Smart Powerr Shifts to Energy Storage Amidst Widening Losses

TL;DR

**CREG is burning cash on a risky pivot to energy storage, making it a speculative play despite a massive cash injection.**

AI Summary

Smart Powerr Corp. (CREG) reported a significant increase in cash to $131,114,964 as of June 30, 2025, up from $25,341 at December 31, 2024, primarily driven by a $65,597,834 advance to supplier and a $55,986,881 increase in short-term loan receivables. The company generated revenue of $82,839 for the six months ended June 30, 2025, a substantial increase from $0 in the prior year period, resulting in a gross profit of $35,421. Despite this revenue growth, CREG posted a net loss of $2,129,276 for the six-month period, widening from a net loss of $689,554 in the same period of 2024, largely due to a surge in general and administrative expenses to $2,223,109 from $559,237. The company is transitioning from its legacy waste energy recycling business, which currently has five power generating systems not producing electricity, to become an energy storage integrated solution provider. Strategic outlook includes disciplined expansion into new market areas and application of energy storage technologies to high-growth segments like industrial complexes and large-scale PV stations. The company's cash flow forecast indicates sufficient liquidity for the next 12 months.

Why It Matters

This filing reveals CREG's pivot from a dormant waste energy recycling business to the high-growth energy storage sector, a critical strategic shift for investors. While the substantial increase in cash and new revenue streams are positive, the widening net loss and soaring administrative costs raise concerns about operational efficiency and the execution of this transformation. For employees, this signals a change in focus and potential new skill requirements. Customers could benefit from new energy storage solutions, but the company's past operational issues with Erdos TCH highlight execution risks. In a competitive energy market, CREG's ability to successfully deploy its new strategy will determine its long-term viability and market position.

Risk Assessment

Risk Level: high — The company reported a net loss of $2,129,276 for the six months ended June 30, 2025, and an accumulated deficit of $64,185,659, indicating ongoing unprofitability. Furthermore, its primary operating entity, Erdos TCH, has ceased operations since May 2019, with its five power generating systems currently not producing electricity, highlighting significant operational dormancy and reliance on a future, unproven business model.

Analyst Insight

Investors should approach CREG with extreme caution, recognizing the high-risk, high-reward nature of its strategic pivot. Monitor closely for concrete progress and financial results from the new energy storage business, as the current financials show significant losses and a dormant legacy operation. Await evidence of successful project deployment and revenue generation in the new segment before considering a position.

Financial Highlights

debt To Equity

0.14

revenue

$82,839

operating Margin

-2640.8%

total Assets

$132,207,923

total Debt

$16,119,715

net Income

-$2,129,276

eps

N/A

gross Margin

42.8%

cash Position

$131,114,964

revenue Growth

N/A

Revenue Breakdown

Key Numbers

• $131,114,964 — Cash (Increased from $25,341 at December 31, 2024, a 518,000% increase.)
• $82,839 — Revenue (For the six months ended June 30, 2025, up from $0 in the prior year period.)
• $2,129,276 — Net Loss (For the six months ended June 30, 2025, widened from $689,554 in 2024.)
• $64,185,659 — Accumulated Deficit (As of June 30, 2025, indicating historical unprofitability.)
• $2,223,109 — General and Administrative Expenses (For the six months ended June 30, 2025, significantly up from $559,237 in 2024.)
• 2,923,822 — Shares Outstanding (As of August 13, 2025.)
• $65,597,834 — Advance to supplier (Net cash generated from operating activities for the six months ended June 30, 2025.)
• $55,986,881 — Short term loan receivable increase (Net cash generated from investing activities for the six months ended June 30, 2025.)

