CENN 10-K & 10-Q changes, risk factors and insider trading

We began pilot production of our first-generation, U.S. Class 1 (0 - 6,000 lbs.), electric light-duty commercial vehicle, the Metro®, in 2018. Our revenues were approximately $31.3$18.1 million for the year ended December 31, 2024.2025. To date, we have derived our revenues principally from sales of the Metro®, Logistar™ series, Teemak™, Avantier® series and iChassis 100 models. We have a limited operating history on which you can base an evaluation of our business and prospects. You should consider our business and prospects in light of the risks and challenges we face in an emerging industry with limited experience to date in high volume manufacturing of electric commercial vehicles (“ECVs”), including challenges related to our ability to:

Our business depends in large part on our ability to execute on our plans to develop, manufacture and sell our ECVs. We began pilot production of the Metro® in 2018. We plan to manufacture ECVs in higher volumes than we have historically and our production capabilities, including our facilities and those of our manufacturing partners, may not be able to handle the anticipated volumes in our business plan. Development and manufacturing of our current and future ECVs, such as the Metro®, Logistar™, LogiMax, iChassis™, Avantier™, Bison Motor™, Teemak™ and Antric One are and will be subject to risks, including:

In 2024,2025, we have introduced fourthree new vehicle models, Avantier Ex, Avantier Commuter,CX, LogistarBM860H. 300 (LS300), and Logister 450 (LS450). Avantier Ex and Avantier CommuterCX are targeting European markets and other markets outside of US markets while LS300BM860H and LS450 areis mainly targeting the US markets. In order to introduce new ECV models through 2024,2025, we have to coordinate with our suppliers, manufacturing partners, channel partners and other third parties in order to ensure timely execution of the manufacturing and assembly processes. If we fail to coordinate these efforts and achieve market introduction and acceptance of our new ECV model in a timely manner, our business, financial condition, operating results and prospects could be adversely affected. In addition, we have limited experience to date in manufacturing and assembling each of our new ECV series, as well as limited experience building and ramping up multiple vehicle production lines across multiple factories (including those of our manufacturing partners) in different geographies. In order to be successful, we will need to implement, maintain and ramp-up efficient and cost-effective manufacturing capabilities between our manufacturing partners, our own facility in Changxing and our local assembly facilities. Manufacturing bottlenecks and other unexpected challenges may arise during our production ramp-up, and we must address them promptly. We may face delays in establishing and/or sustaining production and timely delivery of our new ECV models. Any delay or other complication in ramping up the production of our current or future ECV models may harm our business, financial condition, operating results and prospects.

As of December 31, 2024,2025, we shifted from relying only on channel partners to a hybrid model combines distribution between our wholly owned EV Centers with local established dealers and channel partners. We currently have fivefour EV Centers worldwide and anticipate the EV Centers will lead the distribution network, however if we were to close or dissociate one or more of our EV Centers due to performance, there is no assurance that we would be able to establish a suitable replacement EV Center in the region to take up the role of marketing ,marketing, distributing and after-market care our ECVs in the relevant market within a suitable timeframe or at all.

Substantially all of our revenue for the years ended December 31, 2024,2025, and 20232024 was derived from sales of our ECVs in North America, Europe and Asia. As of December 31, 2024,2025, we have maintained relationships with several distributors in the European and Asian market and operated fivefour EV centers in Germany, Spain, New JersyJersey and California in the US, and China.

In recent years, the global transportation industry has experienced higher volatility in shipping rates from the trans-Pacific Ocean carriers due to various factors, including limited availability of shipping capacity, and geopolitical tensions. AlthoughOur primary shipping routes originate from Shanghai and serve the overallUnited States West Coast and European markets. Trans-Pacific shipping costrates wasexperienced decreasingsubstantial relativelyswings in 2025, driven in part by shippers frontloading imports ahead of U.S. tariff increases, followed by a significant softening in demand in the second half of the year. On Asia-Europe lanes, elevated freight costs persisted into 2025 as a result of ongoing geopolitical disruptions, with routing conditions and carrier capacity deployment remaining subject to thechange. yearThese 2022conditions and 2023, such factors related to capacities and geopolitical tensionshave had, and if persistent, may continue to have a negative impact on our vehicle production,production costs, gross profit margin, margins, product delivery timetimelines, and revenue recognition. Shipping cost have increased as of the end of November 2023 due to the frequent attacks by Houthi rebels on vessels transporting goods through the Suez Canal. Shipments to EU have instead taken a route crossing the Cape of Good Hope, which have significantly increased shipping costs and had lasting effects into 2024. Certain cost were stabilized as of March 2024, but the risk of higher cost volatility remains. Our operating results for the year ended December 31, 2024, have been impacted by certain capacity shortages and attacks on vessels in the Red Sea and weWe expect such incidence causing rising shipping rates volatility to continue for the foreseeable future.

