{"url_path":"/sec/yddl/10-k/2026/item-5","section_key":"item-5","section_title":"Item 5 OPERATING AND FINANCIAL REVIEW AND PROSPECTS**","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-04-27","source_url":"https://www.sec.gov/Archives/edgar/data/2034723/0001213900-26-048051-index.html","accession_number":"0001213900-26-048051","cik":"0002034723","ticker":"YDDL","issuer_name":"One & one Green Technologies. INC","edgar_url":"https://www.sec.gov/Archives/edgar/data/2034723/0001213900-26-048051-index.html","primary_entity_key":"0002034723","primary_entity_name":"One & one Green Technologies. INC"},"word_count":4855,"has_tables":true,"body_markdown":"**ITEM 5.\nOPERATING AND FINANCIAL REVIEW AND PROSPECTS**\n\n \n\nYou\nshould read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated\nfinancial statements and the related notes included elsewhere in this annual report. This discussion contains forward-looking statements\nthat involve risks and uncertainties about our business and operations. Our actual results and the timing of selected events may differ\nmaterially from those anticipated in these forward-looking statements as a result of various factors, including those we describe under\n“Item 3. Key Information—3.D. Risk Factors” and elsewhere in this annual report.\n\n \n\n**5.A.****Operating Results**\n\n \n\n**Overview**\n\n \n\nOne\nand one Cayman was incorporated in the Cayman Islands on April 17, 2024. We conduct our business through the VIEs, Yoda Metal and DL\nMetal in the Philippines. We primarily engage in recycling, production and trading of recycled scrap metals in the Philippines.\n\n \n\nWe\nare a waste materials and scrap metal recycling company in the Philippines. Our capabilities are underscored by our permitted capacity\nfor metal recycling, measured in kilogram (“KG”) per year, and by the government-issued license that enables us to import\nhazardous waste (as raw materials) into the Philippines. We process raw materials and generate final products that include copper alloy\ningot, aluminum scrapes, plastic beads, and others. We provide economical and flexible solutions to the challenges of electronic waste,\nmetal scrap and industrial recycling. By providing lower-cost alternatives for processing recycled materials, we not only contribute\nto environmental sustainability but also highlight our role as a modern and specialized recycling company.\n\n \n\nWe\nhave established an environmentally friendly technology that we believe sets us apart from competitors. Our exhaust gas recirculation\nsystem and exhaust emissions have been examined and approved annually by the Environmental Management Bureau (“EMB”) in the\nPhilippines. Our exhaust gas recirculation system enhances process efficiency while minimizing and, in some cases, eliminating contamination.\nThrough this system, we capture the ash and slag contained in the emissions for further metal recovery ad smelting, ensuring the exhaust\nwe ultimately release meets all applicable standards. In contrast, competing technologies, such as table concentrators, cannot prevent\npollution during the final stages of processing.\n\n \n\nDue\nto our sustainable, environmentally friendly processes, we believe we are well-positioned to comply with heightened regulations across\nthe globe.\n\n \n\nWe\nbenefit from being fully authorized by the government to process hazardous wastes under the framework of The Basel Convention: A Global\nSolution for Controlling Hazardous Wastes.\n\n \n\nWe\nhave a full suite of environmentally friendly devices and have complied with all governmental documentary requirements, including ECC,\nPermit to Operate, Discharge Permit, Import and Export Permit. As of December 31, 2025, our workforce consisted of 90 employees, including\n7 engineers. Electronic waste and metal scraps from local and abroad (Korea, Japan, Southeast Asia, Europe, USA etc.) are carefully segregated\nand processed in compliance with the existing environmental laws, rules and regulations. Our annual processing capacity is estimated\nto be around 300,000 tons.\n\n \n\n30\n\n \n\n \n\nIn\n2025, the Company’s growth strategies will concentrate on geographically expanding into Southeast Asia and other international\nmarkets, establishing stable sources of raw materials from Japan and South Korea. We also expect to recruit an international business\ndevelopment team with well-rounded language skills and cultural expertise to strengthen our capabilities across Europe, America, and\nAsia.