Cenntro Inc.: Form 10-K for the period ended Dec 31, 2025

Overview

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, 2025, we have developed six series of commercial vehicle models, Metro®, Logistar™, iChassis™, Avantier™, Teemak™, Bison Motor™ and Antric 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™ platform that consists of a programmable “smart” chassis that is currently used by third parties and integrated with their controlling software for various autonomous driving commercial vehicle 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. Battery prices 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 BNEF survey in 2025. By emphasizing investments in technology, supply-chains, vehicle distribution and aftermarket support, we have begun making our own battery packs, preparing battery cell production, by building up vehicle distribution and service networks, and introducing our cloud-based parts distribution systems. As investment in battery technology continues to increase, we believe these cost reductions outlined by BNEF will continue to improve the economics of battery-powered ECVs, like ours.

In addition to our investment in battery packing operations, 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 iChassis 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 the United States. We also establish business relationships to assembly vehicles from vehicle kits in Europe with local vehicle assembly facilities. 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 model and, in the long-term, drive higher profit margins.

Our distributed manufacturing model allows us to focus our efforts on the design of New 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 past 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. Since 2021, we have expanded our vehicle portfolio beyond the Metro® by leveraging relationships with third party Original Equipment Manufacturers (“OEMs”) manufacturing partners, who complete our vehicle kits and in some case fully assembled vehicles, with final assembly of vehicle kits performed 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 and 2023, 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 Company-operated EV Centers with local distribution channels and dealer networks, with goals of improving overall operational efficiencies, product quality, brand value, market share, customer support and service.

During 2024 and 2025, the Company refined its distribution strategy to better align with regional market developments and long-term capital efficiency objectives. In European markets, where competitive and macroeconomic conditions warranted a more asset-light approach, the Company transitioned from Company-operated EV Centers to a distribution partner-led model, enabling greater operational flexibility and more efficient deployment of resources. In North America, the Company distributes its vehicles primarily through local dealer networks, supported by Company-operated EV Centers that serve as regional anchors for brand presence, customer service, and after-sales support, with local assembly facilities maintained in Barstow, California and Freehold, New Jersey. The resulting blended model, a dealer-led distribution network complemented by Company-operated EV Centers in North America, and a channel partner-driven approach in international markets, reflects the Company’s ongoing commitment to optimizing its go-to-market strategy in response to the specific commercial opportunities and challenges of each market region.

Corporate Structure and History

Cenntro Inc. was incorporated in the State of Nevada on March 9, 2023, under The Nevada Revised Statutes (the “NRS”). Our principal executive offices are located at 33 Wood Avenue South, Suite 600, PMB #3572 Iselin, New Jersey, 08830, and our telephone number is (732) 820-6757. Our current registered office and current principal place of business in Nevada are located at 701 S. Carson Street, Suite 200, Carson City, NV 89701. Our website address is www.cenntroauto.com (http://www.cenntroauto.com).

Cenntro is a holding company incorporated in Nevada and headquartered in New Jersey. As a holding company with no material operations of its own, Cenntro Inc. conducts operations through its subsidiaries in the United States, Australia, Europe, Mexico, Hong Kong, the Dominican Republic, and in the People’s Republic of China, which we refer to as the PRC or China.

On November 5, 2021, our predecessor Naked Brand Group Limited (“NBG”) entered into an acquisition agreement with Cenntro Automotive Group Limited (“CAG”) to effect a combination through reverse merger which occurred on December 30, 2021 (the “Combination”), whereby NBG purchased ordinary shares of CAG to effect the Combination using 174,853,546 ordinary shares (the “Acquisition Shares”) serving as good and valuable consideration. Immediately after the closing of the Combination, we changed our name from “Naked Brand Group Limited” to “Cenntro Electric Group Limited” and the business conducted by Cenntro became the business conducted by the Company. The transaction was accounted for as a reverse recapitalization in which Cenntro was determined to be the accounting acquirer.

On February 27, 2024, our predecessor CEGL, a public company incorporated under the laws of Australia completed the Redomiciliation of CEGL. As a result of the Redomiciliation, the jurisdiction of incorporation of the ultimate parent company of the Cenntro group of companies was changed from Australia to Nevada, and CEGL became a subsidiary of the Company.

Prior to June 30, 2022, the Company historically qualified as a ‘foreign private issuer’ for purposes of reporting under the Exchange Act and filing registration statements under the Securities Act. As of June 30, 2022, or the end of the Company’s second fiscal quarter in 2022, the Company ceased to qualify as a “foreign private issuer” as defined in Rule 405 under the Securities Act and Rule 3b-4 under the Exchange Act. Accordingly, effective as of January 1, 2023, the Company became obligated to file reports with the SEC as a “domestic issuer” under the Securities Act.

The following diagram illustrates our current corporate structure as of the date of this Annual Report:

On March 22, 2013, Cenntro Motor Corporation (“CMC”) was registered in the State of Delaware. Mr. Peter Wang was the founder and sole director of CMC. CMC conducted business to design and develop electric utility vehicles.

On January 28, 2014, Cenntro Automotives Group Limited (“CAG BVI”) was formed in British Virgin Islands to conduct electric vehicle (“EV”) related business worldwide outside of U.S.A. On January 29, 2014, CAG BVI acquired CMC. CMC changed its name from “Cenntro Motor Corporation” to “Cenntro Motors Corporation” on August 5, 2014, and further changed from “Cenntro Motors Corporation” to “Cenntro Automotive Corporation” on October 7, 2014.

On July 20, 2015, CAG BVI acquired Sinomachinery Equipment Limited, a Hong Kong corporation with its manufacturing subsidiary in PRC, Zhejiang Sinomachinery. Sinomachinery Equipment Limited was renamed Simachinery Equipment Limited on November 2, 2015. Zhejiang Sinomachinery registered Zhejiang Xbean Tech Co. Ltd. in PRC on December 28, 2016.

On August 22, 2014, Cenntro Motors Group Limited was formed in Cayman Islands, which was renamed as Cenntro Automotive Group Limited (“CAG Cayman”) on October 15, 2014.

On February 15, 2016, CAG Cayman formed its subsidiary, CAG HK (formerly Cenntro Automotive (Hong Kong) Limited), in Hong Kong. On March 2, 2016, CAG HK changed its name to “Cenntro Automotive Group Limited”. Subsequently CAG HK took over all Hong Kong and mainland China subsidiaries of CAG Cayman.

On May 6, 2015, CAG HK registered Autotech in PRC.

On May 26, 2016, CAG Cayman merged with CAG BVI and CAG Cayman being the surviving entity. After the merger, all shareholders of CAG BVI automatically became the shareholders of CAG Cayman and the percentage of ownership unchanged. CAG Cayman inherited and took over all existing rights, assets and liabilities of CAG BVI. Subsequently CAG BVI was closed and cancelled. CAG Cayman became the controlling parent company to continue carrying out the business plan and operations.

In August 2016, Autotech acquired 100% equity interest of Hengzhong Tech in PRC.

On June 5, 2017, CAG HK registered Ronda in PRC.

In January 2018, Autotech acquired 100% equity interest of Shengzhou Machinery in PRC.

On December 19, 2018, CAG HK registered Tooniu (formerly Zhejiang Tooniu Tech Co., Ltd.) in PRC, which was relocated and renamed Jiangsu Tooniu Tech Co., Ltd. on November 24, 2022.

On January 20, 2021, CAG HK registered Zhejiang Machinery in PRC to take over and replace Shengzhou Machinery, which is now dormant.

On March 3, 2022, CEGI acquired 100% shares of CEGE (formerly Blitz F22-1 GmbH), a shell company registered on January 13, 2022 in Germany. On November 24, 2023, CEGI transferred 100% shares of CEGE to CEBV.

On March 23, 2022, CEGI acquired 65% of equity interest in CAE (formerly Tropos Motors Europe GmbH), a wholly owned subsidiary of Mosolf SE & Co. KG, a limited liability partnership incorporated under the laws of Germany, (“Mosolf”). On January 31, 2023, CEGI further acquired from Mosolf the remaining 35% equity interest in CAE.

On May 23, 2022, we dissolved both of our previously dormant Nevada subsidiaries Naked Brand Group, Inc. and Naked Inc.

On June 8, 2022, Cennatic was incorporated under the laws of the state of Delaware as a wholly-owned subsidiary of CAC. Cennatic in turn incorporated Cennatic MX in Mexico on August 24, 2022. CAC later transferred all shares in Cennatic Power to CEGI on September 30, 2022.

On November 30, 2022, CAC set up CEG DOM, a 99% owned subsidiary in Dominican Republic.

On December 12, 2022, CEGI incorporated its fully subsidiary CEBV in the Netherlands. CEBV further established CEA, a wholly-owned subsidiary in Turkey on February 21, 2023.

On December 16, 2022, CEGE invested in Antric GmbH (“Antric”) and became a 25% shareholder of Antric. On August 31, 2023, CAE acquired the other 75% shares of Antric from Eric Diederich and Moritz Heibrock, the original founders of Antric.

On January 16, 2023, CAC incorporated its wholly-owned subsidiary CA COL in Colombia.

On January 31, 2023, CEGI incorporated its wholly-owned subsidiary Teemak in the state of Delaware. On May 17, 2023, Teemak formed its wholly-owned subsidiary Teemak HK in Hong Kong. On March 6, 2025, Teemak changed its name to Bison Motors Inc.

On February 14, 2023, CEGI acquired all shares of Avantier, a company incorporated on November 17, 2017, in the state of Delaware with no operations at nil consideration. On March 13, 2023, Avantier formed its wholly-owned subsidiary Avantier HK in Hong Kong.

On March 29, 2023, CAC incorporated its wholly-owned subsidiary, CE COL, in Colombia.

On May 8, 2023, CEBV established its wholly-owned subsidiary, CEV Italy, in Italy.

On May 19, 2023, CEBV acquired 100% of equity interest in CE SPAIN in Spain from an individual Don Yong Wang.

On May 31, 2023, Zhejiang Xbean Tech Co., Ltd. was deregistered.

On August 3, 2023, CEGI incorporated its wholly-owned subsidiary, PEC, in the state of Delaware.

On August 24, 2023, CEGI incorporated its wholly-owned subsidiary, CTC, in the state of California.

On March 9, 2023, Cenntro Inc. was incorporated under the laws of the state of Nevada.

On February 27, 2024, pursuant to the Redomiciliation CEGL became a wholly-owned subsidiary of Cenntro Inc. As a result of the Redomiciliation, the jurisdiction of incorporation of the ultimate parent company of the Cenntro group of companies was changed from Australia to Nevada, and CEGL became a subsidiary of the Company.

On June 23, 2021, Hangzhou Ronda acquired 20% interest of Hangzhou Hezhe Energy Technology Co., Ltd. (“Hangzhou Hezhe”). On May 8, 2024, the Company entered into a new equity investing agreement to acquire another 60% of Hangzhou Hezhe’s equity interest. On July 15, 2025, Hangzhou Hezhe incorporated its wholly-owned subsidiary, Hangzhou Hezhe International Trading co., Ltd.

On April 24, 2025, Cenntro Automotive Corporation disposed of all its remaining equity interests in Cenntro Electric CICS, S.R.L, and the entity is no longer owned or controlled by Cenntro Group.

On September 22, 2025, CE SPAIN changed its corporate name to Avantier Motors Spain, S.L., which was registered with the Mercantile Registry on November 26, 2025.

On October 22, 2025, Zhejiang Sinomachinery Co., Ltd. was deregistered.

On November 12, 2025, Shengzhou Cenntro Machinery Co., Ltd. was deregistered.

On January 1, 2026, Cenntro Inc. incorporated its wholly-owned subsidiaries, Averra Electric Mobility Inc and Autotrax.ai Inc. in the state of Delaware.

On January 14, 2026, Cenntro EV Center Italy S.R.L. was deregistered.

Holding Foreign Companies Accountable Act

Pursuant to the Holding Foreign Companies Accountable Act (the “HFCAA”), if the Public Company Accounting Oversight Board (the “PCAOB”), is unable to inspect an issuer’s auditors for three consecutive years, the issuer’s securities are prohibited to trade on a U.S. stock exchange. The PCAOB issued a Determination Report on December 16, 2021 (the “Determination Report”) which found that the PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in: (1) mainland China of the People’s Republic of China because of a position taken by one or more authorities in mainland China; and (2) Hong Kong, a Special Administrative Region and dependency of the PRC, because of a position taken by one or more authorities in Hong Kong. Furthermore, the Determination Report identified the specific registered public accounting firms which are subject to these determinations. On December 23, 2022, United States Senate passed the Accelerating Holding Foreign Companies Accountable Act (the “AHFCAA”), which amended the HFCA Act by requiring the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three. If trading of our shares of Common Stock is prohibited under the HFCA Act in the future because the PCAOB determines that it cannot inspect or fully investigate our auditor at such future time, Nasdaq may determine to delist our Common Stock.

On August 26, 2022, the PCAOB signed the SOP Agreements with the CSRC and China’s Ministry of Finance. The SOP Agreements established a specific, accountable framework to make possible complete inspections and investigations by the PCAOB of audit firms based in mainland China and Hong Kong, as required under U.S. law.

On December 15, 2022, the PCAOB announced its completion of inspections and investigations of PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong in 2022. Accordingly, the PCAOB vacated its Determination Report. As a result, we do not expect to be identified as a “Commission-Identified Issuer” under the HFCAA for the fiscal year ended December 31, 2022, after we file our annual report on Form 10-K for such fiscal year. However, whether the PCAOB will continue to conduct inspections and investigations of PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong completely to its satisfaction is subject to uncertainty and depends on several factors out of our, and our auditor’s, control. Such factors include positions taken by authorities of the PRC. We expect the PCAOB will continue to demand complete access to inspections and investigations to accounting firms headquartered in mainland China and Hong Kong in the future and the PCAOB has stated that it has made plans to resume regular inspections in early 2023 and beyond.

Under the HFCAA, the PCAOB is required to make its determination on an annual basis with regards to its ability to fully inspect and investigate accounting firms based in mainland China and Hong Kong. The possibility of being a “Commission-Identified Issuer” under the HFCAA and risk of delisting could continue to adversely affect the trading price of our securities. Should the PCAOB again encounter impediments to inspections and investigations in mainland China or Hong Kong as a result of positions taken by any authority in either jurisdiction, the PCAOB will issue new determinations under the HFCAA as and when appropriate.

Our current auditor, GGF CPA LTD (“GGF”), (fka Guangzhou Good Faith CPA LTD), the independent registered public accounting firm that issues the audit report included in this annual report on Form 10-K, as a firm registered with the PCAOB (PCAOB ID:2729), is subject to laws in the U.S. pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards. GGF, whose audit report is included in this report, is headquartered in Guangzhou, China. While our auditor is based in the PRC and is registered with PCAOB and subject to PCAOB inspection, in the event it is later determined that 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 of our securities to be prohibited under the HFCA Act, and ultimately result in a determination by a securities exchange to delist the Company’s securities. The PCAOB continues to demand complete access in mainland China and Hong Kong moving forward and resumed regular inspections in 2023 and beyond, as well as to continue pursuing ongoing investigations and initiate new investigations as needed. The PCAOB has also indicated that it will act immediately to consider the need to issue new determinations with the HFCA Act, if needed.

Transfers of Cash to and from Our Subsidiaries

Cash transfers through the Company since inception are primarily attributed to: 1) capital contribution from CEGL to its subsidiaries; 2) shareholder loans from CEGL to its subsidiaries; or 3) payment from one group company to another through intercompany transactions. During the year ended December 31, 2025, the total material cash transfer of other assets within the organization was approximately USD 2,598,709. An aggregate amount of USD 1,809,922 was transferred from operating subsidiaries to the holding companies as repayment to intercompany advances. As of the date of this Annual Report, none of our operating subsidiaries have made any dividend or distributions to the holding company or through the intermediate holding companies, or to investors including U.S. investors.

Our subsidiaries are permitted to pay dividends to us only out of their accumulated profits. Additionally, each of our subsidiaries in the PRC must make appropriations from after-tax profit to a statutory surplus reserve fund. The reserve fund requires an annual appropriation of 10% of after-tax profit (determined under accounting principles generally accepted in the PRC at each year-end) after offsetting accumulated losses from prior years until such reserve reaches 50% of the subsidiary’s registered capital. The reserve fund can only be used to increase the registered capital and eliminate further losses of the respective companies under PRC regulations. These reserves are not distributable as cash dividends, loans or advances. A PRC company cannot distribute any profits until any losses from the prior fiscal years have been offset. Profits retained from prior fiscal years may be distributed together with distributable profits from the current fiscal year. Total restrictions placed on the distribution of the Company’s PRC subsidiaries’ net assets were approximately $28.5 million, or 72% of the Company’s total consolidated net assets as of December 31, 2025.

In addition, under the regulations of the State Administration of Foreign Exchange of the PRC (“SAFE”), Renminbi is not convertible into foreign currencies for capital account items, such as loans, repatriation of investments, and investments outside of China, unless the prior approval of the SAFE is obtained and prior registration with the SAFE is made.

Our Industry

The ECV Market

According to a July 2025 report by Precedence Research, the global EV market was valued at approximately $988.70 billion in 2025 and is projected to reach approximately $2,529.10 billion by 2034, representing a compound annual growth rate of 11% from 2025 to 2034. Factors such as increases in demand for fuel-efficient, high-performance and low-emission vehicles, along with stringent government rules and regulations toward vehicle emissions are expected to drive the growth of the electric vehicle market. In comparison, IMARC Group projects the global electric commercial vehicle (ECV) market to reach revenues of $190.9 billion in 2025, with a steady annual growth rate (CAGR 2025-2033) of 25.56%, reaching $1,298.26 billion by 2033.

Many governments around the world, including the United States, China, Germany, and various other European countries, are regulating vehicle emissions and fuel economy standards and offering incentives to commercial and government operators to purchase more energy efficient vehicles. The mitigation of greenhouse gas emissions from internal combustion engine (“ICE”) vehicles is an integral part of various nations’ strategies to meet the objectives of the 2015 Paris Agreement, which the United States rejoined in February 2021. As of the date of this Annual Report, a growing number of countries have made announcements regarding their intention to phase out ICE vehicles include the following:

• China: Plans for battery-electric, hybrid, and fuel cell vehicles to constitute 20% of new car sales by 2025 and a majority by 2035;
• France: Aims to phase out ICE vehicle sales by 2040;
• Germany: No registration of ICE vehicles by 2035 (aligns with the EU’s regulations); cities can ban diesel cars;
• India: 30% of vehicle sales to be electric by 2030, with incentive programs in place;
• Japan: Incentive program in place for EV and hybrids sales; and
• United Kingdom: Ban the sale of new ICE cars starting in 2035.

In the United States, the former Biden administration announced plans to achieve net-zero emissions economy-wide by 2050. In 2021, President Biden signed an executive order to replace over 600,000 civilian federal vehicles with U.S.-made zero-emission models and set a target to make half of all new vehicles electric by 2030. The administration also aimed to install over 500,000 EV chargers nationwide and expand tax credits and incentives for EVs and related manufacturing. In November 2021, President Biden signed a $1.2 trillion infrastructure bill, which included $7.5 billion for EV charging infrastructure and $6 billion for domestic battery production and recycling. In August 2022, the Inflation Reduction Act was enacted, offering a 30% tax credit for commercial ECVs and allocating additional funds under the Diesel Emission Reduction Act to support the commercial EV market. While federal policy support varies, many states are independently driving EV adoption through financial incentives, emissions regulations, and infrastructure investments. Several states in the United States have also announced the ban of new ICE vehicles including California and New York by 2035. The state of California is leading the nation with stringent emission standards and a target to phase out the sale of new gas-powered cars by 2035. The California Clean Vehicle Rebate Project (CVRP) offers rebates of up to $7,500 for EV purchases.

Incentive programs and new regulations affecting passenger and commercial vehicles vary by country. However, there is strong sentiment to reduce global greenhouse gas emissions from leading governments. For heavy-duty vehicles, the European Union mandated a 15% reduction in CO2 emissions (from 2019 levels) by 2025 and a 30% reduction target (from 2019 levels) by 2030. Also, by 2025, manufacturers will be required to ensure that at least a 2% market share of the sales of new vehicles is made up of zero-and-low-emission vehicles to counteract steadily increasing road traffic emissions. For light-duty vehicles, the European Union has mandated a 15% reduction in CO2 emissions by 2025 and a 31% reduction target by 2030. The European Union may impose financial penalties on vehicle manufacturers for failure to achieve certain CO2 emission targets imposed on such manufacturers, with such penalties scaling upward based on the level of CO2 emission exceedance for their vehicles. We believe that increasing government regulations and incentives, together with shifting consumer preferences, will encourage significant growth in the market for ECVs.

The Hydrogen Vehicle Market

The global hydrogen vehicle market is projected to experience significant growth over the next few decades, driven by government incentives, advancements in fuel cell technology, and increasing environmental regulations. According to Markets and Data, the market is forecasted to grow at a CAGR of 31.94% from 2025 to 2032, reaching approximately $19.92 billion by 2032. According to Fortune Business Insights, the market is segmented by range, with long-range hydrogen vehicles (above 500 miles) expected to see the highest growth due to demand for commercial fleets, trucks, and intercity buses. The North American market, led by California, is also seeing growth due to strong policy support and investments in refueling infrastructure. ​

United States: The Bipartisan Infrastructure Law has allocated $9.5 billion for clean hydrogen development, with additional state-level incentives such as California’s Clean Vehicle Rebate Project and the Low Carbon Fuel Standard.

European Union: The EU Hydrogen Strategy aims to install at least 40 GW of electrolyzer capacity by 2030. Countries like Germany, France, and the UK have introduced grants and tax incentives to promote hydrogen mobility.

China: The government offers subsidies of up to $19,000 per hydrogen vehicle and aims to deploy 1 million fuel cell vehicles by 2035.

Japan & South Korea: These nations provide heavy incentives for hydrogen infrastructure and have ambitious targets for fuel cell vehicle adoption and refueling stations expansion​

Last-mile Delivery and City Services

The last-mile delivery market in the United States and the European Union is quickly expanding, driven by the rapid growth in the e-commerce industry resulting from consumer preference for faster deliveries, significant increases in online purchases after 2020 and governmental focus on low emission urban logistics models. We believe consumer behavior will accelerate the online transformation of retail businesses and the expected need for efficient last-mile delivery ECVs.

We believe there is a growing sustainability trend among companies to reduce their carbon footprint and incorporate ECVs into their commercial delivery fleets. A number of well-established companies, such as Amazon, FedEx, UPS and Walmart, have made announcements about their intentions to reduce CO2 emissions and/or become carbon-neutral by a specified future date. A number of these companies have committed to purchase large quantities of ECVs (some of which are not yet commercially available) to transition their fleets over the next several years, with a focus on enhancing their last-mile delivery services, as well as lowering their operating costs, all while reducing their carbon footprint.

Our Products

As an electric commercial vehicle (“ECV”) provider, we have developed a full line of vehicle models to meet the market demand and fit various commercial needs and applications. As of the date of this Annual Report, we offer six series of commercial vehicle models and some electric charged products that are ready to be sold on the global markets. We are also developing second generation hydrogen fuel cell Class 8 semi-tractor and have assembled the first prototype in California.

The Metro®

The Metro® is a customizable ECV used in commercial applications such as city utility services (i.e., street cleaners, firetrucks and garbage trucks) and last-mile delivery. The Metro® was “born electric,” meaning that, unlike many other ECVs that are converted from existing ICE designs, the Metro® was purpose-built from inception to be highly energy efficient and providing for a greater range, implementing a number of proprietary design elements, including a lightweight structure and efficient power system.

The Metro® chassis is designed with a unique cab-forward feature. By moving the cab of the Metro® forward over the front wheels, we have been able to increase its cargo volume ratio and decrease the cost of materials used in its manufacturing. In addition, the chassis of the Metro® has been designed to support a variety of fittings, allowing the vehicle to be used for a number of different applications, which we believe is a feature rarely offered by other ECV manufacturers and gives us the opportunity to market the Metro® to a wider array of potential end-users. We believe our lightweight chassis structure and cab-forward design of the Metro® enable greater payload and cargo volume with lower vehicle weight and smaller vehicle size, compared to other like-size ECVs. Our modular vehicle design enables us to manufacture a wide range of variations of Metro® models around a uniform chassis structure.

The Metro® complies with all applicable vehicle safety standards related to light-duty commercial vehicles in North America and the Asian and European countries in which it is sold. The Metro® has passed N1 homologation requirements in Asia. We have obtained EU Small Series Type Approval for our new model of the Metro® under N1 vehicle classification, which includes an annual sales limitation of 1,500 units into the European Union market. In the United States, the Metro® qualifies as a Neighborhood Electric Vehicle (an “NEV”) with low-speed modifications, and, as a result, is not required to pass the United States high speed front-end impact test. NEVs are built to have a top speed of 25 miles per hour (40 km/h) and have a maximum loaded weight of 3,000 lbs. (1,400 kgs) and are classified by the United States Department of Transportation as low-speed vehicles. This qualification generally limits the Metro® to roads with posted maximum speed limits of 35 miles per hour (56 km/h). Under the EU Small Series N1 Type Approval, the Metro® does not have comparable speed limitations in the European Union.

We offer the Metro MR, an electric compact utility vehicle designed for last-mile delivery and urban logistics applications, particularly in densely populated environments. The Metro MR features a compact form factor and is designed to support efficient operations in narrow streets and high-traffic urban areas, making it suitable for applications such as parcel delivery, food distribution, and municipal services. We have developed customized versions of the Metro MR tailored to specific regional requirements, including the Japanese market, where regulatory standards and operational conditions differ from other regions. In January 2025, we announced that we secured an order for 500 customized Metro MR vehicles for delivery in Japan, reflecting demand for small-format electric commercial vehicles in urban markets and supporting our expansion into Asia.

Logistar™ Series

Logistar™ Series are the vehicles for on-road applications with the gross vehicle weight rate (“GVWR”) under 19,500 lbs. It consists of Logistar 100 (LS100), Logistar 200 (LS200), Logistar 210 (LS210), Logistar 260 (LS260), Logistar 300 (LS300), Logistar 400 (LS400), and Logistar 450 (LS450). LS100, LS200, LS210, and LS260 meet with European Union regulatory requirement and are mainly targeted for European markets, and LS300, LS400 and LS450 meet with U.S. regulatory requirements and are mainly targeted for North American markets.

We have introduced the Logistar™ 450 (LS450) both in U.S. and Europe markets since 2024. It is classified as Class 4 truck in US and as M2 Type in Europe. LS450 has four different configurations (versions), Cab-chassis version, cargo truck version, delivery van version, and passenger van version. The cab-chassis version, cargo truck version, and delivery van version are targeted at US markets and passenger van version is targeted at Europe markets. We have completed compliances with DOT requirements in 2023 and received certificate from EPA on September 14, 2023, CARB GHG certificate from CARB on December 14, 2023, and CARB ZEP certificate from CARB on May 24, 2024. Currently our LS450 passenger version is sold with an OEM arrangement with QEV. In 2025, we successfully delivered 99 units of our Logistar® 450P electric buses to QEV Technologies, S.L. in Europe. The LS450P units are part of a larger order received in early 2025 and represent a collaborative development between Cenntro and QEV. The LS450P is designed for short-distance shuttle and public transportation applications and has obtained European Union M2 Type Approval, enabling our deployment across European markets. We intend to continue production and delivery of additional units to fulfill the remaining order and to support further demand in Europe and other markets.

In the United States market, during 2025 we continued to advance the commercialization of the LS450 as a Class 4 battery-electric commercial vehicle targeting fleet and commercial operators. We delivered 12 units of the LS450 in the U.S. market during 2025, with sales concentrated in cargo truck and delivery van configurations.

In addition, we have made significant progress in securing government incentive support for the LS450 through the New York Truck Voucher Incentive Program (“NYTVIP”), a rolling voucher program administered by the New York State Energy Research and Development Authority (“NYSERDA”) that is designed to reduce the acquisition cost of zero-emission medium- and heavy-duty commercial vehicles. The LS450 has been confirmed as a fully eligible vehicle under the NYTVIP program as a Class 4 zero-emission battery electric vehicle. As of the date of this Annual Report, a total of 55 LS450 units have been submitted for NYTVIP approval through our authorized dealer network, with all applications having entered the review stage without deficiency notices or documentation challenges. Based on the applicable incentive structure for Class 4 vehicles, the estimated aggregate subsidy amount for the submitted applications is approximately $6.7 million, subject to final administrative approval. The Company believes the subsidy is highly probable of realization given the vehicle’s eligibility status, the non-competitive rolling-allocation funding structure of the program, and the current clean submission status of all pending applications. We believe participation in the NYTVIP program meaningfully enhances the commercial attractiveness of the LS450 to fleet operators in New York State and supports our broader U.S. market development efforts.

The Logistar™ 400 is a medium-duty electric commercial truck designed to meet the delivery requirements of tier 1 logistics companies as well as upfitters. The Logistar™ 400 is a U.S. Class 4 (over 14,000 lbs.) truck under U.S. truck classification. It can be configured as a delivery van or a shuttle bus or equipped with a cargo box or a truck bed. In addition, the Logistar™ 400 can be upfitted for different applications of city service, such as a vending truck, fire truck, garbage truck and repair truck. We expect that the most common use of the Logistar™ 400 will be for intra-city delivery. The Logistar™ 400 has a cargo volume that is over three times the cargo volume of the Metro® and a payload capacity more than seven times the payload capacity of the Metro®. On June 23, we received certification for our LS400 by the California Air Resources Board (“CARB”) as a zero-emission vehicle in the state of California. The certification is awarded to vehicle manufacturers who meet specific emissions standards in compliance with California Air Resources Board (“CARB”) regulations. In December 2022, the LS400 previously received its certificate of conformity from the United States Environmental Protection Agency (“EPA”). Because we received credentials from both CARB and the EPA, we can now sell our LS400 in every state throughout the U.S.

In December 2023, the LS400 received approval from the California Air Resources Board (“CARB”) to participate in California’s Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project (“HVIP”) in the state of California, providing a $60,000 point-of-sale voucher for the Company’s customers. The LS400’s certification as a zero-emission vehicle cleared the way for the LS400 to be approved for participation in the HVIP.

The approval to participate in the HVIP program is awarded to vehicle manufacturers, like Cenntro, that meet specific on-road zero-emission powertrain standards in compliance with CARB regulations. California’s HVIP incentive program is intended to advance adoption and commercialization of fleet vehicles, helping to reduce the total cost of ownership of hybrid and zero-emission commercial vehicles in the state of California. On December 27, 2024, we received notice from California’s HVIP incentive program that our LS400 model has been removed from HVIP eligibility. We are actively working with HVIP to address vehicle eligibility.