We havemaintain manufacturing and researchassembly facilities currently located in Changxing,Changxing China.and DuringYangzhong, 2021,China, weand beganlocal utilizingassembly one of our two facilities in Freehold, New Jersey forand theBarstow, trial production of our Logistar™ 400 model. In January 2022, we established a European Operations Center in Dusseldorf, Germany, which provides assembly, marketing support, after-market support and spare-parts warehousing for the European market. Effective March 2023, we began pilot production of the Logistar 400 at the in Jacksonville, Florida facility for distributionCalifornia in the NorthUnited AmericanStates, market. Weand also rely on third-party our relationships with variousOEM manufacturing partners in China whofor manufacturethe production of vehicle components and fully assembled units. If major disasters such as earthquakes, fires, floods, hurricanes, wars, terrorist attacks, computer viruses, pandemics, or other unpredictable events including cyber-attacks, occur that impact our newfacilities ECVor series.those of our manufacturing or distribution partners, we may be required to stop or delay production and shipment of our ECVs, which could materially and adversely affect our business, financial condition, operating results and prospects. If major disasters such as earthquakes, fires, floods, hurricanes, wars, terrorist attacks, computer viruses, pandemics (such as COVID-19) or other unpredictable unpredictable events, such as cyber-attacks, occur that impact our facilities or the facilities of our channel and manufacturing partners, we may have to stop or delay production and shipment of our ECVs, and our operations may be seriously damaged. We may incur expenses relating to such delays or damages, which could materially and adversely affect our business, financial condition, operating results and prospects.

Management has taken and is continuing to take actions to remediate this material weakness and is taking steps to strengthen our internal control over financial reporting and risk management. Our Financial Controller for North America joined us in January 2022 and she is a CPA license holder. As of the date of this report,Annual Report, we have a total of four professionals on our Finance team in the United States including two certified public accountants (CPAs) and one staff accountant who has passed the CPA exams with public accounting experience. We intend to hire additional professional accountants with greater familiarity with U.S. GAAP and SEC reporting requirements. We strive to continue to take measures to improve compliance with our overall financial reporting process by (i) further developing and implementing formal policies, processes and documentation procedures relating to our financial reporting as well as (ii) addressing the accounting function’s staffing needs and training and strengthen our internal control processes. This material weakness will not be considered remediated until management completes the design and implementation of the measures described above and the controls operate for a sufficient period of time and management has concluded that these controls are effective.

Scheduled to take effect on September 12, 2025, the EU Data Act introduces new regulatory requirements for data access, sharing, and portability, extending beyond personal data to include non-personal data. This legislation aims to facilitate data sharing among businesses and with governments, but its broad scope and evolving implementation may create uncertainties and compliance challenges for our operations. The Act imposes obligations on data holders—whichholders-which could include companies managing connected devices such as our Electric Commercial Vehicles (ECVs)—to-to provide access to certain data upon request under regulated conditions. Compliance with these requirements may necessitate modifications to our data management systems, contractual agreements, and security protocols. Non-compliance could result in regulatory enforcement actions, penalties, and increased operational costs, particularly as EU member states implement and enforce the Act in different ways. Additionally, the evolving regulatory landscape in the EU could create uncertainties regarding data monetization, competitive practices, and cross-border data transfers, potentially impacting our business model and operations.

Since July 21, 2005, the RMB has been permitted to fluctuate within a narrow and managed band against a basket of certain foreign currencies. It is difficult to predict how market forces or PRC, U.S. or EU government policy may impact the exchange rate between the RMB and the USD or Euro, respectively, in the future. For instance, during the year ended December 31, 2023 2025 the RMB depreciatedappreciated against the USD by approximately 8%.4%.

Our ability to retain an auditor subject to the PCAOB inspection and investigation, including but not limited to inspection of the audit working papers related to us, may depend on the relevant positions of U.S. and Chinese regulators. With respect to audits of companies with operations in China, such as the Company, there are uncertainties about the ability of our auditor to fully cooperate with a request by the PCAOB for audit working papers in China without the approval of Chinese authorities. If the PCAOB is unable to inspect or investigate completely the Company’s auditor because of a position taken by an authority in a foreign jurisdiction, then such lack of inspection could cause trading in the Company’s securities to be prohibited under the HFCAA, and ultimately result in a determination by a securities exchange to delist the Company’s securities. Such a prohibition would substantially impair an investor’s ability to sell or purchase the Company’s Common Stock and negatively impact the price of the Common Stock. The delisting of our Common Stock, or the threat of their being delisted, may materially and adversely affect the value of your investment, even making it worthless. Accordingly, the HFCAA calls for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB.

Sales of a substantial number of Common Stock in the public market, including sales of Common Stock or securities convertible into Common Stock under our existing universal shelf registration statements on Form F-3, filed with the SEC on May 18, 2021, and January 6, 2022, and on Form S-3, filed with the SEC on January 28, 2026, or the perception that these sales might occur, could depress the market price of our Common Stock and could impair our ability to raise capital through the sale of additional equity securities. We are unable to predict the timing of or the effect that any such sales may have on the prevailing market price of our Common Stock.

There can be no assurance that we will be able to comply with the continued listing standards of the Nasdaq Capital Market. Our failure to meet the continued listing requirements could result in a de-listingdelisting of our Common Stock.

