Cenntro Inc.

Previous wording

We are an emerging designer, manufacturer, distributor, and service provider of commercial vehicles powered by either electricity or hydrogen energy sources. Our commercial vehicles are designed to serve a variety of fleet and municipal organizations in support of city services, last-mile delivery and other commercial applications. As of December 31, 2023, we have developed six series of commercial vehicle models, Metro®, Logistar™, Logimax™, Avantier™, Teemak™ and Antric One. We have successfully begun to produce and deliver these models into the global markets, apart from Logimax™.

Current wording

We are an emerging designer, manufacturer, distributor, and service provider of commercial vehicles powered by either electricity or hydrogen energy sources. Our commercial vehicles are designed to serve a variety of fleet and municipal organizations in support of city services, last-mile delivery and other commercial applications. As of December 31, 2024, we have developed five series of commercial vehicle models, Metro®, Logistar™, Logimax™, Avantier™ and Teemak™. We also provide other delivery platforms including Antric One and iChassie, along with Electric Charger Products. We have successfully begun to produce and deliver these models into the global markets, apart from Logimax™.

Previous wording

With the global trend toward reducing the number of internal combustion engine (“ICE”) vehicles, electric-battery and fuel cell technologies stand out as strong alternatives. Prior to COVID-19, battery costs significantly decreased over the past decade. We expect that over the long term, prices will continue to fall. According to research service Bloomberg NEF (“BNEF”), lithium-ion battery pack prices decreased from above $1,200 per kilowatt-hour in 2010 to $132/kWh in 2021. In real terms, this represented a decline of approximately 89%. Although battery pack prices have recently increased and may continue to increase in the near-term due to the rising price of lithium as a result of COVID-19 and other factors, we anticipate that battery prices will continue to decrease in the long-term. BNEF further forecasts that by 2024, average prices are expected to fall to below $100/kWh, though such reductions in average price may be delayed due to higher raw material prices in the near term. Additionally, while prices for key battery metals like lithium, nickel and cobalt have moderated slightly in recent months, BNEF expects average battery pack prices to remain elevated in 2023 at $152/kWh (in real 2022 dollars). BNEF expects battery price to start dropping again in 2024, when lithium prices are expected to ease as more extraction and refining capacity comes online. Based on the updated observed learning rate, BNEF’s 2022 Battery Price Survey predicts that average pack prices should fall below $100/kWh by 2026. By emphasizing investments in technology, supply-chains, vehicle distribution and aftermarket support, we have begun making our own battery packs, preparing battery cell production, by building up vehicle distribution and service networks, and introducing our cloud-based parts distribution systems. As investment in battery technology continues to increase, we believe these cost reductions outlined by BNEF will continue to improve the economics of battery-powered ECVs, like ours.

Current wording

With the global trend toward reducing the number of internal combustion engine (“ICE”) vehicles, electric-battery and fuel cell technologies stand out as strong alternatives. Prior to COVID-19, battery costs significantly decreased over the past decade. We expect that over the long term, prices will continue to fall. According to research service Bloomberg NEF (“BNEF”), lithium-ion battery pack prices decreased from above $1,200 per kilowatt-hour in 2010 to $132/kWh in 2021. In real terms, this represented a decline of approximately 89%. We anticipate that battery prices will continue to decrease in the long-term. BNEF further forecasts that average prices are expected to fall by $3/kWh in 2025. Looking ahead, prices are expected to fall further over the next decade amid continued investment in R&D, manufacturing process improvements, and capacity expansion across the supply chain. Lithium prices are expected to ease as more extraction and refining capacity comes online. Based on the updated observed learning rate, BNEF’s 2022 Battery Price Survey predicts that average pack prices should fall below $100/kWh by 2026. By emphasizing investments in technology, supply-chains, vehicle distribution and aftermarket support, we have begun making our own battery packs, preparing battery cell production, by building up vehicle distribution and service networks, and introducing our cloud-based parts distribution systems. As investment in battery technology continues to increase, we believe these cost reductions outlined by BNEF will continue to improve the economics of battery-powered ECVs, like ours.

Previous wording

Our distributed manufacturing model allows us to focus our efforts on the design of ECV models and related technologies while outsourcing various portions of the manufacturing, assembly and marketing of our vehicles to qualified third parties, allowing the Company to operate with lower capital investment than traditional vertically integrated automotive companies. For the last several years, we relied substantially on private label channel partners to assemble and distribute the Metro® from vehicle kits that we manufactured in our facilities. Our vehicle kits and in some cases fully assembled vehicles are completed by third party Original Equipment Manufacturers (“OEMs”) manufacturing partners and, in the case of vehicle kits, assembled in our own facilities in North America and Europe. Our relationships with such third parties, our “manufacturing partners,” have allowed us to forego expensive capital investments in our own facilities and operate within our historic working capital limitations. Throughout 2022 we began to re-align our distribution and marketing strategy away from relying mainly on third-party channel partners to a distribution model that combines wholly-owned EV Centers with local dealers in order to improve overall operational efficiencies, product quality, brand value, market share, customer support and service. Throughout 2023 we have relied on our local EV Centers to develop local dealer networks that directly sell to local customers in order to improve overall operational efficiencies, product quality, brand value, market share, customer support and service.

