# EDGAR Filing Document

**Accession Number:** 0002015691
**File Stem:** 0001493152-25-021536
**Filing Date:** 2025-11
**Character Count:** 207045
**Document Hash:** 3175b138e02c2457827160c496bb2547
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001493152-25-021536.hdr.sgml**: 20251110

**ACCESSION NUMBER**: 0001493152-25-021536

**CONFORMED SUBMISSION TYPE**: 6-K

**PUBLIC DOCUMENT COUNT**: 129

**CONFORMED PERIOD OF REPORT**: 20250630

**FILED AS OF DATE**: 20251110

**DATE AS OF CHANGE**: 20251110

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Elong Power Holding Ltd.
- **CENTRAL INDEX KEY:** 0002015691
- **STANDARD INDUSTRIAL CLASSIFICATION:** MISCELLANEOUS ELECTRICAL MACHINERY, EQUIPMENT & SUPPLIES [3690]
- **ORGANIZATION NAME:** 04 Manufacturing
- **EIN:** 000000000
- **STATE OF INCORPORATION:** E9
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 6-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-42416
- **FILM NUMBER:** 251467049

**BUSINESS ADDRESS:**
- **ADDRESS IS A NON US LOCATION:** YES
- **STREET 1:** 3 YAN JING LI ZHONG JIE
- **STREET 2:** BLOCK B, ROOM 2110
- **CITY:** BEIJING
- **NON US STATE TERRITORY:** BEIJING
- **PROVINCE COUNTRY:** F4
- **ZIP:** 100025
- **BUSINESS PHONE:** (212) 818-8800

**MAIL ADDRESS:**
- **ADDRESS IS A NON US LOCATION:** YES
- **STREET 1:** 3 YAN JING LI ZHONG JIE
- **STREET 2:** BLOCK B, ROOM 2110
- **CITY:** BEIJING
- **NON US STATE TERRITORY:** BEIJING
- **PROVINCE COUNTRY:** F4
- **ZIP:** 100025

?xml version='1.0' encoding='ASCII'?

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 6-K**

**REPORT OF FOREIGN PRIVATE ISSUER**

**PURSUANT TO RULE 13a-16 OR 15d-16**

**UNDER THE SECURITIES EXCHANGE ACT OF 1934**

**For the month of November 2025**

**Commission File Number: 001-42416**

**Elong Power Holding Limited**

**3 Yan Jing Li Zhong Jie**

**Block B, Room 2110, Beijing**

**People's Republic of China, 341000**

**(Address of principal executive offices)**

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F ☒ Form 40-F ☐

Elong Power Holding Limited (the "Company") is hereby furnishing this report on Form 6-K its Management's Discussion and Analysis of Financial Condition and Results of Operations for the six months ended June 30, 2025 and 2024, and the Unaudited Interim Consolidated Financial Statements for the same period, which are attached as Exhibit 99.1 and Exhibit 99.2, respectively.

This Form 6-K (including the exhibit) is incorporated by reference into the Company's Registration Statement on Form S-8 (File No. 333-286653) filed with the Securities and Exchange Commission on April 21, 2025.

**EXHIBIT INDEX**

---

| | |
|:---|:---|
| **Exhibit No.** | **Description** |
| 99.1 | [Management's Discussion and Analysis of Financial Condition and Results of Operations for the Six Months ended June 30, 2025 and 2024](ex99-1.htm) |
| 99.2 | [Unaudited Interim Consolidated Financial Statements for the Six Months ended June 30, 2025 and 2024](ex99-2.htm) |
| 101.INS | Inline XBRL Instance Document |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document. |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |

---

**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

---

| | | |
|:---|:---|:---|
|  | **Elong Power Holding Limited** | **Elong Power Holding Limited** |
| Date: November 10, 2025 | By: | */s/ Xiaodan Liu* |
|  | Name: | Xiaodan Liu |
|  | Title: | Chief Executive Officer |

---

## Exhibit 99.1

**Exhibit 99.1**

**OPERATING AND FINANCIAL REVIEW AND PROSPECTS**

**IN CONNECTION WITH THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**FOR THE SIX MONTHS ENDED JUNE 30, 2025 AND 2024**

*Unless the context otherwise requires, all references in this section to the "Company," "long," "Elong Power," "we," "us," or "our" refer to Elong Power Holding Limited,* 

 

*The following discussion and analysis of our financial condition and result of operations for the six months ended June 30, 2025, should be read together with our unaudited condensed consolidated financial statements and related notes. The following discussion contains "forward-looking statements " that reflect our future plans, estimates, beliefs and expected performance. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements as a result of a number of factors. We caution that assumptions, expectations, projections, intentions, or beliefs about future events may, and often do, vary from actual results and the differences can be material. Please see the information set forth and incorporated by reference in the Company's Form 20-F for the fiscal year ended December 31, 2025 filed with the Securities and Exchange Commission on September 22, 2025 under, "Cautionary Note Regarding Forward-Looking Statements" and under Item 3.D."Risk Factors."*

**Overview**

**Business Combination**

Elong is an exempted company with limited liability incorporated under the laws of the Cayman Islands. We carry out our business in China primarily through our PRC Entities. See "— Corporate History and Structure." Through our operating subsidiaries, we are committed to the research and development, manufacturing, sales and service of high-power lithium-ion batteries for electric vehicles and construction machinery, as well as large-capacity, long-cycle lithium-ion batteries for energy storage systems. We have a comprehensive product and technology system that includes battery cells, modules, system integration, and battery management system ("BMS") development, based on high-power lithium-ion batteries and battery system products for long-cycle energy storage devices. We offer advanced energy applications and full lifecycle services. Our product portfolio includes products utilizing lithium manganese oxide and lithium iron phosphate, among others, to meet the needs of high-power applications and energy storage applications in various scenarios.

On November 21, 2024 (the "Closing Date"), Elong, TMT Acquisition Corp, a Cayman Islands exempted company and formerly a publicly-traded special purpose acquisition company ("TMT"), and ELong Power Inc., a Cayman Islands exempted company and formerly a wholly-owned subsidiary of Elong ("Merger Sub"), consummated a business combination (the "Business Combination") pursuant to the terms of the Amended and Restated Agreement and Plan of Merger, dated February 29, 2024 (the "Business Combination Agreement"). The Business Combination was accomplished by way of the following transaction steps:

● At the closing of the Business Combination (the "Closing"), Merger Sub merged with and into TMT (the "Merger"), with TMT continuing as the surviving entity and becoming a wholly owned subsidiary of Elong. At the effective time of the Merger (the "Effective Time"), (i) each ordinary share of TMT, par value $0.0001 per share ("TMT Ordinary Share") issued and outstanding immediately prior to the effective time of the Merger (the "Effective Time") (other than TMT Excluded Shares and TMT Dissenting Shares (as each is defined below)) converted into one Class A ordinary share of Elong, par value $0.00001 per share ("Elong Class A Ordinary Share"), (ii) each right of TMT ("TMT Right") issued and outstanding immediately prior to the Effective Time automatically converted in accordance with its terms into 2/10 of one TMT Ordinary Share, and then further converted into 2/10 of one Elong Class A Ordinary Share, and (iii) each unit of TMT, consisting of one TMT Ordinary Share and one TMT Right ("TMT Unit"), issued and outstanding immediately prior to the Effective Time automatically and mandatorily separated into its component parts and the TMT Ordinary Shares and TMT Rights included within such TMT Units automatically converted into Elong Class A Ordinary Shares as described above.

● Prior to the Closing, Elong effectuated a share surrender (with an effect identical to that of a reverse share split) of the Elong Class A Ordinary Shares and Class B ordinary shares of Elong, par value $0.00001 per share ("Elong Class B Ordinary Shares" and collectively with the Elong Class A Ordinary Shares the "Elong Ordinary Shares"), such that, immediately thereafter, Elong had 45,000,000 Elong Ordinary Shares, consisting of 39,222,563 Elong Class A Ordinary Shares and 5,777,437 Elong Class B ordinary share of Elong, par value $0.00001 per share ("Elong Class B Ordinary Share"), issued and outstanding. All of the Elong Class B Ordinary Shares are held by Gracedan Co., Limited (the "Supporting Shareholder"). Because each Elong Class B Ordinary Share entitles the holder thereof to 50 votes on all matters subject to vote at general meetings of Elong, the Supporting Shareholder holds a majority of the total voting power of Elong following the Closing, as described herein.

● Concurrently with the Closing, Elong consummated the PIPE Financing (as defined below), pursuant to a subscription agreement entered into by Elong and an accredited investor (the "PIPE Investor") prior to the Closing, which provided for the purchase by the PIPE Investor of $7,000,000 in Elong Class A Ordinary Shares (the "PIPE Financing"). The PIPE Investor, together with 2TM Holding LP, a Delaware limited partnership and sponsor of TMT (the "Sponsor"), and the representative of the underwriters of TMT's initial public offering (the "Representative"), also entered into the Amended and Restated Registration Rights Agreement with Elong, pursuant to which the Sponsor, the Representative and the PIPE Investors have customary registration rights, including three sets of demand rights and piggy-back rights, with respect to the shares of Elong Class A Ordinary Shares held by such parties following the consummation of the Business Combination.

● At the Closing, the Supporting Shareholder deposited 300,000 Elong Class B Ordinary Shares (the "Indemnification Shares") with Continental as escrow agent (the "Escrow Agent"), which shall be held in escrow as security for the Supporting Shareholder's indemnification obligations on behalf of Elong and be subject to surrender and forfeiture under the terms of Business Combination Agreement and the escrow agreement entered into and effective as of the Closing with the Escrow Agent (the "Indemnification Escrow Agreement").

● After the Closing, the Supporting Shareholder will be entitled to receive up to 9,000,000 Elong Class A Ordinary Shares (the "Earnout Shares") solely upon the achievement of certain financial targets during the fiscal years ended December 31, 2024 and 2025 or upon the completion by Elong of certain change in control transactions, in each case in accordance with the terms of the Business Combination Agreement and the escrow agreement entered into and effective as of the Closing with the Escrow Agent covering the treatment and release of the Earnout Shares (the "Earnout Escrow Agreement").

As a result of the Business Combination, TMT became a wholly owned subsidiary of Elong, the security holders of TMT immediately prior to the Effective Time became security holders of Elong, and Elong became a public company listed on the Capital Market of The Nasdaq Stock Market LLC ("<u>Nasdaq</u>").

**Recent Developments**

On May 18, 2024, a subsidiary of Elong entered into an energy storage equipment sales agreement, which became effective on May 30, 2024, with Nengjian Henan Urban Construction Engineering Co. The contract amount is RMB480,000,000 (USD 67,605,633) including tax. The delivery time for the equipment was initially set for not later than October 31, 2024, contingent upon the timing of the prepayment, which is currently under negotiation with the customer. The customer will pay 30% of the contract price within three months before the shipment of the equipment, 30% of the contract price within seven working days before the shipment of the equipment, and 30% of the contract price within seven working days after the equipment is installed and tested. An amount equal to 10% of the contract price will be reserved for 12 months as a quality guarantee deposit. The sales agreement includes other provisions customary for an agreement of its type. The project delivery was postponed due to the incomplete government approval documents of the customer. According to the latest communication with the customer, the delivery is now expected to be completed in 2026.

On June 12, 2024, a subsidiary of Elong entered into a battery pack sales agreement with Beijing Xinyuanhengyuan Technology Development Co., Ltd. which took effect on the same day. The contract amount is approximately RMB 80.5 million ($11.3 million) including tax. The Company recognized revenues of $19,229 from the customer for the six months ended June 30, 2025. After the customer confirms the products to be qualified, the customer will proceed with the procurement of the remaining batteries, which may be in multiple orders. The sales agreement includes other provisions customary for an agreement of its type.

**Key Factors Affecting Our Results of Operations**

We believe that our results of operations are affected by the following factors.

***Technology and Product Innovation***

Our financial performance is driven by development and sales of products with innovative technology. Our ability to develop innovative technology has been and will continue to be dependent on our dedicated research team. As part of our efforts to develop innovative technology, we plan to continue leveraging our knowledge base in China and to continue expanding our R&D efforts on a global basis. We expect our results of operations will continue to be impacted by our ability to develop new products with improved performance and reduced production cost, as well as the cost of our R&D efforts.

***Market Demand***

Our revenue and profitability depend substantially on the demand for high power battery and energy storage system, which is driven by the growth of the new energy passenger vehicles, commercial applications, and battery energy storage markets. Many factors contribute to the development of the electric vehicle and battery energy storage sector, including product innovation, general economic and political conditions, environmental concerns, energy demand, government support and economic incentives. According to data from the Ministry of Industry & Information Technology of the People's Republic of China (https://www.miit.gov.cn/jgsj/zbys/qcgy/art/2025/art_7e1431443b6740dab8df43cfbf5035eb.html), new energy vehicle sales in China were 693.7 million units for the six months ended June 30, 2025, an increase of 40.3%, and the penetration rate of new energy vehicles has reached 44.3%. The popularity of new energy vehicles has been expanded to the second to third tier cities in China, which continues to drive the market demand for the scale of the power battery industry.

***Manufacturing Capacity***

Our growth depends on being able to meet anticipated demand for our products. In order to do this, we will need to effectively utilize our manufacturing capacity. This will require a corresponding development of our sales and marketing team, an expansion of our customer base and strengthened quality control in a measured manner, based on our ongoing assessment of medium and long-term demand for our solutions.

***Manufacturing Costs***

Our profitability may also be affected by our ability to effectively manage our manufacturing costs. Our manufacturing costs are affected by fluctuations in the price of raw materials. If raw material prices increase, we will have to offset these higher costs either through price increases to our customers or through productivity improvements. Our ability to control our raw materials costs is also dependent on our ability to negotiate with our suppliers for a better price and our ability to source raw materials from reliable suppliers in a cost-efficient manner. In addition, we expect that an increase in our sales volume will enable us to lower our manufacturing costs through economies of scale.

***Regulatory Landscape***

Elong's business complies principally with a series of regulations on electric vehicle batteries and new energy industry in PRC. Regulations on electric vehicles and energy storage such as economic incentives to purchasers of electric vehicles, tax credits for electric vehicle manufacturers or developers of renewable energy projects, and economic penalties that may apply to a car manufacturer may benefit our market demand and help to expand the market size for our products. Meanwhile, we operate in an industry that is subject to many established environmental regulations, which have generally become more stringent over time, particularly with respect to hazardous waste generation and disposal and pollution control such as air emission, wastewater discharge, solid waste and noise. These regulations affect the cost of our products and our gross margins. The requirements of PRC environmental laws and regulations may expose us to possible admonitions, penalties, investigations or inquiries imposed by the environmental regulators, or even result in any possible claims or legal proceedings that would have a material adverse effect on our business, financial condition or results of operations.

**Basis of Presentation**

Our unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP") and pursuant to the rules and regulations of the Securities Exchange Commission ("SEC").

A subsidiary is an entity in which Elong directly controls 100% of the voting power and (a) has the power to appoint or remove the majority of the members of the board of directors (the "Subsidiary Board") (b) to cast majority of votes at the meeting of the Subsidiary Board or to govern the financial and operating policies of the investee under a statute or agreement among the shareholders or equity holders.

The Company operates as one operating segment in accordance with ASC 280, Segment Reporting. The Company has a common basis of organization, and the products and services are offered mutually. Considering the streamlining of the growing organization, the Company's Chief Operating Decision Maker ("CODM") which is the Chief Executive Officer continues to make decisions with regards to business operations and resource allocation based on evaluation of Elong as a whole. Accordingly, the Company operates and makes decisions as one business segment. As the Company's long-lived assets are substantially located in the PRC and all revenue are generated within the PRC, no geographical segments are presented.

**Key Components of Results of Operations**

***(a) Revenues***

Revenue is recognized when or as the control of the goods or services is transferred upon the customer's acceptance of the products. We generated our revenues from 1) sales of battery packs; 2) sales of battery cells; 3) sales of battery spare parts and other such as sales of product waste and scraps.

The Company provides a manufacturer's standard warranty on all battery packs and battery cells sold, ensuring that the products comply with agreed-upon specifications. The Company does not consider the warranty as a separate performance obligation under the ASC 606-10-55-31. The Company considers that standard warranty is not providing incremental service to customers rather than assurance to the quality of the battery packs and battery sales, and therefore should be accounted for in accordance with ASC 460, Guarantees.

***(b) Cost of revenue***

Cost of revenue includes direct parts, material, labor cost, manufacturing overhead (including depreciation of assets associated with the production) and shipping and handling costs charged by suppliers. Cost of revenue also includes charges to write-down the carrying value of the inventories when it exceeds its estimated net realizable value and to provide for on-hand inventories that are obsolete.

***(c) Cost of revenue-idle capacity***

Idle capacity consists of indirect production costs in excess of charges under normal capacity allocated to the Company's produced semi-finished goods and finished goods. Production costs include direct and indirect labor, production supplies, repairs and maintenance, rent, utilities, insurance. The Company charges allocated production costs to its semi-finished and finished goods based on normal capacity on a monthly basis, which is lower than its actual costs incurred. Production costs in excess of production allocations are expensed and recorded in cost of revenue-idle capacity.

***(d) Selling, general and administrative expenses***

Selling expenses consist primarily of employee compensation, and transportation cost as incurred.

General and administrative expenses consist primarily of employee compensation for employees involved in general corporate functions and those not specifically dedicated to research and development activities, depreciation and amortization expenses, legal, and other professional services fees, lease and other general corporate related expenses and professional fees related to the purpose of Business Combination.

***(e) Research and development expenses***

All costs associated with research and development ("R&D") is expensed as incurred. R&D expenses consist primarily of employee compensation for those employees engaged in R&D activities, design and development expenses with new technology, materials and supplies and other R&D related expenses.

***(f) Other income (expenses)***

Other income (expenses) mainly consists of non-operational activities such as income from loan forgiven, loss of disposal of property, plant, and equipment and inventory and litigation charges and debt forgiveness.

***(g) Impairment of Property, plant and equipment***

Property, plant and equipment, are evaluated for impairment whenever events or changes in circumstances have indicated that an asset may not be recoverable and are grouped with other assets to the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. If the sum of the projected undiscounted cash flows (excluding interest charges) is less than the carrying value of the assets, the assets will be written down to the estimated fair value and such loss is recognized in income from continuing operations in the period in which the determination is made.

**Results of Operations**

The following table sets forth, for the periods indicated, statements of loss data:

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| | | | |
|:---|:---|:---|:---|
|  | **For the Six Months Ended June 30,** | **For the Six Months Ended June 30,** | **Change** |
|  | **2025** | **2024** | **%** |
| **Revenues** | $**214039** | $365975 | **(42)%** |
| Cost of revenues | (214897) | (821023) | (74)% |
| Cost of revenues - idle capacity | (594185) | (1249041) | (52)% |
| **Gross loss** | **(595043)** | (1704089) | **(65)%** |
| Selling expenses | (22061) | (63541) | (65)% |
| Reversal for warranty liability | 153845 |  | N/A |
| General and administrative expenses | (1779543) | (1495843) | 19% |
| Provision for doubtful accounts and credit losses | (23132) | (141639) | (84)% |
| Research and development expenses | (17719) | (56904) | (69)% |
| Total operating expense | (1688610) | (1757927) | (4)% |
| **Operating loss** | **(2283653)** | (3462016) | **(34)%** |
| Interest income | 47 | 2245 | (98)% |
| Interest expense | (203675) | (158066) | 29% |
| Foreign currency exchange (loss) gains | (52445) | 9731 | (639)% |
| Other expenses | (115751) | (177277) | (35)% |
| **Loss before income taxes** | **(2655477)** | **(3785383)** | **(30)%** |
| Income tax expense | - | - | N/A |
| **Net loss** | $**(2655477)** | $**(3785383)** | **(30)%** |

---

**Non-GAAP Financial Measures**

We use adjusted gross profit and adjusted gross margin evaluating our operating results and for financial and operational decision-making purposes. Adjusted gross profit represents gross loss excluding idle capacity. We define adjusted gross margin as adjusted gross profit excluding idle capacity as a percentage of revenue.

We present these non-GAAP financial measures because they are used by our management to evaluate our operating performance and formulate business plans. We believe that adjusted gross profit and adjusted gross margin help identify underlying trends in our business that could otherwise be distorted by the effect of certain idle capacity that are included in gross loss. We also believe that the use of the non-GAAP measures facilitates investors' assessment of our operating performance. We believe that adjusted gross profit and adjusted gross margin provide useful information about our operating results, enhance the overall understanding of our past performance and future prospects and allow for greater visibility with respect to key metrics used by our management in its financial and operational decision making.