We cannot assure you that we will be able to comply with the standards that we are required to meet in order to maintain a listing of our Common Stock on the Nasdaq Capital Market of The Nasdaq Stock Market LLC (“Nasdaq”). If we fail to satisfy the continued listing requirements of the Nasdaq Capital Market, such as the minimum stockholder’s equity requirement, the minimum bid price requirements or the minimum market value of publicly held shares requirement, Nasdaq staff may take steps to de-list our Common Stock. A notice of de-listing or any de-listing would likely have a negative effect on the price of our Common Stock and may impair our stockholders’ ability to sell our Common Stock when they wish to do so. In the event that we receive a notice of de-listing, we would plan to take actions to restore our compliance with the Nasdaq Capital Market’s listing requirements, but we can provide no assurance that any action taken by us would result in our Common Stock maintaining its listing, or that any such action would stabilize the market price or improve the liquidity of our Common Stock.

We are an emerging designer, manufacturer, distributor, and service provider of commercial vehicles powered by either electricity or hydrogen energy sources. Our commercial vehicles are designed to serve a variety of fleet and municipal organizations in support of city services, last-mile delivery and other commercial applications. As of December 31, 2024,2025, we have developed fivesix series of commercial vehicle models, Metro®, Logistar™, LogimaxiChassis™, Avantier™, AvantierTeemak™, Bison Motor™ and Teemak™. We also provide other delivery platforms including Antric One and iChassie, along with Electric Charger Products.One. We have successfully begun to produce and deliver these models into the global markets, apart from Logimax™.

We have also developed and introduced iChassis™: a programmable “smart” chassis that may be controlled by third-party software for various remote controlled or autonomous driving drivingapplications. applications.We are also working on developing hydrogen-powered heavy-duty vehicles to meet the market demand. We continue to leverage our technology, vehicle development, and vehicle distribution capabilities with a goal to become a leading provider in the electric commercial vehicle (“ECV”) market. Our greater mission is to provide commercial vehicles that may be powered by sustainable sources while building eco-chains to reduce carbon dioxide for a better environment and quality of life.

With the global trend toward reducing the number of internal combustion engine (“ICE”) vehicles, electric-battery and fuel cell technologies stand out as strong alternatives. Prior to COVID-19, battery costs significantly decreased over the past decade. We expect that over the long term, prices will continue to fall. According to research service Bloomberg NEF (“BNEF”), lithium-ion battery pack prices decreased from above $1,200 per kilowatt-hour in 2010 to $132/kWh in 2021. In real terms, this represented a decline of approximately 89%. We anticipate that battery prices will continue to decrease in the long-term. BNEF further forecasts that average prices are expected to fall by $3/kWh in 2025. Looking ahead, prices are expected to fall further over the next decade amid continued investment in R&D, manufacturing process improvements, and capacity expansion across the supply chain. Lithium prices are expected to ease as more extraction and refining capacity comes online. BasedBattery onprices are forecast to drop in 2026, though it’ll be a smaller dip than 2025 due to high costs of raw materials and tariffs. The average price for a battery pack is expected to fall 3% next year to $105 per kilowatt-hour, according to the updatedBNEF observedsurvey learningin rate, BNEF’s 2022 Battery Price Survey predicts that average pack prices should fall below $100/kWh by 2026.2025. By emphasizing investments in technology, supply-chains, vehicle distribution and aftermarket support, we have begun making our own battery packs, packs, preparing battery cell production, by building up vehicle distribution and service networks, and introducing our cloud-based parts distribution systems. As investment in battery technology continues to increase, we believe these cost reductions outlined by BNEF will continue to improve the economics of battery-powered ECVs, like ours.

In addition to our investment in battery-technology, we have established an asset-light, distributed manufacturing business model through which we may distribute our vehicles in unassembled semi-knockdown vehicle kits (“vehicle kits”) for local assembly in addition to fully assembled vehicles. Some of our vehicle models have a modular design that allows for local assembly in micro factory facilities that require less capital investment. We manufacture our own vehicle kits for the Metro®, Teemak Series and iClassic Series in our facilities in China and leverage the economies of scale of and the supply-chain availability in China to manufacture vehicle kits and fully assembled vehicles in our assembly plants in United States and Germany.States. We believe our distributed manufacturing methodology allows us to execute our business plan with less capital than would be required by the traditional, vertically integrated automotive automotive model and, in the long-term, drive higher profit margins.

