Cenntro Inc

Previous wording

Up until December 31, 2021, we generate revenue primarily through the sale of ECVs to our channel partners. Starting in 2022, especially after the acquisition of CAE and the termination of the channel partners in North America, we have started to transform our go-to-market model to a more blended approach. Historically (i.e. up until end of 2021), these revenues were generated solely by the sale of the Metro®. Starting from the last quarter of 2021, we began generating revenue from the sales of the Logistar™ 200, Logistar™ 100, Logistar™ 260, Teemak™ and Neibor® 150 in Europe.

Current wording

Up until December 31, 2021, we generate revenue primarily through the sale of ECVs to our channel partners. Starting in 2022, especially after the acquisition of CAE and the termination of the channel partners in North America, we have started to transform our go-to-market model to a more blended approach. Historically (i.e. up until end of 2021), these revenues were generated solely by the sale of the Metro®. Starting from the last quarter of 2021, we began generating revenue from the sales of new ECV models, the Logistar™ 200, Logistar™ 210V, Logistar™ 100, Logistar™ 260, Teemak™, Neibor® 200, Avantier™ and Neibor® 150 in Europe, Clubcar, Logistar™ 210 and Logistar™ 260 in Asia, Avantier™ and Logistar™ 400 in the US. Starting from 2024, we expect substantial increase in revenue from the US market as we shift our focus to the North American market sales and introduce additional new models for the US market.

Previous wording

Net revenues ended June 30, 2024 and 2023 were generated from (a) vehicles sales, which primarily represent net revenues from sales of Metro® vehicles (including vehicle kits), Logistar™ 200, Logistar™ 260, Logistar™ 400, Antric®, Avantier™, Logistar™ 100 and Clubcar, (b) sales of ECV spare-parts related to our Metro® vehicles, and (c) other sales, which primarily were: (i) the sales of inventory of outsourced ECV batteries and (ii) charges on services provided to channel partners for technical developments and assistance with vehicle homologation or certification.

Current wording

Net revenues ended September 30, 2024 and 2023 were generated from (a) vehicles sales, which primarily represent net revenues from sales of Metro® vehicles (including vehicle kits), Logistar™ 200, Logistar™ 210, Logistar™ 210V, Logistar™ 260, Logistar™ 400, Antric®, Avantier™, Logistar™ 100, Neibor® 150, Neibor® 200 and Clubcar, (b) sales of ECV spare-parts related to our Metro® vehicles, and (c) other sales, which primarily were: (i) the sales of inventory of outsourced ECV batteries and (ii) charges on services provided to channel partners for technical developments and assistance with vehicle homologation or certification.

Previous wording

Selling and marketing expenses consist primarily of employee compensation and related expenses, sales commissions, marketing programs, freight costs, travel and entertainment expenses and allocated overhead. Marketing programs consist of advertising, tradeshows, events, corporate communications and brand-building activities. We anticipate that our selling and marketing expenses will not increase as we shift our strategy towards strengthening our existing market developments in 2024, instead of pursuing the rapid expansions undertaken in 2023.

Current wording

Selling and marketing expenses consist primarily of employee compensation and related expenses, sales commissions, marketing programs, freight costs, travel and entertainment expenses and allocated overhead. Marketing programs consist of advertising, tradeshows, events, corporate communications and brand-building activities. We expect our selling and marketing expenses to increase as we introduce our new ECV models, further develop additional local dealership and service support networks to augment our expanding sales globally.

Previous wording

We prepare and analyze operating and financial data to assess the performance of our business and allocate our resources. The following table sets forth our key performance indicators for the six months ended June 30, 2024 and 2023.

Current wording

We prepare and analyze operating and financial data to assess the performance of our business and allocate our resources. The following table sets forth our key performance indicators for the nine months ended September 30, 2024 and 2023.

Previous wording

Comparison of the Three and Six months ended June 30, 2024 and 2023

Current wording

Comparison of the Three and Nine Months ended September 30, 2024 and 2023

Previous wording

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 six months ended June 30, 2023. The increase in net revenues in 2024 was primarily attributed to an increase in vehicle sales by approximately $2.4 million due to the improvement of sales volume and average selling price from approximately $19,797 to $22,882 and an increase in spare-part sales by approximately $1.6 million due to the increase of sales of iChassis. The net revenues in US market for the six months ended June 30, 2024 were approximately $5.1 million, an increase of approximately $5.1 million from approximately zero for the six months ended June 30, 2023. The increase in net revenues in US market in 2024 was primarily attributed to an increase in vehicle sales by approximately $5.1 million.

