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 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.

Current wording

Up until December 31, 2021, we generate revenue primarily through the sale of ECVs to our 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 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.

Current wording

Net revenues during the three months ended 2025 and 2024 were generated from (a) vehicles sales, which primarily represent net revenues from sales of Metro® vehicles (including vehicle kits), Logistar™ 200, Logistar™ 210, 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.

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

Cost of goods sold also includes inventory write-downs. Inventories are stated at the lower of cost or net realizable value. The cost of raw materials is determined on the basis of weighted average. The cost of finished goods is determined on the basis of weighted average and is comprised of direct materials, direct labor cost and an appropriate proportion of overhead. Net realizable value is based on estimated selling prices less selling expenses and any further costs of completion. Adjustments to reduce the cost of inventory to net realizable value are made, if required, for estimated excess, obsolescence, or impaired balances. Write-downs are recorded in the cost of goods sold in our statements of operations and comprehensive loss.

Current wording

Cost of goods sold also includes inventory write-downs. Inventories are stated at the lower of cost or net realizable value. The cost of raw materials is determined on the basis of weighted average. The cost of finished goods is determined on the basis of weighted average and is comprised of direct materials, direct labor cost and an appropriate proportion of overhead. Net realizable value is based on estimated selling prices fewer selling expenses and any further costs of completion. Adjustments to reduce the cost of inventory to net realizable value are made, if required, for estimated excess, obsolescence, or impaired balances. Write-downs are recorded in the cost of goods sold in our statements of operations and comprehensive loss.

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.

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 doubtful accounts andimpairment loss for long-lived assets.

Previous wording

Research and development expenses consist primarily of employee compensation and related expenses, prototype expenses, costs associated with assets acquired for research and development, product development costs, production inspection and testing expenses, product strategic advisory fees, third-party engineering and contractor support costs and allocated overhead. We will continue committing our resource in our research and development functions as we continue to invest in new ECV models, new materials and techniques, vehicle management and control systems, digital control capabilities and other related technologies.

Current wording

Research and development expenses consist primarily of employee compensation and related expenses, prototype expenses, costs associated with assets acquired for research and development, product development costs, production inspection and testing expenses, product strategic advisory fees, third-party engineering and contractor support costs and allocated overhead. We expect our research and development expenses to increase as we continue to invest in new ECV models, new materials and techniques, vehicle management and control systems, digital control capabilities and other technologies.

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 continue to monitor general and administrative expenses, we anticipate that our general and administrative expenses will not increase in 2024 as we committed to improve operational efficiency in the next two years, following rapid expansions in previous years.

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 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

The Company adopted ASC 326 Financial Instruments – Credit Losses using the modified retrospective approach through a cumulative-effect adjustment to accumulated deficit from January 1. 2023 and interim periods therein. Management used an expected credit loss model for the impairment of accounts receivable as of period ends. Management believes the aging of accounts receivable is a reasonable parameter to estimate expected credit loss, and determines expected credit losses for accounts receivables using an aging schedule as of period ends. The expected credit loss rates under each aging schedule were developed on basis of the average historical loss rates from previous years, and adjusted to reflect the effects of those differences in current conditions and forecasted changes. Management measured the expected credit losses of accounts receivable on a collective basis. When an accounts receivable does not share risk characteristics with other accounts receivables, management will evaluate such accounts receivable for expected credit loss on an individual basis. Doubtful accounts balances are written off and deducted from allowance. when receivables are deemed uncollectible. after all collection efforts have been exhausted and the potential for recovery is considered remote.

Current wording

We adopted ASC 326 Financial Instruments – Credit Losses using the modified retrospective approach through a cumulative-effect adjustment to accumulated deficit from January 1. 2023 and interim periods therein. We used an expected credit loss model for the impairment of accounts receivable as of period ends. We believes the aging of accounts receivable is a reasonable parameter to estimate expected credit loss, and determines expected credit losses for accounts receivables using an aging schedule as of period ends. The expected credit loss rates under each aging schedule were developed on basis of the average historical loss rates from previous years, and adjusted to reflect the effects of those differences in current conditions and forecasted changes. We measured the expected credit losses of accounts receivable on a collective basis. When an accounts receivable does not share risk characteristics with other accounts receivables, we will evaluate such accounts receivable for expected credit loss on an individual basis. Allowance for credit losses balances are written off and deducted from allowance. when receivables are deemed uncollectible. after all collection efforts have been exhausted and the potential for recovery is considered remote. We expect provision for credit losses to decrease in the future as we shift our sales more to FOB terms, when goods will be delivered only if material payment are received.

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 nine months ended September 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 three months ended March 31, 2025 and 2024.

