U Power Ltd 6-K, filed Oct 10, 2025
U Power Ltd (UCAR)
About this 6-K
U Power Ltd filed this 6-K on October 10, 2025.
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 October
Commission file number:
2F, Zuoan 88 A, Lujiazui,
Shanghai, People’s Republic of China
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
Explanatory Note
On October 10, 2025, U Power Limited (the “Company”) reported its financial results for the six months ended June 30, 2025. The Company hereby furnishes the following documents as exhibits to this report: “Unaudited Financial Results and Statements of U Power Limited for the Six (6) Months Ended June 30, 2025”; and “Operating and Financial Review and Prospects”.
1
EXHIBIT INDEX
| Number | Description of Exhibit | |
| 99.1 | Unaudited Financial Results and Statements of U Power Limited for the Six (6) Months Ended June 30, 2025 | |
| 99.2 | Operating and Financial Review and Prospects | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
2
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| U Power Limited | ||
| Date: October 10, 2025 | By: | /s/ Jia Li |
| Jia Li | ||
| Chief Executive Officer | ||
3
Exhibit 99.1
U POWER LIMITED
INDEX TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
F-1
U POWER LIMITED
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands of RMB and US$, except for number of shares)
| As of | ||||||||||||||||
| December 31, | June 30, | June 30, | ||||||||||||||
| Notes | 2024 | 2025 | 2025 | |||||||||||||
| RMB | RMB | US$ | ||||||||||||||
| ASSETS | ||||||||||||||||
| Current assets: | ||||||||||||||||
| Cash and cash equivalents | ||||||||||||||||
| Restricted cash | ||||||||||||||||
| Accounts receivable | 5 | |||||||||||||||
| Inventories | 6 | |||||||||||||||
| Advance to suppliers | 7 | |||||||||||||||
| Other current assets | 8 | |||||||||||||||
| Amount due from related parties | 16 | |||||||||||||||
| Total current assets | ||||||||||||||||
| Non-current assets: | ||||||||||||||||
| Property, plant and equipment, net | 9 | |||||||||||||||
| Intangible assets, net | 10 | |||||||||||||||
| Operating lease right-of-use assets, net | 15 | |||||||||||||||
| Long-term investments | 11 | |||||||||||||||
| Refundable deposit for investment | 12 | |||||||||||||||
| Other non-current assets | 8 | |||||||||||||||
| Total non-current assets | ||||||||||||||||
| Total assets | ||||||||||||||||
| LIABILITIES AND EQUITY | ||||||||||||||||
| Current liabilities: | ||||||||||||||||
| Short-term bank borrowing | 13 | |||||||||||||||
| Current portion of long-term borrowing | 13 | |||||||||||||||
| Accounts payable | ||||||||||||||||
| Accrued expenses and other liabilities | 14 | |||||||||||||||
| Income tax payables | 18 | |||||||||||||||
| Advances from customers | ||||||||||||||||
| Operating lease liabilities – current | 15 | |||||||||||||||
| Amount due to related parties | 16 | |||||||||||||||
| Total current liabilities | ||||||||||||||||
| Non-current liabilities: | ||||||||||||||||
| Operating lease liabilities – non-current | 15 | |||||||||||||||
| Bank borrowings | 13 | |||||||||||||||
| Commitments and contingent liabilities | 21 | |||||||||||||||
| Total non-current liabilities | ||||||||||||||||
| Total liabilities | ||||||||||||||||
| Shareholders’ equity: | ||||||||||||||||
| Class B Ordinary Shares, $ | ||||||||||||||||
| Additional paid-in capital | ||||||||||||||||
| Accumulated deficit | ( | ) | ( | ) | ( | ) | ||||||||||
| Total U POWER LIMITED’s shareholders’ equity | ||||||||||||||||
| Non-controlling interests | ||||||||||||||||
| Total equity | ||||||||||||||||
| Total liabilities and equity | ||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-2
U POWER LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Amounts in thousands of RMB and US$, except for number of shares and per share data)
| For the six months ended June 30, | ||||||||||||||||
| Notes | 2024 | 2025 | 2025 | |||||||||||||
| RMB | RMB | US$ | ||||||||||||||
| Net revenues | ||||||||||||||||
| Product sales | ||||||||||||||||
| Sourcing services | ||||||||||||||||
| Battery-swapping services | ||||||||||||||||
| Total net revenues | ||||||||||||||||
| Cost of revenues | ( | ) | ( | ) | ( | ) | ||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Sales and marketing expenses | ( | ) | ( | ) | ( | ) | ||||||||||
| General and administrative expenses | ( | ) | ( | ) | ( | ) | ||||||||||
| Research and development expenses | ( | ) | ( | ) | ( | ) | ||||||||||
| Allowance for expected credit losses | ||||||||||||||||
| Total operating expenses | ( | ) | ( | ) | ( | ) | ||||||||||
| Operating loss | ( | ) | ( | ) | ( | ) | ||||||||||
| Interest income | ||||||||||||||||
| Interest expenses | ( | ) | ( | ) | ( | ) | ||||||||||
| Other income | ||||||||||||||||
| Other expenses | ( | ) | ( | ) | ( | ) | ||||||||||
| Loss before income taxes | ( | ) | ( | ) | ( | ) | ||||||||||
| Income tax expense | 18 | ( | ) | ( | ) | |||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ||||||||||
| Less: Net loss attributable to non-controlling interests | ( | ) | ( | ) | ( | ) | ||||||||||
| Net loss attributable to the Company’s shareholders and total comprehensive loss | ( | ) | ( | ) | ( | ) | ||||||||||
| Loss per share attributable to ordinary shareholders of the Company’s shareholders * | ||||||||||||||||
| Basic and diluted | 20 | ( | ) | ( | ) | ( | ) | |||||||||
| Weighted average shares used in calculating basic and diluted loss per share * | ||||||||||||||||
| Basic and diluted | ||||||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ||||||||||
| Other comprehensive income, net of tax of nil: | ||||||||||||||||
| Foreign currency translation adjustments | ( | ) | ||||||||||||||
| Comprehensive loss | ( | ) | ( | ) | ( | ) | ||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-3
U POWER LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(Amounts in thousands of RMB and US$, except for number of shares)
| Total | ||||||||||||||||||||||||||||||||||||||||
| Class A | Class B | Additional | U POWER LIMITED | Non- | ||||||||||||||||||||||||||||||||||||
| Ordinary shares | Ordinary shares | paid-in | Accumulated | Translation | shareholders’ | controlling | Total | |||||||||||||||||||||||||||||||||
| Shares * | Amount | shares* | Amount | capital | deficit | reserve | equity | interests | equity | |||||||||||||||||||||||||||||||
| RMB | RMB | RMB | RMB | RMB | RMB | RMB | RMB | |||||||||||||||||||||||||||||||||
| Balance as of December 31, 2023 | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Consolidated net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Issuance of ordinary shares | ||||||||||||||||||||||||||||||||||||||||
| Investment Refund | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Other comprehensive income | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2024 in RMB | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Consolidated net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Issuance of ordinary shares | ||||||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2025 in RMB | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2025 in US$ | ( | ) | ||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-4
U POWER LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands of RMB and US$, except for number of shares)
| For the six months ended June 30, | ||||||||||||
| 2024 | 2025 | 2025 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ||||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||
| Depreciation and amortization | ||||||||||||
| Amortization of right-of-use assets | ||||||||||||
| Allowance for expected credit losses | ( | ) | ( | ) | ( | ) | ||||||
| Loss from investments | ||||||||||||
| Loss on impairment of inventory | ( | ) | ( | ) | ||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Accounts receivables | ( | ) | ( | ) | ( | ) | ||||||
| Inventories | ( | ) | ( | ) | ( | ) | ||||||
| Advance to suppliers | ( | ) | ||||||||||
| Other current assets | ( | ) | ( | ) | ||||||||
| Amount due from related parties | ( | ) | ( | ) | ( | ) | ||||||
| Other non-current assets | ( | ) | ||||||||||
| Accounts payables | ||||||||||||
| Accrued expenses and other payables | ( | ) | ||||||||||
| Income tax payables | - | |||||||||||
| Advance from customers | ( | ) | ||||||||||
| Amount due to related parties | ( | ) | ( | ) | ( | ) | ||||||
| Operating lease liabilities | ( | ) | ( | ) | ( | ) | ||||||
| Commitments and contingent liabilities | - | |||||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ( | ) | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||
| Purchases of property and equipment | ( | ) | ( | ) | ( | ) | ||||||
| Loans repayments from third parties | ||||||||||||
| Loan payment to related parties | ( | ) | ( | ) | ||||||||
| Return of long-term investments | ||||||||||||
| Net cash provided by investing activities | ||||||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||
| Capital contribution by controlling shareholders | ||||||||||||
| Capital contribution from issuance of ordinary shares | ||||||||||||
| Proceeds from short-term bank borrowing | ||||||||||||
| Repayments of long-term bank borrowing | ( | ) | ( | ) | ||||||||
| Repayments of loan payable | ( | ) | ( | ) | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||||||
| Net (decrease)/ increase in cash and cash equivalents and restricted cash | ( | ) | ( | ) | ||||||||
| Effects of exchange rate changes | ||||||||||||
| Cash and cash equivalents and restricted cash at beginning of year | ||||||||||||
| Cash and cash equivalents and restricted cash at end of period | ||||||||||||
| Supplemental disclosures of non-cash activities: | ||||||||||||
| Right-of-use assets obtained in exchange for new operating lease liabilities | ||||||||||||
| Cancellation of capital contribution | ||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-5
1. ORGANIZATION
(a) Nature of operations
U POWER LIMITED (the “Company”) was incorporated in the Cayman Islands on June 17, 2021, under the Cayman Islands Companies Law as an exempted company with limited liability. Anhui Yousheng New Energy Technology Group Co., Ltd. (“AHYS”, formerly known as “Shanghai Yousheng New Energy Technology Group Co. Ltd.”) was incorporated in the People’s Republic of China (the “PRC” or “China”) on May 16, 2013. AHYS, together with its subsidiaries (collectively, the “Operating Entities”) are principally engaged in the provision of: 1) new energy vehicles development and sales; 2) battery swapping stations manufacturing and sales; 3) battery swapping services; and 4) sourcing services (collectively, the “Principal Business”).
(b) Reorganization
In preparation of its initial public offering (“IPO”) in the United States, the following transactions were undertaken to reorganize the legal structure of the Operating Entities. The Company was incorporated in connection with a group reorganization (the “Reorganization”) of the Operating Entities. On June 30, 2021, and January 5, 2022, the Company incorporated two wholly-owned subsidiaries, Youcang Limited (“Youcang”) and U Robur Limited (“U Robur BVI”) in British Virgin Islands, respectively. On July 19, 2021, Youcang incorporated a wholly-owned subsidiary, Energy U Limited (“Energy U”) in Hong Kong. On January 24, 2022, U Robur BVI incorporated a wholly-owned subsidiary, U Robur Limited (“U Robur HK”). On January 27, 2021, Energy U incorporated a wholly-owned subsidiary, Shandong Yousheng New Energy Technology Development Co, Ltd. (“WFOE”) in the PRC.
On July 8, 2022, the Company, through WFOE, entered into an equity purchase agreement with AHYS and its then shareholders, through which the Company has become the ultimate primary beneficiary of AHYS. As all the entities involved in the process of the Reorganization are under common ownership of AHYS’s shareholders before and after the Reorganization, the Reorganization is accounted for in a manner similar to a pooling of interests with the assets and liabilities of the parties to the Reorganization carried over at their historical amounts. Therefore, the accompanying consolidated financial statements were prepared as if the corporate structure of the Company had been in existence since the beginning of the periods presented. The Company and its subsidiaries hereinafter are collectively referred to as the “Group”.