Current wording

Net revenues for the nine months ended September 30, 2024 were approximately $28.4 million, an increase of approximately $15.0 million or 111.2% from approximately $13.5 million for the nine months ended September 30, 2023. The increase in net revenues in 2024 was primarily attributed to an increase in vehicle sales by approximately $12.8 million due to the improvement of sales volume and average selling price from approximately $19,234 to $23,125, and an increase in spare-part sales by approximately $2.2 million due to the increase of sales of iChassis. The net revenues in US market for the nine months ended September 30, 2024 were approximately $15.4 million, an increase of approximately $15.2 million from approximately $0.2 million for the nine months ended September 30, 2023. The increase in net revenues in US market in 2024 was primarily attributed to an increase in vehicle sales by approximately $15.3 million.

Previous wording

Net revenues for the three months ended June 30, 2024 were approximately $8.3 million, an increase of approximately $4.1 million or 96.4% from approximately $4.2 million for the three months ended June 30, 2023. The increase in net revenues in 2024 was primarily attributed to an increase in vehicle sales by approximately $2.7 million due to the improvement of sales volume and average selling price from approximately $18,581 to $ 27,827 and an increase in spare-part sales by approximately $1.4 million due to the increase of sales of iChassis. The net revenues in US market for the three months ended June 30, 2024 were approximately $4.9 million, an increase of approximately $4.9 million from approximately zero for the three months ended June 30, 2023. The increase in net revenues in US market in 2024 was primarily attributed to an increase in vehicle sales by approximately $4.9 million.

Current wording

Net revenues for the three months ended September 30, 2024 were approximately $16.7 million, an increase of approximately $11.0 million or 190.3% from approximately $5.8 million for the three months ended September 30, 2023. The increase in net revenues in 2024 was primarily attributed to an increase in vehicle sales by approximately $10.4 million due to the increase of sales volume and average selling price from approximately $18,478 to $23,275, and the increase in spare-part sales by approximately $0.6 million. The net revenues in US market for the three months ended September 30, 2024 were approximately $10.3 million, an increase of approximately $10.1 million from approximately $0.2 million for the three months ended September 30, 2023. The increase in net revenues in US market in 2024 was primarily attributed to an increase in vehicle sales by approximately $10.1 million.

Previous wording

For the three months ended June 30, 2024, we sold 255 ECVs, including 24 fully assembled Metro® units, 35 fully assembled Logistar™ 200 units, 33 fully assembled Logistar™ 100 units, 15 fully assembled Teemak™ units, 12 fully assembled Logistar™ 260 units, 33 fully assembled Logistar™ 400 units, 2 fully assembled Logistar™ 210 units, 53 fully assembled Avantier™ units, 11 Antric® units, 19 Clubcar units, 15 Neibor® 150 units and 3 Neibor® 200 units, compared with 235 ECVs for the three months ended June 30, 2023, including 139 fully assembled Metro® units, 54 fully assembled Logistar™ 200, 10 fully assembled Logistar™ 100, one fully assembled Teemak™, 23 fully assembled Logistar™ 260 and 8 Neibor® 150 units. In U.S. market, we sold 55 ECVs, including 2 fully assembled Metro® units, 12 fully assembled Teemak™ units, 37 fully assembled Logistar™ 400 units and 4 fully assembled Avantier™ units, compared with nil for the three months ended June 30, 2023.

Current wording

For the nine months ended September 30, 2024, we sold 1082 ECVs, including 117 fully assembled Metro® units, 62 fully assembled Logistar™ 200 units, 110 fully assembled Logistar™ 100 units, 23 fully assembled Teemak™ units, 68 fully assembled Logistar™ 260 units, 115 fully assembled Logistar™ 400 units, 445 fully assembled Avantier™ units, 20 Neibor® 150 units, 82 Clubcar units, 33 Antric® units, 3 Logistar™ 210 units, 1 Logistar™ 210V units and 3 Neibor® 200 units, compared with 662 ECVs for the nine months ended September 30, 2023, including 234 fully assembled Metro® units, 150 fully assembled Logistar™ 200, 157 fully assembled Logistar™ 100, 6 fully assembled Teemak™, 84 fully assembled Logistar™ 260, 1 fully assembled Logistar™ 400, 21 fully assembled Avantier™, 8 Neibor® 150 units and one Antric® V5. In U.S. market, we sold 149 ECVs, including 12 fully assembled Metro® units, 115 fully assembled Logistar™ 400 units, 18 fully assembled Teemak™ units and 4 fully assembled Avantier™ units, compared with 6 ECVs for the nine months ended September 30, 2023, including 5 fully assembled Metro® units and 1 fully assembled Logistar™ 400.

