Greenland Technologies posts higher Q1 2026 profit

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

 

FORM 10-Q

 

☒ QUARTERLY REPORT PURSUANT TO SECTION
13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2026

 

☐ TRANSITION REPORT PURSUANT TO SECTION
13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from __________ to __________

 

Commission File number 001-38605

 

GREENLAND TECHNOLOGIES HOLDING CORPORATION

(Exact name of registrant as specified in charter)

 

British Virgin Islands   001-38605 (State or other jurisdiction of
incorporation or organization)   (I.R.S. Employer
Identification No.)

 

50 Millstone Road, Building 400 Suite 130
East Windsor, NJ
United States   08512 (Address of principal executive offices)   (Zip Code)

 

1 (888) 827-4832

(Registrant’s telephone number, including
area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered Ordinary shares, no par value   GTEC    The NASDAQ Stock Market LLC

 

Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes
☒ No ☐

 

Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.
See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and
“emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒     Emerging growth company ☐

 

If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

 

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

 

Indicate by check mark whether the registrant
has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent
to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☐

 

As of May 13, 2026, there were 20,532,482 Class
A ordinary shares, no par value per share, of the registrant issued and outstanding.

 

 

 

INDEX

 

 
 
Page

 
 
Number

 
 
 

PART I.
FINANCIAL INFORMATION
1

 
 
 

ITEM 1.
Financial Statements (unaudited)
1

 
 
 

ITEM 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
2

 
 
 

ITEM 3.
Quantitative and Qualitative Disclosures About Market Risk
12

 
 
 

ITEM 4.
Controls and Procedures
12

 
 
 

PART II.
OTHER INFORMATION
14

 
 
 

ITEM 1.
Legal Proceedings
14

 
 
 

ITEM 1A.
Risk Factors
14

 
 
 

ITEM 2.
Unregistered Sales of Equity Securities and Use of Proceeds
39

 
 
 

ITEM 3.
Defaults Upon Senior Securities
39

 
 
 

ITEM 4.
Mine Safety Disclosures
39

 
 
 

ITEM 5.
Other Information
39

 
 
 

ITEM 6.
Exhibits
40

 
 
 

Signatures
 
41

 

 

FORWARD LOOKING STATEMENTS

 

This quarterly report on Form 10-Q (the “Quarterly
Report”), and the Financial Statements and Notes to Financial Statements in this Quarterly Report contain forward-looking statements
that discuss, among other things, future expectations and projections regarding future developments, operations and financial conditions.
Forward-looking statements may appear throughout this Quarterly Report and other documents we file with the U.S. Securities and Exchange
Commission (“SEC”), including without limitation, the following sections: Part I, Item 2, “Management’s Discussion
and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10-Q.

 

Forward-looking statements generally can be identified
by words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,”
“plans,” “predicts,” “projects,” “will be,” “will continue,” “may,”
“could,” “will likely result,” and similar expressions. These forward-looking statements are based on current
expectations and assumptions that are subject to risks and uncertainties, which could cause our actual results to differ materially from
those reflected in the forward-looking statements. We undertake no obligation to revise or publicly release the results of any revision
to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place
undue reliance on such forward-looking statements.

 

 

PART I – FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

GREENLAND TECHNOLOGIES HOLDING CORPORATION

UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

THREE MONTHS ENDED MARCH 31, 2026

 

TABLE OF CONTENTS

 

PAGE
F-1
– F-2
CONSOLIDATED
BALANCE SHEETS AS OF MARCH 31, 2026 (UNAUDITED) AND DECEMBER 31, 2025

 
 
 

PAGE
F
– 3
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025 (UNAUDITED)

 
 
 

PAGE
F
– 4
CONSOLIDATED STATEMENTS OF CHANGE IN SHAREHOLDERS’ EQUITY FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025 (UNAUDITED)

 
 
 

PAGE
F-5
– F-6
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025 (UNAUDITED)

 
 
 

PAGE
F-7
– F-34
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND
SUBSIDIARIES

 

UNAUDITED CONSOLIDATED BALANCE SHEETS

 

AS OF MARCH 31, 2026 AND DECEMBER 31, 2025

 

(IN U.S. DOLLARS)

 

  
March 31,  
December 31, 

  
2026  
2025 

ASSETS 
   
  

Current assets 
   
  

Cash and cash equivalents 
$10,392,136  
$7,775,330 

Restricted cash 
 215,041  
 71,540 

Short term investment 
 20,831,283  
 24,454,701 

Notes receivable 
 18,733,369  
 14,704,079 

Accounts receivable, net 
 25,885,240  
 17,256,479 

Inventories, net 
 25,703,356  
 24,377,036 

Due from related parties-current 
 511,400  
 1,106,417 

Advance to suppliers 
 75,640  
 80,757 

Fixed deposit-current 
 1,500,264  
 2,966,386 

Prepayments and other current assets 
 9,151,451  
 2,472,387 

Total Current Assets 
$112,999,180  
$95,265,112 

  
    
   

Non-current asset 
    
   

Property, plant and equipment, net 
 11,746,243  
 11,889,147 

Land use rights, net 
 3,348,730  
 3,325,188 

Intangible assets 
 53,082  
 68,691 

Deferred tax assets 
 452,771  
 446,613 

Fixed deposit-non current 
 7,474,063  
 4,421,828 

Other non-current assets 
 478,779  
 355,762 

Total non-current assets 
$23,553,668  
$20,507,229 

TOTAL ASSETS 
$136,552,848  
$115,772,341 

 

The accompanying notes are an integral part of
the unaudited consolidated financial statements.

 

 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND
SUBSIDIARIES

 

UNAUDITED CONSOLIDATED BALANCE SHEETS

 

AS OF MARCH 31, 2026 AND DECEMBER 31, 2025 (Continued)

 

(IN U.S. DOLLARS)

 

  
March 31,  
December 31, 

  
2026  
2025 

  
   
  

Current Liabilities 
   
  

Notes payable-bank acceptance notes 
$16,440,997  
$12,759,720 

Accounts payable 
 33,565,416  
 25,604,917 

Taxes payables 
 1,525,716  
 1,622,509 

Contract liabilities 
 122,775  
 93,698 

Due to related parties 
 3,750,588  
 5,275,011 

Other current liabilities 
 1,516,342  
 2,941,871 

Total current liabilities 
$56,921,834  
$48,297,726 

  
    
   

Non-current liabilities 
    
   

Deferred revenue 
 1,039,241  
 1,083,784 

Warrant liability 
 123,837  
 70,910 

Total non-current liabilities 
$1,163,078  
$1,154,694 

TOTAL LIABILITIES 
$58,084,912  
$49,452,420 

  
    
   

COMMITMENTS AND CONTINGENCIES 
 

–

  
 

–

 

Shareholders’ equity 
    
   

Ordinary shares, no par value, unlimited shares authorized; nil  and 17,394,226 shares issued and outstanding as of March 31, 2026 and December 31, 2025.

 
 

–

  
 

–

 

Class A Ordinary Shares, no par value, unlimited shares authorized; 20,532,482  and nil shares issued and outstanding as of March 31, 2026 and December 31, 2025.

 
 

–

  
 

–

 

Class B Ordinary Shares, no par value, unlimited shares authorized; 6,011,740  and nil shares issued and outstanding as of March 31, 2026 and December 31, 2025.

 
 

–

  
 

–

 

Additional paid-in capital 
 38,602,913  
 33,017,917 

Statutory reserves 
 3,842,331  
 3,842,331 

Retained earnings 
 42,534,128  
 37,533,648 

Accumulated other comprehensive loss 
 (727,302) 
 (1,452,410)

Total shareholders’ equity attributed to Greenland Technologies Holding Corporation and subsidiaries 
$84,252,070  
$72,941,486 

Non-controlling interest 
 (5,784,134) 
 (6,621,565)

TOTAL SHAREHOLDERS’ EQUITY 
$78,467,936  
$66,319,921 

  
    
   

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 
$136,552,848  
$115,772,341 

 

The accompanying notes are an integral part of
the unaudited consolidated financial statements.

 

 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND
SUBSIDIARIES

 

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME

 

FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND
2025

 

(UNAUDITED, IN U.S. DOLLARS)

 

  
For the three months ended
March 31, 

  
2026  
2025 

Revenues 
$25,538,345  
$21,677,564 

Cost of goods sold 
 16,779,083  
 15,016,614 

Gross profit 
 8,759,262  
 6,660,950 

Selling expenses 
 419,014  
 331,809 

General and administrative expenses 
 1,842,428  
 1,438,988 

Research and development expenses 
 778,219  
 81,457 

Total operating expenses 
$3,039,661  
$1,852,254 

INCOME FROM OPERATIONS 
$5,719,601  
$4,808,696 

Interest income 
 519,843  
 141,040 

Interest expense 
 (33,380) 
 

–

 

Change in fair value of the warrant liability 
 (52,927) 
 209,294 

Other income 
 599,189  
 282,081 

INCOME BEFORE INCOME TAX 
$6,752,326  
$5,441,111 

INCOME TAX EXPENSE 
 1,003,895  
 878,275 

NET INCOME 
$5,748,431  
$4,562,836 

LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST 
 747,951  
 559,053 

NET INCOME ATTRIBUTABLE TO GREENLAND TECHNOLOGIES HOLDING CORPORATION AND SUBSIDIARIES 
$5,000,480  
$4,003,783 

OTHER COMPREHENSIVE INCOME: 
 814,588  
 448,096 

Unrealized foreign currency translation income attributable to Greenland Technologies Holding Corporation and subsidiaries 
 725,108  
 412,136 

Unrealized foreign currency translation income attributable to non-controlling interest 
 89,480  
 35,960 

Total comprehensive income attributable to Greenland technologies holding corporation and subsidiaries 
 5,725,588  
 4,415,919 

Total comprehensive income attributable to noncontrolling interest 
 837,431  
 595,013 

WEIGHTED AVERAGE ORDINARY SHARES OUTSTANDING: 
 21,753,958  
 13,594,530 

Basic and diluted 
 0.23  
 0.29 

 

The accompanying notes are an integral part of
the unaudited consolidated financial statements.

 

 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND
SUBSIDIARIES

 

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGE
IN SHAREHOLDERS’ EQUITY

 

FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND
2025

 

(UNAUDITED, IN U.S. DOLLARS, EXCEPT FOR SHARE
DATA)

 

  
Ordinary Shares  
   
Accumulated   
   
   
Total
shareholders’
equity
attributed
to
Greenland
Technologies
Holding  
   
  

  
No Par Value  
Additional  
Other  
   
   
Corporation  
Non-  
Total 

  
Shares  
Amount  
Class A
Shares  
Amount  
Class B
Shares  
Amount  
Paid-in
Capital  
Comprehensive
Loss  
Statutory
Reserve  
Retained
Earnings  
and
subsidiaries  
controlling
Interest  
Shareholders’
Equity 

Balance as of December 31, 2024 
 13,594,530  
$

       –

  
 

–

  
$

      –

  
 

–

  
$

      –

  
$27,470,361  
$(3,707,100) 
 3,842,331  
$32,602,105  
 60,207,697  
$(6,938,809) 
$53,268,888 

Net income 
 –  
 

–

  
 –  
 

–

  
 –  
 

–

  
 

–

  
 

–

  
 –  
 4,003,783  
 4,003,783  
 559,053  
 4,562,836 

Dividend 
 –  
 

–

  
 –  
 

–

  
 –  
 

–

  
 

–

  
 

–

  
 –  
 

–

  
 

–

  
 (188,222) 
 (188,222)

Foreign currency translation adjustment 
 –  
 

–

  
 –  
 

–

  
 –  
 

–

  
 

–

  
 412,136  
 –  
 

–

  
 412,136  
 35,960  
 448,096 

Balance as of March 31, 2025 
 13,594,530  
$

–

  
 

–

  
$

–

  
 

–

  
$

–

  
$27,470,361  
$(3,294,964) 
 3,842,331  
$36,605,888  
 64,623,616  
$(6,532,018) 
$58,091,598 

  
    
    
    
    
    
    
    
    
    
    
    
    
   

Balance as of December 31, 2025 
 17,394,226  
$

–

  
 

–

  
$

–

  
 

–

  
$

–

  
$33,017,917  
$(1,452,410) 
 3,842,331  
$37,533,648  
 72,941,486  
$(6,621,565) 
$66,319,921 

Reclassification of existing ordinary shares 
 (17,394,226) 
$

–

  
 11,382,486  
$

–

  
 6,011,740  
$

–

  
 

–

  
 

–

  
 –  
 

–

  
 

–

  
 –  
 – 

Sale of stock and warrants 
 –  
 

–

  
 9,149,996  
 

 

  
 –  
 

–

  
 5,584,996  
 

–

  
 –  
 

–

  
 5,584,996  
 –  
 5,584,996 

Net income 
 –  
 

–

  
 –  
$

–

  
 –  
$

–

  
 

–

  
 

–

  
 –  
 5,000,480  
 5,000,480  
 747,951  
 5,748,431 

Foreign currency translation adjustment 
 –  
 

–

  
 –  
 

–

  
 –  
 

–

  
 

–

  
 725,108  
 –  
 

–

  
 725,108  
 89,480  
 814,588 

Balance as of March 31, 2026 
 

–

  
$

–

  
 20,532,482  
$

–

  
 6,011,740  
$

–

  
$38,602,913  
$(727,302) 
 3,842,331  
$42,534,128  
 84,252,070  
$(5,784,134) 
$78,467,936 

 

The accompanying notes are an integral part of
the unaudited consolidated financial statements.

 

 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND
SUBSIDIARIES

 

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND
2025

 

(UNAUDITED, IN U.S. DOLLARS)

 

  
For the three months ended
March 31, 

  
2026  
2025 

CASH FLOWS FROM OPERATING ACTIVITIES: 
   
  

Net income 
$5,748,431  
$4,562,836 

Adjustments to reconcile net income to net cash provided by operating activities: 
    
   

Depreciation and amortization 
 516,924  
 517,134 

Amortization of deferred subsidy 
 (59,281) 
 (56,420)

Change in fair value of warrant liability 
 52,927  
 (209,294)

Non-cash lease expenses 
 

–

  
 162,361 

Accrued interest income derived from loan to related parties 
 (2,012) 
 (2,334)

Accrued expense 
 (1,816,175) 
 (2,591,067)

Changes in operating assets and liabilities: 
    
   

Decrease (Increase) In: 
    
   

Accounts receivable 
 (8,363,974) 
 (5,528,940)

Notes receivable 
 (3,813,413) 
 2,183,620 

Inventories 
 (993,585) 
 (437,598)

Advance to suppliers 
 6,209  
 (116,320)

Other current and noncurrent assets 
 (319,609) 
 1,454,809 

Increase (Decrease) In: 
    
   

Accounts payable 
 7,581,337  
 6,056,496 

Contract liabilities 
 27,813  
 69,072 

Other current liabilities 
 360,868  
 340,195 

Income tax payable 
 (112,797) 
 267,885 

Due to related parties 
 

–

  
 (5,224,948)

Lease liabilities 
 

–

  
 (202,821)

NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES 
$(1,186,337) 
$1,244,666 

 

The accompanying notes are an integral part of
the unaudited consolidated financial statements.

 

 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND
SUBSIDIARIES

 

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND
2025 (Continued)

 

(UNAUDITED, IN U.S. DOLLARS)

 

  
For the three months ended
March 31, 

  
2026  
2025 

CASH FLOWS FROM INVESTING ACTIVITIES: 
   
  

Purchases of property, plant and equipment 
$(172,528) 
$(14,371)

Loan lent to third parties 
 (4,000,000) 
 (687,493)

NET CASH USED IN INVESTING ACTIVITIES 
$(4,172,528) 
$(701,864)

  
    
   

CASH FLOWS FROM FINANCING ACTIVITIES: 
    
   

Notes payable 
$3,493,311  
$(577,494)

Dividend paid 
 (1,444,711) 
 (188,222)

Proceeds from related parties 
 597,029  
 

–

 

Repayment of loans from related parties 
 (94,442) 
 (1,000,000)

Proceeds from equity and debt financing 
 5,584,996  
 

–

 

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 
$8,136,183  
$(1,765,716)

NET INEREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH 
$2,777,318  
$(1,222,914)

Effect of exchange rate changes on cash 
 (17,011) 
 157,967 

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD 
 7,846,870  
 8,611,795 

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD 
$10,607,177  
$7,546,848 

Bank balances and cash 
 10,392,136  
 5,403,254 

Bank balances and cash included in assets classified as restricted cash 
 215,041  
 2,143,594 

  
    
   

Supplemental Disclosure of Cash Flow Information 
    
   

Income taxes paid 
 1,116,442  
 997,153 

Interest paid 
 17,730  
 

–

 

 

The accompanying notes are an integral part of
the unaudited consolidated financial statements.

 

 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND
SUBSIDIARIES

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 1 – ORGANIZATION AND PRINCIPAL ACTIVITIES

 

Greenland Technologies Holding Corporation (the
“Company” or “Greenland”) designs, develops, manufactures and sells components and products for the global material
handling industries.

 

Through its subsidiaries in the People’s
Republic of China (the “PRC” or “China”), Greenland offers transmission products, which are key components for
forklift trucks used in manufacturing and logistic applications, such as factories, workshops, warehouses, fulfilment centers, shipyards,
and seaports. Forklifts play an important role in the logistic systems of many companies across different industries in China and globally.
Generally, industries with the largest demand for forklifts include the transportation, warehousing logistics, electrical machinery, and
automobile industries.

 

Greenland’s transmission products are used
in 1-ton to 15-tons forklift trucks, some with mechanical shift and some with automatic shift. Greenland sells these transmission products
directly to forklift-truck manufacturers. In the three months ended March 31, 2026 and 2025, Greenland sold an aggregate of 46,027 and
38,734 sets of transmission products, respectively, to more than 100 forklift manufacturers in the PRC.

 

In January 2020, Greenland formed HEVI Corp. (“HEVI”)
to focus on the production and sale of electric industrial vehicles to meet the increasing demand for electric industrial vehicles and
machinery powered by sustainable energy to reduce air pollution and lower carbon emissions. HEVI is a wholly owned subsidiary of Greenland
incorporated under the laws of the State of Delaware. Prior to 2025, HEVI had been manufacturing and selling electric industrial vehicle
products. However, substantially all of HEVI’s business operations have been suspended since 2025 due to uncertainty regarding tariff
policy. HEVI intends to resume operations once the policy environment stabilizes. HEVI’s electric industrial vehicle products (which
are not currently being offered as a result of the suspension of its operations) include GEF-series electric forklifts, a series of lithium
powered forklifts with three models ranging in size from 1.8 tons to 3.5 tons, GEL-1800, a 1.8-ton rated load lithium powered electric
wheeled front loader, GEX-8000, an all-electric 8.0 ton rated load lithium powered wheeled excavator, and GEL-5000, an all-electric 5.0
ton rated load lithium wheeled front loader. In addition, in April 2023, HEVI introduced a line of mobile DC battery chargers that support
DC powered EV applications in the North America market. In July 2024, HEVI announced a partnership with Lonking Holdings Limited to develop
and distribute heavy electric machinery and related technology specialized for the U.S. market. In August 2024, HEVI launched its H55L
all-electric wheeled front-end loader, which can lift up to six tons in indoor and outdoor applications without the mess and emissions
of diesel, and the H65L all-electric wheeled front-end loader, a lithium battery wheeled front-end loader.

 

Greenland is the parent company of HEVI and Greenland
Holding Enterprises Inc. (“Greenland Holding”), a holding company formed in the State of Delaware on August 28, 2023, which
in turn acts as the holding company for Zhongchai Holding (Hong Kong) Limited, a holding company formed under the laws of the Hong Kong
Special Administrative Region of the PRC (“Hong Kong”) on April 23, 2009 (“Zhongchai Holding”). Zhongchai Holding’s
subsidiaries include Zhejiang Zhongchai Machinery Co. Ltd., an operating company formed under the laws of the PRC in 2005 (“Zhejiang
Zhongchai”), Hangzhou Greenland Energy Technologies Co., Ltd. (“Hangzhou Greenland”), an operating company formed under
the laws of the PRC in 2019, and Hengyu Capital Limited, a company formed in Hong Kong on August 16, 2022 (“Hengyu Capital”).
Through Zhongchai Holding and its subsidiaries, Greenland develops and manufactures traditional transmission products for material handling
machinery in the PRC.

 

Greenland was incorporated on December 28, 2017
as a British Virgin Islands business company with limited liability. Following the Business Combination (as described and defined below)
in October 2019, the Company changed its name from Greenland Acquisition Corporation to Greenland Technologies Holding Corporation.

 

The Company’s Shareholders

 

As of March 31, 2026, Trendway Capital Limited
owned 100.0% of Greenland’s outstanding Class B ordinary shares. Trendway Capital Limited is controlled and beneficially owned
by Mr. Peter Zuguang Wang, the chairman of the board of directors of the Company. As a result, Mr. Wang, through Trendway Capital Limited,
holds approximately 88.0% of the total voting power of the Company (based on 20,532,482 Class A ordinary shares entitled to one vote per
share and 6,011,740 Class B ordinary shares entitled to twenty-five votes per share outstanding as of March 31, 2026).

 

 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND
SUBSIDIARIES

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 1 – ORGANIZATION AND PRINCIPAL ACTIVITIES (CONTINUED)

 

The Company’s Subsidiaries

 

Zhongchai Holding, the indirect wholly owned subsidiary
of the Company, owns 89.47% of the equity interests in Zhejiang Zhongchai, 100% of the equity interests in Hangzhou Greenland and 62.5%
of the equity interests in Hengyu Capital. HEVI is a wholly owned subsidiary of Greenland. Greenland Holding is a wholly owned subsidiary
of the Company and holds 100% of the equity interests in Zhongchai Holding.

 

Zhejiang Zhongchai

 

Zhejiang Zhongchai, a limited liability company
registered on November 21, 2005, is the direct operating subsidiary of Zhongchai Holding in the PRC. On April 5, 2007, Usunco Automotive
Limited (“Usunco”), a British Virgin Islands limited liability company, invested US$8,000,000 for purchasing approximately
75.4717% equity interest of Zhejiang Zhongchai. On December 16, 2009, Usunco agreed to transfer its 75.4717% interest in Zhejiang Zhongchai
to Zhongchai Holding. On April 26, 2010, Xinchang County Keyi Machinery Co., Ltd. transferred 24.5283% equity interest it owned in Zhejiang
Zhongchai to Zhongchai Holding in exchange for a consideration of US$2.6 million. On November 1, 2017, Xinchang County Jiuxin Investment
Management Partnership (LP) (“Jiuxin”), an entity controlled and beneficially owned by Mr. He Mengxing, president of Zhejiang
Zhongchai, completed its investment of approximately RMB31,590,000 in Zhejiang Zhongchai for a 10.53% interest. On December 29, 2021,
Xinchang County Jiuhe Investment Management Partnership (LP) (“Jiuhe”), an entity controlled and beneficially owned by Mr.
He Mengxing, president of Zhejiang Zhongchai, completed its investment of approximately RMB34,300,000 in Zhejiang Zhongchai for a 20.00%
interest. On November 25, 2024, Jiuhe withdrew its investment in Zhejiang Zhongchai. As a result, the equity interests in Zhejiang Zhongchai
was redistributed between Zhongchai Holding and Jiuxin. As of March 31, 2026, Zhongchai Holding owned approximately 89.47% of the equity
interests, and Jiuxin owned approximately 10.53% of the equity interests, in Zhejiang Zhongchai.

 

Through Zhejiang Zhongchai, the Company has been
engaging in the manufacturing and sales of transmission systems mainly for forklift trucks since 2006. These forklift trucks are used
in manufacturing and logistics applications, such as factory, workshop, warehouse, fulfilment centers, shipyards and seaports. The transmission
systems are the key components for forklift trucks. The Company supplies transmission systems to forklift truck manufacturers. Its transmission
systems fit for forklift trucks ranging from 1 to 15 tons, with either mechanical shift or automatic shift. All the products are currently
manufactured at the Company’s facility in Xinchang, Zhejiang Province, the PRC and are sold to both domestic and oversea markets.

 

Hangzhou Greenland

 

Hangzhou Greenland is a limited liability company
registered on August 9, 2019 in Hangzhou Sunking Plaza, Zhejiang, the PRC. Hangzhou Greenland engages in the business of trading construction
engineering machinery, electronic components, hardware, and others.

 

HEVI

 

HEVI was incorporated on January 14, 2020 under
the laws of the State of Delaware. HEVI is a wholly owned subsidiary of Greenland and promotes sales of sustainable alternative products
for the heavy industrial equipment industry, including electric industrial vehicles, in the North American market.

 

Hengyu Capital

 

Hengyu Capital is a limited liability company
registered on August 16, 2022 in Hong Kong. The main business of Hengyu Capital is to engage in investment management and consulting services.

 

 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND
SUBSIDIARIES

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 1 – ORGANIZATION AND PRINCIPAL ACTIVITIES (CONTINUED)

 

Greenland Holding Enterprises Inc.

 

Greenland Holding Enterprises Inc. is a holding
company registered on August 28, 2023 in the State of Delaware with no operations.

 

Details of the Company’s subsidiaries, which are included in
these unaudited consolidated financial statements as of March 31, 2026, are as follows:

 

Name  Domicile and
Date of
Incorporation  Paid-in
Capital  Ownership
Percentage   Principal Activities Zhongchai Holding (Hong Kong) Limited  Hong Kong
April 23, 2009  HKD 10,000   100%  Holding Zhejiang Zhongchai Machinery Co., Ltd.  PRC
November 21, 2005  RMB 20,000,000   89.47%  Manufacture, sale of various transmission boxes Hangzhou Greenland Energy Technologies Co., Ltd.  PRC
August 9, 2019  RMB 8,669,482   100%  Trading HEVI Corp.  Delaware
January 14, 2020  USD 6,363,557   100%  U.S. operation and distribution of electric industrial vehicles for North American market Hengyu Capital, Ltd  Hong Kong
August 16, 2022  HKD 10,000   62.5%  Investment management and consulting services Greenland Holding Enterprises Inc.  Delaware
August 28, 2023  USD 1   100%  Holding

 

NOTE 2 – SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The accompanying unaudited consolidated financial
statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”)
for information pursuant to the rules and regulations of the U.S. Securities and Exchange Commission.

 

Principles of Consolidation

 

The unaudited consolidated financial statements
are prepared in accordance with U.S. GAAP. The unaudited consolidated financial statements include the consolidated financial statements
of the Company and its subsidiaries, which include Hong Kong-registered entities and PRC-registered entities directly or indirectly owned
by the Company. All transactions and balances among the Company and its subsidiaries have been eliminated upon consolidation. The results
of subsidiaries acquired or disposed of are recorded in the consolidated income statements from the effective date of acquisition or up
to the effective date of disposal, as appropriate.

 

A subsidiary is an entity in which (i) the Company
directly or indirectly controls more than 50% of the voting power; or (ii) the Company has the power to appoint or remove the majority
of the members of the board of directors or to cast a majority of votes at the meetings of the board of directors or to govern the financial
and operating policies of the investee pursuant to a statute or under an agreement among the shareholders or equity holders.