Adjusted gross profit and adjusted gross margin should not be considered in isolation. Investors are encouraged to compare our historical adjusted gross profit and adjusted gross margin to the most directly comparable GAAP measure. Adjusted gross profit and adjusted gross margin presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to our data. We encourage investors and others to review our financial information in its entirety and not rely on a single financial measure.

The table below sets forth a reconciliation of our gross loss to adjusted gross (loss) profit and adjusted gross margin for the years indicated:

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Six Months Ended June 30,** | **For the Six Months Ended June 30,** | **Change** |
|  | **2025** | **2024** | **%** |
| Gross Loss | $(595043) | $(1704089) | 65% |
| Idle Capacity | (594185) | (1249041) | 52% |
| Adjusted Gross (Excluding Idle Capacity) | (858) | (455048) | 99.8% |
| *Adjusted Gross Margin (Excluding Idle Capacity)* | (0.4)% | (124)% | 123.6% |

---

**Results of Operations – Six months ended June 30, 2025 Compared to Six months June 30, 2024**

***Revenues***

 ****

We generated revenue of $214,039 for the six months ended June 30, 2025, representing a decrease of $151,936, or 42%, compared to $365,975 in the same period of 2024. The significant decline was primarily attributable to an 98% decrease in sales volume of battery spare parts and others. Several factors contributed to this decline: (i) The management paid more attention on the sales of battery packs/battery cells during the six months ended June 30, 2025; (ii) management devoted significant time and resources to the execution of the reverse merger transactions during the period, which temporarily constrained our sales and marketing activities.

The following table summarizes the breakdown of revenues by categories in US dollars:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Six months ended June 30,** | **For the Six months ended June 30,** | **For the Six months ended June 30,** | **For the Six months ended June 30,** | **For the Six months ended June 30,** | **For the Six months ended June 30,** |
|  | **2025** | **2025** | **2024** | **2024** | **Change** | **Change** |
|  | **Amount** | **%** | **Amount** | **%** | **Amount** | **%** |
| Battery packs/battery cells | $209409 | 98% | $89058 | 24% | $120351 | 135% |
| Battery spare parts and others | 4630 | 2% | 276917 | 76% | (272287) | (98)% |
| Total consolidated revenue | $**214039** | 100% | $**365975** | **100%** | $**(151936)** | **(42)%** |

---

***Cost of Revenues***

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the six months ended June 30,** | **For the six months ended June 30,** | **Change** | **Change** |
|  | **2025** | **2024** | **Amount** | **%** |
| Cost of revenues | $214897 | $821023 | $(606126) | (74)% |
| *as a percentage of revenues* | 100% | 224% |  | (124)% |

---

Cost of revenues was $214,897 for the six months ended June 30, 2025, compared to $821,023 for the same period of 2024, a decrease of $606,126 or 74%, primarily aligned with the revenue decline.

The costs of revenues didn't drop in proportion to revenues was caused by 1) deletion of inventory impairment decreased $1,050,392 for the six months ended June 30, 2025, as compared with the same period of 2024; 2) $1,323,065 extra losses related to the sales of defective battery cells during normal production for the six months ended June 30, 2024.

***Cost of Revenues – Idle Capacity***

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the six months ended June 30,** | **For the six months ended June 30,** | **Change** | **Change** |
|  | **2025** | **2024** | **Amount** | **%** |
| Cost of Revenues – Idle Capacity | $594185 | $1249041 | $(654856) | (52)% |
| *as a percentage of revenues* | 278% | 341% |  | (63)% |

---

Our cost of revenues-idle capacity for the six months ended June 30, 2025 was $594,185 compared to $1,249,041 in the same period of 2024, a decrease of $654,856 or 52%, as result of the decrease in the depreciation and amortization expense of property, plant and equipment.

***Gross Loss and Gross Margin***

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the six months ended June 30,** | **For the six months ended June 30,** | **Change** | **Change** |
|  | **2025** | **2024** | **Amount** | **%** |
| Gross Loss | $(595043) | $(1704089) | $1109046 | (65)% |
| *Gross Margin* | (278)% | (466)% |  | 188% |
| *Adjusted Gross Margin (Excluding Idle Capacity)* | (0.4)% | (124)% |  | 123.6% |

---

Our gross loss margin, which excluded the idle capacity was 0.4% for the six months ended June 30, 2025 as compared to 124% for the same period of 2024. The significant increase of GP margin was primarily due to 1) total cost in the six months ended June 30, 2025 decreased by approximately 65% comparing with the same period of 2024; 2) During the six months ending June 30, 2025, sales were primarily comprised of battery packs. In contrast, sales during the corresponding period of 2024 were mainly constituted of defective and scrap batteries, spare parts and auxiliary materials, which had the extra losses.

***Selling Expenses***

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the six months ended June 30,** | **For the six months ended June 30,** | **Change** | **Change** |
|  | **2025** | **2024** | **Amount** | **%** |
| Selling Expenses | $22061 | $63541 | $(41480) | (65)% |
| *as a percentage of revenues* | 10% | 17% |  | (7)% |

---

Selling expenses were $22,061 for the six months ended June 30, 2025, compared to $63,541 in same period of 2024 , primarily due to decrease of sales personnel's salaries and travel expenses.

***Warranty Expense***

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the six months ended June 30,** | **For the six months ended June 30,** | **Change** | **Change** |
|  | **2025** | **2024** | **Amount** | **%** |
| Reversal for warranty liability | $153845 | $0.0 | $153845 | N/A |
| *as a percentage of revenues* | 72% | 0.0% |  | 72% |

---

Reversal for warranty liability were $153,845 for the six months ended June 30, 2025, compared to $nil for the same period of 2024.

***General and Administrative Expenses***

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the six months ended June 30,** | **For the six months ended June 30,** | **Change** | **Change** |
|  | **2025** | **2024** | **Amount** | **%** |
| General and Administrative Expenses | $1779543 | $1495843 | $283700 | 19% |
| *as a percentage of revenues* | 831% | 409% |  | 422% |

---

General and administrative (G&A) expenses were $1,779,543 for the six months ended June 30, 2025, an increase of $283,700 compared to $1,495,843 in the same period of 2024. This was primarily due to an increase of $363,843 in audit and legal service-related expenses, partially offset by a reduction of $80,276 in staff costs.

***Provision for doubtful accounts and credit losses***

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the six months ended June 30,** | **For the six months ended June 30,** | **Change** | **Change** |
|  | **2025** | **2024** | **Amount** | **%** |
| Provision for credit losses | $23132 | $141639 | $(118507) | (84)% |
| *as a percentage of revenues* | 11% | 39% |  | (28)% |

---

Provision for credit losses for the six months ended June 30, 2025 was $23,132, compared to provision for credit loss of $141,639 in the same period of last year.

***Research and Development Expenses***

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the six months ended June 30,** | **For the six months ended June 30,** | **Change** | **Change** |
|  | **2025** | **2024** | **Amount** | **%** |
| Research and Development Expenses | $17719 | $56904 | $(39185) | (69)% |
| *as a percentage of revenues* | 8% | 16% |  | (8)% |

---

Research and development (R&D) expenses were $17,719 for the six months ended June 30, 2025, compared to $56,904 in same period of 2024. The decrease of $39,185 was primarily due to a decrease in depreciation of $25,075 and a decrease in staff remuneration of $12,175.

We will continue to invest in the research and development of high-performance battery technology and seek new innovations to further reduce costs.

The improvement of battery system solutions involves ongoing development of new battery units and modules, and increasing the energy density of existing batteries. The R&D team is committed to integrating new designs technologies, and materials into batteries to further improve performance and reduce costs. Meanwhile, we focus our R&D activities on technology research integration, technology implementation, and technology output that is crucial to help the Company maintain the advancement and forward-looking nature of technologies.

***Operating Loss***

 ****

Total operating loss was $2,283,653 for the six months ended June 30, 2025, compared to $3,462,016 in the same period of last year.

***Other Expenses***

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the six months ended June 30,** | **For the six months ended June 30,** | **Change** | **Change** |
|  | **2025** | **2024** | **Amount** | **%** |
| Other Expenses | $115751 | $177277 | $(61526) | (35)% |
| *as a percentage of revenues* | 54% | 48% |  | 6% |

---

In April 2024, a customer of the Company filed a lawsuit against Ganzhou Zhangyang in Gansu Province. As of June 30, 2025, based on the judgment, the Company recorded $115,115 in other expense for the six months ended June 30, 2025.

***Net Loss***

 ****

As a result of the above factors, our net loss was $2,655,477 for the six-month ended June 30, 2025, as compared to $3,785,383 in the same period of last year.

**Liquidity and Capital Resources**

In accordance with the ASC 205-40, Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern, ("ASC 205-40"), we have evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that the consolidated financial statements are issued.

For the six months ended June 30, 2025, the Company incurred net loss of $2.7 million, with operating outflows of $1.6 million and negative working capital of $12.3 million. As of June 30, 2025, the Company working capital deficit of $12.3 million, shareholders' deficit of $19.4 million and its accumulated deficit was $71.6 million.

As of June 30, 2025, we had current assets of $10.5 million, consisting of $0.1 million in cash and cash equivalents, $0.1 million in restricted cash, $7.0 million in short term investment, $0.1 million in account receivable, net, $1.3 million in inventories, $1.6 million in prepaid expenses other current assets, $0.1 million finance lease right of use assets. Our current liabilities as of June 30, 2025, were $22.8 million, which is comprised of $6.9 million in short-term loans – unrelated parties, $1.9 million in short-term loan-related parties, $0.5 million in current portion of long-term loan payable, $1.1 million in accounts payable, $0.3 million in amounts due to related parties, $4.1 million in contract liabilities, $6.6 million in accrued expenses and other current liabilities, $1.4 million product warranty provision-current. We also had long-term liabilities of $23.8 million, including, $23.2 million in operating lease liability - non-current, $0.1 million in financial lease liabilities-non-current and $0.5 million in product warranty provision -non-current.

The Company has funded its operations and capital needs primarily through the net proceeds received from capital contributions, related parties and other unrelated sources. For more information, please see Note 10, *Short Term Loans-Unrelated Parties*, Note 17, *Related Party Balances and Transactions*, in the unaudited condensed consolidated financial statements as of and for the six months ended June 30, 2025 and 2024.

As of the date of this report, these factors raised substantial doubt about the Company's ability to continue as a going concern for a period of one year from the date that these unaudited condensed consolidated financial statements were issued.

The Company has a plan of operations and acknowledges that its plan of operations may not result in generating positive working capital in the near future.

To meet the cash requirements for the next 12 months from the issuance date of this repot, the Company is undertaking a combination of the remediation plans:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● The Company's shareholder has committed to support the Company's operation in cash and started to fund the Company for a minimum period of twelve months from the date of this report in terms of improving cash position.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● The Company is going to seek more equity investment in the year of 2025.

As of June 30, 2025, the Company maintained a minimum cash balance on its unaudited condensed consolidated statement of financial position. The Company has conducted an intensive review of its operations and expenditures, including selling and administration expenses, to identify and eliminate inefficiencies and redundancies in order to preserve cash while maintaining its business operations. Given the Company's existing cash balances and projected cash generated from and used in operating activities, the Company believes that it will have sufficient liquidity to fund its operating activities and respond as necessary to market changes, which may include working capital needs, for at least twelve months from the issuance date of this report.

The Company will be able to support its continuous operations and to meet its payment obligations as and when liabilities fall due within the next twelve months from the unaudited condensed consolidated balance sheet date and the date of unaudited condensed consolidated financial statements for the financial period ended June 30, 2025. Accordingly, the Company's unaudited condensed consolidated financial statements are prepared on a going concern basis, which assumes that the Company will continue in operation for the foreseeable future and, accordingly, will be able to realize its assets and discharge its liabilities in the normal course of operations as they fall due. In the event the Company will not be able to continue as a going concern, adjustments will have to be made to reflect the situation that assets will need to be realized other than in the amounts at which they are currently recorded in the unaudited condensed consolidated balance sheet. In addition, the Company may have to provide for further liabilities that might arise and to reclassify non-current assets and liabilities as current assets and liabilities.

***Cash Flows Summary***

 ****

The following is a summary of our cash flows provided by (used in) operating, investing, and financing activities for the periods stated below:

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended June 30,** | **For the Six Months Ended June 30,** |
| | **2025** | **2024** |
| Net cash used in operating activities | $(1609906) | $(1355494) |
| Net cash used in investing activities | (62254) | (381096) |
| Net cash provided by financing activities | 1570869 | 2787894 |

---

 ****

***Cash Flows from Operating Activities***

 ****

Net cash used in operating activities was $1,609,906 for the six months ended June 30, 2025, compared to $1,355,494 net cash used for the six months ended June 30, 2024. The Negative cash flow for the six months ended June 30, 2025 was primarily due to i) net loss of $2,655,477, decrease in inventory of $381,238, increase in accrued expenses and other current liabilities of $156,703, increase in retention receivable of $99,183, partially offset by i) provision of credit losses of $23,132, ii) provision of obsolete inventory of $148,912 and deletion of obsolete inventory of $419,712, iii) depreciation and amortization expense of $60,221, iv) amortization of operating and finance right-of-use assets of $820,287, v) gain on disposals of property, plant and equipment of $66,138 and gain from debt forgiveness of $7,218, vi）reversal for warranty liability of $153,845, vii) increase in accounts receivable of $276,816.

Net cash used in operating activities was $1,355,494 for the six months ended June 30, 2024. The Negative cash flow for the six months ended June 30, 2024 was primarily due to i) net loss of $3,785,383, decrease in inventory of $2,031,431, decrease in accrued expenses and other current liabilities of $283,440, increase in retention receivable of $137,465, partially offset by i) provision of credit losses of $141,639, ii) provision of obsolete inventory of $1,203,131,iii) depreciation and amortization expense of $724,050, iv) amortization of operating and finance right-of-use assets of $786,835,v) loss on disposals of property, plant and equipment of $175,292, vi) decrease in accounts receivable of $268,473.

***Cash Flows from Investing Activities***

 ****

Net cash used in investing activities was $62,254 for the six months ended June 30, 2025, compared to $381,096 for the six months ended June 30, 2024. The negative cash flow from investing activities for the six months ended June 30, 2025 was mainly due to the $62,254 cash used in purchase of property, plant and equipment.

Net cash used in investing activities was $381,096 for the six months ended June 30, 2024. The negative cash flow from investing activities for the six months ended June 30, 2024 was mainly due to the $500,000 cash used in issuance of promissory note receivable and offset by $118,904 of proceeds from sales of property, plant and equipment.

***Cash Flows from Financing Activities***

 ****

Net cash provided by financing activities was $1,570,869 for the six months ended June 30, 2025, compared to $2,787,894 net cash provided by financing activities for the six months ended June 30, 2024. The positive cash flow from financing activities for the six months ended June 30, 2025 was mainly the result of $1,280,093 of proceeds from borrowings from related parties, and $322,045 of proceeds from borrowings from third parties, offset by repayment of $31,269 to third party borrowings.

Net cash provided by financing activities was $2,787,894 for the six months ended June 30, 2024. The positive cash flow from financing activities for the six months ended June 30, 2024 was mainly the result of $2,520,467 of proceeds from issuance of note payable, and $935,551 of proceeds from borrowings from third parties, offset by repayment of $275,814 to third party borrowings and $242,552 to loan payable with pledged assets, and increase in deferred offering costs of $149,758.

The majority of the Company's revenues and expenses were denominated primarily in Renminbi ("RMB"), the currency of the People's Republic of China. There is no assurance that exchange rates between the RMB and the U.S. Dollar will remain stable.

**Commitments And Contingencies**

Our future capital requirements will depend on many factors, including, but not limited to funding planned production capacity expansions and for general working capital. If the proceeds from the Business Combination are not sufficient to cover our planned expansions and our general working capital needs, we may need to raise additional capital. In addition, we may in the future enter into arrangements to acquire or invest in complementary businesses or technologies. We may need to seek additional equity or debt financing in order to meet these future capital requirements. Debt or preferred stock financing, if available, may involve covenants restricting our operations or our ability to incur additional debt or issue additional preferred stock, and may contain other terms that are not favorable to us or our stockholders. Additional equity financing may result in substantial dilution to our existing stockholders. If we are unable to raise additional capital when desired, or on terms that are acceptable to us, we may have to delay product development and other initiatives and our business, financial condition and results of operations could be adversely affected.

There are no material off-balance sheet arrangements other than those described below.

***Capital Commitments***

 ****

As of June 30, 2025 and December 31, 2024, the Company had no capital commitments.

***Lease liabilities***

 ****

We lease certain facilities and equipment under non-cancellable lease agreements that expire at various dates through 2041. For additional information, see Note 9, Lease, in the unaudited condensed consolidated financial statements as of June 30, 2025.

 **

***Contingencies***

 **

<u>(a) Legal proceedings</u>

From time to time, the Company may become involved in litigation, claims, and proceedings. The Company evaluates the status of each legal matter and assesses the potential financial exposure. If the potential loss from any legal proceedings or litigation is considered probable and the amount can be reasonably estimated, the Company accrues a liability for the estimated loss. Significant judgment is required to determine the probability of a loss and whether the amount of the loss is reasonably estimated.

For detailed information, see Note 22, Commitments and Contingencies - (i) Litigation, in the notes to the unaudited condensed consolidated financial statements as of June 30, 2025.

**Related Party Transactions**

For detailed related party transactions incurred during the six months ended June 30, 2025 and 2024, please see Note 17, *Related party balances and transactions*, in the notes to the unaudited condensed consolidated financial statements as of June 30, 2025.

**Off Balance Sheet Arrangements**

During the six months ended June 30, 2025 and 2024, we did not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities, which were established for the purpose of facilitating off-balance sheet arrangements.

**Holding Company Structure**

Elong is a holding company with no material operations of its own. We conduct our operations through our PRC subsidiaries. As a result, our ability to pay dividends depends significantly upon dividends paid by our PRC subsidiaries. If our existing PRC subsidiaries or any newly formed ones incur debt on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends to us. In addition, our wholly foreign-owned subsidiaries in China are permitted to pay dividends to us only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. Under PRC law, each of our subsidiaries in China is required to set aside at least 10% of its after-tax profits each year, if any, to fund certain statutory reserve funds until such reserve funds reach 50% of its registered capital. In addition, each of our subsidiaries in China may allocate a portion of its after-tax profits based on PRC accounting standards to enterprise expansion funds and staff bonus and welfare funds and PRC safety production reserve at its discretion. The statutory reserve funds and the discretionary funds are not distributable as cash dividends. Remittance of dividends by a wholly foreign-owned Company out of China is subject to examination by the banks designated by State Administration for Foreign Exchange ("SAFE"). Our PRC subsidiaries have not paid dividends and will not be able to pay dividends until they generate accumulated profits and meet the requirements for statutory reserve funds.

**Inflation**

According to the National Bureau of Statistics of China, the year-over-year percent changes in the consumer price index for the six months ended June 30, 2025 was a decrease by 0.1% and it was a increase by 0.1% for the six months ended June 30, 2024. We have been materially affected by inflation in the raw materials in the past, and we may be affected in the future by higher rates of inflation in the PRC. For example, certain operating costs and expenses, such as employee compensation and raw material purchase price may increase as a result of higher inflation. Additionally, because a substantial portion of our assets consists of short-term investment and inventories, high inflation could significantly reduce the value of these assets. We are not able to hedge our exposure to higher inflation in China.

**Critical Accounting Policies and Estimates**

***Use of Estimates***

 ****

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenue, costs and expenses in the consolidated financial statements and accompanying notes, and disclosure of contingent liabilities at the date of the consolidated financial statements.

Significant accounting estimates reflected in the Company's consolidated financial statements primarily include but not limited to allowance for doubtful accounts, lower of cost and net realizable value of inventory, provision for obsolete inventories, impairment of long-lived assets, provision for warranty liabilities, and valuation allowance for deferred tax assets. Management bases the estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from these estimates.

Please see Note 2 in the notes to the unaudited consolidated financial statements as of June 30, 2025 and 2024.

***Impairment assessments***

 ****

Impairment assessments consist primarily of property and equipment, purchased software and inventory purchased for operation and right of use assets.

Impairment of the Company's long-lived assets were assessed using both qualitative and quantitative analysis, or whenever events or circumstances change that indicate the carrying value of such long-lived assets may not be recoverable.

Management has to estimate the useful lives of the Company's long-lived assets. In regard to the Company's impairment analysis of long-lived asset, the most significant assumptions include management's estimate of the annual growth rate used to project future sales and expenses.

Impairment of inventories were assessed using quantitative analysis whenever events or circumstances change that indicate excess or obsolete inventories, or when the carrying value of inventory exceeds the net realizable value.

Management has to estimate the demand for current and future, and the selling cost of the Company's inventory. The Company analyzes the inventory impairment based on the lower of cost or net realizable value.

