[Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) [PART I - FINANCIAL INFORMATION](index=6&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) The company presents unaudited financial statements for H1 2025, showing a net loss alongside changes in revenue and balance sheet items [Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) The company reported a reduced net loss of $15.56 million for H1 2025 despite an 11.5% revenue decrease from continuing operations Condensed Consolidated Statements of Operations and Comprehensive Loss (Six Months Ended June 30) | Metric | 2025 (Unaudited) | 2024 (Unaudited) | Change (YoY) | % Change (YoY) | | :--- | :--- | :--- | :--- | :--- | | Net revenues | $8,549,976 | $9,657,747 | $(1,107,771) | -11.5% | | Cost of goods sold | $(8,247,353) | $(7,910,923) | $(336,430) | 4.3% | | Gross (loss) profit | $302,623 | $1,746,824 | $(1,444,201) | -82.7% | | Total operating expenses | $(14,574,601) | $(16,741,724) | $2,167,123 | -12.9% | | Loss from operations | $(14,271,978) | $(14,994,900) | $722,922 | -4.8% | | Net loss from continuing operations | $(13,551,663) | $(15,458,812) | $1,907,149 | -12.3% | | Loss from discontinued operations, net of tax | $(2,009,202) | $(2,965,206) | $956,004 | -32.2% | | Net loss | $(15,560,865) | $(18,424,018) | $2,863,153 | -15.5% | | Net loss attributable to the Company's shareholders | $(15,543,673) | $(18,412,978) | $2,869,305 | -15.6% | | Loss per common share - basic and diluted | $(0.46) | $(0.60) | $0.14 | -23.3% | - Gross profit for the six months ended June 30, 2025, **decreased significantly by 82.7%** to **$0.30 million** from $1.75 million in the prior year, primarily due to a decrease in vehicle sales gross profit and spare-part sales gross profit, partially offset by a decrease in inventory write-down[15](index=15&type=chunk)[204](index=204&type=chunk) - Net loss attributable to the Company's shareholders **improved by 15.6%** for the six months ended June 30, 2025, reaching **$(15.54) million** compared to $(18.41) million in the same period last year[15](index=15&type=chunk)[186](index=186&type=chunk) [Condensed Consolidated Balance Sheet](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheet) Total assets decreased to $124.40 million due to lower cash, while total liabilities also declined significantly Condensed Consolidated Balance Sheet (As of June 30, 2025 vs. December 31, 2024) | Metric | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | **ASSETS** | | | | Cash and cash equivalents | $5,992,986 | $12,547,168 | | Total current assets | $58,601,262 | $65,916,446 | | Total non-current assets | $65,797,241 | $66,649,868 | | **Total Assets** | **$124,398,503** | **$132,566,314** | | **LIABILITIES** | | | | Total current liabilities | $32,622,266 | $29,114,024 | | Total non-current liabilities | $12,029,990 | $25,492,788 | | **Total Liabilities** | **$44,652,256** | **$54,606,812** | | **EQUITY** | | | | Total Equity attributable to shareholders | $79,627,518 | $77,837,290 | | **Total Liabilities and Equity** | **$124,398,503** | **$132,566,314** | - Cash and cash equivalents **decreased by $6.55 million (52.2%)** from $12.55 million at December 31, 2024, to **$5.99 million** at June 30, 2025[18](index=18&type=chunk)[231](index=231&type=chunk) - Total non-current liabilities **decreased significantly by $13.46 million (52.8%)** from $25.49 million to $12.03 million, primarily due to the exercise of investor warrants and changes in derivative liabilities[18](index=18&type=chunk)[120](index=120&type=chunk) [Unaudited Condensed Consolidated Statements of Changes in Equity](index=10&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity) Total equity increased to $79.63 million, driven by warrant exercises and bond conversions that offset the net loss Changes in Equity (Six Months Ended June 30, 2025) | Item | Amount (USD) | | :--- | :--- | | Balance as of December 31, 2024 | $77,837,290 | | Share-based compensation | $1,459,588 | | Conversion of convertible bonds into shares | $1,826,131 | | Cashless exercise of warrant | $12,487,838 | | Net loss | $(15,543,673) | | Unrealized holding gains for available-for-sale securities | $15,000 | | Disposal of a subsidiary | $58,122 | | Foreign currency translation adjustment | $1,487,222 | | Balance as of June 30, 2025 | $79,627,518 | - The cashless exercise of warrants contributed **$12.49 million** to additional paid-in capital, reflecting a significant equity transaction during the period[19](index=19&type=chunk) - The conversion of convertible bonds into shares added **$1.83 million** to equity, indicating a shift from debt to equity[19](index=19&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operations decreased to $9.36 million, while financing activities provided $2.93 million from loans Condensed Consolidated Statements of Cash Flows (Six Months Ended June 30) | Cash Flow Activity | 2025 (Unaudited) | 2024 (Unaudited) | Change (YoY) | | :--- | :--- | :--- | :--- | | Net cash used in operating activities | $(9,360,191) | $(12,710,460) | $3,350,269 | | Net cash used in investing activities | $(601,069) | $(349,921) | $(251,148) | | Net cash provided by financing activities | $2,934,554 | $461,636 | $2,472,918 | | Effect of exchange rate changes on cash, cash equivalents and restricted cash | $157,307 | $(546,408) | $703,715 | | Net decrease in cash, cash equivalents and restricted cash | $(6,869,399) | $(13,145,153) | $6,275,754 | | Cash, cash equivalents and restricted cash at end of period | $6,091,089 | $16,426,744 | $(10,335,655) | - Net cash used in operating activities **decreased by $3.35 million (26.3%)** year-over-year, primarily due to adjustments for non-cash items and changes in working capital components[22](index=22&type=chunk)[240](index=240&type=chunk)[241](index=241&type=chunk) - Net cash provided by financing activities **increased significantly by $2.47 million**, driven by proceeds from bank loans ($1.35 million), third-party loans ($1.12 million), and related party loans ($1.00 million)[22](index=22&type=chunk)[244](index=244&type=chunk) [Notes to the Unaudited Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) These notes detail accounting policies, discontinued European operations, and specific financial statement line items [NOTE 1 – ORGANIZATION AND PRINCIPAL ACTIVITIES](index=12&type=section&id=NOTE%201%20%E2%80%93%20ORGANIZATION%20AND%20PRINCIPAL%20ACTIVITIES) Cenntro Inc is a Nevada holding company that designs and manufactures ECVs and has restructured its European operations - Cenntro Inc was incorporated in Nevada on March 9, 2023, and operates through subsidiaries in the US, Australia, Europe, Mexico, Hong Kong, and PRC, focusing on designing and manufacturing purpose-built ECVs[23](index=23&type=chunk)[31](index=31&type=chunk)[32](index=32&type=chunk) - On February 27, 2024, CEGL completed redomiciliation, changing the ultimate parent company's incorporation jurisdiction from Australia to Nevada, making CEGL a subsidiary of Cenntro Inc[34](index=34&type=chunk)[35](index=35&type=chunk) - In November 2024, the Company decided to restructure its European operations, phasing out the direct sales model for a centralized dealership distribution system, leading to the classification of CEGE, CAE, and Cenntro EV Center Italy S.R.L as discontinued operations[38](index=38&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk) [NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=16&type=section&id=NOTE%202%20%E2%80%93%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the basis of presentation, use of estimates, fair value hierarchy, and revenue recognition policies - The financial statements are prepared in conformity with U.S GAAP, requiring management to make significant estimates and assumptions, particularly for credit losses, inventory valuation, impairment losses, deferred tax assets, and fair value measurements[44](index=44&type=chunk)[46](index=46&type=chunk) - The Company applies the fair value option to convertible promissory notes, convertible loan receivables, and currency-cross swaps, measuring them at fair value on a recurring basis[51](index=51&type=chunk) - Revenue is recognized when control of goods or services is transferred to customers, primarily from sales of light-duty ECVs, ECV parts, and off-road electric vehicles, with consideration recorded net of sales returns and VAT[57](index=57&type=chunk)[58](index=58&type=chunk)[61](index=61&type=chunk) Net Revenues by Product Line (Six Months Ended June 