HCAI 6-K
Huachen AI Parking Management Technology Holding Co., Ltd (HCAI)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO
RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of September
Commission File Number:
(Translation of registrant’s name into English)
Room 201, 2nd Floor,
No. 6395 Hutai Road, Baoshan District,
Shanghai, China
(Address of principal executive office)
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 ☐
INFORMATION CONTAINED IN THIS FORM 6-K REPORT
Huachen AI Parking Management Technology Holding Co., Ltd (the “Company”) is hereby furnishing this report on Form 6-K (the “Report”) to provide the Unaudited Interim Condensed Consolidated Financial Statements of the Company as of and for the six months ended June 30, 2026, included as Exhibit 99.1 of this Report, and the Management’s Discussion and Analysis of Financial Condition and Results of Operations as of and for the six months ended June 30, 2026, included as Exhibit 99.2 of this Report.
This Report is incorporated by reference into the Company’s Registration Statement on Form F-3 filed with the Securities and Exchange Commission on June 5, 2026 (Registration No. 333-296529).
Exhibits.
The following exhibits are being filed herewith:
| Exhibit No. | Description | |
| 99.1 | Unaudited Interim Condensed Consolidated Financial Statements for the Six Months Ended June 30, 2026 | |
| 99.2 | Management’s Discussion and Analysis of Financial Condition and Results of Operations for the Six Months Ended June 30, 2026 | |
| 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). |
1
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.
| Date: September 30, 2026 | Huachen AI Parking Management Technology Holding Co., Ltd, | |
| By: | /s/ Bin Lu | |
| Name: | Bin Lu | |
| Title: | Chief Executive Officer | |
2
Exhibit 99.1
Huachen AI Parking Management Technology Holding Co., Ltd
CONDENSED CONSOLIDATED BALANCE SHEETS
(Expressed in U.S. Dollars, except for the number of shares)
| As of | ||||||||
| June 30, 2026 |
December 31, 2025 |
|||||||
Unaudited US$ |
US$ | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | ||||||||
| Accounts receivable | | |||||||
| Other receivables - related parties | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Non-current asset | ||||||||
| Right-of-use asset, net | ||||||||
| Total non-current asset | ||||||||
| TOTAL ASSETS | ||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable | ||||||||
| Accrued liabilities and other payables | ||||||||
| Other payables - related parties | ||||||||
| Taxes payable | ||||||||
| Lease liability - current | ||||||||
| Total current liabilities | ||||||||
| Non-current liability | ||||||||
| Lease liability – non-current | ||||||||
| Total non-current liability | ||||||||
| TOTAL LIABILITIES | ||||||||
| Shareholders’ equity | ||||||||
| Class A ordinary shares (par value of US$ | ||||||||
| Class B ordinary shares (par value of US$ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficits | ( | ) | ( | ) | ||||
| Accumulated other comprehensive income | ||||||||
| TOTAL HUACHEN CAYMAN SHAREHOLDERS’ EQUITY | ||||||||
| Non-controlling interest | ( | ) | ( | ) | ||||
| TOTAL SHAREHOLDERS’ EQUITY | ||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
F-1
Huachen AI Parking Management Technology Holding Co., Ltd
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Expressed in U.S. Dollars, except for the number of shares)
For the Six Months Ended June 30, |
||||||||
| 2026 | 2025 | |||||||
| REVENUE | ||||||||
| Revenue | $ | $ | ||||||
| Total revenue | ||||||||
| COST OF REVENUE AND RELATED TAX | ||||||||
| GROSS PROFIT | ||||||||
| OPERATING EXPENSES | ||||||||
| General and administrative expenses | ||||||||
| Total operating expenses | ||||||||
| INCOME(LOSS) FROM OPERATIONS | ( | ) | ||||||
| OTHER INCOME (EXPENSE) | ||||||||
| Interest income | ( | ) | ||||||
| Other expenses, net | ( | ) | ||||||
| Total other expense, net | ( | ) | ( | ) | ||||
| INCOME(LOSS) BEFORE INCOME TAX PROVISION | ( | ) | ||||||
| Income tax expense | ||||||||
| INCOME(LOSS) FROM CONTINUING OPERATIONS | ( | ) | ||||||
| Income from discontinued operation (net of tax) | ||||||||
| NET INCOME | ||||||||
| Net (loss) income attributable to the noncontrolling interest | ||||||||
| Continuing operations | ||||||||
| Discontinued operations | ||||||||
| Net income attributable to common shareholders | ||||||||
| Continuing operations | ( | ) | ||||||
| Discontinued operations | ||||||||
| OTHER COMPREHENSIVE INCOME | ||||||||
| Foreign currency translation income | ||||||||
| Other comprehensive income, net of tax | ||||||||
| TOTAL COMPREHENSIVE INCOME | $ | |||||||
| Earnings per common share - basic and diluted | ||||||||
| Continuing operations | ( | ) | ||||||
| Discontinued operations | ||||||||
| Weighted average shares - basic and diluted | ||||||||
F-2
Huachen AI Parking Management Technology Holding Co., Ltd
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Expressed in U.S. Dollars, except for the number of shares)
| Accumulated | ||||||||||||||||||||||||||||||||||||||||
| Class A Ordinary Shares |
Class B Ordinary Shares |
Additional Paid in |
Statutory | Other Retained |
Non- Comprehensive |
Controlling | ||||||||||||||||||||||||||||||||||
| Shares* | Amount | Shares | Amount | Capital | Reserves | Earnings | Income (Loss) | Interests | Total | |||||||||||||||||||||||||||||||
| Balance as of December 31, 2024 | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Net income | - | |||||||||||||||||||||||||||||||||||||||
| Issuance of shares for cash | ||||||||||||||||||||||||||||||||||||||||
| Re-designation of shares | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Additional Paid-in Capital | - | - | ||||||||||||||||||||||||||||||||||||||
| Allocation to non-controlling interests | - | - | ||||||||||||||||||||||||||||||||||||||
| Foreign currency translation gain | - | - | ||||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2025 (Unaudited) | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2025 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Net income | - | |||||||||||||||||||||||||||||||||||||||
| Foreign currency translation gain | - | - | ||||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2026 (Unaudited) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
F-3
Huachen AI Parking Management Technology Holding Co., Ltd
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in U.S. Dollars, except for the number of shares)
For
the Six Months Ended |
||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | $ | ||||||
| Net income from discontinued operations | ||||||||
| Net income(loss) from continuing operations | ( | ) | ||||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||
| Amortization of right-of-use asset | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ||||||||
| Other receivable - related parties | ( | ) | ||||||
| Accounts payables | ( | ) | ||||||
| Accrued liabilities and other payables | ||||||||
| Lease liability | ( | ) | ||||||
| Prepaid expenses and other current assets | ( | ) | ||||||
| Taxes payable | ||||||||
| Net cash provided by (used in) operating activities - continuing operations | ( | ) | ||||||
| Net cash used in operating activities - discontinued operations | ( | ) | ||||||
| Net cash provided (used in) by operating activities | ( | ) | ||||||
| Cash flows from financing activity: | ||||||||
| Proceeds from additional paid-in capital | ||||||||
| Net cash provided by financing activities - continuing operations | ||||||||
| Net cash used in financing activities - discontinued operations | ( | ) | ||||||
| Net cash provided by financing activity | ||||||||
| Effect of exchange rate changes on cash from continuing operations | ( | ) | ||||||
| Effect of exchange rate changes on cash from discontinued operations | ||||||||
| Net change in cash, including cash from discontinued operations | ||||||||
| Cash, including cash from discontinued operations - beginning of year | ||||||||
| Cash, including cash from discontinued operations - end of year | ||||||||
| Less cash from discontinued operations | ||||||||
| Cash from continuing operations, end of year | ||||||||
Supplemental of cash disclosure information: |
||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for income tax | ||||||||
F-4
Huachen AI Parking Management Technology Holding Co., Ltd AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
For the Six Months Ended June 30, 2026 and 2025
Note 1 — ORGANIZATION AND BUSINESS DESCRIPTION
Huachen AI Parking Management Technology Holding Co., Ltd (“Huachen” or the “Company”) is a company that was established under the laws of Cayman Islands as a holding company on September 30, 2021. Our main business operations are conducted through our subsidiaries in the People’s Republic of China. We are a comprehensive electric vehicle charging solutions and equipment structural parts provider.
On December 22, 2025, the Company and Hua Chen Intelligent Technology Co., Limited, a company formed under the laws of Hong Kong and a subsidiary of the Company (the “Target”) entered into a share purchase agreement (the “Agreement”) with a buyer (the “Buyer”). Pursuant to the Agreement, the Company agreed to sell and the Buyer agreed to purchase all the issued and outstanding shares of the Target at a purchase price of $
As of June 30, 2026, the Company’s subsidiaries are as follows:
| Percentage of | ||||||||
| direct/indirect | ||||||||
| Date of | Jurisdiction of | Economic | ||||||
| Subsidiaries | Incorporation | Formation | Ownership | |||||
| Yu He Chuang Co., Ltd (“YHC HK”) | % | |||||||
| Chuang Yu He (Shanghai) Industrial Co., Ltd. (“CYH Shanghai”) | % | |||||||
| Hangzhou Zhihuichong Technology Co., Ltd. (“Hangzhou ZHC”) | % | |||||||
| Jiaxing Xuchen Technology Co., Ltd. (“Jiaxing XC”) | % | |||||||
F-5
The Company, through a series of transactions which are accounted for as a reorganization of entities under common control (the “Reorganization”), became the ultimate parent of its subsidiaries. The reorganization involved: the formation of the Company’s wholly-owned subsidiary-YHC HK and YHC HK’s wholly owned subsidiary — CYH Shanghai.
Before and after the reorganization, the Company, together with its subsidiaries, is effectively controlled by the same shareholders, and therefore the reorganization is considered as a recapitalization of entities under common control in accordance with Accounting Standards Codification (“ASC”) 805-50-25. The consolidation of the Company and its subsidiaries have been accounted for at historical cost and prepared on the basis as if the aforementioned transactions had become effective as of the beginning of the first period presented in the accompanying consolidated financial statements in accordance with ASC 805-50-45-5.