***Revenues***

 ****

The Company follows the guidance of ASC Topic 606, Revenue from Contracts with Customers (Topic 606), which requires the Company to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company applies the following steps to recognize revenues: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, the Company satisfies a performance obligation.

The Company's revenues are mainly generated from 1) sales of battery packs; 2) sales of battery cells; 3) sales of battery spare parts and other, such as sales of product waste and scraps.

<u>Sales of Battery packs and battery cells</u>

The Company generates revenue from sales of battery packs and battery cells through sales contract including master agreements and sales orders from the customers, which contain fixed sales price, payment terms, specifications, delivery and acceptance terms, transportation terms, etc., and are all signed-off and stamped.

The Company also identifies only one performance obligation in the contract which is to deliver battery packs and battery cells.

In order for the Company to provide specific battery packs and battery cells explicitly stated in a sales contract or sales orders, the Company requires certain deposits or full amount payment made in advance. Revenue is recognized at the point in time upon the customer's acceptance of products, which is when control of the promised goods is transferred to the customers, in an amount that reflects the consideration the Company expects to be entitled to for the products sold.

The Company presents the contract in the consolidated balance sheets as a contract asset or a contract liability, depending on the relationship between the entity's performance and the customer's payment.

A receivable is recorded when the Company has an unconditional right to consideration. A right to consideration is unconditional if only the passage of time is required before payment of that consideration is due.

<u>Sales of battery spare parts and others</u>

The Company typically enters into formal written contracts for the sale of spare parts, scrap, product waste, etc. which includes the general payment and delivery terms, and specific orders shall be placed to the Company. Under the specific order, full amount prepayment is required, and the Company's performance obligation is to transfer agreed-upon battery spare parts, scrap and product waste. The revenue is recognized at a point in time upon the customer's acceptance of battery spare parts or scrap and product waste.

***Product warranty***

 ****

The Company provides a manufacturer's standard warranty on battery packs and battery cells products sold, which entails repair or replacement of non-conforming items, in conjunction with the sales of products. The Company considers the standard warranty is not providing incremental service to customers rather an assurance to the quality of the vehicle, and therefore is not a separate performance obligation.

The Company's product warranty generally ranges from one to eight years (or 120,000 or 500,000 kilometer if reached sooner). The Company establishes a reserve for the estimated cost of the product warranty at the time revenue is recognized. The management's best estimates of its product warranty are based on historical information and other currently available evidence, including actual claims incurred to date and an estimate of the nature, frequency and costs of future claims for each customer.

The Company review and adjust the estimates to ensure that accruals are adequate to meet expected future warranty obligations. Initial warranty data is limited in the early launch of a new product and accordingly, future adjustments to the warranty accrual may be material.

***Lease***

 ****

The Company follows ASU 2016-02 "Leases" (Topic 842). Please refer to Note 2, Summary of Significant Accounting Policies – (y) Lease, in the notes to the consolidated financial statements as of June 30, 2025.

The Company's lease terms include options to renew or terminate the lease when it is reasonably certain that it will exercise the option. The Company determines if a contract contains a lease based on whether it has the right to obtain substantially all of the economic benefits from the use of an identified asset which the Company does not own and whether it has the right to direct the use of an identified asset in exchange for consideration. Right of use ("ROU") assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. ROU assets are recognized as the amount of the lease liability, adjusted for lease incentives received. Lease liabilities are recognized at the present value of the future lease payments at the lease commencement date. The interest rate used to determine the present value of the future lease payments is the Company's incremental borrowing rate ("IBR"), because the interest rate implicit in most of the Company's leases is not readily determinable. The IBR is a hypothetical rate based on the Company's understanding of what its credit rating would be to borrow and resulting interest the Company would pay to borrow an amount equal to the lease payments in a similar economic environment over the lease term on a collateralized basis. Lease payments may be fixed or variable, however, only fixed payments or in-substance fixed payments are included in the Company's lease liability calculation. Variable lease payments are recognized in operating expenses in the period in which the obligation for those payments is incurred.

The lease right-of-use assets are initially measured at the carrying amount of the lease liability and adjusted for any prepaid or accrued lease payments, remaining balance of lease incentives received, unamortized initial direct costs, or impairment charges relating to the right-of-use-asset. Lease expense for minimum lease payments exclusive of the value-added tax are recognized on straight-line basis over the lease term. The new standard provides a number of optional practical expedients at transition. The Company elected certain practical expedients that must be elected as a package, which permit the Company to not reassess, under the new standard, prior conclusions about (1) lease identification, (2) lease classification and (3) initial direct costs. Additionally, the Company elected a short-term lease exception policy, which allows entities to not apply the new standard to short-term leases (i.e. leases with terms of 12 months or less) and a hindsight policy, which allows an entity to include current considerations for existing leases when determining initial lease terms. The Company has also elected to account for lease and non-lease components as a single component for all leases, and elected to utilize an IBR (incremental borrowing rate) that is risk free rate plus premium for all leases when calculating the lease liability.

***Recent Accounting Pronouncements***

 ****

For a discussion of recently issued accounting pronouncements, see Note 2- Significant Accounting Policy-(bb) Recent accounting pronouncements not yet adopted to our unaudited condensed consolidated financial statements for the six months ended June 30, 2025 and 2024.

**Internal Control Over Financial Reporting**

In connection with the audits of our consolidated financial statements as of and for the years ended December 31, 2024 and 2023, we and our independent registered public accounting firm identified three material weaknesses in our internal control over financial reporting. A material weakness is a deficiency, or combination of deficiencies, in internal controls, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

The three material weaknesses that have been identified relate to (1) lack of experienced accounting team and qualified SEC reporting specialist to deal with complex accounting treatments and draft SEC filing document; (2) lack of controls for the IT environment; (3) lack of controls for the inventories in third-party after-sales warehouses.

To remedy identified material weaknesses, starting from August 2023, we have implemented, and plan to continue to implement below measures:

● hiring additional competent and qualified accounting and reporting personnel with appropriate knowledge and experience of U.S. GAAP and SEC financial reporting requirements;

● planning to implement an IT security control and database disaster recovery system to serve different accounting functions;

● establishing accounting record system with access control;

● managing inventories in third-party after-sales warehouses and maintaining a proper accounting record on a timely basis; and

● formulating internal accounting and internal control guidance on U.S. GAAP and SEC financial reporting requirements.

However, we cannot assure you that all these measures will be sufficient to remediate our material weaknesses in a timely manner, or at all.

 ****

**C**. **Research and Development, Patents and Licenses, etc*.***

 ****

Please see Item 4. "Information on the Company-Intellectual Property" above.

 ****

**D. Trend Information**

See Item 5.A "operating results" above for our trend information.

 ****

**E. Critical Accounting Estimates**

***Use of Estimates***

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenue, costs and expenses in the consolidated financial statements and accompanying notes, and disclosure of contingent liabilities at the date of the consolidated financial statements.

Significant accounting estimates reflected in the Company's consolidated financial statements primarily include but not limited to allowance for doubtful accounts, lower of cost and net realizable value of inventory, provision for obsolete inventories, impairment of long-lived assets, provision for warranty liabilities, and valuation allowance for deferred tax assets. Management bases the estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from these estimates.

***Impairment assessments***

Impairment assessments consist primarily of property and equipment, purchased software and inventory purchased for operation.

Impairment of the Company's long-lived assets were assessed using both qualitative and quantitative analysis, or whenever events or circumstances change that indicate the carrying value of such long-lived assets may not be recoverable.

Impairment of inventories were assessed using quantitative analysis whenever events or circumstances change that indicate excess or obsolete inventories, or when the carrying value of inventory exceeds the net realizable value.

***Nature of estimated required***

<u>Sales of Battery packs and battery cells</u>

The Company generates revenue from sales of battery packs and battery cells through sales contract including master agreements and sales orders from the customers, which contain fixed sales price, payment terms, specifications, delivery and acceptance terms, transportation terms, etc., and are all signed-off and stamped.

The Company also identifies only one performance obligation in the contract which is to deliver battery packs and battery cells.

In order for the Company to provide specific battery packs and battery cells explicitly stated in a sales contract or sales orders, the Company requires certain deposits or full amount payment made in advance. Revenue is recognized at the point in time upon the customer's acceptance of products, which is when control of the promised goods is transferred to the customers, in an amount that reflects the consideration the Company expects to be entitled to for the products sold.

The Company presents the contract in the consolidated balance sheets as a contract asset or a contract liability, depending on the relationship between the entity's performance and the customer's payment.

A receivable is recorded when the Company has an unconditional right to consideration. A right to consideration is unconditional if only the passage of time is required before payment of that consideration is due.

<u>Sales of battery spare parts and others</u>

The Company typically enters into formal written contracts for the sale of spare parts, scrap, product waste, etc. which includes the general payment and delivery terms, and specific orders shall be placed to the Company. Under the specific order, full amount prepayment is required, and the Company's performance obligation is to transfer agreed-upon battery spare parts, scrap and product waste. The revenue is recognized at a point in time upon the customer's acceptance of battery spare parts or scrap and product waste.

***Product warranty***

The Company provides a manufacturer's standard warranty on battery packs and battery cells products sold, which entails repair or replacement of non-conforming items, in conjunction with the sales of products. The Company considers the standard warranty is not providing incremental service to customers rather an assurance to the quality of the vehicle, and therefore is not a separate performance obligation.

The Company's product warranty generally ranges from one to eight years (or 120,000 or 500,000 kilometer if reached sooner). The Company establishes a reserve for the estimated cost of the product warranty at the time revenue is recognized. The management's best estimates of its product warranty is based on historical information and other currently available evidence, including actual claims incurred to date and an estimate of the nature, frequency and costs of future claims for each customer.

The Company review and adjust the estimates to ensure that accruals are adequate to meet expected future warranty obligations. Initial warranty data is limited early in the launch of a new product and accordingly, future adjustments to the warranty accrual may be material.

***Lease***

The Company adopted ASU 2016-02 "Leases" (Topic 842) on January 1, 2021, using the modified retrospective approach. This approach allows the Company to initially apply the new accounting standards at the adoption date and recognize a cumulative adjustment to the opening balance of retained earnings in the period of adoption. The prior year comparative information has not been restated and continues to be reported under the accounting standards in effect for that period.

The Company's lease terms include options to renew or terminate the lease when it is reasonably certain that it will exercise the option. The Company determines if a contract contains a lease based on whether it has the right to obtain substantially all of the economic benefits from the use of an identified asset which the Company does not own and whether it has the right to direct the use of an identified asset in exchange for consideration. Right of use ("ROU") assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. ROU assets are recognized as the amount of the lease liability, adjusted for lease incentives received. Lease liabilities are recognized at the present value of the future lease payments at the lease commencement date. The interest rate used to determine the present value of the future lease payments is the Company's incremental borrowing rate ("IBR"), because the interest rate implicit in most of the Company's leases is not readily determinable. The IBR is a hypothetical rate based on the Company's understanding of what its credit rating would be to borrow and resulting interest the Company would pay to borrow an amount equal to the lease payments in a similar economic environment over the lease term on a collateralized basis. Lease payments may be fixed or variable, however, only fixed payments or in-substance fixed payments are included in the Company's lease liability calculation. Variable lease payments are recognized in operating expenses in the period in which the obligation for those payments is incurred.

The lease right-of-use assets are initially measured at the carrying amount of the lease liability and adjusted for any prepaid or accrued lease payments, remaining balance of lease incentives received, unamortized initial direct costs, or impairment charges relating to the right-of-use-asset. Lease expense for minimum lease payments exclusive of the value-added tax are recognized on straight-line basis over the lease term. The new standard provides a number of optional practical expedients at transition. The Company elected certain practical expedients that must be elected as a package, which permit the Company to not reassess, under the new standard, prior conclusions about (1) lease identification, (2) lease classification and (3) initial direct costs. Additionally, the Company elected a short-term lease exception policy, which allows entities to not apply the new standard to short-term leases (i.e. leases with terms of 12 months or less) and a hindsight policy, which allows an entity to include current considerations for existing leases when determining initial lease terms. The Company has also elected to account for lease and non-lease components as a single component for all leases, and elected to utilize an IBR (incremental borrowing rate) that is risk free rate plus premium for all leases when calculating the lease liability.

***Recent Accounting Pronouncements***

For a discussion of our new or recently adopted accounting pronouncements, see Note 2, *Summary of Significant Accounting Policies – (h) Accounts receivable, net*, to our unaudited condensed consolidated financial statements for the six months ended June 30, 2025 and December 31, 2024 included in this report.

***Safe Harbor Statement***

 ****

Certain statements in this announcement are forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on the Company's current expectations and projections about future events that the Company believes may affect its financial condition, results of operations, business strategy and financial needs. Investors can identify these forward-looking statements by words or phrases such as "may," "will," "expect," "anticipate," "aim," "estimate," "intend," "plan," "believe," "is/are likely to," "potential," "continue" or other similar expressions. The Company undertakes no obligation to update or revise publicly any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company's registration statement and other filings with the SEC, which are available for review at www.sec.gov.

## Exhibit 99.2

?xml version='1.0' encoding='ASCII'?

**Exhibit 99.2**

**ELONG POWER HOLDING LIMITED AND SUBSIDIARIES**

**UNAUDTIED CONDENSED CONSOLIDATED BALANCE SHEETS**

**(Amount in U.S. dollars, except for number of shares or otherwise noted)**

---

| | | |
|:---|:---|:---|
|  | **As of June 30, 2025** | **As of December 31, 2024** |
|  | (Unaudited) | (Audited) |
| **ASSETS** |  |  |
| **CURRENT ASSETS** |  |  |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents | $74623 | $146514 |
| &nbsp;&nbsp;&nbsp;Restricted cash | 125905 | 171487 |
| &nbsp;&nbsp;&nbsp;Short term investment | 7028594 | 7028594 |
| &nbsp;&nbsp;&nbsp;Accounts receivable, net | 145407 | 64159 |
| &nbsp;&nbsp;&nbsp;Retention receivables-current, net | 80450 | 3738 |
| &nbsp;&nbsp;&nbsp;Inventories, net | 1343441 | 1428197 |
| &nbsp;&nbsp;&nbsp;Amounts due from related parties | 69797 | 68500 |
| &nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | 1609256 | 1560119 |
| &nbsp;&nbsp;&nbsp;**TOTAL CURRENT ASSETS** | 10477473 | 10471308 |
| **NON-CURRENT ASSETS** |  |  |
| &nbsp;&nbsp;&nbsp;Retention receivables, net | 8478 | 8569 |
| &nbsp;&nbsp;&nbsp;Property, plant and equipment, net | 991236 | 855190 |
| &nbsp;&nbsp;&nbsp;Intangible assets, net |  | 2673 |
| &nbsp;&nbsp;&nbsp;Operating lease right-of-use asset | 15638091 | 15207546 |
| &nbsp;&nbsp;&nbsp;Finance lease right-of-use asset | 72250 | 85801 |
| **TOTAL ASSETS** | $**27187528** | $**26631087** |
| **LIABILITIES AND STOCKHOLDERS' DEFICIT** |  |  |
| **CURRENT LIABILITIES** |  |  |
| &nbsp;&nbsp;&nbsp;Short term loans- unrelated parties | $6872111 | $6561136 |
| &nbsp;&nbsp;&nbsp;Short term loans-related parties | 1852431 | 561698 |
| &nbsp;&nbsp;&nbsp;Current portion of long-term loan payable | 488581 | 479498 |
| &nbsp;&nbsp;&nbsp;Accounts payable | 1143934 | 1072090 |
| &nbsp;&nbsp;&nbsp;Amounts due to related parties | 259949 | 115313 |
| &nbsp;&nbsp;&nbsp;Contract liabilities | 4103847 | 3878202 |
| &nbsp;&nbsp;&nbsp;Accrued expenses and other current liabilities | 6579575 | 6325810 |
| &nbsp;&nbsp;&nbsp;Product warranty provision-current | 1398852 | 1368031 |
| &nbsp;&nbsp;&nbsp;Operating lease liabilities-current | 54879 | - |
| &nbsp;&nbsp;&nbsp;**TOTAL CURRENT LIABILITIES** | **22754159** | **20361778** |
| **NON-CURRENT LIABILITIES** |  |  |
| &nbsp;&nbsp;&nbsp;Product warranty provision-non current | 454974 | 642176 |
| &nbsp;&nbsp;&nbsp;Operating lease liability-non current | 23237507 | 21946223 |
| &nbsp;&nbsp;&nbsp;Financial lease liability-non current | 137852 | 131635 |
| **TOTAL LIABILITIES** | $**46584492** | $**43081812** |
| **SHAREHOLDERS' DEFICIT** |  |  |
| &nbsp;&nbsp;&nbsp;Class A ordinary shares, $0.00001 par value, 4,000,000,000 shares authorized, 61,278,662 and 53,278,662 share issued and outstanding as of June 30, 2025 and December 31 2024, respectively \* | 613 | 533 |
| &nbsp;&nbsp;&nbsp;Class B ordinary shares, $0.00001 par value, 1,000,000,000 shares authorized, 5,777,437 share issued and outstanding as of June 30, 2025 and December 31 2024, respectively \* | 58 | 58 |
| &nbsp;&nbsp;&nbsp;Additional paid in capital\* | 51070104 | 51070184 |
| &nbsp;&nbsp;&nbsp;Statutory reserve | 708470 | 708470 |
| &nbsp;&nbsp;&nbsp;Accumulated deficit | (71559172) | (68903695) |
| &nbsp;&nbsp;&nbsp;Accumulated other comprehensive income | 382963 | 673725 |
| &nbsp;&nbsp;&nbsp;**TOTAL SHAREHOLDERS' DEFICIT** | **(19396964)** | **(16450725)** |
| **TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT** | $**27187528** | $**26631087** |

---

\* Par value of ordinary shares, additional paid-in capital and share data have been retrospectively restated to give effect to the reorganization that is discussed in Note 1.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements..

**ELONG POWER HOLDING LIMITED AND SUBSIDIARIES**

**UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS**

**(Amount in U.S. dollars, except for number of shares or otherwise noted)**

---

| | | |
|:---|:---|:---|
|  | **For the six months ended June 30,** | **For the six months ended June 30,** |
|  | **2025** | **2024** |
|  | (Unaudited) | (Unaudited) |
| **Revenues** | $214039 | $365975 |
| Cost of revenue | (214897) | (821023) |
| Cost of revenue – idle capacity | (594185) | (1249041) |
| **GROSS LOSS** | **(595043)** | **(1704089)** |
| **OPERATING EXPENSES** |  |  |
| Selling expenses | (22061) | (63541) |
| Reverse form warranty liability | 153845 |  |
| General and administrative expenses | (1779543) | (1495843) |
| Provision for credit losses | (23132) | (141639) |
| Research and development expenses | (17719) | (56904) |
| Total operating expenses | (1688610) | (1757927) |
| **LOSS FROM OPERATIONS** | **(2283653)** | **(3462016)** |
| **OTHER (EXPENSES) INCOME** |  |  |
| Interest income | 47 | 2245 |
| Interest expense | (203675) | (158066) |
| Foreign currency exchange (loss) gains | (52445) | 9731 |
| Other expenses | (115751) | (177277) |
| **TOTAL OTHER EXPENSES, NET** | **(371824)** | **(323367)** |
| **LOSS BEFORE INCOME TAX EXPENSE** | **(2655477)** | **(3785383)** |
| **INCOME TAX EXPENSE** | - | - |
| **NET LOSS** | $**(2655477)** | $**(3785383)** |
| **LOSS PER SHARE FOR BOTH CLASS A AND B ORDINARY SHARES\*** |  |  |
| &nbsp;&nbsp;&nbsp;Basic | $(0.04) | $(0.16) |
| &nbsp;&nbsp;&nbsp;Diluted | $(0.04) | $(0.16) |
| **WEIGHTED AVERAGE SHARES OUTSTANDING USED IN CALCULATING BASIC AND DILUTED LOSS PER SHARE\*** |  |  |
| &nbsp;&nbsp;&nbsp;Class A Ordinary Shares | 56416784 | 39222563 |
| &nbsp;&nbsp;&nbsp;Class B Ordinary Shares | 5777437 | 5777437 |

---

\* Par value of ordinary shares, and share data have been retrospectively restated to give effect to the reorganization that is discussed in Note 1.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements..