Current wording

Our distributed manufacturing model allows us to focus our efforts on the design of ECV models and related technologies while outsourcing various portions of the manufacturing, assembly and marketing of our vehicles to qualified third parties, allowing the Company to operate with lower capital investment than traditional vertically integrated automotive companies. For the last several years, we relied substantially on private label channel partners to assemble and distribute the Metro® from vehicle kits that we manufactured in our facilities. Our vehicle kits and in some cases fully assembled vehicles are completed by third party Original Equipment Manufacturers (“OEMs”) manufacturing partners and, in the case of vehicle kits, assembled in our own facilities in North America and Europe. Our relationships with such third parties, our “manufacturing partners,” have allowed us to forego expensive capital investments in our own facilities and operate within our historic working capital limitations. Throughout 2022 we began to re-align our distribution and marketing strategy away from relying mainly on third-party channel partners to a distribution model that combines wholly-owned EV Centers with local dealers in order to improve overall operational efficiencies, product quality, brand value, market share, customer support and service. Throughout 2024 we have integrated our sales strategy by combining large distributors with our local EV Centers to develop local dealer networks that directly sell to local customers to improve overall operational efficiencies, product quality, brand value, market share, customer support and service.

Previous wording

Additionally, to meet our anticipated demand in the United States, we have established local assembly facilities in Northern America as we have launched assembly facilities in Jacksonville, Florida and Freehold, New Jersey. We are also in the of process establishing additional assembly facility in Ontario, California. Additionally, we expect that our step acquisition of CAE (f.k.a. TME) in 2023 will further expand our local assembly capacity in the European Union for production of some of our ECV models, including the Teemak™ series, Antric products, in addition to the Metro®.

Current wording

Additionally, to meet our anticipated demand in the United States, we have established local assembly facilities in Northern America as we have launched assembly facilities in Ontario, California and Freehold, New Jersey.

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 also include Cenntro Branded EV Centers globally. 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, our primary revenue stream came from selling ECVs through channel partners. Beginning in 2022, we experimented with different go-to-market strategies across regions. In Europe, while we initially tested an EV center approach by acquiring CAE, a German manufacturer and ECV seller, we returned to our distributor-focused model in 2024 given its proven effectiveness. In North America, we implemented a hybrid approach that combines direct sales to end-customers with strategic distributor partnerships. 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, Clubcar, Logistar™ 210 and Logistar™ 260 in Asia, Avantier™ and Logistar™ 400 in the US. Starting from 2024, we witnessed major increase on revenue in the US market as we shift our focus on the North American market sales, actively participate in the ECV incentive programs initiated by state governments, introduced additional new models for the US market.

Previous wording

Net revenues ended December 31, 2023 and 2022 were generated from (a) vehicles sales, which primarily represent net revenues from sales of Metro® vehicles (including vehicle kits), Logistar™ 200, Logistar™ 260 and Logistar™ 100, (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 December 31, 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 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

Cost of goods sold mainly consists of production-related costs including costs of raw materials, consumables, direct labor, overhead costs, depreciation of plants and equipment, manufacturing waste treatment processing fees and inventory write-downs. We incur cost of goods sold in relation to (i) vehicle sales and spare-part sales, including, among others, purchases of raw materials, labor costs, and manufacturing expenses that related to ECVs, and (ii) other sales, including cost and expenses that are not related to ECV sales.

Current wording

Cost of goods sold mainly consists of production-related costs including costs of raw materials, consumables, direct labor, overhead costs, depreciation of plants and equipment, manufacturing waste treatment processing fees, shipping cost and inventory write-downs. We incur cost of goods sold in relation to (i) vehicle sales and spare-part sales, including, among others, purchases of raw materials, labor costs, and manufacturing expenses that related to ECVs, and (ii) other sales, including cost and expenses that are not related to ECV sales.

Previous wording

Our operating expenses consist of general and administrative, selling and marketing expenses, and research and development expenses. General and administrative expenses are the most significant components of our operating expenses. Operating expenses also include provision for doubtful accounts and impairment loss for long- lived assets.

Current wording

Our operating expenses consist of general and administrative, selling and marketing expenses, and research and development expenses. General and administrative expenses are the most significant components of our operating expenses. Operating expenses also include provision for credit losses and impairment loss for long- lived assets and goodwill.