Note 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Method of accounting
The accompanying unaudited consolidated financial statements include the accounts of the Company and its subsidiaries (collectively the “Company”). Management has eliminated all significant inter-company balances and transactions in preparing the accompanying unaudited consolidated financial statements.
Management has prepared the accompanying unaudited consolidated financial statements and these notes in accordance with generally accepted accounting principles in the United States (“US GAAP”) for interim financial information. The Company maintains its general ledger and journals with the accrual method accounting.
Principles of consolidation
The consolidated financial statements include the financial statements of the Company and its subsidiaries. All intercompany transactions and balances are eliminated upon consolidation. All intercompany transactions and balances between the Company and its subsidiaries are eliminated upon consolidation.
Subsidiaries are those entities in which the Company, directly or indirectly, controls more than one half of the voting power; or has the power to govern the financial and operating policies, to appoint or remove the majority of the members of the board of directors, or to cast a majority of votes at the meeting of directors.
Non-controlling interest represents the portion of the net assets of subsidiaries attributable to interests that are not owned by the Company. The non-controlling interest is presented in the consolidated balance sheets, separately from equity attributable to the shareholders of the Company. Non-controlling interest’s operating result is presented on the face of the consolidated statements of income and comprehensive income as an allocation of the total income for the year between non-controlling shareholders and the shareholders of the Company.
Uses of estimates
In preparing the unaudited condensed consolidated financial statements in conformity with US GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information as of the date of the unaudited condensed consolidated financial statements.
Significant estimates required to be made by management are specifically driven by the Company’s current asset and liability structure, which include, but are not limited to: (i) the allowance for credit losses (CECL) on trade accounts receivable and other receivables from related parties, (ii) the assessment of collectability and valuation of prepaid expenses and other current assets, (iii) the determination of the incremental borrowing rate used to measure lease liabilities and the corresponding right-of-use assets, and (iv) provisions necessary for taxes payable and other contingent liabilities. Actual results could differ from those estimates.
Cash and cash equivalents
Cash and cash equivalents represent cash at bank which are unrestricted as to withdrawal and use, and which have original maturities of three months or less.
F-6
Accounts receivable
Accounts receivable are presented net of allowance for credit losses.
Accounts receivable are recorded at the gross billing amount less an allowance for any uncollectible accounts due from the customers. Accounts receivable do not bear interest.
Since January 1, 2023, 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 and records the allowance for credit losses as an offset to accounts receivable and the estimated credit losses charged to the allowance is classified as “General and administrative expenses” in the consolidated statements of comprehensive income(loss). The Company assesses collectability by reviewing accounts receivable on aging schedules because the accounts receivable were primarily consisted of receivables arising from sales of our products. In determining the amount of the allowance for credit losses, the Company considers historical collectability based on past due status, the age of the balances, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect the Company’s ability to collect from customers. Delinquent account balances are written-off against the allowance for expected credit.
As of June 30, 2026 and December 31, 2025, there is allowance for credit losses balances from continuing operations.
Prepaid expenses and other current assets
Prepaid expenses and other current assets are recorded at cost less any provision for impairment.
Prepaid expenses primarily include Nasdaq membership fees, which are amortized on a straight-line basis over the period benefited of five years. As of June 30, 2026 and December 31, 2025, the balance of prepaid expenses from Nasdaq membership is $
Other current assets primarily consist of amounts due from third-party individuals for fund transactions and deposits for daily operations. The Company reviews the recoverability of other current assets on a regular basis and records an allowance for credit loss when collection is considered doubtful. As of June 30, 2026 and December 31, 2025, there is no allowance for credit losses balances from continuing operations.
Accounts payable
Accounts payable are initially recognized at fair value and subsequently measured at amortized cost using the effective interest method. Accounts payable primarily consist of amounts due to suppliers and vendors for goods received in the ordinary course of business. Amounts due to related parties are separately disclosed. Due to their short-term nature, the carrying amounts of accounts payable approximate their fair values. The Company recognizes payables when the risks and rewards associated with the underlying goods have been transferred to the Company and the obligation to pay is established.
F-7
Leases
The Company adopted the new lease standard, ASC 842, Leases (Topic 842) since December 1, 2022. The Company elected the package of practical expedients permitted under the transition guidance within ASC Topic 842, which among other things, allows the Company to carry forward certain historical conclusions reached under ASC Topic 840 regarding lease identification, classification, and the accounting treatment of initial direct costs. The Company elected not to record assets and liabilities on its consolidated balance sheets for any new or existing lease arrangements with lease terms of twelve months or less. The Company recognizes lease expenses for such leases on a straight-line basis over the lease term. The Company elected the transition method which allows entities to initially apply the requirements by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.
Operating lease assets are included within “Right-of-use asset”, and the corresponding operating lease liabilities are included within “Lease liability-current” for the current portion, and within “Lease liability-non-current” for the long-term portion on the consolidated balance sheets as of June 30, 2026 and December 31, 2025.
The initial lease liability is equal to the future fixed minimum lease payments discounted using the Company’s incremental borrowing rate, on a secured basis. The lease term includes optional renewal periods and early termination payments when it is reasonably certain that the Company will exercise those rights. The initial measurement of the right-of-use asset is equal to the initial lease liability plus any initial direct costs and prepayments, less any lease incentives.
Impairment of Long-lived Assets
The Company reviews long-lived assets, including definitive-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the estimated cash flows from the use of the asset and its eventual disposition below are the asset’s carrying value, then the asset is deemed to be impaired and written down to its fair value. There were impairments of these assets as of June 30, 2026 and December 31, 2025.
Fair value of financial instruments
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
| ● | Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. |
| ● | Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted market prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable and inputs derived from or corroborated by observable market data. |
| ● | Level 3 — inputs to the valuation methodology are unobservable. |
Unless otherwise disclosed, the fair value of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, other receivables - related parties, other current assets, accounts payable, other payables - related parties, and accrued liabilities and other payable, approximate the fair value of the respective assets and liabilities as of June 30, 2026 and December 31, 2025 based upon the short-term nature of the assets and liabilities.
Discontinued operations
A component of a reporting entity or a group of components of a reporting entity that are disposed or meet the criteria to be classified as held for sale, such as the management, having the authority to approve the action, commits to a plan to sell the disposal group, should be reported as discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results. Discontinued operations are reported when a component of an entity comprising operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the entity is classified as held for disposal or has been disposed of, if the component either (1) represents a strategic shift or (2) have a major impact on an entity’s financial results and operations. Included in the consolidated statements of operations and comprehensive income (loss), the results from discontinued operations are reported separately from the income and expense from continuing operations and prior periods are presented on a comparative basis. In order to present the financial effects of the continuing operations and discontinued operations, revenues and expenses arising from intra-group transactions are eliminated except for those revenues and expenses that are considered to continue after the disposal of the discontinued operations, if any.
F-8
Revenue recognition
The Company adopted ASC 606 “Revenue Recognition.” It recognizes revenue when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. The Company recognizes revenue based on the consideration specified in the applicable agreement.
Revenue from contracts with customers is recognized using the following five steps:
| 1. | Identify the contract(s) 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 entity satisfies a performance obligation. |
Generally, revenues are recognized when the Company has negotiated the terms of the transaction, which includes determining either the overall price, or price for each performance obligation in the form of a service or a product, the service or product has been delivered to the customer, no obligation is outstanding regarding that service or product, and the Company is reasonably assured that funds have been or will be collected from the customer.
A summary of each of the Company’s revenue streams under ASC 606 is as follows:
Performance obligations satisfied at a point in time
Equipment structural parts income
Revenue from sales of equipment structural parts is recognized when the products are delivered and accepted by customers, which is the point when title has transferred and risk of ownership has passed. Return allowances is determined by an estimate of expected customer merchandise returns, which is calculated based on historical return patterns, and recorded as a refund liability included in accrued liabilities and other payables.
For equipment structural parts sales, the Company passed the control of the goods to the customers at a point in time, typically occurs at the delivery. Revenue from sales of equipment structural parts is recognized when the products are delivered and accepted by customers, which is the point when title has transferred and risk of ownership has passed. There are no other performance obligations in the contract, so we consider there is only one performance obligation for each contract.
For equipment structural parts sales, the transaction price was set up when customer places the purchase order, which in some cases are governed by master sales agreements. Total amount of each transaction was determined based on the unit price multiplied with the delivery quantity of the products ordered, or based on the services priced that was agreed between the parties.
For equipment sales, the Company’s payment terms are generally less than one year. The Company has elected the practical expedient under ASC 606-10-32-18 to not assess whether a contract has a significant financing component.
According to 5-Step revenue analysis, the Company considers customer purchase orders, which in some cases are governed by master sales agreements, to be the contracts with a customer. This purchase order determination guided product sales. The Company signs master agreement with its customers which include the customer’s name, the products’ specifications, payment terms, product acceptance criteria, and other necessary information. The purchase orders, which in some cases are governed by master sales agreements, would be sent to the Company at each time of the purchase. For product, the PO (purchase order) includes types and quantities of goods to be purchased, the place of delivery, and other information relating to the purchase. The master agreement and purchase order signed between the parties create enforceable rights and obligations.
F-9
From time to time, the Company and its customers may renegotiate existing contracts to reflect changes of price and other terms. Such modifications are treated as separate contract if both of the following conditions are met:
| ● | The scope of the contract increases because of the addition of promised goods or services that are distinct. |
| ● | The price of the contract increases by an amount of consideration that reflects the entity’s standalone selling prices of the additional promised goods and any appropriate adjustments to that price to reflect the circumstances of the particular contract. |
The Company considers customer purchase orders, which in some cases are governed by master sales agreements, to be the contracts with a customer. As part of its consideration of the contract, the Company evaluates certain factors including the customer’s ability to pay (or credit risk). For each contract, the Company considers the promise to transfer products or service delivery, each of which are distinct, to be the identified performance obligations.