F-6
As of the date of this report, the details of the Company’s principal subsidiaries are as follows:
| Entity | Date of incorporation/ acquisition | Place of incorporation | Percentage of direct or indirect ownership by the Company | Principal activities | ||||
| Subsidiaries: | ||||||||
| Youcang Limited (“Youcang”) | ||||||||
| Energy U Limited (“Energy U”) | ||||||||
| Shandong Yousheng New Energy Technology Development Co, Ltd. (“WFOE”)(1) | ||||||||
| Anhui Yousheng New Energy Co., Ltd (“AHYS”)(1) | ||||||||
| Youpin Automobile Service Group Co. Ltd. (“Youpin”)(1) | ||||||||
| Shanghai Youchuangneng Digital Technology Co., Ltd. (“SY Digital Tech) (1) | ||||||||
| Youguan Financial Leasing Co., Ltd. (“Youguan Financial Leasing”)(1) | ||||||||
| Youpin Automobile Service (Shandong) Co., Ltd. (“Youpin SD”)(1) | ||||||||
| Chengdu Youyineng Automobile Service Co., Ltd. (“CD Youyineng”)(1) | ||||||||
| Shanghai Youteng Automobile Service Co., Ltd. (“SH Youteng”)(1) | ||||||||
| Liaoning Youguan New Energy Technology Co. Ltd. (“LY New Energy”)(1) | ||||||||
| Shanghai Youxu New Energy Technology Co., Ltd. (“SH Youxu”)(1) | ||||||||
| Quanzhou Youyi Power Exchange Network Technology Co., Ltd. (“QZ Youyi”)(1) | ||||||||
| Youxu New Energy Technology (Zibo) Co., Ltd. (“Youxu Zibo”)(1) | ||||||||
| Youxu (Xiamen) Power Exchange Network Technology Co., Ltd. (“Youxu XM”)(1) | ||||||||
| Wuhu Youxu New Energy Technology Co., Ltd. (“WH Youxu”) (1) | ||||||||
| Henan Youxu New Energy Technology Co., Ltd. (“HN Youxu”) (1) | ||||||||
| Youxu New Energy Technology (Nanyang) Co., Ltd. (“NY Youxu”) (1) | ||||||||
| U SWAP CO LTD(“U SWAP”) | ||||||||
| Greendrive Tech Co. Ltd(“Greendrive”) |
| (1) |
F-7
(c) Initial Public Offering
In April 2023, the Company,
in connection with its IPO in the United States, issued
(d) Additional shares issued
As of December 2023, the
Company, in connection with its additional shares issued in the United States, issued
(e) Consolidation of Ordinary Shares
On March 25, 2024, the Company
issued an aggregate of every
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of presentation
The consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”).
(b) Principles of consolidation
The accompanying consolidated financial statements of the Group include the financial statements of the Company and its subsidiaries for which the Company is the ultimate primary beneficiary.
A subsidiary is an entity in which the Company, directly or indirectly, controls more than one half of the voting power; has the power to appoint or remove the majority of the members of the board of directors (the “Board”); and to cast a majority of the votes at the meeting of the Board or to govern the financial and operating policies of the investee under a statute or agreement among the shareholders or equity holders.
All significant transactions and balances between the Company and its subsidiaries have been eliminated in consolidation. The non-controlling interests in consolidated subsidiaries are shown separately in the consolidated financial statements.
(c) Use of estimates
The preparation of consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant accounting estimates reflected in the Group’s consolidated financial statements mainly include the incremental borrowing rate used in the recognition of right-of-use assets and lease liabilities, allowance for expected credit loss, the useful lives of property, plant and equipment and intangible assets, contingent liabilities and valuation allowance for deferred tax assets. The Group bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Any future changes to these estimates and assumptions could cause a material change to the Group’s reported amounts of revenues, expenses, assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions.
F-8
(d) Functional currency and foreign currency translation
The Group uses Renminbi (“RMB”) as its reporting currency. The functional currency of the Company and its overseas subsidiaries that are incorporated in the Cayman Islands and British Virgin Islands is the U.S. Dollar (“US$”). The functional currency of the Company’s subsidiaries that are incorporated in Hong Kong is Hong Kong Dollar (“HK$”). The functional currency of the Company’s subsidiaries that are incorporated in the PRC is RMB.
In the consolidated financial statements, the financial information of the Company and other entities located outside of PRC has been translated into RMB. Assets and liabilities are translated at the exchange rates on the balance sheet date, equity amounts are translated at historical exchange rates, and revenues, expenses, gains and losses are translated using the average rate for the periods. Translation adjustments are reported as foreign currency translation adjustments and are shown as a component of other comprehensive loss in the consolidated statements of operations and comprehensive income (loss). There is foreign currency translation gain or loss recognized for the six months ended June 30, 2024 and 2025.
Transactions denominated in foreign currencies are re-measured into the functional currency at the exchange rates prevailing on the transaction dates. Financial assets and liabilities denominated in foreign currencies are re-measured into the functional currency at the exchange rates prevailing at the balance sheet date.
(e) Convenience translation
The Group’s business
is primarily conducted in China and all of the revenues are denominated in RMB. However, periodic reports made to shareholders will include
current period amounts translated into U.S. dollars using the exchange rate as of balance sheet date, for the convenience of the readers.
Translations of balances in the consolidated balance sheets, consolidated statements of comprehensive loss, change in equity and related
consolidated statements of cash flows from RMB into US$ as of and for the six months ended June 30, 2025 are solely for the convenience
of the reader and were calculated at the rate of US$1.00 to RMB
(f) Non-controlling interest
For certain subsidiaries, a non-controlling interest is recognized to reflect the portion of their equity which is not attributable, directly or indirectly, to the Group. Consolidated net loss or income on the consolidated statements of operations includes the net loss or income attributable to non-controlling interests. Non-controlling interests are classified as a separate line item in the equity section of the Group’s consolidated balance sheets and have been separately disclosed in the Group’s consolidated statements of operations to distinguish the interests from that of the Company.
(g) Cash and cash equivalents
Cash and cash equivalents represent cash on hand, time deposits and highly-liquid investments placed with banks or other financial institutions, which are unrestricted as to withdrawal and use, and which have original maturities of three months or less.
(h) Restricted cash
Restricted cash represents the cash that is not freely available to be spent nor re-invested to sustain future growth, which is legally or contractually restricted, or only to be used for a specified purpose. The restrictions can be permanent or temporary. Failure to use the asset according to agreed limitations will generate contractual or legal consequences.
(i) Allowance for expected credit loss
Accounts receivable, advance to suppliers and other current assets are recognized at original invoiced amount. The Group measures all expected credit losses at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The Group reviews the accounts receivable, advance to suppliers and other current assets periodically, and recognizes the expected credit losses based on many factors, including the customer’s payment history, its current credit-worthiness and current economic trends.
Based on the result of the Group’s estimation of collectability,
the Group recognized a reversal of RMB
F-9
(j) Inventories
Inventories, consisting of raw materials and products available for sale, are stated at the lower of cost or net realizable value. Cost of inventory are determined using the first-in-first-out method. The Group records inventory reserves for obsolete and slow-moving inventory. Inventory reserves are based on inventory obsolescence trends, historical experience and application of the specific identification method. There was no inventory impairment recognized for the six months ended June 30, 2024 and 2025, respectively.
(k) Property, plant and equipment, net
Property, plant and equipment
are stated at cost less accumulated depreciation and impairment loss, if any. Property and equipment are depreciated at rates sufficient
to write off their costs less impairment and residual value, if any, over their estimated useful lives on a straight-line basis. Leasehold
improvements are amortized over the shorter of the lease term or the estimated useful lives of the related assets.
| Category | Estimated useful life | |
| Leasehold improvements | ||
| Manufacturing equipment | ||
| Computer and electronic equipment | ||
| Office equipment | ||
| Motor vehicles |
(l) Intangible assets, net
Intangible assets are carried
at cost less accumulated amortization and impairment, if any. Intangible assets are amortized using the straight-line method over the
estimated useful lives from
(m) Impairment of long-lived assets
The Group evaluates its long-lived assets, including property, plant and equipment, software and right-of-use assets with finite lives for impairment whenever events or changes in circumstances, such as a significant adverse change to market conditions that will impact the future use of the assets, indicate that the carrying amount of an asset may not be fully recoverable. When these events occur, the Group evaluates the recoverability of long-lived assets by comparing the carrying amounts of the assets to the future undiscounted cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flows is less than the carrying amounts of the assets, the Group recognizes an impairment loss based on the excess of the carrying amounts of the assets over their fair value. Fair value is generally determined by discounting the cash flows expected to be generated by the assets, when the market prices are not readily available. There was impairment of long-lived assets recognized for the six months ended June 30, 2024 and 2025, respectively.
F-10
(n) Long-term investments
The Group’s long-term investments mainly include equity investments in entities. Investments in entities in which the Group can exercise significant influence and holds an investment in voting common stock or in-substance common stock (or both) of the investee but does not own a majority equity interest or control are accounted for using the equity method of accounting in accordance with ASC topic 323, Investments - Equity Method and Joint Ventures (“ASC 323”). Under the equity method, the Group initially records its investments at fair value. The Group subsequently adjusts the carrying amount of the investments to recognize the Group’s proportionate share of each equity investee’s net income or loss into earnings after the date of investment. The Group evaluates the equity method investments for impairment under ASC 323. An impairment loss on the equity method investments is recognized in earnings when the decline in value is determined to be other-than-temporary. There was impairment of long-term investments recognized for the six months ended June 30, 2024 and 2025, respectively.
(o) Fair value of financial instruments
Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be either recorded or disclosed at fair value, the Group considers the principal or most advantageous market in which it would transact, and it also considers assumptions that market participants would use when pricing the asset or liability.
Accounting guidance establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Accounting guidance establishes three levels of inputs that may be used to measure fair value:
Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 - Other inputs that are directly or indirectly observable in the marketplace.
Level 3 - Unobservable inputs which are supported by little or no market activity.
Financial assets and liabilities of the Group primarily consist of cash and cash equivalents, accounts receivable, amounts due from related parties, deposits and other receivables, accounts payable, amounts due to related parties, other payables, short-term bank and other borrowings and loan payables. As of June 30, 2025, the carrying values of these financial instruments are approximated to their fair values.
(p) Revenue recognition
Under ASC 606, Revenue from Contracts with Customers, the Group recognizes revenue when a customer obtains control of promised goods or services and recognizes in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services.
The Group recognized revenue according to the following five-step revenue recognition criteria based on ASC 606: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price; and (5) recognize revenue when or as the entity satisfies a performance obligation.
The Group recognized revenue when or as the control of the goods or services is transferred to a customer. Depending on the terms of the contract and the laws that apply to the contract, control of the goods and services may be transferred over time or at a point in time. Control of the goods and services is transferred over time if the Group’s performance:
| (i) | provides all of the benefits received and consumed simultaneously by the customer; |
| (ii) | creates and enhances an asset that the customer controls as the Group performs; or |
| (iii) | does not create an asset with an alternative use to the Group and the Group has an enforceable right to payment for performance completed to date. If control of the goods and services transfers over time, revenue is recognized over the period of the contract by reference to the progress towards complete satisfaction of that performance obligation. Otherwise, revenue is recognized at a point in time when the customer obtains control of the goods and services. |
F-11
If control of the goods and services transfers over time, revenue is recognized over the period of the contract by reference to the progress towards complete satisfaction of that performance obligation. Otherwise, revenue is recognized at a point in time when the customer obtains control of the goods and services.
Contracts with customers may include multiple performance obligations. For such arrangements, the Group allocates revenue to each performance obligation based on its relative standalone selling price. The Group generally determines standalone selling prices based on the prices charged to customers. If the standalone selling price is not directly observable, it is estimated using expected cost plus a margin or adjusted market assessment approach, depending on the availability of observable information. Assumptions and estimations have been made in estimating the relative selling price of each distinct performance obligation, and changes in judgments on these assumptions and estimates may impact the revenue recognition.
When either party to a contract has performed, the Group presents the contract in the consolidated balance sheets as a contract asset or a contract liability, depending on the relationship between the entity’s performance and the customer’s payment.
A contract asset is the Group’s right to consideration in exchange for goods and services that the Group has transferred to a customer. A receivable is recorded when the Group has an unconditional right to consideration. A right to consideration is unconditional if only the passage of time is required before payment of that consideration is due.
If a customer pays consideration or the Group has a right to an amount of consideration that is unconditional, before the Group transfers a good or service to the customer, the Group presents the contract liability when the payment is made, or a receivable is recorded (whichever is earlier). A contract liability is the Group’s obligation to transfer goods or services to a customer for which the Group has received consideration (or an amount of consideration is due) from the customer.
The following table sets forth a breakdown of our revenues, in absolute amounts and percentages of total revenues for the six months ended June 30, 2024 and 2025,
| For the Six Months Ended June 30, | ||||||||||||||||||||
| 2024 | 2025 | |||||||||||||||||||
| RMB | % | RMB | US$ | % | ||||||||||||||||
| (in thousands, except for percentages) | ||||||||||||||||||||
| （Unaudited） | ||||||||||||||||||||
| Sourcing services | ||||||||||||||||||||
| Product sales | ||||||||||||||||||||
| Battery-swapping services | ||||||||||||||||||||
| Total revenues | ||||||||||||||||||||
Sourcing services
The Group generates revenue from the vehicle sourcing business and battery sourcing business.
Regarding to battery sourcing business, the Group acts as a principal as of being able to fully control relevant risks and benefits during the whole business, indicated by that can decide the selling price, has a right to recall the product and cease the transaction, and bear relevant risk of damage and loss prior to the delivery of battery to the customer. The sales of battery sourcing revenues are recognized on a gross basis at a point in time when the control of the battery pack is transferred to the customer.