**ELONG POWER HOLDING LIMITED AND SUBSIDIARIES**

**UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS**

**(Amount in U.S. dollars, except for number of shares or otherwise noted)**

---

| | | |
|:---|:---|:---|
|  | **For the six months ended June 30,** | **For the six months ended June 30,** |
|  | **2025** | **2024** |
|  | (Unaudited) | (Unaudited) |
| **NET LOSS** | $**(2655477)** | $**(3785383)** |
| **OTHER COMPREHENSIVE (LOSS)/INCOME** |  |  |
| Foreign currency translation adjustment | (290762) | 24886 |
| **COMPREHENSIVE LOSS** | $**(2946239)** | $**(3760497)** |

---

**ELONG POWER HOLDING LIMITED AND SUBSIDIARIES**

**UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIT**

**(Amount in U.S. dollars, except for number of shares or otherwise noted)**

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Class A** | **Class A** | **Class B** | **Class B** | | | | | |
|  | **Ordinary Shares \*** | **Ordinary Shares \*** | **Ordinary Shares \*** | **Ordinary Shares \*** | | | | | |
|  | **Shares** | **Amount** | **Shares** | **Amount** | **Additional**<br>**Paid in**<br>**Capital \*** |<br>**Statutory**<br>**Reserve** |<br>**(Accumulated**<br>**Deficit)** | **Other**<br>**Comprehensive**<br>**Income** | **Total**<br>**Shareholders'**<br>**Equity (Deficit)** |
| **Balance as of January 1, 2024** | **39222563** | $**392** | **5777437** | $**58** | $**38502520** | $**708470** | $**(38790191)** | $**557087** | $**978336** |
| Net loss |  |  |  |  |  |  | (3785383) |  | (3785383) |
| Other comprehensive income | - | - | - | - | - | - | - | 24886 | 24886 |
| **Balance as of June 30, 2024** | **39222563** | $**392** | **5777437** | $**58** | $**38502520** | $**708470** | $**(42575574)** | $**581973** | $**(2782161)** |

---

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Class A** | **Class A** | **Class B** | **Class B** | | | | | |
|  | **Ordinary Shares \*** | **Ordinary Shares \*** | **Ordinary Shares \*** | **Ordinary Shares \*** | | | | | |
|  | **Shares** | **Amount** | **Shares** | **Amount** | **Additional**<br>**Paid in**<br>**Capital \*** |<br>**Statutory**<br>**Reserve** |<br>**(Accumulated**<br>**Deficit)** | **Other**<br>**Comprehensive**<br>**Income** | **Total**<br>**Shareholders'**<br>**Deficit** |
| **Balance as of January 1, 2025** | **53278662** | $**533** | **5777437** | $**58** | $**51070184** | $**708470** | $**(68903695)** | $**673725** | $**(16450725)** |
| Registration of ordinary shares in connection with share incentive plan | 8000000 | 80 |  |  | (80) |  |  |  |  |
| Net loss |  |  |  |  |  |  | (2655477) |  | (2655477) |
| Other comprehensive income | - | - | - | - | - | - | - | (290762) | (290762) |
| **Balance as of June 30, 2025** | **61278662** | $**613** | **5777437** | $**58** | $**51070104** | $**708470** | $**(71559172)** | $**382963** | $**(19396964)** |

---

\* Par value of ordinary shares, additional paid-in capital and share data have been retrospectively restated to give effect to the reorganization that is discussed in Note 1.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

**ELONG POWER HOLDING LIMITED AND SUBSIDIARIES**

**UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS**

**FOR SIX MONTHS ENDED JUNE 30, 2025 AND 2024**

**(Amount in U.S. dollars, except for number of shares or otherwise noted)**

---

| | | |
|:---|:---|:---|
|  | **For the six months ended June 30,** | **For the six months ended June 30,** |
|  | **2025** | **2024** |
| **Cash flows from operating activities** |  |  |
| &nbsp;&nbsp;&nbsp;Net loss | $**(2655477)** | $**(3785383)** |
| &nbsp;&nbsp;&nbsp;Adjustments to reconcile net loss to cash used in operating activities |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provision for credit losses | 23132 | 141639 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provision of obsolete inventory | 148912 | 261851 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deletion of obsolete inventory | (419712) | (1464982) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization expense | 60221 | 724050 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest on lease liabilities | 3678 | 3718 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of operating and finance right-of-use assets | 820287 | 786835 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Gain) loss on disposals of property, plant and equipment | (66138) | 175292 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain from debt forgiveness | (7218) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Reversal for expired warranty | (153845) |  |
| Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notes receivable |  | 15246 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | (276816) | 268473 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories | 381238 | 2031431 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | (28014) | 45256 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Retention receivables | 99183 | (137465) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts and notes payable | 50904 | (38651) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amounts due to related parties | 140972 | (77095) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Contract liabilities | 150313 | 12750 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued expenses and other current liabilities | 156703 | (283440) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Product warranty liability | (38229) | (35019) |
| **Net cash used in operating activities** | **(1609906)** | **(1355494)** |
| **Cash flows from investing activities** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchase of property, plant and equipment | (62254) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from sales of property, plant and equipment |  | 118904 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Issuance of promissory note receivable | - | (500000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Net cash used in investing activities** | **(62254)** | **(381096)** |
| **Cash flows from financing activities** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from borrowings from related parties | 1280093 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from borrowings from third parties | 322045 | 935551 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Repayments of borrowings to third parties | (31269) | (275814) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Repayments of loan payable with pledged assets |  | (242552) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payments of promissory note |  | 2520467 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred offering costs | - | (149758) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Net cash provided by financing activities** | **1570869** | **2787894** |
| **Effect of changes of foreign exchange rates on cash** | (16182) | (42036) |
| **Net decrease in cash** | (117473) | 1009268 |
| **Cash and cash equivalents and restricted cash, beginning of period** | 318001 | 308582 |
| **Cash and cash equivalents and restricted cash, end of period** | $**200528** | $**1317850** |
| **Supplemental disclosures of cash flow information** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash paid for interest | $- | $(30759) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lease liabilities arising from obtaining right-of-use assets | 311871 | - |

---

The following tables provide a reconciliation of cash, cash equivalents and restricted cash reported within the balance sheets that sum to the total of the same amounts shown in the consolidated statements of cash flows:

---

| | | |
|:---|:---|:---|
|  | **As of June 30, 2025** | **As of December 31, 2024** |
| Cash and cash equivalents, beginning of the period | 146514 | 756 |
| Restricted cash, beginning of the period | 171487 | 307826 |
| **Total cash, cash equivalents and restricted cash at beginning of the period** | **318001** | **308582** |
| Cash and cash equivalents, end of the period | 74623 | 146514 |
| Restricted cash, end of the period | 125905 | 171487 |
| **Total cash, cash equivalents and restricted cash at end of the period** | **200528** | **318001** |

---

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

**ELONG POWER HOLDING LIMITED AND SUBSIDIARIES**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**1. ORGANIZATION**

**(a) Principal activities**

**Elong Power Holding Limited ("Elong Power")** was incorporated under the laws of the Cayman Islands on August 18, 2023. Elong Power, through its subsidiaries (collectively "the Company") noted below, specializes in the R&D, production and market application of high-power lithium-ion battery packs, cells and parts for electric vehicles and construction machinery. The Company's lower-cost, high power and fast-charging batteries are designed specifically for commercial vehicles and specialty vehicles.

**(b) History of the Company and Reorganization**

Prior to the incorporation of the Company, Huizhou Jingyang Energy Technology Co., Ltd. ("Huizhou Jingyang", formerly known as Huizhou City Yipeng Energy Technology Co., Ltd) was incorporated under the laws of People's Republic of China ("PRC") on January 26, 2014. On May 28, 2018, and September 29, 2022, Huizhou Jingyang established Ganzhou Zhangyang Energy Technology Co., Ltd. ("Ganzhou Zhangyang", formerly known as Ganzhou Yipeng Energy & Technology Co., Ltd.) and Zibo Jingyang New Energy Technology Co., Ltd. ("Zibo Jingyang", formerly known as Zibo Yipeng Energy & Technology Co., Ltd.) under the laws of PRC, respectively. These two subsidiaries were 100% controlled by Huizhou Jingyang who shareholders are a group of individual and institutional shareholders, with voting agreements to vote consensually concerning operation and development matters before the reorganization.

In preparation for listing on the U.S. Exchange Market via merging with a Special Purpose Acquisition Company ("SPAC") traded on NASDAQ, the Company completed reorganization (the "Reorganization") in November 2023, which involved the following steps:

On October 8, 2023, all shareholders of Huizhou Jingyang entered into Huizhou Jingyang's Reorganization Framework Agreement to vote consensually concerning operation and development matters of the Elong Power and its subsidiaries.

● On August 18, 2023, Elong Power was established under the laws of the Cayman Islands.

● On September 20, 2023, Elong Power International Co, Limited ("Elong Power International") was incorporated in British Virgin Islands as a wholly owned subsidiary of Elong Power.

● On October 8, 2023, all shareholders of Huizhou Jingyang entered into Reorganization Framework Agreement regarding the setting up a Wholly Foreign-Owned Enterprise ("WFOE"), transferring their equity interests in RMB one dollar to the proposed WFOE, and further holding the future shares of Elong Power in order to participate in the future overseas De-SPAC listing, which include issuing ordinary shares and warrant shares to be converted into Class A ordinary shares (Note 18- Equity).

● On October 9, 2023, Elong Power (Hong Kong) International Limited ("Elong Power (Hong Kong)") was incorporated in Hong Kong as a wholly owned subsidiary of Elong Power International.

● On November 2, 2023, Elong Power (Ganzhou) Co., Ltd. ("Elong Power (Ganzhou)", "WFOE") was established in PRC as a wholly owned subsidiary of Elong Power (Hong Kong). Elong Power (Ganzhou) obtained 100 % of the equity interests of Huizhou Jingyang through the unanimous agreement of all shareholders of Huizhou Jingyang under the terms of Huizhou Jingyang's Reorganization Framework Agreement.

By November 17, 2023, Elong Power owned 100% stake in Elong Power (Ganzhou) or WFOE through the following transactions:

● issued Class A Ordinary Shares 6,845,290 at the par value of the Class A Ordinary Share (i.e. $<u>0.00001</u>) of the Company to four individual shareholders who are the original shareholders of Huizhou Jingyang before the reorganization (see Note 18- Equity).

● issued Class B Ordinary Shares 16,538,142 at the par value of the Class B Ordinary Share (i.e. $0.00001) of the Company to GRACEDAN CO., LTD. which is 100 % owned by the Company's CEO and Chairwoman, and who is also one of the controlling persons before the reorganization (see Note 18- Equity).

● issued 105,430,851 warrants ("Warrant Shares") to nine institutional shareholders who are the original shareholders of Huizhou Jingyang before the reorganization.

The above Class A and B ordinary shareholders exchange their shareholdings by their respective ratios in Huizhou Jingyang before the Reorganization and also under the terms of Huizhou Jingyang's Reorganization Framework Agreement.

Immediately before and after the Reorganization as described above, Elong Power together with its subsidiaries were effectively controlled by the same controlling shareholders, and given no change on control, the transaction is accounted for as business combination under common control.

For financial reporting purpose, the acquisition of Huizhou Jingyang represented a transaction between entities under common control, resulted in a change in reporting entity and required retrospective combination of entities for all periods presented, as if the combination has been in effect since the inception of common control. Accordingly, the unaudited condensed consolidated financial statements of Elong Power and subsidiaries reflect the accounting of the combined subsidiaries at historical carrying values, except that equity reflects the equity of Elong Power.

**Reverse Recapitalization**

On November 21, 2024 (the "Closing Date"), Elong consummated the business combination with TMT Acquisition Corp ("TMT"), following the approval of the transaction. At the Closing, Merger Sub merged with and into TMT, with TMT surviving the merger and becoming a wholly owned subsidiary of Elong. At the Effective Time, each outstanding TMT Ordinary Share was converted into one Elong Class A Ordinary Share, each TMT Right was automatically converted into 0.2 of a TMT Ordinary Share and then into 0.2 of an Elong Class A Ordinary Share, and each TMT Unit was separated into its component securities and converted accordingly. As a result, an aggregate of 4,356,099 Elong Class A Ordinary Shares were issued to TMT stockholders.

Elong was determined to be the accounting acquirer as it comprises the ongoing operations, its senior management leads the combined company, and its shareholders hold the majority of voting power after the transaction. The Business Combination is not a business combination under ASC 805 because TMT was not considered a business. Accordingly, the transaction is accounted for as a reverse recapitalization, which is equivalent to Elong issuing shares for the net monetary assets of TMT, accompanied by a recapitalization. As a result, Elong's historical financial statements became those of the combined company, with retrospective adjustments to reflect the reverse recapitalization. The equity was retrospectively adjusted based on an exchange ratio of 0.35, representing 128,814,283 shares exchanged for 45,000,000 shares (excluding escrowed shares), to reflect the equity structure of the legal acquirer, Elong. Net income (loss) per share has been retrospectively restated using the historical weighted-average number of shares outstanding multiplied by the exchange ratio. For the six months ended June 30, 2025, subsidiaries of the Company include the following:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Subsidiaries** | **Place of**<br> **incorporation** | **Date of**<br> **incorporation** | **Percentage of**<br> **ownership** | **Principal activities** |
| Elong Power International Co, Limited ("Elong Power International") | BVI | September 20, 2023 | 100% | Investment holding |
| Elong Power (Hong Kong) International Limited ("Elong Power (Hong Kong)") | Hong Kong | October 9, 2023 | 100% | Investment holding |
| Jingyang Power (Ganzhou) Co., Ltd. ("Jingyang Power (Ganzhou)") | Ganzhou, PRC | November 2, 2023 | 100% | Investment holding |
| Huizhou Jingyang Energy Technology Co., Ltd. ("Huizhou Jingyang") | Huizhou, PRC | January 26, 2014 | 100% | R&D and manufacturing of lithium-ion power batteries, lithium-ion power battery systems and their accessories |
| Ganzhou Zhangyang Energy Technology Co., Ltd. ("Ganzhou Zhangyang") | Ganzhou, PRC | May 28, 2018 | 100% | R&D and manufacturing of lithium-ion batteries, backup power supplies, energy storage systems and accessories. |
| Zibo Jingyang New Energy Technology Co., Ltd. ("Zibo Jingyang") | Zibo, PRC | September 29, 2022 | 100% | R&D and manufacturing of battery spare parts and energy storage technology services |
| Elong Power (Beijing) Co., Ltd. ("Beijing Yipeng") | Beijing, PRC | April 26, 2024 | 100% | Operations, sales and R&D |
| TMT Acquisition Corp ("TMT") | Cayman Islands | July 6, 2021 | 100% | Investment holding |
| Elong Power (Zibo) Co., Ltd. ("Elong Power (Zibo)") | Zibo, PRC | January 23, 2025 | 100% | Operations, sales and R&D |

---

**(c) Going Concern**

The Company has evaluated whether there are certain conditions and events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern within one year after the date that the unaudited condensed consolidated financial statements are issued.

For the six months ended June 30, 2025, the Company incurred net loss of $2.7 million, with operating outflows of $1.6 million. As of June 30, 2025, the Company had an accumulated deficit of $71.6 million, negative working capital of $12.3 million. The Company has funded its operations and capital needs primarily through the net proceeds received from capital contributions related parties and other unrelated sources. As of the date the unaudited condensed consolidated financial statements for the six months ended June 30, 2025 are issued, these factors raised substantial doubt about the Company's ability to continue as a going concern for a period of one year from the date that these unaudited condensed consolidated financial statements are issued.

The business combination was completed on November 21, 2024 and as a result of this deal, TMT Acquisition Corp ("TMT") became a wholly owned subsidiary of the Company, the security holders of TMT immediately prior to the effective time became security holders of the Company, and the Company became a public company following the consummation of the business combination.

The Company has a plan of operations and acknowledges that its plan of operations may not result in generating positive working capital in the near future.

To meet the cash requirements for the next 12 months from the issuance date of this repot, the Company is undertaking a combination of the remediation plans:

● The Company's shareholder has committed to support the Company's operation in cash and started to fund the Company for a minimum period of twelve months from the date of this report in terms of improving cash position.

● The Company is going to seek more equity investment in the year of 2025.

As of June 30, 2025, the Company maintained a minimum cash balance on its unaudited condensed consolidated statement of financial position. The Company has conducted an intensive review of its operations and expenditures, including selling and administration expenses, to identify and eliminate inefficiencies and redundancies in order to preserve cash while maintaining its business operations. Given the Company's existing cash balances and projected cash generated from and used in operating activities, the Company believes that it will have sufficient liquidity to fund its operating activities and respond as necessary to market changes, which may include working capital needs, for at least twelve months from the issuance date of this report.

The Company will be able to support its continuous operations and to meet its payment obligations as and when liabilities fall due within the next twelve months from the unaudited condensed consolidated balance sheet date and the date of unaudited condensed consolidated financial statements for the period ended June 30, 2025. Accordingly, the Company's unaudited condensed consolidated financial statements are prepared on a going concern basis, which assumes that the Company will continue in operation for the foreseeable future and, accordingly, will be able to realize its assets and discharge its liabilities in the normal course of operations as they fall due. In the event the Company will not be able to continue as a going concern, adjustments will have to be made to reflect the situation that assets will need to be realized other than in the amounts at which they are currently recorded in the unaudited condensed consolidated balance sheet. In addition, the Company may have to provide for further liabilities that might arise and to reclassify non-current assets and liabilities as current assets and liabilities.

**2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

**(a) Basis of presentation**

The accompanying unaudited condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") to reflect the financial position, results of operations and cash flows of the Company. Significant accounting policies followed by the Company in the preparation of the accompanying unaudited condensed consolidated financial statements are summarized below.

**(b) Principles of consolidation**

The accompanying 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 with the rules and regulations of the U.S. Securities Exchange Commission ("SEC").

The unaudited condensed consolidated financial statements include the financial statements of the Company and its subsidiaries. All intercompany transactions and balances among the Company and its subsidiaries have been eliminated upon consolidation. A subsidiary is an entity in which (i) the Company directly or indirectly controls more than 50% of the voting power; or (ii) the Company has the power to appoint or remove the majority of the members of the board of directors or to cast a majority of votes at the meetings of the board of directors or to govern the financial and operating activities.

**(c) Use of estimates**

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities on the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, management reviews these estimates and assumptions using the currently available information. Changes in facts and circumstances may cause the Company to revise its estimates. In accordance with ASC 250, the changes in estimates will be recognized in the same period of changes in facts and circumstances. The Company bases its estimates on past experiences and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Estimates are used when accounting for items and matters including, but not limited to, allowances for expected credit losses, estimates for inventory provisions, useful lives and impairment of long-lived assets, and valuation allowance for deferred tax assets.

**(d) Functional currency and foreign currency translation**

The Company's reporting currency is the United States dollars ("$"). The functional currency of the Company and its subsidiary which is incorporated in BVI, Cayman is lands and Hong Kong is United States dollars ("$"). The functional currencies of the other subsidiaries are their respective local currencies ("RMB"). The determination of the respective functional currency is based on the criteria set out by Accounting Standards Codification ("ASC") 830, Foreign Currency Matters.

Revenues and expenses of its subsidiaries have been translated into U.S. dollars at average exchange rates prevailing during the period. Assets and liabilities have been translated at the rates of exchange on the balance sheet date. The resulting translation gain and loss adjustments are recorded directly as a separate component of shareholders' equity. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transactions. Exchange gains or losses arising from foreign currency transactions are included in the determination of net loss for the respective periods.

RMB is not a fully convertible currency. All foreign exchange transactions involving RMB must take place either through the People's Bank of China (the "PBOC") or other institutions authorized to buy and sell foreign exchange. The exchange rates adopted for the foreign exchange transactions are the rates of exchange quoted by the PBOC, which are determined largely by supply and demand. Translation of amounts from RMB into US dollars has been made at the following exchange rates for the respective periods:

---

| | | |
|:---|:---|:---|
| Six months ended June 30, 2025 |  |  |
| Balance sheet, except for equity accounts | RMB | 7.1636 to US$1.00 |
| Income statement and cash flows | RMB | 7.2526 to US$1.00 |

---

---

| | | |
|:---|:---|:---|
| Year ended December 31, 2024 |  |  |
| Balance sheet, except for equity accounts | RMB | 7.2993 to US$1.00 |
| Income statement and cash flows | RMB | 7.1957 to US$1.00 |
| Six months ended June 30, 2024 |  |  |
| Balance sheet, except for equity accounts | RMB | 7.2672 to US$1.00 |
| Income statement and cash flows | RMB | 7.2150 to US$1.00 |

---

**(e) Cash and cash equivalents**

Cash and cash equivalents consist of cash on hand and in banks and highly liquid investments, which are unrestricted from withdrawal or use, or which have original maturities of three months or less.

