{"url_path":"/sec/xch/10-k/2026/item-19","section_key":"item-19","section_title":"Item 19 EXHIBITS","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-04-27","source_url":"https://www.sec.gov/Archives/edgar/data/1979887/0001193125-26-182198-index.html","accession_number":"0001193125-26-182198","cik":"0001979887","ticker":"XCH","issuer_name":"XCHG Ltd","edgar_url":"https://www.sec.gov/Archives/edgar/data/1979887/0001193125-26-182198-index.html","primary_entity_key":"0001979887","primary_entity_name":"XCHG Ltd"},"word_count":24202,"has_tables":true,"body_markdown":"## ITEM 19. EXHIBITS\n\n \n\nExhibit Number\n\nDescription of Document\n\n1.1\n\n[Third Amended and Restated Memorandum and Articles of Association of the Registrant, as currently in effect (incorporated herein by reference to Exhibit 3.2 to the registration statement on Form F-1 (File No. 333-276802), as amended, initially filed with the SEC on February 1, 2024)](https://www.sec.gov/Archives/edgar/data/1979887/000110465924083418/tm2316418d23_ex3-2.htm)\n\n2.1\n\n[Form of Specimen American Depositary Receipt (included in Exhibit 2.3)](https://www.sec.gov/Archives/edgar/data/1979887/000110465924083418/tm2316418d23_ex4-3.htm)\n\n2.2\n\n[Registrant’s Specimen Certificate for Class A Ordinary Shares (incorporated herein by reference to Exhibit 4.2 to the registration statement on Form F-1 (File No. 333-276802), as amended, initially filed with the SEC on February 1, 2024)](https://www.sec.gov/Archives/edgar/data/1979887/000110465924069831/tm2316418d19_ex4-2.htm)\n\n2.3\n\n[Deposit Agreement, dated September 9, 2024, by and between the Registrant, the depositary and owners and holders of the American Depositary Shares issued thereunder (incorporated herein by reference to Exhibit 2.3 to the Annual Report on Form 20-F, filed with the SEC on April 23, 2025)](https://www.sec.gov/Archives/edgar/data/1979887/000095017025056976/ck0001979887-ex2_3.htm)\n\n2.4\n\n[Description of Securities (incorporated herein by reference to Exhibit 2.4 to the Annual Report on Form 20-F, filed on April 23, 2025)](https://www.sec.gov/Archives/edgar/data/1979887/000095017025056976/ck0001979887-ex2_4.htm)\n\n4.1\n\n[The Equity Incentive Plan (The 2023 Share Incentive Plan) (incorporated herein by reference to Exhibit 10.1 to the registration statement on Form F-1 (File No. 333-276802), as amended, initially filed with the SEC on February 1, 2024)](https://www.sec.gov/Archives/edgar/data/1979887/000110465924009133/tm2316418d16_ex10-1.htm)\n\n4.2\n\n[The Equity Incentive Plan (The 2023 Share Incentive Plan II) (incorporated herein by reference to Exhibit 10.2 to the registration statement on Form F-1 (File No. 333-276802), as amended, initially filed with the SEC on February 1, 2024)](https://www.sec.gov/Archives/edgar/data/1979887/000110465924009133/tm2316418d16_ex10-2.htm)\n\n4.3\n\n[The Equity Incentive Plan (The 2025 Share Incentive Plan) (incorporated herein by reference to Exhibit 4.3 to the Annual Report on Form 20-F, filed with the SEC on April 23, 2025)](https://www.sec.gov/Archives/edgar/data/1979887/000095017025056976/ck0001979887-ex4_3.htm)\n\n4.4\n\n[Form of Indemnification Agreement with each of the Registrant’s directors and executive officers (incorporated herein by reference to Exhibit 10.3 to the registration statement on Form F-1 (File No. 333-276802), as amended, initially filed with the SEC on February 1, 2024)](https://www.sec.gov/Archives/edgar/data/1979887/000110465924009133/tm2316418d16_ex10-3.htm)\n\n4.5\n\n[Form of Employment Agreement between the Registrant and an executive officer of the Registrant (incorporated herein by reference to Exhibit 10.4 to the registration statement on Form F-1 (File No. 333-276802), as amended, initially filed with the SEC on February 1, 2024)](https://www.sec.gov/Archives/edgar/data/1979887/000110465924069831/tm2316418d19_ex10-4.htm)\n\n4.6\n\n[Investors’ Rights Agreement (incorporated herein by reference to Exhibit 10.5 to the registration statement on Form F-1 (File No. 333-276802), as amended, initially filed with the SEC on February 1, 2024)](https://www.sec.gov/Archives/edgar/data/1979887/000110465924009133/tm2316418d16_ex10-5.htm)\n\n4.7†\n\n[Convertible Note Purchase Agreement (incorporated herein by reference to Exhibit 10.6 to the registration statement on Form F-1 (File No. 333-276802), as amended, initially filed with the SEC on February 1, 2024)](https://www.sec.gov/Archives/edgar/data/1979887/000110465924083418/tm2316418d23_ex10-6.htm)\n\n4.8†\n\n[English translation of Convertible Loan Investment Agreement (incorporated herein by reference to Exhibit 10.7 to the registration statement on Form F-1 (File No. 333-276802), as amended, initially filed with the SEC on February 1, 2024)](https://www.sec.gov/Archives/edgar/data/1979887/000110465924083418/tm2316418d23_ex10-7.htm)\n\n4.9\n\n[Warrant Subscription Agreement (incorporated herein by reference to Exhibit 10.8 to the registration statement on Form F-1 (File No. 333-276802), as amended, initially filed with the SEC on February 1, 2024)](https://www.sec.gov/Archives/edgar/data/1979887/000110465924009133/tm2316418d16_ex10-8.htm)\n\n4.10†\n\n[English translation of Adjustment Agreement on the Convertible Loan Investment (incorporated herein by reference to Exhibit 10.9 to the registration statement on Form F-1 (File No. 333-276802), as amended, initially filed with the SEC on February 1, 2024)](https://www.sec.gov/Archives/edgar/data/1979887/000110465924083418/tm2316418d23_ex10-9.htm)\n\n4.11†\n\n[Warrant Termination Agreement (incorporated herein by reference to Exhibit 10.10 to the registration statement on Form F-1 (File No. 333-276802), as amended, initially filed with the SEC on February 1, 2024)](https://www.sec.gov/Archives/edgar/data/1979887/000110465924083418/tm2316418d23_ex10-10.htm)\n\n100\n\n \n\n4.12\n\n[XCHG Limited 2026 Share Incentive Plan (incorporated herein by reference to Exhibit 10.2 to Form S-8 (File No. 333-294184) filed with the SEC on March 10, 2026)](https://www.sec.gov/Archives/edgar/data/1979887/000119312526100221/ck0001979887-ex10_2.htm)\n\n4.13\n\n[Sales Agreement, dated January 30, 2026, by and between the Company and A.G.P./Alliance Global Partners (incorporated herein by reference to Exhibit 10.1 to Form 6-K filed with the SEC on January 30, 2026)](https://www.sec.gov/Archives/edgar/data/1979887/000119312526030640/ck0001979887-ex10_1.htm)\n\n8.1\n\n[Principal Subsidiaries of the Registrant (incorporated herein by reference to Exhibit 8.1 to the Annual Report on Form 20-F, filed with the SEC on April 23, 2026)](https://www.sec.gov/Archives/edgar/data/1979887/000095017025056976/ck0001979887-ex8_1.htm)\n\n11.1\n\n[Code of Business Conduct and Ethics of the Registrant (incorporated herein by reference to Exhibit 99.1 to the registration statement on Form F-1 (File No. 333-276802), as amended, initially filed with the SEC on February 1, 2024)](https://www.sec.gov/Archives/edgar/data/1979887/000110465924083418/tm2316418d23_ex99-1.htm)\n\n11.2\n\n[Statement of Policies Governing Material Non-public Information and the Prevention of Insider Trading (incorporated herein by reference to Exhibit 11.2 to the Annual Report on Form 20-F, filed with the SEC on April 23, 2025)](https://www.sec.gov/Archives/edgar/data/1979887/000095017025056976/ck0001979887-ex11_2.htm)\n\n12.1*\n\n[Certification by Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002](ck0001979887-ex12_1.htm)\n\n12.2*\n\n[Certification by Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002](ck0001979887-ex12_2.htm)\n\n13.1**\n\n[Certification by Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](ck0001979887-ex13_1.htm)\n\n13.2**\n\n[Certification by Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](ck0001979887-ex13_2.htm)\n\n15.1*\n\n[Consent of Fangda Partners](ck0001979887-ex15_1.htm)\n\n15.2*\n\n[Consent of Maples and Calder (Hong Kong) LLP](ck0001979887-ex15_2.htm)\n\n15.3*\n\n[Consent of GORG Partnerschaft von Rechtsanwalten mbB](ck0001979887-ex15_3.htm)\n\n15.4*\n\n[Consent of KPMG Huazhen LLP, Independent Registered Public Accounting Firm](ck0001979887-ex15_4.htm)\n\n15.5*\n\n[Consent of Marcum Asia CPAs LLP, Independent Registered Public Accounting Firm](ck0001979887-ex15_5.htm)\n\n15.6\n\n[Letter of KPMG Huazhen LLP dated November 12, 2024 (incorporated herein by reference to Exhibit 16.1 to the Form 6-K filed by the Registrant with the Securities and Exchange Commission on November 12, 2024)](https://www.sec.gov/Archives/edgar/data/1979887/000095017024124500/ck0001979887-ex16_1.htm)\n\n97.1\n\n[Compensation Recoupment Policy of the Registrant (incorporated herein by reference to Exhibit 97.1 to the Annual Report on Form 20-F, filed with the SEC on April 23, 2025)](https://www.sec.gov/Archives/edgar/data/1979887/000095017025056976/ck0001979887-ex97_1.htm)\n\n101.INS*\n\nInline XBRL Instance Document—this instance document does not appear in the Interactive Data File because its XBRL tags embedded within the Inline XBRL document\n\n101.SCH*\n\nInline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents\n\n104\n\nCover Page Interactive Data File (embedded within the Inline XBRL document)\n\n \n\n* Filed herewith\n\n** Furnished herewith\n\n† Certain information in this exhibit has been redacted in accordance with Regulation S-K Item 601(a)(6).\n\n101\n\n \n\nSIGNATURES\n\nThe registrant hereby certifies that it meets all of the requirements for filing its annual report on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.\n\n \n\nXCHG Limited\n\nBy:\n\n/s/ Yifei Hou\n\nName:\n\nYifei Hou\n\nTitle:\n\nChief Executive Officer\n\nDate: April 27, 2026\n\n102\n\n \n\nINDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS\n\nXCHG LIMITED\n\n \n\nCONTENTS\n\n \n\n[Report of Independent Registered Public Accounting Firm (Marcum Asia CPAs LLP, Auditor Firm ID: 5395)](#report_of_independent_registered_public)\n\nF-2\n\n[Report of Independent Registered Public Accounting Firm (KPMG Huazhen LLP, Beijing, China, Auditor Firm ID: 1186)](#report_of_independent_registered_public1)\n\nF-3\n\nConsolidated Financial Statements:\n\n \n\n[Consolidated Balance Sheets as of December 31, 2024 and 202](#consolidated_balance_sheets)5\n\nF-4 - F-5\n\n[Consolidated Statements of Comprehensive Loss for the years ended December 31, 2023, 2024 and 2025](#consolidated_comprehensive_income_loss)\n\nF-6\n\n[Consolidated Statements of Changes in Shareholders’ (Deficit) Equity for the years ended December 31, 2023, 2024 and 2025](#consolidated_statements_of_changes_in)\n\nF-7\n\n[Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2024 and 2025](#consolidated_statements_of_cash_flows)\n\nF-8\n\n[Notes to the Consolidated Financial Statements](#notes_consolidated_financial_statements)\n\nF-9- F-46\n\n \n\n \n\n \n\nF-1\n\n \n\nReport of Independent Registered Public Accounting Firm\n\n \n\nTo the Shareholders and Board of Directors of\n\nXCHG Limited\n\nOpinion on the Financial Statements\n\nWe have audited the accompanying consolidated balance sheets of XCHG Limited (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of comprehensive loss, changes in shareholders’ (deficit) equity and cash flows for each of the two years in the period ended December 31, 2025, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.\n\nBasis for Opinion\n\nThese financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.\n\nWe conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.\n\nOur audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.\n\n/s/ Marcum Asia CPAs LLP\n\nMarcum Asia CPAs LLP\n\nWe have served as the Company’s auditor since 2024.\n\nNew York, New York\n\nApril 27, 2026\n\n \n\nF-2\n\n \n\nReport of Independent Registered Public Accounting Firm\n\nTo the Shareholders and Board of Directors\n\nXCHG Limited:\n\nOpinion on the Consolidated Financial Statements\n\nWe have audited the accompanying consolidated statements of comprehensive loss, changes in shareholders’ deficit and cash flows of XCHG Limited and subsidiaries (the Company) for the year ended December 31, 2023, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the results of operations of the Company and its cash flows for the year ended December 31, 2023, in conformity with U.S. generally accepted accounting principles.\n\nGoing Concern\n\nThe accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in note 2(a) to the consolidated financial statements, the redeemable preferred shareholders have rights to request the Company to redeem all of the redeemable preference shares if the Company has not consummated a qualified initial public offering or qualified share sale by September 30, 2024, that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in note 2(a). The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.\n\nBasis for Opinion\n\nThese consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.\n\nWe conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.\n\n/s/ KPMG Huazhen LLP\n\nWe served as the Company’s auditor from 2023 to 2024.\n\nBeijing, China\n\nJune 10, 2024\n\nF-3\n\n \n\nXCHG LIMITED\n\nCONSOLIDATED BALANCE SHEETS\n\n \n\n \n\n \n\n \n\nAs of December 31,\n\n \n\n \n\n \n\n \n\n2024\n\n \n\n \n\n2025\n\n \n\n \n\nNote\n\n \n\nUS$\n\n \n\n \n\nUS$\n\n \n\nASSETS\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nCurrent assets\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nCash and cash equivalents\n\n \n\n \n\n \n\n \n\n26,773,902\n\n \n\n \n\n \n\n11,385,381\n\n \n\nRestricted cash\n\n \n\n \n\n \n\n-\n\n \n\n \n\n \n\n2,522,898\n\n \n\nAccounts receivable, net\n\n \n\n3\n\n \n\n \n\n11,241,534\n\n \n\n \n\n \n\n7,005,396\n\n \n\nAmounts due from related parties, net\n\n \n\n18\n\n \n\n \n\n2,215,672\n\n \n\n \n\n \n\n2,517,833\n\n \n\nInventories, net\n\n \n\n4\n\n \n\n \n\n7,682,052\n\n \n\n \n\n \n\n9,432,929\n\n \n\nPrepayments and other current assets\n\n \n\n5\n\n \n\n \n\n6,497,363\n\n \n\n \n\n \n\n4,246,959\n\n \n\nTotal current assets\n\n \n\n \n\n \n\n \n\n54,410,523\n\n \n\n \n\n \n\n37,111,396\n\n \n\nNon‑current assets\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nProperty and equipment, net\n\n \n\n6\n\n \n\n \n\n969,207\n\n \n\n \n\n \n\n1,972,396\n\n \n\nLong-term investments\n\n \n\n \n\n \n\n \n\n104,335\n\n \n\n \n\n \n\n106,704\n\n \n\nOperating lease right-of-use assets, net\n\n \n\n7\n\n \n\n \n\n1,653,733\n\n \n\n \n\n \n\n1,766,194\n\n \n\nOther non-current assets\n\n \n\n \n\n \n\n-\n\n \n\n \n\n \n\n1,711,830\n\n \n\nTotal non‑current assets\n\n \n\n \n\n \n\n \n\n2,727,275\n\n \n\n \n\n \n\n5,557,124\n\n \n\nTotal assets\n\n \n\n \n\n \n\n \n\n57,137,798\n\n \n\n \n\n \n\n42,668,520\n\n \n\nLIABILITIES\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nCurrent liabilities\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nShort-term borrowings\n\n \n\n8\n\n \n\n \n\n8,811,599\n\n \n\n \n\n \n\n6,402,231\n\n \n\nAccounts payable\n\n \n\n \n\n \n\n \n\n7,666,956\n\n \n\n \n\n \n\n6,727,086\n\n \n\nContract liabilities\n\n \n\n \n\n \n\n \n\n3,229,431\n\n \n\n \n\n \n\n4,074,505\n\n \n\nOperating lease liabilities—current\n\n \n\n7\n\n \n\n \n\n303,851\n\n \n\n \n\n \n\n592,989\n\n \n\nFinancial liability\n\n \n\n11\n\n \n\n \n\n189,279\n\n \n\n \n\n \n\n63,593\n\n \n\nAmounts to a related party\n\n \n\n18\n\n \n\n \n\n125,748\n\n \n\n \n\n \n\n164,046\n\n \n\nAccrued expenses and other current liabilities\n\n \n\n10\n\n \n\n \n\n5,860,907\n\n \n\n \n\n \n\n5,513,404\n\n \n\nTotal current liabilities\n\n \n\n \n\n \n\n \n\n26,187,771\n\n \n\n \n\n \n\n23,537,854\n\n \n\nNon‑current liabilities\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nOperating lease liabilities—non-current\n\n \n\n7\n\n \n\n \n\n1,274,314\n\n \n\n \n\n \n\n1,175,413\n\n \n\nOther non-current liabilities\n\n \n\n \n\n \n\n \n\n166,829\n\n \n\n \n\n \n\n88,898\n\n \n\nTotal non‑current liabilities\n\n \n\n \n\n \n\n \n\n1,441,143\n\n \n\n \n\n \n\n1,264,311\n\n \n\nTotal liabilities\n\n \n\n \n\n \n\n \n\n27,628,914\n\n \n\n \n\n \n\n24,802,165\n\n \n\nCOMMITMENTS AND CONTINGENCIES\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nThe accompanying notes are an integral part of these consolidated financial statements.\n\nF-4\n\n \n\nXCHG LIMITED\n\nCONSOLIDATED BALANCE SHEETS\n\n \n\n \n\n \n\n \n\nAs of December 31,\n\n \n\n \n\n \n\n \n\n2024\n\n \n\n \n\n2025\n\n \n\n \n\nNote\n\n \n\nUS$\n\n \n\n \n\nUS$\n\n \n\nSHAREHOLDERS’ EQUITY\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nClass A ordinary shares (USD0.00001 par value; 4,258,745,553 shares authorized, 1,636,807,084 and 2,160,310,915 shares issued and outstanding as of December 31, 2024 and 2025, respectively)\n\n \n\n14\n\n \n\n \n\n16,368\n\n \n\n \n\n \n\n21,603\n\n \n\nClass B ordinary shares (USD0.00001 par value; 741,254,447 shares authorized, issued and outstanding as of December 31, 2024 and 2025)\n\n \n\n14\n\n \n\n \n\n7,413\n\n \n\n \n\n \n\n7,413\n\n \n\nAdditional paid - in capital\n\n \n\n \n\n \n\n \n\n79,883,038\n\n \n\n \n\n \n\n100,820,027\n\n \n\nAccumulated other comprehensive income\n\n \n\n \n\n \n\n \n\n1,975,487\n\n \n\n \n\n \n\n1,893,379\n\n \n\nAccumulated deficit\n\n \n\n \n\n \n\n \n\n(52,373,422\n\n)\n\n \n\n \n\n(84,876,067\n\n)\n\nTotal shareholders’ equity\n\n \n\n \n\n \n\n \n\n29,508,884\n\n \n\n \n\n \n\n17,866,355\n\n \n\nTotal liabilities and shareholders’ equity\n\n \n\n \n\n \n\n \n\n57,137,798\n\n \n\n \n\n \n\n42,668,520\n\n \n\n \n\nThe accompanying notes are an integral part of these consolidated financial statements.\n\nF-5\n\n \n\nXCHG LIMITED\n\nCONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS\n\n \n\n \n\n \n\n \n\nFor the Years Ended December 31,\n\n \n\n \n\n \n\n \n\n2023\n\n \n\n \n\n2024\n\n \n\n \n\n2025\n\n \n\n \n\nNote\n\n \n\nUS$\n\n \n\n \n\nUS$\n\n \n\n \n\nUS$\n\n \n\nRevenues (including sales to a related party of US$406,373, US$1,690,196 and US$753,827 for the years ended December 31, 2023, 2024 and 2025, respectively)\n\n \n\n19\n\n \n\n \n\n38,511,652\n\n \n\n \n\n \n\n42,203,660\n\n \n\n \n\n \n\n25,100,392\n\n \n\nCost of revenues (including purchase from a related party of US$70,698, US$428,046 and US$147,611 for the years ended December 31, 2023, 2024 and 2025, respectively)\n\n \n\n \n\n \n\n \n\n(20,937,827\n\n)\n\n \n\n \n\n(20,980,718\n\n)\n\n \n\n \n\n(13,502,911\n\n)\n\nGross profit\n\n \n\n \n\n \n\n \n\n17,573,825\n\n \n\n \n\n \n\n21,222,942\n\n \n\n \n\n \n\n11,597,481\n\n \n\nOperating expenses:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nSelling and marketing expenses\n\n \n\n \n\n \n\n \n\n(6,433,317\n\n)\n\n \n\n \n\n(10,342,509\n\n)\n\n \n\n \n\n(10,704,383\n\n)\n\nResearch and development expenses\n\n \n\n \n\n \n\n \n\n(4,061,037\n\n)\n\n \n\n \n\n(12,159,086\n\n)\n\n \n\n \n\n(7,070,839\n\n)\n\nGeneral and administrative expenses\n\n \n\n \n\n \n\n \n\n(14,025,391\n\n)\n\n \n\n \n\n(10,790,437\n\n)\n\n \n\n \n\n(26,558,833\n\n)\n\nTotal operating expenses\n\n \n\n \n\n \n\n \n\n(24,519,745\n\n)\n\n \n\n \n\n(33,292,032\n\n)\n\n \n\n \n\n(44,334,055\n\n)\n\nGovernment grants\n\n \n\n \n\n \n\n \n\n428,066\n\n \n\n \n\n \n\n38,167\n\n \n\n \n\n \n\n120,721\n\n \n\nOperating loss\n\n \n\n \n\n \n\n \n\n(6,517,854\n\n)\n\n \n\n \n\n(12,030,923\n\n)\n\n \n\n \n\n(32,615,853\n\n)\n\nChanges in fair value of financial instruments\n\n \n\n12\n\n \n\n \n\n(1,472,118\n\n)\n\n \n\n \n\n(87,836\n\n)\n\n \n\n \n\n127,908\n\n \n\nGain on extinguishment of convertible debts\n\n \n\n12\n\n \n\n—\n\n \n\n \n\n \n\n233,216\n\n \n\n \n\n—\n\n \n\nInterest expenses\n\n \n\n \n\n \n\n \n\n(194,500\n\n)\n\n \n\n \n\n(212,732\n\n)\n\n \n\n \n\n(214,888\n\n)\n\nInterest income\n\n \n\n \n\n \n\n \n\n100,832\n\n \n\n \n\n \n\n157,739\n\n \n\n \n\n \n\n200,188\n\n \n\nLoss before income taxes\n\n \n\n \n\n \n\n \n\n(8,083,640\n\n)\n\n \n\n \n\n(11,940,536\n\n)\n\n \n\n \n\n(32,502,645\n\n)\n\nIncome tax expense\n\n \n\n16\n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\nNet loss\n\n \n\n \n\n \n\n \n\n(8,083,640\n\n)\n\n \n\n \n\n(11,940,536\n\n)\n\n \n\n \n\n(32,502,645\n\n)\n\nAccretion of redeemable preference shares to redemption value\n\n \n\n13\n\n \n\n \n\n(2,377,429\n\n)\n\n \n\n \n\n(1,162,826\n\n)\n\n \n\n—\n\n \n\nNet loss attributable to ordinary shareholders\n\n \n\n \n\n \n\n \n\n(10,461,069\n\n)\n\n \n\n \n\n(13,103,362\n\n)\n\n \n\n \n\n(32,502,645\n\n)\n\nNet loss\n\n \n\n \n\n \n\n \n\n(8,083,640\n\n)\n\n \n\n \n\n(11,940,536\n\n)\n\n \n\n \n\n(32,502,645\n\n)\n\nOther comprehensive income (loss)\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nForeign currency translation adjustment, net of nil income taxes\n\n \n\n \n\n \n\n \n\n1,043,513\n\n \n\n \n\n \n\n151,122\n\n \n\n \n\n \n\n(82,108\n\n)\n\nComprehensive loss\n\n \n\n \n\n \n\n \n\n(7,040,127\n\n)\n\n \n\n \n\n(11,789,414\n\n)\n\n \n\n \n\n(32,584,753\n\n)\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nLoss per ordinary share–Basic and diluted\n\n \n\n17\n\n \n\n \n\n(0.01\n\n)\n\n \n\n—\n\n \n\n \n\n—\n\n \n\nLoss per Class A and Class B ordinary share–Basic and diluted\n\n \n\n17\n\n \n\n—\n\n \n\n \n\n \n\n(0.01\n\n)\n\n \n\n \n\n(0.01\n\n)\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nWeighted average number of ordinary shares– Basic and diluted\n\n \n\n17\n\n \n\n \n\n713,323,788\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\nWeighted average number of Class A and Class B ordinary shares – Basic and diluted\n\n \n\n17\n\n \n\n—\n\n \n\n \n\n \n\n1,287,213,767\n\n \n\n \n\n \n\n2,796,963,888\n\n \n\n \n\n \n\nThe accompanying notes are an integral part of these consolidated financial statements\n\nF-6\n\n \n\nXCHG LIMITED\n\nCONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT\n\n \n\n \n\n \n\n \n\n \n\nSeries Seed\n\n \n\n \n\nAdditional\n\n \n\n \n\nAccumulated\nother\n\n \n\n \n\n \n\n \n\n \n\nTotal\n\n \n\n \n\nOrdinary\nShares\n\n \n\n \n\npreference\nshares\n\n \n\n \n\npaid-in\ncapital\n\n \n\n \n\ncomprehensive\nincome\n\n \n\n \n\nAccumulated deficit\n\n \n\n \n\nShareholders’ deficit\n\n \n\n \n\nNumber\n\n \n\n \n\nAmounts\n\n \n\n \n\nAmounts\n\n \n\n \n\nAmounts\n\n \n\n \n\nAmounts\n\n \n\n \n\nAmounts\n\n \n\n \n\nAmounts\n\n \n\nBalance as of December 31, 2022\n\n \n\n \n\n656,200,500\n\n \n\n \n\n \n\n6,562\n\n \n\n \n\n \n\n2,000,000\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n780,852\n\n \n\n \n\n \n\n(30,833,430\n\n)\n\n \n\n \n\n(28,046,016\n\n)\n\nCumulative effect of adoption of ASC 326\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(29,923\n\n)\n\n \n\n \n\n(29,923\n\n)\n\nBalance as of January 1, 2023\n\n \n\n \n\n656,200,500\n\n \n\n \n\n \n\n6,562\n\n \n\n \n\n \n\n2,000,000\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n780,852\n\n \n\n \n\n \n\n(30,863,353\n\n)\n\n \n\n \n\n(28,075,939\n\n)\n\nNet loss\n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(8,083,640\n\n)\n\n \n\n \n\n(8,083,640\n\n)\n\nIssuance of unvested shares\n\n \n\n \n\n150,000,000\n\n \n\n \n\n \n\n1,500\n\n \n\n \n\n—\n\n \n\n \n\n \n\n7,455,300\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n \n\n7,456,800\n\n \n\nAccretion of redeemable preference shares to\n redemption value\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(891,536\n\n)\n\n \n\n—\n\n \n\n \n\n \n\n(1,485,893\n\n)\n\n \n\n \n\n(2,377,429\n\n)\n\nForeign currency translation adjustment, net\n of nil income