F-12
For vehicle sourcing business, the Group charges service fees from its customers for their purchase of vehicles, where the Group is generally acting as an agent and its performance obligation is to purchase the specified vehicles for its customers. The Group charges the customers a commission that is calculated based on the purchase price of each purchase order. Vehicle sourcing service revenues are recognized on a net basis at the point in time when the service of purchase of the specified vehicles for the Group’s customers is completed, i.e., the specified vehicle for the Group’s customers is delivered. Payments are typically received in advance and are accounted for as contract liabilities until delivery, at which point the receipt in advance from customers is offset with the prepayment to the supplier and the difference representing the commission is recognized as revenue.
Product sales
The Group generates revenues from sales of battery swapping stations. The Group identifies the users who purchase battery swapping stations as its customers. The revenue for battery swapping station sales is recognized at a point in time when the control of the product is transferred to the customer.
Battery swapping services
The Group also generates revenues from providing battery swapping services to vehicle drivers and the station control system upgrading services to the battery-swapping station owners. The Group identifies the vehicle drivers who need the services of battery swapping and the owners of battery swapping station that the Group has sold to who have demand for the station control system upgrading services as its customers.
The Group charges the battery swapping service fees from its customers based on vehicle miles traveled. However, as usually, the swapped battery will be immediately used after the payment by customers for driving and the power consumption of vehicles will be fast, the Group ignores the time interval between the timing of payment in advance by customers and the usage life of the swapped battery. The revenue generated from battery swapping services to vehicle drivers is recognized at a point in time when the Group received the payment from vehicle drivers.
The revenue generated from the station control system upgrading service is recognized over time based on a straight-line method.
Two-wheeled vehicle battery-swapping services
By providing battery swap cabinets, two-wheeled vehicle drivers can perform self-service battery swaps. We charge the drivers a certain amount as revenue from the rent of battery.
The Group charges the battery-swapping services fee for battery providing to its customers based on the service time. The Two-wheeled vehicle Battery-swapping Services recognized revenue by over time.
(q) Cost of revenues
Cost of sales of battery-swapping stations primarily includes semi-finished goods purchased from suppliers, labor costs and manufacturing including depreciation of assets associated with production.
(r) Sales and marketing expenses
Sales and marketing expenses consist primarily of (i) compensation to selling personnel, including the salaries, performance-based bonus, and other benefits; (ii) travel cost related to the sales and marketing function; (iii) advertising, marketing and brand promotion expenses; and (iv) other expenses in relation to the selling and marketing activities. Advertising expenses consist primarily of costs for the promotion of corporate image and product marketing.
F-13
(s) Research and development expenses
Research and development expenses consist primarily of personnel-related costs directly associated with research and development organization. The Group’s research and development expenses are related to enhancing and developing UOTTA technology for its existing products and new product development. The Group expenses research and development costs as incurred.
(t) General and administrative expenses
General and administrative expenses consist primarily of salaries, bonuses and benefits for employees involved in general corporate functions, and those not specifically dedicated to research and development activities, such as depreciation and amortization of fixed assets which are not used in research and development activities, legal and other professional services fees, rental and other general corporate related expenses.
(u) Employee benefits
Full time employees of the Group in the PRC participate in a government mandated defined contribution plan, pursuant to which certain pension benefits, medical care, employee housing fund and other welfare benefits are provided to the employees. Chinese labor regulations require that the PRC subsidiaries of the Group make contributions to the government for these benefits based on certain percentages of the employees’ salaries, up to a maximum amount specified by the local government. The Group has no legal obligation for the benefits beyond the contributions made.
(v) Government grants
The Group’s PRC-based subsidiaries received government subsidies from certain local governments. The Group’s government subsidies consisted of specific subsidies and other subsidies. Specific subsidies are subsidies that the local government has provided for a specific purpose, such as product development and renewal of production facilities. Other subsidies are the subsidies that the local government has not specified its purpose for and are not tied to future trends or performance of the Group. Receipt of such subsidy income is not contingent upon any further actions or performance of the Group and the amounts do not have to be refunded under any circumstances. The Group recorded specific purpose subsidies as advances payable when received. For specific subsidies, upon government acceptance of the related project development or asset acquisition, the specific purpose subsidies are recognized to reduce related R&D expenses or the cost of asset acquisition. Other subsidies are recognized as other operating income upon receipt as further performance by the Group is not required.
(w) Taxation
Income Taxes
Current income taxes are provided on the basis of income/(loss) for financial reporting purposes, adjusted for income and expense items which are not assessable or deductible for income tax purposes, in accordance with the regulations of the relevant tax jurisdictions. Deferred income taxes are provided using the assets and liabilities method. Under this method, deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. The tax base of an asset or liability is the amount attributed to that asset or liability for tax purposes. The effect on deferred taxes of a change in tax rates is recognized in the consolidated statement of income and comprehensive income in the period of change. A valuation allowance is provided to reduce the amount of deferred tax assets if it is considered more-likely-than-not that some portion of, or all of the deferred tax assets will not be realized.
F-14
Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Group considers positive and negative evidence when determining whether a portion or all of its deferred tax assets will more likely than not be realized. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of statutory carry-forward periods, its experience with tax attributes expiring unused, and its tax planning strategies. The ultimate realization of deferred tax assets is dependent upon its ability to generate sufficient future taxable income within the carry-forward periods provided for in the tax law and during the periods in which the temporary differences become deductible. When assessing the realization of deferred tax assets, the Group considers possible sources of taxable income including (i) future reversals of existing taxable temporary differences, (ii) future taxable income exclusive of reversing temporary differences and carry-forwards, (iii) future taxable income arising from implementing tax planning strategies, and (iv) specific known trend of profits expected to be reflected within the industry.
Value added tax
Revenue represents the invoiced
value of goods and services, net of value added tax (“VAT”). The VAT is based on gross sales price with VAT rates of
Uncertain tax positions
The Group applies the provisions of ASC topic 740 (“ASC 740”), Accounting for Income Taxes, to account for uncertainty in income taxes. ASC 740 prescribes a recognition threshold a tax position is required to meet before being recognized in the financial statements. The benefit of a tax position is recognized if a tax return position or future tax position is “more likely than not” to be sustained under examination based solely on the technical merits of the position. Tax positions that meet the “more likely than not” recognition threshold is measured, using a cumulative probability approach, at the largest amount of tax benefit that has a greater than fifty percent likelihood of being realized upon settlement. The estimated liability for unrecognized tax benefits is periodically assessed for adequacy and may be affected by changing interpretations of laws, rulings by tax authorities, changes and or developments with respect to tax audits, and the expiration of the statute of limitations. Additionally, in future periods, changes in facts and circumstances, and new information may require the Group to adjust the recognition and measurement of estimates with regards to changes in individual tax position. Changes in recognition and measurement of estimates are recognized in the period in which the change occurs.
The Group’s operating
subsidiaries in the PRC are subject to examination by the relevant tax authorities. According to the PRC Tax Administration and Collection
Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made by the taxpayer or the
withholding agent. The statute of limitations is extended to five years under special circumstances, where the underpayment of taxes is
more than RMB
(x) Comprehensive loss
The Group has adopted FASB Accounting Standard Codification Topic 220 (“ASC 220”) “Comprehensive income”, which establishes standards for reporting and the presentation of comprehensive income (loss), its components and accumulated balances.
There was RMB
F-15
(y) Leases
The Group accounts for lease under ASC Topic 842, Leases. The Group determines if an arrangement is or contains a lease at inception. Right-of-use assets and liabilities are recognized at lease commencement date based on the present value of remaining lease payments over the lease terms. The Group considers only payments that are fixed and determinable at the time of lease commencement.
At the commencement date, the lease liability is recognized at the present value of the lease payments not yet paid, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate for the same term as the underlying lease. The right-of-use asset is recognized initially at cost, which primarily comprises the initial amount of the lease liability, plus any initial direct costs incurred. All right-of-use assets are reviewed for impairment annually. There was impairment for right-of-use lease assets for the six months ended June 30, 2024 and 2025, respectively.
Operating lease assets are included within “right-of-use assets - operating lease”, and the corresponding operating lease liabilities are included within “operating lease liabilities” on the consolidated balance sheets as of December 31, 2024 and June 30, 2025, respectively.
(z) Commitments and contingencies
In the normal course of business, the Group is subject to contingencies, such as legal proceedings and claims arising out of its business, which cover a wide range of matters. Liabilities for contingencies are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.
If the assessment of a contingency indicates that it is probable that a loss is incurred and the amount of the liability can be estimated, then the estimated liability is accrued in the consolidated financial statements. If the assessment indicates that a potential loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss, if determinable and material, would be disclosed.
The Group recognized RMB
(aa) Segment reporting
ASC 280, Segment Reporting, (“ASC 280”), establishes standards for companies to report in their financial statement information about operating segments, products, services, geographic areas, and major customers.
Based on the criteria established by ASC 280, the Group’s chief operating decision maker (“CODM”) has been identified as the Group’s Chief Executive Officer, who reviews consolidated results when making decisions about allocating resources and assessing performance of the Group. As a whole and hence, the Group has only one reportable segment. The Group does not distinguish between markets or segments for the purpose of internal reporting. As the Group’s long-lived assets are substantially located in the PRC, no geographical segments are presented.
F-16
(ab) Recent accounting pronouncements
In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses”, which will require the measurement of all allowance for expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Subsequently, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, to clarify that receivables arising from operating leases are within the scope of lease accounting standards. Further, the FASB issued ASU No. 2019-04, ASU 2019-05, ASU 2019-10, ASU 2019-11 and ASU 2020-02 to provide additional guidance on the credit losses standard, which defers the effective date of ASU No. 2016-13 for smaller reporting companies to fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. The impact of the adoption on the consolidated balance sheets, statements of operations, and statements of cash flows was immaterial.
(ac) Recent accounting pronouncements
In June 2022, the FASB issued ASU 2023-03 Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. The update clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The update also clarifies that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The update also requires certain additional disclosures for equity securities subject to contractual sale restrictions. The amendments in this update are effective for the Group beginning January 1, 2024 on a prospective basis. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. The Group does not expect that the adoption of this guidance will have a material impact on its financial position, results of operations and cash flows.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting: Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which focuses on improving reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. A public entity shall disclose for each reportable segment the significant expense categories and amounts that are regularly provided to the CODM and included in reported segment profit or loss. ASU 2023-07 also requires public entities to provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. Entities are permitted to disclose more than one measure of a segment’s profit or loss if such measures are used by the CODM to allocate resources and assess performance, as long as at least one of those measures is determined in a way that is most consistent with the measurement principles used to measure the corresponding amounts in the consolidated financial statements. ASU 2023-07 is applied retrospectively to all periods presented in financial statements, unless it is impracticable. This update will be effective for the Group’s fiscal years beginning after December 15, 2024, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Group is currently in the process of evaluating the disclosure impact of adopting ASU 2023-07.
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740). The ASU requires specific disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. The ASU is effective on a prospective basis for annual periods beginning after December 15, 2024. Early adoption is also permitted for annual financial statements that have not yet been issued or made available for issuance. This ASU will result in the required additional disclosures being included in the consolidated financial statements, once adopted. The Company is in the process of evaluating the impact of the new guidance and does not expect it to have a significant impact on its consolidated financial statements.
F-17
3. LIQUIDITY
For the six months ended
June 30, 2025, the Group reported a net loss of RMB
In assessing its liquidity, management monitors and analyzes the Group’s cash and cash equivalents, its ability to generate sufficient revenue sources and ability to obtain additional financial support in the future, and its operating and capital expenditure commitments.
The Group’s primary source of liquidity historically has been cash generated from its business operations, bank loans, equity contributions from its shareholders and borrowings, which have historically been sufficient to meet its working capital and capital expenditure requirements.
As of the year ended December
31, 2024 and the six months ended June 30, 2025, the Group’s cash and cash equivalents and restricted cash were RMB
The Group believes that the
substantial doubt of its ability to continue as going concern is alleviated based on the proceeds received from investors and anticipated
increase in cash generated from operations. Meanwhile, on an on-going basis, the Group also has received the financial support commitments
from the Company’s key management to enable the Group to meet its other liabilities and commitments. The Group received an additional
capital injection of RMB
The management believes that the Group will continue as a going concern in the following 12 months from the date the Group’s half of 2025 consolidated financial statements are issued. The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainties described above.
4. CONCENTRATION OF RISKS
(a) Political, social and economic risks
The Group’s operations could be adversely affected by significant political, economic and social uncertainties in the PRC. Although the PRC government has been pursuing economic reform policies for more than 20 years, no assurance can be given that the PRC government will continue to pursue such policies or that such policies may not be significantly altered, especially in the event of a change in leadership, social or political disruption or unforeseen circumstances affecting the PRC political, economic and social conditions. There is also no guarantee that the PRC government’s pursuit of economic reforms will be consistent or effective.
(b) Interest rate risk
The Group is exposed to interest rate risk on its interest-bearing assets and liabilities. As part of its asset and liability risk management, the Group reviews and takes appropriate steps to manage its interest rate exposure on its interest-bearing assets and liabilities. The Group has not been exposed to material risks due to changes in market interest rates, and has not used any derivative financial instruments to manage the interest risk exposure during the years presented.