Previous wording

General and administrative expenses consist primarily of employee compensation and related expenses for administrative functions including finance, legal, human resources, and fees for third-party professional services. While we will continue to monitor general and administrative expenses, we expect general and administrative expenses to materially increase over the next two years in connection with the execution of our growth strategy, including the regionalization of our manufacturing and supply chain and expanded product offerings and expenses relating to being a public company.

Current wording

General and administrative expenses consist primarily of employee compensation and related expenses for administrative functions including finance, legal, human resources, and fees for third-party professional services. While we will continue to monitor general and administrative expenses, we expect general and administrative expenses to decrease over the next two years in connection with our continued effort to improve efficiency, combining our EV centers with local distribution networks and utilizing well-proven OEMs and supply chains.

Previous wording

Interest expense, net, consists of interest on outstanding loans and the convertible promissory notes.

Current wording

Interest (expense) income, net, consists of interest income from short-term investment and deposit, interest on outstanding loans and the convertible promissory notes.

Previous wording

Net revenues for the year ended December 31, 2023 were approximately $22.1 million, an increase of approximately $13.1 million or 146.9% from approximately $8.9 million for the year ended December 31, 2022. The increase in net revenues in 2023 was primarily attributed to an increase in vehicle sales by approximately $12.1 million and an increase in spare-part sales by approximately $1.2 million, offset by the decrease in service revenue of approximately $0.2 million.

Current wording

Net revenues for the year ended December 31, 2024 were approximately $31.3 million, an increase of approximately $20.9 million or 200.2% from approximately $10.4 million for the year ended December 31, 2023. The increase in net revenues in 2024 was primarily attributed to the increase in vehicle sales and spare-part sales by approximately $19.3 million and $1.3 million, respectively. The net revenues in US market for the year ended December 31, 2024 were approximately $19.3 million, an increase of approximately $19.0 million from approximately $0.4 million for the year ended December 31, 2023. The increase in net revenues in US market in 2024 was primarily attributed to an increase in vehicle sales by approximately $19.0 million.

Previous wording

For the year ended December 31, 2023, we sold 1,135 ECVs, including 261 fully assembled Metro® units, 172 fully assembled Logistar™ 200 units, 214 fully assembled Logistar™ 100 units, 13 fully assembled Teemak™ units, 210 fully assembled Logistar™ 260 units, one fully assembled Logistar™ 400 units, 193 fully assembled Avantier™ units, 8 Neibor® 150 units, 42 Clubcar units and 21 Antric® V5 units, compared with 458 ECVs for the year ended December 31, 2022, including 48 Metro® vehicle kits, 200 fully assembled Metro® units, one fully assembled Neibor® 150 unit, 205 fully assembled Logistar™ 200, one fully assembled Teemak™ and three fully assembled iChassis 100.

Current wording

For the year ended December 31, 2024, we sold 1,122 ECVs, including 105 fully assembled Metro® units, 15 fully assembled Logistar™ 200 units, 89 fully assembled Logistar™ 100 units, 35 fully assembled Teemak™ units, 58 fully assembled Logistar™ 260 units, 145 fully assembled Logistar™ 400 units, 492 fully assembled Avantier™ units, 2 Neibor® 150 units, 120 Clubcar units, 45 Antric® units, 4 fully assembled Logistar™ 210 units, 1 fully assembled Logistar™ 210V unit, one fully assembled Logistar™ 300 unit, 4 fully assembled Seres 5 units, 5 AX-3 units and 1 AIQAR EQ7 unit, compared with 630 ECVs for the year ended December 31, 2023, including 209 fully assembled Metro® units, 41 fully assembled Logistar™ 200 units, 63 fully assembled Logistar™ 100 units, 10 fully assembled Teemak™ units, 59 fully assembled Logistar™ 260 units, one fully assembled Logistar™ 400 units, 182 fully assembled Avantier™ units, 8 Neibor® 150 units, 42 Clubcar units and 15 Antric® units. In U.S. market, we sold 192 ECVs, including 24 fully assembled Metro® units, 145 fully assembled Logistar™ 400 units, 19 fully assembled Teemak™ units and 4 fully assembled Avantier™ units, compared with 12 ECVs for the year ended December 31, 2023, including 8 fully assembled Metro, 1 fully assembled Logistar™ 400 unit and 3 fully assembled Teemak™ units.

Previous wording

Geographically, the vast majority of our net revenues were generated from vehicle sales in the European Union during the years ended December 31, 2023 and 2022. For the year ended December 31, 2023, net revenues from Europe, North America, Asia (including China) and Latin America as a percentage of total revenues was 73.4%, 4.6%, 21.8% and 0.2%, respectively, compared to 78.9%, 7.8%, 13.3% and nil, respectively for the corresponding period in 2022.