The Company negotiates with customers for agreed-upon specifications for products or services customer ordered, and such agreed-upon terms are usually documented in the master sales agreement between the Company and its customers.
For product, the Company typically provides
For product sales, the transaction price of a contract is allocated to each distinct goods stated in the purchase order. The price of each distinct goods is determined by the ordered quantities and price quotation.
The summary of the Company’s total revenues by activity categories for the six months ended June 30, 2026 and 2025 was as follows:
| For the Six Months Ended | ||||||||
| June 30, | ||||||||
| 2026 | 2025 | |||||||
| Equipment structural parts | $ | |||||||
| Cubic parking garage | ||||||||
| Maintenance services | ||||||||
| Others | ||||||||
| Total revenue | $ | $ | ||||||
| Timing of Revenue Recognition: | ||||||||
| Performance obligations satisfied over time | $ | $ | ||||||
| Performance obligations satisfied at a point in time | ||||||||
| Total Revenue | $ | $ | ||||||
All revenue for the six months ended June 30 2025 was included under Income from discontinued operations in the Consolidated Statement of Operations and Comprehensive (Loss) Income.
Research and development expenses
In connection with the design and development of cubic parking garage and related equipment products, the Company expense all internal research costs as incurred, which primarily comprise employee costs, internal and external costs related to execution of studies, including manufacturing costs, facility costs of the research center, amortization to intangible assets, and depreciation to plant and equipment used in the research and development activities. For the six months ended June 30, 2026 and 2025, research and development expenses were $ and $
Income taxes
The Company accounts for current income taxes in accordance with the laws of the relevant tax authorities. Deferred income taxes are recognized when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the consolidated financial statements. 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 tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
F-10
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. The amount recognized is the largest amount of tax benefit that is greater than
The Company’s subsidiaries in China are subject to the income tax laws of the PRC. income was generated outside the PRC for the six months ended June 30, 2026 and 2025. As of June 30, 2026, all of the Company’s tax returns of its PRC operating entities remain open for statutory examination by PRC tax authorities.
Share-based compensation
ASC 718-10 requires that share-based payment transactions with employees and nonemployees, such as share options, be measured based on the grant-date fair value of the equity instrument issued and recognized as compensation expense over the requisite service period, with a corresponding addition to equity. Under this method, compensation cost related to employee share options or similar equity instruments is measured at the grant date based on the fair value of the award and is recognized over the period during which an employee is required to provide service in exchange for the award, which generally is the vesting period.
Value added tax (“VAT”)
Sales revenue is reported net of VAT. The VAT is based on gross sales price and VAT rates range up to
Earnings per Share
The Company computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings per Share” (“ASC 260”). ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average common shares outstanding for the period. Diluted presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. For the six months ended June 30, 2026 and 2025, there were dilutive shares.
Foreign currency translation
Since the Company operates all in the PRC, the Company’s functional currency is the Chinese Yuan (“RMB”). The Company’s consolidated financial statements have been translated into the reporting currency U.S. Dollars (“US$”). Assets and liabilities of the Company are translated at the exchange rate at each reporting period end date. Equity is translated at historical rates. Income and expense accounts are translated at the average rate of exchange during the reporting period. The resulting translation adjustments are reported under other comprehensive income (loss). Gains and losses resulting from the translations of foreign currency transactions and balances are reflected in the results of operations.
The RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into US$ at the rates used in translation.
The following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this report:
| For the Six Months Ended | ||||||||
| June 30, | ||||||||
| 2026 | 2025 | |||||||
| Year-end spot rate | US$1=RMB | US$1=RMB | ||||||
| Average rate | US$1=RMB | US$1=RMB | ||||||
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Comprehensive income
Comprehensive income consists of two components, net income/(loss) and other comprehensive income /(loss). Other comprehensive income/(loss) refers to revenue, expenses, gains and losses that under GAAP are recorded as an element of shareholders’ equity but are excluded from net income. Other comprehensive income consists of a foreign currency translation adjustment resulting from the Company not using US$ as its functional currency.
Risks and uncertainties
The main operation of the Company is located in the PRC. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by political, economic, and legal environments in the PRC, as well as by the general state of the PRC economy. The Company’s results may be adversely affected by changes in the political, regulatory and social conditions in the PRC. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations including its organization and structure disclosed in Note 1, this may not be indicative of future results.
The Company’s business, financial condition and results of operations may also be negatively impacted by risks related to natural disasters, extreme weather conditions, health epidemics and other catastrophic incidents, which could significantly disrupt the Company’s operations.
In December 2019, a sudden coronavirus epidemic swept through China and then spread to the rest of the world. For parking field, whether parking equipment manufacturing enterprises or parking management and operation enterprises, due to the significant delay in the working time, normal production cannot be produced, resulting in a decrease in the order volume of parking equipment manufacturing enterprises. Due to the basic stop of travel, parking income has been greatly reduced, and some cities have reduced parking fees, which has further extended the impact on parking income. The extent of the impact on the Company’s future financial results will be dependent on future developments such as the length and severity of the crisis, the potential resurgence of the crisis, future government actions in response to the crisis and the overall impact of the COVID-19 pandemic on the global economy and capital markets, among many other factors, all of which remain highly uncertain and unpredictable. Given this uncertainty, the Company is currently unable to quantify the expected impact of the COVID-19 pandemic on its future operations, financial condition, liquidity and results of operations if the current situation continues.
Recent accounting pronouncements
We consider the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued.
F-12
In April 2026, the FASB issued ASU 2026-01, Equity (Topic 505): Initial Measurement of Paid-in-Kind Dividends on Equity-Classified Preferred Stock. The amendments require PIK dividends to be measured based on agreement rates to improve comparability and eliminate practice diversity. Effective for annual periods beginning after December 15, 2026, and interim periods therein. Early adoption is permitted. The Company is currently evaluating the impact that adoption of this ASU will have on its interim financial statement disclosures.
In May 2026, the FASB issued ASU 2026-02, Environmental Credits and Environmental Credit Obligations (Topic 818). The amendments establish a comprehensive model for the recognition, measurement, presentation, and disclosure of environmental credits and compliance obligations. The amendments are effective for fiscal years beginning after December 15, 2027, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact that adoption of this ASU will have on its interim financial statement disclosures.
In December 2025, the FASB issued ASU 2025-11, which clarifies the scope and disclosure requirements for interim financial reporting under ASC 270. The amendments introduce a principle requiring disclosure of events and transactions occurring after the end of the most recent annual reporting period that have a material impact on the entity and consolidate certain interim disclosure requirements. The amendments are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact that adoption of this ASU will have on its interim financial statement disclosures.
In November 2025, the FASB issued ASU 2025-08, Financial Instruments — Credit Losses (“Topic 326”): Purchased Loans (“ASU 2025-08”). The amendments expand the population of acquired loans subject to the gross-up approach, treating non-credit-deteriorated loans (excluding credit cards) as “seasoned” if purchased at least 90 days after origination or acquired in a business combination. ASU 2025-08 is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the impact that adoption of this ASU will have on its interim financial statement disclosures.
In September 2025, the FASB issued ASU 2025-07, Derivatives and Hedging (“Topic 815”) and Revenue from Contracts with Customers (“Topic 606”): Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract (“ASU 2025-07”). ASU 2025-07, expands an existing scope exception under Topic 815 to exclude non-exchange-traded contracts where the underlying is based on the operations or activities specific to one of the contract parties. The Company is currently evaluating the impact of this ASU on its financial statements.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”). The amendments in ASU 2025-05 provide entities with a practical expedient to simplify the estimation of expected credit losses on current accounts receivable and current contract assets that arise from transactions accounted for under ASC 606, Revenue from Contracts with Customers (“ASC 606”) by allowing the assumption that current conditions as of the balance sheet date will not change during the remaining life of the asset. ASU 2025-05 is effective for the Company for its for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the impact ASU 2025-05 will have on its financial statements.
Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company’s consolidated financial statements upon adoption.
F-13
NOTE 3 — DISCONTINUED OPERATIONS AND DECONSOLIDATION
In accordance with ASC 205-20 Presentation of Financial Statements: Discontinued Operations, a disposal of a component of an entity or a group of components of an entity is required to be reported as discontinued operations if the disposal represents a strategic shift that has (or will have) a major impact on an entity’s operations and financial results when the components of an entity meets the criteria in ASC paragraph 205-20-45-10. In the period in which the component meets the held for sale or discontinued operations criteria the major assets, other assets, current liabilities and non-current liabilities shall be reported as a component of total assets and liabilities separate from those balances of the continuing operations. At the same time, the results of all discontinued operations, less applicable income taxes (benefit), shall be reported as components of net income (loss) separate from the income (loss) of continuing operations.
Disposition of a Subsidiary:
On December 22, 2025, the Company and Hua Chen Intelligent Technology Co., Limited, a company formed under the laws of Hong Kong and a subsidiary of the Company (the “Target”) entered into a share purchase agreement (the “Agreement”) with an unrelated third party, Chen Yi San (the “Buyer”). Pursuant to the Agreement, the Company agreed to sell and the Buyer agreed to purchase all the issued and outstanding shares of the Target at a purchase price of $
The subsidiary comprises our historical equipment structural parts and cubic parking garage-related business operating segment. As a result of the planned disposition of the subsidiary, this historical segment meets the held for sale criteria of ASC 205-20. Accordingly, the historical results of operations of this legacy segment have been reflected as discontinued operations in our consolidated financial statement for all periods prior to the Agreement on December 22, 2025. Subsequent to the disposal, the Company strategically re-entered the equipment structural parts market by acquiring and establishing new operating subsidiaries, the results of which are fully reflected in the Company’s continuing operations for the six months ended June 30, 2026.