30) | Product Line | 2025 (Unaudited) | 2024 (Unaudited) | Change (YoY) | % Change (YoY) | | :--- | :--- | :--- | :--- | :--- | | Vehicles sales | $7,976,499 | $9,610,536 | $(1,634,037) | -17.0% | | Spare-parts sales | $505,779 | $1,978,161 | $(1,472,382) | -74.4% | | Other service income | $229,877 | $123,794 | $106,083 | 85.7% | | Net revenues (total) | $8,712,155 | $11,712,491 | $(2,990,336) | -25.5% | | Less: Discontinued operations | $(162,179) | $(2,054,744) | $1,892,565 | -92.1% | | Net revenues (continuing operations) | $8,549,976 | $9,657,747 | $(1,107,771) | -11.5% | Net Revenues by Geographical Market (Continuing Operations, Six Months Ended June 30) | Market | 2025 (Unaudited) | 2024 (Unaudited) | Change (YoY) | % Change (YoY) | | :--- | :--- | :--- | :--- | :--- | | Asia | $1,931,593 | $2,294,674 | $(363,081) | -15.8% | | Europe | $5,786,495 | $3,654,430 | $2,132,065 | 58.3% | | America | $960,227 | $5,763,387 | $(4,803,160) | -83.3% | | Others | $33,840 | $- | $33,840 | N/A | | Total | $8,712,155 | $11,712,491 | $(2,990,336) | -25.5% | | Less: Discontinued operations | $(162,179) | $(2,054,744) | $1,892,565 | -92.1% | | Net revenues (continuing operations) | $8,549,976 | $9,657,747 | $(1,107,771) | -11.5% | [NOTE 3 - ACCOUNTS RECEIVABLE, NET](index=20&type=section&id=NOTE%203%20-%20ACCOUNTS%20RECEIVABLE%2C%20NET) Net accounts receivable for continuing operations remained stable, while the provision for credit losses increased significantly Accounts Receivable, Net (Continuing Operations) | Metric | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Accounts receivable, net | $3,236,747 | $3,281,865 | | Provision for credit losses (total) | $3,593,840 | $2,018,042 | | Provision for credit losses (continuing operations) | $1,410,296 | $485,016 | - The provision for credit losses for continuing operations increased from $485,016 at December 31, 2024, to **$1,410,296** at June 30, 2025, reflecting significant additions of **$1,346,762** during the period[75](index=75&type=chunk) [NOTE 4 - INVENTORIES](index=20&type=section&id=NOTE%204%20-%20INVENTORIES) Net inventories for continuing operations increased to $25.44 million, with a corresponding rise in the valuation allowance Inventories, Net (Continuing Operations) | Metric | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Inventories, net | $25,437,768 | $24,012,504 | | Inventory valuation allowance (total) | $9,096,992 | $8,255,880 | - Raw material inventory remained stable, while finished goods inventory slightly decreased; the overall increase in net inventories for continuing operations was **$1.43 million**[76](index=76&type=chunk) [NOTE 5 – PREPAYMENT AND OTHER CURRENT ASSETS](index=20&type=section&id=NOTE%205%20%E2%80%93%20PREPAYMENT%20AND%20OTHER%20CURRENT%20ASSETS) Prepayment and other current assets for continuing operations increased slightly to $18.61 million Prepayment and Other Current Assets (Continuing Operations) | Metric | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Advance to suppliers | $12,916,541 | $13,435,558 | | Deductible input value added tax | $5,934,505 | $5,284,726 | | Others | $1,034,514 | $390,617 | | Total prepayment and other current assets (continuing operations) | $18,610,258 | $18,075,415 | [NOTE 6 – LONG-TERM INVESTMENTS](index=22&type=section&id=NOTE%206%20%E2%80%93%20LONG-TERM%20INVESTMENTS) Long-term investments for continuing operations remained stable at approximately $3.11 million Long-Term Investments (Continuing Operations) | Investment Type | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Equity method investment, net | $2,108,108 | $2,068,951 | | Equity investment without readily determinable fair values, net | $1,000,000 | $1,000,000 | | Debt security investments | $656,712 | $641,712 | - The debt security investment in Acton, Inc (a **$600,000** convertible note) had its maturity date extended to July 24, 2026[80](index=80&type=chunk) [NOTE 7 – INVESTMENT IN EQUITY SECURITY](index=23&type=section&id=NOTE%207%20%E2%80%93%20INVESTMENT%20IN%20EQUITY%20SECURITY) The investment in MineOne Fix Income Investment I L.P increased to $27.12 million due to fair value adjustments Investment in Equity Security (Continuing Operations) | Metric | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | MineOne Fix Income Investment I L.P | $27,120,596 | $26,604,319 | | Upward adjustment for changes in fair value (6 months) | $516,277 | $494,451 | [NOTE 8 – PROPERTY, PLANT AND EQUIPMENT, NET](index=23&type=section&id=NOTE%208%20%E2%80%93%20PROPERTY%2C%20PLANT%20AND%20EQUIPMENT%2C%20NET) Net property, plant, and equipment for continuing operations decreased slightly to $17.27 million Property, Plant and Equipment, Net (Continuing Operations) | Metric | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Property, plant and equipment, net | $17,269,071 | $17,401,006 | | Accumulated depreciation | $(6,897,624) | $(6,019,046) | | Impairment | $(1,079,648) | $(949,485) | | Depreciation expenses (6 months) | $894,429 | $765,295 | [NOTE 9 – INTANGIBLE ASSETS, NET](index=23&type=section&id=NOTE%209%20%E2%80%93%20INTANGIBLE%20ASSETS%2C%20NET) Net intangible assets for continuing operations remained stable at $6.24 million Intangible Assets, Net (Continuing Operations) | Metric | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Intangible assets, net | $6,244,650 | $6,225,302 | | Accumulated amortization | $(1,050,296) | $(766,239) | | Amortization expenses (6 months) | $211,496 | $202,949 | [NOTE 10 – ACCOUNTS PAYABLE](index=25&type=section&id=NOTE%2010%20%E2%80%93%20ACCOUNTS%20PAYABLE) Accounts payable for continuing operations decreased to $3.92 million due to lower professional fees and supplier payables Accounts Payable (Continuing Operations) | Metric | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Professional fees payable | $2,263,892 | $2,861,695 | | Payable to suppliers | $2,993,354 | $3,697,743 | | Total accounts payable (continuing operations) | $3,922,891 | $5,135,710 | [NOTE 11 – ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES](index=25&type=section&id=NOTE%2011%20%E2%80%93%20ACCRUED%20EXPENSES%20AND%20OTHER%20CURRENT%20LIABILITIES) Accrued expenses for continuing operations increased to $4.29 million, driven by higher third-party loans Accrued Expenses and Other Current Liabilities (Continuing Operations) | Metric | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Accrued litigation compensation | $1,784,688 | $1,761,275 | | Loan from third parties | $1,403,178 | $626,516 | | Accrued interest for convertible promissory note | $51,349 | $270,690 | | Total accrued expenses and other current liabilities (continuing operations) | $4,294,403 | $3,647,503 | - Loans from third parties **significantly increased** from $626,516 to **$1,403,178**, including new interest-free loans and loans with interest rates ranging from 3.45% to 7.50%[88](index=88&type=chunk) [NOTE 12 –SHORT-TERM AND LONG-TERM BANK LOANS](index=25&type=section&id=NOTE%2012%20%E2%80%93SHORT-TERM%20AND%20LONG-TERM%20BANK%20LOANS) Short-term loans for continuing operations increased to $1.22 million due to a new bank facility Short-Term and Long-Term Bank Loans (Continuing Operations) | Metric | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Short-term loans and current portion of long-term loans | $1,221,453 | $249,614 | | Long-term loans | $- | $362,386 | | Total borrowings (continuing operations) | $1,221,453 | $612,000 | - A new bank facility of approximately **$1.40 million** (RMB10,000,000) was granted by the Industrial and Commercial Bank of China in May 2025, with **$1.22 million** borrowed and due in May and June 2026, secured by plants and building and land with a net value of approximately $16.78 million[91](index=91&type=chunk) [NOTE 13 - INCOME TAXES](index=27&type=section&id=NOTE%2013%20-%20INCOME%20TAXES) The company is subject to varying income tax rates across jurisdictions, with total pre-tax losses of $13.58 million Losses Before Income Taxes by Region (Continuing Operations, Six Months Ended June 30) | Region | 2025 (Unaudited) | 2024 (Unaudited) | | :--- | :--- | :--- | | PRC | $5,217,096 | $4,842,423 | | US | $5,187,770 | $4,834,603 | | Europe | $3,401,675 | $6,359,899 | | Australia | $1,498,725 | $1,703,066 | | Others | $282,639 | $718,742 | | Total losses before income taxes | $15,587,905 | $18,458,733 | | Less: Discontinued operations | $(2,009,202) | $(2,983,173) | | Losses before income taxes (continuing operations) | $13,578,703 | $15,475,560 | - European operations saw a **significant decrease in losses** before income taxes for continuing operations, from **$6.36 million** in 2024 to **$3.40 million** in 2025[100](index=100&type=chunk) [NOTE 14 - LEASES](index=28&type=section&id=NOTE%2014%20-%20LEASES) Operating lease costs for continuing operations decreased to $1.77 million, with a remaining lease term of 4.03 years Operating Lease Costs (Continuing Operations, Six Months Ended June 30) | Metric | 2025 (Unaudited) | 2024 (Unaudited) | | :--- | :--- | :--- | | Operating leases cost excluding short-term lease expenses | $1,703,582 | $2,235,290 | | Short-term lease expenses | $70,559 | $183,679 | | Total | $1,774,141 | $2,418,969 | - Total operating lease costs for continuing operations **decreased by $0.64 million (26.7%)** year-over-year[103](index=103&type=chunk) Operating Lease Supplemental Information (Continuing Operations) | Metric | June 30, 2025 (Unaudited) | June 30, 2024 (Unaudited) | | :--- | :--- | :--- | | Cash paid for amounts included in lease liabilities | $754,386 | $1,531,851 | | Weighted average remaining lease term | 4.03 years | 5.99 years | | Weighted average discount rate | 7.35% | 6.36% | [NOTE 15 - CONVERTIBLE PROMISSORY NOTE AND WARRANT](index=30&type=section&id=NOTE%2015%20-%20CONVERTIBLE%20PROMISSORY%20NOTE%20AND%20WARRANT) The convertible note's due date was extended, and investor warrants were fully exercised during the period - The convertible promissory note's due date was extended to January 19, 2026, and its conversion floor price was amended to **$0.202 per share**[106](index=106&type=chunk)[113](index=113&type=chunk) Convertible Promissory Note and Warrant Balances | Metric | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Convertible promissory notes (liability component) | $10,279,000 | $9,952,000 | | Investor warrants component | $- | $12,137,087 | | Placement agent warrants component | $3,456,797 | $3,455,829 | - Investor warrants, originally for 2,473,334 shares, were **fully exercised** during the six months ended June 30, 2025, resulting in a **$12.49 million decrease in liability**[120](index=120&type=chunk) [NOTE 16- SHARE-BASED COMPENSATION](index=33&type=section&id=NOTE%2016-%20SHARE-BASED%20COMPENSATION) Share-based compensation expenses decreased to $1.46 million for the first half of 2025 Share-Based Compensation Expenses (Six Months Ended June 30) | Expense Category | 2025 (Unaudited) | 2024 (Unaudited) | | :--- | :--- | :--- | | General and administrative expenses | $1,285,083 | $1,500,783 | | Selling and marketing expenses | $31,103 | $96,970 | | Research and development expenses | $143,402 | $175,367 | | Total share-based compensation expenses | $1,459,588 | $1,773,120 | - Total share-based compensation expenses **decreased by $0.31 million (17.7%)** year-over-year[124](index=124&type=chunk) Share Options Activity | Metric | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Outstanding share options | 1,647,568 | 1,733,052 | | Weighted average exercise price | $14.05 | $13.80 | | Unrecognized compensation cost | $2,159,811 | N/A | [NOTE 17 - CONCENTRATIONS](index=34&type=section&id=NOTE%2017%20-%20CONCENTRATIONS) The company has significant customer and supplier concentrations for both continuing and discontinued operations Customer Concentration (Continuing Operations, Six Months Ended June 30, 2025) | Customer | % of Total Net Revenue | | :--- | :--- | | Customer A | 41% | | Total (top customers) | 41% | Supplier Concentration (Continuing Operations, Six Months Ended June 30, 2025) | Supplier | % of Total Purchases | | :--- | :--- | | Supplier A | 52% | | Total (top suppliers) | 52% | Customer Concentration (Discontinued Operations, Six Months Ended June 30, 2025) | Customer | % of Total Net Revenue | | :--- | :--- | | Customer I | 20% | | Customer J | 19% | | Customer K | 15% | | Customer L | 14% | | Customer M | 12% | | Total (top customers) | 80% | [NOTE 18 - COMMITMENTS AND CONTINGENCIES](index=38&type=section&id=NOTE%2018%20-%20COMMITMENTS%20AND%20CONTINGENCIES) The company is involved in various legal proceedings but does not expect a material adverse impact on its financials - CAE is involved in an IP infringement lawsuit in Belgium, where a court ruled against it, ordering cessation of METRO model distribution and imposing fines up to **EUR1,000,000**; CAE has filed an appeal[146](index=146&type=chunk)[300](index=300&type=chunk) - A lawsuit filed by Xiongjian Chen against the Company and its CEO, Peter Z Wang, for stock options claims, will proceed solely on a promissory estoppel claim against Peter Wang, with remote financial consequences anticipated for the Company[147](index=147&type=chunk)[301](index=301&type=chunk)[302](index=302&type=chunk) - CAC is preparing for arbitration against Anhui Deepway Technology Co, Ltd for **RMB320,000** in economic damages and continuation of a Strategic Cooperation Agreement[149](index=149&type=chunk) - BAL Freeway Associates, LLC filed an Unlawful Detainer against CAC for non-payment of rents, seeking damages no lower than **$4,400,000**, with negotiations ongoing[154](index=154&type=chunk) [NOTE 19 - RELATED PARTY TRANSACTIONS AND BALANCES](index=40&type=section&id=NOTE%2019%20-%20RELATED%20PARTY%20TRANSACTIONS%20AND%20BALANCES) The company engaged in several transactions with related parties, including loans from and to entities controlled by the CEO Related Party Transactions (Six Months Ended June 30, 2025) | Transaction Type | Related Party | Amount (USD) | | :--- | :--- | :--- | | Interest expense | Zhongchai | $16,042 | | Interests-bearing loan from | Zhongchai | $1,000,000 | | Interests-bearing loan to | Greenland | $27,760 | | Prepayment of operating fund to | Billy Rafael Romero Del Rosario | $25,378 | | Reimbursement from | Billy Rafael Romero Del Rosario | $88,646 | Amounts Due From/To Related Parties (Continuing Operations) | Metric | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Amounts due from related parties | $40,056 | $11,729 | | Amounts due to related parties | $1,016,042 | $26,226 | - A **$1.0 million** interest-bearing loan was received from Zhongchai Holding (Hongkong) Limited, controlled by the CEO, with a maturity date of April 14, 2026, and an interest rate of **7.50%** per annum[163](index=163&type=chunk)[164](index=164&type=chunk) [NOTE 20 - SUBSEQUENT EVENT](index=42&type=section&id=NOTE%2020%20-%20SUBSEQUENT%20EVENT) A portion of the company's convertible note was converted into common stock after the reporting period - On July 17, 2025, Investment Pte Ltd converted **$1,165,180** of its convertible note into **2,000,000 shares** of Cenntro Inc common stock[165](index=165&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=43&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial results for H1 2025, highlighting decreased revenues, an improved net loss, and strategic operational shifts [A. Key Components of Results of Operations](index=43&type=section&id=A.%20Key%20Components%20of%20Results%20of%20Operations) Revenue is driven by ECV sales, with a strategic shift to a distributor model in Europe and ongoing cost management efforts - Net revenues are primarily generated from sales of various ECV models (e.g, Metro®, Logistar™, Avantier™) and ECV spare parts, as well as other services[169](index=169&type=chunk)[170](index=170&type=chunk) - The company has returned to a distributor-focused model in Europe and implemented a hybrid approach (direct sales + distributor partnerships) in North America to optimize go-to-market strategies[169](index=169&type=chunk) - Operating expenses, particularly general and administrative, are expected to decrease over the next two years due to efficiency improvements, combining EV centers with local distribution networks, and utilizing proven OEMs and supply chains[177](index=177&type=chunk) - Provision for credit losses is expected to decrease in the future as the company shifts sales to FOB terms, requiring material payments before goods delivery[179](index=179&type=chunk) [Key Operating Metrics](index=46&type=section&id=Key%20Operating%20Metrics) The gross margin of vehicle sales declined significantly to 1.33% in H1 2025 from 21.4% in the prior year Key Performance Indicators (Six Months Ended June 30) | Metric | 2025 (Unaudited) | 2024 (Unaudited) | | :--- | :--- | :--- | | Gross margin of vehicle sales | 1.33% | 21.4% | - The gross margin of vehicle sales **decreased substantially** from **21.4%** in 2024 to **1.33%** in 2025, reflecting a significant decline in profitability from