Current wording

Geographically, the vast majority of our net revenues were generated from vehicle sales in the U.S. during the years ended December 31, 2024. For the year ended December 31, 2024, net revenues from Europe, North America, Asia (including China) and other regions (including Africa and Latin America) as a percentage of total revenues was 18.3%, 66.7%, 14.6% and 0.4%, respectively, compared to 43.8%, 9.8%, 46.1% and 0.3%, respectively for the corresponding period in 2023.

Previous wording

Cost of goods sold for the year ended December 31, 2023 was approximately $19.8 million, an increase of approximately $10.4 million or approximately 109.6% from approximately $9.5 million for the year ended December 31, 2022. The increase in cost of goods sold in 2023 was primarily attributable to the increase of cost of vehicle sales of approximately $10.5 million. The increase of cost of vehicle sales was mainly caused by the increased vehicle sales during the year 2023. The increase cost per vehicle was also partly attributable to the additional ocean shipping between continents, as the Company shift from recognizing revenue with FOB terms to recording revenue on local direct pricing in the European and the US market which covered ocean shipping.

Current wording

Cost of goods sold for the year ended December 31, 2024 was approximately $23.7 million, an increase of approximately $14.9 million or approximately 168.9% from approximately $8.8 million for the year ended December 31, 2023. The increase in cost of goods sold in 2024 was primarily attributable to the increase of cost of vehicle sales of approximately $8.4 million and the increase of inventory write-down of approximately $5.56 million. The increase of cost of vehicle sales was mainly caused by the increased vehicle sales during the year 2024.

Previous wording

Gross profit for the year ended December 31, 2023 was approximately $2.3 million, an increase of approximately $2.8 million from approximately $0.5 million of gross loss for the year ended December 31, 2022. For the years ended December 31, 2023 and 2022, our overall gross margin was approximately 10.2% and -5.7%, respectively. Our gross margin of vehicle sales for years ended December 31, 2023 and 2022 was 11.7% and -0.27%, respectively. The increase of our gross profit was caused by (i) the decrease in inventory write-down of approximately $1.5 million; (ii) the realized gross margin of Logsitar®100 and our newly introduced Logsitar®260 was approximately 25.4% and 18.8%, respectively. Both of the models only began sales in 2023.

Current wording

Gross profit for the year ended December 31, 2024 was approximately $7.6 million, an increase of approximately $6.0 million from approximately $1.6 million for the year ended December 31, 2023. For the years ended December 31, 2024 and 2023, our overall gross margin was approximately 24.3% and 15.5%, respectively. Our gross margin of vehicle sales for years ended December 31, 2024 and 2023 was 24.9% and 18.8%, respectively. The increase of our gross profit was caused by the increase in vehicle sales revenue of approximately $19.3 million, offset by the increase in cost of goods sold of approximately $8.4 million and inventory write down of approximately $5.6 million.

Previous wording

Selling and marketing expenses for the year ended December 31, 2023 were approximately $7.9 million, an increase of approximately $1.3 million or approximately 20.6% from approximately $6.5 million for the year ended December 31, 2022. The increase in selling and marketing expenses in 2023 was primarily attributed to the increase in service fees related to European market and distribution channel research and salary and social insurance of approximately $1.6 million and $0.7 million, respectively, offset by a decrease in marketing expense of approximately $1.1 million.

Current wording

Selling and marketing expenses for the year ended December 31, 2024 were approximately $7.4 million, an increase of approximately $3.2 million or approximately 76.4% from approximately $4.2 million for the year ended December 31, 2023. The increase in selling and marketing expenses in 2024 was primarily attributed to the increase in service fees related to global market and distribution channel research and marketing expense of approximately $0.7 million and $2.8 million, respectively, offset by a decrease in share-based compensation and salary and social insurance of approximately $0.1 million and $0.2 million, respectively.

Previous wording

General and administrative expenses for the year ended December 31, 2023 were approximately $35.8 million, an increase of approximately $2.9 million or approximately 9.0% from approximately $32.8 million for the year ended December 31, 2022. The increase in general and administrative expenses in 2023 was primarily attributed to (i) an increase in share-based compensation of approximately $1.4 million, (ii) an increase in ROU amortization of approximately $2.1 million, (iii) an increase in ROU interest expense of approximately $1.0 million, (iv) an increase in office expense of approximately $0.6 million, (v) an increase in others of approximately $0.4 million, which mainly related to garage liability insurance fee, and (vi) the increase in rental expense, travelling fee, freight and depreciation of approximately $0.6 million, $0.3 million, $0.3 million and $0.6 million, respectively, offset by the decrease in salary and social care expense and FOH stripping fee of approximately $2.8 million and $1.8 million, respectively.

