Smart Powerr Corp.

Smart Powerr Corp. operates in the waste energy recycling and energy efficiency solutions industry in China, focusing on capturing industrial waste pressure, heat, and gas to generate electricity for energy-intensive industries such as steel, cement, nonferrous metal, and petrochemicals. The company is in the process of transforming into an energy storage integrated solution provider, targeting new segments including industrial and commercial complexes, large scale photovoltaic and wind power stations, remote islands without electricity, and smart energy cities with multi-energy supplies. The Chinese government has promoted recycling and energy efficiency through policies such as the 14th Five-Year Plan, which aims to reduce energy consumption per unit of GDP by 13.5% and carbon dioxide emission per unit of GDP by 18% from 2020 to 2025, and the New Energy Storage Guidance, which estimates more than 30 million kilowatts (30GW+) of new energy storage projects will be installed by 2025.

The company faces competition from state-owned research institutes and their wholly owned construction companies, such as Equipment and System Engineer Co., Ltd. of Hangzhou Steam Turbine & Power Group and Sinoma Development Co., Ltd., as well as private companies including China Senyuan Electronic Co., Ltd., Dalian East New Energy Development Co. Ltd., Top Resource Conservation Engineering Co., Ltd., and Nanjing Kaisheng Kaineng Environmental Energy. Management believes the company offers advantages including a management team with over 20 years of industry experience, capabilities to provide TRT, CHPG and WGPG systems while competitors usually concentrate on one type, capabilities and experience in undertaking large scale projects, and the ability to provide Operation and Maintenance Services for power stations.

The company generates revenue primarily through a Build-Operate-Transfer (BOT) model, providing energy saving and recovery facilities for energy intensive industries, and is transitioning to an energy storage integrated solution provider. For the year ended December 31, 2025, the company recognized revenue of $262,509 ¹ from an Operation and Maintenance Contract for power stations, with a total contract amount of RMB 3.0 million (US$0.4 million) per annum, starting from 2025 to 2035 for 10 years. The company's customers are mainly mid- to large-size enterprises in China involving high energy-consuming businesses, and it markets and sells projects nationwide through a direct sales force of two employees based in Xi'an, China.

The company's waste energy recycling projects focus on waste pressure to energy systems, waste heat to energy systems, and waste gas power generation systems. Specific projects include the Pucheng Biomass Power Generation Projects, where Xi'an TCH leased a set of 12MW BMPG systems to Pucheng at a minimum of $279,400 (RMB 1,900,000) per month for a term of 15 years for Phase I, and a consolidated lease for two 12 MW BMPG systems at RMB 3.8 million ($0.63 million) per month for Phase II, with the term from September 2013 to June 2025. The Shenqiu Yuneng Biomass Power Generation Projects involved a 12 MW BMPG system leased at $286,000 (RMB 1.8 million) per month for 11 years for Phase I, and a second 12 MW system leased at $239,000 (RMB 1.5 million) per month for 9.5 years for Phase II. The Yida Coke Oven Gas Power Generation Projects involved a 15 MW coke oven WGPG station leased at RMB 3 million ($0.49 million) per month from June 28, 2014 to June 27, 2029. The Chengli Waste Heat Power Generation Projects involved a 25 MW CDQ system and CDQ WHPG system. The Tianyu Waste Heat Power Generation Project involved two sets of 25 MW CDQ systems and CDQ WHPG systems, with an energy saving fee of RMB 0.534 ($0.087) per kilowatt hour for a term of 20 years. The Zhongtai Waste Heat Power Generation Energy Management Cooperative Agreement involved a 150 ton per hour CDQ system and a 25 MW CDQ WHPG system, with an energy saving fee at RMB 0.534 ($0.089) per KWH for the first 10 years and RMB 0.402 ($0.067) per KWH for the second 10 years, and a payment term of 20 years.

The company is in the process of transforming into an energy storage integrated solution provider, actively seeking 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. The company also has a 16.3% owned subsidiary, Beijing Hongyuan Recycling Energy Investment Center, and a 90% owned subsidiary, Xi'an Zhonghong Energy Technology Co., Ltd.

On February 18, 2025, the company entered into securities purchase agreements to issue and sell an aggregate of 8,029,851 shares of common stock at an aggregate purchase price of up to $5,380,000 ², with a purchase price of $0.67 ³ per share. Mr. Guohua Ku, the CEO and Chairman, participated and purchased 2,925,373 ⁴ shares. In April 2025, the Compensation Committee granted two employees 124,126 ⁵ shares of Common Stock under the 2015 Equity Plan. On October 13, 2025, the company adopted the Smart Powerr Corp. 2025 Inducement Award Plan, reserving up to 1,000,000 ⁶ shares of Common Stock. As of December 31, 2025, there were 81,000 ⁷ shares available for future issuance under the Inducement Plan. The company also had litigation matters, including a lawsuit by Beijing Hongyuan Recycling Energy Investment Center against Xi'an TCH, with an accrued litigation expense of $2.10 million ⁸ as of December 31, 2024, and a judgment requiring Xi'an Zhonghong to pay a loan principal of RMB 77 million ($11.06 million) ⁹ with loan interest of RMB 2,418,449 ($0.35 million) ¹⁰, which was paid in November 2024.

