```htmlQuality of Earnings Report: One & One Green Technologies

Quality of Earnings Report

One & One Green Technologies

Date of Report: June 17, 2025

Important Disclaimer: As of the date of this report (June 17, 2025), detailed public financial filings (e.g., S-1 prospectus) specifically for "One & One Green Technologies" in relation to its proposed U.S. IPO were not readily accessible through standard public database searches. Consequently, this Quality of Earnings (QoE) report has been prepared using illustrative financial data and assumptions typical for a rapidly growing company in the green technology sector. The purpose of this report is to demonstrate the analytical framework, methodology, and typical considerations involved in a QoE assessment for such a company. Any financial figures, specific business model details, and growth trajectories presented herein are hypothetical and should not be considered as actual financial information for any specific entity named "One & One Green Technologies." Further due diligence based on actual company filings would be required for any investment decision.

Executive Summary

This Quality of Earnings (QoE) report provides an analysis of the illustrative financial performance, business model, and growth trajectory of "One & One Green Technologies" (OOGT), a hypothetical company in the green technology sector presumed to be preparing for a U.S. Initial Public Offering (IPO). Based on illustrative financials for the fiscal years 2022, 2023, and 2024, OOGT demonstrates strong revenue growth, characteristic of a company in a high-demand sector.

Illustrative Normalized EBITDA grew from $8.5 million in 2022 to $25.0 million in 2024. Key adjustments to reported EBITDA include one-time legal settlements, gains on asset sales, and non-recurring R&D write-offs. The company's illustrative business model, focused on innovative solar technology and energy management SaaS, shows potential for scalability but also faces typical industry risks such as rapid technological change, supply chain dependencies, and regulatory shifts.

Key Strengths (Illustrative):

• Rapid revenue growth in a burgeoning market.
• Improving (illustrative) normalized EBITDA margins.
• Diversified revenue streams (hardware and SaaS).

Key Risks & Areas for Further Due Diligence (Illustrative):

• Dependency on continued technological innovation and R&D investment.
• Potential for customer concentration if reliant on a few large contracts.
• Working capital requirements to fund rapid growth.
• Sustainability of gross margins amidst potential competition and raw material price volatility.

This report highlights the importance of scrutinizing revenue recognition, cost structures, and non-recurring items to ascertain the true underlying earnings power of a growth-stage company like OOGT. Prospective investors should conduct thorough due diligence on actual company data once available.

1.0 Introduction and Engagement Scope

We were engaged to perform a Quality of Earnings (QoE) analysis on One & One Green Technologies (hereinafter "OOGT" or "the Company") in the context of its reported proposed U.S. IPO. The objective of this report is to provide an assessment of the Company's historical earnings quality, the sustainability of its business model, and its growth trajectory. Our analysis is based on illustrative financial information for the three fiscal years ended December 31, 2022, 2023, and 2024.

The scope of our work included:

• Analysis of illustrative income statements, balance sheets, and cash flow statements.
• Identification and quantification of proposed adjustments for non-recurring items, one-time events, and accounting policies to derive a normalized EBITDA.
• Evaluation of illustrative revenue recognition policies, cost structures, and margin sustainability.
• Assessment of the illustrative business model, its scalability, and key operational risks.
• Analysis of illustrative historical growth rates and drivers.

2.0 Company Overview (Illustrative)

One & One Green Technologies (OOGT) is a hypothetical rapidly growing company operating in the green technology sector. For the purpose of this report, we assume OOGT specializes in the development, manufacturing, and sale of advanced solar panel solutions and integrated energy storage systems. Additionally, OOGT is presumed to offer a Software-as-a-Service (SaaS) platform for energy monitoring and management, targeting residential, commercial, and small utility-scale customers.

The Company's mission is assumed to be centered around providing innovative and cost-effective solutions to accelerate the transition to renewable energy. OOGT is portrayed as being in a pre-IPO stage, seeking capital to fund further research and development, scale manufacturing capabilities, and expand its market reach. The green technology sector is characterized by high growth potential, driven by global efforts to combat climate change, supportive government policies, and increasing consumer and corporate demand for sustainable energy solutions.

3.0 Financial Performance Analysis (Illustrative)

This section details our analysis of OOGT's illustrative historical financial performance, focusing on the quality and sustainability of its earnings.

3.1 Historical Income Statement Review (Illustrative)

The following table presents a summary of OOGT's illustrative historical income statements for the fiscal years 2022, 2023, and 2024.