\n\n** **\n\n**Key Factors\nAffecting Our Results of Operations**\n\n \n\nOur\nbusiness and results of operations are affected by Philippines’ overall economic conditions and political stability, especially\nthe development of metal recycle industry, as well as the following company-specific factors.\n\n \n\n**Political\nand social instability**\n\n \n\nWe\nprimarily operate in the Philippines through our Philippine affiliated variable interest entities. The Philippines has, from time to\ntime, experienced political and military instability, including acts of political violence. In the last two decades, there has been political\ninstability in the Philippines, including extra-judicial killings, alleged electoral fraud, impeachment proceedings against two former\npresidents, two chief justices of the Supreme Court of the Philippines, and public and military protests arising from alleged misconduct\nby the previous and current administrations. In addition, a number of officials of the Philippine Government are currently under investigation\nor have been indicted on corruption charges stemming from allegations of misuse of public funds, extortion, bribery or usurpation of\nauthority.\n\n \n\n**Inflation\npressures**\n\n \n\nFor\n2025, the country recorded an annual average inflation rate of 1.7%, lower than the annual average rate of 3.2% in 2024. High inflation\nand monetary tightening are likely to soon weigh more significantly on domestic activity, which can negatively impact purchasing power\nand lead to tough financial decisions for company. Inflation refers to a broad rise in the prices of raw material and products over time,\neroding purchasing power for company but in another way increasing revenue. The fluctuation of price of raw material effects the stability\nof supply chain that may play negative impact to our operation.\n\n \n\nThe\nCompany’s operations in the Philippines are exposed to inflationary pressures, which have been exacerbated by global supply chain\ndisruptions, rising energy costs, and local economic factors. Inflation could lead to higher costs for materials, labor, and services,\naffecting the Company’s operating expenses and margins if these increases cannot be passed on to customers.\n\n \n\nAdditionally,\ninflation may contribute to wage pressures and fluctuations in the value of the Philippine Peso (PHP) against the US Dollar (USD), creating\nforeign exchange risks and potential increases in borrowing costs due to rising interest rates. These factors may impact the Company’s\nprofitability and financial position.\n\n \n\nManagement\nis actively monitoring inflation trends and has implemented strategies such as pricing adjustments, cost-saving measures, and evaluating\nforeign currency hedging to mitigate the impact. The full effect of inflation on the Company’s operations remains uncertain and\nwill depend on future developments. The ascending cost of raw material may affect the stability of our supply chain, however, as the\nsource of material is extensive, the Company has no pressures to acquire new source from suppliers and the cost of changing supply chain\nis also low due to the easiness for obtain such materials.\n\n \n\nThe\nCompany has no financial leverage, which leads to no interest burden. To mitigate against price inflation risk, we have locked-up agreements\nwith part of our suppliers in order to hedge the rise of price. In the long run, the price inflation may spread to all operating procedure\nand may also affect the final price of our products. The inflation has a massive impact on all aspects of macro environment, given the\ninelastic demand for our products, it might as well lead to an increase in our product’s selling price.\n\n \n\n31\n\n \n\n \n\n**Government\npolicies may impact our business and operating results.**\n\n \n\nOur\noperating entities are incorporated, and their operations and assets are located, in the Philippines. Accordingly, our results of operations,\nfinancial condition and prospects are affected by Philippine regulation conditions in the following factors: (a) economic policies and\ninitiatives undertaken by the Philippine government; (b) changes in the Philippine or regional business or regulatory environment affecting\nthe purchase power of consumers of our products; and (c) changes in Philippine government policy affecting our industry. Unfavorable\nchanges could affect demand for products that we sell could materially and adversely affect the results of operations. We have not seen\nany impact of unfavorable government policies upon our inception. However, we will seek to make adjustments as required if and when government\npolicies shift.