Current wording

General and administrative expenses for the year ended December 31, 2024 were approximately $26.7 million, a decrease of approximately $6.2 million or approximately 19.0% from approximately $33.0 million for the year ended December 31, 2023. The decrease in general and administrative expenses in 2024 was primarily attributed to (i) a decrease in share-based compensation of approximately $1.7 million, (ii) a decrease in legal and professional fee of approximately $3.2 million, (iii) a decrease in salary and social care expense of approximately $0.7 million, (iv) a decrease in office expense of approximately $1.1 million, (v) a decrease in rental expense of approximately $0.2 million, offset by the increase in ROU amortization, freight and leasehold improvement depreciation of approximately $0.2 million and $0.2 million, respectively.

Previous wording

Interest income (expense), net, consists of interest income on deposit and short-term products and interest expense on convertible bonds. Net interest income was approximately $0.4 million for the year ended December 31, 2023, a change of approximately $1.2 million or approximately 146.3% compared to the approximately $0.8 million in interest expense for the year ended December 31, 2022. The change was primarily attributable to (i) a decrease in interest expense to convertible bonds of approximately $1.1 million; (ii) the increase in interest income of approximately $0.7 million from short-term money market investment; (iii) offset by a decrease in interest income of approximately $0.6 million from bank deposit.

Current wording

Interest expense, net, consists of interest income on deposit and wealth management products purchased from banks and interest expense on convertible bonds. Net interest expense was approximately $0.2 million for the year ended December 31, 2024, a change of approximately $0.6 million compared to the approximately $0.4 million in interest income for the year ended December 31, 2023. The decrease was primarily attributable to (i) a decrease in interest income of approximately $0.5 million from bank deposit.; (ii) a decrease in interest income of approximately $0.3 million from wealth management products purchased from banks; (iii) offset by a decrease in interest expense to convertible bonds of approximately $0.3 million.

Previous wording

Other income net for the year ended December 31, 2023 was approximately $0.6 million, representing a change of approximately $1.5 million compared to approximately $0.9 million of other expense, net for the year ended December 31, 2022. The change of other income in 2023 compared to 2022 was primarily attributable to the decrease in litigation compensation of approximately $1.3 million paid to Sevic Systems SE over IP dispute and an increase of approximately $0.3 million in liquidation income from Shengzhou Cenntro Machinery Co., Ltd. and Zhejiang Xbean Tech Co. Ltd. during the year 2023.

Current wording

Other expense net for the year ended December 31, 2024 was approximately $0.5 million, representing a change of approximately $1.1 million compared to approximately $0.5 million of other income, net for the year ended December 31, 2023. The change of other income (expense) in 2024 compared to 2023 was primarily attributable to i) the increase in investment loss of approximately $0.7 million and the decrease of approximately $0.4 million in liquidation income from Shengzhou Cenntro Machinery Co., Ltd. and Zhejiang Xbean Tech Co. Ltd. during the year 2023.

Previous wording

An income in the change in fair value of convertible promissory notes and derivative liability for the year ended December 31, 2023 was approximately $0.08 million compared to approximately $37.8 million of a loss in the change in fair value of convertible promissory notes and derivative liability for the year ended December 31, 2022. The less loss derived from fair value change was primarily caused by the reduced volatility of Company’s stock price, which stabilizes the probability of exercising the mandatory redemption rights of the Company’s convertible promissory notes and cashless exercising the warrants.

Current wording

An income in the change in fair value of convertible promissory notes and derivative liability for the year ended December 31, 2024 was approximately nil compared to approximately $0.08 million of an income in the change in fair value of convertible promissory notes and derivative liability for the year ended December 31, 2023.

Previous wording

A loss in the change in fair value of equity securities for the year ended December 31, 2023 was approximately $2.6 million compared to approximately $0.2 million of a loss in the change in fair value of equity securities for the year ended December 31, 2022. The increased loss was attributed to a downward adjustment of approximately $2.3 million due to the fair value change of our investment on participating shares in Micro Money Fund SPC with an original investment value of $5 million, and a loss of $1.4 million related to the redemption of $1 million of Micro Money Fund, offset by an upward adjustment of approximately $1.0 million from our investment on partnership shares in MineOne Fix Income Investment IL.P with an original investment value of $25 million.

Current wording

A gain in the change in fair value of equity securities for the year ended December 31, 2024 was approximately $1.0 million compared to approximately $2.6 million of a loss in the change in fair value of equity securities for the year ended December 31, 2023. The increased gain was attributed to an upward adjustment of approximately $1.0 million from our investment on partnership shares in MineOne Fix Income Investment I L.P with an original investment value of $25 million, and the Company made redemption of almost all funds in Micro Money Fund SPC, which brought $3.64 million loss in fair value change in 2023. No such transaction incurred in 2024.