taxes\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,043,513\n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,043,513\n\n \n\nBalance as of December 31, 2023\n\n \n\n \n\n806,200,500\n\n \n\n \n\n \n\n8,062\n\n \n\n \n\n \n\n2,000,000\n\n \n\n \n\n \n\n6,563,764\n\n \n\n \n\n \n\n1,824,365\n\n \n\n \n\n \n\n(40,432,886\n\n)\n\n \n\n \n\n(30,036,695\n\n)\n\n \n\nXCHG LIMITED\n\nCONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ (DEFICIT) EQUITY\n\n \n\n \n\nOrdinary shares\n\n \n\n \n\nSeries Seed\n\n \n\n \n\n \n\n \n\n \n\nAccumulated\nother\n\n \n\n \n\n \n\n \n\n \n\nTotal\n\n \n\n \n\nClass A Ordinary\nShares\n\n \n\n \n\nClass B Ordinary\nShares\n\n \n\n \n\nOrdinary\nShares\n\n \n\n \n\npreference\nshares\n\n \n\n \n\nAdditional\npaid-in\n\n \n\n \n\ncomprehensive income\n\n \n\n \n\nAccumulated deficit\n\n \n\n \n\nShareholders' (deficit) equity\n\n \n\n \n\nNumber\n\n \n\n \n\nAmounts\n\n \n\n \n\nNumber\n\n \n\n \n\nAmounts\n\n \n\n \n\nNumber\n\n \n\n \n\nAmounts\n\n \n\n \n\nAmounts\n\n \n\n \n\ncapital\n\n \n\n \n\nAmounts\n\n \n\n \n\nAmounts\n\n \n\n \n\nAmounts\n\n \n\nBalance as of December 31, 2023\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n806,200,500\n\n \n\n \n\n \n\n8,062\n\n \n\n \n\n \n\n2,000,000\n\n \n\n \n\n \n\n6,563,764\n\n \n\n \n\n \n\n1,824,365\n\n \n\n \n\n \n\n(40,432,886\n\n)\n\n \n\n \n\n(30,036,695\n\n)\n\nNet loss\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(11,940,536\n\n)\n\n \n\n \n\n(11,940,536\n\n)\n\nAccretion of redeemable preference shares to redemption value\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(1,162,826\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(1,162,826\n\n)\n\nConversion of preference shares immediately prior to the completion of IPO\n\n \n\n \n\n1,433,372,111\n\n \n\n \n\n \n\n14,334\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(2,000,000\n\n)\n\n \n\n \n\n52,683,042\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n50,697,376\n\n \n\nRe-designation of ordinary shares into class A and class B Ordinary shares immediately prior to the completion of IPO\n\n \n\n \n\n64,946,053\n\n \n\n \n\n \n\n649\n\n \n\n \n\n \n\n741,254,447\n\n \n\n \n\n \n\n7,413\n\n \n\n \n\n \n\n(806,200,500\n\n)\n\n \n\n \n\n(8,062\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nShare issuance upon initial public offering and followed offering, net of issuance costs of US$4,264,457\n\n \n\n \n\n138,488,920\n\n \n\n \n\n \n\n1,385\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n14,825,495\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n14,826,880\n\n \n\nShare-based compensation\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n6,973,563\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n6,973,563\n\n \n\nForeign currency translation adjustment, net of nil income taxes\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n151,122\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n151,122\n\n \n\nBalance as of December 31, 2024\n\n \n\n \n\n1,636,807,084\n\n \n\n \n\n \n\n16,368\n\n \n\n \n\n \n\n741,254,447\n\n \n\n \n\n \n\n7,413\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n79,883,038\n\n \n\n \n\n \n\n1,975,487\n\n \n\n \n\n \n\n(52,373,422\n\n)\n\n \n\n \n\n29,508,884\n\n \n\nNet loss\n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(32,502,645\n\n)\n\n \n\n \n\n(32,502,645\n\n)\n\nShare-based compensation\n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n \n\n20,942,224\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n \n\n20,942,224\n\n \n\nShare issuance from vest of restricted shares units\n\n \n\n \n\n523,503,831\n\n \n\n \n\n \n\n5,235\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(5,235\n\n)\n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nForeign currency translation adjustment, net of nil income taxes\n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(82,108\n\n)\n\n \n\n—\n\n \n\n \n\n \n\n(82,108\n\n)\n\nBalance as of December 31, 2025\n\n \n\n \n\n2,160,310,915\n\n \n\n \n\n \n\n21,603\n\n \n\n \n\n \n\n741,254,447\n\n \n\n \n\n \n\n7,413\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n \n\n100,820,027\n\n \n\n \n\n \n\n1,893,379\n\n \n\n \n\n \n\n(84,876,067\n\n)\n\n \n\n \n\n17,866,355\n\n \n\n \n\nThe accompanying notes are an integral part of these consolidated financial statements\n\nF-7\n\n \n\nXCHG LIMITED\n\nCONSOLIDATED STATEMENTS OF CASH FLOWS\n\n \n\n \n\nFor the Years Ended December 31,\n\n \n\n \n\n2023\n\n \n\n \n\n2024\n\n \n\n \n\n2025\n\n \n\n \n\nUS$\n\n \n\n \n\nUS$\n\n \n\n \n\nUS$\n\n \n\nOperating activities:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nNet loss\n\n \n\n \n\n(8,083,640\n\n)\n\n \n\n \n\n(11,940,536\n\n)\n\n \n\n \n\n(32,502,645\n\n)\n\nAdjustments to reconcile net loss to net cash used in operating\n   activities\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n  Allowance for credit losses\n\n \n\n \n\n185,283\n\n \n\n \n\n \n\n127,263\n\n \n\n \n\n \n\n824,520\n\n \n\n  Share-based compensation\n\n \n\n \n\n7,456,800\n\n \n\n \n\n \n\n7,030,846\n\n \n\n \n\n \n\n20,942,224\n\n \n\n  Write-down of inventories\n\n \n\n \n\n155,600\n\n \n\n \n\n \n\n43,190\n\n \n\n \n\n \n\n5,160\n\n \n\n  Depreciation and amortization\n\n \n\n \n\n202,884\n\n \n\n \n\n \n\n232,918\n\n \n\n \n\n \n\n275,252\n\n \n\n  Reduction in the carrying amount of right-of-use assets\n\n \n\n \n\n318,393\n\n \n\n \n\n \n\n421,214\n\n \n\n \n\n \n\n526,732\n\n \n\n  Loss on disposal of property and equipment\n\n \n\n \n\n2,044\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n  Changes in fair value of financial instruments\n\n \n\n \n\n1,472,118\n\n \n\n \n\n \n\n87,836\n\n \n\n \n\n \n\n(127,908\n\n)\n\n  Gain on extinguishment of convertible debts\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(233,216\n\n)\n\n \n\n—\n\n \n\n  Loss on modification of operating lease contract\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n11,890\n\n \n\n  Unrealized foreign currency transaction (gain) loss\n\n \n\n \n\n(205,823\n\n)\n\n \n\n \n\n218,085\n\n \n\n \n\n \n\n(546,226\n\n)\n\nChanges in operating assets and liabilities:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n  Accounts receivable\n\n \n\n \n\n(5,062,424\n\n)\n\n \n\n \n\n668,143\n\n \n\n \n\n \n\n4,722,657\n\n \n\n  Amounts due from related parties\n\n \n\n \n\n(469,422\n\n)\n\n \n\n \n\n(1,330,296\n\n)\n\n \n\n \n\n(744,558\n\n)\n\n  Inventories\n\n \n\n \n\n(663,491\n\n)\n\n \n\n \n\n(1,260,086\n\n)\n\n \n\n \n\n(1,840,199\n\n)\n\n  Prepayments and other assets\n\n \n\n \n\n167,284\n\n \n\n \n\n \n\n(4,706,046\n\n)\n\n \n\n \n\n2,879,268\n\n \n\n  Accounts payable\n\n \n\n \n\n(859,571\n\n)\n\n \n\n \n\n2,415,557\n\n \n\n \n\n \n\n(2,124,017\n\n)\n\n  Contract liabilities\n\n \n\n \n\n(1,533,075\n\n)\n\n \n\n \n\n1,955,497\n\n \n\n \n\n \n\n711,340\n\n \n\n  Amounts due to a related party\n\n \n\n \n\n—\n\n \n\n \n\n \n\n126,926\n\n \n\n \n\n \n\n34,877\n\n \n\n  Operating lease liabilities\n\n \n\n \n\n(345,391\n\n)\n\n \n\n \n\n(458,338\n\n)\n\n \n\n \n\n(459,789\n\n)\n\n  Accrued expenses and other current liabilities\n\n \n\n \n\n1,615,056\n\n \n\n \n\n \n\n(689,051\n\n)\n\n \n\n \n\n(35,080\n\n)\n\n  Other non-current liabilities\n\n \n\n \n\n71,864\n\n \n\n \n\n \n\n88,526\n\n \n\n \n\n \n\n(80,181\n\n)\n\nNet cash used in operating activities\n\n \n\n \n\n(5,575,511\n\n)\n\n \n\n \n\n(7,201,568\n\n)\n\n \n\n \n\n(7,526,683\n\n)\n\nInvesting activities:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nIssuance of a loan to a related party\n\n \n\n \n\n(94,738\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\nProceeds from collection of the loan to a related party\n\n \n\n \n\n—\n\n \n\n \n\n \n\n25,071\n\n \n\n \n\n—\n\n \n\nIssuance of a loan to a related party of a shareholder\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(1,404\n\n)\n\n \n\n—\n\n \n\nProceeds from collection of the loan to a related party of a shareholder\n\n \n\n \n\n2,886,378\n\n \n\n \n\n \n\n56,333\n\n \n\n \n\n—\n\n \n\nLoans provided to third parties\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(821,769\n\n)\n\nCash paid for purchase of property and equipment and intangible assets\n\n \n\n \n\n(525,915\n\n)\n\n \n\n \n\n(613,657\n\n)\n\n \n\n \n\n(677,415\n\n)\n\nNet cash provided by (used in) investing activities\n\n \n\n \n\n2,265,725\n\n \n\n \n\n \n\n(533,657\n\n)\n\n \n\n \n\n(1,499,184\n\n)\n\nFinancing activities:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nProceeds from short-term bank borrowings\n\n \n\n \n\n6,298,822\n\n \n\n \n\n \n\n8,522,049\n\n \n\n \n\n \n\n4,199,987\n\n \n\nRepayment of short-term bank borrowings\n\n \n\n \n\n(4,649,967\n\n)\n\n \n\n \n\n(7,263,737\n\n)\n\n \n\n \n\n(6,767,761\n\n)\n\nInterest free advances to the Founders and executive officers\n\n \n\n \n\n(704,543\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\nProceeds from collection of advances to the Founders and executive officers\n\n \n\n \n\n271,575\n\n \n\n \n\n \n\n675,939\n\n \n\n \n\n—\n\n \n\nProceeds from sale of ordinary shares through public offering\n\n \n\n \n\n—\n\n \n\n \n\n \n\n19,091,338\n\n \n\n \n\n—\n\n \n\nCash paid to the existing equity holders of X-Charge Technology in connection with\n   the restructuring\n\n \n\n \n\n(32,947,273\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\nCash received from the existing equity holders of X-Charge Technology in connection\n   with the restructuring\n\n \n\n \n\n32,947,273\n\n \n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\nCash paid to convertible debts holders of Beijing X-Charge Technology in connection with the conversion of convertible debts\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(7,020,816\n\n)\n\n \n\n—\n\n \n\nCash received from the convertible debt holders of Beijing X-Charge Technology in connection with the conversion of convertible debts\n\n \n\n \n\n—\n\n \n\n \n\n \n\n7,020,816\n\n \n\n \n\n—\n\n \n\nPayments of initial public offering (“IPO”) cost and follow-up offering cost\n\n \n\n \n\n(1,525,934\n\n)\n\n \n\n \n\n(1,875,977\n\n)\n\n \n\n \n\n(1,759,316\n\n)\n\nProceeds from issuance of the convertible debts\n\n \n\n \n\n11,053,172\n\n \n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\nNet cash provided by (used in) financing activities\n\n \n\n \n\n10,743,125\n\n \n\n \n\n \n\n19,149,612\n\n \n\n \n\n \n\n(4,327,090\n\n)\n\nEffect of foreign currency exchange rate changes on cash and cash equivalents and\n   restricted cash\n\n \n\n \n\n(410,966\n\n)\n\n \n\n \n\n(333,295\n\n)\n\n \n\n \n\n487,334\n\n \n\nNet increase (decrease) in cash, cash equivalents and restricted cash\n\n \n\n \n\n7,022,373\n\n \n\n \n\n \n\n11,081,092\n\n \n\n \n\n \n\n(12,865,623\n\n)\n\nCash, cash equivalents and restricted cash at the beginning of the year\n\n \n\n \n\n8,670,437\n\n \n\n \n\n \n\n15,692,810\n\n \n\n \n\n \n\n26,773,902\n\n \n\nCash, cash equivalents and restricted cash at the end of the year\n\n \n\n \n\n15,692,810\n\n \n\n \n\n \n\n26,773,902\n\n \n\n \n\n \n\n13,908,279\n\n \n\nSupplemental cash flow information:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nInterest paid\n\n \n\n \n\n76,901\n\n \n\n \n\n \n\n212,732\n\n \n\n \n\n \n\n127,556\n\n \n\nIncome taxes paid\n\n \n\n \n\n—\n\n \n\n \n\n \n\n82,557\n\n \n\n \n\n \n\n45,457\n\n \n\nNon-cash investing and financing activities:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nAccrual of IPO and follow-up offering cost\n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,168,175\n\n \n\n \n\n \n\n522,813\n\n \n\nConversion of convertible debts into series B+ convertible redeemable preferred shares\n\n \n\n \n\n—\n\n \n\n \n\n \n\n9,651,560\n\n \n\n \n\n—\n\n \n\nExtinguishment of convertible debts\n\n \n\n \n\n—\n\n \n\n \n\n \n\n2,720,155\n\n \n\n \n\n—\n\n \n\nConversion of convertible preferred shares to Class A ordinary shares\n\n \n\n \n\n—\n\n \n\n \n\n \n\n52,697,376\n\n \n\n \n\n—\n\n \n\nDeferred offering costs charged against additional paid-in capital\n\n \n\n \n\n—\n\n \n\n \n\n \n\n4,264,457\n\n \n\n \n\n—\n\n \n\nROU assets disposed as reduction of operating lease liabilities due to lease modification\n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n \n\n345,622\n\n \n\n \n\nThe accompanying notes are an integral part of these consolidated financial statements\n\nF-8\n\n \n\nXCHG LIMITED\n\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n\n1.\nDESCRIPTION OF BUSINESS AND ORGANIZATION\n\n(a)\nOrganization and principal activities\n\nXCHG Limited (“the Company”, “XCHG”), together with its subsidiaries (collectively, the “the Group”), is principally engaged in designing, manufacturing and selling of Electric Vehicle (“EV”) chargers under the brand name of “X-Charge” (collectively referred to as the “X-Charge Business”). The Group’s principal operations and geographic markets are mainly in the People’s Republic of China (“PRC”), Europe and the United States.\n\n(b)\nRestructuring\n\nBeijing X-Charge Technology Co., Ltd. (“X-Charge Technology”) was established in 2015 under the laws of PRC by Mr. Ding Rui and Mr. Hou Yifei (the “Founders”) to be engaged in the X-Charge business. In preparation for the Company’s initial public offering, the Group has completed certain corporate reorganization transactions (the “Restructuring”) as described below, through a series of intermediary holding companies to acquire 100% of the equity interest in X-Charge Technology, and issue new shares of the Company to the beneficial owners of X-Charge Technology (“Existing Equity holders”) or their affiliates, such that an offshore shareholding structure was established.\n\nOn December 16, 2021, the Company was incorporated in the Cayman Islands. The Company is an investment company with no substantial assets and liabilities immediately prior to the Restructuring and has no operations. In December 2021, the Company established Xcar Limited, a wholly-owned subsidiary in British Virgin Islands (“BVI”), which in turn, established Xcharge HK Limited, a wholly-owned subsidiary in Hong Kong in January 2022. On June 29, 2023, Xcharge HK Limited obtained control over X-Charge Technology and become an intermediate offshore holding company of X-Charge Technology.\n\nThe Restructuring principally involved the following steps:\n\ni.\nIn June 2023, the Founders canceled their respective equity interests in X-Charge Technology in exchange for ordinary shares of XCHG Limited. Immediately after the completion of the Restructuring, Next EV Limited, an affiliate of Mr. Ding Rui, held 419,970,000 ordinary shares of XCHG Limited, and Future EV Limited, an affiliate of Mr. Hou Yifei, held 236,230,500 ordinary shares of XCHG Limited.\n\nii.\nIn June 2023, Beijing X-charge Management Consulting Centre (Limited Partnership) canceled its 7.2199% equity interests in X-Charge Technology, which served as share-based awards for future grants to employees. Prior to the Restructuring, X-Charge Technology did not grant any such share-based awards. In June 2023, XCHG Limited adopted a share incentive plan (the “2023 Share Plan”), under which the maximum number of ordinary shares, which may be issued, accounts for 7.2199% of share capital of XCHG Limited (or 150,000,000 ordinary shares) on a fully diluted basis, assuming all ordinary shares under the share incentive plan are outstanding.\n\niii.\nDepending on the applicability of certain PRC foreign exchange regulatory procedures and requirements, the existing preference equity holders of X-Charge Technology canceled their respective equity interests in X-Charge Technology in exchange for either cash proceeds equal to their original investment in X-Charge Technology or preference shares of XCHG Limited;\n\n(a)\nWith respect to certain existing preference equity holders of X-Charge Technology who are required to complete certain PRC foreign exchange regulatory procedures before they are permitted to acquire preference shares of XCHG Limited, X-Charge Technology transferred cash to these Existing Equity holders of X-Charge Technology in an amount equal to their original investment in X-Charge Technology in exchange for their equity interests in X-Charge Technology. In connection with the transfer, XCHG Limited also issued warrants to such Existing Equity holders of X-Charge Technology (or their affiliates) to purchase preference shares of XCHG Limited. The warrant arrangements were contemplated solely to facilitate the completion of the Restructuring. Specifically, these Existing Equity holders were required to complete certain PRC foreign exchange regulatory procedures (which were administrative in nature and completed on June 30, 2023) before they or their affiliates were permitted to acquire preference shares of XCHG Limited. The warrants, in substance, served the purpose of ensuring they will continue to retain substantially the same equity holder rights during the interim period, if any, until they exercised the warrants to acquire preference shares of XCHG Limited. The exercise price of the warrants held by each of such Existing Equity holders (or their affiliates) equals their respective cash proceeds received from the cancellation of equity interests in X-Charge Technology.\n\nF-9\n\n \n\nOn June 30, 2023, XCHG Limited granted the warrants to such Existing Equity holders (or their affiliates) of X-Charge Technology who are required to complete certain PRC foreign exchange regulatory procedures. On the same date, all of such warrant holders exercised their warrants in full and accordingly because the relevant PRC foreign exchange regulatory procedures were completed on the same date, and XCHG Limited issued such number of preference shares to such warrant holders.\n\n(b)\nWith respect to the existing preference equity holders of X-Charge Technology who are not required to complete such PRC foreign exchange regulatory procedures, on June 30, 2023, XCHG Limited issued preference shares to them or their affiliates, as consideration in exchange for the respective equity interests that they held in X-Charge Technology.\n\nOn June 30, 2023, the Company issued Series Angel, Series A, Series A+ and Series B redeemable preference shares to redeemable preferred equity holders of X-Charge Technology and issued Series Seed preference shares to Series Seed preferred equity holders of X-Charge Technology in exchange for the respective equity interests that they held in X-Charge Technology. Collectively, all the Series Angel, Series A, Series A+ and Series B redeemable preference shares are referred to as the “Preference Shares”. The terms of the Preference Shares and Series Seed preference shares of the Company substantially mirror those of the preferred equity of X-Charge Technology.\n\nUpon the consummation of the Restructuring on June 30, 2023, all Existing Equity holders of X-Charge Technology obtained an equity interest of XCHG Limited in proportion to their respective equity ownership in X-Charge Technology immediately prior to the Restructuring and the Company became the ultimate holding company of X-Charge Technology. The issuance and the exercise of the warrants on June 30, 2023 (with no ability of the warrant holder to do anything other than exercise immediately), because of the lack of substance, does not have any accounting consequences.\n\nBecause the equity interests in X-Charge Technology before the Restructuring were the same as the shareholding percentages of XCHG Limited after the Restructuring, and the rights of each equity interest holder of X-Charge Technology before the Restructuring were substantially identical with the rights of each shareholder of XCHG Limited immediately after the Restructuring, the establishment of the corporate structure of XCHG Limited is treated as and accounted for as a recapitalization of X-Charge Technology that lacks economic substance, and the consolidated financial statements of XCHG were prepared as if the corporate structure of XCHG Limited after the Restructuring had been in existence since the beginning of the periods presented. That is, the consolidated financial statements of XCHG include the results of the operations and the statement of financial position of X-Charge Technology as of the beginning of the earliest period presented. XCHG’s consolidated financial position as of December 31, 2024 and 2025, and its results of operations for each of the years in the three-year period ended December 31, 2025 represent the continuation of the consolidated financial statements of X-Charge Technology, except for the capital structure and per share information of the Company, which is retrospectively adjusted from the earliest period in the consolidated financial statements presented to reflect the legal capital structure of XCHG. Accordingly, the effect of the ordinary shares, the Preference Shares and Series Seed preference shares issued by the Company pursuant to the Restructuring have been presented retrospectively as of the beginning of the earliest period presented on the consolidated financial statement.\n\n(c)\nInitial public offering (“IPO”)\n\nOn September 11, 2024, the Company completed its IPO on the NASDAQ Stock Market. In the offering, 3,333,335 American depositary shares (“ADSs”), representing 133,333,400 Class A Ordinary Shares, were issued and sold to the public at a price of US$6.2 per ADS. On September 13, 2024, an additional 128,888 ADSs were issued and sold to the underwriter at a price of US$6.2 per ADS through the partial exercise of the over-allotment option as stipulated in the Underwriting Agreement. The net proceeds to the Company from the IPO and the partial exercise of the over-allotment option, after deducting commissions and offering expenses, were approximately US$19.1 million.\n\n2.\nSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES\n\n(a)\nBasis of presentation\n\nThe accompanying consolidated financial statements of the Group have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the SEC assuming the Group will continue as a going concern. The going concern assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business. However, if the Company had not consummated a Qualified IPO or Qualified share sale by September 30, 2024, which are out of the control of the Company, the redeemable preferred shareholders would have rights to request the Company to redeem all of the redeemable preference shares. The aggregate redemption amount by September 30, 2024 for all redeemable preference shares outstanding as of December 31, 2023 would be US$39.0 million. As a result, substantial doubt about the Company’s ability to continue as a going concern existed before the Company completed a Qualified IPO on September 11, 2024.\n\nF-10\n\n \n\nThe Group had been evaluating strategies to obtain additional funding for future operations. These strategies included, but were not limited to, obtaining equity financing, issuing debt or entering into other financing arrangements, obtaining agreements with the existing investors to extend the due dates for outstanding debt and the redemption dates of redeemable preference shares. However, the Group might be unable to access to future equity or debt financing when needed. As such, there could be no assurance that the Group would be able to obtain additional liquidity when needed or under acceptable terms, if at all.