As a result of the sale of the subsidiary completed during the period ended December 31, 2025, the Company deconsolidated the subsidiary as of December 31, 2025. Therefore, the Company reported no assets or liabilities of the subsidiary as of December 31, 2025 and recognized a net loss on deconsolidation of $
Summary Reconciliation of Discontinued Operations
The following tables present the balance sheets and the results of operations of the Company classified as discontinued operations for the periods presented:
F-14
HUA CHEN INTELLIGENT TECHNOLOGY CO., LIMITED AND ITS SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
For the Six Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| REVENUE | ||||||||
| Revenue | $ | $ | ||||||
| Total revenue | ||||||||
| COST OF REVENUE AND RELATED TAX | ||||||||
| GROSS PROFIT | ||||||||
| OPERATING EXPENSES | ||||||||
| Selling and marketing expenses | ||||||||
| General and administrative expenses | ||||||||
| Research and development expenses | ||||||||
| Total operating expenses | ||||||||
| INCOME FROM OPERATIONS | ||||||||
| OTHER INCOME (EXPENSE) | ||||||||
| Interest expense, net | ( | ) | ||||||
| Other income, net | ( | ) | ||||||
| Total other income(expense), net | ( | ) | ||||||
| INCOME BEFORE INCOME TAX PROVISION | ||||||||
| INCOME TAXE EXPENSE | ||||||||
| INCOME FROM DISCONTINUED OPERATIONS | ||||||||
| Net income attributable to the noncontrolling interest | ||||||||
| Net income attributable to common shareholders | ||||||||
| OTHER COMPREHENSIVE INCOME | ||||||||
| Foreign currency translation income | ||||||||
| Other comprehensive loss, net of tax | ||||||||
| TOTAL COMPREHENSIVE (LOSS) INCOME FROM DISCONTINUED OPERATIONS | $ | |||||||
NOTE 4 — ACCOUNTS RECEIVABLE
Accounts receivable consists of the following:
| As of | ||||||||
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Accounts receivable: | $ | $ | | |||||
The Company’s accounts receivable primarily arise from the sales of products to its customers in the ordinary course of business. As of June 30, 2026, the accounts receivable balance was $
F-15
NOTE 5 — PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid expenses and other current assets consist of the following:
| As of | ||||||||
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Prepaid expenses and other current assets | ||||||||
| Prepaid expenses | $ | $ | ||||||
| Other receivables | ||||||||
| Total | $ | $ | ||||||
Prepaid expenses and other current assets are composed of other receivables and prepaid expenses. As of June 30, 2026, other receivables primarily consisted of $
Prepaid expenses primarily consist of the Nasdaq membership fee, which is amortized using the straight-line method. The membership was initially recorded in January 2025 with an original purchase value of approximately $
NOTE 6 — LEASE
The Company has one lease contract was for the company’s office space, located on Room 201, 2nd Floor, No. 6395 Hutai Road, Baoshan District, Shanghai, China, the original leases are from August 1, 2025 to September 30, 2027, and the leaseholder is Shanghai Yuanbang Enterprise Management Co., Ltd. For lease liability, the Company has classified current portion and non-current portion liabilities. Total lease liability equals the total amount of present value of future lease payments. Current portion equals the present value of the future 12 months lease payments. Non-current portion equals the remaining of lease liability balance.
Supplemental balance sheet information related to operating leases was as follows:
| As of | ||||||||
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Right-of-use asset, net | $ | $ | | |||||
| Lease liability – current | ||||||||
| Lease liability – non-current | ||||||||
| Total | $ | $ | ||||||
The weighted average discount rates and lease cost for all of operating leases were as follows as of June 30, 2026 and December 31, 2025
| June 30, | December 31, | |||||||
| Weighted average discount rates and lease cost: | 2026 | 2025 | ||||||
| Weighted average discount rate | % | | % | |||||
| Operating lease cost | ||||||||
F-16
The following table presents maturity of lease liability as of June 30, 2026:
| As of | ||||
| June 30, | ||||
| Twelve months ending June 30, | 2026 | |||
| FY2026 | $ | |||
| FY2027 | ||||
| Total future minimum lease payments | ||||
| Less: imputed interest | ( | ) | ||
| Present value of lease liability | $ | |||
NOTE 7 — RELATED PARTY TRANSACTIONS
Due from related party consists of the following:
| As of | ||||||||||
| Name | Related party relationship | June 30, 2026 | December 31, 2025 | |||||||
| Zhejiang TD Parking | $ | $ | ||||||||
| Total due from related party | $ | $ | ||||||||
The Company has historically provided interest-free advances to related parties for business purposes. These advances are non-interest bearing and due on demand, and are recorded as amounts due from related parties in the consolidated financial statements. Management periodically evaluates the collectability of these receivables based on the related parties’ financial condition and repayment history. Management believes the outstanding balances are fully collectible as of the balance sheet date, and accordingly, no allowance for doubtful accounts has been recognized.
Due to related parties consists of the following:
| As of | ||||||||||
| Name | Related party relationship | June 30, 2026 | December 31, 2025 | |||||||
| Guowei Xie | | |||||||||
| Chenjie Hong | ||||||||||
| Total due to related parties | $ | $ | ||||||||
As of June 30, 2026 and December 31, 2025, the balance due to related parties was used for working capital during the Company’s normal course of business. These advances are non-interest bearing and due on demand.
F-17
NOTE 8 — TAXES
Corporate Income Taxes (“CIT”)
The Company is subject to income taxes on an entity basis on income arising in or derived from the tax jurisdiction in which each entity is domiciled.
Under the current laws of the Cayman Islands, the Company is not subject to tax on income or capital gain. In addition, no Cayman Islands withholding tax will be imposed upon the payment of dividends by the Company to its shareholders.
Huachen HK is subject to Hong Kong profits tax at a rate of
The Company’s other operating subsidiaries are incorporated in the PRC and are subject to the PRC Enterprise Income Tax (“EIT”). Under the EIT Law of the PRC, domestic enterprises and Foreign Investment Enterprises (“FIE”) are generally subject to a unified statutory enterprise income tax rate of
For the six months ended June 30, 2026, the Company recorded an income tax expense of $
The Company’s PRC subsidiaries are subject to VAT on taxable goods and services. Under China’s current tax regulations, operating entities registered as general VAT taxpayers are subject to a statutory VAT rate of
F-18
Taxes payable consist of the following:
| As of | ||||||||
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Income tax payable | $ | $ | | |||||
| Other taxes payable | ||||||||
| Total taxes payable | $ | $ | ||||||
As of June 30, 2026, other taxes payable primarily consisted of value-added tax (“VAT”) payable of $
Income tax expenses consist of the following:
| For the Six Months Ended | ||||||||
| June 30, | June 30, | |||||||
| 2026 | 2025 | |||||||
| Income tax expense | $ | $ | ||||||
NOTE 9 — CONCENTRATIONS
The Company’s revenue and expense transactions are denominated in RMB and of the Company and its subsidiaries’ assets and liabilities are denominated in RMB. RMB is not freely convertible into foreign currencies. In the PRC, foreign exchange transactions are required by law to be transacted only by authorized financial institutions at exchange rates set by the People’s Bank of China (“PBOC”). Remittances in currencies other than RMB may require certain supporting documentation to affect the remittance.
As of June 30, 2026 and December 31, 2025, $
As of June 30, 2026 and December 31, 2025, there is no restricted cash was on deposit at financial institutions in the PRC. Restricted cash represents cash that cannot be withdrawn without the permission of third parties. The Company’s restricted cash is substantially a cash balance on deposit required by its business partners and commercial banks.
As of June 30, 2026, one supplier accounted for approximately
As of June 30, 2026, one customer accounted for
NOTE 10 — SHAREHOLDERS’ EQUITY
Ordinary Shares
Huachen Cayman was established under the laws of the Cayman Islands on September 30, 2021. The original authorized number of Ordinary Shares was
On August 12, 2024, Huachen Cayman effected a
F-19
Immediately upon the completion of the forward split, cancellation of authorized but unissued Ordinary Shares and diminution of authorized share capital, the board of directors of the Company approved the surrender of a total of
On February 4, 2025, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Benjamin Securities, Inc., as the representative of the underwriters listed on Schedule 1 thereto, in connection with the initial public of
On March 7, 2025, the underwriters fully exercised the Over-Allotment Option to purchase an additional
On May 20, 2025, the Company decided to increase the Company’s authorized share capital from $
On April 8, 2026, the Company announced that a
As of June 30, 2026 and December 31, 2025, the Company had
F-20
NOTE 11 — SEGMENT REPORTING
An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, and is identified on the basis of the internal financial reports that are provided to and regularly reviewed by the Company’s chief operating decision maker in order to allocate resources and assess performance of the segment.
NOTE 12 — COMMITMENTS AND CONTINGENCIES
The Company may be involved in certain legal proceedings, claims and other disputes arising from the commercial operations, projects, employees and other matters which, in general, are subject to uncertainties and in which the outcomes are not predictable. The Company determine whether an estimated loss from a contingency should be accrued by assessing whether a loss is deemed probable and can be reasonably estimated. Although the outcomes of these legal proceedings cannot be predicted, the Company does not believe these actions, in the aggregate, will have a material adverse impact on its financial position, results of operations or liquidity.
Lease Commitments
The company’s subsidiary, CYH Shanghai has entered into
As of June 30, 2026, the total future minimum non-cancelable commitments solely related to the property management fees with respect to the office are payable as follows:
| Lease Commitment | ||||
| Within 1 year | ||||
| 2-5 years | ||||
| Total | ||||
NOTE 13 — SUBSEQUENT EVENTS
The Company has evaluated subsequent events through September 30, 2026, the date the financial statements were issued and filed with the U.S. Securities and Exchange Commission. Based on the Company’s evaluation, except as disclosed in the financial statements, no other event has occurred requiring adjustment or disclosure in the notes to the consolidated financial statements.
Additionally, the Company issued a notice on July 17, 2026, for a separate meeting of Class A shareholders and an Extraordinary General Meeting of shareholders held on August 18, 2026. At these meetings, the shareholders approved the increase of the voting rights of Class B Ordinary Shares from thirty (30) votes per share to two hundred (200) votes per share, alongside the adoption of the Amended and Restated Memorandum and Articles of Association.
