Centro(US:CENN)2024-05-15 20:06Financial 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]