CREG

New in FY2025

• Risk Factors ” beginning on page 25 of this annual report.
• Risks Related to Our Business and Industry ● We face risks related to natural disasters, extreme weather conditions, health epidemics and other catastrophic incidents, which could significantly disrupt our operations.” on page 31 of this annual report); ● Changes in the economic and credit environment could have an adverse effect on demand for our projects, which would in turn have a negative impact on our results of operations, our cash flows, our financial condition, our ability to borrow and our stock price (see “Risk Factors - Risks Related to Our Business and Industry - Changes in the economic and credit environment could have an adverse effect on demand for our projects, which would in turn have a negative impact on our results of operations, our cash flows, our financial condition, our ability to borrow and our stock price.” on page 26 of this annual report); ● Changes in the growth of demand for or pricing of electricity could reduce demand for our waste energy recycling projects, which could materially harm our ability to grow our business (see “Risk Factors - Risks Related to Our Business and Industry - Changes in the growth of demand for or pricing of electricity could reduce demand for our waste energy recycling projects, which could materially harm our ability to grow our business” on page 27 of this annual report); ● We operate in an emerging competitive industry and if we are unable to compete successfully our revenue and profitability will be adversely affected (see “Risk Factors - Risks Related to Our Business and Industry - We operate in an emerging competitive industry and if we are unable to compete successfully our revenue and profitability will be adversely affected” on page 28 of this annual report); Risks Related to Doing Business in China (for a more detailed discussion, see “Item 1A.
• Risk Factors-Risks Related to Doing Business in China” on page 31 of this annual report) ● We may rely on dividends paid by our subsidiaries for our cash needs.
• Any limitation on the ability of our subsidiaries to make dividend payments to us, or any tax implications of making dividend payments to us, could limit our ability to pay our parent company expenses or pay dividends to holders of our common stock” on page 31 of this annual report); ● The Chinese government exerts substantial influence over the manner in which we conduct our business activities and may intervene or influence our operations at any time with little advance notice, which could result in a material change in our operations and the value of our common stock (see “Risk Factors -The Chinese government exerts substantial influence over the manner in which we must conduct our business activities and may intervene or influence our operations at any time with little advance notice, which could result in a material change in our operations and the value of our common stock” on page 32 of this annual report); ● The M&A Rules and certain other PRC regulations establish complex procedures for some acquisitions of Chinese companies by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in China (see “Risk Factors - The M&A Rules and certain other PRC regulations establish complex procedures for some acquisitions of Chinese companies by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in China” on page 35 of this annual report); ● China’s legal system is evolving and has inherent uncertainties that could limit the legal protection available to you (see “Risk Factors - Risks Related to Doing Business in China - Uncertainties with respect to the PRC legal system could adversely affect us” on page 41 of this annual report); ● We may be exposed to liabilities under the Foreign Corrupt Practices Act and Chinese anti-corruption law (see “Risk Factors - Risks Related to Doing Business in China - We may be exposed to liabilities under the Foreign Corrupt Practices Act and Chinese anti-corruption law” on page 38 of this annual report); ● The joint statement by the SEC and the Public Company Accounting Oversight Board (United States), or the “PCAOB,” proposed rule changes submitted by Nasdaq and the Holding Foreign Companies Accountable Act(“HFCAA”) all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors which are not inspected by the PCAOB.
• These developments could add uncertainties to the trading of our common stock” on page 44 of this annual report); Risks Related to Our Common Stock (for a more detailed discussion, see “Item 1A.
• Risk Factors- Risks Related to Our Common Stock ” on page 46 of this annual report) ● The market price of our common stock may be volatile or may decline regardless of our operating performance (see “Risk Factors - Risks Related to Our Common Stock - The market price for our common stock may be volatile” on page 46 of this annual report); Transfers of Cash to and from Our Subsidiaries Smart Powerr Corp. is a holding company with no operations of its own.
• Enrome LLP, our independent registered public accounting firm for the fiscal years ended December 31, 2024 and 2025, is based in Singapore and is registered with PCAOB and subject to PCAOB inspection.
• Therefore, we believe Enrome LLP is subject to the determinations as to the inability to inspect or investigate registered firms completely announced by the PCAOB on December 16, 2021.
• These developments could add uncertainties to the trading of our common stock ” on page 44 of this annual report.
• See “ The Opinions recently issued by the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council may subject us to additional compliance requirement in the future ” on page 43 of this annual report.