F-18
(c) Credit risk
Financial
instruments that potentially subject the Group to significant concentrations of credit risk consist primarily of cash. As of the year
ended December 31, 2024 and the six months ended June 30, 2025, approximately RMB
The Group is also exposed to risk from its accounts receivable and other receivables. These assets are subjected to credit evaluations. An allowance has been made for estimated unrecoverable amounts which have been determined by reference to past default experience and the current economic environment.
(d) Currency convertibility risk
Substantially the Group’s operating activities are settled in RMB, which is not freely convertible into foreign currencies. All foreign exchange transactions take place either through the People’s Bank of China or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the People’s Bank of China. Approval of foreign currency payments by the People’s Bank of China or other regulatory institutions requires submitting a payment application form together with supporting documents.
5. ACCOUNTS RECEIVABLE
Accounts receivable and the allowance for expected credit losses consisted of the following:
| As of December 31, 2024 | As of June 30, 2025 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| (Unaudited） | ||||||||||||
| Accounts receivable | ||||||||||||
| Less: allowance for expected credit losses | ( | ) | ( | ) | ( | ) | ||||||
As of the year ended December
31, 2024 and the six months ended June 30, 2025, all accounts receivable were due from third-party customers. There were and RMB
The movement of allowance of expected credit loss was as follows:
| December 31, 2024 | As of June 30, 2025 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| (Unaudited) | ||||||||||||
| At the beginning of the year | ( | ) | ( | ) | ( | ) | ||||||
| Additions | ( | ) | ( | ) | ( | ) | ||||||
| At the end of the period | ( | ) | ( | ) | ( | ) | ||||||
6. INVENTORY
| As of December 31, 2024 | As of June 30, 2025 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| (Unaudited） | ||||||||||||
| Raw materials | ||||||||||||
| Low value consumables | ||||||||||||
| Finished goods | ||||||||||||
| Less: inventory impairment | ( | ) | - | - | ||||||||
There was and impairment of inventory recognized for the six months ended June 30, 2024 and 2025.
F-19
7. ADVANCE TO SUPPLIERS
Advance to suppliers consisted of the following:
| As of December 31, 2024 | As of June 30, 2025 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| (Unaudited） | ||||||||||||
| Advance to suppliers | ||||||||||||
| Less: allowance for expected credit losses | ( | ) | ( | ) | ( | ) | ||||||
As of the year ended December
31, 2024, the balance of advance to suppliers mainly represented the prepayments in relation to the development and purchase of battery
swapping stations as well as developing UOTTA-powered EVs. As of the six months ended June 30, 2025, the balance of advance to suppliers
mainly represented the prepayments in relation to the development of vehicle sourcing, general and administrative expenses, and purchase
of battery swapping stations.
| As of December 31, 2024 | As of June 30, 2025 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| (Unaudited） | ||||||||||||
| Balance at beginning of the period | ( | ) | ( | ) | ( | ) | ||||||
| Additional reversal for expected credit losses | ||||||||||||
| Balance at the end of the period | ( | ) | ( | ) | ( | ) | ||||||
8. OTHER CURRENT ASSETS AND NON-CURRENT ASSETS
Other current assets consisted of the following:
| As of December 31, 2024 | As of June 30, 2025 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| (Unaudited） | ||||||||||||
| Value-added tax recoverable | ||||||||||||
| Loans to third parties (i) | ||||||||||||
| Deposits | ||||||||||||
| Staff advances | ||||||||||||
| Others | ||||||||||||
| Less: Allowance for expected credit losses | ( | ) | ( | ) | ( | ) | ||||||
| (i) | In January 2023, LY New Energy, Youpin, Youxu Zibo and HN Youxu, respectively, entered into an one-year loan agreement signed annually with Shanghai Huazhen Construction Engineering Co., Ltd (“SH Huazhen”), pursuant to which LY New Energy, Youpin, Youxu Zibo and HN Youxu were entitled to borrow a total loan amount of RMB
In December 2023, Youguan Financial Leasing entered into a one-year loan agreement with Cao Yue, Gong Hua and He Guangquan for revolving loan quota, each quota of RMB
|
F-20
An analysis of the doubtful accounts was as follows:
| As of December 31, 2024 | As of June 30, 2025 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| (Unaudited） | ||||||||||||
| Balance at beginning of the period | ( | ) | ( | ) | ( | ) | ||||||
| Additional (allowance)/reversal for doubtful accounts | ( | ) | ||||||||||
| Balance at the end of the period | ( | ) | ( | ) | ( | ) | ||||||
Other non-current assets consisted of the following:
| As of December 31, 2024 | As of June 30, 2025 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| (Unaudited) | ||||||||||||
| Loans to third parties (ii) | ||||||||||||
| Long-term deferred expenses(iii) | ||||||||||||
| (ii) | |
In April 2023, the Group entered into a cooperation agreement with Richness Fortune Credit (HK) Company Limited (“Richness”), whereby the Group agreed to provide a $ |
| (iii) |
F-21
9. PROPERTY, PLANT AND EQUIPMENT, NET
Property and equipment consisted of the following:
| As of December 31, 2024 | As of June 30, 2025 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| (Unaudited) | ||||||||||||
| Leasehold improvements | ||||||||||||
| Computer and network equipment | ||||||||||||
| Manufacturing equipment | ||||||||||||
| Office equipment | ||||||||||||
| Motor vehicles | ||||||||||||
| Construction in process | ||||||||||||
| Less: loss of impairment | ( | ) | ( | ) | ( | ) | ||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ( | ) | ||||||
For the six months ended
June 30, 2024 and 2025, the Group recorded depreciation expenses of RMB
The loss of the impairment was due to the permanent withdrawn of a production line made in 2023.
10. INTANGIBLE ASSETS, NET
The following table presents the Group’s intangible assets as of the respective balance sheet dates:
| Purchased software | Internal - use software | Total | Total | |||||||||||||
| RMB | RMB | RMB | US$ | |||||||||||||
| Net balance as of December 31, 2024 | ||||||||||||||||
| Additions | ||||||||||||||||
| Amortization expense | ( | ) | ( | ) | ( | ) | ||||||||||
| Net balance as of June 30, 2025 | ||||||||||||||||
The intangible assets are
amortized using the straight-line method, which is the Group’s best estimate of how these assets will be economically consumed over
their respective estimated useful lives of
Amortization expenses for
intangible assets were RMB
The annual estimated amortization expenses for the intangible assets for each of the next five years are as follows:
| RMB | US$ | |||||||
| 2025 (July – December) | ||||||||
| 2026 | ||||||||
F-22
11. LONG-TERM INVESTMENTS
The Group’s long-term investments consisted of the following:
| As of December 31, 2024 | As of June 30, 2025 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| (Unaudited) | ||||||||||||
| Equity investments: | ||||||||||||
| Zibo Hengxin Investment Partnership (Limited Partnership) (the “Fund”) (i) | ||||||||||||
| Huzhou Zheyou New Energy Sales Co., Ltd. (“Huzhou Zheyou”) (ii) | ||||||||||||
| MATSON (HONG KONG)(iii) | ||||||||||||
| UNEX EV B.V(iv) | ||||||||||||
| Less: impairment on equity investments | ( | ) | ( | ) | ( | ) | ||||||
| (i) | In December 2020, the Group entered into a partnership agreement with Zibo Hengxin Investment Partnership (Limited Partnership) and its participating shareholder, Guanmiao (Beijing) Investment Management Co., Ltd. (“Guanmiao”), whereby the Group agreed to purchased limited partnership interest in Zibo Hengxin Investment Fund Partnership (Limited Partnership) (the “Fund”) in the amount of RMB |
| The Fund’s investment strategy is primarily to invest in emerging companies of new energy automobile industry. The Fund is scheduled to be in existence until 2025, unless terminated sooner or extended in accordance with the amended and restated limited partnership agreement. |
| (ii) |
| (iii) |
| (iv) |
F-23
12. REFUNDABLE DEPOSIT FOR INVESTMENT
The balance represented loans
to Shanghai Lingneng Electricity Selling Co., Ltd. (“SH Lingneng”) for its operations pursuant to loan agreements entered
into in 2019, bearing an interest rate of
13. BANK BORROWINGS
Bank borrowings were as follows as of the respective balance sheet dates:
| As of December 31, 2024 | As of June 30, 2025 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| (Unaudited) | ||||||||||||
| Short-term bank borrowing(i) | ||||||||||||
| Long-term bank borrowing, current portion | ||||||||||||
| Long-term bank borrowing, non-current portion(ii) | ||||||||||||
| (i) |
| (ii) |
14. ACCRUED EXPENSES AND OTHER LIABILITIES
Accrued expenses and other liabilities consisted of the following:
| As of December 31, 2024 | As of June 30, 2025 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| (Unaudited) | ||||||||||||
| Payroll and welfare payables | ||||||||||||
| Loans from third parties | ||||||||||||
| Payable to Anhui Juhu (ii) | ||||||||||||
| Payable to Yidong (iii) | ||||||||||||
| Interest payables | ||||||||||||
| Customer deposit | ||||||||||||
| Accrued expenses | ||||||||||||
| Deferred consideration in relation to investment (i) | ||||||||||||
| Others | ||||||||||||
| (i) |
| (ii) |
F-24
| (iii) |
15. LEASES
The Company leases buildings, office facilities, land use rights and batteries in PRC. The Company does not have any finance leases for the year ended December 31, 2024, and for the six months ended June 30, 2025, respectively. Operating leases result in the recognition of right-of-use (“ROU”) assets and lease liabilities on the balance sheet. ROU assets represent the Company’s right to use the leased asset for the lease term, and lease liabilities represent the obligation to make lease payments. The operating lease expenses were charged to cost of sales, research and development expenses and general and administrative expenses.
A summary of supplemental information related to operating leases as of the year ended December 31, 2024 and the six months ended June 30, 2025 was as follows:
| As of December 31, 2024 | As of June 30, 2025 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| (Unaudited) | ||||||||||||
| Operating lease right-of-use assets, net | ||||||||||||
| Operating lease liabilities, current | ||||||||||||
| Operating lease liabilities, non-current | ||||||||||||
| Weighted average remaining lease terms | ||||||||||||
| Weighted average discount rate | % | % | % | |||||||||
Future lease payments under operating leases as of June 30, 2025 were as follows:
| As of June 30, 2025 | ||||
| RMB | ||||
| (Unaudited) | ||||
| FY2025 | ||||
| FY2026 | ||||
| FY2027 | ||||
| FY2028 | ||||
| FY2029 | ||||
| FY2030 | ||||
| FY2031 | ||||
| Total future lease payment | ||||
| less: imputed interest | ( | ) | ||
| Represent value of future lease payments(i) | ||||
| (i) |
F-25
16. RELATED PARTY TRANSACTIONS
Major related parties that transacted with the Group and their respective relationship to the Group are listed as below:
| Names of the related parties | Relationship with the Group | |
| Hangzhou Youyue Travel Technology Co., Ltd. (“Hangzhou Youyue”) | ||
| Shanghai Youzhang Commerical Information Consulting Partnership (Limited Partnership) (“Shanghai Youzhang”) | ||
| Ningbo Youheng Automobile Service Co., Ltd. (“Ningbo Youheng Automobile” | ||
| Zhejiang Youxiaodian Automobile Service Co., Ltd. (“Zhejiang Youxiaodian”) | ||
| Qingshan Wei | ||
| Youjia Technology (Shanghai) Co., Ltd. (“Youjia Technology”) | ||
| Shanghai Youpinsuoer New Energy Technology Co., Ltd. (“Shanghai Youpinsuoer”) | ||
| Jia Li | ||
| Bingyi Zhao | ||
| Shandong Youyidian Automobile Technology Co., Ltd. (“Shandong Youyidian”) | ||
| Youche Jingpin E-commerce (Shanghai) Co., Ltd. (“Youche Jingpin”) | ||
| Shanghai Youcang Business Consulting Partnership (Limited Partnership) (“Shanghai Youcang”) | ||
| Nanmu (Shanghai) Financial Leasing Co., Ltd(“Nanmu”) | ||
| Ke Li |
(a)
| As of December 31, 2024 | As of June 30, 2025 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| (Unaudited) | ||||||||||||
| Nanmu (Shanghai) Financial Leasing Co., Ltd | ||||||||||||
| Jia Li | ||||||||||||
| Ke Li | ||||||||||||
| Shanghai Youcang | ||||||||||||
| Bingyi Zhao | ||||||||||||
(b)
| As of December 31, 2024 | As of June 30, 2025 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| (Unaudited) | ||||||||||||
| Ke Li | ||||||||||||
| Jia Li | ||||||||||||
| Bingyi Zhao | ||||||||||||
| UNEX EV | ||||||||||||
F-26
(c) Related party’s transaction
| For the years ended December 31, | ||||||||||||
| 2024 | 2025 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| (Unaudited) | ||||||||||||
| Loans to Nanmu (Shanghai) Financial Leasing Co., Ltd | ||||||||||||
| Loans to Jia Li | ||||||||||||
| Loans to Ke Li | ( |
) | ( |
) | ||||||||
| Loans to Shanghai Youcang | ( |
) | ( |
) | ( |
) | ||||||
| Loans to Bingyi Zhao | ||||||||||||
| Loans to Bingyi Zhao | ( |
) | ( |
) | ||||||||
| Loans from Ke Li | ( |
) | ( |
) | ( |
) | ||||||
| Loans from Jia Li | ( |
) | ||||||||||
| Loans from Bingyi Zhao | ( |
) | ( |
) | ( |
) | ||||||
| Loans from UNEX EV | ||||||||||||
| Loans from Hangzhou Youyue | ( |
) | ||||||||||
17. EMPLOYEE BENEFIT EXPENSES
All eligible employees of
the Group are entitled to staff welfare benefits, including medical care, welfare subsidies, unemployment insurance and pension benefits
through a PRC government-mandated multi-employer defined contribution plan. The Group is required to make contributions to the plan and
accrues these benefits based on certain percentages of the qualified employees’ salaries. The Group recorded employee benefit expenses
of RMB
18. INCOME TAXES
Cayman Islands
The Company is incorporated in the Cayman Islands and conducts its primary business operations through the subsidiaries in the PRC and Hong Kong. Under the current laws of the Cayman Islands, the Cayman Islands levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and the Company is, therefore, not subject to tax on income or capital gains arising in Cayman Islands.