\n\nThe consolidated financial statements for the year ended December 31, 2023 do not include any adjustments to the carrying amounts and classification of assets, liabilities, and reported expenses that may be necessary if the Group were unable to continue as a going concern. The Company has completed a Qualified IPO on September 11, 2024 and all redeemable preferred shares were converted into Class A ordinary shares. The net proceeds to the Company from the IPO and the partial exercise of the over-allotment option, after deducting commissions and offering expenses, were approximately US$19.1 million. The Group has cash and cash equivalents of US$11.4 million and working capital of US$13.6 million as of December 31, 2025. The Group’s available cash and working capital will be sufficient to support its continuous operations and to meet its payment obligations when liabilities fall due within the next twelve months from the date of issuance of these consolidated financial statements. As a result, no substantial doubt about the Company’s ability to continue as a going concern existed as of December 31, 2025.\n\n(b)\nPrinciples of consolidation\n\nThe consolidated financial statements include the financial statements of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances among the Company and its wholly-owned subsidiaries have been eliminated upon consolidation.\n\n(c)\nUse of estimates\n\nThe preparation of the 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, related disclosures of contingent assets and liabilities at the balance sheet date, and the reported revenues and expenses during the reported period in the consolidated financial statements and accompanying notes. Accounting estimates include, but not limited to, allowance for doubtful accounts, write downs for excess and obsolete inventories, the realization of deferred income tax assets and the fair value of ordinary shares, redeemable preference shares, convertible debts and share-based compensation awards. Changes in facts and circumstances may result in revised estimates. Actual results could differ from those estimates, and as such, differences may be material to the consolidated financial statements.\n\n(d)\nCommitments and contingencies\n\nIn the normal course of business, the Group is subject to loss contingencies, such as legal proceedings and claims arising out of its business, that cover a wide range of matters, including, among others, government investigations, shareholder lawsuits, and non‑income tax matters. An accrual for a loss contingency is recognized when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. If a potential material 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, is disclosed.\n\n(e)\nCash and cash equivalents\n\nCash and cash equivalents consisted of cash on hand, cash at bank, bank check, term deposits and other monetary funds, which have original maturities of three months or less and are readily convertible to known amounts of cash. The Group’s cash and cash equivalents, excluding cash on hand, are deposited in financial institutions at below locations:\n\n \n\nF-11\n\n \n\n \n\nAs of December 31,\n\n \n\n \n\n2024\n\n \n\n \n\n2025\n\n \n\n \n\nUS$\n\n \n\n \n\nUS$\n\n \n\nFinancial institutions in the mainland of the PRC\n\n \n\n \n\n \n\n \n\n \n\n \n\n—Denominated in RMB\n\n \n\n \n\n11,977,938\n\n \n\n \n\n \n\n1,827,969\n\n \n\n—Denominated in USD\n\n \n\n \n\n1,117,452\n\n \n\n \n\n \n\n7,400\n\n \n\n—Denominated in EUR\n\n \n\n \n\n1,776,869\n\n \n\n \n\n \n\n1,574,250\n\n \n\nTotal cash and cash equivalents balances held at mainland\n   PRC financial institutions\n\n \n\n \n\n14,872,259\n\n \n\n \n\n \n\n3,409,619\n\n \n\nFinancial institution in Germany\n\n \n\n \n\n \n\n \n\n \n\n \n\n—Denominated in EUR\n\n \n\n \n\n2,882,073\n\n \n\n \n\n \n\n1,833,658\n\n \n\nTotal cash balances held at a Germany financial\n   institution\n\n \n\n \n\n2,882,073\n\n \n\n \n\n \n\n1,833,658\n\n \n\nFinancial institutions in the USA\n\n \n\n \n\n \n\n \n\n \n\n \n\n—Denominated in USD\n\n \n\n \n\n9,018,804\n\n \n\n \n\n \n\n6,141,320\n\n \n\nTotal cash balances held at a USA financial institution\n\n \n\n \n\n9,018,804\n\n \n\n \n\n \n\n6,141,320\n\n \n\nTotal cash and cash equivalents balances held at financial\n   institutions\n\n \n\n \n\n26,773,136\n\n \n\n \n\n \n\n11,384,597\n\n \n\n \n\n(f)\nRestricted cash\n\nRestricted cash represents cash deposited with a bank primarily in connection with two pending litigation matters as of December 31, 2025. The restriction on the use of such cash and any related interest income is imposed by the bank and will remain in effect until the respective legal proceedings are concluded. This balance is classified as a current asset on the Group's consolidated balance sheets, as the restriction is expected to be released within the 12 months following December 31, 2025. The Group had no restricted cash as of December 31, 2024. The restricted cash is denominated in RMB and held at financial institutions in the PRC.\n\nThe following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows.\n\n \n\n \n\nAs of December 31,\n\n \n\n \n\n2024\n\n \n\n \n\n2025\n\n \n\n \n\nUS$\n\n \n\n \n\nUS$\n\n \n\nCash and cash equivalents\n\n \n\n \n\n26,773,902\n\n \n\n \n\n \n\n11,385,381\n\n \n\nRestricted cash\n\n \n\n \n\n—\n\n \n\n \n\n \n\n2,522,898\n\n \n\nTotal cash, cash equivalents and restricted cash\n\n \n\n \n\n26,773,902\n\n \n\n \n\n \n\n13,908,279\n\n \n\n \n\n(g)\nAccounts receivable, net\n\nAccounts receivable primarily consists of receivables from customers, which are recognized and carried at the original invoice amount less an allowance for credit losses.\n\nPrior to the adoption of ASC 326, Financial Instruments - Credit Loss, the Group establishes an allowance for doubtful accounts primarily based on the aging of the receivables and factors surrounding the credit risk of specific customers. Accounts receivable balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.\n\nF-12\n\n \n\nThe Group adopted ASC 326, Financial Instruments - Credit Loss on January 1, 2023 using the modified retrospective approach. Upon adoption of ASC 326 starting from January 1, 2023, the provision of credit losses for accounts receivable is based upon the current expected credit losses (“CECL”) model. The CECL model requires an estimate of the credit losses expected over the life of accounts receivable since initial recognition, and accounts receivable with similar risk characteristics are grouped together when estimating CECL. In assessing the CECL, the Group considers both quantitative and qualitative information that is reasonable and supportable, including historical credit loss experience, adjusted for relevant factors impacting collectability and forward-looking information indicative of external market conditions. While the Group uses the best information available in making determination, the ultimate recovery of recorded receivables is also dependent upon future economic events and other conditions that may be beyond the Group’s control. Accounts receivable which are deemed to be uncollectible are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. There is a time lag between when the Group estimates a portion of or the entire account balances to be uncollectible and when a write off of the account balances is taken. The Group does not have any off-balance sheet credit exposure related to its customers. The effect of the adoption on the cumulative deficit as of January 1, 2023 was US$29,923.\n\n(h)\nInventories\n\nInventories, consisting of raw materials, work in progress and finished goods, are stated at the lower of cost or net realizable value. The cost of inventory is determined using the weighted average cost method. Cost of finished goods comprise direct materials, direct production costs and an allocation of production overheads based on normal operating capacity. Inventory that is sold to third parties is included within cost of revenues. Inventory that is installed on the operator properties where the Company retains ownership is transferred to property and equipment at the carrying value of the inventory. Inventory is written down for damaged and slow-moving goods, which is dependent upon factors such as historical and forecasted consumer demand. When appropriate, write downs to inventory are recorded to write down the cost of inventories to their net realizable value.\n\n(i)\nProperty and equipment, net\n\nProperty and equipment are stated at cost less accumulated depreciation and any recorded impairment.\n\nThe estimated useful lives are as follows:\n\n \n\nMachinery and equipment\n\n5 years\n\nEV Chargers\n\n5 years\n\nOffice and electronic equipment\n\n3 ~ 5 years\n\nSoftware\n\n10 years\n\nLeasehold improvements\n\nshorter of 5 years or lease term\n\nVehicle\n\n5 years\n\n \n\nThe Group constructs certain of its property and equipment. In addition to costs under the construction contracts, external costs that are directly related to the construction and acquisition of such property and equipment are capitalized. Depreciation is recorded at the time assets are ready for their intended use. Such properties are classified to the appropriate categories of property and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.\n\nDepreciation commences when the asset is ready for its intended use. Depreciation on property and equipment is calculated on the straight-line method over the estimated useful lives of the assets.\n\nWhen items are retired or otherwise disposed of, income is charged or credited for the difference between net book value and the proceeds received thereon. Ordinary maintenance and repairs are charged to expense as incurred, and replacements and betterments are capitalized and amortized over the remaining useful life.\n\n(j)\nIntangible assets, net\n\nIntangible asset mainly represents acquired licenses, which are amortized on a straight-line basis over the estimated useful life of 3 years. The estimated life of intangible assets subject to amortization is reassessed if circumstances occur that indicate the life has changed. Amortization expenses were US$29,597, US$26,981 and nil for the years ended December 31, 2023, 2024 and 2025, respectively.\n\nF-13\n\n \n\n(k)\nLeases\n\nThe Group adopts ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”) for all periods presented. The Group elects the short-term lease exemption for all contracts with lease terms of 12 months or less.\n\nThe Group determines if an arrangement is a lease or contains a lease at lease inception. For operating leases, the Group as a lessee recognizes a right-of-use (“ROU”) asset and a lease liability based on the present value of the lease payments over the lease term on the consolidated balance sheets at commencement date. Lease expense is recorded on a straight-line basis over the lease term. As most of the Group’s leases do not provide an implicit rate, the Group estimates its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in economic environments where the leased asset is located. The Group’s leases often include options to extend and lease terms include such extended terms when the Group is reasonably certain to exercise those options. Lease terms also include periods covered by options to terminate the leases when the Group is reasonably certain not to exercise those options.\n\nThe Group elects not to separate non-lease components from lease components, therefore, accounts for lease component and non-lease components as a single lease component.\n\nAny lease modifications are evaluated in accordance with ASC 842-10-15-6 to determine their impact on the existing lease classification and measurement. A partial lease termination is accounted for by proportionally reducing both the lease liability and the ROU asset. Any difference between the reduction in the lease liability and the corresponding reduction in the ROU asset is recognized as a gain or loss in the consolidated statements of comprehensive loss. During the year ended December 31, 2025, the Group modified a lease arrangement in respective year to reduce leased space, resulting in lower monthly rental obligations. For the years ended December 31, 2025, the modification resulted in a loss of $11,890, which were recorded as a loss in the consolidated statements of comprehensive loss.\n\n(l)\nLong-term investments\n\nThe Group’s long-term investments are consisted of equity investments without readily determinable fair value. The Group adopted Accounting Standards Codification (“ASC”) Topic 321, Investments-Equity Securities (“ASC 321”) to accounting of equity investment. Pursuant to ASC 321, the Group uses the measurement alternative to measure the investment at cost, minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investment of the same issuer. The Group makes a qualitative assessment of whether the investment is impaired at each reporting date. If a qualitative assessment indicates that the investment is impaired, the Group has to estimate the investment’s fair value in accordance with ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”). If the fair value is less than the investment’s carrying value, the Group recognizes an impairment loss in net income equal to the difference between the carrying value and fair value. As of December 31, 2024 and 2025, the Group evaluated its investments, taking into consideration, including, but not limited to, the duration, degree and causes of the decline in financial results, its intent and ability to hold the investment and the invested companies' financial performance and near-term prospects. Based on the evaluation, the Group’s long-term investments are not impaired.\n\n(m)\nImpairment of long-lived assets\n\nLong-lived assets such as property and equipment, intangible assets and operating lease right-of-use assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be fully recoverable or that the useful life is shorter than the Group had originally estimated. When these events occur, the Group evaluates the impairment for the long-lived assets or asset groups by comparing the carrying value of the assets or asset groups with an estimate of future undiscounted cash flows expected to be generated from the use of the assets or asset groups and their eventual disposition. If the sum of the expected future undiscounted cash flows is less than the carrying value of the assets or asset groups, the Group recognizes an impairment loss based on the excess of the carrying value of the assets or asset groups over the fair value of the assets or asset groups. No impairment of long-lived assets or asset groups was recognized for the years ended December 31, 2023, 2024 and 2025.\n\n(n)\nValue added taxes\n\nThe Company’s PRC subsidiaries and German subsidiary are subject to value added tax (“VAT”). Revenues from sales of products are generally subject to VAT at the rate of 13% for PRC subsidiaries and 19% for German subsidiary, respectively. Revenues from services are generally subject to VAT at the rate of 6% for PRC subsidiaries. The Group paid to local tax authorities after netting input VAT on purchases. The excess of output VAT over input VAT is reflected in accrued expenses and other current liabilities, and the excess of input VAT over output VAT is reflected in prepayments and other current assets in the consolidated balance sheets.\n\nF-14\n\n \n\n(o)\nFinancial liability\n\nFinancial liability, consisting of warrants to purchase redeemable equity interest of X-Charge Technology, is recorded on the consolidated balance sheets at fair value. Changes in fair values was included in the changes in fair value of financial instruments on the consolidated statements of comprehensive loss.\n\n(p)\nFair value measurements\n\nFair value represents 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. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.\n\nASC 820, Fair Value Measurements and Disclosures (“ASC 820”) defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Accounting guidance establishes a three-level fair value hierarchy and 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. The three levels of inputs are:\n\nLevel 1—Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.\n\nLevel 2—Include other inputs that are directly or indirectly observable in the marketplace.\n\nLevel 3—Unobservable inputs which are supported by little or no market activity.\n\nAccounting guidance also describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required to replace an asset.\n\nFair Value of Financial Instruments\n\nFinancial instruments include cash and cash equivalents, restricted cash, accounts receivable, amounts due from related parties, other receivables included in prepayments and other current assets, short-term bank borrowings, accounts payable, financial liability, convertible debts and other payables included in accrued expenses and other current liabilities. Financial liability and convertible debts were measured at fair value using unobservable inputs and categorized in Level 3 of the fair value hierarchy, see Note 12. The carrying amounts of other short-term financial assets and liabilities approximate their fair values because of the short maturity of these instruments.\n\n(q)\nRevenue recognition\n\nThe Group generates substantially all of its revenues from sales of electric vehicles (“EV”) chargers to the Group’s PRC domestic and overseas customers. The Group also generates its revenues from provision of EV chargers related support services.\n\nThe Group adopted Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (“ASC 606”) for all periods presented.\n\nThe Group recognizes revenues upon the satisfaction of its performance obligation (upon transfer of control of promised goods or services to customers) in an amount that reflects the consideration to which the Group expects to be entitled to in exchange for those goods or services, excluding amounts collected on behalf of third parties (for example, value added taxes). For each performance obligation satisfied over time, the Group recognizes revenue over time by measuring the progress toward complete satisfaction of that performance obligation. If the Group does not satisfy a performance obligation over time, it recognizes revenue at a point in time when the performance obligation is satisfied.\n\nProduct\n\nIn the sales of EV chargers, the Group’s performance obligation is to deliver the promised EV chargers, including both the hardware and embedded software, to the customers. The software embedded in the EV chargers is not considered distinct as it is integral to the functionality of the EV chargers. The Group recognizes revenue from the sales of EV chargers at a point in time when they are accepted by customers. Generally, the customers are required to pay the transaction price, which is fixed amount as stated in the contracts, within one to six months after they receive the EV chargers.\n\nF-15\n\n \n\nThe Group also provides a standard warranty covering one to three years to all the customers under which the Group is required to fix defects of the hardware and the embedded software. The Group considers the standard warranty is not providing incremental service to customers rather an assurance to the quality of the products and therefore, the Group does not identify the standard warranty as a separate performance obligation. The estimated warranty costs are recognized as a liability when the Group transfers control of the EV chargers to the customers.\n\nService\n\nThe Group also provides software upgrades and updates services and optional platform services to the customers who purchases EV chargers from the Group. The software upgrades and updates service consist of unspecified future software updates and upgrades upon the customer's request. The optional platform services enable the customers to remotely connect, configure and monitor their EV chargers.\n\nThe software upgrades and updates service, the optional platform services and the EV chargers are accounted for as three separate performance obligations because they are capable of being distinct and there is no significant integration, inter-relation or interdependence among these three promises. The Group allocates the transaction price to the software upgrades and updates service, the optional platform services and the EV chargers based on their relative stand-alone selling prices if they are sold together. The stand-alone selling prices are estimated using expected cost plus a margin approach for performance obligations in a bundled transaction if the Company does not have standalone sales of such performance obligations.\n\nThe Group recognizes the revenues from the software upgrades and updates service and the optional platform services over the contractual service period, which is generally one to two years, on a straight-line basis as the customer simultaneously receives and consumes the benefits provided by the Group as the Group performs and the Group’s efforts are expended evenly throughout the period.\n\nThe Group also provides optional maintenance service and extended warranty service to the customers. Revenue from the optional maintenance service, which generally takes one to two days to complete, is recognized at a point in time when the service is completed. Revenue from the extended warranty service is recognized over the warranty period on a straight-line basis.\n\nContract Balances\n\nThe Group recognizes a receivable when it has an unconditional right to receive consideration from a customer. A right to receive consideration is unconditional if only the passage of time is required before payment of that consideration is due. If revenue has been recognized before the Group has an unconditional right to receive consideration, the amount is presented as a contract asset. The Group did not have any contract assets as of December 31, 2024 and 2025.\n\nThe Group recognizes a contract liability when the customer pays the consideration before the Group recognizes the related revenue or when the Group has an unconditional right to receive the consideration before the Group recognizes the related revenue, and in such case a corresponding receivable will be recognized.\n\nChanges in the Group’s contract liabilities are presented as follows for the years ended December 31, 2024 and 2025:\n\n \n\nContract liabilities as of January 1, 2024\n\n \n\n \n\n1,332,132\n\n \n\nCash received in advance, excluding VAT\n\n \n\n \n\n13,769,113\n\n \n\nRevenue recognized from opening balance of contract\n   liabilities\n\n \n\n \n\n(1,021,831\n\n)\n\nRevenue recognized from contract liabilities arising during\n   2024\n\n \n\n \n\n(10,791,785\n\n)\n\nForeign currency translation\n\n \n\n \n\n(58,198\n\n)\n\nContract liabilities as of December 31, 2024\n\n \n\n \n\n3,229,431\n\n \n\nCash received in advance, excluding VAT\n\n \n\n \n\n8,031,503\n\n \n\nRevenue recognized from opening balance of contract\n   liabilities\n\n \n\n \n\n(2,043,549\n\n)\n\nRevenue recognized from contract liabilities arising during\n   2025\n\n \n\n \n\n(5,276,614\n\n)\n\nForeign currency translation\n\n \n\n \n\n133,734\n\n \n\nContract liabilities as of December 31, 2025\n\n \n\n \n\n4,074,505\n\n \n\n \n\nF-16\n\n \n\n(r)\nWarranties\n\nThe Group provides standard warranties for general repairs of defects that exist at the time of sale of EV chargers. The Group accrues the estimated costs of warranties at the time when revenue is recognized. The specific terms and conditions of those warranties vary among different types of EV Chargers. Factors that affect the Group’s warranty obligation include product defect rates and costs of repair or replacement. These factors are estimates that may change based on new information that becomes available each period. The portion of the warranty reserve expected to be incurred within the next 12 months is included within accrued expenses and other current liabilities while the remaining balance is included within other non-current liabilities on the consolidated balance sheets.