Following the Extraordinary Meeting, on August 18, 2026, the sole shareholder of the Class B ordinary shares entered into a Voting Rights Waiver Agreement with the Company, pursuant to which the Class B shareholder voluntarily and irrevocably waived the additional one hundred seventy (170) votes per share, such that the effective voting power of each Class B Ordinary Share shall remain limited to thirty (30) votes per share for all matters submitted to a vote of the Company’s shareholders.
On September 9, 2026, the Company entered into a non-exclusive strategic cooperation framework agreement with Beyinda Limited to expand their precision metal components business in the Chinese market, targeting new energy vehicles, electric vehicle charging piles, and energy storage systems.
F-21
Exhibit 99.2
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
IN CONNECTION WITH THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2026 AND 2025
The information in this report contains forward-looking statements. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and the related notes included elsewhere and incorporated by reference in this report. This discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties. See “Disclosure Regarding Forward-Looking Statements” for a discussion of the uncertainties, risks, and assumptions associated with these statements. Actual results and the timing of events could differ materially from those discussed in our forward-looking statements as a result of many factors.
Throughout this report, unless the context indicates otherwise, references to “we,” “us,” “our,” “Huachen Cayman,” “our Company,” and the “Company” are to Huachen AI Parking Management Technology Holding Co., Ltd, a Cayman Islands exempted company, and when describing Huachen Cayman’s consolidated financial information for the six months ended June 30, 2026 and the fiscal years December 31, 2025, also include Huachen Cayman’s subsidiaries. References to “PRC subsidiaries” are to CYH Shanghai, Hangzhou ZHC and Jiaxing XC. References to “Operating Subsidiaries” are to YHC HK, CYH Shanghai, Hangzhou ZHC and Jiaxing XC.
| ● | “Class A Ordinary Shares” refers to Class A ordinary shares of Huachen Cayman with par value $0.0000375 per share. | |
| ● | “Class B Ordinary Shares” refers to Class B ordinary shares of Huachen Cayman with par value $0.0000375 per share. | |
| ● | “CYH Shanghai” refers to Chuang Yu He (Shanghai) Industrial Co., Ltd., a limited liability company organized under the laws of the PRC and a wholly-owned subsidiary of YHC HK. | |
| ● | “Hangzhou ZHC” refers to Hangzhou Zhihuichong Technology Co., Ltd., a limited liability company organized under the laws of the PRC and a 90% subsidiary of CYH Shanghai. | |
| ● | “Jiaxing XC” refers to Jiaxing Xuchen Technology Co., Ltd. (“Jiaxing XC”), a limited liability company organized under the laws of the PRC and a wholly-owned subsidiary of CYH Shanghai. | |
| ● | “Ordinary Shares” refer to both Class A Ordinary Shares and Class B Ordinary Shares of Huachen Cayman | |
| ● | “RMB” refers to Renminbi, or the legal currency of the PRC. | |
| ● | “YHC HK” refers to Yu He Chuang Co., Ltd, an entity incorporated under the laws and regulations in Hong Kong and a wholly-owned subsidiary of Huachen Cayman. | |
| ● | “U.S. dollars,” “$,” and “USD” refer to the legal currency of the United States. |
Overview
Huachen Cayman was established under the laws of Cayman Islands as a holding company. Our main business operations are conducted through our Operating Subsidiaries in China.
We are an equipment structural parts provider and conduct all our operations through our Operating Subsidiaries in China. The Operating Subsidiaries offer equipment structural parts, including (i) product structural parts, (ii) garage structural parts, (iii) materials such as customized steel and load-bearing steel plates for cubic parking equipment, and (iv) railroad accessories. Customers of equipment structural parts, including are industrial manufacturing companies, such as producers of mining haulers, industrial conveyors, railroad tracks, and other products.
The Company entered into an agreement to sell its Hong Kong subsidiary, Hua Chen Intelligent Technology Co., Limited, and its eight subsidiaries to an unrelated buyer for $50,000. The disposal aligns with the Company’s strategic exit from its legacy operations amid slowing growth in China’s real estate market. Following this restructuring and to revitalize its core business, the Company subsequently re-established its footprint in the equipment structural parts industry by acquiring new operating subsidiaries (including Jiaxing XC). Moving forward, the Company will focus its continuing operations on this newly acquired industrial equipment structural parts business and electric vehicle charging operations through Hangzhou ZHC, launched in the second half of 2025.
For the six months ended June 30, 2026 and 2025, our revenues from continuing operations were approximately $2.47 million and nil, respectively. For the six months ended June 30, 2026 and 2025, our revenues from discontinued operations were approximately nil and $8.15 million. For the six months ended June 30, 2026 and 2025, we had net income of approximately $0.05 million and $1.25 million.
Recent Developments
Share Capital Increase and Share Consolidation Authorization
On July 8, 2026, the Company held an extraordinary general meeting of shareholders at which the shareholders approved, among other matters, (i) an increase in the Company’s authorized share capital from US$78,125 to US$37,500,000, by the creation of 798,333,333,333 additional Class A Ordinary Shares and 199,583,333,333 additional Class B Ordinary Shares, (ii) the adoption of an Amended and Restated Memorandum of Association reflecting such increase, and (iii) the authorization of the Board of Directors to implement one or more consolidations of the Company’s Class A Ordinary Shares and Class B Ordinary Shares during the two-year period following the meeting, at an aggregate consolidation ratio of not more than 4,000-to-1, with the applicable ratio and effective date to be determined by the Board of Directors.
Securities Purchase Agreements
On July 15, 2026, the Company entered into securities purchase agreements with certain investors to sell 7,000,000 Class A ordinary shares at a price of $1.552 per share, raising a total of $10,864,000 in cash. The transaction was conducted as a private placement exempt from U.S. registration requirements, with the company successfully receiving the funds and issuing the shares on July 17, 2026.
Change in Class B Ordinary Shares Voting Rights
On August 18, 2026, the Company held a meeting of the holders of Class A Ordinary Shares and the holders of Class A Ordinary Shares approved the variation of the rights attaching to the Class A Ordinary Shares arising from the proposed increase in the voting rights of the Class B Ordinary Shares and the adoption of the Amended and Restated Memorandum and Articles of Association. At the subsequent extraordinary general meeting held on the same date, the shareholders approved (i) an increase in the voting rights attached to each Class B Ordinary Share from 30 votes to 200 votes per share and (ii) the adoption of the Amended and Restated Memorandum and Articles of Association reflecting such increase.
Following the extraordinary general meeting, the sole holder of the Class B Ordinary Shares entered into a Voting Rights Waiver Agreement with the Company, pursuant to which such holder irrevocably waived the additional 170 votes per Class B Ordinary Share. Accordingly, the Class B Ordinary Shares currently carry 30 effective votes per share.
The Company expects to convene an extraordinary general meeting to approve the reduction of the voting rights attached to each Class B Ordinary Share from 200 votes to 30 votes per share, thereby formally restoring the voting rights applicable prior to the August 18, 2026 extraordinary general meeting.
Strategic Cooperation with Beyinda Limited
On September 9, 2026, Huachen AI Parking Management Technology Holding Co., Ltd. signed a non-exclusive strategic cooperation framework agreement with Hong Kong-based Beyinda Limited to expand the market for precision metal components in mainland China. Huachen will utilize its market channels, customer resources, and business development strengths to boost Beyinda’s sales, while Beyinda will handle product manufacturing, quality assurance, and delivery across sectors like new energy vehicles, charging infrastructure, and energy storage. The agreement sets a collaborative framework only and does not mandate minimum purchase or sales commitments. Furthermore, no specific terms regarding revenue-sharing, pricing, commissions, or compensation have been finalized yet; all commercial details and economic benefits depend entirely on future transaction orders, which are not guaranteed to occur.
2
Registered Direct Offering
On September 15, 2026, we entered into a securities purchase agreement with certain investors pursuant to which we agreed to issue and sell, in a best-efforts offering an aggregate of 2,750,000 Class A Ordinary Shares, accompanied by ordinary warrants to purchase up to an aggregate of 2,750,000 Class A Ordinary Shares (the “Ordinary Warrants”), at an offering price of US$1.00 per Class A Ordinary Share and accompanying Ordinary Warrant. The offering was made pursuant to our registration statement on Form F-3 (File No. 333-296529), initially filed with the SEC on June 5, 2026 and declared effective on June 12, 2026, the base prospectus included therein and a prospectus supplement dated September 15, 2026.
The offering was closed on September 16, 2026. We received gross proceeds of approximately US$2.75 million, before deducting placement agent fees and other offering expenses. We intend to use the proceeds from the offering for the purchase of insurance coverage for our directors and officers and for working capital and general corporate purposes.
A. Operating Results.
Factors Affecting Our Results of Operations
The growth and future success of the business depends on many factors. While each of these factors presents significant opportunities for the business, they also present challenges. We must meet these challenges to sustain our growth and improve our operating results.
Customer and supplier concentration risks
Our revenues and cost of revenues are characterized by a high degree of concentration. For the six months ended June 30, 2026, one single customer accounted for 100% of our total revenue, and one single supplier accounted for 100% of our total cost of revenue. Consequently, our operating results and short-term financial stability are heavily dependent on our ongoing relationship with this key customer and supplier, as well as their respective business viability and operational performance. Any material adverse change in their financial condition, loss of this key customer without immediate replacement, or disruption in the supply chain from this sole supplier could significantly disrupt our business operations and materially and adversely affect our top-line revenue, gross margins, and cash flows.
Success of strategic transformation to an asset-light model
Our future profitability and operational efficiency are heavily dependent on the successful execution of our transition from traditional manufacturing to an asset-light trade and agency model within the equipment structural parts segment. While this shift is intended to reduce capital expenditures and depreciation costs, our margins will increasingly depend on our ability to manage a network of third-party manufacturers and maintain favorable terms in our agency agreements. Any inability to maintain quality control or supply chain stability during this transition could materially impact our results.