Previous wording

For the six months ended June 30, 2024, we sold 420 ECVs, including 53 fully assembled Metro® units, 43 fully assembled Logistar™ 200 units, 59 fully assembled Logistar™ 100 units, 19 fully assembled Teemak™ units, 54 fully assembled Logistar™ 260 units, 37 fully assembled Logistar™ 400 units, 2 fully assembled Logistar™ 210 units, 82 fully assembled Avantier™ units, 14 Antric® units, 39 Clubcar units, 15 Neibor® 150 units and 3 Neibor® 200 units, compared with 364 ECVs for the six months ended June 30, 2023, including 156 fully assembled Metro® units, 102 fully assembled Logistar™ 200, 49 fully assembled Logistar™ 100, 2 fully assembled Teemak™, 47 fully assembled Logistar™ 260 and 8 Neibor® 150 units. In U.S. market, we sold 65 ECVs, including 10 fully assembled Metro® units, 14 fully assembled Teemak™ units, 37 fully assembled Logistar™ 400 units and 4 fully assembled Avantier™ units, compared with nil for the six months ended June 30, 2023.

Current wording

For the three months ended September 30, 2024, we sold 662 ECVs，, including 64 fully assembled Metro® units, 19 fully assembled Logistar™ 200, 51 fully assembled Logistar™ 100, 4 fully assembled Teemak™, 14 fully assembled Logistar™ 260, 78 fully assembled Logistar™ 400, 363 fully assembled Avantier™, 5 Neibor® 150 units, 43 Clubcar units, 19 Antric® units, 1 Logistar™ 210 units, and 1 Logistar™ 210V units, compared with 298 ECVs for the three months ended September 30, 2023, including 78 fully assembled Metro® units, 48 fully assembled Logistar™ 200, 108 fully assembled Logistar™ 100, 4 fully assembled Teemak™, 37 fully assembled Logistar™ 260, 1 fully assembled Logistar™ 400, 21 fully assembled Avantier™ and one Antric® V5.

Previous wording

Geographically, the vast majority of our net revenues were generated from vehicle sales in the North America and European Union during the six months ended June 30, 2024 and 2023. For the six months ended June 30, 2024, net revenues from Europe, North America, and Asia (including China) as a percentage of total revenues was 31.2%, 49.2%, and 19.6%, respectively, compared to 71.8%, 1.3%, and 27.0%, respectively for the corresponding period in 2023.

Current wording

Geographically, the vast majority of our net revenues were generated from vehicle sales in the U.S. during the nine months ended September 30, 2024. For the nine months ended September 30, 2024, net revenues from Europe, North America, Asia (including China) and Africa as a percentage of total revenues was 25.5%, 60.1%, 14.3% and 0.1%, respectively, compared to 74.5%, 3.4%, 22.1% and n il, respectively for the corresponding period in 2023.

Previous wording

The vast majority of our net revenues were generated from vehicle sales in the North America during the three months ended June 30, 2024 and 2023. For the three months ended June 30, 2024, net revenues from Europe, North America, and Asia (including China) as a percentage of total revenues was 24.0%, 61.7%, and 14.3%, respectively, compared to 58.3%, 1.5%, and 40.2%, respectively for the corresponding period in 2023.

Current wording

The vast majority of our net revenues were generated from vehicle sales in the U.S. during the three months ended September 30, 2024. For the three months ended September 30, 2024, net revenues from Europe, North America, Asia (including China) and Africa as a percentage of total revenues was 21.6%, 67.6%, 10.6% and 0.2%, respectively, compared to 78.2%, 6.2%, 15.7% and nil, respectively for the corresponding period in 2023.

Previous wording

For the six months ended June 30, 2024, net revenues from vehicle sales in Europe, North America, and Asia (including China) as a percentage of total vehicle net revenues was 35.4%, 59.9%, and 4.7%, respectively, compared to 74.8%, 0.8%, and 24.4%, respectively, for the corresponding period in 2023.

Current wording

For the nine months ended September 30, 2024, net revenues from vehicle sales in Europe, North America, Asia (including China) and Africa as a percentage of total vehicle net revenues was 27.1%, 66.9%, 5.9% and 0.1%, respectively, compared to 77.6%, 3.3%, 19.1% and nil, respectively, for the corresponding period in 2023.

Previous wording

For the three months ended June 30, 2024, net revenues from vehicle sales in Europe, North America, and Asia (including China) as a percentage of total vehicle net revenues was 26.0%, 72.4%, and 1.6%, respectively, compared to 62.5%, 0.6%, and 36.9%, respectively, for the corresponding period in 2023.

Current wording

For the three months ended September 30, 2024, net revenues from vehicle sales in Europe, North America, Asia (including China) and Africa as a percentage of total vehicle net revenues was 22.2%, 71.2%, 6.5% and 0.1%, respectively, compared to 81.4%, 6.4%, 12.2% and nil, respectively, for the corresponding period in 2023.