Key Players & Entities

• Smart Powerr Corp. (company) — registrant
• Erdos TCH Energy Saving Development Co., Ltd. (company) — joint venture, subsidiary
• Xi'an TCH Energy Technology Co., Ltd. (company) — subsidiary
• Shanghai Yinghua Financial Leasing Co., Ltd. (company) — subsidiary
• Zhongxun Energy Investment (Beijing) Co., Ltd. (company) — subsidiary
• SEC (regulator) — filing authority
• Nasdaq Stock Market LLC (regulator) — exchange where common stock is registered
• Erdos Metallurgy Co., Ltd. (company) — joint venture partner

FAQ

Risk Factors

• Legacy Business Stoppage and Uncertainty [high — operational]: The company's legacy waste energy recycling business, specifically the Erdos TCH joint venture, has ceased operations since May 2019 due to renovations and furnace safety upgrades at Erdos. Resumption of operations has been repeatedly delayed, with the current compensation from Erdos of RMB 1 million ($145,524) per month being recognized as uncertain income. This prolonged inactivity poses a significant operational risk and impacts potential revenue streams.
• Significant Increase in General and Administrative Expenses [medium — financial]: General and administrative expenses surged to $2,223,109 for the six months ended June 30, 2025, from $559,237 in the same period of 2024. This substantial increase, representing a 297% rise, contributed significantly to the widening net loss and raises concerns about cost management during the company's strategic transition.
• Accumulated Deficit and Historical Unprofitability [medium — financial]: As of June 30, 2025, Smart Powerr Corp. has an accumulated deficit of $64,185,659. This indicates a history of net losses and unprofitability, which could impact the company's long-term financial stability and ability to fund future growth initiatives without additional capital.
• Dependence on Supplier Advances and Loan Receivables [medium — financial]: The substantial increase in cash to $131,114,964 is primarily driven by a $65,597,834 advance to supplier and a $55,986,881 increase in short-term loan receivables. The nature and terms of these transactions require further scrutiny to understand their impact on future cash flows and potential risks associated with these significant balances.
• Transition to New Business Model [medium — market]: The company is undergoing a strategic transition from its legacy waste energy recycling business to becoming an energy storage integrated solution provider. This shift involves entering new market areas and applying new technologies, which carries inherent market adoption risks and requires significant investment and execution capabilities.

Industry Context

Smart Powerr Corp. is navigating a transition within the energy sector, moving from waste energy recycling to integrated energy storage solutions. This shift targets high-growth segments like industrial complexes and large-scale PV stations. The energy storage market is experiencing rapid growth driven by renewable energy integration and grid stability needs, but it is also becoming increasingly competitive with established players and new entrants.

Regulatory Implications

As a company operating in the energy sector, Smart Powerr Corp. is subject to various environmental, energy, and financial regulations. The transition to new technologies may involve compliance with evolving standards for energy storage systems. Furthermore, the company's financial reporting and disclosures are governed by SEC regulations, requiring accurate and transparent reporting of its financial condition and operations.

What Investors Should Do

1. Scrutinize the nature and terms of the 'advance to supplier' and 'short-term loan receivables'.
2. Monitor the progress and cost-effectiveness of the strategic transition to energy storage solutions.
3. Evaluate the long-term viability of the legacy business and its potential for future contribution.
4. Analyze the significant increase in General and Administrative (G&A) expenses.

Key Dates

• 2025-06-30: Consolidated Balance Sheets and Statements of Operations and Comprehensive Loss as of and for the six months ended June 30, 2025 — Provides the latest financial snapshot, highlighting significant cash increase, revenue generation, and widening net loss, alongside the strategic shift.
• 2024-12-31: Consolidated Balance Sheets as of December 31, 2024 — Establishes the baseline for comparison, showing a much lower cash position prior to the recent financial activities.
• 2019-05-01: Erdos TCH ceased operations — Marks the beginning of the operational halt for the legacy business, leading to current uncertainties and compensation arrangements.

Glossary

Accumulated deficit

The total net losses of a company that have not been offset by net income since its inception. (Indicates Smart Powerr Corp.'s historical unprofitability, with a deficit of $64,185,659 as of June 30, 2025.)

Advance to supplier

A payment made to a supplier before the delivery of goods or services. (A significant component of CREG's cash increase, totaling $65,597,834, which impacts operating cash flow.)