Market adoption and scaling of EV charging infrastructure
As we pivot toward the EV charging sector, our revenue growth is driven by the pace at which we can deploy hardware in high-traffic destination charging locations. This depends on our success in securing partnerships with property managers and commercial developers. Factors such as the overall adoption rate of electric vehicles, changes in government subsidies for green infrastructure, and the competitive landscape for charging pile installations will significantly influence our top-line growth and market share.
Ability to monetize value-added services via our digital platform
A critical factor for our long-term margin expansion is our ability to transition from hardware-based sales to data-driven monetization. Our operating results will be affected by the progress of our R&D initiatives—specifically the development of proprietary communication protocols and the rollout of value-added services (such as digital marketing and premium memberships). Our success depends on our ability to convert charging user traffic into recurring revenue streams, which is subject to user engagement levels and evolving data privacy regulations.
Timing of R&D milestones and commercialization
As our current charging service offerings are in the research and development stage, the timing of their commercial launch—currently anticipated for the second half of 2026—will be a primary driver of our future financial performance. Delays in technical milestones, challenges in recruiting specialized MCU and software engineers, or higher-than-anticipated R&D expenditures could postpone revenue generation and affect our liquidity and short-term profitability.
Accounting for discontinued operations and structural realignment
Our historical financial results for the 2023 and 2024 fiscal years, as well as the first half of 2025, primarily reflect discontinued operations. Consequently, our future financial statements may not be directly comparable to our historical data. Our ability to manage the wind-down costs of legacy operations while simultaneously funding the growth of our new business segments will be a significant factor in our near-term financial stability.
3
Results of Operations
The following table sets forth a summary of our consolidated results of operations for the six months ended June 30, 2026 and 2025 as indicated and provides information regarding the dollar and percentage increase or (decrease) during such periods. This information should be read together with our unaudited condensed consolidated financial statements and related notes included elsewhere in this report. The operating results in any period are not necessarily indicative of the results that may be expected for any future trends.
For the six months ended June 30, 2026 and 2025
| Change | ||||||||||||||||
| 2026 | 2025 | Amount | % | |||||||||||||
| (US$) | (US$) | (US$) | ||||||||||||||
| Revenue | 2,473,192 | - | 2,473,192 | N/M | ||||||||||||
| Cost of revenue | 1,469,300 | - | 1,469,300 | N/M | ||||||||||||
| Gross profit | 1,003,892 | - | 1,003,892 | N/M | ||||||||||||
| Operating expenses | ||||||||||||||||
| General and administrative expenses | 941,483 | 616,628 | 324,855 | 52.7 | % | |||||||||||
| Total operating cost and expenses | 941,483 | 616,628 | 324,855 | 52.7 | % | |||||||||||
| Income (loss) from operations | 62,409 | (616,628 | ) | 679,037 | 110.1 | % | ||||||||||
| Other (expenses) income | ||||||||||||||||
| Interest expenses | - | (960 | ) | (960 | ) | (100 | )% | |||||||||
| Other expenses, net | (8,248 | ) | - | 8,248 | N/M | |||||||||||
| Total other expenses, net | (8,248 | ) | (960 | ) | 7,288 | 759.2 | % | |||||||||
| Income (loss) before income taxes | 54,161 | (617,588 | ) | 671,749 | 108.8 | % | ||||||||||
| Income taxes expense | 2,888 | - | 2,888 | N/M | ||||||||||||
| Income (loss) from continuing operations | 51,273 | (617,588 | ) | 668,861 | 108.3 | % | ||||||||||
| Income from discontinued operation (net of tax) | - | 1,865,348 | (1,865,348 | ) | (100.0 | )% | ||||||||||
| Net income | 51,273 | 1,247,760 | (1,196,487 | ) | (95.9 | )% | ||||||||||
| Net income attributable to the noncontrolling interest | - | 431,821 | (431,821 | ) | (100.0 | )% | ||||||||||
| Net income attributable to common shareholders | 51,273 | 815,939 | (764,666 | ) | (93.7 | )% | ||||||||||
| OTHER COMPREHENSIVE INCOME (LOSS) | ||||||||||||||||
| Foreign currency translation income | 168,765 | 1,412,731 | (1,243,966 | ) | (88.1 | )% | ||||||||||
| Total comprehensive income | 220,038 | 2,660,491 | (2,440,453 | ) | (91.7 | )% | ||||||||||
We review the following indicators to measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions. The following table summarizes the key performance indicators that we use to evaluate our business for the six months ended June 30, 2026 and 2025.
| For the Six Months Ended | ||||||||||||||||
| June 30, | % | |||||||||||||||
| 2026 | 2025 | Change | Change | |||||||||||||
| REVENUE | 2,473,192 | - | 2,473,192 | N/M | ||||||||||||
| COST OF REVENUE | 1,469,300 | - | 1,469,300 | N/M | ||||||||||||
| GROSS PROFIT | 1,003,892 | - | 1,003,892 | N/M | ||||||||||||
| OPERATING EXPENSES | 941,483 | 616,628 | 324,855 | 52.7 | % | |||||||||||
| GROSS PROFIT MARGIN | 41 | % | N/M | N/M | N/M | |||||||||||
4
Revenues
The following table sets forth the breakdown of total revenues by category of activity for the six months ended June 30, 2026, and 2025.
| For the Six Months Ended June 30, | ||||||||||||||||
| 2026 | 2025 | |||||||||||||||
| US$ | % | US$ | % | |||||||||||||
| Revenues: | ||||||||||||||||
| Equipment structural parts | 2,473,192 | 100.00 | 1,840,487 | 22.60 | ||||||||||||
| Cubic parking garage | - | - | 6,240,539 | 76.62 | ||||||||||||
| Maintenance services | - | - | 60,748 | 0.75 | ||||||||||||
| Others | - | - | 3,483 | 0.03 | ||||||||||||
| Total revenues | 2,473,192 | 100.00 | 8,145,257(1) | 100.00 | ||||||||||||
| (1) | Total revenues for the six months ended June 30, 2025 include revenues of $8,145,257 derived from discontinued operations related to the disposed subsidiaries. On the face of the Condensed Consolidated Statements of Comprehensive Income, revenues from these disposed subsidiaries have been retrospectively reclassified to net income from discontinued operations, resulting in nil revenue from continuing operations for the six months ended June 30, 2025. |
On December 22, 2025, Huachen Cayman divested Hua Chen Intelligent Technology Co., Limited and its subsidiaries and incorporated new subsidiaries dedicated to the equipment structural parts business, while also planning to expand into the electric vehicle charging business.
Total revenue for the six months ended June 30, 2026, was approximately $2.47 million, representing an increase of $2.47 million, or 100%, from nil for the six months ended June 30, 2025. The increase was primarily due to the fact that the Company’s parent entity, acting as a holding company, generated no revenue during six months ended June 30, 2025. Instead, the majority of the Company’s revenue was derived from the disposed subsidiaries and newly incorporated subsidiaries in 2025. Revenue from the disposed subsidiaries has been reclassified to net profit from discontinued operations.
For the six months ended June 30, 2026, $2,473,192 of the revenue from the equipment structural parts, was derived from continuing operations Jiaxing XC. As the Company’s revenues for the six months ended June 30, 2025, $8,145,257 was also primarily generated by the disposed subsidiaries. Revenue from the disposed subsidiaries has been reclassified to net profit from discontinued operations.
Cost of Revenues
For the six months ended June 30, 2026, the cost of revenue was $1.47 million, reflecting an increase of $1.47 million, or 100%, from nil for the six months ended June 30, 2025. The increase was primarily due to the fact that the costs of revenue for the fiscal year 2025 were mainly generated by operations of the disposed subsidiaries, which have been reclassified to net profit from discontinued operations. For the six months ended June 30, 2026, $1,469,300 of the cost of revenue from the equipment structural parts, was derived from continuing operations Jiaxing XC.
Gross Profit and Margin
For the six months ended June 30, 2026, gross profit was $1.00 million and gross profit margin was 41%. For the same reasons mentioned above, the cost of revenues for the six months ended June 30, 2025, was reclassified into net income from discontinued operations, resulting in a gross profit and gross margin of nil.
Operating Expenses
Operating expenses increased from $0.62 million for the six months ended June 30, 2025 to $0.94 million for the six months ended June 30, 2026, representing a growth of 52.7%. This increase was primarily attributable to the increased in general and administrative expenses.
| For the six months ended June 30, | ||||||||||||||||||||
| 2026 | 2025 | Variance | ||||||||||||||||||
| US$ | % | US$ | % | % | ||||||||||||||||
| Unaudited | ||||||||||||||||||||
| Operating expenses | ||||||||||||||||||||
| General and administrative expenses | 941,483 | 100.0 | 616,628 | 100.0 | 52.7 | |||||||||||||||
| Operating expenses | 941,483 | 100.0 | 616,628 | 100.0 | 52.7 | |||||||||||||||
Operating expenses primarily comprised of general and administrative expenses. Total operating expenses were $0.94 million for the six months ended June 30, 2026, an increase of $0.32 million, or 52.7%, from $0.62 million in the same period of the prior year. The increase in expenses was primarily due to the fact that the general and administrative expenses for the six months ended 2025 were mainly generated by operations of the holding company, totaling $0.62 million, which mainly consisted of professional consulting fees.
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For the six months ended June 30, 2026, the $0.94 million in general and administrative expenses was from the holding company and several newly incorporated entities, primarily comprised of intermediary fees, rent, office expenses, and other costs across the Company.
Total other expense, net
Total other expenses, net primarily consists of interest expense, net and other expense, net.
Other expense, net increased by $8,248 (100%) from nil for the six months ended June 30, 2025 to $8,248 for the six months ended June 30, 2026 which was primarily attributable to an increase in non-operating expenses.
Interest expense, net primarily consists of interest expense and interest income. Interest income decreased by 100% from $193 for the six months ended June 30, 2025 to nil for the six months ended June 30, 2026. Interest expense decreased by 1,153 from $1,153 for the six months ended June 30, 2025 to nil for the six months ended June 30, 2026 which was primarily attributable to the decreased average loan balances due to new bank loans obtained.