Previous wording

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

Current wording

Comparison of the Three months ended March 31, 2025 and 2024

Previous 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.

Current wording

Net revenues for the three months ended March 31, 2025 were approximately $2.1 million, a decrease of approximately $0.2 million or 8.5% from approximately $2.3 million for the three months ended March 31, 2024. The decrease in net revenues in 2025 was primarily attributed to a decrease in spare-part sales by approximately $0.6 million, offset by an increase in vehicle sales by approximately $0.3 million and other sales by approximately $0.1 million. The net revenues in Europe market for the three months ended March 31, 2025 were approximately $0.7 million, an increase of approximately $0.09 million from approximately $0.6 million for the three months ended March 31, 2024. The net revenues in Asia market for the three months ended March 31, 2025 were approximately $1.2 million, an increase of approximately $0.07 million from approximately $1.1 million for the three months ended March 31, 2024.

Previous 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.

Current wording

Additional units were sold during the three months ended March 31, 2025; we sold 129 ECVs, including 20 fully assembled Metro® units, 7 fully assembled Logistar™ 200, 2 fully assembled Logistar™ 100, 32 fully assembled Teemak™ , 2 fully assembled Logistar™ 260, 31 fully assembled Avantier™ units, 4 Clubcar units, 7 Antric® units, 2 fully assembled Logistar™ 210 units, 11 fully assembled Logistar™ 450 units,5 fully assembled Seres 5 units, 5 fully assembled Joylong-A4 units and 1 fully assembled Joylong-EA6 units compared with 96 ECVs for the three months ended March 31, 2024, including 15 fully assembled Metro® units, 1 fully assembled Logistar™ 200, 18 fully assembled Logistar™ 100, 2 fully assembled Teemak™, 21 fully assembled Logistar™ 260, 4 fully assembled Logistar™ 400, 12 fully assembled Avantier™ units, 20 Clubcar units and 3 Antric® units.

Previous wording

For the three months ended September 30, 2024, we also sold 230 iChassis™ units and 20 other vehicles, other than the 662 ECVs.

Current wording

For the three months ended March 31, 2025, we also sold 27 iChassis™ units, other than the 129 ECVs.

Previous 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.

Current wording

Geographically, the vast majority of our net revenues were generated from vehicle sales in Asia during the three months ended March 31, 2025 and 2024. For the three months ended March 31, 2025, net revenues from Europe, North America, and Asia as a percentage of total revenues was 32.9%, 12.3%, and 54.8%, respectively, compared to 26.1%, 26.7%, and 47.2%, respectively for the corresponding period in 2024.

Previous 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.

Current wording

For the three months ended March 31, 2025, net revenues from vehicle sales in Europe, North America, and Asia as a percentage of total vehicle net revenues was 33.1%, 9.5%, and 57.4%, respectively, compared to 37.0%, 41.0%, and 22.0%, respectively, for the corresponding period in 2024.

Previous 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.

Current wording

Gross profit for the three months ended March 31, 2025 was approximately $0.3 million, an increase of approximately $0.1 million from approximately $0.2 million of gross profit for the three months ended March 31, 2024. For the three months ended March 31, 2025 and 2024, our overall gross margin was approximately 15.0% and 7.2%, respectively. Our gross margin of vehicle sales for the three months ended March 31, 2025 and 2024 was 10.8% and 18.4%, respectively. The increase of our gross profit was caused by the increase in the gross profit of spare-part sales and other sales of approximately $0.1 million and $0.1 million, respectively, offset by a decrease in the gross profit of vehicle sales of approximately $0.09 million.

Previous 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.

Current wording

Selling and marketing expenses for the three months ended March 31, 2025 were approximately $0.8 million, an increase of approximately $0.2 million or approximately 25.7% from approximately $0.6 million for the three months ended March 31, 2024. The increase in selling and marketing expenses in 2025 was primarily attributed to the increase in freight of approximately $0.4 million, offset by the decrease in salary and social insurance, marketing expense and service fees related to European market and distribution channel research of approximately $0.08 million, $0.05 million and $0.07 million, respectively.

Previous 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.

Current wording

General and administrative expenses for the three months ended March 31, 2025 were approximately $4.9 million, a decrease of approximately $1.0 million or approximately 16.6% from approximately $5.9 million for the three months ended March 31, 2024. The decrease in general and administrative expenses in 2025 was primarily attributed to the decrease in legal and professional fee, salary and social insurance, lease expenses, office expenses, and share-based compensation of approximately $0.2 million, $0.1 million, $0.3 million, $0.2 million and $0.1 million, respectively.

Previous 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.