\n\n \n\n**New\nCustomer Acquisition**\n\n \n\nOur\noperating results and growth prospects will depend on our ability to attract new customers. We are intensely focused on growing our customer\nbase. We will continuously develop technologies and products, in an effort to gain more market shares and cover more new customers.\n\n \n\nWe\nwill strengthen the network of our customers and promote our brand awareness, establishing strategic cooperation with multi-national\nenterprises which are in need of our products. Furthermore, we seek to improve the category and quality of our products line, and to\nenhance our brand recognition, which will allow us to capture additional market share, better optimize the pricing of our products, and\nreach customers in a broader range.\n\n \n\n**Our\nability to compete effectively**\n\n \n\n  \nFor\nthe Years Ended December 31,  \nVariance \n\n  \n2025  \n2024  \n2023  \nAmount  \n% \n\nRevenues \n$65,822,739  \n$53,463,785  \n$41,270,484  \n$12,358,954  \n 23.12 \n\nCost of revenues \n (50,061,941) \n (42,892,958) \n (32,388,301) \n (7,168,983) \n 16.71 \n\nGross\nprofit \n 15,760,798  \n 10,570,827  \n 8,882,183  \n 5,189,971  \n 49.10 \n\n  \n    \n    \n    \n    \n   \n\nOperating expenses: \n    \n    \n    \n    \n   \n\nSelling and marketing expenses \n (525,292) \n (394,294) \n (475,940) \n (130,998) \n 33.22 \n\nGeneral and administrative\nexpenses \n (3,377,118) \n (2,089,783) \n (1,147,744) \n (1,287,335) \n 61.60 \n\nTotal\noperating expenses \n (3,902,410) \n (2,484,077) \n (1,623,684) \n (1,418,333) \n 57.10 \n\n  \n    \n    \n    \n    \n   \n\nIncome\nfrom operations \n 11,858,388  \n 8,086,750  \n 7,258,499  \n 3,771,638  \n 46.64 \n\n  \n    \n    \n    \n    \n   \n\nOther income (expenses): \n    \n    \n    \n    \n   \n\nInterest income \n 11,760  \n 194  \n 120  \n 11,566  \n 5961.86 \n\nOther income, net \n 282,300  \n 331,903  \n 71,673  \n (49,603) \n -14.95 \n\nInterest expense \n (6,454) \n (501) \n -  \n (5,953) \n 1188.22 \n\nTotal\nother income \n 287,606  \n 331,596  \n 71,793  \n (43,990) \n -13.37 \n\n  \n    \n    \n    \n    \n   \n\nIncome before income tax\nexpenses \n 12,145,994  \n 8,418,346  \n 7,330,292  \n 3,727,648  \n 44.28 \n\nIncome tax expenses \n (334,380) \n (1,941,574) \n (1,763,118) \n 1,607,194  \n -82.78 \n\n  \n    \n    \n    \n    \n   \n\nNet\nincome \n$11,811,614  \n$6,476,772  \n$5,567,174  \n$5,334,842  \n 82.37 \n\n  \n    \n    \n    \n    \n   \n\nWeighted average shares outstanding \n    \n    \n    \n    \n   \n\nBasic and diluted* \n 52,396,986  \n 52,000,000  \n 52,000,000  \n    \n   \n\n  \n    \n    \n    \n    \n   \n\nEarnings per share \n    \n    \n    \n    \n   \n\nBasic and diluted* \n$0.2254  \n$0.1246  \n$0.1071  \n    \n   \n\n  \n    \n    \n    \n    \n   \n\nOther comprehensive income\n(loss): \n    \n    \n    \n    \n   \n\nNet income \n$11,811,614  \n$6,476,772  \n$5,567,174  \n    \n   \n\n  \n    \n    \n    \n    \n   \n\nOther comprehensive income (loss): \n    \n    \n    \n    \n   \n\nForeign currency translation\nadjustment \n (567,842) \n (783,940) \n 69,525  \n    \n   \n\nTotal\ncomprehensive income \n$11,243,772  \n$5,692,832  \n$5,636,699  \n    \n   \n\n \n\n \n\n****The\nshares and per share information are presented on a retroactive basis to reflect the Reorganization\n(Note 1) and the additional share issuance on pro rata basis (Note 12) of the consolidated\nfinancial statements.*\n\n \n\n32\n\n \n\n \n\nOur\nbusiness and results of operations depend on our ability to compete effectively in the industry in which we operate. We are committed\nto renovating our existing waste treatment technology in the industry in a cost-effective way for our customers. We believe that our\nproprietary technologies and research and development capabilities help us develop products to satisfy our customers and we can retain\nand develop business with existing customers and to attract new customers. However, if we are unable to keep up with our product development\nor innovation, we might not be able to develop new customers or expand our business effectively. In addition, we are subject to competition\nfrom within our industry. Increased competition could materially and adversely affect our business and results of operations.