Previous wording

Foreign currency exchange loss, net for the year ended December 31, 2023 was approximately $0.8 million, an increase of $0.4 million compared with approximately $0.4 million for the year ended December 31, 2022.

Current wording

Foreign currency exchange gain, net for the year ended December 31, 2024 was approximately $0.04 million, a change of $1.0 million compared with approximately $1.0 million foreign currency exchange loss for the year ended December 31, 2023.

Previous wording

Loss from acquisition of Antric for the year ended December 31, 2023 was approximately $0.1 million compared to nil of loss from acquisition of Antric for the year ended December 31, 2022.

Current wording

Loss from acquisition of Hezhe for the year ended December 31, 2024 was approximately $0.1 million compared to $0.1 million of loss from acquisition of Antric for the year ended December 31, 2023.

Previous wording

As of December 31, 2023, we had approximately $29.4 million in cash and cash equivalents, approximately $4.2 million in short-term investment and approximately $6.5 million of accounts receivables as compared to approximately $154.0 million in cash and cash equivalents, nil in short-term investment and $0.6 million in accounts receivable as of December 31, 2022. For the years ended December 31, 2023 and 2022, net cash used in operating activities was approximately $58.5 million and $69.4 million, respectively.

Current wording

As of December 31, 2024, we had approximately $12.5 million in cash and cash equivalents, approximately $3.3 million of accounts receivables from continuing operations as compared to approximately $28.8 million in cash and cash equivalents, approximately $2.5 million in accounts receivable from continuing operations as of December 31, 2023. For the years ended December 31, 2024 and 2023, net cash used in operating activities was approximately $21.4 million and $58.5 million, respectively.

Previous wording

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 of issuance of our annual report. Our current business strategy for the next twelve months includes (i) the continued rollout of our new ECV models and green energy related products in North America and Europe, as applicable and (ii) the establishment and development of local distribution channels in the United States and the European Union. 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 of issuance of this 10-K. 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 and (ii) the establishment and development of local distribution channels in the United States. 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 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.

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. 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 December 31, 2023, we have spent over approximately $90.0 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 December 31, 2024, we have spent over approximately $94.4 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 December 31, 2023, our working capital was approximately $75.6 million, as compared to a working capital of approximately $132.8 million as of December 31, 2022. The approximately $57.1 million decrease in working capital during 2022 was primarily due to (i) the decrease of cash and cash equivalents of approximately $124.6 million, offset by the increase in inventories, accounts receivable and short-term investment of approximately $12.1 million, $6.0 million and $4.2 million, respectively and (ii) a decrease in convertible bonds of approximately $47.4 million.

Current wording

As of December 31, 2024, our working capital was approximately $36.8 million, as compared to a working capital of approximately $75.6 million as of December 31, 2023. The approximately $38.8 million decrease in working capital during 2024 was primarily due to (i) the decrease of cash and cash equivalents, inventories, short-term investment, the decrease in assets held for sale and current operating lease liabilities of approximately $16.2 million, $5.2 million, $4.2 million, $12.7 million and $0.8 million, respectively and (ii) the increase in prepayment and other current assets and contractual liabilities of approximately $1.2 million and $1.7 million respectively.

Previous wording

Our net cash used in operating activities was approximately $58.5 million and $69.4 million for the years ended December 31, 2023 and 2022, respectively.

Current wording

Our net cash used in operating activities was approximately $21.4 million and $58.5 million for the years ended December 31, 2024 and 2023, respectively.

Previous wording

Net cash used in operating activities for the year ended December 31, 2023 was primarily attributable to (i) our net loss of approximately $54.4 million and adjusted for non-cash items of approximately $18.3 million, which primarily consisted of amortization of operating lease right-of-use asset, share based compensation expense, impairment of long-term investments, depreciation and amortization, loss (gain) on disposal of long-term investment, loss from equity securities investment, foreign currency exchange loss, impairment of slow-moving inventories, impairment of PPE and intangible assets, loss on exercise of warrants, equity pick up loss of the investment and changes in fair value of equity securities of approximately $4.5 million, $5.2 million, $1.2 million, $1.7 million,$0.1 million, $1.4 million, $1.5 million, $0.7 million, $0.4 million, $0.2 million, $0.2 million and $1.2 million, respectively, (ii) the decrease in accrued expense and other current liabilities and operating lease liabilities of approximately $1.1 million and $4.0 million respectively, (iii) increase in account receivable, accounts payable, deferred revenue, inventories and prepayments and other assets of approximately $5.9 million, $3.1 million, $2.5 million, $12.2 million and $4.6 million, respectively.