British Virgin Islands
Subsidiaries in British Virgin Islands are not subject to tax on income or capital gains under the current laws of the British Virgin Islands. Additionally, upon payments of dividends by the Company to its shareholders, no British Virgin Islands withholding tax will be imposed.
Hong Kong
Subsidiaries in Hong Kong
are subject to a two-tiered income tax rate for taxable income earned in Hong Kong. The first
PRC
The Company’s PRC subsidiaries
are incorporated in the PRC and subject to the statutory rate of
Dividends, interests, rent
or royalties payable by the Company’s PRC subsidiaries, to non-PRC resident enterprises, and proceeds from any such non-resident
enterprise investor’s disposition of assets (after deducting the net value of such assets) shall be subject to
The EIT Law also provides
that enterprises established under the laws of foreign countries or regions and whose “place of effective management” is located
within the PRC are considered PRC tax resident enterprises and subject to PRC income tax at the rate of
F-27
As of June 30, 2025, the
administrative practice associated with interpreting and applying the concept of “place of effective management” is unclear.
If the Company is deemed as a PRC tax resident, it will be subject to
Loss before income taxes consisted of:
| For the Six Months Ended June 30, | ||||||||||||
| 2024 | 2025 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| (Unaudited) | ||||||||||||
| Non-PRC | ( | ) | ( | ) | ( | ) | ||||||
| PRC | ( | ) | ( | ) | ( | ) | ||||||
| ( | ) | ( | ) | ( | ) | |||||||
The following table presents the composition of income tax expenses for the six months ended June 30, 2024 and 2025:
| For the Six Months Ended June 30, | ||||||||||||
| 2024 | 2025 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| (Unaudited) | ||||||||||||
| Current income tax expense | ||||||||||||
| - | ||||||||||||
The reconciliation of the effective tax rate and the statutory income tax rate applicable to PRC operations was as follow:
| For the years ended December 31, | For the Six Months Ended | |||||||||||
| 2024 | June 30, 2025 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| (Unaudited) | ||||||||||||
| Loss before provision for income taxes | ( | ) | ( | ) | ( | ) | ||||||
| Income tax benefit computed at an applicable tax rate of | ( | ) | ( | ) | ( | ) | ||||||
| The effect of different tax rate | ||||||||||||
| Change in valuation allowance | ||||||||||||
| Income tax expense | ||||||||||||
Deferred Taxes
Deferred income taxes reflect
the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and
the amounts used for income tax purposes.
| As of December 31, 2024 | As of June 30, 2025 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| (Unaudited) | ||||||||||||
| Deferred tax assets: | ||||||||||||
| Intra-group transaction | ||||||||||||
| Total deferred tax assets | ||||||||||||
| Less: valuation allowance | ( | ) | ( | ) | ( | ) | ||||||
| Deferred tax assets, net | - | - | - | |||||||||
Uncertain tax positions
The Group evaluates each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measure the unrecognized benefits associated with the tax positions. As of the year ended December 31, 2024 and the six months ended June 30, 2025, the Group did not have any significant unrecognized uncertain tax positions.
The Group did not accrue any liability, interest or penalties related to uncertain tax positions in its provision for income taxes line of its condensed consolidated statements of operations for the periods ended June 30, 2024 and 2025, respectively.
F-28
19. RESTRICTED NET ASSETS
Relevant PRC statutory laws and regulations permit payments of dividends by the Group’s PRC subsidiaries only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. The results of operations reflected in the financial statements prepared in accordance with U.S. GAAP differ from those reflected in the statutory financial statements of the Company’s subsidiaries.
In accordance with the Regulations
on Enterprises with Foreign Investment of China, a foreign invested enterprise established in the PRC is required to provide certain statutory
reserves, namely general reserve fund, enterprise expansion fund, and staff welfare and bonus fund which are appropriated from net profit
as reported in the enterprise’s PRC statutory accounts, which is included in retained earnings accounts in equity section of the
consolidated balance sheets. A wholly foreign owned invested enterprise is required to allocate at least
Appropriations to the enterprise expansion fund and staff welfare and bonus fund are at the discretion of the board of directors for all foreign invested enterprises. The aforementioned reserves can only be used for specific purposes and are not distributable as cash dividends. If any PRC subsidiary incurs debt on its own behalf in the future, the instruments governing the debt may restrict its ability to pay dividends or make other payments to the Group. Any limitation on the ability of the PRC subsidiaries to distribute dividends or other payments to their respective shareholders could materially and adversely limit the ability to grow, make investments or acquisitions that could be beneficial to pay dividends.
Additionally, in accordance
with the Company Law of the PRC, a domestic enterprise is required to provide a statutory common reserve of at least
Because the Group’s
entities in the PRC can only be paid out of distributable profits reported in accordance with PRC accounting standards, the Group’s
entities in the PRC are restricted from transferring a portion of their net assets to the Company. The restricted amounts include the
paid-in capital and additional paid-in capital of the Group’s entities in the PRC. The aggregate amount of paid-in capital and additional
paid-in capital, which is the amount of net assets of the Group’s entities in the PRC (mainland) not available for distribution,
were RMB
20. LOSS PER SHARE
Basic and diluted earnings per share for the years presented were calculated as follows:
| For the Six Months Ended June 30, | ||||||||||||
| 2024 | 2025 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| (Unaudited) | ||||||||||||
| Numerator: | ||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ||||||
| Less: net loss attributable to non-controlling interest | ( | ) | ( | ) | ( | ) | ||||||
| Net loss attributable to the Company’s ordinary shareholders | ( | ) | ( | ) | ( | ) | ||||||
| Denominator: | ||||||||||||
| Weighted average number of ordinary shares outstanding used in calculating basic and diluted earnings per share | ||||||||||||
| Basic and diluted earnings per share: | ( | ) | ( | ) | ( | ) | ||||||
F-29
21. COMMITMENTS AND CONTINGENCIES
Commitments
The assets pledged as collaterals for loans of the Group is discussed in Note 13. BANK BORROWINGS.
The following table sets forth the Group’s contractual obligations as of June 30, 2025:
| Payment due by period | ||||||||||||||||||||||||
| Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | ||||||||||||||||||||
| RMB | US$ | |||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||
| Current portion of long-term borrowing (i) | ||||||||||||||||||||||||
| Short-term bank borrowing | ||||||||||||||||||||||||
| Operating lease liabilities (ii) | ||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||
| (i) |
| (ii) |
Contingencies
The Group is subject to legal proceedings and regulatory actions in the ordinary course of business. The results of such proceedings cannot be predicted with certainty, but the Group does not anticipate that the final outcome arising out of any such matter will have a material adverse effect on the Group’s consolidated business, financial position, cash flows or results of operations taken as a whole except the following:
On July 1, 2021, Youpin Automobile
Service Group Co., Ltd. (“Youpin”) signed an Investment Contract with the Wuhu High-Tech Industrial Development Zone Management
Committee (the “Committee”) for a new energy vehicle industrial cluster project. Youpin set up Wuhu Youxu New Energy Technology
Co., Ltd. as the project company, and the Committee agreed to provide financial subsidies. On October 15, 2021, the Committee paid the
first-year rental subsidy (RMB
The defendants in this case
are Quanzhou Youyi Dianhuan Network Technology Co., Ltd., Youpin Automobile Service (Shandong) Co., Ltd., and Shanghai Youxu New Energy
Technology Co., Ltd. The plaintiff, Quanzhou Meibiao Youxin Automobile Sales Service Co., Ltd., filed the following claims: (1) payment
of RMB
F-30
Liaoning Youguan and Youpin
are the defendants in this case, with the Dalian Jinpu New Area Administrative Committee as the plaintiff. The plaintiff and the defendants
entered into a cooperative investment agreement concerning new energy vehicles and related industries. The agreement stipulated that the
plaintiff would provide financial support funds to the defendants under specific conditions. The plaintiff is now demanding the defendants
return the support funds in the amount of RMB
Shanghai Youxu and Youxu
Nanyang are the defendants in this case, with the plaintiff being Shanghai Jiehuan Intelligent Technology Co., Ltd. The parties had previously
entered into a debt-to-equity swap agreement concerning multiple creditor’s rights. The agreement stipulated that the defendants were
required to complete the equity transfer by May 31, 2025. Due to the procedural timeline required for the equity transfer, the defendants
failed to complete it by the deadline. Consequently, the plaintiff filed a claim demanding the defendants pay the outstanding debt of
RMB
Youxu Zibo and Youpin Shandong
are the defendants in this case, with Shandong Qiying Industrial Investment and Development Co., Ltd. as the plaintiff. The parties entered
into a contract in 2022, stipulating that the defendants would lease the plaintiff’s factory building and dormitories by means of equity
transfer. In 2025, the plaintiff filed a lawsuit requesting the court to order the defendants to pay RMB
Youguan Financial Leasing (China)
Co., Ltd. sued Sichuan Maichebang Automobile Sales Co., Ltd., Yuan Mingqin and Yuan Jinsong for rent and liquidated damages of a total
of RMB
Quanzhou Youyi Power Exchange
Network Technology Co., Ltd., Youpin SD and SH Youxu were sued by Quanzhou Meibiaoyouxin Automobile Sales Service Co., Ltd. for payment
of RMB
AHYS, Shanghai Youcang Business
Consulting Partnership (Limited Partnership), and Li Jia were sued by Zhuji Huarui Wenhua Equity Investment Partnership (Limited Partnership),
Zhuji Huarui Torch Venture Capital Investment Partnership (Limited Partnership) and Zhuji Fuhui Industrial Transformation and Upgrading
Investment Fund Partnership (Limited Partnership). The plaintiffs requested the court to order the defendants to jointly pay the investment
exit amount of RMB
Zibo Hengsong You Car Equity
Investment Fund Partnership (Limited Partnership) has sued Youpin SD, AHYS, WFOE and Mr. Jia Li. The plaintiff requests the defendants
to repurchase the
F-31
Liaoning Youguan and Youpin
are the defendants in this case, with the Dalian Jinpu New Area Administrative Committee as the plaintiff. The plaintiff and the defendants
entered into a cooperative investment agreement concerning new energy vehicles and related industries. The agreement stipulated that the
plaintiff would provide financial support funds to the defendants under specific conditions. The plaintiff is now demanding the defendants
return the support funds in the amount of RMB
A contingency provision of
RMB
Guarantees
From August 2020 to November
2021, Youguan Financial Leasing provided a total of RMB
Other than as shown above, the Group did not have any significant capital and other commitments, long-term obligations, provisions or guarantees as of June 30, 2025.