 

 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND
SUBSIDIARIES

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)

 

Use of Estimates

 

The preparation of unaudited consolidated financial
statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities, disclosures of contingent assets and liabilities as of the date of the unaudited consolidated financial statements, and
the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing
basis, management reviews these estimates and assumptions in light of currently available information. In accordance with ASC 250, changes
in estimates resulting from changes in facts and circumstances are recognized in the period in which such changes occur. The Company bases
its estimates on past experience and on various other assumptions believed to be reasonable, the results of which form the basis for making
judgments about the carrying values of assets and liabilities. Estimates are used when accounting for matters including, but not limited
to, allowances for expected credit losses, inventory provisions, useful lives and impairment of long-lived assets, and valuation allowances
for deferred tax assets.

 

Non-controlling Interest

 

Non-controlling interests in the Company’s
subsidiaries are recorded in accordance with the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards
Codification 810 Consolidation (“ASC 810”) and are reported as a component of equity, separate from the parent’s equity.
Purchase or sale of equity interests that do not result in a change of control are accounted for as equity transactions. Results of operations
attributable to the non-controlling interest are included in our consolidated results of operations and, upon loss of control, the interest
sold, as well as interest retained, if any, will be reported at fair value with any gain or loss recognized in earnings.

 

Foreign Currency Translation

 

Since the Company operates primarily in the PRC,
the Company’s functional currency is the Renminbi (“RMB”). The Company’s consolidated financial statements have
been translated into the reporting currency of the United States Dollar (“USD”, “US$” or “$”). Assets
and liabilities of the Company are translated at the exchange rate at each reporting period end date. Equity is translated at the historical
exchange rate when the transaction occurs. Income and expense accounts are translated at the average rate of exchange during the reporting
period. The resulting translation adjustments are reported under other comprehensive income (loss). Gains and losses resulting from the
translation of foreign currency transactions and balances are reflected in the results of operations.

 

The exchange rates used to translate amounts in
RMB into USD for the purposes of preparing the audited consolidated financial statements or otherwise disclosed in this report
were as follows 

 

  
As of 

  
March 31,
2026  
December 31,
2025 

Period end RMB: US$ exchange rate 
 6.8980  
 6.9931 

 

  
For the three months ended
March 31, 

  
2026  
2025 

Period average RMB: US$ exchange rate 
 6.9218  
 7.2728 

 

The RMB is not freely convertible into foreign
currency and all foreign exchange transactions must take place through authorized institutions. The PRC government imposes significant
exchange restrictions on fund transfers out of the PRC that are not related to business operations.

 

Cash and Cash Equivalents

 

For financial reporting purposes, the Company
considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. The Company
maintains its bank accounts with various financial institutions primarily in mainland China and the U.S. The Company has not experienced
any losses in bank accounts. 

 

 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND
SUBSIDIARIES

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)

 

Restricted Cash

 

Restricted cash represents amounts held by a bank
as security for bank acceptance bills, as well as the financial product secured for the short-term bank loan and therefore is not available
for the Company’s use until such time as the bank acceptance notes and bank loans have been fulfilled or expired, normally within
a twelve-month period. 
 

The following represents a reconciliation of cash
and cash equivalents in the consolidated balance sheets to total cash, cash equivalents and restricted cash in the consolidated statements
of cash flows as of March 31, 2026 and December 31, 2025:

 

  
As of 

  
March 31,
2026  
December 31,
2025 

Cash and cash equivalents 
$10,392,136  
$7,775,330 

Restricted cash 
 215,041  
 71,540 

Cash, cash equivalents and restricted cash 
$10,607,177  
$7,846,870 

 

Fair Value of Financial Instruments

 

The Company applies the provisions of ASC 820, Fair
Value Measurements and Disclosures, to the financial instruments that are required to be carried at fair value. Fair value is the
price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market
for the asset or liability in an orderly transaction between market participants at the measurement date. The Company uses a three-tier
fair value hierarchy based upon observable and non-observable inputs that prioritizes the information used to develop our assumptions
regarding fair value. Fair value measurements are separately disclosed by level within the fair value hierarchy.

 

●Level
1—defined as observable inputs such as quoted prices in active markets for identical assets or liabilities;

 

●Level
2—defined as inputs other than quoted prices in active markets, that are either directly or indirectly observable; and

 

●Level
3—defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

 

The Company considers the carrying amounts of
its financial assets and liabilities, which consist primarily of cash and cash equivalents, short-term investments, accounts receivable,
notes receivable, amounts due from/to a related party, other receivables, fixed deposits, accounts payable, other payables, and warrant
liability, to approximate the fair values of the respective assets and liabilities as of March 31, 2026 and December 31, 2025, owing
to their short-term nature or present value characteristics. For note payable-bank acceptance notes, fair value approximates their carrying
value at year-end, as fair value is estimated using discounted cash flows in which the interest rates used to discount the host contracts
approximate market rates. For the three months ended March 31, 2026 and 2025, there were no transfers between different levels of inputs
used to measure fair value.

 

The following table summarizes the fair value
measurements of assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2026:

 

(amount in absolute value) 
Active Market
for Identical
Assets
(Level 1)  
Observable
Inputs
(Level 2)  
Unobservable
Inputs
(Level 3)  
Total
Carrying
Value 

Short term investment 
$

       –

  
 20,831,283  
 

–

  
$20,831,283 

Warrants liability 
 

–

  
 123,837  
 

     –

  
 123,837 

  
    
    
    
   

Total 
$

–

  
 20,955,120  
 

–

  
$20,955,120 

 

Accounts Receivable and Allowance for Expected Credit Losses

 

Accounts receivable are recorded at the gross
billing amount less an allowance for expected credit losses from the customers. Accounts receivable do not bear interest.

 

 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND
SUBSIDIARIES

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)

 

Effective January 1, 2023, the Company adopted
Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit
Losses on Financial Instruments (“ASU 2016-13”), using the modified retrospective transition method. ASU 2016-13 replaces
the existing incurred loss impairment model with an expected loss methodology, resulting in more timely recognition of credit losses.
Upon adoption, the Company changed its impairment model to utilize a forward-looking current expected credit losses (“CECL”)
model in place of the incurred loss methodology for financial instruments measured at amortized cost and receivables resulting from the
application of ASC 606, including contract assets.

 

The Company maintains an allowance for credit
losses in accordance with ASC Topic 326, Credit Losses (“ASC 326”), and records the allowance for credit losses as an
offset to accounts receivable and contract assets, with the estimated credit losses charged to the allowance in the consolidated statements
of operations and comprehensive income (loss). The Company assesses collectability by reviewing accounts receivable on a collective basis
where similar characteristics exist, primarily based on similar business lines, services, or product offerings, and on an individual basis
when the Company identifies specific customers with known disputes or collectability issues. In determining the amount of the allowance
for credit losses, the Company considers historical collectability based on past due status, the age of the accounts receivable balances
and contract asset balances, credit quality of the Company’s customers based on ongoing credit evaluations, current economic conditions,
reasonable and supportable forecasts of future economic conditions, and other factors that may affect the Company’s ability to collect
from customers.

 

Inventories

 

Inventories are stated at the lower of cost or
net realizable value. Cost is determined using the weighted average method and includes all costs of purchase, costs of conversion, and
other costs incurred in bringing the inventories to their present location and condition. Costs of purchase consist of the purchase price,
import duties, freight, handling, and other directly attributable costs, less trade discounts, rebates, and other similar items. Costs
of conversion include direct labor and a systematic allocation of fixed and variable production overheads incurred in converting raw materials
into finished goods. Other costs are included only to the extent they are incurred in bringing the inventories to their present location
and condition. Net realizable value is based on estimated selling prices in the ordinary course of business, less estimated costs of completion
and estimated costs necessary to make the sale. Cost of raw materials is calculated using the weighted average method and is based on
purchase cost. Work-in-progress and finished goods costs are determined using the weighted average method and comprise direct materials,
direct labor and an appropriate proportion of overhead.

 

Advance to Suppliers

 

Advance to suppliers represents interest-free
cash paid in advance to suppliers for purchases of parts and/or raw materials. The balance of advance to suppliers was $0.08 million as
of March 31, 2026 and December 31, 2025.

 

Property, Plant, and Equipment

 

Property, plant, and equipment are stated at cost
less accumulated depreciation, and include expenditure that substantially increases the useful lives of existing assets. Expenditures
for repairs and maintenance, which do not extend the useful life of the assets, are expensed as incurred.

 

Depreciation
is provided over their estimated useful lives, using the straight-line method. Estimated useful lives are as follows:

 

Buildings 
 20 years 

Machinery 
 2~10 years 

Motor vehicles 
 4 years 

Electronic equipment 
 3~5 years 

 

 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND
SUBSIDIARIES

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

The cost and related accumulated depreciation
of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the combined statements of income
and comprehensive income (loss). Expenditures for maintenance and repairs are charged to earnings as incurred, while additions, renewals
and betterments, which are expected to extend the useful life of assets, are capitalized. The Company also re-evaluates the periods of
depreciation to determine whether subsequent events and circumstances indicate a change in estimates of useful lives. No such events were
identified for the three months ended March 31, 2026 and 2025.

 

Construction in process

 

Property, plant, and equipment that are purchased
or constructed which require a period of time before the assets are ready for their intended use are accounted for as construction-in-progress.
Construction-in-progress is recorded at acquisition cost, including installation costs. Construction-in-progress is transferred to specific
property and equipment accounts and commences depreciation when these assets are ready for their intended use. 

 

Land Use Rights

 

According to the PRC laws, the government owns
all the land in the PRC. Companies or individuals are authorized to possess and use the land only through land use rights granted by the
Chinese government. The land use rights granted to the Company are being amortized using the straight-line method over the lease term
of fifty years.

 

Impairment of Long-Lived Assets

 

Long-lived assets are evaluated for impairment
periodically whenever events or changes in circumstances indicate that their related carrying amounts may not be recoverable in accordance
with FASB ASC 360, “Property, Plant and Equipment”.

 

In evaluating long-lived assets for recoverability,
the Company uses its best estimate of future cash flows expected to result from the use of the asset and eventual disposition in accordance
with FASB ASC 360-10-15. To the extent that estimated future, undiscounted cash inflows attributable to the asset, less estimated future,
undiscounted cash outflows, are less than the carrying amount, an impairment loss is recognized in an amount equal to the difference between
the carrying value of such asset and its fair value. Assets to be disposed of and for which there is a committed plan of disposal, whether
through sale or abandonment, are reported at the lower of carrying value or fair value less costs to sell. There was no impairment loss
recognized for the three months ended March 31, 2026 and 2025.

 

Operating leases

 

In February 2016, the FASB issued ASU 2016-02,
Leases (Topic 842), which is effective for annual reporting periods (including interim periods) beginning after December 15, 2018. The
Company adopted the Topic 842 on January 1, 2020 using a modified retrospective approach reflecting the application of the standard to
leases existing at, or entered after, the beginning of the earliest comparative period presented in the consolidated financial statements.

 

 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND
SUBSIDIARIES

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

The Company, through its subsidiary, leases its
assembly site, which are classified as operating leases in accordance with Topic 842. Operating leases are required to be recorded on
the balance sheet as right-of-use assets and lease liabilities, initially measured at the present value of the lease payments. The Company
has elected the package of practical expedients, which allows the Company not to reassess (1) whether any expired or existing contracts
as of the adoption date are or contain a lease, (2) lease classification for any expired or existing leases as of the adoption date, and
(3) initial direct costs for any expired or existing leases as of the adoption date. The Company elected the short-term lease exemption
for the lease terms that are 12 months or less.

 

At inception of a contract, the Company assesses
whether a contract is, or contains, a lease. A contract is or contains a lease if it conveys the right to control the use of an identified
asset for a period of time in exchange of a consideration. To assess whether a contract is or contains a lease, the Company assesses whether
the contract involves the use of an identified asset, whether it has the right to obtain substantially all the economic benefits from
the use of the asset and whether it has the right to control the use of the asset. The right-of-use assets and related lease liabilities
are recognized at the lease commencement date. The Company recognizes operating lease expenses on a straight-line basis over the lease
term and had no finance leases for any of the periods stated herein.

 

The right-of-use of asset is initially measured
at cost, which comprises the initial amount of the lease liabilities adjusted for any lease payments made at or before the commencement
date, plus any initial direct costs incurred and less any lease incentive received. All right-of-use assets are reviewed for impairment
annually. There was no impairment for right-of-use lease assets as of March 31, 2026 and December 31, 2025.

 

Revenue Recognition

 

In accordance with ASC Topic 606, “Revenue
from Contracts with Customers,” the Company recognizes revenues when goods or services are transferred to customers in an amount
that reflects the consideration which the Company expects to receive in exchange for those goods or services. In determining when and
how revenues are recognized from contracts with customers, the Company performs the following five-step analysis: (i) identification of
a contract with a customer; (ii) determination of performance obligations; (iii) measurement of the transaction price; (iv) allocation
of the transaction price to the performance obligations; and (v) recognition of revenues when (or as) the Company satisfies each performance
obligation.

 

Principal versus Agent Considerations

 

The Company acts as a principal, rather than as
an agent, in its revenue transactions. This determination is based on the Company’s assessment of control pursuant to ASC 606-10-55-36
through 55-40. The Company controls each specified good before it is transferred to the customer, as evidenced by the following indicators:

 

Primary responsibility for fulfillment: The
Company is primarily responsible for fulfilling the promise to provide products to customers, including with respect to product quality,
delivery, and acceptance. The Company handles all customer inquiries, complaints, returns, and warranty claims directly with customers.

 

Inventory risk: The Company bears inventory
risk prior to the transfer of goods to customers, including the risk of obsolescence, damage, and loss. The Company purchases raw materials,
manufactures finished goods, and holds inventory at its own facilities prior to the receipt of customer orders.

 

Pricing discretion: The Company has sole
discretion in establishing the prices charged to customers. Prices are determined based on the Company’s own cost structure, market
conditions, and pricing strategies, independently of any third-party suppliers.

 

 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND
SUBSIDIARIES

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

No intermediary role: The Company manufactures
its own products through its subsidiaries and sells them directly to customers. There are no arrangements pursuant to which another party
provides goods or services to the customer on the Company’s behalf.

 

Accordingly, the Company recognizes revenue on
a gross basis, presenting the full transaction price as revenue and the corresponding cost of goods sold as a separate line item
in the statements of operations.

 

Contracts with Customers and Performance Obligations

 

The Company’s contracts with customers are
primarily purchase orders for the sale of its transmission products. These contracts have commercial substance and are short-term in nature,
with a contract term of one year or less. The transaction price in these contracts is fixed, based on the agreed-upon unit price and quantity.
Payment is typically due within two months after the customer’s acceptance of the goods. The Company has concluded that the promise
to transfer each unit of product is the only performance obligation in these contracts. This promise is distinct, as the customer can
benefit from the product either on its own or together with other readily available resources, and the Company’s promise to transfer
the goods is separately identifiable from any other promises in the contract, pursuant to ASC 606-10-25-19. The Company’s standard
warranty is not assessed as a separate performance obligation as it does not provide a service beyond assuring that the product complies
with agreed-upon specifications.

 

Contract assets

 

A contract asset is the right to consideration
in exchange for goods or services transferred to the customer. If the Company performs by transferring goods or services to a customer
before the customer pays consideration or before payment is due, a contract asset is recognized for the earned consideration that remains
conditional upon factors other than the passage of time. The Company does not have contract assets for the years presented.

 

Contract liabilities

 

Contract liabilities represent consideration received
by the Company for which the related performance obligations have not yet been satisfied. Contract liabilities primarily consist of payments
received for the sale of products in advance of revenue recognition and deferred revenue related to government subsidies received prior
to the satisfaction of the associated qualifying conditions

 

The following table summarizes the movement in
contract liabilities during the three months ended March 31, 2026:

 

  
Contract
Liabilities  
Deferred
Revenue  
Total
Contract
Liabilities 

Beginning balance 
$93,698  
 1,083,784  
$1,177,482 

Additions 
 247,174  
 

–

  
 247,174 

Recognized as revenue during the period 
 (219,361) 
 (59,281) 
 (278,642)

Effect of foreign exchange change 
 1,264  
 14,738  
 16,002 

Ending balance 
$122,775  
 1,039,241  
$1,162,016 

 

 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND
SUBSIDIARIES

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Contract liabilities increased during the three
months ended March 31, 2026, primarily due to an increase in advance payments received from customers for orders not yet delivered. The
remaining balance of $122,775 as of March 31, 2026 represents deposits received for orders not yet delivered and is expected to be recognized
as revenue within the next twelve (12) months. The decrease in deferred revenue is primarily attributable to the recognition of grant
income upon satisfaction of the associated qualifying conditions during the period.

 

The Company derives revenues from the processing,
distribution and sale of its products. The Company recognizes its revenues net of value-added taxes (“VAT”). The Company is
subject to VAT at a rate of 13%. Output VAT is borne by customers in addition to the invoiced value of sales and input VAT is borne by
the Company in addition to the invoiced value of purchases to the extent not refunded for export sales.

 

Revenues are recognized at a point in time once
the Company has determined that the customer has obtained control over the product. Control is typically deemed to have been transferred
to the customer when the performance obligation is fulfilled, usually at the time of customers’ acceptance or consumption, at the
net sales price (transaction price) and each of the criteria under ASC 606 have been met. Contract terms may require the Company to deliver
the finished goods to the customers’ location or the customer may pick up the finished goods at the Company’s factory. Revenue
is recognized only upon the customer’s formal acknowledgement of receipt, as evidenced by a signed delivery acceptance document,
at which point the risks and rewards of goods are transferred to customers. International sales are recognized when shipment clears customs
and leaves the port. Payments due within two months after customers’ acceptance or consumption.

 

The Company adopted ASC 606 on January 1, 2018,
using the transition method of Modified-Retrospective Method. The adoption of ASC 606 had no impact on the Company’s beginning balance
of retained earnings.

 

The Company’s contracts are all short-term
in nature with a contract term of one year or less. Receivables are recorded when the Company has an unconditional right to consideration.

 

Contracts do not offer any price protection but
allow for the return of certain goods if there is a quality problem, which is standard warranty. The Company’s product returns and
recorded reserve for sales returns were minimal for the three months ended March 31, 2026 and 2025. The total sales return amount accounted
for around 0.07% and 0.06% of the total revenue for the three months ended March 31, 2026 and 2025.The total amount of warrant expenditures
accounted for around 0.09% and 0.41% of the total revenue for the three months ended March 31, 2026 and 2025, respectively.

 

 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND
SUBSIDIARIES

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

The following table sets forth disaggregation
of revenue:

 

  
For the three months ended
March 31, 

  
2026  
2025 

Major Product 
   
  

Transmission boxes for Forklift 
$24,916,044  
$20,929,412 

Transmission boxes for Non-Forklift (EV, etc.) 
 622,301  
 748,152 

Total 
$25,538,345  
$21,677,564 

 

Cost of Goods Sold

 

Cost of goods sold consists primarily of material
costs, freight charges, purchasing and receiving costs, inspection costs, internal transfer costs, wages, employee compensation, amortization,
depreciation and related costs, which are directly attributable to the production of products. Write-down of inventory to lower of cost
or net realizable value is also recorded in cost of goods sold.

 

Selling Expenses 

 

Selling expenses include operating expenses such
as payroll and traveling and transportation expenses. 

 

General and Administrative Expenses

 

General and administrative expenses include management
and office salaries and employee benefits, depreciation for office facility and office equipment, travel and entertainment, legal and
accounting, consulting fees and other office expenses.

 

Research and Development

 

Research and development costs are expensed as
incurred and totaled approximately $0.78 million and $0.08 million for the three months ended March 31, 2026 and 2025, respectively. Research
and development costs are incurred on a project specific basis.

 

Government Subsidies

 

Government subsidies are recognized when there
is reasonable assurance that the subsidy will be received and all attaching conditions will be complied with. When the subsidy relates
to an expense item, it is recognized as income over the periods necessary to match the subsidy on a systematic basis to the costs that
it is intended to compensate. Where the subsidy relates to an asset, it is recognized as other long-term liabilities and is released to
the statement of operations over the expected useful life in a consistent manner with the depreciation method for the relevant asset.
Total government subsidies recorded in the other long-term liabilities were $1.04 million and $1.08 million as of March 31, 2026 and December
31, 2025, respectively.

 

 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND
SUBSIDIARIES

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)

 

Income Taxes

 

The Company accounts for income taxes following
the liability method pursuant to FASB ASC 740 “Income Taxes”. Under this method, deferred tax assets and liabilities are determined
based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in
effect in the period in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax
assets if, based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets
will not be realized. The effect on deferred taxes of a change in tax rate is recognized in income in the period that includes the enactment
date.

 

The Company also follows FASB ASC 740, which addresses
the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the consolidated financial
statements. The Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position
will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized
in the consolidated financial statements from such a position should be measured based on the largest benefit that has a greater than
fifty percent likelihood of being realized upon ultimate settlement. ASC 740 also provides guidance on recognition, classification, interest
and penalties on income taxes, accounting in interim periods and requires increased disclosures. As of March 31, 2026 and December 31,
2025, the Company did not have a liability for unrecognized tax benefits. It is the Company’s policy to include penalties and interest
expense related to income taxes as a component of other expense and interest expense, respectively, as necessary. The Company’s
historical tax years will remain open for examination by the local authorities until the statute of limitations has passed.

 

Value-Added Tax

 

Enterprises or individuals, who sell commodities,
engage in repair and maintenance or import or export goods in the PRC are subject to a value added tax in accordance with PRC Laws. The
standard VAT rate is 13%. A credit is available whereby VAT paid on the purchases of semi-finished products or raw materials used in the
production of the Company’s finished products can be used to offset the VAT due on the sales of the finished products.

 

Statutory Reserve

 

In accordance with the PRC Regulations on Enterprises
with Foreign Investment, an enterprise established in the PRC with foreign investment is required to provide for certain statutory reserves,
namely (i) a General Reserve Fund, (ii) an Enterprise Expansion Fund and (iii) a Staff Welfare and Bonus Fund, which are appropriated
from net profit as reported in the enterprise’s PRC statutory accounts. A wholly owned foreign enterprise is required to allocate
at least 10% of its annual after-tax profit to the General Reserve Fund until the balance of such fund has reached 50% of its respective
registered capital. A non-wholly owned foreign invested enterprise is permitted to provide for the above allocation at the discretion
of its board of directors. Appropriations to the Enterprise Expansion Fund and Staff Welfare and Bonus Fund are at the discretion of the
board of directors for all foreign invested enterprises. The reserves can only be used for specific purposes and are not distributable
as cash dividends.

 

Comprehensive Income (Loss)

 

Comprehensive income (loss) is defined as the
change in equity during the year from transactions and other events, excluding the changes resulting from investments by owners and distributions
to owners, and is not included in the computation of income tax expense or benefit. Accumulated comprehensive income consists of foreign
currency translation. The Company presents comprehensive income (loss) in accordance with ASC Topic 220, “Comprehensive Income”.

 

 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND
SUBSIDIARIES

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)

 

Earnings per share

 

The Company calculates earnings per share in accordance
with ASC Topic 260 “Earnings per Share.” Basic earnings per share is computed by dividing the net income(loss) attributable
to Greenland Technologies Holding Corporation, by the weighted average number of ordinary shares outstanding during the period. Diluted
earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional
ordinary shares that would have been outstanding if the potential ordinary shares equivalents had been issued and if the additional ordinary
shares were dilutive.

 

Segments and Related Information

 

An operating segment is a component of the Company
that engages in business activities from which it may earn revenue and incur expenses, and is identified on the basis of internal financial
reports provided to and regularly reviewed by the Company’s chief operating decision maker in order to allocate resources and assess
the performance of the segment.

 

In accordance with ASC 280, Segment Reporting,
operating 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”), in deciding how to allocate resources and in assessing performance.
The Company’s revenue segments have similar economic characteristics and they are managed as a single business unit. The Company
uses the “management approach” in determining reportable operating segments. The management approach considers the internal
organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance
as the source for determining the Company’s reportable segments. The Company’s CODM has been identified as the chief executive
officer (the “CEO”), who reviews consolidated results when making decisions about allocating resources and assessing performance
of the Company. The Company has determined that there is only one reportable operating segment. 

 

Commitments and contingencies

 

In the normal course of business, the Company
is subject to contingencies, including legal proceedings and environmental claims arising out of the normal course of businesses that
relate to a wide range of matters, including among others, contracts breach liability. The Company records accruals for such contingencies
based upon the assessment of the probability of occurrence and, where determinable, an estimate of the liability. Management may consider
many factors in making these assessments including past history, scientific evidence and the specifics of each matter. The Company’s
management has evaluated all such proceedings and claims that existed as of March 31, 2026 and December 31, 2025. Normal course of businesses
that relate to a wide range of matters, including among others, contracts breach liability. The Company records accruals for such contingencies
based upon the assessment of the probability of occurrence and, where determinable, an estimate of the liability. Management may consider
many factors in making these assessments including past history, scientific evidence and the specifics of each matter. The Company’s
management has evaluated all such proceedings and claims that existed as of March 31, 2026 and December 31, 2025.

 

Related Party

 

In general, related parties exist when there is
a relationship that offers the potential for transactions at less than arm’s-length, favorable treatment, or the ability to influence
the outcome of events different from that outcome which might result in the absence of that relationship. A related party may be any of
the following: a) an affiliate, which is a party that directly or indirectly controls, is controlled by, or is under common control with
another party; b) a principle owner, owner of record or known beneficial owner of more than 10% of the voting interest of an entity; c)
management, which are persons having responsibility for achieving objectives of the entity and requisite authority to make decision; d)
immediate family of management or principal owners; e) a parent company and its subsidiaries; f) other parties that have ability to significant
influence the management or operating policies of the entity; and g) other parties that can significantly influence the management or
operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly
influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its or their own separate
interests. The Company discloses all significant related party transactions

 

 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND
SUBSIDIARIES

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)

 

Warrants

 

The Company accounts for warrants as either equity-classified
or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance
in the ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”).
Management’s assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, whether they
meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification
under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares and whether the warrant holders could
potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions
for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance
and as of each subsequent quarterly period-end date while the warrants are outstanding.

 

For issued or modified warrants that meet all
of the criteria for equity classification, they are recorded as a component of additional paid-in capital at the time of issuance. For
issued or modified warrants that do not meet all the criteria for equity classification, they are recorded as warrant liability at their
initial fair value on the date of issuance and subject to remeasurement each balance sheet date with changes in the estimated fair value
of the warrants to be recognized as a non-cash gain or loss in the statement of operations and comprehensive income.

 

Uncertainty and Risks

 

Credit Risk

 

Assets that potentially subject the Company to
significant concentration of credit risk primarily consist of cash and cash equivalents. The maximum exposure of such assets to credit
risk is their carrying amount as at the balance sheet dates. As of March 31, 2026, cash and cash equivalents of $40,412,787 were deposited
in financial institutions in the PRC, and each bank account is insured by the PRC government with the maximum limit of RMB500,000 (equivalent
$69,800). To limit exposure to credit risk relating to deposits, the Company primarily places cash and cash equivalent with large financial
institutions in China which management believes are of high credit quality and the Company also continually monitors their credit worthiness.