We have also designed the Logistar™ 200, a multi-purpose vehicle customized for transporting light goods specifically for the EU market. The Logistar™ 200 is designed to qualify as an N1 category truck in the European Union and is available in three models: (i) as a van, (ii) as a flat-bed truck, and (iii) as a cargo truck. Each of the three models is specialized for last-mile delivery, city delivery and city services. We completed homologation of the Logistar™ 200 in the European Union in January 2022 and it is commercially available in the EU market, and countries that adopt EU vehicle homologations. We introduced the LS210 model in October 2024, following its successful homologation in the European Union on May 10, 2024. While the LS210 maintains similar specifications to the LS200, it features significant improvements and new capabilities. The LS210 is an upgrade of the LS200, and replaced the market of LS200 in 2025. We sold 120 LS210s during the year of 2025.

The Logistar™ 260, or LS 260, is positioned above the Logistar™ 200 model and defines a new size in the van segment. With dimensions of 5.50 meters long, 1.85 meters wide and a height of 2 meters, the LS 260 offers a cargo space of 7.5 cubic meters or 265 cubic feet, two side loading doors and convenient rear doors with a loading opening of up to 270°. The load volume, payload and range of the Logistar™ 260 will be targeted for a wide range of applications in the trades, couriers, express and parcel services, logistics solutions, and facility management. In 2025, the LS 260 passed all homologation tests in accordance with European Union (EU) standards and requirements and received EU type approval. We sold 27 LS260s during the year 2025 in the EU market.

The Logistar™ 100, or LS 100, is a versatile, compact light cargo van purpose-built to serve diverse commercial applications, especially in population-dense urban areas. The vehicle has a range of 74 miles (118 kilometers) (WLTP), 1151 lbs. (525 kg) of payload, and a cargo capacity of 73.3 cubic feet (2 cubic meters). The combination of its cargo space and multiple entry points at the side and rear of the vehicle makes the LS100 ideal for multiple applications, including package delivery, trade and maintenance services, hospitality, and catering. The LS100 completed all homologation tests in compliance with the standards and requirements of the European Union (EU) in July and received type approval from the EU in August. As a result, and as of the date of this Annual Report, the LS100 is eligible for sale in all 27 EU member states and other countries that adopt EU vehicle homologation standards.

We have decided to discontinue marketing and selling the LS100 product line as part of our strategic shift toward heavier commercial vehicles. Once we complete selling our remaining LS100 inventory, we will focus on serving our commercial vehicle customers who require heavier-duty trucks.

In January 2023, we introduced the Logistar™ 300 (LS300) in a full-size van segment. The LS 300 sets a new benchmark for all electric commercial work trucks. This model boasts 370 cubic feet of storage space and a payload of 3307 lbs. along with a range of 270 miles. The vehicle can also be made available either as a van or as cab chassis that may be customized. On March 1, 2024, we received EPA certification and on June 21, 2024, we received California CARB certification for LS300. In July 2024, we assembled LS300DV (delivery van version) and LS300C (cargo truck version) in our Barstow Facility and introduced them in US West Coast markets.

Teemak™ Series

Our Teemak™ Series are off-road vehicle models for field utility applications, including The Teemak™ and Teemak™ TB. The Teemak™ is designed for off-road applications for utility or leisure use. The Teemak™ TB is designed for agricultural and forestry uses and currently meets all EU vehicle type regulatory requirements. Following a strategic pause in production to realign resources toward our heavy truck series in 2024, we recommenced active research and development of an enhanced Teemak™ Series during 2025, incorporating product improvements informed by accumulated field experience and evolving customer requirements in the off-road utility segment. We anticipate launching the enhanced Teemak™ Series in the fourth quarter of 2026, targeting primarily the North American market. Development efforts in 2026 will focus on further improving product quality, electric powertrain performance, and application-specific capabilities to broaden the series’ suitability across diverse off-road operating environments, including utility, agricultural, and forestry use cases.

Avantier™ Series

The Avantier™ Series are our micro ECV models. This series includes two vehicle models, the Avantier™ c and the Avantier™ α. They are smaller in size and are purpose-built for dense urban uses. The Avantier™ c is a two-seater utility ECV while Avantier™ α is a four-seater passenger EV. In 2024, we introduced two new models to the Avantier Series: the Avantier Ex and Avantier Commuter. The Avantier Ex is similar to the Avantier c but offers more competitive pricing. The Avantier Commuter, also a four-seat, five-door passenger EV, features a larger size, with 50kw power and an estimated range of up to 320 kilometers on a single charge. Both new models target markets outside the USA. We received European Union Type M1K approval for the Avantier Commuter on August 21, 2024, and European Union Type LS7e approval for the Avantier Ex on January 15, 2025.

Antric One

The Antric One is a cargo bike designed for last mile city logistics. It is especially designed for- and useful in narrow city streets and pedestrian zones. One unique selling proposition for the Antric One compared to other vehicles is, that the Antric One is a cargo-bike. Thus, no driver’s license is required to operate it and the Antric One is permitted to use bike lanes, which makes the vehicle particularly agile in dense city centers. Another advantage includes the Antric One’s exchangeable batteries. A battery-swap for the Antric One takes less than a minute and each swap enables the driver to ride for approximately 50 km. Compared to other cargo bikes the Antric One has a robust construction, cargo volume and payload (>2m3 volume, 270kg payload in the container). The production for Antric One began in November 2022. The production of our advanced version of the Antric One commenced in February 2024. We anticipate the advanced version of the Antric One to be less expensive to produce while maintaining its high quality. We intend to include new features to this second generation Antric One that will make riding easier and more comfortable.

Cenntro iChassis™

We also developed Cenntro iChassis™, which was previously referred to as the ePortee™, an open-platform and programmable (‘smart’) chassis product. The iChassis™ is designed to be a basic modular building block for use by automakers and special vehicle upfitters in the design of automated or autonomous driving vehicles.

Through our advancements in vehicle digitization and digital control (‘drive-by-wire’) capabilities, we commercially launched this product as an industry pioneer. The Cenntro iChassis™ allows third-party developers to integrate detection devices (i.e., lidar, radar, ultra-sound, infrared and other sensory devices) and third-party or proprietary decision-making software to permit vehicles based on the programmable chassis to be driven autonomously. We sold 176 iChassis in 2025.

Bison Motors (BM860H)

We continue to expand our product portfolio with the development of advanced zero-emission commercial vehicles, including our second-generation hydrogen fuel cell Class 8 semi-tractor, the BM860H, developed by our subsidiary, Bison Motors Inc., announced in August 2025, completed assembly and testing derived successful in December 2025. The BM860H builds on the foundation of its predecessor with key performance enhancements, powered by a 210kW hydrogen fuel cell system and designed to provide an estimated driving range of up to 528 miles under full payload conditions, while enabling rapid refueling and producing zero emissions. The BM860H meets all applicable Federal Motor Vehicle Safety Standards (“FMVSS”) and has received certification from the U.S. Environmental Protection Agency (“EPA”), with certification from the California Air Resources Board (“CARB”) currently under review. Key components for the BM860H are sourced primarily from U.S.-based manufacturers, with final assembly taking place at our production facility in Southern California.

Emerging and Next-Generation Products

Beyond our current vehicle lineup, we maintain a pipeline of next-generation energy and power technology products under development, reflecting our broader strategic vision to address evolving energy infrastructure challenges. These initiatives include methanol-based hydrogen generation systems designed to provide on-site hydrogen supply for hydrogen fueling stations, remote charging stations, and off-grid power installations — offering a practical solution to the logistical challenges of hydrogen transportation and the limitations of grid transmission capacity in certain regions of the United States. In addition, the Company has successfully developed and validated solid-state battery manufacturing capabilities, which we believe represent a significant advancement in energy density and safety for next-generation electric vehicle applications. We are also advancing a range of product development initiatives across multiple applications in new energy charging, energy storage, and energy efficiency. The Company intends to leverage these technology reserves to expand its product portfolio and addressable market opportunities in the coming years, as commercial and regulatory conditions continue to support the transition toward cleaner energy solutions.

Our Product Development and Manufacturing Process

Our capability of vehicle development is at the core of what we believe positions us to compete effectively in the ECV market. Since inception in 2013 through December 31, 2025, we have spent approximately USD94.4 million in research and development activities related to our operations, developing various technologies and products, including the following:

Vehicle Development

We have allocated resources and efforts for vehicles that we believe the market demands. We have developed and maintained five vehicle model series: Metro®, Logistar™, Teemak™, Avantier™, and Bison Motors. We believe successful vehicle development will put us in a position to become a leading Greener Energy Commercial Vehicle provider who offers a full line of electric and hydrogen powered commercial vehicles.

Vehicle Charger Development

We have developed level 2 AC chargers (7kw/10kw/22kw) and level 3 DC chargers (120kw), which have received EU CE and US ETL certificates. These chargers will support the charge of the vehicles that we sell to our customers as well as the vehicles that are made by other auto manufacturers as long as they meet the EU (Mennekes/CCS2) and USA (J1772/CCS1) standards. In 2025, we expanded our charging product portfolio with the development of a mobile energy storage and charging solution, available across multiple capacity configurations ranging from 3kWh to 209kWh, designed to address a broad range of use cases including residential emergency backup, personal and commercial vehicle charging, outdoor and off-grid applications, and fleet charging support. The mobile charging units have obtained UL 9540, UL 1973, FCC Part 15, and CE certifications, reflecting compliance with applicable U.S. and European safety and electromagnetic standards. The product line is currently in the configuration and validation stage, with commercial-scale sales expected to commence in 2026.

Electric vehicle chargers are essential for ECV users to charge their ECV for daily use. Many ECV users need to install their own charging stations instead of relying on public charge stations. It would be more convenient and more practical if our customers could purchase their vehicle chargers directly from us when they buy ECVs from us. It will be guaranteed that the charger will work with our vehicle seamlessly.

Manufacturing

We have established an asset-light manufacturing business model under both a distributed manufacturing model and original equipment manufacturing (“OEM”) model. Our distributed manufacturing model focuses on the production of semi-knock down vehicle kits from our centralized manufacturing facilities which are then distributed for local final assembly. Alternatively, we work with tier-one automakers under our OEM model who produce completed vehicles for us that meet our design and specifications.

Under our distributed manufacturing model, some of our vehicle models have a modular design that allows for local assembly in small factory facilities which require less capital investment. We manufacture our own vehicle kits in our facilities in China where we leverage the economies of scale coupled with our mature supply-chain to efficiently manufacture vehicle kits.

Under our OEM manufacturing model, we contracted well established third-party automobile manufacturers, such as Seres, Chery, and JMC, to manufacture vehicle kits and completed vehicles for us. In some cases, we provide technology and vehicle modules to the OEM contractors.

We believe our distributed manufacturing and OEM manufacturing methodologies allows us to execute our business plan with less capital than would be required by the traditional, vertically integrated automotive model and, in the long-term, drive higher profit margins.

As of the date of this Annual Report, we are operating four manufacturing and/or assembly facilities: two in the US (Barstow, California and Freehold, New Jersey) and two in China (Changxing and Yangzhong). In 2024, we terminated operation at our assembly facilities in Jacksonville, Florida, and Herne in Germany. We are also closing battery manufacturing facility in Monterrey in Mexico and considering relocating the operations to the United States, which will help us navigate geopolitical changes, access specialized talent in battery technology, and improve operational efficiency through closer integration with our existing US facilities.

Our Distribution and Service Infrastructure

We have established our distribution and service infrastructure, which consists of our wholly owned local Electric Vehicle Centers (“EV Centers”), local dealer networks, parts fulfillment centers, and local service providers. We continuously develop, expand, and improve our distribution and service infrastructure. We believe that having a good and capable distribution and service infrastructure is essential for our business. We have invested many resources to build this distribution and service infrastructure. We believe a wholly owned distribution and service infrastructure is important to an automobile manufacturer like us. To that end, we have decided to build our own distribution and service infrastructure after we secured sufficient capital to do so.

We distribute and sell our products directly by our corporate sales department or by our local EV Centers. We also distribute and sell our products through our local dealer networks in Europe and in the United States, which are developed by our local EV Centers.

We provide our services through our local EV centers, our local dealers, or our local service providers. To support our local service providers or dealers, our local EV centers provide training and support to our local dealers and local service providers.

To improve efficiency in distribution, sales, and services, we have begun introducing local distribution channels alongside our existing EV Centers. As these new distribution channels are gradually replacing our local EV Centers, we are considering closing some EV Center locations. This shift toward distribution channels will improve service quality, enhance cash flow, reduce inventory burden, and significantly lower our operational costs.

Our Parts Distribution System (“PARDISYS”)

We have invested resources into our cloud-based parts distribution system because we believe an effective and efficient parts distribution system is important for vehicle after-market support and customer satisfaction. Through our cloud-based parts distribution system we globally provide and timely deliver spare-parts to our service providers and customers. The cloud-based system also keeps our parts inventory leaner and more responsive to better manage our working capital more efficiently.

In order to satisfy that goal, we established two production-side parts warehouses in Changxing, China and Yangzhong, China which store our produced parts that can be locally sourced on a global scale. Our warehouses can send the parts globally in response to orders from our website that customers can place. Based on the local demand data, our cloud-based parts distribution system will make determinations on when to send certain parts from production-site warehouses to remote warehouses for quicker local delivery. As of December 31, 2025, we have established two spare-parts fulfillment warehouses in Barcelona, Spain, and Freehold, New Jersey.

Sales and Marketing

We believe that the quality and reputation of our products and our distribution and service infrastructure will support the company’s goals to retain and attract new customers.

We distribute and sell our products to our end-customers through our wholly-owned EV Centers and through our network of Cenntro dealers and distributors. Previously, Cenntro sold its products through a channel partner network which enabled each partner to distribute products under respective private labels. While this model offered benefits of leveraging sales through each partners customer network; are partners ‘white labeled’ our vehicles which diluted our brand value and placed too much of Cenntro’s reliance in each channel partner’s ability to conduct marketing in order to drive sales. With the expansion of our product lines, our ECV distribution model required a shift from strict reliance on channel partners to a hybrid model that utilizes both select channel partners and combines direct sales with established regional dealers and branded EV Centers.

Under a strictly channel partner distribution model, we had little control over sales and quality. Through our EV Center model, we will have better assurance of our product quality, reduce our overhead, improve customer satisfaction and enhance our brand recognition. Furthermore, our EV Center model will allow us to distribute our products directly in US as well as through established dealers and resellers.

This hybrid model will enable the company to scale to meet demand, provide enhance control of the marketing and sales of its products, and parts support. Our EV Centers have become the hub for distribution and provide marketing, technical training, logistical, and after-market support to Cenntro’s regional dealers, strategic partners and customers. Further, Cenntro’s EV Centers work with well-established commercial vehicles dealers to build out and scale markets. We believe this hybrid model will serve us and our customers to improve customer satisfaction and enhance our brand recognition.

The Company’s distribution and service infrastructure also includes the development of a cloud-based parts distribution system as a global spare parts fulfillment system. This system will enhance the after-sales spare parts support for our appointed service providers as well as our enterprise customers in servicing our commercial electric vehicles.

In 2024 and 2025, we began closing select EV centers while establishing local distribution channels.

In key strategic markets, including Japan, the Company has maintained channel partners relationships. For example, the company’s Japanese channel partner HW Electro, has established deep relationships with renowned companies in Japan’s transportation and logistics sector. This channel partner has in turn represented and sold our brand and the company’s product line allowing Cenntro’s EVCs to gain early market share.

Suppliers and Customers

Our Integrated Supply Chain

We have invested significant time and resources in developing a supply chain capable of providing all of the components and materials necessary to manufacture our ECVs. Our integrated supply chain is comprised of over 500 suppliers located in China and various other countries. Our vehicle designs share many of the same component parts, including the battery module, battery control, motor control and vehicle control, allowing us to achieve significant cost efficiencies in our supply chain. Generally, our suppliers undergo rigorous testing before we onboard them as a supplier, including quality and process auditing, product verification, regulatory compliance and reliability testing. Our suppliers must demonstrate that they can consistently deliver their specialized parts on time, while meeting our quality and product specifications. Many of our components are based on Cenntro-developed designs, and our suppliers are contractually restricted from selling our customized components to any third parties unless we discontinue our purchases from such suppliers.

Currently, materials and components for our Metro® are shipped to our Changxing facilities and for Teemak, LS300, and LS400 are shipped to our Yangzhong facilities, where we manufacture key components for and vehicle kits or completed vehicle of our Metro®, Teemak, LS300, and LS400 models for assembly and shipment. Components for our new ECV models are shipped directly to our assembly and manufacturing sites that fully assemble vehicles for their local markets. Since substantially all of our manufacturing to date has been conducted in China (through both our facilities and those of our manufacturing partners), sourcing our components in China has been more cost-effective than sourcing components outside of China, and we believe it has reduced risks arising from shipping delays and importing inefficiencies.

In the long-term, through our deep supply chain development know-how, we plan to geographically expand our supply chain to support our planned growth. More specifically, we intend to establish supply chain relationships in North America and the European Union to support our manufacturing and assembly needs in these markets, thereby reducing the time in transit and potentially the duties associated with importing our components and spare parts from China. We believe we can reduce the overall cost of ECV assembly by shifting to a “merge in transit” model, whereby component shipments from suppliers, including local market suppliers, are consolidated at our local assembly facilities for final ECV assembly.

Historically, we have generally obtained components from multiple sources whenever possible, similar to other automotive manufacturers. However, a small number of components used in our ECVs are purchased from a single-source, which we refer to as our single-source suppliers. For example, while several sources for the airbag module in the Metro® are available, we currently have only one supplier for this component. We generally do not maintain long-term agreements with our single-source suppliers. The vast majority of our components have alternative sources and we do not anticipate that finding qualified alternative sources for any particular component, including single-source supplier components, will be a material concern.

We use various raw materials in our business including aluminum, steel, carbon fiber, non-ferrous metals such as copper, lithium, nickel and cobalt, as well as key component inputs such as semiconductors. The prices for these raw materials and key components fluctuate depending on market conditions and global demand. We believe that we have adequate supplies or sources of availability of the raw materials necessary to meet our manufacturing and supply requirements. There are always risks and uncertainties, however, with respect to the supply of raw materials that could impact their availability in sufficient quantities or reasonable prices to meet our needs. For example, beginning in late 2020, the automotive industry has been subject to a shortage of semiconductors due to a spike in demand and a series of supply chain issues relating to COVID-19.

Our Growth Strategy

We intend to be a leading global designer, developer and manufacturer of a full range of ECVs from electric light models to and heavy-duty ECVs models. The key elements of our growth strategy include:

To Expand Our Cenntro Branded Global Marketing sales and after-sales support network (i.e. EV Centers) to Rebalance our Distribution Network in selected countries

Until the end of 2021, we outsourced the majority of distribution and marketing for our vehicles to third party “channel partners”. Similarly, we substantially relied on private label channel partners to assemble the Metro® from vehicle kits that we manufactured in our China-based facilities. While these relationships allowed the Company to forego expensive capital investments it significantly diluted our brand value and left the Company fully reliant on third parties to scale markets for our ECVs. To further expand our market presence and control our growth we shifted our distribution strategy to our wholly owned and operated EV Centers. In conjunction with the introduction of our new ECV models, we believe operating our own EV Centers will improve brand awareness, effectively scale market penetration and better align product supply to meet demand. Our EV Centers are established locally and provide for local marketing, sales, technical and after-market parts support. Our regional EV Centers will also recruit and develop local dealers and service providers to support expansion of their local networks. As a result of the implementation of this new go-to-market model, in the first quarter of 2022, we terminated two channel partners in the United States. In March 2022 and March 2023, we acquired 65% and further 35% equity interest of TME and gained complete control of our largest channel partner in Europe based in Germany. We rebranded TME to become Cenntro Automobile Europe (i.e. CAE).

During late 2021, Cenntro Automotive Corporation (“CAC”) began utilizing one of our two facilities in Freehold, New Jersey for the trial production of our Logistar™ 400 model. We also have established a European Operations Center in Dusseldorf, Germany, which provides marketing support, after-market support and spare-parts warehousing for the European market, as well as warehousing services with a logistics company in Budapest, Hungary to house spare parts for our ECVs. We established a local assembly facility in Jacksonville, Florida, where we plan to scale assembly of the Logistar™ 400, the Metro® and the Teemak™ for distribution in the North American market. We believe maintaining a local assembly facility in Germany will provide us with access to well-established hardware and logistics systems and trained personnel. We began trial assembly operations at the Jacksonville facility in March 2023 and the Onterio facility in September 2023. We expect that our full acquisition of CAE will allow us to expand local assembly capacity in the European Union for production some of our EU ECV models, including the Metro® series, Teemak® and Antric®.

During 2022, we began to establish a hybrid distribution model that combines our EV Centers, established dealers with select channel partners. To improve operating efficiency and align with regional market conditions, we undertook a strategic rationalization of our EV Center footprint beginning in 2024, consolidating or closing select locations while transitioning to dealer-led distribution channels in key markets. In European markets, this transition has been substantially completed, with the Company now operating primarily through local distribution partners, while retaining a single Company-operated EV Center in Spain as a regional presence. In North America, we continue to maintain a limited number of EV Centers as regional anchors for brand presence and customer service, while relying principally on local dealer networks as the primary channel for vehicle sales. We also cooperate with few channel partners in selected strategic markets, such as Japan in east-Asia. At date of this report, we maintained four operational EV centers in Barcelona, Spain, New Jersey and California in the US, and Changxing in China. We believe this regionally differentiated, dealer-led hybrid model improves capital efficiency, reduces time-to-market for our ECVs, and provides the operational flexibility to respond to the specific commercial conditions of each market.

To Brand our Global Market Sales and After Sales Support Network via our Distribution Channels

Our manufacturing model has traditionally relied on developing supply chain relationships with component vendors and specifically through a network of third-party supply partners. From 2022 onwards we shifted our focus from solely investing in our own manufacturing capabilities to a contract manufacturing strategy. To this end, we work closely with proven suppliers for components and parts in order for the Company to utilize a less capital-intensive path to product development. Correspondingly, we also re-aligned our distribution model from a majority of channel partners and country importers to a hybrid approach combining building our own branded local EV Centers with developing our distribution channels. Our regional EV Centers are wholly-owned subsidiaries that distribute, market, and sell parts in addition to providing after market support for Cenntro distribution channels and dealers. Our implementation strategy focuses on setting EV Centers in targeted local regions to distribute our ECVs mainly through local dealer distribution networks and value-added re-sellers.

We believe our strategy to manage and support our EV Centers and distribution network will distinguish Cenntro from other traditional EV automakers and build a solid distribution and service infrastructure in local markets. We believe this shift will enhance our market penetration, and ability to be more responsive to market feedback and customer input. Local EV Centers will bolster our local presence in sales markets to help Cenntro become perceived and associated with better products and while enhancing our ability to provide hands-on service. In the meantime, with the hybrid model, we also cooperate with large-scale distributors to improve market penetration and utilize local dealer networks with their existing sales and service capabilities for quicker market penetration and reduction on capital requirements. This two-tier approach will achieve our sales control and building our own sales capability but also benefit from distributor’s existing sales capabilities.

As of the date of this Annual Report, our distribution and service infrastructure consist of one EV Centers in Europe, two EV Centers in North America, and one EV Center in China. In addition to our own EV Centers, we also established many local distribution channels and local vehicle dealers through the regions.

To Regionalize Manufacturing and Supply Chain

We regionalize the manufacturing and supply chain relating to certain key components of our ECVs, such as vehicle upfitting and battery packs, in the geographic markets in which our ECVs are sold. In the long-term, through our deep supply chain development know-how, we plan to geographically expand our supply chain to support our planned growth. More specifically, we intend to establish supply chain relationships in North America and the European Union to support our manufacturing and assembly needs in these markets, thereby reducing the time in transit and potentially the duties associated with importing our components and spare parts from China. We believe we can reduce the overall cost of ECV assembly in certain geographical markets by shifting to a “merge in transit” model, whereby component shipments from suppliers, including local market suppliers, are consolidated at our local assembly facilities for final ECV assembly, in contrast with our current model which integrates all components into vehicle kits or fully assembled vehicles in our manufacturing facilities in China or our manufacturing partners’ facilities. We believe that investing in the regionalization of our manufacturing and supply chain can ultimately provide significant benefits to us and our channel partners. We believe sourcing our ECV components and manufacturing, assembling and selling our ECVs regionally can help us reduce costs associated with import/export taxes and shipping, further reducing vehicle production costs. In addition, we believe that regionalizing our manufacturing and supply chain will help support and strengthen our brand in the markets in which our ECVs are sold, as our operations become integrated into those markets. We believe that our deep supply chain development know-how will provide us significant advantages; however, currently, substantially all of our supply chain experience is limited to China. If we are unable to effectively manage the sourcing of our components and the responsiveness of our supply chain in areas outside of China, our business and results of operations may be harmed. It is also likely that in the early stages of our supply chain expansion, we can expect most component sources will be single-source suppliers in areas outside of China.

To Invest in our Enterprise Resource Planning and Parts Distribution Systems

To enhance vehicle after-market support and customer satisfaction, we believe an effective and efficient parts distribution system is important to develop. For this purpose, we have invested resources to build out a cloud-based automobile parts distribution system (“PARDISYS”). This cloud-based automobile parts distribution system allows us to more responsively provide and timely deliver spare parts to our service providers and global customers while maintaining a well-managed minimum parts inventory. To use PARDISYS, our customers log in the cloud-based system to enquire and order the required spare parts. The enquiry can be made by entering the name of the part, part number, VIN number of the whole vehicle, among other search functions. There are both fuzzy inquiries and precise inquiries for searching, which brings convenience to the customers. Currently, parts, accessories and special repair tools for all Cenntro vehicles can be ordered through the PARDISYS system, and the back-office will provide the optimal distribution plan according to the customer’s delivery address and warehouse inventory. PARDISYS maintained one warehouse in Changxing, China and three fulfilment warehouses in New Jersey and California, United States and Barcelona, Spain. The source warehouses distribute frequently used parts to the fulfilment warehouses, which ship them to customers. When parts inventory falls below the safety stock level, the fulfilment warehouses submit replenishment requests to the source warehouses to replenish the inventory to ensure the supply of frequently used parts. Non-usable parts are stored in the fulfilment warehouse and shipped directly to the customer when a customer order is placed.

As of the date of this Annual Report, we established a production site parts warehouse in Changxing, Zhejiang province in China. These warehouses store our parts that are produced or sourced locally. These warehouses can send the parts globally based on the orders from our website that customers can place globally. Based on the local demand data, the system is expected to source certain parts from production-site warehouses to a remote parts warehouse for quicker local delivery. As of the date of this Annual Report, we operate three remote parts warehouses in Barcelona, Spain, Freehold, New Jersey, and Barstow, California.

To Expand Our Product Offerings

We began pilot production of our first-generation, U.S. Class 1 (0 - 6,000 lbs.), light-duty commercial vehicle, the Metro®, in 2018, and, as of December 31, 2022, we have sold more than 4,090 Metro® units throughout Europe, North America and Asia. Utilizing our proprietary design and technology, we subsequently launched four ECV series, Avantier, Logimax, Logistar, and Teemak. By the end of 2025, we have twelve ECV models available for commercial offering for European, America, and other countries. They are Metro MB, Avantier α and c, Avantier EX and CX, Avantier Commuter, Logistar 100, Logistar 200, Logistar 210, Logistar 260, Logistar 300, Logistar 400, Logistar 450, and Teemak. One of our strategies is trying to offer a full line of ECV products.

In 2025, we added two new EV models that are commercially available for our customers. They are Avantier EX and CX. Avantier EX and CX has similar size and features compare it to Avantier α and c but offers more competitive pricing. We expanded our light-duty electric vehicle portfolio with the introduction of new models under the Avantier Series, which now comprises the Avantier C, Avantier EX, and Avantier Commuter. All three models are designed for urban and neighborhood mobility, featuring compact and lightweight designs tailored for city use, and are approved under the European Union’s L7e and M1 type classifications, enabling marketing and sale across all EU member states and other jurisdictions that have adopted EU vehicle type approvals.

The Avantier EX and Avantier C offer similar size and feature profiles to our previously introduced Avantier α and Avantier c models, while providing more competitive pricing to broaden market accessibility. The Avantier Commuter, introduced to the market in 2025, is a four-seat, five-door passenger vehicle equipped with a 50kW powertrain and an estimated range of up to 320 kilometers on a single charge, designed to meet the mobility needs of urban consumers. Since its introduction, the Avantier Commuter has received positive market reception, with 66 units sold and delivered as of the date of the related announcement. We believe the expanded Avantier Series strengthens our presence in the urban electric vehicle segment and broadens our addressable customer base across European and other markets that recognize EU type approvals.

In addition, we are advancing several product development programs to broaden our commercial and specialty vehicle offerings. These include the Teemak™ M2, an upgraded and enhanced generation of our off-road utility vehicle series targeting the North American market, anticipated for launch in the fourth quarter of 2026; a purpose-built electric shuttle bus derived from the LS450 platform, featuring an elevated roofline to enable standing passenger comfort and an enhanced interior passenger experience; and electric-powered platform vehicles for yard logistics and facility transport applications, as well as sightseeing and passenger conveyance platforms, both currently under further development. We believe these initiatives collectively strengthen our product depth across light-duty, specialty, and off-road segments and position the Company to address a broader range of customer requirements in the zero-emission vehicle market.

Beyond our current vehicle lineup, we maintain a pipeline of next-generation energy and power technology products under development, reflecting our broader strategic vision to address evolving energy infrastructure challenges. These initiatives include methanol-based hydrogen generation systems designed to provide on-site hydrogen supply for hydrogen fueling stations, remote charging stations, and off-grid power installations — offering a practical solution to the logistical challenges of hydrogen transportation and the limitations of grid transmission capacity in certain regions of the United States. In addition, the Company has successfully developed and validated solid-state battery manufacturing capabilities, which we believe represent a significant advancement in energy density and safety for next-generation electric vehicle applications. We are also advancing a range of product development initiatives across multiple applications in new energy charging, energy storage, and energy efficiency. The Company intends to leverage these technology reserves to expand its product portfolio and addressable market opportunities in the coming years, as commercial and regulatory conditions continue to support the transition toward cleaner energy solutions.