\n\n(s)\nCost of Revenues\n\nCost of revenues mainly consists of the cost of products sold, shipping costs, warranty costs and write-downs of inventories.\n\n(t)\nSelling and Marketing Expenses\n\nSelling and marketing expenses mainly consist of (i) staff cost and share-based compensation expense, rental and depreciation related to selling and marketing functions, (ii) advertising expenses and (iii) other selling and marketing expenses. Advertising expenses are expensed as incurred. The advertising expenses were US$797,823, US$1,023,352 and US$795,670 for the years ended December 31, 2023, 2024 and 2025, respectively.\n\n(u)\nGeneral and Administrative Expenses\n\nGeneral and administrative expenses mainly consist of (i) staff cost and share-based compensation expense, rental and depreciation related to general and administrative personnel, (ii) foreign currency exchange gain (loss), (iii) professional expenses and (iv) other general corporate expenses.\n\n(v)\nResearch and Development Expenses\n\nResearch and development expenses mainly consist of (i) staff cost and share-based compensation expense, rental and depreciation related to research and development personnel, and (ii) research and development materials. Research and development expenses are expensed as incurred.\n\nCosts incurred for the preliminary project stage of internal use software are expensed when incurred in research and development expenses. Costs incurred during the application development stage are capitalized when certain criteria of ASC 350-40 are met. Costs incurred during the post-implementation-operation stage are also expensed as incurred. As the period qualified for capitalization has historically been very short and the development costs incurred during this period have been insignificant, development costs of internal use software to date have been expensed when incurred.\n\n(w)\nGovernment Grants\n\nGovernment grants generally consist of financial subsidies received from local governments for operating a business in their jurisdictions and compliance with specific policies promoted by the local governments. The eligibility to receive such benefits and amount of financial subsidy to be granted are determined at the discretion of the relevant government authorities.\n\nGovernment grants are recognized when there are reasonable assurances that the Group will comply with the conditions attach to them and the grants will be received. Government grants for the purpose of giving immediate financial support to the Group with no future related costs or obligation are recognized in the Group’s consolidated statements of comprehensive income (loss) when the grants become receivable.\n\nUS$428,066, US$38,167 and US$120,721 were recognized in government grants for the years ended December 31, 2023, 2024 and 2025, respectively. The deferred government subsidies included in liabilities were nil as of both December 31, 2024 and 2025.\n\n(x)\nShare-based compensation\n\nThe Company grants unvested shares and restricted shares units (“RSU”) of the Company to eligible employees, officers and non-employee consultants and accounts for share-based compensation in accordance with ASC 718, Compensation — Stock Compensation.\n\nShare-based awards are measured at the grant date fair value of the awards and recognized as expenses a) immediately at the\n\nF-17\n\n \n\ngrant date if no vesting conditions are required; or b) for shares and restricted shares granted with only service conditions that have a graded vesting schedule, using the straight-line vesting method, over the vesting period, provided that the cumulative amount of compensation cost recognized at any date at least equals the portion of the grant-date value of such award that is vested at that date.\n\nThe Group elects to recognize the effect of forfeitures in compensation costs when they occur. To the extent the required vesting conditions are not met resulting in the forfeiture of the share-based awards, previously recognized compensation expense relating to those awards is reversed.\n\n(y)\nEmployee Benefits\n\nThe Company’s subsidiaries in the PRC and Germany participate in respective government mandated, multiemployer, defined contribution plans, pursuant to which certain retirement, medical, housing and other welfare benefits are provided to employees. Both German Company Pension Scheme Act and the PRC labor laws require the local entities to pay to the local labor bureau a monthly contribution calculated at a stated contribution rate on the basic compensation of qualified employees, respectively. The Group has no further commitments beyond its monthly contribution. Employee social benefits included as cost of revenues and operating expenses in the accompanying consolidated statements of comprehensive loss amounted to US$1.6 million, US$2.18 million and US$2.0 million for the years ended December 31, 2023, 2024 and 2025, respectively.\n\n(z)\nIncome Taxes\n\nCurrent income taxes are recorded in accordance with the laws of the relevant tax jurisdictions.\n\nDeferred income taxes are provided using the liability method. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset deferred tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle deferred tax liabilities and assets on a net basis or their deferred tax assets and liabilities will be realized simultaneously.\n\nA valuation allowance is provided to reduce the amount of deferred income tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred income tax assets will not be realized. The effect on deferred income taxes arising from a change in tax rates is recognized in the consolidated statements of comprehensive loss in the period of change.\n\nThe Group applies a “more likely than not” recognition threshold in the evaluation of uncertain tax positions. The Group recognizes the benefit of a tax position in its consolidated financial statements if the tax position is “more likely than not” to prevail based on the facts and technical merits of the position. Tax positions that meet the “more likely than not” recognition threshold are measured at the largest amount of tax benefit that has a greater than fifty percent likelihood of being realized upon settlement. Unrecognized tax benefits may be affected by changes in interpretation of laws, rulings of tax authorities, tax audits, and expiry of statutory limitations. In addition, changes in facts, circumstances and new information may require the Group to adjust the recognition and measurement estimates with regard to individual tax positions. Accordingly, unrecognized tax benefits are periodically reviewed and re-assessed. Adjustments, if required, are recorded in the Group’s consolidated financial statements in the period in which the change that necessities the adjustments occur. The ultimate outcome for a particular tax position may not be determined with certainty prior to the conclusion of a tax audit and, in certain circumstances, a tax appeal or litigation process. The Group records interest and penalties related to unrecognized tax benefits (if any) in interest expenses and general and administrative expenses, respectively. As of December 31, 2024 and 2025, the Group did not have any significant unrecognized uncertain tax positions.\n\n(aa)\nForeign currency translation and foreign currency risks\n\nThe Group’s reporting currency is United States Dollars (“US$”). The functional currency of the Company and its subsidiaries incorporated in United States, HK S.A.R., British Virgin Islands and Singapore is US$, The functional currency of the Company’s subsidiary incorporated in Germany is Euro (“EUR”), and the functional currency of the Company’s PRC subsidiaries is Renminbi (“RMB”). Transactions denominated in currencies other than the functional currency are remeasured into the functional currency at the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in a foreign currency are remeasured into the functional currency using the applicable exchange rate at the balance sheet date. The resulted exchange differences are recorded as general and administrative expenses in the consolidated statements of comprehensive loss.\n\nThe financial statements of the Company’s German subsidiary and the PRC subsidiaries are translated from their functional currency into US$. Assets and liabilities are translated into US$ using the applicable exchange rates at the balance sheet date. Equity accounts other than earnings or deficits generated in the current period are translated into US$ using the appropriate historical rates.\n\nF-18\n\n \n\nRevenues, expenses, gains and losses are translated into US$ using the average exchange rates for the relevant period. The resulted foreign currency translation adjustments are recorded as a component of other comprehensive income or loss in the consolidated statements of comprehensive loss, and the accumulated foreign currency translation adjustments are recorded in accumulated other comprehensive loss as a component of consolidated statements of changes in shareholders’ (deficit) equity.\n\n(bb)\nConcentration of risk\n\nConcentration of customers and suppliers\n\nCustomers from whom individually represent greater than 10% of total revenues of the Group for the years ended December 31, 2023, 2024 and 2025 are as follows.\n\n \n\n \n\nFor the Years Ended December 31,\n\n \n\n \n\n2023\n\n \n\n \n\n2024\n\n \n\n \n\n2025\n\n \n\n \n\nUS$\n\n \n\n \n\n%\n\n \n\n \n\nUS$\n\n \n\n \n\n%\n\n \n\n \n\nUS$\n\n \n\n \n\n%\n\n \n\nCustomer A\n\n \n\n*\n\n \n\n \n\n*\n\n \n\n \n\n*\n\n \n\n \n\n*\n\n \n\n \n\n \n\n2,819,842\n\n \n\n \n\n \n\n11\n\n%\n\nCustomer B\n\n \n\n*\n\n \n\n \n\n*\n\n \n\n \n\n \n\n9,622,477\n\n \n\n \n\n \n\n23\n\n%\n\n \n\n*\n\n \n\n \n\n*\n\n \n\nCustomer C\n\n \n\n \n\n16,325,786\n\n \n\n \n\n \n\n42\n\n%\n\n \n\n \n\n6,397,733\n\n \n\n \n\n \n\n15\n\n%\n\n \n\n*\n\n \n\n \n\n*\n\n \n\nCustomer D\n\n \n\n*\n\n \n\n \n\n*\n\n \n\n \n\n \n\n5,482,894\n\n \n\n \n\n \n\n13\n\n%\n\n \n\n*\n\n \n\n \n\n*\n\n \n\nCustomer E\n\n \n\n \n\n4,627,547\n\n \n\n \n\n \n\n12\n\n%\n\n \n\n*\n\n \n\n \n\n*\n\n \n\n \n\n*\n\n \n\n \n\n*\n\n \n\n \n\nSuppliers from whom individually represent greater than 10% of total purchases of the Group for the years ended December 31, 2023, 2024 and 2025 are as follows:\n\n \n\n \n\nFor the Years Ended December 31,\n\n \n\n \n\n2023\n\n \n\n \n\n2024\n\n \n\n \n\n2025\n\n \n\n \n\nUS$\n\n \n\n \n\n%\n\n \n\n \n\nUS$\n\n \n\n \n\n%\n\n \n\n \n\nUS$\n\n \n\n \n\n%\n\n \n\nSupplier A\n\n \n\n \n\n5,780,414\n\n \n\n \n\n \n\n23\n\n%\n\n \n\n \n\n4,918,960\n\n \n\n \n\n \n\n26\n\n%\n\n \n\n \n\n1,372,932\n\n \n\n \n\n \n\n12\n\n%\n\nSupplier B\n\n \n\n*\n\n \n\n \n\n*\n\n \n\n \n\n*\n\n \n\n \n\n*\n\n \n\n \n\n \n\n1,334,219\n\n \n\n \n\n \n\n12\n\n%\n\nSupplier C\n\n \n\n \n\n7,050,112\n\n \n\n \n\n \n\n28\n\n%\n\n \n\n \n\n1,839,392\n\n \n\n \n\n \n\n10\n\n%\n\n \n\n \n\n1,283,536\n\n \n\n \n\n \n\n11\n\n%\n\nSupplier D\n\n \n\n \n\n2,434,481\n\n \n\n \n\n \n\n10\n\n%\n\n \n\n \n\n2,377,647\n\n \n\n \n\n \n\n12\n\n%\n\n \n\n \n\n1,239,046\n\n \n\n \n\n \n\n11\n\n%\n\n \n\nCustomers accounting for 10% or more of accounts receivable, net are as follows:\n\n \n\n \n\nAs of December 31,\n\n \n\n \n\n2024\n\n \n\n \n\n2025\n\n \n\n \n\nUS$\n\n \n\n \n\n%\n\n \n\n \n\nUS$\n\n \n\n \n\n%\n\n \n\nCustomer F\n\n \n\n \n\n1,713,707\n\n \n\n \n\n \n\n15\n\n%\n\n \n\n \n\n1,224,249\n\n \n\n \n\n \n\n17\n\n%\n\nCustomer B\n\n \n\n \n\n1,569,321\n\n \n\n \n\n \n\n14\n\n%\n\n \n\n*\n\n \n\n \n\n*\n\n \n\nCustomer G\n\n \n\n \n\n1,498,250\n\n \n\n \n\n \n\n13\n\n%\n\n \n\n*\n\n \n\n \n\n*\n\n \n\nCustomer H\n\n \n\n \n\n1,399,828\n\n \n\n \n\n \n\n12\n\n%\n\n \n\n*\n\n \n\n \n\n*\n\n \n\nCustomer C\n\n \n\n \n\n1,338,451\n\n \n\n \n\n \n\n12\n\n%\n\n \n\n*\n\n \n\n \n\n*\n\n \n\n \n\nCustomers accounting for 10% or more of contract liabilities are as follows:\n\n \n\n \n\nAs of December 31,\n\n \n\n \n\n2024\n\n \n\n \n\n2025\n\n \n\n \n\nUS$\n\n \n\n \n\n%\n\n \n\n \n\nUS$\n\n \n\n \n\n%\n\n \n\nCustomer I\n\n \n\n*\n\n \n\n \n\n*\n\n \n\n \n\n \n\n660,000\n\n \n\n \n\n \n\n16\n\n%\n\nCustomer G\n\n \n\n \n\n320,308\n\n \n\n \n\n \n\n10\n\n%\n\n \n\n*\n\n \n\n \n\n*\n\n \n\n \n\nSuppliers accounting for 10% or more of accounts payable are as follows:\n\n \n\n \n\nAs of December 31,\n\n \n\n \n\n2024\n\n \n\n \n\n2025\n\n \n\n \n\nUS$\n\n \n\n \n\n%\n\n \n\n \n\nUS$\n\n \n\n \n\n%\n\n \n\nSupplier D\n\n \n\n \n\n1,425,008\n\n \n\n \n\n \n\n19\n\n%\n\n \n\n \n\n1,612,153\n\n \n\n \n\n \n\n24\n\n%\n\nSupplier A\n\n \n\n \n\n2,747,890\n\n \n\n \n\n \n\n36\n\n%\n\n \n\n \n\n1,119,645\n\n \n\n \n\n \n\n17\n\n%\n\nSupplier B\n\n \n\n*\n\n \n\n \n\n*\n\n \n\n \n\n \n\n687,776\n\n \n\n \n\n \n\n10\n\n%\n\n \n\nF-19\n\n \n\n \n\nSuppliers accounting for 10% or more of prepayments are as follows:\n\n \n\n \n\nAs of December 31,\n\n \n\n \n\n2024\n\n \n\n \n\n2025\n\n \n\n \n\nUS$\n\n \n\n \n\n%\n\n \n\n \n\nUS$\n\n \n\n \n\n%\n\n \n\nSupplier E\n\n \n\n \n\n3,463,506\n\n \n\n \n\n \n\n66\n\n%\n\n \n\n \n\n1,789,478\n\n \n\n \n\n \n\n56\n\n%\n\nSupplier C\n\n \n\n \n\n605,744\n\n \n\n \n\n \n\n12\n\n%\n\n \n\n \n\n625,654\n\n \n\n \n\n \n\n20\n\n%\n\nSupplier F\n\n \n\n \n\n1,000,000\n\n \n\n \n\n \n\n19\n\n%\n\n \n\n*\n\n \n\n \n\n*\n\n \n\n \n\n* The amount was less than 10% of total sales, total purchases or total balance.\n\nConcentration of credit risk\n\nFinancial instruments that potentially expose the Group to concentrations of credit risk consist principally of cash and cash equivalents, accounts receivable, net, other receivables of prepayments and other current assets, and amounts due from related parties.\n\nThe Group places its cash and cash equivalents in various commercial banks in the PRC, United States, German and Singapore. The Group believes that no significant credit risk exists as these banks are principally government-owned financial institutions with high credit ratings.\n\nThe Group conducts credit evaluations on its customers prior to delivery of goods or services. The assessment of customer creditworthiness is primarily based on historical collection records, research of publicly available information and customer on-site visits by senior management. Based on this analysis, the Group determines what credit terms, if any, to offer to each customer individually. If the assessment indicates a likelihood of collection risk, the Group will not deliver the services or sell the products to the customer or require the customer to pay cash, post letters of credit to secure payment or to make significant down payments.\n\nInterest rate risk\n\nFluctuations in market interest rates may negatively affect the Group’s financial condition and results of operations. The Group is exposed to floating interest rate risk on floating rate borrowings, and the risks due to changes in interest rates is not material. The Group has not used any derivative financial instruments to manage its interest risk exposure.\n\n(cc)\nLoss per share\n\nLoss per share is computed in accordance with ASC 260, Earnings per Share. The two-class method is used for computing earnings per share when the Group has net income available for distribution. Under the two-class method, net income is allocated between ordinary shares and other participating securities based on their participating rights. The liquidation and dividend rights of the holders of the Company’s Class A and Class B ordinary shares are identical, except with respect to voting. As the liquidation and dividend rights are identical, the net incomes are allocated on a proportionate basis. The Company’s redeemable preference shares and Series Seed preference shares are considered as participating securities because they are entitled to receive dividends or distributions on an as if converted basis if the Group has net income available for distribution under certain circumstances. Net loss is not allocated to other participating securities as they are not obligated to share the loss based on their contractual terms.\n\nDiluted loss per share is calculated by dividing net loss attributable to ordinary shareholders as adjusted for the effect of dilutive ordinary equivalent shares, if any, by the weighted average number of ordinary and dilutive ordinary equivalents shares outstanding during the period. Dilutive equivalent shares are excluded from the computation of diluted earnings per share if their effects would be anti-dilutive. Ordinary equivalent shares consist of ordinary shares issuable upon the conversion of the redeemable preference shares, Series Seed preference shares and the exercise of the financial instruments.\n\nF-20\n\n \n\n(dd)\nSegment Reporting\n\nOperating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”), or decision-making group, in deciding how to allocate resources and in assessing performance. The Group’s Chief Executive Officer is the Group’s CODM. The CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance. As such, the Group has determined that it operates as one operating segment. The Group has concluded that consolidated net loss is the measure of segment profitability. The CODM assesses performance for the Group, monitors budget versus actual results, and determines how to allocate resources based on consolidated net loss as reported in the consolidated statements of comprehensive loss. There are no other expense categories regularly provided to the CODM that are not already included in the primary financial statements herein.\n\nThe Group’s long-lived assets are primarily located in and derived from the PRC, and the amount of long-lived assets attributable to any other individual country is not material. Therefore, no geographical segments are presented.\n\n(ee)\nStatutory Reserves\n\nIn accordance with the PRC Company Laws, the Group’s PRC subsidiaries must make appropriations from their after-tax profits as determined under the Generally Accepted Accounting Principles in the PRC (“PRC GAAP”) to non-distributable reserve funds including statutory surplus fund and discretionary surplus fund. The appropriation to the statutory surplus fund must be 10% of the after-tax profits as determined under PRC GAAP. Appropriation is not required if the statutory surplus fund has reached 50% of the registered capital of the PRC companies. Appropriation to the discretionary surplus fund is made at the discretion of the PRC companies.\n\nThe statutory surplus fund and discretionary surplus fund are restricted for use. They may only be applied to offset losses or increase the registered capital of the respective companies. These reserves are not allowed to be transferred to the Company by way of cash dividends, loans or advances, nor can they be distributed except for liquidation.\n\nFor the years ended December 31, 2023, 2024 and 2025, no appropriation was made to the statutory surplus fund and discretionary surplus fund by the Group’s PRC subsidiaries as these PRC companies were in a position of accumulated losses as determined under PRC GAAP. As of December 31, 2024 and 2025, there was no statutory surplus fund and discretionary surplus fund by the Company’s PRC subsidiaries, as these PRC companies were in accumulated losses as determined under PRC GAAP.\n\n(ff)\nRecent Accounting Pronouncements\n\nNewly adopted accounting pronouncements\n\nOn December 14, 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which requires a significant expansion of the granularity of the income tax rate reconciliation as well as an expansion of other income tax disclosures. ASU 2023-09 requires a company to disclose specific income tax categories within the rate reconciliation table and provide additional information for reconciling items that meet a quantitative threshold if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pre-tax income (or loss) by the applicable statutory income tax rate. There are also additional disclosures related to income taxes paid disaggregated by jurisdictions. ASU 2023-09 is effective for public business entities, for annual periods beginning after December 15, 2024. For entities other than public business entities, the amendments are effective for annual periods beginning after December 15, 2025. Early adoption are permitted. The Group early adopted ASU 2023-09 from the year ended December 31, 2025 on a prospective basis and included additional disclosures within Note 16 “Income taxes” to comply with the requirements of ASU 2023-09. There was no other impact to the Group’s financial statement disclosures as a result of adopting ASU 2023-09.\n\nRecent accounting pronouncements not yet adopted\n\n \n\nIn November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), and in January 2025, the FASB issued ASU No. 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date (“ASU 2025-01”). ASU 2024-03 requires additional disclosure of the nature of expenses included in the income statement as well as disclosures about specific types of expenses included in the expense captions presented in the income statement. ASU 2024-03, as clarified by ASU 2025-01, is effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Both early adoption and retrospective application are permitted. The Group is currently evaluating the impact of this accounting standard update on its consolidated financial statements and related disclosures.\n\n \n\nF-21\n\n \n\nIn July 2025, the FASB issued ASU 2025-05 - Financial Instruments—Credit Losses (Topic 326). The amendments in this Update provide (1) all entities with a practical expedient and (2) entities other than public business entities with an accounting policy election when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606. An entity that elects the practical expedient and the accounting policy election, if applicable, should apply the amendments in this Update prospectively. The amendments will be effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted in both interim and annual reporting periods in which financial statements have not yet been issued or made available for issuance. The Group is currently evaluating the impact of this accounting standard update on its consolidated financial statements and disclosures.\n\n \n\n3.