• We are currently not required to obtain approval from Chinese authorities to list on U.S exchanges, however, if our subsidiaries or the holding company were required to obtain approval or filing in the future and were denied permission from Chinese authorities to list on U.S. exchanges, we will not be able to continue listing on U.S. exchange, which would materially affect the interest of the investors ” on page 32 of this annual report.
• Our Business Models We once sold our products to our customers under two models: the BOT model and the operating lease model, although we emphasize the BOT model which we believe is more economically beneficial to us and to our customers.
• We are in the process of transforming and expanding into an energy storage integrated solution provider business.
• The Company plans to pursue disciplined and targeted expansion strategies for market areas the Company currently does not serve.
• The Company actively seeks and explores opportunities to apply energy storage technologies to new industries or segments with high growth potential, including industrial and commercial complexes, large scale photovoltaic (PV) and wind power stations, remote islands without electricity, and smart energy cities with multi-energy supplies.
• The company signed an Operation and Maintenance Contract for power stations.
• We believe we offer advantages over our competitors in several ways: ● Our management team has over 20 years of industry experience and expertise; ● We have the capabilities to provide TRT, CHPG and WGPG systems, while our competitors usually concentrate on one type or another; ● We have the capabilities and experience in undertaking large scale projects; and ● We once provided BOT or capital lease services to the customers, while our competitors usually use an EPC (engineering, procurement and construction) or turnkey contract model.
• We now provide Operation and Maintenance Services for power stations.
• Employees As of December 31, 2025, we had 22 employees: Management: 4 Employees Administration: 1 Employees Marketing: 1 Employees Accounting & Finance: 4 Employees Project Officer: 12 Employees All of our personnel are employed full-time and none is represented under collective bargaining agreements.
• During fiscal years 2025 and 2024, we did not make any material insurance claims in relation to our business.
• We now do not have such business in 2025 and 2024.
• In addition, our business could be affected by public health epidemics, such as the outbreak of avian influenza, severe acute respiratory syndrome, or SARS, Zika virus, Ebola virus, COVID-19 or other disease.
• Should there be such a health epidemic in the future, our business, results of operations, financial condition and prospects could be materially adversely affected to the extent that such health epidemics weaken the Chinese and global economy in general.
• Therefore, we believe Enrome LLP is subject to the determinations as to the inability to inspect or investigate registered firms announced by the PCAOB on December 16, 2021.
• However, recent developments with respect to audits of China-based companies create uncertainty about the ability of Enrome LLP to fully cooperate with the PCAOB’s request for audit workpapers without the approval of the Chinese authorities.
• If we fail to meet all applicable Nasdaq requirements and the Nasdaq Stock Market LLC determines to delist our common stock, the delisting could adversely affect the market liquidity of our common stock, impair the value of our common stock and harm our business.
• On August 1, 2025, the Company received a letter from the Staff notifying the Company that the Staff had determined that for the last 10 consecutive business days, from July 18, 2025 to July 31, 2025, the closing bid price for the Company’s common stock was at least $1.00 per share, and, accordingly, the Company has regained compliance with Listing Rule 5550(a)(2)and the matter is now closed.
• There can be no assurance that we will continue to maintain compliance with the requirements for listing our common stock on Nasdaq.
• Any potential delisting of our common stock from the Nasdaq Capital Market would likely result in decreased liquidity and increased volatility for our common stock and would adversely affect our ability to raise additional capital or to enter into strategic transactions.
• Any potential delisting of our common stock from the Nasdaq Capital Market would also make it more difficult for our stockholders to sell our common stock in the public market.
• Additionally, the market price of our common stock may decline further and stockholders may lose some or all of their investment.
• As of December 31, 2025, approximately 0.025% of our $157.6 million in assets was in cash.

Gone since FY2024

• Risk Factors ” beginning on page 28 of this annual report.