Current wording

Net cash used in operating activities for the year ended December 31, 2024 was primarily attributable to (i) our net loss of approximately $44.9 million and adjusted for non-cash items of approximately $19.9 million, which primarily consisted of amortization of operating lease right-of-use asset, share based compensation expense, depreciation and amortization, foreign currency exchange loss, loss from early termination of lease contract and impairment of slow-moving inventories of approximately $4.6 million, $3.4 million, $2.0 million, $1.1 million, $2.2 million and $6.5 million, respectively, (ii) the decrease in account receivable, inventories, accrued expense and other current liabilities and operating lease liabilities of approximately $1.43 million, $7.9 million, $1.7 million and $4.0 million, respectively, (iii) increase in deferred revenue and prepayments and other assets of approximately $0.5 million and $0.2 million, respectively.

Previous wording

Net cash used in investing activities was approximately $16.4 million for the year ended December 31, 2023. Net cash used in investing activities for the year ended December 31, 2023 was primarily attributable to cash paid for regular financial investments in 2023 in the amount of approximately $4.2 million and approximately $1.1 million in purchase of land use rights and property, additions in long-term investments as a minority interest of approximately $0.9 million, approximately $7.6 million in purchase of plant and equipment and approximately $1.9 million net cash paid in acquisition of 35% of CAE's share and including related expenses.

Current wording

Net cash provided by investing activities was approximately $4.1 million for the year ended December 31, 2024. Net cash provided by investing activities for the year ended December 31, 2024 was primarily attributable to cash received from redeeming regular financial investments in 2024 in the amount of approximately $8.4 million and approximately $1.6 million in redemption of equity securities investment, offset by the cash paid for regular financial investments of approximately $4.2 million, approximately $0.7 million in long-term regular financial investments and approximately $0.4 million in acquisition of 80% of Hezhe's share.

Previous wording

Net cash used by financing activities was approximately $48.1 million for the year ended December 31, 2023. Net cash provided by financing activities for the year ended December 31,2023 was primarily attributable to the redemption of convertible bonds of approximately $47.5 million and the repayments to bank loans of approximately $0.6 million.

Current wording

Net cash provided by financing activities was approximately $1.2 million for the year ended December 31, 2024. Net cash provided by financing activities for the year ended December 31, 2024 was primarily attributable to the proceeds from bank loans of approximately $0.7 million and the loans proceeds from third parties of approximately $0.7 million, offset by the repayment of loans to third parties of approximately $0.1 million.

Previous wording

In June 2021, we signed two non-cancellable operating lease agreements for approximately 11,690 square feet and 3,767 square feet, respectively, of two floors of an office building in Hangzhou, China. The lease period for each lease agreement began in June 2021 and ends in May 2025. Pursuant to each agreement, we paid the first six months of our rent obligations in June 2021 and thereafter will be obligated to make rental payments in advance semi-annually. The total annual base rent under these two lease agreements is $171,397 for the term ending May 2022 and $173,987 for the term ending May 2023.

Current wording

In June 2021, we signed two non-cancellable operating lease agreements for approximately 11,700 square feet and 3,767 square feet, respectively, of two floors of an office building in Hangzhou, China. The lease period for each lease agreement began in June 2021 and ends in May 2025. Pursuant to each agreement, we paid the first six months of our rent obligations in June 2021 and thereafter will be obligated to make rental payments in advance semi-annually. The total annual base rent under these two lease agreements is $186,866 for the term ending May 2023 and $167,521 for the term ending May 2024.

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. Cedar transferred the leasing property to CEGE on February 1, 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.

Previous wording

On March 22, 2023, we signed a non-cancellable operating lease agreement for approximately 26,579 square feet as a local plant in Colombia, the lease period began on May 1, 2023 and the lease term is two years. The rent is COP 46,796,001.49 (or approximately $10,344.77) per month and the value of the lease fee shall be readjusted in a proportion equal to the consumer price index (CPl) certified by DANE as of December 31 of the immediately preceding year, plus two (2) points.

Current wording

On March 22, 2023, we signed a non-cancellable operating lease agreement for approximately 26,579 square feet as a local plant in Colombia, the lease period began on May 1, 2023 and the lease term is two years. The rent is COP 46,796,001.49 (or approximately $11,778.71) per month and the value of the lease fee shall be readjusted in a proportion equal to the consumer price index (CPl) certified by DANE as of December 31 of the immediately preceding year, plus two (2) points.

Previous wording

On February 16, 2022, we signed a non-cancellable operating lease agreement for apartment 53D in the building at 555 Tenth Avenue, New York, NY 10018. The term is one year and one month, beginning on March 5, 2022 and ending on April 4, 2023. The monthly rent is $5,750. On February 1, 2023, we signed a renewal lease agreement. The term of this lease is one year, beginning on April 5, 2023 and ending on April 4, 2024. The monthly rent is $5,950.

