Cenntro Inc.

Previous wording

Except as otherwise indicated by the context, references in this Quarterly Report on Form 10-Q (this “Form 10-Q”) to the “Company,” “Cenntro,” “we,” “us” or “our” are references to the combined business Cenntro Inc. and its subsidiaries. The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) summarizes the significant factors affecting our results of operations, liquidity, capital resources and contractual obligations. The following discussion and analysis should be read in conjunction with the Company’s unaudited condensed consolidated financial statements and related notes included elsewhere herein.

Current wording

Except as otherwise indicated by the context, references in this Quarterly Report on Form 10-Q (this “Form 10-Q”) to the “Company,” “Cenntro,” “we,” “us” or “our” are references to the consolidated business Cenntro Inc. and its subsidiaries. The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) summarizes the significant factors affecting our results of operations, liquidity, capital resources and contractual obligations. The following discussion and analysis should be read in conjunction with the Company’s unaudited condensed consolidated financial statements and related notes included elsewhere herein.

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, Logistar™ 260 and iChassis™ in Asia, and Avantier™ and Logistar™ 400 in the US. We estimate that in year 2026, we will start generating revenue from Bison Motor™, hydrogen-powered heavy-duty vehicles to meet market demand and increased sales from iChassis™ that consists of a programmable “smart” chassis that is currently used by third-party integrated it with their controlling software for various autonomous driving commercial vehicle applications.

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™, Neibor® 150, Antric® and Avantier™ in Europe, Clubcar, Teemak™, Logistar™ 210, Logistar™ 260 and iChassis™ in Asia, and Avantier™, Logistar™ 210, Logistar™ 400 and Logistar™ 450 in the US, Avantier™ in Africa. We estimate that in late 2026, we will start generating revenue from Bison Motor™, hydrogen-powered heavy-duty vehicles to meet market demand and increased sales from iChassis™ that consists of a programmable “smart” chassis that is currently used by third-party integrated it with their controlling software for various autonomous driving commercial vehicle applications.

Previous wording

Net revenues during the nine 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.

Current wording

Net revenues during the three months ended 2026 and 2025 were generated from (a) vehicles sales, which primarily represent net revenues from sales of Metro® vehicles (including vehicle kits), Logistar™ 100, Teemak™, Logistar™ 210, Logistar™ 260, Antric®, Avantier™, Logistar™ 100 and 1-ton Electric Flatbed Truck, (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, inventory write-downs and inventory write-off. 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 and impairment loss for long-lived assets.

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, 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.

Current wording

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

Previous wording

We 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.

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, 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 three months ended March 31, 2026 and 2025.

Previous wording

Comparison of the Three and Nine months ended September 30, 2025 and 2024

Current wording

Comparison of the Three months ended March 31, 2026 and 2025

Previous wording

The following table presents our net revenue components for continuing operations by amount and as a percentage of the total net revenues for the periods presented.

Current wording

The following table presents our net revenue components by amount and as a percentage of the total net revenues for the periods presented.

Previous wording

Net revenues for the three months ended September 30, 2025 were approximately $4.6 million, a decrease of approximately $11.7 million or 71.8% from approximately $16.2 million for the three months ended September 30, 2024. The decrease in net revenues in 2025 was primarily attributed to the decrease in spare-part sales by approximately $0.5 million due to the decrease in sales of iChassis™ and the decrease in vehicle sales of approximately $11.2 million due to the decrease of sales volume and average selling price from approximately $20,999 to $10,161. The net revenues in Europe market for the three months ended September 30, 2025 were approximately $3.7 million, an increase of approximately $0.6 million from approximately $3.1 million for the three months ended September 30, 2024. The net revenues in Asia market for the three months ended September 30, 2025 were approximately $0.3 million, a decrease of approximately $0.7 million from approximately $1.3 million for the three months ended September 30, 2024.