22. SUBSEQUENT EVENTS
The Group evaluated all events that occurred up to the date of this report and determined that there were no events that would have required adjustment or disclosure in the consolidated financial statements, except the following:
Shanghai Youxu and Youxu
Nanyang are the defendants in this case, with the plaintiff being Shanghai Jiehuan Intelligent Technology Co., Ltd. The parties had previously
entered into a debt-to-equity swap agreement concerning multiple creditor’s rights. The agreement stipulated that the defendants were
required to complete the equity transfer by May 31, 2025. Due to the procedural timeline required for the equity transfer, the defendants
failed to complete it by the deadline. Consequently, the plaintiff filed a claim demanding the defendants pay the outstanding debt of
RMB
Xiamen Youxu and Youpin Shandong
are the defendants in this case, with Yidong New Energy Technology Co., Ltd. as the plaintiff. The parties entered into a battery lease
agreement in July 2022, under which the defendants agreed to lease new energy vehicles provided by the plaintiff. During the performance
of the contract, the defendants discovered quality issues with the vehicle batteries supplied by the plaintiff. After multiple rounds
of failed negotiations to resolve the issues, the defendants terminated the cooperation. The plaintiff subsequently filed a lawsuit, citing
the defendants’ failure to pay rent on time. The case was first heard in court on September 11, 2025, the two parties reached a settlement
in court. According to the settlement agreement issued by the court, the defendant is required to pay the outstanding compensation of
RMB
Youxu Zibo and Youpin Shandong
are the defendants in this case, with Shandong Qiying Industrial Investment and Development Co., Ltd. as the plaintiff. The parties entered
into a contract in 2022, stipulating that the defendants would lease the plaintiff’s factory building and dormitories by means of equity
transfer. In 2025, the plaintiff filed a lawsuit requesting the court to order the defendants to pay RMB
F-32
Exhibit 99.2
Item 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes included elsewhere in this annual report. This discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties. See “Special Note 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, including those set forth under “Risk Factors” and elsewhere in this annual report.
| A. | Operating Results |
Since our commencement of operations in 2013, we have principally engaged in the provision of vehicle sourcing services in China. In addition to our vehicle sourcing service, we aspire to becoming an EV market player primarily focused on UOTTA technology, which is an intelligent modular battery-swapping technology designed to provide a comprehensive battery power solution for EVs. As a vehicle sourcing service provider, we broker sales of vehicles between automobile wholesalers and buyers, including SME dealers and individual customers primarily located in the lower-tier cities in China. To that end, we have focused on building business relationships with our sourcing partners and have developed a vehicle sourcing network. As of the date of this annual report, our vehicle sourcing network consisted of approximately 100 wholesalers and 30 SME dealers located in lower-tier cities in China.
Beginning in 2020, we gradually shifted our focus from the vehicle sourcing business to the development of our proprietary battery-swapping technology, or UOTTA technology. Through our research and development efforts, we have developed an intellectual property portfolio centered on our UOTTA technology. Our plan is to develop a comprehensive EV battery power solution based on UOTTA technology, including: (i) UOTTA-powered EVs, which we jointly develop with two major automobile manufacturers in China by adapting selected EV models with our UOTTA technology; (ii) UOTTA battery swapping stations, which are compatible with our UOTTA-powered EVs; and (iii) a UOTTA data management platform which collects and synchronizes real-time information that connects UOTTA-powered EVs with UOTTA battery-swapping stations.
For the six months ended June 30, 2024 and 2025, our total revenues were RMB13.2 million and RMB17.8 million (US$2.5 million), respectively. The increased revenue in 2024 and 2025 was primarily due to the increased product sales of battery swapping stations which had been completed in our established market regions in 2023.
Key Factors Affecting Our Results of Operations
Our results of operations have been, and are expected to continue to be, affected by various factors, which primarily include the following:
General market conditions
General market conditions affecting our operations include:
| ● | China’s macroeconomic conditions, the growth of China’s overall auto market, the commercial EV market and the government policy on promoting the electrification of commercial vehicles; |
| ● | penetration rate of EVs and battery-swapping stations in China’s commercial EV market; |
| ● | development, and customer acceptance and demand, of UOTTA-powered EVs and battery-swapping stations; and |
| ● | government policies and regulations on the EV and battery-swapping station industries in China. |
Our cooperation with auto manufacturers
As of the date of this report, our UOTTA technology is in the process of being adapted to commercial-use electric vehicles, by cooperating with major auto manufacturers in China. We have entered into cooperating agreements with two car manufacturers to jointly develop the UOTTA-powered EV models. We expect that the expertise and industry know-how of such manufacturers will guide us in our efforts in entering the commercial EV market. We believe that we are able to develop such relationships with these major manufacturers, due to our distinct industry experience, research and development capabilities, and industry reputation.
Our ability to attract new customers and grow our customer base
Our ability to attract and retain customers is critical to the continued success and growth of our business. Appropriate pricing is essential for us to remain competitive in the China automotive market, while preserving our ability to achieve and maintain profitability in the future. Our ability to attract new customers also depends on the scale and efficiency of our sales network and marketing channels. We seek to attract new customers cost-efficiently by engaging in various marketing activities. Enhanced customer satisfaction will help to drive word-of-mouth referrals, which we expect may reduce our customer acquisition costs.
Our ability to deliver our UOTTA-powered EV and battery-swapping stations portfolio
Our ability to deliver UOTTA-powered EV models and battery-swapping stations, and to provide battery-swapping services will be an important contributor to our future growth. As of the date of this report, we are jointly developing our UOTTA-powered EV models with car manufacturers and have launched two models of UOTTA battery-swapping stations, Titan and Chipbox, by cooperating with one battery-swapping station manufacturer in China. We expect our revenue growth to be driven in part by the launch of our UOTTA-powered EV and expansion of our battery-swapping stations portfolio.
Our ability to innovate and retain talents
We plan to focus on technological innovations and to continue developing and upgrading our proprietary UOTTA technology. Accordingly, we dedicate significant resources to research and development, and our research and development staff accounted for 32% of our total employees as of the date of this report. We expect our strategic focus on innovations to further differentiate us from our competitors, which may in turn enhance our competitiveness.
2
Key Financial Performance Indicators
Revenues
The following table sets forth a breakdown of our revenues, in absolute amounts and percentages of total revenues for the six months ended June 30, 2024 and 2025, respectively:
| For the Six Months Ended June 30, | ||||||||||||||||||||
| 2024 | 2025 | |||||||||||||||||||
| RMB | % | RMB | US$ | % | ||||||||||||||||
| (in thousands, except for percentages) | ||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||
| Sourcing services | 75 | 0.6 | 2,812 | 393 | 15.9 | |||||||||||||||
| Product sales | 12,389 | 93.9 | 13,899 | 1,940 | 78.4 | |||||||||||||||
| Battery-swapping services | 726 | 5.5 | 1,018 | 142 | 5.7 | |||||||||||||||
| Total revenues | 13,190 | 100.0 | 17,729 | 2,475 | 100.0 | |||||||||||||||
We generate revenues from vehicle sourcing services, products sales of battery-swapping stations, battery-swapping services and two-wheeled vehicle battery-swapping services. Battery-swapping services revenues represent the revenues generated from providing battery swapping services for vehicle drivers, and station control system upgrading services for battery-swapping station owners.
Sourcing services
For vehicle sourcing business, we charge our customers for the service we provide in connection with their purchases of vehicles, where we are generally acting as an agent, and our performance obligation is to purchase the specified vehicles for our customers. We charge the customers a commission that is calculated based on the purchase price of each purchase order. Vehicle sourcing service fee revenues are recognized on a net basis at the point in time when the service of purchase of the specified vehicles for our customers is completed, i.e., the specified vehicle for our customers is delivered. Payments are typically received in advance and are accounted for as contract liabilities until delivery, at which point the receipt in advance from customers is offset with the prepayment to the supplier and the difference representing the commission is recognized as revenue.
Product Sales
We generate revenue from sales of battery swapping stations. We identify the users who purchase battery swapping stations as our customers. The revenue for battery swapping station sales is recognized at a point in time when the control of the product is transferred to our customers.
Battery-swapping services
We generate revenues from providing battery swapping services for vehicle drivers and station control system upgrading services for battery-swapping station owners.
3
Cost of Revenues
The following table sets forth a breakdown of our cost of revenues, in absolute amounts and percentages of the total cost of our revenues for the six months ended June 30, 2024 and 2025, respectively:
| For the Six Months Ended June 30, | ||||||||||||||||||||
| 2024 | 2025 | |||||||||||||||||||
| RMB | % | RMB | US$ | % | ||||||||||||||||
| (in thousands, except for percentages) | ||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||
| Costs of sourcing services | 67 | 0.6 | 2,514 | 351 | 26.9 | |||||||||||||||
| Costs of product sales | 11,313 | 95.0 | 6,116 | 854 | 65.5 | |||||||||||||||
| Costs of battery-swapping services | 499 | 4.2 | 692 | 96 | 7.4 | |||||||||||||||
| Other costs | 23 | 0.2 | 16 | 3 | 0.2 | |||||||||||||||
| Total cost of revenues | 11,902 | 100.0 | 9,338 | 1,304 | 100.0 | |||||||||||||||
Costs of products sales mainly include the costs of sales of batter-swapping stations, which primarily include semi-finished goods purchased from suppliers, labor costs and manufacturing costs, mainly including depreciation of assets associated with production.
Costs of battery-swapping services mainly include the electric charge costs and the rental costs of batteries for battery swapping services.
Other service costs primarily include the taxes and surcharges costs in accordance with PRC laws.
Operating Expenses
The following table sets forth a breakdown of our operating expenses, in absolute amounts and percentages of operating expenses for the six months ended June 30, 2024 and 2025, respectively:
| For the Six Months Ended June 30, | ||||||||||||||||||||
| 2024 | 2025 | |||||||||||||||||||
| RMB | % | RMB | US$ | % | ||||||||||||||||
| (in thousands, except for percentages) | ||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||
| Sales and marketing expense | 1,483 | 5.4 | 1,767 | 247 | 6.8 | |||||||||||||||
| General and administrative expenses | 26,157 | 94.5 | 24,571 | 3,430 | 95.0 | |||||||||||||||
| Research and development expenses | 575 | 2.1 | 3,416 | 477 | 13.2 | |||||||||||||||
| Expected credit losses | (531 | ) | (2.0 | ) | (3,903 | ) | (545 | ) | (15.1 | ) | ||||||||||
| Total operating expenses | 27,684 | 100.0 | 25,851 | 3,609 | 100.0 | |||||||||||||||
4
General and administrative expenses
Our general and administrative expenses primarily consist of (i) employee compensation, including salaries, benefits and bonuses for our general corporate staff; (ii) professional service fees; (iii) depreciation for office equipment; (iv) operating and lease expenses for our offices; (v) office utilities; and (vi) certain other expenses.
Our selling, general and administrative expenses are mainly driven by the number of our sales, general corporate personnel, marketing and promotion activities and the expansion of our sales and service network.
Research and development expenses
Our research and development expenses consist primarily of personnel-related costs directly associated with research and development. Our research and development expenses are related to enhancing and developing UOTTA technology for our existing products and new product development. We expense research and development costs as incurred.
Our research and development expenses are mainly driven by the number of our research and development personnel, as well as the stage and scale of our UOTTA-powered EVs and battery-swapping stations development.
Allowance for expected credit loss
Our allowance for expected credit loss primarily consists of the provision of expected credit losses for accounts receivable, advance to suppliers and other current assets after estimating that the collection for the full amount is no longer probable.
Taxation
Cayman Islands
We are incorporated in the Cayman Islands. The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to us levied by the government of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or after execution, brought within the jurisdiction of the Cayman Islands. The Cayman Islands is not party to any double tax treaties that are applicable to any payments made to or by our company. There are no exchange control regulations or currency restrictions in the Cayman Islands.
Payments of dividends and capital in respect of the shares will not be subject to taxation in the Cayman Islands and no withholding will be required on the payment of a dividend or capital to any holder of the shares, nor will gains derived from the disposal of the shares be subject to Cayman Islands income or corporation tax.
British Virgin Islands
Our subsidiaries incorporated in the British Virgin Islands are not subject to tax on income or capital gains under the current laws of the British Virgin Islands. There are currently no withholding taxes in the BVI applicable to these subsidiaries.
Hong Kong
Our subsidiaries incorporated in Hong Kong, are subject to a two-tiered income tax rate for their taxable income earned in Hong Kong. The first HK$2 million of profits earned by a company is subject to be taxed at an income tax rate of 8.25%, while the remaining profits will continue to be taxed at the existing tax rate of 16.5%. No provision for Hong Kong profits tax has been made in the consolidated financial statements as it has no assessable profit for the six months ended June 30, 2024 and 2025 respectively.
5
PRC
Our subsidiaries in the PRC are subject to Enterprise Income Tax (“EIT”) on their taxable income in accordance with the relevant EIT Law. Pursuant to the EIT Law, which became effective on March 16, 2007 and was amended on December 29, 2018, a uniform 25% enterprise income tax rate is generally applicable to both foreign-invested enterprises, or FIEs and domestic enterprises, except where a special preferential rate applies. The EIT is calculated based on the entity’s global income as determined under PRC tax laws and accounting standards.
Under the EIT Law, dividends generated after January 1, 2008 and payable by an Foreign-invested enterprise (“FIE”) in the PRC to its foreign investors who are non-resident enterprises are subject to a 10% withholding tax, unless any such foreign investor’s jurisdiction of incorporation has a tax treaty with the PRC that provides for a different withholding arrangement. The Cayman Islands, where the Company was incorporated, does not have a tax treaty with the PRC. In accordance with the accounting guidance, all undistributed earnings are presumed to be transferred to the parent company and are subject to the withholding taxes. All FIEs are subject to the withholding tax from January 1, 2008. The presumption may be overcome if we have sufficient evidence to demonstrate that the undistributed dividends will be re-invested and the remittance of the dividends will be postponed indefinitely. We did not record any dividend withholding tax, as we have no retained earnings for any of the years presented.