To Be a Leader in Hydrogen Powered Heavy-Duty Vehicle

We are advancing hydrogen-powered vehicles as a strategic complement to our electric vehicle lineups, with a particular focus on heavy-duty and long-haul commercial applications, where hydrogen power offers distinct performance advantages over battery-electric alternatives. Our first-generation hydrogen-powered US Class 8 heavy-duty truck was introduced in early 2022, and in August 2025 our wholly-owned subsidiary Bison Motors Inc. announced the BM860H, our second-generation hydrogen fuel cell Class 8 semi-tractor, representing a significant advancement in our hydrogen vehicle program. The BM860H is powered by a 210kW hydrogen fuel cell system, delivers an estimated driving range of up to 528 miles under full payload conditions, and features rapid refueling capability while producing zero emissions. The vehicle has received EPA certification and meets all applicable Federal Motor Vehicle Safety Standards, with CARB certification currently under review. Key components are sourced primarily from U.S.-based manufacturers, with final assembly at our production facility in Southern California. A prototype unit was delivered and commissioned in the United States in December 2025. We believe conditions in the United States are now increasingly favorable for the commercial launch of hydrogen-powered heavy-duty trucks, as hydrogen refueling infrastructure continues to expand across key freight corridors, and we anticipate leveraging our development experience and domestic supply chain to establish a competitive position in this emerging market segment.

Hydrogen-powered heavy-duty trucks offer several compelling advantages. Hydrogen powered trucks produce zero harmful emissions, emitting only water vapor. This significantly reduces greenhouse gas emissions and air pollution compared to diesel-powered vehicles. Hydrogen powered trucks have a higher energy density than battery-electric vehicles, enabling greater fuel efficiency and longer ranges that are particularly well-suited to long-distance transportation. Unlike electric trucks that require lengthy charging times, hydrogen trucks can be refueled in a matter of minutes, consistent with the operational cadence of traditional diesel fleets.

Additionally, Hydrogen trucks operate more quietly than their diesel counterparts, reducing noise pollution in urban areas and residential areas, and their lighter fuel system design relative to large battery packs can provide greater payload flexibility. We believe these characteristics make hydrogen-powered heavy-duty trucks a compelling and commercially viable solution for sustainable and efficient freight transportation.

To Expand Market Breadth and Depth

We expect to increase our market share in the current markets where our ECVs are sold, while simultaneously penetrating new markets worldwide. Aside from the Europe and US market, we are expanding our operations to select markets, such as Morocco, the Dominican Republic, and Turkey.

The following table summarizes the breakdown of our revenues excluding discontinued operations by region for the years ended December 31, 2025 and 2024, respectively:

We are currently targeting new markets where local governments have begun incentivizing a shift from ICEs to EVs. We intend to expand our reach in these markets with the efforts and market knowledge of our existing channel partners as well as by forming new partnerships and leveraging our increased brand recognition.

To Emerge as a Key Developer of Autonomous Driving Solutions

We intend to continue to invest in our smart driving technology to develop more applications using our iChassis platforms. We have developed Cenntro iChassis, an open-platform and programmable vehicle chassis with digital control capabilities. The Cenntro iChassis is designed to act as a basic and core execution unit of an automated or autonomous driving vehicle. It includes application programming and communication interfaces that enable third-party autonomous driving vehicle developers to use this programmable chassis to develop various autonomous driving applications and fittings. At the date of this report, we have delivered more than 1,500 iChassis products to the third-party OEMs in China. We will see more iChassis products be produced and delivered in the future. We may work with third-party autonomous driving software developers to develop complete autonomous drive delivery vehicles using our matured iChassis platform.

Competitive Strengths

We design, develop, manufacture, and distribute electric vehicles in a cost-effective manner to enable us to compete favorably in the whole range of commercial vehicle market. In a fast-growing industry, we believe our ability to adapt and evolve without jeopardizing the timing, quality, and quantity of the service through our agile and well-run structure has been proven through our forward-looking approach.

Unlike many of our competitors, our approach is future-focused while developing an asset-light, distributed manufacturing business model as opposed to generating short-term revenues and unsustainable growth. This approach, paired with our values, tools and teams, has put us in a position to operate in the ECV market in a way that we believe our competitors cannot. We believe our competitive strengths position us well to continue to grow our base of vehicles and capitalize on the expected growth in the light- and medium-duty ECV market.

Our Consistent Launch and Homologation of New and Innovative ECV Models

Over the past calendar year, we have introduced three new vehicle models, Avantier Ex four seater, Avantier CX, and BM860H from Bison Motors. Avantier Ex and Avantier CX are targeting European markets and other markets outside of US markets while BM860H are mainly targeting the US markets.

Avantier Ex can be used for both urban commercial applications and city mobility. Avantier Ex can be configurated as a two-seater with a small cargo space in the back or as four-seater passenger vehicle for city mobility. Avantier Commuter is larger than Avantier Ex and serves as an entry-level passenger car for city mobility. It is our first passenger car in addition to our ECV product lines. Avantier Commuter is designed for young urban population as their “first car”.

The BM860H is a Class 8 hydrogen fuel cell semi-tractor developed by our wholly-owned subsidiary, Bison Motors Inc., targeting long-haul freight applications in the United States. The BM860H has received certification from the U.S. Environmental Protection Agency (“EPA”) and meets all applicable Federal Motor Vehicle Safety Standards (“FMVSS”). Certification from the California Air Resources Board (“CARB”) is currently under review. As of the date of this Annual Report, one prototype unit has been completed and commissioned in the United States. The Company intends to progress toward commercial production of the BM860H following the completion of remaining certification processes and validation of the prototype.

The electrification of the global automotive industry has been a major policy focus of governments worldwide. Certain countries, such as the United States, China, Canada, Germany, and various other European countries, have announced aggressive EV initiatives designed to reduce carbon emissions, through the replacement of fossil fuels, and have begun incentivizing the development and sale of ECVs through government subsidy programs.

Proven Record of Manufacturing and Distributing ECVs

We have manufactured light-duty ECVs since 2018. Our business has began to expand beyond Metro® into six other categories of ECV models to expand our reach in the global ECV market. We believe we are well positioned to take advantage of the growing global ECV market, which has few mature competitors capable of manufacturing and delivering cost-effective and financially viable ECVs today.

Distributed Manufacturing Methodology

Traditionally, automakers operate under a vertically integrated business model performing a variety of capital-intensive and time-consuming functions, including not only vehicle design, process setup, tooling, parts making, supply chain establishment, vehicle assembly and vehicle homologation, but also market promotion, sales and distribution, after-market support and vehicle servicing. This business model requires significant capital, is asset heavy and imposes significant barriers to entry for new players while impeding their ability to rapidly change their vehicle lineup or their operating model.

Based on our unique manufacturing and distribution model, we believe we are positioned to be an industry disruptor. Unlike many traditional, vertically integrated vehicle companies, which manufacture fully assembled vehicles for export, we use an innovative distributed manufacturing methodology in which our ECVs are designed to be manufactured and exported as vehicle kits for assembly in local markets. Our ECVs are designed using a “modular” method, allowing for simple final assembly and eliminating the need for acquiring and maintaining heavy and expensive assembly equipment at the local assembly stage. We or our manufacturing partners manufacture and integrate the materials and parts into vehicle kits, which we can then ship to one of our local assembly facilities for final assembly.

We believe that our distributed manufacturing methodology can provide us with competitive advantages compared to traditional vehicle manufacturers, as we are able to operate with lower capital investment requirements. In addition, we believe our distributed manufacturing methodology provides significant advantages for local homologation, local distribution, and local service. For example, we believe U.S. homologation certification requirements are less burdensome for vehicles that are assembled and manufactured in the United States rather than imported into the United States.

As of the date of this Annual Report, we have four manufacturing and assembly plants including two in North America and two in China, including facilities at Changxing and Yangzhong, which manufacture for international export, and our local assembly facility in Barstow, California and Freehold, New Jersey, which we utilize for local assembly of our Logistar™ 400, Logistar™ 300, Logistar™ 450 models, and BM860H, the prototype hydrogen fuel cell semi-tractor.

Our North American facilities provide vehicles to the local market and export ECVs to markets in Central and South America. The Freehold, New Jersey and Onterio, California facilities both assemble the Logistar™ 400/300/450, the Metro® and the Teemak™. The BM850H prototype was assembled in the Onterio facility. We also work with third-party assembly facilities in the European Union for production of our European ECV models, including the Avantier series, the Metro® and the Teemak™.

Prior to the regionalization of our supply chains, we plan to utilize these facilities to assemble vehicle kits that are manufactured by us in our facilities in Changxing, in the case of the Metro®, and by third parties in the case of our other new ECV models. We have subcontracted all manufacturing processes of the ECV components for our Logistar™ and Avantier models to our qualified suppliers, allowing us to further reduce our capital expenditure requirements and increase our focus on local assembly.

In the long-term, through our deep supply chain development know-how, we intend to establish supply chain relationships in North America and the European Union to support our manufacturing and assembly needs in these markets, thereby reducing the time in transit and potentially the duties associated with importing our components and spare parts.

Our Investment in Global Assembly and Manufacturing Facilities

We have established an asset-light, distributed manufacturing business model through which we can distribute our unique modular vehicles in vehicle kits for local assembly in addition to distributing fully assembled vehicles. Each of our vehicle models has a modular design that allows for local assembly in small factory facilities, which allows us to focus our efforts on the design of ECV models and related technologies while outsourcing various portions of the manufacturing, assembly and marketing of our vehicles to qualified third parties, allowing the Company to operate with lower capital investment than traditional vertically integrated automotive companies.

To support the expansion of our product line, in May 2022, we acquired a new manufacturing facility in Changxing, Huzhou City, China, for a purchase price of approximately $19.5 million. The new 474,000-square-foot facility will allow Cenntro to expand its production capacity. The facility, built in 2018, provides Cenntro with advanced manufacturing capabilities. In addition to expanding capacity, the new site is expected to enable Cenntro to obtain ISO 9000 certification. The new facility will support the production of a new Metro® series and have an expected capacity of 50,000 vehicles annually once fully operational.

To meet our anticipated demand in the United States, we maintained two local assembly facilities in Barstow California and Freehold, New Jersey. The New Jersey facility will support the Northeast region and will initially support assembly of the Logistar™ 300/400/450, Metro® and Teemak models. The Barstow, California facility primarily serves the California and Western United States market, and is expected to serve as a key center for the testing, validation, and commercial development of our hydrogen-powered heavy-duty vehicles, including the BM860H, leveraging its proximity to California’s expanding hydrogen refueling infrastructure and the state’s leadership in zero-emission vehicle adoption and regulatory frameworks.

Until approximately December 31, 2021, we outsourced the vast majority of the marketing of our vehicles to third party “channel partners” and relied substantially on private label channel partners to assemble the Metro® from vehicle kits that we manufactured in our China-based facilities. Our relationships with such third parties, our “channel partners,” have allowed us to forego expensive capital investments in our own facilities and operate within our historic working capital limitations. With the introduction of our new ECV models, however, we have shifted the manufacturing of our vehicle kits and in some cases fully assembled vehicles to third party OEM partners and, in the case of vehicle kits, assembling them in our own facilities in North America and Europe. We maintained a European Operations Center in Barcelona, Spain, which provides marketing support, after-market support and spare-parts warehousing for the European market. We also have expanded the Freehold and Barstow facility to include the EV center function since 2022. We believe that a reinvigorated and in-house managed distribution model that is founded on local and strategically placed EV Centers together with local dealers and service networks will enhance brand recognition, provide economic advantages and reduce time to market for our ECVs. We further believe a well-developed distribution and service infrastructure is important to our brand as an automobile manufacturer. For these reasons, we have made new and expanding investments in our own distribution and service infrastructure model.

Our Core Technology

Because we design, develop and manufacture our ECVs, our technology is at the core of what we believe positions us to effectively compete and become a technology leader in the ECV market. Since inception in 2013 through December 31, 2025, we have spent approximately $96.7 million in research and development activities related to our business. Specifically, we have developed new vehicle chassis structures and digital control, smart driving and network connectivity capabilities. In addition to our significant know-how, as of December 31, 2025, we had 125 discovery patents, 10 design patents and 98 innovation patents granted by the Chinese Patent Office, 4 design patent applications and 13 discovery patent applications pending in the Chinese Patent Office, covering our technological innovations relating to power systems, vehicle electronics, vehicle control and structure, production processes and other new technologies.

Our technological advantage begins with our chassis designs, which promote efficiencies in energy consumption as well as development and manufacturing processes. The Metro® and Neibor® Series utilize proprietary, lightweight chassis designs that reduce the overall weight of the vehicle and thus increase the battery efficiency of the vehicle. Our chassis designs also lend themselves to modification and flexibility to meet the needs of the specific customers in our local markets. For instance, our ECVs can be upfitted and customized to fill a variety of end-user roles, such as a small firetruck, street sweeper, vending truck, garbage truck, pickup truck or service truck.

We are focused on continuous improvement in our technology through continued investment in research and development. We believe our ECV expertise, market focus, installed base of vehicles and know-how (including our smart driving capabilities), coupled with our dedication to research and development, will enable us to continue advancing our business.

Low Upfront Cost and Operating Costs to End-Users

Through our modular ECV design and unique business model, we believe we are able to enter the ECV market with competitively priced products compared to our competitors in the ECV space. For instance, our Metro® and and some of our Logistar™ Series are designed with a proprietary, lightweight chassis structure, enabling us to use less steel and such ECVs to utilize less battery power than our competitors. Furthermore, because our ECVs have fewer components and moving parts than their ICE counterparts, we believe the ongoing maintenance costs of our vehicles is low. In addition, engines in traditional ICE commercial vehicles typically have a 10-year life, whereas the motor in our ECVs are designed to last, on average, for more than 20 years. The lithium-ion batteries used in our ECVs have a useful life of approximately 3,000 charge-cycles, with each charge providing for a range, in the case of the Metro®, of approximately 124 miles per charge for a total range of approximately 248,400 miles over a battery’s useful life. Additionally, based on our collected data, the Metro® has a miles per gallon of gasoline equivalent of approximately 156 (equivalent to 4.875 miles per KWh).

Our Integrated Supply Chain

We have invested significant time and resources in developing a supply chain capable of providing all of the components and materials necessary to manufacture our ECVs. Our integrated supply chain is comprised of over 500 suppliers located in China and various other countries. Generally, our suppliers undergo rigorous testing before we onboard them as a supplier, including quality and process auditing, product verification, regulatory compliance and reliability testing. Our suppliers must demonstrate that they can consistently deliver their specialized parts on time, while meeting our quality and product specifications. Many of our components are based on Cenntro-developed designs, and our suppliers are contractually restricted from selling our customized components to any third parties unless we discontinue our purchases from such suppliers.

We plan to expand our supply chain as necessary to support our planned growth, including localizing our supply chain for certain key components of our ECVs in North America and the European Union. To date, the manufacturing of ECV components for our vehicle models has been primarily subcontracted to qualified third-party OEM suppliers, allowing us to minimize capital expenditure and maintain focus on local assembly operations. Looking ahead, we intend to bring the production of select core vehicle models in-house, enabling greater control over product definition, supply chain, quality standards, and long-term technology development.

Strategic Channel Partner Network

In selected markets, we continue to leverage our channel partner network to distribute our ECVs around the world. Through this network, we have engaged partners for local homologation, promotion, distribution, and service in the markets they serve, and, in a limited number of cases, assembly, upfitting and customization. All our channel partners sell fully assembled ECVs under private label to the local market and provide aftermarket service to end users. Our channel partners such as HW Electro in Japan, purchase our fully assembled ECVs with HW Electro’s brand and sell them in their respective local market.

As of December 31, 2025, we approach our market through a hybrid model combining distributors and maintained four EV Centers which are now the base of our distribution network, leading our local marketing and aftermarket service.

Our Highly Skilled and Experienced Management Team

Our management team is led by Peter Z. Wang, our Chief Executive Officer and Chairman of the Board, who we refer to as our Chairman. Mr. Wang has extensive experience in the automotive and technology industries, having co-founded Sinomachinery Group (a diesel power system (engine and transmission) manufacturer) in 2006 and UTStarcom (a global telecom infrastructure provider), which went public in 2000. Mr. Wang was named as one of the Outstanding 50 Asian Americans in Business by Asian American Business Development Center in 2004, one of China’s 100 Most Innovative Businessmen by Fast Company Magazine in 2017 and one of the Most Intriguing Entrepreneurs by Goldman Sachs in 2019.

More specifically, our management team has significant experience in vehicle design, supply chain, logistics, quality control and process management. Our management is singularly focused on developing and manufacturing high quality, best-in-class, light- and medium-duty ECVs for the growing ECV marketplace and becoming a technology leader in the ECV market. Starting in 2013 with a simple idea, our management team has successfully designed energy efficient ECVs and associated technologies and established a broad supply chain to support our product growth.

Intellectual Property

Our success depends, at least in part, on our ability to protect our core technology and intellectual property. To accomplish this, we rely on a combination of patents, patent applications, trade secrets, including know-how, employee and third-party nondisclosure agreements, copyright laws, trademarks, intellectual property licenses and other contractual rights to establish and protect our proprietary rights in our technology. As of December 31, 2025, we had 125 discovery patents, 10 design patents and 98 innovation patents granted by the Chinese Patent Office, and 4 innovation patent applications and 13 discovery patent applications pending in the Chinese Patent Office, covering our technological innovations relating to power systems, vehicle electronics and structure, production processes and other new technologies. All of our patents are granted under PRC law and have not been given reciprocal treatment and protection under the laws of either the United States or the European Union. Our issued patents will begin to expire in August 2026. We intend to continue to file additional patent applications with respect to our innovation and know-how.

Our Employees

As of the date hereof, we have 155 full-time employees. The following table sets forth the number of our employees by function:

We provide social insurance for each employee in accordance with Chinese law, including pension insurance, medical insurance, unemployment insurance, work injury insurance and maternity insurance and housing provident fund.

Risks Related to Our Business

We have a limited operating history and face significant challenges in an emerging industry.

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 $18.1 million for the year ended December 31, 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:

• design and manufacture safe, reliable and quality ECVs on an ongoing basis;
• establish and ramp up assembly facilities in the United States and European Union;
• maintain and expand our network of local assembly facilities, manufacturing partners, channel partners and suppliers;
• execute on our growth plan to regionalize supply chains, manufacturing and assembly of our ECVs;
• maintain and improve our operational efficiency;
• maintain a reliable, high quality, high-performance and scalable manufacturing and assembly infrastructure;
• attract, retain and motivate talented employees including our production workforce in existing and planned facilities, including the challenges we face with COVID-19 and the impact on our workforce stability;
• anticipate and adapt to changing market conditions, including technological developments and changes in the competitive landscape;
• protect our intellectual property; and
• navigate an evolving and complex regulatory environment.

If we fail to address any or all of these risks and challenges, our business, financial condition, operating results and prospects may be materially and adversely affected. As we continue to grow our business, we cannot assure you that we will be able to develop effective and cost-efficient manufacturing capabilities and processes, and maintain reliable sources of component supplies, that will enable us to meet the production demands required to successfully sell our ECVs.

We have historically incurred losses from our operations and may not be profitable in the future.

We incurred losses from operations of approximately $59.0 million, and $47.5 million for the years ended December 31, 2025, and 2024, respectively. We have made significant up-front investments in research and development, supply chain establishment, establishment of local assembly facilities and capacity, and channel partner development to develop and expand our business. We have spent approximately $96.7 million in research and development activities related to our operations from our inception through December 31, 2025. We expect to continue to invest significantly in research and development, manufacturing and supply chain operations to expand our business, and these investments may not result in profitability within our expected timeframe or at all.

We may not generate sufficient revenues to be profitable in the future and we may incur substantial losses for a number of reasons, including lack of demand for our ECVs and increasing competition. In addition, we may incur unforeseen expenses, or encounter difficulties, complications and delays in market penetration or delivery for our products, generating revenue or achieving profitability. If we are unable to achieve profitability, we may have to reduce the scale of our operations, which may impact our planned growth and adversely affect our business, financial condition, operating results and prospects.

Our ability to develop and manufacture ECVs of sufficient quality, on schedule and on a large scale is still evolving.

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:

• accurately manufacturing or procure components within appropriate design tolerances;
• establishing additional manufacturing and local assembly facilities in our various target markets;
• compliance with environmental, workplace safety and similar regulations;
• securing necessary high-quality components and materials from our supply chain on acceptable terms and in a timely manner;
• the impact of tariffs or trade restrictions on the cost and availability of key components and materials;
• our ability to execute on our growth plan to regionalize our supply chain and manufacturing;
• quality controls;
• delays or disruptions in the supply chain, including as a result of pandemics such as COVID-19;
• delays or disruptions in ocean transit or transportation between our suppliers, our manufacturing facilities (or manufacturing partners’ facilities) and our local assembly facilities and our customers;
• our ability to establish, maintain and rely upon relationships with our suppliers, channel partners and manufacturing partners; and
• other delays, backlog in manufacturing and research and development of new models, and cost overruns.

Any of the foregoing could materially and adversely affect our business, financial condition, operating results and prospects.

Our future success depends on our ability to continue to introduce new models and we may experience delays in launching and ramping up production of our new ECV models.

In 2025, we have introduced three new vehicle models, Avantier Ex, Avantier CX, BM860H. Avantier Ex and Avantier CX are targeting European markets and other markets outside of US markets while BM860H is mainly targeting the US markets. In order to introduce new ECV models through 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.

Our operating results may be more volatile due to a shift from only a high concentration of sales in relatively few channel partners to establishing our own distribution network.

For the years ended December 31, 2025, and 2024, our channel partners accounted for approximately 0.3%, and 2.1% of our sales, respectively. As of quarter one of 2022, the company made significant changes regarding its few channel partners and shifted reliance away from select channel partners to its own distribution network through the establishment of local EV Centers. In 2022, we acquired TME inclusive of its assembly facility and distribution network in the EU. Simultaneously, and based on decreasing sales we ended our relationship with two US distributors: Ayro and Tropos. This shift in our distribution model is uncertain, and if we are unable to establish effective EV Centers that make-up for losses in revenue from our channel partners, our operating results could be materially and adversely affected.

Our reliance on our new hybrid distribution model to market, sell and service (and in certain cases, assemble and/or homologate) our vehicles is subject to substantial risks because we do not maintain control over certain of our remaining channel partners and our newly established EV Center dealerships are relatively new.

Our EV Center dealerships and channel partners are responsible for different portions of the sale, marketing and servicing (and for our channel partners, assembly and/or homologation) of the ECV products we sell. We do not control the actions of our channel partners. For example, we do not control how our channel partners market or sell assembled ECVs or the quality of their service on our ECVs and, with respect to the private label channel partners, we do not oversee their assembly of our ECVs.

Our EV Centers are relatively new to the markets in which they are established and working with local dealers to sell our ECVs in the countries and regions in which they operate. If we are unable to efficiently operate or manage these new EV Centers, they may not be successful in the markets in which they operate or fail to satisfy sales targets, meet customer service objectives, or experience adverse regulatory actions or other operational challenges, we could experience a reduction in sales. If we decide to close or shift resources or operations from certain EV Centers at any time in the future, end-user customers of our ECVs may encounter difficulties in maintaining their vehicles and obtaining satisfactory support, which may negatively impact our reputation.

Our channel partners are not subject to any minimum annual purchase requirements. In the event our channel partners are not successful in the markets in which they operate or fail to satisfy sales targets, meet customer service objectives or experience adverse regulatory actions or other operational challenges, we could experience a reduction in sales. Furthermore, if any of our channel partners fail to successfully operate their business or lack liquidity to support their operations, they may be unable to continue to purchase and sell our ECVs in the countries in which they operate, which could limit our sales to such market for an extended period and adversely affect our business.

In addition, our ECVs are highly technical products that require maintenance and support, which we rely on our newly established EV Centers and certain of our channel partners to provide to our customers. If our channel partners were to cease or cut back operations at any time in the future, end-user customers of our ECVs may encounter difficulties in maintaining their vehicles and obtaining satisfactory support, which may negatively impact our reputation.

Disputes may occur between us and our channel partners or our channel partners and their customers, and we could be affected by adverse publicity related to such disputes, whether or not such publicity is related to their collaboration with us. Our ability to successfully build and maintain our brand can be adversely impacted by perceptions about the quality of our channel partners’ servicing (and in some cases, assembly) processes. Our arrangements with our channel partners typically specify general quality standards that the partners may meet, but do not provide us with any direct control or oversight over marketing and selling (and in some cases, assembly) behavior of such channel partners. We rely on our channel partners to meet quality standards, but we cannot assure you that they will successfully maintain quality standards, which could adversely affect our reputation.

We may be unable to enter into new agreements or extend existing agreements with channel partners on terms and conditions acceptable to us or at all. In addition, even if we are able to expand our channel partner network, it on average takes up to six months from the time we enter into an agreement with a new channel partner for them to be operational and selling our ECVs, depending on their familiarity with ECVs and the types of services they will provide to us.

As of December 31, 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 four 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, distributing and after-market care our ECVs in the relevant market within a suitable timeframe or at all.

The expense and time required to establish and train staff at our EV Centers so performance and service will be able to meet our quality standards and regulatory requirements, may be greater than anticipated, or we may never establish a new operation after having invested significant resources on that local market. Any of the foregoing could adversely affect our business, financial condition, operating results and prospects.

Our EV Center dealers and channel partners may reduce or cancel their orders at any time, which could adversely affect our business.

Our relationships with our dealers and channel partners are typically subject to definitive agreements we have with them. Under these agreements, our dealers and channel partners do not have any minimum or binding purchase obligations. Because our sales are made pursuant to standard purchase orders, orders may be cancelled, reduced, or rescheduled with little or no notice. Our ECVs may not meet the expectations of our end users or market requirements. In the future, our dealers or channel partners or their customers may decide to purchase fewer ECVs than they have in the past, may alter their purchasing patterns at any time with limited or no notice, or may decide not to continue to purchase our ECVs at all. Cancellations of, reductions in, or rescheduling of orders could also result in the loss of anticipated sales without allowing us sufficient time to reduce our inventory and operating expenses, as a substantial portion of our expenses are fixed at least in the short term. In addition, changes in forecasts or the timing of orders expose us to the risks of inventory shortages or excess inventory. Any of the foregoing events could materially and adversely affect our business, financial condition, operating results and prospects.

Our EV Center dealers and channel partner network may not grow or develop as we currently expect, in current markets in which we sell ECVs or penetrate new markets, our revenue and financial condition would be adversely affected.

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

Moving forward, we aim to increase the size of our dealership network in our target markets through establishing EV Centers and identifying dealerships partners when warranted, which is necessary for our expansion in both existing and new markets. If we fail to successfully establish new EV Centers in these key markets, our expected expansion could be materially impacted, which could adversely affect our business, financial condition, operating results and prospects. Furthermore, our future revenue growth will depend in part on our ability to penetrate new geographic markets by establishing EV Centers in those markets. Each new geographic market presents distinct and substantial challenges and risks and, in many cases, requires us to develop new customized solutions to address the particular technical and regulatory requirements of that market. Meeting the technical and regulatory requirements in any of these new markets will require a substantial investment of our time and resources. We cannot assure you that we will be able to establish EV Centers in these new markets, or that we will achieve meaningful revenue from sales in these markets. If any of these markets do not develop as we currently anticipate, our business, financial condition, operating results and prospects could be adversely affected.

We do not provide charging solutions for our channel partners or their customers.

Our ECVs have two ways to charge - slow charging from a regular power outlet and fast charging from a public EV charging station. Though we plan to establish charging infrastructure and stations in select regions, we do not currently install charging stations in the markets in which our ECVs are sold through our channel partners. As such, we rely on our channel partners or other third parties in such markets to ensure charging solutions are available for end-user customers. If a market in which our ECVs are sold has few options for charging, the customers of our channel partners may need to rely on their own power supply for charging, which may make our vehicles less attractive in such markets.

The battery capacity of our ECVs will decline over time, which may negatively influence purchasing decisions by our channel partners and end-users.

Our ECVs can experience battery capacity and performance loss over time depending on the use of the battery. We anticipate the battery capacity in our ECVs will decline over time as the battery deteriorates. We currently expect the vehicle battery pack capacity to decrease by up to 20% over six years under normal use conditions. Other factors such as usage, time and stress patterns may also impact the battery’s ability to hold a charge, which would decrease our ECVs range before needing to recharge. Such battery deterioration and the related decrease in range may negatively influence purchase decisions by channel partners and end-users.

Our business is subject to the risk of disruption in our supply chain.

We depend on suppliers for the sourcing of ECV components and principal raw materials. Our suppliers (and those they depend upon for materials and services) are subject to risks, including labor disputes or constraints, financial liquidity, inclement weather, natural disasters, significant public health and safety events, supply constraints or shortages, and general economic and political conditions that could limit their ability to provide us with components and raw materials. Our business and operations would be adversely affected if any of our key suppliers were to experience significant disruption affecting the price, quality, availability or timely delivery of parts they supply to us or if any one or more or our key suppliers discontinued operations. Furthermore, if we experience significant increased demand, or need to replace our existing suppliers, there can be no assurance that additional suppliers of component parts will be available when required on terms that are favorable to us, or at all, or that any supplier would allocate sufficient supplies to us in order to meet our requirements or fill our orders in a timely manner. The partial or complete loss of these suppliers, or a significant adverse change in the sourcing of ECV components, could result in lost revenue, added costs and distribution delays that could harm our business and channel partner relationships. In addition, concentration in our supply chain can exacerbate our exposure to risks associated with the termination by key suppliers of our supply-chain arrangements or any adverse change in the terms of such arrangements, which could adversely affect our business, financial condition, operating results and prospects.

We may be unsuccessful in our continuous efforts to source less expensive suppliers for certain parts, redesign certain parts to make them less expensive to produce and negotiate with existing suppliers to obtain cost reductions and avoid unfavorable changes to terms. Any of these occurrences may harm our business, prospects, financial condition and operating results. We cannot assure you that we will be able to maintain our existing relationships with our suppliers and continue to be able to source key components we use in our ECVs on a stable basis and at reasonable prices or at all. For example, our suppliers may increase the prices for the components we purchase and/or experience disruptions in their production of the components.

We are dependent on our suppliers, certain of which are single-source suppliers, and the inability of these suppliers to continue to deliver, or their refusal to deliver, necessary components of our ECVs at prices and volumes acceptable to us could have a material adverse effect on our business, prospects and operating results.

Historically, we have generally obtained components from multiple sources whenever possible, similar to other automotive manufacturers. However, a small number of our components used in our ECVs are purchased from a single source. We refer to these component suppliers as our single-source suppliers. For example, while several sources for the airbag module for the Metro® are available, we currently have only one supplier for these components.

We generally do not maintain long-term agreements with our single-source suppliers. Any disruption in the supply of airbag modules from our single-source supplier, for instance, could temporarily disrupt production of our ECVs. While we believe that we may be able to establish alternate supply relationships for our single-source components and can obtain or engineer replacement components, we may be unable to do so in the short term or at all at prices or costs that are favorable to us. The loss of any single or limited source supplier or the disruption in the supply of components from these suppliers could lead to delays in vehicle deliveries to our channel partners, which could hurt our relationships with them and their end-user customers and also materially adversely affect our business, prospects and operating results.