Income taxes expenses
Income taxes expense was $2,888 in the six months ended June 30, 2026 compared to an income taxes expense of nil for the six months ended June 30, 2025. The income tax expense mainly relates to income tax recognized on the net income generated by Jiaxing XC, a subsidiary newly consolidated in December 2025, from its operations in mainland China.
Income from discontinued operations (net of tax)
Discontinued operations represent our former PRC-based business, which was disposed of in 2025. These operations accounted for substantially all of our revenue in fiscal years 2024 and 2023, and continued to contribute significantly to our results in fiscal year 2025 prior to disposal.
Revenue from discontinued operations was approximately $8.15 million for the six months ended June 30, 2025, compared to nil for the six months ended June 30, 2026. The decrease in revenue was primarily attributable to the fact that the disposal of the Company’s subsidiaries was completed in December 2025, and there were no longer any discontinued operations in 2026.
Costs and expenses associated with discontinued operations were $5.58 million and nil for the six months ended June 30, 2025 and 2026. The decrease in costs and expenses was primarily attributable to the decline in revenue, which resulted in a corresponding reduction in associated costs.
Income from discontinued operations was $1.87 million and nil for the six months ended June 30, 2025 and 2026. The decrease was primarily attributable to the factors discussed above.
Following the completion of the disposal, we no longer generate revenue from these operations, and they are not expected to contribute to our future results. Accordingly, our future financial performance will depend entirely on our continuing operations.
Net income
As a result of the foregoing, our net income decreased by $1.2 million, or 95.9%, from $1.25 million for the six months ended June 30, 2025 to $0.05 million for the six months ended June 30, 2026.
Taxation
Cayman Islands, British Virgin Islands and Hong Kong
Under the current laws of the Cayman Islands, British Virgin Islands and Hong Kong, we are not subject to tax on income or capital gains. Cayman Islands, British Virgin Islands, and Hong Kong withholding tax will not be imposed upon payments of dividends to our shareholders.
China Mainland
Dividend Withholding Tax
Generally, dividend income is subject to a withholding tax rate of 10%. However, if a tax treaty between China and another country provides for a lower rate, the treaty rate may be applied.
6
Corporate Income Tax
The basic corporate income tax rate is 25%. For small and micro-sized enterprises with annual taxable income not exceeding RMB 3 million, the taxable income is uniformly reduced to 25% and is subject to a tax rate of 20%. High-tech enterprises that are key targets of national support are subject to a reduced tax rate of 15%.
Value-Added Tax
Generally, the tax rate is 13% for the sale of goods, processing, repair and maintenance services, tangible movable property leasing services, and imported goods, unless otherwise specified. The tax rate is 9% for the sale of transportation, postal, basic telecommunications, construction, real estate leasing services, sale of real estate, transfer of land use rights, and the sale or import of specific goods such as agricultural products, edible vegetable oils, and edible salt. The tax rate is 6% for the sale of services and intangible assets (except as otherwise provided above). The tax rate is 0% for the export of goods (unless otherwise specified by the State Council), cross-border sales of services and intangible assets within the scope specified by the State Council.
Basic and diluted EPS
Basic and diluted EPS were approximately $0.04 per ordinary share for the six months ended June 30, 2026, as compared to $0.75 per ordinary share for the six months ended June 30, 2025, respectively.
Discussion of Certain Balance Sheet Items
The following table sets forth selected information from our consolidated balance sheets as of June 30, 2026 and December 31, 2025. This information should be read together with our unaudited condensed consolidated financial statements and related notes included elsewhere in this report.
| As of | ||||||||
| June 30, 2026 | December 31, 2025 | |||||||
| Assets | ||||||||
| Cash and cash equivalents | $ | 61,896 | $ | 389 | ||||
| Accounts receivable | 4,242,678 | 7,070,814 | ||||||
| Other receivables - related parties | 4,925,692 | 4,779,184 | ||||||
| Prepaid expenses and other current assets | 87,653 | 101,344 | ||||||
| Right-of-use assets, net | 29,393 | 39,552 | ||||||
| Total assets | $ | 9,347,312 | $ | 11,991,283 | ||||
| Liabilities and shareholders’ equity | ||||||||
| Accounts payable | 2,661,465 | 6,593,137 | ||||||
Accrued liabilities and other payables | 997,741 | 73,638 | ||||||
| Taxes payable | 196,423 | 59,531 | ||||||
| Other payables - related parties | 39,315 | 21,587 | ||||||
| Lease liability-current | 25,411 | 24,229 | ||||||
| Lease liability-non-current | 6,493 | 18,735 | ||||||
| Total liabilities | $ | 3,926,848 | $ | 6,790,857 | ||||
7
Cash and cash equivalents
Cash and cash equivalents consist of funds deposited with banks, which are highly liquid and are unrestricted as to withdrawal or use. The total balance of cash and cash equivalents increased from $389 as of December 31, 2025 to $61,896 as of June 30, 2026, primarily as a result of net cash of $60,893 provided by operating activities.
Accounts receivable
The total amount of accounts receivable is the sum of the amounts that the Company has not yet collected after selling goods. After deducting the amounts that are expected to be uncollectible (i.e., the allowance for doubtful accounts), the actual amount of accounts receivable that can be collected is referred to as the accounts receivable, net. As compared with the balance as of December 31, 2025, the accounts receivable decreased by 40% to $4.24 million as of June 30, 2026. The decrease in the balance as of June 30, 2026 was caused by collection from customers.
Prepaid expenses and other current assets
Prepaid expenses primarily include Nasdaq membership fees, which are amortized on a straight-line basis over the period benefited of five years. As of June 30, 2026 and December 31, 2025, the balance of prepaid expenses from Nasdaq membership is $36,984 and $41,011.
Other current assets primarily consist of amounts due from third-party individuals for fund transactions and deposits for daily operations. The Company reviews the recoverability of other current assets on a regular basis and records an allowance for credit loss when collection is considered doubtful. As of June 30, 2026 and December 31, 2025, there is no allowance for credit losses balances from continuing operations.
Accounts payable
Accounts payable refers to the amounts that the Company owes to the suppliers for the purchase of materials, goods, or the receipt of services. It is a short-term liability of the Company. The balance as of June 30, 2026 was $2.66 million, a decrease of $3.93 million, or 59.6%, from the balance as of December 31, 2025. The decrease corresponded to some of payments of goods paid during the first half of the year.
Liquidity and Capital Resources.
We fund our operations primarily through operating cash flow and, where necessary, bank loans. We plan to support our future operations primarily from cash flows from operating activities and cash on hand.
Almost all of our business is conducted in China, and all of our income, expenses, cash and cash equivalents are denominated in RMB, which is not freely convertible into foreign currency. All foreign exchange transactions are conducted through People’s Bank of China or other banks authorized to buy and sell foreign exchange at the People’s Bank of China published exchange rate. When People’s Bank of China or other regulatory authorities approve foreign currency payments, payment application forms, supplier invoices, shipping documents, and signed contracts are required. These foreign exchange control procedures imposed by the Chinese government authorities may limit the ability of our PRC operating entities to transfer their net assets to us through loans, advances or cash dividends. In addition, as an offshore holding company with a Chinese entity, we can only transfer funds to or fund our Chinese operating entity through loans or capital contributions. Any capital contributions or loans we make to operating entities in China, including proceeds from this offering, are subject to PRC regulations and approvals.
In assessing our liquidity, we monitor and analyze our cash on hand, our ability to generate sufficient revenue sources in the future and our operating and capital expenditure commitments. As of June 30, 2026, we had cash and cash equivalents of approximately $61,896. Our current assets were approximately $9.32 million, and our current liabilities were approximately $3.92 million, which resulted in a working capital of $5.40 million. Our operating cash inflow was $50,628 for the six months ended June 30, 2026.
Historically, our working capital comes primarily from operations, bank loans, customer advances and shareholder contributions. Our working capital are affected by operational efficiency, the number and dollar value of revenue contracts, the progress or execution of customer contracts, and the timing of accounts receivable collection.
Subsequent to the period end, the Company’s liquidity position significantly improved through capital raising activities. Specifically, between July 15 and July 17, 2026, the Company completed a private placement issuing 7,000,000 Class A Ordinary Shares for gross proceeds of approximately $10.86 million . Taking into account this post-period capital influx, our management believes that our current financial resources, including cash on hand, operating cash flows, and the proceeds from the July 2026 private placement, will be sufficient to meet our anticipated working capital requirements and capital expenditures for at least the next 12 months from the date of this report.
However, we may require additional cash resources if we experience changing business conditions or other strategic developments, such as pursuing opportunities for investments, acquisitions, or strategic partnerships. If our cash needs exceed our available cash on hand, we may continue to seek to issue debt or equity securities or obtain additional credit facilities as appropriate.
8
Cash Flows
| For the Six Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Net cash provided by (used in) operating activities | $ | 50,628 | $ | (5,451,079 | ) | |||
| Net cash provided by financing activities | - | 4,657,078 | ||||||
| Effect of exchange rates on cash and cash equivalents | 10,879 | 812,843 | ||||||
| Net change in cash, including cash from discontinued operations | 61,507 | 18,841 | ||||||
| Cash, including cash from discontinued operations - beginning of period | 389 | 28,654 | ||||||
| Cash, including cash from discontinued operations - end of period | $ | 61,896 | $ | 47,495 | ||||
Operating activities
Net cash provided by operating activities was $50,628 for the six months ended June 30, 2026, which primarily reflected our net income of $51,273, as adjusted for non-cash items and net changes in our operating assets and liabilities. The fluctuations and significant movements in our operating assets and liabilities during the period were primarily driven by the operational dynamics of Jiaxing XC, which mainly included:
(i) a decrease in accounts receivable of $3,010,596, which was primarily driven by accelerated collection efforts and shortened credit cycles implemented by Jiaxing XC during the first half of 2026 to optimize liquidity;
(ii) a decrease in accounts payable of $4,087,223, primarily reflecting timely settlements and heavy repayments of outstanding vendor and supplier liabilities by Jiaxing XC as part of its structural transition; and
(iii) an increase in accrued liabilities and other payables of $928,336, which was primarily driven by increased accrued professional fees, compliance costs associated with listing status, and temporary deferred operational expenditures during the period.