Current wording

Research and development expenses for the three months ended March 31, 2025 were approximately $0.8 million, a decrease of approximately $0.7 million or approximately 48.1% from approximately $1.5 million for the three months ended March 31, 2024. The decrease in research and development expenses in 2025 was primarily attributed to the decrease in design and development expenses, salary expense and others of approximately $0.2 million, $0.4 million and $0.1 million, respectively.

Previous wording

Interest expense, net, mainly consists of interest on convertible bonds. Net interest expense was approximately $ 0.03 million for the three months ended September 30, 2023, a decrease of approximately $0.05 million or approximately 59.6% compared to the approximately $0.08 million in interest expense for the three months ended September 30, 2023. The decrease was primarily attributable to (i) an increase in interest income from deposit and HWE of approximately $0.2 million and $0.1 million, (ii) a decrease in interest income from short-term investment of approximately $0.2 million, (iii) the increase in interest expense to convertible bonds of approximately $0.05 million.

Current wording

Interest expense (income), net, mainly consists of interest expense to convertible bonds and interest income from deposit. Net interest expense was approximately $0.1 million for the three months ended March 31, 2025, a change of approximately $0.2 million compared to approximately $0.07 million in interest income for the three months ended March 31, 2024. The change was primarily attributable to the combined effect of (i) an increase in interest expense to bank loan of approximately $0.02 million, and (ii) the decrease in interest income of approximately $0.15 million from deposit and $0.02 million from RAP.

Previous 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.

Current wording

Other income, net for the three months ended March 31, 2025 was approximately $0.3 million, representing an increase of approximately $0.2 million compared to approximately $0.05 million of other income, net for the three months ended March 31, 2024. The increase of other income in 2025 compared to 2024 was primarily attributable to an increase of approximately $0.2 million in litigation compensation from Fujian Newlongma Automotive Co., Ltd..

Previous 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.

Current wording

A gain in the change in fair value of equity securities for the three months ended March 31, 2025 was approximately $0.3 million compared to approximately $0.2 million for the three months ended March 31, 2024. The gain was attributed to an upward adjustment of approximately $0.3 million from our investment on partnership shares in MineOne Fix Income Investment I L.P with an original investment value of $25 million.

Previous wording

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

Current wording

Adjusted EBITDA for the three months ended March 31, 2025 and 2024

Previous wording

Adjusted EBITDA is a supplemental measure of our performance that is not required by, or presented in accordance with, GAAP. Adjusted EBITDA is not a measurement of our financial performance under GAAP and should not be considered as an alternative to net income or any other performance measure derived in accordance with GAAP. We define Adjusted EBITDA as net income (or net loss) before net interest expense, income tax expense, depreciation and amortization as further adjusted to exclude the impact of stock-based compensation expense and other non-recurring expenses including expenses related to TME Acquisition, expenses related to one-off payment inherited from the original Naked Brand Group, impairment of goodwill, convertible bond issuance fee, loss on redemption of convertible promissory notes, loss on exercise of warrants, and change in fair value of convertible promissory notes and derivative liability.

Current wording

Adjusted EBITDA is a supplemental measure of our performance that is not required by, or presented in accordance with, GAAP. Adjusted EBITDA is not a measurement of our financial performance under GAAP and should not be considered as an alternative to net income or any other performance measure derived in accordance with GAAP. We define Adjusted EBITDA as net income (or net loss) before net interest expense, income tax expense, depreciation and amortization as further adjusted to exclude the impact of stock-based compensation expense and other non-recurring expenses including expenses related toloss on redemption of convertible promissory notes, loss on exercise of warrants, and change in fair value of convertible promissory notes and derivative liability.

Previous 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.

Current wording

As of March 31, 2025 we had approximately $8.5 million in cash and cash equivalents and approximately $3.1 million of accounts receivables as compared to approximately $20.2 million in cash and cash equivalents and $2.5 million in accounts receivable as of March 31, 2024. For the three months ended March 31, 2025 and 2024, net cash used in operating activities was approximately $5.0 million and $8.9 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 (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 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 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:

Previous 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.

Current wording

We intend to further expand our technology through continued investment in research and development. Since inception in 2013 through March 31, 2025 we have spent over approximately $95.2 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 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.

Current wording

As of March 31, 2025, our working capital was approximately $31.9 million, as compared to a working capital of approximately $36.8 million as of December 31, 2024. The approximately $4.9 million decrease in working capital during 2025 was primarily due to (i) the decrease of cash and cash equivalents of approximately $4.0 million, and (ii) the increase in inventories and contractual liabilities of approximately $1.3 million and $1.0 million, offset by the decrease in accounts receivables of approximately $0.2 million.

Previous 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.