vehicle sales[185](index=185&type=chunk) [Results of Operations](index=46&type=section&id=Results%20of%20Operations) H1 2025 net revenues fell 11.5% to $8.55 million, while gross profit dropped 82.7%, though operating expenses also decreased Net Revenues by Category (Six Months Ended June 30) | Category | 2025 (Unaudited) | 2024 (Unaudited) | Change (YoY) | % Change (YoY) | | :--- | :--- | :--- | :--- | :--- | | Vehicle Sales | $7,890,062 | $7,697,504 | $192,558 | 2.5% | | Spare-part sales | $430,037 | $1,885,903 | $(1,455,866) | -77.2% | | Other sales | $229,877 | $74,340 | $155,537 | 209.2% | | Total net revenues | $8,549,976 | $9,657,747 | $(1,107,771) | -11.5% | - Net revenues for the six months ended June 30, 2025, **decreased by $1.1 million (11.5%)** to $8.5 million, primarily due to a **$1.5 million decrease** in spare-part sales, partially offset by a $0.2 million increase in vehicle sales[188](index=188&type=chunk) Operating Expenses (Six Months Ended June 30) | Expense Category | 2025 (Unaudited) | 2024 (Unaudited) | Change (YoY) | % Change (YoY) | | :--- | :--- | :--- | :--- | :--- | | Selling and marketing expenses | $(1,004,297) | $(1,213,969) | $209,672 | -17.3% | | General and administrative expenses | $(10,101,922) | $(12,986,881) | $2,884,959 | -22.2% | | Research and development expenses | $(1,433,039) | $(2,540,874) | $1,107,835 | -43.6% | | Provision for credit losses | $(2,035,343) | $- | $(2,035,343) | N/A | - General and administrative expenses **decreased by $2.9 million (22.2%)**, driven by reductions in salary, office, leasing, freight, rental expenses, and share-based compensation[208](index=208&type=chunk) - Research and development expenses **decreased by $1.1 million (43.6%)**, mainly due to lower design and development expenditures and salary expenses[211](index=211&type=chunk) - The Company recognized a **gain of approximately $1.2 million** from the disposal of Cenntro Electric CICS, SRL's equity for the six months ended June 30, 2025[221](index=221&type=chunk) [Non-GAAP Financial Measures](index=53&type=section&id=Non-GAAP%20Financial%20Measures) Adjusted EBITDA improved to $(10.85) million in H1 2025 from $(15.68) million in the prior year, reflecting better core performance Adjusted EBITDA Reconciliation (Six Months Ended June 30) | Metric | 2025 (Unaudited) | 2024 (Unaudited) | Change (YoY) | | :--- | :--- | :--- | :--- | | Net loss | $(15,560,865) | $(18,424,018) | $2,863,153 | | Interest expense, net | $275,084 | $24,546 | $250,538 | | Income tax benefit | $(27,040) | $(16,748) | $(10,292) | | Depreciation and amortization | $1,105,925 | $975,244 | $130,681 | | Share-based compensation expense | $1,459,588 | $1,773,120 | $(313,532) | | Change in fair value of convertible promissory notes and derivative liability | $137,290 | $(8,532) | $145,822 | | Gain from Note Amendment | $1,756,137 | $- | $1,756,137 | | Adjusted EBITDA | $(10,853,881) | $(15,676,388) | $4,622,807 | - Adjusted EBITDA **improved by $4.62 million (29.5%)** for the six months ended June 30, 2025, indicating a stronger core operating performance compared to the previous year[228](index=228&type=chunk) [B. Liquidity and Capital Resources](index=55&type=section&id=B.%20Liquidity%20and%20Capital%20Resources) Cash decreased to $6.0 million, with the company focusing on operational efficiency and inventory management to meet liquidity needs - Cash and cash equivalents **decreased to approximately $6.0 million** as of June 30, 2025, from $12.5 million at December 31, 2024[231](index=231&type=chunk) - Working capital **decreased by approximately $10.8 million** to $26.0 million as of June 30, 2025, primarily due to decreased cash and increased inventories and various liabilities[237](index=237&type=chunk) - Short-term liquidity requirements will be met through operating efficiency, increased inventory turns, and existing cash, with plans for continued rollout of new ECV models and establishment of local assembly facilities[232](index=232&type=chunk)[233](index=233&type=chunk) - Long-term liquidity plans include regionalizing manufacturing and supply chains, expanding the channel partner network, and increasing R&D expenditure, funded by cash on hand, operations, and future equity/debt financings[234](index=234&type=chunk)[235](index=235&type=chunk)[236](index=236&type=chunk) [Cash Flow](index=57&type=section&id=Cash%20Flow) Net cash used in operations decreased to $9.36 million, while financing activities provided $2.93 million from loans Cash Flow Summary (Six Months Ended June 30) | Cash Flow Activity | 2025 (Unaudited) | 2024 (Unaudited) | | :--- | :--- | :--- | | Net cash used in operating activities | $(9,360,191) | $(12,710,460) | | Net cash used in investing activities | $(601,069) | $(349,921) | | Net cash provided by financing activities | $2,934,554 | $461,636 | | Net decrease in cash, cash equivalents, and restricted cash | $(6,869,399) | $(13,145,153) | - Net cash used in operating activities **decreased by $3.35 million**, primarily due to adjustments for non-cash items like share-based compensation, depreciation, and the gain from disposal of a subsidiary, partially offset by increases in inventories and accounts receivable[241](index=241&type=chunk) - Net cash provided by financing activities **increased by $2.47 million**, mainly from proceeds of **$1.4 million** from bank loans, **$1.0 million** from related parties, and **$1.1 million** from third parties[244](index=244&type=chunk) [Contractual Obligations](index=58&type=section&id=Contractual%20Obligations) The company holds several non-cancellable operating leases for facilities in China, Germany, Mexico, and the US - The Company has non-cancellable operating lease agreements for facilities in Hangzhou, China (annual rent $144,528, ends May 2026), Dusseldorf, Germany (annual rent approx $373,630, ends December 2024), Ontario, California (first-year monthly rent $115,200, ends five years from April 2023), Howell, New Jersey (first annual rent $493,920, ends five years from February 2023), and Mexico (monthly rent $29,225.38, ends 8.5 years from January 2023)[245](index=245&type=chunk)[246](index=246&type=chunk)[250](index=250&type=chunk)[251](index=251&type=chunk)[252](index=252&type=chunk) - New lease agreements were signed in September 2024 for Jiangsu, China (monthly rent approx $22,435, ends December 2026), March 2025 for Barstow, California (first-year monthly rent $12,000, ends three years), and May 2025 for Barcelona, Spain (monthly rent approx $2,357, ends eighteen months)[254](index=254&type=chunk)[255](index=255&type=chunk)[256](index=256&type=chunk) - The Company has not entered into any off-balance sheet financial guarantees, other off-balance sheet commitments, or derivative contracts indexed to its shares[258](index=258&type=chunk) [Critical Accounting Policies and Estimates](index=60&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Management relies on significant estimates for credit losses, inventory valuation, and fair value of complex financial instruments - Significant accounting estimates include provision for credit losses, lower of cost and net realizable value of inventories, impairment losses for long-lived assets and investments, valuation allowance for deferred tax assets, and fair value measurement for share-based compensation, convertible promissory notes, and warrants[263](index=263&type=chunk) - The Company applies the fair value option to convertible promissory notes, convertible loan receivables, and currency-cross swaps, using a three-tier fair value hierarchy (Level 1, 2, 3) for measurement[264](index=264&type=chunk)[269](index=269&type=chunk) - Revenue recognition follows a five-step analysis, primarily from sales of light-duty ECVs, ECV parts, and off-road electric vehicles, with revenue recognized upon transfer of control to customers[274](index=274&type=chunk)[275](index=275&type=chunk)[277](index=277&type=chunk) - The Company adopted ASU 2023-07 (Segment Reporting) for the year ended December 31, 2024, with no significant impact, and is assessing the impact of ASU 2024-03 (Disaggregation of Income Statement Expenses) and ASU 2025-05 (Expected Credit Losses for Current Accounts Receivable)[286](index=286&type=chunk)[288](index=288&type=chunk)[289](index=289&type=chunk) [Item 3. Quantitative and Qualitative Disclosure About Market Risk](index=64&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosure%20About%20Market%20Risk) As a smaller reporting company, Cenntro Inc is not required to