F-1: Elong Power Launches Dilutive Offering Amidst Financial Woes

Elong Power Holding Limited announces a public offering of units and warrants, facing significant dilution and ongoing financial losses, raising substantial doubt about its ability to continue as a going concern.

Summary

• Elong Power Holding Limited, a Cayman Islands holding company operating through its PRC subsidiaries, specializes in R&D, manufacturing, sales, and service of high-power lithium-ion batteries for electric vehicles and construction machinery, and large-capacity, long-cycle lithium-ion batteries for energy storage systems.
• The company is offering 6,666,666 units at an assumed price of US$1.20 per unit, each consisting of one Class A ordinary share and one Common Warrant to purchase one Class A Ordinary Share.
• Pre-Funded Units are also offered for purchasers whose beneficial ownership would exceed 4.99% (or 9.99%), consisting of one Pre-Funded Warrant (exercise price $0.001) and one Common Warrant.
• Common Warrants have an initial exercise price of $1.20, subject to downward adjustments to 70% ($0.84) on the 4th trading day and 50% ($0.60) on the 8th trading day following the offering, with a zero exercise price option allowing holders to receive two Class A Ordinary Shares per cash-exercisable share without additional payment.
• The offering is expected to result in significant dilution, with up to 26,666,664 Class A Ordinary Shares potentially issued from zero exercise price Common Warrants, and up to 30,666,660 shares if the over-allotment option is fully exercised.
• Net proceeds from the offering are estimated at approximately US$7,055,000, intended for working capital and general corporate purposes.
• The company reported a net loss of $2.7 million for the six months ended June 30, 2025, an improvement from $3.8 million for the same period in 2024.
• For the fiscal year ended December 31, 2024, the company incurred a net loss of $30.1 million, a significant increase from $7.4 million in 2023 and $9.8 million in 2022.
• Revenue for the six months ended June 30, 2025, was $214,039, a 42% decrease from $365,975 in the same period of 2024, primarily due to reduced sales of battery spare parts and management focus on reverse merger transactions.
• Revenue for the fiscal year ended December 31, 2024, was $0.4 million, an 87.5% decrease from $3.2 million in 2023, attributed to product upgrades, production line modifications, shifting revenue recognition for new orders to 2025, and management's focus on the energy storage business and reverse merger.
• The company's working capital deficit was $12.3 million as of June 30, 2025, and $9.9 million as of December 31, 2024, with a shareholders' deficit of $19.4 million and $16.5 million, respectively.
• The independent registered public accounting firm has raised substantial doubt about the company's ability to continue as a going concern.
• The company regained compliance with Nasdaq's minimum bid price rule on January 12, 2026, but remains non-compliant with Nasdaq's Market Value of Listed Securities ($50 million minimum) and Market Value of Publicly Held Shares ($15 million minimum) requirements as of October 3, 2025, with a compliance deadline of April 1, 2026.
• A 16-for-1 share consolidation was effective on December 2, 2025, and the company's shareholders approved a further increase in authorized share capital and an increase in voting rights for Class B Ordinary Shares (from 50 to 200 votes) on January 6, 2026.

Sentiment

Score: 2

Explanation: The company is in a precarious financial position, marked by significant and increasing net losses, substantial revenue decline, and a working capital deficit that raises going concern doubts. While there are strategic plans and technological advantages, the immediate financial performance and the highly dilutive nature of the capital raise, coupled with ongoing Nasdaq compliance issues and legal proceedings, present severe challenges and risks for investors.

Positives

• Net loss decreased to $2.7 million for the six months ended June 30, 2025, from $3.8 million in the same period of 2024, indicating some improvement in short-term profitability.
• Adjusted Gross Margin (Excluding Idle Capacity) improved significantly to (0.4)% for the six months ended June 30, 2025, from (124)% in the same period of 2024, primarily due to a decrease in total costs and a shift in sales mix towards battery packs.
• The company has a comprehensive product and technology system, including battery cells, modules, system integration, and Battery Management System (BMS) development, for high-power lithium-ion batteries and long-cycle energy storage devices.
• Elong Power has established stable cooperative relationships with well-known brands like Yutong Bus Co., Ltd., Nanjing Golden Dragon Bus Co., Ltd., Shandong Lingong, and Shaanxi Tongli.
• The company has a strong R&D focus on ultra-fast charging (up to 80% in 9-30 minutes), long-lifespan (up to 30,000 cycles), and high-safety battery technologies, including liquid cooling for energy storage products.
• Elong Power's smart liquid-cooled energy storage products offer higher energy density, longer cycle life (>6,000 cycles), and intelligent temperature control, reducing auxiliary power consumption by about 20%.
• The company's products have received quality and safety certifications, including UN38.3 for sea transport.
• Elong Power has an experienced management team with long tenures and strong technical backgrounds in relevant industries.
• The company has regained compliance with Nasdaq's minimum bid price requirement as of January 12, 2026.