• Risks Related to Our Business and Industry ● Our business could be materially harmed by the ongoing coronavirus (COVID-19) pandemic (see “ Risk Factors - Risks Related to Our Business and Industry - We face risks related to natural disasters, extreme weather conditions, health epidemics and other catastrophic incidents, which could significantly disrupt our operations. ” on page 33 of this annual report); ● Changes in the economic and credit environment could have an adverse effect on demand for our projects, which would in turn have a negative impact on our results of operations, our cash flows, our financial condition, our ability to borrow and our stock price (see “ Risk Factors - Risks Related to Our Business and Industry - Changes in the economic and credit environment could have an adverse effect on demand for our projects, which would in turn have a negative impact on our results of operations, our cash flows, our financial condition, our ability to borrow and our stock price. ” on page 29 of this annual report); ● Changes in the growth of demand for or pricing of electricity could reduce demand for our waste energy recycling projects, which could materially harm our ability to grow our business (see “ Risk Factors - Risks Related to Our Business and Industry - Changes in the growth of demand for or pricing of electricity could reduce demand for our waste energy recycling projects, which could materially harm our ability to grow our business ” on page 29 of this annual report); ● We operate in an emerging competitive industry and if we are unable to compete successfully our revenue and profitability will be adversely affected (see “ Risk Factors - Risks Related to Our Business and Industry - We operate in an emerging competitive industry and if we are unable to compete successfully our revenue and profitability will be adversely affected ” on page 31 of this annual report); Risks Related to Doing Business in China (for a more detailed discussion, see “Item 1A.
• Risk Factors-Risks Related to Doing Business in China” on page 34 of this annual report) ● We may rely on dividends paid by our subsidiaries for our cash needs.
• Any limitation on the ability of our subsidiaries to make dividend payments to us, or any tax implications of making dividend payments to us, could limit our ability to pay our parent company expenses or pay dividends to holders of our common stock ” on page 34 of this annual report); ● The Chinese government exerts substantial influence over the manner in which we conduct our business activities and may intervene or influence our operations at any time with little advance notice, which could result in a material change in our operations and the value of our common stock (see “ Risk Factors -The Chinese government exerts substantial influence over the manner in which we must conduct our business activities and may intervene or influence our operations at any time with little advance notice, which could result in a material change in our operations and the value of our common stock ” on page 35 of this annual report); ● The M&A Rules and certain other PRC regulations establish complex procedures for some acquisitions of Chinese companies by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in China (see “ Risk Factors - The M&A Rules and certain other PRC regulations establish complex procedures for some acquisitions of Chinese companies by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in China ” on page 38 of this annual report); ● China’s legal system is evolving and has inherent uncertainties that could limit the legal protection available to you (see “ Risk Factors - Risks Related to Doing Business in China - Uncertainties with respect to the PRC legal system could adversely affect us” on page 43 of this annual report); ● We may be exposed to liabilities under the Foreign Corrupt Practices Act and Chinese anti-corruption law (see “ Risk Factors - Risks Related to Doing Business in China - We may be exposed to liabilities under the Foreign Corrupt Practices Act and Chinese anti-corruption law ” on page 41 of this annual report); ● The joint statement by the SEC and the Public Company Accounting Oversight Board (United States), or the “PCAOB,” proposed rule changes submitted by Nasdaq and the Holding Foreign Companies Accountable Act(“HFCAA”) all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors which are not inspected by the PCAOB.
• These developments could add uncertainties to the trading of our common stock ” on page 46 of this annual report); Risks Related to Our Common Stock (for a more detailed discussion, see “Item 1A.
• Risk Factors- Risks Related to Our Common Stock ” on page 48 of this annual report) ● The market price of our common stock may be volatile or may decline regardless of our operating performance (see “ Risk Factors - Risks Related to Our Common Stock - The market price for our common stock may be volatile ” on page 48 of this annual report); Transfers of Cash to and from Our Subsidiaries Smart Powerr Corp. is a holding company with no operations of its own.
• Kreit & Chiu CPA LLP (“Kreit & Chiu,” formerly Paris Kreit & Chiu CPA LLP), the independent registered public account firm that issued the audit report for the fiscal year ended December 31, 2022 and 2021 included elsewhere in this annual report, as an auditor of companies that are traded publicly in the U.S. and a firm registered with the PCAOB, is subject to laws in the U.S pursuant to which the PCAOB conducts regular inspections to assess such auditor’s compliance with the applicable professional standards.
• Kreit & Chiu is headquartered in New York, New York, and is subject to inspection by the PCAOB on a regular basis.
• Enrome LLP, our independent registered public accounting firm for the fiscal years ended December 31, 2023 and 2024, is based in Singapore and is registered with PCAOB and subject to PCAOB inspection.
• Therefore, we believe neither Kreit & Chiu, our previous auditor, nor Enrome LLP, our current auditor, is subject to the determinations as to the inability to inspect or investigate registered firms completely announced by the PCAOB on December 16, 2021.
