Cenntro Inc.

Previous 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.

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.

Previous 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.

Current wording

Net revenues during the six 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, Logistar™ 450, 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, 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.

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 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 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.

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 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 ourstatements 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 andimpairment 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.

Previous wording

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

Current wording

Selling and marketing expenses consist primarily of employee compensation and related expenses, sales commissions, marketing programs, freight costs, travel and entertainment expenses and allocated overhead. Marketing programs consist of advertising, trade shows, events, corporate communications, and brand-building activities. We expect our selling and marketing expenses to remain at the current level, as we have stabilized our blended sales channel mix, especially in Europe, by strengthening e-commerce and distributor networks, which reduces the reliance on high-cost direct selling.

Previous 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.

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 is written off when receivables are deemed uncollectible, following the exhaustion of all collection efforts and a determination that recovery. 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 three months ended March 31, 2025 and 2024.

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 six months ended June 30, 2025 and 2024.

Previous wording

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

Current wording

Comparison of the Three and Six months ended June 30, 2025 and 2024

Previous 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.

Current wording

Net revenues for the three months ended June 30, 2025 were approximately $6.4 million, a decrease of approximately $0.9 million or 12.4% from approximately $7.3 million for the three months ended June 30, 2024. The decrease in net revenues in 2025 was primarily attributed to the decrease in spare-part sales by approximately $0.8 million due to the decrease in sales of iChassis™ and the decrease in vehicle sales of approximately $0.1 million. The net revenues in Europe market for the three months ended June 30, 2025 were approximately $4.8 million, an increase of approximately $3.9 million from approximately $1.0 million for the three months ended June 30, 2024. The net revenues in Asia market for the three months ended June 30, 2025 were approximately $0.8 million, a decrease of approximately $0.4 million from approximately $1.2 million for the three months ended June 30, 2024.

Previous 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.

Current wording

For the three months ended June 30, 2025, we sold 430 ECVs, including 10 fully assembled Metro® units, 21 fully assembled Logistar™ 200 units, 56 fully assembled Logistar™ 100 units, 1 fully assembled Teemak™ units, 1 fully assembled Logistar™ 400 units, 5 fully assembled Logistar™ 210 units, 191 fully assembled Avantier™ units, 7 Antric® units, 53 Clubcar units, 69 fully assembled Logistar™ 450 units and 16 fully assembled Seres 5 units, compared with 169 ECVs for the three months ended June 30, 2024, including 2 fully assembled Metro® units, 5 fully assembled Logistar™ 200, 31 fully assembled Logistar™ 100, 14 fully assembled Teemak™, 8 fully assembled Logistar™ 260 , 33 fully assembled Logistar™ 400, 44 fully assembled Avantier™ units, 2 fully assembled Logistar™ 210 units, 19 Clubcar units and 11 Antric® units.

Previous wording

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

Current wording

For the three months ended June 30, 2025, we also sold 29 iChassis™ units, other than the 430 ECVs.

Previous 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.

Current wording

The vast majority of our net revenues were generated from vehicle sales in the Asia during the three months ended June 30, 2025. For the three months ended June 30, 2025, net revenues from Europe, North America, Asia (including China) and Africa as a percentage of total revenues was 76.8%, 10.9%, 11.8% and 0.5%, respectively, compared to 13.5%, 70.2%, 16.3% and nil, respectively for the corresponding period in 2024.

Previous 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.

Current wording

For the three months ended June 30, 2025, net revenues from vehicle sales in Europe, North America, Asia (including China) and Africa as a percentage of total vehicle net revenues was 78.8%, 11.5%, 9.2% and 0.6%, respectively, compared to 15.0%, 83.1%, 1.9% and nil, respectively, for the corresponding period in 2024.

Previous wording

Cost of goods sold for the three months ended March 31, 2025 was approximately $1.8 million, a decrease of approximately $0.4 million or approximately 16.2% from approximately $2.2 million for the three months ended March 31, 2024. The decrease of cost of vehicle sales was mainly caused by the decreased cost of spare-parts sales of approximately $0.7 million, offset by the increased cost of vehicle sales of approximately $0.4 million.

Current wording

Cost of goods sold for the three months ended June 30, 2025 was approximately $6.4 million, an increase of approximately $0.7 million or approximately 12.0% from approximately $5.7 million for the three months ended June 30, 2024. The increase of cost of vehicle sales was mainly caused by the increase in the cost of vehicle sales of approximately $2.1 million, offset by the decrease in the cost of spare-part sales and inventory write-down of approximately $0.7 million and $0.8 million, respectively.

Previous 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.

