NOTE 7 – NOTES RECEIVABLE

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.