Previous wording

Cost of goods sold for the six months ended June 30, 2024 was approximately $10.5 million, an increase of approximately $4.1 million or approximately 64.5% from approximately $6.4 million for the six months ended June 30, 2023. The increase of cost of vehicle sales was mainly caused by the increase in the inventory write-down of approximately $1.7 million compared to nil in the corresponding period in 2023 and the increased cost of vehicle sales and spare-parts sales of approximately $0.7 million and $1.7 million, respectively.

Current wording

Cost of goods sold for the nine months ended September 30, 2024 was approximately $23.2 million, an increase of approximately $11.8 million or approximately 103.0% from approximately $11.4 million for the nine months ended September 30, 2023. The increase of cost of goods sold was mainly caused by (i) the increase in vehicle sales and spare-part sales of approximately $4.3 million and $1.8 million, respectively, (ii) the increase of inventory write-down of approximately $5.7 million compared to nil in the corresponding period in 2023.

Previous wording

Cost of goods sold for the three months ended June 30, 2024 was approximately $7.1 million, an increase of approximately $4.0 million or approximately 129.6% from approximately $3.1 million for the three months ended June 30, 2023. The increase of cost of vehicle sales was mainly caused by the increase in the inventory write-down of approximately $1.7 million compared to nil in the corresponding period in 2023 and the increased cost of vehicle sales and spare-parts sales of approximately $1.1 million and $1.2 million, respectively.

Current wording

Cost of goods sold for the three months ended September 30, 2024 was approximately $12.7 million, an increase of approximately $7.6 million or approximately 151.5% from approximately $5.0 million for the three months ended September 30, 2023. The increase of cost of goods sold was mainly caused by (i) the increase in vehicle sales of approximately $3.6 million, (ii) the increase of inventory write-down of approximately $4.0 million compared to nil in the corresponding period in 2023

Previous wording

Gross Profit for the six months ended June 30, 2024 was approximately $1.2 million, a decrease of approximately $0.1 million from approximately $1.3 million of gross profit for the six months ended June 30, 2023. For the six months ended June 30, 2024 and 2023, our overall gross margin was approximately 10.6% and 17.4%, respectively. Our gross margin of vehicle sales for the six months ended June 30, 2024 and 2023 was 12.1% and 16.7%, respectively. The decrease of our overall gross profit was caused by the increase in inventory write-down of approximately $1.7 million and the decrease in the gross profit of our spare-part sales and other sales of approximately $0.1 million, offset by the increase in the gross profit of our vehicle sales of approximately $1.7 million including approximately $1.0 million increase in the US market sale in the six months ended June 30, 2024 compared with the same period in 2023.

Current wording

Gross Profit for the nine months ended September 30, 2024 was approximately $5.3 million, an increase of approximately $3.2 million from approximately $2.1 million of gross loss for the nine months ended September 30, 2023. For the nine months ended September 30, 2024 and 2023, our overall gross margin was approximately 18.6% and 15.3%, respectively. Our gross margin of vehicle sales for the nine months ended September 30, 2024 and 2023 was 19.2% and 16.3%, respectively. The increase of our overall gross profit was mainly caused by an increase in the gross profit of our vehicle sales and spare-part sales of approximately $8.5 million and $0.4 million, respectively, offset by the increase in the inventory write-down of approximately $5.7 million.

Previous wording

Gross Profit for the three months ended June 30, 2024 was approximately $1.2 million, an increase of approximately $0.1 million from approximately $1.1 million of gross profit for the three months ended June 30, 2023. For the three months ended June 30, 2024 and 2023, our overall gross margin was approximately 14.7% and 27.1%, respectively. Our gross margin of vehicle sales for the three months ended June 30, 2024 and 2023 was 14.2% and 26.4%, respectively. The increase of our overall gross profit was mainly caused by an increase in the gross profit of our vehicle sales and spare-part sales of approximately $1.6 million and $0.2 million, respectively, offset by the increase in the inventory write-down of approximately $1.7 million.

Current wording

Gross Profit for the three months ended September 30, 2024 was approximately $4.0 million, an increase of approximately $3.3 million from approximately $0.7 million of gross profit for the three months ended September 30, 2023. For the three months ended September 30, 2024 and 2023, our overall gross margin was approximately 24.2% and 12.4%, respectively. Our gross margin of vehicle sales for the three months ended September 30, 2024 and 2023 was 23.5% and 15.7%, respectively. The increase of our overall gross profit was mainly caused by an increase in the gross profit of our vehicle sales and spare-part sales of approximately $6.8 million and $0.5 million, respectively, offset by the increase in the inventory write-down of approximately $4.0 million.