\nACCOUNTS RECEIVABLE, NET\n\nAccounts receivable, net consisted of the following:\n\n \n\n \n\nAs of December 31,\n\n \n\n \n\n2024\n\n \n\n \n\n2025\n\n \n\n \n\nUS$\n\n \n\n \n\nUS$\n\n \n\nAccounts receivable\n\n \n\n \n\n11,891,930\n\n \n\n \n\n \n\n8,015,176\n\n \n\nAllowance for expected credit losses\n\n \n\n \n\n(650,396\n\n)\n\n \n\n \n\n(1,009,780\n\n)\n\nAccounts Receivable, net\n\n \n\n \n\n11,241,534\n\n \n\n \n\n \n\n7,005,396\n\n \n\n \n\nThe movements of the allowance for doubtful accounts were as follows:\n\n \n\n \n\nFor the year ended December 31,\n\n \n\n \n\n2023\n\n \n\n \n\n2024\n\n \n\n \n\n2025\n\n \n\n \n\nUS$\n\n \n\n \n\nUS$\n\n \n\n \n\nUS$\n\n \n\nBalance at the beginning of the year\n\n \n\n \n\n(322,873\n\n)\n\n \n\n \n\n(536,414\n\n)\n\n \n\n \n\n(650,396\n\n)\n\nAdoption of ASU 2016-13\n\n \n\n \n\n(29,923\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\nProvision for expected credit losses\n\n \n\n \n\n(301,601\n\n)\n\n \n\n \n\n(180,174\n\n)\n\n \n\n \n\n(425,835\n\n)\n\nReversal of expected credit losses\n\n \n\n \n\n116,318\n\n \n\n \n\n \n\n52,911\n\n \n\n \n\n \n\n98,045\n\n \n\nForeign currency translation\n\n \n\n \n\n1,665\n\n \n\n \n\n \n\n13,281\n\n \n\n \n\n \n\n(31,594\n\n)\n\nBalance at the end of the year\n\n \n\n \n\n(536,414\n\n)\n\n \n\n \n\n(650,396\n\n)\n\n \n\n \n\n(1,009,780\n\n)\n\n \n\n \n\n4.\nINVENTORIES, NET\n\nInventories consisted of the following:\n\n \n\n \n\nAs of December 31,\n\n \n\n \n\n2024\n\n \n\n \n\n2025\n\n \n\n \n\nUS$\n\n \n\n \n\nUS$\n\n \n\nRaw materials\n\n \n\n \n\n2,904,134\n\n \n\n \n\n \n\n3,242,149\n\n \n\nWork in process\n\n \n\n \n\n1,321,802\n\n \n\n \n\n \n\n1,871,933\n\n \n\nFinished goods\n\n \n\n \n\n3,456,116\n\n \n\n \n\n \n\n4,318,847\n\n \n\nInventories, net\n\n \n\n \n\n7,682,052\n\n \n\n \n\n \n\n9,432,929\n\n \n\n \n\nWrite-downs of inventories from the carrying amount to its estimated net realizable value amounted to US$0.16 million, US$0.04 million and US$5.2 thousand were recorded as cost of revenues for the years ended December 31, 2023, 2024 and 2025.\n\n5.\nPREPAYMENTS AND OTHER ASSETS\n\nPrepayments and other assets consisted of the following:\n\n \n\nF-22\n\n \n\n \n\nAs of December 31,\n\n \n\n \n\n2024\n\n \n\n \n\n2025\n\n \n\n \n\nUS$\n\n \n\n \n\nUS$\n\n \n\nAdvances to suppliers\n\n \n\n \n\n748,672\n\n \n\n \n\n \n\n1,042,917\n\n \n\nDeductible input VAT\n\n \n\n \n\n395,398\n\n \n\n \n\n \n\n527,286\n\n \n\nDeferred financing costs(a)\n\n \n\n-\n\n \n\n \n\n \n\n1,097,980\n\n \n\nReceivables from third party payment platforms\n\n \n\n \n\n53,419\n\n \n\n \n\n \n\n8,030\n\n \n\nPrepayment to service vendors(b)\n\n \n\n \n\n4,463,506\n\n \n\n \n\n \n\n1,900,158\n\n \n\nReceivables from underwriter(c)\n\n \n\n \n\n427,172\n\n \n\n \n\n-\n\n \n\nLoans to third parties(d)\n\n \n\n-\n\n \n\n \n\n \n\n824,694\n\n \n\nOthers(e)\n\n \n\n \n\n409,196\n\n \n\n \n\n \n\n557,724\n\n \n\nPrepayments and Other Assets\n\n \n\n \n\n6,497,363\n\n \n\n \n\n \n\n5,958,789\n\n \n\nLess: Other Non-Current Assets\n\n \n\n-\n\n \n\n \n\n \n\n1,711,830\n\n \n\nPrepayments and Other Current Assets\n\n \n\n \n\n6,497,363\n\n \n\n \n\n \n\n4,246,959\n\n \n\n \n\na. Direct costs incurred by the Group in connection with the follow-up offering were deferred and recorded as deferred financing costs as of December 31, 2025 and offset against the gross proceeds received from the follow-up offering upon completion.\n\nb. Prepayment to service vendors primarily consist of advance payments for outsourcing core hardware development and market promotion services.\n\nc. Receivables from underwriter mainly represents unused advance payments made to underwriter for subsequent disbursement to legal advisors. During the year ended December 31, 2025, the balance has been fully collected.\n\nd. As of December 31, 2025, loans to third parties consisted of the following: (i) On November 24, 2025, the Company entered into a loan agreement with an individual third party to provide a loan of US$0.2 million. The loan bears interest at a floating rate equal to 3.91% per annum and matures twelve months from the effective date. (ii) On November 28, 2025, X-Charge Technology entered into a loan agreement with a third-party entity to provide a loan of RMB 4.3 million (approximately US$0.6 million). The loan bears interest at 3.5% per annum and matures two years from the disbursement date.\n\ne. Others mainly include staff advances and deposits.\n\n6.\nPROPERTY AND EQUIPMENT, NET\n\nProperty and equipment consisted of the following:\n\n \n\n \n\nAs of December 31,\n\n \n\n \n\n2024\n\n \n\n \n\n2025\n\n \n\n \n\nUS$\n\n \n\n \n\nUS$\n\n \n\nMachinery and equipment\n\n \n\n \n\n345,721\n\n \n\n \n\n \n\n356,946\n\n \n\nEV Chargers\n\n \n\n \n\n737,191\n\n \n\n \n\n \n\n1,845,556\n\n \n\nOffice and electronic equipment\n\n \n\n \n\n540,133\n\n \n\n \n\n \n\n665,570\n\n \n\nSoftware\n\n \n\n \n\n18,347\n\n \n\n \n\n \n\n18,764\n\n \n\nLeasehold improvement\n\n \n\n \n\n633,569\n\n \n\n \n\n \n\n782,207\n\n \n\nVehicle\n\n \n\n \n\n78,681\n\n \n\n \n\n-\n\n \n\nConstructions in progress\n\n \n\n \n\n165,327\n\n \n\n \n\n \n\n192,436\n\n \n\nProperty and Equipment\n\n \n\n \n\n2,518,969\n\n \n\n \n\n \n\n3,861,479\n\n \n\nLess: Accumulated depreciation\n\n \n\n \n\n(1,549,762\n\n)\n\n \n\n \n\n(1,889,083\n\n)\n\nProperty and Equipment, net\n\n \n\n \n\n969,207\n\n \n\n \n\n \n\n1,972,396\n\n \n\n \n\nDepreciation expense on property and equipment was allocated to the following expense items:\n\n \n\nF-23\n\n \n\n \n\nFor the Years Ended December 31,\n\n \n\n \n\n2023\n\n \n\n \n\n2024\n\n \n\n \n\n2025\n\n \n\n \n\nUS$\n\n \n\n \n\nUS$\n\n \n\n \n\nUS$\n\n \n\nCost of revenues\n\n \n\n \n\n73,829\n\n \n\n \n\n \n\n36,026\n\n \n\n \n\n \n\n56,472\n\n \n\nSelling and marketing expenses\n\n \n\n \n\n13,295\n\n \n\n \n\n \n\n76,649\n\n \n\n \n\n \n\n2,496\n\n \n\nResearch and development expenses\n\n \n\n \n\n11,024\n\n \n\n \n\n \n\n35,171\n\n \n\n \n\n \n\n39,093\n\n \n\nGeneral and administrative expenses\n\n \n\n \n\n75,139\n\n \n\n \n\n \n\n58,091\n\n \n\n \n\n \n\n177,191\n\n \n\nTotal depreciation expense\n\n \n\n \n\n173,287\n\n \n\n \n\n \n\n205,937\n\n \n\n \n\n \n\n275,252\n\n \n\n \n\n7.\nOPERATING LEASE\n\nThe following table summarizes the classification of right-of-use assets and lease liabilities in the Group’s consolidated balance sheets:\n\n \n\n \n\nAs of December 31,\n\n \n\n \n\n2024\n\n \n\n \n\n2025\n\n \n\n \n\nUS$\n\n \n\n \n\nUS$\n\n \n\nRight-of-use assets\n\n \n\n \n\n1,653,733\n\n \n\n \n\n \n\n1,766,194\n\n \n\nLease liabilities-current\n\n \n\n \n\n(303,851\n\n)\n\n \n\n \n\n(592,989\n\n)\n\nLease liabilities-non-current\n\n \n\n \n\n(1,274,314\n\n)\n\n \n\n \n\n(1,175,413\n\n)\n\nTotal lease liabilities\n\n \n\n \n\n(1,578,165\n\n)\n\n \n\n \n\n(1,768,402\n\n)\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nWeighted-average remaining lease term\n\n \n\n9.44 years\n\n \n\n \n\n6.49 years\n\n \n\nWeighted-average discount rate\n\n \n\n \n\n3.92\n\n%\n\n \n\n \n\n3.33\n\n%\n\n \n\nFor the years ended December 31, 2023, 2024 and 2025, total operating lease costs and short-term lease cost recorded in cost of revenues, selling and marketing expenses, research and development expenses, general and administrative expenses were US$0.33 million, US$0.48 million and US$0.59 million, respectively.\n\nSupplemental cash flow information related to operating leases were as follows:\n\n \n\n \n\nFor the Years Ended December 31,\n\n \n\n \n\n2023\n\n \n\n \n\n2024\n\n \n\n \n\n2025\n\n \n\n \n\nUS$\n\n \n\n \n\nUS$\n\n \n\n \n\nUS$\n\n \n\nCash paid for amounts included in the measurement of lease\n   liabilities\n\n \n\n \n\n312,939\n\n \n\n \n\n \n\n531,250\n\n \n\n \n\n \n\n512,274\n\n \n\nRight-of-use assets obtained in exchange for operating lease\n   liabilities\n\n \n\n \n\n325,049\n\n \n\n \n\n \n\n1,647,011\n\n \n\n \n\n \n\n940,101\n\n \n\n \n\nThe following table presents the maturity of the Group’s lease liabilities as of December 31, 2025:\n\n \n\n \n\nAs of December 31, 2025\n\n \n\n \n\nUS$\n\n \n\n 2026\n\n \n\n \n\n641,941\n\n \n\n 2027\n\n \n\n \n\n400,374\n\n \n\n 2028\n\n \n\n \n\n212,870\n\n \n\n 2029\n\n \n\n \n\n120,390\n\n \n\n 2030\n\n \n\n \n\n99,768\n\n \n\n Thereafter\n\n \n\n \n\n481,309\n\n \n\nTotal operating lease payments\n\n \n\n \n\n1,956,652\n\n \n\nLess: imputed interest\n\n \n\n \n\n(188,250\n\n)\n\nPresent value\n\n \n\n \n\n1,768,402\n\n \n\n \n\nLease modification\n\nF-24\n\n \n\nDuring the year ended December 31, 2025, the Group executed partial terminations of leased space, resulting in corresponding reductions in monthly rental payments. In accordance with ASC 842, Leases, partial lease terminations are accounted for by proportionately reducing both the lease liability and the ROU asset. The ROU asset is reduced based on the proportion of the lease that has been terminated, and the lease liability is remeasured based on the updated lease payments. The difference between the decrease in the lease liability and the proportionate reduction in the ROU asset is recognized as a gain or loss in the consolidated statements of income and comprehensive income in the period of modification. These lease modifications did not result in reclassification of the lease types. The Group continues to assess lease changes in accordance with ASC 842-10-15-6 to determine whether modifications represent separate contracts or modifications of the existing lease. The impact of these lease modifications on the consolidated statements of income and comprehensive income is summarized as follows:\n\n \n\n \n\nFor the Years Ended December 31,\n\n \n\n \n\n2023\n\n \n\n2024\n\n \n\n2025\n\n \n\n \n\nUS$\n\n \n\nUS$\n\n \n\nUS$\n\n \n\nDecrease of ROU assets caused by lease modifications\n\n \n\n-\n\n \n\n-\n\n \n\n \n\n345,622\n\n \n\nDecrease of lease liabilities caused by lease modifications\n\n \n\n-\n\n \n\n-\n\n \n\n \n\n357,512\n\n \n\nLoss recorded in the consolidated statements of comprehensive loss\n\n \n\n-\n\n \n\n-\n\n \n\n \n\n11,890\n\n \n\n \n\n \n\n8.\nSHORT-TERM BORROWINGS\n\n \n\n \n\nAs of December 31,\n\n \n\n \n\n2024\n\n \n\n \n\n2025\n\n \n\n \n\nUS$\n\n \n\n \n\nUS$\n\n \n\nShort-term bank borrowings (i)\n\n \n\n \n\n6,724,904\n\n \n\n \n\n \n\n4,268,154\n\n \n\nLoans from investor C (ii)\n\n \n\n \n\n2,086,695\n\n \n\n \n\n \n\n2,134,077\n\n \n\nShort-term borrowings\n\n \n\n \n\n8,811,599\n\n \n\n \n\n \n\n6,402,231\n\n \n\n(i)\nShort-term bank borrowings\n\nShort-term bank borrowings consist of RMB denominated borrowings from financial institutions in the PRC that are repayable within one year. The weighted average interest rates for the outstanding short-term bank borrowings as of December 31, 2024 and 2025 were 3.42% and 2.72%, respectively. As of December 31, 2024 and 2025, the repayments of all short-term bank borrowings are guaranteed by the Founders or third parties except for two loans from Bank of Beijing that started on December 30, 2024, and December 28, 2025. As of December 31, 2024 and 2025, the Company had outstanding short-term bank loan balances payable to the following financial institutions:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nAs Of December 31,\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n2024\n\n \n\n \n\n2025\n\n \n\nLender\n\n \n\nInterest Rate\n\n \n\n \n\nMaturity Date\n\n \n\nUS$\n\n \n\n \n\nUS$\n\n \n\nBank of Beijing Fuyu Sub-branch\n\n \n\n3.45%, 3.10% and 3.00%\n\n \n\n \n\nJune 28, 2025, December 27, 2025 and December 27, 2026\n\n \n\n \n\n2,782,260\n\n \n\n \n\n \n\n1,422,718\n\n \n\nBank of China Beijing Guomao Sub-branch\n\n \n\n2.30% and 2.15%\n\n \n\n \n\nMarch 29, 2025, May 30, 2025 and March 12, 2026\n\n \n\n \n\n1,391,130\n\n \n\n \n\n \n\n1,422,718\n\n \n\nChina Merchants Bank Beijing Dayuncun Sub-branch\n\n \n\n3.40% and 2.30%\n\n \n\n \n\nFrom March 8, 2025 to May 9, 2025 and June 24, 2026\n\n \n\n \n\n1,855,949\n\n \n\n \n\n \n\n1,422,718\n\n \n\nBank of Nanjing Beijing Branch\n\n \n\n \n\n4.50\n\n%\n\n \n\nJanuary 24, 2025\n\n \n\n \n\n695,565\n\n \n\n \n\n-\n\n \n\nTotal Short-term borrowings\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n6,724,904\n\n \n\n \n\n \n\n4,268,154\n\n \n\n \n\nIn December 2024, the Company entered into a revolving credit facility agreement with the Bank of Beijing Fuyu Sub‑branch for an aggregate principal amount of US$1.4 million. The facility matures on December 27, 2026 and allows the Company to draw, repay, and redraw funds at its discretion, subject to the terms of the agreement. As of December 31, 2024 and 2025, the outstanding borrowings under the facility were US$1.4 million, representing the full amount of the facility drawn on both dates.\n\nF-25\n\n \n\nOn March 9, 2026, the Company repaid all outstanding borrowings due to Bank of China Beijing Guomao Sub-branch as of December 31, 2025. Subsequently, on March 12, 2026, the Company obtained a new one‑year borrowing of US$1.4 million from the same bank. The borrowing bears an annual interest rate of 2.24%.\n\nOn March 31, 2025, the Company obtained a new borrowing of US$1.4 million from China Merchants Bank Beijing Dayuncun Sub-branch, with a maturity date of December 18, 2026. The borrowing bears an annual interest rate of 2.3%.\n\n \n\n(ii)\nLoans from investor C\n\nOn May 27, 2024, the Company and Beijing X-Charge Technology Co., Ltd. (“X-Charge Technology”) entered into an adjustment agreement on the convertible loan investment with investor C, pursuant to which all parties agreed that X-Charge Technology shall repay the loan principal in the amount of RMB15 million (equivalent to US$2.1 million) and applicable interest to investor C upon 180 days after the consummation of a qualified IPO (see Note 9).\n\nSubsequently, the qualified IPO was consummated, making the total outstanding amount of RMB 16.13 million (approximately US$2.26 million), comprising principal and accrued interest, due on March 10, 2025. The Company failed to repay by this date, and pursuant to the agreement, overdue principal accrues default interest at a simple rate of 12% per annum from the date of default until full repayment.\n\nOn October 28, 2025, X-Charge Technology received a formal notice of arbitration from the China International Economic and Trade Arbitration Commission (“CIETAC”). The notice states that a claim was filed by Investor C seeking repayment of the outstanding principal and interest totaling RMB16.71 million (equivalent to US$2.33 million), plus default interest accruing at an annual rate of 12% from March 9, 2025, as well as recovery of its legal fees and arbitration costs. The claim also demands joint and several liability from the Company, its German subsidiary, and its founders, Mr. Ding Rui and Mr. Hou Yifei. As of the date these financial statements were authorized for issue, the arbitration is pending, and no hearing has been scheduled.\n\nIn connection with this matter, as of December 31, 2025, the Group had recognized a provision of RMB17.6 million (approximately US$2.5 million) for outstanding principal, accrued interest, and default interest accrued up to the balance sheet date, and had restricted cash of RMB16.9 million (approximately US$2.4 million) due to asset preservation measures on certain bank accounts. The Group concluded that the ultimate outcome of this arbitration would not have a material adverse effect on the Group's results of operations, consolidated financial condition, or cash flows.\n\n \n\n9.\nCONVERTIBLE DEBTS\n\nConvertible Notes\n\nIn July 2023, the Company issued convertible notes with aggregate principal of US$2 million with simple interest of 10% per annum to investor A in exchange for US$2 million in cash. The principal and accrued interest shall be due and payable on the last day of nine months following the closing date on July 7, 2023. Pursuant to the convertible notes agreement, investor A has the right to convert the entire outstanding principal of the convertible notes into Series B+ preference shares in XCHG Limited before maturity date, at a conversion price of RMB0.3964 per share, the share number shall be calculated at the principal of US$2 million and at the exchange rate by the People’s Bank of China on the fifth business day before the date of the conversion. Accrued interests shall be repaid upon conversion.\n\nConvertible Loan\n\nIn July 2023, X-Charge Technology borrowed convertible loans from investor B and investor C with an aggregated principal amount of RMB50 million (equivalent to US$7 million) and RMB15 million (equivalent to US$2.1 million), respectively, at a simple interest of 10% per annum. The principal and accrued interest shall be due and payable on the last day of nine months following the closing date on July 7, 2023. Pursuant to the convertible loan agreement, investor B and investor C have the right to convert the entire outstanding principal of the convertible loan into Series B+ preference shares in XCHG Limited before maturity date, provided certain conditions are met, among which, 1) the convertible loan in an amount of RMB30 million held by investor B can be convertible into 84,104,289 Series B+ preference shares of the Company, at a conversion price of RMB0.3567 per share, 2) the convertible loan in an amount of RMB20 million held by investor B can be convertible into 42,030,928 Series B+ preference shares at a conversion price of RMB0.4758 per share, or, in the event of the Company has new round of financing before or at the same time of the conversion, the latest class of preference shares issued by the Company, at a conversion price determined at the lower price of (i) RMB0.4758, or (ii) 90% of the share price of new round of financing of the Company, and 3) the convertible loan in an amount of RMB15 million held the investor C can be convertible into 37,840,565 Series B+ preference shares of the Company. Accrued interests shall be repaid upon conversion.\n\nF-26\n\n \n\nCollectively, the convertible notes and the convertible loan are referred to as the “convertible debts”.\n\nIn connection with the issuance of convertible debts, in August 2023, the Company granted warrants at nil consideration to each investor, pursuant to which the investors have the right to purchase Series B+ preference shares at an exercise price the same as the conversion price of the convertible debts corresponding to such warrants. The warrants are exercisable from the issuance date and expires on the maturity date of the convertible debts. The investors shall each have the right to choose either to exercise the warrants or the conversion options, but not both. Upon the exercise of the warrant, the investors will be released from all of its liabilities, obligations and rights under the convertible debts contract; Upon the conversion, the corresponding warrants will be terminated accordingly.\n\nBefore conversion, the three investors are entitled to certain rights of the Series B+ preference shareholders, including liquidation preference rights and voting rights.\n\nContingent redemption feature\n\nThe outstanding principal and any accrued but unpaid interest at 10% will become due and payable in full upon the occurrence of any of events of default.\n\nLiquidation preference\n\nUpon the occurrence of a liquidation event or deemed liquidation event as defined in the Amended and Restated Memorandum of Association, the investors shall each have the right to choose either to require the Group to repay loan principal and interest, or request distribution under the liquidation preference. If investors choose to request distribution, the Company shall repay the convertible debts together with accrued but unpaid interest at a simple 8% per annum from July 17, 2023 for the investor A and from July 7, 2023 for investor B and investor C, after such liquidation amounts have been paid in full, all of the remaining assets and funds of the Company legally available for distribution to shareholders and investor A, investor B and investor C shall be ratably distributed among all shareholders and investor A, investor B and investor C on a as converted basis and pari passu basis in proportion to the number of shares held by each shareholder/investor.\n\nVoting rights\n\nEach investor is entitled to the number of votes corresponding to the number of ordinary shares on an as-converted basis (as if the conversion). Each investor shall be entitled to vote on all matters on which the members of ordinary shares shall be entitled to vote.\n\nAccounting for the convertible debts\n\nThe warrants and the convertible debts are treated as one hybrid instrument since they were entered into in conjunction with each other and were neither legally detachable nor separately exercisable. The Group evaluated based on the terms and features of the entire arrangements and concluded that the nature of the host contract was debt. The Group further concluded that the embedded conversion features did not need to be bifurcated pursuant to ASC 815 because the embedded conversion features are underlying preference shares of a private company and could not be publicly traded or readily convertible into cash. The Group made a one-time irrevocable policy election at convertible debts’ inception to elect the fair value option under ASC 825 and measure the convertible debts at fair value. The fair value option election is made on an instrument-by-instrument basis. Subsequently, the component of fair value changes relating to the instrument specific credit risk of the convertible debts is minimal. Fair value changes are recognized in changes in fair value of financial instruments in the consolidated statement of comprehensive loss.\n\nConversion of the convertible debts\n\nOn January 11, 2024, US$2 million convertible notes held by investor A and RMB50 million convertible loans held by investor B were converted into 35,842,294 and 126,135,217 Series B+ redeemable preference shares of the Company, respectively, at a conversion price of RMB0.3964 per share.\n\nUpon the conversion of the convertible debts, the Company recognized the fair value of Series B+ redeemable preference shares and derecognized the carrying value of the convertible debts. Accrued interests of US$0.46 million for the period from the closing date of issuance of convertible debts in July 2023 through the conversion date on January 11, 2024 were unsettled as of conversion date, which were included in accrued expenses and other current liabilities on the consolidated balance sheets as of conversion date and December 31, 2024.\n\nExtinguishment of the convertible debts\n\nF-27\n\n \n\nOn April 7, 2024, RMB15 million convertible loans held by investor C and applicable interest became due. On May 27, 2024, the Company and X-Charge Technology entered into an adjustment agreement on the convertible loan investment with investor C, pursuant to which all parties agreed that X-Charge Technology shall repay the loan principal and applicable interest to this investor (i) upon 180 days after the consummation of a qualified IPO, if this offering is completed on or before September 30, 2024 and the proceeds from such offering are no less than US$20 million; or (ii) on October 15, 2024 or any other date as mutually agreed by all parties in writing, if the conditions prescribed in (i) are not met on or before September 30, 2024. In the event of a default on repayment, the overdue principal amount shall accrue interest at a simple 12% per annum from the date of default.