provide these disclosures [Item 4. Controls and Procedures](index=64&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were not effective due to unresolved material weaknesses in internal control - As of June 30, 2025, the Company's disclosure controls and procedures were **not effective** due to existing material weaknesses in internal control over financial reporting[294](index=294&type=chunk) - The Company is implementing a remediation plan to address the material weaknesses, but they remain unresolved as of the reporting date[296](index=296&type=chunk) - Unremediated material weaknesses could lead to material misstatements, reporting delays, regulatory actions, and adverse impacts on stock valuation and business prospects[297](index=297&type=chunk) [PART II - OTHER INFORMATION](index=65&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=65&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings but expects no material adverse financial impact - CAE is facing an IP infringement lawsuit in Belgium, where a court ruled against it, ordering cessation of METRO model distribution and imposing fines up to **EUR1,000,000**; CAE has filed an appeal[146](index=146&type=chunk)[300](index=300&type=chunk) - A lawsuit by Xiongjian Chen against the Company and its CEO, Peter Z Wang, for stock options claims, will proceed solely on a promissory estoppel claim against Peter Wang, with remote financial consequences anticipated for the Company[147](index=147&type=chunk)[301](index=301&type=chunk)[302](index=302&type=chunk) - CAC is preparing for arbitration against Anhui Deepway Technology Co, Ltd for **RMB320,000** in economic damages and continuation of a Strategic Cooperation Agreement[149](index=149&type=chunk) - BAL Freeway Associates, LLC filed an Unlawful Detainer against CAC for non-payment of rents, seeking damages no lower than **$4,400,000**, with negotiations ongoing[154](index=154&type=chunk) [Item 1A. Risk Factors](index=67&type=section&id=Item%201A.%20Risk%20Factors) Investors should consider the risks detailed in the company's Form 10-K, which could materially affect business results [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=67&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company made no previously undisclosed unregistered sales of equity securities during the reporting period [Item 3. Defaults Upon Senior Securities](index=67&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the quarter ended June 30, 2025 [Item 4. Mine Safety Disclosures](index=67&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company [Item 5. Other Information](index=67&type=section&id=Item%205.%20Other%20Information) No directors or certain officers modified Rule 10b5-1 trading arrangements during the quarter - No Section 16 reporting persons (directors and certain officers) engaged in or modified Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025[308](index=308&type=chunk) [Item 6. Exhibits](index=67&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including officer certifications and XBRL documents - Exhibits include certifications (31.1, 31.2, 32.1) and Inline XBRL documents (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)[310](index=310&type=chunk) [SIGNATURES](index=68&type=section&id=SIGNATURES)

Financial Performance - Net revenues for the three months ended March 31, 2025, were approximately $2.14 million, a decrease of approximately $0.2 million or 8.5% from $2.34 million for the same period in 2024[168]. - The net loss from continuing operations for Q1 2025 was $5.36 million, compared to a net loss of $7.76 million in Q1 2024[168]. - Adjusted EBITDA from continuing operations for the three months ended March 31, 2025 was approximately $(3.96) million, an improvement from $(6.44) million in the same period of 2024[188]. - For the three months ended March 31, 2025, the company's net revenues from continuing operations were $2,143,058, a decrease of 8.5% compared to $2,342,918 for the same period in 2024[236]. Vehicle Sales and Revenue Breakdown - Vehicle sales accounted for $1.81 million or 84.5% of total net revenues in Q1 2025, compared to $1.52 million or 65.0% in Q1 2024[170]. - Vehicle sales for the three months ended March 31, 2025, were $1,837,054, down 27% from $2,514,777 in 2024[236]. - Spare-parts sales decreased significantly to $242,276 in 2025 from $828,785 in 2024, representing a decline of approximately 70.8%[236]. - The company's revenue from Asia increased to $1,174,031 in 2025, up 6.3% from $1,104,475 in 2024, while revenue from Europe and America decreased significantly[237]. Operating Expenses - Total operating expenses for Q1 2025 were $6.50 million, down from $8.04 million in Q1 2024, reflecting a reduction in research and development expenses[168]. - Selling and marketing expenses increased by approximately $0.2 million or 25.7% to approximately $0.8 million for the three months ended March 31, 2025, primarily due to increased freight costs[178]. - General and administrative expenses decreased by approximately $1.0 million or 16.6% to approximately $4.9 million for the three months ended March 31, 2025, attributed to reductions in various operational costs[179]. - Research and development expenses for Q1 2025 were $784,178, a significant decrease from $1.51 million in Q1 2024[168]. Cash Flow and Liquidity - Net cash used in operating activities was approximately $5.0 million for the three months ended March 31, 2025, compared to $8.9 million in the same period of 2024[191]. - As of March 31, 2025, the company had approximately $8.5 million in cash and cash equivalents, down from $20.2 million as of March 31, 2024[191]. - Net cash used in investing activities was approximately $0.5 million, primarily for the purchase of property, plant, and equipment[202]. - Net cash provided by financing activities was approximately $1.2 million, mainly from loans proceeds of approximately $1.0 million from related parties and $0.6 million from third parties, offset by $0.4 million repayment[203]. Contracts and Liabilities - Contractual liabilities for continuing operations rose to $5,102,793 as of March 31, 2025, compared to $4,121,305 as of December 31, 2024, indicating an increase of 23.8%[240]. - Accounts receivable for continuing operations decreased to $3,096,130 as of March 31, 2025, down from $3,281,865 as of December 31, 2024, a decline of 5.6%[240]. - The company recognized $374,384 in revenue from contractual liabilities for the three months ended March 31, 2025, compared to $890,646 in 2024, reflecting a decrease of 57.9%[239]. Future Outlook and Plans - The company plans to continue the rollout of new ECV models and green energy products in North America and Europe over the next twelve months[192]. - The company has invested over approximately $95.2 million in research and development activities since its inception in 2013, with plans to increase R&D expenditure in the long term[195]. - The company expects a decrease in provision for credit losses as sales shift more to FOB terms[161]. - General and administrative expenses are anticipated to decrease over the next two years due to efficiency improvements[160]. Leasing and Facilities - The total annual base rent for two operating lease agreements in Hangzhou, China is $186,866 for the term ending May 2023 and $167,521 for the term ending May 2024[204]. - The lease for a facility in Dusseldorf, Germany has a total annual base rent of approximately $373,630 for the lease term[205]. - A new operating lease agreement in Colombia commenced on May 1, 2023, with a monthly rent of approximately $11,224.92[206]. - The first annual base rent for a facility in Howell, New Jersey is $493,920, with a 3% annual increase[210]. - The monthly rent for a facility in Ontario, California is $115,200 for the first year, increasing to $134,767.71 in the fifth year[209]. Accounting and Financial Reporting - The company is currently assessing the impact of the recently issued ASU No. 2024-03 on its consolidated financial statements, which will improve disclosures about types of expenses[241]. - Shipping and handling costs are recorded as sales and marketing expenses rather than separate performance obligations[235]. - The company has not experienced material costs for quality assurance historically, leading to no accrual for these costs being deemed necessary[235]. - The company has not entered into any off-balance sheet financial guarantees or derivative contracts that are not reflected in the financial statements[214].