Short term loan receivables

Money owed to the company by borrowers that is expected to be repaid within one year. (Contributed $55,986,881 to the increase in cash, impacting investing activities.)

Operating lease right-of-use assets, net

An asset representing the right to use an leased asset over the lease term, net of accumulated amortization. (Reflects the company's use of leased assets, with a net value of $88,692 as of June 30, 2025.)

Statutory reserve

A reserve fund that a company is legally required to maintain, often from retained earnings. (Smart Powerr Corp. has a statutory reserve of $15,191,645, indicating compliance with certain legal requirements.)

Year-Over-Year Comparison

Compared to the prior year period, Smart Powerr Corp. has shown a dramatic increase in its cash position, soaring from $25,341 to $131,114,964, largely due to significant advances and loan receivables. Revenue has emerged from zero to $82,839 for the six months ended June 30, 2025, indicating initial traction in its new business focus. However, this revenue growth has been overshadowed by a substantial increase in net loss, which widened from $689,554 to $2,129,276, primarily driven by a more than threefold increase in general and administrative expenses. The company's accumulated deficit also continues to grow, underscoring historical unprofitability.

Key Financial Figures

• $0.001 — ange on which registered Common stock, $0.001 par value CREG The Nasdaq Stock Market

Filing Documents

• ea0251901-10q_smart.htm (10-Q) — 729KB
• ea025190101ex10-61_smart.htm (EX-10.61) — 28KB
• ea025190101ex10-62_smart.htm (EX-10.62) — 29KB
• ea025190101ex10-63_smart.htm (EX-10.63) — 29KB
• ea025190101ex31-1_smart.htm (EX-31.1) — 11KB
• ea025190101ex31-2_smart.htm (EX-31.2) — 11KB
• ea025190101ex32-1_smart.htm (EX-32.1) — 6KB
• image_001.jpg (GRAPHIC) — 31KB
• 0001213900-25-076004.txt ( ) — 5322KB
• creg-20250630.xsd (EX-101.SCH) — 51KB
• creg-20250630_cal.xml (EX-101.CAL) — 43KB
• creg-20250630_def.xml (EX-101.DEF) — 243KB
• creg-20250630_lab.xml (EX-101.LAB) — 470KB
• creg-20250630_pre.xml (EX-101.PRE) — 260KB
• ea0251901-10q_smart_htm.xml (XML) — 503KB

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION 1 Item 1.

Financial Statements

Financial Statements 1 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 23 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 26 Item 4.

Controls and Procedures

Controls and Procedures 27

– OTHER INFORMATION

PART II – OTHER INFORMATION 28 Item 1.

Legal Proceedings

Legal Proceedings 28 Item 1A.

Risk Factors

Risk Factors 28 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 28 Item 3. Defaults Upon Senior Securities 28 Item 4. Mine Safety Disclosures 28 Item 5. Other Information 28 Item 6. Exhibits 29

SIGNATURES

SIGNATURES 35 i CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q (this "Report"), including, without limitation, statements under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations," includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These forward-looking statements can be identified by the use of forward-looking terminology, including the words "believes," "estimates," "anticipates," "expects," "intends," "plans," "may," "will," "potential," "projects," "predicts," "continue," or "should," or, in each case, their negative or other variations or comparable terminology. There can be no assurance that actual results will not materially differ from expectations. These statements are based on management's current expectations, but actual results may differ materially due to various factors, including, but not limited to those discussed under the heading "Risk Factors" in any of our filings with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act. The forward-looking statements contained in this Report are based on our current expectations and beliefs concerning future developments and their potential effects on us. Future developments affecting us may not be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) and other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We underta