Previous wording

Selling and marketing expenses for the three months ended June 30, 2024 were approximately $1.3 million, a decrease of approximately $1.4 million or approximately 52.4% from approximately $2.7 million for the three months ended June 30, 2023. The decrease in selling and marketing expenses in 2024 was primarily attributed to the decrease in salary expenses, share-based compensations and marketing expense of approximately $1.0 million, $0.1 million and $0.3 million, respectively.

Current wording

Selling and marketing expenses for the three months ended September 30, 2024 were approximately $5.0 million, an increase of approximately $2.4 million or approximately 91.4% from approximately $2.6 million for the three months ended September 30, 2023. The increase in selling and marketing expenses in 2024 was primarily attributed to the increase in marketing expenses and marketing related professional fee of approximately $2.3million and $0.3 million, respectively, offset by the decrease in freight of approximately $0.2 million.

Previous wording

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 approximately 15.8% from approximately $16.6 million for the six months ended June 30, 2023. The decrease in general and administrative expenses in 2023 was primarily attributed to a decrease in legal and professional fee, office expenses and share-based compensation of approximately $1.4 million, $1.8 million and $0.4 million, respectively, offset by the increase in salary expense of approximately $0.9 million.

Current wording

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 approximately 14.7% from approximately $25.7 million for the nine months ended September 30, 2023. The decrease in general and administrative expenses in 2024 was primarily attributed to a decrease in in legal and professional fee, office expenses and share-based compensations of approximately $2.1 million, $1.7 million and $1.5 million, respectively, offset by the increase in salary and social insurance expense, lease ROU amortization, amortization, leasehold improvement depreciation and others of approximately $0.7 million, $0.3 million, $0.2 million, $0.3 million and $0.1 million, respectively.

Previous wording

Research and development expenses for the six months ended June 30, 2024 were approximately $2.8 million, a decrease of approximately $0.9 million or approximately 24.2% from approximately $3.7 million for the six months ended June 30, 2023. The decrease in research and development expenses in 2024 was primarily attributed to the decrease in design and development expenditures of approximately $1.3 million, offset by the increase in salary expense of approximately $0.4 million.

Current wording

Research and development expenses for the nine months ended September 30, 2024 were approximately $4.3 million, a decrease of approximately $1.1 million or approximately 19.7% from approximately $5.3 million for the nine months ended September 30, 2023. The decrease in research and development expenses in 2024 was primarily attributed to the decrease in design and testing material expenditures of approximately $1.3 million, offset by the increase in salary expense of approximately $0.4 million.

Previous wording

Research and development expenses for the three months ended June 30, 2024 were approximately $1.1 million, a decrease of approximately $1.1 million or approximately 49.2% from approximately $2.1 million for the three months ended June 30, 2023. The decrease in research and development expenses in 2024 was primarily attributed the decrease in design and development expenditures of approximately $1.2 million, offset by the increase in salary expense of approximately $0.1 million.

Current wording

Research and development expenses for the three months ended September 30, 2024 were approximately $1.5 million, a decrease of approximately $0.2 million or approximately 9.7% from approximately $1.6 million for the three months ended September 30, 2023. The decrease in research and development expenses in 2024 was primarily attributed to the decrease in design and development expenditures, share-based compensations and others of approximately $0.06 million, $0.09 million and $0.06 million, respectively.

Previous wording

Interest expense, net, mainly consists of interest on convertible bonds. Net interest expense was approximately $0.02 million for the six months ended June 30, 2024, representing a decrease of approximately $0.03 million or approximately 53.8% compared to the approximately $0.05 million in interest expense for the six months ended June 30, 2023.

Current wording

Interest expense, net, mainly consists of interest on convertible bonds. Net interest expense was approximately $0.06 million for the nine months ended September 30, 2023, a decrease of approximately $0.08 million or approximately 57.4% compared to the approximately $0.1 million in interest expense for the nine months ended September 30, 2023. The increase was primarily attributable to (i) the decrease in interest income from deposit of approximately $0.2 million, (ii) the increase in interest income from Acton convertible bonds, RAP and HWE of approximately $0.02 million, $0.01 million and $0.02 million respectively, (iii) a decrease in interest expense to convertible bonds of approximately $0.2 million.

Previous wording

Other expense, net for the six months ended June 30, 2024 was approximately $0.6 million, representing a decrease of approximately $0.2 million compared to approximately $0.8 million of other expense, net for the six months ended June 30, 2023. The decrease of other expense in 2024 compared to 2023 was primarily attributable to an increase in loss on foreign currency exchange and investment gain of approximately $0.6 million, offset by an increase of approximately $0.3 million investment gain and an increase of approximately $0.2 million in income on disposal of PPE from CAC during the second quarter of 2024.