---

| | | |
|:---|:---|:---|
|  | **As of June 30,** <br> **2025** | **As of December 31,** <br> **2024** |
|  | (Unaudited) | (Audited) |
| Cash and cash equivalents | $74623 | $146514 |
| Restricted cash | 125905 | 171487 |
| Total cash, cash equivalents and restricted cash shown in the statements of cash flows | $200528 | $318001 |

---

**(f) Restricted cash**

Restricted cash represents for (a) frozen cash relating to the court order; (b) security deposits held in designated bank accounts for the repayment of the notes payable, and (c) security deposit for executing the sales contract with one customer.

As of June 30, 2025 and December 31, 2024, the restricted cash presented separately on the consolidated balance sheets as follows:

---

| | | |
|:---|:---|:---|
|  | **As of June 30,** <br> **2025** | **As of December 31,** <br> **2024** |
|  | (Unaudited) | (Audited) |
| Frozen amount | $125905 | $171487 |
| Total restricted cash shown in the statements of cash flows | $125905 | $171487 |

---

**(g) Short term investment**

The Company classifies fund investments with original investment terms exceeding three months but less than one year as short-term investments. As of June 30, 2025 and December 31, 2024, the Company held short-to-medium term money market funds with fair values of approximately $7,028,594 and $7,028,594, respectively. Related investment income has been recognized in the consolidated statements of operations and comprehensive loss, with investment gains of nil recorded for the six months ended June 30, 2025 and 2024, respectively.

**(h) Accounts receivable, net**

Accounts receivable are recorded at the gross billing amount less an allowance for expected credit losses from the customers. Accounts receivable do not bear interest.

Since July 1, 2022, the Company adopted Accounting Standards Update ("ASU") No. 2016-13, Financial Instruments- Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"), using the modified retrospective transition method. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. Upon adoption, the Company changed the impairment model to utilize a forward-looking current expected credit losses (CECL) model in place of the incurred loss methodology for financial instruments measured at amortized cost and receivables resulting from the application of ASC 606, including contract assets.

The Company maintains an allowance for credit losses in accordance with ASC Topic 326, *Credit Losses* ("ASC 326") and records the allowance for credit losses as an offset to accounts receivable and contract assets, and the estimated credit losses charged to the allowance in the combined statements of operations and comprehensive income (loss). The Company assesses collectability by reviewing accounts receivable on a collective basis where similar characteristics exist, primarily based on similar business lines, services or product offerings and on an individual basis when the Company identifies specific customers with known disputes or collectability issues. In determining the amount of the allowance for credit losses, the Company considers historical collectability based on past due status, the age of the accounts receivable balances and contract assets balances, credit quality of the Company's customers based on ongoing credit evaluations, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect the Company's ability to collect from customer.

The Company is in the battery technology industry and generates its revenue streams from the sale of battery packs, cells and battery spare parts. Historical credit losses from accounts receivable and retention receivable provides the starting point for management's assessment of the reserve for credit losses. The Company determined the CECL by estimating historical credit loss experience based on the Company' industry demand, risk profile, or past due status and adjusted as appropriate to reflect current conditions and estimates of future economic conditions (such as GDP factor or unemployment factor).

The Company estimated the credit losses for accounts receivable based on historical credit loss experience using the roll-rate method. By utilizing the historical aging data from January 2018 to December 31, 2024, the Company estimated the credit losses on accounts receivable based on rolling loss ratio for the past three years on a semi-annual basis. In assessing relevant information, management scored its assessment of current economic conditions and future expectations, credit ratings, security deposit, and default cover age proportionally, and determined that a 100% credit loss shall be reserved for accounts receivable overdue three years.

In 2025, the Company identified seven customers as uncollectible due to negligible collections during the year. Certain customers also initiated litigation concerning product quality issues. Based on an assessment of recoverability and the customers' repayment intentions, these customers were classified as uncollectible, and a 100% credit loss allowance was recognized for those accounts receivable.

The Company estimated credit losses for retention receivable based on historical credit loss experience using the historical annual loss rate methodology and taking forward-looking factors from 2020 to 2029 to score future factors proportionality of significant economic growth fates inflation rates, unemployment rates and demand from the battery industry. The management judgmentally elects to use additional 10% and 5% credit loss to adjust for future factors of retention receivable for the six months ended June 30, 2025 and 2024 respectively.

The Company also recorded provision for credit losses of US$23,132 and US$141,639 for the six months ended June 30, 2025 and 2024, respectively (see Note 4).

**(i) Inventories, net**

Inventories consist of raw materials, work in process, semi-finished goods and finished goods and are stated at the lower of cost or net realizable value. Cost is calculated on the first in first out ("FIFO"), which is consistent with the physical flow of battery raw materials and finished goods and includes all costs to acquire and other costs to bring the inventories to their present location and condition. The Company records inventory write-downs for excess or obsolete inventories based upon assumptions on current and future demand forecasts. If the inventory on hand is in excess of future demand forecast, the excess amounts are written off. The Company also reviews inventory to determine whether its carrying value exceeds the net amount realizable upon the ultimate sale of the inventory. This requires the determination of the estimated selling price of the products less the estimated cost to convert inventory on hand into a finished product. Once inventory is written-down, a new, lower-cost basis for that inventory is established and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis.

**(j) Property, plant and equipment, net**

Property, plant and equipment (including construction in progress) are stated at cost less accumulated depreciation and impairment charges. Depreciation is calculated primarily based on the straight-line method (after taking into account their respective estimated residual values) over the estimated useful lives of the assets except the depreciation method for mold and tooling:

---

| | |
|:---|:---|
| Property, plant and equipment | Lesser of lease term or expected useful life(number of years) |
| Machinery and equipment | 3-10 years |
| Office equipment | 4 – 5 years |
| Motor vehicles | 5 years |
| Leasehold improvements | Shorter of lease term or estimated useful life of the assets |

---

Mold and tooling are depreciated based on the units-of-production.

The cost and accumulated depreciation of property, plant and equipment sold are removed from the consolidated balance sheets and resulting gains or losses are recognized in the consolidated statements of operations and comprehensive loss.

Construction in progress represents manufacturing facilities and equipment under construction, and is stated at cost. The capitalization of these costs ceases when construction in progress is transferred to property, plant and equipment and substantially ready for its intended use. No depreciation is recorded for construction in progress.

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.

**(k) Intangible assets, net**

Intangible assets consist of software and patents, which are carried at acquisition cost less accumulated amortization and impairment, if any. Intangible assets are amortized using straight-line method over the estimated economic useful lives of the assets. The useful lives are based on the Company's historical experience with similar assets and take into account the anticipated technological changes. The amortization expenses of software and patents are recorded in general and administrative expenses depending upon the nature of activities.

The Company reviews the estimated useful lives of assets annually to determine the amount of amortization expense to be recorded during any financial year. The amortization expense for future periods is adjusted if there are significant changes from previous estimates. Estimated useful lives of intangible assets are as follows:

---

| | |
|:---|:---|
| **Category** | **Estimated useful lives** |
| Software | 2-5 years |
| Patents | 5 years |

---

**(l) Impairment of long-lived assets**

Long-lived assets are evaluated for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will affect the future use of the assets) indicate that the carrying amount may not be fully recoverable or that the useful life is shorter than the Company had originally estimated. When these events occur, the Company evaluates the impairment by comparing carrying value of the assets to an estimate of future undiscounted cash flows expected to be generated from the use of the assets and their eventual disposition. If the sum of the expected future undiscounted cash flows is less than the carrying value of the assets, the Company recognizes an impairment loss based on the excess of the carrying value of the assets over the fair value of the assets. When an impairment loss is recognized for assets to be held and used, the adjusted carrying amounts of those assets are depreciated over their remaining useful life. For the periods presented. we have not recorded any material impairment.

**(m) Fair value measurement**

Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability.

Authoritative literature provides a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. An asset or liability categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement as follows:

*Level 1*

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

*Level 2*

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

*Level 3*

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

Accounting guidance also describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required to replace an asset.

When available, the Company uses quoted market prices to determine the fair value of an asset or liability. If quoted market prices are not available, the Company will measure fair value using valuation techniques that use, when possible, current market-based or independently sourced market parameters, such as interest rates and currency rates.

The Company's financial instruments include cash and cash equivalents, restricted cash, short-term investments, accounts receivable, amounts due from related parties, other receivables (included in "other current assets"), accounts payable, long-term loan payable, amounts due to related parties, short-term borrowings, contract liabilities and other payables (included in "accrued expenses and other current liabilities"), of which the carrying values approximate their fair value. Lease liabilities are measured at amortized cost using discounted rates reflected time value of money.

**(n) Revenue recognition**

From January 1, 2019, the Company adopted the new guidance of ASC Topic 606, Revenue from Contracts with Customers (Topic 606), which requires the Company to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company applies the following steps to recognize revenues: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, the Company satisfies a performance obligation.

The Company's revenues are mainly generated from 1) sales of battery packs; 2) sales of battery cells; 3) sales of battery spare parts and other such as sales of product waste and scraps.

*<u>Sales of Battery packs and battery cells</u>*

The Company generates revenue from sales of battery packs and battery cells through sales contract including master agreements and sales orders from the customers, which contain fixed sales price, payment terms, specifications, delivery and acceptance terms, transportation terms, etc., and are all signed-off and stamped. The Company applied the guidance of ASC Topic 606-10-25-16 through 18 in order to verify which promises should be assessed for classification as distinct performance obligations.

The Company also identifies only one performance obligation in the contract which is to deliver battery packs and battery cells.

In order for the Company to provide specific battery packs and battery cells explicitly stated in a sales contract or sales orders, the Company requires certain deposits or full amount payment made in advance. Revenue is recognized at the point in time upon the customer's acceptance of products, which is when control of the promised goods is transferred to the customers, in an amount that reflects the consideration the Company expects to be entitled to for the products sold.

Revenues are recorded net of return allowances, sales incentives, value-added taxes and related surcharges. For all the Company's battery packs and battery cells sold, the contract price is fixed or determinable. There is no explicit term related to right of return in the contract. Based on the past experience, the likelihood of sales return of other customers is remote. In normal course of business, there is only one single delivery assigned for an individual contract. The customer receives and inspects the battery pack/battery unit at the designated location, thereby completing the delivery of the battery packs/battery cells. The Company recognizes the sales revenue and collects payment from the customer within one week.

The Company presents the contract in the consolidated balance sheets as a contract asset or a contract liability, depending on the relationship between the entity's performance and the customer's payment.

A receivable is recorded when the Company has an unconditional right to consideration. A right to consideration is unconditional if only the passage of time is required before payment of that consideration is due.

*<u>Sales of battery spare parts and others</u>*

The Company typically enters into formal written contracts for the sale of spare parts, scrap, product waste, etc. which includes the general payment and delivery terms, and specific orders shall be placed to the Company. The Company applied the guidance of ASC Topic 606-10-25-16 through 18 in order to verify which promises should be assessed for classification as distinct performance obligations. Under the specific order, full amount prepayment is required, and the Company's performance obligation is to transfer agreed-upon battery spare parts, scrap and product waste. The revenue is recognized at a point in time upon the customer's acceptance of battery spare parts or scrap and product waste.

For all the Company's contract, the contract price is fixed or determinable and no right of return provision indicated in the contract, no price discount, neither variable consideration nor contract modifications. Most of the spare parts are materials generated after the battery is scrapped, and the sale does not provide any warranty business. For delivery of products, the Company believes a single performance obligation is satisfied at a point in time upon: Spare parts and scrap – the products are received and inspected by the customers at the designated places. The Company recognizes revenue when the above criteria are met and collects payments from customers within one week.

***Net revenues by product:***

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| | | |
|:---|:---|:---|
|  | **For the six months ended June 30,** | **For the six months ended June 30,** |
|  | **2025** | **2024** |
|  | (Unaudited) | (Unaudited) |
| Battery packs/battery cells | $209409 | $89058 |
| Battery spare parts and others | 4630 | 276917 |
| Total consolidated revenue | $214039 | $365975 |

---

***<u>Contract Balances</u>***

Contract balances include accounts receivable and contract liabilities. Accounts receivable represent cash not received from customers and are recorded when the rights to consideration are unconditional. The provision from credit loss reflects the best estimate of probable losses inherent to the accounts receivable balance.

According to ASC 606-10-45-2, if a customer pays consideration or the Company has a right to an amount of consideration that is unconditional (that is, a receivable), before the Company transfers a good or service to the customer, the Company shall present the contract as a contract liability when the payment is made or the payment is due (whichever is earlier). A contract liability is the Company's obligation to transfer goods or services to a customer for which the entity has received consideration (or an amount of consideration is due) from the customer. The Company records US$4,103,847 and US$3,878,202 as contract liabilities as of June 30, 2025 and December 31, 2024, respectively.

 

The table below presents the activity of contract liabilities during the six months ended June 30, 2025 and 2024, respectively:

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| | | |
|:---|:---|:---|
|  | **For the six months ended June 30,** | **For the six months ended June 30,** |
|  | **2025** | **2024** |
|  | (Unaudited) | (Unaudited) |
| Balance at beginning of period | $3878202 | $3893986 |
| Deposits received | 106166 | 65973 |
| Revenue recognized | (5798) | (53222) |
| Exchange difference | 125277 | (89737) |
| Balance at end of period | $4103847 | $3817000 |

---

**(o) Product warranty**

The Company provides a manufacturer's standard warranty on battery packs and battery cells products sold, which entails repair or replacement of non-conforming items, in conjunction with the sales of products.

The Company's product warranty generally ranges from one to eight years (or 120,000 or 500,000 kilometer if reached sooner). The Company establishes a reserve for the estimated cost of the product warranty at the time revenue is recognized. The warranty liability recorded at each balance sheet date reflects management's best estimates of its product warranty based on historical information and other currently available evidence, including actual claims incurred to date and an estimate of the nature, frequency and costs of future claims for each customer.

The Company review and adjust the estimates to ensure that accruals are adequate to meet expected future warranty obligations. Initial warranty data is limited early in the launch of a new product and accordingly, future adjustments to the warranty accrual may be material.

The portion of the warranty that is expected to incur within the next 12 months is recorded in current liabilities, while the remaining balance is recorded in non-current liabilities on the consolidated balance sheets. Warranty expense is recorded as a component of selling expenses.

The Company considers the standard warranty is not providing incremental service to customers rather than assurance to the quality of the battery packs and battery cells, and therefore is not a separate performance obligation and should be accounted for in accordance with ASC 460, Guarantees.

**(p) Cost of revenue**

Cost of revenue includes direct parts, material, labor cost, manufacturing overhead (including depreciation of assets associated with the production) and shipping and handling costs charged by suppliers. Cost of revenue also includes charges to write-down the carrying value of the inventories when it exceeds its estimated net realizable value and to provide for on-hand inventories that are either obsolete or in excess of forecasted demand.

*<u>Idle capacity</u>*

Idle capacity consists of indirect production costs in excess of charges under normal capacity allocated to the Company's produced semi-finished goods and finished goods. Production costs include direct and indirect labor, production supplies, repairs and maintenance, rent, utilities, insurance. The Company charges allocated production costs to its semi-finished and finished goods based on normal capacity on a monthly basis which is lower than its actual costs incurred. Production costs in excess of production allocations are expensed and recorded in cost of revenue-idle capacity. Idle capacity expenses amounted to $594,185 and $1,249,041 for the six months ended June 30, 2025 and 2024, respectively.

**(q) Research and development expenses**

All costs associated with research and development ("R&D") is expensed as incurred. R&D expenses consist primarily of employee compensation for those employees engaged in R&D activities, design and development expenses with new technology, materials and supplies and other R&D related expenses. For the six months ended June 30, 2025 and 2024, R&D expenses were $17,719 and $56,904, respectively.

**(r) Selling, general and administrative expenses**

Selling expenses consist primarily of warranty expenses, employee compensation, and transportation cost as incurred. For the six months ended June 30, 2025 and 2024, selling expenses were US$22,061 and US$63,541, respectively, including provision of warranty expenses of nil.

For the six months ended June 30, 2025, reversal for warranty liability were $153,845, compared to the same period of 2024 were nil.

General and administrative expenses consist primarily of employee compensation for employees involved in general corporate functions and those not specifically dedicated to R&D activities, depreciation and amortization expenses, consultant fee paid by shares, legal, and other professional services fees, lease and other general corporate related expenses. For the six months ended June 30, 2025 and 2024, general and administrative expenses were US$1,779,543 and US$1,495,843 respectively.

**(s) Employee benefits**

Full-time employees of the Company in the PRC participate in a government mandated defined contribution plan, pursuant to which certain pension benefits, work-related injury benefits, maternity insurance, medical care, employee housing fund and other welfare benefits are provided to the employees. Chinese labor regulations require that the PRC subsidiaries of the Company make contributions to the government for these benefits based on certain percentages of the employees' salaries, up to a maximum amount specified by the local government. The PRC government is responsible for the medical benefits and the pension liability to be paid to these employees and the Company's obligations are limited to the amounts contributed and no legal obligation beyond the contributions made. For the six months ended June 30, 2025 and 2024, employee benefits expenses were $27,591 and $60,377, respectively.

**(t) Impairment of property, plant and equipment**

Property, plant and equipment, are evaluated for impairment whenever events or changes in circumstances have indicated that an asset may not be recoverable and are grouped with other assets to the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. If the sum of the projected undiscounted cash flows (excluding interest charges) is less than the carrying value of the assets, the assets will be written down to the estimated fair value and such loss is recognized in income from continuing operations in the period in which the determination is made. For the six months ended June 30, 2025 and 2024, impairment of Property, plant and equipment were nil.

**(u) Other expense**

Other expense mainly consists of non-operational activities such as loss of disposal of property, plant, and equipment and inventory, litigation charges, and debt forgiveness.

For the six months ended June 30, 2025 and 2024, the Company recognized other income (expenses) as below:

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| | | |
|:---|:---|:---|
|  | **For the six months ended June 30,** | **For the six months ended June 30,** |
|  | **2025** | **2024** |
|  | (Unaudited) | (Unaudited) |
| (Gain) loss on disposals of property, plant, and equipment | $(66138) | $175292 |
| Charges of legal compensation and contract default penalty expense (i) | 115152 |  |
| Gain (loss) from waste disposal | 307 | (17479) |
| Gain from debt forgiveness | (7218) |  |
| Others | 73648 | 19464 |
| Total other expense | $115751 | $177277 |

---

&nbsp;&nbsp;&nbsp;&nbsp;(i) In
 April 2024, a customer of our company filed a lawsuit against Ganzhou Zhangyang in Gansu Province, requesting the termination of
 their battery purchase contract and the return of 126 undelivered battery packs (valued at USD$3.1 million, RMB 22.7 million). According
 to the court judgment obtained, Ganzhou Zhangyang is required to return the USD$3.1 million (RMB 22.7 million) it has already received
 and pay liquidated damages. As of June 30, 2025, based on this judgment, the Company recorded the estimated liability of USD 3.37 million (RMB 24.20 million), and $115,115 (RMB 835,151) was recorded in other expense for the six months ended June 30, 2025 and
 2024 respectively.

**(v) Income taxes**

Current income taxes are recorded in accordance with the regulations of the relevant tax jurisdiction. The Company accounts for income taxes under the asset and liability method in accordance with ASC 740, Income Tax. Under this method, deferred tax assets and liabilities are recognized for the tax consequences attributable to differences between carrying amounts of existing assets and liabilities in the unaudited condensed consolidated financial statements and their respective tax basis, and operating loss carryforwards. 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 taxes of a change in tax rates is recognized in the consolidated statements of operations and comprehensive loss in the period of change. Valuation allowances are established when necessary to reduce the amount of deferred tax assets if it is considered more likely than not that amount of the deferred tax assets will not be realized.

*<u>Uncertain tax positions</u>*

An uncertain tax position is recognized as a benefit only if it is "more likely than not" that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. For tax positions not meeting the "more likely than not" test, no tax benefit is recorded. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. Interest and penalties related to uncertain tax positions, if any, are recorded under accrued expenses and other current liabilities on its consolidated balance sheets and under other expenses in its consolidated statements of comprehensive loss. The Company did not recognize any significant interest and penalties associated with uncertain tax positions for the six months ended June 30, 2025 and 2024. As of June 30, 2025 and December 31, 2024, the Company did not have any significant unrecognized uncertain tax positions.

**(w) Value-added tax ("VAT")**

The Company is subject to statutory VAT of 13% for revenue from sales of battery cells and battery packs in PRC. The Company charges customers Output VAT on revenue generated from sales of products and pays vendors Input VAT on qualified supply purchases. Net VAT balance between input VAT and Output VAT is recorded in the line item of prepaid expenses and other current assets on the consolidated balance sheet as of June 30, 2025 and December 31, 2024, respectively.