Vehicle Development and Production - As of December 31, 2024, the company has developed six series of commercial vehicle models and has begun production and delivery of these models into global markets[29] - The company has introduced the iChassis™ platform for autonomous driving applications and is developing hydrogen-powered heavy-duty vehicles to meet market demand[30] - The company has begun making its own battery packs and is preparing for battery cell production to enhance its supply chain capabilities[31] - The company has launched subsidiaries in various countries, including Colombia and Italy, to expand its global presence and market reach[63][64] - By the end of 2023, the company has launched seven ECV models available for commercial offering, including Metro MB, Avantier α and c, Logistar 100, Logistar 200, Logistar 260, Logistar 400, and Teemak[157] - In 2024, the company launched five new EV models: Avantier Ex, Avantier Commuter, Logistar 210, Logistar 300, and Logistar 450, enhancing its vehicle lineup and providing more options for customers[158] Market Trends and Projections - The global electric vehicle (EV) market was valued at approximately USD 561.3 billion in 2024 and is projected to reach approximately USD 1.58 trillion by 2030, representing a compound annual growth rate (CAGR) of 19% from 2023 to 2030[80] - The global electric commercial vehicle (ECV) market is projected to reach revenues of USD 623.3 billion in 2024, with a steady annual growth rate (CAGR 2024-2028) of 9.82%, reaching USD 906.7 billion by 2028[80] - The global hydrogen vehicle market is forecasted to grow at a CAGR of 31.94% from 2025 to 2032, reaching approximately USD 19.92 billion by 2032[86] Financial Performance - The company reported revenues of approximately $31.3 million for the year ended December 31, 2024, with significant losses from operations amounting to $55.3 million for the same period[203][205] - The revenue breakdown for 2024 shows the United States contributing $20,888,931 (66.7%), Europe $5,719,353 (18.3%), Asia $4,579,104 (14.6%), and others $110,004 (0.4%) compared to 2023[165] Research and Development - Approximately USD 94.4 million has been spent on R&D since 2013, developing ten vehicle models[116] - The company has invested approximately $94.4 million in research and development activities since inception, focusing on developing energy-efficient electric commercial vehicles (ECVs)[205] - As of December 31, 2024, the company holds 125 discovery patents, 10 design patents, and 86 innovation patents granted by the Chinese Patent Office, with additional applications pending[200] Manufacturing and Supply Chain - The company has established an asset-light, distributed manufacturing model, allowing for local assembly of vehicle kits to reduce capital investment[32] - The company has established a supply chain with over 500 suppliers, aiming to localize key components in North America and the European Union to support growth[192][193] - The new manufacturing facility in Changxing, acquired for approximately $19.5 million, is expected to support the production of 50,000 vehicles annually once fully operational[184] Distribution Strategy - The company has shifted its distribution strategy to combine wholly-owned EV Centers with local distribution channels to improve operational efficiencies and market share[33] - The company has shifted its distribution model, with channel partners accounting for approximately 2.1% of sales in 2024, down from 22.2% in 2023, following the acquisition of TME and the establishment of EV Centers[211] - The company has established a hybrid distribution model, opening eleven EV centers mainly in the US and EU throughout 2023[148] - The company is shifting towards local distribution channels to improve service quality and reduce operational costs[127] Regulatory and Market Challenges - The establishment and training of staff at EV Centers may require more time and resources than anticipated, potentially affecting performance and service quality[221] - The company does not provide charging solutions for channel partners or their customers, relying on third parties to ensure charging availability, which may impact vehicle attractiveness in certain markets[225] - The battery capacity of ECVs is expected to decline by up to 20% over six years under normal use conditions, which may negatively influence purchasing decisions[226] - The company anticipates challenges in penetrating new geographic markets, requiring substantial investment in time and resources to meet technical and regulatory requirements[224] Product Features and Certifications - The Metro® has passed N1 homologation requirements in Asia and has obtained EU Small Series Type Approval for an annual sales limitation of 1,500 units into the European Union market[96] - The LS300 has a payload of 3,307 lbs and a range of 270 miles, with EPA and CARB certifications received in 2024[105] - The company’s ECVs are designed with a lightweight chassis structure, reducing overall weight and increasing battery efficiency compared to competitors[191] - Hydrogen-powered trucks are expected to offer zero harmful emissions, higher energy density, and faster refueling times compared to battery-electric vehicles, making them suitable for long-haul transportation[161] Employee and Operational Insights - The company has a total of 260 full-time employees, with 64 in research and development and 58 in manufacturing[202] - The management team has extensive experience in the automotive and technology industries, focusing on developing high-quality, light- and medium-duty ECVs[198]

Financial Performance - Net revenues for the nine months ended September 30, 2024, were $28,443,831, compared to $13,470,895 for the same period in 2023, representing a 111% increase[154]. - The company reported a net loss of $27,405,605 for the nine months ended September 30, 2024, compared to a net loss of $41,294,342 for the same period in 2023, indicating a 34% reduction in losses[154]. - For the three months ended September 30, 2024, net revenues were approximately $16.7 million, an increase of approximately $11.0 million or 190.3% from approximately $5.8 million for the same period in 2023[158]. - The company reported a net loss of approximately $27.4 million for the nine months ended September 30, 2024, adjusted for non-cash items totaling approximately $12.1 million[212]. - For the nine months ended September 30, 2024, net cash used in operating activities was approximately $12.9 million, a significant improvement compared to $45.6 million for the same period in 2023, indicating a reduction of approximately 71.7%[210]. Revenue Breakdown - Vehicle sales contributed approximately $15.9 million to net revenues for the nine months ended September 30, 2024, with an average selling price increase from approximately $19,234 to $23,125[157]. - Vehicle sales contributed $25,483,836 to total revenues for the nine months ended September 30, 2024, compared to $12,732,639 in 2023, indicating an increase of about 100%[249]. - Revenue from spare parts sales rose to $2,783,954 in 2024 from $586,632 in 2023, reflecting a growth of approximately 373%[249]. - The Company’s revenue from Europe for the nine months ended September 30, 2024, was $17,071,721, a substantial increase from $451,848 in 2023[251]. - Revenue from Asia decreased to $7,260,544 in 2024 from $10,035,492 in 2023, representing a decline of approximately 28%[251]. - Revenue from America increased to $4,080,473 in 2024 from $2,983,555 in 2023, showing an increase of about 37%[251]. Cost and Expenses - Operating expenses totaled $33,889,349 for the nine months ended September 30, 2024, down from $38,301,735 in the same period of 2023, reflecting a 12% decrease[154]. - Selling and marketing expenses increased to $7,651,305 for the nine months ended September 30, 2024, compared to $7,238,563 in the same period of 2023, showing a 6% increase[154]. - Research and development expenses were $4,292,153 for the nine months ended September 30, 2024, down from $5,347,785 in the same period of 2023, representing a 20% decrease[154]. - General and administrative expenses for the nine months ended September 30, 2024, were approximately $21.9 million, a decrease of approximately $3.8 million or 14.7% from approximately $25.7 million for the same period in 2023[177]. - Selling and marketing expenses for the nine months ended September 30, 2024, were approximately $7.7 million, an increase of approximately $0.4 million or 5.7% from approximately $7.2 million for the same period in 2023[174]. Cash Flow and Investments - As of September 30, 2024, the company had approximately $21.8 million in cash and cash equivalents, down from approximately $44.6 million as of September 30, 2023[201]. - Net cash provided by investing activities was approximately $4.9 million for the nine months ended September 30, 2024, primarily due to cash received from redeeming financial investments of approximately $8.4 million[213]. - Net cash provided by financing activities was approximately $1.2 million for the nine months ended September 30, 2024, mainly from proceeds of bank loans and loans from third parties[214]. - The company has spent over approximately $94.3 million in research and development activities since inception in 2013 through September 30, 2024, and plans to increase R&D expenditure in the long term[206]. Market Outlook and Strategy - The company expects substantial revenue growth from the US market starting in 2024 as it shifts focus to North American sales and introduces new models[140]. - The company plans to continue the rollout of new ECV models in North America and Europe, and establish local assembly facilities in the United States over the next twelve months[202]. - The company has committed resources to research and development for new ECV models and related technologies, indicating a focus on innovation and market expansion[145]. Other Financial Metrics - The gross profit for the nine months ended September 30, 2024, was $5,282,088, compared to $2,059,456 for the same period in 2023, marking a 156% increase[154]. - The majority of net revenues for the nine months ended September 30, 2024, were generated from vehicle sales in the U.S., accounting for 60.1% of total revenues[164]. - The company reported an overall gross margin of approximately 18.6% for the nine months ended September 30, 2024, compared to 15.3% for the same period in 2023[172]. - A gain in the change in fair value of equity securities for the nine months ended September 30, 2024, was approximately $0.8 million compared to a loss of approximately $1.2 million for the same period in 2023[188]. - Net interest expense for the nine months ended September 30, 2024, was approximately $0.06 million, a decrease of approximately 57.4% compared to $0.1 million for the same period in 2023[181].