 

A significant portion of the Company’s operations
are conducted in the PRC. Accordingly, the Company’s business, financial condition and results of operations may be influenced by
the political, economic and legal environments in the PRC as well as by the general state of the PRC’s economy. In addition, the
Company’s business may be influenced by changes in governmental policies with respect to laws and regulations, anti-inflationary
measures, currency conversion and remittance abroad, rates and methods of taxation among other factors.

 

Currency Exchange Risk

 

The Company cannot guarantee that the current
exchange rate will remain steady. Therefore, there is a possibility that the Company could post the same amount of profit for two comparable
periods and yet, because of the fluctuating exchange rate, record higher or lower profit depending on exchange rate of RMB converted to
U.S. dollars on the relevant dates. The exchange rate could fluctuate depending on changes in the political and economic environment without
notice.

 

Concentration risks

 

Accounts receivable are typically unsecured and
derived from goods sold to customers that are located primarily in China, thereby exposed to credit risk. The risk is mitigated by the
Company’s assessment of customers’ creditworthiness and its ongoing monitoring of outstanding balances. The Company has a
concentration of its receivables with specific customers. As of March 31, 2026, one customer accounted for 16.44% of the Company’s
total accounts receivable. As of December 31, 2025, three customers accounted for 11.24%, 10.24% and 10.12% of the Company’s
total accounts receivable, respectively. No other customers accounted for more than 10% of the Company’s total accounts receivable
as of March 31, 2026 and December 31, 2025.

 

 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND
SUBSIDIARIES

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

For the three months ended March 31, 2026,
one customer accounted for 16.69% of the Company’s total revenue. For the three months ended March 31, 2025, one customer accounted
for 17.77% of the Company’s total revenue. No other customers accounted for more than 10% of the Company’s total revenue for
the three months ended March 31, 2026 and 2025.

 

There were no suppliers representing more than
10% of the Company’s total purchases for the three months ended March 31, 2026 and 2025.

 

Recently Issued Accounting Pronouncements

 

Recent accounting pronouncements that the Company
has adopted or may be required to adopt in the future are summarized below:

 

In November 2024, the FASB issued ASU 2024-03, Income
Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement
Expenses, which requires incremental disclosures about specific expense categories, including purchases of inventory, employee compensation,
depreciation, amortization, and selling expenses. The amendments are effective for fiscal years beginning after December 15, 2026, and
for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted, and the amendments may be applied
either prospectively or retrospectively. Management is currently evaluating this ASU to determine its impact on the Company’s disclosures.

 

In January 2025, the FASB issued ASU 2025-01,
Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40). The FASB issued ASU
2024-03 on November 4, 2024. ASU 2024-03 states that the amendments are effective for public business entities for annual reporting periods
beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Following the issuance of ASU 2024-03,
the FASB was asked to clarify the initial effective date for entities that do not have an annual reporting period that ends on December
31 (referred to as non-calendar year-end entities). Because of how the effective date guidance was written, a non-calendar year-end entity
may have concluded that it would be required to initially adopt the disclosure requirements in ASU 2024-03 in an interim reporting period,
rather than in an annual reporting period. The FASB’s intent in the basis for conclusions of ASU 2024-03 is clear that all public
business entities should initially adopt the disclosure requirements in the first annual reporting period beginning after December 15,
2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027.

 

In February 2025, the FASB issued ASU 2025-02,
Liabilities (Topic 405): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 122 (“ASU 2025-02”), which
amends the Accounting Standards Codification to remove the text of SEC Staff Accounting Bulletin (“SAB”) 121, “Accounting
for Obligations to Safeguard Crypto-Assets an Entity Holds for its Platform Users,” as it has been rescinded by the issuance of
SAB 122. ASU 2025-02 is effective immediately and is not expected to have a material impact on the Company’s consolidated financial
statements.

 

In April 2025, the FASB issued ASU 2025-04, Compensation—Stock
Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606): Clarifications to Share-Based Consideration Payable to
a Customer, which revises the definition of “performance condition” for share-based consideration payable to a customer, eliminates
the forfeiture policy election for awards granted to customers (unless granted in exchange for a distinct good or service), and clarifies
the applicability of the variable consideration constraint. The amendments are effective for annual reporting periods (including interim
periods within annual reporting periods) beginning after December 15, 2026, for all entities. Early adoption is permitted for both interim
and annual consolidated financial statements that have not yet been issued. The Company is currently evaluating the impact of the adoption
of this guidance.

 

 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND
SUBSIDIARIES

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)

 

In July 2025, the FASB issued ASU 2025-05, Financial
Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which introduces
a practical expedient for all entities and an accounting policy election for entities other than public business entities to simplify
the estimation of expected credit losses for current accounts receivable and current contract assets arising from revenue contracts under
Topic 606. The practical expedient allows entities to assume that current conditions as of the balance sheet date remain unchanged for
the remaining life of the asset, thereby reducing the need for complex macroeconomic forecasts. The amendments are effective for annual
periods beginning after December 15, 2025, with early adoption permitted. The Company is currently evaluating the impact of the adoption
of this guidance.

 

In September 2025, the FASB issued ASU 2025-06,
Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use
Software (“ASU 2025-06”). ASU 2025-06 modernizes the accounting for internal-use software costs by removing all references
to prescriptive software development stages and introducing a single capitalization threshold based on management’s authorization
of and commitment to fund the project and the probability of its completion. The amendments also incorporate website development cost
guidance into Subtopic 350-40 and clarify the related disclosure requirements. The new guidance is effective for annual periods beginning
after December 15, 2027, with early adoption permitted. Entities may apply the amendments prospectively, retrospectively, or using a modified
transition approach. The Company is currently evaluating the impact of the adoption of ASU 2025-06 on its financial statements and disclosures.

 

In November 2025, the FASB issued ASU 2025-08,
Financial Instruments—Credit Losses (Topic 326): Purchased Loans (“ASU 2025-08”), which expands the gross-up approach
to most acquired loans. The amendments are effective for fiscal years beginning after December 15, 2026, and for interim periods within
those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of ASU 2025-08 on its
consolidated financial statements and disclosures.

 

In December 2025, the FASB issued ASU 2025-10,
Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities (“ASU 2025-10”). The amendments
are effective for fiscal years beginning after December 15, 2029, and for interim periods within those fiscal years. Early adoption is
permitted. The Company is currently evaluating the impact of the adoption of ASU 2025-10 on its consolidated financial statements and
disclosures.

 

In December 2025, the FASB issued ASU 2025-11,
Interim Reporting (Topic 270): Narrow-Scope Improvements (“ASU 2025-11”). The amendments are effective for interim periods
within fiscal years beginning after December 15, 2028. Early adoption is permitted. The Company is currently evaluating the impact of
the adoption of ASU 2025-11 on its consolidated financial statements and disclosures.

 

In December 2025, the FASB issued ASU 2025-13,
Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606): Derivatives Scope Refinements and Scope Clarification
for Share-Based Noncash Consideration from a Customer in a Revenue Contract (“ASU 2025-13”). The amendments are effective
for fiscal years beginning after December 15, 2026, and for interim periods within those fiscal years. Early adoption is permitted. The
Company is currently evaluating the impact of the adoption of ASU 2025-13 on its consolidated financial statements and disclosures.

 

Other accounting standards that have been issued
by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements
upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on, or are unrelated to,
its consolidated financial condition, results of operations, cash flows or disclosures.

 

NOTE 3 – SHORT TERM INVESTMENT

 

As of March 31, 2026 and December 31, 2025, the
Company’s short-term investment amounted to $20,831,283 and $24,454,701, respectively. During the three months ended March 31, 2026,
the Company purchased bank management products in a total amount of $20,399,318 (RMB141,200,000). As of March 31, 2026, the fair value
of the Company’s bank management products was $20,831,283(RMB143,694,193).

 

 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND
SUBSIDIARIES

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS

 

NOTE 4 – CONCENTRATION ON REVENUES AND
COST OF GOODS SOLD

 

Concentration of major customers and suppliers:

 

  
For the three months ended March
31, 

  
2026  
2025 

Major customers representing more than 10% of the Company’s revenues 
   
   
   
  

Company A 
$4,261,930  
 16.69% 
$3,852,468  
 17.77%

Total Revenues 
$4,261,930  
 16.69% 
$3,852,468  
 17.77%

 

  
As of 

  
March 31, 2026  
December 31, 2025 

Major customers of the Company’s accounts receivable, net 
   
   
   
  

Company A 
 4,256,213  
 16.44% 
 1,745,719  
 10.12%

Company B 
 2,045,479  
 7.90% 
 1,939,540  
 11.24%

Company C 
 1,329,210  
 5.14% 
 592,957  
 3.44%

Company D 
 1,251,819  
 4.84% 
 681,865  
 3.95%

Company E 
 1,192,724  
 4.61% 
 1,380,095  
 8.00%

Company F 
 938,393  
 3.63% 
 723,683  
 4.19%

Company G 
 877,115  
 3.39% 
 1,766,799  
 10.24%

Total 
$11,890,953  
 45.95% 
$8,830,658  
 51.18%

 

Accounts receivable from the Company’s major
customers accounted for 45.95% and 51.18% of total accounts receivable balances as of March 31, 2026 and December 31, 2025, respectively.

 

There were no suppliers representing more than
10% of the Company’s total purchases for the three months ended March 31, 2026 and 2025, respectively.

 

NOTE 5 – ACCOUNTS RECEIVABLE, NET

 

Accounts receivable is net of allowance for expected credit losses.

 

  
As of 

  
March 31,
2026  
December 31,
2025 

Accounts receivable 
$25,901,491  
$17,272,509 

Less: allowance for expected credit losses 
 (16,251) 
 (16,030)

Accounts receivable, net 
$25,885,240  
$17,256,479 

 

Changes in the allowance for expected credit losses
are as follows:

 

  

For
the
three months

ended
March 31,
2026

  

For
the
Year Ended

December 31,

2025

 

  
   
  

Beginning balance 
$16,030  
$

–

 

Additional provision charged to expense 
 

–

  
 15,596 

Effect of foreign exchange change 
 221  
 434 

Ending balance 
$16,251  
$16,030 

 

 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND
SUBSIDIARIES

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 6 – INVENTORIES, NET

 

As of March 31, 2026 and December 31, 2025, inventories
consisted of the following

 

  
As of 

  
March 31,
2026  
December 31,
2025 

Raw materials 
$10,490,073  
$10,165,798 

Revolving material 
 1,218,866  
 1,172,449 

Consigned processing material 
 54,744  
 28,671 

Work-in-progress 
 2,599,322  
 2,334,681 

Finished goods 
 12,968,469  
 12,290,156 

Less: inventory impairment 
 (1,628,118) 
 (1,614,719)

Inventories, net 
$25,703,356  
$24,377,036 

 

Changes in the inventory reserves are as follows:

 

 
 
For the
three months
ended
March 31,
2026
 
 
For the
Year Ended
December 31,
2025
 

Beginning balance
 
$
1,614,719
 
 
$
541,421
 

Inventory write-downs
 
 

–

 
 
 
1,042,942
 

Effect of foreign exchange change
 
 
13,399
 
 
 
30,356
 

Ending balance
 
$
1,628,118
 
 
$
1,614,719
 

 

NOTE 7 – NOTES RECEIVABLE

 

  
As of 

  
March 31, 2026  
December 31,
2025 

Bank notes receivable: 
$17,391,123  
$12,547,551 

Commercial notes receivable 
 1,342,246  
 2,156,528 

Total 
$18,733,369  
$14,704,079 

 

Bank notes and commercial notes are means of payment
from customers for the purchase of the Company’s products and are issued by financial institutions or business entities, respectively,
that entitle the Company to receive the full nominal amount from the issuers at maturity, which bear no interest and generally range from
three to nine months from the date of issuance. As of March 31, 2026, the Company pledged notes receivable for an aggregate amount of
$5.88 million to Bank of Hangzhou as a means of security for issuance of bank acceptance notes in an aggregate amount of $2.50 million.
As of December 31, 2025, the Company pledged notes receivable for an aggregate amount of $3.43 million to Bank of Hangzhou as a means
of security for issuance of bank acceptance notes in an aggregate amount of $2.47 million. The Company expects to collect notes receivable
within 6 months after the issuance date of bank acceptance notes. All notes receivable outstanding as of March 31, 2026 have been or are
expected to be collected in full prior to their respective maturity dates.

  

Due to the short term, high-quality credit rating
of these commercial banks and no losses have occurred in history, for the three months ended March 31, 2026 and 2025, the Company had
no allowance for expected credit losses for notes receivable.

 

 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND
SUBSIDIARIES

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

  

NOTE 8 – PROPERTY, PLANT AND EQUIPMENT, NET

 

(a) As of March 31, 2026 and December 31, 2025, property, plant and
equipment consisted of the following:

 

  
As of 

  
March 31, 2026  
December 31,
2025 

Buildings 
$11,779,891  
$11,619,695 

Machinery 
 23,965,309  
 23,471,775 

Motor vehicles 
 347,658  
 342,931 

Electronic equipment 
 294,970  
 289,246 

Total property plant and equipment, at cost 
 36,387,828  
 35,723,647 

  
    
   

Less: accumulated depreciation 
 (24,641,585) 
 (23,834,500)

Property, plant and equipment, net 
$11,746,243  
$11,889,147 

   

For the three months ended March 31, 2026 and
2025, depreciation expense amounted to $0.48 million and $0.47 million, respectively, of which $0.31 million and $0.27 million, respectively,
was included in cost of revenue and inventories, and the remainder was included in general and administrative expense, respectively.

 

For the three months ended March 31, 2026 and
2025, nil and nil of construction-in-progress was converted into property, plant and equipment.

 

NOTE 9 – LAND USE RIGHTS

 

Land use rights consisted of the following:

 

  
As of 

  
March 31, 2026  
December 31,
2025 

Land use rights, cost 
$4,460,221  
$4,399,566 

Less: Accumulated amortization 
 (1,111,491) 
 (1,074,378)

Land use rights, net 
$3,348,730  
$3,325,188 

 

Estimated future amortization expense is as follows as of March 31,
2026:

 

Years ending March 31, 
Amortization
expense 

2027 
$88,898 

2028 
 88,898 

2029 
 88,898 

2030 
 88,898 

2031 
 88,898 

Thereafter 
 2,904,240 

Total 
$3,348,730 

 

 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND
SUBSIDIARIES

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS

 

NOTE 10 – FIXED DEPOSIT

 

As of March 31, 2026 and December 31, 2025, fixed
deposit consisted of the following:

 

 

  
As of 

  
March 31, 2026  
December 31,
2025 

Three-year bank deposit-current 
$1,500,264  
$2,966,386 

Three-year bank deposit-non current 
 7,474,063  
 4,421,828 

Total 
$8,974,327  
$7,388,214 

 

All fixed deposits were deposited in local banks
in the PRC, each with a deposit term of three years. As of March 31, 2026, the Company had four outstanding term deposits with the following
maturity dates and annual interest rates:

 

(1) approximately $1.47 million with China Zheshang Bank, maturing on December 5, 2028, bearing interest at 1.90% per annum;

 

(2) approximately $1.52 million with China Zheshang Bank, maturing on June 27, 2027, bearing interest at 2.60% per annum;

 

(3) approximately $3.03 million with China Zheshang Bank, maturing on September 27, 2027, bearing interest at 2.40% per annum;

 

(4) approximately $1.50 million with Bank of Ningbo, maturing on September 21, 2026, bearing interest at 3.00% per annum.

 

(5) approximately $1.46 million with Bank of Ningbo, maturing on January 15, 2029, bearing interest at 3.00% per annum.

 

NOTE 11 – NOTES PAYABLE

 

  
As of 

  
March 31,
2026  
December 31,
2025 

Bank acceptance notes 
$16,440,997  
$12,759,720 

Total 
$16,440,997  
$12,759,720 

 

The interest-free notes payable, ranging from
six months to one year from the date of issuance, were secured by $0.22 million and $0.07 million restricted cash, and $5.88 million and
$3.43 million notes receivable, as of March 31, 2026 and December 31, 2025, respectively.

 

All the notes payable are subject to bank charges
of 0.05% of the principal amount as commission, included in the financial expenses in the statement of operations, on each loan transaction. The
notes payable bears no interests.

 

NOTE 12 – ACCOUNTS PAYABLE

 

Accounts payable are summarized as follow: 

 

  
As of 

  
March 31,
2026  
December 31,
2025 

Procurement of Materials 
$33,029,726  
$25,213,713 

Infrastructure& Equipment 
 211,605  
 113,793 

Freight fee 
 324,085  
 277,411 

Total 
$33,565,416  
$25,604,917 

 

 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND
SUBSIDIARIES

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 13 – OTHER CURRENT LIABILITIES

 

Other current liabilities are summarized as follow:

 

  
As of 

  
March 31, 2026  
December 31,
2025 

Employee payables 
 102,842  
 909,168 

Other tax payables 
 433,113  
 178,399 

Other payable* 
 404,095  
 248,565 

Accrued expenses 
 177,566  
 301,134 

Accrued after-sales service fee 
 398,726  
 1,304,605 

Total 
$1,516,342  
$2,941,871 

 

 

NOTE 14 – DEFERRED REVENUE

 

Deferred revenue is summarized as follow:

 

  
As of 

  
March 31, 2026  
December 31,
2025 

Subsidy 
 1,039,241  
 1,083,784 

Total 
$1,039,241  
$1,083,784 

 

Changes in the deferred revenue are as follows:

 

 
 
For the
three months
ended
March 31,
2026
 
 
For the
Year Ended
December 31,
2025
 

Beginning balance
 
$
1,083,784
 
 
$
1,263,180
 

Recognized as revenue during the year
 
 
(59,281
)
 
 
(228,357
)

Effect of foreign exchange change
 
 
14,738  
 
 
 
48,961
 

Ending balance
 
$
1,039,241
 
 
$
1,083,784
 

 

Subsidy mainly consists of an incentive granted
by the Chinese government to encourage transformation of fixed assets in China and other miscellaneous subsidy from the Chinese government. As
of March 31, 2026, grant income decreased by $0.22 million, as compared to December 31, 2025. The change was mainly due to timing of incurring
qualifying expenses.

 

 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND
SUBSIDIARIES

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 15 – WARRANT LIABILITY

 

The Company accounts for warrants as either equity-classified
or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance
in FASBASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815. The assessment considers whether the warrants
are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants
meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s
own ordinary shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside
of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional
judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

 

For issued or modified warrants that meet all
of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the
time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required
to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair
value of the warrants are recognized as a non-cash gain or loss on the statements of operations.

 

In connection with the registered direct offering
closed on July 27, 2022, the Company issued to an investor a warrant to purchase up to 4,530,000 ordinary shares at an exercise price
of $4.49 per share. The warrant became exercisable on January 27, 2023 and will expire on January 26, 2028.

 

The warrants meet the definition of a derivative
under FASB ASC 815, as the Company cannot avoid a net cash settlement under certain circumstances. The fair value of the warrant liabilities
was measured using a Black–Scholes model. Significant inputs into the model as of the reporting period begin remeasurement dates,
and as of the reporting period end remeasurement dates are as follows:

 

  
Ordinary Share
Warrants  
Ordinary Share
Warrants 

  
March 31,
2026  
December 31,
2025 

  
   
  

Share price 
$0.70  
$0.61 

Exercise price 
$4.49  
$4.49 

Expected term (years) 
 0.91  
 1.04 

Risk-free interest rate 
 34% 
 3.5%

Expected volatility 
 110.00% 
 100.00%

 

The warrants outstanding and fair values at each
of the respective valuation dates are summarized below:

 

  
As of 

  
March 31,
2026  
December 31,
2025 

Number of ordinary share warrants 
 4,530,000  
 4,530,000 

Fair value of the warrants 
$123,837  
$70,910 

 

The fair value of the warrants was classified
as a liability of $70,910 as of December 31, 2025. For the three months ended March 31, 2026, the Company recognized a loss of $52,927
for the investor warrant from the change in fair value of the warrant liability. As a result, the warrant liability is carried on the
consolidated balance sheets at the fair value of $123,837 for the investor warrant, collectively, as of March 31, 2026.

 

 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND
SUBSIDIARIES

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 16 – SHAREHOLDER’S EQUITY

 

Preferred Shares — The
Company is authorized to issue an unlimited number of no par value preferred shares, divided into five classes, Class A through Class
E, each with such designation, rights and preferences as may be determined by a resolution of the Company’s board of directors to
amend the Memorandum and Articles of Association to create such designations, rights and preferences. The Company has five classes of
preferred shares to give the Company flexibility as to the terms on which each class is issued. All shares of a single class must be issued
with the same rights and obligations. Accordingly, starting with five classes of preferred shares will allow the Company to issue shares
at different times on different terms. As of March 31, 2026 and December 31, 2025, there were no preferred shares designated, issued or
outstanding.

 

Ordinary Shares — The
Company is authorized to issue an unlimited number of ordinary shares of no par value, divided into two classes: Class A Ordinary Shares,
each carrying one vote per share, and Class B Ordinary Shares, each carrying twenty-five votes per share. As of March 31, 2026, there
were 20,532,482 Class A ordinary shares and 6,011,740 Class B ordinary shares issued and outstanding. Accordingly, the total voting power
of the Company as of March 31, 2026 was 170,826,982 votes. Trendway Capital Limited, which is controlled and beneficially owned by Mr.
Peter Zuguang Wang, the chairman of the Company’s board of directors, held 100% of the outstanding Class B ordinary shares, representing
150,293,500 votes, or approximately 88.0% of the total voting power of the Company. As a result, Mr. Wang has the ability to control the
outcome of matters submitted to a vote of the Company’s shareholders, including the election of directors and significant corporate
transactions, without the consent of the holders of Class A ordinary shares.

 

On January 28, 2026, the Company entered into
an underwriting agreement with Joseph Stone Capital, LLC, as sole underwriter, pursuant to which the Company agreed to sell 5,083,330
units (the “Units”) at a public offering price of $1.20 per Unit. Each Unit consisted of one ordinary share of the Company
and four-fifths of one warrant (each, a “January 2026 Warrant”), with each whole January 2026 Warrant exercisable for one
ordinary share at an exercise price of $1.20 per share, or by means of a zero price exercise, and expiring three years from the date of
issuance. The ordinary shares and January 2026 Warrants included in the Units were immediately separable and were issued separately. The
offering closed on January 29, 2026, and the Company received gross proceeds of approximately $6.1 million, before deducting underwriting
discounts and other offering expenses.

 

On January 30, 2026, the Company re-convened its
2025 annual general meeting of shareholders (the “2025 Annual General Meeting”). At the 2025 Annual General Meeting, the shareholders
of the Company approved, among other matters: (i) the adoption of amended and restated Memorandum and Articles of Association; (ii) the
implementation of a dual class share structure, pursuant to which the ordinary shares of the Company were re-designated into Class A ordinary
shares of no par value, carrying one vote per share, and Class B ordinary shares of no par value, carrying 25 votes per share; and (iii)
the reclassification of each of the issued and outstanding ordinary shares held by Trendway Capital Limited as Class B ordinary shares,
and the reclassification of all remaining issued and outstanding ordinary shares as Class A ordinary shares. On February 24, 2026, the
dual-class share structure became effective on the Nasdaq Capital Market.

 

Rights

 

Each Class A Ordinary Share confers upon the holder
one vote at a meeting of the Members or on any Resolution of Members, while each Class B Ordinary Share confers upon the holder twenty-five
votes. Both classes of Ordinary Shares have identical economic rights, entitling the holder to an equal share with each other Ordinary
Share in any dividend paid by the Company and in the distribution of the surplus assets of the Company on its liquidation.

 

 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND
SUBSIDIARIES

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 16 – SHAREHOLDER’S EQUITY (CONTINUED)

 

Conversion

 

In accordance with the Memorandum of Association,
Class A Ordinary Shares are not convertible into Class B Ordinary Shares under any circumstance, while each Class B Ordinary Share is
convertible into one Class A Ordinary Share at any time by the holder thereof, and upon any sale, transfer, assignment or disposition
of any Class B Ordinary Shares by a holder thereof to any person who is not an affiliate of such holder, each of such Class B Ordinary
Shares will be automatically and immediately converted into one Class A Ordinary Share. Class A Ordinary Shares are freely transferable.

  

Warrants — Redeemable
warrants sold as part of the units in the Company’s initial public offering, or the Public Warrants (together with the Private Warrants
(as defined below), the “Warrants”) may only be exercised for a whole number of shares. No fractional shares were issued upon
exercise of the Public Warrants. The Public Warrants were exercisable from October 24, 2019 to October 24, 2024, a total of five years
from the consummation of the Business Combination.

 

Private warrants included (i) the 282,000 warrants
underlying the units issued to Greenland Asset Management Corporation (the “Sponsor”) and Chardan Capital Markets, LLC (“Chardan”)
in a private placement in connection with our initial public offering (“Private Unit Warrants”), and (ii) 120,000 warrants
held by Chardan upon the exercise of its unit purchase option to purchase 120,000 units in March 2021 (“Option Warrants,”
together with Private Unit Warrants, the “Private Warrants”). The Private Warrants are identical to the Public Warrants underlying
the units sold in the Initial Public Offering, except that the Private Warrants and the ordinary shares issuable upon the exercise of
the Private Warrants are not transferable, assignable or saleable until 30 days after the completion of a Business Combination, subject
to certain limited exceptions. Additionally, the Private Warrants were exercisable on a cashless basis and are non-redeemable so long
as they are held by the initial purchasers or their permitted transferees. If the Private Warrants were held by someone other than the
initial purchasers or their permitted transferees, the Private Warrants would be redeemable by the Company and exercisable by such holders
on the same basis as the Public Warrants. The Private Warrants expired concurrently with the Public Warrants on October 24, 2024, and
accordingly no Private Warrants remain outstanding.

 

On January 28, 2026, the Company entered into
an underwriting agreement with Joseph Stone Capital, LLC, as sole underwriter, pursuant to which the Company agreed to sell 5,083,330
units (the “Units”) at a public offering price of $1.20 per Unit. Each Unit consisted of one ordinary share of the Company
and four-fifths of one warrant (each, a “January 2026 Warrant”), with each whole January 2026 Warrant exercisable for one
ordinary share at an exercise price of $1.20 per share, or by means of a zero price exercise, and expiring three years from the date of
issuance. The ordinary shares and January 2026 Warrants included in the Units were immediately separable and were issued separately. The
offering closed on January 29, 2026, and the Company received gross proceeds of approximately $6.1 million, before deducting underwriting
discounts and other offering expenses.

 

As of March 31, 2026, there were no warrants outstanding.