Current wording

Net revenues for the three months ended March 31, 2026 were approximately $1.2 million, a decrease of approximately $0.9 million or 43.4% from approximately $2.1 million for the three months ended March 31, 2025. The decrease in net revenues in 2026 was primarily attributed to a decrease in vehicle sales by approximately $1.2 million and other sales by approximately $0.1 million, offset by an increase in spare-part sales by approximately $0.4 million. The net revenues in Europe market for the three months ended March 31, 2026 were approximately $0.4 million, a decrease of approximately $0.3 million from approximately $0.7 million for the three months ended March 31, 2025. The net revenues in Asia market for the three months ended March 31, 2026 were approximately $0.7 million, a decrease of approximately $0.5 million from approximately $1.2 million for the three months ended March 31, 2025.

Previous wording

For the three months ended September 30, 2025, we also sold 31 iChassis™ units other than the 412 ECVs.

Current wording

For the three months ended March 31, 2026, we also sold 72 iChassis™ units, other than the 57 ECVs.

Previous wording

The vast majority of our net revenues were generated from vehicle sales in Asia and European Union during the three months ended September 30, 2025. For the three months ended September 30, 2025, net revenues from Europe, North America, Asia (including China) and Africa as a percentage of total revenues was 81.3%, 6.4%, 12.3% and nil, respectively, compared to 19.1%, 69.7%, 11.0% and 0.2%, respectively for the corresponding period in 2024.

Current wording

Geographically, the vast majority of our net revenues were generated from vehicle sales in Asia during the three months ended March 31, 2026 and 2025. For the three months ended March 31, 2026, net revenues from Europe, North America, and Asia as a percentage of total revenues was 29.4%, 5.8%, and 54.9%, respectively, compared to 32.9%, 12.3%, and 54.8%, respectively for the corresponding period in 2025.

Previous wording

For the nine months ended September 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 74.4%, 9.5%, 15.8% and 0.3%, respectively, compared to 19.6%, 73.8%, 6.5% and 0.1%, respectively, for the corresponding period in 2024.

Current wording

For the three months ended March 31, 2026, net revenues from vehicle sales in Europe, North America, and Asia as a percentage of total vehicle net revenues was 48.9%, 10.4%, and 21.3%, respectively, compared to 33.1%, 9.5%, and 57.4%, respectively, for the corresponding period in 2025.

Previous wording

The following table presents our cost of goods sold for continuing operations by amount and as a percentage of the total cost of goods sold for the periods presented.

Current wording

The following table presents our cost of goods sold by amount and as a percentage of the total cost of goods sold for the periods presented.

Previous wording

Cost of goods sold for the nine months ended September 30, 2025 was approximately $12.7 million, a decrease of approximately $5.1 million or approximately 28.7% from approximately $17.8 million for the nine months ended September 30, 2023. The decrease of cost of goods sold was mainly caused by (i) the decrease in vehicle sales and spare-part sales of approximately $1.0 million and $1.7 million, respectively, due to the decrease of sales, (ii) the decrease of inventory write-down of approximately $2.5 million.

Current wording

Cost of goods sold for the three months ended March 31, 2026 was approximately $1.0 million, a decrease of approximately $0.8 million or approximately 46.5% from approximately $1.8 million for the three months ended March 31, 2025. The decrease of cost of goods sold was mainly caused by the decreased cost of vehicle sales of approximately $1.1 million, offset by the increased cost of spare-part sales of approximately $0.3 million.

Previous wording

Gross Profit for the three months ended September 30, 2025 was approximately $0.1 million, a decrease of approximately $6.2 million from approximately $6.3 million of gross profit for the three months ended September 30, 2024. For the three months ended September 30, 2025 and 2024, our overall gross margin was approximately 2.3% and 38.8%, respectively. Our gross margin of vehicle sales for the three months ended September 30, 2025 and 2023 was 0.8% and 38.9%, respectively. The decrease of our overall gross profit was mainly caused by the decrease in the gross profit of our vehicle sales and spare-part sales of approximately $6.0 million and $0.3 million, respectively.

Current wording

Gross profit for the three months ended March 31, 2026 was approximately $0.2 million, a decrease of approximately $0.1 million or approximately 26.3% from $0.3 million of gross profit for the three months ended March 31, 2025. The decrease was primarily due to lower vehicle sales volume and a decline in vehicle gross margin, partially offset by higher-margin spare-part sales. For the three months ended March 31, 2026 and 2025, our overall gross margin was approximately 19.6% and 15.0%, respectively. Our gross margin of vehicle sales for the three months ended March 31, 2026 and 2025 was 18.5% and 10.8%, respectively.