Financial Performance - Net revenues for the six months ended June 30, 2024, were $11,712,491, compared to $7,708,064 for the same period in 2023, representing a 52% increase [123]. - Net revenues for the six months ended June 30, 2024 were approximately $11.7 million, an increase of approximately $4.0 million or 52.0% from approximately $7.7 million for the same period in 2023 [125]. - Vehicle sales contributed $9.6 million to net revenues for the six months ended June 30, 2024, representing an increase of approximately $2.4 million due to improved sales volume and average selling price from approximately $19,797 to $22,882 [125]. - The company sold 420 ECVs for the six months ended June 30, 2024, compared to 364 ECVs for the same period in 2023, with significant sales in the U.S. market increasing from nil to 65 ECVs [127]. - Revenue from Europe reached $5,763,387, a substantial increase from $96,702 in the prior year, while revenue from Asia decreased to $3,654,430 from $5,531,486 [198]. Expenses and Losses - Total operating expenses for the six months ended June 30, 2024, were $19,450,046, a decrease from $24,968,200 in the same period of 2023, reflecting a 22% reduction [123]. - Loss from operations for the six months ended June 30, 2024, was $18,210,905, compared to a loss of $23,626,211 for the same period in 2023, indicating a 23% improvement [123]. - Net loss attributable to shareholders of the Company for the six months ended June 30, 2024, was $18,412,978, compared to $25,032,433 for the same period in 2023, a reduction of 26% [123]. - The company reported a net loss of approximately $(18.42) million for the six months ended June 30, 2024, compared to $(25.19) million for the same period in 2023 [156]. - The net loss for the six months ended June 30, 2024 was approximately $18.4 million, adjusted for non-cash items totaling approximately $7.1 million [167]. Research and Development - Research and development expenses for the six months ended June 30, 2024, were $2,815,469, down from $3,712,989 in the same period of 2023, a reduction of 24% [123]. - The Company continues to invest in research and development for new ECV models and related technologies, indicating a commitment to innovation [114]. - The company plans to increase research and development expenditures over the long term, having spent approximately $92.8 million since inception in 2013 through June 30, 2024 [162]. - Research and development expenses for the six months ended June 30, 2024, were approximately $2.8 million, a decrease of approximately 24.2% from $3.7 million for the same period in 2023 [142]. Cash Flow and Financial Position - As of June 30, 2024, the company had approximately $16.2 million in cash and cash equivalents, compared to $29.4 million as of December 31, 2023 [157]. - Working capital as of June 30, 2024, was approximately $60.6 million, a decrease of approximately $15.0 million from $75.6 million as of December 31, 2023 [163]. - Net cash used in operating activities for the six months ended June 30, 2024 was approximately $12.7 million, a decrease from $35.6 million for the same period in 2023 [166]. - Cash and cash equivalents at the end of the period were $16.4 million, down from $60.5 million at the end of June 30, 2023 [164]. - The company experienced a net decrease in cash of approximately $13.1 million for the six months ended June 30, 2024, compared to a decrease of $93.6 million in the same period of 2023 [164]. Operating Expenses - Selling and marketing expenses decreased significantly to $2,623,441 for the six months ended June 30, 2024, from $4,611,734 in the same period of 2023, a 43% decrease [123]. - General and administrative expenses for the six months ended June 30, 2024 were approximately $14.0 million, a decrease of approximately $2.6 million or 15.8% from approximately $16.6 million for the same period in 2023 [139]. - The Company anticipates that selling and marketing expenses will not increase in 2024 as it shifts strategy towards strengthening existing market developments [115]. - General and administrative expenses are expected to remain stable in 2024 as the Company focuses on improving operational efficiency [116]. Revenue Recognition and Accounting Policies - The Company utilizes a five-step analysis for revenue recognition, ensuring that revenue reflects the consideration expected to be received [195]. - Significant judgment is required to estimate return allowances, which could materially impact net revenues recognized [196]. - The Company has adopted the fair value option for certain financial instruments, including convertible promissory notes and currency-cross swaps [190]. - The current economic environment has increased uncertainty in estimates and assumptions used in financial reporting [185]. - The Company recognized $923,815 in revenue from contract liabilities for the six months ended June 30, 2024, compared to $479,499 in the same period of 2023 [199]. Other Financial Information - Net interest expense for the six months ended June 30, 2024, was approximately $0.02 million, representing a decrease of approximately 53.8% compared to $0.05 million in the same period in 2023 [143]. - Other expense, net for the six months ended June 30, 2024, was approximately $0.6 million, a decrease of approximately 25% from $0.8 million for the same period in 2023 [144]. - Contract liabilities as of June 30, 2024, were $5,476,006, compared to $3,394,044 as of June 30, 2023, indicating a growing obligation to deliver goods or services [201]. - Accounts receivable increased to $7,871,086 from $6,530,801, reflecting higher revenue recognized but not yet collected [201]. - A gain in the change in fair value of equity securities for the three months ended June 30, 2024, was approximately $0.3 million, an increase of approximately 200% compared to $0.1 million for the same period in 2023 [149].

Financial Performance - Net revenues for the three months ended March 31, 2024, were $3,391,999, a decrease of 2.3% from $3,470,544 in the same period of 2023[125] - Vehicle sales accounted for $2,514,777 (74.2%) of total net revenues, down from $2,840,963 (81.9%) in the prior year[127] - Spare-part sales increased to $828,785 (24.4%) from $598,036 (17.2%) year-over-year, indicating a shift in revenue sources[127] - The gross profit for the three months ended March 31, 2024, was $14,271, significantly lower than $194,744 in the same period of 2023[125] - For the three months ended March 31, 2024, vehicle sales accounted for $2,355,403, representing 69.7% of total cost of goods sold, a decrease from $2,794,762 or 85.3% in the same period of 2023[130] - Gross profit for the three months ended March 31, 2024 was approximately $0.01 million, a decrease of approximately $0.18 million from $0.19 million in the same period of 2023, resulting in a gross margin of 0.4% compared to 5.6% in 2023[130] - The company reported a loss from operations of $9,391,518 for the three months ended March 31, 2024, compared to a loss of $10,602,424 in the same period of 2023[125] - The net loss for Q1 2024 was approximately $9.2 million, adjusted for non-cash items totaling approximately $3.0 million, including foreign currency exchange losses and share-based compensation[166] Operating Expenses - Total operating expenses decreased to $9,405,789 from $10,797,168, reflecting a reduction in general and administrative expenses[125] - General and administrative expenses for the three months ended March 31, 2024 were approximately $6.4 million, a decrease of approximately $1.0 million or 13.3% from $7.3 million in the same period of 2023[132] - Selling and marketing expenses for the three months ended March 31, 2024 were approximately $1.3 million, a decrease of approximately $0.6 million or 29.6% from $1.9 million in the same period of 2023[143] Research and Development - Research and development expenses rose to $1,727,830, compared to $1,569,919 in the previous year, as the company continues to invest in new ECV models and technologies[125] - The company expects research and development expenses to increase as it invests in new materials, vehicle management systems, and digital control capabilities[94] - The company has invested over approximately $91.7 million in research and development since its inception in 2013, with plans to increase R&D expenditure in the long term[185] Cash Flow and Liquidity - As of March 31, 2024, the company had approximately $20.3 million in cash and cash equivalents, down from approximately $91.8 million as of March 31, 2022[146] - Net cash used in operating activities for the three months ended March 31, 2024 was approximately $8.9 million, compared to $17.4 million in the same period of 2023[146] - Net cash used in operating activities for Q1 2024 was approximately $8.9 million, compared to $17.4 million for Q1 2023, indicating a significant reduction in cash outflow[165] - The company plans to fund future operations through cash on hand, cash flow from operations, lines of credit, and additional equity and debt financings[163] Revenue Recognition and Accounting Estimates - The company recognizes revenue primarily through sales of light-duty ECVs, with significant judgment required to estimate return allowances based on historical experience[181] - For the three months ended March 31, 2024, the Company recognized revenue of $890,646 from contractual liabilities, compared to $98,818 for the same period in 2023[220] - The Company recognizes revenue when goods or services are transferred to customers, following a five-step analysis to determine revenue recognition[200] - Contract liabilities represent the Company's obligation to provide additional goods or services for which it has received consideration, remaining a liability until fulfilled[220] - The Company has significant accounting estimates that include provisions for doubtful accounts and impairment losses for long-lived assets, which