**(x) Comprehensive loss**

The Company applies ASC 220, Comprehensive Income, with respect to reporting and presentation of comprehensive loss and its components in a full set of financial statements. Comprehensive loss is defined to include all changes in equity of the Company during a period arising from transactions and other events and circumstances except those resulting from investments by shareholders and distributions to shareholders. For the periods presented, the Company's comprehensive loss includes net loss and other comprehensive loss, which primarily consists of the foreign currency translation adjustments.

**(y) Lease**

From January 1, 2022, the Company adopted Accounting Standards Update ("ASU") 2016-02, Lease (FASB ASC Topic 842). The adoption of Topic 842 resulted in the presentation of operating lease right-of-use ("ROU") assets and operating lease liabilities on the consolidated balance sheet. The Company has elected the package of practical expedients, which allows the Company not to reassess (1) whether any expired or existing contracts as of the adoption date are or contain a lease, (2) lease classification for any expired or existing leases as of the adoption date and (3) initial direct costs for any expired or existing leases as of the adoption date. Lastly, the Company elected the short-term lease exemption for all contracts with lease terms of 12 months or less.

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 of a consideration. To assess whether a contract is or contains a lease, the Company assess 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.

The right-of-use assets and related lease liabilities are recognized at the lease commencement date. The Company recognizes operating lease expenses on a straight-line basis over the lease term.

*Right-of-use of assets*

The Company recognised right-of-use assets at the commencement date of the lease (i.e. the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets. All right-of-use assets are reviewed for impairment annually. There was no impairment for right-of-use lease assets for the six months ended June 30, 2025 and 2024.

*Lease liabilities*

Lease liability is initially measured at the present value of the outstanding lease payments at the commencement date, discounted using the Company's incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise fixed lease payments, variable lease payments that depend on an index or a rate, amounts expected to be payable under a residual value guarantee and any exercise price under a purchase option that the Company is reasonably certain to exercise. Lease liability is measured at amortized cost using the effective interest rate method. It is re-measured when there is a change in future lease payments, if there is a change in the estimate of the amount expected to be payable under a residual value guarantee, or if there is any change in the Company assessment of option purchases, contract extensions or termination options.

*Finance lease*

A lease is classified as a finance lease if it meets any of the following criteria at lease commencement:

1. The
 lease transfers ownership of the underlying asset to the lessee by the end of the lease term.

2. The
 lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise.

3. The
 lease term is for the major part of the remaining economic life of the underlying asset. However, if the commencement date falls
 at or near the end of the economic life of the underlying asset, this criterion shall not be used for purposes of classifying the
 lease.

4. The
 present value of the sum of the lease payments and any residual value guaranteed by the lessee that is not already reflected in the
 lease payments in accordance with ASC 842-10-30-5(f) equals or exceeds substantially all of the fair value of the underlying asset.

5. The
 underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease
 term.

Finance leases are recorded as both an asset and a liability at the lower of the fair value of the asset and the present value of the minimum lease payments at the commencement of the lease term. Finance lease payments are apportioned between the finance charge and the reduction of the outstanding liability.

**(z) *Net loss per share***

The Company complies with accounting and disclosure requirements ASC Topic 260, "Earnings Per Share." Earnings (losses) per ordinary share is computed by dividing net income by the weighted average number of ordinary shares issued and outstanding for the periods except that it does not include ordinary shares subject to forfeiture or cancellation. Diluted net income per share is computed using the weighted average number of ordinary shares and, if dilutive, potential ordinary shares outstanding during the period. Potentially dilutive securities have been excluded from the computation of diluted net income per share if their inclusion is anti-dilutive. Potential ordinary shares consist of the incremental ordinary shares issuable upon the exercise of stock options, warrants, and unvested restricted shares. The dilutive effect of outstanding stock options, warrants, and restricted shares is reflected in diluted earnings per share by application of the treasury stock method and the if-converted method, respectively. As of June 30, 2025 and December 31, 2024, the Company did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into ordinary shares and then share in the income of the Company. As a result, diluted earnings per ordinary share is the same as basic earnings per ordinary share for the periods presented.

In according with ASC 260-10-45, the 300,000 Indemnity Escrow Shares and 9,000,000 Earnout Escrow Shares are considered contingently returnable shares and therefore are excluded from the computation of basic and diluted earnings per share for the six months ended June 30, 2025 and 2024 (on a retroactively adjusted basis).

***(aa)* Segment reporting**

The Company operates as one operating segment in accordance with ASC 280, Segment Reporting. The Company has a common basis of organization, and the products are offered mutually. Considering the streamlining of the growing organization, the Company's Chief Operating Decision Maker ("CODM") which is the Chief Executive Officer continues to make decisions with regards to business operations and resource allocation based on evaluation of Elong Power as a whole. The CODM allocates resources and assess financial performance on a consolidated basis. The measure of segment assets is reported on the balance sheet as total consolidated assets accordingly, the Company operates and makes decisions as one business segment. As the Company's long-lived assets are substantially located in the PRC and all revenue are generated within the PRC, no geographical segments are presented.

**(bb) Recent accounting pronouncements not yet adopted**

In November 2023, the FASB issued ASU 2023-07, which modifies the disclosure and presentation requirements of reportable segments. The new guidance requires the disclosure of significant segment expenses that are regularly provided to the chief operating decision maker ("CODM") and included within each reported measure of segment profit and loss. In addition, the new guidance enhances interim disclosure requirements, clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss, provides new segment disclosure requirements for entities with a single reportable segment, and contains other disclosure requirements. The update is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company has adopted ASU 2023-07 for annual periods beginning from January 1, 2024 (See Note 4).

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosure. This standard requires more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. This standard also includes certain other amendments to improve the effectiveness of income tax disclosures. ASU 2023-09 is effective for public business entities for annual periods beginning after December 15, 2024. For entities other than public business entities, the amendments are effective for annual periods beginning after December 15, 2025. The Company is in the process of evaluating the impact of adopting this new guidance on its consolidated financial statements.

In November 2024, the FASB issued Accounting Standards Update 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 Accounting Standards Update 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, is effective for us for our annual reporting for fiscal 2028 and for interim period reporting beginning in fiscal 2029 on a prospective basis. Both early adoption and retrospective application are permitted. The Company is currently evaluating the impact that the adoption of these standards will have on its unaudited condensed consolidated financial statements and disclosures.

In November 2024, the FASB issued ASU 2024-04, Debt – Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversion of Convertible Debt Instruments ("ASU 2024-04"), which clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. ASU 2024-04 is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted for all entities that have adopted the amendments in Update 2020-06. The Company is in the process of evaluating the impact of adopting this new guidance on its consolidated financial statements.

In February 2025, the FASB issued ASU 2025-02, Liabilities (Topic 405): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 122 ("ASU 2025-02"), amends the Accounting Standards Codification to remove the text of SEC Staff Accounting Bulletin ("SAB") 121, Accounting for Obligations to Safeguard Crypto-Assets an Entity Holds for Its Platform Users, as it has been rescinded by the issuance of SAB 122. ASU 2025-02 is effective immediately and is not expected to have an impact on the Company's financial statements.

Other accounting standards that have been issued by FASB that do not require adoption until a future date are not expected to have a material impact on the unaudited condensed consolidated financial statements upon adoption. The Company does not discuss recent standards that are not anticipated to have an impact on or are unrelated to its consolidated financial condition, results of operations, cash flows or disclosures.

Other accounting standards that have been issued by FASB but do not require adoption until a future date are not expected to have a material impact on the unaudited condensed consolidated financial statements upon adoption. The Company does not discuss recent standards that are not anticipated to have an impact on or are unrelated to its consolidated financial condition, results of operations, cash flows or disclosures.

**3. SHORT TERM INVESTMENT**

---

| | | |
|:---|:---|:---|
|  | **As of June 30,** <br> **2025** | **As of December 31,** <br> **2024** |
|  | (Unaudited) | (Audited) |
| Short term investment | 7028594 | 7028594 |
| Total | $7028594 | $7028594 |

---

In 2024, the Company subscribed for Class A non-voting, redeemable participating shares of Matrix Investment 2 SP, a segregated portfolio of Matrix Investment SPC, an exempted company incorporated with limited liability in the Cayman Islands as a segregated portfolio company. As of June 30, 2025 and December 31, 2024, the net asset value of the investment amounted to USD 7,028,594, Management Fee is 1% per annum of net asset value, accrued monthly. Performance Fee is 30% of the appreciation above the high-water mark, subject to a 15% annual hurdle rate. Shares are redeemable, generally on the first business day of each month, subject to a redemption fee of 1%–2%, which may be waived at the discretion of the directors or the investment manager.

**4. ACCOUNTS RECEIVABLE AND RETENTION RECEIVABLES, NET** 

Account receivable and retention receivables and allowance for credit losses consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **As of June 30,** <br> **2025** | **As of December 31,**<br> **2024** |
|  | (Unaudited) | (Audited) |
| Accounts receivable-non retention | $2650666 | $2261766 |
| Retention receivable | 2398479 | 2517014 |
| Total | 5049145 | 4778780 |
| Less: Allowance for credit loss | (4814810) | (4702314) |
| Account receivable and retention receivables, net | 234335 | 76466 |
| Less: Current portion | 225857 | 67897 |
| Non-current portion | $8478 | $8569 |

---

As the sales contracts of the Company include standard warranty which covers basic functionality of the products between one to eight years (or 120,000 or 500,000 kilometer if reached sooner) after the sales of the battery cells or battery pack. Retention receivable is reserved for product warranty at 5% to 10% of the sales amount, and is interest-free and recoverable at the end of the retention period.

On January 1, 2023, the Company assessed the credit loss for accounts receivable and retention receivable in accordance with ASU 2016-13 (Topic 326) and the impact of adoption on the Company's account receivable and retention receivable was described in Note 2- (h) Accounts receivable, net.

An analysis of movement of the provision for credit losses (with ASC 326) and provision for credit loss (with ASC 326) is as follows:

---

| | | |
|:---|:---|:---|
|  | **For the six months ended June 30,** | **For the six months ended June 30,** |
|  | **2025** | **2024** |
|  | (Unaudited) | (Unaudited) |
| Beginning balance at beginning of the period | 4702314 | 2033896 |
| Provision for the year |  |  |
| &nbsp;&nbsp;&nbsp;Account receivable | 23132 | 141639 |
| Total provision for the year | $**23132** | $**141639** |
| Reversal - recoveries by cash |  |  |
| &nbsp;&nbsp;&nbsp;Account receivable |  |  |
| &nbsp;&nbsp;&nbsp;Retention receivable, current |  |  |
| Total Reversal - recoveries by cash |  |  |
| Charged to consolidated statements of operations and comprehensive loss | 23132 | 141639 |
| Foreign exchange adjustment | 89364 | (47841) |
| **Balance at end of Period** | $**4814810** | $**2127694** |

---

**5. INVENTORIES, NET**

Inventory as of June 30, 2025 and December 31, 2024 consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **As of June 30,** <br> **2025** | **As of December 31,** <br> **2024** |
|  | (Unaudited) | (Audited) |
| Raw materials | $1677440 | $1293051 |
| Work-in-process(i) | 11228 | 20660 |
| Semi-finished goods(ii) | 271140 | 632670 |
| Finished goods | 258530 | 609516 |
| Inventory, subtotal | 2218338 | 2555897 |
| Less: inventory impairment provision | (874897) | (1127700) |
| **Inventory, net** | $1343441 | $1428197 |

---

(i) Work-in-process
 primarily consists of battery cells under production or battery pack under assembly process, which will be transferred into Semi-finished
 goods or finished goods respectively when completed.

(ii) Semi-finished
 goods are mainly battery cells which can be used to produce battery packs or sold directly.

Movement of inventory impairment provision is as below:

---

| | | |
|:---|:---|:---|
|  | **For the six months ended June 30,** | **For the six months ended June 30,** |
|  | **2025** | **2024** |
|  | (Unaudited) | (Unaudited) |
| Balance at beginning of the period | $1127700 | $1942922 |
| Addition | 148912 | 261851 |
| Deletion\* | (419712) | (1464982) |
| Exchange difference | 17997 | (36079) |
| Balance at end of the period | $**874897** | $**703712** |

---

IMPAIRMENT

\* Inventory with impairment provision in the earlier period was sold for the six months ended of June 30, 2025 and 2024.

**6. PREPAID EXPENSES AND OTHER CURRENT ASSETS**

Prepaid expenses and other current assets consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **As of June 30,** <br> **2025** | **As of December 31,** <br> **2024** |
|  | (Unaudited) | (Audited) |
| Value added tax recoverable | $1137931 | $1090079 |
| Prepayments to suppliers | 257183 | 281154 |
| Deposits | 96129 | 60573 |
| Deposit of pledged long-term loan payable | 95900 | 95900 |
| Staff advance | 17085 | 13972 |
| Others | 5028 | 18441 |
| **Total** | $**1609256** | $**1560119** |

---

**7. PROPERTY, PLANT AND EQUIPMENT, NET**

Property, plant and equipment as of June 30, 2025 and December 31, 2024 consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **As of June 30,** <br> **2025** | **As of December 31,** <br> **2024** |
|  | (Unaudited) | (Audited) |
| Leasehold improvements | $3250336 | $3133996 |
| Machinery equipment (i) | 12809954 | 12680132 |
| Office equipment | 824342 | 929161 |
| Motor vehicles | 131279 | 127145 |
| Construction in progress (ii) | 529467 | 414635 |
| &nbsp;&nbsp;&nbsp;Total | 17545378 | 17285069 |
| Accumulated depreciation | (6260936) | (6226161) |
| Impairment | (10293206) | (10203718) |
| **Carrying amount** | $**991236** | $**855190** |

---

(i) Machinery
 equipment also includes mold and tooling.

(ii) During
 the six months ended June 30, 2025 and 2024, the Company transferred construction in progress
 of $0 . During
 the six months ended June 30, 2025, the Company had a gain of asset disposal of $66,138 . During the six months ended June 30, 2024,
 the Company had a loss of asset disposal of $175,292 . During
 the six months ended June 30, 2025 and 2024, the Company incurred depreciation expense of $57,531 and $711,348 , respectively. There
 was no impairment loss during the six months ended June 30, 2025 and 2024. During
 the six months ended June 30, 2025, the Company had offset part of its debt with fixed assets, resulting in a debt restructuring
 gain of $7,218 .

The aggregate carrying amount of the assets pledged for short term and long term loans by the Company as of June 30, 2025 and December 31, 2024 were as follows:

---

| | | |
|:---|:---|:---|
|  | **As of June 30,** <br> **2025** | **As of December 31,** <br> **2024** |
|  | (Unaudited) | (Audited) |
| Machinery equipment | $932900 | $941270 |
| **Total** | $**932900** | $**941270** |

---

**8. INTANGIBLE ASSETS, NET**

---

| | | |
|:---|:---|:---|
|  | **As of June 30,** <br> **2025** | **As of December 31,** <br> **2024** |
|  | (Unaudited) | (Audited) |
| Purchased software | $217551 | $213507 |
| Patents | 2679 | 2629 |
| Accumulated amortization | (220230) | (213463) |
| **Carrying amount** | $- | $**2673** |

---

Amortization expense was $2,690 and $12,702 for the six months ended June 30, 2025 and 2024, respectively.

**9. LEASE**

***i) Operating Lease***

In June 2018, Ganzhou Zhangyang entered into a lease agreement for manufacturing facility, canteen and staff quarters space ("Phase I Lease") in Ganzhou with a third party for a four years term, commencing on June 1, 2018 and expired and terminated on May 31, 2022. The monthly rental payment for the first year is approximately RMB403,248 ($58,394) per month, with 6% increase per year through the lease term.

Ganzhou Zhangyang entered into a lease agreement for manufacturing facility, warehouses, R&D building and staff quarters, ("Phase II Lease") in Ganzhou with a third party with the commencement date on August 1, 2020, through December 31, 2041, and the quarterly payment schedule starting on August 1, 2024. The monthly rental payment is approximately RMB963,355($143,148) per month through the lease term.

Beijing Elong entered into a lease agreement for Office rental agreement with a third party in Beijing with a third party with the commencement date on February 15, 2025 through April 1, 2028, and a quarterly payment plan starting from December 15, 2024. During the entire lease term, the quarterly rent is approximately RMB 196,567 ($27,440).

The short-term lease is a Beijing apartment lease, with the contract expiring on December 18, 2024 and not renewed in 2025.

Both operating lease expense and short-term lease expense are recognized in cost of revenues and general and administrative expenses.

The supplemental balance sheet information related to leases for the period is as follows:

---

| | | |
|:---|:---|:---|
|  | **As of June 30,**<br> **2025** | **As of December 31,**<br> **2024** |
|  | (Unaudited) | (Audited) |
| Operating Lease: |  |  |
| Right of use asset | $15638091 | $15207546 |
| Lease liabilities - current | 54879 | **-** |
| Lease liabilities - non current | 23237507 | 21946223 |
| Total operating lease liabilities | $23292386 | $21946223 |

---

The components of lease expense for the six months ended June 30, 2025 and 2024 were as follows:

---

| | | |
|:---|:---|:---|
|  | **For the six months ended June 30,** | **For the six months ended June 30,** |
|  | **2025** | **2024** |
|  | (Unaudited) | (Unaudited) |
| Lease expense: |  |  |
| Operating lease expense | $805296 | $771787 |
| Short-term lease expense | 82729 | 26100 |
| **Total lease expense** | $**888025** | $**797887** |

---

***ii) Finance Lease***

On August 13, 2022, Ganzhou Zhangyang entered into a lease agreement with a third party for an NMP (N-methyl pyrrolidone) liquid solvent recycling equipment of RMB1.5 million (equivalent to $0.2 million) for a five-year term. Pursuant to the agreement, the Company supplies NMP liquid for manufacturing lithium-ion batteries and the Company uses the equipment with no cash payment while supplying a total of ninety-fives (95) metric tons of NMP liquid produced at market value through the lease term.

The supplemental balance sheet information related to leases for the period is as follows:

---

| | | |
|:---|:---|:---|
|  | **As of June 30,**<br> **2025** | **As of December 31,**<br> **2024** |
|  | (Unaudited) | (Audited) |
| Finance lease: |  |  |
| Right of use asset | $72250 | $85801 |
| Lease liabilities - non current | 137852 | 131635 |
| Total finance lease liabilities | $137852 | $131635 |

---

The components of finance lease expense for the six months ended June 30, 2025 and 2024 were as follows:

---

| | | |
|:---|:---|:---|
|  | **For the six months ended June 30,** | **For the six months ended June 30,** |
|  | **2025** | **2024** |
|  | (Unaudited) | (Unaudited) |
| Finance lease expense: |  |  |
| Amortization of right-of-use assets | $14991 | $15048 |
| Interest on lease liabilities | 3678 | 3718 |
| Total finance lease expense | $18669 | $18766 |

---

The following is a schedule, by years, of maturities of lease liabilities as of June 30, 2025:

---

| | | |
|:---|:---|:---|
|  | **Operating leases** | **Finance leases** |
|  | (Unaudited) | (Unaudited) |
| 2025 (remaining of year) | $54879 | $- |
| 2026 | 4808044 | 144356 |
| 2027 | 5156275 |  |
| 2028 | 1709612 |  |
| 2029 | 1682172 |  |
| Thereafter | 20186064 | - |
| Total future lease payments | 33597046 | 144356 |
| Less: imputed interest | (10304660) | (6504) |
| **Present value of lease liabilities** | $**23292386** | $**137852** |

---

Lease term and discount rate:

---

| | | |
|:---|:---|:---|
|  | **For the six months ended June 30,** | **For the six months ended June 30,** |
|  | **2025** | **2024** |
|  | (Unaudited) | (Unaudited) |
| **Weighted-average remaining lease term (years)** |  |  |
| Operating leases | 14.46 | 17.5 |
| Finance lease | 2.1 | 3.1 |
| **Weighted-average discount rate** |  |  |
| Operating leases | 5.74% | 5.83% |
| Finance lease | 5.48% | 5.48% |

---

**10. SHORT TERM LOANS-UNRELATED PARTIES**

As of June 30, 2025 and December 31, 2024, short term loans from third parties for working capital purposes were as following:

---

| | | |
|:---|:---|:---|
|  | **As of June 30,**<br> **2025** | **As of December 31,** <br> **2024** |
|  | (Unaudited) | (Audited) |
| Third parties loans | 6872111 | 6561136 |
| &nbsp;&nbsp;&nbsp;**Total** | $**6872111** | $**6561136** |

---

***a) Third parties loans***

Third parties loans as of June 30, 2025 and December 31, 2024 consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **As of June 30,**<br> **2025** | **As of December 31,**<br> **2024** |
|  | (Unaudited) | (Audited) |
| Ms. Xiuxia Wang | 2213412 | 1880044 |
| Mr. Hongshan Liu | 568038 | 564330 |
| Fujian Chuanzhiyuan Co, ltd | 139595 | 136997 |
| CISI Investment Limited | 2546066 | 2574765 |
| Ms. Xiaozhen Li | 1405000 | 1405000 |
|  | $6872111 | $6561136 |

---

On June 6 and December 29, 2023, the Company borrowed a revolving credit loan of RMB2.3 million (approximately $319,610) and RMB1.5 million (approximately $211,271 from Mr. Hongshan Liu, an unrelated party individual, bearing 8% per annum and payable on demand. RMB0.7 million (approximately $91,551) was repaid during the year ended December 31, 2023; RMB 50,000 (approximately $6,980) was repaid during the six months ended June 30, 2025.