The EIT Law also provides that an enterprise established under the laws of a foreign country or region but whose “de facto management body” is located in the PRC be treated as a “resident enterprise” and consequently be subject to the PRC income tax at the rate of 25% for its global income. The EIT Law defines the location of the “de facto management body” as “the place where the exercising, in substance, of the overall management and control of the production and business operation, personnel, accounting, properties and others of a non-PRC company is located.” Based on a review of surrounding facts and circumstances, we do not believe that it is likely that our operations outside of the PRC will be considered a resident enterprise for PRC tax purposes. However, due to limited guidance and implementation history of the EIT Law, there is uncertainty as to the application of the EIT Law. If our holding company in the Cayman Islands or any of our subsidiaries outside of China were deemed to be a resident enterprise under the EIT Law, it would be subject to enterprise income tax on its worldwide income at a uniform enterprise income tax rate of 25%.
Results of Operations
The following table sets forth the summary of our consolidated results of operations for the six months ended June 30, 2024 and 2025, respectively, presented both in absolute amounts and as percentages of our total revenues. This information should be read together with our consolidated financial statements and related notes included elsewhere in this report. The results of operations in any particular period is not indicative of our future trends.
| For the Six Months Ended June 30, | ||||||||||||||||||||
| 2024 | 2025 | |||||||||||||||||||
| RMB | % | RMB | US$ | % | ||||||||||||||||
| (Amounts in thousands, except for percentages) | ||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||
| Revenues | ||||||||||||||||||||
| Sourcing services | 75 | 0.6 | 2,812 | 393 | 15.9 | |||||||||||||||
| Product sales | 12,389 | 93.9 | 13,899 | 1,940 | 78.4 | |||||||||||||||
| Battery-swapping services | 726 | 5.5 | 343 | 48 | 1.9 | |||||||||||||||
| Two-wheeled vehicle battery-swapping services | - | - | 675 | 94 | 3.8 | |||||||||||||||
| Total revenues | 13,190 | 100.0 | 17,729 | 2,475 | 100.0 | |||||||||||||||
| Cost of revenues | (11,902 | ) | (90.2 | ) | (9,338 | ) | (1,304 | ) | (52.7 | ) | ||||||||||
| Gross profit | 1,288 | 9.8 | 8,391 | 1,171 | 47.3 | |||||||||||||||
| Operating expenses | ||||||||||||||||||||
| Selling expenses | (1,483 | ) | (11.2 | ) | (1,767 | ) | (247 | ) | (10.0 | ) | ||||||||||
| General and administrative expenses | (26,157 | ) | (198.3 | ) | (24,571 | ) | (3,430 | ) | (138.6 | ) | ||||||||||
| Research and development expenses | (575 | ) | (4.4 | ) | (3,416 | ) | (477 | ) | (19.3 | ) | ||||||||||
| Allowance for expected credit losses | 531 | 4.0 | 3,903 | 545 | 22.0 | |||||||||||||||
| Total operating expenses | (27,684 | ) | (209.9 | ) | (25,851 | ) | (3,609 | ) | (145.8 | ) | ||||||||||
| Operating loss | (26,396 | ) | (200.1 | ) | (17,460 | ) | (2,438 | ) | (98.5 | ) | ||||||||||
| Interest income | 7 | 0.1 | 16 | 2 | 0.1 | |||||||||||||||
| Interest expenses | (877 | ) | (6.6 | ) | (248 | ) | (35 | ) | (1.4 | ) | ||||||||||
| Other income | 1,435 | 10.9 | 3,917 | 547 | 22.1 | |||||||||||||||
| Other expenses | (685 | ) | (5.2 | ) | (13,301 | ) | (1,857 | ) | (75.0 | ) | ||||||||||
| Loss before income taxes | (26,516 | ) | (201.0 | ) | (27,076 | ) | (3,781 | ) | (152.7 | ) | ||||||||||
| Income tax expenses | - | - | (326 | ) | (46 | ) | (1.8 | ) | ||||||||||||
| Net loss | (26,516 | ) | (201.0 | ) | (27,402 | ) | (3,827 | ) | (154.6 | ) | ||||||||||
6
Six months ended June 30, 2025 compared to Six months ended June 30, 2024
Revenues
Our revenues increased by approximately 34.4% from RMB13.2 million for the six months ended June 30, 2024 to RMB17.7million (US$2.5 million) six months ended June 30, 2025. The primary reason for the revenue growth is the Group’s strong performance in overseas markets this year, particularly in Thailand.
Cost of revenues
Our total cost of revenues Decreased significantly by approximately 21.5% from approximately RMB11.9 million to RMB9.3 million (US$1.3 million) for the six months ended June 30, 2024 and 2025, respectively. The decrease was primarily due to the decreased cost of product sales of battery swapping stations for the six months ended June 30, 2025.
Gross Profit
As a result of the factors set out above, our gross profit increased by approximately 551.5% from RMB1.29 million for the six months ended June 30, 2024 to RMB8.39 million (US$1.17 million) for the six months ended June 30, 2025. Due to limited exposure to such products in the overseas markets, the company possesses a certain degree of pricing power. The expansion of the battery swap station business in overseas markets led to the increase of gross profit for the six months ended June 30, 2025.
Sales and marketing expenses
Our sales and marketing expenses increased by approximately 19.2% from RMB1.5 million for the six months ended June 30, 2024 to RMB1.8 million (US$0.2 million) for the six months ended June 30, 2025. In light of business expansion initiatives, advertising expenditures targeting overseas markets have increased for the six months ended June 30, 2025
General and administrative expenses
Our general and administrative expenses decreased by approximately 6.1% from RMB26.2 million for the six months ended June 30, 2024 to RMB24.6 million (US$3.4 million) for the six months ended June 30, 2025. The decrease was primarily due to the legal advisory expenses decreased for the six months ended June 30, 20254.
Research and development expenses
Our research and development expenses significantly increased by approximately 494.1% from RMB0.6 million for the six months ended June 30, 2024 to RMB3.4 million (US$0.5 million) for the six months ended June 30, 2025, primarily due to the increased UOTTA technology innovation activities related to research and development programs.
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Allowance for expected loss
We recorded expected credit losses of RMB0.5 million and RMB3.9 million (US$0.6 million) for the six months ended June 30, 2024 and 2025, respectively. The increase was primarily due to the increased impact of potential uncollectible amounts for advances to suppliers and other current assets for the six months ended June 30, 2025 based on our estimation of collectability with the continued improvement of receivable collections by the management.
Interest income and expenses
Interest income increased from RMB0.01 million to RMB0.02 million (US$0.002 million) for the six months ended June 30, 2025 compared with the same period in the last year, primarily due to the increase of bank interest income. Interest expenses decreased from RMB0.9 million to RMB0.2 million (US$0.04 million) for the six months ended June 30, 2025 compared with the same period in the last year, primarily due to the decrease of loan interest and bank interest
Other income
We recorded other income of approximately RMB1.4 million and RMB3.9 million (US$0.5 million) for the six months ended June 30, 2024 and 2025, respectively. The increase of other income for the six months ended June 30, 2025 was mainly due to the government grant recognized.
Other expenses
The other expenses increased from RMB0.7 million for the six months ended June 30, 2024 to RMB13.3 million (US$1.9 million) for the six months ended June 30, 2025, primarily due to two litigation matters for the six months ended June 30, 2025.
Income tax expenses
We recorded income tax expenses of approximately RMB0.01 and RMB0.3 million (US$0.05 million) for the six months ended June 30, 2024 and 2025, respectively. The increase was primarily due to the increase of taxable income generated from operations of our subsidiaries in Thailand.
Net loss
As a result of the foregoing, we incurred a net loss of RMB21.2 million and RMB27.4 million (US$3.8 million) for the six months ended June 30, 2024 and 2025, respectively.
8
Liquidity and Capital Resources
Our primary source of liquidity historically has been cash generated from our business operations, bank loans, equity contributions from our shareholders and borrowings, which have historically been sufficient to meet our working capital and capital expenditure requirements.
As of the year ended December 31, 2024 and the six months ended June 30, 2025, the Group’s cash and cash equivalents were RMB24.7 million and RMB22.7 million (US$3.2 million), respectively, and the Group’s restricted cash was RMB1.2 million and RMB0.3 million (US$0.04 million), respectively. The Group’s cash and cash equivalents primarily consist of cash on hand and highly liquid investments placed with banks, which are unrestricted to withdrawal and use and which have original maturities of three months or less.
On December 13, 2021, Youxu Zibo entered into a bank facility agreement with Bank of Qishang, a commercial bank in China. The principal amount under this loan agreement is RMB10 million, bearing a weighted average interest rate of 6.87% per annum with a term of three years, and was denominated in RMB. On December 6, 2024, Youxu Zibo entered into an extension agreement with the bank, under which the remaining principal balance of RMB 6.5 million is repayable in installments, with the final payment due no later than June 3, 2026. The loan carries an annual interest rate of 6.87%, consistent with the original terms. As of June 30, 2025, Youxu Zibo had an outstanding bank loan balance of RMB 5.8 million.
The Group believes that the substantial doubt of its ability to continue as going concern is alleviated based on proceeds received from its new investors and potential investors. Meanwhile, the Group also believe its existing cash and cash equivalents, anticipated cash raised from financings, and anticipated cash flow from operations, together with the net proceeds from its new investors and potential investors in 2025, will be sufficient to meet its anticipated cash needs for the next 12 months from the date of this report. The exact amount of proceeds the Group used for its operations and expansion plans will depend on the amount of cash generated from its operations and any strategic decisions the Group may make that could alter its expansion plans and the amount of cash necessary to fund these plans.
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We may, however, decide to enhance our liquidity position or increase our cash reserve for future investments through additional capital and finance funding. We may need additional cash resources in the future if we experience changes in business conditions or other developments, or if we find and wish to pursue opportunities for investments, acquisitions, capital expenditures or similar actions. If we determine that our cash requirements exceed the amount of cash and cash equivalents we have on hand at the time, we may seek to issue equity or debt securities or obtain credit facilities. The issuance and sale of additional equity would result in further dilution to our shareholders. The incurrence of indebtedness would result in increased fixed obligations and could result in operating covenants that would restrict our operations. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all.
Our ability to manage our working capital, including receivables and other assets and liabilities and accrued liabilities, may materially affect our financial condition and results of operations.
The following table sets forth a summary of our cash flows for the six months ended June 30, 2024 and 2025:
| For the Six Months Ended June 30, | ||||||||||||
| 2024 | 2025 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| (Amounts in thousands) | ||||||||||||
| (Unaudited) | ||||||||||||
| Summary Consolidated Cash Flow: | ||||||||||||
| Net cash used in operating activities | (73,170 | ) | (35,934 | ) | (5,016 | ) | ||||||
| Net cash provided by investing activities | 49,093 | 68 | 10 | |||||||||
| Net cash provided by financing activities | 12,958 | 32,581 | 4,548 | |||||||||
| Net change in cash and cash equivalents and restricted cash | (11,119 | ) | (3,285 | ) | (458 | ) | ||||||
| Cash and cash equivalents and restricted cash, at beginning of period | 36,239 | 24,674 | 3,444 | |||||||||
| Cash and cash equivalents and restricted cash, at end of period | 24,674 | 22,997 | 3,210 | |||||||||
Operating Activities
Net cash used in operating activities was RMB35.9 million (US$5.0 million) in the six months ended June 30, 2025, primarily due to net loss of RMB27.4 million (US$3.8million), adjusted to add back depreciation and amortization of property and equipment and intangible assets of RMB1.6 million (US$0.2 million), amortization of right-of-use assets of RMB4.2 million (US$0.6 million) and reversal of allowance for doubtful accounts of RMB3.9 million (US$0.5 million). The amount was further adjusted by changes in itemized balances of operating assets and liabilities that have a negative effect on cash flow, including primarily (i) an increase in accounts receivable of RMB8.0 million (US$1.1 million) in relation to providing battery-swapping services; (ii) an increase in inventory of RMB3.1 million (US$0.4 million) in relation to materials for battery-swapping stations production; and (iii) an increase in other current assets of RMB4.6 million (US$0.7 million), as well as certain changes in itemized balances of operating assets and liabilities that have a positive effect on cash flow, including, primarily an increase in accounts payable of RMB2.9 million (US$0.4 million) in relation to the grace period we enjoyed for the payments payable to third-party suppliers.