Our distributed manufacturing model allows us to focus our efforts on the design of ECVNew Energy Vehicle (“NEV”) models and related technologies while outsourcing various portions of the manufacturing, assembly and marketing of our vehicles to qualified third parties, allowing the Company to operate with lower capital investment than traditional vertically integrated automotive companies. For the lastpast several years, we relied substantially on private label channel partners to assemble and distribute the Metro® from vehicle kits that we manufactured in our facilities. OurSince 2021, we have expanded our vehicle kitsportfolio andbeyond inthe some cases fully assembled vehicles are completedMetro® by leveraging relationships with third party Original Equipment Manufacturers (“OEMs”) manufacturing partnerspartners, and,who complete our vehicle kits and in thesome case fully assembled vehicles, with final assembly of vehicle kits,kits assembledperformed in our own facilities in North America and Europe. Our relationships with such third parties, our “manufacturing partners,” have allowed us to forego expensive capital investments in our own facilities and operate within our historic working capital limitations. Throughout 2022 we began to re-align our distribution and marketing strategy away from relying mainly on third-party channel partners to a distribution model that combines wholly-owned EV Centers with local dealers in order to improve overall operational efficiencies, product quality, brand value, market share, customer support and service. Throughout 2024 we have integrated our sales strategy by combining large distributors with our local EV Centers to develop local dealer networks that directly sell to local customers to improve overall operational efficiencies, product quality, brand value, market share, customer support and service.

Up until December 31, 2021, ourwe primarygenerate revenue streamprimarily camethrough fromthe sellingsale of ECVs through 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 Neibor® 150Avantier™ in Europe, Clubcar, Teemak™, Logistar™ 210210, Logistar™ 260 and iChassis™ in Asia, and Avantier™, Logistar™ 210, Logistar™ 400 and Logistar™ 260 in Asia, Avantier™ and Logistar™ 400450 in the US.US, StartingAvantier™ in Africa. We estimate that in year 2026, we will start generating revenue from 2024,Bison weMotor™, witnessedhydrogen-powered majorheavy-duty increasevehicles onto revenue in the USmeet market asdemand weand increased shiftsales ourfrom focusiChassis™ onthat theconsists Northof Americana marketprogrammable sales, actively“smart” participatechassis inthat theis ECVcurrently incentive programs initiatedused by statethird governments,parties introducedand additionalintegrated newwith modelstheir controlling software for thevarious USautonomous market.driving commercial vehicle applications.

Net revenues ended December 31, 20242025 and 20232024 were generated from (a) vehicles sales, which primarily represent net revenues from sales of Metro® vehicles (including vehicle kits), Logistar™ 200, Logistar™ 210, Logistar™ 210V, Logistar™ 260, Logistar™ 300, Logistar™ 400, Logistar™ 450, Seres 5, Antric®, Avantier™, Logistar™ 100, Neibor® 150100 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.

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 costcost, inventory write-downs and inventory write-downs.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, costs, and manufacturing expenses that related to ECVs, and (ii) other sales, including cost and expenses that are not related to ECV sales.

Cost of goods sold also includes inventory write-downs.write-downs and write-off. Inventories are stated at the lower of cost or net realizable value. The cost of raw materials is determined on the basis 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 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. Inventory write-off, including losses from physical inventory counts or obsolescence where no future economic benefit is expected, are recognized in cost of goods sold in the period incurred. Write-downs are recorded in the cost of goods sold in our statements of operations and comprehensive loss.

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

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. Our selling and marketing expenses decreased during the year, primarily due to decrease of revenue, improved cost efficiencies and more targeted marketing initiatives. 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.

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 use an expected credit loss model for the impairment of accounts receivable as of period ends. We believe the aging of accounts receivable is a reasonable parameter to estimate expected credit loss, and determine 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 measure 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 balance 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 FOBpayment terms, when goods will be delivered only if material payment are received.

In applying the goodwill impairment assessment, we may assess qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. Qualitative factors may include, but are not limited to, economic, market and industry conditions, cost factors and overall financial performance of the reporting unit. If after assessing these qualitative factors, thewe Company determines determine it is “more-likely-than not” that the fair value is less than the carrying value, a quantitative assessment of goodwill is required.

Gross margin of vehicle sales .sales. Gross margin of vehicle sales is defined as gross profit of vehicle sales divided by total revenue of vehicle sales

Net revenues for the year ended December 31, 20242025 were approximately $31.3$18.1 million, ana increasedecrease of approximately $20.9$13.2 million or 200.2%42.2% from approximately $31.3 $10.4 million for the year ended December 31, 2023.2024. The increasedecrease in net revenues in 20242025 was primarily attributed to the increasedecrease in vehicle sales andof approximately $12.1 million due to (i) the average selling price declined from approximately $25,089 to $12,266, mainly due to the suspension of government subsidies, which resulted in a drop in LS400 sales with high average selling price; (ii) the decrease in spare-part sales byof approximately $19.3$1.1 million anddue $1.3to million,the respectively.decrease in sales of iChassis™. The net revenues in USEurope market for the year ended December 31, 20242025 were approximately $19.3$12.2 million, an increase of approximately $19.0$6.5 million from approximately $0.4$5.7 million for the year ended December 31, 2023.2024. The increase in net revenues in USthe Asian market infor 2024the wasyear primarilyended attributedDecember to31, an2025 increase in vehicle sales bywere approximately $19.0$4.0 million.million, with a slight decrease of approximately $0.6 million from approximately $4.6 million for the year ended December 31, 2024.