Current wording

Other expense, net for the nine months ended September 30, 2024 was approximately $0.5 million, representing a change of approximately $1.3 million compared to approximately $0.8 million of other income, net for the nine months ended September 30, 2023. The change of other income/(expense) in 2024 compared to 2023 was primarily attributable to the increase in loss on investment and income on disposal of PPE of approximately $1.0 million and $0.3 million, respectively.

Previous wording

Other expense, net for the three months ended June 30, 2024 was approximately $0.4 million, representing a decrease of approximately $0.7 million compared to approximately $1.1 million of other expense, net for the three months ended June 30, 2023. The change of other expense in 2024 compared to 2023 was primarily attributable to an increase in loss on foreign currency exchange of approximately $1.0 million, offset by an increase of approximately $0.1 million investment gain and an increase of approximately $0.2 million in income on disposal of PPE from CAC during the second quarter of 2024.

Current wording

Other expense, net for the three months ended September 30, 2024 was approximately $0.6 million, representing a change of approximately $0.8 million compared to approximately $0.2 million of other income, net for the three months ended September 30, 2023. The change of other income/(expense) in 2024 compared to 2023 was primarily attributable to the increase in loss on investment of approximately $0.7 million and the decrease in gain on others of approximately $0.1 million.

Previous wording

A gain in the change in fair value of convertible promissory notes and derivative liability for the three months ended June 30, 2024 was approximately $0.01 million, representing a decrease of approximately $0.19 million compared to approximately $0.2 million for the three months ended June 30, 2023.

Current wording

A gain in the change in fair value of convertible promissory notes and derivative liability for the nine months ended September 30, 2024 was approximately $0 million, representing a decrease of approximately $0.09 million compared to approximately $0.09 million for the nine months ended September 30, 2023.

Previous wording

A gain in the change in fair value of convertible promissory notes and derivative liability for the six months ended June 30, 2024 was approximately $0.01 million, representing a decrease of approximately $0.06 million compared to approximately $0.07 million for six months ended June 30, 2023.

Current wording

A loss in the change in fair value of convertible promissory notes and derivative liability for the three months ended September 30, 2024 was approximately $0 million, representing a change of approximately $0.02 million compared to a gain in the change in fair value of convertible promissory notes and derivative liability of approximately $0.02 million for the three months ended September 30, 2023.

Previous wording

A gain in the change in fair value ofequity securities for the six months ended June 30, 2024 was approximately $0.5 million, representing a decrease of approximately $0.2 million compared to approximately $0.7 million of a gain in the change in fair value ofequity securities for the six months ended June 30, 2023.

Current wording

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 approximately $1.2 million of a loss in the change in fair value of equity securities for the nine months ended September 30, 2023.

Previous wording

A gain in the change in fair value of equity securities for the three months ended June 30, 2024 was approximately $0.3 million, representing an increase of approximately $0.2 million compared to approximately $0.1 million of a gain in the change in fair value of equity securities for the three months ended June 30, 2023.

Current wording

A gain in the change in fair value of equity securities for the three months ended September 30, 2024 was approximately $0.3 million compared to approximately $1.9 million of a loss in the change in fair value of equity securities for the three months ended September 30, 2023.

Previous wording

Adjusted EBITDA for the three and six months ended June 30, 2024 and 2023

Current wording

Adjusted EBITDA for the three and nine months ended September 30, 2024 and 2023

Previous wording

We have historically funded working capital and other capital requirements primarily through bank loans, equity financings and short-term loans. Also, the reverse recapitalization we have completed at the end of December 2021 provided significant funding for the Company’s operations. Our Cash is required primarily to purchase raw materials, and pay salaries, office expenses and other operating expenses.

Current wording

We have historically funded working capital and other capital requirements primarily through bank loans, equity financings and short-term loans. Also, the reverse recapitalization we have completed at the end of December 2021 provided significant funding for the Company’s operations. Cash is required primarily to purchase raw materials, repay debts and pay salaries, office expenses and other operating expenses.

Previous wording

As of June 30, 2024, we had approximately $16.2 million in cash and cash equivalents, approximately $7.9 million of accounts receivables, and approximately $41.3 million of inventory as compared to approximately $29.4 million in cash and cash equivalents, $6.5 million in accounts receivable, and $43.9 million in inventory as of December 31, 2023. For the six months ended June 30, 2024 and 2023, net cash used in operating activities was approximately $12.7 million and $35.5 million, respectively.