Negatives

• The company incurred significant net losses of $30.1 million in 2024, $7.4 million in 2023, and $9.8 million in 2022.
• Revenue declined substantially by 87.5% in 2024 to $0.4 million and by 52.9% in 2023 to $3.2 million, indicating a significant contraction in sales.
• The company has a working capital deficit of $12.3 million as of June 30, 2025, and a shareholders' deficit of $19.4 million, raising substantial doubt about its ability to continue as a going concern.
• The offering involves significant dilution for existing shareholders due to the issuance of new units and the highly dilutive nature of the Common Warrants, especially with the zero exercise price option and price reset features.
• The company is currently non-compliant with Nasdaq's Market Value of Listed Securities ($50 million minimum) and Market Value of Publicly Held Shares ($15 million minimum) requirements, with a compliance deadline of April 1, 2026, risking potential delisting.
• A significant impairment of Property, Plant, and Equipment of $10.4 million was recognized in 2024 due to plans to upgrade and replace old production equipment.
• The company faces multiple ongoing legal proceedings and potential liabilities related to contractual disputes and product quality issues, with estimated aggregate amounts of approximately $6.07 million (RMB 43.54 million).
• R&D expenses decreased significantly in 2024 to $0.1 million from $0.9 million in 2023, primarily due to a reduction in R&D personnel, which could impact future innovation.
• The company relies on dividends from its PRC subsidiaries, which are subject to PRC laws and regulations that may restrict their ability to pay dividends and transfer cash out of China.
• The energy storage equipment sales agreement with Nengjian Henan Urban Construction Engineering Co. (RMB480,000,000 / USD 67,605,633) had its delivery postponed to 2025 due to incomplete government approval documents from the customer.
• The dual-class share structure concentrates voting control with the CEO and Chairwoman, Xiaodan Liu, who holds 95.68% of the aggregate voting power, limiting the influence of other Class A shareholders.