\n\n \n\n**Expanding\nUsage by Existing Customers**\n\n \n\nWe\nhave amassed a large and diverse customer base covering a wide spectrum of industry enterprises. We believe that there are significant\ngrowth opportunities within our existing customers. We expect to expand into additional product categories, strive to provide high quality\nfor our customers that cover casting industry, vehicle industry, equipment manufacturer etc., and continue to invest in sales and marketing\nand customer success activities to achieve additional revenue growth from existing customers. We believe that these efforts will have\na long-term, positive impact on our business and results of operations.\n\n \n\n**Strategic\ninvestment and acquisitions**\n\n \n\nWe\nintend to pursue strategic acquisitions and investments in selective technologies and businesses in the metal recycle industry that will\nenhance our technology capabilities. We believe that a solid acquisition and investment strategy may be critical for us to accelerate\nour growth and strengthen our competitive position in the future. Our ability to identify and execute strategic acquisitions and investments\nwill likely have an effect on our operating results over time.\n\n \n\n**Comply\nwith stringent Environmental Laws and Regulations**\n\n \n\nThe\nPhilippines is known for its rich biodiversity and stunning natural landscapes. Due to rapid industrialization, urbanization, and unsustainable\nexploitation of natural resources, the Philippines faces significant environmental challenges. In response to these threats, the country\nhas enacted a comprehensive set of environmental laws aimed at conserving its natural resources, protecting its ecosystems, and promoting\nsustainable development. Potential foreign investors shall also comply with these environmental laws.\n\n \n\n**Results\nof Operations**\n\n \n\nThe\nfollowing table sets forth a summary of our consolidated statements of (loss) income and comprehensive (loss) income for the years ended\nDecember 31, 2025, 2024 and 2023, respectively. This information should\nbe read together with our consolidated financial statements and related notes included elsewhere in this annual report. The results of\noperations in any period are not necessarily indicative of our future trends.\n\n \n\n·*The\nshares and per share information are presented on a retroactive basis to reflect the Reorganization\n(Note 1 to the consolidated financial statements) and the additional share issuance on pro\nrata basis (Note 12 to the consolidated financial statements).*\n\n* *\n\n33\n\n \n\n* *\n\n**Comparison\nof the Fiscal Years Ended December 31, 2025 and 2024**\n\n** **\n\n**Revenue**\n\n** **\n\nOur\nnet revenue was $65,822,739 for the fiscal year ended December 31, 2025 as compared to $53,463,785 for the fiscal year ended December\n31, 2024, representing an increase of $12,358,954 or 23.12%. The Company has three main product categories, brass ingot, copper ingot\nand aluminum. The Company achieved sales of copper ingot for $45,057,703 in FY2025 and $32,843,096 in FY2024, respectively. The revenue\nof aluminum alloy are $19,760,980 in FY2025 and $15,540,135 in FY2024. For brass ingot, the figures are $994,205 in FY2025 and $4,259,192\nin FY2024. In 2025, the Company experienced a notable increase in sales volume for its copper-based and aluminum alloy ingots, primarily\ndriven by stronger demand across key end markets in Asian-pacific region. In contrast, sales of brass ingot declined moderately during\nthe same period, reflecting shifting demand within specific segments.\n\n** **\n\n**Cost\nof revenue**\n\n \n\nOur\ncost of revenue was $50,061,941 and $42,892,958 for the fiscal years ended December 31, 2025 and 2024, respectively. The increase in\ncost of revenue was primarily driven by higher sales volume in fiscal year 2025 compared to fiscal year 2024, resulting in a corresponding\nincrease in costs.\n\n \n\n**Gross\nprofit and gross margin**\n\n \n\n  \nYears\nended December 31, \n\n  \n2025  \n2024 \n\n  \nRevenue  \nSales\n\nQuantity\n(kg)  \nCost  \nRevenue  \nSales\n\nQuantity\n(kg)  \nCost \n\nCopper alloy ingots \n 45,057,703  \n 5,078,975  \n 34,235,365  \n 32,843,096  \n 3,706,792  \n 24,935,868 \n\nAluminum alloy \n 19,760,980  \n 7,945,783  \n 15,019,648  \n 15,540,135  \n 7,016,224  \n 14,332,220 \n\nBrass alloy ingots \n 994,205  \n 176,700  \n 806,928  \n 4,259,192  \n 732,810  \n 3,624,870 \n\nSlag \n 9,851  \n 62,920  \n —  \n 821,362  \n 5,855,500  \n — \n\nTotal \n 65,822,739  \n 13,264,378  \n 50,061,941  \n 53,463,785  \n 17,311,326  \n 42,892,958 \n\n \n\nOur\ngross profit was $15,760,798 for the fiscal year ended December 31, 2025, as compared to gross profit of $10,570,827 for the fiscal\nyear ended December 31, 2024. Our gross margin was 23.94% for the fiscal year ended December 31, 2025, as compared to gross\nmargin of 19.77% for the fiscal year ended December 31, 2024. The increase in margin for the fiscal year ended December 31,\n2025 was mainly due to the lower purchase price of raw material.