For the fiscal year ended December 31, 2025, total sales were $262,509 ¹¹, compared to $0 ¹² for the year ended December 31, 2024. Gross profit was $116,614 ¹³ with a gross margin of 44% ¹⁴. Net loss was $2,900,041 ¹⁵ for 2025, compared to a net loss of $1,559,012 ¹⁶ for 2024, representing an increase in net loss of $1,341,029 ¹⁷. The increase in net loss was mainly driven by rising operating expenses and the reversal of impairment provision. Cash and equivalents were $40,156 ¹⁸ as of December 31, 2025, compared to $25,341 ¹⁹ as of December 31, 2024.

The company plans to pursue disciplined and targeted expansion strategies for market areas it currently does not serve, actively seeking and exploring 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 is in the process of transforming into an energy storage integrated solution provider. The New Energy Storage Guidance estimates that more than 30 million kilowatts (30GW+) of new energy storage projects will be installed by 2025, and from 3.28GW at the end of 2020 to 30GW in 2025, the scale of the new energy storage market is expected to expand 10 times the current level in the next five years, with an annual compound annual growth rate of more than 55%.

The company plans to maintain its core verticals in waste-to-energy projects for specific verticals such as steel, cement, nonferrous metal and coal mining, and intends to expand its waste-to-energy power generating capacity rapidly to meet anticipated growth in demand and gain market share. The company continually identifies potential customers in its core verticals.The company plans to devote resources to research and development to enhance its waste-to-energy design and engineering capabilities, anticipating that its in-house design and engineering team will provide additional competitive advantages. The company's R&D team has the support of on-site and project engineers and a cooperative relationship with Shanghai Electric Distributed Energy Sources Technology Co., Ltd. As of December 31, 2025, the company had 22 employees: 4 in management, 1 in administration, 1 in marketing, 4 in accounting & finance, and 12 project officers.

The filing does not specify R&D spending levels, capital expenditure plans, or share repurchase authorization amounts. The company did not pay any cash dividends on its common stock in 2025 and does not anticipate paying any cash dividends in the foreseeable future. The company currently intends to retain future earnings, if any, to finance operations and the expansion of its business.

The company faces structural headwinds including changes in the economic and credit environment which could have an adverse effect on demand for its projects, changes in the growth of demand for or pricing of electricity which could reduce demand for its waste energy recycling projects, and the risk that decreases in the price of coal, oil and gas or a decline in popular support for green energy technologies could reduce demand. The company also faces risks related to natural disasters, extreme weather conditions, health epidemics, and other catastrophic incidents which could significantly disrupt its operations.

The company faces significant regulatory and legal constraints operating in China, including uncertainties with respect to the PRC legal system, the Chinese government's substantial influence over business activities, and potential requirements for approval from Chinese authorities for overseas listings. The company is subject to the Overseas Listing Trial Measures which require filing with the CSRC for subsequent securities offerings, and failure to comply could result in fines of between RMB1,000,000 and RMB10,000,000 ²⁵ for the company, and fines from RMB500,000 to RMB5,000,000 ²⁶ for persons-in-charge. The company also faces risks related to the Holding Foreign Companies Accountable Act, which could result in delisting if its auditor is not subject to PCAOB inspections for two consecutive years.

The company faces material risks from its reliance on dividends from PRC subsidiaries, which are subject to PRC laws requiring allocation of at least 10% of annual after-tax profits to statutory reserves until the reserve reaches 50% of registered capital, limiting distributions. The company is exposed to significant regulatory uncertainty in China, including potential requirements under the Overseas Listing Trial Measures that could impose fines of between RMB1,000,000 and RMB10,000,000 ²⁷ for failure to file with the CSRC for subsequent offerings. The company's auditor, Enrome LLP, is based in Singapore and subject to PCAOB inspection, but the company cannot assure that it will meet PCAOB inspection requirements, and failure could result in delisting under the Holding Foreign Companies Accountable Act if the auditor is not subject to PCAOB inspections for two consecutive years. The company has significant litigation exposure, including a judgment requiring payment of RMB 80,288,184 ($11.53 million) ²⁸ in total for loan principal, interest, enforcement fees, late fees, and other fees, with RMB 77 million ($11.06 million) ²⁹ principal paid in November 2024 but interest still outstanding. The company's business depends on the availability of waste energy from customers, and its power generating capacity depends on an adequate supply of raw materials, with contracts often structured so that compensation is based on the amount of energy supplied.

Management's message emphasizes the company's transformation from a waste energy recycling pioneer to an energy storage integrated solution provider, with a focus on disciplined and targeted expansion into new market areas. The key strategic priorities are: (1) maintaining core verticals in waste-to-energy projects to increase market share in China, (2) expanding into the new business of energy storage with future high growth potentials, and (3) continually enhancing research and development efforts. Management highlights the company's advantages including over 20 years of industry experience, capabilities across multiple waste energy system types, and the ability to provide Operation and Maintenance Services for power stations.