Risks

• Future growth depends on the adoption of electric vehicles and construction machinery, which may not develop as expected.
• Difficulty in evaluating business prospects and managing growth, especially as a new entrant in the industry.
• Safety risks associated with lithium-ion batteries, which could lead to accidents, liability, manufacturing delays, and adverse market acceptance.
• Exposure to price fluctuations of raw materials, which significantly impact the cost of sales.
• Risk of failure to recover trade and bills receivables in a timely manner, potentially affecting financial condition and results of operations.
• Material weaknesses in internal controls over financial reporting, including lack of experienced accounting team, IT environment controls, and inventory controls in third-party warehouses.
• Inability to meet future capital requirements, which could limit growth and adversely affect financial position and operations.
• Demand for batteries is sensitive to fossil fuel alternatives and extended periods of low oil prices could reduce demand for electric vehicles.
• Intense competition from other battery manufacturers with significantly greater resources and rapid technological changes.
• Developments in alternative battery technologies (e.g., fuel cells, solid-state batteries) could adversely affect demand for current products.
• Significant costs may be incurred due to product warranties (typically one to eight years).
• Failure to develop and commercialize new products in a timely manner and at favorable margins could hinder competitiveness.
• Inability to cost-effectively manufacture batteries in quantities that satisfy customer demand and quality specifications could damage customer relationships.
• Reliance on complex machinery for operations introduces risks of malfunctions, operational performance issues, and increased costs for upgrades.
• Battery packs rely on highly technical software and hardware, and errors, bugs, or vulnerabilities could adversely affect the business.
• Dependence on third-party suppliers for key raw materials and components, with risks of unstable or untimely supply and price increases.
• Fluctuations in quarterly and annual operating results due to market conditions, competition, and other factors.
• Difficulty in attracting, training, and retaining highly-skilled employees and key personnel.
• Impediments to moving cash out of the PRC due to regulatory restrictions could hamper growth and diversification.
• Expansion into new applications and markets (e.g., U.S., Europe, Southeast Asia) poses additional risks due to differing regulatory requirements, intellectual property protection, tax policies, and economic conditions.
• Exposure to litigation, environmental, health, and safety, and other legal compliance risks, including increased climate change legislation.
• Products as components of electric vehicles are subject to motor vehicle safety standards, and failure to satisfy these could adversely affect demand.
• Connected products, website, systems, and data may be subject to intentional disruption, security incidents, or data handling violations.
• Social media platforms present risks to brand and reputation, and potential liability.
• Challenges in obtaining, maintaining, and protecting intellectual property rights, including patents and trademarks.
• Substantial costs could be incurred from claims of infringement of third-party intellectual property rights.
• Difficulties in transferring and communicating technology globally due to differing platforms and immigration requirements.
• Uncertainties regarding the PRC Foreign Investment Law and its potential impact on the corporate structure and operations.
• Procedural requirements for foreign regulatory bodies to conduct investigations or inspections in China.
• Significant oversight and control by the PRC government over business operations, which could lead to material changes or adverse effects.
• Difficulty for shareholders to enforce foreign judgments or bring actions in China against the company or its management.
• PRC regulation of loans and direct investment by offshore holding companies to PRC subsidiaries may delay or prevent the use of offshore fund-raising proceeds.
• The approval and filing with the CSRC may be required for future offerings, and timely completion is uncertain.
• Approval and filing with CAC or other PRC government authorities may be required for capital raising activities, with uncertain timelines and outcomes.
• PRC regulations relating to investments in offshore companies by PRC residents may subject beneficial owners or subsidiaries to liability or penalties.
• Reliance on dividends from PRC subsidiaries, which are subject to statutory reserve requirements and other limitations.
• Potential classification as a PRC resident enterprise for tax purposes could result in unfavorable tax consequences for the company and non-PRC shareholders.
• Dividends and gains on sale of Class A Ordinary Shares by foreign investors may become subject to PRC tax law.
• Uncertainties regarding indirect transfers of equity interests in PRC resident enterprises by non-PRC holding companies.
• Fluctuations in the value of the Renminbi may materially adversely affect investments.
• Risk of being prohibited from trading in the United States under the HFCAA if the PCAOB is unable to inspect or investigate the company's auditor completely in the future.
• The dual-class share structure concentrates voting control with the CEO and Chairwoman, limiting other shareholders' influence.
• The market price of Class A Ordinary Shares has recently declined significantly, and there is a risk of delisting from Nasdaq or trading suspension.
• The company implemented a 16-for-1 share consolidation in December 2025 and is contemplating additional share combinations, which could adversely affect liquidity and increase price volatility.
• The stock price may be volatile in the future, leading to losses for investors and potential securities litigation.
• No expectation of dividend payments in the foreseeable future.
• An active trading market for Class A Ordinary Shares may not be sustained.
• Inability to comply with Nasdaq's continued listing standards.
• Lack of research coverage or inaccurate/unfavorable research by analysts could cause stock price decline.
• As a public company, subject to U.S. federal securities laws and challenges in developing adequate governance, compliance, risk management, and control infrastructure.
• As an emerging growth company, taking advantage of exemptions from disclosure requirements may make securities less attractive.
• As a foreign private issuer, not subject to U.S. proxy rules and has more lenient reporting obligations, potentially offering fewer protections to shareholders.
• Risk of losing foreign private issuer status, leading to significant additional costs and expenses.
• Difficulties in protecting interests and limited ability to enforce rights through U.S. Federal courts due to incorporation in the Cayman Islands.
• Exclusive forum provision in M&A may limit shareholders' ability to bring claims under federal securities laws.
• No public market for Common Warrants or Pre-Funded Warrants, limiting their liquidity.
• Warrants are speculative in nature and do not confer shareholder rights until exercised.
• Sale or availability of substantial amounts of Class A Ordinary Shares could adversely affect market price.
• Broad discretion in the use of net proceeds from the offering, which may not be used effectively.
• Offering price determined by negotiation, may bear no relation to assets or book value.
• Nasdaq may halt trading or delist Class A Ordinary Shares for public interest concerns due to the highly dilutive nature of the offering.
• Unlikely to receive additional funds upon the exercise of Common Warrants due to the zero exercise price option.

Future Outlook

The company expects to continue incurring operating and net losses until at least 2026, when significant production of higher energy cell products is anticipated. Management believes the strategic repositioning towards energy storage systems will provide a foundation for long-term growth. The company plans to continue investing in R&D for high-performance battery technology and cost reduction, and intends to expand globally, particularly in the Southeast Asian market, and further increase its presence in the energy storage market. The company is also contemplating an additional share combination after this offering.