Note: The financial data above is purely illustrative.

3.2 Key QoE Adjustments (Illustrative)

To arrive at a Normalized EBITDA, we identified the following illustrative non-recurring or out-of-period items:

• Accelerated R&D Write-off (2022): An assumed one-time write-off of $1.0 million related to a discontinued product line. This is added back as it's not part of core, ongoing operations.
• Legal Settlement (2023): A one-time legal settlement expense of $1.5 million. This is added back as it's considered non-recurring.
• Gain on Sale of Asset (2024): A one-time gain of $0.5 million from selling a non-core piece of equipment. This is subtracted as it's non-operational and non-recurring.
• IPO Readiness Costs (2024): Assumed $1.0 million in consulting and legal fees directly related to IPO preparation, which are typically added back as they are non-recurring for normal operations.

3.3 Normalized EBITDA (Illustrative)

The following table reconciles Reported EBITDA to Normalized EBITDA based on the illustrative adjustments.

Note: The financial data and adjustments are purely illustrative.

The illustrative Normalized EBITDA shows a consistent upward trend, growing from $8.5 million in 2022 to $33.0 million in 2024. The Normalized EBITDA margin also shows improvement, suggesting enhanced operational efficiency or pricing power alongside revenue growth.

Illustrative Revenue and Normalized EBITDA Trend

4.0 Revenue Analysis (Illustrative)

4.1 Revenue Streams

OOGT's illustrative revenue is primarily derived from two streams:

1. Green Technology Products: Sales of advanced solar panels and energy storage systems. This is likely project-based or direct sales.
2. SaaS Subscriptions: Recurring revenue from its energy management software platform.

A breakdown of illustrative revenue by stream (hypothetical):

Note: Revenue stream breakdown is purely illustrative.

The SaaS component, while smaller, is growing its share of total revenue, which is generally viewed positively due to its recurring nature and potentially higher margins.

4.2 Revenue Recognition Policy

A key area for due diligence in any QoE is the company's revenue recognition policy, particularly alignment with ASC 606 (Revenue from Contracts with Customers). For OOGT (illustrative):

• Product Sales: Revenue would typically be recognized when control of the goods transfers to the customer, which is usually upon shipment or delivery, depending on contract terms. Long-term installation projects may have specific percentage-of-completion considerations.
• SaaS Subscriptions: Revenue is typically recognized ratably over the contract term. Upfront payments would be recorded as deferred revenue and recognized over time.

It is crucial to verify that revenue is recognized appropriately, with no aggressive practices like pulling forward revenue or improper bundling of services and products.

4.3 Revenue Growth and Concentration

Illustrative revenue grew 70% from 2022 to 2023, and 53% from 2023 to 2024. These are strong growth rates. Further analysis would investigate:

• Customer Concentration: Are revenues highly dependent on a few large customers? Loss of a major customer could significantly impact revenues.
• Geographic Concentration: Is revenue concentrated in a specific region, making it vulnerable to local economic or regulatory changes?
• Organic vs. Inorganic Growth: Was growth achieved organically or through acquisitions? If acquisitions, the quality and integration of these would be key. (For this illustrative report, we assume organic growth).

5.0 Margin Analysis (Illustrative)

5.1 Gross Profit Margin

OOGT's illustrative Gross Profit Margin improved from 40.0% in 2022 to 45.0% in 2024. This trend suggests:

• Potential economies of scale in manufacturing/procurement.
• Improved pricing power or a shift towards higher-margin products/services (e.g., SaaS).
• Effective cost management for direct inputs.

Sustainability of gross margins is critical. Factors to consider include raw material price volatility (e.g., polysilicon for solar panels), competition, and supply chain efficiencies.

5.2 EBITDA Margin

Illustrative Normalized EBITDA Margin increased from 17.0% in 2022 to 25.4% in 2024. This improvement indicates operating leverage, where revenues are growing faster than operating expenses (after normalization). This is a positive sign for scalability.

Illustrative Margin Trends

6.0 Cost Structure Analysis (Illustrative)

6.1 Cost of Goods Sold (COGS)

COGS for a green tech company like OOGT would typically include direct material costs, direct labor, and manufacturing overhead. As a percentage of revenue, illustrative COGS decreased from 60% in 2022 to 55% in 2024, contributing to gross margin expansion. Diligence should focus on the components of COGS, supplier dependencies, and fixed vs. variable cost nature.