Geographically, the vast majority of our net revenues were generated from vehicle sales in theAsia U.S.and European Union during the years ended December 31, 2024. 2025. For the year ended December 31, 2024, 2025, net revenues from Europe, North America, Asia (including China) and other regions (including Africa and Latin America)others as a percentage of total revenues was 67.2%, 10.2%, 22.3% and 0.2%, respectively, compared to 18.3%, 66.7%, 14.6% and 0.4%, respectively, compared to 43.8%, 9.8%, 46.1% and 0.3%, respectively for the corresponding period in 2023.2024.

For the year ended December 31, 2024,2025, net revenues from vehicle sales in Europe, North America, Asia (including China) and other regions (including Africa and Latin America) as a percentage of total vehicle net revenues was 72.0%, 10.6%, 17.2% and 0.2%, respectively, compared to 19.6%, 73.5%, 6.6% and 0.3%, respectively, compared to 51.0%, 11.0%, 37.6% and 0.4%, respectively, for the corresponding period in 2023.2024.

Cost of goods sold for the year ended December 31, 20242025 was approximately $23.7$20.4 million, ana increasedecrease of approximately $14.9$3.3 million or approximately 168.9%13.9% from approximately $8.8$23.7 million for the year ended December 31, 2023.2024. The increasedecrease in cost of goods sold in 20242025 was primarily attributable to the increasedecrease ofin cost of vehicle sales and spare-part sales of approximately $8.4$1.0 million and $1.1 million, respectively, the decrease of inventory write-down of approximately $4.0 million, and partially net off by the increase of inventory write-downwrite-off of approximately $5.56$2.8 million. The increasedecrease ofin cost of vehicle sales was mainly causeddue byto the increaseddecreased vehicle sales and spare-part sales during the year 2024.2025.

Gross (Loss) Profit

Gross profitloss for the year ended December 31, 20242025 was approximately $7.6$2.3 million, ancompared increasewith gross profit of approximately $6.0 million from approximately $1.6$7.6 million for the year ended December 31, 2023.2024. For the years ended December 31, 2024 2025 and 2023,2024, our overall gross margin wasdecreased to approximately 24.3%negative and12.8% 15.5%,from positive 24.3%, respectively. Our gross margin of vehicle sales for years ended December 31, 20242025 and 20232024 was 24.9%negative 3.22% and 18.8%,positive 24.9%, respectively. The increasedecrease of our gross profit was causeddue byto the increasedecrease in gross profit of vehicle sales revenuerevenue, spare-part sales and other sales of approximately $19.3$7.5 million, offset by the increase in cost of goods sold of approximately $8.4$0.3 million and inventory$0.04 writemillion, downrespectively. In addition, the gross loss for the year ended December 31, 2025 was impacted by approximately $2.0 million of approximatelyinventory $5.6write-offs million.related to battery equipment.

Selling and marketing expenses for the year ended December 31, 20242025 were approximately $7.4$2.5 million, ana increasedecrease of approximately $3.2$4.9 million or approximately 76.4%65.8% from approximately $4.2 $7.4 million for the year ended December 31, 2023.2024. The increasedecrease in selling and marketing expenses in 20242025 was primarily attributed to the increase in service fees related to global market and distribution channel research and marketing expense of approximately $0.7 million and $2.8 million, respectively, offset by a decrease in share-basedmarketing compensation andexpense, salary and social insurance and service fees related to global market and distribution channel research of approximately $0.1 $3.2 million, $1.0 million and $0.2$0.6 million, respectively.

General and administrative expenses for the year ended December 31, 20242025 were approximately $26.7$20.3 million, a decrease of approximately $6.2 $6.0 million or approximately 19.0%22.7% from approximately $33.0 $26.3 million for the year ended December 31, 2023.2024. The decrease in general and administrative expenses in 20242025 was primarily attributed to (i) athe decrease in share-basedleasing compensationcost, of approximatelyoffice $1.7 million, (ii) a decrease in legalexpense, and professional fee of approximately $3.2 million, (iii) a decrease in salary and social carefreight expense of approximately, approximately $0.7$1.2 million, (iv) a decrease in office expense of approximately $1.1$1.6 million, (v)and a decrease in rental expense of approximately $0.2$0.5 million, offsetrespectively, driven by theongoing increasecost incontrol ROU amortization, freightmeasures and leaseholdimproved improvementoperational depreciation of approximately $0.2 million and $0.2 million, respectively.efficiency.

Research and development expenses for the year ended December 31, 20242025 were approximately $5.2$2.8 million, a decrease of approximately $2.6$2.3 million or approximately 33.2%45.5% from approximately $7.7 $5.2 million for the year ended December 31, 2023.2024. The decrease in research and development expenses in 20242025 was primarily attributed to the decrease in design and development expenditures, share-based compensations and rental expense of approximately $2.7 million, $0.06 million and $0.04 million, offset by the increase in salary and social insurance and others related to miscellaneous expense of approximately $0.3$0.5 million, $1.7 million and $0.1 million.