On December 7, 2023, the Company borrowed two revolving credit loans of RMB5.0 million (approximately $704,235) from Ms. Xiuxia Wang, an unrelated individual, bearing 8% interest and payable on demand.

For the year ended December 31, 2024, the Company borrowed a total of RMB 0.5 million (approximately $68,500) on several occasions from Mr. Hongshan Liu, respectively, bearing 8% interest and payable on demand.

For the year ended December 31, 2024, the Company borrowed a total of RMB 10.71 million (approximately $1.5 million) on several occasions from Ms. Xiuxia Wang, bearing 8% per annum and payable on demand. RMB1.99 million (approximately $272,629) was repaid during the year ended December 31, 2024.

On December 30, 2024, the Company borrowed a revolving credit loan of RMB1 million (approximately $136,999) from Fujian Chuanzhiyuan Industrial Investment Co., Ltd., an unrelated party, bearing 8% per annum and payable on demand.

On February 22, 2024, May 7, 2024 and June 14, 2024, the Company borrowed a revolving credit loan of HKD10,000,000, HKD5,000,000 and HKD5,000,000 (approximately $1,282,051, $641,052 and $641,052) from CISI Investment Limited, a third party, bearing 10% per annum and payable on demand.

As of the merger date on November 21, 2024, the Company assumed liabilities of TMT upon completion of the merger, including a short-term, interest-free loan totaling $1,405,000 owed to a non-related party. The loan agreement does not stipulate a specific repayment timeline.

During six months ended June 30, 2025 the Company borrowed a total of RMB 2.3 million (approximately $322,045) on several occasions from Ms. Xiuxia Wang, bearing 8% interest and payable on demand. RMB 174,000 (approximately) $24,289 was repaid during the six months ended June 30, 2025.

Changes in loans were as follows:

---

| | | |
|:---|:---|:---|
|  | **For the six months ended June 30,** | **For the six months ended June 30,** |
|  | **2025** | **2024** |
|  | (Unaudited) | (Unaudited) |
| Beginning balance | $6561136 | $1143565 |
| Proceeds from third parties | 322045 | 935551 |
| Repayment of loans to third parties | (31269) | (275814) |
| Exchange difference | 20199 | (31065) |
| **Ending balance** | $**6872111** | $**1772237** |

---

**11. ACCOUNTS PAYABLE**

Accounts payable consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **As of June 30,** <br> **2025** | **As of December 31,** <br> **2024** |
|  | (Unaudited) | (Audited) |
| Accounts payable | $1143934 | $1072090 |

---

**12. ACCRUED EXPENSES AND OTHER LIABILITIES**

---

| | | |
|:---|:---|:---|
|  | **As of June 30,** <br> **2025** | **As of December 31,** <br> **2024** |
|  | (Unaudited) | (Audited) |
| Accrued legal expenses (i) | $2849585 | $2750034 |
| Accrued payroll and welfare | 335696 | 332495 |
| Payable for purchase of property, plant and equipment | 1042678 | 1084723 |
| Interest payable | 550301 | 345016 |
| Other payable for endorsed notes receivable |  | 131564 |
| Accrued professional fees | 1778832 | 1650837 |
| Others | 22483 | 31141 |
| **Total** | $**6579575** | $**6325810** |

---

&nbsp;&nbsp;&nbsp;&nbsp;***(i)***  ***Accrued legal expense-*** On May 18, 2022, a customer of the Company filed a lawsuit in Guiyang
 Municipal Huaqi District People's Court, Guizhou Province, against Huizhou Jingyang
 for failure to pay pursuant to the terms of the contract for selling battery packs. The plaintiff
 sought a total amount of $836,537 (RMB 5,769,760) for the relevant battery replacing cost
 and labor cost. On June 13, 2022, the Court rebuked Huizhou Jingyang's appeals. On
 March 6, 2023, the Court entered into a judgment that Huizhou Jingyang was liable for the
 above mentioned expenses. The Company thus accrued the legal expense of $0.8 million (RMB 5.8 million) in full as of June 30, 2025 and 2024 accordingly. On
 March 7, 2024, a customer of the Company filed a lawsuit in Zhengzhou, Henan Providence against Huizhou Jingyang and Jingyang Power
 (Ganzhou), a subsidiary of the Company, demanding compensation in the amount of RMB 13,077,192 ($1.8 million) for losses caused by
 a product quality issue. On December 3, 2024, the court ordered Huizhou Jingyang to pay the plaintiff a battery replacement fee of
 RMB 2,980,724 ($414,235), as well as other fees in the aggregate amount of RMB 162,436 ($22,574), within ten days after the judgment
 was to take effect. The other claims were dismissed. The company has accepted the judgment and recognized RMB 3,143,160 ($436,809)
 as estimated liability as at June 30, 2025 and December 31, 2024.

**13. PRODUCT WARRANTY PROVISION**

The movement of product warranty provision is as following:

---

| | | |
|:---|:---|:---|
|  | **For the six months ended June 30,** | **For the six months ended June 30,** |
|  | **2025** | **2024** |
|  | (Unaudited) | (Unaudited) |
| Balance at beginning of period | $2010207 | $2925070 |
| Warranty costs incurred | (38229) | (35019) |
| Reversal for expired warranty | (153845) |  |
| Foreign exchange adjustment | 35693 | (67087) |
| **Balance at end of period** | **1853826** | **2822964** |
| Less: Current portion | 1398852 | 2061718 |
| Non-current portion | $454974 | $761246 |

---

Warranty provisions are based upon historical experience. Changes in provisions related to pre-existing legacy products were made based on actual claims and intensive testing and analysis on the legacy products.

The cost of repairs and replacement, and the frequency of claims corresponding to the products sold by the Company from 2018 to 2021 have increased due to the fact that the components purchased from one supplier do not meet the Company's quality standards. As a result, the Company determined that the impacted legacy products sold due to the need to be repaired or replaced before the expiration of the warranty term resulted in provision of product warranty liability totaling $8.5 million (RMB58.7 million) related with this matter from 2018 to 2021. As of June 30, 2025, the remaining product warrant liability provision for this legacy supplier was around $1.9 million.

**14. LONG-TERM LOAN PAYABLE**

---

| | | |
|:---|:---|:---|
|  | **As of June 30,** <br> **2025** | **As of December 31,** <br> **2024** |
|  | (Unaudited) | (Audited) |
| Current portion of long-term loan payable | $488581 | $479498 |

---

On June 16, 2023, the Company entered into a two-year pledged long-term loan payable of RMB7.0 million ($965,344), with a third party lender, payable in monthly installments of RMB291,666 ($40,227), bearing interest at 6.8% per annum, with carrying value of machinery equipment of $932,900 pledged. The agreement was extended to September 15, 2025.

**15. INCOME TAXES**

***Corporate income tax***

*Cayman Islands and British Virgin Islands ("BVI")*

Under the current laws of the Cayman Islands, Elong Power Holding Limited ("Elong Power") is not subject to tax on income or capital gain. Additionally, upon payments of dividends to the shareholders, no Cayman Islands withholding tax will be imposed.

The Company's subsidiary, Elong Power International Co, Limited ("Elong Power International") is incorporated in the BVI and under the current laws of the BVI, Elong Power International is not subject to tax on income or capital gain. In addition, payments of dividend by the subsidiary to their shareholders are not subject to withholding tax in the BVI.

*Hong Kong*

Under the current Hong Kong Inland Revenue Ordinance, the Company's Hong Kong subsidiary, Elong Power (Hong Kong) International Limited ("Elong Power (Hong Kong)") is subject to 16.5% income tax on its taxable income generated from operations in Hong Kong. On December 29, 2017, Hong Kong government announced a two-tiered profit tax rate regime. Under the two-tiered tax rate regime, the first HKD $2.0 million assessable profits will be subject to an 8.25% lower tax rate and remaining taxable income will continue to be taxed at the existing 16.5% tax rate. The two-tiered tax regime becomes effective from the assessment year of 2018, which is on or after April 1, 2018. The application of the two-tiered rates is restricted to only one nominated enterprise among connected entities. The Company did not make any provisions for Hong Kong profit tax as there were no assessable profits derived from or earned in Hong Kong for any of the periods presented.

 

*The PRC*

The Company's subsidiaries that are each incorporated in the PRC are subject to Corporate Income Tax ("CIT") on the taxable income as reported in their respective statutory financial statements adjusted in accordance with the new PRC Enterprise Income Tax Laws ("PRC Income Tax Laws") effective from January 1, 2008. Pursuant to the PRC Income Tax Laws, the Company's PRC subsidiaries are subject to a CIT statutory rate of 25%.

Pursuant to Announcement on the Continuation of the Corporate Income Tax Policy for the Development of the Western Region issued by Department of Finance Ministry, State Taxation Administration, National Development and Reform Committee on April 23, 2020 (Notice No. 2020-23), the Company's subsidiary, Ganzhou Zhangyang is entitled to a reduced income tax rate of 15% from January 1, 2021 to December 31, 2030.

The Company's provision for income tax expenses consisted of:

---

| | | |
|:---|:---|:---|
|  | **For the six months ended June 30,** | **For the six months ended June 30,** |
|  | **2025** | **2024** |
|  | (Unaudited) | (Unaudited) |
| PRC income tax |  |  |
| Current | $- | $- |
| Total | $- | $- |

---

Reconciliations of the income tax expenses (benefits) computed by applying the PRC statutory income tax rate of 25% to the Company's income tax expenses of the years presented are as follows:

---

| | | |
|:---|:---|:---|
|  | **For the six months ended June 30,** | **For the six months ended June 30,** |
|  | **2025** | **2024** |
|  | (Unaudited) | (Unaudited) |
| Loss before income taxes | $(2655477) | $(3785383) |
| Tax credit at PRC corporate income tax rate of 25% | (663869) | (946346) |
| Tax effect of entity at preferential tax rate | 113303 | 204555 |
| Non-deductible expenses | 218157 | 186495 |
| Changes in valuation allowance | 332409 | 555296 |
| Total | $- | $- |

---

The Company considers positive and negative evidence to determine whether some portion or all of the deferred tax assets will be more-likely-than-not realized. This assessment considers, among other matters, the nature, frequency and severity of recent loss and forecasts of future profitability. These assumptions require significant judgment, and the forecasts of future taxable income are consistent with the plans and estimates the Company is using to manage the underlying businesses. The statutory income tax rate of 25% or applicable preferential income tax rates were applied when calculating deferred tax assets.

The Company's deferred tax assets consisted of the following components:

---

| | | |
|:---|:---|:---|
|  | **As of June 30,** <br> **2025** | **As of December 31,** <br> **2024** |
|  | (Unaudited) | (Audited) |
| **Deferred tax assets** |  |  |
| Net operating loss carry-forwards | $7464122 | $6929579 |
| Accrued cost and expense | 771394 | 847105 |
| Impairment of inventory | 204915 | 267913 |
| Provision for credit loss | 478917 | 453523 |
| Provision for warranty liability | 229007 | 272073 |
| Lease expense | 1161279 | 1020565 |
| Impairment of Property, plant and equipment | 1586912 | 1557410 |
| Others |  | 644 |
| Less: valuation allowance | (11896546) | (11348812) |
| **Deferred tax assets, net of valuation allowance** | $- | $- |

---

A valuation allowance is provided against deferred tax assets when the Company determines that it is more-likely-than-not that the deferred tax assets will not be utilized in the future.

The Company has tax losses arising in Mainland China of $32,157,905 (RMB239,981,820) that will expire in one to five years for deduction against future taxable profits.

**16. EMPLOYEE BENEFIT PLAN**

Companies operating in China are required to participate in various government sponsored employee benefit plans, including certain social insurance, housing provident funds and other welfare-oriented payment obligations, and contribute to the plans in amounts equal to certain percentages of salaries, including bonuses and allowances, of our employees up to a maximum amount specified by the local government from time to time at locations where we operate our businesses. The requirement of employee benefit plans has not been implemented consistently by the local governments in China given the different levels of economic development in different locations. Currently, our PRC subsidiaries are making contributions to the plans based on the minimum standards as required by law for most employees. With respect to the underpaid or unpaid employee benefits, we may be required to complete registrations, make up the contributions for these plans as well as to pay late fees and fines. If we are subject to late fees or fines in relation to the underpaid or unpaid employee benefits, our financial condition and results of operations may be adversely affected. We may also be subject to regulatory investigations and other penalties if our other employment practices are deemed to be in violation of relevant PRC laws and regulations.

The Company accrues for these benefits based on certain percentages of the employees' salaries, up to a maximum amount specified by the local government. The total employee benefits expensed as incurred were $27,591 (RMB 197,657), and $60,377 (RMB 435,616) for the six months ended June 30, 2025 and 2024 respectively.

**17. RELATED PARTY BALANCES AND TRANSACTIONS**

The principal related parties with which the Company had transactions as of June 30, 2025 and December 31, 2024, and also for the six months ended June 30, 2025 and 2024 presented are as follows:

**a***) Related Parties* 

---

| | |
|:---|:---|
| **Name** | **Relationship with the Company** |
| Mr. Hongzhong Yu | Senior management of Huizhou Jingyang |
| Mr. Zhijiang Chen | Director of the Company |
| Mr. Jiliang Dong | Executive director of the Company |
| Mr. Xiusheng Wang | Senior management of Huizhou Jingyang |
| Shenzhen High-power Technology Co., Ltd. | Affiliate of non-controlling interest shareholder |
| Huizhou Kelie Precision Products Co., Ltd. | Affiliate of non-controlling interest shareholder |
| Beijing Xinlongmai Enterprise Management Co., Ltd. ("Beijing Xinlongmai") | Afficilate of non-controlling interest shareholder |
| Huizhou Highpower Technology Co., Ltd. ("Huizhou High power") | Afficilate of non-controlling interest shareholder power |
| Ms. Xiaodan Liu | CEO of Elong Power |
| Mr. Shilin Xun | Senior management of the Company |
| Phylion Battery (Chuzhou) Co.,Ltd | Affiliate of non-controlling interest shareholder |
| Mr. WeiZou | Senior management of Ganzhou Zhangyang |

---

\* Mr. Shilin Xun has not served as an executive of the Company since 2025 nor held more than 10% of the Company's shares, he is no longer considered a related party since January 31, 2025.

**b) *Related party transactions***

The following table consists of the purchases that have been entered into with related parties:

---

| | | |
|:---|:---|:---|
|  | **For the six months ended June 30,** | **For the six months ended June 30,** |
|  | **2025** | **2024** |
|  | (Unaudited) | (Unaudited) |
| **Lease expense for renting a vehicle from a related party** |  |  |
| –Ms. Xiaodan Liu | $82729 | $- |

---

**c) Short-term loans payable to related parties**

---

| | | | |
|:---|:---|:---|:---|
|  | **Note** | **As of June 30,**<br> **2025** | **As of December 31,** <br> **2024** |
|  | | (Unaudited) | (Audited) |
| Beijing Xinlongmai Enterprise Management Co., Ltd. ("Beijing Xinlongmai") | (a) | $418784 | $410999 |
| Huizhou Highpower Technology Co., Ltd. ("Huizhou High power") | (a) | 139595 | 136999 |
| Mr. Xiusheng Wang | (a) | 13959 | 13700 |
| Ms. Xiaodan Liu | (a) | 1280093 | - |
| **Total** |  | $**1852431** | $**561698** |

---

(a) On
 October 30, 2023, the Company entered into two one-year loans with its related parties Beijing
 Xinlongmai Enterprise Management Co., Ltd. ("Beijing Xinlongmai") and Huizhou
 Highpower Technology Co., Ltd. ("Huizhou Highpower") of RMB 3 million ($0.4 million)
 and RMB 1 million ($0.1 million), respectively, both bearing zero interest rate and payable
 on demand. On
 December 9, 2024, the Company entered into a one-year loans with its related party Mr. Xiusheng Wang of RMB 0.1 million ($13,700),
 bearing zero interest rate and payable on demand. During
 the six months ended June 30, 2025 the Company borrowed a total of RMB 9.1 million (approximately $1,280,093) on several occasions
 from Ms. Xiaodan Liu, bearing 8 % interest and payable on demand.

For the six months ended June 30, 2025 and 2024 interest expense of $16,767 and nil was incurred on the Company's borrowings from related parties, respectively.

**d) *Amounts due from related parties***

Amounts due from related parties consisted of the following for the periods indicated:

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Relationship** | **As of June 30,** <br> **2025** | **As of June 30,** <br> **2025** | **As of December 31,** <br> **2024** | **As of December 31,** <br> **2024** | **Note** | **Note** |
|  |  | (Unaudited) | (Unaudited) | (Audited) | (Audited) | | |
| Ms. Xiaodan Liu | CEO and Board Chair of Elong Power |  | 69797 |  | 68500 |  | Deposit |

---

**e) Amounts due to related parties**

Amounts due to related parties consisted of the following for the periods indicated:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Relationship** | **As of June 30,<br> 2025** | **As of December 31,<br> 2024** | **Note** |
|  |  | (Unaudited) | (Audited) |  |
| Mr. Hongzhong Yu | Senior management of Huizhou Jingyang | $2552 | $2524 | Payable for expense reimbursement |
| Ms. Xiaodan Liu | CEO and Board Chair of Elong Power | 12067 | 1119 | Payable for expense reimbursement |
| Ms. Xiaodan Liu | CEO and Board Chair of Elong Power | 139595 | 54780 | Payable for the lease expense of a vehicle |
| Phylion Battery Co.,Ltd | Affiliate of non-controlling interest shareholder | 14473 | 14204 | Payable for raw material purchases on behalf of the Company |
| Shenzhen High-power Technology Co., Ltd. | Affiliate of non-controlling interest shareholder | 43495 | 42686 | Payable for expenses paid on behalf of the Company |
| Mr. Wei Zou | Senior management of Ganzhou Zhangyang | 47767 | - | Payable for expense reimbursement |
| **Total** |  | $**259949** | $**115313** |  |

---

**18. EQUITY**

***Ordinary shares***

On August 18, 2023, Elong Power Limited was incorporated in the Cayman Islands. On October 21, 2023, Elong Power became the holding company pursuant to the Reorganization described in Note 1. In connection with the Reorganization and 500,000,000 authorized shares of Elong Power, including

● 4,000,000,000 Class A ordinary shares of par value of $0.00001 , entitled to one voting each;

● 1,000,000,000 Class B ordinary shares of par value of $0.00001 , entitled to fifty voting each

Subsequent to the closing of the Business Combination at November 21, 2024, there were 50,056,099 Ordinary Shares (exclusive of 9,000,000 earnout shares) were issued and outstanding, including 44,278,662 Elong Class A Ordinary Shares and 5,777,437 Elong Class B Ordinary Shares. Share data have been retrospectively restated to give effect to the reversal recapitalization that is discussed in Note 1.

At the closing of the Business Combination (the "Closing"), Merger Sub merged with and into TMT (the "Merger"), with TMT continuing as the surviving entity and becoming a wholly owned subsidiary of Elong. At the effective time of the Merger (the "Effective Time"), (i) each ordinary share of TMT, par value $0.0001 per share ("TMT Ordinary Share") issued and outstanding immediately prior to the effective time of the Merger (the "Effective Time") converted into one Class A ordinary share of Elong, par value $0.00001 per share ("Elong Class A Ordinary Share"), (ii) each right of TMT ("TMT Right") issued and outstanding immediately prior to the Effective Time automatically converted in accordance with its terms into 2/10 of one TMT Ordinary Share, and then further converted into 2/10 of one Elong Class A Ordinary Share, and (iii) each unit of TMT, consisting of one TMT Ordinary Share and one TMT Right ("TMT Unit"), issued and outstanding immediately prior to the Effective Time automatically and mandatorily separated into its component parts and the TMT Ordinary Shares and TMT Rights included within such TMT Units automatically converted into Elong Class A Ordinary Shares as described above, resulting in 4,356,099 Class A ordinary shares being issued to TMT stockholders.