In the long-term, we intend to establish supply chain relationships in North America and the European Union to support our manufacturing and assembly needs in these markets, thereby reducing the time in transit and potentially the duties associated with importing our components and spare parts from China. We believe that our deep supply chain development know-how will provide us significant advantages; however, substantially all of our supply chain experience is limited to China. If we are unable to effectively manage the sourcing of our components and the responsiveness of our supply chain in areas outside of China, our business and results of operations may be harmed. It is also likely that in the early stages of our supply chain expansion, we can expect most component sources will be single-source suppliers.

Changes in international trade policies, tariffs and rising political tensions, particularly between the U.S. and China, may adversely impact our business and operating results.

In recent years, China and the United States have implemented certain increasingly protective trade measures with continuing trade tensions, including significant tariff increases, between these countries. Most recently, on March 4, 2025, U.S. president, Donald J. Trump, announced that the U.S. would impose an additional 20% tariff on Chinese imports starting March 4, 2025. The additional tariffs imposed by the U.S. government on certain products imported from China may impact our supply chain and cost structure. Additionally, the U.S. government continues to signal that it may alter trade agreements and terms between China and the United States, including limiting trade with China, and may impose additional tariffs on imports from China and other countries from which we import goods. Although the United States and China previously, successfully reached an interim trade deal in January 2020 that de-escalated the trade tensions with both sides rolling back tariffs, the extent to which this trade deal, or potential future trade deals, will be successfully implemented is unpredictable. A decrease in the level of imports to and exports from China could adversely affect our business, operating results and financial condition.

Rising trade and political tensions could reduce levels of trades, investments, technological exchanges and other economic activities between China and other countries, which would have an adverse effect on global economic conditions, the stability of global financial markets, and international trade policies. It could also adversely affect the financial and economic conditions in the jurisdictions in which we operate, as well as our global expansion, our financial condition, and results of operations.

Moreover, the imposition of tariffs and trade restrictions as a result of international trade disputes or changes in trade policies may adversely affect our sales and profitability. For example, the U.S. government recently imposed and proposed, among other actions, new or higher tariffs on specified imported products originating from China in response to what it characterized as unfair trade practices, and China responded by imposing and proposing new or higher tariffs on specified U.S. products. There can be no assurance that a broader trade agreement will be successfully negotiated between the United States and China to reduce or eliminate these tariffs. These tariffs, and the related geopolitical uncertainty between the United States and China, may cause decreased demand for our products or increase cost of components used in our products, which could have a material adverse effect on our business and results of operations. For example, certain of our foreign customers may respond to the imposition of tariffs or threat of tariffs on products we produce by delaying purchase orders or purchasing products from our competitors. Ongoing international trade disputes and changes in trade policies could also impact economic activity and lead to a general contraction of customer demand. In addition, tariffs on components for our ECVs that we may import from China or other nations will adversely affect our profitability unless we are able to exclude such components of our ECVs from the tariffs or we raise prices for our products, which may result in our products becoming less attractive relative to products offered by our competitors. Future actions or escalations by either the United States or China that affect trade relations may also negatively affect our business, or that of our suppliers or customers, and we cannot provide any assurances as to whether such actions will occur or the form that they may take.

The resulting environment of retaliatory trade or other practices or additional trade restrictions or barriers, if implemented on a broader range of products or raw materials, could harm our ability to obtain necessary raw materials and product components or sell our ECVs at prices customers are willing to pay, which could have a material adverse effect on our business, prospects, results of operations, and cash flows. Relatedly, trade policies could lead to an increasing number of competitors entering the United States, thereby creating more competition. For example, other foreign companies could begin manufacturing vehicles in Mexico in order to take advantage of the United States-Mexico-Canada Agreement that could allow the free flow of trade into the United States and Canada. To the extent that our sales or profitability are negatively affected by any such tariffs or other trade actions, our business and results of operations may be materially adversely affected.

We rely on third parties to manufacture substantially all of our components and vehicle kits for each of our new series of ECV models. Our qualified suppliers and manufacturing partners may fail to deliver components and vehicle kits, respectively, according to schedules, prices, quality and volumes that are acceptable to us.

We have shifted substantially all component manufacturing processes for our new vehicles to qualified suppliers. The continuous and stable supply of components needed in the manufacture and assembly of our ECVs that meet our standards will be crucial to our operations and production. Unexpected changes in business conditions, materials pricing, labor issues, wars, governmental changes, tariffs, natural disasters, health epidemics such as the global COVID-19 pandemic, trade and shipping disruptions and other factors beyond our or our suppliers’ control could affect their ability to deliver components to us and expose us to component shortages.

The unavailability of any component or supplier could result in production delays, idle manufacturing facilities, product design changes and loss of access to important technology and tools for producing and supporting our products. Moreover, significant increases in our production or product design changes by us may require us to procure additional components in a short amount of time. Our suppliers may not be willing or able to sustainably meet our timelines or our cost, quality and volume needs, or to do so may cost us more, which may require us to replace them with other sources. While we believe that we will be able to secure additional or alternate sources or develop our own replacements for most of our components, there is no assurance that we will be able to do so quickly or at all.

As part of our light-asset distributed manufacturing business model and methodology, vehicle kits (and in some instances, fully-assembled vehicles) for our new ECV series are manufactured by third-party manufacturing partners. From time to time, these manufacturing partners may experience production problems or delays and may not be able to meet our demand for vehicles. We may be required to retain additional third-party manufacturing partners to assure continuity in production, but finding additional manufacturing partners in a timely and cost-effective manner may be difficult. Any delays in the manufacture of our vehicle kits could cause the loss of sales, and harm our brand, all of which could adversely affect our business, financial condition, operating results or prospects.

If our suppliers, channel partners or manufacturing partners fail to use ethical business practices and comply with applicable laws and regulations, our brand image and business could be harmed due to negative publicity.

Our core values, which include developing high quality ECVs while operating with integrity, are an important component of our brand image, which makes our reputation sensitive to allegations of unethical business practices. We do not control our independent suppliers, channel partners or manufacturing partners or their respective business practices. Accordingly, we cannot guarantee their compliance with ethical business practices, such as environmental responsibilities, fair wage practices, and compliance with child labor laws, among others. A failure in compliance could lead us to seek alternative suppliers, channel partners or manufacturing partners, which could increase our costs or result in delayed delivery of our products, product shortages or other disruptions of our operations.

Violation of labor or other laws by our suppliers, channel partners or manufacturing partners or the divergence of an independent supplier’s labor or other practices from those generally accepted as ethical in the markets in which we do business could also attract negative publicity for us and our brand. This could diminish the value of our brand image and reduce demand for our ECVs if, as a result of such violation, we were to attract negative publicity. Any negative publicity that results from unethical practices by third parties could harm our brand image, business, financial condition, operating results or prospects. If other manufacturers in our industry encounter similar problems with their third-party partners, any negative publicity with respect to the ECV industry could negatively impact us.

We heavily rely on our third-party logistics service providers for international shipping of our products, and if disruptions in our transportation network continue to occur or our shipping costs continue to increase, we may be unable to sell or timely deliver our products, and our gross margin could decrease.

Our success is dependent on our ability to transport our ECVs (whether as vehicles kits or fully assembled vehicles) from China to markets in the North America, Europe and Asia in a timely and cost-effective manner. We rely heavily on third parties, including ocean carriers and truckers, in that process. The global transportation industry is experiencing ocean shipping disruptions, trucking shortages, increased ocean shipping rates and increased trucking and fuel costs, and we cannot predict when these disruptions will end.

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. Our primary shipping routes originate from Shanghai and serve the United States West Coast and European markets. Trans-Pacific shipping rates experienced substantial swings 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 change. These conditions have had, and if persistent, may continue to have a negative impact on our vehicle production costs, gross profit margins, product delivery timelines, and revenue recognition. We expect such incidence causing rising shipping rates volatility to continue for the foreseeable future.

The commercial viability of our Cenntro iChassis relies on third-party hardware and software that may not be available, which could render our product less marketable and negatively impact our business, prospects and operating results.

The commercial viability of our Cenntro iChassis depends in large part on third-party developers utilizing hardware and software that is required for autonomous driving. The Cenntro iChassis is an open-platform and programmable chassis product, designed to act as a basic and core execution unit of an automated or autonomous driving vehicle. An automated system typically runs within a well-defined set of parameters and is restricted in what tasks can be performed. In contrast, an autonomous system learns and adapts to dynamic environments, and evolves as the environment around it changes. To be driven autonomously, the Cenntro iChassis requires hardware and software that we do not produce, such as detection devices and decision-making software. The Cenntro iChassis can only be utilized if such hardware and software is otherwise available and third parties are willing to integrate such technology with the Cenntro iChassis. To the extent our competitors develop and market a fully integrated autonomous EV, we may be at a commercial disadvantage. The marketability of the Cenntro iChassis is dependent on the willingness of third-party autonomous driving vehicle producers to adopt our programmable chassis technology rather than adopting other similar technologies or developing their own proprietary programmable chassis, as well as the willingness of end-users to purchase autonomous driving vehicles from such third parties. If any of these factors is not present then the marketability of our Cenntro iChassis will suffer, which could negatively impact our business, prospects and operating results. Furthermore, there are many uncertainties relating to the homologation of autonomous driving vehicles, and we are unable to predict when the market for autonomous driving vehicles will develop more fully.

Our business depends substantially on the continuing efforts of our executive officers, and our business may be severely disrupted if we lose their services.

Our future success depends substantially on the continued services of our executive officers, especially our CEO and Chairman, Mr. Peter Z. Wang. We do not currently maintain key man life insurance on any of our executive officers. If any of our executive officers are unable or unwilling to continue in their present positions, we may not be able to replace them readily, if at all. Therefore, our business may be severely disrupted, and we may incur additional expenses to recruit and retain new officers. In addition, if any of our executive officers joins a competitor or forms a competing company, our business, financial condition, operating results or prospects could be harmed.

Our facilities or operations could be damaged or adversely affected as a result of disasters or unpredictable events.

We maintain manufacturing and assembly facilities in Changxing and Yangzhong, China, and local assembly facilities in Freehold, New Jersey and Barstow, California in the United States, and also rely on third-party OEM manufacturing partners in China for the 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 facilities or 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 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.

Global economic conditions could materially and adversely affect our business, financial condition, operating results and prospects.

The global macroeconomic environment is facing challenges, and the uncertain state of the global economy continues to impact businesses around the world, including as a result of COVID-19. If global economic and financial market conditions do not improve or further deteriorate, our business, financial condition, operating results and prospects may be materially and adversely affected. Some of the factors that could materially and adversely affect us include:

• Slower spending may result in reduced demand for our ECVs, reduced orders from our channel partners, order cancellations, lower revenues, higher discounts, increased inventories and lower gross margins.
• Continued volatility in the markets and exchange rates for foreign currencies and contracts in foreign currencies could have a significant impact on our reported operating results and financial condition. We conduct transactions in various currencies, which increases our exposure to fluctuations in foreign currency exchange rates relative to the U.S. Dollar.
• Volatility in the availability and prices for commodities and raw materials we use in our ECVs from our supply chain could have a material adverse effect on our costs, gross margins and profitability.
• Instability in global financial and capital markets may impair our ability to raise additional equity or debt financing on reasonable terms or at all in order to grow our business.

Our financial results may vary significantly from period-to-period due to the seasonality of our business and fluctuations in our operating costs.

Our operating results may vary significantly from period-to-period due to many factors, including seasonal factors that may have an effect on the demand for our ECVs. Demand for vehicles in the automotive industry in general typically decline over the winter season, while sales are generally higher during the spring and summer months. Our limited operating history makes it difficult for us to judge the exact nature or extent of the seasonality of our business. Also, any unusually severe weather conditions in some markets may impact demand for our vehicles. Our operating results could also suffer if we do not achieve revenue consistent with our expectations for this seasonal demand.

We also expect our period-to-period operating results to vary based on our operating costs which we anticipate will increase significantly in future periods as we, among other things, design and develop additional ECVs and components, establish new channel partners relationships, establish new local assembly facilities and technology support and research and developments centers, and increase our general and administrative functions to support our growing operations. In addition, our channel partner network includes companies that have in the past, and may in the future, experience financial difficulty and, in some instance, have been unable to pay amounts owed to us on a timely basis, or at all. This has led us to from time to time recognize provision for doubtful accounts that vary from period to period and are difficult to anticipate. As a result of these factors, we believe that period-to-period comparisons of our operating results are not necessarily meaningful and that these comparisons cannot be relied upon as indicators of future performance.

Our distributed manufacturing methodology and channel partner network model is different from the predominant current distribution model for automotive manufacturers, which makes evaluating our business, financial condition, operating results and prospects difficult.

Our distributed manufacturing model allows us to focus our efforts on the design of ECV models and related technologies while outsourcing various portions of the manufacturing, assembly and marketing of our vehicles to qualified third parties, allowing the Company to operate with lower capital investment than traditional vertically integrated automotive companies. For the last several years, we relied substantially on “private label” channel partners to assemble the Metro® from vehicle kits that we manufactured in our facilities. With the introduction of our new ECV models, we have begun the process of shifting the manufacturing of our vehicle kits, and in some cases fully assembled vehicles, to third party OEM manufacturing partners and, in the case of vehicle kits, assembling in our own facilities in North America and Europe. This model of vehicle distribution is relatively new and unproven and subjects us to substantial risk. For example, our success depends in large part on our ability to effectively establish and maintain successful relationships with manufacturing partners and channel partners and for them to implement successful processes for manufacturing our vehicles or marketing, sales, and servicing, respectively.

Our business model is subject to numerous significant challenges and uncertainties, some of which are outside of our control, and we may not be successful in addressing these challenges. For instance, we have limited control or oversight over our manufacturing partners and channel partners. To the extent a manufacturing partner or channel partner is not conducting its business in an ethical manner or is not performing to the required standards, we have limited recourse. Our manufacturing partner and channel partner networks are based solely on contractual arrangements and such contractual arrangements do not currently, and may not into the future, provide us with adequate oversight over our channel partners to protect our reputation.

Additionally, in certain markets we intend to increase direct sales to dealers, upfitters, enterprises and government organizations, which will require that we add overhead and business structures to service a direct sales business model that we do not currently have in place.

Our business plans require will additional capital in the future, which may not be available to us on acceptable terms or at all.

Our business plans will require additional capital in the future, including to strengthen the selling and marketing functions of our EV Centers and to develop our distribution centers for parts backed by the PARDISYS system. However, we expect to have a constrained cash outlay throughout 2025, and plan to focus on internally generated cash flow rather than on relying on the expectations of future external capital financing. To support this goal, no we do not plan to invest in any production facilities in the near future unless necessary and plan to improve our existing EV Center networks so they may be more efficient. We expect that our level of capital expenditures may be relatively lower in 2025 but may be affected by the profitability and cash generating capacities of our recently established EV Centers around the global markets. The fact that we have a limited operating history means we have limited historical data regarding the demand for our products and services and our future capital requirements. As a result, our future actual capital requirements may be uncertain and actual capital requirements may be materially different from those we currently anticipate.

We may seek equity or debt financing to finance a portion of our capital requirements in the future. Such financing might not be available to us in a timely manner or on terms that are acceptable, or at all. Our ability to obtain the necessary financing to carry out our business plans is subject to a number of factors, including general market conditions and investor acceptance of our business plans. These factors may make the timing, amount, terms and conditions of such financing unattractive or unavailable to us. If we are unable to raise sufficient funds, we will have to significantly reduce our spending, and delay or cancel our planned activities.

As we shift component and vehicle kit manufacturing to qualified suppliers and manufacturing partners, we may have to shorten the useful lives of any equipment to be retired as a result, and the resulting acceleration in our depreciation could adversely affect our financial results

We have invested in what we believe is state of the art tooling, machinery and other manufacturing equipment, and we depreciate the cost of such equipment over their expected useful lives. However, throughout 2023 and well into 2024, we continued to shift procurement of vehicle component, and semi-knocked-down kit manufacturing to qualified suppliers. Continuing into 2025, we have also outsourced vehicle kit manufacturing (and, in some instances, vehicle assembly) to qualified manufacturers for our new ECV series to manufacturing partners to reduce our capital expenditure requirements. As we shift component and vehicle kit manufacturing of our new ECV series to our qualified suppliers and manufacturing partners, respectively, we may have to shorten the useful life of any equipment we retire as a result, which would require that we accelerate the depreciation on such equipment. Any such accelerated depreciation on our equipment, to the extent we own such equipment, could adversely affect our results of operations.

We may not be able to accurately estimate the supply and demand for our vehicles, which could result in a variety of inefficiencies in our business and hinder our ability to generate revenue. If we fail to accurately predict our manufacturing requirements, we could incur additional costs or experience delays.

We may have limited insight into trends that may emerge and affect our business. This may result in our inability to accurately estimate the supply and demand for our vehicles. Beginning in the fourth quarter of 2021 and continuing into the first quarter of 2022, we introduced into the market the Neibor® and Logistar™ series of ECVs as well as the Teemak™ off-road ECV. We cannot predict whether these new ECV models will be readily adopted by channel partners and end-users in their respective markets. We may need to provide forecasts of our demand to our suppliers several months prior to the scheduled delivery of products to our channel partners. Currently, there is limited historical basis for making judgments on the demand for our planned or existing vehicles or our ability to develop, manufacture, and deliver vehicles, or our profitability in the future. If we underestimate our requirements, our suppliers may have inadequate inventory, which could interrupt manufacturing of our products and result in delays in shipments and revenues. In addition, lead times for materials and components that our suppliers order may vary significantly and depend on factors such as the specific supplier, contract terms and demand for each component at a given time. If we fail to order sufficient quantities of product components in a timely manner, the delivery of vehicles to our channel partners could be delayed, which would harm our business, financial condition and operating results.

Our ECVs use lithium-ion battery cells, which have the potential to catch fire or vent smoke and flame and may lead to additional concerns about batteries used in automotive applications.

The battery packs in our ECVs use lithium-ion cells, and we intend to use lithium-ion cells in our future ECV products. On rare occasions, lithium-ion cells can rapidly release the energy they contain by venting smoke and flames in a manner that can ignite nearby materials as well as other lithium-ion cells. Extremely rare incidents of laptop computers, cell phones and EV battery packs catching fire have focused consumer attention on the safety of these cells.

These events have raised concerns about batteries used in automotive applications. To address these questions and concerns, a number of battery cell manufacturers are pursuing alternative lithium-ion battery cell chemistries to improve safety. The battery packs used in our ECVs may need to be redesigned, which would be time-consuming and expensive. Also, negative public perceptions regarding the suitability of lithium-ion cells for automotive applications or any future incident involving lithium-ion cells such as a vehicle or other fire, even if such incident does not involve us, could seriously harm our business.

The majority of the battery packs we use in our ECVs are shipped in a “just in time” fashion so that we are generally not housing them for a long period of time. Nonetheless, we may in the future store lithium-ion cells at our facilities from time to time. Any incident involving battery cells may cause disruption to the operation of our facilities. While we have implemented safety procedures related to the handling of the cells, we cannot assure you that a safety issue or fire related to the cells would not disrupt our operations. Such damage or injury could lead to adverse publicity and potentially a safety recall. Moreover, any type of battery failure in relation to a competitor’s ECV may cause indirect adverse publicity for us and our ECVs. Such adverse publicity could negatively affect our brand and harm our business, financial condition, operating results and prospects.

We have identified a material weakness in our internal control over financial reporting that could materially harm our company. If we fail to remediate the material weakness, or if we experience material weaknesses in the future, we may not be able to accurately and timely report our financial condition or results of operations, which may adversely affect investor confidence in us.

Historically Cenntro had not retained a sufficient number of professionals with an appropriate level of accounting knowledge, training and experience to appropriately analyze, record and disclose accounting matters under U.S. GAAP. Similarly it does not retain certain a sufficient number of professionals which to address its internal control over financial reporting in accordance with requirements applicable to public companies.

A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. During the preparation of its 2021 and 2022 financial statements, Cenntro’s management identified a material weakness in its internal control over financial reporting. Specifically, Cenntro did not historically have adequate accounting staff generally in its finance and accounting department, particularly with respect to (i) the preparation of financial statements prepared in accordance with U.S. GAAP and the inclusion of proper disclosures in the related footnotes, and (ii) the design, documentation and implementation of internal controls surrounding risk management and financial reporting processes. During the preparation of the Company’s consolidated financial statements for the year ended December 31, 2025, management reassessed the Company’s internal control over financial reporting. Although controls and supervision over risk management and financial reporting processes have improved, management has concluded that the Company continues to have this material weakness in its internal control over financial reporting.

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 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.

To the extent we are unable to remediate this material weakness or identify future material weaknesses in our internal control over financial reporting, such material weakness could severely inhibit our ability to accurately report our financial condition or results of operations and could cause future investors to lose confidence in the accuracy and completeness of our financial reports, we could become subject to litigation from investors and shareholders, and we could be subject to sanctions or investigations by the SEC or other regulatory authorities. Failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets.

Risks Related to Our Industry

The unavailability or reduction of government and economic incentives or the elimination of regulatory policies which are favorable for ECVs could materially and adversely affect our business, financial condition, operating results and prospects.

Our business depends significantly on government subsidies, economic incentives and government policies that support the growth of new energy vehicles generally and ECVs specifically. Any reduction, elimination or discriminatory application of government subsidies and economic incentives because of policy changes, the reduced need for such subsidies and incentives due to the perceived success of ECVs, fiscal tightening or other factors may result in the diminished competitiveness of the alternative fuel vehicle industry generally or our ECVs in particular. Any of the foregoing could materially and adversely affect our business, financial condition, operating results and prospects.

Our future growth is dependent upon end-users’ willingness to adopt ECVs.

Our growth is highly dependent upon the adoption by national and local governments and the commercial vehicle market of, and we are subject to a risk of any reduced demand for, alternative fuel vehicles in general and ECVs in particular. The market for alternative fuel vehicles (including ECVs) is relatively new and rapidly evolving, characterized by rapidly changing technologies, price competition, additional competitors, evolving government regulation and industry standards, frequent new vehicle announcements and changing consumer demands and behaviors. If the market for ECVs in North America, Europe, Asia or elsewhere does not develop as we expect, or develops more slowly than we expect, our business, financial condition, operating results and prospects will be harmed. Other factors that may influence the adoption of alternative fuel vehicles, and specifically ECVs, include:

• perceptions about electric vehicle quality, safety, design, performance and cost, especially if adverse events or accidents occur that are linked to the quality or safety of electric vehicles, whether or not such vehicles are produced by us or other manufacturers;
• perceptions about vehicle safety in general, in particular safety issues that may be attributed to the use of advanced technology, including electric vehicle systems;
• the limited range over which electric vehicles may be driven on a single battery charge and the speed at which batteries can be recharged;
• the decline of an electric vehicle’s range resulting from deterioration over time in the battery’s ability to hold a charge;
• concerns about electric grid capacity and reliability;
• the availability of new energy vehicles, including plug-in hybrid electric vehicles and vehicles powered by hydrogen fuel;
• improvements in the fuel economy of the internal combustion engine;
• the availability of service for electric vehicles;
• the environmental consciousness of end-users;
• access to charging stations, standardization of electric vehicle charging systems and perceptions about convenience and cost to charge an electric commercial vehicle;
• the availability of tax and other governmental incentives to purchase and operate electric vehicles or future regulation requiring increased use of nonpolluting vehicles;
• perceptions about and the actual cost of alternative fuel; and
• macroeconomic factors.

Any of the factors described above may cause our channel partners and their customers not to purchase our ECVs. If the market for ECVs does not develop as we expect or develops more slowly than we expect, our business, financial condition, operating results and prospects will be adversely affected.

Continued elevated levels of inflation could adversely impact our business and results of operations.

Adverse and uncertain economic conditions and, in particular, the impact of global general price inflation, may negatively impact our business and operating results. We have experienced, and expect to continue to experience, price increases from, among other things, our component suppliers. Sustained inflation, combined with key component shortages, may require us to raise the prices of our ECVs in order to offset cost increases, which may negatively impact the demand for our vehicles. As a result, our channel partners may become more conservative in response to such conditions and seek to reduce their inventories. Conversely, to the extent inflation or other factors increase our business costs, it may not be feasible to pass price increases on to our channel partners, which will adversely affect our profitability. Our results of operations depend upon, among other things, our ability to maintain and increase sales volume with our channel partners, our ability to attract new channel partners, the financial condition of end-consumers in the commercial ECV market and our ability to provide ECVs that appeal to our channel partners and other direct customers at a competitive upfront cost. Unfavorable macroeconomic conditions may lead our channel partners to reduce, delay, curtail or cancel proposed or existing contracts, decrease the overall demand for our ECVs or otherwise adversely affect our results of operations. The duration and severity of the current inflationary period cannot be estimated with precision.

We could experience cost increases or disruptions in the supply of raw materials or components used in our vehicles, and a shortage of key components, such as semiconductors, can disrupt our production of ECVs.

We incur significant costs related to the procuring of raw materials and components required to manufacture our vehicles. Our ECVs use various raw materials including aluminum, steel, carbon fiber, non-ferrous metals such as copper, lithium, nickel and cobalt, as well as key component inputs such as semiconductors. The prices for these raw materials fluctuate depending on factors beyond our control, including market conditions and global demand for these materials, and could adversely affect our business and operating results. In particular, the automotive industry is currently facing a significant shortage of semiconductors. The global semiconductor supply shortage is having wide-ranging effects across multiple industries, particularly the automotive industry, and it has impacted multiple suppliers that incorporate semiconductors into the parts they supply to us. As a result, the semiconductor supply shortage has had, and will continue to have, a negative impact on our vehicle production. To date, we have experienced price decreases compared to the rising market prices in 2022, which resulted in higher vehicle costs. The market in 2025 was favorable for the entire new energy industry in terms of vehicle costs. For example, semiconductor shortage that previously constrained vehicle production had largely subsided, and the prices of batteries, motors and electronic controls continued fallen.

Increases in the cost, disruptions of supply or shortages of lithium-ion batteries could harm our business.

Our business depends on the continued supply of battery cells for our vehicles. Battery cell manufacturers may refuse to supply battery cells to electric vehicle manufacturers to the extent they determine that the vehicles are not sufficiently safe. We are exposed to multiple risks relating to availability and pricing of quality lithium-ion battery cells. These risks include:

• the inability or unwillingness of current battery cell manufacturers to build or operate battery cell manufacturing plants to supply the numbers of lithium-ion cells required to support the growth of the electric vehicle industry as demand for such cells increases;
• disruption in the supply of cells due to quality issues or recalls by the battery cell manufacturers; and
• an increase in the cost or shortages of raw materials, such as lithium, nickel and cobalt, used in lithium-ion cells.

Any disruption in the supply of battery cells could temporarily disrupt the planned production of our ECVs until such time as a different supplier is fully qualified. Furthermore, strong growth in sales of our ECVs may in some instances outpace the production and availability of lithium-ion batteries, which could result in substantial increases in the price of batteries used in our vehicles. Substantial increases in the prices for lithium-ion batteries would increase our operating costs, and could reduce our gross margins if we cannot recoup the increased costs through increased ECV prices.

Developments in alternative technologies or improvements in the internal combustion engine may materially and adversely affect the demand for our ECVs.

Significant developments in alternative technologies, such as advanced diesel, ethanol, hydrogen fuel cells or compressed natural gas, or improvements in the fuel economy of the internal combustion engine, may materially and adversely affect our business, financial condition, operating results and prospects in ways we do not currently anticipate. Any failure by us to develop new or enhanced technologies or processes, or to react to changes in existing technologies, could materially delay the development and introduction of new and enhanced ECVs, which could result in the loss of competitiveness of our vehicles, decreased revenue and a loss of market share to competitors.

The automotive market is highly competitive, and we may not be successful in competing in this industry.

Both the automotive industry generally, and the ECV segment in particular, are highly competitive, and we will be competing for sales with both ICE commercial vehicles and other ECVs. Many of our current and potential competitors have significantly greater financial, technical, manufacturing, marketing and other resources than we do and may be able to devote greater resources to the design, development, manufacturing, distribution, promotion, sale and support of ECVs. We expect competition for ECVs to intensify due to increased demand and a regulatory push for alternative fuel vehicles and consolidation in the worldwide automotive industry. Factors affecting competition include product quality and features, innovation and development time, pricing, reliability, safety, fuel economy, customer service, and financing terms. Increased competition may lead to lower vehicle unit sales and increased inventory, which may result in downward price pressure and adversely affect our business, financial condition, operating results, and prospects.

If we are unable to keep up with advances in electric vehicle technology, we may suffer a decline in our competitive position.

We may be unable to keep up with changes in ECV technology, and we may suffer a resulting decline in our competitive position, which would materially and adversely affect our business, financial condition, operating results and prospects. Our research and development efforts, as well as our manufacturing and supply chain capacity, may not be sufficient to adapt to changes in ECV technology. As technologies change, we plan to upgrade or adapt our ECVs and introduce new models in order to continue to provide our ECVs with the latest technology, including battery cell technology. However, our ECVs may not compete effectively with ECVs manufactured and marketed by our competitors if we are not able to develop and integrate the latest technology into our ECVs.

Risks Related to Legal and Regulatory Matters

Our business is subject to substantial regulations, which are evolving, and unfavorable changes or the failure by us or our channel partners to comply with these regulations could materially and adversely affect our business, financial condition, operating results and prospects.

Motor vehicles are subject to substantial regulation under U.S. federal, state and local laws as well as the laws of each of our target markets. We incur significant costs to comply with these regulations, including obtaining required vehicle certifications in the jurisdictions in which our ECVs are sold, and we may be required to incur additional costs related to any changes to such regulations. Any failures by us or our channel partners to comply with existing or future regulations could result in significant expenses, vehicle recalls, delays or fines. We and our channel partners are subject to laws and regulations applicable to the supply, manufacture, import, sale and service of automobiles internationally. For example, in countries outside of the United States, we or our channel partners are required to meet standards relating to vehicle safety and testing, fuel economy, battery safety, transportation, testing and recycling and greenhouse gas emissions, among other things, that are often materially different from requirements in the United States, thus resulting in additional investment into the vehicles and systems to ensure regulatory compliance in those countries. This process may include official review and certification of our vehicles by foreign regulatory agencies prior to market entry, as well as compliance with foreign reporting and recall management systems requirements. See “Business-Governmental Regulations.”