• These developments could add uncertainties to the trading of our common stock ” on page 46 of this annual report.
• See “ The Opinions recently issued by the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council may subject us to additional compliance requirement in the future ” on page 46 of this annual report.
• We are currently not required to obtain approval from Chinese authorities to list on U.S exchanges, however, if our subsidiaries or the holding company were required to obtain approval or filing in the future and were denied permission from Chinese authorities to list on U.S. exchanges, we will not be able to continue listing on U.S. exchange, which would materially affect the interest of the investors ” on page 35 of this annual report.
• Erdos TCH - Joint Venture On April 14, 2009, the Company formed Erdos TCH as a joint venture (the “JV” or “Erdos TCH”) with Erdos Metallurgy Co., Ltd.
• (“Erdos”) to recycle waste heat from Erdos’ metal refining plants to generate power and steam to be sold back to Erdos.
• The JV has a term of 20 years with a total investment for the project estimated at $79 million (RMB 500 million) and an initial investment of $17.55 million (RMB 120 million).
• Erdos contributed 7% of the total investment for the project, and Xi’an TCH contributed 93%.
• According to Xi’an TCH and Erdos’ agreement on profit distribution, Xi’an TCH and Erdos will receive 80% and 20%, respectively, of the profit from the JV until Xi’an TCH receives the complete return of its investment.
• Xi’an TCH and Erdos will then receive 60% and 40%, respectively, of the profit from the JV.
• On June 15, 2013, Xi’an TCH and Erdos entered into a share transfer agreement, pursuant to which Erdos transferred and sold its 7% ownership interest in the JV to Xi’an TCH for $1.29 million (RMB 8 million), plus certain accumulated profits as described below.
• Xi’an TCH paid the $1.29 million in July 2013 and, as a result, became the sole stockholder of Erdos TCH.
• In addition, Xi’an TCH is required to pay Erdos accumulated profits from inception up to June 30, 2013 in accordance with the supplementary agreement entered on August 6, 2013.
• In August 2013, Xi’an TCH paid 20% of the accumulated profit (calculated under PRC GAAP) of $226,000 to Erdos.
• Erdos TCH currently has two power generation systems in Phase I with a total of 18 MW power capacity, and three power generation systems in Phase II with a total of 27 MW power capacity.
• The power generation systems were built in 2009, and it is now 13 years old.
• The equipment is obsolete and the efficiency of the power generation systems is declining year by year.
• The current power generation efficiency can only reach 30%, and the equipment needs to be upgraded.
• The Erdos government has requested the Erdos to carry out a comprehensive technical upgrade of its ferrosilicon production line to meet the city’s energy-saving targets.
• Erdos is researching the technical rectification scheme.
• After the scheme is determined, the Company will carry out supporting technical transformation for our waste heat power station project.
• Before it goes into production, the Company is still entitled to a compensation of RMB 1 million per month.
• After considering the challenging economic conditions facing Erdos, and to maintain the long-term cooperative relationship between the parties, which we believe will continue to produce long-term benefits, on April 28, 2016, Erdos TCH and Erdos entered into a supplemental agreement, effective May 1, 2016.
• Under the supplemental agreement, Erdos TCH cancelled monthly minimum lease payments from Erdos, and agreed to charge Erdos based on actual electricity sold at RMB 0.30 / KWH, which such price will be adjusted annually based on prevailing market conditions.
• The Company evaluated the modified terms for payments based on actual electricity sold as minimum lease payments as defined in ASC 840-10-25-4, since lease payments that depend on a factor directly related to the future use of the leased property are contingent rentals and, accordingly, are excluded from minimum lease payments in their entirety.
• The Company wrote off the net investment receivables of these leases at the lease modification date.
• Our Business Models We have sold our products to our customers under two models: the BOT model and the operating lease model, although we emphasize the BOT model which we believe is more economically beneficial to us and to our customers.
• BOT Model We primarily engage in the BOT model to provide waste-to-energy solutions to our customers: “Build” We work directly with customers for each of our waste-to-energy projects.
• Our working process starts with a team of engineers that assesses and analyzes the specific needs of the customer to establish the design layout, equipment procurement list and capital expenditure budget for the project.
• Our sales team works closely with our engineering staff to present and negotiate the model with the customer.
• After signing a contract, we finance the entire capital expenditure budget ourselves and commence the construction and installation of the project.

and 84 more.