may be affected by the current economic environment[199] - The current economic environment has increased uncertainty in the estimates and assumptions used in financial reporting[199] Legal Proceedings - The Company is involved in ongoing legal proceedings, including a demand for arbitration seeking $1,126,640 for outstanding invoices and a lawsuit claiming $19 million in damages related to stock options[204][206] - The Company has filed a lawsuit against MHP Americas, Inc. seeking $512,226 for breach of contract related to the implementation of SAP S/4HANA[207] Strategic Plans - The company plans to continue the rollout of new ECV models and green energy-related products in North America and Europe over the next twelve months[147] - The company aims to regionalize manufacturing and supply chains for certain components of ECVs in the markets where they are sold, enhancing after-sales market services[150] - The company completed the acquisition of Cenntro Elecautomotiv, S.L. in Spain on May 19, 2023, expanding its operational footprint in Europe[194] Other Financial Information - Working capital as of March 31, 2024, was approximately $67.5 million, down from $75.6 million as of December 31, 2023, reflecting an $8.1 million decrease[186] - The company signed multiple non-cancellable operating lease agreements, including a facility in Jacksonville, Florida, with an annual base rent of approximately $695,000 for the first three years[168] - Net cash provided by investing activities for Q1 2024 was approximately $0.3 million, primarily from proceeds of equity securities[189] - The company has not entered into any off-balance sheet financial guarantees or derivative contracts that are not reflected in its financial statements[176] - The Company has not disclosed any sales of unregistered equity securities that were not previously reported[209] - The Company is subject to various risks that could materially affect its business and financial condition, as outlined in the 2023 Form 10-K[208] - Shipping and handling costs for product shipments are recorded as sales and marketing expenses rather than separate performance obligations[219]

Financial Performance - The company's revenues for the year ended December 31, 2023, were approximately $22.1 million[165] - The company incurred losses from operations of approximately $51.9 million for the year ended December 31, 2023, compared to $54.7 million in 2022, indicating a reduction in losses[166] - In 2023, the total material cash transfer within the organization was approximately USD 23 million, including $15 million loan to Cenntro Electric Group Inc. and $8 million loan to Cenntro Automotive Corporation[248] - The company does not intend to pay dividends for the foreseeable future, relying on stock price appreciation for returns[295] - As of December 31, 2023, Cenntro had 191 holders of its Common Stock[338] Research and Development - The company has invested approximately $8.5 million in research and development activities since inception through December 31, 2023, and plans to continue significant investments in this area[166] - Cenntro has developed the iChassis™, a programmable "smart" chassis for remote-controlled or autonomous driving applications[235] - The company has developed eight vehicle models and is focusing on modular designs to allow for local assembly, which requires less capital investment[263] Market and Industry Trends - The last-mile delivery market in the U.S. and EU is expanding rapidly, driven by e-commerce growth and a focus on low-emission logistics, which is expected to increase demand for electric commercial vehicles[185] - The global electric vehicle (EV) market was valued at approximately $163.01 billion in 2020 and is projected to reach approximately $823.75 billion by 2030, representing a compound annual growth rate (CAGR) of 18.2% from 2021 to 2030[249] - The market for alternative fuel vehicles, including ECVs, is rapidly evolving, and any slower-than-expected market development could harm the company's financial condition[340] Manufacturing and Distribution - The company has established local assembly facilities in Jacksonville, Florida, and Freehold, New Jersey, with plans for an additional facility in Ontario, California[213] - The acquisition of CAE (formerly TME) in 2023 is expected to expand local assembly capacity in the European Union for ECV models[213] - Cenntro has established seven manufacturing and/or assembly facilities across the United States, China, Germany, and Mexico as of the date of this report[264] - Cenntro added six EV Centers to its global distribution system in 2022, with additional centers opened in the United States in 2023, totaling eleven EV Centers[270] - The company is shifting its distribution strategy from relying on third-party partners to a model combining wholly-owned EV Centers with local dealers[236] Regulatory and Compliance Risks - The company is subject to compliance with various regulations in North America, Europe, and Asia, which may limit its ability to sell certain ECV models[321] - Compliance with environmental regulations is crucial, and failure to do so could result in significant fines or operational suspensions[325] - The company is subject to various legal and regulatory requirements across different jurisdictions, which may affect its operations and sales[347] - The company must comply with the General Data Protection Regulation (GDPR) and other data protection laws, which may require additional resources[359] Supply Chain and Operational Challenges - The company’s business is subject to risks related to supply chain disruptions, which could adversely affect operations and financial results[178] - Shipping costs have increased significantly due to geopolitical factors, impacting vehicle production and gross profit margins[300] - The company has faced disruptions in ECV deliveries due to limited shipping capacity and increased shipping costs from China to North America and Europe[300] - The company anticipates significant increases in operating costs as it develops additional ECVs and establishes new partnerships and facilities[306] - The company faces risks related to fluctuating raw material costs, particularly for lithium, nickel, and cobalt used in lithium-ion cells[343] Technology and Innovation - The Logistar™ 400 has received certification as a zero-emission vehicle from both the California Air Resources Board and the EPA, allowing it to be sold in all U.S. states[195] - The Logistar™ 200, designed for the EU market, is available in three models and is specialized for last-mile delivery, city delivery, and city services, with homologation completed in January 2022[255] - The LMH864 hydrogen fuel-cell semi-tractor has a total weight of 25 tons and is designed for short- and long-haul applications, with operational range and refueling time comparable to diesel trucks[257] - Cenntro's distributed manufacturing model allows for lower capital investment compared to traditional automotive companies[236] Financial and Market Risks - Cenntro's business is significantly dependent on government subsidies and economic incentives for electric commercial vehicles (ECVs), and any reduction in these could adversely affect competitiveness[314] - The company has experienced price increases from component suppliers due to inflation, which may require raising ECV prices and negatively impact demand[316] - The company may seek equity or debt financing to meet capital requirements, which could be subject to unfavorable market conditions[309] Cybersecurity and Internal Controls - The company is exposed to cybersecurity risks, including ransomware and phishing attacks, which could adversely affect its financial condition[363] - Cenntro identified a material weakness in its internal control over financial reporting, which has not yet been remediated despite improvements in controls and supervision[313] - The company has implemented safety procedures for handling lithium-ion battery cells, but incidents could disrupt operations and harm brand reputation[312] Intellectual Property - The company relies on a combination of patents and trade secrets to protect its intellectual property, which may be vulnerable to infringement[348] - The company may face challenges in enforcing its intellectual property rights, potentially leading to a loss of competitive advantage[348]

FREEHOLD, N.J.--(BUSINESS WIRE)--Cenntro Electric Group Limited (NASDAQ: CENN) (“Cenntro” or “the Company”), a leading electric vehicle technology company with advanced, market-validated electric commercial vehicles, refers to the proposed scheme of arrangement in relation to which Cenntro will redomicile from Australia to the United States ("U.S.", the “Scheme”), and under which Cenntro will become a subsidiary of Cenntro Inc., a corporation incorporated in accordance with the laws of the state of Nevada ( ...

FREEHOLD, N.J.--(BUSINESS WIRE)--Cenntro Electric Group Limited (NASDAQ: CENN) (“Cenntro” or “the Company”), a leading electric vehicle technology company with advanced, market-validated electric commercial vehicles, refers to the proposed scheme of arrangement in relation to which Cenntro will re-domicile from Australia to the United States ("U.S.", the “Scheme”), and under which Cenntro will become a subsidiary of Cenntro Inc., a corporation incorporated in accordance with the laws of the state of Nevada ...

FREEHOLD, N.J.--(BUSINESS WIRE)--Cenntro Electric Group Limited (NASDAQ: CENN) (“Cenntro” or “the Company”), a leading electric vehicle technology company with advanced, market-validated electric commercial vehicles, refers to the proposed scheme of arrangement in relation to which Cenntro will re-domicile from Australia to the United States ("U.S.", the “Scheme”), and under which Cenntro will become a subsidiary of Cenntro Inc., a corporation incorporated in accordance with the laws of the state of Nevada ...