Previous wording

Selling and marketing expenses for the three months ended September 30, 2025 were approximately $0.8 million, a decrease of approximately $3.6 million or approximately 81.4% from approximately $4.4 million for the three months ended September 30, 2024. The decrease in selling and marketing expenses in 2025 was primarily attributed to the decrease in marketing expenses, salary expense, freight and marketing related professional fee of approximately $2.6 million, $0.4 million, $0.2 million and $0.7 million, respectively, offset by the increase in after-sale services of approximately $0.5 million.

Current wording

Selling and marketing expenses for the three months ended March 31, 2026 were approximately $0.3 million, a decrease of approximately $0.5 million or approximately 62.1% from approximately $0.8 million for the three months ended March 31, 2025. The decrease in selling and marketing expenses in 2026 was primarily attributed to the decrease in freight of approximately $0.4 million, due to reduced shipment volumes.

Previous wording

Research and development expenses for the three months ended September 30, 2025 were approximately $0.5 million, a decrease of approximately $0.9 million or approximately 63.0% from approximately $1.4 million for the three months ended September 30, 2024. The decrease in research and development expenses in 2025 was primarily attributed to the decrease in design and development expenditures and salary expense of approximately $0.4 million and $0.5 million, respectively.

Current wording

Research and development expenses for the three months ended March 31, 2026 were approximately $0.5 million, a decrease of approximately $0.3 million or approximately 39.0% from approximately $0.8 million for the three months ended March 31, 2025. The decrease in research and development expenses in 2026 was primarily attributed to the decrease in salary expense of approximately $0.3 million, partially reflecting timing differences in project development activities.

Previous wording

Other income, net for the nine months ended September 30, 2025 was approximately $0.4 million, representing a change of approximately $1.2 million compared to approximately $0.8 million of other expense, net for the nine months ended September 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, loss on investment and other loss of approximately $0.09 million, $0.6 million and $0.1 million, respectively, ii) an increase of approximately $0.3 million in litigation compensation from Fujian Newlongma Automotive Co., Ltd.

Current wording

Other expense, net for the three months ended March 31, 2026 was approximately $0.3 million, and other income, net was $0.7 million of for the three months ended March 31, 2025. The change of other (expense) income in 2026 compared to 2025 was primarily attributable to: (i) foreign currency exchange loss of $0.1 million in 2026 compared with Foreign currency exchange gain of $0.4 million in 2025; and (ii) a decrease of approximately $0.2 million in litigation compensation from Fujian Newlongma Automotive Co., Ltd..

Previous wording

Adjusted EBITDA for the three and nine months ended September 30, 2025 and 2024

Current wording

Adjusted EBITDA for the three months ended March 31, 2026 and 2025

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, 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 loss 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

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.

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 help 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

As of September 30, 2025, we had approximately $4.4 million in cash and cash equivalents, approximately $1.6 million of accounts receivable. and approximately $24.3 million of inventory as compared to approximately $22.4 million in cash and cash equivalents, $3.5 million in accounts receivable, and $23.6 million in inventory as of September 30, 2024. For the nine months ended September 30, 2025 and 2024, net cash used in operating activities was approximately $10.8 million and $12.9 million, respectively.

Current wording

As of March 31, 2026 we had approximately $3.6 million in cash and cash equivalents and approximately $1.2 million of accounts receivables as compared to approximately $8.5 million in cash and cash equivalents and $3.1 million in accounts receivable as of March 31, 2025. For the three months ended March 31, 2026 and 2025, net cash used in operating activities was approximately $2.8 million and $5.0 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 of issuance of this 10Q. Our current business strategy for the next twelve months includes (i) the continued rollout of our new ECV models in North America and Europe, as applicable, (ii) the establishment of local assembly facilities in the United States and the European Union and (iii) additional plants and equipment for the expansion of our Changxing factory 1. Actual results could vary materially as a result of a number of factors, including:

Current wording

We believe our cash and cash equivalents will be sufficient for us to continue to execute our business strategy over the twelve months period following the date of issuance of our 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