\n\nFollowing the adjustment agreement with investor C, the Company recognized RMB15 million (equivalent to US$2.09 million) in loan principal as short-term borrowings, RMB1.13 million (equivalent to US$0.16 million) in applicable interest as accrued expenses and other current liabilities, and RMB1.66 million (equivalent to US$0.23 million) gain on the extinguishment of the convertible debts, while derecognizing the carrying value of the convertible debts. The warrants granted in connection with the issuance of convertible debts are terminated upon the extinguishment of the associated convertible debts.\n\nOn September 11, 2024, the Company successfully completed its IPO and gross proceeds are greater than US$20 million. Consequently, the loan principal and applicable interest would be repaid upon 180 days after the completion of the qualified IPO. If repayment is overdue, the outstanding principal amount shall bear interest at a simple 12% per annum from the date of default until full repayment is made.\n\nF-28\n\n \n\n10.\nACCRUED EXPENSES AND OTHER CURRENT LIABILITIES\n\nAccrued expenses and other current liabilities consisted of the following:\n\n \n\n \n\nAs of December 31,\n\n \n\n \n\n2024\n\n \n\n \n\n2025\n\n \n\n \n\nUS$\n\n \n\n \n\nUS$\n\n \n\nAccrued payroll and social insurance\n\n \n\n \n\n2,310,507\n\n \n\n \n\n \n\n2,938,321\n\n \n\nCash collected on behalf of the customers(a)\n\n \n\n \n\n77,408\n\n \n\n \n\n \n\n53,683\n\n \n\nOther taxes payable\n\n \n\n \n\n662,974\n\n \n\n \n\n \n\n540,679\n\n \n\nAccrued IPO and follow-up offering cost\n\n \n\n \n\n1,167,185\n\n \n\n \n\n \n\n522,813\n\n \n\nAccrued service expenses\n\n \n\n \n\n789,427\n\n \n\n \n\n \n\n403,298\n\n \n\nInterest payable to investors\n\n \n\n \n\n612,443\n\n \n\n \n\n \n\n825,081\n\n \n\nOthers(b)\n\n \n\n \n\n240,963\n\n \n\n \n\n \n\n229,529\n\n \n\nAccrued Expenses and Other Current Liabilities\n\n \n\n \n\n5,860,907\n\n \n\n \n\n \n\n5,513,404\n\n \n\n \n\na. The Group collects the EV charging considerations from end users on behalf of certain customers and pays to these customers on a regular basis.\n\nb. Others as of December 31, 2024 and 2025 mainly included accrued warranty and other payable.\n\n11.\nFINANCIAL LIABILITY\n\nIn October 2020, X-Charge Technology entered into a loan agreement with SPD Silicon Valley Bank to borrow up to RMB10 million (equivalent to US$1.4 million). In October 2020, in connection with the loan agreement, X-Charge Technology issued warrants to Shengwei Venture Capital Management (Shanghai) Co., Ltd (“Shengwei”), an affiliate of SPD Silicon Valley Bank, to purchase 0.542% of X-Charge Technology’s equity interest at an exercise price at RMB2 million (equivalent to US$0.3 million) in aggregate or purchase 8,786,150 ordinary shares of the Company at the option of Shengwei on a fully diluted basis. The warrants are exercisable upon issuance and expires in October 2027. The warrants have not been exercised as of December 31, 2024 and 2025.\n\nDuring the exercisable period and when the warrants are exercised, Shengwei is entitled to require X-Charge Technology to repurchase all equity interest at the price of fair market value.\n\nIn accordance with ASC 480, the Company classified the warrants as financial liability as the warrants embody an obligation to repurchase the X-Charge Technology’s equity interest which may require settlement by transferring assets. The Group recorded the financial liability on the consolidated balance sheets at its estimated fair value and subsequently, at each reporting date, recorded changes in estimated fair value included in the changes in fair value of financial instruments on the consolidated statement of comprehensive loss.\n\n12.\nFAIR VALUE MEASUREMENT\n\nThe following tables present the fair value hierarchy for those liabilities measured at fair value on a recurring basis as of December 31, 2024 and 2025:\n\n \n\n \n\nAs of December 31, 2024\n\n \n\n \n\n \n\n \n\nUS$\n\n \n\nLevel 1\n\n \n\n \n\nLevel 2\n\n \n\n \n\nLevel 3\n\n \n\n \n\nTotal Fair Value\n\n \n\nLiabilities:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nFinancial liability\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n189,279\n\n \n\n \n\n \n\n189,279\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nAs of December 31, 2025\n\n \n\n \n\n \n\n \n\nUS$\n\n \n\nLevel 1\n\n \n\n \n\nLevel 2\n\n \n\n \n\nLevel 3\n\n \n\n \n\nTotal Fair Value\n\n \n\nLiabilities:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nFinancial liability\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n63,593\n\n \n\n \n\n \n\n63,593\n\n \n\n \n\nF-29\n\n \n\nThe tables below reflect the reconciliation from the opening balances to the closing balances for recurring fair value measurements categorized as Level 3 of the fair value hierarchy for the years ended December 31, 2023, 2024 and 2025:\n\n \n\n \n\n \n\n \n\n \n\nFor the Year Ended December 31, 2023\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nGain or Losses\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nUS$\n\n \n\nJanuary 1, 2023\n\n \n\n \n\nPurchase\n\n \n\n \n\nIncluded in Earnings\n\n \n\n \n\nIncluded in Other Comprehensive Loss\n\n \n\n \n\nForeign Currency Translation Adjustment\n\n \n\n \n\nDecember 31, 2023\n\n \n\nLiabilities:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nFinancial liability\n\n \n\n \n\n242,393\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n8,959\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(4,087\n\n)\n\n \n\n \n\n247,265\n\n \n\nConvertible debts\n\n \n\n \n\n—\n\n \n\n \n\n \n\n11,053,172\n\n \n\n \n\n \n\n1,463,159\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n12,516,331\n\n \n\n \n\n \n\n \n\n \n\n \n\nFor the Year Ended December 31, 2024\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nGain or Losses\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nUS$\n\n \n\nJanuary 1, 2024\n\n \n\n \n\nPurchase\n\n \n\n \n\nIncluded in Earnings\n\n \n\n \n\nIncluded in Other Comprehensive Loss\n\n \n\n \n\nConversion of convertible debts into preference shares\n\n \n\n \n\nConversion of convertible debts into short-term borrowing (see Note 8)\n\n \n\n \n\nAccrued interests (see Note10)\n\n \n\n \n\nForeign Currency Translation Adjustment\n\n \n\n \n\nYear ended December 31, 2024\n\n \n\nLiabilities:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nFinancial liability\n\n \n\n \n\n247,265\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(54,859\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(3,127\n\n)\n\n \n\n \n\n189,279\n\n \n\nConvertible debts\n\n \n\n \n\n12,516,331\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(90,521\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(9,651,560\n\n)\n\n \n\n \n\n(2,086,695\n\n)\n\n \n\n \n\n(612,443\n\n)\n\n \n\n \n\n(75,112\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nFor the Year Ended December 31, 2025\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nGain or Losses\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nUS$\n\n \n\nJanuary 1, 2025\n\n \n\n \n\nPurchase\n\n \n\n \n\nIncluded in Earnings\n\n \n\n \n\nIncluded in Other Comprehensive Loss\n\n \n\n \n\nForeign Currency Translation Adjustment\n\n \n\n \n\nDecember 31, 2025\n\n \n\nLiabilities:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nFinancial liability\n\n \n\n \n\n189,279\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(127,908\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n2,222\n\n \n\n \n\n \n\n63,593\n\n \n\n \n\nFor the financial liability that does not have a quoted market rate, the Group measured its fair value using the option-pricing model with the assistance of an independent third-party valuation firm. The fair values of financial liability as of December 31, 2024 and 2025, are estimated with the following key assumptions:\n\n \n\n \n\nDecember 31,\n\n \n\n \n\nDecember 31,\n\n \n\n \n\n2024\n\n \n\n \n\n2025\n\n \n\nRisk-free rate of return (per annum)\n\n \n\n \n\n4.27\n\n%\n\n \n\n \n\n3.47\n\n%\n\nVolatility\n\n \n\n \n\n62.8\n\n%\n\n \n\n \n\n62.4\n\n%\n\nExpected dividend yield\n\n \n\n \n\n0.0\n\n%\n\n \n\n \n\n0.0\n\n%\n\nExpected term\n\n \n\n2.8 years\n\n \n\n \n\n1.8 years\n\n \n\nFair value of the Company’s ordinary shares\n\n \n\nUS$0.05 per share\n\n \n\n \n\nUS$0.03 per share\n\n \n\n \n\n13.\nMEZZANINE EQUITY\n\nSeries Angel Preference Shares, Series Angel Redeemable Preference Shares, Series A Redeemable Preference Shares, Series A+ Redeemable Preference Shares, Series B Preference Shares and Series B+ redeemable preference shares (collectively “Preference Shares”)\n\nIn December 2017, the Company entered into an investment agreement with two investors, pursuant to which the investors purchased 300,000,000 Series A redeemable preference shares from the Company for the considerations of US$5 million. The issuance costs of Series A redeemable preference shares were US$0.3 million.\n\nIn February 2018, the investor of Series Angel shares (see Note 14) and two third party investors entered into equity transfer agreements, pursuant to which the investor of Series Angel shares sold 75,000,000 Series Angel shares of the Company on a fully-diluted basis to the two third party investors. Half of the Series Angel shares was immediately re-designated into Series Angel redeemable preference shares, whereas the remaining half was immediately re-designated into Series Angel preference shares with a deemed liquidation preference. The Company did not receive any proceeds from this transaction.\n\nF-30\n\n \n\nIn April 2018, the Company entered into an investment agreement with certain investors, pursuant to which the investors purchased 118,971,900 Series A+ redeemable preference shares from the Company for an aggregate consideration of RMB25.7 million (equivalent to US$3.6 million). The issuance costs of Series A+ redeemable preference shares were RMB1.5 million (equivalent to US$0.21 million).\n\nIn April 2021, the Company entered into an investment agreement with two investors, pursuant to which the investors purchased 458,623,200 Series B redeemable preference shares from the Company for an aggregate consideration of RMB104.0 million (equivalent to US$14.4 million). The issuance costs of Series B redeemable preference shares were RMB1.2 million (equivalent to US$0.17 million).\n\nIn April 2021, the investor of Series Angel shares (see Note 14) and two third party investors entered into equity transfer agreements, pursuant to which the investor of Series Angel shares sold 88,196,700 shares of the Company to the third- party investors, all of which was immediately re-designated into Series B redeemable preference shares. The Company did not receive any proceeds from this transaction.\n\nIn September 2021, the investor of Series Angel shares (see Note 14) and a third-party investor entered into an equity transfer agreement. Pursuant to the agreement, the investor of Series Angel shares sold 55,552,800 shares of the Company to the third-party investor, all of which was immediately re-designated into Series B redeemable preference shares. The Company did not receive any proceeds from this transaction.\n\nOn January 11, 2024, the Company issued 161,977,511 Series B+ redeemable preference shares to two convertible debts holders who converted their convertible debts (see Note 9).\n\nThe rights, preferences and privileges of the Preference Shares are as follows:\n\nRedemption Rights\n\nRedeemable preference shares shall be redeemable, at any time after the earlier of the occurrence of the following event:\n\n(i) The Company has not consummated a Qualified IPO or Qualified share sale by September 30, 2024;\n\n(ii) There is any material breach by either the Founders or the Company of any applicable laws and the transaction documents relating to these several rounds of equity financing, and such default fails to take remedy measures within thirty days after the receipt of the notice with respect to such remedy requirements from the shareholders;\n\nThe redemption preference from high priority to low priority is as follows in sequence: Series B+ redeemable preference shares, Series B redeemable preference shares, Series A+ redeemable preference shares, Series A redeemable preference shares and Series Angel redeemable preference shares.\n\nThe redemption prices for each owner of the redeemable preference shares are as follows:\n\n1.\nFor Series B+ redeemable preference shares, the redemption price equal to one hundred percent (100%) of its issue price plus a simple eight percent (8%) per annum measured from the date the investors of convertible debts paid the principal to the Company and X-Charge Technology to actual payment date of the redemption, and the accumulated declared but unpaid dividends.\n\n2.\nFor Series B redeemable preference shares, the redemption price equal to one hundred percent (100%) of its issue price plus a simple eight percent (8%) per annum measured from the date of receipt of the investment funds in full to actual payment date of the redemption, and the accumulated declared but unpaid dividends.\n\n3.\nFor Series A+ redeemable preference shares, the redemption price equal to one hundred percent (100%) of its issue price plus the accumulated declared but unpaid dividends.\n\n4.\nFor Series A redeemable preference shares, the redemption price equal to one hundred percent (100%) of its issue price plus a simple ten percent (10%) per annum return measured from the date of receipt of the investment funds to actual payment date of the redemption, and the accumulated declared but unpaid dividends.\n\n5.\nFor Series Angel redeemable preference shares, the redemption price equal to RMB8,500,000 plus the accumulated declared but unpaid dividends.\n\nConversion Rights\n\nF-31\n\n \n\nThe Preference Shares shall be convertible, at the option of the holder, at any time after the date of issuance of such Preference Shares according to a conversion ratio, subject to adjustments for dilution, into ordinary shares. The Preference Shares shall automatically be converted into ordinary shares at the then applicable conversion ratio upon the closing of an underwritten public offering of the ordinary shares of the Group after the prior written approval of the holders of Preference Shares.\n\nVoting Rights\n\nEach Preferred Share shall be entitled to that number of votes corresponding to the number of ordinary shares on an as-converted basis. The shareholders of Preference Shares shall vote separately as a class with respect to certain specified matters. Otherwise, the shareholders of Preference Shares, Series Seed preference shares (see Note 14) and ordinary shares shall vote together as a single class.\n\nDividend Rights\n\nThe shareholders receive dividends on an as-if converted basis when dividends are declared. No dividends have been declared for the investors of the Preference Shares for the periods presented.\n\nLiquidation Preferences\n\nIn the event of any liquidation, dissolution or winding up of the Company, or upon occurrence of a Deemed Liquidation Event as defined in the Investors’ Rights Agreement, either voluntary or involuntary, the amount of shareholders’ distributable property or total transfer price shall be allocated and distributed as follows: first, the Company shall pay to the Series B+ redeemable preferred shareholders the amount of money which is equal to the sum of 100% of the investment plus a simple eight percent (8%) per annum measured from the date the investors of convertible debts paid the principal to the Company and X-Charge Technology to actual payment date of the liquidation and the declared but unpaid dividends; second, the Company shall pay to the Series B redeemable preferred shareholders the amount of money which is equal to the sum of 100% of the investment and the declared but unpaid dividends; third, the Company shall pay to the Series A+ redeemable preferred shareholders the amount of money which is equal to the sum of 100% of their respective investment and the declared but unpaid dividends; forth, the Company shall pay to the Series A redeemable preferred shareholders the amount of money which is equal to the sum of 150% of their respective investment and the declared but unpaid dividends; fifth, the Company shall pay to the owners of Series Angel redeemable preference shares and Series Angel preference shares the amount of money which is equal to RMB8,500,000 and RMB8,500,000, respectively and the declared but unpaid dividends.\n\nAfter such liquidation amounts have been paid in full, all of the remaining assets and funds of the Company legally available for distribution to shareholders shall be ratably distributed among all shareholders on a as converted basis and pari passu basis in proportion to the number of shares held by each shareholder.\n\nConversion immediately prior to IPO\n\nOn September 11, 2024, immediately prior to the completion of IPO, all of the Preferred Shares classified as mezzanine equity were automatically converted and re-designated into 1,358,372,111 Class A ordinary shares on a one-for-one basis.\n\nAccounting of the Preference Shares\n\nThe Group classified Series Angel preference shares as mezzanine equity instead of permanent equity on the consolidated balance sheet because of the existence of a deemed liquidation preference, which was outside of the control of the Company.\n\nThe Group classified the redeemable preference shares as mezzanine equity on the consolidated balance sheets as they were contingently redeemable upon the occurrence of triggering events which were outside of the control of the Company.\n\nThe Group concluded the embedded redemption option of the Preference Shares did not need to be bifurcated pursuant to ASC 815 because these terms do not permit net settlement, nor they can be readily settled net by a means outside the contract, nor they can provide for delivery of an asset that puts the shareholders in a position not substantially different from net settlement.\n\nThe Group also determined that there was no beneficial conversion feature attributable to the Preference Shares because the initial effective conversion prices of the Preference Shares were higher than the fair value of the Company’s ordinary shares at the relevant commitment dates. The fair value of the Company’s ordinary shares and redeemable preference shares on the commitment dates was estimated by management with the assistance of an independent valuation firm.\n\nF-32\n\n \n\nThe initial carrying amount of the Preference Shares was recorded at the fair value at the date of issuance, net of issuance cost. The Company recognized changes in the redemption value immediately as they occur and adjust the carrying value of the Preference Shares to equal the redemption value at the end of each reporting period, as if it were also the redemption date for the Preference Shares.\n\nThe Company considered that the re-designation of Series Angel shares to Series B redeemable preference shares in April 2021 and September 2021, in substance, was the same as repurchase and cancellation of the Series Angel shares and simultaneously issuance of the Series B redeemable preference shares. Therefore the Group recorded 1) the difference in the amount of US$5.8 million between the fair value and the carrying amounts of the Series Angel shares against additional paid-in capital or by increasing accumulated deficit once additional paid-in capital has been exhausted; and 2) the difference in the amount of US$2.5 million between the fair value of the Series B redeemable preference shares and Series Angel shares against additional paid-in capital or by increasing accumulated deficit once additional paid-in capital has been exhausted, representing a return to the preferred shareholders that should be treated similar to dividends paid on preferred shareholders.\n\nOn September 11, 2024, immediately prior to the completion of IPO, the existing carrying amount of the mezzanine equity instrument has been reclassified to permanent equity, and the difference between the carrying amount and the par value of ordinary share is recorded in additional paid-in capital.\n\n \n\n \n\nThe activities of the Preference Shares for the years ended December 31, 2023 and 2024 are as follows:\n\n \n\n \n\nSeries Angel\npreference\nshares\n\n \n\n \n\nSeries Angel\nredeemable\npreference\nshares\n\n \n\n \n\nSeries A\nredeemable\npreference\nshares\n\n \n\n \n\nSeries A+\nredeemable\npreference\nshares\n\n \n\n \n\nSeries B\nredeemable\npreference\nshares\n\n \n\n \n\nSeries B+\nredeemable\npreference\nshares\n\n \n\n \n\nTotal\n\n \n\n \n\nCarrying\namount\n\n \n\n \n\nCarrying\namount\n\n \n\n \n\nCarrying\namount\n\n \n\n \n\nCarrying\namount\n\n \n\n \n\nCarrying\namount\n\n \n\n \n\nCarrying\namount\n\n \n\n \n\n \n\n \n\n \n\nUSD\n\n \n\n \n\nUSD\n\n \n\n \n\nUSD\n\n \n\n \n\nUSD\n\n \n\n \n\nUSD\n\n \n\n \n\nUSD\n\n \n\n \n\nUSD\n\n \n\nBalance as of January 1, 2023\n\n \n\n \n\n1,220,458\n\n \n\n \n\n \n\n1,220,458\n\n \n\n \n\n \n\n7,635,384\n\n \n\n \n\n \n\n3,937,712\n\n \n\n \n\n \n\n24,880,147\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n38,894,159\n\n \n\nAccretion of redeemable preference shares\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n500,000\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,877,429\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n2,377,429\n\n \n\nForeign currency translation adjustment\n\n \n\n \n\n(44,118\n\n)\n\n \n\n \n\n(44,118\n\n)\n\n \n\n \n\n(92,369\n\n)\n\n \n\n \n\n(142,342\n\n)\n\n \n\n \n\n(931,628\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(1,254,575\n\n)\n\nBalance as of December 31, 2023\n\n \n\n \n\n1,176,340\n\n \n\n \n\n \n\n1,176,340\n\n \n\n \n\n \n\n8,043,015\n\n \n\n \n\n \n\n3,795,370\n\n \n\n \n\n \n\n25,825,948\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n40,017,013\n\n \n\nAccretion of redeemable preference shares\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n347,945\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n814,881\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,162,826\n\n \n\nIssuance of Series B+ redeemable preference shares\n   upon conversion of convertible debts\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n9,651,560\n\n \n\n \n\n \n\n9,651,560\n\n \n\nConversion of preference shares to Class A ordinary\n   shares immediately prior to the completion of IPO\n\n \n\n \n\n(1,176,340\n\n)\n\n \n\n \n\n(1,176,340\n\n)\n\n \n\n \n\n(8,390,960\n\n)\n\n \n\n \n\n(3,795,370\n\n)\n\n \n\n \n\n(26,506,806\n\n)\n\n \n\n \n\n(9,651,560\n\n)\n\n \n\n \n\n(50,697,376\n\n)\n\nForeign currency translation adjustment\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(134,023\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(134,023\n\n)\n\nBalance as of December 31, 2024\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n14.\nORDINARY SHARES, SERIES ANGEL SHARES AND SERIES SEED PREFERENCE SHARES\n\nOrdinary shares\n\nIn December 2021, XCHG Limited was incorporated with authorized share capital of US$50,000 divided into 500,000,000 shares with par value US$0.0001 each, the Company issued 499,999,999 ordinary shares to the Founders.