Current wording

As of September 30, 2024, we had approximately $21.8 million in cash and cash equivalents, approximately $4.6 million of accounts receivable. and approximately $35.9 million of inventory as compared to approximately $44.6 million in cash and cash equivalents, $4.6 million in accounts receivable, and $43.1 million in inventory as of September 30, 2023. For the nine months ended September 30, 2024 and 2023, net cash used in operating activities was approximately $12.9 million and $45.6 million, respectively.

Previous wording

We are looking at measures to generate operating efficiency as well as increasing the inventory turns in containing the growth of working capital for reducing negative net cash used in operating activities. With the cash improvement initiatives, we believe our cash and cash equivalents will be sufficient for us to continue to execute our business strategy over the twelve months period following the date ofissuance of this 10Q. Our current business strategy for the next twelve months includes (i) the continued rollout of our new ECV models in North America and Europe, as applicable, (ii) the establishment of local assembly facilities in the United States and the European Union and (iii) additional plants and equipment for the expansion of our Changxing factory 1. Actual results could vary materially as a result of a number of factors, including:

Current wording

We are looking at measures to generate operating efficiency as well as increasing the inventory turns in containing the growth of working capital for reducing negative net cash used in operating activities. With the cash improvement initiatives, we believe our cash and cash equivalents will be sufficient for us to continue to execute our business strategy over the twelve months period following the date ofissuance of this 10Q. Our current business strategy for the next twelve months includes (i) the continued rollout of our new ECV models in North America and Europe, as applicable, (ii) the establishment of local assembly facilities in the United States and (iii) additional plants and equipment for the expansion of our Changxing factory 1. Actual results could vary materially as a result of a number of factors, including:

Previous wording

In the long-term, we plan to regionalize the manufacturing and supply chain relating to certain components of our ECVs in several geographic markets. Through our supply chain development know-how, we intend to establish supply chain relationships especially in the North America to support anticipated manufacturing and assembly needs in these markets, thereby reducing the time in transit and potentially other landed costs elements associated with importing our components and spare parts from China. As part of our growth strategy, we plan to expand our channel partner network, and local assembly facilities to regionalize our manufacturing and supply chains to better serve our global customers, especially to expand our after-sales-market services offerings.

Current wording

In the long-term, we plan to regionalize the manufacturing and supply chain relating to certain components of our ECVs in the geographic markets in which our ECVs are sold. In the long-term, through our supply chain development know-how, we intend to establish supply chain relationships in North America and the European Union to support anticipated manufacturing and assembly needs in these markets, thereby reducing the time in transit and potentially other landed costs elements associated with importing our components and spare parts from China. Currently, the majority of our revenues is derived from the sale of ECVs by private label channel partners that assemble our vehicle kits in their own facilities. As part of our growth strategy, we plan to expand our channel partner network, and local assembly facilities to regionalize our manufacturing and supply chains to better serve our global customers especially to expand our after-sales-market services offerings.

Previous wording

We intend to further expand our technology through continued investment in research and development. Since inception in 2013 through June 30, 2024, we have spent over approximately $92.8 million in research and development activities related to our operations. We plan to increase our research and development expenditure over the long term as we build on our technologies in vehicle development, driving control, cloud-based platforms, and innovations for promoting sustainable energy.

Current wording

We intend to further expand our technology through continued investment in research and development. Since inception in 2013 through September 30, 2024, we have spent over approximately $94.3 million in research and development activities related to our operations. We plan to increase our research and development expenditure over the long term as we build on our technologies in vehicle development, driving control, cloud-based platforms, and innovations for promoting sustainable energy.

Previous wording

As of June 30, 2024, our working capital was approximately $60.6 million, as compared to a working capital of approximately $75.6 million as of December 31, 2023. The approximately $15.0 million decrease in working capital during 2024 was primarily due to the decrease of cash and cash equivalents and inventories of approximately $13.1 million and $2.6 million, respectively, offset by the increase in accounts receivable, accounts and notes payable and accrued expense and other current liabilities of approximately $1.3 million, $0.2 million and $0.2 million, respectively.

Current wording

As of September 30, 2024, our working capital was approximately $53.3 million, as compared to a working capital of approximately $75.6 million as of December 31, 2023. The approximately $22.3 million decrease in working capital during 2024 was primarily due to the decrease of cash and cash equivalents of approximately $7.6 million, the decrease of short-term investment of approximately $4.2 million, the decrease of accounts receivable of approximately $2.0 million, the decrease of inventories of $8.0 million, the increase of contractual liabilities of approximately $1.6 million, offset by the decrease of accounts payable of approximately $0.6 million.

Previous wording

Our net cash used in operating activities was approximately $12.7 million, $35.6 million for the six months ended June 30, 2024 and 2023, respectively.