10
Net cash used in operating activities was RMB31.8 million (US$4.4 million) in the six months ended June 30, 2024, primarily due to net loss of RMB26.4 million (US$3.6million), adjusted to add back depreciation and amortization of property and equipment and intangible assets of RMB2.5 million (US$0.3 million) and amortization of right-of-use assets of RMB2.8 million (US$0.4 million). The amount was further adjusted by changes in itemized balances of operating assets and liabilities that have a negative effect on cash flow, including primarily (i) an increase in accounts receivable of RMB2.8 million (US$0.4 million) in relation to providing battery-swapping services; (ii) an increase in inventory of RMB0.6 million (US$0.09 million) in relation to materials for battery-swapping stations production; and (iii) a decrease in other current assets of RMB3.1 million (US$0.4 million), as well as certain changes in itemized balances of operating assets and liabilities that have a positive effect on cash flow, including, primarily an increase in accounts payable of RMB8.0 million (US$1.1 million) in relation to the grace period we enjoyed for the payments payable to third-party suppliers.
Investing Activities
Net cash used in investing activities for the six months ended June 30, 2025 was RMB0.07 million (US$0.01 million), mainly attributable to repayments of loan from third parties of RMB20.1 million and payment of Loan provided to related parties of RMB20 million.
Net cash used in investing activities for the six months ended June 30, 2024 was RMB13.5 million (US$1.9 million), mainly attributable to (i) purchase of property and equipment of RMB0.3 million (US$0.05 million); (ii) loans provided to related parties of RMB13.8 million (US$1.9 million).
Financing Activities
Net cash provided by financing activities for the six months ended June 30, 2025 was RMB32.6 million (US$4.6 million), mainly attributable to capital contribution from issuance of ordinary shares of RMB33.4 million (US$4.7 million).
Net cash provided by financing activities for the six months ended June 30, 2024 was RMB22.6 million (US$3.1 million), mainly attributable to Capital contribution by non-controlling shareholders of RMB23.1 million (US$3.2 million).
11
Holding Company Structure
U Power Limited, our holding company, has no material operations of its own. We conduct our operations primarily through our subsidiaries in the PRC. As a result, U Power Limited’s ability to pay dividends depends upon dividends paid by our subsidiaries in the PRC. If our existing PRC subsidiaries or any newly formed ones incur debt on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends to us. In addition, our subsidiaries in China are permitted to pay dividends to us only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. Under PRC law, each of our subsidiaries in China is required to set aside at least 10% of its after-tax profits each year, if any, to fund certain statutory reserve funds until such reserve funds reach 50% of its registered capital. In addition, our subsidiaries in China may allocate a portion of their after-tax profits based on PRC accounting standards to enterprise expansion funds and staff bonus and welfare funds at their discretion. The statutory reserve funds and the discretionary funds are not distributable as cash dividends. Remittance of dividends by a wholly foreign-owned company out of China is subject to examination by the banks designated by State Administration of Foreign Excange (“SAFE”). Our PRC subsidiaries have not paid dividends and will not be able to pay dividends until they generate accumulated profits and meet the requirements for statutory reserve funds.
Borrowings
The following table sets forth the breakdown of our borrowings as of the dates indicated:
| December 31 | ||||||||||||
| 2024 | June 30 2025 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| (Unaudited) | ||||||||||||
| (Amounts in thousands) | ||||||||||||
| Short-term bank borrowing | 15,172 | 17,172 | 2,397 | |||||||||
| Long-term bank borrowing, current portion | 2,800 | 5,800 | 810 | |||||||||
| 17,927 | 22,972 | 3,207 | ||||||||||
On December 6, 2024, the company entered into a renewal agreement with Qishang Bank to extend the remaining RMB6.5 million loan to June 3, 2026, maintaining the original annual interest rate of 6.87%. Under the terms of the extension agreement.
On February 21, 2025, Shanghai Youxu entered into new one-year short-term bank loans of RMB2 million.
12
Contractual Obligations
The following table sets forth our contractual obligations as of the dates indicated:
| Payment due by period | ||||||||||||||||||||||||
| Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | ||||||||||||||||||||
| RMB | US$ | |||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||
| (Amounts in thousands) | ||||||||||||||||||||||||
| Current portion of long-term borrowing | 5,800 | 810 | 5,800 | |||||||||||||||||||||
| Short-term bank borrowing | 17,172 | 2,397 | 17,172 | - | - | - | ||||||||||||||||||
| Operating lease liabilities (i) | 5,974 | 834 | 2,282 | 3,140 | 552 | - | ||||||||||||||||||
| Total | 28,946 | 4,041 | 25,254 | 3,140 | 552 | - | ||||||||||||||||||
| (i) | The Group’s commitment for minimum lease payments under the remaining operating leases as of June 30, 2025 is discussed in Note 15 LEASES. |
Other than as shown above, we did not have any significant capital and other commitments, long-term obligations or guarantees as of June 30, 2025.
Off-Balance Sheet Arrangements
From August 2020 to November 2021, Youguan Financial Leasing provided a total of RMB5,869 (US$827) guarantee to its four customers who entered into two five-year guarantees and two four-year guarantees. As of the date of this annual report, the balance of the guarantees were RMB2,003(US$274).
We have not entered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity or that are not reflected in our consolidated financial statements. Furthermore, 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.
| B. | Research and Development, Patents and Licenses, etc. |
See “Item 4. Information on the Company - B. Business Overview - Intellectual Property.”
13
| C. | Trend Information |
Other than as described elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events that are reasonably likely to have a material adverse effect on our revenues, income from continuing operations, profitability, liquidity or capital resources, or that would cause our reported financial information not necessarily to be indicative of future operating results or financial condition.
| D. | Critical Accounting Policies and Estimates |
An accounting policy is considered critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time such estimate is made, and if different accounting estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the consolidated financial statements.
We prepare our consolidated financial statements in conformity with U.S. GAAP, which requires us to make judgments, estimates and assumptions. We continually evaluate these estimates and assumptions based on the most recently available information, our own historical experiences and various other assumptions that we believe to be reasonable under the circumstances. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from our expectations as a result of changes in our estimates. Some of our accounting policies require a higher degree of judgment than others in their application and require us to make significant accounting estimates.
The following descriptions of critical accounting policies, judgments and estimates should be read in conjunction with our consolidated financial statements and other disclosures included in this annual report. When reviewing our consolidated financial statements, you should consider (i) our selection of critical accounting policies, (ii) the judgments and other uncertainties affecting the application of such policies and (iii) the sensitivity of reported results to changes in conditions and assumptions.
See our consolidated financial statements and related notes included elsewhere in this annual report for a description of other significant accounting policies.
Revenue recognition
Under ASC 606, Revenue from Contracts with Customers, we recognize revenue when a customer obtains control of promised goods or services and recognizes in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services.
We recognized revenue according to the following five-step revenue recognition criteria based on ASC 606: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price; and (5) recognize revenue when or as the entity satisfies a performance obligation.
We recognize revenue when or as the control of the goods or services is transferred to a customer. Depending on the terms of the contract and the laws that apply to the contract, control of the goods and services may be transferred over time or at a point in time. Control of the goods and services is transferred over time if our performance:
| (i) | provides all of the benefits received and consumed simultaneously by the customer; |
| (ii) | creates and enhances an asset that the customer controls as we perform; or |
14
If control of the goods and services transfers over time, revenue is recognized over the period of the contract by reference to the progress towards complete satisfaction of that performance obligation. Otherwise, revenue is recognized at a point in time when the customer obtains control of the goods and services.
Contracts with customers may include multiple performance obligations. For such arrangements, we allocate revenue to each performance obligation based on our relative standalone selling price. We generally determine standalone selling prices based on the prices charged to customers. If the standalone selling price is not directly observable, it is estimated using expected cost plus a margin or adjusted market assessment approach, depending on the availability of observable information. Assumptions and estimations have been made in estimating the relative selling price of each distinct performance obligation, and changes in judgments on these assumptions and estimates may impact the revenue recognition.
When either party to a contract has performed, we present the contract in the consolidated balance sheets as a contract asset or a contract liability, depending on the relationship between the entity’s performance and the customer’s payment.
A contract asset is our right to consideration in exchange for goods and services that we have transferred to a customer. A receivable is recorded when we have an unconditional right to consideration. A right to consideration is unconditional if only the passage of time is required before payment of that consideration is due.
If a customer pays consideration or we have a right to an amount of consideration that is unconditional, before we transfer a good or service to the customer, we present the contract liability when the payment is made, or a receivable is recorded (whichever is earlier). A contract liability is our obligation to transfer goods or services to a customer for which we have received consideration (or an amount of consideration is due) from the customer.
Sourcing services
We generate revenues from the vehicle sourcing business and battery sourcing business.
With respect to the battery sourcing business, we act as a principal, as being able to fully control relevant risks and benefits during the whole business, as indicated by the fact that we can decide the selling price, have a right to recall the product and cease the transaction, and bear relevant risks of damage and loss prior to the delivery of battery to the customer. The sales of battery sourcing revenues are recognized on a gross basis at a point in time when the control of the battery pack is transferred to the customer.
For vehicle sourcing business, we charge service fees from our customers for their purchase of vehicles, where we are generally acting as an agent and our performance obligation is to purchase the specified vehicles for our customers. We charge the customers a commission that is calculated based on the purchase price of each purchase order. Vehicle sourcing service revenues are recognized on a net basis at the point in time when the service of purchase of the specified vehicles for our customers is completed, i.e., the specified vehicle for our customers is delivered. Payments are typically received in advance and are accounted for as contract liabilities until delivery, at which point the receipt in advance from customers is offset with the prepayment to the supplier and the difference representing the commission is recognized as revenue.
15
Product sales
We generate revenues from sales of battery swapping stations. We identify the users who purchase battery swapping stations as our customers. The revenue for battery swapping station sales is recognized at a point in time when the control of the product is transferred to the customer.
Battery swapping services
We also generate revenues from providing battery swapping services to vehicle drivers and the station control system upgrading services to the battery-swapping station owners. We identify the vehicle drivers who need the services of battery swapping and the owners of battery swapping stations that the Group has sold to who have demands for the station control system upgrading services as our customers.
We charge the battery swapping service fees from our customers based on vehicle miles traveled. However, as usually, the swapped battery will be immediately used after the payments by customers for driving and the power consumption of vehicles will be fast, we ignore the time interval between the timing of payment in advance by customers and the usage life of the swapped battery. The revenue generated from battery swapping services to vehicle drivers is recognized at a point in time when the Group received the payment from vehicle drivers.
The revenue generated from the station control system upgrading service is recognized over time based on a straight-line method.
Inventories
Inventories, consisting of raw materials, products available for sale, are stated at the lower of cost or net realizable value. Costs of inventory are determined using the first-in-first-out method. We record inventory reserves for obsolete and slow-moving inventory. Inventory reserves are based on inventory obsolescence trends, historical experience and application of the specific identification method.
Impairment of long-lived assets
We evaluate our long-lived assets, including property, equipment, software, and right-of-use assets with finite lives, for impairment whenever events or changes in circumstances, such as a significant adverse change to market conditions that will impact the future use of the assets, indicate that the carrying amount of an asset may not be fully recoverable. When these events occur, we evaluate the recoverability of long-lived assets by comparing the carrying amounts of the assets to the future undiscounted cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flows is less than the carrying amounts of the assets, we recognize an impairment loss based on the excess of the carrying amounts of the assets over their fair value. Fair value is generally determined by discounting the cash flows expected to be generated by the assets, when the market prices are not readily available.
16
Long-term investments
Our long-term investments mainly include equity investments in entities. Investments in entities in which we can exercise significant influence and holds an investment in voting common stock or in-substance common stock (or both) of the investee but does not own a majority equity interest or control are accounted for using the equity method of accounting in accordance with ASC topic 323, Investments - Equity Method and Joint Ventures (“ASC 323”). Under the equity method, we initially record our investments at fair value. We subsequently adjust the carrying amount of the investments to recognize our proportionate share of each equity investee’s net income or loss into earnings after the date of investment. We evaluate the equity method investments for impairment under ASC 323. An impairment loss on the equity method investments is recognized in earnings when the decline in value is determined to be other-than-temporary.
Leases
We account for lease under ASC Topic 842, Leases. We determine if an arrangement is or contains a lease at inception. Right-of-use assets and liabilities are recognized at lease commencement date based on the present value of remaining lease payments over the lease terms. We consider only payments that are fixed and determinable at the time of lease commencement.
At the commencement date, the lease liability is recognized at the present value of the lease payments not yet paid, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, our incremental borrowing rate for the same term as the underlying lease. The right-of-use asset is recognized initially at cost, which primarily comprises the initial amount of the lease liability, plus any initial direct costs incurred. All right-of-use assets are reviewed for impairment annually. There was no impairment for right-of-use lease assets as of June 30, 2024 and 2025.
Operating lease assets are included within “right-of-use assets - operating lease”, and the corresponding operating lease liabilities are included within “operating lease liabilities” on the consolidated balance sheets as of June 30, 2024 and 2025, respectively.
Recent Accounting Pronouncements
For a summary of recently issued accounting pronouncements, see Note 2 to the consolidated financial statements included elsewhere in this annual report.
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