\n\nIn April 2023, the shareholders of the Company agreed to increase the authorized shares to 5,000,000,000 shares with a par value of US$0.00001 each. As described in Note 1 (b), the Company issued ordinary shares in April 2023, issued Preference Shares and Series Seed preference shares in June 2023 to the ordinary shareholders and preferred shareholders of the Company in exchange for the respective equity interests that they held in X-Charge Technology. Upon the completion of the Restructuring in June 2023, authorized ordinary shares are 3,728,605,400, of which issued and outstanding shares were 656,200,500. The authorized, issued and outstanding Series Seed, Series Angel, Series A, Series A+ and Series B preference shares were 175,050,000, 75,000,000, 300,000,000, 118,971,900 and 602,372,700, respectively. All applicable share and per share amounts in the accompanying consolidated financial statements have been retrospectively adjusted to reflect the effects of the Restructuring.\n\nOn August 15, 2023, the Company granted 150,000,000 unvested shares to its directors, executive officers and certain employees under the 2023 Plan. All the unvested shares vested immediately on the date of grant. (see Note 15). The Company issued 150,000,000 ordinary shares to grantees on the date of grant in connection with aforementioned transaction.\n\nF-33\n\n \n\nImmediately prior to completion of IPO, all of the Preferred Shares and Series Seed Preference Shares were automatically converted and re-designated into 1,433,372,111 Class A ordinary shares at the conversion ratio of one-for-one.\n\nImmediately prior to completion of IPO, all of the outstanding Ordinary Shares were automatically re-designated into 64,946,053 Class A Ordinary Shares and 741,254,447 Class B Ordinary Shares, respectively, on a one-for-one basis.\n\nOn September 11, 2024, the Company completed its IPO on the NASDAQ Stock Market. In the offering, 3,333,335 American depositary shares (“ADSs”), representing 133,333,400 Class A Ordinary Shares, were issued and sold to the public at a price of US$6.2 per ADS. On September 13, 2024, an additional 128,888 ADSs were issued and sold to the underwriter through the partial exercise of the over-allotment option as stipulated in the Underwriting Agreement. The net proceeds to the Company from the IPO, after deducting commissions and offering expenses, were approximately US$19.1 million.\n\nOn July 23, 2025, the Company completed the registration of 13,087,595 ADSs, representing 523,503,831 Class A Ordinary Shares, under its share incentive plan.\n\nAs of December 31, 2024 and 2025, the Company had authorized 4,258,745,553 Class A ordinary shares and 741,254,447 Class B ordinary shares. As of December 31, 2024 and 2025, 1,636,807,084 and 2,160,310,915 Class A ordinary shares were issued and outstanding, respectively. All 741,254,447 Class B ordinary shares authorized were issued and outstanding as of December 31, 2024 and 2025.\n\nSeries Angel Shares and Series Seed Preference Shares\n\nOn November 19, 2015, the Company entered into an investment agreement with an angel investor, pursuant to which the investor purchased 218,749,500 Series Angel shares from the Company for an aggregated consideration of RMB7.0 million (equivalent as US$1.0 million). See Note 13 on subsequent redesignation of all Series Angel shares.\n\nOn February 20, 2017, the Company entered into an investment agreement with two investors, pursuant to which the investors purchased 175,050,000 Series Seed preference shares from the Company for an aggregated consideration of US$2 million.\n\nThe rights and privileges of Ordinary shares, Series Angel shares and Series Seed preference shares are as follows:\n\nConversion Rights\n\nThe Series Angel shares and Series Seed preference shares shall be convertible, at the option of the shareholder, at any time after the date of issuance of Series Angel shares and Series Seed preference shares according to a conversion ratio, subject to adjustments for dilution, into ordinary shares. Series Angel shares and Series Seed preference shares shall automatically be converted into ordinary shares at the then applicable conversion ratio upon the closing of an underwritten public offering of the ordinary shares of the Group after the prior written approval of the holders of Series Angel shares and Series Seed preference shares.\n\nVoting Rights\n\nEach Series Seed preferred share shall be entitled to that number of votes corresponding to the number of ordinary shares on an as-converted basis. The shareholders of Series Seed preference shares shall vote separately as a class with respect to certain specified matters. Otherwise, the shareholders of the Preference Shares, Series Seed preference shares and ordinary shares shall vote together as a single class.\n\nDividend Rights\n\nThe shareholders receive dividends on an as-if converted basis when dividends are declared. No dividends have been declared for shareholders for the periods presented.\n\nLiquidation Rights\n\nIn the event of any liquidation, dissolution or winding up of the Company, or upon occurrence of a Deemed Liquidation Event as defined in the Investors’ Rights Agreement, either voluntary or involuntary, shareholders shall be entitled to receive an amount in the sequence of Series B redeemable preference shares, Series A+ redeemable preference shares, Series A redeemable preference shares, Series Angel redeemable preference shares and Series Angle preference shares. After such liquidation amounts have been paid in full, all of the remaining assets and funds of the Company legally available for distribution to shareholders shall be ratably distributed among all shareholders on a as converted basis and pari passu basis in proportion to the number of shares held by each shareholder.\n\nF-34\n\n \n\nConversion immediately prior to IPO\n\nOn September 11, 2024, immediately prior to the completion of IPO, all of the Series Seed Preference Shares were automatically converted and re-designated into 75,000,000 Class A ordinary shares at the conversion ratio of one-for-one.\n\n15.\nSHARE-BASED COMPENSATION\n\nCompensation expenses recognized for share-based compensation granted by the Company were as follows:\n\n \n\n \n\nFor the Years Ended December 31,\n\n \n\n \n\n2023\n\n \n\n \n\n2024\n\n \n\n \n\n2025\n\n \n\n \n\n \n\nUSD\n\n \n\n \n\nUSD\n\n \n\n \n\nUSD\n\n \n\nCost of revenues\n\n \n\n \n\n—\n\n \n\n \n\n \n\n548,762\n\n \n\n \n\n \n\n27,932\n\n \n\nSelling and marketing expenses\n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,767,234\n\n \n\n \n\n \n\n255,325\n\n \n\nResearch and development expenses\n\n \n\n \n\n—\n\n \n\n \n\n \n\n2,308,520\n\n \n\n \n\n \n\n353,116\n\n \n\nGeneral and administrative expenses\n\n \n\n \n\n7,456,800\n\n \n\n \n\n \n\n2,406,330\n\n \n\n \n\n \n\n20,305,851\n\n \n\nTotal\n\n \n\n \n\n7,456,800\n\n \n\n \n\n \n\n7,030,846\n\n \n\n \n\n \n\n20,942,224\n\n \n\n(a)\n2023 Share Incentive Plan\n\nIn June 2023, the Company adopted the 2023 Share Incentive Plan (the “2023 Plan”), under which the Company reserves 150,000,000 shares to motivate directors and employees of the Group. Shares granted to an employee under the 2023 Plan are generally subject to only service condition.\n\nOn August 15, 2023, the Company granted 150,000,000 unvested shares to its directors, executive officers and certain employees under the 2023 Plan. All the unvested shares vested immediately on the date of grant. Based on the fair value per share at grant date, the Company recognized US$7.5 million of share-based compensation expense related to these shares in August 2023.\n\nThe fair value of ordinary shares as at grant date is US$0.05 per share. In determining the fair value of ordinary shares, the Company applied the income approach based on its discounted future cash flow using its best estimate as at the grant date. The major assumptions used in calculating include discount rate, comparable companies, discount for lack of marketability and revenue growth rates.\n\nEffective as of March 9, 2026, the Company terminated the 2023 Plan and ceased making awards thereunder. All awards previously granted under the 2023 Plan remain outstanding and continue to be governed by its terms and applicable award agreements.\n\n(b)\n2023 Share Incentive Plan II\n\nOn December 23, 2024, the Company adopted the 2023 Share Incentive Plan II (the “2023 Plan II”), under which the Company reserves 445,198,950 shares to motivate directors, employees and non-employees. Pursuant to the 2023 Plan II, restricted shares units were granted to its directors, certain employees and non-employee consultants of the Group as approved by the administrator appointed by the board of directors. Shares granted under the 2023 Plan II are generally subject to only service condition but with multiple vesting schedules.\n\nThe fair value of each restricted share units granted is estimated based on the fair market value of the underlying ordinary shares of the Company on the date of grant.\n\nThe following table summarizes activities of the Company’s restricted shares units granted under the 2023 Plan II:\n\n \n\nF-35\n\n \n\n \n\nNumber of\nADS\nOutstanding\n\n \n\n \n\nWeighted\nAverage\nGrant Date\nFair Value (Per ADS)\n\n \n\n \n\n \n\n \n\nUSD\n\nUnvested as of December 31, 2023\n\n \n\n \n\n—\n\n \n\n \n\n—\n\nGranted\n\n \n\n \n\n4,299,891\n\n \n\n \n\n2.04\n\nVested\n\n \n\n \n\n(3,084,129\n\n)\n\n \n\n2.04\n\nUnvested as of December 31, 2024\n\n \n\n \n\n1,215,762\n\n \n\n \n\n2.04\n\nGranted\n\n \n\n \n\n4,387,992\n\n \n\n \n\n1.26\n\nVested\n\n \n\n \n\n(4,325,402\n\n)\n\n \n\n1.36\n\nForfeited\n\n \n\n \n\n(113,785\n\n)\n\n \n\n2.04\n\nUnvested as of December 31, 2025\n\n \n\n \n\n1,164,567\n\n \n\n \n\n1.62\n\n \n\nFor the years ended December 31, 2023, 2024 and 2025, total share-based compensation expenses recognized for the restricted shares units granted under the 2023 Plan II were nil, US$7,030,846 and US$6,183,880, respectively.\n\nAs of December 31, 2024 and 2025, there were US$2,480,154 and US$1,886,411 of unrecognized share-based compensation expenses related to the restricted share units granted under the 2023 Plan II. Such unrecognized expenses are expected to be recognized over a weighted-average period of 0.96 years and 1.26 years as of December 31, 2024 and 2025, respectively.\n\nEffective as of March 9, 2026, the Company terminated the 2023 Plan II and ceased making awards thereunder. All awards previously granted under the 2023 Plan II remain outstanding and continue to be governed by its terms and applicable award agreements.\n\n(c)\n2025 Share Incentive Plan\n\nOn April 18, 2025, the Company adopted the 2025 Share Incentive Plan (the “2025 Plan”), under which the Company reserved 445,198,950 shares to motivate officers. Shares granted to officers under the 2025 Plan are generally subject to only service condition.\n\nThe fair value of each restricted share units granted is estimated based on the fair market value of the underlying ordinary shares of the Company on the date of grant.\n\nThe following table summarizes activities of the Company’s restricted shares units granted under the 2025 Plan:\n\n \n\n \n\nNumber of\nADS\nOutstanding\n\n \n\n \n\nWeighted\nAverage\nGrant Date\nFair Value (Per ADS)\n\n \n\n \n\n \n\n \n\nUSD\n\nUnvested as of December 31, 2024\n\n \n\n—\n\n \n\n \n\n—\n\nGranted\n\n \n\n \n\n11,129,973\n\n \n\n \n\n1.33\n\nVested\n\n \n\n \n\n(11,129,973\n\n)\n\n \n\n1.33\n\nUnvested as of December 31, 2025\n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\nFor the years ended December 31, 2025, total share-based compensation expenses recognized for the restricted shares units granted under the 2025 Plan were US$14,758,344. As of December 31, 2025, there were nil of unrecognized share-based compensation expenses related to the restricted share units granted under the 2025 Plan.\n\nEffective as of March 9, 2026, the Company terminated the 2025 Plan and ceased making awards thereunder. All awards previously granted under the 2025 Plan remain outstanding and continue to be governed by its terms and applicable award agreements.\n\n \n\n \n\n16.\nINCOME TAX\n\n(a)\nIncome tax\n\nCayman Islands\n\nF-36\n\n \n\nUnder the current laws of the Cayman Islands, the Company is not subject to tax on income or capital gain. Additionally, the Cayman Islands does not impose a withholding tax on payments of dividends to shareholders.\n\nPRC\n\nThe Group’s PRC subsidiaries are subject to the PRC Corporate Income Tax Law (“PRC CIT Law”) at the statutory income tax rate of 25%, unless otherwise specified. According to the PRC CIT Law, entities that qualify as “high-and-new technology enterprises” (“HNTE”) are entitled to a preferential income tax rate of 15%. In 2020, X-Charge Technology received the approval from the tax authority that it qualified as an HNTE, and the certification has been renewed in 2023. The certificate entitled X-Charge Technology to the preferential income tax rate of 15% effective retroactively from January 1, 2020 to December 31, 2025, if all the criteria for HNTE status could be satisfied in the relevant year. And the Group is re-applying for an HNTE certificate when the prior certificate expires.\n\nGermany\n\nDuring 2023, 2024 and 2025, the subsidiary in Germany’s primary statutory tax rate was 32.275%, consisting of the German corporate tax rate of 15%, a 5.5% solidarity surcharge on the corporate tax rate, and a trade tax rate of 16.45%.\n\nUnited States\n\nUnder the current U.S. federal corporate income tax, the Company’s subsidiary in United States is subject to 21% income tax on its taxable income generated from operations in United States. The company’s subsidiaries have no taxable income for all periods presented.\n\nThe components of income (loss) before income taxes are as follows:\n\n \n\n \n\nFor the Years Ended December 31,\n\n \n\n \n\n2023\n\n \n\n \n\n2024\n\n \n\n \n\n2025\n\n \n\n \n\nUS$\n\n \n\n \n\nUS$\n\n \n\n \n\nUS$\n\n \n\nPRC\n\n \n\n \n\n821,344\n\n \n\n \n\n \n\n(1,460,541\n\n)\n\n \n\n \n\n(5,253,169\n\n)\n\nGermany\n\n \n\n \n\n997,619\n\n \n\n \n\n \n\n(45,090\n\n)\n\n \n\n \n\n(969,957\n\n)\n\nCayman\n\n \n\n \n\n(8,913,071\n\n)\n\n \n\n \n\n(7,961,485\n\n)\n\n \n\n \n\n(23,277,629\n\n)\n\nUnited States\n\n \n\n \n\n(989,532\n\n)\n\n \n\n \n\n(2,473,420\n\n)\n\n \n\n \n\n(3,001,890\n\n)\n\nTotal\n\n \n\n \n\n(8,083,640\n\n)\n\n \n\n \n\n(11,940,536\n\n)\n\n \n\n \n\n(32,502,645\n\n)\n\n \n\nBoth current and deferred income taxes were nil for the years ended December 31, 2023, 2024 and 2025.\n\n \n\nReconciliation of the differences between PRC statutory income tax rate and the Group's effective income tax rate for the\nyears ended December 31, 2023 and 2024 is as follows:\n\n \n\n \n\nFor the Years Ended December 31,\n\n \n\n2023\n\n \n\n \n\n2024\n\n \n\n \n\nPRC Statutory income tax rate\n\n \n\n \n\n(25.0\n\n)%\n\n \n\n \n\n(25.0\n\n)%\n\n \n\nIncrease/(decrease) in effective income tax rate resulting\n   from:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nTax rate differential for non-PRC entities\n\n \n\n \n\n6.1\n\n%\n\n \n\n \n\n19.6\n\n%\n\n \n\nPreferential tax rate\n\n \n\n \n\n3.1\n\n%\n\n \n\n \n\n0.4\n\n%\n\n \n\nResearch and development expenses bonus deduction\n\n \n\n \n\n(11.8\n\n)%\n\n \n\n \n\n(4.3\n\n)%\n\n \n\nOther non-deductible expenses\n\n \n\n \n\n24.4\n\n%\n\n \n\n \n\n0.5\n\n%\n\n \n\nChange in valuation allowance\n\n \n\n \n\n3.2\n\n%\n\n \n\n \n\n12.5\n\n%\n\n \n\nEffect of true-up on NOL\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(3.7\n\n)%\n\n \n\nEffective income tax rate\n\n \n\n \n\n0.0\n\n%\n\n \n\n \n\n0.0\n\n%\n\n \n\nThe Group is headquartered in the United States and Germany and the subsidiaries incorporated in the PRC functions as the Group’s primary business operation center. Therefore, the Group uses the PRC’s income tax rate as applicable statutory income tax rate.\n\n \n\nUpon adoption of ASU 2023-09, Improvements to Income Tax Disclosures, as described in Note 2, Summary of Significant Accounting Policies, the reconciliation of taxes at the PRC statutory rate to our provision for (benefit from) income taxes for the year ended December 31, 2025 was as follows:\n\nF-37\n\n \n\n \n\n \n\nFor the Year Ended December 31, 2025\n\n \n\n \n\nUS$\n\n \n\n \n\n%\n\n \n\nLoss before income tax\n\n \n\n \n\n(32,502,645\n\n)\n\n \n\n \n\n \n\nPRC Statutory income tax rate\n\n \n\n \n\n25\n\n%\n\n \n\n \n\n25.0\n\n%\n\nComputed income tax benefit with PRC statutory income tax rate\n\n \n\n \n\n(8,125,661\n\n)\n\n \n\n \n\n \n\nDomestic tax effects\n\n \n\n \n\n \n\n \n\n \n\n \n\n  Preferential tax rate\n\n \n\n \n\n525,390\n\n \n\n \n\n \n\n(1.6\n\n)%\n\n  Research and development expenses bonus deduction\n\n \n\n \n\n(567,286\n\n)\n\n \n\n \n\n1.7\n\n%\n\n  Other non-deductible expenses\n\n \n\n \n\n45,259\n\n \n\n \n\n \n\n(0.1\n\n)%\n\n  Change in valuation allowance\n\n \n\n \n\n1,696,837\n\n \n\n \n\n \n\n(5.2\n\n)%\n\n  True-up on NOL\n\n \n\n \n\n(387,864\n\n)\n\n \n\n \n\n1.2\n\n%\n\nForeign tax effects\n\n \n\n \n\n \n\n \n\n \n\n \n\n  United States\n\n \n\n \n\n \n\n \n\n \n\n \n\n    - Statutory tax rate difference between United States and PRC\n\n \n\n \n\n120,076\n\n \n\n \n\n \n\n(0.4\n\n)%\n\n    - Other non-deductible expenses\n\n \n\n \n\n9,814\n\n \n\n \n\n \n\n—\n\n \n\n    - Change in valuation allowance\n\n \n\n \n\n620,584\n\n \n\n \n\n \n\n(1.9\n\n)%\n\n  Germany\n\n \n\n \n\n \n\n \n\n \n\n \n\n    - Statutory tax rate difference between Germany and PRC\n\n \n\n \n\n(70,564\n\n)\n\n \n\n \n\n0.2\n\n%\n\n    - Other non-deductible expenses\n\n \n\n \n\n1,488\n\n \n\n \n\n \n\n—\n\n \n\n    - Change in valuation allowance\n\n \n\n \n\n311,565\n\n \n\n \n\n \n\n(1.0\n\n)%\n\n  Cayman\n\n \n\n \n\n \n\n \n\n \n\n \n\n    - Statutory tax rate difference between Cayman and PRC\n\n \n\n \n\n5,820,362\n\n \n\n \n\n \n\n(17.9\n\n)%\n\nEffective income tax rate\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nUpon adoption of ASU 2023-09, Improvements to Income Tax Disclosures, as described in Note 2, Summary of Significant Accounting Policies, cash paid for income taxes, net of refunds, during the year ended December 31, 2025 was as follows:\n\n \n\n \n\nFor the Years Ended December 31,\n\n \n\n \n\n \n\n2023\n\n \n\n \n\n2024\n\n \n\n \n\n2025\n\n \n\n \n\n \n\nUS$\n\n \n\n \n\nUS$\n\n \n\n \n\nUS$\n\n \n\nPRC\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nUnited States\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nGermany\n\n \n\n \n\n—\n\n \n\n \n\n \n\n82,557\n\n \n\n \n\n \n\n45,457\n\n \n\nTotal income taxes paid\n\n \n\n \n\n—\n\n \n\n \n\n \n\n82,557\n\n \n\n \n\n \n\n45,457\n\n \n\n \n\nF-38\n\n \n\n(b)\nDeferred income tax assets and deferred income tax liabilities\n\n \n\n \n\nAs of December 31,\n\n \n\n \n\n2024\n\n \n\n \n\n2025\n\n \n\n \n\nUS$\n\n \n\n \n\nUS$\n\n \n\nDeferred tax assets:\n\n \n\n \n\n \n\n \n\n \n\n \n\nAllowance for credit losses\n\n \n\n \n\n118,647\n\n \n\n \n\n \n\n286,485\n\n \n\nOperating lease liabilities\n\n \n\n \n\n276,154\n\n \n\n \n\n \n\n300,929\n\n \n\nNet operating loss carry forwards\n\n \n\n \n\n2,855,567\n\n \n\n \n\n \n\n5,101,529\n\n \n\nShare-based compensation\n\n \n\n \n\n928,639\n\n \n\n \n\n \n\n1,258,578\n\n \n\nOthers\n\n \n\n \n\n268,714\n\n \n\n \n\n \n\n271,924\n\n \n\nTotal deferred income tax assets\n\n \n\n \n\n4,447,721\n\n \n\n \n\n \n\n7,219,445\n\n \n\nLess: Valuation allowance\n\n \n\n \n\n(4,160,082\n\n)\n\n \n\n \n\n(6,918,609\n\n)\n\nTotal deferred tax assets, net of valuation allowance\n\n \n\n \n\n287,639\n\n \n\n \n\n \n\n300,836\n\n \n\nNet off against deferred tax liabilities\n\n \n\n \n\n(287,639\n\n)\n\n \n\n \n\n(300,836\n\n)\n\nNet deferred tax assets\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nDeferred tax liabilities:\n\n \n\n \n\n \n\n \n\n \n\n \n\nRight-of-use assets\n\n \n\n \n\n(287,639\n\n)\n\n \n\n \n\n(300,836\n\n)\n\nTotal deferred income tax liabilities\n\n \n\n \n\n(287,639\n\n)\n\n \n\n \n\n(300,836\n\n)\n\nNet off against deferred tax assets\n\n \n\n \n\n287,639\n\n \n\n \n\n \n\n300,836\n\n \n\nNet deferred tax liabilities\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\nAs of December 31, 2025, the Group had net operating loss carry forwards of US$25.0 million attributable to the PRC subsidiaries. As of December 31, 2025, the net operating loss carryforwards from PRC will expire in calendar year 2027 through 2031 and 2033 through 2035, if not utilized. As of December 31, 2025, the Group had net operating loss carry forwards of US$1.0 million for both corporation tax and trade tax arising in Germany and US$4.9 million arising in United States, respectively, which can be carried forward without an expiration date.\n\nTax loss carried forward by the PRC subsidiaries will expire, if unused, by the following period-end:\n\n \n\nYear ending December 31,\n\n \n\nUS$\n\n \n\n2027\n\n \n\n \n\n1,855,867\n\n \n\n2028\n\n \n\n \n\n4,694,906\n\n \n\n2029\n\n \n\n \n\n2,788,564\n\n \n\n2030\n\n \n\n \n\n2,886,996\n\n \n\n2031\n\n \n\n \n\n3,517,673\n\n \n\n2032\n\n \n\n—\n\n \n\n2033\n\n \n\n \n\n1,345,594\n\n \n\n2034\n\n \n\n \n\n339,184\n\n \n\n2035\n\n \n\n \n\n7,551,436\n\n \n\nTotal\n\n \n\n \n\n24,980,220\n\n \n\n \n\nA valuation allowance is provided against deferred income tax assets when the Group determines that it is more likely than not that some portion or all of the deferred income tax assets will not be utilized in the foreseeable future. In making such determination, the Group evaluates a variety of factors including the Group’s operating history, accumulated deficit, existence of taxable temporary differences and reversal periods. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible or utilizable. Management considers projected future taxable income and tax planning strategies in making this assessment. The Group has considered its history of losses and concluded that it is more likely than not that the Group will not generate future taxable income to utilize the deferred tax assets. Accordingly, as of December 31, 2024 and 2025, a US$4,160,082 and US$6,918,609 valuation allowance has been established respectively. Changes in valuation allowance are as follows:\n\n \n\nF-39\n\n \n\n \n\nFor the Years Ended December 31,\n\n \n\n \n\n2023\n\n \n\n \n\n2024\n\n \n\n \n\n2025\n\n \n\n \n\nUS$\n\n \n\n \n\nUS$\n\n \n\n \n\nUS$\n\n \n\nBalance at the beginning of the year\n\n \n\n \n\n2,295,587\n\n \n\n \n\n \n\n2,529,266\n\n \n\n \n\n \n\n4,160,082\n\n \n\nAdditions of valuation allowance\n\n \n\n \n\n589,668\n\n \n\n \n\n \n\n1,503,585\n\n \n\n \n\n \n\n2,628,986\n\n \n\nReductions of valuation allowance\n\n \n\n \n\n(330,665\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\nForeign exchange translation adjustments\n\n \n\n \n\n(25,324\n\n)\n\n \n\n \n\n127,231\n\n \n\n \n\n \n\n129,541\n\n \n\nBalance at the end of the year\n\n \n\n \n\n2,529,266\n\n \n\n \n\n \n\n4,160,082\n\n \n\n \n\n \n\n6,918,609\n\n \n\n \n\nAccording to the PRC Tax Administration and Collection Law, the statute of limitation is three years if the underpayment of taxes is due to computational errors made by the taxpayer or the withholding agent. The statute of limitation is extended to five years under special circumstances where the underpayment of taxes is more than RMB100,000. In the case of transfer pricing issues, the statute of limitation is 10 years. There is no statute of limitation in the case of tax evasion. The income tax returns of the Company’s PRC subsidiaries for the years from 2020 to 2025 are open to examination by the PRC tax authorities. The subsidiary in Germany is subject to the audit by federal, state, local and foreign income tax authorities. According to the statute of limitation, the German tax authorities may initiate additional audits of the tax years for 2021 through 2025. The subsidiary in United States is subject to US federal income tax examinations by the Internal Revenue Service (“IRS”) for tax years ending December 31, 2023, 2024, and 2025. Under the Internal Revenue Code, the statute of limitations for the IRS to assess additional taxes generally expires three years from the later of the tax return filing date or its due date (including extensions). However, this period may be extended to six years in cases of substantial understatement of income (≥25% of gross income) or indefinitely in instances of fraud or failure to file a return.