Net cash used in operating activities was $5,451,079 for the six months ended June 30, 2025, which comprised net cash used in operating activities from continuing operations of $5,303,783 and net cash used in operating activities from discontinued operations of $147,296. Net cash used in operating activities from continuing operations was primarily driven by a net loss from continuing operations of $617,588 for the period, combined with net changes in our operating assets and liabilities, which was primarily characterized by a substantial increase in other receivables from related parties of $4,045,445 due to short-term business advances made prior to the disposal of legacy operations, partially offset by a decrease in prepaid expenses and other current assets of $643,020.
Investing activities
There is no investing activities for the six months ended June 30, 2026 and 2025.
Financing activities
There is no financing activities for the six months ended June 30, 2026. Net cash provided by financing activities was approximately $4,657,078 for the six months ended June 30, 2025, comprised of net cash provided by financing activities from continuing operations $5,353,931, which proceeds from issuance of common stock and net cash used in financing activities from discontinued operations of $696,853, which was repayments of short-term loans – bank of approximately $696,853.
Off-Balance Sheet Commitments and Arrangements
We have not entered into any derivative contracts that are indexed to our shares and classified as shareholders’ equity or that are not reflected in our unaudited condensed consolidated financial statements. Moreover, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or product development services with us.
9
C. Research and Development, Patent and Licenses, etc.
Please refer to “Item 4. Information on the Company – D. Property, Plant and Equipment – Intellectual Property.”
D. Trend Information.
We are not aware of any trends, uncertainties, demands, commitments or events that are reasonably likely to have a material effect on our net revenues, income from continuing operations, profitability, liquidity or capital resources, or that would cause reported financial information not necessarily to be indicative of future operating results or financial condition or results of operations.
E. Critical Accounting Estimates.
Uses of estimates
In preparing the unaudited condensed consolidated financial statements in conformity with US GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information as of the date of the unaudited condensed consolidated financial statements.
Significant estimates required to be made by management are specifically driven by the Company’s current asset and liability structure, which include, but are not limited to: (i) the allowance for credit losses (CECL) on trade accounts receivable and other receivables from related parties, (ii) the assessment of collectability and valuation of prepaid expenses and other current assets, (iii) the determination of the incremental borrowing rate used to measure lease liabilities and the corresponding right-of-use assets, and (iv) provisions necessary for taxes payable and other contingent liabilities. Actual results could differ from those estimates
Cash and cash equivalents
Cash and cash equivalents represent cash at bank which are unrestricted as to withdrawal and use, and which have original maturities of three months or less.
Accounts receivable
Accounts receivable are presented net of allowance for credit losses.
Accounts receivable are recorded at the gross billing amount less an allowance for any uncollectible accounts due from the customers. Accounts receivable do not bear interest.
Since January 1, 2023, 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 and records the allowance for credit losses as an offset to accounts receivable and the estimated credit losses charged to the allowance is classified as “General and administrative expenses” in the consolidated statements of comprehensive income(loss). The Company assesses collectability by reviewing accounts receivable on aging schedules because the accounts receivable were primarily consisted of receivables arising from sales of our products. In determining the amount of the allowance for credit losses, the Company considers historical collectability based on past due status, the age of the balances, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect the Company’s ability to collect from customers. Delinquent account balances are written-off against the allowance for expected credit.
As of June 30, 2026 and December 31, 2025, there is no allowance for credit losses balances from continuing operations.
10
Prepaid expenses and other current assets
Prepaid expenses and other current assets are recorded at cost less any provision for impairment.
Prepaid expenses primarily include Nasdaq membership fees, which are amortized on a straight-line basis over the period benefited of five years. As of June 30, 2026 and December 31, 2025, the balance of prepaid expenses from Nasdaq membership is $36,984 and $41,011.
Other current assets primarily consist of amounts due from third-party individuals for fund transactions and deposits for daily operations. The Company reviews the recoverability of other current assets on a regular basis and records an allowance for credit loss when collection is considered doubtful. As of June 30, 2026 and December 31, 2025, there is no allowance for credit losses balances from continuing operations.
Accounts payable
Accounts payable are initially recognized at fair value and subsequently measured at amortized cost using the effective interest method. Accounts payable primarily consist of amounts due to suppliers and vendors for goods received in the ordinary course of business. Amounts due to related parties are separately disclosed. Due to their short-term nature, the carrying amounts of accounts payable approximate their fair values. The Company recognizes payables when the risks and rewards associated with the underlying goods have been transferred to the Company and the obligation to pay is established.
Leases
The Company adopted the new lease standard, ASC 842, Leases (Topic 842) since December 1, 2022. The Company elected the package of practical expedients permitted under the transition guidance within ASC Topic 842, which among other things, allows the Company to carry forward certain historical conclusions reached under ASC Topic 840 regarding lease identification, classification, and the accounting treatment of initial direct costs. The Company elected not to record assets and liabilities on its consolidated balance sheets for any new or existing lease arrangements with lease terms of twelve months or less. The Company recognizes lease expenses for such leases on a straight-line basis over the lease term. The Company elected the transition method which allows entities to initially apply the requirements by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.
Operating lease assets are included within “Right-of-use asset”, and the corresponding operating lease liabilities are included within “Lease liability-current” for the current portion, and within “Lease liability-non-current” for the long-term portion on the consolidated balance sheets as of June 30, 2026 and December 31, 2025.
The initial lease liability is equal to the future fixed minimum lease payments discounted using the Company’s incremental borrowing rate, on a secured basis. The lease term includes optional renewal periods and early termination payments when it is reasonably certain that the Company will exercise those rights. The initial measurement of the right-of-use asset is equal to the initial lease liability plus any initial direct costs and prepayments, less any lease incentives.
Revenue recognition
We generate our revenues primarily through sales of products. We early adopted Accounting Standards Codification (“ASC”) 606 using the modified retrospective approach. The adoption of this standard did not have a material impact on our unaudited condensed consolidated financial statements. Therefore, no adjustments to opening retained earnings were necessary.
ASC 606, “Revenue from Contracts with Customers,” establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied.
11
ASC 606 requires the use of a new five-step model to recognize revenue from customer contracts. The five-step model requires that the Company (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation. The application of the five-step model to the revenue streams compared to the prior guidance did not result in significant changes in the way we record our revenue.
Income taxes
The Company accounts for current income taxes in accordance with the laws of the relevant tax authorities. Deferred income taxes are recognized when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the consolidated financial statements. 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 tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
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. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. 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. No significant penalties or interest relating to income taxes have been incurred during the six months ended June 30, 2026 and 2025. The Company does not believe there was any uncertain tax provision at June 30, 2026 and 2025.
The Company’s subsidiaries in China are subject to the income tax laws of the PRC. No income was generated outside the PRC for the six months ended June 30, 2026 and 2025. As of December 31, 2025, all of the Company’s tax returns of its PRC operating entities remain open for statutory examination by PRC tax authorities.
Recent Accounting Pronouncements
We consider the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued.
In April 2026, the FASB issued ASU 2026-01, Equity (Topic 505): Initial Measurement of Paid-in-Kind Dividends on Equity-Classified Preferred Stock. The amendments require PIK dividends to be measured based on agreement rates to improve comparability and eliminate practice diversity. Effective for annual periods beginning after December 15, 2026, and interim periods therein. Early adoption is permitted. The Company is currently evaluating the impact that adoption of this ASU will have on its interim financial statement disclosures.
In May 2026, the FASB issued ASU 2026-02, Environmental Credits and Environmental Credit Obligations (Topic 818). The amendments establish a comprehensive model for the recognition, measurement, presentation, and disclosure of environmental credits and compliance obligations. The amendments are effective for fiscal years beginning after December 15, 2027, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact that adoption of this ASU will have on its interim financial statement disclosures.
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In December 2025, the FASB issued ASU 2025-11, which clarifies the scope and disclosure requirements for interim financial reporting under ASC 270. The amendments introduce a principle requiring disclosure of events and transactions occurring after the end of the most recent annual reporting period that have a material impact on the entity and consolidate certain interim disclosure requirements. The amendments are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact that adoption of this ASU will have on its interim financial statement disclosures.
In November 2025, the FASB issued ASU 2025-08, Financial Instruments — Credit Losses (“Topic 326”): Purchased Loans (“ASU 2025-08”). The amendments expand the population of acquired loans subject to the gross-up approach, treating non-credit-deteriorated loans (excluding credit cards) as “seasoned” if purchased at least 90 days after origination or acquired in a business combination. ASU 2025-08 is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the impact that adoption of this ASU will have on its interim financial statement disclosures.
In September 2025, the FASB issued ASU 2025-07, Derivatives and Hedging (“Topic 815”) and Revenue from Contracts with Customers (“Topic 606”): Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract (“ASU 2025-07”). ASU 2025-07, expands an existing scope exception under Topic 815 to exclude non-exchange-traded contracts where the underlying is based on the operations or activities specific to one of the contract parties. The Company is currently evaluating the impact of this ASU on its financial statements.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”). The amendments in ASU 2025-05 provide entities with a practical expedient to simplify the estimation of expected credit losses on current accounts receivable and current contract assets that arise from transactions accounted for under ASC 606, Revenue from Contracts with Customers (“ASC 606”) by allowing the assumption that current conditions as of the balance sheet date will not change during the remaining life of the asset. ASU 2025-05 is effective for the Company for its for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the impact ASU 2025-05 will have on its financial statements.
We do not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the unaudited condensed consolidated financial position, statements of operations and cash flows.
Holding Company Structure
Huachen Cayman is a holding company with no material operation. The Operating Subsidiaries conduct operations in China. Huachen Cayman may rely on dividends to be paid by the PRC subsidiaries to fund its cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders, to service any debt it may incur and to pay its operating expenses. If the PRC subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other distributions to Huachen Cayman.
Inflation
Inflation does not materially affect our business or the results of our operations.
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