6.2 Operating Expenses (SG&A, R&D)

SG&A: Illustrative SG&A as a percentage of revenue decreased slightly from 16% in 2022 to 13.8% in 2024, indicating some operating leverage. Key components would include sales commissions, marketing spend, and administrative salaries. Scalability of the SG&A function is important as the company grows.

R&D: Illustrative R&D expenses increased in absolute terms but remained relatively stable as a percentage of revenue (around 7-8%). Consistent and effective R&D is vital in the rapidly evolving green tech sector. Capitalization policies for R&D (if any) should be reviewed.

7.0 Working Capital Analysis (Illustrative)

Rapidly growing companies often have significant working capital needs. Key components for OOGT would include:

• Accounts Receivable (AR): Growth in sales will lead to higher AR. Days Sales Outstanding (DSO) should be monitored. (e.g., Illustrative DSO: 45 days in 2022, 50 days in 2023, 52 days in 2024 - slight increase needs monitoring).
• Inventory: Managing inventory of raw materials and finished goods is crucial. Days Inventory Outstanding (DIO) and inventory obsolescence risk are key. (e.g., Illustrative DIO: 60 days in 2022, 65 days in 2023, 70 days in 2024 - increase needs scrutiny for efficiency or build-up).
• Accounts Payable (AP): Negotiating favorable terms with suppliers can help manage cash flow. Days Payable Outstanding (DPO). (e.g., Illustrative DPO: 40 days in 2022, 42 days in 2023, 45 days in 2024).

The Cash Conversion Cycle (DSO + DIO - DPO) indicates how long cash is tied up in operations. An increasing cycle (illustrative: 65 days in 2022 to 77 days in 2024) suggests growing working capital investment, which could strain liquidity if not managed effectively or funded by operations/financing.

Note: Working capital metrics are purely illustrative and based on simplified assumptions.

8.0 Business Model Assessment (Illustrative)

8.1 Core Operations

OOGT's illustrative dual model of selling high-tech green products (solar, storage) and offering a complementary SaaS platform is common in modern tech-enabled industries. This potentially offers diverse revenue streams and customer lock-in opportunities.

• Product Sales: Likely involves R&D, manufacturing (or contract manufacturing), supply chain management, sales, and installation/support.
• SaaS Platform: Involves software development, cloud infrastructure, customer support, and subscription management.

8.2 Scalability and Sustainability

Scalability:

• The SaaS component is typically highly scalable with relatively low marginal costs per additional user.
• Product sales scalability depends on manufacturing capacity, supply chain robustness, and ability to manage installation logistics if applicable.

Sustainability:

• Dependent on continuous innovation to maintain a competitive edge in product technology.
• SaaS model sustainability relies on high customer retention (low churn) and continuous value delivery.
• Exposure to commodity price fluctuations for materials used in products.
• Regulatory environment for green technologies can be both a tailwind (incentives) and a headwind (changing standards).

8.3 Key Operational Risks and Dependencies

• Technological Obsolescence: Rapid advancements in green tech could render existing products uncompetitive.
• Supply Chain Disruptions: Reliance on specific suppliers for critical components (e.g., semiconductor chips, battery cells).
• Competition: Intense competition from established players and new entrants in the green tech market.
• Intellectual Property: Protection of proprietary technology is crucial.
• Regulatory Changes: Changes in government incentives, subsidies, or environmental regulations.
• Execution Risk: Ability to manage rapid growth, scale operations, and maintain quality.
• Talent Acquisition and Retention: Need for skilled engineers, sales personnel, and managers.

9.0 Growth Trajectory Evaluation (Illustrative)

9.1 Historical Growth Drivers

OOGT's illustrative strong historical revenue growth (70% in 2023, 53% in 2024) is likely driven by:

• Increasing market demand for renewable energy solutions.
• Successful product innovation and market adoption.
• Expansion of sales and marketing efforts.
• Growth in the recurring SaaS revenue base.

We assume this growth is organic for the purpose of this illustration. If acquisitions were involved, their contribution and successful integration would be key assessment points.

9.2 Future Growth Potential

The green technology sector is poised for continued significant growth. OOGT's future potential (illustrative) could be driven by:

• Expansion into new geographic markets.
• Development of new products or enhancements to existing ones.
• Penetration of new customer segments (e.g., larger commercial or utility-scale projects).
• Strategic partnerships or alliances.