 

 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND
SUBSIDIARIES

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 17 – EARNINGS PER SHARE

 

The Company reports earnings per share in accordance
with the provisions of the FASB’s related accounting standard. This standard requires presentation of basic and diluted earnings
per share in conjunction with the disclosure of the methodology used in computing such earnings per share. Basic earnings per share excludes
dilution, but includes vested restricted stocks and is computed by dividing income available to shareholders by the weighted average ordinary
shares outstanding during the period. Diluted earnings per share takes into account the potential dilution that could occur if securities
or other contracts to issue ordinary shares were exercised and converted into ordinary shares.

 

The following is a reconciliation of the basic
and diluted earnings per share computation:

 

  
For the three months ended
March 31, 

  
2026  
2025 

Net income attributable to Greenland Technologies Holding Corporation and subsidiaries 
$5,000,480  
$4,003,783 

Weighted average basic and diluted computation shares outstanding: 
    
   

Weighted average shares used in basic computation 
 21,753,958  
 13,594,530 

Diluted effect of stock options and warrants 
 

—

  
 

—

 

Weighted average shares used in diluted computation 
 21,753,958  
 13,594,530 

Basic and diluted net income per share 
$0.23  
$0.29 

 

For the three months ended March 31, 2026 and
2025, 4,530,000 shares underlying outstanding warrants to an investor were excluded from the calculation of diluted loss per share as
the warrants were anti-dilutive. The exercise price of the warrants is higher than the average price of ordinary shares during the periods,
so the warrants is “out-of-the-money” and result in an anti-dilutive effect on earnings per share.

 

NOTE 18 – GEOGRAPHICAL SALES AND SEGMENTS

 

All of the Company’s operations are considered
by the chief operating decision maker to be aggregated in one reportable operating segment.

 

Information for the Company’s sales by geographical
area for the three months ended March 31, 2026 and 2025 is as follows:

 

  
For three months ended
March 31, 

  
2026  
2025 

Domestic Sales 
$25,184,187  
$21,184,973 

International Sales 
 354,158  
 492,591 

Total 
$25,538,345  
$21,677,564 

 

 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND
SUBSIDIARIES

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 19 – INCOME TAXES

 

Income tax expense includes a provision for federal,
state and foreign taxes based on the annual estimated effective tax rate applicable to the Company and its subsidiaries, adjusted for
items which are considered discrete to the period.

 

The effective tax rates on income before income
taxes for the three months ended March 31, 2026 was 14.87%. The effective tax rate for the three months ended March 31, 2026 was lower
than the PRC tax rate of 25.0% primarily due to the China Super R&D deduction.

 

The effective tax rates on income before income
taxes for the three months ended March 31, 2025 was 16.14%. The effective tax rate for the three months ended March 31, 2025 was lower
than the PRC tax rate of 25.0% primarily due to the China Super R&D deduction.

 

The Company has recorded $0 unrecognized benefit
as of March 31, 2026 and December 31, 2025, respectively. On the information currently available, the Company does not anticipate a significant
increase or decrease to its unrecognized benefit within the next 12 months.

 

NOTE 20 – COMMITMENTS AND CONTINGENCIES

 

Lease Commitments

 

The following are the aggregate non-cancellable
future minimum lease payments under operating leases as of March 31, 2026: 

 

For the year ending March 31, 
Operating
Leases 

2027 
$3,864 

Total lease payments 
$3,864 

 

Contingencies

 

From time to time, the Company is involved in
various claims, legal proceedings, and other matters arising in the ordinary course of business. As of March 31, 2026, management is not
aware of any pending or threatened litigation, claims, or assessments that would have a material adverse effect on the Company’s
financial position, results of operations, or cash flows. The Company has no material contingent liabilities, including guarantees, letters
of credit, or legal disputes that require accrual or disclosure under ASC 450, Contingencies.

 

 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND
SUBSIDIARIES

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 21 – RELATED PARTY TRANSACTIONS

 

(a) Names and Relationship of Related Parties:

 

  Existing Relationship with the Company Cenntro Holding Limited Under common control of Peter Zuguang Wang Zhuhai Hengzhong Industrial Investment Fund (Limited Partnership) Under common control of Peter Zuguang Wang Peter Zuguang Wang Chairman of the Board of Directors of the Company Xinchang County Jiuxin Investment Management Partnership (LP) Under control of Mr. Mengxing He, the General Manager and one of the directors of Zhejiang Zhongchai/Non-controlling interest of Zhejiang Zhongchai Raymond Z. Wang Chief Executive Officer and President Cenntro Inc. Under common control of Peter Zuguang Wang Cenntro Enterprise Limited Under common control of Peter Zuguang Wang

 

(b) Summary of Balances with Related Parties:

 

  
As of 

  
March 31,
2026  
December 31,
2025 

Due to related parties: 
   
  

Zhuhai Hengzhong Industrial Investment Fund (Limited Partnership)1 
$

–

  
$94,442 

Cenntro Holding Limited2 
 1,341,627  
 1,341,627 

Peter Zuguang Wang3 
 2,392,961  
 2,392,961 

Xinchang County Jiuxin Investment Management Partnership (LP)4 
 

–

  
 1,429,981 

Raymond Z. Wang5 
 16,000  
 16,000 

Total 
$3,750,588  
$5,275,011 

 

All balances of due to related parties as of March
31, 2026 and December 31, 2025 were unsecured, interest-free and had no fixed terms of repayments.

 

The balance of due to related parties as of March
31, 2026 and December 31, 2025 consisted of:

 

 

 

  

 

 

 

GREENLAND TECHNOLOGIES HOLDING CORPORATION AND
SUBSIDIARIES

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 21 – RELATED PARTY TRANSACTIONS
(CONTINUED)

 

  
As of 

  
March 31,  
December 31, 

  
2026  
2025 

Due from related parties-current: 
   
  

Cenntro Inc. 
 490,000  
 840,000 

Zhuhai Hengzhong Industrial Investment Fund (Limited Partnership) 
 

–

  
 245,017 

Cenntro Enterprise Limited 
 21,400  
 21,400 

Total 
$511,400  
$1,106,417 

 

The balance of due from related parties as of
March 31, 2026 and December 31, 2025 consisted of:

 

Due from Cenntro Inc. was $0.49 million and $0.84
million as of March 31, 2026 and December 31, 2025, respectively. The amount of due from this related party represents a loan with an
annual interest rate of 7.5% and matured on April 14, 2026. Pursuant to a supplementary agreement between the parties, the period before
April 15, 2025 was an interest-free period for the advanced funds. On April 14, 2026, the Company (through its subsidiary, Zhongchai Holding
(Hong Kong) Limited) and Cenntro Inc. entered into an Extension Agreement (the “Extension Agreement”), pursuant to which the
maturity date of the loan was extended from April 14, 2026 to October 14, 2026. As of the date of the Extension Agreement, the outstanding
principal balance was approximately $0.55 million. During the extension period, interest accrues at 10% per annum (increased from the
original 7.5%), payable no later than the extended maturity date.

 

Due from Zhuhai Hengzhong Industrial Investment
Fund (Limited Partnership) was nil and $0.25 million as of March 31, 2026 and December 31, 2025, respectively. The amount of due from
this related party represents a loan with annual interest rate of 4.785%.

 

Due from Cenntro Enterprise limited was $0.02
million and $0.02 million as of March 31, 2026 and December 31, 2025, respectively. The amount of due from this related party represents
expenses paid on behalf of the related party.

 

(b) Summary of Related Party dividend payment:

 

A summary of dividend payment declared by Zhejiang
Zhongchai to related parties for the three months ended March 31, 2026 and 2025 are listed below:

 

  
For the three months
ended March 31, 

  
2026  
2025 

Dividend payment to related parties: 
   
  

Xinchang County Jiuxin Investment Management Partnership (LP) 
 1,444,711  
 188,222 

 

NOTE 22 – SUBSEQUENT EVENTS

 

Management has evaluated subsequent events through
the date that the financial statements were available to be issued, which is May 13, 2026. All subsequent events requiring recognition
as of March 31, 2026 have been incorporated into these financial statements and there are no other subsequent events that require disclosure
in accordance with FASB ASC Topic 855.  

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION

 

The following discussion and analysis of financial
condition and results of operations relates to the operations and financial condition reported in the consolidated financial statements
of the Company thereto, which appear elsewhere in this Quarterly Report, and should be read in conjunction with such financial statements
and related notes included in this Quarterly Report. Except for the historical information contained herein, the following discussion,
as well as other information in this Quarterly Report, contain “forward-looking statements,” within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), and are subject to the “safe harbor” created by those sections. Actual results and the timing of the events may
differ materially from those contained in these forward-looking statements due to many factors, including those discussed in the “Forward-Looking
Statements” set forth elsewhere in this Quarterly Report.

  

Overview

 

Greenland designs, develops, manufactures and
sells components and products for the global material handling industries.

 

Through its subsidiaries in the PRC, Greenland
offers transmission products, which are key components for forklift trucks used in manufacturing and logistic applications, such as factories,
workshops, warehouses, fulfilment centers, shipyards, and seaports. Forklifts play an important role in the logistic systems of many companies
across different industries in China and globally. Generally, industries with the largest demand for forklifts include transportation,
warehousing logistics, electrical machinery, and automobile industries. Greenland’s revenue increased from approximately $21.68
million for the three months ended March 31, 2025 to $25.54 million for the three months ended March 31, 2026. The increase in revenue
was primarily the result of an increase of approximately $3.99 million in the Company’s sales volume of transmission products for
the three months ended March 31, 2026. Based on its revenues for the three months ended March 31, 2026 and 2025, Greenland believes that
it is one of the major developers and manufacturers of transmission products for small and medium-sized forklift trucks in China.

 

Greenland’s transmission products are used
in 1-ton to 15-tons forklift trucks, some with mechanical shift and some with automatic shift. Greenland sells these transmission products
directly to forklift-truck manufacturers. For the three months ended March 31, 2026 and 2025, Greenland sold an aggregate of 46,027 and
38,734 sets of transmission products, respectively, to more than 100 forklift manufacturers in the PRC.

 

In January 2020, Greenland formed HEVI to focus
on the production and sale of electric industrial vehicles to meet the increasing demand for electric industrial vehicles and machinery
powered by sustainable energy to reduce air pollution and lower carbon emissions. HEVI is a wholly owned subsidiary of Greenland incorporated
under the laws of the State of Delaware. Prior to 2025, HEVI had been manufacturing and selling electric industrial vehicle products.
However, substantially all of HEVI’s business operations have been suspended since 2025 due to uncertainty regarding tariff policy.
HEVI intends to resume operations once the policy environment stabilizes. HEVI’s electric industrial vehicle products (which are
not currently being offered as a result of the suspension of its operations) include GEF-series electric forklifts, a series of lithium
powered forklifts with three models ranging in size from 1.8 tons to 3.5 tons, GEL-1800, a 1.8-ton rated load lithium powered electric
wheeled front loader, GEX-8000, an all-electric 8.0 ton rated load lithium powered wheeled excavator, and GEL-5000, an all-electric 5.0
ton rated load lithium wheeled front loader. In addition, in April 2023, HEVI introduced a line of mobile DC battery chargers that support
DC powered EV applications in the North America market. In July 2024, HEVI announced a partnership with Lonking Holdings Limited to develop
and distribute heavy electric machinery and related technology specialized for the U.S. market. In August 2024, HEVI launched its H55L
all-electric wheeled front-end loader, which can lift up to six tons in indoor and outdoor applications without the mess and emissions
of diesel, and the H65L all-electric wheeled front-end loader, a lithium battery wheeled front-end loader.

 

 

Greenland is the parent company of HEVI and Greenland
Holding Enterprises Inc. (“Greenland Holding”), a holding company formed in the State of Delaware on August 28, 2023, which
in turn acts as the holding company for Zhongchai Holding (Hong Kong) Limited, a holding company formed under the laws of Hong Kong on
April 23, 2009 (“Zhongchai Holding”). Zhongchai Holding’s subsidiaries include Zhejiang Zhongchai Machinery Co. Ltd.,
an operating company formed under the laws of the PRC in 2005, Hangzhou Greenland Energy Technologies Co., Ltd. (“Hangzhou Greenland”),
an operating company formed under the laws of the PRC in 2019, and Hengyu Capital Limited, a company formed in Hong Kong on August 16,
2022 (“Hengyu Capital”). Through Zhongchai Holding and its subsidiaries, Greenland develops and manufactures traditional transmission
products for material handling machinery in the PRC.

 

Greenland was incorporated on December 28, 2017
as a British Virgin Islands business company with limited liability. Following the Business Combination (as described and defined below)
in October 2019, the Company changed its name from Greenland Acquisition Corporation to Greenland Technologies Holding Corporation.

 

Results of Operations

 

For the three months ended March 31, 2026
and 2025

 

Overview

 

  
For the three months ended March 31 

  
2026  
2025  
Change  
Variance 

  
   
   
   
  

Revenues 
$25,538,345  
$21,677,564  
$3,860,781  
 17.8%

Cost of Goods Sold 
 16,779,083  
 15,016,614  
 1,762,469  
 11.7%

Gross Profit 
 8,759,262  
 6,660,950  
 2,098,312  
 31.5%

Selling expenses 
 419,014  
 331,809  
 87,205  
 26.3%

General and administrative expenses 
 1,842,428  
 1,438,988  
 403,440  
 28.0%

Research and development expenses 
 778,219  
 81,457  
 696,762  
 855.4%

Total Operating Expenses 
 3,039,661  
 1,852,254  
 1,187,407  
 64.1%

Income from operations 
 5,719,601  
 4,808,696  
 910,905  
 18.9%

Interest income 
 519,843  
 141,040  
 378,803  
 268.6%

Interest expenses 
 (33,380) 
 –  
 (33,380) 
 (100.0)%

Change in fair value of the warrant liability 
 (52,927) 
 209,294  
 (262,221) 
 125.3%

Other income 
 599,189  
 282,081  
 317,108  
 112.4%

Income before income tax 
 6,752,326  
 5,441,111  
 1,311,215  
 24.1%

Income tax expense 
 1,003,895  
 878,275  
 125,620  
 14.3%

Net income 
 5,748,431  
 4,562,836  
 1,185,595  
 26.0%

 

Components of Results of Operations

 

  
For the three months ended March 31 

Component of Results of Operations 
2026  
2025 

  
  

Revenues 
$25,538,345  
$21,677,564 

Cost of Goods Sold 
 16,779,083  
 15,016,614 

Gross Profit 
 8,759,262  
 6,660,950 

Operating Expenses 
 3,039,661  
 1,852,254 

Net Income 
 5,748,431  
 4,562,836 

 

 

Revenue

 

Greenland’s revenue was approximately $25.54
million for the three months ended March 31, 2026, representing an increase of approximately $3.86 million, or 17.8%, as compared to that
of approximately $21.68 million for the three months ended March 31, 2025. The increase in revenue was primarily a result of the increase
of approximately $3.99 million in the Company’s sales volume of transmission products for the three months ended March 31, 2026.
For the three months ended March 31, 2026, the Company sold an aggregate of 46,027 sets of transmission products, compared to 38,734 sets
sold in the three months ended March 31, 2025. This represents an increase of approximately 7,293 units, or approximately 18.8%. The sales
volume growth was driven by sustained demand from the Company’s customer base in the material handling sector.

  

Cost of Goods Sold

 

Greenland’s cost of goods sold consists
primarily of material costs, freight charges, purchasing and receiving costs, inspection costs, internal transfer costs, wages, employee
compensation, amortization, depreciation and related costs, which are directly attributable to the Company’s manufacturing activities.
The write down of inventory using the net realizable value impairment test is also recorded in cost of goods sold. The total cost of goods
sold was approximately $16.78 million for the three months ended March 31, 2026, representing an increase of approximately $1.76 million,
or 11.7%, as compared to that of approximately $15.02 million for the three months ended March 31, 2025. Cost of goods sold increased
due to the increase in our sales volume.

 

Gross Profit

 

Greenland’s gross profit was approximately
$8.76 million for the three months ended March 31, 2026, representing an increase of approximately $2.10 million, or 31.5%, as compared
to that of approximately $6.66 million for the three months ended March 31, 2025. For the three months ended March 31, 2026 and 2025,
Greenland’s gross margins were approximately 34.3% and 30.7%, respectively. The increase in gross profit in the three months ended
March 31, 2026 compared to the three months ended March 31, 2025 was primarily due to the increase in our sales volume and a shift in
Greenland’s product mix towards higher value and more sophisticated products, such as hydraulic transmission products.

 

Operating Expenses

 

Greenland’s operating expenses consist of
selling expenses, general and administrative expenses and research and development expenses.

 

Selling Expenses

 

Selling expenses mainly comprise of operating
expenses such as sales staff payroll, traveling expenses, and transportation expenses. Our selling expenses were approximately $0.42 million
for the three months ended March 31, 2026, representing an increase of approximately $0.09 million, or 26.3%, as compared to approximately
$0.33 million for the three months ended March 31, 2025. The increase in selling expenses was mainly due to an increase in the shipping
expenses for the three months ended March 31, 2026 compared to the three months ended March 31, 2025.

 

General and Administrative Expenses

 

General and administrative expenses comprise of
management and staff salaries, employee benefits, depreciation for office facility and office furniture and equipment, travel and entertainment
expenses, legal and accounting fees, financial consulting fees, and other office expenses. General and administrative expenses were approximately
$1.84 million for the three months ended March 31, 2026, representing an increase of approximately $0.40 million, or 28.0%, as compared
to that of approximately $1.44 million for the three months ended March 31, 2025. The increase in general and administrative expenses
was mainly due to an increase of approximately $0.53 million in consultancy fees offset by a decrease of approximately $0.09 million in
employee salary for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025.

 

 

Research and Development (R&D) Expenses

 

R&D expenses consist of R&D personnel
compensation, costs of materials used in R&D projects, and depreciation costs for research-related equipment. R&D expenses were
approximately $0.78 million for the three months ended March 31, 2026, representing an increase of approximately $0.70 million, or 855.4%,
as compared to that of approximately $0.08 million for the three months ended March 31, 2025. Such increase was primarily attributable
to a significant increase in the Company’s R&D activities during the three months ended March 31, 2026.

 

Income from Operations

 

Income from operations for the three months ended
March 31, 2026 was approximately $5.72 million, representing an increase of approximately $0.91 million, as compared to that of approximately
$4.81 million for the three months ended March 31, 2025.

 

Interest Income and Interest Expenses

 

Greenland’s interest income was approximately
$0.52 million for the three months ended March 31, 2026, representing an increase of approximately $0.38 million, or 268.6%,
as compared to that of approximately $0.14 million for the three months ended March 31, 2025. The increase in interest income
was because more cash was deposited in banks during the three months ended March 31, 2026 as compared to the three months ended March
31, 2025.

 

Greenland’s interest expenses were approximately
$0.03 million for the three months ended March 31, 2026, representing an increase of approximately $0.03 million, or 100.0%, as compared
to nil for the three months ended March 31, 2025. The increase was primarily due to an increase in interest expense on the discounted
note for the three months ended March 31, 2026, compared to those for the three months ended March 31, 2025.

 

Other Income

 

Greenland’s other income was approximately
$0.60 million for the three months ended March 31, 2026, representing an increase of approximately $0.32 million, or 112.4%, as compared
to approximately $0.28 million for the three months ended March 31, 2025. The increase was primarily due to an increase in grant income
for the three months ended March 31, 2026, compared to those for the three months ended March 31, 2025.

 

Income Taxes

 

Greenland’s income tax was approximately
$1.00 million for the three months ended March 31, 2026, as compared to that of approximately $0.88 million for the three months ended
March 31, 2025.

 

Zhejiang Zhongchai obtained a “high-tech
enterprise” status near the end of the fiscal year of 2022. Such status allows Zhejiang Zhongchai to enjoy a reduced statutory income
tax rate of 15%, rather than the standard PRC corporate income tax rate of 25%. Income tax for the three months ended March 31, 2026 and
2025 were calculated based on a rate of 15%. The “high-tech enterprise” status is reevaluated by relevant Chinese government
agencies every three years. Zhejiang Zhongchai’s current “high-tech enterprise” status will be reevaluated near the
end of 2028.

 

 

Greenland’s other PRC subsidiaries are subject
to different income tax rates. Hangzhou Greenland, the wholly owned subsidiary of Zhongchai Holding, is subject to the 25% standard income
tax rate. Greenland is a holding company registered in the British Virgin Islands and is not subject to tax on income or capital gains
under the current British Virgin Islands law. In addition, upon payment of dividends to its shareholders, the Company will not be subject
to any British Virgin Islands withholding tax.

 

On January 14, 2020, Greenland established HEVI,
its wholly owned subsidiary in the state of Delaware. HEVI promotes sales of sustainable alternative products for the heavy industrial
equipment industry, including electric industrial vehicles, in the North American market. On December 22, 2017, the U.S. federal government
enacted the 2017 Tax Act. The 2017 Tax Act includes a number of changes in existing tax law impacting businesses, including the transition
tax, a one-time deemed repatriation of cumulative undistributed foreign earnings and a permanent reduction in the U.S. federal statutory
rate from 35% to 21%, effective on January 1, 2018. ASC 740 requires companies to recognize the effect of tax law changes in the period
of enactment, and accordingly, the effects must be recognized on companies’ calendar year-end financial statements, even though
the effective date for most provisions is January 1, 2018. Since HEVI was established in 2020, the one-time transition tax did not have
any impact on the Company’s tax provision and there was no undistributed accumulated earnings and profits as of March 31, 2026.

 

On March 26, 2024, the Company entered into a
share exchange agreement with Greenland Holding Enterprises Inc. and Zhongchai Holding (the “2024 Share Exchange Agreement”).
Pursuant to the 2024 Share Exchange Agreement, Greenland Holding Enterprises Inc. issued 100 shares of common stock to the Company, par
value $0.01 per share, representing all issued and outstanding share capital of Greenland Holding Enterprises Inc., in exchange for 100%
of the equity interest of Zhongchai Holding. Greenland Holding Enterprises Inc. is a holding company registered on August 28, 2023 in
the State of Delaware with no material operations. Since Greenland Holding Enterprises Inc. was established in 2023, the one-time transition
tax did not have any impact on the Company’s tax provision and there was no undistributed accumulated earnings and profits as of
as of March 31, 2026.

 

Net Income

 

Our net income was approximately $5.75 million
for the three months ended March 31, 2026, representing an increase of approximately $1.19 million, as compared to that of approximately
$4.56 million for the three months ended March 31, 2025.

 

Liquidity and Capital Resources

 

Greenland is a holding company incorporated in
the British Virgin Islands. Current PRC regulations permit our PRC subsidiaries to pay dividends to us only out of their accumulated profits,
if any, determined in accordance with PRC accounting standards and regulations. In addition, our PRC subsidiaries are required to set
aside at least 10% of their respective accumulated profits each year, if any, to fund certain reserve funds until the total amount set
aside reaches 50% of their respective registered capital. Our PRC subsidiaries may also allocate a portion of their after-tax profits
based on PRC accounting standards to employee welfare and bonus funds at their discretion. These reserves are not distributable as cash
dividends.

 

We have funded working capital and other capital
requirements primarily by equity contributions, cash flow from operations, short-term bank loans and bank acceptance notes, and long-term
bank loans. Cash is required primarily to purchase raw materials, repay debts and pay salaries, office expenses, income taxes and other
operating expenses.

 

For the three months ended March 31, 2026, our
PRC subsidiary, Zhejiang Zhongchai, paid approximately $1.44 million in dividends, extended approximately $4.00 million in loans to third
parties, and maintained approximately $10.61 million in cash on hand. We plan to maintain the current debt structure and rely on government-supported
loans at lower cost, if necessary.

 

 

Government subsidies mainly consist of an incentive
granted by the Chinese government to encourage transformation of fixed assets in China and other miscellaneous subsidies from the Chinese
government. Government subsidies are recognized when there is reasonable assurance that the subsidy will be received, and all conditions
be completed. Total government subsidies recorded under long-term liabilities were $1.04 million and $1.08 million as of March 31, 2026
and December 31, 2025, respectively.

 

The Company currently plans to fund its operations
mainly through cash flow from its operations, renewal of bank borrowings, additional equity financing, and continuation of financial support
from its shareholders and affiliates controlled by its principal shareholders, if necessary. The Company might implement a stricter policy
on sales to less creditworthy customers and plans to continue to improve its collection efforts on accounts with outstanding balances.
The Company is actively working with customers and suppliers and expects to fully collect the remaining balance.

 

We believe that the Company has sufficient cash,
even with uncertainty in the Company’s manufacturing and sale of electric industrial heavy equipment in the future and potential
fluctuations in demand for our transmission products. We believe our existing funding sources will be sufficient to fund our operations
for the next 12 months. We remain confident and expect to continue to generate positive cash flow from our operations.

 

We may need additional cash resources in the future,
if the Company experiences failure in collecting account receivables, changes in business conditions, changes in financial conditions,
or other developments. We may also need additional cash resources, if the Company wishes to pursue opportunities for investment, acquisition,
strategic cooperation, or other similar actions. If the Company’s management and its board of directors determine that the cash
required for specific corporate activities exceed Greenland’s cash and cash equivalents on hand, the Company may issue debt or equity
securities to raise cash.

 

Historically, we have expended considerable resources
on building a new factory and paid off a considerable amount of debt, resulting in less available cash. However, we anticipate that our
cash flow will continue to improve for the remainder of fiscal year 2026. More specifically, Zhejiang Zhongchai can pledge the deed of
its factory as a collateral to banks in order to obtain loans, refinance expiring loans, restructure short-term loans, and fund other
working capital needs upon acceptable terms to Greenland.

 

Cash and Cash Equivalents

 

Cash equivalents refer to all highly liquid investments
purchased with original maturity of three months or less. As of March 31, 2026, Greenland had approximately $10.39 million of cash and
cash equivalents, representing an increase of approximately $2.62 million, or 33.66%, as compared to approximately $7.78 million as of
December 31, 2025. The increase of cash and cash equivalents was mainly due to a decrease in short-term investment, as compared to that
as of December 31, 2025.

 

Restricted Cash

 

Restricted cash represents the amount held by
a bank as security for bank acceptance notes and therefore is not available for use until the bank acceptance notes are fulfilled or expired,
which typically takes less than twelve months. As of March 31, 2026, Greenland had approximately $0.22 million of restricted cash, representing
an increase of approximately $0.14 million, or 200.59%, as compared to that of approximately $0.07 million as of December 31, 2025. The
increase in restricted cash was due to an increase in notes payable collateralized by cash.

 

Accounts Receivable

 

As of March 31, 2026, Greenland had approximately
$25.89 million of accounts receivables, an increase of approximately $8.63 million, or 50.00%, as compared to approximately $17.26 million
as of December 31, 2025. The increase in accounts receivable was due to the increase in our sales volume and our slowed-down efforts in
receivables collections.