Interest expense, net, mainly consists of interest income on deposit and wealth management products purchased from banks and interest expense on convertible bonds.bonds, offset by the interest income from deposit and unpaid purchases from HWE. Net interest expense was approximately $0.2 $0.5 million for the year ended December 31, 2024,2025, aan changeincrease of approximately $0.6$0.3 million compared to the approximately $0.4$0.2 million in interest incomeexpense for the year ended December 31, 2023.2024. The decreaseincrease was primarily attributable to (i) a decrease in interest income of approximately $0.5$0.1 million from bank deposit.deposit; (ii) a decrease in interest income of approximately $0.3 million from wealthshort-term managementinvestment; productsoffset purchased from banks;by (iii) offset by a decrease in interest expense to convertible bonds of approximately $0.3$0.2 million.

Other expense net for the year ended December 31, 2024 was approximately $0.5 million, representing a change of approximately $1.1 million compared to approximately $0.5 million of other income, net for the year ended December 31, 2023.2025 was approximately $0.4 million, representing a change of approximately $0.9 million compared to approximately $0.5 million of other expense, net for the year ended December 31, 2024. The change of other income (expense) in 20242025 compared to 20232024 was primarily attributable to i) the increasedecrease in investment loss of approximately $0.7$0.6 million and the decreaseincrease of approximately $0.4 $0.3 million in liquidationlitigation incomecompensation from ShengzhouFujian CenntroNewlongma MachineryAutomotive Co., Ltd. and Zhejiang Xbean Tech Co. Ltd. during the year 2023.Ltd..

Loss from early termination of lease contract for the year ended December 31, 20242025 was approximately $2.2$0.7 million compared to nil$2.2 million of loss from early termination of lease contract for the year ended December 31, 2023.2024.

LossA loss from acquisitionNote of HezheAmendment for the year ended December 31, 20242025 was approximately $0.1$1.8 million compared to $0.1 million of loss from acquisition of Antric for the year ended December 31, 2023.million.

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

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’sour operations. Cash is required primarily to purchase raw materials, repay debts and pay salaries, office expenses and other operating expenses.

As of December 31, 2024,2025, our working capital was approximately $36.8$19.0 million, as compared to a working capital of approximately $75.6$36.8 million as of December 31, 2023.2024. The approximately $38.8 $28.0 million decrease in working capital during 20242025 was primarily due to (i) the decrease of cash and cash equivalents, inventories,accounts short-termreceivable, investment,prepayment the decreaseand inother current assets, inventories and current assets held for salediscontinued and current operating lease liabilitiesoperations of approximately $16.2$8.1 million, $5.2$2.0 million, $4.2$3.1 million, $12.7$2.1 million and $0.8 million,$5.0million, respectively and (ii) the increase in prepaymentshort-term loans and accrued expense and other current assets and contractual liabilities of approximately $1.2$1.0 million and $1.7$5.0 million respectively.

Net cash used in operating activities for the year ended December 31, 20242025 was primarily attributable to (i) our net loss of approximately $44.9$73.0 million and adjusted for non-cash items of approximately $19.9 $55.4 million, which primarily consisted of depreciation and amortization, amortization of operating lease right-of-use asset, sharewritten-down of inventories, provision for credit losses, loss on changes in fair value of convertible promissory notes and derivative liabilities, downwards changes in fair value of equity securities, share- based compensation expense, depreciationloss on inventory write-off and amortization, foreign currency exchange loss, lossgain from early terminationdisposal of leaseCenntro contractElectric andCICS, impairmentS.R.L.’s of slow-moving inventoriesequity of approximately $4.6$2.2 million, $1.9 million, $3.4$2.6 million, $2.0$6.0 million, $1.1$8.5 million, $2.2$26.6 million, $2.8 million, $2.9 million and $6.5$1.2 million, respectively, (ii) the decrease in accountprepayments receivable,and inventories,other assets and operating lease liabilities of approximately $3.7 million and $0.6 million, respectively, (iii) increase in accrued expense and other current liabilities and operating lease liabilities of approximately $1.43$2.4 million, $7.9 million, $1.7 million and $4.0 million, respectively, (iii) increase in deferred revenue and prepayments and other assets of approximately $0.5 million and $0.2 million, respectively.million.

Net cash providedused byin investing activities was approximately $4.1$0.9 million for the year ended December 31, 2024.2025. Net cash provided byused in investing activities for the year ended December 31, 20242025 was primarily attributableconsisted of cash paid in purchase of plant and equipment, loans provided to cashthird received from redeeming regular financial investments in 2024 in the amountparties of approximately $8.4$0.8 million and approximately$0.5 $1.6 millionmillion, in redemption of equity securities investment,respectively, offset by the cashproceeds paidfrom fordisposal regularof financialproperty, investmentsplant and equipment and repayment of loans by related parties of approximately $4.2$0.2 million and $0.2 million, approximately $0.7 million in long-term regular financial investments and approximately $0.4 million in acquisition of 80% of Hezhe's share.respectively.

Net cash provided by financing activities was approximately $1.2$4.9 million for the year ended December 31, 2024.2025. Net cash provided by financing activities for the year ended December 31, 20242025 was primarily attributable to the proceeds from bank loansloans, ofrelated approximately $0.7 millionparties and the loans proceeds from third parties of approximately $0.7$3.2 million, $1.0 million and $2.1 million, offset by the repayment of loans to third parties of approximately $0.1$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.