Current wording

Gross loss for the three months ended June 30, 2025 was approximately $0.02 million, a change of approximately $1.6 million from approximately $1.6 million of gross profit for the three months ended June 30, 2024. For the three months ended June 30, 2025 and 2024, our overall gross margin was approximately -0.3% and 21.6%, respectively. Our gross margin of vehicle sales for the three months ended June 30, 2025 and 2023 was -1.5% and 22.1%, respectively. The decrease of our overall gross profit was caused by the decrease in the gross profit of our vehicle sales of approximately $2.2 million and the decrease in the gross profit of our spare-part sales of approximately $0.1 million, offset by the decrease in the inventory write-down of approximately $0.8 million.

Previous 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.

Current wording

Selling and marketing expenses for the six months ended June 30, 2025 were approximately $1.0 million, a decrease of approximately $0.2 million or approximately 17.3% from approximately $1.2 million for the six months ended June 30, 2024. The decrease in selling and marketing expenses in 2025 was primarily attributed to the decrease in salary expenses, share-based compensations and service fee related to European market and distribution channel research of approximately $0.2 million, $0.1 million and $0.1 million, respectively, offset by the increase in freight of approximately $0.2 million.

Previous 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.

Current wording

General and administrative expenses for the three months ended June 30, 2025 were approximately $5.2 million, a decrease of approximately $1.9 million or approximately 26.9% from approximately $7.1 million for the three months ended June 30, 2024. The decrease in general and administrative expenses in 2025 was primarily attributed to a decrease in salary and social insurance, office expenses, freight, leasing cost, rental expense and share-based compensation of approximately $1.2 million, $0.3 million, $0.1 million, $0.2 million, $0.1 million and $0.1 million, respectively, offset by the increase in legal and professional fee of approximately $0.2 million.

Previous 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.

Current wording

Research and development expenses for the six months ended June 30, 2025 were approximately $1.4 million, a decrease of approximately $1.1 million or approximately 43.6% from approximately $2.5 million for the six months ended June 30, 2024. The decrease in research and development expenses in 2025 was primarily attributed to the decrease in design and development expenditures, share-based compensations, miscellaneous expenses and salary expense of approximately $0.1 million, $0.03 million, $0.09 million and $0.8 million, respectively.

Previous 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.

Current wording

Interest expense, net, mainly consists of interest expense on convertible bonds, offset by the interest income from deposit, short-term investment and unpaid purchases from HWE. Net interest expense was approximately $0.2 million for the three months ended June 30, 2025, representing an increase of approximately $0.06 million compared to the approximately $0.1 million in interest income for the three months ended June 30, 2024.

Previous 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..

Current wording

Other income, net for the six months ended June 30, 2025 was approximately $0.2 million, representing a change of approximately $0.4 million compared to approximately $0.2 million of other expense, net for the six months ended June 30, 2024. The change of other income (expense) in 2025 compared to 2024 was primarily attributable to i) the decrease in loss on disposal of PPE and other loss of approximately $0.07 million and $0.08 million, respectively, ii) an increase of approximately $0.06 million in income from government subsidies, iii) 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 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.

Current wording

A loss in the change in fair value of equity securities for the three months ended June 30, 2025 was approximately $0.1 million.

Previous wording

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

Current wording

Adjusted EBITDA for the three and six months ended June 30, 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 toloss 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 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, and change in fair value of convertible promissory notes and derivative liability.

Previous wording

Due to these limitations, Adjusted EBITDA should not be considered as a measure of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our GAAP results and using these non-GAAP measures only supplementally. As noted in the table below, Adjusted EBITDA includes adjustments to exclude the impact of stock-based compensation expense and material infrequent items. It is reasonable to expect that these items will occur in future periods. However, we believe these adjustments are appropriate because the amounts recognized can vary significantly from period to period, do not directly relate to the ongoing operations of our business and may complicate comparisons of our internal operating results and operating results of other companies over time. In addition, Adjusted EBITDA may include adjustments for other items that we do not expect to regularly occur in future reporting periods. Each of the normal recurring adjustments and other adjustments described in this paragraph and in the reconciliation table below help management with a measure of our core operating performance over time by removing items that are not related to day-to-day operations.

Current wording

Due to these limitations, Adjusted EBITDA should not be considered as a measure of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our GAAP results and using these non-GAAP measures only supplementally. As noted in the table below, Adjusted EBITDA includes adjustments to exclude the impact of stock-based compensation expense and material infrequent items. It is reasonable to expect that these items will occur in future periods. However, we believe these adjustments are appropriate because the amounts recognized can vary significantly from period to period, do not directly relate to the ongoing operations of our business and may complicate comparisons of our internal operating results and operating results of other companies over time. In addition, Adjusted EBITDA may include adjustments for other items that we do not expect to regularly occur in future reporting periods. Each of the normal recurring adjustments and other adjustments described in this paragraph and in the reconciliation table below helps management with a measure of our core operating performance over time by removing items that are not related to day-to-day operations.