To the extent U.S. or international laws change, some or all of our vehicles may not comply with any new applicable international, federal, state or local laws, which would have an adverse effect on our business. Compliance with changing regulations could be burdensome, time consuming, and expensive. To the extent compliance with new regulations is cost prohibitive, our business, prospects, financial condition and operating results will be adversely affected. Similarly, compliance with various regulations pertaining to ECVs in our various target markets may limit our ability to sell certain of our ECV models in such markets.

Our ECVs may be subject to product liability claims or recalls which could cause us to incur expenses, damage our reputation or result in a diversion of management resources.

As manufacturer of record of our ECVs (except in the case of vehicles assembled by our private label channel partners), we may be responsible for product liability claims or costs associated with product recalls. We may be subject to lawsuits resulting from injuries associated with the use of the ECVs that we design, manufacture and sell to our channel partners. We may incur losses relating to these claims or the defense of these claims. Our ECVs may also be subject to recalls if any of our ECV designs prove to be defective, or our channel partners may voluntarily initiate a recall or make payments related to such claims as a result of various industry or business practices or the need to maintain good customer relationships. Such a recall would result in a diversion of resources and could damage our reputation with both our channel partners and their customers. Any claims or recalls associated with our ECVs could exceed our insurance coverage and materially and adversely affect our business, financial condition, operating results and prospects.

We face risks associated with our global operations and expansion, including unfavorable regulatory, political, legal, economic, tax and labor conditions, and with establishing ourselves in new markets, all of which could harm our business.

We currently have international operations and subsidiaries in various countries and jurisdictions, and we expect to expand and optimize our channel partner network internationally and to invest in new manufacturing and assembly facilities in various jurisdictions as part of our growth plan. Accordingly, we and our products are subject to a variety of legal, political and regulatory requirements and social and economic conditions over which we have little control. For example, we may be impacted by trade policies, political uncertainty and economic cycles involving geographic regions where we have significant sales or operate.

We are subject to a number of risks associated with international business activities that may increase our costs, impact our ability to sell our ECVs and require significant management attention. These risks include:

• conforming our products to various international regulatory and safety requirements in establishing, staffing and managing foreign operations;
• challenges in attracting channel partners;
• compliance with foreign government taxes, regulations and permit requirements;
• our ability to enforce our contractual rights and intellectual property rights;
• compliance with trade restrictions and customs regulations as well as tariffs and price or exchange controls;
• fluctuations in freight rates and transportation disruptions;
• fluctuations in the values of foreign currencies;
• compliance with certification and homologation requirements; and
• preferences of foreign nations for domestically manufactured products.

In many of these markets, long-standing relationships between potential customers and their local partners and protective regulations and disparate networks and systems used by each country will create barriers to entry.

We are currently selling our ECVs in North America, Europe and Asia, and, as a result, we are subject to laws and regulations in those jurisdictions that are applicable to the import and/or sale of electric vehicles. For example, we are required to meet vehicle-specific safety standards that are often materially different across markets, thus resulting in additional investment into the vehicles and systems to ensure regulatory compliance. For each of the markets in which we sell our ECVs, we must obtain advanced approval from regulatory agencies regarding the proper certification or homologation of our vehicles to enter into these markets. This process necessitates that regulatory officials in each market review and certify our vehicles prior to market entry. Any delay in the homologation process could adversely impact our ability to introduce any of these ECV models in their respective markets on our planned timeframe, which could adversely affect our business, financial condition and operating results and harm our reputation.

Our business will be adversely affected if we are unable to protect our intellectual property rights from unauthorized use or infringement by third parties.

Any failure to adequately protect our intellectual property rights could result in the weakening or loss of such rights, which may allow our competitors to offer similar or identical products or use identical or confusingly similar branding, potentially resulting in the loss of some of our competitive advantage, a decrease in our revenue or an attribution of potentially lower quality products to us, which would adversely affect our business, financial condition, operating results and prospects. Our success depends, at least in part, on our ability to protect our core technology and intellectual property. To accomplish this, we rely on a combination of patents, patent applications, trade secrets (including know-how), employee and third-party nondisclosure agreements, copyright protection, trademarks, intellectual property licenses and other contractual rights to establish and protect our intellectual property rights in our technology. Our registered patents are under PRC law and have not been given reciprocal treatment and protection under the laws of either the United States or the European Union. We may be unable to adequately protect our proprietary technology and intellectual property from use by third parties.

The protection provided by patent laws is and will be important to our business. However, such patents and agreements and various other measures we take to protect our intellectual property from use by others may not be effective for various reasons, including the following:

• our pending patent applications may not result in the issuance of patents;
• our patents may not be broad enough to protect our commercial endeavors;
• the patents we have been granted may be challenged, invalidated or circumvented because of the pre-existence of similar patented or unpatented technology or for other reasons;
• the costs associated with obtaining and enforcing patents in the countries in which we operate, confidentiality and invention agreements or other intellectual property rights may make enforcement impracticable; or
• current and future competitors may independently develop similar technology, duplicate our vehicles or design new vehicles in a way that circumvents our intellectual property protection.

Existing trademark and trade secret laws and confidentiality agreements afford only limited protections. In addition, the laws of some foreign countries do not protect our proprietary rights to the same extent as do the laws of the United States and policing the unauthorized use of our intellectual property is difficult. For example, historically the implementation and enforcement of PRC intellectual property-related laws have been limited. Accordingly, protection of intellectual property rights in China may not be as effective as in the United States or other countries.

Some of the components in our supply chain are co-designed with third-party vendors, who are generally restricted from selling parts that are co-designed with us to other parties. However, in the event we discontinue our purchases of such co-designed components from our vendors, these vendors may no longer be restricted from selling such co-designed components to third parties.

We may need to defend ourselves against patent or trademark infringement claims, which may be time-consuming and could cause us to incur substantial costs.

Companies, organizations or individuals, including our competitors, may hold or obtain patents, trademarks or other proprietary rights that would prevent, limit or interfere with our ability to make, use, develop or sell our vehicles or vehicle kits, which could make it more difficult for us to operate our business. From time to time, we receive notices from holders of patents or trademarks regarding their proprietary rights. Companies holding patents or other intellectual property rights may bring suits against us alleging infringement of such rights or otherwise assert their rights and seek licenses. Even if we are successful in these proceedings, any intellectual property infringement claims against us could be costly, time-consuming, harmful to our reputation, and could divert the time and attention of our management and other personnel or result in injunctive or other equitable relief that may require us to make changes to our business, any of which could have a material adverse effect on our financial condition, cash flows, results of operations or prospects. In addition, if we are determined to have infringed upon a third party’s intellectual property rights, we may be required to do one or more of the following:

• cease selling vehicles or incorporating or using designs or offering goods or services that incorporate or use the challenged intellectual property;
• pay substantial damages;
• obtain a license from the holder of the infringed intellectual property right, which license may not be available on reasonable terms or at all; or
• redesign our vehicles or other goods or services.

In the event of a successful claim of infringement against us and our failure or inability to obtain a license to the infringed technology or other intellectual property right, our business, financial condition, operating results and prospects could be materially adversely affected. In addition, any litigation or claims, whether or not valid, could result in substantial costs and diversion of resources and management attention.

In addition, we have agreed, and expect to continue to agree, to indemnify our channel partners for certain intellectual property infringement claims regarding our products. As a result, if infringement claims are made against our channel partners, we may be required to indemnify them for damages (including expenses) resulting from such claims or to refund amounts they have paid to us.

Compliance with environmental regulations can be expensive, and noncompliance with these regulations may result in adverse publicity and potentially significant monetary damages and fines.

Our business operations may generate noise, wastewater, end-of-life batteries, gaseous byproduct and other industrial waste. We are required to comply with all applicable national and local regulations regarding the protection of the environment. We believe we are in compliance with current environmental protection requirements and have all necessary environmental permits to conduct our business. However, if more stringent regulations are adopted in the future, the costs of compliance with these new regulations could be substantial. Additionally, if we fail to comply with present or future environmental rules or regulations, we may be liable for cleanup costs or be required to pay substantial fines, suspend production or cease operations. Any failure by us to control the use of, or to adequately restrict the unauthorized discharge of, hazardous substances or comply with other environmental regulations could subject us to potentially significant monetary damages and fines or suspensions to our business operations. Additionally, as we expand our local assembly capabilities in our target markets, our expansion will necessarily increase our exposure to liability with respect to environmental regulations and the fines and injunctive actions related thereto and require us to spend further resources and time complying with complex environmental regulations in such jurisdictions.

Contamination at properties currently or formerly owned or operated by us, and properties to which hazardous substances were sent by us, may result in liability for us under environmental laws and regulations, including the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”). The U.S. government can impose liability on us under CERCLA for the full amount of remediation-related costs of a contaminated site without regard to fault. Such costs can include those associated with the investigation and cleanup of contaminated soil, ground water and buildings as well as to reverse impacts to human health and damages to natural resources.

Pursuant to the Environmental Protection Law of the PRC, which was adopted on December 26, 1989, and amended on April 24, 2014, effective on January 1, 2015, any entity which discharges pollutants must adopt measures to prevent and treat waste gas, waste water, waste residue, medical waste, dust, malodorous gas, radioactive substances generated in manufacturing, construction or any other activities as well as environmental pollution and hazards such as noise, vibration, ray radiation, electromagnetic radiation etc. Environmental protection authorities impose various administrative penalties on entities in violation of the Environmental Protection Law, including warnings, fines, orders to rectify within a prescribed period, cease construction, restrict or suspend production, make recovery, disclose relevant information or make an announcement, or seize and confiscate facilities and equipment which cause pollutant emissions, the imposition of administrative action against relevant responsible persons, and orders to shut down enterprises. In addition, pursuant to the Civil Code of the PRC, which was adopted on May 28, 2020, and became effective on January 1, 2021, in the event of damage caused to others as a result of environmental pollution and ecological destruction, the actor will bear tortious liability. In the event a party, in violation of laws and regulations, intentionally pollutes the environment or damages the ecology, thereby causing serious consequences, the infringed party is entitled to claim appropriate punitive damages. Any violations of the Environmental Protection Law or the Civil Code of the PRC could expose us to liabilities including fines and damages that could impact our business, prospects, financial condition and operating results.

China has implemented several regulations, policies and measures to regulate the batteries used in ECVs, which cover the security standards, recycling activities and other specifications. For example, the Interim Measures for the Management of the Recycling of Power Battery in New Energy Vehicles (“PRC Battery Measures”) regulate the recycling and disposal of end-of-life batteries for new energy vehicles. The PRC Battery Measures provide that manufacturers of new energy vehicles must take primary responsibilities of the recycling of batteries and are required, for instance, to transfer batteries that have been damaged during manufacturing to vendors that provide recycling services, and to maintain records of the vehicles they have manufactured, the identification codes of the batteries incorporated into the vehicles, and the owners of the vehicles. The batteries used in our ECVs are also subject to a number of national standards in China, including functional safety requirements and testing methods for the battery management system of electric vehicles.

The EU has specific regulations on batteries and the disposal of batteries to minimize the negative environmental effects of batteries and hazardous waste. The EU Battery Directive (2006/66/EC) (the “EU Battery Directive”) is intended to cover all types of batteries regardless of their shape, volume, weight, material composition or use. It is aimed at reducing mercury, cadmium, lead and other metals in the environment by minimizing the use of these substances in batteries and by treating and re-using old batteries. This directive applies to all types of batteries except those used to protect European Member States’ security, for military purposes, or sent into space. To achieve these objectives, the EU Battery Directive prohibits the marketing of some batteries containing hazardous substances. It establishes processes aimed at high levels of collection and recycling of batteries with quantified collection and recycling targets. The directive sets out minimum rules for producer responsibility and provisions with regard to labeling of batteries and their removability from equipment. Product markings are required for batteries and accumulators to provide information on capacity and to facilitate reuse and safe disposal. We currently ship our ECVs pursuant to the requirements of the directive. Our current estimated costs associated with our compliance with this directive based on our current market share are not significant. However, we continue to evaluate the impact of this directive as European Union member states implement guidance, and actual costs could differ from our current estimates.

In December 2020, the European Commission adopted a proposal to revise the EU Battery Directive. The proposal is designed to modernize the EU’s regulatory framework for batteries to secure the sustainability and competitiveness of battery value chains. It could introduce mandatory requirements on sustainability (such as requiring responsible sourcing of raw materials, restrictions on the use of hazardous substances, carbon footprint rules, minimum recycled content targets, performance and durability criteria), safety and labelling for the marketing and putting into service of batteries, and requirements for end-of-life management including to facilitate the repurposing of industrial and electric-vehicle batteries as stationary energy storage batteries. The proposal also includes due diligence obligations for economic operators as regards the sourcing of raw materials.

The EU Restriction of Hazardous Substances Directive 2002/95/EC (the “RoHS Directive”) places restrictions on the use of certain hazardous substances in electrical and electronic equipment. All applicable products sold in the European Union market after July 1, 2006 must comply with EU RoHS Directive. While this directive does not currently affect our ECVs in any meaningful way, should any changes occur in the directive that would affect our ECVs, we will need to comply with any new regulations that are imposed.

Our noncompliance with any of these regulations may materially and adversely affect our operations or financial condition.

We are subject to anti-corruption, anti-bribery, anti-money laundering, financial and economic sanctions and similar laws, and noncompliance with such laws can subject us to administrative, civil and criminal fines and penalties, collateral consequences, remedial measures and legal expenses, all of which could adversely affect our business, results of operations, financial condition, prospects and reputation.

We are subject to anti-corruption, anti-bribery, anti-money laundering, financial and economic sanctions and similar laws and regulations in various jurisdictions in which we conduct activities, including the U.S. Foreign Corrupt Practices Act, or FCPA and other anti-corruption laws and regulations. The FCPA prohibits us and our officers, directors, employees and business partners acting on our behalf, including agents, from corruptly offering, promising, authorizing or providing anything of value to a “foreign official” for the purposes of influencing official decisions or obtaining or retaining business or otherwise obtaining favorable treatment. The FCPA also requires companies to make and keep books, records and accounts that accurately reflect transactions and dispositions of assets and to maintain a system of adequate internal accounting controls. A violation of these laws or regulations could adversely affect our business, results of operations, financial condition, prospects and reputation.

We have direct or indirect interactions with officials and employees of government agencies and state-owned affiliated entities in the ordinary course of business. These interactions subject us to an increased level of compliance-related concerns. We are in the process of implementing policies and procedures designed to ensure compliance by us and our directors, officers, employees, representatives, consultants, agents and business partners with applicable anti-corruption, anti-bribery, anti-money laundering, financial and economic sanctions and similar laws and regulations. However, our policies and procedures may not be sufficient, and our directors, officers, employees, representatives, consultants, agents, and business partners could engage in improper conduct for which we may be held responsible.

Noncompliance with anti-corruption, anti-bribery, anti-money laundering or financial and economic sanctions laws could subject us to whistleblower complaints, adverse media coverage, investigations, and severe administrative, civil and criminal sanctions, collateral consequences, remedial measures and legal expenses, all of which could materially and adversely affect our business, results of operations, financial condition, prospects and reputation. In addition, changes in economic sanctions laws in the future could adversely affect our business and investments in our shares.

Risks Related to Information Technology, Data Security, and Privacy

We seek to continuously expand and improve our information technology systems and use security measures designed to protect our systems against breaches and cyber-attacks. If these efforts are not successful, our business and operations could be disrupted, and our operating results and reputation could be harmed.

We seek to continuously expand and improve our information technology systems, including implementing new internally developed and/or external industry standard enterprise resource planning systems (“ERP systems”), to assist us in the management of our business. We maintain information technology measures designed to protect us against intellectual property theft, data breaches and other cyber-attacks. The implementation, maintenance and improvement of these systems require significant management time, support and cost. Moreover, there are inherent risks associated with developing, improving and expanding our core systems as well as implementing new systems, including the disruption of our data management, procurement, manufacturing execution, finance and supply chain processes. Despite network security and back-up measures, our information technology systems are potentially vulnerable to physical or electronic break-ins, computer viruses and similar disruptive problems. Despite precautionary measures to prevent unanticipated problems that could affect our information technology systems, sustained or repeated system failures that interrupt our ability to generate and maintain data could adversely affect our ability to manage our data and inventory, procure parts or supplies or manufacture, sell, deliver ECVs, or achieve and maintain compliance with, or realize available benefits under, tax laws and other applicable regulations.

We cannot assure you that any of our new information technology systems or their required functionality will be effectively implemented, maintained or expanded as planned. If we do not successfully maintain our information technology or expand these systems as planned, our operations may be disrupted, our ability to accurately or timely report our financial results could be impaired, and deficiencies may arise in our internal control over financial reporting, which may adversely affect our ability to certify our financial results. Moreover, our proprietary information could be compromised or misappropriated, and our reputation may be adversely affected. If these systems or their functionality do not operate as we expect them to, we may be required to expend significant resources to make corrections or find alternative sources for performing these functions.

Data collection is governed by restrictive regulations governing the use, processing, and cross-border transfer of personal information.

International jurisdictions have their own data security and privacy legal framework with which companies or their customers must comply. The collection, use, storage, transfer, and other processing of personal data regarding individuals in the European Economic Area is governed by the General Data Protection Regulation (“GDPR”), which came into effect in May 2018. It contains numerous requirements and changes from previously existing EU law, including more robust obligations on data processors and heavier documentation requirements for data protection compliance programs by companies. Among other things, the GDPR regulates transfers of personal data subject to the GDPR to countries outside of the European Union that have not been found to provide adequate protection to such personal data, including the United States. The European Data Protection Board has issued draft guidance requiring additional measures be implemented to protect EU personal data from foreign law enforcement, including in the U.S. These additional measures may require us to expend additional resources to comply.

The GDPR also introduced numerous privacy-related changes for companies operating in the European Union, including greater control for data subjects, increased data portability for EU consumers, data breach notification requirements and increased fines. Fines of up to 20 million Euros or up to 4% of the annual global revenue of the noncompliant company, whichever is greater, could be imposed for violations of certain GDPR requirements. Such penalties are in addition to any civil litigation claims by customers and data subjects. The GDPR requirements apply not only to third-party transactions but also to transfers of information between us and our subsidiaries, including employee information.

The collection and processing of electronic communications data in the EU is regulated by the ePrivacy Directive (2002/58/EC), which applies to the confidentiality of communications, the use of tracking technologies (such as cookies), and direct marketing practices. Unlike the GDPR, which focuses on personal data protection, the ePrivacy Directive regulates the privacy of communications and metadata, including data collected from connected devices, such as our ECVs. The directive has been implemented inconsistently across EU member states, leading to fragmented compliance requirements. A proposed ePrivacy Regulation intended to replace the directive and create a uniform legal framework was withdrawn in February 2025, leaving uncertainty regarding future reforms. Compliance with varying national implementations of the ePrivacy Directive may require additional operational adjustments and could result in regulatory fines or enforcement actions if found noncompliant.

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-which could include companies managing connected devices such as our Electric Commercial Vehicles (ECVs)-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.

Following the United Kingdom’s (the “UK”) exit from the European Union, the GDPR was transposed into UK law (“UK GDPR”) as supplemented by the UK Data Protection Act 2018. As a result, the UK GDPR will not automatically incorporate any changes made to the GDPR going forward (which would need to be specifically incorporated by the UK Government). At present, the GDPR and the UK GDPR are broadly similar and have parallel regimes, which have not yet diverged significantly. However, the UK Government has launched a public consultation on proposed reforms to the data protection framework in the UK. This may lead to future divergence and variance between the two regimes.

In addition, China has laws relating to the supervision of data and information protection. The Cybersecurity Law regulates the activities of “network operators,” which include companies that manage any network under PRC jurisdiction. As such, certain of our PRC subsidiaries may be regarded as network operators under the Cybersecurity Law, since our ECVs are fitted with networking devices. The Cybersecurity Law requires that the collection of personal data is subject to consent by the person whose data is being collected.

On June 10, 2021, China enacted the Data Security Law of the PRC (“DSL”), which became effective as of September 1, 2021. The DSL introduces several changes and new features to data security regulation and a comprehensive data security regime, which authorizes national departments to conduct stricter supervision of data in China. For example, the PRC government will establish a catalogue of crucial data categories and promulgate stricter regulations over the protection of such crucial data listed in the catalogue. The DSL also will introduce the concept of “National Core Data,” which refers to data related to, among other topics, national security, the PRC economy, and significant public interests, and provides that stricter regulations may be imposed on such National Core Data. The cross-border transfer of domestic data as required by non-PRC judicial or enforcement authorities is also subject to the approval of competent Chinese authorities.

Effective January 1, 2025, China’s Network Data Security Management Regulations introduce enhanced requirements for data security and privacy, particularly concerning personal information protection, data localization, and cross-border data transfers. These regulations impose stricter compliance obligations on data handlers, including requirements to conduct regular data security risk assessments, implement classified data protection measures, and obtain governmental approval for certain cross-border data transfers. Additionally, companies processing large volumes of “important data” or “national core data” may face heightened scrutiny and stricter regulatory oversight. Failure to comply with these regulations could result in significant financial penalties, operational disruptions, revocation of business licenses, or restrictions on cross-border operations. As a result, we may be required to adjust our data handling practices, enhance internal compliance measures, and allocate additional resources to meet evolving regulatory requirements in China.

Compliance with the GDPR, the UK GDPR, the ePrivacy Directive, as well as the Cybersecurity Law, DSL and enhanced regulations in China, may involve substantial operational costs or require us to change business practices. While we have not had a substantial presence in the European Union historically, in January 2022, we opened our European Operations Center in Dusseldorf, Germany and, in March 2022, we acquired a 65% equity interest in Tropos Motors Europe GmbH (“TME”), a “private label” channel partners that assembles and distributes branded ECVs based on our Metro® called the ABLE and one of our largest customers since 2019. As a result, we may be required to comply with certain provisions of the GDPR. As a result, we may need to undertake an update of certain of our business practices, including (i) updating internal records, policies and procedures; (ii) updating publicly facing privacy notices and consent mechanisms, where required; (iii) implementing employee privacy training; (iv) appointing an individual responsible for privacy compliance; (v) implementing an inter-group data transfer agreement; (vi) reviewing/updating contracts with vendors that process data on our behalf, and (vii) implementing an audit framework. Furthermore, if we begin selling our ECVs directly to end-users in the European Union, UK or China, we would likely be required to comply with additional regulatory requirements. To the extent we become subject to any such regulations, our noncompliance could result in proceedings by governmental entities, customers, data subjects or others and may result in fines, penalties, and civil litigation claims.

Our ECVs are fitted with a networking device connecting the vehicle to our proprietary cloud-based software, which enables end-users to collect data about vehicle configuration, vehicle status and user efficiency through a system of digitally enabled components, which we sometimes refer to as “smart components.” With the permission of the end-users of the vehicles, we received data collected from approximately 950 Metro® units that we put into service through a company affiliated with our former parent company, CAG Cayman, in the Chinese market. This data included vehicle-specific data collected for operational analysis, which we used to make improvements in the quality and durability of such components. We enable end-users to collect, store and analyze data using tools that we have developed but we do not have access to this end-user collected data unless we request and receive access from the end-user. We do not currently collect, use or store any vehicle-specific or driver-specific data in any region and do not intend to do so in the future.

These laws, rules, and regulations are constantly evolving and may be interpreted, applied, created, or amended in a manner that could harm our current or future business and operations and may result in ever increasing regulatory and public scrutiny and escalating levels of enforcement and sanctions. Any significant changes to applicable laws, regulations, or industry practices regarding the use, transfer, or disclosure of individual data, or regarding the manner in which the express or implied consent of individuals for the use and disclosure of such data is obtained - or in how these applicable laws, regulations, or industry practices are interpreted and enforced by state, federal, and international privacy regulators - could require us to modify our services and features, possibly in a material and costly manner, may subject us to legal claims, regulatory enforcement actions and fines, and may limit our ability to develop new services and features that make use of the data that individuals share with us, should we begin to collect such data.

To the extent we are required to comply with regulations under the GDPR, the UK GDPR, the ePrivacy Directive, the Cybersecurity Law, the DSL and China’s enhanced regulations (collectively, the “Data Security Regulations”), any non-compliance could adversely affect our business, financial condition, results of operations and prospects. Compliance with Data Security Regulations may be a rigorous and time-intensive process that may increase our cost of doing business or require us to change our business practices, and despite those efforts, there is a risk that we may be subject to fines and penalties, litigation, and reputational harm in connection with any future activities.

Any unauthorized control or manipulation of our ECV’s information technology systems could result in loss of confidence in us and our ECVs and harm our business.

Our ECVs are equipped with complex information technology systems. For example, our ECVs are designed with built-in data connectivity to improve their functionality. We have designed, implemented and tested security measures intended to prevent unauthorized access to our information technology networks, our ECVs and their systems. However, hackers may attempt in the future to gain unauthorized access to modify, alter and use such networks and ECV systems to gain control of, or to change, our ECVs’ functionality, user interface and performance characteristics, or to gain access to data stored in or generated by our ECVs. In addition, there are limited preventative measures that we can take to prevent unauthorized access to our information technology network by an employee that is knowledgeable about our information technology network and its various safeguards. We encourage reporting of potential vulnerabilities in the security of our ECVs, and we aim to remedy any reported and verified vulnerability. However, there can be no assurance that vulnerabilities will not be exploited in the future before they can be identified, or that our remediation efforts are or will be successful.

Any unauthorized access to or control of our ECVs or their systems or any loss of data could result in legal claims or proceedings. In addition, regardless of their veracity, reports of unauthorized access to our ECVs, their systems or data, as well as other factors that may result in the perception that our ECVs, their systems or data are capable of being “hacked,” could adversely affect our brand, business, financial condition, operating results and prospects.

Breaches in data security, failure of information security systems, cyber-attacks or other security or privacy-related incidents affecting us or our suppliers could have a material adverse effect on our reputation and brand, harm our business, prospects, financial condition, results of operations, and cash flows, and subject us to legal or regulatory fines or damages.

Threats to networks and information technology infrastructure are increasingly diverse and sophisticated. Traditional computer “hackers,” malicious code (such as viruses and worms), phishing attempts, employee theft or misuse, denial of service attacks, ransomware attacks, and sophisticated nation-state and nation-state supported actors engage in intrusions and attacks that create risks for our (and our suppliers’) internal networks, vehicles, infrastructure, and cloud deployed products and the information they store and process, including personal information of our employees and customers, including names, accounts, user IDs and passwords, vehicle information, and payment or transaction related information. Although we have implemented security measures designed to prevent such attacks, our networks and systems may be breached due to the actions of outside parties, employee error, malfeasance, a combination of these, or otherwise, and as a result, an unauthorized party may obtain access to our systems, networks, or data, resulting in data being publicly disclosed, altered, lost, or stolen, which could subject us to liability and adversely impact our financial condition. Further, any breach in our data security could allow malicious parties to access sensitive systems, such as our product lines and the vehicles themselves. Such access could adversely impact the safety of our employees and customers. We and our suppliers have been and continue to be subject to ransomware and phishing attacks. While we seek to learn from all attacks directed at us and implement remedial measures where necessary under the framework of our cybersecurity risk management program we have developed and expect our suppliers to do the same, we cannot guarantee that such remedial measures will prevent material cybersecurity incidents in the future. We also face increasing and evolving disclosure obligations related to cyber and other security events. Despite our cybersecurity risk management program and processes, we may fail to meet our existing or future disclosure obligations and/or may have our disclosures misinterpreted.

Any actual, alleged, or perceived failure to prevent a security breach or to comply with our privacy policies or privacy-related legal obligations, failure in our systems or networks, or any other actual, alleged, or perceived data security incident we or our suppliers suffer, could result in: damage to our reputation; negative publicity; loss of customers and sales; loss of competitive advantages over our competitors; increased costs to remedy any problems and provide any required notifications, including to regulators and individuals, and otherwise respond to any incident; regulatory investigations and enforcement actions; costly litigation; and other liabilities. In addition, we may incur significant financial and operational costs to investigate, remediate, and implement additional tools, devices, and systems designed to prevent actual or perceived security breaches, and other security or privacy-related incidents, as well as costs to comply with any notification obligations resulting from any such incidents. Further, we could also be exposed to a risk of loss or litigation and potential liability under laws, regulations, and contracts that protect the privacy and security of personal information. Any of these negative outcomes could adversely impact the market perception of our products and customer and investor confidence in our Company, and would materially and adversely affect our business, prospects, financial condition, results of operations, or cash flows.

Risks Related to Doing Business in China

Changes in China’s economic, political or social conditions or government policies could have a material adverse effect on our business, results of operations, financial condition and prospects.

A significant amount of our assets and operations are located in China. Accordingly, our business, financial condition, results of operations and prospects may be influenced by political, economic and social conditions in China generally. The Chinese economy differs from the economies of most developed countries in many respects, including the level of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. Although the Chinese government has implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets, and the establishment of improved corporate governance in business enterprises, a substantial portion of productive assets in China is still owned by the government. In addition, the Chinese government continues to play a significant role in regulating industry development by imposing industrial policies. The Chinese government also exercises significant control over China’s economic growth through allocating resources, controlling payment of foreign currency-denominated obligations, setting monetary policy, and providing preferential treatment to particular industries or companies. In some instances, these regulatory measures could negatively impact us. For instance, the Chinese government restricts foreign direct investment in certain industries, which could in the future, if such restrictions are expanded to include the ECV industry, limit our ability to operate through Chinese subsidiaries.

Any adverse changes in economic conditions in China, in the policies of the Chinese government or in the laws and regulations in China could have a material adverse effect on the overall economic growth of China. Such developments could adversely affect our business and operating results, lead to reduction in demand for our ECVs and adversely affect our competitive position. While the Chinese economy has experienced significant growth over the past decades, growth has been uneven, both geographically and among various sectors of the economy. The Chinese government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures may benefit the overall Chinese economy but may have a negative effect on us. For example, our business, results of operations, financial condition and prospects may be adversely affected by government control over capital investments or changes in tax regulations. In addition, in the past the Chinese government has implemented certain measures, including interest rate adjustments, to control the pace of economic growth. These measures may cause decreased economic activity in China, which may also adversely affect our business, results of operations, financial condition and prospects.

The PRC government may intervene or otherwise adversely affect our operations at any time, or may exert more control over foreign investment in issuers with operations in China, which could materially affect our operations.

The PRC government may intervene or otherwise adversely affect our operations at any time, or may exert more control over foreign investment in issuers with operations in China, which could materially affect our operations. For example, the PRC government has recently published new policies that significantly affected certain industries such as the education and Internet industries, and we cannot rule out the possibility that it will in the future release regulations or policies regarding the electric commercial vehicle or any other related industry that could adversely affect the business, financial condition and results of operations of our company. Furthermore, the PRC government has also recently indicated an intent to exert more oversight and control over foreign investment in companies with China-based operations. Rules and regulations in China can change with little advance notice. Any such action, once taken by the PRC government, could cause the value of such securities to significantly decline.