Current wording

Our net cash used in operating activities was approximately $5.0 million, $8.9 million for the three months ended March 31, 2025 and 2024, respectively.

Previous 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.

Current wording

Net cash used in operating activities for the three months ended March 31, 2025 was primarily attributable to (i) our net loss of approximately $5.7 million and adjusted for non-cash items of approximately $1.5 million, which primarily consisted of net foreign currency exchange loss, share based compensation expense, change in fair value of equity securities, depreciation and amortization and amortization of operating lease right-of-use asset of approximately $0.3 million, $0.7 million, $0.3 million, $0.6 million and $0.8 million, respectively, (ii) the increase in inventories, and deferred revenue of approximately $0.9 million and $1.0 million, respectively, (iii) decrease in accounts payable, operating lease liabilitiesand accounts receivable of approximately $0.6 million, $0.6 million and $0.3 million, respectively.

Previous 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.

Current wording

Net cash provided by financing activities was approximately $1.2 million for the three months ended March 31, 2025. Net cash provided by financing activities for the three months ended March 31, 2025 was primarily attributable to loans proceed from related parties of approximately $1.0 million and loans proceed from third parties of approximately $0.6 million, offset by the repayment of loans to third parties of approximately $0.4 million.

Previous 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 $170,617 for the term ending May 2022 and $186,866 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 $385,651) 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 $373,630) 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 $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.

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 $11,224.92) 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. The lease terminated on February 13, 2025.

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 $20,534.52).

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 $19,894).

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 $3,918.92). 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).

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 $3,796.73). On September 1, 2022, the lease area increased to 7,326 square feet and the monthly rent increased to €6,000.32 (or approximately $6,319.00). The additional deposit is €18,000.96 (or approximately $18,956.99). 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 $6,650.79). 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 $9,054.43).

Previous wording

We have not entered into any off-balance sheet financial guarantees or other off-balance sheet commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as shareholders’ equity or that are not reflected in our Unaudited Financial Statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or product development services with us.

Current wording

We have not entered into any off-balance sheet financial guarantees or other off-balance sheet commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as shareholders’ equity or that are not reflected in our Audited Financial Statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or product development services with us.

Previous wording

The preparation of financial statements in conformity with U.S. GAAP requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated and combined financial statements, the reported amounts of revenue and expenses during the reporting period and the related disclosures in the consolidated and combined financial statements and accompanying footnotes. Out of our significant accounting policies, which are described in “Note 2—Summary of Significant Accounting Policies” of our consolidated and combined financial statements for the nine months ended September 30, 2024, included elsewhere in this Semi-annual Report, certain accounting policies are deemed “critical,” as they require management’s highest degree of judgment, estimates and assumptions. While management believes its judgments, estimates and assumptions are reasonable, they are based on information presently available and actual results may differ significantly from those estimates under different assumptions and conditions.

Current wording

The preparation of financial statements in conformity with U.S. GAAP requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated and combined financial statements, the reported amounts of revenue and expenses during the reporting period and the related disclosures in the consolidated and combined financial statements and accompanying footnotes. Out of our significant accounting policies, which are described in “Note 2—Summary of Significant Accounting Policies” of our consolidated and combined financial statements for the three months ended March 31, 2025, included elsewhere in this Quarter Report, certain accounting policies are deemed “critical,” as they require management’s highest degree of judgment, estimates and assumptions. While management believes its judgments, estimates and assumptions are reasonable, they are based on information presently available and actual results may differ significantly from those estimates under different assumptions and conditions.

Previous wording

The accompanying consolidated balance sheet as of December 31, 2023, which has been derived from audited financial statements, and the unaudited condensed consolidated financial statements as of September 30, 2024 and for the nine months ended September 30, 2024 and 2023 have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”).

Current wording

The accompanying consolidated balance sheet as of December 31, 2024, which has been derived from audited financial statements, and the unaudited condensed consolidated financial statements as of March 31, 2025 and for the three months ended March 31, 2025 and 2024 have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”).

Previous wording

Certain information and disclosures, which are normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), have been condensed or omitted pursuant to such rules and regulations. Management believes that the disclosures made are adequate to provide a fair presentation. The interim financial information should be read in conjunction with the financial statements and the notes for the fiscal year ended December 31, 2023. The results of operations for the nine months ended September 30, 2024 are not necessarily indicative of the results for the full year or any future periods.

Current wording

Certain information and disclosures, which are normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the interim financial statements have been included. The interim financial information should be read in conjunction with the financial statements and the notes for the fiscal year ended December 31, 2024. The results of operations for the three months ended March 31, 2025 are not necessarily indicative of the results for the full year or any future periods.