Net revenues during the threesix 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™ 100,200, Teemak™, Logistar™ 210, Logistar™ 260, Logistar™ 450, Antric®, Avantier™, Logistar™ 100100, Clubcar 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.

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-downscost and inventory write-off.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.

Selling and Marketing ExpenseExpenses

We adopted ASC 326 Financial Instruments – Credit Losses using the modified retrospective approach through a cumulative-effect adjustment to accumulated deficit from January 1.1, 2023 and interim periods therein. We used an expected credit loss model for the impairment of accounts receivable as of period ends. We believesbelieve 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.

IncomeGain (loss) from long-term investments

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 threesix months ended March 31,June 30, 2026 and 2025.

Comparison of the Three and Six months ended MarchJune 31,30, 2026 and 2025

Net revenues for the threesix months ended MarchJune 31,30, 2026 were approximately $1.2$7.4 million, a decrease of approximately $0.9$1.1 million or 43.4%13.1% from approximately $2.1$8.5 million for the threesix months ended MarchJune 31,30, 2025. The decrease in net revenues in 2026 was primarily attributeddue to athe decrease in vehicle sales byof approximately $1.2 million and other sales by approximately $0.1$2.6 million, offset by anthe increase in spare-part sales by approximately $0.4$1.6 million.million due to the increase in sales of iChassis™. The net revenues in Europe market for the threesix months ended MarchJune 31,30, 2026 were approximately $0.4$2.9 million, a decrease of approximately $0.3 $2.7 million from approximately $0.7$5.6 million for the threesix months ended MarchJune 31,30, 2025. TheWhile the net revenues in AsiaAmerica market for the threesix months ended March 31,June, 2026 were approximately $0.7$1.8 million, arepresenting decreasean increase of approximately $0.5 $0.9 million from approximately $1.2$1.0 million for the threesix months ended MarchJune 31,30, 2025.

For the threesix months ended MarchJune 31,30, 2026, we also sold 72183 iChassis™ units, other than the 57563 ECVs.

Geographically, the vast majority of our net revenues were generated from vehicle sales in AsiaEuropean during the threesix months ended MarchJune 31,30, 2026 and 2025.2026. For the threesix months ended June March 31,30, 2026, net revenues from Europe, North America, Asia (including China) and AsiaAfrica as a percentage of total revenues was 29.4%,39.5%, 5.8%,24.6%, 30.8% and 54.9%,5.1%, respectively, compared to 65.8%, 32.9%,11.2%, 12.3%,22.6% and 54.8%,0.4%, respectively for the corresponding period in 2025.

The vast majority of our net revenues were generated from vehicle sales in European during the three months ended June 30, 2026. For the three months ended MarchJune 31,30, 2026, net revenues from vehicle sales in Europe, North America, Asia (including China) and AsiaAfrica as a percentage of total vehicle net revenues was 48.9%,41.4%, 10.4%,28.3%, 26.1% and 21.3%,4.2%, respectively, compared to 33.1%, 9.5%,76.8%, 10.9%, 11.8% and 57.4%,0.5%, respectively,respectively for the corresponding period in 2025.

Cost of goods sold for the threesix months ended MarchJune 31,30, 2026 was approximately $1.0$6.8 million, a decrease of approximately $0.8$1.5 million or approximately 46.5%17.7% from approximately $1.8$8.2 million for the the threesix months ended MarchJune 31,30, 2025. The decrease of cost of goodsvehicle soldsales was mainly caused by the decreaseddecrease in the cost of vehicle sales of approximately $1.1$2.7 million, offset by the increasedincrease in the cost of spare-part sales of approximately $0.3$1.5 million.

Gross Profit/(Loss)

Gross profit for the threesix months ended MarchJune 31,30, 2026 was approximately $0.2$0.6 million, aan decreaseincrease of approximately $0.1$0.3 million orfrom approximately 26.3% from $0.3 million of gross profit for the threesix months ended June 30, 2025. For the six months ended March 31,June 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 31,30, 2026 and 2025, our overall gross margin was approximately 19.6%8.7% and 15.0%,3.5%, respectively. Our gross margin of vehicle sales for the threesix months ended MarchJune 31,30, 2026 and 2025 was 18.5%8.1% and 10.8%,1.3%, respectively. respectively.The increase of our overall gross profit was caused by the increase in the gross profit of our vehicle sales of approximately $0.3 million.

Selling and marketing expenses for the threesix months ended MarchJune 31,30, 2026 were approximately $0.3$1.0 million, awhich decreaseremained ofstable compared with approximately $0.5 million or approximately 62.1% from approximately $0.8$1.0 million for the three six months ended March 31,June 30, 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.

General and administrative expenses for the threesix months ended MarchJune 31,30, 2026 were approximately $3.4$7.2 million, a decrease of approximately $1.5$2.9 million or approximately 30.9%28.3% from approximately $4.9 $10.1 million for the three six months ended MarchJune 31,30, 2025. The decrease in general and administrative expenses in 2026 was primarily attributed to thea decrease in salary and social insuranceinsurance, leasing cost, and leaseshare-based expenses,compensation of approximately $0.5 million, million$1.1 million, and $0.3$0.7 million, respectively, reflecting the Company’s ongoing cost optimization initiatives.