Recently, the PRC government initiated a series of regulatory actions and statements to regulate business operations in China with little advance notice, including cracking down on certain activities in the securities market, enhancing supervision over China-based companies listed overseas (particularly those using variable interest entity structures), adopting new measures to extend the scope of cybersecurity reviews (particularly for companies that process large amounts of sensitive consumer data), and expanding efforts in anti-monopoly enforcement. Since these statements and regulatory actions are new, it is highly uncertain how soon legislative or administrative bodies will respond, what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, if any, and the potential impact such modified or new laws and regulations will have on our daily business operations or the ability to accept foreign investments.

Uncertainties with respect to the Chinese legal system could materially and adversely affect us and may restrict the level of legal protections to foreign investors.

China’s legal system is based on statutory law. Unlike the common law system, statutory law is based primarily on written statutes. Previous court decisions may be cited as persuasive authority but do not have a binding effect. Although the Supreme People’s Court has determined and issued guiding caselaw that courts should refer to when trying similar cases, it may not sufficiently cover all aspects of economic activities in China. Since 1979, the Chinese government has been promulgating and amending laws, regulations and relevant interpretations regarding economic matters, such as corporate organization and governance, foreign investment, commerce, taxation and trade. However, since these laws and regulations are relatively new, and the Chinese legal system continues to rapidly evolve, the interpretation of many laws, regulations and rules is not always uniform, and enforcement of these laws, regulations and rules may involves uncertainties, which may limit legal protections available to us.

In addition, any litigation in China may be protracted and may result in substantial costs and diversion of resources and management’s attention. The legal system in China may not provide investors with the same level of protection as in the United States or Australia. We are governed by laws and regulations generally applicable to local enterprises in China. Many of these laws and regulations are still being continuously revised and improved. Interpretation, implementation and enforcement of the existing laws and regulations can be uncertain and unpredictable and therefore may restrict the legal protections available to foreign investors.

We currently conduct a significant amount of our operations through our subsidiaries established in China. Adverse regulatory developments in China may subject us to additional regulatory review or regulatory approval, and additional disclosure requirements. Also, regulatory scrutiny in response to recent tensions between the United States and China may impose additional compliance requirements for companies like ours with significant China-based operations. These developments could increase our compliance costs or subject us to additional disclosure requirements.

We currently conduct a significant amount of our operations through our subsidiaries established in China. Because of our corporate structure, we and our investors are subject to unique risks due to uncertainty regarding the interpretation and application of currently enacted PRC laws and regulations and any future actions of the PRC government relating to companies with significant PRC operations, and the possibility of sanctions imposed by PRC regulatory agencies, including the China Securities Regulatory Commission, if we fail to comply with their rules and regulations. For example, as a result of our PRC operations, we are subject to PRC laws relating to, among others, data security and restriction over foreign investments. Recent regulatory developments in China, in particular with respect to restrictions on companies with significant operations in China raising capital offshore, including companies that process large amounts of sensitive consumer data and companies with a variable interest entities structure, or a VIE structure, may lead to additional regulatory review or approval in China over our financing and capital raising activities in the U.S. capital markets. On December 28, 2021, the Cyberspace Administration of China (the “Cyberspace Administration”) and other competent authorities issued the amended Cybersecurity Review Measures (effective as of February 2022), which provides, among other things, that online platform operators (i.e., over one million users) must apply for cybersecurity review prior to public listings outside of China. Under such rules, the Cyberspace Administration has jurisdiction to review and limit foreign public listings of critical information infrastructure operators (data operators in industries such as energy, water conservancy and public services) and online platform operators with more than one million users (for example, companies that operate consumer platforms such as ride-sharing, personal banking or retail).

Additionally, on December 24, 2021, the China Securities Regulatory Commission (“CSRC”) published the Regulations of the State Council on the Administration of Overseas Issuance and Listing of Securities by Domestic Enterprises (Draft for Public Comments) and the Measures for the Administration of Overseas Issuance and Listing of Securities by Domestic Enterprises (Draft for Public Comments) for public comments, which will apply to a domestic enterprise that issues shares, depositary receipts, corporate bonds convertible into shares, or other securities of an equity nature outside of the PRC, or lists its securities for trading outside of the PRC.

On February 17, 2023, the CSRC issued the Overseas Offering and Listing Measures, which provides principles and guidelines for direct and indirect issuance of securities overseas by a Chinese domestic company. Under the Overseas Offering and Listing Measures, the substance rather than the form of issuance will govern when determining whether an issuance constitutes “indirect issuance of securities overseas by a Chinese domestic company”, and an issuance meeting the following two conditions simultaneously will be deemed as an “indirect issuance of securities overseas by a Chinese domestic company”: (i) 50% or more of the issuer’s operating revenue, total profit, total assets or net assets as documented in its audited consolidated financial statements for the most recent accounting year is accounted for by domestic enterprises, and (ii) the principal business is conducted or the principal business place is within the territory of mainland China, or the majority of senior management in charge of business operation are Chinese citizens or have habitual residence within the territory of mainland China. In the event any listing or issuance of securities has fallen under this definition, the issuer shall assign one of its related major Chinese domestic operating entities to make filings with the CSRC within three business days after its initial public offering or any offerings after the initial public offering. As the Company is an Australian company with (i) only partial business operations conducted within the territory of mainland China constituting less than 50% of our total financials on a consolidated basis, and (ii) does not have its principal business conducted or the principal business place within the territory of mainland China, or have majority of senior management in charge of business operation are Chinese citizens or have habitual residence within the territory of mainland China, we understand the Company’s listing and issuance of securities on Nasdaq will not constitute an indirect issuance of securities overseas by a Chinese domestic company under the Overseas Offering and Listing Measures. However, even if we were subject to the Overseas Offering and Listing Measures according to the Overseas Offering and Listing Notice, an issuer who has completed overseas issuance and listing before March 31, 2023 like us is not required to file with the CSRC for the offering or listing that is already completed but is required to make filings with the CSRC for its follow-on financing activities involving overseas offering or listing after the effective date of the Overseas Offering and Listing Measures. As such, we are not required to make filings with CSRC under the Overseas Offering and Listing Measures unless we qualify under the above criteria and conduct new overseas offerings of our securities in the future. As the Overseas Offering and Listing Measures is recently issued and the interpretations and implementation of such regulation still involve uncertainties, we cannot assure you that the Company, and its subsidiaries can complete the filings with the CSRC if the Company become subject to the Listing Measures intends to conduct new overseas offerings of its securities after March 31, 2023. In addition, since regulatory regime of the PRC for securities activities continues to rapidly evolve, we cannot assure you that we will not be required in the future to make filings with or obtain approvals from the CSRC or potentially other regulatory authorities in order to maintain the listing status on Nasdaq due to changes or passing of applicable laws, regulations, or interpretations in the future. In the event that it is determined that the Company, and its subsidiaries are required to make filings with or obtain approval from the CSRC or any other regulatory authority but fail to make such filings or obtain such approvals timely or at all, the PRC subsidiaries of the Company may be subject to non-compliance rectification order, warning letters or fines, which could materially and adversely affect our business, financial condition, and results of operations, and/or the value of our Common Stock, or could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless.

In addition, on July 30, 2021, in response to the recent regulatory developments in China and actions adopted by the PRC government, the Chairman of the SEC issued a statement asking the SEC staff to seek additional disclosures from offshore issuers associated with China-based operating companies before their registration statements will be declared effective, including detailed disclosure related to VIE structures and whether the VIE and the issuer, when applicable, received or were denied permission from Chinese authorities to list on U.S. exchanges and the risks that such approval could be denied or rescinded.

We may face heightened scrutiny and negative publicity, which could result in a material change in our operations or significantly limit our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline. Additionally, recent statements by PRC authorities and changes in PRC internal regulatory mandates, such as certain rules surrounding mergers and acquisitions, the Data Security Law, and rules related to entities using a variable interest entity structure, may target the Company due to our significant operations in China and impact our ability to conduct business, accept foreign investments, or maintain a listing on a U.S. exchange. We cannot predict the effects of future developments in the PRC legal system. We may be required in the future to procure additional permits, authorizations and approvals for our existing and future operations, which may not be obtainable in a timely fashion or at all and which could materially affect our operations as a business. The occurrence of any of the aforementioned regulatory obstacles or the inability to obtain such permits or authorizations may have a material and adverse effect on our business, financial condition and results of operations.

Increases in labor costs and enforcement of stricter labor laws and regulations in China may adversely affect our business and our profitability.

China’s overall economy and the average wage in China have increased in recent years and are expected to grow. The average wage level for our employees has also increased in recent years. We expect that our labor costs, including wages and employee benefits, will increase. Unless we are able to take effective measures to reduce labor costs or pass on these increased labor costs to those who pay for our ECVs, our profitability and results of operations may be materially and adversely affected.

In addition, we have been subject to stricter regulatory requirements in terms of entering into labor contracts with our employees, limitation with respect to utilization of labor dispatching, applying for foreigner work permits, labor protection and labor condition and paying various statutory employee benefits, including pensions, housing fund, medical insurance, work-related injury insurance, unemployment insurance and maternity insurance to designated government agencies for the benefit of our employees. Pursuant to the PRC Labor Contract Law and its implementation rules, employers are subject to stricter requirements in terms of signing labor contracts, minimum wages, paying remuneration, determining the term of employee’s probation and unilaterally terminating labor contracts. In the event that we decide to terminate some of our employees or otherwise change our employment or labor practices, the PRC Labor Contract Law and its implementation rules may limit our ability to effect those changes in a desirable or cost-effective manner, which could adversely affect our business and results of operations.

In October 2010, the Standing Committee of the National People’s Congress promulgated the PRC Social Insurance Law, which came into effect on July 1, 2011 and was amended on December 29, 2018. On April 3, 1999, the State Council of the People’s Republic of China (the “State Council”) promulgated the Regulations on the Administration of Housing Funds, which was amended on March 24, 2002 and March 24, 2019. Companies registered and operating in China are required under the Social Insurance Law and the Regulations on the Administration of Housing Funds to apply for social insurance registration and housing fund deposit registration within 30 days of their establishment, and to pay for their employees different social insurance including pension insurance, medical insurance, work-related injury insurance, unemployment insurance and maternity insurance to the extent required by law, as well as housing provident funds. If we are deemed to have violated relevant social insurance and housing funds regulations, we could be subject to orders by the competent authorities for rectification and failure to comply with such orders may further subject us to administrative fines or other corresponding measures.

As the interpretation and implementation of labor-related laws and regulations are still evolving, our employment practices may violate labor-related laws and regulations in China, which may subject us to labor disputes or government investigations. We cannot assure you that we have complied or will be able to comply with all labor-related law and regulations including those relating to obligations to make social insurance payments and contribute to the housing provident funds. If we are deemed to have violated relevant labor laws and regulations, we could be required to provide additional compensation to our employees or assume other responsibilities and our business, financial condition and results of operations will be adversely affected.

Fluctuations in the value of the RMB and restrictions on currency exchange may adversely affect our business.

The reporting currency of our U.S. subsidiary is the U.S. Dollar while our Chinese subsidiaries’ functional currency is RMB. Our Audited Financial Statements are presented in USD and will be affected by the foreign exchange rate of the Renminbi (“RMB”) against the USD. During the years ended December 31, 2025, and 2024, significant portions of our revenues were derived from the sales in the European Union and United States, denominated in Euros or USD, respectively, while our costs and expenses were primarily incurred in the PRC (and denominated in RMB). The value of the RMB against the Euro, USD and other currencies is affected by changes in China’s political and economic conditions and by China’s foreign exchange policies, as well as currency market conditions and other factors.

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, 2025 the RMB appreciated against the USD by approximately 4%.

Currency exchange rate fluctuation in either direction can negatively impact our results of operations or financial condition. Appreciation in RMB could have the effect of increasing our operating costs so long as a material amount of our current operations occur in China. Conversely, appreciation of USD against the RMB could have the effect of reducing the value of our cash and cash equivalents in China for the purpose of paying any cash dividends.

We may rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiaries to make payments to us could have a material and adverse effect on our ability to conduct our business.

We conduct our operations in various countries, including China, through wholly owned subsidiaries with direct equity ownership. If our PRC subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other distributions to us. Under PRC laws and regulations, our PRC subsidiaries, which are foreign-owned enterprises, may pay dividends only out of their respective accumulated profits as determined in accordance with PRC accounting standards and regulations. In addition, a foreign-owned enterprise is required to set aside at least 10% of its accumulated after-tax profits each year, if any, to fund a certain statutory reserve fund, until the aggregate amount of such fund reaches 50% of its registered capital. Such reserve funds cannot be distributed to us as dividends. At its discretion, a foreign-owned enterprise may allocate a portion of its after-tax profits based on PRC accounting standards to an enterprise expansion fund, or a staff welfare and bonus fund. To date, we have not been required to set aside and fund any such statutory reserve fund, as we have, since our inception, incurred net losses.

Under applicable PRC accounting standards and regulations, intercompany transfers are accounted for under either a general account, for cash transfers in the ordinary course of business, or a capital account, for cash transfers on investments (i.e., dividends and loan repayments). With respect to our capital account, we can send capital investments to our subsidiaries for working capital and our subsidiaries can use such capital at their discretion. To the extent one of our PRC subsidiaries declares and pays a dividend, such subsidiary must pay a transfer tax of 15% to repatriate any profit distributed to our Australian parent company. Our PRC subsidiaries, as Wholly Foreign Owned Enterprises (WFOEs) under PRC law, can make dividends up to CAG HK without prior PRC regulatory approval. However, any such subsidiary is limited in its ability to make dividends while that subsidiary has either net losses in the current period or accumulated net losses from prior periods and will only be able to pay dividends during periods in which it has positive net income and no accumulated net losses. We have not made any cash distributions or transfers of other assets between us and any of our subsidiaries. To date, there have been no net profits recognized at any of our PRC subsidiaries and thus there have not been any dividends or distributions made by any of our subsidiaries. With respect to our general account, our subsidiaries purchase and pay for materials and parts, and receive funds for the sale of vehicle kits and vehicles. There is no PRC government approval required for transactions in our general account, where funds can be sent and received in the ordinary course of business freely without government approvals.

Revenue generated in Renminbi by our PRC Subsidiaries is not freely convertible into other currencies. As a result, any restriction on currency exchange may limit the ability of our PRC subsidiaries to use their Renminbi revenues to pay dividends to us.

The PRC government may continue to strengthen its capital controls and more restrictions and substantial vetting processes may be put forward by the State Administration of Foreign Exchange, or SAFE, for cross-border transactions. Any limitation on the ability of our PRC subsidiaries to pay dividends or make other kinds of payments to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business. In addition, the Enterprise Income Tax Law and its implementation rules provide that a withholding tax rate of up to 10% will be applicable to dividends payable by Chinese companies to non-PRC-resident enterprises unless otherwise exempted or reduced according to treaties or arrangements between the PRC central government and governments of other countries or regions where the non-PRC-resident enterprises are incorporated.

Changes in U.S. and international trade policies, particularly with regard to China, may adversely impact our business and operating results.

Since the beginning of 2018, there has been increasing rhetoric, in some cases coupled with legislative or executive action, from several U.S. and foreign leaders regarding tariffs against foreign imports of certain materials. More specifically, there have been several rounds of U.S. tariffs on Chinese goods taking effect in the past few years, some of which prompted retaliatory Chinese tariffs on U.S. goods. Most recently, on March 4, 2025, U.S. president, Donald J. Trump, announced that the U.S. would impose an additional 20% tariff on Chinese imports starting March 4, 2025. The additional tariffs imposed by the U.S. government on certain products imported from China may impact our supply chain and cost structure. Additionally, the U.S. government continues to signal that it may alter trade agreements and terms between China and the United States, including limiting trade with China, and may impose additional tariffs on imports from China and other countries from which we import goods. By January 2020, China and the United States had reached a phase one trade deal to roll back tariffs and suspend certain tariff increases by the United States that were scheduled to take effect; however, such phase one trade deal made reductions in tariffs contingent on certain purchase concessions from China. As of March 2022, China has yet to satisfy the trade deal’s purchase conditions and tariff levels have not been reduced under the agreement. The institution of trade tariffs both globally and between the U.S. and China specifically carries the risk of negatively affecting both countries’ overall economic condition. If these tariffs continue or additional new tariffs are imposed in the future, they could have a negative impact on us as we have significant operations in China.

The Chinese government has adopted legislation and new regulations designed to counteract U.S. trade policies towards China, including the Anti-Foreign Sanctions Law and the Ministry of Commerce of the People’s Republic of China Order No. 1 of 2021 on Rules on Counteracting Unjustified Extraterritorial Application of Foreign Legislation and Other Measures. Pursuant to the Anti-Foreign Sanctions Law, all entities and individuals (including subsidiaries of multinational companies and foreign citizen) in China (including Hong Kong and Macao) risk being on the anti-sanctions list if they are deemed to aid and abet in the implementation of sanctions imposed by foreign countries. Continuing trade tensions between China and the United States could adversely affect our business and our operations.

It may be difficult for overseas regulators to conduct investigations or collect evidence within China.

Shareholder claims or regulatory investigations that are common in the United States and other developed countries generally are difficult to pursue as a matter of law or practicality in China. For example, in China, there are significant legal and other obstacles to providing information needed for regulatory investigations or litigation initiated outside China. Although the authorities in China may establish a regulatory cooperation mechanism with the securities regulatory authorities of another country or region to implement cross-border supervision and administration, such cooperation with the securities regulatory authorities in the Unities States may not be efficient in the absence of mutual and practical cooperation mechanism. Furthermore, according to Article 177 of the PRC Securities Law, or Article 177, which became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigation or evidence collection activities within the territory of the PRC. While detailed interpretation of or implementation rules under Article 177 have yet to be promulgated, the inability for an overseas securities regulator to directly conduct investigations or evidence collection activities within China may further increase difficulties faced by you in protecting your interests.

PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from making loans to or make additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.

Under PRC laws and regulations, we are permitted to utilize the proceeds of any financing outside China to fund our PRC subsidiaries by making loans to or additional capital contributions to our PRC subsidiaries, subject to applicable government registration, statutory limitations on amount and approval requirements. These PRC laws and regulations may limit our ability to use Renminbi converted from the net proceeds of any financing outside China to make future loans to our PRC subsidiaries or future capital contributions by us to our PRC subsidiaries. If we fail to complete such registrations or obtain such approvals, our ability to capitalize or otherwise fund our PRC operations may be negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand our business.

PRC regulations relating to offshore investment activities by PRC residents may limit our PRC subsidiaries’ ability to increase their registered capital or distribute profits to us or otherwise expose us or our PRC resident beneficial owners to liability and penalties under PRC law.

SAFE requires PRC residents or entities to register with SAFE or its local branch in connection with their establishment or control of an offshore entity established for the purpose of overseas investment or financing. In addition, such PRC residents or entities must update their SAFE registrations when the offshore special purpose vehicle undergoes certain material events.

If our stockholders who are PRC residents or entities do not complete their registration with the local SAFE branches, our PRC subsidiaries may be prohibited from distributing their profits and any proceeds from any reduction in capital, share transfer or liquidation to us, and we may be restricted in our ability to contribute additional capital to our PRC subsidiaries. Moreover, failure to comply with SAFE registration requirements could result in liability under PRC laws for evasion of applicable foreign exchange restrictions.

However, we may not be informed of the identities of all the PRC residents or entities holding direct or indirect interests in our company, nor can we compel our beneficial owners to comply with SAFE registration requirements. As a result, we cannot assure you that all of our stockholders or beneficial owners who are PRC residents or entities have complied with, and will in the future make or obtain, any applicable registrations or approvals required by, SAFE regulations. Failure by such shareholders or beneficial owners to comply with SAFE regulations, or failure by us to amend the foreign exchange registrations of our PRC subsidiaries, could subject us to fines or legal sanctions, restrict our overseas or cross-border investment activities, limit our PRC subsidiaries’ ability to make distributions or pay dividends to us or affect our ownership structure, which could adversely affect our business and prospects.

Any failure to comply with PRC regulations regarding the registration requirements for employee share incentive plans may subject the PRC plan participants or us to fines and other legal or administrative sanctions.

Under SAFE regulations, PRC residents who participate in a share incentive plan in an overseas publicly listed company may be required to register with SAFE or its local branches and complete certain other procedures. We and our PRC resident employees who participate in our share incentive plans may become subject to these regulations. If we or any of these PRC resident employees fail to comply with these regulations, we or such employees may be subject to fines and other legal or administrative sanctions. We also face regulatory uncertainties that could restrict our ability to adopt additional incentive plans for our directors, executive officers and employees under PRC law.

You may experience difficulties in enforcing foreign judgments or bringing actions in China against us based on foreign laws.

The recognition and enforcement of foreign judgments in China are provided for under the PRC Civil Procedures Law. PRC courts may recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedures Law based either on treaties between China and the country where the judgment is made or on principles of reciprocity between jurisdictions. China does not have any treaties or other forms of reciprocity with the United States or Australia that provide for the reciprocal recognition and enforcement of foreign judgments. In addition, according to the PRC Civil Procedures Law, PRC courts will not enforce a foreign judgment if they decide that the judgment violates the basic principles of PRC laws or national sovereignty, security or public interest. As a result, it is uncertain whether and on what basis a PRC court would enforce a judgment rendered by a court in the United States or Australia against any of our subsidiaries or assets located in China.

Risks Related to Our Common Stock

Our Common Stock may be delisted under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect our auditors. The delisting of our common stock, or the threat of their being delisted, may materially and adversely affect the value of your investment.

The Holding Foreign Companies Accountable Act, or the HFCA Act, was enacted on December 18, 2020. The HFCA Act states if the SEC determines that a company has filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the PCAOB for three consecutive years beginning in 2021, the SEC shall prohibit such Common Stock from being traded on a national securities exchange or in the over-the-counter trading market in the U.S.

On March 24, 2021, the SEC adopted interim final rules relating to the implementation of certain disclosure and documentation requirements of the HFCA Act. A company will be required to comply with these rules if the SEC identifies it as having a “non-inspection” year under a process to be subsequently established by the SEC. The SEC is assessing how to implement other requirements of the HFCA Act, including the listing and trading prohibition requirements described above. Furthermore, on June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, which, if enacted, would amend the HFCA Act and require the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three. A bill corresponding to the Senate’s Accelerating Holding Foreign Companies Accounting Act was introduced in the U.S. House of Representatives on December 13, 2021, though such legislation has not yet been passed. On September 22, 2021, the PCAOB adopted a final rule implementing the HFCA Act, which provides a framework for the PCAOB to use when determining, as contemplated under the HFCA Act, whether the PCAOB is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction. On December 2, 2021, the SEC issued amendments to finalize rules implementing the submission and disclosure requirements in the HFCA Act. The rules apply to registrants that the SEC identifies as having filed an Annual Report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that PCAOB is unable to inspect or investigate completely because of a position taken by an authority in foreign jurisdictions. On December 16, 2021, the PCAOB issued a Determination Report which found that the PCAOB is unable to inspect or investigate completely registered public accounting firms headquartered in: (i) China, and (ii) Hong Kong.

Our current auditor, GGF, the independent registered public accounting firm that issues the audit report included in this annual report on Form 10-K, as a firm registered with the PCAOB (PCAOB ID:2729), is subject to laws in the U.S. pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards. GGF, whose audit report is included in this report, is headquartered in Guangzhou, China, and, as of the date of this Annual Report, was not included in the list of PCAOB Identified Firms in the Determination Report. Recent developments create uncertainty as to the PCAOB’s continued ability to conduct inspections of our independent accounting firm GGF.

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.

Our Common Stock price may be volatile, and the value of our Common Stock may decline.

The market price of our Common Stock may be highly volatile and may fluctuate or decline substantially as a result of a variety of factors, some of which are beyond our control, including:

• our future financial performance, including expectations regarding our revenue, expenses and other operating results;
• changes in customer acceptance rates or the pricing of our vehicles;
• delays in the production of our vehicles;
• our ability to establish new channel partners and successfully retain existing channel partners;
• our ability to anticipate market needs and develop and introduce new and enhanced vehicles to adapt to changes in our industry;
• the success of our competitors;
• our operating results failing to meet the expectations of securities analysts or investors in a particular period;
• changes in financial estimates and recommendations by securities analysts concerning us or the industry in which we operate in general;
• the stock price performance of other companies that investors deem comparable to us;
• announcements by us or our competitors of significant business developments, acquisitions, strategic partnerships, joint ventures, collaborations or capital commitments;
• future investments in our business, our anticipated capital expenditures and our estimates regarding our capital requirements;
• disputes or other developments related to our intellectual property or other proprietary rights, including litigation;
• changes in our capital structure, including future issuances of securities or the incurrence of debt;
• changes in senior management or key personnel;
• changes in laws and regulations affecting our business;
• commencement of, or involvement in, investigations, inquiries or litigation;
• the inherent risks related to the electric commercial vehicle industry;
• the trading volume of our Common Stock; and
• general economic and market conditions.

Broad market and industry fluctuations, as well as general economic, political, regulatory, and market conditions, may also negatively impact the market price of our Common Stock. In addition, technology stocks have historically experienced high levels of volatility. In the past, companies that have experienced volatility in the market price of their securities have been subject to securities class action litigation. We may be the target of this type of litigation in the future, which could result in substantial expenses and divert our management’s attention.

Concentration of ownership among our executive officers, directors and their affiliates, may prevent new investors from influencing significant corporate decisions.

As of December 31, 2025, our executive officers, directors and their affiliates beneficially own, in the aggregate, approximately 8.6% of our outstanding Common Stock. In particular, as of December 31, 2025, Mr. Peter Z. Wang, our Chief Executive Officer, beneficially owned approximately 8.5% of our outstanding Common Stock.

Mr. Wang is able to exercise a significant level of influence over all matters requiring shareholder approval, including the election of directors, amendments of our Constitution and approval of significant corporate transactions. This influence could have the effect of delaying or preventing a change of control of our company or changes in management and will make the approval of certain transactions difficult or impossible without the support of Mr. Wang.

Future sales of our Common Stock by us in the public market could cause the market price of our Common Stock to decline. The issuance of additional Common Stock in connection with financings, acquisitions, investments, our equity incentive plans or otherwise will dilute all other shareholders.

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.

The issuance of additional Common Stock in the future will result in dilution to all other shareholders. In addition, we expect to grant equity awards to employees, directors and consultants under our equity incentive plans. As part of our business strategy, we may acquire or make investments in companies, products or technologies and issue equity securities to pay for any such acquisition or investment. Any such issuances of additional share capital may cause shareholders to experience significant dilution of their ownership interests and the per share value of our Common Stock to decline.

If securities or industry analysts do not publish research or publish unfavorable or inaccurate research about our business, the market price and trading volume of our Common Stock could decline.

The market price and trading volume of our Common Stock is heavily influenced by the way analysts interpret our financial information and other disclosures. We do not have control over these analysts. If industry analysts cease coverage of us or if securities analysts do not publish research or reports about our business, the price of our Common Stock may be negatively affected. If securities or industry analysts downgrade our Common Stock or publish negative reports about our business, the price of our Common Stock would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our Common Stock could decrease, which might cause a decline in the price of our Common Stock and could decrease the trading volume of our Common Stock.

We do not intend to pay dividends for the foreseeable future and, as a result, your ability to achieve a return on your investment will depend on appreciation in the price of our Common Stock.

We have never declared or paid any cash dividends on our Common Stock, and we do not intend to pay any cash dividends in the foreseeable future. Any determination to pay dividends in the future will be at the discretion of our Board. Accordingly, you may need to rely on sales of our Common Stock after price appreciation, which may never occur, as the only way to realize any future gains on your investment.

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 delisting 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.

On April 25, 2025, we received a written notification from Nasdaq, notifying us that we are not in compliance with the minimum closing bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2) for continued listing on Nasdaq. In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we were provided 180 calendar days, or until October 22, 2025, to regain compliance with Nasdaq Listing Rule 5550(a)(2). To regain compliance, our Common Stock must have a closing bid price of at least US$1.00 for a minimum of 10 consecutive business days. In the event we do not regain compliance by October 22, 2025, we may be eligible for additional time to regain compliance or may face delisting. On October 23, 2025, we received a written notice granting an additional 180-day calendar days, or until April 20, 2026, to regain compliance.

In an effort to regain compliance with the minimum bid price requirement, we effected a Reverse Stock Split of our outstanding Common Stock at a ratio of 1-for-60, which became effective on April 13, 2026. As a result of the Reverse Stock Split, every sixty (60) issued and outstanding shares of the Company’s Common Stock were automatically combined into one (1) share of Common Stock. The Reverse Stock Split reduced the number of outstanding shares of the Company’s Common Stock from approximately 87,912,831 shares to approximately 1,465,214 shares. In addition, all outstanding options, warrants and other convertible securities of the Company were proportionately adjusted in accordance with their terms. The Reverse Stock Split did not affect any stockholder’s percentage ownership interest in the Company, except for the impact of fractional share rounding. The par value of the Company’s Common Stock remains unchanged after the Reverse Stock Split. There can be no assurance that the Company will be able to timely regain or maintain compliance with Nasdaq’s continued listing requirement.

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.

Under amended Nasdaq Listing Rule 5810(c)(3)(A)(iv) (the “Nasdaq Excessive Reverse Share Split Rule”), companies are now limited by how many times they can effect reverse share splits within a certain time period to regain compliance with the minimum bid price requirement. Under the Nasdaq Excessive Reverse Share Split Rule, if a company’s ordinary shares fail to meet the minimum bid price requirement and the company has effected a reverse share split within the prior one-year period, it will not be eligible for any compliance period to address a bid price deficiency. Accordingly, if our Common Stock fall out of compliance with the minimum bid requirement within a one-year period following our most recent share consolidation, we will be issued a delisting determination rather than being granted a compliance period. Under these circumstances, we could appeal the delisting determination to a Hearings Panel, during which time any suspension or delisting action will be stayed. This amendment builds upon a 2020 rule change, which established an automatic delisting threshold for companies that have conducted one or more reverse share splits within a two-year period with a cumulative ratio of 250 shares or more to one. Companies that meet this threshold are also ineligible for a compliance period and are subject to delisting (subject to a stay pursuant to the appeal processes).

In the event that our Common Stock are delisted from Nasdaq, U.S. broker-dealers may be discouraged from effecting transactions in our Common Stock because they may be considered penny stocks and thus be subject to the penny stock rules.