\n\n \n\n**Operating\nExpenses**\n\n** **\n\nTotal\noperating expenses increased by $1,418,333 or 57.10% to $3,902,410 for the fiscal year ended December 31, 2025 from $2,484,077 for\nfiscal year ended December 31, 2024.\n\n \n\n34\n\n \n\n \n\nOur\nselling expenses for the fiscal year ended December 31, 2025, decreased by $130,998 compared to the same period in the prior year.\nThe increase in selling expenses was primarily driven by an increase in freight forwarding service fees, which resulted from a shift\nin product mix. While sales revenue increased due to higher prices and higher sales volumes of copper and aluminum alloy, the overall\nshipment volume decreased as a result of lower brass alloy sales.\n\n \n\nGeneral\nand administrative expenses for the fiscal year ended December 31, 2025, increased by $1,287,335 compared to the same period in\n2024. The increase was primarily attributable to: (1) additional listing-related expenses of approximately $363,000 were incurred\nin the IPO offering; and (2) the additional staff salaries and wages for the senior executives of approximately $1,058,000 were incurred\nin the preparation of IPO.\n\n \n\n**Net\nincome**\n\n** **\n\nAs\na result of the cumulative effect of the factors described above, our net income for the fiscal years ended December 31, 2025 and\n2024 were $11,811,614 and $6,476,772, respectively.\n\n \n\n**Comparison\nof the Fiscal Years Ended December 31, 2024 and 2023**\n\n** **\n\n**Revenue**\n\n \n\nOur\nnet revenue was $53,463,785 for the fiscal year ended December 31, 2024 as compared to $41,270,484 for the fiscal year ended December 31,\n2023, representing an increase of $12,193,301 or 29.54%. The Company has three main product categories, brass ingot, copper ingot and\naluminum. The Company achieved sales of brass ingot for $4,259,192 in FY2024 and $2,753,613 in FY2023, respectively. The revenue of copper\ningot are $32,843,096 in FY2024 and $17,776,581 in FY2023. For aluminum alloy, the figures are $15,540,135 in FY2024 and $20,740,290\nin FY2023. In 2024, the Company experienced a notable increase in sales volume for its copper-based and brass alloy ingots, primarily\ndriven by stronger demand across key end markets in Asian-pacific region. In contrast, sales of aluminum alloy declined moderately\nduring the same period, reflecting shifting demand within specific segments.\n\n** **\n\n**Cost\nof revenue**\n\n \n\nOur\ncost of revenue was $42,892,958 and $32,388,301 for the fiscal years ended December 31, 2024 and 2023, respectively. The increase\nin cost of revenue was primarily driven by higher sales volume in fiscal year 2024 compared to fiscal year 2023, resulting in a corresponding\nincrease in costs.\n\n** **\n\n**Gross\nprofit and gross margin**\n\n \n\n  \nYears\nended December 31, \n\n  \n2024  \n2023 \n\n  \nRevenue  \nSales\n\nQuantity\n(kg)  \nCost  \nRevenue  \nSales\n\nQuantity\n(kg)  \nCost \n\nCopper alloy ingots \n 32,843,096  \n 3,706,792  \n 24,935,868  \n 17,776,581  \n 2,277,418  \n 13,029,755 \n\nAluminum alloy \n 15,540,135  \n 7,016,224  \n 14,332,220  \n 20,740,290  \n 9,648,625  \n 17,303,201 \n\nBrass alloy ingots \n 4,259,192  \n 732,810  \n 3,624,870  \n 2,753,613  \n 497,648  \n 2,055,345 \n\nSlag \n 821,362  \n 5,855,500  \n —  \n —  \n —  \n — \n\nTotal \n 53,463,785  \n 17,311,326  \n 42,892,958  \n 41,270,484  \n 12,423,691  \n 32,388,301 \n\n \n\nOur\ngross profit was $10,570,827 for the fiscal year ended December 31, 2024, as compared to gross profit of $8,882,183 for the fiscal year\nended December 31, 2023. Our gross margin was 19.77% for the fiscal year ended December 31, 2024, as compared to gross margin of 21.52%\nfor the fiscal year ended December 31, 2023. The slight decrease in margin for fiscal year ended December 31, 2024 was mainly due to\nthe higher purchase price of raw material.