Current wording

Our net cash used in operating activities was approximately $12.9 million and $45.6 million for the nine months ended September 30, 2024 and 2023, respectively.

Previous wording

Net cash used in operating activities for the six months ended June 30, 2024 was primarily attributable to (i) our net loss of approximately $18.4 million and adjusted for non-cash items of approximately $7.1 million, which primarily consisted of share based compensation expense, net foreign currency exchange loss, depreciation and amortization, impairment of slow-moving inventories and amortization of operating lease right-of-use asset of approximately $1.8 million, $0.6 million, $1.0 million, $1.7 million and $2.4 million, respectively, (ii) the increase in accounts receivable, prepayment and other current assets and operating lease liabilities and of approximately $1.5 million, $1.5 million and $1.9 million, respectively, (iii) increase in deferred revenue, accrued expense and other current liabilities, and accounts payable of approximately $1.8 million, $0.2 million and $0.1 million, respectively, (iv) decrease in inventories and other non-current assets of approximately $0.7 million and $0.8 million, respectively.

Current wording

Net cash used in operating activities for the nine months ended September 30, 2024 was primarily attributable to (i) our net loss of approximately $27.4 million and adjusted for non-cash items of approximately $12.1 million, which primarily consisted of impairment of slow-moving inventories, share based compensation expense and amortization of operating lease right-of-use asset of approximately $5.7 million, $2.6 million and $3.6 million, respectively, (ii) the decrease in inventories, accounts receivable and deferred revenue of approximately $3.5 million, $2.0 million and $1.2 million, respectively, (iii) the increase in operating lease liabilities of approximately $2.7 million.

Previous wording

Net cash used in investing activities was approximately $0.4 million for the six months ended June 30, 2024. Net cash used in investing activities for the six months ended June 30, 2024 was primarily attributable to cash paid in acquisition of 80% of Hezhe’s shares of approximately $0.4 million, approximately $0.7 million in purchase of plant and equipment, offset by the cash from redemption of equity securities investment of approximately $0.6 million.

Current wording

Net cash provided by investing activities was approximately $4.9 million for the nine months ended September 30, 2024. Net cash provided by investing activities for the nine months ended September 30, 2024 was primarily attributable to cash received from redeeming regular financial investments of approximately $8.4 million, redemption of equity securities investment of approximately $1.6 million, approximately $4.2 million in paid for regular financial investments, approximately $0.7 million in purchase of property, plant and equipment and approximately $0.4 million net cash paid in acquisition of 80% of Hezhe's share andincluding related expenses.

Previous wording

Net cash provided by financing activities was approximately $0.5 million for the six months ended June 30, 2024. Net cash provided by financing activities for the six months ended June 30, 2024 was primarily attributable to approximately $0.5 million due to proceeds from bank loans.

Current wording

Net cash provided by financing activities was approximately $1.2 million for the nine months ended September 30, 2024. Net cash provided by financing activities for the nine months ended September 30, 2024 was primarily attributable to approximately $0.7 million due to proceeds from bank loans and $0.7 million due to loans proceed from third parties, offset by repayments of bank loans of approximately $0.1 million.

Previous wording

On December 4, 2021, we entered into an entrustment agreement with Cedar Europe GmbH, a company organized under the laws of Germany (“Cedar”) pursuant to which we entrusted Cedar to, in Cedar’s name, obtain a lease agreement for facilities in Germany and operate such lease facility under Cedar’s name in exchange for the Cenntro’s responsibility for all expenditures and costs of the lease. On December 24, 2021, Cedar entered into a lease agreement for an approximately 27,220 square feet facility in Dusseldorf, Germany, where we now house our European Operations Facility. The lease period began on January 1, 2022 and ends on December 31, 2024. Pursuant to such lease agreement, the total annual base rent is€354,787 (or approximately $383,512) for the lease term. On 17 January 2023, Cedar transferred the lease to CEGE, effectively from 1 February, 2023.

Current wording

On December 4, 2021, we entered into an entrustment agreement with Cedar Europe GmbH, a company organized under the laws of Germany (“Cedar”) pursuant to which we entrusted Cedar to, in Cedar’s name, obtain a lease agreement for facilities in Germany and operate such lease facility under Cedar’s name in exchange for the Cenntro’s responsibility for all expenditures and costs of the lease. On December 24, 2021, Cedar entered into a lease agreement for an approximately 27,220 square feet facility in Dusseldorf, Germany, where we now house our European Operations Facility. The lease period began on January 1, 2022 and ends on December 31, 2024. Pursuant to such lease agreement, the total annual base rent is€354,787 (or approximately $385,651) for the lease term. On 17 January 2023, Cedar transferred the lease to CEGE, effectively from 1 February, 2023.