The SEC has adopted a number of rules to regulate “penny stock” that restricts transactions involving stock which is deemed to be penny stock. Such rules include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Exchange Act. These rules may have the effect of reducing the liquidity of penny stocks. “Penny stocks” generally are equity securities with a price of less than $5.00 per share (other than securities registered on certain national securities exchanges or quoted on Nasdaq if current price and volume information with respect to transactions in such securities is provided by the exchange or system). Our Common Stock could be considered to be a “penny stock” within the meaning of the rules. The additional sales practice and disclosure requirements imposed upon U.S. broker-dealers may discourage such broker-dealers from effecting transactions in shares of our Common Stock, which could severely limit the market liquidity of such Common Stock and impede their sale in the secondary market.

A U.S. broker-dealer selling a penny stock to anyone other than an established customer or “accredited investor” (generally, an individual with a net worth in excess of $1,000,000 or an annual income exceeding $200,000, or $300,000 together with his or her spouse) must make a special suitability determination for the purchaser and must receive the purchaser’s written consent to the transaction prior to sale, unless the broker-dealer or the transaction is otherwise exempt. In addition, the “penny stock” regulations require the U.S. broker-dealer to deliver, prior to any transaction involving a “penny stock”, a disclosure schedule prepared in accordance with SEC standards relating to the “penny stock” market, unless the broker-dealer or the transaction is otherwise exempt. A U.S. broker-dealer is also required to disclose commissions payable to the U.S. broker-dealer and the registered representative and current quotations for the securities. Finally, a U.S. broker-dealer is required to submit monthly statements disclosing recent price information with respect to the “penny stock” held in a customer’s account and information with respect to the limited market in “penny stocks”.

The market for “penny stocks” has suffered in recent years from patterns of fraud and abuse. Such patterns include (i) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (ii) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (iii) “boiler room” practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (iv) excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and (v) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, resulting in losses to our shareholders. Our management is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to our securities.

If we fail to maintain our Nasdaq listing, we may face increased regulatory burdens and reduced investor protections on over-the-counter markets.

If our Common Stock are delisted from Nasdaq, they would likely trade, if at all, on over-the-counter markets such as the OTCQX, OTCQB or OTCID marketplaces. These alternative markets are generally considered to be less efficient and less liquid than Nasdaq. Trading on the over-the-counter markets could subject our Common Stock and our shareholders to additional risks, including limited availability of market quotations, reduced liquidity, decreased market-making activity, reduced analyst coverage, and decreased ability to issue additional Common Stock or obtain additional financing. Additionally, the price of our Common Stock on these markets may be more volatile than on Nasdaq, and shareholders may find it more difficult to dispose of or obtain accurate price information about our Common Stock.

Nasdaq has proposed a new $5 million minimum market value continued listing requirement that, if approved, could result in immediate suspension and delisting of our Common Stock without any cure period or opportunity to regain compliance.

On January 13, 2026, Nasdaq proposed new listing rules requiring companies on the Nasdaq Global and Capital Markets to maintain a minimum Market Value of Listed Securities of at least $5 million. Under this proposal, if our market value falls below $5 million for 30 consecutive business days, our Common Stock would be immediately suspended from trading and delisted from Nasdaq, with no cure period, no compliance period, and no stay of suspension during any appeal.

This proposed rule represents a fundamental departure from Nasdaq’s traditional approach to listing deficiencies. Unlike other continued listing requirements that provide companies with 180 days or more to regain compliance, the proposed market value requirement would result in immediate and irreversible consequences. While we could request a hearing before a Nasdaq Listing Qualifications Hearings Panel to appeal a delisting determination, such a request would not prevent the immediate suspension of our Common Stock from trading. Furthermore, the Hearings Panel would have extremely limited discretion and could only reverse the delisting decision if it determines that the initial determination was in error, and the Panel could not consider evidence that we had subsequently regained compliance or grant us additional time to do so.

Nasdaq’s proposal reflects its belief that once a company’s market value falls below $5 million, the challenges facing that company are generally not temporary and are so severe that the company is unlikely to regain and sustain compliance for the long term. Nasdaq further believes it is difficult to maintain fair and orderly markets for such low-value companies. The SEC must decide on the proposal within 45 days of publication in the Federal Register, unless it extends the review period, creating uncertainty regarding whether and when this rule may become effective.

Given that we are currently subject to a minimum bid price deficiency notice and our Common Stock have experienced price volatility, there is a risk with our market value falling below $5 million if the proposed rule is adopted. Our market value is calculated as our consolidated closing bid price multiplied by our total Listed Securities. Factors that could cause our market value to fall below the proposed threshold include continued stock price decline, lack of investor interest, adverse market conditions, negative developments in our business operations, dilutive financing transactions, or broader market volatility affecting microcap companies. If we are simultaneously addressing our existing minimum bid price deficiency when the proposed rule becomes effective, we could face multiple overlapping listing threats that compound the risk of delisting.

This proposal is part of a broader trend of Nasdaq tightening listing standards for small issuers, including recent rules granting Nasdaq discretion to deny initial listings based on susceptibility to manipulative trading and other market value-based requirements. This increasingly stringent regulatory environment creates greater challenges for microcap companies like us to maintain public listings.

If the proposed $5 million market value continued listing requirement is approved and we subsequently fail to maintain the required market value for 30 consecutive business days, our Common Stock would be immediately suspended and delisted from Nasdaq with no opportunity to cure the deficiency, which would have severe adverse consequences for our business, our ability to raise capital, and the liquidity and value of our shareholders’ investments.

We are an “emerging growth company,” and we cannot be certain if the reduced reporting and disclosure requirements applicable to emerging growth companies will make our Common Stock less attractive to investors.

We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, or Section 404 and disclosure obligations regarding executive compensation. Pursuant to Section 107 of the JOBS Act, as an emerging growth company, we have elected to use the extended transition period for complying with new or revised accounting standards until those standards would otherwise apply to private companies. As a result, our financial statements may not be comparable to the financial statements of issuers who are required to comply with the effective dates for new or revised accounting standards that are applicable to public companies, which may make our Common Stock less attractive to investors. In addition, if we cease to be an emerging growth company, we will no longer be able to use the extended transition period for complying with new or revised accounting standards.

We will remain an emerging growth company until the earliest of: (1) the last day of the fiscal year following the fifth anniversary of January 14, 2022, which was the date of the first sale of our Common Stock pursuant to an effective registration statement; (2) the last day of the first fiscal year in which our annual gross revenue is $1.235 billion or more; (3) the date on which we have, during the previous rolling three-year period, issued more than $1 billion in non-convertible debt securities; and (4) the last day of the fiscal year in which the market value of our Common Stock held by non-affiliates exceeded $700 million as of June 30 of such fiscal year.

We cannot predict if investors will find our Common Stock less attractive if we choose to rely on these exemptions. For example, if we do not adopt a new or revised accounting standard, our future results of operations may not be as comparable to the results of operations of certain other companies in our industry that adopted such standards. If some investors find our Common Stock less attractive as a result, there may be a less active trading market for our Common Stock, and our share price may be more volatile.

The Nevada Revised Statutes contain anti-takeover provisions, which may discourage a third-party from acquiring us and adversely affect the rights of holders of our Common Stock.

The Nevada Revised Statutes contain certain provisions that could limit the ability of others to acquire control of our Company. In addition, Nevada law restricts the ability of a corporation to engage in any combination with an interested stockholder for three years from when the interested stockholder acquires shares that cause the stockholder to become an interested stockholder, unless the combination or purchase of shares by the interested stockholder is approved by the Board of Directors before the stockholder became an interested stockholder. These provisions could discourage, delay or prevent a transaction involving a change in control of our company. These provisions could also make it more difficult for you and other shareholders to elect directors of your choosing and cause us to take other corporate actions that you desire. Additionally, our Chairman and Chief Executive Officer, Peter Z. Wang has considerable influence over the composition of our Board. See “⸺Concentration of ownership among our executive officers, directors and their affiliates, may prevent new investors from influencing significant corporate decisions.”

Our ECVs are fitted with a networking device connecting the vehicle to our proprietary cloud-based software, which enables end-users to collect data about vehicle configuration, vehicle status and user efficiency through a system of digitally enabled components, which we sometimes refer to as “smart components.” With the permission of the end-users of the vehicles, we received data collected from approximately 950 Metro® units that we put into service through a company affiliated with our former parent company, CAG Cayman, in the Chinese market. This data included vehicle-specific data collected for operational analysis, which we used to make improvements in the quality and durability of such components. We enable end-users to collect, store and analyze data using tools that we have developed but we do not have access to this end-user collected data unless we request and receive access from the end-user. We do not currently collect, use or store any vehicle-specific or driver-specific data in any region and do not intend to do so in the future.

While to our knowledge no previous cybersecurity incidents have occurred, we seek to continuously expand and improve our information technology systems, including implementing new internally developed and/or external industry standard enterprise resource planning systems (“ERP systems”), to assist us in the management of our business. We maintain information technology measures designed to protect us against intellectual property theft, data breaches and other cyber-attacks. The implementation, maintenance and improvement of these systems require significant management time, support and cost. Moreover, there are inherent risks associated with developing, improving and expanding our core systems as well as implementing new systems, including the disruption of our data management, procurement, manufacturing execution, finance and supply chain processes. Elements our cybersecurity information technology measures include efforts to identify, prevent, detect, mitigate, and remediate cybersecurity risks and incidents through:

• Cybersecurity risk assessments for identification of material cybersecurity risks to our critical systems, information, products, and our technology environment;
• Security personnel and vendors responsible for managing our cybersecurity risk assessment processes, our security controls, and our response to cybersecurity incidents;
• Training and awareness programs for our personnel and senior management to drive adoption and awareness of cybersecurity processes and information technology measures;
• A cybersecurity monitoring program responsible for tools that produce alerts and reports of suspicious activity for the prevention of and response to cybersecurity incidents;
• Internal testing and assessments, where appropriate, of our cybersecurity information technology measures;
• Management of external consultants and services engaged by us, where appropriate, to assess, test, or otherwise assist with aspects of our cybersecurity information technology measures; and
• A third-party risk management process for evaluating cybersecurity threats associated with our use of service providers, suppliers, and vendors.

Despite network security and back-up measures, our information technology systems are potentially vulnerable to physical or electronic break-ins, computer viruses and similar disruptive problems. Despite precautionary measures to prevent unanticipated problems that could affect our information technology systems, sustained or repeated system failures that interrupt our ability to generate and maintain data could adversely affect our ability to manage our data and inventory, procure parts or supplies or manufacture, sell, deliver ECVs, or achieve and maintain compliance with, or realize available benefits under, tax laws and other applicable regulations.

We cannot assure you that any of our new information technology systems or their required functionality will be effectively implemented, maintained or expanded as planned. If we do not successfully maintain our information technology or expand these systems as planned, our operations may be disrupted, our ability to accurately or timely report our financial results could be impaired, and deficiencies may arise in our internal control over financial reporting, which may adversely affect our ability to certify our financial results. Moreover, our proprietary information could be compromised or misappropriated, and our reputation may be adversely affected. If these systems or their functionality do not operate as we expect them to, we may be required to expend significant resources to make corrections or find alternative sources for performing these functions.

The risks from cybersecurity threats are monitored and managed by the Company’s information systems team members who have relevant expertise with such potential threats, and who operate in collaboration with other Company functions. The Company’s Audit Committee is responsible for overseeing cybersecurity risk and are informed in a timely manner of any incidents considered potentially serious, together with details on the prevention, detection, mitigation and remediation of such incidents.

We currently own one facility in Changxing, China, which is approximately 737,413 square feet, and is primarily used for engineering and production of vehicle kits of the Metro® and assembly of certain ECV models for export and logistics operations. We currently lease six facilities and offices located in the United States, Germany, Spain and China.

Our United States facilities located in Howell, New Jersey, is approximately 41,160 square feet and is used primarily for the production of our Logistar™ 300, Logistar™ 400, and Logistar™ 450 model, and warehousing.

Our leased China facility is located in Hangzhou, Zhejiang Province, with approximately 15,456 square feet of office space primarily used as regional headquarters, as well as for research and development, supply-chain management, and sales operations.

On August 30, 2024, we entered into two operating lease agreements for facilities in Jiangsu, China. The facilities are located in Jiangsu, China, with a total area of approximately 5,398,050 square feet. The facilities are primarily used for production, assembly and office functions, supporting the Company’s manufacturing and operational activities in China.

In January 2025, we entered into a new lease agreement for a facility in Bochum, Germany through our subsidiary Antric GmbH. The facility is located in Bochum, Germany, and has a total area of approximately 4,392 square feet (408 square meters). The facility is primarily used for the assembly and production of Antric vehicles, as well as related operational support functions in the European market.

On March 25, 2025, we entered into an operating lease agreement for a facility in Barstow, California, with the lease commencing on June 1, 2025. The facility is located in Barstow, California, and has a total area of approximately 100,860 square feet. The facility is primarily used to support local assembly, storage and distribution activities, facilitating the Company’s sales and operations in the U.S. market.

On May 19, 2025, we entered into an operating lease agreement for a facility in Barcelona, Spain. The facility is located in Barcelona, Spain, and has a total area of approximately 2,906 square feet. The facility is primarily used as an EV center and for sales, service and spare-parts support functions, supporting the Company’s commercial operations in the European market.

The Company may be involved in various legal proceedings, claims and other disputes arising from the commercial operations, projects, employees and other matters which, in general, are subject to uncertainties and in which the outcomes are not predictable. The Company determines whether an estimated loss from a contingency should be accrued by assessing whether a loss is deemed probable and can be reasonably estimated. Although the outcomes of these legal proceedings cannot be predicted, the Company does not believe these actions, in the aggregate, will have a material adverse impact on its financial position, results of operations or liquidity. Please refer to the description as contained in “Item 8 Financial Statements and Supplementary Data” on page F-1 of our Annual Report and the information described below.

On July 22, 2022, Xiongjian Chen filed a complaint against Cenntro Electric Group Limited (“CENN”), Cenntro Automotive Group Limited (“CAG”), Cenntro Enterprise Limited (“CEL”) and Peter Z. Wang (“Wang,” together with CENN, CAG and CEL, the “Defendants”) in the United States District Court for the District of New Jersey. The complaint alleges eleven causes of action sounding in contract and tort against the Defendants, all pertaining to stock options issued to Mr. Chen pursuant to his employment as Chief Operating Officer of CAG. With respect to the four contract claims, Plaintiff alleges breach of contract claims pertaining to an employment agreement between Plaintiff and CAG and a purported letter agreement between Plaintiff and CEL. With respect to the seven tort claims, Plaintiff alleges claims regarding purported misrepresentations and promises made concerning the treatment of Plaintiff’s stock options upon a corporate transaction, including claims for tortious interference, fraud, promissory estoppel, negligent misrepresentation, unjust enrichment and conversion. The complaint seeks, among other things, money damages (including compensatory and consequential damages) in the amount of $19 million, plus interest, attorneys’ fees and expenses. Defendants moved to dismiss the complaint against all Defendants for failure to state a claim and for lack of personal jurisdiction over defendants CAG and CEL. On April 30, 2023, the District Court dismissed the claims against CAG and CEL for lack of personal jurisdiction. In addition, the District Court dismissed all the claims against Wang and CENN without prejudice and permitted the Plaintiff to amend his complaint within 30 days to address the deficiencies in his claims against Wang and CENN. On May 28, 2023, Plaintiff filed an amended complaint. On July 20, 2023, the Defendants filed a motion seeking the dismissal of that amended complaint. On September 22, 2023, the Plaintiff filed to oppose our Motion to Dismiss and Motion to Strike. The Defendants filed our reply briefs by the deadline on November 9, 2023. On January 25, 2024, the Magistrate Judge entered an Order granting Plaintiff’s Motion to Amend and denying our Motion to Strike as moot. On November 12, 2024, District Court issued an Order, dismissing Plaintiff’s all claims except with respect to the promissory estoppel claim against Peter Wang. On November 26, 2024, the defendants filed a Motion for Reconsideration of the Court’s denial of Cenntro’s Motion to Dismiss Plaintiff’s promissory estoppel claim against Peter Wang. Concurrently, on same date Plaintiff moved for reconsideration of the Court’s decision to dismiss the case as against CAG for lack of personal jurisdiction. On December 30, 2024, the Defendant filed a Reply in Further Support of Peter Wang’s Motion for Reconsideration, which, in accordance with the Court’s practices, was filed as part of a Motion for Leave to File a Reply Brief, against which the Plaintiff filed an Opposition on January 17, 2025. On May 30, 2025, the Court issued the order denying both sides’ respective motions for reconsideration. On June 10, 2025, Plaintiff’s counsel informed us that they do not intend to file a second amended complaint, which means that CAC, CAG, CEL and CENN will be dismissed from the case; and that the case will proceed to discovery solely on Plaintiff’s one claim against Wang for promissory estoppel. At the in-person conference on August 19, 2025, the Court ordered deadlines for completing various stages of discovery in the case, with May 15, 2026 being the deadline for all fact discovery. We anticipate remote financial consequences will incur to the Company.

On July 3, 2025, Cenntro Electric Group (Europe) GmbH (“CEGE”) demanded the return of a EUR 180,000 rental deposit from its former landlord following the termination of a commercial lease on December 31, 2024. Without response from the landlord, CEGE initiated legal proceedings on July 22, 2025, by filing an online payment order (Mahnantrag) with the District Court of Hünfeld, claiming the full deposit amount, statutory interest, and legal fees. On August 4, 2025 the Landlord submitted objection to the default summons. CEGE is currently working on its further action.

On February 12, 2025, Cenntro Automotive Corporation (“CAC”) submitted an application for arbitration with China International Economic and Trade Arbitration Commission, against Anhui Deepway Technology Co., Ltd. (“Deepway”), requesting an economic damage of RMB320,000 and continuation of performance of the Strategic Cooperation Agreement signed between the two parties in July 2024. Both parties reached a settlement on September 3, 2025 that CAC returns the sample vehicle to Deepway, and Deepway reimburses CAC a total amount of RMB700,000 to cover shipping, legal and other related expenses incurred associated with this disputed agreement. The arbitration was subsequently withdrawn. The matter has been fully resolved and concluded.

On January 2, 2024, MHP Americas, Inc. (“MHP”), through counsel, sent a letter to Cenntro Electric Group Limited (“Cenntro”) demanding payment allegedly owed by Cenntro to MHP in the amount of: $ 1,767,516.91 for unpaid invoices, and $ 3,289,500 for total contract invoices and milestone payments for alleged breaches in connection with the parties’ August 8, 2022, Master Consulting Services Agreement and/or March 9, 2023, Statement of Work. On January 12, 2024, Cenntro, through counsel, responded to the letter denying any breach and disputing the amounts claimed.

On April 10, 2024, CEGL filed a lawsuit against MHP Americas, Inc. (“MHP”) for breach under the Master Consulting Services Agreement and SAP S/4HANA SOW by failure to properly implement the SAP S/4HANA globally as set forth in those contracts, and for breach of implied covenants of good faith and fair dealing, causing Cenntro to suffer significant damages; and demanded a jury trial on all issues which are triable. Under this claim, CEGL is seeking for a remittance of $512,226 paid to date and a recission of the remaining contract with MHP. The litigation was removed to Federal Court on May 7, 2024 where it is pending. At the time of this report, discovery has been completed. Mediation is schedule on November 19, 2025. The mediation scheduled for November 19, 2025 proceeded with counsel representing the Company. No agreement was reached during the mediation session and the parties did not engage in substantive settlement discussions. As of the date of this Annual Report, no further mediation sessions have been scheduled and the parties have not yet agreed on the next procedural steps. The case remains pending before the Court.

On March 28, 2025 BAL Freeway Associates, LLC filed an Unlawful Detainer against Cenntro Automotive Corporation alleging non-payment of rents for commercial leased property in San Bernadino County, Ontario, CA. At the time of this report negotiations between parties have been culminated in a partial settlement with possession begin restored to BAL Freeway Associates on May 31, 2025, and the issue of damages remains outstanding. On June 18, 2025, BAL Freeway filed a First Amended Complaint for Damages for Breach of Contract, seeking full damages resulting from the alleged breach of the Lease, claiming total losses no lower than $4,400,000. Negotiations are ongoing at this stage of the reclassified Civil Matter.

On April 16, 2025, Shenzhen Jiangxin Automation Technology Co., Ltd. (“Jiangxin”) filed a lawsuit with the People’s Court of Yuhang District, Hangzhou, against Hangzhou Ronda Tech Co., Limited (“Ronda”), seeking payment of equipment purchase price totaling RMB 170,555 plus accrued interest. Jiangxin claims that Ronda has failed to pay the remaining balance due under three Equipment Purchase Agreements signed during 2021 and 2022. On September 26, 2025, Ronda submitted its defense and counterclaim, asserting that Jiangxin had not fulfilled its contractual obligations, including the delivery of complete technical documents, installation and test run, and therefore the conditions for payment had not been satisfied. Ronda also reserved the right to terminate the agreements and seek a full refund of all payments made. The case remains pending before the court.

On December 2, 2025, Wuxi Hefu Metal Products Technology Co., Ltd. (“Hefu”) filed a lawsuit with the People’s Court of Yuhang District, Hangzhou, against Hangzhou Ronda Tech Co., Limited (“Ronda”), seeking payment of mold development fees totaling RMB 476,314.2 plus accrued interest. Hefu alleges that under the Automotive Parts Product Development Agreement and its supplementary agreement signed on September 20, 2022, it completed the development and delivery of the molds in accordance with the contractual requirements, but Ronda failed to pay the remaining balance of the mold development fees. Hefu further applied for property preservation, and on December 15, 2025, the court issued a ruling to freeze Ronda’s bank deposits in the amount of RMB 476,314.2 or seize other assets of equivalent value. On January 7, 2026, the court organized a pre-trial mediation between the parties. The parties are currently awaiting the mediation proposal from the court. If mediation is unsuccessful, the case will proceed to formal trial. The case remains pending before the court.

On March 4, 2026, American Quartz Group, Inc. (“AQGI”) filed an Unlawful Detainer action against Bison Motors Inc. (“Bison”) seeking possession of the premises. Bison subsequently filed a demurrer in response. On March 25, 2026, Bison filed a separate complaint against AQGI asserting claims including forcible detainer and conversion, seeking restoration of possession, return of inventory, and damages. As of the date of this Annual Report, the matters are at an early stage, and the ultimate outcome remains uncertain.

On October 24, 2025, Ride Man LLC (“Ride Man”) filed a civil complaint against Cenntro Automotive Corporation and Cenntro, Inc. (collectively, the “Company”) in the Superior Court of New Jersey, Ocean County, alleging breach of warranty and violations of the New Jersey Consumer Fraud Act in connection with the purchase of certain commercial electric vehicles. Ride Man alleges that four Logistar 400 vehicles purchased from the Company were defective and failed to perform as warranted, and that the Company did not fulfill its repair and warranty obligations. The complaint seeks rescission of the purchase, refund of the purchase price, and recovery of related damages and costs. As of the date of this Annual Report, the matter remains at a preliminary stage and the Company is evaluating its response.

The information set forth in this section contains certain “forward-looking statements”, including, among others (i) expected changes in our revenue and profitability, (ii) prospective business opportunities and (iii) our strategy for financing our business. Forward-looking statements are statements other than historical information or statements of current condition. Some forward-looking statements may be identified by use of terms such as “believes”, “anticipates”, “intends” or “expects”. These forward-looking statements relate to our plans, liquidity, ability to complete financing and purchase capital expenditures, growth of our business including entering into future agreements with companies, and plans to successfully develop and obtain approval to market our product. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs.

Although we believe that our expectations with respect to the forward-looking statements are based upon reasonable assumptions within the bounds of our knowledge of our business and operations, in light of the risks and uncertainties inherent in all future projections, the inclusion of forward-looking statements in this Annual Report should not be regarded as a representation by us or any other person that our objectives or plans will be achieved.

We assume no obligation to update these forward-looking statements to reflect actual results or changes in factors or assumptions affecting forward-looking statements.

Our revenues and results of operations could differ materially from those projected in the forward-looking statements as a result of numerous factors, including, but not limited to, the following: the risk of significant natural disaster, the inability of our company to insure against certain risks, inflationary and deflationary conditions and cycles, currency exchange rates, and changing government regulations domestically and internationally affecting our products and businesses.

You should read the following discussion and analysis in conjunction with the Financial Statements and Notes attached hereto, and the other financial data appearing elsewhere in this Annual Report.

US Dollars are denoted herein by “USD”, “$” and “dollars”.

Overview

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, 2025, we have developed six series of commercial vehicle models, Metro®, Logistar™, iChassis™, Avantier™, Teemak™, Bison Motor™ and Antric 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 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. Battery prices 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 BNEF survey in 2025. By emphasizing investments in technology, supply-chains, vehicle distribution and aftermarket support, we have begun making our own battery packs, preparing battery cell production, by building up vehicle distribution and service networks, and introducing our cloud-based parts distribution systems. As investment in battery technology continues to increase, we believe these cost reductions outlined by BNEF will continue to improve the economics of battery-powered ECVs, like ours.

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. 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 model and, in the long-term, drive higher profit margins.

Our distributed manufacturing model allows us to focus our efforts on the design of New 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 past 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. Since 2021, we have expanded our vehicle portfolio beyond the Metro® by leveraging relationships with third party Original Equipment Manufacturers (“OEMs”) manufacturing partners, who complete our vehicle kits and in some case fully assembled vehicles, with final assembly of vehicle kits performed 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 and 2023, 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 Company-operated EV Centers with local distribution channels and dealer networks, with goals of improving overall operational efficiencies, product quality, brand value, market share, customer support and service.

During 2024 and 2025, the Company refined its distribution strategy to better align with regional market developments and long-term capital efficiency objectives. In European markets, where competitive and macroeconomic conditions warranted a more asset-light approach, the Company transitioned from Company-operated EV Centers to a distribution partner-led model, enabling greater operational flexibility and more efficient deployment of resources. In North America, the Company distributes its vehicles primarily through local dealer networks, supported by Company-operated EV Centers that serve as regional anchors for brand presence, customer service, and after-sales support, with local assembly facilities maintained in Barstow, California and Freehold, New Jersey. The resulting blended model, a dealer-led distribution network complemented by Company-operated EV Centers in North America, and a channel partner-driven approach in international markets, reflects the Company’s ongoing commitment to optimizing its go-to-market strategy in response to the specific commercial opportunities and challenges of each market region.

On April 9, 2026, we announced the reverse stock split of one (1) share of our common stock for every 60 shares of our common stock (“Reverse Stock Split”). On March 24, 2026, we filed the Certificate of Change Pursuant to NRS 78.209, whereby every 60 shares of our issued and outstanding common stock were combined into one share of its common stock, except to the extent that the Reverse Stock Split resulted in any of our stockholders owning a fractional share, which was rounded up to the next highest whole share. In connection with the Reverse Stock Split, there was no change in the par value per share of $0.0001. The Reverse Stock Split was effective on April 13, 2026 (the “Effective Date”). Our common stock began trading on a Reverse Stock Split-adjusted basis on the Nasdaq Capital Market when the market opened on April 13, 2026. The trading symbol for the Company’s common stock remains “CENN.”

A. Key Components of Results of Operations

Net revenues

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 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 parties and integrated with their controlling software for various autonomous driving commercial vehicle applications.

Net revenues ended December 31, 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™ 300, Logistar™ 400, Logistar™ 450, Seres 5, 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.

Cost of goods sold

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.

Cost of goods sold also includes inventory 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 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. 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.

Operating expenses

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

Research and Development Expenses

Research and development expenses consist primarily of employee compensation and related expenses, prototype expenses, costs associated with assets acquired for research and development, product development costs, production inspection and testing expenses, product strategic advisory fees, third-party engineering and contractor support costs and allocated overhead. 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

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.

General and Administrative Expenses

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

Provision for credit losses

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 payment terms, when goods will be delivered only if material payment are received.

Impairment of Goodwill

Goodwill represents the future economic benefits arising from other assets acquired in a business combination. Goodwill acquired in a business combination is tested for impairment at least annually or more frequently when events and circumstances occur indicating that the recorded goodwill may be impaired. We perform impairment analysis on goodwill as of December 31 every year either beginning with a qualitative assessment, or starting with the quantitative assessment instead. The quantitative goodwill impairment test compares the fair values of each reporting unit to its carrying amount, including goodwill. A reporting unit constitutes a business for which discrete profit and loss financial information is available. The fair value of each reporting unit is established using a combination of expected present value of future cash flows. If the fair value of each reporting unit exceeds its carrying amount, goodwill is not considered to be impaired. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit.

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, we determine it is “more-likely-than not” that the fair value is less than the carrying value, a quantitative assessment of goodwill is required.

The quantitative impairment test requires significant management judgments, including the identification of reporting units, assigning assets and liabilities to reporting units, assigning goodwill to reporting units, and determining the fair value of each reporting unit. The judgment in estimating the fair value of reporting units includes estimating future cash flows, determining appropriate discount rates and making other assumptions. Changes in these estimates and assumptions could materially affect the determination of fair value for each reporting unit.

Other income (expenses)

Interest (expense) income, net

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

Loss from early termination of lease contract

We recognize losses from early termination of lease contracts, primarily in Spain, due to penalties, settlement costs, or leasehold improvement write-offs. These losses have historically fluctuated based on market conditions and strategic decisions. As part of our shift from an EV center sales approach to a hybrid model, we are rebalancing our EV center strategy with our distribution networks, which has led to some lease terminations. However, we anticipate a reduction in future lease terminations as we will stabilize adjustments to our distribution strategy, thereby mitigating the financial impact of such terminations.

Change in fair value of equity securities

Change in fair value of equity securities is the change in fair value of the investment on partnership shares in MineOne Fix Income Investment I L.P with an original investment value of $25 million. As of December 31, 2025, we evaluated whether NAV remains representative of fair value, considering, among other factors, liquidity restrictions, the financial condition of the investee, and the ability to realize returns and concluded that the reported NAV was not representative of fair value as of the balance sheet date. Accordingly we reassessed the fair value of the investment using a market participant perspective and considered the lack of observable market transactions and significant uncertainty regarding recoverability, with a conclusion reached that the fair value of the investment to be fully reduced to nil as of December 31, 2025. For the years ended December 31,2025 and 2024, we recorded downward adjustments of $26,604,319 and upward adjustments $1,043,963 for changes in fair value of the equity investment, held for continuing operations, respectively.

Discontinued operations

We classify the results of a component (or group of components) to be disposed (“disposal group”) as a discontinued operation when the disposal group meets the held-for-sale criteria, is disposed of by sale or is disposed of other than by sale (e.g. abandonment) and when the disposal group represents a strategic shift that has, or will have, a major effect on our operations and our financial results.

We report the operating results and cash flows related to the disposal group as discontinued operations for all periods presented in our consolidated statements of comprehensive loss and consolidated statements of cash flows, respectively.

Key Operating Metrics

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 years ended December 31, 2025 and 2024.