Previous wording

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

Current wording

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

Previous 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.

Current wording

As of June 30, 2025, we had approximately $6.0 million in cash and cash equivalents, approximately $3.2 million of accounts receivables, and approximately $25.4 million of inventory as compared to approximately $12.5 million in cash and cash equivalents, $3.3 million in accounts receivable, and $24.0 million in inventory as of December 31, 2024. For the six months ended June 30, 2025 and 2024, net cash used in operating activities was approximately $9.4 million and $12.7 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 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:

Current wording

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

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

Previous 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.

Current wording

We intend to further expand our technology through continued investment in research and development. Since inception in 2013 through June 30, 2025, we have spent over approximately $95.8 million in research and development activities related to our operations. We plan to increase our research and development expenditure over the long term as we build on our technologies in vehicle development, driving control, cloud-based platforms, and innovations for promoting sustainable energy.

Previous 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.

Current wording

As of June 30, 2025, our working capital was approximately $26.0 million, as compared to a working capital of approximately $36.8 million as of December 31, 2024. The approximately $10.8 million decrease in working capital during 2025 was primarily due to (i) the decrease of cash and cash equivalents of approximately $6.6 million, and (ii) the increase in inventories, short term loans, contractual liabilities, accrued expense and other current liabilities, operating lease liabilities, convertible bonds and amounts due to related parties of approximately $1.4 million, $1.0 million, $0.6 million, $0.6 million, $1.4 million, $0.3 million and $1.0 million.

Previous 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.

Current wording

Our net cash used in operating activities was approximately $9.4 million, $12.7 million for the six months ended June 30, 2025 and 2024, respectively.

Previous 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.

Current wording

Net cash used in operating activities for the six months ended June 30, 2025 was primarily attributable to (i) our net loss of approximately $15.6 million and adjusted for non-cash items of approximately $7.5 million, which primarily consisted of share based compensation expense, net foreign currency exchange loss, depreciation and amortization, impairment of slow-moving inventories, gain from disposal of Cenntro Electric CICS, SRL’s equity, loss from Note Amendment, change in fair value of convertible promissory notes and derivative liability, allowance for doubtful receivables and amortization of operating lease right-of-use asset of approximately $1.5 million, $1.0 million, $1.1 million, $1.4 million, $1.2 million, $1.8 million, $0.1 million, $2.5 million and $1.7 million, respectively, (ii) the increase in inventories, accounts receivable, prepayment and other current assets of approximately $0.3 million, $0.3 million and $0.5 million, respectively, (iii) increase in deferred revenue, accrued expense and other current liabilities and other non-current assets of approximately $1.2 million , $0.4 million and $0.1 million, respectively, (iv) decrease in accounts payable and operating lease liabilities of approximately $1.4 million and $0.8 million, respectively.

Previous wording

Net cash used in investing activities was approximately $0.5 million for the three months ended March 31, 2025. Net cash used in by investing activities for the three months ended March 31, 2025 was primarily attributable to purchase of property, plant and equipment of approximately $0.5 million.

Current wording

Net cash used in investing activities was approximately $0.6 million for the six months ended June 30, 2025. Net cash used in investing activities for the six months ended June 30, 2025 was primarily attributable to cash paid in purchase of plant and equipment of approximately $0.6 million.

Previous 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.

Current wording

Net cash provided by financing activities was approximately $2.9 million for the six months ended June 30, 2025. Net cash provided by financing activities for the six months ended June 30, 2025 was primarily attributable to the proceeds from bank loans, related parties and third parties of approximately $1.4 million, $1.0 million and $1.1 million, offset by the repayment of loans to third parties of approximately $0.4 million and repayment to bank loan of approximately $0.2 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 $186,866 for the term ending May 2023 and $167,521 for the term ending May 2024.

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. These two leases renewed on May 2025. The lease period for each lease agreement began in June 2025 and ends in May 2026. Pursuant to each agreement, we paid the first six months of our rent obligations in May 2025 and thereafter will be obligated to make rental payments in advance semi-annually. The total annual base rent under these two lease agreements is $144,528 for the term ending May 2026.

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 lease was not renewed. 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 after April 4, 2024. The monthly rent is $5,950.

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 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.

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 six months ended June 30, 2025, 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.

Previous 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”).

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 June 30, 2025 and for the three months and six months ended June 30, 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. 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.

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 consolidated financial statements and the notes for the fiscal year ended December 31, 2024. The results of operations for the three months and six months ended June 30, 2025 are not necessarily indicative of the results for the full year or any future periods.