135]. - The Company aims to implement disciplined expansion strategies in market areas currently not served, focusing on energy storage technologies[135]. - The Company plans to raise additional funds through private or public offerings or bank loans to support its business transformation and expansion efforts[139]. - The Company has not recognized any income from its joint venture with Erdos TCH due to uncertainties regarding collection, despite ongoing compensation of RMB 1 million ($145,460) per month until operations resume[144]. - The Company’s subsidiaries, including Xi'an TCH and Zhonghong, are primarily engaged in providing energy-saving solutions and services, contributing significantly to the Company’s consolidated assets and liabilities[152]. Financial Obligations and Regulations - The Company's contractual obligations total $16,451,051 as of June 30, 2023, with $5,460,094 due within one year[189]. - The Company has not entered into any financial guarantees or derivative contracts that would affect its financial obligations[187]. - PRC regulations require foreign-invested enterprises to allocate at least 10% of their annual after-tax profit to surplus reserves until it reaches 50% of registered capital[183]. - The Company's PRC subsidiaries are restricted from distributing cash dividends until statutory reserves are met, which may affect the Company's ability to conduct operations[181]. - The Company relies on dividends from its PRC subsidiaries for working capital, but these subsidiaries have not transferred any earnings to the Company to date[179]. Exchange Rate Impact - Exchange rate fluctuations may impact the Company's earnings, as operations are primarily conducted in RMB[190].
Smart Powerr (CREG) - 2023 Q2 - Quarterly Report