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

Current wording

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

Previous wording

We intend to further expand our technology through continued investment in research and development. Since inception in 2013 through September 30, 2025, we have spent over approximately $96.3 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, 2026 we have spent over approximately $97.2 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, 2025, our working capital was approximately $24.9 million, as compared to a working capital of approximately $36.8 million as of December 31, 2024. The approximately $11.9 million decrease in working capital during 2025 was primarily due to (i) the decrease of cash and cash equivalents, restricted cash, accounts receivable, prepayment and other current assets, accounts payable, contractual liabilities, operating lease liabilities, convertible bonds, current assets held for discontinued operations and current assets held for discontinued operations of approximately $8.1 million, $0.2 million, $1.7 million, $1.0 million, $1.4 million, $0.4 million, $0.2 million, $2.5 million, $2.9 million and $0.3 million, and (ii) the increase in inventories, short-term loans, accrued expense and other current liabilities and amount due to related parties of approximately $0.3 million, $0.7 million, $1.6 million and $0.9 million.

Current wording

As of March 31, 2026, our working capital was approximately $18.4 million, as compared to a working capital of approximately $19.0 million as of December 31, 2025. The approximately $0.6 million decrease in working capital during 2026 was primarily due to the decrease of cash and cash equivalents of approximately $0.9 million.

Previous wording

Our net cash used in operating activities was approximately $10.8 million and $12.9 million for the nine months ended September 30, 2025 and 2024, respectively.

Current wording

Our net cash used in operating activities was approximately $2.8 million, $5.0 million for the three months ended March 31, 2026 and 2025, respectively.

Previous wording

Net cash used in operating activities for the nine months ended September 30, 2025 was primarily attributable to (i) our net loss of approximately $22.3 million and adjusted for non-cash items of approximately $9.7 million, which primarily consisted of depreciation and amortization, amortization of operating lease right-of-use asset, impairment of slow-moving inventories, allowance for doubtful receivables, write-offs of doubtful receivables, foreign currency exchange loss, share based compensation expense, loss from debt extinguishment, change in fair value of convertible promissory notes and derivative liability, change in fair value of equity securities, loss from disposal of land use right and property, plant and equipment, loss from early termination of lease contract and loss from dilution of Cenntro Electric CICS, SRL’s equity of approximately $1.7 million, $2.0 million, $1.3 million, $4.1 million, $0.5 million, $1.2 million, $2.1 million, $1.8 million, $0.3 million, $0.8 million, $0.1 million, $0.5 million and $1.2 million respectively, (ii) the decrease in inventories, accounts receivable, prepayment and other current assets, accounts payable and operating lease liabilities of approximately $1.4 million, $0.3 million, $1.2 million, $1.6 million and $0.9 million, respectively, (iii) the increase in other non-current assets, amount due to related parties and accrued expense and other current liabilities of approximately $0.2 million, $0.1 million and $1.1 million, respectively.

Current wording

Net cash used in operating activities for the three months ended March 31, 2026 was primarily attributable to (i) our net loss of approximately $3.9 million and adjusted for non-cash items of approximately $1.1 million, which primarily consisted of depreciation and amortization and share based compensation expense of approximately $0.5 million and $0.7 million respectively, (ii) the increase in deferred revenue and prepayment and other current assets of approximately $1.4 million and $0.5 million, respectively, (iii) decrease in accounts payable and accrued expense and other current liabilities of approximately $0.7 million and $0.4 million, respectively.

Previous wording

Net cash used in investing activities was approximately $0.6 million for the nine months ended September 30, 2025. Net cash used in investing activities for the nine months ended September 30, 2025 was primarily attributable to cash paid in purchase of plant and equipment of approximately $0.7 million, offset by the proceeds from disposal of property, plant and equipment of approximately $0.2 million.

Current wording

Net cash used in investing activities was immaterial for the three months ended March 31, 2026.

Previous wording

Net cash provided by financing activities was approximately $2.7 million for the nine months ended September 30, 2025. Net cash provided by financing activities for the nine months ended September 30, 2025 was primarily attributable to the proceeds from bank loans, related parties and third parties of approximately $1.7 million, $1.0 million and $1.4 million, offset by the repayment of loans to third parties of approximately $0.4 million, the repayment of loans to related parties of approximately $0.2 million and repayment to bank loan of approximately $0.8 million.