Management Comments

• Management paid more attention to the sales of battery packs/battery cells during the six months ended June 30, 2025.
• Management devoted significant time and resources to the execution of the reverse merger transactions during the period, which temporarily constrained sales and marketing activities.
• Management expects the repositioning toward energy storage systems to provide a foundation for long-term growth.
• The R&D team is committed to integrating new designs, technologies, and materials into batteries to further improve performance and reduce costs.
• Management believes that, compared to new entrants in the marketplace, those that entered the field earlier and possess core technologies will obtain a competitive advantage.
• Management believes that economic factors are the strongest drivers in expanding the construction machinery market given its B2B nature and customer focus on return on investment.
• Management believes building an R&D platform that integrates technology research and project implementation is crucial to helping maintain product desirability and improve overall efficiency and competitiveness.

Industry Context

The global lithium-ion battery market is expected to expand rapidly, driven by increasing demand for new energy vehicles and energy storage systems. New energy commercial vehicles are a key driver for high-power batteries, with the global market size projected to reach $162.4 billion by 2029. Governments worldwide are intensifying policy support for new energy vehicles and power battery industries, including strict CO2 emission standards (e.g., EU's 0g/kilometer target by 2035) and investments in charging infrastructure. Technological progress, particularly in fast charging and energy density, and cost reduction of power batteries are further expanding market scale. The energy storage market is also in a rapid development stage, with electrochemical energy storage, dominated by lithium-ion batteries, growing significantly. Global installed capacity of new electrochemical energy storage is projected to increase from 69.0 GWh in 2022 to 652.4 GWh in 2027, with a compound annual growth rate of 56.7%.

Comparison to Industry Standards

• The company's 6C fast charging batteries (launched in 2020) allow commercial electric vehicles to charge 80% in 10 to 30 minutes, which is a significant efficiency advantage compared to competitor technologies requiring overnight charging.
• The lifespan of the company's battery system (up to 30,000 charging/discharging cycles) matches that of commercial vehicles, potentially eliminating the need for battery replacement during the vehicle's lifespan, reducing total cost of ownership.
• The company's smart liquid-cooled energy storage products are equipped with large capacity 315Ah battery cells, offering more than 10,000 cycles, which is a competitive advantage in terms of total discharge capacity and reduced electricity costs (approximately 30%).
• The highly integrated system design of Elong Power's liquid-cooled products enhances energy density to 290kWh/m2, reducing total floor area by about 50% compared to industry norms, which significantly cuts civil engineering and cable costs.
• The company's liquid cooling technology controls the average temperature difference of cells within 3°C, improving battery consistency and system life by more than 20% compared to less advanced cooling methods.
• Elong Power's products are widely used in terminal products of several well-known brands, including Yutong Bus, Higher Bus, Beiqi Foton Bus, Shandong Lingong, Shaanxi Tongli, Hunan Sany, and Zoomlion Heavy Industry, indicating market acceptance and competitive positioning.

Management Changes

Corporate Governance

Legal Proceedings

• Lawsuit in Xianning, Hubei Province (2021): A user sued a customer and the company. Court ordered payment of RMB7.46 million ($1.2 million) plus RMB1,000 ($145) per day per vehicle from March 1, 2022 (estimated aggregate RMB39.0 million / $5.4 million). The company accrued the initial amount and is preparing to appeal the additional amount. As of July 2024, RMB 968,043 ($134,530) was disbursed from frozen bank funds.
• Lawsuit in Jiangsu Province (November 2022): A customer sued Huizhou Yipeng for RMB2.5 million ($0.4 million) in unpaid amounts and RMB14.0 million ($2.1 million) in compensation for product quality. The company accrued RMB2.5 million and is preparing to appeal the RMB14.0 million claim.
• Lawsuit in Zhengzhou, Henan Province (March 7, 2024): A customer sued Huizhou Yipeng and Elong Ganzhou for RMB13.08 million ($1.8 million) in damages for alleged product quality issues. On December 3, 2024, the court ordered Huizhou Yipeng to pay RMB2.98 million ($415,000) for battery replacement and RMB162,000 ($23,000) in other fees. The company accepted the judgment but is preparing to appeal.
• Lawsuit in Gansu Province (April 2024): A customer sued Ganzhou Zhangyang, requesting contract termination and return of 126 undelivered battery packs (valued at $3.1 million). Court judgment requires return of $3.1 million and liquidated damages. The company recorded an estimated liability of $0.4 million and is negotiating/appealing.
• Lawsuit in Guizhou Province (2022): A customer sued Huizhou Jingyang and Ganzhou Zhangyang for $0.8 million (RMB 5.8 million) for vehicle power battery replacement costs. The company accrued the provision and is actively preparing for the appeal process.