Research and development expenses for the threesix months ended MarchJune 31,30, 2026 were approximately $0.5$0.9 million, a decrease of approximately $0.3$0.5 million or approximately 39.0%34.2% from approximately $0.8 $1.4 million for the three six months ended MarchJune 31,30, 2025. The decrease in research and development expenses in 2026 was primarily attributed to the decrease in salary expense and share-based compensations of approximately $0.3$0.4 million and $0.1 million, partially reflecting timing differences in project development activities.respectively.

Other income (expense) income,, net

Other expense,income, net for the threesix months ended MarchJune 31,30, 2026 was approximately $0.3$0.6 million, andrepresenting an increase of approximately $0.4 million compared to approximately $0.2 million of other income, net was $0.7 million of for the three six months ended MarchJune 31,30, 2025. The changeincrease of other (expense) income in 2026 compared to 2025 was primarily attributable to: (i)the foreignincrease currencyin exchangeincome lossfrom early termination and modification of $0.1 million in 2026 compared with Foreign currency exchange gain of $0.4 million in 2025; and (ii) a decreaselease of approximately $0.8 million, and partially offset by lawsuit compensation of Sevic litigation of $0.2 million in litigationand compensationloss fromon Fujianliquidation Newlongmaof Automotive$0.2 Co., Ltd..million.

Adjusted EBITDA for the three and six months ended MarchJune 31,30, 2026 and 2025

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

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 helphelps management with a measure of our core operating performance over time by removing items that are not related to day-to-day operations.

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 and in the mid-April 2026 provided significant funding for the Company’s operations. Our Cash is required primarily to purchase raw materials, repay debts and pay salaries, office expenses and other operating expenses.

As of MarchJune 31,30, 2026 we had approximately $3.6$4.3 million in cash and cash equivalents and approximately $1.2$1.5 million of accounts receivables as compared to approximately $8.5$6.0 million in cash and cash equivalents and $3.1$3.2 million in accounts receivable as of MarchJune 31,30, 2025. For the threesix months ended MarchJune 31,30, 2026 and 2025, net cash used in operating activities was approximately $2.8$5.5 million and $5.0 $9.4 million, respectively.

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 ourthis report.10Q. 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 andapplicable, (ii) the establishment and development of local distribution channelsassembly facilities in the United States and the European Union.Union and (iii) additional plants and equipment for the expansion of our Changxing factory. Actual results could vary materially as a result of a number of factors, including:

In the long-term, we plan to regionalize the manufacturing and supply chain relating to certain components of our ECVs in theseveral geographic markets in which our ECVs are sold. In the long-term, throughmarkets. Through our supply chain development know-how, we intend to establish supply chain relationships especially in the 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 customerscustomers, especially to expand our after-sales-market services offerings.

We intend to further expand our technology through continued investment in research and development. Since inception in 2013 through MarchJune 31,30, 20262026, we have spent over approximately $97.2$97.7 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.

As of MarchJune 31,30, 2026, our working capital was approximately $18.4$16.4 million, as compared to a working capital of approximately $19.0 million as of December 31, 2025. The approximately $0.6$2.5 million decrease in working capital during 2026 was primarily due to (i) the decrease ofin cashinventories, net and cashassets equivalentsheld for sale, current of $3.5 million and $2.7 million;(ii) increase in accrued expenses and other current liabilities and contractual liabilities of $2.3 million and $2.7 million; and partially offset by (i) the increase in prepayment and other current assets of approximately $0.9$2.2 million, and (ii) the decrease in accounts payable, short-term loans, convertible promissory notes and current portion of long-term loans, operating lease liabilities, current and liabilities held for sale, current of $0.8 million, $1.3 million, $1.3 million, $0.5 million and $2.1 million.

Our net cash used in operating activities was approximately $2.8$5.5 million,million $5.0and $9.4 million for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively.

Net cash used in operating activities for the threesix months ended MarchJune 31,30, 2026 was primarily attributable to (i) our net loss of approximately $3.9$14.5 million and adjusted for non-cash items of approximately $1.1$5.5 million, which primarily consisted of depreciationloss andfrom amortizationliquidation andof discontinued operations, impairment loss, share based compensation expense , depreciation and amortization, amortization of operating lease right-of-use asset and loss in change in fair value of convertible promissory notes and derivative liability of approximately $0.5$4.5 million, $2.9 million, $0.7 million, $1.1 million, $0.6 million and $0.7$1.3 millionmillion, respectively, (ii) the decrease in inventories and contractual liabilities, of approximately $2.8 million, and $2.6 million, respectively, (iii) increase in deferred revenue and prepayment and other current assets of approximately $1.4 million and $0.5 million, respectively, (iii) decrease inassets, accounts payable andpayable, accrued expense and other current liabilities and of approximately $0.7$1.0 million , $0.9 million, and $0.4$2.5 million, respectively.