Current wording

Net cash provided by financing activities was approximately $1.7 million for the three months ended March 31, 2026. Net cash provided by financing activities for the three months ended March 31, 2026 was primarily attributable to proceeds from bank loans of approximately $1.8 million and loans proceed from third parties of approximately $1.5 million, offset by the repayment of bank loans of approximately $1.3 million.

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, 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.

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, 2026, 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, 2024, which has been derived from audited financial statements, and the unaudited condensed consolidated financial statements as of September 30, 2025 and for the three months and nine months ended September 30, 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, 2025, which has been derived from audited financial statements, and the unaudited condensed consolidated financial statements as of March 31, 2026 and for the three months ended March 31, 2026 and 2025 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 consolidated financial statements and the notes for the fiscal year ended December 31, 2024. The results of operations for the three months and nine months ended September 30, 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, 2025. The results of operations for the three months ended March 31, 2026 are not necessarily indicative of the results for the full year or any future periods.

Previous wording

The Company’s financial instruments not reported at fair value primarily consist of cash and cash equivalents, restricted cash, accounts receivable, other current assets, amount due from and due to a related party, accounts payable and other current liabilities and short-term loans.

Current wording

The Company’s financial instruments not reported at fair value primarily consist of cash and cash equivalents, restricted cash, accounts receivable, other current assets, amount due from and to related parties, accounts payable and other current liabilities and short-term loans.

Previous wording

The carrying value of cash and cash equivalents, restricted cash, accounts receivable and other current assets, accounts payable, other current liabilities, bank loans and amount due from and due to a related party, current were approximate fair value because of the short-term nature of these items. The estimated fair values of loan from third party, and amount due from a related party, non-current were not materially different from their carrying value as presented due to the brief maturities and because the interest rates on these borrowings approximate those that would have been available for loans of similar remaining maturities and risk profiles.

Current wording

The carrying value of cash and cash equivalents, restricted cash, accounts receivable and other current assets, accounts payable, other current liabilities, bank loans and amount due from and to related parties, current were approximate their fair values because of the short-term nature of these items. The estimated fair values of loans from third parties were not materially different from their carrying value as presented due to the brief maturities and because the interest rates on these borrowings approximate those that would have been available for loans of similar remaining maturities and risk profiles.

Previous wording

Available-for-sale investments and currency-cross swap were classified within Level 1 of the fair value hierarchy because they were valued using quoted prices in active markets. Our debt security investments are classified within Level 3 of the fair value hierarchy. As the Issuer is not yet listed and there are no similar companies in the market at the same stage of development for comparison, the Issuer is difficult to value, and the valuation is not considered reliable. Therefore, the Company develop own assumption by future cash flow forecast, which contains principle paid and interests accrued.

Current wording

Currency-cross swap was classified within Level 1 of the fair value hierarchy because they were valued using quoted prices in active markets. As the issuer is not yet listed and there are no similar companies in the market at the same stage of development for comparison, the investment is difficult to value, and the valuation is not considered reliable. Therefore, the Company develop its own assumption by future cash flow forecast, which contains principal paid and interests accrued.

Previous wording

The fair value option provides an election that allows a company to irrevocably elect to record certain financial assets and liabilities at fair value on an instrument-by-instrument basis at initial recognition. The Company has elected to apply the fair value option to: i) convertible promissory notes payable due to the complexity of the various conversion and settlement options available to notes holders; ii) convertible loan receivable, which was recognized as debt security in long-term investments, and iii) currency-cross swap, which was recognized as derivative financial instruments in short-term investments.

Current wording

The fair value option provides an election that allows a company to irrevocably elect to record certain financial assets and liabilities at fair value on an instrument-by-instrument basis at initial recognition. The Company has elected to apply the fair value option to: i) convertible promissory notes payable due to the complexity of the various conversion and settlement options available to notes holders; ii) convertible loan receivable, which was recognized as debt security in long-term investments, and iii) currency-cross swap, which was recognized as derivative financial instruments. Specifically, positive fair values of cross-currency swaps are classified as short-term investments in the unaudited condensed consolidated balance sheet, and negative fair values of such instruments are recorded in other current liabilities.