Related Party Transactions

• Short-term loans payable to related parties totaled $1,852,431 as of June 30, 2025, including $418,784 to Beijing Xinlongmai, $139,595 to Huizhou Highpower, $13,959 to Mr. Xiusheng Wang, and $1,280,093 to Ms. Xiaodan Liu (CEO).
• The company borrowed RMB 9.1 million (approximately $1,280,093) from Ms. Xiaodan Liu on several occasions during the six months ended June 30, 2025, bearing 8% interest and payable on demand.
• Lease expense for renting a vehicle from Ms. Xiaodan Liu amounted to $82,729 for the six months ended June 30, 2025.
• Amounts due from related parties included a $69,797 deposit from Ms. Xiaodan Liu as of June 30, 2025.
• Amounts due to related parties totaled $259,949 as of June 30, 2025, including payables for expense reimbursement to Mr. Hongzhong Yu ($2,552) and Mr. Wei Zou ($47,767), expense reimbursement and vehicle lease expense to Ms. Xiaodan Liu ($12,067 and $139,595 respectively), and raw material purchases to Phylion Battery Co.,Ltd ($14,473) and Shenzhen High-power Technology Co., Ltd. ($43,495).

Stakeholder Impact

• Shareholders will experience significant dilution due to the issuance of new units and the highly dilutive nature of the Common Warrants, potentially leading to a substantial decrease in the value of their Class A Ordinary Shares.
• The concentration of voting power with the CEO and Chairwoman (95.68%) due to the dual-class share structure limits the influence of other shareholders on corporate matters.
• Employees may be affected by the company's financial instability and ongoing losses, although the company states it has a good working relationship with employees and no significant labor disputes.
• Customers may face uncertainties regarding product quality and delivery, as evidenced by ongoing lawsuits and postponed delivery of a major energy storage equipment contract.
• Suppliers may face risks related to the company's financial condition and ability to make timely payments, as indicated by the company's working capital deficit and accounts payable.
• Creditors face increased risk due to the company's substantial net losses, negative working capital, and going concern doubt, which could impact the company's ability to service its debts.

Next Steps

• The company will apply the net proceeds from the offering for working capital and other general corporate purposes.
• The company will continue to invest in the research and development of high-performance battery technology and seek new innovations to further reduce costs.
• The company intends to expand its business globally, especially in the Southeast Asian market, and further increase its presence in the energy storage market.
• The company plans to increase its reliance on automated production in the future.
• The company will continue to monitor its MVLS and MVPHS to regain compliance with Nasdaq listing standards by April 1, 2026.
• The company's shareholder has committed to support operations in cash for a minimum of twelve months.
• The company is going to seek more equity investment in 2026.
• The company is preparing to appeal the 'Additional Amount' in the Xianning lawsuit and the RMB14.0 million claim in the Jiangsu lawsuit.
• Huizhou Yipeng has filed an appeal regarding the Zhengzhou lawsuit judgment and is in preliminary oral settlement negotiations.
• The company is actively preparing for the appeal process in the Guizhou lawsuit.

Key Dates

Recommendation

Elong Power Holding Limited presents a high-risk investment profile. The company has a history of significant and increasing net losses, a substantial decline in revenue, and a critical working capital and shareholders' deficit, leading its auditor to express substantial doubt about its ability to continue as a going concern. The proposed public offering, while intended to raise capital, is highly dilutive due to the structure of the warrants, which include price resets and a zero exercise price option, making it unlikely the company will receive significant cash from warrant exercises. Furthermore, the company is currently non-compliant with key Nasdaq listing standards (MVLS and MVPHS), risking delisting, and is embroiled in multiple product quality and contractual lawsuits. The dual-class share structure also concentrates voting power, limiting minority shareholder influence. Given these severe financial, operational, and governance challenges, the stock is a strong sell.

Keywords

Lithium-ion batteries, Electric vehicles, Energy storage systems, EV batteries, Commercial vehicles, Construction machinery, Battery management system (BMS), Lithium iron phosphate (LFP), Ternary lithium batteries, Fast charging, High power batteries, SEC filing, F-1 registration, Public offering, Warrants, Dilution, Nasdaq listing, China operations, Going concern, Financial losses, Corporate governance, Related party transactions, Regulatory risks, Intellectual property, Supply chain, Market competition