 

 

Greenland recorded approximately $0.02 million
and $0.02 million of allowance for expected credit losses as of March 31, 2026 and December 31, 2025, respectively. Greenland conducted
an aging analysis of each customer’s delinquent payments to determine whether allowance for expected credit losses is adequate.
In establishing the allowance for expected credit losses, Greenland considers historical experience, economic environment, and expected
collectability of past due receivables. An estimate of expected credit losses is recorded when collection of the full amount is no longer
probable. When bad debts are identified, such debts are written off against the allowance for expected credit losses. Greenland will continuously
assess its expected credit losses based on the credit history of and relationships with its customers on a regular basis to determine
whether its allowance for expected credit losses on its accounts receivable is adequate. Greenland believes that its collection policies
are generally in line with the transmissions industry’s standard in the PRC.

 

Due from Related Parties

 

Due from related parties was $0.51 million and
$1.11 million as of March 31, 2026 and December 31, 2025, respectively. The balance of due from related parties as of March 31, 2026 and
December 31, 2025 consisted primarily of the following: (i) other receivable from Zhuhai Hengzhong Industrial Investment Fund (Limited
Partnership) of nil and $0.25 million as of March 31, 2026 and December 31, 2025, respectively, representing a loan with an annual interest
rate of 4.785%; (ii) other receivable from Cenntro Inc. was $0.49 million and $0.84 million as of March 31, 2026 and December 31, 2025,
respectively, representing a loan with an annual interest rate of 7.5% that will mature before April 14, 2026; and (iii) other receivable
from Cenntro Enterprise Limited was $0.02 million and $0.02 million as of March 31, 2026 and December 31, 2025, respectively, representing
expenses paid on behalf of the related party.

 

Notes Receivable

 

As of March 31, 2026, Greenland had approximately
$18.73 million of notes receivable, which Greenland expects to collect within the next twelve months. The increase was approximately $4.03
million, or 27.40%, as compared to approximately $14.70 million as of December 31, 2025. 

 

Working Capital 

 

Our working capital was approximately $56.08 million
as of March 31, 2026, as compared to $46.97 million as of December 31, 2025. The increase in working capital of $9.11 million was primarily
attributable to an increase in accounts receivable and prepayments and other current assets.

 

Cash Flow

 

  
For the Three Months Ended
March 31, 

  
2026  
2025 

  
  

Net cash (used in) provided by operating activities 
$(1,186,337) 
$1,244,666 

Net cash used in investing activities 
$(4,172,528) 
$(701,864)

Net cash provided by(used in) financing activities 
$8,136,183  
$(1,765,716)

Net decrease in cash and cash equivalents and restricted cash 
$2,777,318  
$(1,222,914)

Effect of exchange rate changes on cash and cash equivalents 
$(17,011) 
$157,967 

Cash and cash equivalents and restricted cash at beginning of period 
$7,846,870  
$8,611,795 

Cash and cash equivalents and restricted cash at end of period 
$10,607,177  
$7,546,848 

 

Operating Activities 

 

Net cash used in operating activities for the
three months ended March 31, 2026 was approximately $1.19 million, resulting primarily from net income of approximately $5.75 million,
adjusted for non-cash item of depreciation and amortization expenses of approximately $0.52 million, change in fair value of warrant liability
of approximately $0.05 million, change in accrued expense of approximately $(1.82) million and changes in operating assets and liabilities
including: (i) an increase of approximately $8.36 million in accounts receivable due to the increase in our sales volume, (ii) an increase
of approximately $3.81 million in notes receivables, and (iii) an increase of approximately $7.58 million in accounts payable because
we extended the payment cycle.

 

 

Net cash provided by operating activities for
the three months ended March 31, 2025 was approximately $1.24 million, primarily attributable to net income of approximately $4.56 million,
adjusted for non-cash item of depreciation and amortization expenses of approximately $0.52 million, change in fair value of warrant liability
of approximately $(0.21) million, change in accrued expense of approximately $(2.59) million and changes in operating assets and liabilities
including: (i) an increase of approximately $6.06 million in accounts payable because we extended the payment cycle, (ii) an increase
of approximately $5.53 million in accounts receivable due to our slowed-down efforts in receivables collections, (iii) a decrease of approximately
$2.18 million in notes receivables because we prioritized collecting cash rather than accepting notes receivables, and (ⅳ) a decrease
of approximately $5.22 million due to related parties.

 

Investing Activities

 

Net cash used in investing activities resulted
in cash outflow of approximately $4.17 million for the three months ended March 31, 2026. Cash used in investing activities for the three
months ended March 31, 2026 was mainly due to approximately $0.17 million used for purchases of long-term assets and approximately $4.00
million loaned to third parties.

 

Net cash used in investing activities resulted
in cash outflow of approximately $0.70 million for the three months ended March 31, 2025. Cash used in investing activities for the three
months ended March 31, 2025 was mainly due to approximately $0.01 million used for purchases of long-term assets and approximately $0.69
million loaned to third parties.

 

Financing Activities

 

Net cash provided by financing activities resulted
in a cash inflow of approximately $8.14 million for the three months ended March 31, 2026, which was mainly attributable to approximately
$3.49 million change in notes payable and approximately $5.59 million proceeds from equity and debt financing offset by approximately
$1.44 million in dividend.

 

Net cash used in financing activities resulted
in a cash outflow of approximately $1.77 million for the three months ended March 31, 2025, which was mainly attributable to approximately
$1.00 million in repayment of loans from related parties and approximately $0.58 million change in notes payable.

 

Credit Risk

 

Assets that potentially subject the Company to
significant concentration of credit risk primarily consist of cash and cash equivalents. The maximum exposure of such assets to credit
risk is their carrying amount as at the balance sheet dates. As of March 31, 2026, cash and cash equivalents of $40,412,787 were deposited
in financial institutions in the PRC, and each bank account is insured by the PRC government with the maximum limit of RMB500,000 (equivalent
to $69,800). To limit exposure to credit risk relating to deposits, the Company primarily places cash and cash equivalent with large financial
institutions in China which management believes are of high credit quality and the Company also continually monitors their credit worthiness.

 

A significant portion of the Company’s operations
are conducted in the PRC. Accordingly, the Company’s business, financial condition and results of operations may be influenced by
the political, economic and legal environments in the PRC as well as by the general state of the PRC’s economy. In addition, the
Company’s business may be influenced by changes in governmental policies with respect to laws and regulations, anti-inflationary
measures, currency conversion and remittance abroad, rates and methods of taxation among other factors.

 

Currency Exchange Risk

 

The Company cannot guarantee that the current
exchange rate will remain steady. Therefore, there is a possibility that the Company could post the same amount of profit for two comparable
periods and yet, because of the fluctuating exchange rate, record higher or lower profit depending on exchange rate of RMB converted to
U.S. dollars on the relevant dates. The exchange rate could fluctuate depending on changes in the political and economic environment without
notice.

 

 

Concentration risks

 

Accounts receivable are typically unsecured and
derived from goods sold to customers that are located primarily in China, thereby exposed to credit risk. The risk is mitigated by the
Company’s assessment of customers’ creditworthiness and its ongoing monitoring of outstanding balances. The Company has a
concentration of its receivables with specific customers. As of March 31, 2026, one customer accounted for 16.44% of total accounts
receivable. As of December 31, 2025, three customers accounted for 11.24%, 10.24% and 10.12% of total accounts receivable, respectively.
No other customers accounted for more than 10% of the Company’s total accounts receivable as of March 31, 2026 and December
31, 2025.

 

For the three months ended March 31, 2026,
one customer accounted for 16.69% of total revenue. For the three months ended March 31, 2025, one customer accounted for 17.77%
of total revenue. No other customers accounted for more than 10% of the Company’s total revenue for the three months ended March 31,
2026 and 2025.

 

There were no suppliers representing more than
10% of the Company’s total purchases for the three months ended March 31, 2026 and 2025, respectively.

 

Critical Accounting Policies and Estimates

 

We prepare our consolidated financial statements
in accordance with U.S. GAAP. In applying accounting principles, it is often required to use estimates. These estimates consider the facts,
circumstances and information available, and may be based on subjective inputs, assumptions and information known and unknown to us. Material
changes in certain of the estimates that we use could potentially affect, by a material amount, our consolidated financial position and
results of operations. Although results may vary, we believe our estimates are reasonable and appropriate. See Note 2 to our consolidated
financial statements included in “Item 8 – FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA” for a summary of our significant accounting
policies. The following describes certain of our significant accounting policies that involve more subjective and complex judgments where
the effect on our consolidated financial position and operating performance could be material.

 

Revenue Recognition

 

In accordance with ASC Topic 606, “Revenue
from Contracts with Customers,” the Company recognizes revenues when goods or services are transferred to customers in an amount
that reflects the consideration which the Company expects to receive in exchange for those goods or services. In determining when and
how revenues are recognized from contracts with customers, the Company performs the following five-step analysis: (i) identification of
contract with customer; (ii) determination of performance obligations; (iii) measurement of the transaction price; (iv)
allocation of the transaction price to the performance obligations, and (v) recognition of revenues when (or as) the Company satisfies
each performance obligation. The Company derives revenues from the processing, distribution and sale of its products. The Company recognizes
its revenues net of VAT. The Company is subject to VAT which had been levied at the rate of 17% on the invoiced value of sales until April
30, 2018, after which date the rate was reduced to 16%. VAT rate was further reduced to 13% starting from April 1, 2019. Output VAT is
borne by customers in addition to the invoiced value of sales and input VAT is borne by the Company in addition to the invoiced value
of purchases to the extent not refunded for export sales.

 

Revenues are recognized at a point in time once
the Company has determined that the customer has obtained control over the product. Control is typically deemed to have been transferred
to the customer when the performance obligation is fulfilled, usually at the time of customers’ acceptance or consumption, at the
net sales price (transaction price) and each of the criteria under ASC 606 have been met. Contract terms may require the Company to deliver
the finished goods to the customers’ location or the customer may pick up the finished goods at the Company’s factory. International
sales are recognized when shipment clears customs and leaves the port.

 

The Company adopted ASC 606 on January 1, 2018,
using the transition method of Modified-Retrospective Method. The adoption of ASC 606 had no impact on the Company’s beginning balance
of retained earnings.

 

The Company’s contracts are all short-term
in nature with a contract term of one year or less. Receivables are recorded when the Company has an unconditional right to consideration.

 

 

Business Combination

 

On October 24, 2019, we consummated our Business
Combination with Zhongchai Holding following a special meeting of the shareholders, where the shareholders of Greenland considered and
approved, among other matters, a proposal to adopt and entered into the Share Exchange Agreement, dated as of July 12, 2019, among (i)
Greenland, (ii) Zhongchai Holding, (iii) the Sponsor in the capacity as the Purchaser Representative, and (iv) Cenntro Holding Limited,
the sole member of Zhongchai Holding.

 

Pursuant to the Share Exchange Agreement, Greenland
acquired from Cenntro Holding Limited all of the issued and outstanding equity interests of Zhongchai Holding in exchange for 7,500,000
newly issued ordinary shares, no par value of Greenland, to Cenntro Holding Limited. As a result, Cenntro Holding Limited became the then
controlling shareholder of Greenland, and Zhongchai Holding became a directly and wholly owned subsidiary of Greenland. The Business Combination
was accounted for as a reverse merger effected by a share exchange, wherein Zhongchai Holding is considered the acquirer for accounting
and financial reporting purposes.

 

Pursuant to that certain finder agreement with
Hanyi Zhou dated May 29, 2019, 50,000 newly issued ordinary shares issued to Hanyi Zhou as a finder fee for the Business Combination.

 

Inventories

 

Inventories are stated at the lower of cost or
net realizable value. Cost is determined using the weighted average method and includes all costs of purchase, costs of conversion, and
other costs incurred in bringing the inventories to their present location and condition. Costs of purchase consist of the purchase price,
import duties, freight, handling, and other directly attributable costs, less trade discounts, rebates, and other similar items. Costs
of conversion include direct labor and a systematic allocation of fixed and variable production overheads incurred in converting raw materials
into finished goods. Other costs are included only to the extent they are incurred in bringing the inventories to their present location
and condition. Net realizable value is based on estimated selling prices in the ordinary course of business, less estimated costs of completion
and estimated costs necessary to make the sale. Cost of raw materials is calculated using the weighted average method and is based on
purchase cost. Work-in-progress and finished goods costs are determined using the weighted average method and comprise direct materials,
direct labor and an appropriate proportion of overhead.

 

Income Taxes

 

The Company accounts for income taxes following
the liability method pursuant to FASB ASC 740 “Income Taxes”. Under this method, deferred tax assets and liabilities are determined
based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in
effect in the period in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax
assets if, based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets
will not be realized. The effect on deferred taxes of a change in tax rate is recognized in income in the period that includes the enactment
date.

 

The Company also follows FASB ASC 740, which addresses
the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements.
The Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will
be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the
financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood
of being realized upon ultimate settlement. ASC 740 also provides guidance on recognition, classification, interest and penalties on income
taxes, accounting in interim periods and requires increased disclosures. As of March 31, 2026, the Company did not have any liability
for unrecognized tax benefits. It is the Company’s policy to include penalties and interest expense related to income taxes as a
component of other expense and interest expense, respectively, as necessary. The Company’s historical tax years will remain open
for examination by the local authorities until the statute of limitations has passed.

 

Off Balance Sheet Arrangements

 

None.

 

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK.

 

The Company is not required to provide the information
required by this item as it is a smaller reporting company.

 

ITEM 4. CONTROLS AND PROCEDURES.

 

Disclosure controls, as defined under Rule 13a-15(e)
and 15d-15(e) promulgated under the Exchange Act, are procedures that are designed with the objective of ensuring that information required
to be disclosed in our reports filed under the Exchange Act, such as this Quarterly Report, is recorded, processed, summarized, and reported
within the time specified in the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that
such information is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer,
as appropriate to allow timely decisions regarding required disclosure.

 

Evaluation of Disclosure Controls and Procedures

 

As of March 31, 2026, we carried out an evaluation,
under the supervision and with the participation of our management, including our chief executive officer and chief financial officer,
of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e)
under the Securities Exchange Act of 1934, as amended. Based upon such evaluation, our chief executive officer and chief financial officer
concluded that, as of the end of the period covered by this Quarterly Report, our disclosure controls and procedures were ineffective.
Such conclusion is based on the presence of the following material weakness in internal control over financial reporting as of March 31,
2026:

 

Accounting and Financial Reporting Personnel
Material Weakness – As noted in Item 9A of our annual report on Form 10-K for the preceding fiscal year, management concluded
that in light of a lack of sufficient and competent financial reporting and accounting personnel with appropriate knowledge of U.S. GAAP
and SEC reporting requirements to prepare consolidated financial statements and related disclosures in accordance with U.S. GAAP and SEC
reporting requirements, we did not maintain effective controls and did not implement adequate and proper supervisory review to ensure
that significant internal control deficiencies can be detected or prevented.

 

As a result, the Company has developed a remedial
plan to strengthen its accounting and financial reporting functions. To strengthen the Company’s internal control over financial
reporting, the Company expects to implement the following remedial actions during fiscal year ending December 31, 2026:

 

 
●
developing and formalizing of key accounting and financial reporting policies and procedures;

 
 
 

 
●
recruiting more financial reporting and accounting personnel who have adequate U.S. GAAP knowledge;

 

 
●
initiating a targeted training program for key accounting personnel, focusing on complex U.S. GAAP topics and SEC disclosure requirements;

 
 
 

 

 

 
●
planning to acquire additional resources to strengthen the financial reporting function and set up a financial and system control framework; and

 
 
 

 
●
implementing a new review protocol requiring that all non-recurring or complex transactions be reviewed by both management and the external consultants prior to finalization, to ensure proper accounting treatment and disclosure in accordance with U.S. GAAP.

 

Inherent limitation on the effectiveness of
internal control

 

The effectiveness of any system of internal control
over financial reporting, including ours, is subject to inherent limitations, including the exercise of judgment in designing, implementing,
operating, and evaluating the controls and procedures, and the inability to eliminate misconduct completely. Accordingly, any system of
internal control over financial reporting, including ours, no matter how well designed and operated, can only provide reasonable, not
absolute assurances. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls
may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
We intend to continue to monitor and upgrade our internal controls as necessary or appropriate for our business, but cannot assure you
that such improvements will be sufficient to provide us with effective internal control over financial reporting.

 

Notwithstanding the material weakness in our internal
control over financial reporting, the consolidated unaudited financial statements included in this Quarterly Report fairly present, in
all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with accounting
principles generally accepted in the United States of America.

 

Changes in Internal Control Over Financial
Reporting

 

During the most recently completed fiscal quarter,
there has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.

 

 

PART II – OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS.

 

Management is not aware of any legal proceedings
contemplated by any governmental authority or any other party involving us or our properties. As of the date of this Quarterly Report,
no director, officer or affiliate is (i) a party adverse to us in any legal proceeding, or (ii) has an adverse interest to us in any legal
proceedings. Management is not aware of any other legal proceedings pending or that have been threatened against us or our properties.

 

ITEM 1A. RISK FACTORS.

 

Summary of Risk Factors

 

An investment in our Class A ordinary shares is
subject to a number of risks, including risks related to our business and industry, risks related to our corporate structure, risks related
to doing business in China and risks related to our Class A ordinary shares. You should carefully consider all of the information in this
Quarterly Report before making an investment in the Class A ordinary shares. The following list summarizes some, but not all, of these
risks. Please read the information in this section for a more thorough description of these and other risks.

 

Risks Related to Our Business and Industry

 

For more detailed discussions of the following
risks, see “Risk Factors—Risks Related to our Business and Industry” on pages 17 through 24.

 

●Our
subsidiaries’ business operations are cash intensive, and our subsidiaries’ business could be adversely affected if we fail
to maintain sufficient levels of liquidity and working capital;

 

●We
grant relatively long payment terms for accounts receivable which can adversely affect our cash flow;

 

●Our
subsidiaries face short lead-times for delivery of products to customers. Failure to meet delivery deadlines could result in the loss
of customers and damage to our reputation and goodwill;

 

●Our
subsidiaries face intense competition, and if we are unable to compete effectively, we may not be able to maintain profitability;

 

●Our
revenues are highly dependent on a limited number of customers and the loss of any one of our subsidiaries’ major customers could
materially and adversely affect our growth and revenues;

  

●As
our subsidiaries expand their operations, they may need to establish a more diverse supplier network for raw materials. The failure to
secure a more diverse supplier network could have an adverse effect on our financial condition;

 

●To
remain competitive, our subsidiaries are introducing new lines of business, including the production and sale of electric industrial
heavy equipment. If these efforts are not successful, our results of operations may be materially and adversely affected;

 

●New
lines of business, including the production and sale of electric industrial heavy equipment, may subject us and our subsidiaries to additional
risks;

 

 
●
Tariffs and other trade barriers imposed on Chinese goods, including components manufactured in the PRC and assembled in the United States by HEVI, could materially and adversely affect our business, financial condition, and results of operations;

 
 
 

 
●
Volatile steel prices can cause significant fluctuations in our operating results. Our revenues and operating income could decrease if steel prices increase or if our subsidiaries are unable to pass price increases on to their customers;

 

 
●
We are subject to various risks and uncertainties that may affect our subsidiaries’ ability to procure raw materials; and

 
 
 

 
●
Geopolitical conflicts involving Iran, military actions in the Middle East, and the war in Ukraine may adversely affect economic conditions in the U.S., China and globally, and cause significant volatility in the trading price of our Class A ordinary shares.

 

 

Risks Related to Doing Business in China

 

For more detailed discussions of the following
risks, see “Risk Factors—Risks Related to Doing Business in China” on pages 25 through 34.

 

●Changes
in China’s economic, political or social conditions or government policies could have a material adverse effect on our business
and operations;

 

●Uncertainties
arising from the legal system in China, including uncertainties regarding the interpretation and enforcement of PRC laws and the possibility
that regulations and rules can change quickly with little advance notice, could hinder our ability to offer or continue to offer our
securities, result in a material adverse change to our business operations, and damage our reputation, which could materially and adversely
affect our financial condition and results of operations and cause our securities to significantly decline in value or become worthless.
See “Risk Factors—Risks Related to Doing Business in China—The PRC government exerts substantial influence over the
manner in which we must conduct our business activities. If the Chinese government significantly regulates the business operations of
our PRC subsidiaries in the future and our PRC subsidiaries are not able to substantially comply with such regulations, our business
operations may be materially adversely affected and the value of our Class A ordinary shares may significantly decrease” and “Risk
Factors—Risks Related to Doing Business in China—Uncertainties with respect to the PRC legal system could adversely affect
us and our PRC subsidiaries”;

 

●The
Chinese government may intervene or influence our operations at any time or may exert more control over offerings conducted overseas
and/or foreign investment in China-based issuers. Any actions by the Chinese government to exert more oversight and control over offerings
that are conducted overseas and/or foreign investment in China-based issuers could significantly limit or completely hinder our ability
to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or become worthless.
See “Risk Factors—Risks Related to Doing Business in China—The PRC government exerts substantial influence over the
manner in which we must conduct our business activities. If the Chinese government significantly regulates the business operations of
our PRC subsidiaries in the future and our PRC subsidiaries are not able to substantially comply with such regulations, our business
operations may be materially adversely affected and the value of our Class A ordinary shares may significantly decrease”;

 

●Our
future offerings will need to be filed with the CSRC, along with compliance with any other applicable PRC rules, policies and regulations,
in connection with any future offering of our securities. Any failure to filing, or delay in filing, or failure to complying with any
other applicable PRC requirements for an offering, may subject us to sanctions imposed by the relevant PRC regulatory authority. In addition,
if applicable laws, regulations, or interpretations change such that we are required to obtain approval in the future and we fail to
obtain such approvals, we may be subject to an investigation by competent regulators, fines or penalties, or an order prohibiting us
from conducting an offering, and these risks could result in a material adverse change in our operations and the value of our Class A
ordinary shares, significantly limit or completely hinder our ability to offer or continue to offer securities to investors, or cause
such securities to significantly decline in value or become worthless. See “Risk Factors—Risks Related to Doing Business
in China—We are required under PRC laws to submit filings to CSRC for our future offerings. However, we believe that we are not
currently required to obtain the approval and/or comply with other requirements of the CSRC, the CAC, or other PRC governmental authorities
under PRC rules, regulations or policies in connection with our continued listing on Nasdaq. In the event that any such approval is required
or that there are other requirements we are obligated to comply with, we cannot predict whether or how soon we will be able to obtain
such approvals and/or comply with such requirements.” and “Risk Factors—Risks Related to Doing Business in China—We
may be liable for improper use or appropriation of personal information provided by our customers and any failure to comply with PRC
laws and regulations over data security could result in materially adverse impact on our business, results of operations, and our continued
listing on Nasdaq”;

 

●Our
subsidiaries may be liable for improper use or appropriation of personal information provided by their customers and any failure to comply
with PRC laws and regulations over data security could result in materially adverse impact on our business, results of operations, and
our continued listing on Nasdaq;

 

 

●You
may have difficulty enforcing judgments against us;

 

●Under
the PRC Enterprise Income Tax Law, we may be classified as a “Resident Enterprise” of China. Such classification will likely
result in unfavorable tax consequences to us and our non-PRC shareholders;

 

●PRC
regulation of loans to, and direct investments in, PRC entities by offshore holding companies may delay or prevent us from using proceeds
from our future financing activities to make loans or additional capital contributions to our PRC subsidiaries;

 

●We
may rely on dividends paid by our subsidiaries for our cash needs, and any limitation on the ability of our subsidiaries to make payments
to us could have a material adverse effect on our ability to conduct business;

 

 
●
Governmental control of currency conversion may limit our ability to utilize our revenues effectively and affect the value of your investment;

 
 
 

 
●
U.S. regulatory bodies may be limited in their ability to conduct investigations or inspections of our operations in China; and

  

●Our
securities may be delisted and prohibited from being traded under the Holding Foreign Companies Accountable Act if the PCAOB is unable
to inspect our auditor in the future. Any future delisting and cessation of trading of our securities, or the threat of their being delisted
and prohibited from being traded, may materially and adversely affect the value of your investment. Additionally, any inability of the
PCAOB to conduct inspections of our auditor in the future would deprive our investors of the benefits of such inspections. See “Risk
Factors—Risks Related to Doing Business in China—Our Class A ordinary shares may be delisted and prohibited from being traded
under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect our auditors. The delisting and the cessation of
trading of our Class A ordinary shares, or the threat of their being delisted and prohibited from being traded, may materially and adversely
affect the value of your investment. Additionally, any inability of the PCAOB to conduct inspections deprives our investors with the
benefits of such inspections.”

 

Risks Related to Our Class A Ordinary Shares

 

For more detailed discussions of the following
risks, see “Risk Factors—Risks Related to Our Class A Ordinary Shares” on pages 35 through 39.

 

 
●
Nasdaq has recently adopted and proposed new listing rules that could result in the accelerated delisting of our Class A ordinary shares.

 
 
 

 
●
Our dual-class share structure with different voting rights will limit your ability to influence corporate matters and could discourage others from pursuing any change of control transactions that holders of our Class A ordinary shares may view as beneficial;

 
 
 

 
●
The dual-class structure of our ordinary shares may adversely affect the trading market for the Class A ordinary shares;

 
 
 

 
●
Future sales of our Class A ordinary shares, whether by us or our shareholders, could cause the price of our Class A ordinary shares to decline;

 

●Because
we do not expect to pay dividends in the foreseeable future, you must rely on the price appreciation of our Class A ordinary shares for
return on your investment; and

 

●Techniques
employed by short sellers may drive down the market price of our Class A ordinary shares.

 

 

Risks Related to our Business and Industry

 

Our subsidiaries’ business operations
are cash intensive, and our subsidiaries’ business could be adversely affected if we fail to maintain sufficient levels of liquidity
and working capital.

 

As of March 31, 2026, we had approximately $10.61
million of cash and cash equivalents. Historically, we have spent a significant amount of cash on our operational activities, principally
to procure raw materials for our subsidiaries’ products. Our short-term loans are from Chinese banks and are generally secured by
a portion of our fixed assets, land use rights and/or guarantees by related parties. Certain of these loans are secured against a portion
of the shares of our PRC subsidiaries. The term of a majority of such loans is one year. Historically, we rolled over such loans on an
annual basis. However, we may not have sufficient funds available to pay all of our borrowings upon maturity in the future. Failure to
roll over our short-term borrowings at maturity or to service our debt could result in a transfer of the ownership of a portion of the
shares of our PRC subsidiaries to secured lenders, the imposition of penalties, including increases in interest rates, legal actions against
us by our creditors, and even insolvency.

 

Although we have been able to maintain adequate
working capital primarily through cash from operations and short-term and long-term borrowings, any failure by our customers to settle
outstanding accounts receivable, or our inability to borrow sufficient capital from local banks in the future could materially and adversely
affect our cash flow, financial condition and results of operations.

 

We grant relatively long payment terms for
accounts receivable which can adversely affect our cash flow.

 

As is customary in China, for competitive reasons,
we grant relatively long payment terms to most of our subsidiaries’ customers. The allowances we establish for our receivables may
not be adequate. We are subject to the risk that we may be unable to collect accounts receivable in a timely manner. If the accounts receivable
cannot be collected in time, or at all, a significant amount of expected credit losses will occur, and our business, financial condition
and results of operation will likely be materially and adversely affected.