\n\n(c)\nUncertain tax positions\n\nThe 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 December 31, 2025, the Group did not have any unrecognized uncertain tax positions and the Group does not believe that its unrecognized tax benefits will change over the next twelve months. For the year ended December 31, 2025, the Company did not incur any interest and penalties related to potential underpaid income tax expenses.\n\n17.\nLOSS PER SHARE\n\nFor the purpose of calculating loss per share, the number of shares used in the calculation reflects the outstanding shares of the Company as if the Restructuring as described in Note 1 took place at the beginning of the earliest period presented.\n\n \n\n \n\nFor the Years Ended December 31,\n\n \n\n \n\n2023\n\n \n\n \n\n2024\n\n \n\n \n\n2025\n\n \n\n \n\nUS$\n\n \n\n \n\nUS$\n\n \n\n \n\nUS$\n\n \n\nLoss per share—basic and diluted:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nNumerator:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nNet loss attributable to the Company\n\n \n\n \n\n(8,083,640\n\n)\n\n \n\n \n\n(11,940,536\n\n)\n\n \n\n \n\n(32,502,645\n\n)\n\nAccretion of redeemable preference shares to redemption value\n\n \n\n \n\n(2,377,429\n\n)\n\n \n\n \n\n(1,162,826\n\n)\n\n \n\n—\n\n \n\nNet loss attributable to ordinary share of the Company —basic and diluted\n\n \n\n \n\n(10,461,069\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\nNet loss attributable to Class A and Class B ordinary share of the Company —basic and diluted*\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(13,103,362\n\n)\n\n \n\n \n\n(32,502,645\n\n)\n\nDenominator:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nWeighted average number of ordinary shares outstanding\n\n \n\n \n\n713,323,788\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nWeighted average number of Class A and Class B ordinary shares outstanding (a)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,284,218,512\n\n \n\n \n\n \n\n2,608,976,919\n\n \n\nWeighted average number of vested restricted share units\n\n \n\n \n\n—\n\n \n\n \n\n \n\n2,995,255\n\n \n\n \n\n \n\n187,986,969\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nDenominator used in computing loss per share—basic and diluted (b)\n\n \n\n \n\n713,323,788\n\n \n\n \n\n \n\n1,287,213,767\n\n \n\n \n\n \n\n2,796,963,888\n\n \n\nLoss per ordinary share—basic and diluted (US$)\n\n \n\n \n\n(0.01\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nLoss per Class A and Class B ordinary share—basic and diluted (US$)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(0.01\n\n)\n\n \n\n \n\n(0.01\n\n)\n\n \n\nF-40\n\n \n\n \n\nThe following ordinary shares equivalents were excluded from the computation to eliminate any antidilutive effect:\n\n \n\n \n\nAs of December 31,\n\n \n\n \n\n2023\n\n \n\n \n\n2024\n\n \n\n \n\n2025\n\n \n\nRedeemable preference shares\n\n \n\n \n\n1,096,344,600\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nSeries Seed preference shares\n\n \n\n \n\n175,050,000\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nFinancial liability (c)\n\n \n\n \n\n8,786,150\n\n \n\n \n\n \n\n6,892,767\n\n \n\n \n\n \n\n8,410,133\n\n \n\nConvertible debts (d)\n\n \n\n199,710,898\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\na The Company has a dual-class share structure, with each Class A ordinary share carrying 1 vote and each Class B ordinary share carrying 10 votes. All share classes enjoy equal rights to dividends; therefore, the allocation of net profits is independent of voting rights.\n\nb Vested but unregistered restricted share units are included in the denominator of basic earnings (loss) per share calculation once there were no further vesting conditions or contingencies associated with them, as they are not considered contingently issuable shares. Accordingly, the weighted average number of shares of 2,995,255 and 187,986,969 are related to these restricted share units are included in the denominator for the computation of basic EPS for the years ended December 31, 2024 and 2025.\n\nc The warrants represent 0.2898% of the Company's equity interest, calculated on a fully diluted basis according to the warrant agreement for the years ended December 31, 2024 and 2025.\n\nd The conversion price used to calculate ordinary shares equivalents is RMB0.3964 per share. The exchange rate of RMB against US$ used was 7.0827, which was the exchange rate by the People’s Bank of China on December 31, 2023.\n\nF-41\n\n \n\n18.\nRELATED PARTY BALANCE AND TRANSACTIONS\n\nThe following is a list of related parties which the Company has major transactions with:\n\n(1)\nMr. Ding Rui, one of the Founders.\n\n(2)\nZhichong Technology (Shenzhen) Co., Ltd (“Shenzhen Zhichong”), which is 49% owned by the Group.\n\n(3)\nBeijing Puyan Enterprise Management Co.,Ltd (“Beijing Puyan”), which is a related party of one of the Group’s shareholders.\n\n(4)\nBeijing Zhichong New Energy Technology Co., Ltd (“Zhichong New Energy”), which is 12% owned by the Group.\n\n(5)\nMr. Hou Yifei, one of the Founders.\n\nThe Group mainly had the following transactions and balances with related parties:\n\n(a)\nMajor transactions with related parties\n\n \n\n \n\n \n\n \n\nFor the Years Ended December 31,\n\n \n\n \n\n \n\n \n\n2023\n\n \n\n \n\n2024\n\n \n\n \n\n2025\n\n \n\n \n\n \n\n \n\nUS$\n\n \n\n \n\nUS$\n\n \n\n \n\nUS$\n\n \n\nIssuance of loans to Beijing Puyan\n\n \n\n(i)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,404\n\n \n\n \n\n—\n\n \n\nProceeds from repayment of loans to Beijing Puyan\n\n \n\n(i)\n\n \n\n \n\n2,886,378\n\n \n\n \n\n \n\n54,762\n\n \n\n \n\n—\n\n \n\nInterest income from Beijing Puyan\n\n \n\n(i)\n\n \n\n \n\n6,709\n\n \n\n \n\n \n\n1,571\n\n \n\n \n\n \n\n31,450\n\n \n\nPayment of interest free advance to Mr. Ding Rui\n\n \n\n(ii)\n\n \n\n \n\n270,823\n\n \n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\nProceeds from collection of the advance to Mr. Ding Rui\n\n \n\n(ii)\n\n \n\n \n\n244,092\n\n \n\n \n\n \n\n270,001\n\n \n\n \n\n—\n\n \n\nPurchase of materials from Shenzhen Zhichong\n\n \n\n(iii)\n\n \n\n \n\n70,698\n\n \n\n \n\n \n\n428,046\n\n \n\n \n\n \n\n147,611\n\n \n\nSell products to Shenzhen Zhichong\n\n \n\n(iii)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n10,407\n\n \n\nSell products to Zhichong New Energy\n\n \n\n(iv)\n\n \n\n \n\n406,373\n\n \n\n \n\n \n\n1,690,196\n\n \n\n \n\n \n\n743,420\n\n \n\nIssuance of loans to Zhichong New Energy\n\n \n\n(v)\n\n \n\n \n\n94,738\n\n \n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\nProceeds from repayment of loans to Zhichong New Energy\n\n \n\n(v)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n25,071\n\n \n\n \n\n—\n\n \n\nInterest free advances to two executive officers\n\n \n\n(vi)\n\n \n\n \n\n27,483\n\n \n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\nProceeds from collection of advances to the two executive officers\n\n \n\n(vi)\n\n \n\n \n\n27,483\n\n \n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\nInterest free advance to Mr. Hou Yifei\n\n \n\n(vii)\n\n \n\n \n\n406,237\n\n \n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\nProceeds from collection of the advance to Mr. Hou Yifei\n\n \n\n(vii)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n405,938\n\n \n\n \n\n—\n\n \n\n \n\n(b)\nBalance of amounts due from related parties:\n\n \n\n \n\n \n\n \n\nAs of December 31,\n\n \n\n \n\n \n\n \n\n2024\n\n \n\n \n\n2025\n\n \n\n \n\n \n\n \n\nUS$\n\n \n\n \n\nUS$\n\n \n\nBeijing Puyan\n\n(i)\n\n \n\n \n\n298,254\n\n \n\n \n\n \n\n273,066\n\n \n\nShenzhen Zhichong\n\n(iii)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n11,951\n\n \n\nZhichong New Energy\n\n(iv)\n\n \n\n \n\n1,917,418\n\n \n\n \n\n \n\n2,737,608\n\n \n\nAmounts due from related parties, gross\n\n \n\n \n\n \n\n2,215,672\n\n \n\n \n\n \n\n3,022,625\n\n \n\nAllowance for expected credit losses\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(504,792\n\n)\n\nAmounts due from related parties, net\n\n \n\n \n\n \n\n \n\n2,215,672\n\n \n\n \n\n \n\n2,517,833\n\n \n\n \n\nThe movements of the allowance for doubtful accounts were as follows:\n\n \n\n \n\nFor the Years Ended December 31,\n\n \n\n \n\n2024\n\n \n\n \n\n2025\n\n \n\n \n\nUS$\n\n \n\n \n\nUS$\n\n \n\nBalance at the beginning of the year\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\nProvision for expected credit losses\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(496,730\n\n)\n\nForeign currency translation\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(8,062\n\n)\n\nBalance at the end of the year\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(504,792\n\n)\n\n \n\nF-42\n\n \n\n \n\n(c)\nBalance of amounts due to a related party\n\n \n\n \n\n \n\nAs of December 31,\n\n \n\n \n\n \n\n \n\n2024\n\n \n\n \n\n2025\n\n \n\n \n\n \n\n \n\nUS$\n\n \n\n \n\nUS$\n\n \n\nShenzhen Zhichong\n\n \n\n(iii)\n\n \n\n \n\n125,748\n\n \n\n \n\n \n\n164,046\n\n \n\nTotal\n\n \n\n \n\n \n\n \n\n125,748\n\n \n\n \n\n \n\n164,046\n\n \n\n \n\n(i)\nOn March 22, 2021, the Board of Directors of X-Charge Technology approved a loan agreement between X-Charge Technology and Beijing Puyan, pursuant to which X-Charge Technology provided a two-year loan to Beijing Puyan in the amount of RMB30.3 million (equivalent to US$4.2 million) bearing interest at a rate of 3.85% per annum. The loans in the amount of RMB10 million (equivalent to US$1.4 million) was repaid by Beijing Puyan in December 2022, RMB20 million (equivalent to US$2.8 million) was repaid by Beijing Puyan in January 2023. RMB0.3 million (equivalent to US$55 thousand) was repaid by Beijing Puyan in January 2024 and July 2024. US$7 thousand, US$2 thousand and US$31.5 thousand interest income were recognized for the years ended December 31, 2023, 2024 and 2025, respectively.\n\n(ii)\nIn 2022, the Group provided interest-free advance in the amount of RMB1.7 million (equivalent to US$0.24 million) to Mr. Ding Rui for his personal use. The advance was fully collected by the Group in 2023.\n\nIn 2023, the Group provided interest-free advance in the amount of RMB1.9 million (equivalent to US$0.3 million) to Mr. Ding Rui for his personal use. The advance was fully collected by the Group in January 2024.\n\n(iii)\nThe Group purchased certain types of EV chargers from Shenzhen Zhichong in the amount of US$71 thousand, US$0.4 million and US$0.1 million for the years ended December 31, 2023, 2024 and 2025, respectively. The outstanding balance of accounts payable to Shenzhen Zhichong were US$0.1 million and US$0.2 million as of December 31, 2024 and 2025, respectively, which were included in amounts due to related party on the audited consolidated balance sheets.\n\nBesides, the Group also sold certain types of EV chargers to Shenzhen Zhichong in the amount of US$10 thousand for the year ended December 31, 2025. The outstanding balance of accounts receivable from Shenzhen Zhichong were nil and US$12 thousand as of December 31, 2024 and 2025, respectively, which were included in amounts due from related parties, net on the audited consolidated balance sheets.\n\n(iv)\nThe Group sold certain types of EV chargers to Zhichong New Energy in the amount of US$0.4 million, US$1.7 million and US$0.7 million for the years ended December 31, 2023, 2024 and 2025, respectively. The outstanding balance of accounts receivable from Zhichong New Energy were US$1.9 million and US$2.7 million as of December 31, 2024 and 2025, respectively, which were included in amounts due from related parties, net on the consolidated balance sheets.\n\n(v)\nIn October 2023, the Group provided a loan in the amount of RMB0.7 million (equivalent to US$0.1 million) to Zhichong New Energy with a simple interest rate of 6% per annum. The principal and accrued interest in the amount of RMB0.7 million (equivalent to US$0.1 million) shall be due within a year. In January 2024 and July 2024, total RMB0.2 million (equivalent to US$25 thousand) was repaid.\n\n(vi)\nIn September 2023, the Group provided interest-free advances in the amount RMB0.2 million (equivalent to US$27 thousand) to other two executive officers for their personal use. The advances to the two executive officers were fully collected in September 2023.\n\n(vii)\nIn 2023, the Group provided interest-free advance in the amount of RMB2.9 million (equivalent to US$0.4 million) to Mr. Hou Yifei for his personal use. As of December 31, 2024, all of the balance was collected.\n\n \n\n19.\nREVENUE INFORMATION\n\nRevenues consisted of the following:\n\n \n\n \n\nFor the Years Ended December 31,\n\n \n\n \n\n2023\n\n \n\n \n\n2024\n\n \n\n \n\n2025\n\n \n\n \n\nUS$\n\n \n\n \n\nUS$\n\n \n\n \n\nUS$\n\n \n\nProduct revenues\n\n \n\n \n\n38,052,093\n\n \n\n \n\n \n\n41,506,620\n\n \n\n \n\n \n\n24,025,873\n\n \n\nService revenues\n\n \n\n \n\n459,559\n\n \n\n \n\n \n\n697,040\n\n \n\n \n\n \n\n1,074,519\n\n \n\nTotal revenues\n\n \n\n \n\n38,511,652\n\n \n\n \n\n \n\n42,203,660\n\n \n\n \n\n \n\n25,100,392\n\n \n\n \n\nThe following summarizes the Group’s revenues from the following geographic areas (based on the locations of customers):\n\nF-43\n\n \n\n \n\n \n\nFor the Years Ended December 31,\n\n \n\n \n\n2023\n\n \n\n \n\n2024\n\n \n\n \n\n2025\n\n \n\n \n\nUS$\n\n \n\n \n\nUS$\n\n \n\n \n\nUS$\n\n \n\nEurope\n\n \n\n \n\n30,211,836\n\n \n\n \n\n \n\n19,411,490\n\n \n\n \n\n \n\n12,500,580\n\n \n\nPRC\n\n \n\n \n\n4,750,919\n\n \n\n \n\n \n\n6,067,038\n\n \n\n \n\n \n\n3,693,378\n\n \n\nOthers*\n\n \n\n \n\n3,548,897\n\n \n\n \n\n \n\n16,725,132\n\n \n\n \n\n \n\n8,906,434\n\n \n\nTotal revenues\n\n \n\n \n\n38,511,652\n\n \n\n \n\n \n\n42,203,660\n\n \n\n \n\n \n\n25,100,392\n\n \n\n \n\n*Others for the year ended December 31, 2024, primarily consisted of revenue of US$5,869,229 from customer in North America, US$8,736,141 from customer in South America, and US$2,119,762 from customers in various other unspecified countries. Others for the year ended December 31, 2025, primarily consisted of revenue of US$6,653,386 from customer in North America, US$1,757,641 from customer in South America, and US$495,407 from customers in various other unspecified countries.\n\nThe Group has elected the practical expedient in ASC 606-10-50-14(a) not to disclose the information about remaining performance obligations which are part of contracts that have an original expected duration of one year or less.\n\n \n\n \n\n20.\nCommitments and Contingencies\n\nCommitments\n\nAs of December 31, 2025, the Group had neither significant financial nor capital commitment.\n\nContingencies\n\nAs of December 31, 2025, the Group was a party to an arbitration proceeding as detailed described in Notes 8 and 9. In connection with this matter, as of December 31, 2025, the Group had recognized a provision of RMB17.6 million (approximately US$2.5 million) for outstanding principal, accrued interest, and default interest accrued up to the balance sheet date, and had restricted cash of RMB16.9 million (approximately US$2.4 million) due to asset preservation measures on certain bank accounts. The Group concludes that the ultimate outcome of this arbitration could not have a material adverse effect on the Group's results of operations, consolidated financial condition, or cash flows.\n\n21.\nSUBSEQUENT EVENTS\n\nOn January 30, 2026, the Company entered into a sales agreement with A.G.P./Alliance Global Partners (the “Sales Agent”) to offer and sell from time to time its American depositary shares (“ADSs”), each representing 40 Class A ordinary shares, in an “at‑the‑market offering” with an aggregate offering amount of up to US$12,800,000 (the “ATM Program”). As of March 31, 2026, the Company had sold a nominal amount of ADSs under the ATM Program for gross proceeds of approximately $25,000.\n\nOn February 2, 2026, the Company issued 8,500,000 ADSs (representing 340,000,000 Class A ordinary shares) to the depositary as a reserve in relation to the ATM Program. No consideration was received by the Company for this issuance of ordinary shares. These ordinary shares are legally issued but are treated as escrowed shares for accounting purpose, and therefore, have been excluded from the computation of net loss per ordinary share for accounting purposes.\n\nEffective as of March 9, 2026, the Company terminated the 2023 Plan, the 2023 Plan II and the 2025 Plan, and ceased making awards thereunder. All awards previously granted under the 2023 Plan, the 2023 Plan II and the 2025 Plan remain outstanding and continue to be governed by its terms and applicable award agreements.\n\nOn March 9, 2026, the Company adopted the 2026 Share Incentive Plan (the “2026 Plan”). Pursuant to the 2026 Plan, restricted shares units were granted to its directors, certain employees and non-employee consultants of the Group as approved by the administrator appointed by the board of directors. Shares granted under the 2026 Plan are generally subject to only service condition but with multiple vesting schedules. As of March 31, 2026, 1,600,000 of such share awards have been granted.\n\nF-44\n\n \n\n22.\nPARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION\n\nThe following condensed parent company financial information of XCHG Limited has been prepared using the same accounting policies as set out in the accompanying consolidated financial statements. As of December 31, 2024 and 2025, there were no material contingencies, significant provisions of long-term obligations, mandatory dividend or redemption requirements of redeemable convertible preference shares or guarantees of XCHG Limited, except for those which have been separately disclosed in the consolidated financial statements.\n\n(a)\nCondensed Balance Sheets\n\n \n\n \n\n \n\nAs of December 31,\n\n \n\n \n\nAs of December 31,\n\n \n\n \n\n2024\n\n \n\n \n\n2025\n\n \n\n \n\nUS$\n\n \n\n \n\nUS$\n\n \n\nASSETS\n\n \n\n \n\n \n\n \n\n \n\n \n\nCurrent assets\n\n \n\n \n\n \n\n \n\n \n\n \n\nCash\n\n \n\n \n\n8,300,344\n\n \n\n \n\n \n\n5,449,211\n\n \n\nAmounts due from subsidiaries-current\n\n \n\n \n\n8,162,028\n\n \n\n \n\n \n\n7,534,102\n\n \n\nPrepayments and other current assets\n\n \n\n \n\n4,463,506\n\n \n\n \n\n \n\n1,841,298\n\n \n\nTotal current assets\n\n \n\n \n\n20,925,878\n\n \n\n \n\n \n\n14,824,611\n\n \n\nNon-current assets\n\n \n\n \n\n \n\n \n\n \n\n \n\nAmounts due from subsidiaries-non-current\n\n \n\n \n\n38,465,944\n\n \n\n \n\n \n\n40,259,564\n\n \n\nOther non-current assets\n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,097,980\n\n \n\nTotal non-current assets\n\n \n\n \n\n38,465,944\n\n \n\n \n\n \n\n41,357,544\n\n \n\nTotal assets\n\n \n\n \n\n59,391,822\n\n \n\n \n\n \n\n56,182,155\n\n \n\nLIABILITIES\n\n \n\n \n\n \n\n \n\n \n\n \n\nCurrent liabilities\n\n \n\n \n\n \n\n \n\n \n\n \n\nNet liabilities in subsidiaries\n\n \n\n \n\n18,194,078\n\n \n\n \n\n \n\n27,501,236\n\n \n\nAmounts due to a subsidiary\n\n \n\n \n\n9,871,978\n\n \n\n \n\n \n\n9,926,198\n\n \n\nAccrued expenses and other current liabilities\n\n \n\n \n\n1,816,882\n\n \n\n \n\n \n\n888,366\n\n \n\nTotal current liabilities\n\n \n\n \n\n29,882,938\n\n \n\n \n\n \n\n38,315,800\n\n \n\nTotal liabilities\n\n \n\n \n\n29,882,938\n\n \n\n \n\n \n\n38,315,800\n\n \n\nSHAREHOLDERS’ EQUITY:\n\n \n\n \n\n \n\n \n\n \n\n \n\nClass A ordinary shares\n\n \n\n \n\n16,368\n\n \n\n \n\n \n\n21,603\n\n \n\nClass B ordinary shares\n\n \n\n \n\n7,413\n\n \n\n \n\n \n\n7,413\n\n \n\nAdditional paid-in capital\n\n \n\n \n\n79,883,038\n\n \n\n \n\n \n\n100,820,027\n\n \n\nAccumulated other comprehensive income\n\n \n\n \n\n1,975,487\n\n \n\n \n\n \n\n1,893,379\n\n \n\nAccumulated deficit\n\n \n\n \n\n(52,373,422\n\n)\n\n \n\n \n\n(84,876,067\n\n)\n\nTotal shareholders’ equity\n\n \n\n \n\n29,508,884\n\n \n\n \n\n \n\n17,866,355\n\n \n\nTotal liabilities and shareholders’ equity\n\n \n\n \n\n59,391,822\n\n \n\n \n\n \n\n56,182,155\n\n \n\n \n\nF-45\n\n \n\n(b)\nCondensed Statements of Comprehensive Loss\n\n \n\n \n\nFor the Years Ended December 31,\n\n \n\n \n\n2023\n\n \n\n \n\n2024\n\n \n\n \n\n2025\n\n \n\n \n\nUS$\n\n \n\n \n\nUS$\n\n \n\n \n\nUS$\n\n \n\nTotal operating expenses\n\n \n\n \n\n(7,419,798\n\n)\n\n \n\n \n\n(7,972,320\n\n)\n\n \n\n \n\n(23,378,821\n\n)\n\nInterest expense\n\n \n\n \n\n(30,510\n\n)\n\n \n\n \n\n(8,998\n\n)\n\n \n\n \n\n(157\n\n)\n\nInterest income\n\n \n\n \n\n396\n\n \n\n \n\n \n\n19,832\n\n \n\n \n\n \n\n101,383\n\n \n\nShare of profits (losses) in subsidiaries\n\n \n\n \n\n829,431\n\n \n\n \n\n \n\n(3,979,050\n\n)\n\n \n\n \n\n(9,225,050\n\n)\n\nChanges in fair value of convertible debts\n\n \n\n \n\n(1,463,159\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nNet loss\n\n \n\n \n\n(8,083,640\n\n)\n\n \n\n \n\n(11,940,536\n\n)\n\n \n\n \n\n(32,502,645\n\n)\n\nAccretion of redeemable convertible preferred shares to redemption value\n\n \n\n \n\n(2,377,429\n\n)\n\n \n\n \n\n(1,162,826\n\n)\n\n \n\n—\n\n \n\nNet loss attributable to ordinary shareholders of XCHG Limited\n\n \n\n \n\n(10,461,069\n\n)\n\n \n\n \n\n(13,103,362\n\n)\n\n \n\n \n\n(32,502,645\n\n)\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nNet loss\n\n \n\n \n\n(8,083,640\n\n)\n\n \n\n \n\n(11,940,536\n\n)\n\n \n\n \n\n(32,502,645\n\n)\n\nOther comprehensive income (loss)\n\n \n\n \n\n1,043,513\n\n \n\n \n\n \n\n151,122\n\n \n\n \n\n \n\n(82,108\n\n)\n\nTotal comprehensive loss\n\n \n\n \n\n(7,040,127\n\n)\n\n \n\n \n\n(11,789,414\n\n)\n\n \n\n \n\n(32,584,753\n\n)\n\n \n\n(c)\nCondensed Statements of Cash Flows\n\n \n\n \n\nFor the Years Ended December 31,\n\n \n\n \n\n2023\n\n \n\n \n\n2024\n\n \n\n \n\n2025\n\n \n\n \n\nUS$\n\n \n\n \n\nUS$\n\n \n\n \n\nUS$\n\n \n\nNet cash used in operating activities\n\n \n\n \n\n(77,908\n\n)\n\n \n\n \n\n(11,697,046\n\n)\n\n \n\n \n\n(2,339,902\n\n)\n\nNet cash (used in) provided by investing activities\n\n \n\n \n\n(33,370,232\n\n)\n\n \n\n \n\n365,100\n\n \n\n \n\n \n\n(952,452\n\n)\n\nNet cash provided by financing activities\n\n \n\n \n\n34,749,595\n\n \n\n \n\n \n\n18,330,800\n\n \n\n \n\n \n\n441,221\n\n \n\nEffect of foreign currency exchange rate changes on cash\n\n \n\n \n\n35\n\n \n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\nNet increase (decrease) in cash\n\n \n\n \n\n1,301,490\n\n \n\n \n\n \n\n6,998,854\n\n \n\n \n\n \n\n(2,851,133\n\n)\n\nCash at the beginning of the year\n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,301,490\n\n \n\n \n\n \n\n8,300,344\n\n \n\nCash at the end of the year\n\n \n\n \n\n1,301,490\n\n \n\n \n\n \n\n8,300,344\n\n \n\n \n\n \n\n5,449,211\n\n \n\n \n\nF-46"}