\n\n \n\n35\n\n \n\n \n\n**Operating\nExpenses**\n\n \n\nTotal\noperating expenses increased by $860,393 or 52.99% to $2,484,077 for the fiscal year ended December 31, 2024 from $1,623,684 for fiscal\nyear ended December 31, 2023.\n\n \n\nOur\nselling expenses for the fiscal year ended December 31, 2024, decreased by $81,646 compared to the same period in the prior year. The\ndecrease in selling expenses was primarily driven by a reduction in freight forwarding service fees, which resulted from a shift in product\nmix. While sales revenue increased due to higher prices and higher sales volumes of copper and brass alloy ingots, the overall shipment\nvolume decreased as a result of lower aluminum alloy sales.\n\n \n\nGeneral\nand administrative expenses for the fiscal year ended December 31, 2024, increased by $942,039 compared to the same period in 2023. The\nincrease was primarily attributable to: (1) additional indirect listing-related expenses of approximately $400,000 were incurred in preparation\nfor the planned IPO, including audit fees and consulting services; (2) depreciation expenses included in general and administrative expenses\nincreased by approximately $200,000, due to the addition of fixed assets with an original cost of approximately $7.58 million at the\nend of 2023, resulting in a higher depreciation charge in 2024; and (3) service fees rose by approximately $160,000, mainly due to an\nincrease in environmental protection service fees and customs service fees driven by the growth in export sales and import purchases.\n\n \n\n**Net\nincome**\n\n \n\nAs\na result of the cumulative effect of the factors described above, our net income for the fiscal years ended December 31, 2024 and 2023\nwere $6,476,772 and $5,567,174, respectively.\n\n \n\n**Cash\nFlows**\n\n** **\n\n**Years\nEnded December, 2025, 2024 and 2023**\n\n** **\n\nThe\nfollowing table summarizes our cash flows for the periods indicated:\n\n \n\n  \nFor\nthe Years Ended December 31, \n\n  \n2025  \n2024  \n2023 \n\nNet cash (used in) provided by\noperating activities \n$(9,732,429) \n$2,009,738  \n$4,060,835 \n\nNet cash used in investing activities \n (2,029,591) \n (11,542) \n (3,835,841)\n\nNet cash used in financing activities \n 10,085,316  \n (257,538) \n (17,768)\n\nEffect of exchange rate\nchanges on cash and cash equivalents \n 786,355  \n (29,503) \n (295,349)\n\nNet change in cash and cash equivalents \n$(890,349) \n$1,711,155  \n$(88,123)\n\nCash and cash equivalents\nat the beginning of the year \n$1,847,634  \n$136,479  \n$224,602 \n\nCash and cash equivalents\nat the end of the year \n$957,285  \n$1,847,634  \n$136,479 \n\n \n\n**Operating\nActivities**\n\n \n\nOur\nnet cash used by operating activities was $9,732,429 for the fiscal year ended December 31, 2025, compared to $2,009,738 provided by\noperating activities for the fiscal year ended December 31, 2024. The decrease in net cash from operating activities was mainly attributable\nto the increase in net working capital for the operation in the fiscal year ended December 31, 2025 as compared to year ended December\n31, 2024.\n\n \n\nOur\nnet cash provided by operating activities was $2,009,738 for the fiscal year ended December 31, 2024, compared to $4,060,835 for the\nfiscal year ended December 31, 2023. The decrease in net cash from operating activities was mainly attributable to the increase of account\nreceivable in the fiscal year ended December 31, 2024 as compared to year ended December 31, 2023.\n\n \n\n36\n\n \n\n \n\n**Investing\nActivities**\n\n \n\nNet\ncash used in investing activities was $2,029,591 for the fiscal year ended December 31, 2025, compared to $11,542 for the fiscal year\nended December 31, 2024. The significant increase was primarily due to higher capital expenditures, as more equipment purchases were\nmade in 2025, as well as a loan was made to a third party.\n\n \n\nNet\ncash used in investing activities was $11,542 for the fiscal year ended December 31, 2024, compared to $3,835,841 for the fiscal year\nended December 31, 2023. The significant decrease was primarily due to lower capital expenditures, as fewer equipment purchases were\nmade in 2024.\n\n \n\n**Financing\nActivities**\n\n \n\nOur\nnet cash provided by financing activities was $10,085,316 for the fiscal year ended December 31, 2025, compared to $257,538 used in financing\nactivities for the fiscal year ended December 31, 2024. The net cash provided by financing activities for the fiscal year ended December\n31, 2025 was mainly due to the completion of our Initial Public Offering (“IPO”) with the proceeds received.