 

Our subsidiaries face short lead-times for
delivery of products to customers. Failure to meet delivery deadlines could result in the loss of customers and damage to our reputation
and goodwill.

 

Most of our subsidiaries’ customers are
large manufacturers, who generally place large orders for our subsidiaries’ products and require prompt delivery. Our subsidiaries’
product sale agreements typically contain short lead-times for the delivery of products and tight production and manufacturer supply
schedules that can reduce our profit margins on the products procured from our subsidiaries’ suppliers. Our subsidiaries’
suppliers may lack sufficient capacity at any given time to meet all of the demands from our subsidiaries’ customers if orders exceed
their production capacity. Our subsidiaries strive for rapid response to customer demands, which can lead to reduced purchasing efficiency,
increased procurement costs and low profit margins. If our subsidiaries are unable to meet the customer demands, they may lose customers.
Moreover, failure to meet customer demands may damage our reputation and goodwill.

 

Our subsidiaries face intense competition,
and, if our subsidiaries are unable to compete effectively, we may not be able to maintain profitability.

 

Our subsidiaries compete with many other companies
located in the PRC and internationally that manufacture similar products. Many of our subsidiaries’ competitors are larger companies
with greater financial resources. Intense competition in a challenging economic environment in the PRC has, in the past, put pressure
on our margins and may adversely affect our future financial performance. Moreover, intense competition may result in potential or actual
litigation between our subsidiaries and their competitors relating to such activities as competitive sales practices, relationships with
key suppliers and customers or other matters.

 

 

It is likely that our subsidiaries’ competitors
will seek to develop similar competing products in the near future. Some of our subsidiaries’ competitors may have more resources
than our subsidiaries do, operate in greater scale, be more capitalized than our subsidiaries are, have access to cheaper raw materials
than our subsidiaries do, or offer products at a more competitive price. There can be no assurance that our initial competitive advantage
will be retained and that one or more competitors will not develop products that are equal or superior in quality and are better priced
than our subsidiaries’ products. If our subsidiaries are unable to compete effectively, our results of operations and financial
position may be materially and adversely affected.

 

Our revenues are highly dependent on a limited
number of customers and the loss of any one of our subsidiaries’ major customers could materially and adversely affect our growth
and revenues.

 

During the three months ended March 31, 2026 and
2025, our subsidiaries’ five largest customers contributed 39.79% and 41.27% of our revenues, respectively. For the three months
ended March 31, 2026 and 2025, Greenland’s single largest customer, Hangcha Group, accounted for 16.69% and 17.77%, respectively,
of Greenland’s total revenue. Other than Hangcha Group, no other single customer individually contributed to more than 10% of our
total revenue for the three months ended March 31, 2026 and 2025.

 

As a result of our subsidiaries’ reliance
on a limited number of customers, our subsidiaries may face pricing and other competitive pressures, which may have a material adverse
effect on our profits and our revenues. The volume of products sold for specific customers varies from year to year, especially since
our subsidiaries are not the exclusive provider for any customers. In addition, there are a number of factors that could cause the loss
of a customer or a substantial reduction in the products that our subsidiaries provide to any customer that may not be predictable. For
example, our subsidiaries’ customers may decide to reduce spending on our subsidiaries’ products or a customer may no longer
need our subsidiaries’ products following the completion of a project. The loss of any one of our subsidiaries’ major customers,
a decrease in the volume of sales to our subsidiaries’ customers or a decrease in the price at which our subsidiaries sell their
products to customers could materially and adversely affect our profits and revenues.

 

In addition, this customer concentration may subject
our subsidiaries to perceived or actual leverage that our subsidiaries’ customers may have in negotiations, given their relative
size and importance to our subsidiaries. If our subsidiaries’ customers seek to negotiate their agreements on terms less favorable
to our subsidiaries and our subsidiaries accept such terms, such unfavorable terms may have a material adverse effect on our subsidiaries’
business and our financial condition and results of operations. Accordingly, unless and until our subsidiaries diversify and expand their
customer base, our future success will significantly depend upon the timing and volume of business from our subsidiaries’ largest
customers and the financial and operational success of these customers.

 

As our subsidiaries expand their operations,
they may need to establish a more diverse supplier network for raw materials. The failure to secure a more diverse supplier network could
have an adverse effect on our financial condition.

 

In the event that our subsidiaries need to diversify
their supplier network, our subsidiaries may not be able to procure a sufficient supply of raw materials at a competitive price, which
could have an adverse effect on our results of operations, financial condition and cash flows. Furthermore, despite our subsidiaries’
efforts to control their supply of raw materials and maintain good relationships with their existing suppliers, our subsidiaries could
lose one or more of their existing suppliers at any time. The loss of one or more key suppliers could increase our subsidiaries’
reliance on higher costs or lower quality supplies, which could negatively affect our profitability. Any interruptions to, or decline
in, the amount or quality of our subsidiaries’ raw materials supply could materially disrupt our subsidiaries’ production
and adversely affect our subsidiaries’ business and our financial condition and financial prospects.

 

 

Our efforts to
diversify into electric industrial heavy equipment may not be successful, and the suspension of substantially all of HEVI’s operations
due to tariff uncertainty could materially and adversely affect our business, results of operations, and financial condition.

 

To remain competitive,
we have sought to diversify our product offerings beyond our traditional transmission systems and integrated powertrains for material
handling machinery by expanding into the production and sale of electric industrial heavy equipment. Prior to December 2020, through Zhongchai
Holding and its PRC subsidiaries, our products primarily consisted of transmission systems and integrated powertrains for material handling
machinery, particularly electric forklift trucks. In December 2020, through our subsidiary HEVI, we launched a new division that focused
on the production and sale of electric industrial heavy equipment as part of our strategy to diversify our business.

 

HEVI’s electric
industrial heavy equipment product portfolio includes lithium-powered electric forklifts, electric wheeled loaders, electric excavators,
and related charging solutions, which have been marketed primarily in the United States. HEVI also established an assembly and distribution
facility in Maryland and entered into strategic partnerships intended to support the development and commercialization of electric heavy
machinery for the U.S. market. Despite these efforts, this line of business remains at an early stage and has not yet demonstrated sustained
commercial success.

 

Our expansion into electric
industrial heavy equipment involves significant risks and uncertainties. We have limited operating history and experience in this segment,
which differs materially from our legacy business. We may encounter difficulties in product development, manufacturing, supply chain management,
regulatory compliance, distribution, customer adoption, and after-sales service. Our products may not achieve market acceptance, may face
strong competition from established manufacturers, or may not be cost-competitive. As a result, we may be unable to generate sufficient
revenue to recover our investment or achieve profitability.

 

In addition, substantially
all of HEVI’s business operations have been suspended since 2025 due to uncertainty regarding tariff policy, which has adversely
affected our ability to manufacture, import, distribute, and sell electric industrial heavy equipment. This suspension has limited HEVI’s
revenue-generating activities and may continue for an extended period. Although HEVI intends to resume operations once the policy environment
stabilizes, there can be no assurance as to when, or whether, such stabilization will occur, or whether HEVI will be able to successfully
restart operations on commercially reasonable terms.

 

If the suspension of HEVI’s operations continues,
or if we are unable to successfully resume or scale this business following a resumption of operations, our transition into electric industrial
heavy equipment may be delayed or unsuccessful. During this transition period, our revenues may remain limited, our operating losses may
increase, and our results of operations, financial condition, cash flows, and business prospects could be materially and adversely affected.

 

Tariffs and other
trade barriers imposed on Chinese goods, including components manufactured in the PRC and assembled in the United States by HEVI, could
materially and adversely affect our business, financial condition, and results of operations.

 

Our business is subject to significant risks arising
from the trade policies of the United States government with respect to Chinese goods, and the broader relationship between the United
States and the PRC. HEVI’s electric industrial heavy equipment products are manufactured using components sourced from and manufactured
in the PRC, which are then assembled into finished products in the United States. As a result, U.S. tariff policies on Chinese goods have
a direct and material impact on HEVI’s cost structure and business operations. In February 2025, President Donald J. Trump declared
a national emergency under the International Emergency Economic Powers Act (“IEEPA”) and announced the imposition of a 10%
tariff on all imports from China, citing concerns related to trade imbalances and national security. These tariffs were subsequently lifted
following the U.S. Supreme Court’s ruling in Learning Resources in February 2026. A temporary 10% global tariff on imports was separately
imposed under Section 122 of the Trade Act of 1974. Tariffs imposed under Section 301 of the Trade Act of 1974 and Section 232 of the
Trade Expansion Act of 1962 remain unaffected by the Supreme Court’s ruling and continue to apply to Chinese goods. As of May 2026,
average U.S. tariff rates on Chinese goods remained to be over 30%, excluding exemptions and Section 232 actions, further increasing the
cost burden on U.S. importers of PRC-manufactured components and potentially affecting demand for products sourced from the PRC.

 

 

The imposition of these
tariffs, and any future escalation thereof, significantly increases the landed cost of PRC-manufactured components imported by HEVI for
assembly in the United States, potentially rendering HEVI’s finished products less competitive relative to domestically produced
alternatives or products sourced from non-tariffed jurisdictions. Our operating subsidiaries, including HEVI, may be unable to pass increased
costs through to their customers, whether due to competitive pricing pressures, contractual constraints, or prevailing market conditions,
which would compress margins and adversely affect profitability.

 

The business operations
of HEVI have been suspended since 2025 due to the uncertainty surrounding U.S. tariff policy and the broader trade war between the United
States and the PRC, as described elsewhere in this Report. Because HEVI’s products rely on components manufactured in the PRC, the
imposition of tariffs on Chinese goods has materially disrupted HEVI’s ability to import components at commercially viable costs,
thereby rendering its assembly and distribution operations in the United States economically unviable under current tariff conditions.
To the extent that HEVI’s suspension is prolonged or becomes permanent, the practical impact of tariffs on HEVI’s near-term
operations may be limited; however, any future resumption of HEVI’s business activities would require the continued importation
of PRC-manufactured components into the United States, which would be subject to the full scope of applicable tariff regimes. The costs
and uncertainties associated with those tariffs could impede or delay any such resumption. Additionally, the continued application of
tariffs affects the broader competitive and cost environment in which our other subsidiaries operate.

 

More broadly, any deterioration in the relationship
between the United States and the PRC, whether arising from tariff disputes, geopolitical tensions, sanctions, export controls, or other
trade-related measures, could further increase the costs associated with importing PRC-manufactured components into the United States
or limit our ability to source such components altogether. Given HEVI’s dependence on PRC-manufactured components for its assembly
operations in the United States, any such deterioration would have a particularly direct and adverse impact on HEVI’s operations
and cost structure. If existing tariffs remain in place, are further escalated, or if new tariff regimes are introduced targeting Chinese
goods or components, our business, financial condition, and results of operations could be materially and adversely affected.

 

Volatile steel prices can cause significant
fluctuations in our operating results. Our revenues and operating income could decrease if steel prices increase or if our subsidiaries
are unable to pass price increases on to their customers.

 

Our subsidiaries’ principal raw materials
are processed metal parts and components which are made of carburizing steel. The steel industry as a whole is cyclical and, at times,
pricing and availability of steel can be volatile due to numerous factors beyond our subsidiaries’ control, including general domestic
and international economic conditions, labor costs, sales levels, competition, levels of inventory, consolidation of steel producers,
higher raw material costs for steel producers, import duties and tariffs and currency exchange rates. This volatility can significantly
affect the availability and cost of raw materials.

 

Our subsidiaries’ suppliers, like many other
processed metal parts and components manufacturers, maintain substantial inventories of steel to accommodate the short lead times and
just-in-time delivery requirements of customers. Accordingly, our subsidiaries’ suppliers purchase steel in an effort to maintain
their inventory at levels that they believe to be appropriate to satisfy the anticipated needs of customers based upon historic buying
practices, supply agreements with customers and market conditions. When steel prices increase, competitive conditions will influence how
much of the price increase suppliers would pass on to our subsidiaries and how much our subsidiaries can pass on to their customers. To
the extent our subsidiaries are unable to pass on future price increases in raw materials to their customers, the revenues and profitability
of our business could be adversely affected.

 

 

We are subject to various risks and uncertainties
that might affect our subsidiaries’ ability to procure raw materials.

 

Our performance depends upon our subsidiaries’
ability to procure low cost, high quality raw materials on a timely basis from their suppliers. Our subsidiaries’ suppliers are
subject to certain risks, including the availability of raw materials, labor disputes, inclement weather, natural disasters, and general
economic and political conditions, which might limit the ability of our subsidiaries’ suppliers to provide low-cost, high-quality
merchandise on a timely basis. Furthermore, for these or other reasons, one or more of our subsidiaries’ suppliers might not adhere
to our subsidiaries’ quality control standards, and our subsidiaries might not identify the deficiency. Any failure by our subsidiaries’
suppliers to supply quality materials at a reasonable cost on a timely basis could reduce our net sales or profits, damage our reputation
and have an adverse effect on our financial condition.

  

Our subsidiaries may lose their competitive
advantage, and their operations may suffer, if they fail to prevent the loss or misappropriation of, or disputes over, their intellectual
property.

 

Our subsidiaries rely on a combination of patents,
trademarks, trade secrets and confidentiality agreements to protect their intellectual property rights. While our subsidiaries are not
currently aware of any infringement on their intellectual property rights, our subsidiaries’ ability to compete successfully and
to achieve future revenue growth will depend, in significant part, on their ability to protect their proprietary technology. Despite many
laws and regulations promulgated, as well as other efforts made, by China over the past several years in an attempt to protect intellectual
property rights, intellectual property rights are not as certain in China as they would be in many Western countries, including the United
States. Furthermore, enforcement of such laws and regulations in China has not been fully developed. Neither the administrative agencies
nor the court systems in China are as equipped as their counterparts in developed countries to deal with violations or handle the nuances
and complexities between compliant technological innovation and non-compliant infringement.

 

Our subsidiaries’ transmission technology
is protected through a combination of patents, trade secrets, confidentiality agreements and other methods. However, our subsidiaries’
competitors may independently develop similar proprietary methodologies or duplicate our products, or develop alternatives, which could
have a material adverse effect on our subsidiaries’ business and our results of operations and financial condition. The misappropriation
or duplication of our subsidiaries’ intellectual property could disrupt their ongoing business, distract our management and employees,
reduce our revenues and increase our expenses. Our subsidiaries may need to litigate to enforce their intellectual property rights. Any
such litigation could be time-consuming and costly, and the outcome of any such litigation cannot be guaranteed.

 

Our PRC subsidiaries have limited insurance
coverage for their operations in China and may incur losses resulting from product liability claims, business interruption or natural
disasters.

 

Our PRC subsidiaries have limited insurance coverage
for their operations in China, and our PRC subsidiaries are therefore exposed to risks associated with product liability claims against
our PRC subsidiaries or otherwise against their operations in the PRC in the event that the use of our PRC subsidiaries’ products
results in property damage or personal injury. Since our subsidiaries’ transmission products are ultimately incorporated into forklifts,
it is possible that users of forklifts or people installing these products could be injured or killed, whether as a result of defects,
improper installation or other causes. We are unable to predict whether product liability claims will be brought against our PRC subsidiaries
in the future or to predict the impact of any resulting adverse publicity on our PRC subsidiaries’ business. The successful assertion
of product liability claims against our PRC subsidiaries could result in potentially significant monetary damages and require us to make
significant payments. Our subsidiaries do not carry product liability insurance and may not have adequate resources to satisfy a judgment
in the event of a successful claim against us. In addition, our subsidiaries do not currently, and may not in the future, maintain business
interruption insurance coverage. As such, our subsidiaries may suffer losses that result from interruptions in their operations as a result
of inability to operate or failures of equipment and infrastructure at our subsidiaries’ facilities. Our subsidiaries also do not
currently maintain catastrophe insurance. As such, any natural disaster or man-made disaster could result in substantial losses and diversion
of our subsidiaries’ resources to address the effects of such an occurrence, which could materially and adversely affect our subsidiaries’
business and our financial condition and results of operations.

 

 

Failure to make adequate contributions to
various employee benefit plans as required by PRC regulations may subject us to penalties.

 

Our PRC subsidiaries are required under PRC laws
to participate in various government sponsored employee benefit plans, including social security insurance, housing funds and other welfare-oriented
payments, and contribute to the plans in amounts equal to certain percentages of salaries, including bonuses and allowances, of their
employees up to a maximum amount specified by the local government from time to time at locations where our PRC subsidiaries operate their
businesses. Our PRC subsidiaries have not made adequate employee benefit payments to the social security insurance and the housing fund.
As a result, they may be required to make up the contributions for these plans within a stipulated period of time. In addition, our PRC
subsidiaries may be required to pay late fees equal to 0.05% of the shortage of the contributions to the social security fund for each
day our PRC subsidiaries fail to make up the contributions and may be imposed fines up to three times of such shortage if our PRC subsidiaries
fail to make up the difference within the time frame prescribed by relevant government authorities. The maximum amount of such penalties
that we anticipate could be imposed on our PRC subsidiaries with respect such employee benefits payments is approximately US$200,000.
If our PRC subsidiaries are subject to late fees or fines in relation to the underpaid employee benefits, our financial condition and
results of operations may be adversely affected. As of the date of this Report, our PRC subsidiaries have not been ordered to pay outstanding
contributions or related penalties.

 

If labor costs in the PRC increase substantially,
our PRC subsidiaries’ business and our costs of operations may be adversely affected.

 

In recent years, the Chinese economy has experienced
inflation and labor cost increases. Average wages are projected to continue to increase. Further, under PRC law an employer is required
to pay various statutory employee benefits, including pensions, housing funds, medical insurance, work-related injury insurance,
unemployment insurance and maternity insurance to designated government agencies for the benefit of its employees. The relevant government
agencies may examine whether an employer has made adequate payments to the statutory employee benefits, and those employers who fail to
make adequate payments may be subject to late payment fees, fines and/or other penalties. We expect that our labor costs, including wages
and employee benefits, will continue to increase based on the past trends. If we are unable to control our labor costs or pass such increased
labor costs on to our subsidiaries’ customers, our financial condition and results of operations may be adversely affected.

 

We may not be able to effectively protect
our intellectual property from unauthorized use by others.

 

Through its subsidiaries, we hold patents, trademarks
and other intellectual properties that are critical to our business in the PRC. Any of our intellectual property rights could be challenged,
invalidated, circumvented or misappropriated, or such intellectual property may not be sufficient to provide us with competitive advantages.
We cannot assure you that (i) all of the intellectual property rights we owned will be adequately protected, or (ii) our intellectual
property rights will not be challenged by third parties or found by a judicial authority to be invalid or unenforceable. Moreover, there
can be no assurance that we will obtain such trademarks and any other trademarks that are crucial to our business in the future. Thus,
third parties may also take the position that we are infringing their rights, and we may not be successful in defending these claims.
Additionally, we may not be able to enforce and defend its proprietary rights or prevent infringement or misappropriation, without incurring
substantial expenses to us and a significant diversion of management time and attention from our business strategy.

 

To protect our parents, trademarks and other proprietary
rights, we rely on and expect to continue to rely on a combination of physical and electronic security measures and trademark, patent
and trade secret protection laws. If the measures we have taken to protect our proprietary rights are inadequate to prevent the use or
misappropriation by third parties or such rights are diminished due to successful challenges, the value of our brand and other intangible
assets may be diminished and our ability to attract and retain customers may be adversely affected.

 

 

Competition for our and our subsidiaries’
employees is intense, and we and our subsidiaries may not be able to attract and retain the highly skilled employees needed to support
our subsidiaries’ business.

 

As we continue to experience growth, our future
success depends on our and our subsidiaries’ ability to attract, develop, motivate and retain highly qualified and skilled employees,
including engineers, financial personnel and marketing professionals. Competition for highly skilled engineering, sales, technical and
financial personnel is extremely intense. We and our subsidiaries may not be able to hire and retain these personnel at compensation levels
consistent with our existing compensation and salary structure. Many of the companies with which we and our subsidiaries compete for experienced
employees have greater resources than we and our subsidiaries have and may be able to offer more attractive terms of employment.

 

In addition, we and our subsidiaries invest significant
time and expense in training our employees, which increases their value to competitors who may seek to recruit them. If we and our subsidiaries
fail to retain our employees, we could incur significant expenses in hiring and training their replacements, and the quality of our products
could decrease, resulting in a material adverse effect on our subsidiaries’ business.

 

Our business depends on the continued efforts
of our senior management. If one or more of our key executives were unable or unwilling to continue in their present positions, our business
may be severely disrupted.

 

Our business operations depend on the continuing
services of our senior management. While we have provided different incentives to our management, we cannot assure you that we can continue
to retain their services. If one or more of our key executives were unable or unwilling to continue in their present positions, we may
not be able to replace them easily or at all, our future growth may be constrained, business may be severely disrupted and our financial
condition and results of operations may be materially and adversely affected, and we may incur additional expenses to recruit, train and
retain qualified personnel. In addition, although we have entered into a non-competition agreement with Mr. Peter Zuguang Wang, the chairman
of our board of directors, there is no assurance that Mr. Wang will not join our competitors or form a competing business. If any dispute
arises between us and Mr. Wang, we may incur substantial costs and expenses in order to enforce the non-competition agreement in China,
and we may be unable to enforce it at all.

 

We do not maintain “key person”
insurance, and as a result, we may incur losses if any of our directors, executive officers, senior manager or other key employees chooses
to terminate his or her services with us.

 

We do not maintain “key person” insurance
for our directors, executive officers, senior management or other key employees. If any of our key employees terminate his or her services
or otherwise becomes unable to provide continuous services to us, our business, financial condition and results of operations may be materially
and adversely affected and we may incur additional expenses to recruit, train and retain qualified personnel. If any of our executive
officers or key employees joins a competitor or forms a competing company, we may lose customers, operational know-how and key professionals
and staff members.

 

Geopolitical conflicts involving Iran, military
actions in the Middle East, and the war in Ukraine may adversely affect economic conditions in the U.S., China and globally, and cause
significant volatility in the trading price of our Class A ordinary shares.

 

U.S. and global markets are experiencing volatility
and disruption as a result of the outbreak or escalation of wars including Russia’s launch of a full-scale military invasion of
Ukraine, conflicts between Israel and Hamas. Although the length and impact of these ongoing conflicts are highly unpredictable, these
conflicts have led to market disruptions, including significant volatility in commodity prices, credit, and capital markets. In addition,
as a result of the ongoing conflicts around the world, we may experience other risks, difficulties and challenges in the way we conduct
our business and operations generally. For example, the conflict could adversely affect supply chains and impact our ability to control
raw material costs. A protracted conflict between Ukraine and Russia or between Israel and Hamas, any escalation of either conflict,
and the wider global economy and market conditions could, in turn, have a material adverse impact on our business, financial condition,
cash flows and results of operations and could cause the market value of our Class A ordinary shares to decline.

 

 

The heightened military conflict involving the
United States, Israel, and Iran, which escalated significantly in February 2026, has led to profound instability in global financial and
energy markets. These events, including the closure of strategic airspaces and critical maritime routes such as the Strait of Hormuz and
the Red Sea, have contributed to a dramatic increase in the price of oil and gas and created widespread market uncertainty. China is particularly
exposed to these developments, as it is the largest purchaser of Iranian crude oil, having absorbed nearly 90% of Iran’s total crude
exports as of early 2026. Any sustained disruption to Iranian oil exports, whether resulting from military action, the imposition of additional
sanctions, or the closure of key maritime transit routes, could materially reduce the supply of crude oil available to China, drive up
domestic energy costs, and exert significant downward pressure on China’s broader economy. The ongoing disruptions caused by these
military actions, and the potential for further escalation, could result in protracted and severe damage to the global economy and investment
climate, with disproportionate consequences for China-based businesses such as us.

 

Furthermore, the continuing war in Ukraine and
the resulting sanctions levied by the United States, the European Union, and other nations against Russia continue to impact global financial
markets. The extent and duration of these military actions in the Middle East and Eastern Europe, as well as the resulting sanctions and
market disruptions, are impossible to predict but are expected to remain substantial. The cumulative effect of these geopolitical pressures,
including elevated global energy prices, supply chain disruptions, and reduced international trade flows, may weigh materially on China’s
economic growth, consumer spending, and business investment, each of which is relevant to our ability to sustain and grow our business
operations China.

 

Such geopolitical instability often leads to broad
sell-offs in the equity markets and heightened investor sensitivity to risk. To the extent that disruptions to Iranian oil exports or
other geopolitical developments adversely affect China’s energy supply, increase domestic production costs, or dampen consumer confidence
and economic activity within China, our business, financial condition, and results of operations could be materially and adversely affected.
Consequently, these developments may also materially and adversely affect the market price of our Class A ordinary shares, regardless
of our actual operating performance. We cannot predict the ultimate progress or outcome of these situations, and any prolonged unrest
or intensified military activities could have a material adverse effect on the global economy and, in particular, on economic conditions
in China, which in turn could negatively impact our financial condition and the value of our securities.

 

High inflation rates may adversely affect
us by increasing costs beyond what we can recover through price increases and limit our ability to enter into future traditional debt
financing.

 

Inflation can adversely affect us by increasing
costs of critical materials, equipment, labor, and other services. In addition, inflation is often accompanied by higher interest rates.
Continued inflationary pressures could impact our profitability. Inflation may also affect our ability to enter into future traditional
debt financing, as high inflation may result in an increase in cost.

 

The outcome of litigation, inquiries, investigations,
examinations, or other legal proceedings in which we are involved, in which we may become involved, or in which our clients or competitors
are involved could distract management, increase our expenses, or subject us to significant monetary damages or restrictions on our ability
to do business.

 

From time to time, we are subject to litigations
or legal proceedings in connection with our business operations. The scope and outcome of these proceedings is often difficult to assess
or quantify. Plaintiffs in lawsuits may seek recovery of large amounts, and the cost to defend such litigation may be significant.

 

Any negative outcomes from above material litigation
or any other regulatory actions or litigation or claims, including monetary penalties or damages or injunctive provisions regulating or
restricting how we conduct our business could have a material adverse effect on our business, financial condition, results of operations
and reputation. Regardless of whether any current or future claims in which we are involved have merit, or whether we are ultimately held
liable or subject to payment of penalties, such investigations and claims have been and may continue to be expensive to defend, may divert
management’s time away from our operations and may result in changes to our business practices that adversely affect our results
of operations.

 

 

Risks Related to Doing Business in China

 

Changes in China’s economic, political
or social conditions or government policies could have a material adverse effect on our business and operations.

 

A substantial majority of our assets and operations
are located in China. Accordingly, our business, financial condition, results of operations and prospects may be influenced to a significant
degree by political, economic and social conditions in China generally. The PRC economy differs from the economies of most developed countries
in many respects, including with regard to the level of government involvement, level of development, growth rate, control of foreign
exchange and allocation of resources. Although the PRC government has implemented measures emphasizing the utilization of market forces
for economic reform, the reduction of state ownership of productive assets, and the establishment of improved corporate governance in
business enterprises, a substantial portion of productive assets in China is still owned by the government. In addition, the PRC government
continues to play a significant role in regulating industry development by imposing industrial policies.