— FINANCIAL INFORMATION

PART I — FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements SMART POWERR CORP. CONSOLIDATED BALANCE SHEETS JUNE 30, 2025 (UNAUDITED) AND DECEMBER 31, 2024 (IN U.S. DOLLARS, EXCEPT FOR SHARE DATA) JUNE 30, 2025 DECEMBER 31, 2024 ASSETS CURRENT ASSETS Cash $ 131,114,964 $ 25,341 VAT receivable 168,767 165,629 Advance to supplier - 65,214,994 Short term loan receivables - 55,660,132 Other receivables 56,519 49,747 Total current assets 131,340,250 121,115,843 NON-CURRENT ASSETS Operating lease right-of-use assets, net 88,692 115,068 Fixed assets, net 778,981 3,875 Total non-current assets 867,673 118,943 TOTAL ASSETS $ 132,207,923 $ 121,234,786 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 119,330 $ 68,003 Contract liabilities 62,818 - Taxes payable 4,275,621 4,276,597 Accrued interest on notes 37,776 69,103 Notes payable, net of unamortized OID of $ 0 and $ 31,250 , respectively 4,419,334 4,705,696 Accrued liabilities and other payables 2,999,144 3,166,486 Operating lease liability 59,638 58,529 Payable for purchase of 10 % equity interest of Zhonghong 418,784 410,998 Interest payable on entrusted loans 347,591 341,129 Total current liabilities 12,740,036 13,096,541 NONCURRENT LIABILITIES Income tax payable 3,350,625 3,350,625 Operating Lease liability 29,054 56,539 Total noncurrent liabilities 3,379,679 3,407,164 Total liabilities 16,119,715 16,503,705 CONTINGENCIES AND COMMITMENTS STOCKHOLDERS' EQUITY Common stock, $ 0.001 par value; 100,000,000 shares authorized, 24,491,069 and 7,391,996 shares issued and outstanding 25,305 9,161 Additional paid in capital 177,209,736 165,959,857 Statutory reserve 15,191,645 15,191,645 Accumulated other comprehensive loss ( 12,152,819 ) ( 14,373,199 ) Accumulated deficit ( 64,185,659 ) ( 62,056,383 ) Total stockholders' equity 116,088,208 104,731,081 TOTAL LIABILITIES AND STOCKHOLDERS' EQ

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS JUNE 30, 2025 AND 2024 1. ORGANIZATION AND DESCRIPTION OF BUSINESS Smart Powerr Corp. (the "Company" or "SPC") was incorporated in Nevada, and was formerly known as China Recycling Entergy Corporation. The Company, through its subsidiaries, provides energy saving solutions and services, including selling and leasing energy saving systems and equipment to customers, and project investment in the Peoples Republic of China ("PRC"). The Company's organizational chart as of June 30, 2025 is as follows: Erdos TCH – Joint Venture On April 14, 2009, the Company formed a joint venture (the "JV") with Erdos Metallurgy Co., Ltd. ("Erdos") to recycle waste heat from Erdos' metal refining plants to generate power and steam to be sold back to Erdos. The name of the JV was Inner Mongolia Erdos TCH Energy Saving Development Co., Ltd. ("Erdos TCH") with a term of 20 years. Erdos contributed 7 % of the total investment of the project, and Xi'an TCH Energy Technology Co., Ltd. ("Xi'an TCH") contributed 93 %. On June 15, 2013, Xi'an TCH and Erdos entered into a share transfer agreement, pursuant to which Erdos sold its 7 % ownership interest in the JV to Xi'an TCH for $ 1.29 million (RMB 8 million), plus certain accumulated profits. Xi'an TCH paid the $ 1.29 million in July 2013 and, as a result, became the sole stockholder of the JV. Erdos TCH currently has two power generation systems in Phase I with a total 18 MW power capacity, and three power generation systems in Phase II with a total 27 MW power capacity. On April 28, 2016, Erdos TCH and Erdos entered into a supplemental agreement, effective May 1, 2016, whereby Erdos TCH cancelled monthly minimum lease payments from Erdos, and started to charge Erdos based on actual electricity sold at RMB 0.30 / KWH. The selling price of each KWH is determined annually based on prevailing market conditions. In May 2019, Erdos TCH ceased operations due to renovations and furnace safety upgrades of Erdos, and the

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