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

Results of Operations

The following table sets forth a summary of our statements of operations for the periods indicated:

Years Ended December 31,

Comparison of the Years Ended December 31, 2025 and 2024

Net Revenues

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

Net revenues for the year ended December 31, 2025 were approximately $18.1 million, a decrease of approximately $13.2 million or 42.2% from approximately $31.3 million for the year ended December 31, 2024. The decrease in net revenues in 2025 was primarily attributed to the decrease in vehicle sales of 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 of approximately $1.1 million due to the decrease in sales of iChassis™. The net revenues in Europe market for the year ended December 31, 2025 were approximately $12.2 million, an increase of approximately $6.5 million from approximately $5.7 million for the year ended December 31, 2024. The net revenues in the Asian market for the year ended December 31, 2025 were approximately $4.0 million, with a slight decrease of approximately $0.6 million from approximately $4.6 million for the year ended December 31, 2024.

For the year ended December 31, 2025, we sold 1,309 ECVs, including 31 fully assembled Metro® units, 46 fully assembled Logistar™ 200 units, 154 fully assembled Logistar™ 100 units, 33 fully assembled Teemak™ units, 11 fully assembled Logistar™ 260 units, 1 fully assembled Logistar™ 400 units, 611 fully assembled Avantier™ units, 112 Clubcar units, 30 Antric® units, 120 Logistar™ 210 units, 113 Logistar™ 450 units, 1 Logistar™ 300 unit, 40 fully assembled Seres 5 units, 5 fully assembled Joylong-A4 units and 1 fully assembled Joylong-EA6 units, compared with 1,122 ECVs for the year ended December 31, 2024, including 105 fully assembled Metro® units, 15 fully assembled Logistar™ 200 units, 89 fully assembled Logistar™ 100 units, 35 fully assembled Teemak™ units, 58 fully assembled Logistar™ 260 units, 145 fully assembled Logistar™ 400 units, 492 fully assembled Avantier™ units, 2 Neibor® 150 units, 120 Clubcar units, 45 Antric® units, 4 fully assembled Logistar™ 210 units, 1 fully assembled Logistar™ 210V unit, one fully assembled Logistar™ 300 unit, 4 fully assembled Seres 5 units, 5 AX-3 units and 1 AIQAR EQ7 unit.

For the year ended December 31, 2025, we also sold 19 iChassis™ units, other than the 1274 ECVs.

Geographically, the vast majority of our net revenues were generated from vehicle sales in Asia and European Union during the years ended December 31, 2025. For the year ended December 31, 2025, net revenues from Europe, North America, Asia (including China) and 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 for the corresponding period in 2024.

For the year ended December 31, 2025, net revenues from vehicle sales in Europe, North America, Asia (including China) and Africa 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, for the corresponding period in 2024.

Cost of goods sold

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.

Cost of goods sold for the year ended December 31, 2025 was approximately $20.4 million, a decrease of approximately $3.3 million or approximately 13.9% from approximately $23.7 million for the year ended December 31, 2024. The decrease in cost of goods sold in 2025 was primarily attributable to the decrease in cost of vehicle sales and spare-part sales of approximately $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-off of $2.8 million. The decrease in cost of vehicle sales was mainly due to the decreased vehicle sales and spare-part sales during the year 2025.

Gross (Loss) Profit

Gross loss for the year ended December 31, 2025 was approximately $2.3 million, compared with gross profit of $7.6 million for the year ended December 31, 2024. For the years ended December 31, 2025 and 2024, our overall gross margin decreased to approximately negative 12.8% from positive 24.3%, respectively. Our gross margin of vehicle sales for years ended December 31, 2025 and 2024 was negative 3.22% and positive 24.9%, respectively. The decrease of our gross profit was due to the decrease in gross profit of vehicle sales revenue, spare-part sales and other sales of approximately $7.5 million, $0.3 million and $0.04 million, respectively. In addition, the gross loss for the year ended December 31, 2025 was impacted by approximately $2.0 million of inventory write-offs related to battery equipment.

Selling and Marketing Expenses

Selling and marketing expenses for the year ended December 31, 2025 were approximately $2.5 million, a decrease of approximately $4.9 million or approximately 65.8% from approximately $7.4 million for the year ended December 31, 2024. The decrease in selling and marketing expenses in 2025 was primarily attributed to the decrease in marketing expense, salary and social insurance and service fees related to global market and distribution channel research of approximately $3.2 million, $1.0 million and $0.6 million, respectively.

General and Administrative Expenses

General and administrative expenses for the year ended December 31, 2025 were approximately $20.3 million, a decrease of approximately $6.0 million or approximately 22.7% from approximately $26.3 million for the year ended December 31, 2024. The decrease in general and administrative expenses in 2025 was primarily attributed to the decrease in leasing cost, office expense, and freight expense of approximately, $1.2 million, $1.6 million, and $0.5 million, respectively, driven by ongoing cost control measures and improved operational efficiency.

Research and Development Expenses

Research and development expenses for the year ended December 31, 2025 were approximately $2.8 million, a decrease of approximately $2.3 million or approximately 45.5% from approximately $5.2 million for the year ended December 31, 2024. The decrease in research and development expenses in 2025 was primarily attributed to the decrease in design and development expenditures, salary and social insurance and others related to miscellaneous expense of approximately $0.5 million, $1.7 million and $0.1 million.

Interest expense, net

Interest expense, net, mainly consists of interest expense on convertible bonds, offset by the interest income from deposit and unpaid purchases from HWE. Net interest expense was approximately $0.5 million for the year ended December 31, 2025, an increase of approximately $0.3 million compared to the approximately $0.2 million in interest expense for the year ended December 31, 2024. The increase was primarily attributable to (i) a decrease in interest income of approximately $0.1 million from bank deposit; (ii) a decrease in interest income of approximately $0.3 million from short-term investment; offset by (iii) a decrease in interest expense to convertible bonds of approximately $0.2 million.

Other income (expense), net

Other income, net for the year ended December 31, 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 2025 compared to 2024 was primarily attributable to the decrease in investment loss of approximately $0.6 million and the increase of approximately $0.3 million in litigation compensation from Fujian Newlongma Automotive Co., Ltd..

Loss from early termination of lease contract

Loss from early termination of lease contract for the year ended December 31, 2025 was approximately $0.7 million compared to $2.2 million of loss from early termination of lease contract for the year ended December 31, 2024.

Change in fair value of equity securities

A loss in the change in fair value of equity securities for the year ended December 31, 2025 was approximately $26.6 million compared to approximately $1.0 million of a gain in the change in fair value of equity securities for the year ended December 31, 2024. As of December 31, 2025, we evaluated whether NAV remains representative of fair value, considering, among other factors, liquidity restrictions, the financial condition of the investee, and the ability to realize returns and concluded that the reported NAV was not representative of fair value as of the balance sheet date. Accordingly we reassessed the fair value of the investment using a market participant perspective and considered the lack of observable market transactions and significant uncertainty regarding recoverability, with a conclusion reached that the fair value of the investment to be fully reduced to nil as of December 31, 2025.

Loss from Note Amendment and change in fair value of convertible promissory notes and derivative liability

In May 2025, we entered into an amendment to the convertible bonds originally issued in July 2022, which resulted in significant modifications to the key terms and conditions of the instrument. Besides, on October 23, 2025, the Company and the holder entered into an exchange agreement (the “Exchange Agreement”), pursuant to which we issued a new convertible note in a principal amount of $4,000,000 (the “2025 Convertible Note”) in exchange for the outstanding balance of the previously amended convertible instrument. We considered the amendment as an extinguishment of the original convertible bonds, refer to Note 16 for details.

A loss from Note Amendment for the year ended December 31, 2025 was approximately $1.8 million.

Loss on change in fair value of convertible promissory notes and derivative liability was approximately $8.5 million.

Gain from disposal of Cenntro Electric CICS, S.R.L.’s equity

A gain from disposal of Cenntro Electric CICS, S.R.L.’s equity for the year ended December 31, 2025 was approximately $1.2 million compared to nil for the year ended December 31, 2024.

Non-GAAP Financial Measures

Adjusted EBITDA for the Years Ended December 31, 2025 and 2024

In addition to our results determined in accordance with GAAP, we believe Adjusted EBITDA, a non-GAAP measure is useful in evaluating operational performance. We use Adjusted EBITDA to evaluate ongoing operations and for internal planning and forecasting purposes. We believe that non-GAAP financial information, when taken collectively, may be helpful to investors in assessing operating performance.

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 impairment of goodwill, loss on exercise of warrants, and change in fair value of convertible promissory notes and derivative liability.

We present Adjusted EBITDA because we consider it to be an important supplemental measure of our performance and believe it is frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in our industry. Management believes that investors’ understanding of our performance is enhanced by including this non-GAAP financial measure as a reasonable basis for comparing our ongoing results of operations. Management uses Adjusted EBITDA:

• as a measurement of operating performance because it assists us in comparing the operating performance of our business on a consistent basis, as it removes the impact of items not directly resulting from our core operations;
• for planning purposes, including the preparation of our internal annual operating budget and financial projections;
• to evaluate the performance and effectiveness of our operational strategies; and
• to evaluate our capacity to expand our business.

By providing this non-GAAP financial measure, together with the reconciliation, we believe we are enhancing investors’ understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing our strategic initiatives. We caution investors that amounts presented in accordance with our definition of Adjusted EBITDA may not be comparable to similar measures disclosed by our competitors because not all companies and analysts calculate Adjusted EBITDA in the same manner. Adjusted EBITDA has limitations as an analytical tool, and should not be considered in isolation, or as an alternative to, or a substitute for net income or other financial statement data presented in our financial statements as indicators of financial performance. Some of the limitations are:

• such measures do not reflect our cash expenditures;
• such measures do not reflect changes in, or cash requirements for, our working capital needs;
• although depreciation and amortization are recurring, non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future and such measures do not reflect any cash requirements for such replacements; and
• the exclusion of stock-based compensation expense, which has been a significant recurring expense and will continue to constitute a significant recurring expense for the foreseeable future, as equity awards are expected to continue to be an important component of our compensation strategy.

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.

The following table reconciles Adjusted EBITDA to the most directly comparable GAAP financial performance measure, which is net loss:

B. Liquidity and Capital Resources

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

As of December 31, 2025, we had approximately $4.5 million in cash and cash equivalents, approximately $1.3 million of accounts receivables from continuing operations as compared to approximately $12.5 million in cash and cash equivalents, approximately $3.3 million in accounts receivable from continuing operations as of December 31, 2024. For the years ended December 31, 2025 and 2024, net cash used in operating activities was approximately $12.6 million and $21.4 million, respectively.

Short-Term Liquidity Requirements

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

• The costs of bringing our new facilities into operation;
• The timing and costs involved in rolling out new ECV models to market;
• Our ability to manage the costs of manufacturing our ECVs;
• The costs of maintaining, expanding and protecting our intellectual property portfolio, including potential litigation costs and liabilities;
• Revenues received from sales of our ECVs;
• The costs of additional general and administrative personnel, including accounting and finance, legal and human resources, as well as costs related to litigation, investigations, or settlements;
• Our ability to collect future revenues; and
• Other risks discussed in the section titled “Risk Factors.”

For the twelve months from the date hereof, we also plan to continue implementing measures to increase revenues and control operating costs and expenses, implementing comprehensive budget controls and operational assessments, implementing enhanced vendor review and selection processes as well as enhancing internal controls.

Long-Term Liquidity Requirements

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

We intend to further expand our technology through continued investment in research and development. Since inception in 2013 through December 31, 2025, we have spent over approximately $96.7 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.

For our long-term business plan, we plan to fund current and future planned operations mainly through cash on hand, cash flow from operations, lines of credit and additional equity and debt financings to the extent available on commercially favorable terms.

Working Capital

As of December 31, 2025, our working capital was approximately $19.0 million, as compared to a working capital of approximately $36.8 million as of December 31, 2024. The approximately $28.0 million decrease in working capital during 2025 was primarily due to (i) the decrease of cash and cash equivalents, accounts receivable, prepayment and other current assets, inventories and current assets held for discontinued operations of approximately $8.1 million, $2.0 million, $3.1 million, $2.1 million and $5.0million, respectively and (ii) the increase in short-term loans and accrued expense and other current liabilities of approximately $1.0 million and $5.0 million respectively.

Cash Flow

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Operating Activities

Our net cash used in operating activities was approximately $12.6 million and $21.4 million for the years ended December 31, 2025 and 2024, respectively.

Net cash used in operating activities for the year ended December 31, 2025 was primarily attributable to (i) our net loss of approximately $73.0 million and adjusted for non-cash items of approximately $55.4 million, which primarily consisted of depreciation and amortization, amortization of operating lease right-of-use asset, written-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, loss on inventory write-off and gain from disposal of Cenntro Electric CICS, S.R.L.’s equity of approximately $2.2 million, $1.9 million, $2.6 million, $6.0 million, $8.5 million, $26.6 million, $2.8 million, $2.9 million and $1.2 million, respectively, (ii) the decrease in prepayments and 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 of approximately $2.4 million.

Investing Activities

Net cash used in investing activities was approximately $0.9 million for the year ended December 31, 2025. Net cash used in investing activities for the year ended December 31, 2025 was primarily consisted of cash paid in purchase of plant and equipment, loans provided to third parties of approximately $0.8 million and $0.5 million, respectively, offset by the proceeds from disposal of property, plant and equipment and repayment of loans by related parties of approximately $0.2 million and $0.2 million, respectively.

Financing Activities

Net cash provided by financing activities was approximately $4.9 million for the year ended December 31, 2025. Net cash provided by financing activities for the year ended December 31, 2025 was primarily attributable to the proceeds from bank loans, related parties and third parties of approximately $3.2 million, $1.0 million and $2.1 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.

Contractual Obligations

For a discussion of material contractual obligations and commitments, see Note 21 “Commitments and Contingencies” to our consolidated financial statements included in this annual report.

We leases offices space under non-cancellable operating leases. As of December 31, 2025, the minimum future commitments under these agreements are as follows.

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Critical Accounting Policies and Estimates

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 financial statements, the reported amounts of revenue and expenses during the reporting period and the related disclosures in the consolidated 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 financial statements for the year ended December 31, 2025, included elsewhere in this 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.

Fair value measurement

ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. These tiers include:

Level 1—defined as observable inputs such as quoted prices in active markets;

Level 2—defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and

Level 3—defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions.

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.

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.

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.

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 consolidated balance sheet, and negative fair values of such instruments are recorded in other current liabilities.

The convertible promissory notes payable accounted for under the fair value option election are each a debt host financial instrument containing embedded features that would otherwise be required to be bifurcated from the debt-host and recognized as separate derivative liabilities subject to initial and subsequent periodic estimated fair value measurements in accordance with GAAP. Notwithstanding, when the fair value option election is applied to financial liabilities, bifurcation of an embedded derivative is not required, and the financial liability is initially measured at its issue-date estimated fair value and then subsequently remeasured at estimated fair value on a recurring basis as of each reporting period date.

The portion of the change in fair value attributed to a change in the instrument-specific credit risk is recognized as a component of other comprehensive income and the remaining amount of the fair value adjustment is recognized as changes in fair value of convertible promissory notes and derivative liabilities in the Company’s consolidated statement of operations. The estimated fair value adjustment is presented in a respective single line item within other expense in the consolidated statement of operations because the change in fair value of the convertible notes was not attributable to instrument-specific credit risk.

In connection with the issuances of convertible promissory notes, the Company issued investor warrants and placement agent warrants to purchase warrant shares of the Company. The Company utilizes a Binomial model to estimate the fair value of the warrants, which are classified as Level 3 within the fair value hierarchy. The warrants are measured at each reporting period, with changes in fair value recognized in the statement of operations.

As a practical expedient, the Company uses Net Asset Value (“NAV”) or its equivalent to measure the fair value of its certain fund investment. The Company’s investments valued at NAV as a practical expedient are private equity funds, which represent the investment in equity security on the consolidated balance sheet.

Accounts receivable and allowance for credit losses

Accounts receivable are recognized and carried at net realizable value.

Management used an expected credit loss model for the impairment of accounts receivable as of period ends. Management believes the aging of accounts receivable is a reasonable parameter to estimate expected credit loss, and determines expected credit losses for accounts receivables using an aging schedule as of period ends. The expected credit loss rates under each aging schedule were developed on basis of the average historical loss rates from previous years, and adjusted to reflect the effects of those differences in current conditions and forecasted changes. Management measured the expected credit losses of accounts receivable on a collective basis. When an accounts receivable does not share risk characteristics with other accounts receivables, management will evaluate such accounts receivable for expected credit loss on an individual basis. 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.

The Company’s financial assets subject to the current expected credit loss (“CECL”) model mainly include accounts receivable, certain receivable components within other current assets and other non-current assets and debt security investments.

For the years ended December 31, 2025 and 2024, allowance for credit losses recognized by the Company were mainly generated from accounts receivable and certain components within other current assets.

Inventories

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 comprises 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. For the years ended December 31, 2025 and 2024, write-downs of $2,554,421 and $6,462,514, respectively, were recorded in cost of sales in the consolidated statements of operations and comprehensive loss.

Derivative financial instruments

The Company used cross-currency swap contracts to manage its exposures to movements in foreign exchange rates primarily related to the RMB or Renminbi. The use of these derivative financial instruments modifies the Company’s exposure to these risks with the goal of reducing the risk or cost to the Company. The Company does not use derivatives for trading purposes and is not a party to leveraged derivative contracts.

Depending on the nature of the underlying risk being hedged, these derivative financial instruments are accounted for either as cash flow, net investment or mark to market hedges against changes in the value of the hedged item. Derivatives are recorded in the Consolidated Balance Sheets at fair value. The fair value is based upon either market quotes for actively traded instruments or independent bids for nonexchange traded instruments. The accounting for changes in fair value of a derivative instrument depends on whether the instrument has been designated and qualifies as part of a hedging relationship. The Company determines whether a derivative instrument meets the criteria for cash flow or net investment hedge accounting treatment on the date the derivative is executed. Derivatives accounted for as mark to market hedges are not designated as hedges for accounting purposes.

Economic Hedges

A derivative instrument whose change in fair value is used to hedge against changes in the value of a hedged item, but which is not designated as a hedge under ASC815 “Derivative Instruments and Hedging Activities”, is accounted for as an economic hedge. These derivatives are recorded at fair value in the Consolidated Balance Sheets when the hedged item is recorded as an asset or liability and then are revalued each accounting period. Changes in the fair value of derivatives accounted for as economic hedges are reported in the “Gain from cross-currency swaps” lines under “Other expense” in the Consolidated Statements of Operations. Cash flows from derivatives not designated as hedges are classified as cash flows from operating activities in the Consolidated Statements of Cash Flows. For the year ended December 31, 2025 and 2024, all of the cross-currency swap contracts were accounted for as economic hedges.

Investment in equity securities

For investments in equity securities whose returns are linked to the performance of underlying assets, the Company elected the fair value option at the date of initial recognition and carried these investments subsequently at fair value. Changes in fair values are reflected in the consolidated statements of operations and comprehensive loss.

The Company determines the appropriate accounting treatment for its investments in equity securities at the time of acquisition and reassesses such determinations when facts and circumstances change. The private equity funds are measured at fair value with gains and losses recognized in earnings. As a practical expedient, the Company uses Net Asset Value (“NAV”) or its equivalent to estimate the fair value not to measure.

The Company evaluates whether an investment is other-than-temporarily impaired based on the specific facts and circumstances. Factors that are considered in determining whether an other-than-temporary decline in value has occurred include the market value of the security in relation to its cost basis, the financial condition of the investee, and the intent and ability to retain the investment for a sufficient period of time to allow for recovery in the market value of the investment.

Property, plant and equipment, net

Property, plant and equipment are carried at cost less accumulated depreciation and any impairment. Depreciation is calculated over the asset’s estimated useful life, using the straight-line method. Leasehold improvements are amortized over the life of the asset or the term of the lease, whichever is shorter. Estimated useful lives are as follows:

The Company reassesses the reasonableness of the estimates of useful lives and residual values of long-lived assets when events or changes in circumstances indicate that the useful lives and residual values of a major asset or a major category of assets may not be reasonable. Factors that the Company considers in deciding when to perform an analysis of useful lives and residual values of long-lived assets include, but are not limited to, significant variance of a business or product line in relation to expectations, significant deviation from industry or economic trends, and significant changes or planned changes in the use of the assets. The analysis will be performed at the asset or asset category with the reference to the assets’ conditions, current technologies, market, and future plan of usage and the useful lives of major competitors.

The costs and related accumulated depreciation of assets sold or otherwise retired are eliminated from the Company’s accounts and any gain or loss is included in the consolidated statements of operations and comprehensive loss. The cost of maintenance and repair is charged to expenses as incurred, whereas significant renewals and betterments are capitalized.

Revenue recognition

The Company recognizes revenue when goods or services are transferred to customers in an amount that reflects the consideration which it expects to receive in exchange for those goods or services. In determining when and how revenue is recognized from contracts with customers, the Company performs the following five-step analysis: (i) identification of a contract with the customer; (ii) determination of performance obligations; (iii) measurement of the transaction price; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.

The Company generates revenue primarily through sales of light-duty ECVs, sales of ECV parts, and sales of off-road electric vehicles.

The promised warranty does not provide the clients with a service in addition to the assurance that the product complies with agreed-upon contract specifications and is considered an assurance warranty. The warranty is not considered separate performance obligations and no revenue is associated with these services under ASC 606. Historically, the Company has not experienced material costs for quality assurance and, therefore, does not believe an accrual for these costs is necessary.

Revenue is recognized upon the satisfaction of its performance obligation (upon transfer of control of promised goods or services to customers) in an amount that reflects the consideration to which the Company expects to be entitled to in exchange for those goods or services, excluding amounts collected on behalf of third parties (for example, value added taxes).

The Company acts as a principal in the revenue generating process and should recognize revenue on a gross basis. Revenues are measured as the amount of consideration the Company expects to receive in exchange for transferring products to customers. The transaction price is generally fixed as specified in the contracts. The Company’s contracts do not include explicit rights of return, and variable consideration is not significant.

All transactions are settled in cash within the normal credit period, and there is no financing component.

Shipping, handling costs and freight-out expenses for product shipments that occur prior to the customer obtaining control of the goods are accounted for as fulfilment costs rather than separate performance obligations and are recorded as selling and marketing expenses. These costs primarily include domestic transportation and other logistics expenses incurred prior to export under EXW, FOB or FCA arrangements, or costs incurred before delivery to customers.

The following table disaggregated the Company’s revenues by product lines for the years ended December 31, 2025 and 2024:

The Company’s revenues are primarily derived from America, Europe and Asia. The following table sets forth disaggregation of revenue by customer location.

(1) The decrease in revenue from the Americas for the year ended December 31, 2025 was primarily attributable to changes in the external trade environment, including increased tariffs and related uncertainties, which adversely affected the Company’s sales activities in the U.S. market.

Contract Balances

Timing of revenue recognition was once the Company has determined that the customer has obtained control over the product. Accounts receivable represent revenue recognized for the amounts invoiced and/or prior to invoicing when the Company has satisfied its performance obligation and has an unconditional right to the payment.

Contractual liabilities primarily represent the Company’s obligation to transfer additional goods or services to a customer for which the Company has received consideration. The consideration received remains a contractual liability until goods or services have been provided to the customer. For the years ended December 31, 2025 and 2024, the Company recognized $1,085,742 and $1,120,355 revenue that was included in contractual liabilities as of January 1, 2025 and 2024, respectively.

The following table provided information about receivables and contractual liabilities from contracts with customers:

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Share-based compensation expenses

The Company’s share-based compensation expenses are recorded in accordance with ASC 718.

Share-based awards to employees are measured based on the grant date fair value of the equity instrument issued and recognized as compensation expense net of a forfeiture rate on a straight-line basis, over the requisite service period, with a corresponding impact reflected in additional paid-in capital.

The estimate of forfeiture rate will be adjusted over the requisite service period to the extent that the actual forfeiture rate differs, or is expected to differ, from such estimates. Changes in estimated forfeiture rate will be recognized through a cumulative catch-up adjustment in the period of change.

Convertible promissory notes

The Company adopted ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20), effective for the year ended June 30, 2025. The Company accounts for its convertible debentures and notes primarily under ASC 470, Debt.

Under the amended guidance, convertible instruments are accounted for as a single liability instrument measured at amortized cost. This simplified approach eliminates the requirement under previous guidance to separately account for beneficial conversion features (“BCF”) or cash conversion features (“CCF”) in equity.

An exception to this single-instrument approach applies if an embedded conversion feature is required to be bifurcated from the host debt instrument and accounted for separately as a derivative under ASC 815, Derivatives and Hedging (“ASC 815”). This is required when the conversion feature’s economic characteristics are not considered clearly and closely related to the host debt, the feature meets the definition of a derivative, and it does not qualify for a scope exception from derivative accounting. If bifurcation is required, the embedded derivative is recognized as a liability and measured at fair value, with subsequent changes in fair value reported in earnings. The portion of the proceeds allocated to the derivative creates a debt discount, which is amortized to interest expense over the term of the debt.

For instruments accounted for as a single liability, debt issuance costs are recorded as a direct deduction from the carrying amount and are amortized to interest expense over the term of the debt using the effective interest method. Upon conversion into shares in accordance with the original contractual terms, the carrying amount of the debt is reclassified to equity, and no gain or loss is recognized in the income statement.

The Company evaluates modifications of convertible debentures and notes to determine whether such modifications are substantial. If a modification is not substantial, it is accounted for as a modification of the existing instrument, with a revised effective interest rate based on the updated cash flows. If a modification is considered substantial, the existing instrument is derecognized and the new instrument is recognized, with any resulting difference recognized in earnings.

Upon extinguishment of convertible debentures and notes, including repayment or settlement, the difference between the carrying amount of the instrument and the consideration paid is recognized as a gain or loss in the consolidated statements of operations.

Derivative liability

The Company accounts for derivative financial instruments in accordance with ASC 815, Derivatives and Hedging (“ASC 815”). Derivative instruments are initially recognized at fair value on the consolidated balance sheets and are subsequently remeasured at fair value at each reporting date, with changes in fair value recognized in earnings.

Derivatives may arise from embedded features within convertible debentures and notes or from freestanding financial instruments. An embedded feature is bifurcated from the host contract and accounted for separately as a derivative when the feature’s economic characteristics and risks are not clearly and closely related to those of the host contract, the feature meets the definition of a derivative, and it does not qualify for a scope exception under ASC 815.

If bifurcation is required, the embedded derivative is recognized as a derivative liability and measured at fair value, with subsequent changes in fair value recognized in earnings. The portion of the proceeds allocated to the derivative creates a debt discount, which is amortized to interest expense over the term of the host debt using the effective interest method.

For freestanding derivative instruments that are classified as liabilities, the Company measures such instruments at fair value at issuance and remeasures them at each reporting date, with changes in fair value recognized in earnings.

The Company evaluates modifications of contracts containing derivative features to determine whether such modifications result in the extinguishment of the original instrument or the continuation of the existing instrument. If the modification is considered substantial, the original derivative is derecognized and a new derivative is recognized at fair value, with any resulting difference recognized in earnings.

Upon settlement or termination of a derivative liability, the difference between the carrying amount of the derivative and the consideration paid is recognized in earnings.

Recently issued accounting standards pronouncements

The Company is an “emerging growth company” (“EGC”) as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, EGC can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. As a result, the Company’s operating results and financial statements may not be comparable to the operating results and financial statements of other companies who have adopted the new or revised accounting standards.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which requires disclosure of incremental income tax information within the rate reconciliation and expanded disclosures of income taxes paid, among other disclosure requirements. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company’s management does not believe the adoption of ASU 2023-09 will have a material impact on its financial statements and disclosures.

In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses. This new guidance is designed to improve the disclosures about the types of expenses, including employee compensation, depreciation, and amortization, and costs incurred related to inventory and manufacturing activities. In January 2025, the FASB issued ASU No. 2025-01 to clarify certain provisions of ASU 2024-03, including its effective date and transition guidance. As clarified, the amendments in ASU 2024-03 are effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. The guidance should be applied prospectively, with an option for retrospective application. Early adoption is permitted. The Company is currently assessing the impact that adopting this new accounting standard will have on its consolidated financial statements.

In July 2025, the FASB issued ASU 2025-05, which amends ASC 326-20 to address the measurement of expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC 606. The update introduces a practical expedient available to all entities and an accounting policy election specifically for non-public business entities that adopt the practical expedient, aiming to simplify and reduce the cost complexity associated with estimating expected credit losses for such financial assets. The guidance was developed in conjunction with the Private Company Council to respond to stakeholder concerns regarding the burdens of existing credit loss estimation requirements for these transactions. The Company is currently assessing the impact that adopting this new accounting standard will have on its consolidated financial statements. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements and related disclosures and expects to adopt the guidance in its fiscal year beginning January 1, 2027.

Except as mentioned above, the Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company’s consolidated balance sheets, statements of operations and comprehensive loss and statements of cash flows.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

Evaluation of Disclosure Controls and Procedures

Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s Chief Executive Officer (the Company’s principal executive officer and interim principal accounting officer), of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company’s Chief Executive Officer concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f) and 15d-15(f) under the Exchange Act. Internal control over financial reporting is a process used to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external purposes in accordance with U.S. GAAP. Internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of our financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with the authorization of our Board and management; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.

Any system of internal control, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the system are met. Because of the inherent limitations in all internal control systems, no system of internal control over financial reporting can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.

Our management conducted an evaluation of the effectiveness of our internal control over financial reporting. Based on this evaluation, management concluded that Cenntro has limited accounting personnel and other resources with which to address its internal control over financial reporting in accordance with requirements applicable to public companies. Historically, Cenntro had not retained a sufficient number of professionals with an appropriate level of accounting knowledge, training and experience to appropriately analyze, record and disclose accounting matters under U.S. GAAP.

Management’s Remediation Initiatives

Management has taken- and is continuing to take-actions to remediate our material weakness and strengthen our internal control over our financial reporting and risk management. In 2022, we steadily increased our finance team resources based in our Freehold, NJ, headquarters. Also in in January 2022, we appointed our Financial Controller for North America who is a CPA license holder.

As of the date of this 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 with public accounting experience who has passed their CPA exams. We intend to hire additional professional accountants with greater familiarity with U.S. GAAP and SEC reporting requirements. Additionally, we have retained a consulting firm to assist us in assessing our compliance with The Sarbanes-Oxley Act to help us (i) further develop and implement formal policies, processes and documentation procedures relating to our financial reporting as well as (ii) address the accounting function’s staffing needs and training and strengthen our internal control processes. Our 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.

Changes in Internal Controls over financial reporting

No change in our internal control over financial reporting occurred during the fiscal year ended December 31, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.