 

The PRC government also exercises significant
control over China’s economic growth through allocating resources, controlling payment of foreign currency-denominated obligations,
setting monetary policy, and providing preferential treatment to particular industries or companies.

 

While the PRC economy has experienced significant
growth over the past decades, growth has been uneven, both geographically and among various sectors of the economy, and the rate of growth
has been slowing since 2012. Any adverse changes in economic conditions in China, in the policies of the PRC government or in the laws
and regulations in China could have a material adverse effect on the overall economic growth of China. Such developments could adversely
affect our business and operating results, lead to reduction in demand for our subsidiaries’ products and adversely affect our subsidiaries’
competitive position. The PRC government has implemented various measures to encourage economic growth and guide the allocation of resources.
Some of these measures may benefit the overall PRC economy, but may have a negative effect on us and our subsidiaries. For example, our
financial condition and results of operations may be adversely affected by government control over capital investments or changes in tax
regulations. In addition, in the past the PRC government has implemented certain measures, including interest rate adjustment, to control
the pace of economic growth. These measures may cause decreased economic activity in China, which may adversely affect our business and
operating results.

 

Uncertainties with respect to the PRC legal
system could adversely affect us and our PRC subsidiaries.

 

The PRC legal system is a civil law system based
on written statutes. Unlike the common law system, prior court decisions under the civil law system may be cited for reference but have
limited precedential value. Since these laws and regulations are relatively new and the PRC legal system continues to rapidly evolve,
the interpretations of many laws, regulations and rules are not always uniform and the enforcement of these laws, regulations and rules
involves uncertainties.

 

In addition, we and our PRC subsidiaries are subject
to risks and uncertainties of the interpretations and applications of PRC laws and regulations, including, but not limited to, limitations
on foreign ownership in the industry our PRC subsidiaries operate. We and our PRC subsidiaries are also subject to the risks and uncertainties
about any future actions of the PRC government. If any future actions of the PRC government result in a material change in our operations,
and the value of our Class A ordinary shares may depreciate significantly or become worthless.

 

 

The PRC government exerts substantial influence
over the manner in which our PRC subsidiaries must conduct their business activities. If the Chinese government significantly regulates
the business operations of our PRC subsidiaries in the future and our PRC subsidiaries are not able to substantially comply with such
regulations, the business operations of our PRC subsidiaries may be materially and adversely affected and the value of our Class A ordinary
shares may significantly decrease.

 

The PRC government has exercised, and continues
to exercise, substantial control over virtually every sector of the Chinese economy through regulation and state ownership, including
steel sector where our PRC subsidiaries have been doing their business. Any government decisions or actions to change the way steel production
is regulated, or any decisions the government might make to cut spending, could adversely impact our PRC subsidiaries’ business
and our results of operations. In addition, the ability of our PRC subsidiaries to operate in China may be harmed by changes in PRC laws
and regulations, including those relating to taxation, environmental conditions, land use rights, property and other matters. The central
or local governments of these jurisdictions may impose new, stricter regulations or interpretations of existing regulations that would
require additional expenditures and efforts on our part to ensure our compliance with such regulations or interpretations. Accordingly,
government actions in the future, including regional or local variations in the implementation of economic policies, could have a significant
effect on economic conditions in China or particular regions thereof, and could require us to divest ourselves of any interest we then
hold in Chinese properties.

 

We believe that our PRC subsidiaries’ operations
in China are in material compliance with all applicable legal and regulatory requirements. However, the central or local governments of
the jurisdictions in which our PRC subsidiaries operate may impose new, stricter regulations or interpretations of existing regulations
with little advance notice that would require additional expenditures and efforts on their part to ensure our subsidiaries’ compliance
with such regulations or interpretations.

 

Our PRC subsidiaries may incur increased costs
necessary to comply with existing and newly adopted laws and regulations or penalties for any failure to comply. In the event that our
PRC subsidiaries are not able to substantially comply with any existing or newly adopted laws and regulations, our business operations
may be materially adversely affected and the value of our Class A ordinary shares may significantly decrease.

 

Furthermore, the PRC government authorities may
strengthen oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers like us.
Such actions taken by the PRC government authorities may intervene or influence the operations of our PRC subsidiaries at any time, which
may be beyond our control. Therefore, any such action may adversely affect the operations of our PRC subsidiaries and substantially limit
or hinder our ability to offer or continue to offer securities to you and significantly reduce the value of such securities or cause the
value of such securities to be completely worthless.

 

We are required under PRC laws to submit
filings to CSRC for our future offerings. However, we believe that we and our PRC subsidiaries are not currently required to obtain the
approval and/or comply with other requirements of the CSRC, the CAC, or other PRC governmental authorities under PRC rules, regulations
or policies in connection with our continued listing on Nasdaq. In the event that any such approval is required or that there are other
requirements we and/or our PRC subsidiaries are obligated to comply with, we cannot predict whether or how soon we and/or our PRC subsidiaries
will be able to obtain such approvals and/or comply with such requirements.

 

The PRC government authorities may strengthen
future oversight over offerings that are conducted overseas. For instance, on July 6, 2021, the relevant PRC governmental authorities
promulgated the Opinions on Strictly Cracking Down on Illegal Securities Activities, which emphasized the need to strengthen the PRC government’s
supervision over overseas listings by PRC companies. Pursuant to the Opinions, effective measures, such as promoting the construction
of relevant regulatory systems, are to be taken to deal with the risks of China-based overseas-listed companies, cybersecurity and data
privacy protection requirements and similar matters. The Cybersecurity Review Measures (Decree No. 8 of the Cybersecurity Administration
of the PRC), or the revised Cybersecurity Review Measures, enacted on December 28, 2021 and came into effect on February 15, 2022, also
require online platform operators holding over one million users’ personal information to apply for a cybersecurity review before
any public offering on a foreign stock exchange. These statements and regulations are recently issued, and there remain substantial uncertainties
about their interpretation and implementation. See also “—Our PRC subsidiaries may be liable for improper use or appropriation
of personal information provided by their customers and any failure to comply with PRC laws and regulations over data security could result
in materially adverse impact on our business, results of operations, and our continued listing on Nasdaq.”

 

 

On February 17, 2023, the CSRC published the Regulations
of Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the “Trial Measures”)
and its accompanying guidelines and instructions, which came into effect on March 31, 2023, and will apply if a domestic enterprise issues
shares, depositary receipts, corporate bonds convertible into shares, or other securities of an equity nature outside of the PRC, or lists
its securities for trading outside of the PRC. According to such regulations, a domestic enterprise that issues and lists its securities
outside of the PRC shall comply with the filing procedures and report the relevant information to the CSRC. A domestic enterprise shall
not be listed on an overseas stock exchange if any of the following circumstances exists: (i) where such securities offering and listing
is explicitly prohibited by provisions in laws, administrative regulations and relevant state rules; (ii) where the intended securities
offering and listing may endanger national security as reviewed and determined by competent authorities under the State Council in accordance
with law; (iii) where the domestic company intending to make the securities offering and listing, or its controlling shareholders and
the actual controller, have committed crimes such as corruption, bribery, embezzlement, misappropriation of property or undermining the
order of the socialist market economy during the latest three years; (iv) where the domestic company intending to make the securities
offering and listing is suspected of committing crimes or major violations of laws and regulations, and is under investigation according
to law, and no conclusion has yet been made thereof; (v) where there are material ownership disputes over equity held by the domestic
company’s controlling shareholder or by other shareholders that are controlled by the controlling shareholder and/or actual controller.
The Trial Measures changes the management of licensing to record management, strengthen the supervision in the aftermath, create a more
transparent and predictable institutional environment, and support the standardized development of enterprises using the overseas capital
market.

 

According to the Notice on Filing Management Arrangements
for Overseas Listings of Domestic Enterprises issued and implemented by the CSRC on February 17, 2023, since the date of effectiveness
of the Trial Measures, the domestic enterprises falling within the scope of filing that have been listed overseas or met the following
circumstances are existing enterprises: Before the effectiveness of the Trial Measures, the application for indirect overseas issuance
and listing has been agreed by the overseas regulators or overseas stock exchanges (such as having passed the hearing on the Hong Kong
market or registration become effective as agreed on the U.S. market, etc.), and it is not required to perform issuance and listing supervision
procedures of the overseas regulators or overseas stock exchanges (such as rehearing on the Hong Kong market, etc.), and the overseas
issuance and listing shall have been completed by September 30, 2023. According to the above regulations, the Company is an existing
enterprise, which do not be required to file immediately, and filing should be made as required if they involve refinancing and other
filing matters.

 

As of the date of this Quarterly Report, we believe
we and our PRC subsidiaries are not required to obtain any permission from PRC authorities (including the CSRC and the CAC) to operate
our PRC subsidiaries’ business as presently conducted or continue being listed on Nasdaq. Therefore, as of the date of this Quarterly
Report, we and our PRC subsidiaries have not applied for any permission or approval from any PRC governmental authority in connection
with our offshore listing and, as such, no such permission or approval has been granted or denied. However, if it fails to comply with
the Trial Measures during future issuance of securities or listing on other stock exchanges outside of China, we may be subjected sanctions
imposed by the PRC regulatory authorities, and our reputation, financial condition, and results of operations may be materially and adversely
affected.

 

To the extent cash
in the business is in the mainland China/Hong Kong or a mainland China/Hong Kong entity, the funds may not be available to fund operations
or for other use outside of the mainland China/Hong Kong due to interventions in or the imposition of restrictions and limitations on
the ability of our Company or our subsidiaries by the PRC government to transfer cash.

 

Relevant mainland PRC
laws and regulations permit companies in mainland China to pay dividends only out of their respective retained earnings, if any, as determined
in accordance with mainland China accounting standards and regulations. Additionally, each of the companies in mainland China are required
to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50%
of its registered capital. These reserves are not distributable as cash dividends. Furthermore, in order for us to pay dividends to our
shareholders, we may rely on payments made from our mainland PRC subsidiaries to their respective shareholders and then to our Company.
If these entities incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends
or make other payments to us.

 

 

Our cash dividends, if any, will be paid in U.S. dollars.
If we are considered a tax resident enterprise of mainland China for tax purposes, any dividends we pay to our overseas shareholders may
be regarded as mainland China-sourced income and as a result may be subject to mainland PRC withholding tax. See “— Risks
Related to Doing Business in China — Under the PRC Enterprise Income Tax Law, we may be classified as a ‘Resident Enterprise’
of China. Such classification will likely result in unfavorable tax consequences to us and our non-PRC shareholders.” The PRC government
also imposes controls on the convertibility of Renminbi into foreign currencies and, in certain cases, the remittance of currency out
of mainland China. Shortages in foreign currencies may restrict our ability to pay dividends or other payments, or otherwise satisfy our
foreign currency denominated obligations, if any. Under existing PRC foreign exchange regulations, payments of current account items,
including profit distributions, interest payments and expenditures from trade-related transactions, can be made in foreign currencies
without prior approval from the State Administration of Foreign Exchange as long as certain procedural requirements are met. Approval
from appropriate government authorities is required if Renminbi is converted into foreign currency and remitted out of mainland China
to pay capital expenses such as the repayment of loans denominated in foreign currencies. The PRC government may, at its discretion, impose
restrictions on access to foreign currencies for current account transactions and if this occurs in the future, we may not be able to
pay dividends in foreign currencies to our shareholders.

 

As of the date of this
Quarterly Report, there are no restrictions or limitations imposed by the Hong Kong government on the transfer of capital within,
into, and out of Hong Kong (including funds from Hong Kong to mainland China), except for the transfer of funds involving money
laundering and criminal activities. However, there is no guarantee that the Hong Kong government will not promulgate new laws or
regulations that may impose such restrictions in the future. If there is a significant change to current political arrangements between
mainland China and Hong Kong, or the applicable laws, regulations, or interpretations change, our Hong Kong subsidiary may become
subject to PRC laws or authorities. As a result, our Hong Kong subsidiary could be subject to similar government controls on the
convertibility of foreign currency and the remittance of currency out of Hong Kong as described above.

 

As a result of the above, to the extent cash in
the business is in the mainland China/Hong Kong or a mainland China/Hong Kong entity, such funds or assets may not be available to fund
operations or for other use outside of the mainland China/Hong Kong, due to interventions in or the imposition of restrictions and limitations
on the ability of us or our subsidiaries by the competent government to the transfer of cash. 

 

Our PRC subsidiaries may be liable for improper
use or appropriation of personal information provided by their customers and any failure to comply with PRC laws and regulations over
data security could result in materially adverse impact on our business, results of operations, and our continued listing on Nasdaq.

 

Our PRC subsidiaries’ business involves
collecting and retaining certain internal and customer data. Our PRC subsidiaries also maintain information about various aspects of their
operations. The integrity and protection of customer and company data is critical to our business. Our subsidiaries’ customers expect
that our subsidiaries will adequately protect their personal information. Our PRC subsidiaries are required by applicable laws to keep
strictly confidential the personal information that they collect, and to take adequate security measures to safeguard such information.

 

The PRC Criminal Law, as amended by its Amendment
7 (effective on February 28, 2009) and Amendment 9 (effective on November 1, 2015), prohibits institutions, companies and their employees
from selling or otherwise illegally disclosing a citizen’s personal information obtained in performing duties or providing services
or obtaining such information through theft or other illegal ways. On November 7, 2016, the Standing Committee of the PRC National People’s
Congress issued the Cyber Security Law of the PRC, or Cyber Security Law, which became effective on June 1, 2017. Pursuant to the Cyber
Security Law, network operators must not, without users’ consent, collect their personal information, and may only collect users’
personal information necessary to provide their services. Providers are also obliged to provide security maintenance for their products
and services and shall comply with provisions regarding the protection of personal information as stipulated under the relevant laws and
regulations.

 

 

The Civil Code of the PRC (issued by the PRC National
People’s Congress on May 28, 2020 and effective from January 1, 2021) provides the legal basis for privacy and personal information
infringement claims under the Chinese civil laws. PRC regulators, including the CAC, the Ministry of Industry and Information Technology,
and the Ministry of Public Security, have been increasingly focused on regulation in data security and data protection.

 

The PRC regulatory requirements regarding cybersecurity
are evolving. For instance, various regulatory bodies in China, including the CAC, the Ministry of Public Security and the State Administration
for Market Regulation, have enforced data privacy and protection laws and regulations with varying and evolving standards and interpretations.
In April 2020, the Chinese government promulgated Cybersecurity Review Measures, which came into effect on June 1, 2020. According to
the Cybersecurity Review Measures, operators of critical information infrastructure must pass a cybersecurity review when purchasing network
products and services which do or may affect national security.

 

In December 2021, the CAC and other related authorities
promulgated the revised Cybersecurity Review Measures, which came into effect on February 15, 2022. The revised Cybersecurity Review Measures
propose the following key changes:

 

●online
platform operators who are engaged in data processing are also subject to the regulatory scope;

 

●the
CSRC is included as one of the regulatory authorities for purposes of jointly establishing the state cybersecurity review working mechanism;

 

●the
online platform operators holding more than one million users’ individual information and seeking a listing outside China shall
file for cybersecurity review with the Cybersecurity Review Office; and

 

●the
risks of core data, material data or large amounts of personal information being stolen, leaked, destroyed, damaged, illegally used or
transmitted to overseas parties and the risks of critical information infrastructure, core data, material data or large amounts of personal
information being influenced, controlled or used maliciously shall be collectively taken into consideration during the cybersecurity
review process.

 

Certain internet platforms in China have reportedly
become subject to heightened regulatory scrutiny in relation to cybersecurity matters. As of the date of this Quarterly Report, we have
not been included within the definition of “operator of critical information infrastructure” by a competent authority, nor
have we been informed by any PRC governmental authority of any requirement that we file for a cybersecurity review. However, if we are
deemed to be a critical information infrastructure operator or an online platform operator that is engaged in data processing and holds
personal information of more than one million users, we could be subject to PRC cybersecurity review in the future.

 

As there remains significant uncertainty in the
interpretation and enforcement of relevant PRC cybersecurity laws and regulations, we could be subject to cybersecurity review. In addition,
we could become subject to enhanced cybersecurity review or investigations launched by PRC regulators in the future. Any failure or delay
in the completion of the cybersecurity review procedures or any other non-compliance with the related laws and regulations may result
in fines or other penalties, including suspension of business, website closure and revocation of prerequisite licenses, as well as reputational
damage or legal proceedings or actions against us and/or our PRC subsidiaries, which may have material adverse effect on our business,
financial condition or results of operations. As of the date of this Quarterly Report, we and our PRC subsidiaries have not been involved
in any investigations on cybersecurity review initiated by the CAC or related governmental regulatory authorities, and we and our PRC
subsidiaries have not received any inquiry, notice, warning, or sanction in such respect.

 

 

On June 10, 2021, the Standing Committee of the
National People’s Congress of China promulgated the PRC Data Security Law, which took effect in September 2021. The PRC Data Security
Law imposes data security and privacy obligations on entities and individuals carrying out data activities, and introduces a data classification
and hierarchical protection system based on the importance of data in economic and social development, and the degree of harm it will
cause to national security, public interests, or legitimate rights and interests of individuals or organizations when such data is tampered
with, destroyed, leaked, illegally acquired or used. The PRC Data Security Law also provides for a national security review procedure
for data activities that may affect national security and imposes export restrictions on certain data and information.

 

As of the date of this Quarterly Report, we do
not expect that the current PRC laws on cybersecurity or data security would have a material adverse impact on our business operations.
However, as the scope of the PRC Data Security Law is broad and includes the collection, storage, use, processing, transmission, availability
and disclosure of data, among others, and uncertainties remain regarding the interpretation and implementation of these laws and regulations,
we cannot assure you that we and our PRC subsidiaries will comply with such regulations in all respects and we and/or our PRC subsidiaries
may be ordered to rectify or terminate any actions that are deemed illegal by regulatory authorities. Any directly liable person within
our Company for violations or alleged violations of the PRC Data Security Law may become subject to fines. We and/or our PRC subsidiaries
may also become subject to fines and/or other sanctions that may have material adverse effect on our business, operations and financial
condition.

 

On September 24, 2024, the CAC released the Administrative
Regulations on the Network Data Security, or the Data Security Regulations, which became effective on January 1, 2025. The Data Security
Regulations may apply to the use of networks to carry out data processing activities and the supervision and administration of network
data security within the territory of the PRC and apply to activities outside the territory of the PRC to process personal information
of any natural persons within the territory of the PRC under any of the following circumstances: (i) for the purpose of providing products
or services to domestic natural persons; (ii) analyze and evaluate the behavior of domestic natural persons; and (iii) other circumstances
stipulated by laws and administrative regulations. The Data Security Regulations further stipulate that where it is indeed necessary to
transfer “important data” collected and generated by a network data processor during its operation within the territory of
the PRC to overseas parties, it shall pass the security assessment for cross-border data transfer organized by the CAC. Network data processors
should identify and declare “important data” in accordance with the relevant provisions, but they are not required to conduct
security assessment for outbound data transfer for data that has not been notified or published as “important data” by relevant
departments or regions. In addition, the Data Security Regulations provides that data processors that process “important data”
must conduct an annual data security assessment with regard to the data process activities, and submit the assessment report to relevant
competent authorities at or above the provincial level. Since the Data Security Regulations is newly promulgated, there remains uncertainty
as to how it will be implemented and interpreted by the competent authorities and whether the PRC regulatory agencies, including the CAC,
will adopt new laws, regulations, rules, or detailed implementation and interpretation related to security assessment. We cannot predict
the impact of the Data Security Regulations on us, if any, at this stage, and we will closely monitor and assess any development in the
implementation and interpretation of the Data Security Regulations. Even though we do not believe our business activities fall under the
scope of Data Security Regulations, in the event that a competent PRC governmental authority concludes otherwise, we face uncertainties
as to whether such clearance can be timely obtained, or at all.

 

A severe or prolonged downturn in the PRC
or global economy could materially and adversely affect our business and our financial condition.

 

The global macroeconomic environment is facing
challenges. There is considerable uncertainty over the long-term effects of the expansionary monetary and fiscal policies adopted
by the central banks and financial authorities of some of the world’s leading economies, including the United States and China.
Geopolitical conflicts involving Iran, current military actions in the Middle East, as well as the conflicts involving Ukraine, Syria,
Russia and North Korea may result in volatility and disruptions to the economy in the U.S., China, and globally. In particular, the ongoing
conflict involving Iran poses significant risks to regional and global economic stability. Iran is a major producer of crude oil, and
any escalation of conflicts in Iran, including potential disruptions to oil production, export infrastructure, or transit routes through
the Strait of Hormuz, have resulted in and could continue to result in significant increases in global crude oil prices. Elevated energy
costs could, in turn, contribute to inflationary pressures, increased production and transportation costs, reduced consumer spending,
and a broader economic slowdown across major economies, including China and the United States. Such developments could materially and
adversely affect the demand for our products, increase our operating costs, and negatively impact our results of operations and financial
condition. See also “— Risks Related to our Business and Industry — Geopolitical conflicts involving Iran, military
actions in the Middle East, and the war in Ukraine may adversely affect economic conditions in the U.S., China and globally, and cause
significant volatility in the trading price of our Class A ordinary shares.” There have also been concerns on the relationship among
China and other Asian countries, which may result in, or intensify potential conflicts in relation to, territorial disputes, and the trade
disputes between China and other countries. It is unclear whether these challenges and uncertainties will be contained or resolved, and
what effects they may have on the global political and economic conditions in the long term.

 

 

Economic conditions in China are sensitive to
global economic conditions, changes in domestic economic and political policies and the expected or perceived overall economic growth
rate in China. While the economy in China has grown significantly over the past decades, growth has been uneven, both geographically and
among various sectors of the economy, and the rate of growth has been slowing in recent years. Although growth of China’s economy
remained relatively stable, there is a possibility that China’s economic growth may materially decline in the near future. Any severe
or prolonged slowdown in the global or PRC economy may materially and adversely affect our business, results of operations and financial
condition.

 

You may have difficulty enforcing judgments
against us.

 

A significant portion of our assets are located,
and a substantial amount of our subsidiaries’ operations are conducted, in the PRC. In addition, some of our directors and officers
are nationals or residents of the PRC, including our acting chief financial officer, Ms. Chenyang Wang, and independent directors, Mr.
Ming Zhao and Mr. Zheng He, and a substantial majority of their assets are located outside the United States. As a result, it may be difficult
to effect service of process within the United States upon these persons. In addition, there is uncertainty as to whether the courts of
the PRC would recognize or enforce judgments of U.S. courts because China does not have any treaties or other arrangements that provide
for the reciprocal recognition and enforcement of foreign judgments with the United States. In addition, according to the PRC Civil Procedures
Law, courts in the PRC will not enforce a foreign judgment against us or our directors and officers if they decide that the judgment violates
basic principles of PRC law or national sovereignty, security, or the public interest.

 

Under the PRC Enterprise Income Tax Law,
we may be classified as a “Resident Enterprise” of China. Any classification as such will likely result in unfavorable tax
consequences to us and our non-PRC shareholders.

 

Under the PRC EIT Law, an enterprise established
outside of China with “de facto management bodies” within China is considered a “resident enterprise,” meaning
that it can be subject to an enterprise income tax, or EIT, rate of 25.0% on its global income. In April 2009, the SAT promulgated a circular,
known as Circular 82, and partially amended by Circular 9 promulgated in January 2014, to clarify the certain criteria for the determination
of the “de facto management bodies” for foreign enterprises controlled by PRC enterprises or PRC enterprise groups. Under
Circular 82, a foreign enterprise is considered a PRC resident enterprise if all of the following apply: (1) the senior management and
core management departments in charge of daily operations are located mainly within China; (2) decisions relating to the enterprise’s
financial and human resource matters are made or subject to approval by organizations or personnel in China; (3) the enterprise’s
primary assets, accounting books and records, company seals, and board and shareholders’ meeting minutes are located or maintained
in China; and (4) 50.0% or more of voting board members or senior executives of the enterprise habitually reside in China. Further to
Circular 82, the SAT issued a bulletin, known as Bulletin 45, effective in September 2011 and amended on June 1, 2015 and October 1, 2016,
to provide more guidance on the implementation of Circular 82 and clarify the reporting and filing obligations of such “Chinese
controlled offshore incorporated resident enterprises.” Bulletin 45 provides for, among other matters, procedures for the determination
of resident status and administration of post-determination matters. Although Circular 82 and Bulletin 45 explicitly provide that the
above standards apply to enterprises that are registered outside China and controlled by PRC enterprises or PRC enterprise groups, Circular
82 may reflect the SAT’s criteria for determining the tax residence of foreign enterprises in general.

 

If the PRC tax authorities determine that we are
a “resident enterprise” for PRC enterprise income tax purposes, a number of unfavorable PRC tax consequences could follow.
First, we may be subject to the enterprise income tax at a rate of 25% on our worldwide taxable income as well as PRC enterprise income
tax reporting obligations. In our case, this would mean that income such as non-China source income would be subject to PRC enterprise
income tax at a rate of 25%. Second, under the PRC EIT Law, dividends paid to us from our PRC subsidiaries would be deemed as “qualified
investment income between resident enterprises” and therefore qualify as “tax-exempt income” pursuant to the clause
26 of the PRC EIT Law. Finally, it is possible that future guidance issued with respect to the new “resident enterprise” classification
could result in a situation in which the dividends we pay with respect to our Class A ordinary shares, or the gain our non-PRC shareholders
may realize from the transfer of our Class A ordinary shares, may be treated as PRC-sourced income and may therefore be subject to a 10%
PRC withholding tax. The PRC EIT Law is, however, relatively new and ambiguities exist with respect to the interpretation and identification
of PRC-sourced income, and the application and assessment of withholding taxes. If we are required under the PRC EIT Law to withhold PRC
income tax on dividends payable to our non-PRC shareholders, should there be a determination in the future to pay dividends, or if non-PRC
shareholders are required to pay PRC income tax on gains on the transfer of their Class A ordinary shares, our business could be negatively
impacted and the value of your investment may be materially reduced. Further, if we were treated as a “resident enterprise”
by PRC tax authorities, we would be subject to taxation in both China and such countries in which we have taxable income, and our PRC
tax may not be creditable against such other taxes.

  

 

PRC regulation of loans to, and direct investments
in, PRC entities by offshore holding companies may delay or prevent us from using proceeds from our future financing activities to make
loans or additional capital contributions to our PRC subsidiaries.

 

As an offshore holding company with PRC subsidiaries,
we may transfer funds to our PRC subsidiaries or finance our PRC entities by means of loans or capital contributions. Any capital contributions
or loans that we, as an offshore entity, make to our PRC subsidiaries, are subject to PRC regulations. Any loans to our PRC subsidiaries,
which are foreign-invested enterprises, cannot exceed statutory limits based on the difference between the amount of our investments and
registered capital in such subsidiaries, and shall be registered with State Administration of Foreign Exchange, or SAFE, or its local
counterparts. Furthermore, any capital increase contributions we make to our PRC subsidiaries, which are foreign-invested enterprises,
are subject to the requirement of making necessary reports in Foreign Investment Comprehensive Management Information System, and registration
with other government authorities in China. We may not be able to obtain these government registrations or approvals on a timely basis,
if at all. If we fail to obtain such approvals or make such registration, our ability to make equity contributions or provide loans to
our PRC subsidiaries or to fund their operations may be negatively affected, which may adversely affect their liquidity and ability to
fund their working capital and expansion projects and meet their obligations and commitments. As a result, our liquidity and our ability
to fund and expand our business may be negatively affected.