\n\n \n\nOur\nnet cash used in financing activities was $257,538 for the fiscal year ended December 31, 2024, compared to $17,768 for the fiscal year\nended December 31, 2023. The net cash used in financing activities for the fiscal year ended December 31, 2024 was mainly due to the\npayment of deferred offering cost.\n\n \n\n**5.B.****Liquidity and Capital Resources**\n\n \n\n**Material\nCash Requirements**\n\n \n\nThe\nCompany has no material cash requirement as of December 31, 2025. Our operating cash flows are sufficient to support ongoing business\noperations. The Company currently has no interest-bearing debt. Should material investments or capital needs arise in the future, any\nsuch expenditures would be subject to the Board’s approval and, if necessary, supported by appropriately structured bank financing.\n\n \n\n**Capital\nExpenditures**\n\n \n\nOur\ncapital expenditures are primarily incurred for the purpose of acquisition of property and equipment, and intangible assets. Our capital\nexpenditures were $0.7 million, $0.01 million and $3.8 million for the years ended December 31, 2025, 2024 and 2023, respectively.\n\n \n\n**Off-Balance\nSheet Arrangements**\n\n \n\nWe\nhave not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. In addition,\nwe have not entered into any derivative contracts that are indexed to our own shares and classified as shareholders’ equity, or\nthat are not reflected in our financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred\nto an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. Moreover, we do not have any variable\ninterest in an unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging\nor research and development services with us.\n\n \n\n**Leases**\n\n \n\nComponents\nof lease cost, weighted average remaining lease terms and discount rates of operating lease consist of the following:\n\n \n\n  \nFor\nthe Years Ended December 31, \n\n  \n2025  \n2024  \n2023 \n\nLease assets and liabilities \n   \n   \n  \n\nOperating lease right-of-use assets,\nnet \n$6,007,527  \n$314,028  \n$558,376 \n\nOperating lease liabilities-current \n 641,564  \n 785,070  \n 456,372 \n\nOperating lease liabilities-noncurrent \n 3,301,395  \n —  \n 433,213 \n\nOperating lease liabilities-total \n$3,942,959  \n$785,070  \n$889,785 \n\n \n\n37\n\n \n\n \n\n  \nFor\nthe Years Ended December 31, \n\n  \n2025  \n2024  \n2023 \n\nLease expenses \n   \n   \n  \n\nOperating lease expenses-Selling,\ngeneral & admin portion \n$19,450  \n$22,994  \n$60,179 \n\nOperating lease expenses-Manufacturing\ncosts \n 157,770  \n 230,468  \n 2,00,889 \n\nTotal \n$177,220  \n$253,462  \n$261,068 \n\n  \n    \n    \n   \n\nOther Information \n    \n    \n   \n\nCash paid for amounts included in the measurement\nof lease liabilities \n    \n    \n   \n\nOperating cash flows – operating leases \n$2,722,437  \n$95,035  \n$99,639 \n\n  \n    \n    \n   \n\nWeighted average remaining\nlease term (in years) \n    \n    \n   \n\nOperating leases \n 30.00  \n 2.00  \n 2.66 \n\n  \n    \n    \n   \n\nAverage discount rate \n    \n    \n   \n\nOperating leases \n 8.03% \n 5.99% \n 6.01%\n\n \n\n  \nOperating\n\nLeases \n\nFuture minimum lease\npayments \n  \n\nFor the year ending December 31, \n  \n\n2026 \n$936,033 \n\n2027 \n — \n\n2028 \n 3,821,818 \n\n2029 \n — \n\n2030 \n — \n\nThereafter \n — \n\nTotal \n 4,757,851 \n\nLess: interest \n (814,892)\n\nPresent value of lease\nliabilities \n$3,942,959 \n\n \n\n**5.****C.\nTrend Information**\n\n \n\nOther\nthan as disclosed elsewhere in this prospectus, we are not aware of any trends, uncertainties, demands, commitments, or events that are\nreasonably likely to have a material effect on our net revenue, income from continuing operations, profitability, liquidity, or capital\nresources, or that would cause reported financial information not necessarily to be indicative of future operating results or financial\ncondition.\n\n \n\n**5.D. Critical Accounting Policies and Estimates**\n\n \n\nThe preparation of consolidated financial statements\nin conformity with U.S. GAAP requires our management to make estimates and assumptions that affect the reported amounts of assets and\nliabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, the reported amounts of revenue\nand expenses during the reporting period, and the related disclosures in the financial statements and accompanying footnotes.