The unaudited condensed consolidated financial statements are prepared as a continuation of the unaudited condensed consolidated financial statements of Elong, the acquirer and predecessor, with retrospective adjustments to give effect of the reverse recapitalization. The equity is restated using the exchange ratio of 0.35 established in the reverse recapitalization transaction, which is 128,814,283 shares exchanged for 45,000,000 shares (the number of Exchange Shares excluding Escrow Shares, see below), to reflect the equity structure of the legal acquirer, Elong. Earnings (loss) per share is retrospectively restated using the historical weighted-average number of ordinary shares outstanding multiplied by the exchange ratio.

During the year ended December 31, 2024, the Company incurred approximately $0.6 million of direct and incremental transaction costs, consisting of legal services directly associated with the reverse recapitalization. In accordance with SEC reporting guidance with regards to an operating company's reverse acquisition with a nonoperating company having some cash, transaction costs incurred for the reverse acquisition, such as legal fees, may be charged directly to equity to the extent of the cash received, while all costs in excess of cash received should be charged to expense. Accordingly, the Company charged transaction costs of approximately $3.4 million to additional paid in capital in the consolidated financial statements.

300,000 Class B ordinary shares ("Indemnity Escrow Shares") otherwise issuable to Elong shareholders are set aside in escrow for a period of 24 months after the closing to satisfy any post-closing purchase price adjustment and indemnification claims prescribed in the Business Combination Agreement.

9,000,000 Class A ordinary shares (the "Earnout Escrow Shares") otherwise issuable to Elong shareholders are set aside in escrow until released upon the satisfaction of certain financial milestones below:

(a) If, for the fiscal year of Elong ending December 31, 2025, Elong has revenue, determined in accordance GAAP, as applicable, in a manner consistent with the Company's past practice, equal to or greater than $251.5 million, Elong shall issue to the Earnout Shareholder, an aggregate of 4,500,000 Earnout Shares.

(b) In the event that Elong (i) fails to meet the revenue target for the fiscal year ending December 31, 2024 but meets the revenue target for the fiscal year ending December 31, 2025 or (ii) meets the revenue target for the fiscal year ending December 31, 2024 but fails to meet the revenue target for the fiscal year ending December 31, 2025 and, in either case, the combined revenues for fiscal year 2024 and 2025 are equal to or greater than $399.4 million, Elong shall issue to the Earnout Shareholder the full 9,000,000 Earnout Shares as if both individual revenue targets had been met. As of December 31, 2024, Elong failed to meet the revenue target of $251.5 million.

On September 10, 2024, the Company entered into Subscription Agreements with the PIPE Investors, pursuant to which the Company agreed to issue 700,000 Class A Ordinary Shares, at a purchase price of $10.00 per share, in a private placement to be consummated concurrently with the Business Combination.

On April 21, 2025, the Company registered the aggregate of 8,000,000 ordinary shares, par value $0.0001 per share under the registration statement on Form S-8 filed with the SEC on April 21, 2025, which are reserved for issuance under the Plan. We have not granted any shares as of the date of this report.

**19. STATUTORY RESERVE AND RESTRICTED NET ASSETS**

As stipulated by the relevant laws and regulations in the PRC, company established in the PRC (the "PRC subsidiary") is required to maintain a statutory reserve made out of profit for the year based on the PRC subsidiary' statutory financial statements which are prepared in accordance with the accounting principles generally accepted in the PRC. The amount and allocation basis are decided by the director of the PRC subsidiary annually and is not to be less than 10% of the profit for the year of the PRC subsidiary. The aggregate amount allocated to the reserves will be limited to 50% of registered capital for certain subsidiaries. Statutory reserve can be used for expanding the capital base of the PRC subsidiary by means of capitalization issue. In addition, as a result of the relevant PRC laws and regulations which impose restriction on distribution or transfer of assets out of the PRC, the Company had PRC statutory reserve of $708,470 and $708,470 as of June 30, 2025 and December 31, 2024, respectively.

The Company also complies with PRC safety production regulations on battery industry to set aside reserve of $0 and $609,865 as of June 30, 2025 and December 31, 2024, which are under restriction for distribution and included in the balance of accumulated deficit in the equity table.

**20. LOSS PER SHARE**

The following is the calculation of loss per share:

---

| | | |
|:---|:---|:---|
|  | **For the Six months ended June 30,** | **For the Six months ended June 30,** |
|  | **2025** | **2024** |
| Net loss | $(2655477) | $(3785383) |
| Weighted average shares outstanding for Class A and Class B – basic and diluted | 62194221 | 45000000 |
| Loss per share |  |  |
| Basic | $(0.04) | $(0.08) |
| Diluted | $(0.04) | $(0.08) |

---

**21. SEGMENT REPORTING**

The Company's chief operating decision maker has been identified as the Chief Executive Officer ("CEO") who reviews financial information of operating segments based on US GAAP amounts when making decisions about allocating resources and assessing performance of the Company.

The Company determined that it operated in one operating segment includes the manufacture, commercialization and distribution of a wide variety of battery cells and battery packs for use in a wide array of applications.

The Company primarily operates in the PRC and substantially all of the Company's long-lived assets are located in the PRC.

---

| | | |
|:---|:---|:---|
|  | **For the Six months ended June 30** | **For the Six months ended June 30** |
|  | **2025** | **2024** |
|  | (Unaudited) | (Unaudited) |
| **Revenues** | $214039 | $365975 |
| Less: |  |  |
| Cost of revenues (i) | 485697 | 2024154 |
| Cost of revenue – idle capacity (ii) |  | 12248 |
| Provision for credit losses | 23132 | 141639 |
| Reversal for obsolete inventory | (270800) | (1203131) |
| Reversal for warranty liability | (153845) |  |
| Staff cost | 277819 | 433815 |
| Lease expense | 820287 | 786835 |
| Depreciation and amortization expense | 60221 | 724050 |
| Professional fee | 1023521 | 732673 |
| Relocation and demolition fees | 3000 |  |
| Interest expense | 203628 | 155821 |
| Charges of legal compensation and contract default penalty expense | 115152 |  |
| Other segment items\* | 281704 | 343254 |
| **Segment net loss** | (2655477) | (3785383) |
| **Consolidated net loss** | $**(2655477)** | $**(3785383)** |
| **Consolidated total assets** | $**27187528** | $**35379424** |

---

&nbsp;&nbsp;&nbsp;&nbsp;(i) Cost
 of revenues excludes provision of obsolete inventory, staff cost, depreciation and amortization expense, and lease expense which
 are separately listed above.

(ii) Cost
 of revenue – idle capacity excludes staff cost, depreciation and amortization expense, and lease expense which are separately
 listed above, which was calculated by the monthly actual expenses times (x) monthly capacity utilization ratio.

\* Other segment items include selling expenses, remaining general and administration expenses, and other income (expense).

**22. COMMITMENTS AND CONTIGENCIES**

*(i) Capital Commitments*

As of June 30, 2025 and 2024, the Company had no capital commitments.

*(ii) Litigation*

From time to time, we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business. Our subsidiaries in PRC have significant litigations in contractual disputes in court. The Company records a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Company reviews the need for any such liability on a regular basis.

The following table sets forth the current legal proceedings that we are involved, which, if determined adversely to us, would individually or in the aggregate have a material adverse effect on our business, financial condition or results of operations.

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **No.** | **Plaintiff** | **Defendant** | **Cause of Action** | **Status on**<br> **June 30, 2025** | **Recorded in Account Payable (USD) as of June 30, 2025** | **Recorded in Accrued legal expenses (USD) as of June 30, 2025** | **Status of Subsequent Updates to the Filing Date** | **Name of the Court** |
| 1 | Wang Zhangang | Zibo Jingyang, Ganzhou Zhangyang | Labor disputes | Case applying for preservation |  | 3909 | No change | Zhangdian District Labor Dispute Arbitration Committee |
| 2 | Shenzhen Haiying Science & Technology Co., Ltd. | Huizhou Jingyang, Ganzhou Zhangyang | Contractual Dispute | Case applying for preservation | 37680 | 6672 | No change | Shenzhen Futian District People's Court |
| 3 | Suzhou Industrial Park Deyanfu Mechanical Equipment Co., Ltd. | Huizhou Jingyang | Contractual Dispute | Case applying for preservation |  | 1117 | No change | Suzhou Industrial Park People's Court |
| 4 | Ganzhou Dari Mechanical and Electrical Equipment Co., Ltd. | Ganzhou Zhangyang | Contractual Dispute | Case applying for preservation | 37691 |  | No change | Ganzhou Economic and Technological Development Zone People's Court |
| 5 | Ganzhou Dari Mechanical and Electrical Equipment Co., Ltd. | Huizhou Jingyang | Contractual Dispute | Case applying for preservation | 14056 | 30481 | No change | Jiangxi Province Ganzhou Economic and Technological Development Zone People's Court |
| 6 | Shenzhen Kaifu Mechanical and Electrical Equipment Co., Ltd. | Ganzhou Zhangyang | Contractual Dispute | Case applying for preservation | 20102 |  | No change | Longgang District People's Court |
| 7 | Shenzhen Yuqiang New Materials Co., Ltd., Zhongshan Branch | Ganzhou Zhangyang | Contractual Dispute | Case applying for preservation | 10965 |  | No change | Zhongshan City Second People's Court |
| 8 | Deng Yongbo | Huizhou Jingyang | Labor disputes | Case applying for preservation | 11402 | 22565 | No change | Huizhou Huicheng District Labor and Personnel Dispute Arbitration Committee |
| 9 | Shenzhen Kuayue Express Co., Ltd. | Yilon Energy, Huizhou Jingyang | Contractual Dispute | Case applying for preservation | 10746 | 3856 | No change | Shenzhen Bao'an District People's Court |
| 10 | Shenzhen Jintongda Machinery Co., Ltd. | Ganzhou Zhangyang | Contractual Dispute | Case applying for preservation | 45598 | 8389 | No change | Ganzhou Economic and Technological Development Zone People's Court |
| 11 | Shenzhen Fengshengyuan Technology Co., Ltd. | Huizhou Jingyang | Contractual Dispute | Case applying for preservation | 14300 |  | No change | Guangzhou Intermediate People's Court |
| 12 | Shandong Chuangying Flooring Engineering Co., Ltd. | Zibo Jingyang, Huizhou Jingyang | Contractual Dispute | Case applying for preservation | 1674 | 901 | No change | Zibo Zhangdian District People's Court Fengshui Tribunal |
| 13 | Shenzhen Haoneng Technology Co., Ltd. | Ganzhou Zhangyang,Huizhou Jingyang, | Contractual Dispute | Case applying for preservation | 83757 |  | No change | Zibo Zhangdian District People's Court Fengshui Court |
| 14 | Shenzhen Yanxiangda Technology Co., Ltd. | Huizhou Jingyang | Contractual Dispute | Case applying for preservation | 45349 |  | No change | Pingshan District Court, Shenzhen |
| 15 | Amphenol Automotive Connection Systems Changzhou Co., Ltd. | Huizhou Jingyang | Contractual Dispute | Case applying for preservation | 11284 |  | No change | Changzhou Xinbei District People's Court |
| 16<sup>i</sup> | Lanzhou Electric Motor Co., Ltd. Companies | Ganzhou Zhangyang | Contractual Dispute | Case applying for preservation | 2801775 | 576551 | No change | Lanzhou New District People's Court |
| 17 | Shenzhen Lingyueda Technology Co., Ltd. | Huizhou Jingyang | Contractual Dispute | Case applying for preservation | 14204 |  | No change | Shenzhen Guangming District People's Court |
| 18 | Suzhou Qinglizi New Energy Technology Co., Ltd. | Ganzhou Zhangyang, Huizhou Jingyang | Contractual Dispute | Case applying for preservation | 9844 |  | No change | Taicang District People's Court |
| 19 <sup>ii</sup> | Yutong Bus Co., Ltd. | Huizhou Jingyang & Elong Power (Ganzhou) | Contractual Dispute | Case applying for preservation |  | 438768 | No change | Zhengzhou Guancheng District People's Court |
| 20 | Liu Yongjian | Ganzhou Zhangyang | Labor disputes | Case applying for preservation | 398 | 3438 | No change | Ganzhou Economic and Technological Development Zone Labor Arbitration Committee |
| 21 | Ganzhou Tongcheng Hardware & Electrical Co., Ltd. | Ganzhou Zhangyang | Contractual Dispute | Case applying for preservation | 16006 |  | No change | Ganzhou Economic and Technological Development Zone People's Court |
| 22 | Lanjun Hardware & Electrical Co., Ltd. | Huizhou Jingyang | Contractual Dispute | Case applying for preservation | 2540 |  | No change | Ganzhou Economic and Technological Development Zone People's Court |
| 23 | Quanxing Hardware and Electrical Distribution Department | Huizhou Jingyang | Contractual Dispute | Case applying for preservation | 14795 |  | No change | Quanxing Hardware and Electrical Distribution Department |
| 24 | Ganzhou Jiankong Investment Holding Group Co., Ltd. | Ganzhou Zhangyang | Contractual Dispute | Case applying for preservation |  | 1188 | No change | Ganzhou Economic and Technological Development Zone People's Court |
| 25 <sup>iii</sup> | Xianning Fengdan Public Transport Holding Co., Ltd. | Ganzhou Zhangyang, Huizhou Jingyang | Contractual Dispute | Judgment effected |  | 906103 | No change | Xianning Xianning District People's Court |
| 26 | Ganzhou Gert Machinery Co., Ltd. | Ganzhou Zhangyang | Contractual Dispute | Case applying for preservation | 4934 | 36 | No change | Ganzhou Economic and Technological Development Zone People's Court |
| 27 | Jiangxi Guangtai Environmental Engineering Co., Ltd. | Ganzhou Zhangyang,Huizhou Jingyang, | Contractual Dispute | Case applying for preservation | 15224 | 1097 | No change | Huaxi District People's Court, Guiyang City, Guizhou Province |
| 28 | Connet (Changzhou) Intelligent Technology Co., Ltd. | Huizhou Jingyang | Contractual Dispute | Case applying for preservation | 4769 |  | No change | Ganzhou Economic and Technological Development Zone People's Court |
| 29 <sup>iv</sup> | Chery Wanda Guizhou Bus Co., Ltd. | Huizhou Jingyang | Contractual Dispute | Case applying for preservation |  | 805428 | No change | Guiyang Huaxi District People's Court |
| 30 | Xiamen GOLDEN DRAGON Bus Co., Ltd. | Ganzhou Zhangyang | Contractual Dispute | Case applying for preservation |  | 39086 |  |  |
|  |  |  |  | **Total amount:** | $**3229093** | $**2849585** |  |  |

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The Company is subject to legal proceedings and regulatory actions in the ordinary course of business, such as disputes with customers and suppliers. As of this report date of the consolidated financial statements, the Company is ongoing with various lawsuits and the estimate aggregate amount related to such litigations are approximately $6.07 million (RMB43.54 million), which comprises the following: Amounts due to suppliers recorded in accounts payable totaling $3.22 million (RMB23.13 million) Accrued legal expenses recognized pursuant to court judgments amounting to $2.84 million (RMB20.41 million).

i) In April 2024, a customer of our company filed a lawsuit against Ganzhou Zhangyang in Gansu Province, requesting the termination of their battery purchase contract and the return of 126 undelivered battery packs (valued at USD$3.1 million, RMB22.7 million). According to the court judgment obtained, Ganzhou Zhangyang is required to return the USD$3.1 million (RMB22.7 million) it has already received and pay liquidated damages. As of June 30, 2025, based on this judgment, the company recorded the estimated liability of USD 3.37 million (RMB24.20 million), and was recorded RMB 835,151 ($115115) in other income for the six months ended June 30, 2025.

ii) On March 7, 2024, a customer of the Company filed a lawsuit in Zhengzhou, Henan Providence against Huizhou Jingyang and Jingyang Power (Ganzhou), a subsidiary of the Company, demanding compensation in the amount of RMB13,077,192 ($1.8 million) for losses caused by a product quality issue. On December 3, 2024, the court ordered Huizhou Jingyang to pay the plaintiff a battery replacement fee of RMB2,980,724 ($414235), as well as other fees in the aggregate amount of RMB162,436 ($22574), within ten days after the judgment was to take effect. The other claims were dismissed. The company has accepted the judgment but has not yet reached the enforcement stage, and recognized RMB 3,143,160 ($436809) as estimated liability during the year ended June 30, 2025.

iii) In 2021, a user of the Company's product filed a lawsuit in Xianning, Hubei Province against a Company's customer (first defendant) and the Company (the second defendant). The Company accrued USD$0.9 million (RMB6.4 million) lawsuit compensation charge. As of the reporting date, the parties are still negotiating the claim, and the company is preparing for the appeal process.

iv) In 2022, a customer of the Company filed a lawsuit against Huizhou Jingyang and Ganzhou Zhangyang in Guizhou Province, seeking payment for the costs associated with replacing a vehicle's power battery. According to the court judgment obtained, Huizhou Jingyang and Ganzhou Zhangyang must jointly pay the customer a total of USD$0.8 million (RMB5.8 million) for the vehicle's power battery replacement and related expenses. Based on this effective judgment and management's assessment of the relevant facts and legal obligations, the Company has recognized a provision of RMB 5.8 million in its financial statements. As of the reporting date, the parties are still in further negotiations regarding the aforementioned claim, and the Company is actively preparing for the appeal process.

The Company is subject to legal proceedings and regulatory actions in the ordinary course of business, such as disputes with customers and suppliers. The results of such proceedings cannot be predicted with certainty, but the Company does not anticipate that the final outcome arising out of any of such matters will have a material adverse effect on the consolidated balance sheets, comprehensive loss, or cash flows on an individual basis or in the aggregate. As of June 30, 2025 and December 31, 2024, other than as disclosed above, the Company is not a party to any material legal or administrative proceedings.

**23. CONCENTRATION AND CREDIT RISK**

***(a) Customer Concentrations***

The Company had the following customers that individually comprised 10% or more of net revenue for the six months ended June 30, 2025 and 2024 as follows:

---

| | | |
|:---|:---|:---|
|  | **For the six months ended 30,** | **For the six months ended 30,** |
|  | **2025** | **2024** |
| Percentage of the Company's sales of finished goods and raw materials |  |  |
| Customer A | 90% | \*% |
| Customer B | \*% | 47% |
| Customer C | \*% | 21% |
| Customer D | \*% | 14% |

---

\* represent percentage less than 10%

The Company had the following customers that individually comprised 10% or more of net account receivable (included VAT) as of June 30, 2025 and December 31, 2024 as follows:

---

| | | |
|:---|:---|:---|
|  | **As of June 30,** <br> **2025** | **As of December 31,** <br> **2024** |
| Percentage of the Company's accounts receivables |  |  |
| Customer E | 22% | \*% |
| Customer F | 16% | \*% |
| Customer G | 14% | \*% |
| Customer H | 11% | \*% |
| Customer I | \*% | 28% |
| Customer J | \*% | 14% |
| Customer K | \*% | 13% |

---

**(***b) Supplier Concentration*

The Company relies on third parties for the supply of raw materials. In instances where these parties fail to perform their obligations, the Company may find alternative suppliers in the open market.

The Company had the following suppliers that individually comprised 10% or more of net purchase for the six months ended June 30, 2025 and 2024 as follows:

---

| | | |
|:---|:---|:---|
|  | **For the six months ended 30,** | **For the six months ended 30,** |
|  | **2025** | **2024** |
| Percentage of the Company's net purchase of raw materials |  |  |
| Supplier A | 52% | \*% |
| Supplier B | 31% | \*% |

---

\* represent percentage less than 10%

The Company had the following suppliers that individually comprised 10% or more of account payable as of June 30, 2025 and December 31, 2024 as follows:

---

| | | |
|:---|:---|:---|
|  | **As of June 30,** <br> **2025** | **As of December 31,** <br> **2024** |
| Percentage of the Company's account payable |  |  |
| Supplier C | 11% | \*% |
| Supplier D | \*% | 18% |
| Supplier E | \*% | 14% |

---

\* represent percentage less than 10%

***(c) Credit Risk***

Financial instruments that potentially subject the Company to a significant concentration of credit risk consist primarily of cash and cash equivalents and pledged deposits. For the six months ended June 30, 2025 and December 31, 2024 substantially all of the Company's cash and cash equivalents were held by major financial institutions and online payment platforms located in the PRC, which management believes are of high credit quality. The Company has not experienced any losses on cash and cash equivalents to date. The Company does not require collateral or other securities to support financial instruments that are subject to credit risk.

For the credit risk related to trade accounts receivable, the Company performs ongoing credit evaluations of its customers and, if necessary, maintains reserves for potential credit losses.

**24. SUBSEQUENT EVENTS**

The Company has evaluated subsequent events and transactions that occurred after the balance sheet date through the date the unaudited condensed consolidated financial statements were issued and no subsequent events, occurred that require accrual or disclosure.