Current wording

On February 16, 2022, we signed a non-cancellable operating lease agreement for apartment 53D in the building at 555 Tenth Avenue, New York, NY 10018. The term is one year and one month, beginning on March 5, 2022 and ending on April 4, 2023. The monthly rent is $5,750. On February 1, 2023, we signed a renewal lease agreement. The term of this lease is one year, beginning on April 5, 2023 and ending on April 4, 2024. The lease was not renewed. The monthly rent is $5,950.

Previous wording

On March 25, 2022, we completed the acquisition of TME, and change its name to Cenntro Automotive Europe GmbH ("CAE”). TME signed a non-cancellable operating lease agreement for approximately 5,212 square meters in 2019, the lease period starts on July 1, 2019 and ends on June 30, 2024, the monthly rent is €18,891 (or approximately $20,468).

Current wording

On March 23, 2022, we completed the acquisition of TME, and change its name to Cenntro Automotive Europe GmbH ("CAE”). TME signed a non-cancellable operating lease agreement for approximately 5,212 square meters in 2019, the lease period starts on July 1, 2019 and ends on June 30, 2024, the monthly rent is €18,891 (or approximately $20,534.52).

Previous wording

On December 29, 2022, we signed a non-cancellable operating lease agreement with BAL Freeway Associates, LLC for approximately 64,000 square feet as a facility. The lease period commenced on April 1, 2023 and ends five years following a one-month rent abatement period. The base rent for the first year is $115,200 per month. The monthly rent for the following four years is $119,808, $124,600.32, $129,584.33 and $134,767.71, respectively.

Current wording

On December 29, 2022, we signed a non-cancellable operating lease agreement with BAL Freeway Associates, LLC for approximately 64,000 square feet as a facility in Ontario, California. The lease period commenced on April 1, 2023 and ends five years following a one-month rent abatement period. The base rent for the first year is $115,200 per month. The monthly rent for the following four years is $119,808, $124,600.32, $129,584.33 and $134,767.71, respectively.

Previous wording

On July 28, 2022, we signed a non-cancellable operating lease agreement for approximately 12,000 square feet as an EV center in Jacksonville, Florida. The lease period began on September 1, 2022 and ends on August 31, 2029, the first annual base rent is $150,000 and the annual increase is 4%.

Current wording

On July 28, 2022, we signed a non-cancellable operating lease agreement for approximately 12,000 square feet as an EV center in Jacksonville, Florida. The lease period began on September 1, 2022 and ends on August 31, 2029, the first annual base rent is $150,000 and the annual increase is 4%. The lease terminated on September 2024.

Previous wording

On August 31, 2023, we completed the acquisition with Antric GmbH in Germany. On July 20, 2022, Antric signed a non-cancellable operating lease agreement for approximately 4,361 square feet in Bochum, Germany, the lease period ends on December 31, 2026. The monthly rent is €3,605.26 (or approximately $3,988.14). On September 1, 2022, the lease area increased to 7,326 square feet and the monthly rent increased to €6,000.32 (or approximately $6,637.55). The additional deposit is €18,000.96 (or approximately $19,912.66). On January 20, 2023, Antric signed another non-cancellable operating lease agreement for approximately 252 square feet in Bochum, Germany, the lease period starts on February 1, 2023 and ends on December 31, 2026. The monthly rent increased to €6,315.38 (or approximately $6,986.07). On March 27, 2023, Antric signed another non-cancellable operating lease agreement for approximately 2,949 square feet in Bochum, Germany, the lease period starts on April 1, 2023 and ends on December 31, 2026. The monthly rent increased to €8,597.80 (or approximately $9,510.89).

Current wording

On August 31, 2023, we completed the acquisition with Antric GmbH in Germany. On July 20, 2022, Antric signed a non-cancellable operating lease agreement for approximately 4,361 square feet in Bochum, Germany, the lease period ends on December 31, 2026. The monthly rent is €3,605.26 (or approximately $3,918.92). On September 1, 2022, the lease area increased to 7,326 square feet and the monthly rent increased to €6,000.32 (or approximately $6,522.35). The additional deposit is €18,000.96 (or approximately $19,567.04). On January 20, 2023, Antric signed another non-cancellable operating lease agreement for approximately 252 square feet in Bochum, Germany, the lease period starts on February 1, 2023 and ends on December 31, 2026. The monthly rent increased to €6,315.38 (or approximately $6,864.82). On March 27, 2023, Antric signed another non-cancellable operating lease agreement for approximately 2,949 square feet in Bochum, Germany, the lease period starts on April 1, 2023 and ends on December 31, 2026. The monthly rent increased to €8,597.80 (or approximately $9,345.81).