\n\n \n\nManagement evaluates its estimates and judgments\non an ongoing basis based on historical experience, current conditions, and various other assumptions believed to be reasonable under\nthe circumstances. Actual results may differ from those estimates.\n\n \n\nThe Company’s significant accounting policies are described in\n“Note 2 — Summary of Significant Accounting Policies” of our consolidated financial statements for the years ended December\n31, 2025, 2024 and 2023. Among those policies, management has identified certain accounting policies and estimates as critical because\nthey require management’s highest degree of judgment, involve matters that are inherently uncertain, and/or have a material impact\non the Company’s financial condition and results of operations.\n\n \n\n38\n\n \n\n \n\nManagement identified the following as the Company’s\nmost critical accounting policy and estimate:\n\n \n\n**Revenue recognition**\n\n \n\nIn accordance with ASC Topic 606, revenues are recognized when control\nof the contracted goods or services is transferred to the Company’s customers, in an amount that reflects the consideration the\nCompany expects to be entitled to in exchange for those goods or services. In determining when and how much revenue is recognized from\ncontracts with customers, the Company performs the following five-step analysis: (1) identify the contract(s) with a customer; (2) identify\nthe performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance\nobligations in the contract; (5) recognize revenue when (or as) the entity satisfies a performance obligation. The Company assesses its\nrevenue arrangements against specific criteria in order to determine if it is acting as principal or agent. Revenue is recognized upon\nthe transfer of control of contracted goods or services to a customer. \n\n \n\nRevenue recognition is considered a critical accounting policy because\nmanagement is required to exercise significant judgment in evaluating the substance of customer arrangements, identifying the performance\nobligation, determining whether the Company acts as principal or agent, assessing the appropriate gross versus net presentation, and determining\nthe point in time at which control of goods transfers to the customer.\n\n \n\nTrading of recycled scrap metals and related\n\n \n\nRevenues are generated from trading of recycled\nscrap metals and related.\n\n \n\nThe Company is the principal party in fulfilling\nthe identified performance obligation as it controls the finished goods prior to the transfer to the customer, assumes the risks and rewards\nassociated with the transactions, including bearing any associated costs and risks, bearing the risk of loss or damage to inventory, and\nbearing the credit risk associated with customers’ ability to pay for the goods. The revenue is recognized at a point in time which\nthe Company delivers the finished goods to the customers for acceptance, which represents the performance obligation is satisfied and\nwhen the control is transferred to the customer.\n\n \n\nRevenues are measured as the amount of consideration\nthe Company expects to receive in exchange for transferring the finished goods to customers. Consideration is recorded net of value-added\ntax, and there is no variable consideration exists in the trading of the goods.\n\n \n\n**Valuation allowance for deferred tax assets**\n\n \n\nThe\nCompany follows the guidance of ASC Topic 740 “Income taxes” and uses liability method to account for income taxes.\nUnder this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax\nbases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to\nreverse. The Company records a valuation allowance to offset deferred tax assets, if based on the weight of available evidence, it is\nmore-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of\na change in tax rates is recognized in statement of income and comprehensive income in the period that includes the enactment date.\n\n \n\nThe valuation allowance for deferred tax assets\nis considered a critical accounting estimate because management must determine whether it is more likely than not that deferred tax assets\nwill be realized. This determination requires significant judgment regarding future taxable income, reversal patterns of existing temporary\ndifferences, tax planning strategies, and the overall weight of positive and negative evidence. Changes in these assumptions could materially\naffect the amount of valuation allowance recorded and, accordingly, the Company’s results of operations and financial position.\n\n \n\n39"}