 

We may rely on dividends paid by our subsidiaries
for our cash needs, and any limitation on the ability of our subsidiaries to make payments to us could have a material adverse effect
on our ability to conduct business.

 

As a holding company, we conduct a substantial
amount of our business through our subsidiaries in China. We may rely on dividends paid by these PRC subsidiaries for our cash needs,
including the funds necessary to pay any dividends and other cash distributions to our shareholders, to service any debt we may incur
and to pay our operating expenses. The payment of dividends by entities established in China is subject to limitations. Regulations in
China currently permit payment of dividends only out of accumulated profits as determined in accordance with accounting standards and
regulations in China. In accordance with the Article 210, 214 of the Company Law of the PRC (Revised in 2023), each of our PRC subsidiaries
is required to allocate 10% of their profits to their statutory common reserve when they distribute their after-tax profits for the current
year. A company shall no longer be required to make allocations to their statutory common reserve once the aggregate amount of such reserve
exceeds 50% of their registered capital. The statutory common reserve fund of a company may only be used to cover the losses of the company,
expand the business and production of the company or be converted into additional capital. As a result, our PRC subsidiaries are restricted
in their ability to transfer a portion of their net assets to us in the form of dividends. In addition, if any of our PRC subsidiaries
incurs debt on its own behalf in the future, the instruments governing the debt may restrict such subsidiary’s ability to pay dividends
or make other distributions to us. Any limitations on the ability of our PRC subsidiaries to transfer funds to us could materially and
adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends and otherwise
fund and conduct our business.

  

You may be subject to PRC income tax on
dividends from us or on any gain realized on the transfer of our Class A ordinary shares.

 

Under the PRC EIT Law, subject to any applicable
tax treaty or similar arrangement between the PRC and your jurisdiction of residence that provides for a different income tax arrangement,
PRC withholding tax at the rate of 10.0% is normally applicable to dividends from PRC sources payable to investors that are non-PRC resident
enterprises, which do not have an establishment or place of business in China, or which have such establishment or place of business if
the relevant income is not effectively connected with the establishment or place of business. Any gain realized on the transfer of shares
by such investors is subject to 10.0% PRC income tax if such gain is regarded as income derived from sources within China unless a treaty
or similar arrangement otherwise provides. Under the Individual Income Tax Law of the PRC and its implementation rules, dividends from
sources within China paid to foreign individual investors who are not PRC residents are generally subject to a PRC withholding tax at
a rate of 20% and gains from PRC sources realized by such investors on the transfer of shares are generally subject to 20% PRC income
tax, in each case, subject to any reduction or exemption set forth in applicable tax treaties and PRC laws.

 

 

There is a risk that we will be treated by the
PRC tax authorities as a PRC tax resident enterprise. In that case, any dividends we pay to our shareholders may be regarded as income
derived from sources within China and we may be required to withhold a 10.0% PRC withholding tax for the dividends we pay to our investors
who are non-PRC corporate shareholders, or a 20.0% withholding tax for the dividends we pay to our investors who are non-PRC individual
shareholders, including the holders of our Shares. In addition, our non-PRC shareholders may be subject to PRC tax on gains realized on
the sale or other disposition of our Class A ordinary shares, if such income is treated as sourced from within China. It is unclear whether
our non-PRC shareholders would be able to claim the benefits of any tax treaties between their tax residence and China in the event that
we are considered as a PRC resident enterprise. If PRC income tax is imposed on gains realized through the transfer of our Class A ordinary
shares or on dividends paid to our non-resident investors, should there be a determination in the future to pay dividends, the value of
your investment in our Class A ordinary shares may be materially and adversely affected. Furthermore, our shareholders whose jurisdictions
of residence have tax treaties or arrangements with China may not qualify for benefits under such tax treaties or arrangements.

 

Fluctuations in exchange rates could have
a material adverse impact on our results of operations and the value of your investment.

 

The conversion of Renminbi into foreign currencies,
including U.S. dollars, is based on rates set by the People’s Bank of China. The Renminbi has fluctuated against the U.S. dollar,
at times significantly and unpredictably. The value of the Renminbi against the U.S. dollar and other currencies may fluctuate and is
affected by, among other things, changes in political and economic conditions in China and by China’s foreign exchange policies,
among other things. We cannot assure you that Renminbi will not appreciate or depreciate significantly in value against the U.S. dollar
in the future. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between the
Renminbi and the U.S. dollar in the future.

 

Significant fluctuation of the Renminbi may have
a material adverse effect on your investment. For example, to the extent that we need to convert U.S. dollars into Renminbi for our operations,
appreciation of the Renminbi against the U.S. dollar would have an adverse effect on the Renminbi amount we would receive from the conversion.
Conversely, if we decide to convert our Renminbi into U.S. dollars for the purpose of making payments for dividends on our Class A ordinary
shares or for other business purposes, appreciation of the U.S. dollar against the Renminbi would have a negative effect on the U.S. dollar
amount available to us.

 

Very limited hedging options are available in
China to reduce our exposure to exchange rate fluctuations. As of the date of this Quarterly Report, we have not entered into any material
hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we may decide to enter into hedging
transactions in the future, the availability and effectiveness of these hedges may be limited and we may not be able to adequately hedge
our exposure or at all. In addition, our currency exchange losses may be magnified by PRC exchange control regulations that restrict our
ability to convert Renminbi into foreign currency.

 

Governmental control of currency conversion
may limit our ability to utilize our revenues effectively and affect the value of your investment.

 

The PRC government imposes controls on the convertibility
of the Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China. We receive a significant portion
of our revenues in Renminbi. Under our current corporate structure, our British Virgin Islands holding company may rely on dividend payments
from our PRC subsidiaries to fund any cash and financing requirements we may have. Under existing PRC foreign exchange regulations, payments
of current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions,
can be made in foreign currencies without prior approval of SAFE, by complying with certain procedural requirements. Specifically, under
the existing exchange restrictions, without prior approval of SAFE, cash generated from the operations of our PRC subsidiaries in China
may be used to pay dividends to our Company. However, approval from or registration with appropriate government authorities is required
where Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans
denominated in foreign currencies. As a result, we need to obtain SAFE approval to use cash generated from the operations of our PRC subsidiaries
to pay off their respective debt in a currency other than Renminbi owed to entities outside China, or to make other capital expenditure
payments outside China in a currency other than Renminbi. If such approval is withheld or the PRC government imposes other restrictions
on the convertibility of Renminbi into foreign currencies, we may not be able to utilize our revenues effectively, and as a result, our
business and results of operations may be materially adversely affected, and the value of our Class A ordinary shares may decrease.

 

 

U.S. regulatory bodies may be limited in
their ability to conduct investigations or inspections of our operations in China.

 

The SEC, the U.S. Department of Justice and other
U.S. authorities may also have difficulties in bringing and enforcing actions against us or our directors or executive officers in the
PRC. The SEC has stated that there are significant legal and other obstacles to obtaining information needed for investigations or litigation
in China. China has recently adopted a revised securities law that became effective on March 1, 2020, Article 177 of which provides, among
other things, that no overseas securities regulator is allowed to directly conduct an investigation or evidence collection activities
within the territory of the PRC. Accordingly, without governmental approval in China, no entity or individual in China may provide documents
and information relating to securities business activities to overseas regulators when it is under direct investigation or evidence discovery
conducted by overseas regulators, which could present significant legal and other obstacles to obtaining information needed for investigations
and litigation conducted outside of China.

 

Our Class A ordinary shares may be delisted
and prohibited from being traded under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect our auditors. The
delisting and the cessation of trading of our Class A ordinary shares, or the threat of their being delisted and prohibited from being
traded, may materially and adversely affect the value of your investment. Additionally, any inability of the PCAOB to conduct inspections
deprives our investors with the benefits of such inspections.

 

Pursuant to the Holding Foreign Companies Accountable
Act, as amended by the Consolidated Appropriations Act 2023, if the SEC determines that we have filed audit reports issued by a registered
public accounting firm that has not been subject to inspections by the PCAOB for two consecutive years, the SEC will prohibit our Class
A ordinary shares from being traded on a national securities exchange or in the over-the-counter trading market in the United States.

 

Our auditor, Enrome LLP, as an auditor of companies
that are traded publicly in the United States and a firm registered with the PCAOB, is subject to laws in the United States pursuant to
which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards and was not identified
in PCAOB’s determination report as a firm subject to the PCAOB’s determination. Enrome LLP is headquartered in Singapore and
subject to inspect by the PCAOB.

 

If the PCAOB determines in the future that it
no longer has full access to inspect and investigate completely accounting firms in mainland China and Hong Kong and we use an accounting
firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the SEC, we would be
identified as a Commission-Identified Issuer following the filing of the annual report on Form 10-K for the relevant fiscal year. In accordance
with the Holding Foreign Companies Accountable Act, our securities would be prohibited from being traded on a national securities exchange
or in the over-the-counter trading market in the United States if we are identified as a Commission-Identified Issuer for two consecutive
years in the future. A prohibition of being able to trade in the United States would substantially impair or completely hinder your ability
to sell or purchase our Class A ordinary shares when you wish to do so, and the risk and uncertainty associated with delisting would have
a negative impact on the price of our Class A ordinary shares or render them worthless. Also, such a prohibition would significantly affect
our ability to raise capital on terms acceptable to us, or at all, which would have a material adverse impact on our business, financial
condition, and prospects.

 

Additionally, we cannot assure you whether the
national securities exchange we are listed on or regulatory authorities would apply additional and more stringent criteria to us after
considering the effectiveness of our auditor’s audit procedures and quality control procedures, adequacy of personnel and training,
or sufficiency of resources, geographic reach, or experience as it relates to our audit.

 

 

Risks Related to Our Ordinary Shares

 

Nasdaq has recently adopted and proposed
new listing rules that could result in the accelerated delisting of our Class A ordinary shares.

 

Nasdaq has recently adopted and proposed several
new continued listing requirements that could subject our Class A ordinary shares to accelerated suspension and delisting proceedings,
with limited or no opportunity to cure noncompliance.

 

Amended Minimum Bid Price Rule (Effective January
19, 2026). Nasdaq amended its minimum bid price rules, effective January 19, 2026, such that if a listed security’s closing
bid price falls below $0.10 for ten consecutive trading days, Nasdaq will immediately issue a Staff Delisting Determination under Rule
5810 and the company will be ineligible for any compliance period that would otherwise be available. Prior to this amendment, an immediate
delisting determination could only be issued after a company’s security had already been non-compliant with the $1.00 minimum bid
price requirement for 30 consecutive trading days. Nasdaq adopted this change on the basis that a rapid decline in a security’s
price to below $0.10 is indicative of deep financial or operational distress that is unlikely to be temporary.

 

On March 12, 2026, we received a notification
letter (the “Bid Price Deficiency Letter”) from the Listing Qualifications staff of Nasdaq notifying us that, for the last
30 consecutive business days, the closing bid price for our Class A ordinary shares had been below the minimum $1.00 per share required
for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (“Rule 5550(a)(2)”). The Bid
Price Deficiency Letter constitutes a notice of deficiency only and does not currently affect the listing or trading of our Class A ordinary
shares on The Nasdaq Capital Market.

 

Pursuant to the Bid Price Deficiency Letter, we
have 180 days, or until September 8, 2026, to regain compliance with Rule 5550(a)(2) by maintaining a closing bid price of at least $1.00
per share for a minimum of 10 consecutive business days. We may also be eligible for an additional compliance period of 180 calendar days
if, on September 8, 2026, we meet the continued listing requirement for market value of publicly held shares and all other applicable
standards for initial listing on The Nasdaq Capital Market (with the exception of the closing bid price requirement) based on our then
most recent public filings and market information, and we provide written notice to Nasdaq of our intent to cure the deficiency during
such additional compliance period, including, without limitation, by effecting a share consolidation, if necessary.

 

We intend to monitor closely the closing bid price
of our Class A ordinary shares and to consider plans for regaining compliance with Rule 5550(a)(2). While we plan to review all available
options, there can be no assurance that we will be able to regain compliance with the applicable rules during the 180-day compliance period
ending on September 8, 2026, any additional compliance period, or at all. Furthermore, in the event that the closing bid price of our
Class A ordinary shares falls below $0.10 per share for ten consecutive trading days, Nasdaq will issue an immediate Staff Delisting Determination
and we will be ineligible for any compliance period that would otherwise be available, which would result in the immediate delisting of
our Class A ordinary shares from The Nasdaq Capital Market.

 

Proposed Minimum Market Value Requirement (SR-NASDAQ-2026-004,
Pending SEC Approval). Nasdaq has proposed a new rule that would require listed companies on the Nasdaq Global Market and Nasdaq Capital
Market to maintain a minimum Market Value of Listed Securities of at least $5 million. Failure to satisfy this requirement for 30 consecutive
business days would result in immediate suspension and delisting without a standard compliance period. Under the proposed rule, any automatic
stay of suspension during an appeal would be eliminated, meaning our securities would likely trade over-the-counter while any appeal is
pending.

 

 

Proposed Discretionary Delisting Authority
(SR-NASDAQ-2026-009, Pending SEC Approval). Nasdaq has also proposed granting itself discretionary authority to immediately delist
securities if the SEC has suspended trading due to potential third-party misconduct.

 

If our Class A ordinary shares are delisted from
Nasdaq for any reason, it could materially and adversely affect our business, financial condition, and results of operations. Delisting
would likely cause the trading volume and liquidity of our Class A ordinary shares to decline significantly, as many institutional investors
are prohibited by their investment mandates from holding securities that are not listed on a national securities exchange. Our Class A
ordinary shares would likely be traded on the over-the-counter markets, where investors may find it more difficult to obtain timely and
accurate information about our company and where the trading market may be significantly less liquid than Nasdaq. The reduction in liquidity
could cause the trading price of our Class A ordinary shares to decline materially. In addition, delisting could impair our ability to
raise capital through the issuance of equity or equity-linked securities, as investors and underwriters may be unwilling to participate
in offerings of securities that are not listed on a national securities exchange. Delisting could also trigger defaults or acceleration
provisions under any existing or future debt instruments or agreements, and could impair our ability to attract and retain employees,
customers, and business partners who may view a Nasdaq listing as an indicator of our financial stability and credibility. Furthermore,
the delisting of our Class A ordinary shares could result in negative publicity and erode investor confidence in our company, which could
have a long-term adverse impact on our business prospects and the value of your investment.

 

Our dual-class share structure
with different voting rights will limit your ability to influence corporate matters and could discourage others from pursuing any change
of control transactions that holders of our Class A ordinary shares may view as beneficial.

 

Under our dual-class share structure, our
ordinary shares consist of Class A ordinary shares and Class B ordinary shares. In respect of matters requiring the votes of
shareholders, holders of Class B ordinary shares are entitled to 25 votes per share, while holders of Class A ordinary shares
are entitled to one vote per share based on our dual-class share structure. Each Class B ordinary share is convertible into
one Class A ordinary share at any time by the holder thereof, while Class A ordinary shares are not convertible into Class B
ordinary shares under any circumstances. Upon any sale, transfer, assignment, or disposition of any Class B ordinary shares by a
holder thereof to a transferee who is not an affiliate of the transferor, such Class B ordinary shares are automatically and immediately
converted into an equal number of Class A ordinary shares.

 

As of the date of this Report, Mr. Peter Zuguang
Wang, the Chairman of our Board of Directors, beneficially owns all of our issued and outstanding Class B ordinary shares. These Class B
ordinary shares constitute approximately 24.00% of our total issued and outstanding ordinary shares and 88.76% of the aggregate voting
power of our total issued and outstanding ordinary shares, due to the disparate voting powers associated with our dual-class share
structure. As a result of the dual-class share structure and the concentration of ownership, the holder of Class B ordinary
shares will have considerable influence over matters such as decisions regarding mergers, consolidations, and the sale of all or substantially
all of our assets, election of directors, and other significant corporate actions. The holder may take actions that are not in the best
interest of us or our other shareholders. This concentration of ownership may discourage, delay, or prevent a change in control of our
Company, which could have the effect of depriving our other shareholders of the opportunity to receive a premium for their shares as part
of a sale of our Company and may reduce the price of the Class A ordinary shares. This concentrated control will limit your ability
to influence corporate matters and could discourage others from pursuing any potential merger, takeover, or other change of control transactions
that holders of Class A ordinary shares may view as beneficial.

 

 

The dual-class structure of our
ordinary shares may adversely affect the trading market for the Class A ordinary shares.

 

S&P Dow Jones and FTSE Russell have announced
changes to their eligibility criteria for inclusion of shares of public companies in certain indices, including the S&P 500, to exclude
companies with multiple classes of shares and companies whose public shareholders hold no more than 5% of total voting power from being
added to such indices. In addition, several shareholder advisory firms have announced their opposition to the use of multiple class capital
structures. As a result, the dual class structure of our ordinary shares may prevent the inclusion of the Class A ordinary shares
in such indices and may cause shareholder advisory firms to publish negative commentary about our corporate governance practices or otherwise
seek to cause us to change our capital structure. Any such exclusion from indices could result in a less active trading market for the
Class A ordinary shares. Any actions or publications by shareholder advisory firms critical of our corporate governance practices
or capital structure could also adversely affect the value of the Class A ordinary shares

 

Future sales of our Class A ordinary shares,
whether by us or our shareholders, could cause the price of our Class A ordinary shares to decline.

 

If our existing shareholders sell, or indicate
an intent to sell, substantial amounts of our Class A ordinary shares in the public market, the trading price of our Class A ordinary
shares could decline significantly. Similarly, the perception in the public market that our shareholders might sell our Class A ordinary
shares could also depress the market price of our shares. A decline in the price of our Class A ordinary shares might impede our ability
to raise capital through the issuance of additional Class A ordinary shares or other equity securities. In addition, the issuance and
sale by us of additional Class A ordinary shares, or securities convertible into or exercisable for our Class A ordinary shares, or the
perception that we will issue such securities, could reduce the trading price for our Class A ordinary shares as well as make future sales
of equity securities by us less attractive or not feasible. The sale of Class A ordinary shares issued upon the exercise of our outstanding
warrants could further dilute the holdings of our then existing shareholders.

  

We do not know whether a market for the
Class A ordinary shares will be sustained or what the trading price of the Class A ordinary shares will be and as a result it may be difficult
for you to sell your Class A ordinary shares.

 

Although our Class A ordinary shares trade on
Nasdaq, an active trading market for the Class A ordinary shares may not be sustained. It may be difficult for you to sell your Class
A ordinary shares without depressing the market price for the Class A ordinary shares. As a result of these and other factors, you may
not be able to sell your Class A ordinary shares. Further, an inactive market may also impair our ability to raise capital by selling
Class A ordinary shares, or may impair our ability to enter into strategic partnerships or acquire companies or products by using our
Class A ordinary shares as consideration.

 

Securities analysts may not cover our Class
A ordinary shares and this may have a negative impact on the market price of our Class A ordinary shares.

 

The trading market for our Class A ordinary shares
will depend, in part, on the research and reports that securities or industry analysts publish about us or our business. We do not have
any control over independent analysts (provided that we have engaged various non-independent analysts). We do not currently have and may
never obtain research coverage by independent securities and industry analysts. If no independent securities or industry analysts commence
coverage of us, the trading price for our Class A ordinary shares would be negatively impacted. If we obtain independent securities or
industry analyst coverage and if one or more of the analysts who covers us downgrades our Class A ordinary shares, changes their opinion
of our shares or publishes inaccurate or unfavorable research about our business, the price of our Class A ordinary shares would likely
decline. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, demand for our Class A ordinary
shares could decrease and we could lose visibility in the financial markets, which could cause the price and trading volume of our Class
A ordinary shares to decline.

 

 

Because we do not expect to pay dividends
in the foreseeable future, you must rely on the price appreciation of our Class A ordinary shares for a return on your investment.

 

We currently intend to retain most, if not all,
of our available funds and any future earnings to fund the development and growth of our business. As a result, we do not expect to pay
any cash dividends in the foreseeable future. Therefore, you should not rely on an investment in our Class A ordinary shares as a source
for any future dividend income.

 

Our board of directors has complete discretion
as to whether to distribute dividends, subject to certain requirements of British Virgin Islands law. In addition, our shareholders may
by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our board of directors. Under British
Virgin Islands law, a British Virgin Islands company may pay a dividend out of either profit or share premium account, provided that in
no circumstances may a dividend be paid if this would result in the company being unable to pay its debts as they fall due in the ordinary
course of business. Even if our board of directors decides to declare and pay dividends, the timing, amount and form of future dividends,
if any, will depend on, among other things, our future results of operations and cash flow, our capital requirements and surplus, the
amount of distributions, if any, received by us from our subsidiaries, our financial condition, contractual restrictions, and other factors
deemed relevant by our board of directors. Accordingly, the return on your investment in our Class A ordinary shares will likely depend
entirely upon any future price appreciation of our Class A ordinary shares. There is no guarantee that our Class A ordinary shares will
appreciate in value or even maintain the price at which you purchased the Class A ordinary shares. You may not realize a return on your
investment in our Class A ordinary shares and you may even lose your entire investment in our Class A ordinary shares.

 

Techniques employed by short sellers may
drive down the market price of our Class A ordinary shares.

 

Short selling is the practice of selling securities
that the seller does not own but rather has borrowed from a third party with the intention of buying identical securities back at a later
date to return to the lender. The short seller hopes to profit from a decline in the value of the securities between the sale of the borrowed
securities and the purchase of the replacement shares, as the short seller expects to pay less in that purchase than it received in the
sale. As it is in the short seller’s interest for the price of the security to decline, many short sellers publish, or arrange for
the publication of, negative opinions regarding the relevant issuer and its business prospects in order to create negative market momentum
and generate profits for themselves after selling a security short. These short attacks have, in the past, led to selling of shares in
the market.

 

Other public companies listed in the United States
that have substantial operations in China have been the subject of short selling. Much of the scrutiny and negative publicity has centered
on allegations of a lack of effective internal control over financial reporting resulting in financial and accounting irregularities and
mistakes, inadequate corporate governance policies or a lack of adherence thereto and, in many cases, allegations of fraud. As a result,
many of these companies are now conducting internal and external investigations into the allegations and, in the interim, are subject
to shareholder lawsuits and/or SEC enforcement actions.

 

We may in the future be the subject of unfavorable
allegations made by short sellers. Any such allegations may be followed by periods of instability in the market price of our Class A ordinary
shares and negative publicity. If and when we become the subject of any unfavorable allegations, whether such allegations are proven to
be true or untrue, we could be required to expend a significant amount of resources to investigate such allegations and/or defend ourselves.
While we would strongly defend against any such short seller attacks, we may be constrained in the manner in which we can proceed against
the relevant short seller by principles of freedom of speech, applicable federal or state law or issues of commercial confidentiality.
Such a situation could be costly and time- consuming and could distract our management from growing our business. Even if such allegations
are ultimately proven to be groundless, allegations against us could severely impact our business operations and shareholder’s equity,
and the value of any investment in our Class A ordinary shares could be greatly reduced or rendered worthless.

 

 

Our Class A ordinary shares may experience
extreme price and volume fluctuations, which could lead to costly litigation for us and make an investment in us less appealing.

 

The market price of our Class A ordinary shares
may fluctuate substantially due to a variety of factors, including:

 

●our
business strategy and plans;

 

●new
regulatory pronouncements and changes in regulatory guidelines and timing of regulatory approvals;

 

●general
and industry-specific economic conditions;

 

●variations
in our quarterly financial and operating results, including the rate at which we incur negative cash flow in future periods;

 

●changes
in market valuations of other companies that operate in our business segments or in our industry;

 

●lack
of trading liquidity;

 

●changes
in accounting principles; and

 

●general
market conditions, economic and other external factors.

 

In addition, the stock market in general, and
the market for shares of PRC-based issuers in particular, has experienced extreme price and volume fluctuations that have often been unrelated
or disproportionate to the operating performance of individual companies. These broad market and industry fluctuations, as well as general
economic, political, regulatory and market conditions, such as recessions, interest rate changes, inflation, public health crises, geopolitical
instability or disruptions in global supply chains, could cause the market price of our Class A ordinary shares to decline materially,
regardless of our actual operating performance or prospects. As a result, investors in our Class A ordinary shares may experience a significant
decrease in the value of their investment and may be unable to resell their shares at or above the price paid.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES
AND USE OF PROCEEDS.

 

There were no unregistered sales of the Company’s
equity securities during the three months ended March 31, 2026 that were not previously disclosed in reports filed with the SEC.   

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

 

No senior securities were issued and outstanding
during the three-month period ended March 31, 2024.

 

ITEM 4. MINE SAFETY DISCLOSURES.

 

Not applicable.

 

ITEM 5. OTHER INFORMATION.

 

None.

 

 

ITEM 6. EXHIBITS 

 

(a) Exhibits

 

Exhibit
 
Exhibit Description

3.1(2)
 
Memorandum and Articles of Association.

3.2(2)
 
Amended and Restated Articles of Association.

3.3(1)
 
Second Amended and Restated Articles of Association.

3.4(3)
 
Amended and Restated Memorandum and Articles of Association, effective on October 24, 2019.

10.1(4)
 
Employment Agreement, dated March 21, 2026 by and between the Company and Chenyang Wang

10.2*
 
Extension Agreement, dated April 14, 2026, by and between Zhongchai Holding (Hong Kong) Limited and Cenntro Inc.

10.3*
 
Supplementary Agreement, dated January 1, 2025, by and between Zhejiang Zhongchai Machinery Co. Ltd. and Hangcha Group

31.1*
 
Certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*
 
Certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**
 
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2**
 
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS
 
Inline XBRL Instance Document.

101.SCH
 
Inline XBRL Taxonomy Extension Schema Document.

101.CAL
 
Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF
 
Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB
 
Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE
 
Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104
 
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

 

(1)
Incorporated by reference to the Company’s Form 8-K, filed with the SEC on July 30, 2018.

 

(2)
Incorporated by reference to the Company’s Form S-1/A, filed with the SEC on July 16, 2018.

 

(3)
Incorporated by reference to the Company’s Form 8-K, filed with the SEC on October 30, 2019.

 

(4)
Incorporated by reference to the Company’s Form 10-K, filed with the SEC on March 23, 2026.

 

 

**
In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No. 34-47986, the certifications furnished in Exhibits 32.1 and 32.2 herewith are deemed to accompany this Form 10-Q and will not be deemed filed for purposes of Section 18 of the Exchange Act. Such certifications will not be deemed to be incorporated by reference into any filings under the Securities Act or the Exchange Act.

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 

 

 
Greenland Technologies Holding Corp.

 
 

Date: May 13, 2026
/s/ Raymond Z. Wang

 
Raymond Z. Wang

 
Chief Executive Officer and President

 

 

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