• Increased adoption of its SaaS platform, leading to higher recurring revenues.

Projections should be carefully scrutinized against market size, competitive landscape, and the company's operational capacity to execute its growth plans.

9.3 Industry Benchmarking

Benchmarking OOGT against publicly traded peers in the solar, energy storage, and green SaaS sectors would be essential. Key metrics for comparison include:

• Revenue growth rates.
• Gross profit margins and EBITDA margins.
• R&D spending as a percentage of revenue.
• Valuation multiples (e.g., EV/Revenue, EV/EBITDA) - particularly relevant post-IPO.

Without specific peer data in this illustrative report, we acknowledge this step is critical in actual due diligence. Green tech companies often exhibit high growth but can vary widely in profitability and capital intensity.

10.0 Key Findings and Red Flags (Summary - Illustrative)

Based on our illustrative analysis:

Positive Findings (Strengths):

• Significant historical revenue growth driven by strong market tailwinds.
• Improving Normalized EBITDA and EBITDA margins, suggesting operational leverage.
• A business model combining tangible products with a recurring revenue SaaS component.
• Assumed strong R&D focus, critical for this sector.

Potential Risks and Red Flags (Areas for Further Due Diligence):

• Sustainability of Margins: Gross margins could be pressured by competition or input cost volatility. Diligence on COGS components is key.
• Working Capital Needs: Rapid growth and an increasing cash conversion cycle (illustrative) will require careful working capital management and potentially external funding.
• Customer Concentration: (Hypothetical risk) Dependence on a few large customers could pose a risk. This would need to be verified with actual data.
• Technological Risk: The fast-paced nature of green tech means products can become obsolete quickly. Continuous, successful R&D is paramount.
• Reliance on Key Personnel: Often, growth companies rely heavily on founders or key technologists.
• Quality of Reported Earnings: While we've made illustrative adjustments, a thorough review of accounting policies (revenue recognition, capitalization, reserves) on actual financials is crucial.
• Market Saturation & Competition: The attractiveness of the green tech market means intense competition. OOGT's competitive differentiators must be sustainable.

11.0 Conclusion (Illustrative)

The illustrative One & One Green Technologies presents a compelling growth story typical of a company in the dynamic green technology sector. The strong revenue trajectory and improving (illustrative) normalized profitability are attractive. However, like any rapidly growing company, especially in a technology-driven and capital-intensive industry, OOGT faces notable risks related to market competition, technological change, operational execution, and working capital management.

A prospective investor or acquirer would need to perform extensive due diligence on the Company's actual financial statements, customer contracts, supply chain, intellectual property, and management team once detailed information, such as an S-1 filing, becomes available. The adjustments to reported earnings, while illustrative here, underscore the importance of understanding the true underlying economic performance of the business. The quality of OOGT's earnings, its ability to sustain growth profitably, and effectively manage its operational and financial risks will be key determinants of its long-term success and valuation.

This report provides a framework for such an analysis, highlighting areas that would warrant deeper investigation. The "green" label can attract significant investor interest, but rigorous financial scrutiny remains paramount.

Citations & Sources (Illustrative and General)

Given the illustrative nature of this report due to the lack of specific public financial data for "One & One Green Technologies," the following citations are general references for understanding QoE, IPOs, and the green technology sector:

• SEC EDGAR Database: For actual IPO filings (e.g., S-1 forms) for U.S. companies. (A search for "One & One Green Technologies" did not yield specific filings for this report). Link: https://www.sec.gov/edgar/searchedgar/companysearch
• Investopedia - "Quality of Earnings (QOE)": Provides a general overview of QoE concepts. Link: https://www.investopedia.com/terms/q/qualityofearnings.asp
• EY Global IPO Trends Report (or similar from Big Four firms): These reports provide insights into IPO market conditions and sector trends, including technology and renewables. (Example: Search for "EY Global IPO Trends Q1 2025" or similar for current data).
• International Renewable Energy Agency (IRENA): For market data and trends in the renewable energy sector. Link: https://www.irena.org
• Financial Accounting Standards Board (FASB) - ASC 606: Regarding revenue recognition standards crucial for QoE analysis. Link: https://www.fasb.org (Navigate to standards)

© June 17, 2025. Quality of Earnings Report for Illustrative Purposes. Prepared by Senior QoE Analyst.

This document is for informational purposes only and does not constitute investment advice or an offer to sell or a solicitation of an offer to buy any securities.

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